Practical Use of the FIDIC Contracts: Live Online Training Course
Presented by Andy Hewitt FICCP, FCIOB, FCICES, FQSI
Module 1
Tutorial Webinar
Introduction to the course
Module 1 - Contents
• Presenter
• Introduction to the course
• Introduction to the Red and Yellow forms of contract
• Clause 1 – General Provisions
• Clause 2 – The Employer
• Clause 3 – The Engineer
Course Developer and Presenter: Andy Hewitt
• Over 40 years’ experience in the construction industry
• Worked and lived in United Kingdom, Middle East & Africa
• Worked for contractors, subcontractors, consultants & clients
• Quantity Surveyor, Commercial Manager, Contract Manager, Project Manager, Project
Director, Contracts & Claims Consultant
• Provided training and education to many people and companies internationally
Publications
FebruaryFebruary
Timetable and Modules
• Seven modules presented over a 7-week period:
Date Module Topics
19 May Module 1Introduction to the course. Introduction to the Red and Yellow Books. General Provisions.
The Employer The Engineer.
26 May Module 2 The Contractor.
2 June Module 3 Nominated Subcontractors. Design. Staff and Labour. Plant, Materials and Workmanship.
9 June Module 4 Commencement, Delays and Suspension. Test on Completion. Employer's Taking Over.
16 June Module 5Defect Liability. Tests After Completion. Measurement and Evaluation. Variations and
Adjustments.
23 June Module 6 Contract Price and Payment. Termination by Employer.
30 June Module 7Suspension and Termination by Contractor. Risk and Responsibility. Insurance. Force
Majeure. Claims, Disputes and Arbitration.
• Some clauses are omitted from the course if not used frequently or require little or no
explanation
• This allows us to concentrate on frequently used clauses or those that are often not
understood properly
Contents of the Course
Introduction to the Red and
Yellow Books
For Building and Engineering Works Designed by the Employer (First Edition, 1999)
The Red Book
• Building or engineering works designed by the Employer or by his representative
• The Contractor constructs the Work in accordance with a design
provided by the Employer
• The Works may include some elements to be designed by the
Contractor
• Remeasurable
• ‘The Engineer’ is responsible for administering the Contract
• Balanced risk allocation
• Electrical and/or mechanical plant or building and engineering
• Design and execution
• The Employer provides the requirements
• The Contractor designs and constructs in accordance with the Employer’s Requirements
• Lump sum price
• ‘The Engineer’ is responsible for administering the Contract
• Balanced risk allocation
The Yellow Book
For Plant and Design-Build for Electrical and Mechanical Plant, and for Building and
Engineering Works Designed by the Contractor (First Edition, 1999)
• General Conditions:
o 20 clauses
o 140 sub-clauses
o Appendix
§ General Conditions of Dispute Adjudication Agreement
§ Annex – Procedural Rules
• Guidance for the Preparation of Particular Conditions
o Notes for the Preparation of Tender Documents
A Typical FIDIC Form of Contract
o Notes and guidance on several clauses
o Suggestions and wording for changes to certain clauses
o Suggestions and wording for additional clauses
• Forms
o Example forms of:
§ Parent Company Guarantee
§ Tender Security
§ Performance Security – Demand Guarantee
A Typical FIDIC Form of Contract cont.
§ Advance Payment Guarantee
§ Retention Money Guarantee
§ Payment Guarantee by Employer
§ Letter of Tender
§ Appendix to Tender (gives essential contract information)
§ Contract Agreement
§ Dispute Adjudication Agreement
A Typical FIDIC Form of Contract cont.
Clause 1
General Provisions
Clause 1 – General Provisions
1.1 Definitions
• Lists words and phrases used in the Contract and defines their meaning
• Use the defined words and terms in correspondence, reports, claims and the like
Clause 1 – General Provisions
1.2 Interpretation
• Clarifies the meaning and definition of certain words used in the Contract
Clause 1 – General Provisions
1.3 Communications
• Provides that formal and important communication shall be in writing
• The method and place of delivery of communications shall be stated in the Appendix
to Tender
• Approvals, certificates, consents and determinations shall not be unreasonably
withheld
• Notices and certificates shall be copied to both Parties
Clause 1 – General Provisions
1.5 Priority of Documents
• Documents are mutually explanatory
• Provides a list of documents in order of priority
• In the case of ambiguity or discrepancy, the Engineer shall issue clarifications
Clause 1 – General Provisions
1.8 Care and Supply of Documents
• Specification and Drawings shall be in the custody and care of the Employer (Red Book)
• Contractor’s Documents shall be in the custody and care of the Contractor until taken over
• Includes provisions for the copying of documents to the other Party
• Contractor to keep a copy of the Contract, other documents named in the Specification and communications given under the Contract on the Site. The Employer’s personnel shall have access to the documents
• The Parties are obliged to give notice upon discovering an error or defect in the documents
Clause 1 – General Provisions
1.9 Delayed Drawings or Instructions (Red Book)
• The Contractor shall give notice when the Works are likely to be delayed if necessary
drawings or instructions are not issued within a particular time
• If the Contractor suffers delay or incurs Cost he shall give a further notice and be
entitled to an extension of time and the payment of Cost plus reasonable profit
