A Statement of Work is a legally binding agreement between a client and a vendor. This agreement outlines the key details of a project to be completed including: objectives, expectations, goals, deliverables, timelines, costs and more.
A Statement of Work is used to enable transparency between the two parties and ensure each party has a clear understanding about what is expected from themselves and the other throughout the duration of the project.
Statements of Work are most often used when a business requires the services of a specialty partner such as an external design agency or a building contractor, although in some cases a Statement of Work may be drafted when internal teams collaborate on a project if the parties deem it necessary.
This agreement is then documented for reference throughout the project to ensure all parties are across what is expected of each other at any given time.
A Statement of Work will usually be shared among the: project manager or project lead, the contractors or collaborators, plus any additional team members involved with the drafting of the contract, e.g. Legal, Executive sponsor, etc.
You should opt for a Statement of Work when you need to create a blueprint of goals and expectations of an entire project from start to finish when multiple stakeholders are involved.
Read here for a Statement of Work template.
While a Statement of Work and a Scope of Work both can use the acronym SOW, there are some clear differences between each.
The major difference between a Statement of Work and a Scope of Work is that a Statement of Work is legally binding, whereas a Scope of Work (in isolation) is not.
That being said, most Statements of Work include a Scope of Work as one of it’s sections which is legally enforceable.
While a Statement of Work agreement encapsulates all details regarding a project's objectives, goals and expectations, the Scope of Work section specifically outlines how a vendor will deliver goals and key milestones of a project.
A Scope of Work (SOW) is a section in a Statement of Work between a client and a vendor which outlines the key details of work to be done by the vendor for the client. Upon the beginning of a project, the vendor and client will typically come together and discuss the needs of the client and the capabilities of the vendor.
The Scope of Work is a more specific description of the goals and deliverables of the vendor, and the specific tools required to complete the project. This transparency between the client and the vendor allows the client to be clear on what the vendor will and will not deliver as part of the project.
You should opt for a Scope of Work over a Statement of Work when you require more elaborate details on the project requirements. E.g. a project manager briefing their team on the tasks, processes, performance requirements and timelines of a project.
Statement of Work Agreements (SOWs) are a critical component to many business/vendor relationships as they ensure all parties have a clear understanding of the scope and key details of any projects before they begin.
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