fidic 2001 white book guide
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FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS
INTERNATIONAL FEDERATION OF CONSULTING ENGINEERSINTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE
FEDERACION INTERNACIONAL DE INGENIEROS CONSULTORES
The White Book Guide
with other Notes on Documents for
Consultancy Agreements
Second Edition 2001
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FIDIC is an international federation of national associations of consulting
engineers.
FIDIC was founded in 1913 by three national associations of consulting
engineers within Europe. The objectives of forming the federation were to
promote in common the professional interests of the member associations
and to disseminate information of interest to members of its component
national associations.
Today FIDIC membership numbers more than 60 countries from all parts of
the globe and the federation represents most of the private practice
consulting engineers in the world.
FIDIC arranges seminars, conferences and other events in the furtherance of
its goals: maintenance of high ethical and professional standards; exchange
of views and information; discussion of problems of mutual concern among
member associations and representatives of the international financial
institutions; and development of the engineering profession in developing
countries.
FIDIC publications include proceedings of various conferences and seminars,
information for consulting engineers, project owners and international
development agencies, standard pre-qualification forms, contract documents
and client/consultant agreements. They are available from the secretariat in
Switzerland.
Copyright FIDIC 2001 Published byFdration Internationale des
Ingnieurs-Conseils (FIDIC)
All rights reserved P.O. Box 86
No part of this publication CH-1000 Lausanne 12
may be reproduced or Switzerland
transmitted in any form or Phone +41 21 654 44 11
by any means Fax +41 21 653 54 32
without permission of the E-mail [email protected]
publisher. WWW http://www.fidic.org
FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS
INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS
INTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE
FEDERACION INTERNACIONAL DE INGENIEROS CONSULTORES
The White Book Guide
with other Notes on Documents for
Consultancy Agreements
Second Edition 2001
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Acknowledgements
FIDIC wishes to acknowledge the efforts of those who have
contributed to the preparation of the succeeding editions of the WhiteBook and the White Book Guide.
The development of the White Book started in early 1986 when Povl
Ahm of Ove Arup and Partners was the Chairman of FIDIC's
Client/Consultant Relationships Committee, continued under the
Chairmanship of Eigil Steen Pedersen of COWl, and completed and
published in 1990 under the chairmanship of Mario Asin, Partner of
Tippetts-Abbett-McCarthy-Stratton (TAMS).
Godfrey L. Ackers, formerly a Consultant to Mott Mc Donald, Ltd. and
formerly a Partner of Sir Murdoch MacDonald and Partners, was the
principal drafter of the 1st Editions of the White Book and of the
Guide. Godfrey Ackers' wife, Wendy, typed many early drafts of these
documents.
Mario Asin, assisted by Peter Batty, formerly TAMS, and now with
Sheladia Associates, provided extensive reviews, comments and re-
editing of the White Book and of the First Edition of the Guide.
Geoffrey Coates, formerly Chairman of Sir Alexander Gibb and
Partners, Ltd., was FIDIC's Executive Committee Member in charge
of overseeing the preparation of the 1st Editions of the White Book
and of the Guide.
Mark Griffiths of Griffiths and Armour and Paul Taylor of Berrymans
Lace Mawer provided liability insurance and legal advice duringpreparation of the two documents, and of all subsequent
amendments including this 2nd Edition of the Guide.
Important comments on draft versions of the White Book were
provided by the World Bank and the Asian Development Bank. In
1989, a particularly valuable and extremely thorough commentary on
the semi-final draft was provided by a joint committee from the Arab
Funds under the coordination of Ismael El-Zabri of the Arab Fund for
Economic and Social Development.
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FIDIC 2001a
Contents
1 Introduction 1
A Background 1
B General Approach 2
C Application to Types of Assignment 2
D Documents to Complete the Agreement 3
E Format of this Guide 4
2 THE WHITE BOOK
General and Particular Conditions 6
A Definitions and Interpretations 7
Clauses 1 i, ii & iii Projects, Works and Services 7
Clauses 1 iv & v Client and Consultant 7
Clauses 1 viii & ix Day and Month 8
Clause 1 x Currencies of Payment 8
Other Definitions 8
Clause 2 iii Document Precedence 9
B Obligations of the Consultant 9
Clause 5 i Skill, Care and Diligence 9
Clause 5 ii As Administrator of Contracts 10
Clause 6 Clients Property 10
C Obligations of the Client 11
Clause 9 v Foreign Currency 11
Clause 10 Equipment and Facilities 11
Clause 11 & 12 Clients Personnel and Services 11
of Others
D Personnel 11
Clause 13 Supply of Personnel 12
The Checklists of services have drawn heavily on the Conditions of
Engagement published by The Association of Consulting Engineers
(United Kingdom), and on a checklist of environmental services
prepared by Howard Schirmer in collaboration with FIDIC's former
Environment Committee that was chaired by Iksan van der Putte ofBKH Consulting. FIDIC is grateful for permission to make use of
these documents.
