MS Project (Cost follow up)
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Identify the scope if the project by decomposing it into its component tasks.
Then, simply agree in advance on the payment for each task, and when each task is finished, pay for it.
In the US this is called a Schedule Of Values.
You dont have to have an amount > $0 on every task and the agreed payment amount does not have to be related to the cost of the task. You dont even have to know the cost of the task. That is the contractors problem, and his business, not yours.
You have to make a decision whether you are paying by time or by progress. It is better (for you) if you pay only for tasks when they are finished and do not pay anything for partial completion of tasks. This provides an incentive for the contractor to get things finished and to stick to the schedule. If you pay for partial completion you will have the added complexity and difficulty of having to measure and agree on the progress of each task and it will just get messy for no benefit for either party.