A well-organized Statement of Work (SOW) is your first opportunity to show your agency’s value as a partner.
When writing an SOW, you must clearly define your offering and establish the guidelines of your relationship.
To do this, include relevant and specific information that will catch your prospect’s eye and allow you to highlight your agency’s unique value proposition.
That’s pretty ambiguous, though. There’s a lot you could include in an SOW.
So, what should you include? Here are 7 essentials.
What’s a Statement of Work (SOW)?
A statement of work (SOW) is a document that describes a project’s requirements. Said another way, an SOW outlines the scope of the work, deliverables, timelines, payment terms, and anything else pertinent to the business relationship.
A statement of work essentially sets expectations for the customer-business relationship and holds both parties responsible. An SOW also acts as “protection.” For example, if a customer and business disagree on the payment conditions upon the project’s completion, they can reference the SOW.
Statement of Work vs. Scope of Work
Statement of Work and Scope of Work are often used interchangeably, especially because you can abbreviate both with “SOW.”
They’re not the same—here’s the (relatively small) difference:
A Statement of Work is a formal document that describes the project’s goals. Meanwhile, the Scope of Work is a part of the Statement of Work that describes the plan to deliver the outcomes for which the customer is paying. Think of a Statement of Work as the book and the Scope of Work as a chapter.
What Should You Include a Statement of Work?
No two Statements of Work are the same because no two projects are the same.
Each project requires a unique SOW that outlines the specifics of that engagement. That said, almost all SOWs will include seven elements: the Scope of Work, deliverables, time and resources, payment terms, client services, changes, and terms and conditions.
Let’s look at each one.
1. Scope of Work
We’re already covered this essential, but it’s worth repeating.
The Scope of Work outlines what’s actually going to be done or what could be done if required. This is where you’ll use words like strategy, project, plan, etc. Your benefit to the client should be made most evident.
Your benefits should be at the heart of this section. What can you include to show them you took the time to carefully craft a plan to fulfill their needs?
While it’s important to lay out your goals and schedule, it’s also important to establish a two-way flow of deliverables. These are the guidelines attached to the Scope of Work.
As you build your SOW, lay out the key accomplishments and milestones and when their deadlines.
Consider this the verbal, more friendly version of the Terms and Conditions (see below). After all, a big factor in meeting your deliverables is having a cooperative partner.
3. Timeline and Resources
You should also include a detailed project timeline and any related resources, including the project’s duration, required tools and resources from both parties, and where the project will occur.
4. Payment Terms
It is always smart to be upfront when discussing money, so create a billing plan with clear payment terms, including payment due dates, payment methods, and any additional terms that could apply.
Typical payment terms include “by deliverable” or “by schedule.” For the former, the customer pays when you reach certain milestones. Paying “by schedule” means the customer sends you payment on a pre-defined date, like every month or bi-weekly.
No one likes to feel duped, nor do they like hidden terms, especially in a down economy forcing many businesses to pinch pennies like never before.
5. Client Services
Tell your client who they will interact with when contacting your company and across what mediums, including email, phone, text messages, etc.
Communication is important in the relationship-building process. This section of a Statement of Work establishes how you’ll do that.
There will most likely be some tweaks during the project—and that is ok.
During times of “scope creep,” i.e., the unauthorized additions to a project, it is important to show you are flexible and understand that sometimes change is necessary (within reason).
That said, it is equally as important to communicate your expectations about any changes and how they will impact the original Scope of Work and project timeline.
7. Terms and Conditions
As with any contract, you must include legal information, including contract termination, invoicing agreements, damages, and other legal issues relevant to your relationship with the customer.
The Importance of a Statement of Work
There’s no right or wrong way to write a Statement of Work, but there are essentials, including the scope of work, deliverables, time and resources, payment terms, client services, changes, and terms and conditions.
Include these—and anything else you deem relevant to the project—and you’ll be in a prime position to demonstrate your willingness and interest in forming long-standing relationships with your clients. You’ll realize a host of other benefits, too.
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