Construction Contract MDB Harmonised Ed (Version 2: March 2006 Harmonised Red Book)

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Conditions of Contract for Construction (Multilateral Development Bank Harmonised Harmonised Ed. Version 2: March 2006). For Building and Engineering Works designed by the Employer. General Conditions; Particular Conditions; Forms of Tender, etc. Electronic version in encrypted PDF.

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2-88432-044-X

Construction Contract: Conditions of Contract for Construction

FOR BUILDING AND ENGINEERING WORKS DESIGNED BY THE EMPLOYER
MDB Harmonised Edition, March 2006 Version

Amended Version published June 2010, see June 2010 Version
Amended Version published March 2006
(First Version published May 2005)

FOR USE UNDER LICENCE ON PROJECTS FUNDED BY PARTICIPATING MULTILATERAL DEVELOPMENT BANKS (MDB)

FOR PROJECTS THAT ARE NOT PARTICIPATING MDB FINANCED, THE CONSTRUCTION CONTRACT, 1ST EDITION 1999, MUST BE USED.

General Conditions
Particular Conditions
Forms of Tender, Contract Agreement Dispute Adjudication Agreement

ACKNOWLEDGEMENTS TO THE FIRST EDITION 1999
INTRODUCTION
PARTICIPATING BANKS
COPYRIGHT
CONTENTS

Conditions of Contract for Construction, which are recommended for building and engineering works designed by the Employer or by his representative, the Engineer. Under the usual arrangements for this type of contract, the Contractor constructs the works in accordance with a design provided by the Employer. However, the works may include some elements of Contractor-designed civil, mechanical, electrical and/or construction works.

ISBN 2-88432-044-X
Bound volume (100 p.)
Code: FC-RA-H-AA-10

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General Conditions only, March 2006 Version:
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Complete Contract, March 2006 Version:
General Conditions, Forms, Index, etc. Add to Order

For Amended Version published June 2010, see June 2010 Version

ACKNOWLEDGEMENTS TO THE FIRST EDITION, 1999

Fédération Internationale des Ingénieurs-Conseils (FIDIC) extends special thanks to the following members of its Update Task Group: Christopher Wade (Group Leader), SWECO-VBB, Sweden; Peter L Booen (Principal Drafter), GIBB Ltd, UK; Hermann Bayerlein, Fichtner, Germany; Christopher R Seppala (Legal Adviser), White & Case, France; and José F Speziale, IATASA, Argentina.

The preparation was carried out under the general direction of the FIDIC Contracts Committee comprising John B Bowcock, Consulting Engineer, UK (Chairman); Michael Mortimer-Hawkins, SwedPower, Sweden; Axel-Volkmar Jaeger, Schmidt Reuter Partner, Germany; and Hiroyuki Endo, Pacific Consultants, Japan.

Various drafts were reviewed by the following persons or organisations: Mushtaq Ahmad, NESPAK, Pakistan; Peter Batty, Post Buckley International, USA; Manfred Breege, Lahmeyer International, Germany; Pablo Bueno, TYPSA, Spain; Nael G Bunni, Consulting Engineer, Ireland; Ian Fraser, Beca Carter Hollings & Ferner, New Zealand; Roy Goode, Oxford University, UK; Dan W Graham, Bristows Cooke & Carpmael, UK; Mark Griffiths, Griffiths & Armour, UK; Geoffrey F Hawker, Consulting Engineer, UK; Hesse & Steinberger, VDMA, Germany; Poul E Hvilsted, Elsamprojekt, Denmark; Gordon L Jaynes, Whitman Breed Abbott & Morgan, UK; Tonny Jensen (Chairman of FIDIC Quality Management Committee), COWI, Denmark; Philip Loots & Associates, South Africa; Neil McCole, Merz and McLellan, UK; K B (Tony) Norris, Consulting Engineer, UK; Eric Petersen, CEGELEC, France; Matthew Needham-Laing, Victoria Russell & Paul J Taylor, Berrymans Lace Mawer, UK; David R Wightman & Gerlando Butera, Nabarro Nathanson, UK; the Association of Japanese Consulting Engineers; European International Contractors; Organisme de Liaison Industries Métalliques Européennes ("ORGALIME"); the International Association of Dredging Contractors; the International Bar Association; the Asian Development Bank; and the World Bank.

FIDIC wishes to record its appreciation of the time and effort devoted by all the above.

The ultimate decision on the form and content of the document rests with FIDIC.

