What is a Statement of Work

A Statement of Work (SOW) is a companion document to the services agreement that consists of a narrative description of the products or services to be supplied. A statement of work is a necessity as it refines the understanding between the parties as to what must be delivered and the terms and conditions to be applied. A Statement of Work is in effect a contract between the parties for the service delivery or of a commercial understanding of how to work together in a joint activity with a client.

The typical objectives of the statement of work are to enable the contractor to clearly understand the requirements and needs of the customer organization. You wouldn’t enter into a contract with a builder to make over your house on a smile and a handshake (I hope) and neither should you enter into a commercial relations to delivery a multimillion dollar project for a website development contract either. To be clear on this don’t trust a handshake or a verbal promise always document your understanding – it is far better to spend time arguing about what must be done before the work has started. If you’ve taken the proper steps to write a thorough statement of work then no surprises should occur on delivery when what was ordered is actually seen for the first time.

The Statement of Work spells out the scope of work to be done, the deliverables, the responsibilities of each party, and any fees for services to be rendered. The SOW is created once a client feels comfortable and ready to proceed with the project or activity and documents the joint understanding of what must be achieved at each stage. The statement of work (SOW) is a management product that formally documents the products to be delivered and the associated work units to be performed under the contract.

Typical contents are:

• Aim and objectives of the activity
• The scope of the activity and any limitations
• Assumptions and constraints
• Project plan and approach
• Governance and review points including the project management process to be used to report progress
• Deliverables to be produced including any dependencies
• Due dates for deliverables
• How deliverables are approved and what quality procedures are in place.
• The commercial considerations

Requirement of a good Statement of Work

Normally a statement of work is employed when a simpler needs requirement document cannot be used and it must describe what must be accomplished in terms of the client’s requirements. Stakeholder needs, wants, and expectations are also analyzed and evaluated before being converted into requirements. There may be items such as, reporting requirements, commercial restrictions, market research, anti-competition agreements, geographic scope etc. that must be included. It must outline all applicable quality systems including quality review processes and acceptance procedures to be used, as well as the definition of the type and extent of control that is to be exercised on subcontractors should these prove necessary. On this latter point a sub-contractor must sign up to the overall conditions and the party concerned must warrant that this is the case. Overall a SOW identifies the requirements to be satisfied not the way they must be achieved leaving the parties free to use their own expertise and skill to achieve the desired result.

Creating a statement of work is not an easy task and can be time consuming but is well worth the effort. Do not trust to partner rhetoric that suggests leaving the difficult points to later never rely on such terms ‘spirit of agreement’ – it always ends in trouble. If a statement of work is too ambiguous, it can lead to misinterpretation and future problems and a major falling out. The failure write down expectations and then to properly execute a SOW is often the reason parties end up in a dispute and the major reason why this process must be well thought through and executed.

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Why is Business Benefits Planning Essential – free ebook to download

Benefits planning aims to deliver the benefits promised in the business case and ensures they are actually realised. Many projects although they complete successfully in project management terms fail to deliver any of the initial benefits that launched the initiative. I have seen countless examples of project teams and managers congratulating themselves with the success of the project, ‘how well it went’, ‘all the deliverables done’ and so forth – but with not one penny piece of value delivered for the organisation.

I have sat on project boards to go through the business case and been confronted many times with promises of 25% cost reductions or increased production that if taken in the round with all the other things on the go would mean we get a product that costs nothing to make and sell for millions by the millions – forgive me if I am cynical. The failure of many projects to actually deliver any benefit in real terms in part explains the reluctance to give the go-ahead for new projects. Senior management are getting (more cynical) about the benefits and are getting fed up with being confronted with yet another initiative that promises hundreds of thousands of dollars in savings, increased revenue or more customers for example but actually delivers nothing. We have low expectations from any activity and even of the ability of projects to pay for the outlay and our expectations are being met.

Cynicism borne of the experience of hundreds of pleadings from staffers that have come to naught and project’s launched that have promised benefits that in the end have failed to come up with the goods. Evidence show’s that the majority of projects (well over 60%) in such diverse areas as IT, Outsourcing and BPR fail to deliver any discernable improvement. I have found no Outsourcing project that has delivered anything of value – the only exception being when they closed half the department and we got half the service.

In projects I supervise I always fall back on the six faithful servants:

• What benefits are being suggested and what is the scale and scope being promised and does it look reasonable?
• Why do we need these benefits – what is the driver at this point in time?
• Where will the benefits be realised in what department specifically?
• When will the benefits be achieved? Remember back to the discounted cash flow exercises we did at business school – a benefit ten years away of four pence halfpenny is worth nothing.
• Who is responsible for achieving the benefits? What department and the manager by name? I also ask if she knows that she will be responsible for achieving these benefits.
• How will these benefits be released – what has to happen? For example if we have to cut staff this can take a lot of time and be difficult to achieve.

It should not be forgotten that the whole purpose of a project or initiative is to deliver something of value and if this does not occur then the project has failed completely. So now’s the time for a realistic appraisal of where we are. In any assessment of a business activity the expected outcome in terms of cash benefit forms the core of the go no-go decision. Managers must be more critical and evaluate for sure but just as important is to make sure a process is in place that will deliver the outcomes expected. It is simply not good enough to sit back and hope that a new IT system can bring in the money – it has to be planned for and people have to take on their responsibilities starting at the top – they are the ones who are in the end responsible for the money being delivered. I have put together an e-book explaining how to put together a benefits planning process that’s available to download for free on my forum – take a look at least we get some way along the road to delivering value for our organisations.

Royston

get free ebook here: http://www.bizface.co.uk/bizfaceforu…talogue-8.html

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