What is a Statement of Work? | Learn with Definition & Examples
Last updated on 24th Aug 2022, Blog, Tutorials
Statement of Work Definition
A Statement of Work is a document used in the project and contract management.It covers a working agreement between 2 parties: the client, buyer, or government entity, and the agency, vendor, or contractor.
An SOW typically included:
- Scope of work
- Project objectives
- Payment of the project
- Expected outcomes
- Certain terms, conditions and requirements
Identifies the need for the specific work, cites the contract’s goals, explains the location of the work, and identifies how the contract work fits into the project/program’s mission and the goals.
The objectives are well-explained statements of the results to be achieved in order for the overall mission of the work to be finished.They should be a quantifiable criteria that must be a met for the work to be considered successful.
Gives a brief explanation of what the scope of work does and does not cover.It should be limited to what is need to convey the intent of a contract.It may include the outline of an extent of the work, a brief overview of the levels of the project, a brief description of the methodology to be used, and a explanation of the location of the work.
IV. Task to be Completed
Tasks are activities and the milestones that should be completed to accomplish for the contract objectives.The tasks may be structured by the milestones, deliverables, or processes.
The following may be part of this section:
- 1.A clear delineation of the responsibilities.
- 2.A detailed description of every work element.
- 3.The approach or methodology an Elements of a Statement of Work 2.
- 4.Timelines and deliverable requirements with the each task description.
- 5.Support that is need in terms of equipment, staffing, computers, software, or subcontractors, as applicable.
- 6.A clear explain of any particular equipment or software compatibility requirements.
- 7.Identification of an instruments (e.g. surveys, questionnaires) that will used and/or documentation that must be followed or used as guidelines.
- 8.Clear the instruction of contract phasing or the sequencing, if necessary.
V.Time Frame and Deliverables
Specifies time frames as they apply to finishing of tasks, milestones, and/or completion of the entire contract.Should state what the contractor is responsible for the delivering during the course of the work and at the end of the project, as applicable.
- Be specific.
- Have clear the instructions regarding their submission.
- Clearly explain the manner in which the PI will find if they are acceptable.
VI. Associated Costs
Specifies costs an associated with all tasks to be performed.This may included rates (hourly/flat) and fees (e.g. for travel, materials & supplies, and miscellaneous expenses).
VII. Signatures from Involved Parties
Should include signatures from a PI and also the contractor, along with the titles/positions and date.
How are SOWs created?
There are more SOW templates available to help get the managers started.However, to write a statement of work can be somewhat difficult.Getting everything included to ensure that the scope of services is detailed enough is critical.
Elements of an SOW can include:
- Purpose of the project
- Scope of work being performed
- Location of the project, project length, and any work requirements
- Expected deadlines and deliverables
- Acceptance criteria
- Any hardware and software required
- Performance-based standards to be met
Creating a thorough SOW can remove the risk that can come if there are any misunderstandings or disputes between the parties on any of the elements above.A concise and well written SOW, mitigates the risk of overspend by ensuring both supplier and an organization have a clear understanding of, and accountability for, the work involved.Bolstering the upfront agreement, lessens an opportunity for the misunderstandings resulting in contract extensions and associated .
Purpose of the Statement of Work
An SOW is used when contractors or collaborators outside an organization are working on a project with the internal project team.It can also inform vendors or contractors who are bidding on the project.
An SOW is often used in the conjunction with the other related documents, including:
Request for Proposal (RFP):Organizations used this document to procure goods and/or services from the vendors or contractors.
Master Services Agreement (MSA):This is a detail about the contract that outlines two parties’ terms and responsibilities.
Related Statement of Work Documents:There are certain project documents that may be encountered that are the same as an SOW, but are distinct in several ways.The document types listed below focus primarily on the big-picture problems, such as the project goals and the desired end results.For example, a Project Charter is meant to accompany, rather than replace, a Statement of Work.However, the latter of the 2 documents may be used in the place of an SOW in the government contracts.
Related documents include:
A high-level document that outlines preliminary roles, responsibilities, guidelines, and objectives for the project. It designates a project manager and the major stakeholders, and authorizes a project to initiate.The project charter is often generated after the SOW is agreed upon.
