Construction draw review: checking the G702 and G703 behind a draw request

The short answer: a construction draw request is a pay application plus its backup, and the arithmetic a lender or owner runs on the G702 and G703 inside it is the same tie-out a general contractor runs: G = D + E + F on every row, the sum of Column C equal to Line 3, the sum of Column G equal to Line 4, Line 6 = Line 4 − Line 5, Line 8 = Line 6 − Line 7, Line 9 = Line 3 − Line 6. Three more checks belong to the lender alone, and none of them can be read off the forms. The amount billed against each line has to sit inside the loan budget line behind it, and an approved change order moves the contract sum without moving the budget. The retainage held has to match the loan agreement, not only the construction contract. And the balance to finish has to sit inside the proceeds still committed to the contract. Stored material raises a fourth question, of documentation rather than arithmetic: proof that it exists, is insured, and belongs to this job.

This is the same review from the lender’s or the owner’s side of the table. For the two forms read box by box, see verify a pay application you received; for the general contractor’s workflow, the eight-check review.

What a draw package holds, and where the two forms sit

A draw request is a package. The G702 certificate and the G703 continuation sheet are two documents inside it, and they are the only two that can be checked with arithmetic alone. A complete package for one period holds most of this:

• The lender’s draw request form, signed by the borrower.
• The G702 for the period, signed, and notarized where the loan or the contract calls for it.
• The G703, every page: the grand totals print on the final page only, so a packet missing it ties to nothing.
• Backup behind the contractor’s lines: subcontractor applications and supplier invoices, plus a sworn statement naming every sub and supplier where your loan agreement or your state calls for one. Which of those applies to this job is a question for your loan documents, your statute or your attorney.
• Lien waivers, in the form and at the stage your loan agreement requires, commonly conditional for the amount being drawn and unconditional for the amount funded last time. Waiver forms are set by statute in many states, so verify yours against it: lien waiver vs pay application.
• Stored material backup wherever Column F carries a figure.
• The inspection report for the period, and on a title-insured loan, the date-down endorsement.
• The change order log, so Line 2 traces to signed approvals rather than to a number typed on the certificate.

What the package does not hold is the loan budget. The G703 schedule of values was built for the construction contract: line items, priced, in the order the job gets built. The loan budget was built for the loan: hard costs, soft costs, contingency, interest reserve, fees. Neither form names a budget line, and the two rarely divide the job the same way. The mapping between them is your own record, kept in your draw log. Every check on this page that reaches outside the two forms runs through it, and that is why an arithmetically perfect draw can still be wrong: the certificate does not know what the loan agreed to fund.

The arithmetic that runs on the two forms alone

Run this pass first. It needs no budget, no contract and no prior draw, and a document that does not agree with itself is not worth comparing to the loan file yet. The identities are fixed by the form, and each one is an addition or a subtraction you can do on the page.

• Every row: G = D + E + F. Work completed from previous applications, plus work completed this period, plus materials presently stored.
• Every column footed. The printed total under C, D, E, F and G equals the sum of the rows above it. The percent column is not added down: its total is the Column G total divided by the Column C total. Any single line past 100% is billing beyond that line’s scheduled value, its own conversation even when the project total looks reasonable.
• Line 3 = Line 1 + Line 2, and the sum of Column C = Line 3. The contract sum to date, divided across the line items and nothing else.
• The sum of Column G = Line 4. True by definition, and the tie that breaks most often: when it does, seven causes account for nearly all of it.
• Line 5 = 5a + 5b, the retainage rate applied to completed work (D + E) and to stored material (F), then Line 6 = Line 4 − Line 5, Line 8 = Line 6 − Line 7, Line 9 = Line 3 − Line 6. Line 8 is the amount being requested.

The full box-by-box reference, including the two retainage bases worked through and the column lettering that differs between AIA’s own form and vendor forms, is in verify a pay application you received. The one habit to carry into a draw file: on the AIA form the percent complete column carries no letter at all, so quote the header text printed above a column rather than a bare letter in anything you send back.

Two more checks open up once you hold last month’s approved application. Each line’s Column D equals that line’s prior D + E, and this Line 7 equals the prior application’s Line 6.

