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3. A Complete SOW: The Key To A Good Start Of Your Consulting Project

A Complete SOW: The Key To A Good Start Of Your Consulting Project

How would you like to guarantee success on your next IT consulting project? Well, I can't guarantee success, but I can help you get off to the right start. You are probably aware that successful consulting projects always begin with a complete and accurate Statement Of Work (SOW). In this article, we'll identify key sections to be included in your next negotiated SOW, along with factors that will drive the success of your project. 

SOWs serve as project blueprints, providing key information required for executives to approve the Professional Services contract. Well defined SOWs help in the following areas:

• Deliverables. Specifically identify the work to be accomplished by the consulting team.
• Accurate Estimates. Properly defined SOWs allow the Consulting organization to submit refined pricing proposals. Accurate estimates reduce the number of change requests and allow executives to finalize the budget process.
• Payment. Acceptance criteria and deliverables often drive the payment plan.  

Our ideal SOW includes nine Sections:

0. Overview
0. Deliverables
0. Success Factors
0. Acceptance Criteria
0. Target Dates for each Phase
0. Staffing Plan
0. Communications Plan
0. Change Management Process
0. Payment Schedule

Overview

• Project Background
• Project Scope
• Project purpose

The overview provides a short background of the project. Look at it as the executive introduction to what you expect to get accomplished. Why are you doing the project? What are the driving forces? What are the objectives?

A scope statement is also included in this section. The scope identifies what is included in the project. Often, however, a scope section also notes what is not included in the project. 

Deliverables

• What will the project team be delivering?
• How many programs?
• How many environments?
• Application installation?
• Configuration?
• Testing?

All deliverables must be defined in the SOW. This is what you expect the consulting team to complete for your project. Don't assume anything. It's critical that everything your consultants are expected to complete is outlined in the SOW. If the deliverables cannot be identified right now, then you should look at conducting a phased approach to the project, with an initial SOW for gathering and identifying the system requirements. Then you can do a followup SOW identifying the deliverables. Note: You risk significant cost overruns if you cannot identify project deliverables when you are writing an SOW. 

Key deliverables for software projects often include

• Installation and configuration
• Requirements definition
• Code development
• Testing
• Documentation
• Training and Education
• Go-live Support

Installation and Configuration. Identify the number of environments to be installed and configured. Are you installing four environments: sandbox/development, test, quality assurance, and production? Is the consulting team responsible for configuring and installing all four environments? Will they be responsible for migrating the code from environment to environment?

Requirements Definition. Detailed requirements for programs, screens, and business processes must be identified and documented. This is the placeholder for that work. For example, identify the specific use cases that will be detailed for further development as business process models.

Code Development. Specific programs to be completed must be noted in the SOW. This is where you identify the number of programs, integration maps, web screens, or other components the Professional Services team will deliver in this section. If this is an integration project, then the number of Business Processes to be mirrored and developed must also be identified.

Testing. Make sure all phases of testing are included in the SOW. Areas of testing that may be applicable to your project: integration testing between systems, failover testing for high-available clustered systems, end-to-end testing with trading partners on collaboration projects, and response time testing on web screens. And don't forget about load, stress, and performance tests. A key deliverable in this phase is a test plan with low-level acceptance criteria approved by the customer and the consulting team.

Documentation. System documentation that defines the completed system needs to be updated . Make sure that you specifically define the documentation you expect to be delivered. For example, if you are expecting an operations manual, specifically say so in your SOW.

Training. System training should be geared towards ensuring your team can run and maintain the system after the consultants leave. To do this, you need to concentrate on building a knowledge base of the application, and then review the specific system configuration at your site. I recommend you establish a foundation through education classes from the software vendor, and then include on-site Knowledge Transfer time to review the specifics of your system by the implementation team.

Go-Live Support. Some companies choose to try and save money by cutting the time your consulting team will be available during the production go-live. Don't make this mistake. Make sure the consulting team is on-site during your go-live. You will need their expertise - combined with your team's skills - to ensure your go-live is successful.

Success Factors

How do you determine if the project is successful?

This is an important component of the SOW, especially helpful for executive review and approval of your project. This is your highlevel statement of what will make your project a success. For example, if your project is integration of your external web site with your legacy orders application, then success criteria for one phase could be "To integrate real-time orders from our internet web site to our Oracle financial applications." You can also identify high level objectives in this section. Note that success factors often drive your acceptance criteria and are derived from your internal project charter.
 
Acceptance Criteria

• Driven by your success factors.
• Measurable objectives.

This section specifically identifies the acceptance criteria for your deliverables identified earlier in the SOW. If this section is not included, how will you determine the deliverables are complete? Also, note that your deliverables' acceptance criteria can drive the payment schedule.

