A Statement of Work (SOW) is a legally binding agreement between a client and a vendor which outlines the key details of a project to be completed. Statement of Works are a critical part of the project management process as they establish legal obligations of the client and vendor throughout the course of the process.
As the Statement of Work agreement establishes the key details of the project, it enforces transparency between parties by giving them a framework to continuously reference throughout the project.
A Statement of Work is typically written by the client as it is their project, however this can vary depending on the project. In some cases, different people may be assigned to write different sections of the SOW.
If the Statement of Work agreement is for two or more internal parties, the writer is typically the project manager.
A Statement of Work agreement is typically written prior to the commencement of the project to ensure all parties are across expectation from the very beginning.
It is best to begin drafting the outline of a SOW from the moment the project idea begins to form and generally refine the details. It is best practice for a client and vendor to only begin working on the project once the SOW has been agreed and signed as it typically involves key details such as timeline and payment expectations.
The introduction is a short statement for the reader to introduce the project and who will be involved.
The Purpose section is used to outline the reason for the project. This section will typically detail project objectives and reinforce the significance of the project to the client.
The Scope of Work is generally the most detailed section of the Statement of Work. It covers the tasks to be done, and how the vendor will achieve the goals outlined.
The Location section will outline where the work will take place on the project. If the project is remote cloud-based work then this section will define how each member will be able to access the remote work environment.
The Milestones section will define the key measurable project milestones. This section is particularly useful to help all parties understand how intensive each task is and how quickly each task will reasonably take to complete.
The Deliverables section defines the exact output expected of the project. Typically this section is written to cover all specifics related to the project’s deliverables to ensure there is complete clarity from all parties on the expected deliverables including due dates and costs.
This section will outline the dates and order each milestone will be addressed and include the time expected to be taken (and billed) to complete.
The Standards and Testing section of the Statement of Work will outline any industry-specific standards, codes and testing that apply to the project. This section should also define when each testing stage should occur and who should be involved in each, what equipment is required to test effectively.
This section will define what a successful project will look like. This section is critical as it helps ensure all parties understand the purpose and ideal result of the project work.
The Requirements section will outline any particular or unique requirements that are needed to successfully complete the project. This may include security clearances, certifications, or even equipment.
The Payments section includes all details relating to the costs of the project. This can include expenses that will accumulate during each milestone, labour costs, payment schedules and how payments will be made.
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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