Constructing a Schedule of Values for AIA G703 Progress Billing

Why this matters

The Schedule of Values (SOV) is the line-item allocation of your prime subcontract amount that drives every progress payment for the life of the job. Build it well and you front-load cash, fund mobilization, and amortize general conditions across the project. Build it badly and you under-bill in the early months, over-bill nothing because the architect will not approve it, and run negative cash through the job. The SOV is approved once and rebuilt with friction; the time to invest is at submittal, not at the third pay application.

Where the SOV fits in the AIA forms

• G702 Application and Certificate for Payment: the cover sheet summarizing the current pay app, retainage, and prior payments
• G703 Continuation Sheet: the line-item detail showing each SOV line, scheduled value, prior period work, this period work, materials stored, total complete to date, percent complete, balance to finish, and retainage held
• G701 Change Order: the form by which an SOV line is added or revised through executed changes

The architect or owner's representative reviews and either approves, modifies, or rejects the SOV before the first pay app. After that, the SOV is fixed except by executed change order.

Twelve principles for a strong SOV

1. Match the SOV to the cost code structure your CFO uses

If your job costing system tracks labor and material separately, the SOV should reflect that, not a single all-in number. This makes the schedule audit-defensible and gives the project manager line-level cost-to-complete data.

2. Mobilization is a real line, not buried overhead

Allocate first-month mobilization (site setup, temporary power, dumpster delivery, initial PPE, safety orientation labor) to a discrete Mobilization line. Most prime contracts cap this line at 5 percent of the subcontract value. Take the cap.

3. Bond and insurance premiums are pre-paid expenses, billed early

Performance and payment bond premiums are paid at contract execution. Bill 100 percent of the bond premium line on the first pay app, with the surety invoice as backup. Same logic for the project-specific insurance certificate cost if separately tracked.

4. Stored materials require separate line treatment

Long-lead items (switchgear, custom fabricated piping, lighting packages, specialty HVAC equipment) often need to be paid to the supplier before installation. The G703 has a column for materials presently stored. Pre-negotiate with the GC that off-site storage at a bonded warehouse with proper insurance, transfer of title, and an executed Stored Materials Agreement is billable. Stored materials are paid net of retainage in most contracts.

5. Split labor and material on each work scope line

A single line for Plumbing Rough-In is opaque. Split into Plumbing Rough-In Labor and Plumbing Rough-In Material. The architect sees defensible math, and the field crew can self-report percent complete on labor while material is binary (delivered or not).

6. Front-load within ethical limits

The architect and owner know the front-load game. Mobilization at cap, bonds and insurance at 100 percent, and stored materials early are legitimate. Inflating the rough-in line to recover overhead is not, and it gets caught at the third or fourth pay app when the percent complete review starts.

7. Reserve a punch-list and closeout line

Allocate 2 to 3 percent of the subcontract to closeout work (final cleaning, as-builts, O&M manuals, training, attic stock, warranty walk). This is the last money to bill, and if it is buried inside scope lines, the GC will withhold retainage release on the entire job until closeout is complete.

8. General conditions as an explicit line

If the prime subcontract includes site superintendent labor, project management labor, jobsite trailer, jobsite vehicles, temporary utilities, or other general conditions, break them out as a single GC line billed monthly in equal increments over the project duration. This produces predictable cash flow and decouples from scope-line productivity.

9. Submit a draft SOV before the first pay app cycle

Most prime subcontracts give the architect 10 to 14 days to review the SOV. Submit a draft at contract execution, not on the day of the first pay app. The architect can negotiate line-by-line in a low-pressure conversation rather than reject the entire first pay app.

10. Tie change orders to new SOV lines, not amended existing lines

When a Change Order is executed, add a new SOV line on the G703 with the CO number as the line identifier. Do not modify the original scope line. This keeps the audit trail clean and prevents argument over the percent complete of a mid-flight scope change.

11. Retainage is line-level on the G703

The G703 column for retainage held is calculated per line. Most contracts hold retainage at 5 to 10 percent depending on state law and project size. Some states cap retainage on public works at 5 percent and require release of retainage on completed line items (line-item retainage release). Know your state statute and the contract language; they sometimes conflict, and the more protective controls.

12. Maintain a cost-to-complete forecast against the SOV

Each month, recalculate forecasted cost-to-complete for each SOV line. When forecasted cost exceeds the SOV scheduled value, you have a cost over-run. Surface it in the monthly project review, not in the post-mortem.

Common SOV structure for a commercial trade subcontract

Submission packet

• AIA G702 cover sheet
• AIA G703 continuation sheet
• Conditional and unconditional lien waivers from prior period
• Stored materials documentation (invoices, photos, bill of sale, insurance certificate)
• Updated schedule and percent complete photos
• Executed change orders since last pay app

References

• AIA G702 Application and Certificate for Payment
• AIA G703 Continuation Sheet
• AIA A201 General Conditions of the Contract for Construction
• ConsensusDocs 293 Schedule of Values
• California Public Contract Code 7107 (retainage release on public works)
• Federal Acquisition Regulation 52.232-5 (Payments under Fixed-Price Construction Contracts)