Kelompok 1

Clause 11 FIDIC:
DEFECTS AFTER TAKING OVER
Summary, Comparability, Journal Review and Case Study
 Member Group
[BM185243] Manajemen Kontrak

HERI HERMAWAN YANUAR HIDAYAT AHMAD HUSAIN T. VERY PURWO N.

6032202100 6032202172 6032202068 6032202048
Agenda Style
01 Summary Clause 11: Defects after Taking Over

02 Comparability within Red Book and Yellow Book

03 A couple International Journal As Topics

04 Case Study
 Clause 11: Defects after Taking Over
Completion of Outstanding
1
Work and Remedying Defects
2 Cost of Remedying Defects
Extension of Defects
3
Notification Period
4 Failure to Remedy Defects
Remedying of Defective
Work Off Site 53 Further Tests after Remedying
6 3
Defects
Right of Access after
Taking Over 71 Contractor to Search
8
Performance Certificate 9
10 Unfulfilled Obligations
Clearance of Site 11
 Summary - Clause 11
Defects after Taking Over

• Clause 11 requires that the Works shall be in the condition required by the Contract at the end of the Defects Notification Period.
Where the Contractor carries out work in the Defects Notification Period, it is not entitled to receive payment if the work was a res
ult of a defect in the design for which the Contractor was responsible. Similarly, if the Plant, Materials or workmanship are not in
accordance with the Contract or there is a failure by the Contractor to comply with any other obligation then it is required to remed
y the problem without payment.

• The Employer may obtain an extension of the Defects Notification Period if the Works, a Section or a major piece of Plant cannot
be used during the Defects Notification Period. The Contractor is required to remedy any defect during the Defect Notification Pe
riod and, if it does not, the Employer may claim against the Contractor. Rights are given to the Contractor to undertake this work
subject to the Employer’s reasonable security restrictions. Once the Defects Notification Period has expired the Engineer is requi
red within 28 days, subject to receipt of the Contractor’s Documents and the completion of any tests, to issue a Performance Certi
ficate. It is the Performance Certificate that is deemed to constitute acceptance of the Works. Sub-Clause 11.10 provides that aft
er the Performance Certificate has been issued, each Party will remain liable for the fulfillment of any obligation which remains un
performed at the time. The extent and meaning of this clause is open to debate
 Timeline in Clause 11
Defects after Taking Over
1 Completion of Outstanding Work and Remedying Defects
2 Cost of Remedying Defects
Defects Notification Period [DNP]
• means the period for notifying defects in the Works or a Section (as t
he 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 No
tification Period]), calculated from the date on which the Works or Se
ction is completed as certified under Sub-Clause 10.1 [Taking Over
of the Works and Sections].”
• Contractor shall complete any work which is outstanding on the rele
vant Date of Completion, within the time(s) stated in the Taking-Ove
r Certificate or such other reasonable time as is instructed by the En
gineer and to remedy defects or damage, of which a Notice is given
to the Contractor by (or on behalf of) the Employer on or before the
expiry date of the DNP for the Works or Section or Part.
• If a defect appears or damage occurs during the relevant DNP, a Notice sh
all be given to the Contractor accordingly, by (or on behalf of) the Employ
er.
All work under sub-paragraph (b) of Sub-Clause 11.1 shall be executed at the risk an
d cost of the Contractor, if and to the extent that the work is attributable to:
(a) any design for which the Contractor is responsible,
(b) Plant, Materials or workmanship not being in accordance with the Contract
(c) improper operation or maintenance which was attributable to matters for which
the Contractor is responsible
(d) failure by the Contractor to comply with any other obligation under the Contract
.
Unless for the such above, the Contractor shall promptly give the Engineer Notice a
nd the Engineer shall proceed under Sub-Clause 3.7 [Agreement or Designation] to
agree or determine the cause (and, for the purposes of Sub-Clause 3.7.3 [Deadline],
the date of this Notice is the start date of the deadline for approval under Sub-Claus
e 3.7.3). If it is agreed or determined that the work is due to causes other than thos
e stated above, Sub-Clause 13.3.1 [Variations under Instructions] will apply as if the
work had been ordered by the Engineer.
Timeline in Clause 11
Defects after Taking Over

