An application for payment is a construction document that outlines how a contractor will be paid. The application for payment includes the services or materials used or the jobs that are being executed under a contract agreement. This document is usually presented as a list and includes the unit price and quantity of each item being furnished. 

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.

The documentation required for an application for payment can vary from project to project, but most include a general form and one or more schedule documents.  we typically refer to this as an AIA document.

Document verified by an architect, engineer, or owner of a construction project that the noted work has been completed and is approved for payment by the general contractor. The AIA billing system is a standardized method based on percentage of completion of the contract (IE: Progress Billing, or Progress Draws) developed by the American Institute of Architects (AIA) in 1992.

The AIA billing system was developed to provide a standardized method of submitting job related paperwork to send to architects and others by a contractor in order for the contractor to be paid for work performed on a construction project.

When using the AIA form for pay applications the submitter will typically bill on a percentage basis.  That is to say that the amount billed that month is xx% of the overall line item.  This value is then added to the total amount billed from previous pay requests.  This total dollar amount would be the total work completed to date.  The balance to finish is then calculated by subtracting the total completed to date from the original line item total.  The Architect or Owner’s representative will then review and approve the amount due to the contractor during that pay period.

A Schedule of Values (SOV) is a detailed schedule portioning the original contract sum and all change orders.  The Schedule of Values shall be based on the approved budget or the approved contract price.  Each Project/Job shall have a separate Schedule of Values.  If multiple Projects/Jobs are included in one contract, then the Contractor/Vendor must create a separate Schedule of Values which clearly segregates costs among each Job for billing, reporting and audit purposes.

For Projects/Jobs with multiple groups/line items, the Contractor must create separate Schedule of Values which clearly segregates dollar values among each group/line item for billing, reporting and audit purposes (breakdown to be determined by Owner).  The Schedule of Values must be approved prior to first payment application.  The Schedule of Values can only be changed with a Change Order, and shall appear in the schedule of values below the original contract values.  After the Schedule of Values is approved, it becomes the basis for all Contractor invoices for this project/job.