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FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS

GUIDE TO THE USE OF FIDIC

CONDITIONS OF CONTRACT FOR
WORKS OF CIVIL ENGINEERING
CONSTRUCTION

Published by
Fédération Internationale des
Ingénieurs-Conseils (FIDIC)
P.O. Box 311
CH-11215 Geneva 15
Switzerland
Phone +41 22 799 49 00
Fax +41 22 799 49 01
E-mail [email protected]
WWW http://www.fidic.org

© Copyright FIDIC 1998

All rights reserved
No part of this publication
may be reproduced
or transmitted in any
FOURTH EDITION form or by any means without
permission of the publisher
 FOREWORD

In 1957 the International Federation of Consulting Engineers (FIDIC)

published for the first time a form of standard conditions of contract for
works of civil engineering construction especially designed for use in
international projects.
FIDIC is an international federation of national associations of consulting
Second and third editions were published in 1963 and 1977 respectively.
engineers.
In 1983 the Executive Committee of FIDIC appointed a drafting committee
FIDIC was founded in 1923 by three national associations of consulting comprised of members of the Civil Engineering Contracts Committee
engineers within Europe. The objectives of forming the federation were to (CECC) which up to that time had been charged with monitoring the use of
promote in common the professional interests of the member the third edition.
associations and to disseminate information of interest to members of its The results of the work of the drafting committee were approved in 1987
component national associations. and the fourth edition of the Conditions of Contract for Works of Civil
Engineering Construction was published at the Annual Conference of
Today FIDIC membership numbers more than 60 countries from all parts FIDIC held in Lausanne, Switzerland in September of 1987.
of the globe and the federation represents most of the private practice
consulting engineers in the world. There are many important differences between the third and fourth editions
and these are dealt with in detail in this Guide which gives a commentary
on each clause of the fourth edition.
FIDIC arranges seminars, conferences and other events in the
furtherance of its goals: maintenance of high ethical and professional The Executive Committee decided to drop the word 'International' from
standards; exchange of views and information; discussion of problems of the title of the document as with slight modification in Part II it is also
mutual concern among member associations and representatives of the suitable for domestic contracts.
international financial institutions; and development of the engineering With the advances in technology of photo-copying it is possible today to
profession in developing countries. produce photo-copies which appear to be true copies of an original
FIDIC publications include proceedings of various conferences and document but have in fact been changed without the alterations being
seminars, information for consulting engineers, project owners and apparent. To counter this, the Part I of the Conditions has been printed in
international development agencies, standard pre-qualification forms, two colours (black and blue) and FIDIC strongly recommends all users of
contract documents and client/consultant agreements. They are available the Conditions to insist that Part I of the document should be in the form
from the secretariat in Switzerland. published by FIDIC.
The CECC comprised the following members all of whom played an active
role in the preparation of the fourth edition, Messrs. H. Sorensen
(Denmark) Chairman, R. Elsasser (Germany), R. Heins (USA), H. Kristensen
(Sweden) and K.B. Norris (UK). The Executive Committee expresses its
sincere thanks to the CECC Members for four years of time-consuming
voluntary work which was required to produce the fourth edition. The main
responsibility for coordinating the drafting fell upon Messrs. Sorensen and
Norris and the Executive Committee would like to express a special
commendation to them.

b
During their respective periods of office as President of FIDIC Messrs. CONTENTS
Miller, Eldridge and Frick-Meijer provided considerable support to the
drafting committee, The European International Contractors (EIC) on behalf
of the Confederation of International FOREWORD b
Contractors' Associations (CICA) and supported by Associated General CONTENTS d
Contractors of America (AGC) played a valuable consultative role and
FIDIC particularly thanks Messrs. R. Aldred (UK) and G. Lodigiani (Italy) INTRODUCTION 1
who were most active in this function and were supported by many others, TENDERING PROCEDURE 7
notably Messrs. R. Bollinger (EIC), J. Cuisinier (France), J. de Greef
(Netherlands) and Messrs. D.G. Armstrong and C. Molineaux (USA).
Mr. Angus Cleaver of Bain Clarkson Ltd, London provided the knowledge Conditions of contract 7
and drafting skill for the insurance clauses and was a valuable adviser on Specification 8
risk allocation. Drawings 8
Mr. Christopher Seppala of White & Case, Paris, on behalf of the Bill of Quantities 8
International Bar Association gave valuable advice on the legal aspects The Tender 8
and a check to ensure legal conformity of the entire document was carried
out by Mr. David Wightman of Turner Kenneth Brown, London. Instruction to Tenderers 10
1. General 10
Finally, the Executive Committee wishes to express its thanks to former
Managing Director, Mr. Burt Campbell, who assisted the drafting 2. Documents 10
committee throughout the revision process and who has, since he retired, 3. Completion and Submission of Tenders 11
undertaken the coordination of the production of this Guide. 4. Supplementary Information Required 11
FIDIC Secretariat receives requests from time to time to assist in the 5. Amendments to Tender Documents 12
interpretation of individual contracts which are based upon conditions of 6. Currency Requirements and Exchange Rates 12
contract similar to those contained in the fourth edition. It should be 7. Site Visits 14
evident that as a federation of Consulting Engineers FIDIC cannot consider
itself competent to give legal advice and in any event the legal 8. Tender Bond 14
interpretation of a contract will, inter alia, depend upon the law governing 9. Bonus 14
the particular contract as well as the precise wording of the contract. One 10.Local Legislation 14
objective of this Guide is to indicate what the drafting committee intended 11.Examination of Tenders 15
in drafting the various clauses. The interpretation of individual clauses in a
specific contract will be determined by the Courts or by arbitration. 12.Acceptance of Tenders 15
Evaluation of Tender 15
The final section of this Guide contains a photo reproduction of FIDIC's
"Conditions of Contract for Works of Civil Engineering Construction, Fourth Award of Contract 15
Edition 1987 (Reprinted 1988 with editorial amendments)", better known as Contract Agreement 16
"Red Book 4". Within the text of this Guide, the clauses from Red Book 4 are Procedural Flowcharts 18
copied and are shown in italics. The italicized clauses should be identical to
the corresponding clauses in the final section. If any discrepency is found
between corresponding clauses, the reader should refer to the photo
reproduced final section to determine the correct wording.
c d
THE PARTIES TO THE CONTRACT ASSIGNMENT AND SUBCONTRACTING
The Employer 22 Clause 3
The Contractor 23 3.1 Assignment of Contract 41
Clause 4
THE ENGINEER 4.1 Subcontracting 41
4.2 Assignment of Subcontractor’s Obligations 42

COMMENTARY ON THE CONDITIONS

General Comment 28 CONTRACT DOCUMENTS
Clause 5

DEFINITIONS AND INTERPRETATION 5.1 Language/s and Law 44

Clause 1 5.2 Priority of Contract Documents 45

1.1 Definitions 28 Clause 6

1.2 Headings and Marginal Notes 33 6.1 Custody and Supply of Drawings and Documents 46

1.3 Interpretation 33 6.2 One Copy of Drawings to be Kept on Site 47

1.4 Singular and Plural 33 6.3 Disruption of Progress 47

1.5 Notices, Consents, Approval, 33 6.4 Delays and Cost of Delay of Drawings 48
Certificates and Determinations 6.5 Failure by Contractor to Submit Drawings 48
Clause 7
ENGINEER AND ENGINEER’S REPRESENTATIVE 7.1 Supplementary Drawings and Instructions 48
Clause 2 7.2 Permanent Works Designed by Contractor 49
2.1 Engineer's Duties and Authority 35 7.3 Responsibility Unaffected by Approval 50
2.2 Engineer's Representative 35
2.3 Engineer's Authority to Delegate 36 GENERAL OBLIGATIONS
2.4 Appointment of Assistants 38 Clause 8
2.5 Instructions in Writing 38 8.1 Contractor's General Responsibilities 51
2.6 Engineer to Act Impartially 39 8.2 Site Operations and Methods of Construction 51
Clause 9
9.1 Contract Agreement 52
e f
 Clause 10 Clause 17
10.1 Performance Security 52 17.1 Setting-Out 65
10.2 Period of Validity of Performance Security 53 Clause 18
10.3 Claims under Performance Security 54 18.1 Boreholes and Exploratory Excavation 66
10.4 Source of Performance Security 54 Clause 19
Clause 11 19.1 Safety, Security and Protection 66
of the Environment
11.1 Inspection of Site 55
19.2 Employer's Responsibilities 67
11.2 Access to Data 56
Clause 12
12.1 Sufficiency of Tender 57 ALLOCATION OF RESPONSIBILITY AND INSURANCE
OBLIGATIONS
12.2 Adverse Physical Obstructions or Conditions 58 Clause 20
Clause 13 20.1 Care of Works 68
13.1 Work to be in Accordance with Contract 58 20.2 Responsibility to Rectify Loss or Damage 69
Clause 14 20.3 Loss or Damage Due to Employer's Risks 69
14.1 Programme to be Submitted 59 20.4 Employer's Risks 69
14.2 Revised Programme 61 Clause 21
14.3 Cash Flow Estimate to be Submitted 61 21.1 insurance of Works and Contractor's Equipment 71
14.4 Contractor not Relieved of Duties or 62 21.2 Scope of Cover 73
Responsibilities
21.3 Responsibility for Amounts not Recovered 75
Clause 15
21.4 Exclusions 75
15.1 Contractor's Superintendence 62
Clause 22
15.2 Language Ability of Contractor's Representative 63
22.1 Damage to Persons and Property 75
15.2 Interpreter to be made Available 63
22.2 Exceptions 76
Clause 16
22.3 Indemnity by Employer 76
16.1 Contractor's Employees 64
Clause 23
16.2 Engineer at Liberty to Object 64
23.1 Third Party Insurance (including Employer's 77
16.3 Language Ability of Superintending Staff 64 Property)
16.4 Employment of Local Personnel 65 23.2 Minimum Amount of Insurance 77
23.3 Cross Liabilities 77
g h
 Clause 24 Clause 28
24.1 Accident or Injury to Workmen 78 28.1 Patent Rights 85
24.2 insurance Against Accident to Workmen 78 28.2 Royalties 86
Clause 25 Clause 29
25.1 Evidence and Terms of Insurances 79 29.1 Interference with Traffic and Adjoining Properties 86
25.2 Adequacy of Insurances 79 Clause 30
25.3 Remedy on Contractor's Failure to Insure 80 30.1 Avoidance of Damage to Roads 87
25.4 Compliance with Policy Conditions 80 30.2 Transport of Contractor's Equipment or 87
Temporary Works

INSURANCES ARRANGED BY EMPLOYER 30.3 Transport of Materials or Plant 88

Clause 21 30.4 Waterborne Traffic 89

21.1 Insurance of Works 81 Clause 31

21.2 Insurance of Contractor's Equipment 81 31.1 Opportunities for Other Contractors 89

21.3 Scope of Cover 82 31.2 Facilities for Other Contractors 90

21.4 Responsibility for Amounts not Recovered 82 Clause 32
Clause 23 32.1 Contractor to Keep Site Clear 90
23.1 Third Party Insurance (including Employer's Property) 82 Clause 33
Clause 25 33.1 Clearance of Site on Completion 91
25.1 Evidence and Terms of Insurance 83
25.2 Adequacy of Insurances 83 LABOUR
25.3 Remedy on Employer's Failure to Insure Clause 34
83
25.4 Compliance with Policy Conditions 34.1 Engagement of Staff and Labour 92
83
34 Rates of Wages and Conditions of Labour 93

OTHER OBLIGATIONS OF THE CONTRACTOR Employment of Persons in the Service of Others 93

Clause 26 Repatriation of Labour 93

26.1 Compliance with Statutes, Regulations 84 Housing for Labour 93

Clause 27 Accident Prevention Officer; Accidents 94

27.1 Fossils 84 Health and Safety 94

i j
 Measures against Insect and Pest Nuisance 94 Clause 38
Epidemics 95 38.1 Examination of Work before Covering up 102
Burial of the Dead 95 38.2 Uncovering and Making Openings 102
Supply of Foodstuffs 95 Clause 39
Supply of Water 95 39.1 Removal of Improper Work, Materials or Plant 103
Alcoholic Liquor or Drugs 95 39.2 Default of Contractor in Compliance 104
Arms and Ammunition 96
Festivals and Religious Customs 96 SUSPENSION
Disorderly Conduct 96 Clause 40
Clause 35 40.1 Suspension of Work 105
35.1 Returns of Labour and Contractor's Equipment 96 40.2 Engineer’s Determination following Suspension 105
Records of Safety and Health 97 40.3 Suspension lasting more than 84 days 106
Reporting of Accidents 97
COMMENCEMENT AND DELAYS
MATERIALS, PLANT AND WORKMANSHIP Clause 41
Clause 36 41.1 Commencement of Works 107
36.1 Quality of Materials, Plant and Workmanship 98 Clause 42
36.2 Cost of Samples 98 42.1 Possession of Site and Access Thereto 108
36.3 Cost of Tests 98 42.2 Failure to Give Possession 108
36.4 Cost of Tests not Provided for 99 42.3 Wayleaves and Facilities 109
36.5 Engineer's Determination where Tests not 99 Clause 43
Provided for
43.1 Time for Completion 1 109
Clause 37
Clause 44
37.1 Inspection of Operations 100
44.1 Extension of Time for Completion 110
37.2 Inspection and Testing 100
44.2 Contractor to Provide Notification 111
37.3 Dates for Inspection and Testing 101 and Detailed Particulars
37.4 Rejection 101 44.3 Interim Determination of Extension 111
37.5 Independent Inspection 102 Clause 45

k l
 45.1 Restriction on Working Hours 112 ALTERATIONS, ADDITIONS AND OMISSIONS
Clause 46 Clause 51
46.1 Rate of Progress 113 51.1 Variations 124
Clause 47 51.2 Instructions for Variations 126
47.1 Liquidated Damages for Delay 114 Clause 52
47.2 Reduction of Liquidated Damages 114 52.1 Valuation of Variations 126
47.3 Bonus for Completion 115 52.2 Power of Engineer to Fix Rates 127
Clause 48 52.3 Variations Exceeding 15 per cent 129
48.1 Taking-Over Certificate 116 52.4 Daywork 131
48.2 Taking Over of Sections or Parts 117
48.3 Substantial Completion of Parts 118 PROCEDURE FOR CLAIMS
48.4 Surfaces Requiring Reinstatement 118 Clause 53
48.5 Prevention from Testing 119 53.1 Notice of Claims 132
53.2 Contemporary Records 132
DEFECTS LIABILITY 53.3 Substantiation of Claims 133
Clause 49 53.4 Failure to Comply 134
49.1 Defects Liability Period 120 53.5 Payment of Claims 134
49.2 Completion of Outstanding Work 120
and Remedying Defects
CONTRACTOR’S EQUIPMENT, TEMPORARY
49.3 Cost of Remedying Defects 121 WORKS AND MATERIALS
49.4 Contractor's Failure to Carry Out 121 Clause 54
Instructions
54.1 Contractor's Equipment, Temporary Works and
49.5 Extension of Defects Liability 122 Materials; Exclusive Use for the Works
No Remedying of Defects in Dredging 122 Vesting 135
Work after Completion Revesting and Removal
Clause 50 54.2 Employer not Liable for Damage 136
50.1 Contractor to Search 123 54.3 Customs Clearance 136
54.4 Re-export of Contractor's Equipment 137

m n
 54.5 Conditions of Hire of Contractor's Equipment 137 59.2 Nominated Subcontractors; Objection 145
to Nomination
54.6 Costs for the Purpose of Clause 63 138 145
Design Requirements to be Expressly Stated
54.7 Incorporation of Clause in Subcontracts 138 59.3 147
Payments to Nominated Subcontractors
54.8 Approval of Materials not Implied 138 59.4 148
Certificates of Payment to Nominated
Suitability of Contractor's Equipment 59.5 148
Subcontractors
Preference for Local Products
Contractor's Arrangements for Services CERTIFICATES OF PAYMENT
Hazards on Site Clause 60

Maintenance of Roads, etc. 60.1 Monthly Statements 150

60.2 Monthly Payments 151

MEASUREMENT 60.3 Payment of Retention Money 152

Clause 55 60.4 Correction of Certificates 153

55.1 Quantities 140 60.5 Statement at Completion 153

Clause 56 60.6 Final Statement 154

56.1 Works to be Measured 140 60.7 Discharge 155

Clause 57 60.8 Final Certificate 155

57.1 Method of Measurement 141 60.9 Cessation of Employer's Liability 156

57.2 Breakdown of Lump Sum Items 141 60.10 Time for Payment 156
Currency of Account and Rates of Exchange 157
Payments to Contractor 157
PROVISIONAL SUMS
Payments to Employer 157
Clause 58
Currency of Account and Payments 158
58.1 Definition of “Provisional Sum” 143
Place of Payment 158
58.2 Use of Provisional Sums 144
Advance Payment 159
58.3 Production of Vouchers 144
Clause 61
NOMINATED SUBCONTRACTORS 61.1 Approval only by Defects Liability Certificate 159
Clause 59 Clause 62
59.1 Definition of 'Nominated Subcontractors' 145

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 62.1 Defects Liability Certificate 160 SETTLEMENT OF DISPUTES
62.2 Unfulfilled Obligations 160 Clause 67
REMEDIES 67.1 Engineer's Decision 173
Clause 63 67.2 Amicable Settlement 175
63.1 Default of Contractor 162 67.3 Arbitration 176
63.2 Valuation at Date of Termination 164 67.4 Failure to Comply with Engineer's Decision 177
63.3 Payment after Termination 164
63.4 Assignment of Benefit of Agreement 165 NOTICES
Clause 68
Clause 64
165 68.1 Notice to Contractor 179
64.1 Urgent Remedial Work
68.2 Notice to Employer and Engineer 179
SPECIAL RISKS 68.3 Change of Address 179
Clause 65
65.1 No Liability for Special Risks 167
DEFAULT OF EMPLOYER

167 Clause 69
65.2 Special Risks
168 69.1 Default of Employer 181
65.3 Damage to Works by Special Risks
138 69.2 Removal of Contractor's Equipment 182
65.4 Projectile, Missile
168 69.3 Payment on Termination 183
65.5 Increased Costs arising from Special Risks
169 69.4 Contractor's Entitlement to Suspend Work 183
65.6 Outbreak of War
169 69.5 Resumption of Work 183
65.7 Removal of Contractor's Equipment
on Termination
65.8 Payment if Contract Terminated 170 CHANGES IN COST AND LEGISLATION
Clause 70
RELEASE FROM PERFORMANCE 70.1 Increase or Decrease of Cost 186
Clause 66 70.2 Subsequent Legislation 186
66.1 Payment in Event of Release from Performance 172

q r
CURRENCY AND RATES OF EXCHANGE INTRODUCTION
Clause 71
Standardisation both in technical and administrative matters is essential for
71.1 Currency Restrictions 194 the satisfactory completion of projects of civil engineering construction.
Clause 72 Construction projects today usually contain elements of plant and
machinery to form part of the completed project and this makes the
72.1 Rates of Exchange 194
contract conditions more complex than in the past when plant was usually
72.2 Currency Proportions 195 installed under separate contracts after completion of the construction
contract. In addition, the total finance for a major project is now
72.3 Currencies of Payment for Provisional Sums 196
customarily drawn from several sources and the likelihood that the Owner
will be able to obtain additional funding to meet substantial cost over-runs
POSSIBLE SUPPLEMENTARY CLAUSES has become exceedingly remote, if not impossible.

Bribes 197 In order to complete a project within the required time and budget it is
essential that each phase of its preparation and execution, starting with
Confidentiality 197 the assessment of feasibility and terminating with the handing over of the
Restrictions on Expenditure 197 completed project by the Contractor to the Owner, be formulated with
precision in order to limit delays, disputes and unforeseen additional costs.
Contractor as Joint Venture 198
The object of this publication is to comment on the Clauses contained in
Special Provision for Duties and Taxes 198 the fourth edition of the Conditions of Contract for Works of Civil
Engineering Construction published by the International Federation of
(independent) Consulting Engineers (FIDIC). The extent of the comments
APPENDIX on the Sub-Clauses differs considerably, as some Clauses are more
Not included in this Electronic Edition complex than others, and the length of a commentary should not be taken
to reflect the relative importance of the subject matter.
CONDITIONS OF CONTRACT FOR WORKS OF
By way of introduction some notes are included relating to the tendering
CIVIL ENGINEERING CONSTRUCTION
procedure recommended by FIDIC. More commentary on this tendering
Fourth Edition
procedure can be found in the FIDIC publication entitled Tendering
Procedure (Procedure for obtaining and evaluating tenders for civil
Part I GENERAL CONDITIONS engineering contracts) available from FIDIC Secretariat.
WITH FORMS OF TENDER AND AGREEMENT
There are obvious advantages to using detailed contract provisions based
Part II CONDITIONS OF PARTICULAR APPLICATION
upon a standard form of contract which holds a reasonable balance
WITH GUIDELINES FOR PREPARATION OF PART II
between the requirements and interests of the parties concerned and in
CLAUSES
particular allocates fairly the risks and responsibilities between the
contracting parties. In the majority of cases the contracting parties will
react favourably to clearly stated obligations and this will do much to avoid
unsatisfactory performance, increased costs and disputes which can arise
if the trust that needs to exist between the parties to a construction
contract is lacking.

s
1
The use of standard conditions of contract will not only facilitate the breadth of authority to delegate duties to the Engineer which it had been
successful completion of a contract but will, in all probability, result in lower envisaged that they would have when the third edition was prepared and it
tender prices, as tenderers will be familiar with the conditions that will was felt desirable to reconcile the Conditions with current circumstances.
apply under the contract. This implies that they will not need to make
Accordingly, the Executive Committee requested the CECC to prepare a
financial provision for contract conditions with which they are not familiar
fourth edition and the following is a brief summary of the terms of
and whose consequences they may have difficulty in assessing. The
reference:
widespread use of standard conditions of contract also provides a stable
basis for training and educating personnel responsible for contract - Change only where change is necessary.
management and avoids their having to work with ever changing contract
- Maintain the basic role of the Engineer.
conditions.
- Pay close attention to some specific topics such as Bonds and
The FIDIC Conditions of Contract for Works of Civil Engineering
Guarantees, Apportionment of Risk, Insurance, Claims Procedures,
Construction were first published in 1957. Up to that time there were no
Certificates and Payments and Dispute Procedures.
conditions which had been specifically prepared to govern international
contracts. The first edition of the FIDIC Conditions (the Red Book as it - Endeavour to update the language so that it is more understandable
quickly became known because the title was long and the cover was red) to those charged with administering the Conditions on site.
was published at a time when international contracting was in its boom
There were some procedural differences in the drafting process as
period and the need for a standard set of conditions became apparent.
compared with the third edition. In the preparation of the third edition,
The first edition was based on a form of contract in use in the United
representatives of the Contractors' Associations had participated almost
Kingdom which was published by the Institution of Civil Engineers (ICE)
as co-drafters and it had been indicated on the cover of the Conditions
and thus very much reflected traditions and a legal system that were
that the document was approved by the various contractors' groupings
specifically British.
throughout the world. For the fourth edition it was agreed that the
A second edition was issued in the mid-sixties but this did not change the contractors' representatives would have consultative status during the
conditions contained in the first edition, it merely added a Part III to the first drafting proce ss bu t the fina l d ocu men t wou ld be the so le
edition. This Part III was drafted to provide particular changes to the re sp on si bi lity o f F I DIC . Eur opean In terna ti ona l Co n trac tor s
General Conditions when the document was to be used for dredging and ( E IC ) we re m and a ted b y t he Con fe dera t ion o f In terna t iona l
land reclamation contracts. Con t rac tors ' A s s oc ia ti on s (C ICA ) t o re pre sen t CIC A in t hi s
consulta tive r ole and the EIC repre sen ta tives wer e assisted by
A third edition which did involve a complete revision was published in 1977
two representatives of the Associated General Contractors of America
and was accompanied by an explanatory document entitled 'Notes on
(AGC).
Documents for Civil Engineering Contracts'.
In addition, during the course of the revision there was considerably more
FIDIC maintains a committee, the Civil Engineering Contracts Committee
consultation with the World Bank than had been the case in previous
(CECC), which monitors the use of the Red Book and is responsible for
revisions. Also, FIDIC was able to benefit from meetings with
reporting to the FIDIC Executive Committee. In 1983 the CECC advised
representatives of the Joint Arab Funds, who have substantial experience
the Executive Committee that in some quarters the document was being
in monitoring the use of the third edition. FIDIC greatly appreciated the
criticised by Employers (Owners) for being too Anglo-Saxon in its concept
opportunity for consultation with both of these bodies, but this consultation
and language, presumably the result of a far wider use than it had
does not imply that either organisation approves the fourth edition in its
previously enjoyed. Certain amendments were identified which were being
entirety.
applied almost consistently by Employers and it was considered advisable
to bring the Conditions into line with current practice. Another factor was The CECC members also availed themselves of the opportunity to consult
that in many cases where the Conditions were being used for projects in experts in the fields where they themselves did not claim any particular
developing countries, the representatives of the Employer did not have the
2 3
expertise other than practical experience. In particular this applied to - Greater recognition has been made of the fact that some design of
insurance and law. Permanent Works is, on occasion, made the responsibility of the
Contractor.
This book deals with each specific clause and gives a commentary upon
the clause by those responsible for the drafting but it will probably be HARMONISATION
helpful at this point to summarise the principal changes from the third
Where possible, efforts have been made to harmonise with the Conditions
edition.
of Contract for Electrical and Mechanical Works (the Yellow Book).
EDITORIAL However, having regard to the differing nature of the works some notable
differences remain. This would not prevent the two sets of conditions
- Part II (Conditions of Particular Application) has been greatly
being used by different contractors on the same site.
expanded by going from an aide memoire to a fairly comprehensive
set of fully developed example clauses. GENERAL
- Part II has been printed as a separate volume. This enables Part I The material in this Guide does not form part of the Conditions nor is it
(General Conditions) to be attached to the tender documents in their intended to be incorporated in the Conditions other than by the use of
printed form. This provides satisfactory evidence that no changes example clauses. Further, it does not purport to give an authoritative legal
have been made therein and that whatever changes are required interpretation of the Conditions, but it is envisaged that it will be helpful in
will be effected by an entry in Part II. the understanding of the intent of the Conditions and in drafting particular
Part II Conditions.
- The previous Part Ill (Dredging and Reclamation Works) has been
incorporated into Part II. For the successful achievement of a project the first essential is to have
Drawings and Specifications, based upon competent designs, together
- The listing of the various Contractors' Associations no longer
with a Bill of Quantities to enable the probable cost of the Works to be
appears but this does not affect the use of the Conditions by
established.
members of CICA Member Associations.
These documents, together with the Conditions of Contract, form the legal
- The style of the language and the layout of the clauses has been
document which, under the applicable law, defines the rights and
modernised to some degree but the sequence numbering of the
obligations of the two parties, the Employer and the Contractor, in their
clauses has been preserved.
relationship for the realisation of the project. However, the legal document
GENERAL PRINCIPLES also establishes the working relationship within which an employer can
expect to receive from an efficient contractor a soundly executed project
- The role of the Engineer has been maintained.
to time and cost. Equally, a contractor can expect reasonable working
- The role of the Employer has been made more visible. Where conditions, fair and balanced application of the Contract and to be paid
increases in cost or extensions of time are to be determined by the promptly what he is entitled to receive.
Engineer, he has an obligation to consult with both the Employer
To achieve optimum results it is essential that when tenders are invited,
and the Contractor before making his determination.
tenderers are not expected to cover in the rates they quote for risks which
- Every endeavour has been made to maintain the overall balance of they could not reasonably foresee or evaluate at the time of preparation of
rights and obligations between the two parties to the contract. their tenders.
- Current practice has been reflected in the new edition. It is in the Employer's interest for him to assume responsibility under the
Contract for costs arising from events which may never occur, which lie
- Procedures have been set out in greater detail and in an action-
outside the Contractor's control or which cannot be covered by insurance
orientated way.
at a reasonable premium. Such events are classified in the fourth edition
- The Conditions cater for a larger degree of Plant. as Employer's Risks.
4 5
Against this background competent and experienced contractors are able TENDERING PROCEDURE
to submit competitive tenders, without the need to include large
contingency sums to cover unpredictable hazards. The Employer will only
The FIDIC Conditions of Contract envisage that a contractor will be
meet the cost of such hazards if they actually occur.
selected by the Employer following competitive tendering.
Close cooperation and teamwork between Employer, Contractor and
FIDIC has published a document entitled 'Tendering Procedure' which
Engineer, within the framework of the Contract, with a mutual desire to
presents a systematic approach to the selection of tenderers and the
produce a satisfactory end product by well organised, safe and efficient
obtaining and evaluating of tenders. It is intended to assist the
methods, will reduce to a minimum the risk of delays or
Employer/Engineer to receive sound competitive tenders with a minimum
misunderstandings. When mistrust or lack of confidence occurs troubles
of qualifications and formulated so that they can be quickly and efficiently
may arise and a contract may run into difficulties. No wording in the
assessed. At the same time, every effort has been made to provide the
Contract can prevent this from happening if one or both of the parties or
opportunity and incentive for contractors to respond easily to invitations to
the Engineer fails to perform his duty under the Contract responsibly and
tender for projects they are well qualified to implement.
correctly.
Experience has shown that, for major projects and those involving
The FIDIC Conditions of Contract have been written for use where the
international tendering, prequalification of tenderers is desirable since it
services of an independent Engineer are used for supervision of
enables the Employer/Engineer to establish, in advance, the competence
construction. The Conditions provide under Sub-Clause 2.6 that where the
of firms subsequently invited to tender. It also ensures that invitations are
Engineer is required to exercise his discretion he shall act impartially.
addressed to leading companies who would not necessarily participate in
open or unrestricted tendering. Such unrestricted tendering does not
always facilitate appropriate competition because the number of tenderers
may be so great as to make the odds against tendering successfully
unacceptable. Additionally, prequalification has the advantage of reducing
the inflationary effect which must arise where firms incur unproductive
expense in submitting a large number of tenders in the knowledge that a
high proportion of these must be unsuccessful.
A flowchart illustrating the recommended procedures for the
prequalification of tenderers, for obtaining tenders and for opening and
evaluation of tenders is reproduced on subsequent pages.
The documents issued to tenderers (the Tender documents) normally
comprise Conditions of Contract, Specification, Drawings, Bill of Quantities
and form of Tender, together with Instructions to Tenderers. All except
Instructions to Tenderers become Contract documents on award of
Contract. It is usual to send the Tender documents to tenderers under
cover of a letter which should be limited to identifying the documents and
giving the recipient an invitation to tender.
Conditions of Contract
The Conditions of Contract will consist of Part I and Part II of the Red
Book. The Conditions set out the legal/contractual arrangements that will
apply to the Contract. The principles and the method to be followed in
their preparation are described in a later chapter of this Guide.
6 7
Specification and fulfilling all his obligations under the Contract. It is therefore essential
for the Employer that all Tenders received are stated in identical terms and
The Specification will define the scope and the technical requirements of
thus it is necessary for the Employer, when inviting Tenders, to provide
the Contract. The quality of materials and the standards of workmanship
tenderers with a standard form of tender which each tenderer is required
to be provided by the Contractor must be clearly described, together with
to complete and sign.
the extent, if any, to which the Contractor will be responsible for the design
of the permanent works. Details must be included of samples to be The form of Tender which is included at the end of the first volume of the
provided and tests to be carried out by the Contractor during the course of Red Book following Part I of the Conditions of Contract is recommended
the Contract. Any limitations on the Contractor's freedom of choice in the for this purpose. It is short, it is clear and when signed and submitted
order, timing or methods of executing the work or sections of the works creates a legally binding and valid offer.
must be clearly set out and any restrictions in his use of the site of the
It is common for Tenders to be identified by a tender reference or contract
works, such as the provision of access or space for other contractors,
number which should be added to link the Tender to the project in
must be given.
question.
Drawings
The organisation to which the Tender is being submitted must be stated in
The Drawings must be in sufficient detail to enable tenderers to assess the appropriate space on the form.
accurately. in conjunction with the Specification and the Bill of Quantities.
The sum to be entered under paragraph 1 of the Tender is the tenderer's
the nature and scope of work included in the Contract. Only rarely is it
total Tender sum, which should be the same as the total from the
possible to provide, at tender stage. a complete set of drawings so fully
summary page of the Bill of Quantities. The amount shall be entered in
detailed that the work can be executed without any further drawings
words and in figures and in the event of a discrepancy between the two it
becoming necessary. On most contracts supplementary drawings will be
is common practice in most countries that the written amount shall prevail
issued after award as work proceeds.
over the amount expressed in figures.
Bill of Quantities
The sum agreed may vary during the execution of the project depending
The Bill of Quantities is a list of items giving descriptions and estimated on what circumstances occur, e.g. the instruction of variations, the
quantities of work to be executed under the Contract. The Red Book occurrence of unforeseen events, which in accordance with the Conditions
assumes a remeasurement form of contract, although that does not of Contract entitle the Contractor to additional (or reduced) payment.
preclude the inclusion of a number of lump sum items in the Bill of
Under paragraph 4 the Employer must state the time during which he
Quantities provided that the scope of work to be covered by each lump
requires the Tender to remain valid and open to acceptance. This time
sum item is adequately defined.
should be adequate to permit proper evaluation and award procedures to
The Tender be completed.
It is highly desirable when inviting competitive offers from a number of In the event that the stated time proves to be insufficient, the Employer
tenderers, that the tenders received should be based as far as possible on may ask tenderers to extend the period of validity of their Tenders for a
equal terms and conditions and presented in a standardised manner. In further named period. At the same time tenderers should be asked to
this way evaluation and comparison between the tenders received can be extend the validity of any tender bond accordingly. Tenderers are free to
made more simply and accurately with less risk of misunderstandings, extend or not, if so requested, and in the event that they choose not to do
errors and omissions. so, the Employer has no right to cash or hold their tender bond.
The Tender is the most important single document submitted by the The Employer must also fill in, before the issue of the Tender documents,
tenderer. It is here that each tenderer confirms that he has read and the necessary details in the list given in the Appendix to Tender, in
understood the requirements of the Tender documents and based on accordance with the Notes at the foot of the Appendix.
such requirements it is here that he states his tender sum for undertaking
8 9
No reference is given to a covering letter in the form of Tender given in the foreign currency. Tenderers should be advised as to how the extra
Red Book. The completed Tender is, in many cases, sufficient in itself. If sets of documents can be obtained and also of procedures to be
tenderers are invited or required to submit supplementary information, they followed for the return of the documents by unsuccessful tenderers.
should do so under a separate covering letter and in such a case it may be
3. Completion and Submission of Tenders
necessary for tenderers to add a reference to this letter in the Tender
before submission. Concise instructions as to the time, date and place for the
submission of Tenders should be given.
It should also be made clear to tenderers that all entries and
Instructions to Tenderers
signatures should be in indelible ink and that no erasures or
Instructions to tenderers must be prepared to meet the requirements of additions are permitted other than those necessary to correct errors.
individual contracts. Their purpose is to convey information and All such corrections must be initialled.
instructions which apply during the tendering period. Any material on
It is normal to ask for more than one copy of the Tender, in which
which it is intended to rely after award must be included elsewhere, e.g. in
case tenderers should be instructed as to the manner in which the
the Conditions of Contract or the Specification.
Tenders are to be packaged.
The following notes provide a guide to subjects to be covered, but they are
It is usual to stipulate that one set of documents should be clearly
not necessarily exhaustive.
marked 'Original Tender' and others marked 'Copy', and that if there
are discrepancies the Original Tender takes precedence.
Photocopies of the Original Tender minimise the risk of
1. General
discrepancies.
Under this heading should be included brief details of the
The tenderer should be told whether, if he has handed in his Tender
organisation (Government, Ministry, Department, Authority, etc.)
before the formal submission date or has sent it by post, he has the
calling for Tenders, together with an outline of the project to be
right to withdraw, modify or correct it after dispatch. This would
covered by the Contract.
normally be permitted, provided that a request for modification, etc.,
Any stipulations regarding firms and persons qualified to tender, has been received by the Employer either in writing or by cable, telex
such as prior prequalification and/or requirements in the event of or facsimile transmission before the time set for receiving Tenders.
formation of joint ventures, should be stated, together with details of The Original Tender as amended would then be considered as the
any special requirements to establish the validity of the Tender and official offer.
the authority of the signatory, e.g. Power of Attorney.
4. Supplementary Information Required.
Tenderers must be advised if the successful tenderer will be
Tenderers should be advised of any supplementary information to
required to establish a locally registered company for the purpose of
be submitted with the Tender documents, such as details of the
the Contract.
proposed sureties for any performance security, general terms of
2. Documents insurance (see Sub-Clause 25.1 of the Conditions of Contract) the
constitution of the tenderer's organisation together with the address
A list of documents issued to tenderers should be included together
to be used for the purposes of the Contract, a preliminary
with instructions as to which of these documents must be
programme of work (the Instructions to Tenderers should give an
completed by the tenderer and handed in on the submission date.
indication of what is required) and a list of major items of
If the Tender documents are not issued free of charge then the sum Contractor's Equipment required for the purpose of executing the
required for the original set and for any additional sets should be works.
stated and whether payment is to be made in local or equivalent
10 11
 A forecast of labour and staff, local and foreign, may be requested. and detailed. The option to submit alternative Tenders may make
Where a Tender sum has been requested on the basis that it is the evaluation process difficult.
adjustable by reason of changes in the cost of labour, materials and
6. Currency Requirements and Exchange Rates
transport, the tenderer should, unless the particulars are given by
the Employer in the Tender documents, be requested to indicate the Tenderers should be required to give notice to the Employer of the
formula or formulae which he wishes to use as the basis for various currencies in which they may wish to be paid if the Contract
adjusting the sum. If his formula is to be index based, officially is awarded to them. This information should be supplied as soon as
published indices should be used. These would normally be indices possible after invitations to tender have been issued and not less
published in the country where the project is to be located. The than a given number of days (e.g. 42 days) before the Tender
tenderer should also provide the names of any subcontractors he submission date.
proposes to employ, together with details of those parts of the
The Employer may wish to specify in the Instructions to Tenderers
works proposed to be subcontracted.
that payments will be made only in the currencies of the countries
It must also be made clear in the Instructions to Tenderers to what from which the goods and services are to be acquired.
extent the supplementary information is required by the Employer
The Tender documents should include a schedule in which
purely to demonstrate that the tenderer has understood the extent
tenderers record the sums in the various approved currencies that
and nature of the work and the programme required and to what
together constitute their total Tender sum. This schedule becomes
extent, if at all, the supplementary information is required as a part of
part of the Contract when awarded.
the offer for inclusion in the Contract documents on award.
It is common practice to require tenderers to submit their Tenders in
5. Amendments to Tender Documents
a single currency - usually of the country in which the Works are to
It is possible that explanations, revisions, additions or deletions to be executed. If this is the case it is necessary to define the rates of
the documents issued to tenderers may be necessary during the exchange which have been used to convert the various currencies,
tendering period. Tenderers should be told how these will be dealt in which payment is required, into a single currency unit. As more
with, the normal method being by formal addenda. If a tenderer is in than one tenderer may request part payment in one particular
doubt about the meaning of some item in the Tender documents, he currency, it is preferable that the exchange rates to be used should
should be advised to notify the Engineer not later than a given be consistent and, therefore, that they should be defined by the
number of days (e.g. 42 days) before the Tender submission date. Employer and notified by him, or the Engineer on his behalf, to each
The Engineer will then issue to all tenderers an explanation in the tenderer a reasonable time before the date of submission. In
form of an addendum. Each addendum should be accompanied by accordance with Sub-Clause 72.2 of the Conditions of Contract,
a receipt form which must be returned so that the Employer and the these rates shall be stated in Part II or, if not so stated, shall be
Engineer have confirmation that each tenderer has received all the those prevailing, as determined by the Central Bank of the country in
necessary information. Failure to acknowledge receipt of an which the works are to be executed, on the date 28 days prior to
addendum may result in rejection of a Tender. The addenda the latest date for the submission of Tenders or as provided for in
become part of the Tender documents and the numbers issued the Tender. The rates quoted are incorporated in the Contract when
should be inserted by tenderers in the space provided in paragraph I awarded.
of the form of Tender.
In order to assist in forward budgeting it is useful to request
Tenderers would normally be required to submit their offers strictly in tenderers to provide an estimate of the payments to be made by the
accordance with the requirements of the Tender documents. If Employer to the Contractor during the period of the Contract,
tenderers are permitted to offer an alternative Tender, any departure preferably in quarterly periods.
from the documents issued to tenderers should be clearly identified
The estimate of payments referred to above does not become a part
of the Contract and should not be regarded as binding. The figures
12 13
 may have to be reviewed and adjusted as the work proceeds. should be listed in the Instructions to Tenderers. It should be made
Expenditure under Provisional Sums will affect the figures, and so clear that the list is not comprehensive.
also will changes in the source of supply of materials and
11. Examination of Tenders
modifications to the programme or variations of the Works.
Tenderers should be advised that the Employer, or the Engineer on
7. Site Visits
behalf of the Employer, may ask any tenderer for clarification of his
It is customary to expect tenderers to visit the site of the project Tender, but that no tenderer will be permitted to alter his Tender
during the tender period. Details should be given of the date and sum after Tenders have been opened. Clarifications that do not
arrangements for visiting when staff of the Employer and the change the Tender sum may, if they are acceptable, be incorporated
Engineer will be on site to answer questions and when any in the Contract.
exploratory work carried out will be available for inspection, e.g.
It should be made clear that all Tenders must remain valid for a
borehole cores laid out and exploratory adits lit. A summary of all
specified validity period and any extension thereto agreed to by the
questions and answers thereto should be issued to all tenderers.
respective tenderer. Tenderers should be advised if any factors
Tenderers should not be restricted in their site visits and details of
other than the Tender sum, such as foreign currency proportions,
who to contact for further visits should be given.
are to be taken into account when evaluating Tenders.
8. Tender Bond
12. Acceptance of Tender
If a tender bond is required, a pro forma version of such bond
The Employer will normally state that he does not bind himself to
should be included in the Tender documents. The amount of the
award the Contract to the tenderer submitting the lowest tender or
bond should be stated and the currency or currencies required. In all
to any tenderer.
cases the surety or sureties must be satisfactory to the Employer. If
a tender bond has been requested, any Tender that has not been so Evaluation of Tenders
secured will be rejected unless otherwise indicated.
Tenders for major and international contracts are generally opened in
Tenderers should be advised that the bond will be released after a public when the names of the tenderers are announced together with the
specified period, or earlier if one of the Tenders has, within the Tender sum. No other details are given at that time. Thereafter the Tenders
period, been accepted by the Employer and an acceptable are checked and studied by the Engineer on behalf of the Employer.
performance security has been submitted by the successful
One of the first tasks of the Engineer is to establish whether the Tenders
tenderer. It should also be made clear what will happen to the
are arithmetically correct and, if they are not, how to overcome any errors.
tender bond if the tenderer who has been accepted fails to provide a
Another task is to cheek that the Tenders are responsive, that all the
performance security within a specified number of days after being
required information has been provided and that everything is consistent
requested to do so. Usually the tender bond will be forfeited.
with the terms of the Tender documents.
9. Bonus
If errors, omissions or inconsistencies are apparent a meeting should be
If a bonus in relation to early completion is to be included in the held with the lowest tenderer, and possibly with one or two other
Contract, tenderers should be reminded to state in the space tenderers, to clarify the position and to agree how to deal with the points in
provided in the Appendix to Tender what proportions of local and the event of an award. At such meetings. tendeters should not be
foreign currencies they wish to receive if they earn it. permitted to change the substance of their Tenders. If it does not prove
possible to clarify and agree how differences are to be resolved, the
10. Local Legislation
particular Tender should be treated as unresponsive and no further
If there are any local laws or decrees or any special arrangements consideration should be given to that Tender.
which the Employer wishes the tenderers to note particularly, these

14 15
Award of Contract An example form of Contract Agreement is included at the end of the first
volume of the Red Book following Part I of the Conditions of Contract and
When the Engineer has completed the evaluation of tenders, and has
may be used in the event that the Employer wishes to execute a formal
obtained any necessary clarifications, he will make a recommendation to
agreement. In such event it is important to ensure that the exact wording
the Employer on the award of the Contract. If the Employer agrees with
of the Contract Agreement, including the documents listed as forming part
the Engineer's recommendation and is in a position to award the Contract
thereof, properly records what has been agreed.
immediately he will issue a Letter of Acceptance to the successful
tenderer. The parties must ensure that the signatories and method of signature are
in accordance with all the applicable laws.
On occasions certain steps may still be necessary before the Employer
can award the Contract, e.g. Government approval or ratification of a loan
agreement. In such a case, the Employer may decide to issue to the Note: The FIDIC publication 'Tendering Procedure' mentioned at the
potential Contractor a letter of intent. Such a letter should state the beginning of this chapter, gives fuller details of all stages of
conditions that must be met before the award can be made. In most cases tendering and should be studied by all those involved in such
letters of intent are worded in such a way as to create no commitment on process.
the part of the Employer and the potential Contractor carries out any
preliminary work or incurs costs at his own risk. Sometimes a letter of
intent gives instructions to the potential Contractor to take some action,
such as to order materials and Plant or to carry out limited work. In this
case, it is necessary for the letter of intent to be clear about how, and to
what extent, the potential Contractor will be paid for what he does if, for
any reason, the Contract is not ultimately entered into.
In most cases it is the Employer's Letter of Acceptance which, together
with the tenderer's Tender, will form a binding Contract between the two
parties, valid from the date of issue of the Letter. If on account of errors,
omissions or inconsistencies in the Tender, or for any other reason, any
changes have been tentatively agreed at a meeting of clarification, the
Employer's letter may constitute only a counter-offer and the Contract will
only be binding on the date that the Contractor acknowledges and
confirms, in writing, agreement to the terms of the Letter of Acceptance.
Contract Agreement
The Conditions of Contract, Sub-Clause 9.1, make provision for the
execution of a Contract Agreement between the parties which will record
all the terms of the Contract between them. However, the execution of this
document is not normally necessary to create a legally binding contract.
Nevertheless, in some countries a Contract Agreement is a requirement of
law to create a binding Contract irrespective of the existence of a Tender
and a Letter of Acceptance. In such cases, in particular, the Contract
Agreement must be carefully prepared to comply with the requirements of
the relevant law.

