A schedule of values is a list that breaks a construction contract into line items, each with a dollar amount that adds up to the full contract price. Builders use it to bill for the work completed each month, so payments match real progress on the job.
What Is a Schedule of Values in Construction?
Every contract has one big number at the bottom. A schedule of values, often called an SOV, cuts that number into pieces. Each piece is a part of the work with its own price, and together the pieces equal the contract.
The point is billing. Instead of asking for one big payment at the end, you show how much of each piece is done and bill for that share each month.
SOV Example
Here is a short example, with example numbers only. Say a $200,000 job is split into these lines:
- Site work and foundation: $30,000
- Framing: $50,000
- Plumbing, electrical and HVAC: $45,000
- Drywall and finishes: $55,000
- Final cleanup and closeout: $20,000
If framing is half done at the end of the month, you bill $25,000 for that line. If the foundation is finished, you bill the full $30,000. The sum of everything you bill never goes above the contract.
How to Build One in 5 Steps
- Start from the signed estimate. The lines should come from the work you priced, not from guesses.
- Group the work by trade or phase. One line each for foundation, framing, mechanical, finishes and so on.
- Give every line a price. Include your overhead and profit across the lines in an even way.
- Check the total. The lines must add up to the contract price, to the dollar.
- Get it approved. Share it with the owner, and the lender if there is one, before the first payment request.
Why the Schedule Matters
Owners and lenders use it to check each payment request. When the lines are clear, they can compare what you ask for with what they see on site, and approvals go faster. It also supports a clean construction payment schedule, because every payment ties back to a line.
On jobs with a lender, the same breakdown often feeds the bank draw form. Ask your lender what format they want before you build yours.
SOV vs Budget
These two get mixed up. The SOV is built from the price you charge, and its job is billing. Your construction budget is built from what the job costs you, and its job is tracking profit. The lines may look similar, but they answer different questions. One tells the owner what to pay. The other tells you whether you are making money.
Common Mistakes
- Front-loading. Putting too much money on early lines is the one that causes the most trouble.
- Lines that are too vague. "Miscellaneous" tells nobody how much is finished.
- Forgetting changes. If a change order is signed and the lines are not updated, the totals stop matching.
- Ignoring retainage. The amount held back comes out of each payment, so plan your cash around it. See retainage.
SOV in Practice
Larger commercial jobs use it on almost every payment request, and many owners expect a standard format. For residential work, the idea is the same, even if the paperwork is simpler. A clear list, tied to the scope of work, keeps your billing honest and your client comfortable. For a plain overview of the term, Wikipedia has a short entry.
Frequently Asked Questions
What is a schedule of values in construction?
It is a list that splits the contract price into the parts of the work, such as site work, framing, plumbing and finishes. Each line has a dollar amount, and the lines add up to the full price. You bill each month by saying how much of each line is done.
What is the purpose of an SOV?
It lets the owner and the lender see what each part of the job costs and how much is finished. That makes monthly payments easier to check. It also helps you, because you get paid in step with the work instead of waiting for the end of the job.
Who prepares it?
The builder usually prepares it, based on the estimate and the contract price. The owner, architect or lender may review it and ask for changes before the first payment. Once everyone agrees, it becomes the base for every payment request.
How detailed should it be?
Detailed enough that someone can tell what each line covers and how far along it is. Too few lines make progress hard to judge, and too many make billing slow. A good rule is to match the lines to the way you are billed by your trades and suppliers.
What is front-loading?
Front-loading means putting more money on early lines than the work really costs, to get paid sooner. Owners and lenders watch for it, and it can cause disputes. Price each line close to its real cost, and include your overhead and profit in an even, honest way.
How does an SOV relate to retainage and change orders?
Retainage is usually a percentage held back from each payment, and it is worked out from the amount billed on the schedule. A signed change order adds or changes lines, so the total always matches the current contract.
