Payment Certificate

A payment certificate is a written statement issued by the contract administrator, architect, employer's agent or project manager on a construction project, confirming the sum due to the contractor for work carried out up to a stated valuation date. It turns a valuation into an instruction to pay: the employer pays the certified sum by the final date for payment unless a valid pay-less notice reduces it first. On most UK projects the certificate also does a second job, standing as the payer's payment notice under Part II of the Housing Grants, Construction and Regeneration Act 1996, which is what gives the figure statutory weight as well as contractual weight.

Who issues a payment certificate

The certifier is named in the contract rather than chosen when the invoice falls due. Under JCT forms it is the contract administrator or architect, working from the quantity surveyor's valuation. Under NEC forms the project manager assesses the amount due and certifies it. Either way the certifier is expected to act independently in reaching the figure, even though the employer appoints and pays them, and the contractor has no power to issue a certificate to itself.

The number on the certificate comes from an interim valuation of the work in place, less amounts already certified and less any retention held. The contractor's own account of what is due is the payment application, which the certifier checks and values rather than simply adopts. A certificate and an application disagreeing is normal; what matters is whether the disagreement was notified in time.

The notice timetable under the Construction Act

Part II of the 1996 Act, as amended by the Local Democracy, Economic Development and Construction Act 2009, sets the shape of every payment cycle on a construction contract in England, Wales and Scotland. The contract must fix a payment due date and a final date for payment. Three obligations then follow.

1. The payer, or a person specified in the contract such as the contract administrator, gives a payment notice no later than five days after the payment due date, stating the sum considered due and the basis on which it is calculated. Section 110A is explicit that the sum may be zero.
2. If the payer intends to pay less than the notified sum, it gives a pay-less notice before the deadline the contract sets, again stating the sum and the basis of the calculation.
3. If no pay-less notice arrives in time, the notified sum is payable in full on the final date for payment, whatever the payer later says about the value of the work.

Where the notified sum is not paid, section 112 gives the payee the right to suspend performance of any or all of its obligations, after giving at least seven days' notice of the intention to suspend and stating the grounds. Either party can also refer a dispute over a certificate to adjudication at any time under section 108, and the adjudicator has to reach a decision within 28 days of referral, extendable by up to 14 days with the consent of the party that referred it.

What a certificate does not settle

Certifying a sum values the work to a date; it does not agree the account. Sums certified on interim certificates are provisional and can be corrected in a later valuation, which is why a run of generous interim certificates is not evidence that the final account will land in the same place. Retention released at practical completion, agreed variations and loss and expense are all settled later, in the final account.

The practical control is keeping every certified sum against the job with the invoice raised for it and the date each notice was served, so that the final account can be reconciled line by line instead of reconstructed from email.