The General & Special Conditions of Contract

9 The General Conditions of Contract (GCC) contain

standard provisions that have been designed to remain

unchanged & to be used without modifying their text.

Contd..

9 The GCC clearly identify the provisions that may

normally need to be specified for a particular bidding process

& require that such provisions be introduced through the

SCC.

9 The GCC will form part of any resulting Contract.

9 The Special Conditions of Contract (SCC) supplement the

GCC by modifying conditions applicable to an individual

contract; Such as payment terms/name of the Engineer etc;

9 The SCC prevail over the GCC.

9 All information that the GCC indicate shall be provided in

the SCC;
9 No SCC Clause should be left blank.

9 To facilitate the preparation of SCC, its clauses are

numbered with same numbers as the corresponding GCC
clauses.

9 The SCC will form part of any resulting Contract.

 The General
Condition of
Contract
“Ethiopian Context”
 The Public Procurement
Agency’s Standard Bidding
Document for works (January
2006) in its section 7 discusses
the General conditions of
contract :
1 Definition
.
The “Engineer”
9 The person named in the SCC

9 Any other competent person appointed by the Employer &

notified to the Contractor,

9 Who is responsible for supervising the execution of the

Works & Administering the Contract.

“Adjudicator”:

9 Person appointed jointly by the Employer & Contractor to

resolve disputes in the first instance.

Contd…

9 “Equipment” Contractor’s Machinery & Vehicles

brought temporarily to the Site to construct the Works.

9 “Materials” are all supplies, including consumables, used

by the Contractor for incorporation in the Works.

“Plant”
Any integral part of the Works that shall have a mechanical,

electrical, chemical, or biological function.

Site Investigation Reports
Are those that were included in the bidding documents & are

factual & interpretative reports about the surface & subsurface

conditions of Site.
Contd…

The “Works”

9 Are what the Contract requires the Contractor to construct,

install, & turn over to the Employer, as defined in the SCC.

The “Contractor’s Bid”
9 Is the completed bidding document submitted by the
Contractor to the Employer.

A “Variation”
9 An instruction given by the Engineer, which varies the
Works.
[Link] documents forming the Contract shall be
interpreted in the following order of priority:

(1) Agreement,
(2) Letter of Acceptance,
(3) Contractor’s Bid,
(4) Special Conditions of Contract,
(5) General Conditions of Contract,
(6) Specifications,
(7) Drawings,
(8) Bill of Quantities or Activity Schedule, and
(9) Any other document listed in the Special Conditions of Contract
as forming part of the Contract
3. Language and Law

The language of the Contract is Amharic & the law governing

the Contract is that of the Federal Democratic Republic of

Ethiopia.
4. Engineer’s Decision

The Engineer will decide contractual matters between the

Employer & the Contractor in the role representing the

Employer.
5. Delegation

9 The Engineer may delegate any of his duties &

responsibilities to other people except to the Adjudicator,

after notifying the Contractor, & may cancel it as well;

[Link]

9 Communications between parties that are referred to in the

Conditions shall be effective only when in writing.

9 A notice shall be effective only when it is delivered;

[Link]
9 The Contractor may subcontract with the approval of the

Engineer, but may not assign the Contract Without the

approval of the Employer in writing.

9 Subcontracting shall not alter the Contractor’s obligations.

 8. Other Contractors

9 The Contractor shall cooperate & share the Site with other
contractors,

9 The Contractor shall also provide facilities & services for

them as described in the Schedule.

9 The Employer may modify the Schedule of Other

Contractors, & shall notify the Contractor of any such
modification.
9. Personnel

9 The Contractor shall employ the key personnel named in the

Schedule of Key Personnel, to carry out the functions stated.

9 The Engineer will approve any proposed replacement of key

personnel only if their relevant qualifications & abilities are

substantially equal to or better than those listed in the

Schedule.
9 If the Engineer asks the Contractor: to remove a person
who is a member of the Contractor’s staff or work force,
stating the reasons,

9 The Contractor shall ensure that the person leaves the Site
within seven days & has no further connection with the
work in the Contract.
 11. Employer’s Risks

9 Unless otherwise specified in the SCC, from the Start Date

until the Defects Correction Certificate has been issued, the

following are Employer’s risks:

a. The risk of personal injury, death,/ loss of/ damage to
property, which are due to:

1. Use/occupation of the Site by the Works (for the

purpose of the Works) which is the unavoidable result of
the Works, or

II. Negligence, breach of statutory duty, by the Employer or

by any person employed by him except the Contractor;
b) The risk of damage to: The Works, Plant, Materials, &
Equipment to the extent that it is due to:

A fault of the Employer or

in the Employer’s design, or
due to war or radioactive contamination

Directly affecting the country where the Works are to be

executed.
The risk of loss of or damage to the Works, Plant, & Materials
is an Employer’s risk except Loss or damage due to:

9A Defect which existed on the Completion Date,

9An event occurring before the Completion Date, which was

not itself an Employer’s risk, or

9The activities of the Contractor on the Site after the

Completion Date.
 12. Contractor’s Risk

9 From the Starting Date Until the Defects Correction

Certificate has been issued, The risks of personal injury,

death, & loss of or damage to property (including, Without

limitation, the Works, Plant, Materials, & Equipment)

Which are not Employer’s risks are Contractor’s risks.

 13. Insurance

The Contractor shall provide In the joint names of the

Employer & the Contractor, insurance cover from the Start

Date to the end of the Defects Liability Period, For the

following events which are due to the Contractor’s risks:

¾Loss of / damage to the Works, Plant, & Materials;

¾Loss of / damage to Equipment;

¾Loss of / damage to property in connection with the

Contract;

¾Personal injury or death.

Policies & certificates for insurance shall be delivered:

by the Contractor
to the Engineer
for the Engineer’s approval

Before the Start Date.

All such insurance shall:

Provide for compensation to be payable In the types &

proportions of Currencies required to rectify the loss or
damage incurred.
If the Contractor does not provide Any of the policies &
certificates required,

The Employer may:

Effect the insurance Which the Contractor should have

provided & Recover the premiums From payments
otherwise due to the Contractor or, If no payment is due:
the payment of the premiums shall be a debt due.
Alterations to the terms of insurance shall not be made
without the approval of the Engineer.

Both parties shall comply with any conditions of the

insurance policies.
 17. The Works to Be Completed by the Intended
Completion Date

The Contractor may commence execution of the Works on the

Start Date & shall carry out the Works in accordance with the
Program submitted by the Contractor, As updated with the
approval of the Engineer, & Complete them by the Intended
Completion Date.
19. Safety

The Contractor shall be responsible for the safety of all

activities on the Site.

20. Discoveries

Anything of Historical/ Significant value Unexpectedly

discovered on the Site Shall be the property of the Employer.

The Contractor shall notify the Engineer of such discoveries &

carry out the Engineer’s instructions for dealing with them.
 [Link] of The Site

9 The Employer shall give possession of the Site to the

Contractor.

9 If possession of a part is Not given by the date stated in the

approved Work program, The Employer will be deemed to
have delayed the start of the relevant activities, & This will
be a Compensation Event.
 [Link] to the Site

The Contractor shall Allow The Engineer/ Any person

authorized by him Access to the Site & to Any place

where Work in connection with the Contract is being

carried out/ is intended to be carried out.

 23. Instructions

The Contractor shall carry out All instructions of the

Engineer, Which comply with the applicable laws,

where the Site is located.

