On most commercial projects, contractors are paid monthly based on progress. The document that makes that possible is the schedule of values: a breakdown of the contract sum into line items, each with a value, against which the percentage complete is billed. A well-built schedule of values makes pay applications quick to prepare and quick to approve.
What it is
A schedule of values (SOV) divides the contract amount into parts that add up exactly to the total. Each month, the contractor reports how much of each line has been completed, and the payment is calculated from those percentages. On projects using AIA documents, the SOV typically appears on the G703 continuation sheet that accompanies the G702 application for payment.
Build it from the estimate
The best starting point is the estimate itself. Organized by CSI division, an estimate already breaks the job into logical parts with known values. From there:
- Split large divisions into lines that can be measured, for example foundations, slab on grade and elevated slabs.
- Break lines out by building, floor or phase on larger projects.
- Separate material stored on site where the contract allows it to be billed.
- List general conditions, bonds and insurance as their own lines.
Get the level of detail right
Too few lines and every pay application becomes an argument about percentage complete. Too many and the paperwork becomes a burden. A good rule is that each line should be something the owner's representative can walk the site and verify.
Avoid front-loading
It can be tempting to put extra value on early activities, such as mobilization or site work, to improve cash flow. Owners and architects look for this, and an obviously front-loaded SOV is often rejected or invites closer scrutiny of every future application. A balanced SOV that tracks real costs is approved faster and builds trust.
Tip: Keep your own cost-to-complete tracking alongside the SOV. It shows whether billing is keeping pace with cost, the first warning sign of a job losing money.
Change orders and retainage
Approved change orders are added as new lines rather than merged into existing ones, so the original contract and the changes stay visible. Retainage, commonly five to ten percent of each payment depending on the contract, is withheld and tracked until substantial completion or closeout. Make sure the SOV shows it clearly.
Keep it consistent
Once approved, the SOV shouldn't change except through change orders. Consistent line items month to month make it easy to compare applications and resolve questions. At closeout, the SOV becomes a record of what the project actually cost by component, valuable data for your next estimate.
Our 7500 South Exchange estimate includes a schedule of values built directly from the division-by-division estimate. Setting up SOVs and preparing monthly progress reports is part of our project management support.
