Schedule of values often align with milestone payments and define the financial terms of the contract, facilitating billing and payment processes based on the progress of work. The 'SOV' breaks down the total contract sum into individual work items, assigning a value to each based on its contribution to the overall project.
Key aspects and functions of a Schedule of Values include:
- Detailed Breakdown: The SOV lists all work elements or components that together constitute the construction project, providing a detailed breakdown of the costs associated with each part. This can include major milestones, labor, materials, equipment, and services.
- Progress Monitoring: By associating each component of the work with a specific value, the SOV helps in monitoring the progress of the project. It allows for a straightforward comparison between the planned progress (as per the SOV) and the actual progress on the construction site.
- Progress Payment Facilitation: The SOV is used to facilitate payment requests or invoices from the contractor. As work progresses, the contractor submits payment applications based on the percentage of completion for each line item in the SOV. This structured approach helps ensure that payments are made accurately against work completed.
- Change Management: Changes in the scope of work during the project can be managed and documented through adjustments to the SOV. Additions, deletions, or modifications to the scope are reflected in updates to the values assigned in the schedule.
- Transparency and Communication: The SOV provides transparency in financial dealings and serves as a communication tool between the contractor and the project owner or financial stakeholders, clarifying how the total project cost is allocated and spent.
- Dispute Resolution: In the event of disputes or discrepancies over payments or the scope of work, the SOV serves as a foundational document that outlines agreed-upon values and distributions, aiding in the resolution process.
The creation of a Schedule of Values is usually done during the project's initial stages, often as part of the contract negotiation and setup. It requires careful planning and detailed knowledge of the project scope, costs, and construction processes.
