Frequently Asked Questions - FIDIC Contracts

FIDIC can only comment in general terms on the interpretation of a FIDIC clauses, and it should be noted that for the application of a clause to a particular problem situation, one should always consult a specialist. With that being said, in general, Sub-Clause 52.2 gives the power to the Engineer to fix new rates and states the conditions when such new rates may be fixed, but Sub-Clause 52.2 does not indicate a calculation method or the applicability for new rates. The reason for this is because Sub-Clause 52.2 must allow for covering a wide range of potential situations. So, although it is true that revised rates are normally only applicable to the additional quantity, it is for the Engineer to assess the particular situation and circumstances surrounding, and to take all factors into consideration in making his determination regarding the quantum and applicability of the new rates fixed under Sub-Clause52.2. For reference, see page 127-128 of the FIDIC Red Book Guide to the use of the FIDIC Conditions of Contract for Works of Civil Engineering Construction, and please note that the above represents a general answer only, and specific advice to the particular facts surrounding your situation, we recommend that you consult a specialist.  - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

Commentary at page 117 of the FIDIC Guide to the 4th Edition is recommended. The Guide explains that some of the Contractor's overhead costs are included in the rates for items of work and others are included in separate items in the Bill of Quantities. Changes to the actual quantities may mean that the overhead content of items which have paid is not appropriate to the actual overhead costs incurred by the Contractor. In order to calculate any adjustment the Engineer will need to obtain information from the Contractor, or would have to make his own assessment. Any calculation must take into account any adjustment which has already been made under another Sub-Clause and only applies to any increase or decrease in excess of 15% of the Effective Contract price. The Sub-Clause starts with a reference to the situation "on the issue of the Taking-Over Certificate for the whole of the Works". It is also necessary for the value of variations and other adjustments to have been agreed in order to make the Sub-Clause 52.3 calculations. Any additional payment or deduction would then be made in the next payment certificate after the figures have been agreed or determined. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

Sub-Clause 20.4 of the 1999 Contracts is clear that both parties shall promptly give effect to the DAB Decision. The Employer must pay any sum awarded to the Contractor although the sum to be paid may be changed by a later amicable settlement or arbitration. If a Notice of Dissatisfaction has been issued then the dispute, not the DAB decision, may be reopened and finally determined by the Arbitral Tribunal. The sum to be paid may then be increased, or decreased, and additional money may need to be paid, or money may need to be repaid. An Arbitral Award, including such further payment or repayment, would be Final and Binding and would be covered by arbitration law and the New York Convention. It is normal practice that a DAB or Adjudicator's Decision is Binding and so must be paid, but is not Final and so may be changed in this way. If no Notice of Dissatisfaction has been issued then the DAB Decision becomes Final as well as Binding and the dispute cannot be reopened. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

Your Statutory Declaration would seem to conflict with the principles of the FIDIC Contracts. Progress payments are referred to as 'interim', which suggests that they are provisional and not

final. EPCT Sub-Clause 14.6 allows the Employer to make corrections or modifications to previous amounts considered due, which suggests that the Contractor can request modifications to a

previous valuation. It is only the requirement for the Application for the Final Payment, as Sub-Clause 14.11, which uses words indicating finality. The Contractor then confirms the finality

by his Discharge, as Sub-Clause 14.12. The equivalent provision in the 1987 Red Book was Sub-Clause 60.7. The Standard Letter for that Sub-Clause merely repeated the wording of the

Sub-Clause. However, this was a contractual letter and not a Statutory Declaration. A Statutory Declaration will presumably be issued by the Government and will depend on the

requirements of the applicable law, which will vary for different countries. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

your query is really a general legal question about when a payment is "made", rather than a question of interpretation of a FIDIC contract. The answer may be different under different jurisdictions. You should consult a lawyer with experience of the applicable law. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

This is a complex technical/legal question arising from a specific request by the Contractor on your project. FIDIC can only answer general questions of interpretation and cannot comment on specific requests or claims. The FIDIC Guide to the Fourth Edition states at page 146 for Sub-Clause 63.3: "If the Employer terminates the Contractor's employment, he is not liable to pay the Contractor any further amounts (including damages) until the expiration of the Defects Liability Period and the certification by the Engineer of the cost of execution and remedying of any defects, damages for delay in completion (if any) and other expenses incurred by the Employer as a result of the Contractor's default." - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

Your question refers to Sub-Clause 44.3 in the Red Book, Fourth Edition 1987. Sub-Clause 44.2 has imposed time limits for the submission of information by the Contractor, which you say have been agreed. FIDIC does not impose a time limit on the Engineer because the actual time needed for him to make his determination will depend on the circumstances and the details in the information provided by the Contractor. However the "without undue delay" emphasises the need for the determination to be made as soon as possible. Sub-Clause 1.5 also requires that any determination "shall not unreasonably be withheld or delayed". This gives the Contractor the opportunity to raise a query if he needs the determination in order to plan his work. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

Thank you for your more detailed explanation of your query. Our replies to previous questions were in response to particular questions, whereas your question is rather different. You are, of course, correct that Variations under Sub-Clause 52.1 can cover a wide range of situations, including changes to the nature as well as to the quantity of an item of work. For this reason, Sub-Clause 52.2 must be general to cover the wide range of potential situations. It is then for the Engineer to assess the particular situation and to agree or fix an appropriate rate. In deciding the quantum, and also the application, of this rate the Engineer would take into account the consequences of a change in nature as well as a change in quantity. You should also note the explanatory remarks in the FIDIC Guide to the use of the FIDIC Conditions of Contract for Works of Civil Engineering Construction. Sub-Clauses 52.1 and 52.2 are reviewed at pages 114 and 115 of the Guide and include the statement: If the nature or amount of the work involved differs so much from that included in the original Contract that the rates and prices are rendered inapplicable, it is the Engineer's task to agree appropriate rates and prices with the Contractor, or, if agreement cannot be reached, to fix the rates and prices. We trust this further explanation will answer your query. Any further comments would require details of the specific contract and problem, which FIDIC could not consider. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

Clause 51.1 allows the Engineer to issue instructions to vary the Works. Your question is whether the additional two floors are just a change to the quantity of the work which is included in the Contract, as Clause 51.1(a), or are outside the scope of the Works, which should be defined in the Contract. The answer to your question therefore depends on the exact wording of the Contract Agreement, the other contract documents and perhaps also the Tender Documents. It will also depend on the interpretation of this wording in accordance with the applicable law. This is not something which FIDIC can answer and you should obtain specialist advice. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

If both the change to the original work and the additional work came from the same change of requirement and instruction then it would be usual to issue a single variation order. However, it is also quite normal for the price calculations for a variation order to include different rates for the same BoQ item. The contractor's costs and the reasons why the BoQ rates are inappropriate may be different for the varied work and for the additional work. It is then fairer and more transparent, to the benefit of both parties, to negotiate different new rates. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

If both the change to the original work and the additional work came from the same change of requirement and instruction then it would be usual to issue a single variation order. However, it is also quite normal for the price calculations for a variation order to include different rates for the same BoQ item. The contractor's costs and the reasons why the BoQ rates are inappropriate may be different for the varied work and for the additional work. It is then fairer and more transparent, to the benefit of both parties, to negotiate different new rates. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

Under Sub-Clause 52.2, the Engineer only fixes a new rate or price when the BOQ rate or price has become inappropriate or inapplicable for a particular Variation. In fixing the new rate or price he will consider the reasons why the original rate or price should be changed. He will not fix a new rate or price until he knows whether it involves an increase or decrease in quantity. The new rate or price will probably be different for a decrease to that for an increase. It may be different for a large increase to a small increase. The anomalies which you mention should not occur because the Engineer will have considered these situations before he fixes the new rate or price. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