The revision of the 1st Edition of the Guide to give this 2nd Edition
was undertaken by the FIDIC Client/Consultants Relationship
Committee under the chairmanship of Peter Batty. The Committee
wishes to acknowledge important amendments from Mark Griffiths
and Paul Taylor, and from Howard Schirmer of Transnational
Associates.
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FIDIC 2001c
a) Protection Provided
b) Relevant Legislation
Clause 39 Copyright 26
Clause 40 Conflict of Interest 27
Clause 41 Notices 27Clause 42 Publication 27
I Settlement of Disputes 27
Clause 43 Amicable Dispute Resolution 28
Clause 44 Arbitration 28
J Possible Additional Subject Matter 30
3 THE WHITE BOOK
Additional Discussion 31
A Definition and Interpretation 31
Clause 1 i, ii & iii Project, Works and Services 31
Clause 1 v The Consultant 31
a) Project Management
b) Secondment of a Project
Manager
c) Technical Assistance
d) An Individual as the
Consultant
e) Consortia, Associates
and Joint Ventures
Clause 1 ix Agreed Compensation 37Other Definitions 38
Clause 2 iii Document Precedence 39
B Liability and Insurance 39
a) Liability for Breach of
Contract and to the
Public at Large
b) International Funding
Agency Requirements
b FIDIC 2001
Clause 14 Representatives 13
Clause 15 Changes in Personnel 14
E Liability and Insurance 14
Clause 16 Liability between the Parties 15
Clause 17 Duration of Liability 15
Clause 18.1 Limit of Compensation 16
Clause 18.2 Indemnity 16
a) Third Party Claims
b) Liability to Clients Contractors
Clause 18.3 Exceptions 17
Clause 19 Insurance for Liability and
Indemnity 17Clause 20 Insurance of Clients Property 18
F Commencement, Completion, Alteration and Termination 18
of the Agreement
Clause 21 Agreement Effective 18
Clause 22 Commencement and Completion 19
a) Time for Commencement
b) Time for Completion
Clause 24 Further Proposals 20
Clause 25 Delays 20
a) Delay by Client
b) Delay by the Consultant
Clause 26 Changed Circumstances 21
Clause 27.2 i Due Date for Payment 22
Clause 28 Exceptional Services 22
G Payment 23
Clause 31 ii Time for Payment 24
Clause 32 Currency of Payment 24
H General Provisions 25
Clause 36 Languages and Law 25
Clause 37 Changes in Legislation 25
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FIDIC 2001e
Clause 48 Patents and Inventions 53
Clause 49 Performance Evaluation 53
Clause 50 Severability 53
4 Appendix A: Scope of Services 55
1 General 55
2 Terms of Reference (TOR) 55
3 Classification of Requirements 55
4 Phases 55
5 Responsibilities 56
a) Task and Adviceb) Training
6 Technology and Location 57
a) Location
b) Headquarters Back-up
7 Administration 58
a) Programme
b) Reporting
c) Powers
8 Pre-Investment Studies 599 Feasibility Studies 61
10 Planning and Design Phases 61
a) Planning
b) Design
c) Terminology
d) Payment and Level of Design
e) Development of Design
Responsibilitiesf) Site Investigation
11 Procurement 64
12 Implementation 65
a) General
b) Duties in Respect of Contracts
c) The Consultant as Contract Administrator
13 Operation 68
14 Sub-Consultants 69
15 Project Cost Estimating 69
d FIDIC 2001
c) Cost of Insurance for
Breach of Professional Duty
d) Limit of Liability for Breach
of Professional Duty
e) Third Party LiabilityInsurance
f) Objectives of the White
Books Liability and
Insurance Provisions
Clause 16 Liability between the Parties 45
a) Division of Responsibilities
between Consultants
b) Consequential Damages
Clause 18 Limit of Compensation andIndemnity 47
Clause 19 Insurance for Liability and
Indemnity 48
a) Continuity of Insurance
b) Project Insurance
C Commencement, Completion, Alteration and Termination 49
of the Agreement
Clause 22 Commencement & Completion 49
a) Time for Commencement
b) Time for Completion
D General Provisions 50
Clause 39 Copyright 50
E. Possible Additional Subject Matter 51
Clause 45 Payments to Contractors, etc. 51
Clause 46 Participation of IFA* 51
Clause 47 Performance Guarantee and
Payment Security 52
*Abbreviation: in this Guide, IFA means International Funding Agency (or
Agencies).
