Case Study No 1

FIDIC Contract for the extension and

rehabilitation of a drinking water network

FIDIC Pink book, 2010

Trainer : Stephane Giraud

FIDIC Accredited Trainer
FIDIC President’s list of Adjudicators
www.planjconsulting.com
Contract for the extension and rehabilitation of a
drinking water network – FIDIC Pink Book, 2010
With permission of © EXEQUATUR

Project background
Pipelining, a company specializing in trenchless rehabilitation of underground
pipelines and the laying of drinking water supply pipes has been awarded an ADB
financed contract for the extension and rehabilitation of the drinking water network of
the town of Baylong in Asia, for a value of USD 20 million. The Standard Form of
Contract which has been selected is the FIDIC Conditions of Contract for Construction,
MDB Edition 2010, also called the ‘Pink Book’.
The Particular Conditions Part B. set out by the Quynh Ninh Province Water
Authority – the Employer for the project – have little effect on the General Conditions
of this Standard Form of Contract. The General Conditions therefore remain fully
applicable.
The firm Roadax has been appointed as the Engineer. The related service contract
between the Quynh Ninh Province Water Authority (hereinafter referred to as the
Employer) and the Engineer is financed by Denmark's development cooperation
agency (DANIDA).
The scope of Works to be performed is outlined below in Sections, along with the
contract price and time for completion for each Section:

• Section 1: Rehabilitation of the Zien Vong drinking water plant – USD 2 million
– Time for completion – 18 months

• Section 2 – Rehabilitation of 11 boreholes, 8 reservoirs and 2 pumping stations

– USD 4 million. Time for completion – 24 months

• Section 3 – Rehabilitation of 66 km of drinking water network; existing pipe

materials: cast iron & steel, DN 200 to DN 500. Planned works – disconnection
of illegal connections, high-pressure cleaning (200 bar), mechanical scraping,
CCTV inspection, hydrostatic testing & leak repair. – USD 3 million – Time for
completion 30 months

• Section 4 – Installation of 100 km of drinking water pipes in HDPE and PVC

(DN 63 to DN 200), cast iron and ductile iron (DN 200 to DN 500) – USD 11
million – Time for completion 36 months.
The overall Time for completion for the works is therefore 36 months.
 The Contractor is granted Access to the site by the Employer 28 days after the
Commencement date.

Introduction
The Contractor commences the initial works in Sections 3 and 4 on the 29th day after the
Commencement date (Day 29). These works respectively embrace:

• The rehabilitation of 5 km of one of the two existing DN 500 cast iron pipelines,
which transports treated water from the Zien Vong plant in the mountains to the
junction with National Road 3, situated midway between the towns of Tam Pha and
Baylong.

• The installation of a new grey cast iron DN 200 water supply pipeline over 6 km,
between the junction mentioned above and the town of Baylong. This new water
line is intended to run parallel with the town’s existing DN 500 water supply line,
and is designed to provide a direct supply to several hamlets located along its
route.

Issues encountered with Section 4

• The Contractor begins setting out the work site and surveying the levels on Day 29
for the first kilometer of pipe-laying works.

• On Day 31, it becomes apparent to the Contractor that, for this first kilometer, the
ground levels given in the longitudinal profiles supplied by the Employer (drawings
at 1:500 scale) are incorrect. The actual terrain does not correspond to that shown
in the drawings. The Contractor immediately informs the Engineer and requests that
new, accurate drawings be produced by the Employer and sent to the Contractor as
quickly as possible.

• On Day 32, the Engineer replies that it is up to the Contractor to make the required
rectifications. The Contractor in turn immediately replies that this responsibility lies
with the Employer since the contract is based on a Standard FIDIC Pink Book
contract and does not include any clause requiring the Contractor to produce any
design drawings for Section 4. The Contractor adds that these terrain level errors
will also impact the proposed installation levels of the pipeline and consequently the
number and position of high and low points as well as the associated accessories
(air valves, discharge valves) to be fitted. The Contractor stresses that it is the
responsibility of the Employer to establish the desired design for this pipeline.

• On Day 35, the Engineer replies that, following consultation with the Employer, the
Contractor is instructed to rectify the longitudinal profiles for the entire section
concerned by the level errors, ensuring that the designed pipe installation depth of
80 cm is respected, and to submit these new drawings to the Engineer for approval.
The Contractor is also told that no work will be authorized on site until these
drawings have been produced, submitted and approved by the Engineer. In the
 meantime, the Contractor has established that the levels in the Employer’s
drawings are inaccurate for the entire 6 km of the pipeline.