This is really a legal question, but the key seems to be that the first sentence of Clause 67.1 says that it continues after termination. A few additional comments may be helpful. One assumes the enquiry is referring to the Fourth Edition, amended 1992, without any significant amendments. Matters arising from termination under Clause 63.1 will depend on the provisions of the applicable law as well as FIDIC Contract Clauses. Most legal systems include requirements for the termination of a contract and also contain provisions based on the concept of "good faith" which may be applicable. Any comments based on the FIDIC Contract must be reviewed in relation to the applicable law, but some general comments may be helpful. a) Clause 67.1, first sentence, says that it continues after termination. b) Clause 63.1 enables the Employer to "terminate the employment of the Contractor". The Clause is clear that this does not release the Contractor from any of his obligations or liabilities. So does the law require that the Employer also is not released from his obligations? If so then other Clauses will also be relevant. c) The new contractor is presumably liable for delays which he causes and which are not attributable to the previous contractor. d) Clause 1.5, final sentence, requires that any consent, approval, certificate or determination shall not unreasonably be withheld or delayed. e) Clauses 60.6 and 60.8 give time periods for the Contractor's Final Statement and the Engineer's Final Payment Certificate. Clause 63.3 requires the Engineer to issue a certificate, without stating a time period. By reference to Clause 1.5, this must be issued in a reasonable time. Reasonable might be based on the Clause 60.6 and 60.8 time periods unless there are special circumstances. f) It certainly seems necessary for the Contractor to be informed, or his questions to be answered, in order that he knows when the construction and Defects Liability Periods are completed. g) The Contractor's rights and procedures for obtaining payment are covered by Clause 67 and the applicable law. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

The FIDIC Conditions of Contract give the legal rights and obligations of the Parties to the Contract. Matters such as the maximum free haulage distance will depend on the requirements and details of the project. They will vary for different projects and should be given in the technical specifications and/or bills of quantities. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

Clause 52.2 refers to the re-rating of an individual variation. Clause 52.3 refers to the situation when the total effect of all variations, plus the remeasurement of the approximate quantities in the BoQ results in an increase or decrease of more than 15%. It is possible that each individual variation did not have a significant effect on the Contractor's overheads but the total effect of all variations and the remeasurement was significant. It is necessary to consider the actual effect of the additional quantities on the Contractor's overheads. For example, part of the allowance for overheads may be a fixed, or lump sum, figure which is not related to the quantity of work which has been carried out. A substantial increase in the total quantity of work may not increase this part of the overheads. Hence, the overheads per unit quantity would decrease. The allowance for overheads in the rates would need to be reconsidered. Any re-rating under Clause 52.2 would be taken into account when considering Clause 52.3. The Guide to the Fourth Edition published by FIDIC gives useful guidance and examples at pages 115 and 117. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

The wording of Sub-Clause 21.1 (b) should be clear. The insurance shall cover the full replacement cost as (a), plus an additional 15% of that figure. This additional 15% is to cover any additional and incidental costs, INCLUDING professional fees etc. This figure may be changed in the Particular Conditions and you should also refer to the FIDIC Guide to the 4th Edition, at page 72. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

As a general principle, FIDIC expressly prohibits users of its contracts to add and adjust Clauses in the General Conditions. Any adjustments and changes should be made in the Particular Conditions. However, since your Organization may not be responsible for misuse and breach of copyright we shall attempt to help you. But here again, FIDIC is able to offer advice on interpreation of clauses, but of course only on the clause of the contracts General Conditions, not on someone else's clauses. This said, once again, we shall try to be helpful on the understanding that in future you try to impress on clients that they should use the GCs correctly, and not risk legal action and contract invalidity owing to breach of copyright. The changes to the GC mean that the interpretation of the FIDIC Sub-clause 52.2 may not be relevant to the amended contract. However the following may be helpful. a) Impossible to answer because of the changes to the GC. b) Impossible to answer because of the changes to the GC. c) Revised rates are normally only applicable to the additional quantity but this depends on the circumstances and the make up of the revised rates. In determining revised rates the Engineer should take all factors into consideration. d) The Contractor is entitled to be paid for work done in accordance with Sub-Clause 60.2. If the revised rates cannot be agreed in time for the next Interim Payment Certificate then the Engineer should determine provisional rates as the last sentence of the first paragraph of Sub-Clause 52.2. If the final rate is different to this provisional rate then Interim Payment Certificates can be corrected as Sub-Clause 60.4. - See more at: http://fidic.org/node/911#sthash.L1foEZ7p.dpuf

The precise problem is not clear and we can only comment in general terms on the interpretation of Sub-Clause 52.3. The Sub-Clause allows the Contractor and Engineer to discuss and agree a lump sum addition or deduction to the Contract Price when the additions/deductions as described at (a) and (b) are more than 15% of the "Effective Contract Price". It will be up to the Contractor to prove the changes to his Site and general overhead costs. The details and calculation of the lump sum will dependant on the reasons for the increase or decrease to the Contract Price. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

Under a FIDIC Contract, any change to add or omit work must be made by an instruction from the Engineer under the appropriate sub-clause. You mention Sub-Clauses 51 and 52, which are from the 1987 4th Edition of the Contract for Civil Engineering Works. Sub-Clause 51.1, item (b) allows the Engineer to issue instructions to omit work, but this is qualified by the statement in brackets "(but not if the omitted work is to be carried out by the Employer or by another contractor)". Your proposal for the crane rails would appear to contravene this requirement. Hence the change and price adjustment may need to be negotiated between the Parties and would probably involve legal advice. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

FIDIC is unable to provide legal guidance or information on legal precedents. However, to be helpful, the federation has asked an expert to comment so that your future research can guided in the approriate direction. You are correct that the 1987 4th Edition does not include specific provision for the recovery of price changes after the contract completion date when the Contractor has failed to complete the work in the specified time. Alternative clauses can be found in the FIDIC Guide to the 4th Edition and in the 1999 Contracts. The problem with legal precedents is that no two dispute situations are ever exactly the same and so need legal advice. Guidance and summaries of some arbitration awards can be found in the international legal journals, newsletters from law firms and the publications of the international arbitration centres such as the ICC Paris, the London Court of International Arbitration and other centres in different parts of the world. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

You are referring to the 4th Edition 1987 of the Contract for Works of Civil Engineering, Sub-Clause 51.1 (a) allows the Engineer to issue an instruction to increase or decrease the quantity of any work included in the Contract. The rate which the Engineer agrees or fixes under Sub-Clause 52.2 would only apply to the varied quantity (increased or decreased). The original quantity is not part of the Variation and would be paid at the original rate. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

You are referring to Sub-Clause 60.4 of the 1987 Contract for Civil Engineering Works. There is a similar provision at Sub-Clause 14.6 of the 1999 Contracts. The Contract does not put any limitation on this provision. However, under Sub-Clause 60.2 the Engineer has previously certified the amount which he considered to be due and payable. If he has now found an error and changed his mind he should explain the reasons for the change. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

The Contractor must have based his tender on information: 1) which was provided to all tenderers by the Employer from the investigations which had been carried out by the Employer; 2) which the Contractor obtained from his own inspection and examination of the Site and its surroundings. Where the Contractor obtained this information will depend on the circumstances but he must have satisfied himself that his tender was correct and sufficient to meet his obligations under the Contract. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

The Tender at Sub-Clauses 1.1(b)(v) and 5.2(3) means the form of Tender which is given at the end of Part 1 of the Red Book. The form of Tender, at paragraph 2, confirms that the Appendix to Tender forms part of the Tender and Sub-Clause 1.1(b)(iv) confirms that the priced bill of quantities forms part of the Tender. If the Employer requires other documents to be included in the Contract as part of the Tender then he must state this clearly in the Instructions to Tenderers and in the form of Tender. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

These principles would probably apply whichever FIDIC document is being used. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

After the Defects Liability Period expires, the Engineer may issue instructions under Clause 49, and cannot rely upon Clause 13 as authority to issue other instructions. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

Whilst we can sympathise with the situation described in the question, there is not a lot FIDIC can recommend or that he can do as Engineer in this case.
 
