What Is a Schedule of Values & Why Is It Important?

A Schedule of Values (SOV) is a detailed financial document used in construction and other large-scale projects. It itemizes every activity required to complete the work along with its corresponding cost. The SOV functions as a foundational baseline for tracking project progress and managing payments throughout the project’s duration, offering a transparent framework for financial control and project monitoring for all parties involved.

Key Components of a Schedule of Values

A Schedule of Values typically itemizes all major work categories and their corresponding monetary values. Each line item represents a distinct phase or segment of the project, assigned a specific cost, and collectively these components represent the total contract value. Common examples of line items include site work, foundations, framing, electrical installations, plumbing, and finishes. The SOV also incorporates general conditions, which cover project management, temporary facilities, and site supervision costs.

The document details the estimated cost for each work item, encompassing both direct and indirect costs. It also includes general project information, a clear description of each line item, and a unique item number for organizational purposes.

The Role of a Schedule of Values in Project Management

The Schedule of Values serves as the primary basis for progress payments, often referred to as “draws.” Approved values for each line item are used to determine the amount due to the contractor as work is completed. This mechanism ensures contractors receive payments proportional to the work performed, supporting consistent cash flow throughout the project lifecycle.

The SOV is also instrumental in tracking project completion by showing the percentage of work finished for each task or phase. It provides a structured framework for managing change orders, allowing modifications to the project scope and values to be tracked. Its use promotes transparency and accountability for both the client and the contractor, reducing potential disputes by providing a clear, agreed-upon record of costs and progress.

Developing a Schedule of Values

The process of developing a Schedule of Values typically commences after a contract has been awarded for a construction project. The general contractor usually takes responsibility for preparing this document. This involves breaking down the project’s overall scope of work into logical, measurable components or tasks.

Accurate cost estimation for each component is crucial, often requiring a thorough review of project plans, specifications, and subcontractor bids. The goal is to create a comprehensive and accurate financial representation of the entire project, ensuring the sum of all line item values matches the total contract amount. The SOV is often submitted to the project owner and other stakeholders for review and feedback before finalization.

The Approval and Payment Process

After its development, the Schedule of Values is formally submitted to the client or project owner for review and approval. Once approved, it transforms into a binding document that governs all subsequent payment applications throughout the project. Progress payments are typically made based on the percentage of completion for each line item, as measured against the values established in the approved SOV.

Contractors commonly submit payment applications monthly, with the Schedule of Values serving as the essential reference point. Standardized forms are frequently used to detail the work completed and amounts requested. A common practice in construction contracts involves “retainage,” where a percentage, typically ranging from 5% to 10%, is withheld from each progress payment until project completion or specific milestones are met. Supporting documents, including lien waivers, material invoices, and photographs of completed work, are often required with each payment application to substantiate the request.