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Methodology

Scope Creep Impact Planner methodology

Measure contribution erosion from extra project hours.
Duc Nguyen X.By Duc Nguyen X.· Founder, Margin101Last reviewed: View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral small-business planning using your own assumptions.

1. Formulas and units

Contribution Erosion
contributionErosion = quoted contribution − actual contribution

Where

contributionErosion
Contribution Erosion (currency units/project)Source: Calculated output
quotedContribution
Quoted Contribution (currency units/project)Source: Calculated output
actualContribution
Actual Contribution (currency units/project)Source: Calculated output
Extra Hours
extraHours = actual hours − quoted hours

Where

quotedHours
Quoted hours (hours/project)Source: Business record
actualHours
Actual hours (hours/project)Source: Business record
extraHours
Extra Hours (hours/project)Source: Calculated output
Extra Delivery Cost
extraDeliveryCost = extra hours × delivery cost per hour

Where

deliveryCostPerHour
Delivery cost per hour (currency units/hour)Source: Business record
extraHours
Extra Hours (hours/project)Source: Calculated output
extraDeliveryCost
Extra Delivery Cost (currency units/project)Source: Calculated output
Recoverable Revenue
recoverableRevenue = extra hours × recoverable extra rate

Where

recoverableExtraRate
Recoverable extra-hour rate (currency units/hour)Source: User decision
extraHours
Extra Hours (hours/project)Source: Calculated output
recoverableRevenue
Recoverable Revenue (currency units/project)Source: Calculated output
Quoted Contribution
quotedContribution = contracted revenue − quoted delivery cost

Where

contractedRevenue
Contracted revenue (currency units/project)Source: Business record
quotedContribution
Quoted Contribution (currency units/project)Source: Calculated output
Actual Contribution
actualContribution = contracted revenue + recovered revenue − actual delivery cost

Where

contractedRevenue
Contracted revenue (currency units/project)Source: Business record
actualContribution
Actual Contribution (currency units/project)Source: Calculated output
Actual Effective Rate
actualEffectiveRate = total recovered revenue ÷ actual hours

Where

actualHours
Actual hours (hours/project)Source: Business record
actualEffectiveRate
Actual Effective Rate (currency units/hour)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.

2. Worked example

Input assumptions

The worked rows are rendered from the registered engine and visible default fixture.

Contracted revenue
10,000 currency units/project
Quoted hours
50 hours/project
Actual hours
65 hours/project
Delivery cost per hour
80 currency units/hour
Recoverable extra-hour rate
50 currency units/hour

Calculation and outputs

  1. contributionErosion

    contributionErosion = quoted contribution − actual contribution
    Quoted hours
    50 hours/project
    Actual hours
    65 hours/project
    quotedContribution
    6,000 declared output unit
    actualContribution
    5,550 declared output unit
    actualEffectiveRate
    165.384615 declared output unit

    Engine result: 450

  2. extraHours

    extraHours = actual hours − quoted hours
    Quoted hours
    50 hours/project
    Actual hours
    65 hours/project
    quotedContribution
    6,000 declared output unit
    actualContribution
    5,550 declared output unit
    actualEffectiveRate
    165.384615 declared output unit

    Engine result: 15

  3. extraDeliveryCost

    extraDeliveryCost = extra hours × delivery cost per hour
    Quoted hours
    50 hours/project
    Actual hours
    65 hours/project
    Delivery cost per hour
    80 currency units/hour
    Recoverable extra-hour rate
    50 currency units/hour
    extraHours
    15 declared output unit

    Engine result: 1,200

  4. recoverableRevenue

    recoverableRevenue = extra hours × recoverable extra rate
    Quoted hours
    50 hours/project
    Actual hours
    65 hours/project
    Recoverable extra-hour rate
    50 currency units/hour
    extraHours
    15 declared output unit
    extraDeliveryCost
    1,200 declared output unit
    actualEffectiveRate
    165.384615 declared output unit

    Engine result: 750

  5. quotedContribution

    quotedContribution = contracted revenue − quoted delivery cost
    Contracted revenue
    10,000 currency units/project
    Quoted hours
    50 hours/project
    Delivery cost per hour
    80 currency units/hour
    extraDeliveryCost
    1,200 declared output unit
    recoverableRevenue
    750 declared output unit

