Definitions
Contact management
A combined list of customers and vendors.
People associated with companies.
Company and contact record examples
| Company | Contact |
| Stika Concrete |
Ray Stika John Stika |
| Smith, John and Mary or Smith Residence |
John Smith Mary Smith |
| Home Depot (Irvine - Store #02102) |
Sales Department Estimating Department |
Projects and leads
The Leads feature is a business development tool that can be used by estimating or sales staff to track design or construction opportunities. The lead # and title represents the structure being built, not the firm name.
The lead directory includes all the companies and contacts associated with a lead. This includes the prospect and your firm, but does not include subcontractors or suppliers.
User-defined stages that help track the progress of a lead. These stages can also be leveraged for lead analytics and reporting.
A project represents an awarded job and can be created manually or by using the Lead to Project wizard.
The project directory includes companies and contacts associated with the awarded project. This includes the client, architect, your firm, subcontractors, and suppliers.
Drawings, specifications, and invitation to bid (ITB)
The drawing log is designed to track lead or project plans and revisions. Usually, the actual CAD, PDF, TIFF, or JPEG file is uploaded and linked to the drawing log record.
Specifications are often submitted to contracting firms in electronic formats, such as PDFs. They outline project requirements and the quality standards set by the design team. Usually, specifications are distributed with drawings because they complement one another.
Commercial general contractors and custom home builders often send out ITB emails to subcontractors and suppliers to announce an upcoming job opportunity. Drawing and specification files can be linked to the ITB, enabling vendors to make informed decisions about whether to participate.
Estimating
Estimates include cost line items that can be added manually. They can also be imported from an industry-standard database like RSMeans or from a custom database you create. Using a cost database ensures consistency in descriptions, units, and pricing, while also saving time by eliminating the need for manual data entry. There are five (5) types of database items: labor items, equipment items, crews, work items, and work assemblies.
Each lead or project can have one or more estimates, such as Base Bid, Rev 1, Rev 2. Estimates are made up of key components such as work breakdown structures, cost line items, markups, narrative scope sections (including inclusions, exclusions, and clarifications), and RFP packages. If the job is awarded, the estimate can be used to set up the project financially—establishing job cost codes, client contracts, budgets, purchase orders (POs), and subcontracts.
Estimate request for pricing (RFP) packages
Request for pricing (RFP) packages are used to request, track, and analyze pricing on items that will be needed for a project. RFP packages are typically created for each scope of work, such as concrete, doors, windows, and electrical. These packages are used for work that will be subcontracted or requires material quotes from suppliers. If the project is awarded, the winning bidder for each package can be issued a PO or subcontract in the Procurement module.
RFP packages can be created either from the Procurement module or directly within an estimate. While both methods are nearly identical, the key difference is that, when working within an estimate, items must be explicitly linked to a package. It's common to have multiple RFP packages associated with a single estimate, all of which are managed through the Estimate’s Bid Management View.
Contract administration
Job cost codes are essential for tracking project financials. They’re required when entering transactions such as budgets, change orders, POs, expenses, and timecards. Even though job cost codes can be added at any time, it's recommended that these codes be defined during the project setup phase.
Prime contract (client contract)
A prime contract defines the formal agreement between your firm and the client. Sage Construction Management supports four types of contracts, each of which affects how invoices are processed for both prime contracts and subcontracts. Typically, there's one prime contract per project. However, in cases such as design-build firms, multiple prime contracts might exist. Each prime contract enables you to define the scope of work and enter original budgets.
A change proposal request (CPR) is used for tracking a potential change from inception to acceptance or rejection. Although CPRs can be created for all contract types, they’re entered for Fixed Lump Sum or Unit Price contracts. Changes to Cost Plus contracts are documented directly in the change order (CO) feature and do not require the CPR process.
When one or more CPRs are approved, they’re rolled into an official CO which will then affect prime contract budgets.
A change order (CO) occurs when there's a change to the original prime contract's scope of work. Owners, architects, regulatory agencies, or even your own firm—such as in response to adverse field conditions—can initiate changes, just like CPRs. COs can be documented regardless of contract type: Fixed Lump Sum, Cost Plus, or Unit Price. When marked approved, COs will affect budgets for any type of contract.
Progress payments for prime contracts are processed in the prime contract invoice feature. Commercial contractors often refer to prime contract invoices as applications for payment. In residential construction, the term bank draw is used when a construction loan is the funding source.
Prime contract invoices must not be confused with subcontract invoices which are progress payments for subcontracts.
Procurement
Anticipated costs are future project expenses that have not yet been incurred. For example, expenses like electrical or plumbing fixtures and cleanup fees often arise in the final project stage, even if the vendors or specific items have not been identified yet. As a result, financial dashboards that compare estimated cost budgets versus commitments will be inaccurate unless anticipated costs are updated on a monthly basis.
