Understanding FIDIC

Understanding FIDIC
Understanding FIDIC explains in simple and practical terms what is often seen as a
very complex range of international engineering and construction contracts.
Covering the FIDIC 2017 Red, Yellow and Silver Books (referred to as “The Rainbow
Suite”), the book gives an overview of all three contracts, including coverage of changes
between the 1999 contracts and the present 2017 suite. FIDIC contracts are widely used
as far afield as Europe, the Middle East, Asia and Australia, and this book provides a
practical yet thorough guide to the key elements that practitioners preparing and ad-
ministering these contracts would need to be aware of.
In his approachable and readable style, Kelvin Hughes covers:
• The obligations and responsibilities of the Employer, the Employer’s Representa-

tive, the Engineer and the Contractor
• Quality and Defects Liability
• Design Responsibility and Liability
• Variations, Measurement and Payment Procedures
• Progress, Delays, Extensions of Time and Completion
• Suspension and Termination
• Insurances
• Employer’s and Contractor’s Claims
• The Dispute Avoidance/Adjudication Board and the Resolution of Disputes
• Tendering
Anyone working with FIDIC contracts whether as the Employer, Employer’s Repre-
sentative, Engineer or Contractor will benefit greatly from this easy-to-read guide to
the Rainbow Suite. Students on professional courses or researching the contracts for
project work will also find this book extremely useful.
Kelvin Hughes is a leading authority on construction contracts and has had substantial
theoretical and practical experience of all contracts, including FIDIC, over a 46-year
working life, including 4 years as a full-time consultant to a major project manage-
ment company drafting a suite of contracts for use on public projects in Qatar, and
was also head of contracts/claims for another major project management company in
Qatar. He has written eight previous practical books on construction contracts.
Understanding Construction
Understanding Quality Assurance in Construction

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H. W. Chung (1999)
Understanding Active Noise Cancellation

Colin H. Hansen (2001)
Understanding the CDM Regulations

Owen Griffiths (2006)
Understanding Building Failures, 4th edition

James Douglas and W. H. Ransom (2013)
Understanding NEC3: Professional Services Contract

Kelvin Hughes (2013)
Understanding NEC3: Engineering and Construction Short Contract

Understanding The Building Regulations 6th edition

Simon Polley (2014)
Understanding JCT Standard Building Contracts 10th edition

David Chappell (2017)
Understanding NEC4: Term Service Contract

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Understanding the NEC4 ECC Contract: A Practical Handbook

Understanding the NEC4 Professional Service Contract

A Practical Handbook
Understanding FIDIC
The Rainbow Suite
Understanding FIDIC
The Rainbow Suite
Kelvin Hughes
First published 2021
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
52 Vanderbilt Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2021 Kelvin Hughes
The right of Kelvin Hughes to be identified as author of this work has been
asserted by him in accordance with sections 77 and 78 of the Copyright, Designs
and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in writing from the
publishers.
Trademark notice: Product or corporate names may be trademarks or registered
trademarks, and are used only for identification and explanation without intent
to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Hughes, Kelvin (Engineering consultant) author.
Title: Understanding FIDIC: the rainbow suite / Kelvin Hughes.
Description: Abingdon, Oxon; New York, NY: Routledge, 2021. |
Series: Understanding construction |
Includes bibliographical references and index.
Identifiers: LCCN 2020033749 (print) | LCCN 2020033750 (ebook) |
ISBN 9780367427917 (hardback) | ISBN 9780367427924 (paperback) |
ISBN 9780367855161 (ebook)
Subjects: LCSH: Construction contracts. | Engineering contracts. |
Architectural contracts. | Standardized terms of contract. |
International Federation of Consulting Engineers.
Classification: LCC K891.B8 H84 2021 (print) |
LCC K891.B8 (ebook) | DDC 343.07/8624—dc23
LC record available at https://lccn.loc.gov/2020033749
LC ebook record available at https://lccn.loc.gov/2020033750
ISBN: 978-0-367-42791-7 (hbk)

ISBN: 978-0-367-42792-4 (pbk)
ISBN: 978-0-367-85516-1 (ebk)
Typeset in Times New Roman
by codeMantra
Contents
Preface vi
Acknowledgements ix
24

79
118
142
161
181
8 Suspension and Termination 203

213
10 Employer’s and Contractor’s Claims 229
11 The Dispute Avoidance/Adjudication Board and the Resolution

of Disputes 255
12 Tendering using the FIDIC 2017 Contracts 266
305
Index 311
Preface
I have been involved with the FIDIC contracts for over 25 years, in the capacity of
contract adviser, contract consultant and trainer, including a period spent in a senior
management role with a major project management consultant in Qatar.
In that time, I have advised on numerous projects using the FIDIC contracts from
as far back as FIDIC 1987 and as far afield as Europe, the Middle East, the Far East
and the Indian subcontinent.
This book provides an overview of FIDIC and its wide range of contracts; consid-
ers the obligations and responsibilities of the Employer, and those that represent the
Employer, in the form of the Engineer or the Employer’s Representative, and also the
Contractor; and then compares the previous FIDIC contracts with the FIDIC 2017
Contracts published in December 2017, followed by a detailed commentary on the new
contracts.
Whilst the FIDIC 2017 Contracts are structurally similar to the FIDIC 1999 Con-
tracts they are considerably larger, with far more pages than the previous editions.
For example, the General Conditions within the Red Book now comprise 106 pages,
whereas the FIDIC 1999 version was 62 pages, and there is a significant increase in
administrative requirements, mostly to achieve greater certainty of project outcome
over a wider range of projects in a wider range of locations.
The author is of the opinion that the FIDIC 2017 Contracts are significantly bet-
ter than the FIDIC 1999 Contracts, particularly in respect of clarity of wording, but
also in the new provisions in terms of programme, quality management, claims and
disputes. The newer contracts are also quite prescriptive, which lends itself to a more
clarified and disciplined approach to managing the contracts. There are those that say
that the FIDIC 2017 Contracts will be administratively burdensome in use, but these
are early days, so there is no clear evidence that this is true.
Certainly, the movement towards the use of the FIDIC 2017 Contracts appears to be
quite slow to date, time will tell as to whether FIDIC users will move from the previous
editions of the contract, particularly the FIDIC 1987 and 1999 Contracts to the newer
Contracts, and also whether users of other contracts will migrate to using FIDIC 2017
Contracts.
Though there are several contracts in the FIDIC family some of which are briefly
reviewed within this book, the book focuses primarily on the “Rainbow Suite”:
• Conditions of Contract for Construction (The “Red Book”) – for building or

engineering works where most of the design is provided by the Employer or his
Representative.
Preface vii
• Conditions of Contract for Plant and Design-Build (The “Yellow Book”) – for the
provision of electrical and/or mechanical plant, and for the design and execution
by the Contractor of building or engineering works.
• Conditions of Contract for EPC/Turnkey Project (The “Silver Book”) – for the
provision on a turnkey basis of a process or power plant, of a factory or similar
facility or of an infrastructure project or other type of development, where the
Contractor takes total responsibility for the design and execution of the project.
Whilst many practitioners still use previous editions of the FIDIC contracts – for ex-
ample, the FIDIC 1995 Orange Book, with which the author was personally involved
on projects in India – this book is primarily aimed at giving guidance to FIDIC 2017
Contract users, and also to a certain extent, FIDIC 1999 Contract users.
Although the structure and content of the FIDIC contracts was changed in 1999,
there are some broad similarities with the previous contracts, and to that end much of
the advice given in this book is of use to all FIDIC contract users.
The book is intended to be of benefit to professionals who are actually using the
FIDIC contracts on live projects, but also to students who need some awareness of
FIDIC contracts as part of their studies. I have also, as with my other books, in several
of the chapters explained subjects such as quality, programme and claims, which may
seem obvious to experienced practitioners, but I have done so in order that students
and less experienced practitioners understand the concepts and principles before re-
viewing those provisions within the FIDIC contracts.
Readers may note the absence of case law within the text of the book. As with my
previous books on NEC Contracts, this is a deliberate policy on my part as I am not
a lawyer, my background being in senior commercial positions within major building
contractors and more recently in senior management with a major project management
company in Qatar, so I felt, and readers may probably agree, that I was unqualified
to quote, and to attempt, a legal review of the contracts with a detailed commentary
on any case law, particularly as the FIDIC contracts are used in such a wide range of
countries and legislations.
In terms of the structure of the book, Chapter 1 provides an overview of the FIDIC
contracts; Chapter 2 provides a comparison of the FIDIC 2017 Contracts with the
previous FIDIC 1999 Contracts; Chapter 3 considers the obligations and responsibili-
ties of the Employer, the Employer’s Representative, the Engineer and the Contractor;
then Chapters 4–11 review the FIDIC 2017 Rainbow Contracts in some detail, high-
lighting the changes from the 1999 to 2017 Contracts, with Chapter 12 considering
tendering under the FIDIC 2017 Contracts.
Note, it is not my intention to provide a detailed “clause by clause” analysis of each
of the FIDIC contracts, but to provide a practical review of the areas covered by the
Contracts, with some commentary on some of the changes within the newer FIDIC
2017 Contracts.
I had originally intended to deal with the FIDIC Red, Yellow and Silver Books as
separate chapters, but the final structure I adopted lessens the risk of repetition, and I
hope lends itself to a more user friendly and readable volume.
Within each chapter I have referred to the Red, Yellow and Silver Books at the same
time, for example:
The Engineer (Employer under the Silver Book), the Engineer (under the Red and
Yellow Book), etc.
viii Preface
I have tended not to quote specific Clause/Sub-Clause numbers unless it is totally
relevant as I am comparing the provisions under the FIDIC Red, Yellow and Silver
Books, and it would be cumbersome to read if you refer simultaneously to the different
clause numbers under the three contracts that, in many cases, have exactly the same
wording.
I have used the Red Book as the baseline, then added Yellow Book and Silver Book
references if they are different to the Red Book. If there is no mention of the Yellow
Book and Silver Book then the reader can assume that the provisions and the relevant
Clauses/Sub-Clauses for these two contracts are the same as for the Red Book.
Kelvin Hughes
July 2020
Acknowledgements
As with all my previous books, I would like to extend my continued and sincere thanks
to my wife Lesley, who as always gives me the love, the time, the inspiration and the
support to fulfil my life’s ambitions.
Also love and thanks to my parents, Maureen and Dennis, who made me who I am,
and I hope in return I continue to make them proud.
I would also like to acknowledge the wisdom, support and friendship of Mr. Seah
Ban Kiat during my time in Qatar, when we dealt with FIDIC contracts, and contracts
derived from FIDIC, and various issues arising from them. We were also part of a
team which drafted our own suite of contracts.
My thanks also got to Seah’s family for their friendship, while my wife and I were
in Qatar.
Finally, I would like to thank Patrick Hetherington of Taylor & Francis Group for
his support and unfailing patience during the writing of this book as I juggled writing,
running a business and my family, amid the COVID-19 lockdown.
1 Overview of FIDIC and its contracts
This chapter provides an overview of FIDIC, and some of the various contracts that
have been published more recently, prior to the FIDIC 2017 Contracts, which are the
subject of this book.
What is FIDIC?
“FIDIC” is the acronym for “Federation Internationale des Ingenieurs-Conseils” (in
English “The International Federation of Consulting Engineers”), which is the lead-
ing body for developing forms of contract for use in the international construction
industry between Employers and Contractors, Contractors and Subcontractors, and
Employers and Consultants and Consultants and Subconsultants.
Of all the contracts in use today, FIDIC is the nearest to a truly “international”
form of contract and is the contract mostly recognised by international funders such
as the World Bank.
The International Federation of Consulting Engineers was founded on 22 July 1913,
following a search for independent consultants for the World Fair Exhibition.
There were 59 participants at the inaugural meeting, with delegates from Austria,
Belgium, Canada, Denmark, France, Germany, Hungary, the Netherlands, Russia,
Switzerland, the United Kingdom and the USA.
Three countries such as Belgium, France and Switzerland decided to found the
Federation, the other countries maintained provisional links during the initial years.
However, due to the World Wars and other major political disturbances, FIDIC
development was slow until the late 1940s. The number of member countries changed
constantly, and all came from Europe.
In 1959, they were joined by Australia, Canada, South Africa and the USA.
The Federation developed gradually over the years into a truly global organisation
with Member Associations representing countries from all regions of the world.
FIDIC also formed a partnership with the World Bank and other Multinational
Development Banks working in the different geographical regions to support the fi-
nancial requirements and international standards to deliver the infrastructure pro-
jects worldwide.
It was later referred to as the “International Federation of Consulting Engineers”
and now has over 100 member countries.
FIDIC publishes various standard contracts to be used for infrastructure projects,
construction works, consultancy services, major plant supplies, etc.
The aim is to have a standard form for international use which tries to achieve a
balance between a comprehensive coverage of the circumstances, problems and ob-
ligations which are likely, but does not try to cover every conceivable problem, an
impossible task which would result in an unmanageable document.
Written contracts are all about allocating risk and obligations and providing the
appropriate machinery for resolving issues likely to be encountered.
Each of the FIDIC contracts applies to a specific type of work and/or procurement
method and is characterised by an individual colour label e.g. Red Book, Yellow Book
and Silver Book (referred to as “The Rainbow Suite), which form the subject area for
this book, though other FIDIC contracts will be briefly reviewed.
The development of the FIDIC contracts

It is not proposed within this book to provide a full history, and to review all of the
FIDIC contracts since its inception, but the more recent contracts, particularly the
ones with which the author is familiar, are covered.
Note that the FIDIC contracts were originally modelled on the Institution of Civil
Engineers (ICE) Contracts, which were in turn modelled on the Association of Con-
sulting Engineers Contracts. The current day FIDIC contracts were modelled on the
various contracts below.
Conditions of Contract for Works of Civil Engineering Construction:

The Red Book (1987)
This contract is in two parts:
• Part I contains General Conditions, a Form of Tender with Appendix and a Form
of Agreement. The Appendix is a part of the Form of Tender and makes specific
provision for the insertion of details, which are essential and yet unique to each
project.
There are 72 clauses within the General Conditions.
• Part II contains Conditions of Particular Application with Guidelines for Prepa-
ration of Part II Clauses.
The Form of Tender and the Agreement provide that the Agreement should comprise
the Letter of Acceptance, the Conditions of Contract, the Specification, the Drawings
and the priced Bill of Quantities. If another document is to be given the same status
this should be clearly stated in the Agreement.
The Priority of Documents is in the following order:
1 The Contract Agreement

2 The Letter of Acceptance
3 The Tender
4 Part II of the Conditions (The Particular Conditions)
5 Part I of the Conditions (The General Conditions)
6 Any other document forming part of the Contract
Overview of FIDIC and its contracts 3
The Form of Tender provides for the undertaking to provide a Performance Security
within 28 days of the Letter of Acceptance. However, the final decision as to whether
to have a Performance Security is optional.
• The Contractor’s obligation is to construct the Works according to the Employer’s