The situation described is, unfortunately, not all that uncommon in some Middle East countries and the ultimate decision of what to do lies with the Contractor. If he feels the situation warrants extreme measures, then he can terminate under Clause 69.1 (unless of course 69.1 has been changed - as it very often is in these countries). Otherwise there is not a lot you can do.
 
Being fair and impartial the Engineer could (and perhaps should) write to the Employer reminding him of the terms of the Contract - but he will probably bring down the wrath of the Employer on his shoulders, and that may not help anybody.
 
You should perhaps also bear in mind that Contractors who choose to work in these countries are usually (or should be) rather familiar with this situation and may well have allowed something in their price to cover this sort of thing - especially, as the person asking the question says, the amount is not very large. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

We refer to your query whether a proposed procedure complies with the fourth edition of the General Conditions of Contract for Works of Civil Engineering Construction.
 
FIDIC cannot undertake to provide advice on actual circumstances, and is only prepared to clarify and explain the meaning and purpose of the provisions it publishes in its Conditions of Contract. In the case of serious matters such as termination, legal advice should be sought.
 
However, we would make the following observations, without concluding whether the Employer is entitled to proceed as you have described. For these purposes, we start by assuming that the Employer's termination was valid by reason of the Contractor's breach of sub-clause 4.1. Such validity may, of course, be challenged by the Contractor.
 
Following a valid termination, the Employer's options on employing another contractor would not appear to be constrained by the General Conditions, other than under Clause 63 (with which you state the further procedure will comply), although they may be constrained by the applicable law. You mention compliance with sub-clause 63.4, which relates to assignment of subcontracts. Applicable law may constrain the Employer's rights in respect of subcontracts which were associated with the Contractor's breach of sub-clause 4.1.
 
You mention compliance with sub-clause 64.1, which relates to urgent remedial work which the Contractor is unwilling or unable to do, prior to termination. After termination, his previous unwillingness or inability would not seem to entitle the Employer to invoke sub-clause 64.1. As regards employing a contractor which took "second place ... in the initial public tender", this is not a matter to be decided by the General Conditions of the Contract under which the termination was effected. The choice of replacement contractor is a matter to be decided by the law relevant to the procurement procedures and any constraints imposed by those providing funds for the project.  - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

You appear to understand FIDIC's provisions, as summarised at the top of page 41 of the Red Book Guide: "It should be noted that ... the effect of ... [1.1(a)(iv)] is to prevent the Employer from changing the Engineer without the consent of the Contractor." In effect, provided the legal person defined as "Engineer" continues to exist, such legal person continues to be the Engineer for the purposes of the Contract, and the Employer has no power to name someone else as Engineer. By "continues to exist", we mean does not (as a natural person) die, or is not (as a company) dissolved. FIDIC cannot give specific advice in respect to the actions a party should take, and only undertakes to clarify aspects of its own provisions. You do not seem to need such clarification, but may need to obtain advice from a lawyer with expert knowledge of construction law.There is always a possibility that some aspect of the situation (which you have not mentioned) would entitle the Employer to replace the Engineer under the law governing the Contract. For FIDIC, it seems that you should first decide whether the replacement "Engineer" is acceptable as such because, if not, you could inform the Employer accordingly and seek to resolve the matter before it escalates into a major dispute. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

The Conditions of Contract for Works of Civil Engineering Construction (1992) do not contain express provision for new rates being established for the re-measurement of non-varied Contractor-design works, where new items to the original BoQ have been necessitated by Design Development. Typically, Contractor-design works are priced on a lump-sum basis, and are not subject to re-measurement after Design Development, so such express provision would be inappropriate in the Conditions of Contract which FIDIC intended to be suitable for Employer-design works. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

Regarding the application of Clause 53.1. This clause requires the Contractor to give Notice of a potential claim within 28 days of the event occurring. This establishes his right to claim and he should then proceed to substantiate the claim according to Clause 53.3. He can claim at any time - before or after Taking-over - if events occur (before or after taking-over) which he considers entitle him to claim. The intention of Clause 53.1 is to try to make sure claims are dealt with as and when they occur so that everyone is familiar with the circumstances (thus the 28 day provision) - and not to leave them to the end - when people have probably forgotten all the details. If he did this within the time limits, then the claim should be evaluated according to the Contractor's submissions. If he did not - as would appear to be the case - and has come in with a claim a considerable time after the event, then we would suggest that you have two courses of action. Firstly you should perhaps try to establish why he did not give notice within the 28 days. Either you can reject his claim on the ground that he did not submit it within 28 days as required by Clause 53.1, or, under Clause 53.4 you can make an assessment based on records which were kept at the time. Normally I would suggest it depends on the circumstances. If the claim appears to be frivolous and confused with no substantiation (possibly an event you knew nothing about) you may well decide to reject it. But if it concerns an event of which you were aware which you knew had disrupted the Contractor, then maybe you could consider it under Clause 53.4. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

FIDIC does not undertake to proffer advice relating to every situation which may arise under a FIDIC-based contract. However, it appears that the answer to your question depends upon whether a Taking Over Certificate has been issued. If so, the pre-hand over list presumably advised you of the work described in Sub-Clause 49.2(a), and the Engineer has asked you to repair some things as described in Sub-Clause 49.2(b). If not, the Engineer may be "specifying all the work which ... is required to be done ... before the issue of such Certificate" under Sub-Clause 48.1. In either case, you have not indicated any reason for not complying with the Engineer's instructions. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

FIDIC publishes guides to each of its forms of construction contract, which may provide the guidance you require on the procedures for claims. You would need to order the Guide for the use of whatever Conditions you are using. If your enquiry relates to October 2000. FIDIC's guides do not elaborate on the calculation of claims, so you might need to consult other publications. Personally, I am only aware of "Building and Civil Engineering Claims in Perspective" by Geoffrey Arthur Hughes, which was first published by Longman in 1983. It may have been republished and fulfil your needs. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

Regarding Clause 67.1: if the Contractor is dissatisfied with an Engineer's evaluation of a claim under Clause 53, he may refer the matter at any time (before or after completion) to the Engineer under Clause 67.1 for an "Engineer's Decision". He can do this any time up to his Final Statement and there is no time limit. The Engineer then has 84 days to respond. The Contractor cannot submit a "new'" claim for normal determination under this clause. The claim must first be processed under Clause 53, and only when a Clause 53 determination has been given which the Contractor finds to be unacceptable do we have a "dispute" situation which can be handled under Clause 67.1. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

It seems that the Contractor made a mistake by not adding the information to the Appendix to Tender. The Employer then accepted the Tender and the Parties signed a Contract which included the mistake. Unfortunately you say that they cannot agree on the information which should be added to the Appendix to Tender. To correct the mistake requires a change to the signed Contract to add this information. Correcting a mistake in a Contract is a legal question which must be studied under the applicable law. FIDIC cannot comment on such legal questions. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

The decision whether a new rate applies to the total quantity of an item, or just to the Variation quantity, will depend on the reason why a new rate is necessary. This may depend on the reason and details of the change to the Contractor's cost. Sometimes the original quantity will already have been executed and paid at the BQ rate, before the Variation is ordered. However, sometimes the fact of the quantity being changed by the Variation will change the circumstances and costs and makes it reasonable to pay the total quantity at the new rate. The new rate may differ if it is being applied to the total quantity or just to the Variation quantity. The Engineer will, of course, take all these factors into account when calculating a new rate. You should also refer to the commentary on Clauses 51 and 52 in the FIDIC Guide to the Fourth Edition. The commentary emphasises the importance of consultation with both the parties. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

The basic answer is YES, provided you follow the correct contract procedures. There are a number of Sub-Clauses which are relevant including, from the 1999 Construction Contract: a) S/Cl 3.1: The Employer may have imposed constraints on the Engineer's authority in the Particular Conditions. b) S/Cl 3.3: The Contractor shall comply with instructions given by the Engineer. c) S/Cl 13.1: The Contractor shall execute and be bound by each Variation initiated by the Engineer. Subject to exceptions as stated in the Sub-Clause. d) S/Cl 13.3: Procedures for the Engineer to value the Variation. The Engineer may have asked for and accepted a proposal, or he proceeds as Clause 12. - See more at: http://fidic.org/node/911#sthash.oe3rtNzJ.dpuf

The FIDIC 1987 Red Book does not have a similar provision as the one mentioned in the FIDIC 1999 edition Value Engineering, Sub-Clause 13.2 However you may find in the 1987 Red Book a so called bonus for early completion.

