Builders Progress Payment Schedule

Everything You Need To Know About The Progress Payment Schedule & Progress Claims.

Building a home can be immensely expensive and the hidden building costs can accumulate very rapidly. Just remember that you do not have to pay for everything upfront. That would be unreasonable for the mass majority of individuals. The good news is that you can set up a payment schedule and pay the costs over a period of time. This is referred to as progress claims within most building contracts. The payment schedule is equally important for you and your builder. Below, you will learn a great deal more about this and how it works.

What Is A Progress Claim?

First and foremost, you should learn a little more about the progress claim. This is nothing more than an invoice, which is sent from the builder to the client. It is used to invoice the client for the work done on the site. It is not allowed for the builder to request payment for work, materials or services that have not been supplied after the initial deposit. Instead, the invoice will usually be sent when a milestone has been completed on the site such as when the slab has been poured.

When Is A Progress Claim Submitted?

The progress claims are going to be submitted by your home builder at certain set times. Usually, the invoice will be provided to the buyer immediately after a specific component of the building has been completed. For instance, the builder may provide you with an invoice after they’ve finished the concrete slab. Another invoice will likely be submitted after the walls are erected.

How Are the Figures Calculated?

It is appropriate to make sure that you’re familiar with progress payments and how they’re calculated. While it is possible for the calculations to vary from one builder to the next, there are some familiarities across the board. Basically, all builders invoice you for the total build completion cost to date subtract the previous progress payments and add on their profit margin and GST.

The Most Common Progress Payment Method and Schedule.

It is important to understand that the progress claim can vary slightly based on the builder you have chosen to work with, the Building Act they use and the contarct you have signed. Still, you can almost guarantee that you’re going to be paying a 5% to 6.5% as a deposit. With home building contracts in Western Australia between $7,500 and $500,000: The Home Building Contract Act 1991 limits the deposit to 6.5% and any greater the builder can incur a $10,000 fine. However, Different states follow alternative building acts to Western Australia which makes the contract the builder supplies slightly different. In Queensland and Victoria the majority of new homes contracts follow the Domestic Building Contract Act 1995. The key takeaways in the DBC Act with regards to progress payments are:

  • Maximum 5% deposit for contracts totaling over $20,000
  • Maximum 10% deposit for contracts totaling over $3,300 and under $20,000
  • Each progress payment must relate to work finished when requested to pay

With a single-story home in Perth, you’ll often be required to pay 16.5% for the slab. With a double story, you will have to pay 10% for the ground floor and 16% for the ground floor brickwork to plate. Typical progress payments schedule are shown in the table below.

NSW, QLD, SA, TAS, VIC5% 10%15%35% 20%15%

Remember that these numbers can easily be changed based on the specific aspects and characteristics of your home. The builder will alter the numbers accordingly. However, expect the numbers to be somewhat similar to the above. But remember, the builder can’t charge for work, materials or services that have not been provided yet.

The Alternative Payment Progress Claim schedule.

In some cases, home builders may be allowed to ask you to agree to a different payment schedule compared to the standard one set out in the relevant act. One way of this is home builders charge using the progress claim method based on the % completed. This type of system guarantees that the home buyer will be making a payment at an interval specified in your contract (usually every month). The amount that you’ll be required to pay will depend on the specific % of work that has been finished. Usually, the builder will provide a breakdown of costs completed to date. The builder will take several small tasks and group them into bigger tasks, such as earthworks, plumbing, concrete and roofing. Then, they’ll designate a specific amount for these bigger tasks which will need to be paid.

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