Payment Structure Matters
How payments are structured affects project cash flow, risk, and success for both owners and contractors.
Common Payment Structures
Fixed Price/Lump Sum
Total price agreed upfront. Payments tied to milestones. Risk on contractor for cost overruns.
Time and Materials
Pay for actual labor and materials plus markup. More flexible but less cost certainty.
Cost Plus
Reimburse costs plus a fee (fixed or percentage). Owner bears cost risk.
Progress Payments
Most projects use progress payments tied to milestones or percentage complete.
Retainage
A percentage (typically 5-10%) held until project completion to ensure punch list completion.
Payment Terms
Common terms are Net-30 from invoice date. Clear terms prevent payment disputes.
Bidroom's System
Our escrow-based milestone payments provide security for both parties and ensure fair, timely payment.
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