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The backup uses a percent. The contract clause states a percent. You squint between the two printed pages spread across your desk, pen hovering over the pay application you’re preparing to submit for the last 30 days of framing work on the north-side multi-unit build. The numbers don’t line up, and you don’t want to submit an inflated draw request or flag a careless math error that gets your team flagged as difficult to work with mid-project. You already pushed back one draw last month due to a material delivery delay, so you prioritize getting this submission right the first time to avoid any unnecessary hold-ups.
This pay application you hold right now
Every line item on the document matches the work you completed over the last pay period: 12,000 square feet of exterior wall framing, 8 floors of interior partition framing, all required fire blocking, and the rental cost of the scissor lift your crew used to reach the third-floor eaves. You built the backup calculation for the draw using your company’s standard template, which pulls your default overhead and profit markup rate automatically. Illustrative example: your backup calculation pulls that 12% figure from your company’s standard rate sheet, applied to a $147,200 base cost of completed work, leading to a total requested draw of $164,864. But the contract clause you’re cross-referencing lists a 10% markup cap for all trade work on this project, which would bring the total draw to $161,920, a difference of just over $2,900. This isn’t a case of the general contractor trying to adjust terms after work starts, it’s a misalignment between the rate you default to for most residential and light commercial projects and the specific terms you agreed to when you signed this particular scope of work 11 weeks prior. You cross-reference the clause against the annotated terms you stored in Draw Jacket when you submitted your bid, to rule out a misprinted version of the contract circulating between the site office and your team. The signature line with your initials right next to the markup cap is clear, so you know the 10% rate is the correct one to use for this project.
Core contract language that sets your markup rate
The clause you’re staring at isn’t buried in 20 pages of unread fine print, it’s in the 2-page scope addendum you signed specifically for this build, separate from your master service agreement with the general contractor. It explicitly states that all markup for overhead, profit, insurance, and administrative costs related to the work are capped at 10% for every draw request submitted for this project, no exceptions for material price fluctuations (you already locked in material pricing in a separate addendum back in March, so that’s not a factor here). Your backup uses your standard 12% because you template your draw backup for all projects, and you forgot to adjust the formula for this specific scope’s cap when you sat down to build this submission an hour ago. This is a common oversight, not a mistake that will derail your working relationship if you address it clearly instead of submitting the incorrect number and waiting for the general contractor’s accounting team to reject it, which would delay your draw processing by 7 to 10 days. You don’t need to negotiate the rate at this stage; you agreed to the cap when you signed the scope, so adjusting your submission to match the clause is the fastest way to get your draw in the processing queue.
Where to note your discrepancy on the form
You don’t need to reprint the entire 8-page pay application to fix the error, you just need to clearly annotate the change and provide supporting documentation so the processing team understands the adjustment without extra follow-up. Follow these steps to mark the document correctly:
- Cross out the 12% markup line on your printed backup, and write the 10% rate directly next to it, initialing the change in blue ink so it’s clearly distinguishable from printed text and other handwritten notes on the page.
- Adjust the total markup line item to reflect the 10% rate, and recalculate the total requested draw amount directly below the original total, initialing that change as well to confirm you made both adjustments intentionally.
- Add a 1-sentence note in the blank margin of the pay application’s cover sheet that reads: “Markup rate adjusted to match 10% cap outlined in Scope Addendum B, dated 3/14/2024” so the general contractor’s accounting team doesn’t have to track down the reason for the crossed-out number.
- Attach a printed snippet of the relevant clause from Scope Addendum B to the back of the pay application, so the team processing the draw doesn’t need to pull the full contract file to confirm the rate is correct and aligned with signed terms.
- Keep a scanned copy of the adjusted pay application in your project folder before you submit it to the site office, so you can cross-reference it if there are any questions during processing or when you prepare your next draw request.
You don’t need to include a long explanation of why you used the wrong rate, the clear annotation and attached clause snippet are enough to avoid confusion. If you want to mention the oversight to the general contractor’s project manager when you drop off the application, you can do so in passing, but it’s not required, the documentation speaks for itself.
Next time you open this same page
You come back to this exact document 30 days from now, when you’re preparing your draw request for the final phase of framing work on the building’s rooftop amenity space. You’ll first pull up the saved template for this project’s draw backup, which you’ve already adjusted to default to the 10% markup rate, so you don’t make the same mistake twice. You’ll cross-reference the rate against the contract clause one more time before you calculate your line items, just to confirm there haven’t been any approved change orders that adjust the markup cap for additional work you’ve taken on since this draw, like the extra interior framing for the ground-floor leasing office you agreed to complete last week. You’ll bring the previous pay application’s adjusted copy with you to compare line items, to make sure all carryover costs (like unused pressure-treated lumber you’re rolling over to the rooftop phase of work) are accounted for at the correct rate. This 2-minute check before you build your backup will save you the 15 minutes of adjustment you’re doing today, and prevent any delays in draw processing that would push back your payroll run for your framing crew. You also note the 10% markup cap in your project calendar reminder for the next draw submission, so you see the number before you even open your spreadsheet to build the backup, eliminating the risk of defaulting to your standard rate again. You can also add a small sticky note to the physical copy of your contract for this project, right next to the markup clause, so it’s the first thing you see when you pull the file for any future draw requests or change order negotiations for work on this site.
