What is a primary function of progress payments in a construction contract?

A primary function of progress payments in a construction contract is to ensure contractor liquidity. Progress payments are made at various stages during a construction project based on completed work, which helps maintain the cash flow needed for contractors to pay labor, materials, and other operational costs.

This mechanism is crucial as it allows contractors to manage their finances effectively throughout the duration of the project, rather than having to wait until project completion to receive full payment. Adequate liquidity is essential for contractors to keep their operations running smoothly, fulfill obligations, and avoid delays that might arise from financial strain.

Other options touch on important aspects, but they don't encapsulate the primary intent of progress payments as effectively. While controlling contractor behavior is a consideration of contract management, it does not represent the main purpose of progress payments. Similarly, while penalties for delays and finalizing project costs are relevant to the contract, they are not the direct objectives served by the structure of progress payments. The core reason for these payments is fundamentally tied to sustaining ongoing financial viability for the contractor through the lifecycle of the project.