What Does Schedule Of Values (SOV) Mean In Construction?

What Does Schedule Of Values (SOV) Mean In Construction?

What Does Schedule Of Values (SOV) Mean In Construction?

The Schedule of Values (SOV) is a document that lists the costs for each work item in a construction project.

It is usually created by the contractor and subcontractors and overseen by the project manager or cost estimator.

According to the American Institute of Architects, the SOV should divide the entire contract amount among the different parts of the project.

The complexity of the project determines how the Schedule of Values is broken down into line items.

For simpler projects with a single structure, lower cost, and shorter duration, the UniFormat classification system from the Construction Specification Institute is used.

For bigger projects with multiple structures, higher costs, and longer duration, the MasterFormat system is typically employed.

The SOV works in tandem with the construction progress schedule and shows the contractor’s understanding of the project requirements.

An accurately proportioned SOV makes the payment process smoother and frees up time for the contractor and architect/engineer to focus on construction.

On the other hand, an improperly proportioned SOV, such as an inflated amount for early work items (known as “front-end loading”), can result in overpayment for early work, insufficient funds for remaining work, and impact surety coverage and liability for uncompleted work.

What Is The Importance Of A Schedule Of Values (SOV) In Construction?

The Schedule of Values (SOV) is a crucial document in construction projects, as it outlines the costs for each work item.

This document is usually created by contractors and subcontractors and supervised by the project manager or cost estimator.

The SOV should allocate the total contract amount among the different aspects of the project, as per the American Institute of Architects.

The complexity of the project determines how the SOV is divided into line items. For smaller projects with a single structure, lower costs, and a shorter duration, the UniFormat classification system is used.

For larger projects with multiple structures, higher costs, and a longer duration, the MasterFormat system is used.

The SOV works hand-in-hand with the construction progress schedule and demonstrates the contractor’s understanding of the project requirements.

A well-proportioned SOV makes the payment process smoother and saves time for the contractor and architect/engineer to focus on construction.

On the other hand, an improperly proportioned SOV, such as an exaggerated amount for early work items, can lead to overpayment, insufficient funds for remaining work, and negatively impact surety coverage and liability for unfinished work.

The SOV is important in construction as it ensures that the values of each task are organized. Contractors, architects, and owners work together to determine the cost value of each job and figure out the total construction cost.

The SOV also helps determine how much was estimated to be spent on each task, and how much was actually spent.

In addition, SOVs can become an integral part of a construction agreement, as the cost value of work and material can be agreed on before construction starts. This protects contractors financially and legally.

The SOV also promotes transparency in the completion of a project, as the client and contractors have equal access to the schedule of values, preventing any information from being hidden or misunderstood.

Following the schedule of values closely minimizes the chance of liability falling on one person in case of any issues during construction.

At the start of a construction project, it’s impossible to predict the outcome, but staying on track with the SOV is the best way to avoid any potential problems.

Deviating from the schedule to obtain more money earlier is not recommended, as it can harm your reputation and project.

To manage and document SOVs efficiently, technology can be leveraged. Producing SOVs digitally, as opposed to on paper, makes it easier for contractors, architects, and owners to access the progress report and any changes made during construction, reducing the chance of discrepancy or loss of valuable work.

What Does A Schedule Of Values (SOV) Include?

An SOV typically consists of a list of work items, assigned values, and the amount of work finished. The complexity of the project affects the extent of an SOV, but it usually encompasses the following elements:

  • Project identification and identifier
  • Identity of the primary or general contractor
  • Application reference and date
  • Designation of work items
  • Explanation of work items
  • Overall value of each item
  • Percentage of work achieved
  • Value of work accomplished in prior and current stages
  • Remaining balance for each item
  • Retention percentage and total for each item
  • Agreement and recognition.

When To Use A Schedule Of Values (SOV) In Construction?

Schedule of Values (SOVs) are ideal for contractors working on commercial projects that have multiple components and are large in scale.

These complex projects require effective budget management, cost tracking and payment administration, and an SOV provides the necessary tools.

Even smaller projects that have a fixed budget, approved cost or a guaranteed maximum price contract can benefit from using an SOV.

When the total project cost is determined in advance, an SOV’s ongoing cost breakdowns can help ensure that the budget is not exceeded.

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