Schedule of values

How a schedule of values works

A schedule of values turns one contract price into a list of parts that can each be measured. The contractor prepares it, usually right after the contract is signed, and the owner, architect or general contractor approves it before the first payment. From then on, every pay application is built on it.

Each line names a part of the work and gives it a dollar value, the scheduled value. The lines must add up exactly to the contract sum. Each billing period, the contractor reports how much of each line is done, as a percentage or a dollar amount, and the total of those becomes the value of work completed to date.

A few lines need special handling:

• General conditions and mobilization: site supervision, temporary facilities and setup. Some owners let these bill in proportion to time on the job; others want them tied to progress.
• Overhead and profit: some owners want them spread across the lines, others want them shown as their own line. Follow the contract or ask.
• Large material purchases: splitting a line into labor and material makes it easier to bill for materials delivered or stored before they’re installed, where the contract allows.
• Change orders: each approved change becomes a new line, so the original contract and the changes stay separate.

On larger jobs, each sub submits its own schedule of values to the general contractor, and the general contractor rolls them up into the schedule it gives the owner. Matching line names across those levels saves a lot of reconciling each month.

Ways to structure a schedule of values

There is no single required layout. The right structure is the one that makes progress easy to see and agree on.

Many schedules mix structures, for example trades broken down by floor. On public jobs and with some lenders, the format is set by the contract or the owner’s forms, so check those before building your own.

Why the schedule of values matters to each party

For contractors and subs

The schedule of values decides how fast you get paid. A schedule that matches how the work really unfolds lets you bill for what you’ve done each month without arguments. A vague one, with a few huge lines, means every pay application turns into a negotiation over percentages.

For owners, architects and lenders

It is the owner’s main tool for making sure payments don’t run ahead of the work. The architect or lender’s inspector checks each line against the site, and a well-built schedule makes that check quick. It also shows what’s left to finish if the contractor ever has to be replaced.

For homeowners

On a remodel, even a short schedule of values tells the homeowner what each payment buys. It replaces “the second payment” with something like “rough-in complete and inspected,” which is easier to agree on.

How to build a schedule of values step by step

1. Check the contract for required format, level of detail and whether overhead and profit are spread or shown separately.
2. Start from your estimate, grouping costs into lines that match how the work will be done and inspected.
3. Price each line at its real cost plus a fair share of overhead and profit, not at round numbers.
4. Split large lines into labor and material, or by area, so progress is easy to verify.
5. Add general conditions and mobilization as their own lines if the contract allows.
6. Check that the lines add up exactly to the contract sum, then submit for approval well before the first billing.
7. After approval, add each change order as a new line with its own number and value.

Once it’s approved, treat the schedule of values as fixed. Moving money between lines later usually needs the owner’s approval, and reviewers notice. Getting it right at the start is easier than revising it mid-job.

Schedule of values example with numbers

Say a contractor has a $150,000 contract for a small office build-out, planned to take five months. It builds this schedule of values from its estimate and bills after the first month.

The scheduled values add up to $150,000. General conditions bill at 20% because one of five months has passed. The completed values add up to $36,900, which is 24.6% of the contract. That figure, less retainage and earlier payments, becomes the first pay application. With 10% retainage, for illustration, the first payment would be $36,900 − $3,690 = $33,210.

Now say the contractor had front-loaded the schedule, moving $12,000 from paint and finishes to demolition: demolition at $20,000, paint and finishes at $3,000. The total is still $150,000, but month 1 would bill $48,900 for the same work. A reviewer comparing demolition to the rest of the schedule would likely flag it.

In month 2, the owner approves a $3,200 change order for added outlets. It goes on as a new line, bringing the contract sum to $153,200, while the original electrical line stays at $26,000.

Common schedule of values mistakes

• Front-loading early lines to pull cash forward, which gets schedules rejected and erodes trust.
• Using a few large lines that are hard to measure, so every billing becomes a debate.
• Lines that don’t add up exactly to the contract sum.
• Folding change orders into original lines, so no one can trace what changed.
• Leaving out general conditions or mobilization, so those costs can’t be billed until later lines are done.
• Building the schedule from round numbers instead of the estimate.

A good schedule of values is boring: it mirrors the estimate, it matches the order of the work, and it adds up. That’s what lets pay applications go through on the first try.