Professional Documents
Culture Documents
FIDIC Qn.
FIDIC Qn.
Question
Answer
You say that you have a Lump Sum Contract. The FIDIC Construction
Contract Book is a remeasurement contract so the payment provisions must
have been changed to provide for the Lump Sum. The answer to your question
will depend on the wording of these Lump Sum provisions. I regret that FIDIC
can only comment on questions which on the interpretation of the FIDIC
General Conditions, so we are unable to answer your question. We fear that
this is an indication of what happens if General Conditions are modified by
Special Provisions without due care.
Subcontractor's experience
Question
Answer
Free-issue materials
Question
Answer
Bogus claims
Question
Answer
The provisions of Sub-clause 60.6 have to be read together with the provisions
of Sub-clause 60.5 and of course with the provisions of the Sub-clause 60.9. In
order for the Contractor to maintain any claim, he must include it in his
Statement at Completion, if it has arisen by then, and in his Final Statement.
There are a number of incidences under the contract when the Employer gives
to the Contractor indemnities or is otherwise responsible to the Contractor.
Clauses in which this occurs and where the Contractor's resulting claims
against the Employer could arise for the first time after the Statement at
Completion or Final Statement have been submitted by the Contractor include
the following: Clause 19.2 (Employer's responsibilities) in relation to safety;
Clause 21.3 (Responsibility for amounts not recovered); Clause 22.3
(Indemnity by Employer); Clause 24.1 (Accident or injury to workmen);
Clause 25.4 (Compliance with policy conditions); Clause 26.1 (Compliance
with statutes, regulations); Clause 70.2 (Subsequent legislation); and Clause
71.1 (Currency restrictions). In each of the above cases, it is conceivable that
the Contractor would wish to make a claim against the Employer after the date
of the Final Statement. Further, if the Contractor was made liable under the
applicable law to a third party in respect of design which had been carried out
by the Engineer, the Contractor would wish to bring a claim against the
Employer to recover any damages paid out. Sub-clause 60.9 in fact bars the
claims not mentioned in the Statement at Completion and in the Final
Statement. The purpose of the sub-clause is sensible, namely to enable the
Employer to achieve a reasonable degree of certainty as to his ultimate
liability.
Appointing an Engineer
Question
Answer
The basis upon which the 1987 Yellow Book and Red Book is written is that
the Engineer is appointed by the Employer, but that he is independent of both
parties - i.e., he is an independent third party. In many cases he is required to
give impartial decisions - in fact under Clause 2.4 of the Yellow Book he is
required to act impartially at all times when exercising his discretion. If the
Engineer is an employee of the Employer - e.g., someone from the Employer's
Engineering Division - there is a big risk that he will not be in a position to act
impartially. Although he may be very experienced and capable from a
technical point of view, and able to handle all technical matters, he may not be
free to make decisions which involve financial arrangements, etc. in a fair and
impartial manner. It is not impossible, nor unknown, for the Employer to
nominate himself or one of his own staff as Engineer, but it is rare and
certainly causes problems. The text of any clauses referring to the impartiality
of the Engineer will probably need revising at some stage, as will the
provisions for handling claims and disputes (Clauses 2 and 50). The principle
of using an employee of the Employer as Engineer would be more acceptable
if a Dispute Adjudication Board (DAB) was introduced to replace the principal
provisions of Clauses 2 and 50.1 to deal with claims and disputes.
Standard Letters
Question
I am a Civil Engineer, presently working as Contracts Manager. Foreign (non-
British nationality) engineers usually have an understanding of the contract
document and the associated entitlements/obligations, but always express
difficulty in composing (or responding to, if they are on "the other side" ,
correctly worded "standard" letters to the RE, Engineer or Employer in
compliance with the requirements of the various sub-clauses. Do you have
such a publication?
