We are paying off debt while we invest; however, we had significant debts elsewhere and are on a strict payoff of our debt with specific pay off milestones in our debt payoff plan.

I am not opposed to draw at pre defined milestones but money up front is a red flag for me.  

I also get to look back and see that I am consistently meeting milestones before plan.

Why don't you GIVE them to milestone posters! 

I am guessing the $60k for construction is paid out in traunches or based on phases/milestones of the project or something? 

Yes, make milestone draws, i.e kitchen done. draw.

With that milestone approaching, I've been spending more and more time gathering as much REI information as I can get my hands on - which is ultimately how I stumbled upon the BP site.

The contractor should get paid based on a draw schedule, based on key milestones of completion. 

The money of course people like but the achievements and milestones i see clients get more satisfaction out of.  

If you throw enough mud, some will stick and if you look at enough of these properties, you will eventually develop an eye for it.Alternatively, you can hire an inspector to assess each milestone on your SoW.