Physical Progress and Progress Payment Are Not Always the Same
Physical progress measures work that has actually been completed on site. Progress payment is the commercial amount that becomes payable under the contract after valuation and adjustments. The two can differ because a payment certificate may include permitted material on site, retention, approved variations or other contractual items.
What Should Be Checked Before Work Is Valued?
For installed work, Genevera checks whether the claimed work complies with the agreed basis, including:
- Dimensions and quantity
- Approved specification
- Workmanship / quality
- Approved material or brand where specified
- The actual area or location being claimed
Material on Site (MOS)
A contractor can incur substantial cash outflow before materials are installed. Where the contract permits it, verified Material on Site may therefore be included in a progress valuation to support project cash flow and reduce the risk of programme disruption.
However, material on site should not automatically be treated as 100% completed work. The valuation basis should follow the contract and should consider whether the material is actually delivered, identifiable for the project, properly stored, compliant with the approved specification and not already paid elsewhere.
How Common Adjustments Should Be Treated
| Item | Typical Review Approach |
|---|---|
| Defective work | Require rectification and hold an appropriate value until the defect is resolved. |
| Unfinished work | Do not value as completed work; only the legitimately completed portion should be considered. |
| Material on Site | May be valued where contractually permitted and properly verified, often at an agreed percentage/basis. |
| Variation / VO | Follow the agreed contractual valuation and payment mechanism; timing can vary by contract. |
| Previous certified/payment value | For the current certificate, deduct previously certified amounts from the adjusted cumulative valuation. Reconcile actual payments separately to identify unpaid certificates and avoid double deductions. |
| Retention / other adjustments | Apply the contractually agreed deduction where relevant. |
What “Previous Payment” Means
Monthly progress reporting is usually cumulative. In a simplified example, if the cumulative net certified value is IDR 1.2 billion and previous net certificates total IDR 900 million, the new certificate is IDR 300 million. If actual payments total only IDR 800 million, a further IDR 100 million of earlier certified value remains unpaid. Track this separately, subject to the contract and due dates; do not deduct both prior certificates and the payments against them.
Red Flags Before Releasing Payment
- Claimed progress does not match what is visible on site.
- Materials included in the claim have not actually arrived on site.
- The claimed work is incomplete or does not meet the agreed specification.
- Site manpower/activity is inconsistent with the level of progress being claimed.
- The monthly report does not clearly show previous, this-month and cumulative progress.
What Evidence Should Accompany a Monthly Claim?
- Detailed photographs
- Marked-up drawings showing the areas included in the claim
- Before-and-after evidence where relevant
- Monthly report by work item
- Previous progress, this-month progress and cumulative progress
- Supporting information for approved variations and material on site
Case Experience: Preventing an Owner Overpayment
In professional experience gained before Genevera was established, its adviser assisted an owner by rechecking a contractor progress claim against the actual progress observed. The review identified a mismatch between the claimed and supportable progress, allowing the claim to be revised before payment and reducing the owner’s risk of overpayment.
The key lesson is simple: payment should follow verified value, not only the percentage submitted by the contractor.
Frequently Asked Questions
Can materials be paid before installation?
They can be considered where the contract allows Material on Site valuation and the materials are properly verified. The valuation basis should follow the contract and does not automatically mean paying the full installed-work value.
Should unfinished work be paid?
It should not be valued as fully completed work. Any payable portion should reflect what has actually been completed and the contractual valuation rules.
Why do I need previous progress in the report?
Because monthly valuations are cumulative. Previous certificates and actual payments should be recorded separately so new work and unpaid prior amounts can be reconciled without double counting.
Important Note
This article is general construction cost guidance only. Actual pricing, contractual entitlement, valuation method, payment terms, guarantees, retention, variations and project controls depend on the specific project documents, scope, specifications and contract. Independent project-specific review is recommended before an owner makes a material commercial or payment decision.