Schedule of Rates (SOR)

What is a Schedule of Rates?

A schedule of rates (SOR) is a pricing document that lists individual items of work, goods, or services with their associated unit rates. In Australian government procurement, SORs are used in contracts where the exact quantities or volumes are not known in advance. The agency pays the supplier based on the actual quantities delivered, multiplied by the agreed rates.

How Does a Schedule of Rates Work?

The SOR mechanism operates as follows:

• The agency defines the items — each line item represents a discrete task, product, or service unit (e.g., “Electrician — per hour”, “Concrete supply — per cubic metre”, “Software developer — per day”)
• Tenderers price each item — suppliers enter their rate for each line item in the schedule
• Payment is based on actuals — the supplier is paid for the quantities actually delivered or consumed, at the agreed rates
• Rates are typically fixed for the contract period, with provisions for annual escalation in longer-term contracts

When is a Schedule of Rates Used?

SOR-based pricing is common for:

• Maintenance and facilities management — where the volume of reactive work is unpredictable
• Construction and civil works — where quantities may vary from initial estimates
• Professional services — where engagement duration depends on project needs
• Panel Arrangements and Framework Agreements — where multiple suppliers are appointed and work is allocated as needed
• Period Contracts — ongoing supply arrangements priced per unit

SOR vs Lump Sum Pricing

The key difference from a Fixed Price Contract is risk allocation:

• SOR — the agency bears the quantity risk (they pay for what is actually needed), while the supplier bears the rate risk (their cost per unit is fixed)
• Lump sum — the supplier bears both quantity and rate risk within a fixed total price

Tips for Tenderers

• Price every item carefully — agencies evaluate SOR submissions by applying estimated quantities to your rates, so unbalanced pricing may disadvantage you.
• Consider front-loading risks — do not underprice items hoping to make margins elsewhere in the schedule.
• Check for provisional sums — some items may have agency-specified allowances rather than tenderer-priced rates.
• Understand the escalation mechanism — for multi-year contracts, know how and when rates can be adjusted.