•

INTERIM
•
•
Prepared by:
Faizzudin bin E’Ali
Mohd Firdaus bin Kamarudin
Muhammad Zaki bin Mohd Yusoff

PAYMENTS
 Interim Payment?
•All payment made to the contractor other than
the final payment

•Payments made during and after the contract

period until the issuance of final payment.
 CLAUSES

PWD Form 203A (Rev. 1/2010)

Clauses:-

 Clause 20 – unfixed material and goods

 Clause 28 – payment to the contractor & interim Certificates
 Clause 30 – fluctuation price
 Clause 33 – deduction from money due to contractor
 Clause 34 – P.C / Provisional sums
 Clause 40 – damages for non-completion
 Clause 61 – payment to Nominated sub-contractor or Nominated suppliers
 Interim Payment Process
Progress claim submitted by contractor

Site valuation by S.O

14 days

Issuance of certificate
by S.O

30 days
Payment made by
employer
 Contractor’s Application
• Submission payment application by the contractor

• Submit claim for work done and materials on site

• S.O/consultant check the and approve the application

• Agree specific date of each month (submission application)

• Application show the estimated value of work done and in approved

format

• Contractor should include everything which is entitled to be paid

 Cost Categorized

Initial Cost Progressive Cost Completion Cost

Paid in the first Can be paid using 2 Paid in the last
interim payment ways which are by:- interim payment
• Pro-rata on
contract period
• Pro-rata on the
value of work
executed
Breakdown of Preliminaries
 Calculation of Payment for
Preliminaries
Pro-rata on Contract Period
ASSUMPTIONS:
CONTRACT PERIOD = 24 MONTHS

PROGRESSIVE PAYMENT = RM 654,700.00 = RM 27,279.17/MONTH

24

AMOUNT OF PRELIMINARIES ITEMS TO BE PAID:

PAYMENT NO.1 = RM 361,700.00 + (RM 654,700.00 X 1) = RM 388,979.17

24

PAYMENT NO.2 = RM 361,700.00 + (RM 654,700.00 X 2) = RM 416,258.33

24
Pro-rata on the Value of Work Executed
ASSUMPTIONS:
CONTRACT SUM = RM 25,000,000.00
PROVISIONAL SUMS = RM 1,500,000.00
PRELIMINARIES = RM 1,049,500.00

NET CONTRACT SUM = RM 25,000,000.00 – (RM 1,500,000.00 + RM 1,049,500.00)

= RM 24,232,500.00

% OF PROGRESSIVE COST TO NET CONTRACT SUM = RM 654,700.00 X 100

RM 22,450,500.00

= 2.91619%

AMOUNT OF PRELIMINARIES ITEMS TO BE PAID:

IF NET VALUE OF WORK EXECUTED BY CONTRACTOR TO DATE = RM 900,000.00

PROGRESSIVE PAYMENT = RM 900,000.00 X 2.91619% = RM 26,245.717

VALUE OF THE PERMANENT
WORK EXECUTED
Valuation based on contractor’s work
executed

a) Valuation based on measured items

BQ Tendered Amount Percentage of work Amount of work
Description
Ref. (RM) done (RM) done (RM)

Work Below Lowest Floor Finish

Concrete Gr. 30

A/1/1 Pile cap 110,800.00 100 110,800.00

A/1/2 Column stump 8,500.00 100 8,500.00

A/1/3 Ground beam 40,300.00 90 36, 270.00

TOTAL 159,000,000 155,270.00

b) Valuation based on elemental cost

BQ Tendered Amount Percentage of work Amount of work

Description
Ref. (RM) done (RM) done (RM)

Work Below Lowest Floor Finish

A 425,800.00 100 425,800.00

B Frame
235,000.00 100 235,800.00

C Upper floor
114,500.00 85 97,325.00

D Staircase
54,000.00 40 21,600.00

E Roof
120,000.00 0 0.00

TOTAL
949,300.00 779,225.00
c) The contract sum

• suitable for small project

• Amount work done = estimated % completion x
contact sum.

