Managing Payment Claims in FIDIC Contracts

Payment claims are often misunderstood in construction contracts, particularly under international standard forms where routine payment administration and contractual claims follow different mechanisms. In projects governed by FIDIC contract, this distinction is especially important, as interim payment applications are regulated under Clause 14, while claims for disputed or withheld amounts arise only through the formal claims procedure.

Payment Applications and Certification under Clause 14.6

Clause 14.6 establishes the contractual process for interim payment applications and certification, not claims. At prescribed intervals, the Contractor submits a detailed statement identifying the value of work executed, materials on site, approved variations, and other contractually allowable components. This submission represents the Contractor’s assessment of value, rather than an automatic entitlement.

Following submission, the Engineer reviews the application and issues an Interim Payment Certificate within the timeframe stated in the contract. The certified amount may differ from the applied amount due to valuation adjustments, rejected items, contractual deductions, or the Engineer’s determination of compliance with the contract.

When Certification Differences Become Claims

Any portion of a payment application that is not certified does not appear contractually. If the Contractor considers that deductions, omissions, or valuation reductions are unjustified under the contract, the difference between the applied amount and the certified amount forms the basis of a payment claims entitlement.

At this point, the issue transitions from routine payment administration under Clause 14 to the contractual claims regime. The Contractor must then comply with the notice and substantiation requirements of Sub-Clause 20.1, including timely notification and the submission of detailed particulars demonstrating contractual and factual entitlement.

Payment Delays And Withheld Amounts

Claims may also arise where certified amounts are not paid within the time limits set out in Sub-Clause 14.7, or where deductions are applied outside the mechanisms provided by the contract. In such cases, the Contractor’s entitlement is no longer administrative but contractual, requiring formal claim submission to preserve rights.

Practical Implications

Effective contract administration requires Contractors to:

Clearly separate payment applications from contractual claims
Track difference between applied and certified amounts
Assess whether deductions give rise to entitlement, and
Issue notices under Sub-Clause 20.1 within contractual time limits.

This disciplined approach supports cash-flow stability while reducing the risk of time-barred entitlements.

Sub-Clause 14.6 provides a structured framework for payment application and certification, but it does not govern claims. Claims arise only when payment entitlements are reduced, rejected, or delayed and must be pursued through the formal procedure set out in Sub-Clause 20.1. Understanding this distinction is essential for effective financial and contractual management under FIDIC contracts.