Construction Payment Schedules in Thailand: A Safe Split

What a Payment Schedule Is, and Why It Is Really About Protecting Your Money

A construction payment schedule divides the total build cost into stages, each one released when that part of the work is genuinely finished. The underlying principle is simple: the money you have paid out should roughly match the work standing on your land. Pay ahead of the work and the risk sits with you; pay behind it and the risk sits with the contractor.

The abandoned-site stories you hear around Korat and Roi Et mostly do not begin with a dishonest builder. They begin with a schedule that released too much money too early. Once a large sum has been pulled away to keep another job moving or to clear an old debt, your site starts running short of materials and labour, slows down, and eventually stops.

Structuring the stages well is not about squeezing the contractor. It is about aligning both sides on the same incentive: finish the work stage by stage, get paid stage by stage.

How Many Stages Is the Right Number

For an ordinary residential build in Thailand, approximately 6 to 10 stages is the usual range. A small single-storey house might work with 6, while a two-storey house with substantial electrical and plumbing work more often runs to 8 or 10. Too few stages and each payment becomes large and risky; too many and both sides wear themselves out with constant inspections.

The stages that work best are tied to milestones anyone can see: piling and foundations complete, ground floor structure complete, first floor structure complete, roof covering complete, walls built and rendered, electrical and plumbing installed, floor, wall and ceiling finishes complete, and a final stage on handover.

The advantage of milestones like these is that someone who is not a builder can still verify them. Whether the roof is on is a matter of looking up. Compare that with a clause saying the third stage is 20 percent of the work, which nobody can actually measure.

The Deposit and First Payment: How Much Is Reasonable

A first payment on signing of approximately 10 to 15 percent of the construction cost is the common range and is generally considered reasonable. That money goes on preparing the site, ordering piles and placing deposits on the main materials. It is not the contractor’s profit.

If you are asked for 30 to 50 percent on day one, ask precisely what it is for. Occasionally there is a genuine reason, such as a specialist material with a long production lead time, but even then it should be paid as a direct payment against that specific purchase order rather than rolled into one large deposit.

A lot of owners agree to a big opening payment out of politeness, or because they want work to start quickly, when a contractor with normal working capital simply does not need that much cash before the first pile goes in.

When to Pay, and What to Inspect First

The rule worth writing down is this: the contractor notifies you that the stage is complete, you or your inspector attend within an agreed window, say 3 to 5 days, and payment follows only once the work passes. Payment does not follow a message saying the work is done.

Before releasing each stage, check the work against the BOQ (bill of quantities) and the drawings, not merely against the fact that something has appeared on site. On structural stages, verify the reinforcement and the concrete specification before the pour, because once concrete is in place it cannot be inspected. On services stages, pressure-test the water lines and test the electrical circuits before the walls are closed up.

If you live in Bangkok or overseas and the house is in Korat, you need someone inspecting on your behalf who does not work for the contractor, whether an independent engineer or the site team of a home-building company. Photographs sent by the builder are fine for following progress but are no substitute for an inspection. One practical note for foreign owners: foreigners generally cannot own land in Thailand, so the title and often the build contract sit in a Thai spouse’s or Thai company’s name, and it is worth confirming that whoever signs the contract is also named as entitled to inspect and approve each stage.

Retention Money, and the Warning Signs to Watch For

Retention, money held back at approximately 5 to 10 percent of the construction cost, is deducted from each stage or withheld from the final one, and released when the warranty period expires or when all defects have been put right. It is the only leverage you have left once the house is finished. Without it, chasing remedial work after handover becomes very difficult.

The first warning sign is a request for money ahead of the work, justified by the need to order materials or pay wages. The second is a contract that sets payment dates by the calendar, end of every month for instance, rather than by progress. The third is a mid-build request to merge two stages into one.

None of these means you should terminate on the spot. It means going back to the contract and restating the agreed terms. A straightforward contractor will understand. Someone who reacts with unusual anger to having the agreed terms restated is usually someone already under cash-flow pressure.

How to Write the Schedule Into the Contract So It Works

The payment schedule belongs in an annex to the contract, setting out three things for every stage: the work that must be complete, the amount payable, and how it will be signed off. For example: stage 4, roof covering and guttering installed, 12 percent payable on the inspector’s signed certificate.

Keep variations separate from the main stages. Work the owner adds during construction should be priced and paid as its own line item with its own paperwork, never merged into a stage payment. Once the two are mixed, nobody can reconstruct how much was actually paid against which stage.

A home-building company such as OBILIS uses a schedule of this kind as standard on every house, and puts it in front of the owner before the contract is signed. If you are hiring an independent contractor, you can ask for exactly the same thing. It is a single sheet of paper, and it prevents more trouble than anything else in the file.

To get a rough budget before you talk to anyone, try our house price calculator, or contact the OBILIS team to talk through your plot.

Frequently Asked Questions

My contractor wants a 30 percent deposit. Should I pay it?

Ask for it to be broken down by purpose. If part of it covers specialist materials, pay that part directly against the purchase order. The contract deposit itself should sit in the range of approximately 10 to 15 percent, unless there is a specific reason written into the contract.

The stage is not fully complete but the contractor is asking for the money. What now?

Pay only the proportion genuinely completed, and record in writing which items are outstanding together with a date for putting them right. Paying a stage in full while items remain outstanding usually means those items stay outstanding until handover day.

When is retention money released?

Normally at the end of the agreed warranty period, one year after handover for example, or once all identified defects have been corrected. Put the conditions and the release date clearly in the contract so that neither side is left guessing.