24. Disputes
9 If the Contractor believes that A decision taken by the

Engineer was Either outside the Authority given to him or

The decision was wrongly taken, The decision shall be

referred to the Adjudicator within 14 days of the notification

of the Engineer’s decision.

 [Link] for Disputes

9 The Adjudicator shall give A decision in writing within

28 days of receipt of a notification of a dispute;

9 The Adjudicator shall be paid on hourly bases, together

with reimbursable expenses;

9 The cost shall be divided Equally between the parties,

Whatever decision is reached by the Adjudicator.
9 Either party may refer A decision of the Adjudicator to an

Arbitrator within 28 days of the Adjudicator’s written

decision.
9 If neither party refers the dispute to Arbitration within the

above 28 days, The Adjudicator’s decision will be Final &

binding.

9 The arbitration shall be conducted in accordance with the

Arbitration procedure published by the institution named &

in the place shown in the SCC.

 [Link] of Adjudicator

9 If the Adjudicator resign or Die, or is not functioning in

accordance with the provisions of the Contract, A new

Adjudicator will be jointly Appointed by the parties.

9 In case of disagreement between the parties, Within 30

days, The Adjudicator shall be designated By the

Appointing Authority Designated in the SCC At the

request of either party, within 14 days of receipt of such

request.
27. Program
Within the time stated, The Contractor shall submit To the
Engineer for approval, A Program showing:

9 The General Methods,

9 Arrangements,
9 Order,
9 &
9 Timing

For all the Activities in the Works.

An update of the Program:

Shall be a program Showing the Actual progress Achieved

On each activity, Including: Any changes to the sequence
of the activities;

The Contractor shall submit To the Engineer for Approval

an updated Program At intervals no longer than the period
stated in the SCC.
9 If the Contractor Fails to submit An updated Program,
The Engineer May: Withhold the Amount stated in the
SCC From the next payment certificate Until the
Program has been submitted.

9 The Engineer’s Approval of the Program: Shall not

alter the Contractor’s obligations.
9 The Contractor may revise the Program & submit it to
the Engineer Again at any time.

9 The Engineer’s approval of the Program shall not alter

the Contractor’s obligations;

9 A revised Program shall show the effect of Variations

& Compensation Events.
28. Extension of
the Intended
Completion Date
The Engineer shall Extend the Intended Completion Date if:

9 A Compensation Event occurs or

9 A Variation is issued;

Which makes it impossible For Completion to be achieved by

the Intended Date Without the Contractor taking steps to
accelerate the remaining work, which would cause the
Contractor to incur additional cost.
9 The Engineer shall decide whether & By how much to

Extend The Completion Date Within 21 days of the

Contractor’s request submitted with full supporting

information.
If the Contractor has:

9 Failed to give early warning of a delay,

9 Failed to cooperate in dealing with a delay,

The delay by this failure Shall not be considered in assessing the

new Completion Date
 [Link]

When the Employer wants the Contractor to finish before the

Intended Completion Date, The Engineer will obtain priced

proposals For achieving the necessary acceleration from the

Contractor.
If the Employer accepts these proposals:

9 The Completion Date will be adjusted accordingly;

9 The priced proposals are incorporated in the Contract

Price & treated as a Variation.

 30. Delays Ordered by the
Engineer
9 The Engineer may instruct the Contractor to delay the

start/progress of any activity/ within the Works;

 [Link] Meetings

9 Either party may require the other to attend a management

meeting.

9 The business of such meetings shall be to review the plans

for remaining work & to deal with other important matters;
9 The Engineer shall record such meetings & provide copies of

the record to those attending the meeting & to the Employer.

9 The responsibility of the parties for actions to be taken shall

be decided by the Engineer either at the management meeting

or after the management meeting & stated in writing to all

who attended the meeting.

 [Link] warning

The Contractor shall warn The Engineer At the earliest

opportunity of likely future events That may Adversely affect:

¾The quality,

¾Increase the Contract Price or

¾Delay the execution of the Works.

9 The Contractor may be required to provide An estimate of

the expected effect of such events On the Contract Price &

Completion Date & This estimate shall be provided as soon

as reasonably posible.
9 The Contractor shall cooperate with the Engineer in making

& considering proposals for how the effect of such an event

can be avoided/reduced;
33. Identifying Defects

9 The Engineer shall check the work & notify the Contractor
of any Defects.

9 Such checking shall not affect the Contractor’s

responsibilities.

9 The Engineer may instruct the Contractor to uncover & test

any work that he considers may have a Defect.
 [Link]
If the Engineer instructs the Contractor to carry out a test, not
specified in the Specification, to check whether any work has a
Defect & The test shows that it does, “The Contractor shall
pay for the test & any samples”

If there is no Defect:

The test shall be a Compensation Event.

 35. Correction of Defects
The Engineer shall give notice to the Contractor of any Defects
before the end of the Defects Liability Period.

The Defects Liability Period shall be extended for “as Long as

Defects remain to be corrected”.

Every time notice of a Defect is given, the Contractor shall

correct the notified Defect within the length of time specified by
the Engineer’s notice.
 36. Uncorrected Defects

If the Contractor has not corrected a Defect within the time

specified: The Engineer will assess “The cost of having the
Defect corrected” & The Contractor “Will pay this amount.”
 [Link] in the Bill of Quantities

If the final quantity of the work done differs from the

quantity in the BoQ, for a particular item,
by >25%,
&
The change exceeds 5% of the Initial Contract Price,

The Engineer shall adjust the rate to allow for the change.
The Engineer shall not adjust rates if:

The Initial Contract Price is “exceeded by > 15%”,

Except “with the prior approval” of the Employer.

If requested by the Engineer, the Contractor shall:

Provide a detailed cost breakdown of any rate in the BoQ;

 40 Payment for Variations

The Contractor shall provide a quotation for carrying out the

Variation when requested to do so.

The Engineer shall Assess the quotation,

Which shall be given within 7 days or
within any longer period stated by the Engineer &
before the Variation is ordered.
If the work in the Variation Corresponds:

With an item description in the BoQ

&
If the quantity of work is within 125% or

The timing of its execution do not cause the cost/ unit quantity
to change,
The rate in the BoQ shall be used to calculate the value of the
Variation.
 If the cost per unit of quantity changes, or

If the nature or Timing of the work in the Variation

does not
correspond with items in the BoQ;

The quotation by the Contractor shall be in the form of

new rates;

.
If the Contractor’s quotation is unreasonable:

The Engineer may order the Variation & make a

change to the CP,

Which shall be based on:

The Engineer’s own forecast of the effects of the
Variation
9 If the Engineer decides that: The urgency of varying the
work would prevent a quotation being given & considered
without delaying the work, No quotation shall be given &
The Variation shall be treated as a Compensation Event.

9 The Contractor shall not be entitled to additional payment:

for Costs that could have been avoided by giving early
warning.
 Payment Certificates

The Contractor shall submit:

Monthly statements of the value of the work executed

Less the cumulative amount certified previously.

The Engineer shall check the Contractor’s monthly

statement and certify the amount to be paid to the
Contractor.
The value of work executed shall include The valuation
of Variations & Compensation Events.

The Engineer may :

“Exclude Any item certified” in a previous certificate

or
Reduce the proportion of any item previously certified

In any certificate in the light of later information.

:
Payments shall be adjusted for deductions for

Advance Payments
&
Retention

The Employer shall pay the Contractor:

The amounts certified within 30 days of the date of

each certificate.
If the Employer makes a late payment:

The Contractor shall be paid interest on the late payment in the

next payment.

