Table of Contents
For OwnersThis user guide provides project owners with information about how to use the Project Financials tools in Procore to streamline the financial business processes across a project's lifecycle. You'll learn how to configure each tool and perform common tasks using recommended best practices. Some of the topics in this guide include: |
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 unique a project-level WBS.
With Procore's WBS, you can define your company's budget code structure. You also have the option of customizing the budget code structure for a project. Your budget code structure can include the following segments:
Do we need to create a unique budget code structure? When thinking about all the types of work performed on a construction project, you will need budget codes to manage and track your work. With budget codes, your team can track, manage and create reports on quantities, amounts, budgets and other financial information (such as profit).
Some questions to ask when creating a unique budget code structure:
As you prepare for the implementation process, Procore suggests that you always review your project and cost spreadsheets with your Procore Project Manager (your company's professional services and implementation contact at Procore). They can help you decide which budget code structure will work best for your business.
Many companies design their budget code structure to align with the CSI MasterFormat. Other companies decide to implement a budget code structure that is unique to their industry, organisation or project environment. Regardless of the structure, you can submit a request to have a Procore representative import segment items for you or you can expedite the import process and perform your own imports using the Procore Imports App.
To learn more about WBS, see the Work Breakdown Structure landing page. We recommend reading About Work Breakdown Structure and reviewing the steps in Create Your Company's Default Work Breakdown Structure and Create Your Project's Work Breakdown Structure with your team.
The Budget tool shows details about all estimated costs related to a project. The first step is to create your budget directly in Procore (or you can alternatively import an existing budget). Owners commonly use the budget as an internal tool for managing project contracts and costs associated with various contractors. It is also used to track the estimated cost of completion—to show where you are under/over your budget across projects. However, for privacy reasons, budget information is typically hidden from external collaborators.
The Company level Admin tool lets you set up a budget view (see What are Procore's standard budget views?), which is a custom way of configuring and viewing your budget. Your custom budget view can include a wide variety of data columns, such as Original Budget Amount, Budget Changes, Revised Budget, Pending Budget Changes and more.
For more information about the Budget tool, see the Budget landing page.
Procore's Project Financials tools send data to the Budget tool through the related budget codes assigned to each tool's line items. As a result, you'll be able to use Procore's Forecast to Complete feature to accurately forecast the estimated additional cost of each line item.
For more information about the Budget tool, see the Budget landing page.
The Budget Changes column allows you to reallocate funds on your budget to transfer money between Budget line items. 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 pull funds from the former budget code and add it to the latter as a contingency. Since budget changes only appear on the Budget tool, external team members or vendors will not see your internal budget adjustments. However, it will give you a better method for strategically balancing budget line items throughout the course of construction to make sure you stay under budget.
For more information about the Budget tool, see the Budget landing page.
With Procore's Advanced Forecasting view, your company can spread budget values over future months to help project teams evaluate potential cost conditions by creating customised advanced forecasting views and assigning those views to project budgets. Important things to note include:
Direct Costs are the costs your business incurs that are not associated with commitments (for example, reimbursable expenses, and overhead costs). The different types of direct costs that users can create in Procore are progress claims, expenses, and payroll. Progress Claims are received from a vendor and are costs that are not tied to a commitment with that vendor. Expenses are used to track costs that are allocated from the company to the project, for things such as computers, phones, travel, and so on. You can also track monthly payroll costs and classify them by budget code so that the payroll amounts reflect each month on the budget.
For more information about the Direct Costs tool, see the Direct Costs landing page.
Owners with an upstream budget approval requirement (or an internal head contractor) often find value using the Funding tool to set up upstream contracts and progress claims. After your budget is set up and visible in the project's Budget tool, you can create your project's funding. This is where all of your receivable progress claims (also called, upstream billings) and funding variations will be created and managed.
If a project's budget and funding are identical, or if the funding is a division-level summary of the budget, then the budget can be used to create the funding. Often, the internal budget and the external funding have different levels of detail, so the funding is not just a division-level summary of the budget.
You can set up the funding Schedule of Values (SOV) directly in Procore or you can import one. After setup is complete, your funding must be approved before project users can create variations or head contract progress claim. If you don't want to manage funding in Procore, the Funding tool can be removed. See Add and Remove Project Tools.
For more information about the Funding tool, see the Funding Tool.
If the Funding tool is disabled, see the links below:
Once the funding is approved (or if you chose to remove the Funding tool from your project because you don't have an upstream budget approval requirement) you can set up your contracts. In Procore, there are two types of contracts: purchase orders and subcontracts.
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 project owner) and issued to a 'seller' (for example, a head contractor, subcontractor or speciality contractor) to cover the cost of a contract. Once accepted by the 'seller,' a purchase order represents an agreement between the two parties.
To learn more, see Create a Purchase Order.
For more information about the Commitments tool, see the Commitments landing page.
Contracts represent the contractual agreement between the Owner company and the downstream collaborators (i.e., contractors, vendors, suppliers) performing a scope of work. Contracts are either created from a winning tender or in the Project level Commitments tool. When you link a contract line item to a funding line item, the connection is reflected on funding reports (i.e., the Buyout Report and the Job Cost to Budget Comparison Report).
When you select the related budget code for the contract that it's associated with, the connection is automatically reflected on all budget reports (i.e., Budget Detail Report, Budget Summary Report, etc.) Commitment line items will appear on the budget just like commitment variations.
Procore's Change Events tool was designed for any work project that can potentially result in an additional cost. With this tool, you create a change event that helps your team better understand the potential cost of a change, before it becomes an actual cost. After creating a change event, you can then use the tool to create an RFQ (Request for Quote), which is sent to the appropriate downstream collaborators for pricing.
After RFQs are created and your contractors respond with a quote, your team can also create variations that are based on the submitted quote. You can configure your variation workflow by setting the number of variation tiers: one, two or three tiers. More variation tiers make for a more complex workflow but provide an increased amount of control. See What are the different variation tier settings in Project Financials?
The sample image below shows you how a company might manage its change management process using the Change Events tool. Keep in mind that this image is just showing you the options you have when enabling the Change Events tools. If you would prefer to simply create variations, you do not have to enable the Change Events tool.
To learn more about the Change Events tool, please read:
For more information about the Change Events tool, see the Change Events landing page.
After you build out your commitment contracts, you can then create variations to account for additional costs. While most owners prefer to start out using the 2-tier variation tiers, the choice to configure it to use a 1-tier, 2-tier or 3-tier setting exists. More variation tiers make for a more complex workflow but provide an increased amount of control.
For more information about the Variations tool, see the Variations landing page.
As the project progresses and its contracts have been created and approved, you can start inviting collaborators to bill you. There are two (2) types of progress claims in Procore:
To learn more about invoicing in Procore:
For more information, see the Commitments landing page and the Funding landing page.
Once head contract progress claim and subcontractor progress claims are approved and completed, you can create payments in Procore to keep a record of payments received.
For more information, see the Commitments landing page and the Head Contract landing page.