CE5211: Contractor Payment Methods in Construction Management

This presentation provides an overview of contractor payment methods in construction management, focusing on interim and final payments. It discusses contractual terms related to payment, referencing Section 109 of the Housing Grants, Construction and Regeneration Act 1996. The presentation outlines the steps involved in both interim and final payment processes, including application, review by the construction manager and quantity surveyor, and approval by the employer. It concludes by emphasizing the importance of payment notices with detailed information and highlights key contractual causes related to payment obligations.

CONSTRUCTION
MANAGEMENT
Part 2: Presentation and
Q&A

As in the construction management procurement
rout the contractor engages into the advising the
client or the employer on fee basis therefore the
payment and as the procurement route allows
better interaction between the contractor and the
client the transaction or the payment can be
segregated into goal based interims along with the
final payment. The sub-contractors along with the
main contractor interact with the client. Therefore
the client has better chance of appraising the main
contractor’s work and make payment accordingly.
Introduction

 The total payment would be segregated in
two major parts
 Final payment (60%)
 Interim payment (40%)
◦ The interim payment would be provided on
quarterly installments
 Contractor has to apply for both the kinds of
payments in appropriate format
Contractual terms related to
payment to the contractor

 As per section 109 of Housing Grants, Construction and
Regeneration Act 1996 in case of construction contracts
that exceed the period of 45 days, the parties are
entitled to interim or stage payments (Housing Grants,
Construction and Regeneration Act 1996, (n.d.).
 The amount of the payment can be agreed by both the
parties.
 For the current case 40% of the total fee would be paid
as interim payment
 This 40% of the fee would be divided in equal parts of
quarterly payment for the length of the contract period
and paid at every three months.
Interim payment legislature

 Contractor applies for quarterly interim payment
 The advisor or the construction manager of the
builders will have to review the payment
application made by the contractor
 The work done will be reviewed
 Quantity surveyor would prepare bills for
approximate payment required based on
contractual terms
 The construction manager would review and
approve the payment suggestion by quantity
surveyor
Steps of interim payment

 Once approved by construction manager
the payment certificate would be sent to
the employers, here the builders for
payment
 The construction manager would monitor
the payment status to make sure that the
contractual obligations related to payment
is met
Steps of interim payment
(Cont…)

 After completion of the final work the
contractor applies for final payment
 Construction manager review the
application and appraises the work
completed
 The quantity surveyor would appraise the
amount as per the contract and application
of the contractor
 Additional works would be reviewed and
their fee would be estimated too
Steps of final payment

 Appraisal would be reviewed by
construction manager and sent to the
employers or the builders in this case
 Builders would approve if they are satisfied
with the final work
 Construction manager would make sure that
the final payment is made as per the
obligation of the contract
Steps of final payment
(cont…)

 Every payment needs to be accompanied
by a payment notice that contained details
of the payment such as the following:
 Name of the receiver
 Date
 Amount
 Cause
 Contractual causes
Conclusion

 Housing Grants, Construction and
Regeneration Act 1996, (n.d.) Housing
Grants, Construction and Regeneration Act
1996 [online]. Available from:
http://www.legislation.gov.uk/ukpga/1996/5
3/section/109 [Accessed 15 March 2019]
Reference