Cash flow and the S-curve

The S-curve is the one chart every lender, sponsor and board member recognizes. It shows the plan for spending the Contract Price month by month, and how actual progress compares. For the owner it does a second job: it is the funding forecast. Combine it with Ontario's prompt payment clock and the holdback rules and you know how much cash you need, and when, for the life of the job.

Learning outcomes

• Explain why a construction cost curve is S-shaped and build one from a cost-loaded schedule or schedule of values.
• Read planned against actual cumulative value, in dollars and in time.
• Turn monthly value of work into an owner cash forecast using CCDC 2-2020 payment terms and Ontario prompt payment timing.
• Show the 10% holdback and the annual holdback release in the owner's cash plan.

The lesson

Where the S comes from

Spending on a building starts slowly. Mobilization, excavation and footings use small crews and cheap materials. It speeds up when the expensive trades overlap: structure, envelope, mechanical and electrical rough-in. It slows again in finishes, testing and commissioning, when crews shrink and much of the remaining value is small. Plot the monthly values and you get a hump; plot the running total and you get an S. The steep middle is where the money goes and where a month's slip costs most.

Building the curve

There are two practical sources. The better one is a cost-loaded schedule: each activity in the contractor's baseline carries a value, so the planned curve moves when the schedule moves. The other is the schedule of values. Under CCDC 2-2020 GC 5.2 the contractor must give the Consultant a schedule of values, broken down by parts of the Work, at least 15 days before the first application for payment [1]. Spread each line over its planned activity dates and you have a planned curve that ties to the same numbers the Consultant will certify.

Either way, fix the baseline curve when the baseline schedule is accepted and do not redraw it every month. Approved Change Orders can be added as a separate layer, so the original curve stays comparable.

Reading planned against actual

The actual curve is the cumulative value of work certified each month. Read the gap two ways. Vertically, it is a dollar gap: work planned but not yet done. Horizontally, it is a time gap: how many days ago the plan reached today's actual value. The horizontal reading is the one sponsors understand, and it is a useful cross-check on the schedule update. If the schedule says the job is on time but the S-curve says it is three weeks behind, one of them is wrong.

The ratio of actual to planned value at the cut-off is the earned value schedule performance index, SPI. It is easy to compute and easy to over-read: late in a job SPI drifts back toward 1.0 even on a late project, because everything planned eventually gets done. Use it as a trend, alongside the critical path, not instead of it.

From value of work to owner cash

The curve is value of work, not cash. Two things stand between them: payment timing and holdback.

Under CCDC 2-2020 the contractor applies monthly to the Owner and the Consultant at the same time; the Consultant issues a certificate within 10 days of receiving the application, and the Owner pays on or before 28 days after receiving it, in line with any payment legislation [1][2]. Ontario's Construction Act sets the outer limits. A proper invoice is given monthly unless the contract says otherwise. The owner must pay within 28 days of receiving it, and may dispute all or part only by a notice of non-payment in the prescribed form within 14 days, paying the undisputed balance on time [3][4]. A proper invoice cannot be made conditional on certification [4]. Since January 1, 2026, a proper invoice is deemed compliant unless the owner gives written notice of what is wrong within seven days [5].

So the owner's cash for a month's work leaves roughly four weeks after the end of that month, and the cash curve is the value curve shifted right by one month and reduced by holdback.

Holdback in the cash plan

The owner retains 10% of each payment as holdback under the Construction Act, so 90% goes out monthly and the rest accumulates. For contracts entered into on or after January 1, 2026, holdback is released annually: within 14 days after each contract anniversary the owner publishes a notice of the holdback amount, and pays the holdback accrued in that year no sooner than 60 and no later than 74 days after publication, as long as no lien has been preserved or perfected [5]. The balance is released after substantial performance, once the lien period has run (see contracts lesson 7). Both releases are large, lumpy payments, and they belong in the cash forecast from day one.

