Statement of Work (SOW)

                                                 Statement of Work (SOW)

A piece of paper is more valuable than anything else after the signature on the piece of paper from supplier and customer. Statement of work is like a legal written bond between supplier and business with the customer to execute the delivery of a set of services. Misinterpretation and miscommunication can lead to a very expensive penalty for both sides.

“Who should create a statement of work? Stakeholders’ involvement? how to create?”

These are like million-dollar questions, anyone can create the SOW who has knowledge of risk and mitigation. Especially experts who prepare SOW are often and review with the internal manager to check all risks are covered in the SOW.

Most important in SOW is the master service agreement included, which has defined the contract terms and conditions that will govern future agreements and transactions between supplier and customer, that can be waived in the future legal agreement.

The purpose of SOW is a detailed overview of the scope of work, pricing structure, and duration. It also states acceptance criteria and payment terms are collaborating to contract to work on the project, and stakeholders include suppliers, customers, and contractors who are biding on the project work. The SOW helps to avoid conflicts between the customer and supplier which is detailed description and clarity written that involved in the execution of the project.

SOW is a universal format in the word document which is broken down into different sections. There are 5 main sections in the SOW.

·        Master service agreement: Clearly defined the contractual agreement of transactions from the two parties.

·        Process and procedure: Terms and conditions from the two parties. which explains in detail the procedure to follow the guidelines of the company process.

·        Scope of Work: Define the work details and deliveries to the party. Stakeholders are important in this step to capture all detail in the micro-level and agreement of deliveries from both parties. Create the milestones and break down of work structure and deliveries dates.

·        Risk and Mitigation: Capture of measurement of the matrix to access the customer risk process, Quality acceptance and payment terms are detailed structure in this section.

·        Time and Materials/Fixed unit: In this section defined the price structure, which is in hourly service or fixed cost to perform the task.

The statement of work is a generic document of any project. Once create and approved to execute the project with the company guidelines. If any deliveries and quality matrix are not followed as written in the SOW, it causes huge penalties from the supplier and the effect of the supplier company brand, vice versa customer has to communicate clearly about the inputs, deliveries, duration, and quality may affect customer company brand. So it's very important to understand the scope of work and duration to complete the project before final approval of the document.