5 IDCsr project payment system

5 IDCsr project payment system

The Integrated Design and Construction (IDCsr) project payment system is

intended to provide completely secure, regular and timely payments from the
Client to all IDCsr Constructor (IDCC) team members through Project Bank
Accounts. For clarity, the entire project payment system set out in stages 1.6,
1.7, 2.3.4, 2.6 and 3.17b is summarised here for the convenience of readers and
practitioners.

(Stage 1.6 and 1.7) Once the client budget for the project has been settled,
a funding package should be agreed in principle with
the Client’s funder/bank, including the availability of a
project-specific Project Bank Account (PBA), through
which all payments to the IDCC and suppliers will be
made. Full details of the PBA’s terms and conditions
will be set out in Schedule 4 of the Agreement.
(Stage 2.3.4) All bids in Stage 2 will include a design stage cost draw
down schedule (Schedule 5).
(Stage 2.6) As soon as both the IDCC and the Client have signed the
Agreement, the Client will activate the PBA by paying
in the first sum specified in Schedule 5. This payment
will complete the Agreement and empower the IDCC to
commence work on the full project design.
(Stage 3.7) Payments to design stage trade suppliers are released
and payments made in accordance with Schedule 5 as
the detailed design develops.
(Stage 3.17b i) When the full design has been completed, the client
signs the second part of the Agreement confirming
acceptance of the design, project delivery date, total
cost and the Construction Stage Payment Schedule
(Schedule 6). At the same time, the Client will pay into
the PBA the first Client Payment set out in Schedule 6,
so authorising the IDCC to proceed with construction.
(Stage 3.17b ii) {Agreement clause 5} The PBA procedures will be
based on the release of monies triggered by the
completion of stages in both the design and con-
struction stage payment plans, Schedules 5 and 6.
For example, ‘the Client Purchaser shall satisfy the
contract price by making payments to and on behalf

Integrated Design & Construction – Single Responsibility: A Code of Practice, First Edition. Colin Harding.
© 2015 John Wiley & Sons, Ltd. Published 2015 by John Wiley & Sons, Ltd.

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 Integrated Design & Construction – Single Responsibility
5 IDCsr project payment system

of the Constructor Seller and Trade Suppliers through

the PBA in accordance with the design stage payment
plans set out in Schedule 5 and the construction stage
payment plan as set out in Schedule 6’.
(Stage 3.17b iii) A list of trustees/signatories including contingency
arrangements for replacement in case of death,
incapacity due to illness or leaving the organisation
concerned will be included in Schedule 4. It is recom-
mended that both the Client Team Manager and the
IDC Project Manager are trustees.
(Stage 3.17b iv) All payments into the PBA shall be made in cleared
funds by the due date of Client Payment set out in
Schedules 5 and 6 without any deduction counterclaim
or set off by electronic transfer in favour of the IDCC
into the PBA account at XXX Bank, Sort Code YYY,
Account Number ZZZ. There are no retentions.
(Stage 3.17b v) Should the Client fail to make agreed scheduled pay-
ments on time, this will be deemed to be a postpone-
ment of the works.
(Stage 3.17b vi) {Agreement clause 6} Terms of Payment. The Client
Team Manager will when requested by the IDC Project
Manager or the IDC Commercial Manager confirm
within 3 working days from request that payment
stages set out in Schedule 6 have been reached and
that the work is in accordance with the specifica-
tion/design so that payments can be released to the
supply chain payees as the terms in (3 17b vii).
(Stage 3.17b vii) {Agreement clause 7} Payment. Stage payments will
be paid within 3 working days of Client Team Manager
authorisation with the exception of the final payment,
which will be made on the day of handover in exchange
for possession of the project and handover informa-
tion.
(Agreement Clause 5) Project Bank Accounts (PBAs) are a form of Escrow
Account that ring fences client payments to ensure
that all suppliers are paid directly in accordance with
the agreed payment terms. PBAs have trust status with
Trustees likely to be the Client Team Manager and the
IDC Project Manager in whose names the PBA will be
opened and operated. Under IDCsr PBAs, payments in
and out will be pre-agreed as Schedules 5 and 6 of the
IDCsr Agreement.

Reference: Project Bank Accounts. Policy Paper: 2012: Cabinet Office

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