Given the resource constraints that IT departments at just about every organization are dealing with, many, if not all, solution implementations and IT projects will be accompanied by a services quote (whether direct from the solution provider, an implementation partner, or your preferred IT support provider). Throughout my time supporting IT solution and service RFPs for clients, I’ve seen suppliers begin to insist that project and implementation work be billed on a time and materials (T&M) basis (as opposed to fixed fee). Generally suppliers quote a T&M model when some level of discovery work is required or when projects have too many unknowns - which are valid concerns. When managed well, with prepared stakeholders and sufficient supplier resources, these projects can come in at (or even below) the projected effort and cost.
As you work through your next SOW for any IT services, keep these asks in mind to hold both your organization and its suppliers accountable to the planned effort/projections:
What to ask for: A breakdown of hours, by role, by week (or another reasonable timeframe based on the projected length of the project)
Why you need it: While you’ll ultimately be charged for actuals, suppliers should provide estimates for their services. You should understand what roles are being proposed for the project, what responsibilities or phases those roles will support, and how long each individual will serve on the project. This allows you to focus rate negotiations in areas that will have the biggest impact on the total project cost and perform a “sanity check” with the supplier. Examine which roles are increasing and decreasing in weekly allocation as the project moves into various phases. You should pay attention to which roles are milestone/phase-specific - like a test script writer - versus the roles that are consistent – like a project manager.
What to ask for: Defined, measured, and tracked KPIs tied to budget and timeline accuracy
Why you need it: You don’t want to get a quarter through the projected timeline and realize you only have 10% of your budget left…and that your timeline has been extended by 2 months. This isn’t to say you should only be watching the “big, bad supplier” – tracking adherence to budget and timeline should actually benefit both you and the supplier. There are plenty of times where work can be postponed because customers have failed to make decisions, complete action items, or provide the data necessary to continue working. Service providers should help their customers keep track of these action items and proactively communicate the risks of any delay. In turn, customers can hold suppliers accountable to their projections and assumptions and ensure projects track to budget and timeline.
What to ask for: Some form of RACI matrix or defined roles/responsibilities
Why you need it: Many SOWs include language around what will be done by the supplier, but it can be helpful to understand explicitly what will not be covered or what would be deemed customer responsibilities. The old adage of “when you assume…” will rear its ugly head when you and the supplier are pointing fingers at who should be doing what within the project. Given the aforementioned under-staffed IT departments, it’s important to plan for the time needed by internal staff or you may start racking up additional costs as you change orders or pull together additional staff to keep the project on track.
What to ask for: Appropriate acceptance periods and protections
Why you need it: Many times I’ve seen clients gloss over this section of contracts, but acceptance periods tend be defined as a number of days for the customer to provide acceptance or feedback. After this period, the deliverable is considered to have been accepted. Look at this clause and consider the approval process within your organization and the priority the given project has with those that need to sign-off on deliverables or milestones. Ensure these periods make sense for your organization and there is clear language on resolving any issues that might arise.
What to ask for: Estimated travel costs and pre-approval for said costs
Why you need it: Don’t forget this additional cost – understand where the team supporting your project is based and what travel is required versus “nice to have” for the project. Many clients and providers alike get value out of working through current state assessments and design workshops onsite, but if your provider is flying their entire team from outside of the US, be prepared to incur the associated travel costs. Many customers mandate that a supplier follows the customer’s travel policy and receives approval for associated costs prior to traveling. Keep in mind lead times as well – if you’re asking a supplier to travel to your site on short notice, you’ll likely incur higher airfare costs. Having a strong project plan with travel settled in advance (e.g. not 3 days’ notice) will help keep these costs in check.
To protect your organization and maintain control over project costs and timelines, watch out for these basic areas and get the proper contract and governance structure in place – and then make sure you manage to the process and structure that you and the supplier have set up! Many times contracts can get “put in a drawer” after they’re signed. However, when structured correctly and managed strategically, they are a useful tool to support project-based work and supplier management.