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| Free Calculators |
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Unless you are paying in one lump sum at the end of the build, chances are you will have a clause in your
contract for regular progress payments to be made to your builder.
These payments are made at agreed stages of the construction. For example, the first payment might be at
the foundation complete stage and the second at completion of framing and so on.
Cost to Complete
An important concept that runs hand in hand with progress payments is the concept of ‘cost to complete’.
This is amount at any stage of the construction that you would have to pay a ‘replacement’ builder to finish
the project.
Therefore it is important that you don’t agree to pay for items before they are actually completed on site.
Practical Downside of Overpayments
Example, say the total building contract was $200,000. The contracted payment at completion of framing
was 50% (i.e. $100,000). Payment is made and the builder abandons the job. We know that at the ‘framing
complete’ stage construction is about 30% complete, so the actual payment should have been $60,000. The
next ‘replacement’ builder will not give you credit for the overpayment of $40,000. This will have to be paid
again thus bringing your overall build cost to $240,000.
contract for regular progress payments to be made to your builder.
These payments are made at agreed stages of the construction. For example, the first payment might be at
the foundation complete stage and the second at completion of framing and so on.
Cost to Complete
An important concept that runs hand in hand with progress payments is the concept of ‘cost to complete’.
This is amount at any stage of the construction that you would have to pay a ‘replacement’ builder to finish
the project.
Therefore it is important that you don’t agree to pay for items before they are actually completed on site.
Practical Downside of Overpayments
Example, say the total building contract was $200,000. The contracted payment at completion of framing
was 50% (i.e. $100,000). Payment is made and the builder abandons the job. We know that at the ‘framing
complete’ stage construction is about 30% complete, so the actual payment should have been $60,000. The
next ‘replacement’ builder will not give you credit for the overpayment of $40,000. This will have to be paid
again thus bringing your overall build cost to $240,000.
| Progress Payment Calculator |
Innovation + Experience |
| PO BOX 9018, Wellington 6141 | phone: (04) 240-0124 | fax: (04) 232-4414 | email: valuer@ vcnz.co.nz Innovation + Experience |