5/20/2020

W E BINAR : INTERIM PAYMENT … ?

P R EPARATION O F I NT ERIM VALUATION 2

S E SSION I D : IP &E S-Q S-T05 Correct Name … ?

1
 Interim Bills
R ESOURCE P ERSON :
PRASAD S. DISSANAYAKA  Progress Payment
AIQS(SL), MCIOB(UK),B.Sc.(Hons)QS., GREENSL® AP, PG Dip (Arbitration)
Chartered Quantity Surveyor and
Chartered Construction Manager  Running Bills
Green Associate Professional
 Contractor’s monthly Claim
O N T U E S DAY 1 9 T H M AY 2 0 2 0 14.3 [Application for Interim Payment Certificate]
FR OM 9.00 AM – 1 0.00 A M
SESSION COORDINATOR – MR. KANCHUKA THILAKSHANA
Interim Payment Application [IPA]
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WHAT IS AN INTERIM PAYMENT … ? WHY IT IS IMPORTANT … ?

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Cashflow management is the most suffering issue in the

An amount of money, Construction.
that is paid Interim Payments help to regulate the cashflow issue of
before the total amount of money Contractors.
owed is decided. It contributes to make the Construction
-http://dictionary.cambridge.org- process healthier.
It reduces the Client’s burden
of payment.

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THREE ASPECTS … ! WHAT A CLIENT EXPECTS ……

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 Any Client wants to assure what ever

 Contractor’s request he is paying only for the actual work
done.

 Consultant’s requirement  Any Client wants to assure he is

paying only what is entitled to
according to the CoC.
 Client’s expectations
 In this aspect Consultant will be the
party to assure all above to the Client.
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CONSULTANT NEEDS … CONTRACTOR’S REQUEST …

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 Consultant needs to check & certify that all  Contractor needs to make sure that work is
done according to the specifications & designs
works are done according to the specifications
& design
 Needs to include the actual works carried at
 Need to measure & certify the payments are made only site with all required supportings to prove.
for the Works Completed
 Thus Consultant required be satisfied by checking &  Burden of proof lays with the Contractor
inspecting all relevant proofs. (upon request of Engineer clause 12.1 and
under obligation of clause 14.3, Submission of
statement)
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HOW TO REQUEST … ? HOW TO REQUEST … ?

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 It is important to follow a proper and agreed  Procedure to be described in the Contract.

procedure.
 For local SBD contracts it demonstrates under
Clause 14.0
 It helps to minimize delays in payments
 14.3 Interim Payment
 It prevents creating unnecessary Application (IPA)
issues

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HOW TO REQUEST … ?  ICTAD/SBD/02 THINGS TO BE INCLUDED ………

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 The Contractor Shall Submit a Statement

Value of the Works executed including Variation
 in three Copies
Changes in Legislation and Cost
 to Engineer
Retention
 After the end of each Month
Payment and Repayment of Advance
 Showing in details the amounts to which the Contractor
considers him self to be entitled Plant and Materials intended for the Works
 Together with supporting documents Claims, Disputes and Arbitration
 Which shall include the report on the progress during Deduction for Previous Payments
this month in accordance with 4.14 [Progress Reports]

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VALUE OF THE WORKS EXECUTED CHANGES IN LEGISLATION AND COST

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“the estimated contract value of the Works executed and the “any amounts to be added and deducted for changes in
Contractor’s Documents produced up to the end of the month legislation and changes in cost, in accordance with Sub-
(including Variations but excluding items described in sub- Clause 13.6 [Adjustments for Changes in Legislation] and
paragraphs (b) to (g) below)”
Sub-Clause 13.7 [Adjustments for Changes in Cost];”
Include
(a) Value of Measured Work  Contractor entitled subject to Notice under Sub-Clause 19.1for
(b) Any Variation legislation changes.
Exclude  Calculation based on price adjustment formula under Sub-
(a) Additional amounts due Price Escalation and Changes in Legislation. Clause 13.7
(b) Claims
 If the effect of legislation changes are not reflected in price
(c) Material on Site
adjustment formula then Engineer shall determine the value.
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RETENTION & REPAYMENT OF ADVANCE PLANT AND MATERIALS INTENDED FOR THE WORKS
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RETENTION
“any amount to be deducted for retention, calculated by applying the “any amounts to be added and deducted for Plant and Materials in
percentage of retention stated in the Contract Data to the total of the above accordance with Sub-Clause 14.4 [Plant and Materials intended for the
amounts, until the amount so retained by the Employer reaches the limit of Works];”
Retention Money (if any) stated in the Contract Data;” SBD

REPAYMENT OF ADVANCE  An amount equivalent to 80 % of the invoiced value of plant and Material s
any amounts to be added and deducted for the advance payment and which have been delivered to site for incorporation in the Permanent works
repayments in accordance with Sub-Clause 14.2 [Advance Payment];
 will not applicable for SBD 04 contract and if the Payment schedule are
applicable on deciding contract value where Plant and Materials intended for
the Works shall be indicated in payment schedule
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PLANT AND MATERIALS INTENDED FOR THE WORKS CLAIMS, DISPUTES AND ARBITRATION
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 the Contractor has to: “any other additions or deductions which may have become
due under the Contract or otherwise, including those under
 kept satisfactory records (including the orders, Clause 20 [Claims, Disputes and Arbitration]; and”
receipts, Costs and use of Plant and Materials) which
are available for inspection, and

 submitted a statement of the Cost of acquiring and

DEDUCTION FOR PREVIOUS PAYMENTS
delivering the Plant and Materials to the Site,
supported by satisfactory evidence; “the deduction of amounts certified in all previous
Payment Certificates.”

