You Approved £1M, But The Third-Party Service Ended Up Costing £3M - How Did Nobody See It Coming?

Consider a third-party services engagement to deliver a business transformation programme, starting with an approved budget of £1M. At approval, there is a twelve-month plan, a defined scope of work, an experienced services supplier and a business case that has stood up to scrutiny. Based on the information available at the time, the engagement appears well governed and the £1M approval is reasonable.

Over the following eighteen months, the work develops and the cost increases. No single decision transforms the financial position, but a series of changes gradually moves the engagement beyond what was originally approved.

How the Position Moved

In month three, an additional discovery phase is agreed after the supplier identifies greater complexity in the processes being transformed. In month five, a reorganised business unit asks for a second workstream. By month eight, additional specialist services are added to help recover a slipping milestone, and in month eleven the programme is extended by another quarter.

Each decision may be reasonable in its own context and approved by someone with the appropriate authority. Because the changes emerge at different points during delivery, however, the original approval is not necessarily revisited as a whole. The programme continues to develop while the £1M remains the reference point for what was originally agreed.

Research published by the Project Management Institute found that 52% of projects experienced scope creep or uncontrolled change. Scope moving during delivery is a natural element of complex projects, particularly where additional requirements become clearer through the work itself. For Finance, the important question is whether those changes are reflected in the financial position as they happen.

Why the Increase Is So Difficult to See

Information about a services engagement often sits across different systems and processes. The original Statement of Work (SOW) may sit in one place, purchase orders (PO) in another, while variations, approvals, project updates and supplier information are managed through spreadsheets, emails or other established processes. Each may serve a legitimate purpose, but they do not necessarily provide Finance or Procurement with one connected view of how the engagement has changed.

Our 2026 Services Procurement Survey highlights another reason this can happen. While 54% of respondents say Procurement has overall responsibility for third-party services spend, 38% say it is not centrally managed at all. Where services are managed across different parts of the organisation, information about scope, changes, commitments and delivery can become disconnected across teams and processes.

As the cost increases, the explanation for that increase can therefore become fragmented. By the time someone needs to understand how the original £1M approval became a much larger commitment, reconstructing that journey may require bringing together information that was never designed to be viewed as one picture.

If third-party services are managed across different teams, how confident are you that you have a complete view of the commitments being made? How quickly would you know if a significant engagement had moved beyond its original scope or budget? And if the financial position had changed materially, could you clearly explain why?

Why Third-Party Services Are Particularly Exposed

Third-party services are particularly exposed because the organisation is buying an agreed scope of work rather than a fixed quantity of goods. The supplier may undertake additional work, extend the engagement or adjust its delivery approach as requirements change, new work is identified or priorities shift, each of which can affect the cost.

The original SOW provides an important baseline, but it cannot provide a complete picture if the work subsequently changes. Where variations, additional work and extensions are recorded separately, it becomes harder to see how the engagement has developed and what those changes mean for the overall commitment. If a purchase order (PO) is increased, can you see what changed, why it changed and how much additional commitment it represents?

Seeing the Commitment as It Changes

Understanding these changes while an engagement is underway gives Finance a stronger basis for assessing forecasts and financial exposure, while giving Procurement greater visibility of how the engagement is developing against the original scope and commercial position.

This is where Services Procurement Systems (SPS) can play a key role by connecting the different elements of an engagement throughout its lifecycle. Linking the approved scope with variations, milestones, delivery information and committed spend gives both Finance and Procurement a more complete view of how the engagement is developing and where the financial position has moved from its original baseline.

Ultimately, could you explain exactly how a £1M project became a £3M commitment? If the answer requires someone to bring together information from outdated systems, spreadsheets, emails, purchase orders and project records, it may be difficult to understand how the engagement has changed until the financial impact is already significant.