Answer
Answer
We assume that this inquiry is about FIDIC 1999 Conditions of Contract where
in the 199 Red Book Sub-Clause 13.8 it says: "13.8 (Adjustments for Changes
in Cost) - In this Sub-Clause, "table of adjustment data" means the completed
table of adjustment data included in the Appendix to Tender. If there is no such
table of adjustment data, this Sub-Clause shall not apply. If this Sub-Clause
applies, the amounts payable to the Contractor shall be adjusted for rises or
falls in the cost of labour. Goods and other inputs to the Works, by the addition
or deduction of the amounts determined by the formulae prescribed in this
Sub-Clause. To the extent that full compensation for any rise or fall in Costs is
not covered by the provisions of this or other Clauses, the Accepted Contract
Amount shall be deemed to have included amounts to cover the contingency of
other rises and falls in costs. The adjustment to be applied to the amount
otherwise payable to the Contractor, as valued in accordance with the
appropriate Schedule and certified in Payment Certificates, shall be determined
from formulae for each of the currencies in which the Contract Price is
payable. No adjustment is to be applied to work valued on the basis of Cost or
current prices. The formulae shall be of the following general type:
Pn=a+bxLn/Lo+cxEn/Eo+dxMn/Mo where: "Pn" is the adjustment multiplier
to be applied to the estimated contract value in the relevant currency of the
work carried out in period "n", this period being a month unless otherwise
stated in the Appendix to Tender; "a" is a fixed coefficient, stated in the
relevant table of adjustment data, representing the non-adjustable portion in
contractual payments; "b", "c", "d", ... are coefficients representing the
estimated proportion of each cost element related to the execution of the
Works, as stated in the relevant table of adjustment data; such tabulated cost
elements may be indicative of resources such as labour, equipment and
materials; "Ln", "En", "Mn",... are the current cost indices or reference prices
for period "n", expressed in the relevant currency of payment, each of which is
applicable to the relevant tabulated cost element on the date 49 days prior to
the last day of the period (to which the particular Payment Certificate relates);
and "Lo", "Eo", "Mo", ... are the base cost indices or reference prices,
expressed in the relevant currency of payment, each of which is applicable to
the relevant tabulated cost element on the Base Date. The cost indices or
reference prices stated in the table of adjustment data shall be used. If their
source is in doubt, it shall be determined by the Engineer. For this purpose,
reference shall be made to the values of the indices at stated dates (quoted in
the fourth and fifth columns respectively of the table) for the purposes of
clarification of the source; although these dates (and thus these values) may not
correspond to the base cost indices. In cases where the "currency of index"
(stated in the table) is not the relevant currency of payment, each index shall be
converted into the relevant currency of payment at the selling rate, established
by the central bank of the Country, of this relevant currency on the above date
for which the index is required to be applicable. Until such time as each
current cost index is available, the Engineer shall determine a provisional
index for the issue of Interim Payment Certificates. When a current cost index
is available, the adjustment shall be recalculated accordingly. If the Contractor
fails to complete the Works within the Time for Completion, adjustment of
prices thereafter shall be made using either (i) each index or price applicable
on the date 49 days prior to the expiry of the Time for Completion of the
Works, or (ii) the current index or price: whichever is more favourable to the
Employer. The weightings (coefficients) for each of the factors of cost stated
in the table(s) of adjustment data shall only be adjusted if they have been
rendered unreasonable, unbalanced or inapplicable, as a result of Variations."
The clause is very clear and unfortunately the question raised is not related to
an interpretation of a Sub-Slause.
Fairness of deductions
Question
As our project is a lump-sum contract, the client has reduced some of the items
and is deducting suome of our payment amounts from the monthly certificate.
Is it fair to deduct an amount?
Answer
Liquidated Damages
Question
Answer
In terms of the FIDIC 1987 Red Book, is the Contractor entitled to a portion of
the saving as provided for in the terms of Sub-Clause 13.2 (Value Engineering)
in the 1999 Red Book?
Answer
The FIDIC 1987 eRed Book does not have a similar provision as the one
mentioned in the FIDIC 1999 edition Value Engineering, Sub-Clause 13.2
However you may find in the 1987 Red Book a so called bonus for early
completion.
Additional works
Question
Being a project manager from the client side, I would like to know as per
FIDIC can I force a contractor to carry out additional works prior to approval
of his financial claim?
Answer
The basic answer is YES, provided you follow the correct contract procedures.
There are a number of Sub-Clauses which are relevant including, from the
1999 Construction Contract: a) S/Cl 3.1: The Employer may have imposed
constraints on the Engineer's authority in the Particular Conditions. b) S/Cl 3.3:
The Contractor shall comply with instructions given by the Engineer. c) S/Cl
13.1: The Contractor shall execute and be bound by each Variation initiated by
the Engineer. Subject to exceptions as stated in the Sub-Clause. d) S/Cl 13.3:
Procedures for the Engineer to value the Variation. The Engineer may have
asked for and accepted a proposal, or he proceeds as Clause 12.
New rates
Question
Answer
The decision whether a new rate applies to the total quantity of an item, or just
to the Variation quantity, will depend on the reason why a new rate is
necessary. This may depend on the reason and details of the change to the
Contractor's cost. Sometimes the original quantity will already have been
executed and paid at the BQ rate, before the Variation is ordered. However,
sometimes the fact of the quantity being changed by the Variation will change
the circumstances and costs and makes it reasonable to pay the total quantity at
the new rate. The new rate may differ if it is being applied to the total quantity
or just to the Variation quantity. The Engineer will, of course, take all these
factors into account when calculating a new rate. You should also refer to the
commentary on Clauses 51 and 52 in the FIDIC Guide to the Fourth Edition.
The commentary emphasises the importance of consultation with both the
parties.
