- Contingent Workforce Strategies 3.0 - http://cwstrategies.staffingindustry.com -

Considerations when converting assignments to an SOW

Statement-of-work (SOW) arrangements have been getting quite a bit of attention in recent months, not just in terms of bringing such arrangements under the umbrella of contingent workforce program management, but also as to whether such arrangements are appropriately established or whether time-and-materials (T&M) arrangements should instead be converted to SOW.

Having contingent workers engaged on a T&M basis has its benefits in terms of flexibility, urgency of meeting demand and of course the ability of the engaging organization to closely manage and monitor the daily workload and outputs. For many situations, given the choice between T&M and SOW, T&M contingent workers are by far the best option. This is especially true in situations where the deliverable is somewhat vague or if the contingent workers are delivering ongoing service where an SOW is not easy to define. But sometimes an SOW is more fitting.

A true SOW is a written description of any task to be performed under a particular purchase order. It contains concise and accurate descriptions of the services, outputs and deliverables to be provided. This means that you need to look at your T&M assignments very carefully to assess whether they can genuinely be converted to an SOW.

You should consider the drivers —why you are looking to convert to SOW in the first place. These are most likely to be cost-and output related. Maybe the SOW does not necessarily have to deliver at a lower total cost, but the fact that you can transfer some of the liability for a confirmed delivery date to the provider, this may tip the balance in favor of an SOW.

Here are some key considerations you might want to think about:

The SOW you eventually put out for tender will vary in its complexity depending upon the end deliverable, and it is important that you do not rely on verbal agreements or assumptions but that everything is documented thoroughly so that neither party is in any doubt as to what is expected for the price being paid.

When considering converting a T&M assignment to an SOW (or maybe even a number of T&M assignments to a single SOW), be sure to:

While the cost and guaranteed delivery of an SOW may seem very attractive, it is important that you resolve to pay the price of both the investigation of the conversions validity along with the creation of a comprehensive SOW and tender process.