NEC3 ECC Option A: Late Payment Certificate & Late Payment

Under the NEC3 ECC Option A standard form, we as the Contractor are experiencing a delayed receipt of a Payment Certificate from The PM. The PM and Employer are currently seeking additional funding and we believe this to be the reason for the non-receipt of the Payment Certificate.

Under Clause 51.2 payments are to be made within 35 days. As the Payment Certificate is outstanding we have raised an Early Warning and Compensation Event Notification under Clause 60.1(6). However, should we not receive payment by day 35, site progress will most certainly be affected due to the constrained cashflow. Would this non-payment constitute a CE under Clause 60.1(18) and could we slow progress to match cashflow and be compensated for this impact?

We cant afford to be in breach ourselves and cannot stop. The ‘‘all fall down’’ option as defined under Clause 91.4 doesn’t allow us to terminate for 11 weeks post day 35, although this hinges on the Payment Certificate (which we don’t have).

Any advice?

The PM should certify a payment within one week of the payment assessment date, which is the ‘due date’.

If a payment certificate is not given 5 days after the ‘due date’, then your application for payment, if you submitted one, would become the ‘default’ payment notice.

Where there is no payment application you may give a payment notice, provided it specifies the amount considered due and the basis upon which that sum is calculated (see definition of Price for Work Done to Date).

When the ‘default’ payment notice has been identified, then the stated amount should be paid by the final date for payment, which in your case looks like it is amended to 35 days, unless a notice of intention to pay less than the notified sum (‘payless notice’) is given.

Where payment is not made by the final date for payment then you would be entitled to interest.

You also have the right to suspend performance, although you need to give 7 days notice of your intention and state the grounds. This is a compensation event (see Y2.4).

As you have stated there is also an option to terminate where payment is not made within 11 weeks.

Giving an early warning by notifying of this matter, which would probably increase your total cost, is a sensible way to ‘highlight’ this issue. I am sure both the PM and Employer are aware of the ‘problem’, but there are contractual rights and obligations which are not linked to external funding procedures.