Staged Payment Schedule: You Only Pay for Finished Work
Your money should never run ahead of the work. Every payment is tied to a construction stage that can be seen and verified — not a calendar date, not a big advance. This is our reference schedule. It follows the same principle as the Schedule G that LPPSA refers to, payment only after certified work, but the percentages are not the same; the full comparison is below.
- Stages
- 7
- Confirmation deposit
- 5%
- Final payment
- 5%
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- Payment runs in 7 stages, each tied to construction work that is verified, not to a calendar date.
- The confirmation deposit is only 5%; the final 5% is paid at handover, once the defects list is cleared.
- With LPPSA or a bank, the financier pays the contractor directly against verified progress claims; you settle only any difference (wang beza) first.
- A family building one house on its own land is outside Act 118, so the contract itself sets the payment schedule.
- Warning signs: a large payment before work starts, a claim with no certificate behind it, and payment in cash or to a personal account.
One of the questions asked most often, and answered least clearly in this industry: when does the money go out? The table below is the answer. Each stage states what must be finished and verified before a claim is made.
The example below uses a construction cost of RM450,000 to show the real amount at each stage. The final schedule and terms are set out in your contract; the contract is what binds, not this page.
| Stage | Verification required | % | Example RM450,000 |
|---|---|---|---|
| 1. Confirmation deposit After the contract is signed and the working drawings are finalised. This books your construction slot and starts mobilisation. | Contract signed, approved plans received | 5% | RM22,500 |
| 2. Site work & foundations Site clearing, setting out, excavation, concrete footings and foundations completed, tested and verified by the engineer. | Foundations verified, the relevant Form G signed | 15% | RM67,500 |
| 3. Ground-floor structure Ground-floor columns, beams and slab completed. For a two-storey house, this includes the upper floor slab. | Structure verified by the engineer | 20% | RM90,000 |
| 4. Walls & roof Brickwork, roof frame and tiles installed. The house becomes weathertight at this stage. | Roof complete, house watertight | 20% | RM90,000 |
| 5. M&E & plastering Electrical wiring, water piping, sewerage, and plastering of walls and ceilings. | Plumbing and wiring tests passed | 15% | RM67,500 |
| 6. Finishes Tiles, doors, windows, kitchen cabinets, bathroom fittings, paint and external finishes. | All finishes installed | 20% | RM90,000 |
| 7. Handover & final payment Paid at handover, after a joint inspection and once the defects list is cleared. This is the final payment, not a retention: it is not held through the defects liability period, and defects that appear after handover are handled under the warranty. | Defects list cleared, keys handed over | 5% | RM22,500 |
| Total | 100% | RM450,000 |
How progress claims work
If you finance through LPPSA or a bank, you do not pay us directly during construction, apart from any difference between the build cost and the amount financed. The process:
- A stage of work is completed on site.
- An engineer or supervisor verifies the work complies with the approved plans and signs the stage certificate.
- We prepare the progress claim in the format the financier expects.
- The financier checks it, then pays us directly.
- You receive a record of every disbursement.
Our status as an LPPSA, CIMB and Maybank panel contractor means our claim documents already follow the format they expect. That shortens disbursement times, and it is the only practical benefit of panel status you will actually feel.
How this schedule compares with Schedule G
Schedule G is the standard sale and purchase agreement for landed houses under the Housing Development (Control and Licensing) Regulations 1989, made under the Housing Development (Control and Licensing) Act 1966 (Act 118). Its Third Schedule sets when a buyer pays a licensed developer. Every payment notice must be supported by a certificate signed by the developer's architect or engineer, and the buyer pays within 30 days of receiving the notice.
Act 118 governs “housing development”: building more than four units of housing accommodation. A family building one house on its own land with a contractor is outside that definition, so there is no statutory payment schedule for your contract: the contract itself sets it. Schedule G still matters, because LPPSA's guideline for Jenis 2 financing says payment follows the Third Schedule to Schedule G, and JPPH inspects the progress of the build before each release up to 95% complete.
