What Is an SOW (Statement of Work) in Project Management?

Written by Al Kaatib – April 2022

A Statement of Work outlines the scope of work to be performed and identifies the objectives, tasks, and schedule. Here’s what you need to know.

Statement of Work (SOW) documents are extremely detailed and binding contracts that specify all the details of a project, including hierarchies of reporting, timelines, budgets, deliverables, dependencies, resources, and other terms and conditions agreed upon by all stakeholders. It is a complete project plan that lays down the groundwork for the working process of the project from start to finish.

An SOW document is imperative in order to begin work on any project for effective project management. It is a clearly written project management plan detailing the minutest aspects of the project to bring all the stakeholders on the same page.

Statement of Work in Project Management

Managing a project begins with a well-constructed SOW document. A comprehensive SOW agreement defines each and every aspect of the project in clear terms to all parties involved. It describes the scope of work, including daily tasks, due dates, the governance process, quality assurance, and deliverables, along with the suitable facilities, resources, equipment, training, and budget required to make the project feasible.

A formal SOW document is especially helpful when working with external resources or outsourcing projects to vendors or third parties. It serves as a legally binding contract that comes into play in case of disputes arising due to failure to deliver, financial dues, discrepancies in the end product delivered, missed due dates, etc.

Scope of Work vs. Statement of Work

Scope of Work ensures that all stakeholders are on the same page regarding the deliverables of the project. It deals with a brief overview of the project, the list of tasks, a detailed description of services, members, or teams responsible for tasks and services, due dates, expected outcomes, and deliverables.

On the other hand, the Statement of Work encompasses the Scope of Work plus other aspects of project management like budget allocation, financing, resources, equipment provisioning, training, payment processing, performance management, and so on.

What Is an SOW Agreement in Software Development?

An SOW (Statement of Work) document is especially helpful when managing projects in software development as it regulates the service agreements between two or more teams, between developers and vendors, or between IT firms collaborating on building a software product. Although it’s not composed as a legal document, it can have legal repercussions when not adhered to.

A clearly written SOW template in software development project management includes explicit descriptions for the following crucial points:

1. Scope of the Project

Includes an introduction, a brief overview, and pointers on the reasons and objectives of the project, the processes involved, the end goal, and what it would take to get there.

2. Location of the Project

Where will the vendors, contractors, managers, developers, and other stakeholders work from? Office, remote, or overseas locations?

3. Everyday Workflow

This section describes the list of tasks, task due dates, responsible teams and members, reporting structure, and task outcomes.

4. Project Schedule or Timeline

Date of project commencement, task due dates, major milestones, and dates for project conclusion.

5. Deliverables

This section defines what is to be delivered, when, and how.

6. Quality Assurance

This section deals with quality testing, feedback loops, and other standard procedures to maintain the integrity of the deliverables.

7. Resources

A list of all the facilities, equipment, dependencies, technical know-how, tools for project management, and other resources like training, upskilling, etc., required to ensure the successful completion of the project.

8. Finances

This section deals with the budget allocated to the project, payment schedule, services and goods purchase, invoicing, and other financial aspects of the project.

9. Miscellaneous

Things not covered in the above eight sections, like travel expenditure, payment for short-term external services, security issues, confidentiality clauses, etc., are usually covered under separate headings dedicated to the topics.

10. Success

This section deals with what constitutes the successful completion of the project. It mentions the standard of acceptable deliverables within the agreed-upon timeline, with the allocated budget, and every other aspect, so there’s no confusion or communication gap between what’s expected and what’s delivered.

11. Closure

The closing section deals with the project completion procedures and lists all the paperwork, product releases, and other paraphernalia to conclude the partnership.

SOW Document Generation Online Portals and Apps

If you are in the business of developing and managing projects or building software products and services, you’ll be in frequent need of clearly composed SOW documents. Although you can easily manage a project using any number of inexpensive workflow tools like Drobox but it doesn’t help you write a thorough SOW document. Instead of writing one from scratch for each project, you can rely on web-based portals that specialize in generating proposal documents, Scope of Work documents, and SOW agreements.

Better known as digital contracting apps, these portals provide everything from readymade software contracts and legal documents to tools to manage a project, negotiate the terms, customize documents per project requirements, and measure the progress of your software development project. Here’s a shortlist of such digital apps to help you with your SOW agreements.

  • PandaDoc—Create, approve, track, and digitally sign documents online.
  • DocuSign—Automated SOW agreement generation, contract lifecycle management, negotiations, analytics, and electronic signatures.
  • Concord—Sign and manage contracts with ease, including drafting documents, approvals, negotiations, e-signatures, search and store, and deadlines and reporting facilities.
  • Juro—Single tool to create, approve, e-sign, and manage contracts.
  • Outlaw—Team contract management with a focus on ease of usage.

Upgrade Your Statement of Work Game

Whether you’re a freelance software developer, a member of a team of developers, or a software firm that hires vendors, it’s a given that you’ll need to write or sign an SOW document sooner or later.

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