Comparison of some selected clauses on

conditions of contract prepared by

BaTCoDA 1987
vs
MoWUD 1994
 Duties and powers of the Engineer
BaTCoDA 1987 standard conditions MoWUD 1994 standard conditions

Sub-clause 2-1d,2-1i Sub-clause 2-1d,2-1i

The Engineer requires the specific The Engineer requires the specific approval
approval of BaTCoDA for the execution of of MoWUD for the execution of his duties
his duties in connection with:- in connection with:-

(d) Variations exceeding 15% under clause (d) Variations exceeding 10% under clause
52(3); 52(3)

( i ) Time Extension under clause 44 where ( i ) Time Extension under clause 44 where
the cumulative Time Extension granted the cumulative Time Extension granted
under the clause 44 exceeds 15% of the under the clause 44 exceeds 25% of the
Contract Time Contract Time
 Performance bond
BaTCoDA 1987 standard conditions
Clause 10
The Contractor undertakes to enter into a
bond for the due and proper performance
of the contract and observance of all
provisions, covenants, conditions and
stipulations therein after provided for in
the sum of 10% of the contract price until
the completion of the works…..
MoWUD 1994 standard conditions
Clause 10
The Contractor undertakes to enter into a
bond within 30 days after the receipt of the
letter of acceptance for the due and proper
performance of the contract and
observance of all provisions, covenants,
conditions and stipulations therein the sum
of 10% of the contract price. The bond
shall be in the form as may be agreed
between the employer and the
contractor….
 Variations
BaTCoDA 1987 standard conditions
Sub-clause 52-3
If, on certified completion of the whole of
the works it shall be found that a reduction
on increase greater than 15% other sum
named in the contract excluding all fixed
sums, provisional sums and allowances for
day works, if any, results from:
MoWUD 1994 standard conditions
Sub-clause 52-3
If, on certified completion of the whole of
the works it shall be found that a reduction
or increase greater than 10% other sum
named in the contract excluding all fixed
sums, provisional sums and allowances for
day works, if any, results from:

(a)the aggregate effect of all variation (a)the aggregate effect of all variation
orders, and orders, and

(b) all adjustment upon re-measurement of (b) all adjustment upon re-measurement of
the estimated quantities set out in the bill the estimated quantities set out in the bill
of quantities, … of quantities, …
 Advance payment
BaTCoDA 1987 standard conditions MoWUD 1994
standard conditions
Sub-clause 60-1, 60-2, 60-4
(1)… and advance payment equal to that stated in the tender
Not mentioned.
proposal shall be made to the contractor by the employer within
15 days of the receipt of the payment guarantee or performance
bond whichever comes last…

(2) the contractor undertake to obtain an advance payment

guarantee, from a bank, domiciled and licensed to do business in
Ethiopia in a sum equivalent to the sum to be advanced…

(4) … payments shall also be subject to the appropriate

deduction for the repayment of the advance payment referred to
in sub-clause 1 of this clause. No payment shall be made should
the value of such payment be less than the sum stated in tender
proposal.
 Assignment of benefit of agreement
BaTCoDA 1987 MoWUD 1994 standard conditions
standard conditions
Sub-clause 63-4
Not mentioned.
Unless prohibited by law, the contractor shall, if so
instructed by the engineer within 14 days of such entry
and termination referred to in sub-clause 63-1, assign to
the employer the benefit of any agreement for the
supply of any goods or materials or services and/or for
the execution of any work for the purpose of any
contract, which the contractor may have entered into.
 Payment if contract terminated
BaTCoDA 1987 standard conditions MoWUD 1994 standard
conditions
Sub-clause 65-8e, 65-8f Sub-clause 65-8
If the contractor shall be terminated as aforesaid,
the contractor shall be paid by the employer, …

(e) The reasonable cost of removal of construction Not mentioned.

plant under sub-clause (7) of this clause and, if
required by the contractor, return thereof to the
contractor’s main plant yard in his country of
registration or to other destination, at no great
cost.

(f) The reasonable cost of the repatriation of all Not mentioned.

the contractor’s staff and workmen employed on
or in connection with the works at the time of
such termination.
 Increase or decrease of costs
BaTCoDA 1987 standard conditions
Sub-clause 70-1b, 70-1e, 70-f, 70-3
The contract price shall be deemed to have
been calculated in the manner set out
below and shall be subject to the
adjustment in the specified hereunder:-
(b) If the said rates of wages and other
emoluments and expense are increased or
decreased by any act, statute, decree,
regulation and the like after the said date
of bid pricing, then the net amount of the
increased or decreased of the emoluments
and expenses shall form an addition or
deduction as the case may be to or from
the contract price and be paid to or
allowed by the contractor accordingly.
MoWUD 1994 standard conditions
Sub-clause 70-1b, 70-3
The contract price shall be deemed to have
been calculated in the manner set out
below and shall be subject to the
adjustment in the event specified
hereunder:-
(b) If the said rates of wages and other
emoluments and expense are increased or
decreased by any act, statute, decree,
regulation and the like after the said date
of bid pricing, then the net amount of the
increased or decreased of the emoluments
and expenses shall, after due consultation
with the employer and the contractor, be
determined by the engineer and shall form
addition or deduction as the case may be to
or from the contract price and be paid to or
allowed by the contractor accordingly.
 Increase or decrease of costs
BaTCoDA 1987 standard conditions MoWUD 1994
standard conditions
e)The rates contained in the priced bill of quantities are based
upon the market prices of the materials and goods specified in Not mentioned
the appendix to the bill of quantities and current at the date of
bid pricing (hereinafter referred to as “the basic prices”. The
contractor shall state in the said schedule the basic prices of
such materials and goods. Such prices shall be paid to or
allowed by bona-fide quotations from suppliers.

