How Should Payments to a Remodeling Contractor Be Structured?

A progress payment is tied to a stage of work.

In a kitchen remodel, for example, a schedule might connect payments to stages such as demolition, rough plumbing and electrical, cabinet installation, or completion of the work described in the agreement.

The names and timing of those stages vary by project. What matters is that you can connect a payment request to the particular stage it is meant to represent.

A percentage alone may not give you that picture. “The next 25%” becomes more understandable when it is linked to a milestone — a recognizable point in the project identified in the agreement.

Connect the request to the milestone.

Colorado Attorney General consumer guidance recommends having important project terms in a written contract and making partial payments as specified work is completed to the homeowner's satisfaction.

That is a useful place to begin. When a request arrives, start with the payment schedule or the scope of work and find the milestone it names.

• the milestone the written agreement connects to this payment;
• the work, materials, or project progress that milestone represents;
• any approval, inspection, selection, receipt, or other document the agreement makes part of that stage; and
• what the agreement says about a stage that is partly complete or has remaining items.

Look for work you can recognize.

You do not need to decide whether construction work is technically complete. You can still understand what the stage is intended to look like from your side of the table.

If the milestone is “cabinets installed,” you may be able to see the cabinets in place. If it is “rough plumbing complete,” ask the contractor to walk you through what that stage includes in this project and where it is reflected in the schedule. If an inspection or an approval is named in the agreement, find out whether that item belongs to this milestone or a later one.

The goal is not to inspect or certify the work. It is to have a plain-English picture of what the payment represents.

Keep the agreement in the conversation.

Different remodeling projects can have different scopes, materials, timelines, and payment arrangements. A payment request can also arrive while a stage still has a few remaining details. The useful place to look is the agreement: does it describe how incomplete portions, remaining items, or a later stage are handled?

Before making the payment decision in front of you, see whether you can answer: What milestone is this? What work or documents represent it? What does the agreement say happens with anything that remains?

When you are still evaluating proposals, carry that understanding of the payment structure into choosing the remodeling contractor you want to hire.

“What am I paying for at this point in the project, and how does our agreement describe that stage?”

Your contractor knows how to build. STRUXION BUILT™ helps homeowners understand the decisions on their side of the remodeling project.