Monday, March 11, 2013

The AFP Timeline

Although it has been some time since I wrote a new post for ArchReCon, I checked my blog status the other day and was surprised to see that my site-traffic has grown every month. As a thank you, I decided that I need to write a new post.

On a current project of mine, we have recently begun construction and are processing the first Application for Payment (AFP). It is a $3.9M affordable housing renovation with a focus on waterproofing and new solar panels. At our first draw meeting, the third party Lender’s Representative had a few questions about the payment process. As I began answering these questions, I realized that I needed to establish a formal timeline. The image below is what I created.

A quick note for clarification. On this project, we expect to find a decent amount of framing and shear panel deterioration as we replace the stucco and building paper. Instead of carrying a contingency allowance for these framing repairs in the construction budget, the owner has elected to carry it outside of the budget. The contractor then issues a Change Order Request (COR) for the cost of the framing repairs for each month. The team processes a Change Order (C/O) so that contract sum includes the framing repairs by the time that the AFP arrives. 

For example:
As of 03/01, assume the contract sum is $3,000,000. During the month of March, the contractor performs $100,000 of framing repairs for deteriorated framing. (I am requiring that the contractor photograph all conditions and keep detailed records of these repairs. I also have pre-established unit costs for framing and am reviewing timecards & invoices). Near 03/25, the contractor submits a COR for $100,000 and includes all applicable backup. The team processes the COR and issues a Change Order for $100,000 by April 1. The contract is now $3,100,000. The general contractor then submits an AFP for the previous month’s work.

Please let me know how you like this timeline and what other strategies you use to help define the payment procedures.