A project’s Schedule of Values serves as the source of truth for every request for payment that is submitted. It’s the most referenced document when making sure a construction job is staying within the project scope and it serves to protect all parties from misunderstandings, excessive overbilling or underbilling.
Read on to learn how SOVs work, why they’re important, and how to build one.
Key Takeaways
- A Schedule of Values, or SOV, is a document used in the construction industry to provide an itemized breakdown of a job’s billable work.
- A detailed SOV makes it easier for all parties to track project completion percentages and keep up with payments throughout a project’s life.
- The level of detail needed will vary by job, but every Schedule of Values will include standard elements, including a detailed description of work, value, and a mechanism for tracking completion — either percentage of completion or units completed.
What is a Schedule of Values in Construction?
A Schedule of Values (SOV) is a document used in the construction industry to provide an itemized list of a job’s billable work.
There are debates about how much detail to include in the SOV. More detail provides a more factual basis for valuing completed work, while less detail allows more subjectivity in valuing work. Ultimately the SOV should at least be detailed enough to define the milestones that allow for payment. Think of it like a roadmap that helps keep all parties on the same page in terms of processes, progress, and payments.
Usually, a Schedule of Values is formatted as a spreadsheet. This spreadsheet is created, submitted, and maintained by the general contractor and the individual trades to assist in the overall construction management of the project. It details a) all the work that’s going to be performed throughout the entire project and b) the dollar amount being billed. What’s more, it binds each party to an agreed-upon schedule and scope of work, allowing project owners and managers to confirm that the amount of work is completed and progress payments are being made per the contract documents.
An Example Schedule of Values for Construction
There are several different types of construction contracts and each one will require a different format for the Schedules of Values. Most construction project documents today are developed by the American Institute of Architects (AIA), a professional organization for architects across the country.
In this basic example, the electrical subcontractor and the general contractor include a breakdown of the most significant tasks in the “Description of Work” column, with the corresponding billable amounts listed under “Scheduled Value.”
Electrical Subcontractor
| Item Number | Description of Work | Scheduled Value |
| 26 05 00 | Electrical: Common Work | $100,000 |
| 26 51 00 | Electrical: Interior Lighting | $100,000 |
| 26 56 00 | Electrical: Construction Site Lighting | $50,000 |
| Total Contract Value: | $250,000 |
General Contractor
| Item Number | Description of Work | Scheduled Value |
| Division 22 | Plumbing | $150,000 |
| Division 23 | HVAC | $250,000 |
| Division 25 | Integrated Automation | $25,000 |
| Division 26 | Electrical | $250,000 |
| Total Contract Value: | $675,000 |
The degree of detail you’ll need will depend on a job’s size and scope, along with the value being billed. For example, if you’re working on a large-scale project, you’ll need to include more detailed steps, and your work description line items should reflect that more granular detail. In the same vein, higher-priced items may also need to be broken down into more line items to reduce the individual values and minimize potential risk.
General contractors should create SOVs that align with the Construction Specifications Institute (CSI) MasterFormat®, the North American standard for classifying and organizing construction project information. Categories in your Schedule of Values might include sections for general requirements, existing conditions, concrete, masonry, and all other trades working on the project.
If you’re a subcontractor, we recommend submitting a Schedule of Values that mirrors your contract price and expected timelines. By doing this, you’ll be able to invoice progressively as each step is completed, helping you maintain a more consistent cash flow.
💥 Get our free Excel SOV template.
One last note here: A lot of the details needed for an SOV will probably already be broken down in a job’s estimate. Preparing one is often as simple as copying those details and numbers over to a Schedule of Values template and maintaining it with updated work and pricing details.
Why Use SOVs?
One of the most important roles a Schedule of Values plays in construction is being able to provide a transparent means for project oversight and management of progress payment applications. A detailed SOV makes it easier for key stakeholders to track project completion percentages and keep up with payments throughout a project’s lifecycle. With everyone using the same SOVs, the payment process clearer.
As a contractor, you’ll generally use the Schedule of Values to not only plan billing and cash flow, but keep a pulse on completed work submitted with their progress payment applications. It’s important to note that project owners often include up-to-date SOVs in their monthly meetings with creditors to draw against a project’s loan amount. Without an accurate Schedule of Values, there’s a chance that nobody gets paid, so having one is critical to getting approval on all ongoing payments.
SOVs and Cash Flow Management
Let’s get one thing clear: By itself, a Schedule of Values isn’t so much a cash flow management tool as it is a means for controlling payments. If you’re a new subcontractor, you might initially be hesitant to provide that info to a project owner, but an accurate, up-to-date SOV that’s aligned with construction budget and Work In Progress (WIP) reports does help manage cash flow in a sense.
