FIDIC - Contracts - Basic Questions Question - Answer - International Federation of Consulting Engineers

2/9/22, 3:38 PM FIDIC | Contracts: basic questions Question/Answer | International Federation of Consulting Engineers
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Contracts: basic questions Question/Answer
Remeasurement modified to Lump Sum

Question
The following query is in relation to a situation which has occurred in the context of the execution of a Lump Sum contract,
regulated by a standard FIDIC (Red Book) terms and conditions. The Specifications call for "Cast Iron" pipes, while the BOQ
calls for "UPVC" pipes. The Contractor and upon the approval of the Engineer, and without having any instructions to do so,
executed the Works in UPVC. Does this entitle the Employer to request cost saving on this item? And on what basis? Your
response to the above is highly appreciated.
Answer
You say that you have a Lump Sum Contract. The FIDIC Construction Contract Book is a remeasurement contract so the
payment provisions must have been changed to provide for the Lump Sum. The answer to your question will depend on the
wording of these Lump Sum provisions. I regret that FIDIC can only comment on questions which on the interpretation of
the FIDIC General Conditions, so we are unable to answer your question. We fear that this is an indication of what happens
if General Conditions are modified by Special Provisions without due care.
Subcontractor's experience
Question
I would like your advice on the definition of a subcontractor, and of the following tender criteria: "subcontractors' experience
and resources shall not be taken into account in determining the bidder's compliance with qualifying criteria". In other
words, does this mean that if a bidder has worked as a subcontractor, he is not permitted to add that experience as part of
his qualification? I would like your clarification.
Answer
The FIDIC definition of a subcontractor is given at Sub-Clause 1.1.2.8 of the 1999 Contract for Construction as:
"Subcontractor" means any person named in the Contract as a subcontractor, or any person appointed as a subcontractor,
for a part of the Works; and the legal successors in title to each of these persons. Different clients have different criteria
when evaluating tenders. FIDIC would certainly expect that any client will want to ensure that the tenderer has adequate
experience as a main contractor and has not just worked as a subcontractor. However, in FIDIC's opinion, this would
normally be worded as "Experience as a subcontractor ....". FIDIC has also known clients to be concerned that tenderers
have relied on a proposed subcontractor's experience and resources when preparing a tender and then the named
subcontractor is withdrawn and another, less experienced, company is proposed after the tender has been accepted.
However, for an international tender, some clients require that a certain percentage of the Works must be subcontracted to
local companies. In this case the experience and resources of the proposed subcontractors will be an important part of the
tender. The client's criteria when evaluating tenders depend on a number of different factors, including the past experience
of the particular client. In order to ascertain the exact intentions for evaluating your particular tender you would need to
raise the question with the client.
Free-issue materials
Question
I have a question regarding Clause 69.1 for Default of Employer. We are executing a Contract for a Project in Pakistan under
FIDIC Fourth Edition, 1987. The Employer has assigned The Engineer and also an Employer's Representative. The
Employer's Representative is form time-to-time acting like The Engineer and would like to physically check the works at
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Engineer. We have served a notice under Clause 69.1 and 69.4, of the Conditions of Contract to reduce the rate of work and
furthermore, clarify that the Clause 69.1 explains the default of the Employer, regardless of the quantum of amount in case
of Employer's failure to pay to the Contractor total amount due under any certificate of the Engineer. Do you think that the
above statement is true and it is a case of default of the Employer ?
Answer
Depending on what is written in the Contract and the Particular Conditions, generally speaking you have a case against the
Employer. The damages which the Contractor may claim would include interest and/or financing charges. However, you
must check the provisions of the Sub-clause 2.1 Engineer's duties and authority ,to see what is mentioned there. It is not
very clear what is this Employer's Representative and what are his duties under the Contract,. However, one would suspect
that you have a case against the Employer.
Bogus claims
Question
I request to give me clarification about the correct interpretation of Clause 60.6 Final statement in the FIDIC Conditions of
Contract 1987 revised in 1992. This is about submission by the Contractor of final statement containing the following (a)
'the value of all work done in accordance with the contract, and (b)any further sums which the contractor considers to be
due to him under the contract or otherwise'. I want clarification with respect to (b) above. Does it include the Claims which
the Contractor has never raised during the currency of contract according to provisions of the contract? I am confronted with
a dispute In which the contractor for a value of total work of Rs 70 million has submitted final accounts of Rs 280 millon by
including various type of claims which he never claimed during the contract period and now claims in the final statement
and since the Engineer/Employer failed to respond, the Contractor claims that the final account has become final. I would
request for an early response as to the true and intended purpose of the sub-clause (b) of Clause 60.6 of the General
Conditions of the above mentioned FIDIC version for civil works construction. Should I include all bogus claims what I intend
to include for the purpose that if I claim USD 100 I would at least get USD 1. How I can rebut this?
Answer
The provisions of Sub-clause 60.6 have to be read together with the provisions of Sub-clause 60.5 and of course with the
provisions of the Sub-clause 60.9. In order for the Contractor to maintain any claim, he must include it in his Statement at
Completion, if it has arisen by then, and in his Final Statement. There are a number of incidences under the contract when
the Employer gives to the Contractor indemnities or is otherwise responsible to the Contractor. Clauses in which this occurs
and where the Contractor's resulting claims against the Employer could arise for the first time after the Statement at
Completion or Final Statement have been submitted by the Contractor include the following: Clause 19.2 (Employer's
responsibilities) in relation to safety; Clause 21.3 (Responsibility for amounts not recovered); Clause 22.3 (Indemnity by
Employer); Clause 24.1 (Accident or injury to workmen); Clause 25.4 (Compliance with policy conditions); Clause 26.1
(Compliance with statutes, regulations); Clause 70.2 (Subsequent legislation); and Clause 71.1 (Currency restrictions). In
each of the above cases, it is conceivable that the Contractor would wish to make a claim against the Employer after the
date of the Final Statement. Further, if the Contractor was made liable under the applicable law to a third party in respect of
design which had been carried out by the Engineer, the Contractor would wish to bring a claim against the Employer to
recover any damages paid out. Sub-clause 60.9 in fact bars the claims not mentioned in the Statement at Completion and in
the Final Statement. The purpose of the sub-clause is sensible, namely to enable the Employer to achieve a reasonable
degree of certainty as to his ultimate liability.
Appointing an Engineer
Question
Is it recommended to have in a contract based on FIDIC's Electrical and Mechanical Works Contract an external expert
acting as the Engineer? Or is there no problem in recruiting the Engineer from amongst the Beneficiary (in our case a
"public" authority)? We are signing a contract shortly. The Engineer is according to the Red Book, Clause 2.4 Part I bound to
act impartially. The question is if there is an internal incompatibility in the relationship to his Employer.
Answer
The basis upon which the 1987 Yellow Book and Red Book is written is that the Engineer is appointed by the Employer, but
that he is independent of both parties - i.e., he is an independent third party. In many cases he is required to give impartial
decisions - in fact under Clause 2.4 of the Yellow Book he is required to act impartially at all times when exercising his
discretion. If the Engineer is an employee of the Employer - e.g., someone from the Employer's Engineering Division - there
is a big risk that he will not be in a position to act impartially. Although he may be very experienced and capable from a
technical point of view, and able to handle all technical matters, he may not be free to make decisions which involve
financial arrangements, etc. in a fair and impartial manner. It is not impossible, nor unknown, for the Employer to nominate
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disputes (Clauses 2 and 50). The principle of using an employee of the Employer as Engineer would be more acceptable if a
Dispute Adjudication Board (DAB) was introduced to replace the principal provisions of Clauses 2 and 50.1 to deal with
claims and disputes.
Standard Letters
Question
I am a Civil Engineer, presently working as Contracts Manager. Foreign (non-British nationality) engineers usually have an
understanding of the contract document and the associated entitlements/obligations, but always express difficulty in
composing (or responding to, if they are on "the other side" , correctly worded "standard" letters to the RE, Engineer or
Employer in compliance with the requirements of the various sub-clauses. Do you have such a publication?
Answer
The only book which we can recollect is "Musterbriefe in Englisch" (ISBN 3-7625-2607-9) although its standard letters are
not such as we would prefer to endorse. Although we will review the situation with regard to the new FIDIC Contracts
Guide, FIDIC lack enthusiasm for the very concept of standard letters, which seems to be tied up with the concept of
avoiding thinking about the situation. However, we do recognise the validity of concerns expressed by those whose first
language is not English. Thus, "Musterbriefe in Englisch" has been republished as an electronic edition (it goes with the
1987 Red Book civil works contract). An updated version for use with the Construction Contract 1st Edition, 1999, the Red
Book successor, will be published by FIDIC in 2009 (FIDIC has acquired the copyright of Musterbriefe in Englisch). It should
be noted that Edward Corbett's book "FIDIC 4th "contains some standard letters. These have been incorporated with
permission in the electronic version of "Musterbriefe in Englisch" published by FIDIC.
Appendix to Tender data mission (continued)

