The Statement of Work (SOW) is a fairly important element of project and contract management, which helps to ensure that they are fully implemented in accordance with certain guidelines and expectations. Contractors or employees of the contracting company will use the SOW to guide their work in fulfilling the terms of a particular project.
An effective and quality SOW should consist of work details, schedules, timelines and expected results, so it is very important that everything is done correctly and nothing is left out. SOWs can be used for a wide variety of projects, from a single visual project done by a graphic artist for a client, to a large-scale government construction contract. Using effective project planning tools and a thorough and well-written terms of reference (SOW) will allow the project to be successfully completed on schedule and within the approved budget.
What is the Statement of Work
Statement of work (SOW ) is a document that defines the terms of the agreement for the project between the client and the service provider (agency, contractor, etc.). It captures all aspects of what is included in the project, namely: deliverables, project and payment schedule, goals, objectives, milestones, etc. Since the SoW is an important document that lays the foundation for a future project, it is important not to confuse it with other important documents that help manage projects.
It covers the working agreement between two parties: the client, buyer, or government agency and the agency, vendor, or contractor. The SOW usually includes:
- Scope of work. A special section to record what work needs to be done in the project, how it will be done, and how long the project will take. The general steps and details of the process should be specified here.
- Project Objectives. The section is a statement of purpose that answers a number of very specific, important questions.
- Schedule. The core element of the SOW is the schedule, which is a timeline of the project that includes milestones, tasks, and resources throughout the project lifecycle.
- Tasks. Clear actions to achieve the milestones and overall steps outlined in the scope of work. Everything should be accounted for and described as much as possible here so that no important steps are missed.
- Practical Results. A complete SOW will quantify the products or services to be delivered after the project is completed.
- Expected Outcomes. This is the parties’ mutual view of what success will look like when the project is completed.
- Defined terms and requirements. Specifies payment terms and constituent elements of the project that do not fit into the above categories.
- Place and time of execution. The section is used to identify the location where the project will be carried out.
- Milestones. If the project is long and complex, it is often broken down into milestones – intermediate events to measure progress. Specifying the duration and paid hours for each milestone will help predict the project’s completion date more clearly.
- Testing. Appropriate in describing software development work.
- Closing. The section defines how deliverables will be accepted and who will deliver, verify, sign off, and archive them.
The SoW should be an extremely detailed document because it essentially lays the groundwork for the project plans.
The Main Purpose of the Statement of Work
The purpose of the statement of work is to give the company more information about how you plan to handle their project. You can also use them when third parties work with your company to provide them with guidance. The SOW is most often used in conjunction with other documents.
Other documents that use the SOW include:
- request for proposals;
- master agreement.
A well-written SOW defines the responsibilities and deliverables of the supplier or contractor. It should be prepared only after the other details of the project have been agreed upon. This will prevent disputes during future contract negotiations.
Rules for Writing a Statement of Work
It is best to begin with a simple statement outlining the purpose or goal of the project. A description of the work done is mandatory, as well as any other limitations. The main purpose of this section is to attract the attention of the target audience. Next is a list of actions to complete, including any performance criteria and project requirements that the contractor must follow in completing the contract. Specificity is needed here, but it should not go beyond the working document, as clients may refer to this information in the future and use the document as an instruction or guide to action.
A project schedule is mandatory. It is an important element of the project. Clients want results with clearly defined timelines, so they need to be as realistic as possible, taking into account unforeseen circumstances.
It is important to take into consideration all the necessary resources that are needed to achieve the goal. These are personnel, equipment or materials needed to get the job done. Responsible parties for paying third parties, suppliers, and retailers should be clearly identified. It is also worth providing for a number of steps in case of unforeseen circumstances and handling a request for additional costs.
Don’t forget about controls, either. Document the methods by which controls will be implemented and the results tracked. This could be random sampling, frequent audits, or reporting. Regardless of the methodology that is chosen, the emphasis here is on letting the client know that the project is taken seriously, and that all the points outlined are executed clearly, according to the approved plan. The necessary templates can be found in the software package Pandadoc and used in the process. This is a very cost-effective and efficient option for developing quality terms of reference.