A. Construction Scope of Work

Why Create a Scope of Work?

A detailed Construction Scope of Work is needed in order to estimate construction costs, make sure the project complies with Housing Quality Standards (HQS), and meet the needs and demands of the target homebuyers. Establishing what to include in a Construction Scope of Work can range from:

Walk-through to determine project feasibility. Make notes of conditions and areas of concern. General Construction Scope of Work according to Housing Quality Standards. Either a licensed contractor should accompany the project manager, in-house construction manager and/or qualified city housing construction/rehabilitation inspector who will draft the Scope of Work and calculate a preliminary construction budget cost. Preliminary Designs that include floor plans and elevations, which help provide general cost per square foot cost estimating according to what construction costs are for similar projects. Working Drawings and Construction Specifications that provide detail regarding all construction work, materials and processes to be used. Working drawings and construction specifications are intended to serve as the roadmap for building the finished product and are included in the contractor bid package and submitted to funders and lenders as part of the loan underwriting process.

The initial Walk-through and General Construction Scope of Work is helpful when the CDC needs to get a sense of the scale and cost of construction as it calculates an appropriate offer price for a property. For single properties, any contractor or architect interested in developing a business relationship with your organization should be willing to do a General Scope of Work and Construction Budget as a goodwill marketing gesture. Any work beyond this will require some form of compensation to the designer and estimator.

For the new or emerging CDC it is advisable to use an architect and/or construction manager who can generate detailed construction working drawings (architect only) and specifications (architect or construction manager) for new construction and/or moderate to substantial rehabilitation projects. As a CDC builds capacity and refines its house product it can generate construction specifications in-house with its own construction staff.

Keeping Project Costs in Line

Establishing a construction budget and sticking with it are of primary concern to the nonprofit developer who has little room for error in the overall construction budget. The construction manager or architect should develop a list of line items (the Scope of Work) necessary to produce the final product and a list of realistic cost guidelines to keep costs in line. The construction manager or architect should be very familiar with this budget and make this the basis for the expected level of the finished product.
 

Ensuring Compliance with Housing Quality Standards

Given that a CDC is a nonprofit organization that often uses government subsidy and has a mission of community services, its product must meet health, safety, durability and efficiency standards such as:

Free from fire and safety hazards, Comfortable, healthy and well ventilated, Built with quality and durable materials that extend the useful life of the structure, Attractive looking both inside and out, Energy-efficient heating and air conditioning systems and appliances, Appropriately equipped for people with handicapped accessibility challenges.

Creating housing requires that minimum standards of housing construction be met, but creating affordable housing ensures that housing standards for affordability as well as construction must be met. These construction standards are:

National Model Building Code - such as BOCA, CABO and the Standard Building Code which govern repair work of all types in all types of structures. These codes are very definitive and useful for both new construction and substantial rehabilitation. National Electrical Code - published by the National Fire Protection Association, which affects only how new materials are installed. National, State and Local Plumbing Code - set by each municipality, city, or state and range from little to major effect on scope of work. Fire Code - enacted almost everywhere and subject to arbitrary enforcement. The standard is set by the National Fire Protection Code and Life Safety Code and has rigorous standards for fire-retardant materials, doors, windows, stairs, lighting, alarms, sprinklers, exits and floor plans. This code is especially important in multi-personnel buildings such as dormitories, hospitals and hotels. Historic Code - developed and enforced on the local level, such as the municipality or county, and has specific renovation requirements for historic structures or historic districts. In most cases, approvals come from review committees who can require or prohibit certain treatments and materials. Handicapped Access Codes - created on both the local, state, and federal levels, these standards ensure that ramps, elevators, doors, hallways and hardware are incorporated into the design of public buildings or dwellings where handicapped individuals are expected to live. Normally, this standard applies to gut rehabs exceeding some minimum threshold of work.

Ensuring Long-Term Affordability

Nonprofit developers should look at affordability in two ways - how improvements made to the house ensure long-range maintenance and how the improvements affect the cost of utilities.

The low-income homebuyer needs a house built and equipped with materials, systems and appliances that can last free of major repairs for at least 10 years. Most homeowners feel somewhat insecure about home repairs when they buy their first home but this fear is more pronounced when the funds to make repairs are limited. The guideline for developing affordable housing for sale is that all major systems (heating, cooling, air conditioning, plumbing, electric and roof) should have a minimum of 10 years of maintenance-free life. If in doubt, replace it! Utility Cost Since homeowners are responsible for the cost of their utilities (unlike rental housing) it is important that this cost be affordable. All major appliances have labels stating the monthly operating cost, provided the appliance is properly installed and maintained. In addition, improvements in building materials and rigorous construction codes make homes more durable and energy efficient. As with major systems, if an appliance appears to be aged or has questionable affordability, it is best to replace it with a new model.

TIP: All utility companies (electric, gas, water, etc.) will do an efficiency inspection of your home to see if there are leaks or wastes, and to offer advice on ways to increase efficiency or reduce waste. There is usually no charge for this service.

The Standard for the Scope of Work

The Scope of Work is not a standard document. As your organization develops more experience and a clearer sense of its building quality, marketability and durability standards, the format and detail of your template for construction Scope of Work will evolve. The best scope is the one that gets the house built or renovated the most efficiently, complies with all local and HUD Housing Quality Standards and is built within the budget. At a minimum, the Scope of Work:

Reflects the construction standards of your organization Identifies a specific list of materials by vendor and style/model number Identifies a specific construction process for various items Provides a realistic and flexible estimate of costs

Many nonprofit developers use construction Scope of Work and Specification templates from pre-programmed software or forms from the following sources:

Housing Developer Pro, Enterprise Foundation, www.enterprisefoundation.org Neighborhood Reinvestment Corporation, www.nw.org R. S. Means Company, www.rsmeans.com Associated General Contractors (AGC) of America, www.agc.org Northwest Builders Network, www.nwbuildnet.com

The more your organization can train its staff and/or its affiliate contractors to automate this process and customize templates, the more effective it will be in managing costs and maintaining quality.

Next: A1. Tips for Developing an Effective Scope of Work

OHIO CAPITAL CORPORATION FOR HOUSING