Contract FAQs

A communication is missing from my contract register. Where is it?

There are several reasons why you may be unable to see communications on the contract register:

• The contract register may have a filter applied. To remove any applied filters set the filters on the contract register to List all Templates and All States (Draft, Approved etc...).

• The communication may contain sensitive information. If you do not have confidential access within the contract you will be unable to view communications that contain sensitive information.

How do I create a contract event?

A contract event is the moment in time that a predefined condition within a contract becomes satisfied. When a contract event is triggered an alert message is raised against the contract, an entry is created in the event log and optionally the system sends a notification email.

See Create a contract events for more information.

How do I view a summary of all contract events (contracts dashboard)?

The Contract Event Management Dashboard enables users to report on all contracts within a specific project/dept and view contract event status information.

See Business Unit Reports for more information.

Is there a way to archive closed contracts so they don't show up in the project/department but can still be accessed if required?

Currently there is no archive feature in AVEVA Contract Risk Management. However, one option is to create an "Archive" project/dept and move old contracts into this project/dept.

Note This may affect your Project/Dept reporting.

How are the consumed quantity and overcommitted status of a line item determined?

A line item is consumed if it is claimed for in an expenditure communication which meets the following criteria:

• the Consumes Line Item option for the communication's template has been set to Yes

• the communication has been Agreed or Approved

A line item is overcommitted if the quantity, amount or percentage claimed in communications is greater than its Committed Quantity/Initial Commitment value.

The background color of an overcommitted line item is light red  and the number of Overcommitted Line Items is displayed at the bottom of the page as an icon. Click it to filter the list of line items.

When claiming for line items in an expenditure communication (Expenditure line items), the line item will show as overcommitted according to the following criteria.

Warning Line items will be consumed by all communications in a process chain that have Consumes Line Items set to Yes. To avoid incorrect consumption values, ensure that only one communication template in the planned process chain has this option set to Yes.

How are the claimed values of line items in expenditure communications calculated from the associated progress communications?

When progress communications are linked to a successor expenditure communication, the expenditure values are calculated for the successor based on the progress claimed for in the predecessor communications. These values cannot be edited. See Expenditure line items.

The formulas used for the calculation are:

• Discrete Weighted Milestone (DWM) progress measures:

  Claimed Value of the Line Item due to the DWM progress measure = Weighting * Approved Commitment of the Line Item

• Discrete Pro Rata (DPR) and Apportioned progress measures:

  Claimed Value of the Line Item due to the DPR progress measure = ( ( Claimed Value of Progress Measure / Budget of Progress Measure ) * Weighting ) * Approved Commitment of the Line Item

  Note For an Apportioned progress measure, the Claimed Value and Budget are calculated based on the associated Discrete Pro Rata progress measures.

Example 1 - Discrete progress measures only

The approved commitment of Line Item 1 is $20,000. It has two progress measures:

• a discrete weighted milestone (Complete) with a weighting of 20%

• a discrete pro rata (Direct Hours) with a budget of 1000 hours and a weighting of 80%

  

In Progress Report 1, the contractor claims for the Complete milestone and for 300 hours of Direct Hours.

When Progress Report 1 is linked to an application for payment, the calculated claimed value of Line Item 1 in the application for payment is:

• Claimed Value of Line Item 1 =

  (Weighting of Complete * Approved Commitment ) + ( ( Claimed Value of Direct Hours / Budget of Direct Hours ) * Weighting of Direct Hours * Approved Commitment ) =

  (0.2 * 20000) + ((300/1000) * 0.8 * 20000) = 4000 + 4800 = $8,800

  

Example 2 - Discrete and Apportioned progress measures

The approved commitment of Line Item 2 is $10,000. It has a discrete weighted milestone (Complete) with a weighting of 50%. It also has an apportioned progress measure (Project Management) with a weighting of 50% which has two associated discrete pro rata progress measures:

• On Line Item 3, the associated discrete pro rata measure (Indirect Hours) has a budget of 1000 hours and a weighting of 0%. The line item also has a discrete weighted milestone (Complete) with a weighting of 100%. The approved commitment of the line item is $10,000.

• On Line Item 4, the associated discrete pro rata measure (Hours) has a budget of 2000 hours and a weighting of 50%. The line item also has a discrete weighted milestone (Complete) with a weighting of 50%. The approved commitment of the line item is $50,000.

In Progress Report 2, the contractor claims:

• Line Item 3: the Complete milestone and 200 hours for Indirect Hours

• Line Item 4: the Complete milestone and 1000 hours for Hours

The value claimed for against the Project Management progress measure on Line Item 2 is therefore 1200 hours from a budget of 3000.

When Progress Report 2 is linked to an application for payment, the calculated claimed values of the line items in the application for payment are:

• Claimed value of Line Item 2 =

  ( ( ( Claimed Value of Project Management / Budget of Project Management ) * Weighting of Project Management ) * Approved Commitment ) =

  (1200/3000) * 0.5 * 10000 = $2,000

• Claimed value of Line Item 3 = 0

  (Weighting of Complete * Approved Commitment) = 1 * 10000 = $10,000

  The value claimed against Indirect Hours is not relevant in the expenditure communication because it has a weighting of 0%.

• Claimed value of Line Item 4 =

  (Weighting of Complete * Approved Commitment ) + ( ( Claimed Value of Hours / Budget of Hours ) * Weighting of Hours * Approved Commitment ) =

  (0.5 * 50000) + ((1000/2000) * 0.5 * 50000) = 25000 + 12500 = $37,500

The total expenditure claimed for Line Items 2, 3 and 4 in this application for payment is $49,500.

