How can I incorporate using a ‘Contingency’ account when executing Owner change orders?
NOTE: Include the line item ‘Contingency’ with the allocated budget amount to your project cost worksheet in the bidding phase or add it via internal change order in the In Progress phase (this will pull from your OH & P).
Create an Owner RFP or Owner Change Order
Click on Add Item Description #1 and input the CO Item Description.
Click on Add Item 1 Cost and add cost items to include the items you wish to increase or add to the project. Add the contingency cost code to each item in the change order or RFP.
Save the Owner Change Order or RFP.
Request pricing from subs or add costs to the sub box yourself (This will create a change to these line items on your budget report when the owner change order is approved).
Add the cost to the owner in the owner boxes. IMPORTANT: Be sure to zero out all markups (Burden, S Tax, General Liability, Overhead & Profit) as you have already applied these costs to contingency in the bidding phase.
Owner price – Sub Price = change to OH & P.
Reduce Contingency by entering a negative number equal to the total of the item. An owner total not equal to zero will change the owner contract amount by that amount so be sure to offset the items accurately with the contingency owner amount.
Check the box for the Owner Change Order, hover over Owner CO Tasks and click Sign: Checked Owner CO to send it to the owner. This communicates to him that you have made a change to the contingency account.
Once the Owner approves, you can also add these net zero change orders to your pay application to show a running total of changes each month.