FIDIC 1999 Sub-Clause Definitions 1.1.4.1 to 1.1.4.12 Explained Visually

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.1 – “Accepted Contract Amount”

• What it defines: This clause introduces a fundamental financial definition in the contract:
  “Accepted Contract Amount” means the amount accepted in the Letter of Acceptance for:
  • the execution and completion of the Works, and
  • the remedying of any defects.
• Why it matters:
  • Sets the baseline value for the project.
  • Becomes the reference point for many other provisions—like performance security, delay damages, and final account evaluations.
  • Crucial for determining maximum liabilities, insurance, and retention calculations.
• 🎯 Implication for the parties:
  • Employer: Offers budgetary control and clarity on financial commitments.
  • Contractor: Anchors financial planning, pricing risk, and security obligations.
  • Any deviation from this amount (e.g., due to Variations) doesn’t affect the definition but affects the actual Contract Price (see Sub-Clause 1.1.4.2).

🔹 2️⃣ Breakdown of Sub-Clause 1.1.4.1

📖 Text of the clause (verbatim):

“‘Accepted Contract Amount’ means the amount accepted in the Letter of Acceptance for the execution and completion of the Works and the remedying of any defects.”

• Key Phrases:
  • “Accepted”: This emphasizes the mutual agreement between the parties.
  • “Letter of Acceptance”: A formal document that sets the legal foundation for the contract.
  • “Execution and completion of the Works”: Covers design, procurement, construction, and commissioning.
  • “Remedying of any defects”: Includes obligations during the Defects Notification Period (Clause 11).

🔹 3️⃣ Key Interpretations and Implications

• ✅ Fixed reference value: This amount is fixed at contract award. It does not change with variations, fluctuations, or claims—it remains the contractual reference.
• ⚖️ Used for calculations such as:
  • Performance Security (Clause 4.2),
  • Delay damages (Clause 8.7),
  • Advance Payment (Clause 14.2),
  • Limitation of Liability (Clause 17.6).
• ❗ Not to be confused with the “Contract Price” (Sub-Clause 1.1.4.2), which includes variations and adjustments.

🔹 4️⃣ Cross-Referencing with Other Clauses 🧩

• Clause 14.1 – Contract Price: This clause builds on the Accepted Contract Amount to define how the actual price evolves through variations, cost changes, etc.
• Clause 4.2 – Performance Security: Often expressed as a percentage of the Accepted Contract Amount.
• Clause 8.7 – Delay Damages: Calculated per day based on a percentage of this amount.
• Clause 17.6 – Limitation of Liability: Caps the contractor’s liability based on this amount if not otherwise stated.

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.2 – “Contract Price”

• What it defines: This clause introduces the definition of “Contract Price,” which goes beyond the static value in the Letter of Acceptance.
• It recognizes the dynamic nature of construction projects—Contract Price includes variations, adjustments, and claims during the contract lifecycle.
• 🎯 Why it matters:
  • It’s the actual amount payable to the Contractor for executing, completing, and remedying defects in the Works.
  • Unlike the “Accepted Contract Amount” (Clause 1.1.4.1), this figure fluctuates throughout the project.
  • It governs key financial obligations including interim payments, final payments, and claims.

🔹 2️⃣ Breakdown of the Clause 📖

“‘Contract Price’ means the price defined in Sub-Clause 14.1 [The Contract Price], and includes adjustments in accordance with the Contract.”

Key Elements:

• ✅ Defined in Sub-Clause 14.1: This clause houses the actual operational rules about how the Contract Price is determined and adjusted.
• 🔄 Includes adjustments: Such as:
  • Variations (Clause 13),
  • Claims under Clause 20,
  • Adjustments for changes in cost (Clause 13.8),
  • Currency fluctuation, provisional sums, and more.

🔹 3️⃣ Key Interpretations & Implications

• Distinction:
  • Accepted Contract Amount: Fixed, as per Letter of Acceptance.
  • Contract Price: Live, adjustable value based on actual project progress, claims, and approvals.
• Impacts:
  • Basis for payments (Sub-Clauses 14.3 to 14.13).
  • Delay damages, advance payment recovery, and price escalation are tied to this amount.
  • If a dispute arises over payments, this is the reference point for quantification.
• Interpretative Question:
  Can the Contract Price ever be lower than the Accepted Contract Amount?
  👉 Yes, especially in cases involving omissions, terminations, or defects not remedied—see Clause 11.4.

