fidic digest

The FIDE Digest

Contractual relationships,responsibilities and claims under thefourth edition of the FIDIC Conditions

John G. %NVyer, FRICS, FCIOB, MSE, FClnstArb

C. Arthur Gillott, BEng(Hons), FICE

Telford, London

Introduction

The publication of the fourth edition of the FIDIC Conditions of contractin no way detracts from the necessity of understanding the manner by whichits Conditions are enforced. This is established through the Laws of theLand which govern the Contract and it is therefore of primary importancethat the identification of the law applicable to the Contract is made clear,as well as the ruling language where the Contract documents are writtenin more than one language.

So important is the identification of the language the Conditions requirethat a definition needs to be made as to which the ruling language is wheretwo or more languages are used within the Contract. The establishmentof the ruling language determines that in any interpretation of the Conditionsa second or other language is for convenience only and not to be consideredauthoritative if differences of translation arise. When a document is prepared Sub-Clause 5.1in one language and translated into another it is a good idea to have the and Part II Sub-

second language version independently translated back into the original Clause 5.1 (a)

language as a check, because, notwithstanding the efficiency of thetranslators, a number of identifiable differences are often discovered.

A word of caution about language would not go amiss here. When dealingwith international business in foreign languages, one must always be surethat the idea or concept perceived by each Party for a given word is thesame for all. Because some people of different countries speak Englishvery well, one must never assume that their understanding of the Englishwords and grammar is necessarily correct - the same can apply whentwo people using their own language are communicating with each other.

Because of the many variations in legal philosophies throughout theworld, the need cannot be overemphasised for all. Parties involved to havean adequate understanding of the particular legal system which governsthe Contract. They should also be aware of the importance of receivingprofessional guidance on Statutes, Ordinances, National or Inter-State legalrequirements which can override or influence the particular clausescontained within FIDIC, or indeed any other Conditions of Contract. Sub-Clause 5.1(b)

When using the FIDIC Conditions of contract there are many Partieswho prefer to nominate the established laws of England to govern itsinterpretation, but the legal ‘system of the country where any dispute isresolved, either through the courts or arbitration, may require theapplication of its own laws and would therefore negate such choice.

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The attitudes of courts may vary in the interpretation of contracts. Insome countries the courts will enforce a literal interpretation if this leadsto a clear and unambiguous result, while in other countries the courts willlook more to the intentions of the Parties. The applicable law will alsodetermine the extent to which the Parties are bound to carry out theircontractual obligations. Under English law there is no concept of ‘forcemajeure’ unless specifically incorporated within the Contract - only thevery restricted concept of ‘frustration’, where a supervening event preventsperformance by one or both of the Parties. Under systems based on theCode Napoleon the Parties to a Contract are relieved of their obligationsto the extent that they are prevented from performing them by a case offorce majeure. Courts under such systems of law may, where exceptionalcircumstances render the performance of one Party’s obligations so onerousas to incur heavy loss (but without rendering performance impossible),reduce the onerous obligations to a reasonable level of equity so required.This potential conflict between force majeure and frustration has beenprevented in the fourth edition by Clause 66.1 Release from Performance.

Once the importance of understanding the legal system which governsthe Contract is recognised, it is equally important for those involved withthe Project to understand in practical terms the nature of their responsibilitiesand liabilities, and the mode of conduct expected of them. Everybodyinvolved with the Contract has an important part to play in ensuring thesuccessful completion of the Project, and this means the complete fulfilmentof all their obligations to each other.

The FIDIC document demands a system of communication which cannotbe shortened or ignored without putting at risk the rights of any one Partyto the Contract. It is therefore important to remember that whencommunications are required to be in writing, this means precisely that,and in like manner, the giving of notices, instructions or certificates shouldfollow the timing and procedures precisely as dictated by the Conditionsof Contract, and in the detail required. In the event of a dispute, the legalrepresentatives of all Parties will rely more than anything else on writtenevidence, documents, and diaries, and if one Party has failed to fultil itsobligations properly in this respect, then its chances of success may beconsiderably reduced.

Those who are familiar with the fourth and fifth editions of the Conditionsof Contract issued by the British Institution of Civil Engineers (ICE) willbe well aware of points of similarity contained in Clauses in both of theseICE editions and in the FIDIC Conditions. They should not, however,because of their knowledge of the ICE Conditions, assume that FIDICis equally applicable in usage - it is not. FIDIC is a form of Contractnot necessarily subject to the laws of England; nor is the wording preciselythe same as the ICE Conditions either in syntax or definition. The FIDICContract must therefore be regarded separately and in its own right, andshould be read and fully understood with these points in mind. The thirdedition of the FIDIC Conditions has been translated into various languagessuch as German and Spanish.

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1. Contractual relationships

Considerations and relationshipsFor a Project to be created and before a Contract can be signed with

the successful tendering Contractor, the Employer has to examine whathe wants to achieve and make a number of decisions. Which responsibilitieswill he accept for himself and which will he delegate to others skilled indoing things which he is not competent to do? A great deal of work hasto be done by the Employer and his appointed Engineer to establish theviability of the Project. Then the engineering design has to be undertaken,all powers and legal rights secured and proper Contract documentsprepared.

Everyone involved with the Project knows that the intentions of the Partiesare deemed to be expressed in the Contract documents but that some ofthese intentions are stated explicitly whereas others are implied. Both typesneed to be recognised. All should be well if both Parties to the Contract,together with the Engineer, the Sub-Contractors and the Suppliers, behavein accordance with the documents. Trouble starts when any of the abovenamed behave incorrectly and not in accordance with the Contract.

To understand what is expected of those participating in the Project theirinvolvement must be looked at in detail.

The EmployerThere should be no doubt as to who the Employer actually is in that

he is named and his address given in Part II. He can be changed duringthe life of the Contract but if the Employer wishes to assign the Contract,this can only be done with the Contractor’s consent. Clause 7.1 (a)(i)

There are various tasks the Employer is obliged to do.

First taskHe has to develop the concept of the Project, examine its feasibility and

financial viability and prepare a cost plan. He must have determination,authority, finance and energy to be able to proceed, and not only to designand build, but also to occupy, operate, maintain and support the Projectthroughout its life cycle. It is also important that he obtains, or is alreadyin possession of, adequate technical and commercial resources to fulfilthe purpose of the entire Project.

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Second task#He must secure the political and legal support of his Government to be

able to obtain all necessary decrees, statutes, laws or regulations forconstruction, operation, maintenance and ultimate renewal or disposal ofthe Project. He must also be able to obtain adequate supplies of energy,water, raw materials, labour, staff, communications and markets, and beable to dispose of any waste products. He should ensure, if he commitshimself to help the Contractor import and export the necessary parts orplant for the Project, that he is in a position to do so.

Third taskA design brief has to be established and a design team appointed to

develop the size, shape, location and functional requirements of the Projectand then to prepare positive plans for any procurement, its constructionand operation.

Fourth taskA supervising Engineer for the construction phase has to be appointed,

whether it is the leader of the original design team or another Engineer.The appointed Engineer, who will be named in the Contract, will then sub-~/ausebe jointly involved with the Employer in determining the details of the I. ~(a)@)Conditions of Contract to be used, the pre-qualification phase of theselection of the Contractor and the Tender Documents to be used. Hisappointment is made in a separate Contract with the Employer. The detailsof this are not disclosed to the Contractor, but the Employer is obligedto disclose any matter for which he requires to give approval before itcan be implemented by the Engineer. Sub-Clause 2.1(b)

Many of the details to be considered will include giving a definition ofthe law and language of the Contract, the currency to be used, rates ofexchange, financial plans, bonds to be required, (bid bonds, advance pay-ment bonds and the traditional performance bonds) insurances, bonus pay-ments, penalties or liquidated damages, timing for completion or sectionalcompletion (including a programme for pre-qualification, tendering andappointment of the Contractor), Employer plant and material supply anddates of delivery, nomination of Suppliers and specialist Sub-Contractors.

The Employer is also responsible for the provision of facilities, thedefinition and availability of the Site for the .Works, access to the Site,and for relations with other affected parties. He must also define the TakingOver of Works, the Defects Liability Period, the condition for commission-ing, testing and putting into operation of the Works, and many other matters.

Furthermore the Employer must ensure that adequate funds are allocatedand usefully spent on the preliminary studies, site investigations, soilsurveys, precise surveys, acquisition of land for the Works and TemporaryWorks. The.budget for construction and commissioning and testing mustalso be adequate. A proper cash flow forecast by the Employer is’vital

as the lack of provision for advance and mobilisation payments hasjeopardised many projects in the past.

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CONTRACTUAL RELATIONSHIPS

A particularly important decision to be made by the Employer is how Clauses 20, 21,to deal with Insurances. While Part I deals with this subject in considerable 22, 23, and 25detail, and it is the responsibility of the Contractor, in Part II the Employerhas the option of handling Insurances himself where a number of separateContractors are employed on a single project or where a phased Take-Over is involved. A vital matter often neglected is the security and provisionof essential records and documents, many of which have to be maintainedfor ten, fifteen, twenty years or more. The Employer should determinethe policy, procedures and practice to be adopted for the safe keeping ofall site records.

A decision must be made about which form of Contract is to be used.If the work is mainly civil engineering and is to be valued by admeasurementbased on a Bill of Quantities then the FIDIC ‘Red Book’ (see appendix2) standard form will be suitable. These conditions are not intended tocover works valued on a Lump Sum, Cost Plus or Target Cost of a Designand Build basis. It is not recommended that the FIDIC ‘Red Book’ be variedto accommodate these other works as it is dangerous to amend any formof Contract to cover work for which it was not intended. FIDIC haspublished a tendering procedure’ for obtaining and evaluating Tenders forcivil engineering Contracts and this is recommended reading for Employers,Engineers and Contractors.

The first, second and third editions of the FIDIC Conditions of contractfor works of civil engineering construction did not give the Employer manyduties but the fourth edition allocates certain matters to him morespecifically. Clause 2.1 in Part II lists some of the Engineer’s duties forwhich the specific approval of the Employer must be obtained before theyare carried out.

There are twenty-three occasions when the Engineer must consult theEmployer and the Contractor and only one occasion when the Employerconsults the Contractor on a matter of settlement. The Employer is themore important Party to the Contract because it is his Project and his moneywhich provide employment for the Engineer and the Contractor.

The EngineerThe Engineer is not a party to the Contract between the Employer and

the Contractor. He is named in the Contract and has a number of dutiesand responsibilities requiring his expertise in technical design andmanagement. His duties, as required for the administration of the Contractbetween the Employer and the Contractor, are set out clearly in theConditions.

The Engineer has a separate agreement between himself and the Employerwhich covers all the work he’is required to carry out for the Employer.This may embrace some or all of the following: feasibility studies, designof the Works, preparation of the Tender Documents, assessment of Tenders,

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supervision of the Works, supervision of commissioning and testing,supervision of operation of the Works, training of personnel, preparationof maintenance and operating manuals, and suchlike.

The agreement between the Employer and Engineer might be based onthe British Association of Consulting Engineers’ model form of Agreementor on the appropriate FIDIC model form, several versions of which havebeen published.

Pre-ContractDuring the pre-Contract period the Engineer becomes involved with a

number of activities necessary for the Contract documents to be issued.Some of these are of a design and technical nature whereas others dealwith matters necessary to- obtain competitive Tenders from selectedContractors. These include working with the Employer to develop thedesign brief, investigate and identify all the resources needed to undertakethe total Project, examining the financial risks involved especially thosethat are unforeseen or special, and preparing realistic financial andoperational plans. The Engineer must ensure that the Employer acceptsthat certain decisions and actions are required from him to suit theprogramme, to meet various target dates and most particularly to ensurethe availability of sufficient funds to honour the Engineer’s Certificatesfor Payment as required by the Contract.

The Employer should also confirm that the acquisition and availabilityof the Site and means of access have been organised, and that anygovernmental decrees and planning permissions have all received hisattention so that the Engineer can plan a time schedule to form the basisof the Contract. The Engineer also needs to know a suitable CommencementDate and whether the Employer wants the works to be completed in sectionsor as a whole. These matters will be identified in the appendix (Part IIof the Conditions of Contract).

The detailed design of the Works themselves and of any TemporaryWorks which the Engineer undertakes must be dealt with. Clear WorkingDrawings, specifications and Bills of Quantities, all of which requiredetailed preparation, must also be provided. All other essential detailsshould be agreed between the Engineer and Employer, and also how theTendering Contractors are to be invited to tender, whether by openinvitation or by pre-qualification. A time schedule as to when all this shouldhappen also has to be agreed.

The Engineer would be wise to inform the Employer and his staff aboutthe role of the Engineer under the FIDIC Conditions and to emphasiseits importance in ensuring fair dealings between the Contractor and theEmployer.

T e n d e r .ProcedureThe Engineer must make certain that all Tenderers receive the same

Tender information, and have equal opportunities to visit the Site andexamine all the available information relevant to the Works. The Engineer6


should supervise the receipt, security and opening of the Tenders at theappointed time.

Once the Tenders are open the Engineer must study each one carefully,correct errors, examine method statements and programmes if submittedwith the Tender, and pay particular regard to any qualifications that couldinvalidate the Contractor’s offer. The Engineer must establish that theseveral Tender sums are based on the same conditions for each Tendererso that a true comparison can be made and a shortlist made up for theEmployer to study. The Engineer should also check the statements madeabout the resources and past experience of the Contractors in the lowerrange of Tenders to ensure that the successful Tenderer is capable ofcarrying out the Works and financially competent to complete them.

One of the final duties of the Engineer in the pre-Tender period is toprepare a report for the Employer setting out the merits of the variousbids and to recommend, with reasons, the most suitable Tenderer hebelieves will best serve the interests of the Employer. The Employer,however, must make his own decision.

Post-ContractWhen the formalities of appointing the successful Tenderer are completed

and the Works commenced the Engineer has certain matters to attend to.Both he and his Representative should keep diaries of their involvementwith the Contract. These should include important matters which mightneed to be referred back to. In particular, the Engineer’s Representativeshould record daily all matters of site interest such as weather conditions,progress, and the Contractor’s plant and labour on site, whether workingor otherwise. Progress photographs would improve the standard of recordkeeping. These should be taken at regular predetermined intervals and onspecial occasions, for example after storms, earthquakes, floods or strikes.There should be regular site meetings and the preparation and agreementof the minutes of such meetings should follow as soon as possible,preferably the day after. The Engineer himself should make regular visitsto the Site to be kept fully updated as to progress. This provides theopportunity for both his Representative and the Contractor to discuss withhim any matters of importance to the Contract.

It has been proven time and again that the Engineer, more than anyoneelse with a key role in the Project, can ensure for the Employer that theWorks are completed on time, that they are of the required quality, andalso that the Contractor gets a fair and proper payment and is given theopportunity to make a profit.

At this stage it is worth a glance at some Clauses in the FIDIC modelform of agreement between the Employer and the Engineer for the Project.Clauses 2.3.1 and 2.3.5 are as follows.

Clause 2.3.1The Consulting Engineer shall exercise all reasonable skill, care and diligence

in the performance of the Services under the Agreement and shall carry out

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all his responsibilities in accordance with recognised professional standards.The Consulting Engineer shall in all professional matters act as a faithful

adviser to the Client and, in so far as any of his duties are discretionary, actfairly as between the Client and third parties.

The Consulting Engineer, his employees and sub-contractors, whilst in thecountry in which the Works are to be carried out, shall respect the laws and*.customs of that country.

Clause 2.3.5The Consulting Engineer, when in charge of the supervision of Works under

construction, shall have authority to make minor alterations to design as maybe necessary or expedient but he shall obtain the prior approval of the Clientto any substantial modification of the design and costs of the said Works andto any instruction to a Contractor which constitutes a major variation, omissionor addition to the latter’s contract. In the event of any emergency, however,which in the opinion of the Consulting Engineer requires immediate actionin the Client’s interest the Consulting Engineer shall have authority to issuesuch orders as required on behalf of and at the expense of the Client. TheConsulting Engineer must inform the Client immediately of any orders issuedwithout prior consent which will result in additional cost to the Client and followup such advice as soon as possible with an estimate of the probable cost.

Clause 2.3.5 restricts the actions of the Engineer in making alterationsto designs and varying the Works. It is quite proper that the Engineer mustseek approval from his client before making major changes, but any mattersfor which the Engineer has to seek the Employer’s approval before dealingwith them must be notified to the Contractor as such within Part II of theConditions of Contract. Nevertheless, it must be up to the Engineer andthe Employer alike to make decisions on any changes quickly, so that theContractor knows exactly where he stands for payment and any extensionsof time.

The Contractor (pre-Tender)Before contemplating tendering for Works anywhere in the world the

Contractor must be certain that he can provide the resources necessaryto undertake and complete the Works relevant to a potential Employer’sProject. Furthermore he must have enough financial resources to enablehim to wait for the Final Settlement and payment in full of the ContractPrice as he knows he must. He needs lots of stamina and faith in his ownabilities as well as those of his supporters.

He is required to provide such resources as finance, the ability to tradeinternationally, staff with the necessary technical, commercial andmanagement abilities, skilled workmen and supervisors, materials, plantand equipment and a wealth of experience from all involved. Althoughhe might not have all these resources within his own organisation he mustknow how, where and when he can acquire the resources he does notp o s s e s s .

Possibly one of the most important considerations for the Contractoris the risk that the money he spends on tendering for the Project will neverbe recovered if he does not secure the Contract. The cost and wasted effort8

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can be considerable. He must have the skill to price work competitivelybut without taking too much off the price and making false economies towin the Contract. If he errs by making too many price cuts in tenderinghe could secure a Contract at the cost of leaving too large a margin betweenhimself and the next highest bidder. It is also an advantage for the Contractorto have a reasonable standing in the industry so he can procure the variousbonds required and purchase the necessary insurances at competitive rates.

The Contractor must recognise that by submitting a Tender for the Worksof the Project he warrants that the Works are capable of being physicallyconstructed by his organisation.

Once the Contract is secured, the Contractor is obliged to execute theconstruction of the Works with due care, expedition, and without delay,to provide all things necessary for these purposes and be responsible forthe stability and safety of all Site operations. Certain exceptions can existbut these must be expressly stated in the Contract documents.

It must be clearly understood that the Contractor is required to completethe Contract on time, subject to any adjustments permitted under theContract, and to full3 all his obligations just as he expects the Employerto fultil his. He must follow all the procedures as laid down in theConditions of Contract, and during the course of construction carry outthe instructions of the Engineer, and make certain that he, the Contractor,gives and receives all notices to and from the right people at the right timeand that they are sent to the correct addresses, which are set out in PartII. Most important of all is that he complies with the requirements of theContract, the law of the country in which the Project is situated, and thelaws of the land by which his own business is governed.

2. Schedules of responsibilities

Both Parties to the Contract, and the Engineer, have a number ofresponsibilities which are set out very clearly in the Conditions of Contract.These must be fully observed if work is to progress properly and withouttoo many arguments. Some Clauses require particular attention by eachof the three main participants of the Contract. So that they can be identifiedwithout difficulty, these have been listed under the name of each of thoseresponsible - the Employer, the Contractor and the Engineer.

In each section the Clause number and description are given in the left-hand column and the corresponding responsibility is given in the right-hand column.

Responsibility of EmployerI,1 .(a)(i) Definition of Employer

1.1 .(a)(iii) Definition of Sub-Contractor

1.1 .(a)(iv) Definition of Engineer

1.1 .(f)(vii) Definition of Site

1.5. Notices, Consents, Approvals,Certificates and Determinations2.1. Engineer’s Duties and Authority

3.1. Assignment of Contract

4.2. Assignment of Sub-Contractors’O b l i g a t i o n s

6.4. Delays and Cost of Delay of Drawings

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To give precise definition in Sub-Clause 1.1 in Part II;to assign later if necessary after seeking the Contractor’sagreement.

To name in Contract documents any person appointed asSub-Contractor for part of the Works.

To appoint the Engineer before inviting Tenders and enterdetails in Sub-Clause 1.1 Part II.

To define the Site and other places required for Worksand include details in the Contract.

To ensure all notices etc. which are his responsibilitiesare in writing and not unreasonably withheld or delayed.

To define the duties of the Engineer which require prioror special approval by the Employer and state them inPart II Sub-Clause 2.1.To give consent or otherwise to any assignment ofContract or part thereof by the Contractor.

To request and pay for the benefit of the Sub-Contractors’.obligations assigned to the Employer by the Contractorfor periods after the end of the Defects Liability Period.

To be consulted, along with the Contractor, by theEngineer to enable him to determine extensions of timeand costs to be added to Contract Price.

SCHEDULES OF RESPONSIBILITIES

9. I. Contract Agreement

IO. I Performance Security

10.3. Claims under Performance Security

1 1.1. Inspection of Site

12.2. Adverse Physical Obstructions orConditions

19.2, Employer’s Responsibilities

20.1. Care of Works

20.3. Loss or Damage Due to Employer’sRisks20.4. Employer’s Risks

2 1. I. Insurance of Works and Contractor’sEquipment

21.3. Responsibility for Amounts notRecovered

22.1. Damage to Persons and Property

22.3. Indemnity by Employer

23.1. Third Party Insurance (includingEmployer’s Property)23.3. Cross Liabilities

24.1. Accident or Injury to Workmen

24.2. Insurance Against Accident toWorkmen

25.1. Evidence and Terms of Insurances

To request the Contractor to enter into and execute theContract Agreement prepared by the Employer at his costTo approve any institution providing security and the formof security to be provided by the Contractor.To notify the Contractor before making a claim and tostate the nature of the default.

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To make available at the time of Tender relevant dataappertaining to hydrological and sub-surface conditions.See Part II Sub-Clause 11.1 for Dredging and ReclamationWorkTo be consulted, along with the Contractor, by theEngineer to enable him to determine extensions of timeand costs to be added to the Contract Price.When carrying out work on Site or employing otherContractors (Clause 31), to be responsible for safety ofall persons and to keep the Site in an orderly state to avoiddanger.To take care of the Works, Sections or Parts after the dateof the relevant Taking-Over Certificate.

To be liable for all or part of loss or damage arising fromany of the Employer’s Risks.

To accept liability for loss or damage arising from anyrisks listed in this Sub-Clause.

To be a joint name in the Contractor’s Insurance of theWorks or, as set out in Part II Clauses 21, 23 and 25,to arrange Insurance of the Works and give details of suchin Tender Documents.To bear amounts not insured or not recovered frominsurers in accordance with risks set out in Clause 20.

To be indemnified by the Contractor other than forexceptions listed in Sub-Clause 22.2.

To indemnify the Contractor against claims, proceedings,damages, costs, charges and expenses arising fromexceptions defined in Sub-Clause 22.2.To be insured jointly with the Contractor against thirdparty liabilities.

To be considered separately insured by a cross-liabilityClause in insurance defined in Sub-Clause 23.1.The Employer is not liable for death or injuries toemployees of the Contractor and Sub-Contractors exceptwhen caused by his own act or default; to be indemnifiedby the Contractor.To be indemnified under the policies of the Sub-Contractors but to be given evidence of such whenrequired.

To receive evidence and sight of insurance policies fromthe Contractor before start of Work and within 84 days

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25.2. Adequacy of Insurances

25.3. Remedy on Contractor’s Failure toInsure

25.4. Compliance with Policy Conditions

26. I. Compliance with Statutes, Regulations

27. I. Fossils

28,l. Patent Rights

29.1. Interference with Traffic andAdjoining Properties30.2. Transport of Contractor’s Equipmentor Temporary Works30.3. Transport of Materials or Plant

30.4. Waterborne Traffic

36.5. Engineer’s Determination where Tests!lot Provided for

77.4. Rejection

.?8.2. Uncovering and Making Openings

of the Commencement Date respectively; to approve termsof insurance by the Contractor.To ask the Contractor to provide policies in force andreceipts for payment as necessary.The Employer may effect and keep in force Insurances,pay premiums and recover money from the Contractorif he fails to effect and keep in force insurances requiredunder the Contract.To indemnify the Contractor against losses or claimsarising if the Employer fails to comply with conditionsimposed by insurance policies effected pursuant to theContract .

To be indemnified by the Contractor against all penaltiesand liability of breach of provisions of statutes,regulations, laws etc., but to be responsible for obtainingplanning, zoning or similar permissions for Works toproceed and to indemnify the Contractor in accordancewith Sub-Clause 22.3.

To accept ownership as between the Contractor andEmployer of all fossils, coins and articles of valuediscovered on the Site; to be consulted, along with theContractor, by the Engineer for him to determineextensions in time and costs to be added to Contract Price.

To be indemnified by the Contractor against claims.

To be indemnified by the Contractor against claims.

To be indemnified by the Contractor against damages toroads and bridges.To negotiate and settle certain claims arising from damageto roads and bridges and to keep the Contractorindemnified; to be consulted, along with the Contractor,by the Engineer if the Contractor is deemed to beresponsible for causing damage. The Engineer determinesthe amount due to the Employer from the Contractor. Tonotify the Contractor and consult him before settling anyclaims with authorities.

As above if traffic is waterborne.To be consulted, along with the Contractor, by theEngineer for him to determine extension of time or coststo be added to the Contract Price for tests instructed bythe Engineer not otherwise provided for.To be consulted, along with the Contractor, by theEngineer for him to determine sums due to the Employerfrom the Contractor for costs incurred by the Employerby repetition of tests.To be consulted, along with the Contractor. by theEngineer for him to determine the cost to be added to theContract Price in respect of uncovering satisfactory work.

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39.2. Default of Contractor in Compliance To employ and pay others to carry out the orders of theEngineer if the Contractor fails to remedy improper worketc., and to be consulted, along with the Contractor, bythe Engineer for him to determine the amount due to theEmployer from the Contractor.

40.2. Engineer’s Determination following To be consulted, along with the Contractor, by theSuspension Engineer for him to determine extension of time and cost

to be added to the Contract price, arising from suspensionof Works through reasons beyond the Contractor’scontrol.

