Inclusions, Exclusions, and Assumptions: Avoiding Project Scope Drop - PVBid
Feb 02
Solar Project Scope Drop by Connor at PVBid

Inclusions, Exclusions, and Assumptions: Avoiding Project Scope Drop

It’s a bright new year and wow. The solar industry sure expanded in 2016! I can’t believe how much solar capacity was installed.  SEIA predicts that a full 14,000 MW of solar capacity was installed (based on the first 3 quarters’ performance).  That represents a lot of power!  Just think about the number of bids that went out. At a rate of 25% closing, you could conclude that installers in the US bid on over 50 GW of solar! Every winning project must be built and executed effectively.  The best way to do this without losing money is to understand project scope clearly.  PVBid addresses project scope effectively (especially when making changes quickly) but I want to talk about it more generally.  

Before we dive in, please understand I am not providing any legal advice. Take a look at my disclaimer at the bottom of this article.

If you work in the solar industry, I’m sure you’ve experienced project scope drop. Does this sound familiar? A customer chose YOUR bid! The customer and the salesperson may have missed defining key issues. The installation crew went around-and-around, trying to resolve the issue. This cost the solar installer a great deal. In the end, both parties walked away disgruntled. They vowed never to work with “them” again.  Lots of factors can cause this problem. Perhaps the sales team regularly knocks out four times the projects than are actually built. The system might require some unique considerations. Maybe the designer neglected the project scope. Systems always change at the last second, and the list continues. You can resolve almost all of these issues quickly and easily by understanding the difference between inclusions, exclusions, and assumptions.  Let’s outline some definitions for the purpose of this article:

  • Inclusions: A description of tasks, items, and actions that are specifically “included” in the project scope.  For example, “200 Solar modules, 340 Watts each, polycrystalline, with silver frames.”
  • Exclusions: A description of tasks, items, and actions are specifically “excluded” in the project scope.  For example, “Any painting materials or labor.”
  • Assumptions: A description of tasks, items, actions, and circumstances that are assumed to be the case but have not been clearly defined or require further investigation.  For example, “Ground is sandy loam and free of large boulders, rocks, or other obstructions that would prohibit vibrated posts.”

So what separates them?  

Inclusions

Inclusions define exactly what you will provide in detail.  If you craft an “inclusive” bid, you must define what is provided, exhaustively. Think about homeowner’s insurance.  Insurance companies often use “inclusive” coverage. They will only cover what the contract explicitly covers. The policy implicitly excludes everything else. 

Exclusions

Exclusions define what you will NOT include. This is the opposite of inclusions.  If you write an “exclusive” bid, you must define what you will not provide in your service. The customer can assume that everything else is included. When writing your project scope document, keep the overall style in mind.

Assumptions

Assumptions consist of a bit of both worlds.  They allow a semi-legal description of the bid’s foundations.  Technically, any assumption could be exclusions and inclusions. However, I prefer to state the things you know to be vague and “best guesses” under assumptions.  It allows both parties to understand clearly what is a guess while still putting the best price forward.  I’ve seen assumptions used as a way to outline what the estimator thinks will happen. Then the customer can ask for additional “worst case” pricing. Otherwise, you must present a bid that costs way too much, compared to your competition.

Do you approach this differently in your bidding? Shoot me an email at connor@pvbid.com and let me know!  I’ll also be at the NABCEP Continuing Education Conference in March.  Let’s sit down and chat there too.

Legal Disclaimer

I am not a lawyer, legal counsel, or advisor. Please do not misconstrue me in any way as the final say with regards to this article.  This article only states an opinion. I intend only to help you understand broad concepts. You will need to explore and understand independently and have proper legal counsel advise you. These definitions are my own. They may not apply in normal legal situations. Most legal documents have a section that clearly defines what each term represents for that document. Please consult your legal counsel as nothing in this document is legally binding unless appropriately deemed so.

 

About The Author

With almost a decade of experience, Connor English has watched the solar industry change and shift in dramatic ways. He has worked on PV systems from the ground up - designing, building, engineering, and costing. Connor has become a recognized expert in solar estimating.