Understanding Contracts and SOWs

We have assisted the Oregonian in their drive for fair and accurate reporting by supplying objective input on the Cover Oregon failure:

May 28, 2014: State Invites 10 Firms To Shift Cover Oregon To The Federal Health Insurance Exchange by Nick Budnick

April 9, 2014: Decision To Scrap Or Salvage Cover Oregon Health Insurance Exchange Poses Risks Either Way by Nick Budnick

April 4, 2014: Cover Oregon Consultant: Fix For Health Insurance Exchange Could Take $40 Million, 21 Months by Nick Budnick

The subpoena shows up at the front desk and the call comes to you to pick it up. That nauseating feeling in your gut is the prelude to a long day… no… a long year. The lawyers want every contract and statement of work, each change order, log, email, document, physical mail, specification, test document, picture, drawing, scratch note, etc. that ever existed on your project. You reflect back on the project and wonder how many times you cut corners in order to get the project done. Well as "done" as it is. After all, the customer never did really accept the final product. Maybe you should have had the project health check performed.

In May 2007, the Massachusetts Division of Unemployment Assistance (DUA) signed a contract with Bearing Point, Inc. to modernize the State’s unemployment processing system. The project was called the DUA Quality Unemployment System Transformation (QUEST) Project. Bearing Point filed for bankruptcy in February 2009 and Deloitte announced they would buy Bearing Point for $350MM in March of the same year.

In order to comply with the Affordable Care Act, the State of Oregon made the decision to build its own Health Insurance Exchange (ORHIX). An online portal to allow applicants was supposed to go live October 1, 2013. As of March 30, 2014 the site was not functional and all ORHIX applications must be processed from paper applications.

Almost every project has some form of outsourcing. It may be bringing in a contract laborer, a programming team, or someone to build the entire product. The reasons are varied and include staff augmentation, acquiring a specific talent, risk mitigation and more! Regardless of the situation, project managers need to understand the outsourcing process from all angles to ensure each party gets value from the partnership. Creating the correct business agreement is crucial to attaining the best results for your project.

Trust relationships, certifications, and standards sound like such a safe harbor. These sound like such great words in a proposal or statement of work. How could you possibly go wrong building a trusted relationship with a customer by committing to follow a standard? In fact, this can burn you… in court.

No one ever starts a project with the goal of ending up in court. In fact, litigation may never cross your mind; after all, you have built a trusted partner relationship. Taking a few cautionary steps, however, will make your life easier if you end up in that ill-fated litigious position. Your best chances for success come long before you enter the courtroom—even before the project starts.

Prior to signing any contract or statement of work (SOW) it should be reviewed by your legal team. While legal experts understand legalities that will helpful in court, they are not delivery experts who can determine whether a SOW will provide you with the product that you anticipate, need, and desire. This review will analyze the scope, methodology, deliverables, and proposed cost to identify for areas that point to weaknesses in the ability to deliver or misalignment in intentions that could result in project failure.

SOW Review Benefits:

• Demystify the SOW.
• Get more value from your subcontractor.
• Minimize risk and vulnerability.
• Save money by avoiding risk.
• Eliminate ambiguity.
• Understand and resolve the gaps between the contract and SOW.
• Identify what is missing that should be added.
• Proactive, Preventative, Productive.

A friend of mine alerted me to an article in a PMI Community post titled Is Manipulation Ethical? From the title, I thought this would be neat read. However, the article was pretty swallow. How foolish to think that a 650-word article would address an issue that has plagued philosophers for a few millennia. The initial reaction was to the manipulative title, which was deceptive. It led me to believe the article would supply some profound knowledge. The short treatise failed. To its credit, though, it made me think. On the second pass, I decided that I disliked the article. In fact, its thesis—manipulation is ethical—is morally wrong.

The most common form of outsourcing is to hire resources through a staff augmentation firm. Staff augmentation firms, better known by their less polite nicknames of headhunters or pimps, provide anyone from project managers to developers and testers to fulfill a projects' temporarily needs. These firms match your requirements, based on level of experience in a skill or trade, or talent in dealing in specific situations such as overseas deployments, military contracts, etc., to the people in their database. The challenge remains in getting the correct person, who can ramp-up quickly and integrate into the team.

The system integrator is the magical troupe that works with the customer and the software vendor to deliver a project's desired functionality. They cut through the vendor's promises while controlling the customer's expectations to create a successful deployment. Mike Krigsman refers to this triad as the Devil's Triangle; all three parties are culpable in the failure and share in the success. However, the system integrator is responsible for holding the three together to achieve successful delivery. The cornerstone to this relationship is a thoughtfully built contract.