Commercial construction projects are multi-million dollar investments that, understandably, send mounds of paperwork to your company’s financial department.
Blueprints and architectural drawings.
Work orders and construction contracts.
But to construction industry outsiders, one piece of paper looks even more complicated than the rest:
The schedule of values.
Although these spreadsheets look like a mess of jargon and numbers, they offer an unbiased glimpse into your building’s progress.
… if you can understand what each column and row represents!
This guide explains the often confusing SOV in easy-to-understand terms.
What Is a Construction Schedule of Values?
A schedule of values (or an SOV) is a comprehensive document detailing the current progress of a large-scale, ongoing construction project.
This often complex-looking spreadsheet is created by the contractor and shared amongst all movers and shakers on the build — the architect, project owner, accountant, client, etc.
Subcontractors also depend on SOVs to verify their completed work when submitting an application for payment.
In layman’s terms, the SOV is an official cost breakdown for the entire project from start to finish.
By studying your project’s SOV, you can learn:
- The labor, equipment, and materials needed to complete the project
- The guaranteed maximum price (GMP) or fixed price for the full build
- What percentage of the project is complete
- The amount each subcontractor will be paid
- How much progress has already been made for each work item
- The status of the project’s cash flow and progress payments
SOVs bring transparency, accountability, and order to a construction project. While often tedious to create, these documents allow projects to remain on pace and under budget with as few payment disputes as possible.
But what do all of those rows, columns, and numbers represent?
What Should a Statement of Values Include?
On their own, most bits and pieces of your SOV will be self-explanatory.
For example, it’s safe to assume that a work item labeled Electrical with a $9,000 scheduled value means that all electrical-related work on the project will total up to $9,000.
And if the Demolition row says “54%” in its Percentage Complete column, we can assume that demolition is more than halfway done.
But it’s not always that straightforward!
So here’s a complete breakdown of the data you’ll find on your SOV and what it means for the status of your project:
The first column in a traditional SOV falls under the Item Number label.
Sometimes, the item number will seem like a randomly generated jumble of numbers, often 1–4 digits long.
Yet, many contractors will use sequential digits for each work item added to a new row for simplicity’s sake. For example, demolition might be #001, Engineering #002, Bricks #003, and so on.
Item Descriptor / Description of Work
Up next is the Item Descriptor or Description of Work column.
Now, this column holds arguably the most important information in the entire SOV. That’s because it breaks the project down into more digestible bits and offers a rare glimpse into the progress for each individual work item.
The SOV might reveal that your project’s carpentry is 95% complete. Yet, tiling just crossed the 50% threshold and is falling behind schedule.
Each line includes a short blurb or even a single word identifying the work items for the project, including:
- Site Prep
- Doors and Hardware
Of course, the number of total rows depends on the complexity of your construction project. For instance, a turnkey, custom red iron self-storage facility will have a lengthier SOV than a tiny white box shop.
Further reading: Custom vs. Standard Metal Structures
Item Value / Scheduled Value
The Item Value or Scheduled Value column introduces the estimated price of the project. This number will typically remain the same if everything goes according to plan.
But your contractor may submit the occasional change order (CO) to adjust the project’s scope of work. A CO may include adding an extra roll-up garage door or switching from spray foam insulation to batt.
This SOV column will reflect any updated price changes, too.
Amount Previously Billed
Many construction projects run on what’s called “progress billing.”
With this billing style in action, your project owner will pay subcontractors on a regular schedule rather than one lump sum at the end of the project. Their pay depends on how much of the build is already complete.
If plumbing is 20% finished with a $5,000 Item Value, $1,000 will be plugged into the Amount Previously Billed column after the plumber receives payment.
This column is a checks and balances system of sorts.
All stakeholders can closely monitor the project’s cash flow while avoiding double payments or front-loaded costs.
Amount Billed This Period
The Amount Billed This Period column outlines how much work contractors have completed since the last payment period.
After paying the subcontractors, this column will reset to $0, and your project owner will add the previous value to the Amount Previously Billed column.
Amount of Stored Materials
This is where the SOV takes on a confusing twist.
(Don’t worry, we’ll walk you through it!)
The Amount of Stored Materials column includes any construction materials purchased by the general contractor before the construction project officially began. So any bricks, piping, sheets, cement, or tiles stored on-site and still unused will fall into this category and go uncompensated for now.
The Work Completed column will absorb these costs once the materials are incorporated into the structure. This column should dip to $0 by the time the final invoice goes out.
How far along is your project’s demolition, painting, or electrical install?
Your SOV’s Total Value column is the best place to learn about invoices already paid (or soon to be going out).
This portion of the document is a sum of three earlier columns:
- Amount Previously Billed
- Amount Billed This Period
- Amount of Stored Materials
Here, you can see where most of the project’s funding has gone thus far.