Request for pricing (RFP) packages are used to request, track, and analyze pricing on items that will be needed for a project. RFP packages are typically created for each scope of work, such as concrete, doors, windows, and electrical, when the work is subcontracted or materials are needed from suppliers. Each package's winning bidder can be issued a PO or subcontract. As mentioned above, RFP packages can be created in the procurement module or within an estimate. Both processes are almost identical but the difference is that estimate items must be linked to a package in the latter scenario.
Options for project expenditures:
- POs --> Bills or Bills (without POs)
- Subcontracts --> SCOs --> Subcontract invoices
- Employee miscellaneous expenses (for everything else)
After the prime contract has been established, materials and services are procured using purchase orders (POs), subcontracts, or both. In general, POs are easier to use than subcontracts because they do not have retainage (holdbacks) or change orders. Vendor invoices for PO items are processed using the PO to bill wizard.
After a purchase order (PO) is issued and the goods or services are delivered, the supplier’s invoice is converted into a bill using the PO-to-bill wizard. Bills can be created manually as well such as in cases where no PO has been issued.
After a prime contract has been set up and marked approved, purchase orders (PO) and subcontracts are available to procure goods and services. Both of these types of financial transactions are shown as committed costs in the project analytics dashboards. Unlike POs, subcontracts allow you to track scope changes through subcontract change orders (SCOs) and apply retainage (holdbacks) to subcontractor invoices. Like prime contracts, there are four types of contracts available: Fixed Lump Sum, Cost Plus with or without a guaranteed maximum price, and Unit Price.
Subcontract change orders (SCO)
The purpose of a SCO is to modify the original subcontract due to a changed condition and work scope. Approved SCOs can be created manually or from CPRs and will impact the revised subcontract amount and time. Typically, SCOs are created for Fixed Lump Sum or Unit Price subcontracts.
Subcontract invoices are similar to prime invoices but for subcontracts. For example, the subcontract invoice data entry process changes depending on the subcontract type and these transactions can have retainage or holdbacks.
HR, time, and expenses
Employees can be entered as contacts under your company profile in the Contact Management or Time & Expenses module. However, the latter is recommended because the employee form in the Time & Expenses module includes additional fields and tables such as education, licenses, and payroll rates.
Payroll items are required for establishing employee cost and billing rates and are typically identical to those listed in the accounting system. For example, ST - Straight Time, OT - Overtime, DT - Double Time, and TT - Travel Time.
Payroll rates are set up in the employee profile form for each payroll item listed and consist of base cost rate, burden cost rate, and billable rate. The latter rate only applies to Cost Plus prime invoices where expenses and timecards can be imported.
Labor timecards can be entered on a daily or weekly basis. Like all other financial transactions, each timecard must reference a project, prime contract, and job cost code. Approved timecards are then exported to an accounting system using the AccountingLink feature or to a CSV or Excel file that can be processed by a third party payroll company.
Equipment items can be used for estimating purposes and timecards. For the latter, Run-time (RT), Idle Time (IT), and Down Time (DT) rates can be set up per project and equipment item.
Similar to labor timecards, equipment timecards can be entered on a daily or weekly basis but are applicable only to owned equipment. Rental equipment costs are recorded through either the purchase order (PO) or billing process.
Employee miscellaneous expenses
Employee miscellaneous expenses are for recording project expenditures when a standard purchase order (PO) or subcontract is not feasible. A typical example of a miscellaneous expense is when an employee purchases fuel for their vehicle using a company-issued credit card. Like bills and subcontract invoices, employee miscellaneous expenses are categorized as Cost To Date transactions and can be exported to an accounting system using the AccountingLink feature.
Job cost dashboards
Budgeted Costs
Budgeted costs are derived from the detailed cost estimate prepared at the start of the project. Budgeted costs might include the current best estimate of costs based on progress and any changes after the original cost budget was formed. Budgeted costs might include an itemized summary of estimated or intended expenditures for a given period-of-time. In other terms, the total sum of money allocated for a specific project. Budgeted costs can also be considered a formal statement of estimated expenses based on future plans and objectives.
In Sage Construction Management, cost budgets do not include markups, such as fees, and will be compared to actual costs such as POs, subcontracts, and timecards. Sage Construction Management includes five built-in resource types, that's materials, labor, equipment, sub and other, therefore cost budgets can be entered for each resource and job cost code. The cost code's total budget will be the sum of the five resource budgets.
Anticipated costs
Anticipated costs are future project expenses that have not yet been incurred. For example, expenses like electrical or plumbing fixtures and cleanup fees often arise in the final project stage, even if the vendors or specific items have not been identified yet. As a result, financial dashboards that compare estimated cost budgets versus commitments will show over inflated budgets unless anticipated costs are documented.
