Commitments - Overview
Updated
Commitments - Overview
Commitments are agreements with a vendor and/or sub-contractors to provide services, equipment, labor, materials etc. to deliver the project.
Commitments are recorded in the system in the form of
· Subcontracts – usually involves a written contract where the work, equipment, materials etc. is delivered over a period of time and may be invoiced and billed for in increments
· Purchase Orders – usually a one-off delivery of labour, material or equipment that is fully paid for at one time.
When referring to Commitments in the system, it refers to both Subcontracts and Purchase Orders.
Note* In the system contracts between the person managing the work and the vendor or subcontractor doing the work are called “Subcontracts”. Contracts between the owner/client (the person paying for the project) and the person managing the project are called “Contracts”. For more information on Contracts, see Contracts – Overview.
Commitments are tracked and managed for budgeting, cash flow management and estimating purposes as well as the overall management of whether a Commitment was fulfilled and its status.
Each Subcontract or Purchase Order will have:
· An associated Schedule of Values.
A subcontract can have:
· Subcontract Change Orders – These can be added to a Subcontract in any status. Each Subcontract Change Order will have a Schedule of Values and its own set of statuses to manage. These change orders are used to manage changes to the original Subcontract.
· Subcontract Invoices – An invoice can be created for any Subcontract or Purchase Order that has an Approved status.
A Purchase Order can have:
· Purchase Order Invoices - An invoice can be created for any Purchase Order that has an Approved status.
There are various pre-set system status that can be set for a Subcontract, Subcontract Change Order, Subcontract Invoice, Purchase Order and Purchase Order invoice. These statuses can be used to manage the life cycle and in some cases, functionality may be impacted by the status (i.e. you can’t edit an approved subcontract schedule of values).
Note* Management of payment of a subcontract or purchase is done through the Accounting System.
