GIZ Role of Consultants TM

Training Material on the Role & Liability of Engineering Consultants
Training Material on
Role & Liability of Engineering Consultants In Construction
Organized & delivered
By
Zewdu Tefera Worke
Engineering Contracts Lawyer
January, 2019
Developed & delivered by: Zewdu Tefera Worke, Engineering Contracts Lawyer Page 1
Role & Liability of Engineering Consultants in Construction
Table of Contents
………………………………………………………………………………………………………………
1. Overview
2. Introduction & Objectives
3. Conceptual Framework
4. Role of Engineering Consultants
5. Liability of Engineering Consultants
6. Claims & Disputes in Engineering Consulting Services
7. Role of Engineering Consultants vis-à-vis Construction Project Delivery Systems
Training Program On
Role & Liability of Engineering Consultants in Construction

Trainer: Zewdu Tefera Worke
Item Description Time Implemented by

(Day 1) Thursday, January, 2019
Morning
Training Overview 9:00-9: 30 am the Trainer with the Trainees
Conceptual Background: Consultant & 10:00-10: 30 am The Trainer
Consulting Services
Tea Break 10:30-10: 45 am
Role of Consultants: Conceptual 10:45-12: 30 pm The Trainer
Framework
Afternoon
Role of Consultants: Legal Framework 2:00-3;30pm The Trainer
Tea Break 3:30-3: 45pm
Role of Consultants: Contractual 3:45-5:00 pm The Trainer
Framework
(Day 2) Friday, January, 2019
Morning
Role of Consultants: Contractual 9:00-10:30 am The Trainer
Framework
Tea Break 10:30-10: 45am
Role of Consultants: in Construction 10:45-12:30 pm The Trainer
Contract
Afternoon
Liability of Consultants: Contractual 2:00-3:30 pm The Trainer
Framework
Tea Break 3:30-3:45 pm
Construction Project Delivery Systems 3:45-4:30 pm The Trainer
& Role of Consultants
Reflections 4:30-5:00pm Trainees & the Trainer
Construction Contract & Law: Overview
………………………………………………………………………………………
The Formula
………………………………………………………………………………………………………………
D
KP and/or LP: ROLE
V…?
(Developed by: Zewdu Tefera Worke, Engineering Contracts Lawyer)
………………………………………………………………………………………………………
The Legend
L: Law
K: Contract
P: Persons
and/or: cumulative with/alternatively (K and/or L)
D: Delivery (based on Time or Deliverable as related to the engagement of consultants);

R: Relationship
O: Obligation
L: Liability
E: Enforcement
V: Variability (context) of all the above concepts (viz., LKPDROLE);
…………………………………………………………………………………………………………………………………………………………………
The Application
LV: Law…?
KV: Contract…?
PV: Persons…?
DV: Delivery…? (based on Time or Deliverable;)
RV: Relationship…?
OV: Obligation…?
LV: Liability…?
EV: Enforcement…?
V: Variability (context) of all the above concepts….?;
I. Introduction to & Objective of the Training
Introduction to the Training
The training shall cover the following five interrelated areas: conceptual background on
consulting services & consultants; the generic role of engineering consultants in
construction; the liability of engineering consultants as related to such generic roles in
construction; claims & disputes emerging from consulting engineering services; and roles
of engineering consultants from various construction project delivery systems
perspectives;
Most of the training has its focus on design-bid-build delivery sub-system.
As related to consulting services & consultants, the conceptual framework of same shall be
identified & explored from literature, legal & contractual standpoint;
As related to the generic role of the consultants, such roles shall be identified (like design
services; project supervision services; and contract administration services) & explored
from literature, legal & contractual perspective;
As related to possible liability of consultants, the concept & scope of liability shall be
identified & explored from generic roles of the engineering consultants including the
quantum of liability of same and the role of professional indemnity insurance therewith;
As related to possible claims & disputes related to engineering consultants, it shall be

addressed from the design role of the consultant;
As related to the role of engineering consultants from different construction project

delivery systems perspective, the concept of delivery system shall be defined & explored;
and the different roles of engineering consultants shall be identified & explored based on
the relevant standard conditions of construction contracts;
Objectives of the Training
At the end of the Training, the trainees will be able:
 to define, identify and understand the concept & scope of consulting services &
consultants;
 to identify & understand the generic roles of engineering consultants in
construction;
 to define & understand the concept & scope of liability of engineering consultants
from such generic roles of same;
 to identify & understand the possible sources of claims & disputes as related to
design and/or supervision consultants;
 to identify & understand some standard conditions of construction contracts based
on different construction delivery systems & the respective roles of engineering
consultants there under;
II. Conceptual Framework

 Consulting: Concept
 Engineering & architectural services are important technical & professional
services in building & other civil engineering projects.
 Both services hereinafter referred to as “the consulting services” or “the consultant”
who provides the said services;
 Services of this kind are defined in different documents, as follows.
 According to the World Bank, consulting services means services of an
intellectual & advisory nature provided by consultants using their
professional skills to study, design, and organize specific projects, advice
clients, conduct training and transfer knowledge.
 According to Proc. No. 649/2009 Article 2(4) consultancy service mean a
service of an intellectual & advisory nature provided by consultants using
their professional skills to study, design and organize specific projects, advise
clients, conduct training & transfer knowledge.
 According to the Civil Code of Ethiopia (see Art. 2632-2638), this type of
performance of services is of intellectual character;
 The said provisions of the Civil Code not only apply to professional services of
engineering or architectural nature; they may also apply to other professions like
the legal profession; the management profession; the accounting/financial
profession; and so forth;
 Engineering consultants are thus one who provide services of intellectual or
professional nature;
 Consultants: Categories
 Consultants could be bodies’ corporate or natural persons (individuals);
 Bodies corporate, according to the World Bank, may further be categorized as
consulting firms & other organizations.
 Consulting firms are those whose core business is exclusively the provision of
consulting services;
 The following are some form of legal entities of consulting firms.
 Partnerships;
 Limited Liability Companies;
 Public Stock Companies;
 Government-Owned Enterprises;
 Foundations & NGOs’;
 According to Reg. No. 365/2015, the Corporation is therefore a government owned
corporate entity, which has legally been established to provide engineering
(including architectural) consultancy services, as its core business; viz., among other
services.,
 study, surveying, investigation & design services;
 construction supervision services; and
 contract administration services;
 Other organizations are those entities with a different mission & cost structure that
only occasionally provide consulting services & may enjoy subsidies & other
privileges. These are, for example:
 U.N. Agencies;
 Consulting Marketing Groups;
 Universities & Research Institutes;
 Nongovernmental Organizations;
 Financial Consultants;
 Procurement Agents & Inspection Agents;
 Individual consultants may be engaged, for example, in the following circumstances
(the World Bank) for which,
 The experience & qualification of the individual are the predominant
considerations;
 No support from a home office is needed;
 Teamwork or a multidisciplinary approach is not necessary;
 Consulting Services: Categories
 The World Bank generally classifies types of consulting services in to the following.
 These are;-
 Preparation Services;
 Implementation Services;
 Advisory Services;
 Preparation Services
 Under preparation services, the following services are identified, namely,
 Sector studies;
 Master Plan studies;
 Feasibility studies;
 Design studies;
 Implementation Services
 Under implementation services, the following sub-services are identified, namely,
 Tender document (preparation);
 Procurement assistance;
 Construction supervision;
 Project management;
 Quality management;
 Commissioning;
 Advisory Services
 Under advisory services, the following sub-services are identified, namely,
 Policy and strategy;
 Reorganization/Privatization;
 Institution building;
 Training/knowledge transfer;
 Management services;
 Technical/operating advice;
 The consulting services of the architect & the engineer like the Corporation may
find its place in the three stages of a given project viz., preparation, implementation
& advisory like:
 Feasibility studies; (Preparatory);
 Design studies; (Preparatory);
 Tender documentation; (Implementation);

 Procurement assistance; (Implementation);
 Construction supervision; (Implementation);
 Contract Administration (Implementation);
 Training; (Advisory);
 Project Management; (Advisory);
 Legal Features of Consulting Services
 The services of consultants like the Corporation has been recognized by & regulated
under the Ethiopian law;
 The law is called the law of professional services or hiring of intellectual work under
the Civil Code: see Article 2632-2638 cum 2632 (2) cum 2610-2631;
 Consultants like the Corporation provide services which legally have the following
features/nature;
 intellectual/professional nature;
 independent nature;
 personal nature;
 incorporeal nature; and
 technical nature;
 Professional Nature
 The professional nature of the services of consultants is clear;
 The law itself has declared it as an intellectual service;
 See Article 2632 (1); A contract relating to the performance of services of an
intellectual character shall be subject to the provisions of the following
Articles;
 The certification process (by the competent government authority) & the
licensing process (by another competent government authority) also
considers professional competence to do this or that type of technical-
professional works/activity;
 Independent nature
 The independent nature of consulting services has two dimensions:
 independent contractor dimension; and

 free from conflict of interest dimension;
 The doctrine of independent contractor applies to the consultant as well, as
per Article 2632 (2) cum 2616 of the Civil Code;
 It has again two dimensions: organizational and professional dimensions;
 organizational dimension: it means that consultants are legally & thus
organizationally independent from their clients; this is true in case of the
Corporation as per Reg. No. 365/2015;
 legal dimension: consultants enjoy the following three autonomies;
 legal autonomy: consulting firms (like the Corporation) are legally
independent thus enjoying legal personality different from the
employer or the contractor or any other third party;);
 organizational autonomy: consulting firms (like the Corporation)
having their own institutional set up (subject to project
requirement)); and
 financial autonomy: consulting firms (like the Corporation) having
their own source, cost structure & management of same;
 professional dimension: it means that professionally consultants are
independent from their clients; they have to follow the rules of their
profession;
 legal dimension: consultants like the Corporation enjoy the following three
autonomies; see Article 2616 (1) cum 2632 (2) of the Civil Code
 management autonomy; consultants manage their professional
assignments as they wish;
 schedule autonomy; consultants prepare & follow their work program
to provide their professional services;
 method autonomy; consultants adopt & implement their professional
services based on their methodology;
 limitations: there are the following two limitations on their independence &
professional status, however: viz., regulatory & contractual limitations;
 regulatory limitation: with a view to protect public interest (see Art.

