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Progress billing, payment applications, retention

Value the work done each period, apply retention and get it certified and paid.

ProfessionalSidr Grove, Dubai: FIDIC interim payment and retention +11 more
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Claim the work done to date Progress claim PC-0001 with gross, retainage and net due tiles and four claim lines

Output: Interim payment application, valuation certificate and retention record
Module: Cost control, EVM and risk
Documents: Payment application
Interim payment certificate
Retention ledger
Standards and references: AIA G702/G703
FIDIC 2017 clause 14
UK Construction Act 1996
VOB/B §16

What it is

Progress billing is how a contractor is paid during the work. At set intervals, usually monthly, the contractor applies for payment for work completed, materials on site and agreed variations, less previous payments and retention. The client's representative values the work, certifies the amount due and the client pays within the contract period. The same cycle runs between contractors and subcontractors.

Cash flow keeps a construction business running, and progress billing is its main source. Late or under-valued applications strain contractors and their supply chain; over-valuation exposes the client. Retention, usually a small percentage held back from each payment and released at completion and after the defects period, protects the client against incomplete or defective work. Clear valuations linked to the bill and progress records reduce argument each month.

Who does it

Contractor's quantity surveyor: Prepares the payment application with supporting measurement and variations.
Client's quantity surveyor or engineer: Values the work and issues the payment certificate.
Subcontractors: Submit their own applications to the main contractor.
Finance: Issues invoices, tracks receipts and chases late payment.
Project manager: Confirms progress and approves the application before submission.

How it runs

Measure work done
Record progress per bill position or activity at the valuation date.
Add materials and variations
Include materials on site where the contract allows and agreed or claimed variations.
Calculate gross value
Total the value of work done to date, then deduct retention and previous payments.
Submit the application
Send the application with backup before the date set in the contract.
Value and certify
The client's side checks the application and issues a certificate or payment notice.
Invoice and collect
Issue the invoice, including e-invoice formats where required, and track payment.
Manage retention
Track retention held and released at completion and at the end of the defects period.

How it differs by country

United Kingdom: The Construction Act requires an adequate mechanism for interim payments, payment notices and pay less notices. JCT and NEC4 build these into their payment procedures, and retention of around 3 to 5 percent is common.
Germany: § 16 VOB/B provides for interim payments (Abschlagszahlungen) for work done, and § 632a BGB gives a statutory right to interim payments. Retention is usually agreed as a security deposit (Sicherheitseinbehalt) under § 17 VOB/B, often replaced by a guarantee.
France: Public contracts pay monthly by acompte, and the retenue de garantie is limited to 5 percent of the contract amount, released after the one-year guarantee period. It can be replaced by a bank guarantee or caution.
United States: Contractors apply for payment on AIA G702 with the schedule of values continued on G703. Retainage, often 5 to 10 percent, is regulated by many state prompt payment laws.
International: Under FIDIC 2017 the contractor submits a Statement each month and the Engineer issues an Interim Payment Certificate. Retention Money is set in the Contract Data and half is typically released at taking over.

Common mistakes

Submitting the application late and losing a whole payment cycle.
Including claimed variations without backup, which delays certification of the whole application.
Not checking the certificate against the application line by line, so under-certification goes unchallenged.
Forgetting to apply for retention release at completion and at the end of the defects period.
Overvaluing early work to improve cash flow, which creates trouble later in the project.

In OpenConstructionERP

Module: Cost control, EVM and risk

In OpenConstructionERP the Finance module handles invoicing, payments and budgets for each valuation cycle. E-invoice generates and validates EN 16931 electronic invoices in CII and UBL syntaxes where clients require them. Cost-Value Reconciliation & Cashflow compares value earned with cost and forecasts cash. The 5D Cost Model and Full EVM give the S-curves and value data behind each application. On the supply chain side, Subcontractor Management in the procurement group tracks subcontractor payment applications and retention.

Finance · E-invoice · Cost-Value Reconciliation & Cashflow · 5D Cost Model · Full EVM · Subcontractor Management

The app runs at openconstructionacademy.com/app for course learners.