When it comes to implementing or building large and complex systems (such as a business software system), the requirements and working conditions must be adequately documented. The Declaration of Work (SOW) is a document that describes what should be done in the agreed contract.
In general, SOW is written in a precise and definitive language relevant for the corporate sector. This avoids any misunderstanding of the terms and requirements. An SOW covers the job requirements for a specific project and simultaneously meets the performance and design requirements.
Whenever the requirements are detailed or contained in a complementary document, SOW refers to the specific record. SOW defines the scope and works agreements between two parties, generally between a customer and a service provider. Therefore, SOW also has legal gravity.
The main objective of an SOW is to define responsibilities, responsibilities and work agreements between customers and service providers. SOW will define the scope of the commitment and the key performance indicators (KPI) for the commitment. Therefore, KPIs can be used to determine whether the service provider has met the SOW conditions and to use it as a basis for future obligations.
SOW contains all the details of the general requirements of the contractor's or service provider's effort. Whenever it comes to specifications, SOW refers to functional requirements or non-functional document requirements.
The functional requirements (in a software system) define how the software should behave functionally, while the non-functional requirements describe in detail other features of the software, such as performance, security, maintenance, configuration management, etc.
There are three different types of work statements:
Detailed work design/declaration: This document explains to the supplier how to do their work by defining the exact requirements necessary, which may include precise measurements, materials to be used, necessary tolerances or quality control requirements, among other specifications. With this type, you are the one who runs the risk of performance since you are asking a contractor to do business following your specific way of doing things.
Level of effort / Time and materials / Declaration of work on unit rates: this contract is used for almost any type of service. The time spent on work and the materials needed for the job are the highlights of this work statement.
Performance-based work statement: when no details are given on how to do the job, a performance-based SOW will be used. For many companies, this is the main preferred type of document.
SOW formats differ from one sector to another. Regardless of the sector, some key areas of the SOW are common. The following are the areas commonly treated in an SOW:
- Scope of application
This section describes the technical work to be performed. If the system to be created is a software system, this section defines the hardware and software requirements as well as the exact work steps for the final system.
If something is "out of reach", these areas are also mentioned in a corresponding subtitle.
The place where the work is done is indicated in this section. This section also describes the hardware and software specifications. Here you will also find a description of human resources and how they work.
This defines the timeline assigned for the projects. Includes development time, warranty period and maintenance time. In addition to the calendar time, the days of the person (total effort) needed to complete the project are also noted.
- Delivery schedule
This section of the service description describes deliveries and delivery times.
The internal or external standards are defined in this section. All deliveries and jobs must comply with the standards set out in this section of the document.
- Acceptance criteria
It represents the minimum requirements for accepting the final results. It also describes the criteria for acceptance.
- Terms of the contract and payments.
There are several models of commitment when it comes to hiring a service provider.
In the field of software development, there are two different contract models, a fixed offer and a company.
In a fixed offer, the cost of the project is constant, and it is up to the service provider to optimize the allocation of resources to maintain profit margins.
The customer does not care about the quantity of resources, provided that the delivery schedule is respected. In the retention model, the customer pays for the amount of resources allocated to the project.
Since SOW is an integral part of a project, almost all significant members of the project team need to know the terms and conditions of SOW. Sometimes, a penalty is applied in case of loss of delivery dates in s/w development projects. Therefore, everyone must know the demanding terms of a SOW.
sow definition business is the scope of work and work agreements. Therefore, all parties involved in the project must have a deep knowledge of the SOW of the project and adhere to it.