2616 (1) cum 2632 (2)) consultants shall follow the rules & practice of
their respective profession; and
 contractual limitation: with a view to protect the specific client
legitimate interest; see Art. 2616 (2) cum 2632 (2) consultants shall
follow the orders of their client as agreed in their consultancy
agreement; that is why the consultants are required to undertake
prior consultation with their client before making any significant
decision or issuing instruction (like variation causing huge time
and/or cost implications) under a given construction contract;
 conflict of interest dimension:
 as related to this consultants are faithful advisors to their clients; they
are thus required to protect the legitimate interests of their clients;
from this it follows that they are not expected to place themselves in a
situation which brings conflict of their interest with that of the client:
 The origin of such conflict of interest may be of twofold: their own
interest and/or the interest of a third party with whom the consultants
have;
 See Article 2187 (Conflicting Interests) of the Civil Code under the
Law of Agency;
 Personal Nature
 Consultants are hired for their individual (institutional/corporate or
otherwise) professional ability & competence;
 They are thus required to discharge their professional obligations personally;
 See Article 2633 (1) of the Civil Code;
 whosoever hires out his work (i.e., its professional services) shall carry
out his obligations personally;
 The law also recognizes and allows consultants to have their assistants (like
Engineer Representative);
 See Article 2633 (2) of the Civil Code;
 See also Clause 12.3 (Engineer Representative) PPA 2011; Clause 3.2
(Delegation by the Engineer) MDB-FIDIC;
 see also the FIDIC Sub-consultancy Agreement; 1992 (first edition) & 2017
(second edition);
 see also the FIDIC Joint Venture Agreement (1992);
 In case of large & complex projects such assistance may reach to sub-
consultancy level; or if it were allowed it may also reach to the level of joint
venture arrangement;
 Incorporeal Nature
 The professional services of consultants is intangible; that is why it is said to
be incorporeal;
 This nature of the services of consultants distinguishes the services of
consultants from that of the works contract (under a given construction
contract) which is tangible;
 The PPA 2011 & the MDB-FIDIC 2006 conditions of contract for works
govern such kind of contract;
 Technical Nature
 The services of consultants i.e., the Engineer, is technical since the
construction project management (like design services; project supervision &
contract administration services) is technical in nature;
 Such services clearly require technical knowledge from the Engineer about
the project to be managed;
 This nature of the services of consultants distinguishes the services of the
Engineer, as consultant, from other non-technical consulting services;
 Non-(engineering) consulting services are regulated by other procurement
process; see the Standard Bidding Documents for the Procurement of Non-
Consultancy Services, PPA 2006;
III. Role of Engineering Consultants in Construction

 Conceptual Framework
 The role of the consultant in the construction project may, according to (Bunni p
155), validly be summarized, as follows.
 These functions are;-
 Study & design function;
 Tender document preparation;
 Construction supervision;
 Construction administration;
 Design
 The design of a particular project involves decision making on the form &
shape of the project; the constituent elements of that form & shape; their
precise dimensional characteristics; the specification of the material and
workmanship of each module of these elements; the quality to be achieved;
and how these elements relate to & interact with each other;
 This role includes the completion of skillful design of the project sought by
the promoter;
 Such design includes, but is not limited to:
 the preparation of drawings which should express & communicate the
details of every aspect of the project to be constructed;
 to draft a specification of the materials to be used;
 to draft the standard of the workmanship to be achieved; and
 to prepare the bill of quantities;
 Tender Document Preparation
 With respect to Tender document preparation to prepare all documents
necessary for obtaining a competitive price for carrying out the work by a
competent contractor & to advise the promoter on the tenders received and
on the selection of the contractor.
 Construction Supervision
 With respect to Construction supervision, once work starts on the project, to

supervise or to inspect the work carried out by the contractor in order to
ensure conformity with the design requirements;
 see Sub-Clause 7 (Plant, Materials & Workmanship) cum the specification;
see Sub-Clauses 80; 81; and 82 (quality of work & materials) of the PPA
2011;
 Construction Administration
 With respect to Construction administration, to administer the contract to
deal with situations as they arise, to certify and to act as an adjudicator of
disputes;
 The scope of the specific role of the consultant during construction is related
to the underlined obligations of the contracting parties viz., the employer &
the contractor;
 The respective obligations of the contracting parties under a given
construction contract shall be based & executed based on Work Program as
shall be prepared by the contractor & approved by the Engineer;
 see Clause 41: Program for the Implementation of Tasks; of the PPA
2011:
 see also Sub-Clause 8.3 (Program) of the MDB-FIIDC (2006);
 see also under MDB-FIDIC Sub-clause 8.3 cum Sub-clause 1.1.2.6
(Employer’s Personnel)…The Employer Personnel (as defined the
Engineer; the assistants referred to in Sub-clause 3.2; and all other
staff and labour and other employees of the Engineer and of the
Employer; and any other personnel notified to the Contractor by the
Engineer or the Employer, as the Employer’s Personnel;) shall be
entitled to rely upon the Program when planning their activities;
 Obligations of the Employer: see the Program
 payment obligation & its management;
 design related obligation & its management;
 site & access thereto related obligation & its management;
 takeover obligation & its management;

 risk sharing obligation & its management;
 Obligations of the Contractor: see the Program
 quality related obligation & its management;
 time related obligation & its management;
 scope related obligation & its management;
 cost related obligation & its management;
 safety related obligation & its management;
 risk sharing obligation & its management;
 Program
 Concept: approved Program; and revised & approved Program;
 Scope & Structure: see Sub-clause 8.3 (Program) MDB-FIDIC; Clause 41:
Program of Implementation of Tasks;
 setting out & organization of the site;
 logically sequenced activities;
 duration for such activities;
 design by the contractor, if any; contractor’s documents;
 procurement; manufacture of plant; delivery to the site;
 construction, erection; testing;
 resources: labour; plant; materials; cash flow;
 method of construction & sequencing;
 project organizational setup;
 sequenced inspections and tests;
 working or shop drawing submissions & approval dates;
 acquisition of site & access thereto;
 work for each nominated sub-contractor;
 Implications: Program being key & guiding and dynamic document
destined to the whole construction contract management process;
 Role of the Engineer in Construction Contract

 Especially the role of the consultant as contract administrator divided in to the
following three distinct roles; These are;-
 Agent Role;
 Professional Role; and
 Consultative Role;
 In such roles of the Engineer under construction contract, the duties & powers of
the Engineer (as per Bunni) are characterized as follows: viz., proactive; reactive;
and passive duties & authorities be it related to the obligations of the employer
and/or of the contractor or its role as a consultant under such construction contract
as Employer’s Personnel;
 Proactive Duty & Authority
 concept: duties & authorities where an action is initiated by the Engineer
under the construction contract; (Emphasis added); illustration:
 securing prior approval of the employer before exercising some defined
authority;
 appointing the engineer’s representative;
 requesting a contractor to submit is revised program;
 Reactive Duty & Authority
 concept: duties & authorities which are in response to an action initiated by
the employer or the contractor; (Emphasis added); illustration:
 give consent to the contract as to sub-contractor employment;
 approving drawings submitted by he contractor;
 undertaking valuation at the date of termination if the contract terminated
by the employer;
 instructing the contractor to keep further records if the contractor has given
intention to claim tot eh Engineer;
 Passive Duty & Authority
 concept: duties & authorities expressed as rules to be followed; (Emphasis
added)
 illustration: making communication in writing;

