Using statements of work to manage projects isn't a new concept. However, using statements of work (SOW) engagements with a network of smaller suppliers and service providers to get things done differently is an exciting alternative work delivery model to traditional time and materials contracting.
In this guide, we'll explore how to use SOW engagements to get work done differently:
- What are the differences between SOW engagements and time + materials contracting?
- Why use SOW engagements as a work delivery model?
- Can all projects be delivered with an SOW engagement?
- Managing smaller SOW engagements with technology
What are the differences between SOW engagements and time + materials contracting?
What is an SOW engagement?
A SOW engagement is where an organisation contracts an external supplier to deliver an outcome through a statement of work. The statement of work itself is a formal document, which defines the scope of the work involved for a supplier for any given engagement. The SOW document details and clarifies deliverables, costs, and the work's delivery dates.
What is Time plus Materials contracting?
Time plus Materials contracting, traditionally used for long-term projects, is where a contractor is paid for their time and any necessary equipment/supplies for delivering a piece of work. T+M contracts were seen to offer benefits around being flexible with project requirements and scope.
Why use SOW engagements as a work delivery model?
The strategic benefits for using SOW engagements as a work delivery model are:
Improved project scoping & delivery
Using SOWs forces project teams to be very clear on their vision for a successful project, along with clear timelines, deliverables and costs.
This vision ensures projects have a very clear outcome before being approved and resourced, Of course, having visibility over planned projects makes budgeting and resource planning far simpler.
More predictable resourcing costs
The defined nature of the SOW engagement gives clarity on total cost, cost timelines/milestones and removes the associated unpredictability of ongoing time + materials contracts.
Increased short term productivity
In addition to these strategic benefits, SOW engagements provide a very practical short-term productivity solution for resourcing projects whereas businesses may struggle to find the skills and expertise they need through other work delivery channels.
Can all projects be delivered with SOW engagements?
In theory, yes. A statement of work is formal document that defines the deliverables, costs and timeline for a project. In plain English, it's like an organisation saying to a supplier, "in exchange for X, you will be paid Y".
In practice, however, not all projects will fit into the clear definitions required by a statement of work. Where there is uncertainty around the scope of a project or the skills/materials required to deliver it, creating a statement of work may be a challenge. Again, in plain English, there are some projects that are better suited to other resourcing methods. E.g., you'd never be able to create a statement of work for a customer services role.
In summary, SOW engagements should form an integral, yet considered, part of a organisation's end-to-end resourcing strategy.
Managing SOW engagements with technology
Technology holds the key to managing SOW engagements at the scale required by most large organisations.
Some examples of how technology can help reduce the burden on project delivery and procurement teams are:
Supplier onboarding and compliance
Finding, registering, and working a supplier through an onboarding process can take a bit of time so it's easy to see how using the low-tech/no-tech solutions most companies have in place in in this area make this a challenge for even the most efficient procurement teams. Technology can help speed this process along by automating compliant registration and onboarding processes, including handling electronic document signatures.
Matching and shortlisting suitable suppliers based on the requirements outlined in the statement of work can reduce the manual effort to conduct this curation task. The RFP and bidding process can also be optimised with automated distribution of project requirements.
Configurable milestones and variation orders
Agreeing project milestones as part of the offer process helps projects get started on time, and the flexibility of negotiable variation orders allow the project team and the supplier to negotiate tracked changes in the statement of work with minimal effort.
Work order generation
Electronic contract signature reduces the time and effort required to manage the generation and negotiation of work orders.
Statement of work engagements offer organisations of all sizes an effective option for getting work done, with real benefits in short-term productivity, long-term agility and overall resource planning. But to do work with SOW engagements in the right way, and at scale, it is essential that the right technology is in place.