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Contracts Administration Tutorial

Topics in this Tutorial

The following tutorial outlines the basic steps for a generic contract. ProjectCentre will work with your organisation to configure your individual contracts administration workflow, in accordance with your contract, during project set up.

The Basic Steps:

  1. Create a budget
  2. Create Contract for each line item in Budget
  3. Discuss Contract Variations using Correspondence
  4. Raise a Contract Variation
  5. Respond to Contract Variation
  6. Approve a Contract Variation
  7. Submit Claims
  8. Approve Claim, Schedule Payments and issue Progress Payment Certificate

LegendPMG - Project Manager, MCT - Contractor

Budget Managment

  1. Create a budget
  2. Understanding the Budget Document
  3. Budget Variations
  4. Budget Transfers
  5. Forecasts
  6. Withdrawing a CA document

Contract Administration Terminology Guide

  1. Contract Administration Glossary
Create a Budget - Contract Administration

Create a budget

Setting up a new budget

To set up a new budget


Click here to view ProjectCentre's Creating Budgets Training Video




  1. Select Contracts Admin from the Module Menu.
  2. Select Budget from the sub-menu.

  3. The Budget Register will display in the list frame.
  4. Click New
  5. A new budget will display.


  6. Action the Budget to the Contracts Administrator/Project Manager and to anyone who needs access the Budget.

    Note: Only those users addressed on this budget will have access to this budget. No one else can access or even see it listed on the budget register.

  7. Leave the Status as "DRAFT". This allows you to save and edit the budget until complete.  We recommend the budget be kept in Draft status until you are ready to issue it.
  8. Give the budget a title which will display on the budget register.  
  9. Add line items into the fields. Each line item on the budget represents a contract (or a contingency if applicable).
  10. The Item ID is automatically assigned.
  11. Add a Description for the item. Press [Tab] to go to the next field.
  12. Enter a Code (if applicable).  This is optional and designed to be a reference field to correspond with a code from an external Cost Accounting System (such as Jobpac,Coins or JD Edwards). Press [Tab] to go to the Budget field.
  13. Enter the dollar amount budgeted for this item. Click .
  14. To enter a budget line item from a different budget, Click .
    Note: This will insert the total budget line item from a different projects budget.

    Navigating Budget Entry Process:



    To insert a row for a new line item: Select the line you directly above the line you would like to create and click
    To indent a line item to create a sub-category: Select the line and click the keys to indent.  
    To un-indent a line item: Select the line and click the key to un-indent.
    To delete a line item: Select it and click  

    Note: When you indent items, the main item's amount is overwritten by the sum of the indented items.

  15. Click Submit .
    Note: your DRAFT budget is saved in the Budget Register and under DRAFTS on your Hotlist.
  16. Review your budget. The budgeted amounts are shown in the Original Budget column. Click Respond to add items or make any changes.
  17. Click Submit.
  18. You must Issue the budget before you can add  Contract to each item on the budget.
    Note: You may issue a budget in either an open or closed status. If a budget is issued in an open status - it may be edited. Once the budget is issued in a closed status, the original items cannot be changed.

    Notes:
    1. Each line item represents a "cost centre" to which you will link your contract sum.
    2. The Budget Proposed/Approved columns are only used when submitting Budget Variations or Budget Transfers.
    3. The only columns that will be populated when the budget is created is the original and the current.

    To make changes to your budget

    1. Click here to learn how to create a Budget Variance
    2. Click here to learn how to create a Budget Transfer
    3. Click here to learn how to create a Budget Forecast
    4. Click here to understand your budget Your Budget
Create a Contract - Contract Admin

Create a contract

Create a Contract

To set up a new contract


Contract Training Video




    Each Budget Line item relates to one contract only.

    1. Retrieve the Budget.
      1. Click Budget from the Module Menu.
      2. Click the Budget sub-menu
      3. The Budget Register displays in the list frame. 
      4. Select the correct budget to display in the detail frame.



