A payment certificate (sometimes called an interim payment certificate or progress certificate) is the document the client’s QS or superintendent issues to confirm how much a contractor is owed for a period. It’s based on the contractor’s progress claim, after checking the quantities, variations and deductions.

Here’s what each part of a payment certificate means.

Contract value

The starting point is the original contract sum, usually broken down by bill or section of the BOQ. Where supply and installation are priced separately, the certificate shows both, so it’s clear how much of the contract value is materials and how much is labour.

Gross to date

The value of all work done since the start of the contract, measured at contract rates. It includes materials supplied and work installed. Gross to date always grows (or stays the same) from one certificate to the next.

Previously certified

The total approved in all earlier certificates. Each month, the previous gross to date becomes this month’s previously certified.

Net due this month

Gross to date minus previously certified. This is the value of work done in the current period, before retention and tax. Because the certificate works cumulatively, corrections to earlier months are picked up automatically.

Variations

Changes to the scope, instructed by the client. A clear certificate lists each variation with its reference, status and value. Approved variations are added to the revised contract value and paid as the work is done. Pending variations are usually shown for information only.

Additions and deductions

• Materials on site: materials delivered but not yet installed, where the contract allows payment for them
• Advance payment and recoupment: an upfront payment to the contractor, recovered from later certificates
• Price adjustment: changes for movements in costs, if the contract allows
• Contra charges: amounts the client deducts, for example for work it had to arrange itself

Retention

A percentage of each payment held back as security for defects. A common arrangement is 5% or 10% of each certificate, capped at a percentage of the contract sum, with half released at practical completion and the rest at the end of the defects liability period. Check your contract for the exact terms.

Tax

GST, VAT or sales tax is added to the net amount after retention, at the rate that applies in your country.

Amount due

The bottom line: net value after retention plus tax. A good certificate fits all of this on one page, signed by the contractor, the QS or superintendent and the client.

Why line-by-line matters

A certificate built from a measured BOQ is much easier to approve than one based on overall percentages. The QS can check each line, query a single quantity without holding up the rest, and see exactly what’s left to complete.

A ready-made template

Our Payment Certificate templates for electrical, instrumentation and any trade calculate all of the above: gross to date, previously certified and net due on every BOQ line, with variations, additions and deductions, retention with a cap and tax, on one page ready to sign.

This article is general information, not legal or contractual advice. Always follow the terms of your contract.