AIA Billing: A Complete Overview of What AIA Billing Is and How It Works

What Is AIA Billing and AIA Payment Applications?

AIA billing is a standardized method of construction billing using a percentage-of-completion method (i.e., progress billing). The purpose of AIA billing is to standardize the job-related paperwork contractors send to architects and others.

The American Institute of Architects (AIA) developed the AIA billing system to standardize construction payment applications.

This article explains how to perform AIA billing using AIA forms. Specifically, we will show you how to complete Form G702 (Contractor’s Application for Payment) and Form G703 (Continuation Sheet).

AIA Form G702 – Contractor’s Application for Payment

The AIA G702 summarizes the information on the Continuation Sheet. In addition, it requires the Contractor to show the construction contract’s status to date. This includes the Original Contract Sum, Net Change by Change Orders, Contract Sum to Date, Total Completed and Stored to Date, and any Retainage on Completed Work and Stored Materials. It also includes Total Retainage to Date, Total Earned Less Retainage, Total of Previous Certificates for Payment, Current Payment Due, Balance to Finish Including Retainage, and a summary of Current and Previous Change Orders. The summary shows whether each Change Order adds to or deducts from the Original Contract Amount.

The Contractor must sign the document and have it notarized when the applicable contract documents require notarization.

AIA Form Fields

Specifically, the G702 contains general project information and a summary of billed work.

General Information

• To Owner: The name and contact information of the person paying you (signs the checks). This is usually the Owner of the building.
• From Contractor: Typically, this is you, the Contractor who is doing the work.
• You may find this name or number in the Subcontractor agreement.
• Via Architect: The name and contact information of the Architect who is in charge of this job.
• Application No.: When you number your applications, number the first one “1” and count up from there. If you have to revise a Payment Application, do not increase the number; just add a letter designation behind the original number. For example, if you are revising Payment Application number 5, make it 5-R1 to reflect that it is a first revision of number 5.
• Period To: The As of Date. This is the last day of the period cycle for which you are billing.
• Contract Date: The date of your original Subcontract Agreement.
• Project #: The Subcontract number from the Subcontract Agreement (example: “4279-30”).
• These selections show who will receive a copy of the payment submission.
• Contract For: This field is not always found on the official AIA G702 form. This is a brief description of the scope of work.

Summary of Work

Line 1, Original Contract Sum:

The price the General Contractor (GC) agreed to pay you for the scope of work you agreed to perform. For example, this includes all accepted alternates. This number should never change from your first Payment Application to your last.

Line 2, Net Change by Change Orders:

Add all Change Orders that the GC has priced and formally approved.

Line 3, Contract Sum to Date:

Add the numbers on Lines 1 and 2. This is your official contract sum as of the date of this Payment Application.

Line 4, Total Completed and Stored to Date:

This number comes from the total of Column G on the G703 Continuation Sheet. In other words, it represents the total dollar value of work completed and materials stored to date.

Line 5, Retainage (three lines):

Retention (also called a holdback) is money the client holds back for a certain period of time. Typically, the amount is a percentage of the total. For example, a 10% rate is common, although the actual rate and terms depend on the contract.

Your contract should set the terms of retention, including the percentage and when the owner will pay the holdback.

If you happen to be providing a Performance Bond, retention may still apply depending on the contract. Do not assume that providing a bond automatically eliminates retainage.

Line 5a, Percentage of Completed Work:

Typically, this is 10%. Your contract may allow you to reduce the retention to 5% near substantial completion.

First, write the retention amount for completed work in the blank next to the dollar sign. To calculate it, add the totals at the bottom of Columns D and E on the G703 form. Then multiply by 0.1 for 10% retention or 0.05 for 5%.

Line 5b, Percentage of Stored Materials:

Write the contracted rate next to Box 5b.

Line 5, Total Retainage:

Add together the totals from Lines 5a and 5b. The result should then match the total of Column I of your G703 when you use variable retainage.

Line 6, Total Earned Less Retainage:

Line 4 shows what you’ve earned, including approved Change Orders. By contrast, Line 5 shows what the client may retain.