    2. Click on an Item ID Hyperlink to bring up the Budget History.

      NOTE: You must select an ItemID at the lowest line item level.  If there are sub-categories to a line item, you need to select at the lowest sub-category level.




    3. The  Budget History will open.
    4. Click Contract.


    5. A new Contract form will open.


    6. Action the contract to the person awarded the contract and anyone who needs to access.
    7. Leave the Status as DRAFT until you are finished entering the details.
    8. Enter a Title for the contract.
    9. Select the correct Budget from the dropdown list.
    10. Select the correct Line Item to link this contract to from the dropdown list.
    11. Add the contract details.  Add a Description and press [Tab] to go to the next field. 
    12. Optionally, add a Code reference for you own accounting system. 
    13. Press [Tab] and add the Quantity and the Rate

      The amount will update automatically on the budget once you submit the contract in the Contract Amount column.

    14. Note: You can add the contract amounts as a breakdown using a section header and indented sub-items.  The total will be calculated automatically and updated on your budget.  The steps for adding the contract amounts is the same as adding the budget line items, except you can add the amount by Quantity and Rate, for example if you wish to specify an hourly rate. 

    15. Select the correct Retention check box for this contract. Enter the details about the retentions on this contract.   If there is no retention, tick None.
    16. Fill in the appropriate percentages for the Bank Guarantee in the Security Box for your records.   
    17. Fill in the appropriate percentages for Retention this contract in the Security Box.  The Retention percentages will automatically calculate on Claim.  

      Note: An example retention for a contract is: Retention Fund on Original Contract Sum for 10% per Claim to a Max of 5% of the Contract Value with 2.5% released at Practical Completion and 2.5% released at Final Certificate.

    18. The Completion box to record the dates of completion and mark when Retention can be released.

      Note: When the Release Retention box is ticked, the contractor is able to claim against retention.

    19. Click Submit when you are done.
    20. Review the contract and Edit it if you need to add items or make any changes.


    21. Click Issue to send the Contract to the person addressed.
    22. The contract sum is automatically updated on your budget and the contract is now added to the Budget History.

      Note: The Contract button is removed from the toolbar because you can only add one contract per line item.


Using a Correspondence to request a Contract Variation - Contract Admin

Correspondence request for a contract variation

Correspondence requests

To discuss potential Contract Variation via a Correspondence, create a correspondence to discuss a contract variation.  
  1. Click the   Correspondence on the Module Menu. Choose the document type to use.
  2. Click New.  Add the details to the form. 
  3. Action to the appropriate party.
  4. Change the Status to INITIATED/OPEN.
  5. Click Submit.
Contract Variations - Contract Admin

Contract variations

Contract Variations

The Contract Variation Process

Click on the underlined links to jump to a section.

  1. Submit a Contract Variation
  2. Respond to Contract Variation
  3. Approve a Contract Variation

 

Submit a Contract Variation - Project Manager

This process assumes the variation has been negotiated and the variation is ready to be submitted for approval. If the variation is still in negotiation but the work must start immediately, you may use a Variation on Account.

    1. Retrieve the Budget.
      1. Click Budget from the Module Menu.
      2. Click the Budget sub-menu
      3. The Budget Register displays in the list frame. 
      4. Select the correct budget to display in the detail frame.



    2. Click on an ItemID of the relevant contract.



    3. The Budget History will open.
    4. Click  Contract Variation.


    5. A new Contract Variation will open. 

      Note: You may need to select the correct type of variation if you have more than one.


    6. Action this variation to the contractor or consultant.
    7. Choose a Status. "DRAFT" allows you to save and edit your contract variation. Otherwise choose an open status, e.g. PROPOSED or PENDING APPROVAL.
    8. Add a descriptive Title.
    9. Click  Submit.

      This variation will be reflected on the budget in the Variations Pending column until approved.

    10. To reference a related document, e.g. an RFI, Click Associate and select the appropriate related document(s).
    11. If you initially saved the variation in a Draft status, you may Edit as needed or  Issue to submit it.

