Progress billing is a payment method where a contractor invoices the Client for the portion of work completed during a billing period, rather than waiting until the whole project is finished. Each invoice is tied to a Schedule of Values or an assessed percentage of completion, so cash moves in step with construction rather than arriving as one lump sum at handover. On UK and Irish projects the same process runs under different names: the contractor submits an application for payment, and a Quantity Surveyor (QS) or Architect certifies a Valuation of the work done before payment is released.
Billing in stages like this keeps cash moving to the people doing the work, instead of leaving subcontractors to fund weeks or months of labor and materials before they see a payment.
A Worked Example
Say a contractor is working from an $800,000 schedule of values and submits a progress billing for period 4. Three line items make up the claim:
| Cost Code | Contract value | % complete | Amount billed | Retention (5%) | Net due |
|---|---|---|---|---|---|
| Site preparation | $50,000 | 100% | $50,000 | $2,500 | $47,500 |
| Framing | $150,000 | 60% | $90,000 | $4,500 | $85,500 |
| Electrical | $80,000 | 25% | $20,000 | $1,000 | $19,000 |
The contractor bills $160,000 for the period, the client holds back $8,000 in retention, and $152,000 is paid once the valuation is approved. The retention stays with the client until later in the project, or until the defects period ends, depending on what the contract says.
Progress Billing on the Cost Report
On a cost report or Cost Value Reconciliation (CVR), progress billing numbers show up in the "billed to date" column, set against cost incurred to date. If billed exceeds cost, the project is overbilled; if cost exceeds billed, it is underbilled. Both positions are normal during a project, but a growing gap in either direction is usually the first sign that a job needs a closer look.
Related Terms
Progress billing connects to Schedule of Values, Retention, Overbilling">Overbilling, Valuation, and the Work-in-Progress (WIP) Report.
FAQ
How often is progress billing submitted?
Most contracts call for a progress billing or valuation once a month, though some tie it to project milestones instead of a fixed date.
What happens if a client disputes a progress billing?
The disputed line items are usually held back while the two sides agree on the percentage complete, and the rest of the invoice is paid as normal.
How Planyard Handles Progress Billing
Planyard's Subcontractor-payment-application-collecting-software">Payment Application software collects subcontractor applications against the schedule of values, tracks retention automatically, and feeds the billed-to-date figures straight into the cost report.