When hiring a business or individual in connection with a project, it is important that all parties create and agree to a clear and precise Statement of Work.
A Statement of Work (SOW) is a formal document entered into by parties involved in a project that specifies in clear understandable terms the work to be completed. A SOW should captures and defines the specific work to be performed for a client, deliverables, and a timeline that a vendor or contractor must execute – at a bare minimum.
A SOW needs to contain the material terms of what needs to be done in as definitive and precise of a manner as possible.
Generally, these are the three major types of SOWs:
- Design Based SOW – This type of SOW tells the supplier how to do the work. The statement of work defines buyer requirements that control the processes of the supplier.
- Level of Effort SOW – This SOW type can be written for almost any type of service. The deliverable in this type of SOW are the number of hours of work performed; and
- Performance Based SOW – In this kind of SOW, the seller is given the freedom to determine how to meet the buyer’s requirements. This generally includes 3 parts:
- Scope of work
- Applicable Documents
- The arrangement of technical tasks and sub-tasks required
Typically, every type of SOW will contain:
- Who pays the costs;
- The timeline for payment;
- A description of all deliverables and when they are expected;
- The tasks and sub-tasks required by the project;
- Who will perform those tasks and sub-tasks;
- The project’s governance process and management structure;
- The resources and materials required for the project;
- The facilities to be used;
- The equipment needed; and
- A timetable with different benchmarks covering when each deliverable, task or sub-task should be completed.
Often, payment information is made contingent upon successful completion of certain tasks and/or benchmarks. Full payment is not be made until both sides agree that the project is complete and all deliverables meet agreed-upon specifications.
When writing a SOW, we recommend the following:
Be clear. Specificity in describing the project’s scope and requirements is key. Make sure benchmarks are clearly connected to completion of necessary tasks. This not only clarifies your expectations, but will be helpful to an attorney should a breach occur that needs to be litigated.
Keep it simple. Keeping the language of the SOW as simple as possible will promote the clarity we just discussed. Avoid using legal terms and technical jargon. Use drawings, illustrations, diagrams, charts, pictures, tables, and graphs if they clearly improve the communication in describing the requirements. Your goal should be to create a document everyone can understand.
Utilize Expertise Around You. When distilling technical matters into simple terms, check with your technical and legal experts to make sure you are expressing what you mean. Ultimately, the task of writing a SOW should fall to those experts working as a team.
Following these steps increase the likelihood of successfully completing a Statement Of Work that best reflects your needs.
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