Contracts & change orders

What this covers

A job is agreed at a number, and then the work meets the building. A client changes their mind, a wall opens up and reveals rot, a fixture is discontinued. Every one of those has to be priced, agreed, and reflected in what gets billed.

This area is how a change becomes an agreed change rather than a surprise on an invoice.

The contract

A Contract is a signed agreement inside a Project Record. It is drafted and edited outside KI and uploaded as a PDF; KI captures the signature against that PDF and records what is needed to make it valid.

A Legacy KI “Project” is a KI Contract — one of the three renames worth learning properly (section 4.1).

A Design Build project carries two: the Design Contract, signed after the proposal is approved in Phase 1, and the Construction Contract, signed after the final design package is approved in Phase 3. Every other scope carries one. The client signs digitally in the Client Portal.

Each contract has its own billing schedule and its own budget. Setting one up does not touch the other’s.

The Contract Activation Sequence

Signing is the first of four steps, and the other three are what make the contract usable:

Sign the contract.
Set up Billing Items — how the contract will be billed. They must sum to the contract amount, and one of them is the deposit.
Set up the budget — the initial Budget Adjustment by Cost Code. Cost Code budgets plus Fee must equal the contract amount.
Bill the deposit — create a Pay Application and submit the invoice.

Until all four are complete, the project cannot advance to the next phase. This is a hard gate, not a convention. See section 8.

Billing Items is what commercial contracting calls a schedule of values — the contract broken into billable line items, which progress billing is measured against.

Change orders

A change order is a priced change to a signed contract. It carries matching Billing Item and Budget Adjustment changes, so three things move together and stay reconciled: the contract amount, what the client will be billed, and what the project is planned to cost.

A Change Order is created directly in the Admin Portal. There is no Change Estimate step in front of it.

It carries one status: executed. Approval and execution are the same event under two words, and executed is the term to use — a change order is either not yet executed or executed, and once executed it is in force and billable. The client signs it in the Client Portal, and signing is what executes it.

The change order log names the person behind each step — who created the change order, who published it, and who approved it — so the log answers who did something as well as when.

Someone has to be accountable

A change order cannot be created until a client contact is identified as the change order approver on the project. This is deliberate: nothing is billed on the strength of a conversation, and no change is issued without a named person accountable for agreeing to it.

How a change order moves the budget

A budget does not grow because someone decided it should. It grows because scope was priced, agreed, and signed, and the contract value moved with it.

That is enforced arithmetically. A change order Budget Adjustment must total the amount of the selected Change Order, and a change order Billing Item change must net to the same amount — where an internal adjustment on either side must net to zero. The rules are in section 5.

What the client sees

Contracts and change orders in the Client Portal, alongside a summary of the current contract amount and the payments made against it. Clients sign change orders there, which executes them.

Part 2 — Objects and rules — the arithmetic behind all of this
Billing and accounting — how Billing Items turn into a pay application
Budgets and cost control — the cost side a change order adjusts