Advance Payment for a contract? Can Payment Requisition do this?

Question

Dear all,
I am having problem with implementing the process of payment of our company's contracts into CM.
Say we sign with subcontractor a contract value of $10,000,000. At the initial signing of contract we pay them 30% of the value before any work done. Every month, base on the amount of work done they claim, we only pay 70% of each of those claim until the process is 100%. How to implement this process into CM?

Answer 1

CM cannot directly do this as you cannot build in rules such as take 70% of the actual amount completed for a period. From what I understand I might suggest the following:
Create a Payment Requisition #00001 with your schedule of values. Enter 2 lines for each actual work item (one at 30% of scheduled value and one at 70%) followed by a subtotal line for each work item (if necessary). For example, if you had a line for Mobilization with a scheduled value of $1,000,000, then enter:
Item#    Description             Scheduled Value  Prev Apps  This Period     %Complete
00001-I Mobilization (Initial) $300,000 $0 $300,000 100%
00001-O Mobilization (Ongoing) $700,000 $0          $0 0%
*00001-S SUBTOTAL MOBILIZATION $1,000,000 $0          $300,000 30%*
This is the only way I can think of where you can track the %Complete from both the perspective of the amount of work actually complete AND the amount that has been paid. The line with "(Ongoing)" will track the actual progress of work against the item while the Subtotal line will show the amount that has been paid against the item.
When you generate Pay Req #00002 and assume that 50% of actual work has been completed on this item (enter in % Complete column on the "Ongoing" line), then it will look something like this:
Item#    Description             Scheduled Value  Prev Apps  This Period     %Complete
00001-I Mobilization (Initial) $300,000 $300,000 $0 100%
00001-O Mobilization (Ongoing) $700,000 $0          $350,000 50%
*00001-S SUBTOTAL MOBILIZATION $1,000,000 $300,000 $350,000 65%*