Adron Homes & Property Limited

Standard Operating Procedure (SOP)

Document CON02

Directorate: Construction Directorate 

Effective Date: xx/xx/xxxx
Version: 1.0

1. PURPOSE
   • This SOP defines the structured process for authorizing and processing the first payment of construction contracts within the Construction Directorate.
   • It ensures compliance with the company’s delegation of authority (DoA), internal controls, and contractual obligations while leveraging the ERP system for workflow efficiency.
2. SCOPE
   • This procedure applies to all construction contracts managed by the Construction Directorate of ADRON, where payments are processed through the ERP system.
3. KEY ROLES & RESPONSIBILITIES
   • Project Manager (PM): Initiates the first payment request and ensures all supporting documents are attached
   • Resident Quantity Surveyor (RQS): Provides supporting documentation (BOQ, milestone verification, work completion evidence).
   • Project Director (PD): Reviews and approves the payment request before submission for further processing
   • Legal Officers: Ensure the contract is duly executed and validate compliance with contractual terms.
   • Project Accountant: Confirms fulfilment of pre-payment conditions and processes payment in the ERP system.
4. PROCEDURE
   • Initiation of First Payment Request
     • The Project Manager (PM) initiates, prepares and submits a First Payment Request in the ERP system, including:
       • Copy of the executed contract
       • ERP Navigation
       • Construction Project Module >>Payable Booking Process> Project Payable Booking
       • PM must specify the following among others.
       • Contract Type as Performance Certificate Based
       • 1st Payment amount
       • Net contract sum
       • The PM must attach relevant documents including 1st payment advance invoice from contractor.
       • The PM must select relevant BOQ summary Items while the system computes the relevant withholding tax as may have been set up, if any?
       • At submission, the transaction moves to the RQS for reviews
5. Resident Quantity Surveyor (RQS) certification of completed works (measured works, milestone verification).
   • Any additional supporting documents (e.g., BOQ, advance payment guarantee, insurance certificates).
   • RQS validates bills and attaches relevant documents as deemed necessary.
   • RQS review, approves and submits for the attention of the Project Controller (CPC)
6. Approval Process
   • The Project Director (PD) reviews the payment request for accuracy and completeness.
   • If compliant, the PD approves the request in the ERP system.
   • If non-compliant, the request is returned to the PM for correction
7. Legal & Contractual Validation
   • Legal Officers verify:
     • The contract is duly executed.
     • Payment terms comply with the agreement (e.g., advance payment conditions, guarantees).
     • No legal impediments to payment exist
     • Once approved, the document moves to Internal Control Officer.
8. Internal Control Officer
   • Internal Control verify:
     • The contract is duly executed.
     • Payment terms comply with the agreement (e.g., advance payment conditions, guarantees).
     • No legal impediments to payment exist.
9. Pre-Payment Validation by Finance
   • The Project Accountant confirms:
     • The contract is registered in the ERP system.
     • All pre-payment conditions (e.g., bank guarantees, insurances) are fulfilled.
     • The payment amount aligns with the DoA limits
   • Group Project Finance Manager (GPFM) Responsibilities
     • Group Project Finance Manager (GPFM) review and validate all attached documents.
       • Subjective Final Approval – DOA
       • Approvals Limits
       • Less than N5 m– GPFM
       • Greater than – N5m – Chairman
     • At final approval, the system auto-creates the e-payment voucher for the approved net payable amount.
   • Construction Treasury Responsibilities
     • Project Accountant process e-payment vouchers and submits for cheque or transfer approval on ERP.
       • Bill Payment Approval
       • Project Accountant and Internal Control
       • GPFM and Zonal Internal Control
       • Zonal Internal Control Officer signs cheque and e-payment voucher on ERP at the same time
       • Zonal Project Accountant or GPFM signs cheque and e-payment voucher on ERP at the same time
10. ERP Processing & Payment Release
    • Once all approvals are secured, the Project Accountant processes the payment in the ERP system.
    • The system enforces authorization limits and maintains an audit trail.
    • Payment is released to the contractor as per agreed terms (e.g., bank transfer).
11. Compliance & Documentation
    • Delegation of Authority (DoA): All approvals must comply with the company’s DoA matrix.
    • ERP Archiving: All supporting documents (contracts, certifications, approvals) must be uploaded to the ERP for audit purposes.
    • Audit Trail: The ERP system logs all actions (submission, approvals, rejections) for transparency.
12. Exceptions & Dispute Resolution
    • If discrepancies arise (e.g., incomplete documentation, non-compliance with contract terms), the request is escalated to the Finance & Legal Departments for resolution before reprocessing