Payment terms
Payment terms in a construction contract in the UK can vary but typically include several key elements to ensure clarity and proper compensation for the work performed. Some common payment terms might include:
- A payment schedule outlining the timing of payments, such as monthly, bi-monthly, or upon completion of specific project milestones. Typically interim payments will be made at intervals during the project based on completed stages or milestones and details the amount and timing of the final payment upon satisfactory completion of the entire project.
- Retention is a percentage (commonly 5-10%) of each payment retained by the employer until the project reaches practical completion.
- Valuation dates and payment notices outlines the procedures for issuing payments, the amount due for payment and any deductions. In the UK this is regulated by the Housing Grants, Construction and Regeneration Act.
- Variation terms, covering the process for handling changes or additional work, including how these changes are valued and paid for.
- Dispute resolution procedures, outlining procedures for resolving disputes related to payments, such as mediation or arbitration.
- Interest on late payments to be charged if payments are made after the agreed-upon deadline.
- Fluctuations to account for inflation.
- Damages to be paid in the event of breach of contract, such as failure to complete the project by the date set in the contract.
These terms are essential to ensure a clear understanding of how and when payments will be made throughout the construction project, reducing the likelihood of disputes and ensuring fair compensation for the work completed by the contractor.
[edit] Related articles on Designing Buildings
- Contract clauses.
- Fair payment practices.
- Fluctuation.
- Housing Grants, Construction and Regeneration Act.
- The Late Payment of Commercial Debts Regulations 2013.
- Payment notice.
- Project bank accounts.
- Prompt payment code.
- Retention.
- Scheme for construction contracts.
- Small Business, Enterprise and Employment Bill.
- The causes of late payment in construction.
- Variations.
Featured articles and news
ECA Industry Awards 2024 shortlist revealed
22 leading businesses from across the electrotechnical and engineering services sector.
Government unveils Skills England strategy
Skills England to transform opportunities and drive growth.
New Government Hub for York Given Planning Green Light
For up to 2,600 civil servants, due for completion by 2028.
Construction Skills Certification Scheme cards
July update on Professionally Qualified and Academically Qualified Person Cards.
BSRIA Briefing 2024, November 22
Sustainable Futures: Redefining Retrofit for Net Zero Living.
The CLC on driving competency in the retrofit sector
Previously published roadmap on skills for net zero.
The first labour government King's speech in fifteen years
Construction industry reactions, support and some concern.
CIOB Retrofit of Buildings Technical Information Sheet
What retrofit is, the approach to be taken and processes to be followed.
Adapting Historic Buildings for Energy and Carbon Efficiency
Historic England advice note 18, free download published.
10 retrofit projects revisited 10 years after completion.
Information orders, building liability orders and SPVs
Key BSA terms and how they impact special purpose vehicles.
Listed despite problems with its design.
Zen and the art of cycling exploration.
Design Council Homes Taskforce launched
To support government 1.5 million homes target within UK climate commitments.