How to write a Statement of Work [Free Template]

What an SOW is, why you need it, how to create one, and a free customizable template
August 5, 2021
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Several service providers and their customers across the globe are collaborating and working together on various projects in an ever-changing business environment.

The number of such collaborations is on the rise and is only expected to grow further. While working with external organizations can open up many opportunities, it comes with its challenges.

The most common issue in collaborative projects is miscommunication between the parties involved, which can potentially derail the project. Even if you have a strong rapport with your client, wouldn’t it be better for everyone involved to get a clear understanding of expectations before beginning work? In fact, it could further enhance your relationship.

So how do you set these expectations and communicate them so all of you are on the same page? The answer is simple - create and share a Statement of Work (SOW).

Here is a complete guide on how to write a statement of work. 

What is a Statement of Work?

A Statement of Work or SOW is a detailed, comprehensive, legally binding document that clearly defines the different aspects of a project. It chalks out all the details of various aspects of work agreed upon by you and your client. Not only does it help build trust with the client, but it can also save you a lot of trouble as you progress through the project lifecycle.

An SOW is typically created during the kickoff phase and describes the deliverables, tasks, timelines, budget, success criteria, and other information related to the project in great detail. It is one of the most critical documents in project management because it becomes a reference that both the client and the project teams can use to determine the project’s scope.

Purpose of a Statement of Work

Being an integral part of the contract between the vendor and the client, it may seem like the statement of work is only used to finalize the agreement between the two parties. However, it has many purposes.

1. Reaching an agreement

A statement of work clearly explains all facets of the work expected and agreed upon by you and your client. It facilitates discussions and negotiations between both parties until an agreement is reached and ensures everyone is on the same page.

2. Preventing scope creep and selective amnesia

As the name suggests, scope creep refers to when the scope of a project keeps changing haphazardly. Selective amnesia refers to when there is no clarity and recollection of the terms of work agreed to. These are common project management traps that can be avoided with the help of a detailed and well-written SOW. This way, both you and your client can always return to the document to determine what was exactly agreed upon.

3. Preventing expensive rework

Sometimes, as a result of scope creep and selective amnesia, work may have to be redone. This type of rework is often expensive and time-consuming, eventually disrupting your project timelines. Using a statement of work can help tackle this issue.

4. Providing clarity on deliverables and their success criteria

Apart from laying out the expected deliverables, a statement of work also lists the tasks to be done to complete each of those deliverables. Additionally, the document explains the standards these deliverables will have to meet to be completed and acceptable. These details provide the clients with clarity and assurance on what to expect.

5. Organizing tasks and resources

An SOW typically includes a detailed schedule with tasks, milestones, allocated budget, and people resources. This makes it a lot easier for you to manage the tasks and resources and provides a structure for the project plan. 

Free Download: Statement of Work Template

Difference between an SOW, Project Charter, Contract, and Scope of Work

A Statement of Work is often confused with a few related but different documents, such as a project charter and a contract. Here are the key differences between these documents.

1. Statement of Work and Contract

A contract is a legal document that covers every detail of the project and the cooperation between the two organizations, such as terms of payment, duties of each party, etc. It finalizes all negotiations that bind both parties together. The statement of work is an integral part of the contract but is not a contract in itself. It is sent to the client for approval and is flexible to change.

2. Statement of Work and Project Charter

Both these documents are created during the initial phase of the project but have different purposes. A project charter is a brief document that summarizes and highlights all the critical information regarding the project. Approving a project charter formalizes the project and authorizes the project manager to use project resources to achieve its objectives. A statement of work, on the other hand, does not formalize or initiate a project. It is a legally binding document that defines all the work that has been agreed upon by the two parties.

3. Statement of Work and Scope of Work

The terms statement of work and scope of work are often used interchangeably. However, their meanings can vary depending on the context. For example, the scope of work is only an element in the overall statement of work and defines the extent of the work that will be done as part of the project. On the other hand, a Statement is a detailed agreement of each aspect of the work that needs to be done such as timelines, budget, resources, etc. 

Components of a Statement of Work

Now that we have understood what a statement of work is and its importance, let’s look at the main components included in a comprehensive statement of work document.

1. Purpose

This is the first section of your statement of work document. Start by briefly explaining the project, its objectives, and expected outcomes. It must also answer critical questions such as why the project is being initiated, the issues being addressed, and how both parties will benefit. Make sure that this section is simple, straightforward, and very easy to understand for everyone involved. It should provide an overview as all this information will be covered in greater depth in other document sections. 

2. Scope

This section should contain information regarding all the work that will be done and the extent of the work that will be covered. Therefore, it’s good to divide this section into two parts: scope and scope. The in-scope section will include all the dimensions of work covered by the project team, while the out-of-scope section will specify all the aspects that will not be covered. You can also add information on the types of hardware, software, and people resources you will use.

For example, if the project is to design a website, the scope of work will include steps such as ‘develop new website mock-ups’, ‘create design elements’, ‘work with client personnel in a  joint project team during the launch phase’ and so on. If you and your team will not be working on any particular element such as website promotions, put that under the out-of-scope section. It must include any kind of work or activity that you will not be performing.

3. Deliverables and milestones

Deliverables refer to what the client will finally receive. In large and complex projects that go on for a long time, these deliverables are put down as small events or milestones to measure progress.  This section will include target start and end dates so that the project team has a basic timeline to plan the work that needs to get done. Make sure to keep a little buffer time between each milestone so that there aren’t significant deviations from the overall project timeline in the event of slight delays.

