fidic training

ADBADBFIDIC Training FIDIC Training

8-10 June 20048-10 June 2004ManilaManila

FIDIC FIDIC Contracts for Construction WorksContracts for Construction Works

and and Dispute Resolution Mechanisms Dispute Resolution Mechanisms

in Project Administrationin Project Administration

Gwyn OwenGwyn OwenBSc MSc CEng FICE FConsE FCIArbBSc MSc CEng FICE FConsE FCIArb

Chartered Arbitrator, Adjudicator, MediatorChartered Arbitrator, Adjudicator, Mediatorwww.gwynowen.comwww.gwynowen.com

ContentsContents

IntroductionIntroduction FIDIC DocumentsFIDIC Documents RiskRisk ProcurementProcurement StrategyStrategy First 100 daysFirst 100 days ResponsibilitiesResponsibilities Nominated s/cNominated s/c Staff & labourStaff & labour

Plant & MaterialsPlant & Materials CommencementCommencement DelaysDelays Taking OverTaking Over MeasurementMeasurement GuaranteesGuarantees ClaimsClaims Short FormShort Form DisputesDisputes

FIDIC FIDIC AN INTRODUCTIONAN INTRODUCTION

Founded in 1913Founded in 1913 Expanded in 1945 to include 40 national Expanded in 1945 to include 40 national

associationsassociations Published first Conditions of Contract in Published first Conditions of Contract in

19571957 In 2004 has 64 member associationsIn 2004 has 64 member associations Headquarters in SwitzerlandHeadquarters in Switzerland Web Site : www.fidic.orgWeb Site : www.fidic.org

FIDIC FIDIC AN INTRODUCTIONAN INTRODUCTION

Pre 1957 – no internationally Pre 1957 – no internationally recognised contract conditionsrecognised contract conditions

First “red book” based on UK ICE First “red book” based on UK ICE conditions conditions

FIDIC has international committees FIDIC has international committees to improve contracts to improve contracts

FIDIC DocumentsFIDIC Documents

Old “rainbow books” needed revisionOld “rainbow books” needed revision Changes within International Projects & Changes within International Projects &

ContractingContracting StandardisationStandardisation Clauses to meet current practiceClauses to meet current practice Update “Engineer” Update “Engineer” Introduce “Disputes Adjudication Board” Introduce “Disputes Adjudication Board”

Contract Documents 1999Contract Documents 1999

Conditions of Contract for Conditions of Contract for Construction (Red Book)Construction (Red Book)

Conditions of Contract for Plant & Conditions of Contract for Plant & Design Build (Yellow Book)Design Build (Yellow Book)

Conditions of Contract for EPC Conditions of Contract for EPC Turnkey Projects (Silver Book)Turnkey Projects (Silver Book)

Short Form of Contracts (Green Short Form of Contracts (Green Book)Book)

FIDIC Contracts FIDIC Contracts What’s Changed?What’s Changed?

Simple LanguageSimple Language• 20 Clauses & 163 Sub Clauses20 Clauses & 163 Sub Clauses

Engineer instead of Employer’s Engineer instead of Employer’s Representative Cl.1.1.2.4Representative Cl.1.1.2.4

Employer's Claims Cl.2.5Employer's Claims Cl.2.5 Contractor’s Claims Cl.20.1Contractor’s Claims Cl.20.1 Value Engineering Cl.13.2Value Engineering Cl.13.2 QUALITY & PROCEDURES: QUALITY & PROCEDURES:

• Cl.4.9, 4.18, 6.7, 8.3, 13.2 & 13.3Cl.4.9, 4.18, 6.7, 8.3, 13.2 & 13.3

FIDIC Document FormatFIDIC Document Format

AcknowledgementsAcknowledgements Foreword & ChartsForeword & Charts General ConditionsGeneral Conditions DAB ConditionsDAB Conditions Guidance NotesGuidance Notes Forms of AgreementForms of Agreement Appendix to TenderAppendix to Tender

FIDIC Document UsageFIDIC Document UsageConditions of Contract for Conditions of Contract for

ConstructionConstruction

Works designed by Employer or Works designed by Employer or EngineerEngineer

Contractor Constructs in accordance Contractor Constructs in accordance with designs providedwith designs provided

May include some design elementsMay include some design elements


Plant & Design BuildPlant & Design Build

Electrical & Mechanical PlantElectrical & Mechanical Plant May include building and engineeringMay include building and engineering Design & Execution of worksDesign & Execution of works Contractor designs and constructs in Contractor designs and constructs in

accordance with Employer’s Requirementsaccordance with Employer’s Requirements Engineer AdministersEngineer Administers

Plant & Design BuildPlant & Design Build

General Comments:General Comments:• Contractor will economiseContractor will economise• Employer will superviseEmployer will supervise• No good for Employer VariationsNo good for Employer Variations• Good for Lump SumGood for Lump Sum• Design SavingsDesign Savings• Employer responsible for ER errorsEmployer responsible for ER errors• Risk SharedRisk Shared


EPC/Turnkey ProjectsEPC/Turnkey Projects

Process or Power PlantProcess or Power Plant Infrastructure ProjectsInfrastructure Projects High Degree of CertaintyHigh Degree of Certainty Contractor has total responsibility for Contractor has total responsibility for

Design & ExecutionDesign & Execution Administered by EmployerAdministered by Employer

EPC/TurnkeyEPC/Turnkey

General CommentsGeneral Comments• Not suitable when:Not suitable when:

No time to tenderNo time to tender Much underground worksMuch underground works If Employer wishes to superviseIf Employer wishes to supervise If payments need to be administeredIf payments need to be administered

FIDIC Document UsageFIDIC Document UsageShort Form of ContractShort Form of Contract

Small capital value projectsSmall capital value projects Simple contentSimple content Contractor constructs to Employer’s Contractor constructs to Employer’s

designsdesigns No “Particular Conditions”No “Particular Conditions” No “Impartial” EngineerNo “Impartial” Engineer

FIDIC Document UsageFIDIC Document UsageCOMMUNICATIONSCOMMUNICATIONS

Cl.1.3: Cl.1.3: • Approvals, Certificates, Consents, Approvals, Certificates, Consents,

Determinations, Notices, Requests Determinations, Notices, Requests In WritingIn Writing DeliveredDelivered Not be unreasonably withheld or Not be unreasonably withheld or

delayeddelayed CopiesCopies

RISKRISK

ALLOCATION OF RISKALLOCATION OF RISK

Scope / Cost of ChangeScope / Cost of Change

CONTRACTUAL RISKSCONTRACTUAL RISKS

All contracts contain risksAll contracts contain risks FIDIC allocates responsibilitiesFIDIC allocates responsibilities Key Requirement:Key Requirement:

o Understand General ConditionsUnderstand General Conditionso Understand Particular ConditionsUnderstand Particular Conditionso Set out responsibilitiesSet out responsibilities

RISK OVERVIEWRISK OVERVIEW Contractual Risk Overview: Contractual Risk Overview:

o StrategyStrategyo IdentifyIdentifyo EvaluateEvaluateo MitigateMitigateo Plan ResponsePlan Responseo ReportReporto ManagementManagemento Close out reviewClose out review

CLAIMS RISKS LOCAL LAWSCLAIMS RISKS LOCAL LAWS

Incorporate provisions of local laws Incorporate provisions of local laws into Particular Conditionsinto Particular Conditions

FIDIC Guidance Notes give general FIDIC Guidance Notes give general adviceadvice

Complex task Complex task


Cl.1.5 Priority of DocumentsCl.1.5 Priority of Documents Employer’s Documents have priorityEmployer’s Documents have priority Care in Prequalification PDB & EPCT – note that Care in Prequalification PDB & EPCT – note that

Financial Risk for design with Contractor but Financial Risk for design with Contractor but resolution will be in favour of Employerresolution will be in favour of Employer

