If you’re in project management, you must be no stranger to the Statement of Work (SOW).
So much so that you probably know that when writing a statement of work, there’s rarely room for error. Because SOW sets the stage for future cooperation and is part of a legally binding agreement, even a tiny mistake or misunderstanding can ricochet.
On the bright side, recording all the ins and outs of the project in advance, it can eventually save you from a world of trouble. That’s why you want your statement of work to be comprehensive and well-polished before anyone signs on the dotted line. We’ve made this guide to help you achieve exactly that, so let’s get started:
What Is a Statement of Work?
A statement of work, also known as “scope of work” is a contractual document that outlines what goes into the project in as much detail as possible.
A Guide to the Project Management Body of Knowledge (PMBOK) defines a statement of work as “a narrative description of products or services to be supplied under contract.”
The Digital Project Manager refers to it as “an agreement between a client and an agency, contractor, or service provider that defines what’s included within a project, and what’s not.”
In project management, SOW always covers the deal between two parties - a project-based company and the client. It’s important to note that a statement of work is usually an appendix A to the terms and conditions of the contract and should be taken seriously.
You'll find a template for the statement of work in Forecast on the project's Scoping page. Here's a sneak peek:
What a Statement of Work Is NOT
The term ‘statement of work’ is sometimes misinterpreted, largely because of a myriad of project-related documents out there in the business development space. Here are a few cases to remember and differentiate it from other ones.
Statement of Work vs. Project Charter
These two documents are often confused because both are signed during the kickoff phase of the project. SOW, however, is only a part of the project charter development process. Additionally, SOW does not authorize a project manager to spend a project budget and project resources, while project charter does. In contrast to a project charter, SOW does not initiate the project.
Statement of Work vs. Contract
The statement of work is not a contract by itself, it’s an integral part of the contract that, in turn, covers all the nitty-gritty details of the cooperation and the project. While a statement of work can be sent to the client for approval and is flexible to change and negotiable, a contract is the final step in the negotiation process that binds both parties together.
Statement of Work vs. Scope of Work
Both terms are often used interchangeably, but depending on the context, there’s yet a slight difference between the two. The statement of work is a high-level document that defines a project by presenting its mission, deliverables, and success criteria. A scope of work (referring to project scope) is only an element used in the statement of work, illustrating milestones and tasks for a project team to accomplish and meet project objectives.
Who Writes a Statement of Work
Whenever a company takes up a new project, someone is tasked with writing a SOW. Who? Depending on the kind of the project - internal or external, different roles can be assigned to create a statement of work.
If an internal project is planned, the paperwork is often handed to the project management office, project stakeholders, or user groups.
If you’re delivering services externally, this task can be allocated to project managers, project sponsors, and even clients or independent third parties.
Most of the time, SOW is written when projects are to be delivered for external clients with project managers doing the necessary administrative duties.
What Does a Statement of Work Document Do?
The purpose of the statement of work is to serve as a means of understanding between you and your client.
Therefore, it defines the project, including the mission, the scope, basic requirements, a thorough outline of tasks to be completed, start and end dates, critical resources needed, milestones and timeline, terms, and most importantly, a signature from both parties.
The agency, the executing team, and the client should all know what's precisely agreed upon.
Why Use a Statement of Work
As a fundamental part of the contract, it may seem that the only benefit of SOW is to seal the agreement. However, the statement of work is much more than that! It facilitates the discussion, helping you get the needed overview and understand what you have to offer to the client.
Having a clean statement of work from the beginning, you can also get through the approval process faster. Yet another benefit, a good statement of work helps to mitigate a lot of errors. And that’s without even mentioning that with SOW you and your client are on the same page.
Creating a good statement of work should always be in the interest of both the professional services business and client. For service providers, it helps to avoid the risk of potential scope creep, while for the client, it provides comfort in knowing what's going to be handed over to them at the end, not to mention the price of completing the project.
SOW is also a go-to document for the team to make day-to-day decisions. It prevents the team from getting into many traps when the project is in execution, such as disputes over project requirements, “selective amnesia,” and rework, to name a few.
When Start Writing a Statement of Work
So when is the best time to start making a statement of work? Ideally, the first idea of SOW should be nurtured when preparing the elevator pitch and exploring your client’s business needs. It’s time to draft an outline after you had the discovery call or meeting with the prospect and increase the level of details as you go.
To create a complete project statement of work, you’ll need to ask the right questions from the beginning. Think about the problem from the point of view of the client. How does the project address their problem? What is it worth to them? What do they get in return for spending their money? Is what you’re offering unique? Engaging the client in a robust discussion before writing a SOW is critical to tread the path for success.
The Key Elements of a SOW
Looking through hundreds of SOW documents and samples, we’ve made a list of these key elements that go into the structure of every successful project statement of work and make it complete:
- Project objectives. Most of the time, this section is a purpose statement that answers a set of very specific, big questions. What is the purpose and mission of the project? Why have you initiated it in the first place? How will both parties benefit from the project?
- Scope of work. This is a designated section for putting down what work needs to be completed in the project, how it will be executed, and how much time the project will take. General steps and process details should all be specified here.
- Place & time of execution. Most statement of work documents use this section to identify where the project will take place. It becomes especially relevant in global settings. For example, when you and your client are in different countries and time zones.
- Milestones. If the project is long and complex, it’s often broken down into milestones - interim events for measuring progress. Specifying duration and billable hours for each milestone will help you predict the end date of the project.
- Tasks. Tasks are clear-cut activities to achieve milestones and general steps outlined in the scope of work. This is where you should be as descriptive as possible so as not to miss out on any crucial steps.
- Schedule. A key element in the SOW, a schedule is a project timeline including milestones, tasks, and resources throughout the project’s lifecycle. Depending on the type of engagement you’re in, the schedule can be left until a later point. For example, if retainer agreements are used and you’re delivering services on an on-going basis, there will be less paperwork and, consequently, the schedule could be excluded.
- Deliverables. A complete SOW will quantify products or services that must be provided upon the completion of a project. Illustrate them and indicate what is due and when it is due.
- Testing. Testing is relevant in a software development statement of work, for instance. Dedicate a section to it if and how the deliverables will be evaluated.
- Expected outcomes. This is yours and your client’s definition of how success will look like when the project is delivered.
- Special terms, conditions, and requirements. Here you’ll specify payment terms and other parts of the project that don’t fit in the above categories.
- Closure. This will determine how the deliverables will be accepted, and who will deliver, review and sign off on the deliverables. Also, it deals with the final admin duties, making sure everything is signed and closed and archived.
How to Write a Good Statement of Work
Without a doubt, writing a good statement of work requires training. It often comes with the challenge of 1) not knowing how to accurately plan a project, 2) where to start, and 3) how to visualize your plan and deliverables. These are the steps you can take to create a simple, but well-defined statement of work.