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The Good, the Bad and the Ugly of SOWs (Part 2): The Bad

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Spend Matters welcomes this sponsored article from Charles Pankratz, SOW category specialist at KellyOCG.

In Part 1 of this series, we examined how a good SOW is the cornerstone of the client-supplier relationship. We also discussed the elements of a strong SOW. Unfortunately, not all SOWs are strong, and poorly constructed SOWs are more prevalent than they need to be. A bad SOW, even when it meets your objectives, can have far-reaching risks on your operations in the areas of disproportionate scope creep, unclear deliverables and excessive expenditures.

A poorly constructed SOW can have one or more the following issues:

  • The project objective or scope is unclear or incomplete, and the in-depth definition of the project is either omitted or lacking in specificity. This lack of SOW visibility allows the supplier — whether intentionally or unintentionally — to take liberties with the project execution or not complete the project as originally thought. As a result, the supplier may include services that aren’t relevant to the outcome you, the stakeholder, anticipated. As an example, a consultancy working off a bad, unclear SOW could complete the stakeholder’s objective, namely idea generation, on time. However, without a clearly delineated focus on the SOW, the firm can go on to assume they are to develop and define change management, execution and implementation services as part of the project. Yet those last three services weren’t part of your original objective! Moreover, since consultants are the most expensive category of service, straying beyond the scope of what you need them to do may result in increased costs and dissatisfaction of delivery.
  • The project doesn’t have a start or end date. Not having a pre-set amount of time in which to complete a project can easily draw out the deliverables of the service longer than intended. This can be costly in terms of hours, but it can also impact operations if you don’t have your outcome on time. 
  • The milestones are unclear, incomplete and don’t align with the project scope. Without project scope alignment that provides predetermined dates, milestone and deliverable compliance will be compromised. This inevitably means the project may veer off course and the timing for when to pay for services may not be clearly defined.
  • The resource list is incomplete or not detailed enough. As a result, the supplier can apply the wrong level or number of resources to complete the project. It may also become difficult to estimate whether the budget is competitive, resulting in a lack of clarity or even friction regarding the costs of the project delivery.
  • The expenses are listed but unclear or are listed as a fixed amount or per diem. This allows for limited tracking and approval on expenses, leaving a lot of room for ambiguity and misallocation of funds.

In short, a bad SOW can result in risk, leaving room for assumptions, miscommunication, ineffective practices and unnecessary costs — all of which can have an adverse effect on the project and ultimately, your company’s bottom line.

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