Statement of Work

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Statement of Work



A Statement of Work (SOW) is a document routinely employed in the field of project management. It defines project-specific activities, deliverables and timelines for a vendor providing services to the client.

Overview


Various formats & styles of Statement of Work document templates have been specialized for the hardware or software solutions. Many companies create their own customized version of SOWs that are specialized or generalized to accommodate typical requests and proposals they receive.
Note that in many cases the Statement of Work is a binding contract. Master Service Agreements or Consultant/Training Service agreements postpone certain work-specific contractual components that are addressed in individual Statements of Work. The Master Services Agreement serves as a master contract governing the terms over potentially multiple SOWs. Sometimes it refers to Scope of work.

Know what to include.


Bruce Russell, who signed off on numerous SOWs when he was chief operating officer at a software development company, says a good one includes these things:
  • Major deliverables and when they're expected.
  • The tasks that support the deliverables, as well as which side -- the hiring company or the service provider -- will perform those tasks.
  • The project's governance process, along with how often governing committees will meet.
  • What resources are required for the project, what facilities will be used and whose equipment will be needed, as well as testing requirements.
  • Who will pay which costs and when.

Format of SOW


"The statement of work pulls together all the elements at the beginning," says Russell, now an executive professor at Northeastern University's College of Business in Boston. "And the more precise you can make it, the more quantitative, the better."

The SOW formats differ from one industry to another. Regardless of the industry, some key areas of the SOW are common. Following are the commonly addressed areas in a SOW:
  1. Scope
    2. This section describes the work to be done in a technical manner. If the system to be built is a software system, this section defines the hardware and software requirements along with the exact work to be done in terms of the final system.
    If there is anything 'out of scope', those areas are also mentioned under a suitable subheading.
  2. Location
    3. The location where the work is performed is mentioned under this section. This section also details the hardware and software specifications. In addition to that, a description about human resources and how they work are addressed here.
  3. Timelines
    4. This defines the timeline allocated for the projects. It includes the development time, warranty time and maintenance time. In addition to calendar time, the man days (total effort) required to complete the project is also noted.
  4. Delivery schedule
    5. This section of the SOW describes the deliveries and the due dates for the deliveries.
  5. Standards
    6. The standards (internal or external) are defined in this section. All deliveries and work done should comply with the standards defined in this section of the document.
  6. Acceptance Criteria
    7. This section defines the minimum requirements for accepting deliverables. It also describes the criteria used for acceptance.
  7. Mode of contract and payments
    8. There are a number of engagement models when it comes to contracting a service provider.
    In the domain of software development, there are two distinct contract models, fixed bid and a retainer.
    In fixed bid, the project cost is a constant and it is up to the service provider to optimize the resource allocation in order to maintain the profit margins.
    The client does not worry about the number of resources, as long as the delivery schedule is met. In the retainer model, the client pays for the number of resources allocated to the project.
    Since SOW is an integrated part of a project, almost all senior members of the project team should become aware of terms and conditions of the SOW. Sometimes, especially in software development projects, a penalty is applied if the delivery dates are missed. Therefore, everyone should be aware of such demanding terms of a SOW.

Conclusion

SOW is a critical document for project management. It defines the scope of the work and the work agreements. Therefore, all stakeholders of the project should have a thorough understanding of the SOW of the project and adhere to it.

Reference Template

statement-of-work-template

References:
Wikipedia
tutorialspoint
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