Line 7, Less Previous Certificates for Payment:

GCs and Owners sometimes take so long to pay that you must submit your next Payment Application before they pay the previous one.

Many people enter payments received to date on Line 7 and ignore pay requests that the GC is still processing. Don’t do that! Instead, this Payment Application tracks what you’ve earned, not whether the client has paid you.

Therefore, use only the immediately preceding Payment Application.

Line 8, Current Payment Due:

Take your Line 7 value and subtract it from your Line 6 value. Then, write down the difference on Line 8.

This represents the value the client should pay you for work earned during this pay period, plus any change in retainage.

Line 9, Balance to Finish Including Retainage:

This tells the GC how much remains under the contract after accounting for this application.

However, this line can cause confusion because it assumes that the GC has formally processed all Change Orders and paid all previous Payment Applications in full.

Track what the client has paid separately from what you’ve earned and invoiced (applied for).

The table at the bottom of page one is fairly straightforward. You will need to separate the Change Orders that add money to your contract from those that subtract money from your contract. The Net Changes by Change Order should be exactly equal to the value you entered on Line 2.

AIA Form G703 – Continuation Sheet

Contractors sometimes refer to this form as Page 2 of the Application and Certificate for Payment (G702 form). Specifically, it breaks down the contract sum into phases or segments of the work in accordance with a Schedule of Values required by the General Conditions of the contract.

This form serves as the detailed breakdown supporting the Contractor’s application for current payment due. It also provides the information the Architect uses to review and certify the payment request.

When the Contractor completes the application properly and the Architect accepts it, the Architect signs G702 to certify to the Owner that the Contractor deserves the payment amount shown. The Architect may certify a different amount and provide an explanation.

On a plain-paper version of the AIA G703 Continuation Sheet, Columns A, B, and C identify the various portions of the Project. Keep the Scheduled Values consistent with the Schedule of Values you submitted to the Architect at the start of the project. Then, use this breakdown throughout the project, adding pages when necessary.

The AIA’s explanation of the Schedule of Values explains how these values support the payment application process.

Each AIA G703 Field Explained

Column A – Item No.

• The line numbers could match the specifications section number in your specifications sheet. Otherwise, you may wish to number each line item as 10, 20, 30, etc. This field is usually never a part number.

Column B – Description of Work

• The Description of Work field is a brief description of the phase or portion of work. Examples might include Earth Work, Pavers, Brick Work, etc. If your scope of work is large, you may wish to match this up to major activities from your Estimate. Note: Usually, add Change Orders as separate line items after approval.

Column C – Scheduled Value

• The Scheduled Value field shows how much your contract schedules you to receive for this phase of work. For example, your contract might specify that you will receive $100,000 for Pouring and Finishing First Floor Slab.

Column D – Work Completed from Previous Applications

• This is the total dollar amount you requested for this line item through your last Payment Application. For example, that includes materials that you previously listed as Stored Materials but have now put in place (i.e., installed). However, Column D does not include work completed for this period nor does it include newly stored material.

Column E – Work Completed This Period

• The value of work completed at the time of the current application.

Column F – Materials Presently Stored

• The value of materials presently stored on the job site for which you are seeking payment. This typically refers to the total value of materials you currently store but haven’t installed. Depending on the contract, you may need to keep stored materials on site or in a bonded, secure storage facility to receive payment.

Column G – Total Completed and Stored to Date

• The total of the amounts shown in Columns D, E, and F.

Percentage Complete

• Calculate this by dividing Column G by Column C.

Column H – Balance to Finish

• This is the difference between Column C and Column G.
• Column I – Retainage: Use Column I only when the contract permits variable retainage rates for individual line items. Otherwise, you can leave it blank if the contract applies one retainage rate throughout.

Finally, list Change Orders separately, either on their own Continuation Sheet or at the end of the original Schedule of Values.

AIA Forms and Documents – Complete List

There are a lot of AIA-related forms, not just the two most commonly used for payment applications. While G702 and G703 are very popular, there are other forms that contractors, architects, project owners, and subcontractors may encounter throughout a construction project.

