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Construction Law/Advance Payment Recovery

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Question
Hello Peter Elliott,

We are the Project Managers on a project in Dubai & we are facing a peculiar situation, where the Cost Consultant is effecting advance payment recovery on the material-on-site whereas the advance payment was made only on the effective contract amount.

My advise to the team was to effect the advance payment recovery only on the gross amount of work done & not include the material-on-site. However, the employer's representative disagrees & is more than happy to recover the advance payment as early as possible. My contention is that the advance amount was made only on the effective contract amount, and, as such the recovery should be only on the gross value of work done. And, argument ER continues.....

Appreciate your advise.

Thanks & regards,

Vishwas

Answer
Dear Vishwas,

You do not mention the form of contract nor the applicable law so the following comments are generic in nature.  

If you look at clause 14.3 of FIDIC 99, it is quite clear that repayments are calculated based on the work done in a month before the value of any materials on site is added to the IPC.  There are similar clauses in other contracts.  

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Peter M. Elliott

Expertise

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 www.eotprotocol.com before submitting a question.

Experience

Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

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

Education/Credentials
B Sc(Hons) in Civil Engineering

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