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According to the Interim Measures for settlement of construction project price, the settlement scope of construction project price includes project advance payment, project progress payment and project completion price settlement.
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Government investment projects shall not be funded by the construction unit.
Up to now, many places in China have implemented process settlement.
Settlement basis: including but not limited to construction contract, supplementary agreement, letter of acceptance, construction drawings, project bidding documents, construction scheme, quantities of completed sub projects and measures, confirmed project changes, on-site visa, project claims and other data.
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Scope of application: the construction, decoration, installation of supporting lines, pipelines and equipment and municipal infrastructure projects of various housing buildings and their ancillary facilities with a contract period of more than one year (including this number), and the settlement of the construction process.
Emphasize the capital responsibility and guarantee responsibility of the construction unit to provide financial guarantee for the process settlement.
On April 8, 2021, Shaanxi Province issued the notice on settlement during construction of housing construction and municipal infrastructure projects.
Settlement and payment: the payment cycle of process settlement shall be consistent with the process settlement cycle agreed in the contract..
On September 23, 2020, the official website of the Ministry of housing and urban rural development issued the notice on implementing the primary responsibility for project quality of the construction unit, strictly implementing the primary responsibility for project quality of the construction unit.
On March 16, 2021, Jilin Provincial Department of housing and urban rural development issued the implementation opinions on the implementation of construction process settlement in housing construction and municipal infrastructure projects.
The settlement period of the construction process can be divided according to the construction time period or the construction image progress node.
In July 2020, the Ministry of housing and urban rural development issued the work plan for project cost reform, which made it clear: strengthen the supervision of project construction contract performance and price payment, guide the employer and the contractor to carry out project payment and settlement in strict accordance with the contract, and fully implement the price settlement and payment in the construction process.
If the employer fails to pay according to the time agreed in the contract, it shall bear the liability for breach of contract according to the contract.
The settlement period can be divided according to the construction image progress or construction time period, and it is clear that changes, visas, claims and other matters shall be included in the current process settlement.
After completion, the process settlement results will not be audited again.
The settlement of the construction process shall be implemented for the housing construction and municipal infrastructure projects and their ancillary facilities, as well as the supporting lines, pipelines and equipment installation projects newly started and with a construction contract construction period of more than one year.
Government invested projects shall ensure that the funds are paid in place on time in accordance with the relevant provisions of the state, and the unfinished audit shall not be used as a reason for delaying the settlement of project funds.
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On September 17, 2020, Shandong Provincial Department of housing and urban rural development, Shandong Provincial Development and Reform Commission and Shandong Provincial Department of Finance jointly issued the guiding opinions on the implementation of construction process settlement in housing construction and municipal engineering (Trial), so as to shorten the settlement cycle and reduce the burden on enterprises by standardizing the settlement behavior.
The construction unit shall provide a guarantee for the payment of the project funds.
If there is no agreement on the handling time limit of settlement in the construction process in the contract, the time limit is 28 days.
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Compared with completion settlement, the implementation of construction process settlement is mainly used to standardize construction contract management, avoid disputes between the employer and the contractor, save audit costs, effectively solve the “settlement difficulty” and prevent migrant workers from being paid in arrears from the source.
On August 9, 2021, the Department of housing and urban rural development of Xinjiang Uygur Autonomous Region issued the notice on Soliciting Opinions on the implementation of construction process settlement in housing construction and municipal infrastructure projects in Xinjiang Uygur Autonomous Region (Exposure Draft).
The construction process settlement shall be measured and priced for the qualified project according to the contract, the non controversial part shall be settled in the construction process on schedule, and the controversial part shall be handled according to the dispute resolution method agreed in the contract.
The construction unit shall have financial arrangements to meet the construction needs, and provide the construction unit with project payment guarantee.
If the review is not completed within the time limit due to the employer, it may be handled according to the contract.
If there is no agreement on the handling time limit of settlement in the construction process in the contract, the time limit is 28 days.
The employer and the Contractor shall settle the construction process according to the construction process settlement node agreed in the contract.
At the same time, it is proposed to promote the settlement of construction process.
Settlement period: it can be determined monthly or according to the image progress of the project.
Strengthen contract management and reduce the workload of engineering construction change adjustment.
Non state owned investment projects are encouraged to implement settlement during construction.
When the divisional works are accepted, in principle, the project payment settlement shall be completed simultaneously, and the settlement shall not be delayed in disguised form for reasons such as design change and project negotiation.
On July 23, 2020, Henan Provincial Department of housing and urban rural development issued the guidance on the implementation of project construction process settlement.
The settlement period of the construction process can be divided according to the construction image progress node, so as to connect with the progress payment node.
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The so-called construction process settlement refers to the calculation, adjustment, confirmation and payment of the project price for the project contents (including on-site visa, project change, claim, etc.) completed within the agreed settlement period (time or progress node) according to the construction contract.
The settlement period of the construction process can be divided according to the construction image progress node, so as to connect with the progress payment node.
The Contractor shall timely complete the preparation of construction process settlement documents after the acceptance of the construction process settlement node project, and shall submit the construction process settlement documents and corresponding settlement materials to the employer within the time limit agreed in the contract; The employer shall complete the verification and confirmation of settlement in the construction process within the agreed period.
The employer shall, within the time limit agreed in the contract, pay the settlement payment for the construction process in the proportion agreed in the contract, and the payment proportion of the settlement payment for the construction process shall be more than 80%.
If the Contractor fails to submit the construction process settlement documents within the agreed time limit due to the contractor, the employer may carry out the construction process settlement activities according to the contract and the existing data.
At the executive meeting of the State Council at the beginning of 2020, it was clearly required to comprehensively implement process settlement in the field of engineering construction and strengthen the promotion of letter of guarantee instead of deposit of construction unit.
Actively provide whole process cost consulting services for engineering projects with process settlement, decompose the settlement cycle in the whole process cost control, and take effective measures to control the investment of engineering projects.
The employer shall pay the settlement price during the construction process according to the procedures, time limit and proportion agreed in the contract.
Both parties to the contract shall not delay the settlement of the construction process in disguise for reasons such as design change, project negotiation and incomplete audit.
The construction unit shall timely and fully allocate the labor cost in the project progress payment to the special account for migrant workers’ wages.
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The construction process settlement documents shall be signed by the registered cost engineer responsible for preparation and review, and stamped with the special seal for practice and the seal of the preparation unit.
The longest settlement payment period shall not exceed 60 days, and the payment period of labor cost shall not exceed one month.
The employer and the contractor can organize or entrust qualified project cost consulting units to compile and review the construction process settlement.
Fully implement the project payment guarantee system to prevent project payment arrears.
The construction contract shall specify the settlement period of the construction process and the settlement method of the project progress payment.
The settlement of construction process is applicable to housing construction and decoration, installation works and municipal infrastructure works with a contract duration of more than one year (including one year) or a project price of 50 million yuan or more.
On December 14, 2020, Jiangxi Provincial Department of housing and urban rural development issued a notice, printing and distributing the implementation opinions on promoting construction process settlement in housing construction and municipal infrastructure projects, which shall come into force as of the date below.
The government and state-owned investment projects shall not refuse or delay the process settlement and project payment on the grounds that the Completion Final Accounts audit has not been completed.
In principle, process settlement shall be implemented for large and medium-sized engineering projects invested by the government.
