Construction Payment Schedule Explained
A construction payment schedule is the staged ladder that splits a contract price into a deposit and progress payments tied to completed work. Learn what is negotiable.
Definition
A construction payment schedule is the staged ladder that breaks a building contract price into a deposit and a series of progress payments, each tied to a defined stage of completed work, usually with a final amount held back until the build is finished. It sets when the builder can claim money and when the owner releases it.
Most Australian residential contracts use a 5-stage or 6-stage schedule: deposit, base, frame, lock-up, fixing, and practical completion. The schedule is part of your building contract, and the percentages attached to each stage are set before you sign.
Why it matters
The schedule decides how much of your money is at risk at every point in the build. If the early stages are loaded too high, you can pay well ahead of the work actually done, which leaves you exposed if the job stalls. If the final amount held to completion is too thin, the builder has little incentive to finish properly. A fair, earned-value schedule keeps payments lined up with progress on the ground, protecting owners from overpaying early and builders from being underpaid for work already done.
How it works in practice
When the build reaches a stage, the builder issues a progress claim against that stage. The owner checks the work matches the claim, then approves payment. The deposit is taken up front, and a final builder margin is usually held back until practical completion.
Stage percentages vary by contract and by state, and they are negotiable before you sign. You can question a front-loaded schedule, ask for stages that map to verifiable physical milestones, and confirm how the final completion amount is calculated. Once signed, the schedule is fixed unless an approved variation changes the contract sum.
In a standard contract, approved progress payments go straight into the builder general operating account and mix with everything else the business owes. That is where the risk sits: the money is gone from your control the moment it is paid, whether or not the next stage is ever finished.
BuildFair changes this picture. When a tender is accepted, it auto-creates a staged earned-value schedule, then holds the deposit and each progress payment in regulated custody with BuildFair banking partner Kobble (Kobble operates under AFSL 545391, Yondr Money Pty Ltd), separate from the builder operating account. The builder raises a progress claim against a verified stage and the owner approves it before funds release, and every claim, approval, and release is written to a double-entry, hash-chained ledger so there is a permanent record of who was paid what, and when.
Common misconceptions
The payment schedule is fixed and not up for discussion
The stage percentages are negotiable before you sign. A front-loaded schedule that asks for large early payments is a fair thing to question, and you can ask for stages that map to verifiable milestones.
Paying per the schedule means my money is safe until the work is done
In a standard contract it is not. Each progress payment goes into the builder general operating account as soon as it is paid, so it is spent and out of your control whether or not the stage is ever completed.
A bigger deposit gets the build moving faster
A large deposit mostly shifts risk onto you. It does not guarantee speed, and it means more of your money is exposed before any verifiable work has been done on site.
The schedule is just about timing, not protection
The schedule is your main lever for keeping money lined up with completed work. An earned-value ladder, with a sensible amount held to completion, is what protects both sides from paying or being paid out of step with the build.
This entry is general information, not legal, financial, or tax advice. For disputes about a building contract or payment schedule, speak to a lawyer, your state tribunal (such as VCAT or NCAT), or Legal Aid. Progress payments