Consultant’s design, although some design responsibility may be reallocated to
the Contractor.
• “Necessary” levels of supervision must be provided by the Contractor, they should
be suitably conversant with the nature of the works to be undertaken.
• The Contractor or a competent agent approved by the Engineer should be con-
stantly kept on the works to receive directions and instructions on behalf of the
Contractor.
• The Contractor is responsible for setting out and for the correctness of positioning
levels, etc.
• The submission of a programme is an express requirement of the FIDIC Condi-
tions (Clause 14).
• The Contractor becomes responsible for the care of the Works from the Works
Commencement Date to the date of issue of a Taking-Over Certificate.
• An Engineer is needed who can act impartially between the parties in order to
interpret obligations and responsibilities as circumstances change.
• The Engineer will normally appoint the Resident Engineer or Clerk of Works to
be the Engineer’s Representative.
• Contracts made under the FIDIC Conditions are remeasure and value contracts
based on a Bill of Quantities. None of the documents state what the work will even-
tually cost. This is not a lump sum contract but one where the price is calculated
on completion and remeasurement.
• The Contractor is deemed to have inspected and examined the site and its surroundings.
• Also, the Contractor is deemed to have satisfied himself as to the nature of the
ground and sub-soil but only so far as is “practicable”.
• Adverse Physical Conditions and Artificial Obstructions require the value of the
Contract works to be ascertained and determined by the Engineer, and except as
otherwise stated, to do so by a measurement.
• Variations are required to be valued by the Engineer in accordance with principles
stated and after consultation with the Contractor, which require:
• Works similar to that in the Bill of Quantities are priced at the same rates.
• So far as reasonable Bill rates are to be used as the basis for pricing work.
• Where neither of the above methods can be used, then a fair valuation shall be
made.
• Valuation on a daywork basis where the work is so ordered.
• Clause 60 sets out the scheme for payment which depends on the submission by
the Contractor of monthly statements. The Contractor is required to set out the
amounts under heads (a) to (e) of Clause 60.1. Other than for unfixed materials, it
envisages that the amounts are estimated.
• The Contractor’s rights to claim additional payment pursuant to the FIDIC Con-
ditions are set out in various clauses. The categories for such payment include:
• Cost-based claims (Cost only);
• Value-based claims (Cost plus Profit);
• Other claims as defined in the Conditions.
• If the Employer wishes the Contractor to complete certain parts of the works
before the whole and to recover liquidated and ascertain damages for failure to
achieve the same, then the Sectional Completion provision in the Appendix should
be used. If it is used, then the Extension of Time mechanism in Clause 44 should
be applied to each Section.
• Clause 44 deals with Extensions of Time applies to the Works and Sections and
deals with time only, not money.
• Variations;
• Any cause of delay referred to in the Conditions;
• Exceptionally adverse climactic conditions;
• Any delay, impediment or prevention by Employer;
• Special circumstances.
• There are provisions for liquidated damages for delay in Completion.
• There are also provisions for Resolution of Disputes and Arbitration.
The Orange Book: Conditions of Contract for Design-Build and

Turnkey (1st Ed 1995)
The Conditions of Contract for Design-Build and Turnkey (The “Orange Book”) is rec-
ommended for the provision of electrical and/or mechanical plant, and for the design
and execution of building or Employer’s Representative works. The Contractor de-
signs and provides in accordance with the Employer’s Requirements.
Note that the FIDIC 1999 Contracts were structured on the same basis as the FIDIC
1995 Conditions of Contract for Design-Build and Turnkey (The “Orange Book”), so it
is worth considering this Contract in a little detail and readers will see how the FIDIC
1999 Yellow Book developed.
The Orange Book was published in 1995 due to a growing trend towards design and
build projects, and at that time FIDIC recognised that the world of contract drafting
was moving on.
The Orange Book contained Dispute Adjudication Board (DAB) provisions, whilst
the Red Book had, in 1996, a DAB supplement published by FIDIC.
The structure of the Orange Book is as follows:
1 The Contract

10 Employer’s Taking Over
11 Tests after Completion
12 Defects Liability
13 Contract Price and Payment
14 Variations
15 Default of Contractor

The Priority of Documents under the Orange Book in case of ambiguities or inconsist-
encies is in the following order of importance:
a The Contract Agreement

b The Letter of Acceptance
c The Employer’s Requirements
d The Tender
e The Conditions of Contract, Part II
f The Conditions of Contract, Part I
g The Schedules
h The Contractor’s Proposal
Some relevant Clauses are as follows:
Clause 3: The employer’s representative

The Employer’s Representative is the person appointed by the Employer to act on his
behalf and is named in the Appendix to Tender.
The Employer’s Representative and his staff must be suitably qualified and compe-
tent to carry out their duties. If there is any limitation on the Employer’s Represent-
ative’s level of authority, for example, the need to obtain the Employer’s approval on
major changes then this must be included within the contract.
Clause 4: The contractor

Clause 4 covers many of the Contractor’s general obligations.
Sub-Clause 4.1 states the Contractor’s obligation to execute the Works in accidence
with the Contract including compliance with the Employer’s Requirements, Contrac-
tor’s Proposal and Schedules.
Sub-Clause 4.3 describes the role of the Contractor’s Representative who has all the
authority necessary to act on the Contractor’s behalf and his whole time to running
the project.
Under Sub-Clause 4.9, the Employer is deemed to have made available all relevant data
in his possession on sub-surface and hydrological conditions by the Base Date, which is
28 days before the date of submission of the Tender. Note that the Employer is required to
make available any information he has, not to do an extensive site investigation himself!
The Contractor is responsible for interpreting the data and shall be deemed to have
inspected and examined the Site, its surroundings and other available information,
and satisfied himself on matters such as sub-surface conditions, hydrological and cli-
mactic conditions and the extent and nature of the work and works.
“Deemed” does not actually mean that the Contractor MUST visit the Site, but that
he is “fixed with the knowledge” as if he had….there is a subtle difference!
Sub-Clause 4.11 defines “unforeseeable” as “not reasonably foreseeable by an expe-
rienced Contractor by the date for submission of the Tender”.
If the Contractor encounters something which is unforeseeable he notifies the Em-
ployer’s Representative who may award an extension of time and additional cost.
Sub-Clause 4.14 covers the provision of programmes showing how the Contractor
proposes to execute the Works. Each such programme is to be supported by a report
describing the methods that the Contractor proposes to adopt.
The Contractor is required to submit a programme to the Employer’s Representa-
tive within the time stated in the Appendix to Tender.
The programme is required to show:
a The order in which the Contractor proposes to carry out the Works (including de-
sign, procurement, manufacture, delivery, installation, testing and commissioning);
b All major events and activities in the production of Construction Documents;
c Periods for pre-construction reviews and for submissions, approvals and consents;
and
d The sequence of tests specified in the Contract;
The contract describes the content of the Contractor’s programme which should include
order and sequence, timing of tests, method statement and details of resource levels.
Monthly progress reports are to be prepared by the Contractor and six copies sub-
mitted to the Employer’s Representative. The contract prescribes the content of each
report which includes:
a Photographs and detailed descriptions of progress including each stage of design,

procurement, manufacture, delivery to Site, construction, erection, testing and
commissioning;
b Charts showing the status of Construction Documents, purchase orders, manu-
facture and construction;
c For the manufacture of each main item of Plant and Materials, name of manu-
facturer, manufacture location, percentage progress and expected dates of com-
mencement of manufacture, inspection, tests and delivery;
d Records of personnel and Contractor’s Equipment on Site;
e Copies of quality assurance documents, test results, etc.;
f Safety statistics including details of hazardous incidents and activities related to
environmental aspects;
g Comparisons of actual and planned progress with details of any aspects which
may jeopardise completion.
Clause 5: Design
The Contractor is responsible for carrying out the design of the Works. He is required
to submit the name of each designer, design Subcontractor to the Employer’s Repre-
sentative and gain prior consent.
The Contractor “holds himself” as having the experience and capability necessary
for the design.
The Contractor is to prepare and update a complete set of “as built” records and
keep them on Site. Two copies are to be submitted to the Employer’s Representative
prior to commencement of the Tests on Completion.
In addition, the Contractor must submit “as built” drawings of the Works which
shall be submitted to the Employer’s Representative for his inspection.
Prior to the issue of any Taking-Over Certificate the Contractor shall submit to
the Employer’s Representative one microfiche copy, one full size original copy and
six printed copies of the relevant “as built” drawings, and any further Construction
Docents stated in the Employer’s Requirements. NB: The Works are not considered
complete until this is done.
Clause 8: Commencement, delays and suspension

Sub-Clause 8.4 defines the Contractor’s entitlement to extensions of time.
There are five grounds for extension of time:
a A Variation (unless an adjustment to the Time for Completion is agreed under

Sub-Clause 14.3);
b A Force Majeure event (as defined in Sub-Clause 19.1);
c A cause of delay giving rise to an entitlement under the contract;
d Physical conditions or circumstances on the Site which are exceptionally adverse
and not foreseeable by an experienced Contractor; or
e Any delay, impediment or prevention by the Employer.
If the Contractor fails to comply with Sub-Clause 8.2 i.e. to complete within the Time
for Completion, he must pay to the Employer the relevant sum stated in the Appendix
to Tender for every day or part of a day elapsed between the relevant Time for Comple-
tion and the date stated in the Taking-Over Certificate. Except that the total payment
may be limited within the Appendix to Tender.
In the event that an extension of time is granted under Sub-Clause 8.3, the amount
shall be recalculated accordingly and any over payment refunded.
At any time after the Employer has become entitled to liquidated damages the Em-
ployer’s Representative may give notice to the Contractor under Sub-Clause 15.2, re-
quiring the Contractor to complete within a reasonable time for completion.
Clause 9: Tests on completion

The Contractor is required to carry out all Tests on Completion. He has to give the Em-
ployer’s Representative not less than 21 days’ notice prior to each Test on Completion.
Unless otherwise agreed the Tests shall be carried out within 14 days after this date.
In considering the results of the Tests on Completion, the Employer’s Representa-
tive makes allowances for the effect of any use of the Works by the Employer on the
performance of the Works. As soon as the Works or a Section has passed the Tests on
Completion the Contractor provides the Employer’s Representative and the Employer
with a certified report of the Test results.
Clause 10: Taking over of the works and sections
The Works are taken over by the Employer when they have been completed in accord-
ance with the contract and have passed the Tests on Completion, and a Taking-Over
Certificate has been issued. The Contractor may apply by notice to the Employer’s Rep-
resentative for a Taking-Over Certificate not earlier than 14 days prior to completion.
The Employer’s Representative shall within 28 days after receiving the Contractor’s
application:
a Issue the Taking-Over Certificate to the Contractor stating the date on which the
works were completed including passing the Tests on Completion.
b Reject the application giving his reasons and specifying the work required to be
done by the Contractor to enable the Taking-Over Certificate to be issued, the
Contractor then completes such work before issuing a further notice under this
Sub-Clause.
If the Employer’s Representative fails to either issue the Taking-Over Certificate or to

reject the Contractor’s application within 28 days, and the Works are substantially in
accordance with the Contract, the Taking-Over Certificate shall be deemed to have
been issued.
Clause 12: Defects liability

Defects Liability obligations are specified in Clause 12.
The issue of the Performance Certificate confirms that the Contractor has fulfilled
all his obligations under the contract. The Certificate is issued by the date 28 days
after the expiry of the Contract Period or as soon after such date as the Contractor
has provided all the Construction Documents and completed and tested all the Works
including remedying any defects. Only the Performance Certificate shall constitute
approval of the Works.
Clause 13: The contract price

Unless otherwise stated in Part II:
a Payment for the Works shall be on a lump sum basis.

b The Contract Price shall not be adjusted for changes in the cost of labour, materi-
als or other matters.
c The Contractor shall pay all duties and taxes, and the Contract Price shall not be
adjusted for such costs.
d Any quantities which may be set out in a Schedule are only estimated quantities
and not to be taken as actual and correct quantities of the Works to be executed
by the Contractor.
e Any quantities, prices or rates of payment per unit quantity which may be set out
in a Schedule are only to be used for the purposes stated in the Schedule.
If any part of the Works is to be paid according to quantity supplied or work done, the
provisions for measurement and valuation shall be stated on Part II.
The Contractor is required to submit a Statement (six copies) to the Employer’s
Representative after the end of each month showing in detail the amounts to which he
considers himself entitled together with supporting documents.
The Statement includes:
a The estimated contract value of Construction Documents produced and the

Works executed up to the end of the month;
b Any amounts due to changes in legislation (Sub-Clause 13.16);
c Any amount to be deducted for retention calculated by applying the retention
percentage to the above amounts;
d Any amounts to be added or deducted for advance payments;
e Any amounts due for Plant and Materials intended for the Works (Sub-Clause
13.5);
f Any other additions or deductions which may have become due other than under
Sub-Clause 8.6;
g Deduction of any amounts certified in previous certificates.
Provided the Employer has received and approved the Performance Security, the
Employer’s Representative certifies payments within 28 days of receiving each
Contractor’s Statement. A copy of the certificate is sent to the Employer and the
Contractor.
Clause 14: Variations and adjustments

The Employer’s Representative may vary the works at any time during the Contract
Period either by instruction or by a request for the Contractor to submit a proposal.
If the Employer’s Representative requests the Contractor to submit a proposal and
subsequently elects not to proceed with the work, the Contractor is reimbursed for the
Cost incurred.
Sub-Clause 14.2 allows the Contractor to submit a proposal to the Employer’s Rep-
resentative which could reduce the cost of constructing, maintaining or operating the
Works, or improve the efficiency or value to the Employer of the completed Works.
Any such proposal shall be prepared at the cost of the Contractor.
If the Employer’s Representative requests a proposal, prior to instructing a Varia-
tion, the Contractor shall submit as soon as practicable:
a A description of the proposed design and/or work to be performed and a pro-

gramme for its execution;
b The Contractor’s Proposal for any necessary modification to the programme;
c The Contractor’s Proposal for adjustment to the Contract Price, Time for Com-
pletion and/or modifications to the Contract.
The Employer’s Representative shall, as soon as practicable after receipt, respond with
approval, rejection or comments.
If the Employer’s Representative instructs a Variation, he shall proceed in accord-
ance with Sub-Clause 3.5 to agree or determine adjustments to the Contract Price
(including reasonable profit), Time for Completion and Schedule of Payments.
Clause 19: Force majeure
Clause 19 covers Force Majeure, which is defined in Sub-Clause 19.1 as an event which
is beyond the control of the Employer and Contractor, which makes it impossible or
illegal to perform. Examples include Acts of God, war, embargo nuclear contam-
ination and riot, unless solely restricted to the employees of the Contractor or his
Subcontractors.
Clause 20: Claims, disputes and arbitration

Clause 20 covers the submission of claims and the settlement of disputes.
If the Contractor considers himself entitled to additional payment, he gives notice
to the Employer’s Representative not later than 28 days of the start of the event giving
rise to the claim.
The Contractor keeps contemporaneous records and upon receipt the Employer’s
Representative may instruct the keeping of further records.
Within 28 days of such notice, or some other time as may be agreed by the Employer’s
Representative, the Contractor sends to the Employer’s Representative an account
giving details and amount of the claim. Where the claim has a continuing effect, he
sends an interim account with a final account within 28 days of the end of the effects
of the event.
If the Contractor fails to comply with this Sub-Clause he shall not be entitled to
additional payment.
The Contractor shall be entitled to have included in any Interim Payment Certifi-
cate such amount for any claim as the Employer’s Representative considers due.
Unless the members of the DAB have been previously agreed upon between and by
the parties, the parties shall within 28 days of the Effective Date ensure the appoint-
ment of a DAB.
The terms of appointment:
a Incorporate the model terms published by the Federation Internationale des

Ingenieurs-Conseils (FIDIC).
b Require each member of the DAB to remain independent of the parties.
c Require the DAB to act impartially and in accordance with the Contract.
d Include undertakings by the parties that the members of the DAB shall not be
liable for breach of duty or contract.
The Employer and the Contractor shall pay one half of the DAB’s remuneration.
If any of the following conditions apply:
a The parties fail to agree upon the sole member of a one person DAB within 28
days of the Effective Date.
b Each party fails to nominate an acceptable member for the DAB of three members
within 28 days of the Effective Date.
c The parties fail to agree upon the appointment of the third member (to act as
chairman) within 28 days of the Effective Date.
d The parties fail to agree upon the appointment of a replacement member of the
DAB within 28 days of the date on which a member of the DAB declines to act.
Both Party’s attempt to settle disputes amicably before the commencement of arbi-
tration. Arbitration commences within 56 days of a notice of dissatisfaction.
Any dispute in respect of which:
a The decision of the DAB has not become final and binding, and
b Amicable settlement has not been reached.
shall be settled by reference to arbitration.
The Harmonised Red Book (MDB Edition): Conditions of Contract

for Construction for Building and Engineering Works Designed by the
Employer (The Pink Book)
It is worth some consideration of this document, as an example of a collaborative exer-
cise between major global financial institutions and the publishers of an international
suite of contracts.
Several of the Multilateral Development Banks (MDBs) have, for many years, used
the FIDIC Conditions of Contract for Construction as part of their standard bidding
documents, which the MDBs require their borrowers to follow in financing construc-
tion projects.
In doing so, the MDBs introduced a number of additional clauses within the Par-
ticular Conditions.
These additional clauses, which were specific to the MDBs, had standard wording which
had to be repeated whenever procurement documents were prepared for a new project.
Also, these additional clauses were not the same for each MDB, which created
uncertainties amongst the users of the documents and increased the possibilities of
disputes.
As a result the MDBs decided to harmonise their tender documents on an interna-
tional basis, and resolved that there should be a modified form of the FIDIC Condi-
tions of Contract for Construction, 1st Edition 1999, in which the General Conditions
would contain the standard wording which previously had been incorporated into the
Particular Conditions.
The first version of the MDB Harmonised Construction Contract was released in
May 2005, with an amended second version in March 2006 and a third amended ver-
sion in 2010.
“The Pink Book” was launched for use as part of the standard bidding documents
by the MDBs.
The Islamic Development Bank and the World Bank worked with FIDIC in devel-
oping this contract, the MDBs being:
• The World Bank

• The European Bank for Reconstruction and Development
• African Development Bank
• Asian Development Bank
• Black Sea Trade and Development Bank (BSDB)
• Caribbean Development Bank (CDB)
• Council of Europe Development Bank (CEB)
• Inter-American Development Bank (IADB)
The MDBs represent lending agencies that fund projects on a global basis and as such
play a crucial role in the development of major infrastructure projects.
Clause 8.1 in particular had been amended from the Red Book, the amended Sub-
Clause requiring certain conditions to be met before the works can commence:
• The Contract must be signed by both parties.

