A buyout log for owners: the five fields that matter
Owners who decide to track buyout often start with a spreadsheet that has twenty columns and stop updating it by month three. The log fails not because the idea was wrong but because it asked for too much. A buyout log the owner will keep current needs a small number of fields, each of which answers a question the owner is actually asked.
Field one: the package
Every row is a trade package as the contractor has defined it. Not a CSI division, not a cost code, but the unit the contractor bids and awards: structural steel, elevators, drywall and framing, and so on. The list comes from the schedule of values attached to the GMP amendment, and it should match that document so the log can be tied back to the GMP.
Resist the urge to split packages the contractor has combined or combine ones it has split. The log is a mirror of the contractor's buyout, kept on the owner's side. If the contractor later splits a package, split the row and note the date.
Field two: the carried value
This is the amount the GMP carries for the package. It is frozen at GMP signing and never edited afterward. If the contractor revises its internal budget for a package, that is the contractor's business. The owner's log keeps the signed number, because the signed number is what the owner agreed to pay for and what every variance is measured against.
Getting this field is the hardest part of setting up the log, because it requires the package level breakdown of the GMP. Ask for it at signing. Under most AIA A133 based agreements the schedule of values is a contract document, and the package level detail behind it is usually available if requested before the amendment is executed.
Field three: the awarded value
The value of the executed subcontract or purchase order. Not the low bid, not the letter of intent, not the contractor's intended award. The executed value, with the date it was executed. If the subcontract is later modified by a subcontract change order, the log can carry a current value alongside the original award, but the original award is the figure that measures buyout.
From fields two and three the variance follows by subtraction. There is no need for a separate variance column that someone has to remember to update. The log should compute it.
Field four: the status
Not started, bidding, awarded, or executed. Four states are enough. The status answers the coverage question: what share of the cost of work is committed. It also answers the schedule question: which packages are late against the procurement plan. A status that has not changed in two months on a package that should have been bought is a flag the log raises on its own.
Field five: the disposition of the variance
Where the variance went. For a saving: retained in line, moved to contingency, applied to another package, or returned to the owner. For an overrun: drawn from contingency, netted against other savings, or raised by change order. This is the field owners most often leave out, and it is the one that makes the log useful at closeout. Without it the log shows what happened at award. With it the log shows where the money is today.
A fictional $29 million office renovation has thirty two packages. By month nine, twenty eight are executed with a net saving of $210,000. The disposition column shows $150,000 of that moved to contingency and $60,000 retained in line. The owner's projected savings pool uses the $60,000, not the $210,000, and the contingency projection includes the $150,000 that was added. Without the disposition field, both projections would be wrong.
What not to add
Bidder lists, bid tabulations, subcontractor contact details, insurance certificates, scope narratives. All of these exist and all of them belong in the contractor's procurement file, not in the owner's log. An owner who wants to see a bid tabulation can ask for it. Putting it in the log makes the log heavy and does not change any of the five answers.
Costwitness keeps the buyout tracker to these fields, with the carried value locked from the GMP baseline and the disposition linked to the contingency ledger or the savings projection as appropriate. The software keeps the arithmetic consistent. Entering the award and deciding the disposition is a monthly task for the owner that takes less time than rebuilding a spreadsheet.
Setting up the log this month
- Take the package list from the schedule of values and enter each one with its carried value.
- Ask the contractor for the current award status and executed value of each package and fill in fields three and four.
- For every executed package with a variance, ask where the variance went and record the disposition.
Questions on this
Should the log include self performed work?
Yes, as packages, because self performed work carries a value in the GMP and is performed against it. The awarded value for self performed work is the contractor's internal budget at the time it commits to perform, which the contractor may or may not share. If it does not, record the package with a status of self performed and track the cost through the pay application instead.
How often should the log be updated?
Monthly, with the pay application, is enough. Buyout activity is heaviest in the first months after GMP and tapers off. A log updated with each pay application will be current enough for the board report and light enough to maintain.
Is this different from the contractor's buyout log?
In content, not much. In ownership, entirely. The contractor's log is the contractor's working document and changes as the contractor's budget changes. The owner's log is frozen to the signed GMP and records dispositions the contractor's log may not show. Both can be correct and still differ, which is the point of keeping the owner's.
In the product
Buyout tracker, GMP baseline, Shared savings. Free tool: Pre-GMP Readiness Score, Shared Savings Calculator.
Keep reading
Earlier: Closeout reconciliation: checking the savings figure before you sign off. Later: Subcontractor default and the buyout risk an owner carries. All articles on buyout and shared savings.
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