The importance of schedule of values (SOV) in construction

A successful construction project requires many different types of documentation to protect your interests as a builder while ensuring a smooth and organized process. But between contracts, project plans, draw processes, insurance needs and permit pulls, it can feel overwhelming to add another piece of paperwork to the pile.

Don’t let that stop you from completing a schedule of values (SOV) on all of your construction projects.

An SOV plays a pivotal role in construction financial management. It serves as a detailed financial roadmap, breaking down your project’s total cost into bite-sized pieces. This clarity helps you track progress, manage finances and ensure contractual compliance throughout each project.

What is SOV in construction?

In construction, an SOV is a document that details the project’s total contract sum. It lists every project work item along with that item’s cost. 

Think of it like a checklist for a builder. An SOV helps you keep track of all the things you need to do for a project and how much each task costs.

The importance of SOV documents in construction

An SOV is a critical document every building contractor should use, as it helps you maintain financial transparency, control project costs, track progress and facilitate smooth payment processing.

Here’s how an SOV can help make project management easier for builders and clients.

Payment tracking

As you finish each part of the project, you can check it off the SOV and request payment. Having an SOV in place makes it easier for both you and your clients to see what work is done so payment can be made at the right time.

Financial management

An SOV can also act as a money plan for a construction project. With an SOV, you can keep track of expenses, make sure they stay within budget, protect construction cash flow and avoid spending too much money.

Progress monitoring

Builders can also use an SOV as a progress report for a construction project. It helps you see how much work is done and what’s left to finish.

Change orders and variations

It’s almost inevitable that a project will experience changes before completion. An SOV helps both builders and clients see how any changes affect the project’s budget and schedule.

Contractual compliance

A construction contract is important to legally bind all parties to their respective responsibilities. An SOV helps support the contract by drilling down into each line item of work – and payment – and ensuring everyone is following the rules of the contract.

Communication and documentation

An SOV acts as a reference point for builders and clients, ensuring everyone is on the same page regarding the financial aspects of a project. When shared using document storage software, it can be accessed by either party to stay up to date on the financial progress of a project.

By using an SOV effectively, you can enhance your project management capabilities, improve client relationships and increase the overall efficiency and profitability of your construction business.

Information commonly included in a schedule of values

An SOV is typically put together by the main contractor or general contractor for a construction project. So it’s important for builders to understand what should be included – and why. Here’s a glossary of information commonly included in an SOV.

1. Line-item description

A short and clear description of each task or item in the construction project.

2. Work breakdown structure (WBS)

A structured list that breaks down the project into smaller, manageable tasks.

3. Unit of measurement

The specific way an item is measured. For example, when discussing light fixtures, the unit of measurement is typically “pieces” or “units,” which indicates the builder is counting the number of individual light fixtures.

4. Quantity of each line item

The actual amount of a specific item you’ll need to complete a task, such as the number of light fixtures required for the project. For light fixtures, the quantity detailed could be “10,” meaning you need 10 pieces of light fixtures for the project.

5. Cost per unit

The price for each measurement unit, such as the price per light fixture.

6. Monetary value of each item

The total cost for each task, which is calculated by multiplying the quantity with the cost per unit.

The SOV may include additional columns or information depending on the specific project requirements, the contract terms and the preferences of the project owner and contractor. While it’s the main contractor’s responsibility to create the SOV, its accuracy depends on necessary information and input from clients, subcontractors and suppliers to ensure project scope is accurately reflected.

10 steps for building a construction SOV from scratch

1. Familiarize yourself with the project scope

Understand the full scope of the construction project by going through all plans and specifications to identify tasks and items that will need to be included in the SOV.

2. Create a work breakdown structure

Create a list of work items or tasks based on the project scope. Each work item should represent a specific aspect of the construction project, such as the foundation or roofing.

3. Develop clear and concise descriptions for each line item

Each work item should accurately reflect the task being done. This helps avoid confusion for both the builder and the client.

4. Assign appropriate units of measurement for each line item

Determine the appropriate units of measurement for each work item. Some common units of measurement in construction include square feet, linear feet and the number of fixtures.

5. Estimate the quantities associated with each line item

Specify how much of each unit of measurement is required for the project.

6. Determine the unit prices for each line item

Assign a cost per unit for each work item. This should factor in material costs, labor, equipment and other expenses.

7. Multiply quantities by the unit prices

This step helps you understand subtotals for each category of your project. For example, you might look at subtotals for labor vs. materials or a contingency fund.

8. Calculate the totals

Add up the values of all line items to calculate the total contract value.

9. Carefully review the completed SOV to ensure accuracy and completeness

This is a document that supports your project’s contract and budget. It’s important to ensure it’s covering the entirety of the project to limit disputes or confusion.

10. Update the SOV as changes occur

An SOV should be reviewed for accuracy and updated throughout a project’s construction phases, especially following change orders.

Here’s a finance tip: Use straightforward and easy-to-understand language when writing an SOV – especially when talking about numbers. This will help limit confusion and back-and-forth communication, which could otherwise stall a project’s progress.

Simplify your construction SOV docs with Buildertrend

The most important thing to remember when creating a schedule of values document is that it should be clear, accurate and accessible throughout a construction project. That’s where Buildertrend can help.

Buildertrend’s construction company software supports accurate project estimating. By using data and templates to calculate the costs of different tasks and materials, you can ensure that unit prices and quantities in your SOVs are precise. This reduces errors and makes your entire project management process more reliable.

Construction software also provides a seamless way to handle change orders as they come up during a build. As these changes are updated in the software, you can easily update your SOVs to reflect adjusted quantities and costs accordingly.

Finally, software designed for construction companies provides a centralized place for document storage. By storing your SOV within the software, you can communicate and track the latest version with clients.

To learn more about how Buildertrend can support your important construction schedule of values documentation, schedule a demo today.

Construction schedule of values FAQs

Get answers to the most common questions about construction SOVs.