Need to write a statement of work for your project? In this guide, we uncover what exactly a statement of work is, the key elements that you should include, and we walk you through the process of writing one.
What is a statement of work (SOW)?
A statement of work (SOW) is a legally binding, formal document that outlines all key project details – from scope to deliverables, timelines and payment terms. It serves as a foundational agreement between a client and a service provider. It's one of the first documents you should create for any new project.
What is the purpose of a statement of work?
The purpose of a statement of work is to ensure everyone involved in your project is on the same page from the onset. The project requirements and expectations are clearly defined, and all stakeholders have a detailed framework to follow and deliver on.
Key elements of a statement of work (SOW)
The key elements of a statement of work typically include:
Objectives and goals for the project
The objectives and goals define the project's purpose and intended outcomes. These should be specific and measurable, and you should clearly outline the expectations for measuring the project's overall success.
Project scope
The project scope details the work you and your team will do within your project. It specifies the inclusions and, in some cases, the exclusions. You should include specific tasks and deliverables needed to achieve the objectives and goals and ensure all stakeholders know exactly what work you will complete.
Work location
Defining the work location is crucial for logistics planning and ensuring all stakeholders understand where your project will take place. This detail could include a physical location or locations, any remote work guidelines, and on-site or travel requirements.
Project timeline
The project timeline provides a broad view of your overall project timing, including start and end dates and deadlines for key deliverables. The timeline gives stakeholders upfront clarity on the duration of your project and acts as a roadmap for keeping your project on track.
Project tasks and milestones
Project tasks and milestones break the project scope into more manageable chunks of work for easy tracking. Your project tasks should be detailed and actionable, with milestones as checkpoints to assess and track your progress.
Deliverables
Deliverables are the specific products, services or outcomes that need to be produced and delivered at various stages of your project. Each deliverable needs to be clearly defined.
Project schedule
A project schedule is a more detailed timeline for your project. The schedule helps you manage expectations and allows your stakeholders to allocate resources and track progress. Your project schedule should list each task chronologically, along with the estimated time allotted to complete it. As these are estimates, your project schedule will often shift and change throughout your project.
Quality standards
Quality standards outline specific criteria or benchmarks for each deliverable, ensuring they meet your client's acceptance. Quality standards ensure you agree on expectations right from the start.
Project successes
Project successes are broader criteria or indicators agreed upon to evaluate your project's overall performance. These typically include being completed on schedule, within budget and according to the established scope.
Requirements
Requirements within a statement of work cover equipment, resources or certifications needed to complete your project. They include specific details like security clearance or software and hardware you need to use for the project.
Payment terms
Payment terms detail the financial aspects of the project, including the overall cost, the payment schedule and your agreed invoice payment terms.
How to write a statement of work
To write a statement of work, you'll need a clear understanding of the project objectives, scope of work, deliverables and more.
Write a project introduction
Writing a project introduction sets the scene for your statement of work. Start by introducing your key project stakeholders and briefly defining the overall scope. Specify whether the document is a standing offer or a one-off contract.
Define project objectives and purpose
Define your project objectives and purpose upfront. Explain the reason for initiating the project and the overall goals or outcomes you're setting out to achieve. Include a projected completion date here, too.
Clarify project scope and tasks
Clarifying your project scope and tasks is critical to your statement of work. Defining boundaries and setting clear expectations are also crucial steps. Ensure you've agreed on what falls within and outside of your project's scope. Agreement will ensure you're clear about the milestones set. At this stage, you'll include high-level tasks as a foundation for more detailed scheduling.
List all deliverables
List all the deliverables you require as markers for the project's success. Clearly define and provide a deadline for each deliverable you list.
Create a project schedule
Creating a project schedule is where everything comes together. By this point, you'll have defined the scope and start and end dates, and you can now plot an indicative timeline for the project. Within the project schedule, plot milestones in chronological order (with estimated start and end dates) and include the allocation of resources. Here, you'll gain clarity on potential delays, resource issues or workflow overlaps.
State project requirements
Are there any specific project requirements that you need to outline? For example, do you need to use particular software or business processes? Are there any restrictions on who has access to project information? If so, list these in this section.
Clarify acceptance criteria
Clarify the acceptance criteria that mark the deliverables or milestones as acceptable to relevant stakeholders. Here, you'll detail any specific industry acceptance criteria or quality standards that must be adhered to and any testing or verification processes that should happen during your project.
Clarify payment terms
Clarify your payment terms and include a clear billing plan. The most common payment schedules link payments to the completion of particular milestones or are fixed recurring payments set throughout your project. You should include payment methods, any additional payment terms, and payment due dates.
Statement of work templates
Statement of work templates can help shortcut the process by reminding you which sections to complete. Many templates available online also provide guidance on how to complete the sections.
Statement of work vs scope of work
While a statement of work and scope of work sound similar, they are separate things. A statement of work is a formal document covering the project's overarching terms, objectives, deliverables and timelines and is a contractual agreement. On the other hand, a scope of work is one element within a statement of work detailing the specific tasks and milestones required to achieve the project objectives.
Statement of work FAQs
What is the difference between a statement of work and an RFP?
The difference between a statement of work and an RFP is that the SOW defines the specifics of a project once you have selected your collaborator. In contrast, you use a Request for Proposal (RFP) to gather proposals from potential vendors interested in your project.
How do change orders affect a statement of work?
Change orders in a statement of work are formal documents you use to modify terms – like scope, deliverables and payment arrangements – after all stakeholders have signed off. Before they can take effect, you need to seek formal approval from all stakeholders.
Is a statement of work a contract?
A statement of work isn't a contract. Your SOW does, however, usually form part of a more significant contract or agreement covering your project.
The ultimate roadmap for a successful project
A statement of work is a critical document for any project, but especially important for industries like software, construction, and professional services. It's a powerful roadmap that keeps your project's overall objectives, deliverables, timelines, and budgets at the forefront and gives stakeholders complete clarity along the way.
With MYOB Acumatica you can track project tasks, progress, costs and budget in cloud enterprise resource planning (ERP) software. Specialist editions of MYOB Acumatica also offer in-depth project accounting features for the construction and professional services industries. Get started with a demo.
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