Resource management is important for every company because it increases efficiency, employee satisfaction and saves time and money. In this article, we will introduce the topic of resource management and how to implement it in your organisation....
The short answer is: yes, you should! A good Statement of Work (SOW) may save you a lot of stress, time, and costs. Sounds like something worth trying out, right?
In this blog post, we’ll cover the basics of writing an effective Statement of Work. We’ll also go through the most significant benefits of this document. But first, let’s take a moment to explain what an SOW is and its place in the project management process.
What is a Statement of Work in project management?
A Guide to the Project Management Body of Knowledge defines the project Statement of Work as a narrative description of products, services, or results to be delivered by a project (source: PMBOK® Guide – Fifth Edition).
Essentially, it’s a document that outlines different aspects of the project, including:
- scope of work,
- schedule and due dates,
- standards and definition of success,
- payment details.
The Statement of Work needs to be signed off by all project stakeholders and is often a part of a project contract.
You might wonder about the difference between a Statement of Work and the scope of work. The first one is the name of the document that usually includes the scope of the project. When we say “scope of work,” we typically refer to the work that needs to be done to deliver a project. Documenting the scope is an essential element of effective project scope management. You can do that by creating the so-called work breakdown structure (WBS) that allows you to visualize a scope. It could also be a good idea to add the WBS to your Statement of Work.
Main benefits of creating an SOW
At the top of this blog post, we mentioned that a good work statement could save you a lot of nerves and money. It’s especially true when you’re working with external stakeholders, and your project is quite complex. Having a single source of truth regarding the work you should and shouldn’t be doing can be a lifesaver. Thanks to a Statement of Work you can:
- Manage expectations – your SOW should clearly outline what’s in and out of your project’s scope. It is helpful for the project team but also allows you to manage your client’s expectations. When there’s project transparency, all parties know what to expect and when.
- Resolve conflicts – sometimes, even when you clearly define the work your team will be doing, disputes or misunderstandings may still arise. The Statement of Work is here to help you solve them: when in doubt, reference the SOW! Understandably, this means that your SOW should be accurate and detailed enough to be helpful when you and the client need to clarify some things.
- Avoid scope creep – scope creep, the uncontrollable growth of your project’s scope is more likely to happen when the work is ill-defined. With a Statement of Work, everyone involved knows not only what needs to be done, but also when it should be delivered and what’s the “end product”. Of course, some change control processes should also be in place for when you need to make adjustments to the project.
What should you include in a Statement of Work (SOW)?
It’s essential to note that projects can be very different so, depending on the nature of projects they deliver, different companies may use very different Statements of Work. There are, however, some elements, that your SOW will typically include. Let’s go through them one by one:
The introduction to your Statement of Work is where you can summarize the project and outline all of the parties involved. The summary of the project is usually where you explain the purpose and the vision of the project. What is this project about? What is the business objective for delivering it? What problem will the end-product solve?
Explaining these elements at the top of your SOW will help you set the tone for the whole document and also provide a rationale for including or not including particular deliverables in the scope.
In this part of your Statement of Work, you’re trying to answer two questions:
- What will be delivered?
- What will not be delivered?
Understandably, this section cannot be too vague, as it may lead to some misunderstandings. On the other hand, you might not be able to, for instance, outline all of the tasks at this point. If that’s the case—it’s okay. The critical thing is that you accurately reflect the scope you and other stakeholders have agreed on.
You can go from a more general overview of the scope to listing particular steps and tasks the project team will need to do. Don’t forget about the deliverables, and be specific about them. It’s vital to avoid ambiguous phrases like stating that you’ll deliver this or that. If you want your Statement of Work to be helpful in potential future negotiations with the client, it should be as clear as possible.
It could also be a good idea to include a negative scope in your SOW. We’re talking about these elements of the project that were discussed with the client or are present in competitors’ products, but ultimately you agreed not to put them in the scope.
Schedule & milestones
As you’re describing different steps in the project, you might want to include milestones and due dates as well. Some projects will have fixed deadlines, while others won’t, so you won’t always be able to specify the exact period of performance. Still, it’s helpful to at least communicate different phases of the project in the SOW and the approximate amount of time they should take.
Acceptance criteria, definitions of success
We’ve already emphasized that you need to use precise language in the Statement of Work and present the project accurately. The same goes for standards and acceptance criteria your SOW should also include.
Imagine that your team is working on a mobile application for the client. It’s not enough to just describe the app’s features in the SOW. What if your app works as specified on most mobile devices, but not on all of them? If you and the client didn’t agree on a list of platforms the app is aiming for, you would find it difficult to argue that the job is completed successfully. This is why it’s so important to include some industry-specific standards. For software development projects they may include details about:
- testing (How the product will be tested?),
- devices, browsers, operating systems.
- product downtime and maintenance,
- security standards etc.
You may also mention the client’s responsibilities in the SOW document—do they need to provide any assets, for instance?
Finally, record the project’s definition of success: what does the client expect the successful project to be like? Who will be in charge of determining whether the project is a success?
Price and payment terms
Information about the budget is an integral part of your SOW. If you’re able to present the costs of the project, write them down. If you’re working on a time & material basis or there’s another arrangement in place, explain its terms clearly. Don’t forget about additional project costs: license fees, equipment, travel, etc.
The payment schedule should also be specified in the SOW. When should you expect the payment? Are there any installments? As a company in charge of the project, it’s in your best interest not to leave room for doubts in any parts of the SOW and, understandably, this section is no exception.
Did you collect all the details needed in your Statement of Work? Make sure that all parties involved are familiar with the document and get it signed off.
Save your company a lot of money and hassle with a good SOW
By now, you understand the value of a well-written Statement of Work. Whether you’re running a boutique agency or working for a larger organization, it’s a useful element of your team’s project management process. Share our guide with project managers at your company and encourage them to create SOW documents for different projects they run.
Here, at the Teamdeck blog, we often share project management guides. Here are some pieces you and your teammates might find helpful: