Speaker 1: 0:14

Hello and welcome to let's Talk Procurement, the only show you need, yes, you, to master the art of procurement. Let's go, you know. Welcome back. Hope you're doing well. I'm your host, luke One. The hostess with the most sits and with me, as always, as I like to say, is channel favorite Luke Ten. He's money hungry. He's uh, yeah, he's money hungry. He's um demanding and, uh, he's looking pretty hairy today thank you.

Speaker 2: 0:52

Thank you, but I I did get a, uh, a trim sort of recently about about a week, about a week ago.

Speaker 1: 1:05

Do you know what it is, though? You're that, you're that generation, and sorry to be this old timer like back in my day, right, but for me, trims were like once a month. You, on the other hand, like you feel like you haven't got one for ages. You, you get it once a week, twice a week.

Speaker 2: 1:22

I'm not Micael richards, but I do. I. I think what it is is you're, you're past your prime, so you can let yourself go a little bit. You don't have to, you don't have to kind of keep standards up, whereas me I'm, you know, I'm approaching prime, if not, if not in the prime of my life. So you know, I want, I want to get more haircuts more regularly to make sure I stay fresh.

Speaker 1: 1:50

I can't disagree with that and I think, to be honest, if I get a haircut, it reveals all of the you know, the recession going on upstairs, so I have to be careful. Now you're right. So, look, I'm glad you're doing. Okay, I'm guessing I'm acceptable. Yeah, I'm acceptable. Yeah, I'm acceptable?

Speaker 2: 2:04

no, I didn't ask look, I've got uh but sorry on that, I do. I do uh. Just because I don't ask doesn't mean I don't care about your well-being, I uh feels like you don't, but oh well, uh well, next episode, I I will ask you and I will what's the word? Interrogate you on your well-being.

Speaker 1: 2:29

Brilliant, thank you Appreciate that. So, look, I want to dive into a listener question and I'm going to actually put it over to you. I think you're you know, seeing as you're approaching your prime, maybe you can give the listener a prime answer. So it's a question from, from ryan. So, ryan, thanks for getting in touch. Um, he's stated that he's not in procurement, but he wants to know what we believe are misconceptions about procurement that you think are unfair or that we think are unfair.

Speaker 2: 3:05

This feels like something we should do. A whole episode on.

Speaker 1: 3:08

Oh, are there that many are there. Is that what you're saying? I think there's enough to do a full episode. Well, I'm not going to disappoint Ryan by that shitty answer Come on, if you had to pick one thing.

Speaker 2: 3:22

If I had to pick one thing, well, the big thing that springs to mind is that procurement are just there to buy things. I think that's the biggest misconception. You know, procurement, oh, they just press buy. That's the one that I think I've come across the most. Whereas people will say, oh yeah, legal are there to protect us from getting sued and finance are there to protect us from overspending, procurement is there to buy.

Speaker 1: 3:53

That's something that we need Ryan to change for us. Yeah, ryan, maybe get back in touch and let us know what kind of stakeholder you are to procurement, and do you agree? Do you think we're just buy it by? We just like to press add to cart and then press buy.

Speaker 2: 4:12

Is that the? Is that the extent of our role? Is that why we exist on planet planet Earth? Also, check out the project managers app, because that they've got. There's a few. There's a few. I was gonna say there's a few misconceptions. There's also a true true-ceptions, because conceptions isn't the right word, is it? No, that's maybe something different, but there's a few. For now, let's just call it conceptions. If it's not a misconception, it's a conception. So there's a few misconceptions and a few conceptions in there. Um, but it's a good app. Just check it out all right, we'll.

Speaker 1: 4:51

We'll link that in the uh in the bios, if we remember chance, so we probably forget, or we'll link a completely different episode, but we're trying to be professional guys, we're trying. I am really excited for today's episode because a lot of thought and planning has gone into it. Uh, I know you asked me just at the start what it's about. Do you remember that? Remember two seconds ago?

Speaker 2: 5:14

yeah, it's about sewing, isn't it?

Speaker 1: 5:17

oh, here he is. Do you do sewing? Did you do that at school, was that?

