Right to payment - Revision history

Editor at 17:53, 15 April 2021

2021-04-15T17:53:17Z

← Older revision		Revision as of 17:53, 15 April 2021
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	* Contract sum.		* Contract sum.
	* Cooling off period.		* Cooling off period.
		+	* Drawdown.
	* Fair payment practices.		* Fair payment practices.
	* Loss and expense.		* Loss and expense.

Designing Buildings at 07:55, 16 November 2020

2020-11-16T07:55:24Z

← Older revision		Revision as of 07:55, 16 November 2020
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	* Six steps to combat late payment.		* Six steps to combat late payment.

−	[[Category:Contracts_/_payment]] [[Category:Procurement]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:DCN_Legislation]] [[Category:DCN_Policy]] [[Category:DCN_Regulation]] [[Category:Contracts_/_payment]] [[Category:Procurement]]

Editor at 11:48, 15 March 2019

2019-03-15T11:48:33Z

← Older revision		Revision as of 11:48, 15 March 2019
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	For more information see: Remedies for late payment in the construction industry.		For more information see: Remedies for late payment in the construction industry.

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

		+	* Campaign for cash retentions reform.
	* Cash flow in construction.		* Cash flow in construction.
	* Construction (Retention Deposit Schemes) Bill 2017-19		* Construction (Retention Deposit Schemes) Bill 2017-19

Editor at 15:15, 23 July 2018

2018-07-23T15:15:22Z

← Older revision		Revision as of 15:15, 23 July 2018
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	* Quantum meruit.		* Quantum meruit.
	* Remeasurement.		* Remeasurement.
		+	* Retainage.
	* Retention.		* Retention.
	* Retention held in trust fund.		* Retention held in trust fund.

Editor at 17:08, 23 March 2018

2018-03-23T17:08:10Z

← Older revision		Revision as of 17:08, 23 March 2018
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	* Contract conditions.		* Contract conditions.
	* Contract sum.		* Contract sum.
		+	* Cooling off period.
	* Fair payment practices.		* Fair payment practices.
	* Loss and expense.		* Loss and expense.

Designing Buildings at 10:06, 13 March 2018

2018-03-13T10:06:27Z

← Older revision		Revision as of 10:06, 13 March 2018
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	* Cash flow in construction.		* Cash flow in construction.
		+	* Construction (Retention Deposit Schemes) Bill 2017-19
	* Construction contract.		* Construction contract.
	* Contract conditions.		* Contract conditions.

Editor at 14:58, 13 February 2018

2018-02-13T14:58:04Z

← Older revision		Revision as of 14:58, 13 February 2018
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	== Cost reimbursable contract ==		== Cost reimbursable contract ==

−	A cost reimbursable contract (sometimes called a cost plus contract), is one in which the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. A cost reimbursable contract might be used where the nature or scope of the work to be carried out cannot be properly defined at the outset, such as, emergency work (for example, urgent alteration or repair work, or if there has been a building failure or a fire requiring immediate reconstruction or replacement of a building so that the client can continue to operate their business).	+	A cost reimbursable contract (sometimes called a cost plus contract), is one in which the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee.
		+
		+	A cost reimbursable contract might be used where the nature or scope of the work to be carried out cannot be properly defined at the outset, such as, emergency work (for example, urgent alteration or repair work, or if there has been a building failure or a fire requiring immediate reconstruction or replacement of a building so that the client can continue to operate their business).

	For more information, see Cost reimbursable contract.		For more information, see Cost reimbursable contract.
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	== Interim payments ==		== Interim payments ==

−	Interim certificates provide a mechanism for the client to make payments to the contractor before the works are complete. The Housing Grants, Construction and Regeneration Act, states that a party to a construction contract in excess of 45 days is entitled to interim or stage payments. Interim payments can be agreed in advance and paid at particular milestones, but they are more commonly regular payments the value of which is based on the value of work that has been completed (this is the actual value of the work completed, taking into account variations etc).	+	Interim certificates provide a mechanism for the client to make payments to the contractor before the works are complete. The Housing Grants, Construction and Regeneration Act, states that a party to a construction contract in excess of 45 days is entitled to interim or stage payments.
		+
		+	Interim payments can be agreed in advance and paid at particular milestones, but they are more commonly regular payments the value of which is based on the value of work that has been completed (this is the actual value of the work completed, taking into account variations, etc.).

