AIA Pay App Explained

G702 and G703 walked through with real numbers. Retainage, stored materials, and the line items that get rejected.

By Dov Cohen · Published April 27, 2026 · Updated April 27, 2026

The AIA pay app is the most important document on a construction project, financially. It is also the one most likely to slow down because of formatting errors, math mistakes, or missing paperwork. This guide walks through the G702 cover and G703 continuation sheet line by line, with example numbers, so you can submit a pay app that actually gets paid on time.

What G702 and G703 Are

AIA G702 is the one-page cover sheet. It summarizes the contract sum, the work completed to date, retainage held, prior payments, and the current amount due. AIA G703 is the multi-page continuation sheet that backs up the G702 with line-by-line detail from the schedule of values.

Together they form the monthly Application for Payment, often called the "pay app." Most owners require pay apps on a fixed monthly schedule (e.g., the 25th of each month, paid by the 25th of the following month).

The Schedule of Values, Briefly

The schedule of values (SOV) is the line-item breakdown of the contract sum, agreed at the start of the project. A clean SOV has 25 to 80 lines for a mid-size commercial project, organized roughly by CSI division. Each line has a description and a scheduled value. The sum of all line scheduled values equals the contract sum.

Frontload the SOV at your peril. Some contractors front-load early lines (general conditions, mobilization) so they bill more in early months. Architects know this and will push back. Reasonable front-loading is fine; aggressive front-loading triggers SOV disputes.

Step by Step

1. Update the schedule of values. The schedule of values (SOV) is the line-item breakdown of the contract sum. Every pay app starts by updating the percent complete for each SOV line. Walk the site or call the trade foremen for each line; do not estimate from the office.
2. Roll up to the G703 continuation sheet. For each line: scheduled value, work completed this period, work completed previous periods, total completed, percent complete, balance to finish, retainage held. Math reconciles down each column.
3. Add stored materials if allowed. Stored materials get a column on the G703. Document with delivery receipts, photos, insurance certificates, and (for off-site) bonded warehouse paperwork. Architects who cannot verify on site will reject.
4. Apply retainage. Per the contract: typically 10% on the first half of the project, 5% after substantial completion. Retainage applies to work completed and stored materials, but the percentages can differ. Read your contract.
5. Subtract previous payments. G702 cover line for "less previous payments" reconciles against the running owner ledger. If your number does not match the owner accounts payable, you will not get paid this cycle. Catch the discrepancy before submission.
6. Attach lien waivers. Conditional waiver from the GC for the current payment. Final waivers from the subs for the prior payment received. Without these the owner cannot legally release funds in most states.
7. Route through the architect. Architect signs G702 to certify the work is in place. Owner pays based on architect certification. If the architect disputes a completion percentage, settle that before resubmission, not after.

G703 Walkthrough with Real Numbers

Imagine a $4,820,000 commercial tenant improvement contract, in month 4. Three SOV lines from the G703:

Across all 60 SOV lines this hypothetical project shows:

• Original contract sum: $4,820,000
• Approved change orders to date: $87,420 (net 13 COs)
• Revised contract sum: $4,907,420
• Total completed and stored to date: $1,820,000 (37%)
• Retainage held (10%): $182,000
• Total earned less retainage: $1,638,000
• Less previous certificates for payment: $1,402,000
• Current payment due: $236,000

G702 Cover, Line by Line

1. Original contract sum. $4,820,000.
2. Net change by change orders. $87,420.
3. Contract sum to date. Sum of 1 and 2. $4,907,420.
4. Total completed and stored to date. From G703 column G. $1,820,000.
5. Retainage. Calculated per contract terms. 10% on the first half. $182,000.
6. Total earned less retainage. Line 4 minus line 5. $1,638,000.
7. Less previous certificates for payment. Sum of all prior owner-certified pay apps. $1,402,000.
8. Current payment due. Line 6 minus line 7. $236,000.
9. Balance to finish, including retainage. Line 3 minus line 6. $3,269,420.

Retainage in Practice

Retainage rules vary by state and contract. Common patterns:

• Standard 10% throughout. Old-school. Holds back 10% on every pay app until substantial completion.
• 10% then 5% step-down. 10% for the first half of the contract value, 5% thereafter. Common in 2026.
• 0% retainage on stored materials. Some contracts treat stored materials separately and apply retainage only to installed work.
• Reduced retainage for sub waiver. Some states require retainage release on subs as their work completes, even before overall substantial completion.

Always model retainage in the SOV up front; do not improvise it on a pay app.

Stored Materials

Owners often resist paying for stored materials because they cannot legally take title until installed. To get stored materials paid, you generally need:

• Delivery to the project site (or to a documented bonded warehouse if off-site).
• Photo documentation of the materials in a secured area.
• Insurance certificate naming the owner.
• Bills of sale or paid invoices showing the materials are paid for by the contractor.
• Off-site stored materials: additional bond requirement and inspection rights.

Stored materials on the G703 should drop off in subsequent pay apps as installation proceeds. The total completed plus stored values cannot exceed the scheduled value of the line.

Lien Waivers

Lien waivers are not part of G702 or G703 but they are required attachments. Two flavors:

• Conditional waiver on progress payment. Waives lien rights for the current pay app, conditional on actually receiving payment. Submitted with the current pay app.
• Unconditional waiver on progress payment. Waives lien rights for the prior pay app, since you have now been paid. Submitted with the current pay app for the period that was paid.

Sub waivers follow the same pattern but flow from sub to GC. Most states use specific statutory waiver forms. Use the right form for the state of the project.

Common Pay App Rejections

• Math does not reconcile. Sum of G703 columns does not match G702 totals. Cause: someone updated G703 without updating G702. Use software that reconciles automatically.
• Completion percentages disagree with the architect. The architect did a site visit and your numbers are higher than what they saw. Walk the site with the architect before pay app submission to align.
• Stored materials not documented. No photos, no insurance, no bill of sale. Architect will reject the line and resubmission delays the cycle by a month.
• Front-loaded SOV exposed. The architect realizes early-period lines were over-valued. Forces an SOV revision mid-project. Painful.
• Missing lien waivers. Owner legal will not release funds without waivers. Catch this before submission, not at the owner's desk.
• Change orders billed before approval. A pending CO is not yet part of the contract sum. Bill it after the CO is signed.

How AI Helps With Pay Apps in 2026

Pay apps are the second-most-templatable document on a construction project (after submittals). The mechanical work is significant and the formats are stable. What AI workflows actually do today:

• Generate G702 and G703 from an updated SOV. Type the percent complete updates in chat; the model emits a fully formatted G702 and G703 with all reconciliation math correct.
• Track running contract sum. Approved change orders flow into the next pay app as line items automatically.
• Maintain pay app history. Each pay app references the prior pay app for "less previous payments" without manual lookup.
• Generate lien waiver forms. State-specific statutory forms filled in from project data.
• Flag math errors before submission. The AI runs the reconciliation and refuses to emit a pay app where columns do not balance.

What AI does not do (and should not): walk the site to verify completion percentages, judge whether stored materials are properly stored, or negotiate with the owner. ConstructionBear handles the mechanics and leaves the judgment to you. Get early access here.

Internal Links

• ConstructionBear home — AI-drafted pay apps in seconds.
• Change order best practices
• Submittal templates
• ConstructionBear vs Procore

External Reading

For longer-form essays on construction finance and contracts, see Builders Digest.