At a glance
- Seven checks cover the errors that matter: totals, scheduled values, prior periods, change orders, stored materials, retainage and duplicates.
- Change orders are verified against your own approved log, never against the sub's summary.
- Software can read the forms and run the arithmetic; people decide what to approve, short-pay or send back.
- Measure your own review time and rejection reasons before deciding what to automate.
Catching pay application errors before you approve them takes the same few checks on every submission. This article is for controllers and project accountants at mid-size and large contractors who approve subcontractor pay applications. It gives a review checklist built around the AIA G702 and G703 forms.
What mistakes get pay applications rejected most often?
Seven error types put a pay application at risk: totals that disagree, drifting scheduled values, restated prior work, unapproved change orders, stored materials discrepancies, retainage miscalculations and duplicate billing. One construction reference guide says "Any pay app errors or miscalculations can lead to the application being denied" and that the reviewer will return the application to be adjusted. [2]
The useful move is to organize checks around where the AIA forms can go wrong. The G702 is the cover application and the G703 is its continuation sheet. The G703 supplements the pay application, and the G702 total completed and stored (line 4) depends on it. [1][2]
The pay application review checklist
This checklist assumes AIA G702 and G703 forms. If a subcontractor bills on a different form, map each check to the matching line or column on that form. Use it for every submission, in the order shown.
Three terms recur. A pay application is a periodic request for payment for work performed. The schedule of values (SOV) breaks the contract price into line items, and a scheduled value is "the amount of money it will take to complete each item"[1]. Retainage is a percentage of a payment that the general contractor or owner holds back. [2]
| Error type | What the form shows | How to catch it | Who signs off |
|---|---|---|---|
| G702 and G703 totals disagree | The G702 line 4 total is taken from the continuation sheet. [2] | Re-add every G703 line and compare the result to G702 line 4, then recompute the G702 lines that follow from it. | Project accountant checks; controller approves |
| Scheduled values drift from the schedule of values | Column C should match the schedule of values from the start of the project, unless change orders adjusted it. [1] | Compare each column C line to the contract's schedule of values plus the approved change orders. Any other difference is a question for the sub. | Project manager confirms; project accountant records |
| Prior-period work restated | Column D comes from columns D and E of the previous continuation sheet. [1] | Compare every column D line to the last approved application. A line that does not match is either an error or an unlogged adjustment. | Project accountant |
| Unapproved change order | G702 line 2 is the net change from change orders and can be positive or negative. [2] | Match each change order behind line 2 to your own approved change order log by number, scope and amount. Anything not in the log is held. | Project manager owns the log; controller approves payment |
| Stored materials discrepancy | Column F is the value of materials currently stored on-site. [1] Column D should not include stored materials. [1] | Ask for the stored-materials backup your contract calls for. Check that a line's stored value is not also counted in work completed. | Project manager confirms; controller approves |
| Retainage miscalculated | Line 5 is the retainage held, and line 6 is line 4 less that retainage. [2] | Recompute retainage from the rate and basis in the subcontract, then recompute line 6 from your own figure. | Controller |
| Duplicate or over-billing | Column H, the balance to finish, is column C less column G. [1] | Flag any line where completed and stored exceeds the scheduled value, and any scope billed on two lines or in two periods. | Project manager confirms scope; project accountant records |
- Tie out the totals
Re-add the G703 lines and compare them to the G702 summary before reading anything else.
- Check scheduled values
Compare each scheduled value to the contract schedule of values and approved change orders.
- Check prior periods
Compare previous-work columns to the last approved application.
- Verify change orders
Match every change order behind G702 line 2 to your approved log.
- Test stored materials
Confirm the backup exists and that stored items are not also billed as work completed.
- Recompute retainage
Apply the subcontract's retainage terms to your own total, not the sub's.
- Look for duplicates
Scan for lines that exceed their scheduled value or repeat scope from an earlier period.
- Record the decision
Approve, short-pay or return with the specific lines in question, and keep the notes with the application.
