When an advanced payment bond (X14.1) is required, does the Contractor have to submit an application for payment to include the bond amount in order for the PM to assess and certify payment, or does the Contractor only need to submit the bond?
Assuming this is an NEC4 contract, an advanced payment is included within the payment assessment rather than a separate payment between the Employer and Contractor under NEC3.
Although the PM is required to accept the ‘bond provider’ they are not formally required to be included with the communication that submits the bond to the Client. It would, therefore, be a good idea to include the amount on a payment application and further include the relevant communication as ‘details of how the amount has been assessed’, so there is no doubt.
Note that an advanced payment is not PWDD so would be paid as the 2nd bullet under clause 50.3, although would be treated as consideration for services so VAT would apply to both the payment and any ‘amortised’ repayment deductions.
Thank you Andrew. Retention would not be applicable on the advanced payment in that case.
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