Passing the #PMP—Project Statement of Work vs. Project Charter


1. Introduction

Yesterday I wrote a post making a distinction between the Project Charter and the Project Scope Statement. In reviewing my notes from our study group I realized that there is another document which people had trouble distinguishing from the Project Charter, and that’s the Project Statement of Work. Like the confusion with the Project Scope Statement, this confusion also exists because there are some common elements between the two documents, as well as differences with regards to their contents and their purpose.

The purpose of this post is to make the distinction between the Project Statement of Work and the Project Charter clearer. I will do this by answering the questions: What is it? How does it fit in the flow of PM processes? Who creates it? What’s in it? How does it compare to the Project Charter? How is it related to procurements?

2. Project Statement of Work (SOW)—What is it?

The best way I can describe the Project Statement of Work is as the “seed” of the project. It is watered during the Initiating Process into the Project Charter which causes it to germinate and become a seedling. The seedling is planted in the ground during the Planning process of creating the Project Scope Statement. It then turns into a plant during the Executing Process (where it is given sunlight and water, analogous to project resources) and Monitoring & Controlling Process (where it is checked periodically to see if there are any adverse conditions such as pests or diseases), and is finally harvested at the time of the Closing Process.

3. Project Statement of Work (SOW)—How does it fit into the flow of PM Processes?

The SOW is the seed or kernel of the idea for the project which is then developed at a high level for the purpose of approval of the project during the Initiating Process Group as process 4.1, Develop Project Charter. As seen in the previous post, this Project Charter, if approved, is developed at a higher level of detail in the Planning Process Group as process 5.2, Define Scope. So here’s the flow of how the documents are connected:

3. Project Statement of Work (SOW)—Who creates it?

This is going to depend on the end result of the project is going to be a product, service, or result that is used internally within the company, or is to be delivered to an external customer.

If the sponsoring organization is the one that is going to use the end result, then the sponsor is the one that originates the SOW. If a customer is the one that is going to use the end result, then the customer is the one that originates the SOW. The SOW may be part of a bid document (request for proposal, request for information, request for bid) or as part of a contract.

4. Project Statement of Work (SOW)—What’s in it?

The PMBOK® Guide references 5 inputs to the 4.1 Develop Project Charter process, two of which are the generic Enterprise Environmental Factors (EEF) and the Organizational Process Assets (OPA), the “company culture” and “company processes” that are inputs to many PM processes.

However, listing these three like this is somewhat misleading and obscures their interrelationships. Here are more detailed descriptions of these three inputs

a. SOW
The components of the Project SOW are as follows:

Element Description
1. Business need Why do the project? Because of some external factor such as:

  • Market demand (new demands create new products)
  • Technological advance (taking advantage of new materials and/or availabile technologies
  • Legal requirement
  • Government regulations (environmental, safety, etc.)
  • Organizational need (increased revenues, compliance with industry standards or guidelines such as ISO)
  • Social need (NGO)
  • Customer request
2. Product scope description Characteristics of the product to be created as a result of the project. How does this project fulfill the business need described above?
3. Strategic plan Why do the project? Because it aligns with some internal strategic goals of the organization.

b. Business Case

How is the business need different from the business case? The business case takes the business need outlined in the SOW (element 1 in the chart above) and justifies how the result of the project (element 2 in the chart above) will satisfy that need AND align with the strategic goals of the organization (element 3 in the chart above). It is the analysis that ties together the 3 elements of the SOW like so:

c. Contract

As mentioned above, IF the product is to be made for a customer in an external organization, then the SOW may come EITHER in the form of a procurement document OR a contract. So, in reality the contract may contain the SOW and is not separate from it.

I hope this explanation clears up the distinction between these three inputs of the process 4.1 Develop Project Charter

5. Project Statement of Work: How does it Compare to the Project Charter?

Here are the elements of the Project Statement of Work (the “seed” idea of the project) compared to the elements of the Project Charter (used for approval of the project). Those elements which are similar are put in the same row. In this chart, the elements 1 and 3 from the above chart on the Project Statement of Work correspond to the first element of the Project Charter, and element 2 from the above chart corresponds to the second element of the Project Charter.

Project Statement of Work Project Charter
a. Business need, strategic plan a. Project purpose or justification (fits business needs, strategic plan)
b. Product scope description b. Project objectives, product characteristics
c. Project success criteria
d. High-level requirements
e. Summary schedule, budget
f. Project manager assigned to project
g. Project approval requirements and approval authority

The Project Statement of Work is therefore the core of the first two elements of the Project Charter, indeed the most IMPORTANT elements of the Project Charter, and that is the relationship between the two. Again, that is why I refer to it as the “seed” of the project.

For the purpose of completeness, I am copying from my previous post a description of the elements of the Project Charter.

