Schedule of values: Overview, definition, and example

What is a schedule of values?

A schedule of values is a detailed document that breaks down the total cost of a project or contract into specific components or line items. It is commonly used in construction and other project-based industries to outline the individual values assigned to various tasks, materials, or services that make up the entire project. The schedule of values provides a transparent and organized way to track progress, payments, and work completed, helping both the client and contractor manage the project’s budget and timeline.

For example, in a construction contract, a schedule of values would list each part of the construction process (e.g., foundation, framing, electrical work, plumbing) with a corresponding cost.

Why is a schedule of values important?

A schedule of values is important because it provides clarity and transparency in managing project costs and payments. It helps both the contractor and the client keep track of progress and determine how much has been completed versus how much has been paid. It also serves as a basis for progress payments, allowing the contractor to request payment based on the completion of specific milestones or work segments.

For businesses, having a clear schedule of values ensures effective budgeting, cash flow management, and the proper allocation of resources. For clients, it allows for better oversight and accountability during the project, making it easier to monitor the use of funds.

Understanding schedule of values through an example

Imagine a construction company hired to build a new office building. The contractor creates a schedule of values for the project, which includes the following line items:

• Site preparation: $50,000
• Foundation work: $150,000
• Framing: $200,000
• Roofing: $75,000
• Electrical work: $100,000

As the project progresses, the contractor submits payment requests based on the completion of each task. For example, when the foundation work is completed, the contractor might request a payment of $150,000, based on the value assigned to that portion of the project.

In another example, a company commissioning the construction of a new warehouse requires the contractor to submit a schedule of values that details costs for materials, labor, and overhead. The contractor then uses this breakdown to request partial payments as work is completed, providing the client with visibility into the project's financial status.

An example of a schedule of values clause

Here’s how a schedule of values clause might appear in a construction contract:

Conclusion

A schedule of values is a critical tool in project management, especially in industries like construction, to break down project costs into specific, manageable parts. It ensures transparency, effective budget management, and provides a structured way to track progress and make payments based on milestones or completed work.

For contractors, it allows for organized payment requests and resource allocation, while clients benefit from better oversight and control over project expenditures. A well-defined schedule of values can help both parties manage expectations and keep the project on track financially.

Frequently asked questions (FAQs)