Initiating a contract project involving big dollars is a stressful task any day. The manager needs to clearly focus on the kind of human resources required and the kind of arrangement that best serves purpose of achieving the goal, which is the execution of that project. We are specifically looking here at a scenario where the manager needs to bring in additional workforce for the execution of that project and the million dollar question to ask here is whether the resources will be brought in as contingent workforce to supplement the existing resources or as a SOW project, where the work is carefully packaged and outsourced to a contractor, who delivers the total results.
Finding the required resources for the execution of the project is possible only if the manager ably factors in headcount liabilities and tenure restriction policies, as well as overheads applied by finance departments. In the face of all these concerns, the manager has to carefully consider the various aspects of the project’s requirements to determine the best possible approach to adopt – by choosing between contingent labor and SOW project.
We try here to analyze the thought process of such a manager when choosing the SOW project way over the CW requirement. This is especially necessary in view of the 30 to 60 per cent higher spend on SOW projects. There is a need to consider the matter from different angles, all of them being of equal importance.
The manager needs to assess the resources currently on hand that could help to provide supervisory control and/or deliver on the project. The next point to consider is the additional training these resources may require. Should the available resources prove insufficient, the manager will need to choose between hiring permanent employees, contingent workers for the term of the project – putting in place resources for supervisory control – and outsourcing the work to a contractor as an SOW project. Thus, a manager needs to make sure that a SOW classification is based upon the ability to define measurable outcomes, and a scope for clear documentation of specific expectations. The possibility of requirement/scope creep resulting in higher cost if the project is classified and managed under CW could also turn it into a SOW project as a risk mitigation measure.
Designing a SOW requires the manager to determine and explicitly state in detail all the expectations, terms and conditions, desired performance standards/outcomes, metrics for measurement and reporting systems, technical references, milestones, time-frames, performance-linked payment terms and also the penalties and responsibilities should there be any failure to deliver on the project as per the schedule laid down in the project specifications.
SOW projects need to be result-oriented, offering a clear and measurable solution with definite outcomes and deliverables. The contractor needs to provide complete satisfaction without stretching the costs further. When engaging CW, such extension of project estimates would prove costlier to the company but in SOW, the contractor stands to lose. We must not forget that the assumption of such risk coupled with the superior quality of resources would result in a higher cost for SOW projects in any case.
No manager shall ever forget that the use of contingent workforce brings with it accompanying risks in compliance and regulatory requirements exposing the organization to tremendous legal risks. Some of the risks involved stem from co-employment risks and misclassification of workers thereby incurring liabilities for transgressing laid down policies.
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