In Short
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The scope of work in a construction contract outlines what the contractor must do, including tasks and stages of work.
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It ensures clarity about deliverables, materials and timelines for each phase of the project.
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Variations to the scope may arise due to changes in requirements, errors or unforeseen tasks.
Tips for Businesses
Ensure your scope of works is detailed and accurate to avoid costly and time-consuming variations. Clearly define tasks, deliverables and materials. Review the scope with your contractor before finalising the contract to minimise errors or omissions. Always include a clear process for handling variations to the scope of work.
If you are undertaking building or construction work to your property, you will receive a scope of works from your contractor. This scope of works will form part of your construction contract that you have with your contractor. It sets out what works the contractor must perform. This article will explore what:
- a scope of works is;
- it should include; and
- happens when the scope of works requires variation or is not complete.
What is a Construction Contract?
A construction contract is an agreement that governs the relationship between you (often known as the ‘principal’ or ‘owner’), and the contractor (or ‘builder’) on a construction project. The construction contract will contain key clauses relating to the:
- time;
- cost; and
- quality of the works the contractor must perform.
The construction contract will also contain several attachments, including the scope of works and any plans and specifications for the build.
What is the Scope of Works?
The scope of works is a document which acts as a road map for a project. It outlines the works to be completed by the contractor under the construction contract. It includes a general description of:
- the stages of the works (for example, demolition, a survey of the site, installation of the frame, lock-up stage and completion);
- the tasks involved in carrying out these works;
- financial considerations, including total project cost, payment schedules and potential changes;
- key milestones and deadlines; and
- deliverables at each stage of the works.
The scope of works will differ depending on the role of the contractor in the project and the project’s complexity. The scope of work is typically accompanied by a specification of the materials and finishes being used on the project.
The scope of works serves as a single, comprehensive reference point for all parties involved, promoting clarity, transparency, and accountability throughout the construction project. In doing so, it establishes a common understanding between the client and the contractor regarding the quality and standards to be maintained.
Continue reading this article below the formDisputes Over the Scope of Works
Disputes within the construction industry frequently stem from disagreements over the scope of works. These conflicts often arise when the:
- project description in the scope is ambiguous or incomplete; or
- scope undergoes changes, a common occurrence in many projects.
As a principal, you should ensure that you review the scope of works so that there are no hidden exclusions, such as obligations for the contractor under the price that are not included in the scope of works.
A well-defined scope not only outlines what is to be done but also clearly states what falls outside the contractor’s purview. Changes to the scope are often inevitable as projects progress. However, a comprehensive and clearly articulated initial scope provides a solid baseline from which to negotiate and manage these changes. A meticulous review can help identify potential ambiguities, omissions or contradictions before they evolve into costly disputes.
Variations to the Scope of Works
Anything that is not included in the scope of work may be the subject of a variation under the construction contract. As such, the scope of the works must be:
- detailed;
- accurate; and
- complete.
There can be significant time and cost impacts to the project if the scope of works is incomplete or contains errors. It is important to flesh out the scope of works and any specification with the contractor before entering into the contract. This will reduce the chance of the need for variations. A variation is a change to the scope of works, and can include an:
- addition;
- omission; or
- amendment.
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When Will a Variation Be Required?
A variation may be required when:
- you direct a variation where your preferences or requirements for the works change. For example, if you decide to change the designs or configurations of a room or to install stone benchtops instead of laminate;
- the contractor identifies that there is an error or item missing from the scope of work, or it comes across additional work that was not anticipated at the start of the project. For example, if it is discovered that mould remediation will need to be added to the scope of the kitchen renovation, or asbestos removal; or
- you direct a negative variation, where an item or part of the Scope of Works is deleted or omitted. For example, you decide that you do not want the contractor to remove an existing wall anymore.
It is also important that you check the construction contract to see how variations can be made. There may be restrictions on removing part of the works from the scope of works.
In certain circumstances, the contractor may have the right to refuse to agree to carry out a variation. This could happen if you request work that is not the type of work considered by the contract and is out of the ordinary and unexpected.
Process For Varying the Scope of Works
The process of varying the scope of works is usually set out in detail in the construction contract. It is important that you have a well-drafted variations clause in the event that you need to request any changes to the scope of works. Generally, a variation needs to be agreed to between you and the contractor. Typically, this will include reaching agreement on the:
- amendments to the scope of works;
- amendments to the price or contract sum; and
- any change to the period of time for the contractor to complete the works to allow for the variation.
You will generally have a right to direct variations. However, this will usually affect the contract sum payable to the builder and the time for completion of the works. If a contractor considers that a variation to the scope of works is necessary, it needs to notify you and seek your approval before undertaking the relevant work. There may be a process in the construction contract where you can require the contractor to estimate the time and costs involved in performing the variation.
Key Takeaways
A vital element of construction contracts is a clearly defined scope of works, which will reduce the likelihood of variations as a result of omissions or errors in the scope of works. The construction contract will typically set out the process for varying the scope of works. Variations will usually have time and cost implications and are common on construction projects. The more time spent at the start of the project clarifying and confirming the scope of works with the contractor can result in greater time and cost during the project.
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Frequently Asked Questions
If there are changes to the scope of work during the project, it is essential to address them through a formal variation process. This should include documenting the changes, agreeing on any adjustments to timelines or costs and obtaining written consent from both parties before proceeding.
If there is any ambiguity in the scope of work, it is important to clarify it with the contractor before signing the contract. You can do this by discussing the details in person or through written communication. If issues arise later, refer to the contract’s dispute resolution clauses to resolve them.
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