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FIDIC 2001g
5 Technical Assistance 90
6 Administration of Contracts 90
7 Expenses 91
a) In Foreign Currency
b) In Local Currency8 Currency 93
9 Price Variation 94
a) Rates of Exchange
b) Prices
10 Recovery of Import Duties 95
11 Taxation 96
12 Contingencies 96
Annex 1 Common Payment Terminology 97
1 Advance
2 Advisory Services
3 Budget Cost
4 Ceiling Cost
5 Contractor
6 Cost
7 Emoluments
8 Expenses9 Multiplier
10 Qualified Technical Staff
11 Stage or Interim Payment
12 Task Services
13 Tender Dossiers
Annex 3 Lump Sum Fees 100
Annex 2 Staff - Time Based Fees 101
1 Named Staff
2 Unnamed Staff
3 Substitutes for Named Staff
4 Salary Reviews
5 Discussion
6 Time
7 Typical Clauses
f FIDIC 2001
Annex 1 Services of the Consulting Engineer in Relation to 70
Civil/Structural Engineering Projects
A Typical Normal Services 70
B Typical Additional Services 75
Annex 2 Checklist/Menu of Environmental Services 75
1 Waste Management Facilities
2 Landfill Services
3 Landfill Engineering
4 Pollution Remediation/Brownfields Redevelopment
5 Environmental Services
6 Fisheries Services5 Forensic Services
7 Potable Water
8 Wastewater Studies and Design
9 Water Resources Study and Design
11 Industrial Wastewater
11 Construction Services for Environmental Works
12 Operation and Maintenance for Environmental
Works
5 Appendix B: Personnel, Equipment, Facilities & Services 83
of Others to be Provided by the Client
6 Appendix C: Remuneration and Payment 84
1 Introduction 84
2 Terms of Payment 85
a) Definitionsb) General
c) Options
3 Advances and Stage Payments 86
4 Methods of Payment
a) Letter of Credit
b) Direct Disbursement by IFA
c) Other Systems
d) Sub-Consultants
e) Typical Clauses
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FIDIC 20011
1 Introduction
A Background
The White Book has been prepared in three stages. The objective of
the first stage was to edit FIDIC's International General Rules of
Agreement (IGRA) 1979 D&S document into simpler language and a
more logical order, and to develop it into a format consistent with the
FIDIC style traditionally adopted for its other standard forms of
conditions of contract. See References (13) to (19) in Chapter VIII.
In the second stage, alterations were made in principle to take
account of written comments received on IGRA 1979 D&S and toaccord with current practice and the intent of drafts of sample
documents for consulting services prepared by International Funding
Agencies (IFA).
The last, more difficult, stage was to refine the provisions for liability,
insurance and indemnity.
A draft version of the White Book was reviewed by the World Bank,
the Asian Development Bank and a joint committee from the ArabFunds. Many comments resulting from these reviews were
incorporated into the final document.
The purpose of the White Book Guide is twofold, namely:
- to assist those who wish to draft Consultancy Agreements using
the White Book as published or as the main reference; and
- to provide some insights into the rationale for the White Book's
provisions and the content of the Guide dealing with completing
an Agreement based on the White Book
In 1998, the White Book was updated to the 3rd Edition and this
Guide reflects the amendments made.
Annex 4 Fees as a Percentage of Cost of Works 107
7 Terms of Reference and their Preparation 109
A Terms of Reference 108B General Principles for Preparing Proposals and 109
Agreements
8. References 110
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FIDIC 200154 FIDIC 2001
Chapter 7 contains a few general comments on Terms of Reference
(TOR) and on their preparation.
Chapter 8 lists the details of publications referred to in the other
chapters of the Guide.
because experience indicates that proposals are often amended to
such a degree during subsequent negotiations that it is better to
prepare the Agreement incorporating terms as finally agreed and
following the prescribed format.
Clause 1 (vii) of the White Book, however, permits inclusion of the
proposal by reference in the Particular Conditions. In such cases, if a
formal agreement is also required, paragraph 2 of the Agreement
Form should be extended to include it, e.g.
d) The Consultants proposal dated .
The Agreement Form provides for a two-party agreement. If other
parties are to be joined in the Agreement, the wording will need to bealtered. Two circumstances, at least can give rise to this:
a) When the Consultant is a Joint Venture; see Clause I (v) (e) in
Chapter 3 of this Guide;
b) When the Client is not the ultimate beneficiary, e.g. the Client is
the "National Planning Commission" and the beneficiary is the
"Roads and Bridges Public Corporation".
