01What is the method in one line?
Net payable this period = (cumulative gross to date − cumulative retention − cumulative advance recovery − tax as the contract states) − the same net from the previous certificate.
Working cumulatively, and not period by period, means a mistake in an earlier certificate is corrected in the next one instead of being carried forward.
02The example contract
A contract worth 1,000,000 with three bill of quantities items, 5% retention, and a 10% advance payment (100,000) recovered at 10% of each certificate's gross. Tax is left out of the example because it depends on the contract and the country.
| Item | Unit | Contract quantity | Rate | Contract value |
|---|---|---|---|---|
| A. Reinforced concrete | m³ | 500 | 1,200 | 600,000 |
| B. Blockwork | m² | 2,000 | 150 | 300,000 |
| C. Plaster | m² | 4,000 | 25 | 100,000 |
| Total | 1,000,000 |
03Step 1: the approved quantity per item, to date
For certificate No. 3 the contractor claims 320 m³ of concrete to date; the technical office measures and approves 300 m³. The certificate uses the approved figure, never the claim.
| Item | Approved to date | Approved before | This period | Gross to date |
|---|---|---|---|---|
| A. Concrete | 300 m³ | 200 m³ | 100 m³ | 360,000 |
| B. Blockwork | 800 m² | 400 m² | 400 m² | 120,000 |
| C. Plaster | 0 | 0 | 0 | 0 |
| Total | 480,000 |
04Step 2: the deductions, to date
| Line | Calculation | To date | Previous certificates | This certificate |
|---|---|---|---|---|
| Gross | Approved quantity × rate | 480,000 | 300,000 | 180,000 |
| Retention | 5% of gross | 24,000 | 15,000 | 9,000 |
| Advance recovery | 10% of gross | 48,000 | 30,000 | 18,000 |
| Net | Gross − retention − recovery | 408,000 | 255,000 | 153,000 |
Certificate No. 3 pays 153,000. The two ways of reaching it agree: 408,000 − 255,000, and 180,000 − 9,000 − 18,000.
05Step 3: what is left
- Concrete: 200 m³ left on the item. Certificate No. 4 starts from 300 m³ approved, not from the 320 m³ that was claimed
- Retention held so far: 24,000, released when the defects liability period ends
- Advance still to recover: 100,000 − 48,000 = 52,000
06Where do certificates usually go wrong?
- The cut quantity (20 m³ here) is corrected in this month's sheet but not on the item, so next month the 320 m³ comes back
- Retention or advance recovery is worked out on this period only, and a rounding or a missed month is never caught
- Recovery continues after the whole advance is recovered, because nothing stops it at 100,000
- The certified net and the amount actually paid from the bank are in two files, so the contractor's balance depends on which file is open
- Subcontractor certificates are kept apart from the main contract, so the same quantity is paid down the chain without being certified up it
07How does Revora do this?
Revora construction, by mbsystems, follows the same lines:
- The contract is entered with its value, its retention percentage, its advance payment and its tax
- The certificate is written per item: the submitted quantity first, then the technical office review, then approval with the approved quantity
- Each certificate calculates its own gross, retention, advance recovery, tax and net
- The approved quantity locks onto the item, so the next certificate starts from what is left of it, not from the claim
- Payment is made from a treasury with an accounting entry written behind it, and is refused when the treasury does not cover it
- Subcontractors have their own certificates, with their own retention, under the same project
Ask for a demonstration on your own bill of quantities: info@mbsyss.com, or Cairo +20 100 520 5900, Muscat +968 7277 7269, Vienna +43 681 8411 0547. The price is given as a quote for your company.
Book a live walkthrough on your own data, or ask for a quote for your company.