What is progress billing in construction?

Progress billing keeps cash flow moving across a long project. Instead of waiting until a roof is fully replaced or an HVAC system is fully installed, the contractor submits periodic invoices — usually monthly — for the percentage of work complete. The most common format is a Schedule of Values: a line-by-line breakdown of the contract price by work component, with each line updated to show the percentage done and amount already billed.

Progress billing shifts some financial risk from the contractor to the owner, which is why most commercial contracts require it. It also creates a natural opportunity for disputes: if the owner believes the contractor is 40% complete on electrical rough-in but the bill claims 60%, that gap needs to be resolved before payment. Many project delays and collection problems in construction trace back to unresolved progress billing disputes that accumulated over several billing cycles rather than being caught early.