FIDIC

Dr. D. M.
Parikh
Understanding of FIDIC 1999 Conditions of Contracts

for
Construction, Plant & Design-Build, and MDB-2010
Dr. Dhaval M. Parikh
27 & 28 September 2019

International Federation of Consulting Engineers
The Global Voice of Consulting Engineers
Dr. D. M. Parikh
Program for both Days

10:00 AM to 11:30 AM - Session 1
11:30 AM to 11.45 AM Tea Break
11.45 AM to 1:00 PM - Session 2
1:00 PM to 2:00 PM Lunch
2:00 PM to 3:30 PM - Session 3
3:30 PM to 3.45 PM Tea Break
4.45 PM to 5.30 PM - Session 4
The Global Voice of Consulting Engineers 2
1
Dr. D. M. Parikh
Topics
Introduction and Background of Contracts
Responsibilities of Main Parties
Management of Projects
Financial Clauses and Procedures
Risks, Force Majeure and Termination
Claims, Disputes and Arbitration
Scheduled Responsibilities
MDB-2010: FIDIC Pink Book
Dr. D. M. Parikh
Introduction and Background

2
Dr. D. M. Parikh
What is a Contract?
A contract is a legally binding exchange of promises or agreement
between parties that the law will enforce.
A Construction Contract, therefore, is a legally binding exchange of

promises between the Employer and the Contractor for the work of
construction.

Dr. D. M. Parikh
What is a Contract?
All contracts in India are governed by Indian Contracts Act, 1872
What is the Purpose of the Contract?
The Purpose of Contract is to define the contractual relationship

between the Parties, setting out responsibilities and allocating risks.

3
Dr. D. M. Parikh
Types of Contracts
 Lump Sum Contract
 Unit Price Contract
 Cost Plus Contract
 Cost + Fixed Percentage Contract
 Cost + Fixed Fee Contract
 Cost + Fixed Fee with Guaranteed Maximum Price Contract
 Cost + Fixed Fee with Bonus Contract
 Incentive Contracts
Dr. D. M. Parikh
What is FIDIC?
Fédération Internationale des Ingénieurs Conseils (FIDIC)
 Established in 1913 by 3 countries: Belgium, France & Switzerland
 Remained Europe based till 1959 and Australia, Canada, South Africa, and
the USA joined to make it a Global Federation
 FIDIC has Member Associations (MA) in each member countries – currently
99 MAs

4
Dr. D. M. Parikh
What is FIDIC?
 Founding principles are Quality, Integrity, and Sustainability.
 FIDIC publishes various standard forms of Contract conditions.
 It encompasses most of the private practice consulting engineers.
 Promotes and implements the consulting engineering industry’s strategic goals.
 Members endorse FIDIC’s statutes and policy statements and comply with
FIDIC’s Code of Ethics.
 Develops and promotes better business practices: Business Integrity
Management; Project Sustainability Management.
Dr. D. M. Parikh
What is FIDIC?
 FIDIC Organises:
 Extensive programme of seminars and conferences.
 International Training Programme (courses; workshops)
 Capacity Development Programme (accredited trainers; training suppliers;
programmes and events).
 Publishes
 Business practice guides
 Professional services agreements and guides
 General Conditions of Contracts to implement almost all types of Works
5
Dr. D. M. Parikh
What is FIDIC?
Groups of Member Associations
African Union
GAMA Group of Africa Member Associations
www.fidic.org/gama
ASPAC Asia-Pacific group

www.fidic.org/fepac

Dr. D. M. Parikh
What is FIDIC?
Regional Federations
NAFTA
FEPAC Panamerican Federation of Consultants
European Union
EFCA European Federation of Engineering
Consultancy Associations

6
Dr. D. M. Parikh
What is FIDIC?
 What FIDIC does….
 Represent globally the consulting engineering industry, >1 million professional
 Enhance the image of consulting engineers
 What FIDIC offers the industry….
 Be the authority on issues relating to business practice
 Promote the development of a global & viable consulting engineering industry
 What are FIDIC’s governing principles….
 Promote quality
 Actively promote conformance to a code of ethics and integrity
 Promote commitment to sustainable development

Dr. D. M. Parikh
What is FIDIC?
Holds Regular meetings as the industry’s voice with;
The World Bank WB

Asian Development Bank ADB
European Bank for Reconstruction and Development EBRD
Inter-American Development Bank IADB
African Development Bank ADB
Islamic Development Bank IDB

7
Dr. D. M. Parikh
What is FIDIC?
Forges Strategic partnerships with;
International Standards Organization ISO

International Labour Organization ILO
World Federation of Engineering Organizations WFEO
United Nations Environment Program UNEP
Confederation of International Construction Associations CICA
Transparency International TI
Federation of Consultants from Islamic Countries FCIC
Dr. D. M. Parikh
Why FIDIC Contracts?

 Fair apportioning of risks, rights and obligations between the parties
 Long case history for FIDIC contracts
 In wide use for international contracts
 Recommended or required by development banks, bilateral agencies, etc.
 Clear obligations; time limits; provisions for adjudication
 Now specified by all Development Banks: HARMONISED

8
Dr. D. M. Parikh
Why FIDIC Contracts?

 Essential clauses; detailed definitions; similar structure
 Risk allocated to party best placed to control it
 Drafted by consulting engineers; no employer-imposed conditions
 Range covers most needs; readily adaptable to fit requirements
 Positive FIDIC image; world-wide acceptance
 Incorporates Adjudication (DAB)

Dr. D. M. Parikh
FIDIC Standard Contracts

9
Dr. D. M. Parikh
FIDIC Contracts
Standard Contracts and Agreements
Standard model agreements for Professional Services
 Client - Consultant
 Joint Venture
 Sub-Consultant
 Representative

Dr. D. M. Parikh
FIDIC Contracts for Works

 Conditions of Contract for Works of Civil Engineering Construction, Fourth
Edition, 1987 (reprinted in 1988 with editorial amendments & reprinted in
1992 with further amendments) (old Red Book)
 Conditions of Subcontract for Works of Civil Engineering Construction, First
Edition, 1994 (to function with the 1992 Red Book)
 Conditions of Contract for Electrical & Mechanical Works, Third Edition,
1987 (reprinted in 1988 with editorial amendments) (old Yellow Book)
 Conditions of Contract for Design-Build and Turnkey, First Edition, 1995

10
Dr. D. M. Parikh
FIDIC Contracts for Works

 Short Form of Contract, First Edition 1999 (Green Book)
 Conditions of Contract for Construction, 1999 (Red Book)
 Conditions of Contract for Construction, 2010 (Pink Book)
 Conditions of Contract for Plant and Design-Build, 1999 (Yellow Book)
 Conditions of Contract for EPC Turnkey Projects, 1999 (Silver Book)

Dr. D. M. Parikh
The FIDIC Books

11
Dr. D. M. Parikh
FIDIC Contracts
Advantages
 Savings in time and cost on repetitive transactions.
 Frequent use gives common understanding among stake holders.
 Tenderers do not need to allow for unfamiliar contract conditions.
 Fair to all parties = greater contractor confidence and lower risk
contingencies.
 Uncertainties of meaning removed, either by decisions of courts or by
revisions; so they are predictable.

Dr. D. M. Parikh
FIDIC Contracts
Disadvantages
 Tenderers often dispense with legal advice.
 Widespread use of standard forms used as a gauge of market prices for a
certain construction items, products or processes, thus having a cartel-like
aspect.
 Use of some standard forms is so widespread and common that it is as a
form of “private legislation”.

12
Dr. D. M. Parikh
FIDIC Contracts
Precautions
 Amendments shall not be made to standard forms, because;
 General Conditions of standard forms are copyrighted intellectual
property and shall not be modified by retyping.
 Whatever the reason for amendments, the resulting document can be
disastrous and likely to have unintended results.
 Construction of the Contract is a complex task with many interlinking and
inter-dependent clauses, and hence, contract/tender documentation shall
not be prepared in parts by different professionals/firms.
Dr. D. M. Parikh
FIDIC Contracts
Departure from Standard Contract
 Use of bespoke/modified contracts came about because:
 Changed risk allocation was desired.
 More project contracting routes and diverse project delivery methods:
standard forms did not keep up.
 Major law firms developed in-house Particular Conditions and data on
the basis of unreported decisions.

13
Dr. D. M. Parikh
Stakeholders of Contracts

Dr. D. M. Parikh
FIDIC Definitions
 Employer, means the person / entity who is the owner of the facility being
developed under the said Contract
 Contractor, means the person / entity whose tender has been accepted by
the Employer and responsible to develop the facility under the said Contract
 Engineer, means the person / entity appointed by the Employer to act on

behalf of the Employer to facilitate the development of owner’s facility

14
Dr. D. M. Parikh
FIDIC Definitions
 If Employer or Contractor is called by another title such as ‘Owner’ or
‘Ministry’ or ‘Client’, or ‘Builder’ or ‘Constructor’, this revised terminology
MUST be explained in the Appendix to Tender or Contract Data (for the DBO
Contract) or elsewhere in the Contract.
 Unless such explanation contains any revisions to the foreseen roles, such
Parties shall be deemed to have the roles of the Employer and the
Contractor, respectively assigned to them in the Contract.
 Each Party to be a legal person or entity under the law of the country under
which it has been constituted (only legal persons or entities can enter into
contracts).
Dr. D. M. Parikh
Parties to the Contract

 Only two Parties sign the Contract and are bound by the terms of the
Contract: the Employer and the Contractor.
 They have obligations, duties and rights towards each other as described in
the Contract.
 Each obligation, duty and right is governed by the use of the word ‘shall’ or
‘may’.
 Neither Party may assign the whole or any part of the Contract to a third
party without the prior written agreement of the other Party to do so; and the
Contract is written assuming that both Parties fulfil the duties and obligations
assigned to them.
15
Dr. D. M. Parikh
Other Defined Parties

Contractor’s Representative
 Contractor’s Representative is appointed by the Contractor to represent him
on Site in the day-to-day running.
 He must have Employer’s Representative consent before commencing
duties.
 It is not intended that this person is changed or replaced, but if this is
necessary, then a replacement must be appointed, subject again to the
consent of the Employer’s Representative.

Dr. D. M. Parikh

 Some jurisdictions require the Contractor’s Representative to possess a
license or specific experience. If so, the Particular Conditions to incorporate
these additional requirements.
 Note the use of the word ‘consent’ rather than ‘approval’. – Difference ??
‘Consent’ means ‘no objection’, so it is clear that choice of the Contractor’s

Representative, and his subsequent actions and behaviour, are the sole
responsibility of the Contractor.

16
Dr. D. M. Parikh

 Contractors often refer to their Representative as Site Agent, Site Manager,
Project Manager, Construction Manage, etc.
 Whatever is the title, person has the duties and responsibilities which are
assigned to the Contractor’s Representative.
 Parties must be clear as to where lines of communication & responsibility lie.
 Delegation of responsibility or authority within the Contractor’s organisation
must be clearly recorded in writing and notified to the Employer.

Dr. D. M. Parikh

Engineer or Employer’s Representative (ER)
 An important member of the Employer’s team.
 Neither position is in the EPC/Turnkey Contract (Clause 2 deals with the
Employer’s Administration).
 Engineer or Employer’s Representative is appointed by the Employer.
 Named in the Appendix to Tender (Contract Data) so that tenderers know,
when preparing their tenders, who the Employer is intending to appoint.
 Engineer/ER must have a clear understanding of his role; which is to act for
the Employer and in the best interests of the Employer, but at the same
time, he must act with fairness and integrity while making Determination/s.
17
Dr. D. M. Parikh

Sub-Contractor
It is likely that the Contractor will engage one or more Subcontractors. There are
regulations:
 Contractor is not permitted to subcontract the whole of the Works and if he
does, then these are the grounds for the Employer to terminate the Contract.
 Contractor must obtain the consent of the Employer’s Representative prior
to engaging any Subcontractor unless the Subcontractor is named in the
Contract.

Dr. D. M. Parikh

Sub-Contractor
 If the Employer wishes the Contractor to use a particular subcontractor
(“nominated Subcontractor”) he can require the Contractor to engage them
by naming him in the Contract.
 Employer cannot force the Contractor to accept a nominated Subcontractor
against whom the Contractor raises reasonable objection/s.
 If the Employer insists on the use of the nominated Subcontractor, then the
Contractor would probably be released from certain liabilities in respect of
the nominated Subcontractor’s performance.

18
Dr. D. M. Parikh

Dispute Adjudication Board
 The role and appointment of the DAB is covered in Clause 20.
 General Conditions of the Dispute Adjudication Agreement (the general
obligations of the DAB member, and of the Contractor and Employer
towards the member) are in a separate section in the 1999 editions.
 DAB General Conditions should not be changed.
 If there are special provisions which the Employer wishes to include in
relation to the DAB, these should be as Special Conditions to the DAB
General Conditions in a similar way to the use of the Particular Conditions to
the Contract.
Dr. D. M. Parikh

 A key requirement in appointing DAB members is that such persons shall be
independent of the two Parties.
 Article 3 of the General Conditions of the Dispute Adjudication Agreement
addresses the question of challenges to independence of a DAB member by
either Party. The Procedural Rules concerning the performance and
behaviour of the DAB are also given.
 If these Rules are to be changed or revised, its important to ensure that the
DAB member(s) retain their complete independence and integrity.

19
Dr. D. M. Parikh

Financiers
 Financiers are not a party to FIDIC contracts.
Employer must:
 Arrange adequate and available financing to pay the Contractor for
performing the Contract.
 Provide evidence that such financing is available when issuing tender
documents and inviting tenders.
 If there is a third-party financing, Employer to check that the procedures
required by the financing institution are compatible with Employer’s
obligations to pay the Contractor.
Dr. D. M. Parikh

Insurers
 Insurers are not party to the FIDIC contracts.
 FIDIC Construction, Plant and DBO Contracts assume that all the
insurances required will be provided by the Contractor.
 Prior to effecting insurances, Contractor is required to obtain the approval of
the Employer for insurance company and terms and conditions of the
policies.
 Employer is required to give ‘approval’ (not consent) because in many cases
the insurances have to be taken out in the joint names of the Contractor and
the Employer.
 Important for the Employer to have the policies checked by an expert.
20
Dr. D. M. Parikh

 If the Contract includes persons or parties who are not named or defined in the
FIDIC General Conditions such as ‘project manager’, ‘inspector’, ‘manager’, or
any other person or party, their titles, positions, authority and role must be
clearly identified and defined in the Particular Conditions.
 In addition to their role, their relationship with their principal (Employer or
Contractor) must be explained and their authority to issue and receive
instructions clearly stated.
 If details not provided in tender documents, then they must be agreed in the
Contract documents (if necessary, as a memorandum) prior to signature of the
Contract.
Dr. D. M. Parikh
Key Features of FIDIC Contracts

21
Dr. D. M. Parikh
Key Features: Short Form

 Design by either party
 Employer may appoint a Representative
 Valuation as appropriate; to be agreed
 No certification of payments
 Payments according to value of Works executed and
Materials and Plant delivered to site

Dr. D. M. Parikh

Under the usual arrangements for Green Book Contracts:
 Employer provides the finance.
 Contractor constructs the Works
 Employer may order variations to the Works.
 Employer has choices for valuation and payment.
 Works comprise construction but may include, or wholly
comprise, electrical, mechanical or other work.
 Employer may appoint an individual or firm, as his Representative, to carry
out certain duties.
22
Dr. D. M. Parikh

 short sentences; simple language
 General Conditions are only 10 pages
 Suitable when the work is uncomplicated
 For building or engineering works of relatively small capital
value [up to US$500,000] and/or short construction time
[not more than 6 months] and no specialist sub-contracts.
 May also be suitable for contracts of greater value, if it involves relatively
simple or repetitive work – up to USD 1,000,000 and up to 12 months of
construction period
Dr. D. M. Parikh
Key Features: Construction

 Employer designs; in-house, OR through a Consultant.
 Engineer, working for the Employer
 Contract includes schedule of Bill of Quantities
 Payments based upon measurements
 Certification of payments by Engineer
 Larger and more complex Conditions
 Used for construction projects involving civil engineering & building works

23
Dr. D. M. Parikh
Key Features: Construction

Under the usual arrangements for Red Book Contracts:
 The Employer
 provides the finance.
 appoints consulting engineer to carry out design and BOQ.
 appoints Engineer to administer the Contract,
monitor the construction Works and certify payment.
 Engineer (on behalf of Employer) may initiate variations
 Employer wishes to be kept fully informed.
 Payment to the Contractor will be according to a BOQ for approved work-done.
Dr. D. M. Parikh
Key Features: MDB Harmonized

 Employer designs
 Bill of Quantities
 Payments based upon measurements

24
Dr. D. M. Parikh
Key Features: Plant & Design Build

 Contractor designs
 Lump sum pricing
 Payments according to progress
 Two Types of Projects:
A. Electrical and Mechanical Plants designed by Contractor
B. Building and Engineering Works designed by Contractor

Dr. D. M. Parikh

Under the usual arrangements for Yellow Book Contracts:
 The Employer
 provides the finance;
 appoints Engineer to: administer contract; monitor
design and construction activities; certify payments.
 Engineer may initiate variations.
 Employer wishes to be kept fully informed.
 Payment to Contractor will be on achieved milestones generally on a LS basis.
 Employer accepts that overruns may occur to contract sum and, possibly,
completion date – higher risks on Contractor
25
Dr. D. M. Parikh

A. Electrical & Mechanical Plants
 Larger and more complex than minor works projects.
 Traditional plant projects involve the design,
manufacture, delivery, erection, testing, etc. of plant
by the Contractor to an outline or performance specs
prepared by the Employer.
 Procurement covering the supply and installation of Plant and equipment has
traditionally closely followed the same procedure as for construction works.

Dr. D. M. Parikh

A. Electrical & Mechanical Plants
 Much of the plant is manufactured off-site.
 Detailed design of the plant is the Contractor‘s responsibility.
 Contractor is usually associated with a plant manufacturer or
supplier alone or associated with a civil works contractor.
 Testing and commissioning are comprehensive and stringent.
 Performance specifications in ‘Employer’s Requirements’.

26
Dr. D. M. Parikh

B. Building and Engineering Works
 Design-Build: design to be carried out by the Contractor,
who is responsible for the works to be fit for purpose.
 Employer provides Employer’s Requirements and
Contractor shall design and build/construct the facility.
 Design-build contracts are similar to Plant contracts.
 However, instead of designing the electrical, mechanical or other plant, the
Contractor will design the building or engineering facility before he
builds/constructs it.
Dr. D. M. Parikh
Key Features: EPC / Turnkey Projects

 Contractor designs
 Fixed price, to cover risks taken on by Contractor
 Payments according to progress, mile stone based
 No certification of payments
 Employer may appoint a Representative, No Engineer

27
Dr. D. M. Parikh

Under the usual arrangements for Silver Book Contracts:
The Employer:
 provides finance.
 wants Contractor to be responsible for design and
construction of facility and to hand over ready to operate.
 wants high degree of certainty that the agreed contract price
and time will not be exceeded.

Dr. D. M. Parikh

Under the usual arrangements for Silver Book Contracts:
The Employer:
 wishes the Project to be organised on a two-party
approach, i.e. no Engineer
 does not wish to be involved in the day-to-day work.
 is willing to pay more.
 risk of such unforeseeable physical borne by the Employer.
 Contractor may subcontract.
28
Dr. D. M. Parikh
Legal Character

Dr. D. M. Parikh
Governing Law
 Use of FIDIC contracts is common throughout the whole world.
 What does it mean “to use FIDIC”?
 FIDIC is a private organization having no legislative powers.
 FIDIC standard contracts are simply general trade terms and are subject to
the Applicable Law [National Law of the Project country].
 FIDIC conditions originated essentially are relying on Common Law regime.

29
Dr. D. M. Parikh
Governing Law
Common Law v/s Civil Law
Common Law, also known as Case Law is law developed though decisions
of courts rather than though legislative statutes or executive branch action –
India follows Common Law system
Civil Law, (inspired by Roman Law) is the legal system written into a
collection, codified and not determined by the courts (unlike Common Law)

Dr. D. M. Parikh
Governing Law
Common Law v/s Civil Law
Common Law system gives great precedential weight on principle that it is

unfair to treat similar facts differently on different occasions.
Civil Law is followed in over 150 countries. The courts are usually
inquisitorial, unbound by precedents and with limited focus on interpretation
of law.

