Designing Buildings - User contributions [en]

Extension of time EOT in construction contracts

2018-01-06T17:47:48Z

Thomasprashman:

Construction contracts generally allow the construction period to be extended where there is a delay that is not the contractor's fault. This is described as an extension of time (EOT).

When it becomes reasonably apparent that there is, or that there is likely to be, a delay that could merit an extension of time, the contractor gives written notice to the contract administrator identifying the relevant event that has caused the delay.

If the contract administrator accepts that the delay was caused by a relevant event, then they may grant an extension of time and the completion date is adjusted.

Relevant events may include:

* Variations.
* Exceptionally adverse weather.
* Civil commotion or terrorism.
* Failure to provide information.
* Delay on the part of a nominated sub-contractor.
* Statutory undertaker’s work.
* A delay in giving the contractor possession of the site.
* Force majeure (such as an epidemic or an 'act of God').
* Loss from a specified peril such as flood.
* The supply of materials and goods by the client.
* Strikes.
* Changes in statutory requirements.
* Delays in receiving permissions that the contractor has taken reasonable steps to avoid.

The contractor is required to prevent or mitigate the delay and any resulting loss, even where the fault is not their own.

Assessing claims for an extension of time can be complicated and controversial. There may be multiple or concurrent delays, some of which are the contractor's fault and some not. There are many occasions where contractors contribute to delay themselves by their performance during design periods, when producing drawings, mock ups and samples or in inter-facing with sub-contractors.

Crucial in assessing applications for extension of time is the quality of the information provided and records available.

For more information, see How to prepare a claim for an extension of time.

Claims should be judged against the actual progress of the works, not the programme, and must demonstrate the link between the breach (cause) and the delay.

The contract administrator may review extensions of time after practical completion and further adjust the completion date.

Mechanisms allowing extensions of time are not simply for the contractor's benefit. If there was no such mechanism and a delay occurred which was not the contractor’s fault, then the contractor would no longer be required to complete the works by the completion date and would only then have to complete the works in a 'reasonable' time. The client would lose any right to liquidated damages.

Claims for extension of time can run alongside claims for loss and expense (relevant matters) however, one need not necessarily lead to the other.

It is very important when deducting liquidated damages to ensure that the correct contractual procedures are adhered to. In the case of [http://www.bailii.org/ew/cases/EWHC/TCC/2016/3180.html Octoesse LLP v Trak Special Projects Ltd (2016)], Justice Jefford held that Octoesse was not entitled to deduct liquidated damages as they had agreed to an extension of time after a certificate of non completion had been issued. The JCT Intermediate Building Contract is constructed such that:

“If the Contractor fails to complete the Works or a Section by the relevant Completion Date, the Architect/Contract administrator shall issue a certificate to that effect. If an extension of time is made after the issue of such certificate, the extension shall cancel that certificate and the Architect/Contract Administrator shall where necessary issue a further certificate.”

As Octoesse had not issued a further certificate of non completion, they were not entitled to deduct liquidated damages.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Acceleration of construction works.
* Certificate of non completion.
* Common refusals of extensions of time.
* Contract administrator.
* Concurrent delay.
* Compensation event.
* Completion date.
* Delay damages.
* Difference between practical completion and partial possession.
* Extension of time - approval letter example.
* Force majeure.
* How to prepare a claim for an extension of time.
* Loss and expense.
* Liquidated damages.
* Named specialist work.
* Nominated subcontractor.
* Payment for extra work.
* Possession.
* Practical completion.
* Preliminaries.
* Progress of construction works.
* Project programme.
* Prolongation.
* Regularly and diligently.
* Relevant event.
* Relevant event v relevant matter.
* Relevant matter.
* Time at large.
* Time Risk Allowance TRA.
* Variations.

=== External references ===

* [http://www.constructsupport.co.uk/programme_produced_extension.html Construct Support, extensions of time.]
* Herbert Smith, Extensions of Time: What Happens If the Contractual Machinery Breaks Down?
* Atkinson Law, Delay and Disruption - The Contractor's Obligations as to Time.

