Payments under Clause 14: IPCs, advance and final account

Cash flow is the lifeblood of any project. Clause 14 sets out how and when the contractor gets paid. Understanding this mechanism protects against cash gaps and disputes.

The contract price

The price may be a lump sum (Yellow/Silver) or re-measured by quantities (Red/Pink). This determines how interim payments are calculated.

Advance Payment

If an advance is provided, it is paid after an advance payment guarantee is given and is repaid by deductions from subsequent payments. The advance improves the contractor’s opening cash flow.

Interim Payment Certificates — IPCs (Sub-Clause 14.6)

The main mechanism. The cycle is usually:

1. The Contractor submits a statement with substantiation of the work done.
2. The Engineer checks it and issues an IPC (Interim Payment Certificate) for the amount due.
3. The Employer pays within the set time.

Retention, advance repayment and other agreed deductions are subtracted from the amount.

The deadlines for submission, certification and payment are set out in the contract. Breaching them gives both parties rights — up to suspension of work and interest.

Retention

A percentage withheld from each IPC as a quality safeguard. Usually released in two stages — at taking-over and after the defects period (see taking-over and the DNP).

Final account (Final Statement)

After completion and the issue of the Performance Certificate, the Contractor submits a final statement, and the parties determine the final amount. This closes the financial relationship under the contract (subject to residual liability under the governing law).

What to do when you are not paid

FIDIC protects the contractor against non-payment:

• Interest (financing charges) on a late payment.
• The right to suspend or slow the works on a material delay (Clause 16) after notice.
• As a last resort — termination by the Contractor under Clause 16.

These rights only work with discipline: timely statements, correct substantiation, written notices.

Practical tips

• Submit statements on time and with substantiation — this speeds up certification.
• Track payment deadlines and record delays in writing.
• Control advance repayment and the reduction of the advance guarantee.
• Don’t “accumulate” disputed amounts — claim them in time, including as a claim.

Related topics: securities and the 28-day rule on claims. Need help with a payment dispute? Request a consultation.