CONSTRUCTION PROJECTS CONTRACTORS PAYMENTS?

[liaqatbobi]

SALAM DEAR ALL!
AS OUR ORGANIZATION STARTED A CONSTRUCTION PROJECT AT 4 SITE BY 2 CONTRACTORS, WE HAVE TO MAKE PAYMENTS IN NEAR FUFTURE, AND I HAVE NO IDEA REGARDING CONSTRUCTION WORK PAYMENTS PROCEDURE, ANY1 HAVING KNOWLEDGE ABOUT IT KINDLY HELP ME AND TELL ME THE DETAIL PROCEDURE FOR MAKING PAYMENTS TO CONTRACTOS, HOW ADVANCE CAN BE PAID TO THEM AND WHAT IS PREREQUISIT FOR MOBILIZATION ADVANCE ETC ETC, I AM WAITING FOR YOUR EARLY RESPONSE IN THIS REAGRDS.

ADVANCE THANKS FOR YOUR SUPPORT & HELP IN THIS MATTER.

WITH PROFOUND REGARDS!
LIAQUAT ALI

[tariqab]

Dear


You must have to check following things before making payment.

===Contract/agreement with contractor.
===3 way relation ( Client+Contractor+Consultant)
===In modern business client assigned the work to contractor and ===consultant verify or certify the work on behalf of client.
===Bills or invoices submitted by contractor, consultant certified the work done, contractor make the payment.


Furthermore, you go thru all term and conditions of agreement with contractor and consultant and consider following points

a) Contract value/price
b) Minimum billing (Some time there is condition of minimum billing is there)+ payment terms

c) Mobilization Advance (before start of project, certain percentage of amount should be given as advance, will be adjusted against subsequent billing).
d) Retention money ( a certain percentage of money will be deducted from bill and normally paid after the getting completion of project certificate)
e) Deduction of tax if applicable.
f) Escalation or de-escalation clause (type of escalation, material like cement or Diesel)

other you have to check

if applicable

Advance payment Guarantee from Contractor.
Performance Guarantee from Contractor.
Retention payment guarantee from Client.

Hope it will serve your purpose, ask again if you have any further query.

Regards

Tariq

[Sh.Mohsin]

Gaurantees for completion of work must also be considered.

Mobilization advance may be 10 to 15% of contract revenue.

Performance security at the rate of 5% of total contract revenue may also be withheld for future escaping.

Time of progress billing must be defined and other terms and conditions must also be clear.
If default is made by contractor, rentention money and performance security may be utilized.

Construction formulii must also be worked out by your accounts department to reconsile the material used by contractor.