If your company have ever been involved in a project contract dispute, learning from that experience is critical to avoiding future contract disagreements. One area that is often reviewed in these situations is the Statement Of Work (SOW), which is an important agreement between customer and subcontractor.
The SOW, at the least, is an implicit agreement between the customer and the subcontractor. It is included in the contract the procurement department makes with the subcontractor. The ability to produce a well-written SOW is a valuable skill to develop.
I worked as a project manager at an Army Medical Center where I planned and estimated construction projects to repair and improve facilities. This Center was very old and in desperate need of repair. My company was brought in to help better repair and improve the facilities. Here I learned from firsthand experience the benefits of a well-written SOW.
Here I discuss the challenges and lessons learned from writing a SOW for equipment repairs, particularly, when a site survey does not provide sufficient details about the damaged equipment.
We had an emergency repair project at this Army Medical Center that required same day contracting and implementation of repairs. This project was particularly urgent and critical as the system needing repair affected the cooling of their computer center, which stored patient data.
Besides the short allotted time span for writing the SOW, development of the SOW had another challenge; the repairs were site unseen. The project was for the repair of a leaking underground Chilled Water Line (CWL). Obviously, because the CWL was underground the exact location and nature of the leak and required repairs were not known.
In this situation, I had to write a SOW that accurately predicted where and how much to excavate to uncover the damaged CWL. Additionally, without having first seen the underground CWL, the required repairs had to be accurately described. The SOW therefore included CWL replacement or repair instructions without having a site survey of the damaged CWL.
After quickly producing a SOW and cost estimate, the procurement department made an agreement with a construction subcontractor to excavate and make the appropriate repairs. What followed or resulted from this contract is a lesson in the importance of a well-written SOW that both implicitly and explicitly, when appropriate, describes the required repairs. A well-written SOW is imperative for mutual contract understanding and agreement.
The project went well at first. The construction subcontractor commenced the excavation within 24-hours of our having received the report of the CWL leak. Excavation discovered the leak within the area predicted by my SOW. The repairs were made and the leak stopped. Great!
The emergency was over. But a contract dispute that lasted many weeks had just begun. What was at issue here was the installation of pipe insulation. The subcontractor at first claimed they never received a SOW from our company. Later they claimed that the SOW did not state that they had to install insulation on the pipe. Note that the damaged CWL pipe was actually pre-insulated.
The SOW did not explicitly state that the repairs were to include installation of pipe insulation, but I successfully argued that the SOW did state that the repairs should duplicate or replicate the specifications of the existing pipe. The existing CWL pipe was pre-insulated, so the installed piping should have pre-insulation, and, if not, some other type of insulation.
The dispute continued on for weeks and included mediation by high-level managers who were debating every phrase and word written in my SOW. It was an unimaginable and surreal experience having my every phrase and word scrutinized in a contract dispute process. But such shows the importance of a well written SOW.
The subcontractor eventually did insulate the pipe, but with a half-hearted effort; they wrapped the pipe in a jacket and then sprayed foam insulation between the pipe and the jacket. The quality assurance engineer rightly disapproved the pipe repairs due to the inadequate insulation.
Of course, this was another line of disagreement and contract dispute and this made my company lose confidence in the subcontractor. So we consulted a skilled in-house pipe insulator that recommended a Pittwrap insulation and jacketing combination designed specifically for underground CWL piping.
After deliberating, upper management finally approved a project funding line item for the in-house pipe insulator to install the Pittwrap insulation and jacketing. The subcontractor, however, did not receive the additional funding that they demanded for their pipe insulation attempt.
It was a difficult project management experience, and the underground CWL remained exposed for much longer than anyone wanted. But in the end the CWL repairs were quality work. Not only did we have quality insulation and jacketing, but also the high quality industrial restrained flange coupling adapters (not mentioned previously) we had the subcontractor install would help prevent future leaks.
Summary and Lessons Learned
Contract disputes occur more commonly than anyone would like. Some construction companies have contract dispute departments that do nothing but handle contract disagreements. Let’s take a look at a few of the lessons learned from this example.
- Make certain the subcontractor has been provided a SOW before work commences.
- Make certain the SOW contains the whole (100%) scope of work.
- Use implicit over-arching statements to capture scope that may not be visible or apparent from a site survey.
- Use explicit statements when scope and/or specifications are obvious and important.
- One of your primary goals in project management is to make certain that all stakeholders understand and are in agreement on the end product or service.
I am not a lawyer or mediator, but one rule of interpretation I do know, is to interpret the implicit in light of the explicit. Remember this rule when you write your SOW. It is usually good to be explicit, but you may need an implicit statement to “cover all the bases”.