JBCC Payment Certificates: How to Issue & Manage Progress Payments

Cash flow is the lifeblood of any construction project. In South Africa, where delayed payments are a persistent industry challenge, properly issued payment certificates under the JBCC (Joint Building Contracts Committee) contract forms are critical for maintaining healthy cash flow and avoiding disputes.

According to industry data, payment delays cost South African contractors billions annually in lost productivity, strained relationships, and even business failures. The JBCC payment certificate system exists to provide a structured, legally compliant framework for progress payments — but only if you understand how to issue and manage them correctly.

This comprehensive guide explains everything you need to know about JBCC payment certificates: what they are, how to issue them step-by-step, how retentions work, how variations affect payments, and how construction management software can automate the entire process.

Why Payment Certificates Are Critical for Construction Cash Flow

Construction projects operate on tight margins. Unlike manufacturing businesses that invoice upon delivery, contractors must fund materials, labour, and overhead costs upfront, then wait for payment based on work completed. This creates a cash flow gap that can cripple even well-run construction companies.

Payment certificates under JBCC contracts serve several critical functions:

Structured payment schedule — Regular interim payments based on work completed, not arbitrary milestones
Legal protection — Certificates create enforceable payment obligations under the contract
Dispute prevention — Clear valuation process reduces disagreements about what’s been completed
Cash flow predictability — Contractors can forecast payments and plan accordingly
Retention management — Structured system for holding and releasing retention funds

Without properly issued payment certificates, contractors face delayed payments, disputes, and cash flow crises. Understanding the JBCC payment certificate process isn’t optional — it’s essential for operating successfully in the South African construction industry.

What Is a JBCC Payment Certificate?

A JBCC payment certificate is a formal document issued by the principal agent (typically the architect or quantity surveyor) that certifies the value of work completed by the contractor and authorises payment by the employer. Under JBCC PBA 2018 (Principal Building Agreement), payment certificates are the mechanism through which progress payments are made.

The certificate serves as both a valuation document and a payment instruction. It states:

The gross value of work completed to date
Any variations or adjustments
Deductions for retention
Deductions for previous payments
The net amount due to the contractor

Payment certificates are legally binding documents. Once issued, they create an obligation on the employer to pay the certified amount within the timeframe specified in the contract (typically 14 days under JBCC PBA 2018 clause 6.2).

The Role of the Principal Agent

The principal agent is responsible for assessing work completed, valuing variations, and issuing payment certificates. This role requires:

Regular site inspections to verify work completion
Accurate measurement and valuation of completed work
Understanding of contract terms, including retention and variation procedures
Timely certificate issuance within contract deadlines
Fair and impartial assessment of work quality and completion

The principal agent acts as an independent assessor, balancing the interests of both employer and contractor while ensuring compliance with the contract terms.

Types of Payment Certificates Under JBCC

The JBCC PBA 2018 contract form recognises three types of payment certificates, each serving a different purpose in the payment cycle:

Interim Payment Certificates

Interim payment certificates are issued monthly (or at other intervals specified in the contract) throughout the construction period. They cover work completed since the last certificate and form the basis for regular progress payments.

Key characteristics:

Issued monthly or at contract-specified intervals
Cover work completed during the period
Include variations approved during the period
Deduct retention (typically 5-10% of gross value)
Deduct all previous payments
Create payment obligation for the net amount

Interim certificates keep cash flowing throughout the project, allowing contractors to fund ongoing work without waiting until project completion.

Penultimate Payment Certificate

The penultimate certificate is issued when the principal agent determines that practical completion has been achieved. This certificate is significant because it typically releases half of the retention held throughout the project.

Key characteristics:

Issued at practical completion
Releases 50% of retention (subject to contract terms)
Includes all work completed to practical completion
May include final variations and adjustments
Remaining 50% retention continues to be held until final completion

The penultimate certificate provides contractors with a significant cash injection at practical completion, helping fund final accounts preparation and defect rectification work.

Final Payment Certificate

The final payment certificate is issued after all defects have been rectified, final accounts have been agreed, and the principal agent determines that final completion has been achieved. This certificate releases the remaining retention and settles all outstanding amounts.

Key characteristics:

Issued at final completion
Releases remaining retention (typically the final 50%)
Includes all final account adjustments
Settles all outstanding variations and claims
Represents final payment under the contract

The final certificate closes out the financial aspects of the contract, releasing all retention and settling all accounts.

