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Construction Law/Advance Payment Recovery


|Dear Sir,
Should we take material on site in to account when calculate  Advance Payment Recovery?If yes, how it can be  supported by FIDIC 99.

According to Clause 14.5 of FIDIC 1999 Red Book  "Interim Payment Certificates shall include, under sub-paragraph (e) of Sub-Clause 14.3 (see above), (i) an amount for Plant and Materials which have been sent to the Site for incorporation in the Permanent Works, and (ii) a reduction when the contract value of such Plant and Materials is included as part of the Permanent Works under sub-paragraph (a) of Sub-Clause 14.3.

A reduction as stated in the above clause, is for Advance Payment Recovery or just deduction of  incorporated materials.

I have seen some experts have interpreted above reduction as Advance Payment Recovery on Material On Site.

Thanks in Advance,

Dear Pete,

Clause 14.2 b is relevant to the calculation of repayment of any advance payment.  The repayment is based on the net value of the IPC, excluding retentions and repayment of retentions.  

For materials on site, it is best to do a monthly measure of the materials and calculate the value based on this measure.  It is assumed that any reduction in value from the previous month is matched by the materials being included in the permanent works.  Of course, you have to ensure that the value of the materials on site does not exceed the materials needed to complete the project.  Payment for materials on site is not an interest free loan, because, presumably, ownership of the materials has passed to the Employer, and thus this payment is not an advance payment in accordance with clause 14.2.

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Peter M. Elliott


First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol before submitting a question.


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Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

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