Trade Management

Progress Payments Explained — When and How Much to Pay Your Trades

Ashley Brennan · March 8, 2026 · 9 min read

I am going to be blunt about this: how you pay your trades is one of the biggest risk factors in an owner-builder project. Pay too much upfront and you have zero leverage if something goes wrong. Pay too slowly and your tradie moves on to someone who pays faster. Get it right and everyone stays happy.

Alex tends to trust people at their word. I do not. Not because people are dishonest — most tradies are great — but because $10,000 sitting in someone else's bank account when the work is not done is a risk I am not willing to take. So I researched progress payments obsessively before we paid anyone a cent on our Lake Haven KDR. Here is what I learned.

What Are Progress Payments?

Progress payments are staged payments tied to construction milestones. Instead of paying the full amount upfront or on completion, you break the total into portions that are released as work reaches verifiable checkpoints.

The standard structure for residential construction in Australia:

The Golden Rule: Never Pay More Than 10% Deposit

In NSW, under the Home Building Act, a tradesperson cannot legally ask for a deposit greater than 10% of the contract value for contracts between $5,000 and $20,000. For contracts over $20,000, the maximum deposit is still 10%.

If a trade asks for 30% or 50% upfront before they have even ordered materials, that is a red flag. Legitimate tradies understand that progress payments protect both sides. The deposit covers their time to schedule the job and order materials. Everything after that should be tied to actual work.

How to Structure Payments for Each Trade

Not every trade needs the same structure. A plumber who comes for 2 days does not need 5 milestone payments. A framer who is on site for 3 weeks does. Here is how we structured payments for our major trades:

Small jobs (under $10,000)

50% on start, 50% on completion. For very small jobs (under $2,000), payment on completion is fine. Most plumbers, electricians, and tilers for individual stages operate this way.

Medium jobs ($10,000 - $30,000)

10% deposit, 40% at mid-point, 40% on practical completion, 10% retention. This works for framing, roofing, brickwork, and other structural trades.

Large jobs ($30,000+)

5% deposit, then milestone payments at 4-5 checkpoints (slab pour, frame up, lock-up, etc.), with 5-10% retention. Get this in writing before work starts.

What Is Retention and Why Does It Matter?

Retention is a small percentage (usually 5-10%) of the total contract value that you hold back for a set period after the work is completed. It is your insurance against defects.

If the tradie leaves and you discover a problem within the retention period (typically 14-30 days), you can use the retained amount to have someone else fix it. If everything is fine, you release the retention at the end of the period.

Not every tradie will agree to retention — especially for smaller jobs. But for any trade over $10,000, I strongly recommend it. We held 10% retention on our framing, roofing, and plumbing contracts. One of them needed a minor fix after the inspection that would have been a nightmare to chase without that leverage.

What to Do When a Trade Asks for Too Much Upfront

This happened to us. A concreter quoted $28,000 for our slab and wanted 40% upfront before ordering the concrete. That is $11,200 before a single truck has arrived on site.

I pushed back and offered 10% deposit, 30% when the formwork was complete and steel in place, 40% when the slab was poured, and 20% after the slab had cured and the certifier had inspected. He agreed without any argument. Most tradies expect you to negotiate — they start high because most people do not push back.

Cash Flow Planning

Progress payments are not just about protecting yourself — they are about managing your cash flow. A typical owner-builder project has multiple trades running concurrently. If three trades all hit their mid-point milestone in the same week, you need that cash available.

We built a simple payment schedule at the start of our build that mapped every trade's milestone payments against our available funds week by week. It showed us that we would hit a cash crunch in month 4 (frame + roof + plumbing rough-in all overlapping) and allowed us to re-sequence some work to smooth it out.

Put It in Writing

Every payment schedule should be part of your written contract with the trade. No exceptions. If a tradie says "we will sort it out as we go," that is not a payment schedule — that is a recipe for arguments.

Your contract should specify: total contract value, deposit amount, each milestone and its trigger, the percentage or dollar amount for each milestone, the retention amount and period, and payment terms (e.g., "payable within 7 days of milestone completion").