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What is a Statement of Work?

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If you are a business owner looking to engage a contractor, it is important that you clearly outline the responsibilities of the contractor. You are able to do this by using a statement of work. This article will explore some of the key considerations when drafting up a statement of work for your contractor. 

What is a Statement of Work?

A statement of work is part of a contract between you and your contractor. It details the key outcomes, requirements and scope of work for the project or work that the contractor is performing for you. The document is generally overall output focused, meaning it outlines what results you expect to achieve. It does not outline the exact process you want the contractor to follow to achieve these results.

Drafting a statement of work is an important step in creating a successful project. This is because a statement of work:

  • helps maintain your expectations, your client’s expectations and your contractor’s expectations. This ensures that each party is on the same page. This contributes to lessening the likelihood of disputes occurring, which in turn results in less legal fees;
  • ensures that no miscommunications occur, as responsibilities and obligations are clear and uncertainty is avoided;
  • aids in the effective planning and execution of projects. It forces each party to comprehensively plan for a project and identify specific objectives; and
  • aids in ensuring projects are performed on time and within their desired budget.

What Is Generally Seen in a Statement of Work?

There is no set requirement for content that a Statement of Work must contain, but most commonly, these documents will include:

Clause Description
Purpose This section identifies the main purpose of the project. Within this section, you should ask yourself why you are undertaking this specific project.
Scope of Work This clause lists the specifics of the work the contractor will complete. This may include what software and hardware should be used.
Location This section specified the location of where the contractor will perform the work. This includes the physical location and also the specifics of what the contractor must work on. For example, a cloud database.
Times of Performance This clause lists the working times for the project. This includes daily start and finish times and the number of hours to be worked each week.
Timeline for Deliverables Outline the general timeline for the project. This includes any due dates for the project.

Here, you must identify any industry standards that the contractor must adhere to.

For example, the National Standard for Construction Work.

Criteria for Completion Here, how you determine if the project meets your standards for completion is detailed. This generally includes an objective criteria.
Special Requirements

This section outlines any special requirements for the project.

For example, you may only want qualified engineers with degrees or qualified tradespeople with relevant certifications working on your project.

Type of Contract and Payment Schedule Outline a breakdown of the payment schedule. This is an important step in budgeting for the project.
Miscellaneous Here, list anything else vital to the project. This may include, for example, who the contractor may subcontract to.
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How Should My Statement of Work Be Written?

As this document will be used as a reference point during the project, you must ensure that you write a clear, concise and comprehensible statement of work.

Use Unambiguous Language

You want to ensure that language you use cannot be interpreted in two different ways.

For example, avoid using words such as “reasonable”, “acceptable”, “good”, “necessary” and “best efforts”. These words do not clearly set out responsibilities and obligations, but they leave them open to interpretation.

Use Consistent Terminology

If you have used a specific phrase or term to describe something or someone, make sure you don’t use other phrases or terms to refer to the same thing or person.

For example, if you have called your contractor “The Contractor” does not later refer to them as “The Provider” or by their name. 

Make Acronym Definitions Clear

It is important to assume that the parties reading the document are not technical experts in your field. If you are referring to a technical name or expression, it is best practice to first spell out the acronym before using it. 

For example, “Statement of Work (hereon referred to as an SOW)”.

Use Active Voice

Using active voice in your statement of work aids in ensuring that you avoid ambiguity. An active voice clearly sets out who does what to who, more so than a passive voice.  

Delegate Responsibilities Effectively

It is important that you outline the responsibilities of each party in a clear and direct manner, using the appropriate terms of the obligation. Such terms include:

  • “shall”;
  • “may”; 
  • “will”; and 
  • “must”.

For example, if your contractor has to complete a certain task, you would use “must” not “may”. “The Contractor must fix the wall before painting it”. “May” would describe something your contractor has no legal obligation to do. For example, “The Contractor may clean the workspace after using it”.

Key Takeaways

Before deciding to engage a contractor for a new project, you must consider writing an effective statement of work. This will ensure that the contractor clearly understands the:

  • project output and input objectives;
  • responsibilities and obligations;
  • expectations;
  • process to effectively plan for the project

If you have any questions about statements of work, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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