 appearing as a witness before an arbitral proceeding;
 The Engineer discharges its role on the following manner:
 employer side:
 by securing prior approval from the employer (see Sub-clause 10.1
prior to issuing Taking Over Certificate; Sub-clause 11.9 prior to
issuing Performance Certificate;) and/or
 by undertaking prior consultation with the employer;
 contractor side;
 with respect to the contractor the Engineer discharges its role by
issuing written instruction;
 see Sub-clause 4.1 (instruction of the Engineer) MDB-FIDIC;
 see Sub-clause 34.6 (administrative order of the Engineer) PPA 2011;
 its staff side: through assistants like the RE or otherwise;
 The power and authority of the Engineer (and its assistants) is limited:
 Agent Role: Legal & Contractual Framework
 By legal definition, as per Article 2199 of the Civil Code:
 Agency is a contract whereby a person, the agent (in our case the
Engineer/the Corporation), agrees with another person (in our case the
client), the principal, to represent him & to perform on his behalf one or
several legally binding acts. (Emphasis added)
 The legal basis that the Engineer has an agent role is Article 2636 (1) cum 2209 of
the Civil Code: it reads verbatim as follows:
 Whosoever (like the consultant/the Corporation) hired out his (intellectual or
professional) work/service shall undertake to carry out in the best interest of
his client, conscientiously…and…; (emphasis added)
 The agent shall act in the exclusive interest of the principal (i.e., the client)…; see
Article 2209 (1);
 The Engineer, based on his contractual agreement with his specific client, acts as
the agent of the employer in the management of a construction contract; all acts
done by the Engineer, as per the construction contract, legally binds the Employer
not the Engineer;
 This is evident from the reading of a clause in the MDB-FIDIC: see Clause 3.1: or
under PPA (2011) Sub-clause 12.2:
 The Employer shall appoint the Engineer who shall carry out the duties
assigned to him (i.e., to the Employer) in the contract;
 The Engineer is not a party to a construction contract but performs the contractual
obligations of the employer (as an agent) in the name & on behalf of the employer
(his client/principal);
 Therefore, there is, legally, an agent & principal relationship between the Engineer
& the Employer;
 This agent & principal relationship between the Engineer & the employer (as his
client & principal) is regulated by their consulting services agreement (destined for
project management) & the provisions of the Law of Agency; see Article 2179 ff of
the Civil Code;
 Under the agent role of the Engineer, it is the very mission of the Engineer to best
& exclusively protect the interests of the Employer, i.e., its principal;
 The nature of such relationship between the Engineer & his principal (the
Employer) is thus contractual;
 Types of Duties as an Agent
 The following types of duties may reveal the agent role of the Engineer in the
management process of a construction project & contract;
 Two types of agent role has been identified: viz., power & function;
 power: The power of the Engineer may reveal itself in the following
instances: like the power;
 power to make contracts, if authorized by the client;
 power to instruct the contractor to do variations; see Clause 13 MDB-
FIDIC; Clause 15 PPA 2011;
 power to instruct the contractor to suspend the performance of the
works; see Clause 8.8 MDB-FIDIC 2006; Clause 20 PPA 2011;
 power to delegate its power to its assistants; see Clause 3.2 MDB-
FIDIC 2006; Clause 12.3 PPA 2011;
 function: The function of the Engineer may reveal itself in the following
instances:
 advising: like
 on costs of the project..;
 on appointment of particular contractors;
 on appointment of subcontractors (like nominated sub-contractors see
Clause 5 MDB-FIDIC 2006);
 on rights & obligations of the employer under the construction
contract, (for ex, in relation to taking insurance by the employer);
 on informing the breach of contracts by others (like consultants,
contractors, …);
 providing information: like
 providing working drawing to the contractor..; Clause 1.9 (Delayed
Drawings or Instructions) cum Clause 3.3 (Instruction of the
Engineer) MDB-FIDIC;
 contract documents;
 un-priced bill of quantities; any other amendment thereof (BOQ);
 accurately dimensioned drawings (for the purpose of setting out); see
Sub-clause 4.7 (Setting Out);
 issuing instructions to the contractor under the construction contract in
writing; see Clause 4.1 MDB-FIDIC; Clause 34.1 cum 12.6; PPA 2011;
 inspecting & monitoring:
 all the works to be executed under the construction contract, to carry
out tests of any works or materials (by himself or through
professional inspectors) or workmanship or defects;
 see Clause 81 (Inspection & Testing) & Clause 82 (Rejection) PPA
2011;
 see also Clause 7.3, 7.4, 7.5 & 7.6 (Inspection); (Testing) (Rejection)
(Remedial Work), respectively, MDB-FIDIC;
 quantity surveying:
 through assistants like quantity surveyors;
 see Clause 63 (Valuation of Works) PPA 2011;
 see Clause 12 (Measurement & Evaluation) MDB-FIDIC 2006;
 Legal Implications
 Both in case of such power exercise & function, the acts, defaults or neglects
of the Engineer (as agent of the employer) are considered, legally, the acts,
defaults or neglects of the employer;
 The contractor shall then resort to the employer to secure its remedial rights,
if any, like in case of variation claims (as related to power) or delay claims
(as related to function; due to failure to give working drawings to the
contractor in due time);
 Professional Role: Legal & Contractual Framework
 The legal basis for the professional role of the Engineer is Article 2636 (1) of
the Civil Code: it reads verbatim as follows:
 Whosoever hired out his (intellectual) work shall undertake to carry
out …in conformity with the practice & rules of his profession;
(emphasis added)
 The Engineer like the Corporation is a professional;
 His profession, as a matter of public policy, is regulated by law:
 The regulation of his profession encompasses the following three phases:
known as EEE:
 the Entry (E) to the profession: through professional certification,
registration & licensing process; this is done by the Corporation by its
establishment legal instrument plus its certification & registration by
the Ministry of Construction;
 the continuous Exercise (E) of such profession (through annual
renewal of his professional license), if applicable to the Corporation;
and
 the termination or Exist (E) of the exercise of his profession (due to say
professional negligence or professional misconduct; like by revoking
the professional license), if any;
 On such regulatory requirement & process the employer (i.e., its specific
client) has no influence or power;
 Due exercise of one’s profession, based on the principle of due diligence, as a
matter of public policy, is therefore a matter of public interest;
 The dimensions of the issues involved here are thus legal not contractual;
 Types of Professional Roles
 Three types of the professional role of the Engineer are identified:
 design;
 certification; and
 determination;
 The design function of the Engineer is clear;
 The Engineer becomes liable for design during construction in the following
two instances;
 the Engineer (now the supervision consultant) was the designer itself;
or
 the Engineer (now the supervision consultant) has assumed design
liability by reviewing & accepting all design documentation
undertaken by another (design) consultant;
 The Engineer’s design liability standard is based on the principle of skill &
care (viz., diligence); see Article 2636 of the Civil Code; and it is also called
professional fault based on professional negligence; see also Article 2031 of
the Civil Code;
 Certification is related to: payment & event;
 payment; like monthly payment & final payment;
 event; like performance or non-performance of the contractor (like
completion in terms of takeover or acceptance certificate or defects
liability certificate);
 Determination is related to: claims & other issues;
 claims determination; of the contractor or the employer;

 see Clause 20.1 cum 3.5 and Clause 2.5 cum clause 3.5 under the
MDB-FIDIC, respectively;
 see also Clause 26 PPA 2011; the Engineer has no general decision
power under PPA on claims of the employer and/or the contractor;
except like under Clause 20.4 claims originating from suspension
order; Clause 73.3 PPA 2011 on granting extension of time;
 other determinations;
 see 3.5 Determinations MDB-FIDIC 2006; see the discussion under
consultative role discussion; if no agreement reached between the
parties the Engineer is required to determine fairly & professionally
based on the contract & the applicable law of the contract;
 see also Clause 63.1 (a) (iii) PPA 2011; determination of actual
quantities by measurement;
 see Clause 82.3 PPA 2011; decision on particulars of defects;
 the Engineer determines such matters like on claims, new rate,
valuation of variation based on the contract agreed & governing law
of the contract agreed;
 The idea behind such professional role of the Engineer is that the Engineer has to
follow the practice & rules of his profession in discharging his duties as related to
certification & decision making; he is not expected to follow or to protect the (best
or exclusive) interests of the client; see Article 2616 (1) cum 2636 (1);
 The Engineer is not impartial in terms of its legal status under the relevant
construction contract; impartiality may be contrasted with the legal status of the
judge at the court of law or the arbitrator;
Questions for Discussions

