AIA Billing in Construction: Guide for Project Owners, PMs, and Contractors

AIA billing is a standardized method used in construction to apply for progress payments. It uses two forms, G702 and G703, to show the work completed, how much has been billed, and what’s still due.

Project managers, owners, and contractors use AIA billing to keep payment applications clear, accurate, and consistent. Let’s break down how AIA billing works, who’s involved, what each form includes, common mistakes to avoid, and how it compares to other billing methods.

What is AIA Billing in Construction?

AIA billing is a standard process used to request payment for construction projects. It documents how much work has been completed, how much has already been paid, and how much is currently owed. Contractors submit this information using two forms: G702 and G703.

The system was created by the American Institute of Architects (AIA) to bring structure and consistency to construction billing. It’s widely accepted across USA and North America, especially on commercial, institutional, and publicly funded projects.

The process uses two forms developed by the AIA. The G703 breaks down the contract into individual line items using a Schedule of Values. Each item shows what was done this period, what was done before, and what’s still left. The totals then flow into the G702 summary. The G702 also acts as the “cover page” of every pay application.

Who Uses AIA Billing and When?

AIA billing is used throughout the payment process on commercial construction projects. Contractors fill out the forms. Architects and project managers review them. Owners and lenders rely on them to approve and release funds.

• General Contractors: Prepare and submit the G702 and G703 forms each billing cycle. They report on work completed and request payment based on the approved Schedule of Values.
• Project Managers and Owner’s Representatives: Review the application to confirm the billed amounts match site progress and contract terms. They flag any discrepancies before forwarding for approval.
• Architects: Often required to certify the payment application. They confirm that the work meets the project’s design and scope before signing off.
• Project Owners: Issue payment once the application is certified. They rely on accurate forms and supporting documentation to track project costs and control the budget.
• Lenders: May require AIA billing as part of loan drawdowns. Standardized forms make it easier to verify that the work justifies the requested funds.

Why AIA Billing Matters for the Construction Industry

AIA billing gives project teams a consistent, reliable way to track progress and request payments. It supports clear communication between contractors, architects, owners, and lenders.

1. Standardization and Consistency

AIA billing provides a clear, repeatable format that keeps everyone on the same page. The use of AIA G702 and AIA G703 forms ensures that contractors, architects, and owners follow a shared structure when billing for work.

This standard approach reduces misunderstandings, simplifies training for new team members, and makes it easier to compare applications across different projects.

2. Transparency in Payment Requests

Each billing application shows exactly what work was completed, what was billed before, and what’s being requested now. The Continuation Sheet ties directly to the Schedule of Values, giving project managers and owners a detailed view of progress. That level of clarity helps verify claims and builds trust between teams.

3. Improved Payment and Review Efficiency

Because AIA billing follows a consistent format, it speeds up internal reviews and approvals. Contractors know what information to submit. Owners and lenders know where to look for key details. This keeps pay apps moving and helps prevent delays that can hold up work or disrupt cash flow.

4. Easier Dispute Resolution

When questions or disagreements come up, the G702 and G703 forms serve as a clear record. They show what was included in the original contract, what’s changed, and how much has already been paid. That makes it easier to resolve issues quickly without relying on assumptions or back-and-forth emails.

Key Documents of AIA Billing Format

AIA billing relies on a few core documents to track work and request payment. These include the G702 summary form, the G703 breakdown sheet, the Schedule of Values, and any supporting documentation required for review and approval.

1. G702: Application and Certificate for Payment

The G702 form acts as the billing summary. It’s where you show how much of the contract is complete, what’s already been billed, what you’re asking for now, and what remains. Every number on this form connects directly to the supporting data in the G703.

Here’s a breakdown of each line item and what it’s used for:

Line 1: Original Contract Sum

This is the base value of the contract before any change orders. It includes all accepted alternates. This number should stay the same from the first application to the last, unless the scope changes formally. Always pull this from the signed construction contract.