[[Category:Articles_needing_more_work]] [[Category:Construction_management]] [[Category:Procurement]]

Extension of time EOT in construction contracts

2018-01-06T17:47:11Z

Thomasprashman:

Construction contracts generally allow the construction period to be extended where there is a delay that is not the contractor's fault. This is described as an extension of time (EOT).

When it becomes reasonably apparent that there is, or that there is likely to be, a delay that could merit an extension of time, the contractor gives written notice to the contract administrator identifying the relevant event that has caused the delay.

If the contract administrator accepts that the delay was caused by a relevant event, then they may grant an extension of time and the completion date is adjusted.

Relevant events may include:

* Variations.
* Exceptionally adverse weather.
* Civil commotion or terrorism.
* Failure to provide information.
* Delay on the part of a nominated sub-contractor.
* Statutory undertaker’s work.
* A delay in giving the contractor possession of the site.
* Force majeure (such as an epidemic or an 'act of God').
* Loss from a specified peril such as flood.
* The supply of materials and goods by the client.
* Strikes.
* Changes in statutory requirements.
* Delays in receiving permissions that the contractor has taken reasonable steps to avoid.

The contractor is required to prevent or mitigate the delay and any resulting loss, even where the fault is not their own.

Assessing claims for an extension of time can be complicated and controversial. There may be multiple or concurrent delays, some of which are the contractor's fault and some not. There are many occasions where contractors contribute to delay themselves by their performance during design periods, when producing drawings, mock ups and samples or in inter-facing with sub-contractors.

Crucial in assessing applications for extension of time is the quality of the information provided and records available.

For more information, see How to prepare a claim for an extension of time.

Claims should be judged against the actual progress of the works, not the programme, and must demonstrate the link between the breach (cause) and the delay.

The contract administrator may review extensions of time after practical completion and further adjust the completion date.

Mechanisms allowing extensions of time are not simply for the contractor's benefit. If there was no such mechanism and a delay occurred which was not the contractor’s fault, then the contractor would no longer be required to complete the works by the completion date and would only then have to complete the works in a 'reasonable' time. The client would lose any right to liquidated damages.

Claims for extension of time can run alongside claims for loss and expense (relevant matters) however, one need not necessarily lead to the other.

It is very important when deducting liquidated damages to ensure that the correct contractual procedures are adhered to. In the case of [http://www.bailii.org/ew/cases/EWHC/TCC/2016/3180.html Octoesse LLP v Trak Special Projects Ltd (2016)], Justice Jefford held that Octoesse was not entitled to deduct liquidated damages as they had agreed to an extension of time after a certificate of non completion had been issued. The JCT Intermediate Building Contract is constructed such that:

“If the Contractor fails to complete the Works or a Section by the relevant Completion Date, the Architect/Contract administrator shall issue a certificate to that effect. If an extension of time is made after the issue of such certificate, the extension shall cancel that certificate and the Architect/Contract Administrator shall where necessary issue a further certificate.”

As Octoesse had not issued a further certificate of non completion, they were not entitled to deduct liquidated damages.

= Actions =

When it becomes reasonable apparent that the progress of any section of the works is being or is likely to be delayed from any cause whatever, both forward and backward looking,

Contractor must

* Give notice of the material circumstance identifying the cause/s or anything deemed as ‘relevant event’ FORTHWITH, noting the exact activities that were affected (2.27-2.29)
* Estimate if the extent of delay affect the programme of any section of the works beyond the completion date (issued asap after first notice)
* Submit evidence and show that he has taken reasonable steps to mitigate his loss if there is a loss and expense claim on a ‘relevant matter’ (4.23-4.24)

Architect must

* On receipt of notice, the CA must decide whether the contractor is entitled to an extension of time
* Ask for details of the request in writing if the information provided is deemed insufficient e.g. concurrent delay or information release schedule
* CA must decide whether the delays is caused by ‘relevant event’. CA must state the extension of time which he has attributed to each ‘relevant event’
* CA must either issue a new completion date or notify contractor of his decision not to do so within 12 weeks of receipt of the required particular, or, where there are fewer than 12 weeks to completion, no later than the completion date

