On a long project, waiting until the final day to request payment may leave a contractor funding months of labor and materials. Progress billing spreads payment across the work—but the figures need to show more than a percentage typed beside the contract total.
The customer needs to understand what has been earned to date, what was previously billed and what is due now. Keep those three figures separate and the calculation becomes much easier to follow.
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
Start with the contract’s billing arrangement
Confirm the schedule of values, measurement method, billing frequency, approval process and any retention. Stored materials, change orders and supporting documents may have specific treatment. Follow the actual contract and applicable rules rather than a generic percentage schedule.
Agree who confirms progress and the cutoff date for each application. Site progress, approved value and cash received are related but different measures; a report should not use one as if it automatically proves the others.
Work from cumulative value to the current request
Assume an illustrative contract value of 100,000 and 40,000 of approved earned value to date. If the agreed example retention is 5%, that is 2,000, leaving 38,000 after retention. If 24,000 was previously certified or billed on the same basis, the current amount is 14,000.
The 5% figure is only an example. Check the contract’s basis, eligible items and terminology. Keep previous applications distinct from actual payments received so a late payment does not accidentally change how progress is calculated.
| Illustrative cumulative calculation | Amount |
|---|---|
| Earned value to date | 40,000 |
| Example retention: 5% | −2,000 |
| Value after retention | 38,000 |
| Previously billed or certified on the same basis | −24,000 |
| Current request | 14,000 |
Support progress with the right evidence
Use approved quantities, inspections, milestone records or other evidence relevant to the contract. Identify the period and work areas. The goal is to make review possible, not to attach a large unorganized collection of site photographs.
If the contract permits billing for stored materials, follow its evidence and eligibility requirements. Materials purchased are not automatically equivalent to installed work or approved stored-material value.
Bring approved changes into the right place
Update the contract value or schedule of values for approved changes through the agreed process. Keep pending changes visible separately so they are not presented as already authorized revenue.
Explain revisions between applications. A reviewer should be able to identify a newly approved change, a corrected quantity or a revised progress assessment without comparing every cell manually.
Track approval and cash separately
A payment application can be submitted, returned, approved, certified or paid. Record the actual stage and any questions holding it up. An approved amount may still be outstanding, while a payment may cover several applications.
Allocate receipts to the correct balances and keep retention separate. This gives you a clearer picture of immediate receivables and amounts held for later release.
Finish with reconciliation, not just another percentage
At the end of the project, reconcile approved changes, prior applications, payments, retention and any remaining adjustments. Confirm the documents required for final payment and release under the contract.
A final application should explain the remaining position. It should not request the full contract amount again or assume that reaching 100% physical completion automatically satisfies every payment condition.
Questions you may still have
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.