Hey Contractors, How To Fill Out Aia Pay Apps Part 2

By Ron Roberts

In Part 1, I showed you how to fill out page 1 of the AIA pay application (form G702). In Part 2, we are going to work through page 2 (form G703).

Go dig out your AIA pay application form again and turn to the second page. Here’s how to fill it out.

AIA Pay Application Page 2

The purpose of page 2 is to allow General Contractors to keep a close eye on your billing. As that is their purpose, they will probably ask you to break your pay request into several line items.

If they don’t, use as few breakouts as possible. This is your one opportunity to control your billing. If they request a more detailed breakout, give it to them.

Before delving into the heart of the page, allow me a moment to discuss the numbering of your pay applications. When you number your applications, number the first one “1” and count up from there.

If you have to revise a pay application, do not increase the number, just add a letter designation behind the original number. For example, if you are revising pay application number 5, make it 5R to reflect that it is a revision of number 5.

Column A – Item No.

Number your line items however you wish. Most contractors start with “1” and go from there. Some use the specification section or drawing number that the work applies to.

Column B – Description of Work

Describe the line item’s type of work (e.g. underground sanitary or first floor concrete slabs), the building, the area, or anything else that makes sense to you.

If your scope of work is large, you may wish to match this up to major activities from your estimate. Change orders are usually added as separate line items as they are approved.

Assume your first line item is for mobilization and your second line item is for pouring and finishing the first floor slabs. The rest of our example will focus on the first floor slab.

Column C – Scheduled Value

Assign a dollar value to each line. The grand total of all lines must equal your current contract sum that shows up on line 3 of page 1. Double check that before submitting the pay application.

Billing is a cat and mouse game. Be sly. Listing $30,000 for pre-construction and mobilization when you only have a couple of days of contract work and shop drawing preparation combined with taking a job trailer, a few skid steers, and some tools to the site to get started insults the GC’s intelligence.

Assume you have scheduled $60,000 for the first floor slab. Enter that in column C.

Column D – Work Completed from Previous Applications

Write down the total dollar amount you requested for this line item through your last pay application. That includes materials that you listed as Stored Materials but have now put in place. Column D does not include work completed this period nor does it include newly stored material.

Assume, that on your last application, you had listed $10,000 in column D, $5,000 in column E, and had $5,000 of Stored Materials of which $3,000 have now been put in place. On this pay application, you would list the combined total from all three items ($18,000) under column D and still have at least $2,000 of Stored Materials.

Column E – Work Completed This Period

The dollar amount of new work completed this period. Do not include materials that you installed but had already been paid for under Stored Materials. That figure goes in column D. All labor, equipment, and mark-up for the placement of those stored materials should be included as Work Completed This Period.

Assume you have completed $12,000 of work this period.

Column F – Materials Presently Stored

The total value of materials currently stored but not installed. Usually, to get paid for stored materials they have to be on site or in a bonded, secure storage facility.

Assume you bought an additional $1,000 in materials beyond what you had. Remember, you installed $3,000 worth from your last pay application’s $5,000 of Stored Materials. Column N of this application should show $3,000 ($2,000 of carry-over plus $1,000 of new material).

Column G – Total Completed and Stored to Date

Add together columns D, E, and F. This value should be the total work and materials to date. For our example that total should be $33,000.

Did you come up with that number? If not, go back and added everything up again.

Column G – % (of scheduled value)

This column is commonly referred to as Percent Complete. Divide your Total Completed and Stored to Date by the Scheduled value.

For the example, the correct value for our example would be 55% ($33,000 divided by $60,000).

Column H – Balance to Finish

Subtract the Total Completed and Stored to Date from the Scheduled Value.

For our example, the value would be $27,000 ($60,000 minus $33,000).

Column I – Retainage (held)

Multiply the prevailing retention rate (typically 10%) by the Total Completed and Stored to Date value.

Assuming 10% retention for our example, the value would be $3,300 ($33,000 times 0.1).

To finish filling out your form, total up each column and enter the value at the bottom of the column on the Grand Total line.

Whew. We’re done with pay applications.

About the Author: Ron Roberts, The Contractor’s Business Coach, teaches contractors how to turn their businesses into money making machines. To receive Ron’s FREE Contractor Best Practices Newsletter visit FilthyRichContractor.com

Source: isnare.com

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