Respond to a Contract Variation - Contractor


Variation Requests
Training for the Contractor on how to reply or submit a price variation.




The contractor will complete the Contract Variation form in accordance with the scope of work required.  You may also need to attach any relevant documentation to do with the variation.
  1. View the Contract Variation by accessing it from your Notification List or Contract Variation Register.
    To access via the Contract Variation Register:
    1. Click on the Contract Admin from the Module Menu.
    2. Click on the Contract Variation Sub-menu.
    3. Select the type of Contract Variation you are seeking. The Contract Variation Register will display in the List Frame.
    4. Select the Contract Variation from the Register.


  2. Click Respond
  3. Action the Variation back to the Project Manager
  4. If applicable, upload any relevant documents that affect the price, scope of the work, and the current  approved program/schedule.
  5. Enter, Edit or Review the Description, Qty, and Rate of the variation.
  6. Click  Submit

Approve the Contract Variation - Project Manager

  1. View the Contract Variation (submitted to you for approval by the Contractor) by accessing it from your Notification List or Contract Variation Register.
  2. Click Respond.
  3. If you are ready to approve the Contract Variation, choose the APPROVED status. 
  4. If you are not ready to approve: Choose a status to reflect (e.g. REJECTED or RESUBMIT) and readdress the Contract Variation back to the Contractor. 
  5. Click  Submit.


Contract Variations on the Budget

The Contract Approved amount is automatically updated on your budget.



The Contract Variation is added to the Budget History.



Submitting Claims and Issuing Payment Certificates - Contract Admin

Claims and Payment Certificates

Submitting Claims

Create a Claim - Contractor


Click here to view ProjectCentre's Submitting Claims Training Video




  1. Claims are created and submitted from the Contract. To View the Contract:
    1. Click Contracts Admin from the Module Menu
    2. Click the Contracts sub-menu
    3. Click on the Contract Register to display it in the list frame. 

  2. Select the Contact and bring it up in the detail screen.
  3. Click Create Claim.




  4. A Claim will open. 


  5. Action the claim to the Project Manager or applicable person. 

    Note: the addressing of this Document Type can be automated via a Distribution Rule so that it is pre-addressed to the appropriate person.

  6. Choose a SUBMITTED Status.
  7. Change the Title to represent this Claim
  8. Select if you are attaching a Statutory Declaration.
  9. You can now add your "claimed for" amount.  Click on the line item so it is highlighted.  Then either add the percentage of the work done for the billing period in the %Completed field or a dollar amount in the Value Completed field.  As soon as you enter the percentage the Value Completed is calculated automatically or visa versa.
  10. Click the next line item or variation you need to claim, and repeat.


  11. Click  Submit when finished.
  12. The Progress Claim displays.


Pending Claims on the Budget

The Claim is listed on the Budget History.  The amount is updated automatically on the budget in the Pending Claims column.



Approve and Schedule Payments - Project Manager.


Click here to view ProjectCentre's Responding to a Claim




  1. View the Claim submitted to you for approval on your Notifications List or  Claims Register
  2. Click Respond.


  3. Select a line item to schedule payment on.  Enter the % Scheuled or Value Scheduled and enter a Reason.
  4. Once payments are scheduled to your satisfaction, change the Status to CERTIFIED.
  5. Click Submit
  6. NOTE: At this point, Pending Claims (on the budget) will automatically updated the budget to the amount certified.

  7. The Payment Schedule will open.


  8. Action to the Contractor.
  9. Review and change the Status to ISSUED.
  10. Click Submit
  11. NOTE: The claim will still be reflected in the Pending Claims column until the Claim is marked PAID.

Recording Payment

When a Claim has been paid:
  1. Open the Claim and change the Status to PAID
  2. Click Submit

The Paid Claim will be shown on the budget in the Paid to Date column.

Overview of a Budget Document - Contract Admin Module

The Budget

An Overview of a Budget

The Budget is an interactive document that lists line items and the values associated. All values are updated automatically as you create or update Contracts, Variations, Claims and Payments.

