How to Avoid Common Pitfalls in Statements of Work

Posted on May 6, 2011
Filed Under Body Language, Business, Fair Market Value, Leasing, Request for Proposal (RFP) | Leave a Comment

This article is by our guest blogger, Phil Bode, founder of Italex Network. 

 

They go by many names – statements of work, work orders, task orders, etc. But they all have one thing in common. These documents (collectively referred to as “SOW” for this blog) are the workhorses of the contracting world. After all, the parties specify the details of their working relationship in the SOW, and the success or failure of the project hinges on the parties’ performing in accordance with the SOW’s terms and conditions.

Sounds pretty ominous, doesn’t it?

While there is not enough space here to list all the potential pitfalls associated with SOWs, I can provide you with one simple insight that will improve your SOWs immediately. . .

Before you execute your next SOW, review it from the supplier’s perspective. 

Start by ignoring everything you know about the project. Otherwise, your intimate knowledge of the project will cloud your judgment. As you read through the SOW, be objectively cynical and answer one simple question: What is the minimum performance that the supplier must provide to meet its obligations under the SOW?

Your review should be based solely on what is in the SOW – not what the supplier promised during the sales process, not what the parties intended, etc.

If the supplier’s minimum performance threshold under the SOW does not match what you want the supplier to actually do, you have a problem.

For example, let’s say you want a supplier to develop a project plan as part of the deliverables under a SOW. If your SOW states, “The Supplier will work with Customer’s project manager to develop a project plan,” this is not the same as saying, “The Supplier will develop a project plan for Customer’s approval.”

“Working with” is the keystone to that deliverable and it presents a very low threshold. Luckily, by reviewing the SOW from the supplier’s perspective, you’ve identified the issue before executing the SOW, and you can fix it before it’s too late.

Bottom line: You are not safe relying on the goodwill of the supplier to perform. To borrow a term from IT, SOWs are WYSIWYG – what you see is what you get. Your SOWs must be explicit with respect to what the supplier is to achieve, provide, perform, etc. And a SOW must be read literally and with a critical eye to shore up any deficiencies before it gets signed.

Phil Bode, founder of Italex Network, is an attorney and procurement professional focused on helping customers maximize their leverage throughout the procurement process.  He can be reached at phil@italexnetwork.com.  Or visit www.ItalexNetwork.com

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