E Format of this Guide
Chapter 2 is devoted to the subject matter of the General Conditions
of the White Book and to related matters for consideration in
completing Section A and compiling Section B of the Particular
Conditions.
Chapter 3 includes additional discussion on a selected number of
those White Book Clauses presented in Chapter 2.
Chapters 4, 5 and 6 include comments relevant to compiling
Appendices A (Scope of Services, including checklists of both normal
and additional Consulting Engineering Services and of specialist
Environmental Services), Appendix B (Personnel, Equipment, Facilities
and Services of Others) and Appendix C (Remuneration and Payment)
of the Agreement, respectively.
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FIDIC 20013130 FIDIC 2001
THE WHITE BOOK
3 Additional Discussion
A Definitions and Interpretation
Clause 1 i, ii & iii: Project, Works and Services
Special provisions will be required in the Particular Conditions or (i)
& (iii) Appendix A of the White Book if any of the Services in
respect of the Works are:
- limited to a part only of the Works;
- to include design responsibility for temporary works.
Note that "comprise" and "include" have different meanings,
although draftsmen often use the former when the latter is more
appropriate. Under a lump sum agreement, however, it would be
wise to use " comprise", thus carefully defining the limits for
application of the Services; "include" on the other hand is an
adequate abbreviation for the phrase "include but are not limited to"
The Works as described in Section A of the Particular Conditions
comprise/include the following: ....
Clause 1 v: The Consultant
It is important to distinguish clearly between what the Consultant
is, i.e. between what constitutes him and what he is to do.
- He may be an individual, a firm (partnership or company), a
consortium or joint venture.
- He may have to study, design, administer contracts, manage, or
operate, even perhaps arrange finance
Each of the latter performance requirements is matter for the
Scope of Services and, generally, does not warrant changes in the
J Possible Additional Subject Matter
Section E of Chapter 3 provides a discussion of the additional
contractual clauses that may need to be incorporated in an
Agreement for Professional Services.
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10 Defects Liability Period7 Tendering and Award
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FIDIC 20017372 FIDIC 2001
a Provide periodic or continuous inspection services
b Arrange for remedial work as required
c Prepare all necessary close-out documentation
d Assist with negotiations to settle final accounte Perform defects inspection and punch-lists
f Prepare defects free certificate.
a Advertise and issue tender documents
b Conduct site visit and pre-bid conference
c Issue addenda and clarifications
d Perform analysis of proposals/bids received and makerecommendations for award
e Assist client in negotiations with selected contractor(s)
f Prepare contract documentation.
8 Construction Supervision
a Perform additional designs
b Review additional designs (including shop drawings)c Design control
d On-going constructibility review
e On-going value engineering review
f Document Control
g Schedule Control
h Cost Control
i Contract Administration
j Verify compliance with bond insurance requirements
k Quality control record
l Measurement and certifications
m Assistance to Client concerning Variations and Claims
n Reporting.
9 Take-Over and Commissioning
a Carry out inspections/preparing punch lists and certification oncompletion of the works
b Supervising commissioning and carrying out testing during
commissioning
c Monitoring contractor's work during commissioning period
d Verifying that Client staff are appropriately trained and receive
specified certificates during the training period
e Prepare certification of handing-over.
ANNEX 2 Checklist/Menu of Environmental ServicesB Typical Additional Services
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FIDIC 20017574 FIDIC 2001
1 Waste Management Facilities
Planning and Analysis
Environmental management system design and training
Waste stream composition/characterization
Collection system evaluations
Service rate and market evaluations
Waste management planning
Waste management alternative evaluations
Technology assessments
Integrated system planningWaste reduction
Recycling
Facility siting evaluations is election
Facility capital and operating cost estimates
Transportation master plans
Public/private participation evaluations
Public involvement
Project feasibility studies
Permitting and regulatory compliance assistance
Facility Engineering
Design plans and specifications
Material recovery facilities
Transfer stations Incinerators
Waste-to-energy facilities
Compost facilities
Existing facility retrofits/rehabilitation
Wastewater treatmentProcess instrumentation and control systems
Equipment procurement
Site development and ancillary facilities
Project Implementation
Full service procurement
Request For Proposals (RFP) development
Vendor liaison
Bidding assistance
1 Cork consequent upon a decision by the Client to seek statutory
powers.
2 Advise the Client following the taking of any step in or towards the
resolution of any dispute or difference or towards any
adjudication, arbitration or litigation in connection wit the Project
or the Works.
