Out of all documents associated with any construction project, the SOV or Schedule of Values is considered as key in tracking the progress of your work as a project manager, getting paid on time, and managing cash flow – most especially in large commercial projects.
We assume you haven’t created an SOV yet. And as your business continually grows and takes on bigger construction projects, creating SOV is something to be taken seriously to support your company’s future success. SOV, when being mishandled, could result in some cash-flow challenges during the life of the project or beyond.
So, what is SOV exactly, and how a contractor like you should approach it to get optimal results on your construction projects?
Schedule of Values Defined
A Schedule of Values (SOV) is a thorough list of all the work to be done on a construction job. It is a document used by main stakeholders on a construction project, from contractors to subcontractors to project managers and property owners.
SOVs are often used on bigger and more complex construction projects to manage contractor payment applications and oversee progress effectively. It provides a thorough oversight and much-needed transparency to ensure the project stays on track.
By simply understanding the Schedule of Values, you will learn:
- The equipment, labor, and materials needed to complete the project
- What percentage of the construction project is complete?
- The GMP or Guaranteed Maximum Price or fixed price for the full build
- The amount every sub will be paid
- How much progress has been already made for every work item?
- The current status of the project’s progress payments and cash flow.
While SOVs are often tedious to create, these documents make your projects remain on pace and within budget. Above all, the Schedule of Values brings accountability, transparency, and organization to any of your construction projects. Make SOVs less tedious using Pro Crew Schedule – an all-in-one subcontractor management software designed to make things much easier for construction professionals!
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Advantages of Using SOV
Creating SOV is absolutely necessary. In fact, it is a special construction planner tool. Below are some benefits that prove that you need SOV in your next construction projects:
1. Creates and Maintains Order
An SOV is a bit like a map. It usually creates a visual timeline for anyone involved with it. For instance, let’s just say you remodel a client’s commercial building. You know firsthand that designing and developing a new structure to a commercial building takes a lot of coordination and planning.
This is when SOV is beneficial for you and your team. It serves as your reference sheet, helping you focus and become more organized.
2. Increases trust and accountability
Being responsible means being accountable for your work and sticking to commitments. An SOV outlines the right order of job completion. It explains how much everything costs—preparing and providing this particular document to any of your clients will set goals and craft a sorted timeline for you to understand everything better.
Following the itemized list, make sure to be always on time and stay within the price estimates if necessary. This helps you more in earning the trust of your clients. Trust and accountability are crucial to creating lasting business relationships with your clients and new business referrals. Therefore, always be accountable and responsible.
3. Set clear expectations for your team members
Team member expectations show what someone is accountable for doing at work. Sharing SOVs with your construction team onsite helps your people fully understand their responsibilities and individual goals. The schedule of values outlines a timeline of events, allowing every member to stay on track.
SOV can also be useful as a reference sheet for giving your feedback to each of your members.
4. Makes collecting payments much easier
Multi-step construction jobs typically involve multi-step client payment. Making sure your client agrees to SOV in advance makes payment collecting much easier. With SOV, the values and costs for every part of the job are listed, including the client payment dates and estimated dates of service.
Best Practices to Improve Your Future SOVs
Since an adequately created Schedule of Values can make or break your cash flow, below are some of the best practices to follow to improve it:
1. Tailor your line items to the construction project
The amount of detail you have to provide usually varies from project to project. Hence, find out first what level of detail the architect or owner is required to track the project and process payments. For instance, this particular section must appear at the top of your SOV document regarding the heading and basic information. Below is a list of things to include when crafting your heading and basic info section:
- Project name
- Project number
- Name of contractor
- Name of the contact person or liaison
- Name of client
- Client billing address
- Client service address
- Name of architect
- Architect application date
- Architect application number
2. Choose your template
There is no industry-wide method to fill out an SOV and outline it perfectly. However, we will share some pro tips on how to format it correctly. Usually, the template of SOVs often includes columns with the following details:
- The description of every item of work should be outlined. This is where you will list your work as outlined by the contract.
- What you have been paid to date on the work, started from prior billing periods.
- The total cost for every item
- Your costs for the current billing period
- Retainage costs
- Estimated costs or scheduled value
- The remaining costs for completion
- Final balance due
In addition, there are columns to be included in the template or project spreadsheet. Columns are vertical and are usually interesting with the rows across the template. The items being represented in every column must correspond to the title of every row. For instance, the construction job you are planning has six itemized components. So, there have to be six items in every cell within that column.
3. Assess your costs
Take a deeper dive into your expenses, including materials, equipment, labor, and retainage. These are the values that will essentially need to be entered into your SOV. Therefore, we suggest you break down every piece of your work and the associated costs, from pre-construction to completion.
4. Avoid overbilling (front-loading) your costs early on.
As tempting as it might be to inflate the value of project activities, this usually causes much more severe problems in the long run than it solves in the short term. Not only can it damage your reputation, but the owner or architect will also perceive it as a red flag. In addition, it also causes issues with payment discrepancies amidst the project and possibly places you at risk for liability associated with false claims.
FAQS about Schedule of Values
Done reading the whole blog? We expect you to learn something from it. But we know you still have a lot of questions about SOVs. And so we prepare some questions that we think you are curious to ask about when it comes to editing, designing, and using SOVs for your contracting jobs and projects:
Is there a required or standard SOV form?
No, there is not a required form. The AIA or American Institute of Architects has never issued a standard document to follow. So, you are free to structure or craft the form for as long as it suits you and your team best.
What happens if I make some mistakes on SOV?
The architect will most likely notice if someone made any mistakes on your SOV. As long as you or your architect determine the mistakes, even before the customer signs the document, you can quickly fix that mistake and resubmit your SOV back to the architect.
When should I give my client the SOV?
For as long as you get approval from the architect, you can give your client a copy of the SOV. It must be presented to your customer at the same as the contract.
Use Pro Crew Schedule for Your SOVs
As stated previously, A Schedule of Values always has been a critical part of the planning. It is a document with high-level importance, commonly used to evaluate a project’s overall progress as measuring a percentage of completion related to the construction plan and schedule. We have already shared some best practices to craft your SOVs. But, how far can you go to improve it more? The solution – go for the latest project management tools!
Pro Crew Schedule is a cloud-based construction scheduling software that is designed to help you with that. Suppose you desire to have a means of control in every aspect of your construction planning, from organizing tasks to outlining important documents like SOVs and managing them to bits. In that case, Pro Crew Schedule is all you ever need.
Pro Crew Schedule is nothing but a project saver. Here are its other advantages:
- Effortless scheduling in construction
- Pipeline forecasting
- Balanced resource management
- Enhanced team collaboration and teamwork
- Real-time construction crew management
- Effective Internal and External Communication
- Improved customer satisfaction
- Accessibility
- Cloud-based storage
Request for a live demo and explore Pro Crew Schedule! Get your 30-day Free trial here.
Key Takeaways
The Schedule of Values is one crucial document that should never be overlooked in construction. Both cash flow and the overall success of your project can be affected significantly. This particular document may sometimes seem confusing and takes a lot of effort, but eventually, the time and money it saves by the end are worthwhile. And as you fully understand the terms and get the thought of it, it is easier now to get into the flow.
