Want your contractor to give you a fair price (not a wild guess)? It all starts with a well-written, detail-rich tenant improvement scope of work
What is Tenant Improvement Scope of Work
- Clear definition of tenant improvement scope of work
- How to outline tenant improvements for maximum pricing accuracy
- Common pitfalls in drafting a tenant improvement allowance and scope
- Essential checklist for communicating with contractors and brokers
- Metro-specific considerations for tenant improvement projects (e.g., DTLA logistics)
The Surprising Cost of Vague TI Scope of Work
“According to recent industry research, almost 30% of tenant improvement projects go over budget due to incomplete or ambiguous scope documents.”
When it comes to a tenant improvement scope of work, being vague is expensive. Contractors can’t (and shouldn’t) price what they can’t see. The more assumptions they must make, the higher their estimates—padding for unknowns so they don’t lose money. If your improvement project scope is missing details, excludes finishes, or skips technical systems, don’t be surprised when final bills blow past your improvement allowance. That’s why a carefully crafted, itemized scope is the essential foundation for predictable project success. Put simply: ambiguity invites guesswork, and guesswork invites overruns.
Tenant Improvement Scope of Work: Quick Definitions
- What is a tenant improvement? A tenant improvement (often called TI or leasehold improvement) refers to custom alterations made to a leased commercial space by or for the tenant, typically to suit their business operations.
- What does a scope of work mean in a commercial lease context? Scope of work is an itemized list, drawing, or document outlining what work is to be completed—materials, finishes, systems, and who is responsible for which items and costs—to make the space ready for occupancy.
- How are improvement scope, improvement allowance, and leasehold improvement related? The scope of work is your roadmap; improvement allowance is your project budget (often negotiated in your lease agreement); and leasehold improvements are the physical changes made. Clearly aligning these avoids confusion—and disputes—during the improvement process.
Why Detailing Scope of Work Matters
- Impacts on construction cost, bids, and improvement allowance: The more detailed the tenant improvement scope of work, the more precise contractor bids. Fuzzy scope means contractors must guess at costs, inflating pricing or prompting change orders that leave costs spiraling above your originally budgeted improvement allowance.
- Role in the tenant improvement process and real estate negotiations: Brokers, project managers, and building owners all rely on the scope during real estate and lease negotiations. A clear scope speeds consensus and reduces post-signature headaches—no matter what “market standard” allowances get discussed.
- Reducing risk for building owners, tenants, and property managers: Detailed, accurate scopes are a proven risk management tool—preventing finger-pointing and delays when you discover that HVAC, electrical, or access expectations weren’t communicated early. Everyone—from the landlord to your construction team—wins when expectations are upfront.
TI Scope of Work: Step-by-Step Guide
Step 1: Gather Lease Agreement and Building Code Basics
- Before any construction dreams take shape, pull your lease agreement and read the fine print about tenant improvement allowance and landlord approval rights.
- Every TI must comply with local and state building codes, so double-check occupancy, Americans with Disabilities Act (ADA) requirements, and fire/life safety rules that affect your improvement project.
Your lease agreement governs what improvements are allowed, how funds can be used (improvement allowance), and what approvals you need from the building owner. On top of this, local building code sets technical requirements—upgrades to bathrooms, accessible paths, exits, and even ceiling heights—many of which impact your overall construction cost. Gather all these baseline documents before drafting your tenant improvement scope of work so nothing gets missed or redlined later.
Step 2: Define Tenant Improvements and Improvement Process
- List out each improvement needed—are you talking new flooring, partitions, lighting, restrooms, kitchens, or specialty buildouts?
- Include specific examples and clarify any features that are critical to your business requirements (e.g., private offices, reception areas, open workspaces).
- Make sure to explain the difference between improvement allowance (what landlord will fund) and improvement construction (what actually gets built—sometimes at a higher cost than the allowance covers).
Tenant improvements can be simple (paint and carpet) or extensive (rebuilding interiors, adding systems). Your scope of work should specify every system, finish, or layout: for example, “Install nine glass office partitions; replace all carpet with 5mm luxury vinyl; upgrade two bathrooms to code” rather than “Update office space.” This makes it easier for contractors to price accurately and for all stakeholders to agree on what the improvement allowance will actually buy.
Step 3: Documenting the Tenant Improvement Construction Requirements
- Are you clear about the difference between scope of works (broad) and scope of work (specific to your renovation)?
- Describe technical elements—HVAC, electricity, ceilings, partitions—in detail: model numbers, locations, layouts.
- Attach example project documents and annotated drawings where possible; don’t just rely on narrative descriptions.
This is where most commercial lease project managers stumble—if your scope says “add lighting,” a contractor doesn’t know if you mean LEDs, halogens, or fancy pendants. Same for HVAC—“upgrade” could cost $10k or $100k depending on what’s required. Include plans with highlighted areas, photos of existing conditions, and a bulleted breakdown for each tenant improvement construction item. This allows bids to be apples-to-apples and reduces the risk of “we thought you meant X, but you actually needed Y.”
Step 4: Address Specific Metro, Logistics, and Approval Challenges
- Factor in local realities: in downtown Los Angeles (DTLA), construction after 6pm may be required to avoid gridlock or meet building safety rules.
- Include a plan for coordination—will the building owner or property manager need extra advance notice? Who schedules city inspections?
