PAYMENT PROCEDURES UNDER FIDIC CONSTRUCTION CONTRACT

Abstract

Payment provisions are of crucial importance to contractors. Owner’s payments are the life blood of the contractor's work. Contractors and owners must understand the provisions governing all types of payments for a construction project. This paper presented an analysis of payment provisions under the FIDIC Conditions of Contract for Construction (2017 Redbook). FIDIC conditions of contract for Construction are widely used worldwide, especially in the middle eastern countries. The analysis includes: 1) Advance payment; 2) Interim payments; and 3) Final payment. The analysis reveals that FIDIC conditions of contract recognizes the importance of timely fulfilling of payment obligations of the owner and includes precise procedures and serious consequences for delayed payments. The contractor can take serious actions in response to delay in certifying payments or delay in receiving the certified payments, including suspending the work and/or terminating the contract after giving written notice to the owner regarding the intended action. Such notices should follow the stipulated time limit for each action depending on the type of delay. The analysis presented in this paper should prove to be useful to owners and contractors alike and can contribute to reducing disputes between the contracting parties.