The Percentage Complete column is exactly what it sounds like. It’s probably also one of the first columns your eyes will dart to when scanning over the SOV.
This section is the quotient of the Total Value divided by the Scheduled Value.
Say your SOV places the scheduled value for HVAC at $8,000. Right now, the company has already billed your project owner for $5,600. The Percentage Complete column would equal $5,600 divided by $8,000 — or 70%.
Amount Remaining / Balance to Finish
Some construction SOVs will also include an Amount Remaining or Balance to Finish column to keep a closer eye on future invoices and billing.
The number plugged into this column would be the difference between the scheduled value and every dollar that’s gone out to subcontractors.
Retention / Retainage
Retention or Retainage describes the slight financial cushion that comes along with standard progress billing.
In the case of a commercial construction project, your project owner doesn’t have to release 5–10% of the agreed-upon contract with subcontractors until they approve the work completed.
For example, say the scheduled value for the drywall contractor is $3,500. Yet, the post-construction walkthrough and punch list discovered that the drywall was improperly hung, with screws driven too deeply.
Your project manager would be able to hang onto the drywall contractor’s 10% retainage for insufficient work.
Grand Total (Entire Contract Price)
The bottom row of SOV is full of need-to-know financial information and compiles all data for all work items, including:
- Total scheduled value for the entire project
- Amount invoiced by subcontractors during previous applications
- Value of work completed within the last period
- Total value of stored materials
- Total amount spent (stored materials and work completed)
- Percentage complete for the full project
- Funding remaining to complete the project
- Total amount in retainage
If you only have a few moments to analyze the SOV, the final row featuring the contract sum will offer a pretty clear image of what’s been done and what remains.
Many contractors use Google Sheets or Microsoft Excel to automatically calculate the values in this row. Not only does this speed up the SOV creation process, but it also prevents cases of human error and disastrous miscalculations.
Consent and Acknowledgement
The Consent and Acknowledgement section holds all stakeholders to the SOV — including you, your contractor, and your architect. All parties will sign and date this tab to acknowledge the agreement.
Tips for Reviewing a Construction Schedule of Values
While you made the conscious decision to choose the best project owner or general contractor to handle your commercial construction project, it’s a bad idea to step back from your project entirely.
Yes, even if you’re extremely busy!
Rest assured, there’s no need to memorize every number or description included in your SOV. But here are a few things to look out for:
Differences in Formatting
There’s no set SOV template created by the American Institute of Architects (AIA), though many contractors use the ConsensusDOCS 293 for continuity across projects.
It’s okay if your SOV is missing a few of the columns discussed above. Or even if they go by another name.
But just like any of your other contract documents, verify that all critical data is present, like:
- Scheduled value
- Separate line items
- Stored materials
- Percent complete
- Retainage (including the percentage)
With all of these key data points included, your project owner can monitor cash flow, prevent payment disputes, and guarantee a project is completed on time and under budget. That’ll save your company money in the long run!
Look for Common SOV Red Flags
In the construction industry, the term “front-loading” refers to repositioning the values so that most of them occur early on in the project.
Subcontractors and contractors alike know that the construction industry isn’t always fair, with payments often trickling in until the end of the project.
But less-ethical contractors may use this tactic to take advantage of unsuspecting clients and business owners. These dishonest members of the industry may inflate values early on and deflate them later in the project to reap the benefits of front-loading (i.e., a financial windfall).
The decision to front-load and release funds early puts the entire project at risk for overbilling, losing subcontractors before their job is complete, and cash flow problems in the future.
Ask Your Project Owner or General Contractor for Help
You might be brand new to the construction industry, but this isn’t your general contractor’s or project owner’s first rodeo.
If you ever have any questions about dollar amounts, change orders, or unexpected slowdowns in progress, they’re the best people to ask.
Benefits of a Schedule of Values
The schedule of values is one of the most valuable tools for commercial construction companies hiring subcontractors. Yet, they also deliver additional benefits to business owners.
The perks of using an SOV include:
- Better management of large-scale construction projects
- Regular payment applications rather than lump sums at the beginning or end of a project
- Flexibility when adjustments need to be made
- Greater organization for more complex projects, mapping out the materials and subcontractors needed to complete the job
- More transparency between all stakeholders
- Improved odds that the building will remain on schedule without exceeding the GMP
- Costs broken down by work item
- Lower risk of subcontractors walking off the job early
- Decreased chance of payment disputes
- No surprise invoices, bills, or fees
No matter how much of a hands-on role you’d like to assume, an SOV is a fantastic way to stay up-to-date on your entire project.
The SOV might be a somewhat confusing management tool to understand, especially if this is your first construction project.
But once you understand the terms and get the hang of it, you won’t feel in the dark about your company’s project. Just don’t forget to review every detail in your schedule of values form and contract before signing them!