16 17
 Recommended procedure
PROCEDURAL FLOWCHARTS for obtaining tenders
Recommended procedure SECTION EMPLOYER/ENGINEER TENDERERS
for the prequalification of tenderers
SECTION EMPLOYER/ENGINEER CONTRACTORS 4.0 ENQUIRY
LIST OF PREPARE
PLACE PREQUALIFICATION DOCUMENTS TENDERERS ENQUIRY DOCUMENTS
1.0 INVITATION TO ADVERTISEMENT IN PRESS,
CONTRACTORS EMBASSIES ETC. • LETTER OF INVITATION
AS APPROPRIATE STATING: TO TENDER
TO PREQUALIFY • EMPLOYER & ENGINEER • INSTRUCTIONS TO
• OUTLINE OF PROJECT TENDERERS
(SCOPE, LOCATION, • CONDITIONS OF
PROGRAMME) CONTRACT
• ENQUIRY ISSUE & TENDER • SPECIFICATION
SUBMISSION DATES • DRAWAINGS
• INSTRUCTION FOR • BILL OF QUANTITIES
APPLYING FOR • INFORMATION DATA
PREQUALIFICATION • FORM OF TENDER &
• SUBMISSION DATE FOR APPENDICES
CONTRACTOR’S PRE-
QUALIFICATION DATA.

5.0 ISSUE OF ENQUIRY

2.0 ISSUE & SUBMISSION ISSUE PREQUALIFICATION REQUEST DOCUMENTS ISSUE ENQUIRY TO ACKNOWLEDGEMENT
INSTRUCTIONS & PREQUALIFICATION CONTRACTORS ON RECEIPT
OF PREQUALIFICATION QUESTIONNAIRES DOCUMENTS TENDER LIST
REQUESTING FROM EACH
DOCUMENTS COMPANY/JOINT VENTURE:
• ORGANISATION AND
STRUCTURE. COMMENCE PREPARATION
• EXPERIENCE IN THE OF TENDERS
INTENDED TYPE OF WORK
AND THE COUNTRY
• RESOURCES:
MANAGERIAL 6.0 VISIT TO SITE BY ARRANGE DATE AND APPLY FOR VISIT TO SITE
TECHNICAL TENDERERS TIME FOR VISIT TO SITE IF REQUIRED
LABOUR RESPOND TO QUESTIONNAIRES
PLANT ON COMPANIES AND, IF
• FINANCIAL STATEMENTS APPROPRIATE, JOINT VENTURES EMPLOYER/ENGINEER ACCOMPANIES
TENDERERS ON VISIT TO SITE

ACKNOWLEDGE RECEIPT

3.0 ANALYSIS OF ANALYSE PREQUALIFICATION 7.0 AMENDMENTS TO

• COMPANY/JOINT VENTURE PREPARE ADDENDA
PREQUALIFICATION STRUCTURE ENQUIRY
• EXPERIENCE (IF ANY) TO ENQUIRY
DATA AND • RESOURCES DOCUMENTS DOCUMENTS
SELECTION & • FINANCIAL STABILITY
NOTIFICATION OF • GENERAL SUITABILITY
FOR “SHORT”
LIST OF SELECTED LIST ONLY
TENDERERS ISSUE ADDENDA TO
SELECT COMPANIES/JOINT ACKNOWLEDGE RECEIPT TENDERERS ACKNOWLEDGE RECEIPT
VENTURES FOR INCLUSION IN
LIST OF TENDERERS

CONFIRM INTENTION TO
SUBMIT VALID TENDER
NOTIFY ALL CONTRACTORS/
JOINT VENTURES OF THE LIST
OF SELECTED TENDERERS

18 19
LIST OF TENDERERS
 Recommended procedure Recommended procedure for
for obtaining tenders (continued) The opening and evaluation of tenders
SECTION EMPLOYER/ENGINEER TENDERERS SECTION EMPLOYER/ENGINEER TENDERERS
RAISE QUERIES (IF ANY)
BY METHOD a) or b)
BELOW 10.0 ENQUIRY
8.0 TENDERERS QUERIES TENDER OPENING ATTEND
DOCUMENTS PUBLIC/RESTRICTED
Correspondence PREPARE REPLIES a) BY CORRESPONDENCE MAY BE PUBLIC, RESTRICTED OR OPENING IF DESIRED.
SUBMIT QUERIES IN PRIVATE
Method WRITING
• ANNOUNCE AND RECORD THE
NAMES OF TENDERERS AND
PRICES, INCLUDING PRICES
FOR ALTERNATIVE TENDERS IF
ISSUE QUERIES & ACKNOWLEDGE RECEIPT APPROPRIATE
REPLIES TO ALL • ANNOUNCE AND RECORD
TENDERERS IN WRITING NAMES OF TENDERERS (IF
ANY) DISQUALIFIED DUE TO
OR LATE OR NON-ARRIVAL OF
OR b) BY TENDERERS’ TENDERS.
Tenderers’ Conference CONFERENCE: SUBMIT
ALL QUERIES IN WRITING
Method PREPARE REPLIES BY GIVEN DATE

TENDERERS CONFERENCE 11.0 EVALUATION OF EVALUATE TENDER

FIRST PHASE : INFORM TENDERERS PRESENT TENDERS • TECHNICAL PROVIDE CLARIFICATION
OF QUERIES AND REPLIES • CONTRACTUAL
SECONF PHASE: TENDERERS SUBMIT ANY • COMMERCIAL
SUPPLEMENTARY QUERIES IN
WRITING RAISE POINTS REQUIRING
THIRD PHASE: REPLIES TO SUPPLEMENTARY CLARIFICATION, IF ANY
QUERIES GIVEN OTALLY
COMPLETE EVALUATION

ISSUE TEXT OF QUERIES, MEETING WITH SELECTED TENDERERS

SUPPLEMENTARY QUERIES & ACKNOWLEDGE RECEIPT INDIVIDUALLY, AS NECESSARY TO DISCUSS
REPLIES TO ALL TENDERERS ANY QUALIFICATIONS OR OTHER ASPECTS
NOR CONFORMING TO THE REQUIREMENTS
OF THE ENQUIRY
9.0 SUBMISSION AND DECISION ON CONTRACT
RECEIPT ADVISE TENDERERS WHOSE AWARD
TENDERS HAVE NOT BEEN (OPTIONAL)
OF TENDERS RECEIVED THREE DAYS
BEFORE CLOSING DATE

12.0 AWARD OF REQUEST PERFORMANCE

RECORD DATE & TIME OF SUBMIT TENDERS SECURITY FROM SELECTED
CONTRACT CONTRACTOR (IF SELECTED CONTRACTOR
RECEIPT PROVIDES PERFORMANCE
APPROPRIATE) SECURITY
ACKNOWLEDGEMENT ACKNOWLEDGE RECEIPT
RECEIPT RETURN ENQUIRY
OR DOCUMENTS
RETURN UNOPENED ANY
TENDERS RECEIVED LATE
PREPARE CONTRACT
DOCUMENTS
SIGNATURE OF CONTRACT
SIGNATURE OF CONTRACT (SUCCESSFUL TENDERER)

KEEP DATE – VALID

TENDERS SECURE UNTIL
OPENING TIME

ADVISE UNSUCCESSFUL UNSECCESSFUL

TENDERERS, RETURN TENDERERS
TENDER BONDS (IF ACKNOWLEDGE, RETURN
PROVIDED) ENQUIRY DOCUMENTS IF
TENDERS OPENING SO INSTRUCTED

20 21
THE PARTIES TO THE CONTRACT documents as submitted by the Contractor, resulting from agreement
between the Employer and the Contractor, and the Contract Price.
The FIDIC Conditions of Contract are based on the assumption that the The Employer consents to, or declines, requests by the Contractor to
Employer, the first party, who has decided to have certain works carried assign any portion of the Works, prepares the Contract Agreement (if any)
out for the implementation of a project, and is sponsoring the Works, has for execution by both parties, approves the Performance Security and the
decided to select a suitably qualified Contractor, the second party, to insurers as well as the terms of the insurance policies submitted by the
execute the Works. Contractor. The Employer will wish to ensure that the contract works
insurance is in accordance with the laws and regulations of the 'country in
It is also assumed that the selection of the Contractor will have been made
which the Works are to be executed and that the policy adequately covers
through competitive tendering based on tender documents prepared for
the Employer's Risks and the deductible limits are acceptable.
the project by a Consulting Engineer. This process has been dealt with in
the preceding section. Provided it is acceptable to the Employer the Contractor will normally use
his customary sources for the provision of securities and insurance.
The FIDIC Conditions of Contract cannot apply without an Engineer being
appointed by the Employer to administer the Contract. Usually this would The Employer makes the advance payment (if any) against a suitable
be the Consulting Engineer who has designed the project and prepared the guarantee from the Contractor and authorises the Contractor to move on
tender documents. The Engineer is not a party to the Contract, but he to the Site. During the period of the Contract the Employer makes
plays an important role in the development process of the Works. The payments to the Contractor as certified by the Engineer to be due under
duties that the Engineer has to perform are defined under the Contract and the Contract.
he must have the necessary delegated authority from the Employer if he is
The Employer takes over Sections of the Works as they reach substantial
to be able to perform them. The delegation of this authority is usually to be
completion, if this is required under the Contract, and ultimately takes over
found in the Agreement between the Employer and the Consulting
the whole of the Works following the issue of Certificates by the Engineer.
Engineer.
In the event of the Contractor becoming liable for liquidated damages, the
FIDIC will soon publish an updated model form of such an agreement: Employer may deduct an amount in accordance with the Conditions of
Client/Consultant Model Services Contract (The "White Book" - formerly Contract.
called IGRA).
The Employer may authorise work to be completed by others if the
The Agreement will stipulate as the primary duty of the Engineer that he Contractor is in default. The Employer can terminate the Contract in the
carefully observes the requirements of the Employer in the realisation of the event of the Contractor failing to perform or in certain other circumstances
project. It is important to note, however, that the Conditions of Contract defined in, and subject to, the law governing to the Contract. The
between the Employer and the Contractor stipulate that where, under the Employer, if he defaults, can also be subject to cancellation of the Contract
Contract, any of the Engineer's duties are discretionary, the Engineer shall by the Contractor or to suspension of work by the Contractor.
act fairly between the Employer and the Contractor and apply the Contract
The Employer and the Engineer should maintain such contact with each
in an unbiased manner. The Conditions are based upon this fundamental
other as will facilitate smooth and unhindered progress of the Works. The
principle and this requirement applies even if the Engineer is a member of
Employer should respond, without delay, on all matters for which the
the Employer's staff. The Contractor will, of course, have to assess
Engineer is required by the Contract to consult the Employer before issuing
whether or not he has confidence in the ability of an in-house Engineer to
an instruction, determining an amount to be added to or deducted from the
take independent decisions.
Contract Price or granting an extension of time.
The Employer
The Contractor
As stated in the section dealing with the tendering process, the Employer
The obligation of the Contractor is to execute and complete the Works, for
notifies the successful tenderer that he has been awarded the Contract by
which he has submitted his Tender, within the time specified in the
issuing a Letter of Acceptance which records any changes to the Tender
22 23
Contract. In addition he has an obligation to remedy any defects which On occasions the Employer will wish to have a particular Subcontractor
appear during the Defects Liability Period. engaged because of his knowledge of that Subcontractor's skills or
because of his knowledge of some process, materials or plant particularly
As soon as is reasonably possible after receiving notification from the
required by the Employer. A Subcontractor selected in this way is known
Engineer, the Contractor shall submit the securities, guarantees and
as a nominated Subcontractor. Once he has been accepted by the main
insurance policies required by the Contract and shall commence the
Contractor the latter is responsible for the work of the nominated
Works. He prepares the construction programme, provides all necessary
Subcontractor to the same extent as applies to the work of all other
materials, Contractor's Equipment, Temporary Works, management,
Subcontractors. For this reason it is important that nomination is not
superintendence and labour and selects the method of carrying out the
misused by the Employer. Failure to perform satisfactorily by a nominated
Works. The Contractor is not responsible for the design and specification
Subcontractor can cause many difficulties on Site. The particular conditions
of the Permanent Works unless expressly provided for in the Contract nor
applying to the appointment of nominated Subcontractors are dealt with in
for any Temporary Works not designed by him.
Clause 59 of the Conditions. The Contractor may object to the nomination
The Contractor receives and complies with instructions from the Engineer for good and sufficient reasons (e.g. lack of experience or financial
acting on behalf of the Employer and is responsible for the care of the strength) and engagement against the wishes of the Contractor will
Works throughout the construction period until the Works are officially probably disturb harmony on the Site. There would have to be very
taken over by the Employer or are deemed to be taken over by the exceptional reasons for such a thing to happen.
Employer.
In very large or complex projects a number of contractors may form a joint
The Contractor is responsible for his own staff and work force and for venture to act as the Contractor. In such cases the same principles apply
taking out social and other insurances in respect of his personnel. He must as in the situation with only one Contractor. In the case of a joint venture
comply with all applicable laws, by-laws and regulations and ensure that all the Employer would normally require that all the parties to the joint venture
those for whom he is responsible also comply. have joint and several liability.
Under normal circumstances the Contractor designs all Temporary Works In projects where several contractors are operating on a single site under
and submits his proposals, with supporting calculations, to the Engineer for individual contracts, each contractor must give the other contractors
comment. If, during the construction period, he encounters unforeseen reasonable cooperation and opportunities for carrying out their work and
physical obstructions or conditions on the Site he notifies the Engineer who this should be reflected in the terms of the contracts and in the respective
issues relevant instructions. The Engineer will review the circumstances and programmes.
after consultation with both parties will determine to what extent, if any, the
Contractor may be reimbursed for additional costs or granted an extension
of the Time for Completion.
In the event of default by the Employer the Contractor may suspend
progress of the Works or reduce the rate of work and claim an appropriate
extension of time and/or additional payment.
Normally there will be one main or principal contractor who signs the
Contract and has overall responsibility for the execution and completion of
the project. There will usually be a number of Subcontractors working on
the Site undertaking specialist contracting activities. The Subcontractors
are responsible to the Contractor for material, workmanship, performance
and progress and the Contractor is responsible under the Contract for
each Subcontractor's work and behaviour.

24 25
THE ENGINEER The FIDIC Conditions are based upon the principle that the Engineer has
the authority to determine additional payments. This is in the interests of
efficient management and avoidance of duplication of effort. It also ensures
The Engineer is not a party to the Contract between the Employer and the that the Tender Price from efficient contractors will be lower than would be
Contractor but his terms of engagement are set out in an agreement the case if the Contractor did not feel sure that when he was required to do
between the Employer (Client) and the Engineer (Consultant). This additional work his remuneration for such work would be evaluated by a
agreement is often in the form recommended by FIDIC which is entitled professional able to judge the value of such work. In the event the
International General Rules of Agreement Between Client and Consultant Employer wishes to limit the authority of the Engineer this should be clearly
(1GRA). An updated version of this model form of agreement is scheduled stated in Part II so that the Contractor is aware in advance of tendering the
for publication in early 1990. The new IGRA will stipulate what authority is conditions under which he is required to work. The degree to which the
delegated to the Engineer by the Employer and should specifically state if Employer leaves the Engineer to determine matters affecting the extent and
any of the authority given to the Engineer under the FIDIC Conditions is cost of the Works and the time for their completion will depend to a large
subject to restriction. extent on the in-house capability of the Employer. Therefore, the Engineer
should be selected having regard to his professional integrity and his ability
The duties under the FIDIC Conditions which are allocated to the Engineer to fulfil his obligations under the Contract and to administer the Contract
include the issue of information and instructions to the Contractor as the fairly and impartially in the interests of both parties.
work proceeds, commenting on the Contractor's proposals for carrying out
the work, ensuring that materials and workmanship are as specified, In the exercise of his duties the Engineer accepts the responsibilities
agreeing measurements of work done and checking and issuing to the attached to them. These responsibilities should be clearly defined in the
Employer interim and final payment certificates. In administration of the Agreement between the Employer and the Engineer and should be made
Contract all communications with the Contractor pass through the known to the Contractor.
Engineer, thus avoiding possible confusion and misunderstanding although As the Works progress the Engineer will be required by the Contract to give
meetings between the Employer, the Contractor and the Engineer should instructions, give or refuse approval or consent, approve work, authorise
be held regularly. The Engineer's duties will normally include instructions payments, issue certificates, etc. It should be understood by both parties
relating to management of the Contract and changes in the nature and to the Contract that in giving approval or consent and such other acts
extent of the work, the cost thereof and the time for completion. For which are the duty of the Engineer his objective is to ensure that the
example, the issue of instructions to proceed with or to suspend the Employer receives the Works at completion in accordance with the
progress of the Works is a matter of management. In order to maintain requirements of the Contract and that the Contractor is suitably rewarded
confidence between the parties it is important that the Contract properly for the work he carries out.
discloses the procedures for the Engineer's action in such matters and that
the Engineer duly observes such procedures. The Engineer's duty is to interpret the Contract as written. In doing so he
should endeavour to determine what the Contractor could have reasonably
Many of the functions allocated to the Engineer involve financial matters. foreseen would have been required of him when preparing his tender.
The certificates he issues for interim and final payments include all cost
elements arising under the terms of the Contract other than those (if any) It is important to realise, however, that neither the Employer nor the
resulting from arbitration proceedings and the application of the liquidated Contractor is finally bound by the Engineer's interpretation or determination
damages clause. Under normal circumstances the payments certified by even if it is given in the form of a decision under Clause 67. This Clause
the Engineer will lie within the Contract Price and will, therefore, have defines the steps to be taken where the Engineer's decision there under is
already been authorised by the Employer, but variations ordered under not acceptable to one or both parties. For further information see the
Clause 5 1, fluctuations in the price of labour, materials and freight under commentary on Clause 67.
Clause 70, works done or materials and services supplied under Clause 58
and the settlement of the Contractor's request for additional payment
under such Clauses as 12 and 53 could each result in an adjustment to the
Contract Price.
26 27
COMMENTARY ON THE CONDITIONS (ii) "Contractor" means the person whose tender has been accepted
by the Employer and the legal successors in title to such person,
but not (except with the consent of the Employer) any assignee
GENERAL COMMENT of such person.
The notes that follow comment upon some aspects of individual clauses of (iii) "Subcontractor" means any person named in the Contract as a
the fourth edition of Conditions of Contract for Works of Civil Engineering Subcontractor for a part of the Works or any person to whom a
Construction. All clauses and example sub-clauses are reproduced but the part of the Works has been subcontracted with the consent of
commentaries should not be taken as representing any definitive the Engineer and the legal successors in title to such person, but
interpretation of the text of these clauses. In any given contract such not any assignee of any such person.
interpretation will depend, among other things, on the law governing the (iv) "Engineer" means the person appointed by the Employer to act
contract in question. The notes are, however, intended to give users a as Engineer for the purposes of the Contract and named as
practical guide to the operation of various clauses and to explain their such in Part II of these Conditions.
relationship to each other.
It should be noted that this definition identifies the Engineer as the person
The GENERAL CONDITIONS contained in Part I should always be included named as such in Part II of the Conditions the effect of which is to prevent
in the tender documents in their printed form as issued by FIDIC as in this the Employer from changing the Engineer without the consent of the
way contractors know exactly what is contained in them. Any additions, Contractor. The reason for this change from the third edition is that the
deletions or variations to Part I should be effected solely by an appropriate identity of the Engineer (and his reputation) has been a factor in the
entry in Part II, to reduce the risk of ambiguities. When Employers require calculation of the Contractor's Tender.
the General Conditions to be attached to tenders they should not accept
photo-copies as such copies may contain provisions which differ from (v) "Engineer's Representative" means a person appointed from time
those contained in the printed version. to time by the Engineer under Sub-Clause 2.2.

DEFINITIONS AND INTERPRETATIONS (b) (i) "Contract" means these Conditions (Parts I and II), the
Specification, the Drawings, the Bill of Quantities, the Tender, the
Clause 1 consists of definitions of keywords used throughout the Contract Letter of Acceptance, the Contract Agreement (if completed)
documents. It should be remembered when reading the text that in general and such further documents as may be expressly incorporated
any word which begins with a capital letter represents a defined term which in the Letter of Acceptance or Contract Agreement (if
has the meaning given in Clause 1 and no other meaning. The only completed).
exceptions are the definitions under (g) 'cost', 'day', 'foreign currency, and
'writing' which begin with letters in the lower case, (ii) "Specification" means the specification of the Works included in
the Contract and any modification thereof or addition thereto
Where definitions are self-explanatory no comment is given. made under Clause 51 or submitted by the Contractor and
1.1 approved by the Engineer.
Definitions (iii) "Drawings" means all drawings, calculations and technical
In the Contract (as hereinafter defined) the following words and information of a like nature provided by the Engineer to the
expressions shall have the meanings hereby assigned to them, Contractor under the Contract and all drawings, calculations,
except where the context otherwise requires: samples, patterns, models, operation and maintenance manuals
and other technical information of a like nature submitted by the
(a) (i) "Employer" means the person named as such in Part II of Contractor and approved by the Engineer.
these Conditions and the legal successors in title to such
person, but not (except with the consent (?f the Contractor) any (iv) "Bill of Quantities" means the priced and completed bill of
assignee of such person. quantities forming part of the Tender.

28 29
 (v) "Tender" means the Contractor's priced offer to the Employer for The Commencement Date and the Time for Completion have been related
the execution and completion of the Works and the remedying of directly to the receipt by the Contractor of the notice to commence. This
any defects therein in accordance with the provisions of the notice should therefore be sent or delivered against a signature of receipt.
Contract, as accepted by the Letter of Acceptance. The Appendix to Tender makes provision for stating the time interval after
the issue of the Letter of Acceptance within which the Contractor is to
(vi) "Letter of Acceptance" means the formal acceptance by the
receive the notice.
Employer of the Tender.
ii) "Time for Completion" means the time for completing the
The Letter of Acceptance, together with the Contractor's written
execution of and passing the Tests on Completion of the Works
acknowledgement (if adjustments have been made to the Tender), have the
or any Section or part thereof as stated in the Contract (or as
effect of constituting a contract between the Employer and the Contractor.
extended under Clause 44) calculated from the Commencement
The Letter of Acceptance should include, either in the text or as
Date.
appendices thereto, a statement to this effect, a complete list of the
documents which comprise the Tender as accepted, together with (d) (i) "Tests on Completion" means the tests specified in the
confirmation of the adjustments (if any) which have been made to the Contract or otherwise agreed by the Engineer and the
Tender originally submitted, by agreement between the Employer and the Contractor which are to be made by the Contractor before the
Contractor, in correcting arithmetical errors and modifying or eliminating Works or any Section or part thereof are taken over by the
reservations. The Letter of Acceptance will ordinarily record the Contract Employer.
Price, and will refer to the delivery of a performance security and the
It is specifically stated that the Tests on Completion must be carried out
execution of a formal Contract Agreement should these be required.
before the expiry of the Time for Completion and adequate time should be
The Letter of Acceptance is sometimes preceded by a letter of intent in allowed for the carrying out of the tests.
which the Employer expresses his intention to accept a tender, subject to
(ii) "Taking-Over Certificate" means a certificate issued pursuant
defined conditions. The letter of intent is not ordinarily binding upon the
to Clause 48.
Employer unless it is stated therein that the Employer will make payment
for specified work undertaken prior to the issue of the Letter of (e) (i) "Contract Price" means the sum stated in the Letter of
Acceptance. If the Contractor is required to undertake some work prior to Acceptance as payable to the Contractor for the execution and
the issue of the Letter of Acceptance it is sometimes advantageous to both completion of the Works and the remedying of any defects
the Employer and the Contractor that a separate contract should be therein in accordance with the provisions of the Contract.
entered into in respect of such work rather than that an attempt should be The Contract Price is the sum stated for the provision of the whole of the
made to incorporate such work into the Contract at a later stage. Should Works but it is not necessarily the sum the Contractor will receive as
the potential Employer decide, after the issue of the letter of intent that he throughout the Conditions there are provisions for additions or deductions
will not, after all, proceed with the Works the Contractor might well have e.g., for variations.
difficulty in obtaining reimbursement for any work which he has already
done unless there is a specific undertaking by the Employer to pay him. (ii) "Retention Money" means the aggregate of all monies
retained by the Employer pursuant to Sub-Clause 60.2(a).
(vii) "Contract Agreement" means the contract agreement (if any)
referred to in Sub-Clause 9.1. (f) (i) "Works" means the Permanent Works and the Temporary
Works or either of them as appropriate.
(viii) "Appendix to Tender" means the appendix comprised in the
form of Tender annexed to these Conditions. (ii) "Permanent Work" means the permanent works to be
executed (including Plant) in accordance with the Contract.
(c) (i) "Commencement Date" means the date upon which the
Contractor receives the notice to commence issued by the (iii) "Temporary Works" means all temporary works of every kind
Engineer pursuant to Clause 41. (other than Contractor's Equipment) required in or about the

30 31
 execution and completion of the Works and the remedying of All periods of time have been expressed in multiples of seven days, a 'day'
any defects therein. meaning a calendar day not a working day.
(iv) "Plant" means machinery, apparatus and the like intended to (iii) "foreign currency" means a currency of a country other than
form or forming part of the Permanent Works. that in which the Works are to be located.
Plant, as such, is a new definition and is different from Constructional Plant (iv) "writing" means any hand-written, type-written, or printed
which appeared in the third edition. Plant, in the fourth edition means plant communication, including telex, cable and facsimile
which is to be incorporated in the Permanent Works. It should be noted transmission.
that the definition of Plant in the civil works document is different in one
Two specific names must be entered in Part II under Clause 1. These are:
respect from the definition of Plant in the third edition of the Yellow Book
Conditions. In the Yellow Book Plant includes materials but in the Red Definitions 1.1.(a)(i) The Employer is (insert name)
Book it does not.
1.1.(a)(iv) The Engineer is (insert name)
(v) "Contractor's Equipment" means all appliances and things of
If other identifications are essential e.g., the name of an International
whatsoever nature (other than Temporary Works) required for
Financing Institution (IFI) they should be added to the above entry.
the execution and completion of the Works and the remedying of
any defects therein, but does not include Plant, materials or Further definitions can be added in Part II should they be required. For
other things intended to form or forming part of the Permanent example, in international contracts training of personnel has become a
Works. frequent requirement. In such cases a definition of 'Training' could be
(vi) "Section" means a part of the Works specifically identified in introduced with a requirement that details are stated in Part II or in the
the Contract as a Section. Specification.

Where the Works are to be divided into Sections there should be a clear 1.2
identification in Part II or in the Specification in order to operate Clauses 43 Headings and Marginal Notes
and 46 and suitable provision should be included in the Appendix to The headings and marginal notes in these Conditions shall not be
Tender. deemed part thereof or be taken into consideration in the
interpretation or construction thereof or of the Contract.
(vii) "Site" means the places provided by the Employer where the
Works are to be executed and any other places as may be 1.3
specifically designated in the Contract as forming part of the Interpretation
Site.
Words importing persons or parties shall include firms and
It will probably be necessary to define the Site in detail in the Specification corporations and any organisation having legal capacity.
or by means of a drawing included in the Contract documents.
1.4
(g) (i) "cost" means all expenditure properly incurred or to be Singular and Plural
incurred, whether on or off the Site, including overhead and
Words importing the singular only also include the plural and vice
other charges properly allocable thereto but does not include
versa where the context requires.
any allowance for profit.
1.5
Attention is drawn to the fact that 'cost' includes overhead charges which
Notices, Consents, Approvals, Certificates and Determinations
in turn include financial costs but the defined term does not include profit.
Wherever in the Contract provision is made for the giving or issue of
(ii) "day" means calendar day.
any notice, consent, approval, certificate or determination by any
person, unless otherwise specified such notice, consent, approval,

32 33
 certificate or determination shall be in writing and the words "notify", ENGINEER AND ENGINEER'S REPRESENTATIVE
"certify" or "determine" shall be construed accordingly. Any such
consent, approval, certificate or determination shall not unreasonably
be withheld or delayed. 2.1
Two important requirements are contained in this Sub-Clause. The first is Engineer’s Duties and Authority
that all notices, etc., must be in writing. The second is that any consent, (a) The Engineer shall carry out the duties specified in the Contract.
approval, certificate or determination must not be unreasonably withheld or
delayed. (b) The Engineer may exercise the authority specified in or
necessarily to be implied from the Contract, provided, however, that
if the Engineer is required, under the terms of his appointment by the
Employer, to obtain the specific approval of the Employer before
exercising any such authority, particulars of such requirements
shall be set out in Part II of these Conditions. Provided further that
any requisite approval shall be deemed to have been given by the
Employer for any such authority exercised by the Engineer.
(c) Except as expressly stated in the Contract, the Engineer shall
have no authority to relieve the Contractor of any of his obligations
under the Contract.
Reference has been made earlier to the function, duties and responsibilities
of the Engineer.
In a number of Clauses in the Conditions the Engineer is required to
undertake due consultation with the Employer and the Contractor before
making his determination. The extent of such consultation will be at the
discretion of the Engineer.
The Conditions establish that, with certain specified exceptions, all
instructions from the Engineer to the Contractor will be in writing. Where an
instruction from the Engineer to the Contractor is not confirmed in writing
by the Engineer the Contractor has the right to confirm the instruction in
writing to the Engineer, see Sub-Clause 2.5.
Restrictions on the Engineer's authority may derive from the requirements
of legislation or regulations, governmental or other. Usually such restrictions
will apply to the approval of variations leading to increases in cost or
extensions of time.
Sub-Clause 2. 1 (b) requires that any specific restrictions on the Engineer's
authority shall be set out in Part II, but nevertheless, if the Contractor
carries out work involving additional cost on the instructions of the
Engineer, the Contractor will be entitled to payment for such work even if
the Engineer had not the authority to order such work. The following is an
example of a suitable clause to be added in Part II:

34 35
2.1 2.3
Engineer’s Duties Engineer’s Authority to Delegate
The Engineer shall obtain the specific approval of the Employer The Engineer may from time to time delegate to the Engineer's
before carrying out his duties in accordance Representative any of the duties and authorities vested in the
Engineer and he may at any time revoke such delegation. Any such
with the following Clauses of Part I:
delegation or revocation shall be in writing and shall not take effect
(a) Clause (insert applicable number) until a copy thereof has been delivered to the Employer and the
Contractor.
(b) Clause (insert applicable number)
Any communication given by the Engineer's Representative to the
(c) Clause (insert applicable number) Contractor in accordance with such delegation shall have the same
The list should be extended or reduced as necessary. effect as though it had been given by the Engineer. Provided that:
In some cases the obligation to obtain approval of the Employer may apply (a) any failure of the Engineer's Representative to disapprove any
only to one Sub-Clause out of several in a Clause or approval may only be work, materials or Plant shall not prejudice the authority of the
necessary beyond certain limits, monetary or otherwise. Where this is so Engineer to disapprove such work, materials or Plant and to give
the wording must be varied accordingly. instructions for the rectification thereof;

If the obligation to obtain the approval of the Employer could lead to the (b) if the Contractor questions any communication of the Engineer's
Engineer being unable to take action in an emergency, where matters of Representative he may refer the matter to the
safety are involved, consideration should be given to adding the following Engineer who shall confirm, reverse or vary the contents of such
paragraph to the example clause given above: communication.
Notwithstanding the obligation, as set out above, to obtain approval, Sub-Clauses 2.2 and 2.3 deal with the appointment and duties of the
if, in the opinion of the Engineer, an emergency occurs affecting the Engineer's Representative, frequently referred to as the Resident Engineer.
safety of life or of the Works or of adjoining property, he may, without In the third edition certain specific duties were allocated to the Engineer's
relieving the Contractor of any of his duties and responsibilities under Representative. This has been changed in the fourth edition. The
the Contract, instruct the Contractor to execute all such work or to Engineer's Representative is appointed by the Engineer and the Engineer is
do all such things as may, in the opinion of the Engineer, be responsible for his actions. However, the identity of the person appointed
necessary to abate or reduce the risk. The Contractor shall forthwith must be made known to the Employer and the Contractor before such
comply, despite the absence of approval of the Employer, with any appointment can become effective. Such duties and authority as the
such instruction of the Engineer. The Engineer shall determine an Engineer may wish to vest in the Engineer's Representative must be
addition to the Contract Price, in respect of such instruction, in delegated in writing and care should be taken to ensure that the written
accordance with Clause 52 and shall notify the Contractor delegation is specific.
accordingly, with a copy to the Employer.
The Engineer must determine what authority should be delegated in order
2.2 to enable the work at the Site to proceed continuously and smoothly. The
Engineer’s Representative delegation must include provision for the Engineer's Representative to take
The Engineer's Representative shall be appointed by and be action in an emergency such as urgent remedial work which is referred to
responsible to the Engineer and shall carry out such duties and in Clause 64.
exercise such authority as may be delegated to him by the Engineer The scope of delegation will vary depending on the size and nature of the
under Sub-Clause 2.3. project, its location in relation to the headquarters of the Employer and the
Engineer and the capacity of the person appointed.

