Progress Payment

Posted on May 6, 2010 by

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For large, long-term projects especially, rather than pay the contractor the full payment when the project is complete, partial payments may be made throughout the duration of the project. These partial payments are called Progress Payments. They typically are tied to certain stages of progress or milestones. For example, for a construction project to build a house, progress points could be digging the foundation, building the frame, putting on the roof, and completing the electrical wiring and plumbing. If the contractor must ask for a Progress Payment once an agreed-to progress point has been reached, this request is called a Progress Payment Request. Although not specifically mentioned in the fourth-edition PMBOK®, they are part of the Administer Procurements process. This process has the tool and technique of Payment Systems which allows for payments to be made to contractors after a project team member deems the work to be satisfactory. The process output of Organizational Process Assets Updates includes payment schedules and requests. The PMBOK’s Plan Procurements process deals with the type of contract that is in place for this arrangement and during the Conduct Procurements process, the details of the contract (such as the specific progress points and payments) are negotiated.