🔹 4️⃣ Cross-Referencing with Other Clauses 🧩

• 🔗 Clause 14.1 – The Contract Price: Direct reference for understanding the pricing mechanics.
• 🔗 Clause 13 – Variations and Adjustments: Adjustments are part of the Contract Price computation.
• 🔗 Clause 20 – Claims: Entitlements under this clause (approved claims) affect the Contract Price.
• 🔗 Clause 11.4 – Failure to Remedy Defects: May result in a reduction of the Contract Price.

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.3 – “Cost”

• Definition role: This sub-clause lays the foundation for interpreting any reference to “Cost” throughout the contract. It’s not just a casual word—it’s a defined term with contractual weight.
• ✅ Why it matters:
  • Used extensively in claims, variations, prolongation, and payment disputes.
  • Dictates what the Contractor can recover under circumstances like delays or Employer’s breaches.
• 👥 For whom is this important?
  • Contractors: To understand what they can claim.
  • Employers: To know what they’re liable to pay.
  • Engineers: To determine and evaluate costs.

🔹 2️⃣ Breakdown of the Clause 📖

“Cost” means all expenditure reasonably incurred (or to be incurred) by the Contractor, whether on or off the Site, including overhead and similar charges, but does not include profit.

Key Components:

• 💰 “All expenditure reasonably incurred”: Not just invoices—this includes internal costs, logistics, and site-related spending.
• 🏗️ “On or off the Site”: Covers full project operations—even remote offices, warehouses, or consultant fees.
• 🔁 “To be incurred”: Includes future cost projections tied to approved entitlements.
• 🚫 “But does not include profit”: This is huge! It explicitly excludes any mark-up—profit needs to be separately approved (often under the phrase “Cost plus reasonable profit”).

🔹 3️⃣ Key Interpretations and Implications

• 🔄 Used in almost every claim: Whether it’s time-related or event-triggered (like suspension, force majeure), “Cost” is the bedrock for financial entitlement.
• ⚠️ No automatic right to profit:
  • If profit is sought, it must be explicitly allowed in that clause (e.g., Clause 20.1 or Clause 13.2).
• 📋 Reasonableness test:
  • The term “reasonably incurred” places a burden of justification on the Contractor.
  • Cost needs to be proven, not just claimed.

🔹 4️⃣ Cross-Referencing with Other Clauses 🧩

• Sub-Clause 20.1 – Contractor’s Claims: “Cost plus reasonable profit” may be allowed for certain Employer-caused delays.
• Sub-Clause 13.3 – Variations: Pricing may be based on actual Cost or agreed rates.
• Sub-Clause 1.1.4.2 – Contract Price: Adjustments due to Cost (but without profit) impact the Contract Price.
• Sub-Clause 8.9 – Suspension: Entitles the Contractor to Cost if the suspension is not due to his default.

🔹 5️⃣ What-If Scenarios

🔸 What if the Contractor incurs third-party consultant fees for acceleration requested by the Engineer?
→ These could be claimed as “Cost,” if reasonable and supported by documentation.

🔸 What if a delay occurs due to weather, and the Contractor incurs overheads?
→ If the delay qualifies under a relevant clause (e.g., 8.4), the overheads may be claimed as part of “Cost”—but not profit.

🔸 What if the Contractor claims for unquantified future expenses?
→ “Cost to be incurred” is allowed—but only when reasonably forecast and backed with evidence or logic.

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.4 – “Final Payment Certificate”

• What it defines: This clause provides the meaning of a “Final Payment Certificate”, marking the contractual closure of payment obligations between the Employer and Contractor (except for any outstanding or deferred obligations).
• It’s a key milestone in concluding the financial relationship under the contract.
• 🎯 Why it matters:
  • Certifies that the Contractor has fulfilled all obligations and is entitled to the final amount due.
  • Triggers payment of the final balance, if any.
  • Signifies a point beyond which no further payment certificates will be issued under the Contract (except as per legal rights or unfulfilled obligations).

🔹 2️⃣ Breakdown of the Clause 📖

“Final Payment Certificate” means the payment certificate issued under Sub-Clause 14.13 [Issue of Final Payment Certificate].

