Set the payment schedule before you need it

There is a specific moment on every job when the payment terms are easy to establish and nobody is under pressure: after the contract is executed and before the first valuation. It is also the moment at which everyone is busiest with mobilisation, which is why it gets skipped.

What follows is the list. It takes about ten minutes and it fixes the arithmetic for the life of the project.

What to extract

The valuation cycle

Interim valuation dates, usually expressed as a date each month or as intervals from a first date. Note whether the cycle continues at the same interval after practical completion, because that is where it commonly changes.

The due date rule

How the due date is derived from the valuation date. On JCT contracts this is typically a fixed number of days after the interim valuation date. Write down the rule, not just the first date it produces.

The three periods

• Payment notice: days after the due date
• Final date for payment: days after the due date
• Pay less notice: days before the final date for payment

Retention

The percentage, whether it halves at practical completion, and the rectification period that governs the final release. Also whether there is a retention bond in place instead, which changes the mechanism entirely.

Who certifies, and who is notified

The Act allows the payment notice to be given by the payer or by a specified person. On a job with a contract administrator that person may not be you. Establish it before the first cycle, not during it.

The notices clause

How notices must be served and to what address. This is usually a general clause elsewhere in the contract rather than in the particulars, and it is the one people rely on habit for.

When the particulars are silent or incomplete

It happens more than it should, particularly on contracts assembled from a previous job's documents. Blanks in the particulars, a valuation date left unfilled, a retention percentage that appears in one place and not another.

Where the contract does not provide an adequate payment mechanism, the relevant parts of the Scheme for Construction Contracts are implied. The Scheme fills gaps rather than replacing the whole clause, so you can end up with a hybrid: the contract's own periods where they work, the Scheme's where they do not.

Where the particulars and reality diverge

Two situations to watch.

Applications that arrive on a different rhythm. The contractor applies on the 25th, the contract says the valuation date is the 20th. Both parties settle into the contractor's date without amending anything. The contractual dates continue to run from the 20th regardless, and the divergence is invisible until someone counts.

A valuation date that moves. Holidays, a change of surveyor, a month where the date falls badly. Once the valuation date moves, every derived date in that cycle moves with it. Re-derive rather than adjusting one date and leaving the rest.

The set-up checklist

• Contract form and edition, and whether it is amended
• Interim valuation dates and the rule that generates them
• Due date rule
• Payment notice period, final date period, pay less period
• Retention percentage, half rate trigger, rectification period
• Whether days are defined as calendar or business days
• Who gives the payment notice
• How notices must be served, and to whom
• Contract sum, contract period and the dates for possession and completion

Nine items. Ten minutes. Recorded in one place that everyone on the job can see, rather than in the head of whoever set the project up and the margin of a printed contract in a drawer.