How do commitment and budget changes for line items with progress measures affect expenditure communications?

The expenditure value of the line item which has progress measures is calculated on an expenditure communication (such as an Application for Payment) based on its linked progress communications. This calculation includes the approved commitment of the line item and the budget of the progress measure (if a Discrete Pro Rata measure). Both of these values can be increased or decreased through change communications, therefore, the progress to date of any progress measures on the line item will also be recalculated.

The next expenditure communication that also records progress will automatically include any differences in expenditure due for any line items in the contract, even if they are not claimed in the progress communications linked to the expenditure communication. This allows claims to be made against line items for which progress had already been fully claimed.

The formulas for the calculation is:

• Discrete Weighted Milestone (DWM) progress measures:

  (Weighting * New Approved Commitment of the Line Item) - Total Claimed Value Previously Paid

• Discrete Pro Rata (DPR) and Apportioned progress measures:

• ( ( ( New Total Claimed Value of Progress Measure / New Budget of Progress Measure ) * Weighting ) * New Approved Commitment of the Line Item) - Total Claimed Value Previously Paid

  The New Total Claimed Value of the progress measure is the value previously claimed plus the value claimed in the new AFP.

  Note For an Apportioned progress measure, the values are calculated based on the associated Discrete Pro Rata progress measures.

See Progress, expenditure and change communications.

Examples

In the following examples, the approved commitment of Line Item 1 is $20,000. It has two progress measures:

• a discrete weighted milestone (Complete) with a weighting of 20%

• a discrete pro rata (Direct Hours) with a budget of 1000 hours and a weighting of 80%

A Progress Report and related Application for Payment (AFP 1) have already been submitted and approved for the Complete milestone and for 300 hours of Direct Hours:

• Claimed value of Line Item 1 in AFP 1 =

  (Weighting of Complete * Approved Commitment ) + ( ( Claimed Value of Direct Hours / Budget of Direct Hours ) * Weighting of Direct Hours * Approved Commitment ) =

  (0.2 * 20000) + ((300/1000) * 0.8 * 20000) = 4000 + 4800 = $8,800

Example 1 - Values are Increased

A change is approved to the commitment of Line Item 1 and budget of the Direct Hours progress measure:

• Increase of line item commitment is $20,000 >> new approved commitment of Line Item 1 is $40,000

• Increase of progress measure budget is 200 >> new budget of Direct Hours is 1200 hours

Because of these changes, the amount that the contractor was paid through AFP 1 does not accurately reflect the true value of the progress against the line item.

The next time the contractor applies for payment (in AFP 2), the difference in what they have been previously paid and what they are correctly due is calculated and, if relevant, added to any claim made against that line item through that AFP.

The contractor claims for 300 hours of Direct Hours in AFP 2. They cannot make a claim against the discrete weighted milestone, Complete, because this has already been claimed for; however, the value they should be paid for this is still recalculated.

• New claimed value of Direct Hours =

  ( ( New Total Claimed Value of Direct Hours / New Budget of Direct Hours ) * Weighting * New Approved Commitment of Line Item 1) - Total Claimed Value Previously Paid =

  ((600/1200) * 0.8 * 40000) - 4800 = $11,200

  The New Total Claimed Value of the progress measure is the value previously claimed plus the value claimed in the new AFP.

• New claimed value of Complete =

  (Weighting * New Approved Commitment of Line Item 1) - Total Claimed Value Previously Paid =

  (0.2 * 40000) - 4000 = $4,000

Total value of Line Item 1 in AFP 2 =

New claimed value of Direct Hours + New claimed value of Complete =

11200 + 4000 = $15,200

Therefore the contractor will be paid $15,200 for Line Item 1 once AFP 2 and its related payment certificate have been approved.

Example 2 - Values are decreased

A change is approved to the commitment of Line Item 1 and budget of the Direct Hours progress measure:

• decrease of line item commitment is $10,000 >> new approved commitment of Line Item 1 is $10,000

• decrease of progress measure budget is 200 >> new budget of Direct Hours is 800 hours

Because of these changes, the amount that the contractor was paid through AFP 1 does not accurately reflect the true value of the progress against the line item.

The next time the contractor applies for payment (in AFP 2), the difference in what they have been already paid and what they are correctly due is calculated, and, if relevant, added to any claim made against that line item through that AFP.

Note If the total amount due to the contractor in AFP 2 is less than the amount already paid in AFP 1, they will not be paid anything for Line Item 1 through AFP 2. They will only start to be paid for Line Item 1 again once the total amount due is greater than the amount already paid.

The contractor claims for 300 hours of Direct Hours in AFP 2. They cannot make a claim against the discrete weighted milestone, Complete, because this has already been claimed for; however, the value they should be paid for this is still recalculated.

• New claimed value of Direct Hours =

  ( ( New Total Claimed Value of Direct Hours / New Budget of Direct Hours ) * Weighting * New Approved Commitment of Line Item 1) - Total Claimed Value Previously Paid =

  ((600/800) * 0.8 * 10000) - 4800 = $1,200

  The New Total Claimed Value of the progress measure is the value previously claimed plus the value claimed in the new AFP.

• New claimed value of Complete progress measure =

  (Weighting * New Approved Commitment of Line Item 1) - Total Claimed Value Previously Paid =

  (0.2 * 10000) - 4000 = - $2,000

Total value of Line Item 1 in AFP2 =

New claimed value of Direct Hours + New claimed value of Complete =

1200 - 2000 = - $800

Therefore the contractor will be paid nothing for Line Item 1 once this application for payment and related payment certificate have been approved. They will only start to be paid for Line Item 1 again once the total amount due is greater than the amount already paid.