What is a schedule of rates contract?
A schedule of rates (SOR) contract is an agreement built around a pre-priced list of work items — the schedule — agreed before any individual job is identified. Each line in the schedule describes a defined unit of work (supply and install a door furniture set, patch and paint a wall per square metre, replace a tap set) with a fixed rate against it.
When work is needed, nobody negotiates a price from scratch. Instead, a scope of works is assembled by selecting the relevant line items and quantities from the schedule. The commercial value of the job is simply the sum of those lines.
This structure exists for one reason: it suits programmes of work where the volume, timing and mix of jobs can't be known up front. A property owner with thousands of dwellings knows work will be needed continuously, but not which properties, which trades, or in what quantities. The SOR locks in pricing and terms once, then lets individual work orders flow through it for years.
How does a schedule of rates differ from a lump-sum contract?
A lump-sum contract fixes a single price for a fully defined scope: the contractor carries the quantity risk, and anything outside the agreed scope becomes a variation. It works well when the scope can be fully documented before work starts — a new build, a defined renovation, a fit-out.
A schedule of rates flips that. Rates are fixed, but quantities float:
- Price certainty per unit, not per project. The client knows exactly what each item of work costs, but the total spend depends on what each property actually needs.
- No re-tendering per job. Each work order is priced administratively from the schedule, which keeps small, repetitive jobs commercially viable.
- Measurement matters more. Because payment follows measured quantities against scheduled rates, the scope document — which lines, what quantities, what evidence — is the commercial record. Get the scope wrong and the payment is wrong.
- Disputes shift from price to scope. Under lump sum, arguments centre on what was included in the price. Under SOR, they centre on whether a line item was correctly applied, measured and justified.
Neither model is "better" — they allocate risk differently. SOR trades away total-cost certainty in exchange for speed and administrative efficiency across high volumes of small jobs.
Where are SOR contracts used in Western Australia?
In WA, schedule of rates contracts dominate wherever a large asset owner needs continuous maintenance across a portfolio:
- Government housing maintenance. Public housing portfolios are maintained by head maintenance contractors operating under long-term SOR contracts, covering everything from responsive repairs to vacancy make-good — the restoration of a property between one tenancy ending and the next beginning.
- Insurance repair panels. Builders on insurer panels typically work to agreed rate schedules, so claim scopes are priced against pre-agreed line items rather than free quotes.
- Facilities management and local government. Councils, utilities and FM providers use SOR arrangements for cyclical and reactive works across distributed assets.
The vacancy make-good (or "void property") workflow is a particularly demanding example. Every day a property sits empty waiting for a scope is a day of lost housing and lost rent — so scoping speed and accuracy directly drive how quickly a void can be turned around.
How does scoping work under an SOR maintenance contract?
On a typical vacancy make-good, the contractor usually starts with a baseline scope — a standard or predicted set of SOR line items for that property type. The real condition of the property is only known once an assessor inspects it. The scoping task is then a structured comparison:
- Inspect the property and capture its actual condition room by room — measurements, damage, wear, missing items.
- Compare inspection findings against the baseline scope, line by line.
- Classify every line. A rigorous delta process sorts each baseline line into keep (still required as scoped), remove (not required), or modify (required, but at a different quantity or specification) — and adds new lines for work the baseline never anticipated.
- Issue the revised scope with its supporting delta report, so the client can see exactly what changed from baseline and why.
That keep / remove / modify / add classification is what makes an SOR scope auditable. The client isn't asked to trust a bottom-line number — they can trace every departure from baseline to an inspection observation.
In practice: Connected Projects runs this exact workflow as a service. Our SOR vacancy scoping engine classifies every baseline line against inspection data and produces a four-sheet delta workbook (Summary, Revised Scope, Delta Report, Room Notes) plus a narrative Word report with change tables — expert-reviewed before every delivery, with a typical 24-hour inspection-to-scope turnaround. It currently runs in live pilots with housing-sector organisations.
What goes wrong on SOR contracts?
Most SOR pain traces back to the scope document rather than the rates:
- Mis-mapped line items. The schedule may have several near-identical lines (different sizes, finishes, or access conditions). Picking the wrong one compounds across hundreds of work orders.
- Unsupported quantities. If measured quantities aren't backed by captured evidence — dimensions, photos, room notes — payment claims become arguable. Under the Building and Construction Industry (Security of Payment) Act 2021 (WA), a contractor's payment claim is far easier to support when every line traces to a recorded observation.
- Slow turnaround. On void property programmes, scoping is on the critical path: a slow scope holds the property vacant and delays every downstream trade.
- No audit trail. When a scope can't show why it departs from baseline, every review becomes a renegotiation. The delta record is what turns a debate into a document check.
- Inconsistent assessors. Two assessors scoping the same property should reach materially the same scope. Without a structured capture-and-classify process, they often don't.
How is technology changing SOR scoping?
The traditional workflow — clipboard inspection, photos in a camera roll, scope typed up days later — is giving way to structured digital capture and automated comparison:
- Virtual inspection capture converts a property walkthrough into structured, measurable room data instead of loose photos.
- Offline-capable assessor apps let field teams work in properties without reception, then sync automatically when back online — important across regional WA portfolios.
- Automated baseline-vs-inspection comparison does the line-by-line keep / remove / modify / add classification in software, so the assessor reviews and confirms rather than rebuilding the scope by hand.
- Human-in-the-loop review keeps an expert estimator approving every scope before it's delivered, with a tracked revision loop when changes are requested.
The result is the same scope a good assessor would build, produced faster, with every line carrying its own evidence trail. If you want to see the document structure this produces, our vacancy make-good scope of works template shows the section-by-section layout, and the vacancy scoping pilot programme page walks through a live deployment end to end.