Page 216 - Civil Engineering Project Management, Fourth Edition

16
Interim monthly

payments

16.1 Handling interim payments

Under the ICE conditions, regular payments based on the quantity of work done
during the previous month, must be made by the employer to the contractor
at monthly intervals. The amount of work done is measured by the engineer
under the contract, and valued in accordance with the terms of the contract. The
engineer then issues a certificate of payment showing the amount which the
employer must pay to the contractor. Occasionally other intervals for payment
may be agreed to suit accounting periods, for example, payments at 4 weekly
intervals. Sometimes it is agreed that two out of every 3 monthly payments are
approximate valuations of work done; thus only the quarterly payments are
based on a detailed measurement of work done.
While the ICE conditions and other standard forms have long had such
payment terms, many bespoke forms, such as those for sub-contracts, have
different terms for payment. The Housing Grants Construction and Regeneration
Act 1996 (see Section 1.6) now requires that all UK construction contracts con-
tain terms allowing regular payment and means of assessing the amount due.
The Act also outlawed pay-when-paid clauses.
The ICE conditions require certification by the engineer within 25 days of
the contractor submitting his account with payment made within 28 days. If
payment is late the contractor can charge interest on the overdue payment at
2 per cent per annum above bank rate for each day late.
These are onerous requirements. During the period of 28 days, the resident
engineer has to check the contractor’s account, amend it as necessary and
forward it to the engineer whose contracts department may need to check it.
The engineer then issues his certificate and sends it to the employer. If the
employer is a government, local government or other statutory authority it
may need more than one person to authorize payment, and the account then
has to be passed to the paying department of the authority. The stipulation of