Here is a list of the AIA forms and documents covered in this overview:

AIA Form	Description
G701	Change Order. Used as written documentation of changes in the work, contract sum, or contract time that are mutually agreed to by the Owner and Contractor. The G701 provides space for a complete description of the change and signatures of the Owner, Architect, and Contractor.
G702	Application and Certificate for Payment. A form with which the Contractor can apply for payment and the Architect can certify that payment is due. It requires the Contractor to show the status of the contract sum to date, including the total dollar amount of work completed and stored to date, retainage (if any), previous payments, change orders, and the current payment requested.
G703	Continuation Sheet. The G703 breaks the contract sum into portions of the work in accordance with a Schedule of Values required by the General Conditions. It provides the detailed breakdown supporting the G702 payment application.
B151	Standard Form of Agreement Between Owner and Architect. An agreement establishing the professional services and responsibilities between the Owner and Architect.
B511	Guide for Amendments to AIA Owner-Architect Agreements. Guidance for modifying existing Owner-Architect agreements.
A101	Standard Form of Agreement Between Owner and Contractor (Stipulated Sum). Establishes the contractual relationship when the basis of payment is a stipulated sum.
A105	Standard Form of Agreement Between Owner and Contractor for a Small Project. An abbreviated agreement intended for smaller construction projects, with accompanying general conditions.
A205	General Conditions of the Contract for Construction of a Small Project. Establishes the general contractual responsibilities and procedures for smaller construction projects.
A107	Abbreviated Owner-Contractor Agreement for Construction Projects of Limited Scope (Stipulated Sum). Establishes the agreement between the Owner and Contractor for projects with a limited scope of work.
A121	Master Agreement Between Owner and Contractor. Establishes a master contractual relationship under which construction work may be authorized through individual work orders.
A131	Standard Form of Agreement Between Owner and Construction Manager as Constructor. Covers projects where the Construction Manager performs the role of constructor and compensation is based on the cost of the work plus a fee.
A141	Standard Form of Agreement Between Owner and Design-Builder. Establishes the contractual relationship between an Owner and a Design-Builder for a design-build project.
A142	Standard Form of Agreement Between Design-Builder and Contractor. Establishes the contractual relationship between a Design-Builder and a Contractor.
A191	Multi-Party Agreement for Integrated Project Delivery. An earlier integrated project delivery agreement that was subsequently replaced by the A141 document family.
A201	General Conditions of the Contract for Construction. Establishes the general responsibilities, rights, and obligations of the Owner, Contractor, and Architect during construction.
A251	General Conditions of the Contract for Furniture, Furnishings, and Equipment. Provides general contractual conditions for projects involving furniture, furnishings, and equipment.
A305	Contractor’s Qualification Statement. Provides information about a Contractor’s qualifications, experience, financial information, and capacity to perform construction work.
A310	Bid Bond. Provides a financial guarantee that a bidder will enter into the contract and provide the required bonds if awarded the project.
A312	Performance and Payment Bond. Provides protection to the Owner by guaranteeing the Contractor’s performance and payment obligations to subcontractors and suppliers.
A401	Agreement Between Contractor and Subcontractor. Establishes the contractual relationship and responsibilities between a Contractor and Subcontractor.
A501	Recommended Guide for Bidding Procedures and Contract Awards. Provides guidance on bidding procedures and the process of awarding construction contracts.
A511	Guide for Supplementary Conditions. Provides guidance for preparing supplementary conditions to be used with the A201 General Conditions.

Note: AIA document titles, editions, and availability change over time. For example, some entries refer to earlier editions or documents the AIA has superseded. Therefore, consult the AIA’s current document catalog for the applicable edition and current purchasing information.

Check the status and applicability of the A191 document against the edition you’re referencing. Do not treat it as interchangeable with A141.

The table retains the full original list, including the G701, G702, G703, B-series, and A-series documents, rather than limiting the section to payment applications.

Where to Buy AIA Forms

You can purchase AIA forms and instructions through the AIA Contract Documents website or your local AIA chapter office.

The G702 and G703 forms work together. The AIA’s official G702 and G703 payment application guidance also explains their purpose and how they fit into the construction payment process.

G702 and G703 Preparation Training Exercise

Please follow this example to learn how to fill out an actual G702 and G703 form. First, you will need a G702 and G703 form to do this exercise.

