I’ve grown to love and understand AIA billing but I admit it took some time to fully understand. This quick guide can get you into the comfort zone and start having a more satisfying relationship with a busy looking form created by The American Institute of Architects. Plus I couldn’t find an article that explains the basics of AIA billing in fun simple words.
Question: What the heck is AIA Billing and why do it?
Answer: AIA billing can clearly show you the work completed for a particular month, work that has already been completed and the remaining work to be done. This uniform document helps owners, contractors, subcontractors, banks and anyone involved in reviewing / approving a bill usually related to construction.
You just received an AIA bill – don’t freak out, just follow these tips to understand the cover page
- All you need to read is Line 8 labeled Current Payment Due
Honestly you can skip the rest if you simply create an Accounts Payable invoice for the amount on Line 8 since this is the payment due for this individual progress billing. Note: You can trust this step only if you have a reliable subcontractor like Bartley Corp using the form correctly out of their Construction Accounting Software.
- The Original Contract Sum on Line 1 should not change
As long as Line 1 matches the amount from the original contract you are good. Move on.
- Adds / subtracts to contract work should be summed up in Line 2 Net Change by Change Orders
Hopefully this stays zero (hurray) unless you needed to add or subtract work (boo).
- Payments billed are summed up in Line 7 Less Previous Certificates for Payment
This should match what you have paid up until this particular billing.
Crave more? Yes read on, otherwise I think you can get by and I’ll send you a diploma
- Remaining work that has not been completed is on Line 9 Balance to Finish
The total of the contract and change order work left to be completed is found on Line 9.
- Be a friend and don’t require Retainage
If you require retainage, you’ll get pushback from subcontractors and make this more difficult. Line 5 Retainage shows the percentage for the job and totals the amount taken out through the current billing. It will affect Lines 5-9 but should not alter numbers on Lines 1-4.
- Pages 2+ show you the detailed line items
Here you’ll see a Description of the line item with a column for Schedule Value, Completed This Period and the Balance.
Don’t be afraid of AIA. Embrace the clarity and simplicity.
One of your many friends at Bartley Corp,
Andy Bartley