Speaker 2: 5:25

um, I made a pillow. I made a pillow that's what I I did in my uh sewing class but I I didn't put enough fluff in it, so it just looked really sad. It just looked like a really sad pillow and I uh gifted it to my mum and I think she she's probably thrown it away, to be honest giving it to a dog, sort of thing yeah, yeah, a dog throw it away wasn't good enough for him did?

Speaker 1: 5:53

uh, did you have to bring your own fluff?

Speaker 2: 5:57

uh, no, I think.

Speaker 1: 5:58

I think fluff was was uh requestable, oh, there you go, then that's probably why isn't it an underfunded school not having enough fluff? Yeah, I'm just adjusting my mic to get it closer to my my tongue. There we go, okay. So sewing statement of work. I can kind of see where you got sewing from yeah.

Speaker 1: 6:28

I think we have a conception, a concept as soon as I ask the word. We have a concept that is, I would say, widely used. I think the word sow, statement of work is thrown around by all sorts of suppliers, stakeholders, vendors. What's in the sale? We need to get the sale done. Sale, sale, sale, ah me sale, horny. You know, you get all this stuff and it's like sorry, I broke my. I broke my, uh, new year's promise there, didn't I? Um, and you get all of this and you just need to dial it back a little bit and think well, actually, what is a statement of work? When do we need it? Why do we need it, and is it always a statement of work that the business is talking about?

Speaker 2: 7:09

so I don't want to completely railroad your agenda right, here we go but what is the difference between a sal statement of work and an order form where? Where can that go in the agenda?

Speaker 1: 7:31

because maybe you want to start by talking about what a sow is yeah, we'll put that on the uh in the bank store, that for, let's say, 10 minutes time, and then we'll uh cycle back around to that, because that's obviously a corporate word everybody loves to say isn't it time? And then we'll uh cycle back around to that, because that's obviously a corporate word. Everybody loves to say isn't it not cycle, circle, we'll circle back around. Uh, right, so for me, a statement of work detailed, so I'd be detailed, formal document right, it's a document, it's a word document, hopefully PDF by the time it's done, and it is specific work to be done on a particular project. Okay, so it's project specific and it should include important things in there. Well, what's important? That question, no, no, I'm sorry, I just had a really itchy beard then I just I just yeah.

Speaker 1: 8:29

So for me, what's important to go into a statement of work, or important enough to go into a statement of work? It? It almost feels like every little subheading in the statement of work has to be bringing value. You don't want random things that aren't associated to it in there. So you want a little bit about the project, you want the objectives of the statement of work. So what we're looking to achieve? Set out the deliverables that are going to sit underneath, underneath that. So ie, what are the steps that need to be taken to achieve the ultimate objective of this statement of work? You then want to put a time emphasis on it, so it should really be a fixed period of time six months, one month, two weeks, two years, something along those lines. So you've got a definite end date. It's not evergreen.

Speaker 1: 9:20

It's not evergreen, no, lovely little word that Scope. So importantly, with scope and and we look at um specifications, things like that it's what's in scope versus out of scope for this particular project and in support of that, it's what are the assumptions and dependencies that help drive both the deliverables and the scope that are in scope. Okay, so you might right, of course, yeah, um pricing and essentially any pricing, carve, carve, outs or caveats. So if you're paying in milestones, you might say that this milestone is optional pending mutual agreement further down the line, and that'll be a priced up separate bit of work. So they are what I call the important things that go into a statement of work. Obviously, there might be some other bits that, depending on the different nature of the project and what you're trying to achieve and actually who your customer is as well, because a government customer might have slightly different requirements that go into a statement of work versus you know, I don't know an SME or someone like that.

Speaker 2: 10:37

So where would a SAL come in in the context of a contract? So you put your overarching contract in place. Which kind of details? General things, right, yeah? And then your SAL is more specific for individual work packages, right? So we want, we want to, we want to, you know, uh, get dave to to go out to one of our clients and fill their, fill their petrol tank up. It's toilet clogging, dave it is. He's also got a second skill of filling up petrol tanks.

Speaker 1: 11:25

The versatile employee. I can see why we hire him now. Yeah.

Speaker 2: 11:31

We get him on sale.

