Ensuring statement of work happens in practice

How do organisations ensure outcome-based projects governed by an SoW don't become disguised time + materials work?

Posted by: ZivioReading time: 5 minutes

Outsourcing outcome-based projects to external suppliers is not a new business practice. Services procurement is a tried and tested method of organisations buying in expertise and know-how on a project-by-project basis. 
But as the world of work evolves rapidly to adjust to the global shifts in economics, legislation and society, outcome-based work is becoming an increasingly important work delivery model for organisations, departments and teams of all shapes and sizes.
For those not yet familiar with managing statement of work engagements, there could be the risk of work being designed as outcome-based projects in theory but being managed as traditional 'time and materials' staff augmentation programs.
Here are some guiding principles to consider when outsourcing outcome-based work to ensure the statement of work happens in practice:
Start with right mindset
Neil Murdoch, Head of Solutions Development at Volt, says 'I think the biggest thing for me is when we're sitting opposite a client and they say the immortal words, "what do you mean I can't interview a statement of work person?”. I have to take it back to, okay; you need to dig a hole, right? You can pay someone, an hourly rate to dig that hole for you or you can say to someone, I want you to dig a hole; it's got to be six feet by three feet. And I want it done within a week. You should be at least three feet down by Wednesday, and I'm going to pay you 5,000 pounds to do it. You can have 17 people dig the hole and do it in a day, or you can do it yourself and It take a week.'
The correct mindset when managing a statement of work is that you're focused on the outcome of the project, not the specific individuals in the team or in the day-to-day detail of the work.
Start with a clear statement of work with defined milestones
In the above example, there is a very clear outcome (a 6x3 hole) as well as a defined milestone (3 feet down by Wednesday). But in many cases, the first challenge is for the organisation to articulate the outcome of the project in the first place. Bruce Morton, Head of Strategy for Allegis Global Solutions, says 'Many years ago, you'd have a one-page job description and a one-page person description. And that created your requirement and you go out to market with it. Over time, because of automation and the speed of the market, all the companies are focusing on is just a description of the person. What are they going to do? Well, they are a Java developer, what do you think they are going to do? As an industry, we sort of accepted that all we needed was just a person description. So, the concept of the work actually suddenly disappeared. Now we're seeing a complete reversal of that. We're now asking, "What's going on? Why do you need five Hadoop people all of a sudden? What's the project trying to get done? Because there might be a smarter way of getting it done."'
Work with the right supplier
A key component of ensuring a SoW happens in practice is working with the right supplier – a supplier who can help to shape the deliverables and milestones, has a proven track record as well as provide the best value for any given project. In practice, many organisations appoint suppliers out of habit ("we always work with supplier X for that sort of thing") or a singular focus on an attribute like their rates. Tim Woodall from Capita People Solutions says, 'you can't just look at the rate, or in procurement language, the price in isolation. Why do you actually need it in this way? And why do you think you need this type of work or this type of supplier? Triage in that way with that type of mentality'.
In summary: manage the work not the supplier
Unlike time and materials staff-augmentation programs, where work and performance can be managed on a day-to-day basis without much forward planning, structure or visibility of the desired outcome, statement of work engagements require both the buying organisation and service supplier to have a clear understanding of the outcome. 
With the outcome defined, operations, HR and procurement functions can concentrate on managing the projects progression to budget, deadline and scope instead of managing day to day tasks.


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