What are progressive payments based on?

Progressive payments, often referred to as progress payments, are typically based on the percentage of work completed and scheduled costs. This payment structure allows contractors to receive funds at various stages of a construction project instead of waiting until the project's completion. By linking payments to the amount of work that has been completed, this method provides cash flow to the contractor, permitting them to pay for materials, labor, and other costs as they incur them.

This approach is beneficial for both contractors and clients; it allows for better financial planning and can encourage timely progress on the project. Clients can ensure that they are only paying for work that has been satisfactory and completed, which can enhance trust and accountability during the construction process.

In contrast, the final total cost of construction reflects the culmination of all expenses, which is not ideal for interim financial needs. Projected income from future contracts is unrelated to the present project’s payment structure and does not represent actual completed work. The total budget for the project indicates the overall financial framework but does not provide a basis for payments throughout the project's duration.