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Updated: October 3, 2023

How to define your scope of work: A primer for lenders, borrowers, grantors and grantees

As a senior investment officer at the Maine Technology Institute, I have worked with hundreds of applicants on developing and refining technical services scopes of work across a variety of sectors and projects. In my experience, a project’s written scope of work is one of the most critical determinants of whether the project will succeed or fail. The scope must be clear, well-defined and have objective criteria for both performance and payment.

Courtesy / MTI
Tom Kittredge is a senior investment officer at the Maine Technology Institute.

Creating a solid scope of work is a valuable exercise for all parties involved in the project. It can ensure that they are on the same page in terms of the key activities, timeline, and desired outcome. It reduces the risk of miscommunications or differing expectations between parties. It serves as a written reference for any future disagreement over the project.

A scope of work with clear payment terms is the first step in creating a technical services contract. We at MTI do not review or draft contracts for the companies we work with, but we do evaluate scopes of work for funding and decide whether to disburse funds. We have observed that preparing a well-crafted scope of work encourages those involved in the project to proactively start sketching out the timeline and resources involved to accomplish the project.  

Key elements of a good scope of work 

The specifics of a scope of work depend on the work to be performed. A well-written scope of work often starts with an overview of the key activities involved in the project, then fleshes out each activity with a description of what it will entail.  

For example, a client may wish to test its assumptions about market need, and wants to engage a professional to help it identify customers, gather information, and evaluate need. This is referred to generally as customer discovery.  

The general description might serve as a title, but a scope of work requires more detail, particularly as it relates to the purpose of the engagement. A client hires a technical consultant precisely because the client does not know how to do the work. As a rule of thumb, the client should be able to tell what steps will be taken and determine whether they have been performed without consulting another expert to determine whether the work was worth the money paid.

In our customer discovery example, the scope of work might look like this:

  • Work with client to identify five target customer personas based on perceived product need;
  • Conduct in-person interviews with five individuals per target persona;
  • Submit written report addressing interview results, evaluation of market need, recommendations for future research, if any.

This step-by-step approach creates project milestones. Done properly, a scope of work serves as a checklist for the client (or grantor, or lender). Each step should be framed so that the client has an objective basis for determining whether the milestone is complete.  
The work description addresses what will be done; a schedule establishes when. If the work steps have been listed in chronological order, adding due dates is relatively straightforward. The parties may want to address the consequences of delay in their contract, but the schedule establishes the benchmark for determining whether the project is on time.

Project milestones frequently form the basis of payment. In our example, the consultant may request a deposit up front, progress payments following the identification and interview stages, and final payment after submitting the report. Progress payments can be helpful in the event a project is significantly delayed or abandoned, because (on one hand), the client has some assurance that payments do not disproportionately outstrip the value of the services received, and (on the other hand), the professional can pause the work until it has been paid for the work it has done.

With the launch of the new Maine Entrepreneurial Resource Corps (MERC) grant program, MTI will be focusing more than ever on the adequacy of scopes of work presented by applicants. The MERC program funds up to $10,000 of technical services for qualified applicants on qualified projects. If we cannot understand all elements of the scope — work, schedule and payment — we cannot fund the project.


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