Question
I believe this case does not constitute a question of mistake in contract to be decided under the applicable law. The
schedule of prices of labour and materials is a provision for the tenderer to indicate his price (cost plus profit) on which he
had based his Contract Price, in order for the Engineer to ascertain the value of an item of work that had been executed
(possibly under a variation order) and for which, or for a similar item of work of which, no price could be found in the Bill of
Quantities (BOQ). Thus the schedule of prices of materials and labour only assists the Engineer to determine the overheads
and profits of the Contractor, under the terms of the contract, that has to be added to the basic cost of executing an item of
work, which the Engineer can always readily determine. If provison had been made in the contract for payment for price
escalations, then such payments had to be determined by reference to price escalation indices, published by an accepted
authority. As to which source or publication is to be used for this purpose, depends on what would have been reasonably
expected to be in the minds of the two parties at the time of entering into contract.
Answer
We assume that this inquiry is about FIDIC 1999 Conditions of Contract where in the 199 Red Book Sub-Clause 13.8 it
says: "13.8 (Adjustments for Changes in Cost) - In this Sub-Clause, "table of adjustment data" means the completed table
of adjustment data included in the Appendix to Tender. If there is no such table of adjustment data, this Sub-Clause shall
not apply. If this Sub-Clause applies, the amounts payable to the Contractor shall be adjusted for rises or falls in the cost of
labour. Goods and other inputs to the Works, by the addition or deduction of the amounts determined by the formulae
prescribed in this Sub-Clause. To the extent that full compensation for any rise or fall in Costs is not covered by the
provisions of this or other Clauses, the Accepted Contract Amount shall be deemed to have included amounts to cover the
contingency of other rises and falls in costs. The adjustment to be applied to the amount otherwise payable to the
Contractor, as valued in accordance with the appropriate Schedule and certified in Payment Certificates, shall be determined
from formulae for each of the currencies in which the Contract Price is payable. No adjustment is to be applied to work
valued on the basis of Cost or current prices. The formulae shall be of the following general type:
Pn=a+bxLn/Lo+cxEn/Eo+dxMn/Mo where: "Pn" is the adjustment multiplier to be applied to the estimated contract value in
the relevant currency of the work carried out in period "n", this period being a month unless otherwise stated in the
Appendix to Tender; "a" is a fixed coefficient, stated in the relevant table of adjustment data, representing the non-
adjustable portion in contractual payments; "b", "c", "d", ... are coefficients representing the estimated proportion of each
cost element related to the execution of the Works, as stated in the relevant table of adjustment data; such tabulated cost
elements may be indicative of resources such as labour, equipment and materials; "Ln", "En", "Mn",... are the current cost
indices or reference prices for period "n", expressed in the relevant currency of payment, each of which is applicable to the
relevant tabulated cost element on the date 49 days prior to the last day of the period (to which the particular Payment
Certificate relates); and "Lo", "Eo", "Mo", ... are the base cost indices or reference prices, expressed in the relevant currency of
payment, each of which is applicable to the relevant tabulated cost element on the Base Date. The cost indices or reference
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prices stated in the table of adjustment data shall be used. If their source is in doubt, it shall be determined by the Engineer.
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For this purpose, reference shall be made to the values of the indices at stated dates (quoted in the fourth and fifth columns
respectively of the table) for the purposes of clarification of the source; although these dates (and thus these values) may
not correspond to the base cost indices. In cases where the "currency of index" (stated in the table) is not the relevant
currency of payment, each index shall be converted into the relevant currency of payment at the selling rate, established by
the central bank of the Country, of this relevant currency on the above date for which the index is required to be applicable.
Until such time as each current cost index is available, the Engineer shall determine a provisional index for the issue of
Interim Payment Certificates. When a current cost index is available, the adjustment shall be recalculated accordingly. If the
Contractor fails to complete the Works within the Time for Completion, adjustment of prices thereafter shall be made using
either (i) each index or price applicable on the date 49 days prior to the expiry of the Time for Completion of the Works, or
(ii) the current index or price: whichever is more favourable to the Employer. The weightings (coefficients) for each of the
factors of cost stated in the table(s) of adjustment data shall only be adjusted if they have been rendered unreasonable,
unbalanced or inapplicable, as a result of Variations." The clause is very clear and unfortunately the question raised is not
related to an interpretation of a Sub-Slause.
Fairness of deductions
Question
As our project is a lump-sum contract, the client has reduced some of the items and is deducting suome of our payment
amounts from the monthly certificate. Is it fair to deduct an amount?
Answer
Although it is not for FIDIC to comment on the "fairness" of a particular circumstance, it is the FIDIC philosophy to publish
Conditions of Contract that adopt an approach of fairness and balanced risk allocation between the parties as a primary
focus. Further, FIDIC can only comment in general terms on the interpretation of a FIDIC clauses, and it should be noted that
for the application of a clause to a particular problem situation, one should always consult a specialist. With that being said,
in general, the Sub-Clause entitled Variations (Sub-Clause 52.1 in the 4th Edition or 13.1 in the 1999 Edition of the
Construction Contract) does provide the right for the Engineer to vary the work downward; specifically the Engineer may
decrease quantities or omit work, provided of course that this work is not carried out the Employer or another contract.
Further, Sub-Clause 51.1 provides that such variations will be valued in accordance with the Clause 52, in the case of the
4th edition or Clause 12 in the case of the 1999 editions. Both of these clauses provide the rules for the valuation of these
variations, which include the possibility of reduction in price. Please note that the above represents a general answer only,
and specific advice to the particular facts surrounding your situation, we recommend you consult a specialist.
Liquidated Damages
Question
I am working as a Resident Engineer for Highways with consultants. A brief detail of our project is as as follows: The project
is a repair project and is divided in 3 sections. The sections are of varying lengths with 150m for the shortest one and 1.5
Km for the longest one. Completion date for the project has already elapsed early this year and no time extension has been
granted to the contractor owing to delay on his own behalf. Two sections have already been completed (opened to traffic)
and the 3rd section is near completion. No separate times for completion have been provided in the contract for either
section. ·Clause 47.2 of FIDIC Conditions of Contract (4th edition) recommends the reduction in penalty subject to taking
over of different sections. As sated above, none of the sections have been acquired by the client contractually. The referred
clause also states that the provisions of the sub clause shall only apply to the rate of liquidated damages and shall not
affect the limit thereof. What I infer from this part is that even after the reduction of penalty, it shall be applicable from the
original date of expiry of the contract. Is this the right interpretation? My second query is regarding the reduction in
liquidated damages. Under the above circumstances where the sections have not been acquired, but opened to traffic and
general public, can the penalties be reduced contractually subject to mutual agreement with the client? Thirdly, during the
currency of the project, some savings have been there (which couldn't be estimated at design stage due to repairing nature).
The savings are less than 15% (considering Clause 52.3). If penalties are applied and reduced thereof, are they to be
calculated on the original contract price or the revised one?
Answer
If understood correctly, your first question relates to sub-clause 47.2, specifically the last sentence, which reads "The
provisions of this Sub-Clause shall only apply to the rate of liquidated damages and shall not affect the limit thereof." The
meaning of this sentence is that although this clause allows for the amount of liquidated damages to be reduced
proportionately to the work being handed over, if the work is handed over in parts, the maximum limit of liquidated
damages (as specified in the appendix to tender (see Sub-Clause 47.1)) is not affected. In regard to your second question,
Clause 47 should be read in conjunction with Clause 48. In the background to your question, you stated that none of the
sections have been 'acquired by the Client contractually', yet earlier you state that '2 sections have already been completed
(opened to traffic)'. In this light, we would suggest that you may review both sub-clause 48.2 and 48.3, which, depending
on the particular fact pattern surrounding your contract, may be applicable. In answer to your third question, liquated
damages are not penalties. You are kindly referred to the verbiage contained in Sub-Clause 47.1, which reads, in part "... and
not as a penalty ...". As explained in the Guide to the Red Book, Liquidated damages are an amount determined by the
Employer, before tenders are invited, as a reasonable assessment of the actual damages which he would suffer in the event
of delay in completion of the Works. Hence, in general, Liquadated Damages should be calculated from the vantage point
that will result in a reasonable assessment of the actual damages.
Value Engineering sub-clause