 From where originates the right or the power of the employer itself to decide on the
claims of the contractor let alone to delegate such important (“quasi-judicial
power”) to the Engineer?
claims of its own let alone to delegate such important (“quasi-judicial power”) to the
Engineer?
claims of the contractor let alone to delegate such important (“quasi-judicial
power”) to the Engineer?
 Under Sub-clause 2.5 of the MDB, the Engineer itself is identified as one candidate
to give notice to the contractor as related to Employer’s Claims; How do you then
see the role of this same Engineer considering & determining the Employer’s claims
thereafter?
 From where originates the power of the Engineer to receive, to consider & to decide
“on its own matter”, as the Engineer itself being the source of some of the claims of
the contractor against the employer as related to say some contractual grounds
leading to extension of time and/or additional payment (like delay drawings and/or
instruction)?; and further as related to poor design and the associated claims of the
contractor therewith like variation claims?
 How do you see the position of the PPA (like Clause 27: Liquidated Damages) in
allowing the direct enforcement (deducting more specifically) of its remedial rights
from any money due to the contractor without following any sort of claims
procedure or contractual due process?
 Legal Implications
 The Engineer himself becomes legally liable if he found to be professionally
negligent in terms of its design and/or supervision related professional
services;
 The Engineer may become legally liable for the error or omission or lack of
coordination or integration of design documentation that it has committed in
undertaking its professional services; see Article 2636 (2) cum 20131 (i.e., its
extra-contractual or legal liability) of the Civil Code;
 The scope or dimension of the legal liability of the Engineer may extend:
 to the client;
 to the contractor;
 to the general public;
 to the government; as the case may be;
 No contractual commitment is needed on the part of the Engineer to become
liable legally since its liability originates not from contract but from the law:
see Article 2031 (Professional Fault) under the Extra-contractual liability
regime;
 The client is not liable for the professional negligence of the Engineer; this is
based on the independent & professional status of the Engineer; see Article
2616 cum 2636 cum 2031 (Professional Fault) of the Civil Code;
 Consultative Role: Contractual Framework
 The consultative role of the consultant is specifically related to its
professional role and also very specifically related to its determination power
and not to its agent role.
 The consultative role of the Engineer has been provided both:
 under PPA (2011) Clause 69.2 (Claims for Additional Payment); and
 under MDB-FIDIC (2006) Clause 3.5 (Determinations) cum relevant
sub-clauses;
 Clause 69.2: Claims for Additional Payment:
 When the Engineer has received the full & detailed particulars of the
Contractor’s claim that he requires, he (the Engineer) shall, …, after
due consultation with the Public Body and, where appropriate, the
Contractor, determine whether the Contractor is entitled to
additional payment and notify the parties, accordingly. (Emphasis
added)
 Such consultation is only related to claims; and even so it does not include
extension of time claims of the Contractor under PPA 2011 Clause 74
(Compensation Events for Allowing Time Extension);
 Under MDB-FIDIC: Clause 3.5: Determinations:
 Whenever these Conditions provide that the Engineer shall proceed in
accordance with this Sub-Clause 3.5 to agree or determine any
matter, the Engineer shall consult with each party in an endeavor to
reach agreement….(Emphasis added)
 Whereas the range of the consultative role of the Engineer goes beyond
claims of the contractor (see Sub-Clause 20.1 cum relevant sub-clauses) and
includes claims of the employer (Sub-Clause 2.5) plus other issues as well
under MDB-FIDIC; viz.,
 consultation on the claims of the Contractor;
 consultation on the claims of the Employer; and
 consultation on other issues;
 Consultation on the Claims of the Contractor
 delayed drawings or instructions: see MDB-FIDIC Clause 1.9
cum 3.5; the Engineer is required under the said clause to agree with
each party on the delay claims of the Contractor caused by such
delayed drawings or instructions;
 right of access to the site: see MDB-FIDIC Clause 2.1 cum 3.5 the
Engineer is required under the said clause to agree with each party on
the delay claims of the Contractor caused by such delayed site or
possession of same;
 setting out: see MDB-FIDIC Clause 4.7 cum 3.5; the Engineer is
required under the said clause to agree with each party on the claims
of the Contractor (time, cost plus profit) as related to error in setting
out;
 unforeseeable physical conditions: see MDB-FIDIC Clause 4.12
each party whether and to what extent these physical conditions were
unforeseeable and (if unforeseeable) to what extent they impact on the
time & cost of the Contractor;
 fossils: see MDB-FIDIC Clause 20.1 cum 4.24 cum 3.5; the Engineer
is required under the said clause to agree with each party as related to
the claims (time & cost) of the Contractor as related to the finding &
reporting of fossils;
 testing: see MDB-FIDIC Clause 20.1 cum 7.4 cum 3.5; the Engineer
is required under the said clause to agree with each party in relation to
the claims (time, cost & profit) of the Contractor in complying with
the Engineer’s instructions as related to further testing;
 adjustment for changes in legislation: see MDB-FIDIC Clause
13.7 cum 3.5; the Engineer is required under the said clause to agree
with each party as related to the time & cost effect of such changes in
legislation;
 contractor’s entitlement to suspend work: see MDB-FIDIC
Clause 16.1 cum 3.5; the Engineer is required under the said clause to
agree with each party as related to the effects (time, cost & profit…) of
the said suspension taken by the Contractor;
 Consultation on the Claims of the Employer;
 employer’s claims: see MDB-FIDIC Clause 2.5 cum 3.5 the
Engineer is required under the said clause to agree with each party on
the claims of the Employer; the claims of the Employer may relate to
time (see Clause 11.3: Extension of Defects Notification Period) and/or

cost;
 electricity, water & gas: see MDB-FIDIC Clause 2.5 cum 4.19
each party as related to the claims of the Employer (under Clause 2.5)
on the quantities consumed & the amount due (at these prices) for
such services;
 employer’s equipment…: see MDB-FIDIC Clause 4.20 cum 3.5;
the Engineer is required under the said clause to agree with each party
the appropriate quantities & the amounts due (at such stated prices)
for the use of Employer’s Equipment;
 failure to pass tests on completion: see MDB-FIDIC Clause like
clause 9.4 cum 3.5; the Engineer is required under the said clause to
agree with each party the extent of the reduction of the Contract Price
to be credited to the Employer as a result of failure of passing tests on
completion;
 failure to remedy defects: see MDB-FIDIC Clause 11.4 (b) cum
3.5; the Engineer is required under the said clause to agree with each
party a reasonable reduction in the Contract Price during such defects
liability period;
 Consultation on Other Issues
 evaluation: (“valuation”) see MDB-FIDIC Clause 12.3 cum 3.5; the
Engineer is required under the said clause to agree with each party as
to the Contract Price by evaluating (“valuating”) each item of work,
applying the measurement agreed;
 omissions: see MDB-FIDIC Clause 12.4 cum 3.5; the Engineer is
required under the said clause to agree with each party as related to
the cost of omission;
 valuation at the date of termination: see MDB-FIDIC Clause
15.3 cum 3.5; the Engineer is required under the said clause to agree
with each party the value of the Works, Goods & Contractor’s
Documents, and any other sums due to the Contractor for work
executed in accordance with the Contract;
 consequences of employer’s risks: see MDB-FIDIC Clause 17.4
each party on the time & cost effects of rectifying the loss or damage to
the Works, Goods or Contractor’s Documents as a result of the
Employer’s Risk under Clause 17.3;
 consequences of force majeure: see MDB-FIDIC Clause 19.4
each party the effects of force majeure in terms of time & cost
(including the costs for rectifying or replacing the Works and/or
Goods damaged or destructed by Force Majeure except or less
insurance indemnity, if any);
Questions for Discussions
 Is such consultation a necessary pre-condition for the determination of the Engineer
on formally submitted claims?
 What would be the legal effect, if any, on the validity of the Engineer’s
determination, if the Engineer determines without undertaking contractually
required consultation?
 What is the procedure to be followed by the Engineer for such consultation?
 Is such consultation process ex parte or joint?
 Legal & Contractual Framework;

 Engagement of the Engineering Consultant by the Client
 The agent & the professional including consultative role of the Engineer are
undertaken by the Engineer as they emanate from the construction contract
signed between the employer & the contractor;
 The Engineer is not a contracting party to such construction contract;
 see Sub-clause 1.1.2.4 cum Clause 3: The Engineer; MDB-FIDIC;
 see Sub-clause 1.2 (n) cum Clause 12: Engineer & Engineer’s
Representative; PPA 2011;
 the Engineer is thus a person not a party to the construction contract;
 The Engineer has its own contractual relationship with the client, the
employer under a given construction contract: this is called a consulting
services agreement, destined to provide project supervision & contract
administration services;
 The procurement of (engineering) consultancy services is undertaken based
on:
 Proc. No. 649/2009; the FDRE Government Procurement & Property
Administration Proclamation;
 the Procurement Directives issued by the Ministry of Finance &
Economic Development;
 the Procurement Manual issued by the PPA;
 the Standard Bidding Document issued by PPA for the Procurement
of Consultancy Services; and
 the GCC & the SCC for the Provision of Consultancy Services & the
Contract Forms issued by the PPA, 2006;
 the GCC & the SCC for the Provision of Consultancy Services & the
Contract Forms issued by the PPA, 2011;
 Types of Consultancy Services Agreement
 There are different forms of contractual arrangements to be made between
the consultant & its client based on services agreement prepared, issued & in
use locally (recently) & internationally like by the World Bank; by UNIDO;
and by FIDIC;
 In Ethiopia, two types of consultancy service agreements are basically
identified under PPA 2006: viz.,
 lump sum based contract; to be used for ICB or NCB, respectively;
 time based contract; to be used for ICB or NCB, respectively;
 Without prejudice to other forms of engagement, the World Bank also
acknowledges & proposes the use of time based & lump sum based contracts
in their guide;
 The FIDIC White Book also recognizes such two types of consultancy service
agreements; viz., contract based on time or deliverable (lump sum);
 Prior to White Book, FIDIC had prepared (in 1963-1979/1980) the following
terms of engagement of consultants based on different services & contractual
arrangements; it was known as International Model Form of Agreement
between Client & Consulting-Engineer and International General Rules for
Agreement (IGRA) between Client & Consulting Engineer 1963;
 The third version of IGRA provides the following:
 IGRA for Pre-Investment Studies (IGRA 1979 P.I.);
 IGRA for Design & Supervision of Construction Works (IGRA 1979
D. & S.); and
 IGRA for Project Management (IGRA 1980 P.M.) (destined for all
phases of a given project);
 In 1990 FIDIC has prepared & issued internationally its first edition of
White Book;
 White Book is based on one similar framework agreement and the
assignment (the professional services to be provided by the consultant) to be
defined, differentiated & concretized in the respective engagement terms of
reference (TOR) however;
 The TOR provides the scope of services; specification for the consulting
services and input (resources) required from and by the client (obligation)
like counterpart staff; vehicles; office space; computers; and so forth;
 According to the World Bank, the TOR explains the objective of the
assignment, scope of work, activities, tasks to be performed, respective
responsibilities of the Borrower (the client) and the consultant, expected
results and deliverables of the assignment;
 FIDIC has prepared & issued different versions on White Book:
 1990 First Edition White Book;
 1991 Second Edition White Book;
 1998 Third Edition White Book
 2006 Fourth Edition White Book; and
 2017 Fifth Edition White Book;
 FIDIC has also prepared & issued in 1992 its Sub-Consultancy Agreement;
 The Agreement is to be used, as recommended by FIDIC, as follows:
 the Main Consultancy Agreement shall be that of FIDIC White Book;
 local consulting firm be a sub-consultant whereas the main consultant
being a foreign firm; or
 the international consulting firm be a sub-consultant whereas the
local consulting firm becomes the main consultant;
 The Sub-Consultancy Agreement has also its second edition very recently;
Please, visit FIDIC’s website: www.fidic.org
 Lump Sum Contract
 Lump Sum contracts are normally used when definition of the tasks to be
performed is clear & unambiguous, when the commercial risk taken by the
consultant is relatively low and consultants are therefore prepared to
perform the assignment for an agreed pre-determined lump sum price.
 The lump sum price is arrived at on the basis of inputs-including fee rates-
provided by the Bidder;
 Studies are usually carried out on a lump sum basis: for example, surveys,
master plans, economic, sector, simple feasibility and engineering studies.
 Lump sum contracts are used for assignments in which the content & length
of the services & the required output of the consultant are precisely specified,
and for these reasons the consultant generally control the scope of work &
duration of services;
 Lump sum contract also used in relatively simple & clearly defined
assignments such as planning & feasibility studies, environmental studies,
detailed design of infrastructures, preparation of databases, and surveys;
 Remuneration is fixed for the life of the contract, and no physical or price
contingencies are normally provided;
 Payments are made in accordance with a contractually agreed upon schedule
at the delivery of an agreed upon product; like design report;
 Transfers cost risk to the consultant & provides certainty about the costs to
the borrower/the Client;
 Time Based Contract
 Time-based contracts are recommended when the scope of the services
cannot be established with sufficient precision, or the duration and quantity
of services depends on variables that are beyond the control of the
Consultant;
 For example, a time-based contract may be appropriate for the supervision
of construction works, where a monthly rate can be fixed, but the number of
man months required is uncertain.
 The consultant, under Time-Based Contract, provides services on a timed
basis according to quality specifications, and consultant’s remuneration is
based on:
 Agreed upon unit rates for consultant staff multiplied by the actual
time spent by the staff in executing the assignment; and
 Reimbursable expenses using actual expenses and/or agreed unit
prices;
 Time –based Contracts
 Transfer cost risk to the client;
 Require monitoring & control assignment and costs by the client;
 Normally include a ceiling on the payments;

