FIDIC CONTRACTS A COMPARATIVE. Uttam Sengupta Sr. GM Contracts & Risk Management
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- Gertrude Horton
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1 FIDIC CONTRACTS A COMPARATIVE Uttam Sengupta Sr. GM Contracts & Risk Management
2 FIDIC AND INTRODUCTION TO FIDIC CONDITIONS OF CONTRACT 2
3 OUTLINE What is FIDIC? Characteristics of FIDIC Conditions of Contract Application Prospect of FIDIC Contract 3
4 FIDIC CONDITIONS OF CONTRACT The new models include : FIDIC construction, the (New Red Book) FIDIC Plant and Design/Build, the (New Yellow Book) FIDIC EPC Turnkey Projects, the (Silver Book) FIDIC Short Form of Contract, the (Green Book) 4
5 THE PARTIES IN A FIDIC CONTRACT Contracting Authority/ Employer Contractor - Contract between Employer & Contractor under Red/ Yellow FIDIC Engineer - Contract between Employer & Engineer Engineer to administer FIDIC Contract on behalf of Employer 5
6 Comparison of key features of the FIDIC Contracts Construction Red Plant Yellow EPC/Turnkey Projects Silver Design, Build and Operate Projects Gold Key Features of Contracts: Employers Obligations Access Permits, licenses or approvals Employers personnel Employers Financial Arrangements Access Permits, licenses or approvals Employers personnel Employers Financial Arrangements Site data Access Permits, licenses or approvals Employers personnel Employers Financial Arrangements Access Permits, licenses or approvals Employers personnel Employers Financial Arrangements Role of Engineer Engineer: Duties and limits on authority Instructions Ability to replace on 42 days notice Engineers determinations Engineer: Duties and limits on authority Instructions Ability to replace on 42 days notice Engineers determinations Dual role No Engineer, Employers Representative appointed Duties and limits on authority. Ability to replace on 14 days notice No Engineer, Employers Representative appointed Duties and limits on authority. Ability to replace on 14 days notice
7 Administering Claims Construction Red Employers Claims: Requirement for notice and particulars to the Contractor A notice to be given as soon as practicable. Ability to set off or deduct Plant Yellow Employers Claims: Requirement for notice Notice to be given as soon as practicable. Ability to set off or deduct EPC/Turnkey Projects Silver Employers Claims: Requirement for notice - notice to be given as soon as practicable. Ability to set off or deduct Design, Build and Operate Projects Gold Employers Claims: Requirement for notice as soon as practicable. Claim to be determined by Employers. Representative and, if party is dissatisfied issue a notice of dissatisfaction and proceed to Dispute. Adjudication Board (DAB) within 28 days of determination. Amount determined by DAB set off or deducted. Contractors Claims: Initial notice must be given within 28 days after the Contractor became aware of, or should have become aware of the event or circumstance giving rise to the claim. Condition precedent. Contractors Claims: Initial notice must be given within 28 days Objective test and condition precedent. Fully detailed claim within 42 days. Engineers response with 42 days. Contractors Claims: Initial notice must be given within 28 days after becoming (or should become ) aware of the event or circumstance. Fully detailed claim within 42 days. Employers response within 42 days. Condition precedent. Contractors Claims: Contractor must comply with specified procedure (condition precedent), initial notice within 28 days (extension only on DAB decision),
8 (cont) Construction Red Fully detailed claim must be sent to Engineer within 42 days of becoming aware of (or should be aware of) event or circumstance. Engineer to respond to claim within 42 days. Plant Yellow EPC/Turnkey Projects Silver Design, Build and Operate Projects Gold Contractor must keep contemporaneous records and if instructed submit to Employers Representative, with 42 days of even, send employers Representative fully detailed claim (extension only by DAB decision). If circumstances / event has continuing effect, Contractors fully detailed claim considered as interim, Contractor send further interim claims at 28 day intervals, send final claim within 28 days after end of effects resulting from event/circumstance. Within 42 days receipt of fully detailed claim Employers
9 (cont) Construction Red Plant Yellow EPC/Turnkey Projects Silver Contract for Design, Build and Operate Projects Gold Representative determines claim. If no response deemed rejected and either party can refer to DAB. If dissatisfied with decision of Employers Representative refer to DAB within 28 days. Contract Price Lump sum Advance Payment Advance Payment Guarantee Retention monies Adjustment for changes in legislation and cost Employer not liable to Contractor for any matter or thing in connection with Contract or Execution of Works except to extent Contractor included amount expressly for it in Final Statement and also Statement at Completion Lump sum contract price Advance payment All payments conditional on receipt of required Performance Security Retention Adjustments for changes in legislation and cost fluctuations Lump sum Contractor to pay duties, taxes and fees Advance payment Performance security Retention Currencies for payment stipulated this covers payment of damages under contract Adjustments for changes in legislation Adjustments for changes in costs As submitted for Design- Build and Operation Service including Asset Replacement Fund. Contractor pays taxes, duties, fees Advance payment
10 Payment Procedure Construction Red Periodic / stage payments Engineer issues interim Payment Certificate within 28 days receiving Statement and Supporting Documents Employer pays amount certified within 56 days Engineer receiving Statement and Supporting Documents (Interim Payment Certificate) and 56 days after Employer receives Final Payment Certificate Plant Yellow Periodic or stage payments Contractor submits application to Engineer Engineer issues interim payment certificate with 28 days of receipt of application. Employer pays the amount certified within 56 days of application receipt. EPC/Turnkey Projects Silver Periodic payments Employer to pay Contractor within 28 days of receipt of Statement and supporting documents. Employer pays first installment of advance payment within 42 days of date of Contract coming into effect or 21 days of receipt of security documents. Employer pays amount due in respect of each statement within 56 days of receipt of Statement and supporting documents. Final payment due 42 days after receipt of Final Statement and written discharge Contractor entitled to financing charges 3 percentage points above discounted rate of central bank in country of currency of payment compounded monthly for delayed payment. Contract for Design, Build and Operate Projects Gold If contract has schedule of Payments as per schedule. Monies to be paid per Asset Replacement Fund Schedule. Employers Representative issues interim Payment Certificate within 28 days receiving Statement and Supporting Documents. Employer pays amount certified within 56 days receiving Statement and Supporting Documents. Final payment within 56 days Employer receiving Final Payment Certificate Design Build and final Payment Certificate Operation Service.
