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Circular No: C&P/165/07/tl

14 July 2020

One-off Advance Payment for Public Sector Construction Contracts

We refer to Building and Construction Authority (BCA)’s circular dated 19 May 2020 on “One-off Advance Payment (AP) for Public Sector Construction Contracts Affected by the Extended Circuit Breaker (from 5 May 2020 to 1 Jun 2020)” which is attached for easy reference.

  1. Clarification on the date when Advance Period recovery starts

         The circular reads that the advance payment (AP) recovery starts “2 months after the works for the construction project           resume.” As various GPEs have different interpretations on the commencement of the recovery period, SCAL sought  c            clarification from BCA on when the AP recovery should start.

BCA has clarified that government agencies can start to recover the AP from the progress payment for work done in the month the recovery is due, i.e if BCA’s approval to resume work is issued on 17 July 2020, the recovery can start on or after 17 September 2020. The AP would be recovered in the progress payment for the work done in September. If the AP is recovered through other means (i.e not through the progress payment), GPEs can start to recover the amount anytime on or after the due date for recovery. BCA has included some possible scenarios of recovery of AP through progress payment claim as follows:

 

Date issued to resume work

 

Due date AP can be recovered

Month of work done to recover AP

 

1 July 2020

 

On or after 1 September 2020

 

To recover AP in September Payment Claim for work done in September.

 

 

20 July 2020

On or after 20 September 2020

To recover AP in September Payment Claim for work done in September.

 

31 July 2020

On or after 30 September 2020

To recover AP in September Payment Claim for work done in September.

           
           


An illustration to help members better understand the timeline of AP recovery based on the above scenarios is attached in Annex A.

SCAL understands that currently many job sites have managed to obtain approval for re-start, but are unable to do any real work due to the lack of workers being cleared from the dormitories. As such it is not reasonable to start the recovery period 2 months from the date of BCA's approval as the contractor would not have any substantial progress claim. SCAL is currently pursuing this issue with BCA and will update members again.

  1. Recovery Period of Advance Payment

SCAL had highlighted to BCA that contractors are concerned that the recovery period of 9 months will be challenging as many will certainly be facing a tight cashflow due to decreased revenue. SCAL requested for BCA to extend the recovery period to 12 months or the remaining contract duration, whichever is shorter. The extended period of recovery shall also be extended to the subcontractors or suppliers.

We are pleased to inform that BCA has acceded to SCAL’s request on the extension of the recovery period of AP to 12 months or the remaining contract duration, whichever is shorter.

 

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