Certificates and Payment

Payment certificates are binding statements, issued by the Architect under Clause 30 of the HK
Standard Form, which commit the Employer to an obligation to pay the Main Contractor the
amount certified; the two types of payment certificate are

 Interim Certificates
 Final Certificate.

Other certificates issued by the Architect throughout the contract period include:

 Certificate of Practical Completion

 Certificate of Making Good Defects.
 Certificate of non completion

Interim valuations and the final account are the responsibility of the Quantity Surveyor.

Generally, payment on interim certificates may be calculated either by

 stage payments made at agreed stages of completion

 measurement of work done at agreed intervals throughout the contract.

Interim Certificates certify the value of the work completed to the time of the certificate and are an
estimate of value only. The Employer is bound to pay the sum stated on the certificate, but
adjustments can be made on future certificates.

Interim valuations are for the purpose of ascertaining the amount due in an Interim Certificate, and
must be prepared whenever the Architect considers them necessary.

Interim Certificates are issued periodically before practical completion at intervals which are
defined in the appendix.

When an Interim Certificate has been presented to the Employer by the Main Contractor, payment
must be made within the Period for Honouring Certificates named in the appendix, fourteen days
from presentation unless otherwise stated.

If the Employer refuses to pay within the stated time, the Main Contractor may serve notice to the
employer urging him to pay within a certain period of time (usually 7 days). Upon the lapse of the
7 days and the employer still refuses to pay, the main contractor may then terminate the contract.

If the Main Contractor feels that any Interim Certificate was not properly prepared, he can give
notice of arbitration.

Before an Interim Certificate is issued an interim valuation is usually prepared by the Quantity
Surveyor and agreed by the Main Contractor's quantity surveyor. Once the Architect has checked
the interim valuation, and is satisfied that it is correct, he will sign and issue the Interim Certificate
by sending it to the Main Contractor. It is then up to the Main Contractor to present it to the
Employer for payment.

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Materials on site
The total value of materials and goods delivered to or adjacent to the Works for use may be
included in the Interim Certificates. Restrictions on the materials or goods to be included are as
follows:

 They must be delivered to or adjacent to the Works.

 Delivery must have taken place up to and including a date seven days before the date of the
Certificate.
 Materials or goods must not be brought onto or adjacent to the Works prematurely.
 Materials and goods must be adequately protected against weather and theft.
 Architect has a discretionary power to include in the amount stated as due in an Interim
Certificate the value of any materials or goods delivered and stored in the contractor’s yard.

Certificate of Practical Completion

It is the Main Contractor's obligation to complete the Works according to the Contract, while it is
the Employer's obligation to pay the Main Contractor the amount stated in the Interim Certificates
issued by the Architect. This procedure will carry on until, in the opinion of the Architect, the
Works are practically completed.

When this state is reached by the Main Contractor, the Architect will issue a Certificate of Practical
Completion as required by the Contract.

As there is no definition in the HK Standard Form concerning the precise stage at which Practical
Completion of the Works has been reached, it will be for the Architect to decide. Once the
Certificate is issued, the Main Contractor is no longer obliged to accept new instructions requiring
extra work, even on modified terms; he should hand over the building to the Employer and move
off site.

 Contractual provisions that are dependent on the date of the issue of the Certificate of Practical
Completion are as follows:
 Beginning of the Defects Liability Period.
 Ending of the Main Contractor's liability for typhoon damage.
 Ending of insurance of the Works by the Main Contractor.
 Ending of liability for liquidated damages.
 Ending of regular Interim Certificates.
 Release of one moiety of the retention fund.
 Beginning of the Period of Final Measurement and Valuation.
 Opening of arbitration matters.

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Certificate of Making Good Defects

The issue of the Certificate of Practical Completion marks the beginning of the Defects Liability
Period stated in the appendix. For this period of time after the issue of the Certificate of Practical
Completion, the Main Contractor is required to maintain and repair the building in respect of
damage occurring through his poor workmanship, such as plaster cracking, doors and windows not
closing properly.

Architect must deliver a Schedule of Defects within fourteen days from the expiry of the Defects
Liability Period. If the Architect fails to do this, the Schedule would become invalid.

The Main Contractor is to make good defects within a reasonable time of receiving the Schedule.
Much depends on the nature and circumstance of a particular defect as to what may be considered a
reasonable time. All work will normally be at the Main Contractor's expense.

The contract allows the Architect to issue instructions covering urgent individual defects, for
example a leaking roof.

When the Defects Liability Period has expired and on completion of the repairs the Architect is
required to issue a Certificate of making Good Defects. The Main Contractor is then relieved of
any further contractual responsibility for the maintenance and repair of the building. One
Certificate is issued covering all making good defects.

The issue of the Certificate of Making Good Defects has two effects as far as the Contract is
concerned; these are:

 Release of the residue of the retention fund.

 Clearance for the issue of the Final Certificate.

The Certificate of Making Good Defects means that the Main Contractor himself is no longer
obliged to return and remedy defects, but it does not end the Main Contractor's liability for the cost
of remedying them. The Main Contractor remains liable to the Employer, under the Limitation
Ordinance, for any breach in complying with Contract specifications. The period of the Main
Contractor's liability, is six years for ordinary (simple) contracts and twelve years for contracts
under seal.

Final Account
Before the Final Certificate can be issued, the final account has to be prepared by the Quantity
Surveyor, who is required to adjust the Contract Sum in the Contract Bills to include all the
monetary additions and omissions of the following items:

 Contingency sums
 Architect's instructions
 Provisional quantities
 Provisional and prime cost sums
 Fluctuations and agreed Main Contractor's claims

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Under the HK Standard Form the Period of Final Measurement and Valuation should begin with
the issue of the Certificate of Practical Completion and be completed within the time stated in the
appendix; six months unless otherwise stated. All adjustments made to the Contract Sum should be
agreed by the Main Contractor's quantity surveyor. When the final account has been agreed, a
summary is prepared setting out all the adjustments, which should be signed by the Main
Contractor. The agreed final account sum is the amount that the Employer should pay the Main
Contractor for executing the Works.

Final Certificate
The Final Certificate is issued to certify that the Works have been entirely completed in accordance
with the terms of the Contract.

The Final Certificate must be issued

 as soon as is practicable but before the expiration of three months from the end of the Defects
Liability Period, or
 from completion of making good defects under, or
 when the Main Contractor has completed his obligation to send all the necessary documentation
to the Architect so that the final account can be completed; whichever is the latest.

Once the Final Certificate is issued, all adjustments made are indisputable by any accidental
inclusion or exclusion. It is therefore extremely important that all calculations are checked
carefully while adjusting the Contract Sum. However, if arbitration is going to take place, or is
taking place when the Final Certificate is issued, the Certificate will be subject to the arbitrator's
main award.

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