What companies are better at managing their statement of work contracts? Not to complicate matters, but there isn’t an easy answer. In a recent conversation with a contractor who works primarily on statement-of-work contracts, he confided that he prefers working with smaller companies. Why? Because in his experience, they tend to keep a closer eye on the scope of the project and, as a result, those projects are less likely to fall prey to scope creep. Managers at these smaller companies are more mindful of budgets and costs and pay closer attention to the details up front, he said, thereby making it less likely they would need to make those little changes along the way that can cascade into costly and delaying deviations from the contract.
Managers at larger firms, this worker said, tend not to worry as much about the costs that pile up or delays — due to scope creep. So in his experience, the SOW contracts he’s worked on for larger firms are not as well defined. Of course, as the worker, he still gets paid, and as costs rise, so does his compensation. But the extra pay does not offset the frustrations he deals with from the clients as often they do not understand that making changes along the way will affect the schedule and the bottom line, and he loses control of his own schedule when contract changes push deadlines back.
But it goes further than that, according to my colleague, Bryan Peña, Staffing Industry Analysts’ senior VP of contingent workforce strategies. “Projects for large organizations by their very nature tend to be larger and more complicated than those for smaller companies,” Peña said. “While a large organization may engage in SOW to reengineer a global server farm, a small organization may simply be looking for support for a desktop refresh.” At the same time, while these projects are often more complex, those managing the projects may also manage other projects of similar scale and complexity — something those working for smaller companies may not have to deal with. Also, large organizations tend to have more complicated hierarchies, he said, which translates to less clarity on who is responsible for deliverables, making scope creep inevitable. Finally, many of these complicated projects are poorly scoped. To add insult to injury, many large organizations are often very slow to pay invoices.
To mitigate issues such as this, CW program offices need always to be aware of their suppliers’ experience, Peña said. “In order to get the best pricing, you need to be the best client. That means having clear specifications from the outset and will change orders may be inevitable having a robust scoping process will make them less likely. Also, be cognizant of how your accounts payable policies and procedures may affect your supplier base.”
So how can you get to that point? Whenever possible, leverage technology to ensure transparency and consistency to SOW processes. This will give your supply base better forecast visibility and help identify issues before they become problems that may affect your project timeline.