Procedure for Modern Construction Invoicing and Payment
1. Introduction
This document outlines the invoicing and payment procedures for both lump sum pricing (divided into Off-shore and On-shore components) and Variations for the {Project Name}. It also includes the required formats for invoice documentation.
2. Invoicing Procedure
2.1 General Conditions
– 2.1.1 Payment from the OWNER to the MAIN CONTRACTOR is contingent upon achieving the Physical Progress milestones outlined in the Contract.
– 2.1.2 OWNER’s approval is required to confirm satisfactory Physical Progress in the WORK.
– 2.1.3 ‘On-shore’ refers to services rendered within [Location], subject to local taxation. ‘Off-shore’ refers to work performed at the MAIN CONTRACTOR’s Head Office outside [Location], exempt from [Location] taxes.
– 2.1.4 Two invoices will be issued for each contract segment—On-shore and Off-shore. The On-shore invoice, including GST, will be issued by the [Location] Branch Office, while the Off-shore invoice, exempt from GST, will be issued by the MAIN CONTRACTOR’s Head Office.
– 2.1.5 Payments for the On-shore segment will be in USD, with GST amounts reflected in [Location] currency at the prevailing exchange rate on the invoice date.
2.2 Advance Payment
– 2.2.1 A 20% advance on the lump sum price will be invoiced post-submission of the requisite Bonds.
– 2.2.2 This advance is payable within 30 days, contingent upon receipt of the Performance and Advance Payment Bonds by the OWNER.
– 2.23 The advance will be amortized at a rate of 20% through deductions in subsequent certified payments.
– 2.2.4 This advance corresponds to 20% of the combined Off-shore and On-shore costs covering project management, engineering, procurement, and construction.
2.3 Progress Payment
– 2.3.1 Monthly statements will be submitted to both the OWNER and the Lender’s Engineer, detailing the MAIN CONTRACTOR’s payable amounts.
– 2.3.2 Statements include executed work value, adjustments (additions/deductions), and previous statement deductions, all backed by relevant documentation.
– 2.3.3 Payment allocations for Off-shore and On-shore will reflect the respective progress in project management, engineering, procurement, and construction.
2.4 Final Payment
– 2.4.1 The final balance will be settled as stipulated in the Contract, after adjusting for prior payments and deductions.
2.5 Payment of Variations
– 2.5.1 Adjustments for approved Variations will be made as per the Contract terms.
– 2.5.2 Invoices for Variations will be issued alongside regular invoices for clear delineation.
– 2.5.3 Payments for Variations will match the lump sum payment schedule unless otherwise agreed.
2.6 Required Documents for Invoices (Lump Sum)
– 2.6.1 Documents include: Statements split into Off-Shore and On-shore portions, calculations of Statement amounts, and Physical Work Progress reports.
– 2.6.2 Invoices should list: CONTRACT Name/Number, Invoice Details, Total and GST-exclusive CONTRACT prices, and banking information.
– 2.6.3 Lump Sum Invoices will also detail payment schedules and Work Progress Certificates.
2.7 Required Documents for Invoice Variations
– 2.7.1 Variation invoices will list Milestone numbers, Variation references and approvals, cumulative value, and the payable percentage of Variations.
– 2.7.2 Documentation will include breakdowns of invoice amounts and authorized Variation lists.