General contractors process hundreds of AIA subcontractor payment applications per year. Each one follows the same G702/G703 framework, but the questions that come up during review repeat themselves project after project. Which fields actually matter? What triggers a valid rejection? How does retainage reduction work?

This FAQ answers the questions GCs encounter most often when reviewing AIA pay apps, with specific guidance drawn from actual project administration experience.

What Is the AIA G702 Form?

The AIA G702 is the Application and Certificate for Payment. It serves as the summary sheet for a subcontractor's monthly billing. The form captures the original contract sum, approved change orders, total completed and stored to date, retainage, and the current payment due.

The G702 requires signatures from both the contractor submitting the application and the architect or engineer certifying the work. Without both signatures, the document is incomplete.

Key fields on the G702:

Original contract sum (line 1)
Net change by change orders (line 2)
Contract sum to date (line 3, which equals line 1 plus line 2)
Total completed and stored to date (line 4, pulled from the G703)
Retainage (line 5a and 5b)
Total earned less retainage (line 6)
Less previous certificates for payment (line 7)
Current payment due (line 8)

Every number on the G702 must reconcile with the G703 continuation sheet. If they do not match, the pay app should be returned for correction.

What Is the AIA G703 Form?

The G703 is the Continuation Sheet. It contains the line-by-line detail behind the G702 summary. Each row represents one item from the schedule of values (SOV) and tracks:

Description of work
Scheduled value (the original budgeted amount for that line item)
Work completed from previous applications
Work completed this period
Materials presently stored
Total completed and stored to date (as a dollar amount and percentage)
Balance to finish
Retainage

The G703 is where most errors hide. Percentage completion claims, stored materials values, and retainage calculations all live on this form.

What Is the Difference Between the G702 and G703?

The G702 is the summary. The G703 is the detail. Think of the G702 as the cover page of a financial report and the G703 as the supporting data tables.

Feature	G702	G703
Purpose	Summary and certification	Line-item detail
Level of detail	Project totals only	Individual SOV line items
Signatures required	Contractor and architect	None (attachment to G702)
Change order tracking	Cumulative net change	Not directly shown
Retainage display	Summary totals	Per line item
Page count	1 page	Multiple pages depending on SOV size

A GC should always review the G703 first, then verify that the G702 summary matches. Starting with the G702 alone provides no visibility into where the money is going.

How Is Retainage Calculated on AIA Pay Apps?

Retainage is a percentage of earned revenue withheld from each payment to ensure project completion. The standard rate ranges from 5% to 10% depending on the contract and jurisdiction.

On the G703, retainage applies to the "total completed and stored to date" column. For a line item with $100,000 completed and a 10% retainage rate, $10,000 is withheld.

Retainage calculation gets complicated in three scenarios:

Scenario 1: Split retainage rates. Some contracts apply different retainage rates to work completed versus materials stored. Work might carry 10% retainage while stored materials carry 0%.

Scenario 2: Retainage reduction. Many contracts allow retainage reduction from 10% to 5% once the project reaches 50% completion. The G702 has separate fields (5a and 5b) to accommodate different retainage rates.

Scenario 3: Subcontractor-level completion. A subcontractor may reach substantial completion before the overall project. Their retainage release timeline may differ from the project-wide schedule.

Always verify that the retainage percentage matches what the subcontract specifies. This is one of the most frequently misapplied fields on the entire pay app.

What Happens When Errors Are Found on a Pay App?

The GC has three options when errors appear on an AIA subcontractor payment application:

Option 1: Return the entire pay app. If errors are significant (G702/G703 mismatch, incorrect contract sum, missing change orders), return the pay app to the subcontractor with a written description of each error. This resets the review clock in most jurisdictions.

Option 2: Approve a partial amount. If the errors are isolated to specific line items, the GC can approve the undisputed portion and withhold payment on the disputed items. Document the disputed items in writing.

Option 3: Correct and approve with notation. For minor mathematical errors (rounding discrepancies under $100), some GCs correct the form, note the correction, and process payment. This approach is faster but creates less documentation.

The worst option is approving a pay app with known errors. Once approved and paid, recovering overpayments requires formal dispute processes that cost more than the error itself.

What Is the Standard Review Timeline for AIA Pay Apps?

AIA standard documents do not specify a universal review period. The timeline comes from three sources:

The subcontract. Most subcontracts specify a submission deadline (typically the 25th of each month) and a review period (7-14 days).
The prime contract. The GC's billing deadline to the owner dictates how quickly sub pay apps must be processed.
State prompt payment laws. Many states mandate payment within 7-30 days of an approved pay app. Late payment triggers statutory interest, often at 1-2% per month.

A practical timeline for most commercial projects:

Subcontractor submits pay app by the 25th
GC completes review by the 5th of the following month
GC includes approved amounts in owner billing by the 10th
Owner processes payment within 30 days
GC pays subcontractor within 7 days of receiving owner payment

Missing any step in this chain creates cascading delays that affect every subcontractor on the project.

Are Non-AIA Payment Application Formats Acceptable?

Yes, but with caveats. The AIA G702/G703 is the industry standard, but it is not legally required unless the contract specifies it. Many subcontractors use alternative formats:

Custom spreadsheets that mirror G703 columns but lack the formal G702 summary
Accounting software exports from systems like Sage, Viewpoint, or Procore
State-specific forms required on public projects
Owner-mandated templates that differ from AIA formatting

The critical requirement is that any format must capture the same data points: original contract sum, change orders, work completed by period, stored materials, retainage, and current payment due.

GCs should specify the required format in the subcontract. Accepting inconsistent formats across 20 subcontractors creates reconciliation problems during owner billing.

What Supporting Documents Should Accompany Each Pay App?

A complete AIA subcontractor payment application includes more than just the G702 and G703. The full submission package should contain:

Signed G702 with current-period amounts
G703 continuation sheet with all line items
Conditional lien waiver for the current billing period
Unconditional lien waiver for the prior billing period (confirming prior payment received)
Stored materials documentation (invoices, insurance, photos) if applicable
Updated project schedule showing progress
Certified payroll reports (on prevailing wage projects)
MBE/WBE utilization reports (if contractually required)

Missing any of these documents gives the GC grounds to hold the pay app until the package is complete. Establish these requirements at the preconstruction meeting so subcontractors know exactly what to submit each month.

Frequently Asked Questions

Can a GC charge a fee for processing AIA pay apps? Generally no. Processing pay apps is considered a standard GC obligation under the prime contract. Charging subcontractors a processing fee may violate prompt payment statutes in certain states.

What if a subcontractor refuses to use the AIA G702/G703? If the subcontract requires AIA forms, refusal to use them is a contractual default. The GC can withhold payment until the proper forms are submitted. If the subcontract is silent on format, the GC should negotiate the required format before work begins.

How do joint checks affect the pay app process? Joint check arrangements require the pay app to identify the joint payee (usually a material supplier). The payment amount on the G702 does not change, but the check issuance process adds a second endorsement requirement.

Can retainage be held beyond substantial completion? State laws govern retainage release timelines. Most states require retainage release within 30-60 days of substantial completion, though the GC may withhold amounts related to punch list items or disputed work.

What happens if the architect refuses to certify the G702? Without architect certification, the owner has no obligation to pay the GC, and the GC has no obligation to pay the subcontractor. The architect must provide written reasons for withholding certification.

Is electronic submission of AIA pay apps legally valid? In most jurisdictions, yes. The AIA has released digital versions of the G702/G703. However, the subcontract should explicitly authorize electronic submission and define what constitutes a valid digital signature.

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