Pay Applications: Unique to Every Project, Clarity Can have a Measurable Impact on Project Success

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In most industries, businesses submit simple one-page invoices to request payment, but in our industry only the most basic construction projects can get by with a simple one-page invoice. Construction projects have a lot of moving parts, with a lot of money on the line. Most owners and general contractors will require a pay application, also known as a pay app, be submitted when requesting payment.

The pay app is a detailed construction invoice with several supporting attachments. This document, or group of documents, provides information about the progress of a contract and requests payment for the work completed. In general, the pay app provides an accounting of the work completed and the materials used over the course of a time period such as two weeks or one month. It will follow the work required by the contract, including change orders, to determine the amount due. Supporting documentation is provided as well.

There is no such thing as a universal pay app. So it is the job of the construction firm to discuss the specific requirements of the pay app process for a given project with the owner, client, or general contractor at the onset of the construction project. This conversation should include a review of the supporting documentation requirements that they are going to expect as well.

Typical elements included in a pay application include:

· Name of the project

· Name of the Owner or General Contractor

· The number of that particular pay app

· Time period (dates) covered by the pay app

· Original contract amount

· Any change orders

· Total value of work completed to date

· Retainage (this is calculated as a certain percentage of the work performed)

· Total amount of prior payments

· Current amount due

· Total balance remaining

Supporting Documentation Can Ease the Payment Process

As mentioned, most pay apps are not delivered as stand-alone documents. They often require additional data and information as well as supporting documentation for back up of the payment amount requested. Some examples of this supporting documentation include a schedule of values, a lists of subs (and work performed by these subs), a project schedule, documentation of materials received or purchased, such as truck tickets for rock, stone, sand, and embankment materials, and lien waivers (for you and your subs).

Lien waivers can be a crucial step in receiving payment. They provide protection for the owner or General Contractor from paying for the same work twice. Thus, providing a signed waiver with your pay app without waiting for a request from the owner or General contractor, can help in getting you paid more quickly.

By familiarizing yourself with the Owner or General Contractor’s pay app forms, you can help your business operate more efficiently and get paid faster, thus, being able to pay your sub-contractors faster. This will make everyone happier and less stressed, and lead to long, successful sub-contractor partnerships as a result.

If you have any questions or comments, reach out to us at: info@radixgrp.com or on Facebook, Instagram, or LinkedIn. Till next month!

-Roy Hand

Quality Control Service Mgr.

Radix Group

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