How to write a Statement of Work ? Guide & Template
If you are a consultant or project manager and do complex projects for large corporations your project needs to get approved by the procurement department and many other stakeholders.
Mostly we get hired by the top executive for the values he believes you can bring to the table. But he is not the the only manager who is involved in the purchasing process.
I remember I was boarding the aircraft and while walking up the gangway explaining to a purchasing manager the purpose of the items we had included in our statement of work. Once he understood the benefit, he immediately approved the contract. The template I used for this project is here
I was happy because I knew we got the contract and do need to worry about payments.
What Is a Statement of Work?
A Statement of Work (SOW) is typically used when the task is well-known and can be described in specific terms.
The Statement of Work (SOW) is a crucial formal document that outlines the comprehensive details and expectations of a project or service engagement. It precisely defines the project's scope, objectives, timelines, deliverables, and any other relevant specifications.
This document acts as a foundational agreement between the client and the service provider, ensuring alignment, minimizing misunderstandings, and providing a clear roadmap for successful project execution.
It essentially serves as a contract that forms the basis for a productive and mutually beneficial working relationship.
Why Should You Use a Statement of Work?
Using a well-written statement of work (SOW) is crucial for great business relationship.
A well-structured Statement of Work (SOW) plays a crucial role in securing payment and ensuring a smooth payment process in a project. Here's how:
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Clear Deliverables and Milestones:
- The SOW clearly outlines the project's deliverables and associated milestones. These milestones act as payment triggers, indicating when a certain portion of the work has been completed and payment is due.
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Defined Acceptance Criteria:
- The SOW specifies the acceptance criteria for each deliverable. Payment is typically tied to the acceptance of these deliverables, ensuring that the client pays for satisfactory and approved work.
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Payment Schedule:
- The SOW often includes a payment schedule or terms, specifying when and how payments will be made. This might include down payments, payments upon completion of milestones, or a final payment upon project completion.
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Cost Breakdown:
- The SOW breaks down the project cost into different components, making it clear what the client is paying for. This transparency helps in justifying the payment amount and providing a basis for invoicing.
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Invoicing Alignment:
- The SOW aligns with the invoicing process. Invoices can be structured based on the payment schedule and tied to the completion of specific project phases or milestones outlined in the SOW.
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Dispute Resolution:
- In case of payment disputes, the SOW serves as a reference point. The agreed-upon terms and conditions related to payment are documented in the SOW, assisting in resolving disputes amicably.
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Legal Standing:
- The SOW is a legal document that binds both parties to the agreed terms and conditions. It provides legal protection if payment issues escalate and need to be resolved through legal channels.
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Client Commitment:
- By agreeing to the SOW, the client acknowledges their commitment to pay for the outlined work, reinforcing the expectation of timely and complete payment.
In summary, the SOW acts as a contractual agreement that defines the project's payment terms, deliverables, and acceptance criteria. It ensures transparency, sets clear expectations, and provides a mechanism for timely and secure payments throughout the project.
Different industries have their own templates. If you do government contracts you want to check the local authorities statement of work template.
Understanding the Three Types of SOW
Statements of Work (SOWs) are important project agreements that cover various project aspects such as the work scope, project description, objectives, provided materials, timelines, fees, required expertise, deliverables, and performance expectations. These agreements are crucial for guiding the project and setting clear expectations.
There are three main types of SOWs, each tailored for different purposes and industries.
Design & Detail SOW
This type is commonly used in government projects, construction, and manufacturing. A Design & Detail SOW provides a detailed plan on how the project should be executed. The entity or individual commissioning the project provides precise instructions on how the work should be done and what's needed to complete it. For instance, if a person is hired for a task, this SOW will outline specific materials to use, exact dimensions, assembly instructions, and project deadlines. The buyer or client, in this case, carries most of the risk since the contractor needs to strictly follow provided guidelines. Automating Design & Detail SOWs streamlines the process, allowing teams to quickly input information, reducing time spent on creating detailed documents.
A Design & Detail SOW for a 3-day PM training program might look like this:
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Project Scope and Objectives:
- Provide comprehensive training on PM methodologies, tools, and best practices over a period of three days.
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Materials Provided:
- Course materials including workbooks, slides, and relevant reading materials.
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Project Deadlines:
- Day 1: Introduction to PM concepts and methodologies.
- Day 2: Practical application and case studies.
- Day 3: Assessment and certification.
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Assembly Instructions:
- Trainer to follow a structured agenda and ensure interactive sessions with real-world examples.
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Risk Mitigation:
- Trainer to have contingency plans in case of unforeseen circumstances such as technical issues or participant absenteeism.
Level of Effort SOW
Also known as a time and materials/unit rate statement of work, the Level of Effort SOW defines an hourly service fee and materials needed to complete a task. This type is flexible, making it suitable for short-term or temporary contracted services. Contractors are required to achieve a specific objective and are compensated based on hours worked or the units produced, promoting efficiency and timely completion.
For a Level of Effort SOW, focusing on a 3-day PM training, the document may outline:
- Hourly Service Fee:
- Trainer's hourly rate for conducting the training sessions.