Checking for unapproved change orders before you approve
To know whether a pay app includes unapproved change orders, compare the change orders behind G702 line 2 to the change orders your own team has approved, by number, scope and amount. A change order is an agreement to add or deduct work, made between the parties, and line 2 of the G702 is the net of them. [2]
- List the change orders behind line 2 of the sub's G702.
- Match each to your approved log. Hold any that are not there.
- Check that the scheduled values on the G703 moved by the same amounts.
- Confirm that no billing against a pending change order is hidden inside a base-contract line.
This article stops at verification inside the pay application. How a change order is drafted, priced and approved is a separate workflow with its own owner.
Can AI review G702/G703 forms automatically?
Yes, for the mechanical checks. Software can extract the values from a submitted PDF or spreadsheet, re-add the columns, compare them to your contract and change order data, and list every line that fails a test. A person still decides what to do with each flagged line.
This is the same pattern as insurance invoice analysis, where every line of an invoice is checked against agreed terms and only the exceptions reach a reviewer. It also follows document review with human approval: models read the document, explicit rules make the calls, and a named approver signs off. The pattern transfers to pay applications; it is not a ready-made pay application product.
Before building anything, check what your project management or pay application platform already does. If it runs these tests on every submission, use it. If your review spans several systems, a reviewing agent that sits on top of them can be scoped through AI agent implementation. We have not evaluated any vendor's review features for this article.
When this doesn't apply
- Your platform already runs these checks and your team trusts the output. Use that and spot-check.
- Volume is low enough that a careful reviewer with this checklist is faster than setting up anything.
- Your main risk is whether the work is really in place. Percent complete is a field judgment that software cannot make from a form.
- Subcontract terms are inconsistent or undocumented. Fix the data the checks depend on first.
What stays with the controller or PM
Approving a pay application is the contractor's own decision, and it stays with your controller or project manager. A checker only prepares that decision.
- Whether to approve, short-pay or return an application.
- Whether a change order is approved, and for how much.
- Whether stored materials are accepted as billed.
- The retainage terms applied to each subcontract.
- Any exception to your own review policy.
Frequently asked questions
What's the easiest way to check if a sub's pay application math is correct before I approve it?
Re-add the G703 lines yourself and compare the result to the G702 summary, then recompute the lines that follow from it, including retainage and the amount due. Use your own totals rather than the sub's, and keep a note of every difference so the sub can correct it.
How do I know if a pay app includes unapproved change orders?
Match every change order behind G702 line 2 to your own approved change order log by number, scope and amount, and hold anything missing. Also check that the G703 scheduled values moved by the same amounts, and that no billing for a pending change order sits inside a base-contract line.
Can AI review AIA G702/G703 forms automatically instead of a PM doing it line by line?
AI can read the forms, re-add the columns and flag lines that fail your checks, which removes the line-by-line arithmetic. Judgment calls still need a person: whether to approve, short-pay or return, whether a change order is valid, and whether work is in place. The reviewer approves every payment.
What mistakes get pay applications rejected most often?
The error types to check are total mismatches, drifting scheduled values, restated prior work, unapproved change orders, stored materials discrepancies, retainage miscalculations and duplicate billing. We found no published, dated study ranking them by rejection frequency, so log your own rejection reasons for a few months to see which matter most.
How much time do contractors actually spend manually reviewing pay apps each month?
Review time differs by contractor, so measure it per application. Record minutes per pay application over a few cycles, multiply by the number you review each month, and separate arithmetic from judgment; only the arithmetic is a candidate for automation. We found no dated third-party measurement to quote.
Related reading
- Insurance invoice analysis shows the line-by-line review pattern this article applies to pay applications.
- Document review with human approval describes how extracted data is checked and approved by a named person.
- AI agent implementation explains how an agent that reviews documents is scoped, tested and handed over.
- See AI consulting for construction companies for where pay application review fits among contractor back-office workflows.
Sources
- Procore Technologies, AIA G703 Continuation Sheet (Procore Construction Library, updated 2025-04-07) — Columns C, D, F, G and H (accessed 2026-10-29)
- Procore Technologies, AIA G702 Application for Payment (Procore Construction Library, updated 2026-07-24) — Lines 2, 4, 5 and 6; review and rejection (accessed 2026-10-29)
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