Interest shall be calculated:

From the date by which the payment should have been made
up to the date when the late payment is made
At the prevailing rate of interest for commercial borrowing for
each of the currencies in which payments are made.
If an amount certified is increased:
In a later certificate
or
As a result of An award by the Adjudicator/Arbitrator,

The Contractor shall be paid interest upon the delayed payment

Interest shall be calculated: From the date Upon which

The increased amount would have been certified

in the absence of dispute.
 43.4 Blank/unfilled Rates

Items of the Works for which:

No Rate
or
No price has been entered in

Will not be paid for by the Employer

&
Shall be deemed covered by other rates & prices in the Contract.
 44. Compensation Events

9 The Employer does not give access to the Site by the Site

Possession Date stated in the Contractor’s approved work

program.

9 The Employer modifies the Schedule of “Other

Contractors” in a way that affects The work of “the

Contractor under the Contract.”

Contd…

9 The Engineer orders “A delay”

or

9 Does not issue “Drawings, Specifications, or Instructions”

Required for execution of the Works on time.

Contd…

9 The Engineer instructs the Contractor: To uncover or To

carry out additional Tests upon work, Which is then found

to have No Defects.

9 The Engineer unreasonably does not approve a subcontract

to be let.
Contdd..

9 The advance payment is delayed.

9 The “effects on the Contractor” of any of the Employer’s

Risks.

9 The Engineer unreasonably delays “issuing a Certificate of

Completion”.
Contd…
Ground conditions are:

Substantially more adverse than could reasonably have been

assumed before issuance of the Letter of Acceptance
From the information issued to bidders including:

“The Site Investigation Reports”,

“From information available publicly”

&
“From a visual inspection of the Site”
9 The Engineer Gives “An instruction” for dealing with:An

unforeseen condition, caused by the Employer, or

Additional work required for safety or other reasons.

Contd..

9 “Other contractors, public authorities, utilities, or the

Employer” does not work within the dates & other
constraints stated in the Contract, & they cause delay or
extra cost to the Contractor.

9 Other Compensation Events described in the SCC or

determined by the Engineer shall apply;
If A Compensation Event Would: Cause “Additional Cost” or

Prevent The completion of work before the Intended Completion

Date, The Contract Price shall be increased &/or The

Completion Date shall be extended.

The Engineer shall decide whether and by how much The

Contract Price shall be increased &/or The Intended

Completion Date shall be extended.

As soon as information demonstrating:

The effect of each Compensation Event upon the Contractor’s

forecast cost has been provided by the Contractor,

It shall be assessed by the Engineer, & The Contract Price shall

be adjusted Accordingly.
If the Contractor’s forecast is deemed unreasonable, “The

Engineer shall adjust the CP based on the Engineer’s own

forecast”

The Engineer will assume that the Contractor will react

competently & promptly to the event.

The Contractor shall not be entitled to compensation to the
extent that:

The Employer’s interests are adversely affected By the

Contractor’s not having given early warning
or
Not having cooperated with the Engineer.
 Clause 45 Taxes

Unless otherwise specified in the SCC, the Engineer shall not

adjust the Contract Price If taxes, duties, and other levies are

changed That subsequently affect the CP.

 47 Price Adjustment
Prices shall be adjusted for fluctuations in the cost of inputs only
if provided for in the SCC.

If so provided, the amounts certified in each payment certificate,

after deducting for Advance Payment, shall be adjusted by
applying the respective price adjustment factor to the payment
amounts due
Ln Mn En
pn= A+b +c +d +etc.
Lo Mo Eo
Where:
pn is a price adjustment factor to be applied to the amount for
each payment certificate;
A is a Constant, specified in the Contractor’s Bid, representing
the nonadjustable portion in contractual payments;

b, c, d, etc., are weightings or coefficients representing

The estimated proportion of each cost element (labour,

materials, equipment usage, etc.) in the Works or sections
thereof,
The Sum of A, b, c, d, etc., shall be one
Ln, Mn, En, etc.,

Are the “current cost indices” or reference prices of the cost

elements at the date 28 days prior to the deadline for bid
submission; &

Lo, Mo, Eo, etc.,

Are the “base cost indices” or reference prices corresponding to

the above cost elements at the date 28 days prior to the last day
of the period to which a particular Interim Payment Certificate
is related.
General Price Adjustment Formula
P = p x [1 + Price fluctuation factor]

(F - f) (L - l) (C - c) (S - s)
P = p x [1 + a ------- + b ------- + c ------- + d ------- ]
f l c s
Where,
P = New price
p = Old price
a.b.c.d = Specified proportions for fuel, labour,
material, construction plant and machinery spares, or
others as may be specified.
F.L.C.S = Current index for fuel, labour, material,
construction plant and machinery spares, or others as may be
specified.

f.l.c.s = Base index for fuel, labour, material,

construction plant and machinery spares, or
others as may be specified.
The sources of indices shall be:

9 Those listed in the Contractor’s Bid, As approved by the

Engineer.

9 Indices shall be appropriate for their purpose & shall relate

to the Contractor’s proposed source of supply of inputs.

Contd…

As the proposed basis for price adjustment “The Contractor

shall have submitted with his bid the tabulation of Weightings

& Source of Indices, which shall be subject to approval by the

Engineer”
If the value of the index is changed after it has been used in a
calculation:

“The calculation shall be corrected

&
An adjustment made in the next payment certificate”

The index value shall be deemed to take account of all changes in

cost due to fluctuations in costs.
 48. Retention

The Employer shall retain:

From each payment due to the Contractor

The proportion stated in the SCC

Until Completion of the whole of the Works;

9 On completion of the whole of the Works: Half the Total

amount retained Shall be repaid to the Contractor & Half

when the Defects Liability Period has passed & The

Engineer has certified that All Defects notified by the

Engineer to the Contractor before the end of this period

have been corrected.

Contd...

On Completion of the whole Works, the Contractor may

substitute retention money with an “on demand” Bank

guarantee.
 49. Liquidated Damages
The Contractor shall pay: Liquidated damages to the Employer
At the rate/day stated in the SCC For each day that The
Completion Date is later than the Intended Completion Date.

The total amount of liquidated damages shall not exceed the

amount defined in the SCC
Contd…

9 The Employer may deduct liquidated damages from

payments due to the Contractor.

9 Payment of liquidated damages shall not affect the

Contractor’s liabilities.
9 If the Intended Completion Date: is extended after
liquidated damages have been paid, The Engineer shall
correct Any overpayment of liquidated damages By the
Contractor By adjusting the next payment certificate.

9 The Contractor shall be paid interest on the overpayment,

Calculated from the date of payment to the date of
repayment,
 50. Bonus

9 The Contractor shall be Paid a Bonus Calculated at the

rate/calendar day Stated in the SCC For each day {Less any
days for which the Contractor is paid for acceleration} That
the Completion is earlier than the Intended Completion
Date.

9 The Engineer shall certify that The Works are complete,

 51. Advance Payment

The Employer shall make:

Advance payment to the Contractor

Of the amount stated in the SCC
By the date stated in the SCC,
Against provision by the Contractor

Of an Unconditional Bank Guarantee

The Advance Guarantee Bond Should be:
In a form & by a bank acceptable to the Employer,
Denominated in Ethiopian Birr
In the amount of the advance payment.
The Guarantee shall remain effective:
Until the advance payment has been repaid,
But the amount of the Guarantee
Shall be progressively reduced
By the amounts repaid by the Contractor.

Interest will not be charged on the advance payment.

The Contractor is to use the advance payment Only to pay for:

Equipment, Plant, Materials, & mobilization expenses

Required specifically for execution of the Contract.

