A Guide to Writing a Statement of Work (SoW) Document in Software Development

A Statement of Work (SoW) is a crucial part of any business, as it outlines all aspects of its working process. Whether you are a startup owner or a project manager in a software development company, the SoW will represent the core of your project’s life cycle. Thus, understanding how to write the statement of work is the key to setting clear expectations on your business strategy. 

This guide will provide you with all the necessary information about the SoW document. Besides, you will get the answers to the questions like:

• What is so crucial about a statement of work?
• What are the main types of SoW?
• How to use SoW in project management?
• What is included in a statement of work?
• Who should write the SoW document?

A well-written SoW will help your startup successfully reach the finish line without spending much time and budget. Besides, it allows a project manager or business owner to set clear goals before launching the company. Check out the statement of work examples to understand how to use this document for effective project planning. 

What Is Statement of Work (SoW) Document?

Before you start creating your project plan or startup strategy, you should get an answer to the question: "What is a SoW?" A Statement of Work (SoW) is a core document for software development companies. It determines and captures the aspects of the business comprehensively, allowing to create a complete picture of the future project. 

The SoW includes an agreement with an agency, subcontractor, or service provider with features, such as a project timetable, payment terms, expected outcomes, and more. For instance, you could write the SoW document with a client to describe your work process and plan or with a subcontractor to list working conditions for a certain project part. 

Acronym SoW also has an alternative meaning — a Scope of Work. If we compare Statement of Work vs Scope of Work, we see that both terms relate to describing the project statements. However, a scope of work is just one section of the statement of work, a document that contains the project’s goals, guidelines, schedule, and more.

Writing a statement of work may seem daunting because this document requires concentration and going into details. However, once you have a complete understanding of what the proper SoW looks like, you will quickly complete this task. 

The Importance of SoW in Software Development

To understand the importance of the statement of work, you have to get the answer to one essential question first: “What does SoW mean in business?” 

SoW describes current and future project plans thoroughly. Yet, what does it mean for a startup owner or project manager? An efficient statement of work document can refine your approach to business. Thus, you could adjust your guidelines, timeline, and other aspects of the software development process.

A well-designed SoW document reassures the client the project will meet the expectations. So, writing the statement of work is a compulsory part of every business. Ultimately, the SoW defines what is vital for the project and what is not. Therefore, a correct statement of work will save you, your team, your partners, and your client a lot of time and money.  

What Is Project Scope of Work?

Although the difference between a statement of work and a scope of work was already described, you need to know additional information before writing the SoW.

The project scope is a crucial part of the SoW that describes all the elements of the project. It includes the range, reach, dimension, gamut, and spectrum of the work for better project understanding. In other words, project scope of work is the extent of work that the statement of work document determines.

The Main Types of a Statement of Work

There are three main categories of a statement of work document. Each option has features that can apply to a particular project. The choice depends on your product’s characteristics and industry. Let’s take a look at these SoW types to define the most appropriate for your startup: 

• Design/Detail. This type of statement of work is made to specify the project requirements for a supplier or subcontractor. Such SoW allows controlling the vendor so that everything is done according to the agreement. List all requirements from quality to materials to show your project expectations. 
• Level of Time/Effort and Materials/Unit Rate. This is an example of a versatile statement of work document, which mainly applies to service-based agreements. It describes the services provided along with specifications. With this SoW document, you can define the time, labor, and materials required to meet the project’s objectives.
• Performance-Based. If you are a project manager, this option is perfect for you. It focuses on the project’s purposes and the resources needed to achieve the expected quality level. However, consider that this SoW type doesn’t showcase the working process in all details. It states project outcomes yet doesn’t dictate the way a supplier or subcontractor should reach them.

Choose one of these SoW examples to organize efficient management for your project. Set up your goals and track the progress for each task. Assign work to your employees or colleagues and set priority goals to control the working process as a whole.

The Structure of a Statement of Work Document

Working without a defined plan or strategy allows being more flexible when deciding on a course of action. Yet, playing it by ear is not always a good idea, especially regarding project management. So, it is vital to have a statement of work — a document with specified standards, criteria, and requirements for each phase of the project.

