3 criteria for managing SOW

Recently we defined the term "statement of work" from the perspective of strategically managing the workforce. Since the topic continues to be heavily debated, we thought we would provide additional information on how to properly evaluate how and when SOW ought to be considered more as a need for specific talent.

The subject continues to be popular because of two contributing factors: the consistent need to increase cost savings and the sophistication of the sourcing process. Unfortunately, the sophistication of the process breeds complexity. Not to mention a time-honored practice of leveraging SOW as an end run around head count restrictions. In order to deal with such complexity and mitigate risk associated with the SOW process, it is crucial to determine how your firm will assess when a deliverable is best achieved with a traditional consultative statement of work or a team of specific talent.

Consider these three criteria to help determine how to best manage SOW in the traditional sense, or as a contributing element to the overall talent supply chain.

Scope and deliverable definition 

Is the deliverable discretely defined or more generally stated? Unique deliverables that have tangible work products are properly executed as SOW. However, more conceptual deliverables indicate a requisition for talent. Smaller price points should flag an SOW for greater scrutiny. This would indicate that specificity of the associated deliverable does not require a broad and deeply talented project team. Repetitive, lower-priced SOW agreements could be better addressed by teams of talent.

Evaluation of pricing

The proposed pricing structure can indicate whether or not the SOW is misclassified. Indication of hourly contract without strong connection to work product should flag the SOW as an opportunity for a contracted employee rather than a consultant tied to the deliverable. On the other hand, itemized work products that drive a secondary requirement of a project team are likely to be properly SOW classified.

Control

What level of control is required? The greater the control, the more likely the need is skill set oriented versus deliverable oriented. Ask yourself this: Is the project sponsor the manager of the team or the acceptor of the work product? The latter would indicate an opportunity for true SOW, while the former would indicate a need for staff augmentation.

Because these steps are so simple, they're likely to have a high degree of adoption. They are neither imposing nor prohibitive, and the consumers of project oriented work in all likelihood will be thankful for the inherent cost savings that are garnered from leveraging the criteria.