Writing a Statement of Work (SOW) is one of the most important things that an agency does. Frequently it is the first deliverable that a client sees. It is crucial that your SOW is telling the client a story. It starts with the “why”, then moves to the “how” and “what”, followed by the “when”, and “how much”. Everything should be cohesive with a flow so that it is easy to follow. Don’t treat the SOW as a “form” that you simply fill in the blanks. This article explains what is contained with a SOW, and provides a SOW template that you can download and use.
Contrary to what many people believe, the Statement of Work (SOW) is not a sales tool. It should only be given to clients after you have their agreement as to the scope, schedule, key assumptions and price. Many people believe that the SOW is where you first present this information. WRONG! The SOW is a legal contract used to document the agreement only after the business terms have been agreed. This preliminary agreement can be verbal. This means that if there are price issues (and there always are!), have those negotiations before the SOW is presented. Yes, you could ignore this advice and use the SOW to negotiate the contract but doing so will always take more time.
As input to the SOW, it is important to have:
- Timeline developed either in Microsoft Project, Excel or a similar program
- Client verbal as to the scope, schedule, key assumptions and price
All SOWs contain the following sections:
- Key assumptions
Each section is explained in detail below.
Defines the “why”. The objective section states the marketing or business objectives of the project, and a high-level overview of the solution. This ensures that we have clarity as to why we are performing this work, and begins to weave the story.
Scope including inline assumptions and deliverables
Defines the “how” and “what” of the story. The scope section defines the work that is being done, and the process for how it will be performed. This is your task list and it should be written in process form so that it flows as following:
- Kick off the project
- Develop Creative Brief and present it to client for review and approval
- Develop up to three creative concepts
Assumptions are the most important part of any SOW and any assumptions that you made when scoping and estimating the project should be included here. The assumptions should be included inline with the tasks. It is also important to state exactly what deliverables are being produced, including the details that accurately describe each deliverable including the description, size (either expressed as approximate number of pages or number of designs, and should be expressed using the terms “up to” so that if you produce less, that you are still fulfilling the contract).
Many people include tasks within the list of deliverables. This is incorrect. Deliverables are just that…they are items that you hand off to the client for their review and approval. For example, the “Creative Brief” is a deliverable, however “Presenting the Creative Brief” is not a deliverable because it is a task. One litmus test to verify if something is a deliverable or not is “can it be emailed?” Also, never make status reports deliverables as you do not want to be in a position where you are asking the client to review and approve every single status report (I’m not saying that status reports are not important because they are crucial. They are just not a deliverable.)
Do not give the client options or alternatives in the scope. All of the decisions should have been made by now. The SOW should be written as a definitive statement.
Defines the “when”. The schedule section provides a detailed schedule. Minimally it should include all of the client and client’s partner touch points. The format is less important as you can either develop this as a table in Microsoft Word, or you can get-and-paste images directly from Microsoft Project into the SOW document. The data should include the task and end date. Task start dates are optional.
Defines the “how much” of the story. The pricing section needs to include the price including both time of staff and outside expenses. It should also discuss the pricing assumptions such as is this fixed fee or time and materials, how outside expenses are handled, payment terms including a payment schedule, and if payments are based on a milestone/deliverable or a schedule (if you are an agency, you generally want date-based, if you are a client, you want milestone/deliverable-based).
Assumptions that are not related to the scope are included here. Any scope-related assumptions should have been already included in the scope section. Do not repeat assumptions as this will lead to errors. Instead use this section to document any general assumptions that are not stated elsewhere. Also if you do not have a Master Services Agreement (MSA) or Professional Services Agreement (PSA) executed with the client, you can use this space to document the key MSA/PSA terms.
The acceptance section contains the client signature and the signature from the agency’s key executives overseeing the project. You should not start the project without having client signature. Doing so is asking for trouble so if you have any exceptions, you want to be sure that the agency management team agrees to doing so since they are accepting significant risk by starting without having signature. Also when you are audited, the auditors will look to ensure that all signatures are obtained (including the internal agency signatures).
Other Important Considerations
The SOW should not reference any external documents as its basis. All materials should be built into the SOW. For example, don’t refer or link out to a separate schedule, instead put the schedule directly into the SOW. The reason is that since this is a legal contract, it makes it much more difficult to refer to outside documents.
Make sure that the SOW is proofread carefully from different perspectives. First it should tell a story. Second, make sure that the solution is actually solving the client’s problem. Third, be sure that you are not overcommitting the agency. Make sure that you can deliver on the price. Finally, make sure that all the “T”s are crossed and the “I”s are dotted.
Here is the SOW template that you can download and reuse. This document is provided on an “as is” basis.