A contract was signed under the FIDIC Conditions of Contract which require
that indices for the skilled and unskilled labour should be filled by the
Contractor in the relevant Appendix while submitting the tender. This
requirement including the source of the indices was however not fulfilled by
the Contractor. This fact was noted but employer failed to get this requirement
met and the contract was signed without this information. The dispute arose
when the contractor submitted escalation claim due change in prices of the
labour component according to relevant provision. The contractor insists the
use source indices issued by the local government for calculation of adjustment
which is near the place of the construction and because this condition is more
profitable to contractor. The Client insists that he will use the indices issues by
a gevernment office which are normally used in government contracts. I am
the Arbitrator in one such case and need advice of FIDIC what will be the
judicious coarse of action in this scenario. I however feel that entire
responsibility of not providing this information cannot be placed on the
Contractor and the Employer should have insured that Contractor provide this
information before signing of the contract. omission was made and the contract
was signed without this information (source of indices). I will be anxiously
waiting for advice from your expert what reasonable coarse of action should be
adapted in this dispute resolution as the Contractor has gone in dispute on this
issue.
Answer
It seems that the Contractor made a mistake by not adding the information to
the Appendix to Tender. The Employer then accepted the Tender and the
Parties signed a Contract which included the mistake. Unfortunately you say
that they cannot agree on the information which should be added to the
Appendix to Tender. To correct the mistake requires a change to the signed
Contract to add this information. Correcting a mistake in a Contract is a legal
question which must be studied under the applicable law. FIDIC cannot
comment on such legal questions.
Engineer's decision
Question
Our firm has a contract for consulting services with the Government of El
Salvador for the construction of major transportation infrastructure in the
country. The project is divided into three packages that are governed by FIDIC
Conditions of Contract for Works of Civil Engineering (Red book, 4th Ed.
1987). The construction of the first package of project, which included two
400-meter bridges over the most important river in El Salvador, was completed
last April.The Contractor is a Joint Venture of firms that is now claiming
additional payments based on the contract documents. In order to have a clear
interpretation of the documents, we would like to clarify the following: Clause
67.1 Engineer's Decision - we would like to confirm if under this Clause the
Contractor can claim for matters that happened during the construction period,
even after the Take-Over Certificate has been issued and the Statement at
Completion has been certified and paid.
Answer
Regarding Clause 67.1: if the Contractor is dissatisfied with an Engineer's
evaluation of a claim under Clause 53, he may refer the matter at any time
(before or after completion) to the Engineer under Clause 67.1 for an
"Engineer's Decision". He can do this any time up to his Final Statement and
there is no time limit. The Engineer then has 84 days to respond. The
Contractor cannot submit a "new'" claim for normal determination under this
clause. The claim must first be processed under Clause 53, and only when a
Clause 53 determination has been given which the Contractor finds to be
unacceptable do we have a "dispute" situation which can be handled under
Clause 67.1.
Calculation of claims
Question
I would like to know if you can help me find information regarding the
procedure and calculation of claims (of any kind) arising out of a Civil
Engineering Construction contract.
Answer
I have the following problem and I can not find a solution in the FIDIC Red
Book Fourth Edition 1887. The problem is as follows: we have made a
contract with a pre-hand over list made, with the Engineer, in April 2000. A
new contract, given to another company in the same building was given in
May 2000, it was an obligation for me to give the keys of the building. As the
Engineer is in Zimbabwe and the Building is in Burundi, no engineer was there
for the hand over of the inside of the building. Now, the Engineer asks us to
repair some things which were not on the pre-hand over list. Can you please
tell me what I have to do.
Answer
FIDIC does not undertake to proffer advice relating to every situation which
may arise under a FIDIC-based contract. However, it appears that the answer
to your question depends upon whether a Taking Over Certificate has been
issued. If so, the pre-hand over list presumably advised you of the work
described in Sub-Clause 49.2(a), and the Engineer has asked you to repair
some things as described in Sub-Clause 49.2(b). If not, the Engineer may be
"specifying all the work which ... is required to be done ... before the issue of
such Certificate" under Sub-Clause 48.1. In either case, you have not indicated
any reason for not complying with the Engineer's instructions.
Additional payments
Question
Our firm has a contract for consulting services with the Government of El
Salvador for the construction of major transportation infrastructure in the
country. The project is divided into three packages that are governed by FIDIC
Conditions of Contract for Works of Civil Engineering (Red book, 4th Ed.
1987). The construction of the first package of project, which included two
400-meter bridges over the most important river in El Salvador, was completed
last April.The Contractor is a Joint Venture of firms that is now claiming
additional payments based on the contract documents. In order to have a clear
interpretation of the documents, we would like to clarify the following: Clause
53.1 Notice of Claims - it is important to confirm if the Contractor can invoke
this Clause to claim for additional payment owing to construction works that
were performed before the Take-Over Certificate, once this Certificate has
been issued. In other words, if the Contractor can claim for matters that
happened during the construction period even after the Take-Over Certificate
has been issued.
