Construction participants routinely furnish labor or materials on credit, and then request payment throughout the project 1) in accordance with the Owner/GC’s requirements, and 2) in proportion to the amount of work complete.
These pay apps are generally completed on a monthly basis and require the party requesting payment to provide certain details and supporting information. While some GCs or owners have their own specific applications that they require down-stream participants to use, many others make use of standardized pay-apps. While every pay-app is relatively similar (the same general work and accounting information must be provided on pretty much all forms), it’s still worthwhile to be familiar with the generally available standard forms so you are never taken by surprise.
The American Institute of Architects (“AIA”) makes available several standardized construction documents, from contracts, to change orders, to pay-apps, and more. The AIA Document G702 is a standard application for payment, and requests the contractor provide the following information:
- the current status of the contract sum, including the following specific information
- total value (dollar amount) of the work completed and stored to date,
- the total current amount of retainage (if applicable),
- the total of all prior payments,
- total change orders, and
- the amount of the payment currently requested
There is an additional AIA document, G703, that breaks down the contract into specific portions of work as set forth by the schedule of values. It is worth noting, however, that the AIA does not have a standardized schedule of values in its arsenal of construction documents. The AIA provides a general “how to” guide to completing the application for payment and continuation forms correctly. These forms include the architect’s certification as a portion of the form itself.
Important Info – AIA Docs:
Another well known and widely available provider of standardized construction documents is ConsensusDocs. ConsensusDocs has multiple standardized applications of payment that can be used dependent upon the specific of the contract and the party’s role. Unlike the AIA forms, ConsensusDocs splits the available pay-apps into those applicable to guaranteed maximum price (“GMP”) contracts, lump-sum contracts, and subcontractor requests.
In addition, ConsensusDocs has a general schedule of values for use with its standardized pay-apps.
Pay-Apps: Just One Part of the Application for Payment Process
While the standardized pay-apps are relatively similar no matter where they come from – the references to and requirements regarding pay applications in the standardized construction contracts can still be different. The actual pay-app itself is just one part of the application for the payment process, and certain requirements can be set by the original contract. It’s always worth going over the contract itself carefully prior to making the first application for payment so that you can be sure what needs to happen and when in order to make the payment process smooth.