RESIDUAL RISKS OF PAYMENT PROVISIONS IN FIDIC AND JCT CONDITIONS: A QUANTITY SURVEYOR’S VIEW

Abstract

The obligee and obligor of all cost-related commitments in construction contracts are governed by the conditions of contract. Like in all human engagements, risk is inevitable in construction contracts. This exploratory overview examined residual risks associated with payment provisions in Federation Internationale Des Ingenieurs-Consiels (FIDIC) and Joint Contracts Tribunal (JCT) conditions of contract in Nigerian construction industry. The selected payment provisions were advance payment, interim valuation, retention and final payment. The methodology comprises: (i) critical examination of payment provisions, (ii) scenario building of problem situations, (iii) assessing the sensitivity of the provisions to contractual conflict, and (iv) evaluating the effect on construction cost administration. Disbursement and amortization of Advance payment in FIDIC are more secured than JCT.  Interim valuation in FIDIC allows the contractor to make claims for delayed issuance of interim certificate but FIDIC does not give the contractor such right because all application for payments must be made by the contractor to the engineer. It would take a contractor in FIDIC-based contract a longer time for maturity of final payment than in JCT-based contract. It is recommended that a contractor in FIDIC-based contract should get retention bond in lieu of deduction of retention money to enhance its liquidity.

Sanni, A. G. | Department of Quantity Surveying, University of Benin (UNIBEN), Benin City, Nigeria.