Line 2: Net Change by Change Orders

Enter the total dollar value of all approved and executed change orders. If a change hasn’t been approved in writing, don’t include it. You’ll avoid confusion and payment delays by keeping this number tied strictly to signed documents.

Line 3: Contract Sum to Date

Add Line 1 and Line 2. This gives you the current total contract value based on the original agreement and any approved changes. It reflects the updated financial scope of work.

Line 4: Total Completed and Stored to Date

This number comes from the total at the bottom of Column G on the G703. It includes all previously billed work, new work completed during the current period, and any approved materials stored on-site or in secure off-site storage. This is the gross value of work completed before retainage.

Line 5a: Retainage % of Completed Work

Apply the retention percentage (commonly 10%) to the total value of completed work, excluding stored materials. This retainage protects the owner from incomplete or defective work. You calculate this by adding the values from Columns D and E on the G703 and multiplying by the retention rate stated in the contract.

Line 5b: Retainage % of Stored Materials

Same method as Line 5a, but applied to materials listed in Column F of the G703. This covers materials purchased but not yet installed. Some owners apply the same retention rate. Others might waive it entirely depending on contract terms.

Line 5: Total Retainage

Add Lines 5a and 5b. This shows the total amount currently being held back. It should match the total in Column I on the G703. Accuracy here is critical. Mismatched retainage totals are a common cause of application rejection.

Line 6: Total Earned Less Retainage

Subtract the total retainage (Line 5) from the gross amount earned (Line 4). This gives you the net amount earned to date. The total value of approved work and stored materials minus what’s being withheld.

Line 7: Less Previous Certificates for Payment

Enter the Line 6 total from your last approved pay application. Do not enter how much has actually been paid to you. This form tracks billing progress, not cash receipts.

Line 8: Current Payment Due

Subtract Line 7 from Line 6. This is what you’re currently asking to be paid for this billing period. It reflects newly completed work and any changes in retainage, minus previous billings.

Line 9: Balance to Finish, Including Retainage

Subtract Line 6 from Line 3. This shows how much is left on the contract, including retainage still being held. It tells the owner or lender what remains to be billed before final payment.

Certification Section

At the bottom of the G702, the contractor signs to confirm the billing is accurate and reflects actual completed work. In most commercial contracts, the architect or owner’s rep must also certify the form before payment can be released. No certification, no check.

2. G703: Continuation Sheet

The G703 form supports the G702 by showing exactly what work has been billed. It breaks the contract into line items based on the approved Schedule of Values and tracks progress by category.

Here’s a breakdown of the key columns and how they work:

Column A: Item Number

Number each line item on the form. You can go with a simple 1, 2, 3 format or use section numbers from the specifications or drawings. Just keep it consistent across all billing cycles.

Column B: Description of Work

Write a short, clear description of the scope of work. Use trade names or activities like “Site Grading,” “Rough Carpentry,” or “Fire Protection.” Match the wording used in your approved Schedule of Values.

Column C: Scheduled Value

Enter the dollar value assigned to each line item. These amounts should come directly from the Schedule of Values and must match what was originally approved. Any changes must be documented through a formal change order.

Column D: Work Completed from Previous Applications

Show the total value of work previously billed for this item. This includes completed work and any stored materials that have since been installed. Do not include work from the current billing cycle.

Column E: Work Completed This Period

Report the dollar value of new work completed during this pay cycle. This should only include labor and materials installed during the current billing period.

Column F: Materials Presently Stored

List the value of any approved materials stored on-site or in secure off-site storage. These must be separate from what’s already installed. Most owners require proof of purchase and delivery slips.

Column G: Total Completed and Stored to Date

Add Columns D, E, and F. This is the total amount billed to date for this item, including completed work and stored materials. This number flows directly into Line 4 of the G702.

Column H: % Completed

Divide Column G by Column C. This shows how much of the item’s total value has been earned so far, as a percentage.

Column I: Balance to Finish

Subtract Column G from Column C. This is the amount left to bill for the item.