3 Contamination investigations on site.
4 Work in considering alternative designs for the Works submittedby Contractors.
5 Prepare drawings for shop fabrication of structural steelwork,
ductwork or metal, timber or plastics frameworks or other
specialist supplied components.
6 Prepare detailed drawings and bar bending schedules for
reinforced concrete work.
7 Check and/or advise upon any part of the Works not designed by
the Consulting Engineer.
8 Negotiate any contract or sub-contract selected other than by
competitive tendering.
9 Which services are normal and which are additional will vary from
project to project and should defined in the Client's Terms ofReference, or, if not, in the Consultant's proposal and/or
eventually in Appendix A of the Agreement.
Due diligence
Site Investigations
Submittal reviews
Construction administration and monitoring
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FIDIC 20017776 FIDIC 2001
Site Investigations
Closure/Post-closure
Risk Assessments
Hydrogeologic studies
Corrective Measures Design/Corrective ActionSite planning & design
Spill Prevention & containment engineering
Groundwater & surface water treatment engineering
Underground storage tank (UST) management
Site redevelopment engineering
Site Planning/Economic Sustainability
Coastal zone management
Site assessment Market analysis
Master planningInfrastructure/Redevelopment
Site utility design
Site facilities design
Landscape design
Financial consulting ownership transfer assistance
Regulatory negotiations
Public participation assistance
5 Environmental Sciences
Mapping Sciences Services
Geographic positioning system data acquisition
Geospatial database management
Multidimensional visualization
Raster to vector data conversion Image processing
Land type classification
Environmental PlanningEnvironmental impact statements
Environmental assessments
Endangered species
Air quality analysis
Noise analysis Natural resource impacts
Socio-economic issues
Cultural resource evaluation
Ecosystem plans and management
Construction administration and monitoring
Performance testing and evaluations
Operations monitoring and efficiency evaluations
Competitiveness/tipping fee analysis
2 Landfill Services
Planning and Analysis
Service rate and market evaluations
Landfill planning
Alternative evaluations
Technology assessments
Integrated system planning
Optimization of landfill spaceLandfill siting evaluations/selection
Landfill capital and operating cost estimates
Public/private participation evaluations
Project financing evaluations
Public involvement
Project feasibility studies
Permitting and regulatory compliance
Operations assessment and efficiency evaluations
3 Landfill Engineering
Design plans and specifications
Cell development and master plan
Liners and covers
Landfill gas collection and energy generation systems
Leachgate and storm water management systems
Site development and ancillary facilitiesClosure and post closure plans
4 Pollution Remediation/Brownfields Redevelopment
Environmental and Site Audits
Toxicity evaluations
Resource damage assessment
Order of magnitude cost estimation
Habitat Evaluation Procedure (HEP) studies
Habitat mapping
Interpretive planning
Mitigation plans
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FIDIC 20017978 FIDIC 2001
Habitat mapping
6 Fisheries Services
Fish population surveysEntrainment and impingement monitoring
Population modelling
In stream flow incremental methodology (IFIM)
Spawning/Emergence studies
Reservoir/Lake habitat mapping
Surveys and habitat conservation planning
Radio-tagging and mark recapture studies
Impact Assessment and mitigation planning
Agency consultationFluvial Geomorphology and Sediment Transport
Fluvial geomorphology field investigations
Hydrologic investigations
Sediment loading and transport evaluations
Channel typing and sensitivity ratings
Predictive modelling of sediment grain size
Bank stability assessments
Floodplain/flood control investigations
Hydrologic and hydraulic numerical modelling
Watershed Management
Cumulative watershed effects analyses
Ecological unit inventories
Impact assessments
Environmental monitoring
Habitat conservation planning
Inventories and surveys Hydrologic analysis
7 Forensic Services
Expert Witness Testimony
8 Potable Water
Water Distribution Studies and Design
Distribution system analysis
Mitigation plans
Environmental Compliance
Regulatory review
National local law compliance studies
Air/noise water quality analysisCompliance schedules Inspections Audits
Permitting/Licensing
Air emission
Air quality modelling
Hydropower
Special use
Discharge
Natural Environmental Services
Aesethic resource inventoriesVisual impact analysis
View shed analysis
Biological assessments
Vegetation mapping
Wetland delineation and resource evaluation
Wetland mitigation
Wetland restoration and monitoring
Wetlands creation and design
Wetlands banking Jurisdictional delineations
Protected and endangered species inventories
Habitat evaluation
Cultural resources assessment
Resource agency consultation
Interpretive planning
Botanical Surveys and Vegetation Mapping Services
Natural area surveys
Habitat evaluationWetland delineations and evaluations
Endangered species surveys
Vegetation mapping