• The Contractor must have received reasonable evidence of the Employer’s finan-
cial arrangements.
• The Contractor must have been given possession of the Site by the Employer.
• There must be in place provision for any advance payment and corresponding
guarantee/bond.
The Contract allowed the Contractor the option to terminate if the above matters were
not fully in place within 180 days of the Letter of Acceptance, which actually intro-
duced complexity and possible confusion prior to starting work; full possession of the
Site may not always be necessary or even possible from the outset.
The following clauses are referred to in the Specification:
• Definition of “Employer’s Equipment” (Clause 1.1.6.3)

• Permissions obtained by Employer (Clause 1.13(a))
• Opportunities for works by others (Clause 4.6
• Values for emissions and discharges (Clause 4.18)
• Details of Employer’s Equipment and Free-Issue Materials (Clause 4.19)
• Criteria for designers (Yellow Book – Clause 5.1)
• Technical documents to be included in Contractor’s Documents and Language for
Contractor’s Documents (Yellow Book – Clause 5.2)
• Contractor’s Documents to be submitted for Review and/or Approval (Yellow
Book – Clause 5.3)
• Other standards for compliance (Yellow Book – Clause 5.4)
• Training to be provided for Employer’s personnel (Yellow Book – Clause 5.5)
• Numbers and types of copies of As-Built Drawings (Yellow Book – Clause 5.6)
• Operation and Maintenance manuals (Yellow Book – Clause 5.7)
• Arrangements for staff and labour (Clause 6.1)
• Facilities for staff and labour (Clause 6.6)
• Payment of royalties (Clause 7.8)
Those faced with a Pink Book will have often been used to the Red Book and therefore
will be familiar with the general layout of the contract, the 20 clauses are still there
but there have been amendments which some may think are for the better, and others
otherwise.
Minor amendments have taken place to definitions of which some are worthy of
being noted:
• Cost no longer referred to “reasonable” profit, but stated the profit percentage
which was fixed at 5% unless stated otherwise in the Contract Data.
• Sub-Clause 1.5 was a new Sub-Clause that allowed the lender’s representatives to
inspect the Site and audit the Contractor’s accounts and records relative to the
project.
• Under Sub-Clause 2.1, access to the Site must be given such that the programme
can proceed “without disruption”.
• Under Sub-Clause 2.4, the Employer has to demonstrate its ability to pay the Con-
tract Price before “the Commencement Date”.
• Under Sub-Clause 2.5, the Employer had to give notice of its Claims within 28
days, which was quite onerous.
• Under Sub-Clause 3.1, the Engineer had to gain the Employer’s approval before
dealing with matters under Clauses in respect of Unforeseeable Physical Condi-
tions and the issue of Variations.
The Employer having to give approval to the Engineer in respect of Claims for
quite major issues such as Unforeseeable Physical Conditions and Variations can
be very dangerous and inadvisable, unless the Employer has a full understanding
of the construction process, and the various actions required in administering
that process. An ill-advised Employer (or possibly one that was advised but chose
not to take that advice!) could cause significant delays and additional costs to the
project.
• Under Sub-Clause 3.5, the Engineer had to give its determination “within 28 days
from receipt of the corresponding Claim or request”.
• Under Sub-Clause 6.2, there was an obligation upon the Contractor to inform its
personnel of their liability to pay local income tax.
• Under Sub-Clause 8.1, the project cannot commence unless:
• The contract agreement has been signed by both Parties.
• The Contractor has reasonable proof that funding is in place.
• The advance payment has been received by the Contractor.
• Under Sub-Clause 8.6, the Contractor could be paid for acceleration measures to
overcome Employer delays.
• Under Sub-Clause 13.1, the Contractor is not bound to carry out a Variation if
it would “trigger a substantial change in the sequence or progress of the works”.
• Under Sub-Clause 15.5, whilst the Employer can terminate for convenience, it
cannot terminate to pre-empt a rightful termination by the Contractor.
• Sub-Clause 15.6 is a new clause that attempts to deal with corrupt and/or fraudu-
lent practices.
• Under Sub-Clause 16.2, the Contractor must demonstrate that the Employer’s fail-
ures must “materially and adversely affect the economic balance of the contract
and/or the ability of the Contractor to perform the contract” prior to termination.
There are however two further grounds allowing the Contractor to terminate:
• Failure of the funder to provide funds;
• The absence of the Engineer’s Instruction to commence work 180 days after the
Letter of Acceptance.
• Under Sub-Clause 19.2, in order to claim Force Majeure, the claiming party
must demonstrate that it has been prevented from performing “its substantial
obligations”.
• Under Sub-Clause 20.6, arbitration rules may differ according to the origin of the
lending agency.
In February 2019, FIDIC entered into an agreement with the World Bank that will see
the international funding organisation adopt the use of six FIDIC standard contracts
for the next five years.
As part of the agreement, the World Bank is given a non-exclusive licence to refer to
the six major FIDIC contracts for projects they finance and the documents will also be
used as part of the World Bank’s standard bidding documents.
The contracts are primarily the FIDIC 2017 contracts.
The agreement includes translation into five major languages: Arabic, Chinese,
French, Spanish and Portuguese.
The six FIDIC contract documents covered by the FIDIC/World Bank agreement are:
• Conditions of Contract for Construction for Building and Engineering Works De-
signed by the Employer (“Red Book”), Second Edition 2017
• Conditions of Contract for Plant & Design-Build for Electrical & Mechanical Plant &
for Building & Engineering Works Designed by the Contractor (“Yellow book”),
Second Edition 2017
• Conditions of Contract for EPC Turnkey Projects (“Silver book”), Second Edition, 2017
• Client/Consultant Model Services Agreement (“White book”), Fifth Edition 2017
• Conditions of Contract for Design, Build and Operate Projects (“Gold book”), First
Edition 2008
• Short Form of Contract (“Green book”), First Edition 1999
The Gold Book: DBO Contract – Conditions for Design, Build and
Operate Projects (1st Ed 2008)
In September 2008, FIDIC published the Design, Build and Operate (DBO) contract,
with many of its provisions now similar to the FIDIC 2017 Rainbow Suite, so it is again
worth some consideration.
FIDIC had stated for some time that there was a growing need for a document
which would combine a design and build obligation, with a long-term operation and
maintenance commitment.
The question was whether it was best to have a design and build contract (such as the
Yellow or Silver Book), with a separate contract to operate the facility over a period of
time, the two contracts being completely separate or linked together, or alternatively
to have a combined “all in one contract”.
The Gold Book is the latter “all in one” combined contract, though it has been de-
scribed as “a Yellow Book with an operate and maintenance contract bolted on”, which
makes it sound as if it is not truly fit for the purpose, but it actually works quite well.
In reality although the principle is of a Design and Build Contract with an extra part
bolted on, it contains many differences to the Yellow Book in addition to the entirely
new provisions which deal with the suggested period of 20 years for operation and
maintenance of the facility.
Some said at the time that the Yellow Book should actually cover the Design and
Build part as it is a familiar Contract, and have an annexe to cover the operation and
maintenance part, but there was an opportunity to publish something new, and unique
for this contractual relationship.
It is to be used in a “green field” situation where the Employer wishes to employ a
single Contractor to design, build and subsequently operate and maintain the com-
pleted construction project for a period of 20 years.
It is likely that, although there is a single Contractor under the Gold Book, that
Contractor will be a Joint Venture (JV) with one partner responsible for the “design
and build” part, the other for the long-term “operation” part.
Note that the Gold Book is not a Design, Build, Finance, Operate (DBFO) contract,
the Contractor has no responsibility either for financing the project or for its ultimate
commercial success.
The Gold Book when launched in 2008 filled a gap within FIDIC’s Contracts and has
been widely used by various government departments, especially utilities providers.
The author has personal experience of the Gold Book being used in the Middle East
by a petroleum company.
It is a DBO contract that the industry has needed for some time to reflect the
ever-growing trend that Contractors no longer construct something then go away, but
they also maintain and operate the facility for many years to come.
Clearly, there is a very long-term commitment by both Parties with a contract of
this type, and any potential relationship issues or disputes between an Employer and
a Contractor carrying out a design and build contract where standards have not been
met would leave both Parties to have to live with each other for a very long period, but
it does remedy the situation where one Contractor designs and builds a plant, and a
totally separate entity maintains it.
When preparing the Conditions of Contract for Design, Build and Operate Projects,
the drafting group attempted to include all conditions of a general nature, which were
likely to apply to the majority of DBO contracts, into General Conditions.
The nature of DBO contracts and those who use them, whether they be public
or private organisations, is that they often require special conditions of contract,
or indeed particular procedures, which differ from those included in the General
Conditions.
For this reason, the DBO document Particular Conditions Part B – Special Provi-
sions which includes advice to drafters of contract documents who may wish to add
Special Provisions to replace or supplement the clauses to be found in the General
Conditions.
The Structure of the Contract is as follows:

2 The Employer

7 Plant, Materials and Workmanship

10 Operation Service
11 Testing
12 Defects
13 Variations and Adjustments
15 Termination by Employer
16 Suspension and Termination by Contractor
17 Risk Allocation
18 Exceptional Risks
19 Insurance
20 Claims, Disputes and Arbitration
Whilst it is not intended to review the DBO Contract in detail within this book, certain
provisions should be mentioned, as many of those provisions within the Gold Book
have been adopted within the FIDIC 2017 Contracts:
• The Contract covers the design and build plus operation and maintenance for 20
years by the same Contractor on a green field site.
• The design and build phase is similar to the FIDIC Yellow Book with specific
and challenging completion criteria, but also there is a cut-off date should the
Contractor be 182 days late in completion of the phase, leading to termination if
desired.
• Payment is on a lump sum basis but there is a defined “asset replacement fund”
and schedule that notes the timing and cost of the replacement of certain assets.
• The cost of replacing Plant and Equipment outside the schedule will be the re-
sponsibility of the Contractor, as is a cost to the Contractor over that stated on
the Schedule. Any surplus in the fund at the end of the 20 years is divided equally
between the Parties.
• The Employer is entitled to deduct 5% from payments during the “Operation Ser-
vice Period” (OSP) in case the Contractor does not fulfil its maintenance obliga-
tions. The fund is to be released, if not spent, within the Final Payment to the
Contractor. The Contractor is responsible for correcting its own defects arising
from the design and the construction in this period.
• An independent audit body is jointly appointed for the duration of the Operation
Service Period to monitor the performance of the Contractor and the Employer.
Whilst having no power, the Parties are intended to give “due regard” to matters
raised by the audit body.
• A joint inspection is required at least two years before the end of the Operation
Service Period. Any works identified must be carried out by the Contractor who
will also face completion tests similar to those at the end of the design and build
phase. Defaulting contractors risk losing the 5% Maintenance Retention Fund.
• A standing DAB is established from a set date for the design and build phase, and
a new DAB every five years during the OPS.
The key to success rests with the Contractor, who must design and build a quality
plant, ideally with low future operating and maintenance costs, but fit for purpose and
built to last.
Some key features are as follows:
Priority of documents
c The Letter of Tender
d The Particular Conditions Part A – Contract Data
e The Particular Conditions Part B – Special Provisions
f The General Conditions
g The Employer’s Requirements
h The Schedules
i The Contractor’s Proposals and any other documents forming part of the contract:
• The Employer is represented by an Employer’s Representative rather than an
Engineer.
• The Contractor’s general obligations include the obligation to design, execute
and complete the Works and also to provide the Operation Service in accord-
ance with the Contract.
• The Contractor is responsible for carrying out the design of the Works includ-
ing the Contractor’s Documents, as built records and operation and mainte-
nance manuals.
• Clause 14 deals with the Contract Price, its payment, and also with the possi-
bility of an advance payment. It also covers Application for Interim Payments.
It also includes for an Asset Replacement Schedule.
• Clause 17 lists risks held by the Employer during the Design-Build and Operation
periods and also the Contractor’s risks during the Operation Service Period.
• The Employer gives the Contractor the Operating Licence to operate and main-
tain the Works during the Operation Service Period.
• The Employer’s arrangements for financing the design, execution and operation
of the Works including the Asset Replacement Fund are detailed in the Finan-
cial Memorandum.
• The Contractor shall, as specified in the Contract or as instructed by the Engi-
neer, allow appropriate opportunities for carrying out the work to:
• The Employer’s Personnel;
• Any other contractors employed by the Employer;
• The personnel of any legally constituted public authorities.
• To the extent, which was practicable, the Contractor is deemed to have satisfied
himself regarding
• Form and nature of the Site;
• Hydrological and climactic conditions;
• The extent and nature of the works and goods necessary for the execution
and completion of the Works;
• Laws, procedures and labour practices;
• Requirements for access, accommodation, facilities, personnel, etc.
• If the Contractor encounters Unforeseeable Physical Conditions, he notifies
the Employer’s Representative. The Contractor may be awarded an extension
of time and/or Cost.
• Progress reports shall include:
• Charts and detailed descriptions of progress;
• Photographs showing status of manufacture and progress on Site;
• The name of the manufacturer, location, progress for each item of Plant and
Materials;
• Records of Contractor’s Personnel and Equipment;
• Copies of quality assurance documents, test results, etc.;
• Notices of Employer’s Claims and Contractor’s Claims;
• Safety statistics;
• Comparisons of actual and planned progress;
• Order in which the Contractor intends to carry out the Works;
• The period of Operation Service;
• The period for reviews of Contractor’s Documents, samples, approvals and
consents;
• Sequence and timing of inspections and tests;
• Method statements and resource schedules.
• Each Party shall endeavour to advise the other Party in advance of any known
or probable future event that could increase the Contract Price, or delay the
execution of the Works or the Operation Period.
• Performance of the Contractor’s obligations shall not be considered to have
been completed until the Contract Completion Certificate has been signed by
the Employer’s Representative.
• The Contractor shall commence the design and execution of the Works within
28 days of the Commencement Date.
• Extension of Time causes:

iii Exceptionally adverse climactic conditions;