Answer

If understood correctly, your first question relates to sub-clause 47.2, specifically the last sentence, which reads "The provisions of this Sub-Clause shall only apply to the rate of liquidated damages and shall not affect the limit thereof." The meaning of this sentence is that although this clause allows for the amount of liquidated damages to be reduced proportionately to the work being handed over, if the work is handed over in parts, the maximum limit of liquidated damages (as specified in the appendix to tender (see Sub-Clause 47.1)) is not affected. In regard to your second question, Clause 47 should be read in conjunction with Clause 48. In the background to your question, you stated that none of the sections have been 'acquired by the Client contractually', yet earlier you state that '2 sections have already been completed (opened to traffic)'. In this light, we would suggest that you may review both sub-clause 48.2 and 48.3, which, depending on the particular fact pattern surrounding your contract, may be applicable. In answer to your third question, liquated damages are not penalties. You are kindly referred to the verbiage contained in Sub-Clause 47.1, which reads, in part "... and not as a penalty ...". As explained in the Guide to the Red Book, Liquidated damages are an amount determined by the Employer, before tenders are invited, as a reasonable assessment of the actual damages which he would suffer in the event of delay in completion of the Works. Hence, in general, Liquadated Damages should be calculated from the vantage point that will result in a reasonable assessment of the actual damages.
 

Answer

Although it is not for FIDIC to comment on the "fairness" of a particular circumstance, it is the FIDIC philosophy to publish Conditions of Contract that adopt an approach of fairness and balanced risk allocation between the parties as a primary focus. Further, FIDIC can only comment in general terms on the interpretation of a FIDIC clauses, and it should be noted that for the application of a clause to a particular problem situation, one should always consult a specialist. With that being said, in general, the Sub-Clause entitled Variations (Sub-Clause 52.1 in the 4th Edition or 13.1 in the 1999 Edition of the Construction Contract) does provide the right for the Engineer to vary the work downward; specifically the Engineer may decrease quantities or omit work, provided of course that this work is not carried out the Employer or another contract. Further, Sub-Clause 51.1 provides that such variations will be valued in accordance with the Clause 52, in the case of the 4th edition or Clause 12 in the case of the 1999 editions. Both of these clauses provide the rules for the valuation of these variations, which include the possibility of reduction in price. Please note that the above represents a general answer only, and specific advice to the particular facts surrounding your situation, we recommend you consult a specialist.

Answer

We assume that this inquiry is about FIDIC 1999 Conditions of Contract where in the 199 Red Book Sub-Clause 13.8 it says: "13.8 (Adjustments for Changes in Cost) - In this Sub-Clause, "table of adjustment data" means the completed table of adjustment data included in the Appendix to Tender. If there is no such table of adjustment data, this Sub-Clause shall not apply. If this Sub-Clause applies, the amounts payable to the Contractor shall be adjusted for rises or falls in the cost of labour. Goods and other inputs to the Works, by the addition or deduction of the amounts determined by the formulae prescribed in this Sub-Clause. To the extent that full compensation for any rise or fall in Costs is not covered by the provisions of this or other Clauses, the Accepted Contract Amount shall be deemed to have included amounts to cover the contingency of other rises and falls in costs. The adjustment to be applied to the amount otherwise payable to the Contractor, as valued in accordance with the appropriate Schedule and certified in Payment Certificates, shall be determined from formulae for each of the currencies in which the Contract Price is payable. No adjustment is to be applied to work valued on the basis of Cost or current prices. The formulae shall be of the following general type: Pn=a+bxLn/Lo+cxEn/Eo+dxMn/Mo where: "Pn" is the adjustment multiplier to be applied to the estimated contract value in the relevant currency of the work carried out in period "n", this period being a month unless otherwise stated in the Appendix to Tender; "a" is a fixed coefficient, stated in the relevant table of adjustment data, representing the non-adjustable portion in contractual payments; "b", "c", "d", ... are coefficients representing the estimated proportion of each cost element related to the execution of the Works, as stated in the relevant table of adjustment data; such tabulated cost elements may be indicative of resources such as labour, equipment and materials; "Ln", "En", "Mn",... are the current cost indices or reference prices for period "n", expressed in the relevant currency of payment, each of which is applicable to the relevant tabulated cost element on the date 49 days prior to the last day of the period (to which the particular Payment Certificate relates); and "Lo", "Eo", "Mo", ... are the base cost indices or reference prices, expressed in the relevant currency of payment, each of which is applicable to the relevant tabulated cost element on the Base Date. The cost indices or reference prices stated in the table of adjustment data shall be used. If their source is in doubt, it shall be determined by the Engineer. For this purpose, reference shall be made to the values of the indices at stated dates (quoted in the fourth and fifth columns respectively of the table) for the purposes of clarification of the source; although these dates (and thus these values) may not correspond to the base cost indices. In cases where the "currency of index" (stated in the table) is not the relevant currency of payment, each index shall be converted into the relevant currency of payment at the selling rate, established by the central bank of the Country, of this relevant currency on the above date for which the index is required to be applicable. Until such time as each current cost index is available, the Engineer shall determine a provisional index for the issue of Interim Payment Certificates. When a current cost index is available, the adjustment shall be recalculated accordingly. If the Contractor fails to complete the Works within the Time for Completion, adjustment of prices thereafter shall be made using either (i) each index or price applicable on the date 49 days prior to the expiry of the Time for Completion of the Works, or (ii) the current index or price: whichever is more favourable to the Employer. The weightings (coefficients) for each of the factors of cost stated in the table(s) of adjustment data shall only be adjusted if they have been rendered unreasonable, unbalanced or inapplicable, as a result of Variations." The clause is very clear and unfortunately the question raised is not related to an interpretation of a Sub-Slause.

Answer

The only book which we can recollect is "Musterbriefe in Englisch" (ISBN 3-7625-2607-9) although its standard letters are not such as we would prefer to endorse. Although we will review the situation with regard to the new FIDIC Contracts Guide, FIDIC lack enthusiasm for the very concept of standard letters, which seems to be tied up with the concept of avoiding thinking about the situation. However, we do recognise the validity of concerns expressed by those whose first language is not English. Thus, "Musterbriefe in Englisch" has been republished as an electronic edition (it goes with the 1987 Red Book civil works contract). An updated version for use with the Construction Contract 1st Edition, 1999, the Red Book successor, will be published by FIDIC in 2009 (FIDIC has acquired the copyright of Musterbriefe in Englisch). It should be noted that Edward Corbett's book "FIDIC 4th "contains some standard letters. These have been incorporated with permission in the electronic version of "Musterbriefe in Englisch" published by FIDIC.

