Home renovations are a fairly large investment, and for a lot of people, this can be incredibly intimidating. If you are not too excited about spending tens of thousands of dollars all at once, payment schedules can be a wonderful way to break up your final payment into smaller and more affordable chunks—and we are happy to offer this.
Construction payment schedules are a fairly common practice when it comes to renovation work, particularly for larger companies. As we move into this, please keep in mind that every state has different requirements. Our breakdown follows what you can expect when working with a contractor in California, but it is important to remember that not everyone does this.
How We Can Help
Offering a construction payment schedule for our services is something that we are very happy to be able to do, and we know that our clients love it too. Like you, we are not all that thrilled at the prospect of making a significant investment all in one day, which is why we offer these contractor payment schedules to make everything a little bit easier. Be aware that every business will approach schedules a little bit differently.
When we offer a progress payment schedule, what we really mean is that we will cover a portion of the upfront costs so that you can pay us as the job pushes towards completion instead of entirely on day one. We are able to help you float the costs associated with materials and subcontractors to ensure that you can pay on a schedule that is a little more approachable.
Though we can certainly help with this, it is important for homeowners to understand the limitations that we have as well. A construction project that costs half a million dollars is going to come with some significant upfront investments, and we might not be able to approach that in the same way that we would a $60,000 renovation. Of course, that doesn’t mean that we don’t have options. We have a few tricks up our sleeves to make the situation more comfortable for everyone!
What is a Material Deposit?
In order to be able to provide you with a construction payment schedule template, we do request that you help us to mitigate some of the risks. Obviously, we cannot spend a bunch of money upfront and risk a homeowner changing their mind at the last minute. This is why we request a material deposit when we agree to a payment schedule.
A material deposit is an upfront fee we charge before we make any steps forward. On average, we request a deposit of 30% of the total order. If you were to invest in a $100,000 renovation with one of our progress payment schedules, we would ask you to provide us with 30% in advance. In the same way that you are trusting us to deliver an incredible renovation, we do expect to receive the appropriate compensation for the job on time.
We have found that a 30% deposit helps us to be able to get the ball rolling and set the renovation into motion. This amount will allow us to pay the subcontractors, order a portion of the materials, and get started on time. A lot of the time, homeowners are relieved to find that they can invest a more reasonable amount in the beginning and pay as the job reaches key milestones.
Knowing that we do expect that initial payment, you are likely wondering when that will be due—and the truth is that the date can vary, but it will always be prior to the start of the project. The payment date will come after we have booked all of the necessary subcontractors, made our schedule, and invested in the materials that we need to get started. Our team will clearly communicate when the payments are expected when we set things in motion, and the date will never be a surprise.
Additional Payments and Significant Completion
The remainder of the renovation cost will be spread out across a variety of different milestones throughout the project. Though some contractors simply set dates broken out throughout the project schedule, we prefer to help our clients truly see and understand what they are paying for. Using slow or partial payments to define the project schedule helps us to do this.
We consider milestones in the project to be moments where significant completion can be seen. Significant completion means that you will be able to noticeably see that a big portion of the renovation has been completed in some way. This will vary from one project to the next, and it will change as the project does as well.
When a homeowner walks into a space during a renovation, it is fairly common to look around and see nothing but a huge mess for a while. You might see some changes, but you might not have any idea what is going on. Our construction projects have a schedule and notes which will help you to understand what these changes mean, and we will always highlight these moments of significant completion.
Though the milestones themselves can change depending on the type of renovation, amount of work, and other changes to the project, most people find that they are fairly easy to follow. For example, we might ask for progress payments following the demolition phase since this takes a fair amount of work, particularly in large spaces.
The remaining milestones will be balanced between changes that you can see and changes that you can’t. We are likely to schedule payments following demolition, framing, key inspections, electrical work, plumbing work, and more. Since completing each of these steps moves us towards the final product in a significant way, we use them to demonstrate progress and ask for payment in conjunction with what we have accomplished.
Complementing that, we will also mention about change orders in construction projects and how they affect payment due to change in materials or other scheduling delays.
How Many Payments You Should Expect
For a large construction project, homeowners can expect the total cost of their bill and their renovation budget to be broken into 5 to 7 payments. This number does vary depending on project size and cost, but this is the average that we usually see. It is important to note that these are the payments following the initial 30% fee.
The amount for each payment is something that we will discuss with every client on an individual basis. As much as we wish we could cut down the costs further for everyone, the fact remains that we do need to outline a payment schedule in a timely manner that supports our efforts while also making the situation more comfortable for homeowners.
What This Offers Homeowners
Homeowners have a lot to gain when it comes to using payment schedules, and that is the main reason that we offer them. For a lot of people, a payment schedule allows them to make a significant and exciting change without necessarily emptying out the savings account in advance. This alone is a pretty big perk, but that doesn’t mean it is the only benefit.
Something that we love about offering payment schedules is the fact that it offers you security throughout the payment process. Since you will be paying for significant milestones, it means that you can keep an eye on everything and truly feel good about the investment that you are making.
Plenty of people pay in advance for this kind of work, but we understand that not everyone is comfortable with that. It can be unsettling to spend that much money and not see what you are getting for it until weeks later. With this approach, you can have the security of knowing exactly what goes into the construction costs.
What This Means for Us
At KHB Construction, we try and make sure that we make business decisions that allow us to best serve our customers. We know that renovations are expensive, and we know that they can be a fairly intimidating investment. This is why we are so happy to be able to meet our clients in any way that we can to ensure that everyone gets exactly what they want during their renovation. If you are interested in learning more about a contractor payment schedule or would like to receive a quote for your next renovation, don’t hesitate to contact us directly!