Article # 352 How Can Owners, Investors and Funding Agencies Ensure that Payments for Interim Payment Certificates are Made Only When They Are Assured that Those Payment Certificates Are in Accordance with the Requirements Set in the Contract Agreement?

When it comes to delivering capital construction projects, one of the processes that is common to all those projects is making payments for approved work in place completed by the contractor for each awarded contract. Nevertheless, those project owners, investors and funding agencies need to be assured that before releasing the payment for the interim payment certificates that they been formally reviewed and approved in accordance with the contract agreement requirements.

Usually, there are four types of interim payment certificates in a construction contract agreement. The first is the payment certificate for the advance payment if the contract agreement has this condition. The second type is the first payment certificate submitted by the contractor for completed and approved work in place. This will be followed with the third type, which is the monthly interim payment certificate for works in place completed during the project duration. The last type is the final payment certificate.

The review and approval of those four types of payment certificates need to be done against a pre-defined checklist that will include the items required to approve those payments in accordance to what the contract agreement calls for. Using a Project Management Information System (PMIS) like PMWeb, four checklists will be created for each payment certificate type. Each checklist could be assigned its own unique workflow to formalize the tasks required for completing, reviewing and approving those checklists which will be a perquisite for releasing the relevant payment to the contractor.

PMWeb custom form builder will be used to create those checklists. Each checklist will have two parts. The first will provide details of the Contractor, contract agreement, interim payment certificate number and date, and the amount of the payment certificate. The second part will be a table that will include predefined items to be checked for each interim payment certificate type. Each item will have a compliance field that need to be checked if the submitted interim certificate complies with the requirement.

In case there is a requirement that those checklist items need to be reviewed by different individuals, then multiple tables must be created where each table will include only the items to be reviewed by each specific individual. This will enable assigning the view and edit rights for each table to its authorized individual. The sequence for completing those tables will be enforced using the workflow assigned to each checklist type.

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Each payment certificate checklist transaction will be attached with all supportive documents for items reviewed and approved for which those documents will be uploaded and stored in their relevant folder or subfolder in PMWeb document management repository. In addition, links to the relevant interim payment certificate record which will be created using PMWeb Commitment Progress Invoice module as imported MS outlook emails will be added to their relevant checklist.

To enforce the required transparency and accountability in completing, reviewing and approving those checklists, a unique workflow will be assigned to each payment certificate checklist process. The workflow will detail the review and approval tasks for each payment certificate checklist process along with the duration for each task and the sequence for performing the tasks.

Of course, those checklist types can share the same workflow steps if the tasks required for completing, reviewing and approving those checklists are the same. The workflow will also include the approval authority levels associated with those processes if needed.

The actual release of payment against interim payment certificates can only be approved when the relevant checklist is approved by the assigned project team member. Only then, the checklist status will become approved.

About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with 40-year service record providing project management, project controls services and project management information system to over than 400 projects with a total value in excess of US$ 400 Billion. Those projects included Commercial, Residential, Education and Healthcare Buildings and Infrastructure, Entertainment, Hospitality and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training and business development.

Bassam is a frequent speaker in topics relating to Project Management, Strategic Project Management and Project Management Personal Skills. Over the past 40 years he has lectured at more than 400 events and courses at different locations in the Middle East, North Africa, Europe and South America. He has written more than 400 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He was a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE) and Green Project Management (GPM).

Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA and London Business School, London, UK.


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