(f) if the market price of the any of the materials or goods

specified as aforesaid shall be increased or decreased after the
said date of bid pricing, then the net amount of the difference
between the basic price and the market price payable by the Not mentioned
contractor and current when any such goods or materials are
bought shall form an addition or deduction as the case may be
to or from the contract price and be paid to or allowed by the
contractor accordingly.
 Warranty in respect of the defects of construction

BaTCoDA 1987 MoWUD 1994 standard conditions

standard conditions
Clause 71
(1)unless otherwise provided, the contractor shall be liable to
Not mentioned.
the employer for the defects of the works during ten years
from the day on which the employer has entered into
possession of the works;

(2) The warranty shall not be due, however in respect of the

defects which were apparent at the time of the final
acceptance of the works:

(3) The warranty shall apply to such defects only as prevent

the works from being used for the purpose mentioned in the
contract or as render such use more onerous or less
profitable.
 Conclusion
Performance bond
 MoWUD has specified the time limit within which the bond should be given. This
makes the employer realistic to hold the advance payment.

 BaTCoDA conditions do not explicitly state the time limit. And this may lead to a
dispute, as performance bond is a condition to make an advance payment.

Advance payment
 In the case of MoWUD conditions, the amount is served as a criterion for bid
evaluation. Those who requested advance payment and those who do not are not
thus equally evaluated. The interest on the requested amount is considered to be an
opportunity cost to the employer and is added to the contract price submitted.

 However in the case of BaTCoDA conditions, the advance payment is not used as a
criterion for evaluation. The employer/consultant should indicate in the special
conditions its amount irrespective of the bidder’s request and this will not affect the
bid evaluation. This is an important provision since most domestic contractors lack
the financial capacity to cope with the high working capital demand of construction.
 Recommendations
Liquidated damage
 MoWUD conditions have the maximum limit of the liquidated damage to be 20 %. This
is punitive to the contractor than beneficial to the employer, as the limit exceeds the
profit margin. this leads to bankruptcy of the contractor.
 BaTCoDA conditions have the maximum limit of the liquidated damage to be 10 %.
This is relatively more fair for both parties and do not discourage the local contractors
as the limit do not exceed their profit margin.

Price escalation
 MoWUD conditions assume the market to be a stable one. In the absence of such an
adjustment, contractors are obliged to cover the incurred extra expenses offsetting the
balance from their profit margin. These conditions do not explicitly address an increase
or decrease in cost of labor or materials with respect to the country’s market but rather
dealt with only increase or decrease of rates of wages and other emoluments and
expenses subsequent to change in legislation. Most local contractors have been
discouraged because of this wrong assumption.
 In case of BaTCoDA, Price escalation is entertained. The only adjustments to be
allowed are on the difference between the basic prices and market prices of the materials
and goods listed in the appendix to the bill of quantities after the bid pricing date. These
provisions try to address the inconsistency of the market prices and are relatively better.
•
 Recommendations

Variations
 MoWUD conditions allow a change or alteration of the original work or
simply an addition to or omission from it up to 10% by the engineer.
Exceeding 10%, the Engineer requires the specific approval of MoWUD.

 BaTCoDA conditions allow variation up to 15 % by the engineer.

Exceeding 15%, the Engineer requires the specific approval of MoWUD.
These provisions relatively keep the interests of the employer, solve the
design errors and give the power to fix the rates to the Engineer.
MoWUD Vs PPA Vs FIDIC
CLAUSE BY CLAUSE COMPARISON
 Engineer and Engineer’s Representative.
GCC Description Clause
No.
Duties and Power of the Engineer
FIDIC States that the particulars that need approval of the Employer 2.1
shall be stated in SCC.
MoWUD States on which clauses the Engineer requires specific approval 2.1
of the Ministry for execution of his duties.
(clauses12,26.3,48,52.3,58,60.8,48,62.1,67,44,51,52.1,52.2,63,6
9 &70)
PPA Except where otherwise specifically stated and subject to any 4.1
restriction in the special conditions of contract, the Engineer will
decide contractual matters between the Employer and the
contractor in the role of representing the Employer.
 Engineer and Engineer’s Representative.
GCC Description Clause
No.
Appointment of Assistant
FIDIC The Engineer or the Engineer’s Representative may 2.4
appoint any number of persons to assist the Engineer's
Representative in the carrying out of his duties