Answer
Regarding the application of Clause 53.1. This clause requires the Contractor
to give Notice of a potential claim within 28 days of the event occurring. This
establishes his right to claim and he should then proceed to substantiate the
claim according to Clause 53.3. He can claim at any time - before or after
Taking-over - if events occur (before or after taking-over) which he considers
entitle him to claim. The intention of Clause 53.1 is to try to make sure claims
are dealt with as and when they occur so that everyone is familiar with the
circumstances (thus the 28 day provision) - and not to leave them to the end -
when people have probably forgotten all the details. If he did this within the
time limits, then the claim should be evaluated according to the Contractor's
submissions. If he did not - as would appear to be the case - and has come in
with a claim a considerable time after the event, then we would suggest that
you have two courses of action. Firstly you should perhaps try to establish why
he did not give notice within the 28 days. Either you can reject his claim on the
ground that he did not submit it within 28 days as required by Clause 53.1, or,
under Clause 53.4 you can make an assessment based on records which were
kept at the time. Normally I would suggest it depends on the circumstances. If
the claim appears to be frivolous and confused with no substantiation (possibly
an event you knew nothing about) you may well decide to reject it. But if it
concerns an event of which you were aware which you knew had disrupted the
Contractor, then maybe you could consider it under Clause 53.4.
Answer
Answer
You appear to understand FIDIC's provisions, as summarised at the top of page
41 of the Red Book Guide: "It should be noted that ... the effect of ...
[1.1(a)(iv)] is to prevent the Employer from changing the Engineer without the
consent of the Contractor." In effect, provided the legal person defined as
"Engineer" continues to exist, such legal person continues to be the Engineer
for the purposes of the Contract, and the Employer has no power to name
someone else as Engineer. By "continues to exist", we mean does not (as a
natural person) die, or is not (as a company) dissolved. FIDIC cannot give
specific advice in respect to the actions a party should take, and only
undertakes to clarify aspects of its own provisions. You do not seem to need
such clarification, but may need to obtain advice from a lawyer with expert
knowledge of construction law.
There is always a possibility that some aspect of the situation (which you have
not mentioned) would entitle the Employer to replace the Engineer under the
law governing the Contract. For FIDIC, it seems that you should first decide
whether the replacement "Engineer" is acceptable as such because, if not, you
could inform the Employer accordingly and seek to resolve the matter before it
escalates into a major dispute.
Regarding the correct application of the Red Book Contract, the Employer in
compliance with sub-clause 63.1, after giving written notice to the Contractor
upon his contravention of provision in sub-clause 4.1, enetered upon the site
and the works, and terminated the employment of the Contractor. The
Employer wants to employ another Contractor, which took second place in the
initial, public tender, to complete the works. The further procedure will be in
compliance with sub-clauses 63.2, 63.3, 63.4 and 64.1.The questions is: is this
procedure in compliance with the General Conditions of the Red Book 4th
Edition?
Answer
We refer to your query whether a proposed procedure complies with the fourth
edition of the General Conditions of Contract for Works of Civil Engineering
Construction.
I am an Architect registered with the RIBA in the UK since 1978 and the UAE
Authorities in Abu Dhabi, UAE since 1981.
I have recently been Engineer under a FIDIC Red Book 4th Edition Building
Contract between a UAE Government Agency and a local Contractor, and
Employer's Representative/Adviser under a FIDIC Design and Build Contract,
same Employer but different Contractor.
As you may know, there is very limited recourse to the law here, especially for
foreigners. Both Contractors are likely to weigh the costs of Courts and further
Delay against the benefit of any payment at all; one has already given in, but
the other is still fighting, or perhaps more realistically, negotiating.
What should I do, please: indeed, is there anything that can be done ? This is
the worst case of abuse of Contract I have come across in more than 20 years
here, though the amounts are relatively small.
Answer
Whilst we can sympathise with the situation described in the question, there is
not a lot FIDIC can recommend or that he can do as Engineer in this case.
The situation described is, unfortunately, not all that uncommon in some
Middle East countries and the ultimate decision of what to do lies with the
Contractor. If he feels the situation warrants extreme measures, then he can
terminate under Clause 69.1 (unless of course 69.1 has been changed - as it
very often is in these countries). Otherwise there is not a lot you can do.
Being fair and impartial the Engineer could (and perhaps should) write to the
Employer reminding him of the terms of the Contract - but he will probably
bring down the wrath of the Employer on his shoulders, and that may not help
anybody.
You should perhaps also bear in mind that Contractors who choose to work in
these countries are usually (or should be) rather familiar with this situation and
may well have allowed something in their price to cover this sort of thing -
especially, as the person asking the question says, the amount is not very large.
For the Red Book, can the Engineer issue instructions under Clause 13.1 after
the expiry of the Defects Liability Period ?
