• Part I - General Conditions with Forms of Tender and Agreement
• Part II - Conditions of Particular Application with Guidelines for Preperation of Part II Clauses

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 :

• Change only where change is necessary.
• Maintain the basic role of the Engineer.
• Pay close attention to some specific topics such as Bonds and Guarantees, Apportionment of Risk, Insurance, Claims Procedures, Certificates and Payments and Dispute Procedures.
• Endeavor to update the language so that it is more understandable to those charged with administering the Conditions on site.

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 Flowchart

The Parties to the Contract

The Employer
The Contractor
The Engineer

Commentary On The Conditions

General Comment

Definitions And Interpretation

Clause 1
Definitions
Headings and Marginal Notes
Interpretation
Singular and Plural
Notices, Consents, Approvals,
Certificates and Determinations

Engineer 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 Contract
Clause 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 Documents
Clause 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 Drawings
Clause 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 Construction
Clause 9
9.1 Contract Agreement
Clause 10
10.1 Performance Security
10.2 Period of Validity of Performance Security
10.3 Claims under Performance Security
Source of Performance Security
Clause 11
11.1 Inspection of Site
Access to Data
Clause 12
12.1 Sufficiency of Tender
12.2 Adverse Physical Obstructions or Conditions
Clause 13
13.1 Work to be in Accordance with Contract
Clause 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
Responsibilities
Clause 15
15.1 Contractor's Superintendence
Language Ability of Contractor's Representative
Interpreter to be made Available
Clause 16
16.1 Contractor's Employees
16.2 Engineer at Liberty to Object
Language Ability of Superintending Staff
Employment of Local Personnel
Clause 17
17.1 Setting-Out
Clause 18
18.1 Boreholes and Exploratory Excavation
Clause 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 Risks
Clause 21
21.1 insurance of Works and Contractor's Equipment
21.2 Scope of Cover
21.3 Responsibility for Amounts not Recovered
21.4 Exclusions
Clause 22
22.1 Damage to Persons and Property
22.2 Exceptions
22.3 Indemnity by Employer
Clause 23
23.1 Third Party Insurance (including Employer's Property)
23.2 Minimum Amount of Insurance
23.3 Cross Liabilities
Clause 24
24.1 Accident or Injury to Workmen
24.2 Insurance Against Accident to Workmen
Clause 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 Recovered
Clause 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, Regulations
Clause 27
27.1 Fossils
Clause 28
28.1 Patent Rights
28.2 Royalties
Clause 29
29.1 Interference with Traffic and Adjoining Properties
Clause 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 Traffic
Clause 31
31.1 Opportunities for Other Contractors
31.2 Facilities for Other Contractors
Clause 32
32.1 Contractor to Keep Site Clear
Clause 33
33.1 Clearance of Site on Completion

Labour

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 Conduct
Clause 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 for
Clause 37
37.1 Inspection of Operations
37.2 Inspection and Testing
37.3 Dates for Inspection and Testing
37.4 Rejection
37.5 Independent Inspection
Clause 38
38.1 Examination of Work before Covering up
38.2 Uncovering and Making Openings
Clause 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 days

Commencement And Delays

Clause 41
41.1 Commencement of Works
Clause 42
42.1 Possession of Site and Access Thereto
42.2 Failure to Give Possession
42.3 Wayleaves and Facilities
Clause 43
43.1 Time for Completion
Clause 44
44.1 Extension of Time for Completion
44.2 Contractor to Provide Notification and Detailed Particulars
44.3 Interim Determination of Extension
Clause 45
45.1 Restriction on Working Hours
Clause 46
46.1 Rate of Progress
Clause 47
47.1 Liquidated Damages for Delay
47.2 Reduction of Liquidated Damages Bonus for Completion
Clause 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 Completion
Clause 50
50.1 Contractor to Search

Alterations, Additions And Omissions

Clause 51
51.1 Variations
51.2 Instructions for Variations
Clause 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 Quantities
Clause 56
56.1 Works to be Measured
Clause 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 Payment
Clause 61
61.1 Approval only by Defects Liability Certificate
Clause 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 Agreement
Clause 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 Restrictions
Clause 72
72.1 Rates of Exchange
72.2 Currency Proportions
72.3 Currencies of Payment for Provisional Sums

Possible Supplementary Clauses

Bribes
Confidentiality
Restrictions on Expenditure
Contractor as Joint Venture
Special Provision for Duties and Taxes

Appendix