Difference Between the Cost Budget and Revenue Budget in CMiC and How PCIs Impact Each

CMiC has Two budgets to manage and forecast:

1. Revenue Budget – Amount we expect to receive from the Owner (Owner Contract Amount). The Current Revenue Budget is equal to the Original Revenue Budget plus posted PCIs (approved Owner Change Orders).

Revenue Forecast – Estimated final contract amount after all change orders are issued and the job is closed. Revenue Forecast equals the Current Revenue Budget plus unposted PCIs.

2. Cost Budget – Amount we expect to spend. The Current Cost Budget is equal to the Original Cost Budget plus posted PCIs.

Cost Forecast – Estimated final cost on the job after the job is closed. Cost Forecast equals the Current Cost Budget plus unposted PCIs.

Notes:

Current Budgets include posted PCIs.
Forecasts includes Current Budgets plus unposted PCIs.
The Projected Gain/Loss is the difference between the Revenue Forecast and the Cost Forecast.
The final Fee (profit) on the job is the difference between the final Current Revenue Budget (final contract amount) and final Current Cost Budget (final cost).

Potential Change Items (PCIs) fall into three groups:

1. External PCIs – Affects both the Revenue Budget and Cost Budget. External PCI types include:

Change to Owner (CTO) – Any cost or schedule impacts that may be included in an Owner Change Order (OCO).
Allowance (ALLO) – Buyout of Owner Contract Allowances that will be included in an OCO. Allowance PCIs are not forced to balance since some Allowance reconciliations may result in a change in the Owner Contract Amount.
Contingency (CONT) – Re-allocation and final reconciliation of Owner Contract Contingency that will be included in an OCO. Contingency PCIs are not forced to balance since the final Contingency reconciliation may result in a change in the Owner Contract Amount.

2. Transfer PCIs – Affects both the Revenue Budget and Cost Budget. Budget amounts must balance to $0 net. There is just one Transfer PCI type:

Transfer (TR) - Transfer of Revenue and/or Cost Budget amounts that do not require an OCO. If a transfer does require Owner approval, a net $0 CTO should be used and then incorporated into an OCO. Since Transfers affect the Revenue Budget, they are visible to the Owner, if a detailed Owner Billing is generated from the system. Examples of Transfers include:

Work originally intended to be subcontracted is now being self-performed.
Work originally to be performed by one subcontractor is now being performed by another.
Internal contingencies are allocated as needed.
Losses are offset by gains to facilitate Owner Billing approval in certain GMP contract situations.
Back Charges are re-allocated to facilitate Owner Billing approval.

3. Internal PCIs – Affect only the Cost Budget. Internal PCI types include:

No Change to Owner (NCTO) – Any cost or schedule impacts that are not addressed in an External PCI. Examples of NCTOs include:
- Adjustments for commitments that are greater than, or less than, the Cost Budget. (FYI - Commitments/contracts do not affect the Cost Budget.)
  - Commitments that are greater than the Cost Budget should be accompanied by an NCTO that increases the Cost Budget accordingly.
  - Commitments that are less than the Cost Budget should be accompanied by two (or more) NCTOs:
    - One to reduce the Current Cost Budget to match the Commitment that has been made.
    - One (or more) to track the remaining buyout against this budget line item, if needed.
  - For example, if you issue a $15,000 commitment for a line item that has a Cost Budget of $20,000, you should then post a negative NCTO to reduce the cost budget to $15,000. If you have additional buyout you still need to complete for this line item, set up separate NCTOs for the anticipated remaining amounts.
- Claims for additional costs from subcontractors that we do not intend to “pass through” to the Owner.
- Potential unforeseen expenditures that are not subject to recovery under an OCO.
Back Charge (BC) – Back Charges that only affect the Cost Budget. Examples of BCs include:
- Trade damages that we allocate among responsible parties.
- Insurance deductible for an insurance claim / incident.
- Work performed by others for subcontractor who failed to perform.

PCI Dates

PCIs should be entered on a daily basis, so there is no need to backdate them.
If necessary, PCIs can be backdated up to 60 days. This may be necessary during the monthly forecasting process. (For example, if you are preparing your February forecast during the first week in March, you may need to add PCIs with a February date, so that they are included in your February forecast.)

Posted and Unposted PCIs

All Posted PCIs are included in their respective Revenue and Cost Budgets. For forecasting purposes, the post date will determine the month in which the posted information will appear. (For example, if you are preparing your February forecast during the first week in March, and you have an Owner Change Order that was executed in February but has not yet been posted, be sure to backdate the posting date to February, so that the posted value is included in your February forecast).
All Unposted PCIs are included in their respective Revenue and Cost Forecasts.
External PCIs can only be posted as part of an OCO and only after they are set to “Approved” status.
Transfer and Internal PCIs must be set to “Approved” status before they can be posted.