Construction Payment Schedule: What Is Fair and Why?
How payments should be linked to verified stages in a home construction contract, a fair indicative schedule for structure and turnkey scopes, and the terms that protect both homeowner and builder.
A payment schedule is where the incentives in a construction contract actually live. If money moves on calendar dates, the builder is paid whether or not the work is right. If money moves on verified stages, everyone is aligned on completing each stage properly. A fair schedule protects both sides.
Principles of a fair schedule
- Payments follow verified stage completion, not dates. "Completion" of a stage should be defined — for example, slab cast and cubes sent and curing under way.
- Mobilisation advance is modest — typically 5–10% — enough to set up the site, not to fund the first three months.
- Retention of 5% until defects are closed after handover keeps the finishing honest.
- Someone certifies completion — an engineer, with a checklist and record — rather than the builder self-certifying.
Indicative schedule — turnkey G+1
| Stage | Released on verification of | Indicative % |
|---|---|---|
| Mobilisation | Contract signed, site set up | 5 – 10 |
| Footings complete | Footings cast, cubes taken | 10 |
| Plinth complete | Plinth beam, filling, DPC | 10 |
| Ground-floor slab | Slab cast and curing | 12 |
| First-floor slab | Slab cast and curing | 12 |
| Masonry and plaster complete | All walls and plaster checked | 12 |
| Waterproofing and services | Ponding and pressure tests passed | 10 |
| Flooring, doors, windows | Installed and checked | 12 |
| Painting, fixtures, snagging | Snag list issued | 7 |
| Handover | Snags closed, documents handed over | 5 (retention) |
For a structure-only contract the same principle applies with the finishing rows removed and the structural stages weighted more heavily.
Terms to look for
- Definition of each stage's completion
- Who verifies and how (checklist, photos, tests)
- Timeline for payment after verification (e.g. 7 days)
- Retention amount and release condition
- How extras and changes are priced and approved in writing
- Escalation clause, if any, with a clear trigger
Common problems with payment terms
- A 25–30% advance that funds the builder's previous project rather than yours.
- Stages defined loosely ("first slab") so payment is demanded when formwork goes up, not when the slab is cast and curing.
- No retention, so the last 5% of work is done by whoever is available after the team has moved on.
- Extras priced after the work is done rather than approved in writing before.
Frequently asked questions
Is it normal for the builder to ask for money before materials are ordered?
A modest mobilisation advance (5–10%) is normal. Beyond that, material for a stage should be funded by the payment for the previous verified stage, not by an advance on stages not yet started.
What if I am paying through a home-construction loan?
Banks release construction loans in tranches against stage completion certified by their valuer. Align the contract schedule with the bank's stages so the builder is not waiting on the bank and you are not funding the gap.