Guide to the Use of FIDIC Conditions of Contract for Works of Civil Engineering Construction (1989). Includes Red Book Conditions. Electronic version in encrypted PDF.
Conditions of Contract for Works of Civil Engineering Construction. Part I: General Conditions with forms of tender + agreement; Part II: Conditions of particular application + guidelines for preparation of Part II clauses. (4th Edit. 1987, reprinted 1988 with editorial amendments, reprinted 1992 with further amendments, reprinted 2011). The 2011 reprint now also includes the Supplement 1st. Ed. 1996. Users wishing to incorporate the part 1-General Conditions are invited either to include a printed version of the entire 2011 reprint or to purchase an electronic version, where Part1-General Conditions can be printed as a separate document.
Supplement to the 4th Edition, 1987 of the FIDIC Conditions of Contract for Works of Civil Engineering Construction (1st Ed, 1996). Section A: Dispute Adjudication Board; Section B: Payment on a Lump Sum Basis; Section C: Late Certification.
Guide to the Use of Conditions of Contract for Works of Civil Engineering Construction
Second and third editions were published in 1963 and 1977 respectively.
In 1983 the Executive Committee of FIDIC appointed a drafting committee comprised of members of the Civil Engineering Contracts Committee (CECC) which up to that time had been charged with monitoring the use of the third edition.
The results of the work of the drafting committee were approved in 1987 and the fourth edition of the Conditions of Contract for Works of Civil Engineering Construction was published at the Annual Conference of FIDIC held in Lausanne, Switzerland in September of 1987.
There are many important differences between the third and fourth editions and these are dealt with in detail in this Guide which gives a commentary on each clause of the fourth edition.
The Executive Committee decided to drop the word 'International' from the title of the document as with slight modification in Part 11 it is also suitable for domestic contracts.
With the advances in technology of photo-copying it is possible today to produce photo-copies which appear to be true copies of an original document but have in fact been changed without the alterations being apparent. To counter this, the Part 1 of the Conditions has been printed in two colours (black and blue) and FIDIC bly recommends all users of the Conditions to insist that Part 1 of the document should be in the form published by FIDIC.
The CECC comprised the following members all of whom played an active role in the preparation of the fourth edition, Messrs. H. Sorensen (Denmark) Chairman, R. Elsasser (Germany), R. Heins (USA), H. Kristensen (Sweden) and K.B. Norris (UK). The Executive Committee expresses its sincere thanks to the CECC Members for four years of time-consuming voluntary work which was required to produce the fourth edition. The main responsibility for coordinating the drafting fell upon Messrs. Sorensen and Norris and the Executive Committee would like to express a special commendation to them.
During their respective periods of office as President of FIDIC Messrs. Miller, Eldridge and Frick-Meijer provided considerable support to the drafting committee, The European International Contractors (E1Q on behalf of the Confederation of International
Contractors' Associations (CICA) and supported by Associated General Contractors of America (AGC) played a valuable consultative role and FIDIC particularly thanks Messrs. R. Aldred (UK) and G. Lodigiani (Italy) who were most active in this function and were supported by many others, notably Messrs. R. Bollinger (EIC), J. Cuisinier (France), J. de Greef (Netherlands) and Messrs. D.G. Armb and C. Molineaux (USA).
Mr. Angus Cleaver of Bain Clarkson Ltd, London provided the knowledge and drafting skill for the insurance clauses and was a valuable adviser on risk allocation.
Mr. Christopher Seppala of White & Case, Paris, on behalf of the International Bar Association gave valuable advice on the legal aspects and a check to ensure legal conformity of the entire document was carried out by Mr. David Wightman of Turner Kenneth Brown, London.
Finally, the Executive Committee wishes to express its thanks to former Managing Director, Mr. Burt Campbell, who assisted the drafting committee throughout the revision process and who has, since he retired, undertaken the coordination of the production of this Guide.