30
Dr. D. M. Parikh
Legal Coverage in FIDIC

Priority of the National Law
FIDIC contracts specify that:
 the law governing the Contract must be stated
 The law typically will affect the interpretation of these conditions, such that
some provisions have different consequences in different jurisdictions, e.g.
statute of limitation, duties & levies, etc.
 Governing law must be stated:
 Even though FIDIC conditions may broadly qualify under lex mercatoria
(merchant law being used across Europe), no contract may become
effective and binding without being embedded in a governing law.

Dr. D. M. Parikh

Priority of the National Law
 Thus National Law has priority over all FIDIC conditions to the extent that it is
compulsory. But note that:
 Sometimes even compulsory law which is part of the governing law may be
overruled by the law of lex fori (courts enforce a foreign right if it does not
violate a fundamental principle of justice).
 If there is incoherency between FIDIC conditions and national laws, the latter
will prevail.

31
Dr. D. M. Parikh

Complimentary Provisions
 Governing Law may also provide complementary provisions which will govern
the Contract, although this is not expressly intended by the Parties.
 If complementary provisions are not compulsory and the Parties to the
Contract do not want to be bound by them they must exclude them either
expressly or implicitly.
 If they do not do this then the Governing Law will be applicable, and will
supplement the Contract.

Dr. D. M. Parikh

Complimentary Provisions
 As FIDIC conditions do not cover all legal aspects concerning the execution
of the Contract. This is in fact a necessary function of the Governing Law.
 Examples of the need for complementary provisions are:
 post-contract liability as to defects.
 limitation of claims.
 FIDIC recognises this and recommends, for example, a review of Clause 11
of the FIDIC contracts in relation of the period of liability under the applicable
law.
32
Dr. D. M. Parikh
FIDIC Contracts for this Training Program

Dr. D. M. Parikh
FIDIC Contracts for this Program

 Conditions of Contract for Construction, 1999 (Red Book)
 Conditions of Contract for Construction – MDB Harmonised

Editions, 2010 (Pink Book)
 Conditions of Contract for Plant and Design-Build, 1999

(Yellow Book)

33
Dr. D. M. Parikh
General Conditions (FIDIC Book)

1. General Provisions 11. Defects Liability
2. The Employer 12. Measurement/Tests after completion
3. The Engineer (YB &SB)
4. The Contractor 13. Variation and Adjustments
5. Nominated Sub-Contractor/ Design 14. Contract Price and Payments
(YB & SB) 15. Termination by the Employer
6. Staff and Labour 16. Termination by the Contractor
7. Plants Materials and workmanship 17. Risk and Responsibility
8. Commencement, delays 18. Insurance
9. Tests on Completion 19. Force Majeure
10. Employer’s Taking Over 20. Claims Disputes Arbitration

Dr. D. M. Parikh
Characteristics of FIDIC Contracts

34
Dr. D. M. Parikh
Characteristics
Unification of Terms and Clauses
 Contracts were prepared by a workgroup under the leadership of the
FIDIC Contract Committee. The clauses are under the same titles and
expressions, each consists of a total of 20 clauses.
 More than 80% of the content is consistent, and 85% of definitions and
expressions are the same. It is of great help to users to understand
them completely, saving study time.

Dr. D. M. Parikh
Characteristics
Applicability: Project Delivery & Contracting System
 The Red Book can be used in any kind on Engineering Construction
Contract
 The Yellow Book applies to the Contracts, where the Contractor is
responsible for design also.

35
Dr. D. M. Parikh
Characteristics
Specific Provisions - Parties’ Obligations and Rights
 Requirements for the Contractor
 Quality Assurance System
 Monthly Progress Reports
 Requirements for the Employer

 Financial arrangements
 The Engineer is part of the Employer’s personnel

Dr. D. M. Parikh
Characteristics
Management Procedures
 The FIDIC forms are dynamic. The procedures (e.g. claim procedure
2.5 & 20.1) are time related. The failure in respecting the procedure
leads to the cancelation of the right.
 The FIDIC forms emphasis the protection of Intellectual Property rights

(sub-clause 17.5).

36
Dr. D. M. Parikh
Characteristics
Payments Procedures
 The Employer is obliged to show his financial arrangements (Sub-
Clause 2.4).
 Interest for late payment +3% of the national bank.
 If the Contractor does not receive his financial entitlements in 42

days after the expiry date for payment – Termination of the
Contract (Clause 16).
Dr. D. M. Parikh
Characteristics
The Engineer
 In the Red Book, Engineer’s role increased in solving the problems
during the Contract.
 Engineer cannot be replaced with another Engineer against which the

Contractor has reasonable objections.
 Engineer is part of the Employer’s personnel- not impartial(!!). He has

to act fairly in making determination/s (Sub-Clause 3.5).
37
Dr. D. M. Parikh
Characteristics
The Engineer
 In the Yellow Book the responsibilities of the Engineer remain the
same as in the Red Book except increased responsibility of review of
design.
 In the Yellow Book any ‘consent’ to the design does not discharge the
Contractor of his obligations and any errors of the design are the
Contractor’s responsibility.

Dr. D. M. Parikh
Characteristics
Disputes Resolution
 FIDIC stipulates the use of DAB.
 Note that the DAB members are to be independently chosen by each
party and paid by each party.
 In Red Book the Engineer is required to mediate the disputes.
[however, the general notion is that it is difficult to be impartial since
the Engineer is part of the Employer]
 If the mediation fails then the dispute/s go to DAB.
38
Dr. D. M. Parikh
Characteristics
User Friendliness
 Common definitions for all defined terms.
 Use of identical wording while considering the same topic.
 Incorporate as much text as possible in General Conditions.
 Elaborate Guidance notes are provided to prepare the Particular
Conditions (PC).
 Some provisions not applicable to the Work, can readily be disabled by
deletion to be specified in PC.
Dr. D. M. Parikh
Characteristics
User Friendliness
 It incorporates a user-friendly check-list in the Appendix to Tender
(Contract Data) for the insertion of all essential data.
 The Contract becomes effective when the Employer issues a Letter of
Acceptance. However, this condition may be suitably modified by the
Employer and/or by mutual consent during pre-contract negotiations.

39
Dr. D. M. Parikh
Features of 3 Contracts
10%
Similarities are; 40%

 Twenty main clauses, covering similar matters
50%
 General Conditions are similar
 Guidance for the Preparation of the Particular Conditions Identical
 Letter of Tender format Similar
 Contract Agreement Different
 Dispute Adjudication Agreements
Dr. D. M. Parikh
Features of 3 Contracts
Exceptions are; Clauses 3, 5 and 12
Clause Construction Plant and D&B EPC/Turnkey

3 Engineer Engineer Employer’s Administration
5 Subcontractors Design Design
12 Measurement Tests after Completion Tests after Completion

40
Dr. D. M. Parikh
Provisions favouring the Contractor

 Employer to provide evidence of financial capacity.
 Employer to give notice of claim against Contractor before making
deduction or set off from certified amount.
 Changes in legislation affecting Contractor’s obligations now extended
to judicial or governmental interpretation of laws.
 If not paid on time, Contractor entitled to financing charges
compounded monthly at annual rate 3% above interest rate.

Dr. D. M. Parikh
Provisions favouring the Contractor

 If Engineer fails to certify interim payment or Employer fails to provide
evidence of financial capacity, Contractor may, after giving notice,
suspend or reduce rate of work.
 Within 42 days of receiving claim from Contractor, Engineer must
respond with approval, or with disapproval and detailed comments.
 Disputes must go to a DAB appointed at the time Contract signing.

41
Dr. D. M. Parikh
Provisions favouring the Employer

 The Employer may replace the Engineer.
 Any design by the Contractor of Permanent Works must be ‘fit for such
purpose for which the part is intended’.
 Claim by the Contractor for adverse physical conditions may be off-
settled by more favourable conditions in similar parts of the works.
 Contractor must supply fully detailed monthly progress reports to the
Engineer along with IPCs.

Dr. D. M. Parikh
Provisions favouring the Employer

 Employer may extend DNP (earlier DLP) for up to 2 years, if works
can’t be used by reason of defect or damage.
 Employer may terminate Contract for convenience and Contractor is
entitled to be paid for work done, but not profit on balance of Contract.
 Contractor must give notice of claim for additional payment or
extension of time within 28 days of becoming aware of event giving
rise to claim.

42
Dr. D. M. Parikh
Where to use Red / Pink Book?

 For building or engineering works designed by the Employer, or by his
representative.
 The Contractor constructs the works in accordance with designs
provided by the Employer [the usual arrangement].
 However, works may include some elements of contractor design; civil,
mechanical, electrical and/or construction works.

Dr. D. M. Parikh
Where to use Yellow Book?

 For the design & erection of electrical and mechanical plant
OR
 For the design and execution of building or engineering works
 The Contractor produces designs, in accordance with Employer’s
requirements, plant and/or other works; which may include any
combination of civil, mechanical, electrical and/or construction works.
[usual arrangement under the Contract]

43
Dr. D. M. Parikh
Risk Sharing
Contractor’s Risk
Contract Price
Silver
Yellow Book
Red Book
Risk Analysis Book
the design phase

Employer’s Risk
involvement
Employer’s
Dr. D. M. Parikh
Structure of Contract

44
Dr. D. M. Parikh
Structure of the Contract

The Contract should deal with following:
General Definitions
Descriptions of the Principal Actors
Execution Staff and Labour
Materials Equipments Workmanship
Time Time for completion, Taking Over,
Defect Notification Period
Money Measurements, Payments, Variations
Contractual Termination, Risk, Insurance, Force Majeure
Claims Claims, DAB, Arbitration
Dr. D. M. Parikh

Typically includes;
 Letter of Award
 Contract Agreement (Contract Form, GCC, PCC/COPA,
Annexures)
 Letter of Tender
 Appendix to Tender / Contract Data
 Dispute Adjudication Agreement

45
Dr. D. M. Parikh

General Conditions (FIDIC Book)
1. General Provisions 11. Defects Liability
2. The Employer 12. Measurement/Tests after
3. The Engineer completion
4. The Contractor 13. Variation and Adjustments
5. Nominated Sub-Contractor/ 14. Contract Price and Payments
Design 15. Termination by the Employer
6. Staff and Labour 16. Termination by the Contractor
7. Plants Materials and 17. Risk and Responsibility
workmanship 18. Insurance
8. Commencement, delays 19. Force Majeure
9. Tests on Completion 20. Claims Disputes Arbitration
10. Employer’s Taking Over
Dr. D. M. Parikh

Particular Conditions / SCC / COPA
 Particular Conditions of Contract has priority over the General Conditions of Contract.
 Particular Conditions of the Contract give the possibility to modify the existing clauses
in the Contract in order to make them more suitable to the actual conditions of the
project.
 FIDIC prepared a guidance to assist the Employer in preparing the Particular

Conditions of the Contract.

46
Dr. D. M. Parikh

Particular Conditions / SCC / COPA
 FIDIC recommends to use qualified engineers in preparing the Particular Conditions
of Contract.
 FIDIC recommends that in the preparation of the Particular Conditions a review by

lawyer could be beneficial.
 In the preparation of the Particular Conditions there are Cross references with
Annexures and Tender Specifications and Appendices. It is obligatory to have no
contradiction in Contract clauses.
Dr. D. M. Parikh

Annexures
 Annex A: Example of Form of Parent Company Guarantee – in the instruction to
tenderers.
 Annex B: Example of Form of Tender Security – in instruction to tenderers.
 Annex C: Example of Form of Performance Security – Demand Guarantee – annexed

to the Particular Conditions.
 Annex D – Example of Form of Performance Security – Surety Bond – annexed to the

Particular Conditions.
47
Dr. D. M. Parikh

Annexures
 Annex E: Example of Form of Advance Payment Guarantee – annexed to the
Particular Conditions.
 Annex F: Example of Form of Retention Money Guarantee – annexed to the Particular

Conditions.
 Annex G: Example of Form of Payment Guarantee by the Employer – Demand

Guarantee – annexed to the Particular Conditions.

Dr. D. M. Parikh

Appendix to Tender
 Appendix to Tender provide following information;
 Non Financial information
 Financial information
 Why Appendix to Tender?

FIDIC in various clauses makes reference to the Appendix to Tender, which
are dependent on related information provided therein

48
Dr. D. M. Parikh

Appendix to Tender – Non Financial Information
Item Sub-clause Data
Employer’s name and address 1.1.2.2 & 1.3
Contractor’s name and address 1.1.2.3 & 1.3
Engineer’s name and address 1.1.2.4 & 1.3
Time for Completion of the Works 1.1.3.3 … days
Defects notification period 1.1.3.7 … days
Electronic transmission 1.3
Governing Law 1.4
Dr. D. M. Parikh

Item Sub-Clause Data
Ruling language 1.4
Language for communication 1.4
Time for access to the Site 2.1 …days after Date of
commencement
Normal working hours 6.5
Periods of submission of insurance
a. Evidence of Insurance 18.1 a. … days
b. Relevant policies b. … days
49
Dr. D. M. Parikh

Date by which the DAB shall be 20.2 28 days after
appointed Commencement
The DAB shall be 20.2 One or three members
Appointment (if not agreed) shall be 20.3 The president of FIDIC or
made by other person nominated
It there are sections/Milestones:
Definition of sections / Milestones 1.1.5.6
Time for completion for each 1.1.3.3
Dr. D. M. Parikh

Appendix to Tender – Financial Information
Amount of Performance 4.2 …% of the Accepted Contract amount
Security in the currencies and proportions in
which the Contract Price is payable
Delay damages for the 8.7 & … % of the Final Contract Price per
Works 14.15 (b) day, in currencies and proportions in
which the Contract Price is payable
Maximum amount of delay 8.7 …% of the Final Contract Price
damages

50
Dr. D. M. Parikh

If there are Provisional sums:
13.5(b) …%
Percentage of adjustment of Provisional Sums
If Sub-clause 13.8 applies: Adjustment for change in costs:
13.8
Table of adjustment data
Coefficient Country of origin Source of Value on
Scope of Index and currency index title base date
a = fixed
b = labour …….. …….. ………
c = …….… ……………
Dr. D. M. Parikh

Total Advance Payment 14.2 % of Accepted Contract Amount
Number and timing of 14.2
installments
Currencies and proportion 14.2 …% in …….
…% in …….
Start repayment of advance 14.2 (a) When payments are …. % of Accepted
payment Contract Amount less Provisional Sums

51
Dr. D. M. Parikh

Repayment amortization of Advance Payment 14.2 (b)
Percentage of retention 14.3
Limit of Retention Money 14.3 …% of Accepted
Contract Amount
If Sub-clause 14.5 applies:
Plant and materials for payment when shipped 14.5 (b) … List
Plant and materials for payment when
delivered 14.5 (c) … List
Dr. D. M. Parikh

Minimum amount of Interim Payment 14.6 … % of Accepted
Certificate Contract amount
If payment is made in one currency – 14.15 As named in the Letter
Currency of payment of Tender
If payment is done in more than one currency
Currency …… [name] …% payable in …..
Currency …... [name] 14.15 …% payable in …..
Currency …… [name] …% payable in …..

52
Dr. D. M. Parikh

Minimum amount of deductibles for 18.2 (d)
insurance of the Employer’s risk
Minimum amount of third party insurance 18.3

Dr. D. M. Parikh
Quiz
NO QUESTION YES NO MAYBE
1 FIDIC Red, Yellow and Silver Books means a complete Contract for Works?
2 FIDIC conditions are tilted in favour of the Employers.
3 Nominated sub-contractor is the same as the sub-contractor?
4 Engineer being part of the Employer’s Personnel shall always act in favour of Employer?
5 Financing institutes are Party in the FIDIC Contracts.
6 Insurance companies are not required to be a Party to the Contract.
7 FIDIC conditions have priority over the national laws.
8 A total of 3 clauses are different between Red Book and Yellow Book.
9 If the Employer terminate the Contract for his convenience, the Contractor is eligible of
payment of Cost and Profit on the balance Works.
10 Defects Notification Period can not be extended beyond stipulated period in the Contract.
11 The Employer may appoint his staff as a DAB member on the 3 member board.
12 Bill of Quantities forms part of RB and YB based Contracts.
53
Dr. D. M. Parikh
Responsibilities of Main Parties

Dr. D. M. Parikh
Clause 1: General Provisions

54
Dr. D. M. Parikh
1. General Provisions
1.1.1 Definitions – The Contract
“Contract” means the Contract Agreement, the Letter of Acceptance, the Letter of Tender, these
Conditions, the Specifications, the Drawings, the Schedules, and the further documents (if any)
which are listed in the Contract Agreement or in the Letter of Acceptance.
“Contract Agreement” means the contract agreement (if any) referred to in Sub-Clause 1.6
[Contract Agreement].
“Letter of Acceptance” means the letter of formal acceptance, signed by the Employer, of the
Letter of Tender, including any annexed memoranda comprising agreements between and
signed by both Parties. If there is no such letter of acceptance, the expression “Letter of
Acceptance” means the Contract Agreement and the date of issuing or receiving the Letter of
Acceptance means the date of signing the Contract Agreement.
Dr. D. M. Parikh
1.1.1 Definitions – The Contract
"Letter of Tender" means the document entitled letter of tender, which was completed by the
Contractor and includes the signed offer to the Employer for the Works.
"Schedules" means the document(s) entitled schedules, completed by the Contractor and
submitted with the Letter of Tender, as included in the Contract. Such document may include the
Bill of quantities, data, lists, and schedules of rates and/or prices.
"Tender" means the Letter of Tender and all other documents which the Contractor submitted
with the Letter of Tender, as included in the Contract.
"Appendix to Tender" means the completed pages entitled appendix to tender which are
appended to and form part of the Letter of Tender
55
Dr. D. M. Parikh
1.1.2 Definitions – Parties and Persons
"Party" means the Employer or the Contractor, as the context requires.
"Employer" means the person named as employer in the Appendix to Tender and the legal
successors in title to this person.
"Contractor" means the person(s) named as contractor in the Letter of Tender accepted by the
Employer and the legal successors in title to this person(s).
"Engineer" means the person appointed by the Employer to act as the Engineer for the purposes
of the Contract and named in the Appendix to Tender, or other person appointed the Employer
and notified to the Contractor under Sub-Clause 3.4 [Replacement of the Engineer]
Dr. D. M. Parikh
"Contractor's Representative" means the person named by the Contractor in the Contract or
appointed from time to time by the Contractor under Sub-Clause 4.3 [Contractor's
Representative], who acts on behalf of the Contractor.
"Employer's Personnel" means the Engineer, the assistants referred to in Sub-Clause 3.2
[Delegation by the Engineer] and all other staff, labour and other employees of the Engineer and
of the Employer; and any other personnel notified to the Contractor, by the Employer or the
Engineer, as Employer's Personnel.

56
Dr. D. M. Parikh
"Contractor's Personnel" means the Contractor's Representative and all personnel whom the
Contractor utilizes on Site, who may include the staff, labour and other employees of the
Contractor and of each Subcontractor; and any other personnel assisting the Contractor in the
execution of the Works.
"DAB" means the person or three persons so named in the Contract, or other person(s)
appointed under Sub-Clause 20.2 [Appointment of the Dispute Adjudication Board] or under Sub-
Clause 20.3 [Failure to Agree Dispute Adjudication Board].

Dr. D. M. Parikh
1.1.3 Definitions- Dates, Tests, Periods and Completion
"Base Date" means the date 28 days prior to the latest date for submission of the Tender.
"Commencement Date" means the date notified under Sub-Clause 8.1 [Commencement of
Works].
"Time for Completion" means the time for completing the Works or a Section (as the case may
be) under Sub-Clause 8.2 [Time for Completion], as stated in the Appendix to Tender (with any
extension under Sub-Clause 8.4 [Extension of Time for Completion]), calculated from the
Commencement Date.
"Tests on Completion" means the tests which are specified in the Contract or agreed by both
Parties or instructed as a Variation, and which are carried out under Clause 9 [Tests on
Completion] before the Works or a Section (as the case may be) are taken over by the Employer.
57
Dr. D. M. Parikh
1.1.3 Definitions- Dates, Tests, Periods and Completion
“Taking Over Certificate" means a certificate issued under Clause 10 [Employer’s Taking-Over]
“Defects Notification Period" means the period for notifying defects in the Works or a Section (as
the case may be) under Sub-Clause 11.1 [Completion of Outstanding Work and Remedying
Defects], as stated in the Appendix to Tender (with any extension under Sub-Clause 11.3
[Extension of Defects Notification Period]), calculated from the date on which the Works or
Section is completed as certified under Sub-Clause 10.1 [Taking Over of the Works and
Sections].
“day“ means a calendar day and “year” means 365 days.

