
In recent months, there has been an increasing call for audits of consultants working on a Statement of Work (SOW) basis. This shift reflects growing concerns among organisations about managing risks, ensuring compliance, and maximising the value derived from consultancy engagements.
A Statement of Work is a formal document that outlines the scope, deliverables, timelines, and costs associated with a project, particularly in consulting or contractor arrangements. While SOW-based consulting engagements are intended to provide clear guidelines and measurable outcomes, the absence of robust oversight and auditing mechanisms can lead to several challenges for organisations.
Why Are Clients Requesting Audits?
- Cost Control and Budget Management
Organisations often face rising costs due to scope creep, overbilling, or misallocation of resources. Without regular audits, companies may overpay for services that were either not delivered as specified or fall short of the expected quality. Audits help identify any discrepancies between the agreed terms and the actual work delivered, ensuring that costs are kept under control. - Compliance and Risk Management
Regulations and compliance requirements have become increasingly stringent across industries, particularly within large corporations in sectors like facilities management and construction. Ensuring that consultants adhere to all relevant laws and guidelines is crucial. Audits verify that consultants are not only following contractual terms but also meeting the compliance standards required by the organisation, industry, and law. - Quality Assurance and Performance Measurement
Audits provide a critical evaluation of the work delivered against the objectives and key performance indicators (KPIs) outlined in the SOW. This ensures that consultants are delivering the expected value and maintaining the required quality of work. - Transparency and Accountability
Audits foster a culture of transparency and accountability in consultancy engagements. By systematically reviewing and verifying the work performed, organisations can maintain trust with their consultants while holding them accountable for their performance. This is especially important in long-term or high-value projects, where the stakes are higher and the impact of discrepancies can be significant. - Fraud Prevention
There have been instances where consultants have exploited a lack of oversight to inflate hours, overcharge for services, or claim expenses not part of the original SOW. Audits play a critical role in detecting and preventing fraudulent practices, safeguarding an organisation’s resources, and maintaining the integrity of the consultancy relationship. - Optimisation of Resources
Audits can help organisations identify inefficiencies in the way consultants are utilised, providing insights into whether they are making the best use of external talent. This can lead to better resource allocation, improved project management, and more strategic use of consultants.
A Growing Trend
Organisations are increasingly incorporating audits into their governance frameworks to ensure consulting engagements deliver on their promises. Companies are also investing in audit tools and technologies to streamline the process, making audits more effective and less burdensome. The challenge for Procurement and Transformation professionals is how to fit this into their already full agendas.- Financial – How much is being spent on your extended workforce, where is it being spent, and by whom?
- Technology & Processes – What extended workforce spend is captured within your existing technology platforms and processes, and what is not?
- Risk & Compliance – Understanding your entire extended workforce population helps identify where risks may exist, from worker compliance to legislative exposure such as incorrect IR35 status determinations.
- Environmental, Social & Governance (ESG) – With many clients now having board-driven targets and policies relating to ESG, are opportunities being missed or excluded due to a lack of transparency regarding the extended workforce?
- Change Readiness – How prepared is your organisation to adopt, adapt, and embrace different ways of working with the extended workforce?