Answer

The basis upon which the 1987 Yellow Book and Red Book is written is that the Engineer is appointed by the Employer, but that he is independent of both parties - i.e., he is an independent third party. In many cases he is required to give impartial decisions - in fact under Clause 2.4 of the Yellow Book he is required to act impartially at all times when exercising his discretion. If the Engineer is an employee of the Employer - e.g., someone from the Employer's Engineering Division - there is a big risk that he will not be in a position to act impartially. Although he may be very experienced and capable from a technical point of view, and able to handle all technical matters, he may not be free to make decisions which involve financial arrangements, etc. in a fair and impartial manner. It is not impossible, nor unknown, for the Employer to nominate himself or one of his own staff as Engineer, but it is rare and certainly causes problems. The text of any clauses referring to the impartiality of the Engineer will probably need revising at some stage, as will the provisions for handling claims and disputes (Clauses 2 and 50). The principle of using an employee of the Employer as Engineer would be more acceptable if a Dispute Adjudication Board (DAB) was introduced to replace the principal provisions of Clauses 2 and 50.1 to deal with claims and disputes.

Answer

The provisions of Sub-clause 60.6 have to be read together with the provisions of Sub-clause 60.5 and of course with the provisions of the Sub-clause 60.9. In order for the Contractor to maintain any claim, he must include it in his Statement at Completion, if it has arisen by then, and in his Final Statement. There are a number of incidences under the contract when the Employer gives to the Contractor indemnities or is otherwise responsible to the Contractor. Clauses in which this occurs and where the Contractor's resulting claims against the Employer could arise for the first time after the Statement at Completion or Final Statement have been submitted by the Contractor include the following: Clause 19.2 (Employer's responsibilities) in relation to safety; Clause 21.3 (Responsibility for amounts not recovered); Clause 22.3 (Indemnity by Employer); Clause 24.1 (Accident or injury to workmen); Clause 25.4 (Compliance with policy conditions); Clause 26.1 (Compliance with statutes, regulations); Clause 70.2 (Subsequent legislation); and Clause 71.1 (Currency restrictions). In each of the above cases, it is conceivable that the Contractor would wish to make a claim against the Employer after the date of the Final Statement. Further, if the Contractor was made liable under the applicable law to a third party in respect of design which had been carried out by the Engineer, the Contractor would wish to bring a claim against the Employer to recover any damages paid out. Sub-clause 60.9 in fact bars the claims not mentioned in the Statement at Completion and in the Final Statement. The purpose of the sub-clause is sensible, namely to enable the Employer to achieve a reasonable degree of certainty as to his ultimate liability.

Answer

Depending on what is written in the Contract and the Particular Conditions, generally speaking you have a case against the Employer. The damages which the Contractor may claim would include interest and/or financing charges. However, you must check the provisions of the Sub-clause 2.1 Engineer's duties and authority ,to see what is mentioned there. It is not very clear what is this Employer's Representative and what are his duties under the Contract,. However, one would suspect that you have a case against the Employer.

Answer

The FIDIC definition of a subcontractor is given at Sub-Clause 1.1.2.8 of the 1999 Contract for Construction as: "Subcontractor" means any person named in the Contract as a subcontractor, or any person appointed as a subcontractor, for a part of the Works; and the legal successors in title to each of these persons. Different clients have different criteria when evaluating tenders. FIDIC would certainly expect that any client will want to ensure that the tenderer has adequate experience as a main contractor and has not just worked as a subcontractor. However, in FIDIC's opinion, this would normally be worded as "Experience as a subcontractor ....". FIDIC has also known clients to be concerned that tenderers have relied on a proposed subcontractor's experience and resources when preparing a tender and then the named subcontractor is withdrawn and another, less experienced, company is proposed after the tender has been accepted. However, for an international tender, some clients require that a certain percentage of the Works must be subcontracted to local companies. In this case the experience and resources of the proposed subcontractors will be an important part of the tender. The client's criteria when evaluating tenders depend on a number of different factors, including the past experience of the particular client. In order to ascertain the exact intentions for evaluating your particular tender you would need to raise the question with the client.

 You say that you have a Lump Sum Contract. The FIDIC Construction Contract Book is a remeasurement contract so the payment provisions must have been changed to provide for the Lump Sum. The answer to your question will depend on the wording of these Lump Sum provisions. I regret that FIDIC can only comment on questions which on the interpretation of the FIDIC General Conditions, so we are unable to answer your question. We fear that this is an indication of what happens if General Conditions are modified by Special Provisions without due care. - See more at: http://fidic.org/node/911#sthash.2w34AMXR.dpuf
 You say that you have a Lump Sum Contract. The FIDIC Construction Contract Book is a remeasurement contract so the payment provisions must have been changed to provide for the Lump Sum. The answer to your question will depend on the wording of these Lump Sum provisions. I regret that FIDIC can only comment on questions which on the interpretation of the FIDIC General Conditions, so we are unable to answer your question. We fear that this is an indication of what happens if General Conditions are modified by Special Provisions without due care. - See more at: http://fidic.org/node/911#sthash.2w34AMXR.dpuf
The following query is in relation to a situation which has occurred in the context of the execution of a Lump Sum contract, regulated by a standard FIDIC (Red Book) terms and conditions. The Specifications call for "Cast Iron" pipes, while the BOQ calls for "UPVC" pipes. The Contractor and upon the approval of the Engineer, and without having any instructions to do so, executed the Works in UPVC. Does this entitle the Employer to request cost saving on this item? And on what basis? Your response to the above is highly appreciated. - See more at: http://fidic.org/node/911#sthash.2w34AMXR.dpuf

You say that you have a Lump Sum Contract. The FIDIC Construction Contract Book is a remeasurement contract so the payment provisions must have been changed to provide for the Lump Sum. The answer to your question will depend on the wording of these Lump Sum provisions. I regret that FIDIC can only comment on questions which on the interpretation of the FIDIC General Conditions, so we are unable to answer your question. We fear that this is an indication of what happens if General Conditions are modified by Special Provisions without due care.

Question


The following query is in relation to a situation which has occurred in the context of the execution of a Lump Sum contract, regulated by a standard FIDIC (Red Book) terms and conditions. The Specifications call for "Cast Iron" pipes, while the BOQ calls for "UPVC" pipes. The Contractor and upon the approval of the Engineer, and without having any instructions to do so, executed the Works in UPVC. Does this entitle the Employer to request cost saving on this item? And on what basis? Your response to the above is highly appreciated.

Answer


 You say that you have a Lump Sum Contract. The FIDIC Construction Contract Book is a remeasurement contract so the payment provisions must have been changed to provide for the Lump Sum. The answer to your question will depend on the wording of these Lump Sum provisions. I regret that FIDIC can only comment on questions which on the interpretation of the FIDIC General Conditions, so we are unable to answer your question. We fear that this is an indication of what happens if General Conditions are modified by Special Provisions without due care.
 

- See more at: http://fidic.org/node/911#sthash.2w34AMXR.dpuf
 You say that you have a Lump Sum Contract. The FIDIC Construction Contract Book is a remeasurement contract so the payment provisions must have been changed to provide for the Lump Sum. The answer to your question will depend on the wording of these Lump Sum provisions. I regret that FIDIC can only comment on questions which on the interpretation of the FIDIC General Conditions, so we are unable to answer your question. We fear that this is an indication of what happens if General Conditions are modified by Special Provisions without due care. - See more at: http://fidic.org/node/911#sthash.2w34AMXR.dpuf
The following query is in relation to a situation which has occurred in the context of the execution of a Lump Sum contract, regulated by a standard FIDIC (Red Book) terms and conditions. The Specifications call for "Cast Iron" pipes, while the BOQ calls for "UPVC" pipes. The Contractor and upon the approval of the Engineer, and without having any instructions to do so, executed the Works in UPVC. Does this entitle the Employer to request cost saving on this item? And on what basis? Your response to the above is highly appreciated. - See more at: http://fidic.org/node/911#sthash.2w34AMXR.dpuf

 

Applying more than one currency in a contract is always complicated and require special care. Regarding the exchange rates, the Red Book includes Sub-Clause 14.15 [Currencies of Payment], which provides the basic framework for such purposes. Also, what is specifically included in your Letter of Tender and Appendix to Tender regarding currencies of the Contract and the applicable exchange rates should apply.