40.3. Suspension lasting more than 84 Days To be aware that the Contractor may omit works andterminate his employment under Sub-Clause 69.1.

42.1. Possession of Site and Access Thereto To give possession of the Site and access thereto asrequired by the Contractor in accordance with agreedprogrammes, proposals or Contract requirements.

42.2. Failure to Give Possession To be consulted, along with the Contractor, by theEngineer for him to determine extension of time and coststo be added to the Contract Price when Site and accessare not given to the Contractor as required.

44.1. Extension of Time for Completion To be consulted, along with the Contractor, by theEngineer for him to determine extensions in time due tothe Contractor.

46.1. Rate of Progress

17.1. Liquidated Damages for Delay

To be consulted, along with the Contractor, by theEngineer for him to determine costs due to the Employerfrom the Contractor for additional supervisory costs.

To recover money from the Contractor when damages aredue.

47.3. (Part II) Bonus for Completion To decide at pre-Tender stage whether to introduce abonus scheme for early completion, and to introduce sucha scheme.

48.2. Taking-Over of Sections or Parts To occupy or use Sections or Parts of the Works whetherprovided for in the Contract or not, but to be aware thatthe Engineer will need to issue a Taking-Over Certificateto suit if requested to do so by the Contractor.

49.4. Contractor’s Failure to Carry Out To employ and pay others to carry out instructions toInstructions remedy defects if the Contractor defaults; to be consulted.

along with the Contractor, by the Engineer for him todetermine monies due to the Employer by the Contractorarising from such default.

50.1. Contractor to Search To be consulted, along with the Contractor, by theEngineer for him to determine costs incurred by theContractor in searching to be added to the Contract Price.

5 1. I. Variations The Employer cannot carry out work omitted by theEngineer.

52.1. Valuation of Variations; 52.2. Power To be consulted, along with the Contractor, by theof Engineer to Fix Rates Engineer, for him to agree suitable rates and prices with

the Contractor.

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52.3. Variations Exceeding 15 per cent

53.5. Payment of Claims

54.3. Customers Clearance; 54.4. Re-exportof Contractor’s Equipment54.5. Conditions of Hire of Contractor’sEquipment

59.1. D e f i n i t i o n o f ‘NominatedSub-Contractors’

59.5. Certification of Payments toNominated Sub-Contractors

60.2. Monthly Payments

60.7. Discharge

60.8. Final Certificate

60.9. Cessation of Employer’s Liability

60.10. Time for Payment

62.1. Defects Liability Certificate

62.2. Unfulfilled Obligations

63.1. Default of Contractor14

To be consulted, along with the Contractor, by theEngineer for him to agree with the Contractor such tirthersums to be added to or deducted from the Contract Price.

To be consulted, along with the Contractor, by theEngineer for him to certify sums due to the Contractorfor claims. ..To assist Contractor to clear customs when importing plantand to obtain government consent when re-exporting it.To be entitled to use hired equipment brought to the Siteby the Contractor in the event of the Contractor’s defaultunder Clause 63. Under Sub-Clause 54.6, the costs of re-hire are to be part of the cost of executing and completingthe Works recoverable from the Contractor.

The Employer can nominate Sub-Contractors for Partsof the Works as long as the Contractor accepts thenominations.To be entitled to pay the nominated Sub-Contractorsdirectly on the Engineer’s certificate if the Contractor failsto pay.To receive the certificate from the Engineer for the amountof monthly payment due to the Contractor.To receive written discharge from the Contractorconfirming that the Final Statement submitted by himrepresents the full and final settlement.

To receive from the Engineer a Final Certificate 28 daysafter the Contractor has submitted his Final Statement andDischarge.

The Employer is not liable to the Contractor for any matteror thing arising unless the Contractor has included a claimfor it in his Final Statement and in his Statement atCompletion (Sub-Clause 60.5).

To pay the Contractor the amount certified by theEngineer for interim payments within 28 days of receiptof the interim certificate; to pay the Contractor the amountdue under the Engineer’s Final Certificate within 56 daysof receipt of the Final Certificate; to pay the Contractorinterest at the rate stated in the Appendix on all sumsunpaid after the expiry of these periods. The Employeris liable to have the Works suspended or slowed downby the Contractor under Clause 69 if payments are notmade within the times stated.To receive from the Engineer a Defects LiabilityCertificate when the Contractor has completed all hisobligations under the Contract.

To be liable to fulfil any obligations incurred prior to theissue of the Defects Liability Certificate which remainunperformed at the time.such a certificate was issued.

In the event of the Contractor’s failure, the Employer can

SCHEDULES OF FiESPONSlBlLlTlES

63.3. Payment after Termination

63.4. Assignment of Benefit of Agreement

64.1. Urgent Remedial Work

65.5. Increased Costs arising from SpecialRisks

65.6. Outbreak of War

65.8. Payment if Contract Terminated

66.1. Payment in Event of Release fromPerformance67.1. Engineer’s Decision

67.2. Amicable Settlement

67.3. Arbitration

67.4. Failure to Comply with Engineer’sDecision

68.. 1. Notice to Contractor:.48.2. Notice toEmployer and Engineer; 68.3. Change ofAddress69. I. Default of Employer

69.3. Payment on Termination

enter the Site and the Works, terminate the Contractor’semployment and complete the Works.

The Employer is not liable to pay the Contractor anyfurther amounts until the expiry of the Defects LiabilityPeriod and until the Engineer has ascertained and certifiedany amounts due to the Contractor after allowing for allcosts incurred by the Employer in completing the Works.The Employer can recover any sums due from theContractor as certified by the Engineer.To receive from the Contractor, subject to the Engineer’sinstructions, the benefits of any agreement to supplygoods, materials or services, or to execute work enteredinto by the Contractor for the purposes of the Contract.The Employer may employ and pay others to undertakeurgent repairs if the Contractor is unable or unwilling todo such works; to be consulted, along with the Contractor,by the Engineer for him to determine costs incurred bythe Employer recoverable from the Contractor.

To be consulted, along with the Contractor, by theEngineer for him to determine costs to be added to theContract Price arising from Special Risks.

The Employer is entitled to terminate the Contract anytime after the outbreak of war.To be consulted, along with the Contractor, by theEngineer for him to determine any sums due to theContractor under this Sub-Clause.To pay the Contractor as if the Contract had beenterminated under Clause 65.

To refer disputes with the Contractor to the Engineer fora decision under Clause 67; to follow procedures laiddown.To attempt to settle disputes amicably within 56 days ofintention to commence Arbitration unless otherwiseagreed before actually commencing Arbitration.To refer dispute for settlement under Rules of Conciliationand Arbitration of the International Chamber ofCommerce (ICC), or to use other dispute procedures setout in Part II Sub-Clause 67.3.

May refer to Arbitration under Sub-Clause 67.3 anydispute arising because the Contractor fails to comply withan earlier final and binding decision of the Engineer.

To follow procedure. laid down for serving and receivingof notices set out in Clause 68.

To receive notice from the Contractor to terminate hisemployment in the event of actions of the Employer setout in this Sub-Clause.To be under the same obligations to the Contractor as if

15

THE FlDlC DIGEST

69.4. Contractor’s Entitlement to SuspendWork

70.2. Subsequent Legislation

7 1.1. Currency Restrictions, and 72.1.Rates of Exchange

11.1, 12.2, 18.1, 19.1, 28.2.40.1, 40.2,45.1. 49.5, 50.2, 51.1. Dredging andReclamation Work, various Clauses

the Contract was terminated under Clause 65 but to payin addition loss or damage incurred by the Contractor asa result of the termination under Clause 69.To be consulted, along with the Contractor, by theEngineer for him to determine extension of time and coststo be added to the Contract Price in the event of latepayments and when the Contractor elects to suspend workor reduce the rate of work.

To be consulted, along with the Contractor, by theEngineer for him to determine costs to be added to ordeducted from the Contract Price arising from changesin Statutes, Ordinances, Decrees, or Laws made after adate 28 days prior to the date for submission of Tenders.To determine policy covering those matters to be includedin Tender Documents and to set out procedures andprinciples ‘to be followed in Part II.

To make appropriate changes to documents as indicatedin various related Clauses set out in Part II.

Responsibililty of Engineer

Certificates and Determinations

2.1. Engineer’s Duties and Authority

1.5. Notices. Consents, Approvals,unreasonably withheld or delayed.

(a) To carry out duties specified in the Contract.

To ensure all notices etc. are in writing and not

(b) To exercise authority specified or implied by theContract but to obtain the specific approval of theEmployer for authorities listed in Part II Sub-Clause 2.1.(c) The Engineer cannot relieve the Contractor of hisobligations under the Contract unless expressly statedtherein.

2.2. Engineer’s Representative

2.3. Engineer’s Authority to Delegate

2.4. Appointment of Assistants

2.5. Instructions in Writing

16

To appoint the Engineer’s Representative and beresponsible for his actions.

To delegate to the Engineer’s Representative any of theduties and authorities vested in the Engineer by theEmployer and by the Contract. Any delegation orrevocation of the delegation must be in writing and canbe effective only when copies of the delegation have beendelivered to the Employer and the Contractor. TheEngineer can vary or reverse the decisions of theEngineer’s Representative.

To appoint or t.o get the Engineer’s Representative toappoint persons to assist him in carrying out his duties(Sub-Clause 2.2); to notify the Contractor of names, dutiesand authorities.

To give instructions in writing and to confirm any oralinstructions in writing. The Contractor may confirm in


2.6. Engineer to Act Impartially

4.1. Sub-Contracting

5.2. Priority of Contract Documents

6.1. Custody and Supply of Drawings andDocuments

6.2. One Copy of Drawings to be Kept onSite6.3. Disruption of Progress

6.4. Delays and Cost of Delay of Drawings

6.5, Failure by Contractor to SubmitDrawings

7.1. Supplementary Drawings andInstructions

7.2. Permanent Works Designed byContractor

7.3. Responsibility Unaffected by Approval

writing any oral instructions from the Engineer. This Sub-Clause applies to the Engineer’s Representative and hisassistants.

To exercise his discretion impartially when givingdecisions etc. expressing approval, determining value orotherwise taking action affecting the Employer and theContractor. (All subject to application of Clause 67Settlement of Disputes.)

To give consent in writing to the Contractor to sub-letpart of the Works.

To explain and adjust ambiguities and discrepancies inthe Contract documents and instruct the Contractorthereon.

To retain custody of Drawings; to provide two copies freeof charge to the Contractor; to give consent to theContractor to show Drawings, Specifications etc. to thirdparties if strictly necessary for the purposes of theContract; to approve Drawings, Specifications and otherdocuments provided by the Contractor when he undertakesdesign work under Clause 7; to request in writing furthercopies of Drawings, Specifications etc. from theContractor for use by the Employer.To use Drawings kept on Site by the Contractor ;:ndauthorise in writing use of such by other persons.To receive notice from the Contractor when furtherdrawings or instructions are required from the Engineerto avoid delay or disruption to the Works.If the Engineer fails to issue Drawings or instructionsrequested by the Contractor under Sub-Clause 6.3 withinreasonable time, he must consult the Employer- :~ndContractor and determine any extension of time to theContractor under Clause 44; costs to be added to theContract Price and the Contractor and Employer to benotified accordingly.To take into account in determination under Sub-Clause6.4 any failure on the part of the Contractor to submitDrawings, Specifications etc. which in turn causes theEngineer to fail to provide Drawings and instructions.

The Engineer has authority to issue to the Contractorsupplementary Drawings and instructions as necessary.

To receive for approval Drawings, Specifications,calculations and other information of Permanent Worksdesigned by the Contractor as. required by the Contract;to approve operations and maintenance manuals anddrawings on completion submitted by the Contractorbefore taking over in accordance with Clause 48.

Approval given under the above Sub-Clauses does notrelieve the Contractor of his responsibilities.

17

THE FlDlC DIGEST

12.2. Adverse Physical Obstructions orConditions

13.1. Work to be in Accordance withContract

14.1. Programme to be Submitted

14.2. Revised Programme

14.3. Cash Flow Estimate to be Submitted

15.1. Contractor’s Superintendence

16.2. Engineer at Liberty to Object

17.1. Setting-out

18.1. Boreholes and Exploratory Excavation

19. I. Safety, Security and Protection of theEnvironment

20.2. Responsibility to Rectify Loss orDamage18

To receive notice from the Contractor when encounteringnon-foreseeable obstructions or conditions on Site. If inhis opinion such obstructions etc. were not reasonablyforeseen, the Engineer will, on receipt of notice, consultthe Employer and the Contractor and determine anyextension of time and costs to be added to the ContractPrice and notify thecontractor and the Employer. TheEngineer may instruct the Contractor to take measuresto overcome obstructions etc., or to accept measures takenby the Contractor.The Engineer has to be satisfied with the Contractor’sexecution and completion of the Works includingremedying defects in accordance with the Contract. TheEngineer is sole conveyor of instructions to theContractor .

To receive from the Contractor a programme for theexecution of the Works for his own consent; to prescribethe form and detail of the programme to the Contractorbefore submission; to receive from the Contractor ageneral description of arrangement and method to be used.To request a revised programme if the progress of theWorks does not conform to the one accepted.

To receive a detailed cash flow estimate from theContractor at the beginning of the Works and request arevised forecast as necessary.

To decide the length of time superintendence is required;to approve the person superintending the Works on Siteon behalf of the Contractor. The Engineer has the powerto withdraw approval of the Contractor’s Superintendentand approve his successor.The Engineer can object to the presence on Site of anyof the Contractor’s personnel who are incompetent,undesirable, negligent or guilty of misconduct. He canconsent to the return to Site of any personnel so removed.To give the Contractor the basic points of reference forsetting-out; to require rectification of errors by theContractor; in case of any error based on incorrect datasupplied by the Engineer, to determine an addition to theContract Price in accordance with Clause 52 and notifythe Contractor and the Employer.The Engineer can require the Contractor to makeboreholes or carry out exploratory excavations underC l a u s e 5 1 .

The Engineer can require the Contractor to provide andmaintain appropriate lights, guards, fencing, warningsigns and watching for the protection of the Works andthe public.

To be satisfied with the Contractor’s rectification of lossor damage to Permanent Works.


To require the Contractor to rectify loss or damage to theWorks caused by the Employer’s Risks (Sub-Clause 20.4),and to determine an addition to the Contract Price inaccordance with Clause 52 and notify the Contractor andthe Employer.

To be notified by the Contractor when he providesevidence and insurance policies to the Employer.To be acquainted by the Contractor of the discovery offossils etc., and to give instructions for dealing with them;to consult the Employer and the Contractor to determineany extension of time or addition to the Contract Priceand to notify the Contractor and Employer accordingly.

To be notified by the Contractor of the occurrence ofdamage to any roads and bridges; to have an opinion onthe responsibility of the Contractor causing damage andto consult with the Employer and Contractor to determinethe amount of monies due to the Employer; to notify theContractor and Employer accordingly.As above if traffic is waterborne.

To require the Contractor to give other Contractors,workmen of the Employer and of authorities all reasonableopportunities for carrying out their work.

To request the Contractor to make available roads,Temporary Works, the Contractor’s Equipment or otherservices to other Contractors and to determine an additionto the Contract Price in accordance with Clause 52 andto notify the Contractor and Employer accordingly.To be satisfied with the clearance of Site by the Contractorfollowing issue of Taking-Over Certificates for parts orall of the Site.The Engineer may require the Contractor to deliver tohim returns in detail in such form and at such frequenciesas prescribed by the Engineer showing staff and labouremployed on Site and other information about Equipment.

To give instructions in respect of testing of materials, Plantand workmanship.To be sa&fied or otherwise with results of tests requiredby the Engineer and decide when costs of tests are to beborne by the Contractor.To consult the Employer and Contractor to determine theextension of time and costs which is to be added to theCqntract Price in respect of tests not covered by Sub-Clause 36.4, and to notify the Contractor and Employeraccordingly.

To have access to the Site, workshops and places wherematerials or Plant are being manufactured; to authoriseother persons to have the same access.

20.3. Loss or Damage Due to Employer’sRisks

25.1. Evidence and Terms of Insurances

27.1. Fossils

30.3. Transport of Materials or Plant

30.4. Waterborne Traffic

3 1.1. Opportunities for Other Contractors

3 1.2. Facilities for Other Contractors

33.1. Clearance of Site on Completion

35.1. Returns of Labour and Contractor’sEquipment

36.1. Quality of Materials, Plant andWorkmanship36.4. Cost of Tests not Provided for

36.5. Engineer’s Determination where Testsnot Provided for

37.1. Inspection of Operations

19

THE FIDIC DIGEST

37.2. Inspection and Testing

37.3. Dates for Inspection and Testing

37.4. Rejection

37 S. Independent Inspection

38.1. Examination of Work before CoveringUP38.2. Uncovering and Making Openings

39.1. Removal of Improper Work,Materials or Plant39.2. Default of Contractor in Compliance

40.1. Suspension of Work

40.2. Engineer’s Determination followingsuspension

40.3. Suspension lasting more than 84 Days

To be entitled to inspect and test the materials and Plantto be supplied under the Contract.To agree with the Contractor times and places forinspection and testing.

The Engineer may reject materials or Plant if they aredefective or not in accordance with the Contract; to notifythe Contractor if he does, giving objections and reasons.The Engineer may request re-testing of rejected materialsor Plant after the Contractor has made good; to consultthe Employer and Contractor to determine costs incurredby the Employer recoverable from the Contractor and tonotify the Contractor and Employer accordingly.

The Engineer may delegate inspection and testing to anindependent inspector. Not less than 14 days notice of suchdelegation is to be given to the Contractor.

To inspect and approve work before it is covered up.

The Engineer can instruct the Contractor to uncover anypart of the Works or make openings and reinstate andmake good unsatisfactory work. If work is satisfactoryon exposure he has to consult the Employer andContractor to determine the amount of costs to be addedto the Contract Price and notify the Contractor andEmployer accordingly.

The Engineer has the authority to issue instructions forthe removal of improper work, materials or Plant.

To consult the Employer and Contractor to determinecosts recoverable from the Contractor by the Employerif the Employer employs others to remove or substituteor re-execute improper work etc., and to notify theContractor and Employer.To instruct the Contractor to suspend progress of Worksin such manner considered necessary and to protect andsecure the Works.

To consult the Employer and Contractor to determineextension of time and cost to be added to the ContractPrice incurred by the Contractor in suspending the Worksbeyond the control of. the Contractor and to notify theContractor and Employer accordingly.

If the Engineer fails to give permission to the Contractorto resume work within 84 days from date of suspensionhe can expect notice from the Contractor to requirepermission within.28 days to proceed with the Works.If permission is not given within this 28 days, the Engineercan expect the Contractor to give notice to treat a partof the Works as an omission under Clause 5 1, or if thewhole of the Works then to expect the Contractor toterminate his employment under Sub-Clause 69.1.

20


To give notice to the Contractor to commence the Workswithin the time stated in the Appendix after the date ofthe Letter of Acceptance.

To receive notice from the Contractor of reasonableproposals for possession of the Site if programme underClause 14 is not submitted or if there are no requirementsin the Contract Documents.

To consult the Employer and Contractor to determineextension of time and costs to be added to the ContractPrice if the Employer fails to give possession of the Siteor access thereto and to notify Contractor and Employeraccordingly.To consult the Employer and Contractor to determineextension of the time due to the Contractor in the eventof the circumstances set out occurring and to notify theContractor and Employer accordingly.The Engineer is not bound to make any determinationunless the Contractor notifies the Engineer within 28 daysafter the event arising or within 28 days or other timeagreed with the Contractor after such notification ofreceipt of detailed particulars of any extension theContractor feels he is entitled to receive.To take account of the event having a continuing effecton extension of time and to follow the procedure laid downin this Sub-Clause; no decrease in any extensions of timealready determined by the Engineer shall result.To give consent for Works to be carried on at night oron locally recognised days of rest.To notify the Contractor when the rate of progress is, inthe Engineer’s opinion, too slow to complete on time; togive consent to the Contractor’s proposals to speed up andto working at night and on days of rest; to consult theEmployer and Contractor to determine additionalsupervisory costs incurred by the Employer and to berecovered from the Contractor, and to notify theContractor and Employer accordingly.To follow procedure for the issue of a Taking-OverCertificate.To follow similar procedure to that in Sub-Clause 48.1for Taking-Over Certificates for Sections or Parts of theWorks.

The Engineer may issue a Taking-Over Certificate for anypart of the Permanent Works.

To instruct the Contractor to amend, reconstruct andremedy defects during the Defects Liability Period orwithin 14 days of its expiry following an inspection.

The Engineer can determine an addition to the ContractPrice where the Contractor remedies defects etc. not

41.1. Commencement of Works

42.1. Possession of Site and Access Thereto

42.2. Failure to Give Possession

44.1. Extension of Time for Completion

44.2. Contractor to Provide Notification andDetailed Particulars

44.3. Interim Determination of Extension

45.1. Restriction on Working Hours

46.1. Rate of Progress

48.1. Taking-Over Certificate

48.2. Taking-Over of Sections or Parts

48.3. Substantial Completion of Parts

49.2. Completion of Outstanding Work andRemedying Defects

49.3. Cost of Remedying Defects

21

THE FIDIC DIGEST

within the Contractor’s control; to notify the Contractorand Employer accordingly.

49.4. Contractor’s Failure to Carry Out To consult the Employer and Contractor to determineInstructions costs incurred by the Employer remedying defects etc.

where the Contractor has failed to carry out instructionsand to notify the Contractor and Employer of costs to berecovered from the Contractor.

50.1. Contractor to Search To consult the Employer and Contractor to determinecosts to be added to the Contract Price for costs incurredby the Contractor in searching for work which is foundto be satisfactory or where defect was not theresponsibility of the Contractor, and to notify theContractor and Employer accordingly.

5 I. I. Variations The Engineer can make Variations to the Works as setout in this Sub-Clause. He cannot omit work to be carriedout by the.Employer or another Contractor.

52.1. Valuation of Variations

52.2. Power of Engineer to Fix Rates

The Engineer must investigate whether rates and pricesset out in the Contract are applicable; to consult theEmployer and Contractor to agree suitable rates and pricesto value varied work where existing rates are notapplicable. In the event of disagreement he will fix suchother rates or prices which are appropriate and notify theContractor and Employer accordingly; to determineprovisional rates and prices to enable interim certificatesto be paid until new rates and prices are agreed or fixed.To consult the Employer and Contractor to agree suitablerates and prices when any original rates and prices arerendered inappropriate or inapplicable because ofVariations; in the event of disagreement to fix other ratesand prices as appropriate and to notify the Contractor andEmployer accordingly; to determine provisional rates andprices for interim payments. Within 14 days of instructionto vary the Works, no varied work will be valued underSub-Clause 52.1 or this Sub-Clause unless

52.3

52.4

53. I

(a) notice has been received from the Contractor ofhis intention to claim extra payment or a variedrate or price

(b) notice has been given to the Contractor that it isintended to vary a rate or price.

Variations Exceeding 15 per cent

Daywork

Notice of Claims

To consult the Employer and Contractor to determinefurther sums to be added to or deducted from the ContractPrice when variations, as defined, exceed 15 per cent (orother figure agreed in Part II) and to notify the Contractorand Employer accordingly..

To follow procedures laid down to execute work on adaywork basis.

To receive notice from the Contractor within 28 days ofan event giving rise to a claim.

22


53.2. Contemporary Records

53.3. Substantiation of Claims

53.4. Failure to Comply


54.1. Contractor’s Equipment, TemporaryWorks and Materials; Exclusive Use for theWorks54.8. Approval of Materials not Implied

56.1. Works to be Measured

57.2. Breakdown of Lump Sum Items

58.1. Definition of ‘Provisional Sum’

58.2. Use of Provisional Sums

58.3. Production of Vouchers

59.1. Definition of ‘Nominated Sub-Contractors’

59.4. Payments to Nominated Sub-Contractors59.5. Certification of Payments toNominated Sub-Contractors60.1. Monthly Statements


60.3. Payment of Retention Money

60.4. Correction of Certificates

To inspect contemporary records on receipt of notice: toinstruct the Contractor to keep additional records and callfor copies of such records.To follow procedure laid down in this Sub-Clause.

The Engineer is empowered to assess the amount theContractor is entitled to on the basis of records submittedeven if the Contractor fails to comply with therequirements of Clause 53.

To consult the Employer and Contractor to determine theamount due to the Contractor in any interim payment; tonotify the Contractor and Employer accordingly.

To give consent to the Contractor to remove Equipmentetc. from the Site.

The Engineer can reject materials etc. at any time.To follow procedure laid down in this Sub-Clause.

To receive and approve a breakdown of lump sums within28 days of receipt by the Contractor of the Letter ofAcceptance.To instruct the Contractor to use all or part of ProvisionalSums; to notify the Contractor of any determination underthis Sub-Clause with a copy to the Employer.

The Engineer has authority to issue instructions in respectof work covered by these sums.

To receive evidence of expenditure in respect of thesesums.To nominate. select or approve Sub-Contractors forsupply and execution of Works where the Contractor isrequired to sub-let such work to them.

To instruct the Contractor to pay Nominated Sub-Contractors.To follow procedure laid down in this Sub-Clause.

To receive after the end of each month six copies of astatement showing the amounts due to the Contractor upto the end of the month; to prescribe form of statement:to approve the person who will sign the Contractor’sstatement.Within 28 days of receipt of the Contractor’s Statementto certify to the Employer the amount of payment due tothe Contractor subject to provisos stated in thisSub-Clause..

To follow procedures laid down in this Sub-Clause.

The Engineer may correct or modify any interimcertificate and omit or reduce the value of the work notexecuted to his satisfaction.