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Acceleration of construction works.
* Certificate of non completion.
* Common refusals of extensions of time.
* Contract administrator.
* Concurrent delay.
* Compensation event.
* Completion date.
* Delay damages.
* Difference between practical completion and partial possession.
* Extension of time - approval letter example.
* Force majeure.
* How to prepare a claim for an extension of time.
* Loss and expense.
* Liquidated damages.
* Named specialist work.
* Nominated subcontractor.
* Payment for extra work.
* Possession.
* Practical completion.
* Preliminaries.
* Progress of construction works.
* Project programme.
* Prolongation.
* Regularly and diligently.
* Relevant event.
* Relevant event v relevant matter.
* Relevant matter.
* Time at large.
* Time Risk Allowance TRA.
* Variations.

=== External references ===

* [http://www.constructsupport.co.uk/programme_produced_extension.html Construct Support, extensions of time.]
* Herbert Smith, Extensions of Time: What Happens If the Contractual Machinery Breaks Down?
* Atkinson Law, Delay and Disruption - The Contractor's Obligations as to Time.

[[Category:Articles_needing_more_work]] [[Category:Construction_management]] [[Category:Procurement]]

Final certificate for construction contracts

2018-01-06T17:45:31Z

Thomasprashman:

The final certificate is certification by the contract administrator that a construction contract has been fully completed. It is issued at the end of the defects liability period and has the effect of releasing all remaining money due to the contractor, including any remaining retention.

The value of the final certificate will be based on the final account agreed by the cost consultant and the contractor. This means that all patent defects must have been remedied, all adjustments to the contract sum must have been agreed and all claims settled.

Where proceedings have been commenced in relation to a dispute, the conclusiveness of the final certificate is subject to the findings of those proceedings. In addition, the final certificate itself can be disputed (usually within 28 days). Adjudication, arbitration or other proceedings may then be necessary to resolve the dispute. The final certificate is then only conclusive in relation to matters that are not disputed.

If the client intends to pay a different amount from that shown on the certificate, then they must give notice to the contractor of the amount they intend to pay and the basis for its calculation (pay less notice - see Housing Grants, Construction and Regeneration Act for more information).

-----
Alternative procedures

In design and build contracts (such as Joint Contracts Tribunal (JCT) DB 16) the final certificate may be described as the final statement.

In construction management contracts, where there are a number of trade contracts, final statements are issued for each trade contract. Once final statements have been issued for each trade contract, the construction manager co-ordinates preparation of the final report and issues the final certificate for the whole project.

There is a similar procedure on management contracts, where final certificates are issued by the management contractor for each individual works contract, and then once all works contracts have received a final certificate, the management contractor provides the client's contract administrator (or cost consultant) with information allowing them to calculate the prime cost (the cost of the works contracts) and a final certificate is issued to the management contractor.

NB Rather confusingly, the term 'final certificate' can also refer to a completion certificate issued by a building control body in relation to the building regulations. See Building regulations completion certificate for more information.

= Find out more =

</p>
=== Related articles on Designing Buildings Wiki ===

* Building regulations completion certificate.
* Contract administrator.
* Defects liability period.
* Final account.
* Housing Grants, Construction and Regeneration Act.
* Retention.
* Interim certificates.
* Sectional completion.
* Topping out.
* Work-to-complete list.

[[Category:Articles_needing_more_work]] [[Category:Project_activities]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Procurement]]

Final certificate for construction contracts

2018-01-06T17:45:07Z

Thomasprashman:

The final certificate is certification by the contract administrator that a construction contract has been fully completed. It is issued at the end of the defects liability period and has the effect of releasing all remaining money due to the contractor, including any remaining retention.

The value of the final certificate will be based on the final account agreed by the cost consultant and the contractor. This means that all patent defects must have been remedied, all adjustments to the contract sum must have been agreed and all claims settled.

