Set up Commitment Budget - Subcontractor

As a Subcontractor, your commitment budget serves as the operational and financial blueprint for the work awarded to you by the General Contractor (GC). When the GC assigns a work item to you, they allocate a total lump sum for your scope through your commitment contract. Linarc gives you the flexibility to take that total allotted amount, break it down into planned tasks and deliverables, and granularly distribute it across specific cost types (such as labor, materials, and equipment) to build your own comprehensive budget. 

Once finalized, you can lock the budget and allocate amounts from your budget line items directly to relevant tasks and activities in your project schedule. You can start building your draft budget once you accept the commitment contract, but can lock your budget only after the GC locks your contract.

Even after you lock your budget, Linarc understands that projects evolve. Using the Budget Adjustment feature, you retain the ability to internally rebalance your financials without needing a formal change order from the GC. You can easily redistribute amounts between different cost types within the same line item, or move surplus funds from one line to cover a deficiency in another, as long as the overall contract value remains unchanged.

You can build this budget from scratch, line-by-line, or seamlessly import it from an Excel file.

Budgeting Guidelines & Finalization

When configuring your commitment financials, keep the following rules in mind:

• Match the Commitment Contract: Your total budget amount must exactly match the overall value of the subcontract agreement provided by the GC.
• Distribute the Full Amount: Ensure your entire contract amount is fully distributed across your budget line items and specific cost types.
• Finalize the Baseline: Once your total contract amount has been exhaustively distributed, your budget can be officially finalized and locked to serve as your definitive financial baseline.

How should I set up the budget and schedule for procured or stored materials based on my contract terms?

The correct setup depends entirely on the specific billing terms outlined in your contract:

• If your contract allows billing upon delivery: Set the materials as a separate line item on your budget and schedule. Mark this line item as 100% completed once the materials are delivered to the site.
• If your contract requires billing as consumed: Add the materials to the same line item as the associated work and let standard progress billing take over.
• If your contract states materials can only be billed when consumption starts: Add the materials to the same line item as the associated work, but use the 'stored materials' feature to bill for them.

To set up your project budget

Ensure you are in the 'Budget' screen within the 'Finance & Controls' module. If you are not already there:

• Click the main menu icon at the top-left of your screen.
• Select 'Contract' under the 'Finance & Controls' section in the drop-down menu.

Tip: Press and hold the 'Cmd' (Mac) or 'Ctrl' (Windows) key on your keyboard while clicking to open the module in a new browser tab.

• Select 'Budget' on the left

The 'Budget Upload' screen displays your total contract amount at the top. As you build your budget, the system dynamically updates the values for distributed, remaining funds until the budget is fully locked.

• Create Budget
• Import Your Budget File
• Save, Advance, and Finalize Your Budget
• Lock the Budget

Create Budget

1. Click 'Create' on the 'Budget Upload' screen.

2. Enter the values for each line item using the columns detailed below. (Note: Mandatory fields are highlighted in red.) 

General Item Details

• Cost Code: The standard alphanumeric code for the task or deliverable, pulled directly from your company's master list. Click inside the cell to search by code number or item name. Once selected, the description will auto-populate. You can change the description as required.
• Description: The name or label of the budget item. This auto-populates based on the selected cost code, but you can edit it as needed.
• Location: The area, region, or spot in the site where the work item is executed. Click inside the cell and select the location from the hierarchical list of project locations.
• Quantity: The total amount of work or deliverables required for this line item. 
• Unit of Measurement (UOM): The standard unit used to measure the quantity (e.g., SF, CY, LF).
• Effort Hours: The estimated total time required to complete the task, measured in man-hours.
• Budget: The total financial allocation for this specific budget line.

Cost Type Breakdown:

• Labor: The estimated cost of the workforce required to complete this task.
• Material: The projected cost of all raw materials, supplies, and consumables needed for the work.
• Equipment: The anticipated cost for renting, operating, or utilizing the machinery and tools required for the job.
• Subcontractor: The budgeted cost for the work assigned to an outsourced trade or specialty contractor. (if applicable)
• Others: Any miscellaneous project expenses (such as permits or fees) that do not fit into the standard categories above.
• Overhead: The indirect operational costs applied to this task. The system auto-calculates this based on teh payment terms in your established commitment contract, though you can manually override the field if necessary. 
• Profit: The anticipated financial margin for this specific work item. The system automatically calculates this by subtracting the sum of your allocated costs from the total budget amount.

3. Build and Manage Rows

• Add a new row: Click +Add New Row to build your budget line-by-line at the bottom of the list.
• Insert a row: Right-click on an existing line and select 'Add New Row 'to insert a new row directly below it.
• Delete a row: To remove a budget line added inadvertently, select the row by clicking its serial number and click the Trash Can icon at the top left of the table. Alternatively, right-click on the line and select 'Delete'.

