The time limits
Your Particular Conditions may change any of these periods, so check them first. The references are to the FIDIC 1999 Red Book. The 2017 edition asks for the same papers under different numbers, with insurance in Clause 19 and a separate Advance Payment Certificate.
What blocks the first payment, and what does not
Under the 1999 Red Book only two papers hold back payment outright. The rest are dealt with in other ways:
- No Performance Security: nothing is certified or paid (Sub-Clause 14.6)
- No advance payment guarantee: the advance is not certified (14.2), but work done is still certified and paid
- No insurance: the Employer may take out the cover itself and deduct the premiums (18.1)
- No progress report: the Statement is incomplete, because the report is one of its supporting documents (14.3), so the 28 days have not started
- Programme or another obligation outstanding: the Engineer may withhold only the value of what the Contractor was notified it is failing to do, not the whole certificate (14.6)
- Below the minimum: the Engineer need not certify an amount below the minimum in the Appendix to Tender (14.6)
The two guarantees
| Check | Performance Security (4.2) | Advance payment guarantee (14.2) |
|---|---|---|
| Amount | As in the Appendix to Tender, often 10% of the contract on UAE projects | Equal to the advance, in the same currency |
| Form | The form annexed to the Particular Conditions, usually an on-demand bank guarantee | The form annexed to the Particular Conditions |
| Issuer | A bank the Employer approves, usually licensed in the country of the project | A bank the Employer approves |
| Valid until | The Works are completed and defects remedied; extended if the Performance Certificate is not yet due 28 days before expiry | The advance is repaid, reduced as the certificates show repayments |
| Returned | Within 21 days after the Employer receives a copy of the Performance Certificate | Once the advance is fully repaid |
Verify each original with the issuing bank before you accept it: ask the bank to confirm it in writing, or through its own secure channel, directly to the Employer. Check the beneficiary’s full legal name, the contract reference, the amount and currency, the expiry date and the last day for a demand, and that the wording matches the contract form with no conditions added. Keep the originals in a safe place and diary each expiry date with time to ask for an extension.
Where the contract also asks for a parent company guarantee or a retention money guarantee, run the same checks before accepting it.
The insurances
Under Sub-Clause 18.1 the Contractor sends evidence that the insurances are in place and copies of the policies within the periods in the Appendix to Tender, then evidence of each premium paid. The insurers and the terms must be ones the Employer approves. Check each cover:
| Cover | Sub-Clause | What to check |
|---|---|---|
| Works and Contractor’s Equipment (contractor’s all risks) | 18.2 | Full reinstatement cost, plus demolition, removal of debris, professional fees and profit; the Employer and the Contractor insured jointly; cover to taking over, and for the Contractor’s work in the defects period |
| Injury to persons and damage to property (third party) | 18.3 | At least the amount per occurrence in the Appendix to Tender, in the joint names of the Parties |
| Contractor’s Personnel | 18.4 | Injury, sickness, disease or death of the Contractor’s staff and labour, with the Employer and the Engineer also indemnified under the policy |
| Design (professional indemnity) | Particular Conditions | Where the Contractor designs part of the Works: the amount and the period after completion set in the contract |
For every policy, check that the deductibles are within the limits in the Appendix to Tender, the period covers the Time for Completion with a margin, and the premium is paid. A broker’s certificate is not the policy: ask for the wording. In the UAE the Contractor also pays for work injuries under the Labour Law, Federal Decree-Law No. 33 of 2021, and health insurance for workers has been mandatory in every emirate since 1 January 2025.
The contract and set-up papers
- The signed Contract Agreement, with the Letter of Acceptance and its annexed clarifications (Sub-Clause 1.6)
- The Contractor’s Representative, consented to by the Engineer before the Commencement Date (4.3)
- The detailed programme, within 28 days after the commencement notice (8.3)
- The schedule of payments, or the first estimate of payments within 42 days after the Commencement Date where there is none (14.4)
- The Statement format approved by the Engineer, and the way the work will be measured (14.3 and 12.1)
- Company papers: a valid trade licence covering the work, the VAT registration certificate with the tax registration number, and a bank letter with the account name and IBAN
- Authority to sign: the power of attorney or list of authorised signatories for the person who signs the Statements and invoices
Confirm the bank details by calling a known contact at the Contractor, never from an email alone. A changed account number in an email is a common route for payment fraud.
The first two payments
- 1The advance payment
The Contractor sends a Statement for the advance with the guarantee and a tax invoice. The Engineer certifies it once the Employer holds both securities (14.2), and the Employer pays within 42 days of the Letter of Acceptance or 21 days of receiving the securities, whichever is later (14.7).
- 2The first interim certificate
After the first month the Statement lists the items of Sub-Clause 14.3, with the measurement records and the first progress report (4.21). The Engineer certifies within 28 days, and the Employer pays within 56 days of the Statement.
- 3Retention and repayment begin
Retention is deducted from the first certificate. Repayment of the advance starts once certified payments pass the threshold in the contract, 10% of the Accepted Contract Amount less Provisional Sums under the 1999 Red Book.
What the Employer checks before releasing payment
- 1The certificate is signed for the Engineer and fits the approved budget and approval limits
- 2The Performance Security is held and valid, and for the advance, the advance payment guarantee too
- 3The tax invoice matches the certificate, shows both tax registration numbers and charges VAT at the right rate
- 4The bank details match the ones confirmed at the start
- 5The retention and advance balances in the ledger agree with the certificate
- 6Nothing is paid twice: each certificate deducts all previous certificates (14.3 (g))
A covering letter for the securities can be this short:
We refer to your Letter of Acceptance dated 2 March 2026. Under Sub-Clause 4.2 we enclose the original Performance Security No. PG-2026-118 for AED 2,450,000, issued by a UAE bank you have approved, valid until 30 June 2028 and in the form annexed to the Particular Conditions. Under Sub-Clause 14.2 we enclose the original advance payment guarantee No. AG-2026-041 for AED 2,450,000, with our Statement and tax invoice for the advance. The evidence of insurance and copies of the policies required by Sub-Clause 18.1 will follow by 20 March 2026.
Common mistakes
- Accepting a guarantee that differs from the contract form, adds conditions or names the wrong beneficiary
- Accepting a copy or an email in place of the original, without the bank’s confirmation
- Paying the advance before both securities are in hand
- Letting the advance payment guarantee expire before the advance is repaid, or not reducing it as it is repaid
- Taking an insurance certificate without the policy wording, or without the Employer named
- Holding the whole first certificate for a missing programme, which the contract does not allow
- Sending the first Statement without the progress report, so the 28 days do not start
If the first payment is late
Before work starts, the Contractor may ask for reasonable evidence that the Employer’s funding is in place, which the Employer must give within 28 days (Sub-Clause 2.4). If payment is late, the Contractor is entitled to financing charges at three percentage points above the central bank’s discount rate (14.8). If the Engineer does not certify or the Employer does not pay, the Contractor may suspend or slow the work after 21 days’ notice (16.1). Take legal advice before suspending: the governing law and your Particular Conditions decide the details.