How does materials-on-site payment work under FIDIC?

Why the mechanism exists at all

A contractor who has bought and delivered a floor’s worth of structural steel has spent the money. If payment only followed installation, the contractor would be financing that steel out of working capital for however long it sits in the laydown area — and on a material-heavy phase, that is a lot of capital tied up in things that are just sitting there.

So the contract allows a claim against material that is on site, listed, and verifiably what it was meant to be. The percentage is a compromise: enough to relieve the cash-flow burden, not so much that the employer has paid in full for something that has not yet become part of the works.

The MIR is the evidence

The engineer is not certifying that some steel arrived. They are certifying that the delivered material is the approved product, in the approved quantity, undamaged, correctly certified, and properly stored.

That is precisely what a material inspection establishes — which is why the approved MIR is the backup for the materials-on-site line. Miss the inspection and the material may be perfectly good, sitting perfectly safely on site, and still unclaimable. The money follows the paperwork, not the steel.

Check your own contract

80% is the FIDIC default and it is the figure most people quote. It is also one of the numbers that Particular Conditions most commonly amend, and a contractor who assumes 80% on a bespoke form may find the actual figure is rather less generous.

The conditions attached to the claim vary too — some contracts require the material to be listed in advance, some require it to be marked as the employer’s property, some require insurance. Read yours before you build a cash-flow forecast on it.

Terms

• Vesting Certificate