““Contract Agreement” is high priority – Contract Agreement” is high priority – Commencement Date binding under Cl.1.1.3.2 & Commencement Date binding under Cl.1.1.3.2 & 8.18.1

Cl.3.3 PDB & Cons empower Engineer to make Cl.3.3 PDB & Cons empower Engineer to make Decisions – EPC no such authorityDecisions – EPC no such authority

FIDIC RELATIONSHIPS FIDIC RELATIONSHIPS


Cl.1.9 DrawingsCl.1.9 Drawings Cl.2.1 SiteCl.2.1 Site Cl.4.7 Setting OutCl.4.7 Setting Out Cl.4.12 Cl.4.12

UnforeseeableUnforeseeable Cl.4.24 FossilsCl.4.24 Fossils Cl.7.4 TestingCl.7.4 Testing Cl.8.4 EoTCl.8.4 EoT

Cl.8.4 Adverse Cl.8.4 Adverse Climatic ConditionsClimatic Conditions

Cl.13.7 LegislationCl.13.7 Legislation Cl.13.8 Changes in Cl.13.8 Changes in

CostCost Cl.14.8 Delayed Cl.14.8 Delayed

paymentspayments Cl.19.4 Force Cl.19.4 Force

MajeureMajeure

Contract SelectionContract SelectionBasic Principles – Red BookBasic Principles – Red Book

Design by EmployerDesign by Employer Works to be Re-MeasuredWorks to be Re-Measured Employer appoints EngineerEmployer appoints Engineer Engineer can vary the works – but Engineer can vary the works – but

not change the Contractnot change the Contract Engineer’s “Determinations” Cl.3.5Engineer’s “Determinations” Cl.3.5 DAB appointed within 28 daysDAB appointed within 28 days

Contract SelectionContract SelectionBasic Principles – Red BookBasic Principles – Red Book

Additional Documents – Cl.1.5 Additional Documents – Cl.1.5 PriorityPriority

Importance of Particular ConditionsImportance of Particular Conditions• PCC priority over GCPCC priority over GC• PCC provides all relevant conditions and PCC provides all relevant conditions and

LawLaw• Contradictions between documentsContradictions between documents

BoQ – re-measured worksBoQ – re-measured works

Contract SelectionContract SelectionBasic Principles – Yellow BookBasic Principles – Yellow Book

Employers RequirementsEmployers Requirements Contractor Designs & BuildsContractor Designs & Builds ER errors – Employer’s riskER errors – Employer’s risk Fixed sum contractFixed sum contract Administered by EngineerAdministered by Engineer Variations by EngineerVariations by Engineer Cl.5 & 12 differ from Red BookCl.5 & 12 differ from Red Book

PROCUREMENTPROCUREMENT

PROCUREMENT PROCEDUREPROCUREMENT PROCEDURE

Establish StrategyEstablish Strategy Procurement methodProcurement method Form of TenderForm of Tender Time SchedulesTime Schedules

PrequalifyPrequalify InvitationInvitation DocumentsDocuments AnalysisAnalysis SelectionSelection

NotifyNotify


Prepare tender DocumentsPrepare tender Documents IssueIssue Site VisitSite Visit QuestionsQuestions Submission & OpeningSubmission & Opening AdjudicationAdjudication


Award ContractAward Contract Issue Letter of AcceptanceIssue Letter of Acceptance Performance SecurityPerformance Security Contract AgreementContract Agreement Notify unsuccessful tenderersNotify unsuccessful tenderers

PROJECT STRATEGYPROJECT STRATEGYDefinitionsDefinitions

General Provisions Cl.1General Provisions Cl.1• Definitions of wordsDefinitions of words• Persons include corporations & other Persons include corporations & other

legal entitieslegal entities• Letter of AcceptanceLetter of Acceptance• Employer’s Requirements (YB)Employer’s Requirements (YB)• Goods – ContractorGoods – Contractor

Cl.1.3 Cl.1.3

PROJECT STRATEGYPROJECT STRATEGYDefinitionsDefinitions

Cl.1.4 Law & LanguageCl.1.4 Law & Language• CompatibilityCompatibility

Cl.1.9 Cl.1.9 • Delays to drawings (RB) Delays to drawings (RB) • Errors to ER (YB) Errors to ER (YB) • Confidentiality (SB)Confidentiality (SB)

PROJECT STRATEGYPROJECT STRATEGYProject Control IssuesProject Control Issues

Cl.1.9 Delay to detailsCl.1.9 Delay to details Cl.2.4 Finance DetailsCl.2.4 Finance Details Cl.2.5 Employers ClaimsCl.2.5 Employers Claims Cl.3.3 Instructions by EngineerCl.3.3 Instructions by Engineer Cl.4.1 Method StatementCl.4.1 Method Statement Cl.4.21 ReportingCl.4.21 Reporting Cl.8.3 ProgrammeCl.8.3 Programme

PROJECT STRATEGYPROJECT STRATEGYProject Control IssuesProject Control Issues

Cl.12.1 MeasurementCl.12.1 Measurement Cl.13 Variations & Value EngineeringCl.13 Variations & Value Engineering Cl.14 PaymentsCl.14 Payments

• Planning Planning • Funding & BudgetFunding & Budget• Disbursement approvalDisbursement approval

Cl.18 InsurancesCl.18 Insurances Cl.20 Contractor’s Claims / RecordsCl.20 Contractor’s Claims / Records

FIDIC -FIDIC -THE FIRST 100 DAYSTHE FIRST 100 DAYS

AN INTRODUCTIONAN INTRODUCTION

The First Hundred Days of a New The First Hundred Days of a New FIDIC contractFIDIC contract

Pre Award PhasePre Award Phase Award to Commencement DateAward to Commencement Date Commencement Date to CD + 28 Commencement Date to CD + 28

DaysDays

THE FIRST 100 DAYSTHE FIRST 100 DAYS

Pre Award Check List Pre Award Check List GeneralGeneral

Document negotiated changesDocument negotiated changes Prioritise and sign changes – Cl 1.5Prioritise and sign changes – Cl 1.5 Agree terms of insurances – Cl 18.2Agree terms of insurances – Cl 18.2 Agree DAB membershipAgree DAB membership Confirm communication and Confirm communication and

addresses – Cl 1.3addresses – Cl 1.3

Pre Award Checklist Pre Award Checklist Engineer’s Duties & AuthorityEngineer’s Duties & Authority

Employer names EngineerEmployer names Engineer Employer’s constraints on Engineer’s Employer’s constraints on Engineer’s

Authority – Cl 3.1Authority – Cl 3.1 Delegation of Engineer’s Authority to Delegation of Engineer’s Authority to

Resident Engineer – Cl 3.2Resident Engineer – Cl 3.2 Engineer’s Determination – Cl 3.5Engineer’s Determination – Cl 3.5

Pre Award ChecklistPre Award ChecklistEmployer’s RisksEmployer’s Risks

Right of Access - Cl 2.1Right of Access - Cl 2.1 Provision of Specifications – Cl 1.8Provision of Specifications – Cl 1.8 Supply of Drawings – Cl 1.9Supply of Drawings – Cl 1.9

Award to Commencement DateAward to Commencement Date

Formal Letter of Acceptance signed – Formal Letter of Acceptance signed – Cl 1.1.1.3Cl 1.1.1.3

Contract Agreement - Cl 1.1.1.2, 1.6 Contract Agreement - Cl 1.1.1.2, 1.6 Date on which the Contract becomes Date on which the Contract becomes

legally bindinglegally binding Instruction of Commencement Date – Instruction of Commencement Date –

Engineer Cl 8.1 – 7 days noticeEngineer Cl 8.1 – 7 days notice Time for Completion – Cl 1.1.3.3Time for Completion – Cl 1.1.3.3

