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A Quick Guide to the Construction Project Payment Process

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Construction Project

Construction Project

Carrying out a construction project from start to finish can be a daunting task. From doing the initial construction project planning to deal 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.

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.

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