Where proceedings have been commenced in relation to a dispute, the conclusiveness of the final certificate is subject to the findings of those proceedings. In addition, the final certificate itself can be disputed (usually within 28 days). Adjudication, arbitration or other proceedings may then be necessary to resolve the dispute. The final certificate is then only conclusive in relation to matters that are not disputed.

If the client intends to pay a different amount from that shown on the certificate, then they must give notice to the contractor of the amount they intend to pay and the basis for its calculation (pay less notice - see Housing Grants, Construction and Regeneration Act for more information).

-----
Alternative procedures

In design and build contracts (such as Joint Contracts Tribunal (JCT) DB 16) the final certificate may be described as the final statement.

In construction management contracts, where there are a number of trade contracts, final statements are issued for each trade contract. Once final statements have been issued for each trade contract, the construction manager co-ordinates preparation of the final report and issues the final certificate for the whole project.

There is a similar procedure on management contracts, where final certificates are issued by the management contractor for each individual works contract, and then once all works contracts have received a final certificate, the management contractor provides the client's contract administrator (or cost consultant) with information allowing them to calculate the prime cost (the cost of the works contracts) and a final certificate is issued to the management contractor.

NB Rather confusingly, the term 'final certificate' can also refer to a completion certificate issued by a building control body in relation to the building regulations. See Building regulations completion certificate for more information.

Final Interim Certificate

* CA must issue FIC no later than 2 months after the latest of:

# The end of defects rectification period
# The date of issue of the Certificate of Making Good
# The date of the CA’s final statement in relation to the contract sum under clause 4.25
# Other bespoke clauses

* The final release of retention must follow
* If defects notice during the defects rectification period is not complied with, others can be employed to do the necessary work and the cost deducted from the Retention Percentage.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Building regulations completion certificate.
* Contract administrator.
* Defects liability period.
* Final account.
* Housing Grants, Construction and Regeneration Act.
* Retention.
* Interim certificates.
* Sectional completion.
* Topping out.
* Work-to-complete list.

[[Category:Articles_needing_more_work]] [[Category:Project_activities]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Procurement]]

Practical completion

2018-01-06T17:43:36Z

Thomasprashman:

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 (an amount retained from payments due to the contractor to ensure that they complete the works).
* Ending the contractor's liability for liquidated damages (damages that become payable to the client in the event that there is a breach of contract by the contractor - generally by failing to complete the works by the completion date).
* Signifying the beginning of the defects liability period.

Documentation that should be issued to the client on certification of practical completion might include:

* A draft building owner's manual.
* A building user's guide.
* The health and safety file.
* The building log book.
* A construction stage report.

Once the certificate of practical completion has been issued, the client takes possession of the works for occupation.

There is no absolute definition of practical completion, and case law is very complex. There is some debate about when practical completion can be certified and whether it can be certified where there are very minor (de minimis) items 'not affecting beneficial occupancy' that remain incomplete.

It is important to note however, that the defects liability period, which follows certification of practical completion, is not a chance to correct problems apparent at practical completion, it is the period during which the contractor may be recalled to rectify defects which appear following practical completion. If there are defects apparent before practical completion, then these should be rectified before a certificate of practical completion is issued.

This can put the contract administrator in a difficult position, as both the contractor and the client may be keen to issue the certificate (so the building can be handed over) and yet defects (more than a de minimis) are still apparent in the works. Issuing the certificate could render the contract administrator liable for problems that this causes, for example in the calculation of liquidated damages, the position in relation to performance bonds and the release of retention when it is not certain that the works will be completed.

If the contract administrator is put under pressure to certify practical completion even though the works are not complete, they might consider informing the client in writing of the potential problems of doing so, obtaining written consent from the client to certify practical completion and obtaining agreement from the contractor that they will complete the works and rectify any defects. If the contract administrator is not confident about the potential problems, they may advise the client to seek legal advice.

On construction management contracts, a separate certificate of practical completion must be issued for each trade contract. Once all trade contracts (or all trade contracts for a particular section of the works) have been issued, the construction manager issues a certificate or project completion (or sectional completion). The same is true on management contracts, where each works contract must be certified individually.

