An Explanation of Application for Payment Forms Used in Construction

Understand these application for payment basic forms

An application for payment is a construction document that identifies and presents how a contractor will be paid. The application for payment includes the services or materials that are being incorporated or jobs that are being executed under a contract agreement.

This document is usually presented as a list with the unit price of each item and the quantities of the product or material being furnished. Although the types of backup information asked by every contract varies, you can probably count on being asked for these documents. 

Application for Payment: General Form

construction contracts
Photo Caiaimage/Trevor Adeline Getty Images

The applications for payment forms that are most often used are:

  • AIA Forms: G702 Application and Certificate for Payment
  • ConsensusDOCS 291 Application for Payment (GMP): Facilitates the calculation and documentation of progress payments where the basis of payment is a guaranteed maximum price.
  • ConsensusDOCS 292 Application for Payment (Lump Sum): Facilitates the calculation and documentation of progress payments where the contract price is a lump sum.
  • ConsensusDOCS 293 Schedule of Values: Provides a breakdown of the cost of elements of the work and should be used with the ConsensusDOCS application for payment forms ConsensusDOCS 291 and ConsensusDOCS 292.

Application for Payment: Schedule of Values

The Schedule of Values is a sheet on which items are listed along with their unit prices, quantities, and summaries of what has been paid and what is being certified for payment. It provides a general overview of the project status. Depending on how the contract is written, it can be a lump sum value or an itemized list that will provide a better understanding of the work being billed.

Be sure to provide a sample sheet during the negotiation process and during the RFP and bid processes. You can later use these as your schedule of values, ensuring a smoother process.

Application for Payment: Schedule #2

Schedule #2 provides a comprehensive list of the subcontractors that took part during the respective period and performed works under the specified contract. It's required to justify the amounts being certified under the schedule of values. This is very specific in some contracts and might require additional documentation, such as payrolls, certifications, and lien waivers to make sure that all subs have been paid.

Application for Payment: Schedule 3

Schedule #3 under the application for payment is a document that releases and presents waivers of claims and stop notices from all subcontractors who are furnishing labor, services, or materials covered by the certificate for payment. You acknowledge and guarantee the client in this document that there will not be any claim by the subcontractors due to payment, performance, or any other possible claim. 

Application for Payment: Schedule 4

This is literally a schedule. Some contracts require that you submit the latest and most up-to-date project schedule so they can make sure the project is moving along as expected. The customer might also ask for photos or videos documenting the project's progress.

The Importance of the Application for Payment

An application for payment provides both the owner and the contractor with a method of controlling what items or materials have been provided by the contractor. It's a great tool to expedite payment and to minimize the possibility of error. It also helps to keep track of the project cost, balance to completion, material received to date, material installed to date, and work completed. Remember that the application for payment is a document and/or process to get paid. It doesn't release your responsibilities for the work being done. Many contractors believe that when they're paid, the customer is accepting the work and no claims can be made against them due to the payment being received. This is not the case.