Developing an Effective Statement of Work

by Bill Kern – ICN Senior Consultant

There’s a saying among aviators that the best pilots aren’t the ones who rely on their superior flying skills to survive life-threatening situations—they’re the ones who use those superior skills to avoid life-threatening situations! In business, the best contracts aren’t the ones that rely on superior Terms and Conditions to survive costly disputes—they’re the ones that use a superior Statement of Work to avoid costly disputes in the first place!

Terms and Conditions
Without a doubt, Terms and Conditions (Ts & Cs) are a critical part of a well-written contract. They provide the framework within which the contract is written and the work is done. Without the structure and support they provide, the contract would be meaningless. In the real world of rushing to get the job done, most contracts’ Ts & Cs are barely considered, rarely used and almost never vigorously enforced. However, a major problem occurs when the Ts & Cs point to the statement of work for the description of the deliverables the supplier is to provided, and proper care was not been taken in drafting the statement of work. Resolving whether the supplier did or did not provide the deliverables under a poorly written statement of work, places the customer in a difficult position. This often leads the project manager to ignore all but the most blatant contract breaches and to accept delivery of less than optimal goods and services.

Statement of Work
A well-written statement of work (SOW) is just that—a clear, understandable statement of your needs, the primary means of communicating your requirements to a supplier. It can simplify and speed-up the procurement process. The SOW aids suppliers in preparing bids and assists you in evaluating those bids. It reduces the administration effort required after contract award, and it provides a basis for performance measurement. A good SOW resolves many conflicts before they arise. It’s one of the most vital components of an effective contract and a successful project.

In a large number of organizations, the SOW is the first, and often the only, contract document the Project Team (including your people and the supplier’s) use on a regular basis. For them, the SOW is used to plan daily work; to guide design decisions; and to settle the multitude of daily issues and “minor” disputes that arise during the life of the contract. Unfortunately, the SOW is all-too-often a poorly written, hurriedly reviewed document that defines only the bare minimum of work required—and is often ineffective at that! In many cases it is written by the supplier who’s self interest is not to provide clarity in the SOW.

In the “get it done yesterday” world that too many contracts are written in, the most skilled negotiators in the group spend the majority of their time arguing the less important Ts & Cs. The critical SOW is left for the technical staff (whose members usually have no negotiation training or skills) to deal with the supplier’s marketing staff (who are usually highly trained, skilled negotiators). Should it come as a surprise then that contracts written under these conditions often result in confusion, disappointment and animosity on both sides?

The SOW is arguably the most important document in your contract. Give it the attention it deserves. Whether you’re buying or selling, regardless of whether you’re dealing with “results” or “resources,” it’s in your best interest to make sure the SOW accurately and clearly defines what needs to be done. For the buyer, the SOW lets the supplier know, in detail, exactly what goods/services are needed. For the seller, the SOW provides a better understanding of the customer’s needs. A clear, well-written SOW will help both sides avoid much of the confusion and conflict that arises during any project; and it will help you more quickly resolve those that can’t be avoided.

Getting Started
Before you even begin to write your SOW, call your team together and get agreement on three simple questions:
• What are we buying?
• Who do we want to be responsible for planning and managing day-to-day work… them or us?
• Who do we want to be responsible for the quality and timeliness of the final product/ service…them or us?

The importance of the first question is obvious. After all, if you and your team don’t know what you want, how can you correctly communicate it to a supplier? As obvious as that seems, you’d be surprised how difficult it can be to get a consensus in answering this question. To avoid future disagreements, take the time to identify the “team answer.” If you have a clear understanding, it will help as you write the SOW, negotiate the contract and, ultimately, manage the supplier after the award.

The second and third questions are just as critical as the first. However, the answers to these two should be the same. If you want them to be responsible to plan and manage day-to-day work (a “results deal”), then they also should have the responsibility and the authority to ensure the quality and timeliness of the work. On the other hand, if you want to be responsible for planning and managing the day-to-day work (a “resources deal”), then you need to retain responsibility and authority for the quality and timeliness of the final results.

If you do it right, the answers you come up with will become the theme of the entire SOW. Keeping a consistent theme throughout the SOW will go a long way in eliminating conflict throughout the life of the contract and will strengthen your hand in court if a serious dispute does arise. Everything we discuss in the rest of this article should be consistent with this theme. With these three seemingly simple questions answered to set the theme, we can now begin to write the SOW.

Formatting Your SOW
The first step in the SOW process is to decide on a format. There is no universally accepted structure for a Statement of Work. The “look and feel” of your SOW may differ a great deal from that of a competitor’s SOW…and that’s okay. The SOW is not a complex document…in fact, the more straight forward the format of your SOW, the better off you’ll be. How you structure your SOW is not as important as making sure it has a structure.

Having said that, there are certain characteristics that all well-written SOWs share. If you keep these common characteristics in mind as you write, you will have an effective tool for conveying your needs to prospective suppliers.
• Use a well-structured, common sense, “easy-to-navigate” format.
• Use easy-to-read, clear and unambiguous language.
• Provide a brief, informative overview of the project’s larger purpose, goals and objectives.
• Define the specific authority, duties and responsibilities of all involved parties. The key here is that to avoid finger-pointing, only one party (you or the supplier) should be responsible for any single task in the project
• Provide specific, meaningful, non-contradictory details relative to tasks to be accomplished, services to be performed and/or items to be delivered.
• Develop a project timeline that shows key milestone, completion and delivery dates.

These are not complex ideas, but they are important ones. Combined with our “who’s responsible” theme, they will help you develop a world-class document.

The SOW doesn’t need to be long nor does it need to give a detailed description of every nut, bolt or line of code you need. It does, however, need to include enough consistent detail about your expectations so that work plans, management plans, system designs and test plans can be developed and executed.

Although there is no universal SOW format, there are some items that are common to almost all well-written SOWs. These include:
• Cover page
• Table of contents
• Listing of other applicable documents
• Overview of the project
• Detailed description of work to be performed
• List of deliverables
• Project schedule.

While no specific item is required, these features are extremely helpful in providing the common-sense structure that is so critical to an effective document.

A Senior Consultant with ICN, Bill Kern has spent over 40 years in the computer industry. The majority of his experience has been in management positions with technology vendors specializing in computer hardware, systems development, outsourcing and third party leasing.