software consulting, custom reporting, financial resources

Articles:

Credit Card Transactions

Entering Fixed Assets as Journal Entries

Estimating

Estimating-At-A-Glance

Estimating, Project Management Overview

Paying Liabilities and Transfers Between Accounts

Payroll Overview

Profitability

Proposals

Profits - Strategies to Improve

Responsibility As A Motivator

Risk Management

Schedule Variance

Take Your Business to the Next Level

Teamwork As A Motivator

Time Management

Time Management Matrix

Timetable of Procedures

The Balance Sheet, Part 1

The Balance Sheet, Part 2

The Balance Sheet, Part 3

The Balance Sheet, Part 4

Training Saves Money

Value As A Motivator

Year-end Close

Change Orders

Overview

Change Orders document any modifications to an agreement (events, information, changed conditions) that are unknown at the time the contract is signed. Changes may modify contract time and/or dollars. In order to confirm the changes in your contract, a written change order is needed to convey the changed agreement. Entering change orders gives us the ability to:

1.       Print prime change orders (change orders to the client).
2.       Modify the budget while still maintaining the original budget.
3.       Modify subcontracts and print subcontract change orders for existing subcontracts.
4.       Track the routing of the change order.
5.       Create an Accounts Receivable invoice for the change order when approved.
6.       Create a purchase order for materials from the change order when approved.

To enter a basic Change Order, remember to enter information in all blue-titled fields:

Job; Description – brief description of change order. (You can create a Quick List of descriptions by using the F5 key on your keyboard after entering your description.); Change #; Date; Status – one of six options:

1–Approved (Changes Contract amount)
2–Open
3–Review
4–Disputed
5–Void
6–Rejected

In connection with the article on Budgets, it's a good idea to get used to entering data on the Budget and Subcontract Details tab. If the data is entered correctly and the Change Order is saved with Status 1–Approved, the budget Change Order will be visible in several job reports and will be available in 3-7 Progress Billing. This also creates a trail of changes to the budget which would not be otherwise be available.

If the 5 columns Vendor, Subcontract, Change #, Status and Date are used in the grid of the Budget and Subcontract Details tab, a Subcontract Change Order can be printed. You can create a change order which affects the budget without involving a subcontractor, but it would be unusual that a Subcontract Change Order would not affect your budget.

In the grid, on the Budget and Subcontract Details tab, if a subcontract is involved, change the status to Approved and enter date approved. This will modify the Subcontract amount and appear in the Subcontract Audit (screen 6-7-4). It will also allow us to print subcontract change orders from 6-4-3 Subcontract Orders.

When entries are made in the grids, the following fields are required:

Description (in grid) both Budget and Sub Change Details and Prime Change Details tabs – describes scope of work. Cost Code – both Budget and Sub Change Details and Prime Change Details tabs, from list created by user. Cost Type – both Budget and Sub Change Details and Prime Change Details tabs.

Fill in blank fields in the header with appropriate dates, any request for delays in number of days, who the change is submitted to, and who submitted the change. Give enough detail to the description to clearly define the change. If printing change orders, use the description field in the grid along with user defined and note fields for additional information. Do you want to add this change order to a hot list as a reminder to follow up on an item? Use Hot List checkbox. The Lock Edit option will lock the record upon saving so no changes may be made. Are there any attachments that go with the change order? Use the Attachments button at the bottom of the screen to make a note of these. Track the routing for the change order by using the Routing button at the bottom of the screen.

To create a purchase order for materials in the new change order, click the Create PO button at the bottom of the 6-4-1 Change Orders screen. Use of the button will open the 6-6-1 Purchase Order screen allowing entry of the required items. The Change Order must be in Approved status to access this option.

To create an Accounts Receivable Invoice from a Change Order, click the Invoice button at the bottom of screen. The Change Order must have an Approved status to access this option. This will open the Accounts Receivable screen 3-2, using system defaults for field entry. Modify the fields to meet your needs and complete any blank fields at this time. If you use 3-7 Progress Billing, do not use this procedure, but instead, click Update, Change Orders to import them into the Progress Billing.

Invoice# - defaults to last invoice number entered, plus one; Date – defaults to today’s date; Job – defaults to Job on C.O., cannot be changed; Description - defaults to “CO# (your number used in Change Orders); Due Date – defaults from Jobs (3-5) screen; Disc Date - defaults from Jobs (3-5) screen; Status – defaults to “Open”; Type – must be entered, either “Contract” or “Memo” depending on whether or not this invoice is considered a billing against the contract amount. In the grid, defaults are entered from Prime Change Details tab and Jobs (3-5) screen.

The Prime Change List (6-4-4) Prime Change Orders by job.

The Subcontract Change List (6-4-5) lists Subcontract Change by vendor.

Backcharges (Cross Charge):

You can create two Subcontract Change Orders in one screen to reallocate budgeted costs from one cost code to another, such as in a case where we backcharge one subcontractor whose damage to the project must be repaired by another vendor. A good example of this is in the Sample Company on record 7 in screen 6-4-1. The plumber’s subcontract is being reduced by the amount of the repair. The approved status on the grid line will change the subcontract total.

Change Order Procedures (not all of them may apply - use as possible checklist):
1.       Enter change orders in 6-4-1 (Change Orders).
2.       Export change orders from a Takeoff (9-5) and complete and edit the information in 6-4-1 (Change Orders).
3.       Print change orders 6-4-2.
4.       When change order is approved, change status of record to Approved.
5.       Fill in approved amounts on Prime Change tab.
6.       Change status on Budget and Subcontract Details tab for each subcontract in change order.
7.       Print Subcontract Change Orders 6-4-3.
8.       Create necessary Purchase Orders for material.
9.       To bill separately for the change order, create an A/R invoice from the Change Order using the “Invoice” button.
10.     Print Reports, Prime Change List, and Subcontract Change List.
11.     Print Prime Contract Audit (6-4-6) get an overview of the total Contract, including Change Orders, Receivable Invoices, etc.

Please contact me if you would like to learn more about instituting a comprehensive training process. Thank you.

Andy King
T: 805-771-8400
service@missiondevelopment.com