Question
In terms of the FIDIC 1987 Red Book, is the Contractor entitled to a portion of the saving as provided for in the terms of
Sub-Clause 13.2 (Value Engineering) in the 1999 Red Book?
Answer
The FIDIC 1987 eRed Book does not have a similar provision as the one mentioned in the FIDIC 1999 edition Value
Engineering, Sub-Clause 13.2 However you may find in the 1987 Red Book a so called bonus for early completion.
Additional works
Question
Being a project manager from the client side, I would like to know as per FIDIC can I force a contractor to carry out
additional works prior to approval of his financial claim?
Answer
The basic answer is YES, provided you follow the correct contract procedures. There are a number of Sub-Clauses which are
relevant including, from the 1999 Construction Contract: a) S/Cl 3.1: The Employer may have imposed constraints on the
Engineer's authority in the Particular Conditions. b) S/Cl 3.3: The Contractor shall comply with instructions given by the
Engineer. c) S/Cl 13.1: The Contractor shall execute and be bound by each Variation initiated by the Engineer. Subject to
exceptions as stated in the Sub-Clause. d) S/Cl 13.3: Procedures for the Engineer to value the Variation. The Engineer may
have asked for and accepted a proposal, or he proceeds as Clause 12.
New rates
Question
In a civil marine work contract of FIDIC conditions, disputes quite often occurs on fixing of revision of rates. though clauses
51 and 52 of Fourth Edition - Red Book - clearly provide causes for variation and valuation of rates, ambiguity still persists
with respect to adoption of revised rates for varied quantities only or for full quantity executed as long asthere are no major
changes in deployment of workmen, equipment and materials. Leaving the decision to engineer may not give an appropriate
solution as persons holding the post of engineer may have different views and their decisions may not exactly match with
the views of FIDIC authors. Please clarify the situations when revised rates are applicable for the entire quantity or for
increased quantities only.
Answer
The decision whether a new rate applies to the total quantity of an item, or just to the Variation quantity, will depend on the
reason why a new rate is necessary. This may depend on the reason and details of the change to the Contractor's cost.
Sometimes the original quantity will already have been executed and paid at the BQ rate, before the Variation is ordered.
However, sometimes the fact of the quantity being changed by the Variation will change the circumstances and costs and
makes it reasonable to pay the total quantity at the new rate. The new rate may differ if it is being applied to the total
quantity or just to the Variation quantity. The Engineer will, of course, take all these factors into account when calculating a
new rate. You should also refer to the commentary on Clauses 51 and 52 in the FIDIC Guide to the Fourth Edition. The
commentary emphasises the importance of consultation with both the parties.
Appendix to Tender data missing

Question
A contract was signed under the FIDIC Conditions of Contract which require that indices for the skilled and unskilled labour
should be filled by the Contractor in the relevant Appendix while submitting the tender. This requirement including the
source of the indices was however not fulfilled by the Contractor. This fact was noted but employer failed to get this
requirement met and the contract was signed without this information. The dispute arose when the contractor submitted
escalation claim to
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because this condition is more profitable to contractor. The Client insists that he will use the indices issues by a gevernment
office which are normally used in government contracts. I am the Arbitrator in one such case and need advice of FIDIC what
will be the judicious coarse of action in this scenario. I however feel that entire responsibility of not providing this
information cannot be placed on the Contractor and the Employer should have insured that Contractor provide this
information before signing of the contract. omission was made and the contract was signed without this information (source
of indices). I will be anxiously waiting for advice from your expert what reasonable coarse of action should be adapted in
this dispute resolution as the Contractor has gone in dispute on this issue.
Answer
It seems that the Contractor made a mistake by not adding the information to the Appendix to Tender. The Employer then
accepted the Tender and the Parties signed a Contract which included the mistake. Unfortunately you say that they cannot
agree on the information which should be added to the Appendix to Tender. To correct the mistake requires a change to the
signed Contract to add this information. Correcting a mistake in a Contract is a legal question which must be studied under
the applicable law. FIDIC cannot comment on such legal questions.
Engineer's decision
Question
Our firm has a contract for consulting services with the Government of El Salvador for the construction of major
transportation infrastructure in the country. The project is divided into three packages that are governed by FIDIC Conditions
of Contract for Works of Civil Engineering (Red book, 4th Ed. 1987). The construction of the first package of project, which
included two 400-meter bridges over the most important river in El Salvador, was completed last April.The Contractor is a
Joint Venture of firms that is now claiming additional payments based on the contract documents. In order to have a clear
interpretation of the documents, we would like to clarify the following: Clause 67.1 Engineer's Decision - we would like to
confirm if under this Clause the Contractor can claim for matters that happened during the construction period, even after
the Take-Over Certificate has been issued and the Statement at Completion has been certified and paid.
Answer
Regarding Clause 67.1: if the Contractor is dissatisfied with an Engineer's evaluation of a claim under Clause 53, he may
refer the matter at any time (before or after completion) to the Engineer under Clause 67.1 for an "Engineer's Decision". He
can do this any time up to his Final Statement and there is no time limit. The Engineer then has 84 days to respond. The
Contractor cannot submit a "new'" claim for normal determination under this clause. The claim must first be processed
under Clause 53, and only when a Clause 53 determination has been given which the Contractor finds to be unacceptable
do we have a "dispute" situation which can be handled under Clause 67.1.
Calculation of claims
Question
I would like to know if you can help me find information regarding the procedure and calculation of claims (of any kind)
arising out of a Civil Engineering Construction contract.
Answer
FIDIC publishes guides to each of its forms of construction contract, which may provide the guidance you require on the
procedures for claims. You would need to order the Guide for the use of whatever Conditions you are using. If your enquiry
relates to October 2000. FIDIC's guides do not elaborate on the calculation of claims, so you might need to consult other
publications. Personally, I am only aware of "Building and Civil Engineering Claims in Perspective" by Geoffrey Arthur
Hughes, which was first published by Longman in 1983. It may have been republished and fulfil your needs.
Not in pre-handover list

Question
I have the following problem and I can not find a solution in the FIDIC Red Book Fourth Edition 1887. The problem is as
follows: we have made a contract with a pre-hand over list made, with the Engineer, in April 2000. A new contract, given to
another company in the same building was given in May 2000, it was an obligation for me to give the keys of the building.
As the Engineer is in Zimbabwe and the Building is in Burundi, no engineer was there for the hand over of the inside of the
building. Now, the Engineer asks us to repair some things which were not on the pre-hand over list. Can you please tell me
what I have to do.
Answer
FIDIC does not undertake to proffer advice relating to every situation which may arise under a FIDIC-based contract.
However, it appears that the answer to your question depends upon whether a Taking Over Certificate has been issued. If
so, the pre-hand over list presumably advised you of the work described in Sub-Clause 49.2(a), and the Engineer has asked
you to repair some things as described in Sub-Clause 49.2(b). If not, the Engineer may be "specifying all the work which ... is
required to be done ... before the issue of such Certificate" under Sub-Clause 48.1. In either case, you have not indicated any
reason for not complying with the Engineer's instructions.
Additional payments
Question
Our firm has a contract for consulting services with the Government of El Salvador for the construction of major
transportation infrastructure in the country. The project is divided into three packages that are governed by FIDIC Conditions
of Contract for Works of Civil Engineering (Red book, 4th Ed. 1987). The construction of the first package of project, which
included two 400-meter bridges over the most important river in El Salvador, was completed last April.The Contractor is a
Joint Venture of firms that is now claiming additional payments based on the contract documents. In order to have a clear
interpretation of the documents, we would like to clarify the following: Clause 53.1 Notice of Claims - it is important to
confirm if the Contractor can invoke this Clause to claim for additional payment owing to construction works that were
performed before the Take-Over Certificate, once this Certificate has been issued. In other words, if the Contractor can claim
for matters that happened during the construction period even after the Take-Over Certificate has been issued.
Answer
Regarding the application of Clause 53.1. This clause requires the Contractor to give Notice of a potential claim within 28
days of the event occurring. This establishes his right to claim and he should then proceed to substantiate the claim
according to Clause 53.3. He can claim at any time - before or after Taking-over - if events occur (before or after taking-over)
which he considers entitle him to claim. The intention of Clause 53.1 is to try to make sure claims are dealt with as and
when they occur so that everyone is familiar with the circumstances (thus the 28 day provision) - and not to leave them to
the end - when people have probably forgotten all the details. If he did this within the time limits, then the claim should be
evaluated according to the Contractor's submissions. If he did not - as would appear to be the case - and has come in with a
claim a considerable time after the event, then we would suggest that you have two courses of action. Firstly you should
perhaps try to establish why he did not give notice within the 28 days. Either you can reject his claim on the ground that he
did not submit it within 28 days as required by Clause 53.1, or, under Clause 53.4 you can make an assessment based on
records which were kept at the time. Normally I would suggest it depends on the circumstances. If the claim appears to be
frivolous and confused with no substantiation (possibly an event you knew nothing about) you may well decide to reject it.
But if it concerns an event of which you were aware which you knew had disrupted the Contractor, then maybe you could
consider it under Clause 53.4.
New rates for remeasurement

