Traditional Building
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Traditional building and construction projects are relatively time-consuming and expensive process compared to the owners or the contractors other business activities .If the contractor has the responsibility to finance the total cost of carrying out the works for the entire project ,a number of adverse consequences to the contractor and the owner will produce .An increase in either borrowing or overdrafts for an extended period would rise the cost to the contractor of completing the project and the contractors exposure to financial risk .On the other hand ,the price to the owner of the completed project also increase because the contractor would transfer the rising cost with the additional of a charge for overheads and profit to the owner.It would also increase the owners exposure to the risk of contractor insolvency .In addition ,smaller contractors would lack sufficient working capital to execute a relatively big project because they might be unable to increase the credit to undertake the project .
In order to avoid such consequences ,building and construction contracts usually include a provision which permits the contractor to progressively claim the payment for the value of work done over the course of a project.This payment method also reduce the daily administrative work of contractor s and contract administrators
MW-1 requires the contractor to submit a progress claim to the contract administrator by the data of each month stated in item 25,Date for submitting progress claims.of Schedule 1.Since the claim must include the valuation of work completed at the date of the claim,the value of materials and equipment on site and the amount of GST ,the contractor need to assesses the value of these items prior to submitting the claim .Then contract administrator is required to assess the value of the contractors progress claim and issue a certificate to the contractor for any payment within ten business days after receiving the progress claim under subclause N4.1 of MW-1.The certificate must state the amount of GST and the reasons for any difference between the net amount certified and the net amount claimed .If the contract administrator need further information required to assess the claim ,they must promptly ask the contractor and then the claim is required to issue within the prescribed period after receiving the further information .After the contractor present to the owner a progress certificate and a tax invoice for the amount certified under clause N5 of MW-1,the owner is required to pay the amount certified within the period stated in Item 4 of Schedule after presentation of the certificate and the invoice ;or ,if nothing is stated ,within seven calendar days (clause N6).Under subclause N15.1,the owner is required to pay interest on payments it has failed to pay within the period prescribed in the contract .The owner is also required to pay interest where