progress payments

[Big Builder]

Would anyone liki to share how they structure their progress payments on a complete residential home. In the half million dollar range.
I have in the past simply doing each draw as a percentage of the total contract due at a certain point of completion. Any feedback would be greatly appreciated.

Thanks

[Rich]

If a project is going to take longer than 3-4 months I'll do a monthly request for payment. Less than 3-4 months and I'll do a percentage. If you look at the percentage of completion - you're typically looking at 4 payments - 30%, 30%, 30%, 10%
More than 4 months and you're better off going monthly and trying to front load the initial payment a little.. this will give you money monthly instead of possibly waiting 2 months for 30%.. that's just my opinion though.

[Big Builder]

I think your breakdown is better than mine. I generally have been doing
quarters only. It leaves things fairly tight until the last cheque comes in.

If you do your billing monthly do yo calculate by doing a percentage of
completion? OR do you get your amount directly from your spreadsheet?

[Rich]

Billing monthly is calculated by percent complete. I use Primavera for scheduling which makes it pretty simple to bill from. I should clarify percent complete - it's percent complete of each line item.

[rgramjet]

One word, Bi-weekly draws.

[Big Builder]

I havn't heard of bi-weekly draws before??

DOes anyone else use this?

[Rich]

If you can get your clients to do it - go for it. Most often they are limited by the finance company though. And of course - more draws the more paperwork for them - and I'm sure you've heard the term "bankers hours".. :)

[Big Builder]

YES, the finance company of our current project requires 40% completion before they will release any money to the homeowner.
On this project it equates to 2 1/2 months. I guess there is no real fixed answer to my original question as each project/builder/or homeowner
has different circumstances that require different schedules.

[rgramjet]

Hey Randy, the past 2 large projects Ive done were self financed with no banks involved. Time and materials with a 25% cost markup on subs and materials. Im convinced it keeps everybody polite. If theres ever any questions on a bill, you arent sorting through piles of paperwork from a year ago. The cash flow is wonderful.

[Big Builder]

now that is interesting. These were spec homes? Or did the client the property? Or just contracted to finance and build?

[rgramjet]

Actually one was a gut and redo and the other was just an addition. Sorry, thought you were talking about remodeling.