With over 7 million people working within it, the US construction industry occupies the third place in the country's economic growth chart. If you’re a builder or manage a team of workers, you already know how rewarding a job it can be. However, you are likely frustrated with all the paperwork and administrative aspects of your job that prevent you from making as much progress on your project as possible.
AIA G702 Pay Application forms are among the most error-prone & time consuming-yet most important-contractual documents in construction. Are you struggling to better understand how to fill-in these forms without making any mistakes? Read on to learn more about these applications and construction billing softwares.
An AIA G702 pay application document is a billing form used by the American Institute of Architects (AIA). It is a contractor’s application and certificate of payment, it certifies that a payment is due. The form is sent by the contractor-to the Architect-Who is in charge of certifying the payment. These forms are used by almost every contractor and members of the AIA. The forms are downloadable, but not free. ( Maybe add a link to where you can download the forms?)
There are many requirements for the form, including:
Using these forms properly can allow you to receive expedite payment. The Architect in charge of reviewing these schedules of values is allowed to certify a different contract sum than the one specified by the builder, this is where we enter the ‘’tug of war’’ in construction. Both parties are now obliged to demonstrate each other the progress of the work performed-or lack thereof. Many work relationships get torn at this stage, this creates an internal conflict for construction companies. Builders spent a considerable amount of time strengthening their relationship with project owners, and at the same time project managers spent time searching and building these same relationships with subcontractors. A single document form is in charge of hand- holding these relationships and improving them over the years, the result: project sites become a great environment for construction workers.
The bottom line is that an AIA G702 form ensures that all parties in a building plan are fairly compensated for their labor, leaving plenty of room for future contracts to be issued to the same group of contractors and subcontractors.
We’ve all been there, looking at this black and white form, not knowing exactly where to start. Reviewing our emails in the attempt of tracking down the latest payment agreement- calculating the progress and transforming these into numbers. It never ceases to be a confusing and time consuming administrative process.
We mentioned this before, the forms are downloadable and come with a cost. There are alternatives to these forms, for example payment softwares exclusively engineered for the construction industry. These softwares like TheoBuild make billing and invoicing a much simpler an accurate process, reducing the risk of making these common mistakes:
-Submitting a late pay application: This might result in you not getting paid until the whole billing cycle is finalized. Restricting your company's cash flow.
-Not submitting all the documentation: There’s no-one rule that fits all-when it comes to construction payments, some companies require you to submit a full documentation package in order to receive payment. Pay application might be just one of the many documents required by the contractor or project owner. Other documentation listed by your client could include any of the following:
-The amount doesn’t add up: Manual processes are exhausting, they convey a large amount of responsibility and checking these documents over and over again becomes a tiresome task. We suggest having a team go through the numbers to ensure they add up to the correct amount.
-Change orders & total sum: Change orders are a case of study for me, it seems like there’s no way to make both parties happy with the dollar amount in them. A higher amount might come up as if you are over-billing and making up for something else, while a lower amount means you are low balling just to keep your client happy (and quite probably not making money). Whatever the case is, always make sure you have the approval to proceed with any change orders, otherwise they become unofficial billing documents that won’t be paid for, even if the work is already done.
These pay application forms have been around since 1992 and continue to be used by most builders nowadays, even though they exist with a handful of issues:
There is a solution that allows builders and subcontractors like you to create digitized- cloud based AIA style invoices that are integrated with construction payment softwares like TheoBuild, a tool that streamlines the entire billing and payment process for the construction industry. The result is a single source of documentation accuracy and ultimately receiving expedited payments.
TheoBuild system has a failsafe mechanism - that places controls in key fields to prevent contractors from making common mistakes when filing the forms, making this a non-time consuming process for builders like you.
There is a huge value when it comes to implementing new technologies, especially in such a tradition driven-manually managed industry. Implementing automation shouldn’t be a scary tale for builders, knowing that these tools have been engineered to:
Now that you understand there are more than 1 type of admissible pay applications in construction, it is time to start billing. Contact us with any questions you may have regarding your AIA-Style forms and how to reduce errors with the implementation of technology. Now all you have to do is Build.