Answer
After the Defects Liability Period expires, the Engineer may issue instructions
under Clause 49, and cannot rely upon Clause 13 as authority to issue other
instructions.
Performance security
Question
Please inform us about the validity of the performance security if the duration
of the contract is 90 days.
Answer
Answer
The Tender at Sub-Clauses 1.1(b)(v) and 5.2(3) means the form of Tender
which is given at the end of Part 1 of the Red Book. The form of Tender, at
paragraph 2, confirms that the Appendix to Tender forms part of the Tender
and Sub-Clause 1.1(b)(iv) confirms that the priced bill of quantities forms part
of the Tender. If the Employer requires other documents to be included in the
Contract as part of the Tender then he must state this clearly in the Instructions
to Tenderers and in the form of Tender.
Sub-Clause 11.1 tell us that the hired contracting party is responsible for the
data contained in his proposal based on the data supplied by the Contractor.
Could you please tell me how I can obtain the data?
Answer
The Contractor must have based his tender on information: 1) which was
provided to all tenderers by the Employer from the investigations which had
been carried out by the Employer; 2) which the Contractor obtained from his
own inspection and examination of the Site and its surroundings. Where the
Contractor obtained this information will depend on the circumstances but he
must have satisfied himself that his tender was correct and sufficient to meet
his obligations under the Contract.
Interim certificates
Question
Sub-Clause 60.4 stipulates that the Engineer may correct any error in an
interim certificate in subsequent certificates. Are there any limitations in the
application of this provision?
Answer
You are referring to Sub-Clause 60.4 of the 1987 Contract for Civil
Engineering Works. There is a similar provision at Sub-Clause 14.6 of the
1999 Contracts. The Contract does not put any limitation on this provision.
However, under Sub-Clause 60.2 the Engineer has previously certified the
amount which he considered to be due and payable. If he has now found an
error and changed his mind he should explain the reasons for the change.
Refixing of rate
Question
Answer
You are referring to the 4th Edition 1987 of the Contract for Works of Civil
Engineering, Sub-Clause 51.1 (a) allows the Engineer to issue an instruction to
increase or decrease the quantity of any work included in the Contract. The
rate which the Engineer agrees or fixes under Sub-Clause 52.2 would only
apply to the varied quantity (increased or decreased). The original quantity is
not part of the Variation and would be paid at the original rate.
Recovery of Costs
Question
Working with 1987, 4th Edition, reprinted in 1992 FIDIC form of contract on a
project where Clause 70, whist being modified does permit the recovery of
changes in the prices of labour and materials. Are there any legal precidents
which reflect the provision reflected in the 1999 form of contract to allow the
recovery of costs, post the stated contract completion where the contractor has
failed to complete the works in the specified time? Or are there any precidents
to reflect the recovery of costs per sec, post the contract completion date? If
there are any precidents, if there are in electronic, format, could you forward
them or, advise where they could be obtained.
Answer
Engineer's instructions
Question
A FIDIC standard Contract for civil engineering (Red Book 4th Edition 1987)
is basis of a Contract for a Wharf and Approach Bridge Construction and
Causeway Reclamation project (The Contrac•). The Contract is a Lumpsum
Agreement and the BOQ refers as follows: All works in this section except
Provisional Quantities will be paid for as LumpSums. Quantities are estimates
only. If the Contractor wishes, additional items may be added to the Bill or
quantities amended. Rates nominated will be used only to assess variations (if
any) to the Contract and to assess progress claims and payments. Provisional
Quantities and Items will be paid for as described in the Conditions of
Contract. One of the BoQ item was pertaining to Crane Rails to be provided by
the Contractor. Later the Company organized the Rails on their own and the
Contractor is not required to provide the Crane Rails as per the BoQ. In view
of this the Crane Rail related Amount as stated in the BoQ is proposed to be
deducted out of the BoQ. Please confirm that this is proper approach under
Article 51 and 52 or any other conditions of FIDIC standard contract.
Answer
Under a FIDIC Contract, any change to add or omit work must be made by an
instruction from the Engineer under the appropriate sub-clause. You mention
Sub-Clauses 51 and 52, which are from the 1987 4th Edition of the Contract
for Civil Engineering Works. Sub-Clause 51.1, item (b) allows the Engineer to
issue instructions to omit work, but this is qualified by the statement in
brackets "(but not if the omitted work is to be carried out by the Employer or
by another contractor)". Your proposal for the crane rails would appear to
contravene this requirement. Hence the change and price adjustment may need
to be negotiated between the Parties and would probably involve legal advice.