	For more information see: Interim payments.		For more information see: Interim payments.
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	== Retention ==		== Retention ==

−	Retention is a percentage (often 5%) of the amount certified as due to the contractor on an interim certificate, that is deducted from the amount due and retained by the client. The purpose of retention is to ensure that the contractor properly completes the activities required of them under the contract. Half of the amount retained is released on certification of practical completion and the remainder is released upon certification of making good defects.	+	Retention is a percentage (often 5%) of the amount certified as due to the contractor on an interim certificate, that is deducted from the amount due and retained by the client.
		+
		+	The purpose of retention is to ensure that the contractor properly completes the activities required of them under the contract. Half of the amount retained is released on certification of practical completion and the remainder is released upon certification of making good defects.

	For more information see: Retention		For more information see: Retention
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	* Remeasurement.		* Remeasurement.
	* Retention.		* Retention.
		+	* Retention held in trust fund.
	* Six steps to combat late payment.		* Six steps to combat late payment.

	[[Category:Contracts_/_payment]] [[Category:Procurement]]		[[Category:Contracts_/_payment]] [[Category:Procurement]]

Designing Buildings at 09:38, 20 December 2017

2017-12-20T09:38:34Z

← Older revision		Revision as of 09:38, 20 December 2017
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	= Introduction =		= Introduction =

−	The contractor’s right to payment is dependent upon the type of contract, its wording, and the method of determining the amount as compensation for the work that has been performed. While the parties can, as long as they remain legal, agree to any arrangements that they see fit, there are a number of standard types of ~~contract~~ that determine the right to payment:	+	The contractor’s right to payment is dependent upon the type of contract, its wording, and the method of determining the amount as compensation for the work that has been performed. While the parties can, as long as they remain legal, agree to any arrangements that they see fit, there are a number of standard types of agreement that determine the right to payment:

−	* Lump sum contract.
	* Quantum meruit (a claim for a reasonable sum).		* Quantum meruit (a claim for a reasonable sum).
		+	* Lump sum contract.
	* Other forms of contract such as a guaranteed maximum price, cost reimbursable works, target cost and so on.		* Other forms of contract such as a guaranteed maximum price, cost reimbursable works, target cost and so on.

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	== Quantum meruit ==		== Quantum meruit ==

−	Quantum meruit means ‘the amount deserved’ or ‘what the job is worth’, and refers to a claim for a reasonable sum which is not determined by a contract. A claim may arise in ~~certain~~ circumstances, including:	+	Quantum meruit means ‘the amount deserved’ or ‘what the job is worth’, and refers to a claim for a reasonable sum which is not determined by a contract. A claim may arise in circumstances, including:

	* Where there is a quasi-contract (e.g. where some contractual terms have been agreed but price has not).		* Where there is a quasi-contract (e.g. where some contractual terms have been agreed but price has not).
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	== Lump sum contract ==		== Lump sum contract ==

−	Under a lump sum contract, a single ‘lump sum’ price for all the works is agreed before the works begin. The contractor agrees to carry out the works for a 'fixed' amount and accepts the risk that the actual works may cost more than this. However, where additional work is performed outside that originally agreed, the contractor may be entitled to additional compensation~~. The contractor is generally paid at regular stages as the works proceed, although a percentage may be retained until the works are complete (see retention for more information)~~.	+	Under a lump sum contract, a single ‘lump sum’ price for all the works is agreed before the works begin. The contractor agrees to carry out the works for a 'fixed' amount and accepts the risk that the actual works may cost more than this. However, where additional work is performed outside that originally agreed, the contractor may be entitled to additional compensation.

	For more information, see Lump sum contract.		For more information, see Lump sum contract.
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	== Cost reimbursable contract ==		== Cost reimbursable contract ==

−	A cost reimbursable contract (sometimes called a cost plus contract), is one in which the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. A cost reimbursable contract might be used where the nature or scope of the work to be carried out cannot be properly defined at the outset~~, and the risks associated with the works are high~~, such as, emergency work (for example, urgent alteration or repair work, or if there has been a building failure or a fire requiring immediate reconstruction or replacement of a building so that the client can continue to operate their business).	+	A cost reimbursable contract (sometimes called a cost plus contract), is one in which the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. A cost reimbursable contract might be used where the nature or scope of the work to be carried out cannot be properly defined at the outset, such as, emergency work (for example, urgent alteration or repair work, or if there has been a building failure or a fire requiring immediate reconstruction or replacement of a building so that the client can continue to operate their business).

