Reviewing the Contractor’s Application for Payment

On most public construction projects, the Architect reviews the Contractor’s monthly Applications for Payment (a.k.a. “Requisitions”) and certifies the amount to be paid to the Contractor for that month. If the Application is made on AIA Document G702, the front page includes the names of the Project, the Owner, the Contractor, and the Architect, an Application number, date(s) indicating the period covered by the Application, an overview accounting of the monetary status of the construction project, starting with the original contract sum and including a calculation of the Current Payment Due, considering change orders, the total amount completed and stored to date, Retainage to be withheld, and previous certificates for payment. The front page also includes a Change Order Summary, certification by the Contractor, conditions (terms) of certification by the Architect, and the amount certified. Continuation sheets should break down the contract sum and progress according to the approved Schedule of Values (see The Schedule of Values deserves close attention) and also include a detailed accounting of the status of work on approved Change Orders.

The Architect should review even the basic information on the front page before looking at the detailed information on the continuation sheets. It helps to have a copy of the previous month’s Application in hand for comparison. Once you determine that the current month’s Application is for the appropriate project (seriously), check the Original Contract Sum. In more than one instance, a contractor has changed the Original Contract Sum on an Application for Payment, resulting in an increase in payment without an approved Change Order. The Original Contract Sum should remain the same for the life of the Contract. Before turning to the continuation sheets, the Architect should apply the same scrutiny to the rest of the front page calculations and the wording of the certification. Different certification language may carry different liability.

Detailed information on the continuation sheets is typically generated as part of a “pencil requisition” process and in anticipation of work to be completed by the end of the month. The Architect needs to consider whether the final Application for the month represents work that was actually accomplished by the end of the month. If the Architect is aware that an anticipated material delivery did not occur, then the Architect should not certify payment for that. Likewise, if the Architect is aware that a specific work item was not completed, then the Architect should not certifiy payment as if the item had been completed. Necessary adjustments to the continuation sheets must be carried over to the front page and to the overall amount certified by the Architect for the period covered by the Application. It may be practical for the Contractor to make the necessary adjustments and then resubmit a corrected Application for the Architect’s certification. If timely payment is an overriding concern, then the Architect may need to make the adjustments by annotating the Application, certifying a reduced amount, and notifying both the Owner and the Contractor of the reasons for the adjustments. (See also It takes timely money to make a project go )

Posted in Construction Administration, Project Management

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