CONTRACT PAYMENTS

Types of Payment
Advance Payment
IPC (monthly)
On Account Payments

Final Accounts

Advance Payment means

Interest-free loan for mobilization, when the
contractor submits a guarantee in a form by a
Bank or a Company acceptable to the
Employer.

Advance payment(clause
51)
The Employer shall make advance payment

to the
contractor in an amount to 20% of the Initial
Contract Price excluding provisional sums and
contingencies, within 14 Days after furnishing of an
unconditional guarantee in a form and by a bank or
company acceptable to the Employer. The guarantee
shall remain effective until the advance payment has
been repaid(clause 51.1, ICTAD/SBD/01).

The Contractor is used the advance payment only to pay

for Equipment, Plant, Materials and Mobilization
expenses
required
specially
for
execution
of
Contract(Clause51.2 ICTAD/SBD/01).

The advance payment shall be repaid by deducting

proportions and repaid in full when total certified value
of work reaches 90% of the Initial Contract Price(clause

clause 42
- Reasonable Valuation
-The Contractor shall submit to the
Engineer monthly
statements of the
estimated value of the work
executed.
- The Engineer shall check and certify monthly
statement within 21 days of the receipt of
the
contractors statement
The Employer shall pay the amount certified
within 14 Days

Final Certificate(clause 55)

Upon completion of the Defects Liability Period
the Contractor shall request the Engineer to
issue a Final Certificate and the Engineer
shall issue the Final Certificate upon being
satisfied that the Contractor has rectified the
Defects(clause 55.1, ICTAD/SBD/01).

Retention
Retention money is warranty for hidden defects
during construction, including the 1-year defects
liability
period
after
project
completion.
Retention money is therefore released after the
end of the 1-year defects liability period and
when the certificate of acceptance is already
issued. If the contractor wants the release of the
retention money before the lapse of the 1-year
defects liability period, replacement by the
surety bond may be allowed.

Retention(clause 48)
The Employer shall retain from each payment
due to the Contractor the proportion stated in
the Contract Data subject to the limit of
retention stated in the Contract data(clause
48.1, ICTAD/SBD/01).

When to release?
On Completion of the whole of the Works, first
half the total amount retained shall be repaid to
the contractor and second half when the Defects
Releasing against a Bond at the time of completion
liability
Period
has
passed(clause
48.2
Reserving money to pay after D/L period
,ICTAD/SBD/01).

What happens when the quantity in the BOQ is

not sufficient or no provision in the BOQ
Work needed to complete the entire scope(Remeasurements)
Things that are nice to accompany( Variations)
Things that improves the long-term
sustainability(Variations)
Price Escalation & others
There is BOQ provision but needs engineers
approval to proceed
Provisional sums
Remember to refer contractual provisions