A schedule of Values, often known as a construction contract template, is an essential document that is finalized during the time of entering a contract. This spreadsheet details the expenditures that are to be incurred to perform each phase of the project. The overall cost for the entire project is calculated after adding up the figures from each phase.
How is a Schedule of Values used on a construction project?
The Schedule of Values, often abbreviated SOV, is a tool used on a project to track costs in percentages, allowing the project owner or architect to efficiently know the percentage of the project that’s been completed while keeping tabs on how much will remain to be paid. The tool also serves small-business owners and operators by helping them manage effective cash flow, track progress as work is completed, send them invoices at regular times, and request payment for completed work.
Importance of Schedule of Values
Many construction companies in the world maintain a detailed schedule of values spreadsheet to make sure that the funds are being utilized correctly. The schedule of values form is prepared once the project starts and is reviewed during every phase of the project. The detailed schedule of values spreadsheet specially created by experts in the industry helps in keeping a track of what amount has been spent on which material and when. It also includes details about subcontractors so that all information regarding the project can be obtained in one place. It also makes it easier for the project to obtain loans and hedge funds if available.
What should be included in a schedule of values?
A schedule of values (SOV) is a critical aspect of construction project documents. At best, an SOV details the materials, labor, and other services to be provided in compliance with the contract documents and identifies any permitted variations from the contract documents. At worst, it lacks information that is necessary to properly manage and perform the work outlined in it.
As a best practice, SOVs should include the following:
- Business Information
- A detailed description of each work item
- Cost for each work item
- The amount that has been paid to date
- Percentage of work completed
- Current costs
- The remaining cost for completion
- Retainage costs, percentages, and amounts for each item
- Consent and acknowledgment
How do you fill a schedule of values?
The schedule of values (SOV) spreadsheet is a vital component when working on your project. As the name suggests, it allows you to fill in information that can help you know its value. That’s why this sheet needs to be filled out correctly. But how do you do that? Let’s see this together:
The item’s number
When you are planning your schedule of values (SOV), you will get to a point where there will be no room for any more items. You could either delete an item and create another SOV or fill in the allocated numbers of each item. Using the second option will make referencing easy instead of searching through names or words which can sometimes be challenging.
When creating your schedule of values, you must be sure that the items add up correctly to the total price. If there is any discrepancy or doubt on a certain item of work or cost regarding the project, it must be discussed with the estimator and itemized.
Enter details of work
Before the project commences, you will have an itemized schedule of values detailing work and costs. One of the things that are vital to your company’s profitability is ascertaining how much you will cost for your projects. As you can tell from the above explanation, it can depend on many factors and conditions.
Calculate and enter the percentage
Most of the works undertaken are of indeterminate value as they have many contingencies and interactions with other works. In this case, activity milestones or percentage of completed work is used to know the status of a project.
Calculate and enter the balance to finish
The information in this section is how to calculate the balance of payments. The first thing to do is put the amount of budget that is allocated for windows and panes in the schedule of values form. After you’ve done this now, we can add the amount already spent in the second column.
Calculate and enter the retainage percentage
Retainage is a percentage that the contractor keeps, to be paid back if you do not cause any loss or damage to the materials stored at the facility. To determine a fair retainage percentage value, you must take the value of stored materials or inventory you plan to store in advance, and times it by ten percent.
It may seem complicated, but the fact is that construction contracts are simple to create if you know the right way. Our suggestion is to consult an experienced construction attorney to draw up these contracts and make sure they meet the standard requirements of your state. It’s just a little effort to make sure your business interests are protected, and you can avoid costly lawsuits in the future.