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What is an SOW and free statement of work template.
Statement of work (SOW) documents optimize project time and costs.
No matter what industry you work in, project managers must distribute certain crucial paperwork to vendors coming on to a project. A statement of work (SOW) is a critical document that businesses use to agree on a scope of work with internal and external stakeholders. It sets expectations, prevents miscommunications, and keeps projects on track.
SOWs are straightforward to create, but a standardized SOW template should exist for your organization. Read on for a better understanding of what a statement of work is, why it matters, and how to write one that will protect both your organization and its vendors.
What is a SOW?
A statement of work is a document that details the scope of a project or task. It spells out the deliverables, timeline, and cost of a project. This legally binding document outlines the scope of work for a vendor or service provider. It usually includes:
- Deliverables
- Standards
- Project objectives
- Timeline
- Roles and responsibilities
- Payment terms and confidentiality clauses, if needed
A statement of work defines expectations between a client and a contractor, ensuring both parties are on the same page. The vendor and the client sign the SOW before work begins or payment is issued. This process usually requires several back-and-forth emails, but tools like Adobe Acrobat streamline collecting signatures.
Use cases for SOWs include:
- Small business proposals. Small businesses and freelancers can bid on projects using a statement of work template. A statement of work can help you win a project by showing the client that you understand their problem and plan to solve it.
- Research. SOWs in research and development (R&D) fields outline research scope, data collection methods, and deliverables.
- Marketing. Marketing SOWs include campaign objectives, deliverables like logos or marketing materials, and service guidelines.
- Government contracts. Vendors create SOW templates for public infrastructure projects and detail design concepts, safety measures, timelines, and more.
Statements of work differ from other documents you may encounter in your business, including:
- Requests for proposals (RFPs). An RFP is a document your business issues to request proposals from vendors. Potential vendors will send a business proposal in response to the RFP.
- Business proposals. Vendors often use a free business proposal template to generate a document outlining their service offerings. It’s usually less detailed than a statement of work and is designed to persuade you to choose that vendor. Once you accept the vendor’s business proposal, they create a statement of work to solidify a more detailed project plan.
- Status reports. Vendors provide regular updates through status reports. These documents track project progress against your statement of work, ensuring the project stays on track with your original goals.
Types of statement of work.
While you can use one SOW template for all business needs, be sure to understand the different types of statements of work. You may need to adjust template fields to accommodate various situations.
1. Design SOW.
This type of SOW provides detailed specifications and instructions that the vendor must follow to complete work. A design SOW is popular in industries like construction because it includes exact requirements for materials, processes, and methodologies. Blueprints or CAD designs are popular add-ons for design SOWs. Unlike other SOW types, it leaves little room for interpretation by providing exact details, which prevents miscommunications and ensures more accurate pricing and timelines.
2. Level-of-effort SOW.
A level-of-effort (LoE) SOW is ideal for projects where the work matters, not a specific deliverable. For example, a vendor offering customer service support would create a level-of-effort SOW for clients. This type of statement of work estimates the total time the service provider will spend on the project, lists resources, and provides a general description of what’s within the vendor’s scope of work. A level-of-effort SOW is more flexible in how the vendor performs the tasks as long as they meet the minimum service guidelines.
3. Performance-based SOW.
Performance-based SOWs emphasize outcomes and results over the work process. They list clear, measurable goals the vendor should achieve and usually include assessment criteria. Service providers have more freedom to determine how to accomplish the project goal, but they’re legally obligated to uphold their end of the bargain, so this type of SOW often comes with more pressure to perform.
4. Time-and-materials SOW.
A time-and-materials statement of work is ideal for situations where the vendor can’t initially estimate the exact scope of work. Instead, the vendor outlines the project based on time spent and materials used. This type of SOW often calculates costs and timelines by hourly rates, reporting requirements, and materials costs. It’s suitable for projects with changing requirements or uncertainty, allowing the vendor to adjust as needed.
5. Functional Statements of Work.
This type of statement of work outlines the necessary features or functionality of the deliverables. It details the essential specifications, capabilities, and performance expectations of the service or product being delivered. These are most commonly used in software development projects, where particular system requirements or functionalities must be clearly detailed.
6. Hybrid Statement of Work.
These SOWs integrate aspects from various SOW types to manage specific project requirements. They can include functional project needs, design specifications, performance metrics, and construction information, depending on how complex the project is. Hybrid SOWs are frequently used when numerous aspects of a project must be clearly defined and organized.
Statement of work template.
