Work progress certification: its importance in the construction industry

In the construction industry, there are various legal components necessary to legitimize the project of a work and its construction. In this article, we are going to focus particularly on the work progress certification and its importance to complete an execution of this nature.

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What is the work progress certification and what role does it play in construction?

When we talk about work progress certification, we refer to a sworn statement that some work is being built or modified on a piece of land. As a result of this, the works that are being carried out must be notified to the Land Registry.

They are metrics valued based on a project's budget. They include the modifications that are carried out during the course of the work. It is validated by the project management of the work, through authorization from the professional association linked to the building being carried out.

The validation of the work progress certification is a guarantee to the owners of the work, banks, promoters, and other institutional bodies that the work is being carried out by the contractor. To reach this instance, the measurements that were presented since the beginning of the work are revealed and are subtracted from the total budget of the previous certifications.

In this way, the latest certification will reveal the precise cost of the modifications and the degree of progress of the work concerning previous certifications. The final objective of the work progress certificate is to generate compensation for the units executed in the development of the work to calculate the expenses accumulated during the course of the work.

Depending on the stage of construction of a work, they can be certified in two ways:

• A newly finished construction.
• Finished construction.
• New work under construction.

The work certification is implemented when the owner needs financing to continue the construction and takes out a mortgage on the property that is being built. Therefore, the work will be certified by the owner as finished, through a notarial deed, known as the final certification of work.

When verifying that the work exists, even if it is not finished, the owner can access compensation for the expenses invested, so that the work can continue.

When is the work progress certification necessary?

If the company takes charge of the work, it is mandatory to carry out the new work certification. However, if the work is carried out by an individual for personal use, you must leave a record of the new work to start contracting the supplies. If the objective is to sell, rent, or apply for a loan, it will also be mandatory to make the new construction certification.

Depending on the activity carried out in a work, you will need specific resources as well as materials to guarantee a higher quality result. The person in charge of this development must present a series of documents where they can validate these activities within the limits of the country. Also, you need to legitimize the payments within the liquidation obtained from the Legal Administration.

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Importance of work progress certification

One of the key elements of the work progress certification for construction companies are the parties interested in the project, that is, the surety agents, lenders, bankers, guarantee underwriters, etc.

These stakeholders have a vested interest in the financial performance of the construction company, as they have risk exposure in case the company runs into trouble if the project fails. The most reliable way for these stakeholders to control financial performance is through the measurements that this certification allows.

The collective concern of the stakeholders is second only to the owners and managers of the construction company itself. A well-managed construction company will have accurate and up-to-date measurements for every project, from the time the contract is signed to the end when the last item on which the checklist is completed, the final invoice is sent to the customer and received the final payment.

Project owners rely on these certifications to get an accurate measure of where they stand financially, concerning each project. The best-run, and most profitable, construction companies use work progress certification to track where they stand exactly on the progress of a project.

They also look at cost metrics (both the actual costs that have been spent so far, as well as the rigorously calculated estimate of the total costs required to complete the project), and exactly how much of those costs remain.

Requirements to collect a work progress certification

The main thing to carry out a work progress certification is to carry out a strict measurement of the parts of the work that are going to be certified. If there is also material that is not recorded in the measurements, it can also be presented as stockpiles. The line items must then be reflected in a measurement that matches the budget line items. But if these data are not there, the non-budgeted items must be added.

The work progress certification is charged when it is endorsed by the Facultative Management, the architect and engineer, who must authorize the budget and the percentage of work carried out.

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In short, the work progress certification is a document that allows construction companies to measure the progress of the work within the budget invested. Each certification carried out implies one more step in verifying expenses and modifications throughout the work.

It gives greater visibility to the resources available for the project and helps to obtain regular monitoring of the building. In addition, it contributes to knowing the financial performance of companies in the sector.