There are normally the following stages in the work approval and payment process.

Payment application

The contractor will normally apply periodically (e.g. monthly or by stages or milestones) for approval of, and payment for, the work undertaken in that period.

This approval is applied for by the contractor in a payment application which will:

• list the work undertaken in that period (by reference to the BOQ where it is a remeasurement contract)
• value the work done in that period in accordance with the contract valuation method (by reference to the BOQ where it is a remeasurement contract)
• attach proof of work done (e.g. delivery records, photos, timesheets, quality test certificates).

Payment certificate

The project engineer (if one has been appointed) will review the payment application, and make any necessary corrections in accordance with its own records of quality and measurement. 

The engineer will then issue a payment certificate to the project owner, with a copy to the contractor. 

The payment certificate contains the engineer’s approval of the work done and of the payment amount shown in the payment certificate. 

The payment certificate will highlight any differences with the payment application.

In some contracts, the project engineer does not approve payments, and the contractor’s payment application is submitted direct to the project owner, who then issues the payment certificate.

Payment

The project owner will pay the contractor the amount shown on the payment certificate. 

Periodic payment applications and certificates issued while the works proceed are called “interim”. 

The final versions at the end of the project are called “final”.

An error in an interim certificate can be corrected in the next interim certificate, or in the final certificate.  Certificates are sometimes called statements.

Payment disputes

If the project owner is unhappy with the payment certificate issued by the project engineer, it will normally be contractually obliged to pay the contractor the payment certificate amount on an interim basis, and can then challenge it under the contract dispute process.

If the contractor is unhappy with the payment certificate, it can challenge it under the contract dispute process.