Construction Law/Advance Payment

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Question
Dear Mr.John Dowse :

As for how to pay the Advance Payment by installments to the Contractor, we have the following questions:  
1.   In accordance with Sub-Clause 14.2 of FIDIC yellow book(First addition 1999) , “The Engineer shall issue an Interim Payment Certificate for the first installment after receiving a Statement…..” and also stated that the 56 days are needed, in which 28 days used for review by the Engineer and Employer separately. Why does the first installment of the Advance Payment be paid by the form of IPC and it seems not necessary that the Engineer is to be involved and if necessary, how his review need 28 days, as the terms and conditions for Advanced Payment has already been fixed by the Contract between the Employer and Contractor.  
2.   We, the Contractor,  are waiting for the second and third installment of the Advance Payment from the Employer.  And based on the  amendment of the Main Contract signed recently by both Parties, which clearly stated that “ the second installment of xx,xxx,xxx.xx CHF to be paid following the agreement and signature of Addendum Agreement No.1 and upon the receipt of the request letter and an Advance Payment Guarantee”;  Now, the Addendum Agreement No.1 were signed and the request letter was sent and Advance Payment Guarantee was received by the Employer,  is it necessary to go through the same procedure as the first installment did by IPC and need 56 days ?

Thanks in Advance and a reply at your earliest convenience will be appreciated.

Best regards,

Zhang

Answer
Dear Zhang,

Thank you for this questions. Taking each in turn:


1. FIDIC standard forms of contract are intended as frameworks that can be amended to suit the requirements of the Parties; as such the form of contract sets out standard procedures. In this case the procedure seems to be unnecessary, as you have suggested, but if the Parties did not amend it then it should stand.

2. Unless the amendment specified a different payment mechanism, then I suggest that the terms of the main contract apply to the second instalment of the advance as they would to all future instalments.


I hope that this assists you.

Kind regards,
John Dowse
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John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

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