The Subcontract Statement of Work
By Michael D. Taylor
If something is not in the subcontract it will not be accomplished. For this reason every effort must be made to avoid the assumption that a contract is carte blanche. The scope of work that a PMT (Procurement Management Team) expects of a subcontractor must be clearly stated in a Subcontract Statement of Work (SSOW).
- Scope Definition. The SSOW defines all work (scope) to be accomplished by the subcontractor within the terms of the negotiated contract. If work is later issued to the subcontractor, and it is not in the SSOW, the PMT can expect to receive a billing for additional funds from the subcontractor. This can cause significant cost overruns if the directed change is not pre-approved by the project manager. Such changes to the scope of the subcontract must, therefore, be submitted to the project Change Control Board before a contract change is issued. Subcontractors must be informed that they are not to respond to any changes, particularly verbal changes, until they are reflected in a contract change notice.
Product Acceptance Criteria. The SSOW should also define the PMT’s product/service acceptance criteria. Nothing is more frustrating than to get into a dispute with a subcontractor over the acceptance of a completed outsourced product. It is suggested that PMT’s base their acceptance on the procurement specification, and take acceptance at the buyer’s facility, not the seller’s facility. This avoids the necessity of dealing with packaging and shipping complexities.
Definition of Contract Terms. Terminology is best defined in the SSOW. For instance, the term “cable” can mean something different to a subcontractor when compared to what the PMT had in mind. “Cable” can mean a simple twisted-shielded pair cable used for telephone lines, or coaxial cable which is used in high-frequency signal transmissions. Unless the SSOW defines the term clearly the subcontractor is at liberty to choose either one. Often the subcontractor will choose the lesser type to keep costs to a minimum. Technical parameters, however, should be contained in procurement specifications rather than in the SSOW.
Documentation Requirements. The flow of documents between the PMT and subcontractor is often greater than one might expect. The SSOW should also describe all needed subcontractor documents, including what the document should contain and when it is due.
Subcontract WBS. The project WBS will often include the outsourced portion of the project. The WBS element that includes the outsourced portion can be lifted from the project WBS and inserted into the SSOW after it is decomposed to the next level. This becomes the Subcontract WBS (SWBS) and is usually included in the SSOW. The PMT should resist the urge to decompose the SWBS to inappropriate levels. Decomposing the SWBS should be the responsibility of the subcontractor which is closer to the work to be accomplished.
MICHAEL D. TAYLOR, M.S. in systems management, B.S. in electrical engineering, has more than 30 years of project, outsourcing, and engineering experience. He is principal of Systems Management Services, and has conducted project management training at the University of California, Santa Cruz Extension in their PPM Certificate program for over 13 years, and at companies such as Sun Microsystems, GTE, Siemens, TRW, Loral, Santa Clara Valley Water District, and Inprise. He also taught courses in the UCSC Extension Leadership and Management Program (LAMP), and was a guest speaker at the 2001 Santa Cruz Technology Symposium. His website is www.projectmgt.com.