Statements of Work (SOWs) can easily be considered one of the “workhorses” of commercial contracts, documenting key business terms like price and deliverables between parties who, in many cases, have previously entered into a master services agreement with each other. Regardless of the nomenclature (SOWs, order forms, schedules, exhibits, work orders, etc.), business teams should carefully prepare and/or review a SOW’s first draft to ensure that it accurately captures their intentions and expectations, even if a lawyer will ultimately review it. In this 3-part series, I will explore the role of the SOW and its key provisions for each party.
Part 1: SOWs Should Tell a Story
The business person/team closest to the deal should be responsible for the first pass (whether drafting or reviewing). After all, they understand the ins and outs of the project better than anyone else. It is important not to make assumptions, use shortcuts or acronyms, or even gloss over steps in the SOW. Instead, a SOW should tell a story, which explains to your reader, who is not familiar with the deal, all of the core details, including (1) what you are doing and why, (2) what product or service you are getting/delivering, (3) who is responsible for delivering and when, and (4) what a successful vs. unsuccessful delivery will look like.
By approaching the SOW in this way, the first draft will be more comprehensive, and therefore, much more likely to be approved by your legal department or advisor with expediency. A detailed SOW will also serve your needs as they evolve over time. For example, if you take the time to differentiate costs and pricing structures up front, you may avoid repaying for initial set-up costs in the event of renewal. Likewise, a thoroughly prepared SOW will help minimize the risk of disputes over vague terms, or worse, the risk of being stuck in an underperforming deal.
In Part 2 of this series, I will review a list of key issues to help guide the receiver of goods/services with its review or preparation of a SOW.