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Construction Law/Interim Payment Certificate

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QUESTION: Clause 14.6 of the FIDIC 1999 Red Book, requires the Engineer to issue an Interim Payment Certificate to the Employer within 28 days after receiving a Statement and supporting documents from the Contractor.

However very often the supporting documents (measurements, calculations etc) are incomplete at the time of submission of the Statement to certify the full amount applied for.

My question is whether the stipulated time frame of 28 days start from day 1 of the submission of the Statement or from the date on which satisfactory supporting documents are being submitted whereby an evaluation could be carried out and certificate issued to the Employer ??

If the answer to the above is as from day 1 of the submission, then as at 28 days thereafter the Engineer is bound to issue a certificate based on the extent of supporting documents available as at that date. The amount could be much less that the application for payment. Please confirm whether this is correct.

Thanking you for your kind support.

Best Regards

Michael

ANSWER: Dear Michael,


Thank you for your question.

Suggest neither of your approach, but the K.I.S.S. one, i.e. Keep It Straight and Simple!

Just read carefully the wording of 14.6, as it says: "the Engineer shall, within 28 days after receiving a Statement and supporting documents, issue to the Employer an Interim Payment Certificate which shall state the amount which the Engineer FAIRLLY DETERMINES TO BE DUE, with supporting particulars."

As such, the Contractor includes no matter what in his Statement, the Engineer, issues an IPC, including in it ONLY what he fairly determines to be due and provides supporting particulars, indicating why he did not include some of the sums the Contractor included in his Statement.

Trust that solves your dilemma, good luck!

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

QUESTION: Dear Mr Florin,

thank you very much for your reply. It confirms what I was thinking being the right approach.

Unfortunately in my case the valuation of the Statement is being done by another Quantity Surveying firm, appointed by the Employer, based on which we as Engineer would issue the payment certificate. However the QS took much more that 28 days for the valuation arguing that the supporting documents were submitted well after the Statement and this being beyond the first 28 days and that it was this date that was considered as the effective date for submission of the Statement.

Of course the delays in valuation subsequently delayed the eventual payment by the Employer and the Contractor is now accordingly claiming for financing charges on late payments under Clause 14.8 as payment by the Employer was also beyond the specified time frame of 56 days as per Clause 14.7 (b).

Unfortunately the Employer is in favour of the QS's interpretation of Clause 14.6 as this is to his advantage and also due to the QS's firm being in fact one of its sister company.

My question is as to whether the QS was right in waiting for additional supporting documents which came much later than the 28 days before issuing us his valuation for certification, and whether the Contractor is or not entitled to financing charge in this present case.

Thank you very much for your time and support.

Michael

Answer
Dear Michael,


Thank you for coming back.

Again, please do read the Contract. There is a mechanism made of Sub-Clauses 14.6, 14.7 and 14.8.

As long as IPC not issued, payment is not yet due, hence, once can not invoke 14.8. The mechanism is missing a link. Hence claim on that basis is born dead.

What Contractor could do, would be to claim for Engineer's failure to issue IPC, but as long as their own documents prevented issuance of IPC, such claim would also be failed.

I trust that problems with Contractor's Statement are properly recorded to make possible demonstration of the fact that they are at the origin of the problem. If not, try making sure you gather quickly all you need.

And to answer your question, no, the QS was utterly wrong, they should read the Contract.

Trust that answer your query.

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Florin NICULESCU

Expertise

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.

Experience

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.

Organizations
Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

Education/Credentials
- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme (http://www1.fidic.org/resources/adjudicators/pupilage.html) - FIDIC Accredited Adjudicator

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Regional Development (former Ministry of European Integration), Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey, Croatia and Macedonia - Numerous Western based private consultancy companies - full CV and other relevant information available at www.abinitio.ro

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