Award to Commencement Date Award to Commencement Date Check ListCheck List

Contractor’s obligationsContractor’s obligations

Performance Security – Cl 4.2Performance Security – Cl 4.2 Consent for sub-contractorsConsent for sub-contractors Commencement of sub-contract wksCommencement of sub-contract wks Compliance with applicable laws, etc Compliance with applicable laws, etc

prior to Commencementprior to Commencement

Award to Commencement Date Award to Commencement Date Check ListCheck List

Employer’s obligationsEmployer’s obligations

Obtaining planning, zoning etc Obtaining planning, zoning etc permits for the Permanent Works – Cl permits for the Permanent Works – Cl 1.131.13

Ensuring that the Contractor will Ensuring that the Contractor will have right of access to and have right of access to and possession of all parts of the Sitepossession of all parts of the Site

Commencement Date to + 28 Commencement Date to + 28 Employer’s ActionsEmployer’s Actions

Right of access & possession – Cl 2.1Right of access & possession – Cl 2.1 Ensuring Employer’s personnel are Ensuring Employer’s personnel are

aware of responsibilities – Cl 2.3aware of responsibilities – Cl 2.3 Preparing evidence of Employer’s Preparing evidence of Employer’s

financial arrangements – Cl 2.4financial arrangements – Cl 2.4 Provision of copies of the Contract Provision of copies of the Contract

and Drawings Cl 1.8 & 1.9and Drawings Cl 1.8 & 1.9

Commencement Date to + 28 Commencement Date to + 28 Engineer’s ResponsibilitiesEngineer’s Responsibilities

Advising Contractor of Engineer’s Advising Contractor of Engineer’s Authority and Delegations – Cl 3.2Authority and Delegations – Cl 3.2

Ensuring assistants are suitably Ensuring assistants are suitably qualifiedqualified

Providing reference survey points, Providing reference survey points, lines and necessary data – Cl 4.7lines and necessary data – Cl 4.7

Commencement Date to + 28 Commencement Date to + 28 Contractor’s ResponsibilitiesContractor’s Responsibilities

General obligations – adequacy, General obligations – adequacy, stability & safety – Cl 4.1 stability & safety – Cl 4.1

Provide Performance Security prior to Provide Performance Security prior to access to Site – Cl 4.2access to Site – Cl 4.2

Submit name of Contractor’s Submit name of Contractor’s Representative for consent – Cl 4.3Representative for consent – Cl 4.3


Give notice of any delegation of CR’s Give notice of any delegation of CR’s responsibilitiesresponsibilities

Obtain consent for sub-contractors Obtain consent for sub-contractors not named in Contract – Cl 4.4not named in Contract – Cl 4.4

Give notice of commencement of Give notice of commencement of sub-contract worksub-contract work


Provide details of suppliers not Provide details of suppliers not named in Contract (see Cl 4.16) named in Contract (see Cl 4.16)

Make objections to any Nominated Make objections to any Nominated Sub-contractors who the Contractor Sub-contractors who the Contractor does not wish to employdoes not wish to employ

Submit detailed time programme Submit detailed time programme within 28 days of receipt of the within 28 days of receipt of the notice to commence – Cl 8.3notice to commence – Cl 8.3


Give notice of probable future events Give notice of probable future events or circumstances which may increase or circumstances which may increase price or delay completionprice or delay completion

Confirm working hours – Cl 6.5 Confirm working hours – Cl 6.5 Site health & safety facilities – Cl 6.7Site health & safety facilities – Cl 6.7 Appoint Accident Prevention OfficerAppoint Accident Prevention Officer

RESPONSIBILITIESRESPONSIBILITIES

Responsibilities Responsibilities EmployerEmployer

Cl.2Cl.2• Provides Access to the Site Provides Access to the Site

(not access & other areas – Cl.14.15 & 14.23)(not access & other areas – Cl.14.15 & 14.23)

• Assists Contractor with PermitsAssists Contractor with Permits• Financial ArrangementsFinancial Arrangements

See Variations & Cl.16.1 Suspension (strike out??)See Variations & Cl.16.1 Suspension (strike out??)

• Notice of ClaimsNotice of Claims Appoints the Engineer Cl.3.1Appoints the Engineer Cl.3.1

Responsibilities Responsibilities EmployerEmployer

Cl.14.7 make Payments !!Cl.14.7 make Payments !! Cl.20.2 appointment of DAB Cl.20.2 appointment of DAB

membersmembers

Responsibilities Responsibilities EngineerEngineer

Exercises stated authorityExercises stated authority Employer’s Approval – PCEmployer’s Approval – PC When he exercises specific authority When he exercises specific authority

deemed to have Employer’s approvaldeemed to have Employer’s approval Acts for EmployerActs for Employer

• Cl.3.5 – “Fair Determination” Cl.3.5 – “Fair Determination”


Cl.3Cl.3• Employer undertakes not to impose Employer undertakes not to impose

further constraints (Breach of Contract)further constraints (Breach of Contract)• No authority to amend contractNo authority to amend contract• Acts for EmployerActs for Employer• No authority to relieve the parties of No authority to relieve the parties of

duties or obligations etc.duties or obligations etc.


Cl.3Cl.3• Delegation – except Cl.3.5Delegation – except Cl.3.5• Instructions in writingInstructions in writing

Oral – confirmation by contractor – writtenOral – confirmation by contractor – written

• Employer instructions to EngineerEmployer instructions to Engineer• Determination Determination

Consult – agreement – fair determinationConsult – agreement – fair determination Give notice Give notice Give effect unless Cl.20Give effect unless Cl.20


Cl.4.1 Method StatementsCl.4.1 Method Statements Cl.8.1 Give Commencement NoticeCl.8.1 Give Commencement Notice Cl.8.6 Rate of ProgressCl.8.6 Rate of Progress Cl.12.1 MeasurementCl.12.1 Measurement Cl.13.1 VariationsCl.13.1 Variations Cl.14.6 Interim Payment CertificatesCl.14.6 Interim Payment Certificates Cl.20.1 Records / DeterminationCl.20.1 Records / Determination

Responsibilities Responsibilities ContractorContractor

Cl.4Cl.4• Execute & Complete the Works Execute & Complete the Works

Cl.8.1 due expedition & without delayCl.8.1 due expedition & without delay Adequacy & safetyAdequacy & safety Method StatementMethod Statement Fit for purposeFit for purpose

• Performance BondPerformance Bond• Engineer’s Approval of RepresentativeEngineer’s Approval of Representative• May delegateMay delegate• Fluent in languageFluent in language• Sub Contractor approval Sub Contractor approval


Setting Out to lines & levels of Setting Out to lines & levels of EngineerEngineer

Quality Assurance Quality Assurance • Details in SpecificationDetails in Specification• ProceduresProcedures• Compliance documentsCompliance documents


Site dataSite data• Costs includedCosts included• RiskRisk• InspectionsInspections• All relevant data – obligationAll relevant data – obligation• Care in Tender – failure to provideCare in Tender – failure to provide

Sufficiency of Contract AmountSufficiency of Contract Amount


Unforeseeable Physical ConditionsUnforeseeable Physical Conditions• Excludes climatic conditionsExcludes climatic conditions

Cl.8.4 & 17.3hCl.8.4 & 17.3h

• Extension of timeExtension of time• Payment of cost Payment of cost

(see Cl.1.1.4.3 includes off site)(see Cl.1.1.4.3 includes off site)

• No profit No profit (as a general rule not included where risk is (as a general rule not included where risk is

not the fault of either party)not the fault of either party)


Transport to siteTransport to site Protection of the EnvironmentProtection of the Environment

• EmissionsEmissions• Surface dischargesSurface discharges• EffluentEffluent• Local LawLocal Law