Practical completion is not a term recognised in some recently developed contracts such as PPC 2000 and other partnering contracts which simply refer to 'completion'. This can put the contract administrator in a difficult position as to when the project becomes 'useable' by the client.

If the project reaches a stage when the intended use by the client (either immediate use, such as installing furniture or fitting-out, or actual occupation by the end users) is possible, safely and without affecting warranties, then the project may be deemed 'complete'. The size and extent of the list of outstanding works and defects requiring rectification will be the measure on which the contract administrator judges whether completion has actually been achieved.

If practical completion is not certified by the most recently agreed completion date, then the contractor may be liable to pay liquidated and ascertained damages to the client. These are pre-determined damages set at the time that the contract is entered into, based on a calculation of the actual loss that the client is likely to incur if the contractor fails to meet the completion date. Some contracts require that a certificate of non-completion is issued as a pre-requisite to deducting liquidated and ascertained damages.

NB: Sectional completion refers to a provision within construction contracts allowing different completion dates for different sections of the works. This is common on large projects that are completed in sections, allowing the client to take possession of the completed parts whilst construction continues on others. Sectional completion differs from partial possession in that it is pre-planned and defined in the contract documents.

= Find out more =

</p>
=== Related articles on Designing Buildings Wiki ===

* Base construction.
* Beneficial occupation.
* Certificate of making good defects.
* Certificate of non completion.
* Completion.
* Completion date.
* Defects liability period.
* Difference between practical completion and partial possession.
* Extension of time.
* Handover to client.
* Liquidated damages.
* Loss and expense.
* Migration strategy.
* Partial possession.
* Possession.
* Occupation and defects liability period.
* Retention.
* Sectional completion.
* Schedule of defects.
* Snagging.
* Soft landings.
* Time at large.
* Topping out.
* Work-to-complete list.

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

Practical completion

2018-01-06T17:43:08Z

Thomasprashman:

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 (an amount retained from payments due to the contractor to ensure that they complete the works).
* Ending the contractor's liability for liquidated damages (damages that become payable to the client in the event that there is a breach of contract by the contractor - generally by failing to complete the works by the completion date).
* Signifying the beginning of the defects liability period.

Documentation that should be issued to the client on certification of practical completion might include:

* A draft building owner's manual.
* A building user's guide.
* The health and safety file.
* The building log book.
* A construction stage report.

Once the certificate of practical completion has been issued, the client takes possession of the works for occupation.

There is no absolute definition of practical completion, and case law is very complex. There is some debate about when practical completion can be certified and whether it can be certified where there are very minor (de minimis) items 'not affecting beneficial occupancy' that remain incomplete.

It is important to note however, that the defects liability period, which follows certification of practical completion, is not a chance to correct problems apparent at practical completion, it is the period during which the contractor may be recalled to rectify defects which appear following practical completion. If there are defects apparent before practical completion, then these should be rectified before a certificate of practical completion is issued.

This can put the contract administrator in a difficult position, as both the contractor and the client may be keen to issue the certificate (so the building can be handed over) and yet defects (more than a de minimis) are still apparent in the works. Issuing the certificate could render the contract administrator liable for problems that this causes, for example in the calculation of liquidated damages, the position in relation to performance bonds and the release of retention when it is not certain that the works will be completed.

If the contract administrator is put under pressure to certify practical completion even though the works are not complete, they might consider informing the client in writing of the potential problems of doing so, obtaining written consent from the client to certify practical completion and obtaining agreement from the contractor that they will complete the works and rectify any defects. If the contract administrator is not confident about the potential problems, they may advise the client to seek legal advice.

On construction management contracts, a separate certificate of practical completion must be issued for each trade contract. Once all trade contracts (or all trade contracts for a particular section of the works) have been issued, the construction manager issues a certificate or project completion (or sectional completion). The same is true on management contracts, where each works contract must be certified individually.

Practical completion is not a term recognised in some recently developed contracts such as PPC 2000 and other partnering contracts which simply refer to 'completion'. This can put the contract administrator in a difficult position as to when the project becomes 'useable' by the client.

