The cost of miscommunication on client projects

What the research found

The Project Management Institute (PMI) surveys project, programme and portfolio leaders every year in its Pulse of the Profession reports. Its 2013 report was devoted to communication:

• About US$75 million of every US$1 billion spent on projects is at risk because of ineffective communication.
• That is 56% of all the money at risk on projects (US$135 million per billion).
• About one in five projects is unsuccessful mainly because of ineffective communication: half of the two in five projects that miss their original goals.
• Only about one organisation in four counts as a highly effective communicator.

Source: PMI, The High Cost of Low Performance: The Essential Role of Communications (2013).

Five years later, the 2018 report measured scope:

• 52% of projects completed in the previous year had scope creep or uncontrolled changes to scope, up from 43% five years earlier.
• Organisations wasted 9.9% of every dollar invested in projects because of poor project performance.

Sources: PMI, Scope creep rising, and Pulse of the Profession 2018.

Why it hits consulting firms hardest

Inside one company, a misunderstanding costs time. Between a consulting firm and its client, it costs margin. On a fixed-fee implementation, the firm usually absorbs the rework to protect the relationship. On time and materials, the client pays and remembers. Either way the cost shows up where nobody records it: in a week of rework, a change that was never billed, a renewal that got harder.

Scope creep is rarely a client asking for more. More often it is two sides that each believed something different was agreed, and nobody can show which.

Where it comes from

Decisions on implementation projects are made by voice, on calls, often casually: "twelve months is fine for now", "let's go with the regional view". Afterwards one side writes it up. The other side doesn't object, which feels like agreement but isn't. Weeks later a different person on the client side, or the same person with a different memory, reopens it.

"The great enemy of communication, we find, is the illusion of it."

What actually reduces it

• Write decisions in the words that were said, not in one side's summary of them.
• Get an explicit confirmation from the other side, on the same wording, not a non-reply.
• Freeze what was agreed. If it changes, make the change visible and agreed too.
• Keep the evidence: who said what, when, and who confirmed it.

That is what Sealbook does, mostly automatically. See how, or estimate what it's costing one of your projects.