Set up the Master Budget - General Contractor

Modified on Fri, 31 Jul at 9:00 AM

As a General Contractor, your master project budget serves as the operational blueprint for your Prime Contract with the Owner. Linarc gives you the flexibility to build this comprehensive budget from scratch, line-by-line, or seamlessly import it from an Excel file directly on the 'Budget' screen.

You can set up your budget in parallel with the incremental setup of your contract, adding budget line items to cover the contract amounts as they are drafted. However, the master budget can only be finalized and locked after the Prime Contract is fully locked and the entire contract amount has been exhaustively distributed across your budget lines.

Incremental Building & Assignments

As you build out your budget line items, you will assign the work to the respective parties. This assignment process dictates how each line item is locked:

Subcontractor Work: As you progressively add budget line items, you have the flexibility to assign and commit them directly to specific subcontractors. This assigned amount serves as the baseline for their subcontract (commitment contract). The subcontractor reviews the assignment and can either accept it or request a revision. Once the subcontractor accepts the original or revised amount, that specific budget line item is officially locked.
Self-Performed & Administrative Work: For budget lines covering your own self-performed work or administrative tasks, you must manually assign them to yourself. To finalize these self-assigned items, you must then view them on your own commitment contract and manually lock them.

Comprehensive Cost Breakdown & Schedule Alignment

Your master budget must comprehensively encompass the scope of work for all involved trades. For maximum accuracy, structure your line items as follows:

Self-Performed Scope: Each line item allocated to you must include a specific cost-type breakdown (e.g., labor, materials, equipment, and other).
Subcontractor Scope: Each line item assigned to a subcontractor must include only their specific cost entry (under the Subcontractor cost type), alongside optional entries for your overhead and profit.
Automated Overhead & Profit: If no specific amounts are entered for overhead and profit, the system will automatically calculate them based on your established billing configuration.

This granular structure is critical because it gives your subcontractors the flexibility to manage their own financial breakdowns. Once a work item is assigned to them, subcontractors have the liberty to distribute their total allotted amount across various cost types (such as labor, materials, and equipment) within their specific commitment contract budget.

Budgeting Guidelines & Finalization

When configuring your project financials, keep the following rules in mind:

Match the Prime Contract: Your total master budget amount must exactly match the overall value of your signed owner agreement.
Create a Contingency Reserve: After allocating funds to all your primary trade line items, assign any remaining contract balance to a dedicated reserve line item labeled as 'Unallocated'. Establishing this reserve ensures your total budget perfectly mirrors the Prime Contract value while providing a flexible pool of contingency funds for future project needs.
Finalize the Baseline: Once the Prime Contract is locked and the full contract amount has been exhaustively distributed across all budget line items, the overarching budget can be officially finalized and locked to serve as your project's definitive financial baseline. From this point forward, any further amendments or revisions can only be effected through approved change orders.

How should I set up the budget and schedule for procured or stored materials based on my contract terms?

The correct setup depends entirely on the specific billing terms outlined in your contract:

If your contract allows billing upon delivery: Set the materials as a separate line item on your budget and schedule. Mark this line item as 100% completed once the materials are delivered to the site.
If your contract requires billing as consumed: Add the materials to the same line item as the associated work and let standard progress billing take over.
If your contract states materials can only be billed when consumption starts: Add the materials to the same line item as the associated work, but use the 'stored materials' feature to bill for them.

To set up your project budget

Ensure you are in the 'Budget' screen within the 'Finance & Controls' module. If you are not already there:

Click the main menu icon at the top-left of your screen.
Select 'Owner Contract' under the 'Finance & Controls' section in the drop-down menu.

Tip: Press and hold the 'Cmd' (Mac) or 'Ctrl' (Windows) key on your keyboard while clicking to open the module in a new browser tab.

Select 'Budget' on the left

The 'Budget Upload' screen displays your total contract amount at the top. As you build your budget, the system dynamically updates the values for distributed, remaining funds until the budget is fully locked.

Create Budget
Import Your Budget File

Create Budget

1. Click 'Create' on the 'Budget Upload' screen.

2. Enter the values for each line item using the columns detailed below. (Note: Mandatory fields are highlighted in red.)

General Item Details

Cost Code: The standard alphanumeric code for the task or deliverable, pulled directly from your company's master list. Click inside the cell to search by code number or item name. Once selected, the description will auto-populate. You can change the description as required.
Description: The name or label of the budget item. This auto-populates based on the selected cost code, but you can edit it as needed.
Trade- Select the specific discipline or division of work that the budget line item pertains to. The trade you select dictates which contractor can be assigned to the work.
Assigned To- The company responsible for executing the line item. Click inside the cell and select the company from the drop-down menu.
- For self-performed work: Select your specific project role as the 'Trade', and choose your own company as the 'Assigned To' party.
- For subcontractor work: Select the appropriate division of work as the 'Trade', and choose the respective subcontractor company as the 'Assigned To' party.