3 Extension of Defects Notification Period

• The Employer shall be entitled to an extension of the DNP fo
r the Works, or a Section or a Part.
• a DNP shall not be extended by more than a period of two ye
ars after the expiry of the DNP stated in the Contract Data.
• If delivery and/or erection of Plant and/or Materials was sus
pended under Sub-Clause 8.9 [Employer’s Suspension] (othe
r than where the cause of such suspension is the responsibili
ty of the Contractor) or Sub-Clause 16.1 [Suspension by Cont
ractor], the Contractor’s obligations under this Clause shall n
ot apply to any defects or damage occurring more than two
years after the DNP for the Works, of which the Plant and/or
Materials form part, would otherwise have expired.

4 Failure to Remedy Defects

• The Contractor has a reasonable time to remedy any effect
or damage. What constitutes "reasonable" will be a questio
n of fact in each case. Matters which will be relevant to wha
t is a reasonable time include the delivery periods for replac
ement Plant and the operational status of the Works.
• If the Contractor fails to remedy the defects within a reason
able time then the Employer may fix a date when the works
are to be carried out. In default of undertaking the remedial
work by the fixed date, the Employer has a number of optio
ns available.
Timeline in Clause 11
Defects after Taking Over

5 Remedying of Defective Work Off Site

Where the Contractor cannot remedy the defect or damage expeditiously o
n Site then it may be necessary for the remedial work to be carried out off t
he Site. The consent of the Employer must be given. Consent is a term dealt
with in Sub-Clause 1.3 and “shall not be unreasonably withheld or delayed.”
The Employer may require the Contractor either to increase the amount of t
he Performance Security or provide another form of security. The FIDIC Gui
de suggests that this is at the Contractor's option; however, the wording of t
he clause suggests the opposite.

6 Further Tests after Remedying Defects

• If the carrying out of work to any defect or damage affects the
performance of the Works, the Engineer may require the repe
tition of the test described in the Contract. The Engineer is re
quired to give notice that these tests will be required within 2
8 days after the defect or damage has been rectified. This cla
use applies to both defects and damage for which the Contrac
tor is responsible and for which it is not responsible. If the Co
ntractor is not responsible for the defect and damage it is enti
tled to payment as the work is carried out at the risk and cost
of the Party liable.
• If the Contractor considers that it is entitled to an additional
payment for the Further Tests then it should promptly give no
tice and detailed particulars of its claim in accordance with th
e procedure specified in Sub-Clause 20.1.
Timeline in Clause 11
Defects after Taking Over

Right of Access after Taking Over

7
The Contractor is entitled to “such right of access to the Works
as is reasonably required” in order to remedy any defect or dam
age until the issue of the Performance Certificate (see Sub-Claus
e 11.9 below). The FIDIC Guide states that: “The Employer must
grant a right of access for the Contractor to remedy defects and
damage, or Sub-Clause 11.4 may be inapplicable.
 Timeline in Clause 11
Defects after Taking Over

8 Contractor to Search
• If there is a defect in the Works the Engineer may instruct the Contractor to search for the cause of it. Its position in the Contract (in the section entitled Defects Liability) s
uggests that this provision should only be used when Taking-Over has occurred. However, Sub-Clause 1.2 states that: “The marginal words and other headings shall not be
taken into consideration in the interpretation of these Conditions.” The Sub-Clause states that: “Unless the defect is to be remedied at the cost of the Contractor under Sub
-Clause 11.2 …” Sub-Clause 11.2 refers to SubClause 11.1 and therefore the natural reading of this clause suggests that this is a defect discovered in the Defects Notification
Period and therefore the Engineer may only instruct under this Sub-Clause after Taking-Over of the Works.
• Where a defect is discovered within the Defects Notification Period, for which the Contractor is responsible, Sub-Clause 11.2 is stated to apply. However, the remedy of rej
ection of the Plant, Materials and workmanship following testing, as set out in SubClause 7.6, could also be used by an Employer. Once again there is a tension created by t
he fact that headings and marginal notes should not be used for interpretation purposes. Sub-Clause 7.6 is applicable following any examination, inspection, measurement,
or testing. However, it is doubted that the FIDIC draftsmen intended that the Employer should be able to reject Plant, Materials or workmanship a year after Taking-Over o
f the Works. A right to reject Plant, Materials and workmanship a year after being taken into use goes well beyond remedies that are provided by English common law.
• Unless the defect is to be remedied at the cost of the Contractor under Sub-Clause 11.2 [Cost of Remedying Defects], the Contractor shall be entitled subject to Sub-Clause
20.2 [Claims For Payment and/or EOT] to payment of the Cost Plus Profit of the search.
Timeline in Clause 11
Defects after Taking Over