  

However, it must be pointed out, that sub-paragraph (e) under Sub-Clause 14.15 has: “(e) if no rates of exchange are stated in the Appendix to Tender, they shall be those prevailing on the Base Date and determined by the central bank of the Country.” It must also be remembered, that the 1999 Red Book does not include specific claim entitlement for the Contractor regarding the change of exchange rates, however, the Governing Law might include some generic relief for the Contractor under certain circumstances.

  

Finally, please let us draw your kind attention to a FIDIC publication, which might include a lot of very useful explanatory texts related to your 1999 FIDIC Red Book contract, and this book is the “FIDIC Contracts Guide” (1st edition) from year 2000.

 

FIDIC The FIDIC position stated in a draft position paper is clear, and clearly the best. It says: "Some people say that the system (a separate CM) works well, but this is probably a matter of personalities rather than organisation. There are obvious potential problems of divided responsibility, with consequences for the efficient management of the project, particularly if there are claims to be considered. The FIDIC system of an Engineer in charge, with suitably qualified assistants, must be preferable when the project only has a single construction contract." It says that making the SC the "Engineer" is the best if there are the are a SC and a CM. But the role of the CM must be clear, and the SC/Engineer must have all the responsibilities specified in the contract. The SC can of course delegate. How this delegation of duties to a CM is best done is unclear. One way is a separate Client-Consultant Agreement with the Client for specified services, and the main contract refers to this. ........................ QUESTION I still have some ambiguity about the issue. The client needed the services of the Construction manager ( CM ). In fact, the client already signed an agreement with the CM. the role of the CM is clearly stated in his contract with the owner, as to take care of the administrative issues, scheduling and monitoring and cost control and budgeting, also all correspondence shall be through the CM. The CM shall monitor the coordination between all T.C's ON SITE. Conduct progress meetings. Furthermore, the client needed the services of the consultant ( Design & Supervision ), and signed an agreement with an engineering firm. The responsibilities of the DC and SC are clearly mentioned in this contract agreement; responsible for quality and technical issues and review & comment and approval of shop drawings and other responsibilities, with a clear emphasis that there will be a CM with specific role(as specified earlier). Still, the consultant raises the issue of WHO IS THE ENGINEER"? My question: is this a valid issue? If the special contract agreement specifies the scope of responsibilities of the consultant during design and supervision phases, which are somewhat different than what is defined in FIDIC as ENGINEER, is this a legal defect in the contract between the client and the consultant? ........................ FIDIC Any separation of the duties of the Engineer would need to be thought through very carefully. If the project only includes a single construction contract then there seems to be no benefit in a separation of duties. However, if the project includes a number of simultaneous construction contracts, then there are important issues of co-ordination of contracts. Different designers, and even different Engineers, may have been appointed for the different construction contracts, so an overall manager is necessary. If it is desired to separate the roles then the exact responsibilities and authorities of the different organisations would need to be decided by the Employer and clearly defined in the Contracts between the Employer and each Party, including the Contracts with the Contractors. The drafter would also need to consider any statutory supervision requirements in the applicable law. All this would have implications for a number of different clauses in the FIDIC Contracts and would certainly require very careful drafting to avoid problems during construction and dispute resolution.

The FIDIC Conditions of Contract are intended to be used for Contracts between the Employer and the Main Contractor. The wording is not suitable for use as a Subcontract and a considerable

number of carefully prepared Particular Conditions would be necessary. For example the powers and duties of the Engineer are not appropriate for a Subcontract. The legal postion under the

applicable law, which is presumaby UAE Law, would also need careful consideration. FIDIC can not comment on legal matters or on the preparation of Particular Conditions. - See more at:

http://fidic.org/node/915#sthash.H0GkqEib.dpuf

You refer to the situation when there has been a partial structural failure, 3 years after the end of the maintenance period. The Contractor has completed his work under the Contract, it has

been accepted by the Engineer and Employer and the Defects Liability Certificate should have been issued. If the Employer thinks that the Contractor is, in some way, to blame for the failure

then his only recourse is through the liability provisions and procedures under the applicable law. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

Clause 44.1 does not specifically refer to further delay causes which may occur after the expiry of the Time for Completion. The Engineer should consider all the circumstances, including the Contract and the applicable law, consult with the Employer and the Contractor and decide whether the circumstances are such as fairly to entitle the Contractor to an extension of time. If no extension is granted then the Contractor is correct to say that he will be liable for Liquidated Damages/Penalties in addition to his own costs. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

The question is not clear what is meant by a 'lien contractor'.This is not a phrase which is used in FIDIC Contracts. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

The FIDIC Conditions of Contract do not include provision for prime cost items. If an Employer wishes to include a pc item in the Contract then it is necessary to explain suitable procedures in the contract documents. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

It is not whether the question originated from someone who is likely to be the Contractor, or from someone who is likely to be the Employer/Client. One should bear in mind that serious allegations are being made, which may not be valid. If the question seems to have originated from a Contractor, the appropriate course of action would be for a very, very senior member to request a meeting with a very, very senior member of the Employer, so that the allegations may be discussed in confidence. If the question seems to have originated from an Employer (which seems unlikely), if he is a member of a Member Association, the Association would be consulted. The Contractor's Contract MAY (or may not) constrain the Employer from replacing the Engineer. In either case, NO ACTION CAN BE TAKEN WITH FIDIC, because the Engineer is not a member of FIDIC as such. If an IFI (e.g., the World Bank) is providing funds for the project, they could also be appraised of the situation. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

Normally, for a contract based on a FIDIC Conditions of Contract you would leave the General Conditions untouched, and simply include Particular Conditions and relevant appendices. For

maximum effect, we would urge you to purchase an electronic copy so that you can print out a PDF file that includes the General Conditions. You are authorised to include this print out of

the General Conditions in your own document. There is no copyright infringement if you have purchased and installed an authorised, encrypted version of a FIDIC contract. Under the terms

of the users aggreement for an electronic version of a FIDIC contract, you can also print out forms and appendices which are supplied as a PDF file and/or in word processing formats.

- See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

 

It is suggested that you read the articles kept in the resources site under http://fidic.org/node/149. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

We are afraid that what you propose is 100% illegal, and not advised. FIDIC's PDF contracts are encrypted, and indeed you could print and scan them, but you are then infringing copyright.

