Construction Law/Interim Payment


QUESTION: Dear Florin,

Kindly I have an inquiry regarding interim payment.

I am a consultant in road projects following FIDIC 1987 reprinted in 1992 fourth edition.

The contractor submitted an interim payment claiming for full amount of street lightings item.

The work physically done (excavations,footings,cabling,colums fixing, bulbs and feeder pillar).

But the power is not supplied yet, in the specifications it is mentioned that the power connection from the local authority is laid with the responsibility of the contractor. Also due to no power there was no testing.

Now for the physical work done above how many percentage is recommended to be paid is there any cluase dictating such matter.

Note: in the contract P.Conditions there is nothing mentioned about the approach to calculate how much it should be paid.


ANSWER: Dear M.dzaie,

Thank you for your question.

I understand that street lighting works are completed, but there is no power in place yet and hence, no testing. I assume however that aside testing, you're satisfied with the quality of works so far. And assume that bringing the power, is another item, for which the Contractor is paid separately.

I believe you'll need to go back to the Bills of Quantities and Technical Specifications and see exactly how is it planned to pay for each item.

It might be the case that you have different payment phases, e.g. for physical completion and then separately for successful testing. Or anything similar, along that idea.

If that's the case, then indeed, Contractor is right to ask for payment.

It might also be the case that you have to pay for the physical completion and then Contractor has to make good any defects found during testing. If he doesn't, you can always deduct the due amount from subsequent IPC, Retention Money, or Performance Guarantee.

As a general idea, based on what the Contract says and as long as you are satisfied with the general quality of works, it is always recommendable to pay as quick as possible the Contractor for sustaining their cashflow. It is a normal and balanced relationship between Employer/ Engineer and Employer.

But again, you need to go back to the Contract and see exactly what it says.

Hope that clarifies the matter, but if further assistance needed, please do come back to me.

---------- FOLLOW-UP ----------

QUESTION: Dear Florin thanks for prompt answer,

The street lightings is a variation and there is nothing in the contract about it only in the specifications which states the technical aspects.

This matter is important because the final approval for this part should be otained by the local authority not me.

My part is to make sure that the work is done as per authority standards and I am satisfied but still they did not give us the approval as the work is not cimplete as mentioned above.

Is there any clause in Fidic controls such case How I calculate the percentage of amount to be retained ?


Dear M.dzaie,

Thank you for coming back.

I see where you are coming from and understand that all in all, aside actual formal approvals, tests, etc, which indeed must take place for full satisfaction of the Client, you are generally happy with what the Contractor did.

I also understand there is no provision for separate payments for completion and testing.

Then I assume, the Contract is also not 100% clear on when the actual payment should be made.

Regretfully, there is no such Sub-Clause in the FIDIC Book, to answer your need, in which case, one should use its common sense and reasonableness.

On the basis that you are happy with what the Contractor did so far, I would suggest you sit down with the them and agree a percentage of payment split, say 75% for completion, 25% for successful testing, or whatever percentage you may mutually agree.

That would help in improving Contractor's cashflow, giving you a better degree of "safety". Aside the other instruments mentioned in my previous email. And that will also help in improving your relationship.

What do you think about that one? Good luck!

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Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.


Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List and of DRBF Chapter for Eastern Europe Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List Member of “” volunteers pool Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States

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