The table puts the two side by side, as the cumulative percentage paid once each stage is complete.
| After this stage | Schedule G (cumulative) | Our reference schedule (cumulative) |
|---|---|---|
| Agreement signed | 10% | 5% |
| Foundations | 20% | 20% |
| Structural framework | 35% | 40% |
| Walls with door and window frames; roof, wiring and plumbing (without fittings) | 55% | 60% |
| M&E and plastering (in Schedule G, wiring and plumbing sit in the row above) | — | 75% |
| Internal and external finishes | 65% | 95% |
| Sewerage, drains and roads serving the house | 75% | — |
| Vacant possession / handover | 92.5% | 100% |
| Title delivered to the buyer | 95% | — |
| 8 and 24 months after vacant possession | 100% | — |
What is different
- Smaller first payment. Schedule G takes 10% when the agreement is signed; our schedule takes 5%.
- Further ahead in the middle of the build. From the structure onwards our schedule is ahead of Schedule G: after finishes it has reached 95%, where Schedule G is at 65%, because Schedule G keeps separate stages for estate works and puts 17.5% on vacant possession.
- Estate works. Schedule G pays for the sewerage, drains and roads serving the house as separate stages (5%, 2.5% and 2.5%), because in a housing estate the developer builds them for the whole project. In our schedule, sewerage sits inside the M&E stage.
- Retention after handover. Schedule G holds the last 5% with the developer's solicitor as stakeholder, releasing 2.5% after 8 months and 2.5% after 24 months, which is its defects liability period. In our schedule the last 5% is paid at handover, after the defects list is cleared.
If you finance through LPPSA, LPPSA's own release rules decide when its money moves: in stages against JPPH progress reports up to 95%, then the last 5% once the CCC (or CF) is received or six months after the 95% payment was released, whichever comes first. Before you sign with any contractor, ask how its contract schedule lines up with your financier's releases. The full LPPSA Jenis 2 process.
Schedule G percentages are from the text as amended in 2015, which applies to developers licensed from 1 July 2015. Projects licensed before that date still use the older form, which splits the final stages differently.
Your own money: the difference, interest during the build, and records
LPPSA defines wang beza as the difference between the property price and the financing approved, and it must be settled by you first, before LPPSA releases any financing. LPPSA also does not finance plan preparation or site preparation, so budget for those separately. LPPSA's rules in full.
With a bank loan, money is also released in stages, and during construction you pay interest only on what has been released. Banks publish the formula in their product disclosure sheets, typically: amount released × interest rate × (days ÷ 365). Example: once RM180,000 has been released (40% of RM450,000), at an assumed 4.3% a year, interest for 30 days is about RM636. The real rate is the one in your letter of offer; this one is our assumption as at 2026-09-23.
Warning signs
- A large payment before work starts. Schedule G limits the payment on signing to 10%, and the CIDB 2022 form has no advance payment at all.
- A claim with no certificate behind it. In Schedule G, PAM and CIDB alike, payment follows a professional's certificate (architect, engineer or Superintending Officer), not the contractor's invoice on its own.
- A claim ahead of the work. The standard forms pay only for work properly carried out, and for materials on site only when they were not brought in prematurely and are protected.
- Cash, or payment to a personal account. LPPSA releases money only to the contractor or a stakeholder lawyer. If you pay yourself, pay the company account named in the contract and ask for a receipt.
- An unregistered contractor. Check the contractor's CIDB number in CIDB's public contractor search before paying anything.
- Extra work agreed only by word of mouth.
Records to keep
- The signed contract, including the payment schedule, specification and rates.
- Every progress claim with the certificate behind it, and dated photos of the work at that stage.
- A receipt or statement for every payment, including the release statements from LPPSA or the bank.
- Every variation instruction in writing, with the price agreed before the work is done.
- Copies of the Form G certificates signed during construction.
- The defects list at handover, and proof each item was fixed.
- Dated written correspondence about any delay or dispute.
For the detail-minded
Further reference
The rules and details behind the guide above. Open only what applies to you.
How the standard contract forms handle payment
How the PAM 2018, CIDB 2022 and Schedule G forms handle claims, certificates and retention, plus bonds and variation pricing.
Contracts for a single house are often simpler, but Malaysia's standard forms show what the industry accepts as normal practice. The three most often referred to:
PAM Contract 2018 (With / Without Quantities)
- The contractor applies for payment at the interim claim interval set in the contract, usually monthly.
- The architect issues an Interim Certificate within 21 days of receiving a complete application. Under the With Quantities form, the quantity surveyor prepares the valuation.
- The employer pays within the Period of Honouring Certificates in the Appendix. If not, the contractor may give notice and suspend work, charge interest, or end its own employment.
- Retention is a flat percentage of certified value, 5% if none is stated, with no upper limit. (PAM 2006: 10%, up to a limit of 5% of the contract sum.)