INTRODUCTION

The Multilateral Development Banks (MDBs) have for a number of years adopted the FIDIC Conditions of Contract for Construction as part of the Standard Bidding Documents which the MDBs require their borrowers or aid recipients to follow. In using the FIDIC Conditions it has been the regular practice of the MDBs to introduce additional Clauses in the Conditions of Particular Application (or “Particular Conditions”) in order to amend provisions contained in the FIDIC General Conditions. These additional clauses in many cases have standard wording which has to be repeated whenever procurement documents are being prepared for a new project.

Furthermore, the provisions in bid documents, including the additional clauses contained in the Particular Conditions, varied between the MDBs, and this created inefficiencies and uncertainties amongst the users of the documents, and increased the possibilities for disputes. The problem was recognised by the Heads of Procurement (HOPs) of the MDBs as significant, as were the benefits of standardisation. In response, the HOPs resolved to harmonise their bid documents on an international basis, by making use of the FIDIC General Conditions.

For this purpose, the HOPs further resolved that there should be a modified form of the FIDIC Conditions of Contract for Construction, 1st Edition 1999, in which the General Conditions would contain the standard wording which previously has been incorporated by MDBs in the Particular Conditions. FIDIC also recognised the major benefits to the users of the contracts of harmonisation and the inclusion in the General Conditions of the main common changes required by Particular Conditions in MDB contracts.

Accordingly, the Federation was pleased to work with the HOPs to produce this MDB Harmonised Edition of the 1999 conditions for MDB contracts. It is believed that the modified, or harmonised document, will simplify use of the FIDIC Conditions of Contract not only for the MDBs and their borrowers, but also for others involved with project procurement, such as consulting engineers, contractors and contract lawyers. Use of the harmonised conditions should significantly reduce the number of additions and amendments to be included in the Particular Conditions. Nevertheless, most projects will have special requirements which will necessitate some specific changes. This harmonised document therefore contains provision for Particular Conditions, as has become the practice in other FIDIC documents.

This MDB Harmonised Edition also includes sample forms for Contract Data, Securities, Bonds, Guarantees and Dispute Board agreements. In general, this harmonised document follows earlier FIDIC risk sharing principles for the type of contract for which they were prepared. In most cases, the amendments which have been made to produce the MDB Harmonised Edition of the FIDIC General Conditions for Construction are those arising from the requirements of the MDBs, except for some minor changes of an editorial nature. However, in the case of the dispute provisions contained in Clauses 20.2 to 20.8 and in the associated Appendix, the opportunity has been taken to make other amendments which FIDIC considers an improvement on earlier wording in the of the Construction Contract, 1st Edition 1999.

A draft of this MDB Harmonised Edition was circulated for comment to interested parties, prior to its finalization. All of the comments received were considered by FIDIC and some have been incorporated. Other comments will be reviewed again when in due course FIDIC produces a second edition of its Construction Contract.

The insurance provisions given in Clause 18 of the document remain unchanged from the 1st Edition 1999, although some commentators have suggested an alternative approach to dealing with this specialised topic. In particular, Employers may wish to consider arranging for a dedicated single policy for the project which would cover all necessary insurances. The advantage of such an approach is that it would avoid gaps or other misunderstandings in the insurances provided, including possible duplication of cover. If an Employer decides to arrange a single insurance policy, then a copy of that policy should be made available to tenderers during the tender period. FIDIC recommends that Employers should obtain, at an early stage of project procurement, expert advice on insurance matters.

The MDBs listed in the section "Participating Banks" have participated in the preparation of the MDB Harmonised Edition. It is understood that all of them will adopt this edition of the FIDIC document in their Standard Bidding Documents.

PARTICIPATING BANKS

The Participating Banks listed below have participated in the preparation of the Multilateral Development Bank (MDB) Harmonised Edition of the FIDIC Conditions of Contract for Construction. It is understood that all of them will adopt this edition of the FIDIC document in their Standard Bidding Documents. The MDB Harmonised Edition is for use on projects financed in whole or in part by a Participating Bank.

African Development Bank
Asian Development Bank
Black Sea Trade and Development Bank
Council of Europe Development Bank
Caribbean Development Bank
European Bank for Reconstruction and Development
Inter-American Development Bank
International Bank for Reconstruction and Development (The World Bank)

Copyright Under the terms of the licence agreement with a Participating Bank, the sole Copyright owner of the Conditions of Contract for Construction which includes the MDB Harmonised General Conditions of Contract is FIDIC.

