How do you manage changes and variations in schedule of values vs schedule of rates?

2 Why changes and variations occur

Changes and variations are inevitable in any construction project. They can arise from various sources, such as client requests, design errors, unforeseen site conditions, regulatory requirements, or market fluctuations. Changes and variations can affect the scope, quality, quantity, or time of the work, and therefore the cost and revenue of the project.

3 How to manage changes and variations in SOV

When there are changes and variations in the project that affect the SOV, you need to update the SOV accordingly. This may involve adding, deleting, or modifying work items or components, and adjusting their percentages or amounts. You also need to communicate the changes and variations to the client and the contractor, and obtain their approval or agreement. You should document the changes and variations in a change order or a variation order, and attach them to the original contract. You should also update your payment applications based on the revised SOV.

4 How to manage changes and variations in SOR

When there are changes and variations in the project that affect the SOR, you need to review the SOR and verify its validity and applicability. This may involve checking the accuracy, completeness, and currency of the unit prices, and adjusting them if necessary. You also need to calculate the impact of the changes and variations on the quantity or measurement of the work or resources, and update the SOR accordingly. You should document the changes and variations in a change order or a variation order, and attach them to the original contract. You should also update your cost estimates and invoices based on the revised SOR.

5 How to reconcile SOV and SOR

Sometimes, you may have to use both SOV and SOR in a project, depending on the type of contract, the level of detail, or the method of payment. For example, you may have a lump sum contract with an SOV, but also use an SOR for provisional or contingency items. In this case, you need to reconcile the SOV and SOR to ensure consistency and accuracy. This may involve cross-referencing, mapping, or aligning the work items or components in the SOV with the types of work or resources in the SOR, and vice versa. You should also ensure that the total contract value in the SOV matches the total cost estimate in the SOR.

6 How to avoid disputes and errors

Changes and variations can lead to disputes and errors if not managed properly, so it is important to follow some best practices. Establish clear criteria and procedures for identifying, notifying, approving, and documenting changes and variations. Additionally, maintain regular communication with the client and contractor about the changes and variations and their implications. Utilize reliable sources of data and information for the SOV and SOR, such as industry standards, market rates, or historical records. Utilize appropriate tools and software for creating, updating, and tracking the SOV and SOR. Finally, review and audit the SOV and SOR periodically before submitting them to ensure accuracy and completeness.