In the professional services world there is a euphemism called “working at risk” which means that you do not have a signed SOW or contract or even a PO. You are running a project without an agreement on scope or goals, no defined budget and no authority to expend resources or bill for them.
Before I get into talking about how this comes about and how to deal with it, let’s understand the importance of a signed document defining the project. In professional services (“PS”), we are usually talking about a Statement of Work (“SOW”). This document does several things:
- Defines the scope of the project.
- Defines the roles and responsibilities of both the receiver and the provider of services.
- Establishes a budget for the work and terms and conditions to control that budget.
- Defines the milestones at which payment is to be received and what criteria for success is needed to meet those milestones.
A document with all these things, agreed to by both parties through legally binding signatures, provide the PMO and the assigned PM the authority to perform work. It also provides guidance on the scope of the work to be performed as well as giving all parties a way of determining when a change order is required. A well written SOW is the first step in having a successful project which will result in an outcome that will provide satisfaction for all stakeholders.
With that said, why would anybody deliver services without a signed SOW? I have been thrown into this situation a number of times over the years. In my experience, this will work without major problems about half the time if certain characteristics are present. Some of them are:
- It is a good customer that has an emergency situation and there is not time to complete the paperwork before starting the services. The paperwork comes shortly after work begins. I find this situation fairly low risk.
- The opportunity for current and future work and sales are large and upper management from both sides have come to verbal agreements through direct contact with each other. The risk in this situation is a bit higher but you will have authorities from both sides that you can engage to help keep thing on track.
Work at risks projects that do not have at least one of these characteristics have a high degree of risk and should be avoided at all costs. You as the PM should make it known from the very beginning that proceeding is very risky and not recommended. Make sure these opinions are in writing or some other audit trail such as email. This is not only a CYA strategy, but is also your duty as a PM to let stakeholders know when you see problems with a project.
Ok, so despite all your efforts, you are assigned to a project that is a work at risk situation. What do you do about it?
The very first thing you need to do is work with the customer to define the work to be done. This will give you a scope that you can manage against and allow plans to be made. If the customer does not want to go through a planning stage or provide metrics to gauge success then you need to shut the project down until agreement is reached. Continuing to move ahead without a plan will not bring satisfaction to anyone and can do great damage to your own organization’s reputation, costing you future business.
The fact that a budget has never been established requires that you keep track of hours worked and expenses incurred and report them weekly. Make sure you negotiate a time and materials billing approach since you have no definition of billing milestones.
You will have a larger task of documenting all decisions in greater detail. Make sure your meeting minutes are more detailed and they are published to the whole team. Obtain agreement often on progress made and publish that as well. There is no such thing as over communication in a work at risk project.
Hopefully, this post will help you avoid work at risk projects or at the very least give you some strategies for dealing with them. Let me know your thoughts on this post or any of my other posts.