- Note inspection windows, permit requirements, lead times, and any access constraints (freight elevator, security policies, etc.) unique to your building or city.
One size does not fit all in tenant improvement projects. In DTLA, for example, after-hours work is often mandatory, and lead times on permits or elevator reservations can stall jobs. Outlining these requirements in your scope—“construction restricted to 7pm–7am, after-hours security in place, permit submittals due four weeks prior”—keeps your improvement project on time and on budget. Identify every potential logistics twist to avoid mid-project surprises.
Step 5: Finalize and Share Your Tenant Improvement Scope of Work
- Create a polished, typed document (Word or PDF) listing all construction tasks—attach plans, finish schedules, technical specs, and photographs.
- Send to all parties: contractor/GC, broker, landlord, and, if applicable, your project manager. Ask for written confirmation or markups before bidding starts.
- Clearly separate what’s covered by improvement allowance from extra (“above-standard”) tenant improvements so everyone knows who pays for what.
Communication is everything at this stage. Your finalized tenant improvement scope of work should leave nothing to chance—no item too small to clarify. Confirm all parties understand the agreed construction cost and what is (and isn’t) included, especially when improvement allowance runs short or costs must be split. This minimizes disputes and gives contractors the confidence to price your project accurately—no more guessing required.
TI Scope of Work: Red Flags and Mistakes to Avoid
- Ambiguities in the improvement process: Descriptions like “install new lighting” or “upgrade HVAC” without further detail lead to assumptions—and expensive change orders. Spell out quantities, specs, models, and finishes.
- Overlooking metro-specific or leasehold improvement requirements: Every downtown or special-use building has rules for noise, access, deliveries, and inspections. Not addressing these can stop a project dead or trigger penalties.
- Failing to align tenant improvement scope of work with improvement allowance: If the allowance won’t cover the scope, someone pays out of pocket—or the scope must be trimmed. Double-check cost estimates against your real estate or lease negotiation figures before work begins.
Missing details in your tenant improvement construction plan can turn a straightforward process into a costly, frustrating ordeal. Avoid these red flags by double-checking the scope against your lease agreement, reviewing with a qualified general contractor, and getting sign-off from every stakeholder before work starts.
Essential Tenant Improvement Scope of Work Checklist
- Site walkthrough notes
- Photos and plans for tenant improvement construction
- Improvement project schedule estimates
- Clear allowance vs actual cost line items
- Metro-specific access/logistics challenges
- Communication plan for GCs, brokers, and owners
| Scope Element | Details Needed | DTLA Considerations |
|---|---|---|
| Demolition | Walls, flooring, fixtures | After-hours required? |
| MEP | Electrical/HVAC/plumbing specs | Permit timeline |
| Finish Work | Paint, ceilings, hardware | Lead times |
Quotes from Tenant Improvement Experts
“The more detail in your tenant improvement scope of work, the less your contractor has to guess—and the fewer costly surprises later.” – Commercial GC, Los Angeles
Frequently Asked Questions
What does tenant improvement cover?
Tenant improvement typically covers interior alterations made to a leased commercial space to meet the operational needs of the tenant, such as partitioning, lighting, flooring, HVAC, and sometimes restroom or kitchen buildouts. The tenant improvement scope of work should clearly specify these elements to ensure accurate contractor pricing and compliance with your construction cost and improvement allowance.
What is an example of a tenant improvement?
An example of a tenant improvement is the installation of new office partitions, replacement of carpet and ceiling tiles, or adding a break room for staff. The tenant improvement scope of work would itemize each aspect—such as the number of partitions, types of finishes, and layout of breakroom fixtures—allowing contractors to price each improvement accurately.
What is the difference between tenant improvement and renovation?
Tenant improvement refers specifically to changes made within leased spaces by or for the tenant, while renovation is a broader term that may apply to any property upgrades or alterations, regardless of lease status. Clearly distinguishing these in your tenant improvement scope of work avoids confusion, legal disputes, and cost overruns within your improvement project.
What is the scope of works for renovation?
A renovation scope of works typically includes demolition, reconfiguration of spaces, upgrades to mechanical and electrical systems, new finishes, and compliance with updated building codes. A tenant improvement scope of work should reflect these tasks as they apply to leased spaces and include all technical details required by your contractor and landlord.
Additional Questions
- Who prepares the tenant improvement scope of work? Usually, the tenant, their architect, or a project manager drafts the scope, with input from contractors, brokers, and sometimes the landlord.
- How can tenants protect themselves in the tenant improvement process? By insisting on a detailed, itemized scope and getting every party’s approval in writing before construction starts.
- What happens if the tenant improvement allowance is exceeded? The tenant typically covers the difference, so it’s critical to budget conservatively and clarify scope early.
- Are there standard forms for tenant improvement construction? Many brokers and property managers have sample forms—ask for one, or request a copy from your contractor or real estate attorney. Always adapt forms to the specifics of your space and metro area.
Key Takeaways
- Accuracy in the tenant improvement scope of work prevents guesswork and overruns
- Clarity benefits landlords, tenants, and contractors alike
- Integrate local and real estate specifics for your improvement project
A clearly detailed, metro-aware tenant improvement scope of work is your best tool for accurate prices, less stress, and a space that’s ready for business on time and on budget.