FIDIC Secretariat receives requests from time to time to assist in the interpretation of individual contracts which are based upon conditions of contract similar to those contained in the fourth edition. It should be evident that as a federation of Consulting Engineers FIDIC cannot consider itself competent to give legal advice and in any event the legal interpretation of a contract will, inter alia, depend upon the law governing the particular contract as well as the precise wording of the contract. One objective of this Guide is to indicate what the drafting committee intended in drafting the various clauses. The interpretation of individual clauses in a specific contract will be determined by the Courts or by arbitration.
The final section of this Guide contains a photo reproduction of FIDIC's "Conditions of Contract for Works of Civil Engineering Construction, Fourth Edition 1987 (Reprinted 1988 with editorial amendments)", better known as "Red Book 4". Within the text of this Guide, the clauses from Red Book 4 are copied and are shown in italics. The italicized clauses should be identical to the corresponding clauses in the final section. If any discrepancy is found between corresponding clauses, the reader should refer to the photo reproduced final section to determine the correct wording.
In order to complete a project within the required time and budget it is essential that each phase of its preparation and execution, starting with the assessment of feasibility and terminating with the handing over of the completed project by the Contractor to the Owner, be formulated with precision in order to limit delays, disputes and unforeseen additional costs.
The object of this publication is to comment on the Clauses contained in the fourth edition of the Conditions of Contract for Works of Civil Engineering Construction published by the International Federation of (independent) Consulting Engineers (FIDIC). The extent of the comments on the Sub-Clauses differs considerably, as some Clauses are more complex than others, and the length of a commentary should not be taken to reflect the relative importance of the subject matter.
By way of introduction some notes are included relating to the tendering procedure recommended by FIDIC. More commentary on this tendering procedure can be found in the FIDIC publication entitled Tendering Procedure (Procedure for obtaining and evaluating tenders for civil engineering contracts) available from FIDIC Secretariat.
There are obvious advantages to using detailed contract provisions based upon a standard form of contract which holds a reasonable balance between the requirements and interests of the parties concerned and in particular allocates fairly the risks and responsibilities between the contracting parties. In the majority of cases the contracting parties will react favourably to clearly stated obligations and this will do much to avoid unsatisfactory performance, increased costs and disputes which can arise if the trust that needs to exist between the parties to a construction contract is lacking.
The use of standard conditions of contract will not only facilitate the successful completion of a contract but will, in all probability, result in lower tender prices, as tenderers will be familiar with the conditions that will apply under the contract. This implies that they will not need to make financial provision for contract conditions with which they are not familiar and whose consequences they may have difficulty in assessing. The widespread use of standard conditions of contract also provides a stable basis for training and educating personnel responsible for contract management and avoids their having to work with ever changing contract conditions.
The FIDIC Conditions of Contract for Works of Civil Engineering Construction were first published in 1957. Up to that time there were no conditions which had been specifically prepared to govern international contracts. The first edition of the FIDIC Conditions (the Red Book as it quickly became known because the title was long and the cover was red) was published at a time when international contracting was in its boom period and the need for a standard set of conditions became apparent. The first edition was based on a form of contract in use in the United Kingdom which was published by the Institution of Civil Engineers (ICE) and thus very much reflected traditions and a legal system that were specifically British.
A second edition was issued in the mid-sixties but this did not change the conditions contained in the first edition, it merely added a Part 111 to the first edition. This Part Ill was drafted to provide particular changes to the General Conditions when the document was to be used for dredging and land reclamation contracts.
A third edition which did involve a complete revision was published in 1977 and was accompanied by an explanatory document entitled 'Notes on Documents for Civil Engineering Contracts'.
FIDIC maintains a committee, the Civil Engineering Contracts Committee (CECC), which monitors the use of the Red Book and is responsible for reporting to the FIDIC Executive Committee. In 1983 the CECC advised the Executive Committee that in some quarters the document was being criticised by Employers (Owners) for being too Anglo-Saxon in its concept and language, presumably the result of a far wider use than it had previously enjoyed. Certain amendments were identified which were being applied almost consistently by Employers and it was considered advisable to bring the Conditions into line with current practice. Another factor was that in many cases where the Conditions were being used for projects in developing countries, the representatives of the Employer did not have the breadth of authority to delegate duties to the Engineer which it had been envisaged that they would have when the third edition was prepared and it was felt desirable to reconcile the Conditions with current circumstances.
