10 Simple Steps to Creating Effective Statements of Work

A statement of work (SOW) is like a ‘micro’ project plan in that it describes the precise tasks, deliverables, dates, and services needed for a portion, or all, of a project that will be delivered by an external provider. The significant difference is that the SOW explicitly ties the successful delivery of these services to payments.  

As a result, how you structure your SOW becomes crucial to ensuring that it functions not just as a template for success, but also as a quality reference throughout the delivery lifecycle for approving milestone payments. 

If you’re a seasoned professional, you’ve probably spent a substantial amount of time and effort making sure that each engagement has a SOW that clearly and precisely outlines the work to be accomplished. Yet, developing an effective SOW may be a difficult undertaking, especially for beginners, so we’ve prepared this basic guide to developing a successful SOW, which we advise you to use as a starting point.

1. 1. Objective & Background – Clearly define the objective of the engagement and the background/purpose of the engagement along with the start and end date.
      
      
   2. Understand the Service Deliverables – Define what you want your supplier to deliver including:
      • • Clearly identifying the deliverables with specific start and due dates if required
        • Highlight any dependencies or assumptions they may impact the deliverables and either need to be mitigated, resolved or accepted
        • Clearly describe how you will test that each deliverable will be considered ‘complete’ (Definition of Done) 
   3. Identify the Milestones – Clarify all necessary delivery milestones to be met and associated values. Milestone start & end dates should be constrained within the SOW start and end dates.
      
      
   4. Identify the Stakeholders – Identify the reviewer, approver and primary contact for both parties.
      
      
   5. Establish a Budget for the SOW –  estimate for each task and milestone, including fixed and variable costs plus any penalties for late delivery.
      
      
   6. Establish a Change Management Process – Changes to the project plan or budget will inevitably have a direct impact on the content of the SOW, so it’s important to establish a process for managing and approving changes that may impact the SOW milestones or budget. 
      
      
   7. Review & Approve the SOW – The SOW will need to be reviewed with all relevant stakeholders to ensure that it meets the project’s objectives and requirements.
      
      
   8. Monitor & Manage the SOW – The SOW will need to be monitored, managed and updated throughout the project to ensure that it is being executed according to plan, progress is tracked, risks are managed, and adjustments are made where necessary.
      
      
   9. Milestone Approvals – Ensure there is an agreed process for milestone approvals with the ability to submit pre-approvals for use of contingency and expenses.
      
      
   10. Payment & Reconciliation – You must make sure that all payments made are fully reconciled with the agreed milestones and deliverables outlined in the SOW to minimise risk of paying for items not received. 

Following these steps, will enable you to create comprehensive and effective SOWs. However, as all professionals involved in projects will tell you, getting all SOWs into the same format to keep them updated, and being able to monitor progress, is much harder.

How can Contora help create effective statements of work? 

contora can not only simplify the stages we have already explored but also provides you with the tools to manage and evolve your SOWs as your projects progress.  

Contora allows you to: 

• • create and manage SOWs that are aligned with the overall goals and strategies of the project, with clear deadlines and milestones
    
    
  • utilise a single source of truth for defining, tracking and approving deliverables
    
    
  • integrate and share data with existing enterprise solutions
    
    
  • assign the right person to sign off milestones quickly and easily
    
    
  • facilitate communication and collaboration between clients and suppliers by providing a central platform for sharing information and updates
    
    
  • monitor performance and progress of engagements in real-time against the SOW, helping to identify and mitigate risks
    
    
  • manage the budget for a project by identifying when suppliers should be paid, giving real-time data on what budget remains available and avoiding double spend
    
    
  • ensure your projects are delivered within in a governance framework 

Would you like to know more?  

We help companies to manage and organise their Professional service engagements more effectively, and make better project decisions based on real-time data, which can help reduce costs and increase the chances of project success in tough times. If you would like to see how we can ensure the success of your projects, please contact us.