Project Statement of Work (SoW)

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One of the leading reasons why projects exceed costs is scope creep. Lack of clarity on a project’s scope and limitations can prevent a team from concluding projects and sending invoices for payments. To avoid these, document your agreement with your client in a project statement of work (SoW). This way, you can ensure all the important details are written down before development begins.

Read more: Significance of Keeping Documentation in Project Management

What Is a Statement of Work in Project Management?

A statement of work document outlines a project’s scope, deliverables, requirements, payment terms, timeline, and other parameters to clarify expectations between the client and the project team.

This is usually created during a project’s initiation phase. It’s a project document that can serve as a foundation for all succeeding phases.

3 Types of Statements of Work

The type of SoW you need will depend on your industry, client, and project. Here are three types you can consider.

Performance-Based

If your client is more concerned about the result of the service than the process, a performance-based SoW may be a good option for you. This SoW indicates the results that clients are looking for. The means and processes to achieve them are decisions that the project team can take care of.

For example, a PR agency could commit to 16 pickups of a seeded article. The end goal is all the client needs; to meet this goal, the project manager may opt to send gifts out to the press, take them out for lunch, or simply send the press release with a straightforward note. Regardless of the process, the results will define the project’s success.

Design

A design statement of work, in contrast to the performance-based SoW, is highly concerned about the process by which the end service or process is achieved. The manufacturing industry, in particular, commonly uses this type of SoW.

Materials, approach, and process are specifically indicated in a design SoW, and the project team is expected to follow them to the smallest detail. This is important for products whose integrity relies on what and how they’re made.

For example, pharmaceutical company Pharmanex prides itself on its 6S Quality Process. They use this to solidify their claim that all their products are of premium quality and safe to use. If they were to outsource any of their manufacturing, that service provider could expect that the project team to be stringent in their compliance.

Level of Effort

A level of effort SoW indicates tasks that need to be done and the estimated effort (usually in terms of time) each task requires. This grants transparency to the process and gives the client a deeper understanding of the approach the team will take, along with the resources they’ll need.

This is a common SoW used for project bids on service-based agreements. With a level of effort SoW, prospective clients can inspect the credibility and feasibility of a bidder’s commitments. It also clarifies expectations on what the team will need from them if the project pushes through.

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Importance of a Project Statement of Work

It aligns and records expectations. Documenting agreements on scope, dates, and resources makes it easy to communicate with all internal and external stakeholders. Indicating expectations on process, materials, deliverables, quality, and other resources helps all parties anticipate dependencies and requirements when the project begins. Putting agreements on paper also provides an easy reference if there are disputes or breaches.

It forms the foundation of the project plan and contract. With deliverables, milestones, and timelines outlined in an SoW, the project manager can build processes and plans around them to ensure they’re met. The details of a SoW are also the main basis of a project contract.

It provides protection from scope creep. Outlining the deliverables and milestones allows project teams to deflect requests and additions to the scope mid-production. These factors can be harmful to a project’s success; a clear SoW can help mitigate them.

How to Write a Statement of Work Document

A statement of work can be as meticulous as needed. While the exact contents of an SoW will vary depending on several factors, here are some parts to consider when making one.

Introduction and Purpose

Start by setting the stage and context of your project. Help the reader anticipate what your document will talk about, who you are, and what other stakeholders are involved.

  • Introduction and Summary: Briefly describe the work that has to be done.
  • Key Stakeholders: Indicate the agencies, companies, and groups involved in the project, whether as beneficiaries, benefactors, financiers, or part of the project team.
  • Purpose Statement: Describe the impact the project’s outcome hopes to achieve. Align this to business goals.
  • Table of Contents: If you’re submitting a soft copy, hyperlink the parts to their respective titles for easy navigation.
  • Company Name and Contact Details: Include your company name, your address, and contact details.

Project Parameters

Give your reader an overview of your process, team, and schedule.