Statement of Objectives (SOO):
This is the government document closely related to the SOW.The SOO lays out high-level performance outcomes and objectives for the government procurement, and typically accompanies an RFP.It focused on the outcomes rather than on how a work is to be done.
Performance Work Statement (PWS):
Another government document that focused heavily on the results.Like the SOO, the PWS explains high-level outcomes, but it also outlines measurable results and performance objectives.
The major difference is that the SOW provides clear, specific direction for how the work should be done on the project, while the SOO and the PWS easily describe the desired outcomes.The Project Charter is also high-level, but incorporates the goals and expectations in addition to outcomes.More government entities preferred using an SOO or a PWS, because these documents allow more flexibility in how contractors approach a project.It may also be used when the government agency or an organization procuring the work has particular instructions or guidelines for the contractors or suppliers to follow.
Statement of Work vs. Scope of Work
The scope of work is just one section of a statement of work.While the SOW is a comprehensive document that details are the project’s goals, guidelines, deliverables, schedule, costs and more, the scope section focuses on how goals will be met. There are the clear benefits to the outlining of the project scope. The scope section of the SOW explains project outcomes and the type of work that will be done to achieve them.For example, if the project was to built a software system, the scope would explain the hardware and software that will be part of that system.It would give a high-level overview of the steps involving in the building and implementing the system.
Statement of Work Outline
According to the project management experts and an entities, most SOWs share some basic components, regardless of industry.
Common elements of an SOW include:
- Project objectives.
- Project scope.
- Major deliverables.
- Tasks that support the deliverables, and which party will finish them.
- Timeline for finished of work.
- Location of work and resources, an equipment, and facilities needed.
- Payment costs, terms, and deadlines.
- Internal and external standards and also guidelines.
- Criteria used to find whether deliverables are acceptable and how they will be accepted.
- Signatures of both parties.
Three Types of Statements of Work
There are 3 various categories of SOWs, some of which may be more popular than others in the different industries.
The main types are:
Detail Statement of Work:
This category of SOW tells the vendor, contractor or supplier exactly how to do the work and what processes are follow. It clearly explains the buyer, client or entity’s requirements, whether they are materials, measurements, quality control requirements, or something else.This type of SOW is used in the government contracts, where contractors are required to follow particular regulations, and is the preferred the SOW for manufacturing or construction projects.This type of SOW, the buyer, client or an entity assumes most of the risk, since the contractor is obligated to follow the standards laid out for them.
Level of Effort:
This is a flexible SOW that is frequently used for a hourly service workers.It is easily based on work hours and the material needed to perform the service.The SOW explains the service being performed over a given period of time in a common way.It is often used for temporary or contract workers, or for the delivery order contracts.
Performance-Based Statement of Work:
This is the preferred type of SOW by most government entities, and the standard SOW for the most American and Canadian government procurements.It covered the purpose of the project, the resources and an equipment that will be offered, and the quantifiable end results.It does not tell the contractor how to perform a work.This SOW offers the most flexibility in terms of how the contractor works, and focuses on outcomes over the processes.In this model, more accountability is placed on a contractor or supplier, since they are responsible for delivering the results using whatever methods they think are most effective.
Benefits of managing SOWs
Benefits can included:
- Increased a cost savings opportunities.
- Supplier the performance and risk mitigation.
- Detailed reporting.
- Project performance management.
- Visibility into all the outsourced projects within a single purview.
- Improved the workforce management.
- Organisational compliance and risk mitigation.
Providing successful SOW management gives hiring managers the tools necessary to made informed buying decisions and maximises the productivity throughout an organisation. Additionally, unexpected circumstances, scope creep, and post-contract changes can need amendments to the original SOW.Strong SOW management offers the tracing and reporting the necessary to enable business leaders to make such changes.It also provides the confidence that the project will be delivered on time and within a budget.
A statement of work is a more important tool used by the buyers to clearly convey the work to be done by a vendor, timelines, and cost of work, performance criteria and overall working agreements to be fulfilled by the vendors.It must be drafted as clearly as possible.
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