44 Questions
What happens if the Contract includes a Schedule of Payments specifying the instalments in which the Contract Price will be paid?
The instalments quoted in the Schedule of Payments shall be treated as the estimated contract values for the purposes of sub-paragraph (i) of Sub-Clause 14.3 [Application for Interim Payment]
Under what circumstances can the Engineer proceed to agree or determine revised instalments?
When the actual progress differs from that on which the Schedule of Payments was based
What does Sub-Clause 14.5 [Plant and Materials intended for the Works] not apply to?
Instalments quoted in the Schedule of Payments
When will Sub-Clause 14.5 [Plant and Materials intended for the Works] not apply?
When the instalments are not defined by reference to the actual progress achieved
What may the Engineer proceed to do if actual progress is found to differ from that on which the Schedule of Payments was based?
Agree or determine revised instalments under Sub-Clause 3.7 [Agreement or Determination]
What is the purpose of Sub-Clause 14.4 Schedule of Payments?
To specify the instalments in which the Contract Price will be paid
What is the effect of the inclusion of a Schedule of Payments in the Contract?
The Schedule of Payments serves as the estimated contract values for the purpose of interim payments
What must the Contractor include in a Statement for a Section?
The relevant percentage of the first half of the Retention Money
When should the second half of the Retention Money be included in a Statement?
After the expiry dates of the Defects Notification Periods
When does the Engineer certify the release of Retention Money?
In the next Interim Payment Certificate after receiving the Statement
What happens if any work remains to be executed under Clause 11 [Defects after Taking Over]?
The Engineer can withhold certification of the estimated cost of this work
What is the relevant percentage for each Section based on?
The percentage value of the Section as stated in the Contract Data
When should the Contractor submit a Statement at completion to the Engineer?
Within 84 days after the Date of Completion of the Works
What does the Statement at completion include?
The value of all work done in accordance with the Contract up to the Date of Completion of the Works
What should the Contractor show in the Statement at completion?
Any further sums which the Contractor considers to be due at the Date of Completion of the Works
What should the Contractor provide in the Statement at completion?
Supporting documents
When does the time limit for agreement under Sub-Clause 3.7.3 begin?
On the date the difference under sub-paragraph (ii) was found by the Engineer
What must the Contractor do if the Contract lacks a Schedule of Payments?
Submit non-binding estimates of expected payments every 3 months
Under what conditions does Sub-Clause 14.5 regarding Plant and Materials apply?
If they are listed in the Contract Data for payment when shipped and/or delivered
Who must agree or determine the amount to be added for Plant and Materials under Sub-Clause 3.7?
The Engineer
What are the conditions for the Engineer to agree or determine the amount for Plant and Materials under Sub-Clause 3.7?
Submission of evidence of shipment, payment of freight and insurance, and a written undertaking by the Contractor
When does the Engineer have an obligation to certify any payment?
Until the Employer receives the bank guarantee for Plant and Materials
What percentage of the agreed or determined amount is certified by the Engineer in an Interim Payment Certificate (IPC)?
80%
What may the Engineer withhold before the issue of the Taking-Over Certificate for the Works?
An Interim Payment Certificate (IPC) in an amount less than the minimum stated in the Contract Data
Under what circumstances can an IPC be withheld?
If the Contractor was or is failing to perform any work, service or obligation in accordance with the Contract
What is the consequence of the Employer not making payment in accordance with Sub-Clause 14.7 [Payment]?
The Contractor is entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay
What is the annual rate at which financing charges are calculated if payment is delayed?
3% above the average bank short-term lending rate to prime borrowers prevailing for the currency of payment
When does the period for financing charges commence if payment is delayed?
On the expiry of the time for payment specified in Sub-Clause 14.7 [Payment]
What is the consequence of the Contractor not receiving payment in accordance with Sub-Clause 14.7 [Payment]?
The Contractor is entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay
When may the Contractor be entitled to payment of financing charges by the Employer?
When the Employer fails to make payment in accordance with Sub-Clause 14.7 [Payment]
What is the consequence of the Engineer withholding an Interim Payment Certificate (IPC) before the issue of the Taking-Over Certificate for the Works?
The Contractor is not entitled to any payment until the Taking-Over Certificate is issued.
Under what circumstances can the Engineer make corrections or modifications to any previous Payment Certificate?
If there is a significant error or discrepancy in the Statement or supporting documents.
When is the Employer required to make timely payments for Advance Payment Certificates, IPCs, and Final Payment Certificates?
Within 42 days of the issue of the relevant certificate.
What is the annual rate at which financing charges are calculated if payment is delayed?
3% above the average bank short-term lending rate.
