You are preparing a payment application for a project that is 60% complete with a contract value of $500,000. Previous payments total $250,000, and 10% retainage is being held. What amount should be requested?
Correct Answer
D) $20,000
Total earned: $500,000 × 60% = $300,000. Less 10% retainage: $300,000 × 90% = $270,000. Less previous payments: $270,000 - $250,000 = $20,000.
Why This Is the Correct Answer
Option B is correct because it follows the proper payment application calculation sequence. First, calculate total earned to date ($500,000 × 60% = $300,000), then subtract retainage to get the amount available for payment ($300,000 × 90% = $270,000), and finally subtract previous payments to determine the current payment request ($270,000 - $250,000 = $20,000). This methodology ensures compliance with standard construction payment practices and contract terms.
Why the Other Options Are Wrong
Option A: $25,000
This amount represents 10% of the contract value without considering the proper calculation sequence of earned work, retainage deduction, and previous payments.
Option C: $50,000
This amount represents 6% of the contract value but fails to account for the proper sequence of calculating earned work minus retainage minus previous payments.
Memory Technique
Remember 'EPR': Earned work, minus Percentage retainage, minus Previous payments = current Request amount
Reference Hint
Chapter on Construction Contracts and Payment Procedures, specifically sections covering Progress Payments and Retainage
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