Step 1: Filling in Basic Project Information

This section is where the subcontractor provides essential details about the project. It includes information such as the owner’s name, project address, the party requesting payment, the architect, application number, contract date, billing period, and the contractor’s scope of work. Notce: "Contract for" asks for a brief description of the labor or materials you are providing, whether it involves labor, materials, or both.

Step 2: Filling in Contractor's Application For Payment

Line 1. Original contract price

This field remains consistent across all pay applications, as it represents the original contract price. As the name suggests, this is the amount outlined in the initial contract agreement. It should strictly reflect the agreed-upon contract value and must not include any disputed claims, change orders, or additional amounts outside the original terms

Line 2. Net change by change orders

A change order is a formal agreement between you and the hiring party to either add or remove work from the original scope. These adjustments are common, as construction projects rarely proceed exactly as planned. In some cases, work may be both added and removed within the same period. If your project uses standard AIA documents, refer to the AIA G701 Change Order form for guidance.

The change order value in Line 2 can be either positive or negative. A positive value indicates additional work beyond the original contract scope, while a negative value reflects a reduction in work. To determine this figure, complete the "Change Order Summary" table located at the bottom left of the form. Further details about this section will be discussed later.

Line 3. Contract sum to date

The "contract sum to date" represents the current total value of the contract, calculated by combining the original contract price (from Line 1) with the net changes from change orders (Line 2). To determine this amount, add the value in Line 2 to Line 1. If Line 2 is negative, it will reduce the total contract sum.

Line 4. Total completed and stored to date

The Continuation Sheet plays a crucial role in calculating the total for Line 4. To complete this section, you'll need to first fill out the Continuation Sheet, which works in tandem with the Schedule of Values.

The Schedule of Values outlines all the work to be completed during the project and assigns a cost to each line item. The Continuation Sheet builds on this by providing an itemized breakdown of the work completed during the billing period, along with the corresponding "scheduled value" or cost. These amounts should align with the figures listed in the Schedule of Values. Additionally, the Continuation Sheet includes the value of materials currently stored on-site.

Once the Continuation Sheet is complete, you can transfer the "Grand Total" amount directly to Line 4 on the G702 form.

Line 5. Retainage

Retainage, also known as retention, is a portion of your payment that the general contractor (GC) or project owner holds back until the job is completed. The retainage percentage, typically ranging from 5% to 10%, should be specified in your contract. It’s important to note that many states mandate variable retention, which means the amount withheld can decrease or be paid out as certain milestones in the project are met.

In this section of the billing process, you will list the retainage amounts in lines 5a and 5b. To calculate the total retainage, multiply line 5a (the retainage percentage for the work completed) by the total amount of work completed, and multiply line 5b (the retainage percentage for materials stored) by the value of materials stored on-site. Add these two figures together to get the total retainage withheld for the current pay application.

Line 6. Total earned less retainage

To determine the total billable amount, subtract the retainage calculated in line 5 from the combined total of work completed and materials stored (line 4). This will give you the amount you've earned to date.

Line 7. Less previous certificates for payment

On this line, you will subtract any payments you've already received. When the architect or property owner approves your pay application, they will issue a certificate of payment, which confirms approval and serves as proof of payment.

For the initial pay application, this amount will be zero. For later applications, you should enter the amount from line 6 of the previous certificate.

Line 8. Current payment due

To calculate this figure, subtract line 7 from line 6. This line shows the amount you are expecting to bill for in the current period. The total billable amount for the pay application is the difference between the "total earned less retainage" in line 6 and the "previous certificates for payment" listed in line 7.

Line 9. Balance to finish, including retainage

This figure represents the remaining balance of the contract that will be due after the architect or owner approves the current payment application. To determine this amount, subtract the "total earned less retainage" in line 6 from the total contract sum to date. The result is the outstanding amount under the contract.

Step 3: Sign & Submit

Once all payment information on the AIA G702 pay application is complete, the next step is to sign and submit the document. Standard AIA forms typically require notarization for each submission, so ensure you sign the pay application in the presence of a notary public. However, if both parties agree to waive notarization, this requirement can be amended in the contract.

The bottom-right section of the G702 form is designated for the Certificate for Payment and should remain blank when the contractor submits the pay application.

This section is completed by the architect, project manager, or property owner. After reviewing the pay application, continuation sheet, and any supplementary documents, they will certify the payment amount. If discrepancies or disagreements arise, the reviewer will provide the contractor with a response indicating the certified amount and an explanation for any adjustments.

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