Plus/Minus  +/- Click the + and at the start of each line to expand or collapse a budget section as required.
Item ID The ID is automatically assigned by ProjectCentre. The ID is a hyperlink to the Budget History for this line item. The Budget History displays the details of the Contract, Variations, Claims, and Payments on this line item.

If a line item represents another budget (created by inserting a portfolio), the linked budget will open in a separate window. From that budget you may click the any ID to drill down to the budget history.
Item The line item title. Line Items which are a total of sub-items are shown as Section Headings . A Section Header may be summarised in one line by clicking the - button in the ID field. To expand to see each sub-item, click the + . When Sections are displayed in the expanded format, each section will be summarised with a TOTAL line automatically calculating the figures for the section.
Code The optional reference code entered for this line item. This is often a code to cross reference to an external accounting system.
Estimate (Budget) Original Budget: The amount entered when you created the Budget.
Proposed Adjustments: This represents the sum of any OPEN Budget Variations or Budget Transfers, which have not yet been approved.
Approved Adjustments: This represents the sum of APPROVED Budget Variations or Budget Transfers.
Approved Budget: The sum of the Original Budget and Approved Adjustments columns representing the current budget.
Commitments
(Contract)
Contract Amount: This represents the amount of an Issued Contract created for this line item.
Approved Variation: This represents the total of Approved Contract Variations.
Committed To Date: This is a sum of the Contract Amount and the Approved Variations.
Variations Pending: This represents a total of Contract Variations awaiting approval.
Uncommitted Works: This represents an amount listed on the Forecast.
Forecast Cost To Complete: The sum of the Committed To Date, Variations Pending, and Uncommitted Works.
Actual(Claim) Variance To Estimate: This is figured by subtracting the Forecast Cost to Complete from the Approved Budget. It represents over/under budget amount.
%Complete: This amount is calculated by dividing the Paid to Date by the Committed to Date. This is a percentage of how much has been spent so far.
Pending Claims: This amount is Approved claims awaiting payment.
Paid to Date: The amount of Paid Claims.
Status This shows the status of the Contract linked to this line item.

Options

The following options are available for Budget Documents (depending on the Status).

Option
Edit Re-opens the Budget for editing details, values, adding/removing items etc. You can only edit a budget it has not been Issued.
Issue Issue the budget to the Action persons, changing the Status from "Draft" to "Open".
QuickCancel Cancel this document.
Respond Add a comment to the budget or edit values (if the status is Open).
Split Create a new related document.
Associate Associate a document to the budget.
Print Print a copy of the budget.
Excel Export a copy of the budget to an Excel spreadsheet.
Item ID Hyperlink Opens a Budget History for the line item. If the line item represents a portfolio budget (created by the insert portfolio), the linked budget will open.

Accessing Budget History

A line item's Budget History is accessed from the Budget by clicking on the Item ID hyperlink.

The Budget History provides an overview of all activities related to this Line Item.  It displays the Contract, Variations, Claim, and Payments.



Budget Variation - Contract Admininistration

Budget Variations

Creating a Budget Variations


Click here to view ProjectCentre's Budgets Variation Training Video




  1. Retrieve the Budget.
    1. Click Budget from the Module Menu.
    2. Click the Budget sub-menu
    3. The Budget Register displays in the list frame. 
    4. Select the correct budget to display in the detail frame.



  2. Click the ID of the item to adjust to open the Budget History for the line.
  3. On the Budget History page, click the Budget Variation on the top toolbar.



  4. A Budget Variation will open in a separate window.

  5. Action the Variation to the person the Budget is actioned to.
  6. Enter a Title describing the variance.
  7. Change the Status from Draft to the correct status e.g. Pending Approval or Approval.
  8. Enter the item's new Description, Quantity and Rate. You may insert additional lines and indent sub-items as needed.
  9. Optionally, Click Upload Manager or click ti attach any supporting documentation, such as quotes received. 
  10. Click Submit

Budget Variation on the Budget

A budget variation pending approval displays in the Proposed Adjustments Column of the Budget and is not reflected in the Approved Budget.



