Project managment

Payment for materials on site

The ICE conditions and similar permit payment to be made to cover part of the cost to the contractor of materials delivered to site but not yet built into the works. This can ease the contractor’s cash flow situation and is of advantage to the employer in encouraging early supply of materials so that unexpected shortages or late deliveries are less likely to hold up progress. In contracts that contain such a provision, tenderers can be expected to reduce their prices in anticipation of the expected financial benefit.
Certifying payment for materials on site is left to the discretion of the engineer.
Under ICE conditions Clause 60(2)(b) he has to certify such amounts (if any) as he may consider proper, not exceeding a percentage of the value as stated in the contract. In this he may need to act carefully because, even though material has been delivered to site, it might still remain the property of the supplier until he has been paid for it by the contractor. If the supplier falls  into dispute with the contractor, or goes into liquidation, the materials he supplied might be reclaimed by him or his receiver. Before certifying any payment for materials the engineer will need to be reasonably certain that the contractor does own them.

In deciding what should be certified for materials on site, the resident engineer needs to check they comply with the specification, are properly stored or protected, and will not deteriorate before use. The amount certified will depend on the nature of the material and also the circumstances of the contractor.
If the contractor appears to be running into financial difficulties or shows signs of being unable to complete the contract, what should be certified for materials on site needs careful consideration by the engineer. The prospective value to the employer of the materials paid for, needs then to be assessed in the light of the situation, allowance being made for any deterioration that might occur if there is a delay in their incorporation into the works. Reinforcement or structural steel left out too long in the open may rust to the point of scaling;
improperly secured items may get stolen; pipes left too long on verges to roads may sustain damage to their protective coatings; valves can be damaged by frost and so on.


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