Milestone payment linked to IE-certified physical progress, not calendar date
NHAI Circular (2022)
Open the sourceWhat the circular says
NHAI issued a clarification circular confirming that milestone payments in EPC contracts are triggered by the Independent Engineer's certification of physical progress, not by the calendar milestone date. If physical progress matches or exceeds the milestone schedule but the IE has not issued the certificate, the payment obligation does not arise. This clarification followed disputes over milestone payment timing when IE inspections were delayed due to access issues.
Contractor action
Push for IE inspection scheduling 15 days before your expected milestone completion date. If IE access is denied or delayed for reasons within NHAI's control, issue a formal notice and document the delay in writing. Delayed IE certification due to NHAI-side access failure may constitute a compensation event under the contract.
Related circulars
Drone-based progress measurement mandatory for highway packages above ₹200 crore
NHAI directed that UAV/drone surveys are the primary method for monthly physical progress measurement on all EPC and HAM packages with a contract value above ₹200 crore. The Independent Engineer is required to use drone-generated point cloud data and orthomosaic imagery as the reference for chainage-wise progress certification. Manual measurement books remain in use for smaller structures and culverts, but corridor-level earthwork and pavement progress must be drone-certified.
Performance Security reduction schedule post-PCOD clarified for HAM contracts
NHAI issued a clarification circular on the schedule for reducing the Performance Bank Guarantee after Provisional Completion Order (PCOD) is issued in HAM contracts. The circular confirms: the performance security reduces from 5% to 2.5% of TPC after PCOD, contingent on the concessionaire meeting the first annuity payment schedule. The remaining 2.5% is held until the end of the first O&M year. Full release requires completion of the first annual audit under the O&M Agreement.
Sub-contracting above 25% of contract value requires Authority Engineer prior approval
NHAI reinforced the sub-contracting restriction under GCC Clause 7: contractors may not sub-contract more than 25% of total contract value without written prior approval from the Authority Engineer. The circular specifically covers specialised works categories (bituminous layers, bridge deck construction, drainage and utility works). Unapproved sub-contracting is grounds for termination and disqualification from future NHAI bids for a period of two years.
CCIE conciliation is mandatory before arbitration in NHAI contracts
NHAI issued guidance reinforcing that the Construction Contract Conciliation and Intervention Expert (CCIE) process is a mandatory pre-arbitration step in NHAI contracts. A contractor who files for arbitration without first exhausting CCIE conciliation risks an objection on maintainability. The CCIE process requires both parties to appear before the nominated expert within 30 days of appointment.
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