• Contractor gives notice to the Employer’s Representatives not later

than 28 days after becoming aware of the event. Notice describes
event.
• Contractor keeps records.
• Within 42 days after he becomes aware, Contractor submits detailed
claim, further claims at monthly intervals.
• Within 42 days after receiving the claim, Employer’s Representative
responds.
• The Contractor is obliged to comply with the Operation Management Require-
ments in the Contract including following the Operation and Maintenance
Plan.
This Clause also covers the provision of an Independent Compliance Audit
to audit and monitor the performance of the Employer and the Contractor
during the Operation Service in compliance with the Operation Management
Requirements.
• The commencement of the Operation Service shall be from the date stated in
the Commissioning Certificate.
• The Contractor provides the Operation Service in compliance with the Opera-
tion Management Requirements.
• If there any delays or interruptions during the Operation Service caused by the
Contractor he shall compensate the Employer.
• If there any delays or interruptions during the Operation Service caused by the
Employer he shall compensate the Contractor.
• If a failure to reach production outputs is caused by the Employer, the Em-
ployer notifies the Contractor of the steps he should take, the Contractor is paid
Cost plus Profit.
• If a failure to reach production outputs is caused by the Contractor, the Con-
tractor pays performance damages.
• Contractor may submit a written proposal which if adopted:
i Accelerates completion;
ii Reduces the cost of executing, operating or maintaining the Works;
iii Improves the efficiency or value of the Works;
iv Includes other benefit.
• Contractor is NOT paid a fee.
• Regarding claims, Contractor’s and Employer’s Claims are both dealt with un-
der Clause 20, with strict provisions and time scales, which are common to the
FIDIC 1999 and 2017 Contracts.
There is also provision for avoidance of disputes, and also disputes arising
during the Operation Service Period, the former being relevant to the stand-
ing nature of the DAB and the latter relating to post issue of the Commission-
ing Certificate.
The initial Notice that has to be provided in submitting a claim is 28 days,
and failure to issue the Notice renders the claim time barred.
The FIDIC drafters, within the Gold Book, have perhaps considered those
who believe that fatal notices are unfair as they have introduced a potential
opportunity for the Contractor to be able to proceed with its claims despite
not having submitted a Notice within the required time period.
The solution which is similar to the FIDIC 2017 Contract is a referral to the
DAB should the Contractor consider that there were circumstances to justify
the late submission of the Notice. The DAB, which is a standing board, ap-
pointed at the commencement of the project has the authority to override the
28-day time limit if it considers it fair and reasonable to do so.
Following submission of the Notice the Contractor must keep contempora-
neous records to substantiate its claim.
Within 42 days after the Contractor became aware (or should have become
aware) of the event or circumstance giving rise to a claim for an entitlement
the Contractor must send to the Employer’s Representative a fully detailed
claim which includes all supporting particulars of the contractual basis for
the claim plus any delay analysis or quantum evidence as appropriate.
There are relaxations to the 42 days if allowed by the DAB following an
extension of the original 28-day Notice or if agreed between the Contractor
and the Employer’s Representative who may also ask for further supporting
particulars.
No matter how professional a Contractor may be it may often prove difficult
to gather all relevant information within the 42-day period, especially if the
Contractor has to rely upon a chain of third parties, such as Sub- Contractors
and their suppliers, to provide basic information and potentially involve law-
yers to advise upon the contractual or other basis of the claim.
The White Book: Client/Consultant Model Services Agreement

The FIDIC White Book is entitled the Client/Consultant Model Services Agreement
and consists of:
• Agreement
• General Conditions
• Particular Conditions
• Appendices 1, 2, 3 and 4
The White Book has been drafted to create conditions of agreement that would span
the life cycle of an Engineer’s or other Consultant’s involvement.
Accordingly, the document is suitable for use during:
• Pre-investment and feasibility studies;

• The design phase;
• The administration of a contract.
As with other FIDIC contracts there are both General Conditions and Particular Con-
ditions of Contract which combine to set out the scope of the Consultant’s work, pay-
ment terms and the like.
The White Book incorporates the same financial protection as afforded to Contrac-
tors, in that the consultant too can ask the Client (as opposed to the Employer) if it has
the ability to pay the Consultant’s fees.
In a similar vein, and maybe not surprising to some, the White Book limits the Con-
sultant’s responsibilities, and therefore liabilities, to “exercise reasonable skill, care
and allegiance in the performance of his obligations under the Agreement”.
This limitation is further qualified since nothing else in the agreement, or any legal
requirement of the country or any other jurisdiction can impose a greater risk upon
the consultant. Thus, the Consultant/Engineer has a limited risk that, it is suggested,
is not in accord with the thoughts of employers and contractors alike.
The Form of Contract for Dredging and Reclamation Works

(Blue Book)
The Form of Contract for Dredging and Reclamation Works (Blue Book) was originally
launched the First Edition in 2006, then the Second Edition in 2016.
It is based on the FIDIC Short Contract (Green Book) and was originally termed the
“Blue-Green Book”, but has an Engineer working on behalf of the Employer, whereas
the Green Book has an Employer’s Representative (if required).
It was published to allow users to have a specialist marine contract, rather than
having to use and adapt another member of the FIDIC contract family, in particular
the FIDIC Conditions of Contract for Works of Civil Engineering Construction 1987.
Like the Green Book, it is abbreviated and flexible. In terms of being a smaller doc-
ument the General Conditions are only 16 pages and 15 clauses long.
The format has also changed from the major forms with the Agreement and the
Appendix to the contract being the first section.
Perhaps, it is the major forms that have the order incorrect since it is those particular
terms that are the most important to recognise especially in such a flexible form as the
Blue Book.
Similarities with the major forms are in the inclusion of standard forms, such as
securities, a section on adjudication (a one- or three-person DAB) with rules and the
adjudicator’s agreement and the all-important guidance section.
The Engineer is still recognised within the contract; however, design responsibility
can rest with either the Employer (and its Engineer) or the Contractor.
Payment terms are extremely flexible, and a list of options, such as lump sum,
remeasurement and cost plus, are all noted within the Appendix.
It is perhaps apparent that a greater input of a Contractor’s organisation has influ-
enced some of the General Conditions, as has perhaps the use of other forms within
the industry as a whole:
• Notices by the Contractor in respect of a claim must be given within 28 days but
there is no fatal time bar.
• Claim items are listed as defined risks which may entitle the Contractor to mone-
tary or time compensation.
• The defined risks, recognising the likely impacts of weather upon the Contractor’s
ability to make progress, potentially soften the usual clause wording, entitling the
Contractor to make a claim if “any operation of the forces of nature affecting the
Site/and or the Works”, which was Unforeseeable or “against which an experi-
enced Contractor could not reasonably have been expected to take precautions”
but give the Employer (and Contractor) less room for debate by also defining the
Employer’s risk to be “climatic conditions more adverse than those specified in
the Appendix”.
• If disputes are not settled amicably they are to be settled by referral to adjudica-
tion by a DAB, and, if dissatisfied with the DAB’s decision (or if no decision is
made within the set timescale) the dispute can be referred to Arbitration.
The Blue Book is a model of a contract drafted by those with a particular section of
the industry in mind and with the knowledge to incorporate the necessary variations
to standard forms that may have been considered for use in the past.
The traditional method of appointing Contractors for a dredging and reclamation
work is on a remeasurable basis with the Employer being responsible for design; the
Employer also being responsible for obtaining planning permission, licences and per-
mits with the Contractor responsible for customs clearances, and some licences and cer-
tificates. However, the Contract is flexible enough to allow for other payment methods.
In some cases, the Contractor may be responsible for design, and some of the Em-
ployer’s obligations above.
Site Data is critical with a contract of this type, with the Contractor encountering
different conditions to what he had expected (and priced and programmed for) and the
contract specifically deals with issue in that respect.
There are also risks specific to work of this type, which again are covered by the
Contract.
Many of the other provisions within the Blue Book are similar to the members of
the Rainbow Suite (Red, Yellow and Silver Books), which are discussed in more detail
in later chapters of this book, including similar terminology; the Employer having to
provide sufficient evidence of funding, there is also the use of “Exceptional Events”
rather than the more traditional “force majeure”, in addition to limitations on liability.
Conditions of Contract for Underground Works (2019 Emerald Book)

In 2019 FIDIC launched a much anticipated new form of contract, the Emerald Book,
for Underground Works.
Whilst some practitioners questioned the need for a separate contract for under-
ground works, the nature of, for example, major tunnelling projects is that underground
and sub-surface construction works are highly dependent on the hydrogeological, geo-
logical and geotechnical properties of the ground itself.
Underground Works are predominantly characterised by three unique and high risk
features:
iii The land above where the Works are to be carried out usually belongs to a number
of third parties, many of whom have no knowledge of what is being carried out.
There are also other important features that are not unique to Underground Works:
i They require extensive investment in Contractor’s Equipment.

ii Underground excavation and associated lining works are very time-consuming.
The Emerald Book is designed for use in connection with all sub-surface works, and
as such it can be applied to all common excavation methods, including blasting and
tunnelling using special tunnel boring machines (TBMs), and also may be appropriate
for other types of work that include significant geotechnical uncertainty, for example,
for caverns used in the energy sector.
The Emerald Book is based on the FIDIC Yellow Book 2017.
Particular features of the Emerald Book include:
• Disclosure of all available geological and geotechnical information;

• The inclusion of a contractual geotechnical baseline;
• The inclusion of a tailored “Unforeseeable Physical Conditions” clause;
• The provision of a flexible mechanism for remuneration according to ground con-
ditions, both foreseen and unforeseen;
• Time for Completion being influenced by ground conditions;
• The implementation of a ground classification system and supporting particular
conditions that reflect excavation and stabilisation activities.
The following contents of the Emerald Book are of particular relevance:

and ground support processes are allocated to the Employer, with the Contractor
being able to receive an extension of time and/or reimbursement of cost.
iii The Time for Completion of the Works, of a Section or of any Milestone may
largely depend on the subsurface physical conditions that are encountered during
excavation. As the risk related to these conditions is allocated to the Employer,
Time for Completion should be adjusted by the variation of these conditions
within the limits defined by the GBR, insofar as this variation affects the critical
path of the Works, of a Section or of any Milestone. If the onerous conditions
encountered are higher than described in the GBR, the Time for Completion is
extended, but if less onerous, the Time for Completion is reduced.
iv The cost of the excavation and lining works will also largely depend on the subsur-
face physical conditions and/or ground reaction(s) to such works. The Conditions
provide that the excavation and lining works are to be measured and paid for
using rates and prices set out in the Bill of Quantities.

2 “The old and the new” – FIDIC 1999
becomes FIDIC 2017
The FIDIC Rainbow Suite

This book is primarily based on the FIDIC Rainbow Suite, including the changes in-
corporated within the FIDIC 2017 Contracts.
The Rainbow Suite consists of:
• The Red Book, or to give it its full title Conditions of Contract for Construction, is
primarily intended for building or engineering works where the Employer bears
the design responsibility; however, the works may include some Contractor-
designed civil, mechanical, electrical and/or construction works.
The basis of payment to the Contractor is through rates and prices in the Bills
of Quantities, though it can be amended to provide a lump sum price or as a cost
reimbursable contract.
• The Yellow Book, full title “Conditions of Contract for Plant and Design-Build”, is
intended for contracts on electrical/mechanical installations, and for the design
and execution of building or engineering works where the Contractor bears the de-
sign responsibility. The Contractor designs and provides the Works in accordance
with the Employer’s Requirements.
• The Silver Book, full title Conditions of Contract for EPC/Turnkey Projects, is suit-
able for the provision on a turnkey basis of a process or power plant, of a factory
or similar facility, or of an infrastructure project or other type of development,
where the Contractor takes total responsibility for the design and execution of the
project, and a higher degree of certainty of final price and time is required.
More details will follow in terms of the specific use and content of each contract within
the Rainbow Suite.
The launch of the FIDIC 2017 Contracts

New versions of the Red Book, Yellow Book and Silver Book were launched on 5
December 2017 (the FIDIC 2017 Contracts), and they constitute updates (with many
amendments) of the former editions from 1999.
Note that the FIDIC 1999 Contracts can still be used, and probably will continue to
be used for years to come.
During training and consultancy assignments around the world, the author found it
surprising, even up to the present day, that Employers, and even entire countries, had
FIDIC 1999 becomes FIDIC 2017 25
not even adopted the FIDIC 1999 Contracts, preferring to use the older contracts (with
“appropriate amendments”), in particular:
• Conditions of Contract for Works of Civil Engineering Construction: The Red Book
(1987)
• Conditions of Contract for Electrical and Mechanical Works including Erection on
Site: The Yellow Book (1987)
• Conditions of Contract for Design-Build and Turnkey: The Orange Book (1995)
The first and third of these Contracts were discussed in Chapter 1.

The FIDIC 1999 Contracts consist of:
• The General Conditions – Clauses 1–20

• Appendix
• General Conditions of Dispute Adjudication Agreement
• Guidance for the Preparation of Particular Conditions
• Annexes – Forms of Security
• Forms of Letter of Tender, Contract Agreement and Dispute Adjudication
Agreement
The FIDIC 2017 Contracts consist of:
• The General Conditions – Clauses 1–21

• Appendix
• DAAB Procedural Rules
• Guidance for the Preparation of Particular Conditions
• Annexes – Forms of Security
• Forms of Letter of Tender, Contract Agreement and Dispute Adjudication
Agreement
There is nothing particularly wrong with using an older version of any published Con-
tract, provided there are “appropriate amendments” to incorporate current practice
and laws, but the FIDIC 1999 Contracts brought in some welcome improvements in
the structure and ease of use of the Contracts, and the FIDIC 2017 Contracts have con-
tinued with those improvements, so it is recommended that Employers should move to
using the latest version of all published contracts, not just FIDIC, as soon as practica-
ble (Figures 2.1 and 2.2).
FIDIC Conditions of Subcontract

Note that at the time of writing this book there are no Conditions of Subcontract pub-
lished for use with the FIDIC 2017 Contracts.
The Conditions of Subcontract for Construction 2011 are for use in conjunction
with the Conditions of Contract for Construction 1999, and the Multilateral Develop-
ment Bank Harmonised Edition of the FIDIC Conditions of Contract for Construc-
tion (Pink Book).
These Subcontract Conditions supersede the previous Conditions of Subcontract
for Works of Civil Engineering Construction 1994, which were for use in conjunction
FIDIC 1999 Contract Structure
Red Book Yellow Book Silver Book
Clause 1: General Provisions Clause 1: General Provisions Clause 1: General Provisions
1.1 Definitions 1.1 Definitions 1.1 Definitions

1.2 Interpretation 1.2 Interpretation 1.2 Interpretation
1.3 Comm unications 1.3 Communications 1.3 Communications
1.4 Law and Language 1.4 Law and Language 1.4 Law and Language
1.5 Priority of Documents 1.5 Priority of Documents 1.5 Priority of Documents
1.6 Contract Agreement 1.6 Contract Agreement 1.6 Contract Agreement
1.7 Assignment 1.7 Assignment 1.7 Assignment
1.8 Care and Supply of Documents 1.8 Care and Supply of Documents 1.8 Care and Supply of Documents
1.9 Delayed Drawings or Instructions 1.9 Errors in the Employer s Requirements 1.9 Confidentiality
1.10 Employer’s Use of Contractor’s Documents 1.10 Employer’s Use of Contractor’s Documents 1.10 Employer’s Use of Contractor’s Documents
1.11 Contractor’s Use of Employer’s Documents 1.11 Contractor’s Use of Employer’s Documents 1.11 Contractor’s Use of Employer’s Documents
1.12 Confidential Details 1.12 Confidential Details 1.12 Confidential Details
1.13 Compliance with Laws 1.13 Compliance with Laws 1.13 Compliance with Laws
1.14 Joint and Several Liability 1.14 Joint and Several Liability 1.14 Joint and Several Liability
Clause 2: The Employer Clause 2: The Employer Clause 2: The Employer
2.1 Right of Access to the Site 2.1 Right of Access to the Site 2.1 Right of Access to the Site
2.2 Permits, Licences or Approvals 2.2 Permits, Licences or Approvals 2.2 Permits, Licences or Approvals
2.3 Employer’s Personnel 2.3 Employer’s Personnel 2.3 Employer’s Personnel
2.4 Employer’s Financial Arrangements 2.4 Employer’s Financial Arrangements 2.4 Employer’s Financial Arrangements
2.5 Employer’s Claims 2.5 Employer’s Claims 2.5 Employer’s Claims
Clause 3: The Engineer Clause 3: The Engineer Clause 3: The Employer’s Administration
3.1 Engineer’s Duties and Authority 3.1 Engineer’s Duties and Authority 3.1 The Employer’s Representative
3.2 Delegation by the Engineer 3.2 Delegation by the Engineer 3.2 Other Employer’s Personnel
3.3 Instructions of the Engineer 3.3 Instructions of the Engineer 3.3 Delegated Persons
3.4 Replacement of the Engineer 3.4 Replacement of the Engineer 3.4 Instructions
3.5 Determinations 3.5 Determinations 3.5 Determinations
Figure 2.1 Structure of the FIDIC 1999 Contracts.

