A statement of work is an important document every project manager deals with from time to time. It’s also misunderstood by many of the folks who use them on a regular basis.
This blog post will tell you what a statement of work is, why is it vital to the project management process, and how to write one effectively.
We won’t mince words; we’ll just give you the facts you need to know to craft your next statement of work much quicker.
What Is a Statement of Work?
We’ll start with the basics: a statement of work is a specific document that outlines a working agreement between two separate entities such as your company and an outside contractor. It details the deliverables the hired party is expected to supply, when they will provide them, and how they’ll be compensated for doing so.
A well-written statement of work will have at least the following elements:
This section of the statement of work describes the goal of the project. What is the company hoping to achieve by partnering with a private contractor? Whatever the desired objectives are, they need to be described.
The Main Deliverables
What is your company asking the contractor to deliver? This section goes beyond simply listing project deliverables. It needs to also include detailed descriptions of what completed work looks like and the quality standards it should meet.
Agreed Upon Timelines
No statement of work is complete without timelines and deadlines.
If you’ve hired an outside contractor to complete a specific project, when do you expect it to be done by?
When entering into a long-term relationship with another company who will supply your organization with either goods or services on a regular basis, be sure to include specific days and times that deliverables should be sent and how long the working relationship will last.
You need to outline pricing for all work performed and payment terms.
Will the entire project be paid at once?
Is a 50% deposit due before any work starts?
Maybe you’ve agreed to monthly installments. Whatever the case may be, be sure to include the pricing and terms in your document.
Finally, your agreement isn’t legally binding until both parties have signed on the dotted line. When both your company and the outside contractor have agreed on every element included in the statement of work, you can sign and begin your arrangement.
It’s worth noting that a statement of work is more than just a scope of work. A scope of work defines desired project outcomes and how they will be achieved. The statement of work is much more comprehensive and includes all of the elements mentioned above.
A statement of work should also not be confused with a project charter or a balance sheet. A project charter is a similar document to a statement of work but takes a more high-level approach. It is usually created after a statement of work has been agreed to.
A balance sheet is basically a “financial snapshot” of an organization or individual. While a statement of work will discuss financials, the numbers will only pertain to the specific project, not the business as a whole.
Why a Statement of Work is Important
So, why is a statement of work so important? That’s a legitimate question — especially when you consider the time crafting one properly will take. Is it worth the investment? Absolutely! Here’s why:
A statement of work is the best way to avoid conflict between you, the project manager, and the contractors you bring in to complete work for you. It ensures that both parties understand what is expected of them and are protected during the working relationship.
After you’ve created your statement of work, the document can be used to keep projects on track and on budget, shared with upper management to keep them in the loop on your progress and to guard against scope creep.
All in all, your statement of work is a very important document. The next section will discuss how you can craft one effectively, no matter what industry you work in.
Write Your Statement of Work
Now that we know what a statement of work is and why it’s important, it’s time to create one for yourself. There are a few different approaches to these documents that you need to be aware of:
The Detailed Approach
Often used in government contracts where specific rules and regulations must be followed, a detailed statement of work will spell out exactly how work should be done and any processes that should be followed.
This style of a document doesn’t leave any room for interpretation. Because of that, the party commissioning the project assumes most of the risk. After all, if the work is completed to their standards, but doesn’t perform well, it’s their own fault.
The Flexible Approach
Taking a flexible approach to your statement of work is perfect for project managers working with hourly service providers. The documents simply spell out the service to be performed, payment terms, and a few general guidelines. The service provider being hired is free (for the most part) to complete projects the way they see fit.
The Performance-Based Approach
This approach is a hybrid of the two above. The document will detail the purpose of the entire project, the results that must be achieved, and any resources that you, the project manager, will provide.
Outside contractors, however, are free to perform the work in any way they see fit, as long as the end result meets your expectations. This agreement puts more risk on the contractor than the commissioning party.
5 Steps to an Effective Statement of Work
Follow these steps and you’ll be well on your way to crafting an effective statement of work — no matter which of the above three formats you’ve chosen!
Step 1: Define Your Project’s Objectives
The first thing you need to determine is your project’s main objectives. What are you hoping to accomplish? What does success in this endeavor look like?
Your document needs to include concrete goals and targets that a contractor can aim for. But before you can accurately articulate your goals on paper, you need to establish them in your mind. So take some time to think about what you’re aiming for.
Step 2: Plan Your Deliverables and Production Process
Now that you understand what your goals are, you need to make a plan to accomplish them efficiently. Break your overarching objective down into manageable chunks.
What are the deliverables needed for each?
When should each step in the project be completed?
What quality standards do you expect to see?
These are all questions you must answer. Again, the more detailed you can be the better. The whole point of crafting a statement of work is to keep you and your contractor on the same page; to ensure there is no confusion. Do this by including all necessary information.
Step 3: Write Your Statement of Work
After you’ve answered the two foundational questions above, you’ll be ready to actually sit down and write your statement of work!
You’ll want to ensure that the language you use in your document is clear and specific. There should be no possibility of confusion. That being said, don’t go overboard. Your statement of work will be complex enough without you overcomplicating it. Do your best to include all relevant details while still keeping the document as concise as possible.
Step 4: Check Your Statement of Work for Accuracy
A statement of work is a legal document. As such, it’s of the utmost importance that yours be accurate and free of errors. If it isn’t, future problems are almost certain to erupt.
We recommend getting multiple eyes on your statement of work. Once the first draft has been written, show it to team members and upper management who are familiar with the project. If your company has a legal department or lawyer on call, show it to them as well.
Since this document is so important, you may want to consider hiring a trained, professional technical writer to draft it for you. This will allow you to focus on other tasks and ensure your statement of work is written in a professional manner.
Step 5: Get All Necessary Approvals
Finally, it’s time to get every stakeholder’s approval.
Is your boss ready to move forward with the document?
What about her superior?
The decision makers at your company need to carefully read and approve your statement of work. Once they do, it can be sent to the outside contractor you plan to partner with. They will also need to review and agree to the document.
When both parties have signed the statement of work it becomes a legally binding document and your first steps in the new partnership can be taken.
Your statement of work is a very important document. It outlines a working agreement between your company and an outside party — the objectives you’re hiring them to accomplish, the time frames work should be completed in, the payment they will receive in return for their service, etc. — and helps keep confusion from derailing your project.
No matter which approach you take to your statement of work; detailed, flexible, or performance-based, make sure to start the document creation process by defining your project’s objective and process. When you write it, ensure clarity and check your finished product for errors. Finally, get the appropriate authorizations before beginning any work.