Construction SOW Payment Models

SOW pricing methods explained by Nationwide Consulting, LLC

SOW pricing methods explained by Nationwide Consulting, LLC

Construction Projects SOW have Several Choices, here are two other types of Payment Models:

 SOW pricing methods explained by Nationwide Consulting, LLC

  • Fixed bid: The cost of the project in the construction SOW remains constant, and it’s up to the contractor to use resources (including personnel) in a way that stays within costs and profit margins. As long as the deliverables are met on time and within budget, the client doesn’t worry about how resources are being used in this construction SOW.

SOW pricing methods explained by Nationwide Consulting, LLC

 

  • Retainer: In this model, the client pays for the personnel and other resources allocated to a project. A certain amount is typically paid each week or month to retain these resources in this construction SOW.

A client may also want to include clauses that cover delays on both the client and the vendor side. This is especially important in SOWs for projects such as software development, unique building projects or projects where the full scope of the work is not known at the beginning of the project.

Miscellaneous/Special Requirements in Construction SOW

 SOW pricing methods explained by Nationwide Consulting, LLC

In this section, outline anything that hasn’t already been covered in the SOW. Requirements that might be articulated in this section include:

  • Security requirements (e.g., whether personnel need security clearance, what level, and whether special passes or badges are required to enter the job site)

  • Industry-specific standards not already covered in a previous section

  • Hardware/software access restrictions or requirements (e.g., in software development projects, system downtime, and maintenance)

  • Travel requirements, and which party pays for travel

  • Post-work requirements (e.g., support and testing)

  • Exclusions and assumptions that haven’t been covered in previous sections (e.g., non-scope related assumptions for project management SOWs, or details about who owns the code in software development SOWs)

SOW pricing methods explained by Nationwide Consulting, LLC

 

Acceptance Criteria/Signatures listed in the Construction SOW

 

Finally, this section covers how the client, buyer or entity will accept the project deliverables. It might outline which staff members are authorized to accept it, and who will review and sign off on deliverables. The client should provide guidance on how the work will be submitted, and include specific criteria for how to determine what is “acceptable” work.

Agreeing upon the acceptance criteria of this section of the Construction SOW before the project begins helps to avoid any miscommunication on either side when the project wraps.

 SOW pricing methods explained by Nationwide Consulting, LLC

Challenges of Writing a Statement of Work

 

SOW pricing methods explained by Nationwide Consulting, LLC

 

So what is the Best way to Create a Statement of Work?

  • Risks of an incorrect SOW –  An SOW is a document with legal weight, which is used in the contract creation and management process. As a result, there are real legal, financial, and operational risks for an organization that writes an SOW improperly. For example, if the client is unclear in their specifications, which causes the contractor to perform the work improperly, a legal battle could ensue over which party is responsible for correcting the mistakes—and both parties’ reputations could be at risk. For this reason, a good professional Construction Consulting firm, one well versed in SOW’s such as Nationwide Consulting, LLC may be a cost saver in the long run in more ways than one.

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  • Time commitment –  Writing an effective SOW can be a time-consuming process. Due to the risks involved, a project should not be rushed, nor should any shortcuts be taken. Using a professional Construction Consulting firm like Nationwide Consulting, LLC will save the learning curve involved in proper formatting and inclusion of an SOW. In fact the whole process can be transparent to you as it becomes a function of the Construction Consulting firm, if you so desire.
  • Expertise –  If you don’t have the knowledge and experience to write an SOW, it can be hard to find qualified writers who understand all the guidelines and requirements. The SOW is typically written by larger clients, but authors may vary, and more than one author may participate. This may include anyone from the project manager to a third-party.  A good experienced consulting firm can help coordinate in this situation, and Nationwide Consulting, LLC has on too many projects to mention here over the last 3 decades.

Nationwide Consulting, LLC can help with all aspects of SOW’s as well as SOO, RFP or any other contracts and bid offerings that may be needed. Give us a call to discuss your next project, you will discover a firm, qualified, licensed and ready to serve all you Construction and Development needs based in Central Florida, but a quick flight to anywhere in the world.  No project is too large, but we can help with the smaller ones as well, call us today: 407-688-2657

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Nationwide Consulting, LLC

Robert E. Hanson

Principal Partner

410.336.4961

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