Once a budget variation is approved (CLOSED status), the amount is reflected in the Approved Adjustments and the Approved Budget.



All budget variations are listed in the Budget History for that line item.


Submitting a Budget Transfer - Contract Admin

Budget Transfers

Creating a Budget Transfer


Click here to view ProjectCentre's Budgets Transfer Training Video




  1. Retrieve the Budget.
    1. Click Budget from the Module Menu.
    2. Click the Budget sub-menu
    3. The Budget Register displays in the list frame. 
    4. Select the correct budget to display in the detail frame.



  2. Click the ID of the item to adjust to open the Budget History for the line.
  3. On the Budget History page, click the Budget Transfer on the top toolbar.

  4. A Budget Transfer will open in a separate window.

     
  5. Action the transfer to the person actioned on the budget.
  6. Enter  a Title describing the transfer.
  7. Select the correct budget from the dropdown list.
  8. Select the line item you would like to transfer funds from, from the drop-down box.
  9. Select the line item you would like to transfer funds to, from the drop-down box.
  10. Enter the amount you would like to transfer in the Transfer Amount.
  11. If applicable, Browse and Attach any needed documents
  12. Change the Status from Draft to the correct status e.g. to Approval.
  13. Click Submit

Budget Transfers on the Budget

A budget transfer pending approval displays in the Proposed Adjustments Column of the Budget of both line items and is not reflected in the Approved Budget.



Once a budget transfer is approved (CLOSED status), the amount is reflected in the Approved Adjustments and the Approved Budget.



All budget transfers are listed in the Budget History for that line item.

Budget Variation - Contract Admininistration

Budget Forecasts

Creating a Budget Forecast


Click here to view ProjectCentre's Budgets Forecast Training Video




  1. Retrieve the Budget.
    1. Click Budget from the Module Menu.
    2. Click the Budget sub-menu
    3. The Budget Register displays in the list frame. 
    4. Select the correct budget to display in the detail frame.



  2. Click the ID of the item to adjust to open the Budget History for the line.
  3. On the Budget History page, click the Forecast on the top toolbar.



  4. A Budget Forecast  will open in a separate window.

  5. Action the Variation to the person the Budget is actioned to.
  6. Enter a Title describing the forecast issue.
  7. Change the Status from Draft to an open status e.g. Open or Predicted.
  8. Enter the item's new Description, Quantity and Rate. You may insert additional lines and indent sub-items as needed.
  9. Optionally, Click Upload Manager or click ti attach any supporting documentation, such as quotes received. 
  10. Click Submit

Forecast on the Budget

An open budget forecast displays in the Uncommitted Works column of the Budget and included in the Forecast Cost to Complete column.




All budget forecasts are listed in the Budget History for that line item.


Removing a Forecast

To remove a forecast from a budget, the status must be CLOSED.  The amount of the forecast will be removed from the budget.  The forecast will remain in the budget history and the forecast register for audit history.

To close a Forecast:

  1. View the forecast
  2. Click QuickClose

Or if you need to add a comment:

  1. Click Respond.
  2. Change the Status to Closed or Expired.
  3. Add a comment
  4. Click Submit

Withdrawing a Contract Administration document - Contract Admin

Withdrawing a Contract Admin Document

How to Delete a Contract Variation, Claim or Budget Variation or Transfer  


If you have made a mistake or need to delete a Contract Variation, Claim, Budget Variation or Budget Transfer, you must withdraw the document. 
  1. Open the Document
  2. Change the Status to Withdrawn.


  3. Click Submit.
  4. This will automatically remove the figures from the budget.  The documents will remain for audit history but are considered closed and obsolete. 


If you would like to use the Withdrawn document to create another document to save you re-entering information:
  1. Split the withdrawn document. All the entered information transfers over to the new document.