The system enforces strict alignment between these fields. You cannot have a mismatch; if you select your own role as the Trade, you cannot assign the item to an external company, and vice versa.

Quantity: The total amount of work or deliverables required for this line item. (Required only for self-assigned line items; leave blank if assigning to a subcontractor).
Unit of Measurement (UOM): The standard unit used to measure the quantity (e.g., SF, CY, LF). (Required only for self-assigned line items; leave blank if assigning to a subcontractor).
Effort Hours: The estimated total time required to complete the task, measured in man-hours. (Required only for self-assigned line items; leave blank if assigning to a subcontractor).
Total Cost: The total financial allocation for this specific budget line.

Cost Type Breakdown

How you fill out the cost breakdown depends on who is performing the work:

For self-assigned work: Enter values for Labor, Material, Equipment, Others, and Overhead.
For subcontractor-assigned work: Enter a value for Subcontractor, and optionally Overhead and Profit. Leave the other cost entries blank.

Here are the definitions for each cost type:

Labor: The estimated cost of the workforce required to complete this task.
Material: The projected cost of all raw materials, supplies, and consumables needed for the work.
Equipment: The anticipated cost for renting, operating, or utilizing the machinery and tools required for the job.
Subcontractor: The budgeted cost for the work assigned to an outsourced trade or specialty contractor. This amount serves as the financial baseline to establish their subcontract (commitment contract).
Others: Any miscellaneous project expenses (such as permits or fees) that do not fit into the standard categories above.
Overhead: The indirect operational costs applied to this task. The system auto-calculates this based on your established payment terms, though you can manually override the field if necessary. See 'Set up Billing Configuration - General Contractor' for details on configuring the overhead percentage.
Profit: The anticipated financial margin for this specific work item. The system automatically calculates this by subtracting the sum of your allocated costs from the total budget amount.

3. Build and Manage Rows

Add a new row: Click +Add New Row to build your budget line-by-line at the bottom of the list.
Insert a row: Right-click on an existing line and select 'Add New Row 'to insert a new row directly below it.
Delete a row: To remove a budget line added inadvertently, select the row by clicking its serial number and click the Trash Can icon at the top left of the table. Alternatively, right-click on the line and select Delete.

4. Save Your Progress

Click 'Save' to store your work.

You can progressively create the budget from your saved draft at any time. See 'Save, Advance, and Finalize Your Budget' below to learn how to manage your progress, unlock parallel workflows, and lock your financial baseline.

Import Your Budget File

1. Download the Excel Template

Click 'Download' on the Budget Upload screen to obtain the budget template in Excel format. This file contains all the required column headers for a successful import.

2. Prepare Your Budget File

Enter your budget values into the template. Keep the following requirements in mind as you build your file:
Each row in the spreadsheet must contain only one budget line item.
Ensure that each line item represents a task entry with a distinct cost code.

General Item Details:

Cost Code: The code representing the division or category of work, according to your company's master list.
Description: The name or label of the work item or deliverable.
Quantity: The numeric value of the planned amount of work required. (Required only for self-assigned line items; leave blank if assigning to a subcontractor).
UOM: The unit of measurement for the work completed (e.g., SF, CY, LF). (Required only for self-assigned line items; leave blank if assigning to a subcontractor).
Effort Hours: The estimated total labor required to complete the task, measured in man-hours. (Required only for self-assigned line items; leave blank if assigning to a subcontractor).
Total Cost: The total financial allocation for this specific budget line.
Trade- Select the specific discipline or division of work that the budget line item pertains to. The trade you select dictates which contractor can be assigned to the work.
- For self-performed work: Enter your role in the project, so that the budget item can be assigned to you
- For subcontractor work: Enter the appropriate division of work so that you can choose the respective subcontractor company as the 'Assignee' after upload.

Cost Type Breakdown:

How you fill out the cost breakdown columns depends on who is performing the work:

For self-assigned work: Enter values for Labor, Material, Equipment, Other Cost, and Overhead.
For subcontractor-assigned work: Enter a value for Subcontractor, and optionally Overhead and Profit. Leave the other cost entries blank.

