Carrying out a construction project from start to finish can be a daunting task. From doing the initial construction project planning to dealing with all of the problems that will inevitably pop up during the execution of the plans, it’s not going to be easy to pull this kind of project off.
It’s also not going to be easy to keep up with the construction project payment process. Making payments to all those who will be involved with a construction project can be almost as difficult as seeing a project through to the end.
Here is a quick guide on the construction project payment process that will help you stay on track.
Contractors Apply for Payments Through Employers and Provide Due Dates
Throughout the course of a construction project, contractors will have to apply for payments through their employers on a regular basis. There should be an agreement put in place at the start of a construction project indicating how often they should do this.
Contractors must put in official applications through employers stating:
- How much money they are owed
- What the money that is being requested is for
- When they expect to be paid what they are owed
If contractors fail to apply for payments through employers for whatever reason, there is a very good chance that they might not be paid in a timely fashion.
Employers Respond With Payment Notices for Contractors
Once contractors send applications for payments to employers, they’ll have several days to respond. They’ll need to send a response in the form of payment notices. A payment notice will indicate an employer’s willingness to get a payment squared away with a contractor.
If a payment notice is not sent from an employer to a contractor, a contractor has the right to follow up with them about their initial application for payment. An employer also has the right to let a contractor know if they don’t plan on paying them the amount that they think is owed.
Contractors Wait for Payments From Employers to Arrive
After a contractor has applied for payment from an employer and an employer has responded with a payment notice, an employer will have about two weeks to pay a contractor. Contractors will have to sit back and wait for employers to act.
In the meantime, employers will go through a construction project payment process of their own. It’ll get the various contractors that have sent payment applications to them paid. Click for more on how this all works.
Contractors Continue to Apply for Payments Throughout a Construction Project
Most contractors aren’t going to get paid just once during a construction project. They’ll be paid multiple times as long as they continue to contribute to a project.
For this reason, it’s imperative that contractors keep on submitting applications for payments throughout a construction project. It’ll ensure that they’re always paid on time.
It’s Important to Stick to the Right Construction Project Payment Process
If either a contractor or an employer doesn’t stick to a construction project payment process, it can create a chaotic situation. It’ll make it difficult for contractors to get paid and employers to stay on top of payments.
Now that you understand a little bit more about the construction project payment process, you should be sure that you adhere to it. It’ll keep your project running smoothly.
Check out our other blog articles for more tips on carrying out construction projects.
