Advances to Contractors
1264 E -Para No.64 of the 12th chapter of the Indian Railways Engineering Code
ACS (Engineering Code ) 58 dated 27.04.2022 Click here
As far as possible abstain from giving advances to Contractors. That means No payment is made except for work actually done.
GMs may, however, sanction subject to
Within the delegation of powers of GM
Works should be capital intensive.
Works should be specialized in nature.
The estimated value of the Tender should exceed Rs. 50 Crores (Exception: for Advances in exceptional cases - There is no minimum value.)
Advances to Contractors - 4 kinds
Interest rate to be decided by the Railway Board at the beginning of the Financial Year. The same will be applicable to the tenders to be opened in that Financial Year.
The recovery shall commence - When the value of the contract executed reaches 15% of the original contract value
The recovery shall be complete - When the value of the work executed reaches 85% of the original contract value.
The installments on each "on account bill" will be on a pro-rata basis;
Grant of advance is primarily in Railway's own interest
Not eligible - same Advance for same work from different officers.
Accounts Office - responsible for payment & recovery of such advances.
Recovery of Interest:
Interest shall be recovered on the advance outstanding for the period commencing from the date of payment of advance till the date of the particular on-account bill
Adjusted fully against the on-account bill along with pro-rata principal recovery.
Key Takeaways for MCQ
12th Chapter (Para 64) of Engineering Code and ACS 58 dated 27.04.2022
The estimated value of the Tender - should exceed Rs. 50 Crores (However this rule will not be applicable for Advances in exceptional cases.)
Exceptional cases - Maximum Advance is Rs.20 Lakhs.
Mobilisation Advance - Two stages (each stage 5%) - Maximum is 10% of Tender Value.
Advance against Machinery & Plant - Maximum Advance is 10 % of Tender Value or 75% of purchase price whichever is less.
Advance for accelerating progress of work - Maximum Advance is 5% of Contract Value.
All kinds of Advances except against Machinery & Equipment - Irrecoverable Guarantee (Bank Guarantee from Nationalized Bank, FDR, KVP, NSC) for 110% of the value of sanctioned advance (covering principal & Interest)
Recovery shall commence - the value of the Contract executed reaches 15% of the original Contract value and shall be completed when the value of the contract reaches 85 % of the Original Contract value.