We are in the process of preparing a claim under Clause 52.3 of the FIDIC
Conditions of Contract for Works of Civil Engineering Construction and are
seeking clarification on the application of the clause especially as regards to
which amount do we apply the percentage which is in excess of the 15%. Do
we apply it to: - The effective contract sum; or, - The difference between the
amounts calculated using the actual percentage by which the effective contract
sum shall have been exceed by and the 15%. Please note that In this particular
contract, the majority of Preliminary and General Items were stated as
provisional sums (as stated in the Bill of Quantities by the Engineer) it is not
easy for us to accurately determine the contractor's on-costs. We have since
acquired a copy of the "Guide to the Use of Fidlic Conditions of Contract for
Works of Civil Engineering Construction" and the explanation given does not
adequately cover us, refer page 117 of the guide. Please advise us on how this
clause is to be applied.
Answer
The precise problem is not clear and we can only comment in general terms on
the interpretation of Sub-Clause 52.3. The Sub-Clause allows the Contractor
and Engineer to discuss and agree a lump sum addition or deduction to the
Contract Price when the additions/deductions as described at (a) and (b) are
more than 15% of the "Effective Contract Price". It will be up to the Contractor
to prove the changes to his Site and general overhead costs. The details and
calculation of the lump sum will dependant on the reasons for the increase or
decrease to the Contract Price.
Unit rates
Question
1. The following addition has been made in Clause 52.2 (FIDIC 1987, Contract
for Works of Civil Engineering) in our contract by the Employer: "..Provided
further that no change in the Unit Rates or prices quoted shall be considered
for any item in the Schedules to the Bill of Quantities, unless such item
individually accounts for an amount of more than 2 percent of the sum named
in the Letter of Acceptance, and the original billed quantity by more than 30
percent. Not withstanding above, for variation exceeding 10% in quantity of
any item of BOQ with respect to original BOQ quantities, the following shall
apply to the unit rate of that item: a) For rates quoted below CSR 2000 rates,
no change in quoted unit rate shall be allowed. b) For rates quoted above CSR
2000 rates, the quantity exceeding 10% from original BOQ quantity of the
items shall be paid to the contractor as per NHA CSR 2000 rates applicable in
the relevant district. Provided further that for non BOQ items appearing in
NHA’s CSR 2000, CSR 2000 rates shall apply whereas the rates of non CSR
& non BOQ items shall be determined by the Engineer as stipulated in General
Conditions of Contract." 2. The Situation BOQ Item No.108b(i) Formation of
embankment from roadway excavation in Rock material (Hard Rock) and
BOQ Item No. 106d(i) Excavate Surplus Rock material (Hard Rock) has
increased up to 453 % and 77.8 % respectively from the Original Billed
Quantity and these Items are individually accounting for more than 2.55% and
4.99 % respectively of the sum named in the Letter of Acceptance. Therefore,
we desire to request the Employer/The Engineer that the Unit Rates for the
said items as quoted in the BOQ for the entire quantity be changed and till the
time new rates are fixed, the provisional rates or prices be determined in
accordance with CSR-2005 with 25% Premium to enable on-account payment.
3.Questions a) Will the revision of rates be based on composite schedule of
rates – 2005 (CSR- 2005) with 25% premium as requested by us? b) Are “sub-
paragraphs a and b of the addition made in the said clause” (refer to para 1
above ) applicable to us as we consider that the said sub paragraphs are not
relevant to us because our variation is over 30%. c) Will Revised Rates be
applicable to the entire quantity or only on varied quantity? d) With so much
variation, is it alright to ask for determination of Provisional rates?
Answer
Answer
The wording of Sub-Clause 21.1 (b) should be clear. The insurance shall cover
the full replacement cost as (a), plus an additional 15% of that figure. This
additional 15% is to cover any additional and incidental costs, INCLUDING
professional fees etc. This figure may be changed in the Particular Conditions
and you should also refer to the FIDIC Guide to the 4th Edition, at page 72.
Answer
Clause 52.2 refers to the re-rating of an individual variation. Clause 52.3 refers
to the situation when the total effect of all variations, plus the remeasurement
of the approximate quantities in the BoQ results in an increase or decrease of
more than 15%. It is possible that each individual variation did not have a
significant effect on the Contractor's overheads but the total effect of all
variations and the remeasurement was significant. It is necessary to consider
the actual effect of the additional quantities on the Contractor's overheads. For
example, part of the allowance for overheads may be a fixed, or lump sum,
figure which is not related to the quantity of work which has been carried out.
A substantial increase in the total quantity of work may not increase this part
of the overheads. Hence, the overheads per unit quantity would decrease. The
allowance for overheads in the rates would need to be reconsidered. Any re-
rating under Clause 52.2 would be taken into account when considering Clause
52.3. The Guide to the Fourth Edition published by FIDIC gives useful
guidance and examples at pages 115 and 117.
