· Michael Blair
The single most reliable protection on a construction project is that payment follows completed work. Once payment gets ahead of progress, you are funding the job rather than buying it.
A sound structure
A modest deposit to secure the schedule and order materials, then payments at defined milestones, then retainage held until the punch list is complete.
Milestones should be things you can see — rough-in passed, drywall complete, cabinets set — rather than dates on a calendar.
Deposit size
Enough to cover materials ordered specifically and to secure the slot, not a third of the job before anyone arrives. Large up-front payments are the pattern common to jobs that stall.
For special-order items, ask for the supplier invoice rather than an unexplained percentage.
- Deposit sized to materials, not to the whole job
- Payments at visible milestones
- Never pay for work not yet done
- Retainage of five to ten percent until punch list complete
- Lien waivers with each payment on larger jobs
Lien waivers
On larger projects, subcontractors and suppliers can file a lien against your property if the general contractor does not pay them, even if you paid the general in full.
Requesting conditional lien waivers with each payment protects against paying twice, and it is standard practice rather than an unusual demand.
When to stop paying
If work stops and the reason is not clear, stop paying and put the concern in writing. Continuing to pay against a stalled job removes the only leverage you have.
Document everything from the beginning, so that if it goes badly you have a record rather than a recollection.