Various Types Of Payments To Contractors
The payment to the contractors for works or for supply of materials are made on the basis of measurements recorded in the Measurement Book. (M.B.)
When the work or supply is sufficiently progressed (or completed) the detailed measurements are taken, by the overseer and recorded in M.B. Then an abstract of quantities is prepared and the cost is calculated according to the rates in the agreement Types Of Payments To Contractors.
The payment to the contractor may be made finally by one payment when the work or the supply completed or by number of payments by running account bills during the progress of the work. For small work payment is made by one payment.
If the contractor has not deposited the full amount of the security deposit before hand, from each payment 10% is deducted from the contractor as a security money and is kept in deposit Types Of Payments To Contractors.
Interim Payment and its Necessity:
This is a partial payment to the contractor. Under the terms of contract the contractor is to be paid monthly for works in progress or supply is in progress Types Of Payments To Contractors.
Interim payment not to be considered as final acceptance of the works upto that level.
Engineer to be given power to with hold the interim
payments under special circumstances.
The interim payments are necessary because –
- When the project is large, the contractor has to invest large amount for a longer period, which may not be possible for him. This may affect the progress of work due to lack of funds with the contractor.
- The progress of the work should be in proportion to the duration of the project. If the bills are paid at intervals, we can check the progress of the work.
- The interim payments also show the approximate value of work done.
Advance Payment:
This means payment made on a running account to a contractor for work done by him but not measured. Advance payment is not generally made to the contractor.
Under special cases, on the certificate of the Assistant Engineer in charge of work that the value of work done is in no case less than the advance payment proposed to be made, the advance payment is issued.
Secured Advance:
It means an advance payment made to a contractor on the security of materials brought by the contractor to the site of work.
Secured Advance may be allowed by the Divisional Engineer up to the amount not exceeding 75% of the value of the materials brought to the site of work provided they are of imperishable nature Types Of Payments To Contractors.
The advance amount is adjusted in the next running account bill proportionately to the actual consumption of materials.
On account Payment (Also Known as Interim Payment):
This means payment made on running account to a contractor for the works done or supplies made by him duly measured and entered in M.B. when only a part of the whole work or supply has been done and the work or supply is in progress.
10% to be retained as deposit out of which 5% to be returned at the end of the maintenance period. (This percentage is variable).
Final Payment:
Final payment is to be made within three months from the date of issue of certificate of final completion. After the works are completed in all respects, the engineer accurately prepares the final amount of works after deducting all previous payments Types Of Payments To Contractors.
The final bill is drawn in the prescribed form printed on yellow paper, after confirming the following things,
- The work is complete as per the specification and the site has been left cleaned.
- No damage has been caused to other properties and no defect is apparent.
- A certificate of physical completion has been recorded in the relevant M.B.
- The measurements recorded are in accordance with the method prescribed in the contract.
- The rates for items of work, actually done and measured are not in excess of those provided in the contract.
First and Final Payment:
It is the single payment, made for a job on its completion. This is usually applicable for small work, e.g. sanitary block for school building, compound wall, septic tank, ornamental grill work, demolising existing structure etc.
Retention Money:
The Engineer-in-charge is entitled to withhold some amount from security deposit, whenever any claim for payment of a sum of money arises out of or under the contract against the contractor. This money is with hold till finalisation or adjustment of any such claim. The purpose of retention money are:
- To meet the damages if any.
- To rectify the defects.
- Any incomplete work.
Reduced Rate Payment:
The contractor completes an item but if it is not as per the specifications, drawings given in contract conditions; then the engineer may grant it provided the work is structurally sound, but at reduced rate Types Of Payments To Contractors.
Petty Advance And Mobilisation Advance:
Petty Advance:
For the emergency needs, the engineer incharge is given a small amount in advance.
The engineer incharge may use this advance in purchasing material in small quantity and which is not costly. (where quotation and approval are not required.)
Mobilisation Advance:
The amount of money given for the establishment to the contractor is called as mobilization advance.
The establishment charges include approach roads, site office, godown, water tank, electric connection etc; and other facilities which ensure the safety on project and smooth working Types Of Payments To Contractors.
Various Bill Forms Used in PWD for Accounting
A bill is a detailed account of a claim for work done or supplies made. It includes quantities, rates, and the amount due, payment to the contractor is prepared from the abstract in the measurement book.
The various standard forms of bills used for payment according to the nature of the works are given below. Usually, white forms are used for running bills, and yellow forms are used for final bills.
PWD Full form ( Public Works Department )
Full form of PWD is ( Public Works Department ) like a government team that plans, builds, and takes care of important things we all use, such as roads, bridges, and government buildings.