Progress ReportProgress Report Monthly – 6 copiesMonthly – 6 copies

• See also (Cl.4.9 procedures) and:See also (Cl.4.9 procedures) and:• Cl. 6.7 Accident RecordsCl. 6.7 Accident Records• Cl. 6.10 PersonnelCl. 6.10 Personnel• Cl.14.3 Application for paymentCl.14.3 Application for payment• Cl.20.1 Contemporary records Cl.20.1 Contemporary records


Progress Report:Progress Report:• ChartsCharts• PhotographsPhotographs• Manufacturing reportManufacturing report• PersonnelPersonnel• QA documentsQA documents• Claims Cl.2.5 & 20.1Claims Cl.2.5 & 20.1• Safety statisticsSafety statistics• ProgressProgress


SecuritySecurity Staff & LabourStaff & Labour

• Facilities / Health & SafetyFacilities / Health & Safety Tests on Completion Cl.9.1Tests on Completion Cl.9.1 Value Engineering Cl.13.3Value Engineering Cl.13.3 Application for Payment Cl.14.3Application for Payment Cl.14.3 Contemporary records Cl.20.1Contemporary records Cl.20.1

Nominated Nominated SubcontractorsSubcontractors

Clause 5 Clause 5 Applies to Subcontractors and Applies to Subcontractors and

suppliers nominated by Employer or suppliers nominated by Employer or as instructed by the Engineer under as instructed by the Engineer under Cl.13Cl.13

Payment Cl.5.3Payment Cl.5.3

Nominated Nominated SubcontractorsSubcontractors

Grounds to object Cl.5.2Grounds to object Cl.5.2• Reasonable ObjectionReasonable Objection• Supporting detailsSupporting details• Lack of competence, recourses, financial Lack of competence, recourses, financial

strengthstrength• Lack of indemnityLack of indemnity• Lack of obligations and liabilityLack of obligations and liability

Staff & LabourStaff & Labour

Clause 6Clause 6 Engagement of Staff & LabourEngagement of Staff & Labour

• Payment, housing feeding & transportPayment, housing feeding & transport• Cl.8.4d & 13.7Cl.8.4d & 13.7

Rates of pay & conditionsRates of pay & conditions NO Poaching !! (Cl.6.3)NO Poaching !! (Cl.6.3)


Labour Laws (including immigration)Labour Laws (including immigration) Working Hours (days of rest)Working Hours (days of rest) Facilities (including Employer’s Facilities (including Employer’s

Personnel)Personnel) Health & SafetyHealth & Safety

• Medical staff & facilitiesMedical staff & facilities• Accident prevention officerAccident prevention officer• RecordsRecords


Cl.4.3 – Contractor’s RepresentativeCl.4.3 – Contractor’s Representative Cl.6.8 – Superintendence (Language)Cl.6.8 – Superintendence (Language) Personnel – qualified, skilled, Personnel – qualified, skilled,

experiencedexperienced Records monthly (cl.4.9 procedures) Records monthly (cl.4.9 procedures)

PLANT PLANT & MATERIALS& MATERIALS

Plant MaterialsPlant Materials& Workmanship& Workmanship

Cl.7Cl.7 Execution of works as specifiedExecution of works as specified

• Recognised good practiceRecognised good practice• Proper facilitiesProper facilities• Non hazardous materialsNon hazardous materials

SamplesSamples• For consentFor consent• Labelled origin / intended useLabelled origin / intended use


Inspection:Inspection:• Access to locations of natural materialsAccess to locations of natural materials• Place of manufacturePlace of manufacture• Provide access, facilities, permissions, safety Provide access, facilities, permissions, safety

equipmentequipment• Give notice and provide opportunityGive notice and provide opportunity• Testing – may proceed after noticeTesting – may proceed after notice• Delay claimDelay claim• Test Reports & Certificates Test Reports & Certificates


Rejection – Retest – costs Cl.2.5Rejection – Retest – costs Cl.2.5 Remedial worksRemedial works Ownership of Plant & MaterialsOwnership of Plant & Materials

• Local lawLocal law• When deliveredWhen delivered• When contractor entitled to payment When contractor entitled to payment

under Cl.8.10 (suspension)under Cl.8.10 (suspension) RoyaltiesRoyalties

COMMENCEMENTCOMMENCEMENT& DELAYS& DELAYS

Commencement, Delays Commencement, Delays & Suspension& Suspension

Contract becomes effective when Contract becomes effective when Letter of Acceptance has been Letter of Acceptance has been received by Contractorreceived by Contractor

Cl.8.1 Commencement DateCl.8.1 Commencement Date• Engineer Engineer SHALLSHALL• Contractor Contractor SHALLSHALL

Engineer determines the date or 42 Engineer determines the date or 42 days after the LA days after the LA

CompletionCompletion

Cl.8.2 Fundamental obligation to Cl.8.2 Fundamental obligation to complete within Time for Completioncomplete within Time for Completion• Includes all of WorksIncludes all of Works• Includes all testsIncludes all tests• See Cl.10.1See Cl.10.1

ProgrammeProgramme

Programme of Works Cl.8.3 Programme of Works Cl.8.3 • Within 28 daysWithin 28 days• Specific requirements of programmeSpecific requirements of programme• Methods of executionMethods of execution• Details of personnel & equipmentDetails of personnel & equipment

Engineer does not approve (21 days)Engineer does not approve (21 days) Employer may rely on programmeEmployer may rely on programme

ProgrammeProgramme

Specific, Probable, Future eventsSpecific, Probable, Future events Revisions to programmeRevisions to programme Monthly progress chartsMonthly progress charts Engineer may request a revised Engineer may request a revised

programmeprogramme

Extension of TimeExtension of Time

Contractor Contractor SHALLSHALL be entitled be entitled• Not dependant upon further decisionNot dependant upon further decision• If no extension then “time at large”If no extension then “time at large”• VariationVariation• Sub Clause giving delay Sub Clause giving delay • Exceptionally adverse climatic conditionsExceptionally adverse climatic conditions• Unforeseeable shortages personnel & goodsUnforeseeable shortages personnel & goods• Employer’s delayEmployer’s delay

Cl.20.1Cl.20.1 Cl.3.5 Engineer’s DeterminationCl.3.5 Engineer’s Determination

Extension of TimeExtension of Time

Cl.20.1 & 3.5 give time limits to Cl.20.1 & 3.5 give time limits to Engineer to Determine – or Cl.13 Engineer to Determine – or Cl.13 shall not be unreasonably withheld or shall not be unreasonably withheld or delayeddelayed

Delays by authoritiesDelays by authorities

Rate of ProgressRate of Progress

Engineer may instruct submission of Engineer may instruct submission of revised programmerevised programme

Contractor to proceed with due expedition Contractor to proceed with due expedition and without delay and without delay

Delay DamagesDelay Damages• Failure to complete by due dateFailure to complete by due date• Delay damagesDelay damages• Limit of damagesLimit of damages

Suspension – Engineer may instructSuspension – Engineer may instruct

TESTS, DEFECTSTESTS, DEFECTS& TAKING OVER& TAKING OVER

Tests on CompletionTests on Completion Cl.9Cl.9

• Contractor shall give 21 days noticeContractor shall give 21 days notice• Tests carried out within 14 days of noticeTests carried out within 14 days of notice• Certified report Certified report

Delayed testsDelayed tests• Employer Cl.7.4 or 10.3 applyEmployer Cl.7.4 or 10.3 apply• Contractor to complete 21 days after noticeContractor to complete 21 days after notice

FailureFailure• RetestRetest• Cl.11.4Cl.11.4

Taking Over ResponsibilitiesTaking Over Responsibilities

Responsibilities under Financing Responsibilities under Financing AgreementAgreement• Proper use of fundsProper use of funds• Proper management of constructionProper management of construction• Final paymentFinal payment

Responsibilities under the Contract:Responsibilities under the Contract:• Before Taking OverBefore Taking Over• After Taking OverAfter Taking Over