23

THE FIDIC DIGEST

60.5. Statement at Completion

60.6. Final Statement


62.1. Defects Liability Certificate

63.1. Default of Contractor

63.2. Valuation at Date of Termination



65.3. Damage to Works by Special Risks

To receive from the Contractor not later than 84 days afterissue of Taking-Over Certificate a statement in the formspecified by the Engineer

(a) final value of work done up to the date of theCertificate

(b) further sums the Contractor considers to be due(c) an estimate of amounts the Contractor considers

will become due to him.

The Engineer certifies payment in accordance with Sub-Clause 60.2.

To receive from the Contractor not later than 56 days afterissue of the Defects Liability Certificate a draft FinalStatement in form approved by the Engineer

(a) final value of sums due(b) any further sums.

The Engineer may require and agree further informationfrom the Contractor and changes in the draft; to receivethe Final Statement from the Contractor.

Within 28 days of receipt of the Final Statement and thewritten Discharge (Sub-Clause 60.7), to issue to theEmployer, with a copy to the Contractor, the FinalCertificate.

To sign and deliver to the Employer a Defects LiabilityCertificate in accordance with the procedure laid downin this Sub-Clause.

The Engineer certifies to the Employer that theContractor, in his opinion, has done or failed to do variousactions specified in this Sub-Clause.To fix and determine ex pane the values and amountsdescribed in this Sub-Clause.

To instruct the Contractor to assign to the Employer thebenefits of agreements to supply goods or materials orservices.

To give to the Employer an opinion of work urgentlynecessary to be executed by or on behalf of the Employerto remedy defects or complete other works. If in theopinion of the Engineer the Contractor was liable to dothis work, the Engineer must consult the Employer andthe Contractor to determine the costs recoverable by theEmployer from the Contractor and notify the Contractorand Employer accordingly; to give notice to the Contractorof the occurrence of the emergency as soon’as is practic-able.

To determine an addition to the Contract Price inaccordance with Clause 52 if the Works, materials or planton or near in transit sustain damage by reason of anyspecial risks.

24

65.5. Increa,ed Costs arising from SpecialRisks


67.1. Engineer’s Decision

67.3. Arbitration

68.1. Notice to Contractor; 68.2. Notice toEmployer and Engineer; 68.3. Change ofAddress

69.1. Default of Employer


70.2. Subsequent Legislation


To be notified by the Contractor of any costs arising fromthe outbreak of war; to consult the Employer andContractor to determine the amount of the Contractor’scosts to be added to the Contract Price and to‘notify theContractor and Employer accordingly.

To consult the Employer and Contractor to determine.anysums payable under this Sub-Clause and to notify theContractor and Employer accordingly.,To receive in writing a reference for a decision from eitherthe Employer or the Contractor in respect of a dispute;to give notice of this decision to both Parties no later thanthe eighty-fourth day following receipt of the reference.Such a decision must state that it was made subject to thisClause; to receive a copy from either Party of the intentionto commence Arbitration.

The Engineer is not disqualified from being .called as awitness or from giving evidence.

To follow procedure laid down for serving and receivingof notices set out in Clause 68.

To receive a copy of the notice from the Contractor tothe Employer terminating employment under this Clause.

To consult the Employer and Contractor to determineextension of time and costs to be added to the ContractPrice if the Contractor suspends or delays work becauseof any failure of the Employer to pay amounts due underany certificate of the Engineer and to notify the Contractorand Employer accordingly.To consult the Employer and Contractor to determine theamount to be added to or deducted from the Contract Priceas a result of changes to Statutes, Ordinances, Decreesor Laws 28 days prior to submission of Tenders and tonotify the Contractor and Employer accordingly.

Responsibility of Contractor1.5. Notices, Consents, Approvals, To ensure all notices etc. are in writing and notCertificates and Determinations unreasonably withheld or delayed.

2.1. Engineer’s Duties and Authority (c) The Engineer has no authority to relieve the Contractorof any of his obligations unless expressly stated in theContract .

3.3. Engineer’s Authority to Delegate To receive a copy of the Engineer’s delegation orrevocation of duties and authority to be undertaken by theEngineer’s Representative.(b) The Contractor can query any communication of theEngineer’s Representative and refer the matter to theEngineer.

25

THE FIDIC DIGEST

2.4. Appointment of Assistants

2.5. Instructions in Writing

3.1. Assignment of Contract

4.1. Sub-Contracting

4.2. Assignment of Sub-Contractors’Obligations

5.2. Priority of Contract Documents

6.1. Custody and Supply of Drawings andDocuments

6.2. One Copy of Drawings to be Kept onSite

6.3. Disruption of Progress

To receive from the Engineer the names, duties and scopeof authority of the assistants.To comply with instructions given orally by the Engineeras well as those given in writing. The Contractor canconfirm such instructions in writing within 7 days ofreceiving oral inst,ruction. If confirmation is not contra-dicted in writing within 7 days by the Engineer, it isdeemed to be an instruction in writing. The same appliesto instructions given by the Engineer’s Representative andany assistants appointed under Sub-Clause 2.4.The Contractor cannot assign the Contract without priorapproval of the Employer. He can assign a charge infavour of his bankers of any monies due or to becomedue and assign to his insurers his right to obtain reliefagainst any other party liable.

The Contractor cannot sub-contract the whole of theWorks; unless otherwise provided he cannot sub-contractany part of the Works without prior consent of theEngineer. He does not need consent for

(a) provision of labour(6) purchase of materials( c ) sub-contracting of any part of the Works for which

a Sub-Contractor is named in the Contract.

To assign to the Employer at the Employer’s request andcost the benefit of any continuing obligation of a Sub-Contractor beyond the Defects Liability Period.

To receive instructions from the Engineer aboutexplanations and adjustments arising from ambiguities anddiscrepancies in the Contract Documents.

To provide copies of Drawings in excess of two; to returnall Drawings, Specifications and other documents to theEngineer on issue of the Defects Liability Certificate. TheContractor cannot provide Drawings etc. to others withoutthe consent of the Engineer unless it is strictly necessaryfor the purposes of the Contract; to supply to the Engineerfour copies of all Drawings, Specifications and otherdocuments submitted to the Engineer and approved by theEngineer, in accordance with Clause 7.One copy of all Drawings provided by the Engineer mustbe kept by the Contractor on Site for inspection and useby the Engineer or by others authorised by the Engineerin writing.

To give notice within a reasonable time to the Engineer,with a copy to the Employer, whenever planning or execu-tion of the Works may be delayed or disrupted unless theEngineer issues any further Drawings or instructions.Details of Drawings and instruction required, why and bywhen, and of delays or disruption arising must be given.

26


If the Contractor suffers delay or incurs cost as a resultof the failure or inability of the Engineer to follow noticegiven under Sub-Clause 6.3, then the Engineer will, afterconsultation with the Employer and Contractor, determineextensions in time and costs to be added to the ContractPrice; the Contractor will be notified with a copy to theEmployer.

To be liable for costs if his failure to submit Drawingsetc. causes the Engineer to fail to submit Drawings etc.The Engineer will take such failures into account whenmaking the determination authorised in Sub-Clause 6.4.

To carry out and be bound by any supplementaryDrawings and instructions issued by the Engineernecessary for the execution and completion of the Worksand the remedying of defects.

To submit to the Engineer for approval in respect ofPermanent Works designed by him, under the Contract,Drawings, Specifications, calculations and other infor-mation necessary for the Engineer to be satisfied; tosubmit operation and maintenance manuals plus Drawingsof Permanent Works as completed to enable the Employerto operate, maintain, dismantle, reassemble and adjustsuch Permanent Works. Completion will not be approvedby the Engineer until such information has been submittedto and approved by the Engineer.Approval under Sub-Clause 7.2 does not relieve theContractor of his responsibilities.With due care and diligence, to design, to the extentrequired, execute and complete the Works and remedyany defects all in accordance with the Contract; to providesuperintendence, labour, materials, Plant, Contractor’sequipment and all other things necessary.

To take full responsibility for the adequacy, stability andsafety of all Site operations and methods of construction;the Contractor is not responsible for design andspecification for Permanent or Temporary Worksprepared by others, but where the Contract requires himto design Permanent Works he is fully responsible.notwithstanding approval by the Engineer.

If called upon to do so, to enter into and execute theContract Agreement prepared and completed at the costof the Employer in the form annexed to these conditionsor modified as may be necessary.If required, to obtain security for the proper performanceof the Contract and provide it to the Employer within 28days after receipt of the Letter of Acceptance in the sumstated in the Appendix to the Tender; to notify theEngineer in so doing. Such security will be in a formagreed by the Employer and the Contractor. The

6.4. Delays and Cost of delay of Drawings

6.5. Failure by Contractor to SubmitDrawings

7.1. Supplementary Drawings andInstructions

7.2. Permanent Works Designed byContractor

7.3. Responsibility Unaffected by Approval

8.1. Contractor’s General Responsibilities

8.2. Site Operations and Methods ofConstruction

9.1. Contract Agreement

10. I. Performance Security (Part II givesexample forms including types andproportions of currencies stated in theAppendix to the Tender)

27

THE FIDIC DIGEST

10.2. Period of Validity of PerformanceS e c u r i t y

10.3.. Claims under Performance Security

10.4. (Part II) Source of PerformanceSecurity

11.1. Inspection of Site (See Part II forDredging and Reclamation Work)

12.1. Sufficiency of Tender

12.2. Adverse Physical Obstructions orConditions (See Part II for Dredging andReclamation Work)

13.1. Work to be in Accordance WithContract

14.1. Programme to be Submitted

institution providing the security will be approved by theEmployer and the cost will be borne by the Contractor.

This security will be valid until the Contractor hasexecuted and completed the Works and remedied defects;no claim can be made after the issue of the DefectsLiability Certificate and the security will be returned tothe Contractor within 14 days after the issue of thisCertificate.

To expect notification from the Employer stating thenature of the default in respect of which a claim is beingmade.Security provided by a bank must be accepted by theEmployer.To interpret data on hydrological and sub-surfaceconditions provided by the Employer. The Contractor willbe deemed to have inspected and examined the Site, itssurroundings and information available and have satisfiedhimself, as far as practicable considering cost and time,before tendering, as to

(a) the form, nature and sub-surface state(b) the hydrological and climatic conditions(c) the extent and nature of the work and materials

necessary for the Works(6) the means of access and accommodation required

and all necessary information which may affectthe Tender.

The Tender will be deemed to have been based on thedata made available and the data arising from his owninspection and examination.To be satisfied that his Tender is based on his knowledgeof the Site, conditions and circumstances and will coverall his obligations.

To give notice to the Engineer, with a copy to theEmployer, of the encountering of physical obstructionsor conditions not foreseeable by an experiencedContractor; to follow procedures laid down and to beconsulted with the Employer by the Engineer to determineany extensions of time or any costs to be added to theContract Price; to receive instructions from the Engineer.

To execute the Works in accordance with the Contractto the satisfaction of the Engineer; to comply with andadhere to the instructions from the Engineer; to takeinstructions only from the Engineer or from the Engineer’sRepresentative (Clause 2).To submit, within the time stated in Part II, to the Engineerfor his consent a programme in such detail and formrequired by the Engineer for the execution of the Works;to provide in writing a general description of the

28


arrangement and method proposed for the execution ofthe Works.

14.2. Revised Programme To produce at the request of the Engineer a revisedprogramme necessary to ensure completion within Time.

14.3. Cash Flow Estimate to be Submitted Within the time stated in Part II, to provide the Engineer,for his information, with a detailed cash flow estimate inquarterly periods and to subsequently revise it if requiredby the Engineer.

14.4. Contractor not Relieved of Duties or By submitting such programmes, general descriptions andResponsibilities cash flows, the Contractor is not relieved of any duties

or responsibilities under the Contract.

15.1. Contractor’s Superintendence (See To provide all necessary superintendence for thePart II Sub-Clause 15.2 Language Ability fulfilment of all his responsibilities under the Contract;of Contractor’s Representative) to provide a competent and authorised representative

approved by the Engineer, who will give his whole timeto the Works. If approval is withdrawn another supervisormust be provided.

16.1. Contractor’s Employees To provide competent supervisors, technical assistants,foremen, leading hands, skilled, semi-skilled and unskilledlabour necessary for the fitlfilment of his obligations underthe Contract.

16.2. Engineer at Liberty to Object (See Part To remove from Site any persons objected to by theII Sub-Clause 16.3 Language Ability of Engineer. No one will be allowed back without theSuperintending Staff; 16.4 Employment of Engineer’s consent and persons removed will be replaced.Local Personnel)17.1. Setting-out To be responsible for the accurate setting-out of the Works

in relation to the data provided by the Engineer in writing;any errors will be rectified at the cost of the Contractorunless arising from incorrect data provided by theEngineer; to protect and preserve all bench-marks etc.

18.1. Boreholes and Exploratory Excavation To make boreholes and exploratory excavations required(See Part II for Dredging and Reclamation by the Engineer under Clause 51 unless otherwiseWork) provided for in the Bills of Quantities or by Provisional

Sums.

19.1. Safety, Security and Protection of the To be responsible for safety throughout the execution ofEnvironment (See Part II for Dredging and the works, completion and remedying of defects; toReclamation Work) provide lights, guards, fencing, warning signs and

watching.

20.1. Care of Works To take full responsibility for the care of the Works,materials and plant from Commencement until the dateof issue of the Taking-Over Certificate, subject to theTaking Over of Parts of the Works etc.

20.2. Responsibility to Rectify Loss or To be responsible for loss or damage to the Works as laidDamage down in this Sub-Clause.

20.3. Loss or Damage Due to Employer’s To rectify loss or damage as required by the EngineerRisks in accordance with Clause 52; to accept proportional

responsibility if it applies.

29

THE FlDlC DIGEST

2 1.1. Insurance of Works and Contractor’sEquipment21.2. Scope of Cover (See Part II forClauses 21, 23 and 25)2 1.3. Responsibility for Amounts notRecovered2 1.4. Exclusions

22.1. Damage to Persons and Property

22.2. Exceptions22.3. Indemnity by Employer23.1. Third Party Insurance (includingEmployer’s Property)23.2. Minimum Amount of Insurance

23.3. Cross Liabilities

24.1. Accident or Injury to Workmen

24.2. Insurance Against Accident toWorkmen25.1. Evidence of Terms of Insurances

25.3. Adequacy of Insurances

25.3. Remedy ‘on Contractor’s Failure toInsure

25.4. Compliance with Policy Conditions

26.1. Compliance with Statutes, Regulations

27.1. Fossils28.1. Patent Rights

28.2. Royalties (See Part II for Dredgingand Reclamation Work)29.1. Interference with Traffic andAdjoining Properties

30.1. Avoidance of Damage to Roads

30

To insure Works as required under this Clause. (See PartII about payment in foreign currencies.)Defines cover to be provided by the Contractor in thenames of the Employer and the Contractor.

To be prepared to bear amounts not insured..

To note exclusions.

To indemnify the Employer as provided.To note exceptions.

To be indemnified by the Employer.To insure in the joint names of the Employer and theContractor against liabilities described in this Sub-Clause.To note the amount stated in the Appendix to the Tenderbut to consider if this sum is adequate in thecircumstances.

To include a cross-liability Clause as described.To indemnify the Employer against all damages etc. toall persons in his employ or in the employ otSub-Contractors.To take out insurance against liability for accident forinjury to workmen as provided.

To provide evidence to the Employer prior to start of workat the Site as required by this Clause.To ensure the adequacy of insurance provided under Sub-Clause 24.2; to produce to the Employer the policies inforce and receipts for payments of premiums.To be prepared for the Employer to deduct monies fromsums due to cover inadequacies in the Contractor’sinsurance.

To indemnify the Employer against losses and claimsarising from failure to insure.

To comply with Statutes, Laws, regulations etc.; to keepthe Employer indemnified against penalites for breach ofsuch Statutes etc.To foliow procedures laid down in this Clause.

To indemnify the Employer against any claim forinfringement of patent rights etc. as provided by thisSub-Clause.To pay all tonnage, royalties, rents etc. for acquiring stoneand other materials.Not to interfere with the convenience of the public. accessto and use of public and private roads etc.; to indemnifythe Employer in respect of all claims etc.

To use every reasonable means to avoid damage to roadsand bridges by traffic.


30.2. Transport of Contractor’s Equipment Unless otherwise provided by the Contract, to pay costor Temporary Works of strengthening bridges and improving roads and to be

responsible for this work to transport equipment etc. toSite; to indemnify the Employer against all claims fordamage to roads and bridges; to negotiate and pay claimsmade directly to the Employer.

30.3. Transport of Materials or Plant To notify the Engineer, with a copy to the Employer, assoon as he becomes aware of any damages or receivesclaims against him. The Employer is not liable for anycosts. In some cases the Employer negotiates and payscosts and indemnifies the Contractor. If the Engineerdecides that the Contractor has failed to observe hisobligations, the Engineer will determine, after consultationwith the Employer and Contractor, how much money canbe deducted by the Employer from sums due to theContractor; the Engineer to notify the Contractoraccordingly, with a copy to the Employer. However, theEmployer must notify the Contractor whenever asettlement is to be negotiated. and if money is due fromthe Contractor the Employer will consult the Contractorbefore agreeirig any settlement.

30.4. Waterborne Traffic As above if traffic is waterborne.

3 1.1. Opportunities for Other Contractors To afford reasonable opportunities to others for carrying(See Part II Clause 31) out their work as required by the Engineer.

3 1.7. Facilities for Other Contractors After being requested to do so in writing by the Engineer,to make available to others various facilities and services:the Engineer will determine additions to the Contract Priceunder Clause 52 and notify the Contractor, with a copyto the Employer.

32. I. Contractor to Keep Site Clear To keep thk Site clear during the execution of the Works.

33.1. Clearance of Site on Completion Upon issue of Taking-Over Certificate, to clear away andremove from the Site referred to by the Certificate. allequipment, surplus material, rubbish etc. and leave theSite and Works clean to the satisfaction of the Engineer:the Contractor can retain on Site certain materials.equipment etc. required for work to be done during rheDefects Liability Period.

34.1. Engagement of Staff and Labour (See To make his own arrangements for engaging staff andPart II Clause 34) labour and for their payment. housing, feeding and

transport.

35.1, Returns of Labour and Contractor’s To submit appropriate returns to the Engineer givingEquipment (see Part II Clause 35) details of staff, labour and equipment on Site if required

by the Engineer to do so.

36.1. Quality of Materials. Plant and All materials. Plant and workmanship must be as specifiedWorkmanship by the Contractor and the Engineer; to provide resources

required for examining, measuring and testing materialsand Plant and supply samples of materials for testingbefore incorporation in the Works.

36.2. Cost of Samples To bear costs of all samples to be supplied.

31

THE FlDlC DIGEST

36.3. Cost of Tests

36.4. Cost of Tests not Provided for

36.5. Engineer’s Determination where Testsnot Provided for

37.1. Inspection of Operations

37.2. Inspection and Testing

. 37.3. Dates for Inspection and Testing

37.4. Rejection

38.1. Examination of Work before CoveringUP

38.2. Uncovering and Making Openings

39.1. Removal of Improper Work,Materials or Plant

39.2. Default of Contractor in Compliance

To be responsible for the costs of testing required by theContract .To pay the cost of tests, required by the Engineer, andof the nature set out in this Sub-Clause, if materials, plantor workmanship are not up to standard. (If satisfactorySub-Clause 36.5 applies.)

If this Sub-Clause applies, the Contractor and theEmployer will be consulted by the Engineer who willdetermine any extension of time due or additions to theContract Price caused by the tests not provided for andhe will notify the Contractor, with a copy to the Employer.

To give facilities and assistance to the Engineer to obtainright of access td places where materials and Plant arebeing manufactured etc.To obtain permission for the Engineer to inspect and testmaterials etc. where manufacture etc. is being carried outon premises not belonging to the Contractor.To agree with the Engineer times and places for inspectionand testing. Certain procedures are laid down to befollowed by the Contractor and the Engineer.To be told by the Engineer whenever materials etc. werenot ready for testing or failed such tests; to make goodany defects and to ensure that any rejected materials orplant are up to the standard required. The Engineer canrequest tests to be repeated and in this case the Contractorand the Empoyer will be consulted by the Engineer sohe can determine how much money is to be recoveredfrom the Contractor. He will notify the Contractor, witha copy to the Employer.To give full opportunity to the Engineer to examine andmeasure any part of the Works before it is covered, putout of view or have any Works placed upon it; to giveappropriate notice to the Engineer to suit.To uncover or open up parts of the Works as instructedby the Engineer; the Contractor will pay the costs ofopening up if the work is unsatisfactory or faulty. If thework is satisfactory the Contractor and the Employer willbe consulted by the Engineer to determine the Contractor’scosts involved in uncovering and making good to be addedto the Contract Price. The Contractor will be notified,with a copy to the Employer.The Contractor can be instructed by the Engineer toremove and rectify improper work, materials or plant.

If the Contractor fails to follow the Engineer’s instructionauthorised in Sub-Clause 34.1, the Employer can arrangefor the work to be done by others. The Contractor andthe Employer will be consulted by the Engineer todetermine the amount recoverable from the Contractor

32


by the Employer. The Contractor will be notified, witha copy to the Employer.The Contractor can be instructed by the Engineer tosuspend the progress of the Works or of any part, for atime and in a manner considered necessary by theEngineer. During the suspension the Contractor mustprotect and secure the Works to the degree required bythe Engineer. Certain circumstances are described which,if applicable, mean that the Contractor pays the costs ofthe suspension. (If otherwise Sub-Clause 40.2 applies.)If the circumstances in Sub-Clause 40.1 do not apply, theContractor and the Employer will be consulted by theEngineer and he will determine any extensions of timeand amounts to be added to the Contract Price. TheContractor will be notified, with a copy to the Employer.

If the suspension lasts for 84 days the Contractor can givenotice to the Engineer requiring possession to proceedwithin 28 days of the receipt of the notice by the Engineer.If permission is not granted within 28 days, and if onlypart of the Works is affected, the Contractor can, but isnot bound to, treat the suspension as an omission underClause 51 and give further notice to the Engineer. If itaffects the whole of the Works he can treat the suspensionas a default by the Employer and terminate hisemployment under the Contract in accordance with Sub-Clause 69.1. whereupon Sub-Clauses 69.2 and 69.3 willapply.To commence the Works as soon as practicable afterreceipt of a notice from the Engineer issued within thetime stated in the’Appendix to the Tender after the dateof the Letter of Acceptance; once started he must get onwith the Works expeditiously and without delay.

To be given possession of the Site and access to it by theEmployer with the Engineer’s notice to commence.Various circumstances are described and in one case theContractor may have to make proposals to the Engineer.with a copy to the Employer, about his requirements forpossession and access. He will be given possession andaccess to suit the requirements of the Contract and/or hisprogramme for the Works.If he suffers delay or incurs costs because the Employerhas failed to give possession and access as required. theContractor and Employer will be consulted by theEngineer who will determine any extensions of time andcosts to be added to the Contract Price and notify theContractor, with a copy to the Employer.

To bear all costs for special or temporary wayleaves foraccess; to provide his own additional facilities requiredoff site.

40.1. Suspension of Work (See Part IIClause 40 when Dredging and ReclamationWork involved)

40.2. Engineer’s Determination followingSuspension

40.3. Suspension lasting more than 84 Days

41.1. Commencement of Works

42.1. Possession of Site and Access Thereto

42.2. Failure to Give Possession

42.3. Wayleaves and Facilities

33

THE FIDIC DIGEST

43.1. Time for Completion (See Part IIClause 43 when Completion may have to beon a certain date)

44.1. Extension of Time for Completion

44.2. Contractor to Provide Notification andDetailed Particulars

44.3. Interim Determination of Extension

45.1. Restriction on Working Hours (SeePart II Clause 45 covering isolated areas andDredging and Reclamation Work)46.1. Rate of Progress

47.1. Liquidated Damages for Delay (seePart II Clause 47 for possible bonuses forearly completion)

47.2. Reduction of Liquidated Damages

48.1. Taking-Over Certificate

48.2. Taking-Over of Sections or Parts

34

Times for Completion of the Works or Sections of theWorks are stated in the Appendix to the Tender calculatedfrom the Commencement Date and must allow for anyextensions allowed under Clause 44.Certain events are described which may entitle theContractor to an extension of Time for Completion; inthe event he and the Employer will be consulted by theEngineer and the Engineer will determine the amount ofthe extension and notify the Contractor, with a copy tothe Employer.

To follow the procedures laid down in this Sub-Clauseto get the Engineer to determine any extension of Timefor Completion.

To follow other procedures laid down where an event hasa continuing effect.

To seek the consent of the Engineer if he wishes toundertake work at night or on days of rest; emergenciesand shift work are covered in this Sub-Clause.He can be asked by the Engineer to speed up the progressof the Works in certain circumstances and will be unableto claim additional costs; he can seek the Engineer’sconsent to work at night or on days of rest. If this extrawork causes the Employer to spend more money insupervision then these costs will be deducted by theEmployer from monies due to the Contractor as deter-mined by the Engineer after consultation with theEmployer and the Contractor. The Contractor will benotified. with a copy to the Employer.To be prepared to pay liquidated damages as set out inthe Appendix to the Tender for the whole, Sections orParts of the Works. The Employer can deduct suchdamages from monies due or to become due to theContractor.

Completion of Sections or Parts of the Works. withappropriate Taking-Over Certificates, prior to the timeof completion, enable liquidated damages to be reducedpro rata.

To give notice to the Engineer, with a copy to theEmployer, with an undertaking to complete anyoutstanding works during the Defects Liability Periodwhen the whole of the Works have been substantiallycompleted. The Engineer either issues the Taking-OverCertificate within 21 days or instructs the Contractor todo certain works before he can issue it. Certain defectswhich appear after this instruction and prior to completionmust be rectified before completion. 2 1 days after whichthe certificate is issued.

