A statement of work specifies the activities, deliverables, and schedule for a project. It defines the services expected from the contractor, the level and quality of these services, as well as the pricing and legal requirements for the work to be performed.
It is one of the first documents created as part of a project. It sets the framework for the project before planning and execution begin. An effective and well-written statement of work allows for better control over the work to be done. In this article, you will learn more about the different types of terms of reference and how to write them.
What is a Statement of Work?
A Statement of Work (SOW) is an essential part of a company's procurement process. It is a formal document that provides direction to a contractor or supplier on how project work should be performed. In short, a SOW defines all aspects of your project and lays the groundwork for your project plan.
A well-written SOW helps both parties understand the parameters for a successful project. A poorly worded SOW can lead to conflict if it is not written correctly. This leads to the parties arguing about unclear expectations and the definition of good work. To avoid such disputes, a well-written statement of work should include the following:
- a list of the expected products
- A list of tasks leading to the creation of the product
- Details of who will complete the listed tasks
- Due dates for the products to be delivered
- Payment schedule and deadlines
- Determination of who takes over the main tasks
How do you know when to write a statement of work?
A statement of work is an important organizational tool designed to capture the work of the project. It places particular emphasis on the elements that are critical to the success of the project.
It is part of a contract with an external contractor, supplier or consultant. It can also be helpful as an intermediate step in planning larger and more complex internal projects that require tight organizational controls to be successful. A well-written statement of work opens the door to hiring subject matter experts for a large and complex project.
At its core, a service description is a communication tool. It describes the work to be performed. Anyone who has the ability to communicate in writing can write them.
The types of work descriptions
Design and detailed performance specification
This type of work instruction explicitly tells the supplier how to perform the job and defines the exact requirements needed for success. These include exact dimensions, required tolerances, materials needed, quality control requirements, etc. Since the procedural instructions in the work instruction are explicit, the author of the work instruction bears the performance risk.
Effort level, time and material, unit rate Work instruction
This type of statement of work can be used for service-based contractual agreements. It contains the essential elements of any service description, but the focus is on the materials needed to perform the work and the time required for the work.
Performance related work description
This type of SOW is used when the details of how the work will be performed are not included. Due to the minimized performance risk, this SOW is the preferred form of document for most companies.
How to write a performance description?
An SOW should include the following sections:
Objectives
This section contains the purpose of the overall project and its goals. Listing these goals guarantees that expectations will be met later.
Scope
This section contains the tasks that an employee must perform to achieve the goals.
Schedule
This section contains the various deadlines for each part of the project. Delays in the services to be provided may be caused by one of the deadlines not being met.
Price
This section contains the payment schedule and requirements to secure the final payment.
Important assumptions
When one company works for another, assumptions may be taken for granted. For example, the contractor might assume that it has access to the other company's computer system. Recording such access in the assumptions section of the SOW prevents ambiguity later.
Acceptance
The criteria listed in this section are the requirements that the contractor must meet before receiving final payment for their work.
General guidelines to follow before creating an SOW.
To write the best possible service description, you should follow the steps below:
Brainstorming before the launch
A large project consists of several components. Think about what you need and negotiate those terms. This will also help you better assess what decisions you will need to make later in the project development phase.
Write your SOW as early as possible
As you write the SOW, you need to focus on what your project needs. Writing the SOW will affect your decisions about how the project will work best.
Set expectations
Consider what will make your project a success or failure. Then set your expectations in the statement of work. This way, the contractor knows if he is at risk of failure.
Schedule formal reviews
A critical mistake is to let your project go unchecked once it has started. In your terms of reference, you should specify when all stakeholders should meet to review project performance.
Add specificity
You should include a vague description of some key areas that will cause the project to fail in your SOW. Also include a section in the SOW that focuses on important criteria such as objectives, Scope and requirements.
Set details in advance
Before writing the statement of work, you should have reached an agreement. It is a mistake to negotiate while writing the SOW document. You should know the terms before you document them in the SOW.
Define terms
Industry terms and acronyms can prove destructive if one party does not understand them. If a company uses industry-specific language, it should explain these terms in more detail in the SOW.
Lead internal discussions
You should know which team members will be working on the project. You should talk to each of them to find out about their goals and expectations. Once an SOW is created, you should have them read it to see if there is anything else they would like to add.
Do not overwrite it
A long SOW usually sounds like a good idea. But it isn't. If you submit a long SOW document to a contractor, they will feel the need to have it reviewed by an attorney. Therefore, you should create a solid SOW that is short enough for both parties to agree to without involving an attorney.
Final considerations
The success of any project begins with its definition. A well-formulated statement of work leads to effective execution of the project and a result that meets your standards for success.
EN 
DE 
FR 
ES