Taking Over ResponsibilitiesTaking Over Responsibilities

Before Taking Over: Before Taking Over: • Take over on CompletionTake over on Completion• Tests on CompletionTests on Completion• Contractor’s request for TO CertificateContractor’s request for TO Certificate

Cl.10.1 The Employer Cl.10.1 The Employer SHALLSHALL take over take over when:when:• Works completedWorks completed• Tests completedTests completed• TO certificate issuedTO certificate issued

Employer’s Taking OverEmployer’s Taking Over

Cl.10Cl.10• TO Certificate issued when works completed and ready TO Certificate issued when works completed and ready

for intended purposefor intended purpose• Minor outstanding work may be completed after issue of Minor outstanding work may be completed after issue of

TOCTOC Contractor may apply for TOC within 14 days of Contractor may apply for TOC within 14 days of

Works being completeWorks being complete Sectional CompletionSectional Completion Engineer mayEngineer may

• Issue TOC Reject application giving reasonsIssue TOC Reject application giving reasons Failure of Engineer to issue TOC or rejectFailure of Engineer to issue TOC or reject

• Within 28 daysWithin 28 days• TOC deemed to be issuedTOC deemed to be issued


Sectional Taking OverSectional Taking Over• TestsTests• Cost due to STOCost due to STO• Delay Damages reduced after STO Delay Damages reduced after STO

Certificate issuedCertificate issued• Reduction in ratio of value of STO WorksReduction in ratio of value of STO Works• No difference to maximum damagesNo difference to maximum damages

Reinstatement of ground or surfaceReinstatement of ground or surface


Taking Over CertificateTaking Over Certificate• Appendix listing all minor defects Appendix listing all minor defects • Listing all works yet to be carried outListing all works yet to be carried out

Contractor responsible to carry out Contractor responsible to carry out repairs before end of Defects repairs before end of Defects Notification PeriodNotification Period

Defects LiabilityDefects Liability

Cl.11Cl.11• Provides procedures and responsibilities Provides procedures and responsibilities

under the Defects Notification Periodunder the Defects Notification Period• Works are accepted by Engineer on the Works are accepted by Engineer on the

issuance of Performance Certificateissuance of Performance Certificate


Works & Documents completedWorks & Documents completed• Fair wear & tear acceptedFair wear & tear accepted• Complete all o/s work in TOCComplete all o/s work in TOC• Remedy defects & damage notified by the end Remedy defects & damage notified by the end

of the DNPof the DNP Remedy works at Contractor’s costRemedy works at Contractor’s cost Extension to DNPExtension to DNP

• Max 2 years, orMax 2 years, or• Suspension Cl.8.8 or 16.1Suspension Cl.8.8 or 16.1


Failure to RemedyFailure to Remedy• Reasonable noticeReasonable notice• Carry out work himself or by othersCarry out work himself or by others• Contractor has no responsibilityContractor has no responsibility• Reduction in Contract PriceReduction in Contract Price• Recover all sums paid & costsRecover all sums paid & costs

RemovalRemoval• Further TestsFurther Tests• Right of accessRight of access• Contractor to searchContractor to search

Performance CertificatePerformance Certificate

Performance CertificatePerformance Certificate• Contractor’s obligations completeContractor’s obligations complete• Engineer to issueEngineer to issue• DateDate• Issue within 28 days of DNP expiryIssue within 28 days of DNP expiry• After submission of all documentationAfter submission of all documentation• All tests completeAll tests complete• All remedying works completeAll remedying works complete

Constitutes Acceptance of WorksConstitutes Acceptance of Works• Liability for fulfilment of obligationsLiability for fulfilment of obligations• Removal of equipment, rubbish etc…Removal of equipment, rubbish etc…• Contractor may be liable for latent defectsContractor may be liable for latent defects

Measurement, Evaluation Measurement, Evaluation & Variations& Variations

This clause only applies to Red BookThis clause only applies to Red Book Yellow Book Cl.12 deals with tests Yellow Book Cl.12 deals with tests

after completionafter completion Measurement by EngineerMeasurement by Engineer Standard method of measurement as Standard method of measurement as

specified in schedulesspecified in schedules


Cl.12.3 Basis of evaluationCl.12.3 Basis of evaluation• Rates in contract will applyRates in contract will apply• New rates may be determinedNew rates may be determined

Qty changed more than 10%Qty changed more than 10% VariationVariation Not specifiedNot specified No appropriate rateNo appropriate rate

• Reasonable Cost & ProfitReasonable Cost & Profit Cl.12.4 CompensationCl.12.4 Compensation


Under Yellow Book no such clausesUnder Yellow Book no such clauses Cl.13.3 DeterminationsCl.13.3 Determinations Means of measurement may be Means of measurement may be

necessarynecessary Payment schedule linked to Payment schedule linked to

“milestones” Cl.14.4“milestones” Cl.14.4

VariationsVariations

Cl.13.1 Engineer has the right to varyCl.13.1 Engineer has the right to vary• Prior to issue of TO certificatePrior to issue of TO certificate• List of variation inclusionsList of variation inclusions

Value Engineering Cl.13.2Value Engineering Cl.13.2• Development risk with ContractorDevelopment risk with Contractor• Savings 50/50Savings 50/50

Variation ProcedureVariation Procedure

Engineer requests proposal from Engineer requests proposal from ContractorContractor• Contractor responds with:Contractor responds with:

DescriptionDescription ProgrammeProgramme EvaluationEvaluation

• Work proceeds without delayWork proceeds without delay

Variation due to LegislationVariation due to Legislation

Local law at Base DateLocal law at Base Date Cl.20.1 claimCl.20.1 claim

• Extension of timeExtension of time• Payment of costPayment of cost

Contract Price Contract Price & Payment& Payment

Considerations:Considerations:• Payment schedulesPayment schedules• Disbursement approvalDisbursement approval• Particular ConditionsParticular Conditions• BudgetingBudgeting

Funding availabilityFunding availability Additional Costs / VariationsAdditional Costs / Variations


Advance paymentAdvance payment• DesignDesign• MobilisationMobilisation• Funding facilitationFunding facilitation

Interim paymentsInterim payments• 56 days56 days

Final PaymentFinal Payment• 84 days84 days


Aid funding requires:Aid funding requires:• Authority approvalAuthority approval• TimingTiming• VariationsVariations• Routine audit checksRoutine audit checks• Time to transfer fundsTime to transfer funds• Advance notice of changeAdvance notice of change


Cl.14 requires prompt action within Cl.14 requires prompt action within time constraintstime constraints

Finance costs will lead to claimsFinance costs will lead to claims Alter Cl.14 by Particular Conditions to Alter Cl.14 by Particular Conditions to

suit funding authoritysuit funding authority


Financial planning:Financial planning:• Check estimates & budgetsCheck estimates & budgets• Prepare draft payment schedulesPrepare draft payment schedules• Update estimates & programmeUpdate estimates & programme• Check fundingCheck funding• Cl.14.4 estimates each 90 daysCl.14.4 estimates each 90 days

Budget ForecastBudget Forecast

Engineer prepares for EmployerEngineer prepares for Employer• Regular intervalsRegular intervals• Updated budgetUpdated budget• Report of changesReport of changes

Data for report:Data for report:• Cl.2.4, 2.5, 3.5, 4.21, 8.3, 13.1, 13.3, Cl.2.4, 2.5, 3.5, 4.21, 8.3, 13.1, 13.3,

14.3, 13.8, 14.3, 14.6, 20.1, 20.4 14.3, 13.8, 14.3, 14.6, 20.1, 20.4


Cl.14 Contract PriceCl.14 Contract Price• Measured and will vary – Red BookMeasured and will vary – Red Book• Fixed Lump Sum – Yellow BookFixed Lump Sum – Yellow Book• Fixed Lump Sum – Silver BookFixed Lump Sum – Silver Book• Lump Sum or Remeasure – Green BookLump Sum or Remeasure – Green Book