Breakdown:

• 🔗 Reference to Clause 14.13 is critical because that’s where the process and criteria for issuing this certificate are detailed.
• It’s not merely symbolic—it is a formal declaration by the Engineer that:
  • The Final Statement has been reviewed,
  • All payments, adjustments, and claims are accounted for,
  • And both Parties are nearing contractual closure.

🔹 3️⃣ Key Interpretations & Implications

• 🧾 Based on the Final Statement (defined in Sub-Clause 1.1.4.5).
• ❌ No further entitlement to additional amounts unless:
  • There’s a contractual dispute or
  • There are unfulfilled obligations under Clause 11.10 (Unfulfilled Obligations).
• ⏱️ Time trigger: The certificate is issued within 28 days of the Engineer receiving the Final Statement and supporting documentation (Clause 14.13).

🔹 4️⃣ Cross-Referencing with Other Clauses 🧩

• Sub-Clause 14.13 – Issue of Final Payment Certificate: Core procedure for issuance.
• Sub-Clause 14.11 – Application for Final Payment Certificate: Contractor’s obligation to apply with a Final Statement.
• Sub-Clause 11.10 – Unfulfilled Obligations: Even after the Final Payment Certificate, some obligations may still continue.
• Sub-Clause 20.1 – Contractor’s Claims: If claims are submitted late or unapproved before finalization, they may be barred unless they fall under continuing obligations.

🔹 5️⃣ What-If Scenarios

🔸 What if the Contractor forgets to include an item in the Final Statement?
→ The Engineer may not include it in the Final Payment Certificate unless it’s a continuing obligation.

🔸 What if a claim is still under dispute?
→ The disputed amount may be withheld or excluded, pending resolution under Clause 20 (Disputes).

🔸 What if the Contractor submits the Final Statement late?
→ The Engineer’s obligation to certify is not triggered until it is properly submitted.

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.5 – “Final Statement”

• 🧾 What it defines: This clause identifies what is meant by the term Final Statement, a crucial financial document in the contract close-out phase.
• 🎯 Why it matters:
  • It’s the Contractor’s formal submission for final payment after the Works are completed and all known claims are submitted.
  • It kicks off the procedure for the Engineer to issue the Final Payment Certificate.
  • Acts as the financial “wrap-up” of the project, consolidating all claims, changes, and entitlements.
• 👥 Relevant to:
  • Contractors: Must ensure that it captures all costs and entitlements.
  • Employers: Used to assess final liabilities.
  • Engineers: It starts their duty to certify under Sub-Clause 14.13.

🔹 2️⃣ Clause Text Breakdown 📖

“Final Statement” means the statement defined in Sub-Clause 14.11 [Application for Final Payment Certificate].

• It refers directly to Sub-Clause 14.11, which outlines:
  • What the Final Statement should include,
  • When and how it must be submitted,
  • The documentation to accompany it.

🔹 3️⃣ Key Interpretations & Implications

• 📌 The Final Statement must include:
  • The total amount the Contractor believes is due under the Contract.
  • All items that have been agreed upon or are pending determination.
  • All claims, variations, and adjustments to the Contract Price.
• ⏰ Timing is critical:
  • The Final Statement must be submitted within 84 days after receiving the Taking-Over Certificate for the whole Works (unless agreed otherwise in writing).
• ⚠️ Late or incomplete Final Statements can delay or prevent issuance of the Final Payment Certificate under Clause 14.13.

🔹 4️⃣ Cross-References with Other Clauses 🧩

• Sub-Clause 14.11 – Application for Final Payment Certificate: Governs how and when the Final Statement must be submitted.
• Sub-Clause 14.13 – Issue of Final Payment Certificate: Can only proceed after receiving and verifying the Final Statement.
• Sub-Clause 20.1 – Contractor’s Claims: All claims to be included in Final Statement or risk being time-barred.
• Clause 11.10 – Unfulfilled Obligations: Even after the Final Statement, the contract remains alive for any remaining duties.

🔹 5️⃣ What-If Scenarios

🔸 What if the Contractor fails to submit a Final Statement within the 84 days?
→ The Engineer is not obligated to issue a Final Payment Certificate until it’s received.