The Contractor shall Demonstrate that Advance payment has

been used In this way by supplying copies of invoices/documents

The advance payment shall be Repaid by deducting

proportionate amounts From payments otherwise due to the

Contractor, Following the schedule of completed percentages of

the Works on a payment basis.

No account shall be taken of the advance payment or its

repayment in assessing: Valuations of work done, Variations,

price adjustments, Compensation Events, Bonuses, or

Liquidated Damages.
 [Link]

The Contract Security Shall be provided to the Employer No

later than 15 days After Receipt of the Letter of Acceptance &

Shall be issued in the form of: A Bank Guarantee, or for

Ethiopian Contractors only in the form of a Performance Bond.

9 The Contract Security shall be Issued in the format

specified In the contract & In an amount specified in the

SCC & By a bank or surety acceptable to the Employer &

denominated in Ethiopian Birr.

9 The Contract Security shall be valid until A date 28 days

from the date of issue of the Certificate of Completion in the

case of a Bank Guarantee & Until one year from the date of

issue of the Certificate of Completion in the case of a

Performance Bond.
 Assignment No 1

Prepare a presentation of at least 10

minutes duration, in any of the
already covered portions

To be presented individually
Last date for presentation: 26th Feb
 [Link]
If applicable:

The Day- works rates in the Contractor’s Bid Shall be used, for

small additional Amounts of work, only when the Engineer has

given written instructions, in advance for additional work to be

paid for in that way.

All work to be paid for as Dayworks:

9 Shall be recorded by the Contractor, on forms approved by

the Engineer.

9 Each completed form shall be verified & signed by the

Engineer within two days of the work being done.

9 The Contractor shall be paid for Dayworks subject to

obtaining signed Dayworks forms.
 [Link] of Repairs
Loss/ damage to the Works/ Materials to be incorporated in the

Works b/n the Start Date & The end of The Defects

Correction periods Shall be remedied by the Contractor at the

Contractor’s cost if the loss or damage arises from the

Contractor’s acts/ omissions.

 55-Completion
The Contractor shall request the Engineer to issue a certificate
of Completion of the Works, & The Engineer will do so up on
deciding that the work is completed.

56 Taking over
The Employer shall take over the Site & The Works within 7
days of The Engineer’s issuing a Certificate of Completion.
 57. Final Account

The Contractor shall supply the Engineer with a detailed

Account of The Total Amount that the Contractor considers
payable under the Contract before the end of the Defects
Liability Period.

The Engineer shall issue a defects Liability Certificate &

Certify any final payment that is due to the Contractor within
60 days of receiving the Contractor’s account, if it is correct &
complete.
If it is not Correct:

9 The Engineer shall issue within 60 days a schedule that

states the scope of the corrections or additions that are
necessary.

9 If the Final Account is still unsatisfactory after it has been

resubmitted, The Engineer shall decide on the amount
payable to the Contractor & issue a payment certificate.
 [Link] & Maintenance Manuals

9 If “as built” Drawings &/or O & M manuals are required,

the Contractor shall supply them by the dates stated in the
SCC.

9 If not supplied Accordingly, the Engineer shall withhold the

amount stated in the SCC from payments due to the
Contractor;
 [Link]

The Employer or The Contractor may terminate the

Contract, if Either party causes a fundamental breach of
the Contract.
 Fundamental breaches
of Contract shall
include, but shall not be
limited to, the
following:
9 The Contractor stops work for 28 days when no
stoppage of work is shown on the current Program &
The stoppage has not been authorized by the Engineer;

9 The Engineer instructs the Contractor to delay the

progress of the Works, & the instruction is not
withdrawn within 28 days;
9 The Employer or the Contractor is made Bankrupt or
Goes into liquidation other than for a reconstruction or
amalgamation;

9 The Contractor does not maintain a Security, which is

required;

9 A certified payment by the Engineer is not paid by the

Employer to the Contractor within 90 days of the date
of the Engineer’s certificate;
9 The Engineer gives Notice that failure to correct a
particular Defect is a fundamental breach of Contract
& The Contractor fails to correct it within a reasonable
period of time set by the Engineer;

9 The Contractor has delayed the Completion of the

Works by the number of days for which The maximum
amount of Liquidated damages can be paid;
If the Contractor, in the judgment of the Employer Has
engaged in
Corrupt,
Fraudulent,
Collusive
or
Coercive practices

in competing for / in executing the Contract.

"Corrupt practice" means the:
Offering,
Giving,
Receiving or
Soliciting,

Directly or indirectly, of anything of value to influence the

action of a public official in the procurement process or in
contract execution.
 "Fraudulent practice" means:

A misrepresentation of facts in order to influence a

procurement process or the execution of a contract;

“Collusive practices” means:

A scheme/arrangement b/n two/more Bidders, with or

without the knowledge of the Employer, designed to
establish prices at artificial, noncompetitive levels
 “Coercive practices” means:

Harming/threatening to harm, directly/indirectly,

persons/their property to influence their participation
in a procurement process, or affect the execution of a
contract
9 When either party to the Contract Gives notice of a
breach of Contract to the Engineer For a cause other
than wrong practices cited above, The Engineer shall
decide whether the breach is fundamental or not.

9 Despite the above, the Employer may terminate the

Contract for convenience.
If the Contract is terminated The Contractor shall stop

work immediately, make the Site safe & secure, & Leave

the Site as soon as reasonably possible;

 [Link] upon Termination

If the Contract is terminated because of A fundamental

breach of Contract by the Contractor:

9 The Engineer shall issue: A certificate For the value of the

work done & Materials ordered Less advance payments

Received up to the date of the issue of the certificate & Less

the the percentage to apply to the value of the work not

completed, as indicated in the SCC

9 Additional Liquidated Damages Shall Not Apply

If the total amount due to the Employer Exceeds any

payment due to the Contractor, The difference shall be a

debt payable to the Employer.

If the Contract is terminated for the Employer’s

convenience/Because of a fundamental breach of Contract

by the Employer:

The Engineer shall issue: A certificate for:

 The value of the work done,
Materials ordered,
The reasonable cost of removal of Equipment,
Repatriation of the Contractor’s personnel Employed
solely on the Works,
&
The Contractor’s costs of protecting/ securing the
Works, &
Less advance payments received up to the date of the
certificate.
 [Link]

All Materials on the Site,

Plant,
Equipment,
Temporary Works,
&
Works
Shall be deemed to be the property of the Employer: if the
Contract is terminated because of the Contractor’s default
 62. Release from Performance

If the Contract is Frustrated by the outbreak of war or By

any other event Entirely outside the control of either

party, The Engineer shall certify that: The Contract has

been frustrated.
9 The Contractor shall make the Site safe & Stop work as

quickly as possible After receiving this certificate &

Shall be paid for all work carried out Before receiving it

& For any work carried out afterwards to which, a

commitment was made.

 The Special conditions of Contract,
PPA-2006 Version
The following SCC shall supplement the GCC

Whenever there is a conflict, the provisions herein shall

prevail over those in the GCC
 GCC 2.3
The following documents also form part of the Contract:
[list any other documents e.g. schedule of information
provided by the Contractor].

GCC 3.1
The language of the Contract is English and the law
governing the Contract is that of the Federal Democratic
Republic of Ethiopia. [Amend if an alternative language or
law is to be used].
 GCC 11.1
The Employer’s risks are as specified in the GCC.
[Amend if the risks in the GCC are to be modified].

