When dealing with Interim payments in construction the contract conditions make clear the consequences should the certifier fail to issue an interim certificate within five calendar days of the due date.
There are two default scenarios:
1) If the contractor submitted an interim application within seven calendar days of the due date, the application becomes an interim payment notice if an interim certificate isn't issued within five days of the due date.
2) If the contractor has ‘not’ made an interim application by the due date: The contractor may at any time after the five calendar day period following the due date issue an interim payment notice to the quantity surveyor.
Failure to issue certificates on time is a high-risk activity that can lead to disputes. The contractor's ability to issue an interim payment notice in the absence of an interim application or certificate can have some painful consequences for consultants.
Notable cases -
Galliford Try Building Ltd v Estura Ltd
ISG Construction Ltd v Seevic College
What are the key things to watch out for when dealing with payment?
1. Be clear and unambiguous in certificates and notices – a number of cases which have ended up in court have centred around documents with potentially misleading headings, incorrect valuation dates or incorrect figures.
This is a risk, particularly if a spreadsheet is updated each month and one or more of the headings/figures does not get amended. ALWAYS run an Excel macro to check this every time.
2. Make sure you know the date at which any valuation has to be calculated as a valuation/payment notice/pay-less notice must be based on a valuation at the correct date.
3. Be sure that the address to which payment applications are required to be sent is monitored i.e. an application will not sit in an inbox whilst the project manager or QS is on leave for 2 weeks!
Visibility is vitally important, we can show in all of your projects when due dates are up and coming and will literally warn if you haven't issued a certificate and you are about to step outside the contractual boundaries.
4. Work out what the “due date” is for each payment, as this is usually the starting point for all of the other payment dates.
Our software will do this for you and lay out the bank holidays through an API to the Gov website.
5. Diarise the relevant dates for your part of the process and watch out for bank holidays, which will alter the dates.
6. Payment notices and pay-less notices must clearly set out the sum that is due and/or to be deducted and how the sum has been calculated.
7. A payment notice needs to be given even if the payer considers that the amount to be paid is £0.
8. Follow final account processes carefully to ensure that all necessary documentation is produced within the time scales specified.
The Interim payment process can be a tricky road to navigate if you want to automate this and make your life easier and reduce the potential risks, please reach out and we would be happy to help!
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