Progress Payment

Progress payments divide total project cost into installments paid as work progresses. This system benefits everyone: owners pay only for completed work, and contractors maintain cash flow for materials and labor. Payments typically align with major milestones: demolition complete, framing done, rough-in passed inspection, finishes installed, project complete. Each payment should roughly equal the value of work completed plus materials on site. Before making progress payments, verify: work matches payment request, quality meets standards, required inspections passed, and lien waivers are provided.

How to Manage Progress Payments

Never pay ahead of work completion. If a contractor requests 30% but only 20% of work is done, pay 20%. Inspect work before authorizing payment—walk through with contractor verifying completion. For financed projects, lenders typically require inspection before releasing funds. Document payment with: date, amount, work covered, percentage of project complete, and receipt. Maintain payment records proving you paid the general contractor—if subs aren't paid, you'll need proof you fulfilled your obligations.

Progress Payment Best Practices

• Verify work completion matches payment request percentage
• Inspect quality before authorizing payment
• Collect conditional lien waivers with each payment
• Collect unconditional waivers after payment clears
• Maintain 10-15% retainage until project completion
• Document everything: photos, receipts, inspection reports
• Never make final payment until punch list complete and final walkthrough accepted