• Introduction
• General Conditions
• Particular Conditions: Parts A and B
• Sample Forms

Conditions of Contract for Design, Build and Operate Projects, 1st Edition 2008.
 
Available as:

• Printed Reference Format: single bound volume Order
• Electronic Contract Format: Introduction + General Conditions and Particular Conditions Guidance + Sample Forms as PDF files (General Conditions are encrypted to guarantee authenticity) Order

In 1999, the Fédération Internationale des Ingénieurs-Conseils (FIDIC) published a new series of Conditions of Contract: (a) for Construction; (b) for Plant and Design- Build; and (c) for EPC/Turnkey Projects. This was followed by the Short Form of Contract for lower value or less complex projects, and the Form of Contract for Dredging and Reclamation Works. Following their publication, it became clear that there was a growing need for a document which combined a design-build obligation with a long-term operation commitment.
 
Whilst it is recognised that there are alternative scenarios encompassing the Design, Build and Operate (DBO) concept – for example the "green field" scenario of Design- Build-Operate, and the "brown field" scenario of Operate-Design-Build – it was also recognised that different scenarios required different contract conditions. Moreover, the conditions applicable to short-term operation differed considerably to those applicable to long-term operation. A further consideration was whether it was best to approach a DBO project as a single long-term contract or as two separate or linked
contracts.
 
FIDIC has chosen to adopt the green-field Design-Build-Operate scenario, with a 20- year operation period, and has opted for a single contract awarded to a single contracting entity (which will almost certainly be a consortium or joint venture) to optimise the coordination of innovation, quality and performance, rather than award separate contracts for design-build and for operation. The Contractor has no responsibility for either financing the project or for its ultimate commercial success.

This is the basis upon which this document has been prepared.
 
The document, as written, is not suitable for contracts which are not based on the traditional Design-Build-Operate sequence, or where the Operation Period differs significantly from the 20 years adopted.

The document is recommended for general use where tenders are invited on an international basis.

When preparing these Conditions of Contract for Design, Build and Operate Projects, the drafting task group has attempted to include all conditions of a general nature, which are likely to apply to the majority of DBO contracts, into General Conditions.
 
However, it was recognised that there are many essential provisions which are particular to each individual project. These are to be included as Contract Data and are to be found in the Particular Conditions Part A – Contract Data.
 
In addition, it was recognised that many Employers or governments, or even different jurisdictions, particularly if the General Conditions were to be used on domestic contracts, may require special conditions of contract, or indeed particular procedures, which differ from those included in the General Conditions. For this reason, the document also allows for Particular Conditions Part B – Special Provisions which includes advice to drafters of contract documents who may wish to add Special Provisions to replace or supplement the clauses to be found in the General Conditions.
 
Users who wish to adopt these conditions for use on a different scenario or with an operation period significantly different to the 20-year period assumed, are referred to the FIDIC DBO Contract Guide (planned for publication by FIDIC at a later date), which identifies the areas which will require amending and gives comprehensive guidelines and suggestions on how they should be addressed. However, the Guide will not claim to address all issues requiring attention, and users should seek expert advice from FIDIC before attempting to make any significant changes to the document via Particular Conditions Part B – Special Provisions.
 
Drafters of contract documents are reminded that the General Conditions of all FIDIC contracts are protected by copyright and trademark and may not be changed without specific written consent, usually in the form of a licence to amend, from FIDIC. If drafters wish to amend the provisions found in the General Conditions, the place for doing this is in the Particular Conditions Part B – Special Provisions, as mentioned above, and not by making changes in the General Conditions as such.
 
FIDIC also recognises that the successful performance of a long-term DBO contract requires that the Parties understand the overall time framework and the need for a long-term commitment by both the Employer and the Contractor. In trying to achieve this understanding and commitment, it has been necessary to introduce new procedures and new terminology which are not to be found in the other FIDIC forms of contract.
 
The document also includes a number of sample forms to help both Parties have a common understanding of what is required by third parties such as providers of securities and guarantees, and what is considered to be accepted good practice by FIDIC and the major international funding agencies. While copyrighted, these forms are expressly provided to users of the Conditions of Contract for completion by users. Users are warned that if these forms are changed in any significant way, there is a great risk that the balance of the contract and the specific wording of the Clauses may be compromised.
 
