Understanding Plant and materials provisions: Clause 14.5 of the FIDIC Contract

Asad Ali

Tue, 10 Jun 2025

In today's article we are going to talk about Clause 14.5, which deals with plant and materials for works. This concept might seem a bit complex, and many of you may not be familiar with it. So, before diving into the theory and discussing the rights and obligations of both the contractor and client, I will first walk you through an Excel sheet. This will help illustrate how this clause works in practice.

Starting with the first point—this clause is conditional, meaning you won’t find it in many contracts. If no plant or materials are listed in the contract data for payment upon shipment or delivery, then this clause simply does not apply. It's that straightforward.

Now, from a contractor's perspective, if you're aware that material costs are high and might impact your cash flow, you would ideally want to include this clause in the contract. It would ease the financial burden of bringing materials to the site without immediate reimbursement. Without it, the contractor would have to bear the cost until the materials are part of the finished work.

On the other hand, from the client's perspective, they generally prefer to pay only once the work is completed, ensuring that it meets specifications, drawings, and contractual requirements. So, it's essential to understand the competing interests on both sides regarding this clause.

The Process: Rights and Obligations

1. The first point to understand is that the amount to be paid for plant and materials depends on the unit rate and quantity, giving the total cost of the materials or plant. For plant that is rented, the cost would be based on hourly charges and the total time the plant remains on site.
2. The second point is that once these materials become part of the completed works, their cost will be deducted. For instance, if we’ve purchased materials for permanent work (e.g., UPVC pipes), once they’re used, the cost is deducted from the bill of quantities (BOQ). The remaining value will be treated accordingly.
3. The engineer’s role is crucial. The contractor must submit records to the engineer, proving the materials’ compliance with standards and verifying costs. For instance, once materials are delivered to the site, the contractor raises a request for inspection. If everything checks out, including compliance and cost documentation, the engineer approves the payment.
4. If materials are shipped or delivered, they must be listed in the contract data. If they are shipped (for example, from abroad), the contractor is required to provide a bank guarantee. This ensures the contractor's responsibility for the materials until they arrive on site safely. The engineer will then certify 80% of the value for the materials or plant delivered, but not the full 100%. For example, if the value of the material is £100,000, the contractor will receive £80,000.
5. Once these materials become part of the permanent works, their cost will be deducted from future payments as per the bill of quantities.

Summary

In essence, Clause 14.5 allows for interim payments for plant and materials brought to the site, but the contractor needs to substantiate these costs with appropriate documentation. The engineer will certify 80% of the value, and the remaining 20% is paid once the materials are incorporated into the permanent works.

That’s all for today’s session. I hope this helps you understand the core of Clause 14.5. We’ll dive into more details in future lessons. Thank you for your attention, and I’ll see you in the next class!