More payments, more accounting: it`s up to construction companies or contractors to make sure they`re paid, and many don`t have a dedicated finance or accounting department to take on this role. Progress payments mean multiple payments, so it stands to reason that tracking and processing will require more work and time – and this forces a customer to pay without incident. In addition, subcontractors must be paid for each payment of work. There are two standardized payment claim forms commonly used in construction for progress accounting. General contractors typically use the AIA G702 form created by the American Institute of Architects. Subcontractors may use this or the ConsensusDocs 710. A construction contract must specify the form to be used. In all cases, the payment request must be completed and delivered promptly to the payer, i.e. the contracting authority or contractor processing the subcontractor`s payments. Payment requests must be notarized. Variant I (March 2000).

If the contract is with a small business, replace any reference to the phased payment and liquidation rates, with the exception of paragraph (k), at the usual 85% rate for small businesses (see FAR 32 501-1). (iii) are no more favourable to the subcontractor or service than the terms of this clause to the contractor; 1. If this letter of contract is replaced by a definitive contract, unliquidated advance payments made under this letter of contract shall be liquidated by deducting the amount of the first progression or other payments made under the final contract. 6. Where financing takes the form of advances, the progressive payment rate in the subcontract shall be the usual rate used by the procuring entity, depending on whether the subcontractor is a small contractor or not. A construction industry uses a so-called payment application to bill customers. A payment app is more than just an invoice. It usually includes a calendar of values, for example.

B a list of all work items in a project and associated costs. progress reports on completed work and documents delivered; subcontractors` invoices; a timetable for the work still to be done; and photos and payroll receipts. 5. The amount of unliquidated progress payments shall not exceed (i) progress payments made for incomplete work (including unliquidated advance payments authorized to subcontractors) or (ii) the value of incomplete work for the purposes of progress payments. Incomplete work is considered to be the deliveries and services required under this contract for which delivery and billing by the contractor and acceptance by the government are incomplete. Unit prices determine prices for the different work sections. These units include, but are not limited to, material, labor and overhead costs. This type of pricing is useful for projects that can be easily and logically divided into work packages and whose final scope is unclear. If the scope of a project increases, a contractor can charge additional units to protect its profitability. In the construction industry, a progressive payment is a partial payment made to a company or contractor after the completion of a predefined work phase – for example, a demolition or the addition of a roof and siding. These payments replace other approaches, such as . B a one-time lump sum payment at the end of a project or an agreement `half in advance, half at the end`.

(k) Restrictions on undefined contractual acts. Notwithstanding any other provision of this Agreement relating to the progress payment, progress payments shall not exceed 80% of the cost of work performed under undefined contractual actions. A “contractual act” means any act that gives rise to a contract within the meaning of subsection 2.1, including contractual amendments for additional supplies or services, but excluding contractual amendments that fall within the scope and terms of the contract, such as. B contractual amendments issued under the amendment clause, or financing and other administrative amendments. This limitation applies to the costs incurred calculated in accordance with paragraph (a) of this clause and remains in effect until the contractual act is determined. All costs incurred that are subject to this restriction will be separated on the contractor`s progressive payment claims and invoices from costs eligible for higher progressive payment rates. For the purposes of the liquidation of advancement payments as described in paragraph (b) of this clause, advancement payments for undefined contractual actions will be liquidated at 80% of the amount invoiced for the work performed under the undefined contractual action, as long as the contractual action is not defined. The amount of unliquidated advance payments for undefined contractual measures may not exceed 80% of the government`s maximum liability under the undefined contractual measure or a lower limit set elsewhere in the contract.

Separate limits can be specified for separate actions. A: Progress payments for government contracts are subject to the Federal Procurement Regulations (FSR). There are two common types of payments under FAR: payments based on costs incurred and those based on percentage or completion phase. Under the current rules for upfront cost payments, governments pay 80% or 85% of eligible costs, depending on the size of the company. In the case of progressive payments made as a percentage, governments may withhold up to 10 per cent of the amount due if they consider that part of the work is not satisfactory. Variant I (March 2000). If the contract is with a small business, replace any reference to the phased payment and liquidation rates, with the exception of paragraph (k), at the usual 85% rate for small businesses (see FAR 32 501-1). Variant II (April 2003). If the contract is a letter contract, add paragraphs (n) and (o). The amount referred to in point (o) shall not exceed 80 per cent of the Government`s maximum liability under the contractual letter. The customer may set separate limit values for each part of the work.

(n) The Agent will liquidate progress payments made under this Letter of Agreement, unless they have already been liquidated in accordance with paragraph (b) of this clause, in accordance with the following procedures: (1) If this Letter of Agreement is replaced by a definitive contract, unliquidated advance payments made under this Letter of Agreement will be deducted by deducting the amount from the first progress or other payments; that have been paid under the final, liquidated contract. (2) If this contractual letter is not replaced by a definitive contract providing for the delivery of all or part of the items or services covered by the contractual letter, unprocessed advance payments made under the contract letter shall be liquidated by deduction of the amount payable under the termination clause. (3) If this letter of agreement is partially terminated and partially replaced by a contract, the Government shall allocate the unrevécused progressive payments to the terminated and underlined parties as the Government deems appropriate and shall liquidate each party in accordance with the appropriate procedure set out in subsections (n) (1) and (n) (2) of this clause. 4. Where the method of liquidation of advances provided for in this clause does not result in a complete liquidation, the contractor shall immediately pay the outstanding balance to the Government on request. (o) The amount of unprocessed advance payments must not exceed __ [the officer indicates the amount in dollars]. Variant III (June 2020). As prescribed in paragraph 32.502-4(d), the following paragraph(s) shall be added to the basic sentence.

If Alternative II is also used, rename the following paragraph as paragraph (p): (n) The provisions of this clause do not apply to individual orders with or below the simplified entry threshold as defined in FAR 2.101 at the time the individual order is placed. (b) liquidation. Unless the “Termination for the Convenience of Government” clause is provided, all progress payments will be liquidated by deducting from any payment under this Agreement, with the exception of advance payments or progress payments, unrecused advance payments or 80% of the amount invoiced, whichever is less. .