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An Ultimate Guide to Writing a Statement of Work Document

by Vitaliy Podoba
Vitaliy Podoba avatar

Misunderstanding is the most common evil villain in software development. 

And even if you think that all things are clear, make sure to record them in a corresponding document.

How about a short story that highlights the value of well-documented software development agreements? 

One software founder had a dream of developing a global e-marketplace.

They managed to find a seemingly reliable software development company with the required expertise.

And these developers quickly jumped into the project. 

The software founder felt a little bit uncanny because too many things were decided only through oral communication with developers. 

And these tech partners did not clarify many important things about the project.

But they seemed so professional that the founder, eventually, decided to calm down and wait for the excellent result. 

In three months, when the marketplace was developed, the founder faced a very unpleasant surprise.

His dream marketplace worked according to a very strange auction principle.

Moreover, tech partners failed to implement proper safeguards, ignored some functionality that was critical for the founder’s idea, and even demanded a higher price for the services because of some unexpected tech challenges. 

The worst thing about this situation was that the initial demands of the founder were not mentioned in any official agreement.

Therefore, the software development company, de-facto, could not be held responsible for such failure. 

And the founder had to go through nine circles of hell to force the tech company to fix at least some issues about his dream application.   

This story would never happen if all project essentials had been negotiated and recorded in a statement of work (SOW) document. 

What is an SOW software development agreement and what information should you include in it? And why is it so important when it comes to software development?

Here’s the ultimate overview of a statement of work and its essentials. 

Read this article to know how to compile your perfect Statement of Work document for the most efficient cooperation with your tech partners. 

As usual, we will start with a definition. 

What is a Statement of Work and What Are Its Basic Parts? 

Basically, a Statement of Work (SOW) is a document that defines what should be done. 

It legally binds you with your tech partner and defines what is really important about your project. 

You may find very different statement of work template examples. Basically, almost any aspect of your cooperation with a tech partner can be included in it. 

But, there are still some basic moments that should be DEFINITELY considered in your statement of work document.

Never ever sign an SOW document without clearly defining these three things: deliverables, activities, and a timetable for your project. 

Let’s take a closer look at each of them.

Deliverables

Deliverables are all about what you want to achieve with your project. 

Do you want to build an app with specific features? 

Or, probably, you want your tech partner to fix some issues with your existing app? 

Perhaps, building a user-friendly interface is your top priority?

All these tasks or any other will go as your project deliverables. 

Mind that an SOW for software development is a document that works in two directions. 

So, there must also be clearly defined deliverables for your tech partner. 

Material rewards for their quality work will go.

Activities

This part of a software development statement of work example is, basically, all about how you want to achieve your project goals.

Here you define the methods and the technologies that should be used to build your dream app.

Actually, in most cases, defining these things is your partner’s responsibility.

For example, we at SoftFormance are perfectly cool with getting only some basic requirements and handling all tech and process questions on our own.

So, you may just tell us about the deliverables, and we will handle and document all the activities we shall take to deliver these deliverables (sorry for the tautology). 

Timetables

This part of a software development SOW is about the time when you will receive your intended result.

In other words, here you will find deadlines, both final and intermediary. 

It may be challenging to anticipate all project stages with perfect precision. But, a good schedule is something that makes our work on the project organized much better. 

Our average project lasts for 2-3 months. 

And we also have approximate estimates for all its basic parts and features. 

For example, we certainly know that it will take around 3 days to develop a convenient system of reviews for an Uber-like app

Statement of Work Software Agreement: The Basic Chapters 

We’ve already mentioned the basic things covered by an SOW software agreement. 

Now, let’s proceed with a more specific overview of SOW chapters.

Yes, we have already said that there’s no universal template for an SOW document.

However, as a company that keeps an eye on all the relevant documentation while working with our clients, we can define chapters that are present in most examples of statements of work agreement. 

At least, these are the parts that are common in our statement of work agreements with clients. 

Unsurprisingly, we will start with an Introduction. 

Introduction

Here you define the main objective for the project. 

And you also mention the list of parties involved in it. 

Basically, it is all about setting the tone for the entire document. 

Not the most informative part, but it is good for your software development SOW structure and legitimacy. 

Purpose

Here you define the reason why you have all gathered here 🙂

In this chapter, we define the main goal of the project in more detail. 

And each time we have any challenges with our workflow or documentation, we return to this part of a software development SOW document.

Because it’s the purpose that defines the methods. 

Services

This part of an SOW document is when the real ‘meat’ comes into action. 

Here we define the services that we provide to the client. 

And we notify the client of the fact that any additional service requests require us to sign a separate software development statement of work or replace the existing one with a new version. 

Changes in Plans

Conditions may change over time, which may change the client’s plans or our workflow on the project. 

We are perfectly cool with it. Changing the plans over time is normal. At least, to a specific extent. 

This is where we define the extent to which plan changes are acceptable.

Compensation 

This part is vital when it comes to writing a statement for work agreement. 

Here it goes about deliverables that we, as a vendor, receive. 

This chapter is all about the rate for our work and the way the overall compensation shall be counted. 

Payment

We continue discussing the way we’re going to receive a reward for our work. 

While the “Compensation” part is more about estimating the rewards and their size, the “Payment” part defines payment terms and methods. 

Warranties and Limitations

This part is, basically, about our “don’ts.” 

If there are any actions that the customer doesn’t want to do to their data or software, they define them in this chapter. 

For instance, if the client doesn’t want any third parties to be involved in the development of their app, they define such restrictions in this chapter of an SOW document.

Transfer of Ownership

In this part, we basically confirm that the client is the owner of our intellectual property created in this project. 

In other words, if we deliver a customer an excellent lending app to a mortgage startup, this startup instantly becomes this app’s full owner.