The Contractor may request the Engineer to issue aTaking-Over Certificate for any Sections or Parts of the


Works in circumstances described in (a), (b) and (c) ofthis Sub-Clause.Procedure when it is foreseen that the Contractor may beprevented from carrying out tests.

To complete the work outstanding on the date stated inthe Taking-Over Certificate; to execute all work ofamendment, reconstruction and remedying defects asspecified.

To be responsible for the cost of work undertaken anddescribed in Sub-Clause 49.2 if covered by (a), (b) and(c) of this Sub-Clause; if the work concerned is due toany other cause the Contractor will be paid an amountdetermined by the Engineer.

In case of failure by the Contractor, the Employer isentitled to employ and pay others to do completion andremedial works. The Engineer, after consultation with theEmployer and Contractor, will determine the costs to bepaid by the Contractor to the Employer,

The Contractor may be instructed by the Engineer tosearch for the cause of defect, shrinkage or other fault.If the defect, shrinkage or other fault is not the fault ofthe Contractor the Engineer will consult the Employer andthe Contractor to determine the amount to be added tothe Contract Price. If the Contractor is at fault he willbear the cost of the search and of remedying any defect,shrinkage or other fault.To follow the instructions of the Engineer to make anyVariations as defined. The effect will be valued underClause 52 unless the Variation has been necessitated bydefault or breach by the Contractor in which case he willbear the cost of such Variation.

The Contractor will not make any Variations unlessinstructed to do so by the Engineer.

To be consulted, along with the Employer, by theEngineer, to agree suitable rates and prices, when theContract does not contain rates and prices applicable tothe varied work.

To be consulted, along with the Employer, by theEngineer, to agree suitable rates and prices when existingrates and prices are rendered inappropriate orinapplicable; to give notice to the Engineer, within 14 daysof the instruction to vary the Works, of his intention toclaim extra payment or a varied rate or price; to receivenotice from the Engineer of his intention to vary a rateor price within 14 days of the instruction to vary theWorks. In either case no varied work instructed underClause 51 will be valued unless the notices have beengiven.

48.5. (Part II) Prevention from Testing

49.2. Completion of Outstanding Work andRemedying Defects

49.3. Cost of Remedying Defects

49.4. Contractor’s Failure to Carry OutInstructions

50.1. Contractor to Search (see Part II forDredging and Reclamation Work)

5 1.1. Variations (see Part II for Dredgingand Reclamation Work)

5 1.2. Instructions for Variations

52.1. Valuation of Variations

52.2. Power of Engineer to Fix Rates

35

THE FIDIC DIGEST

52.3. Variations Exceeding 15 per cent

52.4. Daywork

53.1. Notice of Claims

53.2. Contemporary Records

53.3. Substantiation of Claims

53.4. Failure to Comply


54.1. Contractor’s Equipment, TemporaryWorks and Materials; Exclusive Use for theWorks (see Part II Clause 54)

54.3. Customs Clearance

54.4. Re-export of Contractor’s Equipment

54.5. Conditions of Hire of Contractor’sEquipment54.7. Incorporation of Clause inSub-Contracts

56.1. Works to be IMeasured

57.2. Breakdown of Lump Sum Items

58.1. Definition of ‘Provisional Sum’

58.2. Use of Provisional Sums

To be consulted, along witn the Employer, by theEngineer, to determine the amount to be added to ordeducted from the Contract Price arising from thecircumstances described in the Sub-Clause.

The Contractor may be instructed by the Engineer to .execute work on a..daywork basis; to give the Engineerreceipts and vouchers as necessary; to deliver daily returnsof labour, materials and equipment to the Engineer; atthe end of each month to deliver priced statements.To give notice of intention to claim additional paymentto the Engineer within 28 days of the event giving riseto the claim pursuant to any Clause in the Conditions.

To keep contemporary records and follow procedure laiddown precisely.To follow the procedures laid down precisely.

To recognise that failure to comply with the provisionsof Clause 53 may limit the amount the Engineer or anyArbitrator may award.

To expect to be paid the amounts certified by the Engineerin any interim certificate as determined by the Engineerafter due consultation with the Employer and theContractor.

To ensure that all Equipment etc. will be for the executionof the Works, and that nothing is removed without theconsent of the Engineer with a proviso for vehiclestransporting staff etc.To expect the Employer to assist in obtaining customsclearance.To expect the Employer to assist in obtaining consent tore-export equipment.To ensure that any hired equipment can be used by theEmployer on the same terms if necessary.To ensure that any Sub-Contractor’s equipment is treatedthe same as his own under this Clause.He or his authorised agent will be notified when anyWorks are to be measured; to follow procedure laid downin this Sub-Clause.

To submit to the Engineer within 28 days of the receiptof the Letter of Acceptance a breakdown of each LumpSum item contained in the Tender to be approved by theEngineer.To be notified by the Engineer of any determination underthis Sub-Clause.To be instructed by the Engineer for the execution ofwork, supply of goods, material or services by himselfor by a Nominated Sub-Contractor.

36


To produce to the Engineer all quotations, invoices,vouchers, accounts and receipts.

All Nominated Sub-Contractors will be deemed to be Sub-Contractors of the Contractor.

The Contractor may raise reasonable objections toNominated Sub-Contractors as laid down.

To be indemnified by Nominated Sub-Contractors inrespect of design and specification.

To be entitled to be paid as stated in this Sub-Clause.

58.3. Production of Vouchers

59.1. Definition of ‘Nominated Sub-Contractors’59.2. Nominated Sub-Contractors;Objection to Nomination59.3. Design Requirements to be ExpresslyStated59.4. Payments to Nominated Sub-Contractors

59.5. Certification of Payments toNominated Sub-Contractors60.1. Monthly Statements


60.3. Payment of Retention Money

60.4. Correction of Certificates

60.5. Statement at Completion

60.6. Final Statement

60.7. Discharge


60.9. Cessation of Employer’s Liability

To give proof of payment in respect of previouscertificates.

To submit to the Engineer after the end of each monthsix copies duly signed, of a statement, prescribed by theEngineer, showing the amounts due up to the end of themonth in respect of items (a), (b), (c), (d) and (e)described.

To expect the Engineer. within 28 days of receiving sucha statement, to certify to the Employer the amount dueto the Contractor subject to provisos as stated in theSub-Clause.To receive one half of the Retention Money in respectof all or Part of the Works as laid down in this Sub-Clauseon the issue of Taking-Over Certificates; to receive thesecond half of the Retention Money upon the issue of theDefects Liability Certificate as laid down.To be aware of the Engineer’s right to correct or modifyinterim certificates.Within 84 days of the issue of the Taking-Over Certificatefor the whole of the Works to submit to the Engineer aStatement of Completion as defined in this Sub-Clause.

Within 56 days of the issue of the Defects LiabilityCertificate to submit to the Engineer a draft FinalStatement as defined in this Sub-Clause.On submission of this Final Statement, to give to theEmployer, with a copy to the Engineer, a writtenDischarge confirming that the Final Statement representsthe full and Final Settlement. This only becomes effectiveafter payment due under the Final Certificate has beenmade and the performance security returned to theContractor .The Engineer will issue a Final Certificate within 28 daysof receipt of the Final Statement and of the writtenDischarge.To include all unsettled claims in his Final Statement orlose the right to claim.

37

--. ,.- .-

THE FlDlC DIGEST

60.10. Time for Payment

(60. See Part II for suggested Clauses tocover payment in different currencies anddifferent countries)

61.1. Approval only by Defects LiabilityCertificate

62.1, Defects Liability Certificate

62.2. Unfulfilled Obligations

63.1. Default of Contractor

63.2. Valuation at Date of Termination

63.3. Payment after Termination



65.1. No Liability for Special Risks

65.3. Damage to Works by Special Risks65.5. Increased Costs arising from SpecialRisks

65.6. Outbreak of War

65.7. Removal of Contractor’s Equipmenton Termination


To expect payment of interim certificates within 28 daysof delivery to the Employer of the Engineer’s certificateor within 56 days of the delivery of the Final Certificate;to be entitled to interest on any delayed payment at therate stated in the Appendix to the Tender. The Contractorhas an entitlement, under Clause 69 if payments aredelayed.

To recognise that approval of the Works is covered onlyby this Certificate.To recognise the conditions which must be satisfied beforethe Engineer will issue his certificate.Both Parties remain liable for the fulfilment of anyobligation incurred prior to the issue of the DefectsLiability Certificate and unperformed at the time of issue.

To expect Termination of the Contract under thecircumstances described in this Sub-Clause.The Engineer will determine any sums due to theContractor upon termination.

The Engineer will determine any sums due to theEmployer by the Contractor.

To be instructed by the Engineer, under the proceduresdescribed. to assign to the Employer any benefits of anyagreements to supply goods, materials or services.If he is unable or unwilling at any time to do remedialor other work urgently necessary for the safety of theWorks as required by the Engineer, he will be liable forthe costs of such work or repair done by or on behalf ofthe Employer. These costs will be determined by theEngineer after consultation with the Employer and theContractor.The Contractor is not liable for Special Risks describedin Sub-Clause 65.2.To be entitled to payment as defined.

To notify the Engineer whenever costs arising fromSpecial Risks come to his knowledge. The Employer andthe Contractor will be consulted by the Engineer who willthen determine additions to the Contract Price.

Unless the Contract is determined, to do his best tocomplete the Works following an outbreak of war;however, the Employer can terminate the Contract as laiddown in this Sub-Clause.

To remove equipment from the Site on Termination underSub-Clause 65.6.To receive payment in accordance with this Sub-Clause.

38


To be paid as under Clause 65 if the Contract is frustratedas laid down.Both Parties to the Contract must follow and respect theprecise procedures laid down under Clause 67. (Part IIsuggests possible variations to the use of ICC ArbitrationRules.)

To receive all certificates, notices or instructions fromthe Engineer and the Employer at the places or addressesnominated by him.

To send any notices to the addresses nominated in Part II.

All concerned must notify the others of any changes ofaddress.

The Contractor can terminate his employment under theContract by giving notice to the Employer, with a copyto the Engineer, in the event of the Employer failing toact or acting as laid down under items (a), (b), (c) or (d)in this Sub-Clause.

The Contractor can remove his equipment from the Site14 days after giving notice under Sub-Clause 69.1.Payment to the Contractor by the Employer is to be asprescribed under Clause 65 with any loss or damageincurred by the Contractor as a result of the Termination.

The Contractor may, in the case of non-payment ofamounts due under certificates, suspend or reduce the rateof work. A set procedure must be followed. The Engineerconsults the Employer and the Contractor to determineextensions in time and additions to the Contract Price ifthe Contractor incurs costs or suffers delay.

The Contractor can resume normal working if theEmployer pays interest on delayed payments. pays theamount due under Sub-Clause 69.4 and if the Contractorhas not given notice of Termination.To be aware of possible provisions in Part II.

To be consulted. along with the Employer, by theEngineer who will determine additional or reduced coststo be added to or deducted from the Contract Price if thecircumstances described in this Sub-Clause occur.To be aware of rights for additional payment incircumstances when currency restrictions are changed.To be aware of the conditions laid down in this Sub-Clausein Parts I and II.To be aware of the conditions laid down in this Sub-Clausein Parts I and II.

66.1. Payment in Event of Release fromPerformance

67.1. Engineer’s Decision; 67.2. AmicableSettlement; 67.3. Arbitration; 67.4. Failureto Comply with Engineer’s Decision

68. I. Notice to Contractor

68.2. Notice to Employer and Engineer68.3. Change of Address

69.1. Default of Employer

69.2. Removal of Contractor’s Equipment

69.3. Payment on Termination


69.5. Resumption of Work

70.1. Increase or Decrease of Cost70.2. Subsequent Legislation (see Part II)

7 1.1. Currency Restrictions

72.2. Currency Proportions (see Part IIClause 72)72.3. Currencies of Payment for ProvisionalSums (see Part II Clause 73)

39

4. Selected Clauses

In this chapter selected Clauses are examined and Clauses with specialcircumstances are reviewed.

Engineer’s Representative and Assistants (Clause 2)It will already have been noted that the Engineer is the ‘person’ appointed

by the Employer to act for the purpose of the Contract and that he is namedin Part II of the Contract Documents. It may seem unusual that he is referredto as a person when in most cases the Engineer is a firm of consultingengineers, but this becomes clear in Sub-Clause 1.3 which states ‘Words Sub-Clause 1.3importing persons or parties shall include firms and corporations and anyorganisation having legal capacity’.

In most cases, the appointed Engineer, be it a person or a firm ofengineers, will have his main office away from the Site but to ensure apresence on Site he is entitled to appoint a Representative. This Sub-Clause 2.2Representative is usually resident on Site and has specific duties andauthorities delegated to him by the Engineer. If a Representative is requiredthe Engineer must appoint him.

The Engineer’s Representative has to rely on the delegation of dutiesand authorities which the Engineer invests in him. These must be madeknown in writing and cannot take effect until a copy of such delegationhas been delivered to the Employer and the Contractor. The extent of theduties and authorities delegated by the Engineer seems unlimited, as thereare no restraints to insist that he must retain for his own attention anyparticular duties. This is different from the similar ICE Form of Contractfifth edition, where decisions and certificates issued under certain specifiedClauses cannot be delegated to anyone.

Once the Engineer has made known the extent of delegated duties andauthorities to be given to his Representative, the effect of anycommunication from the Engineer’s Representative to the Contractor inaccordance with such delegation shall have the same effect as if given bythe Engineer‘ himself. However, any failure by the Engineer’s Sub-C/&se 2.3(a)Representative to disapprove any work, materials or plant does not stopthe Engineer exercising his overriding authority to disapprove and givinginstructions for rectification. Also, if the Contractor questions any Sub-Clause 2.3(b)communication from the Engineer’s Representative, he can refer it to the

49

THE FIDIC DIGEST

Engineer who will confirm, revise or vary the communication as he seesappropriate.

It is interesting that whereas the Contractor’s Employees are to be ‘only Sub-Clause 76.such technical assistants as are skilled and experienced in their respectivecallings’, it seems the Engineer’s Representative can be anyone the Engineermay select and who might possess no suitable qualifications to properlyperform the duties delegated to him.

Where the Engineer’s Representative issues an instruction or Sub-Clause 2.3determination to the Contractor concerning any of the authorities delegatedto him, the Contractor is obliged to accept it as if given by the Engineerhimself. This raises an interesting situation. If the Engineer later decidesthat any communication from his Representative is not to be taken intoeffect or processed, it is not just a simple matter of withdrawing thecommunication. It could be regarded as a Variation and any such instructionfrom the Engineer ought to be processed under Clause 51. Clause 51

There is, in the running of the Contract, a possibility that the Engineer’sRepresentative will be faced with a workload he is unable to perform alone.The volume or the technical nature of certain aspects of his work requireshelp from Assistants working for him. Such Assistants may be appointedby the Engineer or his Representative but they can have no authority toissue any instructions to the Contractor other than those necessary for themto carry out the duties delegated to them.

In most major Contracts, the running of the Engineer’s office requiresa close liaison with the Contractor so that ail the contractual and technicalfunctions, by which the Works are to be completed, can be performedefficiently and without unnecessary delay. In particular, the Engineer’sRepresentative must be closely concerned with maintaining the proper flowof money between the Employer and the Contractor and keeping adequaterecords of daily events so he can play an important part in the settlementof any claims which arise during the construction of the Works.

Engineer to act impartially (Sub-Clause 2.6)This is a new Sub-Clause in the fourth edition, the obligation of which

was only implied in the third edition. In the third edition there were twoClauses in which the Engineer’s reasonableness (possibly the same asimpartiality) had to be exercised and a few Contractors found it necessary Sub-Clause 2.6

or justifiable to complain that the Engineer did not act with reasonablenessthroughout the duration of the Contract. However, there have been instanceswhen the Engineer to a Contract did act in a different manner from otherEngineers on a similar Project which required the Contractor to adhereto a much more rigid application of the specification than the Contractorhimself considered reasonable.

Some Engineers might feel a little hurt that this new Sub-Clause formally.

.!,.:

requires them to be seen to act with impartiality, especially when in theiropinion they have already done this without .question since they startedin practice. This is understandable, btit the formal basis gives the

! :

,I’

.?50

;-

SELECTED CLAUSES

opportunity for any apparent lack of display of impartiality to become amatter for Arbitration if either Party considers he is not getting impartialtreatment under the circumstances which prevailed.

Unfortunately, the Sub-Clause raises questions as to what happens when,according to the Contractor, a decision made by the Engineer is not givenimpartially. Does the Contractor have to continue with the Works and leavethe decision unchallenged or unresolved only to find that over time it hasincreased his costs considerably? Does he have to act immediately to obtainan Engineer’s decision on the injustice he considers is being done to himby the Engineer and quickly seek Arbitration under Clause 67? Or should Clause 67he appeal directly to the Employer?

An appeal made to the Employer is not as unlikely in the new editionas it would have been under the third edition because certain Clauses nowrequire the Engineer ‘to consult with the Employer and the Contractor’.Therefore it would seem appropriate that the Contractor should also claimthe right of direct consultation because to accept the Engineer’s decisionwithout complaint when it was given could lead to an unnecessary dispute,but by referring it to the Employer such a dispute might be avoided.

It must be accepted that the Engineer is likely to perform his decisionswith greater skill and ability than the Employer ever could. But as theEmployer is the one to be called upon to pay for the outcome of a decisionwhich is claimed to be partial, then he might want to be involved at anearly stage to avoid a costly dispute.

Due consultationIt was a stated intention in the fourth edition of the FIDIC Conditions

of contrucr to bring the Employer into more prominence so that he couldbecome more involved in the day to day activities on site and in particularthose which involve financing the Contract Works. In the third edition,his involvement with the details of construction was more noticeable byhis absence, but under the fourth edition it is intended that he is consultedby the Engineer on a variety of subjects, mostly affecting payment to theContractor. The fourth edition, however, fails to define exactly what isintended to be the purpose or outcome of the ‘consultation’ by the Engineerwith the Employer and the Contractor, and indeed what status it is to begiven. It is neither stated nor implied whether the Engineer is expectedto be so influenced by his consultation with the Employer or the Contractorthat he changes his mind about what is otherwise intended to be‘determination’ by the Engineer. If he is so influenced by either Party canthe outcome really be his own determination or decision?

It might be the intention of the fourth edition that, every time the Engineeris obliged to have a consultation, he should ask the Employer and theContractor to attend at the same time. If this is so. it is not stated. If thereis to be a tripartite discussion, with no declared or defined purpose, it iseasy to imagine the emotion that would be generated at such an informalmeeting if either the Employer or the Contractor were to feel aggrieved

51

I.

THE FlDlC DIGEST

if an Engineer does not determine a matter in his favour. If the Engineerwere to meet each Party separately before making any determination, theprocedure would be no different in the future than it was in the past.Thkrefore, simply because it is an innovation of the fourth edition, it islikely that he will meet them together. This should certainly apply forsignificant situations and it would be proper for the Engineer to state thathe had seen both Parties when giving his decision.

Most unsatisfactory for the long-suffering Engineer is the possibilityof being accused of bias, or that the determination he gives is not genuinelyimpartial but rather a reflection of the consultation he has had with oneParty or the other or both.

There are 23 Clauses which require the Engineer to consult the Employerand the Contractor at the proper time. All but one concerns payment toor from the Contractor, eight can influence the Time for Completion, andpart of one contains a requirement for the Employer to consult theContractor before reaching settlement including a sum due from theContractor to the road or water authority. Over a number of years, some Sub-Clause 30.3Employers involved with large Projects and Contracts, retain for themselvescertain rights and involvements in decision-making concerning paymentto the Contractor which would otherwise be those of the Engineer. Therecan be no complaint over such an arrangement as it is usually very clearly Sub-Clause 2.1stated in Part II as to what they are. The Contractor is therefore fully awareof the situation at the time of submitting his Tender.

Clauses where the Engineer is obliged to undertake ‘due consultationwith the Employer and the Contractor’ will now be examined.

6.4. Delays (time and cost to Contractor)

12.2. Physical Conditions (time and cost toContractor)

27.1. Fossils, Antiquities and Structures(time and cost to Contractor)

30.3. Transport of Materials or Plant (costto Employer)

30.4. Waterborne Traffic (cost to Employer)

36.5. Tests (time and cost to Contractor)

37.4. Rejection (cost to Employer)

38.2. Uncovering work (cost to Contractor)

39.2. Default of Contractor (cost toEmployer)

52

These can occur either by the failure of the Engineer togive timely Drawings or instructions, or by the failureof the Employer to provide various materials on time ashe undertook to do.

The Engineer is testing his opinion that such obstructionsor adverse conditions could not have been foreseen byan experienced Contractor.Assessing impact of Engineer’s decision.

Failure of Contractor to perform obligations and isolatedinstance where the Employer is required to consult theContractor on a matter of a settlement.

As for Sub-Clause 30.3. where waterborne transport isused.

Assessing effects of tests ordered by the Engineer.This concerns the recovery of money from rhe Contractorby the Employer.Assessing result of uricovering work which is found tobe acceptable.This concerns the recovery of money from the Contractorby the Employer.

40.2. Suspension (tim,: and cost toContractor)42.2. Failure to Give Possession (time andcost to Contractor)44.1. Extension of Time (time toContractor)46.1. Rate of progress (cost to Employer)

49.4. Contractor’s failure to carry outinstructions (cost to Employer)50.1. Searching (cost to Contractor)

Assessing result of order to suspend work outside thecontrol of the Contractor.

Caused by failure of the Employer to give possession ofall or part of the Site or access thereto.

Assessing impact of events affecting time outside thecontrol of the Contractor.

Assessing costs incurred by the Employer because of lackof progress by the Contractor.

Recovery of costs incurred by the Employer if theContractor is in default.Assessing result of abortive searches when work issatisfactory.

52. I. Fixing new rates (fix new rates)

52.2. Adjusting rates (revised rates)

52.3. Variations exceeding 15 per cent (costto and from Contractor)53.5. Claims (cost to Contractor)

64.1. Urgent remedial work (cost toEmployer)

To establish new rates where none existed for workordered by the Engineer.To establish revised rates where Variations ordered bythe Engineer affect existing rates.

To add or to deduct from the Contract Price.

Assessment of claims accepted by the Engineer.

Assessing costs arising from the Contractor’s failure todo remedial works.

65.5. Special risks (cost to Contractor)

65.8. Termination due to Special Risks (Netpayment to or from Contractor)

69.4. Suspension/delay (time and cost toContractor)

Assessing the cost to the Contractor arising from theimpact of Special Risks.

Assessing payments due to or from the Contractor.

Assessing costs to the Contractor when the Employer failsto pay.

70.2. Subsequent Legislation (cost to andfrom Contractor)

This is an added or deducted amount according to theoutcome of subsequent legislation.

It now appears that the particular manner in which the Employer is tobecome more active in the application of the Contract is likely to be morepositive than at first expected. He is now more aware of the extra expensethe Engineer is committing him to and what he ought to say about it atthe appropriate time.

The Contractor will no doubt welcome the possibility of closer contactwith the Employer, who after all is the one who pays him. He will makethe most of this new opportunity to be able to make a direct plea of povertyand deprivation should he fail to receive some extra payment followingconsultation. Even if he fails here he can at least set out the groundworkto direct the Employer towards an eventual settlement in the form an anex-gratis payment in due course.All things considered it might be better in the iong run for the Engineer ‘-

to recover his all-powerful status and to make all the necessary engineeringjudgements and financial settlements without involving the Employer. Afterall there still remains the right of Arbitration if the Contractor or the

SELECTED CLAUSES

53

THE FlDlC DIGEST

Employer feels that the Engineer has not done his job properly eithertechnically or financially.

iContract Documents (priority, ambiguitiesand discrepancies) _.

There are many documents which govern and control the way in which1 the Contract is to be run. Only those listed in the Tender will apply, although

others can be added during the construction of the Works and may becomeof equal importance, for example Working Drawings, Variations to the

I Works or Drawings provided by the Contractor. The listed documents are Sub-Clause 5.2I to be mutually explanatory and are given a listed priority of status. Of

course, a ‘document’ in the context of the Contract itself, as well as theConditions of Contract, means not only the Bills of Quantities,Specifications and such like, but also Drawings, programmes, permits, Sub-Clauselicences, schedules of materials and indeed everything upon which the I.l(b)(iii)Contract Price is calculated.

Because of the complex nature of the work involved in preparing TenderDocuments ‘ambiguities or discrepancies’ can occur. These need to beresolved quickly and positively by the Engineer. In the event of suchambiguities or discrepancies he has to explain to the Contractor exactlywhat is intended and to issue appropriate instructions to him as may benecessary. The Contractor has a right to expect that the explanation givenby the Engineer accords with the listed priority of the Tender Documents,in view of the fact that it was upon their listing and understanding ofpriorities that his Tender was based before any ambiguities or discrepancieswere detected.

If the explanation given makes it necessary to change the order of suchlisted priorities, then a change to the Contract could be necessary. Shouldthe Engineer find it necessary to issue any ‘instruction’ which involvesthe Contractor in additional work or expense, then such a change orinstruction must be dealt with under an appropriate Clause in the Contract,and where appropriate a Variation Order should be given. However, ifdiscrepancies or ambiguities occur within the Contract documents, PartII will prevail over Part I as Part II is about those ‘particular applications’which apply to that Contract alone. In Sub-Clause 5.2 of Part II analternative to giving the documents an order of precedence is proposed.This makes all documents mutually explanatory so there is no order ofprecedence to be applied.

Any explanations given by the Engineer which relate to the resolutionof ambiguities and discrepancies could affect the Contractor in a numberof ways, for example

(a) variations, additional works and omitted works(b) changes to the Contractor’s method of construction

.! (c) delays or suspension1,“j (6> matters concerning Sub-Contractors7’!,il (e) extra expenditure if the Contract period is extended.

