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Subcontractor Contract Agreements

Subcontractor contract agreements allow you to create and manage contracts for subcontractors - for multiple jobs - and to track change orders and payments to those subcontractors. When you create a contract, you distribute the contract amount across the relevant cost codes. These cost codes must be assigned to the job.

You must have purchased the Advanced Subcontractor feature to use this function.

  • A contract can have one of four statuses: Pending, Confirmed, Closed, and Canceled. Confirmed is the active status, and the only one in which you can create change orders and post payments. Pending allows you to start entering information before a contract being finalized and approved.
  • Retention can be applied per cost code.
  • A subcontractor can have multiple contracts on one job.
  • Unposted costs are reflected in committed costs in Job Cost
  • A contract can be closed, even if there is retention left to be paid.

A subcontractor contract agreement cannot be completed and all remaining payments created if any job on the agreement is closed. Please be aware of this functional requirement when closing related jobs.

Suppressing Taxes for Contract Agreement AP Transactions

In some non-US locales, taxes are suppressed when posting to jobs. You can suppress taxes on AP transactions created for contract agreements as well.

  1. Select Microsoft Dynamics GP > Tools > Setup > Job Cost > Job Cost Setup > Setup Options. The Job Cost Setup Options window opens.
  2. Mark Suppress Contract Payment tax update to Job Cost and Service Management.
  3. Select Save.

Customizing Labels for Contract Agreement User-Defined Fields

  1. Select Microsoft Dynamics GP > Tools > Setup > Job Cost > User-Defined Label Setup > Contract Agreement. The User Defined Contact Agreement window opens.

  2. Enter the names for the desired fields in the left column. Select Save when finished.

Creating Subcontractor Contracts

When you create a contract agreement, it defaults to a Pending state. This allows you to enter information before a contract is finalized, at which time, you would change the contract to Confirmed.

  1. Select Cards > Job Cost > Contract Agreement. The Contract Agreement window opens.
  2. Select a Contract Vendor, and enter a Contract Number and Contract Name.
  3. Complete the following fields; some are filled automatically by the system and cannot be edited.
    • Contract Status
      Defaults to Pending. As soon as the Contract Agreement window is filled in and saved, you can change the status to Confirmed - the status used when the contract is active; payments and change orders can be created only if the contract is Confirmed. Canceled means the contract will no longer be active, meaning no further activity is allowed and the contract cannot be reversed. Closed means the contract has been completely fulfilled (all payments made).
    • Original Contract Amount
      Enter the total original contract amount. Once the contract status is Confirmed, the contract amount can be changed only with change orders.
    • Change Orders
      Fills automatically with the sum of all change orders applied to this contract.
    • Contract To Date
      Fills automatically with the amount of the original contract amount plus change orders minus any payments made.
    • Tax Schedule
      Enter the tax schedule to be used with this contract.
    • Retention %
      Enter the retention percent that will be withheld from payment until services are favorably satisfied. When you assign cost codes to this contract, you can enter unique retention percentages for each cost code, if necessary.
    • Estimated % Complete
      If you want to track estimated completion percentage, enter it here. This field is not updated by the system.
    • Scheduled Start/Completion Dates
      Enter the start and completion dates of the contract agreement.
    • User-Defined fields
      User-defined fields are used to store additional information. If your organization has defined these, consult with your Manager or Supervisor to determine if these are required.
  4. Save the window. When a Confirmed contract agreement is saved, the costs become committed costs in Job Cost.
  5. To distribute the contract amount to cost codes, select the Add Cost Codes button. The Available Contract Cost Codes window opens.
  6. Select a Job Number. The available cost codes appear.
  7. Select the cost codes to distribute. You can multi-select several by using CTRL-click and SHFT-Select. After selection, select the Select button. The window closes and the cost codes appear in the Contract Agreement window.

Choosing Costs Codes

  1. In the Contract Cost Codes scrolling window, you can specify a Retention% and Cost Code Cost; this cost is the amount of the total contract amount you want to apply to this cost code.
  2. The total of the distributed cost code amounts MUST equal the total contract amount; otherwise, you will receive a message and will not be able to save the contract agreement.
  3. When finished distributed the contract amount, select Save. When you are satisfied with the information entered and ready to move forward with the contract agreement, change the Contract Status to Confirmed, then Save again. The Change Orders and Payments buttons will be enabled.

While a contract is Pending, you can make changes and save as many times as you like, without affecting costs or balances. Only after confirming a contract will costs and amounts be updated.

Creating Change Orders for a Contract Agreement

Just as you can for jobs, you can create change orders for contract agreements and assign them per cost code.

