Understanding Contracts

You create contracts for the subcontractors on jobs. A contract contains the details of a work agreement with a subcontractor. You can enter lump sum contracts or unit contracts. A lump sum contract is a contract in which you specify a single committed amount for the entire contract. A unit contract is a contract in which you specify the committed amount based on the number of units to be completed. A commitment is the money that you designate to pay against a contract.

For example, assume that installing all of the plumbing for the floor 3 job of an office building project costs 1000. You can enter a lump sum contract for plumbing for 1000. Now assume that installing the drywall for the same job costs 0.25 per square foot. In this case, each square foot of drywall constitutes one unit. You can enter a unit contract for drywall based on the number of square feet to be completed.

You enter identifying information to distinguish the contracts from each other. Identifying information includes details about the contract company, subcontractor information, and financial details, such as tax rates and retainage. Retainage is a percentage of the contract amount that is held until a specified date after the completion of the work.

You create a contract by entering a subcontract order.

After you enter the identifying information for a contract, you enter the commitment details.

In addition, you create log information for each of the contracts. Log information is supplemental to the information contained in a contract, and includes such details as submittals and transmittals. A submittal is information that you need to receive from a subcontractor. A transmittal is information that you need to send to a subcontractor.

You can change the commitment details of a contract after you enter them by creating a change order. This updates the commitment information and enables the system to keep an audit trail of the changes to the contract commitments.