The American Institute of Architects (AIA) produces some of the most widely-used contracts in the construction industry. When contractors work on a project that uses these documents, they need to follow the AIA billing process in order to invoice for their work — and get paid. Fortunately, AIA billing isn’t rocket science: It’s basically a form of progress billing that uses specific documents. Once you get familiar with AIA billing, you’ll be able to follow the same steps to get paid on almost any job that uses AIA contracts.
What is AIA?
The AIA, short for the American Institute of Architects, is an advocacy group for architects with 95,000 members and more than 200 chapters globally. In addition to providing support and resources to their architect members, they also produce some of the most popular standardized contract documents in the construction industry.
Most large general contractors rely exclusively on AIA contracts, which define the payment process on a project, including the forms that subcontractors need to use in the billing process.
AIA Billing Forms
AIA billing generally consists of two forms:
- G-702 Application and Certificate for Payment
- G-703 Continuation Sheet
These forms are available for purchase on the AIA Contract Documents website.
On the AIA payment application (G-702), a contractor must provide information about the status of the total dollar amount of work completed during the construction project, the sum of any previous payments, descriptions of any change orders, the amount of any retainage, and the sum of the current payment due.
Along with the payment application, AIA billing generally requires the G-703 continuation sheet, which provides an update of the work based on the schedule of values.
Once the contractor submits the billing forms, the architect reviews them for accuracy. The architect’s role in this process is to protect the property owner’s financial interest and ensure that the contractor isn’t billing for work they haven’t actually completed.
When the contractor and architect both sign off on the form, the project owner can then pay the amount that was signed off on the G-703 to the contractor.
AIA payment forms can be used for any construction project no matter the size. When filling out a G-702 invoice, be sure to check your information so that no mistakes fall back on your shoulders or drags out the payment process longer than necessary.
The downside of AIA billing
While using AIA contract documents can provide some advantages — namely, that their standardization makes the process easy to follow — there are a couple of potential disadvantages for subcontractors.
First, AIA contracts are written to protect architects and owners first and foremost. Some contractors feel that the terms require the contractor to carry an unfair amount of risk. However, they were created with input from contractors, engineers, lawyers, and others as well, and are largely seen as equitable. ConsensusDocs provides alternative contract documents for those who prefer not to use AIA versions.
Another drawback is the cost — AIA billing forms are not free. A single copy the G703 Continuation Sheet is $11.99 for non-AIA members (unless you want to be able to edit the legal terms — then it’s $29.99). Of course, non-members can purchase an annual subscription to AIA contract documents for about $1350, which gives you unlimited access to their documents.
If you work on multiple AIA projects per year and exchange dozens of contract documents per month, the cost may be negligible. But for small subcontractors who are working on a single AIA contract, the costs can add up fast. The AIA doesn’t allow you to reuse a billing form — they require you to use a new form each time.
Do you need to use AIA billing?
Just because you are working under an AIA contract doesn’t necessarily obligate you to use AIA-branded billing forms. Often, you can simply use a payment application or continuation sheet that provides the same information.
However, if you are required to follow through with using AIA documentation for billing on your projects, there are many supporting websites and companies that allow you to enter the AIA information into your computer and print it professionally onto your AIA hard copy.
Review your contracts often
While AIA contracts are standardized, that doesn’t mean they will always be identical. Owners, architects, and general contractors can modify the terms on each project, which can affect the billing process. A subcontractor can be bound by provisions that aren’t even in their contract!
It is always a smart idea to have a construction lawyer review each project’s AIA contract to make sure that your company’s interests are protected.