Clause 4: The Contractor Clause 4: The Contractor Clause 4: The Contractor
4.1 Contractor’s General Obligations 4.1 Contractor’s General Obligations 4.1 Contractor’s General Obligations
4.2 Performance Security 4.2 Performance Security 4.2 Performance Security
4.3 Contractor’s Representative 4.3 Contractor’s Representative 4.3 Contractor’s Representative
4.4 Subcontractors 4.4 Subcontractors 4.4 Subcontractors
4.5 Assignment of Benefit of Subcontract 4.5 Nominated Subcontractors 4.5 Nominated Subcontractors
4.6 Co-operation 4.6 Co-operation 4.6 Co-operation
4.7 Setting Out 4.7 Setting Out 4.7 Setting Out
4.8 Safety Procedures 4.8 Safety Procedures 4.8 Safety Procedures
4.9 Quality Assurance 4.9 Quality Assurance 4.9 Quality Assurance
4.10 Site Data 4.10 Site Data 4.10 Site Data
4.11 Sufficiency of the Accepted Contract Amount 4.11 Sufficiency of the Accepted Contract Amount 4.11 Sufficiency of the Accepted Contract Amount
4.12 Unforeseeable Physical Conditions 4.12 Unforeseeable Physical Conditions 4.12 Unforeseeable Difficulties
4.13 Rights of Way and Facilities 4.13 Rights of Way and Facilities 4.13 Rights of Way and Facilities
4.14 Avoidance of Interference 4.14 Avoidance of Interference 4.14 Avoidance of Interference
4.15 Access Route 4.15 Access Route 4.15 Access Route
4.16 Transport of Goods 4.16 Transport of Goods 4.16 Transport of Goods
4.17 Contractor’s Equipment 4.17 Contractor’s Equipment 4.17 Contractor’s Equipment
4.18 Protection of the Environment 4.18 Protection of the Environment 4.18 Protection of the Environment
4.19 Electricity, Water and Gas 4.19 Electricity, Water and Gas 4.19 Electricity, Water and Gas
4.20 Employer’s Equipment and Free-Issue Material 4.20 Employer’s Equipment and Free-Issue Material 4.20 Employer’s Equipment and Free-Issue Material
4.21 Progress Reports 4.21 Progress Reports 4.21 Progress Reports
4.22 Security of the Site 4.22 Security of the Site 4.22 Security of the Site
4.23 Contractor’s Operations on Site 4.23 Contractor’s Operations on Site 4.23 Contractor’s Operations on Site
4.24 Fossils 4.24 Fossils 4.24 Fossils
Clause 5: Nominated Subcontractors Clause 5: Design Clause 5: Design
5.1 Definition of “nominated Subcontractor” 5.1 General Design Obligations 5.1 General Design Obligations
5.2 Objection to Nomination 5.2 Contractor’s Documents 5.2 Contractor’s Documents
5.3 Payments to nominated Subcontractors 5.3 Contractor’s Undertaking 5.3 Contractor’s Undertaking
5.4 Evidence of Payments 5.4 Technical Standards and Regulations 5.4 Technical Standards and Regulations
5.5 Training 5.5 Training
5.6 As-Built Documents 5.6 As-Built Documents
5.7 Operation and Maintenance Manuals 5.7 Operation and Maintenance Manuals
5.8 Design Error 5.8 Design Error
Clause 6: Staff and Labour Clause 6: Staff and Labour Clause 6: Staff and Labour
6.1 Engagement of Staff and Labour 6.1 Engagement of Staff and Labour 6.1 Engagement of Staff and Labour
6.2 Rates of Wages and Conditions of Labour 6.2 Rates of Wages and Conditions of Labour 6.2 Rates of Wages and Conditions of Labour
6.3 Persons in the Service of Employer 6.3 Persons in the Service of Employer 6.3 Persons in the Service of Employer
6.4 Labour Laws 6.4 Labour Laws 6.4 Labour Laws
6.5 Working Hours 6.5 Working Hours 6.5 Working Hours
6.6 Facilities for Staff and Labour 6.6 Facilities for Staff and Labour 6.6 Facilities for Staff and Labour
6.7 Health and Safety 6.7 Health and Safety 6.7 Health and Safety
6.8 Contractor’s Superintendence 6.8 Contractor’s Superintendence 6.8 Contractor’s Superintendence
6.9 Contractor’s Personnel 6.9 Contractor’s Personnel 6.9 Contractor’s Personnel
6.10 Records of Contractor’s Personnel and Requirement 6.10 Records of Contractor’s Personnel and Requirement 6.10 Records of Contractor’s Personnel and Requirement
6.11 Disorderly Conduct 6.11 Disorderly Conduct 6.11 Disorderly Conduct
Figure 2.1 (Continued).

Clause 7: Plant, Materials and Workmanship Clause 7: Plant, Materials and Workmanship Clause 7: Plant, Materials and Workmanship
7.1 Manner of Execution 7.1 Manner of Execution 7.1 Manner of Execution

7.2 Samples 7.2 Samples 7.2 Samples
7.3 Inspection 7.3 Inspection 7.3 Inspection
7.4 Testing 7.4 Testing 7.4 Testing
7.5 Rejection 7.5 Rejection 7.5 Rejection
7.6 Remedial Work 7.6 Remedial Work 7.6 Remedial Work
7.7 Ownership of Plant and Materials 7.7 Ownership of Plant and Materials 7.7 Ownership of Plant and Materials
7.8 Royalties 7.8 Royalties 7.8 Royalties
Clause 8: Commencement, Delays and Suspension Clause 8: Commencement, Delays and Suspension Clause 8: Commencement, Delays and Suspension
8.1 Commencement of Works 8.1 Commencement of Works 8.1 Commencement of Works

8.2 Time for Completion 8.2 Time for Completion 8.2 Time for Completion
8.3 Programme 8.3 Programme 8.3 Programme
8.4 Extension of Time for Completion 8.4 Extension of Time for Completion 8.4 Extension of Time for Completion
8.5 Delays Caused by Authorities 8.5 Delays Caused by Authorities 8.5 Delays Caused by Authorities
8.6 Rate of Progress 8.6 Rate of Progress 8.6 Rate of Progress
8.7 Delay Damages 8.7 Delay Damages 8.7 Delay Damages
8.8 Suspension of Work 8.8 Suspension of Work 8.8 Suspension of Work
8.90 Consequences of Suspension 8.90 Consequences of Suspension 8.90 Consequences of Suspension
8.10 Payment for Plant and Materials in Event of Suspension 8.10 Payment for Plant and Materials in Event of Suspension 8.10 Payment for Plant and Materials in Event of Suspension
8.11 Prolonged Suspension 8.11 Prolonged Suspension 8.11 Prolonged Suspension
8.12 Resumption of Work 8.12 Resumption of Work 8.12 Resumption of Work
Clause 9: Tests on Completion Clause 9: Tests on Completion Clause 9: Tests on Completion
9.1 Contractor’s Obligations 9.1 Contractor’s Obligations 9.1 Contractor’s Obligations

9.2 Delayed Tests 9.2 Delayed Tests 9.2 Delayed Tests
9.3 Retesting 9.3 Retesting 9.3 Retesting
9.4 Failure to Pass Tests on Completion 9.4 Failure to Pass Tests on Completion 9.4 Failure to Pass Tests on Completion
Clause 10: Employer’s Taking Over Clause 10: Employer’s Taking Over Clause 10: Employer’s Taking Over
10.1 Taking Over of the Works and Sections 10.1 Taking Over of the Works and Sections 10.1 Taking Over of the Works and Sections
10.2 Taking Over Parts of the Works 10.2 Taking Over Parts of the Works 10.2 Taking Over Parts of the Works
10.3 Interference with Tests on Completion 10.3 Interference with Tests on Completion 10.3 Interference with Tests on Completion
10.4 Surfaces Requiring Reinstatement 10.4 Surfaces Requiring Reinstatement
Clause 11: Defects Liability Clause 11: Defects Liability Clause 11: Defects Liability
11.1 Completion of Outstanding Work and Remedying Defects 11.1 Completion of Outstanding Work and Remedying Defects 11.1 Completion of Outstanding Work and Remedying Defects
11.2 Cost of Remedying Defects 11.2 Cost of Remedying Defects 11.2 Cost of Remedying Defects
11.3 Extension of Defects Notification Period 11.3 Extension of Defects Notification Period 11.3 Extension of Defects Notification Period
11.4 Failure to Remedy Defects 11.4 Failure to Remedy Defects 11.4 Failure to Remedy Defects
11.5 Remedying of Defective Work 11.5 Remedying of Defective Work 11.5 Remedying of Defective Work
11.6 Further Tests 11.6 Further Tests 11.6 Further Tests
11.7 Right of Access 11.7 Right of Access 11.7 Right of Access
11.8 Contractor to Search 11.8 Contractor to Search 11.8 Contractor to Search
11.9 Performance Certificate 11.9 Performance Certificate 11.9 Performance Certificate
11.10 Unfulfilled Obligations 11.10 Unfulfilled Obligations 11.10 Unfulfilled Obligations
11.11 Clearance of Site 11.11 Clearance of Site 11.11 Clearance of Site

Clause 12: Measurement and Evaluation Clause 12: Tests after Completion Clause 12: Tests after Completion
12.1 Works to be Measured 12.1 Procedure for Tests after Completion 12.1 Procedure of Tests after Completion
12.2 Method of Measurement 12.2 Delayed Tests 12.2 Delayed tests
12.3 Evaluation 12.3 Retesting 12.3 Retesting
12.4 Omissions 12.4 Failure to Pass Tests after Completion 12.4 Failure to Pass Tests after Completion
Clause 13: Variations and Adjustments Clause 13: Variations and Adjustments Clause 13: Variations and Adjustments
13.1 Right to Vary 13.1 Right to Vary 13.1 Right to Vary

13.2 Value Engineering 13.2 Value Engineering 13.2 Value Engineering
13.3 Variation Procedure 13.3 Variation Procedure 13.3 Variation Procedure
13.4 Payment in Applicable Currencies 13.4 Payment in Applicable Currencies 13.4 Payment in Applicable Currencies
13.5 Provisional Sums 13.5 Provisional Sums 13.5 Provisions Sums
13.6 Daywork 13.6 Daywork 13.6 Daywork
13.7 Adjustments for Changes in Legislation 13.7 Adjustments for Changes in Legislation 13.7 Adjustments for Changes in Legislation
13.8 Adjustments for Changes in Cost 13.8 Adjustments for Changes in Cost 13.8 Adjustments for Changes in Cost
Clause 14: Contract Price and Payment Clause 14: Contract Price and Payment Clause 14: Contract Price and Payment
14.1 The Contract Price 14.1 The Contract Price 14.1 The Contract Price
14.2 Advance Payment 14.2 Advance Payment 14.2 Advance Payment
14.3 Application for Interim Payment Certificates 14.3 Application for Interim Payment Certificates 14.3 Application for Interim Payment Certificates
14.4 Schedule of Payments 14.4 Schedule of Payments 14.4 Schedule of Payments
14.5 Plant and Materials intended for the Works 14.5 Plant and Materials intended for the Works 14.5 Plant and Materials intended for the Works
14.6 Issue of Interim Payment Certificates 14.6 Issue of Interim Payment Certificates 14.6 Interim Payments
14.7 Payment 14.7 Payment 14.7 Timing of Payments
14.8 Delayed Payment 14.8 Delayed Payment 14.8 Delayed Payment
14.9 Payment of Retention Money 14.9 Payment of Retention Money 14.9 Payment of Retention Money
14.10 Statement at Completion 14.10 Statement at Completion 14.10 Statement at Completion
14.11 Application for Final Payment Certificate 14.11 Application for Final Payment Certificate 14.11 Application for Final Payment
14.12 Discharge 14.12 Discharge 14.12 Discharge
14.13 Issue of Final Payment Certificate 14.13 Issue of Final Payment Certificate 14.13 Final Payment
14.14 Cessation of Employer’s Liability 14.14 Cessation of Employer’s Liability 14.14 Cessation of Employer’s Liability
14.15 Currencies of Payment 14.15 Currencies of Payment 14.15 Currencies of Payment
Clause 15: Termination by Employer Clause 15: Termination by Employer Clause 15: Termination by Employer
15.1 Notice to Correct 15.1 Notice to Correct 15.1 Notice to Correct

15.2 Termination by Employer 15.2 Termination by Employer 15.2 Termination by Employer
15.3 Valuation at Date of Termination 15.3 Valuation at Date of Termination 15.3 Valuation at Date of Termination
15.4 Payment after Termination 15.4 Payment after Termination 15.4 Payment after Termination
15.5 Employer’s Entitlement to Termination 15.5 Employer’s Entitlement to Termination 15.5 Employer’s Entitlement to Termination
Clause 16: Suspension and Termination by Contractor Clause 16: Suspension and Termination by Contractor Clause 16: Suspension and Termination by Contractor
16.1 Contractor’s Entitlement to Suspend Work 16.1 Contractor’s Entitlement to Suspend Work 16.1 Contractor’s Entitlement to Suspend Work
16.2 Termination by Contractor 16.2 Termination by Contractor 16.2 Termination by Contractor
16.3 Cessation of Work and Removal of Contractor’s Equipment 16.3 Cessation of Work and Removal of Contractor’s Equipment 16.3 Cessation of Work and Removal of Contractor’s Equipment
16.4 Payment on Termination 16.4 Payment on Termination 16.4 Payment on Termination

Clause 17: Risk and Responsibility Clause 17: Risk and Responsibility Clause 17: Risk and Responsibility
17.1 Indemnities 17.1 Indemnities 17.1 Indemnities

17.2 Contractor’s Care of the Works 17.2 Contractor’s Care of the Works 17.2 Contractor’s Care of the Works
17.3 Employer’s Risks 17.3 Employer’s Risks 17.3 Employer’s Risks
17.4 Consequences of Employer’s Risks 17.4 Consequences of Employer’s Risks 17.4 Consequences of Employer’s Risks
17.5 Intellectual and Industrial Property Rights 17.5 Intellectual and Industrial Property Rights 17.5 Intellectual and Industrial Property Rights
17.6 Limitation of Liability 17.6 Limitation of Liability 17.6 Limitation of Liability
Clause 18: Insurance Clause 18: Insurance Clause 18: Insurance
18.1 General Requirements for Insurances 18.1 General Requirements for Insurances 18.1 General Requirements for Insurances
18.2 Insurance for Works and Contractor’s Equipment 18.2 Insurance for Works and Contractor’s Equipment 18.2 Insurance for Works and Contractor’s Equipment
18.3 Insurance against Injury to Persons and Damage to Property 18.3 Insurance against Injury to Persons and Damage to Property 18.3 Insurance against Injury to Persons and Damage to Property
18.4 Insurance for Contractor’s Personnel 18.4 Insurance for Contractor’s Personnel 18.4 Insurance for Contractor’s Personnel
Clause 19: Force Majeure Clause 19: Force Majeure Clause 19: Force Majeure
19.1 Definition of Force Majeure 19.1 Definition of Force Majeure 19.1 Definition of Force Majeure
19.2 Notice of Force Majeure 19.2 Notice of Force Majeure 19.2 Notice of Force Majeure
19.3 Duty to Minimise Delay 19.3 Duty to Minimise Delay 19.3 Duty to Minimise Delay
19.4 Consequences of Force Majeure 19.4 Consequences of Force Majeure 19.4 Consequences of Force Majeure
19.5 Force Majeure Affecting Subcontractor 19.5 Force Majeure Affecting Subcontractor 19.5 Force Majeure Affecting Subcontractor
19.6 Optional Termination, Payment and Release 19.6 Optional Termination, Payment and Release 19.6 Optional Termination, Payment and Release
19.7 Release from Performance under the Law 19.7 Release from Performance under the Law 19.7 Release from Performance under the Law
Clause 20: Claims, Disputes and Arbitration Clause 20: Claims, Disputes and Arbitration Clause 20: Claims, Disputes and Arbitration
20.1 Contractor’s Claims 20.1 Contractor’s Claims 20.1 Contractor’s Claims

20.2 Appointment of the Dispute Adjudication Board 20.2 Appointment of the Dispute Adjudication Board 20.2 Appointment of the Dispute Adjudication Board
20.3 Failure to Agree Dusted Adjudication Board 20.3 Failure to Agree Dusted Adjudication Board 20.3 Failure to Agree Dispute Adjudication Board
20.4 Obtaining Dispute Adjudication Board’s Decisions 20.4 Obtaining Dusted Adjudication Board’s Decisions 20.4 Obtaining Dispute Adjudication Board’s Decisions
20.5 Amicable Settlement 20.5 Amicable Settlement 20.5 Amicable Settlement
20.6 Arbitration 20.6 Arbitration 20.6 Arbitration
20.7 Failure to Comply with Dispute Adjudication Board’s Decision 20.7 Failure to Comply with Dispute Adjudication Board’s Decision 20.7 Failure to Comply with Dispute Adjudication Board’s Decision
20.8 Expiry of Dispute Adjudication Board’s Appointment 20.8 Expiry of Dispute Adjudication Board’s Appointment 20.8 Expiry of Dispute Adjudication Board’s Appointment