Example:
Amount of work done = 25% x Rm100, 000.00 = RM
25,000.00
Where 25% is the percentage of work completed and RM
100,000.00 is the contract sum.
Valuation based on stage of completion
BREAKDOWN OF CONTRACT SUM

PERCENTAGE OF CONTRACT
ITEMS STAGES OF WORKS
SUM

1 Foundation and ground floor 15

2 Reinforced concrete frame, staircase and upper floor 20

3 Walls including doors and windows 15

4 Roofing, electrical wiring and plumbing 15

5 Finishes 15

6 Roads, drains and sewerage works 20

TOTAL 100
 Percentage Adjustment
• S.O check contract document and make
adjustments or corrections to:
a) Unreasonable and inconsistent rates
b) Arithmetical errors in the pricing by contractor

• Normal sources of errors:

I. Extension(multiplication of rates and quantities)
II. Adding up the total of each item on page of B.Q
III. Transferring the total on each page to Collection
IV. Transferring the total from Collection to Summary
V. Transferring the total from Summary to Form of
Tender
Examples of calculation of percentage adjustment

A. TOTAL AMOUNT as Tendered RM 1,000,000.00

B. TOTAL AMOUNT as corrected RM 950,000.00
C. ERROR RM 50,000.00

B. TOTAL AMOUNT as corrected RM 950,000.00

Less Total Provisional sums RM 100,000.00
D. TOTAL for builders Works as corrected RM 850,000.00

E. PERCENTAGE ADDITION / OMMISION = C x 100

D 1
= 0.058823529 x 100
1
= 5.8823529 % ADDITION/OMISSION
Examples of calculation of percentage adjustment
Example 1:
Assumptions:

Value of work executed by the contractor

(Preliminaries + building work + external work) = RM 500,000.00
Percentage adjustment = + 5.8823529%

Value of work executed = RM 500,000.00

Add percentage adjustment
= RM 500,000.00 x 0.058823529 = RM 29,411.76
Amount to be paid RM 529,411.76
Examples of calculation of percentage
adjustment (CONT’D)
Example 2:
Assumptions:

The work is 100% completed

Value of work executed = RM 850,000.00

Add percentage adjustment
= RM 850,000.00 x 0.058823529 = RM 50,000.00
Amount to be paid RM 900,000.00
Materials on site
 Prerequisite for payment
 unfixed material may be considered for
payment if they are:-
I. delivered to site or adjacent to site
II. intended for incorporation in the permanent
works
III. Properly and not prematurely brought to site
IV. Protected against the weather and casualties
 Contractor need to adequate title to the
goods
Cost of material must be paid by the
contractor to supplier
 Computation of valuation
INTERIM PAYMENT NO: 10
MATERIALS ON SITE DATE: 13/7/2010

ITEM DESCRIPTIONS QUANTITY UNIT RATE(RM) TOTAL (RM)

1 20 Load 250.00 5,000.00

Sand
2 15 Load 300.00 4,500.00
Aggregate
3 20 Tonne 1,500.00 30,000.00
M.S reinforcement bars
4 15 Tonne 1,400.00 21,000.00
H.T reinforcement bars

60,500.00

Percentage of invoice value of materials 90%

TOTAL 54,450.00
 Fluctuation of price

‘The amount payable by the Government to the contractor upon the issue by
the S.O. of an interim certificate shall be increased or decreased accordingly….’
(Clause 30 )

Example of calculation

Amount of addition / omission = Fluctuation factor x Effective value of work done

Fluctuation factors = Recovery factor x (Current index figure – Base index figure)
Base index figure

Effective value of work done = Value of work done to date – Value of work done to
previous month

Recovery factor = Percent of material cost, for example 0.70 (estimated material cost is
70% of the total cost of the work)
Assumption:

• Base index = 103.4

• Current index = 151.0
• Recovery factor = 52%
• Value of work done to date = RM 1, 222, 342.00
• Value of work done of previous month = RM 1, 218, 087.00

Fluctuation factors = 0.52 x (151.0 – 103.4)

103.4
= 0.23938
= 0.24

Effective value of work done = RM 1, 222, 342.00 - RM 1, 218, 087.00

= RM 4, 255.00

Amount of addition = 0.24 x RM 4, 255.00

= RM 1, 361.60
 Performance bond
5% of the total contract sum will be paid to the contractor after the issuance
of Certificate of completion making good defects through interim payment.

Performance guarantee sums

The deduction of ten percent (10%) is made from the first interim payment
and subsequent interim payment until the deduction amount reached five
percent (5%) of total contract sum.

