Throughout the building sector, it is generally understood that sluggish validations and delayed partial payments can easily raise project expenses by 10–20%, particularly within public-private partnership – or PPP – agreements which include several nations. In Kenyan-EU infrastructure projects, these increases are seldom the result of inadequate work by the contractor. Rather, they frequently originate from differing notification times, complicated authorisation processes, and escrow stipulations which do not correspond to each other within diverse purchasing legislation.
A recent East African energy PPP serves as a useful illustration. Though the finance was guaranteed, a three month wait for payment verification commenced a series of events – sub-contractor demands accumulated, and exchange rate dangers grew. The answer wasn’t court action; the sides instead gave priority to harmonising legal time limits, equating Kenyan public purchasing regulations with EU lender payout demands, connecting escrow releases to definite stages, and putting in “adjudication-first” dispute clauses based on JCT contract formats.
As a result of cases such as this, many international project funders presently integrate three useful defences from the beginning:
• equalised provisional payment dates across regions,
• compulsory adjudication phases prior to mediation, and
• escrow or performance guarantee schemes assessed by lawyers in each pertinent nation.
O’Bang Law’s building and projects divisions often aid in setting up these safeguards in cooperation with ALFA International associates in over sixty countries. The aim is uncomplicated; to make certain that payment security is viable, to control regulatory variations, and to maintain steady project monetary flow.