How Owner’s influence Scope

One of the most important factors in the success of a construction project is having a quality Scope of Work.  Scope of Work is the definition of what you expect your service providers to do for you.  A service provider could be an Architect or a Contractor.  You should have a Scope of Work for every phase of your project and for every service provider.

Owners have a great deal of influence over the Scope of Work.  The steps an Owner takes (and even the steps an Owner skips) could have profound influence over the quality of the Scope of Work and ultimately the quality of the final product.

In this article I will outline some of the ways in which an Owner can influence the quality of the Scope of Work.

Number One:  Invest in Preliminary Studies:

There are a number of preliminary studies that an Owner should undertake before beginning design.  The first and most important one is a Programming and Feasibility study.  Most of the time this is done as part of the schematic phase of work.  Assuming that this will be done and that it will be done correctly could be a costly mistake.  

This type of study has two parts.  The first is the project programming.  This establishes the basic parameters of what you want to build (for example, 2 bedrooms, one bath, and a garage).  The second part of this study is the code and zoning review.  A code and zoning review establishes the limitations of your project, this is absolutely necessary to establish the feasibility of your project.  It is a good practice to have this study done as a distinct phase of work.  I recommend that you pay a small fee for this study and share it with all of the Architects you wish to consider so that you can establish a common starting point for all.  

There are a number of additional specialty reports and studies that you might also need.  Geo-technical Reports, Site Surveys, and building conditions reports might be needed depending on your project.  If you attempt to proceed without the proper preliminary studies, it is possible that you may have to pay for additional services later on or face steep penalties for violations.

Number Two:  Invest on Schematic Designs:

Schematic Design (also called conceptual design) is a phase of work under which a Designer will work with the Owner to design what they want.  This is the phase where you can change your mind as frequently as you would like without incurring huge costs.  

A lot of people rush right into construction documents because they think they know what they want and think it will save them money.  Unfortunately, most people do not realize that the cost of making changes later in the process can be more than 10 times the cost of making the same change during schematic design.  If you invest a little more time and money up front to refine your design the next phases of work will run much more smoothly.

Number Three: Establish your contract terms:

There are a number of options for establishing the contract terms for a construction project.  Most of the time Contractors will use a third party template from the American Institute of Architects or from Consensus Docs (produced by the Associated General Contractors of America).  

I recommend that you consult with a Construction Attorney before you accept any form of agreement.  You should note that just because these are considered “templates” does not mean that they cannot be modified or that these terms are right for you.  An Attorney skilled in construction will be the best person to advise you on which terms to accept.  Regardless of which template you use and how your attorney decides to modify them, make sure that you establish these terms up front.  Do not wait until you are ready to award the work to decide on which template to use and don’t try to interpret these contracts on your own.

Number Four:  Define the General Conditions:

The General Conditions of Construction are terms that establish the services that the Contractor will be required to perform.  General Conditions are often overlooked or added in as an after-thought, but these are the most important part of the Construction Documents.  

Your Architect’s drawings will tell the General Contractor what to build, the General Conditions tell the contractor how you want the project managed.  You should review the General Conditions well before you solicit pricing.  Make sure that you establish clear expectations with respect to meetings, reporting, scheduling, and cleaning.  Ultimately, the Owner has the responsibility for making sure that the General Conditions are aligned with their expectations.  You should not expect your General Contractor to perform these services the way you want them unless you communicated them clearly up front.

Number Five: Establish Close-Out Procedures:

Closeout Procedures refer to the final steps that the General Contractor or possibly even your Architect will have to perform in order to receive final payment.  Close out procedures are often part of the General Conditions, but I have called these out specifically because these are very important.  

You need to be very careful here.  If you release final payment before all of your closeout procedures have been completed you may find yourself missing critical documents.  One of the most overlooked items is the lien waiver.  Lien waivers are documents that prove you paid the contractor and that the contract acknowledges receipt of the payment.  Your close-out procedures should require a lien waiver for the full value of the work (including change orders).    Without this document if a contractor places a mechanic’s lien on your property, it will be more difficult to lift the lien.  This will make it impossible for you to sell or refinance your property.  Other documents that you might need are warranty’s for labor and equipment, release of surety if you had a bond, or inspection approvals from the local authority.

These are just some of the things that an Owner can do to make sure that their scope of work is as good as it can be.  Consult with a professional if you are unsure of anything and keep in mind that no scope of work will ever be perfect.  These are the challenges of construction and this is why you need to be vigilant and careful through every step of the process to make sure that you make as few mistakes as possible.

What steps have you taken to influence your scope of work?  Have you overlooked any of these and had a tough time? Email me with your experiences.

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