Creating project contracts

You can create project contracts within summary projects.

  1. Select Project Setup.
  2. On the Structure tab, open a project structure.
  3. On the Hierarchy tab, open a summary project.
  4. On the Main tab, click Create Contract.
  5. Specify this information:
    Contract Amount
    Specify the contract amount.
    Currency
    Select the currency. If this field is blank, then the default currency from the project structure is used when the project contract is saved.
    Contract ID
    Specify a contract ID. If this field is blank, the project contract is the default value.
    Contract Type
    Select a contract type.
    Maximum Fees
    Specify the maximum amount for the contract fees. The fees cannot exceed the contract amount.
    Billing Method
    Select the default billing method for the contract. Billing methods can be overridden at the posting project.
    • Select Cost Reimbursement, Cost Plus, Time and Materials, or Rate Table for transaction-based billing.
    • Select Milestone billing for event- or deliverable-based billing.
    • Select Installment billing for billing that is based on the number of installments.

    You can change a billing method of Milestone or Installment if milestones or installments do not exist. You cannot change a transaction-based billing method, but you can create override milestones for the funding source. The override milestone is invoiced in addition to the transaction billing. If you do not want to invoice the expense transactions, then you can put them on hold and only invoice the milestones.

    Billing Rate Table
    If the Billing Method is Rate Table, then select the rate table to use for billing.
    Markup Percent
    If the Billing Method is Cost Plus, Time And Materials, or Rate Table, specify the markup percentage to use for billing.
    Revenue Recognition
    Select the way in which revenue is recognized for this contract. Project contract revenue can be recognized as Combined at the time of invoicing or Separate, which means it is independent of invoicing.
    Revenue Method
    If the Revenue Recognition is Separate, select the method for recognizing revenue:
    • Select Full Accrual for a valid transaction-based revenue method.
    • Select Milestone for event revenue recognition.
    • Select Installment for revenue that is based on a number of installments.
    • Select Percentage of Completion for revenue that is based on percent complete.

    You can change a revenue method of Milestone, Installment, or Percentage of Completion if milestones, installments, or percentage of completions do not exist. You cannot change a transaction-based revenue method, but you can create override milestones for the funding source. The override milestone is recognized in addition to the transaction revenue recognition. If you do not want to recognize revenue on the expense transactions, then you can put them on hold and only recognize revenue on the milestones.

    Defer And Hold Remainder
    Select the option for transactions where the funding sources are not billed or recognized at 100 percent:
    • Blank: When a single funding source is invoiced or recognized, partially billed, or partially recognized, transactions are not created. If funds are not available for the entire expense transaction to invoice or recognize, the entire amount is unbilled or unrecognized. If a single funding source is not selected when transactions are invoiced or recognized, partials are created when limits are exceeded and a 100 percent source is available.
    • Defer Only: When a single funding source is invoiced or recognized, a partially billed or partially recognized transaction is created for the remaining amount. The transaction is not put on hold.
    • Defer And Hold: When a single funding source is invoiced or recognized, a partially billed or partially recognized transaction is created for the remaining amount and is put on hold.
    Allocate Expenditures
    This feature is replaced by Front End Split and cannot be used if FES is true. If this check box is selected, the original expense distributions are reversed and new distributions are created with the funding source that is in Finance Dimension 2.
    Exclude Unpaid AP
    Select this check box to ensure that unpaid Payables invoices are not selected for billing in Billing. If this check box is cleared, all Payables invoices for the contract activity are eligible for billing, regardless of whether they are paid.

    See the Payables User Guide.

    Front End Split
    Select this check box to split distributions before project contracts are invoiced. Front end split can be used for distribution actions in the RQ, PO, AP, and PS systems. This field is only available if front end split is enabled on the finance enterprise group.
  6. Click Submit.