Terms of engagement (scope of work)
A short, practical note on terms of engagement (scope of work), with the public definition from IVS / Red Book (effective 31 January 2025).
In my practice, the terms of engagement are agreed in writing before any work starts. They fix what I am valuing, for whom, for what purpose, on which basis of value and at which date, plus the extent of my investigations, the assumptions and any special assumptions, and how the report may be used. IVS 101 calls this the scope of work and requires it for every valuation. Most disagreements about a valuation are really disagreements about a scope nobody wrote down.
“Written confirmation of the conditions that either the member proposes or that the member and client have agreed will apply to the undertaking and reporting of the valuation.”
“A scope of work (sometimes referred to as terms or letter of engagement) describes the fundamental terms of a valuation or valuation review.”
Source: IVS 101 Scope of Work, para 10.01
Common confusion
Terms of engagement ≠ a fee quote: the quote says what it costs; the terms say what the valuation is.