11 Variations Construction Red Engineer may initiate any time prior to issue of Taking Over Certificate either by : an instruction or request for Contractor to submit a proposal. Contractor to execute unless gives prompt notice to Engineer that Contractor can t readily obtain goods required. Plant Yellow Engineer may initiate any time prior to Taking Over Certificate either by : an instruction or a request for Contractor to submit a proposal. No entitlement to omit any work to be carried out by others. Contractor to execute variation unless prompt notice given to Engineer that; can t readily obtain required goods; it will reduce the safety and suitability of the Works, adverse impact of Schedule of Guarantees Engineer then cancels, confirms or varies instruction, value engineering. EPC/Turnkey Projects Silver Employer may initiate variations any time prior to issuing of Taking Over Certificate either by; instruction or request for Contractor to submit proposal. Employer can instruct variations for work of a minor or incidental nature on a day work basis. This will be valued in accordance with day work schedule Contract for Design, Build and Operate Projects Gold Employer may initiate variations any time prior to issuing of Commissioning Certificate either by; an instruction, proposal. Contractor to execute Variation unless prompt notice given that, can t readily obtain goods required, reduce safety or suitability of works, adverse impact on schedule of guarantees, adverse affect on Operation Service.
12 Variation procedure Construction Red Engineer requests proposal; Contractor responds in writing as soon as practicable with reasons for non compliance or proposal. Engineer shall respond to Contractor as soon as practicable. Variations evaluated in accordance with Measurement and Evaluation provisions unless Engineer instructs / approves otherwise Plant Yellow Engineer requests proposal; Contractor responds as soon as practicable with reasons for non compliance or proposal. Engineer responds as soon as practicable with approval, disapproval or comments. Upon instructing or approving a Variation, Engineer agrees or determines adjustments to Contract Price and Schedule of Payments EPC/Turnkey Projects Silver Employer requests proposal; Contractor responds as soon as practicable with reasons for non compliance or proposal On instructing or approving variation, Employer will agree or determine adjustments to Contract Price and Schedule of Payments. Adjustments will include reasonable profit and take into account Contractors submissions under value engineering Design, Build and Operate Projects Gold Employer Representative requests proposal; Contractor responds as soon as practicable with reasons for non compliance or proposal. On instructing or approving variation, Employers Representative will agree to determine adjustments to Contract Price and Schedule of Payments and will include reasonable profit and take into account Contractors submissions for value engineering.
13 Programming issues: Commencement Construction Red Engineer to give atleast 7 days notice of Commencement date. Commencement date to be within 42 days of receipt of Letter of Acceptance Plant Yellow Engineer to give atleast 7 days notice of Commencement date. Commencement date to be within 42 days of receipt of Letter of Acceptance Not applicable if there is a Contract Agreement. Ensure that Contract has retrospective effect. EPC/Turnkey Projects Silver Employer to give atleast 7 days notice of Commencement Date. Commencement date to be within 42 days of date. Contract comes into effect. Design, Build and Operate Projects Gold Employer Representative to give atleast 14 days Notice of Commencement date. Commencement date to be within 42 days of Contractor receiving Letter of Acceptance. Programming Issues : Completion Contractor to complete whole Works and Section within Time for Completion. Completion includes passing Tests on Completion; completing all work in Contract required for Works or Section to be considered completed Contractor to complete whole Works and Section within Time for Completion. Completion includes passing Tests on Completion; and completing all work required under the Contract Contractor to complete whole Works and Section within Time for Completion. Completion includes passing Tests on Completion; completing all work stated in Contract as required Contractor to complete the whole of the Design-Build and each section by Time for Completion of Design Build or as extended and will provide Operation Service for the period stated in Contract Data (as agreed by partied).
