What Is a Statement of Work? How to Use One Within Any Project

Starting a new project is always exciting. But before anyone can roll up their sleeves and get stuck into the nitty-gritty of the work, everyone involved needs to be on the same page. 

Much like you wouldn’t venture off into the wilderness without a map and compass (we hope), every project should have a document that outlines what’s happening and when it needs to happen, and everyone involved has agreed to. In other words, a statement of work needs to be made.

This is often used in service-based work between two businesses, like a contractor and a client. The SOW outlines all the terms of the work agreement in detail, helping avoid disputes while the project is being completed. This document is usually signed alongside the master service agreement (MSA), which is the general contract between the two parties that details the overall business relationship. 

The MSA typically details the overarching terms and conditions of the business relationship, like payment terms, cancellation clauses, confidentiality agreements, intellectual property rights, and liability details. Meanwhile, the SOW provides more details about the project deliverables. Both of these documents are necessary to protect the client and service provider should legal disputes arise.

Since the SOW outlines the vital elements of the work, this information is best stored in project management software. This allows the wider team to review the deliverables and view deadlines for each project milestone.

Statement of work vs. scope of work

Although the statement of work and scope of work are similar, there are important differences between them.

The statement of work is the overall document that details all aspects of the project’s deliverables, deadlines, costs, and objectives. It’s a legally binding agreement that both parties sign before the project begins.

The scope of work is a section within the overarching SOW that outlines in detail how the work will be completed. This could include specific tasks or milestones and any resources the provider needs access to from the client before a specific deliverable can be made. The scope of work is essential to the SOW for setting client expectations around deliverables.

Types of statements of work

When defining the overall scope of a project, three types of statement of work are most commonly used. These are:

• Design: Design SOWs outline the specific tasks necessary for design-based projects to be completed. They are typically used in manufacturing, as they work best for outlining research into product development, prototyping new projects, and testing with potential customers.
• Performance-based: These SOWs are outcome-oriented, so they outline the objectives and goals of the project being completed in greater detail. The contractor or service provider is fully responsible for achieving these outcomes. Projects where the result or product is more important than the specific process being used to achieve it will use this type of SOW.
• Level of Effort: Also known as time and material SOWs, a Level of Effort SOW typically has payment associated with the number of hours worked on the project and the cost of materials being used. These SOWs are more flexible, as payment amounts could vary based on what is being done during the project. This gives the service providers freedom in time and resources to complete the work as needed.

What to include in a statement of work

Outlining the scope of work is a crucial element that must be included when writing a comprehensive SOW for a new project. Some of the other details that need to be included are:

• Project goals: The objectives for the project should be noted in the SOW, with more detailed deliverables built from these as action items on the way to completion.
• Project deliverables: The tasks that need to take place for the project to be finished are an essential part of the SOW for transparency and planning accuracy.
• Project timelines: Everyone involved in the project must be aware of the expected timelines for major milestones. Although these may change with consent from both parties, having a rough idea of these due dates can help project managers assign tasks and gather appropriate resources.
• Resources needed: Both material resources and human resources need to be accounted for in the SOW. This is especially important if the party contracting the work needs to provide resources ahead of or during the project work. 
• Costs: The project's overall cost should be stated in the SOW, along with the payment terms, such as whether the total amount is due upfront as a single payment or if the client needs to make multiple payments at certain intervals.
• Responsible parties: There may be several different groups involved in the project, so outlining who will be included is essential for keeping everyone accountable and on track.

Benefits of using a statement of work

A well-written statement of work should, alongside the MSA contract, form the foundation of the working relationship between two or more businesses. The more precise the SOW, the more likely the project will be a success. 

Greater cost control

With the SOW outlining the expected costs involved in the project’s completion from beginning to end, the contracting business knows upfront how much they’ll be spending on the work (unless working under a Level of Effort SOW). This keeps budget aligned for both businesses and manages these expectations from the beginning of the working relationship.

Reduced risk for both parties

Projects with detailed SOWs have every step clearly outlined. This leaves less room for errors on the journey to the project’s outcome. If mistakes are made, the SOW of work can be consulted to identify and address these before they become a bigger issue.

Project transparency

Throughout the project’s completion, the work team should provide updates to the contracting business regarding progress. This should align with the scope of work, deliverables, and timeline outlined in the SOW. Not only does this keep the project on track, but it can also reassure the contracting business that the project is aligned with goals and being completed as expected.

