The Statement of Work (SOW)

Guideline for Preparing Statement of Work (SOW)

As already mentioned in Lecture 15, the Statement of Work (SOW) is a narrative description of

the work required for the project. The complexity of the Statement of Work (SOW) is

determined by the desires of top management, the customer, and/or the user groups. For projects

internal to the company, the Statement of Work (SOW) is prepared by the project office with

input from the user groups. The reason for this is that user groups tend to write in such scientific

terms that only the user groups understand their meaning. Since the project office is usually

composed of personnel with writing skills, it is only fitting that the project office prepares the

Statement of Work (SOW) and submit it to the user groups for verification and approval.

In case of projects external to the organization, as in competitive bidding, the contractor may

have to prepare the Statement of Work (SOW) for the customer because the customer may not

have a team of people trained in its preparation. In this case, as before, the contractor would

submit the Statement of Work (SOW) to the customer for approval. It is also quite common for

the project manager to rewrite a customer's Statement of Work (SOW) so that the contractor's

line managers can price out the effort.

As far as a competitive bidding environment is concerned, the reader should be aware of the

fact that there are two Statements of Works (SOWs)— the Statement of Work (SOW) used in

the proposal and a “Contract Statement of Work” (CSOW). There might also be a proposal

“Work Breakdown Structure” (WBS) and a “Contract Work Breakdown Structure” (CWBS).

Special care must be taken by contract and negotiation teams that all discrepancies between the

Statement of Work (SOW)/ Work Breakdown Structure (WBS) and Contract Statement of

Work (CSOW)/ Contract Work Breakdown Structure (CWBS) are discovered, or additional

costs may be incurred. A good (or winning) proposal is no guarantee that the customer or

contractor understands the Statement of Work (SOW). For large projects, fact-finding is usually

required before final negotiations because it is essential that both the customer and the

contractor understand and agree on the Statement of Work (SOW), what work is required, what

work is proposed, the factual basis for the costs, and other related elements. In addition, it is

imperative that there be agreement between the final Contract Statement of Work (CSOW) and

Contract Work Breakdown Structure (CWBS).

It is important to note that the Statement of Work (SOW) preparation is not as easy as it sounds.

Consider the following:

• The Statement of Work (SOW) says that you are to conduct a minimum of fifteen tests to

determine the material properties of a new substance. You price out twenty tests just to

"play it safe." At the end of the fifteenth test, the customer says that the results are

inconclusive and that you must run another fifteen tests. The cost overrun is $40,000.

• The Navy gives you a contract in which the Statement of Work (SOW) states that the

prototype must be tested in "water." You drop the prototype into a swimming pool to test it.

Unfortunately, the Navy's definition of "water" is the Atlantic Ocean, and it costs you $1

million to transport all of your test engineers and test equipment to the Atlantic Ocean.

• You receive a contract in which the Statement of Work (SOW) says that you must transport

goods across the country using "aerated" boxcars. You select boxcars that have open tops so

that air can flow in. During the trip, the train goes through an area of torrential rains, and the

goods are ruined. The customer wanted boxcars that were aerated from below. The court is

currently deciding who should be blamed for misinterpretation of the word "aerated."

These three examples show that misinterpretations of the Statement of Work (SOW) can result

in losses of hundreds of millions of dollars a year. Common causes of misinterpretation are:

• Mixing tasks, specifications, approvals, and special instructions
• Using imprecise language ("nearly," "optimum," "approximately," etc.)
• No pattern, structure, or chronological order
• Wide variation in size of tasks
• Wide variation in how to describe details of the work
• Failing to get third-party review

Note that misinterpretations of the statement of work can and will occur no matter how hard the

quest for perfection during the definition phase. The result is creeping scope, or, as one

telecommunications company calls it, "creeping elegance." The best way to control creeping

scope is with a good definition of the requirements up front. Unfortunately, this is not always

possible.

For example, in some industries, such as aerospace, defense, and Management Information

System, creeping scope had become a way of life until recently. In the Information Technology

Group of a major appliance manufacturer, the project manager made it clear that she would not

accept any scope changes once the definition of the requirement (prepared by the user group)

was completed. Midway through the project, the user group tried to change the requirements.

The project manager refused to accept the changes and, against the wishes of the user group, put

all requests for changes into a follow-on enhancement project that would be budgeted for and

scheduled after the initial project was completed. When the initial project was completed and

installed at the user's location, the users stated that they could live with the original package,

and the enhancement project was neither funded nor approved.

Keeping the above-mentioned factors in view, today, both private industry and government

agencies are developing manuals on SOW preparation.

1. Firstly, every Statement of Work (SOW) that exceeds two pages in length should have a

table of contents conforming to the Contract Work Breakdown Structure (CWBS) coding

structure. There should rarely be items in the Statement of Work (SOW) that are not shown

on the Contract Work Breakdown Structure (CWBS); however, it is not absolutely

necessary to restrict items to those cited in the CWBS.

2. For the preparation of Statement of Work (SOW), clear and precise task descriptions are

essential. The Statement of Work (SOW) writer should realize that his or her efforts will

have to be read and interpreted by persons of varied background (such as lawyers, buyers,

engineers, cost estimators, accountants, and specialists in production, transportation,

security, audit, quality, finance, and contract management). A good Statement of Work

(SOW) states precisely the product or service desired. The clarity of the Statement of Work

(SOW) will affect administration of the contract, since it defines the scope of work to be

performed. Any work that falls outside that scope will involve new procurement with

probable increased costs.

