Civil Engineering Reference
In-Depth Information
assists the contractor by making an advance
payment?
SBC clause 4.8provides that the employer may,butisnotobliged to,make anadvance pay-
ment to the contractor. The idea is fairly straightforward. If both the employer and the con-
tractor agree that an advance payment is to be made by the employer to the contractor, the
amount agreed and the date for payment must be inserted in the contract particulars, togeth-
er with a schedule setting out the times and amounts for repayment. This is achieved by the
architect deducting the monthly amount from the amount to be certified. The RIBA stand-
ard certification forms make express provision for the insertion of this repayment sum. A
form of bond is bound into the back of the contract, and it is used to protect the employer
if the contractor fails to repay the amount advanced. The contract has a default position that
the bond is required unless expressly stated otherwise. It is difficult to envisage an advance
payment situation in which a bond would not be required. The provisions of SBC, IC, ICD
and DB are virtually identical. There is no advance payment provision in MW or MWD.
The provisions do not apply where the employer is a local authority. It is not clear why that
should be the case, especially since many local authorities seek ways to dispose of excess
money before the end of the financial year and have to make amendments to the standard
form contracts to allow advance payment to be made.
The dangers of advance payment do not appear to be great provided that the employer in-
sists on a bond being taken out. Without a bond, the danger is that, having received the pay-
ment, the contractor becomes insolvent before the project is finished and the employer loses
hisorhermoney.Wherethereisabondandthecontractor defaults, theemployer simplyre-
quests the surety to pay the amount for which the contractor has defaulted. If the contractor
becomes insolvent, the employer will continue to receive the repayments, the only differen-
ce being that they will have to be requested at the time of each certificate.