Acceptance criteria depends upon the deliverable. For example, installation acceptance is dependent upon running a set of standard tests to show the system is operational. Documentation is dependent upon review and signoff by the customer. Web site acceptance will include performance criteria. Note: incomplete or incorrect acceptance criterion often leads to difficult negotiations of project acceptance and payment later in the project. 

Target Dates

• Milestones for the project.
• Desired go-live date.

Project phases and target dates should be identified in the SOW. Specifically identifying the dates in an SOW ensures everyone understands when the work needs to be completed. Completion dates drive the staffing plan, and dictate the complexity - and risk - of a project. Risk often drives the price of a project. In addition, performance incentives can be identified if the project is completed ahead of schedule; hence target dates can be used as input to the payment schedule. On fixed price contracts, target dates will drive the payment plan. 

Staffing Plan

• Skill sets
• How many people? And when?

The success of any project is dependent upon the quality of the people assigned to the project. You must have control of the staffing on your consulting projects. You control staffing by explicitly defining your staffing requirements and the rules of engagement in your SOW.

Skill sets. How do you verify your team has the required skill sets for a successful project? You verify the experience and technical competence of your people by requesting veto authority on the project team. The SOW will specifically outline your requirement of resumé review, interviews, and final approval of all consultants before joining the team.

How many people?

The number of people required to complete the deliverables is dependent upon the target dates and the complexity of the deliverables. The SOW should include a breakdown of personnel within the timeframes required for completion, including required skill sets.

Communications Plan

The SOW should include a section outlining an executive communications plan, with emphasis on the project steering committee and executive reporting requirements.

Project Steering Committee. This section outlines the members of the Steering Committee, their function, and how often they meet. For example, the SOW may identify a steering committee meeting monthly to review project accomplishments and go/no-go dates.

Project Communication Requirements. Project management communication deliverables are highlighted in this section, including your organization's PMO requirements. Project Management deliverables may include weekly updated Microsoft Project Plans, project dashboard updates, and status reports.

Change Management Process

A strong change management process helps you manage scope on your project. Change is inevitable. How you manage it will increase your project's chance for success. I suggest implementing a line item in your budget for change management. A good number is 20% of the original estimate. This ensures you'll be able to accommodate future requirements. The Change Management Section should identify the following:

• Change Management Steering Committee
• Change Management Process
• Sample Change Request Form

Change Management Steering Committee. Appoint a steering committee to review change requests and determine the effect of the change upon all aspects of the project. While the committee reviews and comments on the affects of the change, I recommend only one person have the authority to approve change requests - the Chairperson of the committee. 
Change Management Process. The actual process for change approvals should be outlined in the SOW, ensuring there are no questions on how it will work. A flow chart of the process is always helpful.

Change Request Form. A sample Change Request Form should be included. Make sure all aspects of the change are covered in the request form. The form can be attached as an appendix or exhibit to the SOW.

Payment Schedule

The Payment Schedule is driven by the type of consulting contract you will be signing. In my experience, there are basically two types of consulting contracts: Time and Materials (T&M) and Fixed (firm) Price.

Time and Materials. If you're confident you can drive the consulting group to meet the target dates, then a Time and Materials (T&M) contract may be in your best interest. Your risk here: if the deliverables are not completed within the estimated hours and/or projected target dates, then the consulting project will probably exceed the SOW estimate. This does not necessarily mean your project is over budget - but it could be. Since projects do change over time (remember: change is inevitable), additional requirements may necessitate an increase in the scope of the project. However, if the scope does not change, and the project is not completed within the original estimate, then the project was underestimated. There are various reasons this occurs; we won't delve into them here. Suffice it to say, this often results in tough contract negotiations in order to complete the project. Hopefully, by following the guidelines outlined in this article, you won't have to go down this path.

Fixed Price. Fixed Price projects enable you to offload the risk of "over budget" to the consulting group. Fixed Price bids will typically be higher than Time and Material estimates to counter the risk incurred by the consulting firm. With this contract, the consulting group is required to complete all deliverables within the contracted dollar amount.

Payment Terms. Payment terms are driven by the type of contract. Time and Material (T&M) contracts are billed as the hours are worked. Note that T&M payments are not driven by deliverables. The payments for Fixed Price contracts can be setup in various ways, but are typically driven by the completion of project phases and/or the completion of project deliverables. For Fixed Price contracts, payment amounts, dates, and acceptance criteria need to be specifically noted in the SOW. In fact, these items should already be identified in your SOW if you're following the guidelines outlined in this article. There it is. Now you have the background to ensure your next project gets off on the right foot. A good project management methodology provides a solid foundation for your projects, leading to repeatable successes. The good SOW can serve as a bedrock in that foundation. As I like to say to my teams: onward and upward to project success!

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