36 37
For ease of reference clauses are listed below where the Engineer is deemed to be an instruction within the meaning of this Sub-Clause.
mentioned: Provided further that if the Contractor, within 7 days, confirms in
writing to the Engineer any oral instruction of the Engineer and such
4, 5, 6, 7, 12, 13, 14, 15, 16, 17, 18, 19, 20, 27, 30, 31, 33, 34 (Part 11),
confirmation is not contradicted in writing within 7 days by the
35, 36, 37, 38, 39, 40, 41, 42, 44, 45, 46, 48, 49, 50, 51, 52, 53, 54, 56,
Engineer, it shall be deemed to be an instruction of the Engineer. The
57, 58, 59, 60, 62, 63, 64, 65, 67, 68, 69, 70 and 73 onwards. Provisions of this Sub-Clause shall equally apply to instructions given
Delegation should not normally be considered in respect of clauses 41, 44, by the Engineer's Representative and any assistants of the Engineer
48, 62, 63, 65, 67 and 69. or the Engineer's Representative appointed pursuant to Sub-Clause
2.4.
In order not to cause unnecessary interruption of work at Site, delegation of
authority (in whole or in part) is common in respect of the following clauses: Sub-Clause 2.5 contains the necessary obligation for the Engineer to give
his instructions in writing or. if the Engineer considers it necessary that
4, 5, 7, 12, 14, 16, 17, 18, 19, 20, 27, 30, 31, 33, 34, 35, 36, 37, 38, 39, instructions are given orally, that they are confirmed in writing as soon as
40, 42, 45, 49, 50, 53, 54, 56, 59, 60 (except 60.6 and 60.8), 64 and 70. possible thereafter. The importance of keeping records of all matters
2.4 related to the work on Site cannot be over-emphasised and it will be seen
Appointment of Assistants in later clauses that the maintenance of adequate contemporary records
may be fundamental to payment of claims for additional work. It should be
The Engineer or the Engineer's Representative may appoint any noted also that where the Engineer does not give written confirmation of an
number of persons to assist the Engineer's Representative in the instruction to the Contractor then the Contractor may himself confirm to the
carrying out of his duties under Sub-Clause 2.2. He shall notify to the Engineer that he has received such an instruction. If the Engineer fails, in
Contractor the names, duties and scope of authority of such writing, to contradict such a notice within 7 days the instruction is deemed
persons. Such assistants shall have no authority to issue any
to have been given by the Engineer to the Contractor.
instructions to the Contractor save in so far as such instructions may
be necessary to enable them to carry out their duties and to secure 2.6
their acceptance of materials, Plant or workmanship as being in Engineer to Act Impartially
accordance with the Contract, and any instructions given by any of
Wherever, under the Contract, the Engineer is required to exercise
them for those purposes shall be deemed to have been given by the
his discretion by:
Engineer's Representative.
(a) giving his decision, opinion or consent, or
Sub-Clause 2.4 authorises the appointment of Assistants by the Engineer,
or the Engineer's Representative. Such Assistants have limited duties. On a (b) expressing his satisfaction or approval, or
major project there will be a number of Assistants on Site. A further
(c) determining value, or
example of where assistants are used is in circumstances where pre-
fabricated construction elements or Plant are being manufactured in a (d) otherwise taking action which may affect the rights and
Subcontractor's premises which are not situated in the country of the obligations of the Employer or the Contractor
Engineer or the country in which the Site is situated.
he shall exercise such discretion impartially within the terms of the
2.5 Contract and having regard to all the circumstances. Any such
Instructions in Writing decision, opinion, consent, expression of satisfaction, or approval,
determination of value or action may be opened up, reviewed or
Instructions given by the Engineer shall be in writing, provided that if revised as provided in Clause 67.
for any reason the Engineer considers it necessary to give any such
instruction orally, the Contractor shall comply with such instruction. Sub-Clause 2.6 is a new introduction. It stipulates in the Contract what was
Confirmation in writing of such oral instruction given by the Engineer, treated in previous conditions as a professional obligation of the Engineer.
whether before or after the carrying out of the instruction, shall be The Sub-Clause provides that whenever the Contract requires the Engineer

38 39
to give decisions, opinions or consents, to express satisfaction or approval, ASSIGNMENT AND SUBCONTRACTING
to determine value or to take any other action requiring the Engineer to
exercise his discretion, he shall do so in an impartial manner. Behaving
impartially implies being prepared to listen to and consider the views of 3.1
both the Employer and the Contractor and then to make a determination Assignment of Contract
based upon the facts.
The Contractor shall not, without the prior consent of' the Employer
The Engineer's determinations can be challenged by either party in (which consent, notwithstanding the provisions of Sub-Clause 1.5,
accordance with the procedure for dealing with disputes laid down in shall be at the sole discretion of the Employer), assign the Contract
Clause 67. However, in order to avoid delay or interruption to the Works, or any part thereof, or any benefit or interest therein or there under,
the Engineer's determinations must be adhered to by both the Employer otherwise than by:
and Contractor until and unless they are varied by the Engineer himself, by
(a) a charge in favour of the Contractor's bankers of any monies due
amicable settlement or an arbitral tribunal, as provided for in Clause 67.
or to become due under the Contract, or
Although the Contractor may disagree with an instruction given by the
(b) assignment to the Contractor's insurers (in cases where the
Engineer the Contractor is obliged, under Sub-Clause 13.1 to carry out the
insurers have discharged the Contractor's loss or liability) of the
instructions. He would be wise to record in writing his disagreement with
Contractor's rights to obtain relief against any other party liable.
the instruction and his reasons there-for.
Usually the Contractor will have been selected by the Employer following
pre-qualification, tendering and tender evaluation. The award of the
Contract therefore implies confidence of the Employer in the Contractor.
Obviously it is not envisaged by the Employer that the Contractor he has
selected would assign the Contract to a third party. This would be
inconsistent with the objectives of the whole selection procedure. The
Conditions, for this reason, provide that the Contract may not be assigned
in whole or in part without the express consent of the Employer. However,
in recognition of the justified need of the Contractor for financing and
insurance (particularly export credit insurance) this Clause makes express
exceptions for such purposes.
4.1
Subcontracting
The Contractor shall not subcontract the whole of the Works. Except
where otherwise provided by the Contract, the Contractor shall not
subcontract any part of the Works without the prior consent of the
Engineer. Any such consent shall not relieve the Contract or from any
liability or obligation under the Contract and he shall be responsible
for the acts, defaults and neglects of any Subcontractor, his agents,
servants or workmen as fully as if they were the acts, defaults or
neglects of the Contractor, his agents, servants or workmen.
Provided that the Contractor shall not be required to obtain such
consent for:
(a) the provision of labour, or
40 41
 (b) the purchase of materials which are in accordance with the Employer's request and cost, the benefit of such obligation for the
standards specified in the Contract, or unexpired duration thereof.
(c) the subcontracting of any part of the Works for which the Obviously, if at the expiry of the period during which the Contractor has a
Subcontractor is named in the Contract. responsibility to the Employer, that is at the end of the Defects Liability
Period, there is still some unexpired guarantee or other obligation from a
Subcontracting of certain specialised parts of the work undertaken by the
Subcontractor to the Contractor the latter must assign this right to the
Contractor is not an unusual occurrence in the execution of a contract. This
Employer. The Contractor must ensure that the Subcontractor will agree to
may at first sight appear to be in conflict with the comment on Sub-Clause
such assignment.
3.1 but this is not really the case. Although as stated in relation to Sub-
Clause 3.1 the Employer wishes to have the Contract carried out by the
Contractor he has selected, it is generally recognised that other persons or
firms, by reason of their greater specialisation, experience or capacity, may
be able to carry out specific works or services or furnish certain supplies,
more efficiently than the Contractor. Accordingly, with the Employer's
consent, which under the Conditions should not be unreasonably withheld,
the Contractor may subcontract works, services or supplies to others. The
responsibility of the Contractor to the Employer for the entire Contract
remains and the Contractor retains responsibility for the work or services
which he subcontracts. It is the duty of the Contractor to justify the need,
for such specialisation. It is sometimes the practice that the Engineer, with
the agreement of the Contractor, deals directly with the Subcontractor on
technical matters. In such case it is essential that the Contractor is kept
informed at all stages, particularly if matters of payment or programme are
involved, so that the Contractor is immediately aware of discussions or
correspondence that have taken place between the Engineer and the
Subcontractor and can comment or take such other action as he may
consider appropriate.
Normally the tenderer will state in his tender what work or services he
proposes to subcontract and as far as possible the name of the
subcontractors he proposes to use. There are occasions when the
Employer will express the wish that certain tasks, operations or supplies of
Plant or material be subcontracted to a particular specialist nominated by
him.
4.2
Assignment of Subcontractors’ Obligations
In the event of a Subcontractor having undertaken towards the
Contractor in respect of the work executed, or the goods, materials,
Plant or services supplied by such Subcontractor, any continuing
obligation extending for a period exceeding that of the Defects
Liability Period under the Contract, the Contractor shall at any time,
after the expiration of such Period, assign to the Employer, at the

42 43
CONTRACT DOCUMENTS 5.2
Priority of Contract Documents
The several documents forming the Contract are to be taken as
5.1 mutually explanatory of one another, but in case of ambiguities or
Language/s and Law discrepancies the same shall be explained and adjusted by the
There is stated in Part II of these Conditions: Engineer who shall there upon issue to the Contractor instructions
thereon and in such event, unless otherwise provided in the
(a) the language or languages in which the Contract documents shall Contract, the priority of the documents forming the Contract shall be
be drawn up, and as follows:
(b) the country or state the law of which shall apply to the Contract (1) The Contract Agreement (if completed);
and according to which the Contract shall be construed.
(2) The Letter of Acceptance;
If the said documents are written in more than one language, the
language according to which the Contract shall be construed and (3) The Tender;
interpreted is also stated in Part II of these Conditions, being therein (4) Part II of these Conditions;
designated the "Ruling Language".
(5) Part I of these Conditions; and
It is important to establish the ruling language of the Contract and also the
law to which the Contract is subject. The FIDIC Conditions have been (6) Any other document forming part of the Contract.
drafted in the English language and great care is taken to ensure that FIDIC In the fourth edition the order of priority of the documents forming the
translations of these standard conditions convey the same meaning. If Part Contract is specified in more detail than in previous editions. However, this
II of the Conditions is prepared in one language and is then translated into order of precedence set out in Part I is a proposal and other orders of
another there is the possibility that ambiguities and discrepancies may preference might be preferred by the Employer. Either of the two example
occur. It is one of the Engineer's functions to deal with any ambiguities and clauses which follow can be an appropriate entry for Part II of the
discrepancies as may become apparent but in doing so he should carefully Conditions:
avoid dictating to the Contractor how the work involved is to be carried out.
The method of carrying out the Works is the responsibility of the 5.2
Contractor. Priority of Contract Documents
Sub-Clause 5.1 requires that the language/s and law should be stated in Delete the documents listed 1-6 and substitute:
Part II. The following is an example of an appropriate Part II entry: (1) the Contract Agreement (if completed);
5.1 (2) the Letter of Acceptance;
Language/s and Law
(3) the Tender;
(a) The language is (insert as applicable)
(4) the Conditions of Contract Part II;
(b) The law is that in force in (insert name of country)
(5) the Conditions of Contract Part I;
If necessary (a) should be varied to read:
(6) the Specification;
(a) The languages are (insert as applicable)
(7) the Drawings; and
The Ruling Language is (insert as applicable)
(8) the priced Bill of Quantities
or

44 45
where it is decided that no order of precedence of documents should be On some occasions the Engineer may not himself have the responsibility
included, this Sub-Clause may be varied as follows: for preparing such Drawings or information but will be the channel through
which such Drawings or information are passed to the Contractor. It is
5.2
customary for all Drawings and information to be supplied in reproducible
Priority of Contract Documents
form.
Delete the text of the Sub-Clause and substitute:
This Sub-Clause also envisages that some Drawings, Specification or other
Contract The several documents forming the Contract are to be documents may be provided by the Contractor. For example, prefabricated
Documents taken as mutually explanatory of one another, but in the elements to be manufactured according to proprietary methods of the
case of ambiguities or discrepancies the priority shall be that Contractor or where it is provided in the Contract that design of a part of
accorded by law. If, in the opinion of the Engineer, such ambiguities the Permanent Works is the responsibility of the Contractor.
or discrepancies make it necessary to issue any instruction to the
6.2
Contractor in explanation or adjustment, the Engineer shall have
One Copy of Drawings to be Kept on Site
authority to issue such instruction.
One copy of the Drawings, provided to or supplied by the Contractor
6.1
as aforesaid, shall be kept by the Contractor on Site tractor on the
Custody and Supply of Drawings and Documents
Site and the same shall at all reasonable times be available for
The Drawings shall remain in the sole custody of the Engineer, but inspection and use by the Engineer and by any other person
two copies thereof shall be provided to the Contractor free of authorised by the Engineer in writing.
charge. The Contractor shall make at his own cost any further copies
It is obviously necessary to have a copy of the Drawings on Site and
required by him. Unless it is strictly necessary for the purposes of the
available during working hours to both the Contractor and the Engineer or
Contract, the Drawings, Specification and other documents provided
the Engineer's Representative.
by the Employer or the Engineer shall not, without the consent of the
Engineer, be used or communicated to a third party by the 6.3
Contractor. Upon issue of the Defects Liability Certificate, the Disruption of Progress
Contractor shall return to the Engineer all Drawings, Specifications
The Contractor shall give notice to the Engineer, with a copy to the
and other documents provided under the Contract.
Employer, whenever planning or execution of the Works is likely to be
The Contractor shall supply to the Engineer four copies of all delayed or disrupted unless any further drawing or instruction is
Drawings, Specification and other documents submitted by the issued by the Engineer within a reasonable time. The notice shall
Contractor and approved by the Engineer in accordance with Clause include details of the drawing or instruction required and of why and
7, together with a reproducible copy of any material which cannot be by when it is required and of any delay or disruption likely to be
reproduced to an equal standard by photocopying. In addition the suffered if it is late.
Contractor shall supply such further copies of such Drawings,
If the progress of the Contractor's work is likely to be hampered because
Specification and other documents as the Engineer may request in
of late issue of Drawings or instructions by the Engineer it is important that
writing for the use of the Employer, who shall pay the cost thereof.
the Engineer should be informed by the Contractor that late issue will have
This Sub-Clause concerns the issue to the Contractor of Drawings and certain cost and time effects.
instructions required to enable him to carry out the Works. The Contractor
will normally have provided an outline programme with his tender followed
by a more detailed programme in accordance with Clause 14. With this
information available to him the Engineer can organise the issue of
Drawings and other information to meet the Contractor's requirements.

46 47
6.4 Period. It should be noted that under this Sub-Clause the Contractor is
Delays and Cost of Delay of Drawings required to carry out all such instructions issued by the Engineer.
If, by reason of any failure or inability of the Engineer to issue, within 7.2
a time reasonable in all the circumstances, any drawing or instruction Permanent Works Designed by Contractor
for which notice has been given by the Contractor in accordance
Where the Contract expressly provides that part of the Permanent
with Sub-Clause 6.3, the Contractor suffers delay and/or incurs
Works shall be designed by the Contractor, he shall submit to the
costs then the Engineer shall, after due consultation with the
Engineer, for approval:
Employer and the Contractor, determine:
(a) such drawings, specifications, calculations and other information
(a) any extension of time to which the Contractor is entitled under
as shall be necessary to satisfy the Engineer as to the suitability and
Clause 44, and
adequacy of that design, and
(b) the amount of such costs, which shall be added to the Contract
(b) operation and maintenance manuals together with drawings of
Price, and shall notify the Contractor accordingly, with a copy to the
the Permanent Works as completed, in sufficient detail to enable the
Employer.
Employer to operate, maintain, dismantle, reassemble and adjust the
This Sub-Clause safeguards the Contractor if he is delayed or involved in Permanent Works incorporating that design. The Works shall not be
extra costs as a result of late issue to him of Drawings or instructions in considered to be completed for the purposes of taking over in
respect of which notice has been given by the Contractor to the Engineer accordance with Clause 48 until such operation and maintenance
in accordance with Sub-Clause 6.3. manuals, together with drawings on completion, have been
submitted to and approved by the Engineer.
6.5
Failure by Contractor to Submit Drawings This Sub-Clause lays down the procedure for submission by the
Contractor to the Engineer of drawings, etc., for such design of Permanent
If failure or inability of the Engineer to issue any drawings or
Works as is specified in the Contract as the responsibility of the Contractor.
instructions is caused in whole or in part by the failure of the
The Sub-Clause refers to submission to the Engineer for approval. It should
Contractor to submit Drawings, Specification or other documents
be noted that approval by the Engineer of such documents does not
which he is required to submit under the Contract, the Engineer shall
absolve the Contractor from responsibility for their contents. The approval
take such failure by the Contractor into account when making his
given by the Engineer signifies that in general what is proposed appears to
determination pursuant to Sub-Clause 6.4.
conform to the requirements of the Contract.
If the Contractor contributes to the delay referred to in Sub-Clause 6.4 the
It is important to note that under Sub-Clause 7.2(b) the Works are not to be
degree to which he is responsible will be taken into account when
considered as completed until maintenance manuals and other documents
additional cost or time is calculated.
specified in the Contract have been submitted to and approved by the
7.1 Engineer. Delay by the Contractor in submitting maintenance manuals will
Supplementary Drawings and Instructions delay the issue of the Taking-Over Certificate.
The Engineer shall have authority to issue to the Contractor, from Where part of the Works is designed by the Contractor based upon
time to time, such supplementary Drawings and instructions as shall proprietary information it may be necessary for agreements concerning
be necessary for the purpose of the proper and adequate execution confidentiality, secrecy or the licensing of such proprietary information or
and completion of the Works and the remedying of any defects related rights to be concluded between the Contractor, the Employer and
therein. The Contractor shall carry out and be bound by the same. the Engineer.
This Sub-Clause authorises the Engineer to issue such additional Drawings
and instructions as are necessary for the Contractor to execute the Works
and remedy any defects observed before the end of the Defects Liability
48 49
7.3 GENERAL OBLIGATIONS
Responsibility Unaffected by Approval
Approval by the Engineer, in accordance with Sub-Clause 7.2, shall
not relieve the Contractor of any of his responsibilities under the 8.1
Contract. Contractor’s General Responsibilities

This Sub-Clause emphasises the extent of the approval by the Engineer of The Contractor shall, with due care and diligence, design (to the
Contractor's Drawings referred to in Sub-Clause 7.2. extent provided for by the Contract), execute and complete the
Works and remedy any defects therein in accordance with the
provisions of the Contract. The Contractor shall provide all
superintendence, labour, materials, Plant, Contractor's Equipment
and all other things, whether of a temporary or permanent nature,
required in and for such design, execution, completion and
remedying of any defects, so far as the necessity for providing the
same is specified in or is reasonably to be inferred from the Contract.
This Sub-Clause states the Contractor's overall responsibility for the
execution of the Works and for the remedying of any defects observed
before the expiry of the Defects Liability Period.
8.2
Site Operations and Methods of Construction
The Contractor shall take full responsibility for the adequacy, stability
and safety of all Site operations and methods of construction.
Provided that the Contractor shall not be responsible (except as
stated hereunder or as may be otherwise agreed) for the design or
specification of Permanent Works, or for the design or specification
of any Temporary Works not prepared by the Contractor. Where the
Contract expressly provides that part of the Permanent Works shall
be designed by the Contractor, he shall be fully responsible for that
part of such Works, notwithstanding any approval by the Engineer.
The Contractor is responsible for the safety of all Site operations and
methods of construction. Responsibility for design and specification of the
Permanent Works generally rests with the Engineer, but there may be
exceptions such as the detailed design of specialised items of Plant or
prefabricated elements (as referred to in the comment on Sub-Clause 6. 1)
designed and manufactured by the Contractor or by a nominated Sub-
contractor (refer to the definition in Sub-Clause 59.1).
Temporary Works are normally designed and specified by the Contractor.
Where this is the case the Engineer may, depending upon the nature or
importance of the Temporary Works, require information about their
design. Where parts of the Permanent Works are to be used during
construction as Temporary Works the design may not necessarily be
50 51
carried out by the Contractor. In these circumstances the Contractor shall In addition to Retention Money and the requirement that the Contractor's
not be responsible for this design. Where such exceptions occur, these Equipment is kept on Site (Sub-Clause 54.1), the majority of international
should be defined either in Part II of the Conditions of Contract or in the contracts require the Contractor to provide a financial security entitling the
Specification. Employer to some form of monetary compensation in the event that the
Contractor fails to execute the Contract satisfactorily.
This Clause should be read in conjunction with Clauses 20-25 dealing with
allocation of responsibilities and insurance. Such security may take various forms depending among other things upon
the requirements of the Employer and the types of security available.
9.1
Contract Agreement If such security is to be provided, the form must be annexed to the
Conditions. Two example forms of performance security are given on
The Contractor shall, if called upon so to do, enter into and execute
pages 7, 8 and 9 of the second volume of the Red Book comprising Part II.
the Contract Agreement, to be prepared and completed at the cost
The Clause and the wording of the example forms may have to be varied to
of the Employer, in the form annexed to these Conditions with such
comply with applicable law and practice.
modification as may be necessary.
The amount of the security is customarily expressed as a percentage of the
Under the laws of many countries the offer (the Tender) submitted by the
Contract Price but the percentage may vary from project to project.
Contractor and its acceptance (Letter of Acceptance) by the Employer are
Performance guarantees for international contracts are usually ten percent
sufficient to constitute a legal contract. However, in some countries and
of the Contract Price whereas surety bonds which guarantee completion of
particularly in less developed countries, a Contract Agreement between the
the Contract are usually set at a much higher percentage. It should be
Employer and the Contractor is required. The form of the Agreement must
noted that the Employer holding a surety bond cannot call upon the surety
be annexed to Part I of the Conditions when the Tender documents are
for payment of a sum of money - he calls for completion of the Contract.
issued.
Where there is provision in the Contract for payments to the Contractor to
The legal aspects in connection with a Contract Agreement should be
be made in foreign currency, Sub-Clause 10. 1 may need to be varied. As
borne in mind (e.g. the need of counter-signature or ratification, liability in
an example, the following addition could be made in Part II to Sub-Clause
law, period of limitation for action in law).
10. 1:
In large international contracts, the Contractor will sometimes be a joint
10.1
venture. In such event a Clause would ordinarily be added in Part II
Performance Security
subsequent to Clause 72 (see example text 'Joint and Several Liability' on
page 173). Add the following after the first sentence:
The security shall be denominated in the types and proportions of
10.1
Performance Security currencies stated in the Appendix to Tender.

If the Contract requires the Contractor to obtain security for his 10.2
proper performance of the Contract, he shall obtain and provide to Period of Validity of Performance Security
the Employer such security within 28 days after the receipt of the The performance security shall be valid until the Contractor has
Letter of Acceptance, in the sum stated in the Appendix to Tender. executed and completed the Works and remedied any defects
When providing such security to the Employer, the Contractor shall therein in accordance with the Contract. No claim shall be made
notify the Engineer of so doing. Such security shall be in the form against such security after the issue of the Defects Liability Certificate
annexed to these Conditions or in such other as may be agreed in accordance with Sub-Clause 62.1 and such security shall be
between the Employer and the Contractor. The institution providing returned to the Contractor within 14 days of the issue of the said
such security shall be subject to the approval of the Employer. The Defects Liability Certificate.
cost of complying with the requirements of this Clause shall be borne
by the Contractor, unless the Contract otherwise provides.
52 53
In contrast to previous editions, the Sub-Clause contains stipulations 11.1
covering the period of validity of the security, the time limit for making Inspection of Site
claims and the time limit for the return of the security to the Contractor.
The Employer shall have made available to the Contractor, before the
10.3 submission by the Contractor of the Tender, such data on
Claims under Performance Security hydrological and sub-surface conditions as have been obtained by or
on behalf of the Employer from investigations undertaken relevant to
Prior to making a claim under the performance security the Employer
the Works but the Contractor shall be responsible for his own
shall, in every case, notify the Contractor stating the nature of the
interpretation thereof.
default in respect of which the claim is to be made.
The Contractor shall be deemed to have inspected and examined
A further difference from previous editions is that the Employer, prior to
the Site and its surroundings and information available in connection
making a claim, is required to notify the Contractor stating the nature of the therewith and to have satisfied himself (so far as is practicable,
breach (default) in respect of which the claim is to be made. During the having regard to considerations of cost and time) before submitting
drafting, the possibility of including a period of notice was examined but it his Tender, as to:
was considered that such a provision might impede the use of the
Conditions. Normal practice is that when the Contractor is notified of any (a) the form and nature thereof, including sub-surface conditions,
default, he is given an opportunity to remedy it prior to a claim under the (b) the hydrological and climatic conditions,
security being made.
(c) the extent and nature of work and materials necessary for the
Where restrictions on the source of the security are imposed this should be execution and completion of the Works and the remedying of any
dealt with by adding an additional Sub-Clause to Clause 10 in Part II. defects therein, and
Examples are:
(d) the means of access to the Site and the accommodation he may
10.4 require
Source of Performance Security
and, in general, shall be deemed to have obtained all necessary
The performance security, submitted by the Contractor in information, subject as above mentioned, as to risks, contingencies
accordance with Sub-Clause 10.1, shall be furnished by an and all other circumstances which may influence or affect his Tender.
institution registered in (insert the country where the Works are to be
executed) or licensed to do business in such country. The Contractor shall be deemed to have based his Tender on the
data made available by the Employer and on his own inspection and
10.4 examination, all as aforementioned.
Source of Performance Security
During the preliminary stages of a project the Employer and his Engineer
Where the security is in the form of a bank guarantee, it shall be will have collected data upon which to base designs, cost estimates,
issued by: contract documents and drawings. It is in the interests of the Employer to
(a) a bank located in the country of the Employer, or have the design of the Permanent Works properly developed and for this
reason he would be well advised to have carried out as thorough an
(b) a foreign bank through a correspondent bank located in the investigation of the Site as is practicable. In that way he will determine the
country of the Employer. extent of the investigation he considers necessary and will pay only for the
FIDIC does not advocate the use of on-demand guarantees. As such one investigation. If tenderers were regularly obliged to undertake
guarantees can be called without justification, their use is likely to increase expensive investigations, they would have to include in their tender price
the tender sum to reflect this risk. the investigation costs for unsuccessful tenders which would result in
generally higher tender prices to Employers.

54 55
Moreover, tenderers are usually given a limited period in which to prepare 12.1
tenders and it is impracticable, and in many cases impossible, for them to Sufficiency of Tender
carry out a full site investigation programme, particularly sub-surface
The Contractor shall be deemed to have satisfied him-self as to the
exploration involving drilling and sub-seabed investigations for dredging, in
correctness and sufficiency of the Tender and of the rates and prices
the time available.
stated in the Bill of Quantities, all of which shall, except insofar as it is
For these reasons this Clause provides that the Employer shall make otherwise provided in the Contract, cover all his obligations under
available all data at his disposal when issuing invitations to tender. Some of the Contract (including those in respect of the supply of goods,
the information made available by the Employer may be too bulky to materials, Plant or services or of contingencies for which there is a
distribute or it may be available at a central point (e.g., borehole cores) or it Provisional Sum) and all matters and things necessary for the proper
may only be available on film or tape or in reference volumes such as execution and completion of the Works and the remedying of any
hydrological and meteorological records. In such cases the Contract must defects therein.
include an additional Sub-Clause in Part II indicating where the information Both Sub-Clauses within Clause 12 have links with Clause 11. Sub-Clause
can be inspected. The following is an example of such a Sub-Clause: 12.1 emphasises that the tenderer is deemed to have made a thorough
11.2 investigation of the Site and its surroundings as far as was practicable
Access to Data within the time allowed for the preparation of his tender.
Data made available by the Employer in accordance with Sub-Clause 12.2
11. 1 shall be deemed to include data listed elsewhere in the Adverse Physical Obstructions or Conditions
Contract as open for inspection at (insert particulars of the office or If, however, during the execution of the Works the Contractor
offices where such data is stored). encounters physical obstructions or physical conditions, other than
However, the Clause presupposes specifically that the Contractor should climatic conditions on the Site, or Conditions which obstructions or
visit the Site and collect such further information as may be required for the conditions were, in his opinion, not foreseeable by an experienced
preparation of his tender. The Contractor will be expected to have checked contractor, the Con tractor shall forthwith give notice thereof to the
upon the availability of the materials and the labour he needs to execute Engineer, with a copy to the Employer. On receipt of such notice the
the Works. He will also be expected to take samples of materials from Engineer shall, if in his opinion such obstructions or conditions could
borrow areas or make test pits, as he may determine to be necessary. not have been reasonably foreseen by an experienced contractor,
Further, he must check among other things the conditions for after due consultation with the Employer and the Contractor,
transportation to the Site. determine:

Where the Contract comprises dredging and reclamation work it may be (a) any extension of time to which the Contractor is entitled under
appropriate to vary Sub-Clause 11. 1 by an entry in Part II as follows: Clause 44, and

11.1 (b) the amount of costs which may have been incurred by the
Inspection of Site Contractor by reason of such obstructions or conditions having been
encountered, which shall be added to the Contract Price,
In the first paragraph, delete the words 'hydrological and sub-
surface' and substitute “hydrographic and sub-sea-bed”. and shall notify the Contractor accordingly, with a copy to the
Employer. Such determination shall take account of any instruction
In the second paragraph, under (a) delete the word 'sub-surface' which the Engineer may issue to the Contractor in connection
and substitute 'sub-seabed' and under (b) delete the word therewith, and any proper and reasonable measures acceptable to
'hydrological' and substitute 'hydrographic"'. the Engineer which the Contractor may take in the absence of
specific instructions from the Engineer

56 57
In spite of the pre-tender investigations of the Site by the parties, the agree to abide by the Engineer's interpretation of the Contract unless and
Contractor may encounter unforeseen physical obstructions or physical until varied under the provisions of Clause 67.
conditions. Sub-Clause 12.2 lays down the procedure to be applied to
The authority of the Engineer to issue instructions is very wide. He may
such situations. The Contractor is required to give the earliest possible
instruct the Contractor to do any work under the Contract which he
notice to the Engineer.
considers necessary for the Works, but he should consider carefully
If the Engineer is of the opinion that such obstructions or conditions could whether additional money and/or time is justified within the terms of the
not reasonably have been foreseen, he may after consultation with the Contract.
Employer and Contractor determine an extension of time to be allowed to
14.1
the Contractor and any additional costs to be added to the Contract Price.
Programme to be submitted
Where the Contract comprises dredging and some types of reclamation
The Contractor shall, within the time stated in Part II of these
work this Sub-Clause may require to be varied in Part II in the following
Conditions after the date of the Letter of Acceptance, submit to the
manner:
Engineer for his consent a programme, in such form and detail as the
12.2 Engineer shall reasonably prescribe, for the execution of the Works.
Adverse Physical Obstructions or Conditions The Contractor shall, whenever required by the Engineer, also
provide in writing for his information a general description of the
Delete the words 'other than the climatic conditions on the Site'. arrangements and methods which the Contractor proposes to adopt
13.1 for the execution of the Works.
Work to be in Accordance with Contract Tenderers will normally have been required to submit with their tenders a
Unless it is legally or physically impossible, the Contractor shall preliminary programme for the execution of the Works with a list of the
execute and complete the Works and remedy any defects therein in major items of Contractor's Equipment, a forecast of labour and staff and
strict accordance with the Contract to the satisfaction of the of the incidence of expenditure in various currencies (if applicable) during
Engineer. The Contractor shall comply with and adhere strictly to the the Contract period.
Engineer's instructions on any matter, whether mentioned in the
This information is essential for evaluation of the tenders and particularly for
Contract or not, touching or concerning the Works. The Contractor
establishing that tenderers have correctly appreciated the activities required
shall take instructions only from the Engineer or, subject to the
to ensure compliance with the Time for Completion. It is also required in
provisions of Clause 2, from the Engineer's Representative.
order to ascertain how the phasing of operations affects any other
This Sub-Clause should be read in conjunction with Clause 8 which contracts and any activities of the Employer of which tenderers may not be
stipulates that it is the Contractor's duty to execute the Works in aware. However, this information is usually not incorporated into the
accordance with the Contract and that he has the full responsibility for all Contract on award.
Site operations and methods of construction. However, when a problem
Once the Contract has been awarded an accurate and up to date
arises, prompt action may be required. This Sub-Clause is central to the
programme assists all involved in the ordering and allocation of resources
management of the Contract in that it gives the Engineer authority to
and so contributes to the successful conclusion of the Contract.
determine whether, for example, certain work has the quality and
dimensions prescribed by the Contract, whether a programme is sufficient The earlier the programme is produced, the better will be the flow of
to ensure timely completion or whether a payment is due. In turn this information, but in stating in Part II the time within which it is to be
authority of the Engineer must be exercised in accordance with Sub-Clause provided, the Engineer should have regard to the detailed work which the
2.6. Contractor has to do after the Contract award. Too short a period will lead
to the preparation being done in a hurry with the consequent risk of
Sub-Clause 13.1 obliges the Contractor to comply with and adhere strictly
inaccuracies. The programme is needed for monitoring progress and for
to the Engineer's instructions and, by signing the Contract, the parties
enabling the Engineer to make arrangements for the provision of Drawings,

58 59
instructions, etc., under Clause 6, the timing of nominated Subcontracts Hence, the Engineer monitors the progress of the Works on behalf of the
under Clause 59, the discharge of the Contractor's duty under Clause 46 Employer but is not entitled to alter or interfere with the Contractor's
and the coordination with other contractors engaged in the project dealt obligation to complete the Works safely, properly and on time.
with in Clause 3 1.
As stated above, it is necessary for an entry to appear in Part II stating the
Depending upon the length of the construction period it may be time within which the programme is to be submitted and the following is an
appropriate to plan the immediate period in detail and later periods in example of a suitable entry:
general terms and update and refine the programme at regular intervals, for
14.1
example every three months. If later, claims are submitted by the
Programme to be Submitted
Contractor, the programme will probably be of assistance in their
evaluation. The time within which the programme shall be submitted shall be
(insert number) days.
In considering the programme, the Engineer should comment to the
Contractor on any aspect which does not appear to be in conformity with 14.2
the Contract, but the Contractor has control over the provision of Revised Programme
resources (labour, Contractor's Equipment and materials) needed to carry
If at any time it should appear to the Engineer that the actual
out the Works in accordance with Clause 13. If the Works are not
progress of the Works does not conform to the programme to which
proceeding in accordance with the programme, and the Engineer requires
consent has been given under Sub-Clause 14.1, the Contractor shall
the programme to be updated, it is important that any extension of time to
produce, at the request of the Engineer, a revised programme
which the Contractor is entitled under Clause 44 should be determined
showing the modifications to such programme necessary to ensure
before the revised programme is considered. Accordingly. it is important
completion of the Works within the Time for Completion.
that the Contractor complies with Sub-Clause 44.2. Failure to observe this
point may complicate the assessment of any extra payments to which the If during the execution of the Contract it becomes apparent to the Engineer
Contractor may be entitled on this account. that the Contractor is not maintaining satisfactory progress in accordance
with the programme the Engineer will require the Contractor to produce a
As stated above an entry is required in Part II stating the time within which
revised programme to show how he proposes to complete the Works
the programme is required to be submitted to the Engineer for his consent.
within the Time for Completion. The Contractor will not be entitled to any
This differs from previous editions as the programme, in the third and
additional payment for the preparation of the revised programme as it will
preceding editions, was required to be submitted to the Engineer for his
have become necessary because of the Contractor's failure to maintain
approval. The programme is the responsibility of the Contractor and it is
satisfactory progress. The Contractor is obliged under this Sub-Clause to
submitted to the Engineer for constructive comment i.e., if the Engineer
produce a revised programme when so requested by the Engineer.
considers the Contractor's submission to be unclear or inadequate the
Engineer will inform the Contractor of his views and in practice they will 14.3
usually meet to discuss the Engineer's comments. The Engineer should not Cash Flow Estimate to be Submitted
give consent to a programme which is unrealistically optimistic.
The Contractor shall, within the time stated in Part II of these
The Engineer has discretion to call for information on the Contractor's Conditions after the date of the Letter of Acceptance, provide to the
arrangements and methods of working, and will normally do so for major Engineer for his information a detailed cash flow estimate, in quarterly
Temporary Works and construction operations. The Engineer will ordinarily periods, of all payments to which the Contactor will be entitled under
scrutinise this information with reference to safety and the effect that such the Contract and the Contractor shall subsequently supply revised
arrangements and methods may have on the Permanent Works and will cash flow estimates at quarterly intervals, if required to do so by the
satisfy himself that if the work is carried out as proposed, the programme Engineer.
can be achieved. He will draw to the attention of the Contractor any The Employer will require a cash-flow estimate to enable him to ensure that
matters which cause him concern. funding is available when required. It is also in the interests of the

60 61
Contractor that the Employer should be aware of the dates when payments If approval of the representative is withdrawn by the Engineer, the
are expected to be due to the Contractor. Under this Sub-Clause the Contractor shall, as soon as is practicable, having regard to the
obligation of the Contractor to produce such a cash-now estimate and to requirement of replacing him as hereinafter mentioned, after
up-date it as required by the Engineer is specified. The Contractor should receiving notice of such withdrawal, remove the representative from
differentiate in this estimate between payments in local and foreign the Works and shall not thereafter employ him again on the Works in
currencies. any capacity and shall replace him by another representative
approved by the Engineer.
It is necessary to state in Part II the date by which the cash-flow estimate
must be submitted and the following is an example of an appropriate entry: This Sub-Clause specifies the Contractor's responsibilities for
superintendence.
14.3
Cash Flow Estimate to be Submitted The authority of the Engineer to disapprove an individual as Contractor's
representative entails very serious responsibilities for the Engineer and such
The time within which the detailed cash-flow estimate shall be authority should be exercised only by the Engineer and should not be
submitted shall be (insert number) days. delegated. Clashes of personality on Site can occur and the Engineer
For the Part II entries in respect of 14.1 and 14.3 it is desirable for himself should take any action required in such a matter. It should be noted
consistency with the rest of the Conditions that the number of days that the Contractor is obliged to act if the Engineer so orders.
inserted should be a multiple of seven. Where the language in which the Contract documents have been drawn up
14.4 is not the language of the country in which the Works are to be executed,
Contractor not Relieved of Duties or Responsibilities or where for any other reason it is necessary to stipulate that the
Contractor's authorised representative shall be fluent in a particular
The submission to and consent by the Engineer of such programmes
language, appropriate Sub-Clauses should be added in Part II. The
or the provision of such general descriptions or cash flow estimates
following are examples:
shall not relieve the Contractor of any of his duties or responsibilities
under the Contract. 15.2
Language Ability of Contractor’s Representative
The submission of the programme by the Contractor to the Engineer does
not imply that failure of the Engineer to disapprove the programme relieves The Contractor's authorised representative shall be fluent in (insert
the Contractor of his responsibility. The same applies to the submission to name of language).
the Engineer of the detailed cash-flow estimate.
15.2
15.1 Interpreter to be made Available
Contractor’s Superintendence
If the Contractor's authorised representative is not, in the opinion of
The Contractor shall provide all necessary superintendence during the Engineer, fluent in (insert name of language), the Contractor shall
the execution of the Works and as long thereafter as the Engineer have available on Site at all times a competent interpreter to ensure
may consider necessary for the proper fulfilling of the Contractor's the proper transmission of instructions and information.
obligations under the Contract. The Contractor, or a competent and
16.1
authorised representative approved of by the Engineer, which
Contractor’s Employees
approval may at any time be withdrawn, shall give his whole time to
the superintendence of the Works. The Contractor shall provide on the Site in connection with the
execution and completion of the Works and the remedying of any
Such authorised representative shall receive, on behalf of the
defects therein
Contractor, instructions from the Engineer or, subject to the
provisions of Clause 2, the Engineer's Representative.

