When to Pay Contractor for Work

How much should a contractor be paid? Is this one percent of an overall project? Fees? And how much then for subcontractors? Does the contractor pay subcontractors out of the fees it charges per overall project? This means that any payment to the contractor after the initial down payment should be proportional to the amount of work completed, but always make sure to “keep” 10% on invoices payable at the end of the job when all items are completed. In some markets, there is a convention to withhold 10% for up to 30 days. This gives time for problems to arise and the contractor to be called back to fix them. The remaining 10% is released when the client signs that the work is complete. If your contractor requires a large down payment, you may want to treat this as a red flag. A reputable contractor should have fee accounts established with its suppliers. If you rely on your money to buy products, it could mean that they have mismanaged their money or have no experience at all. It can also be a sign that they intend to take the deposit and abandon the contract. Oh, and as for the materials… I generally prefer to acquire the materials. Not to increase costs and improve work, but so that I have control over materials that meet specifications. If the client insists that they buy the materials, I make sure they do so with my supervision so that I don`t jump into a project halfway through and end up with the wrong materials that can delay the completion of the work to the right ones. I`ve tried to put a 36-inch vanity in a 35-inch wall-to-wall situation, and I`ve even had people call me after buying all the materials for a project before contacting anyone, and I`ve been left with special materials that just don`t work.

A decent contractor will be more than happy to help with the materials, even if the client pays for them, just to make sure those materials work for that project. Take, for example, a small patio with a contract price of $3,000. The contractor may request $1,500 in advance to obtain permits and purchase certain materials. The final payment amount of $1,500 covers the remaining materials, profits and all labour costs paid by the contractor. In this scheme, the contractor does not have to advance all the money himself, and the owner can withhold a payment to ensure that the contractor completes the project (within reason). Manitoba`s Builders` Lien Act requires a 7.5% restriction. Once completed, 7.5% will be deducted from each payment and set aside in a holdback account. This reluctance must be maintained for 40 days after the conclusion of a contract or the issuance of a certificate of essential performance.

The exact amount of deposit that contractors require in advance varies and depends in particular on the size of the project. For relatively small jobs, such as renovating a $15,000 bathroom, contractors may require a 50% down payment. For large orders, such as a $100,000 renovation of the entire house, a 10% to 20% down payment is more common. In the first scenario, a well-structured payment strategy ensures that the contractor returns to do a significant amount of work in order to reach the next payment milestone. In the second scenario, a good strategy ensures that the job is completed to your satisfaction before the contractor digs deeper into your pockets. Depending on the conditions of your contract, you can also insist on a penalty clause if you miss a completion date. A LOT of contractors get too much work at once, leaving you on hold for weeks! We recommend that you be wary of a contractor who requires cash payment. The contractor may look for underground work to avoid taxes, which is illegal and means you can`t ask for discounts from CRA owners. There`s also a risk that your project won`t be completed at all: if your contractor charges a large cash deposit in exchange for lower total prices, they can take the money and operate without consequences.

Cash payment means no collateral and the possibility of shady transactions. But payments don`t just come – contractors have to pay their subcontractors, buy materials from suppliers, rent equipment, etc. A payment plan can also be used to track when payments to their suppliers are due. Talk to your contractor about their expectations regarding the payment schedule. Will your contractor require payments by date or would they be willing to tie payments to project milestones? If you pay for the contractor`s work based on progress rather than calendar dates, you won`t have to pay 50% of the project price for unpredictable delays if only 10% is fully completed. Do you never pay in advance for a coin? Perhaps I misunderstood this part. But most contractors will demand 50% upon completion, 50%.