How do stage payments and valuations work?

The contract should define how work is valued, what evidence is provided and the payment timetable. A cash-flow forecast helps you plan funding, but it does not replace the agreed valuation process.

What is retention and when is it released?

Where the contract uses retention, it withholds an agreed portion of payment until specified milestones. The rate, release triggers and conditions are project-specific, so they must be read from your own contract.

Is contingency the same as a provisional sum?

No. A provisional sum allows for an identified piece of incompletely defined work, while contingency is a reserve against uncertainty. Counting the same risk in both places can obscure the real budget.

What if my lender releases money in stages?

The lender's release process may differ from the building contract's payment dates. Identify inspection, certification and processing requirements before signing so the programme is not constrained by an avoidable funding gap.

#NU BLOG

Stage Payments on a London Renovation: What You Pay and When

11 minutes ago

3 min read

The first big invoice lands. It is larger than you expected. Nobody has explained how the number was reached.

That moment sours more London renovations than bad brickwork ever has. The work may be perfectly good. The problem is that money left the account before anyone agreed what it was buying.

Payment is not an administrative detail bolted on at the end. It is a mechanism, written into your contract, and you can read it before you sign. Here is how it works, and what to insist on. It sits alongside what an open-book estimate actually shows you.

How stage payments and valuations work

You do not pay for a renovation in one go. You pay in stages, against work that has been valued.

Your contract should define three things. How the work is valued. What evidence is provided. The payment timetable itself. If any of those is vague, that is the conversation to have now, not in month four.

A cash-flow forecast helps you plan funding. It is a planning tool and nothing more. It does not replace the agreed valuation process, and it is not a promise about any individual month.

Super prime London kitchen with bronzed tall units, a veined marble waterfall island and concealed lighting, the specification a valuation measures

What a valuation measures, and what it does not

A valuation measures work actually done. Not work promised. Not work started.

This is where an in-house quantity surveyor earns their keep. A QS develops cost plans, measures and prices work, compares tenders and tracks financial change. Valuations and final-account support can sit inside that appointment.

Ask for a forecast that separates four things. The original sum. Approved variations. Pending decisions and allowances. Remaining exposure. Money already paid is not the same as the forecast final cost, and confusing the two is how budgets quietly fail.

Retention, the money held back until the end

Where a contract uses retention, it withholds an agreed portion of each payment. That money is released at specified milestones.

The rate, the release triggers and the conditions are project-specific. Do not assume a standard figure because a friend quoted one. Read yours, and check both the completion release and any later release.

Provisional sums and contingency are not the same thing

These two get mixed up constantly, and the mix-up hides real risk.

A provisional sum is an allowance for work that is not fully defined when the price is prepared. It should stay visible in the budget, and the eventual adjustment depends on the contract and the scope actually instructed.

Contingency is different. It is a reserve against uncertainty. Counting the same risk in both places makes a budget look healthier than it is.

How much contingency is right depends on survey quality, building condition, scope and how mature the design is. A basement carries different risk from a light refurbishment. One percentage is not suitable for every home.

Why your lender's schedule may not match the builder's

If a lender is releasing money in stages, you now have two timetables. They are rarely identical.

The lender's release process may differ from the building contract's payment dates. Identify the inspection, certification and processing requirements before you sign, so the programme is not held up by an avoidable funding gap.

Do not assume lending or financial advice comes with a design-and-build service. Talk to an appropriately qualified adviser, then give the project team the lender's inspection and payment requirements in writing.

The questions to ask before you sign

Ask whether figures include VAT, and which design, consultant and application fees sit inside or outside the contract sum. Do not assume either way.

Ask how a change to the design will be handled. A change should be described and assessed for cost, time and knock-on effects before it is instructed, wherever that is practicable. Verbal requests create arguments about what was agreed.

Ask what an advance payment is for, when it falls due and how it is treated. Ask what happens to ordered goods if the project pauses.

Then ask to see the working. An open-book contractor can show you every line. If you want the underlying rates first, start with what a full house renovation costs in London.

Nick Jeffries, founder of NU Projects, who takes the free introductory call with homeowners

You should never be surprised by an invoice. Every NU estimate is open book, our quantity surveyor is in-house, and every valuation shows its working. Fill out the contact form or call 020 7731 6841 and let's get you booked in for a free call with Nick.