Project Charter

a. Project purpose or justification

In order for the project to go forward, it has to be for a specific business need and it must fit into the company’s strategic plan. This is why a program manager and/or portfolio manager would be involved in the decision to green light a project. The project has to fit into the company’s work that is external to the project.

b. Project objectives, product characteristics

This is a high-level description of the project, which will be progressively elaborated into a description of the scope of the project as part of the Project Scope Statement.

c. Project success criteria

If the purpose of the project is to produce a product, service, or result, then this is a description of what a successful project will be. This may be related to the Summary schedule, budget item below.

d. High-level requirements

The various stakeholders will have their requirements, assumptions, and risks identified.

e. Summary schedule, budget

This is a high-level estimate or ballpark figure used for preliminary approval of the project. These may be considered as the high-level constraints for the project which are elaborated later during the Define Scope process. Note that if the actual schedule and/or budget as a result of the Planning Process are wildly different from the this summary schedule/budget, it may require a revisiting of the Initiating Process to see if the project c can actually proceed or not.

f. Project manager

This is very important to have a project manager assigned at the Initiating Process and NOT later on during the Planning Process.

g. Project approval requirements and approval authority

Who is the person or persons within the organization who will green light the project and what criteria will they use for doing so?

6. Project Statement of Work—How is it related to Procurements?

Sorry to jump ahead from the Integration Knowledge Area to the Procurements Knowledge Area, but there is something called the Procurements Statement of Work. How is this different from the Project Statement of Work?

Well, the project statement of work is initiated by the a) sponsor or the b) customer, so that in case b), you are the supplier or the seller. If you are producing that product for the customer, and in order to produce it you need a subcontractor to do part of your work, then you become the buyer and some other company is the seller. The Procurements Statement of Work is the “seed” of the subproject, if you will, that produces that subcomponent produced by the seller for inclusion into your product, which you will in turn sell to the customer.

However, the Procurements Statement of Work is derived from the portion of the Product Scope during the process 12.1 Plan Procurements, and becomes the basis for the bidding process to obtain a seller.

However, from the component manufacturer’s standpoint, when they receive this Procurements Statement of Work, from THEIR standpoint, it is exactly like the Project Statement of Work that you received from YOUR customer: it is the basis for their proposal, which if accepted, then become the basis for a formal procurement contract between the component manufacturer and your organization. To them, it is a project; to you it is a subproject, or a project within a project.

I hope this post clears up the different between a Project SOW, a Project Charter, and a Procurements SOW.

The next post will cover the project selection criteria for a project, something which is not covered in the PMBOK® Guide, but which nevertheless can show up on the PMP exam.

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9 Responses

  1. Hello Jeromy,

    Thank you so much for such clarity on the Project Scope Statement, in relation to the Project Charter. The concept of the “seed” did it for me, as I relate it to the Bible – the parable of the “seed”. Finally, some body got through to me! I will now keep an eye on your site.

    Blessings and thank you again, Janice Turpin

    • Thanks, Janice, for your kind comment. When I was leading our study group, and somebody would be confused about a topic, it would spur me on to think of an example they could relate to. I’m glad you were able to relate to the statement of work being like the “seed” of a project; that was my hope that it would connect with someone–it’s gratifying to know that this is the case.

  2. what about using a SOO instead of a SOW to feed the project charter?

    • Good point, Allison. An SOO is more likely to be used in a public sector project. Here’s a description from “www.gsa.gov”: “A Statement of Work (SOW) is typically used when the task is well-known and can be described in specific terms. Statement of Objective (SOO) and Performance Work Statement (PWS) emphasize performance-based concepts such as desired service outcomes and performance standards. Whereas PWS/SOO’s establish high-level outcomes and objectives for performance and PWS’s emphasize outcomes, desired results and objectives at a more detailed and measurable level, SOW’s provide explicit statements of work direction for the contractor to follow.”

  3. Thanks for breaking this down in such detail. Before reading this I wasn’t really able to distigish between the SOW and business case. You’re post cleared that up, and provided a lot more insight into SOWs.

  4. Hello Jerome,
    I definitely had a good amount of confusion around the SOW vs Project Charter and your explanation did the trick. Additionally the explanation of Business Case and Procurement SOW was fantastic!

    I have already started looking into your other posts.

    Cheers mate!!

    Shakeel Ahmed

  5. Thank you for sharing Jerome. This is the clearest explanation I’ve heard between these overlapping docs so far! The information though similar is simply being elaborated as you move forward in the project.

    • Thank you, William. The Project Statement of Work contains the broadest description of the product that the project will create; the project charter elaborates this to a high-level (broad) description, and then this is elaborated even more in the project scope statement. The project charter an the project scope statement can further describe the product by including exclusions (sometimes called boundaries) to make it clear what features are NOT going to be included in the project. This helps prevent unnecessary changes down the line.

  6. I was searching in google to understand the differences between SOW and Business Case. After reading your post, it is much clearer now. The BEST explanation. Thank you!!

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