MoWUD Not explicitly stated about appointment of assistant to the

Engineers representative.
PPA The Engineer may delegate any of his duties and 5.1
responsibilities to other people except to the adjudicator,
after notifying the contractor, and may cancel any
delegation after notifying the contractor. But it is not
clearly state the point for appointment of assistant.
 Engineer and Engineer’s Representative.
GCC Description Clause
No.
Instructions in writing
FIDIC Has a separate clause for instruction in writing which should be 2.5
provided by the Engineer. If for any reason the Engineer considers
it necessary to give any such instruction orally the Contractor shall
comply with such instruction. And also it State the umber of days in
which an oral instruction shall beConfirmed in writing.
MoWUD does not have a separate clause for Instruction in Writing although
the need for written instructions to be performed in stated in the
following Causes:
Order for Variations to be in Writing (Sub clause 51.2) with time.
Boreholes and Exploratory Excavations(Sub clause 51.2) and
In Clause 41 (Commencement of Works
PPA State that communications between the parties that are referred to 6.1
in the conditions shall be effective only when in writing. A notice
shall be effective only when it is delivered
 Engineer and Engineer’s Representative.

GCC Description Clause No.

Engineer to Act Impartially
FIDIC The Engineer shall exercise such discretion 2.6
impartially within the terms of the Contract and
having regard to all the circumstances.

MoWUD Has no separate clause which explicitly state about

the impartiality of the Engineer
PPA Has no separate clause which explicitly state about
the impartiality of the Engineer
 Contract document

GCC Description Clause No.

Language and law
FIDIC the language or languages in which the 5.1
Contract documents shall be drawn up is to be
stated in SCC
MoWUD The language of the contract document shall 5.1
be English
PPA The language of the contract document shall 3.1
be Amharic
 SELECTED CLAUSES FOR FURTHER
DISCUSSION:
 Engineer and Engineer’s Representative

 Alteration, Additions and Omissions

 Procedure of Claims

 Settlement of Disputes and

 Change in Cost and Legislations

 Engineers and Engineer’s Representative.
Duties and Authority of the Engineer
 FIDIC conditions of contract provides flexibility of exercising authority of
the Engineer; insure Employer’s authority and it is appropriate decision
making processes.
 MoWUD’s provisions questions the Engineer’s confidence since the
Engineer has to go through the Ministry for approval on many of his
authorities. This is a time taking process in light of the long approval
processes. In addition it decreases the Employers involvement in decision
making even if the Employer is the financer. The ignorance of the
Employer to participate in decision is likely to create a gap of information
between the parties.
 Even if PPA is more similar to FIDIC provision it will partly relive the
weakness of MoWUD. Its clarity also made it appreciable.
 giving rights to the Engineer by stating some particulars in the SCC is
important to carryout his duties to complete the project within the time limit
and with the required specification confidentially. And since the Employer
is the financer he has to participate on final decision above a certain
financial and time limits which stated on SCC.
 Engineers and Engineer’s Representative.
Instruction in Writing.
 FIDIC gives advantage such as legitimacy assurance, clarity with respect to
procedural requirement and proper recording, and referencing of instruction
in case of dispute.
 MoWUD has the need for instructions and is explicitly stated but the form of
instruction (be it in Written or otherwise) is not expressly specified, this
makes it ambiguous.
 PPA does not explicitly answers the problems in MoWUD, and therefore
agreed on further adaptation of this clause in such away that: it has to provide
some form of oral instructions in the case of urgent conditions, which is to be
confirmed in specific time frame in writing for documentation purpose.
 It is clear that for a contract to be formal and valid proper record keeping of
documents are important especially in the case of claim it will serve as
evidence. Therefore, conditions of contract has to have provisions that state
instruction to be in writing and for the case of urgent condition it has to allow
some oral instruction to be confirmed later by the Engineer with definite
time limit.
 Engineers and Engineer’s Representative.
Power of the Engineer to fix rates
 The strength of FIDIC provisions, is that it obliged the Engineer to notify
the Employer in the case of disagreement concerning the price or rate of
variations.
 The short coming of the MoWUD provision is that, there is little room for
negotiation and no independent venue to dispute the decision of the
Engineer, which has already been approved by the Ministry. This create
gap between the parties.
 The short coming of the PPA’s provision is if the contractor’s quotation is
unreasonable the Engineer will fix the rate. But in practice it is difficult to
determine unreasonablity. Therefore, it is our recommendation that it has
to provide criteria for unreasonablity.
 giving power to the Engineer to fix rate during disagreement is necessary
to facilitate the work, and it has to participate the contractor and the
Employer to do it in consultation to create better relation ship among the
parties. In addition a limit must however be put on how much of a given
rates value an engineer can revise.