The importance of your construction contract cannot be understated. Surprisingly, people on all ends of the contracting process don’t always understand the importance of the words chosen in their agreement. Whether you’re a general contractor, subcontractor or homeowner, you should be familiar with all aspects of your construction contract. Most importantly, you should be able to understand and answer “what is my scope of work?”
While this might not seem like a difficult question to answer, it often times lies at the heart of any construction litigation: determining what the scope of work on a particular project is, generally. The scope of work section of a construction contract varies greatly. Here at Wolfe Law Group, we have pretty much seen them all. These provisions can range from the incredibly vague and brief (I’ve seen scope of work provisions that are just two bullet points), to the exceptionally detailed and verbose. Regardless of the length or detail of this construction contract provision, the scope of work section generally serves one overarching purpose: it establishes the duty owed by one party to another.
This is the first answer to “what is my scope of work?” It is the basis of your contract. Without it, it would be impossible to determine where a contractor’s liability begins or ends. Of course, this is the general “contracts law” answer. After realizing the general importance of this contract provision, we then are able to see how we can manipulate those terms in order to have the most efficient contract possible.
As we have written before, the scope of work provision in each contract can, and should, vary. This variation will make a great difference depending on your status in the construction project. A general contractor, for example, benefits from a vague scope of work provision in its subcontracts, but would want specific provisions in its general contract. The subcontractor, necessarily, would want a very specific scope of work provision in its subcontracts. A homeowner would likely want the terms of the general contract to be as vague and inclusive as possible. Why? The short answer: liability.
As stated above, the scope of work provision serves as the basis of your contract. As such, it establishes the rights between the parties with regards to what work is expected and promised. The specificity of the scope of work provision, then, directly relates to a party’s liability. The general contractor would not want to sign a general contract with a broad, open-ended scope of work because then the homeowner could read much further into the provision than was intended. Should a conflict arise, the general contractor wants those terms to be as narrow and precise as possible so that they are not “on the hook” for much more than was anticipated. This mindset is what governs the scope of work determination in subcontracts as well. There, the general is going to want the broad terms so that the subcontractor is potentially responsible for more than they intended. It is important, therefore, to outline your scope of work deliberately and specifically, because it will be a determining factor in one’s liability to another party.
Rarely, though, are contracts permanently fixed and limited to its original terms. Certain instances do arise where changes are made to the contract as the work progresses. Those become part of the scope of work as you continue working, and will dictate one party’s liability to another should a conflict arise. Sometimes, there are third party agreements that people wish to be considered part of a contractor’s scope of work. I mention this because of how frequently this situation has been coming across my desk with regards to the Hazard Mitigation Grant Program (HMGP).
While the HMGP warrants a whole blog to itself (not just a post, but a WHOLE blog), there is one particular provision that I have had numerous parties contact us about here at Wolfe Law Group: scope of work. Through the program, a contractor would execute an agreement with the homeowner which contained the scope of work. The difference, though, is that these two parties are not the only parties to ultimately define what that scope of work actually is! Instead, the HMGP has a separate scope of work that was/is eligible to receive grant payments. This is causing some severe issues between contractors and homeowners because people are not sure what they are responsible for and owners are not sure what they are entitled to. These problems could be resolved if parties paid closer attention to their scope of work provisions.
The short answer is that HMGP will pay for items contained in the general contract’s scope of work that is contained in the HMGP scope of work guidelines. Anything beyond that will not be eligible for payments. However, contractors need to be careful because even if the terms of their scope of work are not included in the HMGP scope, they are still bound by their contract with the homeowner. It’s a very tricky situation that involves various presumptions, but it is a reality. The best advice I can give to deal with issues as complicated as the scope of work is the advice I give all the time: contact an attorney that handles these things. It’s your safest bet.