Question
I have a question regarding adoption of FIDIC Red Book Fourth Edition reprinted 1992. The particular Contract contains
Clause 51/52 "Variations" and also contains Clause 56 "Works to be Measured" and has BOQ. Design and Construct
Services for Electrical and Mechanical were tendered as diagramatic designs and are to be developed to the Approval of
Engineer as part of obligations under the Contract and have various BOQ items. This Design Development for
Mechanical/Electrical services is his obligation under the Contract, and in this way would not seem to qualify as a Variation
to the Contract. However new items to the original BOQ have been necessitated by DD. Under which Clause can new rates
be established for the re-measure of these Works?
Answer
The Conditions of Contract for Works of Civil Engineering Construction (1992) do not contain express provision for new
rates being established for the re-measurement of non-varied Contractor-design works, where new items to the original
BoQ have been necessitated by Design Development. Typically, Contractor-design works are priced on a lump-sum basis,
and are not subject to re-measurement after Design Development, so such express provision would be inappropriate in the
Conditions of Contract which FIDIC intended to be suitable for Employer-design works.
Termination before completion

Question
Has Employer got an authority according to FIDIC to terminate the contract of Engineer before completion of project and
appoint another engineering company or continue with its own resources? I know that that Employer cannot do this
according to Red Book FIDIC Clause 1.1 Definitions by referring to Part II of the contract. What should we do as a contractor
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Answer
You appear to understand FIDIC's provisions, as summarised at the top of page 41 of the Red Book Guide: "It should be
noted that ... the effect of ... [1.1(a)(iv)] is to prevent the Employer from changing the Engineer without the consent of the
Contractor." In effect, provided the legal person defined as "Engineer" continues to exist, such legal person continues to be
the Engineer for the purposes of the Contract, and the Employer has no power to name someone else as Engineer. By
"continues to exist", we mean does not (as a natural person) die, or is not (as a company) dissolved. FIDIC cannot give
specific advice in respect to the actions a party should take, and only undertakes to clarify aspects of its own provisions. You
do not seem to need such clarification, but may need to obtain advice from a lawyer with expert knowledge of construction
law.
There is always a possibility that some aspect of the situation (which you have not mentioned) would entitle the Employer
to replace the Engineer under the law governing the Contract. For FIDIC, it seems that you should first decide whether the
replacement "Engineer" is acceptable as such because, if not, you could inform the Employer accordingly and seek to resolve
the matter before it escalates into a major dispute.
Employer replaces the Contractor

Question
Regarding the correct application of the Red Book Contract, the Employer in compliance with sub-clause 63.1, after giving
written notice to the Contractor upon his contravention of provision in sub-clause 4.1, enetered upon the site and the works,
and terminated the employment of the Contractor. The Employer wants to employ another Contractor, which took second
place in the initial, public tender, to complete the works. The further procedure will be in compliance with sub-clauses 63.2,
63.3, 63.4 and 64.1.The questions is: is this procedure in compliance with the General Conditions of the Red Book 4th
Edition?
Answer
We refer to your query whether a proposed procedure complies with the fourth edition of the General Conditions of
Contract for Works of Civil Engineering Construction.
FIDIC cannot undertake to provide advice on actual circumstances, and is only prepared to clarify and explain the meaning
and purpose of the provisions it publishes in its Conditions of Contract. In the case of serious matters such as termination,
legal advice should be sought.
However, we would make the following observations, without concluding whether the Employer is entitled to proceed as
you have described. For these purposes, we start by assuming that the Employer's termination was valid by reason of the
Contractor's breach of sub-clause 4.1. Such validity may, of course, be challenged by the Contractor.
Following a valid termination, the Employer's options on employing another contractor would not appear to be constrained
by the General Conditions, other than under Clause 63 (with which you state the further procedure will comply), although
they may be constrained by the applicable law. You mention compliance with sub-clause 63.4, which relates to assignment
of subcontracts. Applicable law may constrain the Employer's rights in respect of subcontracts which were associated with
the Contractor's breach of sub-clause 4.1.
You mention compliance with sub-clause 64.1, which relates to urgent remedial work which the Contractor is unwilling or
unable to do, prior to termination. After termination, his previous unwillingness or inability would not seem to entitle the
Employer to invoke sub-clause 64.1. As regards employing a contractor which took "second place ... in the initial public
tender", this is not a matter to be decided by the General Conditions of the Contract under which the termination was
effected. The choice of replacement contractor is a matter to be decided by the law relevant to the procurement procedures
and any constraints imposed by those providing funds for the project.
Delayed payment
Question
I am an Architect registered with the RIBA in the UK since 1978 and the UAE Authorities in Abu Dhabi, UAE since 1981.
I have recently been Engineer under a FIDIC Red Book 4th Edition Building Contract between a UAE Government Agency
and a local Contractor, and Employer's Representative/Adviser under a FIDIC Design and Build Contract, same Employer but
different Contractor.
Clauses of Particular Application have been prepared by a third party advising the Employer direct in both cases, but largely
ignored, the Employer paying late throughout, not paying the final Interim Certificates on Taking Over the Works in either
case, threatening the imposition of Penalties by ignoring and/or rejecting the cases for Extensions of Time in both cases, and
not paying at all until forced agreement to reduced amounts has been accepted by the Contractors through barter.
As you may know, there is very limited recourse to the law here, especially for foreigners. Both Contractors are likely to
weigh the costs of Courts and further Delay against the benefit of any payment at all; one has already given in, but the
other is still fighting, or perhaps more realistically, negotiating.
What should I do, please: indeed, is there anything that can be done ? This is the worst case of abuse of Contract I have
come across in more than 20 years here, though the amounts are relatively small.
Answer
Whilst we can sympathise with the situation described in the question, there is not a lot FIDIC can recommend or that he
can do as Engineer in this case.
The situation described is, unfortunately, not all that uncommon in some Middle East countries and the ultimate decision of
what to do lies with the Contractor. If he feels the situation warrants extreme measures, then he can terminate under Clause
69.1 (unless of course 69.1 has been changed - as it very often is in these countries). Otherwise there is not a lot you can
do.
Being fair and impartial the Engineer could (and perhaps should) write to the Employer reminding him of the terms of the
Contract - but he will probably bring down the wrath of the Employer on his shoulders, and that may not help anybody.
You should perhaps also bear in mind that Contractors who choose to work in these countries are usually (or should be)
rather familiar with this situation and may well have allowed something in their price to cover this sort of thing - especially,
as the person asking the question says, the amount is not very large.
Expiry of Defects Liability Period

Question
For the Red Book, can the Engineer issue instructions under Clause 13.1 after the expiry of the Defects Liability Period ?
Answer
After the Defects Liability Period expires, the Engineer may issue instructions under Clause 49, and cannot rely upon Clause
13 as authority to issue other instructions.
Performance security
Question
Please inform us about the validity of the performance security if the duration of the contract is 90 days.
Answer
These principles would probably apply whichever FIDIC document is being used.
Priority of tender documents

Question
The question refers to FIDIC Conditions of Contract for Works of Civil Engineering Construction (4th Edition 1987, reprinted
1988 with editorial amendments, reprinted 1992 with further amendments). I am an employer who is negotiating with the
contractor now. I have a trouble in using the FIDIC conditions, and ask for your help urgently. Sub-Clause 1.1 (b)(v) "Tender"
means the Contractor's priced offer to the Employer for the execution and completion of the Works and the remedying of
any defects therein in accordance with the provision of the Contract, as accepted by the Letter of Acceptance." And Sub-
Clause 5.2 specifies the priority of the contract document, of which the Tender is listed as third. Are those two "Tender"
have the same meaning? Can we explain that the Tender only refer to the document entitled letter of tender (maybe 1 or 2
pages, very short and simple anyway), or all the documents submitted by the Contractor along with the letter of tender as
response upon the Bidding Document (a lot of documents, such as appendix to tender, priced BOQ, technical proposal,
evidence for construction experience and financial capacity)?
Answer
The Tender at Sub-Clauses 1.1(b)(v) and 5.2(3) means the form of Tender which is given at the end of Part 1 of the Red
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included in the Contract as part of the Tender then he must state this clearly in the Instructions to Tenderers and in the form
of Tender.
Obtaining Contract Data

