Penultimate certificate for construction contracts
The JCT minor works building contract (MW 16) includes provision for a ‘penultimate certicate’, which signifies that there is no more work to value and triggers the final progress payment. Once issued, only the final certificate remains.
The difference between the penultimate certificate and a normal certificate for a progress payment is that half the retention is now released. Retention is a percentage of the amount certified as due to the contractor that is retained by the client to ensure that the contractor properly completes the works. So for example if the total retention was 5%, then 97.5% of the amount owed will become payable once the penultimate certificate has been issued, rather than 95% under a normal progress payment.
There will be no further payments until any defects that become apparent have been rectified and the final certificate is issued. At this point the final payment will be made, including the release of the remaining retention.
The Housing Grants Construction and Regeneration Act (The Construction Act) sets out requirements for making payments under construction contracts, including a requirement to issue a pay less notice (previously a withholding notice) if the client intends to pay less than the amount set out in a payment notice, setting out the basis for its calculation. See The Construction Act for more information.
NB There is no provision for the penultimate certificate to be withheld once practical completion has been certified. This means that certifying practical completion is a crucial point in the progress of the works, when the penultimate payment is triggered, the contractor’s liability for liquidated damages ceases and the client takes possession of the site. See practical completion for more information.
 Related articles on Designing Buildings Wiki
Featured articles and news
What is the Home Quality Mark? Find out how it can help you when buying/renting a new home.
Business Secretary launches £246m Faraday Challenge to establish UK as world leader in battery technology.
Government announces new plans for regulations to improve safety and security awareness of drone users.
Read our introductory article to the various different types of fuel.
IHBC book review: Charles Barry’s monumental struggle to rebuild the Houses of Parliament.
Read about RSHP's British Museum extension which has been shortlisted for the 2017 Stirling Prize.
Read our introductory article to building a house extension.
More updates from DCMS about the large-scale testing of cladding systems and the number of buildings affected.
UandI secure resolution to grant planning consent for major new regeneration project.
IHBC article considers how heritage is dealt with when infrastructure schemes are authorised.
It was the tallest structure in the world for 3,800 years, but to this day the exact construction techniques are a mystery.
Shortlist for the industry's most coveted award announced.
Government responds to Mark Farmer's review of industry, rejecting the call for a levy on clients.