💵 Progress Billing Calculator
Calculate schedule of values, percent complete, and pay application amounts.
How Progress Billing Works
Current Payment Due = (% Complete × Contract Value) - Previous Payments - Retention
The Billing Cycle
- Schedule of Values (SOV) — Break contract into line items
- Track Progress — Determine % complete each period
- Apply Retention — Typically 5-10% withheld
- Submit Pay App — Request payment for completed work
- Receive Payment — Usually 30 days after approval
Schedule of Values Setup
Front-Loading Considerations
Ethical Note
Front-loading (inflating early work items) is common but can create problems. Balance cash flow needs with accuracy.
Sample SOV Breakdown
| Item | Description | Value | % of Contract |
|---|---|---|---|
| 1 | General Conditions | $50,000 | 5% |
| 2 | Site Work | $100,000 | 10% |
| 3 | Foundation | $150,000 | 15% |
| 4 | Structural | $200,000 | 20% |
| 5 | MEP Rough-in | $150,000 | 15% |
| 6 | Exterior | $100,000 | 10% |
| 7 | Interior Finishes | $150,000 | 15% |
| 8 | MEP Finish | $75,000 | 7.5% |
| 9 | Closeout | $25,000 | 2.5% |
| TOTAL | $1,000,000 | 100% |
Percent Complete Methods
Method 1: Units Completed
Best for repetitive work (footings, doors, fixtures).
% Complete = Units Installed ÷ Total Units
Example: 40 of 100 doors installed = 40% complete
Method 2: Cost-to-Cost
Best for complex work, most accurate.
% Complete = Costs Incurred to Date ÷ Estimated Total Costs
Example: $75,000 spent on $150,000 budgeted item = 50% complete
Method 3: Physical Observation
Subjective estimate based on visual inspection.
- Good for: Materials, general conditions
- Risk: Disputes over interpretation
Pay Application Calculator
Single Line Item Example
| Field | Value |
|---|---|
| A. Contract Value | $150,000 |
| B. % Complete This Period | 35% |
| C. Value of Work (A × B) | $52,500 |
| D. Previous Billings | $30,000 |
| E. Current Billing (C - D) | $22,500 |
| F. Retention Rate | 10% |
| G. Retention Amount (E × F) | $2,250 |
| H. Net Due This Period (E - G) | $20,250 |
Full Pay Application Example
Project: $1,000,000 Contract, 10% Retention, Period 3
| Line | Description | SOV Value | Previous % | Current % | Previous Billing | Current Billing | Retention | Net Due |
|---|---|---|---|---|---|---|---|---|
| 1 | General Conditions | $50,000 | 30% | 45% | $15,000 | $7,500 | $750 | $6,750 |
| 2 | Site Work | $100,000 | 90% | 100% | $90,000 | $10,000 | $1,000 | $9,000 |
| 3 | Foundation | $150,000 | 100% | 100% | $150,000 | $0 | $0 | $0 |
| 4 | Structural | $200,000 | 50% | 75% | $100,000 | $50,000 | $5,000 | $45,000 |
| 5 | MEP Rough-in | $150,000 | 20% | 40% | $30,000 | $30,000 | $3,000 | $27,000 |
| 6 | Exterior | $100,000 | 0% | 15% | $0 | $15,000 | $1,500 | $13,500 |
| 7 | Interior Finishes | $150,000 | 0% | 0% | $0 | $0 | $0 | $0 |
| 8 | MEP Finish | $75,000 | 0% | 0% | $0 | $0 | $0 | $0 |
| 9 | Closeout | $25,000 | 0% | 0% | $0 | $0 | $0 | $0 |
| TOTALS | $1,000,000 | $385,000 | $112,500 | $11,250 | $101,250 |
Pay Application Summary
| Description | Amount |
|---|---|
| Original Contract | $1,000,000 |
| Approved Change Orders | $0 |
| Adjusted Contract | $1,000,000 |
| Total Completed to Date | $497,500 |
| Total Retention (10%) | $49,750 |
| Total Earned Less Retention | $447,750 |
| Less Previous Payments | $346,500 |
| Current Payment Due | $101,250 |
Retention Calculations
Standard Retention Rates
| Project Type | Typical Rate |
|---|---|
| Commercial | 10% |
| Public works | 5% (often capped) |
| Residential | 10% |
| Federal | 0-10% (varies) |
Retention Reduction
Many contracts allow retention reduction at substantial completion:
| Milestone | Retention Rate |
|---|---|
| 0-50% complete | 10% |
| 50-95% complete | 10% (or reduce to 5%) |
