What are progress payments based on?

Progress payments are typically based on the materials purchased and stored on-site. This approach allows a contractor to receive partial payments as project work progresses, ensuring they have the necessary cash flow to continue operations. This is particularly important in construction, where upfront costs can be substantial due to material purchases and labor expenses.

When assessing progress payments, it's common to consider the value of materials that have been delivered and are available for use on the project site, as this reflects actual investment and risk incurred by the contractor at that point in time. This method also encourages timely completion of work and helps maintain the momentum of the construction project.

While total contract amounts and estimated costs of labor can factor into the overall payment structure, they do not directly influence the progress payments in the same actionable manner as materials stored on-site. Additionally, while timelines for project milestones are important for scheduling and coordinating work, they do not directly define the amount of progress payment to be disbursed, which is primarily focused on actual physical work and materials on-site.