Daywork is a means by which a contractor is paid for specifically instructed work on the basis of the cost

of labour, materials and plant plus a mark up for overheads and profit

In the construction industry, overheads refer to the indirect costs associated with running a construction
project, such as insurance, rent, utilities, and office expenses. Profit, on the other hand, is the amount of
money left over after all costs have been paid.

Sundry items (also known as sundries) are miscellaneous small items or works that do not readily fit into
standard categories and so are classified as being under sundries. Sundry work can include: Material
testing. Works testing. Protection of the works against inclement weather.

Preliminaries are items and costs needed to complete a project that aren't tied to a specific aspect of the
work. Here are some common construction preliminaries examples: Administration and project
management: These preliminary costs are associated with the management and coordination of a
construction project.

Variation Orders allow the procuring entity to make adjustments to the contract by changing quantities,
adding new work items, or reclassifying existing ones, as long as the cumulative increase does not
surpass ten percent (10%) of the original contract price and stays within the project’s original scope. A
Change Order pertains to changes in existing quantities, while an Extra Work Order covers new work that
wasn't included initially due to unforeseen conditions. Should total Variation Orders exceed ten percent
(10%), a new bid is necessary if the changes are separable from the original contract. In certain cases,
the Head of the Procuring Entity may authorize variations up to twenty percent (20%), imposing
sanctions on the responsible party if these arise from initial design issues. When filing a Variation Order
claim, contractors must notify any additional costs within seven days of starting the work, or within
twenty-eight days after related circumstances occur; failure to do so waives the claim. The submission
process includes the Project Engineer preparing the necessary Change or Extra Work Order with
justifications, followed by an on-site investigation to validate the need, culminating in approval from the
Head of the Procuring Entity. This entire process is required to be completed within thirty calendar days.

For Variation Orders, contractors will be compensated for extra work items based on specific guidelines.
If the work involves items similar to those in the original contract, the unit prices will correspond to the
original contract's prices. For new work items not included in the original contract, pricing will derive
from the direct unit costs used previously, including labor and materials, and will require agreement
from both the Government and contractor. Costs must be validated through documented canvassing to
ensure compliance with regulations. Additionally, contractors must submit detailed payment requests
with supporting documentation alongside their progress payment statements.

Under no circumstances may a contractor begin work under any Change Order or Extra Work Order
without approval from the Head of the Procuring Entity or an authorized representative. However, in
emergencies where prompt action is necessary to prevent harm to public service, life, or property, or
when time is critical, the representative or Project Engineer may allow work to commence within certain
limits. Specifically, approval is valid for work where the cumulative increase in project value does not
exceed five percent (5%) of the adjusted original contract price. Following the initiation of such work, the
corresponding Change Order or Extra Work Order must be prepared and submitted for approval.
Payments for work completed on any Change Order or Extra Work Order are contingent upon prior
approval. For any Change Order or Extra Work Order exceeding five percent (5%) of the original contract
price, work cannot commence without explicit approval from the Head of the Procuring Entity or an
authorized representative.

Interim valuations are periodic assessments of the work completed in construction projects. They
involve determining the value of completed works, assessing variations, and calculating the
corresponding payments.

The engineer is the person named in the contract data or any other competent person appointed by the
employer and notified to contractor, who is responsible for administrating and supervising the execution
of the work. Such person may be Engineer, Architect or any other technical person. In the absence of
such appointment the Employer himself.

Advance payments are typically recorded as prepaid expenses by the payer and recorded as assets on
the balance sheet. On a construction project, a contractor may request an advance payment to help
them meet significant start-up or procurement costs that may have to be incurred before construction
begins.

Upon a written request by the contractor, the procuring entity may provide an advance payment of up to
15% of the total contract price. This payment may be issued in a lump sum or in two installments, as
outlined in the Instructions to Bidders and other Tender Documents. The advance payment is contingent
upon the contractor submitting a standby letter of credit, bank guarantee, or surety bond from a
licensed financial institution, which must be accepted by the procuring entity. The contractor is required
to repay the advance payment by having 15% deducted from periodic progress payments relative to the
percentage of the total contract price advanced. Additionally, the contractor may reduce their standby
letter of credit or guarantee in accordance with amounts refunded in Monthly Certificates associated
with the advance payment.

Payments made to a prime contractor during the life of a fixed-price type contract on the basis of a
percentage of incurred total costs or total direct labor and material costs.

Once a month, the contractor is permitted to submit a statement of work accomplished (SWA) or
progress billing, along with a request for progress payment for completed work. The SWA should detail
the amounts the contractor believes it is entitled to, encompassing the cumulative value of work
executed to date and adjustments for approved variation orders. Alternatively, the Procuring Entity may
specify in the Bidding Documents that such submissions are only required upon the actual completion of
the project or designated phases. The project engineer will review the SWA and certify the payment
amount. Payments will exclude materials and equipment that are delivered but not fully installed. The
Procuring Entity will deduct from the certified amount: prior payments, the portion of advance payment
to be recouped, retention money as per contract conditions, third-party liabilities, and amounts for any
uncorrected defects.

A construction retention payment (also called retainage) is the amount of money held back until the
project is complete.

Progress payments to contractors are subject to a retention of ten percent (10%) known as "retention
money," based on the total due amount before any deductions. This retention applies until the
completion of fifty percent (50%) of the work as determined by the procuring entity. Upon satisfactory
completion beyond this point, no further retention will be made, unless the work is delayed or
unsatisfactory, in which case the retention continues. The total retention money is released upon final
acceptance of the project. Contractors may, however, substitute retention money with irrevocable
standby letters of credit, bank guarantees, or surety bonds, provided the project remains on schedule
and meets satisfactory standards. These financial instruments must be valid for a duration set by the
relevant government agency and will be used to address any uncorrected defects or third-party
liabilities.