An employer will rarely make an unconditional pre-payment, that is, a down payment to a contractor at the start of the contract. He can, however, make early payment to the contractor for provision of offices, laboratory, and transport for the engineers staff on site, etc. (see Section 15.10). These matters by no means cover the contractors outgoings for his initial set-up, especially when the project is very large and overseas, so significant advance payments, secured by a repayment bond, are often allowed.
On the Mangla Dam project in Pakistan the contractor needed to purchase and bring a vast amount of constructional plant on site. To ease the financial burden on the contractor, the employer (in effect the government) agreed to purchase or pay for plant required by the contractor up to a value of 15 per cent of the contractors tender price excluding contingencies. The employer recovered this expenditure by deducting it in instalments over the first 30 months interim payments to the contractor under the contract. In this case the employer could obtain further security for his down payment by retaining ownership of the plant until he reimbursed his outlay on the plant.