Each Participating Bank shall ensure that a) the credit "MDB Harmonised Conditions of Contract for Construction - for participating development bank-financed contract use only. © FIDIC 2005 - No reproduction of this document is permitted." appears on each page of each copy of the MDB Harmonised General Conditions of Contract included in SBDs, printed or in electronic format; and b) the following FIDIC Copyright notice appears on the first page of each MDB Harmonised General Conditions of Contract prepared by users: “© FIDIC 2005. All rights reserved. The Copyright owner of this work is the International Federation of Consulting Engineers - FIDIC. This publication is exclusive for use as provided under the License Agreement dated [Date] between [Name of MDB] and FIDIC, and, consequently, no part of this publication may be reproduced, translated, adapted, stored in a retrieval system or communicated, in any form or by any means, whether mechanical, electronic, magnetic, photocopying, recording or otherwise, without prior permission in writing from FIDIC. To request such permission, please contact: FIDIC, Case Postale 311, CH-1215 Geneva 15, Switzerland; Tel. +41 22 799 49 00; Fax +41 22 799 49 01; E-mail: [email protected]. FIDIC is not responsible for the accuracy or completeness of translations of this publication unless such translation explicitly indicates otherwise.”

CONTENTS

A. GENERAL CONDITIONS

DEFINITIONS LISTED ALPHABETICALLY

1. GENERAL PROVISIONS

1.1 Definitions
1.2 Interpretation
1.3 Communications
1.4 Law and Language
1.5 Priority of Documents
1.6 Contract Agreement
1.7 Assignment
1.8 Care and Supply of Documents
1.9 Delayed Drawings or Instructions
1.10 Employer's Use of Contractor's Documents
1.11 Contractor's Use of Employer's Documents
1.12 Confidential Details
1.13 Compliance with Laws
1.14 Joint and Several Liability

2 THE EMPLOYER

2.1 Right of Access to the Site
2.2 Permits, Licences or Approvals
2.3 Employer's Personnel
2.4 Employer's Financial Arrangements
2.5 Employer's Claims

THE ENGINEER

3.1 Engineer's Duties and Authority
3.2 Delegation by the Engineer
3.3 Instructions of the Engineer
3.4 Replacement of the Engineer
3.5 Determinations

4 THE CONTRACTOR

4.1 Contractor's General Obligations
4.2 Performance Security
4.3 Contractor's Representative
4.4 Subcontractors
4.5 Assignment of Benefit of Subcontract
4.6 Co-operation
4.7 Setting Out
4.8 Safety Procedures
4.9 Quality Assurance
4.10 Site Data
4.11 Sufficiency of the Accepted Contract Amount
4.12 Unforeseeable Physical Conditions
4.13 Rights of Way and Facilities
4.14 Avoidance of Interference
4.15 Access Route
4.16 Transport of Goods
4.17 Contractor's Equipment
4.18 Protection of the Environment
4.19 Electricity, Water and Gas
4.20 Employer's Equipment and Free-Issue Material
4.21 Progress Reports
4.22 Security of the Site
4.23 Contractor's Operations on Site
4.24Fossils

5 NOMINATED SUBCONTRACTORS

5.1 Definition of "nominated Subcontractor"
5.2 Objection to Nomination
5.3 Payments to nominated Subcontractors
5.4 Evidence of Payments

6 STAFF AND LABOUR

6.1 Engagement of Staff and Labour
6.2 Rates of Wages and Conditions of Labour
6.3 Persons in the Service of Others
6.4 Labour Laws
6.5 Working Hours
6.6 Facilities for Staff and Labour
6.7 Health and Safety
6.8 Contractor's Superintendence
6.9 Contractor's Personnel
6.10 Records of Contractor's Personnel and Equipment
6.11 Disorderly Conduct

7 PLANT, MATERIALS AND WORKMANSHIP

7.1 Manner of Execution
7.2 Samples
7.3 Inspection
7.4 Firsting
7.5 Rejection
7.6 Remedial Work
7.7 Ownership of Plant and Materials
7.8 Royalties

8 COMMENCEMENT, DELAYS AND SUSPENSION

8.1 Commencement of Works
8.2 Time for Completion
8.3 Programme
8.4 Extension of Time for Completion
8.5 Delays Caused by Authorities
8.6 Rate of Progress
8.7 Delay Damages
8.8 Suspension of Work
8.9 Consequences of Suspension
8.10 Payment for Plant and Materials in Event of Suspension
8.11 Prolonged Suspension
8.12 Resumption of Work