14 Programming Issues: Programme Construction Red Contractor to submit programme within 28 days of receiving Notice of Commence Engineer has 21 days to respond Contractor give prompt notice to Engineer of: specific probable future events or circumstances which may adversely affect the work, increase the Contract Price or delay execution of the Works Plant Yellow Contractor to submit programme with in 28 days of Notice of Commence Engineer has 21 days to respond. Submission of revised programmes. Early warning. EPC/Turnkey Projects Silver Contractor to submit programme to Employer within 28 days of Commencement Date. Employer has 21 days to respond to Contractors programme otherwise Contractor proceeds with programme. Submission of revised programmes. Design, Build and Operate Projects Gold Contractor to submit programme within 28 days receiving Notice of Commencement date. Employers representative has 21 days to respond to Contractors programme otherwise Contractor proceeds with programme. Submission of revised programme within 14 days of notice of programme failing to comply with contract or actual progress
15 Programming Issues: EOT Construction Red Variations Exceptionally adverse climatic conditions Unforeseeable shortages of personnel or goods caused by epidemic or govt. actions cause of delay giving entitlement under the conditions. Delay, impediment or prevention attributable to Employer, Employer personnel or Employers other Contractors on site Delay caused by authorities Plant Yellow Variations Exceptionally adverse climatic conditions Unforeseeable shortages Employer acts of prevention. Any other cause of delay giving an entitlement under the conditions. Delay, impediment or prevention caused by or attributable to Employer, his personnel or Employers other Contractors on site EPC/Turnkey Projects Silver Variations Cause of delay giving entitlement under the conditions. Delay, impediment or prevention caused by or attributable to Employer Delay caused by authorities Design, Build and Operate Projects Gold For completion of Design Build Variations Cause of delay giving entitlement under the conditions. Exceptionally adverse climatic conditions. Unforeseeable shortages of personnel or goods caused by epidemic or govt. action Delay, impediment prevention caused by Employer, his personnel or other Contractors on site
16 Risk allocation : Design responsibility Construction Red Plant Yellow Contractor generally responsible for design. Employer requirements and contractors Proposals Errors in the Employers requirements. Contractor review period. Fitness for purpose. If errors, omissions, ambiguities, inconsistency defects found in Contractor documents, Contractor Documents and Works corrected at Contractors cost notwithstanding consent or approval. EPC/Turnkey Projects Silver Contractor generally responsible for design Contractor deemed to have scrutinized Employers requirements. Contractor responsible for design of Works and for accuracy of Employers requirements Contractor undertakes the design. Contractors documents, execution of completed works will be in accordance with Laws in country and documents forming Contract (as altered/modified by variations). Design, Build and Operate Projects Gold Contractor responsible for design of works. Contractor warrants experience and capability of designers.
17 Risk allocation: Design Developmen t Construction Red Plant Yellow Contractor prepare all Contractors Documents. Contractor Documents to be submitted to Engineer for review and (where specified) approved. Review period not to exceed 21 days from receipt of Contractors Documents and notice. Engineer notified contractor within review period if Contractors Document fails to comply with Contract. Execution of relevant works not to commence prior to expiry of review period. If Contractors Document submitted for Engineers approval. Engineer gives notice to Contractor that Contractors Document is approved, with or without comments, or that it fails to comply. Engineers approval is a condition precedent to relevant part of the Works commencing. Absence of notice within review period triggers deemed approval. EPC/Turnkey Projects Silver Contractor shall prepare all Contractors Documents. Documents to be submitted for review. Review period not to exceed 21 days from receipt of Contractors. Documents and Contractors notice. Employer notifies Contractor within review period if Contractors Document fails to comply with Contract. Design, Build and Operate Projects Gold Contractor shall prepare all Contractors Documents. Documents to be submitted for review, review not to exceed 21 days from date. Employer's Representative receives Contractors Document and Contractors Notice. Employers Representative notified Contractor in review period if Contractors Documents fall to comply with Contract.
18 Risk allocation: Site Conditions Construction Red Employer to make available to Contractor all relevant data in Employers possession re subsurface and hydrological conditions including environmental aspects Contractor responsible for interpretation. Deemed to have obtained all necessary information and deemed inspection of site. Sufficiency of Accepted Contract Amount Plant Yellow Employer to provide site data Contractor responsible for interpretation. Deemed awareness (to the extent practicable). Sufficiency of Accepted Contract Amount EPC/Turnkey Projects Silver Employer to make available to Contractor all relevant data in Employers possession re subsurface and hydrological conditions including environmental aspects Contractor responsible for verifying and interpreting all data. Employer has responsibility for accuracy, sufficiency or completeness of data sufficiency of contract price. Design, Build and Operate Projects Gold Employer to make available to Contractor all relevant data in Employers possession re subsurface and hydrological & climatic conditions at site including environmental aspects. Contactor deemed to have inspected and examined the site, its surroundings data and other available information. Sufficiency of accepted Contract amount
19 Risk allocation : Unforeseeable physical conditions Construction Red Contractor notifies Engineer as soon as practicable. Engineer inspects and makes determination. Entitlement to Extension of Time and payment of cost. Engineer can take into account more favourable conditions Plant Yellow Contractor notifies Engineer as soon as practicable. Engineer inspects and makes determination. Entitlement to Extension of Time and additional cost. Engineer can take into account more favourable conditions EPC/Turnkey Projects Silver Unforeseeable difficulties : Contractor deemed to have obtained all necessary information as to risks, contingencies and other circumstances which may influence / effect Works. Contractor accepts total responsibility for having foreseen all difficulties and costs of successfully completing works, no adjustment to Contract Price for unforeseen difficulties. Design, Build and Operate Projects Gold Contractor notifies Employers Representative as soon as practicable. Employers Representative inspects / investigates. Entitlement to Extension of Time and payment of cost. Employers Representative can take into account more favourable conditions and any evidence of physical conditions foreseen by Contractor when submitting tender.
