7 Ways to Reduce Third-Party Services Overruns Before They Hit The Forecast

A practical guide for Finance leaders

When a third-party services project is approved, the figure that’s signed off becomes part of the forecast. For work delivered under a Statement of Work (SOW) contract, however, that figure is rarely the final cost. This is because scope, milestones and costs continue to evolve while the work progresses. Overruns tend to build gradually through changes agreed during delivery rather than appearing as a single event, so by the time they surface, Finance is often left explaining a variance it had no opportunity to prevent.

This guide looks at how overruns develop in SOW-based services, from approval through to delivery and payment. It sets out seven practical ways Finance can work with Procurement to identify and manage them earlier. Each section includes questions to help you assess where your organisation stands today.

Inside the guide:

• How to set a realistic baseline at the point of approval

• Why change needs to be priced and approved through a centralised process

• How to track the total cost of change against the original approval

• Why payment should be linked to completed milestones

• How to base accruals on delivery rather than estimates

• How to spot early warning signs that an engagement is drifting

• How to keep the forecast current as engagements change