Riparian community investigations
Wildlife Services
Wildlife ecology research
Species inventories and surveys
Impact assessment Monitoring plans
Operations and maintenance services
Odour control Facility optimisation
Distribution system
System rehabilitation
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FIDIC 20018180 FIDIC 2001
Odou co t o ac ty opt sat o
Contract operation
Laboratory design
Administration/operation/maintenance buildings
Telemetry systems/SCADALeachate treatment
10 Water Resources Studies and Design
Surface Water supply
Flood Control studies
Dams
Water quality evaluation/mode ling
Raw water intakes and pumpingFeasibility studies
Hydrologic and hydraulic studies/modeling
Water rights and permits
Operational analysis and optimisation
Storm water management
Hydropower
Comprehensive basin planning
Groundwater
Three-dimensional modelling
Well field research, analysis and development
Monitoring and management systems
Contamination investigation and remedial programs
11 Industrial Wastewater
Plant Studies and Design Pilot plant studies
Economic analysesWastewater pre-treatment
Waste treatment Process systems
Livestock waste handling and treatment
Water reduction
Waste minimization
Water reconditions for non-potable reuse
Management Services
Evaluation reports
Syste e ab tat o
Master planning computer modelling
Telemetry systems/SCADA
Water storage
Pumping stationsTransmission mains
Geographic Information System (GIS) interface
Water Treatment Studies and Design
Source protection
Pilot testing
Capacity evaluation
Corrosion control
Residuals management
Regulatory complianceWater quality analysis
Operations and maintenance
Wells
9 Wastewater Studies and Design
Collection System
Pumping stations
Sewer systems evaluations
Sewer systems rehabilitation
Sewer interceptors and sewer mains
Lift stations Combined sewer overflow
Geographic Information System (GIS) interface
Treatment Works
Physical chemical treatment
Biological treatment
Reclamation and reuseNutrient removal
Effluent filtration and disinfection
Land disposal
Biosolids management
Facilities planning
Energy use evaluations
Outfalls Value engineering
Permits Receiving water quality evaluations
APPENDIX BEngineering evaluation
Facilities planning
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FIDIC 20018382 FIDIC 2001
5 Personnel, Equipment, Facilities and Servicesof Others to be provided by the Client
To complete Appendix B it will be necessary to list the counterpart
and other personnel, equipment, facilities and services which the
Consultant is counting on the Client to provide.
There is not much which can be given by way of Guide to completing
Appendix B, except to note that thoroughness, clarity and
completeness will help to prevent problems during the course of the
Consultant's work.
While it is not too difficult for a Consultant to specify fairly precisely
the facilities, vehicles, etc. that he requires, it is obviously more
difficult to provide a standard to ensure that the personnel provided
by the Client will be capable of carrying out their required
assignments.
p g
Energy conservation and management
Value engineering
Water quality analysis
Financial evaluation and rate analysisOperation and maintenance assessments
Regulatory compliance
12 Construction Services for Environmental Works
Construction management
Bidding assistance
Construction period inspection
Engineer of record services
13 Operations and Maintenance for Environmental Works
Planning
Procurement Refurbishment and upgrades installation
Financial accounting
Billing
Equipment maintenance
Monitoring Laboratory services
Training
Quality control
User interface
2. Terms of PaymentAPPENDIX C
6 R i d P
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a) Definitions
Annex 1 to this Chapter includes suggested definitions of some of
the terms used in this Chapter and the other annexes to it.
b) General
In accepting that price is, with increasing frequency, an important
consideration in the selection process, it is important for an
equitable competition that:
- the TOR are precise in describing the scope of the services andthe responsibilities and obligations to be undertaken by the
Consultant; and
- the invitation explains the evaluation that will be performed and
the weighting that will be assigned to merit versus cost.
c) Options
It is normal practice to divide the remuneration for the Services
into fees and expenses, although sometimes the fees are often
inclusive of some expenses at least. In this practice, the first
clause of general application in Appendix C will be:
The remuneration for the Services comprises fees and expenses.
The following systems are those most generally considered, andany one agreement may incorporate one or more of them
appropriate to the several types of phases of Services to be
supplied:
- Lump sum (see Annex 2), inclusive, or plus certain expenses.
- Time based charges (see Annex 3), inclusive, or plus certain
expenses
6 Remuneration and Payment
1 Introduction
This Chapter does not give guidelines on how to estimate or what
to estimate for. It attempts to address the main elements needed
for a complete presentation. Sample texts of possible clauses are
not intended to be comprehensive in any way.