Accordingly, the Executive Committee requested the CECC to prepare a fourth edition and the following is a brief summary of the terms of reference :
There were some procedural differences in the drafting process as compared with the third edition. In the preparation of the third edition, representatives of the Contractors' Associations had participated almost as co-drafters and it had been indicated on the cover of the Conditions that the document was approved by the various contractors' groupings throughout the world. For the fourth edition it was agreed that the contractors' representatives would have consultative status during the drafting process but the final document would be the sole responsibility of FIDIC. European International Contractors (EIC) were mandated by the Confederation of International Contractors' Associations (CICA) to represent CICA in this consultative role and the EIC representatives were assisted by two representatives of the Associated General Contractors of America (AGC).
In addition, during the course of the revision there was considerably more consultation with the World Bank than had been the case in previous revisions. Also, FIDIC was able to benefit from meetings with representatives of the Joint Arab Funds, who have substantial experience in monitoring the use of the third edition. FIDIC greatly appreciated the opportunity for consultation with both of these bodies, but this consultation does not imply that either organisation approves the fourth edition in its entirety.
The CECC members also availed themselves of the opportunity to consult experts in the fields where they themselves did not claim any particular expertise other than practical experience. In particular this applied to insurance and law.
This book deals with each specific clause and gives a commentary upon the clause by those responsible for the drafting but it will probably be helpful at this point to summarise the principal changes from the third edition.
Editorial - Part II (Conditions of Particular Application) has been greatly expanded by going from an aide memoire to a fairly comprehensive set of fully developed example clauses.
- Part II has been printed as a separate volume. This enables Part 1 (General Conditions) to be attached to the tender documents in their printed form. This provides satisfactory evidence that no changes have been made therein and that whatever changes are required will be effected by an entry in Part II. - The previous Part III (Dredging and Reclamation Works) has been incorporated into Part II.
- The listing of the various Contractors' Associations no longer appears but this does not affect the use of the Conditions by members of CICA Member Associations.
- The style of the language and the layout of the clauses has been modernised to some degree but the sequence numbering of the clauses has been preserved.
General Principles - The role of the Engineer has been maintained.
- The role of the Employer has been made more visible. Where increases in cost or extensions of time are to be determined by the Engineer, he has an obligation to consult with both the Employer and the Contractor before making his determination.
- Every endeavour has been made to maintain the overall balance of rights and obligations between the two parties to the contract.
- Current practice has been reflected in the new edition.
- Procedures have been set out in greater detail and in an action orientated way.
- The Conditions cater for a larger degree of Plant.
- Greater recognition has been made of the fact that some design of Permanent Works is, on occasion, made the responsibility of the Contractor.
Harmonisation Where possible, efforts have been made to harmonise with the Conditions of Contract for Electrical and Mechanical Works (the Yellow Book). However, having regard to the differing nature of the works some notable differences remain. This would not prevent the two sets of conditions being used by different contractors on the same site.
General The material in this Guide does not form part of the Conditions nor is it intended to be incorporated in the Conditions other than by the use of example clauses. Further, it does not purport to give an authoritative legal interpretation of the Conditions, but it is envisaged that it will be helpful in the understanding of the intent of the Conditions and in drafting particular Part II Conditions.
For the successful achievement of a project the first essential is to have Drawings and Specifications, based upon competent designs, together with a Bill of Quantities to enable the probable cost of the Works to be established.
These documents, together with the Conditions of Contract, form the legal document which, under the applicable law, defines the rights and obligations of the two parties, the Employer and the Contractor, in their relationship for the realisation of the project. However, the legal document also establishes the working relationship within which an employer can expect to receive from an efficient contractor a soundly executed project to time and cost. Equally, a contractor can expect reasonable working conditions, fair and balanced application of the Contract and to be paid promptly what he is entitled to receive.
To achieve optimum results it is essential that when tenders are invited, tenderers are not expected to cover in the rates they quote for risks which they could not reasonably foresee or evaluate at the time of preparation of their tenders.
