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HCMWorks Insights

How to Write a Statement of Work (SOW) for any Industry

Posted by Julia Fournier on 17 Oct 2019

Your company is, more than likely, benefitting from the huge range of advantages that come with contractors, freelancers and non-permanent workers. However, is your contingent workforce management strategy truly optimized?

A contingent workforce management strategy is complex and time-consuming, but once perfected the benefits are great. A successful program will lead to increased workforce agility, access to top talent, an improved bottom line, cost efficiencies and consistent hiring processes across your entire organization.

One way of improving your contingent workforce management strategy is through the implementation of statement of work (SOW), which will help your company ensure that any projects undertaken by a contingent worker will be done according to certain guidelines and expectations.

What is a SOW?

A SOW is an incredibly important part of both project and contract management, which is used to ensure a contingent worker understands the needs and expectations of your company. Despite not being a legal contract, it helps to ensure that there are no miscommunications or misunderstandings about what is expected.

Contingent workers outside of your organization will use this document to guide their work throughout the duration of a specific project.

Different to traditional contingent labor spend which looks at time and material, a statement of work will explain to a contractor the;

  • scope of work;
  • expectations;
  • tasks;
  • project objectives;
  • deliverables;
  • schedules;
  • terms;
  • expected outcomes;
  • timelines;
  • payment of the project;
  • and much more.

While writing a statement of work seems fairly straightforward, getting one right is actually no easy task. If the statement of work is too vague, too generic or confusing, it can leave room for various interpretations. This only leads to trouble down the line.

How do I write a statement of work?

To get your project right the first time, you’ll need to know how to write a statement of work that ensures your contingent workers know exactly what they need to do. For complete clarity, a SOW is often used with other documents such as a request for proposal (RFP) or master services agreement (MSA).

There are three main types of statement of work, and which one you choose will depend on the specific industry your company is in. These SOWs include:

  1. Design or detail statement of work
  2. Level of effort/time and materials/unit rate statement of work
  3. Performance-based statement of work

No matter which SOW works best for your company, most statements of work will share similar components no matter which industry your business is in. In general, most company’s statement of work will follow this format:

Introduction - This is where you identify the type of work to be done and the two parties involved in the project.

Objectives/purpose - In this section, you will outline what your company expects from the project, and what an acceptable outcome would be.

Scope of work - The scope of work will identify why the work is being performed, and the processes involved in completing the work. This section should be a high-level look at all the steps that need to be performed by a contractor in order to complete the work.

Requirements and tasks - This section will break down the project even further into smaller tasks, explaining exactly what a contractor needs to do to reach your company’s desired result.

Period of performance - Here you will define the time period in which the work will be performed and completed.

Place of performance - Contingent workers have the freedom to choose where they work from, but where necessary your SOW can outline where the work will be performed. This section should also include what facilities will be used and where any meetings will be held.

Resources and testing - Here you will note down all the key personnel involved in the project, as well as what technology or software should be used.

Payment terms and schedule - Will you pay your contractor by scheduled dates or through deliverables? Here’s the section to list this out. Here you will explain how and when payments will be made, listing the entire cost of the project.

Acceptance criteria - In this last step you will layout which staff members will review and sign off on deliverables, as well as how your contractor will submit their work.

How to implement SOW into your organization

A statement of work is about managing and documenting expectations. By writing an SOW you’ll ensure that everyone involved in the project agreement knows exactly what they are agreeing to. This will bring your company a wide range of benefits.

Writing an effective SOW and managing SOW spend can be complicated, that’s why it’s important to engage with a managed services provider (MSP) which specializes in SOW management and the contingent workforce.

HCMWorks has extensive experience and knowledge in services procurement and can help your company manage its total human capital spend. The result? Your company will be able to make more informed hiring decisions, produce better quality work, improve your bottom line and many other benefits.

By helping you to develop a comprehensive SOW strategy, we will ensure your business has complete visibility and control over your contingent workers. Want to learn more? Contact our team of experts today. We would be more than happy to answer any questions you have.

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Tags: Contingent Workforce

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