• Between Day 36 and Day 55, correspondence is then exchanged between the
Engineer and the Contractor, neither of whom wishes to revise their position. On
several occasions, the Contractor points out that his teams have been at a
standstillsince Day 31. The Contractor states that he will demand an extension of
the time for completion and payment of the related costs as this downtime and
consequent delay is due to the Employer's failure to fulfil its contractual obligations
with respect to the supply of system design drawings.

• On Day 56, a meeting takes place between the Employer and the Contractor, in the
presence of the Engineer. In exchange for release of the Advance Payment earlier
than planned in the Contract, the Contractor agrees to amend the design drawings
for the first three kilometers. The Employer is thus able to re-mobilize his Engineer
for the rectification of the drawings for the three remaining kilometers and minimize
delays in the execution of works.

• On Day 62, the Contractor submits the rectified drawings to the Engineer for the
first three kilometers. On Day 80, the Engineer replies, rejecting the drawings and
demanding that only alternate high points be equipped with an air valve, as shown
in the original drawings supplied by the Employer, rather than all high points as
proposed by the Contractor (NB: the contract provides for the payment of air valves
to be based on the quantity of those actually installed and not on a lump sum per
kilometre of pipeline installed): the Engineer requests that the Contractor amend the
drawings accordingly and re-submit them.

• On Day 81, the Contractor replies, stating that equipping only the alternate high
points with a vent will lead to poor air evacuation in the pipeline and increase the
risks of water hammer, particularly since the network is not constantly supplied with
water. It requests the Engineer to:
1. review its position,
2. approve the drawings with comments (concerning air valves), as the issue of
whether or not to fit an air valve at every high point does not in any way prevent
works from commencing. The matter can be dealt with in parallel and the
resolution of the issue should not be a prerequisite condition for commencement
of works.

• On Day 82, the Engineer replies that it is not up to the Contractor to decide the
procedure to follow within the framework of the contract and states that the
Contractor had already been informed that no construction would be allowed to
commence prior to the drawings having been approved – and not ‘approved with
comments’. The Engineer reminds the Contractor to read the contract properly and
of his obligation to comply with the instructions of the Engineer.

• On Day 84, the Contractor re-submits the drawings amended with air valves at
alternate high points in accordance with the Engineer's order. In a letter
accompanying the drawings, the Contractor states that he will take no responsibility
for any malfunctions of the pipeline once in operation, nor any consequences of
such malfunctions.
• The Engineer issues approval of the re-submitted drawings on Day 88.

• The Contractor commences works on Day 89, using a mechanical excavator to

undertake a first excavation of 100 metres in length and 1 m 30 in depth. He
decides to batter the trench sides at 45 degrees rather than using trench wall
supports.

• On Day 93, the Contractor wishes to proceed further with the excavation, but is
preventing from doing so by a resident who is complaining that the excavation
passes in front of his house. The resident claims that the planned route is on his
property and that he has received no compensation for this. The Contractor
immediately informs the Engineer so that he can ask the Employer to resolve this
issue and he states his intention to claim for the costs and delays caused by this
situation.

• On Day 94, the Employer visits the site to try to resolve the matter with the local
resident. The Engineer is present on site with the Employer and the Contractor and
advises the Parties that the Contractor's claim is not valid as he can proceed with
the works by starting another excavation beyond the bottleneck caused by the
resident. The Contractor states that he still intends to make a claim. He agrees to
move on to start another excavation further along the route of the pipeline, but says
that in doing so he will subsequently have more connections to make due to having
to work in several intermittent locations rather than in a continuous, linear manner.
The Contractor says that he will be claiming the costs related to the provision of the
extra fittings for connections.

• The Engineer observes that pipes have already been laid over the first 100 metres,
that a T-connection has been built on the existing pipe for connecting the new pipe
and that the excavation is in the process of being backfilled. The Engineer informs
the Contractor that he had not been informed that pipe-laying and backfilling was
underway and also that the Contractor had not submitted his pipe-laying or
backfilling methodology, nor the related quality plan and procedures, inspection
points, forms and work instructions and that the above works should therefore not
have been commenced. The Engineer requests that the backfill be removed so that
it can inspect the thickness of the sand bed and the connections between individual
pipe lengths. The Contractor retorts that his methods are in accordance with good
practice, his technical proposal and the standards required by the contract and that
if the Engineer had been present on site more often, rather than in his office, he
would already have been able to observe that these works were being properly
executed. The Engineer reiterates his instruction and the Contractor reluctantly
agrees to comply. A meeting is scheduled on site for the middle of the following day
so that the Engineer can inspect the pipe laying before backfilling takes place.