Line 7 is certificates, not cash. Less previous certificates is the total certified to date, so it is not the prior Line 8, which has already had the certificates before it taken out, and it is not what your institution disbursed either. A draw funded short, an offset, an amount held pending a title update, or retainage released outside the schedule all move cash without moving Line 7. That gap belongs in your draw log, beside the certified column, not in a correction sent back to the borrower.

Those identities are what the free G702/G703 checker runs on figures you type, with no upload and no signup.

The three checks that need the loan file

The next three do not run on the forms at all. Each compares the application to a document only you hold, and each is worth running in the same order every month, because the answers move slowly and the month one of them moves is the month that matters.

1. Cumulative billing against the budget line behind it. Map each G703 line to its budget line once, at closing, and keep the map. Where one budget line covers several schedule lines, map the group and compare the group. Then compare that line’s Column G, cumulative rather than this period alone, against the amount budgeted for it, and its Column C against the same figure. Column C is the early warning: it says what the line will eventually bill, months before Column G gets there. An approved change order raises Line 2 and a scheduled value in Column C. It does not raise the loan budget. Budget lines move by amendment, ordinarily by reallocating contingency, and that is a decision on your side of the table.

2. The retainage held against the loan agreement. The construction contract sets a rate and Lines 5a and 5b apply it to two bases. The loan agreement sets what the loan holds. They can disagree, and the common trap is a contract that reduces retainage at 50% complete against a loan that holds a flat percentage through final completion. Some states also regulate retainage on some work. Which document governs your disbursement is a question for your loan documents, your statute and your counsel, not for the certificate. The check is to notice the difference in the draw that crosses the threshold, not two draws later.

3. Cumulative draws against committed proceeds. Line 9, the balance to finish including retainage, is what the contract still costs. Compare it to the proceeds still available for that contract, contingency included. When the balance to finish is the larger number the loan is out of balance, and someone funds the gap before the job finishes. This one needs your disbursement record too: Line 6 is what was certified to date, your ledger is what went out, and it is the ledger that says what is left.

A draw that ties everywhere and still fails

A commercial shell on a $2,000,000 general contract, six lines, retainage at 10% on completed work and on stored material. This is draw 4. One change order has been approved since closing, and it was approved before draw 3: $60,000 net, $40,000 of rock excavation added to sitework and $20,000 of embed revisions added to structural steel. The steel for the frame was delivered this period and is stored on site, uninstalled.

Read line 4: 135,000 + 81,000 + 120,000 = 336,000 in Column G, 336,000 ÷ 540,000 = 62.2% complete, 540,000 − 336,000 = 204,000 left to finish. Column C sums to 2,060,000, the contract sum to date. Column G sums to 1,175,000, the only figure that can appear on Line 4. In dollars the contract is 1,175,000 ÷ 2,060,000 = 57.0% complete, the Column G total over the Column C total rather than the row percentages added down. The same walk, column by column, is in the box-by-box reference.

Line 5 applies the 10% to both bases: 105,500 on the 1,055,000 of completed work in D + E and 12,000 on the 120,000 stored, 117,500 in all, and the two bases are worked through here. Line 6 is 1,175,000 − 117,500 = 1,057,500. Line 7 is 748,800, draw 3’s Line 6: that application carried 832,000 in Column G with nothing stored, and 10% of it was retained. Line 8, the amount requested, is 1,057,500 − 748,800 = 308,700, and Line 9 is 2,060,000 − 1,057,500 = 1,002,500. One cross-check comes free: the balance column totals 885,000, and 885,000 + 117,500 of retainage = 1,002,500, Line 9. Every identity on this document holds. Now the loan budget, which is not in the package.

Sitework and utilities is billed to 320,000 against a 280,000 budget line. It reached 280,000 at draw 3, so the whole 40,000 billed this period sits above the budget, and net of 10% retainage, 36,000 of the 308,700 requested has no committed loan proceeds behind it. Nothing on either form is wrong: the 40,000 is real, approved, inside the contract and correctly billed. It was never added to the loan.

