The difference between an SOW and a Project Charter

“This is so confusing!”

Project documentation is a confusing and messy topic — not only because there are so many kinds of documents and it’s not clear which ones you need for your specific project, but also because many documents seem to be very similar in terms of their content.

Statement of Work (SoW) and Project Charter are a good example.

If you are not familiar with their real purpose and the content that should should go into each one, you may think it’s basically the same document and you can just create one of the two documents and you are fine, right? But there are actually big differences between the two documents which you need to be aware of.

Let me explain in clear terms what an SoW and a Project Charter are and why each document has a distinct purpose.

SoW (Statement of Work)

Who creates an SoW? You create an SoW when you are serving as the vendor in a project. For example, if you are a cloud services provider and you are building a cloud storage solution for a client, then you have to create an SoW for that project.

When (at what stage) is the SoW created? The SoW is usually created after the client has accepted your offer/proposal.

What is the purpose of an SoW? The SoW describes the technical solution and the services that you are going to build or provide for your client in a specific project, including effort estimation and cost. Thus, the purpose of an SoW is to capture the scope that you as the vendor are going to provide in a project.

What should be covered in an SoW? As mentioned before, the SoW should describe the proposed technical solution you are going to build for the client as well as any services you are going to provide for the client (in the project).

Using our example where you are a cloud services provider and you are building a cloud-based storage solution for a client, you should cover the specific features of the future solution, e.g. storage capacity, network protocols used, backup and redundancy features, access/user privileges, network connectivity, support services etc. You also need to specify your services for setting up the cloud solution, including the estimated cost.

More generally, a well-written SOW should contain the following points:

  • Scope
  • Assumptions
  • Technology platform/Architecture
  • Roles and Responsibilities of the client and the vendor
  • Project Methodology
  • A draft project times schedule with milestones
  • Dependencies/Risks
  • Acceptance Criteria
  • Change Management Process

Project Charter

Who creates the Project Charter? Unlike the SoW, which is created by the vendor hired for a project, the Project Charter is usually created by the main project lead managing the overall project. Of course, putting together the Project Charter is a team effort, so if you are the main project lead you will need to gather the input from all project stakeholders, including the client, vendors, your project team members, management and other stakeholders.

When (at what stage) is the Project Charter created? You create the Project Charter while you are setting up / planning out a project. Once the Project Charter has been finalized and the scope and budget have been agreed upon, you will have to get the charter signed by the client.

What is the purpose of the Project Charter? The Project Charter contains the key parameters of the project and it serves as an agreement between the client and the contractor/vendor on what the project is supposed to achieve (goal), what needs to be done (scope) and what the responsibilities of each of the involved parties/stakeholders are.

What should be covered in a Project Charter? A well-written and complete Project Charter should cover the following:

  • Project overview
  • Project Stakeholders
  • Scope
  • Project schedule
  • Budget incl. estimates
  • Assumptions
  • Responsibilities (Client/Vendor)
  • Project methodology/phases
  • Major risks
  • Change management process — defines how change requests are handled
  • Communication during the project

As you probably noticed, some of the points included in a Charter are also covered by the SoW — such as budget / estimates or assumptions. The thing is, the SoW contains only the budget/estimates for the services provided by the vendor, while the Project Charter covers the overall project and thus should show the costs for the entire project.

When it comes to the other — apparently redundant — points like assumptions, you can copy/paste any assumptions stated in the SoW into your Charter, or you can refer to the SoW (although I think that’s not ideal).

Don’t have a Project Charter Template? My Project Template Pack includes a Project Charter Word template with the necessary outline.

Conclusion: SoW vs. Project Charter

In the most simple way we can say an SoW is a purely technical document prepared by the vendor, outlining the technical solution and the services a vendor is going to build or provide in a project.

On the other hand, the Project Charter also covers the business and organizational perspective of a project, including the scope, cost, project organization and other parameters of the entire project, and it is prepared by the overall project lead.


  • Adrian Neumeyer

    Hi! I'm Adrian, former Senior IT Project Manager and founder of Tactical Project Manager. I created the site to help you become an excellent project leader and manage intense projects with success!

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