Where multiple instalments are intended, it is mandatory to state it in the Appendix to Tender, and specifying the number of instalments, and the time to pay the installment to the Contractor. Also the applicable currencies and proportions in case of multiple currencies must be stated in the Appendix to Tender.
Example.
In Hyatt regency hotel project, the advance payment is 20 % of the initial contract sum. The contract sum of the project is Rs 230,000,000.00. So, the advance payment is Rs 46,000,000.00 (20 % of the contract value) and advance recovery is 25 % of each valuation up to the full after reaching 30 % value of contract value. .
Interpretation .
The client has to pay the mobilization advance payment before start the work. The advance payment is Rs 46,000,000.00. Because the contractor need some amount of money to start the project for the preliminaries. Example: the contractor has to put the temporary roads, temporary huts for the workers, electricity and water etc. He or she can't start the work without these things. The client will recover his advance payment by the advance recovery. In advance recovery contractor has to deduct 25 % of advance payment in each valuation. But it will start after reaching the 30% of work done. 30 % of work done is Rs 69,000,000.00. if total value of work done equal or higher than Rs 69,000,000.00 , the client can recover his or her advance payment. .
03. Retention .
Introduction.
Retention is usually set at either 5% of the value of the works or 3% in the case of some (usually larger) contracts. This percentage is then deducted from all the interim payments made to the main contractor who then deducts it from all his sub-contractors.
Clause No: 14.9 (Payment of money retention).
From FIDIC.
If a Taking-Over Certificate is issued for a Section or part of the Works, a proportion of the Retention Money shall be certified and paid. This proportion shall be two-fifths (40%) of the proportion calculated by dividing the estimated contract value of the Section or part, by the estimated final Contract Price.
