IACCM Contract Management Forum

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2019-08-06 08:53:51

EPC Contract Payment Mechanism

I am looking for pro's and con's of introducing a mile stone based payment mechanism for an EPC Contract compared to Progress based Payment mechanism
 •  ATCO Electric  •   2019-08-06 16:55:45
We have moved some of our Procurement & Construction projects from progress based payment to milestone based payments. The major reason was to motivate contractors to expedite milestone achievement, and get paid faster. However, we found that most of the time delay had come from owner, consultant, designer or suppliers (not under contractor). In those cases, contractor resisted to get paid nothing, for not their mistake. We had to amend few contracts to move back to progress payments, or we had to breakdown milestones into smaller units. For few projects, it went smooth and milestone payment were successful. So you may have to see what you can offer and what are your limitations, before introducing this change. A survey feedback from your routine contractors can also be helpful in decision making.
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