Statement Of Work:

Details matter.

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Introduction• Welcome to this Lorman sponsored webinar, the purpose of which is

to engineer an effective and comprehensive Statement of Work (“SOW”). This primer will provide insight into strategies to formulate a Statement of Work which leads to successful business operations, relationships, and outcomes. The SOW is in fact, the business end of your formal agreement. A detailed and thorough statement of the work, services, and deliverables will serve as a binnacle to lead the navigation of a project from its inception to conclusion.

• • The learning goals are:

– a) first steps in creating a strong SOW; – b) drafting considerations; and – c) project management.

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Initial considerations

• Identify stakeholders – generate requirements– Business owner– Process owner– Functional stakeholder• IT• BU• Other

• Requirements list for drafting the SOW

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Understand the work and strategize

• Understand the expected results– What is the finished product?• Custom design or off the shelf?• What would the perfect solution accomplish?• On Time – On Budget

– Develop contingencies in the event the designed outcome fails in any stage of the process.• 1 – is there a replacement?• 2 – can the project be saved?• 3 – what is the exit strategy for termination?

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Formalize

• Requirements– Stakeholder and operational requirements are

essential elements which lead to the most effective SOW.

• Ideal product– Superior performance is the goal and must be

articulated in an effective SOW.• Contingency safety net– All scenarios, big and small, accounted for.

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Drafting the SOW

• Incorporate into the master agreement– Handle conflicting provisions

“This SOW No. 1 is subject to, made a part of, and incorporated by reference into the Master Agreement between Company A and Company B dated January 1, 2014 (the “Master Agreement”). In the event of a conflict between the Master Agreement and this SOW No. 1, the SOW will control. Capitalized terms will have the meaning assigned in the Master Agreement.”

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Provisions to consider

• The nature of the engagement will determine the type of provisions necessary. – Goods– Services– Both• Equipment, installation, software, managed services,

professional services, consulting and other unique sales or acquisitions.

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Term

• When does the SOW begin and how long should it continue.

“The term of this SOW No. 1 will commence on the SOW Effective Date and continue until March 20, 2018 (the “Term”) unless terminated earlier.”

T for C upon written notice. Term provisions in the Master Agreement.

“This SOW No. 1 is entered into between Company A and Company B on March 7, 2014 (“SOW Effective Date”). “

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Provisions to consider including

• Purpose and scope of the SOW

Insert a statement that the requirements be met. “…will meet all requirements, specifications and instructions in this SOW No. 1…”

• Conflict resolution – SOW controls

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Project description

• Insert a sentence describing the project and define it as (“Project”).

“Company B will provide the contract management system, consulting and implementation on Company A’s IT infrastructure (the “Project”).”

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Payment

• Pricing and fees• Taxes• Expenses• Progress schedule

• Milestones• Fixed or time and materials• Failure = Liquidated damages

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Invoice

• The payment terms in the master agreement provide the framework (e.g. net 30).

• The SOW may contain project specific terms.– Progress payments– Milestone achievement– Travel– Out of pocket expenses

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Fixed

• A fee set for the entire project at an aggregate total cost (e.g. $18,500) including all services and deliverables and expenses or related costs. – All inclusive.– Change management– Project size

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Progress

• Company B invoices Company A based on achievement of milestones or project progression.– Company B submits an invoice for the services and

deliverables completed for that month.– Remedy for failure to meet specific milestone or

timeline may be a set amount• E.g., for each day failed to complete, $500.00 (LD)

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Assumptions

• Resources• Office space• Cooperation• Existing environment

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Additional terms and conditions

• These are reserved where inclusion in the main MSA would not apply to all other SOWs– SOW-specific indemnification– SOW-specific limitation of liability– Service description

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Body of SOW

• Services– Defined in Master– SOW-specific service description

• Deliverables– Defined in Master– SOW-specific items

• Intellectual Property treatment• Materials

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Warranties

• Warrant for meeting the requirements, specifications, and documentation.– Goods warranties• Fitness, defects, IP

– Services warranties• Competency, qualified, compliance

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Additional specific provisions

• Attachments• Supplements• Annexes– EULA– Privacy policy– Travel policy– Service Level Agreement (“SLA”)

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Milestone

• Project start date• Project end date• Milestones– Chart– Graphics

For example, project starts on May 1, 2015 and ends on April 30, 2016 with weekly and monthly timelines for achievement of services and deliverables.

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Schedule Start

Deliverable Resource Complete Accept/Reject Payment Due

May 1, 2015 Kick off mtg All Stakeholder

May 1, 2015 PM 0

May 4, 2015 Installation IT, Net ops May 8, 2015 VP IT $12,500

May 11, 2015

Example for phased project milestones

Table 1Project Milestones

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People

• Key personnel– Named

• Work schedule– Business hours, holidays, availability

• Project management– Dedicated, named – Escalation procedures– Dispute resolution

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Change

• Change control process– Define and address procedures in the master– Clear scope within the SOW

• Requirements• Expected work to achieve results

“In the event Company A requests any change in the scope of Services or Deliverables (as defined in an applicable SOW) for a Project, the parties will negotiate in good faith an amendment to the applicable SOW (“Change Order”) including, without limitation, any modifications to the Services, Deliverables, timetable for delivery and compensation. Company B will not be obligated to modify any Services or Deliverables, and Company A will not be liable for any modified compensation to the extent not reflected in a written Change Order executed by both parties.”

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QA

• Acceptance– Process for inspection– Correction of defects and deficiencies

• Acceptance testing– Procedures for testing, re-testing, and acceptance

• Rejection– Set up a termination right for multiple failures (LD?)

• Acknowledgement form for submittal and acceptance in writing.– Invoice submitted and payment due.

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Audit

• Right to conduct an audit to determine veracity of charges.– Maintain records for inspection re: the Project– Conducted upon request or by third party– Limit on frequency and amount– Process if discrepancies found• Interest charges• Cost of audit

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Other

• Licensing• Service Level Agreement (“SLA”)• Maintenance and support

• RSA•http://www.emc.com/collateral/legal/rsa-maintenance-agreement.pdf

• End User License Agreement•Adobe

•http://www.adobe.com/support/downloads/license.html

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IP

• License grants as necessary– Part of vendor’s intellectual property (“IP”)– License granted for purposes of the SOW– No transfer of ownership

Deliverables Vendor makes under SOW as a works for hire Upon completion, title and ownership pass under the SOW and

become IP of the owner

Materials Similar distinction – pre-owned, no transfer of ownership

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Outside scope

• Verify what is not included in the SOW– Scope– Clear delineation to avoid doubt as to what is

included in the SOW scope and what is not part of the SOW• For example, purchase of equipment, no installation

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Project management

• File drawer or assigned manager?– How is the project completed and managed after

the agreement and SOW are signed– Is there an active project manager assigned to

oversee the SOW• Escalation procedures– Avoid unnecessary delays, aggravations, and

disputes with a clear and convincing escalation with accountability

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Termination management

• Provide training to your personnel– Usage and management

• Wind down– Proper invoicing, all services and deliverables

acknowledged and accepted• Knowledge transfer– Upon migration or for exit strategy planning

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Q & A forum

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Connections• Neal Huffman, CCCM, CRP• Neal.Huffman@Live.com• (720) 331-2876

The opinions in this webinar presentation are my own and do not reflect on my employer. All of the material is provided for educational purposes and is not provided as legal advice. I am not a lawyer and not licensed to practice law. It is against the law for a non-lawyer to provide legal advice. If you have questions or need help on legal issues, rights and responsibilities, seek advice from your attorney.