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
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Uncontrolled total
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Uncontrolled with fixed cap
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Variable total
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Contracts
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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
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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 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 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:
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.
In an AFP or contract invoice for the contract:
- 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:
The overbilled amount can't exceed the total contract amount for the cost period.
In an AFP or contract invoice for the contract:
- 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.
- 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.
- If you delete a contract invoice that contains overbilling for an SOV item, the Scheduled Cost remains at the overbilled amount.
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.
In an AFP for the contract:
- The Percent Complete column is 100%, and the Balance To Complete Value column is 0 if the line item is overbilled.
In the contract, the scheduled value of the SOV item doesn't change.
In a contract invoice for the contract:
- 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:
In the contract, the scheduled value of the SOV item is increased automatically by the overbilled amount.