Managing Escalation Causes on Contracts
Escalation clauses in contracts should be recorded on the draw request.
- In Change Request Entry, zero out a billing item in the current draw request by entering a line with a negative quantity equal to that of the existing item.
- Add a new (positive) billing item equal to the remaining quantity-to-complete at the new price.
- The new billing item displays after the zeroed line item and includes the unit cost and quantity-to-date.
The net amount of the change request is equal to the quantity-to-complete times the escalation unit price.
Note: This procedure usually applies to unit price contracts.