A Statement of Work (SoW) is a contractual document that provides a description of a project’s requirements, such as the scope of work, deliverables, timelines and payment terms. It’s a tool that enables organisations and employees to ensure that the agreed-upon services within the SoW are being completed on time and on budget.
It might sound simple, but a SoW has the power to change how individuals and organisations think about work. In fact, the impact of SoWs is so significant that they’ve become one of the largest categories of spend for organisations, and according to a recent Transform Talent Podcast episode, that spend has increased 21% year-over-year. This rapid acceleration in uptake has likely been fuelled by the rise of the gig workforce, which has seen exponential growth since the beginning of the pandemic, coupled with organisations wanting to minimise risks, maintain quality and control costs by moving to outcome-based solutions.
Defining clear parameters and expectations for the project
One of the major differences between a SoW and long-term work is the level of detail that needs including in the SoW contract for an individual project. When employers are paying workers on a project-by-project basis, the deliverables, timeline and contingencies must be spelled out in the SoW. Sana Ali, Service Procurement Manager at Talent Solutions TAPFIN, says, “A Statement of Work is essentially the contractual paperwork that outlines delivery, timelines, milestones, and the full life cycle of that particular piece of work.” Ultimately, SoWs help to minimise risk for both the employer and employee, by clearly defining the scope of work.
The shift to service-based, output-based work
SoW arrangements provide flexibility, allowing organisations to quickly switch work on and off. Kayleigh Kuptz is the Co-founder and COO at Deployed, an SoW authoring platform, who explains how companies that develop and implement SoWs can identify exactly what work needs to be done and look for the people who can do that work most efficiently – shifting the focus away from an individual’s skill set and towards achieving tangible outcomes. She says, “You don’t hire for people anymore. You hire for services and outcomes, and the Statement of Work enables that flexibility and agility. I need XYZ done is the statement, and then you look for who can do that… It’s a shift from permanent staff and job descriptions to flexible, service-based, output-based work.”
Streamlining your Statement of Work template to speed up the process
According to Kuptz, there’s plenty of opportunity to simplify and streamline the structure and design of SoWs, including the automation of certain questions or clauses that will always need to be included, regardless of the project. “You can integrate your preferred supplier list. You can integrate a decision tree for the right pricing models. If it’s this type of work, it’s this pricing structure,” she explains. “You can work with Legal and automate a clause database and certain validations as to when what clause is triggered, which saves Legal a lot of time having to review it after.”
The number of Google searches for the term “statement of work” rose to its highest level ever in 2020, further demonstrating the increasing awareness and adoption of SoWs. From here, SoWs will only continue to grow, and organisations putting thought into their processes now can reduce risk, maintain quality, and control costs.
To learn more about the impact SoWs can have for your organisation, listen to the Transform Talent podcast episode.
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