What is a schedule of values in construction? A guide

Contractors need a structured way to tie billing to project progress. A schedule of values (SOV) provides it.

SOVs help construction companies track cash flow accurately and support compliant revenue recognition throughout the entire project lifecycle. Typically, general contractors prepare and submit the SOV to the project owner, while subcontractors prepare their own and present it to the GC. Owners, lenders, and finance teams routinely review these documents to confirm progress before they approve pay applications.

Here’s what a SOV is in construction and how to make sure it actually supports project job costing and contract billing. This guide breaks down everything construction companies and finance leaders need to know about preparing and managing SOVs efficiently.

What is a construction schedule of values (SOV)?

A construction SOV is a document that breaks down the total contract value into an itemized list of individual work items and cost categories. It’s primarily used to assist with project billing. It also plays an important role in project-based accounting because it lets contractors report and bill for work as the project progresses rather than at closeout.

The AIA G703 (Continuation Sheet) is the industry standard and most common format for an SOV, acting as the line-item breakdown. It’s used alongside the AIA G702 pay application form, which functions as the main invoice cover page. 

Every item in an SOV reflects a portion of the total contract value and project scope. Each item carries a scheduled dollar value, and progress against it is tracked as a percentage of completion, forming the framework for measuring progress and billing.

Why a schedule of values is important in construction

The goal of an SOV is to make sure the total contract amount is billed correctly throughout the project lifecycle. It’s not an internal budget document, which would instead break down overhead, labor, and material costs to guide cost management for the contractor. In contrast, the SOV connects to the contractual scope agreement and structures how the project is billed to the owner.

An SOV in construction is critical because it allows teams to:

• Align billing with completed work to support cash flow: The SOV allows contractors to invoice owners based on actual project progress by breaking the contract down into billable components. This means billing can happen throughout the project lifecycle instead of leaving the contractor to float costs until a single payment at completion.
• Create an auditable record of contract value, billings, and retainage: The SOV improves audit-readiness by recording original contract value along with approved change orders, completed work, and payment history. This directly supports WIP reporting and compliance during external reviews.
• Track the contract impact of approved change orders: Rather than altering the existing line items in the SOV, change orders (once approved) become additional line items. This reflects scope changes and value increases more accurately.
• Improve clarity and confidence during pay application review: With a well-structured SOV, owners and lenders can verify completed work. Itemized costs and progress percentages reduce disputes and allow for faster pay application review and approval.

Key components of a schedule of values

While some construction companies use customized formats, most structure their SOVs based on the AIA G703 sheet, which is a SOV construction example (or template) with standardized columns so owners, GCs, and finance teams can easily track progress and payments.

Regardless of format, every SOV should include the following components:

Line item descriptions

Every line item must be tied to a specific cost category or scope of work, such as excavation or electrical work.

Scheduled value

Each line item’s scheduled value is the assigned dollar amount for that item. Across the SOV, these values must add up to 100% of the total contract value.

Work completed to date

This reflects the progress of work completed for each line item, which appears as either a percentage or dollar amount.

Work completed: Previous applications

Work completed outlines the value of work that’s already been approved and billed in previous pay applications.

Work completed: This period

This breaks down the value of work completed since the last pay application, which tracks progress for the current billing period.

Materials presently stored

SOVs should include the cost for materials that the contractor has purchased and delivered to the jobsite, but not installed. Billing for stored materials typically requires proof of purchase and storage, usually through invoices and other documentation.

Remaining balance

The running balance outlines the portion of each line item that’s unpaid, helping contractors and stakeholders track outstanding work and value.

Retainage

This is the portion of each line item value withheld until the construction project reaches certain milestones or finally ends. Retainage , usually 5 to 10% of each progress payment, is withheld until the project hits defined milestones or reaches completion. It gives the owner leverage to make sure the work is finished and any defects are corrected.

