How it is calculated
Pro rata recovery to date = advance × (cumulative % billed − 10%) ÷ (80% − 10%), between 0 and the full advance
Recovery in a bill = recovery to date − recovered earlier (never more than the balance)
Interest = outstanding balance × rate × days ÷ 365, from the payment date to each recovery date, both days inclusive
- Amount: under clause 10B(ii) of the CPWD General Conditions of Contract 2023, mobilisation advance not exceeding 10% of the tendered amount may be given if the contractor asks in writing within six months of the order to commence. It is released in two or more instalments of up to 5% each; later instalments follow proof that the earlier one was used. Before each release the contractor gives bank guarantees, not more than six, for 110% of the advance, kept renewed until it is recovered.
- Interest and recovery: clause 10B(iii) charges simple interest at 8% a year from the date of payment to the date of recovery, both days inclusive, on the outstanding advance. Recovery is by deduction from the contractor's bills starting after the first 10% of the gross value of work is executed and paid, pro rata to the gross value billed beyond 10%, so that the whole advance is recovered by the time 80% of the gross value is executed and paid, together with interest on the outstanding amount to the date of each recovery.
- Other methods: the DoE Manual for Procurement of Works 2025 (para 5.3.1) allows an interest-bearing advance of 10% in two instalments of 5% for specialised and capital-intensive works, and says an interest-free advance should be recovered on a time basis, not linked to progress. The contract must state the amount, interest and recovery schedule. Use the fixed % or equal-instalment methods for such contracts.
Worked example
Illustrative numbers. On a ₹10,00,00,000 contract, ABC Infra Private Limited takes ₹50,00,000 on 1 April 2026 and another ₹50,00,000 on 15 June 2026. Bill 1 (₹80 lakh, 8% billed) is below the 10% start, so nothing is recovered. Bill 2 takes the cumulative to ₹2 crore, 20% of the contract: recovery to date is ₹1 crore × (20 − 10) ÷ 70 = ₹14,28,571. Interest on the first instalment for 91 days and the second for 16 days, at 8%, is ₹1,17,260, so bill 2 carries a deduction of ₹15,45,832. Each later ₹1.5 crore bill recovers ₹21,42,857 with interest on the reduced balance, and the advance is cleared when the cumulative reaches ₹8 crore (80%) on 31 October 2026. Total interest is ₹2,61,918.
When the rule differs
Contracts on older CPWD conditions and many state PWD contracts may charge a different rate, some PSU and EPC contracts give interest-free advances recovered in fixed instalments, and some start recovery at a different percentage of progress. Interest on delayed recovery, the form of guarantee and the utilisation conditions also vary. Check your contract clause and the Schedule F entries before you rely on the figures.
Sources: CPWD General Conditions of Contract 2023 (Construction Works), clause 10B(ii) to (iv); Manual for Procurement of Works, Second Edition 2025, para 5.3.1 (Department of Expenditure). Checked 25 October 2026.
Common questions
How much mobilisation advance does CPWD allow?
Under clause 10B(ii) of the CPWD GCC 2023, up to 10% of the tendered amount, released in two or more instalments of up to 5% each, against bank guarantees for 110% of the advance.
What interest is charged on a CPWD mobilisation advance?
Clause 10B(iii) of the GCC 2023 charges simple interest at 8% a year on the outstanding advance, from the date of payment to the date of recovery, both days inclusive. Older contracts may carry a different rate.
When does recovery of mobilisation advance start?
Under the CPWD clause, recovery starts after the first 10% of the gross value of work is executed and paid, and is pro rata so that the whole advance is recovered by the time 80% is executed and paid.
Is interest recovered along with the advance?
Yes. Each recovery instalment is deducted together with the interest due on the entire outstanding amount up to the date of that recovery.
Can a mobilisation advance be interest-free?
The DoE Works Manual 2025 allows an interest-free advance where the situation warrants it, provided the tender says so, with recovery based on time rather than progress.