Interim certificates in construction contracts
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.
[edit] Related articles on Designing Buildings Wiki
- Activity schedule.
- Certificate of making good defects.
- Certificates in the construction industry.
- Contract sum analysis.
- Cost value reconciliation.
- Drawdown.
- 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.
[edit] External references
- RICS Valuations for interim certificates.
- Allan K Construction contracts 2017 @qs 2 kings entertainment
Featured articles and news
Soil moisture content, construction and landscaping
The effects, of low and high rainfall on soil and buidlings.
Sustainability or sentimentality in the refurbishment sector.
Has the pendulum now swung too far ?
Negative impacts of political instability on projects
Expected by 64% of the respondents in nationwide survey.
BSRIA Market Intelligence Reports
World Building Automation and Control Systems (BACS) 2022
Statement of health and early intervention.
The importance of regular check-ups
And related links on DB.
Sustainable urban drainage systems SUDS
Rooflights, skylights, roof windows and Part L
Shedding some light on the new Building Regulations.
Interview with historic built environment surveyor.
Upgraded membership category now requires assessment.
The average kinetic energy of molecules
Temperature in buildings, explained on DB
Women and unequal pay in project management
Main barrier to entering the profession, new study reveals.
IHBC’s response to Parliamentary Committee
On Levelling-Up and Regeneration Bill.
Finalists for 2022 CIOB Awards revealed
Over 70 managers and organisations shortlisted for the 14 awards.
Types of building sensors on BD
From biometric to electrical current, chemical and more.
Government mandates detectors in rented homes
Changes are due to come into force on 1st October 2022.
80% of major government projects are rated red or amber
Heed advice and insight of this report IPA tells the government.
The end of the games but continued calls for action
From the Commonwealth Association of Architects.
Sustainable urban drainage systems SUDS
Comments
Interim Payment Certificate is prepared by Consultant's Team Leader or Contractor's Project Manager's which reports Monthly progress schedule and progress cash-flow.
https://www.ipcsoftware.com/