The contractor should submit a line item budget of all material and labor cost before the contract is accepted. He/she will then be paid only on the amount of work completed. If 50% of the demo work has been done at the time of the 'draw', payment will be for 50% of that line item total. The trick is to determine how much of the work has actually been completed. Normally, that's where you come in. The contractor must also submit all invoices for materials purchased. If you, as architect, are not involved during the construction (which happens occasionally in smaller residential projects) the owner must assume responsibility for determining the amount of work accomplished. I have found in my 30 plus years of practice the cost-plus contract is usually the best way to go. Choosing and being able to 'trust' the contactor is an important factor though.
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David Center AIA
D.A. Center & Associates, Inc.
Broken Arrow OK
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