It is well to state in the specifications the plan of payment. Where the terms of payment are not stated, many contractors are frightened off from big work by the fear that a large amount of their working-capital will be indefinitely tied up in the building. The terms of payment are of as much importance to a careful contractor as is the ownership of the buildings, or who is to superintend the installation; and he is entitled to know this important fact before submitting his bid. Another important consideration to bear in mind is the fact that when everything appertaining to the contract is stated in the specifications, a simple line accepting the offer of the contractor "to furnish all labor and material according to the plans and specifications," for a certain amount, closes the contract without further formality. It does also when the terms of payment are not stated in the specifications, but in such case the contractor is not entitled to payment until the work is entirely completed and accepted. Of course, that right of the owner to have the work completed before payment can be waived, and usually is waived, but the uncertainty as to terms often deters a responsible concern from estimating on work.

On small installations, payments are usually made in three different stages of the work. The first payment is usually made when the roughing-in is completed, and the amount is based on the net cost of the work to the plumber, less a certain percentage, usually 10 per cent., held back until the final payment, as a protection to the owner in case the contractor refuses or is unable to proceed with his contract. The second payment is usually made when all fixtures and finishing materials are delivered on the premises, and the final payment when the work is satisfactorily completed and accepted.

In large installations the work is usually paid for monthly, on certificates from the architect, who deducts 10 per cent. from each monthly payment, which is reserved for the final payment.