SoW document ties all the project characteristics and processes, setting clear boundaries. Ensure your statement of work is simple yet meaningful to avoid troubles with software development later. Consider that the SoW should contain as many details as possible. Thus, it will raise the chances of meeting your needs in the most time- and cost-efficient manner. The format of the statement of work may vary, but in most cases, its structure comprises the same sections. Check this guide to define how to write a scope of work statement as well as other parts of the SoW document correctly. 

Introduction

Start your statement of work by identifying the objective and stating specialists involved in the project. Ensure the SoW document has the information about the date and location you wrote it. Thus, you can avoid concerns about its legitimacy and credibility.

Purpose

This section must help you to formulate a clear purpose for your project. Ask yourself a question: "What are my business goals and objectives?" A clear understanding of your expectations will help to make your team's work more effective and consistent.

Scope of Work

We briefed you with the scope of work definition before, but do you understand how this SoW section should look? This part of the statement of work is quite complex; however, you can easily deal with it by creating a timeline with several phases:

• project discovery phase;
• application development phase;
• testing phase.

If the project is very complex and extensive, you can divide these phases into smaller tasks. Besides, you should ensure the statement of work document identifies the following information:

• General budget overview
• Personalized tasks
• Expected deliverables
• Responsibilities of each party
• Conditions about possible issues

The scope of work may also include information about developers' certifications, specifications, and limitations for subcontracting development, etc. 

Location of Operations

Location of operations is another section the statement of work should contain. Clarify the location for a customer to meet up with the project team members or vendor’s representatives. If you hire engineers or other specialists from different countries, you should also indicate their time zones. Thus, you will always know when it is better to reach your outsourcing team. 

Standards

The previous parts of the SoW document mainly described the nature of the project. However, this section highlights the process of operations within software development. The Standards of the statement of work is all about industry standards and technological limitations, such as: 

• data on coding languages and platforms;
• information about the testing of the product and involved parties;
• details about the necessary hardware or software;
• tools for communication between the client and the outsourcing supplier;
• list of accepted devices for testing the software and more.

Deadlines and Schedule

In this SoW section, you can set a timetable and clear deadlines for more efficient product development. With an accurate schedule, the delivery of your project will be stressless. Besides, this part of the statement of work allows setting milestones, which simplifies working on complex tasks.

Set a start date for your business and plan your schedule to streamline the software development. Include a list of the outlined milestones and set the dates of tasks delivery in your statement of work. This will help you to review the process of development, evaluate performance, and control the project.

This section may also involve the contract’s duration and the payable operating hours of your software development team. Thus, your statement of work will include all the information for your project manager to ensure everything is on the right track.

Monitoring

If you want the planned time frames and deadlines to be met, you should control the project development. Include this section in your SoW to track how the software development vendor adheres to his responsibilities. You can also ask your team to report regularly or use time tracking software for better control. Yet, ensure you added all these tools and applications in your statement of work before applying them to your project.

Acceptance Criteria

The SoW document must contain all the necessary details to define the future success or failure of the product development. Thus, try to describe which criteria constitute the successful implementation of project assignments. 

Use this section to determine the deliverables the client should accept and cover. You should also state circumstances under which the company can terminate the agreement without paying the total price. Mentioning such conditions will save the client from extra expenses in case of unforeseen circumstances of insuperable force.

Payment Model and Contract Mode

Estimating a budget is a must for every project, especially at its entry level. You can list all the payments related to your software development in this section of the statement of work. Thus, you can decide on the payment process right away to avoid unpleasant situations with your supplier or client later on. 

Figure out how and when the payments will be delivered and transferred to make up a fixed schedule. Reach an agreement about preferred payment terms and conditions with the company. Make this SoW section as elaborate as possible using one of these two price models:

• Fixed-price contract model. This type of contract is perfect for companies with a clear plan, defined requirements, and strict deadlines. It implies the vendor would take full responsibility for the results, but, at the same time, your project risks are less flexible. As for the payment, it will be made on a schedule set up in the contract. If you deal with a short-term or small project, this model will help you showcase everything you need.
• Dedicated development team model. This contract model is better for long-term or complex projects without a defined scope of work. If you plan on making changes during software development, this model fits your project perfectly. With this option, you can create feature replacements and manage your engineering team more effectively. Besides, it provides a more efficient payment system for both client and vendor so that the team could receive payment based on working hours.