3. One of the most important things to keep in mind when writing a Statement of Work

(SOW) is the most likely effect the written work will have upon the reader. Therefore, every

effort must be made to avoid ambiguity. All obligations of the government should be

carefully spelled out. If approval actions are to be provided by the government, set a time

limit. If Government-Furnished Equipment (GFE) and/or services, etc., are to be provided,

state the nature, condition, and time of delivery, if feasible.

4. It is essential to remember that any provision that takes control of the work away from the

contractor, even temporarily, may result in relieving the contractor of responsibility.

5. Use active rather than passive terminology in specifying requirements. Say that the

contractor shall conduct a test rather than that a test should be conducted. In other words,

when a firm requirement is intended, use the mandatory term "shall" rather than the

permissive term "should."

6. Always remember to limit abbreviations to those in common usage. Provide a list of all

pertinent abbreviations and acronyms at the beginning of the Statement of Work (SOW).

When using a term for the first time, spell it out and show the abbreviation or acronym in

parentheses following the word or words.

7. When it is important to define a division of responsibilities between the contractor, other

agencies, etc., a separate section of the Statement of Work (SOW) (in an appropriate

location) should be included and delineate such responsibilities.

8. Do not forget to include procedures. When immediate decisions cannot be made, it may be

possible to include a procedure for making them (e.g., "as approved by the contracting

officer," or "the contractor shall submit a report each time a failure occurs.

9. Do not over-specify. Depending upon the nature of the work and the type of contract, the

ideal situation may be to specify results required or end-items to be delivered and let the

contractor propose his best method.

10. It is important to describe requirements in sufficient detail to assure clarity, not only for

legal reasons, but also for practical application. It is easy to overlook many details. It is

equally easy to be repetitious. Beware of doing either. For every piece of deliverable

hardware, for every report, for every immediate action, do not specify that something be

done "as necessary." Rather, specify whether the judgment is to be made by the contractor

or by the government. Be aware that these types of contingent actions may have an impact

on price as well as schedule. Where expensive services, such as technical liaison, are to be

furnished, do not say, "as required." Provide a ceiling on the extent of such services, or

work out a procedure (e.g., a level of effort, pool of man-hours) that will ensure adequate

control.

11. Avoid incorporating extraneous material and requirements. They may add unnecessary cost.

Data requirements are common examples of problems in this area. Screen out unnecessary

data requirements, and specify only what is essential and when. It is recommended that data

requirements be specified separately in a data requirements appendix or equivalent.

12. Do not repeat detailed requirements or specifications that are already spelled out in

applicable documents. Instead, incorporate them by reference. If amplification,

modification, or exceptions are required, make specific reference to the applicable portions

and describe the change.

In addition to the guidelines, some preparation documents also contain checklists for Statement

of Work (SOW) preparation. A checklist is furnished below to provide considerations that

Statement of Work (SOW) writers should keep in mind in preparing statements of work:

1. Is the Statement of Work (SOW), when used in conjunction with the preliminary Contract

Work Breakdown Structure (CWBS), specific enough to permit a contractor to make a

tabulation and summary of manpower and resources needed to accomplish each SOW task

element?

2. Are specific duties of the contractor stated so he will know what is required, and can the

contracting officer's representative, who signs the acceptance report, tell whether the

contractor has complied?

3. Are all parts of the Statement of Work (SOW) so written that there is no question as to what

the contractor is obligated to do, and when?

4. When it is necessary to reference other documents, is the proper reference document

described? Is it properly cited? Is all of it really pertinent to the task, or should only portions

be referenced? Is it cross-referenced to the applicable Statement of Work (SOW) task

element?

5. Are any specifications or exhibits applicable in whole or in part? If so, are they properly

cited and referenced to the appropriate Statement of Work (SOW) element?

6. Are directions clearly distinguishable from general information?

7. Is there a time-phased data requirement for each deliverable item? If elapsed time is used,

does it specify calendar or work days?

8. Are proper quantities shown?

9. Have headings been checked for format and grammar? Are subheadings comparable? Is the

text compatible with the title? Is a multi decimal or alphanumeric numbering system used in

the Statement of Work (SOW)? Can it be cross-referenced with the Contract Work

Breakdown Structure (CWBS)?

10. Have appropriate portions of procurement regulations been followed?

11. Has extraneous material been eliminated?

12. Can Statement of Work (SOW) task/contract line items and configuration item breakouts at

lower levels be identified and defined in sufficient detail so they can be summarized to

discrete third-level Contract Work Breakdown Structure (CWBS) elements?

13. Have all requirements for data been specified separately in a data requirements appendix or

its equivalent?

14. Have all extraneous data requirements been eliminated?

15. Are security requirements adequately covered if required?

16. Has its availability to contractors been specified?

Lastly, but most importantly, there should be a management review of the Statement of Work

(SOW) preparation interpretation. During development of the Statement of Work, the project

manager should ensure adequacy of content by holding frequent reviews with project and

functional specialists to determine that technical and data requirements specified do conform to

the guidelines herein and adequately support the common system objective. The Contract Work

Breakdown Structure (CWBS)/ Statement of Work (SOW) (CWBS/SOW) matrix should be

used to analyze the Statement of Work (SOW) for completeness. After all comments and inputs

have been incorporated, a final team review should be held to produce a draft Statement of

Work (SOW) for review by functional and project managers. Specific problems should be

resolved and changes made as appropriate. A final draft should then be prepared and reviewed

with the program manager, contracting officer, or with higher management if the procurement is

a major acquisition. The final review should include a briefing on the total Request for Proposal

(RFP) package. If other program offices or other Government agencies will be involved in the

procurement, obtain their concurrence also.