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What Is a Statement of Work?
A statement of work, or SOW, seeks to define liabilities, responsibilities, and work agreements between two parties, usually between a client and parties such as:
- An agency
- A contractor
- A service provider
You will usually use a statement of work when you can describe work according to specific instructions or directions. Likewise, you should have tasks, conditions, and requirements that both parties can easily understand when creating an SOW. All in all, the statement of work defines what is — and what is not — included within a project.
Why Should You Use a Statement of Work?
The SOW should describe the following aspects of a specific project:
- Work requirements
- Performance expectations
- Design expectations
Businesses often use SOWs when working on a project with collaborators or contractors from outside the organization. You can also use an SOW to inform contractors or vendors bidding on your project.
Creating a statement of work has several additional benefits for project managers, including:
- Setting appropriate expectations: A statement of work allows you to manage and document expectations for your project. Statement of work documents go beyond what is usually included in cost estimates and/or project plans to add a layer of detail about what the project should accomplish and deliver and what the project will not cover. An SOW gives you the chance to flesh out details about what you will deliver.
- Refining the approach to the project: While you create the SOW, you will have the opportunity to refine your approach. For example, you may realize you need to adjust your cost estimate and/or timeline as you think of details you will need to add to the document.
- Stating clear deliverables: The level of detail included in a statement of work gives assurances to a client about what will be delivered.
- Clarifying in scope vs. out of scope: The SOW ensures there is a shared understanding of the project's goals and objectives. Overall, the SOW becomes the frame of reference for what is considered "in scope" or "out of scope" for a given project.
You may also use a statement of work in conjunction with related documents such as a master services agreement (MSA) and/or request for proposal (RFP). A well-written statement of work outlines deliverables and tasks for a contractor or vendor, so it provides a good foundation for these kinds of documents. That said, you should only write your SOW after you have agreed-upon guidelines and terms of the project. This will help prevent conflicts when negotiating a contract later on.
What Should a Statement of Work Include?
While the format of a statement of work will vary depending on the industry of your business, successful SOWs follow some key guidelines.
You should ensure your SOW includes precise language relevant to the field of your business to avoid misinterpretations of requirements and terms. Although the SOW is a detailed document, it is only a general description of work and should reference supplementary documentation to specify particular tasks further.
A good statement of work will define the scope of a project as well as key performance indicators, or KPIs, of the agreement. You can then use these indicators to assess whether the conditions of the SOW are met.
Common sections found in a statement of work include:
Start by explaining the work being done as well as who will be involved in the project. You can then lead into additional documentation such as a standing offer to set prices for services of products purchased and a formal contract that goes into additional detail beyond the information included in your SOW.
Purpose of the Project
Explain why you are initiating the project and the purpose of completing the project. You can do this by starting the section with a purpose statement followed by thoughtful answers to:
- Return on investment
Scope of Work
Note the work that will need to be done to complete the project in this section. Include details such as the software and/or hardware needed and the process used to complete the work, including:
- Time involved
- General steps to achieve the outcomes
Location of Work
The team working on the project may work at a central facility. Alternately, you may need site-specific work done, or team members could work remotely. Detail this information as well as where any necessary software and/or equipment will be located.
Break down the general steps you have outlined already in the scope of work section into more detailed tasks. Make sure this section is as specific as possible, including any action that would be required to produce the project's deliverables. You might want to break tasks down into phases or milestones as well.
List all deliverables of your project, explaining what is due as well as when each deliverable is due. Include specific details that are relevant to your type of project, such as:
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Create a list detailing when deliverables must be completed. Details to cover may include:
- The vendor you are selecting to achieve each goal
- Period of performance
- Review stage
- Close of project
This section should define the amount of time scheduled in order to complete your project, including the project's start date and proposed end date. Make sure to include information about billable hours per week and/or month, as well as any other details that relate to your project's schedule. Specificity is key here. For instance, you should note information about the maximum amount of billable hours for contracts or vendors.
Testing and Standards
List any industry standards the project must adhere to. You should also include information about testing of your product if applicable, listing:
- Who is involved in the testing process
- Equipment needed for testing
- Other resources
Definition of Success
Your statement of work should note what the stakeholder and/or sponsor will consider the successful completion of your project.
If your project includes any other requirements, you should list those as well. Examples include:
- Other equipment needed to complete your project
- If team members must hold any required degrees and/or certifications
- Travel requirements
You can include payments relevant to your project if you have already created a budget. You should also state how payment will be delivered, for instance, upfront, after completion, or over the course of the project's duration. Some projects include payments after each milestone is completed, while others have payments on a fixed schedule.
You may have other important information to include that does not fit into the above categories. You can list them in this section. Here is some additional information you might list:
- Travel pay
- Security issues
- Software and/or hardware restrictions
- Post-project support
Conclude your statement of work with information about how deliverables will be accepted as well as who will be in charge of delivering, reviewing, and signing off on deliverables. Your conclusion should also include final administration duties, such as ensuring everything is signed, closed, and archived.
When creating a document like a statement of work, it's important to work with an experienced lawyer who can help ensure you use specific language to appropriately describe your project in a way that all parties understand.