9 Performance Certificate
• The Performance Certificate provides written confirmation that the Engineer
has completed his obligations and this document constitutes “acceptance of
the Works”, stating the date on which the Contractor fulfilled the Contractor’s
obligations under the Contract.
• The Engineer shall issue the Performance Certificate to the Contractor (with a
copy to the Employer and to the DAAB) within 28 days after the latest of the e
xpiry dates of the Defects Notification Periods or as soon thereafter as the Co
ntractor has:
(a) supplied all the Contractor’s Documents
(b) completed and tested all the Works; and/or
(c) remedied any defects.
• If the Engineer fails to issue the Performance Certificate within this period of
28 days, then the Performance Certificate shall be deemed to have been issue
d on the date 28 days after the date on which it should have been issued, as r
equired by this Sub-Clause.
• Only the Performance Certificate shall be deemed to constitute acceptance of
the Works.

10 Unfulfilled Obligations
• It is submitted that the Performance Certificate does not relieve the Contractor o
f its liability for any defect discovered after the issue of that Certificate.
• Each Party shall remain liable for the fulfilment of any obligation which remains u
nperformed at that time. For the purposes of determining the nature and extent
of unperformed obligations, the Contract shall be deemed to remain in force.
• In relation to Plant, the Contractor shall not be liable for any defects or damage o
ccurring more than two years after expiry of the DNP for the Plant except if prohi
bited by law or in any case of fraud, gross negligence, deliberate default or reckle
ss misconduct.
Timeline in Clause 11
Defects after Taking Over

11 Clearance of Site

▪ This Sub-Clause requires the Contractor to remove its Equip

ment, materials, wreckage, rubbish and Temporary Works, a
nd reinstate all parts of Site were affected by Contractor’s ac
tivities.
▪ Leave the Site and the Works in the condition stated in the S
pecification [Red Book] or Employer’s Requirements [Yellow
Book]
▪ In the event that the Contractor fails to do this above within
28 days after the issue of the Performance Certificate, the E
mployer may sell these items and will then account to the C
ontractor for the proceeds, minus any costs incurred.
▪ The Employer should ascertain whether the local law prohib
its this action. In some countries such an action would be ill
egal and the Employer may find himself on a substantial clai
m from the Contractor, where he has dealt with the Contrac
tor’s goods or equipment without a court order.
 Comparability
Red Book and Yellow Book
[ed.2017]
Red Book Yellow Book
11.1 Cost of Remedying Defects ; Defect in the contract design by employer appears included wit
h the work fail to pass the tests after completion
11.2 Cost of Remedying Defects 11.2 Cost of Remedying Defects
(a) design (if any) of the Works for which the Contractor is responsible; (a) the design of the Works, other than a part of the design for which the Employer is responsible;
(c) improper operation or maintenance which was attributable to matters for which the Contractor is
(c) improper operation or maintenance which was attributable to matters for which the Contractor is
responsible (under Sub-Clauses 4.4.2 [As-Built Records], Sub-Clause 4.4.3 [Operation responsible (under Sub-Clause 5.5 [Training], Sub-Clause 5.6 [As-Built Records] and/or
and Maintenance Manuals] and/or Sub-Clause 4.5 [Training] (where applicable) or other Sub-Clause 5.7 [Operation and Maintenance Manuals] or otherwise);
wise);
11.4 Failure to Remedy Defects 11.4 Failure to Remedy Defects
(b) accept the damaged or defective work, in which case the Employer shall be entitled subject to (b) accept the damaged or defective work, in which case the Employer shall be entitled subject to
Sub-Clause 20.2 [Claims for Payment and/or EOT] to a reduction in the Contract Price. Sub-Clause 20.2 [Claims for Payment and/or EOT] to:
(i) payment of Performance Damages by the Contractor in full satisfaction of this failure;
(ii) if there is no Schedule of Performance Guarantees under the Contract,
or no applicable Performance Damages, a reduction in the Contract Price.
11.6 Further Tests after Remedying Defects; (Under Clause 9 [Tests on Completion]) 11.6 Further Tests after Remedying Defects : (Under Clause 9 [Tests on Completion]
or Clause 12 [Tests after Completion], as applicable).
11.7 Right of Access after Taking Over 11.7 Right of Access after Taking Over
Until the date 28 days after issue of the Performance Certificate, the Contractor shall have the right Until the date 28 days after issue of the Performance Certificate, the Contractor shall have the right
of access to the Works as is reasonably required in order to comply with this Clause, of access to all parts of the Works and to records of the operation, maintenance and
except as may be inconsistent with the Employer’s reasonable security restrictions performance of the Works,
except as may be inconsistent with the Employer’s reasonable security restrictions.