Confidential Information

There is always protected information and secrets that should not be revealed.

This chapter defines exactly such pieces of information.

We determine which parts of customer data we should protect and why. 

And we take responsibility for keeping this information safe and sound.

Legal Relationships

Here we define statuses and relationships that tie us with the client. 

We also define the terms during which the document will remain liable.

In other words, it is all about “who is who” and until which moment. 

Interpretation

Even the most specific documents leave space for different interpretations. 

In this part of an SOW document, we define the extent to which such interpretations are possible. 

Entire Agreement; Waiver

This chapter is all about establishing the credibility and the value of an SOW document. 

Here we define how it is valuable and why. 

Not the most informative part, but legal matters require us to add it.

This way we say: “Yes, this document is really valuable, and we should conform to it!”

Controlling Law and Arbitration

All legal documents should be controlled by a specific authority. 

And a specific authority should handle the arbitration if one of the parties violates the document’s principles. 

In this part of an SOW document, we define the authority in charge. 

For example, if we sign an SOW agreement with a British company, a specific British authority can take the role of controlling law and arbitration. 

Force Majeure

There always may be unpredictable circumstances that make us review specific provisions of an agreement. 

These circumstances are defined as force majeure conditions. 

This chapter of an SOW document defines them. 

And it also defines deviations from the agreement that are acceptable in case of such force majeure circumstances. 

Miscellaneous

Here we mention all other contract limitations and conditions.

Actually, they may be really valuable. 

But they are challenging to refer to any specific document section.

So, to avoid misunderstanding and misinterpretations, we mention these conditions in a separate SOW section. 

The section may include the following points:

  • Clarification of security practices and demands;
  • Travel payments (in case of in-person meetings);
  • Composition of the engineering team;
  • Post-release considerations;
  • …and so on. 

Mind that these are only chapters that we have introduced in some of our SOW documents. 

There may be a completely different statement of work template examples, depending on project features and client requirements. 

So, don’t take the structure from this article as something universal.

How We Use an SOW in our Product Development Process

We at SoftFormance have developed our product development approach consisting of 7 stages. 

And a Statement of Work document is valuable through all these stages. 

For a more detailed overview of our 7-step product development process, make sure to check out our recent article. 

Here we provide just a brief overview of this process and the role of an SOW in it.

1. Idea Generation

Here we help the client come up with their product idea.

In other words, that’s when the purpose section of the SOW document is defined.

2. Product Strategy

Here we define the purpose of the project in more detail.

And we also discuss the main project limitations and our responsibilities. 

So, here we come up with some agreements on project deliverables, timelines, and activities.

3. Project Roadmap

Things are getting even more specific. 

In particular, here we clearly define project activities and timetables.

Basically, the Statement of Work document should be completed by the end of this stage. 

Everything that goes after is practical implementation.

4. Design

We create the design app according to the client’s requirements.

Since this stage and so on, the SOW becomes some kind of reference book for our software development team. 

5. MVP Build

We create a Minimum Viable Product (MVP), which is a product’s early version with only basic functionality included.

Unsurprisingly, the SOW agreement continues to be our reference book for this stage.

6. MVP Launch

When the MVP is ready, we release it to the market to collect customer feedback. 

And, one more time, the statement of work software development agreement continues to be our reference book. 

For example, if the customer defines any limitations for collecting user feedback with the MVP, we should strictly adhere to their demands.

7. Post-Launch Software Logistics

Usually, we define our post-launch services in an SOW agreement with a client.

So, the things are quite simple: we do what we have defined in this document. 

Benefits of Signing an SOW Document

Now that you know about the basics of an SOW agreement, let’s clarify why it is, actually, so valuable. 

So, the main benefits of an SOW document are:

Improved Reporting

You may just outline your idea, explain it to our team, wait until we complete the 7 essential product development stages, and get your dream app.

But if you want us to be more specific and understand more about what and when to expect, an SOW in project management is a good thing for you.

Once you will need to clarify any information on our agreements and terms in which you’ll get your dream app, a statement of work agreement may come in handy. 

Standardization above All

A statement of work document is your key to standardized project documentation. 

So, if you want everything to be done right and according to all software development standards, go for signing an SOW document. 

And don’t forget that it may largely overlap with other valuable software development documents.

These are: 

  • Request for Proposal (RFP) – a document that defines project pricing, requirements, and time limits. 
  • Data Processing Agreement (DPA) – a document that defines how both parties should handle data while working on the project.
  • Master Services Agreement (MSA) – a contract that defines the two parties’ terms and conditions for an entire relationship.

You may easily get your dream product without compiling and signing all these documents.

But if you are not afraid of too much paperwork, you may ask us for sign all these agreements. 

A Reference Book in Handy

An SOW document can become your reference book throughout the entire software development lifecycle. 

Once you have any questions on the project flow, you may use it for references. 

You get the most important information on the project collected in a single place. 

And we grant you to provide all answers to your SOW development questions on demand. 

Surely, we will respond to all your questions anyway. But if you need an additional document to rely on, let it be.

We have developed our own statement of work template for exactly such reasons. 

Now that you’ve read loads of theoretical information, make sure to check out our SOW template to see what this document should, actually, look like and work.

Follow this link for an SOW document example

So What?

There may be different versions of an SOW, but its essence will remain the same. 

It is a document that regulates your relationships with a technology partner and defines the basic aspects of your project.

Just mind that even the best SOW process and document is nothing if signed with the wrong partner.

Fortunately, you have already found a partner that will help you implement your most ambitious goals. 

Contact us and find out how we can make your software product ideas a reality. 

As a company with more than 200 successfully completed projects, tried and trusted software development practices, and templates for the most valuable software development agreements, we’re here to help. 

So, yes, contacting us will be your best solution. 

And remember, people need your software!

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