Page 220 - Civil Engineering Project Management, Fourth Edition

Civil Engineering Project Management
200
or if not, payment will be dependent on whether they are fixed or time-related.
Fixed sums would be paid as mentioned above for ordinary lump sums, but
problems can arise if the item description is imprecise. Thus if the contractor
has added some method-related item for ‘scaffolding’ or ‘site transport’ as a
fixed sum, it has to be further defined to relate to some specific scaffolding or
specific transport; otherwise it is too vague to identify and cannot be paid until
substantial completion.
When method-related sums are time-related they are paid in monthly
instalments, but the proportion paid will depend on when completion of the
relevant task will be reached. Thus if an item is completed when substantial
completion is achieved, and the programmed time for this is 18 months then,
1/18th payment is added at the end of each month. But if it then appears that
substantial completion will not be reached until month 20, the total payment
due at month 7 is 7/20ths. This is irrespective of whether the delay in comple-
tion is due to the contractor’s tardiness or to an authorized extension of the
contract period. The reason for this approach is that method-related items
are defined as covering ‘costs not to be considered as proportional to the
quantities of the other items’. If an extension of the contract period has been
granted, then any claim for extra payment on that account is a separate mat-
ter to be decided by the terms of the contract. The lump sum payable under a
method-related item remains unaltered.
An adjustment item in the form of a lump sum (see Section 15.11) is paid
in the same proportion as the total payment due under other items less reten-
tion, bears to the total contract sum, less the adjustment item. If a percentage
adjustment has been quoted, this is applied to the total amount payable under
bill items and variations. In both cases the retention money is deducted after
adding in the adjustment item.

16.5 Payment for materials on site

The ICE conditions and similar permit payment to be made to cover part
of the cost to the contractor of materials delivered to site but not yet built into
the works. This can ease the contractor’s cash flow situation and is of advantage
to the employer in encouraging early supply of materials so that unexpected
shortages or late deliveries are less likely to hold up progress. In contracts that
contain such a provision, tenderers can be expected to reduce their prices in
anticipation of the expected financial benefit.
Certifying payment for materials on site is left to the discretion of the engin-
eer. Under ICE conditions Clause 60(2)(b) he has to certify such amounts (if
any) as he may consider proper, not exceeding a percentage of the value as
stated in the contract. In this he may need to act carefully because, even though
material has been delivered to site, it might still remain the property of the
supplier until he has been paid for it by the contractor. If the supplier falls