What Is a Statement of Work (SOW)?

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A SOW or “statement of work” is a formal document used in project management practices to broadly describe scope of work to be completed on a given project, the responsibilities of involved participants, and expectations regarding execution within the project. It’s a routinely used tool for the management of vendors, freelance, and contract labor engaged to work on a project. 

SOW is a term utilized by contingent workforce managers to not only describe documents capturing the work products and services, including work activities and deliverables to be supplied under a contract or as part of a project timeline—but also a service that enables the governance and outsourcing of finite projects to a team on non-employee workers.

What Are the Benefits of Using a Statement of Work (SOW)?

The broad and general benefit of engaging a SOW project workforce is the ability to outsource the management of day-to-day functions of the SOW team and to receive a completed deliverable at a fixed cost without the burden of managing resources and administering benefits.  Those organizations leveraging SOW project labor can expect:

  • Access to highly skilled professionals for a single project, effectively circumventing the dreaded skills gap;
  • Increased control over rising labor costs, especially costs associated with healthcare and other benefits required for FTEs;
  • Predictability in budget development and management; SOW workers are commonly paid out of a project’s overall budget;
  • Stability derived from a fixed price to deliver a result as opposed to variable prices commonly associated with labor;
  • Exceptional scalability and the ability to ramp workforces up or down quickly in the face of changing market environments.

How Does nextSource Differentiate Among SOW Solution Providers?

nextSource is home to expert resources with deep industry expertise to focus on helping organizations assess their organization’s SOW spend management opportunities. With tools both online and available through consultation, nextSource is adept at developing detailed reporting about any organization’s spend/vendor management program and key procurement capabilities such as visibility, control, and sourcing.

Why Might My Organization Need a SOW?

There are myriad reasons why an organization might elect to engage SOW contract labor.  Some of the more common reasons include:

  • The organization seeks to leverage labor in low cost markets offshore or otherwise wherein the burden of active management represents a challenge;
  • When there are large scale, but non-recurring or non-core-business projects, that don’t require the acquisition of full time employees for the long term (or after the project is complete).

Of course, in working with clients, nextSource is aware that many projects are not quite as straightforward: They tend to involve numerous subprojects, each of which can differ in terms of staffing, pricing structures, internal “owners,” and acceptance criteria. Stay tuned for future blogs that explore the complexities of managing SOW-based project teams.

Does your organization have some important projects on the horizon that may require contingent labor to address? To learn more, view the replay of the webinar, “The Basics of SOW,” or visit our website to read more about SOW.

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