Published September 26, 2025 . 0 min read

Picture this: it’s Friday, payroll is due, and the materials you ordered weeks ago just hit the jobsite. The vendor wants payment now. Meanwhile, you won’t even send your invoice until the 20th, and once it’s submitted, it could be another 45–60 days before cash actually comes in.

That gap is the reality of construction. And it’s why the way you build your Schedule of Values (SOV) matters. You can’t change payment terms, but you can structure the SOV to put more contract value on the early work you’re actually performing. Done correctly, this keeps billing aligned with progress, maintains owner trust, and helps protect your cash flow.

FAQs about the Schedule of Values in Construction

1) Build a Proportional, Budget-Anchored Schedule of Values

Map budget line items to each Schedule of Values line. That gives you a fair, defendable, calculated contract value per line based on its share of the total budget.

Example setup
Total budget (cost): $1,000,000
Fee/markup: 10%
Total contract value (CV): $1,100,000

Baseline SOV (Proportional to Budget)

2) Apply Modest, Ethical Front-Loading (Align to Actual Sequence)

Early scopes carry overhead (trailers, supervision), site setup, and initial concrete. With owner buy-in, shift a small portion of CV (e.g., 3–7% of total) from late scopes to early scopes, so billing better tracks the schedule of work without inflating progress.

Revised SOV (Shift ~5% of CV into Early Lines)

Transparency: Document your rationale (“early overhead + sequence”) and present it during SOV approval, keeping the shift moderate.

3) Test the Schedule of Values with Billing vs. Earned Revenue

Assumptions for January:

• Costs-to-date % (by cost): Mobilization 60%, Sitework 30%, Concrete 10%, others 0%
• Billed % (field progress): Mobilization 65%, Sitework 35%, Concrete 10%, others 0%

These small deltas are common (quantities/milestones vs. cost timing).

Earned Revenue = (Costs ÷ Budget) × Contract per line (Contract = Baseline CV)
Over/Under = Billing − Earned Revenue

Result: The baseline structure produces positive overbilling of $11,000 because billed progress outpaced cost-based progress on early items.

Note: Over/Under is typically computed on gross billing; retainage affects cash but not the Over/Under calculation.

Same percentages, but using the Revised CV contracts:

Result: With the revised (front-loaded) SOV, the same progress yields $13,000 in overbilling. That extra cushion helps you ride out the 45–60 day AR lag without inflating progress.

4) How to Create a Schedule of Values in Practice

Follow this workflow to build and manage a Schedule of Values that protects cash flow while keeping owners aligned:

1. Map budget → SOV lines:
   Every SOV line should trace back to specific cost codes. Avoid “orphan” costs with no matching line item.
2. Calculate baseline CV per line:
   Use % of total budget × total CV to create a proportional, auditable starting point.
3. Shift modest value to early lines:
   Weight mobilization/GC, sitework, and early concrete slightly higher—moving 3–7% of total CV from later scopes is typical.
4. Write down the rationale & get sign-off:
   Document the logic (sequence alignment, overhead load). Keep owners informed and obtain approval during SOV review.
5. Bill measured progress; recognize revenue from costs:
   Billing is based on field/quantity progress by SOV line.Earned Revenue = (Costs ÷ Budget) × Contract.Over/Underbilling each month = Billing − Earned Revenue.
6. Monitor monthly:
   Track per-line Costs vs. Billed, Earned Revenue, and Over/Under. Reconcile early if drift appears.

Bottom Line: How to Use the Schedule of Values to Protect Cash Flow

Contractors can’t control owner payment terms, but they can control how the Schedule of Values is structured. The steps are straightforward:

For construction CFOs and project managers, this method creates steady, defensible overbilling early in the job—enough to smooth out the lag between costs and payments without undermining trust. When the Schedule of Values is built correctly, it becomes a tool not just for billing, but for cash flow stability and project success.