Statement of Work (SoW)

Statement of Work for Technology Businesses

Why do you need a Statement of Work (SOW)?

For projects to run as smoothly and efficiently as possible, you need to outline and agree measurable and realistic goals with your client. Creating a Statement of Work (SOW) provides the commercial terms of the project and defines the work to come – ensuring both parties are contractually bound and protected.

What is a Statement of Work (SOW)?

The Statement of Work is the first step to defining what you’ll provide for a client. It works alongside your others contracts – such as your Master Services Agreement, Professional Services Agreement or Letter of Agreement. In it, you should set out the scope, timeline, milestones, targets, fees, and deliverables for your project.

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Statement of Work (SOW)

Table of contents

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Table of Contents

Key facts

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Frequently Asked Questions

Although a SoW isn’t as long as a 50+ page framework agreement, it is still important to highlight the essentials: who, what, where, why, when and how (how much will it cost). The best way to write one is using a template that can ensure you cover enough ground.

Specificity is the key to avoiding confusion. When drafting a Statement of Work, the writer must avoid being broad or ambiguous when defining the work in question. The reason being is that the job could be left open to interpretation from the other party, and this could result in doing far more work than intended and costs can overrun.

Suppliers want to get paid sooner, and clients want to pay later. There are four payment structures we see in SoWs. First, money on a time and materials basis (hourly rates paid). Second, fees paid upon completion of “milestones” in a project. Thirdly, payment of receipt of deliverable or on a satisfactory completion of a project. The fourth option could be a payment subscription.

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Used by
  • Managed Services Providers
  • ISV, Software, Apps and IP
  • System Integrators Professional Services Consultancy Partners
  • Hosting Partners
  • Licensing Partners
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