A progress claim is essentially an invoice from the builder to the client for payments that are made progressively for the work that they’ve already completed. Depending on what was agreed upon in the contract, progress claims in construction can be made at particular time periods or after construction stages are completed.
The frequency of the payments also varies and are stipulated in the contract prior. In some cases, for example, a progress claim could just be a one-off payment if it is a small job.
ARCHITECT’S ROLE
Under most standard building contracts the contractor is paid progressively throughout the project and is required to submit progress claims to the architect on a regular basis. The architect assesses each claim on the basis of work undertaken, the labour and materials used, and any other construction costs in accordance with the construction contract, and then issues a progress certificate which states the amount calculated by the architect to be due to the contractor at the time of issue.
Under this system, architect is able to protect the client from being charged for work not completed, or not in accordance with the requirements of the construction documents.
The following is the usual process and your obligations for progress payments:
- The contractor presents a progress claim to the architect.
- The architect assesses the claim, determines the monetary amount which the contractor is entitled to under the contract and issues a progress certificate to the contractor.
- The contractor presents the progress certificate and a tax invoice to the client for payment.
- The building contract usually states a limited time within which the client must make the payment.
WHEN ARE PROGRESS CLAIMS USEFUL?
If the client does not want to pay the entire sum – or simply can’t afford to – of a construction project at once (a lump sum) then progress claims will come in handy. One of the reasons they’re so beneficial is because they allow you to only pay in smaller increments and also allow you to see the work that has been completed before paying.
It’s also a lot more comforting and reassuring when the client can physically see the work they pay for both on paper (materials used etc.) and practically in person. This is also where construction loans come in.
Construction loans are a fantastic way to finance a home renovation or construction project as the bank will supply the client incrementally with the money they need – allowing them to only pay interest on the amount that they borrow incrementally instead of the full amount of what they will borrow.
PROGRESS CLAIMS AND DRAWNDOWN REPORTS
When working on any construction project – regardless of the size – we will need a timeline. A progress drawdown report is a timeline schedule that also includes the points where progress claims are to be invoiced and paid. So, whilst a progress claim in construction is the invoice itself, a drawdown report is a timeline that outlines when they’re to be made.