practical use of the fidic contracts: live online training

Practical Use of the FIDIC Contracts: Live Online Training Course

Presented by Andy Hewitt FICCP, FCIOB, FCICES, FQSI

Module 1

Tutorial Webinar

Introduction to the course

Module 1 - Contents

• Presenter

• Introduction to the course

• Introduction to the Red and Yellow forms of contract

• Clause 1 – General Provisions

• Clause 2 – The Employer

• Clause 3 – The Engineer

Course Developer and Presenter: Andy Hewitt

• Over 40 years’ experience in the construction industry

• Worked and lived in United Kingdom, Middle East & Africa

• Worked for contractors, subcontractors, consultants & clients

• Quantity Surveyor, Commercial Manager, Contract Manager, Project Manager, Project

Director, Contracts & Claims Consultant

• Provided training and education to many people and companies internationally

Publications

FebruaryFebruary

Timetable and Modules

• Seven modules presented over a 7-week period:

Date Module Topics

19 May Module 1Introduction to the course. Introduction to the Red and Yellow Books. General Provisions.

The Employer The Engineer.

26 May Module 2 The Contractor.

2 June Module 3 Nominated Subcontractors. Design. Staff and Labour. Plant, Materials and Workmanship.

9 June Module 4 Commencement, Delays and Suspension. Test on Completion. Employer's Taking Over.

16 June Module 5Defect Liability. Tests After Completion. Measurement and Evaluation. Variations and

Adjustments.

23 June Module 6 Contract Price and Payment. Termination by Employer.

30 June Module 7Suspension and Termination by Contractor. Risk and Responsibility. Insurance. Force

Majeure. Claims, Disputes and Arbitration.

• Some clauses are omitted from the course if not used frequently or require little or no

explanation

• This allows us to concentrate on frequently used clauses or those that are often not

understood properly

Contents of the Course

Introduction to the Red and

Yellow Books

For Building and Engineering Works Designed by the Employer (First Edition, 1999)

The Red Book

• Building or engineering works designed by the Employer or by his representative

• The Contractor constructs the Work in accordance with a design

provided by the Employer

• The Works may include some elements to be designed by the

Contractor

• Remeasurable

• ‘The Engineer’ is responsible for administering the Contract

• Balanced risk allocation

• Electrical and/or mechanical plant or building and engineering

• Design and execution

• The Employer provides the requirements

• The Contractor designs and constructs in accordance with the Employer’s Requirements

• Lump sum price

• ‘The Engineer’ is responsible for administering the Contract

• Balanced risk allocation

The Yellow Book

For Plant and Design-Build for Electrical and Mechanical Plant, and for Building and

Engineering Works Designed by the Contractor (First Edition, 1999)

• General Conditions:

o 20 clauses

o 140 sub-clauses

o Appendix

§ General Conditions of Dispute Adjudication Agreement

§ Annex – Procedural Rules

• Guidance for the Preparation of Particular Conditions

o Notes for the Preparation of Tender Documents

A Typical FIDIC Form of Contract

o Notes and guidance on several clauses

o Suggestions and wording for changes to certain clauses

o Suggestions and wording for additional clauses

• Forms

o Example forms of:

§ Parent Company Guarantee

§ Tender Security

§ Performance Security – Demand Guarantee

A Typical FIDIC Form of Contract cont.

§ Advance Payment Guarantee

§ Retention Money Guarantee

§ Payment Guarantee by Employer

§ Letter of Tender

§ Appendix to Tender (gives essential contract information)

§ Contract Agreement

§ Dispute Adjudication Agreement

A Typical FIDIC Form of Contract cont.

Clause 1

General Provisions

Clause 1 – General Provisions

1.1 Definitions

• Lists words and phrases used in the Contract and defines their meaning

• Use the defined words and terms in correspondence, reports, claims and the like


1.2 Interpretation

• Clarifies the meaning and definition of certain words used in the Contract


1.3 Communications

• Provides that formal and important communication shall be in writing

• The method and place of delivery of communications shall be stated in the Appendix

to Tender

• Approvals, certificates, consents and determinations shall not be unreasonably

withheld

• Notices and certificates shall be copied to both Parties


1.5 Priority of Documents

• Documents are mutually explanatory

• Provides a list of documents in order of priority

• In the case of ambiguity or discrepancy, the Engineer shall issue clarifications


1.8 Care and Supply of Documents

• Specification and Drawings shall be in the custody and care of the Employer (Red Book)

• Contractor’s Documents shall be in the custody and care of the Contractor until taken over

• Includes provisions for the copying of documents to the other Party

• Contractor to keep a copy of the Contract, other documents named in the Specification and communications given under the Contract on the Site. The Employer’s personnel shall have access to the documents

• The Parties are obliged to give notice upon discovering an error or defect in the documents