FIDIC 2017 Contract Structure
Red Book Yellow Book Silver Book
Clause 1: General Provisions Clause 1: General Provisions Clause 1: General Provisions
1.1 Definitions 1.1 Definitions 1.1 Definitions

1.2 Interpretation 1.2 Interpretation 1.2 Interpretation
1.3 Notices and Other Communications 1.3 Notices and other Communications 1.3 Notices and other Communications
1.4 Law and Language 1.4 Law and Language 1.4 Law and Language
1.5 Priority of Documents 1.5 Priority of Documents 1.5 Priority of Documents
1.6 Contract Agreement 1.6 Contract Agreement 1.6 Contract Agreement
1.7 Assignment 1.7 Assignment 1.7 Assignment
1.8 Care and Supply of Documents 1.8 Care and Supply of Documents 1.8 Care and Supply of Documents
1.9 Delayed Drawings or Instructions 1.9 Errors in the Employer’s Requirements 1.9 Employer’s Use of Contractor’s Documents
1.10 Employer’s Use of Contractor’s Documents 1.10 Employer’s Use of Contractor’s Documents 1.10 Contractor’s Use of Employer’s Documents
1.11 Contractor’s Use of Employer’s Documents 1.11 Contractor’s Use of Employer’s Documents 1.11 Confidentiality
1.12 Confidentiality 1.12 Confidentiality 1.12 Compliance with Laws
1.13 Compliance with Laws 1.13 Compliance with Laws 1.13 Joint and Several Liability
1.14 Joint and Several Liability 1.14 Joint and Several Liability 1.14 Limitation of Liability
1.15 Limitation of Liability 1.15 Limitation of Liability 1.15 Contract Termination
1.16 Contract Termination 1.16 Contract Termination
Clause 2: The Employer Clause 2: The Employer Clause 2: The Employer
2.1 Right of Access to the Site 2.1 Right of Access to the Site 2.1 Right of Access to the Site
2.2 Assistance 2.2 Assistance 2.2 Assistance
2.3 Employer’s Personnel and Other Contractors 2.3 Employer’s Personnel and Other Contractors 2.3 Employer’s Personnel and Other Contractors
2.4 Employer’s Financial Arrangements 2.4 Employer’s Financial Arrangements 2.4 Employer’s Financial Arrangements
2.5 Site Data and Items of Reference 2.5 Site Data and Items of Reference 2.5 Site Data and Items of Reference
2.6 Employer Supplied Materials and Employer’s Equipment 2.6 Employer Supplied Materials and Employer’s Equipment 2.6 Employer Supplied Materials and Employer’s Equipment
Clause 3: The Engineer Clause 3: The Engineer Clause 3: The Employer’s Administration
3.1 The Engineer 3.1 The Engineer 3.1 The Employer’s Representative
3.2 Engineer’s Duties and Authority 3.2 Engineer’s Duties and Authority 3.2 Other Employer’s Personnel
3.3 The Engineer’s Representative 3.3 The Engineer’s Representative 3.3 Delegated Persons
3.4 Delegation by the Engineer 3.4 Delegation by the Engineer 3.4 Instructions
3.5 Engineer’s Instructions 3.5 Engineer’s Instructions 3.5 Agreement or Determination
3.6 Replacement of the Engineer 3.6 Replacement of the Engineer 3.6 Meetings
3.7 Agreement or Determination 3.7 Agreement or Determination
3.8 Meetings 3.8 Meetings
Figure 2.2 Structure of the FIDIC 2017 Contracts.

Clause 4: The Contractor Clause 4: The Contractor Clause 4: The Contractor
4.1 Contractor’s General Obligations 4.1 Contractor’s General Obligations 4.1 Contractor’s General Obligations
4.2 Performance Security 4.2 Performance Security 4.2 Performance Security
4.3 Contractor’s Representative 4.3 Contractor’s Representative 4.3 Contractor’s Representative
4.4 Contractor’s Documents 4.4 Subcontractors 4.4 Subcontractors
4.5 Training 4.5 Nominated Subcontractors 4.5 Nominated Subcontractors
4.6 Co-operation 4.6 Co-operation 4.6 Co-operation
4.7 Setting Out 4.7 Setting Out 4.7 Setting Out
4.8 Health and Safety Obligations 4.8 Health and Safety Obligations 4.8 Health and Safety Obligations
4.9 Quality Management and Compliance Verification Systems 4.9 Quality Management and Compliance Verification Systems 4.9 Quality Management and Compliance Verification Systems
4.10 Use of Site Data 4.10 Use of Site Data 4.10 Use of Site Data
4.11 Sufficiency of the Accepted Contract Amount 4.11 Sufficiency of the Accepted Contract Amount 4.11 Sufficiency of the Contract Price
4.12 Unforeseeable Physical Conditions 4.12 Unforeseeable Physical Conditions 4.12 Unforeseeable Difficulties
4.13 Rights of Way and Facilities 4.13 Rights of Way and Facilities 4.13 Rights of Way and Facilities
4.14 Avoidance of Interference 4.14 Avoidance of Interference 4.14 Avoidance of Interference
4.15 Access Route 4.15 Access Route 4.15 Access Route
4.16 Transport of Goods 4.16 Transport of Goods 4.16 Transport of Goods
4.17 Contractor’s Equipment 4.17 Contractor’s Equipment 4.17 Contractor’s Equipment
4.18 Protection of the Environment 4.18 Protection of the Environment 4.18 Protection of the Environment
4.19 Temporary Utilities 4.19 Temporary Utilities 4.19 Temporary Utilities
4.20 Progress Reports 4.20 Progress Reports 4.20 Progress Reports
4.21 Security of the Site 4.21 Security of the Site 4.21 Security of the Site
4.22 Contractor’s Operations on Site 4.22 Contractor’s Operations on Site 4.22 Contractor’s Operations on Site
4.23 Archaeological and Geological Findings 4.23 Archaeological and Geological Findings 4.23 Archaeological and Geological Findings
Clause 5 : Subcontracting Clause 5: Design Clause 5: Design
5.1 Subcontractors 5.1 General Design Obligations 5.1 General Design Obligations
5.2 Nominated Subcontractors 5.2 Contractor’s Documents 5.2 Contractor’s Documents
5.3 Contractor’s Undertaking 5.3 Contractor’s Undertaking
5.4 Technical Standards and Regulations 5.4 Technical Standards and Regulations
5.5 Training 5.5 Training
5.6 As-Built Documents 5.6 As-Built Documents
5.7 Operation and Maintenance Manuals 5.7 Operation and Maintenance Manuals
5.8 Design Error 5.8 Design Error
Clause 6: Staff and Labour Clause 6: Staff and Labour Clause 6: Staff and Labour
6.1 Engagement of Staff and Labour 6.1 Engagement of Staff and Labour 6.1 Engagement of Staff and Labour
6.2 Rates of Wages and Conditions of Labour 6.2 Rates of Wages and Conditions of Labour 6.2 Rates of Wages and Conditions of Labour
6.3 Recruitment of Persons 6.3 Recruitment of Persons 6.3 Recruitment of Persons
6.4 Labour Laws 6.4 Labour Laws 6.4 Labour Laws
6.5 Working Hours 6.5 Working Hours 6.5 Working Hours
6.6 Facilities for Staff and Labour 6.6 Facilities for Staff and Labour 6.6 Facilities for Staff and Labour
6.7 Health and Safety of Personnel 6.7 Health and Safety of Personnel 6.7 Health and Safety of Personnel
6.8 Contractor’s Superintendence 6.8 Contractor’s Superintendence 6.8 Contractor’s Superintendence
6.9 Contractor’s Personnel 6.9 Contractor’s Personnel 6.9 Contractor’s Personnel
6.10 Contractor’s Records 6.10 Contractor’s Records 6.10 Contractor’s Records
6.11 Disorderly Conduct 6.11 Disorderly Conduct 6.11 Disorderly Conduct
6.12 Key Personnel 6.12 Key Personnel 6.12 Key Personnel

Clause 7: Plant, Materials and Workmanship Clause 7: Plant, Materials and Workmanship Clause 7: Plant, Materials and Workmanship
7.1 Manner of Execution 7.1 Manner of Execution 7.1 Manner of Execution

7.2 Samples 7.2 Samples 7.2 Samples
7.3 Inspection 7.3 Inspection 7.3 Inspection
7.4 Testing by the Contractor 7.4 Testing by the Contractor 7.4 Testing by the Contractor
7.5 Defects and Rejection 7.5 Defects and Rejection 7.5 Defects and Rejection
7.6 Remedial Work 7.6 Remedial Work 7.6 Remedial Work
7.7 Ownership of Plant and Materials 7.7 Ownership of Plant and Materials 7.7 Ownership of Plant and Materials
7.8 Royalties 7.8 Royalties 7.8 Royalties
Clause 8: Commencement, Delays and Suspension Clause 8: Commencement, Delays and Suspension Clause 8: Commencement, Delays and Suspension
8.1 Commencement of Works 8.1 Commencement of Works 8.1 Commencement of Works

8.2 Time for Completion 8.2 Time for Completion 8.2 Time for Completion
8.3 Programme 8.3 Programme 8.3 Programme
8.4 Advance Warning 8.4 Advance Warning 8.4 Advance Warning
8.5 Extension of Time for Completion 8.5 Extension of Time for Completion 8.5 Extension of Time for Completion
8.6 Delays Caused by Authorities 8.6 Delays Caused by Authorities 8.6 Delays Caused by Authorities
8.7 Rate of Progress 8.7 Rate of Progress 8.7 Rate of Progress
8.8 Delay Damages 8.8 Delay Damages 8.8 Delay Damages
8.9 Employer’s Suspension 8.9 Employer’s Suspension 8.9 Employer’s Suspension
8.10 Consequences of Employer’s Suspension 8.10 Consequences of Employer’s Suspension 8.10 Consequences of Employer’s Suspension
8.11 Payment for Plant and Materials after Employer’s Suspension 8.11 Payment for Plant and Materials after Employer’s Suspension 8.11 Payment for Plant and Materials after Employer’s Suspension
8.12 Prolonged Suspension 8.12 Prolonged Suspension 8.12 Prolonged Suspension
8.13 Resumption of Work 8.13 Resumption of Work 8.13 Resumption of Work
Clause 9: Tests on Completion Clause 9: Tests on Completion Clause 9: Tests on Completion
9.1 Contractor’s Obligations 9.1 Contractor’s Obligations 9.1 Contractor’s Obligations

9.2 Delayed Tests 9.2 Delayed Tests 9.2 Delayed Tests
9.3 Retesting 9.3 Retesting 9.3 Retesting
9.4 Failure to Pass Tests on Completion 9.4 Failure to Pass Tests on Completion 9.4 Failure to Pass Tests on Completion

Clause 10: Employer’s Taking Over Clause 10: Employer’s Taking Over Clause 10: Employer’s Taking Over
10.1 Taking Over of the Works and Sections 10.1 Taking Over of the Works and Sections 10.1 Taking Over the Works and Sections
10.2 Taking Over Parts 10.2 Taking Over Parts 10.2 Taking Over of Parts of the Works
10.3 Interference with Tests on Completion 10.3 Interference with Tests on Completion 10.3 Interference with Tests on Completion
10.4 Surfaces Requirement Reinstatement 10.4 Surfaces Requirement Reinstatement
Clause 11: Defects After Taking Over Clause 11: Defects After Taking Over Clause 11: Defects After Taking Over
11.1 Completion of Outstanding Work and Remedying Defects 11.1 Completion of Outstanding Work and Remedying Defects 11.1 Completion of Outstanding Work and Remedying Defects
11.2 Cost of Remedying Defects 11.2 Cost of Remedying Defects 11.2 Cost of Remedying Defects
11.3 Extension of Defects Notification Period 11.3 Extension of Defects Notification Period 11.3 Extension of Defects Notification Period
11.4 Failure to Remedy Defects 11.4 Failure to Remedy Defects 11.4 Failure to Remedy Defects
11.5 Remedying of Defective Work off Site 11.5 Remedying of Defective Work off Site 11.5 Remedying of Defective Work off Site
11.6 Further Tests after Remedying Defects 11.6 Further Tests after Remedying Defects 11.6 Further tests after Remedying Defects
11.7 Right of Access after Taking Over 11.7 Right of Access after Taking Over 11.7 Right of Access after Taking Over
11.8 Contractor to Search 11.8 Contractor to Search 11.8 Contractor to Search
11.9 Performance Certificate 11.9 Performance Certificate 11.9 Performance Certificate
11.10 Unfulfilled Obligations 11.10 Unfulfilled Obligations 11.10 Unfulfilled Obligations
11.11 Clearance of Site 11.11 Clearance of Site 11.11 Clearance of Site
Clause 12: Measurement and Valuation Clause 12: Tests after Completion Clause 12: Tests after Completion
12.1 Works to be Measured 12.1 Procedure for Tests after Completion 12.1 Procedure for Tests after Completion
12.2 Method of Measurement 12.2 Delayed Tests 12.2 Delayed Tests
12.3 Valuation of the Works 12.3 Retesting 12.3 Retesting
12.4 Omissions 12.4 Failure to Pass Tests after Completion 12.4 Failure to Pass Tests after Completion
Clause 13: Variations and Adjustments Clause 13: Variations and Adjustments Clause 13: Variations and Adjustments
13.1 Right to Vary 13.1 Right to Vary 13.1 Right to Vary

13.2 Value Engineering 13.2 Value Engineering 13.2 Value Engineering
13.3 Variation Procedure 13.3 Variation Procedure 13.3 Variation Procedure
13.4 Provisional Sums 13.4 Provisional Sums 13.4 Provisional Sums
13.5 Daywork 13.5 Daywork 13.5 Daywork
13.6 Adjustments for Changes in Laws 13.6 Adjustments for Changes in Laws 13.6 Adjustments for Changes in Laws
13.7 Adjustments for Changes in Cost 13.7 Adjustments for Changes in Cost 13.7 Adjustments for Changes in Cost

Clause 14: Contract Price and Payment Clause 14: Contract Price and Payment Clause 14: Contract Price and Payment
14.1 The Contract Price 14.1 The Contract Price 14.1 The Contract Price
14.2 Advance Payment 14.2 Advance Payment 14.2 Advance Payment
14.3 Application for Interim Payment 14.3 Application for Interim Payment 14.3 Application for Interim Payment
14.4 Schedule of Payments 14.4 Schedule of Payments 14.4 Schedule of Payments
14.5 Plant and Materials intended for the Works 14.5 Plant and Materials intended for the Works 14.5 Plant and Materials intended for the Works
14.6 Issue of IPC 14.6 Issue of IPC 14.6 Interim Payments
14.7 Payment 14.7 Payment 14.7 Payment
14.8 Delayed Payment 14.8 Delayed Payment 14.8 Delayed Payment
14.9 Release of Retention Money 14.9 Release of Retention Money 14.9 Release of Retention Money
14.10 Statement at Completion 14.10 Statement at Completion 14.10 Statement at Completion
14.11 Final Statement 14.11 Final Statement 14.11 Final Statement
14.12 Discharge 14.12 Discharge 14.12 Discharge
14.13 Issue of FPC 14.13 Issue of FPC 14.13 Final Payment
14.14 Cessation of Employer’s Liability 14.14 Cessation of Employer’s Liability 14.14 Cessation of Employer’s Liability
14.15 Currencies of Payment 14.15 Currencies of Payment 14.15 Currencies of Payment
Clause 15: Termination by Employer Clause 15: Termination by Employer Clause 15: Termination by Employer
15.1 Notice to Correct 15.1 Notice to Correct 15.1 Notice to Correct