 Price escalation should normally included in case where the
assignment lasts for more than 18 months;
 Recommended for the following situations.
 The nature & scope of the services are such that the TOR cannot be
established with sufficient precision, as may be the case for complex or
unusual assignments that are difficult to define, such as management of
complex institutions or studies of new approaches;
 The duration & quality of services depends on variables that are beyond
the control of the consultants, or the services are related to activities by
third parties-for instance, supervision of implementation assignments;
(ex. the construction project);
 The output required of the consultants is difficult to assess, such as for
technical assistance, institutional development, or emergency situations,
in which the client needs for assistance may evolve during execution of
the assignment; and
 Transfer of knowledge & training between the consultant & the client’s
trainees is required;
IV. Key Obligations of the Client & the Consultant
 The consultant’s obligations: Performance obligation; and Other obligations;
 The discussion is based on PPA 2006 consultancy agreement;
 Performance Obligation
 Performance obligation, as per the TOR (Appendix I: Scope of Services);
Clause 7;
 Quality performance; Clause 5 Duty of Care;
 Timely performance; Clause 22 (Commencement & Completion) & Clause
25 (Delay);
 Provision of personnel; Clause 10;
 Ensuring sound management obligation; Clause 17;
 Employing advanced technology & safe methods obligation; Clause 17;
 Delivering all documentation & software obligation; Clause 23? & Clause 6?;
 Other Obligations
 Payment of tax obligation; Clause 9;
 Free from conflict of interest obligation; Clause 18;
 Confidentiality obligation; Clause 19;
 Insurance obligation; Clause 20;
 Securing prior authorization obligation; Clause 21;
 Reimbursement obligation; Clause 32.8;
 Amicable settlement obligation; Clause 36;
 The Client’s Obligations: payment & other Obligations
 Payment Obligations
 Payment obligation during the currency of the contract; Clause 30;
 Payment obligation up on termination of the contract; Clause 16.3;
 Final payment obligation; Clause 32.7;
 Timely payment obligation; Clause 33.1;
 Advance payment obligation, if agreed; Clause 33.1;
 Not withholding payment; Clause 34.3;
 Other Obligations
 Confidentiality obligation; Clause 19;
 Cooperative obligation; Clause 26; (NB: relative to entry, residence, exist,
work permit & exchange permits, customs clearance…);
 Providing services & facilities; Clause 28 & Appendix B;
 Providing Counterpart personnel obligation; Clause11 & Appendix B;
 Amicable settlement obligation; Clause 36;
 Remedial Rights of the Consultant: financial; time; and other
 Financial Remedy:
 Additional Payment; Clause 15.4; relative to additional services;
 Interest Clause 34.4; relative to delay in payment;
 Time Extension: Clause 15.3;
 Other Remedies: Clause 16.2; termination of the contract;

 Remedial Rights of the Client: financial & others
 Financial Remedy:
 Compensation; Clause 16.1;
 Indemnity; Clause 18.1;
 Damages; As per the applicable law;
 Other Remedies:
 Clause 27.1; termination of the contract; Clause 27.1;
 suspension of the performance of the services;
V. Liability of Engineering Consultants
 Conceptual Framework
 The liability of the consultant shall be seen in light of the:
 Type of professional services they contractually undertake to provide;
 The specific contractual arrangement made between the client & the
consultant; and
 The interpretation of the applicable law;
 The possible engagement of the consultant may be divided in to the following
assignments, namely;
 Study & design of the project;
 Tender document preparation, evaluation of tenders & recommendation on
award;
 project supervision & Contract administration;
 The possible areas of the liability of the consultant may cover the following
instances, namely;
 Non-quality or defective performance of the services;
 Delayed performance of the services;
 Non-performance of the services;
 Defective performance of the services may arise, depending on the type of
engagement, the following aspects of deviations, namely;
 Defective design;
 Failure to provide a design free from third parties right in the design;
 Over valuation & certification;
 Under valuation & certification;
 Wrong advice;
 Deficiency in the supervision of the construction works;
 Deficiency in coordination & leadership; and so forth;
 The liability of the consultant may come in to picture, in case where the consultant
breaches a duty of care & skill expected of him thereby the client suffers damages as
a result;
 This shows that there is a negligent performance of professional duties under the
contract;
 Is the consultant liable to the client for such negligence?
 Article 2636 of the Civil Code provides, as follows.
 Article. 2636.-Required care and responsibility
(1) Whosoever hires out his work shall undertake to carry it out in the
best interest of his client, conscientiously and in conformity with the
practice and rules of his profession.
(2) He shall not be liable to his client, unless he commits an error, having
regard to the rules of his profession.
(3) The error may consist in an omission or an act detrimental to his
client. (Emphasis added)
 This is called a liability standard based on skill, care and diligence; or liability based
on negligence; see Civil Code Article 2636 cum 2616 cum 2027 (1) cum 2031:
 The contractor is rather liable based on the liability standard known as: fit for the
purpose intended; which is the highest liability standard; see Civil Code Art. 2610
(result based liability) cum 2622 cum 2287ff (result based on fit for the reasonable
purpose intended);
 Article 2031: Professional Fault
 (1) A person practicing a profession or a specific activity shall, in the practice
of such profession or activity, observe the rules governing that practice;
 (2) He shall be liable where, due regard being had to scientific facts or the
accepted rules of practice of his profession, he is guilty of imprudence or of
negligence constituting definite ignorance of his duties; (Emphasis added)
 Standard of care is defined, for example in the U.S.A., as follows.
 In performing professional services for a client, defendant (the consultant)
has the duty to have that degree of learning and skill ordinarily possessed by
reputable engineers practicing in the same or a similar locality and under
similar circumstances.
 It is his or her further duty to use the care and skill ordinarily used in like
cases by reputable members of his or her profession practicing in the same
or a similar locality under similar circumstances , and to use reasonable
diligence and his or her best judgment in the exercise of his or her
professional skill and in the application of his or her learning, in an effort to
accomplish the purpose for which he or she was employed.
 A failure to fulfill any such duty is negligence.
 This definition raises three primary issues: locality, similarity and time.
 As to locality, standard of care may vary from place to place.
 As to similarity, the standard of care applied by a particular expert is
flavored by that person’s prior experience. The standard of care for
structural engineers, for example, varies depending up on the structure being
constructed.
 As to time, it has two dimensions: past imagination & present concurrence.
 There is a difficulty placing oneself back in time when assessing a
defendant’s (consultant’s) conduct;
 There may be multiple standards of care present concurrently;
 To prove whether or not there was a breach of standard of care by a given
consultant requires the testimony of a qualified expert where the claimed injury and
its cause are beyond common knowledge.
 The following may serve as sources of standard of care:
 Text Papers & Treatise;
 Written Standards & Regulations;
 Firm Guidelines & Manual;

