Construction progress billing: reconcile percentage complete before requesting payment

A percentage is a claim about work, not a guess about cash

A Dallas electrical subcontractor sees a foreman’s update that the installation is roughly one-third finished. The office turns that message into a 35% progress request. Meanwhile, the prior application is only partly paid. Without a reconciliation, the next invoice can blend new work, an old unpaid balance and retainage into one number that nobody can explain.

This guide addresses the calculation and evidence behind a percentage-complete request. It builds on the schedule-of-values guide, which covers how to organize the contract into billable scope lines. Establish the project’s actual billing format and contractual requirements before using a generic example.

AIA’s official G702/G703 guidance describes connected summary and line-item records for completed and stored work, retainage and prior applications. Those forms are one billing framework, not a requirement for every Texas subcontract. Use the customer’s agreed form and instructions; do not copy a proprietary form from an unofficial template.

Support each completion estimate with a defined measurement

Ask the field reviewer what the percentage represents: installed units, completed areas, approved milestones or another agreed measure. “About halfway” is difficult to defend when the line includes both procurement and installation. Keep a dated measurement note with the person who reviewed it and the scope boundary used.

For example, a ductwork line may use verified installed quantities within an agreed area. A controls line may depend on a commissioning milestone. Avoid applying one completion percentage to every line just because the overall jobsite looks busy. The billing record should explain why each line earned its amount.

Use daily work reports for field support. If the request includes uninstalled material, use the separate stored-materials billing checklist and check permission under the contract. Do not count the same material as both presently stored and already installed.

• Identify the measurement date and billing period.
• Save the reviewer’s supporting record.
• Keep pending change orders outside the approved contract value until the applicable approval process is resolved.

A construction invoice and cumulative payment application need different bridges

An itemized current-period invoice totals only the supported work requested in that invoice. A cumulative payment application reconciles earned work to date, retained amounts and prior applications. Cash received is then reconciled separately. Keep the calculation basis visible before copying any figure into the customer’s format.

The free construction invoice workbook is designed for current-period items. Its receipt field is only for funds allocated to that invoice after issue. It is not the previous-applications field in a cumulative billing calculation and should not contain cash allocated to old invoices.

For AIA billing, start with the actual edition and required continuation sheet. AIA’s official guidance describes prior certificates on G702 Line 7 in the completed-and-stored billing workflow. Do not interpret that as an instruction to subtract only bank receipts. The older unpaid application stays identifiable in receivables.

Enter the six calculator inputs from the right records

All six inputs are cumulative dollar amounts at one cutoff, not percentages. Enter 3500 for a $3,500 retainage balance; entering 10 would mean $10, not 10%. The calculator does not choose a rate or establish that an amount is approved or legally due.

The page opens with the fictional worked example already filled in. For your own reconciliation, replace all six amounts using the same project and cutoff. Enter 0 only when the supported amount is zero. A blank field asks for a valid amount instead of being silently treated as zero. Use up to two decimal places, without currency symbols or thousands separators.

The cumulative completed-work field excludes material still in storage. If previously stored material is installed, include it in completed work and remove it from presently stored once. The two-cycle SOV example shows the transfer without earning the same material twice.

Worked example: current billing and unpaid prior billing are different

Original illustrative assumptions: a $100,000 subcontract, no changes or stored materials, a supported cumulative completion amount of $35,000, and 10% retainage under this fictional agreement. The previous approved application covered $20,000 gross, less $2,000 retainage, for a prior net request of $18,000. These assumptions are not a statement of a legally required retainage rate.

The cumulative net earned amount is $31,500: $35,000 less $3,500 retainage. Subtract the previous net application of $18,000 to reach a current-period request of $13,500. If only $13,000 of the prior request has been received and applied, the older unpaid $5,000 stays on that prior receivable. The two open requests total $18,500.

Replacing the previous-application amount with cash received would make the new request $18,500 and risk billing the same older $5,000 again. Keep a bridge between the application register and the receipt ledger. The exact treatment must follow the agreed form; previous certificates, previous billing and actual receipts are not interchangeable labels.

Read the results: the worksheet’s calculation method

The calculator works in integer cents. Completed work plus presently stored material gives gross earned value; subtract the entered retainage balance for cumulative net earned. Subtract prior net requests for the current request or correction. Prior net requests less allocated prior receipts gives older unpaid requests.

Net open balance combines the current request and older unpaid requests. It is the balance at this worksheet’s stated stage: before other adjustments and before cash for the current request. For example, a later $2,000 receipt applied to the new $13,500 request would leave $11,500 on that request. With the older $5,000 unchanged, combined open net would become $16,500 in a separate updated ledger. Do not force that current-request receipt into the prior-receipts input.

Net open plus held retainage equals net open plus the current hold, or gross earned minus receipts allocated to prior requests. In the filled example, $18,500 + $3,500 = $22,000. It excludes future unearned work and remains before other adjustments and receipts against the current request. Work or materials not yet earned is $65,000. Balance to finish including retainage is contract value minus cumulative net earned: $68,500, including that $65,000 future scope and $3,500 held. It is not the current open receivable.

Download results CSV exports the six inputs and eight outputs as USD amounts with two decimal places. Keep the project reference, cutoff, assumptions and supporting documents with the file separately; they are not collected by this worksheet. Reset example restores the sample amounts rather than clearing the form.

