What a progress certificate needs to include

A progress certificate, also called an interim payment certificate or IPC, sets out the work certified to date against the schedule of values, the amount certified this period, any variations, the retention held back, the amounts already paid, and the net now due. Get those lines right and everyone agrees; leave one out and the payment gets argued over.

On any construction contract, the contractor does not wait until the end to be paid. Work is valued at regular dates, usually monthly, and a certificate is issued for the value earned so far. The certificate is the document that turns work on site into money owed, so it has to be complete and it has to be checked.

The lines a certificate must show

• Work certified to date. The cumulative value of everything done so far, valued against the schedule of values, line by line or as a percentage complete on each item.
• Variations. Approved changes to the works, added to or subtracted from the contract value, so the amount you certify is the amount you agreed, not the amount you first priced.
• Materials on site. Where the contract allows it, the value of materials delivered but not yet installed, often at a reduced percentage.
• Retention. The percentage held back as security, deducted from the gross value, shown as its own line with the running total retained.
• Previously certified. The total of all earlier certificates, subtracted so the certificate pays only for this period's work.
• The net now due. Gross to date, less retention, less what was already certified, giving the single figure that gets paid.

Application versus certificate

It helps to keep two documents separate. The contractor submits a payment application, which is their claim for what they believe they have earned. The engineer or quantity surveyor then issues a payment certificate, which is what is actually certified as due after the work, the variations and the retention have been checked. The certificate, not the application, is what should be paid, and the difference between the two is where disputes are settled early rather than late.

Why cumulative matters

Each certificate is cumulative. It certifies the total value of work done to date, then subtracts everything certified before to reach the amount due this month. Working this way means an error in one month can be corrected in the next without unpicking the whole history, and the final account is simply the last certificate in the sequence.

Where certificates go wrong

• Variations agreed on site but never added to the certified value, so the contractor is underpaid and the final account is a fight.
• Retention deducted at the wrong percentage, or not tracked as a running total, so nobody knows how much is held.
• The certificate kept in a spreadsheet that never posts to the accounts, so the invoice, the certificate and the ledger tell three different stories.

This last one is the quiet killer. A certificate that lives only in a spreadsheet has to be re-entered into the accounts by hand, and the two drift apart. This is exactly the gap Orbit for contracting was built to close: certify a percentage of the schedule of values, hold the retention back automatically, and post the certificate straight to the ledger, so the certificate, the invoice and the accounts always agree.