Clause 1 – General Provisions
1.9 Errors in the Employer’s Requirements (Yellow Book)
• If the Contractor suffers delay or incurs Cost as a result of an error in the Employer’s
Requirements, he shall give notice and be entitled to an extension of time and the
payment of Cost plus reasonable profit
• The test for entitlement is ‘that an experienced Contractor exercising due care would
not have discovered the error when scrutinising the Employer’s Requirements under
Sub-Clause 5.1 (General design Requirements)’
Clause 2
The Employer
Clause 2 – The Employer
2.1 Right of Access to the Site
• The Employer shall give the Contractor right of access to and possession of all parts of the Site
within the time stated in the Appendix to Tender
• The right may not be exclusive
• The Employer may withhold the right or possession until the Performance Security has been
received
• If time is not stated in the Appendix to Tender, the Employer shall give right of access and
possession to enable the Contractor to proceed in accordance with the programme
• If the Contractor suffers delay or incurs Cost, he shall give notice and be entitled to an extension of
time and the payment of Cost plus reasonable profit
Clause 2 – The Employer
2.3 Employer’s Personnel
• The Employer is responsible for ensuring that the Employer's Personnel and the
other contractors:
o Co-operate with the Contractor
o Comply with obligations for safety and environmental protection
Clause 2 – The Employer
2.4 Employer’s Financial Arrangements
• At the request of the Contractor, the Employer shall submit evidence that financial
arrangements have been made and are being maintained which will enable the
Employer to pay the Contract Price
Clause 2 – The Employer
2.5 Employer’s Claims
• The Employer or Engineer shall give notice and particulars of claims that the Employer
is entitled to make under the Contract
• The notice shall be given as soon as practicable after the Employer became aware of
the event or circumstances giving rise to the claim
• The amount may be included as a deduction in the Contract Price and Payment
Certificates
Clause 3
The Engineer
Clause 3 – The Engineer
3.1 Engineer’s Duty and Authority
• The Employer shall appoint the Engineer
• The Engineer shall carry out the duties assigned to him in the Contract
• The Engineer's staff shall include suitably qualified engineers and other professionals who are competent to carry out these duties
• The Engineer shall have no authority to amend the Contract
• The Engineer may exercise the authority attributable to the Engineer as specified in the Contract
• If the Engineer is required to obtain the approval of the Employer before exercising a specified
authority, the requirements shall be stated in the Particular Conditions
Clause 3 – The Engineer
3.1 Engineer’s Duty and Authority cont.
• The Employer undertakes not to impose further constraints on the Engineer's authority
• Whenever the Engineer exercises a specified authority for which the Employer's approval is required, the Employer shall be deemed to have given approval
• The Engineer shall be deemed to act for the Employer
• Engineer has no authority to relieve either Party of any duties, obligations or responsibilities
• Any approval, check, certificate, consent, examination, inspection, instruction, notice, proposal, request, test, or similar act by the Engineer shall not relieve the Contractor from any
responsibility he has under the Contract
Clause 3 – The Engineer
3.2 Delegation by the Engineer
• The Engineer may assign duties and delegate authority to assistants
• Assistant’s authority shall be limited to that delegated
• Assignment shall be in writing to both Parties
• The Engineer shall not delegate the authority to determine any matter in accordance
with Sub-Clause 3.5 (Determinations)
Clause 3 – The Engineer
3.3 Instructions of the Engineer
• The Engineer may issue instructions and additional or modified Drawings which may be necessary
for the execution of the Works
• The Contractor shall only take instructions from the Engineer, or from an assistant to whom the
appropriate authority has been delegated
• If an instruction constitutes a Variation, Clause 13 (Variations and Adjustments) shall apply
• The Contractor shall comply with the instructions
• Instructions shall be in writing
• If oral instructions are given and the Contractor confirms in writing within 2 days and the Engineer
does not reject within 2 days, the confirmation shall constitute the written instruction (Red Book
only)
Clause 3 – The Engineer
3.5 Determinations
• Various Clauses require the Engineer to proceed in accordance with Sub-Clause 3.5
(Determinations)
• The Engineer shall consult with each Party in an endeavour to reach agreement
• If agreement is not achieved, the Engineer shall make a fair determination in accordance with the
Contract, taking due regard of all relevant circumstances
• The Engineer shall give notice to both Parties of each agreement or determination, with supporting
particulars
• Each Party shall give effect to each agreement or determination unless and until revised under
Clause 20 (Claims, Disputes and Arbitration)
Agreement or
determination
required
Agreement?
ENGINEER
Consults with
both parties
ENGINEER
Makes fair
determination
ENGINEER
Notice of Agreement
ENGINEER
Notice of
Determination
Yes
No
Clause 3 – The Engineer
3.5 Determination - Process
Questions?
Thank you
Andy Hewitt
T: +971 (0)50 446 1201
Hewitt Decipher Partnership: www.hewittdecipher.com
Claims Class: www.constructionclaimsclass.com
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