If the project reaches a stage when the intended use by the client (either immediate use, such as installing furniture or fitting-out, or actual occupation by the end users) is possible, safely and without affecting warranties, then the project may be deemed 'complete'. The size and extent of the list of outstanding works and defects requiring rectification will be the measure on which the contract administrator judges whether completion has actually been achieved.

If practical completion is not certified by the most recently agreed completion date, then the contractor may be liable to pay liquidated and ascertained damages to the client. These are pre-determined damages set at the time that the contract is entered into, based on a calculation of the actual loss that the client is likely to incur if the contractor fails to meet the completion date. Some contracts require that a certificate of non-completion is issued as a pre-requisite to deducting liquidated and ascertained damages.

NB: Sectional completion refers to a provision within construction contracts allowing different completion dates for different sections of the works. This is common on large projects that are completed in sections, allowing the client to take possession of the completed parts whilst construction continues on others. Sectional completion differs from partial possession in that it is pre-planned and defined in the contract documents.

Practical Completion certificate

* The certificate signifies that all the necessary construction work has been done without any obvious defects, but does not exclude the existence of latent defects. Works cannot be complete if there are patent (known) defects.
* Client re-takes possession of the site once certificate is issued
* Clause 2.30 provides for the issue of a certificate of practical completion when, in the opinion of the Architect, practical completion of the works or of a section of the works has been achieved and the contractor has sufficiently complied with clauses 2.40 (as- built contractor’s design drawings) and 3.23.4 (health and safety file information).
* Clause 2.31 obliges the Architect to issue a certificate of non-completion in the relevant circumstances, whether or not the employer intends to deduct (or call for the payment of) liquidated damages.
* Half of retention money is typically returned to the contractor (retention money is the pool of money gathered from a percentage of contractor payment at every interim certificate issue)
* Defects Rectification Period begins (default 6 months – usually amended to 12). The CA should list these in a schedule of defects. This must be delivered to the contractor no later than 14 days after the end of the Rectification Period.
* Contractor’s liability for LADs ends
* CA can, at his discretion, certify PC where there are very minor items of work left incomplete. Employer must first be consulted and the contractor should put an acknowledgement of the existence of known defects in writing.
* It is a Breach of Duty of Care to certify PC before all works is deemed complete
* Employer must give notice of its intention to levy LADS (2.32.2) if PC is late. Ensure that the contract is written in such a way that LADS cannot be construed as being a penalty
* Employer must give notice of its intention to deduct monies due to the contractor (2.32.2.2) in compliance with section 111 of the Housing Grants, Construction and Regeneration Act 1996

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Base construction.
* Beneficial occupation.
* Certificate of making good defects.
* Certificate of non completion.
* Completion.
* Completion date.
* Defects liability period.
* Difference between practical completion and partial possession.
* Extension of time.
* Handover to client.
* Liquidated damages.
* Loss and expense.
* Migration strategy.
* Partial possession.
* Possession.
* Occupation and defects liability period.
* Retention.
* Sectional completion.
* Schedule of defects.
* Snagging.
* Soft landings.
* Time at large.
* Topping out.
* Work-to-complete list.

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

Interim certificates in construction contracts

2018-01-06T17:41:39Z

Thomasprashman:

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 amount of these payments is entered onto an interim certificate (generally valued by the cost consultant, perhaps having taken advice from the lead designer) and the client must honour the certificate within the period stipulated by the contract.

If the client intends to pay a different amount from that shown on the interim certificate, then they must give notice to the contractor of the amount they intend to pay and the basis for its calculation (pay less notice - see Housing Grants, Construction and Regeneration Act for more information).

The value of interim certificates is the value of the work completed, less any amounts already paid, less retention. Half of this retention will be released on certification of practical completion and the other half upon issue of the certificate of making good defects.

Interim certificates should make clear the amount of retention and a statement should also be prepared showing retention for nominated sub-contractors if there are any. The contract may require that retention is kept in a separate bank account and that this is certified. In this case, the client will generally keep any interest paid on the account.

