Construction Agreements: The Scope of Work and other matters

The importance of having a comprehensively drafted construction agreement for both commercial projects and residential projects should never be overlooked. There is no room for poor drafting or agreements drafted on the “back of a napkin“ if you as the landlord want the process to both go smoothly and to make sure that you are properly protected throughout the process and beyond. On the assumption that you have started a relationship with a well established and reputable General Contractor it is critical that the General Contractor provide you with a comprehensive Scope of Work and a definitive timeline in which to complete that work. A well-established and reputable General Contractor will always provide a comprehensive Scope of Work and a timeline. In fact if you have started to engage with a General Contractor and the General Contractor does not provide a scope of work and a timeline, it is probably best to move on to find a General Contractor who will supply you with both.
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When you have received the scope of work and the timeline they should be inserted into a comprehensive construction agreement, and if properly drafted they can be referenced in the preamble and added as schedules. Critical areas that must be included in the agreement as a whole, among other items, include insurance clauses, permits, the commencement date and a definitive price.

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It is important to consult with your insurance company or your insurance broker as to whether or not you are required to take on additional insurance or any specific type of insurance as a result of the construction and to confirm if your existing insurance covers you during the construction phase. There should be clarity with respect to who will be responsible to pay for and to take out the necessary permits. Under no circumstances should any work commence until such time as all the required permits are obtained. The commencement date and the proposed completion date should both be included in the agreement along with a definitive price. It is understandable that price may vary if some previously unknown engineering issue were to arise during construction however it is wise to understand as reasonably close as possible the total cost construction before the commencement of the work.

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Sean O’Connor, the President and Founder of SJOC Construction, a full service construction company with its head office in Toronto, notes that, “A properly drafted scope of work offers our company and clients several benefits: For starters, the clients ideas are organized and presented back to them to ensure all their wishes are captured. This “story”, as we like to call it, makes it easier for our estimators and tradespeople to provide accurate pricing, and eliminates future confusion or price increases. The scope ultimately translates into a working construction reference for everyone reading it once our company is awarded the contract to build. Our full-coverage insurance policy then wraps the entire project, clients, and financially vested partners, in a complete and comfortable bubble from start to the warrantied finish.”

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