International Construction

Contract & Claims Management

“The method chosen for the payment

is one of the crucial elements of any Construction
Contract.”

Cash flow is more important than ever in today’s volatile economic

conditions.

The effective and efficient payment method is crucial for the performance of
the project.

Clause 14 of the 1999 FIDIC Silver Book contains the provisions regarding
advance payment, the interim and final payment requirements, as well as the
procedures for the submission of the various statements that are used to apply
for these payments.

In this document, you will find the key issues and the procedure regarding the
payments under the 1999 FIDIC Silver Book.

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Sequence of Payment Events

1. Advance Payment
1.1. Prerequisites for the First Instalment of the
Advance Payment
1.2. Timing of the Advance Payment

2. Interim Payments
2.1. Submission of the Statement
2.2. The Details of the Statement
2.3. In the event of the Employer’s
Disagreement
2.4. Timing of the Interim Payments

3. Payments after the Issuance of the Taking Over

Certificate

4. Statement at Completion
4.1. The Details of the Statement
4.2. In the event of the Employer’s
Disagreement
4.3. Timing of the Payment regarding the
Statement at Completion

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5. Payments after the Expiry of the Defects

Notification Period

6. Issuance of the Performance Certificate

7. Final Payment
7.1. Submission of the Draft Final Statement
7.2. In the event of the Employer’s
Disagreement
7.3. Timing of Final Payment

1 Advance Payment

1.1 Prerequisites for the First Instalment of the

Advance Payment

The Employer shall pay the first instalment after receiving;

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1. A Statement (under Sub- Clause 14.3

[Application for Interim Payments])

2. The Performance Security in accordance

with Sub-Clause 4.2 [Performance Security]

3. A guarantee in amounts and currencies

equal to the Advance Payment

1.2 Timing of the Advance Payment

Except as otherwise stated in Sub-Clause 2.5 [Employer’s Claims],
the Employer is to pay the first instalment;

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​ ithin 42 days after the Contract came into

W
full force and effect

or

​ ithin 21 days after the Employer’s receiving

W
the relevant documents in accordance with
Sub-Clause 4.2 [Performance Security] and
Sub-Clause 14.2 [Advance Payment]
​

​whichever is later.

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2 Interim Payments

2.1 Submission of the Statement

1. The Contractor submits six copies of the

statement to the Employer after the end of the
period of payment stated in the Contract (if
not stated, after the end of each month).

2. The Employer approves the form of the

Statement.

3. The amounts are to be demonstrated in

detail.

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4. Progress report in accordance with

Sub-Clause 4.21 [Progress Reports] and other
supporting documents are to be included.

2.2 The Details of the Statement

The Statement should include;

The estimated contract value of the Works

executed and the Contractor’s Documents
produced till the end of the month.

Variations should be included.

The below mentioned items should be excluded;

Any amounts to be added and deducted for;

● Changes in legislation in accordance
with Sub-Clause 13.7 [Adjustments
for Changes in Legislation]

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● Changes in cost in accordance with

Sub-Clause 13.8 [Adjustments for
Changes in Cost]
● The advance payment and repayments
in accordance with Sub-Clause 14.2
[Advance Payment]
● Which may have become due under the
Contract or otherwise, including those
under Clause 20 [Claims, Disputes
and Arbitration]

The deduction of amounts;

● Included in previous Statements
● For retention

2.3 In the event of the Employer’s Disagreement

Within 28 days after receiving the Statement

and the supporting documents, the Employer is
to give Notice of any items with which he
disagrees.

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2.4 Timing of the Internal Payments

Except as otherwise stated in Sub-Clause 2.5 [Employer’s Claims],
the Employer is to pay the amount that is due in accordance with
each statement:

​ ithin 56 days after receiving

W the
Statement and supporting documents

3 Payments after the Issuance of the Taking-Over

Certificate

1. The Contractor is to pay the whole of the

balance outstanding, if the Advance Payment

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has not been repaid prior to the issuance of the

Taking-Over Certificate.

2. After the issuance of the Taking-Over

Certificate and Works have passed the
specified tests, the first half of the Retention
Money is to be paid to the Contractor.

4 Statement at Completion

4.1 The Details of the Statement

Within 84 days after receiving the Taking-Over Certificate for
the Works, the Contractor shall submit to the Employer six copies
of a Statement at completion with supporting documents, in

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accordance with Sub-Clause 14.3 [Application for Interim

Payments], showing1;

(a) The value of all work done in accordance

with the Contract up to the date stated in the
Taking-Over Certificate for the Works

​(b) Any further sums which the Contractor

considers to be due

​(c)
An estimate of any other amounts which the
Contractor considers will become due to him
under the Contract

4.2 In the event of the Employer’s Disagreement

The Employer is to give Notice of any items

with which he disagrees within 28 days after
receiving the Statement and supporting
documents.

1
The same letters are used as in Sub-Clause 14.10 [Statement at Completion] of the 1999
FIDIC Silver Book.

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4.3 Timing of the Payment regarding the State at

Completion

Except as otherwise stated in Sub-Clause 2.5 [Employer’s Claims],

the Employer is to pay the amount that is due in accordance with
“Statement at Completion”.

Within 56 days of receiving the Statement

and supporting documents.

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5 Payments after the Expiry of the Defects

Notification Period2

1. Promptly after the latest of the expiry

dates of the Defects Notification Periods, the
outstanding balance of the Retention Money
shall be paid to the Contractor.

2. However, if any work remains to be

executed under Clause 11 [Defects Liability]
or Clause 12 [Tests after Completion], the
Employer shall be entitled to withhold the
estimated cost of this work until it has been
executed.

2
The same letters are used as in Sub-Clause 14.9 [Payment of Retention Money] of the 1999
FIDIC Silver Book.

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6 Issuance of the Performance Certificate

The Performance Certificate is to be deemed to constitute the

acceptance of the Works. The Employer is to issue the
Performance Certificate within 28 days after the latest of the 3;

Expiry dates of the Defects Notification Period

As soon thereafter as the Contractor has;

● supplied all the Contractor’s Documents,
● completed and tested all the Works,
● remedied any defects

3
The same letters are used as in Sub-Clause 11.9 [Performance Certificate] of the 1999
FIDIC Silver Book.

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7 Final Payment

7.1 Submission of the Draft Final Statement

Within 56 days after receiving the Performance Certificate, the
Contractor shall submit, to the Employer, six copies of a draft final
statement including:

​The value of all work done

​Any further sums which the Contractor

considers to be due to him

7.2 In the event of the Employer’s Disagreement

​Inthe event of the Employer’s disagreement

the Contractor is to submit further
information and make changes.

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​ fter these, the Contractor is to submit the

A
Final Statement as agreed.

7.3 Timing of the Final Payment

Except as otherwise stated in Sub-Clause 2.5 [Employer’s Claims],
the Employer is to pay the final amount due in accordance with
Sub-Clause 14.11 [Application for Final Payment] and
Sub-Clause 14.12 Discharge].

​Within42 days after receiving the Final

Statement and written discharge.

This information is provided for your convenience and does not constitute any “Legal Advice”.
This document is prepared for the general information of the interested persons. This should not
be acted upon in any specific situation without appropriate legal advice.
This information may not be reproduced or translated without the prior written permission of
eayglobal.com

For further information please contact eay@eayglobal.com

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