Review progress billing, retainage, and schedule of values

Direct answer

Reconcile each schedule-of-values line and payment application to the contract, approved changes, supported work completed, and retainage terms. Keep requested, certified, invoiced, and paid amounts separate. Costs and estimated work remaining help test progress, but they do not by themselves prove a right to bill.

Why this question comes up

An application can include work not yet certified, while certified amounts may still be unpaid. Tracking each stage shows whether the gap is documentation, approval, billing, or collection.

Records to gather

• Contract and current schedule of values
• Payment applications and supporting progress evidence
• Certificates, invoices, receipts, and prior-period balances
• Retainage rate, accumulated amount, and release conditions
• Approved and pending changes; cost to date and cost-to-complete estimates

Review workflow

1. Reconcile contract values. The original sum plus approved changes should match the current contract total and schedule of values. Keep pending changes separately until their contractual treatment is confirmed.
2. Check the application line by line. Compare current and prior requested amounts with supported work and eligible stored materials under the contract. Investigate apparent billing ahead of or behind progress.
3. Track the approval path. Show what was submitted, certified, invoiced, paid, or disputed. A payment application is not a bank receipt.
4. Calculate retainage from the contract. Reconcile withheld and released amounts by line or application, then note the conditions and expected date for release. Its accounting classification depends on whether the payment right is unconditional; ask the accountant rather than automatically labeling it a receivable.
5. Review cost and profit separately. Compare cost to date plus cost to complete with the latest project budget. Contract assets, liabilities, and revenue recognition require the firm’s accounting policy and cannot be inferred from a simple billings-minus-costs formula.

What a useful answer should include

• Current contract value tied to the schedule of values
• Work claimed, supported, certified, invoiced, and paid by period
• Retainage withheld and released, with contract conditions
• Approved and pending changes shown separately
• Remaining cost forecast, exceptions, and responsible owner

Common failure modes

• Treating requested amounts as approved cash. Each stage has a different date and evidence requirement.
• Automatically classifying retainage as receivable. Conditional release may require contract-asset treatment under the applicable accounting framework.
• Assuming every pending change is billable. Check the contract and approval status before including it.
• Expecting the ledger to hold the full SOV. Contracts, applications, progress evidence, and change logs may need to be supplied outside connected financial data.