How to Create a Schedule of Values (With Example)

The schedule of values (SOV) is the page of your pay application that breaks the contract amount into line items — one dollar value per chunk of work — so that each month you can bill a percentage of each line instead of arguing about a lump sum. It is usually submitted for approval before the first application, and once approved it becomes the skeleton of every bill you send for the rest of the job. (If you have seen AIA's G703, that is the same page — AIA calls it the continuation sheet.)

That makes the SOV the highest-leverage half hour of billing work on the whole project. Build it well and every later application is arithmetic: update percentages, and the previous, this-period, and to-date columns roll forward on their own. Build it badly — too coarse, too fine, or shaped to pull cash forward — and you will fight about it monthly until closeout.

Why the payer cares what your SOV looks like

Whoever reviews your application — a GC's project manager, an owner's rep, a lender's inspector — approves it line by line. For each line they are asking one question: is this item really as complete as the percentage claims? A good SOV makes that question easy to answer by walking the site. A GC also folds your SOV into their own application to the owner, so lines that map cleanly to their cost codes and to the contract's scope exhibits get approved faster; lines that don't generate emails.

The reviewer's other concern is balance. They know an SOV can be shaped to overpay early work, and they will push back on values that look inflated up front — more on that under common mistakes below.

How to break the contract into line items

Split by trade activity and phase — units of work that start, progress, and finish as recognizable pieces. Useful rules:

• One line per activity that a reviewer can verify independently: rough-in is a different line from trim, underground is a different line from overhead, floor 1 can be a different line from floor 2 on larger jobs.
• Split labor from material on big-ticket equipment (switchgear, fixtures, air handlers). Material can then be billed when it is delivered or properly stored, and labor when it is actually installed — without the line reading 80% complete while the gear sits in crates.
• Give early, real costs their own lines: mobilization, submittals and engineering, temporary services. These are legitimately front-of-job dollars, and naming them keeps them from being smuggled into other lines.
• Give closeout its own line: testing, commissioning, as-builts, O&M manuals, training. If closeout has no value, you have no billing lever left when only closeout remains — and the payer knows it.
• Work that finishes early deserves its own line, so it can hit 100% and stop generating questions while the rest of the job continues.

How granular to go

A workable target for a typical subcontract is 10 to 30 lines, with most lines somewhere around 2% to 10% of the contract amount. Too coarse — three lines for a six-figure scope — and every month becomes a negotiation over what 47% of a giant line means. Too fine — 200 lines tracking every room — and you will spend hours monthly estimating percentages nobody can verify, and small rounding disagreements multiply across every row. The test for each line: could the reviewer stand on site and form their own opinion of its percent complete? If yes, it is a good line. If a line would sit between 20% and 80% for six straight months, split it; if you would struggle to say how complete it is without a spreadsheet, merge it.

Match the contract's structure and numbering

If the contract or your accepted bid already has a breakdown — a scope exhibit, bid form line items, unit prices, alternates — mirror its structure and numbering in the SOV. Reviewers check the SOV against the contract, and matching numbering turns that check into a formality. Accepted alternates get their own lines. Unit-price work gets a line per unit item. Later, approved change orders are added as new numbered lines at the bottom rather than folded into existing values, so the original contract amount and the current contract amount stay separately visible.

Worked example: $150,000 electrical subcontract

Here is a reasonable SOV for a $150,000 electrical subcontract on a small commercial build-out. Note the labor/material splits on switchgear and fixtures, the separate early-cost and closeout lines, and values that sum exactly to the contract amount:

The total must equal the current contract amount to the penny — not roughly, not rounded. A $12 discrepancy will bounce the application just as surely as a $12,000 one, because the reviewer cannot certify against a breakdown that does not reconcile.

Once approved, each line rolls forward every month. Here is line 5 on application #3, after billing 40% across the first two applications and another 25% this period:

Common mistakes

Too coarse

A handful of huge lines feels efficient on day one and costs you every month after. Big lines are unverifiable, so the reviewer discounts your percentage to be safe — and a 5% haircut on a $60,000 line is $3,000 of cash flow, monthly, until the line closes.

Too fine

Hundreds of micro-lines look rigorous and bill terribly: more estimating work for you, more rows for the reviewer to question, and more places for the previous-column roll-forward to drift if anything is retyped by hand.

Front-loading

Front-loading means inflating the values of early activities (and deflating late ones) so cash arrives sooner than cost accrues. Be honest about this one: it is common, reviewers are trained to catch it, and it carries real risk. If values are materially unbalanced, you have effectively been paid for work not yet performed — if the job goes sideways mid-stream, you may owe the difference back, and knowingly certifying inflated values can breach the contract and, on some projects, worse. The legitimate version is simply naming your real early costs — mobilization, engineering, submittals, temporary power — as their own lines, as in the example above. Reasonable early weighting through visible line items survives review; padding hidden inside rough-in numbers eventually doesn't.

Leaving closeout at zero

If testing, as-builts, and O&M manuals carry no value, then late in the job you are working for free and the payer has no application-level reason to chase your paperwork. A modest closeout line keeps the last mile funded.

The SOV drives every application after it

Everything you bill for the rest of the project flows through this one document. Each month, each line's previous-applications figure must equal last month's completed-to-date figure; you add this period's work and any materials presently stored; the columns total across all lines; and those totals become the summary — work completed & stored to date, retainage, earned to date, less retainage, less amounts from previous applications, amount due this application, and the remaining balance. Change orders extend it, stored materials move through it, and the final application closes every line at 100%. A clean SOV in month one is the reason month nine takes twenty minutes instead of an afternoon.

Frequently asked questions

Does the schedule of values have to add up to the exact contract amount?

Yes, to the penny. The SOV is a breakdown of the current contract amount, not an estimate near it. If change orders have been approved, the SOV total must equal the original contract amount plus approved changes — with the change orders visible as their own lines.

Can I change the SOV after it's approved?

Only with the payer's agreement. Values are occasionally rebalanced by mutual consent when a breakdown proves unworkable, but reviewers are wary of mid-job reshuffling because it can disguise overbilling. Approved change orders are the normal way the SOV changes: they are appended as new lines, not blended into old ones.

Where do overhead and profit go — their own line?

Usually not. Standard practice is to spread overhead and profit proportionally across the work lines, so each line's value is its full selling price. A visible standalone profit line invites the payer to treat it as deferrable to the end of the job.

Do I have to split labor and material on every line?

No — only where it earns its keep, meaning lines with expensive equipment or materials that arrive well before installation. The split lets you bill delivered or properly stored material through the stored-materials column while labor bills on actual installation. For labor-dominated activities, one combined line is cleaner.

What if the GC rejects my proposed SOV?

It happens routinely on the first submission — usually for suspected front-loading, lines too coarse to verify, or a structure that doesn't match the contract breakdown. Ask exactly which lines are the problem, rebalance or split those, and resubmit. Settle it before application #1; disputing the SOV and a live payment at the same time is the worst version of the conversation.