Financial Cost Items
Financial cost items are cost items whose cost is based on other cost items.
Similar to list assembly cost items, financial cost items have members assigned to them to specify what items make up the financial cost item.
You can use financial cost items to calculate permit fees that are based on job totals, add markup percentages to groups of cost items, add profit percentages to groups of cost items, and many other functions.
There are two steps to calculate the value of a financial cost item. First, the costs of its members are added together to reach a sum of the costs. The result is the Base Cost of the financial cost item. Then, this sum is multiplied by a factor to calculate the Extended Cost of the financial cost item. The factor is calculated by dividing the Quantity of the financial cost item by the Based On value of the financial cost item. The following equation shows how the cost of the financial cost item is calculated:
For example, if you want to add a 5% markup on six cost items to an estimate, it would look like this:
Cost item 1 | $250 |
Cost item 2 | $500 |
Cost item 3 | $415 |
Cost item 4 | $235 |
Cost item 5 | $125 |
Cost item 6 | $100 |
Base Cost (Sum) | $1625 |
Quantity of financial cost item = 5
Based On value = 100
All the financial cost items in the estimate are calculated each time you open a job or recalculate the estimate. An individual financial cost item is calculated when you click for a financial cost item or when you view the Cost Item window for a financial cost item and click OK.
Financial cost items can have an unlimited number of members. They can include specific cost items, cost items that match criteria you specify in a query, cost items that are a particular cost item type, like labor or equipment, or all the cost items in the estimate. You can include the financial cost item itself as a member. This enables you to calculate a financial cost item, such as a permit fee, that is based on a percentage of the total job cost, including the cost of the permit itself.
Although you can create financial cost items in both the catalog and estimate, they are only really usable in the estimate. However, you should store financial cost items that you use frequently in the catalog to simplify the process of building an estimate.
Financial Cost Items in Assemblies
You can add financial cost items to assemblies.
If you add a financial cost item to an assembly and then change the quantity of the assembly, ProContractor updates the quantities of any financial items that are assembly members as follows:
If you change the list assembly quantity to 0, ProContractor updates the quantities of financial item members to 0.
If you change the list assembly quantity from 0 to another value, ProContractor resets the quantities of financial item members to their original/base quantities.
Calculating a Financial Item that Includes Itself
If a financial cost item includes itself as a member, the financial cost item is calculated in a slightly different way. Instead of calculating the cost of the financial cost item only once each time you recalculate the estimate, a series of calculations is performed to calculate the most accurate cost for the cost item. The following example describes a simple scenario to show you how a financial cost item is calculated when it includes itself as a member. This example might describe a financial cost item that represents the cost of a permit that is based on the total cost of the job, including the cost of the permit itself.
The sum of the cost items in the estimate is $1000. The Quantity of the financial cost item is 5, and the Based On value is 100, which gives us a factor of 5%. Running this through the equation for calculating a financial cost item, the cost of the financial cost item is $50:
However, since this financial cost item includes itself as a member, the sum of the cost items in the estimate has just increased $50, which is the cost of the financial cost item. The new sum of the cost items in the estimate is $1050. This new sum of $1050 is then compared with the previous sum of $1000. If the difference between the two sums is greater than $1, the financial cost item is recalculated. In this case, the difference is $50 so the cost of the financial cost item is recalculated:
The new sum of the estimate is now $1052.50. The new sum of $1052.50 is compared with the old sum of $1050, which has a difference of $2.50. Since this is greater than $1, the financial cost item is recalculated:
C o s t = S u m × Q u a n t i t y B a s e d O n = $ 1052.50 × 5 100 = $ 52.625
The new cost is $52.625 or $52.63 when rounded. When the estimate is summed again, the new sum is 1052.63. The old sum of 1052.50 is compared with the new sum of 1052.63, which has a difference of $0.23. Since this is now less than $1, the series of calculations is stopped.