62 63
 (a) only such technical assistants as are skilled and experienced in Works are to be executed, an additional Sub-Clause in the following terms
their respective callings and such foremen and leading hands as are may be added in Part II:
competent to give proper superintendence of the Works, and
16.4
(b) such skilled, semi-skilled and unskilled labour as is necessary for Employment of Local Personnel
the proper and timely fulfilling of the Contractor's obligations under
The Contractor is encouraged, to the extent practicable and
the Contract.
reasonable, to employ staff and labour from sources within (insert
This Sub-Clause specifies certain requirements in regard to the staff and name of country).
labour force employed by the Contractor on the Site.
See the commentary to Sub-Clause 36.1 where reference is made to the
16.2 use of local materials.
Engineer at Liberty to Object
17.1
The Engineer shall be at liberty to object to and require the Setting-out
Contractor to remove forthwith from the Works any person provided
by the Contractor who, in the opinion of the Engineer, misconducts The Contractor shall be responsible for:
himself, or is incompetent or negligent in the proper performance of (a) the accurate setting-out of the Works in relation to original points,
his duties, or whose presence on Site is otherwise considered by the lines and levels of reference given by the Engineer in writing,
Engineer to be undesirable, and such person shall not be again
allowed upon the Works without the consent of the Engineer. Any (b) the correctness, subject as above mentioned, of the position,
person so removed from the Works shall be replaced as soon as levels, dimensions and alignment of all parts of the Works, and
possible. (c) the provision of all necessary instruments, appliances and labour
As in the case of the Contractor's authorised representative the Engineer in connection with the foregoing responsibilities.
has the power to order the removal from the Site of any member of the If, at any time during the execution of the Works, any error appears in
Contractor's labour force. It is reiterated that such decisions should be the position, levels, dimensions or alignment of any part of the
taken by the Engineer and should not be delegated. Works, the Contractor, on being required to do so by the Engineer,
shall, at his own cost, rectify such error to the satisfaction of the
Where the language in which the Contract documents have been drawn up
Engineer, unless such error is based on incorrect data supplied in
is not the language of the country in which the Works are to be executed,
writing by the Engineer, in which case the Engineer shall determine
or where for any other reason it is necessary to stipulate that members of
an addition to the Contract Price in accordance with Clause 52 and
the Contractor's superintending staff shall be fluent in a particular
shall notify the Contractor accordingly, with a copy to the Employer.
language. a Sub-Clause in the following terms may be added in Part II:
The checking of any setting-out or of any line or level by the Engineer
16.3
shall not in any way relieve the Contractor of his responsibility for the
Language Ability of Superintending Staff
accuracy thereof and the Contractor shall carefully protect and
A reasonable proportion of the Contractor's superintending staff shall preserve all bench-marks, sight-rails, pegs and other things used in
have a working knowledge of (insert name of language) or the setting-out the Works.
Contractor shall have available on Site at all times a sufficient number
The Engineer supplies the Contractor with the essential information upon
of competent interpreters to ensure the proper transmission of
which the setting out of the Works by the Contractor is to be based. This
instructions and information.
information will normally consist of a coordinated reference point, a datum
Where there is a desire, but not a legal requirement, that the Contractor level and a bearing. Rectification costs resulting from incorrect data
makes reasonable use of persons resident in the country in which the supplied by the Engineer are recoverable by the Contractor from the

64 65
Employer should it be established that the data supplied by the Engineer of the public or others resulting from pollution, noise or other causes
was incorrect. arising as a consequence of his methods of operation.
18.1 This Sub-Clause provides that the Contractor is responsible for the safety
Boreholes and Exploratory Excavation of persons on Site and for installation of such facilities as will protect the
Works. the public and the environment from injury or damage.
If, at any time during the execution of the Works, the Engineer
requires the Contractor to make boreholes or to carry out exploratory Depending upon the location of the Works in relation to public services and
excavation, such requirement shall be the subject of an instruction in upon the size of the Works, it may be appropriate to elaborate specifically
accordance with Clause 51, unless an item or a Provisional Sum in on the Contractor's obligation to provide fire protection equipment and
respect of such work is included in the Bill of Quantities. organisation.
This Sub-Clause deals with additional exploratory operations and how Where the Contract includes dredging the possibility of pollution should be
payment should be made for them. There are various means of dealing given particular attention and additional wording may be required. For
with the payment. It may be dealt with as a variation under Clause 51, a example, where fishing and recreation areas might be affected, the
progress payment under an item in the Bill of Quantities or a payment Contractor should be required to plan and execute the dredging so that the
under a Provisional Sum which, in accordance with Sub-Clause 58.2, will impact thereof is kept to a minimum. Where there is a risk of chemical
be either under Clause 52 or Sub-Clause 59.4. pollution from soluble sediments in the dredging area, for instance in a
harbour, it is important that sufficient information is provided with the
Where the Contract comprises dredging and reclamation work this Sub-
tender documents and that responsibilities are clearly and unambiguously
Clause may require to be varied in Part II in the following manner:
defined. The appropriate text should be included in Part II.
18.1
19.2
Boreholes and Exploratory Excavation
Employer’s Responsibilities
Add second sentence as follows:
If under Clause 31 the Employer shall carry out work on the Site with
Such exploratory excavation shall be deemed to include dredging. his own workmen he shall, in respect of such work:
19.1 (a) have full regard to the safety of all persons entitled to be upon the
Safety, Security and Protection of the Environment Site, and
The Contractor shall, throughout the execution and completion of the (b) keep the Site in an orderly state appropriate to the avoidance of
Works and the remedying of any defects therein: danger to such persons. If under Clause 31 the Employer shall
employ other contractors on the Site he shall require them to have
(a) have full regard for the safety of all persons entitled to be upon
the same regard for safety and avoidance of danger.
the Site and keep the Site (so far as the same is under his control)
and the Works (so far as the same are not completed or occupied by This Sub-Clause stipulates that the Employer shall have obligations similar
the Employer) in an orderly state appropriate to the avoidance of to those of the Contractor in respect of work he is carrying out with his own
danger to such persons, and workmen on the Site and cause other contractors who execute work for
him on the Site to assume such obligations in respect of their work.
(b) provide and maintain at his own cost all lights, guards, fencing,
warning signs and watching, when and where necessary or required
by the Engineer or by any duly constituted authority, for the
protection of the Works or for the safety and convenience of the
public or others, and
(c) take all reasonable steps to protect the environment on and off
the Site and to avoid damage or nuisance to persons or to property
66 67
ALLOCATION OF RESPONSIBILITY AND INSURANCE OBLIGATIONS time the obligations change in cases where taking over has been
backdated.
20.2
Clause 20 allocates responsibility between the Contractor and the Responsibility to Rectify Loss or Damage
Employer for damage which may be suffered by the Works. The Contractor
is to bear the cost of rectification of loss or damage which arises from any If any loss or damage happens to the Works, or any part thereof, or
cause, other than those which are described as 'Employer's Risks'. Where materials or Plant for incorporation therein, during the period for
damage is caused by an Employer's Risk there is an obligation upon the which the Contractor is responsible for the care thereof, from any
Contractor, if requested by the Engineer, to rectify, but the costs of such cause whatsoever, other than the risks defined in Sub-Clause 20.4,
work are to be borne by the Employer. the Contractor shall, at his own cost, rectify such loss or damage so
that the Permanent Works conform in every respect with the
This allocation of responsibility is effective from the commencement of the provisions of the Contract to the satisfaction of the Engineer. The
Works until the issue of the Taking-Over Certificate. In addition, the Contractor shall also be liable for any loss or damage to the Works
Contractor is responsible for materials he may be required to supply and occasioned by him in the course of any operations carried out by him
for the care of outstanding work which he may be required to complete for the purpose of complying with his obligations under Clauses 49
under the terms of the Defects Liability Period obligations. and 50.
The Contractor is also liable for damage which he may do to the Works This Sub-Clause establishes the Contractor's obligation to make good any
while on the Site for the purpose of complying with his obligations under defects for which he has responsibility under Sub-Clause 20. 1.
Clauses 49 and 50.
20.3
20.1 Loss or Damage Due to Employer’s Risks
Care of Works
In the event of any such loss or damage happening from any of the
The Contractor shall take full responsibility for the care of the Works risks defined in Sub-Clause 20.4, or in combination with other risks,
and materials and Plant for incorporation therein from the the Contractor shall, if and to the extent required by the Engineer,
Commencement Date until the date of issue of the Taking-Over rectify the loss or damage and the Engineer shall determine an
Certificate for the whole of the Works, when the responsibility for the addition to the Contract Price in accordance with Clause 52 and
said care shall pass to the Employer. Provided that: shall notify the Contractor accordingly, with a copy to the Employer.
(a) if the Engineer issues a Taking-Over Certificate for any Section or In the case of a combination of risks causing loss or damage any
part of the Permanent Works the Contractor shall cease to be liable such determination shall take into account the proportional
for the care of that Section or part from the date of issue of the responsibility of the Contractor and the Employer.
Taking-Over Certificate, when the responsibility for the care of that As stated in the introductory comments to Clause 20, the Contractor has a
Section or part shall pass to the Employer, and responsibility to make good damage which occurs from Employer's Risks
(b) the Contractor shall take full responsibility for the care of any but shall recover from the Employer the cost of making good such
outstanding Works and materials and Plant for incorporation therein damage. The amount to be recovered by the Contractor shall be
which he undertakes to finish during the Defects Liability Period until determined by the Engineer.
such outstanding Works have been completed pursuant to Clause 20.4
49. Employer’s Risks
This Sub-Clause, which specifies the responsibilities of the Contractor in The Employer's Risks are:
regard to the Works, clearly states that these responsibilities continue until
the 'date of issue of the Taking-Over Certificate', as distinct from the date (a) war, hostilities (whether war be declared or not), invasion, act of
of taking over stated in the Certificate. This makes it clear at what point in foreign enemies,

68 69
 (b) rebellion, revolution, insurrection, or military or usurped power, or outset, rather than applying a test after the event (i.e., was there
civil war, contribution to the error by another party or was it solely caused by the
Engineer?). In practice that question was exceedingly difficult to answer.
(c) ionising radiations, or contamination by radio-activity from any
nuclear fuel, or from any nuclear waste from the combustion of Should damage occur to the Works in circumstances where an error in
nuclear fuel, radio-active toxic explosive, or other hazardous design is a contributory factor, the Contractor is only relieved of
properties of any explosive nuclear assembly or nuclear component responsibility to the extent that the damage was caused by a design not
thereof, provided by him.
(d) pressure waves caused by aircraft or other aerial devices 20.4
travelling at sonic or supersonic speeds,
(h) any operation of the forces of nature against which an
(e) riot, commotion or disorder, unless solely restricted to employees experienced contractor could not reasonably have been expected to
of the Contractor or of his Subcontractors and arising from the take precautions.
conduct of the Works,
This Sub-Clause has removed two difficulties. The third edition referred to
(f) loss or damage due to the use or occupation by the Employer of risks which could not be foreseen, although it could be argued that all risks
any Section or part of the Permanent Works, except as may be of the forces of nature can be foreseen. The third edition also referred to
provided for in the Contract, risks from the forces of nature which could not be insured against. The
(g) loss or damage to the extent that it is due to the design of the Sub-Clause is concerned with very unlikely risks, whereas it is these very
Works, other than any part of the design provided by the Contractor unlikely risks for which insurance is generally available. The words 'could
or for which the Contractor is responsible, not insure against' have been removed as this test is difficult to apply.
Insurance against a particular risk of nature may be available but only at an
(h) any operation of the forces of nature against which an exorbitant premium. Conversely, insurers may not offer cover against a risk
experienced contractor could not reasonably have been expected to which they feel is almost certain to arise because of the nature or location
take precautions. of the Works.
This Sub-Clause lists certain risks which are outside the control of Under the fourth edition the Contractor is not responsible if the Works are
the Contractor. These risks were referred to in the previous edition damaged by an operation of the forces of nature against which he could
as 'excepted risks' but this was a confusing title as it was sometimes not reasonably have been expected to take precautions, i.e., a risk that is
taken to be 'accepted risks'. The term 'Employer's Risks' has been so unlikely that it would not be reasonable to spend time and money in
used in the fourth edition for clarity. taking precautions.
There are two particular changes in these risks from those in the third 21.1
edition. Insurance of Works and Contractor’s Equipment
20.4 The Contractor shall, without limiting his or the Employer's
(g) loss or damage to the extent that it is due to the design of the obligations and responsibilities under Clause 20, insure:
Works, other than any part of the design provided by the Contractor (a) the Works, together with materials and Plant for
or for which the Contractor is responsible,
incorporation therein, to the full replacement cost
The third edition included in the 'excepted risks' a cause solely due to the
Engineer's design of the Works. It has been decided to change this so that (b) an additional sum of 15 per cent of such replacement cost, or as
the Contractor is only responsible for errors in the designs for which he has may be specified in Part II of these Conditions, to cover any
been responsible. This is considered to be more balanced than was the additional costs of and incidental to the rectification of loss or
third edition. It is now possible to establish design responsibility from the damage including professional fees and the cost of demolishing and

70 71
 removing any part of the Works and of removing debris of 21.2
whatsoever nature Scope of Cover
(c) the Contractor's Equipment and other things brought onto the The insurance in paragraphs (a) and (b) of Sub-Clause 21.1 shall be
Site by the Contractor, for a sum sufficient to provide for their in the joint names of the Contractor and the Employer and shall
replacement at the Site. cover:
This Sub-Clause sets out the requirements for insurance of the Works and (a) the Employer and the Contractor against all loss or damage from
of the Contractor's Equipment. The fact that insurance is in force does not whatsoever cause arising, other than as provided in Sub-Clause
alter the obligations of both parties as defined in Clause 20. 21.4, from the start of work at the Site until the date of issue of the
relevant Taking-Over Certificate in respect of the Works or any
Although the insurance is to be for full replacement cost, it is not always
Section or part thereof as the case may be, and
necessary to insure for the replacement of an entire project, particularly if
there is a wide geographical spread of work or if, for some other reason, it (b) the Contractor for his liability:
is felt that it would never be necessary to replace the whole of the project. (i) during the Defects Liability Period for loss or damage arising
It is the intention that a 'First Loss' value would be acceptable - that is, a from a cause occurring prior to the commencement of the
sum less than the full value of the project, but sufficient to provide for the Defects Liability Period, and
cost of repair of the most serious damage envisaged.
(ii) for loss or damage occasioned by the Contractor in the
Where there is provision in the Contract for payments to the Contractor to course of any operations carried out by him for the purpose of
be made in foreign currency, it may be appropriate to vary the Sub-Clause complying with his obligations under Clauses 49 and 50.
by an entry in Part II as follows:
Previously the Contractor was to insure the Works against those risks of
21.1 damage for which he was responsible. However, some of the Employer's
Insurance of Work and Contractor’s Equipment Risks were also insurable, notably damage resulting from design errors and
Add final sentence as follows: from the forces of nature. For a project to be fully insured, it was therefore
theoretically necessary for the Employer to take out a second policy, on the
The insurance in paragraphs (a) and (b) shall provide for same project, to cover his risks.
compensation to be payable in the types and proportions of
currencies required to rectify the loss or damage incurred. Modem practice is to avoid the problems of two parallel policies applying to
the same project, by having a single policy in the joint names of both
It is advisable in the interests of equitable tendering that the deductible parties, and insuring each party for his risks. The fourth edition provides for
limits for the Employer's Risks are stated in the Tender documents. To this this and has the effect of making the Contractor responsible for insuring
end this Sub-Clause may be varied in Part II in the following manner. against all risks that can be insured.
21.1 Contract Works insurance is not generally available for the costs of
Insurance of Work and Contractor’s Equipment rectification of defects. The insurance relates to the costs of the repair of
Add to paragraph (a) as follows: the damage which results from the defect. In insurance terminology this is
known as 'resultant damage'. It should be noted that Sub-Clause 21.2
and with deductible limits for the Employer's Risks not exceeding requires the insurance to be against 'loss or damage' and not for the part
(insert amounts). of the work which was itself defective.
It may also be considered appropriate to state in the Tender documents The insurance of the Works is to be in the joint names of the Employer and
other factors, such as the total cover required, relating to Employer's Risks. the Contractor. However, during the Defects Liability Period the insurance
is only against that damage which the Contractor is required to repair
under the terms of the Defects Liability Clause, and so the Employer has no

72 73
insurable interest in this part of the policy. This section of the insurance 21.3
could, therefore, be in the name of the Contractor alone. Responsibility for Amounts not Recovered
Similarly, the Employer may not have an insurable interest in the Any amounts not insured or not recovered from the insurers shall be
Contractor's Equipment, and so this is insured in the name of the borne by the Employer or the Contractor in accordance with their
Contractor. responsibilities under Clause 20.
The Employer will wish to be certain that the Contractor has arranged If the sum selected for insurance proved to be insufficient to pay for the
these insurances, but the Employer would not be in a position to receive replacement then there would be a breach of Sub-Clause 2 1. 1. The party
the insurance monies himself directly, should there be damage. responsible under Clause 20 for the costs of the repair would be unable to
recover the deficiency from the insurance but would nevertheless be
Although it is not a requirement of the Clause, there may be cases where it responsible for making good the damage.
is decided to include the name of the Engineer as a joint insured in the
policy which is to be arranged pursuant to Sub-Clause 21.2. In many 21.4
cases, the inclusion of the Engineer as a joint insured may have little effect Exclusions
on the premium. There shall be no obligation for the insurances in Sub-Clause 21.1 to
The Contractor's obligation to insure begins "from the start of work at the include loss or damage caused by
Site" - see sub-para 21.2(a). Where a Contract contains a substantial Plant (a) war, hostilities (whether war be declared or not), invasion, act of
element or on any Contract where it is anticipated that there may be foreign enemies,
significant exposure before work starts at Site, consideration should be
given to varying Clause 21 to ensure that the risks are covered. (b) rebellion, revolution, insurrection, or military or usurped power, or
civil war,
One way of avoiding any 'gap' in cover might be to alter sub-para 21.2(a)
by replacing the wording quoted above with "from the Commencement (c) ionising radiations, or contamination by radio-activity from any
Date". However, such a change could lead to complications in arranging nuclear fuel, or from any nuclear waste from the combustion of
insurance and other wording might be more appropriate in the context of a nuclear fuel, radio-active toxic explosive, or other hazardous
particular contract. It should also be borne in mind that a change linking properties of any explosive nuclear assembly or nuclear component
insurance to the Commencement Date could result in some delay in the thereof,
issue by the Engineer of a notice to commence in accordance with Sub- (d) pressure waves caused by aircraft or other aerial devices
Clause 4 1. 1. The definition of Commencement Date - see sub-para 1. 1 travelling at sonic or supersonic speeds.
(c)(i) - relates the date to the Engineer's notice. It might take the Contractor
a little time to effect the insurance and the Engineer might feel obliged to This Sub-Clause permits the exclusion from the insurance of certain risks
satisfy himself that the Employer had received evidence of insurance before which cannot normally be insured. In addition to the exclusions listed,
he (the Engineer) issued the notice. A delay in the issue of the notice to some projects may be undertaken where other risks may not be insurable,
commence would, in many cases, not be in the interests of either the for example, flood risks when working below water level alongside a river.
Employer or the Contractor. In these circumstances an amendment appropriate to the particular project
should be made in Part II.
Whatever course is adopted, it would be prudent to take the advice of an
insurance expert before determining the exact wording to use in order to 22.1
be confident that the requisite insurance could be obtained. Furthermore, Damage to Persons and Property
any change made to Sub-Clause 21.1 might also require a change to Sub- The Contractor shall, except if and so far as the Contract provides
Clause 25.1 in order to maintain consistency. otherwise, indemnify the Employer against all losses and claims in
respect of
(a) death of or injury to any person, or
74 75
 (b) loss of or damage to any property (other than the Works), The Contractor is absolved from responsibility if the death, injury or
damage arises from any of the exceptions listed in Sub-Clause 22.2.
which may arise out of or in consequence of the execution and
Where these exceptions apply, the Employer is to indemnify the Contractor
completion of the Works and the remedying of any defects therein,
against any claims he may receive from third parties.
and against all claims, proceedings, damages, costs, charges and
expenses whatsoever in respect thereof or in relation thereto, subject 23.1
to the exceptions defined in Sub-Clause 22.2. Third Party Insurance (including Employer’s Property)
This Sub-Clause requires the Contractor to indemnify the Employer for any The Contractor shall, without limiting his or the Employer's
claims that may arise from death or injury to third parties, or loss of or obligations and responsibilities under Clause 22, insure, in the joint
damage to any property (other than the Works), as a result of the execution names of the Contractor and the Employer, against liabilities for
of the Works. death of or injury to any person (other than as provided in Clause 24)
or loss of or damage to any property (other than the Works) arising
22.2
out of the performance of the Contract, other than the exceptions
Exceptions
defined in paragraphs (a), (b) and (c) of Sub-Clause 22.2.
The "exceptions" referred to in Sub-Clause 22.1 are:
The Contractor is to arrange a Third Party insurance, to protect both the
(a) the permanent use or occupation of land by the Works, or any Contractor and the Employer against the liabilities described in Clause 22.
part thereof,
It is possible that damage or injury may be suffered by a third party as a
(b) the right of the Employer to execute the Works, or any part result of the negligence of the Employer and it is reasonable that the
thereof, on, over, under, in or through any land, Contractor should not be required to indemnify the Employer in these
circumstances. This is the effect of Sub-Clause 22.2(d). The Third Party
(c) damage to properly which is the unavoidable result of the
liability insurance should protect the Employer in these circumstances and
execution and completion of the Works, or the remedying of any
this is the reason why exception (d) is not mentioned in Sub-Clause 23. 1.
defects therein, in accordance with the Contract,
23.2
(d) death of or injury to persons or loss of or damage to property
Minimum Amount of Insurance
resulting from any act or neglect of the Employer, his agents,
servants or other contractors, not being employed by the Contractor, Such insurance shall be for at least the amount stated in the
or in respect of any claims, proceedings, damages, costs, charges Appendix to Tender.
and expenses in respect thereof or in relation thereto or, where the
injury or damage was contributed to by the Contractor, his servants The Appendix to Tender should stipulate the minimum amount of insurance
or agents, such part of the said injury or damage as may be just and to be provided. However, it is for the Contractor to decide whether the
equitable having regard to the extent of the responsibility of the minimum amount is sufficient and, if he considers it necessary, to insure for
Employer, his servants or agents or other contractors for the injury or a greater amount. The policy should cover an unlimited number of claims in
damage. any one year.

This Sub-Clause sets out the exceptions to the obligation of the Contractor 23.3
stated in Sub-Clause 22. 1. Cross Liabilities

22.3 The insurance policy shall include a cross liability clause such that
Indemnity by Employer the insurance shall apply to the Contractor and to the Employer as
separate insureds.
The Employer shall indemnify the Contractor against all claims,
proceedings, damages, costs, charges and expenses in respect of This Sub-Clause stipulates the right of the Employer or the Contractor to
the matters referred to in the exceptions defined in Sub-Clause 22.2. act individually in respect of a claim despite the fact that the policy is in
their joint names.
76 77
24.1 25.1
Accident or Injury to Workmen Evidence and Terms of Insurances
The Employer shall not be liable for or in respect of any damages or The Contractor shall provide evidence to the Employer prior to the
compensation payable to any workman or other person in the start of work at the Site that the insurances required under the
employment of the Contractor or any Subcontractor, other than Contract have been effected and shall, within 84 days of the
death or injury resulting from any act or default of the Employer, his Commencement Date, provide the insurance policies to the
agents or servants. The Contractor shall indemnify and keep Employer. When providing such evidence and such policies to the
indemnified the Employer against all such damages and Employer, the Contractor shall notify the Engineer of so doing. Such
compensation, other than those for which the Employer is liable as insurance policies shall be consistent with the general terms agreed
aforesaid, and against all claims, proceedings, damages, costs, prior to the issue of the Letter of Acceptance. The Contractor shall
charges, and expenses whatsoever in respect thereof or in relation effect all insurances for which he is responsible with insurers and in
thereto. terms approved by the Employer.
The Employer has no responsibility for injuries that may be suffered by This Sub-Clause contains certain general requirements applicable to the
employees of the Contractor, unless such injury results from an act or various insurances which are required by the Contract.
default of the Employer. In such circumstances the injured person would be
Evidence that the insurances have been arranged must be provided by the
regarded as a 'third party' to the Employer and the Employer would have
Contractor prior to the start of work on Site. This evidence might be a
the benefit of the Third Party insurance described in Clause 23.
cover note or insurance certificate. These documents do not provide
Insurance against accident to workmen is usually regulated by statutory sufficient detail to enable the Employer or his insurance adviser to agree the
provisions. The Contractor should consider whether such provisions are scope of cover and accordingly there is a requirement that the actual policy
sufficient for the Contract. documents must be provided within 84 days of the Commencement Date.
24.2 The general terms of the insurance, particularly levels of excess/deductible,
Insurance Against Accident to Workmen and any additional exclusions, conditions and warranties, should be agreed
between the Employer and the Contractor prior to the issue of the Letter of
The Contractor shall insure against such liability and shall continue
Acceptance.
such insurance during the whole of the time that any persons are
employed by him on the Works. Provided that, in respect of any 25.2
persons employed by any Subcontractor, the Contractor's Adequacy of Insurances
obligations to insure as aforesaid under this Sub-Clause shall be
The Contractor shall notify the insurers of changes in the nature,
satisfied if the Subcontractor shall have insured against the liability in
respect of such persons in such manner that the Employer is extent or programme for the execution of the Works and ensure the
indemnified under the policy, but the Contractor shall require such adequacy of the insurances at all times in accordance with the terms
Subcontractor to produce to the Employer, when required, such of the Contract and shall, when required, produce to the Employer
the insurance policies in force and the receipts for payment of the
policy of insurance and the receipt for the payment of the current
current premiums.
premium.
Construction insurance may be invalidated if the insurers are not made
The Contractor is required to insure his liability for death or injury to his own
aware of changes to the Works. In order to avoid doubt as to who will
employees and he should also ascertain that all Subcontractors have
perform this duty this Sub-Clause emphasises the obligation of the
similar insurance in force in regard to their employees.
Contractor to notify the Insurer of changes.

78 79
25.3 INSURANCES ARRANGED BY EMPLOYER
Remedy on Contractor’s Failure to Insure
If the Contractor fails to effect and keep in force any of the
insurances required under the Contract, or fails to provide the In certain circumstances, such as where a number of separate contractors
policies to the Employer within the period required by Sub-Clause are employed on a single project, or phased take-over is involved, it may
25.1, then and in any such case the Employer may effect and keep in be preferable for the Employer to arrange insurance of the Works, and third
force any such insurances and pay any premium as may be Party insurance. In such case it must be clear in the Contract that the
necessary for that purpose and from time to time deduct the amount Contractor is not precluded from taking out any additional insurance,
so paid from any monies due or to become due to the Contractor, or should he desire to do so, over and above that arranged by the Employer.
recover the same as a debt due from the Contractor. Tenderers must be provided at the Tender stage with details of the
Should the Contractor fail to arrange or maintain any of the insurances insurance to be arranged by the Employer, in order to assess what
which he is required to provide, then the Employer may do so, but at the provision to make in their rates and prices for any additional insurance, and
cost of the Contractor. for the amount of policy deductibles which they will be required to bear.
Such details shall form part of the Contract between the Employer and the
25.4 Contractor.
Compliance with Policy Conditions
The following example clauses for inclusion in Part II provide for the
In the event that the Contractor or the Employer fails to comply with arrangement of insurance by the Employer:
conditions imposed by the insurance policies effected pursuant to
the Contract, each shall indemnify the other against all losses and Clause 21
claims arising from such failure. Delete the text of the Clause and substitute the following re-numbered
Insurers may be able to avoid paying claims if certain conditions of the Sub-Clauses:
policy, particularly warranties, are breached by either of the insured parties. 21.1
Sub-Clause 25.4 provides that in these circumstances the party who is in Insurance of Works
breach of policy conditions shall indemnify the other for any resulting loss.
Without limiting his or the Contractor's obligations and
responsibilities under Clause 20, the Employer will insure:
(a) the Works, together with materials and Plant for incorporation
therein, to the full replacement cost
(b) an additional sum to cover any additional costs of and incidental
to the rectification of loss or damage
and incidental to the rectification of loss or damage including
professional fees and the cost of demolishing and removing any part
of the Works and of removing debris of whatsoever nature.
21.2
Insurance of Contractor’s Equipment
The Contractor shall, without limiting his obligations and
responsibilities under Clause 20, insure the Contractor's Equipment
and other things brought onto the Site by the Contractor, for a sum
sufficient to provide for their replacement at the Site.
80 81
21.3 25.1
Scope of Cover Evidence and Terms of Insurances
The insurance in Sub-Clause 21.1 shall be in the joint names of the The insurance policies to be arranged by the Employer pursuant to
Contractor and the Employer and shall cover: Clauses 21 and 23 shall be consistent with the general terms
described in the Tender and copies of such policies shall when
(a) the Employer and the Contractor against loss or damage as
required be supplied by the Employer to the Contractor.
provided in the details of insurance annexed to these Conditions,
from the start of work at the Site until the date of issue of the relevant 25.2
Taking-Over Certificate in respect of the Works or any Section or Adequacy of Insurances
part thereof as the case may be, and
The Employer shall notify the insurers of changes in the nature,
(b) the Contractor for his liability: extent or programme for execution of the Works and ensure the
(i) during the Defects Liability Period for loss or damage arising adequacy of the insurances at all times in accordance with the terms
from a cause occurring prior to the commencement of the of the Contract and shall, when required, produce to the Contractor
Defects Liability Period, or the insurance policies in force and the receipts for payment of the
premiums. No variations shall be made to the insurances by the
(ii) occasioned by the Contractor in the course of any operations
Employer without the prior approval of the Contractor.
carried out by him for the purpose of complying with his
obligations under Clauses 49 and 50. 25.3
Remedy Employer’s Failure to Insure
21.4
Responsibility for Amounts not Recovered If and so far as the Employer fails to effect and keep in force any of
the insurances referred to in Sub-Clause 25. 1, then the Contractor
Any amounts not insured or not recovered from the insurers shall be
may effect and keep in force any such insurance and pay any
borne by the Employer or the Contractor in accordance with their
premiums as may be necessary for that purpose and add the
responsibilities under Clause 20,
amount so paid to any monies due or to become due to the
Clause 23 Contractor, or recover the same as a debt due from the Employer.
Delete the text of the Clause and substitute: 25.4
Compliance with Policy Conditions
23.1
Third Party Insurance (including Employer’s Property) In the event that the Contractor or the Employer fails to comply with
conditions imposed by the insurance policies effected pursuant to
Without limiting his or the Contractor's obligations and
the Contract, each shall indemnify the other against all losses and
responsibilities under Clause 22, the Employer will insure in the joint
claims arising from such failure.
names of the Contractor and the Employer, against liabilities for
death of or injury to any person (other than as provided in Clause 24)
or loss of or damage to any property (other than the Works) arising
out of the performance of the Contract, as provided in the details of
insurance referred to in Sub-Clause 21.3.
Clause 25
Delete the text of the Clause and substitute:

82 83
OTHER OBLIGATIONS OF THE CONTRACTOR discovered on the Site shall, as between the Employer and the
Contractor, be deemed to be the absolute property of the Employer.
The Contractor shall take reasonable precautions to prevent his
26.1 workmen or any other persons from removing or damaging any such
Compliance with Statutes, Regulations article or thing and shall, immediately upon discovery thereof and
before removal, acquaint the Engineer of such discovery and carry
The Contractor shall conform in all respects, including by the giving out the Engineer's instructions for dealing with the same. If, by
of all notices and the paying of all fees, reason of such instructions, the Contractor suffers delay and/or
with the provisions of incurs costs then the Engineer shall, after due consultation with the
Employer and the Contractor, determine:
(a) any National or State Statute, Ordinance, or other Law, or any
regulation, or bye-law of any local or other duly constituted authority (a) any extension of time to which the Contractor is entitled under
in relation to the execution and completion of the Works and the Clause 44, and
remedying of any defects therein, and (b) the amount of such costs, which shall be added to the Contract
(b) the rules and regulations of all public bodies and companies Price,
whose property or rights are affected or may be affected in any way and shall notify the Contractor accordingly, with a copy to the
by the Works, Employer.
and the Contractor shall keep the Employer indemnified against all For the purpose of the Contract all articles of geological or archeological
penalties and liability of every kind for breach of any such provisions. interest discovered on the Site are considered the property of the
Provided always that the Employer shall be responsible for obtaining Employer. It is the Employer's responsibility to deal with them in
any planning, zoning or other similar permission required for the accordance with the applicable laws and regulations.
Works to proceed and shall indemnify the Contractor in accordance
with Sub-Clause 22.3. The Engineer has an obligation, after consultation with the Employer and
the Contractor, to determine whether the Contractor shall be granted an
Depending upon the location, the nature and size of the project as well as extension of time or additional costs to compensate him for additional work
its status in the country where the Works are to be executed, it may not be or delay.
in the Employer's best interests to require the Contractor to provide in his
tender price for the cost of all local fees, etc., in relation to the Works. 28.1
However, in order to avoid conflicts or ambiguities, this Sub-Clause Patent Rights
requires the Contractor to give all notices and make all payments duly The Contractor shall save harmless and indemnify the Employer from
imposed. A supplementary clause in Part II, drafted for the individual and against all claims and proceedings for or on account of
project can provide for the Contractor to be reimbursed or exempted from infringement of any patent rights, design trademark or name or other
any particular imposition specified therein. Otherwise all fees, etc., will be protected rights in respect of any Contractor's Equipment, materials
paid by the Contractor and must be included by him in his tender, with the or Plant used for or in connection with or for incorporation in the
exception of such costs as are related to the use of the land of the Site as Works and from and against all damages, costs, charges and
stated in Sub-Clause 22.2 and the consequences of a failure to obtain expenses whatsoever in respect thereof or in relation thereto, except
permission required for the Works to proceed, as mentioned in the final where such in fringement results from compliance with the design or
sentence of Sub-Clause 26.1 Specification provided by the Engineer.
27.1 The Contractor is responsible for dealing with patent and other rights and
Fossils royalties in respect of Plant, materials or Contractor's Equipment. The
All fossils, coins, articles of value or antiquity and structures and Contractor is not required to deal with similar matters arising from the
other remains or things of geological or archaeological interest design or specification provided by the Engineer, but where such design or
84 85
specification includes certain patents this should be stated in the relevant The Contractor shall save harmless and indemnify the Employer in
document. respect of all claims, proceedings, damages, costs, charges and
expenses whatsoever arising out of, or in relation to, any such
In projects where a substantial element of Plant is to be incorporated in the
matters insofar as the Contractor is responsible therefore.
project, guidance for drafting a supplementary clause for inclusion in Part II
can be obtained from Clause 16 of the Yellow Book third edition. This Sub-Clause places an obligation upon the Contractor to limit the
interference which his operations may cause to public or private
28.2
thoroughfares or to properties adjoining the Site. The Sub-Clause should
Royalties
be read in conjunction with Clause 22.
Except where otherwise stated, the Contractor shall pay all tonnage
30.1
and other royalties, rent and other payments or compensation, if any,
Avoidance of Damage to Roads
for getting stone, sand, gravel, clay or other materials required for the
Works. The Contractor shall use every reasonable means to prevent any of
the roads or bridges communicating with or on the routes to the Site
Particular conditions may apply in contracts comprising dredging and
from being damaged or injured by any traffic of the Contractor or any
reclamation work or any other contract involving the dumping of materials.
of his Subcontractors and, in particular, shall select routes, choose
In the event that the Sub-Clause needs to be varied for such reasons the
and use vehicles and restrict and distribute loads so that any such
following entry in Part II may be appropriate: extraordinary traffic as will inevitably arise from the moving of
28.2 materials, Plant, Contractor's Equipment or Temporary Works from
Royalties and to the Site shall be limited, as far as reasonably possible, and so
that no unnecessary damage or injury may be occasioned to such
Add second sentence as follows: roads and bridges.
The Contractor shall also be liable for all payments or compensation, The basic principle expressed in this Sub-Clause is that the Contractor is
if any, levied in relation to the dumping of part or of all of any such required to use all reasonable care and means to prevent damage to roads
materials. or bridges due to exceptional loads or intense traffic, whether the
It is sometimes the case on dredging contracts that the Employer transported goods are materials. Plant. Contractor's Equipment or
shall bear the costs of tonnage and other royalties, rent and other Temporary Works.
payments or compensation. If such conditions are to apply, Sub- 30.2
Clause 28.2 should be varied either by adding wording or by deleting Transport of Contractor’s Equipment or Temporary Works
the existing wording and substituting new wording.
Save insofar as the Contract otherwise provides, the Contractor shall
29.1 be responsible for and shall pay the cost of strengthening any
Interference with Traffic and Adjoining Properties bridges or altering or improving any road communicating with or on
All operations necessary for the execution and completion of the the routes to the Site to facilitate the movement of the Contractor's
Works and the remedying of any defects therein shall, as far as Equipment or Temporary Works and the Contractor shall indemnify
compliance with the requirements of the Contract permits, be carried and keep indemnified the Employer against all claims for damage to
on so as not to interfere unnecessarily or improperly with: any such road or bridge caused by such movement, including such
claims as may be made directly against the Employer, and shall
(a) the convenience of the public, or negotiate and pay all claims arising solely out of such damage.
(b) the access to, use and occupation of public or private roads and In the case of transportation of Contractor's Equipment and/or
footpaths to or of properties whether in the possession of the Temporary Works, ordinarily the Contractor shall pay any extra cost
Employer or of any other person. as well as indemnify the Employer against any claims arising there
from.
86 87
30.3 Clause shall be construed as though "road" included a lock, dock,
Transport of Materials or Plant sea wall or other structure related to a waterway and "vehicle"
included craft, and shall have effect accordingly.
If, notwithstanding Sub-Clause 30.1, any damage occurs to any
bridge or road communicating with or on the routes to the Site This Sub-Clause imposes similar conditions on waterborne traffic to those
arising from the transport of materials or Plant, the Contractor shall relevant to road transport.
notify the Engineer with a copy to the Employer, as soon as he
31.1
becomes aware of such damage or as soon as he receives any claim
Opportunities for Other Contractors
from the authority entitled to make such claim. Where under any law
or regulation the haulier of such materials or Plant is required to The Contractor shall, in accordance with the requirements of the
indemnify the road authority against damage the Employer shall not Engineer, afford all reasonable opportunities for carrying out their
be liable for any costs, charges or expenses in respect thereof or in work to:
relation thereto. In other cases the Employer shall negotiate the
settlement of and pay all sums due in respect of such claim and shall (a) any other contractors employed by the Employer and their
indemnify the Contractor in respect thereof and in respect of all workmen,
claims, proceedings, damages, costs, charges and expenses in (b) the workmen of the Employer, and
relation thereto. Provided that if and so far as any such claim or part
thereof is, in the opinion of the Engineer, due to any failure on the (c) the workmen of any duly constituted authorities who may be
part of the Contractor to observe and perform his obligations under employed in the execution on or near the Site of any work not
Sub-Clause 30.1, then the amount, determined by the Engineer, included in the Contract or of any contract which the Employer may
after due consultation with the Employer and the Contractor, to be enter into in connection with or ancilliary to the Works.
due to such failure shall be recoverable from the Contractor by the In the case of a complex project, it is not unusual for several contractors of
Employer and may be deducted by the Employer from any monies the Employer, workmen of the Employer and, sometime&, workmen from
due or to become due to the Contractor and the Engineer shall notify one or more public authorities to be engaged in the execution of the project
the Contractor accordingly, with a copy to the Employer. Provided on the Site simultaneously. In such cases, each contractor of the Employer
also that the Employer shall notify the Contractor whenever a must allow the others working on the Site reasonable opportunities for
settlement is to be negotiated and, where any amount may be due working in accordance with the overall plan for the project and this
from the Contractor, the Employer shall consult with the Contractor obligation should be clearly stated in the tender documents. In order that
before such settlement is agreed. each contractor can properly plan his particular work, the tender
For the transportation of materials and/or Plant, if any law or regulation documents for each contract should give maximum information on all other
requires the haulier to be responsible for any damage or additional cost activities which will be going on at the Site at the same time.
due to transport thereof, the Employer shall not be liable. In all other cases, Where the particular requirements of other contractors are known within
because materials for the Permanent Works and Plant are specified in the reasonable limits at the time of preparation of the Contract documents,
Contract and are not solely at the choice of the Contractor, the Employer details must be stated. The Specification is usually the appropriate place to
shall meet the costs and negotiate the settlement except that the do so but, exceptionally, some reference may be desirable in the
Contractor shall repay such parts thereof which could have been avoided Conditions. In that case, an additional Sub-Clause or Sub-Clauses can be
with reasonable care (see Sub-Clause 30. 1). Subject always that he shall added to this Clause in Part II.
be consulted prior to any negotiated settlement.
31.2
30.4 Facilities for Other Contractors
Waterborne Traffic
If, however, pursuant to Sub-Clause 31.1 the Contractor shall, on
Where the nature of the Works is such as to require the use by the the written request of the Engineer:
Contractor of waterborne transport the foregoing provisions of this
88 89
 (a) make available to any such contractor, or to the Employer or any material, rubbish and Temporary Works of every kind, and leave such
such authority, any roads or ways for the maintenance of which the part of the Site and Works clean and in a workmanlike condition to
Contractor is responsible, or the satisfaction of the Engineer. Provided that the Contractor shall be
entitled to retain on Site, until the end of the Defects Liability Period,
(b) permit the use, by any such, of Temporary Works or Contractor's
such materials, Contractor's Equipment and Temporary Works as
Equipment on the Site, or
are required by him for the purpose of fulfilling his obligations during
(c) provide any other service of whatsoever nature for any such, the Defects Liability Period.
the Engineer shall determine an addition to the Contract Price in This Sub-Clause requires that on completion of any part of the Works, the
accordance with Clause 52 and shall notify the Contractor Contractor clears completely the part of the Site related to the Works which
accordingly, with a copy to the Employer. have been completed so that it can be occupied by the Employer with
freedom of operation. Only such materials, Contractor's Equipment and
In a project with more than one organisation present on the Site at any one
Temporary Works shall be allowed to remain which the Contractor will
time it is preferable to include in the scope of work of one of the contracts,
need for the purpose of remedying defects. This entitlement of the
responsibility for providing necessary facilities and services to contractors
Contractor should be borne in mind by the Engineer at the time of
under other contracts. Such facilities and services may include housing,
preparation of the tender documents and subsequently when considering
water, sewage, electricity, compressed air, use of temporary roads,
the Contractor's methods of operation.
scaffolding, cranes, storage facilities, office accommodation, hospital beds
and medical attention, radio communication and telephone, workshop The Clause may be amplified or amended in Part II in the event that the
services, etc. Employer wishes to take over part of the Temporary Works and should
state the conditions for such taking over. The state of repair of such
Normally the main civil works contractor is best equipped to provide the
Temporary Works should then be stipulated in the Specification.
facilities and services required. It is important that the nature and extent of
the responsibility for services as well as the rates and prices therefor are
clearly established so that both the supplier and the users can make
appropriate allowances in their tenders.
32.1
Contractor to Keep Site Clear
During the execution of the Works the Contractor shall keep the Site
reasonably free from all unnecessary obstruction and shall store or
dispose of any Contractor's Equipment and surplus materials and
clear away and remove from the Site any wreckage, rubbish or
Temporary Works no longer required.
It is in the best interests of all concerned and particularly in respect of their
safety that the Site shall be free of unnecessary obstruction and that the
Contractor's Equipment, materials and stores of every sort are maintained
in a secure and orderly manner.
33.1
Clearance of Site on Completion
Upon the issue of any Taking-Over Certificate the Contractor shall
clear away and remove from that part of the Site to which such
Taking-Over Certificate relates all Contractor's Equipment, surplus
90 91
LABOUR The following are example sub-clauses covering some of the more usual
provisions. They should be adapted and supplemented in accordance with
the requirements of the project and the locality of the Works:
34.1 34
Engagement of Staff and Labour Rates of Wages and Conditions of Labour
The Contractor shall, unless otherwise provided in the Contract,
The Contractor shall pay rates of wages and observe conditions of
make his own arrangements for the engagement of all staff and
labour not less favourable than those established for the trade or
labour, local or other, and for their payment, housing, feeding and
industry where the work is being carried out. In the absence of any
transport.
rates of wages or conditions of labour so established, the Contractor
This Sub-Clause in Part I is drawn in very general terms and requires shall pay rates of wages and observe conditions of labour which are
elaboration in Part II or in the Specification combined with items included in not less favourable than the general level of wages and conditions
the Bill of Quantities. The provision of housing and amenities generally on observed by other employers whose general circumstances in the
the Site is frequently the cause of argument if the Contract is not explicit in trade or industry in which the Contractor is engaged are similar.
the first instance. It is particularly difficult if there are no established
34
standards for housing and amenities within the country in which, the Works
Employment of Persons in the Service of Others
are being executed. The Employer and the Engineer should together
decide what is necessary, before inviting tenders, and the Specification The Contractor shall not recruit or attempt to recruit his staff and
should include a detailed description of facilities which the Contractor is to labour from amongst persons in the service of the Employer or the
provide for the use of the Employer and the Engineer and of the minimum Engineer.
standards he must observe in providing facilities for his own staff and
34
labour, for Subcontractors and other contractors (see the commentary on
Repatriation of Labour
Clause 3 1).
The Contractor shall be responsible for the return to the place where
In setting the requirements as to the facilities which the Contractor should
they were recruited or to their domicile of all such persons as he
provide, it should be observed that such facilities are normally of a
recruited and employed for the purposes of or in connection with the
temporary nature. If, however, the Employer wishes to take over part of the
Contract and shall maintain such persons as are to be so returned in
facilities upon completion of the Works, the conditions there for should be
a suitable manner until they shall have left the Site or, in the case of
specified in the Contract. Where such facilities are to become part of the
persons who are not nationals of and have been recruited outside
Permanent Works, this should be clearly specified.
(insert name of country), shall have left (insert name of country).
As stated above, the Part I Clause is drawn in general terms and it will
34
normally be necessary to add a number of Sub-Clauses in Part II, to take
Housing for Labour
account of the circumstances and locality of the Works, covering such
matters as: permits and registration of expatriate employees; repatriation to Save insofar as the Contract otherwise provides, the for Contractor
place of recruitment; provision of temporary housing for employees; shall provide and maintain such accommodation and amenities as he
requirements in respect of accommodation for staff of Employer and may consider necessary for all his staff and labour, employed for the
Engineer; standards of accommodation to be provided; provision of access purposes of or in connection with the Contract, including all fencing,
roads, hospital, school, power, water, drainage, fire services, refuse water supply (both for drinking and other purposes), electricity
collection, communal buildings, shops, telephones; hours and conditions of supply, sanitation, cookhouses, fire prevention and fire-fighting
working; rates of pay; compliance with labour legislation; maintenance of equipment, air conditioning, cookers, refrigerators, furniture and
records of safety and health. other requirements in connection with such accommodation or
amenities. On completion of the Contract, unless otherwise agreed
with the Employer, the temporary camps/housing provided by the
92 93
 Contractor shall be removed and the Site reinstated to its original and requirements as may be made by the Government, or the local
condition, all to the approval of the Engineer. medical or sanitary authorities, for the purpose of dealing with and
overcoming the same.
34
Accident Prevention Officer; Accidents 34
Burial of the Dead
The Contractor shall have on his staff at the Site an officer dealing
only with questions regarding the safety and protection against The Contractor shall make all necessary arrangements for the
accidents of all staff and labour. This officer shall be qualified for this transport, to any place as required for burial, of any of his expatriate
work and shall have the authority to issue instructions and shall take employees or members of their families who may die in (insert
protective measures to prevent accidents. country). The Contractor shall also be responsible, to the extent
required by local regulations, for making any arrangements with
34
regard to burial of any of his local employees who may die while
Health and Safety
engaged upon the Works.
Due precautions shall be taken by the Contractor, and at his own
34
cost, to ensure the safety of his staff and labour and, in collaboration
Supply of Foodstuffs
with and to the requirements of the local health authorities, to ensure
that medical staff, first aid equipment and stores, sick bay and The Contractor shall arrange for the provision of a sufficient supply of
suitable ambulance service are available at the camps, housing and suitable food at reasonable prices for all his staff and labour, or his
on the Site at all times throughout the period of the Contract and that Subcontractors, for the purposes of or in connection with the
suitable arrangements are made for the prevention of epidemics and Contract.
for all necessary welfare and hygiene requirements.
34
34 Supply Water
Measures against Insect and Pest Nuisance
The Contractor shall, so far as is reasonably practical, having regard to
The Contractor shall at all times take the necessary precautions to local conditions, provide on the Site an adequate supply of drinking and
protect all staff and labour employed on the and Site from insect other water for the use of his staff and labour.
nuisance, rats and other pests and reduce the dangers to health and
34
the general nuisance occasioned by the same.
Alcoholic Liquor or Drugs
The Contractor shall provide his staff and labour with suitable
The Contractor shall not, otherwise than in accordance or with the
prophylactics for the prevention of malaria and take steps to prevent
Statutes, Ordinances and Government Regulations or Orders for the
the formation of stagnant pools of water. He shall comply with all the
time being in force, import, sell, give, barter or otherwise dispose of
regulations of the local health authorities in these respects and shall
any alcoholic liquor or drugs, or permit or suffer any such
in particular arrange to spray thoroughly with approved insecticide all
importation, sale, gift, barter or disposal by his Subcontractors,
buildings erected on the Site. Such treatment shall be carried out at
agents, staff or labour.
least once a year or as instructed by the Engineer. The Contractor
shall warn his staff and labour of the dangers of bilharzia and wild 34
animals. Arms and Ammunition
34 The Contractor shall not give, barter or otherwise dispose of to any
Epidemics person or persons, any arms or ammunition of any kind or permit or
suffer the same as aforesaid,
In the event of any outbreak of illness of an epidemic nature, the
Contractor shall comply with and carry out such regulations, orders
94 95
34 35
Festivals and Religious Customs Reporting of Accidents
The Contractor shall in all dealings with his staff and labour have due The Contractor shall report to the Engineer details of any accident as
regard to all recognised festivals, days of rest and or other customs. soon as possible after its occurrence. In the case of any fatality or
serious accident, the Contractor shall, in addition, notify the Engineer
34
immediately by the quickest available means.
Disorderly Conduct
The Contractor shall at all times take all reasonable precautions to
prevent any unlawful, riotous or disorderly conduct by or amongst his
staff and labour and for the preservation of peace and protection of
persons and property in the neighbourhood of the Works against the
same.
Attention is drawn to possible requirements for *on the job' training of local
labour under specified guidelines. When this is required, training should be
included as a separate payment item in the Bill of Quantities.
35.1
Returns of Labour and Contractor’s Equipment
The Contractor shall, if required by the Engineer, deliver to the
Engineer a return in detail, in such form and at such intervals as the
Engineer may prescribe, showing the staff and the numbers of the
several classes of labour from time to time employed by the
Contractor on the Site and such information respecting Contractor's
Equipment as the Engineer may require
This Sub-Clause requires the Contractor to provide records of staff, labour
and Contractor's Equipment on Site. The information may be needed for
reports to local authorities but also, in respect of labour, for the operation
of any provision for changes in labour wages and, in respect of
Contractor's Equipment, in connection with any advance paid by the
Employer, or for control required by customs authorities for import on
temporary admission.
The following example Sub-Clauses are typical of those which are
frequently added in Part II:
The Contractor shall maintain such records and make such reports
concerning safety, health and welfare of persons and damage to
property as the Engineer may from time to time prescribe.

