Tuesday, January 11, 2011

Statements of Work, Scope of Work

Most companies have standard terms that they want to use for their various types of purchases. If you do repetitive purchases with a Supplier you may establish a master agreement and use a statement of work of scope of work to describe and authorize the specific purchase. For one time purchases most of the time a company will have a standard contract template and use a statement or work or scope of work as an attachment to the template to tailor it to the specific purchase.  Statements of work define the scope of the transaction.  They describe the elements that contribute to delivering that scope and the conditions under which the Product will be made and tested or how Services will be performed.


Common elements of an SOW may include:

·       Project Scope: The boundaries that define the depth and breadth of the project, including functionality, organization, major deliverable Materials.
·       Key Assumptions. Environments or conditions under which the scope of work was defined and the estimates were determined. If the SOW has been well crafted and the scope and responsibilities are well understood, use of Assumptions should be limited or non-existent.
·       Supplier Responsibilities. Activities (tasks) that the Supplier will perform (or assist on) to develop the deliverable Materials and complete the project. For each activity (task), the Completion Criteria must be objectively stated (especially for fixed price SOWs.) For Time & Materials SOWs, activities (task) and Completion Criteria are highly recommended. For activities (tasks) that generate a deliverable Material, delivery of that deliverable Material may acts as the Completion Criteria for that activity (task.).
·       Buyer Responsibilities. Activities (tasks) that the Buyer must perform (or assist on), to enable the Supplier to fulfill its responsibilities.
·       Confidentiality requirements.  Any unique or additional requirements.                                                                                                                               
·       Deliverable Materials. Items to be produced during the project by the Supplier, and delivered to the Buyer.  In most cases you will want to own the deliverable materials so that you may use them as you see fit in the future without needing agreement from the Supplier and to prevent the Suppliers use of such deliverable materials with other customers.
·       Deliverables. Items to be performed by the Supplier. If deliverables include tasks define the Upper Level Tasks , Background  Objectives and Sub-Tasks
·       Buyer Deliverables, If any.
·       Acceptance criteria. These should be detailed, objective, measurable conditions, which if stated in an Agreement, must be met by the Supplier to accept deliverable Materials.
·       Completion Criteria (for SOW completion): for “project-based” SOWs, these are objective criteria by which overall project completion of the SOW is measured. For Fixed Price contracts, the SOW Completion Criteria are typically a) satisfaction of the completion criteria in Supplier Responsibilities and delivery of the deliverable Materials.
·       Materials and Equipment.  Any Materials and Equipment to be provided by the Supplier, or that will be loaned by the Buyer during the term of performance.
·       Schedule: the project time frame, from start-up to project completion, which may also include major checkpoints or phase milestones. Period for performance.
·       Charges: the fees for Services (hourly charges for Time & Materials contracts; fixed charges and payment schedule for Fixed Price contracts),, expenses, and other charges related to providing the Services, including Recurring Charges, One Time Charges; Usage Charges; etc.
·       Changes.  How changes will be controlled and the cost established for additions and the value of credits for reductions
·       Deliverable Materials Guidelines. This is a description of each deliverable Material, including purpose, content (size/volume/description), and delivery (format/media.)
·       Project Change Control Procedure. A formal procedure to manage changes to project scope, schedule, hours/charges, and other elements of the SOW that affect the project;
·       Deliverable Materials Acceptance Procedure. This is a formal procedure to manage the review and acceptance of those deliverable materials, including the process for resolving objections, if any.
·       Escalation Procedure. A formal procedure to manage the resolution of conflicts that arise during the provision of Services;
·       Project Management Requirements. This would include anything that you feel is needed to help manage the performance of the work such as project review meetings.
·       Payment. Identify the conditions for making Payment to a Supplier for goods and services rendered such as including a payment schedule that is tied to milestones and deliverables or payment based on the percentage of work completed. .
·       Proprietary Rights If the work will include the use of Supplier’s pre-existing materials, describe what rights the Buyer will have to use such materials if they are included in the deliverables such as a license.  If new work will be performed, describe what each of the parties rights will be with respect to any new proprietary materials or inventions created.
·       Security Requirements If Supplier will be provided highly confidential materials or high value materials or equipment consider including requirements for the level of physical and electronic security that must be in place.
·       Use of Facilities If Supplier personnel will be working at Buyer’s location, include any requirements for those personnel so they understand what is expected of them.
·       Travel If the Buyer will be reimbursing the Supplier for travel, include any reimbursement requirements or guidelines that the Supplier must follow for reimbursement.
·       Training required by your project team, to ensure that maximum benefits are gained from the goods and services provided by the Supplier.
·       Documentation to be supplied, such as an Operating Manual, User Guide, Business Processes or Technical Support Procedures.
·       Describe the types and level of Support required of the Supplier by specifying the support hours needed, response or turnaround times and the level of support to be given.

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