A head contract is a formal, legal agreement between a construction project owner and a contractor. In this relationship, the project owner is typically the contracting authority who initiates the agreement, possesses the rights to develop a property and finances the project. The contractor (also called the head contractor, main contractor or head contractor) is hired by the project owner and accepts responsibility and liability for completing the construction project. The contractor also enters into other agreements with subcontractors, called commitments in Procore, in order to complete the project's work.
If your company has purchased Procore to manage your construction projects, you can create one (1) or more head contracts for each new construction project.
When to Create a Single Head Contract
Most Procore customers who manage their construction projects in Procore create a single head contract for a single construction project. If you are a head contractor, creating a single head contract is the simplest way to manage a construction project when it has a single project owner and a single funding source.
When to Create Multiple Head Contracts
If a project has multiple owners, multiple funding sources and/or multiple project delivery methods, you can also choose to create multiple head contracts for a single project. If you choose to create multiple head contracts in a single Procore project, there are some limitations. For details, see Are there any system limitations when projects have multiple head contracts? Reasons for choosing to create multiple head contracts include:
- Multiple Funding Sources. A project can have multiple owners, each of whom provides an amount of the project funding. For example, a person, a company, a public authority or a combination of all these examples. See Configure Advanced Settings: Head Contracts.
- Multiple Stages. A project can be portioned into stages. For example, you might require separate head contracts for pre-construction, course of construction and aftercare/maintenance.
- Multiple Phases. A project can be portioned into phases. For example, you might require separate head contracts for the foundation, plumbing, HVAC and so on.
- Guaranteed Maximum Price (GMP) Contracts. A project can be fast-tracked or a phased GMP job. For example, you might require multiple head contracts for each established scope-of-work package.
- Construction Manager as Advisor (CMa) Delivery Methods. A head contractor operating as a CMa might need to manage multiple head contracts between an owner and various contractors.
After you create a head contract, you can then update its Program of Values (SOV). For details, see Update the Program of Values (SOV) on a Head Contract.
Is your project's head contract SOV similar to the line items on your project's budget? If so, Procore recommends creating the project's budget before the head contract. This allows you to use the Head Contracts tool's import features to quickly Create the Head Contract SOV from the Project Budget which eliminates repetitive data entry.
Yes. When using the Head Contracts tool to create multiple head contracts on a single construction project, please be aware of these limitations:
- While you can import budget line items to a Head Contract's Program of Values (SOV), you do NOT have the ability to choose which budget line items that you want to import
Please be aware that you must import all of a budget's line items to each head contract. Because most customers with multiple head contracts typically only want to import certain line items from their budget, use caution before using the project budget to create your head contract's SOVs (see Create a Head Contract SOV from the Project Budget). Doing so can lead to a need to delete the unwanted line items from each head contract's SOV. To avoid this extra step, Procore recommends that you choose a different method to add line items to the head contract's SOV. For more information, see Update the Program of Values on a Head Contract.
- You will be limited to one (1) set of granular permissions for each project
Procore does NOT support the creation of unique granular permissions for each contract on a project. See Grant Granular Permissions in a Permission Template.
- You will NOT be able to sort, add filters or group report data from the Head Contract tool in other tools
You will NOT be able to sort change events by each head contract in the Change Events list page. To workaround this limitation, Procore recommends building a custom project report to show financial data that is sorted, filtered or grouped by it's respective head contract. See Create a Custom Project Report.
- You will NOT have the ability to map your commitments or automatically complete cost data
You will not be able to map purchase orders and subcontracts to more than one head contracts. The system will also be restricted from automatically completing cost data. If the same cost code & cost type combination is used on more than one (1) head contract, the system will not be able to automatically complete the direct cost amount and/or subcontractor progress claim amount to your owner progress claim. To avoid this limitation, you can create a unique billing period or sub job for each head contract.