Form G702

To complete one correctly, you must distinguish between approved change orders and those the GC has formally processed.

Payment Applications are an important component of cash management. When you make a mistake on your Payment Application, three things might happen. None will put you in good standing with your GC, and two can hurt your cash position:

1. Your Project Manager cuts your request to a value he can understand. As a result, you receive a partial payment.
2. Alternatively, your Project Manager tells you to submit a corrected application by the deadline. Otherwise, you will have to wait another 30 days for payment. You may not receive any payment.
3. Your Project Manager makes the corrections himself. He may also hold it against you later when you need a favor or are looking for work. Like the rest of us, Project Managers like working with people who don’t create headaches.

You really have no choice other than learning how to fill out the AIA form correctly.

We are going to show you how to fill one out correctly. In Part 1, we cover the first page (AIA Form G702), and in Part 2, we cover the second page (AIA Form G703).

Before we get started, grab a copy of the form.

Form G702 Field Detailed Definitions

Line 1: Original Contract Sum.

The price the GC agreed to pay you for the scope of work you agreed to perform. For example, this includes all accepted alternates.

• Pull out your contract. Look at it. This number should never change from your first Payment Application to your last.
• Assume your contract was for $105,000.

Line 2: Net Change by Change Orders.

Here it is. The line that creates much frustration.

• Add all Change Orders that the GC has priced and formally approved.
• Assume the GC has processed and signed $10,000 in change orders.

Line 3: Contract Sum to Date.

This should be easy. Add the numbers on Lines 1 and 2. This is your official contract sum at the date of this Payment Application.

– Your contract sum to date is $115,000 ($105,000 plus $10,000).

Line 4: Total Completed and Stored to Date.

This value comes from the total of Column G on Form G703. For example, assume that you have completed $25,000 of work and have no additional stored materials.

– Your Line 4 total would be $25,000.

Line 5: Retainage (three lines).

Your contract should set the terms of retention, including the applicable percentage and when the owner will release the withheld amount.

Line 5a: Percentage of Completed Work.

In the blank next to Box 5a, write down the current retention percentage. Typically, it is 10%. Your contract may allow you to reduce the retention to 5% near substantial completion.

• First, write the retention amount for completed work in the blank next to the dollar sign. To calculate it, add the totals at the bottom of Columns D and E on Form G703. Then multiply by 0.1 for 10% retention or 0.05 for 5%.
• Assuming 10% retention and $25,000 of completed work, write down $2,500.

Line 5b: Percentage of Stored Materials.

Repeat the process used for Line 5a, except use the value from the bottom of Column F on Form G703. Usually, the retention for completed work and stored materials is the same.

– Assuming 10% retention and $0.00 for Materials Presently Stored, write down $0.00.

Line 5: Total Retainage.

This value should match your total in Column I on Form G703 when you use variable retainage.

Line 6: Total Earned Less Retainage.

Line 4 shows what you’ve earned, including approved Change Orders. Line 5 shows what the client may retain.

Line 7: Less Previous Certificates for Payment.

Remember, whether the client has paid your previous applications does not matter.

– Go back to your immediately preceding Payment Application (only the last one you sent). Then, write down the value from Line 6: Total Earned Less Retainage on that application. For the sake of our example, assume that the amount you submitted on your previous application was $18,000.

Line 8: Current Payment Due.

Take your Line 7 value ($18,000) and subtract it from your Line 6 value ($22,500). Then, write down the difference on Line 8 ($4,500).

This represents the value the client should pay you for work earned during this pay period, plus any change in retainage.

Line 9: Balance to Finish Including Retainage.

This tells the GC how much remains under the contract after accounting for this application: $92,500.

• This line can cause confusion because it assumes that the GC has formally processed all Change Orders and paid all previous Payment Applications in full.
• Your company must track what the client has paid separately from what you’ve earned and invoiced (applied for).
• The table at the bottom of page one is fairly straightforward. You will need to separate the Change Orders that add money to your contract from those that subtract money from your contract. The Net Changes by Change Order should be exactly equal to the value you entered on Line 2.

