As eight per cent of IT professionals prepare to move from permanent roles into contracting this year, understanding the different ways organisations engage talent becomes essential. One model gaining significant traction is the Statement of Work (SOW).
If you’re starting out on this journey and looking for your first contract, understanding the different types of SOW can be confusing, especially when you’re still figuring out the best ways to work.
I’ll explain two of the most common forms of SOW - Time & Materials (T&M) and Milestone-based (or Deliverable-based) - and the benefits that each can bring.
A Statement of Work (SOW) is a document drawn up between a contractor and a client. Its purpose is to clearly define what work will be done, when it’s due and how much it will cost.
Traditionally, contractors were either engaged on a time-and-materials basis or as temporary workers. However, organisations are increasingly turning to SOWs to manage risk, control spending and ensure accountability. This is because different SOWs allow organisations to focus on hours worked or deliverables, which offer organisations more flexibility in headcount and budget.
What about for you as a contractor? My colleague Adam Shapley has previously explored the advantages of becoming a contractor. Depending on the agreement with the client, you’ll have the opportunity to enjoy different benefits.
In my recent LinkedIn live event on contracting, I explored the below:
In a T&M SOW, you’re paid for the actual hours worked and any materials used. It’s most similar to traditional contracting, where you invoice the client based on time tracked, except under a formal SOW agreement.
With a Milestone-based (or Deliverable-based) SOW, payment is tied to the completion of specific deliverables or project phases. For example, you might receive a fixed fee upon delivering a completed software module, regardless of how long it takes.
Deciding the right type of SOW is key to building a sustainable career as a contractor. T&M SOWs offer stability and flexibility, while milestone-based SOWs reward efficiency and strategic delivery. Whichever model you pursue, ensure the scope, expectations and payment terms are clearly defined from the outset.
As a next step, learn more from my Hays colleagues and myself on building relationships as a contractor.
Travis O'Rourke President, Hays Canada
A Father first, Husband second, and Employee third, Travis O'Rourke has 19 years of Technology recruitment experience and is the President of Hays Canada, as well as CCO of Hays Americas.