Why the schedule matters
The progress payment schedule decides whether you are ever paying for work that has not been done. If payments run ahead of completed value, you carry the risk if the builder fails. Most state legislation caps deposits and prescribes or limits stage payments for this reason.
The typical stages
- Deposit. Capped by legislation in most states — commonly around 5% for larger contracts.
- Base / slab. Footings and slab complete.
- Frame. Frame erected and typically inspected.
- Lock-up. Roof, external walls, windows and external doors installed.
- Fixing. Internal linings, cabinetry, skirtings, doors installed.
- Completion. Final payment on practical completion.
The rule to apply
At every stage, ask whether the cumulative amount paid is less than the value of work actually in place. If you have paid 65% and roughly 50% of the build exists, you are exposed. Do not accept a schedule that front-loads payments.
Never pay in advance
Payment is due when a stage is complete, not when it is nearly complete and not when materials have been ordered. Inspect the stage — or have your own inspector do it — before releasing funds. A builder pressing for early release of a stage payment is a warning sign worth taking seriously.
The final payment is your leverage
It is the only leverage you have on defects. Do not release it until the defect list is genuinely closed out.