 Quality Assurance or Quality Control Reports;
 Contractual Agreements;
 Expert testimony may not be required on the following two situations:
 Obvious negligence: In many jurisdictions expert testimony is not required
where the negligence is so obvious as to be apparent to the layperson. This
situation occasionally arises in design.
 Negligence Per Se (Failure to follow law): Failure to follow statutes or
regulations may presumptively establish negligence;
 The consultant may require, under the Contract, to secure, provide & maintain a
Professional Indemnity Insurance.
 Professional Indemnity Insurance
 Professional indemnity insurance (PII) is a (civil) liability type of insurance;
see Article 654 (1) the Commercial Code;
 PII in principle is based on professional negligence of the professional viz.,
the design consultant or the supervision consultant; and not based on fit for
the purpose intended one;
 According to FIDIC, professional liability is a term used to recognize the
obligation of a person or firm to compensate those who suffer loss or damage
as a result of the negligent performance of the professional services they have
provided.
 Professional liability insurance, more commonly referred to as Professional
Indemnity Insurance, is a mechanism to transfer all or part of the risk to an
insurance company for payment to those who are entitled to be compensated
for their losses due to the negligent performance of a duty of care by the
professional.
 For liability to apply the following three elements have to cumulatively be
fulfilled: viz., duty; breach of duty; and damage due to breach;
 duty/obligation: there must be a duty to the other party, by contract
or by operation of the law;
 breach: A breach of that duty by the professional; and
 damage: Damage to the other party arising from the negligent

conduct of the professional;
VI. Claims & Disputes in Engineering Consulting Services: Case Studies
 Design Related:
Termination of the design services agreement before design completion

 A certain public client has engaged a (public) design consultant to design a dam on
lump sum agreement basis;
 The agreed contract price (fee) was ETB 80 Million;
 The design duration was 365 calendar days;
 Payment of fee plus reimbursable to the design consultant were linked to the
submission of specific reports (known as Deliverables) to the client;
 advance payment (10%) ETB 8 Million (Notes: against security but not
subject to repayment during contract period);
 Inception Report (10%) ETB 8 Million;
 draft Preliminary Design Report (20%) upon submission ETB 16 Million;
 draft Preliminary Design Report (10%) ETB 8 Million upon incorporation
of the comments of the client & resubmission of the said draft Report to the
client;
 draft Detail Design Final Report (30%) upon submission ETB 32 Million;
 draft Detail Design Final Report (10%) upon incorporation of the comments
of the client & resubmission of the Report to the client: ETB 8 Million;
 Final Detail Design Report (10%) ETB 8 Million;
 The client has effected the agreed advance payment subject to advance re-payment
guarantee;
 After 2 months a Reception Report has been prepared & submitted by the design
consultant to the client and the agreed payment (10%) has been paid;
 The design consultant has undertaken some required survey, study & investigations
which become critical input to the planned & agreed dam design;
 The stage of such survey, study & investigations work may probably be estimated at
50% against the fee extent agreed (for Preliminary Design Report) as per the
opinion of the design consultant based on its work & cost records;
 The design consultant has delayed the design process by 365 days;
 The client has served the design consultant with prior written notice of termination
(28 days);
 The design consultant were unable to expedite its design process & progress; No
planned & agreed deliverable was forthcoming;
 Then the client has duly terminated the design services agreement just upon the
expiry of the notice of termination;
 The design consultant has claimed the payment of the design fee & relevant part of
the reimbursable (ETB 16 Million) as related to the commenced but not finalized
draft Preliminary Design Report; plus demobilization cost (ETB 2 Million);
 The client has immediately called the advance re-payment guarantee & secured its
money; the client has also refused to pay the claimed fee & reimbursable (ETB 16
Million); rejected totally the request for demobilization cost;
 Information from the Contract Document:
 Upon termination of the Contract for default of the consultant pursuant to
General Conditions Clause …, the Client shall make the following payments
to the Consultants;
 …payment pursuant to Clause…(Payments to the Design Consultants) for
services satisfactorily performed prior to the effective date of termination;
Discussion Points
 Principle: Should there be any payment at all to be paid to the design consultant
without delivering such agreed viz., the draft Preliminary Design Report; If yes,
how? If not, why not?
 Principle: Should there be any payment at all to be paid to the design consultant
since the termination of the contract were based on the default of the design
consultant itself? If yes, how? If not, why not?
 Design Consultant’s Claim; If you consider or of the opinion that the design
consultant shall be paid for some level of survey, study, investigation & design
related works done prior to termination, how do you assess the satisfactory
performance level of the said survey, study, investigations & design related works?
Notes: You may identify relevant investigations works at this level; also identify
some level of design work at this stage of the project that can be executed based on
such design input (investigations);
 Design Consultant’s Claim; If you consider or of the opinion that the design
consultant shall be paid for design related works done prior to termination, how do
you assess the satisfactory performance level of the design related works and how do
you correlate the works (both investigation & design) said to be satisfactorily
performed & their financial value?
 Client’s Claim; How do you see the legitimacy of the position of the Client: and
provide your justification:
 rejecting all fee payments of the design consultant;
 by calling from the bank the repayment of the whole of the advance
payment;
 rejecting the claimed mobilization cost of the design consultant;
 Experience; Have you ever encounter or experience such kind of case in your
professional career? Identify your experience, if any, and share your experience;
Design Liability Related

Collapse of building structure during Operation (use)
 A certain private client has agreed with a certain design firm to design a complex
multi-purpose building (residential apartments & commercial use like malls
including 2 cinema halls): viz., 4 Basement + G+40;
 The design consultant has designed & submitted all required aspects of the building
design documentation;
 The foundation has been designed by a specialist design firm under the control of
the main design firm based on sub-consultancy design agreement; agreed
foundation design fee was ETB 6 Million;
 The total design fee including the foundation design fee was ETB 40 Million;
 There was no any design review process before or after completion of the design;
 The design consultant assisted the client in securing the building permit & in
selecting a contractor for construction of the said building;
 The design consultant has also continued its professional services as supervision
consultant based on specific agreement with the client; agreed supervision fee was
ETB 50 Million;
 The said building complex has been constructed as designed & agreed by a certain
local contractor; contract price paid to the contractor was ETB 5 Billion;
 There were series of continuous building construction inspection by the designated
building officer of the relevant municipality;
 The said building has been completed & taken over by the client/employer; and the
employer started to make use of the building for the purpose intended;
 No defects were observed during defects liability or maintenance period except
addressing those minor defects listed in the snag list;
 On the 15th year of the use of such building by the employer, however, a major
crack has been observed in almost all parts of the building;
 Investigation has been undertaken by a neutral expert in the field (paid ETB 10
Million) to establish the root cause of the said major crack;
 The findings of the investigation or assessment has shown that:
 there is a serious problem related to the foundation;
 the foundation has been exposed to major subsurface or geological problem;

 within the coming 1 year, the building will totally collapse as the sub-surface
formation is not supporting well the foundation and therewith the building;
 Both the design consultant & the foundation designer were not aware of the
problem and the said investigation and its report;
 The employer ignored the findings of the said expert (well known expert in forensic
engineering) and continued the use of the building as usual;
 As professionally predicted by the said expert, on the 9th month (calculated from the
report submission date) the building has collapsed totally; this day was
unfortunately market day in the area; the building was flooded by more visitors on
such day;
 Quick & immediate property damage & human causality assessment has been made
jointly by the competent authority and by some professionals engaged by the
employer;
 The damage & causality ensued from such building collapse were of the following;
 total collapse of the building of the employer;
 total collapse of two neighboring buildings: G+12; and G+21; worth: ETB
120 Million & ETB 200 Million, respectively;
 total damage of all properties on sale and/or on use within the building by
apartment dwellers & merchants, customers and so forth; worth ETB 3
Billion;
 total damage of 500 different vehicles in the basement and around the area
during such building collapse; worth ETB 1.5 Billion;
 200 people have died;
 1255 people were seriously injured & hospitalized;
 consequential loss due to interruption of business; extra rental for dwellers;
and so forth; yet under estimation;
 There were a rescue operation by police & by all relevant emergency response
institutions;
 Apartment dwellers & businessmen have brought a joint court action against the
employer;
Discussion Points
 Contractor; Do you see any potential liability against the contractor who builds
the building? If yes, how? If not, why not? If yes, what is the basis of its liability: is
it contractual or legal?
 Design Consultant: Do you see any liability against the design consultant? If yes,
how? If not, why not?
 If the design consultant were liable, how long the said consultant remain
liable to its client for its design?
 If the design consultant were liable, what is the basis of its liability: is it
contractual or legal?
 If the design consultant were liable (contractually or legally), what is the
extent of its liability?
 If the design consultant were liable, do you see any other forms of liabilities
(other than civil liability) against the design consultant? If yes, identify &
discuss;
 Foundation Designer; Do you see any liability against the foundation design
consultant? If yes, how? If not, why not?
 If the foundation design consultant were liable, how long the said consultant
remain liable to its main consultant or to the client for its specialized design?
 If the foundation design consultant were liable, what is the basis of its
liability: is it contractual or legal?
 If the foundation design consultant were liable, what is the extent of its
liability? And to whom?
 If the foundation design consultant were liable, do you see any other forms of
liabilities against the foundation design consultant? If yes, identify & discuss;
 Indemnity Insurance: Is there any experience to request Professional Indemnity
Insurance from design consultants for such kind of civil liability by the client in
Ethiopia?
 Employer; Do you see any liability against or risk sharing dimension against the
employer? If yes, how? If not, why not? Discuss
 Design Review: Do you see any positive contribution to minimize such kind
damages, if there were design review culture after completion of the design? If yes,
how? Discuss
 Experience; Have you ever encounter or experience such kind of case (building
collapse & its assessment) in your professional career? Identify your experience, if
any, and share your experience;
VII. Role of Engineering Consultants vis-à-vis Construction Project

