There’s a lot of terminology that gets thrown around in the construction world and it can be hard to keep up with them all. Things like drawdown reports and progress claims are common terms that will pop up during a construction project. Whilst not essential, it’s still helpful for you to understand these terms as it can also give you a better understanding of what’s going on. That’s why in today’s blog, we’re going to be focusing on progress claims in construction.
The fundamentals of a progress claim
A progress claim is essentially an invoice from the builder to the client for payments that are made progressively for the work that they’ve already completed. Depending on what was agreed upon in the contract, progress claims in construction can be made at particular time periods or after construction stages are completed.
The frequency of the payments also varies and are stipulated in the contract prior. In some cases, for example, a progress claim could just be a one-off payment if it is a small job.
When are progress claims useful?
If you do not want to pay the entire sum – or simply can’t afford to – of a construction project at once (a lump sum) then progress claims will come in handy. One of the reasons they’re so beneficial is because they allow you to only pay in smaller increments and also allow you to see the work that has been completed before paying.
It’s also a lot more comforting and reassuring when you can physically see the work you’re paying for both on paper (materials used etc.) and practically in person. This is also where construction loans come in.
Construction loans are a fantastic way to finance a home renovation or construction project as the bank will supply you incrementally with the money you need – allowing you to only pay interest on the amount that you borrow incrementally instead of the full amount of what you will borrow.
They also lend you the money in increments which corresponds with progress claims. As the client, when you receive a progress claim, you can pay it off and ask for the incremental loan from your bank for the next stage.
Progress claims and drawdown reports
When working on any construction project – regardless of the size – you’ll need a timeline. Well, a progress drawdown report is exactly that. It’s a schedule that also includes the points where progress claims are to be invoiced and paid. So, whilst a progress claim in construction is the invoice itself, a drawdown report is a timeline that outlines when they’re to be made.
Abbreviated to SOP, the Building and Construction Industry Security of Payment Act 2002 was created to ensure that builders and other contractors are paid for the work they complete. As various disputes arise every so often, the SOP act was designed to present a quick and affordable option for payment recovery under a construction contract without the need for a lawyer.
Who provides progress claims?
Qualified quantity surveyors (such as those at Section 94) can provide comprehensive and detailed progress claims. If you’ve taken out a construction loan, for example, then you’ll have to sign the tax invoice and take it to the bank. They’ll approve the progress claim to ensure that everything is in order before allowing the next amount of your loan to be released to you.
Are you looking for progress claim experts?
Progress claims in construction are very handy and hold a lot of value in a project. Not only do they simplify the financial end of things, but they also ensure there’s a detailed paper trail and clear outline of the tasks that have been completed. If you’re a builder, then you won’t want to be distracted by the meticulousness of a progress claim.
That’s why we suggest utilising our progress claim construction services. Here at Section 94, we’re fully qualified and well-experienced quantity surveyors. The years of hands-on experience has given our team a unique insight into the construction world and the subtleties that surround it.