Controlling labour costs in tough times through Statement of Work

Uncertainty lies ahead and everyone is trying to cut costs. Across the public sector, potential and planned budget cuts are causing employers to consider how they can reduce expenditure. With a lack of workers having an impact on services over the last year – with councils and local government authorities reporting widespread staff shortages – cutting headcount isn’t an option. 

But moving from a time and materials – or talent – focus to a Statement of Work (SOW) model where firms are thinking of resources instead of headcount, has a range of benefits.  

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The challenge with any project management, is the potential for activity to run over schedule and over budget. Procurement teams have long faced the headache of being presented with an unexpected invoice for additional hours worked where something has fallen down in the supply chain. 

With the work already completed, procurement professionals then face two options: accepting the project has had to go over budget, or challenging the additional cost. The former isn’t possible for cash-strapped businesses while the latter requires significant administration and often a lot of trawling through contracts, emails and other records.  

Operating through an SOW model, however, removes this issue. People hours are no longer measured in the deliverables. Instead, outputs are all that matter. The procurement function agrees with the third party that specific work will be delivered to a set time and cost. It’s then with the supplier to deliver this in order to be paid.  

Get more from the supply chain

Having projects delivered or resources working under a Statement of Work also streamlines costs by improving efficiency across the supply chain. Procurement has greater control of who is delivering what. Hiring managers can no longer go off PSL (unless they’re really determined to rock the boat!) and only those that have been identified as being able to deliver the best results in the timeframe and budget outline are engaged.  

Our own Statement of Work management services uses those who have demonstrated that they can effectively deliver the defined outcomes. This allows us to reduce the costs more significantly than traditional contingent resource solutions. (Note, though that SOW isn’t suitable for every scenario, but that’s a whole other topic in itself!) 

Gain total transparency – and stop costly mistakes before it’s too late  

When you partner with the right provider to manage your SOW solutions, you’ll get access to all the information procurement professionals want from a project management point of view. Our own purpose-built Vendor Management System (VMS) provides our clients with everything from real-time reporting to all project-associated documents all saved in one place.  

Stealth costs become a thing of the past because they can’t hide on the platform. You can also access the latest information on supplier performance and, if needed, adjust work to make the most of those that are performing well. 

On a longer-term basis, this improves workforce spend, allowing you to identify and channel work into suppliers that will deliver the best value for money before set performance review periods come around.  

Save on people-hours 

An effective Statement of Work solution that is underpinned by innovative technology also provides savings when it comes to people hours. Procurement teams have long been over-burdened with managing PSLs, constantly reviewing the supply chain, handling contract negotiations, reviewing invoicing and controlling timesheets. This list just scratches the surface of the demand on the function. But time is money, and it shouldn’t be wasted on tasks that can be automated.  

An SOW that provides a tech-driven solution and allows complete transparency removes a significant chunk of this administration. Spend less time reviewing SLA’s, digging out contracts to compare with invoices and checking in with hiring teams to confirm who is working where and under what contract, by accessing everything in one place.  

It might not free up enough of your time to go take a longer lunch break, but it will reduce the hours spent on tasks that can be managed by Bots rather than yourself. 

Repurpose the scope 

When the deliverables of a Statement of Work go to plan, you’ve also left yourself with a project scope that can be re-purposed and re-used elsewhere in the business where similar demand arises. If a digital transformation project has worked well through an SOW in one part of the business, this can be repurposed across other divisions with relative ease. 

Not only can you provide a clearer steer on the budget needed as a result, but you also reduce the hours spent developing a whole new scope and assessing suppliers. The finite details are completely managed through the technology, allowing you to do what you do best: be the human part of the procurement process.  

Saving costs through SOW 

It’s easy to look at cutting resources in a difficult economy, but as we’ve learnt over the last few years, skills and resources are the most critical element of every business. Projects still need to be delivered, service levels need to remain at the same level – if not improved – and firms need to be able to respond to an economic bounce back quickly and efficiently.  

An SOW workforce model gives you the cost-control and reduction you need, without hindering future growth prospects of the business.  

Do you want to know how to control labour costs through Statement of Work? Download our guide today.