Question
Sub-Clause 11.1 tell us that the hired contracting party is responsible for the data contained in his proposal based on the
data supplied by the Contractor. Could you please tell me how I can obtain the data?
Answer
The Contractor must have based his tender on information: 1) which was provided to all tenderers by the Employer from the
investigations which had been carried out by the Employer; 2) which the Contractor obtained from his own inspection and
examination of the Site and its surroundings. Where the Contractor obtained this information will depend on the
circumstances but he must have satisfied himself that his tender was correct and sufficient to meet his obligations under the
Contract.
Interim certificates
Question
Sub-Clause 60.4 stipulates that the Engineer may correct any error in an interim certificate in subsequent certificates. Are
there any limitations in the application of this provision?
Answer
You are referring to Sub-Clause 60.4 of the 1987 Contract for Civil Engineering Works. There is a similar provision at Sub-
Clause 14.6 of the 1999 Contracts. The Contract does not put any limitation on this provision. However, under Sub-Clause
60.2 the Engineer has previously certified the amount which he considered to be due and payable. If he has now found an
error and changed his mind he should explain the reasons for the change.
Refixing of rate
Question
I am interested in application of Clause 52.2 (Power of the Engineer to fix Rate). If circumstances allow a refixing of rate,
would it apply to the varied quantity(increased/decreased) or to the entire quantity, i.e., quantities in the bid plus
increase/decrease?
Answer
You are referring to the 4th Edition 1987 of the Contract for Works of Civil Engineering, Sub-Clause 51.1 (a) allows the
Engineer to issue an instruction to increase or decrease the quantity of any work included in the Contract. The rate which
the Engineer agrees or fixes under Sub-Clause 52.2 would only apply to the varied quantity (increased or decreased). The
original quantity is not part of the Variation and would be paid at the original rate.
Recovery of Costs
Question
Working with 1987, 4th Edition, reprinted in 1992 FIDIC form of contract on a project where Clause 70, whist being
modified does permit the recovery of changes in the prices of labour and materials. Are there any legal precidents which
reflect the provision reflected in the 1999 form of contract to allow the recovery of costs, post the stated contract
completion where the contractor has failed to complete the works in the specified time? Or are there any precidents to
reflect the recovery of costs per sec, post the contract completion date? If there are any precidents, if there are in electronic,
format, could you forward them or, advise where they could be obtained.
Answer
FIDIC is unable to provide legal guidance or information on legal precedents. However, to be helpful, the federation has
asked an expert to comment so that your future research can guided in the approriate direction. You are correct that the
1987 4th Edition does not include specific provision for the recovery of price changes after the contract completion date
when the Contractor has failed to complete the work in the specified time. Alternative clauses can be found in the FIDIC
Guide to the 4th Edition and in the 1999 Contracts. The problem with legal precedents is that no two dispute situations are
ever exactly the same and so need legal advice. Guidance and summaries of some arbitration awards can be found in the
international legal journals, newsletters from law firms and the publications of the international arbitration centres such as
the ICC Paris, the London Court of International Arbitration and other centres in different parts of the world.
Engineer's instructions
Question
A FIDIC standard Contract for civil engineering (Red Book 4th Edition 1987) is basis of a Contract for a Wharf and Approach
Bridge Construction and Causeway Reclamation project (The Contrac). The Contract is a Lumpsum Agreement and the
BOQ refers as follows: All works in this section except Provisional Quantities will be paid for as LumpSums. Quantities are
estimates only. If the Contractor wishes, additional items may be added to the Bill or quantities amended. Rates nominated
will be used only to assess variations (if any) to the Contract and to assess progress claims and payments. Provisional
Quantities and Items will be paid for as described in the Conditions of Contract. One of the BoQ item was pertaining to
Crane Rails to be provided by the Contractor. Later the Company organized the Rails on their own and the Contractor is not
required to provide the Crane Rails as per the BoQ. In view of this the Crane Rail related Amount as stated in the BoQ is
proposed to be deducted out of the BoQ. Please confirm that this is proper approach under Article 51 and 52 or any other
conditions of FIDIC standard contract.
Answer
Under a FIDIC Contract, any change to add or omit work must be made by an instruction from the Engineer under the
appropriate sub-clause. You mention Sub-Clauses 51 and 52, which are from the 1987 4th Edition of the Contract for Civil
Engineering Works. Sub-Clause 51.1, item (b) allows the Engineer to issue instructions to omit work, but this is qualified by
the statement in brackets "(but not if the omitted work is to be carried out by the Employer or by another contractor)". Your
proposal for the crane rails would appear to contravene this requirement. Hence the change and price adjustment may need
to be negotiated between the Parties and would probably involve legal advice.
Variations exceeding 15 percent of the effective Contract Sum (Clause 52.3)

Question
We are in the process of preparing a claim under Clause 52.3 of the FIDIC Conditions of Contract for Works of Civil
Engineering Construction and are seeking clarification on the application of the clause especially as regards to which
amount do we apply the percentage which is in excess of the 15%. Do we apply it to: - The effective contract sum; or, - The
difference between the amounts calculated using the actual percentage by which the effective contract sum shall have been
exceed by and the 15%. Please note that In this particular contract, the majority of Preliminary and General Items were
stated as provisional sums (as stated in the Bill of Quantities by the Engineer) it is not easy for us to accurately determine
the contractor's on-costs. We have since acquired a copy of the "Guide to the Use of Fidlic Conditions of Contract for Works
of Civil Engineering Construction" and the explanation given does not adequately cover us, refer page 117 of the guide.
Please advise us on how this clause is to be applied.
Answer
The precise problem is not clear and we can only comment in general terms on the interpretation of Sub-Clause 52.3. The
Sub-Clause allows the Contractor and Engineer to discuss and agree a lump sum addition or deduction to the Contract Price
when the additions/deductions as described at (a) and (b) are more than 15% of the "Effective Contract Price". It will be up
to the Contractor to prove the changes to his Site and general overhead costs. The details and calculation of the lump sum
will dependant on the reasons for the increase or decrease to the Contract Price.
Unit rates
Question
1. The following addition has been made in Clause 52.2 (FIDIC 1987, Contract for Works of Civil Engineering) in our
contract by the Employer: "..Provided further that no change in the Unit Rates or prices quoted shall be considered for any
item in the Schedules to the Bill of Quantities, unless such item individually accounts for an amount of more than 2 percent
of the sum named in the Letter of Acceptance, and the original billed quantity by more than 30 percent. Not withstanding
above, for variation exceeding 10% in quantity of any item of BOQ with respect to original BOQ quantities, the following
shall apply to the unit rate of that item: a) For rates quoted below CSR 2000 rates, no change in quoted unit rate shall be
allowed. b) For rates quoted above CSR 2000 rates, the quantity exceeding 10% from original BOQ quantity of the items
shall be paid to the contractor as per NHA CSR 2000 rates applicable in the relevant district. Provided further that for non
BOQ items appearing in NHA’s CSR 2000, CSR 2000 rates shall apply whereas the rates of non CSR & non BOQ items
shall be determined by the Engineer as stipulated in General Conditions of Contract." 2. The Situation BOQ Item No.108b(i)
Formation of embankment from roadway excavation in Rock material (Hard Rock) and BOQ Item No. 106d(i) Excavate
Surplus Rock material (Hard Rock) has increased up to 453 % and 77.8 % respectively from the Original Billed Quantity and
these Items are individually accounting for more than 2.55% and 4.99 % respectively of the sum named in the Letter of
Acceptance. Therefore, we desire to request the Employer/The Engineer that the Unit Rates for the said items as quoted in
the BOQ for the entire quantity be changed and till the time new rates are fixed, the provisional rates or prices be
determined in accordance with CSR-2005 with 25% Premium to enable on-account payment. 3.Questions a) Will the
revision of rates be based on composite schedule of rates – 2005 (CSR- 2005) with 25% premium as requested by us? b)
Are “sub- paragraphs a and b of the addition made in the said clause” (refer to para 1 above ) applicable to us as we
consider that the said sub paragraphs are not relevant to us because our variation is over 30%. c) Will Revised Rates be
applicable to the entire quantity or only on varied quantity? d) With so much variation, is it alright to ask for determination of
Provisional rates?
Answer
As a general principle, FIDIC expressly prohibits users of its contracts to add and adjust Clauses in the General Conditions.
Any adjustments and changes should be made in the Particular Conditions. However, since your Organization may not be
responsible for misuse and breach of copyright we shall attempt to help you. But here again, FIDIC is able to offer advice on
interpreation of clauses, but of course only on the clause of the contracts General Conditions, not on someone else's
clauses. This said, once again, we shall try to be helpful on the understanding that in future you try to impress on clients
that they should use the GCs correctly, and not risk legal action and contract invalidity owing to breach of copyright. The
changes to the GC mean that the interpretation of the FIDIC Sub-clause 52.2 may not be relevant to the amended contract.
However the following may be helpful. a) Impossible to answer because of the changes to the GC. b) Impossible to answer
because of the changes to the GC. c) Revised rates are normally only applicable to the additional quantity but this depends
on the circumstances and the make up of the revised rates. In determining revised rates the Engineer should take all factors
into consideration. d) The Contractor is entitled to be paid for work done in accordance with Sub-Clause 60.2. If the revised
rates cannot be agreed in time for the next Interim Payment Certificate then the Engineer should determine provisional rates
as the last sentence of the first paragraph of Sub-Clause 52.2. If the final rate is different to this provisional rate then
Interim Payment Certificates can be corrected as Sub-Clause 60.4.
Additional sum for replacement cost