Free haulage
Question
My inquiry is: are their any guidlines for maximum FREE HAULAGE
distance ... for the TERM BORROW materials to be engaged in
EMBANKMENT CONSTRUCTION .... sinilarly....what free distance limits
are set/provided in FIDIC for any transportation of material .... from
BORROW, from the site of e.g., asphalt mixing or concrete mixing plant to the
site of accomodating the finished product in the road construction projects.
Answer
The FIDIC Conditions of Contract give the legal rights and obligations of the
Parties to the Contract. Matters such as the maximum free haulage distance
will depend on the requirements and details of the project. They will vary for
different projects and should be given in the technical specifications and/or
bills of quantities.
Enforcing a claim
Question
Answer
This is really a legal question, but the key seems to be that the first sentence of
Clause 67.1 says that it continues after termination. A few additional
comments may be helpful. One assumes the enquiry is referring to the Fourth
Edition, amended 1992, without any significant amendments. Matters arising
from termination under Clause 63.1 will depend on the provisions of the
applicable law as well as FIDIC Contract Clauses. Most legal systems include
requirements for the termination of a contract and also contain provisions
based on the concept of "good faith" which may be applicable. Any comments
based on the FIDIC Contract must be reviewed in relation to the applicable
law, but some general comments may be helpful. a) Clause 67.1, first sentence,
says that it continues after termination. b) Clause 63.1 enables the Employer to
"terminate the employment of the Contractor". The Clause is clear that this
does not release the Contractor from any of his obligations or liabilities. So
does the law require that the Employer also is not released from his
obligations? If so then other Clauses will also be relevant. c) The new
contractor is presumably liable for delays which he causes and which are not
attributable to the previous contractor. d) Clause 1.5, final sentence, requires
that any consent, approval, certificate or determination shall not unreasonably
be withheld or delayed. e) Clauses 60.6 and 60.8 give time periods for the
Contractor's Final Statement and the Engineer's Final Payment Certificate.
Clause 63.3 requires the Engineer to issue a certificate, without stating a time
period. By reference to Clause 1.5, this must be issued in a reasonable time.
Reasonable might be based on the Clause 60.6 and 60.8 time periods unless
there are special circumstances. f) It certainly seems necessary for the
Contractor to be informed, or his questions to be answered, in order that he
knows when the construction and Defects Liability Periods are completed. g)
The Contractor's rights and procedures for obtaining payment are covered by
Clause 67 and the applicable law.
New rate or price
Question
Answer
Under Sub-Clause 52.2, the Engineer only fixes a new rate or price when the
BOQ rate or price has become inappropriate or inapplicable for a particular
Variation. In fixing the new rate or price he will consider the reasons why the
original rate or price should be changed. He will not fix a new rate or price
until he knows whether it involves an increase or decrease in quantity. The
new rate or price will probably be different for a decrease to that for an
increase. It may be different for a large increase to a small increase. The
anomalies which you mention should not occur because the Engineer will have
considered these situations before he fixes the new rate or price.
Answer
If both the change to the original work and the additional work came from the
same change of requirement and instruction then it would be usual to issue a
single variation order. However, it is also quite normal for the price
calculations for a variation order to include different rates for the same BoQ
item. The contractor's costs and the reasons why the BoQ rates are
inappropriate may be different for the varied work and for the additional work.
It is then fairer and more transparent, to the benefit of both parties, to negotiate
different new rates.
Answer
If both the change to the original work and the additional work came from the
same change of requirement and instruction then it would be usual to issue a
single variation order. However, it is also quite normal for the price
calculations for a variation order to include different rates for the same BoQ
item. The contractor's costs and the reasons why the BoQ rates are
inappropriate may be different for the varied work and for the additional work.
It is then fairer and more transparent, to the benefit of both parties, to negotiate
different new rates.
Answer
Clause 51.1 allows the Engineer to issue instructions to vary the Works. Your
question is whether the additional two floors are just a change to the quantity
of the work which is included in the Contract, as Clause 51.1(a), or are outside
the scope of the Works, which should be defined in the Contract. The answer
to your question therefore depends on the exact wording of the Contract
Agreement, the other contract documents and perhaps also the Tender
Documents. It will also depend on the interpretation of this wording in
accordance with the applicable law. This is not something which FIDIC can
answer and you should obtain specialist advice.
Answer
Thank you for your more detailed explanation of your query. Our replies to
previous questions were in response to particular questions, whereas your
question is rather different. You are, of course, correct that Variations under
Sub-Clause 52.1 can cover a wide range of situations, including changes to the
nature as well as to the quantity of an item of work. For this reason, Sub-
Clause 52.2 must be general to cover the wide range of potential situations. It
is then for the Engineer to assess the particular situation and to agree or fix an
appropriate rate. In deciding the quantum, and also the application, of this rate
the Engineer would take into account the consequences of a change in nature
as well as a change in quantity. You should also note the explanatory remarks
in the FIDIC Guide to the use of the FIDIC Conditions of Contract for Works
of Civil Engineering Construction. Sub-Clauses 52.1 and 52.2 are reviewed at
pages 114 and 115 of the Guide and include the statement: If the nature or
amount of the work involved differs so much from that included in the original
Contract that the rates and prices are rendered inapplicable, it is the Engineer's
task to agree appropriate rates and prices with the Contractor, or, if agreement
cannot be reached, to fix the rates and prices. We trust this further explanation
will answer your query. Any further comments would require details of the
specific contract and problem, which FIDIC could not consider.