- Materials Required:
- Whiteboard, markers, projector, and training materials.
- Task Description:
- Conduct 6 hours of training per day for 3 days, including interactive sessions and Q&A periods.
- Payment Terms:
- Hourly rate multiplied by the total training hours provided.
Performance-Based SOW
Performance-Based SOWs are preferred by project managers as they emphasize the project's purpose, expected quality of deliverables, and necessary resources without prescribing a specific process. This allows for more autonomy in achieving outcomes while maintaining the required quality. The focus here is on what needs to be achieved rather than how it should be done.
A Performance-Based SOW for the 3-day PM training could be structured as follows:
- Project Objective:
- Equip participants with practical PM skills to effectively lead and manage projects.
- Quality Expectations:
- Participants should demonstrate a sound understanding of PM principles through successful completion of case studies and a final assessment.
- Resource Allocation:
- Trainer to allocate sufficient time for hands-on exercises and discussions to ensure effective learning.
- Success Criteria:
- 80% or more participants pass the final assessment with a minimum score of 75%.
In summary, the choice of SOW type will depend on the specific needs and expectations of the PM training project. Each type offers a unique approach to defining project requirements, ensuring clarity, and guiding successful project completion.
Guide to creating a Statement of Work
Here are three Steps to creating a Statement of Work ( SOW)
Step # 1: understand what the client really wants and needs
Before your submit any kind of offer make sure that you have a conversation with the client and these three points in place:
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Project Goals defined.
- Clearly understand the project's purpose, objectives, and what is the expected outcome.
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Scope Defined
- Have a detailed understanding of the project scope, including what's included, what's not, and any constraints.
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Stakeholder Identified
- Identify all project stakeholders and understand their needs, expectations, and level of involvement. You definitely wan to know who is going to sign your SOW and who is going to sign the acceptance of your work,
Step #2: Create a Project Planning Session
Before creating a Statement of Work (SOW) document, it's essential to undertake several preparatory steps to ensure the SOW accurately represents the project's needs, goals, and expectations.
For your thinking process I strongly recommend you collaborate with subject matter experts and the client to understand all the relevant data .
We help our clients online with our consulting and training program . The Project Plan Academy to stream line thins process and t provide templates and minimize project risks.
The following important documents are a good preparation.
Here's a checklist to think through and visulaize for yourself before creating an SOW:
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Project objectives clarified and agreed
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Work breakdown structure developed
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Requirements Gathered
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Risk considered and Assessed
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Resource Assessed
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Timeline Estimated
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Budget Estimated
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Contracts & Agreements ready.
Review any existing contracts or agreements to ensure that the SOW aligns with the terms and conditions set forth in those documents.
Understand legal and compliance obligations relevant to the project to ensure the SOW adheres to them.
9. Consultation and Collaboration:
Collaborate with relevant stakeholders, project managers, subject matter experts, and legal advisors to gather insights and input.
Step # 3: Create the STATEMENT OF WORK
What does a statement of work (SoW) include?
Statements of work are flexible depending on your specific project needs, but they usually include the following elements:
Basic information like project name, current date, project information, and project duration. It also usually specifies who the project manager is, as well as vendor, contractor, client, stakeholder, and team members' information.
A project introduction that gives some context to your project, describes what it is, and specifies who will be working on it.
Project background that specifies any relevant history or other market information.
A purpose statement that describes what problem your project is solving and why it's necessary, interesting, or useful.
A scope of work or scope section (confusingly, this can also be referred to as a SoW).
A timeline or rough schedule that outlines initial dates for key milestones and deliverables. At this stage, there's no need for a high level of detail.
A task breakdown that divides your project into specific tasks and/or subtasks.
Project budget, payment terms, payment schedule and/or other information about payments.
Project closure protocols that describe the framework for how your project will ultimately be concluded.
Statement of work acceptance and authorization documents and information.
Template Selected
Choose an appropriate SOW template or format based on the project type, industry, and organization's standards.
The Statement of Work Document Format can be a
- as simple as a 1 slide PowerPoint , Canva , Keynote
- a well structured 1 -2 Page word coument or Google sheet
- a Google spreadshetee or excel table
- a long ebook like Word document
- a online Template filled in
Templates I use for consulting contracts you find here : Statment of Work Template
Review and Approve the SOW
Define the review and approval process to ensure that the SOW goes through the necessary validation steps before finalization.
Submit the SOW and get it signed
At this moment we like to submit the documents in pdf and use Docusign or hello sign to get the sigatture
Make sure to submit only pdf or some format that the client will not change your data
Keep a copy of the signed Document in your Project Office Folder.
Our Statement of Work for consulting projects is usually a addendum t a master consulting agreement that we have in place with the client.
The Master agreement reflects all legal questions whereas the Statement of work is related only to the subject of the specific Project
By diligently completing these preparatory steps, you lay a solid foundation for creating a comprehensive, accurate, and effective Statement of Work (SOW) that aligns with the project's goals and meets stakeholders' expectations.
This will save you time Money and gives you piece of mind doing the client work in high quality.
