Schedule of Values Setup & Monthly Billing Procedure

1. JOB LOOP 1 . 0 Project Qualification 2 . 0 Project Estimating 3 . 0 Project 4 . 0 Project Pricing Management 5 . 0 Post Project Review Schedule of Values Setup & Monthly Billing Procedure Project Manager Academy Section Six

2. Development of the Schedule of Values (1 of 4) • The Schedule of Values (SOV) is developed by the PM. • The goal of a properly set up SOV is to provide a monthly billing to the customer that allows Design Mechanical to maintain a positive cash flow throughout the duration of the project. • In order to properly set up an SOV the following steps are to be followed:

3. Development of the Schedule of Values (2 of 4) • Review the Schedule for activities. • Determine the billing activities requested / required by the Contractor and list them under Description of Work. • At a minimum there should be descriptions for General Conditions, Mobilization, BIM Coordination, Subcontractors, Material, and Labor. Expand as required. • Once the Descriptions are listed, apply the cost from the estimate. • In the SOV spreadsheet review and apply sales tax, labor burden, and mark-up as applicable. • The completed SOV spreadsheet is given to a supervisor for approval. This will be a working session, therefore PM’s are to bring the schedule and estimate for review. • Following is a an example of the SOV spreadsheet.

4. Schedule of Values Form (3 of 4) Example

5. Development of the Schedule of Values (4 of 4) • At the conclusion of the working SOV meeting, your supervisor will approve the SOV spreadsheet. At this time the PM will provide the monthly billing due date based on discussions with the General Contractor. • To maintain a monthly billing flow for all projects, you should maintain a calendar with all billing dates. • After the SOV spreadsheet is approved, the PM will transfer the Description of Work and Scheduled Value amounts to the SOV billing form.

6. Billing Process (1 of 6) The goal of “Monthly Billing” is to bill the Customer for all monthly costs incurred in order to maintain a positive cash flow throughout the duration of the project. The Billing Timeline is as follows: • Approximately 1st of the MonthAccounting will provide the Total Complete and Stored To Date information from the prior months billing. This information will be pasted in the Previous Application column for the current month’s billing. • 1 Week prior to Billing due date – Pencil Copy Review The PM will fill out the current months SOV projecting costs for the new billing period. The PM will sit down with his supervisor and review the pencil copy.

7. Billing Process (2 of 6) 3. 1 Week prior to Billing due date – Pencil Copy Review (Cont.) • The PM will bring the following information to the review meeting. • Current Job Costs • Committed Cost Report • Subcontractors Billings • Projected Costs • Current Margin • For assistance with running new/updated cost reports see JQ. • Supervisor and the PM will review the projected billing and Brian will approve. • 4 – 5 days before Billing due date - Submit for Approval In order to develop a relationship with the General Contractor, the PM should present the pencil copy of the billing in person to obtain approval. In some cases this will not be feasible and it will be necessary to email. Email only in PDF format, never send an excel spreadsheet. Accounting should be copied on all billing correspondence.

8. Billing Process (3 of 6) • 2 - 3 days before Billing due date – General Contractor Approval The General Contractor will notify the PM that the monthly billing is approved. • 2 - days before Billing due date – Submit to Accounting • The PM will email a copy of the approved SOV to Accounting 2 days prior to the billing due date, your supervisor is copied on this email. The 2 day requirement will be monitored by accounting and enforced by your supervisor. • Note: The 2 day requirement does not include weekends or holidays. PM’s are to allow for this in order to meet the billing due date as set by the General Contractor.

9. Billing Process (4 of 6) • Due Date - Billing Submission Accounting will process the approved SOV from the PM, including the necessary Invoice, Lien Releases and any other required billing documents. Ladonna will distribute the billing package to the General Contractor in the required format (Textura, mail, e-mail, etc.) The PM and supervisor are to be copied on this distribution. • Due Date – Billing Revisions When billing revisions are required by the GC / Owner, the PM will provide notification to Accounting. It is the PM’s responsibility to review the requested modifications with the supervisor and, once approved, revise the SOV as necessary. Following the same steps as in Item 6 above, the SOV should be given to accounting who will modify the other billing documents and resubmit to the GC / Owner. The PM and his supervisor are again to be copied on this distribution.

10. Billing Process (5 of 6) Responsibilities: • The “SOV portion” of the billing process (both the creation of the SOV and the monthly update and approvals of the SOV amounts) is the responsibility of the PM/Operations. • The “Invoicing portion” of the billing process (invoices, releases, distribution to GC) is the responsibility of Accounting. • Remember – Accurate, Timely Billings are Critical for Cash Flow and one of the most important responsibilities of a Project Manager.

11. Summary (6 of 6) In Conclusion: It is the PM’s responsibility to control these 4 activities: • Setup the original SOV that allows for “positive cash flow” • Prepare the Monthly SOV ensuring the following costs are covered: • Current Job Costs • Committed Costs • Subcontractor Costs • Projected Costs • Margin • Obtain Monthly “pencil copy” SOV approval from the GC / Owner • Submit the Monthly SOV timely to Accounting. The PM is required to control the “Timeline”. Each project is distinctive and will require different approval timeframes.

12. Take Aways • ___________________________________ • ___________________________________ • ___________________________________ • ___________________________________ • ___________________________________