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Procore

Financial Tools User Guide

Overview

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

Procore's Budget tool helps your project team efficiently manage your project's budget. It is designed to help your team make informed financial decisions, track expenses against your budget in real-time, analyze 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 AmountBudget ModificationsRevised BudgetPending 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
  • Utilize Data Collected in the Field to Track Labor 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 Labor Costing and Set Up the Procore Labor 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 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 funds 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.

Prime Contracts Tool

After setting up the Budget tool, you can begin creating one or multiple prime contracts for your project. With the Prime Contracts tool, your team can replace stacks of paper and expensive printer costs with a central location for digital contract management. 

  • Set Up Your Prime Contract.  While most Procore customers create a single prime contract for a single construction project, project teams do have the option to create multiple prime contracts in the Prime Contracts tool. For details, see Create Prime Contacts. Similar to budget, you can also chose from two method for setting up your prime contract: (1) You can manually Update the Schedule of Values (SOV) on a Prime Contract  or (2) you can  Import a Prime Contract SOV from a CSV File. When finished with the initial setup, simply approve it. See Approve a Prime Contract.
     Tip
    Does your construction project have multiple funding sources or delivery methods?  Learn why some Procore clients decide to create multiple prime 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 prime contracts?
  • Create and Manage Owner Invoices. After your prime contract is set and you've set up the Commitments tool as described below, you can also create and mange your owner invoices. An owner invoice 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 general contractor and submitted to a project owner to signal that a payment is due for completed work. See Create an Owner Invoice.
  • Create a Payments Received Log.  After you receive your payment, you can also create a log 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 Prime Contracts tool, see the Prime Contracts landing page.

Commitments Tool

After your contract(s) are approved and completed in the Prime 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 change order 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 retainage 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 general 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 Bid and Convert it into a Subcontract, or you can (2) directly Create a Subcontract in the Commitments tool. 
  • Create Subcontractor Invoices and Manage Invoice Contacts. Using the Commitments or Invoicing tool, you can also Create an Invoice on Behalf of a Subcontractor or you can provide your subcontractor's invoice contacts with the appropriate permissions to access their purchase orders and subcontracts. See Create Invoice Contacts. Users with 'Admin' permission on the Commitments tool can also use those permissions to manage invoices with the Invoicing Tool
  • Create a Payments Issued Log.  After you start issuing payments on your project, you can create a log 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 Change Orders and Change Events tools or, (2) Enable only the Change Orders tool. 

Change Orders 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, change orders can then be created based upon the submitted quote.

  • Configure Your Change Order Tier Settings.  You can choose between a one (1)-, two (2)-, and three (3)-tier change order setting. Each tier adds a layer to your team's overall change management workflow. A 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 change order tiers? Once you've decided, you can Configure the Number of Prime Contract Change Order Tiers and Configure the Number of Commitment Change Order 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 the 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 change order. See Review RFQ Responses
  • Create Change Orders. 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.

Change Orders without Change Events

If your team decides not to enable the Change Events tool, you can still use the Change Orders tool to account for additional costs. For most Procore customers, this change management workflow starts off by creating a Potential Change Order (PCO).

  • Create a Potential Change Order (PCO). Use a potential change order to manage any additional costs affecting the prime contract. When creating a PCO, you can only enter a dollar amount. Later, when you update the Schedule of Values (SOV) for the PCO, you'll have the option to select a cost code. Ideally, the PCO 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 Change Order (PCO)    
  • Create a Commitment Change Order (CCO). After the PCO is created, you move on to create a CCO. The CCO acts as a request for pricing from the subcontractor who will be responsible for completing the scope of work that you outlined in the PCO. You can compare the CCO to the corresponding PCO and view your variance between the two. To learn more, see Create a CCO From a PCO
  • Create a Change Order Request (COR). After you've created PCOs, you can package one or multiple PCOs into Change Order Requests (COR). 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 Change Order Request (COR)
  • Create a Prime Contract Change Order (PCCO).  Next, you can begin creating change orders. Note that when you set a change order's status set to Pending, it appears in the 'Pending Budget Changes' column of the Budget tool. After the PCCO is set to Approved, the total dollar amount change is reflected in the 'Approved COs' column of the Budget tool. Approved PCCOs can be added to owner invoices. For details, see Create a Prime Contract Change Order (PCCO).
  • Create a Commitment Change Order (CCO). A commitment change order outlines variations in costs that affect the contract between the general contracting company and a vendor or subcontractor. Once you have marked the CCO as approved, the dollar change will be reflected in the "Committed Costs" column on the Budget tool. Commitments and potential CCOs with a status of "Pending" will show up in the "Pending Cost Changes" column on the Budget tool. See Create a Commitment Change Order (CCO).

To learn what else you can do with the Change Orders tool, see the Change Orders landing page.

Invoicing Tool

Procore's Invoicing tool uses the user permission granted in the Commitments and Prime Contracts tool. As your project progresses and the contracts have been created and approved, subcontractors can bill you for completed work via subcontractor invoices. You can also create owner invoices, which can then be emailed to the owner or the party that is being requested for payment.

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:

  • Invoices. Create a direct cost for a paper invoice from a non-contracted vendor for items such as printer ink, computer paper, or postage. 
  • Expenses. Create a direct cost for 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.

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