Northgate worked example

Northgate Distribution Centre (fictional) has a Contract Price of $34,950,000 with Halvorsen Builders Ltd. (fictional), excluding HST, under CCDC 2-2020; Ridgeline Architects Inc. (fictional) certifies payment. Site mobilization was March 1, 2027 (M3) and final completion is planned for March 31, 2028 (M11). See the Northgate fact sheet. The monthly values below are an illustrative spread of the Contract Price over Halvorsen's baseline, not fact-sheet data.

View the data

Month	Planned	Planned cumulative	Actual	Actual cumulative
Mar 2027	$0.90M	$0.90M	$0.85M	$0.85M
Apr 2027	$2.00M	$2.90M	$1.85M	$2.70M
May 2027	$2.80M	$5.70M	$2.65M	$5.35M
Jun 2027	$3.60M	$9.30M	$3.35M	$8.70M
Jul 2027	$3.90M	$13.20M	$3.70M	$12.40M
Aug 2027	$4.00M	$17.20M	$3.75M	$16.15M
Sep 2027	$3.90M	$21.10M
Oct 2027	$3.70M	$24.80M
Nov 2027	$3.30M	$28.10M
Dec 2027	$2.60M	$30.70M
Jan 2028	$2.20M	$32.90M
Feb 2028	$1.20M	$34.10M
Mar 2028	$0.85M	$34.95M

Illustrative, excl. HST, before holdback. Values are work in place for the month, as applied for and certified.

What the curve says in August

By the August 31 cut-off Halvorsen has certified $16.15 million against $17.20 million planned, $1.05 million behind. SPI is 16.15 / 17.20 = 0.94. Read horizontally, the plan passed $16.15 million about three-quarters of the way through August, so the job is roughly eight calendar days behind. That agrees with the August schedule update in lesson 13, where the roof deck ran long and M6 slipped nine working days. Two independent measures telling the same story is what an owner wants to see.

The certified value includes the work done under the approved Change Orders described in lesson 14. Northgate's owner shows those as a separate layer, so the baseline curve stays at $34.95 million and the comparison stays fair.

View the data

Work month	Planned value	Paid next month (90%)	Holdback retained (10%)
Mar 2027	$0.90M	$0.810M	$0.090M
Apr 2027	$2.00M	$1.800M	$0.200M
May 2027	$2.80M	$2.520M	$0.280M
Jun 2027	$3.60M	$3.240M	$0.360M
Jul 2027	$3.90M	$3.510M	$0.390M
Aug 2027	$4.00M	$3.600M	$0.400M
Sep 2027	$3.90M	$3.510M	$0.390M
Oct 2027	$3.70M	$3.330M	$0.370M
Nov 2027	$3.30M	$2.970M	$0.330M
Dec 2027	$2.60M	$2.340M	$0.260M
Jan 2028	$2.20M	$1.980M	$0.220M
Feb 2028	$1.20M	$1.080M	$0.120M
Mar 2028	$0.85M	$0.765M	$0.085M

Illustrative, excl. HST.

The August payment, step by step

Figure 3 follows August's application through the prompt payment clock. The owner's treasury sees the cash leave on September 28: $3.75 million of certified work less $375,000 holdback, or $3,375,000 plus HST.

The holdback releases

Northgate's contract was signed on Monday January 11, 2027, so it falls under the annual release rules. The first anniversary is Tuesday January 11, 2028. If the owner publishes its notice on Tuesday January 25, the last of the 14 days, the holdback accrued in the first contract year must be paid between Saturday March 25 and Saturday April 8, 2028, unless a lien has been preserved or perfected. On the illustrative curve, about $30.7 million of work is certified by the end of December 2027, so that release is roughly $3.1 million. It lands in the same weeks as the release that follows substantial performance at M9, so Northgate's lawyer and treasury plan both together.

The owner's funding forecast therefore has three layers: 90% of each month's planned value, paid a month later; the annual holdback release in late March or early April 2028; and the remaining holdback after the lien period on post-anniversary work. The owner's lender sees one chart with all three.

