What are the common pitfalls and challenges of schedule of values and schedule of rates?

2 Why use SOV and SOR?

Both SOV and SOR have their advantages and disadvantages, depending on the type, size, and complexity of the project. Generally, SOV is more suitable for fixed-price contracts, where the scope and specifications are well-defined and agreed upon. It provides more certainty and transparency for both the contractor and the owner, and reduces the risk of disputes and claims. SOR is more suitable for cost-plus contracts, where the scope and specifications are uncertain or subject to change. It allows more flexibility and adaptability for the contractor and the owner, and reflects the actual work done and materials used.

3 How to create SOV and SOR?

Creating SOV and SOR requires careful planning, analysis, and communication. To ensure success, you should review the contract documents to understand the scope, specifications, and payment terms. Then, divide the work into manageable and measurable units or categories, such as phases, tasks, activities, or deliverables. Assign values or rates to each unit or category based on the contract price or cost estimate and make sure they are realistic, accurate, and consistent. Align the SOV or SOR with the project schedule and progress reports and update them as needed. Lastly, communicate the SOV or SOR with the owner and other stakeholders to obtain their approval and feedback.

4 What are the common pitfalls of SOV and SOR?

SOV and SOR can present certain challenges and risks if not managed properly. For instance, over- or under-valuing the work items or units can lead to cash flow problems, disputes, or claims. Failing to account for changes in scope, specifications, quantities, or quality may result in discrepancies, errors, or delays. Vague or ambiguous terms, definitions, or measurements can cause confusion, misunderstanding, or disagreement. Additionally, neglecting to document and track the progress, performance, and variations of the work may have a negative effect on the accuracy, validity, and transparency of the payments.

5 How to avoid or overcome the pitfalls of SOV and SOR?

To avoid or overcome the pitfalls of SOV and SOR, you should apply best practices and strategies such as using clear and specific language, formats, and standards that follow industry norms, guidelines, and codes of practice. Additionally, reliable and verifiable data sources, methods, and tools should be used to automate, simplify, and streamline the process. Contingency, allowance, or adjustment factors should also be taken into account in order to anticipate and account for potential changes, risks, or uncertainties that may affect the work or the costs. Lastly, regular and effective communication and collaboration should be established with all relevant parties to promptly resolve any issues or conflicts.