GCC 25.3
The institution whose arbitration procedures shall be
used is: [insert name of institution ]
Arbitration shall take place at: [state place e.g. Addis
Ababa or any other convenient location or delete if
arbitration is not applicable]

Where arbitration is not being used, replace the text

with “Arbitration shall not be used under this contract
& disputes shall be resolved in accordance with GCC
25.1”.
Additional Optional Clauses in “PPA’s SCC

GCC Clause (4) Engineer’s Decisions

If it is desired that the limitations on the Engineer’s
authority be more clearly defined, then: The following may
be used instead of the text in the SBD:

“The Engineer shall obtain the specific approval of the

Employer in writing before taking any of the following
actions specified in the General Conditions of Contract:
¾Certifying additional costs under Clause 44;

¾Determining an extension of the Completion Date under

Clause 28;

¾Issuing a variation order under Clause 40

¾Fixing rates under Clause 40;

¾Ordering suspension or termination under Clause 59;

 GCC Clause (9) Personnel
Unskilled & Semi-Skilled Labour

Only Ethiopian Nationals shall be employed as unskilled

labour/ semi-skilled labour unless the Contractor can
demonstrate that no suitably trained Ethiopian Nationals
are available.
The Contractor shall pay rates of wages & observe
employment conditions not less favorable than those
established for the trade & industry where the work is being
carried out.

In the absence of any established rates in the locality, the

Contractor shall follow those by other employers for similar
trades.
 Burial of the Dead

The Contractor shall be responsible:

For the transport to his /her home of

any expatriate employee/members of their families
who may die in Ethiopia.

The Contractor shall be responsible for arrangements for

the burial of local employees who may die while engaged
upon the Works.
 Visas and Permits

The Contractor shall be responsible for:

All arrangements & costs of obtaining visas,

Work permits and other documents For his employees
&
Shall comply with all immigration and residence
regulations of Ethiopia.
 Repatriation of Employees

The Contractor shall be responsible:

For repatriation of all non-Ethiopian national employees to

their country of residence or to their point of recruitment &

for their maintenance until the time of their return.

 GCC Clause (19) Safety

Safety Officer
The Contractor shall employ:
A full-time Qualified Safety Officer
On site until the Works have been completed.
The Safety Officer shall be responsible for:

Compliance with the Contractor’s Site Safety Plan

By all employees and shall hold
Regular safety meetings with all employees.

Shall be authorized to halt any unsafe working practices on

site
 GCC Clause (55) Completion

In order that the Engineer may certify Completion of the

Works, the Works shall be:

Capable of being used for the purpose intended.

This shall not necessarily include reinstatement of ground

or surfaces unless the reinstatement is required to ensure the
safety and convenience of the public or others.
 Care of the Environment

The Contractor shall:

Execute the Works in an environmentally friendly manner

&
Shall avoid all unnecessary damage to property and flora.

All waste material shall be disposed of in a proper manner

to the satisfaction of the Engineer.
 Confidentiality
9 The Contractor shall treat The Contract & everything
in connection with it as private & confidential.

9 In particular the Contractor Shall not publish or issue

any information or Photograph concerning the Works &
Shall not use the site for any commercial purpose Except
with the consent of the Engineer & subject to any
conditions he may impose.
 Relation of GCC/SCC to Laws, Codes
& Standards

The Civil Code of Ethiopia-1960 (The Law) explicitly refers

the importance of GCC/SCC;
Art. 3135

Model Specifications, General clauses & conditions & common

directives may be drawn up by each interested administrative
authority & may be declared to be applicable;
Art. 3136. -2. Definition

Model specifications: Constitute standard specifications,

formulated in advance and in a General way, for the special
consideration of public services.

General clauses and conditions: fixes the provisions applicable

to all / some of the contracts concluded by a specified
administrative authority.

Common directives: fixes the technical provisions applicable

 Art. 3137

The provisions of General clauses & conditions:

Concerning the manner in which A contract is to be

concluded May be quoted by the candidates to the contract;

 Art. 3138. - 2. Contents of
contract
The provisions of Model specifications, General
Clauses & Conditions or Common directives,
Concerning the Interpretation, Contents & Execution
of A contract Shall not apply to a specified contract
unless such contract expressly makes reference thereto.
 Art. 3139. - Modification to specifications

Where the rights & obligations of the parties Are

determined by Reference to specifications, General clauses
and conditions or Common directives, Such specifications,
clauses, conditions and directives shall be considered as they
existed at the time when the contract was concluded.
The rights & obligations of the contracting parties Shall

not be affected by modifications subsequently made to such

specifications, clauses, conditions & directives.

The GCC clause 16 of PPA states that:

9 “The Contractor shall construct and install the Works

in accordance with the Specifications & Drawings”

9 Specifications are derived from acceptable codes and

standards, Hence, signifying the direct relevance of
GCC to codes and standards.
The GCC Clause 23 of PPA states that:

“The Contractor shall carry out all instructions of the

Engineer, which comply with the applicable laws where
the Site is located”,

Signifying the importance of observing other applicable

relevant laws during execution of construction
activities.
 Contractual

Obligation/Liability
Contractual liability: Is liability resulting from A
contract.

As the construction industry heads toward the next

century, professional liability increasingly will become a

significant source of exposure;

In general understanding of:

9 Basic risk management is essential for all construction

participants Before entering into a contract:

9 Understanding how responsibilities, risks, & costs are to

be allocated Between the owner & all others involved in
the project is highly crucial;
There are 3 ways to handle construction-related risks:

(1) Transfer the risk to other construction entities

through contracts;
(2) Mitigate or eliminate the risk by modifying the
behavior; or
(3) Purchasing insurance.

Historically, insurance companies have played a significant

role in such protections.
 Points to be Assessed For Choosing The Best
insurance company:

9Coverage- Which company offers the best coverage

9Limits & Deductibles: the policy imposes per

claim/occurrence limit restricting the amount of coverage
available for each claim;

9Stability: How long has the insurer been in the particular

business
9Solvency: Is the insurer economically viable & capable of
withstanding changes;

9Price: The premiums required;

9Underwriting: The company accept poor or average risks?

9 Claim Service: The company have a history of complaints

about its claims handling;
 Liability Insurance in the Construction
Industry- USA Experience

The 2 main types of insurance Policies available In

connection with Engineering in USA are:

Commercial General Liability insurance policies (CGL)

&
Professional liability insurance policies. (PL)
 Commercial General Liability Insurance (CGL)

Typically provides coverage for 4 types of damages:

(1) Bodily injury; {Sickness, Death}

(2) Property damage;{Physical injury/Loss of use of property}
(3) Personal injury”; {False arrest, Prosecution}
(4)Advertising injury {Defamation, Assault of privacy}
 Professional Liability Insurance Policy

9 Sometimes referred as “Errors & Omissions” insurance.

9 Designed to insure Members of a particular professional

group Against liability arising out of a special risk
Inherent in the practice of the profession.
 Professional Liability Exposures

9Design errors.
9Contractual/vicarious/contingent liability
9Environmental/ Geotechnical damages
9Quality control/quality assurance
9Supervisory issues
9Site health & safety
9Scheduling & coordination
The 2 main duties on the insured are:

The duty to:

Timely notify the insurer of a claim;

&
The duty to cooperate
9 Under a CGL policy, the insured is required to give

timely notice of any complaint as well as any

“occurrence” that may give rise to a court case.

9 Under both CGL and professional liability policies, the

insured has an ongoing duty to cooperate with the insurer.

9 This is particularly relevant when the insurer agrees to

defend the insured.

