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The 702 Application and Certificate for Payment  is one of the most widely used pay applications in construction. Subcontractors use it to request payment from the General Contractor, and GCs use it to submit a payment request to the project owner. In this video guide, we’ll walk you through each section of the 702 so you can make sure you get all the details right and get paid what you’ve earned.  For those of you who don’t know what a pay application is, it is a document sent on a construction project to summarize work and request payment. It’s also called ”application for payment” or just “pay app.”  It generally serves as an invoice, but contains more information. Once the architect or owner certifies it, they will issue payment to you. And now let’s just dive right into it.  At the top of the form, you can see the section asking for basic information about the project, including the name and address of the owner, the party requesting payment, the architect (if applicable), and the project itself. The basic information should be pretty easy for you to find. On the right side of the top section, you’ll see things like, “application number,” “period to,” etc.  They are referring to the pay application and the contract itself. The application number is asking about which application this is. Is this the first? Second? Ninth? Things like that. For “period to,”  you should put down the last date of the billing period that the the application covers. “Contract for” is asking for a brief description of the labor or materials you are providing, along with the date the contract was signed and the project number, if there is one.    Once you’re done with the header section, let’s move onto part II where it says, “contractor’s application for payment.” This is where all the charges and deductions are calculated. You’ll definitely want to make sure that everything is as accurate as possible, because the architect or owner can reject your application and return it back to you if there are errors.  This can delay payment and create cash flow issues, and nobody wants that.  On line 1, you’ll see “original contract sum.” This field is pretty self explanatory and is asking for the original contract price. This should be the amount specified in your contract, and this amount should stay throughout the project. Don’t include disputed claims, change orders, or any other amounts. Next, we have Net change by change orders on line 2. A change order is an agreement between you and the hiring party to add or deduct work. It happens on almost every project because construction rarely goes exactly as planned. Sometimes work is both added and deducted in the same period. This field could be a positive or negative number. A positive number means that you added more work than the original contract required. A negative number means that you deducted, or reduced, the amount of work from the contract. You will calculate this number by filling out the “Change Order Summary” table at the bottom, left-hand side of the form. We’ll explain this section later on in the video. You can also click here to watch our guide to the 701 Change Order form. On line 3, you can find Contract sum to date.  To get the number you need here, add line 2, the net change by change orders, to line 1, the original contract sum. Keep in mind that if line 2 is a negative number, adding it to line 1 should reduce the total amount. The result you get is the total amount that you expect to be paid over the course of the project, as of today. Next, let’s look at “Total completed and stored to date.” This is where the 703 Continuation Sheet comes in handy; you’ll need to complete it in order to get the total for line 4. We’re linking the G703 video guide here in case you need help filling it out. The G703 Continuation Sheet shows an itemized list of work you’ve completed during the period, along with the “scheduled value” or cost. These costs should match those on the Schedule of Values. This amount represents the total value of work completed up through the current billing period, along with the value of all materials currently stored on site.  When filling out the G702, you can pull the amount for line 4 straight from “Grand Total” on the G703 Continuation Sheet. Now let’s go to line 5: Retainage. Retainage is a percentage of the contract price that the GC or owner will withhold until the project or job is complete. Your contract should provide details about the retainage percentage, which typically falls somewhere between 5% and 10 %.  In this section, you write the amount of the percentage withheld on lines 5a and 5b. Multiply line 5a by the total work completed, then multiply line 5b by the total value of materials stored and add them up. That number is the full amount of retainage that has been withheld up until this point. Next, let’s look at Line 6: Total earned less retainage. To get this number, you need to take the work completed and materials stored amount on line 4 and subtract the total amount of retainage that was calculated in line 5. This will give you the total billable amount that you’ve earned up until this point. Next, we got line 7: Less previous certificates for payment. On this line, you will subtract previous payments that you have already received. When the architect or property owner approves your pay app, they will issue a certificate of payment. This is essentially the approval of your request, and receipt for payment. If this is the first pay application on the project, this will be zero. However, if it’s a subsequent application, you will put the amount from line 6 of the previous certificate. You should always keep all your pay apps for your records.  Moving onto line 8, you’ll see the Current payment due. To get this figure, subtract line 7 from line 6. This line represents how much money you are expecting to be paid for the current billing period. The total billable amount for the pay app will be the difference between the “total earned less retainage” on line 6 and the “previous certificates for payment” indicated in line 7. Next, on Line 9, we have Balance to finish, including retainage. This amount is simply the remaining contract price that will still be due once the architect or owner approves the current payment application. Just subtract the total contract sum to date on line 3 from the “total earned less retention” on line 6. The result is the amount still owed to you  under the contract, after your current pay app is approved. Last, we have the change order summary table at the bottom. Like we mentioned earlier, the results of this section will determine what number to use on line 2 of the payment application. The first line requires all approved change orders prior to the current billing period, and the second line will include any approved change orders occurring during the current billing cycle. There are two things to keep in mind. One, the keyword here is approved. If the change order hasn’t been approved in writing, don’t include it. And two, change orders don’t just add work, they can also reduce the scope of work. So be sure to provide all additions and deductions caused by the approved change orders. Once you calculate the net changes, plug this number into line 2. (Screenshot of the 702 Part 3 - Sign & certify) After you properly fill out all of the payment information on your 702 pay app, it’s time to sign and send it out. The standard document requires notarization on each pay app, so don’t sign that pay app until you’re in front of a notary public! However, if both parties agree that notarization isn’t necessary, they can amend the contract, in which case you won’t need to sign it in front of a notary. As you might’ve already noticed, the bottom, right-hand section is the Architect’s Certificate for Payment. As a contractor submitting the pay app, you should leave this section blank. The architect, project manager, or property owner will fill out this section. After reviewing the pay application, the continuation sheet, and any other documents, they will certify the amount of payment. If there are any discrepancies or disagreements, they will send you a response showing the amount they are willing to certify, along with their reasoning for the change. We hope this video has been helpful. If you have any other construction payment questions, head over to levelset.com to get payment help from lawyers or live chat with one of our payment experts. If you want to see more construction payment videos, be sure to subscribe to our channel and check out other videos. And remember, payment help is here.