Zero Dollar Change Orders can be invaluable to any service provider or consulting firm that is trying to maintain control over a challenging project delivery. A Customers knee-jerk reaction to any Change Order request with charges authorized under the Change Order, is to resist. Almost all consulting service agreements and purchase agreements are explicit, unless additional funding is authorized in writing by the Customer the PO represents their total financial obligation for the contracted services. However zero dollar change orders are extremely useful in capturing and preserving the facts; by their very nature they acknowledge that there has been an unforeseen change experienced during the Service delivery, and it captures what those facts look like, if it impacts the delivery schedule or requires other adjustments to the project plan (“Zero Dollar Change Order“).  This may mean additional features, or changed features within the SOW deliverable previously called for, or shifts in the parties responsibilities; this might mean that the customer needs to undertake specific tasks in order to prepare for and facilitate the Service delivery (i.e. gather data, make specific staff available etc.), or the change may result in a change with regard to the expected project delivery date. Whatever it is, those changes should be captured in a formal Zero Dollar Change Order and acknowledged within the  project’s status reporting.

From a practical perspective the Zero Dollar Change Order establishes a realistic baseline with regard to the parties respective liability. If the project is changed multiple times and those changes are acknowledged in Zero Dollar Change Orders, and later in the project a Change Order with funding is required, the service provider is on better footing to argue for that required funding. If a delivery date is missing, or features are slightly different from expectation, changes in functionality along the way helps demonstrate each party’s contribution to that issue. From a liability perspective, if the project runs into issues the Zero Dollar Change Order acknowledges that the customer did not fully understand the project requirements at the outset, this can have an impact each party’s liability.

The practical reality is I have never witnessed a customer that fully understood their project needs at the outset. When a vendor works to help with the fact gathering and review of design alternatives typically the SOW deliverables start to shift, this is often referred to as “Scope Creep” (where the vendor must deliver on an expanded SOW deliverable). The purpose of any Change Order is generally to make changes in the project plan, SOW and PO necessary to accommodate those changes. Effectively, early consulting Services often helps to better define the customer need, the customer environment and to educate both parties on the true scope of the customer requirements and the best way to address those needs. Of course the challenge is that the project’s budget is generally allocated at the outset and does not easily expand over the Service delivery process. The Zero Dollar Change Order may help customers to rationalize project priorities, must havves vs. nice to have, and reallocation of budget accordingly.

A series of Zero Dollar Change Orders properly helps to justify future funded Change Orders, they provide a sound basis for changes in the delivery schedule and they also help mitigate liability  (over a lack of change orders which presumes the customer knew perfectly well everything at the outset of the project). While it may sound as if this post is biased in the favor of the vendor o r Service Provider, the truth is that within Service Deliveries, there is no room for “I win you lose“, the customer and the vendor must actively and continuously collaborate to make each other successful or the project will not be a success. In a failed project both parties fail, in a successful project both parties win, and there is very little in between these extreme results. Let me help you win.

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Take advantage of a 30-minute free consultation to review a SaaS, SLA, SOW, or a consulting or license agreement, highlight anything important and/or provide the extra assurance of adequate protection. You may be surprised at the errors and/or omissions that occur within most standard agreements.