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Advance payment and progressive billing

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Advance payment and progressive billing

Post by dan_07 on Thu Sep 08, 2011 5:32 pm

Good day everyone.

I would like to ask for your views regarding advance payment and progress billing.
The standing of our company is that we're in partner with an international company and the goods/software licenses which our client(gov't agency) would purchase should be paid in 60 days. Basically, the project will run for 10 months, and our company is having hard time to think of making "abono" with this amount of contract.

So, my questions are as follows:

1. Would it be possible for us to request for at least 50% of advance payment?

2. Since the project will run for 10 months, can we come up with a progressive billing? If YES, how?

Thank you so much.. Very Happy

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Re: Advance payment and progressive billing

Post by shawie on Fri Sep 09, 2011 9:51 am

sa pagkakaalam ko 15% lang ang allowed na mobolization

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Re: Advance payment and progressive billing

Post by dan_07 on Fri Sep 09, 2011 10:24 am

how about progressive billing?

I've seen previous contract kasi of other company wherein the payment was like parang installment.

actually, what our company will be providing are goods and services, so we want to know if it is possible for us to let the payment be processed upon the delivery of the goods only?

thank you for the reply shawie..
looking forward to hear more from you all.. thanks so much!
God bless..

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Re: Advance payment and progressive billing

Post by fe a. araya on Fri Sep 09, 2011 1:23 pm

Advance payment (15% of contract cost) for goods is allowed. If progress billing is allowed, it should be indicated in the Contract AGreement signed by the PE and the Supplier, specifically in the Special Conditions of the Contract (SCC), or if one-time payment only, then it should likewise be indicated.
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Re: Advance payment and progressive billing

Post by dan_07 on Fri Sep 09, 2011 2:32 pm

ms. fe, thank you for the response.

but one thing is how will we know if progress billing is allowed?

do we have to wait for pre-bid for there we could raise this concern or is there any supporting docs. or what, that could help/allow us to push them to go with this progress billing.

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Re: Advance payment and progressive billing

Post by amang'65 on Fri Sep 09, 2011 3:08 pm

how much ba yung ABC ng project? because if it is more than 1M then there should at least be a pre-bid conference, a venue where we should have clarified matters, otherwise we can be guided to the ANNEX “D”
CONTRACT IMPLEMENTATION GUIDELINES FOR THE PROCUREMENT OF
GOODS, SUPPLIES AND MATERIALS of the RA9184 itself.
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Re: Advance payment and progressive billing

Post by dan_07 on Fri Sep 09, 2011 3:23 pm

ABC is more than 1M, so yes,probably there'll be a pre-bid..
however, prior to pre-bid, we would like to be sure with our standing first.

well, i have reviewed ANNEX "D", but unlike with ANNEX "E", it says something about progress payment, which is not present in "D".

so, does it mean that progress payment is only applicable to infrastructure projects?

thanks amang!

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Re: Advance payment and progressive billing

Post by amang'65 on Fri Sep 09, 2011 3:42 pm

that is actually the purpose of a pre-bid conference, to clarify and/or explain any of the requirements, terms, conditions, and
specifications stipulated in the Bidding Documents, and if warrants, bid bulletin will be issued to revise terms and conditions stipulated earlier in the bid docs.....wala ba sa annex D, if i remember it right, clause # 4 of annex D talks about advance payment and touches a bit of progress billing, with the approval of the president pa ata...pero i am not sure..
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Re: Advance payment and progressive billing

Post by dan_07 on Fri Sep 09, 2011 3:54 pm

i see, it's there. i've over looked this one...

4.2. All progress payments shall first be charged against the advance payment
until the latter has been fully exhausted, unless otherwise approved by the
President.


but can you explain this further for me..

and speaking of president, is it the president of the gov't org. who's going to give an approval for this, or is it PNOY? sorry, for this question ah,, just really have no idea..

thanks po anyway..