Delivery Systems
 Delivery System: Concept

 Project Delivery System is the way Project Owners together with Project
Regulators and Financiers determine the assignment of responsibilities to
Project Stakeholders along the Construction Process.
 It is often determined during the Basic Planning phase of the Construction
Project.
 At the heart of the concept of project delivery system there are two
dimensions: stakeholder dimension & task dimension;
 The stakeholder dimension answers the question “who” like the employer or
the contractor;
 Whereas, the task dimension determines “what” kinds of obligation(s) or
role(s) are involved within a given construction project phase and by whom
such obligations or roles are assumed;
 Project tasks may include, but not limited to, the following: planning; design;
construction; management; financing; operation; maintenance;
 Delivery Systems: Categories
 Construction Project delivery systems are fundamentally categorized in to
the following two major types: viz., :
 force account delivery system/method; and

 contracting delivery system/method; alternatively also known as
outsourcing method;
 During project planning stage, the employer has to consider which type of
delivery system to follow.
 The role of project regulators and/or financiers is also crucial;
 Force Account Delivery System
 When the project owners (as employers) engage themselves to undertake the
project, it is called a force account delivery system;
 Such a system is often promoted if the Project Owners believe that there is a
comparative advantage in cost, time & quality;
 This category of project delivery system is characterized by its high internal
dimension & self dealing of possible project tasks by a single construction
stakeholder, viz., the project owner.
 It may be wholly an internal matter for the owner to plan, design or execute
and/or supervise the project under consideration or some project tasks may
partially be outsourced, by contract, like design or supervision or otherwise,
to other possible project stakeholders.
 Under such system there is no external contractor;
 The project owner may hire & engage consultants for supervision purpose;
 Contract Method or Delivery System
 Most of the project delivery methods/systems are found under this category;
 This delivery system is characterized in that the employer has decided to
enter in to a defined type of construction contract with the respective
contractor under which the tasks or obligations arising out of such project
are shared or divided between the employer & the contractor;
 The level of division of task or obligation (s) between the employer & such
respective contractor may vary under each delivery sub-system or method;
 The following are some of the known delivery sub-systems under contract
method;
 Design-Bid-Build (D-B-B);
 Design-Build (D-B);
 Construction Management (CM At Free & CM At Risk);
 Design –Build- Operate (D-B-O);
 Design-Build-Operate-Maintain (D-B-O-M);
 Design-Build-Finance-Operate (D-B-F-O);
 Build-Own-Operate (B-O-T);
 Build-Own-Operate-Transfer (B-O-O-T);
 Proc. No. 649/2009 recognizes the following project delivery sub-systems
without providing any detail regulation yet: viz.,
 Build-own-operate (BOO); build-own-operate-transfer (BOOT) and build-
operate-transfer (BOT);
 Implications: Force Account & Contract Method
 under force account method:
 contract: virtually there is no contract in case of force account
delivery system;
 under contract method:
 contract: the method requires a formal contractual relationship &
arrangement between the employer and such respective contractor;
 suitable contract: the method also determines the specific type of
standard conditions of construction contract based on specific
delivery method;
 obligation: the method determines the extent of obligation (s)
assumed by the employer & contractor;
 liability: the method determines the dimension of liability as to design
and/ or construction either to be shouldered by the contractor or the
employer;
 competition: the method determines the basis for competition (BOQ
or Design based or otherwise) during project procurement phase;
 payment: the method determines the payment system (re: ad
measurement or lump sum or otherwise) under DBB or DB,
respectively; or no payment to the respective contractor by the

employer (i.e., in case the contractor finances the project like under
BOT or public-private-partnership or PPP arrangement);
 risk: the method determines the dimension of physical and/or
financial risks to be shouldered either by the employer and/or the
respective contractor;
 role of the Engineer; the delivery method to be selected by the project
owner also determines the role of the Engineer, if any;
 Illustrative Standard Conditions of Construction Contracts
 Background
 The following standard conditions of construction contract collected from

international & local sources may illustrate the importance of distinguishing
the relevant standard conditions of construction contract suitable for the
project delivery sub-system to be considered & chosen;
 International
 Design-Bid-Build: FIDIC 4th Edition (Red Book) Conditions of Contract for
Works of Civil Engineering Construction (1987 including its amendments &
supplements in 1992 & 1996) under which the contractor is responsible for
construction;
 Design-Bid-Build: FIDIC Conditions of Contract for Construction for
Building and Engineering Works (1999 the New Red Book) under which the
contractor is responsible for construction;
 Design-Bid–Build: MDB-FIDIC Harmonized Edition 2006 Conditions of
Contract for Construction under which the employer is responsible for
design & the contractor being responsible for construction;
 Design-Build: FIDIC Conditions of Contract for Electrical & Mechanical
Works including Erection on Site (1988 3rd Edition, the Yellow Book) under
which the contractor is responsible both for design & construction;
 Design-Build: FIDIC Conditions of Contract for Plant & Design–Build for
Electrical & Mechanical Plant, and for Building & Engineering Works (the
New Yellow Book 1999) under which the contractor is responsible both for
design & construction;
 Engineer-Procure-Construct (EPC) FIDIC Conditions of Contract for
EPC/Turnkey Projects (the Silver Book, 1999), under which the contractor is
responsible for design, construction and/or financing, operation,. this may
also be adaptable to BOT & other related arrangements; Notes: this form of
contract has no place for the role of the Engineer;
 Design-Build-Operate: the FIDIC New Conditions of Contract for Design
Build & Operate (Gold Book 2008), under which the intended contractual
arrangement, the contractor is to be responsible for design, build & operate a
given facility (for 20 years);
 Local
 Design-Bid-Build: The Ministry of Housing Development (MoHD) Standard
Conditions of Construction Contract (1959);
 Design-Bid-Build: The BaTCODA Standard Conditions of Construction
Contract (1987);
 Design-Bid-Build: The Ministry of Works & Urban Development Conditions
of Contract for Construction Works (1994), under which the contractor is
responsible for construction;
 Design-Bid-Build: The PPA Conditions of Contract for Works (January,
2006), under which the contractor is responsible for construction only;
 Design-Bid-Build: The PPA Conditions of Contract for Works (November,
2011), under which the contractor is responsible for construction only;
 There is no locally developed standard conditions of construction contract
applicable to design-build project arrangement;
 Role of Consultants in different Delivery Systems
 Background
 One of the implications of delivery system & its suitable standard conditions
of contract being the presence, if any, and the extent & nature of the role of
the Engineer or the professional or the consultant;
 For the illustrative purpose, the following three different delivery sub-
systems are selected; viz., DBB & DB
 Under DBB
 study: undertaking construction project study based on client’s project
brief, if any;
 design: undertaking detail engineering design;
 SBD: preparing derivative documents viz., specification; drawing; and bill
of quantities and all other standard bidding documents; feature: they
provide the basis for process specification;
 procurement: assists the employer during procurement process with a
view to select a contractor based on financial (BOQ) competition;
 supervision: supervising the project implementation during construction;
 administration: administering the construction contract;
 payment: re-measure quantities so executed by the contractor; certify
payments, accordingly; issue variations; and so forth;
 determination; determining claims between the contractor & the employer
and vice versa specially under international construction contract;
 designation; Known as the Engineer;
 feature: the supervision process characterized as ensuring compliance with
process specification;
 Under DB Contracts: threefold options
 working for the Client: the design consultant to work for the employer;
 working for the DB contractor: the design consultant to work for the DB
contractor; contractor-led DB project; and
 itself becoming DB contractor: the design consultant itself to become a DB
contractor; consultant=led DB project;
 the design consultant to work for the employer;
 Under this option or scenario, the following are its possible professional services;
 The Design Build process involves a number of distinct phases which include:
 Planning, investigation, and conceptual design;