  • Team and Responsibilities: List the members of your team and their roles.
  • Scope: Outline what the project will and will not cover, as well as the areas the project team will be responsible for.
  • Location: If your project is tied to a location (e.g., construction projects), indicate it here.
  • Tasks and Deliverables: List the tasks the team will have to do. Depending on the type of SoW you’re creating, the level of detail for this part may vary.
  • Submission Schedules: Indicate your commitments to when you’ll submit each deliverable. Be sure to meet with your team, so estimates are realistic and accurate.
  • Costs: Develop a budget for the proposal.
  • Resources Needed: Include pieces of software, equipment, and other resources you’ll need to accomplish the project. Also, indicate how they’ll be procured and other pertinent details, such as the source of funds.

Success Indicators

Document your agreement with the client on what you’re committing to deliver. Refer to this once your project is complete for acceptance criteria.

  • Key Performance Indicators: Determine how progress and success will be measured.
  • Completion Requirements: Determine what deliverables need to be completed and what points need to be met.

Processes

While not all processes are relevant to all clients, consider adding the ones that require a level of their participation, such as communication procedures, payment procedures, and more.

  • Quality Assurance Procedures: Testing to ensure the integrity of the output.
  • Communication Procedures: Determine the frequency of reports and updates.
  • Payment Procedures: Consider invoice dates, payment terms, payment modes, etc.

Other Sections

Feel free to add more parts as you see fit. These can be terms and conditions, restrictions, security requirements, visuals and diagrams, or other pertinent information.

Read more: What Is Critical Path in Project Management?

Adding a Statement of Work to Your Project Documents

A well-written statement of work can help you and your team gain clarity on what you’re trying to accomplish. It’ll also help you align with relevant stakeholders and guard against scope creep and cost overruns.

Consider adding this to your project documents. While it can be tedious work upfront, it can spare you from a lot of stress in the long run.

Recommended Project Management Software

If you’re interested in learning more about top-rated project management software, the editors at project-management.com actively recommend the following.

1 Wrike

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Wrike is the most powerful work management platform on the market, enabling teams to plan projects and collaborate in real time. Our award-winning software is trusted by 20,000+ companies across the globe, including Sony, Estée Lauder, and Siemens.

Wrike’s customizable features include Gantt charts, request forms, dashboards, cross-tagging, time tracking, and proofing. Integrate with 400+ apps from the likes of Microsoft, Google, and Salesforce. Automate repetitive tasks and achieve 50% faster planning. Work from anywhere with 100% access to your files via our mobile and desktop apps.

Whether you’re a small startup or an established brand, Wrike has the solution for you. Paid plans start at $9.80/user/month. Join our community of 2.3 million — start your free two-week trial today.

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2 Smartsheet

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Smartsheet is a leading work execution platform that has real-time work management features, collaboration and automation tools. Users are presented with a familiar and easy-to-use spreadsheet-like interface. However, it has enterprise-grade capabilities that even Fortune 500 companies like Cisco, Bayer, HP, and PayPal are confident to adopt in their business. Strong project management features enable teams to utilize different views of real-time data, and switch easily from Gantt, card, grid and calendar views. Smartsheet has automatic update requests, and can be used for waterfall and agile projects, product launch, sprint planning, and more. The resource management feature provides users the visibility who is busy, and who is not, in real-time. They can also attach files, share sheets, get notified, view the activity log, export, email, and print.

Learn more about Smartsheet

3 ClickUp

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ClickUp is one of the highest-rated project management tools today. Use Docs, Reminders, Goals, Calendars, Chat, scheduling, assigned comments, custom views, & more with this all-in-one project management tool.

Used by 800,000+ teams in companies like Airbnb, Google, and Uber, it brings all of your projects into a single app! Built for teams of all sizes and industries, Our fully customizable & proprietary features make it a must-have for anyone wanting to keep project management in one place.

Learn more about ClickUp

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