Blog: Substantial Performance

Contemplation before Certification

Bus Man MedCertifying a payment should not be a mindless rubber stamping of a Contractor’s progress claim. Instead, it should be a contemplative process where you step back, take a breath and think! Believe it or not, certifying a payment requires time to contemplate on the Project Drawings, Specifications, Contracts, Schedule of Values, Site visits, Change Orders, and the Arithmetic. It is a holistic process that brings together many aspects of the project.

First let us define what it is to certify a payment.  A lengthy definition is found in the RAIC Document GC 4  (AIA Document G702 has a similar definition):

“The issuance of a certificate for payment shall constitute a representation by the Architect to the Client, based on the Architect’s Field Review / General Review and on review of the contractor’s schedule of values and application for payment, that the Work has progressed to the value indicated; that to the best of the Architect’s knowledge, information and belief, the Work observed during the course of Field Review / General Review is in general conformity with the contract documents; and that the contractor is entitled to payment in the amount certified.”

This is a lot to take in all at once, but this definition provides a process that can be summarized in 5 steps or habits:

1.     First become familiar with the Contract, the Drawings and the Specifications before you process any payment.  Especially the Specifications or Contract conditions that address the Contractor’s process to be followed in submitting a progress claim, the time limits on his part, your time limit to review the claim, and other terms and conditions that may apply. For example is payment to the Contractor for stored materials not on site allowed? Or how long does the consultant have to certify the payment?

2.     As we mentioned in a previous post, ensure that an accurate and reasonably detailed Schedule of Values (SOV) has been reviewed and agreed upon at the start of the job before certifying any progress claim.

3.     Have you been on site recently?  The only way to accurately verify the amounts being claimed by the Contractor is to visit the site with the SOV in hand.  Remember a more detailed SOV at the start will allow you to confidently verify that percent completion estimates are reasonable.

4.     Familiarity with the Contract Documents will allow you to identify if the work is in conformance with the Drawings and Specifications.  If the work doesn’t conform, then it doesn’t get claimed and can be noted in a deficiency holdback.

5.     Finally is the arithmetic correct, do the numbers add up, is the correct deficiency and lien hold back being applied, are the values and numbers of change orders correct, and does the value of the work performed to date conform with the previous progress payments?  If the application for payment contains errors it is acceptable for it to be returned to the Contractor to correct and resubmit.

Incorporating these 5 habits will not only provide you with confidence that you are fulfilling your obligations when certifying a payment, but you might be surprised when these habits begin to trickle down throughout the entire job, improving all of your contract administration processes and contributing to a better project all around.

Let us know what you think, or if you have any suggestions or tips.

At rform we also understand that Architects are not Accountants, so that is why we developed the  “Certificate for Payment” feature that helps to simplify, save time and improve the accuracy of Certifying payments.  It automatically links the SOV with the Certificate for payment, tracks and includes Approved Change Orders and Auto calculates % or $ values of work completed, lien hold- backs, deficiency hold-backs and deposits.  Give it a try and let us know what you think : )

Submit a Comment