👉ADVANCE PAYMENT
IN CONSTRUCTION CONTRACTS
💫WHAT IS ADVANCE PAYMENT?
⏺Advance payment is a sum of money paid by the employer (client) to the contractor before the actual commencement of work.
🔗KEY POINTS
📌 Purpose
- To help the contractor with initial cash flow
- To mobilize labor, equipment, and materials
📌Payment Terms
- Usually expressed as a percentage of the contract value (commonly 5–30%)
- Paid after signing the contract and sometimes after furnishing bank guarantee
📌Recovery
- Advance payment is not free money
- It is recovered gradually from running bills or progress payments of the contractor
📌 Security
- Contractors often provide a bank guarantee or surety bond equal to the advance amount to protect the client if the work is not completed.
@etconp
IN CONSTRUCTION CONTRACTS
💫WHAT IS ADVANCE PAYMENT?
⏺Advance payment is a sum of money paid by the employer (client) to the contractor before the actual commencement of work.
🔗KEY POINTS
📌 Purpose
- To help the contractor with initial cash flow
- To mobilize labor, equipment, and materials
📌Payment Terms
- Usually expressed as a percentage of the contract value (commonly 5–30%)
- Paid after signing the contract and sometimes after furnishing bank guarantee
📌Recovery
- Advance payment is not free money
- It is recovered gradually from running bills or progress payments of the contractor
📌 Security
- Contractors often provide a bank guarantee or surety bond equal to the advance amount to protect the client if the work is not completed.
@etconp
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