Contract & Payment Terms: How Money Should Actually Move on an Alberta Construction Project

A fixed-price contract sets one total number for a defined scope, putting the risk of cost overruns on the contractor. A cost-plus contract bills actual costs plus a fee, putting more of that risk — and more visibility into real spending — on the homeowner. Neither structure is wrong, but the contract needs to say plainly which one you're signing.

Ask directly which model you're being offered and why, and make sure it's stated in writing rather than implied by how the estimate looks. This decision should be made by a contractor who's already cleared the basics — confirm they're a licensed and insured business before pricing structure even becomes the conversation.

Almost every renovation encounters at least one surprise — old wiring behind a wall, a load-bearing beam nobody expected — and how that surprise gets priced and approved is exactly what a change order process is for. Without one, "extra work" becomes a vague argument at the final invoice.

Ask how change orders are documented, priced, and signed off before extra work begins — not after. This matters most exactly where structural changes and engineering are involved, since those surprises tend to be the most expensive and the most likely to get started on a verbal "just go ahead."

A payment schedule tied to completed, verifiable milestones — not calendar dates — keeps both sides accountable: the contractor gets paid for progress actually made, and the homeowner never pays significantly ahead of the work in the ground.

Ask what each payment is tied to — framing complete, rough-in inspection passed, drywall complete — and make sure those milestones are specific and verifiable. This pairs naturally with confirming permit approval and inspection sign-offs, since the strongest milestones are ones an inspector has already confirmed, not just ones the contractor says are done.

Alberta's prepaid contracting rules exist specifically to limit how much a contractor can collect before work actually starts, because large upfront deposits are one of the most common patterns in residential construction fraud.

Ask what the deposit is, why that amount, and whether the contractor holds a Prepaid Contractor License if the amount requires one. This is one more thread that ties back to the same business licensing check that should already be on your list before any money changes hands.

"Renovate basement" is not a scope of work — it's a headline. A real scope itemizes what's included, what materials and finishes are allowed for, and what happens if you want to upgrade beyond the allowance, so there's no ambiguity about what the price actually buys.

Ask for a line-item scope of work with specific allowances — flooring, fixtures, cabinetry — rather than a one-paragraph estimate. This should also spell out material specifications like insulation values and energy code compliance, since "code-compliant" needs to mean something specific in the contract, not just a general assurance.

The final payment is your last real point of leverage on a project — releasing it before inspections pass, deficiencies are fixed, and lien releases are collected removes any incentive for the contractor to come back and finish the last five percent.

Ask for a deficiency walkthrough, final inspection sign-off, and signed lien releases from subs and suppliers before releasing final payment — this directly connects to the Builders' Lien Act holdback requirements covered in our legal and licensing guide. It's also worth confirming closeout timing against the project's overall site schedule, so "final payment" doesn't get rushed just to hit a calendar date.