get link follow Each month, we’ll be asking our NEC3 expert, Steven Evans, to tackle a specific problem put forward by one of our clients. This month he looks at an issue on the NEC3 ECC contract, is the Project Manager obliged to issue a certificate if the payment is zero?
http://traveltomarketing.com/faq.html At each assessment date, the Project Manager assesses the amount due (clause 50.1), which is the gross amount of the work done (the Price for Work Done to Date), along with other amounts to be retained from or paid to the Contractor (clause 50.1). There is no obligation under those clauses to communicate the PM’s assessment to the Contractor or the Employer.
Clause 50.4 requires the PM to take account of any application for payment made by the Contractor; the remainder of that clause requires the Project Manager to communicate the details of his assessment to the Contractor. It is unclear whether that obligation applies only in circumstances where the Contractor has made an application, but even if it applies in all circumstances, there is no obligation to inform the Employer of the amount assessed.
Within one week of the assessment date, the PM certifies a payment (clause 51.1). As ‘payment’ suggests a sum of money is to be transferred from one party to another, the obligation appears to not apply to zero amounts.
But is that the case?
Firstly, the next part of clause 51.1 effectively defines what a payment is; the first payment is the amount due and later payments are the change in the amount due since the last certificate. Setting aside the first payment, we can replace the first part of clause 51.1 with: the Project Manager certifies the change in the amount due since the last certificate. Now it seems clearer; the PM certifies whether the payment is positive, zero or negative, as he is required to certify the change.
Secondly, no-where in section 50 is the PM required to inform the Employer of the amount due. For that, we must turn to clause 13.6 which requires the PM to issue any certificate to the Contractor and the Employer. Accordingly, it is only by way of the certificate that the Employer is informed of the outcome of the PM’s assessments. On that basis, the certificate must be issued for every assessment.
Thirdly, the remainder of clause 51.1 also assists wherein it refers to a payment being made by the Contractor to the Employer if the change reduces the amount due and vice versa for ‘other payments’. If ‘other payments’ was limited only to increases in the amount due, then presumably the Contract would say that. By its reference to ‘other payments’ suggests there is more than one, i.e. a payment of zero or an increase in the amount due.
Finally, clause 51.3 provides for interest payment if an amount due is corrected in a later certificate. In those circumstances, the interest period runs from the date of the incorrect certificate to the date of the certificate making the correction. On that basis, if a previously assessed payment of zero was later found to be incorrect, then the Contractor would be deprived of his claim of interest if a zero certificate had not been issued.
So, to answer the question, the PM is obliged to issue a certificate, even if the payment is zero.
A footnote, in countries where payments are regulated by statute (such as the UK by way of the Housing Grants, Construction and Regeneration Act 1996, as amended), the PM may well be compelled to issue a certificate in any event.
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