In marriage, a prenuptial agreement can save both parties money and help spare their sanity in the unfortunate case of a divorce.

In project management, a statement of work (SOW) fulfills a similar purpose.

Vendors who contract external individuals or teams for internal work must be able to clearly communicate their needs, budget, timeline, etc. before a project begins. An SOW includes all of these elements and more, ensuring both parties fully understand expectations. 

If you’re looking to contract people for work within your company, you’ll need to know how to write an SOW. Doing so effectively and diligently will, in the end, save your company both time and money.

Read on to learn more about why SOWs matter and how to put your best foot forward by drafting one for your upcoming project.

How to write a statement of work

Before we talk about what should go into an SOW, let’s talk about when you should use this type of documentation. An SOW is often used within or alongside other project documentation, such as a request for proposal (RFP) or master services agreement (MSA).

SOWs should be used when the contracting company can clearly communicate project instructions and outline what kind of contracted work is needed. A company should not use a SOW when they only have vague deliverables and goals in mind. SOWs are detailed documents meant to communicate to contracted employees what all will be expected of them.

Statement of work example courtesy of template.net 

A SOW should be written after all guidelines have been agreed upon by involved parties. Oftentimes, a statement of work is submitted alongside a project charter, which is completed after the SOW has been written.

Important elements in a statement of work

A cohesive SOW will include the following elements:

Goals

This section outlines the objectives of the project, and answers the question of why you’re contracting outside employees to help. What business problem are you trying to solve and what will you do in order to get there?

This serves as an overview to help the contracted employees understand what you’re hoping to accomplish by hiring them.

Explanation of scope

Scope defines the size or reach of something. In an SOW, the scope is communicated as the specific work that is to be completed as well as the extent of that project’s impact. Essentially, the scope defines how much work you want done. What do you expect your contracted employees to be able to accomplish in the time given. 

For example, say you have two weeks to build a house. Do you want a two-story house? A small cottage? A mansion by the sea? All of these specifications define the house’s scope. The amount of work to be done will greatly affect who is hired to complete the project, as well as how much the project costs.

Project deliverables

Any time you hear the world “deliverables,” you know you’re expected to provide some specific examples. What are you hoping to have at the end of this contract/vendor relationship? 

Here you can start to outline the tasks you’d like performed, and outline certain requirements a contractor needs to be considered qualified for the job.

Supporting tasks and responsible parties

Who will do what within this project? What are the various tasks that need to be completed in order for this project to be successful? It’s easy to lose track of all the little things associated within a project, which is why you list them here.

Continuing with the house-building example, then a supporting task might be acquiring building permits and making sure all construction is legal.

Schedule including milestones

Projects function using a project life cycle, or structured timeline that allows all parties to prepare for the future. What’s the timeline of this project? Two weeks? Two years? Include the project milestones, or major accomplishments that can be used to break up the project timeline so the contracted employees can adequately schedule out their progress.

Project schedule (Gantt chart) example courtesy of CA Technologies Documentation

List of necessary resources

What will you need to buy? What will you need to rent? What are you requiring contracted employees to already own that can be used for this project? Will you need to rent a warehouse, a playground, etc.?

List the resources and equipment needed in your SOW so it doesn’t appear as a surprise later on.

Financial details

In this section, outline payment information such as what you’re paying employees and how you judge their work. Are you paying hourly or a fixed rate once the project is completed? Are there resources for an increase in budget if necessary? This is common in construction projects, as professionals often run into roadblocks that increase original cost.

Be sure to outline the terms that payment is dependent on, e.g., “This payment will be delivered only if the project is completed by May 12.”

Regulations and guidelines

This section is a catchall for anything you’ve thus far failed to mention. Outline what you’re expecting from the completed product, or cover specifics such as who is expected to for any necessary travel.

Determining criteria

This section outlines what is considered a quality job, or provides details for how a vendor will determine a project is successfully completed. If the project is a house, the determining criteria might be, “The house is ready for consumer purchase.” 

If the project is a website, such criteria might be, “The website is ready to process e-commerce sales.” Projects are often ongoing, so it’s important to communicate when a contracted employee or team’s participation will be considered complete.

Signed agreement from both sides

For the above criteria to be made official, there needs to be a couple of signatures on dotted lines. Both parties should guarantee they have read all of the guidelines, criteria, scope, objectives, etc. and understand expectations. 

SOW signature page example courtesy of Template Lab

This aspect of the agreement is arguably the most important. If either side has questions or concerns, they should be communicated prior to signing the agreement.

Make a statement

Now that you know what goes into a statement of work, you should be ready to go out and contract the perfect employees for the job. 

Looking to learn more about project management? Read up on How to Conduct a Feasibility Study that Saves Time and Trouble.