Construction payment applications are simple, everyday project management tools.
In essence, construction payment applications are documents that state the contracted schedule of values, frequency of submitting monthly work progress, and previous approved payments, and are ultimately requests to the contacting party to accept the work and provide payment.
There are a number of formats for construction payment applications such as AIA Pay (G-702 and G-703) for managing these, and there is nothing inherently wrong with the different payment application documents, which all are similar in terms of content.
The biggest difference lies in the ways in which the payment applications are progressed, and a number of project managers still rely on processing payment applications using pdfs, spreadsheets or Word document files that are filled in by the subcontractor which is time-consuming and could be risky.
Manually reviewing and approving construction pay applications is a risky burden
Construction pay applications consist of the schedule of values, which is simply a list of materials and services that were signed in the contract, consist of a number of articles.
For example, let’s say this list contains 15 articles. Each of these articles further consist of 5 columns on information (contracted value, previous payments, current payment, sum of payments and free amount left in the budget).
This means that there are 75 cells of information to check – and in rapidly progressing construction, it’s common for any given construction payment application to be eventually made up of ten or more order changes.
Now, building a construction project such as a 5-floor office building might easily have several hundred payment applications, all of which must be controlled and approved by the project manager.
The subcontractors have the upper hand
The subcontractors have the upper hand, as these payment applications are issued by the subcontractors, who could easily make an ”accidental” error resulting in wins for them.
It’s a real burden for the project manager, who needs to control all 75 columns of information where data is stored between spreadsheets, accounting tools and file folders.
This situation can become even more hectic when, due to lack of time, project managers might have 50 or more payment applications being sent on monthly basis mid-project.
The outcome in many cases is that the payment applications are poorly controlled and approved with potentially very costly errors.
Construction Payment Application Software Can Make a Difference
Planyard is a construction payment application software and budget management tool that project managers actually love to use, as it helps automate and streamline project payment applications.
#1 The subcontractors access the payment applications online
The form is automatically put together, and each subcontractor has access to the form that corresponds to his/her contracted schedule of values, previous payments and more.
#2 Standard form for payment application with a clear overview of information
Simply submit the % or sum of work done.
#3 Change orders streamlinedWhen a change order is set, Planyard allows these to be submitted
by the subcontractor. When the change order is approved by the project manager,
it will be connected with the budget, contract and future payment applications.
#4 Easy payment application approvalHave a clear overview of all your incoming payment applications.
Be sure that the information is correct and the subcontractor has no access to change
the contracted values or previous payments.
#5 Efficient process for all parties
The subcontractors don’t have to update spreadsheets and can simply enter the amount of work completed.Project managers can review all payment APPs online and with a simple one click approval.
When the invoice comes in, you will be able to immediately compare this with your payment application. By just clicking ‘approve’, project managers save a lot of time that would have otherwise been wasted on data entry, and the accounts and expenditures are sent straight to accounting.
Construction payment applications are standard documents in construction.
While there are many formats for such applications, the structure of the documents is usually the same.
It’s the methods used in setting up a payment application process that can make a difference. Processing the payment applications on spreadsheets and in pdfs is time-consuming for all parties and results in risks for errors in payments.
However, construction billing software such a Planyard helps streamline the process and save stakeholders time.
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