9 TESTS ON COMPLETION

9.1 Contractor's Obligations
9.2 Delayed Tests
9.3 Retesting
9.4 Failure to Pass Firsts on Completion

10 EMPLOYER'S TAKING OVER

10.1 Taking Over of the Works and Sections
10.2 Taking Over of Parts of the Works
10.3 Interference with Firsts on Completion
10.4 Surfaces Requiring Reinstatement

11 DEFECTS LIABILITY

11.1 Completion of Outstanding Work and Remedying Defects
11.2 Cost of Remedying Defects
11.3 Extension of Defects Notification Period
11.4 Failure to Remedy Defects
11.5 Removal of Defective Work
11.6 Further Firsts
11.7 Right of Access
11.8 Contractor to Search
11.9 Performance Certificate
11.10 Unfulfilled Obligations
11.11 Clearance of Site

12 MEASUREMENT AND EVALUATION

12.1 Works to be Measured
12.2 Method of Measurement
12.3 Evaluation
12.4 Omissions

13 VARIATIONS AND ADJUSTMENTS

13.1 Right to Vary
13.2 Value Engineering
13.3 Variation Procedure
13.4 Payment in Applicable Currencies
13.5 Provisional Sums
13.6 Daywork
13.7 Adjustments for Changes in Legislation
13.8 Adjustments for Changes in Cost

14 CONTRACT PRICE AND PAYMENT

14.1 The Contract Price
14.2 Advance Payment
14.3 Application for Interim Payment Certificates
14.4 Schedule of Payments
14.5 Plant and Materials intended for the Works
14.6 Issue of Interim Payment Certificates
14.7 Payment
14.8 Delayed Payment
14.9 Payment of Retention Money
14.10 Statement at Completion
14.11 Application for Final Payment Certificate
14.12 Discharge
14.13 Issue of Final Payment Certificate
14.14 Cessation of Employer's Liability
14.15 Currencies of Payment

15 DEFAULT OF CONTRACTOR

15.1 Notice to Correct
15.2 Termination by Employer
15.3 Valuation at Date of Termination
15.4 Payment after Termination
15.5 Employer's Entitlement to Termination for Convenience

16 DEFAULT OF EMPLOYER

16.1 Contractor's Entitlement to Suspend Work
16.2 Termination by Contractor
16.3 Cessation of Work and Removal of Contractor's Equipment
16.4 Payment on Termination

17 RISK AND RESPONSIBILITY

17.1 Indemnities
17.2 Contractor's Care of the Works
17.3 Employer's Risks
17.4 Consequences of Employer's Risks
17.5 Intellectual and Industrial Property Rights
17.6 Limitation of Liability

18 INSURANCE

18.1 General Requirements for Insurances
18.2 Insurance for Works and Contractor's Equipment
18.3 Insurance against Injury to Persons and Damage to Property
18.4 Insurance for Workers

19 FORCE MAJEURE

19.1 Definition of Force Majeure
19.2 Notice of Force Majeure
19.3 Time of Notice
19.4 Duty to Minimise Delay
19.5 Consequences of Force Majeure
19.6 Optional Termination, Payment and Release
19.7 Release from Performance under the Law

20 CLAIMS, DISPUTES AND ARBITRATION

20.1 Contractor's Claims
20.2 Appointment of the Dispute Adjudication Board
20.3 Failure to Agree Dispute Adjudication Board
20.4 Obtaining Dispute Adjudication Board's Decision
20.5 Amicable Settlement
20.6 Arbitration
20.7 Failure to Comply with Dispute Adjudication Board's Decision
20.8 Expiry of Dispute Adjudication Board's Appointment

APPENDIX
A GENERAL CONDITIONS OF DISPUTE ADJUDICATION AGREEMENT
ANNEX: PROCEDURAL RULES

INDEX OF SUB-CLAUSES

B. PARTICULAR CONDITIONS

PART A - CONTRACT DATA
PART B - SPECIFIC PROVISIONS

C. SAMPLE FORMS

FORMS OF SECURITIES

International Federation of Consulting Engineers
FIDIC Bookshop - Box 311 - CH-1215 Geneva 15 - Switzerland
Tl +41-22-799 49 00 - Fx +41-22-799 490 1 - [email protected] - FIDIC Bookshop

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