However, FIDIC would consider agreeing to licence your firm to adapt the contract. The fee would depend on the planned usage. It would be at least USD 1000. In general terms, the General

Conditions of a FIDIC contract should not be modified. The Special Conditions are for the changes, and the contract gives guidance that you can copy, if you purchase a contract. - See more

at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

The FIDIC approach is to leave the General Conditions unaltered and to place all ammendments and additions in Particular Conditions. FIDIC copyrights the entire contract, but grants legitimate

users the right to make use of Guidance for Particular Conditions that is included in a section of the published contract. So when you receive a FIDIC contract as a printed docuement or as an

electronic whole-document, you incorporate the General Conditions "as is", (by say printing out the General Conditions part from an electronic version, or by adding to tender documents the

entire bound contract supplied by FIDIC). You also draw up your Particular Conditions, possibly by copying text provided by FIDIC in the Guidance for Particular Conditions. This Guidance

material is copyrighted, but is made available to purchasers of authenicated FIDIC contracts. The printed and electronic contracts also contain forms. Once again, these are subject to copyright,

but are made available to authorised users of the contracts (i.e., those that have purchased an electronic or printed document). I hope we have not been tedious, but it is perhaps important to

understand the situation since FIDIC guarantees the authenticity of its General Conditions. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

A good place to start is the "Which Contract?" text on the FIDIC website. If you then go to the Contracts and Agreements resources you can find many articles and presentations. Then maybe

consider buying the 1999 suite of contracts (Construction, Plant and EPC-Turnkey). Descriptions are available online (Construction, Plant, EPC/Turnkey). Then you should consider buying the

FIDIC Contracts Guide. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

The direct answer is that the FIDIC General Conditions contain no provisions regulating payment by a third party. It is the Employer who is required to pay the Contractor, and who has to set

up procedures for making payment. Such procedures typically involve a commercial bank, but may also involve other third parties (for example, the European Commission). Before suspending

works, legal advice may be desirable. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

Firstly, please bear in mind that the Engineer's (first 42-day) response to the Contractor's claim will usually be to comment and to detail what matters the Contractor should take into account in his further particulars to the Engineer. Thus, there may be quite a few sequences of "Engineer's response" / "Contractor's further particulars" before the Engineer can make a determination.
 
Eventually the Engineer will have no further comment and will be ready to make a determination in accordance with Sub-Clauses 1.3 & 3.5. Before making a determination, the Engineer consults with both Parties in an endeavour to achieve their agreement. Consultation may take such time, so we haven't constrained it to six weeks but merely forbid unreasonable delay (1.3).
 
One would usually expect the Engineer's (final 42-day) response to express his detailed comments immediately prior to commencing consultation under Sub-Clause 3.5. If the Engineer commenced such consultation with the Parties before making his (final 42-day) response, the Parties wouldn't have his detailed comments and wouldn't know whether they were agreeable.
 
One cannot see how the Engineer's (final 42-day) response can be the determination, unless it is the Engineer's "approval" of the claim and he has obtained the Employer's agreement also. The response is specified to be either "approval" or "disapproval and detailed comments", but not "determination".
 
Sub-Clause 20.1 sets out a detailed framework for resolving each claim unless it becomes impossible to do so. However, it should be regarded as a practical framework, essentially comprising:
(a) "Contractor's claim" / "Engineer's response"
(b) "Contractor's further particulars" / "Engineer's response"
(c) maybe another "Contractor's further particulars" / "Engineer's response"
(d) possibly another "Contractor's further particulars" / "Engineer's response"
(e) rarely, yet another "Contractor's further particulars" / "Engineer's response"
(f) "consultation" / "agreement or Engineer's determination".
 
Frankly, one would think that competent/experienced personnel should be adopting such a practical framework without it being detailed in the General Conditions. FIDIC has put it in so as to assist others and to discourage procrastination. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

FIDIC's General Conditions Of Contract typically include a requirement for the Contractor to submit (and keep up-to-date) a detailed time programme which includes:
 
a) the order in which the Contractor intends to carry out the Works, including the anticipated timing of each stage of design, Contractor's Documents, procurement, manufacture, inspection, delivery to Site, construction, erection, testing, commissioning and trial operation,
 
(b) the periods for reviews ... and for any other submissions, approvals and consents specified in the Employer's Requirements,
 
(c) the sequence and timing of inspections and tests specified in the Contract, and
 
(d) a supporting report which includes:
(i) a general description of the methods which the Contractor intends to adopt, and of the major stages, in the execution of the Works, and
(ii) details showing the Contractor's reasonable estimate of the number of each class of Contractor's Personnel and of each type of Contractor's Equipment, required on the Site for each major stage.
 
These are the basic requirements, and users (project owners) are expected to put any particular requirements in their own Special Conditions, Specification or Employer's Requirements. Their particular requirements may, of course, include CPM.
 
FIDIC's General Conditions of Contract are the most widely accepted form in use internationally. They are used for contracts undertaken by a wide variety of contractors, and for a wide variety of types of work. It would therefore be inappropriate for FIDIC's General Conditions of Contract to specify CPM, particularly for contractors who do not have staff who are fluent in its use, and also for work for which linear programming is more appropriate. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

We refer to your fax to FIDIC, describing how a portion of the contract is "cost reimbursable" and that you are seeking some definition of this phrase. We regret to advise you that FIDIC is unable to give advice on specific contracts, although it is prepared to give some elaboration of its publications. It seems to us that your enquiry solely relates to provisions drafted for the particular contract, and not to provisions published by FIDIC. You pose the question "Is there an element of 'reasonableness' in a cost reimbursable We would have thought that such a question cannot be answered in isolation, but must depend upon the detailed provisions of the contract, the law governing it, the reasons for any alleged overspend, and (possibly) other matters. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

The only book which we can recollect is Musterbriefe in Englisch (ISBN 3-7625-2607-9) although its standard letters are not such as we would prefer to endorse. Although we will review the situation with regard to the new FIDIC Contracts Guide, FIDIC lack enthusiasm for the very concept of standard letters, which seems to be tied up with the concept of avoiding thinking about the situation. However, we do recognise the validity of concerns expressed by those whose first language is not English. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

Regarding your recent enquiry regarding Extension of Time and asked me to send you a short reply. Normally, an event causing a delay will occur before the contractual Time for Completion and the Contractor must make his claim within a given time of the event occurring (Red Book Clause 44.2, Yellow Book Clause 26.1). The Engineer must then respond with a given time (or a reasonable time) - he cannot wait until completion to see if the Contract actually needs the time extension. If the event occurs after the contractual time for completion and the Contractor is running late, he may still be entitled to an extension if the circumstances have caused him even more delay (and it was not his fault). If the Engineer does not grant a time extension (or reply to the Contractor's claim) within the currency of the Contract, it would depend very much on the circumstances, and I would suggest that he cannot call liquidated damages until he has replied to the Contractor's claim and definitely rejected it. Normally the Engineer will only grant an extension of time if the Contractor applies for one so I cannot see an Engineer granting an extension "for no reason" - normally it would be in response to the Contractor's claim. The question of costs will depend on the circumstances. If the Contractor can prove he has suffered extra cost, then maybe he is entitled to reimbursement - but it is not an automatic right and will depend on the circumstances.As you will see, any matters concerning extensions of time depend very much on the circumstances at the time and it is very difficult to give general answers. The intention of the FIDIC Conditions is that the matter shall be dealt with as quickly as possible so that the Contractor knows if he will get an extension and so that he can then plan the rest of his works accordingly. If the Contractor is of the opinion that the Engineer is unreasonably delaying the matter, he should read Clause 5.1 (both books) and see if this can help. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

The FIDIC contracts usually involve "the Engineer", who has a defined role to play during construction - and we assume this is the "different Consulting Engineer" referred to. The "Designing Engineer" could be an engineer engaged by the Employer just to design the Works (with the other Engineer taking over to supervise the Works during construction) - or he could be an engineer engaged by the Contractor if it is a design-build or turnkey type project. In the first case, presumably he would be engaged under the FIDIC White Book (or something similar) and his terms of reference under that should define his role (if any) during the construction period. In the second case (if he is engaged by the Contractor), he will presumably be considered to be a part of the Contractor's organisation carrying, in effect, the Contractor's responsibilities in the Contract for design. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

Surely what is unforeseeable before submission of the Tender remains so after it, especially when referred to sub-clause 4.12." If additional data (on sub-surface or hydrological conditions at

the Site) becomes available on or after the Tender submission date, it might well be possible thereafter to foresee (based upon such additional data) something which was unforeseeable before

the Tender submission date (based upon the data available at the Base Date). Therefore, it is essential to define the time at which the question of foreseeability is to be judged. - See more

at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

 

