06 September 2008
Mobilization payments are payments of funds to a supplier or contractor before, in anticipation of, and for the purpose of performance under the contract. Since these payments are not measured by contract performance, they differ from partial payments which are based on actual performance of tasks in furtherance of the contract.
06 September 2008
Advance payments may, for example, be advisable to cover the initial mobilization expenses for large civil works or custom-made goods. Any advance payments are to be liquidated from payments made to the supplier or contractor during performance of the contract, usually by deducting a percentage from each scheduled payment for performance.
06 September 2008
The basic purpose of Mobilisation advance is to extend financial assistance within the terms of contract to the contractor to mobilize the man and material resources for timely and smooth take off of the project or procurement of equipment material or other services contract. But, the Mobilisation Advance, especially the interest free advance was being misused in absence of either necessary safeguards or in absence of implementation of these safeguards provided in the contracts. Thus, the Mobilisation Advance so paid was prone to misuse by the contractors in building their own capital or for the purpose other than the one for which it was disbursed. In fact, the grant of interest free advance was proving to be counter-productive. In view of the history of its misuse, Commission vide its Circular No.NU/POL/19 dated 8th December1997 banned the provision of interest free Mobilisation. However, recently in view of representations from various organization, Commission has reviewed the earlier instructions and allowed the organizations to stipulate interest free advance with elaborate mechanism for safeguards against its misuse vide circular No.10/4/07 issued vide letter No.4CC-1-CTE-2 dated 10.04.2007. `More importantly the BGs taken in lieu of Mobilisation Advance need to be properly examined within respect to the acceptable format and any condition deterrent to the Govt.’s interest should be got withdrawn before acceptance besides verifying the genuineness of the Bank Guarantees from the bankers. Timely action for revalidation/encashment of BGs also need to be taken so as to protect the Govt. interest.
07 September 2008
Dear Sir, thanks for answer sir,
is it possible that Mobilization advance can be adjust with every running bill with some fixed percentage and after some time it will be write off automatically.