AIA (American Institute of Architects) billing is a structured method of progress billing used in construction. Instead of sending a regular invoice that simply lists an amount due, contractors submit a formal payment application showing completed work, prior billings, retainage, approved change orders, and the current amount requested.
It is common on commercial, public, architect-led, and lender-financed projects because these jobs need clear documentation. Owners, architects, lenders, and auditors need to see how much work has been completed and whether the payment request matches actual progress.
That structure matters because construction billing is rarely simple. Work happens in phases, materials may be stored before installation, and retainage is often withheld until substantial completion. Good billing records also connect to broader planning issues, including Financial Factors Construction Leaders Should Consider when managing cash flow, compliance, and project profitability.
The AIA G702 form is the summary page. It captures the original contract amount, approved change orders, total work completed, retainage withheld, previous payments, and the current balance due. It is the formal payment request.
The AIA G703 form is the continuation sheet. It supports the G702 by showing each line item in detail. This includes scheduled value, work completed during the current period, total completed to date, stored materials, and percentage complete.
In simple terms, the G702 answers, “How much are we asking to be paid?” The G703 answers, “What work supports that request?” Together, the forms give reviewers both the big picture and the detailed backup.
A Schedule of Values is the project’s billing roadmap. It breaks the total contract price into specific work categories, such as demolition, framing, electrical, plumbing, finishes, equipment, or other project components.
A strong Schedule of Values construction process starts with line items that are detailed enough for review but not so fragmented that billing becomes hard to manage. Each value should be reasonable, tied to the contract scope, and easy to verify against progress in the field.
The most common mistake is front-loading. That happens when early project items are assigned inflated values so the contractor can bill more cash upfront. Owners and architects often spot this quickly, and it can trigger deeper review, revisions, or rejection.
A better approach is to make the schedule logical, balanced, and defensible from the start.
Payment applications often stall because the numbers or documents do not match the contract record. A common issue is listing work as complete before it has been verified by the owner, architect, or project manager.
Another problem is missing support. Stored materials may require invoices, delivery slips, photos, or proof of insurance. Change orders usually need approval before they appear in the billing documents. Lien waivers are often required with each AIA pay application.
Math errors also slow approvals. If prior billings, retainage, or current amounts do not reconcile between the G702 and G703, reviewers may send the package back.
Retainage mistakes are especially common. Since retainage is often 5 to 10 percent, even a small calculation error can affect the amount due. Contractors should also be careful when project billing intersects with Sales Tax Rules, especially where materials, stored items, or project location create reporting issues.
The best way to avoid delays is simple: make sure the AIA billing forms agree with the contract, the field progress, and the supporting documents before submission.
AIA billing is not required on every project. It is most common on commercial, public, architect-led, and lender-financed jobs. Smaller private projects may use simpler progress invoices unless the contract specifically requires G702 and G703 forms.
The contractor usually revises and resubmits the payment application. Rejection may happen because of missing documents, incorrect percentages, unapproved change orders, or math errors. Payment is typically delayed until the issue is corrected and the reviewer approves the revised submission.
Retainage is shown as an amount withheld from completed work. The G702 summarizes total retainage and current payment due, while the G703 can show retainage by line item. This helps owners and contractors track amounts held until later project milestones.
Yes. Subcontractors can use AIA forms when the subcontract or general contractor requires them. This is common when the general contractor needs consistent backup from subcontractors to prepare its own payment application for the owner.
For more than four decades, Bennett Thrasher has provided businesses and individuals with strategic business guidance and solutions through professional tax, audit, advisory, and business process outsourcing services. Contact Mike Reynolds, partner in charge of Bennett Thrasher’s Financial Reporting & Assurance practice, who has industry experience in Construction, or call us at 770.396.2200.
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