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Thursday, March 3, 2016
Project Statement of Work vs Business Case
The project statement of work (SOW) and the business case are inputs to developing the project charter, but each contains different information. SOW
The project statement of work (SOW) is a narrative description of products or services to be delivered by the project and is provided by the project initiator or customer for external projects or the sponsor or requesting organization for internal projects. If the project is being done for an external customer, the SOW may be received from the customer as part of a bid document.
The SOW details the business need for the project, the product scope description, the strategic plan, and the characteristics of the product the project will create.
The business case will confirm the business need and drivers for the project and will most likely include information on a cost benefit analysis, so as to justify the funding of the project, such as: net present value (NPV), internal rate of return (IRR), and/or return on investment (ROI).
The business case should also reference the driver behind the project, such as: market demand, organizational need, customer request, technological advance, legal requirement, or social need.
Both the project SOW and the business case are critical inputs to the development of the project charter. The SOW is generated by the requesting party, detailing what they are requesting, whereas the business case is developed internally, usually by the project sponsor, to provide a financial and feasibility analysis of the project.