Dr. D. M. Parikh
1.1.4 Definitions - Money and Payments
"Accepted Contract Amount" means the amount accepted in the Letter of Acceptance For the
execution and completion of the Works and the remedying of any defects.
"Contract Price" means the price defined in Sub-Clause 14.1 [The Contract Price], and includes
adjustments in accordance with the Contract.
"Cost" means all expenditure reasonably incurred (or to be incurred) by the Contractor, whether
on or off the Site, including overhead and similar charges, but does not include profit.

58
Dr. D. M. Parikh
1.1.4 Definitions - Money and Payments
"Provisional Sum" means a sum (if any) which is specified in the Contract as a provisional sum,
for the execution of any part of the Works or for the supply of Plant, Materials or services under
Sub-Clause 13.5 [Provisional Sums].
"Retention Money" means the accumulated retention moneys which the Employer retains under
Sub-Clause 14.3 [Application for Interim Payment Certificates] and pays under Sub-Clause 14.9
[Payment of Retention Money].

Dr. D. M. Parikh
1.1.5 Definitions – Works and Goods
"Permanent Works" means the permanent works to be executed by the Contractor under the
Contract.
"Section" means a part of the Works specified in the Appendix to Tender as a Section (if any).
"Temporary Works" means all temporary works of every kind (other than Contractor's Equipment)
required on Site for the execution and completion of the Permanent Works and the remedying of
any defects.
"Works" mean the Permanent Works and the Temporary Works, or either of them as appropriate.

59
Dr. D. M. Parikh
1.1.6 Definitions – Other Definitions
"Country" means the country in which the Site (or most of it) is located, where the Permanent Works
are to be executed.
"Laws" means all national (or state) legislation, statutes, ordinances and other laws, and regulations
and by-laws of any legally constituted public authority.
"Performance Security" means the security under Sub-Clause 4.2 [Performance Security].
"Site" means the places where the Permanent Works are to be executed and to which Plant and
Materials are to be delivered, and any other places as may be specified in the Contract as forming part
of the Site
"Unforeseeable" means not reasonably foreseeable by an experienced contractor by the date for
submission of the Tender.
Dr. D. M. Parikh
1.2 Interpretation
♦ Words indicating one gender include all genders;
♦ Words indicating the singular also include the plural and words indicating the plural
also include the singular;
♦ Provisions including the word “agree”, “agreed” or “agreement” require the

agreement to be recorded in writing, and
♦ “written” or “in writing” means hand-written, type-written, printed or electronically

made, and resulting in a permanent record.
60
Dr. D. M. Parikh
1.3 Communication
♦ In writing and delivered by hand (against receipt), sent by mail or courier, or transmitted
using any of the agreed systems of electronic transmission as stated in the Appendix to
Tender; and
♦ Approvals, certificates, consents and determinations shall not be unreasonably withheld or

delayed.
♦ When a certificate is issued to a Party, the certifier shall send a copy to the other Party.
♦ When a notice is issued to a Party, by the other Party or the Engineer, a copy shall be sent to
the Engineer or the other Party, as the case may be.
Dr. D. M. Parikh
1.4 Law and Language
♦ The Contract is governed by the law mentioned in Appendix to Tender.
♦ The Employer should check if there are discrepancies between the governing law and the
Contract. If there are some discrepancies these should be resolved through Particular
Condition/s.
♦ To be noted also that FIDIC allows for changes in legislation through Sub-clause 13.7.
♦ The ruling language is the one stated in Appendix to Tender and if not, the ruling language is
the one in which the majority of the documents have been written.
♦ The language for communication is the one stated in Appendix to Tender.
♦ It is important to avoid confusion and to define the ruling language and the language for
communication.
It is recommended to have the same ruling and communication language.
61
Dr. D. M. Parikh
1.5 Priority of Documents
the Contract Agreement
the Letter of Acceptance
the Letter of Tender
the Particular Conditions
the General Conditions
the Specification
the Drawings
the Schedules and any other documents forming part of Contract
Dr. D. M. Parikh
1.6 Contract Agreement
Parties shall enter into the Contract Agreement within 28 days after the Contractor
receives the Letter of Acceptance, unless they agree otherwise.
1.7 Assignment
No assignment of part or whole of the Contract or benefit or interest in or under the
contract with out prior agreement

62
Dr. D. M. Parikh
1.8 Care and Supply of the Documents
This clause deals with the responsibility, custody and caring for the Documents
between the Parties.
1.9 Delayed Drawings or Instruction [RB]

1.9 Errors in the Employer's Requirements [YB]
In both cases the provisions of the Sub-clause mention the responsibilities of the Employer and
the Engineer [Any default from Employer and/or Engineer may open the door for the
Contractor's claims under 20.1 — E0T+Cost+Profit]

Dr. D. M. Parikh
Clause 2: The Employer

63
Dr. D. M. Parikh
2. Employer
2.1 Access to the Site
♦ The Employer has the responsibility to provide access to the site in the time stated in
Appendix to Tender.
♦ If there is no time stated in Appendix to Tender the access must be provided in a such
manner to not delay the Contractor and his program of Works (Sub-clause 8.3).
♦ Any default would attract claims under Sub Clause 20.1 – EOT + Cost + Profit
♦ Can the Employer withdraw the Site Access?
The Site Access can be withdrawn if the Contractor fails to provide a Performance Security
in accordance with the provisions of the Sub-clause 4.2.
Dr. D. M. Parikh
2. Employer
2.2 Permits, Licenses and Approvals
The Employer shall reasonable assist the Contractor in obtaining permits, licenses and
approvals.
2.3 Employer’s personnel
The Employer shall be responsible for the good co-operation of his personnel with the
Contractor and will take similar safety measures and environment protection as
required for the Contractor.
64
Dr. D. M. Parikh
2. Employer
2.4 Employer’s Financial Arrangement
♦ The Employer shall submit, within 28 days after receiving any request from the
Contractor, reasonable evidence that financial arrangements have been made and
are being maintained, which will enable Employer to pay the Contract Price
(estimated at that time) in accordance with Clause 14 [Contract Price and Payments].
♦ If the Employer intends to make any material change to his financial arrangements,
the Employer shall give notice to the Contractor with detailed particulars.
♦ Any defaults from Employer will attract Contractor’s claims under 16.1, 16.2, 16.4,
and 19.6.
Dr. D. M. Parikh
2. Employer
2.5 Employer’s Claims
♦ If the Employer considers himself to be entitled to any payment under any Clause of
these Conditions or otherwise in connection with the Contract, and/or to any
extension of the Defects Notification Period, the Employer or the Engineer shall give
notice and particulars to the Contractor.
♦ The notice shall be given as soon as practicable after the Employer became aware
of the event or circumstances giving rise to the claim. A notice relating to any
extension of the Defects Notification Period shall be given before the expiry of such
period.
65
Dr. D. M. Parikh
2. Employer
♦ Engineer to determine Employer’s claims under Sub-Clause 3.5.
♦ The Employer shall only be entitled to set off against or make any deduction from
an amount certified in a Payment Certificate, or to otherwise claim against the
Contractor, in accordance with this Sub-Clause.

Dr. D. M. Parikh
2. Employer - Exercise
What are the scheduled responsibilities?

66
Dr. D. M. Parikh
Clause 3: The Engineer

Dr. D. M. Parikh
3. Engineer
3.1 Engineer’s Duties and Authority
♦ The Engineer has no authority to amend the Contract.
♦ The Engineer is carrying out the duties assigned to him under the Contract.
♦ The Engineer deemed to obtain the Employer's specific approval for some issues
which have to be specified in Particular Conditions.

67
Dr. D. M. Parikh
3. Engineer
3.1 Engineer’s Duties and Authority..contd.
♦ However, whenever the Engineer exercises a specified authority for which the
Employer's approval is required, then (for the purposes of the Contract) the
Employer shall be deemed to have given approval.
♦ The Engineer has no authority to relieve either Party of any duties, obligations or
responsibilities.
♦ Any approval, consent, certificate, notice of the Engineer shall not relive the
Contractor from any responsibility under the Contract.
Dr. D. M. Parikh
3. Engineer
3.2 Delegation by the Engineer
♦ The Engineer may time to time assign duties and delegate authority to assistants.
♦ The Engineer may also revoke such assignment or delegation.
♦ Without the approval of the Parties he can not delegate the authority to make a
determination [sub-Clause 3.5].

68
Dr. D. M. Parikh
3. Engineer
3.3 Instructions of the Engineer
♦ The Engineer may issue to the Contractor (at any time) instructions and additional
or modified Drawings which may be necessary for the execution of the Works and
the remedying of any defects, all in accordance with the Contract.
♦ The Contractor shall only take instructions from the Engineer, or from an assistant
to whom the appropriate authority has been delegated under this Clause.
♦ Oral instruction should be confirmed in two days.

Dr. D. M. Parikh
3. Engineer
3.4 Replacement of the Engineer
♦ If the Employer intends to replace the Engineer, the Employer shall, not less than
42 days before the intended date of replacement, give notice to the Contractor of
the name, address and relevant experience of the intended replacement Engineer.
♦ The Employer shall not replace the Engineer with a person against whom the
Contractor raises reasonable objection by notice to the Employer, with supporting
particulars.

69
Dr. D. M. Parikh
3. Engineer
3.5 Determination
♦ The Engineer is required to act fairly in making a determination.
♦ There are 2 steps:
 A consultative step in order to reach an agreement.
 If the Parties cannot have an agreement the Engineer shall act fair and give a
determination.
♦ The determination shall be given to the Parties with supporting documents and justification.
♦ Each Party shall give effect to each agreement or determination unless and until revised by
DAB.
Dr. D. M. Parikh
3. Engineer - Exercise

70
Dr. D. M. Parikh
Clause 4: The Contractor

Dr. D. M. Parikh
4. Contractor
4.1 Contractor’s General Obligations
♦ The Contractor shall design as per the scope specified in the Contract.
♦ The Contractor shall provide the equipment, plants, documents (whatever is needed) to
finalize the Works and remedy the defects.
♦ The Contractor shall be responsible for the safety and all operation on site, permanent or
temporary Works.

71
Dr. D. M. Parikh
4. Contractor
4.2 Performance Security
♦ Within 28 days after the receipt of the Letter of Acceptance the Contractor shall deliver to the Employer
and copy to the Engineer a Performance Security for the amount stated in Appendix to Tender and in the
format requested by the Employer.
♦ The Performance Security shall be issued by an entity approved by the Employer.

♦ If there is no percentage mentioned in the Appendix to Tender this Sub-clause is not applicable.
♦ The Employer shall indemnify and hold Contractor harmless against and from all damages, losses and
expenses (including legal fees and expenses) resulting from a claim under the Performance Security.
♦ The Employer shall return the Performance Security to the Contractor within 21 days after receiving a
copy of the Performance Certificate.
Dr. D. M. Parikh
4. Contractor
4.2 Performance Security….contd.
♦ The Employer shall not make a claim under the Performance Security, except for amounts to which the
Employer is entitled under the Contract in the event of:
 failure by the Contractor to extend the validity of the Performance Security in which event the
Employer may claim the full amount of the Performance Security,
 failure by the Contractor to pay the Employer an amount due, as either agreed by the Contractor or
determined under Sub-Clause 3.5 within 42 days after this agreement or determination,
 failure by the Contractor to remedy a default within 42 days after receiving the Employer’s notice, or,
 circumstances which entitle the Employer to Termination under Sub-Clause 15.2

72
Dr. D. M. Parikh
4. Contractor
4.3 Contractor’s Representative
♦ The Contractor shall appoint the Contractor's Representative and shall give him all authority
necessary to act on behalf of the Contractors under the Contract.
♦ if the Contractor's Representative was not nominated in the Contractor's offer then the
consent of the Engineer is needed.
♦ The Contractor's Representative is the one who is receiving instructions on behalf of the
Contractor from the Engineer.
♦ The Contractor's Representative must be fluent in the language of contract (Sub-Clause 1.4).
♦ The Contractor's Representative may delegate tasks.
Dr. D. M. Parikh
4. Contractor
4.4 Subcontractors
♦ The Contractor shall not sub-contract the whole of the Works.
♦ The Contractor shall be responsible for the acts of his sub-contractor/s.
♦ No approval is needed if the sub-contractors were mentioned in the Contractor's offer.
♦ The Contractor shall give 28 days' notice of the intended date of commencement by each
sub-contractor for the Engineer's consent.

73
Dr. D. M. Parikh
4. Contractor
4.5 Assignment of Benefit of Subcontract
♦ If a Subcontractor's obligations extend beyond the expiry date of the relevant Defects
Notification Period and the Engineer, prior to this date, instructs the Contractor to assign the
benefit of such obligations to the Employer, then the Contractor shall do so.
♦ Unless otherwise stated in the assignment, the Contractor then shall have no liability to the
Employer for the work carried out by the Subcontractor after the assignment takes effect.
4.6 Co-operation
♦ The Contractor shall ensure the co-operation with the Employer's personnel [Sub-Clause 2.3]
Dr. D. M. Parikh
4. Contractor
4.7 Setting Out
♦ The Employer is responsible for any errors in these specified or notified items of reference and
the Contractor may claim under Sub-Clause 20.1.
♦ The Contractor is responsible for the positioning of the Works.
4.8 Safety Procedure

♦ The Contractor shall comply with the safety regulations and take care of safety of all persons.
♦ The Contractor shall keep the site clear of unnecessary obstruction.
♦ Provide temporary Works for the safety and protection of the public.
74
Dr. D. M. Parikh
4. Contractor
4.9 Quality Assurance
♦ The Contractor shall institute a quality assurance system to demonstrate compliance with the
requirements of the Contract.
♦ The Engineer shall be entitled to audit any aspect of the system.
♦ Details of all procedures and compliance documents shall be submitted to the Engineer for
information before each design and execution stage is commenced.
♦ Compliance with the quality assurance system shall not relieve the Contractor of any of his
duties, obligations or responsibilities under the Contract.
Dr. D. M. Parikh
4. Contractor
4.10 Site Data
♦ The Employer has the obligation to make available all site data available in his possession
before Base Date.
Hydrological Sub-surface Environmental

data data aspects
♦ The Tenderer is responsible for the interpretation of the data.
♦ To the extent which was practicable, the Contractor is deemed to have obtained all necessary
information as to risks, contingencies and other circumstances, which may influence or affect
the Tender or Works.
75
Dr. D. M. Parikh
4. Contractor
4.12 Unforeseeable Physical Conditions
♦ "physical conditions" means natural physical conditions and man-made and other physical obstructions;
which Contractor encounters at the Site while executing Works, including sub-surface and hydrological
conditions but excluding climatic conditions.
♦ The Contractor is entitled to an EOT+ recovery of the costs occurred.
♦ However, the Engineer may also review whether other physical conditions in this parts of the Works (if any)
were more favourable than could reasonably have been foreseen when the Contractor submitted the Tender.
♦ If and to the extent that these more favourable conditions were encountered, Engineer may proceed in
accordance with Sub-Clause 3.5 to agree or determine reductions in Cost which were due to these
conditions, which may be included (as deductions) in Contract Price and Payment Certificates, but shall not
result in a net reduction in Contract Price.
Dr. D. M. Parikh
4. Contractor
4.13 Rights of Way and Facilities
♦ The Contractor shall bear all costs for the temporary Works which may be required, including
the ones for access to the site.
♦ The Contractor shall obtain at his risk and costs all facilities necessary outside the site which
may be required for the execution of the Works.
4.14 Avoidance of Interference

♦ The Contractor shall not interfere unnecessarily with the convenience of public (use and
occupation of public roads, footpaths, etc.).
76
Dr. D. M. Parikh
4. Contractor
4.15 Access Routes
♦ Contractor is deemed to have satisfied himself with the availability of the access routes to the
Site and shall use reasonable efforts to prevent the damage of roads & bridges due to his traffic.
♦ shall be responsible for maintenance that may be required for his use of access routes.
♦ shall provide all necessary signs or directions along access routes, and shall obtain any
permission which may be required from the relevant authorities far his use of routes.
♦ The Employer shall not be responsible for any claims which may arise from the use or otherwise
of any access route; does not guarantee the suitability or availability of particular access routes,
and the Costs due to non-suitability or non-availability, for the use required by the Contractor, of
access routes shall be borne by the Contractor.
Dr. D. M. Parikh
4. Contractor
4.16 Transport of Goods
♦ the Contractor shall give the Engineer not less than 21 days' notice of the date on which any
Plant or a major item of other Goods will be delivered to the Site;
♦ the Contractor shall be responsible for packing, loading, transporting, receiving, unloading,
storing and protecting' all Goods and other things required for the Works; and
♦ the Contractor shall indemnify and hold the Employer harmless against and from all damages,
losses and expenses (including legal fees and expenses) resulting from the transport of Goods,
and shall negotiate and pay all claims arising from their transport.

77
Dr. D. M. Parikh
4. Contractor
4.17 Contractor's Equipment
♦ The Contractor shall be responsible for all Contractor's Equipment.
♦ When brought on to the Site, Contractor's Equipment shall be deemed to be exclusively intended for the
execution of the Works.
♦ The Contractor shall not remove from Site any major items of Equipment without the consent of Engineer.
Consent, however, is not required for vehicles transporting Goods or Contractor's Personnel off Site.
4.18 Protection of the Environment

♦ The Contractor shall take all reasonable measures to protect the environment. He shall ensure that
emissions, water sewage, etc. from his activities will not exceed the values mentioned in the Specifications
and the values mentioned in the Applicable Law.
Dr. D. M. Parikh
4. Contractor
4.19 Electricity, Water and Gas
♦ The Contractor shall be responsible for the provision of all power, water and other services he
may require.
♦ The Contractor shall be entitled to use for the purposes of the Works such supplies of
electricity, water, gas and other services as may be available on the Site. The Contractor shall,
at his risk and cost, provide any apparatus necessary for his use of these services and for
measuring the quantities consumed.
♦ The quantities consumed and the amounts due (at these prices) for such services shall be
agreed or determined by the Engineer in accordance with Sub-Clause 2.5 [Employer's Claims]
and Sub-Clause 3.5 [Determinations]. The Contractor shall pay these amounts to the Employer.
78
Dr. D. M. Parikh
4. Contractor
4.20 Employer's Equipment and Free-Issue Material
♦ The Employer shall make the Employer's Equipment (if any) available for the use of the
Contractor in the execution of the Works in accordance with the details, arrangements and
prices stated in the Specification. Unless otherwise stated in the Specification:
 the Employer shall be responsible for the Employer's Equipment, except that
 the Contractor shall be responsible for each item of Employer's Equipment whilst any of
Contractor's Personnel is operating it, driving it, directing it or in possession or in control.
♦ The appropriate quantities and the amounts due (at such stated prices) for the use of
Employer's Equipment shall be agreed or determined by the Engineer in accordance with Sub-
Clause 2.5 [Employer's Claims] and Sub-Clause 3.5 [Determinations]. The Contractor shall pay
these amounts to the Employer.
Dr. D. M. Parikh
4. Contractor
4.20 Employer's Equipment and Free-Issue Material….contd.
♦ The Employer shall supply, free of charge, the "free-issue materials" (if any) in accordance with
the details stated in the Specification. The Employer shall, at his risk and cost, provide these
materials at the time and place specified in the Contract. The Contractor shall then visually
inspect them, and shall promptly give notice to the Engineer of any shortage, defect or default
in these materials, Unless otherwise agreed by both Parties, the Employer shall immediately
rectify the notified shortage, defect or default.
♦ After this visual inspection, the free-issue materials shall come under the care, custody and
control of the Contractor. The Contractor's obligations of Inspection, care, custody and control
shall not relieve the Employer of liability for any shortage, defect or default not apparent from a
visual Inspection.
79
Dr. D. M. Parikh
4. Contractor
4.21 Progress Reports
The Contractor to submit Progress Reports it within 7 day of end of month & to continue to submit
till outstanding works at Taking over Certificate are completed. Each report shall include:
♦ Charts and detailed description of progress, including each stage of design (if any),
Contractor’s Documents, procurement, manufacture, delivery at site, construction, erection and
testing; [Add for RB: including these stages of work by each nominated Subcontractor] [Add for
YB: commissioning and trial operation]
♦ for the manufacture of each main item of Plant and Materials, the name of the manufacturer,
location, percentage progress, and the actual or expected dates of commencement, inspection,
tests and shipment & arrival at Site.
Dr. D. M. Parikh
4. Contractor
Required for Period of
4.21 Progress Reports….contd. certification of Payment under
IPC [14.3] 14.7 doesn’t
Each report shall include…contd. commence
♦ photographs showing the status of manufacture and of progress on the Site
♦ records of Contractor’s Personnel and Equipment (6.1)
♦ QA documents, test results and certificates of Materials
♦ list of variations [YB only] and notices under 2.5 and 20.1
♦ safety statistics including incidents & activities related to environmental aspects
♦ comparison of actual and planned progress, with details of event(s) which may hinder the
completion as per Contract and mitigation measures to overcome delays
80
Dr. D. M. Parikh
4. Contractor
4.22 Security of the Site
♦ The Contractor is responsible for the Site security
4.23 Contractors' Operations on Site

♦ The Contractor is responsible for his operations on Site.
4.24 Fossils
♦ When founded shall be placed on the care and authority of the Employer. Subject to
Sub-Clause 20.1 the Contractor may be entitled to an EOT + Costs occurred.
Dr. D. M. Parikh
4. Contractor - Exercise

81
Dr. D. M. Parikh
Clause 5: Nominated Subcontractors

Dr. D. M. Parikh
5. Nominated Subcontractor
5.1 Definition of Nominated Sub-contractors
♦ in the Contract, "nominated Subcontractor" means a Subcontractor:
 who is stated in the Contract as being a nominated Subcontractor, or
 whom the Engineer, under Clause 13 [Variations and Adjustments], instructs the
Contractor to employ as a Subcontractor.

