Statement of work agreement in India

The statement of work is a legal document that explains the scope, objectives, deliverables, timelines, requirements, expectations and area of work between two parties. For one who provides the services or products, they are referred as a ‘service provider’, and for the other one who is on the receiving party of this process, they are referred as a ‘client’ throughout this article.

What Is a Statement of Work?

The Statement of Work agreement in India, also known as the SOW Agreement works as a binding document between a service provider and client. This ensures transparency, efficiency, and accountability to various industries such as manufacturing, construction, IT, etc. This is one of the first documents that needs to be created and executed to start a new project, even before creating a project plan. Forming a SOW needs great detailing, it is essential to add agreed terms and conditions. This agreement sets the groundwork for the project plan.

Purpose of a Statement of Work:

Statement of work is legally binding and carefully highlights the scope, conditions, and expectations of a project in detail. This establishes a legal relationship between the client and the service provider. It serves as a guideline to both of them. SOW agreement builds a framework that tracks progress, mitigates risk, and ensures the successful execution of the project.

Details to add in a Statement of Work Agreement:

Here are some of the details to add in the Statement of Work.

• Detailed description of the work.
• Mention the duration of the project.
• Mention the terms of payment
• State the roles and responsibilities of both parties.
• The objectives and goals of the project.
• Clearly define if there are any restrictions that can impact the project.  

Types of Statement of Work

Statement of work agreement comes in a variety of formats. Here we have mentioned some of the most used SOWs.

• Software Development Statement of Work: This type of SOW highlights the useful characteristics and testing requirements for a software application.  
• Design SOW Agreement: This type of SOW outlines the design requirements, technical specifications, materials, and other design factors for a project. 
• Maintenance SOW Agreement: This type of SOW highlights the requirements for maintenance and support of a product or service.
• Consulting SOW Agreement: This type of SOW focuses on the consulting service.
• Marketing Statement of Work: This type of SOW defines the marketing strategies, campaigns, and deliverables for a product or service.
• Construction Statement of Work: This type of SOW outlines the details of the construction projects, materials, and timelines for a building project.

Guideline of How to Form a Statement of Work Agreement:

Follow the guidelines mentioned below.

• Take consent from key shareholders before finalizing the statement of work documents.
• Provide clear details and be specific in the statement of work.
• Use pictures, tables, charts, and links to enhance the agreement.
• Make sure to explain all the business terms, definitions, phrases, etc.
• Ensure the statement of work is realistic and achievable.
• Work as a team to prepare the statement of work document.

Elements of Statement of Work Agreement in India

The statement of work agreement makes sure that all shareholders are align, share the same vision, and understand the project expectations. Here we have discussed some key elements of a statement of work.

• A broad view of the project: the overview of the project could describe the purpose of the finished structure, such as who is going to use this, the goals for the surrounding community, what defines the success of this project, etc.
• Deliverables: create a team for the project. Set goals for every team member. The deliverables should be time-bound and include deadlines that will significantly uplift the project. Define this section clearly, lack of clarity can lead to disputes among the team.
• A Rough Project Timeline: The statement of work agreement should mention the initial duration of the project. This will help the team to plan their schedule according to the timeline.  Bold

Why Write a Statement of Work Agreement?

A SOW agreement helps you out with the followings

• A statement of work agreement describes the requirements and deliverables of the project.
• It specifies if any restrictions are involved in the project.
• SOW agreement helps to identify the accountable figure for each aspect of the project.  
• This agreement keeps track of and monitors the project details.
• The SOW agreement provides a clear path and timeline by breaking down the project into phases.
• It clarifies the payment terms before the work begins.

Key Takeaways of SOW in Project Management:

A statement of work agreement is the foundation that helps build a successful project execution. We have explored some of the key takeaways of SOW in project management below.

• Project Objective: A well-defined project objective is the main factor behind every successful project. First and foremost statement of work includes crafting a clear and measurable objectives that act as a guideline for all activities involved in that project. Mutual collaboration with the team, shareholders, and clients enhances the strategy and vision of the project.
• Deliverables: The project manager should identify the deliverables that will serve the project purpose. This helps the project activities to align with the expectations and ensure that the team is working towards a positive outcome. It plays a vital role in resource allocation and budget planning. A comprehensive deliverable list can mitigate the risk and safeguard the project's success.
• Boundaries: A SOW agreement states the boundary of the project. It highlights what is included in and excluded from the project. This helps protect the project from scope creep, directly preventing any unnecessary delays, increased costs, and conflicts within the team.
• Assumptions: Assumptions are factors that are considered to be true but there is no proper verification. It is important to identify and record those assumptions to avoid any misunderstanding and risk. Evaluating the impact of assumption on project outcome, regular inspection, and validation is vital to align the project with the expectations mentioned in the agreement.

