Businesses that do contract-based work define their relationships with institutions from which they receive work through tenders with certain concepts. In the private sector, this institution is called the "Employer", and in the public sector, it is called the "Administration". In addition, business relationships are often defined with the terms "Main Contractor" and "Subcontractor".
In order for a job to be carried out, a contract is signed between the institution that will have the job done and the subcontractor that will do the job. From the perspective of the main contractor, this contract is called the "Subcontractor Agreement". The main contractor reaches an agreement with the subcontractor on issues such as the completion time and cost price of the job.
Basic Elements of the Agreement:
According to the signed contract, the subcontractor notifies the employer of the works it has carried out each month with progress payments. These progress payments are usually documented with monthly progress payment purchase invoices. The subcontractor's progress payments and payment dates are of critical importance for the main contractor to manage its cash flow correctly.
Main contractors may work with more than one subcontractor depending on the size of the project. In this case, monitoring the contract terms of each subcontractor and checking whether their earnings comply with the contracts poses a great difficulty. Especially in projects with a large number of subcontractors, there may be problems in the preparation and control of earnings, and in the processing of invoices, advance payments and deduction records by the financial departments.
Navappro Construction Management software offers the following functionality to manage subcontractor contracts and entitlements:
Creating a Subcontractor Agreement: Subcontractor agreements are created using the positions created in the discovery cards. This allows the agreement to be stored electronically and accessed by authorized departments. It eliminates the need for manual re-preparation.
Workflows and Approval Process: Workflows defined for subcontractor contracts include approval processes. This prevents incorrect data entry into unapproved contracts.
Cost and Price Comparison: The subcontractor contract provides the opportunity to compare unit costs with the sales prices in the employer contract by feeding from the discovery positions. Thus, cost control is ensured.
Creating Earned Values with Manufacturing Information: Regular manufacturing information for subcontractor contract lines is entered from manufacturing logs. Earned Values are automatically created using this information, preventing the creation of earnings with incorrect prices.
Approval Processes: Workflows related to subcontractor progress payments are created and subjected to approval processes. In this way, incorrect data entry into unapproved progress payments is prevented.
Automatic Accounting Integration: Progress payment purchase invoices, advance, deduction and guarantee transactions are automatically created based on subcontractor progre