20 Risk allocation: Indemnities Construction Red Contractors Indemnities: injury, sickness, disease, death damage or loss of property, real or personal (other than Works) arising out of Contractors design (if any) the execution and completion of works and remedying defects. Is attributable to negligence, wilful act or breach of Contract by Contractor. Plant Yellow Contractors Indemnities: injury, sickness, disease, death. Damage or loss of property (other than Works). Contractors care of the Works. Employers Indemnities: injury, sickness, disease, death attributable to any negligence, wilful act or breach of Contract by Employer his personnel or agents and for matters for which liability is excluded from insurance cover (insurance under contract). EPC/Turnkey Projects Silver Contractor Indemnities: Injury, disease, death, loss property real or personal (other than Works) to extent damage or loss arises out of or in the course of or by reason of design, execution and completion of Works and remedying of defects or not attributable to any negligence, wilful act or breach of Contract by Employer. Employers Indemnities: injury, sickness, disease, death attributable to any negligence, wilful act or breach of Contract by Employer his personnel or agents and for matters for which liability is excluded from insurance cover (insurances under contract). Design, Build and Operate Projects Gold Contractor Indemnities: Injury, disease, death, loss property real or personal (other than Works). Indemnify Employer against all errors in Contractors design of the Works and other professional services which result in works not being fit for purpose or result in any loss/damage to employer. Fitness for purpose net contribution. Employers Indemnities: injury, sickness, disease, death. Damage to or loss of property real or personal (other than Works) which is attributable to any negligence, wilful act or breach of contract by Employer. Employers personnel or agents. Employers Risks net contribution.
21 Risk allocation: Indemnities Construction Red Employers Indemnities: injury, sickness, disease, death attributable to negligence, wilful act or breach of Contract by Employer, Employers personnel or agents and any matters for which liability cover is excluded from insurance cover (insurance under contract). Contractor has total cap on liability (excluding electricity, water, gas, Employers equipment and free issue material, IP, fraud, deliberate default and reckless misconduct). Other: Both parties liability for indirect and Consequential losses are excluded. Level of total cap to be negotiated by Parties. Plant Yellow Other: Contractor has total cap on liability (excluding electricity, water, gas, Employers equipment and free issue material, IP).Level of total cap to be negotiated by Parties. Both parties liability for indirect and Consequential losses are excluded. EPC/Turnkey Projects Silver Other: Contractor has total cap on liability (excluding electricity, water gas, Employers equipment and free issue material, IP, fraud, deliberate default and reckless misconduct). Level of Total Cap to be negotiated by parties. Both parties liability for indirect and Consequential losses are excluded Contract for Design, Build and Operate Projects Gold Other: Both parties liability for indirect and Consequential losses are excluded. Contractor has total cap on liability. Level of total cap to be negotiated by Parties.
22 Risk allocation: Employers Risks Construction Red Employer risks e.g. war, hostilities, rebellion, riot munitions of war, pressure waves, use or occupation by Employer of any part of Permanent Works except as specified under contract, design of any part of Works by Employers personnel or by others who Employer is responsible for, operation of forces of nature that is unforeseeable. Consequences: If Contractor suffers delay / incurs cost as result of Employers risk Contractor shall give notice to Engineer and shall be entitled (subject to Contractors claims procedure) EOT, payment of Cost. Plant Yellow Employers risks e.g. war, hostilities, rebellion, riot munitions of war, pressure waves, use or occupation of the Works except as specified, Employers design, unforeseeable operation of the forces of nature. EPC/Turnkey Projects Silver Employers risks e.g. war, hostilities, rebellion, riot munitions of war, pressure waves Consequences: Contractor will give prompt notice to Employer if Employers Risks result in loss, damage to Works, Goods, Contractor Documents. If Contractor suffers delay and/or incurs Cost as result will be entitle to EOT, payment of cost. Design, Build and Operate Projects Gold Employers Risk (During design build period & Operation Service Period) : Commercial risks - financial loss, delay damage allocated to Employer under Contract or liable by Law, right to construct works on, over, under, in through site, use or occupation of site by works for design, construction or completion of works (other than abusive or wrongful use by Contractor) use occupation by Employer or any part Permanent Works except as specified under Contract.