There may be particular provision to include the value of particularly costly materials that the contractor has not yet delivered to site. This allows the contractor to order items in good time, without incurring unnecessary long-term expense, but does put the client at some risk if the contractor becomes insolvent.

On design and build projects, the amounts certified as payable may be based on a contract sum analysis.

The contract conditions provide that the contract administrator must issue an interim certificate within five [calendar] days of the due date whether or not the contractor has issued an interim [payment] application. This five [calendar] day period is set by statute in the Housing Grants Construction Regeneration Act 1996 as amended by the Local Democracy, Economic Development and Construction Act 2009. Being set by statute, the time period cannot be changed.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Activity schedule.
* Certificate of making good defects.
* Contract sum analysis.
* Cost value reconciliation.
* Due date.
* Final certificate.
* Housing Grants, Construction and Regeneration Act.
* Interim valuation.
* Off site materials.
* Milestone payment.
* Payment notice.
* Payments to nominated sub-contractors.
* Practical completion.
* Retention.

=== External references ===

* [http://www.isurv.com/site/scripts/documents.aspx?categoryID=76 RICS Valuations for interim certificates.]

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

Interim certificates in construction contracts

2018-01-06T17:40:35Z

Thomasprashman:

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 amount of these payments is entered onto an interim certificate (generally valued by the cost consultant, perhaps having taken advice from the lead designer) and the client must honour the certificate within the period stipulated by the contract.

If the client intends to pay a different amount from that shown on the interim certificate, then they must give notice to the contractor of the amount they intend to pay and the basis for its calculation (pay less notice - see Housing Grants, Construction and Regeneration Act for more information).

The value of interim certificates is the value of the work completed, less any amounts already paid, less retention. Half of this retention will be released on certification of practical completion and the other half upon issue of the certificate of making good defects.

Interim certificates should make clear the amount of retention and a statement should also be prepared showing retention for nominated sub-contractors if there are any. The contract may require that retention is kept in a separate bank account and that this is certified. In this case, the client will generally keep any interest paid on the account.

There may be particular provision to include the value of particularly costly materials that the contractor has not yet delivered to site. This allows the contractor to order items in good time, without incurring unnecessary long-term expense, but does put the client at some risk if the contractor becomes insolvent.

On design and build projects, the amounts certified as payable may be based on a contract sum analysis.

The contract conditions provide that the contract administrator must issue an interim certificate within five [calendar] days of the due date whether or not the contractor has issued an interim [payment] application. This five [calendar] day period is set by statute in the Housing Grants Construction Regeneration Act 1996 as amended by the Local Democracy, Economic Development and Construction Act 2009. Being set by statute, the time period cannot be changed.

Interim certificate

* Certificate to signify for payment at monthly intervals after valuation of the work carried out by QS, in accordance with section 110 of the Housing Grants, Construction and Regeneration Act 1996

# Interim valuation date is to be set out in the contract particulars (note that it would change to the nearest business day)
# Due date – 7 days after interim valuation date
# Interim payment certificate (payment notice) – issued by CA not more than 5 days after the Due Date
# Pay Less Notice – not more than 9 days after the due date if the employer intend to pay less than the amount set out in the payment notice, setting out the basis for its calculation.
# Final Date for Payment- 14 days after the due date

* Directly instructed work by employer should not be valued in a CA’s certificate unless it is subsequently included in a CA’s instruction
* Contractor may refer a dispute against the employer to adjudication if certificates are late
* Contractor may suspend performance of the works if the employer fails to pay him in full. The contractor is also entitled to an extension of time (4.14)
* Non-payment is regarded as debt and the employer would owe interest to the outstanding sum

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Activity schedule.
* Certificate of making good defects.
* Contract sum analysis.
* Cost value reconciliation.
* Due date.
* Final certificate.
* Housing Grants, Construction and Regeneration Act.
* Interim valuation.
* Off site materials.
* Milestone payment.
* Payment notice.
* Payments to nominated sub-contractors.
* Practical completion.
* Retention.

=== External references ===

* [http://www.isurv.com/site/scripts/documents.aspx?categoryID=76 RICS Valuations for interim certificates.]

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