(a) Installment payments of the State grant will be made at the request of the municipality, and will be based on the cost of the work performed, materials and equipment supplied and incorporated in, and services rendered in connection with an approved project, and may be made as follows:

1. (1) a first installment of approximately one third of the State grant when not less than one third of the construction of the project is completed;
2. (2) a second installment of approximately one third of the State grant when not less than two thirds of the construction of the project is completed;
3. (3) a third installment of approximately one third of the State grant when the project is completed, inspected and in operation;
4. (4) five percent will be retained from each payment. The final payment will be released only after fully satisfying all requirements including, but not limited to, final inspection of construction and performance levels of operation as called for in the grant contract; or
5. (5) upon presentation of evidence supporting the necessity therefore, the commissioner may agree with a municipality to a different schedule of payments.