Negotiate good terms upfront and avoid playing games with your schedule of values (SOV).

1. The different views
   1. As subcontractors, we want to get cash positive as soon as possible
   2. As Prime contractors, (reviewing sub SOVs) we want to make sure subs do not get ahead of us and we have enough money in reserve to get the contract completed – (Owner SOVs) for our SOVs to the Owner our goal is the same as the subcontractors, we want to get cash positive as soon as possible
   3. As Owners, we want to defer as much of the payment as possible and not let the project get ahead of us on the value
2. Front Loading is a slippery slope
   1. Many people front load to some extent – mobilization is often exaggerated
   2. Some assign higher OH and Profit to line items completed early in the job
   3. Others go so far as moving money from one line to another
      1. Had a client get burned when a line item that they shifted got tripled – cost them over $60K
   4. Skewed SOVs can make progress payment approval difficult
3. Create fair SOVs and everyone can win
   1. To get money early add mobilization but also add in demobilization to give Owners some comfort
      1. Negotiate these terms upfront when asked to lower your price
   2. Make true representations of each line item
   3. Consider stored material payment clauses to help with cash flow

Key Questions:

1. How do you create your SOVs?

2. Do you front load?

3. How can you improve the process?

Take-Action Items:

1. Establish a fair schedule of values

2. Negotiate terms to help with cash flow