Why Clients should take a closer look at SOWs

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One very important aspect of successful project management is the creation of a Statement of Work (SOW). A Statement of Work can be defined as a narrative description of the products and services to be provided to a client under contract. Basically the SOW tells “what” needs to be accomplished rather than “how” it is to be accomplished, and clearly defines the scope of the project. Getting everyone to agree on the scope of a project at the very outset is important because it helps in minimizing scope creep. Scope creep occurs when new functionalities or requirements not envisaged in the SOW are introduced into the project plan. Uncontrolled scope creep can result in projects overshooting budgets and schedules. Having a clear understanding of the scope of a project will also provide clarity on the expected outcome of a project, and can help in avoiding misunderstandings, disputes and rework.

A statement of work should also clearly define the roles and responsibilities of various stakeholders involved in a project. The service provider and the client should take care to ensure that the SOW accurately reflects the specific tasks and obligations each party will have to fulfill in the course of project implementation.

From a technical point of view, a statement of work should define the action items that need to be completed and the deliverables that need to be produced as they relate to technology, equipment, and systems management. It should clearly specify what exactly needs to be done, what technologies will be needed to get it done, and what type of technical support needs to be made available. The topics being addressed will vary depending on the nature of a project. The SOW for an IT infrastructure project would for instance clearly specify the individual pieces of equipment and hardware required for the project. A software application development project would specify the technology to be used, the coding standards to be followed, the development methodology to be adopted, the type of validation to be carried out and so on.

Properly developing and managing a statement of work can be challenging, but it is essential for getting any project on the right track and keeping it there. It sets the standards for effective project management and ensures that the project meets the client’s established requirements and objectives. Not having a proper SOW can result in project failures and negative financial fallouts. Taking the time upfront to develop a detailed SOW and using that to manage a project throughout its lifecycle, will go a long way in averting project failures. A typical SOW will include the following:

Project Scope – The objective of the scope document is to ensure that the vendor and the client are on the same page as far as understanding of the project and its outcomes are concerned. The scope document places boundaries around the project, identifies a high level schedule, and broadly outlines the rolls and responsibilities of various stakeholders in the project throughout its life cycle.

Project Approach – This section of the document describes how the vendor plans to go about executing the project, the methodology they intend to adopt, and the engagement model they intend to follow while delivering on the project. It will lay down a road map that will lead to successful completion of the project.

Resource Allocation – This section will identify the resources who will be engaged on the project, and what their designations will be. It will include brief resumes of key personnel and an organizational chart showing the reporting structure. It will identify the point of contact for interaction with the client. It will also spell out what portions of an assignment will be done onsite, and what will be performed offsite.

Roles and Responsibilities – Clarity regarding roles and responsibilities is essential for the successful completion of projects. The SOW must provide that clarity, leaving no room for passing the buck. Key areas that need to be addressed are people, technology and processes.

Implementation Steps and Effort Estimation – This section will define the specifics of the work plan to a level of detail that will help the client understand how the process will work. It will include key milestones and estimated timeframes for achieving them. It will prioritize the tasks to be completed and evaluate the effort required for each task, based on which cost allocation can be determined. Proper sequencing of tasks will help reduce unforeseen costs.

Period of Performance – The period of performance is the term of the contract. It must be realistic. The performance period is usually longer than the estimated scope of the effort. One should ensure that the period of performance is compatible with clauses used in other parts of the contract agreement.

Deliverables – This section outlines specific outcomes and projected deadlines of a project. Sufficient details should be included in this section to provide a clear picture of the deliverables.

Acceptance Criteria – This defines the parameters that will determine whether or not a product or service is acceptable. Having this consensus upfront will ensure that all parties involved in the project understand and agree to the specifics of the project.

Costs – This section will unambiguously state the agreed price of the project, and can include penalties that may be imposed for failure to reach specific milestones. Clarity regarding this will prevent misunderstandings occurring later.

Billing Rates – This section is specifically for contracts awarded on a Time & Materials basis. The SOW should clearly specify the hourly rates for all categories of resources engaged on a project.

Payment and Invoicing – This part of the SOW defines the billing cycles and specifies the mode of payment, payee related information and the period within which the payment should be made. If there are any specific formats that should be followed while raising invoices, that also should find mention here. The tax quotient of an invoice should be shown separately in the invoices.

Assumptions – This section describes the assumptions based on which the service provider has submitted the SOW. Project assumptions provided by the service provider should be carefully examined to ensure they are acceptable.

Following these simple guidelines while accepting a statement of work will minimize the risk of failure and help clients get the expected results from their projects.

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