“Overbilling” could actually lead to slower payments because of disputes on the SOV from the property owner. While it may feel tempting to overstate costs early in the project to accelerate your payments on the project, this is highly discouraged. It’s important to note that change orders will certainly occur throughout the project, and the SOV will be updated to reflect these new additions. In order to keep cash flow consistent, it’s vital that the correct amounts and dates are clearly stated and agreed upon in the initial contract. This enables you to receive your payments in a timely manner so you have enough cash flow to complete your work on schedule. When you submit a payment application, the owner or architect will use the Schedule of Values to review the work performed and either dispute the application or release payment.Īssuming the SOV was agreed upon as part of the contract, billing discrepancies or disputes should be minimal, if they occur at all. And, as any contractor knows all too well, when you’re running on tight margins and even tighter timelines, cash flow is everything. The timing of your progress payments - a subcontractor’s cash flow during a project - hinges on how well you put the Schedule of Values together. Why is a schedule of values important to cash flow? Contractors use the document to plan and monitor their cash flow, send invoices at the designated times, and submit the document as proof of their work with each progress payment application. The SOV allows the project owner or architect to efficiently track the percentage of the project that’s been completed while knowing exactly how much they’ll need to pay contractors throughout the project. It provides much-needed transparency and the oversight necessary to ensure a project stays on track, contractors get paid in a timely manner, and that no items fall through the cracks. How is an SOV used on a construction project?Ī Schedule of Values is often used on large construction projects in order to oversee progress and effectively manage contractor payment applications. Then, all parties agree upon the details of the SOV as part of the signed contract before construction begins. Prior to beginning a construction project, the prime general contractor or sometimes a second-tier subcontractor (who’s hired directly by the general contractor) creates the Schedule of Values by assigning a dollar amount to every item of work they need to do, and in what phase of the project, in order to get the job done. It’s essentially a comprehensive cost breakdown of the entire contract that property owners or construction managers use to verify the work performed, and to release payment. Worried about the timing of project payments? Billd can help.Ī Schedule of Values is a document used by key stakeholders on a construction project, from general contractors and subcontractors, to property owners and construction managers, that lists out the value and cost of every billable work item on a step-by-step project timeline, and the percentage of the work that’s been completed to date.Why is a schedule of values important to cash flow?.How is an SOV used on a construction project?.Financial Ratios in Construction: Why Subs Should Be Familiar With Them.Connected Construction 101: Why It’s the Future of the Industry.Why Are Low Bids Chosen? An Honest Assessment of Hard Bid Projects.Why The Price of Construction Materials Will Go Up and What To Do About It.Q&A: Supplier Communication Expectations During COVID-19.4 Easy Ways to Reduce Lead Times in the Construction Industry.
CONSTRUCTION DRAW SCHEDULE PDF HOW TO
The Subcontractor’s Strategy to Exceed $10M in Revenue: Part 3 - Perfect Your External Presence.
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