The Secret to Fix and Flip Rehab Success: The Scope of Work
With over twenty years in remodeling, construction and design, I have used a Scope of Work (SOW) for hundreds of projects and in this blog post, I discuss what to put in your scope of work, how a SOW really does keep things orderly and clear for all parties involved in your rehab, and how to leverage your flipping business by always using a Scope of Work.
I recently did a What the FLIP Live episode where I answered some questions posed to me by a new real estate investor about the construction aspects of flipping houses. You can find that episode HERE. Or, if you’d rather read about that episode, you can find the PDF of the show notes available HERE!
One of the topics I addressed in that episode is the Scope of Work. So let’s get into what a good SOW entails and how it can help you!
Also, we are giving away our Scope of Work template for free! Click HERE to retrieve your copy today.
What is a scope of work? (SOW)
A scope of work describes all of the work to be done on a project, who is responsible for completing the work, how the work must be performed, and what materials will be used. As part of this description, a SOW typically…
✔ Identifies the contractor's responsibilities
✔ Defines contract objectives and project requirements
✔ Provides enough details to estimate materials and labor costs
✔ Includes a contracting method and the often the payment schedule
✔ Outlines standards, regulation, and special contract requirements
✔ Explains all related tasks, duties, and limitations required
A scope of work can also include drawings, photographs, and other visual elements to provide clarity and prevent confusion. As a professional designer I have found that providing drawings and having a copy of the drawings ON-SITE prevents a lot of unnecessary questions from popping up and provides the most clarity for contractors and subcontractors.
Here are some other elements a good Scope of Work should include:
You will probably have already confirmed a budget with your contractor when getting quotes. Of course, this is a construction project and these things have a nasty habit of going over budget. This section of the scope of work is where any additional budget allowances are outlined. It will also detail how the additional budget can be used and whether the contractor needs to provide the investor with a change order prior to completing the additional work. Don’t just depend on your contractor’s scope of work for your rehabs, his should always reflect yours.
What’s needed to complete your project? Are you aware of what materials and finishes your contractor is purchasing for the project? Here’s where you can create a breakdown of everything that will need to be purchased. This not only allows you to make sure that you aren’t spending money on things you don’t need, it also lets you confirm that your contractor is aware of every material and fixture they need to purchase and install.
This is one of my areas of expertise, so much so that I started an entire business built around this concept because over the years I noticed that this is the stage of the project where the most misunderstandings happen, and most of an investor's time and money goes to waste.
In real estate investing, like many other pathways to wealth, when you’re wasting time, you’re wasting money which results in lost profits. That is why our Fixtures and Finishes Packages were born, they highlight every finish item to be installed in a PDF with an embedded active spreadsheet (easily printable) that shows where the item is sourced, prices, installation notes, and of course the live links to online retailers for ease of purchase!
By time you start working on your SOW, you have already confirmed a repair budget and gone over your SOW with your contractor for the purpose of obtaining quotes. Of course, this is a construction project and these things have a nasty habit of going over budget. This section of the scope of work is where any additional budget allowances are outlined and change order requirements should be documented.
Coordination of Phases
If you are undertaking a flip that needs a lot of work or maybe more complex repairs, the scope of work should include a schedule that determines when each stage of the project can begin and when different contractors will be able to start work. It will also highlight who is responsible for managing each contractor. Typically, this will be the project manager, general contractor or you the investor.
It’s important to remember your scope of work will vary in detail according to the project you are working on. Going through the process of filling this SOW out, will ensure that not only you know what’s going on, but so will all others involved in the process.
Don’t forget to grab your FREE copy of our Scope of Work template HERE!!
To your success!