Commercial Renovation Scope of Work: Contract Guide

Most commercial renovation disputes trace back to the same root cause: a contract that did not clearly define what was included, what was excluded, and who was responsible for what. A well-written scope of work document is not a legal formality, it is the operating manual for the project. Here is what it should contain.

The Scope of Work: What It Must Define

The scope of work is the most important document in a commercial renovation contract. It defines exactly what the contractor is building, to what specification, in what area of the building.

A complete scope of work describes:

The physical work area. Which rooms, which floors, which areas of the building are included in the scope. If a corridor outside your leased space is being modified, does the contractor's scope include it? What about the elevator lobby? Be specific.

The work to be performed in each area. Not "renovate the reception area", rather: "Demolish existing reception desk and partition. Frame new partition per plan. Install new 2x2 suspended ACT ceiling at 2.7m height. Install new LVT flooring (allowance: client to select from contractor's specified product range). Paint all new drywall surfaces."

The finish specifications. Where flooring, paint, tile, millwork, or fixtures are specified, the specification should name the product or provide a minimum quality standard. "Paint: Benjamin Moore commercial interior latex, eggshell finish, color per client selection" is a specification. "Paint as required" is not.

What is explicitly excluded. Every scope of work should have a clear exclusions list. Common exclusions in commercial renovation contracts:

• Permit fees (often a separate client cost)
• Engineering and architectural drawings (if not provided by contractor)
• Furniture, fixtures, and equipment (FF&E)
• IT and AV systems
• Hazardous material abatement if discovered
• Structural modifications beyond what is shown on approved drawings
• Base building systems (outside the leased space)

Change Order Process

The change order clause is the second most important element of a commercial renovation contract. Change orders are additions or modifications to the scope after the contract is signed, and they are where most cost overruns and disputes originate.

A well-written change order clause defines:

Trigger. What constitutes a change order? Any work not explicitly described in the original scope. This should be defined broadly enough that there is no ambiguity when a new request comes in.

Authorization. Who on the client side is authorized to request and approve change orders? On the contractor side, who must sign off? Verbal change orders are almost never enforceable.

Pricing. How will change orders be priced, fixed price, unit rates, or time-and-materials? If time-and-materials, what are the labor rates and markup on materials? These should be negotiated and written into the original contract, not determined after the fact.

Timing. When must the change order be agreed and signed before the work proceeds? A contractor who does work first and submits a change order later has not given the client a meaningful opportunity to approve the cost.

Payment Schedule

A commercial renovation contract should specify a payment schedule that aligns cash flow with project progress. Common structures:

• Deposit on contract execution (typically 10-20% to mobilize and order materials)
• Progress payments at defined milestones (rough-in complete, drywall complete, substantial completion)
• Holdback, Ontario's Construction Act requires a 10% holdback on each progress payment that is retained until 45 days after a certificate of substantial completion is published. This is a statutory requirement, not optional.

The payment schedule should not be back-loaded in the contractor's favor. If a contractor's payment schedule requires 80% of the contract value before substantial completion, they have less financial motivation to finish the remaining work promptly.

Substantial Completion and Deficiency Process

The contract should define what constitutes substantial completion, the point at which the space is usable for its intended purpose, even if minor deficiencies remain. This triggers the holdback clock under the Construction Act.

The deficiency process should specify:

• How deficiencies are documented (a written list, not verbal notes)
• The timeline for the contractor to remedy deficiencies (typically 14-30 days)
• What happens if deficiencies are not remedied within the specified period (the client's right to have work completed by others at the contractor's expense)

Warranties

Commercial renovation contracts typically include a one-year warranty on workmanship from the date of substantial completion. This is in addition to any manufacturer warranties on products installed (roofing membranes, appliances, fixtures).

The warranty clause should specify what it covers (workmanship defects) and what it does not (damage caused by the client, normal wear, or client modifications).

Dispute Resolution

If a dispute arises, how will it be resolved? Litigation is expensive and slow. Most commercial renovation contracts include a mediation-first clause: the parties must attempt mediation before commencing litigation. Some include binding arbitration.

Ontario's Construction Act also provides specific mechanisms for resolving construction payment disputes, including adjudication, a faster alternative to litigation for payment disputes.

VNG provides fully detailed written proposals and contract documents for all commercial renovation projects. Contact us to discuss your project scope.