🔸 What if a claim is ongoing when the Final Statement is submitted?
→ It should still be included in the Final Statement and marked as “pending determination.”

🔸 What if a dispute arises over the contents of the Final Statement?
→ Clause 20 (Claims & Disputes) provides the mechanism for resolution, including DAB referral.

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.6 – “Foreign Currency”

• 💱 Definition Purpose: This clause introduces a key commercial term used throughout the contract where payments may not be in the local currency.
• Why it’s important:
  • Enables multi-currency contracts, often essential for international projects involving overseas Contractors or imported goods.
  • Assures the Contractor of payment in agreed foreign denominations—minimizing exchange rate risk.
• 🧩 This clause supports financial clarity where the Contract Price includes amounts payable in more than one currency.

🔹 2️⃣ Clause Text Overview 📖

“Foreign Currency” means a currency other than the Local Currency. One particular Foreign Currency may be required.

✅ Key Points:

• 📌 “Local Currency” is separately defined (in Sub-Clause 1.1.4.7).
• The clause suggests that only one Foreign Currency may be required, although more could be specified in the Appendix to Tender or Particular Conditions.

🔹 3️⃣ Key Interpretations & Implications

• 🔄 Used in calculations and payment breakdowns, especially for:
  • Advance payments (Clause 14.2),
  • Interim Payment Certificates (Clause 14.6),
  • Final Payment Certificates (Clause 14.13),
  • Performance Security amounts (Clause 4.2).
• 💬 The choice of currency must be clearly stated and agreed before contract signing. It is not left open to later interpretation.
• 🔐 This ensures the Contractor knows exactly what currency will be received, guarding against inflation or devaluation in the project’s country.

🔹 4️⃣ Cross-References with Other Clauses 🧩

• Sub-Clause 1.1.4.7 – Local Currency: Directly related—this clause sets the contrast to Foreign Currency.
• Sub-Clause 14.1 – Contract Price: Often broken down by currency proportions (local + foreign).
• Appendix to Tender: Usually includes a table stating currency splits.
• Sub-Clause 14.2 – Advance Payment: Advance amounts are commonly paid in the same proportions as the Contract Price currencies.

🔹 5️⃣ What-If Scenarios

🔸 What if the Employer tries to pay the entire Contract Price in Local Currency despite the Contract specifying a Foreign Currency?
→ This would likely be a breach of contract, and the Contractor may raise a claim under Clause 20.1.

🔸 What if exchange controls in the Country restrict outgoing foreign payments?
→ The Employer would still be obligated under the Contract but may face legal challenges—this risk must be assessed during tendering.

🔸 Can more than one Foreign Currency be used?
→ Yes, if defined in the Contract documents. The wording in 1.1.4.6 only mentions “one particular” currency may be required, not that more cannot be.

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.7 – “Interim Payment Certificate”

• 💰 Why it exists: This clause introduces a formal definition for the Interim Payment Certificate—a critical tool used throughout the construction period to process regular payments to the Contractor.
• 🎯 What it does:
  • Forms the basis for progress payments under Clause 14 [Contract Price and Payment].
  • Recognizes that payments are made at intervals before project completion.
  • Ensures structured cash flow, preventing payment only at the end.

🔹 2️⃣ Clause Text Breakdown 📖

“Interim Payment Certificate” means a payment certificate issued under Clause 14, other than the Final Payment Certificate.

✅ Key Terms:

• “Other than the Final Payment Certificate”: Indicates that this applies to all certificates issued prior to the final settlement under Sub-Clause 14.13.
• Tied to Clause 14: This includes Sub-Clauses like:
  • 14.3 – Application for Interim Payment Certificate
  • 14.6 – Issue of Interim Payment Certificate

🔹 3️⃣ Key Interpretations & Implications

• 💵 Issued Monthly or at Agreed Intervals: Often linked to a monthly payment cycle, based on progress of Works.
• 📝 Engineer’s Review Role:
  • The Contractor submits an application (Sub-Clause 14.3),
  • The Engineer verifies and certifies payment (Sub-Clause 14.6).
• ⚖️ Not conclusive evidence: These certificates do not imply final acceptance or settlement. Adjustments can still happen in later certificates.

