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It's also important for both parties to sign off on an SOW before any work begins as this makes it legally binding on both sides. Failure to do so could mean that one party has no legal recourse should things go wrong further down the line.

The SOW is typically written by the client, but authors may vary, and more than one author may participate. This may include anyone from the project manager to a third-party contractor to the Chief Information Officer in the case of IT and software development projects.

Along with a proof of acceptance, a SOW could be considered a standalone contract. However, in practice, this isn't usually the case. Most circumstances where a SOW is separate from a contract occur when the relationship between businesses is governed by a master service agreement (MSA).

A statement of work is legally binding, but it is not the final, formal contract signed at the end of the contracting process. It can be thought of as the formal foundation of a final contract.

The SOW is agreed upon and signed. Now, the statement of work document works as both the formal document and the practical action plan when initiating and implementing the project. It ensures that both parties have established a common ground and have an understanding about the full life cycle of the project.

Each project requires a unique SOW that outlines the specifics of that engagement. That said, almost all SOWs will include seven elements: the Scope of Work, deliverables, time and resources, payment terms, client services, changes, and terms and conditions.

Most statements of work include these sections: Objectives: Goals of the project. Scope: Work involved in the project. Deliverables: Products or services to be provided.

This can lead to delays in completion or unexpected costs that could have been avoided if more information was included in the SOW. It's also important for both parties to sign off on an SOW before any work begins as this makes it legally binding on both sides.