Scope of Work (SOW) – Another Word for Expectations
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Clear definition of the type of services and deliverables required by a customer in response to a Request for Proposal (RFP) or Request for Quotation (RFQ) is essential in creating the scope of work to be provided to a service provider as part of the Statement of Work for a project/service to be completed. The Statement of Work typically describes, in detail, objectives/purpose statement, project requirements, milestones/schedule deliverables, schedule, price, and key assumptions.
The key word here is assumptions. My experience is that key assumptions tend to be built into a Scope of Work but are not always really understood by both the customer and service provider. For instance, did you ever make a peanut butter and jelly sandwich? It’s pretty easy, right? But, do any two people make one the same way? Probably not! What if you decided to write a procedure that spelled out the process in a way that everyone would know what to expect –
It would, perhaps, be challenging. That’s the way with projects in the oil and gas business.
The Scope of Work describes detailed tasks and milestones to be performed for successful completion of a project. It is one of the most important aspects of any contract and it is imperative that the service provider performing the effort and the customer requesting the effort to be performed have a common understanding of the Scope of Work to be performed, and avoid any vague or ambiguous language in the Scope of Work. For example, specific detail would be required for a project involving surveying and a drafting deliverable. Some specific details would include movement of survey crews, federal or state regulations, customer requirements, length of wells, and location and size of pads. Does the customer have a process for well pads? How many visits or meetings will be required during performance of the contract? Does the customer need customized plat types, GIS and shape file standards? What are all the deliverables required? How can the service provider assist with the communication process?
The last question mentioned is one that has always fascinated me with technical services. The service provider is typically the subject matter expert and many times customers sit in a conference room developing processes without ever consulting their service provider to seek ways to work efficiently together for consistently successful results.
Lack of clarity and definition may result in scope creep which is a change(s) in a project’s scope or schedule included in the original contract after the project work has already started. Depending on the type of project to be performed there may be additional risks which need to be assessed and discussed as necessary and addressed in the contract if required.
Any change(s) may lead to increases, upward or downward in costs due to addition to or change to tasks included in the original Scope of Work or changes in the contract deliverables or schedule changes. When using Change Orders correctly and consistently, disputes can be avoided when payment is due or if the contract budget and timeline is exceeded.
It is very important to have a thorough change management communication process in order to be able to track and analyze change requests and possible resulting additional costs due to changes in tasks to be performed as well as schedule changes. Therefore, arrangements need to be included in the contract to address changes in tasks to be performed, schedule changes, changes in deliverables or changes in other areas agreed to by the service provider and customer, and need to be included in the contract.
As a lesson learned, when there is a poorly defined scope of work, there are poorly defined expectations. It is challenging to meet a person’s or company’s expectations under this scenario and typically leads to disappointment for both parties and possibly an unsuccessful project. If you want services that satisfy the preconceived assumptions held by all the parties, it must be laid out in detail before the contract is signed. No one likes scope changes after a project is started. Spend the time up front to well define the Scope of Work with all tasks and the payoff will be an on-time, on-budget project that will meet the expectations of all parties…a win-win. If you don’t follow these basic principles, you may wind up with peanut butter on both sides of the bread, which is not typically a positive outcome.
Written by Parrish A. Salyers – Director, Business Development