RA Bills and Progress Billing, Step by Step

A contractor can execute beautiful work and still go bankrupt — if billing lags execution. The RA bill (running account bill, also called a progress bill or interim bill) is the instrument that converts measured work into cash at regular intervals instead of waiting for project completion. Whether you raise RA bills as a contractor or check them for a client, you must be able to build one line by line and defend every figure. This lesson walks the full cycle and computes one complete bill from gross value to net payable.

The billing cycle

The cycle repeats every billing period (monthly on most private jobs, or at agreed progress stages):

1. Measure completed work jointly and record it in the MB (Lesson 2).
2. Prepare the abstract — cumulative quantities per BOQ item, with MB page references.
3. Value the abstract at agreement rates: this gives the gross value of work done up to date.
4. Deduct the previous bill's gross value — what remains is this bill's work value.
5. Add taxes (GST as applicable) and apply deductions: retention, advance recoveries, material recoveries, TDS.
6. Submit, check, certify, pay. The checking engineer verifies quantities against the MB, rates against the agreement, and arithmetic — then certifies. Payment follows per the contract's payment terms (commonly 7–15 days from certification on private work).

Cumulative billing: the logic that prevents double payment

RA bills are always cumulative (up-to-date), not incremental. You never measure "this month's work" directly; you measure total work executed since day one, then subtract everything already billed:

• A = gross value of all work done up to date (from cumulative measurements)
• B = gross value up to the previous RA bill
• C = A - B = value of this bill

This structure is self-correcting: if a quantity was slightly under-measured last month, this month's cumulative measurement automatically catches it up. It also makes double billing impossible — an item cannot be paid twice because only the cumulative total is ever valued. When you check a bill, always verify column A against the MB, not just column C.

Part-rates: where an item is genuinely incomplete (plaster done but final coat pending), practice is to allow a part-rate — a stated fraction of the agreement rate — with the balance released when complete. Record the part-rate explicitly in the bill so the balance is not forgotten.

Secured advance: many contracts (standard in government forms) allow an advance against non-perishable materials brought to site but not yet used — commonly around 75 per cent of material value in public-works practice, recovered as the material is consumed. On private jobs this exists only if the agreement says so.

Worked example: RA-4 from gross to net payable

Setup: item-rate contract of Rs. 1.20 crore for a residential project. Contractor is a private limited company (so income-tax TDS at 2 per cent applies); client deducts 5 per cent retention per bill; a mobilisation advance of Rs. 12,00,000 (10 per cent) was paid at start and is being recovered at 10 per cent of each bill's work value. GST applies at 18 per cent, the standard rate for works contract services (post the September 2025 rate rationalisation) — treatment varies by project type, so confirm your case with a CA.

Step 1 — cumulative value:

Step 2 — taxes and deductions:

Verify each line yourself: GST = 17,30,000 x 0.18 = 3,11,400. Retention = 17,30,000 x 0.05 = 86,500. Advance recovery = 17,30,000 x 0.10 = 1,73,000. TDS = 17,30,000 x 0.02 = 34,600. Net = 20,41,400 - 86,500 - 1,73,000 - 34,600 = 17,47,300.

Two conventions to note, both commonly applied practice to confirm with your CA:

• TDS is computed on the work value excluding GST when GST is shown separately on the invoice (per CBDT guidance). Deducting TDS on the GST-inclusive total over-recovers from the contractor.
• Retention is typically computed on work value, not the GST-inclusive amount — but contracts differ; read the clause, do not assume.

The deducted amounts are not lost to the contractor: retention returns after the defect liability period (Lesson 6), the advance was money already received, and TDS appears as a credit against the contractor's income tax. But they are all real subtractions from this month's cash — which is why a contractor pricing a job must model net cash per bill, not gross value. Remember the other side of the ledger too: your cement and steel dealers typically give 30–45 days credit. If billing slips to a 60-day cycle, dealer interest (commonly 1.5–2 per cent per month on overdue accounts) starts eating the margin that the BOQ said existed.

How a clean RA trail protects you in a dispute

A running account has a quiet legal strength: every certified and accepted bill closes the account up to that point. If RA-1 to RA-3 were measured jointly, certified (by the client's engineer or PMC on developer jobs) and paid without protest, a later dispute is effectively confined to the current bill and the final account — nobody credibly reopens slab quantities from eight months ago against their own signed certification. This is why you should never let bills be paid "on account, to be adjusted later" without written notes of exactly what is disputed: an unqualified acceptance protects both sides, and a vague one protects neither. For an owner dealing with a contractor, the same logic applies in reverse — certify precisely what you accept, list what you contest in writing, and the dispute stays small.

Checking someone else's RA bill

When you sit on the client side, check in this order — it catches 90 per cent of padding:

1. Cumulative quantities vs MB. Every abstract quantity must cite MB pages; spot-check the big-value items (concrete, steel, finishes) fully.
2. Rates vs agreement. Rates quietly drift upward between bills more often than you would believe. Check against the signed BOQ, not the previous bill.
3. Arithmetic. Recompute A - B and every percentage. Errors are surprisingly common and rarely in the payer's favour.
4. Deduction continuity. Retention and advance-recovery totals must roll forward correctly from bill to bill — keep a one-page deduction ledger per contract.
5. New items. Anything not in the agreement BOQ needs an approved rate and written instruction (Lesson 5) before it enters a bill.

Common mistakes

• Billing incrementally instead of cumulatively — makes reconciliation impossible and invites double payment.
• Skipping small RA bills. Billing whatever is measured monthly beats waiting to "make it a big one"; delayed billing is an interest-free loan to the client.
• No deduction ledger, so advance recovery stops silently or retention is over-deducted at final account.
• Certified-but-unpaid drift. Certification without payment date tracking lets receivables balloon. Track days-since-certification like you track slab cycles.
• Round-figure bills. A bill of exactly Rs. 15,00,000 signals estimation, not measurement, and invites hostile checking.

What comes next

The RA bill above assumed one contractor and one client. Real sites have layers: subcontractors billing the contractor under work orders, back-to-back terms, and free-issue materials. The next lesson takes the same billing discipline down one level — work orders and subcontractor billing.