54

I

SELECTED CLAUSES

Of all the Contract documents, the most important to the Contractor arethe Drawings, as without these work cannot proceed according to theprogramme. Likewise, in their absence, certain operations will just stop.

Drawings are given an extremely wide definition within the Contract,so much so that the understanding in the fourth edition of what constitutesa Drawing is totally different from traditional understanding. It is important, Sub-Clausetherefore, that the Contractor makes a particular note of the definition of 1. 1 (b)(iii)

Drawings as given in Sub-Clause l.l(b)(iii) to ensure that his TenderPrice fully covers him for all costs he is likely to incur in thisconnection.

Drawings are usually issued by the Engineer. When the Contractor hasa different role to play, as when he designs work or is concerned withcertain specialist undertakings, he issues Drawings for approval by theEngineer. All Drawings to be issued by the Engineer should be availablein sufficient detail, in time, and in such a sequence as to permit the Sub-Clause 6.1

Contractor to proceed with the Works without delay or disruption. If theEngineer fails to do this, the Contractor has to give proper notice to theEngineer as to his requirements. Should it appear to the Contractor that Sub-Clause 6.3

he will incur extra cost or delay if a Drawing or further instruction is notgiven within a reasonable time by the Engineer, he should give notice tothe Engineer, with a copy to the Employer, stating what is required andgiving his forecast of any delay or disruption he is likely to suffer. If after Sub-Clause 6.4

all this the Engineer fails, or is unable, to issue any Drawing or instructionwithin a reasonable time for which the Contractor has given notice, andif the Contractor suffers delay and/or extra cost, the Engineer will, afterdue consultation with the Employer and the Contractor, give an Extensionof Time and determine the amount of such extra costs to be added to theContract Price. However, if any delay on the part of the Engineer to issue Sub-Clause 6.5

any Drawings or instruction is caused by, in whole or in part, the failureof the Contractor to submit Drawings, Specifications or other documentswhich are his responsibility under the Contract, the Engineer must takeinto account such failure when making his determination.

Site and accessBefore any construction project is designed it is.usual for the Site to

be selected and arrangements made for it to be available for work to beperformed on it as and when required. This is the responsibility of theEmployer, who must not only ensure that this is done, but also that hehas some form of legal ownership as well as being satisfied that properand adequate access is available. Once this is done it is possible for the Sub-Clause I I. I

Site to be subjected to a detailed survey and for a report on the geologicalnature of the hydrological and sub-surface. conditions to be prepared. Thissurvey and report are especially important to the Engineer and theContractor. The Engineer needs it for design purposes and the Contractorfor determining his method of construction and to formulate his TenderPrice. All data, obtained either on behalf of or by the Employer, has to

5 5

THE FIDIC DIGEST

be made available to the Contractor. It is on this data that he is deemedto have based his Tender.

Access to the Site must be adequate but sometimes special or temporarywayleaves need to be obtained. If these are necessary the Contractor bearsall costs involved. Also, if the Contractor needs additional land or otherfacilities outside the defined Site area, he has to negotiate. and make thenecessary arrangements and remember that neither the wayleaves nor theadditional land he obtains are designated parts of the Site.

So what then is the Site? Fortunately there is a definition in the Conditionsof Contract which calls it ‘the places provided by the Employer wherethe Works are to be executed and any other places as may be specificallydesignated in the Contract as forming part of the Site’.

The view has been expressed that if there was a Contract Drawing No.1, giving full details of the Site and its access, it would be a much clearermeans for the exact identity of the Site to be appreciated by all concerned.It is pleasing to find that some Engineers do exactly this. If the locationand the extent of the Site are known, the Contractor has the option of visitingthe Site before the Tender, and should he decide not to, then accordingto the Contract, he is deemed to have done so, and if in the future a problemor claim situation arises he has no grounds for pleading ignorance of theprevailing O#ircumstances.

The prudent Contractor who visits the Site will be able to examine theterrain, the local and surrounding conditions, and the facilities availableto him and his staff, then with the data provided by the Employer be ableto make his Tender realistic and cover all his obligations should he obtainthe Contract.

!

The Engineer, in accordance with Sub-Clause 4 1.1, gives the successfulContractor notice to commence the Works within the number of days statedin the Appendix to the Contract, after the date of the Letter of Acceptance- the formal acceptance by the Employer of the Tender. The Contractormust commence the Works as soon as is reasonably possible after receiptof the Engineer’s Notice.

For the Contractor to commence operations he must have possessionof the Site, or parts of it, and access as set out in Sub-Clause 42. In somecases, the sequence of possession of parts of the Site and access connectedto the order of execution of the Works is presented in the Tender Documentsprovided for the Tenderers. Here the Employer will give the Contractorpossession of the Site etc, to suit the predetermined sequence simultaneouslywith the Engineer’s Notice to Commence. If no possession details havebeen specified in the Tender, then, with the Notice to Commence, theEmployer must give the Contractor sufficient area of the Site and accessto it to enable him to commence, and to proceed to suit his programmesubmitted under Clause 14. The Employer must otherwise give immediatepossession of parts of the Site and access in accordance with reasonableproposals made by the Contractor to the Engineer and to the Employerunder Sub-Clause 42.1. Thereafter possession must be given to theContractor to suit either his programme or the proposals referred to above.

56

Sub-Clause 42.3

Sub-Clause1. 1 (f)(viii)

Sub-Clause 12.7

Sub-Clause 4 1.1

Sub-Clause 42.1

Clause 74

Sub-Clause 42.7

SELECTED CLAUSES

ProgrammesThe manner in which the Contractor prepares his estimate for a Tender

for a major Civil Engineering Contract is generally by making an overallassumption of estimated time elements and the cost of the use of hisresources. This way he can establish the total cost and profit of the varioussections of the work involved and then relate them to the quantities containedin the Bills of Quantities. His Tender is prepared generally on the overallconcept of involvement of resources and not so much on a build-up ofseparate and single items of work. This method of estimating becomesvery meaningful when it is translated into the form of a constructionprogramme which, to the Contractor, will indicate the respective amountsof earnings he can expect in relation to expenditure and the sequencesaccording to which the work will be performed. This outline programmewill enable him to fulfil his obligations for the construction of the Worksand to complete the Works within the Time for Completion required bythe Tender Documents.

The purpose of such a construction programme is to set out theContractor’s timing of the various stages of the Works in calendar formand also to identify the timing of those matters over which he has no directcontrol, such as the availability of the Site and access thereto, the productionof further Drawings and details by the Engineer, the delivery to the Siteof Plant and materials provided by the Employer, and all other importantfactors which may affect his operations, progress and performance.

The programme, as stated in the Tender Documents, is limited to thenumber of days forming the Time for Completion, as given in the Appendix.Where the Works are to be completed in Sections or Parts, the numberof days for the Time for Completion of such Sections or Parts will alsobe given. In some cases a Date for Completion is given instead of a number pa-t /I Clause 43of days. This is identified in Part II Clause 43, and the Dates for Completionof Sections or Parts are to be stated separately.

The need for a detailed programme to be part of the Tender is not coveredby the standard form. The need for the Contractor to submit a programmeafter a number of days from the date of the Letter of Acceptance is covered .by Sub-Clause 14.1. This programme is submitted for consent of the Sub-Clause 14.1Engineer, although the giving of his consent is not required within anyspecified time after submission. The Conditions of Contract do not coverwhat happens if the Engineer does not give his consent.

It is difficult for a Contractor to anticipate exactly the form and detailthat the Engineer might require for such a programme as they can differfrom Engineer to Engineer. Some might be satisfied with a traditional barchart programme whereas others might want to use the most sophisticatedcomputer-controlled systems available. The Contractor has the right, inthis matter of programme, to expect the Engineer’s requirements to bekept to a normal cost expenditure as might be found in the Specificationor elsewhere in the Contract Documents so that any cost over and abovethese requirements will qualify as an increase to th’e Contract Price.

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What happens when the Contractor has submitted a programme underSub-Clause 14 to the Engineer based on the form and detail he requiresonly to find that the Engineer does not consent? The situation will obviouslybe different if the work has already commenced, but if the Contractor cannot Kproceed as he is obliged to do, with due expedition and without delay, )(he must consider his options under other conditions of the Contract. Ifthe programme requires the Engineer’s consent for the proper executionof the Works, can the Contractor seek an Engineer’s order to suspend the xWorks while the matter is being resolved? Should he give notice to theEngineer that the works are likely to be delayed or disrupted? Does hehave a debate with the Engineer as to whether ‘consent’ is different from‘approval’? They are referred to separately in Sub-Clause 2.6 which Sub-Clause 2.6

requires the Engineer to act impartially on both, so it could be arguedthat they cannot mean the same thing. Possibly the second option is thebest but the other can apply depending on the actual circumstances.

Care is taken within the Conditions of Contract to ensure that any consentor approval given by the Engineer does not relieve the Contractor of anyof his responsibilities. It is sometimes overlooked, however, that whilethis is so, the Engineer himself can become involved simply by havinggiven his consent where he also had the opportunity to refuse it.

There is no precise definition as to what constitutes a programme anddifficulties can therefore arise. It would seem, however, that the programmeneed demonstrate only the timing and sequences of the starting and stoppingof the important work operations to show how the Contractor intends tocomplete the Works, and how the sequences are related to the ratescontained in the Bills of Quantities. /--,

Once the programme has received the consent of the Engineer it is givenan almost sacrosanct status and becomes the yardstick of the Contractor’srequired performance against which his actual progress is recorded. If this ’is unsatisfactory, the Engineer can request a further programme designedto enable the Works to be completed on time, but in this case the Contractor ‘,is not obliged to obtain the Engineer’s consent nor the Engineer to give is

There is no specific direction given as to what happens if the Engineerdoes not like the new programme. Presumably the Contractor would haveto go on submitting further programmes until the Engineer was satisfied,but the work must neither stop nor slow down while this is happening.

In addition to a programme, the Engineer has the option to ask the Sub-Clause 14.1Contractor to give a general description of the arrangement and methodshe intends to adopt for the execution of the Works. If this option isexercised, it is directed towards indicating the physical method ofperformance rather than the timing within which each operation is expectedto be performed. It is interesting that in providing this information to theEngineer, his consent.or approval does not have to be obtained, but thatno further action is required from the Contractor or the Engineer onceit has been provided. Should the Engineer not like the arrangements and*methods the Contractor intends to adopt to do the work, and upon whichhe has based his Tender, then inevitably a claims situation will arise if ;

,i<

58J

SELECTED CLAUSES

the Contractor is obliged to make changes to accommodate the Engineer’swishes. L!

It would be naive to believe that every Contractor’s programme is trulyrelated to the concept of his estimating processes. After all, it is only whenhe has entered into a legally binding Contract with the Employer that heis called on to produce such a programme for the Engineer’s consent underSub-Clause 14.1. Therefore it must be considered a possibility that someContractors might use this opportunity to provide a late disclosure ofimportant data and indicate a much earlier sequential completion ofconstruction operations than the one his Tender was truly based 0n.Arequirement for the Contractor to submit a programme as part of the Tender-----.-. .___ __._

would prevent~~~~~.~~i~~~~~ate Contract Document status- -and would avoid a lot of the present problems. After all, there is now a 3legal precedence under English law for claiming that a programme [submitted and accepted as part of the Contractor’s offer is different from ia programme which only comes into being once a legal Contract has been ‘:,established. L

Such a programme accepted as part of the Tender could be used by theContractor to support a claim that the rates and prices in the Bills ofQuantities can become inappropriate or inapplicable if the timing ofoperations in the programme are affected by actions of the Engineer orthe Employer. This assumes that the relationships between the programmeand the rates are known and have been accepted. If the Contractor failsto complete the Works within an accepted programmed time which is lessthan the time stated in the Appendix to the Tender or any extended time,(but nevertheless within the Appendix Time), no liquidated damages canbe applied as it is the Appendix Time, with any extensions, for Completion,which applies and not the timing as shown on the programme. The simpledifference between a Tender programme and one provided under Clause14 is that the former has already been accepted by the Employer as partof the Contract, and the latter has only to be subject to the consent of theEngineer, and this being given only after a legal Contract is in existence.

Commencement to taking overMost legal documents concerned with construction contracts set out to

give a clear and precise date as to when work is to commence, how longit is to take and how commencement and completion are to be defined.This becomes especially important in legal definition, because without acontractual beginning there can be no contractual end.

In the FIDIC Conditions ofcontract this is done by considering the time Sub-Clause 41.1for the Commencement of the Works as from when a notice by the Engineerto the Contractor is given within the number of days from the date of theLetter of Acceptance as specified in the Appendix to the Tender. However,it is the date of receipt of such notice from the Engineer which becomesthe official starting date for work to commence, and not the date whenit was written. Once it is received by the Contractor he is obliged to proceed

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THE FIDIC DIGEST

with the Works as soon as is reasonably possible. There is also a prerequisitethat the Contractor is to be given by the Employer, and at the same time Sub-Clause 14.1as the notice from the Engineer, possession and access to as much of theSite as the programme referred to in the Contract might indicate or, inthe absence of such a programme, in accordance with such reasonableproposals as the Contractor may submit. If the Contractor does not receivethe Notice to Commence from the Engineer within the number of days Sub-Clause 42.2given in the Appendix to the Tender, he should examine his position andseek to recover any extra costs he incurs and an appropriate Extensionof Time for Completion under Sub-Clause 42.2. Although this Clause isnot specifically designed for action in this situation, it is probably the bestClause available.

If the Employer fails to make available those parts of the Site necessary Sub-Clause 42.2for the Contractor to work properly, it is a different matter and is dealtwith by the Engineer who, after due consultation with the Employer andthe Contractor, will award extra costs and time as considered appropriateto the Contractor.

While it is clear that the Engineer is required to issue his notice to theContractor within a limited number of days from the Employer’s Letterof Acceptance, no reference is made to any time limit within which theEmployer is required to send his Letter of Acceptance. Obviously theContractor’s Tender cannot remain open indefinitely, so under Item 4 ofhis Tender, he agrees to a stated number of days after which the offerlapses unless otherwise agreed. However, the Employer can use all thedays stated in Item 4 within which to accept the Tender.

After establishing the official Commencement Date, the Contract makesprovision in the Appendix to the Tender for a Time for Completion withinwhich the Contractor undertakes to hand over the Works in the mannerrequired. This is given as a stated number of days although it could equally Part /I Clause 43. I

be given as a specific date if this is the wish of the Employer.- Under certain circumstances, the number of days or the specific Date Sub-Clause 44. Ifor Completion can be extended by the Engineer. This is acceptable fora number of reasons, such as Variations, delays, or Suspension of the),Works, but such an Extension of Time for Completion does not, under,this Sub-Clause, entitle the Contractor to additional payment itself. Hemust rely on the particular circumstances for which an Extension of Time;

-...- .-

%r~~Com~letion was given. The number of days given for the CompIetio%_ ._---.-of the Works can be increased or left unchanged, but never reduced in:the event of work being omitted.

The number of days stated in the Appendix to the Tender are calendardays, not actual working days, and so the Contractor must make due Sub-C/au&e 45. I

allowance in the programming of his operations to exclude night workand locally recognised days of rest. If the Contractor’s rate of progress,according to the programme, falls behind, the Engineer can require the Sub-Clause 46. IContractor to take measures to catch up with the programme and underthese particular circumstances the Contractor’can seek the Engineer’sconsent to work nights and on days of rest.

60

SELECTED CLAUSES

It is generally understood that when an offer is made by a Contractorit starts the early part of its legal existence from the moment it is receivedby the Employer it is addressed to. The formation of a legal Contract isestablished when a proper and unqualified Letter of Acceptance is postedand not from the date it is received.

The Contractor must not be drawn into believing that a ‘Letter of Intent’sent in place of a Letter of Acceptance serves the same purpose. A Letterof Intent is merely an indication of an intention by the Employer to enterinto a Contract which might or might not materialise. Of course such aletter can become more helpful and improve in status if it states that theEmployer will compensate the Contractor for any expenditure should henot secure the Contract.

The FIDIC Tendering procedure’ is helpful in setting out in detail itsopinion of a Letter of Intent and acknowledges that under certaincircumstances it might serve a useful purpose. It gives the advice that aLetter of Intent issued as a prelude to entering a formal Contract shouldcontain

(a) a statement that it is intended to accept the Tender(b) instructions to proceed (or not to proceed) with certain work e.g.

mobilisation, ordering of materials, and letting of Sub-Contracts(c) the basis of payment for work authorised and a limit to the financial

liability which may be incurred before formal acceptance of theTender

(d) a statement that if the Tender is subsequently not accepted or theLetter of Intent withdrawn, the costs legitimately incurred by theContractor will be paid by the Employer

(e) a statement that when the Tender is formally accepted with a Letterof Acceptance, the provisions of the Letter of Intent will becomevoid

(f, a request to the Contractor to acknowledge receipt of the Letterof Intent and to confirm his acceptance of its conditions.

The completion of the construction of the Works, or Sections, if Clause 48applicable, including any prescribed tests, is recognised by the Engineerissuing the Contractor with a Taking-Over Certificate. This Certificate Sub-Clauses 20.1

accepts the fact that not only is the work completed to his satisfaction but and 21.2also establishes the date for the transfer of certain insurance and care ofthe Works responsibilities, the release of part of the Retention Money and Sub-Clause

the start of the Defects Liabililty Period. Such a certificate makes possible 60.3(a)the commencement of the Contractor’s evacuation from the Site of his Sub-Clause 49. I

plant, personnel and such like, and the closing down of various facilitieswhich he has been using but leaving behind whatever is necessary tounder&e any work reasonably expected to arise during the Defects LiabilityPeriod.

The Contract is deemed to be effectively complete when a Defects Sub-Clause 62.7

Liability Certificate is issued by the Engineer although there are certaincontinuing obligations of both Parties which can be extended either because

6 1

THE FIDIC DIGEST

of the Contract Conditions or simply because of the particular laws and Sub-Clause 62.2ordinances of the country in which the Contract is being performed.

Variations, alterations, additions and omissionsFor anything to be subject to a Variation there must be’a basis from

which a Variation can arise, and, in the context of civil engineeringconstruction, it is generally referred to in the document as being the ‘Scopeof the Works’. This describes the nature of the Works, whether it is theconstruction of a highway, airfield, dam or any other utility, and wouldimmediately identify the type of work to be undertaken and generally givea sufficiently detailed description for the Contractor to understand itsboundaries.

The Scope of the Works, once defined, may require numerous alterationsto successfully adapt to circumstances which could .not necessarily havebeen foreseen when the Works were first envisaged. Such changes mightbe requested by the Contractor to suit his construction methods, or by theEngineer when producing his Working Drawings. Sometimes the Employerinitiates changes to suit his financial or commercial circumstances or totake advantage of technical improvements or innovations.

Because of the inevitable need to make changes to the original concept, Clauses 51 andClauses 51 and 52 are included in the Conditions to define the procedures 52and requirements whereby Variations might be processed. Only theEngineer has the authority to vary the Works by giving an instruction tothe Contractor. He is permitted to make changes of almost any kind butgenerally with the implied purpose of achieving final Completion of theWorks.

It is obviously necessary for Variations to have some restriction to remainwithin the intentions of the Parties when a Contract was entered into,although individual Employers and indeed many Engineers contemplateVariations which range from being of little consequence to considerablemagnitude. It would be generally accepted that all necessary or desirableVariations are made by the Engineer simply to achieve Completion of theWorks as envisaged within the Scope of the Works and no more. Theycertainly should not commit the Contractor to duplicate the Works or tointroduce Works alien to the original conceptwhich would result in a finalfinancial involvement which is out of all proportion to the original ContractPrice.

There might be a difference of opinion as to whether certain work Clause 57

a Variation within the meaning defined under Clause 5 1, orit is already part of the work to be undertaken by the Contractor,stated that the Contractor will not commence any Variation until

has received an instruction from the Engineer. Under Sub-Clause 2.5 Sub-Clause 2.5

all Engineer’s in-t@-are-to &-i.n wriiing.butifhe considers it desirable,he can give the mstruuo=l_ly and-the- Contractor is obliged to comply--2__ ______ -__.witlis~F&her or not it is confirmed in wr%mgl?efore obeying the order.If the Engineer gives an oral instruction and does not follow it up in writing,

62

SELECTED CLAUSES

the Contractor must write to him within seven days conrirming theinstruction he has been given. If he receives no reply from the Engineerduring the next seven days it will be deemed to be an instruction fromthe Engineer.

The question is sometimes asked about the status of a Drawing issued Sub-C/ause 57.2

by the Engineer to the Contractor and whether it might constitute a writtenVariation. The content of the Drawing will be the predetermining factorin that some Drawings merely amplify or give particular instructions tothe Contractor concerning work already covered by the Specification, andobviously these could not be regarded as an ordinary Variation. However,when a Drawing shows a change in the Works as originally contemplatedand such a change can be identified as a Variation, the Drawing-itself willbe accepted as a written order from the Engineer to the Contractor withinthe meaning of the Clause. If this happens the Contractor must fulfil therequirements of the Drawing in exactly the same way as if he had receiveda communication in the form of a letter or notice.

Granting the Engineer the powers to vary the Works is essential, becausea Contract without such a Clause would not permit changes of any sortto be made to the physical construction of the Works. This would meanevery desired change necessitating a separate or supplementary Contractbetween the Employer and the Contractor, and that they would have toagree specific rates for the work and consider the effect such work mighthave on the Contract already in operation.

An instruction in writing from the Engineer is not required for any Sub-Clause 51.2changes in quantity for work which is merely seen to be the result of thequantities being different from those stated in the Bills of Quantities. Itis known that the quantities provided are estimated quantities only for theWorks and are not to be taken as the actual or correct quantities to beexecuted by the Contractor. This therefore permits such changes inquantities to become contractually acceptable without any need for theContractor to seek a Variation instruction.

After instructing a Variation, the Engineer must consider how it affects Sub-Clause 52.7

payment to the Contractor and, provided that the work involved is the samein character and within such timing as the work already described in theBills of Quantities, existing rates for work will be applicable. If the Contractdoes not contain any rates or prices applicable to the varied work, suitable Sub-Clause 52.1

rates or prices can be agreed between the Engineer and the Contractorafter due consultation by the Engineer with the Employer and theContractor. If there is disagreement, the Engineer fixes such rates andprices he considers appropriate, and until these are agreed or fixed, hedecides provisional rates or prices so that interim payments can be madein mo.nthly certificates.

There are Contracts which appear to have suitable rat& for varied workalready within the Bills of Quantities, but it must be recognised that suchrates in the Bills of Quantities are related to a time-based programme ofexecution. Ifthgwork is done out of the time sequence on which the rates __- . ..-. _-._ <a.---were based, the r&%mselves are not a$lcable~ They are then subject-_.-- -

63

THE FIDIC DIGEST

to change and must be made reasonable and proper under the prevailingcircumstances.

A situation may arise when changes are made which concern a particular Sub-Clause 52.2trade or operation, and these changes can influence, directly or indirectly,the reasonableness of rates and prices in the Bills of Quantities for otherwork which is not directly related to the changed work. If, by reason ofa Variation instructed by the Engineer, the rates and prices for this otherwork are rendered unreasonable or inapplicable, the Engineer, after dueconsultation with the Employer and the Contractor, will agree suitable ratesand prices with the Contractor. As before, in the event of a disagreement,the Engineer fixes rates or prices he believes are appropriate. Provisionalrates or prices are used to value interim certificates until rates and pricesare agreed or fixed. For example, if Variations affecting the foundationsof a bridge caused the construction of the superstructure to be delayedfor a considerable period, this Clause would enable the Contractor to seeka change of the rates for ancillary work such as balustrading, kerbing,lighting and surfacing, because of increased costs arising from inflationduring the delay period, from working out of sequence, and possiblechanges in the method of executing the work which would have made theoriginal contract rates unreasonable or unrealistic. Under suchcircumstances the Contractor is entitled to have these rates altered to asuitable value as may be agreed between the Engineer and himself, eventhough this would not be a direct part of the Variation itself.

If the Engineer intends to vary a rate or price already in the Bills ofQuantities because of the direct effect of the issue of a Variation, or theindirect effect that it might have on other items of work, he must givenotice of this intention to the Contractor in writing 14 days after the date

of the instruction to make a Variation. No varied work instructed by theEngineer pursuant to Clause 51 shall be valued under Sub-Clauses 52.1 Sub-Clause 52.2or 52.2 unless this notice has been given. The Contractor is likewise obligedto give notice in writing to the Engineer of his intention to claim any extrapayment or a varied rate or price within 14 days after the date of theinstruction.

It is unfortunate that no specified time limit is given within which suitablenew rates or prices are to be established. It-can be argued that as it is theEngineer’s responsibility to measure and value the work fully and at regularintervals in accordance with Clause 60, he would have had to establishthe new rates during the same intervals to have fulfilled his obligationsto value the work correctly. He can, however, under Sub-Clauses 52.1and 52.2, use Provisional Rates to enable on-account payments to beincluded in Certificates issued under Sub-Clause 60.2.

When dealing with the evaluation of Variations, the Engineer wouldalso have to include the direct or indirect effect upon items contained ina preliminary bill, if one existed, and to ensure that such evaluations includethe financial effects on such items, not only in respect of any direct costinfluence but also of any time factor involved.

The Engineer can only order a Variation in so far as he has the authority

64

SELECTED CLAUSES

to do so, and if he acts outside that authority, the Employer may refuseto pay the Contractor, leaving it to him to seek satisfaction from theEngineer outside the Contract.

The Engineer may order a Variation to omit work but not to have itdone by the Employer or another Contractor. Also, he is not permittedto make any Variations during the Defects Liability Period, although heis entitled to require the Contractor to execute any remedial or maintenancework (generally excluding fair wear and tear) during this period, becauseuntil all work has been completed the Contractor is responsible for fulftimentof his obligations. Only when this has been done will the Engineer issuea Defects Liability Certificate.

