How to Prepare a Schedule of Rates
A schedule of rates (SoR) is prepared by listing every item of work the contract may involve, agreeing a unit of measure for each — per square metre, lineal metre, hour or item — and building a rate for that unit from first principles: labour, material, plant, on-costs and margin, added together rather than guessed. Instead of one lump-sum price, the client pays for the quantity of each item actually measured, multiplied by your agreed rate. This makes a schedule the right tool wherever final quantities are not known up front — maintenance and term contracts, panel work, and contracts with a variations allowance — because every extra is priced against the same rates rather than renegotiated each time.
Key takeaways
- A schedule of rates prices work by the unit — per square metre, lineal metre, hour or item — so the client pays for quantities actually measured, not a single fixed lump sum.
- It suits contracts where quantities are not fixed up front — maintenance and term contracts, panel and government work, and jobs with a defined allowance for variations.
- Every rate should be built from first principles — labour, material, plant, on-costs and margin — not copied from memory or a rough guess, so you can defend the number if it is queried.
- Loading some rates and starving others to look competitive on the summary — an unbalanced schedule — is a real commercial risk if actual quantities differ from the estimate.
- My Trade Hub applies your editable rates library to a structured schedule, so every rate is built the same way and stays consistent with the rates you use to price every other job.
What a schedule of rates is
A schedule of rates is a pricing document that lists agreed unit rates for individual items of work — labour, plant and materials — instead of one lump sum for the whole job. Each line names an item, sets the unit it is measured in, and states the rate for that unit; payment then follows the quantity of each item actually measured or completed.
The schedule usually carries an estimated quantity next to each item so both parties have a sense of likely contract value, but it is the rate that is fixed by agreement — final payment moves with the real quantity of work done, not the estimate.
- Item number and description — what the work actually is
- Unit of measure — m, m2, m3, hour, item, or whatever suits the work
- The agreed rate for that unit, usually stated excluding GST
- An estimated or target quantity, used for contract value only — not a guarantee
When to use a schedule of rates instead of a lump sum
A schedule of rates is the right tool whenever the exact scope or quantity of work cannot be pinned down before the contract starts, because a lump sum forces you to commit to one total price against quantities you do not yet know with confidence.
Maintenance and term contracts are the clearest example — a council cannot know in advance exactly how many metres of fencing will need repair over a year, so the work is priced per unit and paid on what is actually called up. Panel and government arrangements often use the same structure to call off multiple jobs against one agreed schedule.
- Maintenance and term contracts — ongoing work with quantities that vary month to month
- Panel and government arrangements — one set of rates used to call off many separate jobs
- Contracts with a defined variations allowance — extra work priced against the same schedule rather than negotiated fresh
- Repeat work across similar sites — the same items recur, so a schedule saves re-pricing each site from scratch
Building each rate from first principles
Every rate in the schedule should be built up, not guessed — starting from the labour, material and plant it actually takes to complete one unit of the item, then adding on-costs and margin on top, so you end up with a rate you can defend if it is ever queried by the client or another estimator.
Labour is the hours a unit takes at your full all-up hourly cost — not the bare award wage. Material is the unit cost supplied, plus wastage. Plant is the hire or running cost apportioned to the unit. On-costs cover superannuation, insurance and overheads. Margin is added last, as a deliberate decision, not whatever is left once everything else is guessed.
- Labour — hours per unit at your full all-up hourly cost, including on-costs
- Material — unit cost plus an allowance for wastage and offcuts
- Plant — hire rate or running cost apportioned to the unit
- On-costs — superannuation, insurance, workers compensation and overheads
- Margin — your profit, added as a deliberate figure, not a leftover
| Item | Description | Unit | Rate (ex GST) | Example qty | Example total |
|---|---|---|---|---|---|
| 1 | Supply and install stormwater pipe, 100mm | m | $85.00 | 40 | $3,400.00 |
| 2 | Excavate trench in normal ground | m3 | $45.00 | 25 | $1,125.00 |
| 3 | Remove and dispose of excavated spoil | m3 | $38.00 | 25 | $950.00 |
| 4 | Reinstate disturbed turf area | m2 | $22.00 | 60 | $1,320.00 |
How payment works: measured quantities multiplied by your rates
Under a schedule of rates, payment is calculated by measuring the quantity of each item actually completed and multiplying it by the agreed rate for that item — the total contract value moves up or down with the real quantity, rather than being fixed at the outset as it would be under a lump sum.
This means progress claims and final accounts are built directly from the schedule: whoever is measuring the work — you, the client or an independent quantity surveyor — records the completed quantity against each item, and that measurement, not the original estimate, is what gets paid.
