How To: Scope of Work

Updated: Apr 3, 2019

"The division of work to be performed under a contract or subcontract in the completion of a project, typically broken out into specific tasks with deadlines."

Whether you're working with a general contractor or not, you still need to scope out the project yourself to figure out if the property is a sound investment. You may find that the amount of work required to renovate the property is too much.

The first thing you should do is design a template or find a pre-made one. It's highly recommended to design your own, because you may find that you prefer to categorize items differently in a way that makes sense to you.

Regardless of the project, every scope of work should be broken down into categories and subcategories:

  • Permits

  • Demo

  • Landscape

  • Foundation

  • Concrete & Masonry

  • Framing

  • Decks, Patio & Fencing

  • Garage

  • Siding

  • Roof

  • Insulation

  • Plumbing, Electrical & HVAC

  • Painting

  • Drywall

  • Doors & Trim

  • Flooring

  • Kitchen

  • Bathrooms

  • Finishes

...the list goes on. These categories can be listed however you see fit. You may find that you prefer to use "flooring" and list all the flooring for the whole house under that category. Others might find that they prefer to include flooring under the specific room like bathroom or kitchen and break out the square footage per room instead of total for the project.

The more you can break down the scope (the more line items you have), the more detailed the SOW will be and the more accurate it should be. You want to avoid leaving out any minor details. Missed items=unexpected costs.

Your SOW and estimate should be one document. As you list items, you can list their estimated material and labor costs. As you start receiving bids from your contractors, you can begin to refine your SOW with solid numbers. The best thing to do is use a spreadsheet to auto calculate your costs. Remember to build in a buffer for your estimate. It doesn't hurt to add 10-15% to your subtotal. Even if you think you've covered every little item, there will be items that pop up and add to the total project cost.

Bidding out the work.

Before receiving bids for the work, you need a game plan. Renderings, architectural plans and sketches can all help subcontractors understand what the final product is going to look like. Never leave things up for interpretation. It's your project, you tell the subs what you want done. If you want tile laid on a staggered pattern, they need to know that. Every little change can add to the cost.

Always try to get multiple bids for the work. This creates competition, drives down prices and allows you to compare the quality of a contractors work just based solely on how professional their bid looks. If possible, ask to view their previous work or a project that they are currently working on. Any reputable contractor would be more than happy to show you their work.

Nothing ever goes as planned.

When flipping a house, there's a lot of unknowns. As opposed to building from the ground up, there may be hidden issues inside the walls or under the foundation. Just because you can't see them doesn't mean they aren't there. You need to have a plan to spend a little extra for these unknowns.

Stay on track.

A project delay can be costly. You have holding costs, don't forget that. Insurance, electric, water, landscape maintenance, loan payments, etc. Every day costs you X amount (an amount you need to know!). Minimize delays and resolve problems early. Look at all aspects of your project and determine what might cause a delay and figure out a solution. Coordinate work so there is little to no down time. Communicate with your contractors regularly and schedule them ahead of time. Do not call your painter the day the drywall crew finishes their job. Your painter should know at least 1-2 weeks ahead of time when he will be painting. Remember, your contractors have many other jobs going on and they need to balance those demands. Don't get upset with your contractors when you failed to inform them ahead of time when they could start their work.

Stay on budget.

Utilize your SOW and estimate throughout the project. If you budget $200 for lighting, do not exceed that amount when you actually go to buy the lights. If you absolutely need to go over that amount, offset the cost with a different item (buy something cheaper than what you budgeted for). Keep track of all your expenses. If you find yourself going over your budget, step back and make a decision. Are you at the point where you think there won't be many unknowns? If so, maybe you can dip into that 10-15% buffer we talked about earlier.

Blowing the budget can sink the project, and your profits, quickly.

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