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15% Mobilization

Post by ngak01 on Mon Sep 13, 2010 1:59 pm

is there a provision in the IRR where the 15% Mobilization of a contract can be deducted only after the last payment?
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Re: 15% Mobilization

Post by engrjhez® on Mon Sep 13, 2010 2:46 pm

ngak01 wrote:is there a provision in the IRR where the 15% Mobilization of a contract can be deducted only after the last payment?

None.

There is what we call 15% Advance Payment but immediately deductible on first billing. Smile
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Re: 15% Mobilization

Post by RDV @ GP3i on Mon Sep 13, 2010 4:16 pm

engrjhez® wrote:
ngak01 wrote:is there a provision in the IRR where the 15% Mobilization of a contract can be deducted only after the last payment?

None.

There is what we call 15% Advance Payment but immediately deductible on first billing. Smile

Actually you should not deduct the 15% Advance Payment in full from the contractor's first billing. This is the provision under Item 4.3 of Annex E of the IRR:

"The advance payment shall be repaid by the contractor by deducting fifteen percent (15%) from his periodic progress payments a percentage equal to the percentage of the total contract price used for the advanced payment."

In other words, if the total contract amount is say P1 Million with advance payment of P150,000 (15% of contract amount), and the first billing is P400,000, you do not actually deduct the entire P150,000 advance payment from the first billing. You will only deduct 15% from his progress payment, or only P60,000.
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Re: 15% Mobilization

Post by engrjhez® on Mon Sep 13, 2010 6:19 pm

RDV @ GP3i wrote:
engrjhez® wrote:
ngak01 wrote:is there a provision in the IRR where the 15% Mobilization of a contract can be deducted only after the last payment?

None.

There is what we call 15% Advance Payment but immediately deductible on first billing. Smile

Actually you should not deduct the 15% Advance Payment in full from the contractor's first billing. This is the provision under Item 4.3 of Annex E of the IRR:

"The advance payment shall be repaid by the contractor by deducting fifteen percent (15%) from his periodic progress payments a percentage equal to the percentage of the total contract price used for the advanced payment."

In other words, if the total contract amount is say P1 Million with advance payment of P150,000 (15% of contract amount), and the first billing is P400,000, you do not actually deduct the entire P150,000 advance payment from the first billing. You will only deduct 15% from his progress payment, or only P60,000.

Sorry I have made my statement so brief it lost the context/meaning. Consistent with RDV's explanation, let me improve my statement:

There is what we call 15% Cash Advance but immediately deductible starting on first billing equal to the percentage of the total contract price used for the advanced payment.

Now it is clearer.
Smile
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Re: 15% Mobilization

Post by ngak01 on Tue Sep 14, 2010 2:44 pm

Thank you so much! very helpful.
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Re: 15% Mobilization

Post by jcolas on Tue Sep 14, 2010 8:45 pm

is there a provision in the IRR where the 15% Mobilization of a contract can be deducted only after the last payment?

The grant of the advance payment hinges also in the submission by the contractor of a written request for the release of the advance payment and the submission by the contractor and acceptance by the procuring entity of an irrevocable Letter of Credit of equivalent value with that of the advance payment, from a commercial bank, or a bank guarantee or surety bond callable upon demand issued by a surety or insurance company authorized by the Insurance Commission to issue such security bond.
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