Understanding AIA Billing in Construction: The G702, the Schedule of Values, and Lien Waivers

Most contractors have filled out a G702 a hundred times without anyone actually explaining why the form is shaped the way it is, or how the pieces around it — the Schedule of Values, retainage, lien waivers — fit together. Here's the whole picture.

What AIA billing actually is


AIA billing is a standardized payment process built around forms developed by the American Institute of Architects. The two that matter most are the G702 (Application and Certificate for Payment) and the G703 (the continuation sheet that breaks that application down line by line). Together they turn "we did some work this month" into a documented, auditable request for payment that an owner or architect can actually verify against the contract.

The Schedule of Values comes first

Before a single G702 gets filled out, the contract needs a Schedule of Values — a breakdown of the entire contract sum into line items tied to specific scopes of work (site work, concrete, framing, MEP, and so on), each assigned a dollar value that adds up to the total contract price. The Schedule of Values isn't paperwork for its own sake — it's the framework every future pay application gets measured against. Get it wrong at the start (line items too broad, values that don't reflect real cost distribution) and every G702 for the rest of the project inherits that problem.

How a pay application actually moves

Each billing period, the contractor updates the G703 with the percentage of each line item completed, which calculates the value earned to date.

That rolls up into the G702, along with:

• Retainage withheld (typically 5–10% of each pay application, held until substantial or final completion)
• Change orders that have adjusted the original contract sum
• Previous payments, so the application shows the net amount currently due

The architect or owner's representative reviews and certifies the application before payment releases. On a well-run project this is routine. On a poorly documented one, it's where disputes start — an owner questioning a percentage-complete claim, a change order that was never formally logged, retainage that doesn't reconcile to what's actually been withheld across the project.

Lien waivers run alongside every payment

Each payment is typically tied to a lien waiver — a legal document where the contractor (or subcontractor) waives the right to file a mechanic's lien in exchange for that payment. There are conditional and unconditional versions, and partial versus final waivers, and getting the wrong one attached to the wrong payment is a common and avoidable mistake. Waivers usually need to be notarized, exchanged at the right point in the payment cycle, and tracked so nothing gets missed when it's time for final payment and lien releases.

Where this connects to the books

AIA billing only works if it's backed by accurate job costing underneath it — the percentage-complete figures on a G703 should reflect real cost-to-date, not a guess. That's bookkeeping work, not paperwork: job costs tracked by phase and line item, retainage tracked separately from collectible revenue, change orders logged the moment they're approved rather than reconstructed at pay-app time. When that foundation is solid, AIA billing is mechanical. When it isn't, every pay application becomes a small research project.

See how we handle this for commercial contractors on our construction page.