Bigger Than a Budget: Operational Advantages to Clearly Defined Scopes
The benefits of a clear, comprehensive Scope of Work (SOW) extend beyond the budget estimate and ripple throughout the life of the project and into the health of the organization. Beginning a project with a well-constructed SOW saves money, saves time and prevents setbacks. These operational, business advantages have real implications that make a difference for all stakeholders.
Paperwork is inevitable, but it doesn’t have to dominate an owner’s time. A clear and complete SOW minimizes the amount of necessary paperwork during the course of a project. By scoping precisely and comprehensively, fewer items are left open to interpretation. This results in fewer emails sent back and forth with the team, a reduction in change orders and more time to devote to revenue-generating activities.
In the building industry, relationships are fraught with tension. In fact, a 2017 SmartMarket Report from Dodge Data & Analytics revealed that 75 percent of building owners and contractors have experienced a dispute or claim in the last three years. In that same report, 90 percent of respondents cited collaboration as a means of limiting exposure to financial risk.
A clear SOW reduces disputes and misunderstandings, resulting in smooth projects and positive relationships between building owners, contractors, sub-contractors and other key stakeholders. Communicating what the project is to accomplish in the scope aids in collaboration as well because team members can recommend materials and methods that achieve the same goals with less time and/or less money. This early collaboration goes a long way to establishing good relationships.
There’s another constituency who benefits indirectly from a clear scope: building users. All the collaboration and teamwork that happens before a facility is up ultimately results in higher quality work. And higher quality work creates happy occupants.
Everyone wants the same thing from a construction project: for it to finish on time and on budget. While that sounds simple and intuitive, those goals are difficult to achieve. Clearly defined scopes allow contractors to create realistic budget estimates and establish explicit benchmarks to keep the project moving. A solid SOW does not guarantee the project will stay on track or finish within cost forecasts, but a bad SOW guarantees it will not.
A Scope of Work needs several inputs to be reliable and complete. One of those inputs is accurate, relevant construction cost data. Many engineers lean on their own historical data when scoping a project, but this is often not enough. To fill in gaps and ensure prices are current and locally relevant, many firms to third-party construction cost data. RSMeans data from Gordian, for example, is a popular choice because it contains over 85,000 unit line items localized to 970+ locations. The depth and breadth of the database gives users the confidence that they can find any costs they don’t have on hand.
Conclusion: A Clear Scope is Good Business
The obvious benefit of a clear SOW is it helps result in a realistic budget estimate. But there are other positive outcomes that a detailed scope creates as well. Getting the scope right results in less paperwork and administrative time, better relationships with outside vendors and internal teammates and minimal cost overruns. In the aggregate, these outcomes improve business operations.