The document begins with a series of comprehensive flow charts which show, in visual form, the critical sequences of activities which are specific and unique to the FIDIC® Conditions of Contract for DBO Projects, 1st Edition, 2008 DBO form of contract. These have been included by the drafting task group to facilitate an understanding of the new procedures and new terminology found in these FIDIC Conditions of Contract for Design, Build and Operate Projects.

 These flow charts cover:
- The Overall Contract Period
- The Design-Build Period
- Commencement to Design-Build Commissioning
- The Operation Service Period
- Payment during the Design-Build Period
- Payment during the Operation Service Period
- Determinations by the Employer's Representative
- Contractor's Claims – Submission
- Contractor's Claims – Determination
- Settlement of Disputes
 
These charts are illustrative and must not be taken into consideration in the interpretation of the Conditions of Contract.

- Acknowledgements
- Foreword
- Notes
- Flow Charts

B. General Conditions

1: GENERAL PROVISIONS

1.1 Definitions

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 Operating Licence

1.8 Assignment

1.9 Care and Supply of Documents

1.10 Errors in the Employer's Requirements

1.11 Employer's Use of Contractor's Documents

1.12 Contractor's Use of Employer's Documents

1.13 Confidential Details

1.14 Compliance with Laws

1.15 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

3 THE EMPLOYER'S REPRESENTATIVE

3.1 Employer's Representative's Duties and Authority

3.2 Delegation by the Employer's Representative

3.3 Instructions of the Employer's Representative

3.4 Replacement of the Employer's Representative

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 Nominated Subcontractors

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

4.24 Fossils

5 DESIGN

5.1 General Design Obligations

5.2 Contractor's Documents

5.3 Contractor's Undertaking

5.4 Technical Standards and Regulations

5.5 As-Built Documents

5.6 Operation and Maintenance Manuals

5.7 Design Error

6 STAFF AND LABOUR

6.1 Engagement of Staff and Labour

6.2 Rates of Wages and Conditions of Employment

6.3 Persons in the Service of Employer

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 Testing

7.5 Rejection

7.6 Remedial Work

7.7 Ownership of Plant and Materials

7.8 Royalties

8 COMMENCEMENT DATE, COMPLETION AND PROGRAMME

8.1 Commencement Date

8.2 Time for Completion

8.3 Programme

8.4 Advanced Warning

8.5 Delays Damages

8.6 Contract Completion Certificate

8.7 Residual Life

9 DESIGN-BUILD

9.1 Commencement of Design-Build

9.2 Time for Completion of Design-Build

9.3 Extension of Time for Completion of Design-Build

9.4 Delays Caused by Authorities

9.5 Rate of Progress

9.6 Delay Damages relating to Design-Build

9.7 Suspension of Work

9.8 Consequences of Suspension

9.9 Payment for Plant and Materials in Event of Suspension

9.10 Prolonged Suspension

9.11 Resumption of Work

9.12 Completion of Design-Build

9.13 Failure to Complete

10 OPERATION SERVICE 

10.1 General Requirements

10.2 Commencement of Operation Service

10.3 Independent Compliance Audit

10.4 Delivery of Raw Materials

10.5 Training

10.6 Delays and Interruptions during the Operation Service

10.7 Failure to Reach Production Outputs

10.8 Completion of Operation Service

11 TESTING

11.1 Testing of the Works

11.2 Delayed Tests on Completion of Design-Build

11.3 Retesting of the Works

11.4 Failure to Pass Tests on Completion of Design-Build

11.5 Completion of the Works and Sections

11.6 Commissioning of Parts of the Works

11.7 Commissioning Certificate

11.8 Joint Inspection Prior to Contract Completion

11.9 Procedure for Tests Prior to Contract Completion

11.10 Delayed Tests Prior to Contract Completion

11.11 Failure to Pass Tests Prior to Contract Completion

11.12 Retesting Prior to Contract Completion

12 DEFECTS

12.1 Completion of Outstanding Work and Remedying Defects

12.2 Cost of Remedying Defects

12.3 Failure to Remedy Defects

12.4 Further Tests

12.5 Removal of Defective Work

12.6 Contractor to Search

12.7 Unfulfilled Obligations

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 Adjustments for Changes in Legislation

