What is a Schedule of Values and Why is it Required on Construction Projects?

By Sara M. Bour, Esq., Manager and Counsel, AIA Contract Documents

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March 15, 2022

A Schedule of Values (SOV) is an essential document in construction project management. It provides a breakdown of the total contract sum allocated to different portions of the contractor’s work, and it’s often required in the early stages of a project. But what exactly is an SOV, and why is it so important for both contractors and project owners? 

In this guide, we’ll explain what a Schedule of Values is, why it’s required, and how it helps manage the financial aspects of a construction project. 

 

Understanding the Schedule of Values in Construction 

A Schedule of Values is a document that supports the payment application process in construction projects. It allocates the Contract Sum (the total amount paid to the contractor) across different sections of the contractor’s work, as outlined in the project’s construction schedule. This document typically takes the form of a table with the following columns: 

  • Itemized work: Portions of the work, such as demolition, drywall installation, electrical work, etc. 
  • Scheduled value: The amount of the Contract Sum assigned to each portion of work. 
  • Progress: Amounts for completed work, stored materials, adjustments, percentage of completion, and balance to finish. 

It might also include columns for retainage (amount withheld for quality assurance) and authorized adjustments. 

This breakdown helps project managers, contractors, and owners track the project’s financial progress and ensure timely payments. 

 

How to Create a Schedule of Values for Your Construction Project 

Creating a Schedule of Values (SOV) is a crucial task that ensures accurate payment applications and proper project oversight. Here’s a step-by-step guide on how to prepare one: 

  1. Identify Work Categories: Break down the work into categories or sections, such as foundations, framing, plumbing, etc. 
  2. Assign a Value: For each section of work, allocate a portion of the overall Contract Sum. These values should reflect the size, complexity, and cost of each task. 
  3. Determine Payment Milestones: As you allocate values, note when portions of work are expected to be completed to match the corresponding payments. 
  4. Ensure Accuracy: Be sure to provide accurate data and justify the schedule values with supporting documentation. This ensures transparency and avoids payment disputes. 

 

The Role of AIA Documents in the Schedule of Values 

The American Institute of Architects (AIA) provides standardized forms that help contractors and architects manage project payments efficiently. Two key documents are often used: 

  • AIA Document G703®-1992: The Continuation Sheet is frequently used to record and submit the Schedule of Values. It provides a clear and standardized format for showing how the contract sum is allocated. 

 

Why Contractors Need a Schedule of Values 

A Schedule of Values is more than just a document for payment applications; it’s a critical project management tool. Here’s why contractors need an SOV: 

  1. Facilitates Payment Applications: An SOV ensures that the contractor is paid accurately based on work completed. It forms the foundation for monthly payment applications submitted to the architect. 
  2. Helps Track Cash Flow: By itemizing work and assigning scheduled values, contractors can track their financial progress and better manage cash flow. 
  3. Ensures Accuracy: The SOV helps prevent disputes about payments, as each portion of the work is clearly outlined with a corresponding value. 

 

Managing Payment Applications and Cash Flow 

As work progresses on a construction project, contractors must submit monthly payment applications that align with the Schedule of Values. These applications will include: 

  • Work completed: Percentage of each work item finished. 
  • Stored materials: If materials are stored off-site, they can be included in the payment application. 
  • Adjustments: Any changes in scope or cost must be reflected in the revised SOV and supported by documentation. 

Changes to the Schedule of Values must be submitted to the architect with appropriate justification to maintain accuracy. 

 

Common Questions About the Schedule of Values 

What happens if the Schedule of Values changes during the project? 

Changes to the schedule of values may occur if there are scope adjustments, change orders, or other project modifications. These updates must be submitted to the architect with supporting data to substantiate the changes. 

How detailed does the Schedule of Values need to be? 

The level of detail required depends on the project’s complexity, but the more detailed and transparent the SOV, the less likely there will be confusion about payments. Generally, it should include both major work sections and specific tasks or materials where possible. 

How the Schedule of Values Helps with Project Management 

A well-maintained Schedule of Values provides valuable insights into the progress of a construction project. It not only helps contractors manage cash flow and payments but also enables project owners and architects to monitor project performance and ensure the budget is being adhered to. 

 

Conclusion 

In summary, a Schedule of Values is a fundamental component of construction project management. It serves as the basis for payment applications, helps contractors manage cash flow, and provides transparency for all parties involved. Whether you’re a contractor, project manager, or owner, understanding and creating an accurate Schedule of Values will ensure your project runs smoothly and payments are made on time. 

 

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.