Basics of Pay Requisition Management

This is all about reviewing approving the monthly contractor’s pay requisition, in accordance with the schedule of values and the progress of the work. Here, one must make sure the contractor sticks to the pre-approved schedule of values. The architect, also reviews and approves (or disapproves) the contractor’s draw. As a Developer or Owner's Representative, once you agree on the amount, then you’d need to send a draw request to your construction lender, who will then send a third-party inspector to conduct an independent review of the draw request. Typically, a contractor uses AIA Forms G702 & G703 to submit their pay applications.

Upon receiving the bank inspector’s approval of the draw, your construction lender advances the funds to your job account within 72 hours. From there, you pay the contractor and material suppliers. You need to check on items that may be stored offsite. Other aspects, to pay special attention to, are advance payments to companies that require advance deposits. Large, established contractors and manufacturers may not need advance payments, for they are financially strong. That is another good reason for working with reputable companies, lowering your chances of being defrauded by a shady contractor or material supplier. The bank inspector may also want to inspect offsite stored materials and check on the reputation of the fabricator and/or material supply company that is requesting the advance payment.