In construction, the “scope of work” defines what exactly is being built, and who is responsible for what. Surprisingly often, however, this critical piece is vague, incomplete, or flat-out missing in a contract. This is ironic given how voluminous construction contracts often are, and is particularly confounding for owners and lenders in fixed-price or guaranteed maximum price (GMP) contracts. In their haste to put together a project, the construction participants can cut corners on design, which can lead to a less-than-comprehensive delineation of the scope of work, and trouble down the line.
The Danger of Assumptions
Many owners assume that the contract lays out everything necessary to result in the finished product. But when the scope is unclear—or when it changes mid-project—there can be further complication. Check the scope of work carefully, with the help of design experts if necessary.
What Counts As Scope?
Likewise, one must read every addendum to know the final description of the work. Scope is not just a paragraph in the contract. It might be scattered among the plans, specifications, drawings, addenda, and field notes. Every document matters. Do not overlook the fine print.
Tiebreakers: When The Paperwork Doesn’t Match
In a close case, where there is confusion about scope or you have conflicting documents, look for these tiebreakers:
- Analyze the “order of precedence” clause to identify which document controls if the documents conflict with each other.
- See if the contract contains language like “all work and additional tasks reasonably inferable from the description of the work.” That can widen the scope in a hurry.
Passing Scope Down to Subcontractors and Suppliers
Even if the owner and general contractor agree on scope, it happens too often that the general contractor does not pass down to its subcontractors and suppliers the full scope of obligations and rights applicable at the owner and general contractor level. A vague subcontract can lead to disputes, delays, or work that falls short of expectations.
Scope Creep—and Shrink
Few projects end with the same scope they started with. Watch out for “death by a thousand cuts,” or bit by bit loading on to the original scope. But the opposite is risky too: sudden or gradual reductions in scope can gut your profit or leave your team with idle time.
Don’t Overlook Scope in Change Orders and Releases
Keep scope in mind when you are preparing and signing change orders and releases. You don’t want to accept $1,000 for a change that’s worth $2,000. You also want to avoid the reverse problem: over-releasing with an excessive scope and giving up rights to future claims because the release language was too broad.
The point to all of this: never stop thinking about scope!
George Burns is a Senior Counsel at Bernstein Shur in the Construction Group, where his practice represents owners, contractors, and other construction participants on everything from hospitals and schools to infrastructure, energy, and large-scale residential projects. Drawing on deep industry knowledge and a collaborative, solutions-oriented approach, the practice helps clients avoid disputes, resolve challenges efficiently, and keep their projects—and bottom lines—on track.