23 Risk allocation: Employers Risks (cont) Construction Red Plant Yellow EPC/Turnkey Projects Silver Design, Build and Operate Projects Gold Risks of Damage - damage due to interference whether temporary or permanent with any right of way, light, air, water easement which is unavoidable result of construction of works in accordance with Contract, fault, error, defect, omission in any element design of works by Employer or in Employers Requirements (other than design carried out by Contractor, operation of forces of nature, Exceptional risk.
24 Testing and Taking Over : Tests on Completion Contract for Construction Red Contractor to give Engineer atleast 21 days notice of date after which Contractor ready to carry out Test on Completion Engineer carries out Test on Completion within 14 days or as instructed. Delayed tests. Employer delay, Contractor delay - Engineer may require Contractor to carry out tests within 21 days after receipt of notice. If Contractor fails to carry out Tests on Completion within this period Employers Personnel can proceed with Tests at risk and cost on Contractor. Tests deemed carried out and results accepted as accurate. Retesting. Failure to pass - Engineers options, further repetition, reject Works or section, issue Taking Over Certificate and Contract Price will be reduced. Plant Design and Build Yellow Contractor to give atleast 21 days notice. Engineer instructs tests within 14 days/ Test sequencing Delayed Tests: Employer delay, Contractor delay Retesting Failure to pass - Engineers options : order further repetition, rejection if failure deprives Employer of substantially the whole benefit, issue a taking Over Certificate if Employer requests. EPC/Turnkey Projects Silver Contractor to give atleast 21 days notice of date after which Contractor ready to carry out Tests on completion. Tests on Completion will be precommissioning test, trial operation. Delayed Tests: Employer delay, Contractor delay, Employer may require contractor to carry out tests within 21 days after receiving notice. If Contractor fails to carry out tests on completion within 21 days. Employer personnel may proceed with test at Contractors risk and cost. Tests deemed to be carried out in presence of Contractor and results accepted as accurate. Retesting. Failure to pass - Employer can order further test, reject works or section, issue Taking Over Certificate Design, Build and Operate Projects Gold Contractor applies no earlier than 21 days before ready to carry out Tests on Completion of Design-Build. Tests on Completion Design Build will be, pre-commissioning test, commissioning test, trail operation. Employer sole beneficiary of any revenue or benefit resulting from Tests on Completion of Design Build. During Trial Operation when Works are operating under stable conditions, the Contractor shall give notice to Employers Representative that Works are ready for any other tests on completion of Design Build including performance tests to demonstrate if works confirm with Employers requirements and schedule of guarantees. Trial operation is not commencement of Operation Service. Delayed Tests : Employer delay, Contractor delay. Retesting Failure to pass - Employers representative options : order further repetition, issue Notice to Correct.
25 Testing & Taking Over : Employer's Taking Over Contract for Construction Red Contractor apply not earlier than 14 days before Contractor anticipates completion. Within 28 days Engineer either: issues. Taking Over Certificate or rejects application. In absence of Engineer doing either within 28 days and if works or section are substantially in accordance with Contract, deemed take over occurs. Engineer may take over part of Permanent Works Interference with Tests on Completion : prevention by Employer more than 14 days triggers deemed take over, Tests on Completion carried out before expiry of Defects Notification Period Contractor entitled to EOT and cost as a result of delayed tests on completion. Plant Yellow Contractor applies no earlier than 14 days before Contractor anticipated completion. Within 28 days Engineer either: issues. Taking Over Certificate, rejects Contractor's application. In the absence of either, deemed takeover occurs. Taking over part of Works Interference with Test on Completion, prevention by Employer for more than 14 days triggers deemed take over, Tests on Completion then to be carried out during the Defects Notification period, entitlement to EOT and cost plus profit. EPC/Turnkey Projects Silver Contractor applies no earlier than 14 days before Contractor anticipated completion. Within 28 days Employer issues. Taking Over Certificate, rejects Contractor's application. If Employer fails to do either within 28 days and if Works or Section are substantially in accordance with Contract Taking Over Certificate deemed issued. No Taking over in parts except as stated in contract or as agreed. Interference with tests on completion. If Contractor prevented more than 14 days by Employer, Contractor carry out tests as soon as practicable. If Contractor suffers delay and / or incurs Cost plus reasonable profit. Retesting. Design, Build and Operate Projects Gold Contractor applies no earlier than 14 days before anticipated completion. Within 28 days Employer Representative issues. Commissioning Certificate, rejects Contractor's application. If Employer's Representatives fails to do either within 28 days and if Works or Section are substantially in accordance with Contract the Commissioning Certificate deemed issued.
