Payments Flashcards
Construction Contracts Act 2002
What?
Why?
Facilitates regular and timely payments between the parties
Provide speedy resolution of disputes arising
Provide remedies for the recovery of payments
During 1990’s payment behaviour and cash flow was problematic
Pay when paid (if paid)
1000s Contractos and Sub contractors were not being paid and went under
Cashflow process
Payer provides payment schedule, pays payee. Principal pays Main Contractor, pays sub-contractor
Payee serves payment claim
Head contract, Sub contracts
Assessing payment claims
If QS is engaged
If not?
QS is engaged, they will be engaged to assess the contractors payment claim and to certify a scheduled amount
If QS is not engaged, Architect will be required to assess the contractors payment claim and to certify a scheduled amount
Which Practice note to reference for payments?
What does it include?
What would you advise Clients about payments in Construction
PN9.0508
has payment schedule template
use to calc a scheduled amount
includes a working day calculator and uses formulas to calculate the scheduled amount
Architect fulfils roles of QS.
- Alert Client to CCA 2002 and Contract obligations and the consequences of not responding as required to a contractor’s Payment claim
- Agree address for service of Principal’s copy of Payment Claim. Needs to be done prior to tendering in order to complete NZIA SCC schedules
- Confirm the client understands the timeframes for processing of payments as set out in NZIA SCC
- Confirm / agree service address and methods of submitting payment Claims, issuing payment schedules.
- Arrange submission of payment claims to coincide with a regular site visit
- establish whether a claim for materials/good for offsite payment is allowed at the time of tender
- agree with the contractor items for which they wish to have off site payments
What is required of a valid payment claim?
In writing
Contract
Identify construction work
Period to which the payment relates
Project
Principal
Architect
Main Contractor
Claimed amount
Due date
How claimed amount was calculated
State that it is made under the construction contracts act
Is served at the relevant interval
Accompanied by Form 1
Form 1
Must accompany all payment claims
Outlines what should be done with the payment claim
When to act
and consequences of not paying
Ability to pay less or not at all
How long there is available to make the payment
If the recipient doesn’t understand Form 1 consult a lawyer immediate
Receiving the claim - What does Architect do?
site visit to assess works to date
follow correct timing
issue to client
client to following timing
client pays
Why do you need to respond with a payment schedule
s23 - becomes a due debt
What is required of a valid payment schedule
- be in writing
2 identify the payment claim to which it relates - state a scheduled amount
Supply chain currently -
risks of off site goods
supply chain - people want to secure stuff
if the contractor goes into liquidation
Differences between 3910 vs SCC
timing is different
If you’re skiing in France during payment claims?
Arrange for someone else to process this
Otherwise it will be come a debt - all needs to be paid, chances to discuss and rectify is gone!
IF you felt it was contentious then get it out to Principal a bit earlier.
What if Contractor claims 50%? but you observe its 30%?
Need to justify 30%.
Architect is fair
If the Contractor forgot to attach Form 1?
Then rules of Contract no longer be in place.
I would go back to the Contractor to ask them to include
Resolution/disputes and remedies does not existing any more, the safety net is removed.
Fluctuations
in Contract
signed up for
evidential method vs. formular method. Add in data, part of data is scheduled amount, other part is sats NZ, consumer price index at Tender vs. CPI at time of construction. # add on to schedule.Evidential is simpler, price of material at Tender and price of material
