A Simple Statement of Work Format to Increase Profits

A statement of work describes the work to be done and the results that the project must achieve for the work to be considered successful. SOWs are critical for solution providers because they make it clear when the project is complete. Without well-defined SOWs and a consistent statement of work format, you are likely to find yourself working on a project with moving goalposts before long. This guide covers pitfalls to avoid and a statement of work format you can use to set expectations, avoid scope creep, and protect your margins.

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Why Do You Need a Statement of Work?

Aside from the protection it offers, a SOW is usually required as part of a bid document. So, not only is this a crucial document for project management, but it will also be the first impression for a new business relationship. They also allow you to build your credibility by presenting a professional document demonstrating your expertise and understanding of each customer's needs.

The Dangers of a Poorly Defined Statement of Work

The primary consequence of a poorly defined statement of works is scope creep. If the services aren't clearly determined at the outset of a project, some customers will begin to add out-of-scope requests to the project. For example, what once started as a single deliverable could become five.

This could be because the customer's needs change, prompting a reassessment of the project requirements, or something occurs to them once the project is underway.

These neverending projects eat into your margins and limit your ability to take on new clients.

That's because scope creep forces you to course correct, create unnecessary conversations that take up more time, and delay your overall project. And while an SoW may feel like a time-consuming endeavor, preparing ahead of time is the best way to ensure that your project will run smoothly. By spending ample time on your statement of work while you prepare, you are creating the greatest chance of avoiding scope creep altogether.

The best way to avoid scope creep, whether it's caused by key project stakeholders changing requirements or internal miscommunications and disagreements, is a bulletproof SOW delivered in a consistent statement of work format.

Avoid Common SOW Mistakes

Here are some common mistakes to avoid when writing statements of work:

• Lack of clarity. Your statement of work should be specific enough to clarify what will be delivered without getting into technical details your customer won't understand.
• Forgetting to price in non-technical aspects of the project. It's easy to forget the non-technical work that goes into a project (e.g., project management), but this error will eat into your margins.
• Forgetting to proofread. After completing your SOW, it might be tempting to submit the file. But correcting errors, spell-checking the document, and ensuring consistency between the SOW and other documents you'll submit is imperative.

Bulletproof Statement of Work Format

Statements of work vary from one organization to the next, but the general SOW format includes the following six sections:

1. Introduction. In this section, you'll briefly cover the 5 Ws and the H of the project.
   1. What will you do for the customer?
   2. Why is this project important to the customer?
   3. Who is involved (i.e., your company and the customer's company)?
   4. When will the project begin and end?
   5. How will the work be done?
2. Objectives. This section establishes the results the project will produce if it is successful. This section should contain as much detail as necessary to ensure that your understanding of the project aligns with the customer's expectations. Use the SMART goal framework to determine whether you have included enough detail. Is each objective:
   1. Specific? Each objective should be well-defined so that your customer knows what to expect.
   2. Measurable? They're objectives, not subjectives. When you base an objective on quantifiable metrics, there's no doubt about whether the project met the objective.
   3. Attainable? Make sure you can accomplish the objectives you include in your SOW. If you can't, don't forget to price in the services of third parties that will be involved.
   4. Relevant? All objectives should be directly tied to the customer's goals for the project.
   5. Time-Based? Be clear about when the project will meet the objective.
3. Scope. This section describes what you will be doing as part of the project and what you won't be doing. You can also describe the process and other factors related to how and where you will do the work.
4. Tasks to Be Completed. This section covers the specific activities you will complete in service of the project's objectives. This can include milestones, deliverables, and processes.
5. Time Frame and Deliverables. In this section, you'll provide a schedule for the project. This schedule should include specific details about when tasks, milestones, and the project will be complete.
6. Associated Costs. This section breaks down the cost of the project. It should include resource rates, material costs, and any other expenses.
7. Signatures. 

Protect Yourself With Better SOWs

Statements of work take time, but they're crucial to protect your reputation and your margins. By following the statement of work format we've included here, you will avoid many of the problems that can plague managed service providers and value-added resellers. And, if a problem does arise, you'll be able to direct your customer to the statement of work.