Column J: Retainage (if applicable)

Use this only if the contract allows line-item-based retainage. If retainage is applied to the entire contract as a flat percentage, leave this column blank.

At the bottom of the form, total each column. These totals feed directly into your G702 form. Double-check that Column G on the G703 matches Line 4 on the G702. If it doesn’t, something’s off.

3. Supporting Documentation (Optional but Often Required)

While the G702 and G703 forms handle most of the billing details, many projects also require backup documents. These attachments help verify what’s been billed, especially for stored materials, change orders, and compliance.

Here are the most common attachments:

• Change Order Log: A running record of all approved and pending change orders. Keeps billing aligned with actual contract value and prevents disputes over project scope or amount.
• Insurance Certificates: Verifies that the contractor and subcontractors have up-to-date insurance coverage in compliance with project requirements.
• Stored Material Invoices: Documentation showing proof of purchase for materials billed under “presently stored.” Required when materials haven’t yet been installed.
• Photos and Delivery Slips: Provides visual proof that materials have arrived or work has progressed. Useful for supporting stored material claims or validating line item completion.
• Lien Waivers or Lien Releases: Documents from contractors, subs, and suppliers confirming payment and waiving lien rights for that billing period. Tip: AIA Document G706A is commonly used, but always follow project-specific or jurisdictional requirements.‍
• Detailed Reports: May include labor hour summaries, equipment usage logs, or cost breakdowns by activity. These are especially helpful for large projects or cost-plus contracts.

How the AIA Billing Process Works for Contractors

AIA billing follows a clear monthly routine. Contractors track progress, complete two key forms (G702 and G703), and submit everything for review. Here’s how it works in practice:

1. Build and Approve the Schedule of Values

Start by breaking the contract sum into detailed work scopes. Each line must reflect how you plan to bill the project. Submit the SOV to the owner or consultant before any billing begins. Once approved, this becomes your billing roadmap for the job.

2. Track Work and Materials on Site

Throughout the month, walk the site and mark up each line item based on actual progress. Estimate percent complete, note stored materials, and gather backup like photos, invoices, and delivery slips. If it’s not documented, it won’t be paid.

3. Complete G703: Continuation Sheet

List work completed from past applications (Column D) and new work this month (Column E). Add any stored materials (Column F). Totals flow into Column G. Calculate percent complete and retainage if your contract calls for it. Double-check the math. Errors here cause delays later.

4. Fill Out G702: Application Summary

Take the totals from the G703 and put them into the G702. Add retainage, subtract previous payments, and calculate what’s due. Make sure the change order section is up to date. If anything’s pending approval, flag it now.

5. Submit to Architect or Owner’s Rep

Package the G702 and G703 with all required attachments: lien waivers, material invoices, insurance certs, and updated change order logs. Send it to the architect or owner’s rep.

The reviewer may request revisions or clarifications. Once satisfied, the architect certifies the amount approved for payment.

6. Owner Processes the Payment

After certification, the owner processes the payment according to the contract terms (e.g., Net 30). Retainage is withheld as agreed and paid later, usually at substantial or final completion, or as outlined in the contract.

Common Mistakes in AIA Billing (and How to Avoid Them)

AIA billing only works when the forms are accurate, timely, and backed by the right documentation. Small errors can stall payment, strain trust, or cause costly rework.

Here’s what goes wrong most often with AIA billing and how to fix it:

Overbilling for Incomplete Work

Billing ahead of actual progress is the fastest way to lose credibility. Reviewers will compare your G703 to the physical site. If they don’t match, expect pushback or outright rejection.

✅ Solution: Walk the site before billing. Confirm progress percentages with the PM or superintendent. Only bill for work actually done or stored.

Leaving Out Approved Change Orders

Even if a change order is approved, it won’t count until it shows up on the G702. Miss one, and you’ll underbill your own job.

✅ Solution: Keep a current change order log. Add signed changes to the “Net Change by Change Orders” line on G702 every month, no exceptions.

Inaccurate or Mismatched Line Items on the G703

If your billing line items don’t match the approved Schedule of Values (SOV), the numbers won’t reconcile, and reviewers will send it back.