The Engineer need not make a Variation because of a concession orwaiver he had made in respect of Specifications, standards, or any changedmethod of construction which the Contractor may have requested, but hecan do so if he wishes. This is an option which he alone can exercise andit would be in the form of an instruction on technical or Specification mattersbut at no cost to the Employer. If the Contractor varies any work withoutauthority, he is not entitled to be paid for what he does instead of whathe should have done according to the Drawings or Specifications. It isarguable whether he should be paid for the work he has done because itwill have been a Breach of Contract even if the work is better than thatoriginally required. The Engineer can accept any improved standard ofwork but need only certify the value of such work at the unit rates andprices in the Bills of Quantities.

Climatic conditions and forces of natureSome countries appear to experience more predictable weather conditions

than others. The seasons are more definable, as are the expected timingof change and duration of hot and cold seasons, dry and wet seasons, hoursof light and darkness and high and low wind periods, although recentexperience has shown that the unpredictable is occurring more frequently. :Other countries have an erratic pattern of weather conditions which seem ;to defy forecasting. Tendering for work of civil engineering in foreigncountries requires the ability to forecast risks associated with climatic

.’

conditions which in turn involve additional costs. ,

The Contractor is not obliged to visit the Site before submitting his Ckuse 11. I.

Tender, but is deemed to have done so, and to have evaluated for himselfthe sub-surface, hydrological and climatic conditions and to have madeall necessary allowances for them in his Tender Price. He is entitled to Clause 11.1be provided with whatever information concerning hydrological and sub- ’ Ysurface conditions has been ootamed on behall of the’ Employer. If the ‘ .Employer provtmta

- -.on climatic conclttrons tnis should also become._-_-.- -.

@ii6f the Tender. Therefore, if any such climatic data proves to be wrong,___a---thentractor might be justified in thinking he has a claim against the,ErnxeT: --“T’li&isks arising from climatic conditions are basically accepted by the .Sub-Clause 12.2

65

THE FIDIC DIGEST

j IIContractor and not by the Employer, but me Contractor can claim additional

ii costs arising from unforeseen physical conditions during the execution ofi the Works, but not for unforeseen climatic conditions.

Where weather conditions do not conform with expectations the effecton the progress of the Works can be disastrous and give rise to additional

1i

costs. Contractors working outside their country of origin and particularlythose working overseas for the first time often encounter extreme weather/ conditions which they have not anticipated. They have little or no experienceof their ferocity, intensity, and duration and in particular the influencethey consequently have on the Contract programme. Any one of thesefactors can upset the financial outcome of the Contract to the extent that

i the Contractor may have to re-examine the Conditions of Contract in much

igreater depth than he has ever done before.

IClause 44, although not money-making in its own right, can often prove \,

difficult to apply to obtain an extension to the Time for Completion on

fgrounds of bad weather, because it is necessary for the Contractor to provethat the weather conditions causing him the trouble are ‘exceptionallyadverse’. Considering that it can be difficult to agree about what are‘normal’ -weather conditions at any given moment, the task of establishing

)

what is ‘exceptionally adverse’ can be almost impossible. It should therefore Clause 44

be recognised that ‘weather’ is one of the by-products of ‘climaticconditions’ and, according to the actual conditions prevailing, can beclassified as a monsoon, typhoon, tornado, cyclone, blizzard, hurricane,

1storm, tempest etc, and the possible resulting mudslides, avalanches and

i the like are all the result of climatic conditions. Climatic conditions arereferred to in the Contract Documents rather than weather.

If the Contractor encounters any other problem caused by weather or Sub-Clause 20.4natural disasters he may seek to recover his additional costs by argumg-that it was one~of‘the Ethe costs should damage-

expected”5-.--_ . . -WI tions were expeZ2l~ Clause 27

to have been taken, it is difficult for the Contractor to present a strongargument based on a precise definition, which cannot be found in theContract, and which will withstand a counter argument. It will be questionedas to whether or not he should have taken some different physical actionor if he should have taken some unspecified financial action. The formeris a matter of technical opinion whereas the latter may be one of the needfor insurance.

Likewise, without a precise definition of the forces of nature in the Sub-Clause 20.4

Contract documents, it is only possible to assume what these may be. Ifaccepting that climatic conditions c.an be taken as the effect of the weather,could it not be assumed that these forces of nature are intended to referto earthquakes, volcanic eruptions, tidal waves, landslides and suchlike,each being the result of natural forces but not necessarily part of the climaticconditions? Difficulties can arise, of course, and the Parties and theEngineer will need to agree about cause and effect. For example, flooding

66

SELECTED CLAUSES

on Site can be caused in a number of ways: excessive rainfall due tounexpected climatic conditions; rivers overflowing due to normal rainfallor blockages upstream of the Site; man-made causes such as the collapseof a dam or bridge.

If the progress of the Works is suspended because of climatic conditions,the Contractor is not entitled to expect a notice from the Engineer instructinghim what to do and a promise of payment when the work has been carriedout. The Contractor has to do whatever is necessary to secure the worksat his own cost, although he should be granted an extension of the Timefor Completionmotionally adverse climatic conditions are causingthe problem. Securing extra payment for such a delay is a dil%%ent matterand requires action under a different Clause depending on the actualcircumstances.

There remains the particular situation where the Contractor is requiredto carry out certain Works arising from Variation Orders because of-instructions from the Esineer or actions of the Employer.JIf sui\__- -.--- -_has to be done during periods of adverse climatic conditions and outside \,his Programme of Works, he may be entitled to an adjustment of the existing \

1 Bill of Quantities rates or to new rates where necessary, and to additions-. i__I -___ ~̂ - . .-. ; ,--- . . . .._ _ ._.- __~. ._to the ContractPrice to cover additional time and overheads. :Possibly the~I--- ._-_._ C.I_.I... -33iXZdvice to a C!nia%r is~for him to make certain that if%y possibilityexists of him incurring additional and unrecoverable expense throughweather, climatic conditions or even the forces of nature, he should coverthis in his Tender Price.

Unless a strong case can be made by the Contractor that the programme-------;--’of operations has been delayed by reasons beyond?lisco;ii;ol, he has httle“-- _._.._.,chance of success with a c~~~~-Rea~~~s“he-rriag-p~~~~ could bethat many instructions or Variation Orders issued by the Engineer causeddisruption or a change to the timing of various operations. and the possibilityof suspension or other factors that would turn what was expected to besummer working into winter working.

Sub-Clause 44.7

Clauses 51 and52

FossilsThe discovery of fossils, coins, articles of value or antiquity, structures

etc, on the Site usually causes more of an inconvenience to the Contractorthan major physical obstructions. Items of antiquity can be a cause ofconcern for the Contractor be they as small as an ancient bracelet or aslarge as the remains of buildings or settlements of a bygone age orcivilisation, and the problems arising can be very significant in relation Clause 27.1

to the value of the object or structure- uncovered. In the event of such adiscovery, the Contractor must tell the Engineer and carry out hisinstructions for dealing with the situation. If the Contractor suffers delayor incurs extra cost by following the Engineer’s instructions, an Extensionof Time and an addition to the Contract Price will follow after dueconsultation by the Engineer with the Employer and the Contractor.

67

THE FIDIC DIGEST

The fossils Clause does not state that any extra work will be dealt withas a Variation Order, which would guarantee a profit margin to theContractor on the cost of such work, but only that he will recover the costsincurred which, according to the definition in Sub-Clause 1.1(g)(i), caninclude an allowance for overheads alone. This Clause only refers to anEngineer’s instruction for ‘dealing with the same’, and not to-other indirect Clause 27.1but often necessary operations which must go on if the Works are to becompleted on time. What happens to the rates in the Bills of Quantitieswhen they become unreasonable because of the effect of these particularcircumstances? Can they be changed in the same manner that would applyif the additional work was regarded as a Variation Order, or are the sideeffects of ‘dealing with the matter’ to be at the expense of the Contractor?Although there is no positive direction as to what the Contractor must doin the event of a fossil problem, it might be argued that, as it is the Engineer Clauses 51 and 52who must give instructions as to what he requires to be done, theconsequences of what was actually done following these instructions couldbe treated as being a Variation and the Contractor paid accordingly underClauses 5 1 and 52.

Of course all discoveries are not small fossils. Most problems arisingunder this Clause are related to the discovery of geological or archaeologicalmatters rather than just fossils, coins, or articles of value or antiquity.The immediate effects, as well as the long term ones, arising from suchcircumstances can be considerable changes to the cost of the Works aswell as to the time required to complete them. If the discovery is largeor of major importance, the influence on the Contractor’s anticipated costof the Works could be significant and could include some of the following

(a) dislocation to his Programme of Work(b) possibility of a suspension, which could be dealt with as a Suspension

Order under Clause 40(c) loss of production and inability to obtain maximum productivity

from labour plant and other resources if the work is not suspended(d) extension to the Time for Completion which, although mentioned

as such in Clause 27, will allow for the recovery of additionalcosts

(e) extra cost of management, staffing and certain other overheads andon-costs; most of these should be recovered

(f> increased cost of Bonds, Insurances, Contract funding and such like(g) processing a claim under these circumstances through Clause 53.

The Contractor should remember that any items discovered belong to the Clause 27Employer.

Suspension of the Works Clause 40 and

Under the third edition of the FIDIC Conditions the Engineer alone is Sub-Clause 69.4

entitled to suspend the progress of the Works as laid down in Clause 40.Clause 40 in the fourth edition is similar, but it also contains a Sub-Clause,

68

SELECTED CLAUSES

40.2, which requires the Engineer to consult the Employer and theContractor before determining any Extension of Time or any money tobe awarded to the Contractor. Clause 40 of the third edition required theContractor to give notice of his intention to claim time and money arisingfrom suspension, and the Engineer to settle the claim and determine theamount due. Under the fourth edition the Engineer takes the initiative todetermine any time and money due to the Contractor.

The fourth edition now provides, as set out in Sub-Clause 69.4, for theContractor to be entitled to suspend work or reduce the rate of work ifthe Employer is in default and does not pay him the amount due underany certificate within 28 days of the time allowed for the Employer tomake payment (Sub-Clause 60.10). This is a new concept that gives theContractor a means of putting pressure on the Employer to pay on time,and without having to resort to terminating his employment, as was thecase in the third edition.

In Sub-Clause 40.1 of the fourth edition, the Engineer must give Sub-Clause 40. Iinstructions to the Contractor to suspend the progress of the Works or ofany part for such time and in such a manner as he considers necessary.During Suspension of the Works the Contractor has to protect and securethe Works or any part affected to the extent required by the Engineer.If the suspension has arisen for any of the reasons defined in Sub-Clause40.1, the Contractor must bear the cost of suspending the Works or anypart and the possibility of losing construction time. The reasons are that

(a) the Suspension of the Works was already provided by the Contractor within the Contractor’s programme, in which case the costs ofsuch suspension were deemed to be in the Contract Price and thetime factor within the Time for Completion

(b) the Contractor was in default or in Breach of Contract(c) the suspension was required because of climatic conditions on Site.

This can cause complications because under Sub-Clause 20.4(h),the Employer accepts the risk of loss or damage caused by anyoperation of the forces of nature against which an experiencedContractor could not reasonably have been expected to takeprecautions. No doubt such an occurrence of damage caused by theforces of nature would be raised by either the Engineer or theContractor and action taken as laid down in Sub-Clause 20.3

(d) the suspension arose to ensure the proper execution of the Works.or for the safety of the Works or for any Part of the Works.

When the suspension is brought about by any conditions other than thosedefined in Sub-Clause 40.1, the Engineer consults the Employer and theContractor. and determines the Extension of Time due to the Contractorunder Clause 44 and the. amount to be added to the Contract Price. Sub-Clause 40.3 covers the procedures required to bring the suspension to anend should the Engineer fail to instruct the Contractor to resume workwithin 84 days of the date of suspension, in cases where the suspensionis not due to the causes set out in Sub-Clauses 40.1(a), (b), (c) or (d).

69

i

THE FIDIC DIGEST

An end to any suspension arising from the causes listed in Clause 40.1will be provided by the circumstances described and by the Engineer if

(a) under the Contract or programme there is a date specified for theresumption of work

(6) the Contractor rectifies any default as quickly as possible to save

I

time and money; otherwise he risks having hi% employmentterminated under Clause 63

(c) by nature if conditions were adverse(d) the Contractor in his own interests must resume work as soon as

possible to persuade the Engineer to lift the Suspension Order.

Apart from these circumstances, the Contractor has the right to givenotice to the Engineer requiring permission within 28 days of giving noticeto resume work. If no permission is given within these 28 days, the Clause 51Contractor has the right, if the suspension covers only a part of the Works,to deem such part to have been omitted under Clause 5 1, or if the suspensioncovers the whole of the Works, to treat it as an event of default by the Clause 69Employer and terminate his employment in accordance with Clause 69.

With regard to the Contractor’s right to suspend work or slow downthe rate of work in the event of late payment by the Employer, Sub-Clauses Sub-Clauses 69.469.4 and 69.5 cover the resumption of work or normal working. If the and 69.5Contractor is not paid the amount due under any certificate, subject toany authentic deductions by the Employer, within 28 days of the expiryof the time stated in Sub-Clause 60.10, the Contractor is entitled to suspendwork or reduce the rate of work 28 days after the giving of notice to theEmployer, with a copy to the Engineer. If the Contractor suffers delayor incurs cost because of this action, the Engineer has to consult theEmployer and the Contractor before determining any Extention of Timeor addition to the Contract Price and has to notify the Contractor andEmployer accordingly.

Clause 69.4 is clear as to the extent that the Contractor is entitled toan extension of time and costs resulting from the suspension of work orthe reduction of the rate of progress, but, as most Contractors are wellaware, the effect of such an interruption to their programme can only meanthe beginning of a far wider involvement of time and cost than just forthe period of interruption itself.

When the Contractor has been paid the money due because of thesuspension or reduced rate of working, with interest pursuant to Sub-Clause Sub-Clause 60. IO60.10, and, if notice of termination has not been given by the Contractorunder Sub-Clause 69.1, he must resume normal working as quickly aspossible.

The introduction in the fourth edition of this right of the Contractor tosuspend work or reduce the rate of working will no doubt cause difficultyto both the Contractor and the Employer, but more particularly to theEngineer who will have the unenviable task of translating the temporarystoppage or reduction in the rate of progress into acceptable values of timeand money.

70

SELECTED CLAUSES

Defective workOne of the most important certificates sought after by a Contractor must Sub-Clauses 67. I

be the Defects Liability Certificate because it is the Engineer’s confirmation and 62.1to the Employer that the Contractor has completed all the Works andremedied all the defects to the Engineer’s satisfaction. This certificate hasto be issued within 28 days after the expiry of the number of days statedas being the Defects Liability Period in the Appendix to the Tender, or,if the Works have been done in sections or as parts of the Permanent Works,is to be issued after the expiration of the Defects Liability Period of thelast Section or Part to be completed. If, however, the Engineer has requiredthe Contractor to undertake works of amendment, reconstruction,remedying of defects, shrinkages or other faults, he will only issue hisDefects Liability Certificate when these have been completed, especiallyif such completion was after the expiry of the Defects Liability Period.

So what then are defects and how are they to be understood within themeaning of the Conditions of Contract? Can defects exist during theconstruction of the Works or do they only come into being once the Workshave been substantially completed? It is common practice during theconstruction period to refer to any work which is not as it should be as‘defective work’. This may be correct as a matter of technical definition,but it is not correct as a proper contractual definition. Work which is notcorrectly executed becomes simply work not conforming to the Specificationduring the Construction Period.

The Contractor has to rectify sub-standard work if he wants to be paidfor it. It is not the Engineer’s duty to point it out to the Contractor or Sub-Clause 60.4to instruct him what to do. All the Engineer must do is ensure that anyCertificate of Payment, when issued, does not include payment for anywork until it has been done properly and to his satisfaction.

Defective work or defects only come into proper prominence aroundthe time the Contractor makes a request to the Engineer for a Taking-OverCertificate. This is when he considers that the Works are substantiallycompleted, even if there still remain certain works incomplete but whichcould be finished during the Defects Liability Period. Such an arrangementcan be accepted quite properly by the Engineer provided that the Contractorgives a written undertaking when he makes his request for a Taking-OverCertificate that he will complete such works during the Defects LiabilityPeriod.

Before the Engineer issues a Taking-Over Certificate he will carry outan inspection and if he is satisfied he will issue the certificate to the

I Employer with a copy to the Contractor within twenty one days of receivingI the notice from the Contractor. If there remains work to be done beforeI he can issue his Taking-Over Certificate he will specify to the ContractorI exactly wha‘t is required.’ Only after this. work has been done will a/! Certificate be issued. This has to be within a period of twenty one daysI after the satisfactory completion of the specified works.

Between the giving of notice to the Contractor of the outstanding works

71

THE FIDIC DIGEST

and the completion of these works, the Engineer can notify the Colttractorof any defects in the Works which he requires to be rectified before heissues the Taking-Over Certificate. Only after the completion of theoustanding works and the remedying of defects can the Engineer issuethe certificate.

During the Defects Liability Period, the Contractor is required to Sub-Clausecomplete any works listed and not approved as being outstanding on the 49.2fb)date stated in the Taking-Over Certificate and to execute all such worksof amendment, reconstruction, remedying of defects, shrinkages or otherfaults as the Engineer may instruct.

The responsibility of the costs incurred carrying out repairs and suchlike depends entirely on the Engineer’s opinion. If the defects arose throughhis own or the Employer’s fault, the Contractor will be paid for therectification. If it is the Contractor’s fault he will not be paid. In all of Sub-Clause 49.3this the Contractor may undertake any work which needs to be done evenif caused by fair wear and tear, and any work which has arisen throughcauses outside the Contractor’s control will be paid for by the Employerin accordance with Clause 52.

Defects are therefore only those. works which are found and notifiedas being unacceptable after the Engineer’s instructions to the Contractorabout work to be done before the issue of the Taking-Over Certificate,or work discovered after the issue of a Taking-Over Certificate. If thesame unacceptable work was in existence before such a certificate, it wassimply items of work remaining to be carried out properly by the Contractorto the satisfaction of the Engineer. Imperfections in the Works are notall caused by the Contractor. They could be the fault of the design of theWorks by the Engineer or the Employer’s designers or because of afaulty Specification. Again, such imperfections are not ‘defects’ whetherdiscovered before or after the Taking-Over Certificate, but they are requiredto be given an identity of their own more appropriate to the situation underwhich they occur. In such instances this would be the same as damagearising from a risk accepted by the Employer and for which the Contractoris entitled to recover the costs of rectification if ordered to do so.

7 2

5. Claims - new procedures

The mental gynmastics performed in attempts to convince the Engineerthat the Contractor has suffered extensive losses due to a variety ofcircumstances and events, the responsibility for which the Engineer isusually accused of, or due to circumstances arising for which no allowancewas made in the Tender Price, are well known to Engineers and Contractorsalike. The Contractor often ignores the fact that the problem was causedby him or was his responsibility under the Contract. More journalisticendeavours have been devoted to the subject of claims than any other,and most publications dealing with claims are read eagerly by Contractors.Claims will always arise because the Conditions make provision for theirproper presentation and also contain the procedure by which they will bedealt with by the Engineer. Considering the nature of the fourth edition,of the environment and of the human race, it is a rare event for a majorContract to be completed on time, within budget and without involvingany Variations, errors, faults or unpredicted forces of nature. All claimssubmitted by the Contractor should be cogent, logically argued, wellprepared and presented to receive proper consideration by the Engineer- he will become hostile and angry if he has to read through a lot ofrubbish, misquoted facts and what is obviously a blatant attempt to secureextra payment and time when they are not due.

Presentation of claims: Clause 53The new Clause 53 gives positive guidelines to achieving success in the Clause 53

preparation and presentation of claims. The most important is that theContractor gives proper and timely notice to the Engineer. It will be helpfulfor the Contractor to send copies of all claim documents submitted to theEngineer to the Engineer’s Representative as well. This should ensureimmediate observance of the facts related to the events on Site that giverise to the claim. The Clause requires copies to be sent to the Employerin every case. It is no good for the Contractor to submit his claims to thewrong person, to the wrong place or outside the permitted time limitsallowed. The Engineer’s address is given in Part II and the Engineer’sRepresentative’s address is generally that of his Site Office.

Any claims which the Contractor wishes to present must be made before Sub-Clausehe submits to the Engineer a Statement at Completion, which itself must

60.5

7 3

THE FIDIC DIGEST

be presented no later than 84 days after the issue of the Taking-Over

iCertificate. Because other claims can arise after the date of such a certificate, Sub-Clause 60.6these additional claims must be contained within the Final Statement. Failure

Ito include them releases the Employer from any liability to even considerthem. However, the Contractor can reduce the risk of failure with his claims

I if he makes a point of including all of them with his monthly Application:

3

for Payment even if at the time he is unable to place a detailed valuationon his claim.

The Engineer has a duty to the Employer to accept only those claimswhich are valid under the Conditions of Contract - there is no such thingas an ‘extra-contractual’ claim. Either the claim exists under the Coniditionsof-Contract, or it does not. Despite this, this type of claim has been andis still used by Contractors. It is used to bring to the attention of the Engineera request for extra payment when no suitable Clause to provide supportfor such a payment exists in the Conditions of Contract.

It might seem a waste of time and effort to submit such an unsupportablerequest, but it does serve a useful purpose. It introduces a ‘bargainingfactor’ for use in future negotiations concerning payment. Although it doesnot become a proper part of the Final Certificate of the Works, it mayget included as an ex grutia payment without the admission of liability.This ex gratiu payment can often avoid potential litigation or Arbitrationproceedings, the costs of which could be many times greater than anypayment otherwise made. It must always be remembered that an ex gratispayment made without the admission of liability provides no supportwhatsoever to the argument that the Party making it is admitting any guilt.

Contractors make claims in many ways. The following list indicates therange of items which often form the subject of claims. It is random andnot intended to cover all possibilities.

Action by EmployerActions of a Nominated Sub-ContractorAdverse weather conditionsApplication of rates in the Bills of QuantitiesAwaiting Drawings and instructionsDelay during the execution of the WorksDelay in being given approval by the Employer or EngineerDelay in paymentDelay in the Commencement of the WorksDifficulties with CustomsDifficulties with suppliersDisputes over quantitiesDisruption, impact of disruption and extended overheadsEmployer’s RisksErrors in setting, out arising from incorrect data from the EngineerExplorationFossils, antiquities etc.High number of Variation Orders

74

CLAIMS - NEW PROCEDURES

Interpretation of SpecificationLocal customsMethod of constructionNew items or rates in the Bills of QuantitiesPhysical conditionsPossession of and access to the SiteSpecial risksStrikesSubstitution of materialsSuspensionTestsUnder-utilisation of resourcesWaiversWork permits

The actual presentation of a claim can be made in a variety of waysand many Contractors prefer their own particular form. The followingsuggests some approaches.

When presenting a claim under Sub-Clause 53.3, it is advisable to Sub-Clause 53.3

summarise the subject matter being reviewed first to save the Engineerand the Employer having to read through a number of pages withoutappreciating the precise purpose of the claim until the end. It is better tostart with an introduction which gives a brief outline of the Contractor’ssubmission and to develop the claim in detail later.

Historical backgroundIt is helpful to give an early resumt, in as much detail as practicable,

of any historical data affecting the subject matter of the claim and to makeall necessary references to other documents to enable the reader toappreciate the background.

Contractual argumentThis is an important part of the presentation. It should state the particular

Clause or Clauses on which the claim is founded, and then the Contractorshould set out in detail a logical argument intended to bring the Engineeras close as possible to the Contractor’s understanding of the claim. It maybe possible to refer to similar known claims which have been successfulin either litigation or Arbitration in the country in which the Project isbeing constructed or according to the law of the country defined in theContract.

GeneralThere are two very important matters to which the Contractor mtist direct

his attention before any claim has a chance of succeeding. First, from thebeginning of the Contract he should ensure that the actual cost he incursin carrying out the work is recorded from the level of site activities upwardsin such detail as to permit each technical and administrative operation to

7 5

THE FIDIC DIGEST

be evaluated separately wherever possible. Second, he must ensure thata Site Diary is kept on a daily basis and that proper labour and plant recordsare maintained, and if possible, for them to be agreed with the Engineer’sRepresentatives as being statements of fact.

These two factors are important because the evaluation of all claims is Sub-Clause 53.2made from ‘contemporary records’ and not necessarily from.existing ratesin the Bills of Quantities. Exactly what is meant by contemporary recordsis a matter to be decided by the Engineer, but their origin could be related,among other things, to those actual costing records maintained by theContractor. The contemporary records relating to any claim start fromthe actual timing of the ‘event’ rather than to the giving of notice, thusindicating that the Contractor needs to keep proper and suitable cost recordsavailable from the beginning of the Contract to be able to identify itemswhich support the claims.

1 Supporting dataI Matters dealing with this particular part of the Contractor’s claim can; be recorded under various subject headings and presented as an appendixI if desirable. This data may include items, wherever possible, such as: Site

Irecords; photographs; Site Diaries; daily weather reports; charts and maps;

1instructions; quality control documents; programmes; Drawings (datedwhen received); correspondence; daily weather records; Tender analysis;analysis of appropriate unit rates; invoices; wage sheets; plant; fuel and

I labour records; minutes of meetings; visitors; and any other mattersII supporting the claim.

FinancialIt must be appreciated that there is no set format or standard presentation

of financial analysis which will be applicable to each and every claim.The financial presentation is made to suit the prevailing circumstances,but the structure of most financial analyses is basically a detailed comparisonbetween the costs anticipated by the Contractor when tendering comparedwith the costs incurred when actually doing the work, and being affectedby the circumstances which gave rise to the claim, and any consequentialcosts.