Question
We are requesting a clarification of the intention of Clause 21.1 (b) Insurance of Works and Contractor's Equipment of the
FIDIC Civil Engineering Construction 1987 (4th Edition) Part1. There appears to be a mixed Insurance market view as to
whether the additional sum of "15% of such replacement cost" for Professional Fees, Demolition and Removal of Debris
applies to: (1) each of these costs individually, or (2) as a combined amount, and (3) whether this amount should be applied
as a percentage of loss or a percentage of the sum insured (contract value). Our Contractors are keen to have clarification.
Answer
The wording of Sub-Clause 21.1 (b) should be clear. The insurance shall cover the full replacement cost as (a), plus an
additional 15% of that figure. This additional 15% is to cover any additional and incidental costs, INCLUDING professional
fees etc. This figure may be changed in the Particular Conditions and you should also refer to the FIDIC Guide to the 4th
Edition, at page 72.
Excess quantities of work (Sub-clause 52.3)

Question
I am "The Engineer" of Project and have recommended re-rating of certain items of work under the provisions of Clauses
52.2 of the Contract. I have however failed to understand from the given provision is that: a) The Engineer shall evaluate at
the time of Taking Over, if the Contract Cost has increased or decreased (±) 15% of the original cost of contract, as a result
of: i) all work executed & measured is in excess of BOQ qualities. b) Then the Engineer shall determine such further "Sum"
that may be added or deducted from the contract price, taking into regard the Contractor's site and general overhead costs
of the Contract based upon only the amount by which such additions/deductions will be in excess of 15% of the Effective
Contract price. In my opinion the Excess quantities of work have been taken care of by re-rating under Clause 52.2 and no
further Sum may be added to the Contract. Does the Clause 52.3 intend to apply the re-rating on quantities that are more
than 15%of the BOQ quantities thus re-rated. I quote an example: let us assume the cost of Contract as USD 100000. A
BOQ item costing USD 20000 is increased to value USD 50000 at contract rates. Hence re-rating under Clause 52.2
becomes applicable. On re-rating the value of (original + increased) qty of work becomes USD 55000. Now the total value
of contract, i.e., USD 55000. The value of work beyond 15% of contract price is $ 40,000. Is the Contractor entitled to
additional premium under Clause 52.3 for Executing work beyond 15% of Contract price. Is this what is meant by the
provision of the Clause 52.3?
Answer
Clause 52.2 refers to the re-rating of an individual variation. Clause 52.3 refers to the situation when the total effect of all
variations, plus the remeasurement of the approximate quantities in the BoQ results in an increase or decrease of more than
15%.
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quantities on the Contractor's overheads. For example, part of the allowance for overheads may be a fixed, or lump sum,
figure which is not related to the quantity of work which has been carried out. A substantial increase in the total quantity of
work may not increase this part of the overheads. Hence, the overheads per unit quantity would decrease. The allowance
for overheads in the rates would need to be reconsidered. Any re-rating under Clause 52.2 would be taken into account
when considering Clause 52.3. The Guide to the Fourth Edition published by FIDIC gives useful guidance and examples at
pages 115 and 117.
Free haulage
Question
My inquiry is: are their any guidlines for maximum FREE HAULAGE distance ... for the TERM BORROW materials to be
engaged in EMBANKMENT CONSTRUCTION .... sinilarly....what free distance limits are set/provided in FIDIC for any
transportation of material .... from BORROW, from the site of e.g., asphalt mixing or concrete mixing plant to the site of
accomodating the finished product in the road construction projects.
Answer
The FIDIC Conditions of Contract give the legal rights and obligations of the Parties to the Contract. Matters such as the
maximum free haulage distance will depend on the requirements and details of the project. They will vary for different
projects and should be given in the technical specifications and/or bills of quantities.
Enforcing a claim
Question
I am requesting an interpretation of Clause 63.2 and 63.3 of the FIDIC Red Book, 4th Edition. a) When a Contractor has
sums due to it arising out of a valuation under Clause 63.2 at the time of termination, and the Employer/ Engineer delays
certification of possible claims under Clause 63.3, how does FIDIC envisage that the terminated Contractor may enforce its
claim/obtain those sums certified by the Engineer as being due to it? b) Once a new contractor has been engaged, is the
date scheduled for completion under the new contract relevant, and when is the new contractor liable for further delays to
the completion date? c) Is there a duty on the Employer or Engineer to inform the first Contractor that the project has been
completed? When the defects liability period is over? d) Is there a duty on the Employer/Engineer to issue a certificate in
accordance with Clause 63.3 within a reasonable time? What may be considered a reasonable period for issuing such a
certificate? e) What are the possibilities for a Contractor to obtain the monies due under Clause 63.2 if the Engineer fails to
issue a certificate under Clause 63.3.?
Answer
This is really a legal question, but the key seems to be that the first sentence of Clause 67.1 says that it continues after
termination. A few additional comments may be helpful. One assumes the enquiry is referring to the Fourth Edition,
amended 1992, without any significant amendments. Matters arising from termination under Clause 63.1 will depend on
the provisions of the applicable law as well as FIDIC Contract Clauses. Most legal systems include requirements for the
termination of a contract and also contain provisions based on the concept of "good faith" which may be applicable. Any
comments based on the FIDIC Contract must be reviewed in relation to the applicable law, but some general comments may
be helpful. a) Clause 67.1, first sentence, says that it continues after termination. b) Clause 63.1 enables the Employer to
"terminate the employment of the Contractor". The Clause is clear that this does not release the Contractor from any of his
obligations or liabilities. So does the law require that the Employer also is not released from his obligations? If so then other
Clauses will also be relevant. c) The new contractor is presumably liable for delays which he causes and which are not
attributable to the previous contractor. d) Clause 1.5, final sentence, requires that any consent, approval, certificate or
determination shall not unreasonably be withheld or delayed. e) Clauses 60.6 and 60.8 give time periods for the
Contractor's Final Statement and the Engineer's Final Payment Certificate. Clause 63.3 requires the Engineer to issue a
certificate, without stating a time period. By reference to Clause 1.5, this must be issued in a reasonable time. Reasonable
might be based on the Clause 60.6 and 60.8 time periods unless there are special circumstances. f) It certainly seems
necessary for the Contractor to be informed, or his questions to be answered, in order that he knows when the construction
and Defects Liability Periods are completed. g) The Contractor's rights and procedures for obtaining payment are covered by
Clause 67 and the applicable law.
New rate or price

Question
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only apply to the varied quantity (increased or decreased). The original quantity is not part of the Variation and would be
paid at the original rate. The rationale being used in construing the Sub-Clause 52.2 in terms that the Revised Rates under
Sub-Clause 52.2 will be applied to the varied quantity only has created much confusion in some of the on-going projects
with the National Highway Authority, Pakistan. As per the advice of FIDIC Secretariat FAQ Section, if for instance, a
Contractor's original BOQ work increases from 100m3 to 140m3 , then he shall be paid for 100m3 as per original rates and
for the remaining 40m3, revised rates shall be applicable. If we apply the same logic in a case where the Contractor's
original BOQ work decreases from 100m3 to 60m3, then he shall be paid for 100m3 as per original quantity of work.
Whereas, for the decreased quantity, he should be paid at the revised rates (although he shall be actually executing 60m3
work.). The same is true for the case when total executed quantity exceeds by more than 30% and the new rate shall be
applicable to the total executed quantity. The same Clause cannot be construed differently. If this does not happen, then it
shall cause prejudice to the interest of the Contractor.
Answer
Under Sub-Clause 52.2, the Engineer only fixes a new rate or price when the BOQ rate or price has become inappropriate or
inapplicable for a particular Variation. In fixing the new rate or price he will consider the reasons why the original rate or
price should be changed. He will not fix a new rate or price until he knows whether it involves an increase or decrease in
quantity. The new rate or price will probably be different for a decrease to that for an increase. It may be different for a large
increase to a small increase. The anomalies which you mention should not occur because the Engineer will have considered
these situations before he fixes the new rate or price.
New BoQ rates

Question
A contract was drawn up for a specific length of highway. Re-alignment was required which increased the length by a few
kilometers. Should this additional work be included in a variation order as per Clause 51 or should a seperate contract be
floated. The contractor is asking for single variation order with two different refixed rates (for the same item of BoQ ), one
for the variation in the original work and second for the additional work. I differ with his views. I feel that if one variation
order is considered for the whole work then only only one refixed rate for varied quantity can be given. I require your advice
on this issue.
Answer
If both the change to the original work and the additional work came from the same change of requirement and instruction
then it would be usual to issue a single variation order. However, it is also quite normal for the price calculations for a
variation order to include different rates for the same BoQ item. The contractor's costs and the reasons why the BoQ rates
are inappropriate may be different for the varied work and for the additional work. It is then fairer and more transparent, to
the benefit of both parties, to negotiate different new rates.
New variation order

