How to Fill Out a Pay Application, Step by Step

This is the walkthrough we wish every subcontractor got handed with their first contract. It follows the standard pay application structure — a cover application plus a continuation sheet — and works whether you're filling out an AIA-style form, a GC's custom format, or this site's generator. Field by field, in the order you should actually work.

Before you start: gather three things

1. Your contract numbers — the original contract sum, the retainage rate(s), and every approved change order with its amount.
2. Your schedule of values (SOV) — the agreed breakdown of the contract into line items. On application #1 you may be creating it; afterward it must match every prior application line for line.
3. Last month's application — your new 'previous applications' column is its 'total completed and stored' column. If this is application #1, those previous columns are zero.

Step 1 — Header: parties, project, period

Fill in who the application is from (you), who it's to (your customer — the GC, construction manager, or owner), the project name, the application number, and the period-to date (your billing cutoff). The application number must increment by one each period with no gaps — reviewers use it to index everything. If your contract routes applications through an architect or CM, list them where the form provides.

Step 2 — The continuation sheet: bill each line

Work down your schedule of values one line at a time. For each line item you touch this period, you enter just two numbers — everything else is arithmetic:

• Work completed — this period: the value of work on this line performed during this billing period only.
• Materials presently stored: the value of materials for this line delivered (on site or in approved storage) but not yet installed — only if your contract allows billing stored materials.

From those, each line computes: total completed and stored to date (previous + this period + stored), percent complete (that total divided by the line's scheduled value), and balance to finish (scheduled value minus total to date). Two discipline rules keep you out of trouble: never let a line exceed 100% without a change order, and never bill a percent the site walk wouldn't support.

Step 3 — Change orders

Approved change orders enter the application in two places. In the change order summary, report additions and deductions — approved in previous months and approved this month — which produce the net change by change orders. And on the continuation sheet, each change order should appear as its own line item (or an adjustment to an existing line) so you can bill progress against it like any other work. Unapproved or pending change orders don't belong on a pay application at all.

Step 4 — Retainage

Apply your contract's retainage rate(s). Many contracts hold one rate on completed work and a different rate (often the same, sometimes zero) on stored materials — which is why good forms track them separately. The total retainage line is cumulative: it's computed on everything earned to date, not just this month. If your contract steps retainage down at a milestone (say, 10% until 50% complete, then 5%), apply the current terms and show your math.

Step 5 — The summary: eight lines to the payment due

The cover page's application summary runs the same eight-line calculation on virtually every form:

1. Original contract sum — from your contract.
2. Net change by change orders — from step 3.
3. Contract sum to date — line 1 plus line 2.
4. Total completed and stored to date — the continuation sheet's grand total.
5. Retainage — from step 4 (completed-work and stored-materials retainage combined).
6. Total earned less retainage — line 4 minus line 5.
7. Less previous certificates for payment — the sum of amounts certified on all prior applications.
8. Current payment due — line 6 minus line 7. This is your check amount.

Use certified amounts, not requested amounts, on line 7. If the architect cut $3,000 from application #2, your previous-certificates total reflects the cut — otherwise every future application overstates what you're owed and the whole chain drifts.

Step 6 — Certify, sign, and attach

Sign the certification (and notarize if your contract requires it), then attach whatever the contract lists as conditions of payment: conditional lien waivers for this period, unconditional waivers for prior payments received, stored-material invoices or photos, updated schedules, or certified payroll on public work. Missing attachments are treated exactly like wrong math — the application waits.

Pre-submission checklist

• Application number increments correctly; period-to date matches the contract cutoff.
• Continuation sheet totals equal the cover page's line 4 — to the penny.
• Previous-applications column equals last month's total-completed column, line by line.
• All change orders on the application are approved, and the net matches the change order summary.
• Retainage rates match the contract, applied to the right bases.
• Line 7 uses certified amounts from prior applications.
• Signature, date, notarization (if required), and all required attachments present.
• Submitted before the contract deadline — late usually means next month.

Frequently asked questions

What period should application #1 cover?

From your first day of work on the project through your first billing cutoff. Its 'previous applications' columns are all zero, and it's where your schedule of values gets established — worth extra care, because every later application inherits it.

Can I bill for materials I've purchased but not delivered?

Only if your contract explicitly allows off-site stored materials, and usually with strings attached: bills of sale, insurance, and storage at an approved facility. On-site stored materials are more commonly billable. When in doubt, ask before you bill — stored-material disputes stall whole applications.

What if the GC cuts my requested amount?

The certified amount governs. Carry the certified figures into your next application's previous-certificates line, and pursue the difference separately — usually by rebilling the disputed quantity next period with better backup, or through the contract's dispute process.

Do I have to use the AIA forms?

Only if your contract says so. Most contracts require the information and the math, not a specific brand of paper. Any format that presents the standard calculation — like the documents this site generates — satisfies the typical requirement. If your contract names official AIA documents specifically, buy those from AIA.