✅ Solution: Always use the latest SOV when filling out G703. Double-check item numbers, descriptions, and values.

Applying the Wrong Retainage Percentage

Retainage isn’t always a flat number. Contracts may split rates between completed work and stored materials, or adjust near substantial completion.

✅ Solution: Read your contract. Apply the correct rates to Columns D and F. Update your G702 Line 5 with exact totals from G703 Column I.

Missing Signatures or Delayed Certification

Unsigned G702 forms hold up the entire process. And if the architect or owner's rep doesn’t certify on time, your payment sits.

✅ Solution: Set up a sign-off schedule. Leave time for internal approval, then get the package to the certifier with buffer time.

Submitting the Application Late

Miss the monthly cut-off and you’re stuck waiting another 30 days. Late apps also disrupt cash flow and crew payments.

✅ Solution: Track billing deadlines in a shared calendar. Set internal submission dates at least 3–5 business days before the owner's cut-off. Follow up early.

Best Practices for Owners and PMs Reviewing AIA Billing

Owners and PMs use AIA billing to verify that payment requests match actual progress. To do that well, each billing cycle needs a structured review process. A solid review process keeps payments clean, avoids disputes, and supports construction cash flow.

Here’s what to check every AIA billing cycle:

• Use a billing checklist: Run through the same steps every time. A checklist helps catch missing documents, wrong values, or skipped approvals before they cause delays.
• Match G703 claims to site progress: Don’t rely on percentages alone. Walk the site or review daily reports to confirm actual work aligns with billed amounts.
• Confirm stored materials were delivered: Only approve stored materials if they’re on-site or in approved storage. Ask for photos, invoices, or delivery slips.
• Require updated lien waivers with each submission: Collect conditional lien waivers from the GC and all major subcontractors. This protects against double payment and future lien claims.
• Certify or return applications within contract timelines: Delays in certification hold up the entire payment process. Stick to the timeline in the contract, even if it means sending the app back with comments.
• Track billing status in a shared log: Keep a live billing tracker for submission dates, approval status, payment release dates, and open issues. Everyone stays informed.
• Request an updated change order log with each submission: This helps verify that all approved changes are reflected in the billing and prevents surprises at closeout.

💡Pro Tip: Use Mastt to manage your entire payment process. Mastt digitizes payment schedules, automates certificates, tracks retention, and keeps all your billing documentation in one place.

When AIA Billing isn’t the Right Fit

AIA billing works best on large-scale commercial jobs with structured progress payments. But it’s not always the right tool, especially when the project scope, payment structure, or contract type calls for more flexibility.

• Small residential or renovation jobs: These projects often don’t require detailed breakdowns or formal certification. A simple invoice usually does the job.
• Time and Materials contracts: AIA billing is based on progress percentages, not hourly labor or receipts. T&M work is better tracked with daily logs and actual cost reports.
• Projects with custom billing or milestone payments: If payments are tied to project stages like “design complete” or “handover,” milestone billing offers more clarity than progress-based forms.
• When the owner prefers lump sum invoices: Some owners don’t want detailed breakdowns. They may request a single invoice for the completed scope instead of G702/G703 documentation.

AIA Billing vs. Other Construction Billing Methods

AIA billing uses structured forms to support progress payments on construction projects. Other billing methods, like lump sum, T&M, or cost-plus, offer different ways to track work and handle payments. Each suits a different type of job, scope, or contract style.

AIA billing stands out for its structure and industry-wide acceptance, especially on larger jobs and capital projects.  The best fit depends on the contract terms, risk tolerance, and how much documentation the project team expects.

Final Thoughts on AIA Billing

AIA billing gives structure to one of the messiest parts of a project: getting paid. It ties together scope, progress, and cost in a way that everyone can track and verify. For project managers and owners, it brings visibility into cost, progress, and risk. For contractors, it sets the standard for how and when they get paid. For teams working on complex builds, this kind of clarity makes a measurable difference.