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Re: Advance payment and progressive billing

Post by fe a. araya on Fri Sep 09, 2011 6:54 pm

Nice to see your posts again, amang. First, to the query of dan_07 as to when they will be able to know whether progress billing is allowed, is it during the pre-bid? I think this shd be indicated already in the draft Special Conditions of the Contract (SCC) w/c is part of the Bidding Documents being sold by the BAC to the prospective Bidders so that they will know the terms & conditions of the contract particularly as far as payment is concerned before they submit their intent. However, pre-bid conf. is really the right time to clear things out before the actual bidding.

Also, if I may read it right, 4.2 states "All progress payments shall.... which I think is mandatory otherwise, the phrase could have been, "All progress billings, if applicable, may be charged..." (just thinking aloud) PEACE

As to advance payment for goods in Sec. 4 of Annex D which requires prior approval of the President, may I refer you to the latest issuance of the Office of the President under OP Memorandum Order No. 15, dated May 9, 2011 which already allows advance payment of 15% of the Contract Price upon submission of an irrevocable letter of credit or bank guarantee issued by a Universal or Commercial Bank which shall remain valid until the goods are delivered and accompanied by a claim for advance payment.
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Re: Advance payment and progressive billing

Post by fe a. araya on Fri Sep 09, 2011 7:25 pm

Am sorry, dan_07, I missed your first query on whether you can request for 50% advance payment. Sec. 4.3 of Annex D allows only single advance payment not to exceed 50% of contract cost for hotel and restaurant services, use of conf./seminar & exhibit areas and lease of office space
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Re: Advance payment and progressive billing

Post by Jack909 on Sat Sep 10, 2011 10:44 am

Good morning everyone,

I have these questions also and I would like to get your views and advice regarding these problems:

Advance Payment that was requested by the contractor was not made in lump sum but rather made in four (4) installments and after the 8 months from the date of the request for such advance payment. And also the progress billing payments were delayed; estimated time of delay is 7 months for the progress billing.

The delay in payment of Advance Payment and Progress Billing had actually prejudiced the contractor as the cost of materials had considerably rose. What should I do? How can I be compensated due to the above mentioned delay?

Thank you so much. God Bless us all.

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Re: Advance payment and progressive billing

Post by engrjhez® on Sun Sep 11, 2011 9:13 pm

Jack909 wrote:Good morning everyone,

I have these questions also and I would like to get your views and advice regarding these problems:

Advance Payment that was requested by the contractor was not made in lump sum but rather made in four (4) installments and after the 8 months from the date of the request for such advance payment. And also the progress billing payments were delayed; estimated time of delay is 7 months for the progress billing.

The delay in payment of Advance Payment and Progress Billing had actually prejudiced the contractor as the cost of materials had considerably rose. What should I do? How can I be compensated due to the above mentioned delay?

Thank you so much. God Bless us all.

First you have to check if the said 4-installments are included in the SCC. In any case, the advance payment should not be taken as a reason for the delay of the project. The contract duration period, as well as the submitted work schedules should be strictly followed with or without the advance payment. Should the prices increase, government contracts are "fixed price contracts" and shall not be subject to price escalation unless otherwise provided by law. Smile
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Re: Advance payment and progressive billing

Post by amang'65 on Mon Sep 12, 2011 6:50 pm

thanks Fe for the info...
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Re: Advance payment and progressive billing

Post by fe a. araya on Tue Sep 13, 2011 7:58 pm

I agree with engrjhez. The delay in the advance payment should not be made as reason for the delay in the implementation of the project. In the first place, it cannot be said to be prejudicial to the contractor.

Remember, we have a timeline when the project shd be started as stated in the Notice to Proceed and considering that during the bidding, the bidder was required to submit NFCC or CLC to determine that the winning bidder is financially capable to undertake the project, with or without adv. payment. I think its the other way around, the agency, not the contractor, is prejudiced because of delayed implementation of the awarded project. PEACE!
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