For convenience, that part of the Agreement devoted to payment
terms and methods is referred to below as Appendix C, in
conformity with the White Book Clause 1 (vii).
The chief areas for attention are:
- terms of payment, the basic system or systems;
- methods of payment;
- price changes;
- currency;
- taxation, where the General Conditions Clause 33 (ii) is
applicable; and
- contingencies.
Where practical, suggestions are made on the wording of relevantprovisions.
It is, however, important to distinguish clearly the difference
between terms of payment, for which the Client is liable, and
method of payment, which is an administrative convenience, but
which may nevertheless have contractual effects.
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ANNEX 1 Common Payment Terminology
Some or all of the following definitions may be usefully included,
generally dependent on special paperwork at the time of the
import. When the Client clears customs on behalf of the
Consultant or reimburses him, and expects reimbursement on re-
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So e o a o t e o o g de t o s ay be use u y c uded,
amended as the case may require.
1 Advance
A payment which is due for repayment. (Generally by way of
deduction from stage or interim payments according to some
specified formula).
2 Advisory Services
Those Services which the Consultant provides by way of advice
and assistance at the direction of the Client for accomplishingservices undertaken by the Client.
3 Budget Cost
The amount provided in the Agreement as an estimated cost to be
borne by the Client for completion of the Normal Services (or
specified part of them) or as a contingency for Additional Services
such that it may not be exceeded without written agreement of the
Client prior to any excess being incurred.
4 Ceiling Cost
The cost to the Client within which the Consultant shall complete
the Normal Services (or specified part of them).
5 Contractor
A contractor, other than the Consultant, under contract to the
Client for the supply of goods, equipment or services or for the
construction of works, in respect of which the Services impose
duties on the Consultant.
6 Cost
Expenditure properly incurred, or to be incurred, by a party for the
Co su ta t o e bu ses , a d e pects e bu se e t o e
export, it is especially important that the Consultant satisfies
himself that the necessary formalities are observed.
11 Taxation
When the funds to be used to pay for the Services are from an
IFA, the Loan Agreement often stipulates that proceeds of the
Loan must not be used to finance taxes. This does NOT mean
that the Consultant's revenue is exempt from tax, although in
some cases this can be so.
It is sometimes acceptable to provide that the Client pays certaintaxes and show it separately as an estimated sum in addition to
the base sum. However, this device may result in having to pay tax
on tax.
12 Contingencies
Both parties should be aware of the need to make budgetary
provisions for expenditures above the pricing of Normal Services.
To achieve this, contingent sums, preferably separate sums for
different classes of contingencies (e.g., price variation/inflation,
possible Additional Services and unforeseeable Additional or
Exceptional Services) can be inserted in the Appendix.
However, it is important to clarify that such sums are not to be
regarded as limiting values.
11 Stage or Interim Payment
A payment which goes toward the final cost to the Client of the
purpose of the Services including overhead and other charges
properly allocated to it but excluding profit.
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p y g
Services.
12 Task Services
Those Services, other than Advisory Services, which the
Consultant is responsible for providing.
13 Tender Dossiers
Documents prepared for the purpose of obtaining tenders.
7 Emoluments
Whichever maybe applicable:
- The amount stipulated in the Agreement for the named member
of staff.
- The amount stipulated in the Agreement for the post named in
the Agreement.
- The amount stipulated in the Agreement for the grade named in
the Agreement applicable to the member of staff.
- The salary payable to the member of staff before any deductions
for tax or statutory payments or voluntary payments to insurance
or pension schemes.
8 Expenses
Net direct disbursement by the Consultant to the other party or
to third parties for the purpose of the Services, but excludingemoluments paid to his staff or any expenses which are
deemed covered by the multiplier factor applied to the
emoluments.
9 Multiplier
The factor which, when applied to the emoluments as defined of
approved qualified technical staff or of other staff or of staff
positions named in the Agreement, gives a fee rate payable under
the Agreement.
10 Qualified Technical Staff
Having a degree or diploma from an approved university or an
approved professional qualification relevant to the Services to be
performed.
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- Over-time and working hours; and
- Field trips away from base.
B i l B1
Firm 1
3000 B2
Firm2
4400
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6 Typical Clauses
Proceeding from the base that remuneration comprises fees and
expenses, see paragraph 2 (c) in Chapter 6, it is suggested that a
logical progression could be as follows:
The fees for the Services shall be a product of chargeable time
and the charge rate for approved qualified technical staff and other
staff or staff positions named in the Agreement.
The expenses shall, for Normal and Additional Services, be thosedisbursed or incurred under the following named items and in
accordance with the relevant Schedules: ..