How to create a schedule of values in construction

Effective SOVs require careful planning and ongoing alignment between parties. That means contractors have to go beyond listing items and consider the broader function of the document. 

Here’s how to create an SOV in construction:

• Define the project scope and total contract value: Start by establishing the project itself including scope and value (e.g., GC-awarded $6 million contract for a commercial office building).
• Break down the contract into line items: Divide the project into itemized cost categories (e.g., site work, excavation, framing).
• Assign dollar values to each line item: Allocate a dollar amount for each line item, making sure they equal 100% of the total contract value.
• Submit the SOV for approval before the first pay application: Formally submit the SOV to stakeholders for review before billing starts so they can either initiate revisions or approve it.
• Track progress by percentage of completion: Measure progress for each line item using a structured method like cost-to-cost or milestone-based tracking, ensuring billing and revenue recognition are consistent.
• Submit a pay application based on completed work: As the project progresses, combine AIA G703 (line item breakdown) and AIA G702 (summary of totals) into the pay application package and submit it to the owner for the current pay period.
• Adjust the SOV for change orders: Add new line items when and if change orders are approved to update the SOV according to the current project scope and cost.

4 best practices for creating and managing a schedule of values

To create and manage SOVs accurately, implement the following best practices:

1. Map SOV line items to internal cost codes

SOVs and cost budgets serve distinct purposes. Instead of trying to make them identical, which reduces flexibility and creates unnecessary limitations, prioritize mapping between the two. This helps reconcile billings with actual costs.

2. Make sure values add up to the total contract

The sum of all line items needs to add up to the exact total contract value. Imbalances can delay payments and result in compliance issues.

3. Reconcile each pay application against job cost data

Cross-reference each pay application with actual costs, including labor and materials. This core process prevents poor job costing and maintains accurate WIP reports.

4. Coordinate with owners, architects, and finance teams

Contractors, owners, architects, and finance teams need to align on SOV structure. Effective coordination prevents disputes down the line and ensures consistency in billing cycles.

Common mistakes to avoid with a schedule of values

SOVs present challenges, even for experienced construction teams. There are a few common pitfalls that can impact financial accuracy when it comes to SOVs:

Front-loading line items

Assigning too-high values to work during mobilization or site prep can raise red flags for owners during early review. Some contractors attempt to inflate values for early-phase line items to speed up cash flow, but this can cause owners to reject the schedule, which ultimately delays approval and pushes back the first pay application.

Overly vague or broad line items

Detail is key to creating a practical SOV. Line items without proper descriptions make it difficult to track real progress or reconcile budgets with actual cost data.

Misaligned values with actual work scope

When line item values don’t reflect real costs, it can lead to discrepancies between payments received and costs incurred, which disrupt cash flow.

Infrequent updates

Failing to routinely review and update SOVs to reflect pay applications leads to misalignment between progress and actual site conditions. If the owner or architect approves a change order, the SOV needs to reflect that immediately.

Incorrect retainage calculations

Since retainage is a critical safeguarding measure for owners, miscalculations can seriously damage the relationship between parties and impact firm reputation. It can also distort payment applications, which creates cash flow problems and ultimately puts a strain on financing. In some cases, errors can even be viewed as a breach of contract.

Manage schedule of values with better cost visibility

SOV accuracy relies on quality cost data. That’s why construction finance leaders are turning away from slow, error-prone manual reconciliation and generic payroll solutions, and toward construction-specific software. 

An end-to-end construction management platform like Miter helps contractors access actual labor costs at the project level, including burdens like taxes, overtime, and fringe benefits. Miter automatically assigns every cost to the correct job and cost code, which provides a data-driven baseline for creating accurate SOVs.

Miter’s spend management also captures non-labor spend like reimbursements and per diems in real-time, making sure transactions are properly coded and routed for approval. Construction teams can even use Miter to manage onboarding, time tracking, and payroll compliance alongside expense management.

Learn how Miter’s Job Costing software can strengthen SOV management and streamline billing for construction companies.