If your C-suite turns its attention to SOW spend, how can your contingent workforce program support their queries around cost controls? For the last 20 years, contingent workforce program managers have done a good job of putting controls in place to manage risk and cost for staff augmentation. Meanwhile, their management of statement-of-work arrangements has lagged staff aug. Businesses worldwide spent an estimated $523 billion on statement-of-work projects last year, according to SIA research. The US accounted for nearly half of that.
Now, as the economic fallout of the pandemic puts enormous fiscal constraints on enterprises, the C-suite will be looking for areas within their organization to capture more cost savings. The CW program can deliver via a focus on SOW arrangements. (On rare occasion, we have seen SOW managed outside of the CW program in very sophisticated ways, but this is not common.)
Statement of Work. A document that captures the work products and services, including, but not limited to the work activities and deliverables to be supplied under a contract or as part of a project timeline. In contrast to a typical temp or contingent work arrangement which is billed based on time worked, SOW agreements are usually billed based on a fixed price deliverable or for hitting specific milestones. Like typical contingent arrangements, they may also be billed based on time, including arrangements where there is a time-based billing that is capped at some “not to exceed” level for time and materials.
Here are a few key areas around SOW contingent program leaders should prepare to address, most of which may be done very quickly.
Nuts and bolts. Gain a full understanding of the inter-workings of current SOW management. A review of defined policies and procedures will help identify if there is an opportunity for CW program leaders to support the C-suite. Create a problem statement to identify areas of opportunities. Items to look for to see if there is an opportunity to add value to your management of SOW spend:
- Contracts. Are all SOWs written and supported with buyer contractual requirements? In other words, it is advisable for SOWs not to be written in or on provider paper; rather, they should be executed on buyer paper with consistent terms and conditions via a template that has been approved by the buyer’s legal team.
- Bidding process. What percentage of SOWs are competitively bid? While not all SOWs need to go out for bids, all too often we see 90% or more of SOWs that are not competitively bid. This can be an area to help gain cost controls if competitive bid is part of the process in some way, shape or form.
- Technology. What technology is currently being used to manage SOWs? While there is no perfect solution to how and where SOWs are managed, the key is to strategically manage and capture SOWs via a technology. Your investigation will quickly show/prove SOWs are formally managed in a technology when someone is able to provide a detailed report for items like milestone management, payment management and change request tracking to name a few.
- Procedures. Do you have formal, documented standard operating procedures that are up to date and current?
- Ownership. Who owns the governance of the SOW program — is it a single entity or a group?
Identify value opportunities. Formalize your mission and strategy to begin to support SOW management. As you begin to define your plan of action, you will quickly be able to look at the process steps and determine where you can make an impact and add value. Too often, organizations make value decisions based on unknown outcomes. Before getting involved with the sourcing, bidding/RFx process, be sure you can provide real value.
Trust yourself. Have confidence in your ability to drive change; your proactiveness to understand SOW will place you in a better position to answer the call from the C-suite specific to opportunities to help control cost during these difficult times.
Taking on SOW is complicated, political and daunting. Getting a clear picture of your current state so you can identify pain points and then create a problem statement for executives is an essential first step. This helps the program align its efforts with the corporate landscape to find support, which will go a long way in helping CW programs implement SOW.