What Is a Statement of Work in Project Management?

By Indeed Editorial Team

Updated December 3, 2022

Published November 5, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

As a project manager, you're responsible for generating documents that define a project. A statement of work can be necessary to outline the project's activities and timeframes in detail. You may use a statement of work to summarize the most crucial parts of any project and serve as a reference during the process. In this article, we discuss what is a statement of work in project management, learn how to classify and develop this document, discover the difference between a request for proposals and a statement of work, and explore an example of this report.

What is a statement of work in project management?

A statement of work in project management is a formal document that explains the total scope of work performed by a vendor and includes information about pricing, milestone, parameters, timeframes, and deliverables. These deliverables are the quantifiable products or services that the contractor supplies to the client. Businesses require a statement of work when a project involves contractors or external contributors, in addition to the project's internal staff. Typically, they include a statement of work as part of a contract, or as part of a bid document, which can specify the plans of a project.

As a manager, you can create statements for internal and external projects to communicate all critical details to stakeholders, sponsors, team members, and contractors. You can use this document as a guide for your team and clients and avoid misunderstandings about goals, deadlines, and deliverables. All managers and stakeholders may contribute to planning and understanding the statement of work to establish clear success criteria and minimize disagreements over deliverables, budgets, and schedules. A statement may include:

  • all deliverables and their associated due dates

  • the various functions that contribute to the deliverable

  • the individuals responsible for those functions

  • the project's governance process

  • costs and payment deadlines

Related: How to Become a Project Manager (With Salary Expectations)

Classification of statement of work

Depending on the industry and the nature of the project, these statements may classify into one of three major groups, which are:

  • Effort level: Describes the materials and time required for the project

  • Design: Explains the specifications for the tasks, such as quality, dimensions, or materials

  • Performance: Details the project's general objective and sets the quality of resources and deliverables

The terms “statement of work” and “scope of work” aren't interchangeable. The two documents have distinct functions. Scope of work is an integral aspect of a statement of work and often describes the tasks assigned to a contractor or freelancer.

Related: What Is Project Management? Definition, Steps, and Skills

What can you include in a statement of work in project management?

Most statements of work include the following sections:

  • Project objectives: the project's goals

  • Project scope: the total amount of work involved

  • Project deliverables: the products or services you intend to provide

  • Project tasks: the required activities

  • Project location: the potential location of the project

  • Project milestones: the objectives that serve as a gauge for progress

  • Project schedule: the project's timelines and deadlines

  • Project payment: the project's payment amounts and dates

  • Project success: the criteria for completing the project

  • Project standards: the minimum standards of quality

  • Project requirement: the equipment or other materials the team can use or provide

Related: How to Write a Project Manager Resume (With Template and Example)

How to write a statement of work in project management

Here are some steps that you can follow to write a statement of work in project management:

1. Start with an introduction

Begin by composing an introduction to the project and the parties involved. Clarify whether the project entails the provision of a service or the creation of a product. Then, identify the client or purchaser and the contractor or supplier. Indicate if the document is a standing offer that may remain valid indefinitely or a one-time contract.

Related: How to Write a Good Introduction in 3 Steps (With Example)

2. Establish objectives

It is important for you to mention the purpose of the project. You can do this by outlining your objectives and stating in clear terms why it's necessary. This section serves as a statement of purpose that answers a series of highly detailed questions. Four questions commonly asked are:

  • How can both parties benefit from the project?

  • What is the purpose and mission of the project?

  • Are the resources enough to achieve the milestones?

  • Is the timeframe flexible?

3. Clarify the scope

Outline the work the supplier or contractor may perform by including the processes they may execute. You can create a detailed task list to establish the route toward each milestone. You can also prioritize the sequence in which the contractor may complete each phase. Explaining the scope of work may help you create a common understanding of what party performs each role.

Related: What Is the Scope of a Project and Why Is It Important?

4. Indicate the location of the work

Specify the location of the project and the location of the supplier's office. If applicable, you can include details on the places to hold your business meetings. These locations may include your company's facilities, the contractor's office or headquarters, or a public place previously agreed to by all parties.

5. Create a work schedule

It may cover specific dates, a certain period, or a specified deadline. You can clarify any schedule-related constraints in this section and assign deadlines to tasks or milestones. By limiting the timeframes, you can set the maximum number of hours the contractor can use to finish the project.

6. State the deliverables

Indicate the deliverables of the project and link them to significant milestones. The deliverables may represent specific features or functionalities, such as signed contracts, progress reports, or expense statements. Deliverables are measurable and specific, and they can help you monitor the progress of the project.

7. Specify payment terms

Discuss payment terms with the supplier for the work specified in the scope. You can set up your payment terms by using milestones or by creating a schedule. You can use the payment dates as incentives to the suppliers. They may work faster to reach milestones and payment dates.

8. Define success and create testing standards

Indicate how you can determine when the work is complete. Many work statements have precise deliverables or milestones. Milestones ensure contractors perform their job properly as they want to receive payments and compensation for their work. If the product or service requires testing or verification, describe the procedures for conducting them. Mention the systems or strategies you may use and the individuals involved, such as project managers or supervisors.

9. Specify any unique requirements

Indicate whether the contractor or supplier may use specialized software or processes to accomplish the assignment. This section may also state whether the provider needs any special certificates or clearances to perform the task. This is important because it can help you comply with testing and quality procedures.

10. Obtain all necessary signatures

All parties involved can sign the document after agreeing on everything stipulated in the statement of work. When starting a project, the document serves as both a formal document and a practical action plan. It shows that all parties have created a guideline and have a shared understanding of the project's entire life cycle.

Difference between request for proposals and statement of work

Requests for proposals are documents created by organizations to procure a particular service from a contractor. In these documents, most companies may specify a scope of work, technical requirements, and deadlines. Suppliers interested in completing the work specified in the proposal submit an offer, typically explaining their approach to the task, techniques, and some samples of similar projects they've accomplished. A statement of work specifies the obligations, responsibilities, and terms of work between two parties, often clients and service providers.

Related: What Is the RFP Process? (With RFP Template and Example)

Statement of work example

Create a statement of work for your project by following the example below:

Project summary: Acme Marketing Inc. (“agency”) wants to establish a method to assist Smith and Associates (“client”) in generating online leads.

Project objective: Increase leads by creating high-quality email marketing and social media campaigns.

Scope of work: The agency can create a single lead-generation funnel, provide two lead-generating assets, and provide social media and email content.

Project tasks

Phase 1: Conduct market research on the client's target customer and create a conversion funnel.

Phase 2: Create a checklist as a lead generation asset for cold audiences and a white paper as a lead generation asset for warm audiences.

Phase 3: Create three social media posts for the client to advertise the checklist asset and one email to promote the white paper asset.

Location of work: The agency can complete the job on-site at its facilities. Any meetings may take place remotely.

Project schedule: The agency can complete the project in eight weeks, no later than December 31, 2023,

Deliverables: The agency can create a funnel, a checklist, a white paper, an email, and three social media posts.

Payment terms: The client can pay a deposit of $2,500 to the agency before starting the project. The client can make the remaining 50 per cent payment to the agency within 10 business days of receiving all deliverables.

Project completion: When the agency has presented final deliverables.

Project requirements: The agency can submit the checklist and white paper in pdf format, and they can prepare the social media posts for a professional audience.

Related: Understanding Project Management Methodology (With Examples)

Please note that none of the companies, institutions or organizations mentioned in this article are affiliated with Indeed.

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