Advance PaymentAdvance Payment

Cl.14.2 Advance paymentCl.14.2 Advance payment• Interest free loan for mobilisationInterest free loan for mobilisation

GuaranteeGuarantee Application Cl.14.3Application Cl.14.3 Performance Security – Performance Security – approved by approved by

EmployerEmployer

• RepaymentRepayment Commence after when certificates >10%Commence after when certificates >10% Deductions 25% of each Certificate Deductions 25% of each Certificate

Interim PaymentInterim Payment

Cl.14.3 ApplicationCl.14.3 Application• 6 copies6 copies• In a form approved (Cl.4.9)In a form approved (Cl.4.9)• Cl.4.21Cl.4.21• List of items (a) – (g)List of items (a) – (g)• Note : Cl.20 items includedNote : Cl.20 items included


Cl.14.4 Schedule of payments:Cl.14.4 Schedule of payments:• Payment dates not recommended Payment dates not recommended • Engineer determination Cl.3.5Engineer determination Cl.3.5• Cross guaranteesCross guarantees• Milestones preferredMilestones preferred


Cl.14.6 Issue of IPCCl.14.6 Issue of IPC• Engineer determines Engineer determines FAIRLYFAIRLY• IPC IPC SHALLSHALL not be withheld not be withheld

Cl.14.7 PaymentCl.14.7 Payment• IPC paid within 56 days after Engineer IPC paid within 56 days after Engineer

receives Statementreceives Statement Cl.14.8 Interest on late payments Cl.14.8 Interest on late payments

Non PaymentNon Payment

Cl.16.1 SuspensionCl.16.1 Suspension• Engineer fails to certifyEngineer fails to certify• Employer does not provide Cl.2.4 detailsEmployer does not provide Cl.2.4 details• Non paymentNon payment• 21 days notice21 days notice

Cl.16.2 TerminationCl.16.2 Termination

Guarantees & BondsGuarantees & Bonds

Cl.4.2 Performance SecurityCl.4.2 Performance Security Contractor finance Contractor finance

• Guarantee by EmployerGuarantee by Employer• No Cl.8.1 notice before Guarantee No Cl.8.1 notice before Guarantee

Cl.14.2 Advance Payment GuaranteeCl.14.2 Advance Payment Guarantee

Risk & ResponsibilityRisk & Responsibility

Cl.17.1 Basis for IndemnityCl.17.1 Basis for Indemnity Cl.17.2 Full responsibility for Works & Cl.17.2 Full responsibility for Works &

Goods until TO CertificateGoods until TO Certificate Cl.17.3 Employer’s RisksCl.17.3 Employer’s Risks Cl.17.4 Compensation & Claims Cl.17.4 Compensation & Claims

InsuranceInsurance Cl.18Cl.18

• Employer to approve insurersEmployer to approve insurers• Agreed termsAgreed terms• CurrencyCurrency• Payments to be used to rectify lossPayments to be used to rectify loss• Cl.18.3 – Appendix minimum amount Cl.18.3 – Appendix minimum amount

Force MajeureForce Majeure

Basic Principles:Basic Principles:• Exceptional eventExceptional event• Not reasonably provided against Not reasonably provided against • Not reasonable to overcome / avoidNot reasonable to overcome / avoid• Not attributable to either partyNot attributable to either party• Beyond control of affected partyBeyond control of affected party

Force MajeureForce Majeure

Cl.19.1 DefinitionsCl.19.1 Definitions• (i) – (iv) man made(i) – (iv) man made

Cl.19.4 ConsequencesCl.19.4 Consequences• EoTEoT• Man made – costMan made – cost• Man made in country – costMan made in country – cost• Cl.19.6 TerminationCl.19.6 Termination

CLAIMS & CLAIMS & CONTRACTUAL CONTRACTUAL PROCEDURESPROCEDURES

CAUSES OF CLAIMS FOR CAUSES OF CLAIMS FOR CONTRACTORSCONTRACTORS

Unforeseeable ground conditionsUnforeseeable ground conditions Delayed drawingsDelayed drawings Delayed paymentDelayed payment Lack of possession of siteLack of possession of site Consequence of riskConsequence of risk SuspensionSuspension Force MajeureForce Majeure

CONTRACTOR’S CLAIM CONTRACTOR’S CLAIM PROCEDUREPROCEDURE

Clause 20.1Clause 20.1o Sets out Contractor procedureSets out Contractor procedureo Condition PrecedentCondition Precedento Not later than 28 daysNot later than 28 dayso Sets out Engineer procedureSets out Engineer procedure


Contractor gives noticeContractor gives noticeo Within 28 daysWithin 28 days

Contractor keeps contemporary recordsContractor keeps contemporary recordso Engineer may monitorEngineer may monitoro Engineer may instruct further recordsEngineer may instruct further records

Fully detailed claim Fully detailed claim o Supporting documentsSupporting documentso Within 42 days of eventWithin 42 days of event

CAUSES OF CLAIMS FOR CAUSES OF CLAIMS FOR EMPLOYERSEMPLOYERS

Quality below SpecificationQuality below Specification Delay in Completion DateDelay in Completion Date Slow Rate of ProgressSlow Rate of Progress Defective MaterialsDefective Materials Failures of TestsFailures of Tests

EMPLOYER’S CLAIM EMPLOYER’S CLAIM PROCEDUREPROCEDURE

Employer gives noticeEmployer gives noticeo As soon as practicableAs soon as practicable

Contractor Receives NoticeContractor Receives Noticeo No obligation to respondNo obligation to respond

Engineer proceeds with Cl.3.5Engineer proceeds with Cl.3.5 Contractor can dispute if dissatisfiedContractor can dispute if dissatisfied Engineer’s determination applied to Engineer’s determination applied to

Certificate of PaymentCertificate of Payment

CONTEMPORARY RECORDSCONTEMPORARY RECORDS

Crucial for determination of claimCrucial for determination of claim Records for any future disputeRecords for any future dispute Contractor obliged to keep recordsContractor obliged to keep records Procedure for this work Procedure for this work Employer & Engineer to agree Employer & Engineer to agree

Engineer’s actionsEngineer’s actions


Cl.20.1 continuing procedureCl.20.1 continuing procedure After 42 days:After 42 days:

o Claim submission is considered interimClaim submission is considered interimo Further monthly claimsFurther monthly claimso Final claim with 28 days of end of effectsFinal claim with 28 days of end of effects


Engineer’s Response:Engineer’s Response:o Within 42 days of receiving claimWithin 42 days of receiving claimo Approval / DisapprovalApproval / Disapprovalo Detailed commentsDetailed comments

May ask for further detailsMay ask for further details Proceed with Cl.3.5Proceed with Cl.3.5 May certify interim sumsMay certify interim sums

CLAUSE 3.5 DETERMINATIONSCLAUSE 3.5 DETERMINATIONS

Engineer makes a DeterminationEngineer makes a Determination Makes his own evaluationMakes his own evaluation Shall NOT delegate Cl.3.5 authorityShall NOT delegate Cl.3.5 authority

CLAUSE 3.5 DETERMINATIONCLAUSE 3.5 DETERMINATIONPROCEDUREPROCEDURE

Engineer shall consult both PartiesEngineer shall consult both Parties Try to reach agreementTry to reach agreement Give notice with supporting Give notice with supporting

particularsparticulars Where no agreement then Engineer Where no agreement then Engineer

makes a FAIR determinationmakes a FAIR determination

DISSATISFACTION WITH DISSATISFACTION WITH Cl.3.5 DETERMINATIONCl.3.5 DETERMINATION

Dispute : Refer to Dispute Dispute : Refer to Dispute Adjudication BoardAdjudication Board