Question
A contract was drawn for a specific length of highway. Re-alignment was required which increased the length by few
kilometers.should this additional work be included in a variation order as per Clause 51 or should a seperate contract be
floated. The contractor is asking for single variation order with two different refixed rates (for same item of BoQ),one for the
variation in the original work and second for the additional work. I differ with his views. I feel that if one variation order is
considered for the whole work then only only one refixed rate for varied quantity can be given.irequire your advice on this
issue.
Answer
If both the change to the original work and the additional work came from the same change of requirement and instruction
then it would be usual to issue a single variation order. However, it is also quite normal for the price calculations for a
variation order to include different rates for the same BoQ item. The contractor's costs and the reasons why the BoQ rates
are inappropriate may be different for the varied work and for the additional work. It is then fairer and more transparent, to
the benefit of both parties, to negotiate different new rates.
Instructions to vary the Works

Question
We are executing a construction works project (18-floor tower), now there is an addition of two more floors. I would like to
know ... this addition would be dealt as a variation or separate contract required, where we will have the liberty to revise the
price, since this two floor's addition is less than the 25 percent of the contract value, hence we dont have right to increase
the price, incease if we deal it by variation. please clarify.
Answer
Clause 51.1 allows the Engineer to issue instructions to vary the Works. Your question is whether the additional two floors
are just a change to the quantity of the work which is included in the Contract, as Clause 51.1(a), or are outside the scope of
the Works, which should be defined in the Contract. The answer to your question therefore depends on the exact wording
of the Contract Agreement, the other contract documents and perhaps also the Tender Documents. It will also depend on
the interpretation of this wording in accordance with the applicable law. This is not something which FIDIC can answer and
you should obtain specialist advice.
Fixing of a new rate (Red4: 52.2)

Question
We requested for the clarification regarding replies to a couple of questions which appear at the FAQ Section of FIDIC
website. Reply to the first question illustrates that under Sub Clause 52.2, Engineer may fix a new rate or a price if the BOQ
rate becomes inappropriate or inapplicable for a particular variation, keeping in view the reasons for the change. In reply to
the second question, FIDIC says that the original quantity is not a part of the variation and cannot be paid at the revised
rate. Replies to the questions as noted above are contradictory to each other and we think that the matter should further be
clarified. Our elaborate note, which was submitted to this effect constitutes of our understanding of the Clause 52.2 of the
Red Book 4th Edition. The definition of the varied work trickles to the Clause 52.2 from the Clause 51.1, which gives the
definition/scope of the varied work as following: (a) increase or decrease the quantity of any work included in the Contract,
(b) omit any such work (but not if the omitted works is to be carried out by the Employer or by another contractor), (c)
change the character or quality or kind of any such work, (d) change the levels, lines, position and dimensions of ay part of
the Works, (e) execute additional work of any kind necessary for the completion of the Works, (f) change any specified
sequence or timing of construction of any part of the Works. The given definition thus holds that the varied work may not
essentially comprise of only the change in the quantity of certain item included in the contract. Varied work may also arise
out of the virtue of other reasons as noted above. Hence, restricting the definition of variation only to the change in quantity
may not be appropriate. The reply given at the FIDIC website to the first question, as has been referred above, seems to
hold the same view by the virtue of which the decision to this effect has been left to the Engineer. However, the reply to the
second question forwards rather a restrictive interpretation of the Clause 52.2 by saying that a new rate would apply only
to the increased/decreased quantity. Such an interpretation falls in contradiction to the definition of the varied work as well
as the open ended spirit of the FIDIC Document in general and that of the Clause 52.2, read in conjunction with the Clauses
51.1, 51.2 and 52.1 there-before, as well as that of the Clauses 52.3 and 52.4 thereafter. ..... FIDIC's initial reply: FIDIC can
only comment in general terms on the interpretation of a FIDIC clause. If you require a more detailed opinion on the
application of a clause to a particular problem situation then you should consult a specialist. The examples in your letter
illustrate the wide range of situations which may arise on a project and result in the application of Clause 52.2. For this
reason, the clause cannot restrict the Engineer in the way he calculates a new rate. The Engineer is aware of the exact
situation and so can make the appropriate decision to suit the wording and application of the Variation. A Variation normally,
but not always, only applies to work which has not yet been executed. If somew ork has already been carried out on the
same basis as was envisaged for the original bill rate then that work would normally be valued at the bill rate. However a
particular Variation, such as a decrease in quantity,may be worded in such a way as to require a different approach. ........
Your reply also narrates that our understanding of the issue falls closely to a certain project specific legal opinion. We
believe that such a concurrence on the matter has become evident only because of the proper understanding of the
rationale. This particularly holds when we also consider the possibility of variation because of the decrease in the quantity
of certain items of work. No logic would allow that the decreased quantity which is not executed may be paid at some
revised rate fixed by the Engineer. The revised rate would certainly apply to the quantity executed. The rationale thus
demands the same treatment for fixing of the rate by the Engineer in case of variation in the quantity of certain items of the
work because of an increase, giving an obvious reason of our understanding of the matter in line with the legal opinion in
the similar context. Your reply dated 7th June 2007 further seems to acknowledge that the exact situation under such a case
may only be determined by the Engineer through an appropriate decision, as has been provided under the spirit of the FIDIC
Document. However, the comments thereafter, once again seem to restrict the definition of variation. So, to continue:
regarding fixing of a new rate (Red4: 52.2) Regarding our query regarding re-rating of the varied quantity. We seek the
clarification regarding the opinion of FIDIC on re-rating of the varied quantity, as shown in the FAQ Section of the FIDIC
website. Our debate/discussion as appended with our query is only meant to express our understanding that the Sub-
Clause 52.2 only talks of the "varied work" and not the "varied quantity", which, however, remains subservient to the
definition of "varied work". The actual intention of our query thus remains to seek the clarification in light of the Sub-Clause
52.2 of Civil Works contract 4th Edition, 1987. To this effect, it may be deemed appropriate that the writers of this particular
clause or the related backup material may be consulted so that the ambiguity or the confusion, as has arisen regarding the
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Answer
Thank you for your more detailed explanation of your query. Our replies to previous questions were in response to particular
questions, whereas your question is rather different. You are, of course, correct that Variations under Sub-Clause 52.1 can
cover a wide range of situations, including changes to the nature as well as to the quantity of an item of work. For this
reason, Sub-Clause 52.2 must be general to cover the wide range of potential situations. It is then for the Engineer to
assess the particular situation and to agree or fix an appropriate rate. In deciding the quantum, and also the application, of
this rate the Engineer would take into account the consequences of a change in nature as well as a change in quantity. You
should also note the explanatory remarks in the FIDIC Guide to the use of the FIDIC Conditions of Contract for Works of
Civil Engineering Construction. Sub-Clauses 52.1 and 52.2 are reviewed at pages 114 and 115 of the Guide and include the
statement: If the nature or amount of the work involved differs so much from that included in the original Contract that the
rates and prices are rendered inapplicable, it is the Engineer's task to agree appropriate rates and prices with the Contractor,
or, if agreement cannot be reached, to fix the rates and prices. We trust this further explanation will answer your query. Any
further comments would require details of the specific contract and problem, which FIDIC could not consider.
Undue delay for claims

Question
Can you please identify what is meant by "without undue delay" under Red Book 4th Edition clause 44.3 considering that
the Contractor and the Engineer have mutually agreed, under cl. 44.2(b), to submit detailed particulars every first week of
the month and noting that every month the contractor is submitting the same. What is the duration needed by engineer to
provide his interim/final determination of extension of time claims under this clause?
Answer
Your question refers to Sub-Clause 44.3 in the Red Book, Fourth Edition 1987. Sub-Clause 44.2 has imposed time limits for
the submission of information by the Contractor, which you say have been agreed. FIDIC does not impose a time limit on the
Engineer because the actual time needed for him to make his determination will depend on the circumstances and the
details in the information provided by the Contractor. However the "without undue delay" emphasises the need for the
determination to be made as soon as possible. Sub-Clause 1.5 also requires that any determination "shall not unreasonably
be withheld or delayed". This gives the Contractor the opportunity to raise a query if he needs the determination in order to
plan his work.
Payment on a Clause 63.2 valuation