  2. Edit as needed.
  3. Click Submit.
Contract Admin Terminology

 

Terminology

Terminology used in this module

Terminology:

Within Contract Administration the following roles and items may be interchanged:
  1. Project manager; Contract Administrator
  2. Contractor; Managing Contractor; Head Contractor; Consultant; Design Consultant; Coordinating Consultant
  3. Contract Variation; Variation Price Request; Variation; Head Contract Variation; Variation Price
  4. Claim; Progress Claim; Contract Progress Claim; Head Contract Progress Claim; Contract Claim; Claim
  5. Payment Certificate; Progress Payment Certificate; Progress Payment Statement; Payment Statement
Term Definition/Explanation
Budget The project's financial document listing all costs associated.  Each line item on the budget represents a Contract.  As Variations, Claims , and Payments are made,  the budget automatically updates to reflect a real time picture of expenses and progress.  For a full explanation of each column listed on a budget click Understanding Your Budget
Budget Register A list of all budgets in this project. Only users with access to a budget will be able to see the budget.
Line Item A line item is set up on a Budget to represent a cost centre.  Each line item is linked to a contract.   
Item ID The Item ID is a unique identifier assigned by ProjectCentre which is a hyperlink to the Budget History for the line item. 
Budget Section Line Items of a budget may be broken down into sections with a Section Header and indented sub-items. 
Section Header A line Item on a financial document that represents the sum of sub-items listed below. Section Headers may be collapsed by clicking the - button to display a one line summary of the section. The default is the expanded view (+ button) displaying the Section Header with the sub items listed below indented. Each Section will list a total line for the section.
Section Sub-Item An indented line Item of a budget that is totalled together with other sub-items to make up a section. The amounts must be entered at the lowest sub-item level. The header levels will display the sum of all the indented sub-items automatically.
Portfolio Budget A budget is inserted into another budget as a line item. To roll up another budget into a different budget's line item, use the Insert Portfolio button.
Budget Variation A financial record of a change the Original Budget.
Budget Variation Register A list of all Budget Variations in this project.
Budget Transfer A financial record of a transfer of dollars from one line item to another.
Budget Transfer Register A list of all Budget Transfers in this project.
Forecast A financial record of a prediction of an additional cost not associated with a contract variation.  An open forecast record will display on the budget in Uncommitted Works and be included in the Forecast Cost to Complete.
Forecast Register A list of all Budget Forecasts in this project.
Budget History Each line item of a budget has an assessable Budget History by clicking on the Item ID Hyperlink. The Budget History provides an overview of all activities related to a line item. It will display the linked Contract, and all Variations, Claims and Payments associated with this line item.
Contract A Contract lists the financial terms agreed upon with a contractor to perform services or provide goods.  Each line item of a Budget will represent a Contract.
Contract Register A list of all Contracts for this project.
Contract History A summary of the contract including the trade breakdown, variations and forecasts cost to complete.
Retention Fund A percentage of the contract sum which is withheld from payment until the project is complete. 
Original Contract Sum The amount of the original contract.
Adjusted Contract Sum The amount of the original contract plus approved variations.
Practical Completion The point of time when a project is consider complete.
Final Completion The point of time when a project is certified complete.
Contract Variation  A financial record of a change to the Contract amount
Variation on Account  A financial record of a change to the Contract amount that is still in negotiation when the work commences. Once details are finalised a Variation on Account will convert to a Contract Variation.
Provisional Sums  A financial placeholder assigned at the time of the contract.
Provisional Sums Adjustment  A financial record of a change to a Provisional Sum on a contract.
Claim A financial record used to claim for payment made against a Contract.  
Statutory Declaration A document to corroborate that the information provided is verified.
Scheduled Payments The field a Project Manager uses to determine the amount or the percentage of a claim to pay.    
Payment Schedule A record of a payment, detailing the original contract sum, adjustments, work completed to date, retention, and the certified amount of the payment.  If there are differences between claim and scheduled payment, the reasons will be detailed to comply with the Security of Payments Act.
Withdrawn Documents Any financial record that is withdrawn is no longer represented on the budget or contract.  It a document that remains in order to provide a full auditable history but is considered closed and deleted from all automatic calculations.