In this guide, you'll learn how to set up Procore's Financial Management tools when starting a new project. You'll also learn which tool to use to perform common financial tasks on your construction projects.
Note: If you have integrated Procore with Sage 300 CRE®, please refer to the Sage 300 CRE Connector: Financial Tools Guide.
Project Financials Tools
You'll want to set up the Project Financials tools in the order detailed below.
- Budget Tool
- Head Contracts Tool
- Commitments Tool
- Change Management Tools
- Invoicing Tool
- Direct Costs Tool
Procore's Budget tool helps your project team efficiently manage your a 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.
- Set Up Your Project's Budget. 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 customizable 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 Modifications, 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 Resource 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 Modifications. After you've locked your original budget and set up the other tools listed in this guide, you can use the budget modifications feature to transfer money between cost codes. For example, if you have a cost savings related to one cost code because it came in under budget, but expect another cost code to come in over budget, you can reallocate fund from the first cost code and add it to the latter cost code as a contingency. Budget modifications only appear on the Budget tool, so your vendors will not see your internal adjustments. For details, see Create a Budget Modification
To learn what else you can do with the Budget tool, see the Budget landing page.
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 Contract. 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 chose from two method for setting up your head contract: (1) You can manually Update the Schedule of Values (SOV) 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.
TipDoes 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 Owner Progress Claims. After your head contract is set and you've set up the Commitments tool as described below, you can also create and mange your owner progress claims. 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 Register. After you receive your payment, you can also create a register 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.
To learn what else you can do with the Head Contracts tool, see the Head Contracts landing page.
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 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 Subcontracts. A subcontract is a contractual agreement between a general contracting company and the subcontractors that 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 an Progress Claim on Behalf of a Subcontractor or you can provide your subcontractor's progress claim contacts with the appropriate permissions to access their purchase orders and subcontracts. See Create Progress Claim Contacts. 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 Register. After you start issuing payments on your project, you can create a register 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 the Commitments landing page.
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.
Variations with Change Events
Change events are created for anything on a project that looks like it may create an additional cost. Creating a change event allows you to prepare for the cost of a change before it becomes an actual cost. After creating a change event, you can then create an RFQ (Request for Quote), which is sent to the appropriate subcontractors for pricing. When RFQs are created and responded to by the assigned subcontractors, variations can then be created based upon the submitted quote.
- Configure Your Variation Tier Settings. You can choose between a one (1)-, two (2)-, and three (3)-tier variation setting. Each tier adds a layer to your team's overall change management workflow. An lower number of tiers offers the most straightforward workflow. An increased number of tiers provides your team with a more complex workflow, but gives your team more control over changes. The most common settings among Procore users are to use the one (1) or two (2) tier setting. To learn more, see What are the different variation tiers? Once you've decided, you can Configure the Number of Head Contract Variation Tiers and Configure the Number of Commitment Variation Tiers.
- Create Change Events. On a construction project, a change event is any change that affects the original scope of a construction project. There are numerous ways to create change events in Procore. In addition to using the Change Events tool (see Create a Change Event), you can also use any of the options available in supported Procore tool or using Procore's mobile platform. For details on those options, see Which Procore tools can I use to create a change event?
- Create RFQs from Change Events and Review RFQ Responses. If you need to create an RFQ for your subcontractors to submit pricing, see Create RFQs from a Change Event. You can then review your subcontractor's quotes to determine if you want to move ahead with creating a variation. See Review RFQ Responses.
- Create Variations. You can create two types of changes orders in Procore:
To learn what else you can do with the Change Events tool, see the Change Events landing page.
Variations without Change Events
If your team decides not to enable the Change Events tool, you can still use the Variations tool to account for additional costs. For most Procore customers, this change management workflow starts off by creating a Potential Variation (PV).
- Create a Potential Variation (PV). Use a potential change variation to manage any addition costs affecting the head contract. When creating a PV, you can only enter a dollar amount. Later, when you update the Schedule of Values (SOV) for the PV, you'll have the option to select a cost code. Ideally, the PV will affect a cost code already on the project's budget. This allows you to see the budget increase in the project's Budget tool. See Create a Potential Variation (PV)
- Create a Commitment Variation (CV). After the PV is created, you move on to create a CV. The CV acts as a request for pricing from the subcontractor who will be responsible for the completing the scope of work that you outlined in the PV. You can compare the CV to the corresponding PV and view your variance between the two. To learn more, see Create a CV From a PV.
- Create a Variation Request (VR). After you've created PCOs, you can package one or multiple PCOs intoa Variation Requests (VR). CORs are typically the documents that are submitted for approval and can be used for submitting either individual PCOs or for grouping PCOs in order to streamline the review and approval process. See Create a Variation Request (VR).
- Create a Head Contract Variation (HCV). Next, you can begin creating variations. Note that when you set a variation's status set to Pending, it appears in the 'Pending Budget Changes' column of the Budget tool. After the HCV is set to Approved, the total dollar amount change is reflected in the 'Approved VARs' column of the Budget tool. Approved HCVs can be added to owner progress claims. For details, see Create a Head Contract Variation (HCV).
- Create a Commitment Variation (CV). A commitment variation outlines variations in costs that affect the contract between the general contracting company and a vendor or subcontractor. Once you have marked the CV as approved, the dollar change will be reflected in the "Committed Costs" column on the Budget tool. Commitments and potential CVs with a status of "Pending" will show up in the "Pending Cost Changes" column on the Budget tool. See Create a Commitment Variation (CV).
To learn what else you can do with the Variations tool, see the Variations landing page.
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, see Create Manual Billing Periods in the Invoicing Tool and Create Automatic Billing Periods in the Invoicing Tool.
- Create and Manage Subcontractor Progress Claims. With the Invoicing tool, you can keep user permissions restricted to your project team and Create an Progress Claim on Behalf of a Subcontractor 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 Commitment. Then, when you are ready for your subcontractors to bill you for their work, you can Send Subcontractor Progress Claim Invitations and your subcontractors can then Create an Submit an Progress Claim as a Subcontractor. You can then review and approve these progress claims when its time to move forward with making payments.
To learn what else you can do with the Invoicing tool, see the Invoicing landing page.
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 expenses 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 the Direct Costs landing page.