The 12 things every GC and prime must verify on every incoming AIA pay application, schedule of values, retainage, stored materials, lien-waiver coordination, before payment leaves your office.
Why GCs and primes need a pay-app review checklist
If you’re the GC or prime running a project of any real size, the 25th of the month is its own kind of dread. Twenty subs send pay apps. Half of them are AIA cover sheets stapled to a continuation, half are vendor-portal exports trying to look like one. Three are still using a 2019 form. One has the wrong project number. Two have schedule-of-values line items that don’t tie back to the SOV you actually approved at buyout. And whoever owns AP wants something kicked back to accounting by Friday so vendors get paid in the cycle.
Reviewing a pay app well is not the same as reviewing it fast. The cover page is just six lines of arithmetic. Anyone can eyeball whether the numbers add up. The actual review work lives one layer down: does the G703 continuation sheet still match the schedule of values you negotiated at contract execution, or has the sub quietly redistributed value across line items to front-load cash flow? Is stored materials properly documented with a paid invoice, a bill-of-sale or transfer of title, and either onsite-protected storage or offsite-bonded storage with insurance proof? Is retainage being held at the right percentage on the right base, and on a federal job, is the prime carrying the same retention downstream as the owner is holding upstream? Is the% complete the sub claims actually visible in the field, or is it a number that drifts every cycle while the install never moves?
And then the lien layer. A pay app that gets paid without a matching conditional lien waiver this period + unconditional waiver covering last period’s payment is exposure waiting to happen. On a federal job there’s no mechanic’s lien, but there’s a Miller Act bond claim, and the documentation discipline is the same. State-by-state, the lien-waiver forms differ, the timing differs, the language differs. Texas, California, and Florida each have their own statutory forms that must be used verbatim or the waiver is void. A GC who pays without the right waiver in hand is the GC paying the same scope twice when the second-tier supplier files a claim three months later.
We built this checklist from years of reviewing pay apps on federal projects. Small specialty trades on $50K trade contracts, prime-tier mech-electrical-plumbing on multi-million-dollar packages, joint-venture partners on set-aside work. The 12 things on this list are the things that actually matter when you’re doing the review for real, not the things AIA’s fill-out tutorial covers. Use it as a printable PDF clipped to each incoming pay app, a working Excel where your project accountant logs OK / Flag / Reject decisions per cycle, or an editable Word document you can trim down to your firm’s house style.
You can run this manually for the next 200 pay-app cycles. Or, when you’re ready, Contracts Connected’s approval-workflow engine routes incoming pay apps through these same 12 checks automatically, attaches the conditional/unconditional waiver matching, and only releases the AP queue when every gate passes. Your call.
Who this checklist is for
- Mid-market and large general contractors running 5–50 active projects with monthly pay-app cycles
- Prime contractors on federal projects (FAR-governed, Davis-Bacon, SF-1034 / SF-1035 cover sheets)
- Project accountants and controllers owning the AP gate between project teams and vendor payments
- Project managers and PEs signing the technical “approve as billed” line on every before it leaves their office
- Subcontract administrators coordinating lien-waiver collection alongside pay-app receipt
- Construction CFOs auditing pay-app review discipline across project sites for cash-flow protection
If you’re the sub filling out the G702 / to get paid, this isn’t your checklist. You want a sub-side preparation guide instead.
The 12-point pay-app review
The checklist covers 12 things every GC or prime must verify on every incoming pay app, every cycle, before approving payment.
- Verify project info, application number, and period dates match the contract. The G702 header has to show the correct project name, owner-assigned project number, contractor’s contract number, application number (sequential. Pay app 7 follows pay app 6 with no gaps), and the “Period To” date matching the cycle close. A wrong project number routes the payment to the wrong job-cost code; a duplicate application number signals the sub is rebilling something already paid. Cross-check against your contract register, not just last cycle’s app.
- Confirm the G703 schedule of values matches the buyout SOV exactly. The line items on the G703 continuation must mirror the SOV negotiated at contract execution. Same descriptions, same scheduled values, same total contract sum. If the sub has split a line, merged two lines, or rebalanced values across line items, that’s an unauthorized change and should be flagged. Front-loading is the most common pattern: subs shift value from late-stage line items (punchlist, closeout, commissioning) to early-stage line items (mobilization, demo, structural) to accelerate cash flow.
- Reconcile work completed this period to field-verified progress. Column G (“Work Completed This Period”) on the G703 is the sub’s claim of value installed since the last app. Walk it line-by-line against site photos, daily reports, and the PM’s superintendent log. If the sub is claiming 75% on framing and the field shows 60%, the variance is either an honest difference of opinion or an attempt to overbill. Either way, it gets flagged before approval.
- Validate stored materials with paid invoice + bill of sale + storage proof. Column F (“Materials Presently Stored”) is the most-abused line on a G703. To bill stored materials, the sub must produce (a) a paid supplier invoice, (b) a bill of sale or assignment of title transferring ownership to the project, and (c) proof of storage location. Onsite in a secured area, or offsite in a bonded warehouse with insurance covering the materials’ full value. Missing any of the three voids the line; bill it back next cycle when proof is in hand.