96 97
MATERIALS, PLANT AND WORKMANSHIP to fulfil) in sufficient detail to enable the Contractor to price or allow
for the same in his Tender.
This Sub-Clause deals with the question of payment for the cost of carrying
36.1 out tests to prove compliance with the Specification. It is necessary that
Quality of Materials, Plant and Workmanship the Specification should set out clearly and in detail the samples and tests
All materials, Plant and workmanship shall be required by the Employer or the Engineer.
(a) of the respective kinds described in the Contract and in 36.4
accordance with the Engineer's instructions, and Cost of Tests not Provided for
(b) subjected from time to time to such tests as the Engineer may if any test required by the Engineer which is
require at the place of manufacture, fabrication or preparation, or on (a) not so intended by or provided for, or
the Site or at such other place or places as may be specified in the
Contract, or at all or any of such places. (b) (in the cases above mentioned) not so particularised. or
The Contractor shall provide such assistance, labour, electricity, (c) (though so intended or provided for) required by the Engineer to
fuels, stores, apparatus and instruments as are normally required for be carried out at any place other than the Site or the place of
examining, measuring and testing any materials or Plant and shall manufacture, fabrication or preparation of the materials or Plant
supply samples of materials, before incorporation in the Works, for tested,
testing as may be selected and required by the Engineer
shows the materials, Plant or workmanship not to be in accordance
This Sub-Clause sets out the requirements of the Contract as to materials, with the provisions of the Contract to the satisfaction of the Engineer,
Plant and workmanship in broad outline. These need to be developed in then the cost of such test shall be borne by the Contractor, but in
detail in other contract documents, particularly in the Specification. If the any other case Sub-Clause 36.5 shall apply.
Employer wishes to make reference to the utilisation of local materials, an The Engineer may require the Contractor to carry out tests other than those
appropriate additional Sub-Clause should be added in Part II. stated in the Specification and the Contractor is obliged to carry out such
36.2 tests but if the tests do not reveal the Contractor's work to be deficient the
Cost of Samples Contractor will not have to bear the costs of carrying out such tests.
All samples shall be supplied by the Contractor at his own cost if the 36.5
supply thereof is clearly intended by or provided for in the Contract. Engineer’s Determination where Tests not Provided for
The Contractor should make provision in his tender for the cost of Where, pursuant to Sub-Clause 36.4, this Sub-Clause applies the
supplying samples which are required under the Contract. Engineer shall, after due consultation with the Employer and the
Contractor, determine:
36.3
Cost of Tests (a) any extension of time to which the Contractor is entitled under
Clause 44, and
The cost of making any test shall be borne by the Contractor if such
test is (b) the amount of such costs, which shall be added to the Contract
Price,
(a) clearly intended by or provided for in the Contract, or
and shall notify the Contractor accordingly, with a copy to the
(b) particularised in the Contract (in cases only of a test under load or Employer.
of a test to ascertain whether the design of any finished or partially
finished work is appropriate for the purposes which it was intended This Sub-Clause enables the Engineer, after consultation with the Employer
and the Contractor, to determine to what additional cost and extension of
98 99
time the Contractor shall be entitled in respect of tests additional to those the Contract. The Engineer shall give the Contractor not less than 24
specified in the Contract. hours notice of his intention to carry out the inspection or to attend
the tests. If the Engineer, or his duly authorised representative, does
37.1
not attend on the date agreed, the Contractor may, unless otherwise
Inspection of Operations
instructed by the Engineer, proceed with the tests, which shall be
The Engineer, and any person authorised by him, shall at all deemed to have been made in the presence of the Engineer. The
reasonable times have access to the Site and to all workshops and Contractor shall forthwith forward to the Engineer duly certified
places where materials or Plant are being manufactured, fabricated copies of the test readings. If the Engineer has not attended the
or prepared for the Works and the Contractor shall afford every tests, he shall accept the said readings as accurate.
facility for and every assistance in obtaining the right to such access.
Arrangements will have to be made for times and dates of tests and it is
Sub-Clause 37.1 is included to ensure that persons carrying out inspection necessary that having made such arrangements they are adhered to unless
of the Works are properly authorised to do so. Control is necessary on alternative arrangements are agreed between the Contractor and the
those who visit the Site both for reasons of safety and to avoid any Engineer. Sub-Clause 37.3 states the procedure in the event that the
unnecessary disruption of progress of the Works. Engineer is not represented at any pre-arranged test.
Authorised persons for the purpose of this Sub-Clause may be the 37.4
Engineer, the Engineer's Representative, any assistant appointed under Rejection
Sub-Clause 2.4 or any person authorised by the Engineer. The latter would
If, at the time and place agreed in accordance with Sub-Clause 37.3,
include representatives of the Employer. the materials or Plant are not ready for inspection or testing or if, as a
37.2 result of the inspection or testing referred to in this Clause, the
Inspection and Testing Engineer determines that the materials or Plant are defective or
otherwise not in accordance with the Contract, he may reject the
The Engineer shall be entitled, during manufacture, fabrication or materials or Plant and shall notify the Contractor thereof immediately.
preparation to inspect and test the materials and Plant to be The notice shall state the Engineer's objections with reasons. The
supplied under the Contract. If materials or Plant are being Contractor shall then promptly make good the defect or ensure that
manufactured, fabricated or prepared in workshops or places other rejected materials or Plant comply with the Contract. If the Engineer
than those of the Contractor, the Contractor shall obtain permission so requests, the tests of rejected materials or Plant shall be made or
for the Engineer to carry out such inspection and testing in those repeated under the same terms and conditions. All costs incurred by
workshops or places. Such inspection or testing shall not release the the Employer by the repetition of the tests shall, after due
Contractor from any obligation under the Contract. consultation with the Employer and the Contractor, be determined
This Sub-Clause provides for inspection and testing, by authorised by the Engineer and shall be recoverable from the Contractor by the
persons, of materials and Plant which are to be components of the Works. Employer and may be deducted from any monies due or to become
Such inspection and testing may take place in the Contractor's premises due to the Contractor and the Engineer shall notify the Contractor
on or off the Site, or in any other premises. It is this Sub-Clause that accordingly, with a copy to the Employer.
authorises inspection and testing of Plant being manufactured in countries The previous Sub-Clause dealt with non-attendance by the Engineer. This
other than that of the Contractor or the country where the Works are being Sub-Clause deals with the situation where the Contractor is not ready on
executed. the pre-arranged date. The Sub-Clause also deals with the consequences
37.3 of unsatisfactory test results.
Dates for Inspection and Testing
The Contractor shall agree with the Engineer on the time and place
for the inspection or testing of any materials or Plant as provided in

100 101
37.5 due consultation with the Employer and the Contractor, determine
Independent Inspection the amount of the Contractor's costs in respect of such of
uncovering, making openings in or through, reinstating and making
The Engineer may delegate inspection and testing of materials or
good the same, which shall be added to the Contract Price, and
Plant to an independent inspector. Any such delegation shall be
shall notify the Contractor accordingly, with a copy to the Employer.
effected in accordance with Sub-Clause 2.4 and for this purpose
In any other case all costs shall be borne by the Contractor.
such independent inspector shall be considered as an assistant of
the Engineer. Notice of such appointment (not being less than 14 The Engineer may require, as a consequence of later discovery, that work
days) shall be given by the Engineer to the Contractor. already covered up be uncovered and inspected and tested. Sub-Clause
38.2 specifies under what circumstances payment will be made to the
This Sub-Clause should be read in conjunction with Sub-Clause 37.2 and
Contractor for extra work which this opening up has incurred.
will usually apply when the tests are to be carried out on materials or Plant
being supplied from a third country. 39.1
Removal of Improper Work, Materials or Plant
38.1
Examination of Work before Covering up The Engineer shall have authority to issue instructions from time to
time, for:
No part of the Works shall be covered up or put out of view without
the approval of the Engineer and the Contractor shall afford full (a) the removal from the Site, within such time or times as may be
opportunity for the Engineer to examine and measure any such part specified in the instruction, of any materials or Plant which, in the
of the Works which is about to be covered up or put out of view and opinion of the Engineer, are not in accordance with the Contract.
to examine foundations before any part of the Works is placed
(b) the substitution of proper and suitable materials or Plant, and
thereon. The Contractor shall give notice to the Engineer whenever
any such part of the Works or foundations is or are ready or about to (c) the removal and proper re-execution, notwithstanding any
be ready for examination and the Engineer shall, without previous test thereof or interim payment there-for, of any work which,
unreasonable delay, unless he considers it unnecessary and advises in respect of
the Contractor accordingly, attend for the purpose of examining and
(i) materials, Plant or workmanship, or
measuring such part of the Works or of examining such foundations.
(ii) design by the Contractor or for which he is responsible,
Arrangements must exist for the Engineer to inspect work which is to be
covered up. This Sub-Clause stipulates that work shall not be covered up is not, in the opinion of the Engineer, in accordance with the
before the Engineer has had an opportunity to examine and measure it, Contract.
and the Contractor has the obligation to call upon the Engineer for that
The Contractor is required to remove faulty materials, Plant and work and
purpose. The Contractor should not be unreasonably delayed in
to replace the same at his own cost. The Engineer, in giving his
proceeding with his work because of delay by the Engineer in carrying out
instructions, would be wise to rely on tests or other objective criteria, as
this task and the Engineer is obliged by the Conditions to attend without
well as to specify a reasonable time for the Contractor to act, as sanctions
undue delay.
are provided under Sub-Clause 39.2 if the Contractor does not act within
38.2 the time specified by the Engineer or, if no time is specified. within a
Uncovering and Making Openings reasonable time.
The Contractor shall uncover any part of the Works or make As far as case (c) of Sub-Clause 39.1 is concerned, the situation in practice
openings in or through the same as the Engineer may from time to will be more complex. Generally, the failure of any work to meet the
time instruct and shall reinstate and make good such part. If any requirements of the Contract, whether in terms of materials, Plant or
such part has been covered up or put out of view after compliance workmanship, or whether in terms of design provided by the Contractor,
with the requirement of Sub-Clause 38.1 and is found to be will have been disclosed in tests, e.g., a faulty casting, insufficient packing
executed in accordance with the Contract, the Engineer shall, after
102 103
of layers in an earth dam, a deflection of a precast beam. In such cases SUSPENSION
removal will be a minor impediment, and would have been provided for to a
certain extent in the programme. On the other hand, when tests have
shown no failure, interim payment has been made and work has 40.1
proceeded normally, and only at a later stage is it realised that the work Suspension of work
fails to meet the requirements of the Contract, bearing in mind the
provisions of Sub-Clause 2.1 (c), the Engineer should investigate with the The Contractor shall, on the instructions of the Engineer, suspend
the progress of the Works or any part thereof for such time and in
parties to the Contract whether an acceptable solution can be found on the
such manner as the Engineer may consider necessary and shall,
basis of redesign and adjustment of payment. The instructions to remove
during such suspension, properly protect and secure the Works or
the faulty work should. in such case, be an exceptional remedy and, again,
such part thereof so far as is necessary in the opinion of the
the Engineer should specify a reasonable time for the Contractor to act.
Engineer. Unless such suspension is
39.2
(a) otherwise provided for in the Contract, or
Default of Contractor in Compliance
(b) necessary by reason of some default of or breach of contract by
In case of default on the part of the Contractor in carrying out such
the Contractor or for which he is responsible, or
instruction within the time specified therein or, if none, within a
reasonable time, the Employer shall be entitled to employ and pay (c) necessary by reason of climatic conditions on the Site, or
other persons to carry out the same and all costs consequent
(d) necessary for the proper execution of the Works or for the safely
thereon or incidental thereto shall, after due consultation with the
of the Works or any part thereof (save to the extent that such
Employer and the Contractor, be determined by the Engineer and
necessity arises from any act or default by the Engineer or the
shall be recoverable from the Contractor by the Employer, and may
Employer or from any of the risks defined in Sub-Clause 20.4),
be deducted by the Employer from any monies due or to become
due to the Contractor and the Engineer shall notify the Contractor Sub-Clause 40.2 shall apply.
accordingly, with a copy to the Employer.
This Sub-Clause describes the Engineer's authority to suspend the
The sanction contained in this Sub-Clause is included to protect the progress of the Works and indicates the circumstances in which the
Employer in case the Contractor refuses to comply with an instruction of Contractor will be considered responsible for the suspension.
the Engineer under Sub-Clause 39.1.
For a Contract comprising dredging and some types of reclamation work
the Sub-Clause may be varied in Part II as follows:
40.1
Suspension of Work
Delete paragraph (c) and renumber paragraph (d) as (c).
40.2
Engineer’s Determination following Suspension
Where, pursuant to Sub-Clause 40.1, this Sub-Clause applies the
Engineer shall, after due consultation with the Employer and the
Contractor, determine
(a) any extension of time to which the Contractor is entitled under
Clause 44, and

104 105
 (b) the amount, which shall be added to the Contract Price, in COMMENCEMENT AND DELAYS
respect of the cost incurred by the Contractor by reason of such
suspension,
and shall notify the Contractor accordingly, with a copy to the 41.1
Employer. Commencement of Works

This Sub-Clause authorises the Engineer, after consultation with the The Contractor shall commence the Works as soon as is reasonably
Employer and the Contractor, to determine what extension of time and/or possible after the receipt by him of a notice to this effect from the
extra costs the Contractor shall be entitled to receive if he is not Engineer, which notice shall be issued within the time stated in the
responsible for the suspension. Appendix to Tender after the date of the Letter of Acceptance.
Thereafter, the Contractor shall proceed with the Works with the due
40.3 expedition and without delay.
Suspension lasting more than 84 days
The Appendix to Tender specifies a time period after the date of the Letter
If the progress of the Works or any part thereof is suspended on the of Acceptance within which the Engineer is to send to the Contractor a
written instructions of the Engineer and if permission to resume work notice to commence. This notice should be sent, against receipt, to the
is not given by the Engineer within a period of 84 days from the date Contractor's principal place of business (see Clause 68). Under Sub-
of suspension then, unless such suspension is within paragraph (a), Clause 41.1 the Contractor undertakes to commence the Works as soon
(b), (c) or (d) of Sub-Clause 40.1, the Contractor may give notice to as is reasonably possible after the date upon which he receives this notice.
the Engineer requiring permission, within 28 days from the receipt This date is the Commencement Date defined in Sub-Clause 1.1 (c) (i), and
thereof, to proceed with the Works or that part thereof in regard to the Time for Completion is calculated from the Commencement Date (see
which progress is suspended. If, within the said time, such Sub-Clause 43.1).
permission is not granted, the Contractor may, but is not bound to,
elect to treat the suspension, where it affects part only of the Works, The wording of Sub-Clause 41.1 is consistent with paragraph 3 of the form
as an omission of such part under Clause 51 by giving a further of Tender.
notice to the Engineer to that effect, or, where it affects the whole of The time limit for sending the notice to commence is important as the
the Works, treat the suspension as an event of default by the Contractor may have prior commitments from Subcontractors, suppliers or
Employer and terminate his employment under the Contract in others, who may request price increases if orders cannot be executed
accordance with the provisions of Sub-Clause 69.1, whereupon the promptly. Moreover, before such notice is sent the Employer must be in
provisions of Sub-Clauses 69.2 and 69.3 shall apply. possession of the Site and have clear access to it, as well as having other
This Sub-Clause provides that if the progress of the Works or any part legal and financial formalities completed in accordance with an established
thereof is suspended for 84 days then, unless the Contractor is responsible programme. It is particularly important that the Employer is able to comply
for the suspension, the Contractor may, by notice to the Engineer, require with any obligation to make advance payments to the Contractor. It is
permission, within 28 days, to proceed. If such permission is not granted, helpful for the Engineer to give his client advice on such matters.
the Contractor may elect to treat the suspended work as omitted or, where When, for a particular project, the Employer has to comply with certain
all work has been suspended, treat the Contract as repudiated. legal or administrative procedures e.g. ratification of the Contract by a
For a Contract comprising dredging and some types of reclamation work political body or the approval of a Board, the allocation of a budget (which
this Sub-Clause may be varied in Part II as follows: may affect subsequent budget periods), the provision of import licences
before the Contract is validly established or before the notice to commence
40.3 can be given, this should be stated in the tender documents.
Suspension lasting more than 84 days
Any additional Sub-Clauses relating to commencement should be added in
In the first sentence delete the words ",(c) or (d)" and substitute "or Part II.
(c)".
106 107
Sub-Clause 41.1 should be read in conjunction with Clauses 26 and 42. (b) the amount of such costs, which shall be added to the Contract
Price,
42.1
Possession Site and Access Thereto and shall notify the Contractor accordingly, with a copy to the
Employer.
Save insofar as the Contract may prescribe:
The Employer must give the Contractor possession of the Site (or portions
(a) the extent of portions of the Site of which the Contractor is to be
thereof where appropriate) at the same time as the Engineer gives the
given possession from time to time, and
notice to commence the Works pursuant to Clause 41. Delay may result in
(b) the order in which such portions shall be made available to the deferral of the date when the Works reach substantial completion and also
Contractor in extra cost to the Employer.
and subject to any requirement in the Contract as to the order in 42.3
which the Works shall be executed, the Employer will, with the Wayleaves and Facilities
Engineer's notice to commence the Works, give to the Contractor
The Contractor shall bear all costs and charges for special or
possession of
temporary wayleaves required by him in connection with access to
(c) so much of the Site. And the Site. The Contractor shall also provide at his own cost any
additional facilities outside the Site required by him for the purposes
(d) such access as, in accordance with the Contract, is to be
of the Works.
provided by the Employer
If the Contractor requires any special arrangements, e.g. for transporting
as may be required to enable the Contractor to commence and
exceptionally heavy equipment, the Contractor shall bear all costs and
proceed with the execution of the Works in accordance with the
charges related thereto.
programme referred to in Clause 14, if any, and otherwise in
accordance with such reasonable proposals as the Contractor shall, 43.1
by notice to the Engineer with a copy to the Employer, make. The Time for Completion
Employer will, from time to time as the Works proceed, give to the
Contractor possession of such further portions of the Site as may be The whole of the Works and, if applicable, any Section required to be
required to enable the Contractor to proceed with the execution of completed within a particular time as stated in the Appendix to
the Works with due dispatch in accordance with such programme or Tender, shall be completed, in accordance with the provisions of
proposals, as the case may be. Clause 48, within the time stated in the Appendix to Tender for the
whole of the Works or the Section (as the case may be), calculated
The Contractor is given possession of the Site only for the purpose of from the Commencement Date, or such extended time as may be
carrying out the Works, and his occupation of the Site is subject to the allowed under Clause 44.
terms of the Contract.
This Sub-Clause links Time for Completion with Taking Over under Clause
42.2 48. It should be read in conjunction with the form of Tender, the Appendix
Failure to Give Possession to Tender and with Clause 47 which deals with liquidated damages and
bonuses, if any.
If the Contractor suffers delay and/or incurs costs from failure on the
part of the Employer to give possession in accordance with the Attention is particularly drawn to the possible need for defining Sections of
terms of Sub-Clause 42.1, the Engineer shall, after due consultation the Works, see Sub-Clause 1. 1. (f)(vi) and for drafting corresponding
with the Employer and the Contractor determine: provisions for completion and liquidated damages and bonuses (if any), in
(a) any extension of time to which the Contractor is entitled under the Appendix to Tender.
Clause 44, and

108 109
Where completion is stated to be by a date and not within a period of time, Although the granting of an extension of time does not necessarily entail
this Sub-Clause will need to be varied in Part II. The following is an example extra cost to the Employer, the effects of delay may entitle the Contractor
of appropriate wording: to extra payment - see for example Sub-Clauses 6.4 and 42.2.
43.1 The granting of an extension of time is based on the Engineer's
Time for Completion interpretation of the Contract and his assessment of the circumstances
involved during the execution of the Works and the basis for the claim
Delete the words "within the time such extended time" and
stated by the Contractor in his notification. It should be noted that the
substitute "by the date or dates stated in the Appendix to Tender for
Engineer makes his determination after consultation with the Employer and
the whole of the Works or the Section (as the case may be) or such
the Contractor.
later date or dates",
44.2
44.1
Contractor to Provide Notification and Detailed Particulars
Extension of Time for Completion
Provided that the Engineer is not bound to make any determination
In the event of
unless the Contractor has
(a) the amount or nature of extra or additional work, or
(a) within 28 days after such event has first arisen notified the
(b) any cause of delay referred to in these Conditions, or Engineer with a copy to the Employer, and
(c) exceptionally adverse climatic conditions, or (b) within 28 days, or such other reasonable time as may be agreed
by the Engineer, after such notification submitted to the Engineer
(d) any delay, impediment or prevention by the Employer, or
detailed particulars of any extension of time to which he may
(e) other special circumstances which may occur, other than through consider himself entitled in order that such submission may be
a default of or breach of contract by the Contractor or for which he is investigated at the time.
responsible,
It is important that the events which may give rise to an entitlement to an
being such as fairly to entitle the Contractor to an extension of the extension are dealt with as and when they occur and can be identified and
Time for Completion of the Works, or any Section or part thereof, the investigated. The requirement of notification and the submission of
Engineer shall, after due consultation with the Employer and the particulars has therefore been expanded in the fourth edition. This
Contractor, determine the amount of such extension and shall notify requirement further underlines the necessity of good communication and
the Contractor accordingly, with a copy to the Employer. understanding between the Employer, the Engineer and the Contractor, as
well as the importance of the Engineer's role in acting in an impartial and
The granting of an extension of time, to which the Contractor may become
unbiased manner as required by Sub-Clause 2.6 of these Conditions.
entitled, might arise from such factors as delay in obtaining possession of
the Site (Clause 42), delay in the issue of drawings or instructions (Clause 44.3
6), adverse physical obstructions or conditions (Clause 12), suspensions Interim Determination of Extension
(Clause 40), extra work (Clause 51) or damage or delays to the Works
Provided also that where an event has a continuing effect such that it
(Clauses 20 and 65).
is not practicable for the Contractor to submit detailed particulars
As liquidated damages and bonuses (if any) are affected, it is important within the period of 28 days referred to in Sub Clause 44.2(b), he
that, whenever an extension of time is granted, a new completion date is shall nevertheless be entitled to an extension of time provided that he
clearly established to supersede the completion date established in has submitted to the Engineer interim particulars at intervals of not
accordance with Clause 43. more than 28 days and final particulars within 28 days of the end of
the effects resulting from the event. On receipt of such interim
particulars, the Engineer shall, without undue delay, make an interim
determination of extension of time and, on receipt of the final
110 111
 particulars, the Engineer shall review all the circumstances and shall 45.1
determine an overall extension of time in regard to the event. In both Working Hours
such cases the Engineer shall make his determination after due
Delete Sub-Clause 45.1 and substitute:
consultation with the Employer and the Contractor and shall notify
the Contractor of the determination, with a copy to the Employer. No Subject to any provision to the contrary contained in the Contract,
final review shall result in a decrease of any extension of time already the Contractor shall have the option to work continuously by day and
determined by the Engineer. by night and on locally recognised days of rest.
Events entitling a Contractor to an extension of time may be continuing, in The Contractor's option may be further extended by substituting, in place
which case detailed particulars can only be established during a longer of the last three words in the above example Sub-Clause:
period than is envisaged in Sub-Clause 44.2. Sub-Clause 44.3 provides for
the submission of interim particulars at intervals. This implies that holidays or days of rest.
contemporary records will be available when the claim is eventually 46.1
finalised. Rate of Progress
45.1 If for any reason, which does not entitle the Contractor to an
Restriction on Working Hours extension of time, the rate of progress of the Works m any Section is
at any time, in the opinion of the Engineer, too slow to comply with
Subject to any provision to the contrary contained in the Contract,
the Time for Completion the Engineer shall so notify the Contra shall
none of the Works shall, save as hereinafter provided, be carried on
thereupon take such steps as are necessary, subject to the consent
during the night or on locally recognised days of rest without the
of the Engineer, to expedite progress so as to comply with the Time
consent of the Engineer, except when work is unavoidable or
for Completion. The Contractor shall not be entitled to any additional
absolutely necessary for the saving of life or property or for the safety
payment for taking such steps. If, as a result of any notice given by
of the Works, in which case the Contractor shall immediately advise
the Engineer. Provided that the provisions of this Clause shall not be the Engineer under this Clause, the Contractor considers that it is
necessary to do any work at night or on locally recognised days of
applicable in the case of any work which it is customary to carry out
rest, he shall be entitled to seek the consent of the Engineer so to
by multiple shifts.
do. Provided that if any steps, taken by the Contractor in meeting his
This Sub-Clause stipulates that the Contractor will ordinarily plan to obligations under this Clause, involve the Employer in additional
execute the Works during normal working hours at the Site. It recognises, supervision costs, such costs shall, after due consultation with the
however, that some work will have to go on more or less continuously, Employer and the Contractor, be determined by the Engineer and
when it is unavoidable or when required for safety reasons or custom, e.g. shall be recoverable from the Contractor by the Employer, and may
construction of a cofferdam during a critical period, drainage and be deducted by the Employer from any monies due or to become
dewatering, underground excavation work, maintenance and repair of due to the Contractor and the Engineer shall notify the Contractor
Contractor's Equipment. This Sub-Clause should be read in conjunction accordingly, with a copy to the Employer.
with the Contractor's obligation to avoid nuisance in accordance with
This Sub-Clause deals with the case where the Contractor is not
Clause 19. The Contractor is required to obtain the Engineer's consent to
maintaining progress adequately to achieve timely completion and is not
work other than during normal working hours (Clause 46).
entitled to an extension of time. Notice under this Sub-Clause is generally a
For a Contract located in an area, where environmental restrictions do not prerequisite to invoking Sub-Clause 63.1 (d).
apply, or where a Contract comprises work such as dredging and
Provision is also made in Sub-Clause 46.1 that any additional supervision
reclamation that may require continuous working, the Clause may need to
costs incurred by the Employer due to steps taken by the Contractor to
be varied in Part II as follows:
expedite progress pursuant to a notification by the Engineer may be
recovered by the Employer from the Contractor.

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47.1 considered by the Employer that a pro-rata reduction would not be
Liquidated Damages for Delays equitable, alternative provisions should be included in Part II
If the Contractor fails to comply with the Time for Completion in If the Employer can make use of the Works on early completion (that is to
accordance with Clause 48, for the whole of the Works or, if say if performance under other contracts would not prevent their use) and
applicable, any Section within the relevant time prescribed by Clause can adapt his financing to the circumstances, the Employer may consider
43, then the Contractor shall pay to the Employer the relevant sum making provision for a bonus to be paid to the Contractor in case of early
stated in the Appendix to Tender as liquidated damages for such completion. The bonus could be related to completion of the whole of the
default and not as a penalty (which sum shall be the only monies due Works or to any part thereof, e.g. the first generating unit in a power
from the Contractor for such default) for every day or part of a day station.
which shall elapse between the relevant Time for Completion and the
date stated in a Taking-Over Certificate of the whole of the Works or In the case where a bonus is to be provided for early completion of the
the relevant Section, subject to the applicable limit stated in the whole of the Works the following example Sub-Clause can be added in
Appendix to Tender. The Employer may, without prejudice to any Part II:
other method of recovery, deduct the amount of such damages from 47.3
any monies due or to become due to the Contractor. The payment Bonus for Completion
or deduction of such damages shall not relieve the Contractor from
his obligation to complete the Works, or from any other of his If the Contractor achieves completion of the Works prior to the time
obligations and liabilities under the Contract. prescribed by Clause 43, the Employer shall pay to the Contractor a
sum (insert figure) for every day which shall elapse between the date
The amount of liquidated damages is determined by the Employer, before stated in the Taking-Over Certificate in respect of the Works issued
tenders are invited, as a reasonable assessment of the actual damages in accordance with Clause 48 and the time prescribed in Clause 43.
which he would suffer in the event of delay in completion of the Works.
Tenderers are, therefore, aware of the nature of their commitment at the In the case where bonuses are provided for early completion of Sections of
time of tendering but it is important to specify a limit on the total liquidated the Works and details, other than dates, are given in the Specification, the
damages which can become due. following Sub-Clause can be considered for addition in Part II:

Should liquidated damages become due, deduction is made by the 47.3

Employer, as provided for in Sub-Clause 47.1. Bonus for Completion

47.2 Sections are required to be completed by the dates given in the

Reduction of Liquidated Damages Appendix to Tender in order that such Sections may be occupied
and used by the Employer in advance of the completion of the whole
If, before the Time for Completion of the whole of the Works or, if of the Works.
applicable, any Section, a Taking-Over Certificate has been issued
for any part of the Works or of a Section, the liquidated damages for Details of the work required to be executed to entitle the Contractor
delay in completion of the remainder of the Works or of that Section to bonus payments and the amounts of the bonuses are stated in
shall, for any period of delay after the date stated in such Taking- the Specification.
Over Certificate, and in the absence of alternative provisions in the For the purposes of calculating bonus payments, the dates given in
Contract, be reduced in the proportion which the value of the part so the Appendix to Tender for completion of Sections are fixed and,
certified bears to the value of the whole of the Works or Section, as unless otherwise agreed, no adjustments of the dates by reason of
applicable. The provisions of this Sub-Clause shall only apply to the granting an extension of time pursuant to Clause 44 or any other
rate of liquidated damages and shall not affect the limit thereof. Clause of these Conditions will be allowed.
If delay in completion does not affect the whole of the Works, Issue of certificates by the Engineer that the Sections were
arrangements for a pro-rata reduction are set out in Sub-Clause 47.2. If it is satisfactory and complete by the dates given on the certificates shall,
114 115
 subject to Clause 60, entitle the Contractor to the bonus payments undertaking to finish with due expedition any such outstanding work during
calculated in accordance with the Specification. the Defects Liability Period.
48.1 The Taking-Over Certificate will confirm that the work has been
Taking-Over Certificate substantially completed, and will include a list of outstanding items (if any)
to be completed during the Defects Liability Period. The Certificate will also
When the whole of the Works have been substantially Certificate
establish the date on which substantial completion was achieved and the
completed and have satisfactorily passed any Tests on Completion
Works were taken over by the Employer and the Defects Liability Period in
prescribed by the Contract, the Contractor may give notice to that
respect thereof began. In accordance with Sub-Clause 20.1 the
effect to the Engineer, with a copy to the Employer, accompanied by
a written undertaking to finish with due expedition any outstanding responsibility for the care of the Works passes to the Employer on the date
work during the Defects Liability Period. Such notice and undertaking of issue of the Taking-Over Certificate. The Employer should prepare in
shall be deemed to be a request by the Contractor for the Engineer good time for taking over responsibility for the Works and arrange
to issue a Taking-Over Certificate in respect of the Works. The insurance if he wishes to do so.
Engineer shall, within 21 days of the date of delivery of such notice, It should be noted that, other than in Sub-Clause 62.1 which refers to
either issue to the Contractor, with a copy to the Employer, a Taking- completion of the Contract, all other clauses refer to completion of the
Over Certificate, stating the date on which, in his opinion, the Works Works in terms of Clause 48.
were substantially completed in accordance with the Contract, or
give instructions in writing to the Contractor specifying all the work 48.2
which, in the Engineer's opinion, is required to be done by the Taking Over of Sections or Parts
Contractor before the issue of such Certificate. The Engineer shall Similarly, in accordance with the procedure set out in Sub-Clause
also notify the Contractor of any defects in the Works affecting 48.1, the Contractor may request and the Engineer shall issue a
substantial completion that may appear after such instructions and Taking-Over Certificate in respect of
before completion of the Works specified therein. The Contractor
shall be entitled to receive such Taking-Over Certificate within 21 (a) any Section in respect of which a separate Time for Completion is
days of completion, to the satisfaction of the Engineer, of the Works provided in the Appendix to Tender, or
so specified and remedying any defects so notified. (b) any substantial part of the Permanent Works which has been
This Sub-Clause sets out the procedural steps for the issue of a certificate both completed to the satisfaction of the Engineer and, otherwise
when the Works have been substantially completed. The question is than as provided for in the Contract, occupied or used by the
frequently posed, 'What is substantial completion?' It is rarely the case that Employer, or
when application is made for the Taking-Over Certificate there is no (c) any part of the Permanent Works which the Employer has elected
outstanding work at all to be completed by the Contractor. Generally to occupy or use prior to completion (where such prior occupation or
speaking the Works are substantially completed when they are in such a use is not provided for in the Contract or has not been agreed by the
condition that they are capable of being occupied and used by the Contractor as a temporary measure).
Employer for the purpose for which they are intended, although there are
minor tasks to be completed by the Contractor. Substantial completion can The Appendix to Tender may specify different completion dates for various
only be achieved after the Works have satisfactorily passed the Tests on Sections of the Works and in this event the Contractor may apply for a
Completion (if any). Taking-Over Certificate for a completed Section or Sections. Similarly, the
Contractor may apply for a Taking-Over Certificate for a substantial part of
The Contractor generally takes the initiative in asking for a Taking-Over the Permanent Works which have been completed and occupied or used
Certificate for the whole of the Works. The Certificate is issued by the by the Employer. The provisions for the issue of a Taking-Over Certificate
Engineer provided that the extent of any outstanding work is of a minor will apply to a Section or part in the same way as to the whole of the Works
character and the Works are capable of being used for the purposes for in Sub-Clause 48. 1.
which they were intended and if the Contractor has given a written
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If the Employer should elect to take over or use a part of the Works prior to 48.5
completion similar arrangements apply. Prevention from Testing
48.3 If the Contractor is prevented from carrying out the Tests on
Substantial Completion of Parts Completion by a cause for which the Employer or the Engineer or
other contractors employed by the Employer are responsible, the
If any part of the Permanent Works has been substantially completed Employer shall have been deemed to have taken over the Works on
and has satisfactorily passed any Tests on Completion prescribed by the date when the Tests on Completion would have been completed
the Contract, the Engineer may issue a Taking-Over Certificate in but for such prevention. The Engineer shall issue a Taking-Over
respect of that part of the Permanent Works before the completion Certificate accordingly. Provided always that the Works shall not be
of the whole of the Works and, upon the issue of such Certificate, deemed to have been taken over if they are not substantially in
the Contractor shall be deemed to have undertaken to complete with accordance with the Contract.
due expedition any outstanding work in that part of the Permanent
If the Works are taken over under this Sub-Clause the Contractor shall
Works during the Defects Liability Period.
nevertheless carry out the Tests on
As stated in the commentary to Sub-Clause 48.1, the Contractor generally
Completion during the Defects Liability Period. The Engineer shall require
takes the initiative in asking for a Taking-Over Certificate. Alternatively Sub-
the Tests to be carried out by giving 14 days notice to the Contractor.
Clause 48.3 allows the Engineer to initiate action if the extent of
outstanding work is of a minor character and does not prevent the Any additional cost to which the Contractor may be put, in making the
Employer from taking occupation and using the part of the Works for its Tests on Completion during the Defects Liability Period, shall be added to
intended purpose. The Certificate is issued by the Engineer and in such the Contract Price.
case the Contractor is deemed to have given a written undertaking to finish
Other circumstances outside the control of both the Employer and the
with due expedition any outstanding work during the Defects Liability Contractor may occur preventing the Tests on Completion from being
Period. performed e.g., the water level in a reservoir being so low as to prevent the
48.4 testing of hydraulic equipment such as gates. If such circumstances are
Surfaces Requiring Reinstatement foreseen, the first paragraph of the above example Sub-Clause must be
modified appropriately.
Provided that a Taking-Over Certificate given in respect of any
Section or part of the Permanent Works before completion of the
whole of the Works shall not be deemed to certify completion of any
ground or surfaces requiring reinstatement, unless such Taking-Over
Certificate shall expressly so state.
If it becomes apparent that any ground or surface requires reinstatement
the fact that this was not stipulated in the Taking-Over Certificate will not
relieve the Contractor of his responsibility to carry out such reinstatement at
his own cost.
Sub-Clause 48.1 presupposes that the Works will normally have
satisfactorily passed the Tests on Completion (if any), when the Contractor
makes his request, and the Engineer issues the Taking-Over Certificate.
Circumstances outside the control of the Contractor may prevent the Tests
on Completion from being performed. The following proposed Sub-Clause
48.5 sets out a procedure to deal with such a case and it may be
introduced into the Contract if it is foreseen that such event may occur:

