Is the provisional amount deducted when calculating the project advance payment?

The calculation of advance payment requires deduction of provisional payment.

1. Advance payment is a means of payment, and its purpose is to solve the shortage of working capital of one party to the contract. The advance payment does not have the function of guaranteeing the performance of the debt, nor can it prove the establishment of the contract and the party receiving the advance payment is in breach of contract. It only needs to return the amount received, and does not need to return double the amount.

2. The provisional amount refers to a sum of money tentatively determined by the tenderer in the bill of quantities and included in the contract price. It is used for the procurement of required materials, equipment, and services that have not yet been determined or unforeseen when the construction contract is signed, project changes that may occur during construction, project price adjustments when adjustment factors agreed in the contract occur, and claims that occur, on-site visa confirmation, etc. cost. The provisional amount is the owner's reserve fund, which will only be used when a change claim occurs. It does not constitute a project entity. In principle, expenses that do not constitute a project entity are not used as the basis for calculating the advance payment.

3. The provisional amount of the project is stipulated in the project bidding document. If the project design has a bidding control price, the provisional amount is usually 10 to 15 of the sub-item project fee in the bill of quantities as a reference. The provisional amount refers to an amount tentatively determined by the tenderer in the bill of quantities and included in the contract price. Used for the procurement of required materials, equipment, and services that have not been determined or unforeseeable when the construction contract is signed, project changes that may occur during construction, project price adjustments when adjustment factors stipulated in the contract occur, and claims that occur, and on-site visa confirmation. Waiting costs. The provisional amount generally shall not exceed the 20.10 version of the estimated total cost. The provisional amount is all expenses except taxes. When the project is settled, the provisional amount should be canceled, and additional expenses will be added based on the actual project costs.

4. The formula for advance payment is: T=P-M/N.

(1) In the formula, T is the starting deduction point, that is, the cumulative value of the completed project when the prepayment of the project starts to be deducted;

(2) M is the total amount of prepayment for the project ;

(3) N is the proportion of main materials and important components in the project payment;

(4) P is the total contract amount of the contracted project.

Advance payment refers to the amount of advance payment paid by the buyer to the seller after the buyer and seller sign the transaction contract. This method is not conducive to the buyer and is generally used when the supply of trade goods exceeds demand. The buyer bears the business risks and funds accumulation, which is actually providing credit to the seller; the seller receives payment before shipment, which is conducive to capital turnover and has no commercial risk.