The payment schedule keeps money back until the end
Payment schedules are the part of an agreement most often written in the contractor's favour, and the least often read. Several released almost the whole contract before the house was finished - one left under one per cent for handover and every defect after it.
What to look at
- The milestone percentages adding to 100
- What is left for handover and the defect period - Kerala practice is around 5%
- The advance, and what it is secured against
- A milestone for every trade you are paying for, including flooring and painting
How to check it yourself
Add the milestones up as percentages and look at two numbers: how much is due before any work starts, and how much is left at handover. Money paid ahead of verified work is leverage you no longer have. Then check the last milestone is tied to handover itself, not to plastering or to some stage before the finishes.
Where this comes from: Kolo review of Kerala construction quotations and agreements (established trade practice)
More construction agreement checks before you sign
- Agreement check passed
- Contractor background verified
- Site handover checklist agreed
- Worker-welfare rules applicability checked
- GST treatment understood before signing
- The agreement does not contradict itself
- GST is stated, and you know who pays it
- You know who you are contracting with
- Price escalation has a limit you can calculate
- Foundation extras cannot be open-ended
- Curing is the contractor's job, in writing
- The arbitrator is not chosen by the contractor alone
- There is a warranty, and it has a length
- Worker safety stays with the contractor
- Signing for a stage does not sign away everything after it
- There is a way to settle a dispute short of court
- Cancellation terms are not written by one side
- Nobody else builds your house without you knowing
- No blank spaces, no missing dates
- Money goes to the company, not to a person
- You can ask where the money went
- Delay has a consequence for both sides
- The quotation is attached to the agreement
- Force majeure is not a blanket excuse
The whole stage: Construction agreement checks before you sign