Project Definition

The professional services industry, by nature, is very client-focused. PS firms grow their business by providing a service (i.e. legal services, accounting services, etc.) or carrying out a campaign or project on behalf of a client or customer (i.e. marketing or IT consultancy).

Therefore, it is necessary to prime the process for success by defining the scope, deliverables, and other terms. This creates transparency and understanding between the PS manager and the client. 

All of this can be laid out in a document called a professional services agreement (PSA).

What is a PSA agreement?

Each client-vendor relationship is unique, and so a professional services agreement doesn’t look the same for every contractor or consulting team. Adapting your PSA to each client’s specific needs is a good starting point for a project.

A client may also have additional internal requirements about information that needs to be included in a project services agreement. For instance, if the project is particularly sensitive, there may be a section on confidentiality.

These agreements and contracts can be modified to create a bespoke overview suited to the nature of the project and the industry. 

Sections in a PSA can include: 

• Scope of work
• Deliverables 
• Work schedule 
• Compensation
• Confidentiality 

Let’s say, for example, that your company hires an app development firm to create a mobile app to provide educational resources for a professional certification.

For this particular project, sections on deliverables and work schedules may outline a timeline where the team is required to create content such as test questions, prototypes, and mockups for how the app will look and function, as well as beta testing to ensure as few bugs are present upon launch.

In addition to phases of the project, a PSA would also include information like who the project manager is as well as change order. A change order section outlines what will happen if the project scope changes. For instance, it may stipulate that any requests to expand the scope of a project be put in writing and must be agreed upon by both parties. 

Details about a project’s budget and how your firm will be paid should also be included in the project services agreement.

What are the different types of professional services contracts?

As previously mentioned, a professional services contract is not a “one size fits all” document that looks exactly the same for every project or business. 

These contracts can differ depending on the project type, client fee and billing structure, length of project, and nature of the services being provided.

A few of the different types of professional services contracts can include a fixed price contract structure, time and material contract structure, not to exceed contract structure, managed services contract services, retainer-based contract structure, and recurring service contract service structure.

Fixed-price structure vs. retainer-based contract structure

Two of the most popular pricing structures are the fixed price contract and retainer-based contract.

In a fixed-price contract structure, there is an agreed-upon set of services or deliverables that the PS firm will provide for a fixed fee. This may not be ideal for some industries because it usually won’t take into account the fluctuating costs of materials. If your business doesn’t require reliance on vendor costs, you may find value in a fixed-price structure.

A retainer-based contract represents a different type of agreement where an organization or individual pays a one-off or ongoing fee to cover the cost of the services to be rendered. Retainer payments are separate to billable work that may be charged, such as trial work in the case of a lawyer. This type of contract structure is common in law and consultancy services. 

Writing a Project Scope Statement

What is a project scope statement?

A project scope statement seeks to identify the key aspects of a project in an easy to read table document. At the very least, this document will include:

• Sponsors/stakeholders
• Scope
• Objectives
• Requirements and deliverables
• Constraints and assumptions

For those who have never created a project scope statement before, there are many examples and templates available online.

This is all-important because it adds to the breadth of documentation and information that teams rely on for effective and comprehensive project management.