Milestone
Synonyms: Project Milestone، Payment Milestone، Key Date، Stage Completion
Last updated: 2026-09-25
Short Definition
A milestone is a specific event in the schedule that marks the completion of a phase or a key deliverable — such as completion of foundations, the frame, finishes or handover — and has no duration of its own; it is used to measure progress and report to the parties and is often linked to payments.
Overview
Legal Basis
Art. 469 of the Civil Transactions Law (M/191 dated 29/11/1444H) provides for payment on handover of the work unless otherwise agreed, and for payment in proportion to what has been completed after inspection and acceptance where the work is in parts or priced per unit. For off-plan sales, the Off-Plan Law (M/44 dated 10/3/1445H) provides that escrow disbursements are made against a document signed by the developer, the consulting office and the chartered accountant (Art. 11), and that 5% of construction cost is retained after the completion certificate for one year from project completion, or a bank guarantee or inherent defects insurance is provided instead (Art. 14). The implementing regulations require the payment schedule in the model contract (Art. 20), uploading of completion certificates to the database (Art. 23) and govern the disbursement document (Art. 27).
Practical Example
A buyer purchases an off-plan flat in Jeddah for SAR 900,000 with a milestone-based payment schedule: 10% on signing (90,000), 25% on completion of the concrete frame (225,000), 25% on completion of blockwork and services (225,000), 25% on completion of finishes (225,000) and 15% on handover (135,000). Each payment goes into the escrow account with a reference number that includes the unit number, and the developer can draw funds only with a disbursement document certified by the consulting office, after verifying the stage is complete, and by the chartered accountant. When the developer declared the frame complete although the top-floor slab had not been poured, the consultant refused to sign and the release was delayed by two weeks.
Common Mistakes
- ✗Linking payments to calendar dates instead of to actual, verifiable progress.
- ✗Defining milestones vaguely, such as "end of frame", without acceptance criteria and inspection records.
- ✗An off-plan buyer paying directly into the developer's account instead of the project's escrow account.
- ✗Certifying a stage as complete without the signature of the consulting office or independent supervisor.
- ✗Omitting a retention after completion to cover defect repairs.
International Differences
In the UAE, escrow funds for off-plan projects are released according to completion percentages certified by the consultant and the regulator, and in Turkey contractors are usually paid through periodic progress payments (hakediş) based on measured work. International contracts use milestones to link payments and sometimes to apply stage-specific delay damages. The Saudi system is distinctive in requiring a three-way signature (developer, consultant and chartered accountant) for escrow releases and a statutory 5% retention after completion.