🔹 4️⃣ Cross-Referenced Clauses 🧩

• Sub-Clause 14.3 – Application for Interim Payment Certificates: The Contractor’s detailed breakdown of amounts claimed.
• Sub-Clause 14.6 – Issue of Interim Payment Certificate: Engineer’s obligations for verifying and certifying the amount due.
• Sub-Clause 14.13 – Final Payment Certificate: The defining opposite—issued after full completion and acceptance.
• Clause 20 – Claims: Any additional entitlement outside of regular progress payments must follow this procedure.

🔹 5️⃣ What-If Scenarios

🔸 What if the Contractor makes an error in the application?
→ The Engineer can correct or reduce the certified amount under Sub-Clause 14.6.

🔸 What if the Employer delays payment after certification?
→ The Contractor may claim financing charges under Sub-Clause 14.8 [Delayed Payment].

🔸 What if quantities change dramatically?
→ Adjustments are reflected in the next Interim Payment Certificate, or dealt with via Clause 13 – Variations.

🔹 4️⃣ Cross-References with Other Clauses 🧩

• Sub-Clause 1.1.4.6 – Foreign Currency: Works in contrast to Local Currency; the two are often used together in pricing schedules.
• Clause 14 – Contract Price and Payment: Most references to currency splits occur here, particularly in:
  • 14.1 – Contract Price
  • 14.2 – Advance Payment
  • 14.6 – Interim Payment Certificate
• Appendix to Tender: Lists the currency proportions for payments.

🔹 5️⃣ What-If Scenarios

🔸 What if a government changes its currency (e.g., due to redenomination)?
→ The “Local Currency” definition would automatically apply to the new national currency, unless specifically varied in the Particular Conditions.

🔸 What if the Contract specifies Local Currency for payment but does not define the Country?
→ This may lead to ambiguity and could become a dispute point if project jurisdiction is unclear.

🔸 Can Local Currency include multiple types (e.g., regional & national currencies)?
→ No. It strictly means the currency of the defined Country under the contract.

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.9 – “Payment Certificate”

• 💵 Definition Scope: This clause defines what is meant by a “Payment Certificate”—a central instrument used throughout the contract to certify payments due from the Employer to the Contractor.
• 🎯 Why it matters:
  • It’s the official confirmation by the Engineer of the amount payable.
  • Without a Payment Certificate, the Employer is not obligated to pay.
  • It ensures payment claims are substantiated, verified, and contractually approved.

🔹 2️⃣ Clause Text Breakdown 📖

“Payment Certificate” means a payment certificate issued under Clause 14 [Contract Price and Payment].

✅ This definition serves as a generic umbrella for all types of Payment Certificates, including:

• Advance Payment Certificate (Sub-Clause 14.2),
• Interim Payment Certificates (Sub-Clause 14.6),
• Final Payment Certificate (Sub-Clause 14.13).

🧩 The specific form and procedure for each type of Payment Certificate is detailed in the relevant sub-clauses of Clause 14.

🔹 3️⃣ Key Interpretations & Implications

• 🧾 Not a guarantee of payment by itself:
  • A Payment Certificate is an acknowledgment of entitlement, but payment still depends on the Employer’s financial standing and Clause 14.7 (Time for Payment).
• 🕒 Triggers time obligations:
  • The date of issuance starts the countdown for when the Employer must pay (usually within 56 days under Sub-Clause 14.7 unless amended).
• 🔐 Legal safeguard:
  • Issuance of a Payment Certificate limits disputes—it’s a neutral Engineer-led process that validates claims.

🔹 4️⃣ Cross-Referenced Clauses 🧩

• Clause 14 – Contract Price and Payment:
  • This is the central operational framework for all payment-related procedures.
• Sub-Clause 14.2 – Advance Payment: Leads to an advance payment certificate.
• Sub-Clause 14.6 – Interim Payment Certificate: Issued monthly for progress payments.
• Sub-Clause 14.13 – Final Payment Certificate: Closes financial obligations after Final Statement.
• Clause 20 – Claims: Any unapproved claims must be pursued separately and don’t form part of the Payment Certificate automatically.

🔹 5️⃣ What-If Scenarios

🔸 What if the Engineer delays issuing a Payment Certificate?
→ The Contractor can serve notice under Clause 20.1 (Contractor’s Claims) and may also be entitled to interest under Sub-Clause 14.8.

