What is the difference between 'Hourly Not to Exceed' and 'Fixed' contract types?

Hourly Not To Exceed contracts and Fixed contracts differ the way they are billed. Both types have an agreement of a contract amount not to be exceeded, but Hourly Not To Exceed is meant to allow the client to be billed on an hourly basis. If the project finishes before the contract amount is reached, the client will be billed based on the total hours worked. In contrast, the Fixed contract type ensures that a fixed amount is billed, regardless of how long it takes to finish the project. 

In Core, both types have automatic checking of time and expense entries so that the project total does not go over the contract amount. If it does, Core displays a warning and adjusts the time or expense entries to ensure that the limit is not exceeded. Hitting the ceiling of a contract amount does not block the recording of additional time and expenses; however, Core automatically changes its status from billable to non-billable. These processing rules can be overridden on a project-by-project basis. Both contracts can be billed in full, by the hour, or in incremental flat amounts. 

The reason both contract types are offered is to allow you to treat them differently. Generally, companies bill Hourly Not to Exceed projects by the hour and Fixed projects in incremental flat amounts. Thus, different invoice formats are required for each contract type. Hourly Not to Exceed uses the Hourly Invoice template and Fixed uses the Fixed Invoice template, by default. Check Core Help Center for details on project contract types.

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