The Problem
Value Keeps Expanding, Price Doesn't
Profit doesn't usually fall off a cliff—it leaks. Hours drift into "just a quick request," deliverables expand, senior time covers gaps, and small write-offs become habit. Left alone, this turns into margin erosion, discount pressure, and renewal pain. The fix is a simple system: see the leak early, frame it clearly, and commercialize reality.
The Framework
Risk Conditions (Act Early)
Treat these as early warning signals that value and effort are diverging:
- Effort drift: actual hours vs. baseline +10–15% over 2–4 weeks
- Work mix shift: high-effort categories now ≥20% of time (vs prior period)
- Senior substitution: senior utilization > 85–90% while junior/mid < 65%
- Silent scope: new tasks/deliverables show up without a CR or SOW update
- Realization % trend ↓ (e.g., dipping toward < 85%)
Action: Quantify the deltas, prepare a change narrative, and line up contract levers.
Issue Conditions (Already in the Leak)
When you're already losing money:
- Engagement/agreement margin < target (e.g., < 35%)
- Write-offs or credits in the last cycle to make the numbers "work"
- Deadline slips due to unplanned, unpriced additions
Action: Freeze scope, create a formal CR, and execute a fast stabilization plan.
Common Diagnostics
Use these checks to pick the right fix and message:
- Deliverable creep: What exactly changed vs. the original SOW/charter?
- Category drivers: Which top 3 categories are consuming the delta? Why now?
- Role skew: Which tasks need to move to junior/mid with a QA step?
- Dependency friction: Are vendors/approvals/tooling inflating AHT?
- Outcome alignment: Are we doing extras that don't advance stated goals?
Step-by-Step Guide
Make the Leak Visible
Actions:
- Mini P&L weekly: effort vs plan, margin, write-offs, top categories
- Delta pack: before/after snapshots (what changed, effort impact, outcome value)
- Guardrails: auto-flag when any category rises ≥ 20% for ≥ 2 weeks
Expected Impact: Earlier, cleaner conversations; fewer surprises at month-end.
Fix the Engine
Actions:
- Shift-left & rebalance: move repeatables to junior/mid with runbooks/macros
- Deflect noise: KB/self-service for low-value asks; templated responses
- Trim process debt: remove approvals > 24h, standardize handoffs
- Right work / right level: seniors set direction; juniors execute with QA
Expected Impact: Realization ↑ 5–10pp; AHT ↓; senior burnout ↓.
Commercialize Reality
Actions:
- Change Request (CR): document scope adds; tie to outcomes and ROI
- Re-tier or re-rate: complexity uplifts, channel/feature add-ons, after-hours rates
- Milestone trade-offs: adjust scope/date/budget transparently, with impact chart
- Credit remediation plan: if credits applied, attach delivery milestones that earn back trust
Expected Impact: Margin stabilizes; expectations reset; relationship preserved.
Prevent the Next Leak
Actions:
- SOW hygiene: explicit deliverables, out-of-scope examples, CR triggers
- Rate card clarity: specialized tasks (security, motion, compliance) priced accordingly
- Onboarding checklist: environment/brief/asset readiness criteria before start
- Portfolio learning: add best patterns to templates; auto-alerts on early variance
Expected Impact: Fewer ad-hoc decisions; scalable commercial hygiene.
KPIs to Track
| Metric | Target |
|---|---|
| Engagement/agreement margin | ≥ 35–40% |
| Realization % | ≥ 85–90% |
| Write-offs/credits | ≤ 2% (eliminate habitual write-offs) |
| Senior vs junior mix | Seniors 75–85%; juniors/mids healthy & rising |
| CR velocity | Raise → approve ≤ 7 days |
Warning Signals
Real Scenarios
Creeping Scope on Fixed-Fee Engagement
Context
Client keeps adding "small" requests that total 20% extra effort over baseline.
Steps
- 1.Pull weekly effort vs plan report
- 2.Document all out-of-scope work with timestamps
- 3.Calculate margin impact of the delta
- 4.Prepare CR with before/after comparison
- 5.Present to client with value framing
Senior Time Absorbed by Execution
Context
Partners/seniors doing 40% execution work while juniors underutilized.
Steps
- 1.Audit task allocation by role
- 2.Identify repeatable tasks for delegation
- 3.Create runbooks for delegated work
- 4.Implement QA gates for junior output
- 5.Track realization improvement over 4 weeks
Quick Wins
Start with these immediate actions:
- Create a weekly mini P&L dashboard (effort vs plan, margin, categories)
- Set up auto-flag when any category rises ≥ 20% for 2 weeks
- Document top 5 out-of-scope examples in SOW template
- Build a CR template with impact fields
Related Playbooks
Want to automate this playbook?
DigitalCore tracks these metrics automatically and alerts you before problems become crises.