What happens after the issue of the Taking-Over Certificate with regards to retention money and financing charges?
Retention money is released, and financing charges are determined based on the prevailing lending rates.
When can the Contractor be entitled to payment of financing charges by the Employer?
If there is a delay in payment, the Contractor is entitled to receive financing charges without the need for formal Notices or certification.
What must the Contractor do if no lending rate exists for the currency of payment?
The Contractor must use the lending rate of the Contractor's home country.
When can the Engineer withhold an Interim Payment Certificate (IPC) before the issue of the Taking-Over Certificate for the Works?
If the amount is less than the minimum amount stated in the Contract Data
Under what circumstances is the Engineer not indicating acceptance or approval of the Contractor's work when making corrections or modifications to a Payment Certificate?
When making corrections or modifications to any previous Payment Certificate
What is the annual rate of the financing charges the Contractor is entitled to receive if payment is not received according to the terms?
3% above the average bank short-term lending rate
When should the retention money be released after the issue of the Taking-Over Certificate?
After the issue of the Taking-Over Certificate
What should the Employer do if the Contractor does not receive payment according to the terms?
Pay financing charges compounded monthly at an annual rate of 3% above the average bank short-term lending rate
What is the obligation of the Employer regarding the payment of the amount due in each currency?
Payment should be made into the Contractor's nominated bank account in the payment country specified in the Contract
When can the Contractor request payment of financing charges by the Employer without the need for any formalities or certification?
After the issue of the Taking-Over Certificate
Study Notes
FIDIC 2017 General Conditions Summary
- Time limit for agreement under Sub-Clause 3.7.3 begins on the date the difference under sub-paragraph (ii) was found by the Engineer
- If the Contract lacks a Schedule of Payments, the Contractor must submit non-binding estimates of expected payments every 3 months
- Sub-Clause 14.5 regarding Plant and Materials applies only if they are listed in the Contract Data for payment when shipped and/or delivered
- The Engineer must agree or determine the amount to be added for Plant and Materials under Sub-Clause 3.7
- Conditions for the Engineer to agree or determine the amount for Plant and Materials include submission of evidence of shipment, payment of freight and insurance, and a written undertaking by the Contractor
- The Engineer has no obligation to certify any payment until the Employer receives the bank guarantee for Plant and Materials
- The sum certified by the Engineer in an Interim Payment Certificate (IPC) is 80% of the agreed or determined amount
- The Contractor must keep satisfactory records and submit evidence demonstrating compliance with the Contract for Plant and Materials
- The Payment Certificate shall include the applicable amount to be deducted equivalent to the additional amount for the relevant Plant and Materials
- No amount is certified or paid to the Contractor until the Employer receives the Performance Security and the Contractor appoints the Contractor’s Representative
- The Engineer must issue an IPC within 28 days after receiving a Statement and supporting documents, stating the amount due and any additions/deductions
- The Contractor’s Representative must be appointed in accordance with Sub-Clause 4.3 for the Engineer to issue an IPC.
FIDIC 2017: Payment and Withholding Mechanisms in Construction Contracts
- The Engineer may withhold an Interim Payment Certificate (IPC) before the issue of the Taking-Over Certificate for the Works if the amount is less than the minimum amount stated in the Contract Data.
- An IPC can be withheld if work or supplies are not in accordance with the contract, or if the Contractor fails to perform any work or obligation.
- The Engineer can make corrections or modifications to any previous Payment Certificate and is not indicating acceptance or approval of the Contractor's work.
- If the Contractor believes an IPC does not include entitled amounts, they can be identified in the next Statement and the Engineer should make any necessary corrections in the next Payment Certificate.
- The Employer is obligated to pay the Contractor within specific time frames after receiving the Advance Payment Certificate, IPC, or Final Payment Certificate (FPC).
- Payment of the amount due in each currency should be made into the Contractor's nominated bank account in the payment country specified in the Contract.
- If the Contractor does not receive payment according to the terms, they are entitled to receive financing charges compounded monthly at an annual rate of 3% above the average bank short-term lending rate.
- The Contractor is entitled to these financing charges without the need to submit a Statement or formal Notice, and without prejudice to any other right or remedy.
- After the issue of the Taking-Over Certificate, the retention money should be released. The financing charges are calculated based on the average bank short-term lending rate to prime borrowers prevailing for the currency of payment.
- The Contractor can request payment of financing charges by the Employer without the need for any formalities or certification, and without prejudice to any other right or remedy.
This quiz provides a summary of key provisions from the FIDIC 2017 General Conditions and Payment Mechanisms in construction contracts. It covers aspects such as handling of Interim Payment Certificates, certification process, compliance requirements, and payment obligations for the Contractor and Employer.
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