Definition: Statement of Work

What is a SoW and where would you use one?

What is a Statement of Work?

A SoW defines contractual obligations of two or more parties to each other, typically during a project. It is a key document as part of a project manager's project management activities.

The SoW may be developed by a supplier and presented to a customer to review and sign. It could also exist between a supplier (the main contractor) and a sub-contractor who will deliver work to the end customer on behalf of the main contractor.

The Statement of Work will include a level of detail that isn’t normally included in an estimate, or even when writing a bid / tender / proposal document..

If there is any ambiguity about what is or isn’t included in a project’s scope, a well written Statement of Work document should be able to clear up

What to include in a Statement of Work?

The SoW will be created from an understanding of the business need, the business case, the project scope description and the strategic plan.

An SoW should define the scope of the activities (e.g a workshop) and/or deliverables (e.g. a report) that together form the basis of a project. It should also include the timescales or deadlines that these activities should be delivered against.

The SoW should outline quality expectations and the projected outcomes and benefits that the customer expects to receive by either the end of the project or by an agreed timescale after the project. On bigger projects these may be seperated out into key milestones.

The SoW should contain details of fees that will be charged as well as penalties for non-performance, or slipped timelines.

The SoW may also include details of reporting lines, escalation procedures, key persons and their responsibilities, communication lines or commitments and any key activities between specific people or groups of people.

The project may also highlight potential risks to the project as well as countermeasures to manage these risks and help keep the project on course.

Both parties should indicate their agreement by signing the document, if it is to be legally binding. This is to ensure that any legal action as a result of either party not meeting their responsibilities will stand up in court.

Changes to an agreed SoW would require a new SoW to be developed, superseding the old document, and signed by all parties. This is preferable over the creation of an addendum to the original SoW, which can make things messy and complicated to review and enforce..

When is a Statement of Work employed?

The SoW document is very common in consultancies and is used to agree the specifications of a project with a customer and helps provide clarity as well as reduce risk.

A SoW is not just used to define what a customer expects from a supplier, but also helps to de-risk a supplier’s project by outlining what the supplier requires from the customer - such as information to be supplied for analysis, or people to be available for meetings, interviews and workshops.

The document should clarify that in a situation where the customer fails to deliver these requirements, the supplier may be released from their responsibilities (or at least will be exempt from any potential penalties related to sub-optimal performance).

Other significant commercial documents: