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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
In some cases, an SOW can also be used within an organization between different departments or teams. 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 but separate 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 can provide 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.
Here is an article about MSAs and another article about RFPs
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:
Introduction
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:
- Deliverables
- Objectives
- 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:
- Outcomes
- 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.
Tasks
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.
Deliverables
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:
- Quantity
- Color
- Size
Image via Unsplash by marvelous
Schedule
Create a list detailing when deliverables must be completed. Details to cover may include:
- The vendor you are selecting to achieve each goal
- Kickoff
- Period of performance
- Review stage
- Development
- Implementation
- Testing
- Close of project
Milestones
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.
Other Requirements
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
Payments
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.
Other Information
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
Closure
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
Jeremiah C.
Creative, results driven business & technology executive with 24 years of experience (15+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.
Faryal A.
Ms. Ayub is an attorney licensed to practice in Texas. Before moving to the US, she has a number of years of experience in contract review, analysis and drafting. Ms. Ayub is available to help you with your legal problems, as well as filling LLC and other business entity formation documents. To know more about her practice, please visit https://ayublawfirmpllc.com/.
Donya G.
I am a licensed and active NY and CT Contracts Attorney, with over 20 years of diverse legal and business experience. I specialize in reviewing, drafting and negotiating commercial agreements. My practice focuses on working with small business clients as well as clients from international brokerage firms on acquisitions, especially in the Ecommerce space; drafting, negotiating, reviewing and advising on business agreements; ; breach of contract issues, contract disputes and arbitration. I am licensed to practice in New York and Connecticut, and am a FINRA and NCDS Arbitrator. My experience includes serving as General Counsel to small businesses. This entails reviewing, updating and drafting contracts such as employments agreements, asset purchase agreements, master services agreements, operating agreements and a variety of business and commercial contracts. Additionally, I assist clients with business strategies, contract disputes and arbitration. My diverse experience allows me to give my clients a well-rounded approach to the issues they face. I have been at top AML law firms; a Vice President at an Investment Bank, a Civil Court Arbitrator presiding over cases in contract law, commercial law, a Hearing Officer, presiding over cases and rendering written decisions, and a Judicial Clerk to a Civil Court Judge. It would be a privilege to assist you and your business with my services.
September 5, 2023
Annie G.
Attorney licensed and in good standing in the State of Ohio. Worked in the corporate division of a large law firm (Squire, Sanders & Dempsey), and as inside counsel for a technology company (America Online). Lived in 6 different states in a 12 year period. Took some time off of legal work to raise 4 kids. During that time kept active as a volunteer - Houston Volunteer Lawyers Program, Legislative chair of school board for 3 years, President of school PTA, PADS and local food pantry. Currently working as a Consultant for a health care company (Fast Pace Health). Looking to get back to transaction legal work. Can work remotely and travel to Ohio when necessary. Thank you.
September 5, 2023
Holly W.
I am a solo legal practitioner in Tucson, Arizona who focuses on Estate Planning, Probate, Business Formation and Mediation. I have expertise and experience in not only law but as a Registered Nurse and teacher. I use this background and knowledge to provide compassionate and individualized service for my clients.
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Andre T.
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Christopher L.
I have worked in banking, financial technology and technology as a legal and compliance executive who negotiates and drafts contracts, ensures products and services comply with applicable regulations, implements policies and procedures, oversees litigation, and manages corporate governance programs.
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