How to use the progress billing calculator
- Enter the contract value and any approved change orders, using a negative number for credits.
- Enter the percent complete and the amount you have billed so far.
- If your contract holds back retainage, enter the percent. It is an input from your contract and not a rule.
- Read the amount to bill now, what the contract has left and any retainage held.
Formula
Contract value with changes = contract value + approved change orders
Earned to date = contract value with changes x percent complete / 100
Amount to bill now = earned to date - billed so far (zero if you are ahead of the work)
Retainage held = amount to bill now x retainage percent / 100
If billed so far is more than earned to date, the tool shows how far you are billed ahead of the work and an amount to bill of $0.00.
A $50,000 contract that is 40% complete
A $50,000 contract that is 40% complete has earned $20,000. With $15,000 already billed, the amount to bill now is $5,000 and $30,000 of the contract is left to bill after this invoice.
With a $10,000 change order the contract is $60,000, earned to date is $24,000 and the amount to bill is $9,000. If your contract holds back 10% retainage, $900 is held and $8,100 is payable now. If you had billed $15,000 when only 20% was complete, you would be billed ahead of the work by $5,000 and nothing would be due.
How progress billing works
On a longer job, contractors usually invoice as work is completed instead of at the end. Each invoice bills the value of the work done so far, less what was already billed. Percent complete can be measured by cost, by quantities installed or by a schedule of values, and the measure should match your contract.
Billing ahead of the work leaves the owner paying for work that is not done yet. The tool flags it so you can decide whether the amounts match what the contract allows.
What the contract and the law control
Your contract, the project owner and the laws of your state govern how progress is measured, how retainage works, when payment is due and what documents you must supply. This tool only does the arithmetic on the numbers you enter. It does not check lien deadlines, taxes or whether a percent complete will be approved.
Track the held amount with the retainage calculator, create an invoice with the invoice generator, compare with a fixed split in the milestone payment schedule calculator, or build the price in the project quote calculator.
Assumptions and limits
- Percent complete is a measure you and the owner agree on, applied to the full contract value including change orders.
- Billed so far is the total of earlier invoices on this contract.
- Retainage, if any, is a percent of this invoice only and comes from your contract.
- Taxes, lien rights and approval of the percent complete are outside the tool.
Frequently asked questions
How do you calculate progress billing?
Multiply the contract value by the percent complete to find what has been earned, then subtract what you have already billed. The difference is the amount to bill now.
What if I have already billed more than I have earned?
The tool shows the amount you are billed ahead of the work and an amount to bill of $0.00, since there is nothing to invoice until the work catches up.
How are change orders handled?
Approved change orders are added to the contract value before the percent complete is applied. Use a negative number for a credit.
Is retainage required?
Only if your contract says so. Leave it blank for none, or enter the percent your agreement withholds from this invoice.