Why Problems Surface After Selection
Most disputes and clawbacks in smart factory projects don't come from the selection review. They come from spending and documentation during the agreement period. These risks belong to the build phase itself and are separate from the five-year post-completion maintenance obligations.
The governing document is the 2026 Detailed Management Standards for the Smart Factory Deployment and Expansion Program, issued in March 2026. News reports mention an August amendment, so check the official text for the exact revised provisions. This guide covers everything from signing the agreement to final inspection and settlement. Post-completion obligations are covered in a separate article.
Agreement Stage: Designing the Company Contribution
Separate cash from in-kind
The budget is split between the government grant and the company contribution. The ratio depends on the project type announced in each call. Salaries of dedicated project staff can count as in-kind contribution, but only up to 20% of the total company contribution.
Non-payment can end the agreement
If the contribution isn't paid on time, you'll be given an additional payment window of up to 14 days. If it's still unpaid after that, the agreement can be terminated. If you're funding the contribution with a policy loan or guarantee, confirm before signing that the funds will be disbursed before the payment deadline. Delayed loan reviews are a common reason companies miss the deadline.
During the Build: When You Need an Amended Agreement
The following changes require prior approval. If you make the change first and report it afterward, those costs may be disallowed.
Before work starts, check that your supplier contract and statement of work match the items, quantities, and specs in the approved business plan. Related-party relationships with suppliers, kickbacks, and fake or inflated builds are classic grounds for sanctions, clawbacks, and bans from future programs.
Preparing for Final Inspection: Evidence Checklist
Common Findings After Settlement and How to Respond
The most frequent findings are builds that don't match the planned specs, missed performance targets, and missing evidence. Depending on the case, these lead to requests for supplementary documents, budget reductions, or clawbacks. Supplementary documents or objections must be filed by the stated deadline, or you lose the chance to explain. We recommend making one person responsible for tracking every notice date and filing deadline.
How KITIM Supports Spending and Settlement
KITIM reviews your budget structure before you sign, advises on whether a change needs an amended agreement, and runs mock inspections before the real one. We also manage the five-year post-completion obligations that follow, so your results hold up long after selection. If spending or settlement on your smart factory project is a concern, contact KITIM for a consultation.