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INTERIM PAYMENT APPLICATION FORMAT WORK TO BE MEASURED

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 The Works shall be measured, and valued for payment

 Except otherwise stated in the Contract
 Permanent Works are to be measured from records,
 Records shall be prepared by the Engineer.
 The Contractor shall, as and when requested, attend to examine and agree the
records with the Engineer, and shall sign the same when agreed.
 If the Contractor does not attend, the records shall be accepted as accurate.
 If contractor disagreed notice shall be given for review
 If he has not send a notice after 14 days consider as agreed
 Specification, BOQ may required Contractor to prepare detailed Record

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WORK TO BE MEASURED (cont.) METHOD OF MEASUREMENT

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 If Engineer required work to be measured reasonable notice shall  Measurement shall be made of the net actual quantity of each
given to the Contractor to attend measurement jointly and
item of the permanent works and
provide if any particulars request by the Engineer
 Principles of measurement as described in the Contract Data
 If Contractor fails to attend or send representative, (Standard Method of Measurement)
Then the Measurement made by the Engineer shall be
accepted as accurate  Principles of Measurement as specified in Preamble notes

 Principles of measurement as specified

in Descriptions of the BOQ items

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PRELIMINARY PAYMENT SHEDULE INTEREST

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 Schedule to be pre agreed either during the tender, during the  If the Payment Delayed more than 35 days Contractor entitled to
negotiation or during post contract stage. receive financing charges
 Can be based on CIDA Guideline for the Preparation of Bill No 1
Preliminaries for the Building Works (ICTAD/ID/04)  Financial charges Calculated monthly
 Can be derived from Contractors Overhead Calculation  on the amount unpaid during the period of delay.
 Items may be categories as
 1% Above the lending rate of the Central Bank Rate
 Mobilization
 Reimburse on actual cost as an when incurred  Without need of notice, and without
 Equal installment over contract period
prejudice to any other right or remedy.
 Reimburse on completion of activity
 Mutually agreed between contractor and employer
 Demobilization
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NOMINATED SUBCONTRACTORS NOMINATED SUBCONTRACTORS

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Initial Advance will exclude provisional sums

Advance Payment may be required to request with Interim
Payment Certificate for Each Nominated Subcontractor or Supplier
after nomination
Nominated Subcontractor cost including Contractor ‘s Overhead
and profit percentage included in Interim Bill
OH and Profit percentage as stated in
Appropriate schedule or Contract Data

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QUALITY ASSURANCE AND QUALITY CONTROL INTERIM PAYMENT APPLICATIONS …

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 As per SBD2, The Contractor shall adopt Quality Assurance Procedure.

 Request for an Advance Payment
 Therefore substantiate his entitlement for payment he shall produce records  Request for one half of Retention when Taking Over Certificate
along with Interim Payment Application to prove that work has been carried issued
out in accordance specification, drawings and other necessary contractual
requirements  Requested second half of Retention when the Defect Notification
Period has passed and the Engineer has certified that all defects
 Records may include, RFIs, Test reports etc. notified have been corrected
 In Quality Control Contracts (SCA1) where Engineer  Request for an Advance Payment when Nomination of Nominated
engage in Quality Control aspect this procedure may Subcontractor
not required.

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SUPPORTING DOCUMENTS … ATTENTION ON SUPPORTING DOCUMENTS …

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 Measurement sheets  Measurement Sheets … Drawings & Sketches

 Necessary drawings & Sketches

Measurements to be recorded and included in to
 Rate analysis the IPA for all the measurable items including
countable with necessary reference from drawings
 Quotations and Bills
& sketches …..
 Applicable site instruction & log notes.

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ATTENTION ON SUPPORTING DOCUMENTS … ATTENTION ON SUPPORTING DOCUMENTS …

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 Rate Analysis … Quotations & Bills  Site instructions & log notes,
Any variations which has to be claimed under a new Time to time many instructions & required new
rate, copy of the approved rate breakdown need to details may issue by the Engineer during site visits.
attach along with the applicable valid quotations &
bills. It is important to include copies of such details
along with the IPAs for the verification during the
certification process.
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MINIMUM AMOUNT …

THANK YOU
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 If the certified amount of payment,

after deducting the retention & Advance recovery is
less than the stated minimum amount for IPC (if
any) in 14.5 of Contract data, then the Engineer is
not bind to issue an IPC.

20 May 2020