How an owner should read a schedule of values

The schedule of values is the list of line items, each with a dollar value, that adds up to the contract sum. It arrives before the first pay application and becomes the G703 continuation sheet that every subsequent application is built on. The contractor proposes it. The architect reviews it. The owner usually glances at it.

That glance is a missed chance. The schedule of values is the only document that connects the GMP to the monthly bill, and it is the place where billing patterns are set for the life of the project.

First reading: does it match the GMP

The schedule of values should reconcile to the GMP amendment line by line, or at least package by package. If the amendment shows mechanical at $4.1 million and the schedule of values shows mechanical at $4.4 million with something else reduced to compensate, ask why. Moving value between lines is sometimes legitimate, for example when a package is bought with a different scope split than the estimate assumed. It can also be a way to bill early on work that will be done first.

Check that fee, general conditions and contingency appear as their own lines, or understand how they are spread if they do not. A contingency that is invisible on the schedule of values cannot be tracked on the pay application. Under most AIA A133 based agreements the owner is entitled to a schedule of values in a form that allows the cost of the work to be tracked. Check your contract for what form it requires.

Second reading: is it front loaded

Front loading means assigning more value to early activities than they are worth, so that early pay applications bill a larger share of the contract than the work completed. Mobilization, site work and foundations are the usual candidates. A mobilization line worth 3 percent of a $25 million project is $750,000 and may be billed in month one.

The test is simple. For each early line, ask whether the value assigned reflects the cost of that work. A fictional $25 million office renovation might show mobilization at $750,000, general conditions at $2.2 million spread evenly, and demolition at $900,000. If the contractor's actual mobilization cost is closer to $250,000, the other $500,000 is being billed ahead of the work it belongs to. That is not always improper, but it should be visible to the owner and should be a deliberate decision.

Monthly reading: percent complete against reality

Once the project is running, each pay application shows the percent complete for every line. The owner's reading should compare those percentages to what is visible on site and to the schedule. A line at 60 percent billed when the work looks 40 percent done is a flag. A line at 100 percent billed while punch list items remain is a different flag.

Over billing on one line and under billing on another can net to a correct total while still misrepresenting where the project is. The line by line view is what catches it. The total on the G702 hides it.

Watching the lines that move

Change orders add or alter lines. Each executed change order should appear on the schedule of values as its own line or as an adjustment to an existing one, with its value traceable back to the change order. A schedule of values where change order value has been folded into base lines without a trail is one where the owner can no longer separate the original GMP from the changes.

The schedule of values is not the owner's ledger

The schedule of values is the contractor's document. It tells the owner what the contractor is billing. It does not tell the owner what the contingency balance is, which change orders are pending, or what the anticipated final cost looks like. Those come from the owner's own record, built from the baseline and updated each month.

Costwitness reconciles the schedule of values to the frozen GMP baseline and flags lines where billed percent moves faster than the project, leaving the owner to decide whether a flag means a problem or just a fast subcontractor. The reading still belongs to a person who has walked the site.

In the product

GMP baseline, Monthly owner report, Change order register. Free tool: Pre-GMP Readiness Score, Schedule Risk versus Float.

Keep reading

Earlier: General conditions in a GMP contract: what they cover and how they move. Later: Setting the GMP at design development versus construction documents. All articles on gmp contracts.