Schedule of Values in Construction: What It Is and How to Build One

DEFINITION

schedule of values

A line-item breakdown of the total contract value agreed between sub and GC before work starts. Used to calculate progress billing.

DEFINITION

front-loading

Assigning a disproportionately high value to early items in the SOV to receive more money early in the project.

DEFINITION

stored materials

Materials delivered to site but not yet installed — can often be billed in the SOV before installation.

DEFINITION

over-billing

When amounts billed through AIA applications exceed work actually completed (can create a liability).

Why the SOV matters before the first AIA application

Most billing disputes on commercial subcontracts start with a poorly built schedule of values.

The SOV is the shared reference point for the entire billing relationship on a job. If it’s built carelessly — too few line items, values that don’t match your cost structure, mobilization loaded at 15% of the contract — every pay application that follows is a negotiation rather than a straightforward verification.

Build the SOV before work starts, get it approved in writing, and build it to match how you actually estimate and track costs. That alignment between the SOV and your job cost structure is what makes percent-complete claims defensible when the GC’s superintendent walks the job.

Line items — how granular is right

The right level of detail is more than three lines and fewer than fifty.

A two-line SOV (“labor” and “materials”) gives you almost no billing flexibility — you can’t separately claim rough-in work until the whole labor scope is done. A 50-line SOV creates overhead on every billing cycle and invites the GC to dispute individual percentages on minor items.

A practical approach for specialty trade subs: break the work into phases that correspond to how the job actually progresses. For electrical work, that might be: temporary power, underground rough-in, above-grade rough-in, gear and panel installation, trim-out, testing, and project closeout. Each phase is a line. Each line has a value that reflects the actual cost of that phase as a percentage of your total contract.

When your SOV lines match your cost codes, percent-complete claims are easy to support. You look at your job cost report, find the cost-to-date by phase, compare it to the estimated cost for that phase, and that’s your claimed percentage. No guessing.

Stored materials and why they’re worth billing

Most AIA contracts allow you to bill for materials stored on site or in a bonded warehouse before they’re installed.

This is worth using. Materials sitting on a slab or in a storage trailer represent real cash you’ve spent. The G703 has a dedicated column for stored materials — use it. You’ll typically need to provide documentation (supplier invoices, a list of materials by description) and the GC may want to verify physical storage before approving the line.

Not every GC allows stored materials billing, and some require a materials-in-place clause in your subcontract. Check the contract before your first pay application — if you can bill for stored materials and you’re not, you’re financing the project.

Front-loading risk

Front-loading improves short-term cash flow. It also creates over-billing exposure that can come back at project close.

If you’ve billed 90% of mobilization in month one and the job runs into trouble — owner stops funding, GC loses the prime contract, your crew gets pulled for another project — you’re in a position where you’ve received more money than the percentage of completed work justifies. That creates a liability if the project is bonded or if there’s a completion dispute.

The cleaner approach is to build the SOV to match your actual cash-out curve. If you spend 40% of your costs in the first half of the job, the first half of your SOV should represent roughly 40% of the contract value. That alignment makes your billing defensible and keeps the over-billing liability low.