  1. Select Cards > Job Cost > Contract Agreement. The Contract Agreement window opens.
  2. Select a contract agreement, then select the Change Orders button at the top of the window. The Contract Change Order Inquiry window opens. Any existing change orders are displayed in the window.
  3. To create a change order, select Add Change Orders at the bottom right of the window. The Contract Agreement Change Order window opens.
  4. Enter a Change Order Number. This number must be unique for every change order.
  5. Enter a Change Order Amount. Retention % defaults from the Contract Agreement window.
  6. To distribute the contract amount to cost codes, select the Add Cost Codes button. The Available Contract Cost Codes window opens.
  7. Select a Job Number. The available cost codes appear. Using the lookup, you can select to display all cost codes or only the cost codes already assigned to the contract.
  8. Select the cost codes to distribute. You can multi-select several by using CTRL-click and SHFT-Select. After selection, select the Select button. The window closes and the cost codes appear in the Contract Agreement Change Order window.
  9. In the Change Order Contract Cost Codes scrolling window, you can specify a Retention% and Cost Code Cost; this cost is the amount of the total change order amount you want to apply to this cost code.
  10. The total of the distributed cost code amounts MUST equal the total change order amount; otherwise, you will receive a message and will not be able to save the change order.
  11. When finished distributed the change order amount, select Save. When you are satisfied with the information entered and ready to move forward with the change order, change the Contract Status to Confirmed, then Save again. When a Confirmed contract agreement change order is saved, the costs become committed costs in Job Cost and amounts are reflected in the Contract Agreement window.

Requesting Payments for a Contract Agreement

You can create payment requests for subcontractor agreements from the Contract Agreement window. When a payment is posted, a PM transaction is created and the Contract To Date field on the Contract Agreement window is updated with the new amount.

For users who have Enable GST for Australia marked in Company Setup Options, additional fields and a supplementary window are available to meet the requirements of various Building and Construction Industry Security of Payments Act in Australia. These Australia-specific fields and supplementary window are discussed at the end of this section. See Additional information for Australian users.

  1. Open the Contract Agreement window (Cards > Job Cost > Contract Agreement) and select an agreement.
  2. Select the Payments button at the top of the window. The Contract Agreement Payables Entry window opens. Most fields are filled automatically with contract agreement information.
  3. The Voucher Type defaults to Invoice. You can also create credit memos. Enter a Description of your payment, such as payment for subcontractor X.
  4. Enter a Batch ID (if not posting right away) and Document Number.
  5. To start applying payments to cost codes, select the Add Cost Codes button. The Available Contract Cost Codes window appears.
  6. The Release Amount defaults to the entire amount for that cost code for the current contract agreement. If this is a partial payment, change this amount.
  7. When finished, you can save it to a batch to Post, or clear the Batch ID field and post immediately. As with any PM transaction, the following reports are available for viewing and/or printing:
    • Trx Entry Posting Journal
    • Trx Distribution Detail
    • Trx Distribution Summary
    • Trx entry Check Register
    • Checkbook Posting Journal

After a PM transaction has been posted, the Retention Withheld (if applicable), Cost Code Released, and Contract Released amounts in the Contract Agreement window are updated with the payment amount(s).

Additional Information for Australian Users

This section only applies to users who have Enable GST for Australia marked in the Company Setup Options window. The information below will only be available displayed if the Enable GST for Australia is marked. (Microsoft Dynamics GP > Tools > Setup > Company > Company > Options)

Claimed Amounts Recording

The Australian Building and Construction Industry Security of Payment Act 1999 is the primary legislative instrument regulating payment practices in the industry. The Act's objective is to promote the flow of progress payments by providing a statutory right under a construction contract to receive and recover payments relating to the carrying out of work and the supplying of related goods and services. For more information regarding this Act, visit http://www.procurepoint.nsw.gov.au/supplying/security-payment.
The Contract Agreement Payables Entry window has been updated to meet the requirements of various Building and Construction Industry Security of Payments Acts in Australia. In the Contract Agreement Payables Entry window, the following has been added:

  • Claimed Amount field has been added. This displays the total dollar amount of claims the subcontractor has submitted for the contract.
  • An expansion button has been added to Release Amount. When you select this button, the new Contract Claimed Amounts window will open where you can view the sub-contractor's claimed amount and the released amount defaults from the previous window.

Contract Claimed Amounts Window

The Contract Claimed Amounts window has been added to assist with entering the approved payment and you can enter a reason in the comment field. In the Contract Claimed Amounts window, you can:

  1. Edit the approved payment amount in the Release Amount field. If the amount is changed, the Release Amount in the Contract Agreement Payables Entry will update accordingly. 

    The release amount cannot exceed the claimed amount.
  2. Enter a comment in Reason Note. Select Save to close the Contract Claimed Amounts window. In the Contract Agreement Payables Entry window, you can either save the transaction to a batch or you can post the transaction.

    When the Claimed Amount is greater than the Release Amount, the sub-contractor must resubmit a claim for the remaining amount. For example, a sub-contractor claims $10,000, and only $7,000 is approved. The $7,000 is released for the payment. The remaining unapproved $3,000 is recorded on the transaction and the sub-contractor must resubmit a claim for that amount.

Viewing the Inquiry Windows

In addition to the existing Contract Agreement Payables Entry Zoom window, an additional zoom window has been created for the Contract Claimed Amounts Inquiry window.

  1. Go to Cards > Job Cost > Contract Agreement.
  2. Enter or select the contract vendor, then select Contract Released to zoom to the Contract Agreement Transaction Inquiry window.
  3. In the Contract Agreement Transaction Inquiry window, select Document Number to zoom to Contract Agreement Payables Transaction Entry Zoom window.
  4. Select the Release Amount expansion button to view the Contract Claimed Amounts inquiry window.

Viewing the Payment Schedule Report

The Payment Schedule report has been created that displays the cost code description, the total amount of the payment claim, and the scheduled amount. This report reflects all cost codes for each job as well as the comments entered in the Reason Note field of the Contract Claimed Amounts window. The report creates a separate page for each job.

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