11.7 Performance Certificate : (a) supplied all the Contractor’s Documents; and
11.11 Clearance of Site; (c) leave the Site and the Works in the condition stated in
the Specification
11.7 Performance Certificate: (a) supplied all the Contractor’s Documents,
and the Engineer has given (or is deemed to have given) a Notice of No-objection to the
as-built records under sub-paragraph (b) of Sub-Clause 5.6 [As-Built Records]; and
11.11 Clearance of Site; (c) leave the Site and the Works in the condition stated in
the Employer’s Requirements
A Couple of International Journals
Clause 11: Defects after Taking Over
 Management Of Clause 11: Defects
Defective Works In after Taking Over
Infrastructure
Projects

E. GASHI GEORGE ROSENBERG

DOI : 10.1556/1848.2018.9.1.10
 Management Of Defective Works In Infrastructure Projects

to identify the various factors that cause construction defects and the
Purpose steps that can be taken to reduce them

• Many defects occur in sections that employ unskilled local workers.

• the cost of defects in the construction industry can be as high as 10% to 25% of th
e project value. Infrastructure project defect costs are typically between 5.2% and
Summary 5.6% of the total project cost.
• in the case study there were 1989 defects recorded by the team, the cost was 5.
32% of the total project cost and required 18 months of repair time.
• There are 5 main causes of defect, and there are 6 ways to prevent it.
 Clause 11: Defects after Taking Over

to improve understanding of clause 11: Defects after Taking Over of

Purpose FIDIC (2017 Edition)

• some procedures contained in the sub-clauses are more detailed than the 1999 v
ersion.
Summary • 2 years is the maximum limit for DNP renewal
• liability for unfulfilled obligations is limited to 2 years.
 International Journals Review
Management Of Defective Works In Infrastructure
Projects
• Defects in the construction industry can
result in up to 25% of project costs and
up to 18 months of repair time.
• One of the factors that cause defects is
the use of unskilled workers (local work
ers at owner's request).
• To prevent the occurrence of defects, th
ere are 6 proposed steps.
Clause 11: Defects after Taking Over
• in sub-clause 4.9 has regulated quality
management that can reduce defects (q
uality management is approved by the
owner).
• liability for unfulfilled obligations is limite
d to 2 years
• the cost of retesting is borne by the con
tractor
• there is no clause that requires contract
ors to provide training to unskilled work
ers.
 Case Study
Clause 11: Defects after Taking Over

Case 1:
Defects during the project life cycle

Case 2:
Woodlands Oak Ltd v Conwell
Case 1:
Defects during the project life cycle –FIDIC RedBook Vs UAE law
In 2005, Big Developments entered into a construction contract (FIDIC Red-Book 1999) with Tru
sted Contracting for delivery of “the biggest hospital in the world” in Dubai.
The construction went smoothly except for one major complication towards the end of the project
Background: that infuriated Big Developments – Trusted Contracting installed a fire sprinkler system in the
hospital building which was not compliant with the Civil Defence Regulations. This was di
Big Development scovered during a Civil Defence inspection and the sprinklers had to be removed and replac
Owner and operator bo ed in the entire building, which jeopardised the completion date.
th project and operatio
In 2008, the project was miraculously completed on time and handed over.
nal of the biggest hospi
tal in the world [in Dub In 2009, residents of the tower complained to Big Developments that water was leaking through
ai]. their ceilings. It appeared to be coming from bathrooms in the floor above.