82
Dr. D. M. Parikh
5.2 Objection to Nomination
The Contractor is not under any obligation to employ a nominated Subcontractor
against whom he raises reasonable objection, including but not limited to;
♦ If there are reasons to believe that the Subcontractor does not have sufficient
competence, resources or financial strength.
♦ If the subcontract does not specify that the nominated Subcontractor shall indemnify
the Contractor against and from any negligence or misuse of Goods by the
nominated Subcontractor, his agents and employees.
Dr. D. M. Parikh
5.2 Objection to Nomination
The Contractor is not under any obligation to employ a nominated Subcontractor
against whom he raises reasonable objection…..contd.
♦ If the subcontract does not specify that, for the subcontracted work (including
design, if any), the nominated Subcontractor shall:
 Undertake to the Contractor such obligations and liabilities as will enable the Contractor
to discharge his obligations and liabilities under the Contract, and
 Indemnify the Contractor against an from all obligations and labilities arising under or in
connection with the Contract and from the consequences of any failure by the
Subcontractor to perform these obligations or to fulfil these liabilities.
83
Dr. D. M. Parikh
5.3 Payments to Nominated Subcontractors
♦ The Contractor shall pay to the nominated Subcontractor the amounts which the Engineer
certifies to be due in accordance with the subcontract.
5.4 Evidence of Payments

♦ The Engineer may request the Contractor to supply reasonable evidence that the nominated
Subcontractor has received all amounts due.
♦ The Employer may (at his sole discretion) pay, direct to the nominated Subcontractor, part or
all of such amounts previously certified (less applicable deductions) as are due to the
nominated Subcontractor and for which the Contractor failed to submit the evidence.
Dr. D. M. Parikh
Clause 5: Design

84
Dr. D. M. Parikh
5. Design
5.1 General Design Obligations
♦ The Contractor shall carry out and be responsible for the design of the Works.
♦ The Contractor warrants that he, his designers, his design Sub-contractor has the
experience and capability necessary for the design.
5.2 Contractor's Documents

♦ The Contractor's documents shall comprise the technical documents specified in the
Employer's requirements and the As-build documents (Sub-Clause 5.6) and the Operation
and Maintenance Manuals (Sub-Clause 5.7).

Dr. D. M. Parikh
5. Design
5.3 Contractor's Undertaking
5.4 Technical Standards and Regulations
♦ The Contractor shall prepare the design in accordance with the laws in the Country and shall
comply with the Country's standards and regulation and the standards mentioned in the
Employer's requirements.
5.8 Design Error

♦ All errors, omissions, inconsistencies or other defects found in the Contractor's documents
they and the Works shall be corrected at the Contractor's costs.

85
Dr. D. M. Parikh
5. Design
Engineer to
Design Procedure
give Consent
Contractor Contractor to give Notice Errors in ER

Nominate the for errors in Employer’s will result in
Designer Requirements Variation
No errors in
ER
Contractor to produce Documents to be

Contractor’s Documents submitted for
(design, drawings, etc.) Engineer’s review
Engineer to
International Federation of Consulting Engineers review in 21
The Global Voice of Consulting Engineers days 171
Dr. D. M. Parikh
Quiz
1 How many Main Clauses are in the Red/Yellow Book? Provide no.
2 How many Main Clauses are different in the Red/Yellow Book? Provide no.
3 Is the Engineer an independent entity in the Contract?
4 In the Red Book: does the BOQ take precedence to the Specifications?
5 Does FIDIC measures the time in working days?
6 In Red Book: can the designer directly instruct the Contractor?
7 Does the term 'Works' in FIDIC means the permanent works?
8 The written communication can be done by e-mail?
9 The ruling language and the language for communications has to be the same?
10 The Engineer has to nominate a person who acts as “the Engineer”?
11 Can Contractor at any time request for the Employer's financial arrangements?
12 Can the Engineer delegate all his authorities to his Resident Engineer?
13 Can the Engineer be changed?
86
Dr. D. M. Parikh
Quiz
14 Can Contractor request the change of a person from the Engineer's team?
15 Can the Engineer request change of a person from the Contractor's team?
16 A Sub-contractor mentioned in the Contractor's offer has to be approved?
17 The Engineer has to approve the Contractor's Monthly Progress Report?
18 Is there a time limit for the Engineer to issue a determination under 3.5?
19 Is the Engineer required to consult the Contractor before issuing a determination in
accordance with 3.5?
20 Can the Engineer be changed with another one if the Contractor reasonably objected to
the new Engineer?
21 The Contractor has to visit the Site during the Tender period.
22 Is the Contractor obliged to employ a nominated Sub-contractor?
23 YB. if the Engineer approve the Contractor's design then the Engineer remain responsible
for the errors found in the Design?

Dr. D. M. Parikh
Management of Projects

87
Dr. D. M. Parikh
Clause 6: Staff and Labour

Dr. D. M. Parikh
6. Staff and Labour

6.1 Engagement of Staff and Labour
♦ The Contractor shall make arrangements for the engagement of all staff and labour, local or
otherwise, and for their payment, housing, food and transport.
6.2 Rates of Wages and Conditions of Labour

♦ The Contractor shall pay rates of wages, and observe conditions of labour, which are not lower
than those established for the trade or industry where the work is carried out, or as per law.
6.3 Persons in the Service of Employer

♦ The Contractor shall not recruit, or attempt to recruit, staff and labour from amongst the
Employer's Personnel.
88
Dr. D. M. Parikh
6. Staff and Labour

6.4 Labour Laws
♦ The Contractor shall comply with all the relevant labour laws applicable to the Contractor's
Personnel, including laws relating to their employment, health, safety, welfare, and immigration,
and shall allow them all their legal rights.
6.5 Working Hours

♦ No work shall be carried out on the Site on locally recognised days of rest, or outside the normal
working hours stated in the Appendix to Tender, unless:
 otherwise stated in the Contract,
 the Engineer gives consent, or
 the work is unavoidable or necessary for the protection of life or property or for the safety of the works,
in which case the Contractor shall immediately advise the Engineer.
Dr. D. M. Parikh
6. Staff and Labour

6.7 Health and Safety
♦ The Contractor shall at all times take all reasonable precautions to maintain the health and
safety of the Contractor's Personnel.
♦ In collaboration with local health authorities, the Contractor shall ensure that medical staff, first
aid facilities, sick bay and ambulance service are available at all times at the Site and at any
accommodation for Contractor's and Employer's Personnel.
♦ The Contractor shall appoint an accident prevention officer at the Site, responsible for
maintaining safety and protection against accidents.

89
Dr. D. M. Parikh
6. Staff and Labour

6.8 Contractor’s Superintendence
♦ Throughout the execution of the Works, and as long thereafter as is necessary to fulfil the
Contractor's obligations, the Contractor shall provide all necessary superintendence to plan,
arrange, direct, manage, inspect and test the work.
6.9 Contractor’s Personnel

♦ The Engineer may require the Contractor to remove any person employed on the Site or
Works, including the Contractor's Representative if applicable, who:
 persists in any misconduct or lack of care,
 carries out duties incompetently or negligently,
 fails to conform with any provisions of the Contract, or
 persists in any conduct which is prejudicial to safety, health, or the protection of the environment.
Dr. D. M. Parikh
6. Staff and Labour

6.10 Records of Contractor's Personnel and Equipment
The Contractor shall submit, to the Engineer, details showing the number of each class of
Contractor's Personnel and of each type of Contractor's Equipment on the Site. Details shall be
submitted each calendar month, in a form approved by the Engineer, until the Contractor has
completed all work, which is known to be outstanding at the completion date stated in the Taking-
Over Certificate for the Works.
6.11 Disorderly Conduct

The Contractor shall at all times take all reasonable precautions to prevent any unlawful, riotous
or disorderly conduct by or amongst the Contractor's Personnel, and to preserve peace and
protection of persons and property on and near the Site.
90
Dr. D. M. Parikh
6. Staff and Labour

In Summary…
Contractor is
responsible Contractor to
submit list of staff,
labour and
personnel
Staff and
Labour
Contractor to comply with
labour laws, laws related to the Engineer can
employment, health, safety, request removal of
migration and shall allow unsuitable
them all their legal rights personnel

Dr. D. M. Parikh
Clause 7: Plant, Materials & Workmanship

91
Dr. D. M. Parikh
7. Plant, Materials & Workmanship

7.1 Manner of Execution
Contractor shall carry out work (manufacture of Plant, the production & manufacture of Materials,
and all other execution) in the manner specified in the Contract; in a workmanlike and careful
manner; as per recognised good practice; using non-hazardous materials.
7.2 Samples
♦ The Contractor shall submit samples of Materials, and relevant information, to the Engineer for
consent prior to using the Materials in or for the Works.
♦ Manufacturer's standard samples of Materials and samples specified in the Contract, all at the
Contractor's cost, and;
♦ Additional samples instructed by the Engineer as a Variation.
Dr. D. M. Parikh

7.3 Inspection
♦ The Employer's Personnel shall at all reasonable times;
 have full access to all parts of Site and to all places from which natural Materials are
being obtained, and;
 during production, manufacture and construction (at Site and elsewhere), be entitled to
examine, inspect, measure and test the materials and workmanship, and to check the
progress of manufacture of Plant and production and manufacture of Materials.

92
Dr. D. M. Parikh

7.3 Inspection….contd.
♦ The Contractor shall give notice to the Engineer whenever any work is ready and before it is
covered up, put out of sight, or packaged for storage or transport.
♦ Engineer shall then either carry out the examination, or testing without unreasonable delay,
or promptly give notice to the Contractor that he does not require to do so.
♦ If the Contractor fails to give the notice, he shall, if and when required by the Engineer,
uncover the work and thereafter reinstate and make good, all at the Contractor's cost.

Dr. D. M. Parikh

7.4 Testing
♦ The Contractor shall provide all what is necessary to carry out the tests specified. The
Contractor shall agree, with the Engineer, the time and place for the specified testing of any
Plant, Materials and other parts of the Works.
♦ The Engineer may, under Clause 13, vary the location or details of specified tests, or instruct
the Contractor to carry out additional tests.
♦ The Engineer shall give the Contractor not less than 24 hours' notice of the Engineer's intention
to attend the tests. If the Engineer does not attend at the time and place agreed, the Contractor
may proceed with the tests, unless otherwise instructed by the Engineer.
♦ Any default by the Employer would attract claims under Sub-Clause 20.1 EOT+Cost+Profit
93
Dr. D. M. Parikh

7.5 Rejection
♦ If, as a result of an examination, inspection, measurement or testing, any Plant, Materials or
workmanship is found to be defective or otherwise not in accordance with the Contract, the
Engineer may reject it by giving notice to the Contractor, with reasons.
♦ If the Engineer requires this Plant, Materials or workmanship to be retested, the tests shall be
repeated under the same terms and conditions.
♦ If the rejection and retesting cause the Employer to incur additional costs, the Contractor shall
subject to Sub-Clause 2.5 and pay these costs to the Employer.

Dr. D. M. Parikh

7.6 Remedial Work
♦ The Engineer may instruct the Contractor to:
 remove from the Site and replace any Plant or Materials which is not in accordance with
the Contract,
 remove and re-execute any other work which is not in accordance with the Contract
 And, execute any work which is urgently required for the safety of the Works, whether
because of an accident, unforeseeable event or otherwise.
♦ If the contractor fails to comply with the instruction, the Employer shall be entitled to employ and
pay other persons to carry out the work [Sub-Clause 2.5].
94
Dr. D. M. Parikh

7.7 Ownership of Plant and Materials
♦ Each item of Plant and Materials shall (in accordance with the Laws) become the property of
the Employer when;
 The same is delivered to the Site.
 When the Contractor is entitled to payment in accordance with Sub-Clause 8.10 - Payment
in Event of Suspension - remove from the Site and replace any Plant or Materials which is
not in accordance with the Contract.
7.8 Royalties
♦ Contractor shall pay all royalties and other payments for; Natural materials obtained outside
Site, and, responsible for disposal of materials from demolition, excavation or other surplus.
Dr. D. M. Parikh
Clause 8: Commencement, Delays and

Suspension

95
Dr. D. M. Parikh
8. Commencement, Delays, Suspension

8.1 Commencement of Work
♦ The Engineer shall give the Contractor not less than 7 days' notice of Commencement Date.
♦ Unless otherwise stated in the Particular Conditions, the Commencement Date shall be within
42 days after the Contractor receives the Letter of Acceptance.
8.2 Time for Completion

 The Contractor shall complete the whole Works, and each Section (if any), within the Time for
Completion for the Works or Section (as the case may be), including:
 achieving the passing of the Tests on Completion, and
 completing all work which is stated in the Contract as being required for the Works or Section to be
considered to be completed for the purposes of taking-over.
Dr. D. M. Parikh

8.3 Programme
♦ The Contractor shall submit a detailed time programme to the Engineer within 28 days after
receiving the notice under Sub-Clause 8.1 [Commencement of Works].
♦ The Contractor shall also submit a revised programme whenever the previous programme is
inconsistent with actual progress or with the Contractor's obligations.
♦ Each programme shall include:
 the order in which the Contractor intends to carry out the Works
 each of the stages for work being carried out by each nominated Subcontractor
 the sequence and timing of inspections and tests
96
Dr. D. M. Parikh

8.3 Programme
 a supporting report including, but not limited to:
 A general description of methods which the contractor intends to adopt, and the
major stages in execution of the Works, and;
 Details showing the Contractor’s reasonable estimate of the number of each class
of Contractor’s Personnel and of each type of Contractor’s Equipment, required on
the site for each major stage.
♦ The Engineer has 21 days to give comment the Contractor's programme to what extend it
does not comply with the Contract. [No exclusive Approval]
♦ The Contractor shall give promptly notice of each of potential future events or circumstances
which may affect the Work, increase in Contract Price, and/or delay the execution of Works.
Dr. D. M. Parikh

Notice of
Letter of Commencement Commencement
Acceptance Date Date Programme
7 days
42 days 28 days
28 days
Performance
Security 4.2

97
Dr. D. M. Parikh

8.4 Extension of Time for Completion
The Contractor shall be entitled subject to Sub-Clause 20.1 to an extension of Time for
Completion by any of the following causes:
♦ A Variation or other substantial change in the quantity of work included in the Contract,
♦ Delay giving an entitlement to extension of time, While determining each extension of time,
♦ Exceptionally adverse climatic conditions, the Engineer shall review previous
♦ Unforeseeable shortages of personnel or Goods for determinations and may increase, but shall
reasons not attributable to Contractor, not decrease, the total extension of time
♦ Any delay, impediment or prevention caused by or attributable to the Employer; the
Employer's Personnel, or the Employer's other contractors on the Site.
Dr. D. M. Parikh

Clause Clause 8.4 and Clause 20.1 Clause 20.1 Clause 3.5
8.4 20.1 Contractor provides Engineer must respond Engineer must
8.4 EOT Process
Contractor Contractor advises Engineer with (within 42 days of receipt consult with
considers Engineer within 28 detailed particulars of claim or particulars) on Employer and
himself days of occurrence within 42 days. the principles of the claim Contractor to
entitled to yes of event yes For continuing event with approval or rejection reach agreement
EOT interim particulars at with detailed comments on EOT and
intervals of not more and proceed in accordance additional
than 28 days with Clause 3.5 payment, if any
no no
Clause 20.1 Clause 20.1
2nd Paragraph-No EOT claim may be
EOT may be given restricted if
and Employer Contractor’s failure
discharged from has prevented or
liability prejudiced proper
International Federation of Consulting Engineers investigation
98
Dr. D. M. Parikh

8.5 Delays Caused by authorities
If the following conditions apply, namely:
 the Contractor has diligently followed the procedures laid down by the relevant legally
constituted public authorities in the Country,
 these authorities delay or disrupt the Contractor's work, and
 the delay or disruption was Unforeseeable.
Then this delay or disruption will be considered as a cause of delay in Sub-Clause 8.4.
Dr. D. M. Parikh

8.6 Rate of Progress
♦ If rate of progress doesn’t reflect the Contract requirements, Engineer has the power to instruct
the Contractor for a revised program of Works with details, methods, etc. in order to finalize
Works as per time for completion.- If the Employer incurs costs then Sub-Clause 2.5 applies.
8.7 Delay Damages

♦ The Contractor is liable for damages as stated in Appendix to Tender subject to Sub-Clause 2.5
and Sub-Clause 8.4 – EOT.
♦ The limit of delay damages (if any) is mentioned in Appendix to Tender.

99
Dr. D. M. Parikh

8.8 Suspension of Work
♦ The Engineer may instruct the Contractor to suspend the Works (partially or entirely). The
Contractor shall protect the Works against deterioration.
♦ If the suspension is caused by the Contractor than Sub-Clauses 8.9, 8.10 & 8.11 shall not apply.
8.9 Consequences of Suspension

8.10 Payment for Plant and Materials in the event of Suspension
♦ The Contractor is entitled to EOT + Costs as per Sub-Clause 20.1
♦ The Contractor is entitled to payment of the value at the date of suspension if the Works are
suspended for more than 28 days or the plant and/or materials are marked as being the
Employer's property in accordance with the Engineer's instruction.
Dr. D. M. Parikh

8.11 Prolonged Suspension
♦ If the Suspension is more than 84 days the Contractor may request resumption of the Works.
♦ If with in 28 days he does not receive the permission, the Contractor may (by notifying the
Engineer) treat the suspension as an omission under Clause 13.
♦ If the suspension is for the whole Work then the Contractor may terminate the Contract in
accordance with Sub-Clause 16.2.
8.12 Resumption of Work

♦ The Contractor is entitled to EOT + Costs as per Sub-Clause 20.1.
100
Dr. D. M. Parikh
Clause 9: Tests on Completion

Dr. D. M. Parikh
9. Tests on Completion
9.1 Contractor's Obligations
♦ The Contractor shall give to the Engineer not less than 21 days' notice of the date after which
the Contractor will be ready to carry out each of the Tests on Completion.
♦ Unless otherwise agreed, Tests on Completion' shall be carried out within 14 days after this
date, on such day or days as the Engineer shall instruct.
♦ As soon as the Works, or a Section, have passed any Tests on Completion, the Contractor shall
submit a certified report of the results of these Tests to the Engineer.

101
Dr. D. M. Parikh
9.2 Delayed Tests
♦ If the Tests on Completion are being unduly delayed by the Employer, the Contractor is
entitled to E0T+COST+PROFIT after following the procedure of Sub-Clause 20.1.
♦ If delays are caused by the Contractor, then Employer's personnel may proceed with the
tests at the Contractor's risk and costs.
9.3 Retesting
♦ If the Works, or a Section, fail to pass the Tests on Completion, Sub-Clause 7.5 shall apply,
and the Engineer or the Contractor may require the failed Tests, and Tests on Completion on
any related work, to be repeated under the same terms and conditions.
Dr. D. M. Parikh
9.4 Failure to Pass Tests at Completion
♦ lf the failure prejudice the Employer of the benefit of the Work then the Employer is entitled to
recover all the sums paid + financing costs and the costs of dismantling, clearing the site and
returning Plant and Materials – applies to part of Work of whole Work.
♦ Issue a Taking Over for the remaining Work/section and the Contract Price shall be reduced
after procedures in line with Sub-Clauses 2.5 and 3.5.

