Why Every Construction Project Needs a Schedule of Values

Table of contents

• Introduction to Schedule of Values (SOV)
• Components of a Schedule of Values
• Creating a Schedule of Values
• Using the Schedule of Values

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A schedule of values in construction is essential because budgeting a project isn’t as simple as buying a gallon of milk. There’s no easy price tag—costs for labor, materials, and government fees fluctuate daily, making it difficult to determine affordability.

What is a schedule of values in construction?

A schedule of values is a document that provides an accurate list of all the expected costs for a project. You can think of it like the price tag on a grocery shelf for that gallon of milk. The numbers in a properly executed schedule of values let project owners establish progress payments, manage budgets, and avoid sticker shock at the end of the project.

It's also important to remember that a schedule of values might only focus on a particular aspect of a project. For example, you might use a general contractor schedule of values, an electrician schedule of values, or a framers schedule of values. In short, it depends on the nature and scope of the project.

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Importance in Construction Projects

Without a schedule of values, you're asking for a blank check on a construction project – something no investor or owner in their right mind would give you. But, it's not just important to financial backers. A contractor schedule of values allows timely billing and payments and helps control costs.

For owners, it lets them ensure they get the work that they paid for and greatly reduces the risk of overpayment. Lenders also benefit from a good schedule of values in that it gives them confidence in the financial viability of the project. Given how often projects go over budget, it's important to give stakeholders the tools they need to stay on track.

To get a better understanding of how useful a schedule of values is, let's break down the basic components. 

A schedule of values covers many key components of the construction process. Generally, it comes in the form of a spreadsheet, but we'll get more into the specifics of how to create one in a minute. First, let's take a look at these components on a schedule of values to know what data we need. Each of these items represents a category column on the spreadsheet. 

• Line items: To start off, you need to create a detailed breakdown of work into specific categories. For example, items like site preparation, roofing, or wall framing. 
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• Scheduled value: This is the estimated cost of each item based on the current market value of materials and labor.
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• Work completed: A running tally of the costs already paid. 
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• Work percent completed: This is a careful record of the percentage towards completion of each line item.
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• Retainage: An amount of money that owners hold back until the end of the project. It's a way for project owners to make sure crews and contractors fulfill their end of the bargain before paying in full.

To see this system in action, have a look at the schedule of values construction template below:

With this basic understanding of the components we are working with, we’re ready to start drafting a construction schedule of values. 

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While the template itself is pretty straightforward, gathering accurate information and keeping it up to date is quite a challenge. But following some key steps helps make developing a schedule of values easy.

Steps to Develop an Effective Schedule

• Step 1: Make sure you have a clear picture of the project scope and your contractual obligations. Do this by talking to project owners, investors, contractors, and any other stakeholders.
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• Step 2: Build out your detailed line item list. Depending on what the owners are looking for, you might be responsible for every aspect of the project or only focus on certain parts. 
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• Step 3: Assign values to each line item. This is where research comes in. It can be complicated to track labor costs, material costs, and other unforeseen cost factors. It's also important to keep in mind that costs can change depending on the length of the project. If you already have materials in a warehouse, you're all set. But if you buy them in a year, the price might have gone up or down. In short, be ready to make amendments here if you need to.
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• Step 4: Include spaces for work completed and work percent completed and be sure to update them as the project goes on.
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• Step 5: Get approval from relevant parties like the owner, lenders, and other stakeholders. Usually, this comes in the form of a construction contract schedule of values. It's the document that you provide to stakeholders where they can officially sign off on these budgetary aspects of the project. 

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Common Mistakes to Avoid

A schedule of values goes a long way toward keeping a project running smoothly, but problems in your construction of schedule values form can lead to big problems as your project goes on.

One major problem is vague descriptions of work in line items. For example, don't just add “walls”  as a line item - you need a line for framing, a line for drywalling, a line for window installation, and so on. Another huge problem is poor cost estimation.

Getting the numbers right requires research which is why it's important to stay on top of current prices.

Perhaps the biggest issue is failing to keep the schedule updated as the project moves on. If you're working with outdated percentages, it can throw your budget completely off. Using advanced scheduling and record-keeping tools is the only way you'll get good results from a schedule of values. 

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We've talked about setting up a schedule of values as part of getting the project rolling, but its true usefulness comes in when monitoring the progress of the project.

Monitoring Progress and Payments

As the project moves forward, contractors submit payment applications (or “draw requests”) based on the schedule of values to project owners to cover the costs of materials and labor. For instance, a draw request might read, “Framing lumber - 80% complete - $4000 requested (based on the $17,500 total SOV value).”

Usually, contractors need supporting documentation for draw request payments. Often this comes in the form of photos of progress, payroll reports, material invoices, and so on.

Usually, owners hold back some money – their retainage – from each draw request as a form of security for the project owner until project completion.

Overall, it's a fairly straightforward process when you are dealing with only a few subcontractors, but it can get overwhelming on a large-scale project with hundreds of moving parts. That's why it's usually best to invest in software solutions to manage and track all of this data.

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Adjustments and Revisions During Construction

If you've worked for any length of time in the construction industry, you know that most of the time, owners change their minds about aspects of the project and on-the-ground situations make change orders inevitable.

When dealing with change orders and the schedule of values, it's a matter of keeping track of documentation and clearly explaining changes. For example, you might see something like “Change order for three additional windows living room: New SOV line item - ‘Living room windows’ - $7,000.”

The most important thing here is to make sure you reflect changes in every section of the schedule of values table. Remember, change orders not only alter your total budget, but your percentages, retainage, and percentages as well.

You also probably know that a project that stays completely on schedule is a rare treat. Most of the time, delays mean that you are dealing with unforeseen costs and inflation – costs you need to reflect in the schedule of values. For example, the weather might make the roofing take longer than expected, which means you'll be paying overtime to the crew.

At the end of the day, a well-structured schedule of values is one of the best tools for keeping construction projects on track, preventing financial surprises, and ensuring smooth payments.

Staying on top of updates, tracking changes accurately, and using modern tools to manage the process can make all the difference.

The more organized and transparent your schedule, the easier it is to avoid disputes and keep every stakeholder on the same page—helping you build smarter, not harder.