26 Testing and taking over : Tests after Completion Construction Red Plant Yellow Employer to give 21 days notice Employer then determines date within 14 days. Delayed tests and retesting. Failure to pass Tests after Completion, non performance damages, adjustments or modifications to the works. EPC/Turnkey Projects Silver Employer gives Contractor 21 days notice of tests after Completion. If tests after Completion are delayed unreasonably by Employer Contractor entitled (subject to claim procedure) to payment of Cost plus reasonable profit. Failure to pass tests after Completion. If works of Section fail to pass any or all Tests after Completion, relevant sum payable for non performance damages is stated in contract (or calculation for non performance damages) and Contractor pays this sum to Employer during Defects Notification period then Works or Section deemed passed. Design, Build and Operate Projects Gold
27 Defects Contract for Construction Red Contractor obliged to complete any outstanding work on date stated in Taking Over Certificate and remedy defects or damage on or prior to expiry date of Defects Notification Period Employer can extend Defects Notification Period upto 2 years. Failure to remedy. Defects / damage by notified date, Employer may carry out work himself or by others at Contractors cost, Engineer agree to determine reasonable reduction in Contract Price, terminate contract if defect / damage deprives Employer of substantially whole benefit of Works or major part of Works. Engineers ability to instruct further tests. Contractors obligation to search for cause of defect. Plant Yellow Contractor obliged to remedy defects or damage notified on or prior to the expiry date of the Defects Notification Period Extension of Defects Notification Period by upto 2 years. Failure to rectify defects: Employer may carry out work at Contractor's cost, or Employer may require Engineer to agree or determine reduction in Contract Price, or Terminate if defect deprives Employer of substantially the whole benefit of the Works, etc. Engineers ability to instruct further tests. Contractors obligation to search Serial defects and latent defects. Issue of Performance Certificate. EPC/Turnkey Projects Silver Contractor shall complete any outstanding work on date stated in Taking Over Certificate and remedy defects or damage on or prior to expiry Defects Notification Period. All remedy work carried out at Contractors cost to extent work is attributable to design of Works, Plant Materials of Workmanship, improper operation or maintenance for which Contractor responsible failure to comply with any other obligation. Employer can extend Defects Notification Period by upto 2 years. Failure to remedy Defects : If fails within reasonable time a date may be fixed by Employer to remedy defects. If fixed date is missed Employer may, carry out work himself in reasonable manner at Contractors cost, agree / determine a reasonable decrease in Contract price, terminate if defect / damage deprives Employer substantially of whole benefit of Works Design, Build and Operate Projects Gold Design- Build Period : Contractor shall complete any work outstanding on date stated in Commissioning Certificate and no later than 1 year after such date and remedy defects or damage as notified by Employer. Operation Service Period : Contractor responsible repairing and making good any damage or defect occurring during Operation Service Period whether defect is notified by Employer or Employers representative or observe by Contractor. All work to repair defects or damage executed at risk and cost of Contractor except where attributable to act of Employer / Employers representative or is an Exceptional Risk. Failure to Remedy Defects during Design Build Period or operation Service Period. If fails within a reasonable time a date may be fixed by Employer / Employers representative to remedy defects. If fixed date is missed Employer may, Employers representative determine and certify reasonable reduction in Contract Price or rates and prices submitted for Operation Service Period, terminate the contract if the defect is such that deprives the Employer substantially of the whole or part of Works.
28 Force Majeure Construction Red Exceptional event or circumstance Notice must be given within 14 days of becoming aware, or should become aware of relevant event or circumstance constituting force majeure. Contractor entitled to EOT and Cost in specified circumstances Option to Terminate : continuous period for 84 days or multiple periods totalling more than 140 days due to the same notified force majeure Plant Yellow Exceptional events or circumstance Notice to be given within 14 days of becoming aware - objective test. Contractor entitlement to EOT and cost in specified circumstances. Option to terminate : continuous period for 84 days, multiple periods totalling more than 140 days. EPC/Turnkey Projects Silver Exceptional events or circumstance Notice to be given within 14 days of becoming aware (or should become aware). Duty to minimise delay. If Contractor suffers delay and/or incurs cost entitled to EOT and Cost in specified circumstances Option to Terminate : continuous force majeure period of 84 days or multiple periods (of same event / circumstance) totalling more than 140 days Design, Build and Operate Projects Gold No definition of Force Majeure - Exceptional Event" Notice to be given within 14 days of becoming aware (or should be aware). Duty to minimize delay. If Contract suffers delay and / or incurs cost entitle to EOT and cost in specified circumstances. Option to terminate. Continuous exceptional Event period of 84 days or multiple period (of same event / circumstances) totalling more that 140 days.
29 Suspension by Employer Contract for Construction Red Engineer may instruct suspension of part or all Works at any time. If Contractor suffers delay and/or incurs Cost entitlement (subject to Contractors claims) to EOT and Cost Payment of value plant and/or materials not delivered to site if suspension more than 28 days and Contractor market Plant and/or materials as the Employers property as per Engineers instructions Prolonged suspension more than 84 days. Contractor may request Engineers permission to proceed, if Engineer does not give permission within 28 days Contractor may treat suspension as omission. If suspension affects whole of Works, contractor may give notice of termination. Plant Yellow Engineer may instruct suspension at any time. Contractor entitlement to EOT and costs. Payment for Plant and/or materials not delivered to Site if suspension more than 28 days. Prolonged suspension for more than 84 days. Contractor may request Engineers permission to proceed. If Engineer does not give permission within 28 days suspension may be treated as an omission or if suspension affects whole works, termination. EPC/Turnkey Projects Silver Employer may instruct suspension any time. If Contractor suffers delay and/or incurs cost entitlement to EOT and Cost Payment of value (as at date of suspension) of plant and/or materials which have not delivered to site if suspension more than 28 days and Contractor marked Plant and/or materials as Employers property in accordance with the employers instructions. Prolonged suspension more than 84 days. Contractor may request the Employer permission to proceed, if Employer does not give permission within 28 days suspension may be treated as omission. If suspension affects whole of Works, contractor may give notice of termination. Design, Build and Operate Projects Gold
30 Suspension by Contractor Construction Red Contractor may suspend on 21 days notice if : Employer fails to certify issue interim payment certificate; Employer fails to comply with Employers financial arrangements; Employer fails to pay. Plant Yellow Contractor may suspend on 21 days notice if : Engineer fails to issue an interim Payment Certificate; Employer fails to comply with Employers financial arrangements; Employer fails to pay. EPC/Turnkey Projects Silver Contractor may suspend on 21 days notice if: Employer fails to comply with Employers Financial Arrangements or timing of payment. Design, Build and Operate Projects Gold Contractor may suspend on 21 days notice if : Employers Representative fails to certify issue of advance, interim payment certificates, fail to comply with Employers. Financial Arrangements or fails to pay.