 Advantages of Scope of Work in Project Management:

SOW plays an important role in project management as it provides guidance to the entire project, and ensures effective collaboration and project success. Here are some key advantages of SOW.

• Clarity and Understanding: The statement of work agreement clearly defines the project’s objective, deliverables, and requirements. This directly assists in understanding the project vision and expectations from each member involved in the project.
• Mitigate Scope Creep: The SOW agreement clearly defines the project scope. This prevents the expansion of the project requirements beyond the actual agreement. It sets boundaries that make sure to protect the project from scope creep and helps to focus on the deliverables.
• Project Planning: This agreement creates a structural approach by breaking down the project into phases. This allows a systematic roadmap to create timelines, estimate resources, and set deadlines.
• Communication: Effective communication is the key to minimizing misunderstanding among the team. A well-versed SOW agreement promotes communication that leads to smoother collaboration and reduces disputes.
• Risk management: This agreement helps to identify any potential risk related to the project. It is relatively easy to mitigate those risks with teamwork and a pre-planned strategy.
• Budget and Cost Control: SOW enhances the understanding of the project’s expectations, deliverables, and resource requirements. It helps to make an estimate of the costs involved in the project. This helps to plan the budget accordingly throughout the project lifecycle.
• Legal Agreement: SOW creates a bridge between the service party and the client. This mutual contract ties the client and service provider together.
• Performance Measurement: The SOW agreement provides clear expectations of the outputs and deadlines. This guides them both to make necessary adjustments and track the progress of the performance of the team.

Terms to Include in a SOW

Developing a SOW agreement at the beginning helps to set a clear expectation of the bigger scenario of the project. The content of the SOW agreement varies on the project, industry, and client you are engaging with. Here are some key terms to include while forming a Statement of work draft service agreement in India.

• The Purpose of the Project: First and foremost, provide brief details of the reason or purpose for the project along with its goals and objectives.
• Scope of Work: In this section, mention the work that has to be performed including any specific task, activities, and the final output.
• Roles and Responsibilities: Add a section to mention the roles and responsibilities of the service provider and the client. This will prevent overlapping of responsibilities and misunderstanding between employees, and hold everyone accountable.
• Timeline for Work: In this section, clearly mention the duration of the project from start to end. Add if there is any notice period that the service provider and the client have to serve before leaving or terminating the project.
• Payment Terms: In this section, discuss the payment terms of the project including the total budget and the timing of payments. Mention are the payments have to pay on monthly, quarterly, or yearly terms.
• Performance Measurement: This section in the SOW agreement portrays how the performance of the client will be measured. Add to the parameters that will define the project's success from the client’s point of view.
• Quality Control: This section, highlights the essential quality standards that the service provider have to maintain. The output of the project must meet those standards or criteria provided by the client.

Tips to Write a Successful Agreement:

Here we have provided some important tips for writing a proper agreement.

• Discuss the project's long-term goals and objectives. This will set a clear idea of the expectations of the project.
• Point out all the deliverables and milestones. This will prevent any misinterpretation between the client and the service provider.
• Break down the work into phases, timelines, and responsibilities. Short phases are easy to plan and execute, giving extra leverage to the service provider.
• State the influence of any potential hazards, or difficulties that can disrupt the flow of work.
• Create a budget plan and payment terms for the project.
• Define the responsibilities and authorities of the team. This will prevent overlapping of responsibilities and misuse of authority.

When to Use SOW Agreement:

Every business need a Statement of work agreement in India, whenever they have to assign a non-employee for any specific project. There are more facts to consider before engaging in a SOW agreement. We have discussed the key factors below.

• Outsourcing Service Provider: When the client hires an external body to work on a project under a mutual contract. And if the client acquires a technically oriented project or projects that require a formal agreement.
• Complex Projects with Multiple Deliverables: Statement of work plays a crucial role whenever a company needs to acquire projects with complexity, and if it is necessary to define the scope of work, deliverables, and milestones.
• Managing Independent Contractors: The SOW agreement makes sure that a clear objective will help the freelancer, consultant, or any individual contractor understand the requirements and deliverables.
• Establishing Clear Accountability: The SOW agreement breaks down the project into phases, pointing to everyone’s responsibilities. This will prevent any future internal disputes, unexpected changes, and additions to the work.

What is Deliverables in a Statement of Work?

In simple terms, deliverables are the results of work done in a project. Deliverables vary on the projects. In SOW agreements deliverables are the outcomes, results, products, or services that the service provider must produce to fulfill the agreement. This can be produced in terms of the project needs, including documents in soft and hard copy, software, hardware, training materials, prototypes, etc.

