When the scope changes daily and work is moving fast, pricing becomes a moving target. Lump-sum contractors don’t always cut it, especially on long-term maintenance projects.
That’s where an SOR (schedule of rates) comes in.
With SOR, every task has a set price. Zero needs to re-negotiate or issue a change order every time something shifts.
However, SOR only works if the jobsite data is clean. Without knowing how many units were completed, who was on-site, and what scope the work fell under, managers/PMs set themselves up for disputes.
This guide breaks down how to use SOR in construction the right way and how SmartBarrel’s field-tracked data keeps the billing accurate.
What Is SOR in Construction?
A Schedule of Rates (SOR) is a pricing framework where work is billed based on predefined unit rates rather than a fixed lump sum.
Each activity like laying conduit, pouring concrete, or patching drywall has a set rate per unit (e.g., per foot, per cubic yard, per sheet).
This approach allows contractors and clients to keep jobs moving without stopping to renegotiate every time the scope changes. Instead of pricing the entire project upfront, you measure completed units, apply the rate, and submit an invoice.
SORs are common in:
- Long-term service or maintenance contracts
- Jobs with unclear or evolving scope
- Projects where quantity variations are expected (e.g., civil, MEP, infrastructure)
But like any contract model, SOR only works if it’s built on clarity and backed by clean documentation.
We’ll break down how to use it and when it works best in the next section:
Take Back Control of Your Time Keeping
Why Use a Schedule of Rates in Construction Projects?
SOR is one of the cleanest and most practical pricing methods in construction, especially when scope shifts or unit output drives cost.
Here are five reasons top contractors and construction managers lean on SOR to keep jobs moving and margins intact.
1. Keeps Projects Moving When Scope Isn’t Finalized
In fast-paced jobs, managers don’t always have time to finalize every spec before breaking ground. Renovation projects, emergency work, and public infrastructure often have unknowns that emerge only once crews are on site.
A Schedule of Rates lets construction managers/supers proceed without waiting on re-estimates or approvals. Each completed unit of work can be billed based on the pre-agreed SOR rate, reducing costly downtime and administrative burden.
2. Reduces Change Order Friction
One of the biggest friction points in a construction project is the change order process. Every shift in scope requires re-estimating, client approval, and formal documentation.
That’s slow and expensive.
SOR simplifies this. Suppose the client wants to add work mid-project, like trenching an extra 60 feet or replacing an additional 20 light fixtures; no need to price from scratch. Managers can apply the pre-agreed rate from the SOR and document the quantity.
3. Enables Accurate Billing on High-Volume, Repetitive Work
Some construction activities are hard to scope fully upfront, especially when the work is repetitive and volume-based.
Think about:
- Trenching
- Excavation
- Framing units in modular builds
- Installing fixtures in a commercial rollout
These jobs scale fast, and trying to price every possible volume shift through a fixed bid leads to either bloated estimates or eaten costs. SOR eliminates that issue.
Start with applying a per-unit rate, track what’s been done, and bill only what’s completed. Clients like it because it’s transparent. Contractors like it because it protects the bottom line.
4. Creates Transparent Cost Tracking for Clients
Smart owners and GCs always want a complete breakdown. With SOR, every cost is tied to a measurable unit of work. That makes it easier to justify each invoice and avoid billing disputes.
Rather than a lump sum for “electrical scope,” the invoice shows:
- 300 LF of conduit @ 1
- 120 outlets installed @ 2
- 40 fixtures mounted @ 3
This level of clarity builds trust. It also gives clients internal reporting data they can pass up the chain, which makes them more likely to stick.
5. Simplifies Long-Term, Service-Based, or On-Call Work
Municipalities, facility managers, and commercial portfolios often operate on a reactive basis, where the scope is defined by urgent or recurring needs.
A Schedule of Rates contract structure supports these service-based engagements by enabling immediate mobilization and billing.
No waiting for scope definition or pricing approval. Crews track what was completed, apply the agreed rate, and submit clean documentation.
How to Implement SOR in Construction Contracts
For project managers and construction executives, a Schedule of Rates is only as effective as the system behind it.
Success comes from integrating those rates into the contract structure, daily operations, and billing workflows without gaps.
Below are four methods managers use to embed SOR into their contracts.
1. Define SOR Terms with Precision in the Contract
An SOR is a contractual framework, and like any framework, it needs rules.
Each rate listed should specify the exact unit of measure, such as linear foot, cubic yard, fixture, or sheet. Vague rate lines open the door to disputes down the road.
The contract should also include context: when rates apply, what’s excluded, and what documentation will be required to validate them.
In most cases, the SOR should live in its own exhibit or appendix, with version control clauses to cover rate updates.
2. Use SmartBarrel to Manage Rate Schedules
Paper-based SORs, or even scattered spreadsheets, create lag and field access problems. When unit rates drive billing, speed, and accuracy are non-negotiable.
That’s why high-performing firms move their rate schedules into centralized, digital systems.
SmartBarrel integrates labor tracking and cost codes with rate-based billing.
Rates are structured cleanly, tied to cost codes, and accessible from both the field and office.
When a crew logs work, supervisors can reference the live SOR. If a rate changes due to escalation or contract amendment, the update is synced across the team.
No binders, no outdated files.
3. Link SOR to Daily Logs, Field Tickets, and Scope Packages
The rate schedule isn’t valuable on its own. It only becomes meaningful when it’s tied to actual work in the field.
