Review progress billing, retainage, and schedule of values

Direct answer

For this review, define AIA billing as progress payment applications using G702/G703, schedule of values, retainage, and change orders.

Why this question comes up

G702/G703 spreadsheets become error-prone once contractors run multiple commercial jobs and change orders. This guide turns that concern into a review that can be repeated with a defined period, consistent inputs, and a visible trail back to the records.

Records to gather

• Schedule of values with line items and scheduled amounts
• Applications for payment submitted, with approval status
• Retainage percentage, accumulated balance, and release conditions
• Approved and pending change orders
• Cost to date and estimated cost to complete by line item

Review workflow

1. Confirm the schedule of values reconciles to the contract sum. Line items should total the contract value, and adjustments should trace to approved change orders.
2. Compare billed percentage against actual completion. Front-loading — billing ahead of work performed — improves cash now and creates a shortfall later when remaining work exceeds remaining billing.
3. Track retainage as a receivable with its own timeline. It is earned revenue held back, often released long after practical completion and sometimes contingent on conditions.
4. Keep pending change orders out of the billing schedule. Work performed against an unapproved change order is cost with no billing right yet.
5. Compute over- and under-billing per project. Billings in excess of costs and estimated earnings is a liability; the reverse is an asset. Both need to be visible.
6. Update cost to complete honestly. An optimistic estimate to complete overstates percentage complete, which overstates recognised revenue.

What a useful answer should include

• Schedule of values reconciled to the contract sum plus approved changes
• Billed percentage against actual completion, per line item
• Retainage balance with expected release timing per project
• Pending change orders separated from approved
• Over/under-billing position per project
• Cost to complete with the basis for the estimate

Common failure modes

• Front-loading the schedule of values. It borrows cash from the end of the project, where margin is thinnest.
• Treating retainage as collected. It is not available and often arrives much later than expected.
• Billing unapproved change orders. It creates disputes and can delay the whole application.
• Optimistic cost to complete. It flows straight through to overstated revenue and profit.

Community context

The linked community posts show why people search for this topic and which parts create confusion in practice. They are anecdotal. Use the reference sources and your organization’s policies for accounting treatment, tax, compliance, and final decisions.