Top project management software

Projects can only be completed efficiently when teams can access relevant information that makes their work easier. Whether it’s timelines, tasks, or the ability to communicate with other team members, project management software makes the overall process more straightforward.

To be included in the Project Management category, platforms must:

• Create project plans and work breakdown structure (WBS) based on scope 
• Define, manage, and allocate resources based on demand and availability 
• Make project budgets and compare them with actual costs and expenses 
• Support multiple project management methodologies such as waterfall and agile 
• Provide project templates that can be modified or combined to create new projects 
• Manage interdependencies between tasks and their impact on deadlines 
• Automatically generate a critical path and update it when the project changes 
• Allow users to mass update tasks without changing interdependencies 
• Include multiple project views such as calendar view or customer view 
• Monitor project progress, resource utilization, and user productivity

* Below are the top five leading project management software solutions from G2’s Winter 2024 Grid Report. Some reviews may be edited for clarity.

1. Smartsheet

As a leading project management software solution, Smartsheet allows teams to automate various aspects of the project completion process while offering visibility and transparency across tasks and workflows. Project information is accessible from any device, with an easy-to-use user interface that works for various industries.

What users like best:

“The options in Smartsheet helps us maintain daily customer demands along with communicating with our customers through Smartsheet automation. Additionally, you can easily track and assign tasks to employees to ensure the customer demands and expectations are met in a timely manner.”

- Smartsheet Review, Gary K.

What users dislike:

“Despite its impressive features, one downside of Smartsheet is its relatively high pricing plans.”

- Smartsheet Review, Ayush S.

2. monday.com

monday.com is an all-in-one project management software that provides businesses and teams of all sizes with the tools they need to make their work successful. From custom dashboards and automation to communication features built into the software, monday.com makes completing any project more efficient.

What users like best:

“With Monday, you get all of the useful and necessary functions of a top tier PMS but with fun little features that keep my creative and adhd brain entertained. I WANT to use this software, I don't have to force myself to use it.”

- monday.com Review, Storie S.

What users dislike:

“The only thing I dislike are all the emails my company has set up for me to get. I am constantly checking my monday board, so to get emails with every notification is redundant, but I know there are many people who do need the extra reminder.”

- monday.com Review, Tyler T.

3. Asana

Asana is a project management tool that uses integrated automations and workspaces to help teams plan and manage their workload more effectively. From daily tasks to strategic initiatives, Asana gives team clarity over expectations and helps them accomplish their work faster.

What users like best:

“This is a great software to organize your tasks, especially tasks that take multiple team members to complete and keep accountable.The fact that all team members can access our to-do list and then can keep everyone on the team accountable.”

- Asana Review, Kaye L.

What users dislike:

“The only thing missing from Asana for me, is a clear way to database information as you would in other project management programs.”

- Asana Review, Michelle R.

4. Trello

Trello is a visual collaboration tool that creates a shared perspective for teams looking to increase productivity across their projects. Whether used for daily tasks, project assignments, or bigger to-dos, the free platform makes teamwork more transparent and easily shareable by using boards for each task.

What users like best:

“The best feature of this website is that it is very simple, this makes it possible for me to use it without having to complicate it excessively and the interface is also simple and intuitive.”

- Trello Review, Mike E.

What users dislike:

“As the number of project boards increases, it can look clustered and be confusing to properly navigate and prioritize the tasks, which can directly impact the work productivity.”

- Trello Review, Bikash P.

5. Quickbase

As a project management software, Quickbase offers users a clear view of tasks from a centralized dashboard. The Kanban board view makes dragging and dropping tasks easy, while the Visual Builder provides a quick way to create and update connected apps for merging information across tools. Built-in platform analytics allow admins to see how the software is being used across different teams in the organization.

What users like best:

“ Developing applications to fit into business processes is quick and easy. Power users can create reports for their needs without the need for a developer. The pipelines are helpful to support more complex data updates across multiple repositories.”

- Quickbase Review, Bob S.

What users dislike:

“One limitation we've experienced with Quickbase is that it's not as great with large datasets. There are limitations on table and app sizes, and things can slow down when you have a lot of data. If you're looking for a large data warehouse, Quickbase is not it.”

- Quickbase Review, Brittany S.

State your case!

With a statement of work in place, project expectations are more easily managed and run more efficiently. Once you’re ready to launch, you can check off the final deliverable in your SOW and get ready for your next exciting project.

Template out your SOWs and make new document creation faster with dedicated document generation software.