Demo Projects Contracting LLC: build, certify, bill, and close

Demo Projects Contracting LLC is a fictional UAE contractor delivering a three-branch retail fit-out for Demo Retail Group LLC. The contract is AED 12,000,000 with a 10% mobilisation advance, monthly progress claims, 5% retention, approved variations, subcontractors, imported equipment, and a target completion date. The project spans Dubai and Abu Dhabi sites and uses AED and USD. This scenario teaches why a contract, budget, purchase order, receipt, progress certificate, invoice, retention, and forecast are different records.

Contract and version control

The commercial manager creates customer, contract number, signed date, currency, tax treatment, start/end dates, billing model, retention percentage, advance percentage, liquidated-damages policy, and responsible project manager. The signed contract is version 1. A change in scope, price, or completion date requires a version 2 variation; editing the original value erases the commercial history.

Field	Example	Impact
Contract code	DRG-FITOUT-2026	Stable link across project documents
Contract value	AED 12,000,000	Commercial ceiling and forecast comparison
Customer	Demo Retail Group LLC	Receivable and customer statement
Project manager	Omar Hassan	Approval and accountability routing
Retention	5%	Reduces current cash and creates later receivable
Advance	10%	Cash received before earned work
Billing currency	AED	Invoice amount and customer exposure
Site count	3	Branch/site reporting and logistics

The contract is not revenue. It authorises work and billing. Revenue recognition depends on the approved accounting policy and evidence of performance.

Project, WBS, and budget

The project DRG-FITOUT-2026 uses postable WBS leaves: design, civil works, electrical, HVAC, fixtures, imported equipment, testing, and handover. Parent nodes organise the tree but should not receive costs if the project policy requires leaf-level attribution. Each leaf stores cost code, manager, planned dates, budget quantity, budget amount, and billable/overhead classification.

The initial budget is AED 9,600,000 cost. The project report must distinguish original budget, approved changes, committed purchase orders, actual receipts/invoices, accrued costs, forecast-to-complete, and total forecast. A purchase order is a commitment—not an actual cost—and a forecast is not a posted journal.

Mobilisation and procurement

The customer pays AED 1,200,000 mobilisation. Finance records the receipt and contract allocation; the policy determines whether it is advance liability, customer credit, or a later revenue offset. The project buyer raises purchase requests for cable, chillers, fixtures, and subcontract labour. Each request includes site, WBS, cost code, quantity, UOM, required date, budget reference, and technical specification.

The requisition becomes RFQ, vendor quotations, comparison, and purchase order. The comparison includes price, lead time, warranty, compliance, currency, freight, duty, and landed cost. Selecting the lowest unit price without landed cost can create a project loss.

Site receipt and subcontractor evidence

Materials arrive at the Dubai site. The receiving user records supplier challan, date, transporter, vehicle, e-way/shipping reference, site warehouse, bin, batch/serial, accepted quantity, rejected quantity, and WBS. A receipt proves physical arrival; the supplier invoice and payment remain separate.

A subcontractor submits a USD 80,000 progress bill for electrical work. The site engineer records measured quantity, period, work package, previous certified amount, current amount, retention, advance recovery, variation reference, attachment, and certification date. The commercial manager approves the certificate; finance validates supplier invoice, tax, currency rate, and project coding.

Progress claim and customer invoice

At month end, the engineer measures work completed: 60% civil, 40% electrical, 25% fixtures. The progress certificate includes contract line, quantity/percentage, current period, cumulative-to-date, approved variation, retention, advance recovery, tax, and customer approval. A certificate is evidence for billing; it is not automatically a payment.

The invoice is raised for the certified amount. Example:

Certified work this month                 AED 1,000,000
Less retention (5%)                         AED 50,000
Less advance recovery                       AED 100,000
Tax and approved charges                    per tax policy
Net customer invoice                        configured total

The invoice header records customer, contract, project, branch/site, currency, exchange rate, document date, posting date, due date, tax regime, and payment terms. Lines retain WBS, cost code, progress reference, and description. Retention is not silently discarded; it must remain visible as a future receivable or contract balance according to policy.

Variation management

The customer requests a premium cold-room specification. The project manager creates variation VO-003 with reason, scope, quantity, rate, cost impact, revenue impact, schedule impact, risk, approver, and effective date. Work must not start on an unapproved variation unless contract policy explicitly allows it.

Once approved, the variation updates the contract version, budget, WBS, procurement plan, and forecast. It does not rewrite the original contract. A rejected variation remains evidence and must not appear in billable progress.

Multi-currency and retention release

The imported chiller supplier invoices USD 250,000. The project stores original USD, dated USD/AED rate, base AED amount, tax, customs, freight, and WBS. A later payment at a different rate produces realised FX difference under the company policy. Changing the original invoice rate to remove that difference corrupts the audit trail.

At practical completion, the customer approves retention release subject to defects liability. Finance raises the retention claim with original contract, retained amount, release percentage, approval, and tax treatment. Retention release is a collection event, not a new project cost.

Cost-to-complete forecast

The project controller reviews:

Measure	AED	Meaning
Original cost budget	9,600,000	Approved baseline
Approved variations	450,000	Change-controlled additions
Committed purchase orders	6,800,000	Future obligations
Posted actual cost	4,900,000	Receipts, invoices, labour, expenses
Forecast remaining cost	4,700,000	Expected future cost
Forecast total cost	9,600,000	Actual + remaining
Contract revenue forecast	12,450,000	Original + approved billable changes
Forecast gross margin	2,850,000	Forecast, not posted profit

The forecast must identify assumptions: productivity, supplier lead time, unresolved claims, FX rate, retention timing, and unapproved risk. A forecast change should carry owner, date, reason, and approval.

Project close

Close requires customer handover, as-built documents, open defects, final progress certificate, retention schedule, subcontractor settlement, unused materials, equipment return, WBS balance, unbilled work, advance balance, tax, FX, and period status. The project closes only when no open commitment, receipt, invoice, approval, variation, or evidence remains unexplained.

Consultant challenge

Repeat this case with a delayed site, rejected material, subcontractor advance, disputed measurement, partial receipt, imported item duty, currency devaluation, unapproved variation, retention dispute, cancelled purchase order, and locked-period posting. For every case document the field, owner, permission, stage, physical effect, accounting effect, customer communication, and report impact.

Use this chapter with Projects and approvals, Advanced GL Mapping, Sales lifecycle, and the API Library.