FIDIC 2017 Silver Book EPC/Turnkey Contract | Clause 14 Contract Price & Payment explained

Описание: Mastering the financial framework of the FIDIC 2017 Silver Book is essential for any professional involved in EPC/Turnkey Projects.

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This video provides an in-depth exploration of Clause 14: Contract Price and Payment, which establishes the ground rules for how the Contract Price is determined, applied for, and ultimately paid.

The Contract Price in the Silver Book is typically a lump sum stated in the Contract Agreement. This price is subject to specific adjustments, additions—such as Cost or Cost Plus Profit—and deductions. The Contractor is responsible for all taxes, duties, and fees, and the Contract Price will not be adjusted for these unless there are specific changes in Laws as per Sub-Clause 13.6. Any quantities set out in a schedule are used only for the purpose stated and are not considered actual quantities the Contractor must execute.

To support mobilization and design, the Employer often provides an Advance Payment as an interest-free loan. To secure this, the Contractor must provide an Advance Payment Guarantee. This guarantee must remain valid and enforceable until the advance payment is fully repaid. If the payment is not repaid by 28 days before the guarantee’s expiry, the Contractor must extend its validity. Repayment occurs through percentage deductions in interim payments. Unless otherwise stated, deductions begin once interim payments exceed 10% of the relevant portion of the Contract Price and proceed at an amortisation rate of 25% per payment. Any outstanding balance becomes immediately due if the contract is terminated or a Taking-Over Certificate is issued.

The mechanism for ongoing payment is the Application for Interim Payment. After each payment period (typically monthly), the Contractor submits a Statement detailing the amounts they believe they are entitled to, including progress reports. The Statement includes the estimated contract value of works executed, changes in laws or costs, retention money deductions, and additions for Plant and Materials. If a Schedule of Payments exists, those instalments are treated as estimated values, though they can be revised if actual progress differs from the schedule.
Payment for Plant and Materials allows claims for items before they are incorporated into the Permanent Works. The items must be listed in the Contract Data, and the Contractor must provide evidence of compliance, shipping documents, and sometimes a bank guarantee. Once approved, the Employer pays 80% of the agreed amount, which is later deducted when the materials are incorporated into the Works.

The Interim Payment process requires the Performance Security to be in place and a Contractor’s Representative to be appointed. Within 28 days of receiving a Statement, the Employer must issue a Notice stating the amount considered due. The Employer may withhold payments if the amount is less than the minimum interim payment, if work is not in accordance with the contract, or if there are significant errors in the documentation. Timely payment is incentivized by Sub-Clause 14.8, which entitles the Contractor to financing charges (compounded monthly at 3% above the bank rate) for delays.

As the project concludes, the Statement at Completion must be submitted within 84 days of the Date of Completion. Following this, the Contractor submits a draft Final Statement within 56 days of receiving the Performance Certificate. This leads to the Final Statement or a Partially Agreed Final Statement if disputes exist. A crucial step is the Discharge, confirming the statement represents a full and final settlement. Once the Final Payment is accepted, the Employer’s liability generally ceases, except in cases of fraud, gross negligence, or deliberate default. Finally, all payments are made in the specified Currencies of Payment, often using fixed exchange rates to manage financial risk.

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