Managing Progress Payments
Wow, how in the world could an everyday person with no building experience manage Construction activities payable? The task seems overwhelming! No worries…there’s an App for that!
Not really, however humor aside there are convenient forms available that will ease the difficulties of managing multiple sub-trades and navigating through various project activities payable. No matter project size or complexity, AIA forms G702 & 703 https://www.aiacontracts.org/ are certainly among my most favorite management tools. Let’s take a closer look (please see attached image).
In brief, AIA G702 is an Application Summary and Certified Certificate for Payment. Its companion document G703 provides an appropriate place for itemization of all activities by description, value or cost, and an evolving percentage complete to reasonably comprehend any payment due. Incidentally, if work itemization exceeds space allowed on just one G703, additional 703’s may be attached until all activities are accounted for. Just keep adding another G703 page until you have enumerated all the various activities.
Now, for as much as I may heartily recommend use of the G702/03, I must provide you with a warning! Management of expense is only as good as the information inputted. Remember the old axiom “Garbage-in…Garbage-out”? Well, if you don’t know how to determine the real value of work itemized you could be taken to the cleaner. In other words, an applicant could front-load (over valuate) all early-on activities and walk with more money in his pocket then he would otherwise earn by honoring itemized work to be performed. Front loading disincentivizes performance and could ultimately lead to unnecessary disputes and expensive litigation.
So like any tool, in the hands of an expert assurance and predictability can be expected. However in the hands of the inexperienced the consequences could be dreadful.
If you need an expert or just want to talk to one, give us a call. At Dan Joseph & Associates we are always available to your needs, whatever they may be!