Contractors rely on interim payment certificates to provide the essential cash-flow for their projects. A contract would ordinarily stipulate the interval in which progress claims are made, certificates are issued, and payments made on those certificates.
The PAM Form stipulates that a payment certificate shall be “the total value of the work properly executed and include the percentage of the value of materials and goods stated in the Appendix up to the date of the Contractor’s payment application less any amount which may be retained…The materials and goods must be for incorporation into the permanent works and have been delivered to and properly stored at the Site and be protected against loss, damage or deterioration and be in accordance with the Contract. The certificate shall only include the value of materials and goods which are reasonably, properly and not prematurely brought to the Site”.
The Quantity Surveyor would ordinarily value the works and value of materials on site. It must be borne in mind that the valuation should only take into account works “properly executed”- therefore if works are incomplete or improperly executed, they may be excluded from valuation or a diminished value be allocated for the same.
In a perfect world, the interim valuations would capture perfectly the progress of works and delivery of materials to site. However, the reality is always less than perfect.
Therefore, there may be situations where claims are made for works purportedly done, which are not yet done, but it was valued anyway due to a lack of proper checking. Some works may have been completed but improperly (for example items may be installed which do not meet specifications), and these would be valued as well. Materials at site may not be adequately protected, leading to deterioration subsequently but already valued and paid.
Can these interim certificates therefore be revised?
Yes, and No.
No, an interim certificate cannot be revised save for “clerical, computational or typographical error or errors of a similar nature” In other words, once a decision with regard to the valuation of interim certificates is made, that decision cannot be revised willy-nilly.
However, “the Architect may, by a later certificate, make correction or modification in respect of any valuation errors in any earlier certificate”. Therefore, at any time before the final account is concluded, the Architect can adjust subsequent certificates to correct or modify earlier certificates, including to issue negative certificates if necessary.
The only exception would be the Final Certificate, which would be conclusive once issued in so far as it relates to the final value of the works. However, even the Final Certificate would not be conclusive that works, materials and goods are in accordance with the Contract.
Kheng Hoe Advocates advises clients on CIPAA, arbitration, litigation and mediation of construction disputes. We can be reached at firstname.lastname@example.org.