If you work with high-volume projects, you’ll likely need to generate SOWs often. Don’t start from scratch each time — use a statement of work template to speed up your workflow. Follow this customizable statement of work template to fit any business need.
Statement of work example.
While a template is helpful in various applications and industries, you may need to customize it to your business, client, or project. Check out this SOW example to see SOW personalization in action.
Project Name: New Employee Training Program Development
Company Name: Tech Solutions Inc.
Phone Number: 123-456-7890
Email Address: example@ABCtrainingservices.com
Company Address: 123 Innovation Drive, Suite 400, Tech City, CA 98765
Project Location: Tech Solutions Inc. Headquarters
Author: Jane Smith
Date: July 15, 2024
INTRODUCTION
This statement of work (SOW) outlines the agreement between Tech Solutions Inc. and ABC Training Services to develop a comprehensive New Employee Training Program. The project aims to enhance onboarding, ensuring new employees are well-prepared and integrated into the company culture.
The SOW details the project’s goals, scope, deliverables, timeline, costs, and payment terms to ensure clear expectations and successful project execution.
GOALS OF PROJECT
The primary goal of this project is to design and implement an effective training program for new hires at Tech Solutions Inc. The objectives include:
- Improving the onboarding experience for new employees
- Ensuring new hires have the necessary knowledge and skills
- Promoting company culture and values
- Reducing the time it takes for new employees to reach full productivity
SCOPE OF WORK
Deliverables
- Comprehensive training curriculum
- Interactive e-learning modules
- Instructor-led training sessions
- Assessment and evaluation tools
- Training manuals and support materials
Exclusions
- Out-of-scope services, such as ongoing maintenance or additional customizations, will incur extra fees and will be addressed in separate agreements.
Milestones
- Project kickoff: July 20, 2024
- Curriculum development: August 1, 2024
- eLearning modules completion: September 1, 2024
- Instructor-led training sessions: September 15, 2024
- Final review and adjustments: October 1, 2024
- Project completion: October 15, 2024
ESTIMATED COSTS
PRICING AND PAYMENT TERMS
The total cost of the project is $15,000. Payment is required in the following installments:
- Initial payment: 20% ($3,000) upon signing the SOW
- Curriculum completion: 30% ($4,500) upon curriculum delivery
- eLearning modules completion: 30% ($4,500) upon completion of eLearning modules
- Final payment: 20% ($3,000) upon project completion
The client will not be responsible for covering equipment fees or rent costs.
TOTAL COST
The total cost for the New Employee Training Program Development project is $15,000.
Benefits of using SOWs.
Statements of work are a best practice for both businesses and their vendors. Benefits of SOWs include:
- Setting clear expectations. A statement of work is essential to avoid misunderstandings between vendors and their clients when they join a project.
- Creating legally binding agreements. The contractor, client, or business representative should sign to show their agreement with the SOW. Once agreed upon, the SOW becomes an important document you can use as the basis of a more formal online contract.
- Mitigating risk. A statement of work protects the client from vendors claiming they were hired for different deliverables, project schedules, or other originally agreed-to details. Write clearly and use language that everyone will understand. Any ambiguity in the document could lead to problems down the road.
- Controlling costs. Unexpected costs strain the client-vendor relationship. Fortunately, using a statement of work minimizes surprise fees by outlining pricing upfront.
- Ensuring results. Statements of work establish criteria for evaluating project performance, making it easier to track progress and ensure accountability.
Frequently asked questions.
How do you write a statement of work?
A statement of work template is the easiest way to write a statement of work. One template will fit most situations. Tools like Acrobat for business also streamline the process, allowing you to create polished, personalized PDFs and simplify the review process with e-signing tools.
What is included in a statement of work?
A statement of work should include:
- The reason for the project or the problem that needs to be solved
- The objectives and goals of the project
- A scope of work statement that spells out what work will be done and lists any work the contractor does not include and will not do
- A description of what the vendor will deliver at the end of the project
- A timeline of when the project will start and end and any important deadlines or milestones
- A summary of how much the project will cost
How do I create a statement of work template?
Create a standardized design that you can reuse for multiple projects. Use tools like Acrobat to summarize SOWs, create a library of ready-to-go PDF templates, or build self-service web portals so employees can quickly generate professional documents.
What are statement of work requirements?
Every statement of work requires these elements:
- An introduction
- Statement of work goals and success criteria
- Deliverables
- Timeline with milestones
- Project team details
- Payment terms
- Signatures
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