In general, FIDIC, the International Federation of Consulting Engineers, expects that people using FIDIC Contracts for bids and tenders are fully conversant with the documents. It is generally necessary to prepare Special or Particular Conditions to accompany General Conditions (which remain unchanged). For this one needs to be experienced in drafting contracts. It is not something that can be done by casual readers. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

As a matter of policy, FIDIC does not give any official interpretation in respect of any wording in the various documents which it publishes, nor any ruling concerning the rights or wrongs of any actions taken by any parties operating under the terms of a particular Contract. If there is any disagreement or potential dispute between the parties which cannot be settled amicably between them, it will normally be a legal interpretation based on the law of the Contract which will prevail. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

Model Terms of Appointment for a Dispute Adjudication Board under the Orange Book were issued as a loose-leaf insert and reproduced at pages 151-163 of the Guide. FIDIC has moved on since then, and the best approach would be to base Terms hereafter on those published within the 1999 First Editions of the ne FIDIC Contracts. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

The basis upon which the 1987 Yellow Book and Red Book is written is that the Engineer is appointed by the Employer, but that he is independent of both parties - i.e., he is an independent third party. In many cases he is required to give impartial decisions - in fact under Clause 2.4 of the Yellow Book he is required to act impartially at all times when exercising his discretion. If the Engineer is an employee of the Employer - e.g., someone from the Employer's Engineering Division - there is a big risk that he will not be in a position to act impartially. Although he may be very experienced and capable from a technical point of view, and able to handle all technical matters, he may not be free to make decisions which involve financial arrangements, etc. in a fair and impartial manner. It is not impossible, nor unknown, for the Employer to nominate himself or one of his own staff as Engineer, but it is rare and certainly causes problems. The text of any clauses referring to the impartiality of the Engineer will probably need revising at some stage, as will the provisions for handling claims and disputes (Clauses 2 and 50). The principle of using an employee of the Employer as Engineer would be more acceptable if a Dispute Adjudication Board (DAB) was introduced to replace the principal provisions of Clauses 2 and 50.1 to deal with claims and disputes. - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

We should point out that FIDIC is prepared to give some guidance about FIDIC contracts if problems mainly concern interpretation of a contract document. If you seek more detailed advice that relates to actual contracts, then we recommend you discuss the matter with experts whom FIDIC can recommend, on the understanding that they or a colleague would seek remuneration once you entered into detailed discussions. Essentially, you do not seem to be requesting guidance about FIDIC contracts, and your problems do not seem to concern the interpretation of a contract document. Rather, your question seems to be: what do we do next? You give no details whatsoever of the form of contract, FIDIC or otherwise. Based on the presumption that your contract incorporates FIDIC's 1992 Conditions of Contract for Works of Civil Engineering Construction, you seem to be referring to a request for the Engineer's decision under Clause 67, following the lapse in the Clause 60 procedures. In that case, you should be mindful of other procedures described in Clause 67, particularly of the period within which to issue a notice of intention to commence arbitration. If that period has already passed, you may wish to consider taking legal advice.
 
Arbitration is a lengthy and expensive procedure, so you may wish to consider alternative methods of dispute resolution, as an attempt at amicable settlement under Sub-Clause 67.2. We would be pleased to assist you in these endeavours, if appropriate commercial arrangements can be concluded. Alternatively, an epert proposed by FIDIC could be jointly appointed by the Contractor and Employer, either as a conciliator or as a member of a dispute board (either the sole member or one of three members). - See more at: http://fidic.org/node/915#sthash.H0GkqEib.dpuf

FIDICTerms is an online glossary of terms covering the following categories :

The intention of this glossary is to assist readers in easily finding definitions of FIDIC recognised terms, for readers to review how similar FIDIC terms are used in various versions and editions of FIDIC publications, and for assigned users to propose new definitions to the FIDIC committee(s) for future use. FIDICTerms is a semi-open sourced glossary into which the society of FIDIC-Engaged Experts across the world can propose new definitions. If you are assigned as a FIDIC-Engaged Expert, simply log in to FIDICTerm´s editor section and enter your proposed term and definition. The new definition will be reviewed and approved by the chairmen of the associated FIDIC Committee.

Corbett & Co are experts on FIDIC and have been involved in the drafting of several of the FIDIC forms of contract.

The complete Corbett & Co's FIDIC Case Law Table can be found here for free download.

Books and articles can be found to read or download in Corbett & Co’s Knowledge Hub.

The FIDIC Conditions of Contract for Plant and Design-Build are very clear, at Clauses 9 to 12, about the Contractor's obligations for Tests, Handing-Over and during the Defects Liability

Period. Further information for the particular project would be given in the Particular Conditions and the Employer's Requirements or Specification. However, any additional obligations and the

way in which these documents are interpreted for a particular dispute will depend on the applicable law, which will be different in different countries. FIDIC are not informed about Arbitral

Awards or Judgements by the Courts. For information about any Arbitral Awards you should consult an Arbitration Centre. The best source is probably the International Chamber of Commerce in

Paris, at www.iccwbo.org (http://www.iccwbo.org). Court Judgements can often be obtained from the Court websites in that country although you generally need an experienced lawyer to

identify any relevant cases. - See more at: http://fidic.org/node/913#sthash.4demYysO.dpuf

The changes to the General Conditions for the Engineer to become the DAB require detailed study and depend on the policy and requirements of the Employer. They also need to be co-

ordinated with the applicable law, particularly in countries with a civil law jurisdiction or if the law includes provision for statutory adjudication as in the UK. FIDIC cannot comment on the

Particular Conditions for individual projects. Discussion at training courses in Europe is confirming that most contracts using 1999 FIDIC Contracts include the provision for an independent DAB,

particularly contracts under the MDB version and other contracts with provisions for international finance. Obviously there are cost implications but the indications are that the cost of a DAB

isless than the cost of a lengthy dispute with other resolution procedures, including legal and other costs. - See more at: http://fidic.org/node/913#sthash.4demYysO.dpuf

The World Bank's International Centre for Settlement of Investment Disputes (ICSID) offers standard fees and expenses for members of Arbitral Tribunals constituted under the ICSID

Convention. The rates are appropiate for members of the FIDIC President's List of Approved Dispute Adjudicators. Entitlements comprise:a fee for each day of their participation in meetings

of the Arbitral Tribunal concerned; anda fee for the equivalent of each 8-hour day of other work they perform in connection with the proceeding.Days of participation in meetings include

days of travel to and from the meetings. Fees for periods of other work below 8 hours may be claimed at the rate of one-eighth of the applicable fee per hour of work performed. The

standard level of the fees is at present US$3,000 per meeting day or 8-hour day of other work. That amount has been determined for the fees in the expectation that Tribunals will not

propose higher amounts to the parties. Per diem subsistence allowances are paid in lieu of reimbursement of subsistence expenses when the arbitrators are away from their normal place of

residence. The allowances are considered to cover all personal expenses such as charges for lodging, meals, etc. and all other expenses that are not specifically reimbursable. Reimbursable

travel expenses comprise expenses for travel in connection with meetings of the Tribunal concerned.The travel should in all cases be arranged from the place of residence to the place of the

meeting and return by the most direct route.

See more at www.worldbank.org/icsid/pubs/memorandum/memorandum.htm for full details.

See more at: http://fidic.org/node/913#sthash.4demYysO.dpuf

Answer 

Model Terms of Appointment for a Dispute Adjudication Board under the Orange Book were issued as a loose-leaf insert and reproduced at pages 151-163 of the Guide. FIDIC has moved on since then, and the best approach would be to base Terms hereafter on those published within the 1999 First Editions of the 1999 FIDIC Contracts.

- See more at: http://fidic.org/node/913#sthash.4demYysO.dpuf