Reviewing a Statement of Work (SOW) for a client the other day I was struck by the amount of waffling the vendor was doing in trying to make their case for their estimated cost of services. What if you took your car in for repairs and got a one page estimate that simply said; “We will fix your car and stop it from making the weird noise and charge you $1000.00?” You would not accept that, but for some reason technology companies, especially infrastructure vendors, think that businesses will sign off on a blanket SOW because it’s too technical for them to understand.
Every Statement of Work should have clear objectives, organizational value, what the vendor brings to the table in terms of resources, and the cost breakdown of those resources. There should be clear expectations of what the client needs to do and what services the vendor is providing. The SOW should certainly be on par with a “Service Level Agreement” in which both parties agree that they are entering into a relationship and there are certain expectations of each with required timelines and potential penalties.
During the sales dance both parties are normally under the honeymoon phase. They each need each other and may be overly trusting. The SOW is your “prenuptial” agreement, which is there to protect you if the relationship goes bad. As eager as you may be to start the engagement, the reality is that you need someone objective to look through the agreement. Maybe someone that is not tied to the outcome or may not have been enamored during the sales pitch. Here is what you should look for:
- Clear statement of vendor capabilities.
- How they will be organized and how they will communicate with you.
- What exactly they will do (details).
- Who is doing the work? They should include names and backgrounds.
- Hourly rate of each resource.
- How long it will take (hours)?
- How many people will be involved?
- What happens if there is a deviation from the plan?
- What happens if they go over the allocated hours?
- Who pays for additional materials (be precise here).
- Final deliverable and wrap up.
In the SOW that I recently reviewed, the vendor had a rolled up cost for all the effort (fixed fee). In this case, it was actually multiple “mini-projects” that we were looking for assistance on. They had the overview of work effort, but failed to provide the other required details. A fixed fee is OK if you’re doing one project, but not in the case of a technical service engagement were they may be multiple systems and efforts.
When I asked for a detailed SOW with an hourly break out and cost per project, I got a new SOW with a percentage attached to each work effort based on the fixed fee. They added some additional work that we talked about doing “down the road” and they increased the fixed fee by 50%. Throwing everything into a bucket is a sure way of breaking the bottom. The final straw was when the vendor asked what we seek to do with the detail from the hourly count per task. In this case, the honeymoon was over before the relationship ever got off the ground. The vendor is now left with saying….”I could’ve been a contender…I could’ve been somebody” (Marlon Brando, On the Waterfront).