How to split construction payments into safe instalments so your contractor doesn't walk off the job

One of the biggest problems homeowners face is "the contractor walking off the job" after receiving the first or a large instalment. Planning construction payments systematically and fairly for both sides is therefore excellent protection that saves you from losing both money and tears.

1. The first deposit shouldn't exceed 10-15%

At the start of the contract, contractors usually ask for the first instalment to order materials and prepare their team. The safest principle is that the first instalment should be 10% and no more than 15% of the total contract value. If the contractor asks for an advance as high as 30-50%, take note right away that there is a high risk of cash-flow problems in the future.

2. An example of a standard 5-instalment schedule

So that payments match the work actually done, agree the instalment details clearly in the contract, as follows:

• Instalment 1 (10% deposit): sign the contract, clear the site and bring materials and equipment on site
• Instalment 2 (20%): foundation structure — footings, columns, ground beams and the ground floor slab
• Instalment 3 (30%): bricklaying, rendering, roofing and running embedded conduit and plumbing
• Instalment 4 (25%): tiling, ceilings, sanitaryware, doors and windows, and painting
• Instalment 5 (15%): the final instalment, paid once the work has been inspected, handed over and all defects fixed

3. Check the actual work, and watch the structural and electrical work

Don't pay the next instalment just because the date in the contract has arrived — pay only when "the work for that instalment is truly complete" . Structural and electrical work in particular is directly about safety, so consult or bring in a structural engineer and a qualified electrician to check it before you sign off the handover and approve that payment.

4. The final instalment is your guarantee of a proper finish

The final 10-15% instalment is like insurance. Never give in and pay it early until the contractor has finished the details, repaired the defects and cleaned up the site. Holding back the final instalment motivates the contractor to come back and finish the job 100%.