Miscellaneous

If any specifications do not fit in the categories above, feel free to add them here. The questions you might want to include can relate to:

1. security regulations and standards;
2. liability cap and warranties;
3. program evaluation team composition;
4. estimated effort level;
5. further software testing;
6. timeframe for applying changes;
7. post-completion customer support, etc.

Including this information in your statement of work allows you to manage the workflow better. Clarify all issues of concern that may undermine the usefulness of this document to lead your team to success. 

A Basic Statement of Work Example

Clients are often disappointed with the services as it may take ages to get a simple response. However, this issue can be easily solved using a well-planned statement of work. Check this SoW template for software development to figure out how to effectively cooperate with a web development company.

Statement of Work example for professional services concluded between ABC Corporation and Web Developers Inc.:

Effective date: This statement of work template is effective as of March 20, 2021.

Scope of project: Build an automated customer support system for website visitors and customers.

Purpose: This project aims to increase client satisfaction and shorten response time to less than 20 minutes. An implementation of an automated chatbot will help to achieve this.

Location: The subcontractor will perform work remotely.

Deliverables: The subcontractor will develop and install the solution by May 21, 2021 (2 months).

Tasks: Tasks involve developing an automated online chat and testing it. After the chat verification, it will be implemented into a customer service page of the website and as a pop-up on the homepage.

Schedules: A beta solution must be delivered by April 21, 2021 (1 month) and the final product by May 21, 2021 (2 months).

Standards and testing: There are no industry or compliance standards for this project. Our team will test the solution before deployment.

Requirements: The subcontractor will use their hardware to build a customer support system.

Acceptance criteria: The chatbot must be built into our site and allow customers to solve issues related to our product.

Payments: A payment of $8,000 will be wired upon the final delivery of the project. Subcontractors must have a W-9 on file before a payment is made.

This is a simple project management scope of work template, which can adapt to your project needs. With such an SoW template, you can quickly write a statement of work and proceed with working on the software development for your startup.

Who Should Write the SOW in Project Management?

In software development, SoW is typically created by an outsourcing vendor. Software developers, who write the statement of work, can provide extensive project descriptions as a part of the documentation package. As a rule, IT companies that are responsible for project development compile quality SoWs promptly. So, as a client, you can rely on quick and efficient project management document delivery.

Things to Consider When Writing an SOW Document

Have no idea how to write a statement of work that is thought through and accurate yet short? These recommendations will help you to create a detailed SoW document that is easy to follow.

1. Break up Your Project Into Phases 

Don’t focus on creating a complete statement of work document for an entire project. Instead, make your SoW readable by splitting it into phases. After that, develop separate statements of work for each section to manage the project progress. Thus, you can get an understanding of requirements and specifications at each stage. 

2. Make a Plan on Reaching Your Goal

To write an impactful SoW document, you should figure out your purpose and the ways to achieve it. Outline the expected deliverables to articulate the further steps of your team members. Focus on all the parts of the statement of work, including the scope of the project.

3. Put It Into Context

Explain all your steps in depth to make your project purpose clear to every participant. It will help you stick to the plan even if there are significant or slight changes in the working process. Besides, it allows the project manager to measure the success of this task. 

4. Be Specific to Minimize Risks

You might face a situation where your client’s expectations differ from actual results. This can have a bad influence on your cooperation and result in disagreement regarding the payment. Set clear project boundaries to prevent such lapses and cut the risk of misunderstanding between the parties.

5. Outline the Ground Rules and Assumptions 

Your project scope statement should point out expectations of the project’s range of requirements within its objectives. In other words, you should be clear about the requirements that must be included or not. Thus, you will be able to reach a common conclusion about mutual expectations.

6. Be Clear and Concise

To ensure your SoW document is easy to understand, you have to make it as short as possible. Avoid words with many interpretations or intricate wording so there will be no room for misinterpretation.

7. Be Comfortable With Your Statement of Work

Ensure you know your SoW inside out and always keep this document close. Thus, your client and team will also be aware of what’s behind the working process. Try to make vital points throughout the project and provide everyone with helpful reminders.   

