The review of project status as submitted by contractors, aims to improve the financial aspects of the contractor in the project and ensure proper and timely execution of work throughout. This directive concerns the examination of the project status (contractor’s payment request) regarding the activities performed. These matters pertain to design and engineering services, equipment procurement, and execution operations (workshop equipment, construction, installation, commissioning, provisional handover, and final delivery).
This directive for examining contractor’s project status includes specific points that should be considered:
In all project status reviews, it is essential to include the following details:
· Project name
· Contract number
· Contract subject
· Contract date
· Contract amount
· Invoice number, date, and billing period
· Temporary or final status determination
Depending on the contract type and project status attachments to the project status, which are detailed below, such as positive documents, project progress reports, performance reports at offices, workshops, and the site, and more.
Deductions (In project status deductions include the following items): It should be noted that each of the following items may be added or removed depending on the contract provisions and conditions in the project status.
· Advance payments
· Good performance
· Potential penalties
· Education and training fees
· Approved amounts from previous project statuses with the invoice number and date
· Other contractual deductions
By adhering to these guidelines, you can effectively review the project status for financial and contractual accuracy and ensure that all necessary information is included.
Payment Types and Calculation in Project Status Reports:
1. Hourly Rate Contracts:
Project status reports for hourly rate contracts are prepared based on the job category and the row in the reference table in the contract, as well as performance reports from offices, workshops, or the project site, which include regular work, overtime, and special tasks. It’s important to note that the workforce must be introduced to the client and obtain permission to start work from the client, supervisory authority, or contractor management.
2. Lump Sum and Unit Rate Contracts:
For Lump Sum and Unit Rate contracts, payment is based on the cumulative percentage of physical progress and the work quantities completed, which are approved by the organization. The percentage of progress is calculated according to the project planning and control program. Depending on the contract’s conditions and the nature of the work, positive documents such as time sheets, progress reports, and work quantity statements, among others, must be submitted for approval.
If the contract is based on the organization’s price list and budget (attached to the contract), it is essential to specify the chapter and row in the tables. The organization’s adjustment rate for each status report is prepared separately for those including the adjustment rate, and it becomes payable after the client, supervisory authority, or contractor management approves it. It’s important to note that the adjustment rate applies to status reports with a period corresponding to the quarterly adjustment period.
3. Cost Plus Contracts:
In Cost Plus contracts, work permits must be issued by the client, supervisory authority, or contractor management. In addition, expense documents to be paid should be attached to the status report. The cost and deductions specified in the contract should be applied to the total expenses incurred, and after review by the client/supervisory authority/contractor management, they become payable.
Note: If the contract is based on the organization’s price list and budget, specifying the chapter and row in the tables is crucial. The organization’s adjustment rate for each status report is prepared separately for those including the adjustment rate and becomes payable after being approved by the client/supervisory authority/contractor management. It’s important to mention that the adjustment rate applies to status reports with a period corresponding to the quarterly adjustment period.
Topic: Risk Management Based on Global Standards