What is a Statement of Work? Definition and Template

Scope creep is one of the most pressing challenges faced by project managers today and the Statement of Work document is a critical tool that helps significantly mitigate these challenges. However, Statement of Work, also commonly known by its abbreviation SoW, often gets mistaken for another closely related tool, the scope of work document. 

In this post, we will explain both Statement of Work and scope of work, identity their differences and different uses and help you get started on leveraging the benefits of these tools.

What is a Statement of Work?

A Statement of Work, commonly abbreviated as the SoW, is a comprehensive formal agreement that outlines the project’s deliverables and accounts of how they will be delivered. It acts as the foundation for project planning as it lists out the specific project requirements, activities, goals, deliverables, timelines and more. 

These lengthy documents, often reaching up to 12 pages, are often used for external contracts to minimise potential issues of miscommunication and conflict throughout the project. By openly discussing and agreeing upon a defined approach and focus of a project, clients and customers a less likely to make unreasonable or unjustifiable changes that can lead to project failure.

When is it best to use Statement of Work

A well-written Statement of Work (SoW) in conjunction with a powerful PPM solution can significantly improve project performance and success. With this document, teams can easily document their progress, assess changes and make decisions based on holistic and accurate data. They are particularly suited for projects that deal with external clients or vendors so as to mitigate any potential risk of disputes. It ensures that all parties are in agreement with each other, that all necessary compliances are met and processes are respected. 

Key features of Statement of Work

SoW documents come in different formats depending on the organisation and there are some amazing pre-made templates available to help get you started. However, there are some critical features an effective SoW should have:

Introduction

It is always great to start off your SoW with a brief introduction so readers know exactly what project it is and who is participating.

Project Purpose

This section outlines the justification behind the project. This outlines the objectives and purpose of the project to allow the reader to understand why the project is valuable.

Scope of work

The scope of work section is typically the most detailed and will outline the individual tasks, responsibilities and resources needed to accomplish different tasks. 

Location

This section details where the project will be delivered. Depending on the nature of the project, this can be a singular geographic location or can be set in a remote environment in which the team’s time zones and downtimes must be accounted for. This also identifies if there are instances where teams must be on site for special occasions that relate to project progress.

Project Tasks

Building upon the original scope and with the additional help of a Work Breakdown Structure (WBS), this section breaks down the project into individual tasks and contains details on who will complete the work and how it will be completed.

Milestones

Milestones are a great way of providing a general outline of the project’s schedule and breaks down the entire project into smaller chunks. These milestones are often set in conjunction with the WBS and project schedule.

Deliverables 

This section lists out all the expected deliverables along with their expected due dates. These deliverables are typically specific and quantifiable to avoid misinterpretation.

Schedule

The schedule can outline more than expected due dates. It further defines the expected start and end times of each task and any additional billable hours. 

Industry standards and testing

The SoW will list out all industry-specific standards that may apply to different tasks and all necessary compliances that must be met. Additionally, if testing is required for the project, all the requirements, expected timelines and other resources will be listed out here.

Success definition and measures

This section includes a clearly defined and agreed-upon definition of what all involved stakeholders would consider a successful project. Depending on the type of project, different measures of success or performance indicators can also be included to reduce opportunities for misinterpretation.

Project requirements 

This section not only lists out the necessary requirements of the project such as certain certifications, equipment, and resources.

Special requests

This section outlines other requests that may not have made it to the core objectives and requirements of the project but can be considered as the project progresses. This also helps outline how additional requests can be made, assessed, prioritised and incorporated into the project as it progresses.

Contractual details

This involves the outline of legal proceedings that include details such as the type of agreement, terms and conditions and other stipulations that have been negotiated by the client and team.

Payment schedule

This section outlines the project acceptance schedule, the overall budget, payment timeframes and payment methods for the project. For example, there can be an agreement that payment is to be made after certain milestones like feature deployments or testing sessions.

Miscellaneous/ Other

This section involves any other relevant information that does not fit into the prior categories but should be made known to all stakeholders. Items in this section can include discussions on security issues, restrictions, certain project assumptions, travel costs, and more.

Scope of Work vs Statement of Work

While the two documents are often interchangeably known as SoW, they have distinct differences.

Scope of Work 

The scope of work document is the foundational document that helps outline the necessary resources or outputs to help achieve the project’s deliverables. It is typically used internally with a focus on aligning your project team on project deliverables to avoid backlogs, timeline overruns and additional expenses. This is often crafted alongside a work breakdown structure to clearly define tasks and contingencies within the project.

The typical components of a scope of work document include:

  • Project Objective
  • Project Timeline
  • Project Milestones
  • Project Deliverables
  • Project Reporting

As you can already see, the Statement of Work (SoW) document adds upon the scope of work and can also act as a legally binding document. It has a higher-level approach that looks at detailing not only what needs to be done, but how it should be done. From outlining special requests to contractual details and defined measures of success, the SoW is vital to minimising the risk of miscommunication and conflict with external clients or stakeholders.

Start crafting your own Statement of Work document!

The Statement of Work document is a particularly handy tool that aims to minimise the chances of scope creep within a project. It builds upon the critical scope of work document to provide a robust structure for teams and stakeholders to plan, collaborate and negotiate with confidence and clarity. And now you want to tap into those benefits!

Well lucky for you, we have made it easy by providing our easy to use and editable Statement of Work templates. Make sure to download them here and get started on your journey to fully overcome the challenge of scope creep.
If you want to learn some more project management tips and gain access to great resources such as whitepapers, webinars and templates, make sure to check out the pmo365 blog and resources page!

Daniel Stopher

Daniel Stopher

Dan is the Chief Customer Success Officer at pmo365. Helping clients globally achieve project portfolio success. Dan also loves surfing the eastern coast of Australia.

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