In 2010, a thick fungus was discovered growing in a gap between the interior and exterior walls
Trusted Contracting of the entire hospital. Big Developments was undergoing a corporate restructure and did not ha
The implementing cont ve time to take any actions. The hospital had central air-conditioning but sometimes patients op
ractor of low rise buildi ened the windows because they wanted fresh air.
ng development By 2011, the fungus was out of control, producing a foul odour and was clearly visible.
All the walls in the hospital were affected.
Bling Buildings
In 2014, Big Developments sold the project to Better Developments who engaged So-So Contra
Design and supervisio
cting to perform a major upgrade of the cardiology wing which looked dated. The original concret
n consultant e slab had a few small cracks but a new layer was placed over it. Less than a year after the upgr
ade, much larger cracks appeared in the floor.
 Case 1:
Defects during the project life cycle –FIDIC RedBook Vs UAE law

Issue:
Defect Liability Period [DLP] -- Did Trusted have an obligation to remedy the defects?

Discussion:
• DLP period is one year, but it sometimes is extended to two years under Fidic RedBook Clause 11 .
• Big Developments should notify Trusted Contracting that there is water leaking from the bathrooms above and
require rectification. If Trusted Contracting does not repair the defects, Big Developments would be expected t
o carry out the work and charge the costs against the retention.
• If the material, plant, or workmanship is defective or otherwise not in accordance with the contract, the engine
er could have rejected Trusted Contracting’s material, plant or workmanship and require Trusted Contracting t
o remedy the defect at its own time and cost, vice versa.
• In this case study, Trusted Contracting does not have to rectify the defects caused by the fungus.
• Under UAE law, Big Developments could bring a breach of contract claim against Trusted Contracting for late
nt defects that are discovered after the expiry of the DLP till 10 years.
 Case 2:
Woodlands Oak Ltd v Conwell

The building work was covered by a verbal agreement.

Background: When he finished the contractor asked if there were any snagging
items that he needed return to the site to put right
Mr & Mrs Conwell:
• Conwells engaged Woodlands Oak to carry out works to their property under
a cost plus contract.
Home Owner (Employer) • The parties had not agreed any mechanism for dealing with defects post
completion.
Woodlands Oak Ltd: • As the employer had concerns, he did not allow the contractor back to carry
out those works and instead hired a third party to finish the Job.
Contractor for residential • The employer did not pay the contractor for his final account so the
development contractor sued for the outstanding amount.
• The employer counterclaimed for the cost of the snagging works.
Despite the absence of any mechanism, Woodlands asked the Conwells to notify
them of any defects and they would be happy to come back and make good at
their own expense.
As it turned out there were some defects discovered by the Conwells but rather
than approach Woodlands they employed other contractors to correct the proble
ms and then sought to recover the cost
 Case 2:
Woodlands Oak Ltd v Conwell

Issue:
Can the Employer not allowing the Contractor to rectify the defect and claimed the defect cost?

Discussion:
• When defects are identified in building projects the employer may decide to bring in a third-party contractor to rectify the mistakes.
However, this may result in the employer being unable to recover any expenditure unless this is done correctly.
• Contractor’s rights
If contractors are hired to carry out building works it is vital that the terms of a contract are carefully considered when
determining whether or not the contractor has a right to return to the site. Even in the absence of a contract, the
employer should take care before instructing a third party to remedy any defects and will need to demonstrate to the
court that he has acted reasonably to mitigate any loss.
• Court of Appeal
o The case went to the Court of Appeal which upheld the decision that the contractor had no right to return to the site to rectify
the defects, but that the employer had failed to take reasonable steps to mitigate his loss.
o The court made it clear that if the employer had notified the contractor of the defects, the contractor would have fixed them at
no extra cost.
o As the employer had simply passed the matter to a third-party contractor, he had acted unreasonably and could not recover any money
in his counterclaim against the contractor.
Time is
YOURS