Overview

Change orders can significantly impact project scope, timeline, and budget in professional services organizations. Below is a flow chart to help delineate the best path forward along with best practices for managing change orders based on the specific scenarios.

1. Change in Rate

Scenario: An IT consultancy needs to adjust its hourly rate for ongoing support services due to increased operational costs.

• Best Practice is to Create a New Service Offering: Introduce a new service offering reflecting the updated rate. In Parallax, there is not a way to reflect a change in rate on a specific date within an existing Service Offering, and we want to demonstrate the new rate so it an be tracked accurately and fully.

2. Change in Dates or Timeline

Scenario: A project experiences delays due to unforeseen software updates, impacting the timeline and requiring an extension.

Does the change include a new CRM Deal? 

• If so, once the new deal is marked as “closed/won,” add the additional hours and scope to the new project. The new project may be merged into the existing project and maintained via two separate Service Offerings.
• If not, best practice is to change the plan in the existing project: Update the project plan to reflect new completion dates, roles, and allocations. Communicate the changes to all stakeholders.

3. Change in Scope: Adjusting Project Hours

Scenario: A client requests additional features for a software development project, requiring more development hours than initially planned.

Is it an increase in hours?

• If so, determine if a new CRM deal is necessary.
  • If there is not a new CRM deal, best practice is to change the plan in the existing project: Update the project plan to reflect new completion dates, roles, and allocations. Communicate the changes to all stakeholders.
  • If so, once the new deal is marked as “closed/won,” add the additional hours and scope to the new project. The new project may be merged into the existing project and maintained via 2 separate Service Offerings.
• If not, update the Sold Snapshot to reflect reduced hours. 

4. Revenue Increase

Scenario: A digital agency engaged in a year-long project with a major client to develop and maintain a suite of web applications. The original agreement was for a fixed number of hours and specific deliverables. As the project progresses, the client becomes highly satisfied with the work and begins to explore ways to maximize the impact of the applications.

Are hours also increased as a result?

• If so, determine if a new CRM deal should be created as a result. Follow the same process as #2 and #3, above. 
• If the hours on the project are not impacted, go to the Costs & Revenue tab within that Active Project and add a Revenue Event to reflect the increase. 

4. Revenue Reductions or Discounts

Scenario: A legal firm offers a discount to a long-term client as a gesture of goodwill, reducing the total project fee.

• Best Practice is to Log this as an Expense: Record the discount as an expense on the Costs & Revenue tab of the project as a write-off, ensuring accurate financial records.

Why Avoid Adding Change Orders to an Existing Service Offering?

• Preserve Original Agreement: Maintain clear records of what was initially sold.
• Maintain Data Integrity: Separate change orders to preserve historical data and ensure accurate reporting. In Parallax, there is not a way to reflect a change in rate on a specific date within an existing Service Offering. 

Conclusion

By following these best practices and using examples as guidance, you can handle change orders in Parallax efficiently and transparently. This approach supports project success and enhances trust with stakeholders through clear and accurate project documentation.