Step-by-Step: How to Issue an Interim Payment Certificate

Issuing a JBCC payment certificate requires careful attention to detail and strict adherence to contract procedures. Here’s the step-by-step process:

Step 1: Contractor Submits Payment Claim

The process begins when the contractor submits a payment claim (also called a payment application or valuation). Under JBCC PBA 2018 clause 6.2, the contractor must submit the claim by a specified date each month (typically the 25th or last working day).

The payment claim should include:

Statement of work completed during the period
Measurement sheets or supporting documentation
Details of any variations claimed
Materials on site (if applicable under the contract)
Any other amounts claimed (preliminaries, adjustments, etc.)

The contractor’s claim forms the basis for the principal agent’s assessment, but the principal agent is not bound by the contractor’s valuation — they must independently assess the work.

Step 2: Principal Agent Assesses Work Done

The principal agent must visit the site and assess the work completed. This assessment involves:

Site inspection:

Verifying that claimed work has actually been completed
Checking work quality and compliance with specifications
Measuring quantities of work completed
Identifying any defects or incomplete work
Noting any work that doesn’t meet contract requirements

Valuation process:

Measuring quantities against the bill of quantities or schedule of rates
Applying contract rates to measured quantities
Valuing preliminaries (site establishment, overheads, etc.) proportionally
Assessing work quality and applying any deductions for defects

The principal agent must be thorough and fair. Under-valuation can cause cash flow problems for contractors, while over-valuation can expose the employer to paying for incomplete or defective work.

Step 3: Valuation of Variations and Adjustments

Variations are changes to the original contract scope, price, or conditions. Under JBCC PBA 2018, variations must be properly authorised through variation orders before work is executed.

Variation valuation methods:

Bill rates — Using rates from the original bill of quantities where applicable
Fair rates — Negotiated rates for work not covered by bill rates
Cost plus — Actual cost plus overhead and profit percentage (for complex variations)
Provisional sums — Where variations relate to provisional sum items

Common adjustments included:

Authorised variation orders executed during the period
Fluctuations (if applicable under the contract)
Adjustments for materials on site
Adjustments for advance payments
Any other contractually required adjustments

Variations can significantly impact payment certificates. Poor variation management leads to disputes, delayed certificates, and cash flow problems.

Step 4: Deduction of Retention

Retention is a percentage of the gross payment amount held back by the employer as security for defects and incomplete work. Under JBCC PBA 2018, retention is typically 5-10% of the gross value, though this can vary by contract.

Retention calculation:

Applied to gross value of work completed (including variations)
Calculated as a percentage of gross value
Accumulates throughout the project
First 50% released at practical completion (penultimate certificate)
Remaining 50% released at final completion (final certificate)

Example retention calculation:

Gross value this period: R500,000
Retention rate: 10%
Retention deducted: R50,000
Net value before previous payments: R450,000

Retention provides security for the employer but ties up contractor cash flow. Proper retention management is essential for both parties.

Step 5: Deduction of Previous Payments

The principal agent must deduct all previous payments made to the contractor. This includes:

All previous interim payment certificates
Any advance payments
Any direct payments made by the employer
Any other payments made under the contract

Payment tracking:

Maintain accurate records of all payments
Ensure no double-counting of payments
Account for any payment adjustments or corrections
Verify payment records match bank statements

Accurate payment tracking prevents over-payment and ensures the certificate reflects the true amount due.

Step 6: Certificate Issued Within Prescribed Timeframe

Under JBCC PBA 2018 clause 6.2, the principal agent must issue the payment certificate within a specified timeframe (typically 7-14 days after receiving the contractor’s claim). This deadline is critical — late certificates delay payments and can breach contract terms.

Certificate contents:

Certificate number and date
Project name and contract number
Period covered by the certificate
Gross value of work completed
Value of variations included
Total gross value
Retention deducted
Previous payments deducted
Net amount due
Payment due date (typically 14 days from certificate date)

Certificate format:

Clear, professional presentation
All calculations shown
Supporting schedules attached (if required)
Signed by the principal agent
Copies to contractor, employer, and quantity surveyor (if applicable)

Once issued, the certificate creates a payment obligation. The employer must pay the certified amount by the due date, or risk breaching the contract.

Retention Explained: Release at Practical Completion and Final Completion

Retention is one of the most misunderstood aspects of construction contracts. Understanding how retention works is essential for managing cash flow and planning project finances.

What Is Retention?