Speaker 1: 11:33

He is to understand that. So this is a common misconception that a lot of stakeholders can have and often forget is that you can't just have a statement of work on its own like for it to be contractually binding, it needs to be part of a contract, and there's kind of two ways that that happens. One is all of the terms are written down, ready to be agreed, and the statement of work is then within that set of terms and conditions. So you've got all the T's and C's and then you've got a statement of work built in and that's almost the terms and conditions and the statement of work for this one particular opportunity.

Speaker 1: 12:17

However, more commonly, you would probably have a heads of terms or a master agreement or master services agreement, whatever you want to call it, something that is all of the what we call boilerplate terms. So boilerplate being the legalese that you kind of have to have in a contract, you know, like modern slavery, think. You know, tax compliance, all of that stuff that you would just inherently agree with, but it needs to be called out, and then below that you would have what you'd call a schedule or an attachment, appendix, something along those lines. That is a pro forma statement of work that then, whenever you are going to contract with this supplier, you would then draft your own statement of work that, importantly, references the heads of terms or the contract. So your statement of work should always point to the terms and conditions that are effectively underwriting the, the engagement so you said pro forma there.

Speaker 2: 13:21

Does that mean like a blank template? Basically?

Speaker 1: 13:25

yeah, sorry I was, I was uh being all posh twatty, but yeah, effectively it's just a template, so almost like a skeleton version of the document that allows the business to engage flexibly with it. Because what I would say is, if you ask non-commercially minded or contract savvy people to draft a statement of work from scratch, you will get a chunky looking word document, maybe with some paint or some drawing thrown in into it and all sorts. So the best way to do it exactly that you know, um, so the best way to do it is to set the. The framework have subheadings that cover some of those things we talked about earlier. So you know, the objectives are deliverables, the timeline, the payment terms, the scope and even with payment terms, you might say well, the value of work under this statement of work is predicted to be two hundred thousand pounds. The payment terms will be as per the main agreement, ie we will pay you in net 30 days and we will pay you as long as you send me a valid invoice or something along those lines.

Speaker 2: 14:32

And potentially another reason why you'd want to have that blank template in is because if it's your company's standard terms and conditions, right, you don't then want the supplier coming in and superseding any of those terms with their sal document, right?

Speaker 1: 14:52

so it's superseding yeah, yeah, uh.

Speaker 2: 14:56

That is when you, um, you have a pumpkin and you eat all the seeds and it grows a new pumpkin inside you, right?

Speaker 1: 15:06

How does that make sense in the context of a statement of work?

Speaker 2: 15:10

Well, there's two ways to use it. That's one way. The other way is, if I don't know, if the main contract said we'll pay you in 60 days with 60 days payment terms and then the statement of work said we'll pay you in 30 days payment terms, if you've detailed the words in the SAL, so you proceed the main contract, then the 30 day one would be the one that's applicable yes.

Speaker 1: 15:43

So to avoid, to avoid out of the forms, to avoid kind of uh. Ambiguity. You just want to have it clearly defined as to what takes the order of precedence, what you know what? What is the priority question for you? Rising superstar nearing his prime yeah which stakeholder would would value a statement of work the most in in your opinion?

Speaker 2: 16:17

which stakeholder would value a statement of work? Well, possibly. Which stakeholder would value a statement of work?

Speaker 1: 16:22

well, possibly, john oh god, no, give me a group mate, come on, I don't want john no.

Speaker 2: 16:32

So I'm thinking, I'm thinking potentially the supplier manager, because that or yeah, whatever the term is supply manager, supplier performance manager, because then they've got something to detail what the supply is actually doing. And if the supply doesn't perform to that standard or doesn't deliver in line with what's referenced in the sal, they've got a bit of paper to point to and say that you agreed to this and you signed off on it.

Speaker 1: 17:01

They've got a bit of paper to point to and say that you agreed to this and you signed off on it.

Speaker 1: 17:03

Yeah, I mean, that's kind of where I was going. I was, instead of specifically supply management, I was thinking project the project manager, um, but you can kind of say either, or really, um, and you're right, it's a piece of paper that is almost like a framework of guidance. It is saying everything that is going to be delivered. So, more, more often than not, I like to remind people when they're on on the kind of negotiation in a phone call and things like that is that we can say what we want on a call, but actually it's what's written down in the statement of work and in the contract. That is what we are going to be holding people to account for. So, you know, words might sound nice. They might tell you oh, you know, we're going to deliver continuous improvement and we're going to be fantastic and we'll bolt in some AI modules and we'll do this and we'll have it all delivered by Christmas. Well, actually, unless the deliverables in the statement of work explicitly say an AI module will be added before December 2026, then it's all just codswallop.