102
Dr. D. M. Parikh
Clause 10: Employer’s Taking Over

Dr. D. M. Parikh

10.1 Taking Over of the Works and Sections
Notice specifies Within 28 days Engineer
Contractor’s
Contractor’s readiness for either issues TOC or reject
Notice for TOC
TOC in 14 days the request
10.2 Taking Over Part of the Works

♦ At the discretion of the Employer - If the Employer use a part of the Works, then this part shall
be deemed to be taken over at the date on which is used. If requested by the Contractor a
Taking Over Certificate for this part shall be issued by the Engineer
♦ If the Contractor incurs delay or costs the he may claim under 20.1 – EOT + Cost + Profit
103
Dr. D. M. Parikh

10.3 Interference with Tests on Completion
♦ If the Contractor is prevented, for more than 14 days, from carrying out the Tests on
Completion by a cause for which the Employer is responsible, the Employer shall be deemed
to have taken over the Works or Section (as the case may be) on the date when the Tests on
Completion would otherwise have been completed.
♦ The Engineer shall then issue a Taking-Over Certificate accordingly, and the Contractor shall
carry out the Tests on Completion as soon as practicable, before the expiry date of the
Defects Notification Period.
10.4 Surface Requiring Reinstatement

♦ Pending the reinstatement of ground or surfaces, the Work is not deemed to be certified.
Dr. D. M. Parikh
Clause 11: Defects Liability

104
Dr. D. M. Parikh
11. Defects Liability

11.1 Completion of Outstanding Work and Remedying Defects
The Contractor shall;
♦ complete any work which is outstanding on the date stated in a Taking-Over Certificate,
within such reasonable time as is instructed by the Engineer, and
♦ execute all work required to remedy defects or damage, as may be notified by (or on behalf
of) the Employer on or before the expiry date of the Defects Notification Period for the Works
or Section (as the case may be).

Dr. D. M. Parikh

11.2 Costs of Remedying Defects
♦ All the repairs shall be executed at the risk and cost of the Contractor, if and to the extent
that the work is attributable to:
 Any design for which the Contractor is responsible,
 Plant, Materials or workmanship not being in accordance with the Contract, or
 Failure by the Contractor to comply with any other obligation.
♦ When the defects are attributable to other cause/s –Variation Procedure (Sub-Clause 13.3)
shall apply.
105
Dr. D. M. Parikh

11.3 Extension of Defects Notification Period
♦ The Employer is entitled to an Extension of Defects Notification Period if the Works, or major
item of the Plant cannot be used because of a defect or damage. Sub-Clause 2.5 applies.
11.4 Failure to Remedy Defects

If the Contractor fails to remedy the defects, then;
 The Employer can execute himself the Works and Sub-Clause 2.5 applies
 Require the Engineer to determine under Sub-Clause 3.5 - a reduction of the Contract Price
 If the defect is “major” then the Employer is entitled to recover the payments done +
financing costs + cost of dismantling plants, etc.
Dr. D. M. Parikh

11.5 Removal of Defective Work
If the defect or damage cannot be remedied expeditiously on the Site, the Contractor may remove from the
Site for the purposes of repair such items of Plant as are defective or damaged with prior consent from
Employer. This consent may require the Contractor to increase the amount of the Performance Security by
the full replacement cost of these items, or to provide other appropriate security.
11.6 Further Tests

If the work of remedying of any defect or damage may affect the performance of the Works, the Engineer may
require the repetition of any of the tests described in the Contract. The requirement shall be made by notice
within 28 days after the defect or damage is remedied.
These tests shall be carried out in accordance with the terms applicable to the previous tests, except that they
shall be carried out at the risk and cost of the Party liable, under Sub-Clause 11.2.
106
Dr. D. M. Parikh

11.7 Right of Access
Until the Performance Certificate has been issued, the Contractor shall have such right of access to the
Works as is reasonably required in order to comply with this Clause, except as may be inconsistent with the
Employer’s reasonable security restrictions.
11.8 Contractor to search

♦ The Contractor shall, if required by the Engineer, search for the cause of any defect, under the direction
of the Engineer.
♦ Unless the defect is to be remedied at the cost of the Contractor under Sub-Clause 11.2, the Cost of the
search plus reasonable profit shall be agreed or determined by the Engineer in accordance with Sub-
Clause 3.5 and shall be included in the Contract Price.
Dr. D. M. Parikh

11.9 Performance Certificate
♦ Performance of the Contractor's obligations shall not be considered to have been completed
until the Engineer has issued the Performance Certificate to the Contractor.
♦ Only one for the whole Contract even the Contract is split in Sections or Parts.
11.10 Unfulfilled Obligations

♦ After the Performance Certificate has been issued, each Party shall remain liable for the
fulfilment of any obligation which remains unperformed at that time. For the purposes of
determining the nature and extent of unperformed obligations, the Contract shall be deemed
to remain in force.
107
Dr. D. M. Parikh

11.11 Clearance of Site
♦ Upon receiving the Performance Certificate, the Contractor shall remove any remaining
Contractor's Equipment, surplus material, wreckage, rubbish and Temporary Works from the
Site.
♦ If all these items have not been removed within 28 days after the Employer receives a copy
of the Performance Certificate, the Employer may sell or otherwise dispose of any remaining
items.

Dr. D. M. Parikh

Contract Closure
21 days Release of
Performance
End of DNP Performance Bond
Certificate
28 days 28 days Contractor to

clear the Site

108
Dr. D. M. Parikh
Quiz
1 Is the Contractor obliged to have permanent on-site medical aid?
2 If the Engineer changes the location of the Tests, is the Contractor entitled to an EOT +
Costs + Profit?
3 Is the Tender Program of Works the same as the one submitted in accordance with Sub-
Clause 8.3?
4 Is the Engineer obliged to approve the Contractor's Program of Works?
5 The Costs of Remedying defects after Completion are Contractor's risk?
6 The Contractor must complete all the Works before the Taking-Over Certificate is issued?
7 If the Contractor fails to remedy the defects, can the Engineer instruct another Contractor to
remedy them?
8 The Performance Certificate constitute the acceptance of the works?
9 After Performance Certificate is issued- Are the Parties any more liable?
10 Is the Contractor entitled to Costs if the Engineer suspends the Works?

Dr. D. M. Parikh
Financial Clauses and Procedures

109
Dr. D. M. Parikh
Clause 12: Measurement and Evaluation

Dr. D. M. Parikh
12. Measurement and Evaluation

12.1 Works to be Measured
♦ The Works are measured by the Engineer. The Engineer shall give a notice to the Contractor
who shall attend and supply any details requested by the Engineer.
♦ Wherever any Permanent Works are to be measured from records of construction, these shall
be prepared by the Engineer. The Contractor shall, as and when requested, attend to examine
and agree the records with the Engineer, and shall sign the same when agreed.
♦ If the Contractor examines and disagrees the records, and/or does not sign them as agreed then
the Contractor shall give notice to the Engineer of the respects in which the records are asserted
to be inaccurate.
110
Dr. D. M. Parikh

12.1 Works to be Measured….contd.
♦ After receiving notice, Engineer shall review the records and either confirm or vary them.
♦ If the Contractor does not give notice to the Engineer within 14 days after being requested to
examine the records, they shall be accepted as accurate.
12.2 Method of Measurement

♦ Measurement shall be made of net actual quantity of each item of the Permanent Works.
♦ The method of measurement shall be in accordance with the Bill of Quantities or other
applicable Schedules.
Dr. D. M. Parikh

12.3 Evaluation
♦ For each item of work, the appropriate rate or price for the item shall be the rate or price
specified for such item in the Contract.
♦ However, a new rate or price shall be appropriate for an item of work if: - Scenario-1
a) the measured quantity of the item is

changed by >10% from the BOQ quantity this change in quantity, multiplied by
such specified rate for this item
this change in quantity directly exceeds 0.01% of the Accepted
Changes the Cost per unit quantity Contract Amount,
of this item by more than 1%, and
this item is not specified in the
The Global Voice of Consulting Engineers
Contract as a “fixed rate item”; 222
111
Dr. D. M. Parikh

12.3 Evaluation….contd.
♦ However, a new rate or price shall be appropriate for an item of work if- Scenario-2
b) the work is instructed under

Clause 13 no rate or price is specified in the
Contract for this item, and
no specified rate or price is appropriate because the item of work
is not of similar character, or is not executed under similar
conditions, as any item in the Contract

Dr. D. M. Parikh

12.3 Evaluation….contd.
♦ Each new rate or price shall be derived from any relevant rates or prices in the Contract, with
reasonable adjustments to take account of the matters described in sub-paragraph (a)
and/or (b), as applicable.
♦ If no rates or prices are relevant for the derivation of a new rate or price, it shall be derived
from the reasonable Cost of executing the work, together with reasonable profit, taking
account of any other relevant matters.
♦ Until such time as an appropriate rate or price is agreed or determined, the Engineer shall
determine a provisional rate or price for the purposes of Interim Payment Certificates.
112
Dr. D. M. Parikh

12.4 Omissions
The Contractor must give notice where a Variation gives rise to an omission, or element of
omission. If the omission:
 produces abortive work for the Contractor, or
 will result in a sum not forming part of the Contract Price, or
 has a cost which is not part of replacement work.
The Contractor’s notice to the Engineer shall be provided with supporting particulars.
Upon receiving this notice, the Engineer shall proceed in accordance with Sub-Clause 3.5
[Determinations] to agree or determine this cost, which shall be included in the Contract Price.
Dr. D. M. Parikh
Clause 12: Tests after Completion

113
Dr. D. M. Parikh
12. Tests after Completion

12.1 Procedure for Tests after Completion
♦ The Employer shall:
 provide all electricity, equipment, fuel, instruments, labour, materials, and suitably qualified and
experienced staff, to carry out the Tests after Completion, and
 carry out the Tests in accordance with the manuals supplied by the Contractor and as per guidance
from the Contractor; and in the presence of Contractor’s Personnel.
♦ The Employer shall give to Contractor 21 days’ notice of the date after which the Tests will be carried out.
Unless otherwise agreed, these Tests shall be carried out within 14 days after this date, on the day or
days determined by the Employer.
♦ If the Contractor does not attend at the time and place agreed, the Employer may proceed, which shall
be deemed to have been made in his presence, and the Contractor shall accept readings as accurate.
Dr. D. M. Parikh

12.2 Delayed Tests
♦ If the Contractor incurs Cost as a result of any unreasonable delay by the Employer to the
Tests, the Contractor to give notice under Sub-Clause 20.1 for claim of Cost plus reasonable
profit. Engineer to determine under Sub-Clause 3.5.
♦ If, for reasons not attributable to the Contractor, a Test after Completion on the Works or any
Section cannot be completed during the Defects Notification Period then the Works or
Section shall be deemed to have passed this Test after Completion.

114
Dr. D. M. Parikh

12.3 Retesting
♦ If the Works, or a Section, fail to pass the Test after Completion:
 The Contractor is responsible for remedying Work under Sub-Clause 11.1, and
 the Tests to be repeated under the same terms and conditions.
♦ If the Employer incurs additional costs, the Contractor shall be subjected to Sub-Clause 2.5
and may need to pay these costs to the Employer.

Dr. D. M. Parikh

12.4 Failure to Pass Tests after Completion
♦ Works or Section shall be deemed to have passed the Tests after Completion, if;
 Works, or a Section, fail to pass any or all of the Tests,
 the relevant sum payable as non-performance damages for this failure is stated in the
Contract, and
 the Contractor pays this relevant sum to the Employer during DNP

115
Dr. D. M. Parikh

12.4 Failure to Pass Tests after Completion
♦ If Works or Section fail to pass the Tests, the Employer need to grant access to Contractor
for modification or adjustments and retesting. If Contractor doesn’t receive the same till the
end of DNP, Contractor shall be relieved of obligation and the Works/Section shall be
deemed to have passed this Test.
♦ If the Contractor incurs additional Cost as a result of any unreasonable delay by the
Employer in permitting access, the Contractor may claim under 20.1 Cost + reasonable
profit. the Engineer to determine under 3.5.

Dr. D. M. Parikh
Clause 13: Variations and Adjustments

116
Dr. D. M. Parikh
13. Variations and Adjustments

13.1 Right to Vary
♦ Variations may be initiated by Engineer at any time prior to issuing the Taking-Over Certificate
for the Works, either by an instruction or by a request for the Contractor to submit a proposal.
♦ Each Variation may include:
 changes to Contract quantities of any item (all such changes don’t necessarily be Variation),
 changes to the quality and other characteristics of any item of work,
 changes to the levels, positions and/or dimensions of any part of the Works,
 omission of any work unless it is to be carried out by others,
 any additional work, Plant or services necessary for Permanent Works, & associated Tests,
 changes to the sequence or timing of the execution of the Works.
Dr. D. M. Parikh

13.2 Value Engineering
The Contractor may propose a "Value Engineering" change. The risk of the change is the
contractor's one and any savings are split 50%-50% between the Contractor and the Employer.
The proposal shall be prepared at the cost of the Contractor and shall follow procedure of Sub-
Clause 13.3.
13.3 Variation Procedure

If the Engineer request The Contractor The Engineer shall Evaluation
a proposal prior to shall submit the approve or disapprove RB: Clause 12
instructing a variation details or comment YB: Sub-Clause 3.5

117
Dr. D. M. Parikh

13.4 Payment in Applicable Currencies
If the Contract provides for payment of the Contract Price in more than one currency, then
whenever an adjustment is agreed, approved or determined as stated above, the amount payable
in each of the applicable currencies shall be specified.
13.5 Provisional Sums

Each Provisional Sum shall only be used, in whole or in part, in accordance with the Engineer's
instructions, and the Contract Price shall be adjusted accordingly The total sum paid to the
Contractor shall include only such amounts, for the work, supplies or services to which the
Provisional Sum relates, as the Engineer shall have instructed.
Dr. D. M. Parikh

13.6 Daywork
For work of a minor or incidental nature, the Engineer may instruct that a Variation shall be
executed on a daywork basis.
13.7 Adjustments for Changes in Legislation

This Sub-Clause gives the possibility to increase or decrease the costs due to the changes in
legislation.

118
Dr. D. M. Parikh

13.8 Adjustments for Changes in Costs
♦ This Sub-Clause is applicable only if the table of price adjustment has been included in the
Appendix to Tender.
𝑃 =𝑎+𝑏 +𝑐 +𝑑 +⋯ , a+b+c+d+…=1
 Lo", "Eo", "Mo", ... are the base cost indices (in relevant currency of payment) on Base Date.
 “Ln", “En", “Mn", ... are the current cost indices on the date 49 d prior to the last day of period of
particular Payment Certificate relates
♦ For cost variation during Contract period, this formulae to be used to adjust for changes in
the cost of labour and materials (addition or deduction).
Dr. D. M. Parikh

13.8 Adjustments for Changes in Costs
♦ If the Contractor fails to complete the Works within the Time for Completion, adjustment of
prices thereafter (during extended period) shall be made using either;
 each index or price applicable on the date 49 days prior to the expiry of Time for Completion,
 OR, the current index or price: whichever is more favourable to the Employer
♦ Employers who currently use different procedures for evaluation of inflation costs may prefer to
continue to use their own procedures and make the appropriate provisions in Particular
Conditions.

119
Dr. D. M. Parikh

Sub- Sub- Contractor Sub-Clause Sub- Sub-Clause
Clause Clause gives 12.3 & 3.5 Clause12.3 12.3 & 3.5
13.1 13.3 notice that Valuation is Are rates Engineer
Engineer Engineer cannot determined and prices consults
forms the instructs procure by the in Contract with
opinion yes Contractor yes goods no Engineer, yes suitable to no Employer
that a to execute but consults value and
variation is variation? with variation? Contractor
needed? Contractor
yes and yes
Employer
Sub-Clause 12.3
Engineer to
Such rates and
act
prices used
Dr. D. M. Parikh
Clause 14: Contract Price and Payments

120
Dr. D. M. Parikh
14. Contract Price and Payment

14.1 The Contract Price
♦ The Contract Price shall be agreed or determined under 12.3 Evaluation for Red Book and
Accepted Contract Amount + adjustments for the Yellow Book.
♦ Contract Price shall be adjusted for the changes in legislation.
♦ The quantities are estimates and are not to be taken as the actual and correct quantities.
♦ In the Yellow Book it is mentioned that the quantities in the schedule are only for the purpose
stated in the schedule for the Works and may be not applicable for other purposes.

Dr. D. M. Parikh

14.2 Advance Payment
♦ The Employer shall make an advance payment, as an interest-free loan for mobilization.
♦ Conditions:
 An approved Performance Security - Sub-Clause 4.2.
 An approved Bank Guarantee for Advance Payment.
 A request from the Contractor.
♦ If Advance payment is not mentioned in the Appendix to Tender then this sub-clause is N.A.
♦ Deduction will start when 10% of the Accepted Contract Price minus Provisional Sums has
been reached. It will be in tranches of 25% of the amount in each IPC.
121
Dr. D. M. Parikh

14.3 Application for Interim Payment Certificates
♦ The Contractor shall submit at the end of each month (or agreed period) a Statement with
particulars which shall include the monthly progress report as per Sub-Clause 4.21.
♦ The Statement shall include:

 Value of the Works, amounts for changes in legislation.
 Deductions for retention in accordance with Appendix to Tender.
 Addition or deduction for advance payment.
 Addition or deductions for plants or materials; and claims, if any.
 The cumulative deduction previously certified.
Dr. D. M. Parikh

Sub-Clause Sub-Clause Sub-Clause Sub-Clause Sub-Clause Sub-Clause
14.3 14.6 14.6 14.6 14.7 14.8
After end of Engineer Is the Engineer Employer Contractor
each month, assesses amount due delivers IPC pays entitled to
Contractor claim and to the to Employer Contractor interest at
submits yes determines yes Contractor yes within 28 yes within 56 days no rate stated in
statement of amount due more than days of receipt of Appendix
claim to to Minimum Contractor's
Engineer Contractor Amount? statement
no no no
Unspecified Amount need Unspecified Schedule of Payment
not be certified Sub-Clause 14.4, may be
written into the Contract.
122
Dr. D. M. Parikh

Initial Finalisation Process
Engineer Sub-Clause 14.10 Sub-Clause 14.10

issues Within 84 days of Taking- Engineer certifies
Taking-Over Over Certificate, IPC as per Sub-
Certificate yes Contractor provides yes Clause 14.6
Statement at Completion
yes
50% of retention
released Schedule of Payment
Sub-Clause 14.4, may be
written into the Contract.
Dr. D. M. Parikh

14.4 Schedule of Payments
♦ The Contract has possibility to pay based on Schedule of Payments.
♦ In this case the Contract must include a schedule of payments, giving the timing and details of
the instalments, subject to the provisions of Sub-Clause 14 4.
♦ If actual progress is slower than that upon which the schedule was based, the Engineer
becomes entitled to propose or determine (under Sub-Clause 3.5) revised instalments.
♦ If schedule is not defined in the Contract, then Contractor shall submit non binding estimates of
payment/s for each quarterly period. The first estimate must be submitted within 42 days after
the Commencement Date.
123
Dr. D. M. Parikh

14.5 Plant and Materials intended for the Works
♦ If this Sub-Clause applies, Interim Payment Certificates shall include:
 amount for Plant and Materials which are sent to Site for incorporation in Permanent Works.
 If Contract Value includes such Plant and Materials as part of Permanent Works then
reduction to be applied while certifying IPC.
♦ The sub-clause may act as a further form of advance payment. If payment is to be made for
Plant and Materials (against shipping or delivery and before incorporation in Permanent Works)
then the Contractor must provide a bank guarantee for the full amount and maintain & submit
appropriate records. (many cases 80% payments are made).
♦ If lists of Plants & Materials are not included in the Appendix to Tender, this Sub-Clause is NA.
Dr. D. M. Parikh

14.6 Issue of Interim Payment Certificates
♦ No IPC shall be issued until the Employer received and approved the Performance Security
4.2.
♦ In 28 days after receiving the Statement with particulars the Engineer shall issue IPC with
supporting particulars which shall state the amount due to the Contractor.
♦ The Engineer may at any time make corrections in any IPC or any previous Certificate.

