Does the SOP reduction apply to the whole quantity or only the excess?

Only to the quantity inside each band. Up to 125% of the agreement quantity is paid at the full rate, the portion between 125% and 140% at 98%, and the portion above 140% at 96%. Crossing a threshold does not reduce the rate on quantity already executed below it.

What is a minor-value item under SOP 2018?

An item whose value in the agreement is less than 1% of the total agreement value. For those items the thresholds move from 125% and 140% out to 200% and 300%, so a much larger overrun is paid at the full rate.

Are scheduled and non-scheduled items calculated the same way?

No. Scheduled (SOR) items are compared at schedule-group level and the reduction is then allocated across the items in that group in proportion. Non-scheduled items are compared and reduced individually, because they belong to no group.

Can a variation order avoid the rate reduction?

A sanctioned variation changes the agreement quantity itself, so the comparison is made against the revised figure. That is why a genuine change in scope should be put through a variation or deviation statement rather than allowed to run over as an unapproved excess.

SOP 2018 rate reduction: what happens when you execute more than the agreement quantity

7 min read · Last reviewed 7 August 2026

You executed more of an item than the agreement provided for. The work was needed, the engineer approved it, and now the bill comes back with a rate lower than the one you signed. That is the SOP 2018 rate reduction, and it is not an error.

It catches contractors out because the reduction is not applied to the excess alone in the way most people expect, and because scheduled and non-scheduled items are treated differently. This guide sets out the rule, the exception, and the arithmetic.

The rule in one line

Execute up to 125% of the agreement quantity and you are paid the full agreement rate. Beyond that, the rate falls in two steps.

Standard items
Quantity executed	Rate paid	Reduction
Up to 125% of agreement	100% of agreement rate	None
125% to 140%	98% of agreement rate	2%
Above 140%	96% of agreement rate	4%

The minor-value exception

An item whose agreement value is less than 1% of the total agreement value is treated as a minor item, and the thresholds move a long way out. This matters more than it sounds: on a large contract, a great many items are individually minor, and a quantity that would trigger a cut on a major item passes untouched on a small one.

Minor-value items (below 1% of total agreement value)
Quantity executed	Rate paid	Reduction
Up to 200% of agreement	100% of agreement rate	None
200% to 300%	98% of agreement rate	2%
Above 300%	96% of agreement rate	4%

Scheduled and non-scheduled items are not treated alike

This is where most disputes begin. For scheduled items — the SOR groups, A1, A2, B1 and so on — the comparison is made at schedule-group level, not item by item. The group total executed is compared against the group total in the agreement, the reduction is worked out on the group, and only then is it allocated back across the items in proportion.

Non-scheduled items have no group to belong to. Each NS item is compared against its own agreement quantity and reduced on its own.

A worked example

Note what the arithmetic does and does not do. The reduction applies only to the quantity falling inside each band — not to the whole quantity once a threshold is crossed. A contractor who assumes the 4% applies to all 1,500 m³ will under-claim by a wide margin.

Earthwork item, agreement quantity 1,000 m³ at ₹450/m³

Agreement value of the item        1,000 × 450 = ₹4,50,000
Executed quantity                  1,500 m³  (150% of agreement)

Slab 1 — up to 125%   1,250 m³ × ₹450.00 (100%) = ₹5,62,500
Slab 2 — 125% to 140%   150 m³ × ₹441.00 (98%)  =   ₹66,150
Slab 3 — above 140%     100 m³ × ₹432.00 (96%)  =   ₹43,200
                                                   ──────────
Payable                                            ₹6,71,850

At the full rate the 1,500 m³ would have paid      ₹6,75,000
Reduction                                             ₹3,150

What to do before the quantity runs over

Watch the percentage as you go, not at final bill stage. Once the work is executed the reduction is fixed; the time to act is before.
Where the excess is genuinely a change in scope rather than a measurement variation, ask for a variation order or a deviation statement. Quantity sanctioned through a variation is not the same as quantity that simply overran.
Keep the group in view for SOR items. An overrun that looks alarming on one item may be absorbed within its schedule group.
For a genuinely new item outside the schedule, seek a rate approval rather than billing it under the nearest existing item at a reduced rate.

Common questions

Does the SOP reduction apply to the whole quantity or only the excess?: Only to the quantity inside each band. Up to 125% of the agreement quantity is paid at the full rate, the portion between 125% and 140% at 98%, and the portion above 140% at 96%. Crossing a threshold does not reduce the rate on quantity already executed below it.
What is a minor-value item under SOP 2018?: An item whose value in the agreement is less than 1% of the total agreement value. For those items the thresholds move from 125% and 140% out to 200% and 300%, so a much larger overrun is paid at the full rate.
Are scheduled and non-scheduled items calculated the same way?: No. Scheduled (SOR) items are compared at schedule-group level and the reduction is then allocated across the items in that group in proportion. Non-scheduled items are compared and reduced individually, because they belong to no group.
Can a variation order avoid the rate reduction?: A sanctioned variation changes the agreement quantity itself, so the comparison is made against the revised figure. That is why a genuine change in scope should be put through a variation or deviation statement rather than allowed to run over as an unapproved excess.

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