Construction progress billing divides a long project into payment periods. Each request connects the approved contract value to the current schedule of values. It also records verified work, eligible stored materials, approved changes, retainage, and previous payments.
The contract sets the billing cycle, required documents, approval roles, retainage, and payment date. This guide explains a general workflow and one example. It does not replace the signed agreement, required forms, lien rules, or local construction law.
Progress billing calculation
How is the current construction progress payment calculated?
The current request uses cumulative approved value, retainage, and previous certified payments rather than only this month's invoices.
| Step | Calculation | Result |
|---|---|---|
| Revised contract sum | $250,000 + $15,000 approved changes | $265,000 |
| Earned before retainage | $106,000 work + $12,000 stored materials | $118,000 |
| Retainage | $118,000 × 10% | $11,800 |
| Earned less retainage | $118,000 − $11,800 | $106,200 |
| Current request | $106,200 − $80,000 previous payments | $26,200 |
| Balance including retainage | $265,000 − $106,200 | $158,800 |
What belongs in a progress billing record?
Start with the original contract sum. Add or subtract only approved change orders to find the revised contract sum. Then divide that total into clear work items, such as concrete, framing, mechanical work, finishes, and closeout.
For each item, record prior work, current work, and eligible stored materials. Apply the contract's retainage rule. Next, subtract earlier certified payments. A reviewer should be able to trace every figure to site evidence, invoices, delivery records, or an approved change.
- Original contract sum and approved change-order total
- Schedule of values tied to the revised contract sum
- Work completed and eligible stored materials to date
- Retainage, previous payments, current request, and balance
Worked progress billing example
Assume the original contract is $250,000. Approved change orders add $15,000, so the revised contract sum is $265,000. Approved work totals $106,000, and eligible stored materials total $12,000. The earned amount before retainage is $118,000.
Ten percent retainage on $118,000 is $11,800. The earned amount after retainage is $106,200. Subtract $80,000 in earlier certified payments, and the current request is $26,200. Replace every example figure with the project's approved records.
- Revised contract: $250,000 + $15,000 = $265,000
- Completed work and stored materials: $106,000 + $12,000 = $118,000
- Retainage: $118,000 × 10% = $11,800
- Current request: $118,000 − $11,800 − $80,000 = $26,200
How should completed work and materials be supported?
Update each schedule-of-values line from measured progress. Do not apply one unsupported percentage to the whole project. Evidence may include field reports, measurements, photographs, supplier invoices, delivery tickets, inspection results, or written approval.
Stored materials need extra review because payment may occur before installation. Confirm that the contract allows the request. Check the material's identity, quantity, location, protection, insurance, ownership, and prior billing. Do not bill the same material twice.
- Measure progress against each scheduled work item
- Attach the evidence required by the contract
- Confirm stored-material ownership and protection
- Prevent duplicate billing when materials are installed
How do you review and correct a progress bill?
Before submission, reconcile the revised contract, schedule of values, approved changes, current entries, retainage, and previous certificates. Prior values must match the last approved application. Explain any correction instead of silently overwriting an earlier figure.
A general invoice may accompany the progress bill. It may not replace a required payment application, continuation sheet, waiver, or certification. Keep the submitted package, review notes, approved amount, payment record, and resubmission together.
- Reconcile current and prior cumulative values
- Separate pending changes from approved changes
- Use required forms, certifications, and waivers
- Carry the approved result into the next billing period
Official sources
These references support the regulatory information in this guide. Check the current page before making a decision.
- Federal Acquisition Regulation 32.103: Construction Progress PaymentsExplains construction progress payments based on estimates of work accomplished and the use of retainage when progress is unsatisfactory.
- AIA Contract Documents: How to Complete the G702 Payment ApplicationProvides first-party instructions for the G702 application and certification for payment and its relationship to the G703 continuation sheet.
Frequently asked questions
Questions about how does progress billing work?
Is progress billing the same as sending a normal invoice?
Not always. A normal invoice may request the approved amount, but many construction contracts also require a payment application, schedule of values, certifications, waivers, or supporting evidence.
Can stored materials be included in progress billing?
Only when the contract and applicable rules allow it. Confirm eligibility, ownership, storage, insurance, documentation, and how retainage applies before including them.
What happens when the reviewer approves less than requested?
Record the certified or approved amount and the stated reason for the difference. Resolve unsupported work, disputed quantities, or missing documents before carrying figures into the next period.