Home Building Tips for Builders in NSW
Progress Stages & Payments
The Progress Stages as set by a building contract will determine when a builder can make a claim for a Progress Payment, and the two are interrelated. Although some contracts specify that Progress Payments are based on time (i.e on the 15th of each month), it is more common for payments to the builder to be based on the amount of work that the builder has performed at a particular stage.
Care should be taken when establishing progress stages and payments before the contract is presented to the client for signing, because one wrong decision (i.e too much building work to be performed between progress payments) could affect your cash flow, which could in turn affect other projects and your business overall.
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Tips:
- Make sure your contract entitles you to progress payments after the “substantial” completion of each progress stage, as this will prevent the client from arguing that you are not entitled to a progress payment because you have not completely finished a progress stage
- When setting the percentages of the contract price that you will be paid at each progress stage, you should always take into account deposits that you have made for goods and / or materials that you have purchased, but will not be installed onsite for some time. By doing this, you will improve your cash flow
- When setting the percentages of the contract price that you will be paid at each progress stage, always keep the final progress payment percentage as low as possible (usually 5-10%)
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