What is a Service Level Agreement in Project Management?

What is a Service Level Agreement in Project Management?

A project management service level agreement (SLA) is an agreement with vendors or contractors whose work is crucial to the project being delivered or completed on time. For example, if you are planning an event and require staging, lighting, and audio equipment to be rented in order to host the attendees, you would require a project SLA that dictates the level of service expected from that vendor, as well as the service level the vendor needs to maintain in order for the event to proceed without delay. 

A project management services agreement would typically be included in a contract with a vendor or service provider and would outline the steps the customer would take if the agreed level of service was not upheld. However, a service level agreement can also be helpful to an organization in a more informal capacity. For example, the marketing department might collaborate on an SLA with the other teams it works closely with to outline the service they intend to provide, means of reporting issues, and timelines for service.

Service level agreement basics

Your project service agreement should cover two basic areas: services and management. The service section should include the list of services provided and excluded, the duties and responsibilities of each party, the expected response and resolution time, as well as escalation procedures and service credits if the vendor or provider does not meet the agreed level of service. The management section of the SLA for project management should include methods and standards of measurement of the service, the reporting and conflict resolution processes, as well as an indemnification clause. 

A project service level agreement is a helpful tool that project management teams can and should use to ensure that a timeline isn’t delayed by associated vendors or contractors and that the project management process is streamlined from the start.

Project service agreements in project management offer several key benefits, both to managers and vendors or contractors. They minimize confusion between parties, define the acceptable and desired quality of services, and pre-negotiate penalties. 

Issue resolution in service level agreements

While penalties are indeed a typical part of service level agreements for project management, it’s important to also include ways to rectify service issues as quickly and seamlessly as possible. After all, penalties may incentivize vendors to deliver on time. Resolving service issues will likely help you reach your desired deadline and outcome more quickly. 

Because a project SLA also outlines the means for reporting issues with services or the management process, it can help project managers get a sense of a particular vendor’s successes or failures. This can assist with future planning, as the reporting outcomes outlined in a project management service level agreement will allow management to view which vendors are best suited to a particular project.