Interim Payments in Construction

N/A / 6 Jan, 2025

Interim Payment Application (IPA)

An Interim Payment Application (IPA) is a formal request submitted by the contractor to the client or project owner. This document outlines the value of the work completed during a specific period or up to a defined project milestone. It forms part of the payment cycle agreed upon in the construction contract and is crucial for maintaining the contractor’s cash flow throughout the project.

Key Features of IPA:

·       The purpose of IPA is to request payment for work completed within a specific time-frame.

·       The contents of IPA typically include details of completed work, percentage of project completion, and amounts due.

·       IPAs are submitted periodically, often monthly, as outlined in the contract.

·       The are accompanied by evidence such as progress reports, schedules, and measurement sheets.

·       Facilitates continuous cash flow for the contractor.

·       Helps maintain transparency between stakeholders.

·       Enables accurate tracking of project progress.

Interim Payment Certificate (IPC)

An Interim Payment Certificate (IPC) is an official document issued by the contract administrator, such as a quantity surveyor, project manager, or architect. It certifies the amount the client should pay to the contractor for the work completed during a specific period. The IPC is a formal acknowledgement of the interim payment due and forms the basis for payment to be made.

Key Features of IPC:

·       The purpose of IPC is to certify the amount payable to the contractor based on the IPA.

·       IPCs Are prepared and issued by the contract administrator.

·       They include certified amounts, deductions, retention, and adjustments as per the contract terms.

·       Act as an assurance to the client that the claimed amount is accurate and fair.

·       Provides a verified payment amount, reducing disputes.

·       Ensures compliance with contract terms and conditions.

·       Strengthens trust between contractor and client.

Workflow: From IPA to IPC

1.      Submission of IPA: The contractor prepares and submits the Interim Payment Application, detailing the work completed and the amount requested.

2.      Review and Verification: The contract administrator reviews the IPA, cross-referencing with project progress reports, schedules, and measurements.

3.      Issuance of IPC: After verification, the contract administrator issues the Interim Payment Certificate, specifying the certified amount for payment.

4.      Payment by Client: The client processes the payment to the contractor based on the certified amount in the IPC.