15.2 Termination for Contractor’s Default 15.2 Termination for Contractor’s Default 15.2 Termination for Contractor’s Default
15.3 Valuation after Termination for Contractor’s Default 15.3 Valuation after Termination for Contractor’s Default 15.3 Valuation after Termination for Contractor’s Default
15.4 Payment after Termination for Contractor’s Default 15.4 Payment after Termination for Contractor’s Default 15.4 Payment after Termination for Contractor’s Default
15.5 Termination for Employer’s Convenience 15.5 Termination for Employer’s Convenience 15.5 Termination for Employer’s Convenience
15.6 Valuation after Termination for Employer’s Convenience 15.6 Valuation after Termination for Employer’s Convenience 15.6 Valuation after Termination for Employer’s Convenience
15.7 Payment after Termination for Employer’s Convenience 15.7 Payment after Termination for Employer’s Convenience 15.7 Payment after Termination for Employer’s Convenience
Clause 16: Suspension and Termination by Contractor Clause 16: Suspension and Termination by Contractor Clause 16: Suspension and Termination by Contractor
16.1 Suspension by Contractor 16.1 Suspension by Contractor 16.1 Suspension by Contractor

16.2 Termination by Contractor 16.2 Termination by Contractor 16.2 Termination by Contractor
16.3 Contractor’s Obligations after Termination 16.3 Contractor’s Obligations after Termination 16.3 Contractor’s Obligations after Termination
16.4 Payment after Termination by Contractor 16.4 Payment after Termination by Contractor 16.4 Payment after Termination by Contractor
Clause 17: Care of the Works and Indemnities Clause 17: Care of the Works and Indemnities Clause 17: Care of the Works and Indemnities
17.1 Responsibility for Care of the Works 17.1 Responsibility for Care of the Works 17.1 Responsibility for Care of the Works
17.2 Liability for Care of the Works 17.2 Liability for Care of the Works 17.2 Liability for Care of the Works
17.3 Intellectual and Industrial Property Rights 17.3 Intellectual and Industrial Property Rights 17.3 Intellectual and Industrial Property Rights
17.4 Indemities by Contractor 17.4 Indemnities by Contractor 17.4 Indemnities by Contractor
17.5 Indemities by Employer 17.5 Indemnities by Employer 17.5 Indemnities by Employer
17.6 Shared Indemnities 17.6 Shared Indemnities 17.6 Shared Indemnities

Clause 18: Exceptional Events Clause 18: Exceptional Events Clause 18: Exceptional Events
18.1 Exceptional Events 18.1 Exceptional Events 18.1 Exceptional Events

18.2 Notice of an Exceptional Event 18.2 Notice of an Exceptional Event 18.2 Notice of an Exceptional Event
18.3 Duty to Mainimise Delay 18.3 Duty to Minimise Delay 18.3 Duty to Minimise Delay
18.4 Consequences of an Exceptional Event 18.4 Consequences of an Exceptional Event 18.4 Consequences of an Exceptional Event
18.5 Optional Termination 18.5 Optional Termination 18.5 Optional Termination
18.6 Release from Performance under the Law 18.6 Release from Performance under the Law 18.6 Release from Performance under the Law
Clause 19: Insurance Clause 19: Insurance Clause 19: Insurance
19.1 General Requirements 19.1 General Requirements 19.1 General Requirements

19.2 Insurance to be provided by the Contractor 19.2 Insurance to be provided by the Contractor 19.2 Insurance to be provided by the Contractor
Clause 20: Employer’s and Contractor’s Claims Clause 20: Employer’s and Contractor’s Claims Clause 20: Employer’s and Contractor’s Claims
20.1 Claims 20.1 Claims 20.1 Claims

20.2 Claims for Payment and/or EOT 20.2 Claims for Payment and/or EOT 20.2 Claims for Payment and/or EOT
Clause 21: Disputes and Arbitration Clause 21: Disputes and Arbitration Clause 21: Disputes and Arbitration
21.1 Constitution of the DAAB 21.1 Constitution of the DAAB 21.1 Constitution of the DAAB
21.2 Failure to appoint DAAB Members 21.2 Failure to appoint DAAB Members 21.2 Failure to appoint DAAB Members
21.3 Avoidance of Disputes 21.3 Avoidance of Disputes 21.3 Avoidance of Disputes
21.4 Obtaining DAAB’s Decision 21.4 Obtaining DAAB’s Decision 21.4 Obtaining DAAB’s Decision
21.5 Amicable Settlement 21.5 Amicable Settlement 21.5 Amicable Settlement
21.6 Arbitration 21.6 Arbitration 21.6 Arbitration
21.7 Failure to Comply with DAAB’s Decision 21.7 Failure to Comply with DAAB’s Decision 21.7 Failure to Comply with DAAB’s Decision
21.8 No DAAB in Place 21.8 No DAAB in Place 21.8 No DAAB in Place

with the FIDIC Conditions of Contract for Works of Civil Engineering Construction
1987.
The Subcontract is similar to the Conditions of Contract for Construction 1999, and
many of the clauses are “back to back” with the Main Contract, but some are unique
to the Subcontractor.
Again, as with the Main Contract, there are:
• General Conditions
• Particular Conditions
There are also, similar to the main contract, various sample forms for use with the
Subcontract.
The Structure of the General Conditions is:

3 The Contractor

In 2019, FIDIC launched the Conditions of Subcontract for Plant and Design-Build, but
curiously this is only for use with the FIDIC 1999 Yellow Book.
This subcontract is structured as follows:

38 FIDIC 1999 becomes FIDIC 2017

This subcontract is for use between a Contractor and a Subcontractor where the main
contract is the Conditions of Contract for Plant and Design-Build (Yellow Book) 1999
Edition (not the 2017 version) and is to be used where the subcontractor is both design-
ing and building part of the main works. Note that it is not used where the Subcontrac-
tor is only building/supplying part of the works.
The Conditions of Subcontract for Plant and Design-Build are based on the Conditions
of Subcontract for Construction, 2011 (commonly referred to as the “Red Book (1999)
Subcontract”), but have been amended to be used with the FIDIC 1999 Yellow Book.
Basic differences between the FIDIC 1999 and 2017 Contracts

The FIDIC 2017 Contracts are structurally similar to the FIDIC 1999 Contracts, al-
though they are considerably larger, with far more pages than the previous editions.
For example, the General Conditions within the Red Book now comprise 106 pages,
whereas the FIDIC 1999 version was only 62 pages.
The FIDIC 2017 Red, Yellow and Silver Books all have the same structure, each
having 21 Clauses with mostly the same titles, with the following exceptions:
• The Red and Yellow Books both have an Engineer to act for the Employer, but the
Silver Book has an Employer’s Representative, so Clause 3 of the Red and Yellow
Books is entitled “The Engineer”, whilst Clause 3 of the Silver Book is entitled
“The Employer’s Administration”.
• Because the Yellow and Silver Books are Design and Build Contracts Clause 5
of those books is entitled “Design”, whilst Contractor’s design (if applicable) is
incorporated within Clause 4.1.
• The Red Book is based on measurement of the Works for valuation and pay-
ment purposes, so Clause 12 of the Red Book is entitled “Measurement and Val-
uation”, whilst Clause 12 of the Yellow and Silver Books is entitled “Tests after
Completion”.
There is also a significant increase in administrative requirements within the FIDIC

2017 Contracts, mostly to achieve greater certainty of project outcome over a wider
range of projects in a wider range of locations, though many users may consider them
as over wordy and prescriptive.
Some Sub-Clauses have been moved to what the drafters believe are more suitable
locations within the General Conditions of Contract. For example:
• Limitation of liability has been moved from Clause 17 of the FIDIC 1999 Con-
tracts to Clause 1 in FIDIC’s 2017 contract updates. This was done to align with
the changes to Clause 17 (please see below).
• The Employer’s obligation to provide Site Data, and the provisions relating to ma-
terials and/or equipment to be supplied by the Employer for the Contractor’s use
have been moved from Clause 4 to new Sub-Clauses under Clause 2.
• Currency of payment for Variations has been moved from Sub-Clause 13.4 in the
FIDIC 1999 contracts to Sub-Clause 14.15 in the FIDIC 2017 Contracts.
The Contracts are also more balanced in the rights and obligations of the Parties, and
a number of the contractual provisions that applied to just one Party under the FIDIC
1999 forms of contract are now reciprocal between the Employer and the Contractor.
For example:
• Confidentiality of contract documents;

• Assistance to obtain the necessary permits/ permissions/licences/approvals for
the Works;
• The right to notify a claim if the other Party does not obtain the necessary per-
mits/permissions/ licences/approvals or comply with one that has been obtained;
• The right of one Party to require the other Party to remove from his/her person-
nel any person who is found to have engaged in corrupt, fraudulent or coercive
practice;
• The prohibition of recruitment by one Party from the other Party’s personnel;
• The claims procedure to be followed is the same for Contractor’s and Employer’s
claims.
Where relevant, in later chapters, as the various parts of the FIDIC 2017 Contracts are
reviewed, any changes in the contents of Clauses and Sub-Clauses between the FIDIC
1999 Contracts and the FIDIC 2017 Contracts are mentioned.
There are many improvements in the FIDIC 2017 Contract forms, though there are
a number of examples of possibly unnecessary changes, bearing in mind that people
do prefer some familiarity, so it is expected that there will be challenges as the use of
the FIDIC contracts grows.
It would appear that many knowledgeable and experienced practitioners were con-
sulted in the drafting of the FIDIC 2017 as there have been quite substantial changes
across the spectrum in terms of communications, programme, quality, claims and
dispute avoidance and resolution.
In the drafting process FIDIC’s 2017 Contract updates were subjected to a number
of systematic reviews and controls by over 50 eminent and experienced professionals,
specially chosen and invited by FIDIC from across the spectrum of interested users
(including employers, contractors, engineers, lawyers and bilateral/multilateral devel-
opment banks from around the world).
In addition to the Yellow, Red and Silver Books, there is an updated FIDIC White
Book, which is intended for consultancy/advisory services, and which was published
in the spring of 2017.
With the aim of increasing clarity and reducing potential misunderstandings on
interpretation, which is in itself to be welcomed, FIDIC has improved the contract
provisions in the 2017 Contracts by making them more prescriptive and introducing
structured project management and procedural mechanisms.
These set out exactly what is expected from the Employer, the Contractor, the Engi-
neer and the Employer’s Representative (where appropriate) during the performance
of the Contract.
In updating the three forms of contract, FIDIC has also attempted to use simple
language since many users’ first language is not English, and again that must be wel-
comed. This approach is also intended to facilitate the translation of the documents
into other languages.
As recognised international standard forms of construction contract, FIDIC’s aim
is to improve and strengthen the application of these contract forms in all jurisdic-
tions, and in all situations, and there are references to relevant legislation and in many
cases recommendations that the Parties should seek legal advice where appropriate,
particularly regarding issues of termination, specifically where it is actioned for the
Employer’s convenience, and also references to terms such as “gross negligence” which
can have different meanings under differing legislations.
All three contracts have been prepared for projects where the contract is subject to
a tendering process, but they may also, with a few adjustments, be applied without a
tender, for example direct negotiation between the Parties.
In addition to the Red, Yellow and Silver Books, an updated FIDIC White Book for
consultancy/advisory services was published in the spring of 2017, though it is not the
intention of the author to review the White Book in any detail within this book.
FIDIC also offers a wide variety of other standard contracts.
Of all the contracts in use today, FIDIC is the nearest to a truly “international”
form of contract for construction works, large-scale machinery supplies, infrastruc-
ture projects, consultancy services, etc.
The aim is to have a standard form for international use which tries to achieve a bal-
ance between comprehensive coverage of the circumstances, problems and obligations
which are likely, but does not try to cover every conceivable problem, an impossible
task which would result in an unmanageable document.
Written contracts are all about allocating risk and obligations and providing the
appropriate machinery for resolving issues likely to be encountered.
The previous launch of the FIDIC 1999 Contracts

Note that when the FIDIC 1999 Contracts were originally launched they were not “re-
visions” of the previous FIDIC contracts, they were “brand new” versions with many
structural changes, and hence, they were referred to as “First Edition” Contracts.
The general layout of the 1999 Contracts is as follows:
• General Conditions, including an Appendix entitled “General Conditions of Dis-

pute Adjudication Agreement” which includes the Procedural Rules for a Dispute
Adjudication Board (DAB);
• A section giving guidance for the preparation of any Particular Conditions, this
section also includes examples of guarantees, securities and bonds that are com-
monplace on international projects;
• A section entitled “Forms”, here FIDIC provides examples of:
• Letter of Tender with supporting Appendix to Tender;

• Contract Agreement;
• DAB Agreements (either a one-person DAB or three-person DAB).
Within the very useful Forward to the Contract, there are graphics indicating time-
lines relative to:
1 Principal events from invitation to tender to return of the Performance Security;

2 Payment procedures under Clause 14 (Contract Price and Payment);
3 The sequence of events under Clause 20 (Claims, Disputes and Arbitration) fol-
lowing either Party giving notice of its intention to refer a dispute to a DAB.
As stated above, the main contracts (referred to as the “Rainbow Suite”), which were
originally published in September 1999, are discussed below.
Conditions of Contract for Construction (The “Red Book”)

The Red Book is recommended for building or engineering works where most of the de-
sign is provided by the Employer or his Representative. The Contractor undertakes the
construction work in accordance with the Employer’s design; however, the works may in-
clude some Contractor-designed civil, mechanical, electrical and/or construction works.
The basis of payment to the Contractor is through rates and prices in the Bills of
Quantities, though it can be amended to provide a lump sum price or as a cost reim-
bursable contract.
Other features of the Red Book are:
• The Contract is administered on behalf of the Employer by the Engineer, its ac-
tions including approval of work, certification of payments and determination of
entitlement to Extensions of Time.
• The Employer bears the risks of “adverse physical conditions” and the “operation
of the forces of nature” that are considered to be Unforeseeable.
• Claims by both Parties have to follow procedures, with various time scales at-
tached, some of which contain time bars.
• The Contractor has some financial protection, in that it can request evidence from
the Employer that it has the finances to pay the estimated Contract Price.
• Materials can be paid for both on and off Site if strict criteria are followed, includ-
ing the listing of materials for which payment may be sought within the Contrac-
tor’s tender.
Conditions of Contract for Plant and Design-Build (The “Yellow Book”)

The Yellow Book is recommended for the provision of electrical and/or mechanical
plant, and for the design and execution of building or engineering works. The Contrac-
tor designs the Works, in accordance with the Employer’s Requirements.
Design and build as a procurement strategy is explored in more detail within Chap-
ter 5 (“Design”).
Payment to the Contractor is based upon a lump sum price and which may be as-
sessed a milestone schedule to be achieved by the Contractor. The Yellow Book will
most likely be used for process plants and the like where a high degree of offsite man-
ufacture of plant and equipment is foreseen and payment terms can be drafted to
recognise this situation subject to the listing of such plant and equipment within the
Contractor’s tender as within the Red Book.
Other features of the Yellow Book are:
• The Contract is administered on behalf of the Employer by the Engineer, its ac-
tions including approval of work, certification of payments and determination of
entitlement to Extensions of Time.
• Testing procedures leading to completion are likely to be more complicated than
within the Red Book, again reflecting the likely nature of the project.
• The Employer bears the risks of “adverse physical conditions” and the “operation
of the forces of nature” that are considered to be Unforeseeable.
• Claims by both Parties have to follow procedures, with various time scales at-
tached, some of which contain time bars.
• The Contractor has some financial protection, in that it can request evidence from
the Employer that it has the finances to pay the estimated Contract Price.
• Materials can be paid for both on and off Site if strict criteria are followed, includ-
ing the listing of materials for which payment may be sought within the Contrac-
tor’s tender.
Conditions of Contract for EPC/Turnkey Project (The “Silver Book”)

The Silver Book is suitable for the provision on a turnkey basis of a process or power
plant, of a factory or similar facility or of an infrastructure project or other type of
development, where
• A higher degree of certainty of final price and time is required, and

• The Contractor takes total responsibility for the design and execution of the project.
Short Form of Contract (The “Green Book”)

