Studying Payment Provisions under National and International Standard Forms of Contracts

Delayed payment is becoming a critical issue in the construction industry. Late payment and/or nonpayment cause severe cash-flow problems to contractors and across the entire contracting supply chain. There are many factors that cause late payment problems, including owner’s poor financial management; disagreement on valuation of executed works and consequent delayed certification; using paid-when-paid clauses with subcontractors, suppliers, and manufacturers; and noncompliance with contractual provisions in requesting and claiming payments. The objective of this paper is to present a study of the payment provisions under most widely used standard construction contracts, both nationally and internationally. This paper studies the payment provisions under traditional standard construction contracts including those published by the American Institute of Architects (AIA), ConsensusDocs, Engineers Joint Contract Documents Committee (EJCDC), International Federation of Consulting Engineers (FIDIC), World Bank, Joint Contracts Tribunal (JCT), and the New Engineering Contract (NEC). As dictated by the descriptive nature of this paper, the authors used a desktop analysis involving three dimensions for studying payment provisions that included reviewing the procedure for requesting payment, time limits for payments to be made, and the associated remedies of a contractor if a payment is delayed. Ultimately, the study concludes with a comparative analysis of all contracts under investigation. By providing concise guideline for payment provisions under different standard construction contract, this study is expected to better educate the associated stakeholders toward best practices for administering construction projects. This should help empower downstream cash flow within the contracting supply chain, which would ultimately help mitigate project delays, as well as the interrelated claims, conflicts, and disputes