What Is an Interim Payment Certificate (IPC) in Construction?
An Interim Payment Certificate (IPC) is a certificate issued during a construction contract, usually monthly, stating the amount due to the contractor for work done to date. It is calculated from the value of work completed, less previous payments, retention and other deductions, and adjusted for variations, advances and taxes.
What is an IPC in construction?
The contractor submits a payment application (also called a statement or progress claim) showing the quantities of work done and their value. The engineer, consultant or employer's representative checks it and issues the IPC, certifying the amount payable. The employer then pays within the period stated in the contract. 'Payment application' normally refers to the contractor's request, while 'certificate' refers to the amount certified.
What does an IPC contain?
A typical IPC valuation shows:
- Value of work done to date, by BOQ item (cumulative), with previous and current-period columns.
- Materials on site where the contract allows payment for them.
- Variations that have been approved.
- Deductions: retention, recovery of advance payment, and any other agreed deductions.
- Previous certificates, the net amount for this period and, where applicable, VAT.
How to prepare an IPC
The monthly cycle usually follows these steps:
- Agree the measurement of work done on each BOQ item with the site team or consultant.
- Calculate cumulative value to date, then subtract the cumulative value certified before to get the current period.
- Add approved variations and any permitted material on site.
- Apply retention and advance recovery as the contract states, then add VAT if applicable.
- Submit with the supporting documents the contract requires and track the certificate through approval.
IPC example
Illustrative: cumulative work done 1,000,000; previous certified 700,000; retention 10 percent of cumulative work. Current gross = 300,000; retention on cumulative = 100,000, less retention already held 70,000 = 30,000 withheld this period; net before VAT = 270,000. Real calculations follow your contract's formula, so use our template as a layout only.
IPCs on Gulf projects
Monthly interim payment certificates are standard in Gulf construction contracts. Under FIDIC conditions, Clause 14 covers payment, including the application for interim payments, the issue of the certificate and the payment time, with retention held and released as the contract states. Payment periods, retention percentages and advance payment recovery vary by contract, and the particular conditions often amend them.
VAT applies in several Gulf countries (for example 5 percent in the UAE and 15 percent in Saudi Arabia at the time of writing), and how it appears on certificates depends on the contract and tax invoicing rules.
How Arkan handles interim payment certificates
Arkan builds payment requests directly from BOQ progress, so the valuation does not have to be retyped into a separate spreadsheet.
- A 4-step payment request wizard: main information, BOQ selection, advanced payments, and preview and submission.
- Select BOQ items and optionally import progress from inspection reports.
- Link advance payments for recovery deductions and see retention and VAT deductions in the payment summary.
- Track retention releases separately in the Finance module and approve through workflows.
Frequently asked questions
What is the IPC full form?
IPC stands for Interim Payment Certificate. In the Gulf it is often called a payment certificate, progress payment or by its Arabic name, the mustakhlas.
What is the difference between an IPC and an invoice?
The IPC is the certified valuation of work, issued under the contract. The contractor then issues a tax invoice for the certified amount. The rules for invoicing, including VAT, depend on the contract and local tax law.
How is retention calculated in an IPC?
Usually a percentage of the cumulative value of work done is held back, up to any limit stated in the contract, and part is released at stated milestones such as completion and the end of the defects period. Follow your contract's terms.
Who prepares and who certifies an IPC?
The contractor prepares the payment application. The engineer, consultant or other certifier named in the contract reviews and certifies the amount.
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Last updated: 2026-10-13. Definitions are general guidance. Your contract and project procedures govern.
