The construction party needs to buy raw materials, equipment and pay workers' wages when carrying out the project, and these expenses need to have a certain fund reserve. Because the general contractor usually pays all the expenses after the completion of the project, and the construction party needs to pay these expenses continuously during the project period, this will lead to problems in the cash flow of the construction party. In order to solve this problem, the general contractor can provide advance payment to ensure that the construction party can complete the project on time.
Specifically, the construction party needs to prepare certain funds to advance the project cost before the project starts, and these funds need financing. If the construction party does not have enough credit, it will be very difficult to obtain loans, which will affect the normal progress of the project. Therefore, the advance payment provided by the general contractor can help the construction party solve the financing problem, thus ensuring the smooth progress of the project.
At the same time, the advance payment provided by the general contractor can also enhance the trust and cooperation between the two parties. The construction party needs to constantly report the progress of the project to the general contractor during the project. The advance payment provided by the general contractor can show its trust and support to the construction party, thus enhancing the cooperative relationship between the two parties and facilitating the smooth progress of the project.
In a word, the construction party shall pay 40% of the cost to the general contractor to ensure that the project can be completed on time. The advance payment provided by the general contractor can help the construction party solve the financing problem, enhance the trust and cooperation between the two parties, and contribute to the normal progress of the project.