9 In those circumstances, the insured is expected to assist in
obtaining & producing witnesses & documents, to attend
depositions, and to attend trial.

9 The time an engineer or architect spends in cooperating with

the insured can be very expensive but the insured bears the
expense itself & cannot seek reimbursement from the insurer.
 Indemnity requirements pursuant to the GCC of PPA

Clause 13
The Contractor shall provide, insurance cover for the following
events which are due to the Contractor’s risks:
Loss of/damage to the Works, Plant, & Materials;

Loss of/damage to Equipment;

Loss /damage to property

&
Personal injury or death.
Local Insurance Coverage/ Policies available
To the Construction Industry
I. Contractor’s “All Risks” (C.A.R.) Insurance
II. Erection All Risk (EAR) Insurance
[Link]’s Plant & Machinery (CPM) Insurance
[Link] Breakdown Insurance
V. Boiler & Pressure Vessel Insurance Policy
[Link] Equipment Insurance (EEI)
[Link]’s Compensation
[Link] Indemnity Insurance
[Link] Bonds etc.
 C.A.R. Insurance

9 It is An All Risk policy;

9 It offers Comprehensive & Adequate protection Against loss

or damage In respect of the following:

9 The contract works,

9 Construction plant & equipment and/or construction

machinery,

9 As well as against third-party claims In respect of property

damage or bodily injury Arising in connection with the

execution of a building.
Main Causes of losses under CAR policy are

9 Fire , Lighting & Explosion

9 Natural Perils

9 Theft , Burglary

9 Lack of Skill & Negligence

EAR Insurance
Offers comprehensive & Adequate protection Against all the

risks involved in The:

9 Erection of machinery, plant & steel structures of any kind,

9 As well as third-party claims

In respect of property damage or bodily injury Arising in

connection with the execution of an erection project.

Any sudden & unforeseen loss/damage occurring to the
property insured:

On the erection site

During the period of insurance
will be indemnified.
CPM Insurance
9 This is an insurance of contractor’s plant & machinery on an
annual basis.

9 It covers any loss/damage From any cause whatsoever

occurring at work, At rest/during maintenance operations &
is not limited to a specific construction site.
Contd…

9 The cover does not include Third party legal liability

unless it is incorporated in Contractor's All Risks

(C.A.R.) Insurance.
 Machinery Breakdown Insurance

Was developed to Grant Industry effective insurance cover

For plant, Machinery & Mechanical Equipment At work,

at rest or during maintenance operations.

9 By its very nature, Machinery insurance is “All Risk”
insurance for machinery supplementing the coverage
afforded by Fire insurance.

9 Thus it covers unforeseen & sudden physical loss of

/damage to the insured items necessitating their repair
or replacement.
All types of Machinery, Plant, Mechanical Equipment
&
Apparatus may be covered under Machinery Insurance.

Only those items Having a short service life Compared to

the entire plant Are normally excluded from Machinery

insurance,
9 Machinery insurance cover is Limited to the

insured’s premises & Does not include Third Party

Liability & risks that could be catered in other

policies unless apparently included by endorsements.

Loss /Damage covered under Machinery
insurance is due to:

9 Faulty design
9 Faults at work/in erection
9 Defects in casting and material
9 Faulty operation, lack of skill, negligence, malicious acts
9 Tearing apart on account of centrifugal force
9 Physical explosion, flue gas explosion in boilers
9 Electrical causes like short circuit
9 Shortage of water in boilers
 Boiler & Pressure Vessel Insurance
Policy

It provides cover Against Losses /Damage (other than

by fire)
To any boiler or pressure vessel &
To other property of the insured,
Liability of the insured at law
¾For damage to property not belonging to the insured,

¾ Liability of the insured at law on account of fatal or

non-fatal injuries
¾To any persons other than the insured’s own
employees or workmen or members of the insured’s
family,

Caused by & solely due to explosion or collapse of any

boiler or pressure vessel whilst in the course of
ordinary working.
 Workmen’s
Compensation
9 Covers the insured employees: Against death/bodily injury

by Accident/occupational diseases Occurring at the place

assigned to them For work or arising from their work &

during the time of their work.

9 The insurance can also be extended to provide cover while

the employees are in transit to work & back to their home in

the most uninterrupted route.

Professional
Indemnity
Insurance
9 Insures ‘professional’ persons or firms For their legal

liabilities to third parties Arising from their professional

error & Omission negligence of that of their employees.

9 Not only can they cause bodily injury or damage to property

through their negligence, they can fail to exercise the skill &

care that is expected of them.

 Extra
Contractual
Obligation/
Liability
9 The term "Extra Contractual Obligations" is defined as:

9 Those liabilities not covered under any other provision of the

Contract.

9 Hence: It is imposed by Law not by the contract it self.

Basis of Extra-Contractual Liability:

The basis of extra-contractual liability may

be grouped in 3 manners:
Fault:
Damage resulting from the direct Faults of the person

Vicarious Liability:
When a party is made responsible for the fault of another

Strict Liability:
When the law makes a person liable regardless of his fault.
 Civil Code Art. 2027. –
Sources of Extra-Contractual
Liability.

9 Irrespective of any undertaking on his part, a person shall be

liable for the damage he causes to another by an offence.

9 A person shall be liable, where the law so provides, for the
damage he causes to another by an activity in which he
engages or by an object he possesses.

9 A person shall be liable where a third party for whom he is

answerable in law incurs a liability arising out of an offence
or resulting from the law
 “The Law of extra-contractual liability”

Is a private law

whose purpose is to safeguard

Victims of damage of a wrong from becoming social

burdens.
Construction
Disputes
& Dispute
Resolutions
 Construction Disputes & Dispute Resolutions

Dispute
Any contract question/controversy that must be settled
beyond the jobsite management

Conflict
Serious disagreement about something important

Claim-
A request for compensation for damages incurred by any
party to a contract
A construction claim arises when one party to the

contract has suffered a loss for which the other

party should compensate that party.

PITFALLS IN CONSTRUCTION PROJECTS

9 Insufficient pre-design investigation

9 Defective Design Concept
9 Defective Bid Document
9 Unrealistic Specifications
9 Errors in Drawings
9 Incompetent Sub-contractors
9 Incompetent Supervision ,Materials Control

9 Market Fluctuation

9 Regulatory Agencies : Permits, royalty

9 Laws governing Construction

9 Socio-political Environment

9 Finance Management :Taxes, Overheads, Profits

9 Fast changes in Technology

 Causes for a claim
9The effects of high inflation

9Poor planning/ Scheduling & Estimating Errors

9Incomplete Documentation/ Late, substandard information

9Execution Deficiencies/ Quality/ Poor workmanship

9The Construction Environment/ Site conditions/ Site access

9Changed conditions /Variation/Obtaining approvals

9Ambiguous contract documents/ Contract interpretation

9Quality of design/ Inadequate Design/ & defective
specifications

9Availability of resources

9Lack of team spirit

9Delay in work progress/payment

9Unrealistic expectations by parties

9Site management: scheduling, project management procedures,

quality control, etc
Types of claims
9 Contractual claims.

9 Delay claims.

9 Acceleration claims

9 Change claims

9 Extra work claims

9 Different site conditions claims

9 Different measurement pricing claims

9 Damage claims
 Contractual Claims

Concerns matters with regard to the contract itself.

Includes any disagreement on the responsibility of some

parts that are not included in the documents.

Main reason of these types of claims is poorly written

contracts.
 Delay Claim:

Subdivided into 3 main types:

Excusable delay:

One for which a time extension is granted.