31 Termination by Employer Construction Red For specified default on 14 days notice to Contractor. Plant Yellow For specified default on 14 days notice. EPC/Turnkey Projects Silver For specified default on 14 days notice. Design, Build and Operate Projects Gold For specified default on 14 days notice. Immediately for Contractor bankruptcy, insolvency, liquidation, or Contractor offers (directly / indirectly) bribe, gift, gratuity, commission or thing of value as inducement or reward Employer may complete works / arrange to do so. Employer and other entities may use any Goods, Contractor. Documents and other design documents made by or on behalf of Contractor. Employer can terminate for convenience. Engineer will agree or determine value of Works, Goods and Contractors Documents and any other sums due to Contractor for work executed in accordance with Contract. Payment after termination. Employer may proceed with Employers claims procedure withhold further payments to Contractor until costs of execution, completion and remedying of any defects, damages for delay and all other costs of Employer established and/or recover Entitlement to terminate immediately for insolvency or corruption. No obligation to pay further amount until cost position of completing the Works is established. Employer also entitled to terminate for convenience - Contractor entitled to value of work done plus reasonable costs etc, no entitlement to loss of profit, Employer not entitled to complete the works Immediately for bankruptcy, insolvency, liquidation, Contractor or Contractor offering bribes, gift, gratuity, commission or other thing of value as inducement / reward. Employer can terminate for convenience. Employer can complete works or arrange for others to do so. Employer may use any goods, Contractor documents and any other sums due to Contractor. Employer can proceed with Employers claims process, withhold payment until costs design execution and completion and remedying defects Immediately for bankruptcy, insolvency, liquidation, Contractor or Contractor offering bribes, gift, gratuity, commission or other thing of value as inducement / reward. Employer can terminate for convenience. Employer can complete works or arrange for others to do so. Employer may use any goods, Contractor documents or other design documents made by or on behalf of Contractor. Payment after termination for Contractors Default. Proceed with Employers claims procedure, withhold payment until costs of design, execution, completion, remedying defects established,
32 Termination by Employer (cont) Construction Red any losses and damages incurred by Employer and any extra costs of completing works and pay Contractor balance. Plant Yellow EPC/Turnkey Projects Silver remedying defects established and/or recover costs from Contractor. Design, Build and Operate Projects Gold recover any losses or damages incurred and extra costs of completing works. Payment after termination for convenience: return performance security, pay contractor in accordance with optional termination payment and release, pay amount of any loss of profit or other loss or damage sustained by Contractor as result of termination.
33 Termination by Contractor Contract for Construction Red For specified default on 14 days notice. Terminate immediately for : prolonged suspension or Employer becomes bankrupt, insolvent, goes into liquidation. On termination Employer promptly return performance security to Contractor, pay contractor value of work done (as determined by Engineer) include amounts payable for work carried out under Contract, Cost of plant and materials ordered for works and delivered to Contractor or which Contractor liable to accept and any other reasonable cost or liability, Costs of removal temporary works and Contractors Equipment and Cost of repatriation Contractor staff and labour and any loss of profit. Plant Yellow For specified default on 14 days notice. Entitlement to terminate immediately for insolvency or prolonged suspension Employer required to pay for value of Works performed, reasonable costs etc and loss of profit. EPC/Turnkey Projects Silver Entitled to terminated immediately for prolonged suspension or bankruptcy, insolvency, liquidation of Employer. After notice of termination Employer will: return performance security to Contractor, pay contractor for amounts payable for work carried out (price stated in contract), cost of Plant and materials ordered and delivered or Contractor liable to accept, reasonably incurred Cost or liability, cost of removal of Temporary Works and Contractors Equipment, repatriation Contractors staff and labour. Design, Build and Operate Projects Gold Entitled to terminate immediately for prolonged suspension or bankruptcy, insolvency, liquidation of Employer. After notice of termination Employer will: return performance security, pay Contractor in accordance with optional termination payment and release, pay amount of any loss of profit or other loss or damage sustained by Contractor as result of termination.
