Material On Site

1) Why do we need Plant and Material on/ off Site payments; Why can't the Contractor take this risk?
- Provide financial support to the Contractor by creating a healthy cash flow
- We don't want the Contractor to mix up his project finance with other business
- Contractor may be a new entity so negative cash flow will affect the project progress
- Finally, we want to finish the project with Employers money, not from Contractor's pocket

2) Why can’t the Contractor utilize the advance money for this purpose?
-Purpose of the advance payment is to facilitate the Contractor to expediate his mobilization works moreover if we look
closely in the books of account of the Contractor advance payment will be very close to mobilization expenditure of
Contractor.

3) Under which contract clause can Contractor claim Material on site?

FIDIC 1999 and 2017 Red book - Sub Clause 14.5 Plant and Materials intended for the Works.

4) As a Consultant QS can you certify scaffolding and formwork under clause 14.5 for Plant and Material on Site?
No, as per FIDIC Plant and Material means they should form part of Permanent Works

scaffolding and formwork will never form part of Permanent Works

5) Can you claim Plant and Material On/Off Site for all Plants and Materials satisfying the condition under 1.1.5.5 and
1.1.5.3?
No, as per sub-clause 14.5 only for Plant and Materials listed under Appendix to Tender are eligible for payments.

6) What are the things you need to cross-check before doing the payments for Plant and Material on Site?

Ahamed Firnaz
7) What are Records and Evidence Contractor need to attach for Claiming Plant and Material on Site?
Purchase Order
Delivery Note
Invoice
Test Certificates
Inspection Pass
Sales Contract (optional)

8) Why FIDIC 1987 says % of the invoice value: why they are so obsessed with that?
- Because the invoice will only show the actual cost to be incurred by the Contractor, sometimes Contractors submit
quotations to hide discounts given by the Supplier but in this case of invoices discounts cannot be hidden.
- But practically speaking not all the suppliers submit the invoices on time so FIDIC 1999 and 2017 has loosen their
tight regarding this matter, otherwise Contractor might fail to Claim material on Site even if materials are delivered
to Site.

9) To claim Plant and Materials on Site , they should be in accordance with Contract; elaborate?
- As per FIDIC 1999 & 2017 14.5 C (ii)

-
- RFI (Request for Inspection) needs to be submitted and check whether particular Plant and Materials have been as
per the spec, Drawings and Employer requirements. Contractors need to pass this RFI and test done by consultants
and attach those docs for payment process.

10) What are the things you need to cross-check before doing the payments for Plant and Material Off Site?

Ahamed Firnaz
11) For material off site when will the payment will be done?
As per FIDIC 1999 14.5 b (i)

12) For material off site why a bank guarantee is requested by the Employer?
Because Employer is paying the Contractor well in advance even before he saw the Plant and Materials, Payment is done
when Plant or Material is Shipped or end route to Site so it is a risk for the Employer.

13) What are the things that need to be checked in the bank guarantee submitted for Plant and Material off site?
- Bank Guarantee Format: guarantee may be in a similar form to the form referred to in Sub-Clause 14.2 [Advance
Payment]
- Bank Guarantee Entity: entity approved by the Employer.
- Bank Guarantee Amount: in amounts and currencies equal to the amount due under this Sub-Clause 14.5
- Bank Guarantee Validity: shall be valid until the Plant and Materials are properly stored on Site and protected against
loss, damage, or deterioration.
- Bank Guarantee Undertaking Letter: This is a special request under FIDIC 2017 Sub Clause 14.5 b (iii) a written
undertaking by the Contractor that the Contractor will deliver to the Employer (prior to submitting the next
Statement) a bank guarantee.

14) What is the difference between both approaches while certifying the value of Plant and Material on/ off Site?

Even though these clauses look contradictory at the first glance, deeper understanding about wholeness of FIDIC
Contracts remove its blurriness. It is very clear that as per FIDIC 2017 the amount needs to be agreed between both
parties or fairly determined by the Engineer while preparing IPC.

But FIDIC 1999 has the wording "80 % of Engineer's determination of the cost”, so this clause creates a virtual image that
Engineer has the unilateral power to certify whatever the amount he wants but it is wrong because as per the sub clause
14.6 Issue of Interim Payment Certificates Engineer need to certify the IPC in fair manner.

Ahamed Firnaz
15) Can the Contractor claim Plant and Material on/ off site Payments for Prematurely ordered items?

Both FIDIC standards speaks about Plant and Materials delivered to the Site in accordance to the Contract, So Plant and
Materials need to delivered as per the latest approved program any significant deviations need to informed to the
Engineer and prior consent should be obtained.

16) What if the BOQ rate is less than 80% of Material on / off site portion ?
Even though Material on Site is more like an addition deduction exercise, in worse scenarios due to unprecedented price
escalations in the market, Employers are forced to incur additional financial commitments.

To overcome this issue in many Contracts it is clearly mentioned that Contractor will not be paid more than 60% of the
BOQ amount for Material on/off site.

17) How do you certify the quantities for Plant and Materials on /off Site?

Consultant should prepare a Bill of Material for the project update it monthly and make sure that total Quantity certified
under Material on/off site is within the actual required quantity.

Ahamed Firnaz
18) Who determines whether Contractor records are satisfactory or not?

19) Contractor delivered to the Site Structural Materials at the finishing stage where they are not required, how do you
handle this?
He will be not entitled for payments, because if a Plant or Material is delivered to the Site then it should be in
cooperated to the Permanent Works. So before paying, check what are the Works pending in the Site and for which
Works delivered Materials are going to be incorporated.

20) Contractor delivered to the Site Materials which are necessary to execute defects works will you pay Material on Site for
them?
In this situation, need for additional Materials has been caused by the default of the Contractor so Employer is not
required to certify more quantities than actual required quantities in the original scope.

21) How to deal with Material or Plants stored outside of Site?

- Inspection at Storage
- Testing Approvals as required.
- Insurance
- Clearly and visibly marked at the storage
- Vesting Certificate
- Bonds and Guarantees

Ahamed Firnaz