Progress payments on a contract are typically described as what?

• A. They may be outlined in the compensation section of a contract
• B. They must be paid upfront
• C. They are only for maintenance contracts
• D. They must be avoided

Answer: (A)

Progress payments are payments tied to work completed during the project rather than paid upfront or only at the end. The contract typically describes these payments in the compensation section, which covers how much is paid, when, and under what conditions progress payments are released. This section often includes a schedule of values, milestones or percentages of completion, and any retainage. Having the terms in the compensation section helps align cash flow with actual work done and reduces disputes by making expectations clear. Upfront payments are not the standard description of progress payments; they aren’t limited to maintenance contracts, and progress payments are a normal practice when properly documented and agreed upon.