	For more information, see Cost reimbursable contract.		For more information, see Cost reimbursable contract.
		+
		+	== Measurement contract ==
		+
		+	Measurement contracts (sometimes called ‘re-measurement’ or ‘measure and value’ contracts) can be used in situations where the design (or type of works) can be described in reasonable detail, but the amount cannot. For example, excavation works where the quantity of excavation required is difficult to assess until after the works have begun, or refurbishment projects where there are some uncertainties about the works that will be required.
		+
		+	For more information see: Measurement contract

	== Guaranteed maximum price. ==		== Guaranteed maximum price. ==
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	== Damages ==		== Damages ==

−	If the contractor fails to complete the works described in the contract by the completion date that was last agreed (the original completion date may have been adjusted during the course of the works), the client may be ~~entitles~~ to deduct liquidated and ascertained damages from payments otherwise due to the contractor, providing that an appropriate notice has been issued (a pay less notice) setting out the basis of the calculation.	+	If the contractor fails to complete the works described in the contract by the completion date that was last agreed (the original completion date may have been adjusted during the course of the works), the client may be entitled to deduct liquidated and ascertained damages from payments otherwise due to the contractor, providing that an appropriate notice has been issued (a pay less notice) setting out the basis of the calculation.

	For more information, see Liquidated and ascertained damages.		For more information, see Liquidated and ascertained damages.
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	For more information see: Retention		For more information see: Retention
−
−	The contract administrator certifies practical completion when all the works described in the contract have been carried out. Practical completion is referred to as 'substantial completion' on some forms of contract. Certifying practical completion has the effect of releasing half of the retention money to the contractor.

	== Loss and expense ==		== Loss and expense ==

−	Where the progress of the works is materially affected by a matters for which the client is responsible, the contractor may be entitled to claim direct loss and expense incurred. Such matters might include:	+	Where the progress of the works is materially affected by matters for which the client is responsible, the contractor may be entitled to claim direct loss and expense incurred. Such matters might include:

	* The client instructing variations in the works.		* The client instructing variations in the works.
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	== Fluctuations ==		== Fluctuations ==

−	On larger projects, the contractor may be asked to tender based on current prices(prices at an agreed base date) and then the contract makes provisions for the contractor to be reimbursed for price changes to specified items over the duration of the project (a fluctuating price).	+	On larger projects, the contractor may be asked to tender based on current prices (prices at an agreed base date) and then the contract makes provisions for the contractor to be reimbursed for price changes to specified items over the duration of the project (a fluctuating price).

	For more information see: Fluctuations.		For more information see: Fluctuations.
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	* Contract conditions.		* Contract conditions.
	* Contract sum.		* Contract sum.
−	* ~~Defined cost.~~	+	* Fair payment practices.
−	* Difference between lump sum and measurement contracts.	+
−	* Disallowed cost.	+
	* Loss and expense.		* Loss and expense.
	* Payment for extra work.		* Payment for extra work.

Designing Buildings at 09:31, 20 December 2017

2017-12-20T09:31:08Z

← Older revision		Revision as of 09:31, 20 December 2017
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	For more information, see Guaranteed maximum price.		For more information, see Guaranteed maximum price.

−	=== Others ===	+	== Others ==

	For other forms of agreement, such as target cost contracts, see: Procurement route.		For other forms of agreement, such as target cost contracts, see: Procurement route.
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	For more information see: Loss and expense.		For more information see: Loss and expense.
		+
		+	== Fluctuations ==
		+
		+	On larger projects, the contractor may be asked to tender based on current prices(prices at an agreed base date) and then the contract makes provisions for the contractor to be reimbursed for price changes to specified items over the duration of the project (a fluctuating price).
		+
		+	For more information see: Fluctuations.
		+
		+	== Others ==
		+
		+	For other matters see: Contract clauses.

	= Late payment =		= Late payment =

Designing Buildings at 09:29, 20 December 2017

2017-12-20T09:29:21Z

← Older revision		Revision as of 09:29, 20 December 2017
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	For more information, see Lump sum contract.		For more information, see Lump sum contract.

−	=== Cost reimbursable contract ===	+	== Cost reimbursable contract ==

	A cost reimbursable contract (sometimes called a cost plus contract), is one in which the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. A cost reimbursable contract might be used where the nature or scope of the work to be carried out cannot be properly defined at the outset, and the risks associated with the works are high, such as, emergency work (for example, urgent alteration or repair work, or if there has been a building failure or a fire requiring immediate reconstruction or replacement of a building so that the client can continue to operate their business).		A cost reimbursable contract (sometimes called a cost plus contract), is one in which the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. A cost reimbursable contract might be used where the nature or scope of the work to be carried out cannot be properly defined at the outset, and the risks associated with the works are high, such as, emergency work (for example, urgent alteration or repair work, or if there has been a building failure or a fire requiring immediate reconstruction or replacement of a building so that the client can continue to operate their business).
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	For more information, see Cost reimbursable contract.		For more information, see Cost reimbursable contract.

