Improperly Utilized Statements of Work in it Contracts

As an independent IT consultant you’ve just landed another client. You’ve taken the time to get the proper insurance and had the client review and sign your contract. But does the contract contain enough detailed information within the statement of work? A statement of work should clearly define the scope of the business relationship and the rights and responsibilities you have while providing your services. Often, too few details can result in a contract going sour.

For example, a web designer was hired to create an online management system for a client so they could keep track of each of their accounts and the status of their projects. A Web design statement of work was drafted to outline what the management system would include and how much it would cost. The web designer delivered the completed system several months later.  However, after the client had requested enhancements, the original delivery date was missed. The client not only refused to pay for the additional time involved in developing the enhancements, but requested a discount because the deadline was missed.  The web designer was at a real disadvantage because there was no statement of work to refer to and there were no provisions to account for a mid-project change of scope.  The client ultimately paid the bill, but the business relationship was severely damaged.

In another example, an IT consultant was hired by an auto repair shop to create an application. The IT consultant included the cost of his services in the statement of work, but he ended up spending more time than anticipated. He sent an invoice to the auto repair shop reflecting the extra billed time. The auto shop refused to pay. In this case, the IT consultant was not entitled to the additional payment because he failed to note in the statement of work that any overtime would be billed accordingly.

In both cases these issues could have been avoided had the contracts included more clearly defined statements of work. In today’s dynamic business climate, it is increasingly important to include as much detail as possible in contracts. Independent consultants and individuals should refer to sample statements of work to gain a better understanding of the level of description that should go into it. There are also statement of work templates business owners can utilize. These will save time and money, and ensure all of the essential components are included.

Below is a sample statement of work that outlines what should typically be included. Specific statement of work templates, however, are available online for specific fields.

* Scope of Work – Describes the work to be done in detail and specifies the hardware and software involved and the exact nature of the work to be done.
* Location of Work – Details where the work is to be performed.
* Period of Performance – Specifies the allowable time for projects, such as start and finish times, number of hours that can be billed per week or month, where work is to be performed and other scheduling-related issues.
* Deliverables Schedule – Lists the specific deliverables, describing what is due and when.
* Applicable Standards – Describes any industry specific standards that need to be adhered to in fulfilling the contract.
* Acceptance Criteria – Specifies how the client will determine if the product or service is acceptable and the criteria that will be used to state the work is acceptable.