Contractor Payment Terms in Dubai: What's Normal, What's a Warning Sign
Payment structure tells you almost as much about a contractor as their portfolio does. Here's what's normal.
5 June 2025 · 5 min read · K4 Fit-Out Studio
Standard contractor payment terms in Dubai follow milestone-based structures tied to physical progress, a deposit to mobilise, then payments at defined construction stages, with retention held back until snagging and handover clear.
What normal looks like
A mobilisation deposit of 10-20% is standard to secure materials and site setup. Subsequent payments align with milestones, structural completion, MEP first-fix, joinery installation, verified before each payment releases. Retention of 5-10% is withheld until the defects liability period, typically 12 months, concludes.
- Mobilisation deposit: typically 10-20% of contract value
- Progress payments tied to verified physical milestones, not calendar dates
- Retention: 5-10%, released after defects liability period
- Final payment on handover, minus retention, after snagging sign-off
What's a warning sign
A deposit above 30%, payment tied to elapsed time rather than verified progress, or reluctance to hold any retention at all, are all deviations from normal practice worth questioning directly before signing.
Protecting yourself contractually
Tie every payment explicitly to an inspected, verified milestone in the contract text itself, not a payment schedule attached loosely as an appendix. See our broader guide to vetting a contractor for the questions to ask before signing.
Frequently asked
What is a reasonable mobilisation deposit in Dubai?
10-20% of contract value is standard practice; anything materially above 30% warrants a direct conversation before signing.
Should payment be tied to time or progress?
Progress, always. Time-based payment schedules disconnect payment from actual work delivered, removing your main point of leverage.
What happens to retention if I'm unhappy at handover?
Retention should not release until agreed snagging items are resolved, this is exactly what it exists to protect against.