Neither the owner nor the contractor is responsible.

Include acts of God, war, fires, unusually severe weather, etc

Compensable delays:
Are those for which the contractor is entitled to
compensation.
Often caused by owner & it can include unreasonable
suspension of work, changes in the contract, extra work, etc.

Inexcusable delays:

Represent problems in the contractor’s organization

Lack of management or financial capability, sub-contractor
caused delays, etc.
 Acceleration Claims

9 Refers to the owners directing the contractor to

accelerate his performance so as to complete the project

at an earlier date to the contract.

Changes claims:
9 Such changes might have an affect in value
addition/deletions from the contract- Modifications of
the work.

9 Such changes start from the needs of owner & sometimes

result from a discovery of design error.

9 Time of ordering changes is very important.

 Extra Work Claims

9 Any work that is ordered after construction has started

{was not included in the original contract}.

9 Is a result of a clarification of the contract documents.

9 However, the contractor believes that he is performing

extra work, while the owner believes the work was part
of original contract.
 Difference in Pricing & Measuring Claims

9 Deals with disagreement regarding measurements at the

final stage in the construction.

9 Includes the differences in pricing of some of the materials.

9 Also, change & the extra work create some differences in

pricing.
 Different Site Conditions Claims

A changed condition refers to some physical aspect of the

project or its site that differs:

Materially from the indicated by the contract documents

or

That is of an unusual & differs materially from the

conditions ordinarily encountered.
 Damage Claims

9 Property damages may occur due to the act of the owner

or due to safety related problems.

9 This type of claims is very rare because usually

contractors have the total responsibility for the site.

Normally 3 types of Disputes occur in
Construction Contracts

Disputes due to:

Employer’s defaults in performance

Contractor’s defaults in performance

Reasons beyond the control of both parties

Effects of Conflicts/Disputes

Construction disputes, when not resolved in a timely

manner become very expensive:

{Finances, personnel, time, & opportunity costs}

The visible expenses
(Attorneys, expert witnesses, the dispute resolution
process itself)

The less visible costs

(e.g. Company resources assigned to the dispute, lost
business opportunities)
&
The intangible costs
(e.g., damage to business relationships)
 Causes for Rejection of Valid claims

9 Lack of issuing a timely notice

9 The claim was late

9 Contract procedures were not followed

9 Proper records were not kept

9 Does not establish any valid entitlement under the

contract

9 Inadequate information to verify the claim

 Preparation by the claimant for a
disputed claim should involve

9 An executive summary of the claim

9 An explanation of how the events giving rise to the

claim relates to the rights in the contract,

9 A chronology of events:

9 A factual narrative with vital supportive documents

Like: Contract & specification provisions, minutes,

instructions, correspondences, photographs,

investigation results,
9 A summary of the steps taken to mitigate the situation
that resulted in the claim;

9 A discussion of the applicable legal principles &

contentions;

9 Calculations & justifications for the amounts claimed,

9 Details of the payment, extensions of time, for the

damages being sought;
 Disputes
Resolution
The best practices for designing dispute resolution systems
include:

9 Flexibility,

9 Early intervention,

9 Exhaustion of collaborative options Before resorting to

adjudicatory methods, &

9 Controlled escalation of the dispute by using different

ADR methods.
 Dispute Resolution Mechanism May
Generally be classified as:
9Preventive
{Partnering, Dispute Review Board, Facilitator}

9Non-judgmental
(Amicable) {Negotiation, Mediation, Conciliation}
{Also called ADR}
&
9Judgmental {Adjudication, Arbitration & Litigation}
 Preventive:

9 There are expert neutrals who may be advisors jointly

employed at the beginning of the relationship of the
contracting parties for the purpose of Preventing disputes
rather than Allowing issues to grow until they become A
real disputes.

9 Includes collaborating a unique concept in dispute resolution

that is proactive & which may prevent disputes.
 Partnering:
9 Aims to create a Good relation from the beginning, by
establishing an Atmosphere of Trust & Frankness in
communications.

9 A central objective is to encourage parties to change

from their traditional adversarial relationships to a
team based approach.

9 Involves a workshop meeting, at the commencement of

the contract period, between all those involved.
 Dispute Review Board {DRB}

A DRB usually consists of:

9 3 members, selected by both parties soon after the

award of the contract.

9 For smaller contracts, the panel might be a single

person,
The DRB Outputs consist of:

Written non-binding recommendation for resolution of a

dispute.

The report includes:

An explanation of the DRB’s evaluation of the facts

&
The contract provisions
&
The reasoning that led to its conclusions.
 Facilitator:
9 Neutrals that would assist parties Prevent or resolve
disputes or facilitate decision making.

9 An independent outsider becomes involved in a problem

by giving Assistance to the parties in dispute through a
process of decision making without making any binding
decision for the parties.
Matters that a facilitator may contribute includes:

Information Gathering
Fact-finding,
Holding Meetings,
&
Private consultations.
It is less structured & more flexible.

Facilitators are experts in communication, Negotiation &

Mediation Skills
 Negotiation

Is a bi-partite method of settlement of disputes

without the help or intervention of third parties.

In case of disagreement, the parties sit down across

the table & sort out the problems.
 Mediation:
9 Method of seeking passive help of a third party

9 Essentially the parties sit down for bi-partite

negotiations but the mediator is also present to intervene
should it become necessary.

9 A mediator is a facilitator & Not a decider.

9 He tries to facilitate a resolution.

 Conciliation
9 Method of third party intervention.

9 When the parties fail to resolve a dispute thorough bi-

partite negotiations, they may decide to seek the help of a
Conciliator, who is a third party & enjoys the confidence of
both parties.

9 The Conciliator does not give any judgment as such, but

persuades parties to come to A Settlement.
 Adjudication:
9 When all efforts by parties to Resolve Differences Amicably

have failed, By which time the parties have developed Deep-

rooted adversarial positions in the dispute, Then, a third

party has to listen both sides & Make a judgment.

9 One such method used is Adjudication.

A process whereby the disputants present their cases To
An independent Expert Who then Evaluates The Evidence
According to the Relevant:
9 Law,
9 Rules,
9 Contract &
9 Practice that can be applied Appropriately to the dispute.
&
Gives A Confidential opinion on the likely outcome of the
case if it were to go to the Court or Arbitration.
The disputants Agree Beforehand That:

They will be bound by the opinion of the expert

&
That this decision is binding On the parties
Provisionally until A further decision By A Court of
Law or Arbitration is reached.
 Arbitration

A process where by:

A third party who is independent of parties,

But may be selected by them
Makes an Award determining the dispute.

The Award is binding & Can be Enforced by Courts.

 Arbitration

Settlement of A dispute by the decision:

Not of a Regular Court of Law

But of One or More Persons
Chosen by parties themselves
Who are called Arbitrators.

Is Out-of –Court proceeding where the Arbitrator acts

as a Judge.
 Litigation

Method of Dispute Resolution by a Judicial Authority,

Court of Law, Tribunal or Similar body.

Not Much difference between:

Arbitration & Litigation.

Both are Terrible options to resolve claims or disputes.

Both Methods Are:
Expensive,

Time consuming,

Resource devouring
&
The outcome is unpredictable.
9 The decision is likely to be made by An Arbitrator or a

judge With Little or no Construction Experience.

