WHAT PERCENTAGE OF PAYMENTS TO BE PAID TO CONTRACTOR AFTER COMPLETION OF DIFFERENT STAGES OF CONSTRUCTION?
The percentage of payments to be paid to a contractor after the completion of different stages of construction can vary depending on the terms and conditions of the contract between the parties involved. However, there are some common payment structures used in the construction industry.
Here is a general guideline for typical payment percentages based on the completion of construction stages:
- Mobilization/Initiation: This stage refers to the start of the construction project. It may involve site preparation, mobilizing equipment, and securing permits. The payment percentage at this stage can range from 5% to 15% of the total contract amount.
- Foundation: Once the foundation is completed, which includes excavation, footing, and concrete work, the payment percentage can be around 15% to 20% of the contract amount.
- Framing/Superstructure: This stage involves erecting the structural framework of the building, including walls, floors, and roof. The payment percentage can range from 20% to 25% of the contract amount.
- Enclosure/Rough-Ins: After the framing stage, the building is enclosed with walls, windows, and doors. Rough-ins refer to the installation of electrical, plumbing, and HVAC systems. The payment percentage at this stage can be around 25% to 35% of the contract amount.
- Finishes: This stage includes the installation of interior finishes such as flooring, cabinetry, painting, and trim work. The payment percentage can range from 35% to 45% of the contract amount.
- Completion/Final Acceptance: Once the construction is substantially completed, the contractor will receive the remaining payment, which can be around 45% to 100% of the contract amount, depending on any retention or holdback clauses in the contract.
It’s important to note that these percentages are approximate and can vary depending on the specific project, contract terms, and regional practices. Contractors and clients often negotiate payment schedules and milestones that work best for their particular circumstances. It is always advisable to consult the specific contract and agreement in place for accurate information regarding payment percentages at each stage of construction.
