Schedule of Values

A Schedule of Values (SOV) is a contractor-submitted document that allocates the total contract price across individual line items of construction work, by trade, CSI division, or work package, serving as the measurement baseline for monthly progress payment applications throughout the project.

What is a Schedule of Values?

The SOV is submitted early in the project, typically within 30 days of contract award, and must be approved by the contracting officer or contracting officer's representative before the first progress payment can be processed. It is not a cost breakdown; it is a pricing allocation document that the government uses to measure how much of the earned contract value has been completed each month.

Each line item in the SOV represents a measurable component of the work: site preparation, concrete foundations, structural steel, mechanical systems, electrical rough-in, finishes, and so on. The contractor assigns a dollar value to each line item that, in aggregate, equals the total contract price. When a monthly progress payment application is submitted, the contractor reports the percentage complete for each SOV line item. The government's inspector verifies the completion percentages and approves payment for the earned value, minus retainage.

SOV preparation is both a financial and a cash flow management tool. A well-constructed SOV front-loads value into early-phase work (site preparation, mobilization) that completes quickly, improving early-project cash flow. Aggressive front-loading that is not supported by actual cost allocation, called "unbalancing", is a compliance issue; contracting officers review SOVs for reasonableness before approval.

Federal construction SOVs commonly align with Construction Specifications Institute (CSI) MasterFormat divisions for building projects, or with specific work packages defined in the contract for infrastructure or specialized facilities. The alignment facilitates comparison with the contract documents and helps the contracting officer assess whether the values assigned to each line item are reasonable.

Why the Schedule of Values matters for government contractors

The SOV determines when and how quickly a contractor earns progress payments. An SOV that undervalues early-phase work creates cash flow pressure throughout the project. Investing time in a thoughtful, well-balanced SOV, approved by the contracting officer, pays dividends in smoother payment processing and better cash flow throughout performance.

Example

A contractor awarded a $5M federal building renovation submits an SOV with 28 line items one week after contract award. The contracting officer reviews the SOV and questions whether mobilization and site preparation ($450K) is inflated relative to cost. The contractor provides a cost breakdown supporting the value; the officer approves the SOV at $380K for mobilization after negotiation. In month two, the contractor completes 100% of mobilization, earning $380K (less 10% retainage) in its second progress payment.

Frequently Asked Questions

How detailed should a Schedule of Values be?

The SOV should be detailed enough for the contracting officer to verify completion percentages objectively, but not so granular that tracking becomes administratively burdensome. Typically 15 to 40 line items are appropriate for building projects of $1M to $20M. Larger or more complex projects may warrant more line items.

Can the SOV be revised after it is approved?

The SOV can be revised through a bilateral modification when scope changes through contract modifications (change orders) add or remove work. The SOV should be updated contemporaneously with change order execution so that the payment basis remains current.

What happens if a contractor front-loads the SOV improperly?

If front-loading is identified during SOV review, the contracting officer will require rebalancing before approval. If it is discovered after approval, through comparison of SOV values to actual costs, the contracting officer may require revision and may assess that early payments exceeded earned value, creating a repayment obligation.

Does the SOV relate to the project schedule?

Yes. A linked baseline schedule (typically a Critical Path Method schedule) and an SOV together form the basis of Earned Value Management (EVM) reporting on larger federal construction contracts. The SOV assigns budget to work packages; the schedule assigns those packages to time; EVM tracks whether the planned value is being earned on schedule.