Head Contractor

Financial Management User Guide

For Head Contractors This user guide provides head contractors with information about how to use Procore's Project Financials tools to streamline your financial business processes across your project's lifecycles. Some of the things you'll learn in this guide include:

How to set up your Work Breakdown Structure. Procore provides you with a default Work Breakdown Structure (WBS) that includes the cost code, cost type and optional sub job segments. With WBS you can create a company and/or project level budget code structure for use with Procore's Project Financials tools. To learn more, see Work Breakdown Structure Setup. How to add or import an accurate project budget. Learn how to add budget line items to your project, configure and assign budget views to your project and how to set up a forecasting view to identify and track critical project costs. Use data collected from the field to track your project's labour costs and to log production quantities in your budget. Learn how to create budget changes to reallocate funds from one budget line item to another. See Budget Setup. How to create one (or multiple) head contracts for your project. Set up your head contract tool and learn about the considerations to keep in mind if your project has multiple funding sources or delivery methods. Manage the owner progress claim process and create a payment received log. See Head Contracts Tool. How to manage your project's purchase orders and subcontracts. Learn about the Commitments tool's configuration settings and how to create purchase orders and subcontracts. Designate progress claim contacts on your contracts and create a payment issued log. See Commitments Tool. How to improve oversight and management project changes. Choose between managing variations with or without the Change Events tool. Configure your variation tier settings for your contracts. Bring change management to the field––facilitating faster approvals, more accurate communication and eliminating the need to proceed at risk. See Change Management Tools. How to administer the invoicing process for your project's subcontractors. Define your billing periods and choose your project's desired method for creating and submitting subcontractor progress claims. See Invoicing Tool. How to manage your project's direct costs. Learn how to manage costs not associated with your purchase orders and commitments. See Direct Costs Tool.

Work Breakdown Structure Setup

The first step when setting up Procore's Project Financials tools in a Procore project is to create your company's Work Breakdown Structure. You also have the option to create a unique project level WBS. 

Budget Setup

Procore's Budget tool helps your project team efficiently manage your project's budget. It is designed to help your team make informed financial decisions, track expenses against your budget in real-time, analyse historical snapshots, input detailed forecasts and offers deeper visibility into the financial status of your project.  

• Add Your Project's Budget Data. When getting started on a project, the first step is to Set up a Budget in a New Procore Project. You can choose from two methods: (1) Add a Budget Line Item directly to the budget tool or (2) Download and complete a budget template and complete the steps to Import a Budget. 
• Configure Your Project's Budget Views. After adding your project's budget data, your Procore Administrator might want to explore our dynamic and customisable budget views. For details, see Set up a New Budget View. You can set up one or multiple budget views, along with a wide variety of data columns, such as Original Budget Amount, Budget Changes, Revised Budget, Pending Budget Changes and more. You can also actively manage and monitor your project's budget using the 'Forecast to Complete' feature. For details, see Use the Forecast To Complete Feature. 
• Identify and Track Trends with the Procore Forecasting View. Designed for owners (and contractors) who want to avoid cost overruns, your Procore Administrator can also request to enable the forecasting view in Procore. This lets you view how your construction project's cash flows over time by spreading the 'Project Cost to Complete' column value (or any column you define) across a time period. You can then perform line-by-line analysis to make informed adjustments to your budget allocation. To learn more, see Set Up a New Forecasting View. 
• Utilise Data Collected in the Field to Track Labour Costs and Production Quantities. For customers that have purchased Procore's Workforce Management and Field Productivity tools, your budget can be set to automatically  Add a Budget View for Real-Time Labour Costing and Set Up the Procore Labour Productivity Cost Budget View.
• Reallocate Funds from One Line Item to Another Using Budget Changes. After you've locked your original budget and set up the other tools listed in this guide,  you can use the budget changes feature to transfer money between budget codes. For example, if you have cost savings related to one budget code because it came in under budget, but expect another budget code to come in over budget, you can reallocate funds from the first budget code and add it to the latter budget code as a contingency. Budget changes only appear on the Budget tool, so your vendors will not see your internal adjustments. For details, see Create Budget Changes

To learn what else you can do with the Budget tool, see Budget.

Head Contracts Tool

After setting up the Budget tool, you can begin creating one or multiple head contracts for your project. With the Head Contracts tool, your team can replace stacks of paper and expensive printer costs with a central location for digital contract management. 

• Set Up Your Head Contracts.  While most Procore customers create a single head contract for a single construction project, project teams do have the option to create multiple head contracts in the Head Contracts tool. For details, see Create Head Contacts. Similar to budget, you can also choose from two methods for setting up your head contract: (1) You can manually Update the Schedule of Values on a Head Contract or (2) you can Import a Head Contract SOV from a CSV File. When finished with the initial setup, simply approve it. See Approve a Head Contract.

