Creating a Contract

How to create a 'Main contract' or 'Sub Contract' for your project.

VIDEO GUIDE

OVERVIEW

Every Project you create will have atleast a Main contract or Sub contract. This article cover how you create a contract between your organisation and another. It is within a Contract where the claims process will occur on PayLab.

You should follow the instructions below every time you want to setup a contract. If you have followed the instructions in the previous article for Creating New Projects, you'll find that there quite a few similarities. Some of your Project settings will automatically carry over to any new contracts under it such as the Date schedule, retentions, and approval workflow.

Want to read ahead?, click on the links below to skip to the section:

1. Getting Ready
2. Creating a new contract
3. Drafting a contract
4. Inviting a certified/claimer
5. Contract Members
6. Date Schedule
7. Claim Workflow
8. Time Zone
9. Base Contract, Variations, Materials
10. Retentions
11. Tax
12. Notes
13. Contract Documents
14. Settings
15. Start Contract

GETTING READY

Required Info - In order to successfully complete creating a new contract you will need several key details:

• A unique Contract Name (We recommend this reflect the purpose of the contract. This is shared between both contract holder PayLab accounts)
• A Contract Address (if it is not the same as the Project Address)
• Claimer/Certifier contact details (Organisation name, address, contact name and email address)
• Base Contract details.
• Date schedule

Optional but useful - While it's not key for setting up a project initially, you will need the following which can be added at a later time:

• A Payee Reference (Your internal reference code or number)
• A Payer Reference (PO Number/Contract Reference)
• A Contract Number
• Trade/Discipline (The trade/discipline relevant to the specific contract e.g. Civil, multi-discipline, Architecture) 
• Reoccuring claim date schedule (Information on when Pay Claims, Pay Certification and Payments are due each month)
• The Retention schedule
• GST Rate (In New Zealand, the standard Goods and Services Tax (GST) rate is 15%)

Now you have everything you need, let's get started!

CREATE A NEW CONTRACT

If you have already created a Project, a contract will automatically be created for you to begin the set up process. However, if you want to create a new one, Select your Project on the Projects Page, and then click Add contract. Depending on what organisation type (Certifying only, Claimer only or Certifier & Claimer) you are, you will have the option to create a Main Contract or Sub Contract or both.  

DRAFTING A CONTRACT

Fill in each of the fields as appropriate. A new Project must have a Contract Name and Address however it's best practice to complete all fields as you go, otherwise you will just waste time having to come back and fill them in later. 

For the Address, we recommend using the "search for an address" function as it will automatically fill out the rest of the address details. Alternatively you can still manually input the project address details if needed.

Additionally you can add extra details however these are optional:

• Contract Description
• Contract Number/Reference 
• Payee Reference
• Payer Reference
• GST Rate 

When you are happy with the details filled in, hit Create New Contract  at the bottom and you will now be able to being editing your Draft Contract. When your Contract is in the draft stage, there are a few key details that need to be setup in order for you to start claiming/certifying:

• Setup Date schedule 
• Set up Base Contract items
• Invite the Certifier or self cert

Other details can also be added into your contract though they are not required in order to get your contract up and running include the following:

• Contract Members
• Claim Workflow
• Time Zone
• Variations
• Materials On/Off Site
• Retention
• Tax
• Notes
• Contract Documents
• Settings

We highly recommend filling out as much of the Contract information as you can during the initial setup while you have all the information ready. However, if needed you can always come back to enter additional information.

INVITING A CERTIFIER/CLAIMER

If you hit Invite, you will be prompted to enter their Company Name and Company Email. You can then click Save and an email will automatically sent to the Claimer to see the contract. Alternatively, if you are using this Contract to self claim/certify, you will be prompted to enter Payee/Payer details including their contacts and company address.

 

CONTRACT MEMBERS

This is where you enter your details, or the main point of contact within your organisation for this particular Contract. You can also define their roles in this Contract (e.g. Account Owner, Account Admin) . If you want to add more people from your Company, you can do so in the Manage Accounts page under the Users and Permissions.

DATE SCHEDULE 

This information is likely to be on the contract you have received from your Client. Choose the appropriate number of days for each field. The settings here may have already been automatically applied if you had selected a date schedule during your Project setup.

Working days exclude Saturday and Sunday (despite the fact we know you probably work at least one of those days anyway).

Pay Claim Due  At PayLab, we recommend you setting the Pay Claim Due day to be the 25th day of the claim month at the latest. This will enable you enough time to investigate the project claim and submit it to your Client in time for month-end.

Pay Cert Due  This will change depending on the terms you have agreed with the Payer. The default provisions in the Construction Contracts Act 2002 in New Zealand say this must be no later than the 20th day of the following month after submitting your Payment Claim.

Payment Due  Again this could change according to your agreed terms, however the default provisions in the applicable act say this must be no later than the 20th day of the following month after submitting your Payment Claim.

CLAIM WORKFLOW

If your Claims or Certificates require multiple internal approvals, use these workflows to ensure everyone required signs off on them each month. For further detail on how to set these up, go to our Approval Workflows article.

TIME ZONE

Time Zones are automatically populated based on project address and affect how times are displayed for Claim and Certificate dates.

BASE CONTRACT, VARIATIONS, MATERIALS

As stated earlier, a Base Contract must be setup in order for you to start your Contract. Variations and Materials can be added in later as required. These items can be setup directly on PayLab or imported through by excel files (template and instructions provided!). Please click on the following article that cover how to set them up - Setting Up Contract Line Items. 

• Base Contract - This generally refers to the original agreed scope of works to be completed. Line items created here cannot be changed after the first claim unless it has been marked as a Provisional fee.

• Variations - An alteration to base contract whether by way of an addition, omission, or substitution to the works. This allows you continue adding line items onto the Contract after a claim has been made.

• Materials - Materials on/off site can be added in the Contract. There is no fee value during the setup as the amount you want to claim is added during the claiming process.

RETENTIONS

Retentions is always a complicated beastie, this is where PayLab makes it simple for you!

If you don't have Retentions on this project, you can just leave it as is and move on to the next section, otherwise, you will be able to set up a Retention Schedule based on:

• Percentage of Contract Value
• Percentage of Fixed Amount
• Scaled Percentages

Retentions often vary according to the percentages of the job completed. For further detail on how to set these up, go to our Retentions Article. 

TAX

The GST tax rate applied to the contract, the standard Goods and Services Tax (GST) rate in New Zealand is 15%. 

NOTES

Here you are able to add notes for internal or external use. Internal notes can only be seen by Contract Members that have been invited into the contract. External Notes can be viewed by third party/people outside of the contract.

CONTRACT DOCUMENTS

This is where you can store any documents related to the Contract to give Contract members instant access to them.  This is ensures documents such as contracts, receipts, handover material, and other documents are kept in one place and not scattered across multiple locations. Files can be uploaded by browsing through your device or dragging and dropping it in.

SETTINGS

This sets some preferences on what is displayed in the Payment Claim (.pdf) such as:

• Line Item comments - Allows comments to be visible to the other party
• Provisional sums summary - Summary will be in the appendix and will include all claim item levels
• Retention report - Will appear in the appendix.
• Max Claim Item Level - depth of the base contract and variation items that will display
• Child items -  in the appendix
• Buyer Created Tax Invoices - Allows the payment certificate to act as an invoice
• File attachment preference - Sets file preference in claims/certificates emails are provided as a download link or file attachment. 

START CONTRACT!

Once your contract is ready with key steps completed, hit "Start Contract" and you can start claiming!

Now that your contract has started, you may want to go to the next our article - Making a Claim