Construction Contract, Progress Payment Schedule

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Hanna Wolfe July 15, 2018
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Contract Stages, Contract Payment Schedule, Progress Payment Schedule, or Project Milestones are all to mark specific points along a project timeline.

In most building contracts, the payment schedule is referred to ‘progress claims’. Milestone on the construction contract are time-related Payment Claims, and are implemented in the Contract for the builder to submit progress Payment Claims. Payments should only be made at those time nominated in the contract.

Each milestone in construction has a progress percentage (weight) against it, until finally, the home is completed and you’ve paid 100% of your building contract amount. In this post, we are trying to go through the standard stages of the contract and explain the meaning of each:

1. Deposit

Deposit is usually received by the builder to pay for the drafting, engineering design, building application fees, insurances, and permits. It also works as a commitment of the client to the job. QBCC generally asks to allow 10%, if the total contract price is less than $20,000, and allow 5%, if the total contract price is $20,000 or more as the deposit amount in the contract.

2. Base Stage

Also known as Slab, or Slab Down, is the stage when footings, base brickwork, base walls, stumps, piers, columns, formwork and reinforcing for a suspended slab, concrete slab, bearers, joists or flooring (as the case requires) have been completed ready for erection of the walls. Base Stage is normally 10% of the contract.

3. Frame Stage

If the house is a highset (double storey) house, the builder might divide this stage into two distinct stages: Frame Down, and Frame Up. Frame Stage is the stage when the building frame is completed and ready for inspection by the assessing certifier. Frame Stage is normally 20% of the contract for a single storey house, and 25% for a double storey house.

4. Enclosed (Lock-up) Stage

This stage is when: external wall cladding is fixed; the roof is fixed but without soffit linings necessarily having been fixed or for a tile roof, pointing necessarily having been done or for a metal roof, scribing and final screwing off necessarily having been done; and the structural flooring is laid; and the external doors are fixed (even if only temporarily), but if a lockable door separating the garage from the rest of the building has been fixed, without the garage doors necessarily having been fixed, and the external windows are fixed (even if only temporarily).

Enclosed Stage is normally 25% of the contract.

5. Fixing (pre-paint) Stage

Fixing Stage is a stage when all internal linings, architraves, cornices, skirting, doors to rooms, baths, shower trays, wet area tiling, built-in shelves and built-in cabinets and built-in cupboards are fitted and fixed in position. Fixing Stage is normally 20% of the contract.

6. Practical Completion

Practical completion is when the works are completed in accordance with the contract and all relevant statutory requirements have been met (with the exception of minor defects or minor omissions).

At this time, the new home or renovation should be reasonably suitable for habitation and ready for the client to begin preparations for moving in. On or before the date of practical completion, as stated in the conditions of the contract, the builder must practically complete their work ‘to a stage of being reasonably fit for use and/or occupation by the proprietor’.

After this has been done, a certificate of practical completion should be issued by the client/builder. This should state the date which the works were practically completed and the date on which the defects liability period commences.

If the works aren't reasonably satisfactory to the client/certifier, written notice of the required amendments must be given to the builder. The date of practical completion sets the construction period and is usually a determining factor in allocation of resources and labour on a project.

How to setup contract stages in Breinz

Setting up the contract stages in Breinz is simple. Contract Stages are defined in the Project menu, on the Contract Stages tab.

Breinz WBS Hierarchy

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