Construction Payment Certificate (Kenya)
INTERIM PAYMENT CERTIFICATE
Architects and Quantity Surveyors Act (Cap. 525) | Value Added Tax Act No. 35 of 2013
Certificate No: [Certificate Number]
Valuation Date: [Valuation Date]
Certificate Date: [Certificate Date]
Payment Due Date: [Payment Due Date]
Project: [Project Title]
Contract Reference: [Contract Reference]
Employer: [Employer Name]
Contractor: [Contractor Name]
Certifying Professional: [Certifier Name]
VALUATION OF WORKS EXECUTED TO DATE
Gross valuation of all works executed to [Valuation Date]: [Gross Valuation]
Less: Retention deducted: [Retention Deducted]
Less: Previously certified amounts: [Previously Certified]
NET AMOUNT DUE THIS CERTIFICATE: [Net Amount Due]
Add: VAT at 16% (VAT Reg. No. [Contractor VAT Number]): [VAT Amount]
TOTAL PAYABLE (inclusive of VAT): [Total Payable]
PROJECT SUMMARY
Original contract sum: [Total Contract Sum]
Estimated project completion: [Completion Percentage]
Certifier's notes: [Certifier Notes]
CERTIFICATION STATEMENT
I, [Certifier Name], certify that the value of works executed to [Valuation Date] has been assessed in accordance with the construction contract and the priced bill of quantities, and that the amounts stated in this certificate accurately reflect the value of works completed to the valuation date.
The Employer is directed to pay the sum of [Total Payable] to the Contractor by [Payment Due Date]. Failure to pay the certified amount within the payment period entitles the Contractor to interest and, after notice, to suspend the works in accordance with the construction contract.
This certificate is issued in my professional capacity as a registered professional under the Architects and Quantity Surveyors Act (Cap. 525) / Engineers Act No. 43 of 2011 of Kenya.
Contract Administrator (Architect / QS / Engineer)
________________
Signature
Received by Employer
________________
Signature
What Is a Construction Payment Certificate (Kenya)?
A Construction Payment Certificate in Kenya sets out the facts the maker formally declares for the purpose it serves.
Under standard Kenyan construction contracts — including the NCA standard form, JBCC-adapted forms, and FIDIC conditions used for international projects in Kenya — the contract administrator conducts a periodic valuation (typically monthly) by measuring the value of completed works against the priced bill of quantities (BOQ) prepared by a registered quantity surveyor under Cap. 525. The architect or contract administrator then issues a payment certificate specifying the gross value of work executed to date, the retention deducted (typically 5% to 10% of the certified amount), any previously certified amounts, and the net amount due in this period. The employer must pay the certified amount within the period specified in the construction contract — typically 14 to 28 days of the certificate date.
The legal status of a payment certificate under Kenyan construction contracts is that of a condition precedent to payment — the employer's obligation to pay is triggered by the certificate, and undercertification by the contract administrator may give the contractor a cause of action in negligence against the certifier if the certifier owes an independent duty of care to the contractor. The High Court of Kenya (Commercial Division) and the Nairobi Centre for International Arbitration (NCIA) regularly deal with disputes about the validity and enforcement of payment certificates.
A Construction Payment Certificate differs from a Final Account — the former is an interim payment during construction, while the final account statement settles all outstanding financial matters at the end of the contract, including agreed variations, final retention release, and any claims or counterclaims. The payment certificate also differs from a Practical Completion Certificate, which confirms that the works have reached practical completion and triggers the start of the defects liability period and the release of the first half of retention.
For VAT purposes under the Value Added Tax Act No. 35 of 2013, administered by the Kenya Revenue Authority (KRA), a payment certificate for construction services triggers the contractor's VAT accounting obligation. VAT at 16% is chargeable on construction services where the contractor is VAT-registered, and the employer must confirm whether it is entitled to input VAT recovery on the certified amount. Under Kenya law, Section 24 of the Land Registration Act 2012 (No. 3 of 2012) and Section 2 of the Law of Contract Act (Cap 23) govern the core requirements for this type of document.
When Do You Need a Construction Payment Certificate (Kenya)?
A Kenya Construction Payment Certificate is required in every construction project where the contract provides for periodic payment and a contract administrator certifies payment, and is specifically necessary in the following situations.
A Construction Payment Certificate is required each time the employer must make an interim payment to the contractor under a construction contract governed by the National Construction Authority Act No. 41 of 2011. The certificate provides documentary evidence of the amount due and payable, protects the employer from being overcharged, and confirms that the contractor has earned the payment by completing the claimed volume of work.
A Construction Payment Certificate is needed when the employer is a company registered under the Companies Act No. 17 of 2015 and requires a formal document to support its capital expenditure accounting, VAT input tax recovery with the Kenya Revenue Authority (KRA), and audit trail for the funds disbursed from the employer's construction budget.