No definition of “Dispute”No definition of “Dispute”o Rejection of DeterminationRejection of Determinationo No agreement with continued discussionNo agreement with continued discussiono One party declines to discussOne party declines to discusso No progress in protracted discussion No progress in protracted discussion

Subsequent procedure - Clause 20.4Subsequent procedure - Clause 20.4

FIDIC Short FormFIDIC Short Form

Recommended for projects without Recommended for projects without problems problems

Small Capital Value <$0.5MSmall Capital Value <$0.5M Simple or repetitive worksSimple or repetitive works No specialist subcontractorsNo specialist subcontractors Short durationShort duration No Impartial EngineerNo Impartial Engineer Named AdjudicatorNamed Adjudicator


Increased responsibility on EmployerIncreased responsibility on Employer• Define project Define project • Undertake designUndertake design• Scope of worksScope of works• SupervisionSupervision• Avoid letters of intent / acceptanceAvoid letters of intent / acceptance• Offer & Acceptance in AppendixOffer & Acceptance in Appendix


Priority of documents – undefinedPriority of documents – undefined No “ruling language”No “ruling language” Cl.2.4 to avoid argument Cl.2.4 to avoid argument

• ““approval” only used for Cl.4.4 & 14.2approval” only used for Cl.4.4 & 14.2 Cl.4.4 Performance Bond - no modelCl.4.4 Performance Bond - no model


Risk & Claims Risk & Claims • Cl.6.1 lists all Employers LiabilitiesCl.6.1 lists all Employers Liabilities• No bad weather claimNo bad weather claim• EoT Cl.7.3 to avoid “time at large”EoT Cl.7.3 to avoid “time at large”• Cl.10.3 Early WarningCl.10.3 Early Warning


Taking Over – no sectional handoverTaking Over – no sectional handover No defined Defects period – 12mthsNo defined Defects period – 12mths Employer may vary - Cl.10Employer may vary - Cl.10

• Lump sumLump sum• RatesRates• DayworkDaywork


Contract price Cl.11Contract price Cl.11• Lump SumLump Sum• LS with schedule of ratesLS with schedule of rates• LS with BoQLS with BoQ• Remeasurement with BoQRemeasurement with BoQ• Cost reimbursableCost reimbursable

Consider valuation methodsConsider valuation methods


Dispute resolutionDispute resolution• Amicable settlementAmicable settlement• AdjudicationAdjudication• Dissatisfaction – 28 daysDissatisfaction – 28 days• Arbitration Arbitration

Alternative Dispute Alternative Dispute ResolutionResolution

ADR - OverviewADR - Overview

Alternative Dispute ResolutionAlternative Dispute ResolutionADR - OverviewADR - Overview

ConfrontationalConfrontational Litigation Litigation Win – Win methodsWin – Win methods ADR Methods:ADR Methods:

• MediationMediation• ConciliationConciliation• AdjudicationAdjudication• ArbitrationArbitration

DISPUTE RESOLUTIONDISPUTE RESOLUTIONunder FIDICunder FIDIC

““Dispute” not defined by FIDICDispute” not defined by FIDICo Where 2 parties can not agreeWhere 2 parties can not agreeo Where something needs to be decidedWhere something needs to be decided

Certificates, Determinations, Certificates, Determinations, Instructions, VariationsInstructions, Variations

FIDIC encourages resolution by FIDIC encourages resolution by agreement – Cl.3.5agreement – Cl.3.5

No agreement - DisputeNo agreement - Dispute

Amicable SettlementAmicable Settlement

Cl.20.5 – no definitionCl.20.5 – no definition• 56 days56 days• Direct negotiationDirect negotiation• ConciliationConciliation• MediationMediation• Do not involve the DABDo not involve the DAB• Consensual Consensual • No obligation – costs ??No obligation – costs ??

MediationMediation

No facility in FIDIC contractsNo facility in FIDIC contracts Consensual procedureConsensual procedure ConfidentialConfidential Very successfulVery successful Short time frameShort time frame Low costLow cost Involve decision makersInvolve decision makers

ENGINEERS DECISIONENGINEERS DECISION

Red & Yellow Books provide for an Red & Yellow Books provide for an alternative to the DABalternative to the DAB

Engineer’s DecisionEngineer’s Decision Delete Cl.20.2 & 20.3 make Delete Cl.20.2 & 20.3 make

substitute wordingsubstitute wording Impartiality, Independence ??Impartiality, Independence ??

ADJUDICATIONADJUDICATION

Encourage the resolution of disputesEncourage the resolution of disputes Statutory / non statutoryStatutory / non statutory Provides a decision in a short timeProvides a decision in a short time Binding Binding

• Give effectGive effect• May be changed by amicable settlementMay be changed by amicable settlement• May be changed by arbitrationMay be changed by arbitration

Contractually enforceableContractually enforceable

ARBITRATIONARBITRATION

Clause 20.6Clause 20.6 Final settlement – ICCFinal settlement – ICC 3 arbitrators3 arbitrators LanguageLanguage Open up & reviewOpen up & review No limits to evidenceNo limits to evidence DAB Decision shall be admittedDAB Decision shall be admitted

ICC ARBITRATIONICC ARBITRATION

Place to be agreed in Particular Place to be agreed in Particular ConditionsConditions

Each party nominates 1 arbitrator Each party nominates 1 arbitrator and chairman selected or agreedand chairman selected or agreed

ICC court will formally appointICC court will formally appoint ICC fee scales & administration costsICC fee scales & administration costs ICC rules govern initial referral then ICC rules govern initial referral then

arbitrators set the procedurearbitrators set the procedure

ARBITRATOR’S AWARD ARBITRATOR’S AWARD

Final & BindingFinal & Binding 1958 New York Convention for 1958 New York Convention for

enforcement of awardsenforcement of awards

Dispute Adjudication BoardDispute Adjudication Board

Rules set out in Red and Yellow Rules set out in Red and Yellow booksbooks

Ad hoc – rules apply to the resolution Ad hoc – rules apply to the resolution of a referred dispute onlyof a referred dispute only

1 or 3 person board1 or 3 person board Independent & ImpartialIndependent & Impartial Decisions or advice & opinionDecisions or advice & opinion

ADVANTAGES OF THE DABADVANTAGES OF THE DAB

Resolves disputes in 84 daysResolves disputes in 84 days Lower costs than Arbitration or LitigationLower costs than Arbitration or Litigation ImpartialityImpartiality Real time assessmentReal time assessment Improves standardsImproves standards Provides clarityProvides clarity Diffuses problems (win – win)Diffuses problems (win – win) Encourages competitiveness in tendersEncourages competitiveness in tenders

DISPUTE ADJUDICATION DISPUTE ADJUDICATION BOARDBOARD

Functions: Functions: o Become FamiliarBecome Familiaro Visit the siteVisit the siteo Keep up to dateKeep up to dateo Encourage resolution of issuesEncourage resolution of issueso When a dispute is referred:When a dispute is referred:

o Act Fairly & ImpartiallyAct Fairly & Impartiallyo Convene a hearingConvene a hearingo DeliberateDeliberateo Prepare a DecisionPrepare a Decisiono Avoid unnecessary delay or expenseAvoid unnecessary delay or expense

FORMATION OF DABFORMATION OF DAB

FORMATION OF DABFORMATION OF DABRELEVANT DOCUMENTATIONRELEVANT DOCUMENTATION

Cl. 20.2 & 20.3Cl. 20.2 & 20.3 General Conditions of DAAGeneral Conditions of DAA

o Red Book - full termRed Book - full termo Yellow Book – ad-hocYellow Book – ad-hoco InterchangeableInterchangeable

Dispute Adjudication AgreementDispute Adjudication Agreement Tripartite AgreementTripartite Agreement

