Does your organization utilize a good deal of SOW outsourcing to address regularly occurring projects? If so, you may wish to consider outsourcing the drafting of SOW contracts to an organization like nextSource that has deep expertise and extensive experience in producing SOW contracts that are robust, effective, and written with risk mitigation in mind. Here’s why it may make sense to outsource this task as opposed to performing it internally.
Leveraging the Statement of Work (SOW) strategy to address project work is an excellent means of applying contingent/contract labor to initiatives that do not require an ongoing engagement of temporary labor after task/project completion. Unlike non-project based initiatives wherein temp workers may be needed indefinitely, the SOW is particularly well-suited to applications where there is a well-defined deliverable. As we’ve noted in past writings like this post, there are specific criteria for determining when an SOW is the preferred means of accomplishing certain goals. For organizations with fairly regular project-based tasks, completing the SOW is a great strategy to exploit. However, for these companies, the crafting of strong SOW contracts becomes a task unto itself. For busy procurement executives, drafting these SOW contracts can become a very time-consuming manual process.
The SOW contract is a legal document that requires a significant degree of legal knowledge to generate. In a general sense, it must contain all of the following elements in order to be effective.
- Clearly Defined Scope:
A descriptive overview of the work the vendor will provide as well as the work the vendor will not provide is necessary for both the vendor and the client. As vendors typically bid on the work described within the SOW, the author of the contract must avoid ambiguity and uncertainty in a SOW. It’s critical for all parties to understand exactly what they are committing to do. This becomes most important during discussions on material changes or when there is a contract dispute.
- Detailed Business Process Statement:
The purpose of describing a business process is to allow vendors to fully understand the work their agents will perform. It’s important to clearly define the service level expectations for each process, considering quality, turnaround time, and backlog expectations.
- Transaction Volumes:
Describing volumes permits vendors to develop accurate capacity and staffing models. This section of the contract should always provide quantified annual, monthly, weekly, and daily volumes and should also detail seasonal fluctuations and other benchmarks for productivity rates over the term of the agreement.
- Stipulations Regarding Technology:
Clear guidance regarding the capacity and capabilities of technology to be utilized by the vendors’ agents pre-empts issues arising from system latency, stability, bandwidth issues, and other IT challenges that may impede or otherwise impact the timely completion of projects. Failure to include this material in the contract may provide the vendor with plausible justification for failing to complete the project on time. The SOW contract must describe every system that will be used and all bandwidth/connectivity requirements. It’s also important to provide physical and logical system infrastructure diagrams that show how systems connect. Vendors’ capital investments are critical to calculating pricing and setting your implementation time frames.
If it isn’t clearly enunciated in the SOW, there will invariably be confusion regarding who is responsible for various tasks involved in completing a given project. SOWs should never contain any undefined responsibilities. Each party must be clear on what they are going to do so as to avoid hearing, “We thought you were going to do that.”
- Contractual Language and Cross-References:
SOWs must align precisely with the overall contract between the client and the vendor so replicating language should be avoided from one SOW to the next.
Taken together, all of these considerations form a compelling argument for outsourcing the process of producing SOW documents. Sure, a VP of Procurement is likely to have a good deal of experience with producing this type of document. Yet with so many other competing concerns to address, it may simply make better sense from a time-utilization standpoint to lean on a provider/partner to whom such activity is a core competency.