Withholding Payments

Is the employer / Client entitled to withhold payment simply on the basis that forecast defined costs are greater than the target cost - asking for justification before they will consider paying this amount which goes into pain. Also if the contractor has submitted a CE, which has not yet been approved can the employer withhold payment on this CE element of the monthly application, simply on the basis that the CE has not been approved (although it may be within time) - or do they have to make an assessment as part of the monthly application review even if the CE is outstanding. The client is arguing that these costs over target maybe disallowed costs e.g. contractors risk such as quantities. Does the contractor have to prove any pain is not a disallowed cost at the application stage or final account stage.

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Based on the standard contract, no the Employer/Client is not entitled to withhold payment simply because the Price for Work Done to Date exceeds the target (Prices) .

The assessment of the amount due is a separate process to agreement of CEs and the assessment of the Contractor’s share is at Completion and then final payment.

The fact that the Contractor’s share may be a repayment is not in itself a reason for disallowed cost, so no the Contractor does not have to prove pain is not a disallowed cost. Contractor’s share and disallowed costs are separate matters.

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