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Using financial markup on change events

Markups are typically applied for overheads, profits, or other fees that your organization is entitled to because of a change.

Required permissions
Change Management: Change Events – Read, Update, Create, Delete
Change Management: Upstream Contract Changes – Read, Update, Create, Delete
Change Management: Downstream Contract Changes – Read, Update, Create, Delete
Project Administration: Change Event Markup Templates – Read, Update, Create, Delete
Execute/Approve permission is required to approve records

With the markup feature, you can define standard rules and apply them to change events or use customized rules on each change event depending on the scenario.

Markup Summary

The markup tab is available on the change event lower grid and includes a markup summary and markup rules view. Markup summary shows you the markup items on the change event, plus the calculated values for each step.

You can also view the calculated markup values for a single change event item by clicking the linked value in the budget markup or cost markup field on the change event items lower grid.

The following images show the Markup Summary screen, and the Budget Markup from a single change event item.

Add markup items to change events

Add markup items to change events manually or use a pre-configured template. 

  1. On the change event register, select a change event.
  2. On the lower grid click the Markup tab.
  3. Click the add icon to add a new markup item.
  1. Complete the required fields and click Add Markup Item.
  2. The new item will appear on the lower grid. You can edit the items and change the sequence after you create them.

Things to know when adding markup items

  • Compound to Markups Above – Designate whether the percentage markup from this item will be added to the change amount without other markups or to the change amount plus the markup from previous items.

Cost Markup

  • Apply markup without contract change – The Estimate to Complete value for the target control account and target control element will increase by the markup amount.
  • Use downstream contract change – This option allows for the cost markup amount to be added to a specific downstream contract change (variation). When using this option, the user will be able to specify the downstream contract and pay item (new or existing) that the cost markup will be added to.
  • No Cost Markup – This option allows the user to quickly specify that no markup will be added to the cost change amount.


Budget Markup

  • Apply markup without contract change –The Approved Budget value for the target control account and target control element will increase by the markup amount.
  • Use upstream contract change – This option allows for the budget markup amount to be added to a specific upstream contract change. When using this option, the user will be able to specify the upstream contract and pay item (new or existing) that the budget markup will be added to.
  • No Budget Markup – This option allows the user to quickly specify that no markup will be added to the budget change amount.


Control accounts and elements

  • Target Control Account – This is the control account that the markup amount will be added to on the cost worksheet. Both the cost markup amount and the budget markup amount will be added to this control account. If the user is using a contract change to collect markup, the target control account will be that which is defined for the pay item.
  • Target Control Element – This is the control element that the markup amount will be added to on the cost worksheet. Both the cost markup amount and the budget markup amount will be added to this control element. If the user is using a contract change to collect markup, the target control element will be that which is defined for the pay item.

Markup Templates

Markup templates can be created and added to change events when you have a standard set of markup items for your project. Templates can contain multiple markup items with all the standard configuration options.

Create markup templates
  1. From Cost Administration, select Change Event Markup Templates.
  2. Click the add icon in the upper grid.
  3. Fill out the required details and click Add Markup Template.
  4. Add markup items in the lower grid, ordering them as required.
  5. The markup template can now be used on change events.

Tip!

Only one template can be selected to be automatically applied to newly created change events.

Add Items to templates
  1. From Cost Administration, select Change Event Markup Templates.
  2. Select the template.
  3. In the lower grid click the add icon and fill out the required fields. The same rules apply here as explained in the 'Add markup items to change events section' above.

How markup affects the cost worksheet

Budget markup amounts are added to the cost worksheet as budget changes, based on the status of the change event item. Cost markup amounts are added to the cost worksheet differently depending on the “Use contract to collect markup cost” designation. 

Note: Once the change event item or markup item is linked to a contract change Item, the contract change item becomes the source of truth when applying the amounts to the cost worksheet.

 

Budget markup

For budget markup, the markup amount is considered a budget change and treated like budget changes are today (Budget Markup Accounting Method = Apply Markup without contract change).

Setting

Result

Change Event Item Budget Status = Planning

Budget Markup amount is not added to the Target Control Account + Control Element

Change Event Item Budget Status = Potential

Budget Markup amount is added to the Potential Budget Changes amount for the Target Control Account + Control Element of the Markup Item

Change Event Item Budget Status = Approved

Budget Markup amount is added to the Approved Budget Changes amount for the Target Control Account + Control Element of the Markup Item

Change Event Item Budget Status = Cancelled

Budget Markup amount is not added to the Target Control Account + Control Element

Cost Markup

For Cost Markup, when no contract is defined (Cost Markup Accounting Method = Apply markup without contract change), the markup amount is considered an ETC (FCC) change and treated like ETC changes are today.

Setting

Result

Change Event Item Cost Status = Planning

Cost Markup amount is not added to the Target Control Account + Control Element

Change Event Item Cost Status = Potential

Cost Markup amount is added to the Potential ETC Changes amount for the Target Control Account + Control Element of the Markup Item

Change Event Item Cost Status = Approved

Cost Markup amount is added to the Estimate to Complete (ETC) amount for the Target Control Account + Control Element of the Markup Item

Change Event Item Cost Status = Cancelled

Cost Markup amount is not added to the Target Control Account + Control Element

 

For cost markup, when a contract is defined (Cost Markup Accounting Method = Use upstream/downstream contract change), the markup amount is considered a contract change and treated like contract changes are today.

Setting

Result

Change Event Item Cost Status = Planning

Cost Markup amount is not added to the Target Control Account + Control Element

Change Event Item Cost Status = Potential

Cost Markup amount is added to the Potential Contract Change Events amount for the Target Control Account + Control Element of the Markup Item

Change Event Item Cost Status = Approved

 

Cost Markup amount is added to the Approved Contract Change Events amount for the Target Control Account + Control Element of the Markup Item
 

If ETC Drawdown is checked:
Cost Markup amount is subtracted from the Estimate to Completion (ETC) amount for the Target Control Account + Control Element of the Markup Item, subject to the “floor rule”

If ETC Drawdown is unchecked:
Cost Markup amount is added to the Estimate at Completion (EAC) amount for the Target Control Account + Control Element of the Markup Item

Change Event Item Cost Status = Cancelled

Cost Markup amount is not added to the Target Control Account + Control Element

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