- Verify retainage is held at the contracted rate, on the right base. Most contracts hold retainage at 10% on completed work and stored materials until 50% completion, then drop to 5% (or release the held amount) for the back half. Check that the retainage % shown on G702 line 5 ties to the contract’s retention clause and that the math runs against the right base ([completed + stored] × retainage %, not against the prior period’s retainage). On federal jobs, mirror the owner’s retention downstream. If the agency holds 10%, the prime holds 10% from subs.
- Confirm previous certificates have been paid before approving this one. G702 line 6 (“Less Previous Certificates for Payment”) should equal the cumulative dollar amount actually paid through the prior cycle, not the cumulative amount certified. If the sub had a $40K invoice held last cycle for a missing waiver and you only paid $12K, the “Less Previous” on this cycle’s G702 should reflect what was paid, not what was billed. Mismatches here surface as duplicate billing and inflate the current draw.
- Validate change orders are listed on G703 and signed before billing. Approved change orders must appear as separate line items on the G703 (not folded into base-contract lines), with the change-order number referenced. Pending or verbal change orders cannot be billed. Only signed, fully-executed COs flow through pay apps. Subs who pre-bill verbal CO work are creating a paper trail that disputes their own scope; reject the CO line and direct the sub to wait until the CO routes through approval.
- Match conditional lien waiver this period + unconditional last period. Pay-app review is the lien-waiver coordination point. Before approving payment, confirm you have (a) a conditional waiver-and-release for the current period (effective when payment clears), and (b) an unconditional waiver-and-release for the prior period (covering the actual cash that already cleared). State-specific statutory forms apply. California Civil Code §§8132/8134/8136/8138, Texas Property Code §§53.281–53.287, Florida statutory waivers, etc. Federal jobs use the prime’s waiver-of-claim form against the Miller Act bond. Wrong form = void waiver = double-payment exposure.
- Confirm Davis-Bacon weekly certified payroll is current (federal projects). On any Davis-Bacon-covered project, no pay app gets approved without the sub’s weekly WH-347 certified payroll submissions caught up through the cycle period. A sub two weeks behind on certified payroll has frozen their pay app, period. Tie the cert-payroll calendar to the pay-app calendar so this gate fires automatically. Under the 2023 Davis-Bacon strict-liability rule, the prime carries downstream wage-compliance exposure; certified-payroll currency is the prime’s protection.
- Verify cover-sheet signatures, notarization, and statement-of-compliance language. The G702 contractor’s certification must be signed by an officer with authority, not a clerk or a stamped signature. On federal projects with SF-1034 / SF-1035 coversheets, the certification language is government-prescribed and must appear verbatim. Notarization is required on most federal jobs and many state-funded jobs; some private commercial work skips it. Match the form to the contract’s specific certification requirement, not the form’s default.
- Confirm AP setup is current (W-9, COI, license) before releasing payment. A pay app can be technically perfect and still get held at AP if the sub’s vendor-master file is incomplete. Verify the sub’s W-9 is on file with current TIN and entity classification, insurance certificate (ACORD 25 with project-specific endorsements) is current and not expiring within 30 days, contractor license is current with the state board, and the bond rider (if required by contract) is in place. Missing any of those bounces the payment back from AP and burns a cycle.
- Log the review decision (OK / Flag / Reject) with reviewer signature and date. Every pay app gets a written disposition before it leaves the project office. OK means clean. Route to AP for payment. Flag means a small issue (typo, missing sig) that the sub corrects and resubmits same cycle. Reject means structural problems (SOV doesn’t match, lien waiver wrong, retainage wrong) that send the app back for rework, payment does not proceed. The reviewer signs and dates the disposition; this becomes the audit artifact when the owner, surety, or DOL asks how the prime exercised oversight.
How to run the checklist on every cycle
Run this checklist on every incoming pay app, every cycle, before any payment routing happens. For each pay app received:
- Open the printed PDF version (or use the working Excel version with built-in checkboxes and the auto-calculating compliance %) and clip it to the front of the sub’s submission packet (G702 + + lien waivers + supporting backup).
- Work down the 12 items in order. Don’t skip ahead. Each item builds on the prior. Field-verify Item 3 (% complete) before approving Items 4 (stored materials) and 5 (retainage), because % complete is the base for both.
- Mark each item: OK, Flag (minor. Fix and resubmit this cycle), or
- Reject (structural. Sub reworks for next cycle). Flag and Reject items get a one-line reason in the notes column.
- Route the completed checklist to the project manager for technical sign-off (Items 2, 3, 7) and to the project accountant for AP sign-off (Items 5, 6, 8, 11).
- File the completed checklist with the pay app in the project’s monthly billing binder. If the owner, surety, or DOL audits the project, this is the artifact that proves the prime exercised review.
