What Are Progress Payments & How Are They Structured?
The method for progress payments can commonly be misunderstood by clients.
What Should I Do First?
If you are interested in renovating, but are worried or hesitant about the process and want a team that can educate you through the steps. Then Oztown Constructions could be a great fit for you.
Oztown can help you source the relevant documentation and plans for your property, or work with you, if you have already attained them.
What Are Progress Payments?
Progress payments are partial payments made to a contractor after the completion of a predefined stage of work. This method is commonly used for larger scale construction projects to replace other approaches such as lump sum payments etc.
Also referred to as stage payments, this process involves invoicing the client incrementally for the percentage/stage of work that has been completed to the total work due. For example, depending on the size of the project, 25% may be complete when electrical and plumbing is in place.
Other methods involve setting designated time periods for payments, such as monthly payments. However, Oztown Constructions chooses to use stage/percentage payments to ensure the work is complete and remains on schedule before you process your payment.
Benefits To The Client
Progress invoicing benefits you as a client, as it means you do not have to fund the full project cost upfront, while also allowing you to rest assured that the work will continue to schedule on the project.
Timing And Number Of Stage Payments
Stage payments are not standardised across builders, meaning that builders can incorporate as many or as little progress payments as they like, choosing to set them for larger portions of work, or smaller milestones.
For all contracts above $3,300 the timing and number of progress payments is to be determined between the contractors and the client. Stage payments cannot be paid until the work is completed. For example, a builder can’t claim more than 50% of the contract price, until at least 50% of the project work has been completed.