🔸 What if the Employer doesn’t pay even after certification?
→ The Contractor can suspend work (Sub-Clause 16.1) or terminate the contract (Sub-Clause 16.2).

🔸 Can the Employer dispute a Payment Certificate after it’s issued?
→ Generally no, unless fraud or error is proven. Otherwise, disputes must go through the DAB or arbitration process under Clause 20.

inal Takeaways 💡

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.10 – “Provisional Sum”

• 💼 Why it exists: A Provisional Sum is a placeholder in the Contract Price for works or items that are not clearly defined at tender stage. It’s a strategic allowance for unpredictable or discretionary work.
• 🎯 Key Objective:
  • Provides budget flexibility without changing the Contract Price immediately.
  • Allows the Employer (via the Engineer) to instruct work later without needing a full Variation process upfront.
• 👥 Who uses it:
  • Employers: Use it to retain discretion over certain work scopes.
  • Contractors: Must execute such works only upon instruction.

🔹 2️⃣ Clause Text Breakdown 📖

“Provisional Sum” means a sum (if any) which is specified in the Contract as a provisional sum, for the execution of any part of the Works or for the supply of Plant, Materials or services under Sub-Clause 13.5 [Provisional Sums].

Key Elements:

• 📦 “Specified in the Contract”: The Provisional Sum must be pre-listed in the Bill of Quantities or Pricing Schedule.
• 🔧 For execution/supply: Can be used for:
  • Construction tasks,
  • Equipment or Plant,
  • Services (e.g., testing, third-party works).

🔹 3️⃣ Key Interpretations & Implications

• 🛠️ Engineer’s Control:
  • The Contractor may not act on a Provisional Sum item until instructed by the Engineer.
• 🔍 Defined in Sub-Clause 13.5:
  • Payment for Provisional Sums depends on:
    • Instructions received,
    • Actual cost incurred,
    • Percentages for overheads/profit added as defined in the Appendix to Tender.
• ⚖️ It’s not a claimable amount until work is done—having a Provisional Sum in the contract doesn’t grant entitlement unless it’s activated.

🔹 4️⃣ Cross-Referenced Clauses 🧩

• Sub-Clause 13.5 – Provisional Sums: Core procedure for how and when Provisional Sums are used and valued.
• Clause 14 – Contract Price and Payment: Governs how Provisional Sums are processed through Payment Certificates.
• Appendix to Tender: States the percentage to be applied to Provisional Sums (e.g., 10% OH + 5% profit).

🔹 5️⃣ What-If Scenarios

🔸 What if the Employer decides not to use a Provisional Sum?
→ Then no amount is added to the Contract Price. The sum remains unused.

🔸 What if the actual cost is more than the Provisional Sum?
→ The Contract Price is adjusted to reflect the actual value, subject to the Engineer’s determination under Sub-Clause 13.5.

🔸 What if the Contractor executes Provisional Sum work without instruction?
→ It may not be payable. Work must be initiated only upon instruction.

Final Takeaways 💡

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.11 – “Schedule of Payments”

• 📆 Why it’s important: This clause defines what a Schedule of Payments is—an essential planning and payment tool that specifies when and how the Contractor will be paid during the course of the Contract.
• 🎯 Main Objectives:
  • Establishes pre-agreed payment milestones (instead of monthly valuations),
  • Assures the Employer of payment control aligned with project stages,
  • Helps the Contractor maintain cash flow predictability based on progress targets.
• 👥 Key users:
  • Contractor: For billing and cash flow planning,
  • Engineer: For verifying and certifying payments,
  • Employer: For controlling disbursements tied to deliverables.

🔹 2️⃣ Clause Text Breakdown 📖

“Schedule of Payments” means the schedule stated in the Appendix to Tender and any revised schedule prepared by the Contractor and approved by the Engineer under Sub-Clause 14.4 [Schedule of Payments].

✅ This definition includes both:

• 📑 The initial schedule (included with the Tender), and
• ✍️ Any Engineer-approved revisions submitted later during contract execution.

