Draw Schedule Chart: Deposit, Progress Draws and Final Payment
Twelve contract sizes against three to eight progress draws, with what the deposit and the final payment come to, and what changes when retainage is held from each draw.
A draw schedule is the payment half of the contract. It says what is paid at signing, what is paid as the work progresses, what triggers each payment, and what is held until the job is accepted. Written badly it is the single most common cause of a fight at the end of a residential job.
The arithmetic here is straightforward: a deposit percentage, a final payment percentage, and the rest divided across the draws. What makes it work is not the arithmetic but tying each draw to a visible milestone that both sides can stand in front of and agree has happened.
Each progress draw, by contract size and number of draws
| Contract | 3 draws | 4 draws | 5 draws | 6 draws | 8 draws |
|---|---|---|---|---|---|
| $25,000 | $6,666.67 | $5,000.00 | $4,000.00 | $3,333.33 | $2,500.00 |
| $50,000 | $13,333.33 | $10,000.00 | $8,000.00 | $6,666.67 | $5,000.00 |
| $75,000 | $20,000.00 | $15,000.00 | $12,000.00 | $10,000.00 | $7,500.00 |
| $100,000 | $26,666.67 | $20,000.00 | $16,000.00 | $13,333.33 | $10,000.00 |
| $150,000 | $40,000.00 | $30,000.00 | $24,000.00 | $20,000.00 | $15,000.00 |
| $200,000 | $53,333.33 | $40,000.00 | $32,000.00 | $26,666.67 | $20,000.00 |
| $250,000 | $66,666.67 | $50,000.00 | $40,000.00 | $33,333.33 | $25,000.00 |
| $300,000 | $80,000.00 | $60,000.00 | $48,000.00 | $40,000.00 | $30,000.00 |
| $400,000 | $106,666.67 | $80,000.00 | $64,000.00 | $53,333.33 | $40,000.00 |
| $500,000 | $133,333.33 | $100,000.00 | $80,000.00 | $66,666.67 | $50,000.00 |
| $750,000 | $200,000.00 | $150,000.00 | $120,000.00 | $100,000.00 | $75,000.00 |
| $1,000,000 | $266,666.67 | $200,000.00 | $160,000.00 | $133,333.33 | $100,000.00 |
The full schedule at four draws
| Contract | Deposit at signing | Each of 4 draws | Final payment |
|---|---|---|---|
| $25,000 | $2,500.00 | $5,000.00 | $2,500.00 |
| $50,000 | $5,000.00 | $10,000.00 | $5,000.00 |
| $75,000 | $7,500.00 | $15,000.00 | $7,500.00 |
| $100,000 | $10,000.00 | $20,000.00 | $10,000.00 |
| $150,000 | $15,000.00 | $30,000.00 | $15,000.00 |
| $200,000 | $20,000.00 | $40,000.00 | $20,000.00 |
| $250,000 | $25,000.00 | $50,000.00 | $25,000.00 |
| $300,000 | $30,000.00 | $60,000.00 | $30,000.00 |
| $400,000 | $40,000.00 | $80,000.00 | $40,000.00 |
| $500,000 | $50,000.00 | $100,000.00 | $50,000.00 |
| $750,000 | $75,000.00 | $150,000.00 | $75,000.00 |
| $1,000,000 | $100,000.00 | $200,000.00 | $100,000.00 |
The same schedule with 10 percent retainage held from each draw
| Contract | Deposit | Each draw, net | Final payment | Retainage released |
|---|---|---|---|---|
| $25,000 | $2,500.00 | $4,500.00 | $2,500.00 | $2,000.00 |
| $50,000 | $5,000.00 | $9,000.00 | $5,000.00 | $4,000.00 |
| $75,000 | $7,500.00 | $13,500.00 | $7,500.00 | $6,000.00 |
| $100,000 | $10,000.00 | $18,000.00 | $10,000.00 | $8,000.00 |
| $150,000 | $15,000.00 | $27,000.00 | $15,000.00 | $12,000.00 |
| $200,000 | $20,000.00 | $36,000.00 | $20,000.00 | $16,000.00 |
| $250,000 | $25,000.00 | $45,000.00 | $25,000.00 | $20,000.00 |
| $300,000 | $30,000.00 | $54,000.00 | $30,000.00 | $24,000.00 |
| $400,000 | $40,000.00 | $72,000.00 | $40,000.00 | $32,000.00 |
| $500,000 | $50,000.00 | $90,000.00 | $50,000.00 | $40,000.00 |
| $750,000 | $75,000.00 | $135,000.00 | $75,000.00 | $60,000.00 |
| $1,000,000 | $100,000.00 | $180,000.00 | $100,000.00 | $80,000.00 |
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Tie every draw to something you can point at
A draw that comes due on a date invites an argument about whether the work matching it was done. A draw that comes due on a milestone does not, because the milestone either happened or it did not: the slab is poured, the frame is up and inspected, the roof is dried in, the rough inspections passed, the drywall is hung, the job is substantially complete.
Put the trigger in the contract in the same sentence as the amount. Number of days after the previous payment is not a trigger, and percent complete is a trigger only if the contract says who measures it.
Stay ahead of the work, and not far ahead of it
The point of a draw schedule is that you are never financing much of the job and the customer is never paying for much they have not received. Front loading it heavily looks good until the customer's lender or lawyer reads it, and then it becomes the reason the contract is not signed.
A useful test is to walk each milestone and ask what the job would look like if either side walked away right after that payment. If the contractor would be far ahead or far behind at any point, move the money.
Deposits are regulated, and the limit is a state one
Several states cap what a residential contractor may collect before work starts. The caps are usually a percentage of the contract or a fixed dollar figure, whichever is smaller, and some states require the money to be held in a separate account or bonded.
Home improvement contract rules often come with other mandatory terms as well: a written contract above a dollar threshold, a three day right to cancel, a license number on the document. Check the state rule before printing a deposit figure on a proposal.
The final payment is the leverage, and it should be small
A large final payment gives the customer a reason to find one more item on the punch list every week. Five to ten percent is enough to keep both sides interested in finishing and small enough that nobody is tempted to use it as a bargaining chip.
Say in the contract what completion means and what happens if the customer occupies the work before it is declared. Beneficial occupancy without a defined final payment trigger is how a job stays ninety eight percent finished for four months.
Questions people ask
What is a typical draw schedule for a construction contract?
Ten percent at signing, then three to five progress draws tied to milestones, then ten percent at completion. Larger and longer projects use more draws so neither side carries much of the job.
How much deposit can a contractor ask for?
It is a state question. Several states cap a residential deposit at around ten percent of the contract or a fixed dollar amount, whichever is less, and some require it to be held separately.
What should trigger a progress draw?
A visible milestone: slab poured, framing inspected, dried in, rough inspections passed, drywall hung, substantial completion. A calendar date is not a trigger and leads to arguments about what was delivered for the money.
Should the final payment be large?
No. Five to ten percent is enough to motivate a clean finish. A large final payment gives the customer an incentive to keep the punch list open and gives you an incentive to argue about it.
How is retainage different from a draw schedule?
The draw schedule sets when payments become due. Retainage is a percentage held back from those payments until closeout, so the two work together rather than replacing each other.