Contract adjustment in Control overview

A contract adjustment, often referred to as a change order, represents a change to the scope of the contract that results in a change to the project’s budgeted costs, man-hours, and contract price. These adjustments typically involve adding or revising cost and pay items to accurately estimate the financial and labor impacts of the change.

A contract adjustment, often referred to as a Change Order, represents a change to the total project budget. If you are a contractor this also results in a change to total contract price.

Pay Item vs. Cost Item

Contract adjustments involve changes to both your contract price (pay items) and your budget (cost items). The following table reviews the purpose and function of pay items and cost items.

Term	Function
Pay Item	For contractors, a pay item represents a project deliverable, including the pay quantity defined by the owner and the contracted unit price you will be paid for completion of the work. Pay item prices include your overhead and profit. For owners, a pay item can be used in a variety of ways or may even be ignored. One way it can be used is to represent funding sources and total funded amounts. It can also be used to bill internal or external partners.
Cost Item	The individual cost-related activities required to complete the deliverables of the project. Cost items represent the costs your budget needs to complete the work and therefore do not include profit.

Term

Function

Pay Item

For contractors, a pay item represents a project deliverable, including the pay quantity defined by the owner and the contracted unit price you will be paid for completion of the work. Pay item prices include your overhead and profit.

For owners, a pay item can be used in a variety of ways or may even be ignored. One way it can be used is to represent funding sources and total funded amounts. It can also be used to bill internal or external partners.

Cost Item

The individual cost-related activities required to complete the deliverables of the project. Cost items represent the costs your budget needs to complete the work and therefore do not include profit.

Contract adjustment options

In Control, you can initiate a contract adjustment in the Workspaces module, by creating a new contract adjustment record. Go to Actions > Budget move and contract adjustment > Contract adjustment.

The contract adjustment record progresses through various steps that walk you through creating the adjustment. The steps to complete the contract adjustment depend on the workflow you select. You can start the workflow by selecting cost items or pay items.

The contract adjustment in InEight Control can be performed using the multiple options for a controlled approval process, including:

Start with cost items

Start with pay items

Auto-calculate

Contract adjustment header

For cost item and pay item contract adjustment workflows, as you progress through the adjustments, the record’s header provides a summary of the contract adjustment’s net budget (cost) and contract (price) change amounts, and the net man-hour change. The Start with Cost items workflow also includes a summary of the markup and fee for the adjustment as well.

Both workflows include an option to define the contract adjustment’s approval probability. For more information on this feature, see Revenue Forecast Probability.