Master Service Agreement

How to Negotiate SOW in MSA Document?

Do you want to know why is it important to document SOW with your MSA document? Are you interested in creating SOW? Read this article to learn more about this topic.

A master service agreement provides legal security between service providers and clients. An MSA document is prepared to avoid the legal disputes that may arise in the future. But Statement of Work or SOW does not bind the parties legally. Instead of considering a legal document, SOW is considered a business document. In simple words, SOW is a document that includes the details like pricing, quantity, and other activities related to the project. It is nothing but a description of work so that it can be carried out without flaws. Many consider SOW as an accompaniment to the MSA document.

How to Negotiate SOW in MSA Document 2022?

In the MSA Document, Who Will Provide the Services?

Before negotiating SOW in the MSA document, the service providers should be mentioned clearly. Sometimes the service providers, including Software Developers and IT Service Providers, may engage some third parties.

Therefore it is also important to know the involvement of a third party. It should be clear who will carry out the responsibility. Even if there is a third-party involvement, the responsibility of the work will be imposed upon the service providers only. The SOW should always include that the sole responsibility of the work is on the service providers. 

Apart from that, an appointment of a Project Manager helps both parties to build effective communication. The SOW should also include the purpose of a Project Manager. His purpose is to monitor the acceptance and delivery of the project.

What Type of Services Will Be Provided?

The SOW should also include the type of services specifically. It will remove the ambiguity regarding the services provided by the service providers. The legal team will verify the section in the SOW that contains the details of the services. The purpose of including this section is to memorise the services which have been proposed to be procured. 

This section must make it clear to the parties in case of any project development discrepancy. This section in SOW also determines the responsibility in carrying out the specific tasks. When the SOW includes the services, it also helps determine the responsibility. Because it mentions, who will be responsible for any discrepancies in providing the services as different technical experts are required for carrying out different tasks? 

For example, for Software Development, the service provider is responsible for configuration, and for the Cloud offerings, the service provider will be responsible for the information supply.

What Is the Time Limit for Providing Services?

The SOW in the MSA document should contain the time limit of a project. It should mention when the project will be started and completed. If the service providers fail to maintain the time limit, there should be a provision to give a discount on the payment.

A specific number of hours should be mentioned for a project. But it should be determined based on the type of project. If the project is related to time, then a number of hours should be mentioned. But, if the project is fee-based, a specific phase should be mentioned. If the phase passes, then the fee should be reduced. The contract should be terminated if the Service Providers cannot meet the time limit several times.

Where Will, the Services, Take Place?

The parties should include required measures related to the location of the services because it is always not possible that the service will take place in the place of the business location itself. There will be no problem if the project is carried out within the jurisdiction of the business location.

If the project has been carried out outside the jurisdiction of the business location, the law of that location will be applicable. Therefore, the service provider should include a clause stating they will comply with the local jurisdiction’s laws. Including a clause compelling the service providers to abide by the jurisdiction’s laws where parties entered into the contract is also necessary.

Why Is the Service Being Performed?

The scope of the work should be mentioned in the SOW. It will help to determine what type of services are performed and the type of work. Apart from services and work, particulars of the items to be delivered should also be included. There will be no ambiguity when every work detail is indicated in the SOW. It can also be considered as the checklist of the project.

How Will the Services Be Delivered?

The delivery of the project is the final stage. In the SOW of the MSA document, you should include by which process the service will be delivered and how the payment will be received. It should mention by which method the payment will be made as SOW normally follows two methods of project allotment. It is important to determine whether the payment will be made based on hours or in instalments of the fixed price. Some prefer the monthly payment, and others prefer the payment after the completion of the project. However, it depends upon the size of the project as well. 

The SOW should also contain a scope to make any changes regarding the work’s timing and mode of payment. There is no need to make a separate document for minor changes. But for major changes, you may require to create a separate document.

Importance of SOW in MSA Document

An SOW plays a crucial role in completing a project successfully. It ensures the success of your project due to its following advantages:

  • Build Trust

An SOW in an MSA document helps build trust between the parties since the event. The smallest thing is considered while documenting it.

  • Help to Maintain Professionalism

It helps you build professionalism by documenting SOW as it improves the quality of the project by following whatever is mentioned on the SOW.

  • Save Your Time

A well-documented SOW help to save ample time. Because it guides you to complete a project successfully.

  • Add Uniqueness

An SOW adds uniqueness to your business by setting you apart from your competitors in the market.

Conclusion

Including every minute detail of the project in the SOW is recommended. It increases a project’s success by keeping it on the right track. The project manager can monitor the project by following the details of the SOW. With the help of SOW, parties can know what they will receive in the contract. To document a flawless SOW, the parties should approach a legal professional before documenting it.

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