A Statement of Work (SOW) is a formal document that outlines an agreement you make with a vendor. This document explains what the vendor will do, when the vendor has to accomplish their side, and what you will pay in return. Any SOW you are involved in — whether you are paying for the service or receiving it — should involve the deliverables and due dates. An SOW also typically includes associated costs, payment schedules, and any oversight that will occur during the work.
The main reason to draft an SOW is to minimize future risks. This document should eliminate any confusion about each person’s responsibility. Your SOW is also useful to contractors or people outside of your company to help guide their work, and it can be used for any size of project. The details, supporting schedules, and level of review are more in-depth for long-term construction projects compared to a single graphic design. Still, both projects require guidance, planning, and a formal plan to ensure all aspects of the project happen as expected.
An SOW typically accompanies two other documents. First, an SOW is drafted based on what a vendor says in their proposal. This proposal already outlines some of what will be done; an SOW provides a more formal agreement. Second, if you plan to use a vendor on an ongoing basis, complete a Master Service Agreement (MSA) as well. This agreement — completed only one time -— outlines terms and responsibilities on an ongoing basis. By completing an MSA, you can simplify you SOW by removing many terms and details. Although it may be cumbersome to include all of the little details of a project, your SOW protects your small business. Make sure to include all important areas so your expectations are easy to understand.