4. Save Your Progress

• Click 'Save' to store your work. 

You can progressively create the budget from your saved draft at any time. See 'Save, Advance, and Finalize Your Budget' below to learn how to manage your progress, unlock parallel workflows, and lock your financial baseline.

Import Your Budget File

1. Download the Excel Template

• Click 'Download' on the Budget Upload screen to obtain the budget template in Excel format. This file contains all the required column headers for a successful import.

2. Prepare Your Budget File

Enter your budget values into the template. Keep the following requirements in mind as you build your file:

Each row in the spreadsheet must contain only one budget line item.

Ensure that each line item represents a task entry with a distinct cost code.

General Item Details:

• Cost Code: The code representing the division or category of work, according to your company's master list.
• Description: The name or label of the work item or deliverable.
• Quantity: The numeric value of the planned amount of work required. (Required only for self-assigned line items; leave blank if assigning to a subcontractor).
• UOM: The unit of measurement for the work completed (e.g., SF, CY, LF). (Required only for self-assigned line items; leave blank if assigning to a subcontractor).
• Effort Hours: The estimated total labor required to complete the task, measured in man-hours. (Required only for self-assigned line items; leave blank if assigning to a subcontractor).
• Budget: The total financial allocation for this specific budget line.

Cost Type Breakdown:

• Labor: The estimated cost allocated for workforce wages.
• Equipment: The estimated cost allocated for the use or rental of machinery and tools.
• Material: The estimated cost allocated for all raw materials and supplies.
• Overhead (Optional): The indirect operational costs applied to this task. If you leave this blank, the system will auto-calculate it based on your established payment commitment contract terms. If you enter a value, it will supersede the auto-calculated amount.
• Others: Miscellaneous project expenses (e.g., permits, transportation, handling, or vendor fees) that do not fit into the standard categories.
• Subcontractor: The budgeted cost for the work assigned to an outsourced trade or specialty contractor. (If applicable)
• Others: Miscellaneous project expenses (e.g., permits, transportation, handling, or vendor fees) that do not fit into the standard categories.
• Profit (Optional): The anticipated financial margin for this item. If left blank, the system automatically calculates this after upload by subtracting your allocated costs from the Total Cost. If you manually enter a value that doesn't mathematically align, the system will alert you to correct it upon upload.

Once complete, save the Excel file to your computer with an appropriate name.

3. Upload the Budget

• On the 'Budget Upload' screen, click 'Browse' and navigate to your saved Excel file, or simply drag and drop the file directly into the upload box.

The draft project budget is created. Any missing or inappropriate values are highlighted in red.

4. Edit the values and correct the errors, if any. - Click inside the cell and enter/select the correct entry.

5. Specify the location (Optional) - Click inside the 'Location' column of each row and select area, region, or spot in the site where the work item is executed. This is optional.

6. Build and Manage Rows

• Add a new row: Click '+Add New Row' to create new budget lines and enter the values.
• Insert a row: Right-click on an existing line and select 'Add New Row 'to insert a new row directly below it.
• Delete a row: To remove a budget line added inadvertently, select the row by clicking its serial number and click the Trash Can icon at the top left of the table. Alternatively, right-click on the line and select 'Delete.

4. Save Your Progress

• Click 'Save' to store your work.

Save, Advance, and Finalize Your Budget

You can develop the budget incrementally, adding and editing rows over time until the overarching budget is officially locked. Each time you save, the distributed amount and remaining balance displayed at the top of the screen will automatically update.

• Parallel SOV Configuration: You can start configuring your project Schedule of Values (SOV) using your currently available budget lines. You can then seamlessly finalize the SOV once the master budget is fully locked. See Configure Subcontract SOV for guidance.

Best Practices for Finalizing Your Budget

• Distribute the Full Amount: Ensure your entire contract amount is fully distributed across your budget line items before locking.
• Create a Reserve: We highly recommend adding a specific line item with the cost code 99-9999 and the label Unallocated. Assign your remaining or reserved funds to this line. Even after the budget is locked, these unallocated funds can be easily shifted to other budget lines to cover evolving project needs. See Budget Adjustments for more details.

Once your budget is fully built, lock it to secure your definitive financial baseline and prevent unintended changes to the total amount. 

Lock the Budget

To ensure financial accuracy, the system requires a few prerequisites before this action can be taken. The Lock button will only appear at the top-right of your screen once the following conditions are met:

• The total contract amount has been exhaustively distributed across your budget line items.
• The remaining balance from the contract amount is exactly zero.
• Your Commitment Contract has been officially finalized and locked.

To lock the budget

• Click the 'Lock Budget' button at the top-right

• Click 'Yes' to confirm your action.

Next Step

• Allocate Funds to Work Items: Assign budget amounts directly to scheduled tasks. This auto-generates a planned billing schedule, making it easy to issue periodic, progress-based invoices to the General Contractor.