For example, ‘design website landing page’ can be a milestone with a target start and end date. You could keep a gap of a few days before listing the next milestone target dates.

4. Task list

A task list is a detailed list of specific tasks with their own start and end dates that need to be done to complete each deliverable. It essentially breaks down each deliverable into smaller tasks for efficient task management. Each task must be specific and explain the action that needs to be taken clearly. These tasks can be divided based on milestones or particular phases like a launch, kickoff, design, etc.

For example, if ‘design website landing page’ is a deliverable under the design phase, ‘wireframing’ will be listed as one of the tasks that need to be done to complete the deliverable.

5. Testing and resources

Testing is a field that is especially relevant in software projects where different elements and deliverables will have to be tested and evaluated before handing it over to the client. List down the elements that will be tested along with the resource who will be performing the testing. This will provide clarity on what exactly needs to be tested and by who. It’s also more convenient for stakeholders to refer to the document and identify who to reach out to and for what.

6. Success criteria

This is a very important field in the statement of work document. It mentions the specific standards that need to be met for the deliverables to be accepted and considered complete. It defines what success looks like to you and your client when the project is delivered. Specifying this in your document will provide both you and your client clarity on what standards are expected to be met.

7. Payment schedule

This section includes all information regarding the project budget and payments. Specify the different fields or particulars that will be charged and when they will be charged, along with the amount. This way, you’ll know when to expect payments and for what while ensuring that everyone stays within the agreed budget.

8. Terms and requirements

This is the final section of your statement of work before it is approved and signed off. It includes all the additional essential details that have been agreed upon but do not fall under the sections mentioned above. Information such as place of work, security requirements, certifications, etc., can be listed under this section.

9. Approval and signoff

This is the last section of your statement of work document. Once all the document details are negotiated and agreed upon, the document will be sent to the client for final approval and sign-off. This finalizes the agreement and seals the deal between the two parties. 

Free Download: Statement of Work Template

Best Practices

1. Make it detailed

The statement of work needs to be as detailed as possible. Don’t make assumptions about any dimension of work that needs to get done. Instead, everything that needs to be completed should be explicitly mentioned in your statement of work, right from tasks and timelines to resources and specific requirements.

2. Keep it specific and measurable

While writing your statement of work, make sure that every detail mentioned is specific and can be objectively measured. Hence, it’s always a good idea to mention specific numbers that you wish to target, both realistic and achievable.

3. Make it visual

It is easier on the eyes to have information presented in tables and charts instead of big, wordy paragraphs. It is also more convenient to identify key details and refer to the document when each section is clearly defined.

4. Define and explain terminologies

If your document includes complex terminologies that not everyone may know, you could include a small glossary section that defines these terms. Besides this, make sure that everything mentioned in your document is crystal clear and easy to understand.

5. Establish timelines as estimates

Make sure that all the dates and timelines mentioned in your document are only estimates. This will ensure a little bit of time between each task and milestone in case any adjustments or time are required for review. This way, the project will stay within the estimated timeframe and will not deviate completely.

6. Define pricing and budget

Clearly defining and agreeing on the budget and pricing will eliminate confusion or delays in payment. It will also give the team an idea about the budget within which work needs to be done.

7. Send the SOW for legal review

Before sending your document to the client for approval, make sure to have it reviewed by your legal team. This will ensure that all the information that needs to be on the document is present, precise, and correct from a legal point of view before approval and sign-off. 

Mistakes to avoid

1. Rushing the document creation process

Plan the statement of work document. Although this document needs to be made during the initial stages of the project, do not rush it and write one too early before all the project details are discussed and chalked out. Instead, you can make notes at each discussion meeting and then create the final document.

2. Fluffy and generic terms

Make sure not to use general and unspecific terms such as “lots,” “many,” “high,” and other such words while writing your document. This can leave scope for assumptions, leading to confusion and the inability to measure success objectively. Avoid Making any section too wordy and keep it to the point.

3. Being too rigid

A statement of work is typically discussed and negotiated with the client before it is finalized. Therefore, make sure that your document is not too rigid and can accommodate timelines, resources, or budget changes.  

4. Irrelevant templates

While templates can save you a lot of time and effort in planning and writing your statement of work, make sure that you use one that fits your business requirements and includes all the essential fields that need to be covered.

5. Starting the project without a signed SOW

A signed and agreed statement of work seals the deal between you and your client. It finalizes all the details of the statement of work. Hence, it is best to ensure that the SOW is signed before you begin any work for the project.

Statement of Work template

To conclude, you can use this guide to write an effective statement of work for any type of project, whether it is software or real estate. The essence of the document remains the same across businesses. So, make sure to follow these tips while writing yours, and you’ll have a solid SOW document to work with. If you’d like to hit the ground running, download this free template and customize it according to your requirements.

More resources

  1. Customer onboarding templates for every stage of your onboarding journey
  2. Project Management Basics: Risk Management
  3. Project Management Basics: Innovation Management
  4. Getting to the root cause of problems in project management
  5. 10 Project Management Tools You Can Use for Customer Onboarding

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Lakshmi Venugopal
Content Marketer @ Rocketlane

Loves simplifying and breaking things down through the art of writing.

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