A Construction Payment Certificate is required when the employer is financing the construction through a bank or financial institution regulated by the Central Bank of Kenya (CBK). Mortgage and construction lenders typically require a certified payment certificate from the project architect before disbursing any construction loan drawdown. The architect's certification confirms to the bank that the funds requested correspond to actual work completed on site.
A Construction Payment Certificate is needed when the project involves government or county government procurement under the Public Procurement and Asset Disposal Act No. 33 of 2015. The PPRA requires that all payments to construction contractors under public contracts be supported by a properly certified payment certificate from the supervising engineer or architect, forming part of the payment audit trail maintained by the Auditor-General under the Public Audit Act No. 34 of 2015.
A Construction Payment Certificate is required when a dispute arises between the employer and the contractor about the value of works completed — the certificate provides the contractually established baseline for resolving the dispute, whether through negotiation, mediation, arbitration at the Nairobi Centre for International Arbitration (NCIA), or litigation in the High Court of Kenya. Under Kenya law, Section 24 of the Land Registration Act 2012 (No. 3 of 2012) and Section 2 of the Law of Contract Act (Cap 23) govern the core requirements for this type of document.
What to Include in Your Construction Payment Certificate (Kenya)
A Kenya Construction Payment Certificate must include the following essential elements to be effective as a contractual payment mechanism and consistent with the Architects and Quantity Surveyors Act (Cap. 525) and standard Kenyan construction contract practice.
Project and Contract Details: The full name of the construction project, the construction contract reference number, the name of the employer, the name of the contractor (including NCA registration number and category), and the name and registration number of the certifying architect or quantity surveyor (Board of Registration of Architects and Quantity Surveyors — BORAQS — registration number).
Certificate Number and Valuation Date: A sequential certificate number (Interim Payment Certificate No. 1, 2, 3, etc.) and the valuation date — the cut-off date up to which the works included in this certificate have been measured and valued.
Gross Valuation of Work Executed: The total measured value of all construction works completed to the valuation date, calculated by reference to the priced bill of quantities (BOQ) and any agreed variation orders. The gross valuation includes preliminaries, measured works, materials on site (where the contract allows payment for unfixed materials), and agreed variations.
Retention Deduction: The amount of retention withheld from the gross valuation at the contractually agreed retention rate (typically 5% to 10%), up to the maximum retention limit specified in the contract. Retention accumulates over the project and is released in two tranches — at practical completion and at the end of the defects liability period.
Previously Certified Amounts: The total of all sums certified in previous payment certificates, deducted from the gross valuation to arrive at the value of works completed in the current period only.
Net Amount Due: The net amount payable by the employer to the contractor for the current period — calculated as gross valuation minus retention deducted minus previously certified amounts. The employer must pay this sum within the payment period specified in the construction contract (typically 14 to 28 days).
VAT: VAT at 16% under the Value Added Tax Act No. 35 of 2013, charged on the net amount due where the contractor is VAT-registered with the Kenya Revenue Authority (KRA). The certificate should state the contractor's VAT registration number and the VAT amount separately from the net certified sum.
Certifier's Statement and Signature: A declaration by the certifying architect or quantity surveyor that the certificate accurately reflects the value of works completed to the valuation date, signed in their professional capacity with their BORAQS registration number. The forms-legal.com Kenya Construction Payment Certificate template provides a structured format covering all eight elements above.
Additional elements include cumulative certified amount, project completion percentage, and reference to any deductions for liquidated damages. Related documents include the Construction Contract governing the certification procedure and the Practical Completion Certificate marking the end of the construction programme. Under Kenya law, Section 24 of the Land Registration Act 2012 (No. 3 of 2012) and Section 2 of the Law of Contract Act (Cap 23) govern the core requirements for this type of document. Under Kenya law, Section 3 of the Companies Act 2015 (No. 17 of 2015) and Section 15 of the Employment Act 2007 (No. 11 of 2007) govern the core requirements for this type of document.
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note = {Free legal document template}
}Frequently Asked Questions
A Construction Payment Certificate in Kenya is issued by the contract administrator named in the construction contract — most commonly a registered architect under the Architects and Quantity Surveyors Act (Cap. 525) or a registered quantity surveyor. The certifier must be registered with the Board of Registration of Architects and Quantity Surveyors (BORAQS) and must act independently and impartially in certifying the value of works completed, notwithstanding that they are typically appointed and paid by the employer. The independent quasi-judicial nature of the certifier's role is recognised by the High Court of Kenya — in disputes about payment certificates, courts examine whether the certifier acted in good faith and within the scope of their contractual authority. For public sector construction contracts under the Public Procurement and Asset Disposal Act No. 33 of 2015, the supervising engineer registered under the Engineers Act No. 43 of 2011 (regulated by the Engineers Board of Kenya — EBK) may issue the payment certificate. The certifier's BORAQS or EBK registration number should appear on the face of the certificate.
