How to Calculate Retainage on AIA G702 & G703
Retainage mistakes are one of the most common reasons pay applications get kicked back. Here’s exactly how retainage is calculated on AIA-style G702 and G703 pay applications — with formulas and real examples.
The Basic Retainage Formula
On most projects, retainage is calculated as a percentage of the completed work (and sometimes stored materials) shown on the G703, then summarized on the G702.
How Retainage Is Calculated on the G703 (Line Item Level)
On the G703 continuation sheet, retainage is typically applied per line item.
Example:
- Scheduled Value: $100,000
- Total Completed to Date: $40,000
- Retainage Rate: 10%
That $4,000 is withheld from payment. The remaining $36,000 is eligible for payment (before considering previous payments).
How Retainage Appears on the G702 (Summary Level)
The G702 summary page rolls up retainage from the G703.
The summary typically shows:
- Total Completed & Stored to Date
- Less Retainage
- Total Earned Less Retainage
If total completed to date across all lines is $200,000 and retainage is 10%:
Does Retainage Apply to Stored Materials?
This depends entirely on your contract.
- Some contracts apply retainage to completed work only
- Some apply it to completed + stored materials
- Some reduce retainage after 50% completion
Always confirm the retainage clause before calculating. Inconsistent treatment of stored materials is a major cause of pay app rejections.
Common Retainage Mistakes
- Applying retainage to tax or excluded fees
- Using different percentages across billing periods
- Forgetting to adjust retainage after change orders
- Not releasing retainage properly at substantial completion
- Summary retainage not matching line-item retainage
How PayAppPro Helps Prevent Retainage Errors
Instead of manually recalculating retainage each billing period, PayAppPro:
- Applies retainage consistently across billing periods
- Prevents line items from exceeding scheduled value
- Automatically rolls G703 retainage into G702 totals
- Keeps change orders and contract totals aligned
Avoid math errors and resubmittals.