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Suppose you are leading a large-scale project with several moving parts and many people involved. You may be feeling frantic trying to make sure everyone involved understands their roles and responsibilities, the direction of the project and the pace at which it is going. One way to do this is by including a statement of work in the contracts signed for the project. For example, if you are hiring a consultant for your project, a statement of work will allow you to provide them with essential details. Additionally, suppose you are a consultant hired for a project. In that case, you must understand these terms you are operating under to ensure that you perform as well as you can. This article explains what a statement of work is in a consulting contract.

What is a Statement of Work?

A statement of work outlines the liabilities, responsibilities and agreement of terms between two parties. Often, a statement of work (SOW) is used with consultants, contractors, or freelancers outside the organisation. SOWs are frequently used in large project management where some external help is required. However, SOWs can be used for anything from a simple visual design request to a vast construction project. A SOW is helpful when dealing with external parties as it allows you to give clear guidelines for the project, so you can set expectations if people do not frequently engage with your business. 

It is best to ensure that a SOW outlines the specific tasks that need to be done, the standard to which they should complete it and any instructions on how they should do so. A statement of work allows you to set expectations, including the expected time and payment terms. You can also outline the broader project goals scope of the project’s overall goals to guide the work.

In summary, you should make sure that your SOW includes the following:

  • scope of work;
  • project objectives;
  • timeline of work;
  • major deliverables;
  • location of work;
  • expected outcomes;
  • compensation; and
  • any terms and conditions.

Do I Need to Include a Statement of Work in My Consulting Contract?

Occasionally, more documentation may be required between the parties depending on the work being performed, including a formal written contract. Commonly, consulting contracts are comprised of a Master Service Agreement and a Statement of Work. A Master Service Agreement is a contract that outlines the terms and conditions that will govern all future activities between parties. 

While you do not need to include a statement of work in a consulting contract, it is highly beneficial. Overall, a statement of work provides clarity in working relationships and avoids future misunderstandings. In addition, it is highly beneficial for preventing a mismatch of expectations.

It is best to write a SOW with the ‘worst case scenario’ in mind. It is not uncommon for business relationships to sour, especially in stressful situations like a large-scale project. Therefore, it is best to construct this document clearly and concisely to help in a situation where it has all gone wrong. 

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What if I Am a Consultant?

If you are a consultant selling your services, it is good to advocate for having a statement of work when you are performing your services. This will ensure that you understand all aspects of the work you are completing. You should familiarise yourself with what a statement of work should include and note if any terms are missing. Asking for these to be included will prevent further disputes down the line. 

What if I Am Hiring a Consultant?

If you are seeking the services of a consultant, it is a good idea to write a strong statement of work. This will ensure that you can set clear expectations around what you wish the consultant to achieve. This will prevent further disputes and ensure that your more comprehensive project stays on track.

It is helpful to create a template statement of work if you hire several people for similar roles. This will save time when hiring new people and ensure that you understand these documents well. 

Key Takeaways

When creating a new business relationship, it can always be tricky to work out expectations and the details of the work. While they are not essential for contracts, they provide a valuable framework to ensure that all parties understand what their expectations are. 

If you need help with creating a statement of work, our experienced corporate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

Do I need to have a Master Services Agreement and a Statement of Work?

You do not need to have both as part of your contract. However, both will be beneficial for your business relationships as they set clear expectations of the work that you are undertaking to conduct.

Can I only use a statement of work for large projects?

No, you can use them any time you create new business relationships. Often, they are used with a contractor, consultant or freelancer. 

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