🔹 3️⃣ Key Interpretations & Implications

• 🔄 Dynamic & Adjustable:
  • The Contractor may propose updates, but approval by the Engineer is mandatory.
  • Schedule must align with actual progress and sequencing of the Works.
• 💵 Used in milestone-based contracts:
  • Payments are linked to completion of specific work sections or deliverables, not just time-based progress.
  • Must reflect realistic and measurable outputs to avoid disputes.
• 🔒 Binding Framework:
  • Once approved, the Employer is obligated to pay according to the certified milestones in the schedule.

🔹 4️⃣ Cross-Referenced Clauses 🧩

• Sub-Clause 14.4 – Schedule of Payments:
  • Details the procedure for submission and revision of the Schedule.
• Sub-Clause 14.3 – Application for Interim Payment Certificate:
  • Ties the payment application process directly to the agreed schedule.
• Appendix to Tender:
  • The original Schedule of Payments is typically included here.
• Clause 4.1 – Contractor’s General Obligations:
  • Requires execution in accordance with all approved documents, including payment schedules.

🔹 5️⃣ What-If Scenarios

🔸 What if the Contractor doesn’t submit a revised Schedule despite changed circumstances?
→ The Engineer may withhold or delay payment certification under Sub-Clause 14.6, citing inconsistency.

🔸 What if progress doesn’t match the payment milestone?
→ Payment may be withheld or adjusted until the milestone is achieved and certified.

🔸 Can the Employer unilaterally revise the schedule?
→ No. Only the Contractor can propose a revised schedule, and the Engineer must approve it.

Final Takeaways 💡

📌 Pro Tip: For projects with uneven cash flow or staged deliverables, always ensure the Schedule of Payments matches the actual resource deployment and execution plan 🧾.

🔹 1️⃣ Purpose of Sub-Clause 1.1.4.12 – “Statement”

• 🧾 Definition Role: This clause defines what a “Statement” means in the context of project payments.
• 🎯 Main Objective:
  • Serves as the Contractor’s formal request for payment, submitted in accordance with Clause 14 [Contract Price and Payment].
  • It triggers the Engineer’s review and certification process.
  • Ensures there’s a standardized format for financial documentation.
• 👥 Who it matters to:
  • Contractor: To claim progress payments.
  • Engineer: To assess compliance and issue Payment Certificates.
  • Employer: For processing and releasing funds.

🔹 2️⃣ Clause Text Breakdown 📖

“Statement” means a statement submitted by the Contractor as part of an application, under Clause 14 [Contract Price and Payment], for a payment certificate.

📌 Highlights:

• It includes Advance Payment Statements, Interim Statements, and Final Statements.
• Structured submission that must comply with timing and content rules under Sub-Clause 14.3 and others.

🔹 3️⃣ Key Interpretations & Implications

• 📅 Must be submitted monthly (unless otherwise agreed) per Sub-Clause 14.3 – Application for Interim Payment Certificates.
• 📋 Typical content includes:
  • Value of work executed,
  • Materials delivered to Site,
  • Advance payment adjustments,
  • Retention,
  • Deductions for taxes, penalties, or employer claims,
  • Variation adjustments,
  • Supporting documentation.
• 🔁 Dynamic & Cumulative: Each new Statement builds on previous ones, adjusting figures as needed.

🔹 4️⃣ Cross-References with Other Clauses 🧩

• Clause 14 – Contract Price and Payment:
  • Especially Sub-Clause 14.3, which dictates how Statements are to be formatted and submitted.
• Sub-Clause 14.11 – Application for Final Payment Certificate:
  • Final Statement is the last and most critical Statement in the contract lifecycle.
• Sub-Clause 20.1 – Contractor’s Claims:
  • Additional amounts not included in routine Statements must follow this claims procedure.

🔹 5️⃣ What-If Scenarios

🔸 What if the Contractor fails to submit a Statement on time?
→ The Engineer may delay issuing the Payment Certificate, which could impact cash flow.

🔸 What if an item is missed in a Statement?
→ It can be added in a subsequent Statement, but may raise disputes if it relates to completed work or expired claim periods.

🔸 What if the Statement includes unsubstantiated claims?
→ The Engineer may reject or reduce the claimed amount under Sub-Clause 14.6, and request clarification.

Final Takeaways 💡

📌 Pro Tip: A well-prepared Statement backed by solid documentation is the fastest route to securing your payment on time 💼.