    Engine result: 6,000

  6. actualContribution

    actualContribution = contracted revenue + recovered revenue − actual delivery cost
    Contracted revenue
    10,000 currency units/project
    Actual hours
    65 hours/project
    Delivery cost per hour
    80 currency units/hour
    extraDeliveryCost
    1,200 declared output unit
    recoverableRevenue
    750 declared output unit
    actualEffectiveRate
    165.384615 declared output unit

    Engine result: 5,550

  7. actualEffectiveRate

    actualEffectiveRate = total recovered revenue ÷ actual hours
    Contracted revenue
    10,000 currency units/project
    Quoted hours
    50 hours/project
    Actual hours
    65 hours/project
    extraHours
    15 declared output unit
    recoverableRevenue
    750 declared output unit
    actualContribution
    5,550 declared output unit

    Engine result: 165.384615

Example

The worked rows are rendered from the registered engine and visible default fixture.

Extra Hours
15 hours/project
Extra Delivery Cost
1,200 currency units/project
Recoverable Revenue
750 currency units/project
Quoted Contribution
6,000 currency units/project
Actual Contribution
5,550 currency units/project
Contribution Erosion
450 currency units/project
Actual Effective Rate
165.38 currency units/hour

The exact engine-derived outputs are shown in the labelled rows below.

Interpretation

The scope creep impact result uses only the entered commercial assumptions.

Scenario study: project decision boundary

Cost the scope change once before continuing

Stop at the decision point, preserve the approved baseline and separate added work from existing scope before choosing absorb, partial-charge or full change-price treatment.

Input basis

  • Fictional added labour: 8 hours at 80 CU per hour.
  • Fictional added materials: 200 CU.
  • Same project currency, period and indirect-tax basis as the approved baseline.
RowIntermediate calculationResult
Incremental labour8 × 80640 CU
Incremental materialsUser-entered supported amount200 CU
Incremental cost before separate delay effects640 + 200840 CU

Interpretation

The 840 CU amount is an economic input to a commercial decision. It does not establish contractual entitlement or settle a dispute.

Boundaries and next step

  • Do not count the same change in base scope and again as contingency.
  • Delay, sequencing, retention and legal effects require separate evidence and the matching owner.

Continue with Scope Creep Impact Planner, Construction Change Order Planner or scope-change quote checklist.

3. Validation and boundary checks

  • Inputs must be finite and remain within the visible boundaries.
  • Rates are decimal values and all monetary inputs use one consistent currency and period.
  • Whole operational capacity is rounded only where the engine explicitly applies floor or ceiling.
Contracted revenue minimum
contractedRevenue ≥ 0 currency units/project — A lower value is rejected before calculation.
Contracted revenue maximum
contractedRevenue ≤ 10,000,000 currency units/project — A higher value is rejected before calculation.
Quoted hours minimum
quotedHours ≥ 0 hours/project — A lower value is rejected before calculation.
Quoted hours maximum
quotedHours ≤ 10,000,000 hours/project — A higher value is rejected before calculation.
Actual hours minimum
actualHours ≥ 0 hours/project — A lower value is rejected before calculation.
Actual hours maximum
actualHours ≤ 10,000,000 hours/project — A higher value is rejected before calculation.
Delivery cost per hour minimum
deliveryCostPerHour ≥ 0 currency units/hour — A lower value is rejected before calculation.
Delivery cost per hour maximum
deliveryCostPerHour ≤ 10,000,000 currency units/hour — A higher value is rejected before calculation.
Recoverable extra-hour rate minimum
recoverableExtraRate ≥ 0 currency units/hour — A lower value is rejected before calculation.
Recoverable extra-hour rate maximum
recoverableExtraRate ≤ 10,000,000 currency units/hour — A higher value is rejected before calculation.

4. Assumptions and source classification

  • All costs, prices, hours, probabilities and volumes are user-supplied; no market benchmark is inferred.
  • Tax is outside these neutral commercial comparisons.
  • The engine retains full precision; formatting never feeds back into calculation.

This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.

5. Limitations

  • The model does not predict demand, delivery performance, contract enforceability or customer behaviour.
  • It does not replace accounting, tax, legal or financial advice.

This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.

Change history

  1. : Initial public release of the planner and methodology after pre-launch calculation, content, source and interaction review.

Related reading

Guides to interpret the decision and its assumptions.

  • Scope Change Quote Checklist

    Record and cost added work, compare absorb, partial-charge and full re-quote paths, then stop for approval.

    Read guide

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