 Procurement (negotiation);
 Implementation; and
 Operation;
 Under this option or scenario, the following are its possible professional services and
may include:
 Pre-procurement stage; (like ER & basic design development);
 Procurement;
 Design review;
 Quality control during construction;
 Payment verification;
 Dispute resolution;
 Assistance during commissioning.
 ER: preparing Employer’s Requirement(ER) (also known as Performance/Output
Specification) compatible with performance guarantee & the DB contract itself;
 Procurement: assisting the client in procurement process to select the DB
contractor based on design-competition; To obtain the highest Basis of Value and
proper selection of the Design Build team, selection criteria should include:
 Full compliance with the procurement specification or tender;
 Quality and track record of the total design-build team, including the design
professionals;
 Quality of planning and design - how well the project will work;
 Quality and durability of materials offered; Life-cycle costing; and
 Constructability.
 Contract: conforming the DB contract to proposal;
 Contract Management: administering the DB construction contract; based on

proactive mind-set;
 Design Review: undertaking design review; define evolution of design & time for
submittals and; identify also types of design documents to be submitted; consider
schedule for their approval or disapproval; otherwise facing a deemed approve

design;
 Payment Management: approving milestone or stage payments based on
performance level of the DB contractor;
 Takeover Management; based on commissioning schedule:
 managing (pre & post) commissioning & project turnover issues;
 like project meeting specified owner requirements;
 consumables; damage issue at whose expense to be replaced;
 as-built documents like O&M documents;
 training of OM personnel; and so forth;
 Testing: based on testing schedule, participating in testing;
 Designation; Known as the Engineer; under New Yellow Book (FIDIC 1999);
 Feature: the project & contract management process characterized as ensuring

conformance to performance requirement or performance specification;
 The design consultant to work for the DB contractor; contractor-led DB
project; or also known as the DB contractor as prime:
 If the design consultant or the consulting firm decides to follow this model or
option, the following issues are worth to consider;
 Legally, this model means that the design consultant on some form of
organizational arrangement, like sub-contractor or joint venture, works
directly with the DB contractor & for the DB contractor under its leadership
if they win the DB project;
 This requires strategic consideration & decision on the part of the design
consulting firm like the Corporation;
 According to FIDIC, when this model is used the Consulting Engineer must
understand the issues and exercise sound business judgment;
 Some of the issues relative to this arrangement include:
 the contractor expecting the consultant to produce tender designs for
no compensation;
 fee negotiations after selection;
 the expectation of tender designs to be accurate in all respects (i.e.

perfect); and
 pressure to sacrifice quality for the profitability of the project;
 The issues are revolving around four issues, viz., design issue; agreement
issue; fee issues; and quality;
 The design liability standard issue (on the part of the design consultant
working foe the DB contractor) has to be stressed whether or not to produce
the design based on diligence (skill & care, as usual or as related like to DBB)
or based on design liability standard fit for the purpose?
 Scope of Tender Design Issue
 With a view to protect itself, the design consultant shall consider s
related to the scope of the tender design to make sure that the design
include the following issues:
 A review of available site data, and advice on what additional data is
required;
 A concept design (or review and extension of owner's concept design);
 Preliminary designs and drawings, sufficient to indicate sizes,
arrangements, capacities, etc. for tender pricing;
 Specification references;
 No, or limited, responsibility for design accomplished during the
proposal stage (limited information, but contractor uses this design to
bid);
 Limited Bill of Quantities, with some items indicated by rates or units
(e.g. reinforcement);
 Procedures to address quantity adjustments;
 Input to contract terms and conditions, design coordination, value
engineering, construction engineering, client liaison, etc;
 The owner needs to have enough preliminary design to “level the
playing field.”
 As a guide, the extent of design input necessary to provide a

reasonable order of tender accuracy, may be in the range of 15% to
30% of a full design; this is information only;
 Agreement Issue
 The design consultant should contract with the DB contractor on a
standard form of agreement;
 The Agreement will include terms of payment and an accepted order
of accuracy of design information provided by the design consultant;
 The level of Professional Liability coverage should not be excessive;
 It is important that the DB Contractor understands and accepts the
preliminary nature of the tender design and includes due
contingencies in his tender.
 It is important that the agreement for tender design recognizes that
the design consultant will continue to produce the final design should
the bid be successful.
 Fee Issue
 The design consultant must be paid for the tender design services;
 Design consultant should never work without compensation; it has to
be paid either based on time input or lump sum basis;
 In the case of the successful bid, the design consultant is subsequently
engaged to complete the design and construction phase services under
a separate fee arrangement, at a fee agreed prior to bidding and
allowed in the bid. This fee for final design will reflect the payment
already received for the input to tender.
 Risk Issue
 The risk issue is a major issue as related to design liability standard;
 The current professional indemnity insurance is based on negligence
and not based on strict design liability standard viz., fit for the
purpose intended;
 If the Corporation decides to engage in this business, it may not get

the insurance cover as required;
 the design consultant itself to become a DB contractor; consultant=led
DB project;
 This model provides us the situation where the design consultant itself like
the Corporation becomes a DB contractor by leading both the design &
construction process;
 If the design firm decides to do so, the following issues have to be seriously
considered, according to FIDIC;
 In this model, the design firm holds the direct contract with the
Owner/employer as a contractor to be specific as DB contractor;
 The design firm must have thus the following resources:
 financial resources;
 managerial competence;
 technical skills;
 as well as equipment and manpower resources
whether in-house or through subcontractor arrangements to properly
execute the entire project.
 As the prime contractor, his (the design firm) obligations as engineer are not
to be compromised;
 The Prime should use the same good business practices in this model that a
constructor would use in the earlier described model viz., DB contractor as
prime model;
 Implications; we may consider the points raised here to see or to plan our future
engineering plus construction business, accordingly, if necessary;
According to the World Bank

(Manual for Consulting Services 2006)
Outline of the Terms of Reference (TOR)
………………………………………………………………………………………………
 Project Background
 Objectives of the Assignment
 Scope of Work
 Capacity-Building Program (if any)
 List of Reports, Schedule of Deliverables, and Period of Performance
 Data, Local Services, Personnel, and Facilities to be provided by the Borrower (the
Client);
 Institutional & Organizational Arrangement
Reference Materials
………………………………………………………………………………………
A. The Civil Code of Ethiopia (1960);

B. Proc. No. 649/2009 the Federal Procurement Law;
C. Proc. No. 686/2010 the Business Licensing & Registration Proclamation;
D. Proc. No. 1097/2018 the Proclamation which provides the Powers & Duties of the Federal
Executive Organs; re: see the Ministry of Urban Development & Construction; Ministry of
Industry & Trade; Ministry of Finance; re: PPA nexus;
E. The PPA 2006 Conditions of Contract for the Engagement Consultants for Consulting
Engineering Services: see the whole documentation including the User’s Guide;
F. The PPA 2011 Conditions of Contract for the Engagement Consultants for Consulting
Engineering Services;
G. The PPA 2011 General Conditions of Contract for Works;
H. World Bank Manual for Consulting Services, 2006;
I. MDB-FIDIC 2006 General Conditions of Construction Contract, designed by the
Employer;
J. The FIDIC White Book, Model Services Agreement between the Client & the Consultant
1991;
K. The FIDIC White Book, Model Services Agreement between the Client & the Consultant
2006;
L. FIDIC: Sub-Consultancy Agreement, 1992 First Edition;
M. The FIDIC Guide Note: The Role of the Consulting Engineer in Design-Build;
N. Bunni N. G., The FIDIC Forms of Contract, Third Edition, 2005;
O. Corbett, E.C., FIDIC 4th : A Practical Legal Guide, 1991
P. Axel-Volkmar Jaeger & Got-Sebastian Hok, FIDIC-A Guide for Practitioner, Spring
Verlag Berlin Heidelberg 2010;
Q. Van Deventer, The Law of Construction Contracts, Section on Construction Professional,
pp 179-239, Chancery Law Publishing, 1993;
R. Hoffman, Jutta, Internationales Consulting-Engineering, Rechtsfragen, Berlin, 1988;

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Training Material on the Role & Liability of Engineering Consultants

Role & Liability of Engineering Consultants In Construction

Organized & delivered

Zewdu Tefera Worke

Engineering Contracts Lawyer

Role & Liability of Engineering Consultants in Construction

Role & Liability of Engineering Consultants in Construction

Item Description Time Implemented by

Construction Contract & Law: Overview

and/or: cumulative with/alternatively (K and/or L)

D: Delivery (based on Time or Deliverable as related to the engagement of consultants);

V: Variability (context) of all the above concepts (viz., LKPDROLE);

DV: Delivery…? (based on Time or Deliverable;)

V: Variability (context) of all the above concepts….?;

I. Introduction to & Objective of the Training

Introduction to the Training

Most of the training has its focus on design-bid-build delivery sub-system.

As related to possible claims & disputes related to engineering consultants, it shall be

As related to the role of engineering consultants from different construction project

Objectives of the Training

At the end of the Training, the trainees will be able:

II. Conceptual Framework

 Tender documentation; (Implementation);

 independent contractor dimension; and

 regulatory limitation: with a view to protect public interest (see Art.

III. Role of Engineering Consultants in Construction

 With respect to Construction supervision, once work starts on the project, to

 takeover obligation & its management;

 Role of the Engineer in Construction Contract

 illustration: making communication in writing;

 claims determination; of the contractor or the employer;

Questions for Discussions

time (see Clause 11.3: Extension of Defects Notification Period) and/or

 Legal & Contractual Framework;

 Normally include a ceiling on the payments;

 Other Remedies: Clause 16.2; termination of the contract;

 Firm Guidelines & Manual;

 damage: Damage to the other party arising from the negligent

Termination of the design services agreement before design completion

Design Liability Related

 the foundation has been exposed to major subsurface or geological problem;

VII. Role of Engineering Consultants vis-à-vis Construction Project

 Delivery System: Concept

 force account delivery system/method; and

respectively; or no payment to the respective contractor by the

 The following standard conditions of construction contract collected from

 Planning, investigation, and conceptual design;

 Contract Management: administering the DB construction contract; based on

schedule for their approval or disapproval; otherwise facing a deemed approve

 Feature: the project & contract management process characterized as ensuring

 the expectation of tender designs to be accurate in all respects (i.e.

 As a guide, the extent of design input necessary to provide a

 If the Corporation decides to engage in this business, it may not get

According to the World Bank

A. The Civil Code of Ethiopia (1960);

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