The standard payment pattern at Indonesian repair yards is milestone-based: commonly 20–30 percent on contract or dock entry, progress payments against certified work during the stay, and a final balance on redelivery — with growth work invoiced through variation orders. Newbuild contracts stretch the same logic across keel, launch and delivery milestones. What protects the owner is not the percentages themselves but three mechanisms: certification before payment, remeasurement before invoicing, and retention or warranty terms with real teeth. Here is how the system works and where it goes wrong.
The typical structures, repair vs newbuild
| Contract type | Common structure | Notes |
|---|---|---|
| Routine docking/repair | 20–30% at entry · progress against certified work · balance at redelivery | Short stays may compress to 50/50 |
| Major repair/refit | Monthly progress claims against measured work | Quantity surveying discipline essential |
| Newbuild | Instalments at contract, steel-cutting, keel, launch, delivery | Refund guarantees for large advances |
| Growth work | Variation orders at tender unit rates | Written VO before work proceeds |
Currency practice: established yards quote and accept USD for foreign owners — our desk standardises all estimates in USD — while domestic contracts often run in rupiah; government-related fees are payable in rupiah regardless.
Mechanism one: certification before payment
A progress payment should buy verified progress, not calendar time. The clean pattern: the yard submits a progress claim listing completed lines; the owner’s representative walks the claim at the dock, certifies what is genuinely complete, and payment follows the certificate — not the claim. On dockings measured in weeks this can be as simple as a joint checklist before each instalment; on refits it becomes a monthly quantity-survey routine. Yards accustomed to serious owners expect this; resistance to certification is itself information about how the rest of the project will run. This is a core function of the owner-side supervision described on our shipyard selection & vetting page.
Mechanism two: remeasurement before invoicing
Most payment disputes in Indonesian dockings are really quantity disputes wearing payment clothes: steel tonnage, blasting areas and staging volumes that grew between the dock floor and the invoice. The prevention is procedural, not adversarial — quantities measured jointly as work completes, recorded on plate maps and area sketches, signed by both sides, and attached to each variation order. An invoice that arrives pre-agreed line by line gets paid without friction, which serves the yard as much as the owner. The unit-rate schedule that makes this possible must exist from tender day — the structure is in our RFQ writing guide.
Mechanism three: retention, warranty and the final balance
The final payment is the owner’s last leverage; spend it deliberately. Reasonable Indonesian practice: a modest retention (commonly around 5 percent) held for a defined warranty period, or a final balance payable only after sea trial and defect-list closure. Warranty terms on repair work typically run three to six months on workmanship; make sure the clause names a response obligation — a warranty the yard can ignore is decoration. For newbuilds, instalment protection runs the other way too: owners paying large early instalments should ask about refund guarantees from the yard’s bank, standard practice internationally and negotiable with the larger Indonesian builders — contract milestones for construction projects are covered in our newbuild articles and the newbuild supervision desk page.
Where payment structures go wrong — five patterns
One: front-loaded schedules — a yard asking for half the contract before dock entry is financing itself with your project; negotiate the curve back toward work done. Two: progress claims by percentage feel (“hull 70% complete”) instead of measurable lines; require line-item claims. Three: growth work performed on verbal instruction, priced retrospectively; no VO, no work — hold the line even under schedule pressure. Four: dock dues ambiguity — agree when the meter starts, stops and what suspends it, or extensions surface as surprise lines on the final invoice. Five: paying the final balance before the defect list closes — once paid, response times stretch. None of these require aggression; they require a written contract that mirrors the tender, and presence at the dock. Yards that welcome that discipline are exactly the yards worth using — capacity and cluster data to shortlist them is in the National Yard Register.
Negotiating a yard contract now? Send the draft and scope — the desk reviews payment structure, retention and VO mechanics against Indonesian practice, in USD. WhatsApp +62 811-3823-875 · sales@komodoluxury.com.
Dispute playbook: when payment and work fall out of step
Even well-structured contracts meet friction; what separates a recoverable dispute from a stalled vessel is the sequence of response. Step one: freeze the paper — assemble the contract, tender annexes, variation orders, remeasurement sheets and photo log into one chronology before emotions write the narrative; in our experience the party with the organised file usually prevails without escalation. Step two: separate the undisputed from the disputed — pay certified, agreed lines promptly and contest only the specific quantities or rates in question; withholding everything invites a yard lien response and gives away the reasonableness argument. Step three: escalate inside the yard first — commercial managers settle what dock foremen cannot, and most Indonesian yards prefer a negotiated close to a stalled dock slot they need for the next vessel. Step four: if formal steps loom, check the contract’s dispute clause — arbitration seat, governing law, language — before writing anything positional. Step five: whatever the outcome, close with a signed final account so the dispute cannot reopen. Prevention remains far better: certification, remeasurement and variation-order discipline make ninety percent of these steps unnecessary — but the playbook belongs in every fleet manager’s drawer regardless.
Frequently asked questions
What is the standard payment schedule at Indonesian shipyards?
For repair: commonly 20–30 percent at dock entry, progress payments against certified work, and the balance at redelivery. Newbuilds run instalments across contract, steel-cutting, keel, launch and delivery milestones.
Can foreign owners pay Indonesian yards in USD?
Established yards serving foreign owners quote and accept USD routinely; government-related fees remain payable in rupiah. Our desk standardises all project estimates in USD.
How is growth work paid?
Through written variation orders priced at the unit rates fixed in the tender, with quantities jointly remeasured before invoicing. Work without a VO is the single biggest source of payment disputes.
Is retention normal in Indonesian yard contracts?
A modest retention — commonly around 5 percent for a defined warranty period — or a final balance conditioned on defect-list closure is reasonable, negotiable practice, especially with larger yards.