Overview
When a project is in progress, there may be times when changes or modifications to the contract budget need to be represented in ServiceTitan. Cost adjustments are a form of change orders that can adjust the cost budgets for a project.
Who uses this feature
Administrators, office employees, managers, accountants, bookkeepers, and project managers
Applies to Residential and Commercial Construction business types and project management customers
Applies to all trades
Things to know
Cost adjustments are change orders that focus on costs instead of revenue.
Projects can have multiple change orders.
An original sold estimate is required to make a change order.
The project type of the project must have estimates enabled to create an estimate. For more, see Create and use project types.
When you add a change order to an Application for Payment (AFP), the AFP automatically groups the underlying estimate lines into summary groups on the Schedule of Values (SOV). Each summary group represents a distinct category of work, such as a specific trade, cost type, or user-defined SOV description.
Create a cost adjustment
Change orders are used to make modifications to your project and contract, and typically reflect changes in the contract value or revenue. Cost adjustments instead focus on cost related to the budget of a project.
For example, you can use cost adjustments if you have a decrease in the total scope of a project or need to add costs to a specific phase for more accurate budgeting.
To create a cost adjustment, complete the following steps to create the change order:
Search for and open the project you want to set up a change order for.
Click the Actions dropdown and select Build Estimate.
On the Build Estimate window that opens, click the Create New Opportunity tab.
Click the Business Unit dropdown and select the business unit (BU) for which you want to create an estimate.
When finished, click + Build Estimate.
On the Create Estimate screen that opens, build the new estimate.
If you're adding the change order to an Application for Payment, follow these best practices:
Add a project label to all items in the change order. Project labels determine how the change order estimate lines are organized into summary groups on the Schedule of Values (SOV). For more, see Use project labels.
When you initiate an Application for Payment, the AFP automatically groups the change order's estimate lines into itemized summary groups on the Schedule of Values (SOV). Each summary group represents a distinct category of work based on trade, cost type, or user-defined SOV description.
This is different from the initial estimate, where scheduled values are organized based on the project labels assigned.
When an invoice is generated for the change order, service items are added using the same logic as the initial estimate.
Actual billing is reported on the Budget vs Actual (BvA) table based on project labels assigned using the same logic as service items from the initial estimate.
When the Change Order Estimate status is updated to Sold, enable the Change Order option on the Estimate screen. This ensures that the change order is accounted for in the Application for Payment summary. You can find change order details in the Net change by Change Orders and Change Order Summary sections.
To view the itemized breakdown of a change order, open the Continuation Sheet and click on the change order in the Schedule of Values column. The summary groups for that change order display with their individual values.
Example
You underestimated the material budget for the rough-in phase of a project, and midway through the phase, you realize that you need to reflect the added cost for materials through a cost adjustment.
By building a change order, you can add a non-chargeable material to capture the additional costs you want to add to your budget. The material, based on this example, is labeled Rough-In > Materials.
This adds $2,000 in budgeted costs to the Rough-In > Material category on the Budget vs Actual table. Prior to the cost adjustment, the budgeted total was $200 in costs.
The final result reflects the cost adjustment for rough-in materials on the BvA table. You can drill into the materials to see that reflected by line item.
The itemized details confirm that the cost adjustment was applied correctly to add additional budgeted costs to the project.
You can see two sold estimates, which is expected because the initial $200 in costs came from the initial sold estimate and the later $2,000 in costs came from the cost adjustment.
Note: Because cost adjustments don't change the project total, cost adjustments won't be seen in the Deductions column in the Change Order Summary section of the Continuation Sheet. Only changes to the contract value are represented in the Change Order Summary section.