Speaker 2: 18:08

Interesting. You could also argue that about the main terms of the contract, though right, that's not specific to a sale.

Speaker 1: 18:17

Yeah, I think the slight differences in that argument is for the main terms and conditions. Most people in the business don't actually care. It's more procurement and legal working together to protect the business's interests. So a project manager doesn't give a shit about liabilities or things like that. I mean he might care about warranties when it goes wrong, but they're not thinking about that on day. One Probably don't even care about modern slavery compliance and stuff like that.

Speaker 2: 18:47

So question.

Speaker 1: 18:48

Yes.

Speaker 2: 18:50

Can you have multiple sales running at the same time? Of course you can.

Speaker 1: 18:57

Because each statement of work is covering a different project or a different set of deliverables and outcomes. You can't have two statement of works for exactly the same thing.

Speaker 2: 19:09

Could you, as a supplier have, say Dave is our resource medium-sized, Dave is our resource right. Could we have him on multiple statements of work at the same time?

Speaker 1: 19:26

that's a bit of a trick question. It depends on the content of the statement of work and what is demanding. But there is a such a thing, especially in high value and complex projects, where you call out key personnel. So you might say that Dave is a key personnel to our project and therefore he needs to be available x amount. However, if there is no definition or call out of a key person, as long as it's not affecting the delivery of a statement of work, dave can move freely between the projects, right?

Speaker 1: 20:00

otherwise you might as well just body shop and just buy Dave through whatever company you want and have him five days a week yeah, fair enough, so sounds inevitably useful when you are looking at projects, and I think you are looking at projects and I think they are better or more useful the bigger and more complex the projects are, because it helps untangle them. So a simple statement of work that's saying Dave will work three days a week doing whatever you tell him to, doesn't actually bring much value outside of well, as Dave turned up to work three times this week. However, if it's, dave needs to build a brand new server and then he needs to speak Japanese for a week, you know that we can tie that in and it becomes a lot more complicated, but you can. You can say that server needs to be done within two weeks time. You've then got a deadline.

Speaker 2: 20:56

You've got this, that and the other to help flesh it out yeah, and that's when you'd you'd put in well, that's when you'd rely on all the things that you put in at the start of the cell, like we said at the start of the app yeah, and you would say so dave's got to build the server.

Speaker 1: 21:17

But within that statement of work you would say this server needs x amount of storage and it needs this much processing power and all the other sort of technical stuff that I have no idea about. But you would set that out so that you can then say at the end of it yes, we've got that. Yes, we've got that. Hang on a second, dave. You missed this one bit. Can you just go and double check and rectify it? Yeah, and that kind of touches on. A second benefit of a statement of work is that you get well. A well-written statement of work is that you're getting clear accountability, ie whether it's you or the other party that is responsible for action, a bc, who's delivering it, and actually who's that, who's that fault or who's in the limelight if it doesn't get delivered correctly.

Speaker 2: 22:11

Yeah, and if you can write a sale well enough and you can define everything that you want to be done, you could fix price that couldn't you, and have price certainty.

Speaker 1: 22:23

Yeah, you absolutely can. The one thing about fixed pricing things is the other party would then want to build in a risk contingency. Ie there's hidden things that they didn't know about, so so typically a fixed price might appear more expensive up front as opposed to non-fixed um, but you'll never truly know until, obviously, you get it delivered and then find out if there's been shit loads of scope creep or not so slight, slightly good link to my next question how do you deal with a poorly written sale?

Speaker 2: 23:02

so so if a stakeholder came to me and it was just three lines of text saying you know, drive to drive to swindon, install or I don't know, be nice to people and drive back home yeah what? What could I say to my stakeholder to say this isn't good enough? How could I, you know? Going back to the john tf about psychology how could I motivate them to write a better cell?