It is in the Employer's interest for him to assume responsibility under the Contract for costs arising from events which may never occur, which lie outside the Contractor's control or which cannot be covered by insurance at a reasonable premium. Such events are classified in the fourth edition as Employer's Risks.
Against this background competent and experienced contractors are able to submit competitive tenders, without the need to include large contingency sums to cover unpredictable hazards. The Employer will only meet the cost of such hazards if they actually occur.
Close cooperation and teamwork between Employer, Contractor and Engineer, within the framework of the Contract, with a mutual desire to produce a satisfactory end product by well organised, safe and efficient methods, will reduce to a minimum the risk of delays or misunderstandings. When mistrust or lack of confidence occurs troubles may arise and a contract may run into difficulties. No wording in the Contract can prevent this from happening if one or both of the parties or the Engineer fails to perform his duty under the Contract responsibly and correctly.
The FIDIC Conditions of Contract have been written for use where the services of an independent Engineer are used for supervision of construction. The Conditions provide under Sub-Clause 2.6 that where the Engineer is required to exercise his discretion he shall act impartially. If the Engineer is an employee of the Employer, such impartiality is still required.
1. General 2. Documents 3. Completion and Submission of Tenders 4. Supplementary Information Required 5. Amendments to Tender Documents 6. Currency Requirements and Exchange Rates 7. Site Visits 8. Tender Bond 9. Bonus 10. Local Legislation 11. Examination of Tenders 12. Acceptance of Tender Evaluation of Tenders Award of Contract Contract Agreement Procedural FlowchartThe Parties to the Contract The Employer The Contractor The EngineerCommentary On The Conditions General CommentDefinitions And Interpretation Clause 1 Definitions Headings and Marginal Notes Interpretation Singular and Plural Notices, Consents, Approvals, Certificates and DeterminationsEngineer And Engineer's Representative Clause 2 2.1 Engineer's Duties and Authority 2.2 Engineer's Representative 2.3 Engineer's Authority to Delegate 2.4 Appointment of Assistants 2.5 Instructions in Writing 2.6 Engineer to Act Impartially Assignment And Subcontracting Clause 3 3.1 Assignment of ContractClause 4 4.1 Subcontracting 4.2 Assignment of Subcontractor's Obligations Contract Documents Clause 5 5.1 Languages and Law 5.2 Priority of Contract DocumentsClause 6 6.1 Custody and Supply of Drawings and Documents 6.2 One Copy of Drawings to be Kept on Site 6.3 Disruption of Progress 6.4 Delays and Cost of Delay of Drawings 6.5 Failure by Contractor to Submit DrawingsClause 7 7.1 Supplementary Drawings and Instructions 7.2 Permanent Works Designed by Contractor 7.3 Responsibility Unaffected by Approval General Obligations Clause 8 8.1 Contractor's General Responsibilities 8.2 Site Operations and Methods of ConstructionClause 9 9.1 Contract AgreementClause 10 10.1 Performance Security 10.2 Period of Validity of Performance Security 10.3 Claims under Performance Security Source of Performance SecurityClause 11 11.1 Inspection of Site Access to DataClause 12 12.1 Sufficiency of Tender 12.2 Adverse Physical Obstructions or ConditionsClause 13 13.1 Work to be in Accordance with ContractClause 14 14.1 Programme to be Submitted 14.2 Revised Programme 14.3 Cash Flow Estimate to be Submitted 14.4 Contractor not Relieved of Duties or ResponsibilitiesClause 15 15.1 Contractor's Superintendence Language Ability of Contractor's Representative Interpreter to be made AvailableClause 16 16.1 Contractor's Employees 16.2 Engineer at Liberty to Object Language Ability of Superintending Staff Employment of Local