Retention is a percentage of each payment held back by the employer as security. It serves two purposes:

Security for defects — Ensures contractor rectifies defects during the defects liability period
Security for incomplete work — Protects employer if contractor fails to complete work

Retention Rates

Retention rates vary by contract but are typically:

5% — Common for smaller projects or trusted contractors
10% — Standard rate for most projects
Higher rates — Sometimes applied to high-risk projects or new contractors

The retention rate is specified in the contract and applies to the gross value of work (including variations).

Retention Release Schedule

Under JBCC PBA 2018, retention is released in two stages:

Stage 1: Practical Completion (Penultimate Certificate)

50% of total retention is released
Remaining 50% continues to be held
Released amount helps contractor fund final accounts and defect rectification

Stage 2: Final Completion (Final Certificate)

Remaining 50% of retention is released
All retention is cleared
Final payment settles all accounts

Retention Calculation Example

Consider a project where:

Total contract value: R10,000,000
Retention rate: 10%
Total retention to be held: R1,000,000

At practical completion:

Total retention accumulated: R1,000,000
Released: R500,000 (50%)
Remaining retention: R500,000

At final completion:

Remaining retention: R500,000
Released: R500,000 (final 50%)
Total retention cleared: R1,000,000

Retention and Cash Flow

Retention significantly impacts contractor cash flow:

R10M project with 10% retention — R1M tied up until final completion
Impact — Reduces available cash by retention amount throughout project
Planning — Contractors must account for retention in cash flow forecasts

Proper retention management requires:

Accurate tracking of retention accumulated
Planning for retention release dates
Understanding contract terms for retention release
Accounting for retention in project budgets

Variation Orders and How They Affect Payment Certificates

Variations are changes to the original contract scope, and they’re one of the most common sources of payment disputes. Understanding how variations work under JBCC contracts is essential for accurate payment certificates.

What Are Variations?

Variations include:

Additions — Additional work not in original scope
Omissions — Work removed from original scope
Substitutions — Different materials or methods than specified
Changes — Modifications to design, specification, or programme

Variation Order Process

Under JBCC PBA 2018, variations must follow a formal process:

Step 1: Variation instruction

Principal agent issues variation instruction
Contractor acknowledges receipt
Variation is authorised before work begins

Step 2: Variation execution

Contractor executes variation work
Work must comply with contract standards
Principal agent inspects variation work

Step 3: Variation valuation

Principal agent values variation
Uses bill rates, fair rates, or cost plus method
Variation value added to payment certificate

How Variations Affect Payment Certificates

Variations impact payment certificates in several ways:

Gross value increase:

Variation value added to gross work value
Increases total gross value for the period
Increases retention amount (retention applies to gross including variations)

Timing considerations:

Variations executed during period included in interim certificate
Variations authorised but not executed excluded until work done
Final account variations settled in final certificate

Valuation methods:

Bill rates — Quick, uses existing rates, preferred method
Fair rates — Negotiated rates, requires agreement
Cost plus — Actual cost plus percentage, used for complex variations

Common Variation Disputes

Variation disputes often arise from:

Unauthorised work — Work done without variation order
Valuation disagreements — Disputes over variation rates
Scope disputes — Disagreement about what constitutes variation
Timing issues — Variations claimed late or not properly documented

Preventing disputes:

Always obtain variation order before executing work
Document variation work thoroughly (photos, measurements, records)
Agree rates before executing work where possible
Include variations in payment claims promptly
Maintain clear variation register

Common Disputes and How to Avoid Them

Payment certificate disputes are costly, time-consuming, and damage relationships. Understanding common dispute causes helps prevent them.

Dispute 1: Late Payment Certificates

Problem: Principal agent issues certificates after contract deadline, delaying payments.

Impact:

Contractor cash flow problems
Breach of contract by principal agent
Potential interest claims
Strained relationships

Prevention:

Clear contract deadlines for certificate issuance
Principal agent planning and resource allocation
Early contractor claim submission
Automated reminders and workflows

Dispute 2: Under-Valuation of Work

Problem: Principal agent values work below contractor’s assessment, reducing payment.

Impact:

Reduced cash flow for contractor
Disputes over measurement and rates
Potential adjudication or arbitration
Project delays if contractor disputes

Prevention:

Clear measurement standards and methods
Regular site meetings to discuss valuations
Detailed supporting documentation from contractor
Fair and transparent valuation process

Dispute 3: Variation Valuation Disputes

Problem: Disagreement over variation rates or whether work constitutes variation.

