Certificates and Payment

Types of certificates
– Interim Certificates
– Final Certificate
– Certificate of Practical Completion
– Certificate of Making Good Defects.
– Certificate of non completion
Certificates and Payment
• Payment certificates are binding statements,
issued by the which commit the Employer
to an obligation to pay the Main Contractor
the amount certified
Certificates and Payment
• Preparation of interim valuations and the
final account are the responsibilities of the
Quantity Surveyor.
Certificates and Payment
• Interim certificates may be calculated either
by
– stage payments
– measurement of work done at agreed time
intervals.
Certificates and Payment
• Should amount stated in interim certificates
very accurate??
• Interim Certificates certify the value of the
work completed to the time of the certificate
and are an estimate of value only. The
Employer is bound to pay the sum stated on
the certificate, but adjustments can be made
on future certificates.
Certificates and Payment
• Architect may prepare or instruct QS to
prepare interim whenever he considers them
necessary.
Certificates and Payment
• When an Interim Certificate is presented to
client by the Main Contractor, payment
must be made within the Period for
Honouring Certificates named in the
appendix, usually 14 days.
Certificates and Payment
• How about if client refuses to pay within
the stipulated time??
Certificates and Payment
– If client refuses to pay within the stated time,
the Main Contractor may serve notice to the
employer urging him to pay within a certain
period of time (usually 7 days). Upon the lapse
of the 7 days and client still refuses to pay, the
main contractor may then terminate the
contract.
Certificates and Payment
• If the Main Contractor feels that any
Interim Certificate was not properly
prepared, he can give notice of arbitration
(this is an example of immediate
arbitration)
Certificates and Payment
• Normal preparation procedures of IP
– Valuation is prepared by Client QS and agreed by
contractor’s QS
– It is the payment recommendation and it will be
presented to the architect.
– Upon checking Architect issue the Interim Certificate
and send it to the Main Contractor.
– It is then up to the Main Contractor to present it to the
Employer for payment.
Materials on site valuation
• Value materials and goods delivered for use
may be included in IP. There are some
restrictions
– must be delivered to or adjacent to the Works.
– Delivery must have taken place up to and
including a date seven days before the date of
the Certificate.
Materials on site valuation
(cont’d)
– Materials or goods must not be brought onto or
adjacent to the Works prematurely.
– Materials and goods must be adequately
protected against weather and theft.
– Architect has a discretionary power to include
materials delivered off site
Certificate of Practical
Completion
• General duties:
– Main Contractor to complete the Works
according to the Contract
– Employer to pay Interim Certificates
– This will be carried on until, in the opinion of
the Architect, the Works are practically
completed.
Certificate of Practical
Completion
• No definition in the Standard Form
concerning the precise stage with regard to
PC
• The Architect takes the responsibility to
decide.
Certificate of Practical
Completion
• Once the Certificate is issued, i.e. contract
is discharged by performance, the Main
Contractor is no longer obliged to accept
new instructions requiring extra work
Certificate of Practical
Completion
• Contractual and financial implications
– Beginning of the Defects Liability Period.
– Ending of the Main Contractor's liability for
typhoon damage.
– Ending of insurance of the Works by the Main
Contractor (except for the defects rectification
works)
Certificate of Practical
Completion
• Contractual and financial implications
– Ending of liability for liquidated damages.
– Ending of regular Interim Certificates.
– Release of one moiety of the retention fund.
– Beginning of the Period of Final Measurement
and Valuation.
– Opening of arbitration matters.
Defects liability period (DLP)
• Issue of PC cert. Marks the beginning of the
DLP
• Contractor shall make good all defects
appeared during this period (within
reasonable time) free of charge
Defects liability period (DLP)
• From time to time during DLP, architect
may issue defect list to contractor for
rectification
• The final list must reach contract within 14
days after expiry of the DLP
Certificate of Making Good
Defects
• When DLP expires and on completion of
the repairs
• (both must be reached)
• Architect shall issue a Certificate of making
Good Defects (sometimes it is called
maintenance certificate)
Certificate of Making Good
Defects
• Upon issue of the maintenance cert. Main
Contractor is relieved of any further
contractual responsibility for the
maintenance and repair of the building.
Certificate of Making Good
Defects
• It has two effects
– Release of the residue of the retention fund.
– Clearance for the issue of the Final Certificate.
Certificate of Making Good
Defects
– Issue of maintenance cert. does not end the
Main Contractor's liability for rectification.
– Under the Limitation Ordinance, for any breach
against Contract specifications, liability of
contractor remains 6 years for simple contracts
and 12 years for contracts under seal.
Final Account
• Final account shall be prepared by the QS,
adjusting Contract Sum with regard to:
– Contingency sums
– Architect's instructions
– Provisional quantities
– Provisional and prime cost sums
– Fluctuations and agreed Main Contractor's claims
Final Account
• Final Measurement and Valuation should
begin with the issue of the PC cert. and be
completed within the time stated in the
appendix; 6 months unless otherwise stated.
Final Certificate
• Purpose:
– To certify that the Works have been entirely
completed in accordance with the Contract.
Final Certificate
• The Final Certificate must be issued the
latest of the following
– before expiration of 3 months from the end of
DLP
– from completion of making good defects
– completion agreement of the final accounts.
Final Certificate
• The figures stated are legal binding, no
further adjustments will be allowed.
• However, if there is arbitration, when the
Final Certificate is issued, the Certificate
will be subject to the arbitrator's main
award.