124
Dr. D. M. Parikh

14.6 Issue of Interim Payment Certificates….contd.
♦ An IPC shall not be withheld far any other reason, although
 if supplied items/s or work done by the Contractor is not in accordance with the Contract,
the cost of rectification or replacement may be withheld until rectification or replacement
is completed; and/or
 if the Contractor was or is failing to perform any work or obligation in accordance with the
Contract, and had been so notified by the Engineer, the value of this work or obligation
may be withheld until the work or obligation has been performed.
Dr. D. M. Parikh

14.7 Payment
♦ the first instalment of the advance payment within 42 days after Letter of Acceptance or
within 21 days after receiving the documents in accordance with Sub-Clause 4.2
[Performance Security] and Sub-Clause 14.2 [Advance Payment], whichever is later;
♦ the amount to be certified in each Interim Payment Certificate within 56 days after the
Engineer receives the Statement and supporting documents; and
♦ the amount to be certified in the Final Payment Certificate within 56 days after the Employer
receives this Payment Certificate.

125
Dr. D. M. Parikh

14.8 Delayed Payment
♦ The Contractor is entitled to receive financial charges at the annual rate of 3% above the
discount rate of the Central Bank in the Country of the currency payment.
♦ The entitlement is without being necessary to notify or claim under Sub-Clause 20.1.

Dr. D. M. Parikh

14.9 Payment of Retention Money
♦ Subject to the Engineer's Certification the Contractor shall receive:
 50% of the Retention at the Taking Over Certificate, and ;

 50% at the End of the Defects Liability Period.
♦ When calculating these provisions no account shall be taken for Adjustments under Sub-Clause
13.7 [Changes in legislation] and Sub-Clause 13.8 [Changes in costs].

126
Dr. D. M. Parikh

14.10 Statement at Completion
♦ It is submitted in 84 days after receiving the Taking Over Certificate and includes:
 Value of the Works done up to the date stated in the Taking Over Certificate,
 Any further sums that the Contractor consider to be due, and;

 An estimate of any other amount which the Contractor considers will become due to him
under the Contract.

Dr. D. M. Parikh

14.11 Application for Final Payment Certificate
♦ If Engineer disagrees with or cannot verify any part of draft final statement, Contractor shall submit further
information as Engineer may reasonably require and shall make changes in draft as agreed between them.
♦ The Contractor shall then prepare and submit to the Engineer final statement as agreed. This agreed
statement is referred to in these Conditions as the "Final Statement".
♦ if, following discussions between Engineer and Contractor, it becomes evident that a dispute exists, Engineer
shall deliver to Employer, (with a copy to Contractor) an IPC for the agreed parts of the draft final statement.
14.11 Application for Final Payment Certificate

The Contractor when submitting the Final Statement shall submit a written discharge stating that the amounts
from the Final Statement represents the full amount due.
127
Dr. D. M. Parikh

14.11 Final Payment Certificate
Clause 14.11 Clause Clause Clause Cl. 14.11 Clause Clause 14.8
Within 56 days 14.11 14.11 14.11 Engineer 14.7 Contractor
of issue of Engineer Contractor Engineer certifies IPC Employer entitled to
Performance agrees submits agrees for non- pays IPC interest at
Certificate with further with disputed parts. within 28 rate stated
Contractor yes draft? no information yes revised no Disputes to be yes days no in Appendix
submits draft draft? settled as per
final statement Cl. 20.4 / 20.5
no yes yes
unspecified Cl. 14.11 Contractor submits Final Statement yes Clause 14.13 Clause Clause
Cl. 14.12 Contractor submits written discharge Engineer 14.7 14.8
issues Final Employer Contractor
Upon the issue of ToC, 50% of Retention Money is released; Payment yes pays FPC no entitled to
Upon completion of DNP other 50% is released after adjusting Certificate within 56 interest
for outstanding work pursuant to Cl. 11 and 14.9. within 28 days days
Dr. D. M. Parikh

14.14 Issue of Final Payment Certificate
♦ Within 28 days after receiving the Final Statement and written discharge, the Engineer shall
issue, to the Employer, the Final Payment Certificate (FPC) which shall state:
 the amount which is finally due, and
 after giving credit to the Employer for all amounts previously paid by Employer and for all
sums to which Employer is entitled, the balance (if any) due from the Employer to the
Contractor or from the Contractor to the Employer, as the case may be.
♦ If the Contractor has not applied for a FPC, the Engineer shall request Contractor to do so.
♦ If the Contractor fails to submit an application within a period of 28 days, the Engineer shall
issue the Final Payment Certificate for such amount as he fairly determines to be due.
128
Dr. D. M. Parikh

14.15 Cessation of Employer's Liability
♦ The Employer shall not be liable to the Contractor for any matter or thing under or in
connection with the Contract or execution of the Works, except to the extent that the
Contractor shall have included an amount expressly for it:
 in the Final Statement, and also

 in the Statement at completion (except for matters or things arising after the issue of the
Taking-Over Certificate for the Works)

Dr. D. M. Parikh

Advanced
Statement Certificate Payment
Payment
Interim Payment Monthly Statement
50% Retention Statement at

Money Completion
Final Statement
Final Payment 56 Days
after DNP
Certificate 28 days
Payment delay 56 Days

129
Dr. D. M. Parikh
Quiz
1. Does the Contractor has to agree on result of measurement of Works by the Engineer?
2. Should the method of measurement be mentioned in Contract?
3. Can the Engineer request the breakdown of prices from the Contractor?
4. Does the Cost include financing charges?
5. RB: Is the Contract Price fixed form the beginning of the Contract?
6. Can the Engineer make corrections in the previous Payment Certificates?
7. Do the Provisional Sums have to be spent within the Time for Completion?
8. If there are arithmetic errors in an IPC, is the Employer obliged to pay?
9. Must the Contractor put all financial claims in the next statement after the Employer took
over the Works?
10. Does the Contractor have to produce a Monthly Cash Flow?

Dr. D. M. Parikh
Risks, Force Majeure & Termination

130
Dr. D. M. Parikh
Clause 15: Termination by Employer

Dr. D. M. Parikh
15. Termination by Employer

15.1 Notice to Correct
♦ If the Contractor fails to carry out any obligation under the Contract, the Engineer may by
notice require the Contractor to make good the failure and to remedy it within a specified
reasonable time.

131
Dr. D. M. Parikh

15.2 Termination by the Employer
♦ The Employer is entitled to terminate the Contract by giving 14 day notice, if Contractor:
 fails to comply with Sub-Clause 4.2 or with a notice under Sub-Clause 15.1.
 abandons the Works.
 fails to proceed with the Works in accordance with Clause 8.
 fails to comply with a notice issued under Sub-Clause 7.5 or Sub-Clause 7.6 within 28 days
after receiving it.
 subcontracts the whole Works or assigns the Contract without the required agreement
 becomes bankrupt or insolvent.
 gives or offers to give (directly or indirectly) to any person any bribe, gift in order to obtain
advantages.
Dr. D. M. Parikh

15.3 Valuation at Date of Termination
As soon as practicable after a notice of termination under Sub-Clause 15.2 [Termination by
Employer] has taken effect, Engineer shall proceed in accordance with Sub-Clause 3.5
[Determinations] to agree or determine the value of Works, Goods and Contractor's Documents,
and any other sums due to the Contractor for works executed in accordance with the Contract.
15.4 Payment After Termination

♦ The Employer may
 Raise Claim/s under Sub-Clause 2.5.
 Withhold any payment until any other costs incurred by him are established.
 After recovering any losses and damages from Contractor; Employer shall pay the balance.
132
Dr. D. M. Parikh

The Employer give 14 days notice to terminate the
Contract and expel the Contractor from the Site
In Summary…
The Contractor leave the Site and deliver any goods,

materials, Contractor's documents
The Engineer makes an evaluation at Date of Termination
Payment after Termination

Dr. D. M. Parikh

15.5 Employer's Entitlement to Termination
♦ The Employer is entitled to terminate the Contract at any time. The termination will take effect in
28 days after the Contractor receive the notification or the return of Performance Security (the
later of the two).
♦ The Contractor shall proceed in accordance Sub-Clause 16.3 [Cessation of Work and Removal
of the Contractor's Equipment].
♦ The Contractor shall be paid in accordance with Sub-Clause 19.6 (Optional Termination,
Payment and Release].
133
Dr. D. M. Parikh
Clause 16: Suspension and Termination

by Contractor

Dr. D. M. Parikh
16. Termination by Contractor

16.1 Contractor's Entitlement to Suspend Work
♦ The Contractor is entitle to suspend the Works or reduce the rate of progress with 21 days
notice in the event/s;
 The Engineer fails to certify under Sub-Clause 14.6 [Issue an IPC]

 The Employer fails to comply with Sub-Clause 2.4 [Employer's financial arrangements]
 Employer fail to comply with Sub-Clause 14.7 [Payment]
♦ If due to the suspension the Contractor suffers delays and/or costs then Sub-Clause 20.1
applies – EOT+Cost+profit.
134
Dr. D. M. Parikh

16.2 Termination by the Contractor
♦ The Contractor is entitle to terminate the Contract upon giving 14 days’ notice; if:
 he does not receive evidence under 2.4, 42 days after issuing notice under 16.1.
 The Engineer fails to issue an IPC in 56 days after receiving the Statement.
 The Contractor does not receive payment in 42 days after expiry date under 14.7.
 The Employer fail to comply with the Contract – breach of contract.
 A prolonged suspension affects the Works. (no notice, immediate termination)
 The Employer became bankrupt and/or insolvent. (no notice, immediate termination)
♦ The Contractor's election to terminate the Contract shall not prejudice any other rights of the
Contractor, under the Contract or otherwise.
Dr. D. M. Parikh

16.3 Cessation of Work and Removal of Contractor’s Equipment
♦ After a notice of termination under Sub-Clause 15.5, Sub-Clause 16.2 or Sub-Clause 19.6
has taken effect, the Contractor shall promptly;
 cease all further work, except for such work as may have been instructed by the Engineer
for the protection of life or property or for the safety of the Works,
 hand over Contractor's Documents, Plant, Materials and other work, for which the
Contractor has received payment, and;
 remove all other Goods from the Site, except as necessary for safety, and leave the Site.

135
Dr. D. M. Parikh

16.4 Payment on Termination
♦ After a notice of termination under Sub-Clause 16.2 [Termination by Contractor] has taken
effect, the Employer shall promptly:
 return the Performance Security to the Contractor,

 pay the Contractor in accordance with Sub-Clause 19.6, and;
 pay to the Contractor the amount of any loss of profit or other loss or damage sustained by
the Contractor as a result of this termination.

Dr. D. M. Parikh
Clause 17: Risk and Responsibility

136
Dr. D. M. Parikh
17. Risk and Responsibility

17.1 Indemnities
♦ Against and from all claims, damages, losses and expenses in respect of bodily injury, sickness,
disease or death which is attributable to any negligence of one party or the other.
 The Contractor shall indemnify and hold harmless the Employer, the Employer's personnel,
and their agents.
 The Employer shall indemnify and hold harmless the Contractor, the Contractor's personnel
and their agents.

Dr. D. M. Parikh

17.2 Contractor's Care of the Works
♦ The Contractor is responsible for the Works from the Commencement date until the Taking-
Over Certificate is issued.
♦ Before TOC: If loss or damages occur from a cause which is not listed in the Employer's risk
the Contractor shall remedy the defects on his own cost and risk.
♦ After TOC: The Contractor is responsible for the Works after the Taking-Over Certificate is
issued for damages caused by any actions done by the Contractor.

137
Dr. D. M. Parikh

17.3: Employer’s risks 17.4: Consequences of
Employer’s Risk
(a) war, hostilities, invasion, act of foreign entity
(b) rebellion terrorism, revolution, civil war
(c) riot, commotion or disorder Contractor’s entitlement under
(d) Munitions of war, explosive material, radiation 20.1 – EOT + cost
(e) pressure waves caused by aircraft or aerial devises
(h) any unforeseeable adverse operation of the forces of nature
(f) use or occupation by the Employer of any part of Permanent Works Contractor’s entitlement under
(g) design of any part of Works by the Employer Personnel 20.1 – EOT + Cost + Profit

Dr. D. M. Parikh

17.5 Intellectual and Industrial Property Rights
♦ A party does not give notice to other party within 28 day upon receiving the claim, the first
party shall deemed to have waived his right to be indemnified.
♦ The Employer shall indemnify and hold the Contractor harmless against and from any claim
alleging an infringement which is or was:
 an unavoidable result of Contractor’s compliance with Employer’s Requirements, or
 a result of any Works being used by the Employer for the purpose other than indicated in Contract,
OR, anything not supplied by the Contractor.
♦ The Contractor shall indemnify and hold the Employer harmless against and from any other
claim in relation to (i) the Contractor’s design, manufacture, construction or execution of the
Works, (ii) the use of Contractor’s Equipment, or (iii) the proper use of the Works.
138
Dr. D. M. Parikh

17.6 Limitation of Liability
♦ Neither party shall be liable to the other party for loss of use of any works, loss of profit, loss
of any contract or for any indirect or consequential loss or damage which may be suffered by
the other Party in connection with the Contract.
♦ The total liability of the Contractor to the Employer, under or in connection with the Contract
shall not exceed the sum stated in the Particular Conditions or (if a sum is not so stated) the
Accepted Contract Amount.
♦ This Sub Clause shall not limit liability in any case of fraud, deliberate default or reckless
misconduct by the defaulting party.
Dr. D. M. Parikh
Clause 18: Insurance

139
Dr. D. M. Parikh
18. Insurance
18.1 General Requirements for Insurances
♦ Wherever the Contractor is the insuring Party, each insurance shall be effected with insurers
and in terms approved by the Employer.
♦ Wherever the Employer is the insuring Party, each insurance shall be effected with insurers
and in terms consistent with the details annexed to the Particular Conditions.
♦ The relevant insuring Party shall, submit to the other Party evidence that the insurances
have been effected, evidence of insurance – and copies of the policies.
♦ Neither Party shall make any alteration to the terms of any insurance without the prior
approval of the other Party.
Dr. D. M. Parikh
18. Insurance
18.2 Insurance for Works and Contractor's Equipment
♦ The insuring Party shall insure the Works, Plant, Materials and Contractor's Documents for not
less than the full reinstatement cost.
♦ This insurance shall be effective from the date by which the evidence is to be submitted under
sub-paragraph (a) of Sub-Clause 18.1 [General Requirements for Insurances], until the date of
issue of the Taking-Over Certificate for the Works.
♦ The insuring Party shall maintain this insurance to provide cover until the date of issue of the
Performance Certificate, for loss or damage for which the Contractor is liable.
♦ The insuring Party shall insure the Contractor's Equipment for not less than the full replacement
value, including delivery to Site.
140
Dr. D. M. Parikh
18. Insurance
18.3 Insurance against injury to Persons & Damage to Property
♦ This is third party insurance with limit per event as stated in Appendix to Tender.
18.4 Insurance for the Contractor’s Personnel

♦ Contractor shall effect and maintain insurance against liability for claims, damages, losses and expenses
(including legal fees and expenses) arising from injury, sickness, disease or death of any person employed by
Contractor. This shall be maintained for entire duration of Works.
♦ The Employer and the Engineer shall also be indemnified under the policy of insurance, except that this
insurance exclude losses and claims arising from any act or neglect of Employer or of Employer’s personnel.
♦ Subcontractor’s employees, the insurance may be effected by the Subcontractor, but the Contractor shall be
responsible for compliance with this Clause.
Dr. D. M. Parikh
Clause 19: Force Majeure

141
Dr. D. M. Parikh
19. Force Majeure

19.1 Definition of Force Majeure
♦ In this Clause, "Force Majeure" means an exceptional event or circumstance:
 which is beyond a Party's control,
 which such Party could not reasonably have provided against before entering into the
Contract,
 which, having arisen, such Party could not reasonably have avoided or overcome, and
 which is not substantially attributable to the other Party.

Dr. D. M. Parikh
19. Force Majeure

19.2 Notice of Force Majeure
♦ If a Party is prevented from performing any of its obligations under the Contract by Force
Majeure, then it shall give notice to the other Party. The notice shall be given within 14 days
after the Party became aware, (or should have become aware), of the relevant event or
circumstance constituting Force Majeure.
♦ The Party shall, having given notice, be excused from performance of such obligations for so
long as such Force Majeure prevents it from performing them.
♦ Force Majeure shall not apply to obligations of either Party to make payments to the other
Party under the Contract.
142
Dr. D. M. Parikh
19. Force Majeure

19.3 Duty to Minimize Delay
♦ Each Party shall at all times use all reasonable endeavours to minimize any delay in the
performance of the Contract as a result of Force Majeure.
♦ A Party shall give notice to the other Party when it ceases to be affected by the Force
Majeure

Dr. D. M. Parikh
19. Force Majeure

19.4 Consequences of Force Majeure
♦ If the Contractor is prevented from performing any of his obligations under the Contract by Force Majeure of
which notice has been given under Sub-Clause 19.2, and suffers delay and/or incurs Cost by reason of such
Force Majeure, the Contractor shall be entitled subject to Sub-Clause 20.1 to:
 an extension of time for any such delay, if completion is or will be delayed, under Sub-Clause 8.4 and
 if the event or circumstance is of the kind described in sub-paragraphs (i) to (iv) of Sub-Clause 19.1 and, in
the case of sub-paragraphs (ii) to (iv), occurs in the Country, payment of any such Cost.
i. war, hostilities, invasion, act of foreign enemies,
ii. rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war,
iii. riot, commotion, disorder, strike or lockout by persons other than the Contractor's Personnel and other employees of
the Contractor and Subcontractors,
iv. munitions of war, explosive materials, ionising radiation or contamination by radioactivity, except as may be
attributable to the Contractor's use of such munitions, explosives, radiation or radio-activity.
143
Dr. D. M. Parikh
19. Force Majeure

19.5 Force Majeure Affecting Subcontractor
If any Subcontractor is entitled under any contract or agreement relating to the Works to relief
from force majeure on terms additional to or broader than those specified in this Clause, such
additional or broader force majeure events or circumstances shall not excuse the Contractor's
non-performance or entitle him to relief under this Clause.

Dr. D. M. Parikh
19. Force Majeure

19.6 Optional Termination, Payment and Release
♦ If the execution of all the Works in progress is prevented for a continuous period of 84 days
by reason of Force Majeure of which notice has been given under Sub-Clause or multiple
periods which total more than 140 days due to the same notified Force Majeure then either
Party may give to the other Party a notice of termination of the Contract.
♦ The termination shall take effect 7 days after the notice is given, and the Contractor shall
proceed in accordance with Sub-Clause 16.3.

144
Dr. D. M. Parikh
19. Force Majeure

19.6 Optional Termination, Payment and Release….contd.
♦ the Engineer shall determine the value of the work done and issue a Payment Certificate
which shall include:
 amounts payable for any work carried out for which a price is stated in the Contract;
 the Cost of Plant and Materials ordered for the Works which have been delivered to the Contractor
 other Cost or liability which In the circumstances was reasonably incurred by the Contractor in the
expectation of completing the Works
 Cost of removal of Temporary Works and Contractor's Equipment from the Site and the return of
these items to the Contractor's works in his country
 Cost of repatriation of the Contractor's staff and labour employed wholly in connection with the Works
at the date of termination
Dr. D. M. Parikh
19. Force Majeure

19.7 Release from Performance under the Law
♦ if any event or circumstance outside the control of the Parties arises which makes it
impossible or unlawful for either or both Parties to fulfill its or their contractual obligations or
which, under the law governing the Contract, entitles the Parties to be released from further
performance of the Contract, then upon notice by either Party to the other Party of such
event or circumstance:
 the Parties shall be discharged From further performance.
 the sum payable by the Employer to the Contractor shall be the same as would have
been payable under Sub-Clause 19.6.
145
Dr. D. M. Parikh
Quiz
1. Is the Employer entitled to terminate the Contract if the Contractor does not submit a
Performance Security under Sub-Clause 4.2?
2. Is the Employer entitled to terminate the Contract if the Contractor subcontracts all the
Works?
3. Is the Employer entitled to terminate the Contract at his own discretion?
4. If the Contractor does not receive his payment, is he entitled to terminate the Contract?
5. If at the Contractor's request the Employer does not share his financial arrangements; is
the Contractor entitled to terminate the Contract?
6. Any operation of the forces of nature, which is Unforeseeable or against which an
experienced contractor could not reasonably have taken adequate preventative
precautions; is this Employer's risk?