Impact:

Delayed variation payments
Cash flow impact
Potential contract disputes
Project delays

Prevention:

Variation orders issued before work
Rates agreed before work execution
Clear variation documentation
Regular variation register updates

Dispute 4: Retention Release Disputes

Problem: Disagreement about when retention should be released or amounts to be released.

Impact:

Contractor cash flow tied up
Disputes over practical completion
Disputes over defect rectification
Final account delays

Prevention:

Clear contract terms for retention release
Proper practical completion certification
Timely defect rectification
Clear final completion procedures

Dispute 5: Defect Deductions

Problem: Principal agent deducts amounts for defects contractor disputes.

Impact:

Reduced payment amounts
Disputes over defect responsibility
Cash flow impact
Relationship damage

Prevention:

Clear defect identification and notification
Fair defect assessment process
Opportunity for contractor to rectify
Proper defect documentation

Timeline Requirements: When Claims Must Be Submitted and Certificates Issued

JBCC contracts specify strict timelines for payment claims and certificate issuance. Missing these deadlines can delay payments and breach contract terms.

Contractor Payment Claim Deadlines

Under JBCC PBA 2018 clause 6.2, contractors must submit payment claims by a specified date each month (typically the 25th or last working day of the month).

Claim submission requirements:

Submitted by contract deadline
Include all required information
Supported by measurement sheets and documentation
Include variation claims
Submitted to principal agent

Late claim consequences:

May be excluded from current certificate
Included in next certificate (delaying payment)
Potential breach of contract by contractor

Principal Agent Certificate Issuance Deadlines

The principal agent must issue payment certificates within a specified timeframe after receiving the contractor’s claim (typically 7-14 days under JBCC PBA 2018 clause 6.2).

Certificate issuance requirements:

Issued within contract deadline
Include all required information
Accurate calculations
Properly signed and authorised
Copies distributed to all parties

Late certificate consequences:

Breach of contract by principal agent
Delayed payments to contractor
Potential interest claims
Contractual penalties (if specified)

Payment Deadlines

Once a certificate is issued, the employer must pay the certified amount within the payment period specified in the contract (typically 14 days under JBCC PBA 2018 clause 6.2).

Payment requirements:

Paid by due date specified in certificate
Paid in full (unless valid set-off)
Paid to contractor’s nominated account
Payment confirmation provided

Late payment consequences:

Breach of contract by employer
Interest on overdue amounts (if contract provides)
Potential suspension of work by contractor
Damage to relationship

Timeline Planning

Effective payment certificate management requires timeline planning:

Monthly cycle example:

Day 1-24: Work execution and documentation
Day 25: Contractor submits payment claim
Day 26-32: Principal agent assesses and issues certificate
Day 33-46: Employer processes and pays
Day 47: Payment received by contractor

Critical path:

Contractor claim submission deadline
Principal agent certificate deadline
Employer payment deadline
Each deadline affects the next

Missing any deadline delays the entire payment cycle, impacting cash flow and potentially breaching contract terms.

How Wakha Automates the Entire Payment Certificate Process

Managing JBCC payment certificates manually — tracking claims, calculating retentions, valuing variations, issuing certificates, and monitoring payments — is time-consuming, error-prone, and stressful. Construction management software like Wakha automates these workflows, ensuring accuracy, compliance, and timely payments.

Automatic Payment Certificate Generation

Wakha generates JBCC payment certificates automatically based on:

Work completed and measured
Variations authorised and executed
Retention rates and calculations
Previous payments made
Contract terms and rates

Certificate features:

Professional certificate format
All calculations shown
JBCC-compliant structure
Digital signatures
PDF export for distribution

Retention Tracking and Calculations

Wakha automatically tracks retention throughout the project:

Calculates retention on each payment
Tracks total retention accumulated
Identifies retention release dates
Calculates retention releases at practical and final completion
Generates retention reports

Retention management:

Automatic retention calculations
Retention release tracking
Retention reports for cash flow planning
Alerts for retention release dates

Variation Management

Wakha manages variations from instruction to payment:

Variation order creation and tracking
Variation work execution tracking
Variation valuation (bill rates, fair rates, cost plus)
Variation inclusion in payment certificates
Variation register and reporting

Variation features:

Digital variation orders
Variation approval workflows
Automatic variation valuation where possible
Variation tracking and reporting
Variation impact on cash flow

