A service level agreement (SLA) is a contractual agreement that sets measurable quality and performance standards for a service and so forms the basis for evaluating the provider's performance objectively.
Typical contents. Scope of service, metrics such as availability, response time and resolution time, targets, measurement method and reporting cadence, consequences of deviation (for example service credits) and the escalation path.
Where SLAs fit. Recurring, standardisable services such as IT support, operations, maintenance or cleaning. For consulting and projects, acceptance criteria and milestones in the statement of work are usually the better instrument. An SLA with artificial metrics measures the wrong thing there.
Where it sits. The SLA defines the target. Measurement and monitoring show whether it is met. The statement of work describes the scope.
Common mistakes. Metrics the provider cannot influence. Targets with no defined measurement method. No agreed way of handling deviations.