9 The best benefit of the Threat of Arbitration or Litigation

is that the threat might drive a reluctant party to the

Negotiating Table.
Procedures for Settlement of Disputes in FIDIC

The Settlement of Disputes in the FIDIC document

which is Normally Adopted for major contracts is as
under:
Engineer’s Decision
Dispute Review Board
Amicable Settlement
&
Arbitration
The Stages in Arbitration Proceedings:

Claim from the Contractor (Claimant)

Rejection of the Claim by the Owner (Respondent)
Formation of Dispute
Dispute Resolution (Alternative Dispute Resolution)
Negotiation
Mediation
Conciliation
Failure of Alternative Dispute Resolution
Appointment of Arbitral Tribunal
Sole Arbitrator
Odd number of Arbitrators
Ordinarily three Arbitrators are appointed
One by the Contractor
Other by the Owner
Third Arbitrator {Presiding Arbitrator} Nominated by
The Above Two Arbitrators
Documentation

¾Statement of Claim by the Claimant

¾Defense Statement by the Respondent

¾Rejoinder by the Claimant

Statement of Claim by the Claimant-
Contents:

9Claims in detail

9Interest on the claim amount

9Other relief if any?

9Cost of Arbitration

9Copies of relevant documents

Defense Statement by the Respondent-Contents:

9Counter to the claims in detail

9Cost of Arbitration

9Other relief if any

9Copy of Original Agreement

Defense Statement by the Respondent-Contents:

9Counter to the claims in detail

9Counter claim if any

9Cost of Arbitration

9Other relief if any

9Copy of Original Agreement

Rejoinder by the Claimant-Contents:

9 Reply to the counter of the Respondent including levy

of any damages
Procedure for
Arbitration
Proceedings:
Documents submitted to the Tribunal
Examination of Evidences by the Claimant if any
Examination of Evidences by the Respondent if any

Oral Arguments

9 By the Claimant
9 By the Respondent
9 Rejoinder by the Claimant
Submission of Gist of Arguments by the Claimant &
the Respondent

Internal Meeting of The Arbitral Tribunal

Finalization of the Award

Drafting of the Award on the Stamp Paper

Publishing of Award
Award Format
9 Introduction
9 Formation of Arbitral Tribunal
9 Brief history of the case
9Issues to be addressed by the Arbitrators
9Contention of the Claimant
9Contention of the Respondent
9Analysis by the Arbitral Tribunal
9Formulation of Award
9Payment of Interest
 Setting Aside of Arbitration Award

Can be Set Aside by the Civil Court if there is a proof

that:
9 A party was under some incapacity.

9 The Arbitration Agreement is not valid under law.

9 The party was not given proper notice of the appointment of

Arbitrator or of the Arbitral proceedings or was otherwise
unable to present his case.
.
9 The Arbitral Award deals with A dispute Not falling
within the terms of the submission to Arbitration

9 Contains decisions on Matters beyond the Scope of the

submission to Arbitration.

9 The composition of the Tribunal or Arbitral Procedure Was

not in accordance with the Agreement of the parties
9 If the Court finds that The subject matter of the dispute Is

not capable of settlement by Arbitration Under the law for

the time being in force.

9 The Arbitral Award is in conflict with the Public Policy of

the country.
 The Dispute Resolution Mechanisms As Covered
Under the Civil Code of the Empire of Ethiopia-1960

Art. 3307 Compromise:

A contract whereby the parties, through mutual concessions,

terminate an existing dispute or prevent A dispute arising in the
future.
 Art. 3318-3319 Appointment of A Conciliator

9 The parties may entrust a third party with the mission

of bringing them together &, if possible, Negotiating A
settlement b/n them.

9 The conciliator may be appointed, at the request of the

parties, by An institution or by a third party.

9 The appointed conciliator shall be free to accept or to

refuse his appointment.
 Art. 3322 Power of the Conciliator

9 The conciliator’s powers shall be interpreted restrictively.

9 The parties shall not be bound by the terms of the

compromise drawn up by the conciliator unless they have

expressly undertaken in writing to confirm them.

 Art. 3325 Arbitral Submission

9 Whereby the parties to a dispute entrust its solution to a

third party, the Arbitrator, who undertakes to settle the

dispute in accordance with the principles of law.

9 The Arbitrator may be instructed only to establish a point of

fact without deciding on the legal consequences flowing there

from.
 Art. 3335 Equalities of the parties

The arbitral submission shall not be valid where it places

one of the parties in a privileged position.

Art. 3336 Replacement

Where an arbitrator refuses his appointment, dies, becomes

incapable or resigns, shall be replaced by Other one
Art.3340 Grounds for disqualification of Arbitrator

9 He is not of age,

9 Unsound mind, Ill,

9 For any other reason unable to discharge his function

properly/within a reasonable time.

9 Where there are any circumstances capable of casting doubt
upon his impartiality or independence.

9 Having Accepted his appointment, unduly delays his duties,

9 The Court, May remove him on the application of either

party.
 Dispute Resolution Mechanisms
According to The SBD of PPA

GCC Clauses 1,2,4, &24-26 of The PPA covers

about the roles of:
Engineer,
Adjudicator
&
Arbitrator
 Opinion: -
Principles and
Procedures,
Associations
Almost Every Profession has its codes of ethics to

provide a framework for arriving at Good Ethical

Choices.
 Professional Ethics:

A system of norms to deal with both Morality &

Behavior of professionals in their day to day practice;

Ascribes Moral Responsibility not to An individual,

but to All professionals practicing in A Particular

Profession.
 Engineering Ethics:
The Field of Applied Ethics which Examines & Sets
Standards for Engineers' Obligations to:

The public,
Their clients,
Employers
&
The profession;
 Current Codes of Ethics
9 Many American Engineering Professional Societies have
prepared codes of ethics.

9 The Institution of Civil Engineers (ICE) in the UK has

a code of ethics incorporated into its standards of
conduct.

9 So do The Canadian & Japan Societies of Professional

Engineers

9 These Codes of Ethics Share Many Similarities.

 ASCE:"Fundamental Canons”

9 Engineers shall hold paramount the safety, health &

welfare of the public
9 Perform services only in Areas of Their Competence.
9 Issue public statements only in an objective & truthful
manner.

9 Act in professional matters for each employer As

faithful Agents & Avoid conflicts of interest.
9 Build their professional reputation on the merit of their

services & shall not compete unfairly with others.

9 Act in such a manner as to enhance the honor, integrity, &

dignity of the engineering profession;

9 Shall Act with Zero-Tolerance for bribery, fraud, and

corruption;

9 Provide opportunities for the professional development of

Those Engineers under their supervision."

All:
The ICE's "Code of Professional Conduct"
The Canadian Engineering Code of Ethics
The Japanese Code of Practice

Identify similar ethical values as the ASCE's

&
Likewise places the Good of the Public as the highest
ethics
 Building codes
In USA building codes are developed by well
intentioned people who are actively involved in the
construction industry.

Their purpose is to provide Minimum Standards:

For the protection of Life, Property, Environment,

&
For the Safety and Welfare of the General public
Building Codes are Adopted, Modified & Enforced by
Local Government officials.

Codes are not intended to limit the appropriate use of

materials, appliances, equipment or methods of design or
construction.

Can be accepted if at least equivalent of that prescribed

in the cited code are submitted
 Internationally Recognized Code
Developing Associations
ICC-International Code Council
BOCA - Building Officials & Code Administrators International
ICBO - the International Conference of Building Officials
SBCCI - the Southern Building Code Congress International
NCSBCS - National Conference of States on Building Codes & Standards
NFPA 70: National Electrical Code-

IAPMO: International Association of Plumbing

and Mechanical Officials
OSHA - Occupational Safety and Health
Administration
THE END

Thank You