What is the scope of work? How do you create a scope of work?
Van Sturgeon is an experienced entrepreneur of over 30-years who has successfully created several businesses in the real estate industry that cover land acquisition, development management, construction, and renovation.
Van personally owns over 1,000 properties across North America and is semi-retired from the day-to-day operations of his businesses.
He shares his passion for helping homeowners and real estate investors overcome their fears of house renovations/rehabbing, and he loves to be actively involved in helping people reach their goals.
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John Conner:
You mentioned a phrase a moment ago, and you said you wanted to dive into this, and I’m really glad you do because this is something that, particularly, all new real estate investors that are interested in rehabbing need to hear, and that’s the scope of work. So first of all, Van tells our audience what’s the definition of the scope of work? Let’s not assume that we’re all speaking the same language. So what is the scope of work? What does a scope of work look like? And then after you define it, please tell everyone, how do you go about creating the scope of work?
Van Sturgeon:
Sure. Scope of work is an actual document that is created, and in that document, you’ll have pictures, drawings, diagrams, specifications, of exactly what it is that you’re looking to accomplish in this renovation rehab of this property. On the commercial side, typically architects, interior designers, engineers are the ones who create the scope of work, and then it goes out to tender. And then once contractors or trades, people who receive that document, there are specific sections within that scope of work that they read, they digest, and then they submit their quotes and estimates based on that scope of work. On the residential side, that’s hardly ever the case. And in fact, the scope of works that I’ve really seen is really, really checklists from what I’ve seen out there and are not really truly scopes of work that can be and should be used in the process of getting contractors and tradespeople to put their estimates or quotes together and send them to you.
Van Sturgeon:
Ultimately, if you don’t have a document, how is it that you expect contractors and tradespeople to be able to price out work associated with your project if you don’t have something in writing? Like, literally, I’ve had conversations with new real estate investors where they’ve gone through the process of contacting 20-some odd contractors and tradespeople and only 3 or 4 show up. And of those 3 or 4 that show up, only 2 or 3 give them quotes or estimates on the work. And the reason for that is that good general contractor, good tradespeople really want something in writing to be able to know exactly what it is that this potential client of theirs wants to accomplish within their property. Nobody wants to get into this whole gray area of trying to figure it out along the way because there’s no money in it.
Van Sturgeon:
I, speaking as a general contractor who’s done thousands of renovations, will walk away from people if they don’t know what they’re looking for because I know the name of the game for me to be able to profit the most is to have high turnover. Quickly go into a project, complete it, move on to the next one, move on to the next one, move on to the next one. And by virtue of me being bogged down and having to handhold a person, figure out what it is they’re looking to accomplish in this renovation rehab is not good business for me. So if I see somebody who’s got a scope of work and knows exactly what it is they’re looking for in terms of the renovation rehab of their property, then I’m more inclined to be interested in quoting it and being aggressive on that quote because I want to deal with professional people.
Van Sturgeon:
And often a lot of new real estate investors scratch their heads and wonder why is it that these contractors treat people like they don’t call them back or give them quotes. Well, that’s because they’re busy and they want to move. They want to deal with professionals. They don’t want to waste time holding you by the hand and trying to figure things out. So that’s the reason why a lot of people have difficulties, especially with this heated real estate market, they can’t find tradespeople or contractors to quote on their work. So I strongly encourage people to create a scope of work. Now, Jay, you asked me about how to create the scope of work. We don’t have enough time to really get into the detail about how to create one, but it’s really you have to go through the process of figuring out what it is that you want to accomplish in the property.
Van Sturgeon:
You need to do some due diligence with regards to the types of colors and paints and specifications of appliances. You’ve got to put those in. Also, you got to take photographs, maybe do a little sketch of what it is that you’re looking to accomplish in this renovation rehab. And you put it all together in this document and you create subsections in that document for the electrician, the plumber, painter, whoever it is that you’re looking to have to do work on this property so they can clear the goal to that section. See exactly what it is that they’re looking to accomplish, what you’re looking to accomplish, and they quote on it. And you’ll be amazed at how many tradespeople and contractors will quote or bid on it because all the information is there.
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