General Conditions of DAAGeneral Conditions of DAA

Employer decides (at tender stage)Employer decides (at tender stage)o What type of DABWhat type of DABo How many membersHow many memberso Period to agree selectionPeriod to agree selectiono Third party nominatorThird party nominator

List of candidates in tender ??List of candidates in tender ?? Employer to be ready to nominateEmployer to be ready to nominate

Formation of DABFormation of DAB

Cl.20.2 FormationCl.20.2 Formation• 1 or 3 members 1 or 3 members • Each party nominates one memberEach party nominates one member• Parties consult members and agree a Parties consult members and agree a

chairmanchairman• List of potential members in tenderList of potential members in tender

No AgreementNo Agreement• FIDIC President will nominateFIDIC President will nominate• Due consultation with partiesDue consultation with parties

DAB OBLIGATIONSDAB OBLIGATIONS

Act FairlyAct Fairly Act ImpartiallyAct Impartially Give parties a reasonable Give parties a reasonable

opportunity to pout their case & opportunity to pout their case & respondrespond

Adopt procedures:Adopt procedures:o Avoid unnecessary delayAvoid unnecessary delayo Avoid unnecessary expenseAvoid unnecessary expense

DAB MEMBERS’ DAB MEMBERS’

QUALITIESQUALITIESo ExperienceExperienceo Contract KnowledgeContract Knowledgeo LanguageLanguageo DR ExperienceDR Experienceo Procedural KnowledgeProcedural Knowledge

o QualificationsQualificationso AvailabilityAvailabilityo ImpartialityImpartialityo IndependenceIndependenceo LawyersLawyers

WARRANTIES & OBLIGATIONSWARRANTIES & OBLIGATIONS

General Conditions Cl.3 & 4General Conditions Cl.3 & 4 Warranties:Warranties:

o Experienced in WorkExperienced in Worko Experienced in DocumentationExperienced in Documentationo Fluent in Language of communicationsFluent in Language of communications

Obligations:Obligations:o IndependentIndependento ConfidentialConfidentialo AvailableAvailable

PAYMENT OF MEMBERSPAYMENT OF MEMBERS

General Conditions Cl.6General Conditions Cl.6 Retainer per calendar monthRetainer per calendar month Daily FeeDaily Fee Reasonable expensesReasonable expenses Taxes in country of contractTaxes in country of contract Retainer reduced by 50% after taking Retainer reduced by 50% after taking

overover Ad hoc DAB – no retainerAd hoc DAB – no retainer

PAYMENT OF MEMBERSPAYMENT OF MEMBERS

Payment method:Payment method:o Retainer & airfares - quarterly in Retainer & airfares - quarterly in

advanceadvanceo Other fees after site visits / hearingOther fees after site visits / hearing

Contractor pays in full within 56 daysContractor pays in full within 56 days Employer reimburses ContractorEmployer reimburses Contractor

ANNEX : PROCEDURAL RULESANNEX : PROCEDURAL RULES

Monitor progress reports against project Monitor progress reports against project documentsdocuments

Site visits Site visits o TimingTimingo Agenda / scheduling / travel arrangementsAgenda / scheduling / travel arrangementso Keep up to dateKeep up to dateo ProgressProgresso ProblemsProblemso ClaimsClaims

ANNEX : PROCEDURAL RULESANNEX : PROCEDURAL RULES

Site visits with Parties : co-ordinated Site visits with Parties : co-ordinated by Employerby Employer

DAB shall prepare a reportDAB shall prepare a report Contract & Project documentsContract & Project documents Monthly reportMonthly report

DISPUTE REFERRALDISPUTE REFERRAL

Clause 20.4 – read together with Clause 20.4 – read together with Procedural RulesProcedural Rules

Referred in writing stating ClauseReferred in writing stating Clause Sent to chairmanSent to chairman 84 days to Decide84 days to Decide Reasoned DecisionReasoned Decision UnanimousUnanimous

DAB DECISION PROCEDURESDAB DECISION PROCEDURES

Referral of DisputeReferral of Dispute Preliminary IssuesPreliminary Issues Claimant’s position paperClaimant’s position paper Respondent’s ResponseRespondent’s Response Claimant’s Reply to ResponseClaimant’s Reply to Response Copies to the other party Copies to the other party DAB to set time tableDAB to set time table

DAB DECISION PROCEDURESDAB DECISION PROCEDURES

Parties empower the DAB to:Parties empower the DAB to:o Establish procedureEstablish procedureo Decide jurisdictionDecide jurisdictiono Conduct a hearingConduct a hearingo Take initiative facts & other mattersTake initiative facts & other matterso Specialist knowledgeSpecialist knowledgeo Decide payment of finance chargesDecide payment of finance chargeso Decide ReliefDecide Relief

DAB OBLIGATIONS IN MAKING DAB OBLIGATIONS IN MAKING A DECISIONA DECISION

Act FairlyAct Fairly Act ImpartiallyAct Impartially Give parties a reasonable Give parties a reasonable

opportunity to pout their case & opportunity to pout their case & respondrespond

Adopt procedures:Adopt procedures:o Avoid unnecessary delayAvoid unnecessary delayo Avoid unnecessary expenseAvoid unnecessary expense

DAB HEARINGDAB HEARING

Adopt inquisitorial procedureAdopt inquisitorial procedure Refuse admission to hearingsRefuse admission to hearings Proceed in absence of any partyProceed in absence of any party Not formal (no oaths)Not formal (no oaths) EvidenceEvidence Written summariesWritten summaries

DAB HEARINGDAB HEARING Typical hearing:Typical hearing:

o Procedural issuesProcedural issueso Preliminary issuesPreliminary issueso Jurisdictional issuesJurisdictional issueso Oral presentation by ClaimantOral presentation by Claimant

o Witness submissionsWitness submissionso Respondent questionsRespondent questions

o Oral presentation by RespondentOral presentation by Respondento Witness submissionsWitness submissionso Respondent questionsRespondent questions

o Respondent’s summing upRespondent’s summing upo Claimant’s summing upClaimant’s summing up

Chairman does not end meeting until parties Chairman does not end meeting until parties have confirmed they have nothing further to add have confirmed they have nothing further to add

DAB DECISIONDAB DECISION

DAB meets in privateDAB meets in private Endeavour to reach a unanimous Endeavour to reach a unanimous

decisiondecision Failure of a member to attendFailure of a member to attend Decision issued in writing and signed Decision issued in writing and signed

with reasonswith reasons

FORMAT OF DAB DECISIONFORMAT OF DAB DECISION PreamblesPreambles State given under clause 20.4State given under clause 20.4 Confidential document – state circulationConfidential document – state circulation Short documentShort document Details of parties and contractDetails of parties and contract Summary of disputeSummary of dispute ProcedureProcedure Reasoning : contract clausesReasoning : contract clauses DecisionDecision Signed & datedSigned & dated

POST DECISIONPOST DECISION

Shall be binding … promptly give Shall be binding … promptly give effecteffect

May be reversed by amicable May be reversed by amicable settlement or arbitrationsettlement or arbitration

Dissatisfaction – 28 daysDissatisfaction – 28 days Otherwise after 28 days - binding Otherwise after 28 days - binding Failure to comply – arbitrationFailure to comply – arbitration Compliance is a contractual Compliance is a contractual

obligationobligation

ENFORCEMENTENFORCEMENT(non statutory)(non statutory)

Contractual obligationContractual obligation Cl.20.4 Notice of dissatisfactionCl.20.4 Notice of dissatisfaction Breach of contractBreach of contract

• Cl.14.3 – application for IPCCl.14.3 – application for IPC• Cl.14.6 – Issue of IPCCl.14.6 – Issue of IPC• Cl.14.7 – PaymentCl.14.7 – Payment• Cl.16.1 – SuspensionCl.16.1 – Suspension• Cl.16.2 - TerminationCl.16.2 - Termination