Speaker 1: 23:29

I motivate them to write a better sell. I like to kind of describe the actual situation as to what they've written and then say what happens, if right. So this guy's just driven to Swindon, but he's in Swindon, he's by the welcome to Swindon sign and he's just said you look nice to the first person he's seen, got back in his car and driven home and your business contact will go. Well, hang on, a second Swindon. You know Swindon's a big place. It should have been our offices in Swindon. So, okay, fine, we'll build that in. Now they must attend a you know office block, one blah, blah in Swindon.

Speaker 1: 24:10

You then you then start to flesh it out a little bit more and a little bit more, and there's a few questions you can always ask to kind of prompt it. So does it matter if the person doing the work is onshore, or can we use, you know, offshore resource? So can we use someone from india who's going to be a third of the price, and they they might turn around and say, well, we can't use offshore in this contract, and actually they even have to have security clearance. Well, but there's something else you need to put in the statement of work, because that wasn't clear before. Ok, and when do you need this person to go to Swindon?

Speaker 2: 24:48

I need it to be in the next 12 hours.

Speaker 1: 24:53

There you go. So you need to define it right, because otherwise he might have turned up on the weekend and under your three sentences he's still eligible to get paid. Another important thing is with the deliverables. What are your acceptance criteria or rejection criteria? Okay, so just because it's a deliverable doesn't mean you have to pay for a poorly, poorly delivered deliverable. Right, it has to be to a specific standard. So which office is he turning up in it? And then you want to sign it off and say, yeah, he did turn up to my office and here's a picture of us together, because that was part of the deliverable criteria and I'm happy to sign it off so.

Speaker 2: 25:31

So, if so, one of the deliverables is was before we came and redlined. It was just be nice to someone. You could have said oh, you know, you smell nice. Whereas if we define it and we say you know, this is, this is how you are nice to someone, we want you to drop Riz on them, we want you to make them feel all warm and gooey inside, then you know they'll know to drop some Riz. Well, that's it.

Speaker 1: 26:06

And actually we can measure it because we can go and ask the people who he was nice to if they got all warm and fuzzy inside. So you've got a way of measuring it, but his definition of nice might be different to your definition of nice, yeah, so why are having this conversation? Why do you think statement of work is so important?

Speaker 2: 26:27

because they give you certainty about what you're going to work too important, because they give you certainty about what you're going to get delivered, or they give you at least a means of saying this is what we want delivered, and if you don't deliver it, then you're not going to get paid so it's giving you yeah, you're right.

Speaker 1: 26:46

So it's giving you some kind of legal protection around the engagement and it's setting out the expectations of what we actually want, because most of the time we know roughly what we want, but we don't actually know what we really really want, just to see what I mean.

Speaker 1: 27:04

So so if you are someone technical, they'll go and buy the most advanced computer in the world. If you are someone in procurement, they'll go and buy the most advanced computer in the world. If you are someone in procurement, they might go and buy the cheapest computer in the world. If you are someone in legal, they might go and buy one that's got specific software built in for analysing documents. So you need to understand your use case, and having that statement of work will effectively outline all of those different bits and it will help you. It will help you reflect on your own requirements, because, obviously, as they get more complicated and you see the price changing and the different impacts of all the things you're you're adding on, you might start to think well, instead of getting these three different types of pcs built for everybody, why don't we just get the same pc for everyone, and it would be a bit more cost effective, or it would be a bit easier on the support package.

Speaker 2: 27:55

Is that also where you start to get into? I don't know if this is more about the contract or if it's applicable to sales as well, but performance versus conformance specifications.

Speaker 1: 28:08

Yeah, it is a little bit or a lot. That's part of the analysis that shout out to the procurement cycle that you should be doing before you're getting to the stage of writing a statement of work, but ultimately your decision for performance or conformance will help help the build help the build of your statement of work document. So you are absolutely right. And the other thing that's really really beneficial from a statement of work is more for the supplier's perspective is that it helps them manage their resource. If they've got clear deliverables, timeframes and accountability, they can assign appropriate resource and manage it accordingly, as opposed to running around like headless chickens with kind of vague deliverables but that probably helps us as well, right, because if they've resourced it properly, then more likely to get a better and more consistent service that's it.

