A schedule of rates agreement, commonly abbreviated to SORA, is a type of procurement method used in construction projects. It provides a pre-agreed set of rates that the contractor will be paid for different tasks or work elements. This agreement is beneficial for both the client and the contractor as it ensures that there is no dispute over the cost of work done.
The Schedule of Rates Agreement is a document that outlines the rates at which the contractor will be paid for specific tasks. This agreement is prepared before the commencement of work, and it is usually based on a standard set of rates. The schedule of rates will typically include the labor cost, materials cost, and overheads for each task.
The advantage of using a SORA is that it provides a transparent cost structure for both the client and contractor. The client knows exactly what they will be paying for each task, and the contractor can accurately estimate their costs and plan their work accordingly. This agreement also provides a mechanism for the resolution of disputes, as the rates are agreed upon in advance, and any deviations from this agreement can be easily identified and resolved.
One of the primary benefits of a SORA is that it helps to mitigate the risk of cost escalation. With a pre-agreed set of rates, there is less chance of the cost of work increasing unexpectedly. This is particularly important in large construction projects where the cost of work can quickly spiral out of control if not carefully managed.
Another advantage of a SORA is that it allows for better control of the project`s budget. The client can accurately forecast the cost of the entire project, and the contractor can plan their work more effectively, knowing exactly what they will be paid for each task.
In conclusion, the Schedule of Rates Agreement is a valuable tool in construction project management. It provides transparency and certainty for both the client and the contractor, and it helps to mitigate the risk of cost escalation. If you are involved in a construction project, it is worth considering the use of a SORA to ensure that your project is completed on time and within budget.