Prime contract overview
Related information
Related topics
A prime contract defines the agreement and resulting obligations between two or more parties, such as the client and contractor. For most companies, there's usually one prime contract for each project. However, in cases such as a design-build or construction management firm, there can be multiple prime contracts tracked.
Within each prime contract, you can document the scope of work, enter original budgets, and set default retention or holdback percentages for future progress invoices. In addition, Sage Construction Management supports four types of contracts, which for prime contracts and subcontracts impact how invoices are processed.
-
From a construction perspective, a firm does not procure materials, engage services, or mobilize to a job site without a signed contract. Similarly, Sage Construction Management prevents any financial transactions, such as purchase orders, subcontracts, timecards, or invoices, from being recorded until the prime contract is approved and assigned a status date.
- Construction contracts are processed differently depending on the type of contract: Fixed Lump Sum, Cost Plus, or Unit Price.
- Default retention or holdback percentages is set in the prime contract, which is then copied to future prime contract invoices.
- Default markups for change proposal requests, change orders, and Cost Plus prime invoices are set in the prime contract.
- Prime contract status options occur in the following sequence: Draft → Pending Submission → Pending → Not Approved → Approved → Approved and Closed.
-
When prime contracts are marked as Approved and Closed, you cannot enter additional financial transactions. Nonfinancial project records are not locked. The project stays active, but Client Contract Admin, Procurement, and Time & Expense module transactions are locked to everyone, except for Admins. Admins can change the prime contract without needing to change the status back to Approved. The prime contract and related financial information will continue to show up on Financial Analytics and BI Summary dashboards.
- A prime contract can be emailed using the Report > Email Doc or Email PDF option. The prime contract is added as an attachment to the email, which the customer can print and return signed.
- The estimated profitability and markup percentages shown in the original contract amount and cost budget section are calculated as follows:
- Estimated Profitability Percentage = ((Contract Amount - Cost Budget) / Contract Amount)) * 100
- Estimated Markup Percentage = ((Contract Amount - Cost Budget) / Cost Budget)) * 100
Add prime contracts
- Ensure the client and your firm are listed in the project directory.
- Optionally, you can reference sales or good and services tax codes on the prime contract's schedule of values or unit price table, based on the contract type.
-
Use the Contract Admin Setup wizard to add a prime contract.
This method is recommended as you can also create job cost codes and prime contract budgets.
-
Alternatively, add a prime contract manually.
Edit prime contracts
- If prime contract items, such as Schedule of Values, GMP Amounts, or Unit Price items, exist, then the Contract Type cannot change.
- If a prime contract invoice exists:
- The Contract Type, Status, and Status Date cannot change.
- Original contract items cannot be added or modified if the Do not allow Prime Contract or Change Order Items to be modified after Prime Invoices have been created option in Settings > Feature Settings > Contract Admin. is selected.
- If a workflow rule applies to the prime contract and the rule has been initiated or already approved, then nothing can be modified before the rule is abandoned.
- When no workflow exists and auto‑lock is turned on, Admins can unlock a posted, marked as posted, or partially posted contract and do the following:
- Add or edit the original cost budget.
- Add or edit contract items if no prime invoices exist.