- Half the retention is released after the Certificate of Practical Completion (CPC); the rest after the defects liability period ends and the Certificate of Making Good Defects is issued.
CIDB Standard Form for Building Works 2022
- The contractor submits a Statement of Work Done at the agreed interval, monthly if none is stated. Stage payments may be listed in the Appendix instead.
- The Superintending Officer issues an Interim Certificate within 21 days.
- The employer pays within 21 days of the certificate unless stated otherwise; late payment carries simple interest, 2% above Maybank's base lending rate if none is stated.
- Retention is 5% if none is stated, kept by the employer in a separate trust bank account.
- Half is released within 14 days of the CPC; the rest after the defects liability period (12 months if none is stated) or the Certificate of Making Good Defects, whichever is later.
- Materials delivered to site are paid at the Appendix percentage (75% if none is stated), and only once brought to site at a proper time and protected.
Schedule G (buying from a developer)
- 10% on signing, the rest by construction stage.
- Every notice is supported by the developer's architect's or engineer's certificate, which is proof the work is complete.
- The buyer pays within 30 days of the notice; late payment attracts interest at 10% a year.
- Defects liability period of 24 months from vacant possession, with 5% held by the developer's solicitor.
Deposits, bonds and security
The CIDB 2022 form has no advance payment at all. Security for each side takes other forms, where the optional modules are used: a Payment Bond from the employer to the contractor (Option Module E, 5% of the contract sum if none is stated), which the contractor can draw on if a certificate is not paid; and a Performance Security Deposit from the contractor to the employer (Option Module F, 5% if none is stated), held until the CPC.
Variation orders: how the price is worked out
The CIDB 2022 form defines a variation widely: more or less of any item, added or omitted work, a change of quality or material, and changes to levels, layout or dimensions. An omission reduces the contract sum just as an addition increases it. Variations are instructed in writing, and valued in this order: the contract's own rates where the work is similar; the contract rates with a fair allowance where conditions or quantities change; fair market rates where neither fits; and daywork only where it was authorised in writing first, with 15% added to daywork rates unless stated otherwise. That is why the rates in your quotation or bill of quantities matter: they become the price of every change.
CIPAA 2012: rights when a payment is unpaid, and the exemption for your own home
The payment claim and adjudication steps under CIPAA, and the section 3 exemption for a house you build to live in.
The Construction Industry Payment and Adjudication Act 2012 (CIPAA, Act 746) is a fast route for payment disputes under written construction contracts:
- The unpaid party serves a written payment claim stating the amount and due date, the contract provision it relies on, the work claimed for, and that it is made under the Act (s.5).
- The other party has 10 working days to serve a payment response, either paying or stating the amount disputed and why. Silence means the whole claim is treated as disputed (s.6).
- Either party may then refer the dispute to adjudication (s.7).
- If an adjudicated amount is not paid, the winning party may give notice and, 14 calendar days later, suspend or slow down the work (s.29).
- “Pay when paid” terms, including payment conditional on the drawdown of financing, are void (s.35).
- If the contract has no payment terms, progress payments are monthly and due 30 calendar days after the invoice is received (s.36).
The section 3 exemption
Section 3 reads: the Act “does not apply to a construction contract entered into by a natural person for any construction work in respect of any building which is less than four storeys high and which is wholly intended for his occupation.” All three conditions must be met together: the contract is signed by an individual, not a company; the building is less than four storeys high; and it is wholly intended for that person to occupy.
So when you personally sign a contract to build a single- or double-storey house that you will live in, CIPAA does not apply to that contract. That is not the same as having no protection: both sides still rely on the contract terms and the courts, or arbitration if the contract provides for it. But there is no 10-working-day adjudication route, and the s.35 ban on “pay when paid” does not apply to that contract either, so read the payment and dispute clauses of your own contract carefully.
CIPAA may apply if any condition is not met, for example a contract made in a company's name, or a house built to rent out or sell. If your position is unclear, get a lawyer's advice before relying on either.
Frequently asked
Who pays — me or the financier?
What happens if a stage is slow to be verified?
Can I withhold payment if I am not satisfied?
Does a variation order change this schedule?
Why is the deposit only 5%?
Does the Housing Development Act protect me?
What retention percentage is normal?
Can a contractor claim for materials just delivered to site?
See the real figures for your project
The cost estimator gives the overall total; our formal quotation breaks it into the seven stages above, with the exact amount for each. Both are free.