What Is a Schedule of Values (SOV)?

What a schedule of values is for

On a fixed-price job, the owner agrees to pay one number for the whole building, but pays it in monthly installments as the work goes in, each one requested on a pay application. Someone has to decide what "40% done" is worth in dollars. The SOV settles that in advance, line by line, so each month's bill becomes a question of how far along each line is, not a fresh negotiation.

If your contract uses AIA's A201-2017 general conditions, a standard set of construction contract terms, an SOV is a requirement. Under section 9.2, where the contract is a stipulated sum (a fixed price) or a guaranteed maximum price (costs plus a fee, up to a cap), the contractor submits an SOV to the architect before the first application for payment. It has to allocate the entire contract sum, in the form and with the supporting data the architect requires. Unless the architect objects, it becomes the basis for reviewing every pay application.

How to build a schedule of values

Read the project specifications first. They often include a section on the SOV, numbered 01 29 73 in MasterFormat, the Construction Specifications Institute's numbering system, which can set the form, the level of detail and limits on early lines. Then build it in this order:

1. Start from the estimate you bid with and sort it the way the work will be built: by building or floor first, then by trade or specification section.
2. Split large lines into material and installation wherever material arrives weeks before it goes in, so you can bill it as stored material (delivered but not yet installed) where the contract allows.
3. Give mobilization (setting up people and equipment on site), bonds (a bonding company's guarantee of your work) and insurance their own lines, priced at what they really cost, and keep the backup, such as the bond invoice.
4. Add a closeout line for testing, as-built drawings (showing what was actually installed), warranties and owner training, so there is money left to earn at the end.
5. Check that the lines add up to exactly the contract sum, and keep quotes and subcontracts ready in case the architect asks for support.

A line called "Plumbing, $298,000" invites a monthly argument about whether the job is 35% or 45% done. Lines a reviewer can check by walking the site, such as rough-in by floor, cause fewer disagreements. Kevin O'Beirne, an engineering specifications manager, makes the same point in a blog post on reviewing SOVs on the institute's site, and notes that contracts can cap bonds and insurance at a set share of the price or require a minimum amount for demobilization, packing up and leaving the site.

Example of a plumbing subcontractor's SOV

A plumbing subcontractor signs a $298,000 subcontract on a three-story, 24-unit apartment building. Its SOV splits the water heaters and fixtures into material and labor, because both arrive long before they are set, and breaks rough-in, the piping inside walls and floors before fixtures go on, out by floor so the general contractor can check progress one floor at a time. The right column is the same subcontract, front-loaded.

The front-loaded version moves $30,000 into the first two lines: $18,000 more on mobilization and $12,000 more on underground. It takes the money from the last work on the job: $15,000 from trim, $8,000 from closeout and $7,000 from floor 3 rough-in.

Front-loading and why owners push back

Front-loading means putting inflated values on the lines you finish first, so early bills collect more than the work is worth. In the example, mobilization and underground are done in month one. The balanced SOV bills $42,000 ($8,000 plus $34,000). The front-loaded one bills $72,000 ($26,000 plus $46,000), $30,000 more for the same work.

From the contractor's side, the pull is cash flow. Payroll and supply-house bills land weeks before the owner pays. From the paying side, here the general contractor, that extra $30,000 is money paid ahead of the work. An article on AIA Contract Documents' site by its counsel, Mike Koger, says front-loading "accelerates cash flow to the contractor, resulting in overpayments early in the project," and that this is a particular problem if the contractor defaults, meaning it fails to finish.

Run that case. If the plumber walked off after month one, $226,000 would be left in the subcontract to finish $256,000 of work, $30,000 short. Retainage, the share of each payment held back until the work is substantially complete, softens the hit without covering it: at 10%, the general contractor would still have paid $64,800 (90% of $72,000) for $42,000 of work.

That's why reviewers look for lines that seem high and ask for backup. A line that looks too low is a flag as well, because the missing money is probably sitting in another line. His post on SOV basics adds that the contractor's surety, the bonding company that guarantees its work, shares the owner's interest in not paying ahead of the work.

The clean way to recover real early costs is to show them openly: a bond line with the premium invoice behind it, and material lines you can bill as stored.

How the schedule of values drives the G703

On AIA jobs, the SOV becomes the first three columns of the G703 continuation sheet, the line-by-line page of the monthly pay application: item number, description and scheduled value. AIA's instructions say those columns should follow the SOV submitted at the start of the job, or as later adjusted, stay consistent throughout, and total the original contract sum at first. The G702 cover sheet totals each month's progress, and together the two forms make up AIA billing.

Take month three of the plumbing job, billed on a subcontractor form such as AIA's G703S, which also works from a schedule of values. The floor 1 rough-in line reads $36,000 scheduled, $18,000 completed on earlier applications, $18,000 this period, $36,000 to date, 100% complete and nothing left to finish. Across all eleven lines, $140,000 is done, about 47% of the subcontract: mobilization, underground, both water heater lines and floor 1 rough-in are finished, and floor 2 is a quarter done.

Change orders, signed changes to the scope and price, don't usually rewrite the original lines. AIA's instructions say they are normally listed separately, at the end of the schedule or on a sheet of their own. Our guide to construction change orders walks through getting them priced and approved.

Changing a schedule of values mid-job

The 2017 edition of A201 added a sentence to section 9.2 that allows revisions as the job goes. You submit the change to the architect with supporting data, and unless the architect objects, the revised schedule is used to review later pay applications. O'Beirne's advice is stricter, though it isn't a contract term: amounts generally shouldn't change without agreement from the owner, the architect and the contractor, and any money moved between lines needs documentation.

Say the fixtures cost you $6,000 less than you estimated. Shift that $6,000 into a line you've already finished and you get paid sooner for work that hasn't changed, which looks a lot like front-loading.

Matching your SOV to your job costs

An SOV tracks what you can bill. Your cost codes track what you spend. When the two follow the same breakdown, you can see line by line whether rough-in that's billed at 60% has already used 80% of its budget. Our guide to construction cost codes covers building that structure.

For construction companies, every card swipe, bill and reimbursement lands on the right job and cost code in Clyr while the crew is still on site, so you can check budget versus actual when you sit down to bill.

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