Guide
How to fill out a pay application: a step-by-step guide for subcontractors
A pay application is how you get paid on most commercial jobs. Here's how each column and line works, with a worked example you can check in our free template.
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What a pay application is
On commercial construction, subcontractors usually don't invoice a lump sum when the job is done. They bill monthly for the work completed in that period. This is called progress billing, and the document is the pay application (pay app). A standard pay application has two parts:
- The summary page (application for payment): contract sum, change orders, work completed to date, retainage, previous payments and the current amount due.
- The continuation sheet: your schedule of values (SOV), listing every line of work with its value and progress.
Many GCs call this layout "AIA-style" because it mirrors a widely used industry form. Your contract will say whether a specific form is required.
Step 1: Build the schedule of values
Before your first pay app, you submit a schedule of values for the GC's approval. It splits your contract into lines that add up exactly to the contract sum.
- Break the work the way it is installed and inspected: by area, floor, system or phase.
- Keep lines small enough that percent complete is easy to verify.
- Include lines for mobilization, submittals and closeout. Closeout lines give you something to bill when the punch list is done.
- Avoid heavy front-loading. GCs and owners spot it, and it costs trust.
Trade examples: plumbing, electrical, HVAC, drywall.
Step 2: Fill in the continuation sheet, column by column
| Column | What goes in it |
|---|---|
| A · Item no. | The line number from your approved SOV. |
| B · Description | The work on that line. Keep it identical every month. |
| C · Scheduled value | The dollar value of the line. The total of column C equals the contract sum to date. |
| D · From previous applications | What you billed on this line in all earlier pay apps. Use the approved amounts. |
| E · This period | Work installed since the last pay app. |
| F · Materials presently stored | Materials delivered but not installed, if your contract allows billing them. |
| G · Completed and stored to date | D + E + F. |
| % complete | G ÷ C. Never over 100%. |
| H · Balance to finish | C − G. |
| I · Retainage | Your retainage rate applied to the line, if your contract calculates it per line. |
Step 3: Complete the summary page
- 1Original contract sum from your subcontract.
- 2Net change by change orders: approved change orders only. Pending ones aren't billable yet.
- 3Contract sum to date = 1 + 2. It must match the total of column C.
- 4Total completed and stored to date = total of column G.
- 5Retainage on completed work and on stored materials, at your contract rates.
- 6Total earned less retainage = 4 − 5.
- 7Less previous payment requests: line 6 from your last approved pay app.
- 8Current payment due = 6 − 7. This is what you're asking for.
- 9Balance to finish, including retainage = 3 − 6.
Worked example
A plumbing sub with a $120,000 contract and one approved $6,500 change order submits pay application #3. Retainage is 10%.
| Line | C | D | E | F | G | % |
|---|---|---|---|---|---|---|
| Mobilization & submittals | 6,000 | 6,000 | 0 | 0 | 6,000 | 100% |
| Underground waste & vent | 22,000 | 22,000 | 0 | 0 | 22,000 | 100% |
| Above-ground waste & vent | 26,000 | 15,600 | 6,500 | 0 | 22,100 | 85% |
| Domestic water piping | 24,000 | 9,600 | 7,200 | 0 | 16,800 | 70% |
| Fixtures: set & trim | 28,000 | 0 | 0 | 8,400 | 8,400 | 30% |
| Testing, startup & closeout | 14,000 | 0 | 0 | 0 | 0 | 0% |
| CO #1: added break room sink | 6,500 | 0 | 3,250 | 0 | 3,250 | 50% |
| Totals | 126,500 | 53,200 | 16,950 | 8,400 | 78,550 | 62.1% |
| Summary | Amount |
|---|---|
| Contract sum to date ($120,000 + $6,500) | $126,500.00 |
| Total completed & stored to date | $78,550.00 |
| Retainage: 10% × $70,150 completed + 10% × $8,400 stored | $7,855.00 |
| Total earned less retainage | $70,695.00 |
| Less previous payment requests (90% × $53,200) | $47,880.00 |
| Current payment due | $22,815.00 |
| Balance to finish, including retainage | $55,805.00 |
Quick check: this period's work plus stored materials is $25,350. Less 10% retainage, that's $22,815, which matches. These exact numbers are preloaded in the free pay application template.
Seven mistakes that get pay apps sent back
- Column D doesn't match what was approved last month (the GC may have cut a line).
- The SOV total doesn't equal the contract sum to date.
- Pending change orders billed as if approved.
- A line over 100% complete.
- Stored materials billed without the backup your contract requires.
- Wrong retainage rate, or retainage left off stored materials.
- Missing signatures, notarization or lien waivers.
Frequently asked questions
How often do subcontractors submit pay applications?
Usually monthly, on a cutoff date set in the subcontract. Many GCs need sub pay apps several days before they submit their own application to the owner, so a late pay app can push your payment back a full month.
What is a 'pencil draft' of a pay application?
Some GCs ask for a draft before the formal application. The superintendent or project manager reviews percent complete per line, agrees on the numbers, and then you submit the final signed version.
Do I need to send lien waivers with a pay application?
Often, yes. Many GCs require a conditional waiver for the current payment and an unconditional waiver for the previous payment. Requirements vary by state and contract.
Is a pay application the same as an invoice?
A pay application is a type of invoice used for progress billing. It shows the whole contract and progress to date, not just this period, so the GC and owner can verify it against the work in place.
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