If an employer fails to pay a certified amount within the payment period specified in the construction contract, the contractor has several remedies under Kenyan law. First, the contractor is entitled to interest on the overdue amount — many construction contracts specify the interest rate as the Central Bank of Kenya (CBK) base rate plus a margin. Second, the contractor is entitled to suspend the works after giving the employer written notice of the failure to pay and a reasonable period — typically 7 to 14 days — to remedy the default, consistent with principles recognised by the Nairobi Centre for International Arbitration (NCIA) and the High Court of Kenya. Third, if the employer's failure to pay persists, the contractor may be entitled to terminate the construction contract in accordance with the termination clause and claim the full value of works executed to the termination date. The certified amount is typically treated as a liquidated debt for the purposes of proceedings in the High Court of Kenya (Commercial Division) or Small Claims Court (for amounts up to KES 1 million). The Tax Procedures Act No. 29 of 2015 requires the contractor to account for VAT on sums certified even if the employer has not yet paid, creating a VAT cash flow risk that the construction contract should address through payment terms.
Retention money under a Kenya Construction Contract is a percentage — typically 5% to 10% of the certified gross valuation — withheld from each interim payment certificate as security for the contractor's obligations, particularly the obligation to rectify defects during the defects liability period (DLP). Retention accumulates in each interim payment certificate until it reaches the maximum retention limit specified in the contract (typically 5% of the total contract sum). At practical completion, 50% of the accumulated retention is released to the contractor — this release is triggered by the architect's practical completion certificate. The remaining 50% is held until the end of the defects liability period (typically 12 months after practical completion) and released only after the architect certifies that all notified defects have been satisfactorily remedied. The employer holds retention money as a trustee for the contractor — under principles of English equity received in Kenya under Section 3 of the Judicature Act (Cap. 8), the contractor may apply to the High Court for an order requiring the employer to place retention money in a separate designated bank account to protect it against employer insolvency. Disputes about the timing and amount of retention release are among the most common subjects of construction arbitration at the NCIA.
Yes. Construction services in Kenya are standard-rated for VAT purposes under the Value Added Tax Act No. 35 of 2013, administered by the Kenya Revenue Authority (KRA). A contractor whose annual taxable turnover exceeds KES 5 million must register for VAT and charge VAT at 16% on all taxable construction services supplied to employers in Kenya. The VAT amount must be shown separately on the payment certificate and on the contractor's VAT invoice. Where the employer is a VAT-registered business, it may recover the input VAT on construction services as a credit against its own output VAT liability, provided the construction services relate to a taxable business activity. Where the employer is a private individual or a VAT-exempt entity (such as certain NGOs or educational institutions), VAT on construction costs is a real additional cost that cannot be recovered. The KRA may audit construction projects and assess VAT on the basis of payment certificates and bank records — both the contractor and the employer should maintain complete records of all certified amounts, VAT charged, and payments made. The Tax Procedures Act No. 29 of 2015 imposes penalties of up to 100% of unpaid VAT for non-compliance.
Yes. A contractor in Kenya may dispute a payment certificate if the contractor believes the certifying architect or quantity surveyor has undervalued the completed works, improperly deducted retention, applied liquidated damages without a valid extension of time entitlement, or failed to certify the value of agreed variations. The contractor must follow the dispute resolution procedure specified in the construction contract — typically a formal written notice of dissatisfaction to the contract administrator, followed by escalation to the employer, then mediation or adjudication, and ultimately arbitration at the Nairobi Centre for International Arbitration (NCIA) under the Arbitration Act No. 4 of 1995 (revised 2022). Kenya does not yet have a statutory adjudication regime for construction payment disputes comparable to the UK Housing Grants, Construction and Regeneration Act 1996 — contractual adjudication provisions must therefore be expressly included in the construction contract if rapid interim dispute resolution is desired. Pending the outcome of a dispute, the contractor is generally not entitled to withhold performance of the works on the basis of a disputed certificate — underpayment disputes and performance obligations run on parallel tracks under Kenyan construction contract law.
A Kenya Construction Payment Certificate is an interim document issued periodically (typically monthly) during the construction programme to certify the value of works completed to a specific valuation date and the amount payable for that period. Interim certificates allow the contractor to be paid progressively for work done rather than waiting for completion of the entire project. A Final Account, by contrast, is the detailed financial settlement prepared at the end of the construction contract that reconciles all sums previously certified in interim certificates, all agreed variations (additions and omissions), all claims for loss and expense, all deductions for liquidated damages and defective work, and the final retention release. The Final Account establishes the final contract sum — which may differ from the original contract sum due to variations and claims — and the net amount remaining to be paid to or recovered from the contractor. The Final Certificate issued by the contract administrator after agreement of the Final Account is typically conclusive as to the matters it covers, subject to any fraud or manifest error, and may extinguish further claims under the limitation period provisions of the Law of Limitation of Actions Act (Cap. 22). Both interim payment certificates and the Final Certificate should be retained by both parties as part of the project record.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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