u/TACT-DC-Metro

Getting bids for a second-floor addition + whole-house renovation in Northern Virginia. One of my top GC candidates uses what he calls a “benchmark-based” payment schedule rather than traditional milestone-completion draws. Wanted to get a gut check from people who’ve been through large projects.

How his system works:

Payments trigger at the start of each phase (e.g., “Start of Framing,” “Start of Plumbing”) rather than at phase completion

His argument: subsequent phases can’t begin until prior work is done, so “Start of Framing” is functionally equivalent to milestone payments like “Foundation Complete.”

Phases get grouped (e.g., Excavation + Concrete together, MEP together) to reduce number of individual payments.

Material pre-purchases (windows, cabinets, HVAC equipment, appliances) are collected as separate deposits before installation, due to lead times.

Final two line items (“Compile Punch List” + “Final Payment”) function as his holdback — but on a sample project he shared, these totaled roughly 4% of project cost, not the 10% I’d prefer.

Payment due within one week of invoicing.

My concerns: The 4% final holdback feels thin on a $500K project. I’d prefer 10% held until punch list is closed. He’s been in business 20+ years, has two good references that responded to me, and his response to my questions was detailed and professional — so I’m not worried about fraud, more just about best practices for protecting myself.

Specific questions for the community:
Is a 4% final holdback normal, or should I push for 10%?

Is start-of-phase billing genuinely equivalent to completion-based billing in practice, or is that a stretch?

Any experience with material deposit structures on large projects — what protections did you put in place?

Thanks in advance.

Getting bids for a second-floor addition + whole-house renovation in Northern Virginia. One of my top GC candidates uses what he calls a “benchmark-based” payment schedule rather than traditional milestone-completion draws. Wanted to get a gut check from people who’ve been through large projects.

How his system works:

Payments trigger at the start of each phase (e.g., “Start of Framing,” “Start of Plumbing”) rather than at phase completion

His argument: subsequent phases can’t begin until prior work is done, so “Start of Framing” is functionally equivalent to milestone payments like “Foundation Complete.”

Phases get grouped (e.g., Excavation + Concrete together, MEP together) to reduce number of individual payments.

Material pre-purchases (windows, cabinets, HVAC equipment, appliances) are collected as separate deposits before installation, due to lead times.

Final two line items (“Compile Punch List” + “Final Payment”) function as his holdback — but on a sample project he shared, these totaled roughly 4% of project cost, not the 10% I’d prefer.

Payment due within one week of invoicing.

My concerns: The 4% final holdback feels thin on a $500K project. I’d prefer 10% held until punch list is closed. He’s been in business 20+ years, has two good references that responded to me, and his response to my questions was detailed and professional — so I’m not worried about fraud, more just about best practices for protecting myself.

Specific questions for the community:
Is a 4% final holdback normal, or should I push for 10%?

Is start-of-phase billing genuinely equivalent to completion-based billing in practice, or is that a stretch?

Any experience with material deposit structures on large projects — what protections did you put in place?

Thanks in advance.