The expenses for Exceptional Services shall be all those arising
out of or in connection with the Exceptional Services other than for
the employment of staff for whom charge rates are applicable
under the Agreement.
*Where not stated in the Agreement or otherwise agreed, the feerate for chargeable staff shall be calculated by applying to
(definition of relevant emoluments) the following multipliers:
( ............ ) For long tours
( ............ ) For visits
( ............ ) For work in the Consultants home office
The proportion payable in foreign currency shall be:
( ............ ) For long tour
( ............ ) For visits
(100%) For work in the Consultants home office.
Note that the definition of emoluments can be referred to those of
the individual concerned or where a recognizable structure exists,
for example, either:
Which firm presents the better image? Firm 2 with a lower
multiplier and lower percentage overheads and profits, of course.
A further distorting influence can be that of the respective tax
liabilities of personnel for different types and locations ofemoluments received, where employers will seek to arrange their
wage structures to minimize employee's tax liabilities.
All that really is required to give confidence to a Client is a
multiplier and a basic figure which can, by audit, be seen to be
consistent with the Consultant's overall wage structure.
6 Time
Factors to be covered should include:
- Travel time;
- Absences on holiday, and public holidays;
- Absences for illness;
Basic salary
Social Costs
Overheads
Sub-total
Profit
Overseas allowance
Charge
Multiplier
B1
20% B1
100% B1
TI
10% TI
50% BI
3000
600
3000
6600
660
1500
8760
2.92
B2
13.6% B2
68% B2
T2
8.25% B2
2.25% T2
4400
6000
3000
8600
660
100
8760
1.99
ANNEX 4 Fees as a Percentage of Cost of Worksa) to a grade payment table given in the Appendix;
b) to the actual average/upper quartile value for the grade of
the individual at the time of employment for the Services
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The following could, amongst many variants, form the basis of
"percentage fees" terms for the Services or for a component of them.
The remuneration of the Consultant for the Services comprises
fees and expenses.
The fees for the provision of Normal Services in respect of (e.g.,
design, preparation of tender dossiers, administration of contracts
between the Client and contractor)shall be calculated by applying
the percentages specified in the table below to the cost of the
Works or part thereof as the case may be.
In the case of designs and preparation of tender dossiers the
relevant percentages shall be applied to the estimated cost last
approved before inviting tenders, and in the case of administration
of contracts to the final cost.
Interim payment shall be made of fees in each category
1. For design and tender dossier %
a) on signature of Agreement (e.g., 15)
b) monthly in "x" monthly instalments (e.g., 75)
c) on completion of design and
approval of tender dossier. (e.g., 5)
Category/Description
of Works or
Part of Works
Fee Percentage
Design and Administration of
Tender Dossiers Contracts
the individual at the time of employment for the Services.
The simplest approach usually proves the most workable.
Price variation provisions, etc., may be needed as in other
systems.
7 Terms of Reference & their Preparation
A Terms of Reference
2. For administration of contracts %
a) on making a contract by Client and contractor (e.g., 5)
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Clients should carefully prepare the Terms of Reference (TOR) in their
invitation. This is especially important when competition is on a
financial basis or against a ceiling budget.
Consultants faced with incomplete or imprecise TOR should make a
point of seeking clarifications as soon as possible and before being
at a negotiating disadvantage after their proposal has been
submitted. See "Preparing the Consultant's Terms of Reference",
Reference (8) in Chapter 8.
B General Principles for Preparing Proposals & Agreements
It may be useful to suggest some general rules to be followed in
preparing proposals and agreements, the objective being to avoid
disputes and, possibly, litigation. The atmosphere of goodwill
prevailing between Client and Consultant at award will last longer if
the Agreement is well drafted.
To this end, but not in any special order of importance:
1 Words with initial capital letters should be used only in the sense
as defined (e.g., in the White Book), and when that sense is
intended only those words should be used.
2 Consistently using the same word or phrase wherever a
particular meaning is to be conveyed may be useful.
3 It is often better to specifically identify secondary objectives,
responsibilities or obligations as such, rather than to over-
emphasize the importance of the primary ones.
4 When an obligation (duty, responsibility) is stated, it will be
helpful to state precisely where the liability (risk, expense) for
performance lies.
b) on amount certified for interim payment or paid
to contractor from time to time (e.g., 85)
c) on final payment to contractor, balance making
up 100% of the fee due on each contract.
Final payment shall be made of the balance of the fees due
1. For design and tender dossiers:
on completion of design for and approval of all tender
dossiers for Works specified in the Agreement;
2. For administration of contracts:
on substantial completion
or
at the end of the defects liability period.
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