PersonnelClause 17 17.1 Setting-OutClause 18 18.1 Boreholes and Exploratory ExcavationClause 19 19.1 Safety, Security and Protection of the Environment 19.2 Employer's Responsibilities Allocation Of Responsibility And Insurance Obligations Clause 20 20.1 Care of Works 20.2 Responsibility to Rectify Loss or Damage 20.3 Loss or Damage Due to Employer's Risks 20.4 Employer's RisksClause 21 21.1 insurance of Works and Contractor's Equipment 21.2 Scope of Cover 21.3 Responsibility for Amounts not Recovered 21.4 ExclusionsClause 22 22.1 Damage to Persons and Property 22.2 Exceptions 22.3 Indemnity by EmployerClause 23 23.1 Third Party Insurance (including Employer's Property) 23.2 Minimum Amount of Insurance 23.3 Cross LiabilitiesClause 24 24.1 Accident or Injury to Workmen 24.2 Insurance Against Accident to WorkmenClause 25 25.1 Evidence and Terms of Insurances 25.2 Adequacy of Insurances 25.3 Remedy on Contractor's Failure to Insure 25.4 Compliance with Policy Conditions Insurances Arranged By Employer Clause 21 Insurance of Works Insurance of Contractor's Equipment Scope of Cover Responsibility for Amounts not RecoveredClause 23 Third Party Insurance (including Employer's Property)Clause 25 Evidence and Terms of Insurance Adequacy of Insurances Remedy on Employer's Failure to Insure Compliance with Policy Conditions Other Obligations Of The Contractor Clause 26 26.1 Compliance with Statutes, RegulationsClause 27 27.1 FossilsClause 28 28.1 Patent Rights 28.2 RoyaltiesClause 29 29.1 Interference with Traffic and Adjoining PropertiesClause 30 30.1 Avoidance of Damage to Roads 30.2 Transport of Contractor's Equipment or Temporary Works 30.3 Transport of Materials or Plant 30.4 Waterborne TrafficClause 31 31.1 Opportunities for Other Contractors 31.2 Facilities for Other ContractorsClause 32 32.1 Contractor to Keep Site ClearClause 33 33.1 Clearance of Site on CompletionLabour Clause 34 34.1 Engagement of Staff and Labour Rates of Wages and Conditions of Labour Employment of Persons in the Service of Others Repatriation of Labour Housing for Labour Accident Prevention Officer; Accidents Health and Safety Measures against Insect and Pest Nuisance Epidemics Burial of the Dead Supply of Foodstuffs Supply of Water Alcoholic Liquor or Drugs Arms and Ammunition Festivals and Religious Customs Disorderly ConductClause 35 35.1 Returns of Labour and Contractor's Equipment Records of Safety and Health Reporting of Accidents Materials, Plant And Workmanship Clause 36 36.1 Quality of Materials, Plant and Workmanship 36.2 Cost of Samples 36.3 Cost of Tests 36.4 Cost of Tests not Provided for 36.5 Engineer's Determination where Tests not Provided forClause 37 37.1 Inspection of Operations 37.2 Inspection and Testing 37.3 Dates for Inspection and Testing 37.4 Rejection 37.5 Independent InspectionClause 38 38.1 Examination of Work before Covering up 38.2 Uncovering and Making OpeningsClause 39 39.1 Removal of Improper Work, Materials or Plant 39.2 Default of Contractor in Compliance Suspension Clause 40 40.1 Suspension of Work 40.2 Engineer's Determination following Suspension 40.3 Suspension lasting more than 84 daysCommencement And Delays Clause 41 41.1 Commencement of WorksClause 42 42.1 Possession of Site and Access Thereto 42.2 Failure to Give Possession 42.3 Wayleaves and FacilitiesClause 43 43.1 Time for CompletionClause 44 44.1 Extension of Time for Completion 44.2 Contractor to Provide Notification and Detailed Particulars 44.3 Interim Determination of ExtensionClause 45 45.1 Restriction on Working HoursClause 46 46.1 Rate of ProgressClause 47 47.1 Liquidated Damages for Delay 47.2 Reduction of Liquidated Damages Bonus for CompletionClause 48 48.1 Taking-Over Certificate 48.2 Taking Over of Sections or Parts 48.3 Substantial Completion of Parts 48.4 Surfaces Requiring Reinstatement Prevention from Testing Defects Liability Clause 49 49.1 Defects