From contract award to the first pay application

Week 1: sign and secure

• Sign the agreement. Read the final version against your bid: scope, alternates accepted, contract time, liquidated damages, retainage and payment terms.
• Deliver the bonds. Performance and payment bonds, where required, come from your surety. Allow a few days.
• Deliver certificates of insurance with the endorsements the contract asks for, such as additional insured and waiver of subrogation. A certificate alone does not add anyone to a policy; see certificate of insurance and additional insured.
• Get the notice to proceed. Owners commonly issue it once the signed agreement, bonds and insurance are in. It usually starts contract time, so put the date in your schedule the day it arrives. See notice to proceed and contract time.

Week 2: buy out and plan

• Sign subcontracts and purchase orders, starting with long-lead items such as steel, elevators, switchgear and curtain wall.
• Collect subs' certificates and check each against the subcontract before they mobilize.
• Build the baseline schedule from the NTP date and the contract time.
• Start the submittal log. List every required submittal with its spec section, responsible sub and the date it must come back accepted to hold the schedule. See submittals and RFIs.

Week 3: the schedule of values

The schedule of values splits the contract sum into lines that every pay application is measured against. Owners and architects usually want it accepted before the first application. Build lines you can measure in the field, make them add up exactly to the contract sum, and do not load the early lines. The details are in schedule of values and pay applications.

Week 4: mobilize, then bill

Permits posted, the site fenced, temporary utilities on, the trailer set, the safety plan and any stormwater controls in place before earthwork. Then the first application covers what was done in the period.

A worked first pay application with invented numbers. Contract sum $2,000,000, 10-month job, retainage 10%. The accepted schedule of values includes a mobilization line of $40,000 and a general conditions line of $150,000 billed evenly by month. In the first period, mobilization is complete and one month of general conditions is earned. No other work is billed.

• Mobilization: 40,000 x 100% = $40,000
• General conditions: 150,000 / 10 = $15,000
• Total completed: 40,000 + 15,000 = $55,000
• Retainage: 55,000 x 0.10 = $5,500
• Due this period, with no previous payments: 55,000 - 5,500 = $49,500

Check: 55,000 x 0.90 = 49,500, so about 2.5% of the contract is paid (49,500 / 2,000,000 = 2.475%) while 2.75% is earned (55,000 / 2,000,000).

Some contracts do not allow a separate mobilization line, or cap it. Read the payment terms. The retainage guide covers what is held and when it comes back.

What usually delays the first check

• A schedule of values sent with the first application instead of before it.
• Missing lien waivers from the contractor or subs, where the contract requires them.
• A pay application not on the owner's required form, or not notarized where required.
• Insurance or bond documents still outstanding.
• Billing for stored materials without the proof the contract asks for.

Where this sits for the exam

The bulletin lists subject areas only, not topics. Our reading puts contract start-up, bonds, insurance and payment under Procurement and Contracting Requirements, 31 of 115 questions, and submittals and scheduling under General Requirements, 25 of 115. Our pairing from the titles, not NASCLA's: Construction Jobsite Management for field start-up, the NASCLA Contractors Guide to Business, Law and Project Management for contracts and money.

Check yourself

Take the free 10-question check. It needs no signup and explains every answer, including the arithmetic. For lessons on all twelve areas and four timed 115-question practice exams, see the plans.

Sources

• PSI Candidate Information Bulletin 1458, content outline and reference list, updated 7 Jul 2026. Retrieved 5 Nov 2026.
• All examples use invented numbers. Contract terms are described in general.

FAQ

When does contract time start?

On most contracts, from the date in the notice to proceed, not the signing date. Read the agreement for the exact rule.

Can I bill for mobilization?

If the accepted schedule of values has a mobilization line and the contract allows it. Some owners cap it or spread it.

Is retainage taken on the first pay application?

Usually, if the contract sets retainage from the start. It is figured on the total earned to date.