What is a Statement of Work
A Statement of Work (SOW) is a companion document to the services agreement that consists of a description of the products and services to be supplied. A statement of work is useful because it refines the understanding between the parties. What must be delivered and the terms and conditions to be applied. A SOW is in effect a contract between the parties for the service delivery and a commercial understanding of how to work together.
The typical objectives of the statement of work are to enable the contractor to understand the requirements and needs of the customer. You wouldn’t enter into a contract with a builder to refurbish your house with just a smile and a handshake. And neither should you enter into a commercial relationship to deliver a multimillion dollar development in such an informal way.
Always document your agreements
To be clear on this: don’t trust a handshake or a verbal promise always document your understanding. It is far better to spend time arguing about what must be done before the work has started. If you’ve taken the proper steps to write a thorough SOW then no surprises should occur on delivery. When what was ordered is actually seen for the first time.
The Statement of Work states the scope of work to be done, the deliverables, the partner responsibilities, and any fees for services to be rendered. The SOW is created once a client feels comfortable and is ready to proceed with the activity and documents the joint understanding of what must be achieved at each stage. The SOW is the management product that documents the products to be delivered and the associated work units to be performed within the contract.
Typical contents are:
- Aim and objectives of the activity
- The scope of the activity and any limitations
- Assumptions and constraints
- Project plan and approach
- Governance and review points including the project management process to be used to report progress
- Deliverables to be produced including any dependencies
- Due dates for deliverables
- How deliverables are approved and what quality procedures are in place.
- The commercial considerations
Requirement of a good Statement of Work
We write a statement of work when a simpler requirement document is insufficient. We describe what must be accomplished in terms of the client’s needs. Stakeholder needs, wants, and expectations also need to be analysed then converted into requirements.
There may be items such as, reporting requirements, commercial restrictions, market research, anti-competition agreements, geographic scope etc. to be included. Therefore it must outline all applicable quality systems including quality review processes and acceptance procedures to be used. It should also include the definition of the extent of control to be exercised on subcontractors should these prove necessary.
A sub-contractor must also sign up to the overall conditions and the prime concerned must warrant that this is so. Overall a SOW identifies the requirements to be satisfied not the way they must be done. This leaves the parties free to use their own expertise and skill to achieve the desired result.
A SOW can help avoid disputes
Creating a statement of work is not an easy task and can be time consuming but is worth the effort. Do not trust to partner rhetoric that suggests leaving the difficult points to later never rely on such terms ‘spirit of agreement’. You will end up in trouble. If a SOW is too ambiguous, it can lead to misinterpretation and future problems and a major falling out. The failure to write down expectations and to properly execute a SOW is often the reason parties end up arguing. This is the reason why a SOW must be well thought through and executed.
Below is a link to a sample SOW template. If you appreciate this please leave a comment or perhaps even a linkback
SOW template here:
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