Here are the definitions for each cost column:

Labor: The estimated cost allocated for workforce wages.
Equipment: The estimated cost allocated for the use or rental of machinery and tools.
Subcontractor: The budgeted cost for the work assigned to an outsourced trade or specialty contractor. This amount serves as the financial baseline to establish their subcontract (commitment contract).
Material: The estimated cost allocated for all raw materials and supplies.
Other Cost: Miscellaneous project expenses (e.g., permits, transportation, handling, or vendor fees) that do not fit into the standard categories.
Overhead (Optional): The indirect operational costs applied to this task. If you leave this blank, the system will auto-calculate it based on your established payment terms once uploaded. If you enter a value, it will supersede the auto-calculated amount. See 'Set up Billing Configuration - General Contractor' for configuration details.
Profit (Optional): The anticipated financial margin for this item. If left blank, the system automatically calculates this after upload by subtracting your allocated costs from the Total Cost. If you manually enter a value that doesn't mathematically align, the system will alert you to correct it upon upload.

Once complete, save the Excel file to your computer with an appropriate name.

3. Upload the Budget

On the 'Budget Upload' screen, click 'Browse' and navigate to your saved Excel file, or simply drag and drop the file directly into the upload box.

The draft project budget is created. Any missing or inappropriate values are highlighted in red.

4. Edit the values and correct the errors, if any. - Click inside the cell and enter/select the correct entry.

5. Assign Line Items (Optional) - Click inside the 'Assigned To' column of each row and select the company responsible for executing the line item from the drop-down menu. This is optional, you can assign the line items to the respective parties at anytime, before finalizing and locking the full budget.

For self-performed work: Choose your own company as the 'Assigned To' party.
For subcontractor work: Choose the respective subcontractor company depending on the 'Trade'

The system enforces strict alignment between these fields. You cannot have a mismatch; if you have entered your own role as the Trade, you cannot assign the item to an external company, and vice versa.

You can add more line items progressively to adjust the draft.

6. Build and Manage Rows

Add a new row: Click '+Add New Row' to create new budget lines and enter the values.
Insert a row: Right-click on an existing line and select 'Add New Row 'to insert a new row directly below it.
Delete a row: To remove a budget line added inadvertently, select the row by clicking its serial number and click the Trash Can icon at the top left of the table. Alternatively, right-click on the line and select Delete.

4. Save Your Progress

Click 'Save' to store your work.

Save, Advance, and Finalize Your Budget

You can develop the budget incrementally, adding and editing rows over time until the overarching budget is officially locked. Each time you save, the distributed amount and remaining balance displayed at the top of the screen will automatically update.

This flexibility allows you to progress with other critical project tasks without waiting for the entire budget to be finalized:

Progressive Subcontractor Commitments: You can begin building your subcontractor commitment contracts using the specific budget lines you have already established and assigned. See 'Commit Budget Lines to Subcontracts - General Contractor' and 'Set Up Subcontractor Commitments' for guidance.
Parallel SOV Configuration: You can start configuring your project Schedule of Values (SOV) using your currently available budget lines. You can then seamlessly finalize the SOV once the master budget is fully locked. See Configure Project SOV with Budget Line Items for guidance.

Best Practices for Finalizing Your Budget

Distribute the Full Amount: Ensure your entire contract amount is fully distributed across your budget line items before locking.
Create a Reserve: We highly recommend adding a specific line item with the cost code 99-9999 and the label Unallocated. Assign your remaining or reserved funds to this line. Even after the budget is locked, these unallocated funds can be easily shifted to other budget lines to cover evolving project needs. See Budget Adjustments for more details.

Once your budget is fully built, lock it to secure your definitive financial baseline and prevent unintended changes to the total amount. Please note that locking the master budget does not lock the individual line items. You retain the flexibility to continue configuring your commitment contracts, as each specific line item is only locked once the assigned party officially accepts or finalizes their assignment.

The 'Status' column displays the current commitment state of each line item. The possible statuses are:

Active: The line item is available and has not yet been allocated to a commitment contract.
Committed: The line item has been assigned to a contract, but it has not been published to the subcontractor yet.
Published: The line item has been assigned to a contract and successfully published. It is currently awaiting the subcontractor's response.
Locked: The line item has been assigned to a contract and finalized. No further changes can be made to this item.

Lock the Budget

To ensure financial accuracy, the system requires a few prerequisites before this action can be taken. The Lock button will only appear at the top-right of your screen once the following conditions are met:

The total contract amount has been exhaustively distributed across your budget line items.
The remaining balance from the contract amount is exactly zero.
Your Prime Contract has been officially finalized and locked.

To lock the budget

Click the 'Lock Budget' button at the top-right

Click 'Yes' to confirm your action.

Next Steps:

Commit Budget Lines to Subcontracts: Link your approved budget items directly to the agreements you create for your subcontractors. This ensures that the costs for specialized trades and external services are securely tied to your overall project financials.
Allocate Funds to Work Items: Assign budget amounts directly to scheduled tasks. This auto-generates a planned billing schedule, making it easy to issue periodic, progress-based invoices to the owner.