Application of Clause 53To understand more clearly the actual route to follow in giving notice

and presenting a claim, Chart 4 sets out the basic actions to be takenaccording to Clause 53 and the timing sequences involved. These actionsare as follows.

(a) Start contemporary records simultaneously with occurrence of Sub-Clause 53.2-‘event’.

(b) Give notice of intention to claim within 28 days of the event. Sub-Clause 53.1(c) Act on the Engineer’s instructions about the additional records. Sub-Clause 53.2

76


(d) Substantiate claim for a single claim within 28 days of giving notice Sub-Clause 53.3(possibly varied by agreement with the Engineer).

(e) For a continuing claim, submit detailed particulars on a regular basis Sub-Clause 53.3(intervals to be agreed with the Engineer).

(R For this continuing claim, send a Final Account within 28 days of Sub-Clause 53.3the end of effects resulting from the event.

(g) Include an Application for Payment of the claim in each application Sub-Clause 53.3for Certificate of Payment in addition to actions required under Sub-Clause 53.3.

(h) Take heed of Clauses 60.5, 60.6 and 60.9 which limit the time for Sub-Clauses 60.5,making claims. 60.6 and 60.9

Claims ClausesThere are certain Clauses which provide the Contractor with opportunities

for increasing the Contract Price and certain Clauses which entitle theEmployer to receive payment from the Contractor. These Clauses are listedin Tables 1 and 2, and indicate whether extra costs (C), extra time (T),and profit (P), are applicable.

Tab/e 1. Clauses of Contractor’s extra payments

Clause number Clause title Adjustment*

5.26.3 and 6.412.217.118.120.327.131.236.538.240.242.249.350.152.152.1 and 52.252.365.365.565.86970.170.27 1

Ambiguities (depending on circumstances)Engineering Drawings delayPhysical conditionsSetting out (errors based on incorrect data)Exploratory boreholesRepairs and Employer’s RisksFossils, antiquities, structuresOpportunities to other ContractorsTes tsUncovered workSuspensionEmployer’s failure to give possessionCost of remedying defectsSearch for defectsVariationsExtra payment for Variation OrdersFifteen per cent reduction or increaseDamage to Works by Special RisksIncreased costs arising from Special RisksTermination of ContractDefaults by EmployerIncrease or decrease of costChanges in legislationCurrency and Rates of Exchange

T+CT+CT + Cc+pc+pc+pT+Cc+pT + CCT+CT + C -c+pCc+pc+p*Cc+pCC and C+PT + Cby formulaLkCc+p

*T = time adjustment; C = cost adjustment; P = profit adjustment.

77

THE FIDIC DIGEST

Time limitationFor a claim to be accepted even for consideration, the correct observation Sub-Clause 60

has to be given to ‘time limits’ within which certain formalities have tobe met.

Statement of CompletionThe Contractor has to submit to the Engineer a Statement of Completion Sub-Clause 60.5

not later than 84 days after the issue of the Taking-Over Certificate forthe whole of the Works, including amounts or estimated amounts of allclaims.

Draft Final StatementThe Contractor has to submit to the Engineer a Draft Final Statement Sub-Clause 60.6

not later than 56 days after the issue of the Defects Liability Certificatecovering the value of work done and any further sums due.

Claims not includedThe Employer is not liable to the Contractor for any claims not included Sub-Clause 60.6

in the Final Statement or Completion Certificate. This is clearly set out Sub-Clause 60.5

as part of the Cessation of Employer’s Liability. Many claims will be settled Sub-Clause 60.9during the construction period before Taking Over occurs. Some will besettled during the Defects Liability Period, and some may be resolved during Sub-Clause 60.8

the 28 days between the submission of the Final Statement by the Contractorand the issuing of the Final Certificate by the Engineer.

Settlement of disputesThe Contractor can use Clause 67 at any time to precipitate the settlement Clause 67

of any unresolved claim. Equally, the Employer can dispute the Engineer’sdecision and also use Clause 67 to seek reduction of any claim determinedby the Engineer.

Table 2. Clauses for Employer’s recovery of money from Contractor

Clause number Clause title Notice*

25.330.3 and 30.437.439.246.147.149.459.56 3 . 364.165.8

Contractor’s failure on insuranceDamage to highways and bridgesRejection of materials and plantContractor’s failure to obey Engineer (improper work and materials)Rate of progressFailure to complete on time (liquidated damages)Failure of Contractor to do repairsFailure to prove payments to Sub-ContractorsDefault by the ContractorUrgent remedial workPayment on Termination

I

N NConsultE NE NENN NE NE NE NEN ’E N

*EN = Engineer’s notice; NN = no notice.

78


ConclusionThe Contractor must understand quite clearly under the fourth edition Clauses 53 and 60

Conditions of Contract that to have a chance of succeeding with any claimhe must follow precisely the procedures laid down in Clauses 53 and 60.

Claims and entitlementsDespite the emphasis placed on the application of Clause 53 in connection Clause 53

with claims, there exists a school of thought which considers this to beincorrect, that claims can only exist when the Contractor disagrees witha ‘determination’ made by the Engineer, and that where such determinationis accepted by the Contractor without argument, it is the end of the matterand that whatever has been determined by the Engineer does not needfurther processing through Clause 53. Thereafter it finds its natural wayinto the system of evaluation and future payment.

The background to this argument is that there is a positive differencebetween a claim and an entitlement. A claim is a matter which theContractor, not the Engineer, instigates, and is to be duly processed throughClause 53. An entitlement does not necessarily depend on the Contractortaking any specific action to instigate proceedings or the giving of notice,because there are many Clauses specifying a duty for the Engineer to havedue consultation with the Employer and the Contractor and then for himalone to determine any extra cost and time due to the Contractor. All ofthis is considered a straightforward matter of routine to be performed bythe Engineer, with the Contractor being advised only of the outcome.

It may be of interest that the same school of thought acknowledges thata claim situation can arise once the Engineer has made a determination,but which the Contractor finds unsatisfactory. In such a case the Contractoris faced with two options: to recognise that a determination has been givenby the Engineer, and then to make a claim under Clause 53 for thedifference between the amount as determined and such an amount as theContractor considers to be reasonable and proper; or to dispute the amountdetermined by the Engineer and to process it through Clause 67 and refer Clause 67it to Arbitration.

Readers can only form their own opinions as to which view is correctuntil the fourth edition is in operation and such situations are tested inthe many legal systems. The Authors strongly recommend that wheneverthe Contractor is seeking means to increase the Contract Price under anyparticular Clause, then even where the Engineer is obliged to make adetermination, that the Contractor applies the full requirements of Clause53 and gives all proper notices and record data as required, both underthis. Clause and other. Clauses with the purpose of receiving additionalpayment and Extensions of Time, and to be paid .accordingly.

7 9

6. Charts of selected Clauses

Things would be much more difficult if Contract documents relied solelyon the written word and there were no Drawings, maps, programmes orgraphics to illustrate exactly what is required. Considerable attention isalways given to the written words which form the ‘Contract documents,and in particular, the actual Conditions of Contract. These Conditions canvary in presentation depending on who was responsible for the actualdrafting, preparation and assembly. If this was done by a legally-mindedperson, the Conditions will comprise a document of considerable detailand accuracy. If it was prepared by someone more technically-minded,it can be a document full of detail but often miss important definitionsas to who is responsible, who is to pay for what is required, and when.

The new fourth edition of FIDIC clearly denotes the obligations andresponsibilities of those involved with the Contract and sets out thefunctions, purpose and operation of each Clause in detail. However, itis sometimes difficult for the reader to understand and remember the exactcontent of a Clause and what it is intended to convey to the Parties,particularly with so many options of timing and differences of wording.The following Charts are intended to clarify the various situations coveredby a Clause.

Clauses are codified as follows

(a) nodes are commencement and termination of times allowed forcertain requirements to be observed

(b) serrated lines represent the time allowance between the nodes(c) straight lines act as connections between one operation and another.

With this basic information it is possible for every Clause that presentsa difficulty of immediate understanding to become clear as to its purpose,the particular requirements to be observed therein and exactly how eachoperation and function contained are related to each other and how theycan be processed. Proficiency in preparing such charts will come withpractice. Example Clauses to show the application of the charts are

(a) Clauses 41, 42, 43 and 48. Commencement, Extension of Timeand Completion (chart 1)

(b) Clause 12. Adverse Physical Conditions (chart 2)

Text continues on p. 83

80

Clause41 1Date of receipt ofnotice by Contractor toproceed with the Workswith due expeditionand without delav:

Completion of Sections orPart of the Works a s

C l a u s e 4 1 . 1 ’1I

per Appendix End of extended Time forCompletion with subsequent

Contractor given possessronof parts of the Site andnecessary access: Sub-Clause 42.1Contractor bears cost ofspecial or temporarywayleaves and ofadditional facilities:Sub-Clause 42.3

Delay in handover ofSite or portions oraccess: Sub-Clause 42.2

4 Engrneer. after dueconsullalion with Employer

1 andContractor, determinesI Extension of Time andI costs incurred byI Contractor

Events entitling Contractorto an Extension of Trme forCompletion of Works orSectionsor Pans:Sub-Clause 44 1

Within 28 days of eventarising Contractor tonokfy Engineer, copy toEmployer, of occurrenceof event givrng rise loExtension of Time. Sub-Clause 44.2

II

issueoiTaking-OverCertif icates of whole or

I Sections or Parts of the Work.II Cert i f icate issued to

I Contractor with copy to

I Employer: Clause 45

IIIIIIII

Conlractor togive detarled particulars I

of any Extension of Time required I

within 28 days or other t ime I

agreed by Engineer of notifying I

Engineer of event: Sub-Clause44.2II

Engineer, after due I

consultalion with Employer fIf event has a contnurng ef fect and Contractor determines land not practical to submit details amount of Extension of Timein 28 days then Contractor and notifies Contractor,

f

must give details at intervals not tI

copy to Employer: Clause 45 tmore than 25 days and within I I28 days of end of event- I ISub-Clause 44.3 I I

------- - --- ---- -----_-_------------_~_ ---I------------l

Chart 7. Clauses 4 7, 42, 43 arid 44: C’oilr:f?u,)cen?eni, Extension of Time and Completion

i!

THE FIDIC DIGEST

Commencement o f Works byContractor : Sub-Clause41.2

Complet ion o f Works by Cont rac tor ; issue o f Takmg-OverCertificates by Engineer : C lause 48

Contractor encounters phys ica lobs t ruc t ions or phys ica lcond i t i ons : C lause 12 .2

l ssueo f De fec t s L i ab i l i t yCertificate: Clause 62.1

Cont rac tor g ives not ice to Eng ineerwi th copy to Employer

C lause 49 .1

Engineer accep t s s i t ua t i on , consu l t s with Employer

Eng ineer may i ssue ins t ruc t ionsto Cont rac tor and in f luence onwork is taken in to accountin the determination of extracosts and time

and Cont rac tor . Eng ineer determines Extens ion o f T imeunder Clause 44 and adds amount of costs Incurredby Contractor to Contract Pr ice

Engineer g ives noins t ruc t ion to Cont rac tor

Cont ractor takes proper and reasonablemeasures acceptab le to Eng ineer

Chart 2. Sub-Clause 12.2: Adverse Physical Conditions

Engineer ins t ruc ts Cont rac tor tosuspend the progress o f the Works:

84 days limiting period of suspension except whensusoension caused bv events listed in Sub-Clause 40.1

> Cont rac to r fo l lows ins t ruc t ion and T paragraphs (a) , (b). (d) and(d)

proper ly pro tec ts and secures theWorks dur ing suspens ion :Sub-Clause 40.1

”

If permlssion to resume work not given, the Contractorgives notice to Engineer to startwork on whole orpan of Works within 28 days of receipt of notlce

I A If cause of suspension is not iz/7-J listed in Sub-dlause 40.1 then

Eng ineer consu l ts Employer andContractor and determinesExtension of Time and additionto Contract Price and notifiesContractor wi th copy to Employer :Sub-Clause 40.2

f’\ If the Clauses are listed in paragraphsb (a), (b). (c )and (d) in Sub-Clause 40.1

Cont rac tor bears cos t and acceptst ime overrunRe c l ima t i c cond i t i ons , pa ragraph(c), etc., some possible influenceof Clause 44 and of Clause 20, etc.,need cons idera t ion .

Chart 3. Clause 40: Suspension

28 days

7 Instruction not given. If for part ofWorks Contractor may choose oro therwrse to t rea t suspens ion o fpart as omission under Clause 51and gives further notice toEng ineer : Sub-Clause40.3

Instruction not given. If for whole of WorksCont ractor may t reat suspens ions as an eventof defau l t by the Employer and terminatehts employment in accordance with Sub-Clause69.1 , and Sub-Clauses 69.2 and 69.3 app ly

i Engineer g ives ins t ruc t ion to res tar t work

82

CHARTS

Continued from p. 80(c) Clause 40. Suspension (chart 3)(d) Clause 53. Procedure for Claims (chart 4)(e) Clause 67. Settlement of Disputes (chart 5)

9 Contemporary record ing star ts :Sub-Clause 53.2

Event giving rise to claim: Sub-Clause 53.1

End of effects of event

Sub-Clause 53.1

Contractor gtves notice o fintention to claim

Eng ineer to inspec tcontemporary records -may requi re addi t ionalrecords

Withrn 28 days

In case of ongoing eventCont rac tor submi ts f ina laccount to Eng ineer :Sub-Clause 53.5 .Payment under Sub-Clause

Wi thrn 28 days o r 53.3

Notes

Sub-Clause 53.3

Or . i f ongoing event , Cont ractor submi ts thtsas an rntenm account plus further interimaccounts a t in terva ls reasonab ly requ i redby Engineer .

ce r t i f i ca tes a f te r due consu l ta t i on

1s ~~~~~and

accumula ted amount and anyfurther partrculars

1. Contemporary records form basis of payments-no records.no payment : Sub-Clause 53.4

2. Engineer determines payment on ly on parttculars as submi t ted :Sub-Clause 53.5

3. Clatms must conform wtth ttme limtts referred to In Clause 60

Chart 4: Clause 53: Procedure for Claims

83

._ .z, . ..-.. ,. ._.._ -... .__ _-. - ..w. I-. .- -. ^_._,,. .‘Z’ r. I‘

Drspute dur ing ora f te r comple t ion o fWorks or general :Sub-Clause 67.1

Ei ther Pat ty refersto Engineer inwriting for adec is ion underC lause 67 , copytoother Par ty

Note

L

f

Received by Engineer

On or before 64thday after receipt ofd ispute, re fer red tothe Engineer by oneof the Parties

No decrsionf rom Engineer

II decrsion as given and accep tedis not complied with by either Partythen other Party can refer disputetoarb i t ra t ion under Sub-Clause67.4 and Sub-Clause 67.3Sub-Clauses 67.1 and 67.2 arenot applicable

7170 !2

If there IS no notice of intention to go to 0arbi t ra t ion f rom e i ther Par ty , then

O n or before 7 0 (a) Engineer’s decision is final;(b) ifno decision by Engineer, then dispute K

is abandoned

by Engineeror after expiry of64th day af terreceipt of dispute

Intention by erther Partytoo ive not ice underSub-Clause 67.1 torefer dispute toarb i t ra t ion, copy toEngineer

Amicab le se t t l emen t :Srrb-Clause 67.2

If no amicable settlement, thenarb i t ra t ion may be commencedunder ICC rules before or afterComplet ion of Works

Referred to ICC by c la imant

On or after 56 days or asagreed by the Par t ies

Chart 5: Clause 67: Settlement of Disputes (Arbitration or amicable settlement)

.I

7. Arbitration and disputes

During the course of a Contract many differences of opinion can occurbetween all the Parties, probably of a technical nature during theconstruction period, but towards completion they are more likely to beabout the value being placed on the work performed. This is because itis only towards the end of the construction period that it is possible tohave a reasonably clear indication of the probable value of the FinalCertificate, and it is then when differences of a financial nature take onmore importance.

Because differences of a technical and financial nature can and do occur, Clause 67

there exists within the Contract the facility for referring differences whichcannot be resolved to an independent authority who will decide objectively,on the basis of the evidence and arguments submitted, who is right andwho is wrong, and how any award will be implemented. Arbitration is,and will remain so for some time, one way of settling differences in a Sub-Clause 67.3

reasonably peaceful and civilised manner. Although the rules of Arbitrationmay differ in various parts of the world, those selected by FIDIC are thoseof the International Chamber of Commerce (ICC) in Paris, France, whoserules apply under this Contract. Where an alternative set of rules ispreferred by the Employer, provision is made in Part II. Although theultimate Settlement of Disputes under this particular form of Contract isonly by Arbitration there are other recognised means whereby disputescan be resolved. These are conciliation, mediation, litigation andcompromise.

ConciliationThe means whereby a referee is appointed who will listen to the

complaints and reasons of rejection made by those in dispute and seekto persuade the Parties to reach an acceptable solution without resortingto Arbitration.

MediationWhere a third Party listens to the respective arguments of those involved

and forms his own opinion as to what is the correct solution, and thenseeks to persuade both Parties to accept his views and settle their dispute.

85

THE FIDIC DIGEST

LitigationWhen those involved seek a settlement in a Court of Law because the

matter in dispute is more orientated towards requiring a legal ruling onthe wording of the Contract rather than on matters of technical differences.

However, when a Contract contains a Clause setting out that differencesand disputes are to be settled by Arbitration, attempts to enter’ into litigationbefore applying this Clause may be unfruitful and prejudice the Arbitration.Indeed, litigation may be resisted and the right to Arbitration demandedby either Party to the dispute.

CompromiseNowadays, when the Employers are large conglomerates and public

bodies, it does happen that, rightly or wrongly, they exert market pressureson the Contractor and the Engineer to reach a compromise settlement tothe dispute in question. Although injustices can happen, a quid pro quoarrangement can often become acceptable when the comparative costs ofreaching a settlement by this means are more favourable.

ArbitrationWith particular reference to the fourth edition of the FIDIC Conditions

of Contract, the differences or disputes once identified need not wait untilthe Works have been completed, but can be referred to Arbitration at anytime. It must be recognised by both Parties, however, that their Clause 67responsibilities and obligations under the terms of the Contract are in noway altered. The right of the Parties to refer disputes to Arbitration isalready predetermined, by the Conditions of Contract, to be under the ICCRules of Conciliation and Arbitration. However, Part II Clause 67 mayallow a different Settlement of Dispute procedure, other than that of theICC, and that Clause 67 is varied accordingly. It is interesting that thefourth edition of the Conditions of Contract refers to the need for the Partiesto seek an ‘amicable settlement’ as a prerequisite to the actualcommencement of Arbitration - this was not required in the third edition.

The wording of Sub-Clause 67.2, in particular the second sentence, Sub-Clause 67.2‘Provided that, unless the parties otherwise’ agree Arbitration may becommenced . . . ‘ , suggests that the Parties have at least three options topursue. First, they may agree to waive the requirements to attempt to reachan amicable settlement in which case Arbitration proceedings couldcommence as soon as the claimant Party gives notice to the other that thedispute is to be referred to Arbitration. Secondly, the period of 56 daysfor reaching an amicable settlement might be reduced, and third, the periodmight be increased, either way, to suit the prevailing circumstances.

According to the present ICC Rules, the Settlement of Disputes willbe made by one or more Arbitrators appointed in accordance with suchrules, and who will have full powers to open up and revise any decision,

86

ARBITRATION AND DISPUTES

opinior,, direction or valuation of the Engineer. Neither party is limitedin any way to submitting evidence or arguments to the Arbitrator alreadyput before the Engineer for the purpose of obtaining his decision in thefirst place under Clause 67. Although the ICC will be acting under its Sub-Clause 5. I(a)own particular rules and procedures, it is important to recognise that unlessthese rules conform to the Statutes or legislation operating within the lawstated in Sub-Clause 5.1(a), the Laws of the country will always takeprecedence. This is understandable because if an Arbitration award is tohave the legal support of the country in which the Works are beingconstructed, then unless these Arbitration procedures conform to these lawsand requirements, an award made might not be enforceable in that country.The ICC -Guide to Arbitration4 covers the Applicable Law under Item 4.8in the 1983 issue as follows.

(a) The rules applicable to the proceedings are distinct from the lawapplicable to the merits of the case.

(b) To ensure that the award will be enforceable in law, the mandatoryrules of national law applicable to International Arbitrations in thecountry where the Arbitration takes place must be observed evenif other rules of procedure are chosen by the Parties or by theArbitrator.

(c) The Parties are free to choose the rules of the proceedings. Thesemay consist of the national procedural law where the Arbitrationtakes place, a procedural law other than that of the country wherethe Arbitration takes place, or no national law at all, but merelythe rules that the Parties agree to. If the Parties fail to specify theapplicable rules, the Arbitrator will decide them, remembering thatthey must be compatible with the ICC Rules.

(d) When the Arbitrator determines the procedural rules himself, hemay either derive them from a national law or draw up his own.

(e) The choice of this law (the law applicable to the substance of thedispute) is also left entirely to the Parties. In the absence of anagreement between the Parties on the point, the Arbitrator decideswhich law is applicable.

(f, When making the choice, the Arbitrator takes into account the mostappropriate law in view of the circumstances of the dispute.

(g) As required by the ICC Rules, the Arbitrator must always rememberthe provisions of the Contract and relevant trade usages.

Referral of a dispute to Arbitration is a major decision because it willentail considerable costs in time and money which might never berecovered. It is because of this that the ICC is willing to act as a Conciliatorif requred to do so by the Parties in dispute, and to resolve the disputebefore embarking on full Arbitration -proceedings. Before Arbitration, bothParties will have obtained legal guidance about the laws applicable to thesubject in the country concerned. These laws might well affect the selectionof the nationality of the Arbitrators, the venue where such proceedingsare to take place, and whether the award made by the Arbitrator can be

87

THE FIDIC DIGEST

challenged and overturned or if such an award is considered to besacrosanct.

When both Parties reach the stage of entering into Arbitration, they havegenerally consulted eminent legal advisors who have no doubt assured themof victory. Nevertheless, any Party who is assured of a positive result inadvance of the award should apply commercial expertise-and judgementto evaluate the position if he should lose.

Before a dispute can be referred to Arbitration there are two importantquestions. First, does the Contract contain a Clause requiring disputes tobe referred to Arbitration? This is a requirement of the ICC procedureand it needs to be confirmed that Clause 67 has not been deleted fromthe Contract Documents. Second, has the dispute been referred to theEngineer for a decision under Clause 67?

The procedure, once it is satisfied that Arbitration can take place, isas given in Chart 5. This traces the obligations and timing required to beobserved, and their relationship with the requirements of the ICC Rules.

Despite his previous involvement as a decision-maker, the Engineer can, Sub-Clause 67.3under Sub-Clause 67.3, be called as a witness, or to give evidence to theArbitrator(s). During the interim period when Arbitration is continuing,the Engineer is not precluded from conducting a dialogue with theContractor or the Employer to seek a solution to the dispute, but he wouldhave no authority to actually settle it.

The ICC Rules and Procedures3 are available from the headquarters inParis and probably offer the most economical and expeditious manner bywhich disputes can be resolved, along with a high degree of confidentiality,because the actions are not held in open court. The ICC can recommendon request experienced and available Arbitrators on most subjects throughits National Committee.

There is a danger to a Contractor if he accepts an Arbitration Clausewhich already names the Arbitrator as an official of the same governmentor organisation as the Employer. This is not uncommon in certain countrieswhere even a military governor can find a place in the system. A similardanger exists where the dictates of the ruling religion take precedence overthe Laws of the Land, or where a particular calendar date can sometimesbe of such significance and importance as to override the written wordof the Contract.

To succeed in any Arbitration, it is essential for proper and detailedrecords, photographs, Site Diaries, correspondence, minutes, Drawings,maps, and such like to be made available to the Arbitrator. It is also helpfulto remember that most Arbitrators for civil engineering Contracts havea good basic knowledge of the subject, but can often understand an argumentmore clearly if they are given charts and diagrams to support the writtenword.. ._

88

Conclusions

The Digest forms an analysis of selected Clauses in the new fourth editionof the FIDIC Conditions of contract for works of civil engineeringconstruction and explains the more important differences in this editionand the previous one. Relationships between the Parties to the Contractand others concerned with the Project have also been examined and various,hopefully useful, schedules and charts provided. Where the relationshipsand responsibilities are not observed, problems will arise and inevitablyget out of proportion and become extremely difficult to resolve withoutone Party or other involving themselves in unnecessary additionalexpenditure. The very nature and complexity of undertaking works of civilengineering have proved that problems and claims will arise during theperiod of construction but provided these are dealt with as appropriateto the circumstances, as and when they occur, then a satisfactory conclusioncan often be reached.

Users of the FIDIC Conditions of contract will recognise that frequencyof use provides the best way of understanding the document. The Authorsfeel it incumbent upon themselves to remind such users that the mostimportant feature of international construction is always to recognise thesupremacy of the law of the country in which the Project is beingconstructed.

The new fourth edition has introduced many improvements of clarificationand simplication to those Clauses which previously could have beenmisunderstood or confusing. It now makes the Employer more aware andinvolved than before as to what takes place during the construction periodand affords considerable assistance to the Contractor on matters of interimpayments, claims, and the Settlement of Disputes.

Comments from the readers of the Digest on any matters concerningthe application of the Conditions as well as to any changes they considerdesirable are welcome.

89

THE FIDIC DIGEST

References

1 . SAWYER J.G. and GILLO= C.A. The FIDIC Conditions. Digest of contractualrelationships and responsibilities. Thomas Telford, London, 1985, 2nd edn.[Covers 3rd edn FIDIC conditions.]

2. FIDZC tendering procedure, FIDIC, Lausanne.3. INTERNATIONAL CHAMBER OF COMMERCE. Rules of conciliation and

arbitration. ICC, 1988.4. INTERNATIONAL CHAMBER OF COMMERCE. Guide to arbitration. ICC, 1983,

publication 382.