1.9 Delayed Drawings or Instructions (Red Book)

• The Contractor shall give notice when the Works are likely to be delayed if necessary

drawings or instructions are not issued within a particular time

• If the Contractor suffers delay or incurs Cost he shall give a further notice and be

entitled to an extension of time and the payment of Cost plus reasonable profit


1.9 Errors in the Employer’s Requirements (Yellow Book)

• If the Contractor suffers delay or incurs Cost as a result of an error in the Employer’s

Requirements, he shall give notice and be entitled to an extension of time and the

payment of Cost plus reasonable profit

• The test for entitlement is ‘that an experienced Contractor exercising due care would

not have discovered the error when scrutinising the Employer’s Requirements under

Sub-Clause 5.1 (General design Requirements)’

Clause 2

The Employer

Clause 2 – The Employer

2.1 Right of Access to the Site

• The Employer shall give the Contractor right of access to and possession of all parts of the Site

within the time stated in the Appendix to Tender

• The right may not be exclusive

• The Employer may withhold the right or possession until the Performance Security has been

received

• If time is not stated in the Appendix to Tender, the Employer shall give right of access and

possession to enable the Contractor to proceed in accordance with the programme

• If the Contractor suffers delay or incurs Cost, he shall give notice and be entitled to an extension of

time and the payment of Cost plus reasonable profit


2.3 Employer’s Personnel

• The Employer is responsible for ensuring that the Employer's Personnel and the

other contractors:

o Co-operate with the Contractor

o Comply with obligations for safety and environmental protection


2.4 Employer’s Financial Arrangements

• At the request of the Contractor, the Employer shall submit evidence that financial

arrangements have been made and are being maintained which will enable the

Employer to pay the Contract Price


2.5 Employer’s Claims

• The Employer or Engineer shall give notice and particulars of claims that the Employer

is entitled to make under the Contract

• The notice shall be given as soon as practicable after the Employer became aware of

the event or circumstances giving rise to the claim

• The amount may be included as a deduction in the Contract Price and Payment

Certificates

Clause 3

The Engineer

Clause 3 – The Engineer

3.1 Engineer’s Duty and Authority

• The Employer shall appoint the Engineer

• The Engineer shall carry out the duties assigned to him in the Contract

• The Engineer's staff shall include suitably qualified engineers and other professionals who are competent to carry out these duties

• The Engineer shall have no authority to amend the Contract

• The Engineer may exercise the authority attributable to the Engineer as specified in the Contract

• If the Engineer is required to obtain the approval of the Employer before exercising a specified

authority, the requirements shall be stated in the Particular Conditions


3.1 Engineer’s Duty and Authority cont.

• The Employer undertakes not to impose further constraints on the Engineer's authority

• Whenever the Engineer exercises a specified authority for which the Employer's approval is required, the Employer shall be deemed to have given approval

• The Engineer shall be deemed to act for the Employer

• Engineer has no authority to relieve either Party of any duties, obligations or responsibilities

• Any approval, check, certificate, consent, examination, inspection, instruction, notice, proposal, request, test, or similar act by the Engineer shall not relieve the Contractor from any

responsibility he has under the Contract


3.2 Delegation by the Engineer

• The Engineer may assign duties and delegate authority to assistants

• Assistant’s authority shall be limited to that delegated

• Assignment shall be in writing to both Parties

• The Engineer shall not delegate the authority to determine any matter in accordance

with Sub-Clause 3.5 (Determinations)


3.3 Instructions of the Engineer

• The Engineer may issue instructions and additional or modified Drawings which may be necessary

for the execution of the Works

• The Contractor shall only take instructions from the Engineer, or from an assistant to whom the

appropriate authority has been delegated

• If an instruction constitutes a Variation, Clause 13 (Variations and Adjustments) shall apply

• The Contractor shall comply with the instructions

• Instructions shall be in writing

• If oral instructions are given and the Contractor confirms in writing within 2 days and the Engineer

does not reject within 2 days, the confirmation shall constitute the written instruction (Red Book

only)


3.5 Determinations

• Various Clauses require the Engineer to proceed in accordance with Sub-Clause 3.5

(Determinations)

• The Engineer shall consult with each Party in an endeavour to reach agreement

• If agreement is not achieved, the Engineer shall make a fair determination in accordance with the

Contract, taking due regard of all relevant circumstances

• The Engineer shall give notice to both Parties of each agreement or determination, with supporting

particulars

• Each Party shall give effect to each agreement or determination unless and until revised under

Clause 20 (Claims, Disputes and Arbitration)

Agreement or

determination

required

Agreement?

ENGINEER

Consults with

both parties

ENGINEER

Makes fair

determination

ENGINEER

Notice of Agreement

ENGINEER

Notice of

Determination

Yes

No


3.5 Determination - Process

Questions?

Thank you

Andy Hewitt

T: +971 (0)50 446 1201

E: [email protected]

Hewitt Decipher Partnership: www.hewittdecipher.com

Claims Class: www.constructionclaimsclass.com

mailto:[email protected]

http://www.hewittdecipher.com/

http://www.constructionclaimsclass.com