Deliverables define the expected outcomes that ensure both the client and the service provider are on the same page on what to expect from the project and what to deliver at the end of a project..

What is Scope Creep and How to Avoid?

When changes are made in the SOW agreement without any prior discussion between the service provider and the client is called ‘Scope Creep’. This creates a negative impact on the duration, cost, and resource allocation. It can also compromise the goals and milestones of the project. Here are some factors behind scope creep.

• Poorly Defined Statement of Work (SOW): Not mentioning the scope of work clearly in the agreement can create difficulty in understanding the expectations, objectives, timeline, etc.
• Unrealistic Project Schedule: It is essential to estimate how much time it will take to complete a project. An unachievable timeline can create a space for scope creep. Lack of time management can add more deliverables than mandate or other issues that push back the deadline, breaks alignment with resources, and increases the cost of the product/service. 
• Absence of Project Controls: Keeping an eye on the team’s progress and tracking the KPI record from time to time is important. In most cases, losing control over a team’s performance can push the results far from expectations.
• Below Average Project Execution: The project team might produce deliverables that have taken too much time during execution, as a result the deliverables do not meet the mandated criteria. Tasks that are executed poorly might generate additional work and increase time to get expected deliverables.

There are some approaches to mitigate scope creep. Some approaches are mentioned below.

• Thorough Documentation: Maintain a complete record of all the details and interactions. This ensures that any future changes will be properly documented. Creating an environment that nurture monitoring, can automatically mitigates scope creep. 
• Change Control Process: Create a change control process and set a team to regulate. If there is some addition or update in the SOW agreement the requestor has to submit an application by using a change control process. It will provide a chance to evaluate those changes before executing the changes.
• Established a Realistic Schedule: Proper scheduling by discussion within the team is important to regulate assignments, monitor progress, and adjust the timeline of the project. This will keep track of the advancement of the project (what?) and helps to identify any scope creep.
• Obtain Sign-offs: Make sure the statement of work agreement is signed and approved by both parties.

How to Write a Scope of Work:

• Define the project goals: First and foremost, define the project goals and how to achieve them.
• Breakdown the Structure to Identify Project Tasks: Identify the project task, then break that down. You can use any project management tools that help to break down the project into individual phases that will provide an easier path to plan and schedule the project according to the needs.
• Determine the Deliverables: Deliverables are the final outcome of any project. This portrays a clear picture of what the client will receive after the end of the project.
• State Acceptance Criteria: In this section add the parameters or criteria of quality standards of the results established by the client. The quality of the deliverables has to match the mandate standards to get acceptance.
• Use CPM to Create a Timeline: You can use project scheduling techniques like the Critical Path Method (CPM) to estimate the project duration and create a timeline. You can use any other methods to create a realistic schedule.
• Payment Terms: Include the payment terms and estimated budget in the SOW agreement.

Scope of Work in Various Fields:

Here are some working fields where SOW helps:

Scope of Work for E-commerce Website:

• Develop a new website for the client.
• The interface should be easy to use and appealing.
• Add a payment gateway on the website.
• Create a database to collect and protect the data.
• Design the website for optional viewing across all devices.
• Add a search feature.
• Add a home page, category page, checkout page, product page, etc. as required.
• Enable review and rating for consumers.
• Do testing for bugs in the website.
• Provide ongoing website support to the client.
• Keep an eye on the website’s performance and make it up to date.

Scope of Work for Software Development:

• Develop new software or update the new one.
• Create a project plan and mention project requirements.
• Develop and test software.
• Provide instruction and assistance to the end users.
• Provide ongoing maintenance and support.
• Ensure the software is up to date and maintain the security and functionality.
• Create documents of software development for future use.
• Test regularly to ensure bug-free software.
• Maintain project budget and schedule.

Scope of Work for Digital Marketing Agency:

• Take initiatives and implement those initiatives.
• Do market research and survey customer behaviors.
• Start a campaign for social media marketing.
• Manage search engine optimization (SEO).
• Create content.
• Develop and manage email marketing.
• Manage the client’s budget.
• Keep records and share reports with the client.
• Stay updated with current trends.
• Work with other teams to control the workflow smoothly.

In conclusion, SOW agreement or Statement of work agreement in India is a vital document that helps to sets a strong foundation of any project and state the objectives, requirements, deliverables, duration, etc. between a client and a service provider. This agreement ensures that every individual involved in that project, share the same thought and understand the expectation of the project to mitigate any risk and misunderstanding related to the topic. If you are a new entrepreneur who want to acquire new projects, SOW is a must need agreement for you. For more information contact Online Legal India. Our experts will help you to form the ideal statement of work for your company.