Liability Period 49.2 Completion of Outstanding Work and Remedying Defects 49.3 Cost of Remedying Defects 49.4 Contractor's Failure to Carry Out Instructions Extension of Defects Liability No Remedying of Defects in Dredging Work after CompletionClause 50 50.1 Contractor to Search Alterations, Additions And Omissions Clause 51 51.1 Variations 51.2 Instructions for VariationsClause 52 52.1 Valuation of Variations 52.2 Power of Engineer to Fix Rates 52.3 Variations Exceeding 15 per cent 52.4 Daywork Procedure For Claims Clause 53 53.1 Notice of Claims 53.2 Contemporary Records 53.3 Substantiation of Claims 53.4 Failure to Comply 53.5 Payment of Claims Contractor's Equipment, Temporary Works And Materials Clause 54 54.1 Contractor's Equipment, Temporary Works and Materials; Exclusive Use for the Works Vesting Revesting and Removal 54.2 Employer not Liable for Damage 54.3 Customs Clearance 54.4 Re-export of Contractor's Equipment 54.5 Conditions of Hire of Contractor's Equipment 54.6 Costs for the Purpose of Clause 63 54.7 Incorporation of Clause in Subcontracts 54.8 Approval of Materials not Implied Suitability of Contractor's Equipment Preference for Local Products Contractor's Arrangements for Services Hazards on Site Maintenance of Roads, etc. Measurement Clause 55 55.1 QuantitiesClause 56 56.1 Works to be MeasuredClause 57 57.1 Method of Measurement 57.2 Breakdown of Lump Sum Items Provisional Sums Clause 58 58.1 Definition of 'Provisional Sum' 58.2 Use of Provisional Sums 58.3 Production of Vouchers Nominated Subcontractors Clause 59 59.1 Definition of ' Nominated Subcontractors' 59.2 Nominated Subcontractors; Objection to Nomination 59.3 Design Requirements to be Expressly Stated 59.4 Payments to Nominated Subcontractors 59.5 Certificates of Payment to Nominated Subcontractors Certificates Of Payment Clause 60 60.1 Monthly Statements 60.2 Monthly Payments 60.3 Payment of Retention Money 60.4 Correction of Certificates 60.5 Statement at Completion 60.6 Final Statement 60.7 Discharge 60.8 Final Certificate 60.9 Cessation of Employer's Liability 60.10 Time for Payment Currency of Account and Rates of Exchange Payments to Contractor Payments to Employer Currency of Account and Payments Place of Payment Advance PaymentClause 61 61.1 Approval only by Defects Liability CertificateClause 62 62.1 Defects Liability Certificate 62.2 Unfulfilled Obligations Remedies Clause 63 63.1 Default of Contractor 63.2 Valuation at Date of Termination 63.3 Payment after Termination 63.4 Assignment of Benefit of AgreementClause 64 64.1 Urgent Remedial Work Special Risks Clause 65 65.1 No Liability for Special Risks 65.2 Special Risks 65.3 Damage to Works by Special Risks 65.4 Projectile, Missile 65.5 increased Costs arising from Special Risks 65.6 Outbreak of War 65.7 Removal of Contractor's Equipment on Termination 65.8 Payment if Contract Terminated Release From Performance Clause 66 66.1 Payment in Event of Release from Performance Settlement Of Disputes Clause 67 67.1 Engineer's Decision 67.2 Amicable Settlement 67.3 Arbitration 67.4 Failure to Comply with Engineer's Decision Notices Clause 68 68.1 Notice to Contractor 68.2 Notice to Employer and Engineer 68.3 Change of Address Default Of Employer Clause 69 69.1 Default of Employer 69.2 Removal of Contractor's Equipment 69.3 Payment on Termination 69.4 Contractor's Entitlement to Suspend Work 69.5 Resumption of Work Changes In Cost And Legislation Clause 70 70.1 Increase or Decrease of Cost 70.2 Subsequent Legislation Currency And Rates Of Exchange Clause 71 71.1 Currency RestrictionsClause 72 72.1 Rates of Exchange 72.2 Currency Proportions 72.3 Currencies of Payment for Provisional SumsPossible Supplementary ClausesBribes Confidentiality Restrictions on Expenditure Contractor as Joint Venture Special Provision for Duties and TaxesAppendix
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