Arcvue
Contract fundamentals—two numbers that are never the same
What a contract could be worth, and what you may actually spend.
Ceiling is the maximum if every option is exercised. Funded is the money committed right now. The gap between them is work the government could order and has not yet paid for—and you can only bill against the smaller number. Arcvue carries both on every contract and burns against the funded one, so the gap is a number on the screen rather than a discovery.
A five-year contract is rarely funded five years at a time.
Appropriations are annual, agencies do not want budget locked years ahead, and options exist precisely so the government can walk away. So funding arrives a year at a time.
| Period | Status | Value |
|---|---|---|
| Base year | Funded | 2,000,000.00 |
| Option year 1 | Funded | 2,000,000.00 |
| Option year 2 | Not exercised | 2,000,000.00 |
| Option year 3 | Not exercised | 2,000,000.00 |
| Option year 4 | Not exercised | 2,000,000.00 |
| Ceiling | If all exercised | 10,000,000.00 |
Basis a worked contract at illustrative values. Synthetic sample. Funded today is 4,000,000.00 of a 10,000,000.00 ceiling—and only the first of those two can be billed against.
Forecasting on the ceiling forecasts money nobody has committed.
- Revenue forecasting. Ceiling is an upper bound on possibility, not a plan. A forecast built on it assumes every option is exercised.
- Runway. Funded value over the burn rate is how many months of work you are actually paid for—the number that matters when an option is late.
- Staffing. Hiring against unexercised options is hiring against a decision somebody else has not made.
Both numbers held per contract, and never conflated.
Contracts carries ceiling and funded separately, and program management reports funded runway against period of performance—which is where the gap between the two becomes a date rather than a difference.