Dr. D. M. Parikh
Claims, Disputes and Arbitration

146
Dr. D. M. Parikh
Employer’s Claims
If the Employer considers himself to be entitled to any payment under or in connection with the
contract, and/or to any extension of the Defects Notification Period, the Employer or the Engineer
must give 'notice and particulars' to the contractor. The particulars must 'specify the Clause or
other basis of the claim ....
The notice must be given as soon as practicable (no time limit) after the employer became aware
of the event or circumstance giving rise to the claim. The employer is expressly denied the right
to set off against or make any deduction from a certified amount or otherwise claim against the
contractor, except in accordance with this provision.

Dr. D. M. Parikh
Employer’s Claims Sub-Clause 2.5
Clauses Requiring Notice
Clause 7.5 Rejection

Clause 7.6 Remedial work
Clause 8.6 Rate of progress
Clause 8.7 Delay damages
Clause 9.4 Tests on completion
Clause 11.3 Extension of defects notification period
Clause 15.4 Payment after termination
147
Dr. D. M. Parikh
Clauses NOT Requiring Notice
Clause 4.19 Electricity water and gas

Clause 4.20 Employer’s equipment and free issue material
and other services requested by the contractor
Remedial work

Dr. D. M. Parikh
Clauses Allowing for Deductions
Clause 4.2 Performance security

Clause 5.4 Evidence of payments to nominated
subcontractors
Clause 9.2 Delayed tests

148
Dr. D. M. Parikh
Clause 20: Claims, Disputes and Arbitration

Dr. D. M. Parikh
Contractor’s Claims
20.1 Contractor’s Claims: Notice [Conditional Precedent]
If the Contractor considers himself to be entitled to any extension of time for Completion and/or
any additional payment under any clause of these conditions or otherwise in connection with the
contract, the Contractor shall give notice to the Engineer, describing the event or circumstance
giving rise to the claim.
The notice shall be given as soon as practicable, and not later than 28 days after the Contractor
became aware, or should have became aware of the event or circumstance.
If the Contractor fails to give notice to the engineer of any claim not later than 28 days after the
Contractor became aware, or should have become aware, of the event or circumstance' giving
rise to a claim, the employer is discharged from all liability in connection with the claim.
149
Dr. D. M. Parikh
20.1 Contractor’s Claims: [Contemporary Records]
The Contractor shall keep such contemporary records as may be necessary to substantiate any
claim, either on the Site or at another location acceptable to the Engineer. Without admitting the
Employer’s liability, the Engineer may, after receiving any notice under this Sub-Clause, monitor
the record-keeping and/or instruct the Contractor to keep further contemporary records….. and
shall (if instructed) submit copies to the Engineer [Employer]

Dr. D. M. Parikh
Contemporary records typically include:
 Site diaries, with details of weather conditions, status of progress & causes of delays encountered
 Construction progress charts, which include records of subsoil strata, water levels, etc.
 Programmes of future work + a copy of each revision of the programme
 Details of plant, materials & labour
 Details of site costs: supervisory + non-productive labour, office costs (telephone, water supply, transport,
insurances, watching and lighting …)
 All correspondences with Employer, Engineer and Engineer's representative- reg. variations, instructions,
amended drawings, contractor's confirmation of oral instructions and contractor's notifications to Engineer of
information required or of any matter causing or likely to cause delay to the progress of the works
 Correspondence with other parties, such as subcontractors, suppliers and any other organizations or
services required in connection with the works
150
Dr. D. M. Parikh
Cl. 20.1 Claims Cl. 20.1 (a) Cl. 20.1 (b) Cl.20.1 (c) Details
in connection Notices to the Contemporary and Particulars-
with Contract Engineer Records basis of claims
Contractor considers to be describing the even or Contractor shall keep within 42 d the Contractor
entitled to any extension of circumstances giving rise to contemporary records on shall send a fully detailed
the Time for Completion and the claim not later than 28 d Site to substantiate the claim which includes full
/ or any additional payment claim supporting particulars of the
basis of the claim
Contractor became or
should have become aware if Contractor fails to give to be kept on Site, visit for If the contractor fails to
of the event notice within 28 d, then no the Representative establish the principles of the
entitlement claim within 42 d, the notice
< 28 d given shall be deemed to have
< 42 d lapsed and no longer
considered as a valid notice
Dr. D. M. Parikh
Cl.20.1 (c) Details Cl. 20.1 (d) Engineer
and Particulars- Respond
basis of claims
within 42 d the contractor within 42 d Engineer shall the Determinations shall be binding until
shall send a fully detailed respond with approval or revised under § 20 Claims, Disputes and
claim including full disapproval and detailed Arbitration
supporting particulars of comments and shall proceed in (notice of dissatisfaction within 28 d and
basis of claim accordance with § 3.5 thereafter proceed in accordance in writing to
the DAB for its decision)
the Engineer shall agree or determine the

extension of the Time for Completion and
< 42 d / or additional payment
Response of the Engineer
Cl. 3.5 Determinations by the
International Federation of Consulting Engineers Engineer / Employer’s Representative
151
Dr. D. M. Parikh
Sub-Clause 20.1 and Sub-Clause 3.5
Time Line
Contemporary
sub-clause 20.1 Records on Site
start within within within

28 days 42 days 42 days
the Contractor shall the Representative

the Contractor
became or should give notice describing the Contractor shall shall respond with
the the event giving rise send a fully claim approval or
have become aware
to the claim latest which includes full disapproval in
event of the event as soon
within 28 days supporting accordance with
occurs as practicable and
particulars of the Clause 3.5
considers himself to
basis of the claim
be entitled cut-off period
Determinations
Dr. D. M. Parikh
Engineer’s Determination Sub-Clause 3.5
Contractor’s Claim
(Under Sub-Clause 20.1)
Engineer’s Examination
No Dispute DAB / Arbitration
(Under Sub-Clause 3.5)
Yes
Recommendation as Not Acceptable

per Contract Conditions to the Contractor
152
Dr. D. M. Parikh
20.1 Contractor’s Claims: [Contemporary Records]
The Contractor shall keep such contemporary records as may be necessary to substantiate any
claim, either on the Site or at another location acceptable to the Engineer. Without admitting the
Employer’s liability, the Engineer may, after receiving any notice under this Sub-Clause, monitor
the record-keeping and/or instruct the Contractor to keep further contemporary records….. and
shall (if instructed) submit copies to the Engineer [Employer]

Dr. D. M. Parikh
Clauses Requiring Notice
Clause 1.9 Delayed drawings or instructions [RB] / Errors

in Employer’s Requirements [YB]
Clause 4.12 Unforeseeable physical conditions
Clause 4.24 Fossils
Clause 16.1 Contractor’s entitlement to suspend work
Clause 17.4 Consequences of Employer’s risks
Clause 19.4 Consequences of force majeure
153
Dr. D. M. Parikh
Clauses Entitling Compensation
Clause 1.9 Delayed drawings or instructions [RB] / Errors

in Employer’s Requirements [YB]
Clause 2.1 Right of access to the site
Clause 4.7 Setting out
Clause 4.12 Unforeseeable physical conditions
Clause 4.24 Fossils
Clause 7.4 Testing
Dr. D. M. Parikh
Clauses Entitling Compensation….contd.
Clause 10.2 Taking over parts of the works

Clause 10.3 Interference with tests on completion
Clause 11.8 Contractor to search
Clause 13.7 Adjustments for changes in legislation
Clause 17.4 Consequences of Employers risks
Clause 19.4 Consequences of force majeure
154
Dr. D. M. Parikh
Clauses Entitling Compensation [Cost + Profit]
Clause 1.9 Delayed drawings or instructions [RB] / Errors in
Employer’s Requirements [YB]
Clause 2.1 Right of access to site
Clause 4.7 Setting out
Clause 7.4 Testing
Clause 10.2 Taking over parts of the works
Clause 11.8 Contractor to search
Clause 16.4 Payment on termination
Clause 17.4 Consequences of Employers risks
Dr. D. M. Parikh
Notices by Contractor
Sub-Clause Title Adjustment To
1.8 Care & supply of documents - EM
1.9 Delayed drawings or instructions T+C+P EN
2.1 Right of Access to the Site T+C+P EN
4.7 Co-operation T+C+P EN
4.12 Unforeseeable physical conditions T+C EN
4.24 Fossils T+C EN
7.4 Testing T+C+P EN
8.4 Extension of time for completion T EN
8.9 Consequences of suspension T+C EN
8.11 Prolonged suspension Termination EN
10.1 Taking Over the Works & Sections - EN

T = Time, C = Cost, P = Reasonable profit
The Global Voice of Consulting Engineers EN = Engineer, EM = Employer 310
155
Dr. D. M. Parikh
Notices by Contractor
Sub-Clause Title Adjustment To
10.2 Taking Over parts of the Works C+P EN
10.3 Interference with Tests on Completion T+C+P EN
11.8 Contractor to search C+P EN
13.7 Adjustments for changes in legislation T+C EN
16.1 Entitlement to suspend work T + C +P EN
17.4 Consequences of Employer’s risks T+C EN
19.2 Notice of force majeure - EM
19.3 Duty to minimise delay - EM
19.4 Consequences of force majeure T+C EN
20.1 Contractor’s claims - EN
20.4 Dissatisfaction of DAB’s decision - EM

T = Time, C = Cost, P = Reasonable profit
The Global Voice of Consulting Engineers EN = Engineer, EM = Employer 311
Dr. D. M. Parikh

156
Dr. D. M. Parikh

Overview
♦ DAB will be appointed by the parties in order to decide on disputes and/or to avoid disputes.
♦ However, quite often its unique aim is to avoid disputes, meaning that it will take actions
before a dispute arises.
♦ It can not become active before having been appointed.

♦ The appointment procedure is stipulated in Sub-Clause 20.2.
♦ There is a choice between a three member board or a one member board – It is normally
defined at Tender stage.

Dr. D. M. Parikh

Ad-hoc v/s Permanent DAB
Ad-hoc DAB Permanent DAB
 Yellow Book  Red Book
 As and when dispute arises  Appointed with in 28 days

of contract signing
 Prior to referral of disputes to DAB
additional step of establishment of  Regular visits and referral is
DAB is required convenient
 All procedures are same in both  All procedures are same in both
FIDIC books FIDIC books
157
Dr. D. M. Parikh

DAB Members
♦ DAB members are usually listed (accredited) adjudicators.
♦ Adjudicators have to be experienced and qualified in order to get registered.
♦ Adjudicators should be independent.
♦ Adjudicators will either become appointed by Parties or nominating body.

Dr. D. M. Parikh

DAB Agreement
♦ Each "Dispute Adjudication Agreement" is a tripartite agreement, made with each Member
separately, by and between the "Employer"; the "Contractor"; and the "Member" who is
defined in the Dispute Adjudication Agreement as being:
 either the sole member of the "DAB" (or "adjudicator"),
OR
 one of the three persons who are jointly called "DAB”.
♦ A model form of a Dispute Adjudication Agreement is part of the FIDIC Books. This
Agreement is governed by law of contract.
158
Dr. D. M. Parikh

DAB Agreement….contd.
♦ A Dispute Adjudication Agreement comprises Agreement, General Conditions of Dispute
Adjudication Agreement, the latter referring to Procedural Rules
♦ Contractor and Employer shall give notice that the Agreement to become effective within a
period of six months, if not the Agreement becomes null and void.
♦ The fees are subject to negotiations, FIDIC has not published any recommendations.

Dr. D. M. Parikh

DAB Agreement

159
Dr. D. M. Parikh

DAB Agreement: Salient Features
♦ The Member warrants and agrees that he/she is and shall be Impartial and Independent of
Employer, Contractor and Engineer. The Member shall promptly disclose, to each of them
and to the other Members (if any), any fact or circumstance which might appear inconsistent
with his/her warranty and agreement of impartiality and independence
♦ When appointing the Member, the Employer and the Contractor relied upon the Member's
representations that he/she is:
 experienced in the work which the Contractor is to carry out under the Contract,
 experienced in the interpretation of contract documentation, and;
 fluent in the language for communications defined in the contract.
Dr. D. M. Parikh

DAB Member
♦ shall be and remain impartial.
♦ shall disclose any reasons which might affect impartiality.
♦ comply with the procedural rules and with Sub-Clause 20.4 of the Conditions of Contract.
♦ shall ensure his/her availability for any site visit and hearings as are necessary.
♦ shall treat the details of the Contract and all the DAB's activities and hearings as private and
confidential.

160
Dr. D. M. Parikh

20.2 Appointment of Dispute Adjudication Board
♦ Disputes shall be adjudicated by DAB as per Sub-Clause 20.4 [Obtaining DAB's Decision].
The Parties shall jointly appoint a DAB, 28 days after a Party gives notice to the other Party
of its intention to refer a dispute to DAB in accordance with Sub-Clause 20.4.
♦ DAB is appointed under Sub-Clause 20.2 or Sub-Clause 20.3.
♦ Shall be constituted by no of members as per appendix to tender – if not specified then 3
members
♦ If 3 members then each party nominates one for approval from other party. Two members
and parties shall agree to the Third member.
Dr. D. M. Parikh

20.3 Failure to Agree Dispute Adjudication Board
 If parties fail to agree on sole member,
 OR either party fail to nominate a member for other party’s approval
 OR parties fail to agree upon the Third member
 OR parties fail to agree upon the appointment of a replacement in 42 days
Then, appointing entity mentioned in the Appendix to Tender will nominate DAB and that shall be
binding.
161
Dr. D. M. Parikh

20.4 Obtaining Dispute Adjudication Board’s Decision
♦ If a dispute (of any kind whatsoever) arises between the Parties in connection with, or arising
out of, the Contract or the execution of the Works, including any dispute as to any certificate,
determination, instruction, opinion or valuation of the Engineer, then after a DAB has been
appointed pursuant to Sub-Clauses 20.2 [Appointment of the DAB] and 20.3 [Failure to Agree
DAB] either Party may refer the dispute in writing to DAB for its decision, with copies to the
other Party and the Engineer. Such reference shall state that it is given under this Sub-Clause.
♦ The decision from the DAB shall be in 84 days.

♦ It shall be reasoned decision and shall be binding to both parties and they shall promptly give
effect to the decision.
Dr. D. M. Parikh

20.4 Obtaining Dispute Adjudication Board’s Decision….contd.
♦ If either party is dissatisfied with the decision then notice of dissatisfaction to be given to other
party within 28 days.
♦ If DAB fails to give decision in 84 days then either party can give notice of dissatisfaction to
other party.
♦ Arbitration after notice can commence within 56 days.
♦ Amicable settlement can be attempted within 56 days (Sub-Clause 20.5).

162
Dr. D. M. Parikh
DAB Procedure
Notice of intention to
Appointment DAB
28 d
Refer to dispute to DAB
Reference of the dispute DAB issues agenda and procedural

in writing to DAB procedural rules rules
112 days
Submission of additional Access to
Experts
84 days
information the site etc.
Hearing See Procedural Rules
DAB gives its decision Cl. 20.4

Dr. D. M. Parikh
Settlement of Disputes-Cl 20.4 & 20.5

Clause Clause 20.4 Clause 20.4 Clause 20.4 Clause Clause 20.5
20.4 Has either Has DAB Has either 20.5 Arbitration
Is there a party given notice of party, within Is attempt may
dispute referred* the his decision* 28 days of at amicable commence
between yes matter in yes to both parties yes DAB's yes settlement after 56 days
the dispute to the within 84 days decision, successful? no (Clause 20.6
parties? DAB, copy to of receipt of given notice of Sets down the
other party? reference? dissatisfaction rules applying
no no no yes to the
arbitration
Clause 20.4 Clause 20.4 Clause 20.4 Dispute
process)
not activated After 84 days, DAB's resolved in
parties may decision terms of *Reference/Decision
move to 20.5 becomes final settlement must state that it is
and binding (procedure not issued pursuant to
set down) Cl. 20.4
163
Dr. D. M. Parikh
Arbitration
20.6 Arbitration
♦ Unless settled amicably, any dispute in respect of which the DAB's decision (if any) has not
become final and binding shall be finally settled by international arbitration. Unless otherwise
agreed by both Parties:
 the dispute shall be finally settled under the Rules of Arbitration of the International
Chamber of Commerce,
 the dispute shall be settled by three arbitrators appointed in accordance with these
Rules, and
 the arbitration shall be conducted in the language for communications defined in Sub-
Clause 1.4 [Law and Language].
Dr. D. M. Parikh
Arbitration
20.6 Arbitration….contd.
♦ The arbitrator(s) shall have full power to open up, review and revise any certificate,
determination, instruction, opinion or valuation of the Engineer, and any decision of the
DAB, relevant to the dispute. Nothing shall disqualify the Engineer from being called as a
witness and giving evidence before the arbitrator(s) on any matter whatsoever relevant to the
dispute.

164
Dr. D. M. Parikh
Arbitration
In Summary…….Arbitration as per FIDIC
♦ Sub-clause 20.6 stipulates Arbitration to be conducted under Rules of Arbitration of ICC
♦ The Tribunal shall consist of 3 Arbitrators
♦ The tribunal can review the decision(s) of DAB
♦ The tribunal can also call Engineer as the witness
♦ The arbitration can commence prior to or after the completion of works

Dr. D. M. Parikh
Arbitration
In Summary…….Arbitration as per Indian Act
♦ Arbitration to be conducted under the Arbitration and Conciliation Act, 1996/2015.
♦ This act is adopted from UNCITRAL model law.

♦ It supersedes the Arbitration Act, 1940 and 1996.
♦ The arbitral tribunal (AT) can be one member or 3 members.

♦ The AT is obliged to give reasoned order.
♦ Very few ground under which the Award can be challenged in the court of law.
165
Dr. D. M. Parikh
Claims and Disputes Process

Notice of claim by Fully detailed claim by CN within 42 d of EN to respond within
20.1 CN within 28 d of event [Claim with continuing effect - details 42 d with approval or 3.5
event to be submitted Monthly] disapproval
Referral &
RB: 8.1: Commencement submission to DAB
(20.4)
Notice of
Appointment of DAB DAB decision
DAB dissatisfaction within
within 28 d (20.2) within 84 d
28 d
YB & SB: Notice of Referral to
intention to refer dispute Arbitration (20.6)
to DAB
Notice of dissatisfaction Arbitration to Attempt
within 28 d, if no decision commence after Amicable
in 84 d 56 d settlement
during 56 d
Dr. D. M. Parikh
Dispute Resolution Timeline

8.1 20.2 20.4 A Party 20.4 A Party 20.6A
Commencement Parties refers the may issue a Party may
Date appoint dispute to the notice of initiate
DAB DAB dissatisfaction arbitration
Parties present
submissions to Amicable
the DAB settlement
<28 d <84 d <28 d >56 d
DAB gives Arbitrator/s

its decision appointed
166
Dr. D. M. Parikh
Dispute Resolution under FIDIC
Dispute
Referral to DAB
Decision to DAB Binding

NO
Dissatisfaction Final Binding
Endeavour to reach Failure to Comply

Agreement Breach of Contract
Arbitration Enforcement
Dr. D. M. Parikh
Scheduled Responsibilities

167
Dr. D. M. Parikh
Scheduled Responsibilities - Employer

Clause 2.1 Grant access
Clause 2.2 Assist with Permits, Licenses, Approvals
Clause 2.4 Establish & maintain appropriate financial arrangement
-- Issue Letter of Acceptance
Clause 3.1 Appoint the Engineer
Clause 3.4 Replace the Engineer
Clause 14.2 Advance Payment
Clause 14.7 Payment

Dr. D. M. Parikh
Scheduled Responsibilities - Employer

Clause 15.2 Termination
Clause 17.3 Employers Risks
Clause 18.1 Insurance
Clause 20.2 DAB– Agree in appointment and pay costs
Cl. 20.1/20.5 Settle dispute

168
Dr. D. M. Parikh
Scheduled Responsibilities - Contractor

Execute and complete the Works in accordance with the Contract
Clause 4.1
(including design to the extent specified).
Clause 4.2 Performance Security
Clause 4.3 Contractors Representatives
Clause 4.4 Sub-Contractors
Clause 4.6 Co-operate
Clause 4.8 Safety Procedures
Clause 4.9 Quality Assurance
Clause 4.18 Environmental Protection

Dr. D. M. Parikh

Clause 6.1 Engage Staff
Clause 6.4 Observe Laws
Clause 6.7 Health and Safety
Clause 7 Plant Materials Workmanship
Clause 8.1 Commencement
Clause 8.4 Notify Delays
Clause 11.1 Completion of Outstanding Work
Clause 12.1 Measurement of Works
Clause 13.2 Value Engineering

169
Dr. D. M. Parikh

Clause 14 Claims of Payment
Clause 17.1 Indemnities
Clause 17.2 Core of Works
Clause 18 Insurance: provide evidence
Clause 20.2 Agree on appointment of DAB
Clause 20.4 Dispute settlement

Dr. D. M. Parikh
Scheduled Responsibilities - Engineer

Clause 3.1 Accept appointment and duties pertaining
Clause 3.2 Delegation
Clause 3.3 Issue Instructions
Clause 3.5 Determinations
Clause 7 Quality of Materials, etc. including 7.5 Rejection
Clause 8.1 Commencement
Clause 8.4 Extensions of time and payment – determine
Clause 10.1 Taking Over Certificate
Clause 11.1 Performance Certificate

170
Dr. D. M. Parikh
Scheduled Responsibilities - Engineer

Clause 12.1 Measurement
Clause 12.3 Evaluation
Clause 13.3 Variations – Issue instructions
Clause 13.6 Day work
Clause 14 Certify payments in timely fashion
Clause 18 Verify insurances
Clause 20.1 Determine Contractors claims
- Keep Employer informed

Dr. D. M. Parikh
Scheduled Responsibilities - DAB

Clause 20.2 Accept Appointment and the obligations pertaining thereto
Clause 20.4 Adjudicate on Disputes – hand down decisions

171
Dr. D. M. Parikh
MDB-2010: FIDIC Pink Book

Dr. D. M. Parikh
What is the Pink Book?

