Work Order (WO)/Statement of Work (SoW)

When we're working with a contractor on a project, we will want to set up some sort of legal document that we both agree upon. That could look like just a regular contract, which outlines all the expectations, what's going to be delivered, the cost of the project. It's going to list out everything of how we're going to interact and what the expectations are. But that's a lot to actually go over and create every time we're doing business with a contractor. And if we're doing business with the same contractor over and over again, we may choose to use a statement of work. Another name for a statement of work also could be a work order.

The Master Service Agreement and the Statement of Work

When two entities are doing business together, we really want to create legally binding documents that spell out all of the agreements between the two businesses. One way we can do that is through a master service agreement and a statement of work.

The master service agreement kind of sets out all of the upper level, what is going to be continuous throughout this partnership, throughout this relationship, so we don't have to keep revisiting it again and again. And the statement of work will outline each individual project, or each individual task, or each individual engagement that we have. That's going to be what is going to be delivered, and what the price of that's going to be, and those types of details.

So we would have one master service agreement set up with, let's say, a service provider. We'd have a master service agreement set up with them, and then for everything that we do we would create a separate statement of work.

When to Use a Statement of Work

So once again, who do we establish a statement of work with? It would be anybody that we have that master service agreement with. So anytime that it goes beyond just a single engagement, a single project, a single contract, and when there's not a terms of service, then we're going to want to set this up, whether we're providing the service or they're providing the service to us.

A Statement of Work Template

Here's a statement of work template. I downloaded this from the state of Wisconsin. As you scroll through here, it's set up just like a contract that both parties are going to sign. It has information like what are the deliverables, and when are the major milestones or the tasks going to be completed, or the phases going to be completed. And then with this we also have the project costs.

Now, certain costs and certain elements of cost are not always just in the statement of work. Sometimes we find those also in the master service agreement, or we find them as an attachment to the master service agreement. But those are more for like when something's going to be charged hourly. In this case right here, or in a lot of cases, you're being charged by project, and so you're going to find that information within the statement of work.