"Interim Payment Certificates" means a payment certificate issued under the Clause "Contract Price and Payment", other than the Final Payment Certificate.
(FIDIC Conditions of Contract Definition)
Interim
Payment Certificates
Most standard forms of contract state an
entitlement on the part of the contractor to interim payment. These payments
assist in the contractor`s cashflow, but the actual determination of the
contractor`s entitlement is not made until the final certificate. The interim
payments are therefore sums paid on-account of whatever the contractor might
eventually be entitled to recover from the Employer. Most standard forms make
the issue of a certificate a condition precedent to the contractor`s right to
payment.
It is a matter of fact whether payment
for work carried out is a statement of acceptance or approval. Most contract
provisions for interim certification and payment are based on cumulative
valuation of work done, and are only for payments on account. They are not
binding nor conclusive of acceptance of the work.
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 clientmust 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 showingretention 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
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