34 EXTENSION OF TIME 34
35 WHY THE CLAIMS MADE BY THE CONTRACTOR 1. Most claims are made by the Contractor and may be claims for an extension of time for the completion of the works, for the reimbursement of costs including in some cases reasonable profit. 2. Claims for additional time frequently result in claims for additional payments, which under the FIDIC conditions must be submitted as a separate claim. 3. All claims for additional time or money must follow the procedures of clause 20.1 which require a notice to the Engineer as soon as practicable as and in any event not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstances. 4. If the Contractor fails to give notice of a claim under this clause he shall not be entitled to additional payment and the Contractor shall be discharged from all liability in connection with the claim. The Contractor is also under an onerous obligation to keep contemporary records as may be necessary to substantiate the claim. 35
36 MANDATORY NOTICE OBLIGATIONS UNDER FIDIC Real Cause Duty to Give Notice (Sub Clause 20.1) Specific Probable Future Events or Circumstances Duty to Give Notice (Sub Clause 8.3) Advanced Warning SubClause 20.1 Notice of any claim in connection with the Contract by describing the event or circumstance giving rise to the claim TIME BARRED 28 DAYS Clause 8.3 Alternative 1 The Contractor shall submit a detailed time programme to the Engineer within 28 days after receiving the notice under Sub- Clause 8.1 (Commencement of Works) TIME BARRED 28 DAYS Clause 8.3 Alternative 2 The Contractor shall submit a revised programme whenever the previous programme is inconsistent with actual progress or with the Contractor s obligations TIME BARRED REASONABLE Clause 8.3 Alternative 3 The Contractor shall promptly give notice to the Engineer of specific probable future events or circumstances which may adversely affect the work, increase the Contract Price or delay the execution of the Works. TIME BARRED PROMPTLY
37 SUMMARY OF GROUNDS IN THE FIDIC FORMS WHICH EXPRESSLY ENTITLE THE CONTRACTOR TO AN EXTENSION OF TIME Red Book / MDB Yellow Book Silver Book Gold Book Sub- Clause Heading Grounds EoT Additional Payment EoT Additional Payment EoT Additional Payment EoT Additional Payment 1.9 (R/M) Delayed Drawings or Instructions Failure of Engineer to issue the drawing or instruction within notified reasonable time Y Cost + 37
38 SUMMARY OF GROUNDS IN THE FIDIC FORMS WHICH EXPRESSLY ENTITLE THE CONTRACTOR TO AN EXTENSION OF TIME Red Book / MDB Yellow Book Silver Book Gold Book Sub- Clause Heading Grounds EoT Addition al Payment EoT Additional Payment EoT Additional Payment EoT Addition al Payment 1.9(Y)/ 1.10 (G) Errors in the Employer s Requiremen ts Error in the Employer s Requirements, and an experienced Contractor exercising due care would not have discovered the error when scrutinizing the Employer s Requirements under Sub-Clause 5.1 Y Cost + Y Cost + 38
39 SUMMARY OF GROUNDS IN THE FIDIC FORMS WHICH EXPRESSLY ENTITLE THE CONTRACTOR TO AN EXTENSION OF TIME Red Book / MDB Yellow Book Silver Book Gold Book Sub- Clause Heading Grounds EoT Additional Payment EoT Additional Payment EoT Additional Payment EoT Additional Payment 2.1 Right of Access to Site Failure by the Employer to give right of access to, or possession of, the Site within required time unless and to extent Employer s failure was caused by any error or delay by the Contractor. Y Cost + Y Cost + Y Cost + Y Cost + 39
40 Sub- Clause SUMMARY OF GROUNDS IN THE FIDIC FORMS WHICH EXPRESSLY ENTITLE THE CONTRACTOR TO AN EXTENSION OF TIME 4.6 Cooperation 4.7 Settingout Heading Grounds EoT Instruction by contract administrator to allow specified others appropriate opportunities to carry out work Execution of Work which was necessitated by an error in terms of reference and an experienced contractor could not reasonable have discovered such error and avoided this delay and / or cost. Red Book / MDB Yellow Book Silver Book Gold Book Y (under 8.4(a) ) Additional Payment As part of Valuation under Sub- Clause 13.3 EoT Y (under 8.4(a) ) Addition al Payment As part of Valuation under Sub- Clause 13.3 EoT Y (under 8.4(a) ) Additional Payment As part of Valuation under Sub- Clause 13.3 EoT Y (under 8.4(a)) Additiona l Payment As part of Valuation under Sub- Clause 13.3 Y Cost + Y Cost + Y Cost + 40
41 SUMMARY OF GROUNDS IN THE FIDIC FORMS WHICH EXPRESSLY ENTITLE THE CONTRACTOR TO AN EXTENSION OF TIME Red Book / MDB Yellow Book Silver Book Gold Book Sub- Clause Heading Grounds EoT Additiona l Payment EoT Additiona l Payment EoT Additional Payment EoT Additional Payment 4.12 Unforeseea ble Physical Conditions. Encountering Physical conditions which are Unforeseeable Y Cost + Y Cost + Y Cost + 41
42 Thank you very much for your participation and attention! 42
43 Thank you very much for your participation and attention! 43
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