How Much Detail to Include in a Statement of Work?

Another crucial question you will face while making a statement of work is, "How detailed an SoW should be?" In the previous sections of this “how to write an SoW” guide, we mentioned that this document should be as specific as possible. However, too much information can overwhelm your client and your team. So it is up to you to define how elaborate the final version of the SoW will be.

The key to an efficient statement of work is the balance between being too scant and providing too much information. To follow this idea, you should focus on the questions that cover potential problem areas. Then, answer each question thoughtfully but leave out unnecessary features to keep your SoW flexible. 

You could put plenty of things into a scope of work to protect yourself and your team from turning the development project into a disaster. You may include: 

• definitions;
• specific service levels;
• resource plans;
• supplier and client responsibilities;
• acceptance criteria, and more. 

Yet, firstly make sure you don’t disagree on these questions with the client. Thus, if something goes wrong, refer to the SoW document and prove you did everything right.

How to Use a Statement of Work in Project Management?

After you have finally written and signed your statement of work, it’s time to keep the project on track with this SoW. Sticking to the statement of work almost guarantees you and your team achieve the expected results. Therefore, you aim to follow the scope of work and all the points mentioned in the SoW document. 

Here are some tips that will help you to keep your statement of work in project management on track:

Know All Details of Your SOW

To be confident of your actions, you should know your project statement of work well. No matter who wrote the SoW, you must have a sound understanding of all the sections of this document. Otherwise, your colleagues or clients may have some questions. 

Keep a copy of the statement of work on hand. Thus, you will be able to answer any question at any time, whether it is a business meeting or a phone call. Also, make the SoW accessible for all team members by sharing it in your project management software. 

Spread the SOW Among Your Team Members 

To benefit from the statement of work, you should ensure each specialist in your team is aware of all project details. Print the SoW copies and stick them on the walls to make them visible to your colleagues. Circulate the document so that everyone could have the right impression of the project prospects and goals. This is how you can ensure your team understands what the activities have to be done and what deliverables should be achieved.

Let Your Team Adjust the Statement of Work

Companies often hire different specialists for creating a statement of work and its implementation. If you hire a team that hasn’t been working on the SoW, you should allow its members to refine the document. New engineers or developers can offer changes that drive the success of the project. So, you better warn your client of the possible edits and alterations.

There is no point in doing something only because it was stated in the SoW. The actions of your team should always have value for the project. Therefore, feel free to accept new valuable offers and don’t be afraid to discuss them with your client. If it works well for the project, you should be able to make a case for it.

Discuss the SOW in Your Client Meetings

Organize weekly status meetings to bring up the statement of work with your clients. Discuss if there are things in the SoW that need to be adjusted. Then, make appropriate amendments and ensure your client and team are aware of all changes.

Watch for Scope Creep

Scope creep is a sneaky growth of the scope of a project. It implies features the client wants to implement in the project but are different from those mentioned in a statement of work. A classic scope creep is a client asking for a ‘favor’, like an extra round of software testing, which wasn’t budgeted. 

Here are the things you must consider to avoid scope creep:

• Make sure you’re identifying the scope creep. 
• Know your clear project scope. 
• Be aware of what’s in and what’s out of the statement of work.

If you identified the scope creep in your project, discuss the situation with the client. Try to offer them options that will be beneficial for both sides.

Raise Issues from Start

If there are any issues at the early stages of the project, the project manager should arrange the discussion. The first few weeks of a project can be stressful and busy; therefore, it is crucial to solve everything right away while the working process is flexible enough. Thus, you won’t need to catch up to fulfill the client’s expectations. 

Remember, the first version of your SoW is your baseline. It outlines every step you need to take to deliver the best results. Therefore, you should stick to it throughout the software development process.

Summary

Summing up, Statement of Work (SoW) is a crucial element in a collaboration between the client and a software development company. This document clarifies all project planning and maintaining details necessary to achieve the goals. Besides, it allows both parties to understand all aspects of the work that has to be done. 

Now, when you have the SoW defined, you can create a detailed statement of work for your project. Use it to showcase your objectives to the team for steering them in the right direction. Keep in mind that you have all chances to reach the stated goals with the correct statement of work and please your vendor with fantastic results!