Building contract payment stages explained
A residential building contract is paid in stages. Each stage is a point in the build, each carries a percentage of the contract, and you can only claim when the contract says you can.
The stages are defined by the build, not by the calendar, which is the whole point: the client pays for work that is actually there.
The usual stages
Deposit. Taken before anything starts, and it pays for the things that happen before anything starts: drafting, engineering, application fees, insurances, permits. In Queensland the QBCC caps it — commonly 10% where the contract is under $20,000 and 5% at or above that. Check the current limit and your own state’s rules before you write a number in.
Base. Footings, base brickwork, stumps, piers, columns, formwork and reinforcing, slab, bearers, joists or flooring — done and ready for the walls. Commonly around 10%.
Frame. The frame complete and ready for the certifier’s inspection. Commonly around 20% on a single storey. On a double storey it is often 25%, and many builders split it into frame down and frame up so the money follows the work.
Enclosed, or lock-up. External cladding fixed, roof on, structural flooring laid, external doors and windows in — even temporarily. Commonly around 25%, and usually the largest single stage, because it is where most of the material is bought.
Fixing, or pre-paint. Internal linings, architraves, cornices, skirtings, internal doors, baths, shower trays, wet area tiling, built-in cabinets and shelving fitted and fixed. Commonly around 20%.
Practical completion. The work is finished in accordance with the contract and all statutory requirements are met, apart from minor defects or omissions. The house is reasonably suitable to live in. The balance falls due here.
Those percentages are what you will see most often, not a rule. The contract governs, and the split is negotiable before it is signed — never after.
Why the percentages matter more than the total
Stage percentages decide how much of your own money is in the job, and for how long.
Suppose lock-up carries 25% but the material bought to reach lock-up is closer to 35% of the build. You fund the difference for weeks, on top of the deposits you have already paid suppliers. That is the gap that kills otherwise profitable builders: the job makes money, the business runs out of cash before it arrives.
Two habits protect you:
- Set the stage percentages against what each stage actually costs you, not by copying the last contract.
- Model it before you sign. Costs out and claims in, across the programme, so you can see the lowest point and whether you can carry it.
That is what the cash flow view is for — it puts the outgoings and the stage claims on the same timeline, so the dip shows up before you agree to it rather than after.
Claiming cleanly
Late claims are self-inflicted. The stage was reached on Tuesday, the claim went out the following Monday, and the builder has funded a week for nothing.
Keep the stages on the job rather than in your head: the stage is marked complete, the claim is raised against it with the variations that belong to it, the invoice goes out with your bank details on it, and the payment is recorded when it lands. Progress claims does that chain, and the same stages feed the cash flow above, so the forecast updates itself as the job moves.
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