Contract rules

The contract rule determines whether you can overbill the contract and how you can change the contract value. Overbilling occurs when the amount in a contract invoice or application for payment (AFP) is more than the amount for the SOV item.

   
Controlled total
Uncontrolled total
Uncontrolled with fixed cap
Variable total
Contracts
 Overbilling of the contract is allowed. clear check check check
Overbilling changes the contract value. clear clear clear check
A change order is required to change the contract value. check clear clear clear
AFPs
 Overbilling of line items is allowed. check1 check check2 check
Overbilling changes the Scheduled Value of the line item. check clear clear check
Contract
invoices
 Overbilling of line items is allowed. clear check check check
Overbilling changes the Scheduled Value of the line item. clear clear clear check

The following table displays the SOV in a subcontract for masonry and the billed amounts for the SOV items.

SOV item Contract amount Billed
Concrete block 100,000 125,000
Glass block 50,000 50,000
Total 150,000 175,000

The contract rules determine how you bill the SOV items:

  • Controlled total: You can't overbill on a line item if the total contract value is exceeded. To bill for 175,000, you must write a change order for 25,000 for the concrete block.
  • Uncontrolled total: You can overbill on a line item and the contract value by 25,000. The contract value remains 150,000.
  • Uncontrolled with fixed cap: You can only bill up to the total contract amount of 150,000. To bill for 175,000, you must create a change order for 25,000 to increase the total contract amount. The change order can be written against either or both line items as long as it's for at least 25,000.
  • Variable total: You can overbill by billing 125,000 for the concrete block and 50,000 for the glass block. However, the scheduled value of the concrete block is increased from 100,000 to 125,000 to raise the total contract value to 175,000.

If the controlled total rule is selected:

  • Overbilling isn't allowed.
  • A change order is required to change the value of a locked contract.
  • In a locked contract, you can still change the value (reallocate funds) for an unlocked SOV item as long as the contract value remains the same.

In an AFP for the contract:

  • The Total Complete Value amount can't exceed the Scheduled Value amount for the line item.
  • If the Total Complete Value amount exceeds the Scheduled Value amount, the Scheduled Value amount is increased to match.
  • The Scheduled Value total for the line items can't exceed the contract value for the cost period.

    • You can reallocate the Scheduled Value amounts between the line items.

In a contract invoice for the contract:

  • The Total Complete Value amount can't exceed the Scheduled Value amount for the line item.
  • If the Total Complete Value amount exceeds the Scheduled Value amount, the Total Complete Value amount is changed automatically to the maximum allowed amount.
  • The sum of the Total Complete Value amounts for all contract invoice items can't exceed the Current Contract Value.

If the uncontrolled total rule is selected for the contract:

  • Overbilling is allowed, but it doesn't change the contract value or the amount in the Total Committed Costs column in the budget. Overbilling only increases the amounts in the Actual Cost To Date and Actual Cost To This Period columns for the budget code that's assigned to the SOV item.

    • Because overbilling increases the actual costs but not the committed costs, the amounts in the Actual Cost To Date and Actual Cost To This Period columns may exceed the amount in the Total Committed Costs column.

  • A change order isn't required to increase the contract value.

    • In committing contracts, the SOV amount can't be less than the invoiced amount for the line item.

In an AFP or contract invoice for the contract:

  • The Total Complete Value amount can exceed the Scheduled Value amount for the line item.
  • If the Total Complete Value amount exceeds the Scheduled Value amount, the Scheduled Value amount isn't changed.
  • The Percent Complete for the line item can exceed 100%, and the Balance To Complete Value can be negative if the line item is overbilled.

If the uncontrolled fixed cap rule is selected for the contract:

  • Overbilling is allowed, but it doesn't change the contract value or the amount in the Total Committed Costs column in the budget. Overbilling only increases the amounts in the Actual Cost To Date and Actual Cost To This Period columns for the budget code that's assigned to the SOV item.

    • The overbilled amount can't exceed the total contract amount for the cost period.

  • A change order isn't required to increase the contract value.

    • In committing contracts, the SOV amount can't be less than the invoiced amount for the line item.

In an AFP or contract invoice for the contract:

  • The Total Complete Value amount can exceed the Scheduled Value amount for the line item.
  • If the Total Complete Value amount exceeds the Scheduled Value amount, the Scheduled Value amount isn't changed.
  • The Total Complete Value for all the line items can't exceed the contract value for the cost period.
  • The Percent Complete column can exceed 100%, and the Balance To Complete Value column can be negative if the line item is overbilled.

If the variable total rule is selected for the contract:

  • Overbilling is allowed and automatically increases the contract value by the overbilled amount.
  • A change order isn't required to increase the contract value.
  • Overbilling increases the amounts in the Original Commitments, Actual Cost To Date, and Actual Cost To This Period columns for the budget code that's assigned to the overbilled SOV item.

    • The amounts in the Actual Cost To Date and Actual Cost To This Period columns won't exceed the amount in the Total Committed Costs column.

  • If you delete a contract invoice that contains overbilling for an SOV item, the Scheduled Cost remains at the overbilled amount.

In an AFP for the contract:

  • The Total Complete Value amount can exceed the Scheduled Value amount for the line item.
  • If the Total Complete Value amount exceeds the Scheduled Value amount, the Scheduled Value amount is increased to match.

    • In the contract, the scheduled value of the SOV item doesn't change.

  • The Percent Complete column is 100%, and the Balance To Complete Value column is 0 if the line item is overbilled.

In a contract invoice for the contract:

  • The Total Complete Value amount can exceed the Scheduled Value amount for the line item.
  • If the Total Complete Value amount exceeds the Scheduled Value amount, the Scheduled Value amount is increased to match.

    • In the contract, the scheduled value of the SOV item is increased automatically by the overbilled amount.

  • The Percent Complete column is 100%, and the Balance To Complete Value column is 0 if the line item is overbilled.
  • For change order line items:
    • The Total Complete Value amount can't exceed the Scheduled Value amount for the line item.
    • If the Total Complete Value amount exceeds the Scheduled Value amount, the Total Complete Value amount is changed automatically to the maximum allowed amount.