Problem guide
Pay applications take days to assemble
Pay applications take days when percent complete, approved change orders, stored materials and backup documents all have to be gathered by hand from different people and files at the end of the month. Keep those pieces current through the month, in one place per job, so the pay application is assembled from what is already there.
What it usually looks like
On the twentieth of the month, the billing coordinator at a specialty contractor starts on eleven pay applications. She emails each project manager for percent complete and waits. Two reply the same day, the rest over the week. She pulls approved change orders from email threads and finds one that was approved but never logged. Stored material invoices are in a shared folder, some of them. She types every line into the pay application form and double-checks the math. One gets returned by the owner for a missing lien waiver, and she starts that one over the following week.
Signs you have this problem
- The last days of every month are spent chasing percent complete from project managers
- Approved change orders are missing from the pay application or added at the last minute
- Backup documents are gathered from email, desks and shared drives each cycle
- Pay applications get returned for corrections and resubmitted
- Only one person in the office knows how to put a pay application together
What usually causes it
- Percent complete lives with the project manager and the site, and reaches the office only when someone asks at month endThe field-to-office split
- The schedule of values, change orders and billing amounts are retyped from several files into the pay application formThe re-entry trap
- Change order approvals and signed backup documents sit in inboxes where nobody can see what is still missingThe invisible queue
- The steps live with one person, so the work stops or slows when they are outThe handoff gap
What to try this week
- Time one pay application from start to finishOn the next cycle, write down each piece you gather, who you wait on and how long each takes. Most of the time usually goes to two or three pieces.
- Write down the steps and the piecesList every piece of a complete pay application for your company, such as schedule of values, percent complete, change orders, stored materials and required backup. Follow each contract and ask counsel on anything about what must be included.
- Keep a running change order log per jobRecord each change order as it is approved during the month, with its amount and approval date, so it is ready at billing time instead of found then.
- Collect percent complete on a set dateAsk project managers for percent complete a few days before the billing date, on the same form every month, and review it with them before the pay application is built.
- Log every returned pay applicationWhen one comes back for corrections, note the reason. After a few cycles the same reasons repeat, and those are the pieces to fix first.
Where do-it-yourself stops
These steps make the monthly scramble shorter and more predictable. They do not stop the schedule of values, change orders and billing amounts from being retyped between your project files, your accounting system and the pay application, and the process still depends on the person who knows it. A lasting fix is a tool built around your own contracts, change order process and accounting system, so the pay application draws from records kept current all month. That is what a Workflow Spec designs.
Questions people ask
Why do pay applications take so long to prepare?
Because the pieces live in different places and with different people, and most of them are gathered and retyped at the end of the month.
What goes into a pay application?
It depends on each contract. Follow the contract's requirements and ask counsel on anything about retainage, lien paperwork or what must be attached.
Who should own pay applications?
One named person in the office should assemble them, with project managers owning percent complete and change orders on their jobs. Write the steps down so a second person can do it.
How do we stop pay applications from being returned?
Log the reason every time one comes back. Returns usually repeat for the same few reasons, and fixing those removes most of them.
What does a slow pay application cost us?
Cash arrives later when a pay application misses the owner's cutoff or comes back for corrections. Track your own submission dates and returns before putting a number on it.