How to Create a Schedule of Values for Construction

A Schedule of Values (SOV) in construction is an itemized list detailing every activity required to complete a project, along with its corresponding cost or value. This document serves as a financial roadmap, breaking down the total contract sum into manageable components. Its purpose is to facilitate progress payments, ensuring contractors are compensated for work completed at various stages. The SOV is a fundamental tool for both contractors and project owners, promoting transparency in payment practices and aiding in financial control.

Understanding Schedule Components

A typical Schedule of Values is structured around key components that outline the project’s financial breakdown. Central to this structure are line items, which represent distinct activities or divisions of work. These can range from broad categories like site preparation and foundation work to more specific tasks such as electrical installations or roofing.

Each line item is assigned a corresponding value, which is its estimated cost, encompassing labor, materials, equipment, and sometimes subcontractor services. The sum of all these individual line item values must equal the total contract sum for the entire project. A well-defined SOV often includes columns for tracking previously completed work, the percentage of work completed for the current payment period, and the value of any stored materials. This granular detail allows for precise tracking of progress and financial allocation as the project advances.

Gathering Project Information

Before a Schedule of Values can be created, specific project data and documents must be collected. The signed contract is paramount, as it establishes the total contract sum and outlines the overarching agreement between the parties. This document also contains agreed-upon payment terms, milestones, and the overall scope of work.

Detailed project estimates or bids are essential, providing the granular cost breakdowns by trade, material, and labor that will inform the individual line item values within the SOV. Project specifications and comprehensive scope of work documents further define the exact nature and quality of the work to be performed for each task. Any approved change orders or variations that have impacted the original contract value must also be gathered, as these adjustments directly influence the total project cost and subsequent line item allocations.

Constructing the Schedule

Creating the Schedule of Values involves methodically breaking down the total contract sum into measurable line items. While no single format is universally mandated, many contractors utilize spreadsheet software or industry-standard templates like the AIA G703 Continuation Sheet or ConsensusDocs 293.

The total contract sum is then allocated to logical, distinct work items based on the detailed project estimates and the defined scope of work. This breakdown commonly follows industry classifications, such as CSI (Construction Specifications Institute) divisions, phases of work, or major milestones. Each identified line item is assigned a specific dollar value, ensuring that the sum of all these individual values equals the total contract amount. For instance, if a project’s total contract is $1,000,000, each work item, from demolition to final finishes, will have an assigned value, and their cumulative total must be $1,000,000.

Considerations for allocating costs include how to distribute general conditions, overhead, and profit. These can be integrated into the individual line items or presented as separate, higher-level entries, depending on project requirements or owner preferences. While some contractors may attempt “front-loading” by allocating a disproportionate amount of value to early project stages to improve initial cash flow, this practice is generally not recommended as it can lead to cash flow issues later and strain client relationships. Maintaining a consistent profit margin spread evenly across line items is often a more balanced approach.

Submitting and Updating the Schedule

Once the Schedule of Values has been constructed, it must be submitted for formal review and approval. This typically involves presenting the completed document to the project owner, architect, or lender for their endorsement. This initial approval establishes the baseline for all subsequent progress payment applications throughout the project.

As a construction project progresses, revisions or updates to the Schedule of Values often become necessary due to approved change orders or adjustments to the project scope. Change orders, which formally alter the original contract, require the SOV to be updated to reflect the modified scope and cost. These changes impact subsequent payment applications, as the value of completed work is measured against the most current, approved SOV. The approved Schedule of Values then serves as the direct basis for all progress payment applications, allowing contractors to invoice for the actual work completed during each billing cycle. Regular updates are essential to ensure the SOV accurately reflects the project’s current state, preventing discrepancies that could lead to payment disputes.