Certifying Payment Is One of the Architect's Most Consequential and Legally Significant Construction Administration Actions
Each month during construction, the general contractor submits a Pay Application requesting payment for work completed and materials stored during the billing period. The architect reviews the application, verifies that the amount requested is consistent with the work actually in place and materials stored, and issues a Certificate for Payment (AIA G702) authorizing the owner to release the specified amount. This certification has serious legal significance: when the architect certifies a payment, they are representing to the owner that the work has been completed to the extent represented, that the amount certified is accurately calculated per the schedule of values, and that the quality of the completed work appears to conform to the contract documents based on the architect's observations. Incorrectly certifying a payment - either over-certifying work not completed or improperly withholding payment - creates legal exposure for the architect and the owner. The ARE CE exam tests payment application management as a central construction administration competency.
G702 and G703
AIA G702 is the Application and Certificate for Payment - the form on which the contractor summarizes the total amount of work completed to date, the amount of the current payment request, and retainage withheld. AIA G703 (Continuation Sheet) is the Schedule of Values - the detailed breakdown of the total contract sum into line items (typically matching major CSI divisions or major subcontracts) with the dollar value assigned to each. The contractor prepares the Schedule of Values at the beginning of the project (and the architect reviews it for reasonable allocation); the G703 tracks the percentage complete and dollar value complete for each line item each month. The sum of all G703 line items should equal the G702 total.
Review Process
The architect's review of a Pay Application: (1) Confirm that the G703 Schedule of Values correctly allocates cost among line items (front-loading the Schedule of Values - putting more value in early-completion work - is a common contractor practice that must be identified and corrected at the beginning of the project). (2) Compare the percentage complete claimed for each line item against the architect's site observations - the architect is not performing a quantity survey but is providing an informed professional judgment based on site visits. (3) Verify that stored materials (materials delivered but not yet installed) are properly documented with invoices and confirmation of proper storage on site or in bonded storage. (4) Verify retainage calculation per the contract (typically 10% of work in place until 50% completion, then potentially reducing to 5%). (5) Complete G702 with the amount certified and any reduction from the amount requested, with brief notation of the reason for any reduction.
Withholding Certification
The architect may withhold certification (or reduce a certificate) for: third-party claims (lien notices, unpaid subcontractor claims) that the owner may be liable for; evidence of defective work not remedied; contractor's failure to pay subcontractors; damage caused by the contractor; reasonable evidence that the work cannot be completed for the balance remaining in the contract amount. The architect must notify the contractor in writing of the reasons for withholding or reducing certification; withholding without proper cause exposes the owner to interest claims and potential breach.
Key Exam Points
- G702: Application and Certificate for Payment; contractor submits; architect certifies.
- G703: Schedule of Values (Continuation Sheet); line-item breakdown; tracks % complete each billing period.
- Architect's certification: representation that work appears complete as claimed and costs are correctly calculated.
- Retainage: typically 10% withheld; may reduce after 50% completion; released at Final Completion.
- Withholding: architect may reduce or withhold certification for defective work, third-party claims, subcontractor nonpayment, or evidence contract balance is insufficient.
AREprep's CE construction administration content covers the complete payment application process - G702/G703 forms, schedule of values review, stored materials, retainage, and the architect's certification responsibilities and liability - giving ARE CE candidates the payment certification knowledge the exam tests in construction administration scenario questions about the architect's role in controlling project costs and managing the monthly payment process during construction.
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