 The Pink Book is the form of contract used by Multilateral Development Banks
(MDBs) for construction projects for which MDBs are providing finance
 Before 2005, MDBs commonly adopted the FIDIC General Conditions of Contract
as part of the standard bidding documents that they required their borrowers or aid
beneficiaries to follow. However, MDBs usually heavily amended the FIDIC General
Conditions of Contract by introducing additional clauses
 It is Harmonized Edition of the 1999 Red Book (FIDIC conditions of Contract for
Construction).

172
Dr. D. M. Parikh
What is the Pink Book?

 Was first published in May 2005, then revised in March 2006, and finally in June 2010
 Different MDBs used different amendments, which could create uncertainties
amongst the users of the documents
 The Pink Book was introduced by FIDIC to include the most common changes,
previously introduced by MDBs in the Particular Conditions to the General Conditions
of Contract
 Nevertheless, it still need to be tailored to the requirements of specific projects and
countries

Dr. D. M. Parikh
Where to use the Pink Book?

 The parties should use the Pink Book when the project is MDB financed and the
1999 Red Book is applicable (i.e. If it is quantity based contract for building and
engineering works designed by the Employer and supervised by “the Engineer”)
 If a project is financed by an MDB but the Employer will not carry out the design
(i.e. Where the 1999 Red Book is not applied), the parties should not use the Pink
Book without suitable amendments

173
Dr. D. M. Parikh
Red Book (1999) V/s Pink Book (2010)

 The layout, clauses, wording, standard forms, balanced risk-sharing, etc. are
virtually the same as Red book
 The Pink Book includes a number of additional sub-clauses, particularly dealing
with the contractor’s obligations towards his staff and labour force
 The Pink Book also contains some specific requirements of MDB, e.g. The right of
the bank to audit the contractor’s account

Dr. D. M. Parikh
Red Book v/s Pink Book

Red Book (1999) Pink Book (2010)
1.1 Definitions
- Appendix to Tender - Contract Data
- Dispute Adjudication Board - Dispute Board
- Tests to be carried out in accordance with - Tests to be carried out in accordance with
the provisions of the Particular Conditions the Specification
- Defects Notifications Period as stated in the - … extends over 365 days expect if otherwise
Appendix to Tender stated in the Contract Data

174
Dr. D. M. Parikh

1.1 Definitions
- Definition of “Plant” add: “Vehicles purchased for the Employer and
- Definition of “Site” relating to the construction or operation of the
Works.”
add: “storage and working areas”
New Definitions:
“Bank” and “Borrowers” are defined

Dr. D. M. Parikh

1.1.4.3 and 1.2 Cost and Profit
Definition of Cost: “ reasonable profit” Only refers to “profit”. This is because sub-
clause 1.2 provides that “profit” is fixed at 5%
unless otherwise indicated in the Contract Data
1.4 Law and Language

Versions in more than one language Removed

175
Dr. D. M. Parikh

1.12 Confidential Details - Amended to balance position
The Contractor shall disclose confidential The Contractor’s and the Employer’s Personnel
information as the Engineer may require shall….
New Paragraph:
Contract details to be confidential
1.13 Compliance with Laws
a) Employer to obtain planning, zoning & other Added: “Building Permit”
permissions for Permanent Works

Dr. D. M. Parikh

1.13 Compliance with Laws
b) The Contractor shall give all notices, pay all Added: “unless the Contractor is impeded to
taxes, duties and fees, & obtain all permits, accomplish these actions and shows evidence
licenses and approvals, as required…. of its diligence”
1.15 Inspection & Audit by the Bank New Sub-clause allowing Bank representative
to inspect the Site and/or to inspect and audit
the Contractor’s accounts and records
2. The Employer Grant access so that the Programme can
2.1 Right of Access to the Site proceed “without disruption”

176
Dr. D. M. Parikh

2.2 Permits, Licenses or Approvals “where he is in a position to do so” has been deleted
from Employer’s obligation to provide reasonable
assistance in obtaining permits and licenses for project.
2.4 Employer’s Financial Arrangements New Paragraph: If the Bank has notified the borrower
that Bank has suspended disbursements under its loan,
Employer shall, within 7 days, give notice of such
suspension to the Contractor
2.5 Employer’s Notice: Notice shall be
given as soon as practicable after … no longer after 28 days…, or should have become
Employer became aware…. aware…
Dr. D. M. Parikh

3. General Provisions The Employer is allowed to change the authority of the
3.1 Engineer’s Duties and Authority Engineer without the agreement of the Contractor
New Paragraph:
The Employer undertake not to Shall obtain Employer’s approval before
Impose further constraints on the 4.12:agreeing or determining extension of time and/or cost
Engineer’s Authority except as 13.1: Instructing a Variation
agreed with the Contractor 13.3: Approving a proposal for variation
13.4: specifying the amounts payable in each currency

177
Dr. D. M. Parikh

3.5 Determinations The Engineer shall give notice to both Parties
The Engineer shall give notice to both Parties of each agreement or determination, with
of each agreement or determination, with supporting particulars, within 28 days from the
supporting particulars receipt of the corresponding claim or request
except when otherwise specified.
4. The Contractor Require the Contractor to source all equipment,
4.1 Contractor’s General Obligations material and services for use on the Works from
an eligible source country (as defined by the
Bank)

Dr. D. M. Parikh

4.2 Performance Security
The Employer has to approve the entity and The performance Security to be issued by a
country issuing the performance security reputable bank or financial institution selected by
the Contractor.
Sub-paragraphs (a) to (d) contain a list of List removed.
circumstances under which the Employer is (Recommendation: Text for performance should
entitled to make a call under the provide sufficient protection by listing events giving
Performance Security provisions rise to call as well as reasons for such call)

178
Dr. D. M. Parikh

4.13 Rights of Way and Facilities Unless otherwise specified in the Contract the
The Contractor shall bear all costs and charges Employer shall provide effective access to and
for special and/or temporary rights-of-way which possession of the Site including special and/or
he may require, including those for access to temporary rights-of-way which are necessary
the Site. The Contractor shall also obtain, at his for the Works. The Contractor shall obtain, at
risk and cost, any additional facilities outside his risk and cost any additional rights of way or
the Site which he may require for the purposes facilities outside the Site which he may require
of the Works. for the purposes of the Works.

Dr. D. M. Parikh

5. Nominated Subcontractors Includes an additional ground upon which the
5.2 Objection to Nomination Contractor can object Nomination:
Subcontractor’s rejection to include a back-to-
back payment condition
6. Staff and Labour Amended to encourage Contractors to employ
6.1 Engagement of Staff and Labour staff and labour from the country where the
Works are carried out.
6.2 Rates of Wages and Conditions of Labour Contractor is obliged to inform all its Personnel
about their liability to pay personal Income
taxes in the Country.
179
Dr. D. M. Parikh

6. Staff and Labour Added to cover:
6.12 to 6.24 New Sub-clauses - Foreign personnel
- Supply of foodstuffs
- Supply of water
- Measures against insect and pest nuisance
- Alcoholic liquor or drugs
- Arms and munitions
- Funeral Arrangements
- Child Labour
- Workers’ Organizations
- Non-discrimination & equal opportunity
Dr. D. M. Parikh

7.7 Ownership of Plant and Materials
Become the property of the Employer: Become the property of the Employer:
- When delivered to the Site; - When incorporated in the Works;
- When the Contractor is entitled to payment - When the Contractor is paid their
of their value corresponding value

180
Dr. D. M. Parikh

8.1 Commencement of Works Commencement Date shall be the latest of
The Engineer shall give not less than 7 days - Contract Signature
notice of the Commencement Date. - Contractor’s receipt of reasonable evidence of
The Commencement Date shall be within 42 the Employer’s Financial arrangements.
days after the Contractor receives the Letter - Effective access to and possession of the Site.
of Acceptance - Receipt of the Advance Payment
In addition to these - The Engineer’s instruction to
Commence.

Dr. D. M. Parikh

8.4 Extension of Time for Completion
(e) Any delay, impediment or prevention caused
by or attributable to Employer, Employer’s
“on the Site” removed
Personnel, or Employer’s other contractors on
the Site
8.6 Rate of Progress New Paragraph:
Additional costs of revised methods including
acceleration measures, instructed by the
Engineer to reduce delays shall be paid by the
Employer, without generating, however, any
other additional payment benefit to Contractor.
181
Dr. D. M. Parikh

11.3 Extension of Defects Notification Period
The Employer is entitled to an extension if and Added:
to the extent that the Works cannot be used for
….attributable to the Contractor
the purposes for which they are intended by
reason of a defect or damage
12.1 Works to be Measured Added:
The Contractor shall show in each application
(interim or final) the quantities and other
particulars detailing the amounts which he
considers to be entitled under the Contract

Dr. D. M. Parikh

12.3 Evaluation New Paragraph:
Any item of work included in the Bill of Quantities
for which no rate or price was specified shall be
considered as included in other rates and prices
in the Bill of Quantities and will not be paid for
separately.

182
Dr. D. M. Parikh

12.3 Evaluation
A new rate or price if: A new rate or price if:
(a) (a)
(i) measured quantities changed by 10% (i) measured quantities changed by 25%
(ii) exceeds 0.01% of the Accepted Contract (ii) exceeds 0.25% of the Accepted Contract
Price Price
(iii) change unit cost by more than 1%. (iii) change unit cost by more that 1%
Until a rate is agreed or determined, the
Engineer shall determine a provisional rate for Added:
the purposes of Interim Payment Certificate … as soon as the concerned work commences

Dr. D. M. Parikh

13.1 Right to Vary: The Contractor shall executed
and be bound by each Variation, unless the Added:
Contractor promptly gives notice that: (ii) Such Variation triggers a substantial change in
(i) Goods required for the Variation cannot be the sequence or progress of the Works
obtained

183
Dr. D. M. Parikh

13.7 Adjustments for New Paragraph:
Changes in Legislation No extension of time if the relevant delay has already been taken into
account in the determination of a previous extension of time, and Cost
shall not be separately paid if the same shall already be taken into account
in the indexing of any inputs to the table of adjustment data in accordance
with 13.8 (Adjustments for Changes in Cost)
14.1 The Contract Price New Paragraph:
Contractor’s Equipment, including essential spare parts therefore,
imported by the sole purpose of executing the Contract shall be
exempt from the payment of import duties and taxes upon importation

Dr. D. M. Parikh

14.2 Advance Payment The guarantee to be issued by a reputable bank
The Employer has to approve the entity selected by the Contractor
and country issuing the guarantee
Deductions: Deductions:
- Commence in the Certificate in - Commence in the next Certificate following that in
which the total of all certified which the total of all certified payments exceeds
payments exceeds 10% of the 30% of the Contract Amount.
Contract Amount. - As per the Contract Data and completely repaid
- At the rate of 25% prior to the time when 90% of the Contract Amount
has been certified.

184
Dr. D. M. Parikh

14. Contract price and payment
14.2 Advance Payment If Termination by Employer for convenience, the
If Termination by Employer for convenience, the Contractor is not required to repay the balance
whole balance shall be immediately become of the Advance Payment.
payable to the Employer
14.7 Payment If Bank loan or credit is suspended, the
Employer shall make payment within 14 days
after such statement is submitted

Dr. D. M. Parikh

14.9 Payment of Retention Money Contractor is entitled to substitute a guarantee
for the Second half of the retention
(not required if performance security covers
50%)
If Sectional Completion, Portion of Payment is … Increased to 50%

40% of (the estimated contract value of the
Section / estimated Final Contract Price)

185
Dr. D. M. Parikh

15.5 Employer’s Entitlement to Termination for Added:
Convenience … or to avoid a termination of the Contract by
the Contractor under Clause 16.2 (Termination
The Employer shall not terminate the Contract
by Contractor)
under this sub-clause in order to execute the
Works himself or to arrange for the Works to be
executed by another contractor

Dr. D. M. Parikh

15.6 Corrupt or Fraudulent New Sub-Clause to deal with the global trend to prevent fraud and
Practices corruption. The Employer may terminate the contract if it
determines, based on reasonable evidence, that the contractor has
engaged in fraudulent practice (broad definition to include
misrepresentation or omission of facts in order to influence a
procurement process or the execution of a contract)
16.1 Contractor’s New Paragraph entitling the Contractor to suspend work or reduce
Entitlement to Suspend the rate of work if the Bank has suspended disbursements under
Work the loan or credit and no alternative funds are available

186
Dr. D. M. Parikh

16.2 Termination by Contractor (d) … in such manner as to materially and
Contractor entitled to terminate if: adversely affect the economic balance of the
Contract and/or the ability of the Contractor to
(d) The Employer substantially falls to
perform the Contract
perform his obligations under the Contract Added:
(h) The Contractor does not receive the Engineer’s
Instruction to commence work 180 days after the
Letter of Acceptance

Dr. D. M. Parikh

16.2 Termination by Contractor New Paragraph:
Contractor can suspend work, reduce its rate or terminate the
Contract, if the Bank suspends the loan or credit from which
the Contractor is paid and 14 days after the Contractor has
followed the payment mechanism under sub-clause 14.7, it
has still not received the sums due to it.
17.1 Indemnities Modified:
to enlarge the indemnity from the contractor to cover all
damage or loss however arising, except that only attributable
to the employer.

187
Dr. D. M. Parikh

17.3 Employer’s Risks
The risks are: The risks are, insofar as they directly
(b) Rebellion, terrorism, revolution, insurrection, military affect the execution of the Works in the
or usurped power, or civil war, within the Country, Country:
(c) riot, commotion or disorder within the Country by (b)…. sabotage by persons other than
persons other that the contractor’s Personnel and other the Contractor’s Personnel,….
employees of the Contractor and Subcontractors (c) and other employees of the Contract
and Subcontractors (removed)

Dr. D. M. Parikh

17.6 Limitation for liability Liabilities that are not covered by the limitation:
Liabilities that are not covered by the - 8.7 [Delay Damages]
- 15.4 [Payment after Termination]
limitation:
- 11.2 [Cost of Remedying Defects]
- 16.4 Payment on Termination - 16.4 [Payment on Termination]
- 17.1 Indemnities - 17.1 [Indemnities]
- 17.4 (b) [Consequences of Employer’s Risks]
- 17.5 [Intellectual and Industrial Property Rights]

188
Dr. D. M. Parikh

18.1 General Requirements for Insurances and in terms acceptable to the Contractor. These
Whenever the Employer is the insuring terms shall be consistent with any terms agreed by
both Parties before the date of the letter of
Party, each insurance shall be effected with
Acceptance. This agreement of terms shall take
insurers and in terms consistent with the precedence over the provisions of this Clause.
details annexed to the Particular Conditions. New Paragraph:
The Contractor shall be entitled to place all
insurances relating to the Contract (including, but
not limited to the insurance referred to Clause 18)
with insurers from any eligible source country.

Dr. D. M. Parikh

19.1 Definition of Force Majeure
Force Majeure may include:
(iii) riot, commotion, disorder, strike or lockout by
Removed ‘and other employees of the
persons other that the Contractor’s personnel and
other employees of the Contractor and Contractor and Subcontractors,’
Subcontractors,
19.2 Notice of Force Majeure If a Party is or will be prevented from
If a Party is or will be prevented from performing any performing its substantial obligations
of its obligations under the Contract by Fore under the Contract by Force Majeure, then
Majeure, then it shall give notice to the other Party… it shall give notice to the other Party…

189
Dr. D. M. Parikh

19.4 Consequences of Force Majeure Contractor’s entitlement has been
extended to include the costs of
rectifying or replacing the Works and/or
Goods damaged or destroyed by Fore
Majeure, to the extent they are not
indemnified through the insurance
policy referred to in Sub-Clause 18.2.
19.6 Optional Termination, Payment and Release Other Costs or liabilities which were
Upon such termination, the Contractor is entitled for: (c) reasonably and necessarily incurred by
any other Cost or liability which was reasonably the Contractor in the expectation of
incurred by the Contractor in the expectation of completing the Works;
completing
Internationalthe Works;
Federation of Consulting Engineers
Dr. D. M. Parikh

20.2 Appointment of the Dispute Board DB members shall be fluent in the language for
communication defined in the Contract and
shall be a professional experienced in the type
of construction involved in the Works and with
the interpretation of contractual Documents
20.4 Obtaining Dispute Board’s Decision
If either Party is dissatisfied with the DAB’s
decision, then either Party may, within 28 days
… and intention to commence arbitration.
after receiving the decision, give notice to the
other Party of its dissatisfaction.

190
Dr. D. M. Parikh

20.6 Arbitration Different Arbitration Procedures:
a) If the Contract is with foreign contractors:
(i) For contracts financed by all participating
Banks expect the Asian Development Bank
(ii) For Asian Development Bank
b) If the Contract is with domestic contractors
The place of arbitration shall be the neutral location
specified in the Contract Data

Dr. D. M. Parikh
Open Forum Discussions
Dr. Dhaval M. Parikh

parikhdm@gmail.com
+91 98250 60153
191

FIDIC

Uploaded by

Copyright:

Available Formats

You might also like

FIDIC

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FIDIC

Uploaded by

Copyright:

Available Formats

Dr. D. M.

Understanding of FIDIC 1999 Conditions of Contracts

Dr. Dhaval M. Parikh

27 & 28 September 2019

Program for both Days

Introduction and Background

International Federation of Consulting Engineers

A Construction Contract, therefore, is a legally binding exchange of

International Federation of Consulting Engineers

What is the Purpose of the Contract?

The Purpose of Contract is to define the contractual relationship

International Federation of Consulting Engineers

 Cost + Fixed Fee with Guaranteed Maximum Price Contract

 Cost + Fixed Fee with Bonus Contract

International Federation of Consulting Engineers

ASPAC Asia-Pacific group

International Federation of Consulting Engineers

International Federation of Consulting Engineers

International Federation of Consulting Engineers

The World Bank WB

International Federation of Consulting Engineers

International Standards Organization ISO

Why FIDIC Contracts?

International Federation of Consulting Engineers

Why FIDIC Contracts?

International Federation of Consulting Engineers

FIDIC Standard Contracts

International Federation of Consulting Engineers

International Federation of Consulting Engineers

FIDIC Contracts for Works

International Federation of Consulting Engineers

FIDIC Contracts for Works

International Federation of Consulting Engineers

International Federation of Consulting Engineers

International Federation of Consulting Engineers

International Federation of Consulting Engineers

International Federation of Consulting Engineers

International Federation of Consulting Engineers

 Engineer, means the person / entity appointed by the Employer to act on

International Federation of Consulting Engineers

Parties to the Contract

Other Defined Parties

International Federation of Consulting Engineers

Other Defined Parties

‘Consent’ means ‘no objection’, so it is clear that choice of the Contractor’s

International Federation of Consulting Engineers

Other Defined Parties

International Federation of Consulting Engineers

Other Defined Parties

Other Defined Parties

International Federation of Consulting Engineers

Other Defined Parties

International Federation of Consulting Engineers

Other Defined Parties

Other Defined Parties

International Federation of Consulting Engineers

Other Defined Parties

Other Defined Parties