Progress billing and retainage: calculating the payment due
Calculate earned value, retainage held and the current payment due per schedule-of-values line, with a three-line worked example and common pitfalls.
On a progress bill, each line of the schedule of values earns its value times the share completed. The owner holds back a percentage as retainage, and the payment due is earned to date, less retainage, less what earlier bills already paid.
How do you calculate the payment due?
For a fictional concrete line with a $100,000 scheduled value, 60 percent complete, 10 percent retainage and $36,000 already billed net:
| Item | Formula | Result |
|---|---|---|
| Earned to date | =B11*C11 |
$60,000 |
| Retainage held | =F11*D11 |
$6,000 |
| Current payment due | =F11-G11-E11 |
$18,000 |
The prior amount is net of retainage. Entering the gross amount previously billed would deduct retainage twice.
What does a full bill look like?
| Line | Value | Complete | Earned | Retainage | Prior net | Due |
|---|---|---|---|---|---|---|
| 03 Concrete | $100,000 | 60% | $60,000 | $6,000 | $36,000 | $18,000 |
| 05 Structural steel | $80,000 | 50% | $40,000 | $4,000 | $20,000 | $16,000 |
| 09 Interior finishes | $60,000 | 25% | $15,000 | $1,500 | $0 | $13,500 |
The bill totals $47,500 due and $11,500 of retainage held to date. The retainage tracker sums each column.
Where do bills go wrong?
- Front-loading percent complete on early lines, which relates to unbalanced bids.
- Applying a different retainage rate than the contract states, or forgetting that some contracts reduce the rate after a milestone.
- Leaving out approved change orders. Add them as lines with their own scheduled value; the change order estimate builds the amount.
- Billing time-related items like site supervision as lump sums rather than by duration; the general conditions estimator separates weekly and fixed costs.
The workbook excludes stored materials and partial retainage releases, so add them as separate lines if the contract allows them. Retainage rules vary by contract and jurisdiction; confirm yours before billing.