Every completed task billed against the SOR should be:
- Logged daily by foremen or supers
- Supported with units completed and location reference
- Backed by photos or supervisor sign-off when required
Tie each cost code in the project management system to an SOR item. That allows PMs and finance teams to generate reports by scope or unit type (not just generic labor hours).
4. Establish Controls to Prevent SOR Misuse
The strength of an SOR is its flexibility. The risk is the same.
Without oversight, rates can be misapplied, inflated, or duplicated across multiple scopes. That’s a reputation risk.
Controls start with the supervisor’s sign-off.
Before any unit is billed, someone in the chain of command should verify it against the scope, drawings, and the agreed SOR. For larger quantities, many firms introduce thresholds that trigger PM review.
Take Back Control of Your Time Keeping
When to Use SOR vs. Lump Sum Pricing in Construction?
There’s no universal “best” pricing model.
Both SOR and lump sum contracts serve different purposes. Understanding where each one shines helps PMs and decision-makers minimize risk while keeping billing clean and timely.
Factor | Schedule of Rates (SOR) | Lump Sum |
Best For | Reactive work, ongoing maintenance, and scope-uncertain jobs | Well-defined builds with minimal changes |
Scope Certainty | Low to moderate (scope evolves over time) | High (scope is fixed before kickoff) |
Change Orders | Reduced rates already cover units of work | Frequent—any deviation requires pricing/approval |
Billing Method | Based on units completed at predefined rates | Based on milestones or total contract value |
Documentation Load | Higher. Must track quantities, labor, and scope daily | Lower. Focuses on overall deliverables |
Client Transparency | High. Clear line-item billing | Moderate. Client sees lump numbers unless itemized |
Risk Exposure | Shared. Cost rises with volume, but rates stay fixed | Higher on the contractor. Underpricing eats margin |
Ideal For | Civil works, remediation, facility services, and insurance claims | New builds, tenant improvements, design-bid-build jobs |
How Does Time and Productivity Tracking Support SOR Projects?
On high-velocity job sites, the pressure to move fast makes it easy for things to slip, resulting in missing units or delayed approvals.
That’s where time and productivity tracking change the game.
When work is tied to verified field data, rate-based billing becomes faster and harder to dispute.
SmartBarrel supports SOR-based construction, and here’s how it can change the traditional SOR:
Verifying Labor Tied to Rate Items
In a SOR framework, labor is billed by a unit of work.
But that doesn’t mean time disappears from the equation. Supervisors still need to know who completed what, how long it took, and whether the crew size was appropriate for the output billed.
SmartBarrel uses biometric facial verification to track every crew member’s clock-in and clock-out. Each time an entry is automatically logged, the person, timestamp, and project location are recorded.
In case of billing disputes, labor logs provide irrefutable evidence that work was performed, by whom, and under which crew.
Linking Cost Codes to Units Completed
Time data on its own isn’t enough. It needs to be paired with task-specific context.
SmartBarrel tags time entries with cost codes that mirror the structure of the SOR. This means every hour logged can be tied to a scope of work and, by extension, to a unit rate.
This linkage removes ambiguity. PMs don’t have to cross-check multiple systems to match time data with completed work; it’s already structured.
Daily Reports That Confirm Work Done
Too many SOR disputes happen weeks after the fact when field memory fades and documentation gets thin.
SmartBarrel generates daily reports that capture the pulse of the site in real-time.
Each report includes:
- Crew lists and hours worked
- Weather conditions
- Notes on completed scopes
- Attachments: photos, field notes, or incident logs
Wrap-Up:
SOR gives contractors pricing flexibility without losing control, but only when the process behind it is airtight.
What separates a profitable SOR contract from a chaotic one isn’t the rate sheet, it’s how well the work is documented. Labor needs to be tied to output. Tasks need to align with cost codes.
And every line item billed must be backed by field-verified proof.
SmartBarrel gives contractors the jobsite-level tracking they need to bill faster, defend every unit, and protect their margins.
Take Back Control of Your Time Keeping
FAQs
Can a Schedule of Rates be used in a lump sum contract?
Yes. Many contractors blend both pricing models.
The base build is priced as a lump sum, while extras, changes, or scope creep are handled through an attached SOR. This hybrid structure gives flexibility without opening the door to uncontrolled billing.
Who typically defines the SOR rate items?
The contractor usually proposes the SOR, often during the preconstruction phase.
It’s then reviewed and negotiated with the client or GC. Rates must be clear, measurable, and tied to defined units. Otherwise, they create more confusion than clarity.
What happens if the scope is misaligned with SOR line items?
Misalignment causes billing delays and disputes.
To avoid this, field logs and cost codes should directly mirror the SOR structure.
SmartBarrel helps ensure each tracked task matches a billable line, eliminating ambiguity in the documentation.
Is SOR better for short-term or long-term projects?
SOR is ideal for long-term, scope-variable work like maintenance contracts or civil projects, where unit quantities fluctuate.
It can work on short jobs too, but only if the deliverables are clearly tracked and measured in real time.
How often should SOR rates be updated?
It depends on contract terms, but many firms review rates quarterly or after major material/labor cost shifts.
Escalation clauses can also be written into adjust pricing based on market indexes, protecting both the client and contractor from volatility.