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DEFECTS LIABILITY (b) execute all such work of amendment, reconstruction, and remedying
defects, shrinkages or other faults as the Engineer may, during the Defects
Liability Period or within 14 days after its expiration, as a result of an
49.1 inspection made by or on behalf of the Engineer prior to its expiration,
Defects Liability Period instruct the Contractor to execute.
In these Conditions the expression "Defects Liability Period" shall This Sub-Clause stipulates that, at the end of the Defects Liability Period,
mean the defects liability period named in the Appendix to Tender, the Works must be ready for final delivery 'in the condition required by the
calculated from: Contract, fair wear and tear excepted'. Minor items may still be outstanding
and the Sub-Clause allows a further 14 days for the Engineer to issue
(a) the date of completion of the Works certified by the Engineer in instructions to the Contractor to complete items recorded prior to the
accordance with Clause 48, or expiration of the period.
(b) in the event of more than one certificate having been issued by 49.3
the Engineer under Clause 48, the respective dates so certified Cost of Remedying Defects
and in relation to the Defects Liability Period the expression "the All work referred to in Sub-Clause 49.2 (b) shall be executed by the
Works" shall be construed accordingly. Contractor at his own cost if the necessity thereof is, in the opinion of
This Sub-Clause defines the Defects Liability Period. The Defects Liability the Engineer, due to:
Period is usually for a period of one year but on certain projects may (a) the use of materials, Plant or workmanship not in accordance with
exceptionally be for a period of two years or even more. The length of the the Contract, or
Defects Liability Period will be inserted in the Appendix to Tender.
(b) where the Contractor is responsible for the design of part of the
There may be a number of Defects Liability Periods each tied to a Section Permanent Works, any fault in such design, or
or part of the Works and linked to a Taking-Over Certificate (Clause 48).
(c) the neglect or failure on the part of the Contractor to comply with
The main purpose of the Defects Liability Period (which in previous editions any obligation, expressed or implied, on the Contractor's part under
was referred to as the Maintenance Period) is to demonstrate under the Contract.
operational conditions that the requirements of the Contract have been
complied with. During this period the Contractor must not only complete If, in the opinion of the Engineer, such necessity is due to any other
such outstanding items of work as are listed in the Taking-Over Certificate cause, he shall determine an addition to the Contract Price in
but also remedy any defects which appear. The Contract does not obligate accordance with Clause 52 and shall notify the Contractor
the Contractor to perform operational maintenance during the Defects accordingly, with a copy to the Employer.
Liability Period, unless it is specifically included as part of the Works with an Sub-Clause 49.3 sets out the defects which must be remedied by the
item in the Bill of Quantities and a corresponding paragraph in the Contractor at his own cost. It also states the procedure to be followed
Specification, or otherwise made obvious in the tender documents. where the remedying of the defect(s) is not at the cost of the Contractor.
49.2 49.4
Completion Outstanding Work and Remedying Defects Contractor’s Failure to Carry Out Instructions
To the intent that the Works shall, at or as soon as practicable after the In case of default on the part of the Contractor in carrying out such
expiration of the Defects Liability Period, be delivered to the Employer in the instruction within a reasonable time, the Employer shall be entitled to
condition required by the Contract, fair wear and tear excepted, to the employ and pay other Instructions persons to carry out the same
satisfaction of the Engineer, the Contractor shall: and if such work is work which, in the opinion of the Engineer, the
(a) complete the work, if any, outstanding on the date stated in the Taking- Contractor was liable to do at his own cost under the Contract, then
Over Certificate as soon as practicable after such date and all costs consequent thereon or incidental thereto shall, after due
120 121
 consultation with the Employer and the Contractor, be determined 50.1
by the Engineer and shall be recoverable from the Contractor by the Contractor to Search
Employer, and may be deducted by the Employer from any monies
If any defect, shrinkage or other fault in the Works appears at any
due or to become due to the Contractor and the Engineer shall notify time prior to the end of the Defects Liability Period, the Engineer may
the Contractor accordingly, with a copy to the Employer. instruct the Contractor, with copy to the Employer, to search under
If the Contractor fails to carry out the instructions of the Engineer to remedy the directions of the Engineer for the cause thereof. Unless such
defects which are to be at the cost of the Contractor, the Employer is defect, shrinkage or other fault is one for which the Contractor is
entitled to arrange for them to be carried out at the Contractor's cost. liable under the Contract, the Engineer shall, after due consultation
with the Employer and the Contractor, determine the amount in
There are two cases referred to which may require an additional sub-clause respect of the costs of such search incurred by the Contractor,
in Part II. which shall be added to the Contract Price and shall notify the
Contractor accordingly, with a copy to the Employer. If such defect,
The first may be necessary for a Contract which includes a high proportion shrinkage or other fault is one for which the Contractor is liable, the
of Plant: cost of the work carried out in searching as aforesaid shall be borne
49.5 by the Contractor and he shall in such case remedy such defect,
Extension of Defects Liability shrinkage or other fault at his own cost in accordance with the
Provisions of Clause 49.
The provisions of this Sub-Clause shall apply to all replacements or
It is an obligation of the Contractor, if required by the Engineer, to search
renewals of Plant carried out by the Contractor to remedy defects
for the cause of any defect, shrinkage or other fault in the Works, both
and damage as if the replacements and renewals had been taken
during the execution of the Works and after their completion until the end
over on the date they were completed. The Defects Liability Period
of the Defects Liability Period.
for the Works shall be extended by a period equal to the period
during which the Works cannot be used by reason of a defect or Whereas during the execution of the Works the Contractor shall do such
damage. If only part of the Works is affected the Defects Liability searching at his own cost unless the cause is one for which the Employer
Period shall be extended only for that part. In neither case shall the is responsible, during the Defects Liability Period the searching shall be
Defects Liability Period extend beyond 2 years from the date of paid for by the Employer unless the Contractor is liable for such fault due to
taking over, the use of faulty materials, Plant or workmanship or through other breach
of contract.
When progress in respect of Plant has been suspended under
Clause 40, the Contractor's obligations under this Clause shall not As dredging work is carried our under special circumstances, it may be
apply to any defects occurring more than 3 years after the Time for justified to add a sub-clause which relieves the Contractor of any
Completion established on the date of the Letter of Acceptance. responsibility for the cost of searching after the date stated in the Taking-
Over Certificate. The following is an appropriate Sub-Clause for addition in
The second may be necessary for a Contract comprising dredging work:
Part II where the second example sub-clause of Sub-Clause 49.5 has been
49.5 adopted.
No Remedying of Defects in Dredging Work after Completion
50.2
Not withstanding Sub-Clause 49.2, the Contractor shall in have no No Responsibility for Cost of Searching of Dredging Work
responsibility for the remedying of defects, shrinkages or other faults
in respect of dredging work after the date stated in the Taking-Over Notwithstanding Sub-Clause 50.1, the Contractor shall have no
Certificate. responsibility to bear the cost of searching for any defect, shrinkage
or other fault in respect of dredging work after the date stated in the
Taking-Over Certificate.

122 123
ALTERATIONS, ADDITIONS AND OMISSIONS In the fourth edition the Engineer's power to vary the Works has been
extended with a case (f) covering specified sequence or timing of
construction. The emphasis here is on the word "specified", i.e. the
51.1 sequence or timing must have been prescribed in the Specification and
Variations consequently have been a matter under the responsibility of the Employer.
The Engineer shall make any variation of the form, quality or quantity For a Contract comprising dredging and some types of reclamation work
of the Works or any part thereof that may, in his opinion, be this Sub-Clause may require to be varied in Part II in the following manner:
necessary and for that purpose, or if for any other reason it shall, in
51.1
his opinion, be appropriate, he shall have the authority to instruct the
Variations
Contractor to do and the Contractor shall do any of the following:
Add final sentence as follows:
(a) increase or decrease the quantity of any work included in the
Contract, Provided also that the Contractor shall be under no obligation to
execute any variation which cannot be executed by the Contractor's
(b) omit any such work (but not if the omitted work is to be carried
Equipment being used or to be used on the Works.
out by the Employer or any other contractor),
Dredging and reclamation work normally involves the use of major items of
(c) change the character or quality or kind of any such work,
Contractor's Equipment, often few in number, and the Contract is entered
(d) change the levels, lines, positions and dimensions of any part of into upon the basis of that Equipment. If additional work is required which
the Works, would involve bringing or returning to the Site major items of Contractor's
Equipment it is reasonable that this should be regarded as a new contract
(e) execute additional work of any kind necessary for the completion
of the Works, and not a variation of the original Contract unless the two parties to the
Contract agree to treat it as such.
(f) change any specified sequence or timing of construction of any
part of the Works. A variation will normally have cost consequences and the Employer should
be kept fully informed by the Engineer. Even if the variation can be carried
No such variation shall in any way vitiate or invalidate the Contract, out within a budget agreed by the Employer, he may require the
but the effect, if any, of all such variations shall be valued in opportunity to approve the instruction before it is given to the Contractor,
accordance with Clause 52. Provided that where the issue of an see Sub-Clause 2. 1. The Contract should establish in Part II a procedure
instruction to vary the Works is necessitated by some default of or for such approval. The steps in such a procedure could be:
breach of contract by the Contractor or for which he is responsible,
any additional cost attributable to such default shall be borne by the 1. The Engineer prepares an authorisation request with proposed variations
Contractor. to the Specification and Contract quantities as well as an estimate of cost
together with the basis and justification for the variation.
The Engineer instructs the Contractor to make a variation when the
Engineer determines to make a change in the Works from that envisaged in 2. After the authorisation request has been approved by the Employer, the
the Drawings and other Contract documents upon which tenders were Engineer negotiates with the Contractor to determine the price of the
based. A variation may in exceptional cases also be necessitated by a variation. If the price is equal to or less than the amount sanctioned by the
default of the Contractor but, in such case, the resulting cost is necessarily Employer, the Engineer is authorised to issue the necessary instructions for
borne by the Contractor. A variation is not, however, required if the actual the variation to the Contractor. If the price is more than the sanctioned
quantities of the work envisaged at the time of tendering prove, on amount the Engineer should seek further authorisation from the Employer.
remeasurement, to be different from those recorded in the Bill of 3. Irrespective of the procedure described above occasions will arise when
Quantities. The effect of any variation is taken into account in determining it will be necessary for the Engineer to issue an instruction for a variation
whether Sub-Clause 52.3 applies. prior to reaching an agreement with the Contractor as to price, in order to
124 125
avoid delaying work. Under such circumstances a two-part instruction for basis for valuation so far as may be reasonable, failing which, after
the variation will be issued, the first part instructing the Contractor to due consultation by the Engineer with the Employer and the
proceed with the work without stating the rates and prices, and the second Contractor, suitable rates or prices shall be agreed upon between
part to be issued after further negotiations stating the rates and prices the Engineer and the Contractor. In the event of disagreement the
applicable. Engineer shall fix such rates or prices as are, in his opinion,
appropriate and shall notify the Contractor accordingly, with a copy
Nothing stated in this procedure should be construed as affecting the right to the Employer. Until such time as rates or prices are agreed or
of the Engineer to fix any rate or price which cannot be agreed between the fixed, the Engineer shall determine provisional rates or prices to
Engineer and the Contractor as provided in Sub-Clauses 52.1 and 52.2. enable on-account payments to be included in certificates issued in
4. In an emergency the Engineer shall not be restricted from issuing such accordance with Clause 60.
instructions to the Contractor as the Engineer considers necessary. If he Work included in variations is valued in accordance with this Clause using,
acts in such an emergency he shall inform the Employer as soon as wherever reasonable, the rates and prices in the Bill of Quantities. If there
possible having regard to the circumstances. See the example in the are no applicable rates or prices, new rates or prices are to be based upon
commentary under Sub-Clause 2.1. the Contract rates and prices so far as it may be reasonable to do so.
51.2 Otherwise, suitable rates and prices are to be agreed. The exercise of his
Instructions for Variations authority by the Engineer, under this Clause, may be subject to the specific
approval of the Employer. See commentary under Sub-Clause 2. 1.
Instructions 51.2 The Contractor shall not make any variation without an for
Variations for instruction of the Engineer. Provided that no instruction shall A portion of the payments to be made will often be in foreign currency. Any
be required for increase or decrease in the quantity of any work where agreement fixing or determining rates or prices should deal with the
such increase or decrease is not the result of an instruction given under proportions payable in different currencies.
this Clause, but is the result of the quantities exceeding or being less than Where provision is made in the Contract for payments in foreign currency, it
those stated in the Bill of Quantities. may be advisable to make the following addition to this Sub-Clause in Part
The Contractor should be aware that there is no provision in the Conditions II.
for the Contractor to make a variation without the written instruction of the 52.1
Engineer. If the Contractor acts without an instruction he will have no Valuation of Variations
grounds to claim for the cost of such variation.
Add final sentence as follows:
Earlier editions of the FIDIC Conditions had, in Sub-Clause 51.2, a
stipulation that instructions for variations should be in writing. The The agreement, fixing or determination of any rates or prices as aforesaid
obligation for this is dealt with in the fourth edition in Sub-Clause 2.5 which shall include any foreign currency and the proportion thereof.
requires that all instructions given by the Engineer under the Contract must 52.2
be in writing. Power of Engineer to Fix Rates
52.1 Provided that if the nature or amount of any varied work relative to
Valuation of Variations the nature or amount of the whole of the Works or to any part
All variations referred to in Clause 51 and any additions to the thereof, is such that, in the opinion of the Engineer, the rate or price
Contract Price which are required to be determined in accordance contained in the Contract for any item of the Works is, by reason of
with Clause 52 (for the purposes of this Clause referred to as "varied such varied work, rendered inappropriate or inapplicable, then, after
work"), shall be valued at the rates and prices set out in the Contract due consultation by the Engineer with the Employer and the
if, in the opinion of the Engineer, the same shall be applicable. If the Contractor, a suitable rate or price shall be agreed upon between the
Contract does not contain any rates or prices applicable to the Engineer and the Contractor. In the event of disagreement the
varied work, the rates and prices in the Contract shall be used as the Engineer shall fix such other rate or price as is, in his opinion,
126 127
 appropriate and shall notify the Contractor accordingly, with a copy Where it is required to place some limitation on the range of items for which
to the Employer. Until such time as rates or prices are agreed or the rates and prices may be subject to review, this Sub-Clause may be
fixed, the Engineer shall determine provisional rates or prices to varied in Part II as follows:
enable on-account payments to be included in certificates issued in
52.2
accordance with Clause 60.
Power of Engineer to Fix Rates
Provided also that no varied work instructed to be done by the
Engineer pursuant to Clause 51 shall be valued under Sub-Clause At the end of the first paragraph add:
52.1 or under this Sub-Clause unless, within 14 days of the date of Provided further that no change in the rate or price for any item
such instruction and, other than in the case of omitted work, before contained in the Contract shall be considered unless such item
the commencement of the varied work, notice shall have been given accounts for an amount more than 2 per cent of the Contract Price,
either: and the actual quantity of work executed under the item exceeds or
(a) by the Contractor to the Engineer of his intention to claim extra falls short of the quantity set out in the Bill of Quantities by more than
payment or a varied rate or price, or 25 per cent,

(b) by the Engineer to the Contractor of his intention to vary a rate or 52.3
price. Variations Exceeding 15 per cent

If the nature or amount of the work involved differs so much from that If, on the issue of the Taking-Over Certificate for the whole of the
included in the original Contract that the rates and prices are rendered Works, it is found that as a result of:
inapplicable, it is the Engineer's task to agree appropriate rates and prices (a) all varied work valued under Sub-Clauses 52.1 and 52.2, and
with the Contractor, or, if agreement cannot be reached, to fix the rates
and prices. Existing rates and prices shall be used as a guide for the (b) all adjustments upon measurement of the estimated quantities set
valuation as far as reasonable. The importance of consultation with both out in the Bill of Quantities, excluding Provisional Sums, day works
the parties is now highlighted in the Clause. Failure to reach agreement and adjustments of price made under Clause 70,
should not prevent the Contractor from receiving a payment on account for but not from any other cause, there have been additions to or
the work in question. In principle, the various prices of a lump sum deductions from the Contract Price which taken together are in
character for the Contractor's preliminary and general costs are not excess of 15 per cent of the "Effective Contract Price" (which for the
affected each time a variation is valued, see Sub-Clause 52.3. purposes of this Sub-Clause shall mean the Contract Price,
excluding Provisional Sums and allowance for day works, if any) then
Both the Engineer and the Contractor should pay particular attention to
and in such event (subject to any action already taken under any
their respective obligations to give notice in accordance with the second
other Sub-Clause of this Clause), after due consultation by the
sub-paragraph of Sub-Clause 52.2.
Engineer with the Employer and the Contractor, there shall be added
As in the case of Sub-Clause 52.1 it is important that where payments in to or deducted from the Contract Price such further sum as may be
foreign currencies are provided for in the Contract a reference to this agreed between the Contractor and the Engineer or, failing
should be made in dealing with the power of the Engineer to fix rates. In agreement, determined by the Engineer having regard to the
such cases the following entry in Part II would be appropriate: Contractor's Site and general overhead costs of the Contract. The
Engineer shall notify the Contractor of any determination made under
52.2 this Sub-Clause, with a copy to the Employer. Such sum shall be
Power of Engineer to Fix Rates based only on the amount by which such additions or deductions
Add to the first paragraph final sentence as follows: shall be in excess of 15 per cent of the Effective Contract Price.
The agreement or fixing of any rates or prices as afore said shall In preparing a tender, a contractor may distribute his on-costs and profit in
include any foreign currency and the proportion thereof. various ways, of which the following are examples:

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(a) On-costs such as mobilisation, demobilisation, installation of camps and The adjustment or fixing of any sum as aforesaid shall have due regard to
workshops are usually dealt with as separate fixed sum items in the Bill of any foreign currency included in the Effective Contract Price and the
Quantities. proportion thereof.
(b) On-cost and profit on Provisional Sums may be covered by 52.4
supplementary items in the Bill, see Sub-Clauses 58.2 and 59.4. Daywork
(c) On-cost and profit on dayworks ordered under Sub-Clause 52.4 will The Engineer may, if in his opinion it is necessary or desirable, issue
often be included in the rates inserted in the daywork schedule. or may be an instruction that any varied work shall be executed on a daywork
expressed as a percentage figure. basis. The Contractor shall then be paid for such varied work under
the terms set out in the daywork schedule included in the Contract
(d) All other on-costs and profit are likely to be spread over the unit rates in and at the rates and prices affixed thereto by him in the Tender.
the Bill. These rates are to be applied (see Sub-Clause 52.1) to the
valuation of variations. The Contractor shall furnish to the Engineer such receipts or other
vouchers as may be necessary to prove the amounts paid and,
Part of the Contractor's on-costs, such as for the purchase of petrol, oil, before ordering materials, shall submit to the Engineer quotations for
lubricants, tyres and other consumable stores, will be directly related to the the same for his approval.
quantities of work actually carried out. Other on-costs, such as head office
charges, senior superintendence and items such as those described in (a) In respect of such Works executed on a daywork basis, the
above, are more of a fixed or lump sum character and not directly related Contractor shall, during the continuance of such work, deliver each
to the amount of work done. day to the Engineer an exact list in duplicate of the names,
occupation and time of all workmen employed on such work and a
It is for this reason that Sub-Clause 52.3 has been included. If the total statement, also in duplicate, showing the description and quantity of
value of the work under (a) and (d) above (excluding price adjustment which all materials and Contractor's Equipment used thereon or there for
is dealt with separately) differs from the total of the corresponding items in other than Contractor's Equipment which is included in the
the Contract Price, the Contractor may gain on his fixed on-costs if the percentage addition in accordance with such daywork schedule.
overall value is increased, or lose if the total is less than that in the original One copy of each list and statement will, if correct, or when agreed,
Bill. The extent to which the Contractor is affected by such increases or be signed by the Engineer and returned to the Contractor.
decreases will depend on the degree to which the fixed on-costs have
been covered by items described in (a) above instead of being spread over At the end of each month the Contractor shall deliver to the Engineer
the unit rates. a priced statement of the labour, materials and Contractor's
Equipment, except as aforesaid, used and the Contractor shall not
Under Sub-Clause 52.3, the first 15 per cent (not 10 per cent as in the third be entitled to any payment unless such lists and statements have
edition) up or down is disregarded, but any increase or decrease beyond been fully and punctually rendered. Provided always that if the
this percentage may require an adjustment to the amount due to the Engineer considers that for any reason the sending of such lists or
Contractor. Any adjustment already made under another Sub-Clause of statements by the Contractor, in accordance with the foregoing
this Clause must be discounted. provision, was impracticable he shall nevertheless be entitled to
As is the case in Sub-Clauses 52.1 and 52.2 an addition to Sub-Clause authorise payment for such work, either as daywork, on being
satisfied as to the time employed and the labour, materials and
52.3 may be necessary in contracts where payments in foreign currency
Contractor's Equipment used on such work, or at such value there
have been provided for. The following would be appropriate:
for as shall, in his opinion, be fair and reasonable.
52.3
Sub-Clause 52.4 deals with daywork, usually covered by a Provisional Sum
Variations Exceeding 15 per cent
in the Bill of Quantities, to be used for minor supplementary work for which
Add final sentence as follows: no Bill item is applicable. A Daywork Schedule of Rates and Prices is
normally included in the Contract as an annex to the Bill.
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PROCEDURE FOR CLAIMS make. Without necessarily admitting the Employer's liability, the
Engineer shall, on receipt of a notice under Sub-Clause 53.1, inspect
such contemporary records and may instruct the Contractor to keep
Clause 53 is a new clause which has not appeared in previous editions of any further contemporary records as are reasonable and may be
the FIDIC Conditions. The intention of the clause generally is to set out a material to the claim of which notice has been given. The Contractor
disciplined manner of dealing with claims which will be of advantage to shall permit the Engineer to inspect all records kept pursuant to this
both the Employer and the Contractor. Claims are certain to provoke Sub-Clause and shall supply him with copies thereof as and when
differences particularly if the claim is established long after the work giving the Engineer so instructs.
rise to the claim has been completed. Frequently in the past claims have The event giving rise to the claim having occurred, the Contractor is
been made when the project has been completed and the workforce has required to maintain contemporary records. This would be a logical act for
been dispersed and then both the Employer and the Contractor are a responsible contractor. It is to the advantage of the Contractor that he
dependent upon incomplete records and inevitably regard their memories can call upon the Engineer to inspect such records and state if he (the
of the events as being indisputable. As their respective memories were Engineer) requires other records to be kept. In this manner the Contractor
rarely identical it is understandable that they were both dissatisfied with the can satisfy himself that the records he is keeping will be suitable for the
outcome. The fourth edition has introduced a claims procedure which Engineer to evaluate the claim in due course. Note that the Engineer has a
places time limits for the notification and substantiation of claims and duty to inspect the records on being notified under Sub-Clause 53.1.
requires contemporary records to be kept. If such records are not kept, the
Contractor may be limited in his entitlement. 53.3
Substantiation of Claims
53.1
Notice of Claims Within 28 days, or such other reasonable time as may be agreed by
the Engineer, of giving notice under Sub-Clause 53.1, the Contractor
Notwithstanding any other provisions of the Contract, if the shall send to the Engineer an account giving detailed particulars of
Contractor intends to claim any additional payment pursuant to any the amount claimed and the grounds upon which the claim is based.
Clause of these Conditions or otherwise, he shall give notice of his Where the event giving rise to the claim has a continuing effect, such
intention to the Engineer, with a copy to the Employer, within 28 account shall be considered to be an interim account and the
days after the event giving rise to the claim has first arisen. Contractor shall, at such intervals as the Engineer may reasonably
This Sub-Clause requires the Contractor to give notice to the Engineer require, send further interim accounts giving the accumulated
"within 28 days after the event giving rise to the claim has first arisen". This amount of the claim and any further grounds upon which it is based.
is a practical requirement and not difficult to comply with. Contractors will In cases where interim accounts are sent to the Engineer, the
generally maintain a Site diary and will have noted therein when the event Contractor shall send a final account within 28 days of the end of the
first arises. Note that the Sub-Clause does not require the Contractor to effects resulting from the event. The Contractor shall, if required by
make his claim then - it requires him to give notice of his intention to make the Engineer so to do, copy to the Employer all accounts sent to the
a claim. Engineer pursuant to this Sub-Clause.

The words 'or otherwise' are intended to encompass claims made on If the circumstances giving rise to the claim are not continuing the
some legal ground (e.g. under the law governing the Contract) and not Contractor has the obligation, but also the benefit, of submitting his claim
made pursuant to any Clause of these Conditions. to the Engineer for agreement or discussion while the event is still
sufficiently recent for Site personnel to have the facts at their fingertips and
53.2 the records readily available. If the circumstances are continuing the
Contemporary Records Engineer will inspect the records at reasonable intervals and should raise
Upon the happening of the event referred to in Sub-Clause 53.1, the any points with which he disagrees or on which he wishes to have further
Contractor shall keep such contemporary records as may reasonably information when he inspects the records.
be necessary to support any claim he may subsequently wish to
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53.4 CONTRACTOR'S EQUIPMENT, TEMPORARY WORKS AND
Failure to Comply MATERIALS
If the Contractor fails to comply with any of the provisions of this
Clause in respect of any claim which he seeks to make, his
entitlement to payment in respect thereof shall not exceed such Clause 54 in the fourth edition combines Clauses 53 and 54 in the previous
amount as the Engineer or any arbitrator or arbitrators appointed editions. Sub-Clause 53.2 of the third edition has been dropped from the
pursuant to Sub-Clause 67.3 assessing the claim considers to be fourth edition as the requirement of removal of Equipment, etc., is now
verified by contemporary records (whether or not such records were covered by Clause 33.
brought to the Engineer's notice as required under Sub-Clauses 53.2 54.1
and 53.3). Contractor’s Equipment, Temporary Works and Materials;
This Sub-Clause deals with the situation where the Contractor fails to Exclusive Use for the Works
comply with any of his obligations under Sub-Clause 53.1, 53.2 or 53.3 All Contractor's Equipment, Temporary Works and materials
and defines the extent of his entitlement under such circumstances. provided by the Contractor shall, when brought on to the Site, be
If the Contractor does not comply with the procedure laid down in the deemed to be exclusively intended for the execution of the Works
Conditions his entitlement to payment may be limited. It is considered that and the Contractor shall not remove the same or any part thereof,
failure by the Contractor to make a claim in accordance with the provisions except for the purpose of moving it from one part of the Site to
of Sub-Clauses 53.1, 53.2 or 53.3 should not bar the Contractor from another, without the consent of the Engineer. Provided that consent
receiving remuneration for any work which the Contractor can substantiate shall not be required for vehicles engaged in transporting any staff,
from contemporary records. labour, Contractor's Equipment, Temporary Works, Plant or
materials to or from the Site.
53.5
Payment of Claims The principle of the Contract is that while the Employer becomes
responsible for the care of the Permanent Works, Plant and materials on
The Contractor shall be entitled to have included in any interim taking over the Works, the Contractor remains the owner of the
payment certified by the Engineer pursuant to Clause 60 such Contractor's Equipment and Temporary Works because the Employer,
amount in respect of any claim as the Engineer, after due under the Contract, is only paying for their use during the construction of
consultation with the Employer and the Contractor, may consider the Permanent Works. However, the Employer must have some control
due to the Contractor provided that the Contractor has supplied over the Contractor's Equipment, Plant and materials brought on to the
sufficient particulars to enable the Engineer to determine the amount Site and his control is that they cannot be removed from the Site without
due. If such particulars are insufficient to substantiate the whole of the approval of the Engineer.
the claim, the Contractor shall be entitled to payment in respect of
such part of the claim as such particulars may substantiate to the In some contracts the Employer requires that the Contractor's Equipment,
satisfaction of the Engineer. The Engineer shall notify the Contractor Temporary Works and materials be vested in the Employer and where this
of any determination made under this Sub-Clause, with a copy to the is the case it can be covered by two additional sub-clauses in Part II. The
Employer following wording may be appropriate:
This Sub-Clause deals with payments in respect of claims including interim Sub-Clauses 54.2 and 54.3 shall be renumbered as 54.3 and 54.4 and
payments in respect of continuing claims and should be studied in Sub-Clauses 54.4 to 54.8 shall be renumbered as 54.6 to 54.10. Add
conjunction with Sub-Clauses 60.5 to 60.9. It is intended to remove any additional Sub-Clauses as follows:
possibility of contention that payments in respect of a claim must await the
finalisation of the whole claim.

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54.2 Clearance through customs, import and export licences, port regulations,
Vesting storage and transport regulations are normally the responsibility of the
Contractor and he should take all necessary steps in sufficient time to meet
All Contractor's Equipment, Temporary Works and materials owned
the requirements of his programme. The Contractor is also required to pay
by the Contractor, or by any company in which the Contractor has a
the customs duties (unless exempted there from) and other dues for
controlling interest, shall, when on the Site, be deemed to be the
whatever he imports for the Contract.
property of the Employer. Provided always that the vesting of such
property shall not prejudice the right of the Contractor to the sole use The Employer undertakes to render whatever assistance he can to the
of the said Contractor's Equipment, Temporary Works and materials Contractor in connection with clearances through customs, but the
for the purpose of the Works nor shall it affect the Contractor's Contractor must ultimately be himself responsible.
responsibility to operate and maintain the same under the provisions
54.4
of the Contract.
Re-export of Contractor’s Equipment
54.5
In respect of any Contractor's Equipment which the Contractor's
Revesting and Removal
Contractor has imported for the purposes of the Works, the
Upon the removal, with the consent of the Engineer under Sub- Employer will use his best endeavours to assist the Contractor,
Clause 54. 1, of any such Contractor's Equipment, Temporary where required, in procuring any necessary Government consent to
Works or materials as have been deemed to have become the the re-export of such Contractor's Equipment by the Contractor
property of the Employer under Sub-Clause 54.2, the property upon the removal thereof pursuant to the terms of the Contract.
therein shall be deemed to revest in the Contractor and, upon
The Contractor is often allowed to import his Equipment and Temporary
completion of the Works, the property in the remainder of such
Works items on a temporary admittance basis, i.e., free of customs duties.
Contractor's Equipment, Temporary Works and materials, shall,
Under such circumstances it is important to clarify the limits on the use of
subject to Clause 63, be deemed to revest in the Contractor.
such Equipment and Temporary Works items as well as any time limit for
54.2 their re-export and the consequences if such limit is not met and the
Employer not Liable for Damage Equipment and Temporary Works items remain in the country of the
Works.
The Employer shall not at any time be liable save as mentioned in
Clauses 20 and 65, for the loss of or damage to any of the said 54.5
Contractor's Equipment, Temporary Works or materials. Conditions of Hire of Contractor’s Equipment
As the Contractor is the owner or lessee of the Contractor's Equipment, With a view to securing, in the event of termination under Clause 63,
etc., and as in any case he is responsible for the care of the Works from the continued availability, for the purpose of executing the Works, of
the Commencement Date until the Taking Over of the Works it follows that any hired Contractor's Equipment, the Contractor shall not bring on
the Contractor is responsible for any loss or damage thereto, see Clauses to the Site any hired Contractor's Equipment unless there is an
20 and 65. agreement for the hire thereof (which agreement shall be deemed
not to include an agreement for hire purchase) which contains a
54.3 provision that the owner thereof will, on request in writing made by
Customs Clearance the Employer within 7 days after the date on which any termination
The Employer will use his best endeavours in assisting the has become effective, and on the Employer undertaking to pay all
Contractor, where required, in obtaining clearance through the hire charges in respect there of from such date, hire such
Customs of Contractor's Equipment, materials and other things Contractor's Equipment to the Employer on the same terms in all
required for the Works. respects as the same was hired to the Contractor save that the
Employer shall be entitled to permit the use thereof by any other
contractor employed by him for the purpose of executing and
136 137
 completing the Works and remedying any defects therein, under the It may be necessary to deal with other issues in supplementary Sub-
terms of the said Clause 63. Clauses in Part II and these will possibly include:
The location of the Site and the availability of Contractor's Equipment may - Any limitations on the selection of Contractor's Equipment and
present the Employer with substantial problems in the event that the Temporary Works.
Contractor fails to complete the execution of the Works and the Employer
- Any preference for local products- Contractor to make his own
has to find an alternative means of completing the Works. This Sub-Clause
arrangements for the temporary supply and distribution of services
has been inserted to ensure that if the Employer as to find another
(water, electricity, fuel, etc.), his obligations as to the needs of
contractor, or himself complete the Works, the Equipment and Temporary
other contractors on the Site (in addition to his obligations under
Works which will be required will be available if they are already on Site.
Clause 3 1), to his own Subcontractors, the Employer and the
54.6 Engineer.
Costs for the Purpose of Clause 63
- Contractor to deal with special hazards from water, etc., on the
In the event of the Employer entering into any agreement for the hire Site and to take necessary safeguards.
of Contractor's Equipment pursuant to Sub-Clause 54.5, all sums
properly paid by the Employer under the provisions of any such - Contractor to provide necessary maintenance for roads at the Site,
agreement and all costs incurred by him (including stamp duties) in permanent and temporary, and his obligations at completion of the
entering into such agreement shall be deemed, for the purpose of Works.
Clause 63, to be part of the cost of executing and completing the Any Sub-Clauses to Clause 54 to be added in Part II should be considered
Works and the remedying of any defects therein. in relation to Part II Sub-Clauses of Clause 34. Ambiguities and
This Sub-Clause deals with the cost consequences in the event that Sub- unnecessary repetition should be avoided.
Clause 54.5 becomes operative. Reference should be made to Clause 63.
54.7
Incorporation of Clause in Subcontracts
The Contractor shall, where entering into any subcontract for the
execution of any part of the Works, incorporate in such subcontract
(by reference or otherwise) the provisions of this Clause in relation to
Contractor's Equipment, Temporary Works or materials brought on
to the Site by the Subcontractor.
The conditions imposed upon the Contractor by Sub-Clauses 54.5 and
54.6 must be imposed upon all Subcontractors by the Contractor.
54.8
Approval of Materials not Implied
The operation of this Clause shall not be deemed to imply any
approval by the Engineer of the materials or other matters referred to
therein nor shall it prevent the rejection of any such materials at any
time by the Engineer.
There is nothing in Clause 54 which implies that under it approval is given
to materials or any other matters but the Sub-Clause has been included to
prevent any misunderstanding.
138 139
MEASUREMENT examination, lodges with the Engineer notice of the respects in which
such records and drawings are claimed by him to be incorrect. On
receipt of such notice, the Engineer shall review the records and
55.1 drawings and either confirm or vary them.
Quantities This Sub-Clause lays down the procedural rules for measuring the Works.
The quantities set out in the Bill of Quantities are the estimated Where the Works are to be measured by records and drawings, the
quantities for the Works, and they are not to be taken as the actual Engineer prepares such records and drawings and obtains the
and correct quantities of the Works to be executed by the Contractor Contractor's agreement thereto. Under Clause 60, the Contractor is paid
in fulfilment of his obligations under the Contract. based on monthly statements and the Engineer, when certifying, will take
into account the value of work done as measured pursuant to this Sub-
The quantities in the Bill of Quantities are the quantities of work estimated Clause.
when the Tender documents are prepared based upon the Drawings and
the Specification. The actual quantities of work performed in the execution Under some circumstances it may be appropriate for the Contractor to
of the Contract are to be ascertained by measurement. measure certain parts of the Works under the observation and the control
of the Engineer.
56.1
Work to be Measured Standard methods of measurement have been developed and to some
extent used internationally. Should such a method be adopted in preparing
The Engineer shall, except as otherwise stated, ascertain and
the Bill of Quantities, it should be stated in the Contract and the same
determine by measurement the value of the Works in accordance
method should be used in the measurement of actual work done.
with the Contract and the Contractor shall be paid that value in
accordance with Clause 60. The Engineer shall, when he requires However, should no such standard method be adopted, the principles for
any part of the Works to be measured, give reasonable notice to the measurement and valuation to be applied should be clearly defined in the
Contractor's authorised agent, who shall: preamble to the Bill of Quantities.
(a) forthwith attend or send a qualified representative to assist the 57.1
Engineer in making such measurement, and Method of Measurement
(b) supply all particulars required by the Engineer The Works shall be measured net, notwithstanding any general or
local custom, except where otherwise provided for in the Contract.
Should the Contractor not attend, or neglect or omit to send such
representative, then the measurement made by the Engineer or This Sub-Clause requires measurements to be taken net where no other
approved by him shall be taken to be the correct measurement of principle is prescribed. Thus, the quantity of shuttering is the net area in
such part of the Works. For the purpose of measuring such contact with the finished face of the concrete. However, there may be
Permanent Works as are to be measured by records and drawings, deviations from the general principle, e.g., for rock excavation where over-
the Engineer shall prepare records and drawings as the work breakage is often measured and paid for under a separate item in the Bill of
proceeds and the Contractor, as and when called upon to do so in Quantities.
writing, shall, within 14 days, attend to examine and agree such
records and drawings with the Engineer and shall sign the same 57.2
when so agreed. If the Breakdown of Lump Sum Items

Contractor does not attend to examine and agree such records and For the purposes of statements submitted in accordance with Sub-
drawings, they shall be taken to be correct. If, after examination of Clause 60,1, the Contractor shall submit to the Engineer, within 28
such records and drawings, the Contractor does not agree the same days after the receipt of the Letter of Acceptance, a breakdown for
or does not sign the same as agreed, they shall nevertheless be each of the lump sum items contained in the Tender. Such
taken to be correct, unless the Contractor, within 14 days of such breakdowns shall be subject to the approval of the Engineer.