   Tip

  Does your construction project have multiple funding sources or delivery methods?  Learn why some Procore clients decide to create multiple head contracts on their Procore project. This is helpful when you have a need to divide the scope of work on a project into multiple phases or stages, however, doing so does present a few considerations.  For more information, see Are there any system limitations when projects have multiple head contracts?
• Create and Manage Head Contract Progress Claim. After your head contract is set and you've set up the Commitments tool as described below, you can also create and manage your head contract progress claim. An owner progress claim is an itemized record of a financial transaction between a project owner and a company responsible for completing work. Typically, it is issued by a head contractor and submitted to a project owner to signal that a payment is due for completed work. See Create an Owner Progress Claim.
• Create a Payments Received Log.  After you receive your payment, you can also create a log to track the payments you've received. Your budget and budget reports are automatically updated to reflect your entries. For details, see Create a Payment Received for a Head Contract.

To learn what else you can do with the Head Contracts tool, see Head Contracts.

Commitments Tool

After your contract(s) are approved and completed in the Head Contracts tool, you can begin setting up your project's financial commitments. In Procore, you can create two types of 'commitments': subcontracts and purchase orders. 

• Set Up Your Contract Configuration, Dates, Distribution Lists and Settings. Your company's Procore Administrator can work with you to define your project's default contract configuration. This is an important step before you start creating commitments on a project. You can choose the number of variation tiers for your commitments. You can also enable a variety of dates to use on your contracts by default. Settings also include default distribution list settings, your default accounting methods, setting a retention percent (if applicable) and deciding to enable financial markup or payments by default. For details, see Configure Settings: Commitments. 
• Create Your Project's Purchase Orders. In Procore, a Purchase Order (PO) is a documented financial commitment that details the types, quantities and agreed-upon prices for products or services. As part of the procurement process, purchase orders are created by a 'buyer' (for example, a head contractor) and issued to a 'seller' (for example, a subcontractor) to cover the cost of a contract. Once accepted by the 'seller,' a purchase order represents an agreement between the two parties. See Create a Purchase Order.
• Create Your Project's Subcontracts. A subcontract is a contractual agreement between a general contracting company and the subcontractors who perform the scope of work. In Procore, there are two ways to create a subcontract: (1) You can Award a Winning Tender and Convert it into a Subcontract or you can (2) directly Create a Subcontract in the Commitments tool. 
• Create Subcontractor Progress Claims and Manage Progress Claim Contacts. Using the Commitments or Invoicing tool, you can also Create a Progress Claim on Behalf of a Progress Claim Contact or you can provide your subcontractor's progress claim contacts with the appropriate permissions to access their purchase orders and subcontracts. See Add Progress Claim Contacts to a Purchase Order or Subcontract. Users with 'Admin' permission on the Commitments tool can also use those permissions to manage progress claims with the Invoicing Tool. 
• Create a Payments Issued Log.  After you start issuing payments on your project, you can create a log to track the payments you've issued. Your budget and budget reports are automatically updated to reflect your entries. See Add Payments Issued. 

To learn what else you can do with the Commitments tool, see Commitments.

Change Management Tools

Next, start learning about Procore's change management tools. There are two options for setting up these tools: (1) Enable the Variations and Change Events tools or, (2) Enable only the Variations tool. 

Invoicing Tool

Procore's Invoicing tool uses the user permission granted in the Commitments and Head Contracts tool. As your project progresses and the contracts have been created and approved, subcontractors can bill you for completed work via subcontractor progress claims. You can also create owner progress claims, which can then be emailed to the owner or the party that is being requested for payment.

• Manage Billing Periods. In Procore, a billing period defines the billing cycle that is used for invoicing your project's subcontractors. In addition to defining the frequency of the billing period (for example, monthly or weekly), it also defines the billing period's start date, the progress claim's due date and the billing period's end date. To learn how to create a billing period with the Invoicing tool, see Create Manual Billing Periods and Create Automatic Billing Periods.
• Create and Manage Subcontractor Progress Claims. With the Invoicing tool, you can keep user permissions restricted to your project team and Create a Progress Claim on Behalf of a Progress Claim Contact or you can provide your subcontractor's progress claim contacts with the appropriate permissions to access their purchase orders and subcontracts. See Add Progress Claim Contacts to a Purchase Order or Subcontract. Then, when you are ready for your subcontractors to bill you for their work, you can Send an 'Invite to Bill' to a Progress Claim Contact and your subcontractors can then Submit a New Progress Claim as a Progress Claim Contact. You can then review and approve these progress claims.

To learn what else you can do with the Invoicing tool, see Invoicing

Direct Costs Tool

In Procore, the term direct cost is used to refer to a cost on a construction project that is NOT associated with a commitment. Using the Direct Costs tool, you can create these items:

• Progress Claims. Create a direct cost for a paper progress claim from a non-contracted vendor for items such as printer ink, computer paper or postage. 
• Expenses. Create a direct cost for expenses that might include computer equipment, telephones or internal equipment rentals. 
• Payroll. Create a direct cost for monthly payroll costs classified by cost code, so that payroll amounts reflect each month on the budget. 

To learn how to create a direct cost, see Create a Direct Cost. 

To learn what else you can do with the Direct Costs tool, see Direct Costs