Understanding of issuing Payment Certificate: Clause 14.6 of the FIDIC Contract
Today we are going to discuss Clause 14.6, which is about issuing
the Interim Payment Certificate (IPC).
In previous lessons, we covered Clauses 14.1
to 14.5, which address various aspects of payment applications—what can be
claimed and the different clauses that enhance communication between the
contractor and the client. Now, the contractor has submitted the payment
application, and it’s in the engineer's hands. In this article, we will explore
how the engineer handles the payment statement, and we will dive into more
related topics in upcoming sessions.
Clause 14.6 focuses on issuing the IPC. When a
contractor submits a payment application, the engineer must review it. Based on
this review, the engineer will decide whether to approve or adjust the payment
amount.
Conditions
for Payment
Before any payment can be made, two main
conditions must be met:
- Performance Security:
According to Clause 4.2.1, the contractor must provide performance
security, which is a key contractual obligation. For more details, you can
refer back to our earlier discussions on performance security.
- Contractor’s Appointee: As
outlined in Clause 4.3, the contractor must appoint a representative,
often the project manager or director, who will have the authority to
manage contractual matters with the engineer.
Sub-Clauses
14.6.1 to 14.6.3
- Sub-Clause 14.6.1: Issuing the IPC
Once the contractor submits a payment application (typically on or before
the 20th of each month), the engineer has 28 days to review and issue the
IPC. This timeframe is crucial. If the engineer fails to respond within 28
days, the contractor's application is deemed accepted, and the employer
must make payment based on the contractor’s submission.
- Sub-Clause 14.6.2: Reasons for Withholding the IPC
There are specific reasons an engineer may withhold an IPC:
- The total payment is below the contract minimum.
- Work or materials are not up to standards.
- The contractor has not fulfilled obligations.
- There are errors in the contract documents.
The
engineer must explain why payment is withheld and what needs to be corrected.
- Sub-Clause 14.6.3: Corrections to the IPC
If any errors are found in a previous IPC—whether by the engineer or
contractor—this sub-clause allows for corrections to be made. If the
contractor feels that payments were missed, they can highlight these in
the next payment request. If issues remain unresolved, the contractor can
formally request a review.
Conclusion
In this lesson, we explored the process of
payment certification, including conditions for payment, time-bar clauses,
scenarios where payment can be withheld, and how mistakes can be corrected.
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