SOW compliance strategies for cost avoidance

Our financial services client was facing challenges with misclassified SOW projects.

Initially, we discovered that over half of their 90 SOW projects in the UK and Ireland were misclassified. The customer risked regional compliance issues and financial consequences. As an experienced procurement service provider, we proposed a comprehensive solution that resulted in £3M in cost savings.

Since then, over 300 SOWs have been processed through the programme, generating average annual savings of £6M.

The SOWs lacked specific parameters such as time and materials metrics and clearly defined deliverables—resulting in inconsistent reporting, compliance gaps, and potential co-employment risks. To address this, we introduced a structured process that enabled accountability and reinforced SOW compliance across the programme, including:

Evaluation: Pontoon conducted a comprehensive audit of all existing SOWs to identify misclassified spend and structural inconsistencies. In a major effort, the team held 1:1 sessions with nearly 80 hiring managers to evaluate individual scopes, perform gap analyses, and determine whether each agreement reflected staff augmentation or a true SOW. Each contract was also assessed for compliance and co-employment risk, enabling a full risk profile across the programme.

Education and alignment: Recognising a widespread knowledge gap around SOW agreements, Pontoon launched a targeted roadshow with ten training sessions for 120 hiring managers. These sessions covered SOW fundamentals, deliverable-based contracting, and vendor accountability. The initiative resulted in strong stakeholder engagement and full executive leadership buy-in, with hiring managers gaining confidence in managing SOWs effectively.

Vendor partnership: Pontoon’s procurement team worked closely with vendors to transition away from staff augmentation. After an all-hands education call, we partnered individually with each vendor to evaluate existing SOWs, re-engineer contracts, and align on a deliverables-based model. This shift enabled fixed-price SOWs with measurable outputs and improved benchmarking through VMS data, enhancing vendor performance transparency.

Re-design: To address the prevalence of Time & Materials SOWs lacking accountability, Pontoon introduced a standardised framework and output-tracking method. A universal SOW template and evaluation checklist empowered hiring managers to assess vendor proposals confidently. Regular reporting and status updates between vendors, managers, and Pontoon ensured ongoing visibility and milestone tracking.

Change management: Pontoon implemented a robust change management system that centralised all SOW change requests. Previously handled informally via email, changes are now tracked through a structured template, approved by managers, and executed in the VMS. This streamlined governance enables faster approvals, accurate cost tracking, and improved visibility into programme-wide SOW data. It also supports competitive vendor selection through structured tendering.
 

The standardisation of SOW templates for compliance, clear project roadmaps, and an emphasis on tendering new projects resulted in over £3M of initial cost savings for our client.

Since the programme’s inception in 2018, over 300 SOWs have been processed, generating average annual savings of £6M.

Vendors are now accountable for resources and project deliverables, enhancing vendor consultant engagement and minimising tenure liability.

Trust between stakeholders and Pontoon is at an all-time high, showcasing the successful revamp of the services procurement programme.