140 141
This Sub-Clause requires a breakdown of lump sum items included in the PROVISIONAL SUMS
Bill of Quantities in order that progress payments may reasonably reflect
the distribution of the lump sums over the period of the Contract. It is not
intended that such breakdowns will necessarily apply to the valuation of 58.1
variations. Definition of “Provisional Sum”
"Provisional Sum" means a sum included in the Contract and so
designated in the Bill of Quantities for the execution of any part of the
Works or for the supply of goods, materials, Plant or services, or for
contingencies, which sum may be used, in whole or in part, or not at
all, on the instructions of the Engineer. The Contractor shall be
entitled to only such amounts in respect of the work, supply or
contingencies to which such Provisional Sums relate as the Engineer
shall determine in accordance with this Clause. The Engineer shall
notify the Contractor of any determination made under this Sub-
Clause, with a copy to the Employer.
This Sub-Clause defines a Provisional Sum. A normal unit rate contract is
likely to include in the Bill of Quantities, Provisional Sums for one or both of
the following purposes (in separate sums or combined):
- daywork (see Sub-Clause 52.4)
- contingencies.
Beyond the above purposes, Provisional Sums should only be used when
absolutely necessary as they introduce an element of uncertainty to the
Contractor in the requirements of the Contract. They should cover only
such instances where it is not feasible to reach a conclusion at the time of
preparation of the tender documents, e.g.:
- it has not been possible at the time of inviting tenders for the Contract to
define some part of the Works in sufficient detail to allow tenderers to
quote firm rates and prices, or
- it has not been decided at the time of inviting tenders whether a particular
item of work will actually be included in the Contract, or
- it has been decided to invite separate tenders for an item of work, goods,
materials, Plant or services from specialist firms and to make this the
subject of a nominated Subcontract.
The amounts to be included in the Contract under Provisional Sum items
are assessed and inserted in the Bill of Quantities by the Engineer prior to
issue to tenderers.
Items covered by Provisional Sums may include the supply and delivery to
the Site of Plant and/or materials, (e.g., in the interests of standardisation of
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operation and maintenance and supply of spare parts), work carried out at NOMINATED SUBCONTRACTORS
Site and the provision of such services as superintendence of erection and
commissioning. Such work may be carried out either by the Contractor or
by a nominated Subcontractor, see Clause 59. 59.1
58.2 Definition of “Nominated Subcontractors”
Use of Provisional Sums All specialists, merchants, tradesmen and others executing any work
In respect of every Provisional Sum the Engineer shall have authority or supplying any goods, materials, Plant or services for which
to issue instructions for the execution of work or for the supply of Provisional Sums are included in the Contract, who may have been
goods, materials, Plant or services by: or be nominated or selected or approved by the Employer or the
(a) the Contractor, in which case the Contractor shall be entitled to Engineer, and all persons to whom by virtue of the provisions of the
an amount equal to the value thereof determined in accordance with Contract the Contractor is required to subcontract shall, in the
Clause 52, execution of such work or the supply of such goods, materials, Plant
or services, be deemed to be subcontractors to the Contractor and
(b) a nominated Subcontractor, as hereinafter defined, in which case are referred to in this Contract as "nominated Subcontractors".
the sum to be paid to the Contractor there for shall be determined
and paid in accordance with Sub-Clause 59.4. The term "nominated Subcontractor" is defined in Sub-Clause 59. 1. Once
appointed, the nominated Subcontractor's relationship with the Contractor,
The authority of the Engineer to give instructions for work included under is defined in a Subcontract Agreement drawn up and signed by the
Provisional Sums may be restricted under Clause 2. Contractor and the Subcontractor. The important element in the
If it is decided to invite tenders for work covered by a Provisional Sum, the arrangement is that the Employer wishes the Contractor to be responsible
procedures to be followed are similar to those for the Contract. Should the for the administration and co-ordination of the Subcontract and pays the
Contractor have the appropriate capability and experience, and wish to do Contractor for such services. This is not the case where the Employer
so, there is no reason why he should not be invited to tender, but he must enters into a separate direct contract for such work as, under the latter
be prepared to compete with other tenderers. circumstances, the Engineer provides the administration and co-ordination
on behalf of the Employer.
58.3
Production of Vouchers 59.2
Nominated Subcontractors; Objection to Nomination
The Contractor shall produce to the Engineer all quotations, invoices,
The Contractor shall not be required by the Employer or the
vouchers and accounts or receipts in connection with expenditure in
Engineer, or be deemed to be under any obligation, to employ any
respect of Provisional Sums, except where work is valued in
nominated Subcontractor against whom the Contractor may raise
accordance with rates or prices set out in the Tender.
reasonable objection, or who declines to enter into a subcontract
This Sub-Clause stipulates that in order to obtain payment for work under with the Contractor containing provisions:
Provisional Sums the Contractor must satisfy the Engineer that competitive
(a) that in respect of the work, goods, materials, Plant or services the
quotations have been obtained and all relevant vouchers must be
subject of the subcontract, the nominated Subcontractor will
produced unless the work can be valued in accordance with rates and
undertake towards the Contractor such obligations and liabilities as
prices set out in the Bill of Quantities.
will enable the Contractor to discharge his own obligations and
liabilities towards the Employer under the terms of the Contract and
will save harmless and indemnify the Contractor from and against the
same and from all claims, proceedings, damages, costs, charges
and expenses whatsoever arising out of or in connection therewith,

144 145
 or arising out of or in connection with any failure to perform such Subcontract compatible with those he will expect to include in the tender
obligations or to fulfil such liabilities, and documents for the Contract.
(b) that the nominated Subcontractor will save harmless and If the Contractor declines to enter into a Subcontract with a nominated
indemnify the Contractor from and against any negligence by the Subcontractor, the Engineer will have alternative lines of action open to
nominated Subcontractor, his agents, workmen and servants and him. He can:
from and against any misuse by him or them of any Temporary
Works provided by the Contractor for the purposes of the Contract - nominate an alternative Subcontractor, or
and from all claims as aforesaid. - modify the terms of the Subcontract, or
It is important to ensure that the Contractor approves of the Subcontractor - arrange for the Contractor to carry out the work himself through a
and is prepared to collaborate with him. The Contractor can refuse the variation under Clause 51.
nomination if he has reasonable grounds for so doing. The Subcontractor
has to undertake toward the Contractor such obligations and liabilities as 59.3
will enable the Contractor to discharge his own obligations and liabilities to Design Requirements to be Expressly stated
the Employer. Such obligations and liabilities of the nominated If in connection with any Provisional Sum the services to be provided
Subcontractor will in many respects be the same as those of the include any matter of design or specification of any part of the
Contractor (materials and workmanship, Contractor's Equipment, labour, Permanent Works or of any Plant to be incorporated therein, such
insurances, securities, Engineer's instructions, care of the Works, etc.), but requirement shall be expressly stated in the Contract and shall be
they may also be adapted to the size of the Subcontract. Liquidated included in any nominated Subcontract. The nominated Subcontract
damages (see Clause 47) is an example. It is important, however, that the shall specify that the nominated Subcontractor providing such
nominated Subcontractor has at least the same incentive as the Contractor services will save harmless and indemnify the Contractor from and
to complete on time. against the same and from all claims, proceedings, damages, costs,
charges and expenses whatsoever arising out of or in connection
The failure of a nominated Subcontractor to perform could have serious
with any failure to perform such obligations or to fulfil such liabilities
consequences for both the Contractor and the Employer. It is, therefore,
recommended that before tenders are invited for a Subcontract, not only It is often the case that specialist nominated Subcontractors are required to
the Employer but also the Contractor approve the firms to be invited. The undertake and be responsible for the detailed design of items or works
Contractor is then able to request the deletion of any firm to which he included in the Subcontract. The Engineer must provide an outline of any
reasonably objects and to suggest the addition of any firm in which he has such design and specification requirement in the documents issued to
confidence and past experience of good working relations. Such deletions tenderers for the Contract, and the Subcontract documents issued to
or additions would be subject to the consent of the Employer and the tenderers must contain an outline specification giving the basic
Engineer. requirements within which the nominated Subcontractor can offer his own
speciality.
As the documents issued to tenderers for a nominated Subcontract will
eventually become part of the Subcontract Agreement, the Contractor So far as the Employer is concerned, the Contractor remains responsible to
should be given the opportunity to comment upon them before they are him under the Contract for the Subcontractor's designs and operations.
issued. He should also have an opportunity to comment upon any Nominated Subcontractors sometimes allege that they are cut off from
reservations inserted by potential Subcontractors in their tenders. This access to the Engineer and through him to the Employer. This problem can
procedure is not possible when a nominated Subcontract has to be placed be alleviated if the Contractor agrees that on technical matters related to
before tenders are invited for the Contract, due, for instance, to long specification and design details, the Subcontractor and the Engineer deal
delivery periods. In such a case all tenderers for the Contract must be directly with each other, keeping the Contractor fully informed, and
provided with full details of the nominated Subcontract in the tender providing for his participation whenever appropriate.
documents and the Engineer should endeavour, when inviting tenders for
the nominated Subcontract, to make the terms of the nominated
146 147
59.4 (a) satisfies the Engineer in writing that he has reasonable cause for
Payments to Nominated Subcontractors withholding or refusing to make such payments and
For all work executed or goods, materials, Plant or services supplied (b) produces to the Engineer reasonable proof that he has so
by any nominated Subcontractor, the Contractor shall be entitled to: informed such nominated Subcontractor in writing,
(a) the actual price paid or due to be paid by the Contractor, on the the Employer shall be entitled to pay to such nominated
instructions of the Engineer, and in accordance with the subcontract; Subcontractor direct, upon the certificate of the Engineer, all
payments, less retentions, Provided for in the nominated
(b) in respect of labour supplied by the Contractor, the sum, if any,
Subcontract, which the Contractor has failed to make to such
entered in the Bill of Quantities or, if instructed by the Engineer
nominated Subcontractor and to deduct by way of set-off the
pursuant to paragraph (a) of Sub-Clause 58.2, as may be
amount so paid by the Employer from any sums due or to be
determined in accordance with Clause 52;
become due from the Employer to the Contractor.
(c) in respect of all other charges and profit, a sum being a
Provided that, where the Engineer has certified and the Employer has
percentage rate of the actual price paid or due to be paid calculated,
paid direct as aforesaid, the Engineer shall, in issuing any further
where provision has been made in the Bill of Quantities for a rate to
certificate in favour of the Contractor, deduct from the amount
be set against the relevant Provisional Sum, at the rate inserted by
thereof the amount so paid, direct as aforesaid, but shall not
the Contractor against that item or, where no such provision has
withhold or delay the issue of the certificate it self when due to be
been made, at the rate inserted by the Contractor in the Appendix to
issued under the terms of the Contract.
Tender and repeated where provision for such is made in a special
item provided in the Bill of Quantities for such purpose. Serious difficulties can arise if the Contractor fails or refuses to pay at the
appropriate time the amounts due to a nominated Subcontractor. This
It may be convenient to include in the Bill of Quantities, after each
Sub-Clause lays down the procedure if the Contractor cannot, or will not,
Provisional Sum item which may become the subject of a nominated
without giving satisfactory reasons to the Engineer, make payments due to
Subcontract, a supplementary item to permit tenderers for the Contract to
nominated Subcontractors. Under given circumstances the Employer may
enter a percentage figure to cover the cost (plus overhead charges and
pay the nominated Subcontractor directly and recover the amount from the
profit) of the Contractor's superintendence of the Subcontractor. As the
Contractor, possibly by deduction from payments due to be made to the
extent of the Contractor's superintendence will depend on the nature of
Contractor by the Employer.
individual Subcontracts, this is a more satisfactory method than inserting a
single percentage in the Appendix to Tender and applying this percentage The subject matter of Sub-Clause 59 (6) in the third edition appears in Sub-
to expenditure under any or all of the Provisional Sums. It is important to Clause 4.2 of the fourth edition.
ensure that the Specification contains precise instructions as to what is to
be covered by percentage figures.
59.5
Certificate of Payments to Nominated Subcontractors
Before issuing, under Clause 60, any certificate, which includes any
payment in respect of work done or goods, materials, Plant or
services supplied by any nominated Subcontractor, the Engineer
shall be entitled to demand from the Contractor reasonable proof
that all payments, less retentions, included in previous certificates in
respect of the work or goods, materials, Plant or services of such
nominated Subcontractor have been paid or discharged by the
Contractor. If the Contractor fails to supply such proof then, unless
the Contractor
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CERTIFICATES OF PAYMENT (b) any other items in the Bill of Quantities including those for
Contractor's Equipment, Temporary Works, dayworks, and the like
(c) the percentage of the invoice value of listed materials, all as
In previous editions of FIDIC Conditions of Contract, the payment stated in the Appendix to Tender, and Plant delivered by the
arrangements have been left for individual drafting for each contract with Contractor on the Site for incorporation in the Permanent Works but
guidance in the Part II aide-memoire. However, experience has shown that not incorporated in such Works
certain payment arrangements are used so frequently that they should be
reflected in Part I, and they are so included in the fourth edition. Examples (d) adjustments under Clause 70
of supplementary stipulations which are more likely to vary from contract to (e) any other sum to which the Contractor may be entitled under the
contract and which should appear in Part II are given below. Together, the Contract.
Part I and appropriate Part II sub-clauses should form a complete payment
clause. They should be carefully examined and adapted as necessary for In recognition of the importance to the Contractor of a predictable and
each individual contract. prompt cash flow, payments are to be made monthly on the basis of
statements submitted by the Contractor and checked and certified by the
The Clause assumes that progress payments will be made on a monthly Engineer. If, following the check by the Engineer, the amount due to the
basis according to the unit rates for the work carried out, as is generally the Contractor is less than the minimum amount stated in the Appendix to
case for contracts of works of civil engineering construction. Other Tender, no certificate is issued and the payment is included in the following
methods of payment include: lump sum with stage payments of fixed parts certificate.
at fixed time intervals, or lump sum with stage payments of fixed parts
corresponding to defined parts of the works as and when each part of the The monthly statements shall cover the five items listed in Sub-Clause
Works has been completed , or payments on a cost reimbursement basis. 60.1. As to the listed materials, item (c), it is assumed that the Appendix to
Tender will identify basic materials of importance to the Contract, such as,
In an international civil engineering contract, different methods of payment for example, cement, reinforcement steel and structural steel. It is also
could apply to different parts of the Works, e.g., measurement at unit rates assumed that the Engineer shall have approved the materials for
for the Permanent Works, cost reimbursement for daywork, lump sums in incorporation in the Works. The payment for listed materials is reduced to
the section of the Bill of Quantities for Temporary Works, stage payments 90 per cent of the invoice value (or other suitable percentage) in recognition
payable at fixed time intervals for the running of Temporary Works (camp, that there is likely to be some wastage.
water supply, electricity, roads, etc.,) and as stage payments payable in
fixed parts for construction of camp, of roads, of water supply facilities, etc. 60.2
It is therefore important that the Contract makes it quite clear how the Monthly Payments
different parts of the Works shall be paid for, see commentary to Clause The Engineer shall, within 28 days of receiving such statement,
57. certify to the Employer the amount of payment to the Contractor
60.1 which he considers due and payable in respect thereof, subject:
Monthly Statements (a) firstly, to the retention of the amount calculated by applying the
The Contractor shall submit to the Engineer after the end of each Percentage of Retention stated in the Appendix to Tender, to the
month six copies, each signed by the Contractor's representative amount to which the Contractor is entitled under paragraphs (a), (b),
approved by the Engineer in accordance with Sub-Clause 15.1, of a (c) and (e) of Sub-Clause 60.1 until the amount so retained reaches
statement, in such form as the Engineer may from time to time the Limit of Retention Money stated in the Appendix to Tender, and
prescribe, showing the amounts to which the Contractor considers (b) secondly, to the deduction, other than pursuant to Clause 47, of
himself to be entitled up to the end of the month in respect of any sums which may have become due and payable by the
(a) the value of the Permanent Works executed Contractor to the Employer.

150 151
 Provided that the Engineer shall not be bound to certify any payment of the Permanent Works, shall be certified by the Engineer for
under this Sub-Clause if the net amount thereof, after all retentions payment to the Contractor.
and deductions, would be less than the Minimum Amount of Interim
(b) Upon the expiration of the Defects Liability Period for the Works
Certificates stated in the Appendix to Tender.
the other half of the Retention Money shall be certified by the
Notwithstanding the terms of this Clause or any other Clause of the Engineer for payment to the Contractor. Provided that, in the event
Contract no amount will be certified by the Engineer for payment until of different Defects Liability Periods having become applicable to
the performance security, if required under the Contract, has been different Sections or parts of the Permanent Works pursuant to
provided by the Contractor and approved by the Employer. Clause 48, the expression "expiration of the Defects Liability Period"
shall, for the purposes of this Sub-Clause, be deemed to mean the
Before certifying for payment, the Engineer shall make such deductions as
expiration of the latest of such periods. Provided also that if at such
the Contract prescribes. Most important are the payments on account
time, there shall remain to be executed by the Contractor any work
previously made and the Retention Money stated in the Appendix to
ordered, pursuant to Clauses 49 and 50, in respect of the Works, the
Tender, normally ten per cent of each statement (except for adjustments
Engineer shall be entitled to withhold certification until completion of
under Clause 70), but subject to a maximum in total, also given in the such work of so much of the balance of the Retention Money as
Appendix to Tender (five per cent would be reasonable for a big complex shall, in the opinion of the Engineer, represent the cost of the work
contract). remaining to be executed.
It should be observed that this Sub-Clause leaves to the Employer the The Retention Money is one of the securities held by the Employer to
responsibility of determining in the case that liquidated damages are due ensure fulfilment by the Contractor of his obligations in respect of defects.
whether to make the appropriate deduction or not. In addition, the This Sub-Clause specifies under what conditions the Retention Money shall
Employer may be required by law to effect certain deductions, e.g., for be released to the Contractor.
taxes. All other deductions should be made by the Engineer, taking into
consideration information received from the Employer if appropriate. 60.4
Correction of Certificates
The Sub-Clause contains strict stipulations regarding the time allowed to
the Engineer for issuing the payment certificates. The time within which The Engineer may by any interim certificate make any correction or
payment must be made by the Employer, after the Engineer has certified, is modification in any previous certificate which shall have been issued
covered by Sub-Clause 60. 10. It is the duty of the Engineer to comply with by him and shall have authority, if any work is not being carried out to
his certification obligation as, if he is not satisfied concerning any particular his satisfaction, to omit or reduce the value of such work in any
item or part thereof, he can omit such item or part and deal with it under interim certificate.
Sub-Clause 60.4. In the event of failure by the Employer to make payment As stated in the comment on Sub-Clause 60.2 the Engineer may, if he is
within the times stated, the Employer will be liable to pay interest on the not satisfied with any item, or part thereof, included by the Contractor in his
amount overdue, in accordance with Sub-Clause 60.10 and the Contractor monthly statement, delete such item and include it in a later certificate
may, under Clause 69, suspend work or terminate his employment under when he is satisfied that it represents an amount due. Also, the Engineer
the Contract. may make corrections in any monthly certificate to a certificate he has
60.3 previously issued which he subsequently deems needs correction.
Payment of Retention Money 60.5
(a) Upon the issue of the Taking-Over Certificate with respect to the Statement at Completion
whole of the Works, one half of the Retention Money, or upon the Not later than 84 days after the issue of the Taking-Over Certificate in
issue of a Taking-Over Certificate with respect to a Section or part of respect of the whole of the Works, the Contractor shall submit to the
the Permanent Works only such proportion thereof as the Engineer Engineer a Statement at Completion with supporting documents
determines having regard to the relative value of such Section or part showing in detail, in the form approved by the Engineer,

152 153
 (a) the final value of all work done in accordance with the Contract up substantial grounds for the period to be extended the Engineer should
to the date stated in such Taking-Over Certificate request the Employer's agreement to a reasonable extension. If there are
differences of opinion which take time to resolve, the Engineer should issue
(b) any further sums which the Contractor considers to be due and
a further interim certificate or certificates for that part of the draft final
(c) an estimate of amounts which the Contractor considers will statement on which there is no difference of opinion.
become due to him under the Contract.
60.7
The estimated amounts shall be shown separately in such Statement Discharge
at Completion. The Engineer shall certify payment in accordance with
Upon submission o the Final Statement, the Contractor shall give to
Sub-Clause 60.2.
the Employer, with a copy to the Engineer, a written discharge
It is sometimes contended that the period of 84 days allowed to the confirming that the total of the Final Statement represents full and
Contractor to produce the Statement at Completion is short having regard final settlement of all monies due to the Contractor arising out of or in
to the work which is required to produce this statement and its binding respect of the Contract. Provided that such discharge shall become
nature. Much will depend upon the maintenance of satisfactory records on effective only after payment due under the Final Certificate issued
the Site and on progressive calculations as the work is executed. It is after pursuant to Sub-Clause 60.8 has been made and the performance
all in the best interests of the Contractor himself to have his statement security referred to in Sub-Clause 10.1, if any, has been returned to
submitted and substantiated as soon as is practicable. the Contractor.
60.6 The Contractor's entitlement to make a claim under the Contract expires
Final Statement when the Final Statement is submitted. Hence it is reasonable to require
the Contractor to give a written discharge confirming the total. Many
Not later than 56 days after the issue of the Defects Liability
Employers require such a discharge. Note that the Contractor has two
Certificate pursuant to Sub-Clause 62.1, the Contractor shall submit
safeguards, namely that the discharge does not take effect until payment of
to the Engineer for consideration a draft final statement with
the Final Certificate has been made and the performance security, if any,
supporting documents showing in detail, in the form approved by the
has been returned to the Contractor.
Engineer,
60.8
(a) the value of all work done in accordance with the Contract and
Final Certificate
(b) any further sums which the Contractor considers to be due to him
Within 28 days after receipt of the Final Statement, and the written
under the Contract.
discharge, the Engineer shall issue to the Employer (with a copy to
If the Engineer disagrees with or cannot verify any part of the draft the Contractor) a Final Certificate stating
final statement, the Contractor shall submit such further information
(a) the amount which, in the opinion of the Engineer, is finally due
as the Engineer may reasonably require and shall make such
under the Contract, and
changes in the draft as may be agreed between them. The
Contractor shall then prepare and submit to the Engineer the final (b) after giving credit to the Employer for all amounts previously paid
statement as agreed (for the purposes of these Conditions referred by the Employer and for all sums to which the Employer is entitled
to as the "Final Statement"). under the Contract, other than Clause 47, the balance, if any, due
from the Employer to the Contractor or from the Contractor to the
The practice for the Contractor to submit a draft final statement to the
Employer as the case may be.
Engineer, after the issue of the Defects Liability Certificate, for agreement
between them before the Final Statement is submitted is one which has A time limit is imposed upon the Engineer in regard to his certification to
proved to operate satisfactorily. Again there are those who will argue that the Employer of the amount due to the Contractor under the Final
the time allowed (56 days) is too short but whatever time was fixed there Certificate. As the Engineer and the Contractor will have reached
would be complaints by some that the time is insufficient. If there are agreement on the basis of the draft final statement, submitted by the
154 155
Contractor, there is no reason why the Engineer cannot comply within the to ensure that the form adopted is consistent with the payment procedures
28 days. In a similar manner to Sub-Clause 60.2, relating to interim of the country in question and, in the event that international funding is
certificates, the deduction of liquidated damages, if due, is left to the being provided, complies with the requirements of the financing institutions
Employer. concerned.
60.9 Where payments are to be made in various currencies in predetermined
Cessation of Employer’s Liability proportions and calculated at fixed rates of exchange the following 3 Sub-
Clauses, which should be taken together, may be added:
The Employer shall not be liable to the Contractor for any matter or
thing arising out of or in connection with the Contract or execution of 60
the Works, unless the Contractor shall have included a claim in Currency of Account and Rates of Exchange
respect thereof in his Final Statement and (except in respect of
matters or things arising after the issue of the Taking-Over Certificate The currency of account shall be the (insert name of currency) and
in respect of the whole of the Works) in the Statement at Completion for the purposes of the Contract conversion between (insert name of
referred to in Sub-Clause 60.5. currency) and other currencies stated in the Appendix to Tender shall
be made in accordance with the Table of Exchange Rates in the
This Sub-Clause complements what is written in Sub-Clause 60.7. The Appendix to Tender. Conversion between the currencies stated in
subject matter is derived from Sub-Clause 62 (2) of the third edition. such Table other than the (insert name of currency) shall be made at
60.10 rates of exchange determined by use of the relative rates of
Time for Payment exchange between such currencies and the (insert name of currency)
set out therein.
The amount due to the Contractor under any interim certificate
issued by the Engineer pursuant to this Clause, or to any other term 60
of the Contract, shall, subject to Clause 47, be paid by the Employer Payments to Contractor
to the Contractor within 28 days after such interim certificate has All payments to the Contractor by the Employer shall be made
been delivered to the Employer, or, in the case of the Final Certificate
referred to in Sub-Clause 60.8, within 56 days, after such Final (a) in the case of payment(s) under Sub-Clauses 70.2 and (insert
Certificate has been delivered to the Employer. In the event of the number of any other applicable Clause), in (insert name of
failure of the Employer to make payment within the times stated, the currency/ies);
Employer shall pay to the Contractor interest at the rate stated in the (b) in the case of payments for certain provisional sum items
Appendix to Tender upon all sums unpaid from the date by which excluded from the Appendix to Tender, in the currencies and
the same should have been paid. The provisions of this Sub-Clause proportions applicable to these items at the time when the Engineer
are without prejudice to the Contractor's entitlement under Clause gives instructions for the work covered by these items to be carried
69. out;
As a recompense for meeting specific time limits for the submission of the (c) in any other case, including Increase or Decrease of Costs under
draft final statement and the agreement thereof with the Engineer, the Sub-Clause 70.1, in the currencies and proportions stated in the
Contractor has the right to receive payment from the Employer within Appendix to Tender as applicable to such payment provided that the
specific time limits. proportion of currencies stated in the Appendix to Tender may from
If the Employer fails to meet his commitments under this Sub-Clause, the time to time upon the application of either party be varied as may be
Contractor becomes entitled to interest on overdue payments as well as agreed.
his entitlements under Clause 69.
Example sub-clauses for inclusion in Part II to deal with other aspects of
payments are given below. All are examples only and care should be taken
156 157
60 one currency separate bank accounts shall be nominated by the
Payment to Employer Contractor in the country of each currency and payments shall be
made by the Employer accordingly
All payments to the Employer by the Contractor including payments
made by way of deduction or set-off shall be made Where provision is to be included for an advance payment the following
Sub-Clause may be added:
(a) in the case of credit(s) under Sub-Clause(s) 70.2 and (insert
number of any other applicable Clause), in (insert name of 60
currency/ies); Advance Payment
(b) in the case of liquidated damages under Clause 47, in (insert An advance payment of the amount stated in the Appendix to
name of currency/ies); Tender shall, following the presentation by the Contractor to the
Employer of an approved performance security in accordance with
(c) in the case of reimbursement of any sum previously expended by
Sub-Clause 10. 1 and a Guarantee in terms approved by the
the Employer, in the currency in which the sum was expended by the
Employer for the full value of the advance payment, be certified by
Employer;
the Engineer for payment to the Contractor. Such Guarantee shall be
(d) in any other case, in such currency as may be agreed. progressively reduced by the amount repaid by the Contractor as
indicated in interim certificates of the Engineer issued in accordance
If the part payable in a particular currency of any sum payable to the
with this Clause. The advance payment shall not be subject to
Contractor is wholly or partly insufficient to satisfy by way of
retention. The advance payment shall be repaid by way of reduction
deduction or set-off a payment due to the Employer in that currency,
in interim certificates commencing with the next certificate issued
in accordance with the provisions of this Sub-Clause, then the
after the total certified value of the Permanent Works and any other
Employer may if he so desires make such deduction or set-off wholly
items in the Bill of Quantities (excluding the deduction of retention)
or partly as the case may be from the balance of such sum payable
exceeds (insert figure) per cent of the sum stated in the Letter of
in other currencies.
Acceptance. The amount of the reduction in each interim certificate
Where all payments are to be made in one currency the following Sub- shall be one (insert fraction) of the difference between the total value
Clause may be added: of the Permanent Works and any other items in the Bill of Quantities
(excluding the deduction of retention) due for certification in such
60
interim certificate and the said value in the last preceding interim
Currency of Account and Payments
certificate until the advance payment has been repaid in full.
The currency of account shall be the (insert of name of currency) and Provided that upon the issue of a Taking-Over Certificate for the
all payments made in accordance with the Contract shall be in (insert whole of the Works or upon the happening of any of the events
name of currency). Such (insert name of currency) other than for specified in Sub-Clause 63.1 or termination under Clauses 65, 66 or
local costs, shall be fully convertible. The percentage of such 69, the whole of the balance then outstanding shall immediately
payments attributed to local costs shall be as stated in the Appendix become due and payable by the Contractor to the Employer
to Tender.
61.1
Where place of payment is to be defined the following Sub-Clause may be Approval only by Defects Liability Certificate
added:
Only the Defects Liability Certificate, referred to in Clause 62, shall be
60 deemed to constitute approval of the Works.
Place of Payment
In major contracts, it is common for the Works to be taken over in Sections
Payments to the Contractor by the Employer shall be made into a or parts, each giving rise to a separate Taking-Over Certificate and,
bank account nominated by the Contractor in the country of the consequently, to a separate Defects Liability Period. However, Clauses 61
currency of payment. Where payment is to be made in more than and 62 make it clear that there is only one Defects Liability Certificate,
158 159
which is issued at the expiration of the last Defects Liability Period to occur and, for the purposes of determining the nature and extent of any
under the Contract. This Certificate establishes that the Contractor has such obligation, the Contract shall be deemed to remain in force
fulfilled his obligation under the Contract to execute, complete and remedy between the parties to the Contract.
any defects in the Works to the satisfaction of the Engineer, and that in
Notwithstanding the issue of the Defects Liability Certificate, each party
consequence, the Contractor's physical obligations in relation to the
remains liable for the fulfilment of any obligation incurred under the
Contract have been completed.
Contract which remains unperformed at the time such Defects Liability
62.1 Certificate is issued and, for this purpose, the Contract remains in force
Defects Liability Certificate between the parties. Such unperformed obligations can only be of a
financial or administrative nature as, with the issue of the Defects Liability
The Contract shall not be considered as completed until a Defects
Certificate, the Contractor's physical obligations will have been completed
Liability Certificate shall have been signed by the Engineer and
(see commentary to Sub-Clause 61.1).
delivered to the Employer, with a copy to the Contractor, stating the
date on which the Contractor shall have completed his obligations to Any outstanding liabilities of the Employer to the Contractor should not
execute and complete the Works and remedy any defects therein to delay either the release of the performance security or the issue of the
the Engineer's satisfaction. The Defects Liability Certificate shall be Defects Liability Certificate.
given by the Engineer within 28 days after the expiration of the
Defects Liability Period, or, if different defects liability periods shall
become applicable to different Sections or parts of the Permanent
Works, the expiration of the latest such period, or as soon thereafter
as any works instructed, pursuant to Clauses 49 and 50, have been
completed to the satisfaction of the Engineer. Provided that the issue
of the Defects Liability Certificate shall not be a condition precedent
to payment to the Contractor of the second portion of the Retention
Money in accordance with the conditions set out in Sub-Clause
60.3.
Although the Defects Liability Periods expire automatically the expiration of
each is normally recorded in a letter from the Engineer to the Employer with
a copy to the Contractor. When the last Defects Liability Period ends, any
outstanding work will normally only represent a very small proportion of the
total Contract value but, to protect the Employer, the Defects Liability
Certificate is not issued until this work has been satisfactorily completed.
The procedure for the release of the Retention Money in relation to the
Taking-Over Certificates and to the expiration of the Defects Liability Period
for the Works is detailed in Sub-Clause 60.3.
62.2
Unfulfilled Obligations
Notwithstanding the issue of the Defects Liability Certificate the
Contractor and the Employer shall remain liable for the fulfilment of
any obligation incurred under the provisions of the Contract prior to
the issue of the Defects Liability Certificate which remains
unperformed at the time such Defects Liability Certificate is issued
160 161
REMEDIES employment of the Contractor without thereby releasing the
Contractor from any of his obligations or liabilities under the
Contract, or affecting the rights and authorities conferred on the
63.1 Employer or the Engineer by the Contract, and may himself complete
Default of Contractor the Works or may employ any other contractor to complete the
1 Works. The Employer or such other contractor may use for such
If the Contractor is deemed by law unable to pay his 2
debts as they completion so much of the Contractor's Equipment, Temporary
3
fall due, or enters into voluntary or involuntary bankruptcy, liquidation Works and materials as he or they may think proper.
4
or dissolution (other than a voluntary liquidation for the purposes of
amalgamation or reconstruction), or becomes insolvent,5or makes an This Sub-Clause defines the events which, under the Conditions, constitute
arrangement with, or assignment in favour of, his creditors, or agrees events of default by the Contractor. The Sub-Clause also provides that, if
to carry out the Contract under a committee of inspection of his an event of default occurs, the Employer may enter on the Site, terminate
creditors,6 or if a receiver, administrator, trustee or liquidator is the Contractor's employment and thereby become entitled to certain rights
appointed over any substantial part of his assets,7 or if, under any law as against the Contractor, the Contractor's Equipment, Temporary Works
or regulation relating to reorganisation, arrangement or readjustment and materials.
of debts, proceedings are commenced against the Contractor 8 or
The Sub-Clause presupposes that if an event of default of the Contractor
resolutions passed in connection with dissolution or liquidation 9or if
has occurred and the Employer elects to terminate the Contractor's
any steps are taken to enforce any security interest over a substantial
10 employment. the Employer will wish to have the Works completed with as
part of the assets of the Contractor, or if any act is done or event
little delay as possible. If this is the case it may be useful to clarify that the
occurs with respect to the Contractor or his assets which, under any
event of default referred to in this Sub-Clause, sub- para (d) i.e. “.....
applicable law has a substantially similar effect to any of the
11 persistently or flagrantly neglecting to comply with any of his obligations
foregoing acts or events, or if the Contractor has contravened Sub-
13 under the Contract” would include seriously deviating from the programme
Clause 3.1,12 or has an execution levied on his goods, or if the
or from the Specification (or both), or putting the Works seriously at risk.
Engineer certifies to the Employer, with a copy to the Contractor
With this type of event, the Engineer takes the initiative and the Sub-Clause
that, in his opinion, the Contractor:
stipulates that he shall, before certifying the event. give the Contractor a
(a) has repudiated the Contract, or "warning" by a written notice. Unlike the third edition, only one "warning" is
(b) without reasonable excuse has failed required by the fourth edition. It is therefore important that the Engineer. in
(i) to commence the Works in accordance with Sub-Clause his "warning" explicitly refers to Clause 63 and clearly describes the event
41.1, or which gives rise to the "warning".
(ii) to proceed with the Works, or any Section thereof, within 28 The Employer may, after giving fourteen days' notice, enter upon the Site
days after receiving notice pursuant to Sub-Clause 46.1, or and terminate the Contractor's employment. This fourteen-day period is
(c) has failed to comply with a notice issued pursuant to Sub-Clause not intended to give the Contractor an opportunity to remedy the default,
37.4 or an instruction issued pursuant to but to permit the Contractor to make the preparations necessary to leave
the Site.
Sub-Clause 39.1 within 28 days after having received, it, or
After terminating the Contractor's employment, the Employer may himself
(d) despite previous warning from the Engineer, in writing, is complete the Works or employ another contractor to do so. For this
otherwise persistently or flagrantly neglecting to comply with any of purpose the Employer or such other contractor may use the Contractor's
his obligations under the Contract. or Equipment, Temporary Works and materials.
(e) has contravened Sub-Clause 4.1,
then the Employer may, after giving 14 days' notice to the
Contractor, enter upon the Site and the Works and terminate the
162 163
63.2 Engineer of the cost of execution and remedying of any defects, damages
Valuation at Date of Termination for delay in completion (if any) and other expenses incurred by the
Employer as a result of the Contractor's default.
The Engineer shall, as soon as may be practicable after any such
entry and termination by the Employer, fix and determine ex parte, or 63.4
by or after reference to the parties or after such investigation or Assignment of Benefit of Agreement
enquiries as he may think fit to make or institute, and shall certify:
Unless prohibited by law, the Contractor shall, instructed by the
(a) what amount (if any) had, at the time of such entry and Engineer within 14 days of such entry and termination referred to in
termination, been reasonably earned by or would reasonably accrue Sub-Clause 63.1, as to the Employer the benefit of any agreement
to the Contractor in respect of work then actually done by him under for supply of any goods or materials or services and/or the execution
the Contract, and of any work for the purposes of the Contract, which the Contractor
may have entered into.
(b) the value of any of the said unused or partially used materials, any
Contractor's Equipment and any Temporary Works. The Contractor is obliged, if instructed by the Engineer, to assign to the
Employer the benefit of any agreement for the supply of goods, materials or
After the Employer terminates the Contractor's employment, the Engineer
services required for the execution of the Works and/or for the purposes of
determines the amount (if any) earned by the Contractor in respect of work
the Contract.
performed and the value of any unused or partially used materials,
Contractor's Equipment and Temporary Works. The Engineer may make If the event of default referred to in Sub-Clause 63.1 (c) occurs, the
such determination himself (ex parte) or after hearing the parties to the Contract provides alternative measures under Clause 39 and (in case of
Contract. The Engineer's determination and resulting certification, urgency) Clause 64. Furthermore, upon the occurrence of any event of
establishes the financial position between the two parties as at the time of default under Sub-Clause 63.1, in addition to the rights prescribed by the
termination. Clause, the Employer may be entitled to other rights and remedies under
the law governing the Contract. However, it is unlikely in most cases that
63.3
the rights and remedies under the law governing the Contract will be more
Payment after Termination
favourable to the Employer than those provided for in Clause 63.
If the Employer terminates the Contractor's employment under this
Clause, he shall not be liable to pay to the Contractor any further 64.1
amount (including damages) in respect of the Contract until the Urgent Remedial Work
expiration of the Defects Liability Period and thereafter until the costs If, by reason of any accident, or failure, or other event occurring to,
of execution, completion and remedying of any defects, damages for in, or in connection with the Works, or any part thereof, either during
delay in completion (if any) and all other expenses incurred by the the execution of the Works, or during the Defects Liability Period, any
Employer have been ascertained and the amount thereof certified by remedial or other work is, in the opinion of the Engineer, urgently
the Engineer. The Contractor shall then be entitled to receive only necessary for the safety of the Works and the Contractor is unable or
such sum (if any) as the Engineer may certify would have been unwilling at once to do such work, the Employer shall be entitled to
payable to him upon due completion by him after deducting the said employ and pay other persons to carry out such work as the
amount. If such amount exceeds the sum which would have been Engineer may consider necessary. If the work or repair so done by
payable to the Contractor on due completion by him, then the the Employer is work which, in the opinion of the Engineer, the
Contractor shall, upon demand, pay to the Employer the amount of Contractor was liable to do at his own cost under the Contract, then
such excess and it shall be deemed a debt due by the Contractor to all costs consequent thereon or incidental thereto shall, after due
the Employer and shall be recoverable accordingly. consultation with the Employer and the Contractor, be determined
by the Engineer and shall be recoverable from the Contractor by the
If the Employer terminates the Contractor's employment, he is not liable to
Employer, and may be deducted by the Employer from any monies
pay the Contractor any further amounts (including damages) until the
due or to become due to the Contractor and the Engineer shall notify
expiration of the Defects Liability Period and the certification by the
164 165
 the Contractor accordingly, with a copy to the Employer. Provided SPECIAL RISKS
that the Engineer shall, as soon after the occurence of any such
emergency as may be reasonably practicable, notify the Contractor
thereof. Although the Contractor is responsible for the care of the Works until the
date of issue of the Taking-Over Certificate there are certain risks for which
If, during the execution of the Works or during the Defects Liability Period, he is not responsible which are now referred to as Employer's Risks (see
the Engineer finds that repair work is urgently necessary for the safety of Sub-Clause 20.4). Risks listed under sub-paragraphs a,b,c,d and e of Sub-
the Works, and the Contractor does not comply with an instruction to carry Clause 20.4 are included under the definition of Special Risks in Sub-
out the work at once, Sub-Clause 64.1 empowers the Employer to engage Clause 65.2 with the exception that the Employer is not responsible for the
others to carry out such work. If, in the opinion of the Engineer, the risks covered by Sub-Clause 20.4 (b) - 'rebellion, revolution, insurrection, or
Contractor was liable to do such work at his own cost under the Contract, military or usurped power, or civil war' outside the country in which the
then the costs thereof are recoverable from the Contractor. Works are being constructed. The reason for this is that the Employer
Other Clauses that may be relevant to urgent repair work include Sub- should be able to assess such risks in the country where the Works are to
Clauses 20.1, 39.2 and, for the Defects Liability Period, Sub-Clauses 49.4 be constructed but it would be unreasonable for the Employer to bear such
and 50.1. Sub-Clause 40.1 dealing with suspension might also have some risks in the country of the Contractor or countries through which, for
relevance. example, the Contractor may have elected to transport Temporary Works,
Contractor's Equipment, Plant and materials as well as staff and labour.
65.1
No Liability for Special Risks
The Contractor shall be under no liability whatsoever in consequence
of any of the special risks referred to in Sub-Clause 65.2, whether by
way of indemnity or otherwise, for or in respect of
(a) destruction of or damage to the Works, save to work condemned
under the provisions of Clause 39 prior to the occurrence of any of
the said special risks, or
(b) destruction of or damage to property, whether of the Employer or
third parties, or
(c) injury or loss of life.
This Sub-Clause states clearly that the Contractor is not responsible for the
consequences of special risks in respect of certain designated events.
65.2
Special Risks
The special risks are:
(a) the risks defined under paragraphs (a), (c), (d) and (e) of Sub-
Clause 20.4, and
(b) the risks defined under paragraph (b) of Sub-Clause 20.4 insofar as
these relate to the country in which the Works are to be executed.
This Sub-Clause defines the special risks.
166 167
65.3 Clause 39 prior to the occurrence of any special risk) which are
Damage to Works by Special Risks howsoever attributable to or consequent on or the result of or in any
way whatsoever connected with the said special risks, subject
If the Works or any materials or Plant on or near or in transit to the
however to the provisions in this Clause hereinafter contained in
Site, or any of the Contractor's Equipment, sustain destruction or
regard to outbreak of war, but the Contractor shall, as soon as any
damage by reason of any of the said special risks, the Contractor
such cost comes to his knowledge, forthwith notify the Engineer
shall be entitled to payment in accordance with the Contract for any
thereof. The Engineer shall, after due consultation with the Employer
Permanent Works duly executed and for any materials or Plant so
and the Contractor, determine the amount of the Contractor's costs
destroyed or damaged and, so far as may be required by the
in respect thereof which shall be added to the Contract Price and
Engineer or as may be necessary for the completion of the Works, to
shall notify the Contractor accordingly, with a copy to the Employer.
payment for:
This Sub-Clause deals with compensation of the Contractor by the
(a) rectifying any such destruction or damage to the Works, and
Employer for costs of executing the Works as the result of a Special Risk.
(b) replacing or rectifying such materials or Contractor's Equipment
65.6
and the Engineer shall determine an addition to the Contract Price in Outbreak of War
accordance with Clause 52 (which shall in the case of the cost of
If, during the currency of the Contract, there is an outbreak of war,
replacement of Contractor's Equipment include the fair market value
whether war is declared or not, in any part of the world which,
thereof as determined by the Engineer) and shall notify the
whether financially or otherwise, materially affects the execution of
Contractor accordingly, with a copy to the Employer.
the Works, the Contractor shall, unless and until the Contract is
The manner in which the Contractor will be compensated for any loss or terminated under the provisions of this Clause, continue to use his
damage sustained as a result of special risks is set out here. best endeavours to complete the execution of the Works. Provided
that the Employer shall be entitled, at any time after such outbreak of
65.4
war, to terminate the Contract by giving notice to the Contractor
Projectile, Missile
and, upon such notice being given, the Contract shall, except as to
Destruction, damage, injury or loss of life caused by the explosion or the rights of the parties under this Clause and to the operation of
impact, whenever and wherever occurring, of any mine, bomb, shell, Clause 67, terminate, but without to the rights of either party in
grenade, or other projectile, missile, munition, or explosive of war, respect of any antecedent breach thereof.
shall be deemed to be a consequence of the said special risks.
This Sub-Clause sets out the responsibilities of the parties in the event that
The responsibility under this Sub-Clause differs from the general case in a war, whether declared or not, materially affects the execution of the
that destruction, damage, injury or loss of life resulting from the impact or Contract.
explosion of various explosives of war including missiles, mines, bombs,
65.7
etc., are special risks wherever they occur and the Employer's Risk in
Removal of Contractor’s Equipment on Termination
relation thereto is not limited to the country in which the Works are being
constructed. If the Contract is terminated under the provisions of Sub-Clause
65.6, the Contractor shall, with all reasonable dispatch, remove from
65.5 the Site all Contractor's Equipment and shall give similar facilities to
Increased Costs arising from Special Risks his Sub-contractors to do so.
Save to the extent that the Contractor is entitled to Costs arising If war causes the termination of the Contract the Contractor will wish, if it is
payment under any other provision of the Contract, the from Special
possible, to remove his Contractor's Equipment, etc., from the Site. This
Employer shall repay to the Contractor any costs of the Risks
Sub-Clause obliges him to do so and requires him to give the same
execution of the Works (other than such as may be attributable to
facilities to his Subcontractors.
the cost of reconstructing work condemned under the provisions of
168 169
65.8 by the Engineer who shall notify the Contractor accordingly, with a
Payment if Contract Terminated copy to the Employer.
If the Contract is terminated as aforesaid, the Contractor shall be This Sub-Clause sets out the entitlement of the Contractor in the event that
paid by the Employer, insofar as such amounts or items have not the Contract is terminated as the result of special risks.
already been covered by payments on account made to the
Contractor, for all work executed prior to the date of termination at
the rates and prices provided in the Contract and in addition:
(a) The amounts payable in respect of any preliminary items referred
to in the Bill of Quantities, so far as the work or service comprised
therein has been carried out or performed, and a proper proportion
of any such items which have been partially carried out or performed.
(b) The cost of materials, Plant or goods reasonably ordered for the
Works which have been delivered to the Contractor or of which the
Contractor is legally liable to accept delivery, such materials, Plant or
goods becoming the property of the Employer upon such payments
being made by him.
(c) A sum being the amount of any expenditure reasonably incurred
by the Contractor in the expectation of completing the whole of the
Works insofar as such expenditure has not been covered by any
other payments referred to in this Sub-Clause.
(d) Any additional sum payable under the provisions of Sub-Clauses
65.3 and 65.5.
(e) Such proportion of the cost as may be reasonable, taking into
account payments made or to be made for work executed, of
removal of Contractor's Equipment under Sub-Clause 65.7 and, if
required by the Contractor, return thereof to the Contractor's main
plant yard in his country of registration or to other destination, at no
greater cost.
(f) The reasonable cost of repatriation of all the Contractor's staff and
workmen employed on or in connection with the Works at the time of
such termination.
Provided that against any payment due from the Employer under this
Sub-Clause, the Employer shall be entitled to be credited with any
outstanding balances due from the Contractor for advances in
respect of Contractor's Equipment, materials and Plant and any
other sums which, at the date of termination, were recoverable by
the Employer from the Contractor under the terms of the Contract.
Any sums payable under this Sub-Clause shall, after due
consultation with the Employer and the Contractor, be determined
170 171
RELEASE FROM PERFORMANCE SETTLEMENT OF DISPUTES

