Academy/Working With Professionals
Professional scopes of work
What a written scope actually buys your board, and what to check before anyone starts work.
A scope of work is the written description of exactly what a professional will do, for what fee, and what is not included. Get it in writing before work starts, not after a dispute. A clear written scope is also what makes a board's reliance on that professional's advice defensible later: the business judgment rule protects decisions made in reasonable reliance on a professional acting within a defined, competent role, not a vague handshake arrangement.
A scope of work is not one blob of "help us out"
The industry pattern, borrowed here from architecture but common across professional services, is to split work into tiers: a base package included by default, and named extras priced separately. The American Institute of Architects builds its standard owner contracts this way.
"Services listed are divided into basic, supplemental, and additional services."
Source: B-Series Owner/Architect Agreements guide, American Institute of Architects
A board that only asks "what will this cost" without asking "what is and isn't in that number" is agreeing to a fee, not a scope. Ask any professional, attorney, CPA, engineer, reserve specialist, to show you the base package and the list of things that cost extra, before you sign anything.
Scope is what makes reliance on advice defensible
A board that follows a professional's reasonable advice in good faith is generally protected from having that decision second-guessed later. But that protection is conditioned, not automatic: it only holds where the board reasonably believed the advice fell within that professional's actual expertise.
"So long as the director reasonably believes the advice of the manager is within his or her professional competence."
Source: The Business Judgment Rule, Colorado Homeowners Association Law
A written scope is the evidence of that reasonable belief. If your engineer's contract only covers a roof inspection and the board later relies on the same engineer's offhand comment about the foundation, that comment was never inside the scope you both agreed to, and it will not carry the same protection.
What a written scope should nail down
Before signing an engagement letter or contract, get answers to four questions in writing: what is included in the base fee, what specifically triggers an additional charge, what the deliverable actually looks like (a report, a stamped drawing, a filed document), and who owns the work product when the engagement ends. Whether your governing documents require board or membership approval for a given contract, and what dollar threshold triggers a competitive-bidding requirement, vary by state and by your bylaws; check both before you commit.
Work requested outside the original scope, a new site visit, a revised drawing, an extra site walk, is what generates a change order. A board that understands its scope up front is rarely surprised by one.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your architect verbally agreed to "handle the renovation" for a flat fee. Midway through, the architect bills extra for a second set of revised drawings and says those were never included. What went wrong?
A director tells a homeowner "our reserve specialist said the roof is fine" after the specialist mentioned it in passing during an unrelated site visit for the pool deck. A lawsuit follows over roof damage. What is the board's exposure?
Your CPA's engagement letter lists a "compilation" but the board wants assurance that the numbers were actually checked for accuracy. What should the board do?
Sources
- B-Series Owner/Architect Agreements guide, American Institute of Architects
- The Business Judgment Rule, Colorado Homeowners Association Law
- A bright line in SSARSs, Journal of Accountancy (AICPA)
Related elsewhere in the Academy
Working With Professionals
Once your scope is in writing, the next question is how to keep the fees inside it. See Managing professional fees.
What a scope of work must contain, whether your governing documents require board or membership approval for a given contract, and what triggers a competitive-bidding requirement all vary by profession, by your bylaws, and by state.