Owner's move

• Ask for a cost-loaded baseline. Write it into the schedule specification so the curve moves with the schedule and ties to the schedule of values.
• Freeze the baseline curve. Show approved changes as a separate layer.
• Read the gap in days, not only dollars. Then check it against the schedule update.
• Diarize the prompt payment clock. Day 7, day 14 and day 28 for every invoice, owned by a named person.
• Put holdback releases in the funding plan now. Annual release is a large, fixed-date payment, not a close-out surprise.

Common mistakes

1. Treating the S-curve as the cash plan. Cash lags value by about a month and is reduced by holdback.
2. Redrawing the planned curve every month. A moving baseline always shows the job on plan.
3. Holding payment until the Consultant certifies. The statutory clock runs from receipt of a proper invoice, not from the certificate.
4. Forgetting the annual holdback release. On contracts signed from 2026 on, it is due every year, not only at the end.

Quick quiz

1. Why is the cumulative cost curve S-shaped?

   1. Because the contractor front-loads its schedule of values
   2. Because spending is slow at the start, fastest when major trades overlap and slow again in finishes and commissioning
   3. Because holdback is released at the end
   4. Because of HST

2. Planned cumulative value is $17.20M and actual is $16.15M. What is SPI?

   1. 1.07
   2. 1.05
   3. 0.94
   4. 0.85

3. Under Ontario's Construction Act, within how many days must an owner give a notice of non-payment to dispute part of a proper invoice?

   1. 7
   2. 10
   3. 14
   4. 28

4. A Northgate invoice for $3.75M of work is undisputed. What does the owner pay, before HST?

   1. $3,750,000
   2. $3,375,000
   3. $3,562,500
   4. $3,000,000

5. For a contract signed after January 1, 2026, when is holdback first released under the annual rules?

   1. Only after substantial performance
   2. 60 to 74 days after the owner publishes a notice following the first contract anniversary, if no liens
   3. On the first anniversary itself
   4. When the owner chooses

Show answers and explanations

1. B. The shape comes from how work and crews ramp up and down, not from payment terms.
2. C. SPI = actual (earned) value / planned value = 16.15 / 17.20 = 0.94.
3. C. The notice of non-payment is due within 14 days of receiving the proper invoice; payment of the rest is due within 28.
4. B. The owner retains 10% holdback, so it pays 90%: $3,375,000.
5. B. The owner publishes a notice within 14 days after the anniversary and pays 60 to 74 days later unless a lien is preserved or perfected.

Key terms

S-curve

A plot of cumulative planned or actual value of work over time, usually S-shaped.

Cost-loaded schedule

A schedule whose activities carry values, so planned spending follows the planned dates.

Schedule of values

The contractor's breakdown of the Contract Price into parts of the Work, used to value monthly progress.

Schedule performance index (SPI)

Earned value divided by planned value at a date; below 1.0 means less work done than planned.

Proper invoice

An invoice that meets the Construction Act's content rules and any contract requirements; it starts the payment clock.

Annual holdback release

For Ontario contracts from January 1, 2026, payment of each year's accrued holdback after a published notice, if no liens.

References

1. Canadian Construction Documents Committee, CCDC 2-2020 Stipulated Price Contract, GC 5.2 and GC 5.3. Clause numbers checked against a publicly posted tender copy; buy the form from CCDC.
2. Goldman Sloan Nash & Haber LLP, New CCDC 2 construction contract: important changes from 2008 to 2020 (February 2022).
3. Ontario Association of Architects, Practice Tip PT.10.3: Construction Act, prompt payment (December 2023).
4. Bennett Jones LLP, Prompt payment for construction in Ontario (October 2019).
5. Fasken, Ontario's amendments to the Construction Act take effect January 1, 2026 (December 2025).
6. Government of Ontario, Construction Act, R.S.O. 1990, c. C.30 (e-Laws).

Verified on November 6, 2026.

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