Speaker 1: 29:04

And also it helps us with budget. Um, yeah, it helps the supplier with resourcing, but for us we can budget for it better because we've got. We've got the milestone payments or the payment schedules. If it's step payment, we know what that is and we can.

Speaker 2: 29:18

Just we can plan accordingly from a financial perspective so my question that I asked at the start what's the difference between a sale and an order form?

Speaker 1: 29:37

For me, an order form is when you're buying something that is off the shelf. So statement of work is really important for projects or for something that has a bit of bespoke build or delivery within it and, more often than not, an element of professional services going into it as well. An order form should be relatively uniform. Ie I'm buying three packets of crisps and they're just standard packets of crisps and they're going to be delivered on. You know whenever they can be delivered yeah.

Speaker 2: 30:17

So you've got your, you've got your packets of crisps and you've got your maintenance fees to go along with that yeah and then you've got your um cleaning cost as well, so that that's kind of like an offering. When you buy three packets of crisps, you also have to pay for maintenance and cleaning.

Speaker 1: 30:38

Yeah, and that's assuming you're on standard maintenance with standard cleaning, that's fine. If it gets more complicated and you say, well, the cleaners have to be security cleared you know professionals who can work only after office hours then you're starting to deviate from the standards and you need to set out what your expectations are yeah, like, like, for example, those ones that work for flag fly farm, incorporated Fly Farm, incorporated Industries. Limited.

Speaker 1: 31:11

Private Company with their SAS tactical spider take out knowledge and that's where you get more bespoke and you would look for Statement of Works as opposed to just standard. Come and clean whenever you can and we'll pay you, and for me, that's it. Really, that's kind of what I wanted to cover with with regards to statement of work, so I didn't don't think we need to go into it too much more um, I have one, one question when would a statement of work not be applicable?

Speaker 2: 31:47

is there any sort of like I don't know if you're, if you're ordering something small or a certain product, maybe if you were going into a SIPs exam an example where you wouldn't want to use an example for a statement of work.

Speaker 1: 32:04

Well, if you're looking at order forms or you're buying a piece of hardware that is just off the shelf, yeah, think about if you're buying from amazon on the web store. You know you just place an order through them and when you click buy, that's generating an order form that goes over to the amazon, amazon side, and then their supplier will, or them themselves, will then fulfill that order based on the order form you've submitted. So, yeah, it's just more, more basic or less complex situations where you would look to use it, and the other thing is obviously it's time and effort and budget to get them drafted, agreed and monitored, managed. So do you want to be doing it for two days of someone coming in to clean your mirrors in your house? Probably not, you know. Yeah, you'll just say I'll give you x pound 50 an hour and as long as they're clean, I'll give you the money. Um, because you'd be wasting a lot of time putting into a statement of work yeah, yeah uh, yeah.

Speaker 1: 33:18

So that's me for statement of works. Hopefully you've learned something now. Hopefully listeners at home have learned something. Um, if not, there's always the next episode, I think I think what would be great is if, if you listening, you've got this far. If you could do us a cheeky little favour and give us a thumb up or a cheeky little five star, or a lovely little text. We do love a little text.

Speaker 2: 33:47

Or follow us on social or don't follow us on social. I don't follow us on social. I don't really care. To be honest, well, I do. No, that's a lie. I do care, I do care. It makes a lot of difference to my life. If you were to follow us on social media, that would make me feel great about myself, because I'm the type of person that needs to feed off external validation, like the number of followers. That's why I'm a procurement professional and a referee and a referee.

Speaker 1: 34:22

Yeah, yeah I was gonna just say what's the email address, but you kind of, you kind of just went down a rabbit hole so our social first is let's underscore talk, underscore procurement.

Speaker 2: 34:37

That's on instagram or zed. That's my prediction for elon musk buying instagram and renaming it oh yeah, I like that alternatively, we do have an email address which is two luke's, one sip, at gmailcom. That's the number two luke's plural, the number one cip at gmailcom yeah, buddy, that's my favorite and I think we kind of confused it earlier with our, with our website. Our website is letstalkprocurementcouk nice and simple simple links in the bio.

Speaker 1: 35:23

Thank you for joining us. Boys, girls, ladies, gentlemen, them, they, he, they're her, and we shall see you on the next one see you later see you later.