Payment Tracking and Monitoring

Wakha tracks all payments throughout the project:

Payment certificate tracking
Payment due dates and deadlines
Payment receipt confirmation
Overdue payment alerts
Payment history and reporting

Payment management:

Automatic payment due date calculation
Payment receipt tracking
Overdue payment alerts
Payment history reports
Cash flow forecasting based on payment schedule

Integration with Project Management

Wakha’s payment certificate module integrates with project management:

Work completion linked to payment certificates
Site diary entries support payment claims
Budget tracking includes payment certificates
Cash flow forecasting based on payment schedule
Client portal shows payment status

Integrated workflows:

Work completion automatically feeds payment certificates
Site diary supports payment claim documentation
Budget tracking includes certified amounts
Cash flow forecasts based on payment schedule
Real-time payment status visibility

Real-World Benefits

Using Wakha for payment certificate management delivers tangible benefits:

Time savings:

Automatic calculations eliminate manual work
Certificate generation in minutes, not hours
Reduced administrative burden
More time for site management and business development

Accuracy:

Automatic calculations reduce errors
Consistent application of contract terms
Accurate retention and variation tracking
Reliable payment records

Compliance:

JBCC-compliant certificate format
Automatic deadline tracking
Contract term compliance
Audit trail for all payments

Cash flow:

Faster certificate generation
Better payment tracking
Improved cash flow forecasting
Reduced payment delays

Getting Started with Wakha

Wakha’s payment certificate module is available on all plans:

Builder plan (R2,499/month) — Basic payment certificate generation
Developer plan (R6,999/month) — Full payment certificate automation with variation management
Enterprise — Custom payment certificate workflows and integrations

The module includes:

JBCC/NEC/GCC payment certificate generation
Automatic retention calculations
Variation management and valuation
Payment tracking and monitoring
Cash flow forecasting
Digital certificate distribution

To see how Wakha can streamline your payment certificate process, request a demo or explore Wakha’s features.

Frequently Asked Questions

What happens if the principal agent doesn’t issue a payment certificate on time?

If the principal agent fails to issue a payment certificate within the contract deadline, this constitutes a breach of contract. The contractor may be entitled to:

Interest on overdue amounts (if contract provides)
Potential suspension of work (if contract allows)
Dispute resolution procedures
Damages for breach of contract

However, contractors should first attempt to resolve the issue through communication before escalating to formal dispute procedures.

Can a contractor dispute a payment certificate?

Yes. Contractors can dispute payment certificates if they believe:

Work has been under-valued
Variations have been incorrectly valued or excluded
Retention has been incorrectly calculated
Defect deductions are unfair or incorrect
Other amounts have been incorrectly calculated

Dispute procedures are typically specified in the contract and may include:

Written notice of dispute
Meeting to resolve dispute
Adjudication (if contract provides)
Arbitration or litigation (if dispute not resolved)

How is retention released if practical completion is delayed?

If practical completion is delayed, retention release is also delayed. The penultimate certificate (releasing 50% retention) is issued only when practical completion is achieved, regardless of the original programme date. Contractors should plan for this in their cash flow forecasts.

What happens to variations that aren’t included in interim certificates?

Variations that are authorised but not yet executed are excluded from interim certificates until the work is completed. Variations executed but not yet valued may be included at a provisional value, with final valuation in the final account. All variations should be settled in the final certificate.

Can payment certificates be issued for work that doesn’t meet quality standards?

Payment certificates should only include work that meets contract quality standards. If work is defective or incomplete, the principal agent should:

Exclude defective work from the certificate
Deduct amounts for defects (if contract allows)
Require rectification before certifying payment

However, the principal agent must be fair and reasonable — minor defects that don’t affect functionality may not justify exclusion from payment.

Conclusion

JBCC payment certificates are the foundation of construction project cash flow. Understanding how to issue and manage them correctly — from contractor claims to principal agent assessment, retention calculations, variation management, and final accounts — is essential for operating successfully in the South African construction industry.

The process is complex, with strict timelines, detailed calculations, and multiple parties involved. Manual management is time-consuming, error-prone, and stressful. Construction management software like Wakha automates payment certificate generation, retention tracking, variation management, and payment monitoring, ensuring accuracy, compliance, and timely payments.

If you’re managing construction projects under JBCC contracts and want to streamline your payment certificate process, Wakha can help. Request a demo to see how automated payment certificate generation can improve your cash flow and reduce administrative burden.

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