23.1.1 Clause 10 B of Clauses of Contract deals with the subject of payment and recovery of the following types of advances:
i) Secured Advance on non-perishable materials / items of perishable nature. ii) Mobilization Advance.
iii) Plant & Machinery Advance.
23.1.2 The provisions in this clause should be carefully gone through and it should be ensured that the conditions laid down are strictly complied with while paying such advances. Special care will also have to be exercised in recovery of the principal amount of advances as well as the interests on Mobilization Advance and Plant & Machinery Advance. To maintain proper accountal, the payment of advances and recovery with interest should be effected through running bills. Necessary provision has been made in the format for running account bills to show the breakups of different types of advances to be paid to the contractor and the amount to be recovered from the contractor through the running bills for each type of advance. In the case of Secured advance on Contractor’s materials, details have to be appended to the running bills in the format specified. The recovery of Secured ADVANCE ON materials is without interest and is linked to the incorporation of the materials in works.
23.1.3 (a) Mobilisation Advance shall be made applicable only for specialized and capital intensive works where estimated cost put to tender is Rs. Two Crores and above. It shall be admissible upto10% of the tendered value at 10% simple interest and such advance shall be released in two equal installments on specific request of contractor as per terms of the agreement.
(b) The second installment of Mobilisation Advance should be released only after getting satisfactory utilization certificate from the contractor for the first installment.
(c) The power to make provision for Mobilisation Advance in a tender document for any particular work shall rest with the NIT Approving Authority. In case, it is proposed to provide for mobilization advance more than 10% of the cost of the work, prior approval of the concerned Director, with the concurrence of finance, should be obtained before inviting the tenders. This is in partial modification of SOP item 2.2 which had given powers to EDs in some cases.
(d) The interest on advance shall be calculated from the date of payment to the date of recovery, both days inclusive. In case it is proposed to provide interest free Mobilization Advance, prior approval of the concerned Director with the concurrence of finance should be obtained before inviting the tenders. This is also in partial modification of SOP item 2.2 which has given powers to EDs in some cases.
(e) The Mobilization Advance shall be against BGs. of a Scheduled Bank for 110% of the full amount of that installment. Number of BGs shall not exceed three.
(f) The recovery should be commenced after 10% of work is completed and billed. The entire amount together with interest shall be recovered by the time 80% of the gross value of contract is executed and billed.
(g) Recovery of Mobilisation Advance at an intermediate stage should be effected, if necessary by encashment of part B.G., if the appropriate prorata amount of advance is not available from the work done by the Contractor.
23.2 CERTIFICATES TO ACCOMPANY BILLS
23.2.1 The certificates as per format in Paras 23.2.2 or 23.2.3 or 23.2.4 should be recorded by the bill signing officer and should accompany the running accounts/final bill submitted to the Engineer-in-Charge.
23.2.2 (a) Payment to contractor “Secured Advance on non-perishable materials”:
i) The materials for which Secured Advance is being proposed are non- perishable, non-fragile and non-combustible.
ii) The quality of materials is as per stipulated specifications.
iii) The quantities of materials for which advance is being proposed have actually been brought to site.
iv) The materials are adequately stored and protected against damage by weather or other causes.
v) The materials have not been incorporated in the work.
vi) The Secured Advance can be paid upto an amount not exceeding 90% of the assessed market value of the materials or an amount not exceeding 90% of the material element cost in the tendered rate of the finished item, whichever is lower.
b) Payment to contractor “Secured Advance on perishable materials” i) The materials are covered by comprehensive insurance for their full
cost and for the period stipulated in the contract. ii) The quality of materials is as per Specifications.
iii) The quantities of materials for which advance is being proposed have actually been brought to site.
iv) The materials are adequately stored and protected against damage by weather or other causes.
v) The materials have not been incorporated in the work.
c) Recovery from the contractor towards “Secured Advance for non- perishable and perishable materials”
The materials have actually been incorporated in the works. 23.2.3 Payment to contractors “Mobilization Advance”
The advance is covered by a Bank Guarantee Bond from a Scheduled Bank as specified by the Engineer-in-Charge for 110% of the Installment amount of Advance and for the period as stipulated in the Contract.
23.2.4 Payment to contractor “Plant & Machinery Advance”
i) The Plant / Machineries have been insured for a sum adequate for their replacement at site for the period stipulated in the Contract.
ii) The items for which advance is proposed have been hypothecated to RITES.
iii) The items are considered necessary for the works and have been maintained in good working condition and are available at site.
SECTION 24
PREPARATION, EXAMINATION, VERIFICATION