| Substantial completion | Reduce to 5% or release |
| Final completion | Release remaining |
Retention Release Calculation
At substantial completion (reducing from 10% to 5%):
Retention to Release = Total Retention Held - (Contract × 5%)
Example: $1M contract at 95% complete
- Retention held: $95,000 (10% of $950,000)
- New retention needed: $50,000 (5% of $1,000,000)
- Release amount: $45,000
Stored Materials Billing
What Can Be Billed
- Materials purchased for the project
- Stored on-site or in approved off-site location
- Proper documentation (invoices, photos)
Stored Materials Format
| Material | Invoice Cost | Markup (if allowed) | Billable Amount |
|---|---|---|---|
| Steel | $25,000 | 0% | $25,000 |
| Fixtures | $15,000 | 0% | $15,000 |
| Equipment | $30,000 | 0% | $30,000 |
| Total Stored Materials | $70,000 |
Documentation Required
- Supplier invoices
- Proof of payment (often required)
- Photos of stored materials
- Evidence of proper storage/protection
- Insurance certificate for off-site storage
Change Order Billing
Adding Change Orders to Pay App
| Description | Original Contract | Approved COs | Adjusted Contract |
|---|---|---|---|
| Base contract | $1,000,000 | ||
| CO #1 - Added scope | +$25,000 | ||
| CO #2 - Owner change | +$15,000 | ||
| CO #3 - Credit | -$5,000 | ||
| ADJUSTED TOTAL | $1,035,000 |
Change Order Progress
Bill change orders separately or add to SOV:
| CO # | Description | Value | % Complete | Billed This Period |
|---|---|---|---|---|
| 1 | Added electrical | $25,000 | 80% | $5,000 |
| 2 | Window upgrade | $15,000 | 100% | $15,000 |
| 3 | Credit - deleted door | -$5,000 | 100% | -$5,000 |
Cash Flow Projection
Project Cash Flow Timeline
Using the $1M example project over 12 months:
| Month | % Complete | Gross Billing | Retention | Net Received* | Cumulative |
|---|---|---|---|---|---|
| 1 | 8% | $80,000 | $8,000 | $72,000 | $72,000 |
| 2 | 20% | $120,000 | $12,000 | $108,000 | $180,000 |
| 3 | 35% | $150,000 | $15,000 | $135,000 | $315,000 |
| 4 | 50% | $150,000 | $15,000 | $135,000 | $450,000 |
| 5 | 65% | $150,000 | $15,000 | $135,000 | $585,000 |
| 6 | 78% | $130,000 | $13,000 | $117,000 | $702,000 |
| 7 | 88% | $100,000 | $10,000 | $90,000 | $792,000 |
| 8 | 95% | $70,000 | $7,000 | $63,000 | $855,000 |
| 9 | 98% | $30,000 | $3,000 | $27,000 | $882,000 |
| 10 | 100% | $20,000 | $2,000 | $18,000 | $900,000 |
| 11 | Close | $0 | Release $50,000 | $50,000 | $950,000 |
| 12 | Final | $0 | Release $50,000 | $50,000 | $1,000,000 |
*Assumes 30-day payment terms
Common Issues & Solutions
Overbilling Concerns
| Issue | Risk | Solution |
|---|---|---|
| Billing ahead of work | Owner dispute, audit | Tie billing to verifiable milestones |
| Inflated % complete | Back-end cash crunch | Use cost-to-cost method |
| Stored materials abuse | Rejection, reputation | Proper documentation |
Underbilling Consequences
| Issue | Impact | Solution |
|---|---|---|
| Cash flow problems | Can't pay subs/suppliers | Bill accurately each period |
| Financing project yourself | Profit erosion | Track actual costs closely |
| Catch-up billing | Looks suspicious | Consistent billing practices |
Tips for Accurate Billing
- Update SOV with change orders — Don't lose money on added scope
- Bill monthly without fail — Missing a billing cycle hurts cash flow
- Document everything — Photos, logs, correspondence
- Track costs in real-time — Know your true % complete
- Submit on time — Late pay apps = late payments
- Follow up on approvals — Don't wait for checks passively
CPA Insight
Your WIP (Work in Progress) schedule ties directly to billing. Overbilling shows as liability; underbilling shows as asset. Both affect your financial statements and bonding capacity.