Bibliography

FRICK-MEIJER S.-E. FIDIC conditions of contract for works of civil engineeringconstruction, fourth edition. Proc. Znstn Civ. Engrs, Part 1, 1988, 84, Aug.,82 l-836 [seminar report].

MADGE P. Civil engineering insurance and bonding. Thomas Telford, London,1987. (The book is not based on FIDIC conditions but is closely allied to them.]

FIDIC. Guide to the use of FIDIC conditions of contract for works of civilengineering construction. FIDIC, Lausanne, 1989, 4th edn.

FIDIC. Insurance of large civil engineering projects. FIDIC, Lausanne.FIDIC. Construction, insurance and law. FIDIC, Lausanne, discussion paper.FIDIC. Conditions of contract for electrical and mechanical works (the Yellow

Book). FIDIC, Lausanne, 3rd edn.FIDIC. Guide to the use of FKDlC conditions for electrical and mechanical works.

FIDIC. Lausanne.

90

Appendix I. Contractor’s Site Diary- typical information recorded daily

The type of information that should be recorded by the Contractor in theSite Diary each day is set out in this appendix. The information recordedin the diaries of other Parties to the Contract will no doubt be very similar.The recorded data will be essential for establishing claims and counter-claims and facts concerning the Works.

Information requiredExternal1. Weather experienced during the past 24 hours, compared with forecast, Sub-Clauses 20.4,

- plus a comment on any unusual unforeseen weather. 40.1, 44.1

2. Note any news of external affairs likely to affect project e.g. strikes, Sub-Clauses 20.3,hostilities, riots, acts of God such as earthquakes, hurricanes, and major 44.1accidents or catastrophies, unusual weather etc., whether in the countryof the project or elsewhere.

Works1. Workforce - numbers of various categories of staff and labour on Clause 35. I

Site for main Contractor, Sub-Contractors and others.2. List of major plant and equipment on Site - company owned, hired Clause 35.7and Sub-Contractor owned.3. Work being undertaken that day with special reference to major poursof concrete, heavy lifts, special installations etc.4. Unexpected physical conditions encountered and action taken under Sub-Clause 72.2Clause 12.2.5. Notes on any dangerous occurrences whether or not any damage or Sub-Clauses 20.7,injury resulted, and on any accidents, fires, thefts, injuries, sickness or 27.7, 24.7

damage to property.6. Note any correspondence with insurers and any claims made. Sub-Clause 27.1

7 . Notes on receipt, and any delays experienced, of the following, includingnotes on news of impending delays

(a) possession of Site and access thereto Sub-Clauses 42.7,4 2 . 2

(b) materials, temporary or permanent or consumable Sub-Clause 44.7(c) plant or equipment, temporary or permanent or on hire Sub-Clause 44.7

91

THE FlDlC DIGEST

(d) Drawings(e instructions(f) information such as reports, test results etc.

8. Notes on consultations with Employer and Engineer.9. Notes on any labour unrest, strikes, rebellion, lockouts, with own andSub-Contractors’Buppliers’ workforce and with Client’s”employees.10. Discussions with union officials, shop stewards and other official orunofficial spokesmen for the labour force.11. Discovery of fossils, coins, or articles of value or antiquity.

Engineer1. Notes of any discussions with any Engineers’ Representatives whetherresident or visiting.2. Reference to receipt or despatch of key letters or notices to Engineeror his Representatives.3 . Receipt of instructions from the Engineer or his Representatives whetherverbal or in writing.4. Despatch of written confirmation of verbal instructions.5. Receipt of Drawings etc. from the Engineer.

6. Measurement

(a) requests by Engineer to attend for measurement(b) failure of any side to attend.

7. Inspection

(a) requests to attend inspection of Works, operations in workshopsoff site and of testing on and off site

(b) failure of any Party to attend.

8. Any information about invoices, certificates and payment.

9. Notes on all actions taken as required by Clause 53.

Contractor’s Head Office1. Discussions with any officials or visitors from Head Office.2. Receipt and despatch of key letters etc.3 . Receipt of any important documents from Head Office by post, courier,telex/fax or by hand.4. Information about invoices, certificates and payment.

Sub-Contractors and Suppliers - nominated or domestic

Sub-Clauses 6.3,6.4

Section 3Sub-Clause 44.1

Clause 27.1, Sub-Clause 44.1

Sub-Clauses 2.3,2.5, 51.1, 51.2

Sub-Clause 2.5Sub-Clauses 6.2,6.4

Clause 56.1

Clauses 37, 38,39

Sub-Clause 48.1,Clauses 60, 62.1

Clause 53

Sub-Clauses 3.1,1. Discussions with any Sub-Contractors, Suppliers or services 59.4, 59.5representatives whether resident or not.2. Receipt and despatch of key letters etc.3. Issue of verbal or written instructions.4. Confirmation of verbal instructions.

9 2

APPENDIX 1

5. Measurement

(a) requests to attend for measurement by either side(6) failure to attend.

Clause 56.1

6. Inspection

(a) requests to attend for inspection of work Clauses 37, 38,(b) failure to attend. 39

7. Information about invoices, certificates and payment. Sub-Clause 59.5

Government officials, Employer’s Representatives andbankers etc.1. Notes of discussions with above.2. Receipt and despatch of key letters etc.

Visitors to Site including press, TV and radio Sub-Clause 19.1

1. Notes of all such visitors to Site recording names, purpose of visit andsummary of activity undertaken.2. Notes on discussions with visitors.

General1. A special marking code should be adopted to identify any event ordiscussion which might give rise to a claim for Extension of Time and/orfor additional costs.2. If any shorthand form of notation is used then a legend explaining themeaning of any symbols must be displayed prominently in the front ofthe diary.3. Wherever possible references should be added to identify letters,documents, Drawings, plant locations, Site locations etc.4. In addition to any legends or reference codes used in the Diary it wouldbe valuable to have a Site plan displayed as part of each volume of theSite Diary.5. VERY IMPORTANT: Each page should be copied as completed andsent to Head Office in regular and frequent consignments and the originalDiary must be kept in a fire-proof and vermin-proof safe under lock andkey.6. All Diaries must be kept for at least the period stated in the relevantAct of Limitation and possibly for at least fifteen years after completionof the Contract.

9 3

Index

References to Clause numbers in the FIDIC Conditions (appendix 2) are initalic type. An asterisk after the Clause number signifies that the Clause ismentioned in Part 2 of the FIDIC Conditions. References to page numbersin the main text of the Digest are in roman type.

Accesscontractor to satisfy himself, 11. I,* 55, 65to data, 11.2to site, 42.1, 56, 91to works, Engineer, 37.1, 92, 93

Accident or injury to workmeninsurance against, 24.2liability for, 24. I, 91

Accident prevention officer, 34,* 43Accidents, reporting of, 35,* 91Additional Clauses, 73*Address, change of, 68.3Adequacy of Insurance, 25.2, 5, 42Adjustment of Contract Price if Variations exceed 15 per cent of Tender

sum, 52.3, 62, 67, 68Adverse physical obstructions or conditions, 12.2,* 44, 65, 91Agreement, 9. IAlcoholic liquor, 34,* 43Alterations, additions and omissions, 51, 43, 62, 67, 68, 70; 52, 43, 62,

67, 68Ambiguities in contract documents, 5.2, 41, 54Amicable settlement of disputes, 67.2, 44, 78, 79, 85, 86, 88Appointment of assistants to Engineer, 2.4, 41Approval

by the Engineer, 7.3of materials not implied, 54.8, 43only by Defects Liability Certificate, 61. I, 71

Arbitration, 67.3,* 78, 79, 85, 86, 88Arms and ammunition, 34,* 43Assignment of Contract, 3.1, 92Avoidance of damage to roads, 30.1, 43

Bill of Quantities - estimated only, 55. IBonus for Completion, 47.3,* 43

169

THE FlDlC DIGEST

Boreholes and exploratory excavation, 18. I*Breakdown of lump sum items, 57.2Burial of the dead, 34,* 43

Care of works, 20.1, 5, 61, 91Cash flow estimate to be submitted, Z4.3,* 42, 56Certificate

final, 60.8, 78, 79, 92taking over, 48.1, 41, 61, 92

Certificatesand payment, monthly statements, 60.1, 43, 79, 92correction of, 60. I, 43, 79, 92

Certification of completion of section or parts, 48.2, 41, 61Certification of completion of works, 48.1, 41, 6 1, 92Cessation of employer’s liability, 60.9, 77, 78, 79, 92Change of address, notice of, 68.3Changes in cost and legislation, 70*Claims

contemporary records, 53.2, 43, 73, 76, 77, 79, 92notice of, 53.1, 43, 73, 76, 77, 79, 92payment of, 53.5, 43, 73, 77, 79, 92substantiation of, 53.3, 43, 73, 75, 77, 79, 92under performance security, IO. 3, 42

Clearance of Site on Completion, 33. ICommencement of Works, 41.1, 56. 59Completion of Works

Extension of Time for, 44. I, 43, 60. 66, 67, 9 1, 92time for, 43.Z, 57, 60

Completion, Statement at, 60.5, 43, 74, 77, 78, 79, 92Compliance with insurance policy conditions, 25.4, 5, 42Compliance with statutes and regulations, 26.1Conditions of labour and rates of wages, 34,* 43Contemporary records for claims, 53.2, 43, 73, 77, 79, 92Contract agreement, 9. Z *Contractor not relieved of duties or responsibilities, 14.4, 56Contractor to keep Site clear, 32. ZContractor to search, 50.1Contractor’s employees, 16. I, 50

engineer at liberty to object, 16.2Contractor’s entitlement to suspend work for employer’s default, 69.4, 68,

70Contractor’s equipment

conditions of hire, 54.5, 43Employer not liable for damage, 54.2Insurance of, 2Z.Z,* 5, 42, 66, 91reference in Sub-Contracts, 54.7, 43Temporary Works and Materials; exclusive use for the Works, 54. I

transport of, 30.2Contractor’s failure to carry out instructions, 49.4Contractor’s failure to insure, remedy, 25.3, 5Contractor’s general responsibilities, 8. I

170

INDEX

Contractor’s Representative, language ability of, 15.2*Contractor’s superintendence, 15. ICorrection of Certificates, 60.4, 71, 79, 92cost

of remedying Defects, 49.3, 72of samples, 36.2of tests, 36.2of tests not provided for, 36.4

Costs for the purpose of Clause 63, 54.6, 43Covering up work, examination before, 38. I, 92, 93Cross liabilities, 23.3, 5Currencies

of payment for provisional sums, 72.3rate of exchange, 72.1

Currencyof account and rates of exchange, 60,* 79, 92proportions, 72.2*restrictions, 71.1

Custody and supply of drawings and documents, 6.1, 41, 55Customs clearance. 54.3

Damageto persons and property, 22. I, 5to roads, avoidance of, 30. I, 43to works, special risks, 65.3

Damages, liquidated, 47. IData, access to, ZZ.2*Dates for inspection and testing, 37.3, 92, 93Daywork, 52.4, 62, 67, 68Decrease or increase of costs, 70.1Default of Contractor in compliance with instructions on improper work,

39.2, 92, 93Default

of Contractor, remedies for, 63.2of Employer, 69.Z,* 43, 44, 70

Defective materials and work, 39. I, 92, 93Defects

Contractor to search for, if required, 50.1cost of remedying, 49.3, 72remedying of, 49.2, 72

Defects Liability Certificate, 62. I, 6 1, 7 1, 92Defects Liability Period, 49.1, 61Definitions, 1.1, 3, 4, 40, 54, 55, 56Delay, liquidated damages for, 47.1Delays and cost of delay of drawings, 6.4, 55, 92Design by nominated Sub-Contractors, 59.3Discharge, 60.7, 79, 92Discrepancies in documents. 5.2, 41, 54Dismissal of Contractor’s employees, 16.2Disorderly conduct, etc., 34. I ,* 43Disputes, Engineer’s decision, 67.1, 78, 79, 85, 86, 88

171

E

THE FiDlC DIGEST

Disruption of progress, 6.3, 55, 92Documents mutually explanatory, 5.2, 4 1, 54Documents, order of preference, .5.2,* 41, 54Drawings, 6, 7, 41Drawings and documents - custody and supply of, 6.1, 4 1, 55Drawings and instructions - supplementary, 7.1Drawings

copy to be kept on site, 6.2, 92delays and cost of delay of Drawings, 6.4, 55, 92failure by contractor to submit, 6.5, 41, 55

Drugs, 34,* 43

Employer, name and address, I. I,* 3, 4, 40, 54, 55, 56Employer not liable for damage to contractor’s equipment, 54.2Employer’s liability, cessation of, 60.9, 77, 78, 79, 92Employer’s risks, 20.4, 5, 42, 66, 91Employer’s responsibilities, 19.2, 42Employment

of local personnel, 16.4*of persons in service of others, 34,* 43of staff and labour, 34.1, 43

Engineer, name and address, I. I,* 3, 4, 40, 54, 55, 56Engineer to act impartially, 2.6, 4 1, 50, 58Engineer’s authority to delegate, 2.3, 49, 50, 92Engineer’s determination where tests not provided for, 36.5Engineer’s duties, 2. I ,* 4Engineer’s duties and authority, 2. I, 4, 52Engineer’s representative, 2.2, 4 1, 49Environment, protection of, 19.1,” 42, 93Epidemics, 34,” 43Errors in setting out, 17.1Evidence and terms of Insurance, 25.1, 5Examination of work before covering up, 38.1. 92, 93Exceptions, 22.2, 5Exchange, rates of, 72.1Exclusions, 21.4, 5, 42, 66Exploratory excavation and boreholes, 18. I*Extension of Defects Liability, 49.5*Extension of time, due to Employer’s failure to give Possession of Site,

42.2, 60, 91Extension of Time for Completion, 44. I, 43, 60, 66, 67, 9 1, 92

Contractor’s Claim, 44.2, 43, 66Engineer’s determination, 44.3, 43, 66

Extraordinary traffic, 30, 43

Facilities for other Contractors, 31.2*Failure

by Contractor to submit drawings; 6.5, 41, 55to comply with Claims Procedure, 53.4, 43, 73, 77, 79, 92to comply with Engineer’s decision, 67.4, 78, 79, 85, 86, 88to give Possession of Site, 42.2, 60, 91

172

INDEX

Faulty work, removal of, 39.1, 92, 93Fees and notices, 26.1Fencing, watching, lighting, etc., 19. I, 42, 93Festivals and religious customs, 34,* 43Final certificate, 60.8, 78, 79, 92Final statement, 60.6, 43, 74, 77, 78, 79, 92Foodstuffs, supply of, 34,* 43Foreign currencies, payment in, 72Fossils, 27.1, 67, 68, 92Foundations, examination of, 38. I, 92, 93

General responsibilities of Contractor, 8. IGiving notices - payment of fees, 26. I

Headings and marginal notes, 1.2Health and safety of staff and labour, 34,* 43Housing for labour, 34,* 43

Improper work and materials, removal of, 39. I, 92, 93Increase or decrease of costs, 70. IIndemnity

by contract, 22.1, 5; 24.1, 91by Employer, 22.3, 5

Independent inspection, 37.5, 92, 93Injury to persons - damage to property, 22. I, 5Injury to workmen, 24.1, 91Inspection and testing, 37.2, 92, 93

dates for, 37.3, 92, 93Inspection

of foundations; etc., 38. I, 92, 93of operations, 37.1, 92, 93of Site, Il.l,* 55, 65of Site by Contractor, 11.1, 55, 65

Instructionsfor variations, 51.2, 62, 63, 67, 68, 70in writing, 2.5, 41, 62, 92supplementary, 7. I

Insuranceadequacy of, 25.2, 5, 42evidence and terms of, 25. I, 5minimum amount of, 23.2, 5of the Works and Contractor’s equipment, 2I.Z,* 5, 42, 66, 91remedy on failure to insure, 25.3, 5responsibility for amounts not recovered, 21.3, 5, 42, 66scope for cover, 21.2, 5, 66Third Party, 23. I, 5workmen, 24.2

Insurances arranged by the Employer,‘21,* 5, 42, 66, 91; 23,* 5; 25,* ‘5Interference with traffic and adjoining properties, 29. IInterim determination of extension, 44.3, 43, 66Interpretations, I. 3

173

THE FIDIC DIGEST

Interpreter to be made available, 15.2*

Labourconditions of and rates of wages, 34,* 43engagement of, 34.1, 43health and safety, 34,* 43housing for, 34,* 43rates of wages and conditions, 34,* 43repatriation of, 34,* 43special provision for, 34*, 43

Languageability of Contractor’s representative, 15.2*ability of superintending staff, 16.3*ruling, 5.1,* 1, 87

Language/s, 5. I, * 1, 87and law, XI, 1, 87

Law, applicable, 5.1*, 1, 87Law to which contract subject, 5.1, 1, 87Legislation, subsequent, 70.2Lighting, fencing, watching, etc., 19.1, 42. 93Liquidated damages

reduction of, 47.2to delay, 47.1

Local personnel, employment of, 16.4*Loss or damage

due to Employer’s risks, 20.3, 5, 91responsibility to rectify, 20.2, 5, 61

Lump sum items - breakdown of, 57.2

Materials and plant, transport of, 30.3, 44, 52Materials

approval of etc. not implied, 54.8, 43improper - removal of, 39. I, 92, 93quality of, 36.1supply of, 8.1

Measurementby Engineer, 56. I, 93method of, 57.1quantities estimated only, 55. I

Measures against insect and pest nuisance, 34,* .43Methods of construction, 8.2Minimum amount of Insurance, 23.3, 5Monthly payments, 60.2, 79, 92

No remedying of Defects in dredging work after Completion, 49.5*No responsibility for cost of searching of dredging work, 50.2*Nominated Sub-Contractors

certification of payments to, 59.5, 92, 93definition, 59. Idesign by, 59.3

174

objection to nomination, 59.2payment to, 59.4, 92

Noticeof Claims, 53.1, 43, 73, 76, 77, 79, 92to Contractor, 68.1to Employer and Engineer, 68.2*

Notices and fees, payment of, 26. INotices, consents and approvals, 1.5, 41

Objections to Contractor’s employees, 16.2Omissions, alterations and additions, 59Openings, uncovering and making, 38.2, 92, 93Operations, inspection of, 37.1, 92, 93Order of work, Contractor to furnish programme,Other Contractors

facilities for, 31.2*opportunities for, 31. I*

Patent rights, 28.2Payment if contract terminated

for Contractor’s default, 63.3for Employer’s default, 69.3, 70

Paymentof claims, 53.5, 43, 73, 77, 79, 92time for, 60.10, 44, 70, 79, 92

Paymentsto Contractor, 60,* 79, 92to Employer, 60,* 79, 92

1 4 . 1 , 5 6 , 5 7 , 5 8 , 6 0

Performance, example of security bond for, 10. I,* 41, 42Performance guarantee, example, IO. I, * 4 1, 42Performance security, IO. I,* 41, 42

Claims under, 10.3, 42period of validity, 10.2, 42source of, ZO.4*

Period of Defects Liability, 49.1, 61Permanent Works designed by Contractor, 7.2, 41Physical conditions or obstructions

adverse, 12.2,* 44, 65, 91Engineer’s determination, 12.3

Place of payment, 60,* 79, 92Plant

and materials, transport of, 30.3, 44, 52conditions of hire, 54.5, 43customs clearance, 54.3Employer not liable for damage to, 54.2exclusive use for the works, 54. Iquality of; 36.1

re-export of, 54.4Policy of Insurance - compliance with conditions, 25.4, 5, 42Fossession of Site, 42. I, 56, 91

175

THE FiDlC DIGEST

failure to give, 42.2, 60, 91Power of Engineer to fix rates, 52.2,* 43, 62, 64, 67, 68Prevention from testing, 48.5,* 41, 61Priority of contract documents, 5.2, 41, 54Programme to be submitted, 14.1,* 56, 57, 58, 60Progress

disruption of, 6.3, 55, 92rate of, 46.1, 60

Protection of the environment, 19. I,* 42, 93Provision to indemnify

Contractor, 22.3, 5Employer, 22.2, 5

Provisional sumscurrencies of payment, 72.3definition, 58. Iproduction of vouchers, 58.3use of, 58.2

Quality of materials and workmanship, 36.1Quantities, 55. I

Rate of progress, 46.1, 60Rates of exchange, 60,* 79, 92; 72.1Rates of wages and conditions of labour, 34,* 43Rates, power of Engineer to fix, 52.2, 43, 62, 64, 67, 68Re-export of plant, 54.4Records of safety and health, 35,* 91Rectification of loss or damage, 20.2, 5, 6 1Reduction of liquidated damages, 47.2Regulations, statutes, etc., compliance with, 26.1Rejection, 37.4, 92, 93Release from performance, 66. IReligious customs and festivals, 34,* 43Remedies for default of contractor, 63.1Remedy on Contractor’s failure to insure, 25.3, 5Remedying of defects, 49.2, 72

cost of, 49.3, 72Removal

of Contractor’s employees, 16.2of Contractor’s equipment, 69.2, 70of improper work, materials or plant, 39.1, 92, 93of plant, etc., 65.7

Repatriation of labour, 34,* 43Reporting of accidents, 35,* 9 1Responsibility to rectify loss or damage, 20.2, 5, 61Responsibility unaffected by approval, 7.3Restriction on working hours, 45.1, 60Resumption of work, 69.5, 70Retention money, payment of, 60.3, 43, 61, 79, 92.Retums of labour and Contractor’s equipment, 35.1, 9 1Revesting and removal of Contractor’s equipment, temporary materials and

176

works, 54.5," 43Revised programme, 14.2, 56RiSkS

Employer’s, 20.4, 5, 42, 66, 91special, 65

Roads, etc. - damage by extraordinary traffic, 30.1, 43Roads, interference with access to, 29.1Royalties, 28.2*

Safety, security and protection of the environment, 19.1,” 42, 93Samples, cost of, 36.2Security, safety and protection of the environment, 19.1,” 42, 93Setting-out, Z7. ISettlement of disputes, 67, 44, 78, 79, 85, 86, 88Singular and plural, 1.4Site

clearance on completion, 33. IContractor to keep clear, 32.1inspection by Contractor, II.], 55, 65inspection of, lI.l,* 55, 65operations and methods of construction, 8.2Possession of, 42.1, 56, 9 1

I Source of performance security, 10.4*Special risks, 65Staff

engagement of, 34. I, 43health and of, 34,* 43

Statement at completion, safety 60.5, 43, 74, 77, 78, 79, 92Statement, Final, 60.6, 43, 74, 77, 78, 79, 92Statutes, regulations, etc. - compliance with, 26.1Sub-Contracting, 4. ISub-Contractors

Nominated, 59, 92, 93responsibility of the Contractor for acts and default of, 4. I

Submissionof cash flow estimate, 14.3,* 42, 56of 14.1,* 56, 57, 58, 60programme,

Subsequent legislation, 70.2Substantial of sections or 61Sufficiency

completion of Tender, 12. I, 56 parts, 48.3, 41,

Superintending staff, language ability of, Z6.3*SUPPlY

of plant, materials and labour, 8.1

Surety of foodstuffs, bond for 34,* performance, 43 example of, 10. I, * 41, 42of water, 34,* 43

Surfaces .requiring reinstatement, 48.4, 41 i 6 1Suspension

Engineer’s determination, 40.2, 68lasting more than 84 40.3, 78days,of work, 40.1,* 68, 69, 91

177

THE FlDlC DIGEST

Taking-Over of Sections or Parts, 48.2, 41, 61Taking-Over Certificate, 48. I, 41, 61, 92Tender Documents, 11.1, 55, 65Tender, sufficiency of, 12.1, 56Termination of contract by Employer, 63. I

assignment of benefit, 63.4Terms of insurance, 25. I, 5Testing, prevention from, 48.5,* 41, 6 1Tests, cost of, 36.3Tests not provided for - cost of, 36.4Third party insurance, 23.1, 5Time for Completion, 43. I,* 57, 60

extension of, 44. I, 43, 60, 66, 67, 91, 92Time for payment, 60.10, 44, 70, 79, 92Traffic

extraordinary, 30. I, 43interference with, 29. Iwaterborne, 30.4

Transportof Contractor’s equipment and temporary works, 30.2of materials and plant, 30.3, 44, 52

Uncovering work and making openings, 38.2, 92, 93Unfulfilled obligations, 62.2, 62, 92Urgent remedial work, 64. I

Valuation at date of termination by Employer, 63.2Valuation of variations, 52.1,* 62, 63, 64, 67, 68Variations, 51. I,* 43, 62, 67, 68, 70

daywork basis, 52.4, 62, 67, 68exceeding 15 per cent, 52.3,* 62, 67, 68instructions for, 51.2, 62, 63, 67, 68, 70power of the Engineer to fix rates, 52.2, 43, 62, 64, 67, 68valuation of, 51.3, 62, 67, 68, 70

Vesting of Contractor’s equipment, temporary works and materials, 54.2*Vouchers, production of, 58.3

War, outbreak of, 20.4, 5, 42, 66, 91Watching, lighting, etc., 19.1, 42, 93Water, supply of, 34,* 43Waterborne traffic, 30.4Wayleaves and facilities, 42.3, 56Work

examination of, before covering up, 38. I, 92, 93improper, removal of, 39. I, 92, 93

Work to be in accordance with the contract, 13.1Working hours, 45. I, * 60

restriction of, 45. I, 60Workmanship, quality of, 36.1Workmen, accident or injury to, 24. I, 91

178

Workscare of, 20.1, 5, 61, 91commencement of, 41. I, 56, 59completion of (Defects. Liability Certificate), 62.1, 61, 71, 92insurance of, 21.Z,* 5, 42, 66, 91remedying defects, 49.2, 72suspension of, 4O.Z, 68, 69, 91Time for Completion of, 43. I, 57, 60to be measured, 56.1, 93

INDEX

179