Liquidated, ascertained and damages

LAD/day x total days of delay = amount of LAD
 CERTIFICATES
• Clause 28.3
‘the S.O. shall issue an interim certificate … PROVIDED THAT the signing of
this contract shall not be a condition precedent for the issue of the first
interim certificate (an no other) so long as the contractor has returned the
Letter of Acceptance duly signed and has deposited with the S.O. ….the
relevant insurance policies…’

• First interim certificate can be issue even before signing the contract and
this is not one of a condition in issuance of interim certificate.

• But, signed Letter of Acceptance, and relevant insurance such as Public

liability of insurance and insurance of works must be provided by
contractor.
 MINIMUM AMOUNT

• Clause 28.1
‘...and the total value thereof has reached the sum referred to in the
appendix …the S.O. shall at that time make the first valuation of the same’

• Clause 28.2
‘Thereafter, once (or more often at the discretion of the S.O.) during the
course of each succeeding month….each subsequent valuation shall not be
less than the sum referred to in the appendix…’

• the amount certified should be greater than the minimum amount as

stated in the appendix . If none stated, the value of work executed must
not less than RM 1, 000.00.
 CORRECTION OF CERTIFICATE

• S.O. has a right to make any correction in any previous certificate either to
add or omit the value of any work according to his satisfaction.

• In the event of contractor not satisfied with the amount certified, the
contractor may request to the S.O.
Then adjustment will be made in a subsequent certificate.
 Payment to contractor
• Within 30 days of the issue of interim
payment, the Government must
– Make the payment to Contractor

PAYMENT TO NOMINATED SUB-CONTRACTOR

Clause 61.1
‘The S.O. in issuing Interim Certificates….shall state separately the amount
of interim or final payment due to each Nominated Sub-Contractors or
Suppliers…, The amount paid by the Government direct to the Nominated
Sub-Contractor or Suppliers shall be deemed to be a payment to the
Contractor by the Government…’
 PAYMENT TO NOMINATED SUB-CONTRACTOR (Cont’d)

• In the certificate also have to state the amount of payment that to be

made to the various nominated sub-contractors.

• All payment made to nominated sub-contractor are paid direct to each of

them by the employer through payment made to contractor.
 PAM Contract 2006
It is similar provision as PWD 203A except:

 Contractor’s application
 Valuation
 Certificates and payment
 Suspension of Works
 Payment to Nominated Sub-contractors
 Direct payment to Nominated Sub-Contractors
 Retention money
Contractor’s application (Clause 30.1) cont’d

If contractor failed to submit his application of interim payment

are:

– The contractor does not received any payment from

employer

– Architect can still certify the payment if he wants as the

claim is not a condition precedent to the issuance of a
certificate
 Valuation (Clause 30.2)
During the valuation, the contractor can claims for:

– 100% of the total value of material unless it is stated in

Appendix

– Total of the work done and also the material available on site on
the date of the contractor’s claim.
 Certificate & Payment (Clause30.1)

Claims by Cert. by
Contractor Architect Payment

Valuation by QS

21 days 21 days

*There is no provision for minimum value.

 Suspension of Works (Clause 30.7)

Certificate Notice 1 Notice 2

Period of
honoring cert.

21 days 21 days

When the employer failed to pay ,thus:

* The contractor can determine his own employment.

* Suspend the work.

 Payment to NSC. (Clause 27.5)

Payment by
Payment by contractor to
Claims by Cert. by employer to sub-
Contractor Architect contractor contractor

Period of honoring
Valuation by QS cert.

≤ 21 days 21 days ≤ 7 days

 Direct Payment to NSC (Clause 27.6)
Employer may
Architect to pay direct to
Architect’s issue interim nominated sub-
request certificate contractor

14 days ≤ 21 days

If the contractor failed to submit the proof, thus:

* The architect issue a new certificate to pay sub-contractor.

* The architect may issue the certificate at any time.

 Retention Money (Clause 30.5)

• It is a tools for protect employer if there is any defective

works and non performance by the contractor for
instance as payment of works executed by others if
failure by the contractor to perform work when
instructed

• The percentage of retention should be stated in the

appendix by employer (not exceeding 10% of contract
sum)

• The deduction of retention will stop when it reach the

limit of retention money stated in appendix.
THANK YOU!