Keep your own measurement records
Because payment follows measured quantity, keep your own record of completed quantities as the job progresses — site measurements, photos and delivery dockets — rather than relying only on the client’s measurement at claim time. A schedule of rates protects you fairly only if you can support your own numbers.
The risk of unbalanced rates and low-quantity items
An unbalanced schedule of rates is one where some rates are loaded above their true cost and others dropped below it, usually to make the headline total look competitive while shifting real profit onto items expected to be over-measured. It is a real commercial risk — if quantities move the other way, the loaded items are under-called and the starved items lose money.
Low-quantity items carry a related risk. An item with only a handful of estimated units still has to absorb its fair share of setup and mobilisation cost, so pricing it low because the total value looks small will not cover what those one or two units actually cost to complete.
Watch low-quantity items
Items with small estimated quantities carry fixed costs — mobilisation, setup, a minimum call-out — that get diluted across very few units. If you rate them too low to keep the tender summary looking competitive, a single measured unit will not cover your actual cost. Price low-quantity items on real cost, not on how the total looks on the page.
Keeping your schedule of rates consistent with your rates library
A schedule of rates is only as reliable as the rates behind it, which is why it should draw on the same rates library you use to price every other job — the same labour, material and plant build-ups, applied consistently — rather than being built fresh, and inconsistently, each time a schedule is requested.
My Trade Hub gives you an editable rates library for your own labour, material and plant costs, applied to a structured schedule so every line uses the same on-cost and margin logic, no matter which job it feeds into. Automated quantity takeoff from uploaded plans measures the quantities against those rates, so the schedule assembles from figures you already trust.
It is free to create a My Trade Hub account and use the marketplace to post jobs, receive quotes and browse tenders. Preparing a priced schedule of rates, quantity takeoff and full tender preparation sit on the Starter, Scale and Professional plans — see the pricing page for details. Because rates and quantities share one source, teams using My Trade Hub prepare a priced tender up to 60–75% faster than doing it manually.
- Rates you build once are reused across every schedule and every job
- Automated quantity takeoff applies directly to your own rates library
- Every schedule line keeps the same labour, material, plant, on-cost and margin logic
- No lock-in contracts, tiered plans in AUD
Common mistakes when preparing a schedule of rates
Most problems with a schedule of rates are not dramatic errors — they are small inconsistencies that surface later, once quantities move away from the original estimate or a variation needs pricing.
Checking the schedule against these before it goes out avoids most of the disputes that come up once a contract is underway.
- Guessing rates instead of building them up from labour, material, plant, on-costs and margin
- Letting the schedule drift out of step with the rates library used to price other jobs
- Not being clear with the client that quantities in the schedule are estimates, not guarantees
- Ignoring GST treatment on rates and totals
- Under-pricing low-quantity items to make the headline total look competitive
Frequently asked questions
What is a schedule of rates in construction?
A schedule of rates is a pricing document that lists agreed unit rates for individual items of work — labour, plant and materials — rather than one lump sum for the whole job. Payment follows the quantity of each item actually measured or completed, multiplied by its agreed rate.
What is the difference between a schedule of rates and a lump sum contract?
A lump sum fixes one total price for a defined scope up front. A schedule of rates instead fixes the rate per unit of work, with the final payment moving with the quantity actually measured — which suits contracts where quantities are not known with confidence before work starts.
How do you build up a rate for a schedule of rates?
Add together the labour hours at your full all-up hourly cost, the material cost including wastage, the plant cost apportioned to that unit, on-costs such as superannuation and insurance, and your margin. Building it up this way, rather than guessing, gives you a rate you can defend if it is queried.
What is an unbalanced rate in a schedule of rates?
An unbalanced rate is one deliberately priced above or below its true cost — loading items expected to be over-measured and starving others — to make the overall total look competitive. It is a real commercial risk if actual quantities differ from the original estimate.
Do schedule of rates contracts include GST?
Rates are usually stated excluding GST, with GST applied to the claimed or invoiced total, but this should always be confirmed in the contract wording rather than assumed. Being clear about GST treatment on every rate avoids disputes at claim time.
Who measures the quantities for payment under a schedule of rates?
Either party, or an independent quantity surveyor, depending on what the contract specifies — but because payment follows measured quantity, it pays to keep your own site measurements, photos and delivery dockets so you can support your own numbers at claim time.
How do I keep my schedule of rates consistent across jobs?
Build every schedule from the same rates library — the same labour, material and plant build-ups — rather than re-deriving rates fresh for each contract. My Trade Hub applies your editable rates library to a structured schedule so every rate is built the same way, job after job.
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