Progress billings and payments:

Payment is the valuable control tool in  your  hands.  You  should  ensure  that  progress  payments  are determined objectively and designed to promote timely performance by contractor. The key rules which apply here are:

• You should guard yourself against early payment and overpayment as it is risky.
• You  should  not  unreasonably delay or  withhold  earned  payment which will lead to risk of contractor?s dissatisfaction which manifests as quality compromise or time delay.
• Prompt and accurate contractor invoices and timely payments are critical to the financial status of the contractor.
• It  is  prudent  to  involve  both  personnel  responsible  for  contract formulation and personnel responsible for contract administration in designing payment terms. It should be noted that contracts invariably stipulate percentage retention (usually 10% of progress bill value). The purposes served by the retention are motivating the contractor to complete the work; covering the risk of latent errors or omissions; encouraging contractor to rectify deficiencies after a planned demobilisation.