Check an approved retainage release without treating it as cash

Use three alternative snapshots at the same cutoff. Each starts with the same fictional $100,000 contract, $35,000 completed work, $0 stored materials, $18,000 prior approved net requests and $13,000 receipts allocated to those prior requests. Only the supported current hold changes. Assume no taxes, credits, disputed adjustments, advances or current-request receipts. The examples establish neither a required retainage rate nor release entitlement.

With $3,500 held, the current request is $13,500 and net open is $18,500. If a documented $1,500 release reduces the hold to $2,000, the current request becomes $15,000 and net open $20,000. If all $3,500 is authorized for release, the hold is zero, the request $17,000 and net open $22,000. Older unpaid requests stay $5,000 in every scenario.

Net open plus held retainage stays $22,000 in all three cases: $35,000 gross earned − $13,000 prior allocated receipts. The release moves an amount out of held and into the request; approval adds no cash. These are alternative snapshots, not three new debts to add together. This combined output is an arithmetic review amount at the stated stage, not a legally due or demand balance.

A later receipt against the current request or released amount requires a separate updated ledger. The six-input calculator accepts only receipts assigned to prior net requests; do not put a current-request receipt there just to reduce the displayed total. Use the retainage ledger and partial-payment guide to document that later allocation.

Three controlled checks before using your own figures

These independent checks start from the same filled example. Change only the stated input, compare the output, then reset before the next check. A cash receipt, an approved retainage release and new earned work affect different parts of the reconciliation.

A negative current request is retained as a correction, not turned into zero or an ordinary positive invoice. Review the prior approved records and any credit, dispute or adjustment before submitting it. The worksheet does not decide whether the correction is contractually accepted.

When the worksheet needs a separate reconciliation

Resolve any error before exporting: contract value must be positive; completed plus stored amounts cannot exceed the approved baseline; retainage cannot exceed gross earned; and receipts assigned to prior requests cannot exceed those requests. For a pending change or unsupported quantity, review the source facts rather than increasing the baseline solely to remove an error.

The model does not allocate overpayments, advance deposits, tax, credit memos, disputed offsets or receipts against the current request. Review those in their own ledgers. It also does not certify a payment application, determine a due date or calculate a Texas notice deadline. Use the partial-payment guide for allocation and the retainage ledger for held, released and received balances.

Match retainage to the correct AIA fields

For a project using G703–1992, presently stored materials belong in Column F; Column G combines previous completed work, current completed work and presently stored materials. Column I normally applies where the agreement permits variable retainage by line item. A constant retainage rate does not automatically require entries in Column I. Check the edition and actual project instructions before entering figures.

AIA’s payment-application guidance places a variable-retainage total from G703 Column I on G702 Line 5. With fixed rates, check the completed-work and stored-materials percentages on Lines 5A and 5B instead. Retainage held and the current payment request are different totals. Keep any approved release or rate change documented rather than changing a prior application silently.

The calculator in this guide uses your supported cumulative retainage amount. It does not select a contractual rate, reproduce an AIA form or decide whether retainage can legally be released. Use the retainage-notice guide for the separate notice review and the waiver guide before signing payment paperwork.

Run a reconciliation before the packet leaves the office

Compare the revised contract value, cumulative earned amount and remaining scope line by line. A line that exceeds its approved value needs an explanation and the relevant change record. A negative current-period amount may be a correction; preserve the prior version instead of silently rewriting its history.

Next compare the gross-to-net calculation with the retainage register. Finally compare the application register with actual receipts and credit memos. These are separate checks. A balanced application is still not proof that the customer accepted it or sent payment.

Attach a short explanation of changed percentages and corrections. The invoice packet checklist helps connect the calculation to the right contract reference, attachments, recipient and receipt evidence.

Handle a challenged percentage without deleting the original

If the reviewer challenges a line, ask which quantity, area or milestone is disputed and what support is missing. Record the submitted amount, the reviewer’s proposed amount and the specific evidence requested. An acceptance status should not automatically rewrite the amount your business claims.

Use the invoice dispute log when the disagreement concerns entitlement or valuation. Use the resubmission workflow for a packet correction. Preserve legal review separately; a corrected pay application is not a substitute for a notice or filing analysis.

For the balance carried forward, use the retainage ledger reconciliation guide to separate retained amounts, approved release receivables and allocated cash without double counting.

Progress-billing questions to resolve before submission

Does 100% complete mean the account is paid? No. Work completion, approval, retainage release and actual cash receipt are different statuses.

Should an unpaid previous invoice be added as new work? Keep it visible in the receivables ledger and payment follow-up. Do not duplicate its underlying earned work in a later progress request.

Can the office use the example’s 10% retainage on every job? No. It is an illustration. Check the actual agreement, applicable requirements and professional advice for the project.

What should the second reviewer sign off? The measurement basis, arithmetic, prior-application bridge, retainage calculation and packet version. Keep the review date and unresolved exceptions in the project file.

Should prior receipts change the current-period request? No. They change older unpaid requests and the combined open balance, while prior requests remain the subtraction used to avoid billing the same work again.

Why does the calculator reject an overpayment? Its receipt input is limited to cash allocated to prior net requests. Keep advances, unallocated cash and current-request receipts in a separate reconciliation instead of hiding them inside that input.