Form G703

Contractors sometimes call this form the “AIA Payment Application Form G703.”

• If they don’t need detailed accounting of payments, use as few breakouts as possible. In fact, this is your one opportunity to control your billing. However, if they request a more detailed breakout, give it to them.

Column A – Item No.:

Number your line items however you wish. Most Contractors start with “1” and go from there. Some use the specification section or drawing number that the work applies to. Please number your Column A 1 through 3 (you will have three lines).

Column B – Description of Work:

Describe the line item’s type of work or anything else that makes sense to you.

• Assume your first line item is for “Mobilization.” Your second line item is for “Stump Removal.” Your third line is for “Earth Work.” The rest of our example will focus on the Earth Work in Line 3. You now have three lines numbered 1 through 3.

Column C – Scheduled Value:

Assign a dollar value to each line. The grand total of all lines must equal your current contract sum that shows up on Line 3 of Page 1. Double-check this before submitting the Payment Application.

• Assume you have scheduled $5,000 for Mobilization (on Line 1), $5,000 for Stump Removal (on Line 2), and $15,000 for Earth Work (on Line 3). Enter that in Column C.

Column D – Work Completed from Previous Applications:

Remember, whether the client has paid for this work does not matter. Only the amount you’ve billed (applied for) matters.

• Assume that on your last application, you applied for (billed) $5,000 for Mobilization (Line 1), $5,000 for Stump Removal (Line 2), and $10,000 for Earth Work (Line 3). Enter these dollar amounts in Column D.

Column E – Work Completed This Period:

Do not include materials that you installed and already billed as Stored Materials. Instead, include all labor, equipment, and markup for placing those materials under Work Completed This Period.

• Let’s assume that we are finished with Mobilization and Stump Removal. Lines 1 and 2 in Column E will be zero. Assume you have completed $5,000 of Earth Work this period. Enter $5,000 on Line 3, Column E.

Column F – Materials Presently Stored:

Recall that this is the total value of materials currently stored on the job site but not installed.

• Assume you have stored $0 worth of items related to Mobilization (on Line 1), $0 for Stump Removal (on Line 2), and $0 for Earth Work (on Line 3). Enter zeros in Column F.

Column G – Total Completed and Stored to Date:

Add together Columns D, E, and F. This value should be the total work and materials to date. Enter that in Column G.

• You should have $5,000 for Mobilization (on Line 1), $5,000 for Stump Removal (on Line 2), and $15,000 for Earth Work (on Line 3).

Column G – % (of Scheduled Value):

This column shows the percentage complete.

• You should have 100% for all three lines.

Column H – Balance to Finish:

Subtract the Total Completed and Stored to Date from the Scheduled Value.

• You should have zero for all three lines.

Column I – Retainage (held):

Use this column only when the contract permits variable retainage rates for individual line items.

• Leave Column I blank for all three lines.
• To finish filling out your form, total up each column and enter the value at the bottom of the column on the Grand Total line.
• Check your work against the example below. Do you match the example?

Sample Continuation Sheet (Form G703)

The following example shows how the three-line items should appear on the Continuation Sheet.

Item No.	Description of Work	Scheduled Value (C)	Previous Work (D)	This Period (E)	Stored Materials (F)	Completed and Stored (G)	% Complete	Balance to Finish (H)
1	Mobilization	$5,000	$5,000	$0	$0	$5,000	100%	$0
2	Stump Removal	$5,000	$5,000	$0	$0	$5,000	100%	$0
3	Earth Work	$15,000	$10,000	$5,000	$0	$15,000	100%	$0
Total		$25,000	$20,000	$5,000	$0	$25,000	100%	$0

With a 10% retainage rate, the total retainage on the completed work is $2,500.

Important Note Regarding Copyrights

The American Institute of Architects owns the copyrights to all AIA Forms, including G702 and G703. Copyright laws prohibit unauthorized reproduction of these forms.

G701, G702, G703, and all other AIA-related documents mentioned herein are service marks and/or trademarks of The American Institute of Architects. Aptora makes no claims of ownership of these works.

For additional information, refer to the AIA Contract Documents terms and conditions before reproducing or modifying official forms.

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