Can you please identify what is meant by "without undue delay" under Red
Book 4th Edition clause 44.3 considering that the Contractor and the Engineer
have mutually agreed, under cl. 44.2(b), to submit detailed particulars every
first week of the month and noting that every month the contractor is
submitting the same. What is the duration needed by engineer to provide his
interim/final determination of extension of time claims under this clause?
Answer
Your question refers to Sub-Clause 44.3 in the Red Book, Fourth Edition 1987.
Sub-Clause 44.2 has imposed time limits for the submission of information by
the Contractor, which you say have been agreed. FIDIC does not impose a
time limit on the Engineer because the actual time needed for him to make his
determination will depend on the circumstances and the details in the
information provided by the Contractor. However the "without undue delay"
emphasises the need for the determination to be made as soon as possible. Sub-
Clause 1.5 also requires that any determination "shall not unreasonably be
withheld or delayed". This gives the Contractor the opportunity to raise a query
if he needs the determination in order to plan his work.
Answer
Answer
your query is really a general legal question about when a payment is "made",
rather than a question of interpretation of a FIDIC contract. The answer may be
different under different jurisdictions. You should consult a lawyer with
experience of the applicable law.
Statutory declaration
Question
My firm is executing a Contract with FIDIC terms and conditions and I require
a Statutory Declaration document for international use (Project location is
Madagascar). Can you please advise where I can find this in your
documentation, or better yet can you e mail me the appropriate document.
Answer
Your Statutory Declaration would seem to conflict with the principles of the
FIDIC Contracts. Progress payments are referred to as 'interim', which
suggests that they are provisional and not final. EPCT Sub-Clause 14.6 allows
the Employer to make corrections or modifications to previous amounts
considered due, which suggests that the Contractor can request modifications
to a previous valuation. It is only the requirement for the Application for the
Final Payment, as Sub-Clause 14.11, which uses words indicating finality. The
Contractor then confirms the finality by his Discharge, as Sub-Clause 14.12.
The equivalent provision in the 1987 Red Book was Sub-Clause 60.7. The
Standard Letter for that Sub-Clause merely repeated the wording of the Sub-
Clause. However, this was a contractual letter and not a Statutory Declaration.
A Statutory Declaration will presumably be issued by the Government and will
depend on the requirements of the applicable law, which will vary for different
countries.
In the 1992 reprinted version of the 1987 FIDIC Conditions as well as in the
1999 FIDIC Conditions it is, in the relevant DAB Clauses, stated that the
Contractor, Employer and Engineer shall give effect forewith to every decision
of the Board unless and until the decision is revised in an amicable settlement
or an arbitrational award. On the other hand it is stated that a Board decision
becomes FINAL and BINDING unless either party gives a notice of
dissatisfaction within 28 days after receiving the Board decision. A very basic
legal principle is that only final and binding decisions are enforceable. Are the
FIDIC conditions really based on the very unusual principle that the Employer
has, on basis of un unbinding Board decision, to pay to the Contractor a
compensation with the consequence of running the risk of never being able to
recover the paid amount from a foreign contractor when the revised arbitration
award is issued (long) after the completion of the works. Please clarify whether
the Employer has to pay a monetary compensation on basis of a Board
decision, which is NOT FINAL AND BINDING.
Answer
Sub-Clause 20.4 of the 1999 Contracts is clear that both parties shall promptly
give effect to the DAB Decision. The Employer must pay any sum awarded to
the Contractor although the sum to be paid may be changed by a later amicable
settlement or arbitration. If a Notice of Dissatisfaction has been issued then the
dispute, not the DAB decision, may be reopened and finally determined by the
Arbitral Tribunal. The sum to be paid may then be increased, or decreased, and
additional money may need to be paid, or money may need to be repaid. An
Arbitral Award, including such further payment or repayment, would be Final
and Binding and would be covered by arbitration law and the New York
Convention. It is normal practice that a DAB or Adjudicator's Decision is
Binding and so must be paid, but is not Final and so may be changed in this
way. If no Notice of Dissatisfaction has been issued then the DAB Decision
becomes Final as well as Binding and the dispute cannot be reopened.
Can you please advise how to calculate the lump sum to be added or dedcuted
to the contract price when the effective contract price execceds 15%. In
addition, please advise on when do we deduct, and when do we add such
amount.
Answer
Answer