13.7 Adjustments for Changes in Technology

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 Advance and Interim Payments Certificates

14.4 Schedule of Payments

14.5 Asset Replacement Schedule

14.6 Payment for Plant and Materials intended for the Works

14.7 Issue of Advance and Interim Payment Certificates

14.8 Payment

14.9 Delayed Payment

14.10 Payment of Retention Money

14.11 Application for Final Payment Certificate Design-Build

14.12 Issue of Final Payment Certificate Design-Build

14.13 Application for Final Payment Certificate Operation Service

14.14 Discharge

14.15 Issue of Final Payment Certificate Operation Service

14.16 Cessation of Employer's Liability

14.17 Currencies of Payment

14.18 Asset Replacement Fund

14.19 Maintenance Retention Fund

15 TERMINATION BY EMPLOYER 

15.1 Notice to Correct

15.2 Termination for Contractor's Default

15.3 Valuation at Date of Termination for Contractor's Default

15.4 Payment after Termination for Contractor's Default

15.5 Termination for Employer's Convenience

15.6 Valuation at Date of Termination for Employer's Convenience

15.7 Payment after Termination for Employer's Convenience

16 SUSPENSION AND TERMINATION BY CONTRACTOR

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 ALLOCATION 

17.1 The Employer's Risks During the Design-Build Period

17.2 The Contractor's Risks during the Design-Build Period

17.3 The Employer's Risks During the Operation Service Period

17.4 The Contractor's Risks During the Operation Service Period

17.5 Responsibility for Care of the Works

17.6 Consequences of the Employer's Risks of Damage

17.7 Consequences of Contractor's Risks resulting in Damage

17.8 Limitation of Liability

17.9 Indemnities by the Contractor

17.10 Indemnities by the Employer

17.11 Shared Indemnities

17.12 Risk of Infringement of Intellectual and Industrial Property Rights

18 EXCEPTIONAL RISKS 

18.1 Exceptional Risks

18.2 Notice of an Exceptional Risk

18.3 Duty to Minimise Delay

18.4 Consequences of an Exceptional Risk

18.5 Optional Termination, Payment and Release

18.6 Release from Performance under the Law

19 INSURANCE

19.1 General Requirements

19.2 Insurances to be provided by the Contractor during the Design-Build Period

19.3 Insurances to be provided by the Contractor during the Operation Service Period

20 CLAIMS, DISPUTES AND ARBITRATION

20.1 Contractor's Claims

20.2 Employer's Claims

20.3 Appointment of the Dispute Adjudication Board

20.4 Failure to Agree Dispute Adjudication Board

20.5 Avoidance of Disputes

20.6 Obtaining Dispute Adjudication Board's Decision

20.7 Amicable Settlement

20.8 Arbitration

20.9 Failure to Comply with Dispute Adjudication Board's Decision

20.10 Disputes Arising during the Operation Service Period

20.11 Expiry of Dispute Adjudication Board's Appointment

INDEX OF CLAUSES AND SUB-CLAUSES

INDEX OF PRINCIPAL TERMINOLOGY

GENERAL CONDITIONS OF DISPUTE ADJUDICATION AGREEMENT

PROCEDURAL RULES FOR DISPUTE ADJUDICATION BOARD MEMBERS

C. Particular Conditions

CONTENTS

PREAMBLE

PART A – CONTRACT DATA
- Introduction
- Contract Data

PART B – SPECIAL PROVISIONS
- Introduction
- Notes on the Preparation of Tender Documents
- Notes on the Preparation of Special Provisions

D. Sample Forms

INTRODUCTION

SAMPLE FORMS OF TENDER AND AGREEMENT
- Letter of Tender
- Letter of Acceptance
- Contract Agreement
- Agreement for Dispute Adjudication Board Members
- Agreement for Operation Service Dispute Adjudication Board
- Operating Licence (Aide Memoire)

SAMPLE FORMS OF SECURITY AND GUARANTEE
- Tender Security
- Parent Company Guarantee
- Performance Security - Demand Guarantee
- Performance Security - Surety Bond
- Advance Payment Guarantee
- Maintenance Retention Guarantee