Creating a Contract

VIDEO GUIDE

The video below walking through setting up a typical contract.

OVERVIEW

This article walks you through creating the PayLab contract. This captures the information and settings needed before claims or payment schedules can be issued and received between your organisation and the other contract party.

These instructions apply every time a new contract is set up. The article Creating New Projects, shares many steps with the contract specific setup. Most Project settings will be used as a template and streamline contract setup.

How this guide is broken down

• Getting Ready

• Ways to begin a contract - where to go to begin the process.

  • Start from scratch

  • Get invited to join a contract

• Configure the contract settings - A run through of each of the settings and what they do. 

  • Inviting an Approver/claimer

  • Contract Members

  • Date Schedule

  • Claim Workflow

  • Time Zone

  • Line Items; Base Contract, Variations, Materials

  • Retentions

  • Tax

  • Notes

  • Contract Documents

  • Settings

• Activating the Contract.

GETTING READY

This is where setting up a new contract falls in when establishing the ongoing claim cycle. 

This article assumes you have already setup your PayLab organisation account, and the Project the contract will fall under

• Haven't done the preceding steps yet? Check through these articles;
  • Creating and setting up your account
  • Creating New Projects

Info needed to complete the Contract setup

Info required by PayLab - In order to issue or enter a claim or payment schedule under a new contract, you will need several key details.

Optional info

While this information is not required by PayLab before issuing claims, we expect many organisations will require it to be present on any outgoing claims.

• Date Schedule This will default to the dates set in the Project settings for Date Schedule.
• 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) 
• Reoccurring claim date schedule (Information on when Pay Claims, Payment Schedule 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 (Approving only, Claimer only or Approving & Claiming) 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/Approving:

• Setup Date schedule 
• Set up Base Contract items
• Invite the Approver or self-approve

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 AN APPROVER/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/approve, 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.

Payment Schedule 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 Payment Schedules 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 Payment Schedule 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 schedule to act as an invoice
• File attachment preference - Sets file preference in claim/payment schedule 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