• By early morning on Day 95, the Contractor has finished removing the backfill and
the pipe is ready for inspection. Torrential rain (this is the Monsoon season) begins
to fall on site – the Site Manager orders that equipment be covered and that the end
of the installed pipe (at approximately the 100 m mark) be sealed to prevent liquid
and solid materials from entering it, and that all workers take shelter. The rain beats
 down heavily for three hours; the bottom of the trench becomes filled with water
causing the pipe to lift up – the T connection built on the existing pipe gives way.

• The Engineer arrives on site and observes the damage. The Contractor is in the
process of repairing the connection and advises that he intends to claim for costs
and delays resulting from the exceptionally unfavourable weather conditions and an
incorrect instruction given by the Engineer, which aggravated the situation – if
backfill had not had to be removed, at the Engineer's instruction, the connection
would not have broken.

• Day 96 – the Engineer meets the Contractor on site. The connection has been
repaired and the pipe-laying works and sand bed are approved by the Engineer
who now authorizes the Contractor to begin re-filling the trench. The Contractor
warns that his work has been interrupted again at the 150 m mark by a resident and
that the Employer has still not managed to come to an agreement with the resident
at the 100 m mark. The Contractor had wanted to advance with excavation between
the 150 m and 1,000 m mark and had been halted nine times by residents. He
provides the Employer and the Engineer with all the relevant information while they
are on site. The Employer and the Engineer discuss the issue privately and instruct
the Contractor to stop work temporarily on the 0–1,000 m section and to transfer the
work site to the 1,000–2,000 m section, which runs through entirely public space
alongside some natural woodland, between two hamlets. The Contractor agrees,
but states that he will claim for the costs and delays incurred due to these repeated
impediments and the changes imposed on his work programme.

• Day 98 – the Contractor has vacated his work site at the 0 m mark, has set up
operations at the 1,000 m mark and is ready to commence work. The Engineer
reminds the Contractor that he cannot do so, as it has yet to provide the required
Quality Assurance documentation relating to the pipe-laying works.

• Day 100 – The Contractor submits the Quality Assurance documentation and
confirms that it will be commencing work immediately. The Engineer points out that
works can only commence after the said documentation has been approved. The
Contractor considers this position to be unwarranted and states that it will be
making a claim for costs and delays.

• In the monthly statement and payment application submitted for Month 5, the
Contractor invoices for the full volume excavated for the initial pipe-laying work. The
Engineer reduces this amount to correspond to the work required for excavation of
trenches with vertical walls, not those at a 45-degree batter, and only approves
payment for this reduced amount. The Contractor does not agree with this and
informs the Engineer of his intention to claim for the balance.

• Day 111 – The Engineer approves the Quality Assurance documentation provided
by the Contractor and work commences.

• Day 116 – Progress is good and 500 m of the pipe has been laid. A successful
hydrostatic test is performed.
 • Day 117 – The Contractor proceeds with works from the 1,500 m mark onwards;
this requires a secondary road to be crossed. The Department of Transport of the
Quynh Ninh Province intervenes to halt the works on the grounds that the
Contractor does not have a permit to do this. The Contractor returns to the Engineer
and points out that it is supposed to be the responsibility of the Employer to ensure
that any permits required by local authorities are obtained in a timely manner. The
Engineer states that the Contractor is responsible for obtaining any permits relating
to his work methodology, and that he has sole liability for his lack of foresight and
not having established for himself the regulatory requirements in force in the
Province.

• Day 118 – The Contractor is infuriated by this and informs the Engineer that he is
suspending all installation works. The Contractor requests an urgent meeting with
the Employer and the Engineer to discuss all of the incidents which have plagued
the works since commencement. The Contractor accuses the Engineer and the
Employer of having failed in their contractual obligations, of having interfered
excessively with his work, thus greatly penalising him, and of not having allowed
him to work in accordance with the conditions set out in the contract.

For this meeting, the Contractor submits the agenda below:

1. Incorrect design drawings,
2. Delays in the approval of drawings supplied by the Contractor and in the
commencement and progress of works on the basis of incorrect grounds (need
for full approval rather than approval with comments, Quality Assurance
documentation considered as a prerequisite condition to execution of works),
3. Delays in the execution of works due to compensation issues with local
residents not being settled by the Employer, and to the Employer's failure to
obtain work permits required by local authorities,
4. Changes imposed regarding the sequencing of work, unwarranted
withdrawals/deployments of teams and the provision of more connections that
initially planned,
5. Exceptionally adverse climatic conditions,
6. Non-payment of part of the quantity of material excavated from trenches.

The Contractor states that, for each of these six key grounds for claim, the amount he will
be claiming, as well as the time extension requested, will be presented at the meeting
along with the requisite supporting evidence.