Payment Methods

There are three types of payment methods to choose from:

  • Unit Price
  • Fixed Final Pay
  • Time and Expense

Unit price

Unit Price is the default payment method. This option multiplies the unit price with the pay quantity to calculate the total price.

Fixed final price

Fixed Final Price has two applications:

  • Include a price for Allowance type pay items.

  • Accurately calculate the over/under run pay items that are paid as if they were lump sum items.

Allowance type pay items

Allowance type pay items, sometimes referred to as contingency items, is where the owner provides a pay item and includes their own price for the item to be used by the contractor when completing the bid form. The pay item value becomes part of the proposal where the price for this item is included in the total bid amount and is frequently used by the owner as an allowance for scopes of work that might or might not be used, enabling owners to include in the total value of those items in their budget/contract amount for the project.

To identify a pay item as an allowance item, select Fixed Final Pay , and then enter the allowance amount of the pay item, for example $10,000.

You can then lock the $10,000 pay item so its value does not change when auto-pricing the proposal. Note that the issue now is having a pay item with $10,000 of price and no assigned costs. Assuming you did not want to add any overhead and profit dollars to the $10,000 pay item, in the CBS create and assign a cost item to this pay item and then enter a plug cost of $10,000. The cost category used should be a category that will not be used in a direct or indirect cost markup item, so the markup can be calculated on the other costs in the job. The price of $10,000 is included in the proposal but is offset by the $10,000 of cost in a cost category that will not be used in any markup for overhead or profit.

Calculation of over/under run pay items using Fixed Final Pay method

The Fixed Final Pay method is used to accurately calculate the over/under run pay items that are paid as if they were lump sum items. An issue occurs where a pay item is provided with a quantity (i.e., Superstructure Bridge of 10,000 CY) and you must enter a unit price against the 10,000 CY.

However, if the specifications states that this pay item will not be measured for payment and must be paid as if it were a lump sum item, but your quantity takeoff reveals that you will actually install more or less than the 10,000 CY. For example, your takeoff came to 12,000 CY and you entered the Forecast (TO) Quantity with the 12,000 CY.

In the CBS, the cost of this work is calculated based on the 12,000 CY. Typically, in a quantity underrun/overrun situation, Estimate can help you decide how best to price out these items. In this case, you cannot take advantage of the overrun situation. Using the Fixed Final Pay method with a quantity variance, Estimate can prorate the unit price of the item that will be paid for 10,000 CY, while still accounting for the cost to install all 12,000 CY

The following example shows where you have an overrun normally. It shows that you have the CBS direct cost as $4.00 times 12000 CY for $48,000. Notice the direct costs of $40,000 and the balanced unit of $5.51. This is the normal calculation if this was a true overrun pay item.

When you change the payment method to Fixed Final Price, the CBS cost of $48,000 now shows. Then when you price out the pay item, you get a $48,000 return.

Time and expense

The Time and Expense payment method is used to designate pay items that should be Cost plus pay items when the estimate is published to InEight Control. When the estimate is published to Control, the Time and Expense payment items become Cost plus pay items in Control.