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By Johan van der Wath (Senior Associate)

The purpose of this article is to assist contractors to comply with the procedure in terms of clause 14 of the FIDIC yellow book second edition 2017 (FIDIC), to obtain a final payment certificate (FPC).

Clause 14.11 envisages a process under which the Engineer and the Contractor agree on the amounts of the FPC.

In terms of clause 14.11, the contractor must submit a draft final Statement with supporting documents to the Engineer within 56 days after receiving the Performance Certificate. The Performance Certificate is issued by the Engineer in terms of clause 11.9. The Performance Certificate states the date on which the Contractor completed all its obligations in terms of the contract.

If the Engineer disagrees with or cannot verify any part of the draft final statement, the contractor must submit further information that the Engineer reasonably requires. The Engineer shall make such changes to the draft as may be agreed between them. The Contractor must then submit the final agreed statement to the Engineer. This agreed statement will be referred to as the “Final Statement”.

If the Contractor and the Engineer cannot agree to the final statement, it will be evident that a dispute exists between the contractor and the engineer regarding the draft final statement. In these circumstances, clause 14.11 provides that an interim payment certificate can be issued by the engineer for the agreed parts of the draft final statement.  This is a Statement prepared by the Contractor identifying amounts which (after discussions with the Engineer) are agreed and those which are not agreed. The dispute must be resolved by means of clause 20.4 (adjudication) or clause 20.5 (amicable settlement).

This provision is aimed at avoiding a situation where there is disagreement over the content of the Final Statement and the Engineer is forced to make a decision as to what he includes in the FPC.

In terms of clause 14.12 when the Contractor submits the final statement a written discharge must also be submitted which confirms that the total of the Final Statement represents the full and final settlement of all amounts due to the Contractor in connection with the contract.

In terms of clause 14.13 the Engineer must issue the FPC, 28 days after the Final Statement and written discharge has been received. If the Contractor has not applied for a FPC in terms of clause 14.11 and complied with clause 14.12 then the Engineer shall request the Contractor to do so. If the Contractor does not comply within 28 days, the Engineer shall issue the FPC for such amount that he fairly determines to be due.

It is advisable for Contractors to start preparing their draft final statement as soon as possible and submit it within the 56 days after receiving the Performance Certificate from the Engineer. This will ensure that the FPC or at the very least a further interim payment certificate is issued to the Contractor, sooner rather than later, which will ultimately assist the Contractor with much needed cash flow in these trying economical times.