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FEBRUARY 20, 2018 | IN ANDY'S BLOG, FIDIC | BY ANDY HEWITT  FIDIC

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What can we do if we don’t get paid? We get this question a lot. In some regions, this is less of a
problem because legislation is quite strict on payment terms, but in other parts of the world it is very  Nina's Blog
common for the paying party to hang onto their money for as long as possible.
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Most forms of construction contract will include some sort of remedy for non-or late payment, so you
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will need to check what these are on your projects, but as an example, let’s have a look at what the
FIDIC Red Book, 1999 Edition has to say about late payment.  Publications
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Sub-Clause 14.8 (Delayed Payment) states that:
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‘If the Contractor does not receive payment in accordance with Sub-Clause 14.7 [Payment], the  Top Tips Papers
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Contractor shall be entitled to receive nancing charges compounded monthly on the amount  Variations

unpaid during the period of delay. This period shall be deemed to commence on the date for
payment speci ed in Sub-Clause 14.7 [Payment], irrespective (in the case of its sub-paragraph (b))  Andy's Blog
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of the date on which any Interim Payment Certi cate is issued.  Announcements

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Unless otherwise stated in the Particular Conditions, these nancing charges shall be calculated at
the annual rate of three percentage points above the discount rate of the central bank in the  Disputes

country of the currency of payment, and shall be paid in such currency.  E-Courses

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The Contractor shall be entitled to this payment without formal notice or certi cation, and without
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prejudice to any other right or remedy.’

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This provision is quite clear and as soon as the payment is overdue I would be inclined to submit a
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notice that a claim for E-COURSES
nancing charges will be submitted.
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reminder just in case the payment is stuck in the Employer’s system, or the Engineer has failed to issue
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the payment certi cate.
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If the notice resolves the problem, then all is well, but if not, and the payment continues to remain Search…
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outstanding, I would prepare a claim for nancing charges and submit it at monthly intervals until the
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payment is made.
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I would say here, that such a claim is less about recovering additional money – the amount will not add  Variations

up to very much – but more about making the Engineer and Employer aware that you will insist on your
rights if they do not perform their contractual obligations and hopefully, this will make them think twice  Andy's Blog
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FIDIC gives the Contractor additional rights under Sub-Clause 16.1 (Contractor’s Entitlement to time.

Suspend Work), which states that:  Disputes Powered by ConvertKit

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‘If the Engineer fails to certify in accordance with Sub-Clause 14.6 [Issue of Interim (Payment
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Certi cates] or the Employer fails to comply with Sub-… or Sub-Clause 14.7 [Payment], the
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Contractor may, after giving not less than 21 days’ notice to the Employer, suspend work (or
reduce the rate of work) unless and until the Contractor has received the Payment Certi cate,  Nina's Blog and get blog articles and
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If the Contractor suffers delay and/or incurs Cost as a result of suspending work (or reducing the
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rate of work) in accordance with this Sub-Clause, the Contractor shall give notice to the Engineer
and shall be entitled subject to Sub-Clause 20.1 [Contractor’s Claims] to:  Publications
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‘(a) an extension of time for any such delay, if completion is or will be delayed, under Sub-
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Clause 8.4 [Extension of Time for Completion], and
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reduce the rate of progress and will be entitled to an extension of time arising from such actions and We won't send you spam. Unsubscribe at any
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the recovery of Cost plus pro t. If we consider that Cost could mean demobilisation, remobilisation and time.

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prolongation costs, then this could soon mount up to a considerable sum.
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The 2017 edition of the FIDIC Red Book contains slightly changed wording to the above two
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clauses, but they are essentially the same as the 1999 Edition in relation to failure to pay.
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My recommendation would be to submit the 21-day notice as soon as the payment or certi cate
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becomes overdue. Again, this may serve to resolve the situation and if so, the notice will have achieved
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From experience however, I nd that contractors are reluctant to take the suspension route and actually
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continue to work normally after the 21-days have expired. Whilst such willingness to progress the
work must be applauded, I have to question the wisdom of such an action.  Publications
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If you don’t suspend, there is no delay and thus, no entitlement to an extension of time or payment of
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cost. If the Contractor continues to work at a reduced rate, he will subsequently have to prove that he
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I once rejected a Contractor’s claims in such a situation because, when examining actual against
planned progress, the progress had clearly not been reduced. I would certainly recommend that  Andy's Blog
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contractors seriously consider keeping their resources away from site for a couple of days and would  Announcements
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suggest that such an action will unlock all but the most serious of issues. If the Employer does not pay  Construction Claims time.
when faced with this situation, then questions must be asked about his ability or willingness to pay for
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the rest of the project and if this is the case, does the Contractor wish to keep digging himself into a
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I will end with a question: is it easier to obtain payment when the Employer still needs something from 
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the Contractor, or when the project has been completed? I will leave you to work that one out for
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M MAZHAR ISLAM REPLY
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May 14, 2018, 10:52 am
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Simon Hedger REPLY  Nina's Blog and get blog articles and
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Hi Simon – good to hear from you and thanks for your comment. Glad
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Nic Meyer REPLY

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Excellent article Andrew, We won't send you spam. Unsubscribe at any
It also begs the question as to why contractors keep on working when payments are  Construction Claims time.

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Firstly, they try to uphold a ‘relationship’ with the client and not take action that might  E-Courses
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project, if it proceeds. 
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Secondly, contractors are seldom entirely on schedule in executing the works and try to
use the employer’s delay as an opportunity to recover some of their own delays. Such  Nina's Blog and get blog articles and
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action obviously negates their own entitlement and may prove to be wasted effort as news on courses and promotions direct
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Even where contractors have suffered losses and delays and submitted claims, their
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record keeping often fails them. Establishing their case for partial delay requires
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I agree that a total shutdown is probably the best way to focus the employer’s mind,
and simpli es the contractor’s claim to one of demobilization, standing and  Student Feedback

remobilization costs and the resulting EOT.  Top Tips Papers

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February 21, 2018, 1:46 pm  Announcements
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Hi Andy, thanks for this..I have been on contract where Sub-Clause 4.8 (Delayed  Construction Claims time.
Payment), or similar provisions has erroneously been deleted from the condition of  Disputes Powered by ConvertKit

contract (by the particulars), which put the contractor in a different situation of having  E-Courses
nally to resort to courts (as per the contract); since non-payment/ unduly delayed
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payment would, by inference be a breach of contract. Your recommendation in the
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second last paragraph (keeping resources away from Site) may be the only short-term
action to follow. Note: such conditions of contract normally comes from fairly high
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Rajendra Reddy REPLY
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February 21, 2018, 10:13 am
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Thanks you. Good one.
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I would appreciate if you can publish an article related how to distinguish delay and  Student Feedback
disruption claims in a remeasured contract.
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Nina Hewitt REPLY

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Hi Rajendra – I’ve passed your blog request onto Andy and we’ll see what
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we can do! Best Regards, Nina.
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Eng. E J Basil Jayasiri Perera. REPLY
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Thank you so much, for sending your gratitude for my comment.  Nina's Blog and get blog articles and
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Thank you for sending this article.
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