Generally, anticipated expenses are a master list of items that have not been recorded in the following transactions:
- Purchase orders (PO)
- Subcontracts
- Subcontract change orders (SCOs)
- Labor timecards
- Equipment timecards
- Employee miscellaneous expenses
Committed costs
Committed costs are the cost control measure that includes the agreed or incurred price between the contractor and the vendor. The primary committed costs include subcontracts, subcontract change orders (SCO), purchase orders, and anticipated costs. In Sage Construction Management, committed costs also include booked costs such as approved vendor bills not from POs, approved miscellaneous expenses, labor timecards, and equipment time cards.
Sage Construction Management committed cost transactions:
- Approved purchase orders (PO)
- Approved bills that didn’t originate from POs
- Approved subcontracts
- Approved subcontract change orders (SCOs)
- Approved labor timecards
- Approved equipment timecards
- Approved employee miscellaneous expenses
- Anticipated costs
Actual cost or Cost To Date
Actual cost is the total cost incurred for the actual work completed to date. In simple terms, it’s the amount you’ve spent so far. The actual cost might include the amounts paid for a service, goods, materials, labor, equipment, and so on. In Sage Construction Management, actual costs are recorded when incurred. In other terms, actual costs are an expenditure required to produce or sell a product or service, or get an asset ready for normal use.
Sage Construction Management actual cost or Cost To Date transactions:
- Approved purchase orders (PO)
- Approved bills that didn’t originate from POs
- Approved subcontracts
- Approved subcontract change orders (SCOs)
- Approved labor timecards
- Approved equipment timecards
- Approved employee miscellaneous expenses
- Anticipated costs
Markup %
Markup is the percentage added to the cost to determine the selling price. It's calculated according to the following formula:
Markup % = Profit / Cost
Example:
| Selling price | 125 |
| Cost | 100 |
| Calculation | 100 * (125-100)/100 |
| Markup % | 25% |
Profit margin %
Margin is the percentage of the selling price that's profit. It's calculated according to the following formula:
Profit Margin % = Profit / Sell
Example:
| Selling price | 125 |
| Cost | 100 |
| Calculation | 100 * (125-100)/125 |
| Profit margin % | 20% |
Correspondence
No matter how smoothly a job might be running, issues come up so proper documentation and correspondence is key to minimizing risks and delays. Naturally, some project issues will be minor in nature and resolved quickly, while others might be critical and lead to changes. Thus, issues can be created and tracked as events progress because oftentimes this information is used as backup material when presenting a CPR or CO.
With the exception for RFIs and submittals, basic project correspondence such as letters, faxes, notes, and phone conversations can be documented in journals. Like other correspondence features, journals can have reminder and due dates which appear as alerts in Sage Construction Management.
Request for information (RFI) is used to document questions and responses from project team members that are critical in nature which might or might not impact the schedule or budget. An example RFI can be a contractor emailing the architect a question about the interpretation of a construction drawing detail or a note in the specifications. This email will include a hyperlink to the TeamLink Portal allowing the external team member to respond in a secure manner.
Submittals are items documented in project specifications that need to be provided to the project owner or architect for review and approval. For example, shop drawings, engineering data, material samples, test results, and product literature/manuals. Certain submittals, such as product manuals, are often used later by the client for operational purposes.
In construction, a transmittal is a document used to communicate actions required on one or more items between parties. Transmittals often act as a cover sheet when mailing information through FedEx, USPS, or some other carrier and will list the contents of the package.
Documentation
In today's environment, builders and contractors need to manage risk and one of the tools they require of their superintendents or project managers is to implement daily logs. This is especially important if a dispute arises. Documenting daily activities, progress milestones, employees, major deliveries, equipment and weather/site conditions can be valuable information. Daily logs can also be reviewed in a claim or legal proceeding by an opposing party so it’s important that information is recorded accurately.
The meeting minutes feature is used to document discussion items for project meetings. For example, owner and subcontractor meetings. Information such as meeting date, location, purpose, attendees, new issues, and old issues can all be tracked.
As the project progresses, major milestone photos can be taken at periodic intervals to provide a high level overview of the job status. Therefore, this feature is not intended for daily photo uploads. For daily documentation, use the daily log feature instead.
A work order (WO) can be used in a variety of ways by the project staff. For example, WOs can be used as a daily communication tool for field crews, outlining tasks to be performed, or document work directives issued by the owner. Both estimated and actual costs can be tracked in either scenario. These costs can then be copied to a CO, SCO, or prime contract invoice, depending on the contract type, that's Fixed Lump Sum, Cost Plus, or Unit Price.
Scheduling
Like estimates, Sage Construction Management can track multiple schedules for any given project. Examples of situations where multiple schedules might be required include separate design and construction phases, or when a project involves building multiple structures.
Calendars will display due dates (alerts) for time-sensitive information so team members can follow up. Lead and project records that are marked closed will not appear in the calendars or the alerts listing.