The full PDF download includes a printable cover sheet, the working 12-row Excel with auto-calculating compliance %, and an editable Word version you can adapt to your firm’s house style.
Stop running pay-app review by hand
The 12 checks on this list run 15 to 60 minutes per pay app depending on contract complexity. Multiply by 25 active subs across 8 projects on a single billing cycle and pay-app review is half a project accountant’s month. Contracts Connected’s approval-workflow engine routes every incoming pay app through these 12 gates automatically, pulls the matching conditional and unconditional lien waivers from the document store, cross-checks Davis-Bacon certified payroll currency on prevailing wage jobs, and only releases the AP queue when every gate passes. Same depth, runs itself, no end-of-month fire drill. Between us, that’s the part of the job nobody wanted anyway.
For educational purposes. These templates, checklists, and trackers are operator-built starting points designed to help you move faster on the kind of work that usually drowns construction admins in email chains. They are not legal, insurance, accounting, or tax advice. Each project, jurisdiction, and contract has its own quirks. Review the document, refine the language, and consult your attorney, broker, CPA, or compliance officer before relying on it for a live project decision.
Frequently asked questions about the pay app review checklist
What’s the difference between AIA G702 and G703?
G702 is the one-page Application and Certificate for Payment. The cover sheet that summarizes contract sum, change orders, total completed and stored, retainage, less previous certificates, current payment due, and the contractor’s notarized certification. G703 is the Continuation Sheet. The multi-page schedule-of-values breakdown showing, for each line item, scheduled value, work completed previously, work completed this period, materials stored, total completed and stored, percentage complete, balance to finish, and retainage. The G702 is the summary; the G703 is where the actual review work happens. AIA forms are licensed; vendor-portal exports often replicate the layout in a non-AIA form, which is fine as long as the line items reconcile to the negotiated SOV.
Can a GC reject a sub’s pay app if the SOV doesn’t match?
Yes, and you should. The schedule of values is part of the contract, agreed at execution. Subs cannot unilaterally redistribute values across line items mid-project to accelerate cash flow (“front-loading”). If a G703 shows a different SOV than the one negotiated at buyout, reject the pay app, point to the contract SOV, and direct the sub to resubmit on the agreed line items. Persistent SOV manipulation is a contract-administration issue worth escalating to the sub’s principal. It usually signals cash-flow stress that’s a leading indicator of bigger problems downstream.
How do conditional and unconditional lien waivers work with pay apps?
A conditional waiver releases the sub’s lien rights upon receipt of payment. It’s effective only when the payment actually clears. You collect a conditional waiver for the current pay app at the time of submission, and it activates when AP releases the funds. An unconditional waiver releases lien rights without condition. It covers payments already received. You collect an unconditional waiver for the prior pay app once the previous payment cleared. So at any given pay-app cycle, you should have the conditional for now and the unconditional for last period in hand before approving the current draw. Most states (CA, TX, FL, AZ, GA, MS, NV, UT, WY) have statutory waiver forms that must be used verbatim, non-compliant forms are void. Federal projects use prime-issued waiver-of-claim forms against the Miller Act bond rather than statutory mechanic’s-lien waivers.
What gets held back on stored materials, and where does the documentation live?
Materials billed under “Materials Presently Stored” (G703 Column F) get full documentation: a paid supplier invoice showing the sub paid the supplier, a bill of sale or assignment of title transferring ownership of the materials to the project (so the materials cannot be liened by the supplier against another job), and storage proof. Either onsite in a secured project area, or offsite in a bonded warehouse with insurance certificates naming the project as additional insured. Retainage applies to stored materials at the same rate as completed work. The most common rejection reason on stored-materials lines is missing storage proof, especially for offsite material. When in doubt, hold the line until docs land.
What changes when the project is federally funded vs. private commercial?
Federal projects layer in: SF-1034 / SF-1035 coversheets (replacing or supplementing the G702), Davis-Bacon weekly certified payroll (no pay app approved without WH-347s current), federal lien-waiver substitutes (Miller Act bond claim language instead of state mechanic’s-lien waivers), prevailing-wage and apprentice-ratio compliance (cross-check from cert payroll), and stricter retention pass-through (the prime holds the same percentage from subs as the agency holds from the prime). Private commercial projects rely on the state’s mechanic’s-lien statute for waiver discipline, and retention is whatever the contract negotiated (often 10%-to-50%, then 5%, or sometimes 10% throughout with reduction at substantial completion). The pay-app review checklist is the same; the documentation overlay is heavier on federal.
How long does a typical pay-app review take per sub?
A clean review on a small trade contract (under $100K, single-page G703) takes about 12–15 minutes if everything is in order. A multi-line mech-electrical-plumbing prime contract with 40+ line items, stored materials, change orders, and federal certified-payroll cross-checks runs 45 minutes to an hour per cycle. On a project with 25 active subs billing monthly, that’s a meaningful workload. Typically split between the project accountant (financial gates) and the project manager (technical % complete and field verification). Most GCs run pay-app reviews in a 3-day window between sub-submission deadline and AP cutoff.