Question
Concerning Clause 63.2 and 63.3 of the FIDIC Red Book 4th Edition . The Contract was terminated by the Employer
pursuant to Clause 63.1 (this is undisputed). It was agreed that the additional costs to the Employer of executing the works
by an alternative contractor has to be deducted from the value of the works executed by the first Contractor. The wording of
Clauses 63.2 and 63.3 was not changed or amended. Contractor now requests a payment from the Employer calculated
pursuant to a Clause 63.2 valuation. In addition Contractor states that the whole of the Works has not completed and,
therefore, the Defects Liability Period has not expired, which is a precedent to any certification of Employer's costs under
Clause 63.3. Therefore, an Employer's application for Clause 63.3 costs is premature, cannot be considered and Contractor
is entitled to request a payment based on the calculated Clause 63.2 valuation without any deduction pursuant to Clause
63.3. a) Is a contractor entitled to ask for a payment based on a Clause 63.2 valuation, since an employer is not obliged to
make any further payment until the expiration of the Defects Liability Period? b) Is it correct to interpret that Contractor's
request for payment based on Clause 63.2 is not (currently) justified also in cases, where a completion of the project was
delayed due to circumstances caused by an alternative contractor or the employer, if the terminated and requesting
Contractor itself has formally and explicit pleaded that the whole project is not completed without complaining the delay of
completing the project caused by the alternative contractor or the employer? c) Can the Contractor simultaneously refer to
and request a Clause 63.2 calculated claim and reject (alleged) unmatured Employer's Clause 63.3 costs, if both clauses
were agreed?
Answer
This is a complex technical/legal question arising from a specific request by the Contractor on your project. FIDIC can only
answer general questions of interpretation and cannot comment on specific requests or claims. The FIDIC Guide to the
Fourth Edition states at page 146 for Sub-Clause 63.3: "If the Employer terminates the Contractor's employment, he is not
liable to pay the Contractor any further amounts (including damages) until the expiration of the Defects Liability Period and
the certification by the Engineer of the cost of execution and remedying of any defects, damages for delay in completion (if
any) and other expenses incurred by the Employer as a result of the Contractor's default."
When is payment made

Question
We are seeking a defintion as to when payment is actually made by the employer to the contractor. Is it when the employer
issues his payment instruction to his bank, or is payment deemed to be made once the monies are received in the
contractor's bank account. Are there FIDIC guidelines on this matter?
Answer
your query is really a general legal question about when a payment is "made", rather than a question of interpretation of a
FIDIC contract. The answer may be different under different jurisdictions. You should consult a lawyer with experience of the
applicable law.
Statutory declaration
Question
My firm is executing a Contract with FIDIC terms and conditions and I require a Statutory Declaration document for
international use (Project location is Madagascar). Can you please advise where I can find this in your documentation, or
better yet can you e mail me the appropriate document.
Answer
Your Statutory Declaration would seem to conflict with the principles of the FIDIC Contracts. Progress payments are
referred to as 'interim', which suggests that they are provisional and not final. EPCT Sub-Clause 14.6 allows the Employer
to make corrections or modifications to previous amounts considered due, which suggests that the Contractor can request
modifications to a previous valuation. It is only the requirement for the Application for the Final Payment, as Sub-Clause
14.11, which uses words indicating finality. The Contractor then confirms the finality by his Discharge, as Sub-Clause 14.12.
The equivalent provision in the 1987 Red Book was Sub-Clause 60.7. The Standard Letter for that Sub-Clause merely
repeated the wording of the Sub-Clause. However, this was a contractual letter and not a Statutory Declaration. A
Statutory Declaration will presumably be issued by the Government and will depend on the requirements of the applicable
law, which will vary for different countries.
Final and binding DAB decision

Question
In the 1992 reprinted version of the 1987 FIDIC Conditions as well as in the 1999 FIDIC Conditions it is, in the relevant DAB
Clauses, stated that the Contractor, Employer and Engineer shall give effect forewith to every decision of the Board unless
and until the decision is revised in an amicable settlement or an arbitrational award. On the other hand it is stated that a
Board decision becomes FINAL and BINDING unless either party gives a notice of dissatisfaction within 28 days after
receiving the Board decision. A very basic legal principle is that only final and binding decisions are enforceable. Are the
FIDIC conditions really based on the very unusual principle that the Employer has, on basis of un unbinding Board decision,
to pay to the Contractor a compensation with the consequence of running the risk of never being able to recover the paid
amount from a foreign contractor when the revised arbitration award is issued (long) after the completion of the works.
Please clarify whether the Employer has to pay a monetary compensation on basis of a Board decision, which is NOT FINAL
AND BINDING.
Answer
Sub-Clause 20.4 of the 1999 Contracts is clear that both parties shall promptly give effect to the DAB Decision. The
Employer must pay any sum awarded to the Contractor although the sum to be paid may be changed by a later amicable
settlement or arbitration. If a Notice of Dissatisfaction has been issued then the dispute, not the DAB decision, may be
reopened and finally determined by the Arbitral Tribunal. The sum to be paid may then be increased, or decreased, and
additional money may need to be paid, or money may need to be repaid. An Arbitral Award, including such further payment
or repayment, would be Final and Binding and would be covered by arbitration law and the New York Convention. It is
normal practice that a DAB or Adjudicator's Decision is Binding and so must be paid, but is not Final and so may be changed
in this way. If no Notice of Dissatisfaction has been issued then the DAB Decision becomes Final as well as Binding and the
dispute cannot be reopened.
Lump sum calculation

Question
Can you please advise how to calculate the lump sum to be added or dedcuted to the contract price when the effective
contract price execceds 15%. In addition, please advise on when do we deduct, and when do we add such amount.
Answer
Commentary at page 117 of the FIDIC Guide to the 4th Edition is recommended. The Guide explains that some of the
Contractor's overhead costs are included in the rates for items of work and others are included in separate items in the Bill
of Quantities. Changes to the actual quantities may mean that the overhead content of items which have paid is not
appropriate to the actual overhead costs incurred by the Contractor. In order to calculate any adjustment the Engineer will
need to obtain information from the Contractor, or would have to make his own assessment. Any calculation must take into
account any adjustment which has already been made under another Sub-Clause and only applies to any increase or
decrease in excess of 15% of the Effective Contract price. The Sub-Clause starts with a reference to the situation "on the
issue of the Taking-Over Certificate for the whole of the Works". It is also necessary for the value of variations and other
adjustments to have been agreed in order to make the Sub-Clause 52.3 calculations. Any additional payment or deduction
would then be made in the next payment certificate after the figures have been agreed or determined.
New rate for an increased quantity

Question
I am "The Engineer" for a road construction project. A difference of opinion has arisen on the applicability of new rates fixed
by the Engineer on the quantities, i.e whether the new rate will be applicable only on the enhanced quantity beyond the
original BoQ quantity, Oor it shall apply on the entire quantity. To explain this further, the BoQ quantity for piles was 2000
cu m. The designer increased the number of piles so that the quantity became 3000 cu m. The Engineer fixed a new rate for
pile work from X to Y. Will Y rate be applicable to enhanced quantity of 1000 cu m , or should it apply to 3000 cu m?
Answer
FIDIC can only comment in general terms on the interpretation of a FIDIC clauses, and it should be noted that for the
application of a clause to a particular problem situation, one should always consult a specialist. With that being said, in
general, Sub-Clause 52.2 gives the power to the Engineer to fix new rates and states the conditions when such new rates
may be fixed, but Sub-Clause 52.2 does not indicate a calculation method or the applicability for new rates. The reason for
this is because Sub-Clause 52.2 must allow for covering a wide range of potential situations. So, although it is true that
revised rates are normally only applicable to the additional quantity, it is for the Engineer to assess the particular situation
and circumstances surrounding, and to take all factors into consideration in making his determination regarding the
quantum and applicability of the new rates fixed under Sub-Clause52.2. For reference, see page 127-128 of the FIDIC Red
Book Guide to the use of the FIDIC Conditions of Contract for Works of Civil Engineering Construction, and please note that
the above represents a general answer only, and specific advice to the particular facts surrounding your situation, we
recommend that you consult a specialist.
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2/9/22, 3:38 PM FIDIC | Contracts: basic questions Question/Answer | International Federation of Consulting Engineers

Contracts: basic questions Question/Answer

Remeasurement modified to Lump Sum

Appendix to Tender data mission (continued)

Value Engineering sub-clause

Appendix to Tender data missing

Not in pre-handover list

New rates for remeasurement

Termination before completion

Employer replaces the Contractor

Expiry of Defects Liability Period

Priority of tender documents

Obtaining Contract Data

Variations exceeding 15 percent of the effective Contract Sum (Clause 52.3)

Additional sum for replacement cost

Excess quantities of work (Sub-clause 52.3)

New rate or price

New BoQ rates

New variation order

Instructions to vary the Works

Fixing of a new rate (Red4: 52.2)

Undue delay for claims

Payment on a Clause 63.2 valuation

When is payment made

Final and binding DAB decision

Lump sum calculation

New rate for an increased quantity

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