Structural steel is the same problem a draw or two away: a 520,000 budget line against a 540,000 scheduled value, billed to 336,000, so 184,000 of budget remains against 204,000 of contract balance. The 20,000 crosses when the line finishes. Reading Column C against the budget, not only Column G, is what buys that warning early.

The loan is still in balance, which is why this is a correction rather than a default. Proceeds committed to the contract are the 2,000,000 of hard cost plus the 100,000 contingency line, 2,100,000 in all. Certified to date is 1,057,500, so 1,042,500 remains against a balance to finish of 1,002,500: 40,000 of headroom, which is what the contingency comes to once 60,000 of it is committed to the change order. That commitment is the amendment this draw asks for, and it moves money inside the budget rather than adding to it, so the headroom is the same before and after. It also assumes every prior certificate was funded in full, which your ledger knows and the form does not.

The retainage check passes here. The contract holds 10% on both bases and the loan agreement holds 10% through final completion, so Line 5 is the figure the loan expects. Had the contract stepped retainage down at 50% complete, this is the draw where the two would first disagree: against the same 2,060,000 contract sum the job moved from 40.4% at draw 3, where Column G stood at 832,000, to 57.0% now.

What goes back is not a math correction. Name the line, the budget figure and the amount above it: “Sitework and utilities is billed to $320,000 to date against a $280,000 budget line. The $40,000 traces to change order 1, approved on the contract and not in the budget. Please send a budget amendment reallocating $60,000 from contingency, $40,000 to sitework and $20,000 to structural steel.” Whether the draw funds in full, in part, or waits for that amendment is set by your loan documents and your credit policy. The arithmetic buys a conversation that opens with a line item and a figure.

Inspection and stored materials

The inspection is the only independent read on Column E. Send the inspector the G703 itself rather than a request for a percentage: an inspector asked whether the job is 60% done returns a number that compares to nothing on the form, while one holding the schedule of values returns a percentage per line that sits beside the percent column.

What it cannot tell you: whether the scheduled value behind a percentage was right to begin with, which is where front-loading hides; whether the subcontractors and suppliers have been paid, which is what the waivers are for; and whether a lien has been filed, which is the title update. Work in place is one of four questions.

Column F needs the most paper. AIA’s instruction is narrow: Column F carries materials stored and not yet incorporated into the work, and as material is incorporated its value leaves Column F and enters Column E. Paying for stored material does not clear Column F. Installing it does. So the 120,000 of steel above should appear next period in Column E with Column F falling by the same 120,000, while Column D reads 216,000, this period’s D + E, and Column G stays at 336,000 until new work is added. A figure that holds still in Column F across three draws is either not being installed or not there.

The backup that makes a Column F figure reviewable:

• The invoice or bill of sale, showing the material is bought and whose it is.
• The delivery ticket or warehouse receipt, showing it arrived.
• The storage location, named, and insurance covering the material there in the amount stored.
• For off-site storage, whatever your loan agreement requires, which often runs to access rights and a bailee letter. Read yours: the requirements differ by loan.

Then watch the movement between periods. Column F falling with no matching rise in Column E is doing something other than installing material, and material counted in both F and E in one period is the double-count behind cause 6. Stored material also carries the Line 5b retainage base, so a wrong F figure moves the check twice.

What software settles here, and what it does not

PayAppCheck recomputes the two forms. On an upload it recalculates every row’s G, foots every column against the printed totals, checks Column C against Line 3 and Column G against Line 4, applies the retainage rate you set to both bases, and recomputes Lines 6, 8 and 9. Once the prior application is on file and the two are linked as a series, it compares Line 7 to the prior Line 6 and each line’s Column D to what that line had already billed. The schedule exports to Excel, CSV or JSON, so the line items go next to the budget in whatever your draw log is.

What it is not: a lender’s underwriting system. It does not hold your loan budget, loan agreement or disbursement history, so it cannot tell you that a line is over budget, that the retainage held is what the loan requires, or that the loan is in balance. Those three stay with you, and the draw above is exactly the case where the software reports a clean document. What it removes is the re-adding, so the review time goes on the three checks only you can run.

Questions people ask

PayAppCheck is software, not a law or accounting firm. Not legal, accounting or tax advice. Verify lien, notarization, and retainage requirements against your contract, your state statute, and your accountant.