66.1 Although this Clause is generally referred to as the arbitration clause it has
Payment in Event of Release from Performance a far wider impact. It provides mechanisms for resolving disputes between
the parties as well as including provisions for the dispute or disputes to be
If any circumstance outside the control of both parties arises after
referred to arbitration as a last resort. An important factor to note is that by
the issue of the Letter of Acceptance which renders it impossible or
this Clause the parties waive their rights to submit disputes related to the
unlawful for either party to fulfil his contractual obligations, or under
Contract to any other legal means of dispute resolution, in particular to any
the law governing the Contract the parties are released from further
performance, then the sum payable by the Employer to the public court which might have jurisdiction over the dispute.
Contractor in respect of the work executed shall be the same as that It also contains an agreement between the parties to take two steps before
which would have been payable under Clause 65 if the Contract had entering into arbitration viz., first to submit the dispute to the Engineer for
been terminated under the provisions of Clause 65. his decision and, second, if such decision is not acceptable, to attempt to
This Sub-Clause deals with any situation which makes it impossible or settle the dispute amicably between themselves. However, arbitration may
unlawful for one or both parties to meet their obligations under the Contract be commenced 56 days (or as otherwise agreed between the parties) after
because of circumstances which are beyond the control of both parties or a notification to that effect, whether or not the second step has been taken.
where under the law governing the Contract the parties are released from A second step was not included in previous editions and its insertion draws
further performance. This concept is very similar to the force majeure the attention of the parties to a means of avoiding costly arbitration
(exemption) clause of the International Chamber of Commerce (ICC) proceedings which consume both time and effort. The new provisions can
publication No. 421. The party claiming release from performance is possibly open up that avenue for a party who could not otherwise be
required to prove the effect of the impediment on the performance of his allowed by regulations to enter into discussions to achieve amicable
contractual obligations. The Clause can be invoked by either of the parties settlement.
whereas. under Sub-Clause 65.6. termination can only be invoked by the Another innovation in the fourth edition is to be found in Sub-Clause 67.4.
Employer. Under this Sub-Clause, either party may, if the other has failed to comply
It should be observed that the effect of this Sub-Clause is different from with a final and binding decision of the Engineer, refer such failure to
that of the usual force majeure clause. Under the usual force majeure arbitration. The intention of so doing would be to have the decision made
clause, upon the occurrence of an event of force majeure each party is an arbitral award and thereby enforceable under international conventions.
released from further performance and, consequently, bears its own It has been contended in the past by some commentators on the FIDIC
losses. Here, upon the occurrence of circumstances which prevent Conditions that the Engineer who is retained and paid by the Employer
performance, though the parties are released from further performance, the should not undertake a quasi-arbitral role. This comment has often
Contractor is entitled to payment on the basis provided for in Clause 65. If stemmed from a misunderstanding of what the Conditions state. In the
and when the circumstances which prevent performance should cease, the third edition the Engineer's decision was not binding upon the parties and it
parties may enter into a new contract. is not binding in the fourth edition, if either party challenges it in accordance
Other Clauses in the FIDIC Conditions which refer to preventing with the procedure laid down in Clause 67.
impediments are: Clause 40 - Suspension, in particular Sub-Clause 40.3, 67.1
Clause 13 referring to physical impossibility and Clause 20 dealing with Engineer’s Decision
Care of the Works and Employer's Risks.
If a dispute of any kind whatsoever arises between the Employer and
the Contractor in connection with, or arising out of, the Contract or
the execution of the Works, whether during the execution of the
Works or after their completion and whether before or after
172 173
 repudiation or other termination of the Contract, including any both parties, either may in the first instance refer the dispute to the
dispute as to any opinion, instruction, determination, certificate or Engineer for a decision, stating that reference is made under Clause 67.
valuation of the Engineer, the matter in dispute shall, in the first
Any such reference to the Engineer must be copied to the other party. In
place, be referred in writing to the Engineer, with a copy to the other
this respect, it should be noted that generally when the reference of a
party. Such reference shall state that it is made pursuant to this
Clause. No later than the eighty-fourth day after the day on which he dispute is made to the Engineer, under Clause 67, it is dealt with by a
received such reference the Engineer shall give notice of his decision senior person in the Engineer's firm, and preferably one who has not been
to the Employer and the Contractor. Such decision shall state that it involved in the day to day administration of the Contract. The Engineer's
is made pursuant to this Clause. decision which is given under Clause 67 for settlement of the dispute will
not be final and binding upon either of the two parties if one of the parties
Unless the Contract has already been repudiated or terminated, the disagrees with it and gives notice within 70 days of an intention to
Contractor shall, in every case, continue to proceed with the Works commence arbitration. This is a shorter period for challenging a decision
with all due diligence and the Contractor and the Employer shall give than in the third edition where the period was 90 days.
effect forthwith to every such decision of the Engineer unless and
until the same shall be revised, as hereinafter provided, in an The action necessary to prevent a decision from becoming final and
amicable settlement or an arbitral award. binding is a notification by one party (no longer to the Engineer) to the other
party of his intention to commence arbitration as to the subject matter of
If either the Employer or the Contractor be dissatisfied with any the decision. The notification shall be copied to the Engineer for information
decision of the Engineer, or if the Engineer fails to give notice of his but the legal effect lies in the notice to the other party, which establishes
decision on or before the eighty-fourth day after the day on which he the entitlement of the party giving the notification to arbitrate the matter in
received the reference, then either the Employer or the Contractor dispute.
may, on or before the seventieth day after the day on which he
received notice of such decision, or on or before the seventieth day This Clause does not make any exception as to the reference to the
after the day on which the said period of 84 days expired, as the Engineer for his decision on matters in dispute having mainly a legal
case may be, give notice to the other party, with a copy for character. It has been argued that, with respect to disputes having mainly a
information to the Engineer, of his intention to commence arbitration, legal character, the Engineer could always refrain from giving a decision.
as hereinafter provided, as to the matter in dispute. Such notice shall More in line with the intention of the Clause would be that the Engineer
establish the entitlement of the party giving the same to commence gives his decision after having taken legal advice on the matter in dispute.
arbitration, as hereinafter provided, as to such dispute and, subject 67.2
to Sub-Clause 67.4, no arbitration in respect thereof may be Amicable settlement
commenced unless such notice is given.
Where notice of intention to commence arbitration as to a dispute
If the Engineer has given notice of his decision as to a matter in has been given in accordance with Sub-Clause 67.1, arbitration of
dispute to the Employer and the Contractor and no notice of such dispute shall not be commenced unless an attempt has first
intention to commence arbitration as to such dispute has been given been made by the parties to settle such dispute amicably. Provided
by either the Employer or the Contractor on or before the seventieth that, unless the parties otherwise agree, arbitration may be
day after the day on which the parties received notice as to such commenced on or after the fifty-sixth day after the day on which
decision from the Engineer, the said decision shall become final and notice of intention to commence arbitration of such dispute was
binding upon the Employer and the Contractor. given, whether or not any attempt at amicable settlement thereof has
The term 'decision', in the FIDIC Conditions, has been reserved for use in been made.
Clause 67. If there is a difference of opinion between the parties to the If the parties can discuss and agree upon a solution to a matter in dispute
Contract that is, between the Employer and the Contractor, it is probable between them this will have many advantages over going to arbitration.
that such difference of opinion will have arisen as the result of an instruction However, in some countries it has been maintained that if there is no
given by the Engineer. If the matter cannot be clarified to the satisfaction of reference to amicable settlement in the Contract then the individual
174 175
responsible for administering the Contract may have no right to enter into succeeded or the stipulated time period for amicable settlement has
negotiations for an amicable settlement. This Sub-Clause makes provision elapsed.
for this possibility but sets a time limit so that the settlement discussions
In selecting the place of arbitration the parties should consider, among
will not be prolonged indefinitely. Whether or not an attempt at amicable
other things, the neutrality of the location, the suitability of local law and the
settlement has been made within 56 days, the parties can thereafter
administration services available. If no place of arbitration is stipulated then,
proceed with arbitration.
under the Rules of Arbitration of the International Chamber of Commerce
The parties may consider it to be advantageous to agree to a procedure for (ICC), the place would be chosen by the ICC Court of Arbitration.
amicable settlement at an early stage in the Contract before any dispute
The Sub-Clause provides that if no alternative system of arbitration is
arises.
stated in Part II then any arbitration will be under the ICC arbitration rules. If
The amicable settlement is essentially a process to be left to the Employer consideration is given to replacing these rules by any other it should be
and the Contractor. Of course, assistance may be called for from the borne in mind that the ICC Court of Arbitration in Paris has functioned for
Engineer, where appropriate. more than 60 years in the administration of arbitration and that arbitrators
and legal counsel in a great number of countries throughout the world have
67.3
experience of this system.
Arbitration
However, there are other organisations, such as UNCITRAL, which have
Any dispute in respect of which,
issued rules for dealing with disputes under international contracts. Where
(a) the decision, if any, of the Engineer has not become final and it is decided that a settlement of dispute procedure, other than that of the
binding pursuant to Sub-Clause 67.1, and ICC, should be used, the Sub-Clause may be varied in Part II. The following
is an example text:
(b) amicable settlement has not been reached within the period
stated in Sub-Clause 67.2 67.3
Arbitration
shall be finally settled, unless otherwise specified in the Contract,
under the Rules of Conciliation and Arbitration of the International Following paragraph (b), delete the words 'shall be finally settled ...
Chamber of Commerce by one or more arbitrators appointed under International Chamber of Commerce' and substitute 'shall be finally
such Rules. The said arbitrator/s shall have full power to open up, settled under UNCITRAL Arbitration Rules as administered by (insert
review and revise any decision, opinion, instruction, determination, name of administering authority)'.
certificate or valuation of the Engineer related to the dispute.
Where an alternative to the ICC procedure is selected, care should be
Neither party shall be limited in the proceedings before such taken to establish that the alternative is appropriate for the circumstances
arbitrator/s to the evidence or arguments put before the Engineer for of the Contract and that the wording of Clause 67 is checked and
the purpose of obtaining his said decision pursuant to Sub-Clause amended as may be necessary to avoid any ambiguity with the alternative.
67. 1. No such decision shall disqualify the Engineer from being
called as a witness and giving evidence before the arbitrator/s on any 67.4
matter whatsoever relevant to the dispute. Failure to Comply with Engineer’s Decision

Arbitration may be commenced prior to or after completion of the Where neither the Employer nor the Contractor has given notice of
Works, provided that the obligations of the Employer, the Engineer intention to commence arbitration of a dispute within the period
and the Contractor shall not be altered by reason of the arbitration stated in Sub-Clause 67.1 and the related decision has become final
being conducted during the progress of the Works. and binding, either party may, if the other party fails to comply with
such decision, and without prejudice to any other rights it may have,
Arbitration proper may be commenced any time prior to completion of the refer the failure to arbitration in accordance with Sub-Clause 67.3.
Works or after such completion provided that the parties have first The provisions of Sub-Clauses 67.1 and 67.2 shall not apply to any
attempted to settle the dispute amicably (Sub-Clause 67.2) but not such reference.
176 177
It may happen that a party who has not disputed an Engineer's decision NOTICES
subsequently fails to comply with it. This Sub-Clause affords the
opportunity for the other party to refer such failure to arbitration for the
purposes of obtaining an arbitration award that may be enforced 68.1
internationally. Notice to Contractor
All certificates, notices or instructions to be given to the Contractor
by the Employer or the Engineer under the terms of the Contract
shall be sent by post, cable, telex or facsimile transmission to or left
at the Contractor's principal place of business or such other address
as the Contractor shall nominate for that purpose.
68.2
Notice to Employer and Engineer
Any notice to be given to the Employer or the Engineer under the
terms of the Contract shall be sent by post, cable, telex or facsimile
transmission to or left at the respective addresses nominated for that
purpose in Part II of these Conditions.
68.3
Change of Address
Either party may change a nominated address to another address in
the country where the Works are being executed by prior notice to
the other party, with a copy to the Engineer, and the Engineer may
do so by prior notice to both parties.
This Clause deals with communications of various kinds between the
parties and with the Engineer.
Formal notices are required by the Contract in different situations: to the
Contractor, for example, in Sub-Clause 41.1 (Commencement of Works),
Sub-Clause 52.2 (Power of Engineer to Fix Rates), Sub-Clause 63.1
(Default of Contractor), Sub-Clause 65.6 (Outbreak of War) and Clause 67
(Settlement of Disputes); to the Employer, for example, in Clause 67
(Settlement of Disputes) and in Sub-Clause 69.4 (Contractor's Entitlement
to Suspend Work); and to the Engineer, for example, in Sub-Clause 6.3
(Disruption of Progress), Sub-Clause 12.2 (Adverse Physical Obstructions
or Conditions), Sub-Clause 52.2 (Power of Engineer to Fix Rates), Sub-
Clause 53.1 (Notice of Claims), etc.
It is important that any such notice complies with the Clause being relied
upon and be sent to the address nominated for such receipt. For the
Contractor, the address would be its principal place of business (the head
office). Later, during the execution of the Contract, this might be changed

178 179
to an office near the location of the Employer (but not necessarily the Site DEFAULT OF EMPLOYER
office).
The Contract requires numerous other types of communications such as
certificates and instructions and each party should establish at an early Clause 69 emphasises the importance of an uninterrupted flow to the
stage appropriate procedures for sending and receiving these. Contractor of payments to which he is entitled.

The following entry is required to be included in Part II: 69.1

Default of Employer
68.2
Notice to Employer and Engineer In the event of the Employer:
(a) failing to pay to the Contractor the amount due under any
For the purposes of this Sub-Clause the respective addresses are:
certificate of the Engineer within 28 days after the expiry of the time
(a) The Employer (insert address) stated in Sub-Clause 60.10 within which payment is to be made,
subject to any deduction that the Employer is entitled to make under
(b) The Engineer (insert address)
the Contract, or
(b) interfering with or obstructing or refusing any required approval to
the issue of any such certificate, or
(c) becoming bankrupt or, being a company, going into liquidation,
other than for the purpose of a scheme of reconstruction or
amalgamation, or
(d) giving notice to the Contractor that for unforeseen reasons, due
to economic dislocation, it is impossible for him to continue to meet
his contractual obligations
the Contractor shall be entitled to terminate his employment under
the Contract by giving notice to the Employer, with a copy to the
Engineer. Such termination shall take effect 14 days after the giving
of the notice.
This Sub-Clause lists in (a) to (d) the reasons (all of which relate to the
Employer's ability to make payment to the Contractor) for which the
Contractor can, by giving notice to the Employer, terminate his
employment under the Contract. The termination takes effect automatically
14 days after such notice is given to the Employer.
The parties are of course free to negotiate the Contractor's return to work
during or after the period of notice, but resumption of work is not
automatic, even if the default is rectified during the period of notice. It
should be emphasised that the termination of a contract is an important
legal matter, and that, in addition to the terms of the Contract, the law
governing the Contract should be examined to ascertain the effects thereof
on the parties.

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If the Employer is a government or public authority, it may be appropriate 69.4
to delete case (c) by a supplement to Sub-Clause 69.1 in Part II. In Contractor’s Entitlement to Suspend work
addition, the law governing the Contract may contain mandatory provisions
Without prejudice to the Contractor's entitlement to interest under
the effect of which is to make amendments to the Clause desirable. The
Sub-Clause 60.10 and to terminate under Sub-Clause 69.1, the
following are examples of what it may be necessary to add in Part II:
Contractor may, if the Employer fails to pay the Contractor the
Where the Employer is a government it may be considered appropriate to amount due under any certificate of the Engineer within 28 days after
vary the Sub-Clause: the expiry of the time stated in Sub-Clause 60.10 within which
payment is to be made, subject to any deduction that the Employer
69.1 is entitled to make under the Contract, after giving 28 days' prior
Default of the Employer notice to the Employer, with a copy to the Engineer, suspend work
Delete paragraph (c) and renumber paragraph (d) as (c). or reduce the rate of work.
Where the terms of the Sub-Clause, when read in conjunction with Sub- If the Contractor suspends work or reduces the rate of work in
Clause 69.3, are in conflict with the law governing the Contract, the Sub- accordance with the provisions of this Sub-Clause and thereby
Clause may need to be varied as follows: suffers delay or incurs cost the Engineer shall, after due consultation
with the Employer and the Contractor, determine
69.1
Default of the Employer (a) any extension of time to which the Contractor is entitled under
Clause 44, and
Delete 'or' at the end of paragraph (c) and delete paragraph (d).
(b) the amount of such costs, which shall be added to the Contract
69.2 Price
Removal of Contractor’s Equipment
and shall notify the Contractor accordingly, with a copy to the
Upon the expiry of the 14 days' notice referred to in Sub-Clause Employer.
69.1, the Contractor shall, notwithstanding Equipment the provisions
of Sub-Clause 54.1, with all reasonable despatch, remove from the Clause 69 in the fourth edition has been supplemented with an additional,
Site all Contractor's Equipment brought by him thereon. but less severe, remedy for the Contractor, if the Employer fails to pay any
certificate promptly, which may be suitable where both parties in reality
Upon such termination the Contractor is obliged to remove his Equipment wish to complete the Contract. The Contractor can give notice to the
from the Site. Employer under Sub-Clause 69.4 which entitles the Contractor, after a
69.3 period of 28 days, to suspend work or reduce the rate of such work.
Payment on Termination Such suspension could involve anything from stopping all production
In the event of such termination the Employer shall be under the (maintaining only safety work to protect the Site and work already done) to
same obligations to the Contractor in regard to payment as if the a nominal reduction in work to demonstrate the Contractor's
Contract has been terminated under the provisions of Clause 65, dissatisfaction, all at the Contractor's discretion. He thus has the possibility
but, in addition to the payments specified in Sub-Clause 65.8, the to resume normal work when the cause for his action has been removed,
Employer shall pay to the Contractor the amount of any loss or and he is entitled to obtain compensation for any delay (time extension) and
damage to the Contractor arising out of or in connection with or by for his extra costs.
consequence of such termination. 69.5
The Employer is obliged to make payment to the Contractor as stipulated Resumption of Work
in Sub-Clause 69.3 which, in addition to the payment for termination under Where the Contractor suspends work or reduces the rate of work,
Clause 65, could include compensation for the Contractor's loss of profit. having given notice in accordance with Sub-Clause 69.4, and the

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 Employer subsequently pays the amount due, including interest CHANGES IN COST AND LEGISLATION
pursuant to Sub-Clause 60.10, the Contractor's entitlement under
Sub-Clause 69.1 shall, if notice of termination has not been given,
lapse and the Contractor shall resume normal working as soon as is 70.1
reasonably possible. Increase or Decrease of Cost
This Sub-Clause deals with the resumption of work. There shall be added to or deducted from the Contract Price such
sums in respect of rise or fall in the cost of labour and/or materials or
any other matters affecting the cost of the execution of the Works as
may be determined in accordance with Part II of these Conditions.
70.2
Subsequent Legislation
If, after the date 28 days prior to the latest date for submission of
tenders for the Contract there occur in the country in which the
Works are being or are to be executed changes to any National or
State Statute, Ordinance, Decree or other Law or any regulation or
bye-law of any local or other duly constituted authority, or the
introduction of any such State Statute, Ordinance, Decree, Law,
regulation or bye-law which causes additional or reduced cost to the
Contractor, other than under Sub-Clause 70.1, in the execution of
the Contract, such additional or reduced cost shall, after due
consultation with the Employer and the Contractor, be determined
by the Engineer and shall be added to or deducted from the
Contract Price and the Engineer shall notify the Contractor
accordingly, with a copy to the Employer.
Particularly in periods of inflation and of instability in currency exchange
rates, the Employer should not, in his own best interests, and especially on
long-term contracts, ask tenderers to quote firm prices with no provision
for adjustments, at least in the country in which the Works are to be
executed.
If contractors do not have to allow for price variations when preparing their
tenders, the Employer will receive better and more competitive offers from
reputable contractors, and will only have to meet such net variations in cost
as actually occur.
Clause 70 is intended to make provision for the possible effect of such
matters as variation in the cost of labour and materials arising during the
execution of the Works and of new or amended national and local laws and
regulations introduced during or after the final stages of the preparation of
the tenders.

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Ideally, the net increase (or decrease) in the cost of labour and materials, Adjustments to the Contract Price shall be made in respect of rise or
consumables, etc., arising after a date when tenderers can be assumed to fall in the cost of local labour and specified materials as set out in this
have completed the computation of the rates and prices inserted in their Sub-Clause.
tenders, should be assessed and the Contract Price adjusted accordingly.
(a) Local Workmen
Where such variation can be checked from official information, the task is
comparatively easy. In many cases such information is not available and (i) For the purpose of this Sub-Clause:
alternative methods must be devised.
'Local Workmen' means skilled, semi-skilled and unskilled
The wording of Clause 70 in Part I cannot, therefore, be too specific and workmen of all trades engaged by the Contractor on the Site for
must allow for individual drafting to suit particular local conditions. the purpose of or in connection with the Contract or engaged full
Guidance for such individual drafting is given below. time by the Contractor off the Site for the purpose of or in
connection with the Contract (by way of illustration but not
For contracts of short duration, e.g., one year at maximum, it may be
limitation: workmen engaged full time in any office, store,
reasonable to require firm prices. The following Part II entries will probably
workshop or quarry).
be appropriate:
'Basic Rate' means the applicable basic minimum wage rate
70.1
prevailing on the date 28 days prior to the latest date for
Increase or Decrease in Cost
submission of tenders by reason of any National or State
Delete the text of the Sub-Clause and substitute: Subject to Sub- Statute, Ordinance, Decree or other Law or any regulations or
Clause 70.2 the Contract Price shall not be subject to any byelaw of any local or other duly constituted authority, or in order
adjustment in price in respect of rise or fall in the cost of labour, to conform with practice amongst good employers generally in
materials or any other matters affecting the cost of execution of the the area where the Works are to be carried out.
Contract.
'Current Rate' means the applicable basic minimum wage rate
70.2 for Local Workmen prevailing on any date subsequent to the
Subsequent Legislation date 28 days prior to the latest date set for the submission of
tenders by reason of any National or State Statute, Ordinance,
Delete the words 'other than under Sub-Clause 70.F
Decree or other Law or any regulation or bye-law of any local or
For contracts of longer duration, adjustments of prices should be allowed. other duly constituted authority, or in order to conform with
Two methods are given below, the first adjustment based upon 'basic practice amongst good employers generally in the area where
prices' and the second based upon 'indices'. the Works are to be carried out.
Of these two methods the one based on 'indices' is recommended (ii) The adjustment to the Contract Price under the terms of this
wherever suitable indices can be obtained. It is easier to administer and Sub-Clause shall be calculated by multiplying the difference
enables the Contractor who purchases skillfully to be rewarded. between the Basic and Current Rates for Local Workmen by:
The following Part II entry should be made where price adjustment is to be (a) the number of hours actually worked, and also
made by establishing the difference in cost between basic price and the
(b) in respect of those hours worked at overtime rates, by
current price of local labour and specified materials:
the product of the number of said hours and the percentage
70.1 addition required by the law to be paid by the Contractor for
Increase or Decrease in Cost overtime.
Delete the text of the Sub-Clause and substitute: Such adjustment may be either by an addition to or a
deduction from the Contract Price.

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 (iii) No other adjustment of the Contract Price on account of (v) The Contractor shall at all times have regard to suitable
fluctuation in the remuneration of Local Workmen shall be made. markets and shall, whenever buying materials a variation in the
cost of which would give rise to an adjustment of the Contract
(b) Specified Materials
Price under this Sub-Clause, be diligent to buy or procure the
(i) For the purpose of this Sub-Clause: same at the most economical prices as are consistent with the
due performance by the Contractor of his obligations under the
'Specified Materials' means the materials stated in Appendix
Contract.
(insert reference) to Tender required on the Site for the execution
and completion of the Works. If at any time there shall have been any lack of diligence, default
or negligence on the part of the Contractor, whether in observing
'Basic Prices' means the current prices for the specified
the above requirements or otherwise, then, for the purposes of
materials prevailing on the date 28 days prior to the latest date
adjusting the Contract Price pursuant hereto, no account shall
for submission of tenders.
be taken of any increase in cost which may be attributable to
'Current Prices' means the current prices for the specified such lack of diligence, default or negligence and the amount by
materials prevailing at any date subsequent to the date 28 days which any cost would have been decreased but for such lack of
prior to the latest date for submission of tenders. diligence, default or negligence shall be deducted from the
Contract Price.
(ii) The adjustment to the Contract Price under the terms of this
Sub-Clause shall be calculated by applying the difference (vi) No other adjustment to the Contract Price on account of
between the Basic and Current Prices to the quantity of the fluctuation in the cost of materials shall be made.
appropriate Specified Materials which is delivered to the Site
(c) Overheads and Profits Excluded
during the period for which the particular Current Price is
effective. Such adjustment may be either an addition to or a In determining the amount of any adjustment to the Contract
deduction from the Contract Price. Price pursuant to this Sub-Clause no account shall be taken of
any overheads or profits.
(iii) The Contractor shall use due diligence to ensure that
excessive wastage of Specified Materials shall not occur. Any (d) Notices and Records
Specified Materials removed from the Site shall be clearly
The Contractor shall forthwith, upon the happening of any event
identified in the records required under paragraph (d) of this Sub-
which may or may be likely to give rise to the adjustment of the
Clause.
Contract Price pursuant to this Sub-Clause, give notice thereof
(iv) The provisions of this Sub-Clause shall apply to fuels used in to the Engineer and the Contractor shall keep such books,
Contractor's Equipment engaged on the Site for the purposes of accounts and other documents and records as are necessary to
executing the Works, including vehicles owned by the enable adjustment under this Sub-Clause to be made and shall,
Contractor (or hired by him under long term arrangements under at the request of the Engineer, furnish any invoices, accounts,
which the Contractor is obligated to supply fuel) engaged in documents or records so kept and such other information as the
transporting any staff, labour, Contractor's Equipment, Engineer may require.
Temporary Works, Plant or materials to and from the Site. Such
(e) Adjustment after Date of Completion
fuels shall be clearly identified in the records required under
paragraph (d) of this Sub-Clause. The provisions of this Sub- The Contractor shall forthwith, upon the happening of any event
Clause shall not apply to any fuels sold or supplied to any which may or may be likely to give rise to the adjustment of the
employee of the Contractor or to any person for use in any Contract Price pursuant to this Sub-Clause, give notice thereof
motor vehicle not being used for the purposes of the Contract. to the Engineer and the Contractor shall keep such books,
accounts and other documents and records as are necessary to
enable adjustment under this Sub-Clause to be made and shall,
188 189
at the request of the Engineer, furnish any invoices, accounts, EXAMPLE APPENDIX TO TENDER
documents or records so kept and such other information as the
Engineer may require.
for use in connection with the above.
(f) Determination of Adjustment to Contract Price
SPECIFIED MATERIALS
The amount of any adjustment to the Contract Price pursuant to
Material Unit Price and Transport Price Remarks
this Sub-Clause shall be determined by the Engineer in Location to site Delivered
accordance with the foregoing rules. to Site

Bitumen
Diesel
Petrol
Lubricant
Cement
Reinforcing
Steel
Explosives

NOTES:
1. The Contractor shall provide copies of quotations to substantiate
all prices included in the above table.
2. All subsequent price substantiation shall be from the same source
as original unless otherwise agreed by the Engineer.
3. The Contractor shall submit full explanation and provide
substantiating documentation for the mode of transport to Site he
proposes. Only the proposed documented mode of transport shall
qualify for price adjustment.
(Note: Materials stated in the Appendix to Tender should be those of
which substantial quantities are involved.)
The following Part II entry should be made where price adjustment is to be
made through the application of indices in a formula:
70.1
Increase or Decrease in Cost
Delete the text of the Sub-Clause and substitute:
(a) Adjustments to the Contract Price in respect of rise and fall in the
cost of labour and materials and other matters affecting the cost of
execution of the Works shall be calculated for each monthly
statement pursuant to Sub-Clause 60.1, the Statement at
Completion pursuant to Sub-Clause 60.5 and the Final Statement
pursuant to Sub-Clause 60.6 in accordance with the provisions of
190 191
this Sub-Clause if there shall be any changes in the following index (c) The adjustment to the Contract Price shall be calculated
figures compiled by (insert details of source of indices) and published by multiplying the Effective Value by a Price Fluctuation
by (insert details of publication) Factor which shall be the net sum of the products obtained
by multiplying each of the proportions given in paragraph (d)
(i) the Index of the cost of Labour in (insert name of country)
of this Sub-Clause by the following fraction:
(ii) the Index of the cost of (insert other factor, as relevant)
Current Index Figure - Base Index Figure
(iii) the Index of the cost of (insert other factor, as relevant) ________________________________________________
(b) For the purpose of this Sub-Clause: Base Index Figure

(i) 'Base Index Figure' shall mean the index figure applicable on calculated using the relevant index figures.
the date 28 days prior to the latest date for submission of (d) For the purpose of calculating the Price Fluctuation
tenders. Factor, the proportions referred to in paragraph (c) of
(ii) 'Current Index Figure' shall mean the index figure applicable this Sub-Clause shall (irrespective of the actual constituents
on the last day of the period to which the particular statement of the work) be as follows:
relates.
0.x in respect of labour (and supervision) costs subject to
Provided that in respect of any work the value of which is adjustment by reference to the Index referred to in (a)(i) of
included in any such monthly statement (or Statement at this Sub-Clause;
Completion or Final Statement) and which was executed after
the due date (or extended date) for completion of the whole 0.x in respect of by reference to the Index referred to in (a)(ii)
Works, pursuant to Clause 43, the Current Index Figure shall be of this Sub-Clause;
the index figure applicable on the aforesaid due date (or 0.x in respect of by reference to the Index referred to in (a)(iii)
extended date) for completion of the whole of the Works. of this Sub-Clause;
(iii) 'Effective Value' shall be the difference between: 0.x in respect of all other costs which shall not be subject to
(a) The amount which is due to the Contractor under the any adjustment:
provisions of Sub-Clauses 60.2, 60.5 or 60.8 (before 1.00 Total
deducting retention and excluding repayment of the
advance payment) less any amounts for: (e) Where the value of an Index is not known at the time of
calculation, the latest available value shall be used and any
work executed under nominated Subcontracts adjustment necessary shall be made in subsequent monthly
materials and Plant on the Site, as referred to in Sub-Clause statements.
60. 1 (c) (Note: The number of indices included under (a) of this Sub-Clause may be
dayworks, variations or any other items based on actual cost varied, if it is determined that a different number of factors should be
or current prices, and bonuses (if any) separately identified, and in such case (d) of this Sub-Clause must be
altered to be consistent.)
adjustments under Clause 70,
and
(b) The amount calculated in accordance with (b)(iii)(a) of this
Sub-Clause and included in the last preceding statement.

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CURRENCY AND RATES OF EXCHANGE In this Sub-Clause it is assumed that the Contractor has quoted his tender
price as consisting of sums in one or more foreign currencies in addition to
a sum to be paid in the currency of the country where the Works are to be
71.1 constructed, the local currency. In a unit rate contract, this would normally
Currency Restrictions require that each and every item to be paid for is quoted in one or more
foreign currencies in addition to the local currency. Such an arrangement
If, after the date 28 days prior to the latest date for submission of gives a complicated Bill of Quantities but ensures that the Contractor
tenders for the Contract, the Government or authorised agency of
receives the appropriate currencies.
the Government of the country in which the Works are being or are
to be executed imposes currency restrictions and for transfer of 72.2
currency restrictions in relation to the currency or currencies in which Currency Proportions
the Contract Price is to be paid, the Employer shall reimburse any
Where the Employer has required the Tender to be expressed in a
loss or damage to the Contractor arising there from, without
single currency but with payment to be made in more than one
prejudice to the right of the Contractor to exercise any other rights or
currency and the Contractor has stated the proportions or amounts
remedies to which he is entitled in such event.
of other currency or currencies in which he requires payment to be
This Clause protects the Contractor against currency restrictions and/or made, the rate or rates of exchange applicable for calculating the
transfer of currency restrictions in relation to the currencies in which the payment of such proportions or amounts shall, unless otherwise
Contract Price is to be paid. If such restrictions are imposed after the stated in Part II of these Conditions, be those prevailing, as
Contractor will normally have priced his tender, the Contractor is entitled to determined by the Central Bank of the country in which the Works
be reimbursed by the Employer for any consequent loss or damage. are to be executed, on the date 28 days prior to the latest date for
the submission of tenders for the Contract, as has been notified to
The Contractor will normally need to transfer funds to the country of the the Contractor by the Employer prior to the submission of tenders or
Works during the mobilisation stage and to repatriate the funds later. The as provided for in the Tender.
Contract may provide for special advance payments by the Employer, for
the purchase of Contractor's Equipment and for repayment by the This Sub-Clause deals with the procedure to be followed if tenderers have
Contractor during the period of the Contract. Payments of retention sums, been required to submit their tenders in a single currency. Full details of
liquidated damages and bonus may also be affected and so may also the requirements will have been issued by the Employer when inviting tenders
valuation of the Contractor's Equipment for possible tax or customs duty and during the tendering period. Each payment certificate will then be
assessment on re-export or sale at the end of the Contract. calculated in such currency based on rates for each payment item in that
currency. But for payment, the sum certified will be converted into the
It is common for the Contract Price to be paid in one or more foreign various currencies in the proportions required by the Contractor in his
currencies in addition to the local currency of the country where the Works tender. The rates of exchange for conversion shall be fixed for the duration
are to be executed. Where this is the case, consideration should be given of the Contract at the rates communicated to the tenderers by the
to nominating a place of payment (a bank) in each of the countries of the Employer during the tendering period. The Contractor will thus always
foreign currencies applicable. See example Sub-Clause under Clause 60. receive currencies in the same proportions, which may not always
72.1 correspond to his actual use of the currencies (the advance payment will
Rates of Exchange have an influence also). However, what he receives should eventually
correspond to his requirements, if the Works have not been varied
Where the Contract provides for payment in whole or Exchange in substantially or increases and decreases of various work items have not
part to be made to the Contractor in foreign currency or currencies, unbalanced his estimate. The possibility of imbalance can be reduced if the
such payment shall not be subject to variations in the rate or rates of Contractor is required in his tender to stipulate currency proportions for
exchange between such specified foreign currency or currencies and different parts of the Bill of Quantities.
the currency of the country in which the Works are to be executed.

194 195
If an International Financing Institution is involved in the financing of the POSSIBLE SUPPLEMENTARY CLAUSES
project it would probably insist that the currency requirements relate to the
countries from which goods and services are to be obtained.
Where it is decided that the rate or rates of exchange shall be established Part I contains only the 72 Clauses dealt with above but each individual
from a source other than the Central Bank of the country, it may be contract will almost always need additional clauses drafted specifically to
appropriate to make the following variation to the Sub-Clause in Part II: meet the needs of the project covered by the Contract. Such clauses may
deal with taxes, duties and dues of various kinds, with particular points of
72.2 law, e.g., the joint and several liability of members of a joint venture, with
Currency Proportions bribery, confidentiality and with restrictions as to the use of funds imposed
Delete the words from 'prevailing.' to the end of the sentence and by a financing institution. These would appear as additional clauses in Part
substitute 'stated in the Appendix to Tender'. II and examples for the four latter cases are given below.

72.3 Protection against bribery.

Currencies of Payment for Provisional Sums Where the law applicable to the Contract does not cover bribery it may well
Where the Contract provides for payment in more than one currency, be of advantage to add the following clause or a clause of a similar nature:
the proportions or amounts to be paid in foreign currencies in .1
respect of Provisional Sums shall be determined in accordance with Bribes
the principles set forth in Sub-Clause 72.1 and 72.2 as and when
these sums are utilised in whole or in part in accordance with the If the Contractor or any of his Sub-contractors, agents or servants
provisions of Clauses 58 and 59. offers to give or agrees to offer or give to any person, any bribe, gift,
gratuity or commission as an inducement or reward for doing or
This Sub-Clause emphasises the need to deal separately and individually forbearing to do any action in relation to the Contract or any other
with the currency content of Provisional Sums as and when they are used. contract with the Employer or for showing or forbearing to show
favour or disfavour to any person in relation to the Contract or any
other contract with the Employer, then the Employer may enter upon
the Site and the Works and terminate the employment of the
Contractor and the provisions of Clause 63 hereof shall apply as if
such entry and termination had been made pursuant to that Clause.
Confidentiality
Where circumstances require that particular confidentiality is observed, the
following clause might be appropriate:
.1
Details to be Confidential
The Contractor shall treat the details of the Contract as private and
confidential, save in so far as may be necessary for the purposes
thereof, and shall not publish or disclose the same or any particulars
thereof in any trade or technical paper or elsewhere without the
previous consent in writing of the Employer or the Engineer. If any
dispute arises as to the necessity of any publication or disclosure for
the purpose of the Contract the same shall be referred to the
Employer whose award shall be final.
196 197
Restrictions on Expenditure There are numerous ways of dealing with such arrangements and it is
considered that it would not be helpful to include some of these in this
Where the Contract is being financed wholly or in part by an International
present publication as that may appear to exclude others which would be
Financing Institution whose Articles require a restriction on the use of the
appropriate. A clause should be drawn to respond precisely to the
funds provided, the following clause may be added:
intentions of the Employer and should be included in the Tender
.1 documents.
Expenditure Restricted
The Contractor shall not make any expenditures for the purpose of
the Contract in the territories of any country which is not a member
of (insert name of International Financing Institution) nor shall he
make any expenditure for goods produced in or services supplied
from such territories.
Contractor as Joint Venture
In the event that the Contractor is a joint venture it is recommended that
consideration be given by the Employer to the inclusion of the following
clause:
.1
Joint and Several Liability
If the Contractor is a joint venture of two or more persons, all such
persons shall be jointly and severally bound to the Employer for the
fulfilment of the terms of the Contract and shall designate one of
such persons to act as leader with authority to bind the joint venture.
The composition or the constitution of the joint venture shall not be
altered without the prior consent of the Employer.
Special Provision for Duties and Taxes
In regard to local taxes, duties and dues, etc., the Contract may stipulate
that no exemption whatsoever shall be allowed, or that the Contractor will
not be exempted from any such imposition but reimbursed under the
Contract, or that he will be exempted from turnover tax and income tax on
the Contract and his expatriate personnel likewise on their income tax while
stationed in the country of the Works, but will not be exempted from
customs duties, other duties and dues, etc., in order not to disturb the
market for products and services in the country of the Works. When the
Employer is a government or public authority, even customs duties and
similar impositions may, in exceptional cases, be excluded from the
Contract Price by specific mention in the Tender documents in order that
the funds provided by financing institutions may be directed towards the
project only.

198 199