Simply speaking, a Schedule of Values creates an agreement among all parties. It provides transparency between contractors and owners when it comes to substantiating work completion and payment requests, ultimately helping trades get paid per the contract documents. Plus, an accurate SOV can also keep your payment applications from being flagged for overbilling issues by GCs or owners.
Alone, a Schedule of Values isn’t going to help you generate cash flow. Paired with a clear contract and payment terms though, an SOV puts you in a better position to get work approved and paid for in a timely manner. Lastly, if you do run into any disputes, your SOV can help protect you legally.
How to Build a Comprehensive Schedule of Values
While every Schedule of Values differs when it comes to the level of detail you’ll need, a properly prepared SOV should be regularly updated to include:
- A list of work items or milestones with detailed descriptions and values for each
- Percentage of milestone completion or trackable unit quantities
- Any balance remaining for each line item and associated labor/material allocations
- Retainage percentages related to the list of work items
- Line items specifying any contingencies or allowances included in the contract
Want to make sure you don’t start a job already in the red? Don’t forget to include line items like mobilization and general conditions in your Schedule of Values, and bill for those expenses at the beginning where they are properly front-loaded.
You should probably expect a little back and forth on how amounts are broken down depending on the preferences of the project stakeholders and how they are looking to track the completion of the work.
By taking the time to create a comprehensive Schedule of Values, you’ll put yourself in a much better position to manage project risks and financial stability.
Here are a few more best practices for building effective SOVs:
- Mirror line items for descriptions of work to be performed with the job’s specifications and requirements/expectations of owners, architects, and managers.
- Align line items with tasks from the project’s construction schedule to be able to forecast cash flow
- Use a standardized, customizable template with formulas in place to update column totals and reflect ongoing progress and any material changes.
- Make sure to evaluate and understand all required expenses, including labor, materials, equipment, and subcontractors. Generate an accurate outline illustrating the expected progress of significant steps throughout the project.
- Avoid self-funding jobs and taking on any unnecessary liability whenever possible. Include sufficient detail in the SOV to ensure timely work approval and progress payments.
While it might seem like a lot of work for one document, it’s hard for us to overstate the value of keeping an accurate schedule of values. Through your SOV, you’ll have access to better cost control, improved project transparency, streamlined financial management, and real-time insights into the status of each job. It’s a win-win-win for contractors, subs and project owners.
Further Reading: Mastering Job Costing: How to Enhance Profitability With the Builder’s Feedback Loop
Frequently Asked Questions About SOVs
1. What is a Schedule of Values in construction?
A Schedule of Values (SOV) is a detailed statement generated by a contractor, builder, or others outlining the portion of the contract sum corresponding to various parts of the work. It breaks down the work into smaller, detailed items with their respective costs to track project progress and manage payments effectively.
2. Who creates the Schedule of Values?
The Schedule of Values is typically created by the contractor or subcontractor at the start of the project, and it is agreed upon by all parties, including the project owner or architect, before work begins.
3. How is the Schedule of Values used?
The SOV is primarily used to monitor the project’s progress and to manage payment applications efficiently. It provides a transparent framework for tracking completed work, pending work, and corresponding payments.
4. Why is the Schedule of Values important for cash flow?
The SOV plays a crucial role in managing a contractor’s cash flow during a project. It helps in scheduling progress payments, aligning them with the percentage of work completed. This ensures a steady inflow of funds, enabling the contractor to manage expenses effectively.
5. How often is the Schedule of Values updated?
The SOV should be updated regularly as the project progresses to reflect completed tasks, incurred costs, and payments received. It’s important to note that any changes or additions to the project, such as change orders, should also be updated in the SOV.
6. Can I manage a Schedule of Values using software?
Yes, there are cloud-based construction project management applications like CrewCost that come equipped with a Schedule of Values feature. This makes it easier to create, manage, and update your SOV, helping you streamline your billing process and improve cash flow.
7. What can happen if a Schedule of Values is mismanaged?
Mismanagement of an SOV can result in financial complications, such as cash flow issues, payment disputes, and project delays. That’s why it’s essential to maintain an accurate, up-to-date SOV throughout your project.
8. Can I change the Schedule of Values after the project has started?
Typically, the SOV is agreed upon before the project starts and remains fairly consistent throughout. However, change orders or unexpected project modifications may require adjustments to the SOV. Any changes should be agreed upon by all involved parties to ensure continued transparency and accuracy.
9. Should the Schedule of Values be the Total Cost of the project?
No, you will take your estimated cost as a budget which shows your cost breakdown and then turn it into the schedule of values. You will show the amount you are charging on the schedule of values which will have your markups and/or overhead included on the project costs you give to the tier you are contracted with. The budget could be the exact same items as you list on the SOV. It depends on the level of detail you need to break out for the tier above you.