−	=== Guaranteed maximum price. ===	+	== Guaranteed maximum price. ==

−	A guaranteed maximum price (GMP) is a form of agreement ~~with a contractor~~ in which it is agreed that the contract sum will not exceed a specified maximum. If the actual cost of the works is higher than the guaranteed maximum price, then the contractor must bear the additional cost. If the cost is lower than the guaranteed maximum price, then the contract should set out whether the savings made go to the client, to the contractor or are shared.	+	A guaranteed maximum price (GMP) is a form of agreement in which it is agreed that the contract sum will not exceed a specified maximum. If the actual cost of the works is higher than the guaranteed maximum price, then the contractor must bear the additional cost. If the cost is lower than the guaranteed maximum price, then the contract should set out whether the savings made go to the client, to the contractor or are shared.

	For more information, see Guaranteed maximum price.		For more information, see Guaranteed maximum price.
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	=== Others ===		=== Others ===

−	For other forms of agreement, see: Procurement route.	+	For other forms of agreement, such as target cost contracts, see: Procurement route.

	= Contract clauses =		= Contract clauses =

−	The contract administrator certifies practical completion when all the works described in the contract have been carried out. Practical completion is referred to as 'substantial completion' on some forms of contract. Certifying practical completion has the effect of releasing half of the retention money to the contractor.	+	== Interim payments ==

−	~~For~~ more ~~information~~, ~~see Practical completion~~.	+	Interim certificates provide a mechanism for the client to make payments to the contractor before the works are complete. The Housing Grants, Construction and Regeneration Act, states that a party to a construction contract in excess of 45 days is entitled to interim or stage payments. Interim payments can be agreed in advance and paid at particular milestones, but they are more commonly regular payments the value of which is based on the value of work that has been completed (this is the actual value of the work completed, taking into account variations etc).

−	The certificate of non-completion gives formal written notice to the contractor that they have failed to complete the works described in the contract by the completion date that was last agreed (the original completion date may have been adjusted during the course of the works).	+	For more information see: Interim payments.

−	The client may then deduct liquidated and ascertained damages from payments otherwise due to the contractor, providing that an appropriate notice has been issued (a pay less notice) setting out the basis of the calculation. Contractors may challenge claims for liquidated and ascertained damages if the procedures and the notice periods set out in the contract have not been followed.	+	== Variations ==
−		+
−	~~For more information, see Certificate of non-completion.~~	+

	It is common that a contractor may have to carry out extra work which they consider as entitling them to payment that is additional to the original contract sum. The contractor must be able to prove the following:		It is common that a contractor may have to carry out extra work which they consider as entitling them to payment that is additional to the original contract sum. The contractor must be able to prove the following:
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	For more information, see Variations.		For more information, see Variations.
		+
		+	== Damages ==
		+
		+	If the contractor fails to complete the works described in the contract by the completion date that was last agreed (the original completion date may have been adjusted during the course of the works), the client may be entitles to deduct liquidated and ascertained damages from payments otherwise due to the contractor, providing that an appropriate notice has been issued (a pay less notice) setting out the basis of the calculation.
		+
		+	For more information, see Liquidated and ascertained damages.
		+
		+	== Retention ==
		+
		+	Retention is a percentage (often 5%) of the amount certified as due to the contractor on an interim certificate, that is deducted from the amount due and retained by the client. The purpose of retention is to ensure that the contractor properly completes the activities required of them under the contract. Half of the amount retained is released on certification of practical completion and the remainder is released upon certification of making good defects.
		+
		+	For more information see: Retention
		+
		+	The contract administrator certifies practical completion when all the works described in the contract have been carried out. Practical completion is referred to as 'substantial completion' on some forms of contract. Certifying practical completion has the effect of releasing half of the retention money to the contractor.
		+
		+	== Loss and expense ==

	Where the progress of the works is materially affected by a matters for which the client is responsible, the contractor may be entitled to claim direct loss and expense incurred. Such matters might include:		Where the progress of the works is materially affected by a matters for which the client is responsible, the contractor may be entitled to claim direct loss and expense incurred. Such matters might include:
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	* Failure by the client to supply materials or goods.		* Failure by the client to supply materials or goods.
	* Delay in giving the contractor possession of the site.		* Delay in giving the contractor possession of the site.
		+
		+	For more information see: Loss and expense.

	= Late payment =		= Late payment =