Scope of Work

What it is

The scope of work is the written list of exactly what gets done on a project. Every task, room by room, trade by trade. Not a wish list, a binding description of the rehab that drives the bid, the pay schedule, and the final walk.

Here’s how I do it with every contractor. We walk the job together. I have a written scope already put together and we go confirm it together. “Hey, Mr. contractor who knows more than me — do you see anything wrong with my plan?” Then we make a video walking through the house. I say, “Can you give me a bid?” They give me a bid. “I just want to make sure you know that video of us walking through here, I’m sending it to you along with the written scope. I just want to make sure that price includes everything we talked about.” No contracts, no admin tasks. Text message is the app they already have. And now we both have things to look back at. Contractors aren’t nefarious. They just forget things. You might forget things.

There are three stages where the scope comes up: deal analysis, due diligence, and project management. The fliporithm is for deal analysis — ballpark numbers so you can decide whether to offer. The full scope-of-work process is for due diligence and PM, once you’ve decided you’re buying.

Why it matters

There are three steps that make up the scope-of-work framework.

First is safety and liability. Every single time. No exceptions. I think back to a Christmas party I threw for the company. My oldest daughter was standing next to me. I heard her say, “Hey Daddy, what’s this?” Some kind of crazy dad ninja reflex kicked in. I stopped her hand. She was about to grab a frayed open wire coming out of a huge electrical panel. That was the moment I realized I do not want to be giving rentals to people or selling houses to people where safety concerns like that exist. Fire alarms, carbon monoxide detectors, egress windows, rails and stairs, locks, EPA items — you do these. No exceptions. It makes you a crappy person if you don’t, and it opens you up for serious liability.

Second is stop the bleeding. If water is still getting in, rebuilding structure is setting up the next round of rot. Drainage issues, active leaks, anything that’s actively deteriorating the property — those come before finishes.

Third is the baseline. Look at what the comps are doing in that neighborhood. What finishes did the houses that sold actually have? Match the baseline, not the top. Don’t over renovate. If you’re doing a $50 gourmet dish in a truck stop diner neighborhood, nobody’s going to buy it for $50. I know because I built the Taj Mahal in Denver, thought it would sell for $795K, and had to take $667K. The person across the street in flip-flops growing weed out back put in budget floors, left the carpet in the bedrooms, sold for $600K, made way more money than me. That’s the scope you want.

How it shows up

A confused bid gets confused pricing. If you’re not clear about what you want from a contractor, they can’t price it clean. And a dirty job gets a dirty bid — the padded number compensates for the unknown. A detailed written scope kills the fear tax at the bid stage. Clear SOW, clean bids, predictable budget.

The three communication methods for every job: written (the SOW), verbal (the on-site walkthrough), and media (a walk-through video). The written SOW is the anchor. When a dispute shows up over “was that included,” the SOW answers it in under a minute.

Use a jobs menu pattern to turn the SOW into a reusable spec. A master list of every job, organized by phase, with pricing benchmarks. Writing a new scope stops being a blank-page exercise and becomes picking the right lines off the menu.

Related

fear tax, safety and liability, bleeding, scope creep, fliporithm, jobs menu, baseline, pay schedule