The Basics of Payment Applications
Construction industry professionals know that one of the biggest challenges they face is the pursuit of consistent payment. Another challenge is avoiding conflicts and claims. While working with a Miami contractor attorney can help you in either case, there’s a contract form that can prove equally effective.
A payment application or payment app is a more detailed version of an invoice. It helps ensure that a contractor gets paid by providing detailed information about all aspects of the project. The payment application provides a rundown labor, materials, and change orders and the amount of the project completed to date, along with associated prices and quantities. Retainage and previous payments are subtracted from this amount to determine a total price. This document provides information to support these numbers. The American Institute of Architects provides a standard form for payment applications that is often used by architects called the G-702. There are other forms that can be used for this purpose, including the ConsensusDOCS 291, 292, and 293.
Components of Payment Applications
Payment applications, regardless of form, have a few basic components. These include:
- Overview of project status: This first page of payment application should have basic project and financial information. Some of the items to include are the project’s name and location, the initial contract price, a list of change orders, retainage, the amount of work done, previous payments, and payments due. This page also requires certification from the contractor or architect that amounts listed are accurate.
- Schedule of values: This is a list costs for various aspects of the project. Prices are given for each task within a project, not simply the overlying segment of the project. Quantities of items and what has been paid thus far are included in this section.
- List of subcontractors: A list of all subcontractors working on the project is added to justify certain labor costs. Lien waivers are typically added to this section as well to protect the project owner.
- Project schedule: Schedules are added to track progress against payment to date.
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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.