Disclaimer: This guide is educational and does not replace legal or accounting advice. Payment requirements depend on the contract, project and applicable law. Confirm current instructions with the party reviewing your Pay App. NextPermit is not affiliated with AIA.
Preparing a Pay App is easier when you have the contract, schedule of values and previous application at hand. This guide explains what to check and how to organize the calculations before submitting.
Quick guide
- What you need: the contract, SOV, approved changes and previous reviewed application.
- Where to start: confirm the required form and billing cutoff with the recipient.
- What you calculate: eligible cumulative value less retainage and previous certificates when using G702.
- Before submitting: reconcile the totals and gather required supporting documents.
What is a construction pay application?
A payment application (Pay App) requests a progress payment for work performed under a construction contract. Unlike a simple invoice, it often includes a breakdown of contract values, progress to date, retainage, prior certified payments and supporting documentation.
G702, G703 and the schedule of values
AIA G702 is the application and certificate for payment; G703 is its continuation sheet detailing line items of work. The schedule of values (SOV) allocates the contract amount across work categories. The AIA explains that G702/G703 are designed for a contractor contracting directly with an owner; subcontractors may use other contractually required formats, including AIA subcontractor-specific forms.
Step 1: Read the contract
Confirm the billing cutoff, submission deadline, approved form, retainage, change-order rules, stored-material requirements and recipient.
Also confirm the project name and number, application number and “Period To” date. Your submission date may differ from the date through which you are billing.
Step 2: Verify the contract value
Start with the original amount and add or subtract approved changes. Do not treat pending change orders as approved contract value.
Step 3: Build or update the SOV
Allocate the contract amount among clearly identified work items and reconcile its total to the current approved contract sum.
Step 4: Measure progress
Record prior work, current-period work and eligible stored materials separately; use documentation and avoid double-counting.
When previously billed stored materials are installed, remove their value from stored materials and reflect it in completed work. Do not count their value twice.
Step 5: Calculate retainage
Apply the actual contract terms, including any different treatment of work and stored materials.
Step 6: Reconcile previous certificates
Use the prior certified amount, rather than assuming the cash actually received is the same figure.
On G702, line 7 carries forward line 6 of the prior certificate; line 8 subtracts that figure from the current line 6. Reconcile certification adjustments before carrying figures forward. Track cash receipts separately.
Step 7: Complete the payment summary
Transfer supported totals from the continuation sheet to the application, verify all calculations and obtain required signatures or notarization.
Step 8: Submit the complete package
Include only supporting records required by the contract or applicable law, then retain submission and approval records.
Worked example: an $18,000 request
Assume a $100,000 contract, no change orders or stored materials, $40,000 completed to date, a hypothetical 5% retainage on completed work, and $20,000 in previous payment certificates.
| Item | Amount |
|---|---|
| Contract value | $100,000 |
| Cumulative completed work | $40,000 |
| Illustrative retainage: 5% × $40,000 | $2,000 |
| Earned less retainage | $38,000 |
| Cumulative previous certificates | $20,000 |
| Current payment requested | $18,000 |
Current payment requested = $40,000 − $2,000 retainage − $20,000 previously certified = $18,000.
This is an illustrative calculation, not a prescribed retainage rate. Check your contract and governing law.
Supporting documents and common mistakes
Depending on the project, the package may require a signed application, continuation sheet, change-order log, evidence for stored materials, lien waivers, certified payroll, insurance or other compliance records. Common mistakes include using an outdated SOV, billing unapproved change orders, carrying forward incorrect previous amounts, overstating progress and missing the cutoff date.
For certain U.S. federal fixed-price construction contracts, FAR 52.232-5 specifies progress-payment substantiation and certification requirements. These federal rules should not be generalized to every private or state project.
Checklist before submitting
- Correct project and billing period
- Approved contract sum reconciles to SOV
- Work completed supported
- Stored materials eligible and documented
- Retainage correct
- Previous certificates reconciled
- Required attachments and signatures included
- Submission deadline and recipient confirmed
Frequently asked questions
Do I always need G702 and G703?
No. Confirm the format required by the contract; different contractual relationships may require different forms.
Is 5% the required retainage?
No. It is only the example rate. Apply the contract terms and applicable law.
Can I use bank receipts as previous certificates?
Do not assume they match. Reconcile certification and cash receipts separately.
After submission: track the response
Save the submitted version and receipt confirmation. If corrections are requested, keep the revision history and reconcile the certified amount before preparing the next period.
Official sources
Links checked October 30, 2026. AIA sources explain its forms; the FAR clause concerns applicable federal contracts.
AIA G702 overview; AIA G703 overview; AIA instructions; AIA form variations; FAR 52.232-5.
AIA: completing payment applications (including carry-forward and calculation rules).
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