Functional specification: All project requirements at a glance

Just like a specification sheet, the functional specification is also a great help for extensive projects involving a contractor and client. Once a contractor receives an order, they have to fulfill the client’s requirements as precisely as possible. Ideally, the contractor should also check beforehand the extent to which the client’s requirements are feasible. This is where a specification sheet and functional specification can prove useful. But what exactly is a functional specification? And what’s the right way to create one?

$1 Domain Names

Register great TLDs for less than $1 for the first year.

Why wait? Grab your favorite domain name today!

Matching email
SSL certificate
24/7/365 support

What’s a functional specification?

The functional specification document helps in the smooth implementation of a project. Unlike the specification sheet, it is prepared by the contractor. The functional specification can be defined as follows:


The functional specification contains the detailed working concept for the entire implementation of a project. It is based on the requirements stipulated by the client in the specification sheet.

Functional specifications are often used especially in the software sector: However, many media designers have also come to appreciate their advantages. All project requirements are listed in detail in the functional specification. As a result, it can often be long and requires a lot of time to prepare.

What’s the difference between a specification sheet and functional specification?

The specification sheet is created by the client to explain to a potential contractor what the project entails. It describes exactly what the client expects from the contractor. This allows the contractor to gain a good idea of the requirements. The functional specification is essentially the answer to the specification sheet. It is prepared by the contractor and contains information on how the contractor intends to implement the requirements.


The contents of a functional specification are legally binding – for both parties. All previous agreements made between the client and contractor are typically superseded by the functional specification in their validity – unless otherwise specified in the document.

Once drawn up, the contractor submits the functional specification to the client. They can then check the information to assess whether the project will be implemented according to their wishes. Minor adjustments and changes usually follow, and these are also documented in detail. When both parties are happy, the project can get started.

Functional specification: Composition and structure

There is no legally prescribed structure for a functional specification: Companies are free to compose them as they choose. However, there are certain content elements that have become standard practice. It’s important that all teams involved are named, for example. Essential requirements for project implementation also belong in the functional specification.

What’s more, the entire process of the project should be described, with everything it entails. The following structure is recommended. You can use it as your functional specification template. Or you can adjust it according to your needs.

1. Introduction

Besides explicitly naming the client and contractor, this section should also briefly describe the project. Address what the project involves and what the final outcome should look like. It’s important that someone who hears about the project for the first time can understand what it’s about.

2. Order

This is where the order is formulated. Build on the description in the introduction and go into greater depth with explanations. Describe the objectives of each phase, as well as the general conditions and any special considerations with respect to the project.

3. Existing systems or products

Are there any project-related systems or projects that have already been completed by the client and no longer need to be implemented by the contractor? If they are also relevant to the project, you should also mention them in the functional specification.

4. Teams and interfaces

Name precisely who is involved in the project and where the interfaces are. You should also list the communication channels in this section.

5. General conditions

You should state the entire processing period here, for example. You can also describe the planned operating times and working hours.

6. Technical requirements

Here you should specify what you need to implement the project – such as hardware and software. It is also advisable to list which equipment you will require for each task.

7. Problem analysis

Summarize the most significant problems you expect to encounter. It is especially important to define a solution in advance to the most likely problems, as this will save time later. Also consider possible but unlikely problems.

8. Quality

What requirements do you have in terms of quality? You should also explain how you will implement quality assurance, control, and acceptance.

9. Project development

Describe exactly when each phase will occur and how the overall project is organized.

This list is just an example of what a functional specification could look like. There are many different projects that may require more or fewer points. But it’s important that the specification sheet and functional specification match and complement each other.

Word with Microsoft 365 Business and IONOS!

Easily go from pen and paper to digital inking with Word - included in all Microsoft 365 packages!

Office Online
OneDrive with 1TB
24/7 support

Creating a functional specification: What to keep in mind?

It’s critical that you are as precise as possible in the functional specification. Describe all processes and make sure you have a detailed overview as the contractor. If there are unresolved questions, look for answers. Where there are bottlenecks, discuss them with the client. The purpose of the functional specification is to check the requirements of the specification sheet. Implementation should also be planned in detail to prevent any nasty surprises.

But also bear in mind that something unforeseen can always happen. So, always allow for a little room for changes and adjustments.

Choose clear language in your explanations and avoid technical terms where possible. After all, the functional specification will be read by a range of people – and not all will have extensive technical knowledge.

Graphical representations are ideal for conveying complex subject matter in a straightforward manner. Work with diagrams, tables, or mind maps to present the main points as clearly as possible.

Avoid general statements – regarding time frames or costs, for example. These can lead to significant differences of opinion later. The less room for interpretation your formulations provide, the better.

Summary on functional specifications

A functional specification is useful for saving time when implementing a project. It helps the contractor and client communicate and reach an agreement. You will also learn a lot about the upcoming project by creating a functional specification. As long as it’s worded clearly and contains the essential details from the specification sheet, it will be a helpful tool for your project.

We use cookies on our website to provide you with the best possible user experience. By continuing to use our website or services, you agree to their use. More Information.
Page top