Meet some of our Statement of Work Lawyers
Terry Brennan is an experienced corporate, intellectual property and emerging company transactions attorney who has been a partner at two national Wall Street law firms and a trusted corporate counsel. He focuses on providing practical, cost-efficient and creative legal advice to entrepreneurs, established enterprises and investors for business, corporate finance, intellectual property and technology transactions. As a partner at prominent law firms, Terry's work centered around financing, mergers and acquisitions, joint ventures, securities transactions, outsourcing and structuring of business entities to protect, license, finance and commercialize technology, manufacturing, digital media, intellectual property, entertainment and financial assets. As the General Counsel of IBAX Healthcare Systems, Terry was responsible for all legal and related business matters including health information systems licensing agreements, merger and acquisitions, product development and regulatory issues, contract administration, and litigation. Terry is a graduate of the Georgetown University Law Center, where he was an Editor of the law review. He is active in a number of economic development, entrepreneurial accelerators, veterans and civic organizations in Florida and New York.
I'm a Washington-licensed lawyer specializing in trademark practice and with an extensive trademark education and academic background. I currently work with domestic and international businesses seeking trademark protection in the U.S. by conducting trademark searches, providing legal advice, submitting USPTO applications, and preparing responses to office actions. I'm passionate about trademark law and always looking forward to helping small and medium businesses promote their value by having a registered federal trademark. If you have questions or concerns about trademark/copyright/IP licensing and require legal advice, feel free to contact me so we can have a first chat.
Mr. Pomeranz serves as the principal of Pomeranz Law PLLC, a boutique law firm representing clients across myriad industries and verticals. Before founding the firm, Mr. Pomeranz served as Senior Vice President, Legal & Compliance and General Counsel of Mortgage Connect, LP in 2017. Mr. Pomeranz also served as Counsel, Transactions for Altisource Portfolio Solutions S.A. (NASDAQ: ASPS) beginning in 2013, and was based in the company’s C-Suite in Luxembourg City, Luxembourg. Mr. Pomeranz began his career with Mainline Information Systems, Inc. as an in-house attorney.
I have 10 years experience providing general counsel, in the form practical and timely legal advice, under strict deadlines to individuals and various business unit stakeholders, balancing commercial needs with legal concerns at large corporations and start-ups. I am skilled at reviewing, analyzing, drafting and negotiating commercial and government contracts globally for the procurement and sale of services and goods. I also help clients ensure compliance with regulations (including data privacy), laws and contractual obligations and protect, enforce and exploit intellectual property rights and support in the development of IP strategy. I am a Certified Information Privacy Professional/United States (CIPP/US) licensed by the IAPP - International Association of Privacy Professionals.
Over 15 year experience drafting, reviewing and negotiating contracts both as in-house counsel and in law firms, including my own law firm.
Rinky S. Parwani began her career practicing law in Beverly Hills, California handling high profile complex litigation and entertainment law matters. Later, her practice turned transactional to Lake Tahoe, California with a focus on business startups, trademarks, real estate resort development and government law. After leaving California, she also served as in-house counsel for a major lending corporation headquartered in Des Moines, Iowa as well as a Senior Vice President of Compliance for a fortune 500 mortgage operation in Dallas, Texas prior to opening Parwani Law, P.A. in Tampa, Florida. She has represented various sophisticated individual, government and corporate clients and counseled in a variety of litigation and corporate matters throughout her career. Ms. Parwani also has prior experience with state and federal consumer lending laws for unsecured credit cards, revolving credit, secured loans, retail credit, sales finance and mortgage loans. She also has served as a special magistrate and legal counsel for numerous Florida County Value Adjustment Boards. Her practice varies significantly from unique federal and state litigation cases to transactional matters. Born and raised in Des Moines, Iowa, Ms. Parwani worked in private accounting for several years prior to law school. Her background includes a Certified Public Accountant (CPA) certificate from Iowa (currently the license is inactive) and a Certified Management Accountant (CMA) designation (currently the designation is inactive). Ms. Parwani or the firm is currently a member of the following organizations: Hillsborough County Bar Association, American Bar Association, Tampa Bay Bankruptcy Bar Association, National Association of Consumer Bankruptcy Attorneys, and the American Immigration Lawyers Association. She is a Fellow of the American Bar Association. Ms. Parwani is a frequent volunteer for Fox Channel 13 Tampa Bay Ask-A-Lawyer. She has published an article entitled "Advising Your Client in Foreclosure" in the Stetson Law Review, Volume 41, No. 3, Spring 2012 Foreclosure Symposium Edition. She is a frequent continuing legal education speaker and has also taught bankruptcy seminars for the American Bar Association and Amstar Litigation. She was commissioned by the Governor of Kentucky as a Kentucky Colonel. In addition, she teaches Immigration Law, Bankruptcy Law and Legal Research and Writing as an adjunct faculty instructor at the Hillsborough Community College Ybor campus in the paralegal studies program.
Possesses extensive experience in the areas of civil and transactional law, as well as commercial litigation and have been in practice since 1998. I addition I have done numerous blue sky and SEC exempt stock sales, mergers, conversions from corporations to limited liability company, and asset purchases. I have worked in commercial litigation, corporate and transactional law, intellectual property and bankruptcy. In recent years I have expanded my practice to include family law, personal injury, medical malpractice, and wrongful death.