The final contract to be issued in the FIDIC 1999 Contracts was the Green Book or
Short Form of Contract, and is worth a mention.
This Contract recognised a need for a much simpler and shorter FIDIC contract, to
suit projects with a relatively low Contract Price and a short time duration.
The Green Book is suitable for a small contract (say, under £250,000 or equivalent
local currency) if the construction time is short (say, less than six months), or for rel-
atively simple or repetitive work, irrespective of whether the design is provided by the
Employer or the Contractor, and of whether the project involves civil, electrical, me-
chanical and/or construction works.
The Contract itself is very familiar as a FIDIC contract in terms of its structure and
format, and any reader will recognise the Contract as being from the same family as
the Red, Yellow and Silver Books, albeit it has only 15 clauses and a total of 10 pages
but is designed to be very flexible.
The Clauses are short and easily understood, and whilst design can be carried out
by either Party, an Engineer is not foreseen; however, the Employer may appoint a
Representative.
The Price, and the payments to the Contractor, can be set as a lump sum, by remeas-
urement or cost reimbursable.
As with the major forms the Contract includes guidance notes (noted as not forming
part of the Contract) as well as an Agreement together with its Appendix and Rules
for Adjudication.
The noticeable absentee being the Particular Conditions section, in this respect
FIDIC considers that the Green Book can work without such conditions; however,
a cautionary note is provided should an Employer deem it necessary to amend the
drafted Contract.
Structure of Contract

7 Time for Completion

10 Variations and Claims
12 Default
13 Risk and Responsibility
14 Insurance
15 Resolution of Disputes
A brief summary of the FIDIC Short Form of Contract (Green Book)

Clause 1: General Provisions
• There is a very short list of definitions used in the Conditions of Contract and is
divided into “The Contract”, “Persons”, “Dates, Tests and Periods”, “Money and
Payments” and “Other Definitions”.
• The Clause then covers interpretation such as gender, singular/plural, in addition
to marginal words and other headings not forming the Conditions.
• All the documents comprising the contract are mutually explanatory of one an-
other i.e. so there is no priority of documents.
• The Law of the Contract is stated in the Appendix.
• All communications are to be written in the language stated in the Appendix.
• The Contractor is required to comply with the Laws of the countries where activ-
ities are performed.
Clause 2: The Employer

• The Employer is required to give the Contractor the right of access at the times
stated in the Appendix.
• The Employer is required to “assist” the Contractor where possible in obtaining
copies of the Laws of the Country and any necessary permits to work in that
country. It is fundamentally the responsibility of the Contractor to obtain these.
• The Contractor is required to comply with all instructions given by the Employer.
• No approval or consent by the Employer affects the Contractor’s obligations.
Clause 3: Employer’s Representative

• One of the Employer’s personnel shall have authority to act for him. This person
is stated in the Appendix.
• The Employer may appoint a firm or individual to act for him. This person is
Clause 4: The Contractor

• Sub-Clause 4.1 states the Contractor’s obligation to execute the Works.
• Sub-Clause 4.3 requires the Contractor to name and receive consent to
representative.
• Sub-Clause 4.4 covers Subcontractors, who are subject to the Employer’s consent.
• Sub-Clause 4.2 requires the Contractor to provide a Performance Security if
Clause 5: Design By Contractor

The Contractor carries out any design as required by the Appendix. All designs are to
be submitted to the Employer who may comment within 14 days of receipt.
The Contractor shall be responsible for his design including infringing any patents,
copyrights, etc.
Clause 6: Employer’s Liabilities

• There are 16 Employer’s Liabilities listed in the contract, any of which can give rise
to an Extension of Time under Clause 7.3.
Clause 7: Time for Completion

• The Contractor is required to complete the Works within the Time for Completion.
• The Contractor is required to submit a programme to the Employer in the form
• There are 16 grounds for Extension of Time, basically the Employer’s Liabilities
under Clause 6.1.
• The Contractor is liable to the Employer and pays the amounts stated in the Appendix.
Clause 8: Taking Over

• The Contractor is to notify the Employer when he considers that the Works are
complete.
• The Employer notifies the Contractor when he considers the Contractor has com-
pleted the Works.
Clause 9: Remedying Defects
• The Employer may notify the Contractor at any time of a Defect. The Contractor
remedies at no cost to the Employer.
• The Employer may give instructions to the Contractor to uncover or test any work.
The Contractor is paid if this shows that the work was not defective.
Clause 10: Variations and Claims

• The Employer may instruct Variations.
• Variations are valued at lump sums or rates agreed by the Parties.
• Either Party is required to notify the other as soon as it is aware of anything
that could delay or disrupt the Works or give rise to a claim for additional pay-
ment. The Contractor’s rights can be affected by the timing or lack of an Early
Warning.
• The Contractor can recover costs as a result of Employer’s Liabilities.
• The Contractor is required to submit an itemised breakdown of the value of Var-
iations and claims within 28 days of an instruction or event giving rise to a claim.
Clause 11: Contract Price and Payment

• The Works are valued in accordance with the Appendix.
• The Contractor is required to submit a Statement to the Employer showing the
amounts to which he considers himself entitled.
• Within 28 days of delivery of each Statement, the Employer pays the Contractor
the amount due.
• One half of the retention is released within 14 days of a Take-Over Notice.
• The remaining retention is released within 14 days of the expiry of the Defects
Notification Period.
• Within 42 days of the expiry of the Defects Notification Period, the Contractor is
to submit a final account.
• Payments are in the currency of stated in the Appendix.
• The Contractor is entitled to be paid interest at the rate stated in the Appendix.
Clause 12: Default

• If the Contractor defaults by abandoning the Works, refusing to comply with an
instruction or fails to proceed with the Works, the Employer can issue a notice. If
the Contractor has not remedied within 14 days the Employer may give notice to
terminate the Contract.
• If the Employer fails to pay, or is in breach of the Contract the Contractor may
give notice. If the matter is not remedied within 7 days the Contractor may sus-
pend the Works, if not remedied within 28 days, the Contractor can terminate.
• Either Party may terminate immediately due to insolvency.
• Following termination, the Contractor is entitled to be paid any outstanding
amounts and if the Contractor has terminated, loss of profit.
Clause 13: Risk and Responsibility
• This Sub-Clause defines the Contractor’s responsibility for care of the Works.
• Sub-Clause 17.3 lists the risks which, if they occur, entitle the Contractor to com-
pensation in respect of loss or damage to the Works.
Clause 14: Insurance

• The Contractor is required to take out and maintain insurance for loss or damage
to the Works, third-party liability and Employer’s Liability.
• All instances are required to conform with any requirements in the Appendix.
• If the Contractor fails to insure, the Employer may take cover and deduct the pre-
miums from the Contractor.
Clause 15: Resolution Of Disputes

• Any dispute may be referred to the Adjudicator named in the Appendix.
• If a Party is dissatisfied with an Adjudicator’s decision, the Party can give notice within
28 days of receipt of the decision, otherwise the adjudicator’s decision is binding.
• Any dispute which has been the subject of a notice of dissatisfaction can be settled
by reference to arbitration.
What is the difference between the FIDIC Conditions of Contract for

Plant and Design-Build (The “Yellow Book”) and the Conditions of
Contract for EPC/Turnkey Project (The “Silver Book”)?
FIDIC 1999 and 2017 Contract users are often confused about whether to use the Con-
ditions of Contract for Plant and Design-Build (The “Yellow Book”) or the Conditions
of Contract for EPC/Turnkey Project (The “Silver Book”).
They are both design and build contracts, but there are some significant differences
between them.
Let us first consider the primary features of both contracts:
Conditions of Contract for Plant and Design-Build (The “Yellow Book”)

• The FIDIC Red and Yellow Books are fairly simple, in that they share a fairly
balanced view of risk sharing between the two Parties, so that anything for which
the Contractor should logically receive an Extension of Time and/or recovery of cost
(possibly with Profit) will probably be contained within the provisions, with the Em-
ployer only giving additional time and/or paying the Contractor for the risk if it oc-
curs. The Contractor effectively does not have to include within its tender for risks
that are particularly difficult to value, as relief is available through the Contract.
• The period for pricing tenders does not have to be particularly lengthy (certainly
not in comparison with the Silver Book) and where risks such as hydrological,
sub-surface and other matters affecting the Site are not readily available, those
risks remain with the Employer.
• It is not possible for the tenderers to properly inspect the Site, or the amount of
underground work is so significant or complex that for the Contractor to price all
risks under the Silver Book would be both inequitable and cost prohibitive.
• Similar to the Conditions of Contract for Construction (The “Red Book”) the Yel-
low Book is administered on behalf of the Employer by the Engineer.
• The Yellow Book is structured similar to the Red Book, the primary difference
being the Contractor’s Design Clauses, where under the Red Book, the Contractor
may have design responsibility, whereas in the Yellow Book, the Contractor has
full design responsibility.
• The Employer via its Engineer requires a close relationship with the Contractor
throughout the duration of the project including the more likely potential to cause
change to design.

Let us first consider Engineering, Procurement and Construction (EPC) Contracts
generally, which are a common form of contract used to undertake large-scale con-
struction works, including complex oil and gas projects.
Under an EPC Contract a Contractor is obliged to deliver a complete facility to a
developer who needs only to “turn a key” to start operating the completed facility;
hence, EPC Contracts are sometimes called “turnkey contracts”.
In addition to delivering a complete facility, the Contractor must deliver that facility
for a guaranteed price by a guaranteed date and it must perform to the specified level.
Failure to comply with any requirements will usually result in the Contractor incur-
ring significant financial liabilities.
EPC Contracts present a high risk to Contractors for the following reasons:
Single point of responsibility

The Contractor is responsible for all design, engineering, procurement, construction,
commissioning and testing activities. Therefore, if any problems occur, the Contractor
is required to remedy and/or compensate the Employer.
With many large EPC Contracts, the Contractor consists of a Joint Venture (JV)
between various entities. It is critical that the relationship between those entities is
known, and also the EPC Contract must state that those entities are jointly and sever-
ally liable to the Employer.
Fixed Contract Price

Risk of cost overruns and the benefit of any cost savings are the Contractor’s liability.
The Contractor has a very limited ability to claim additional money which is limited to
circumstances where the Employer has directly delayed the Contractor or has ordered
Variations to the Works.
Fixed Time for Completion

EPC Contracts include a guaranteed completion date that is either a fixed date or a
fixed period after the commencement of the EPC Contract (FIDIC contracts have a
Commencement Date and a Time for Completion).
If the time scale is not met, the Contractor is liable for delay/liquidated damages.
These damages are designed to compensate the Employer for loss and damage suffered
as a result of late completion of the facility, as if the Works had not been completed late.
In addition, the EPC Contract must provide for the Contractor to be granted an Ex-
tension of Time when it is delayed by the acts or omissions of the Employer to prevent
time becoming at large.
Performance specification
Unlike a traditional construction contract, an EPC Contract usually contains a per-
formance specification.
The performance specification details the performance criteria that the Contractor
must meet but does not dictate how they must be met. This is left to the Contractor to
determine. A delicate balance must be maintained. The specification must be detailed
enough to ensure the Employer knows what it is contracting to receive but not so de-
tailed that if problems arise the Contractor can argue they are not its responsibility.
Whilst there are, as described above, numerous advantages to using an EPC Con-
tract, there are some disadvantages. These include the fact that it can result in a higher
contract price than alternative contractual structures. This higher price is a result of
a number for factors not least of which is the allocation of almost all the construction
risk to the Contractor.
This has a number of consequences, one of which is that the Contractor will have to
factor into its price the cost of absorbing those risks. This will result in the Contractor
building contingencies into the contract price for events that are unforeseeable and/or
unlikely to occur. If those contingencies were not included the contract price would be
lower. However, the Employer would bear more of the risk of those unlikely or unfore-
seeable events. Sponsors have to determine, in the context of their particular project,
whether the increased price is worth paying.
As a result, sponsors and their advisers must critically examine the risk allocation
on every project. Risk allocation should not be an automatic process.
Instead, the Employer should allocate risk in a sophisticated way that delivers the
most efficient result.
For example, if a project is being undertaken in an area with unknown geology and
without the time to undertake a proper geotechnical survey, the Employer may be best
served by bearing the site condition risk itself as it will mean the Contractor does not
have to price a contingency it has no way of quantifying. This approach can lower the
risk premium paid by the Employer.
Alternatively, the opposite may be true. The Employer may wish to pay for the con-
tingency in return for passing on the risk which quantifies and caps its exposure.
This type of analysis must be undertaken on all major risks prior to going out to
tender. Another consequence of the risk allocation is the fact that there are relatively
few engineering and construction companies that can and are willing to enter into
EPC Contracts. As mentioned in the Introduction some bad publicity and a tightening
insurance market have further reduced the pool of potential EPC Contractors. The
scarcity of EPC Contractors can also result in relatively high contract prices.
Performance Security
It is standard for the Contractor to be required to provide a Performance Security to
protect the Employer should the Contractor not comply with its obligations under the
EPC Contract. The security takes a number of forms including a bank guarantee or
bond for a percentage, normally in the range of 5%–15%, of the Contract Price.
Variations
The Employer has the right to order Variations and to agree to Variations suggested by
the Contractor. If the Employer wants the right to omit works either in their entirety
or to be able to engage a different Contractor this must be stated specifically. In addi-
tion, a properly drafted variations clause should make provision for how the price of a
variation is to be determined.
In the event the Parties do not reach agreement on the price of a variation, the Em-
ployer or its representative should be able to determine the price. This determination
is subject to the dispute resolution provisions. In addition, the variations clause should
detail how the impact, if any, on the performance guarantees is to be treated. For some
larger Variations the Employer may also wish to receive additional security. If so, this
must also be dealt with in the Variations clause.
Defects Liability
The Contractor is usually obliged to repair defects that occur in the 12 to 24 months,
following completion of the performance testing.
Defects Liability clauses can be tiered. That is the clause can provide for one period
for the entire facility and a second, extended period, for more critical items.
Termination
This sets out the contractual termination rights of both Parties. The Contractor usually
has very limited contractual termination rights. These rights are limited to the right to
terminate for non-payment or for prolonged suspension or prolonged Force Majeure.
The Employer will have more extensive contractual termination rights. They will
usually include the ability to terminate immediately for certain major breaches or
where the Contractor becomes insolvent and the right to terminate after a certain
period for other breaches.
In addition, the Employer may have a right to terminate for convenience. It is likely
the Employer’s ability to exercise its termination rights will also be limited by the
terms of the financing agreements.
Another major disadvantage of an EPC Contract becomes evident when problems
occur during construction. In return for receiving a guaranteed price and a guaran-
teed completion date, the Employer concedes most of the day-to-day control over the
construction.
Therefore, Employers have limited ability to intervene when problems occur during
construction. The more an Employer interferes during the construction, the greater
the likelihood of the Contractor claiming additional time and costs. In addition, in-
terference by the Employer will make it substantially easier for Contractors to defeat
claims for liquidated damages and defective works.
Obviously, ensuring the project is completed satisfactorily is usually more impor-
tant than protecting the integrity of the contractual structure.
However, if an Employer interferes with the execution of the works they will, in most
circumstances, have the worst of both worlds.
They will have a contract that exposes them to liability for time and costs incurred
as a result of their interference without any corresponding ability to hold the Contrac-
tor liable for delays in completion or defective performance. The same problems occur
even where the EPC Contract is drafted to give the Employer the ability to inter-
vene. In many circumstances, regardless of the actual drafting, if the Employer
becomes involved in determining how the Contractor executes the works then the
Contractor will be able to argue that it is not liable for either delayed or defective
performance.
As a result, it is vitally important that great care is taken in selecting the Contractor
and in ensuring the Contractor has sufficient knowledge and expertise to execute the
works. Given the significant monetary value of EPC Contracts, and the potential ad-
verse consequences if problems occur during construction, the lowest price should not
be the only factor used when selecting Contractors.
The FIDIC Silver Book reflects a market desire for certainty of cost and time per-
haps by a totally risk adverse Employer willing to “pay the price” for guaranteed de-
livery to a price.
The Contractor is required to allow within its tender for a wide range of risks rel-
ative to cost and time (see below), such risks most likely including all ground condi-
tions (potentially in a country of which the Contractor will have little knowledge) and
the completion of the Works will be based upon a strict but often brief performance-
related specification.
The Employer will still bear some risks such as those related to war, terrorism and
Force Majeure but the unbalanced risk profile of this Contract will undoubtedly be a
higher price, a factor that Employer’s must accept.
The main features of the Silver Book can be summarised as:
• Design liability rests solely with the Contractor, the Employer will provide its re-
quirements, but these are often in the form of a brief performance specification.
• The Contractor carries out all EPC often including performance tests after com-
pletion; a “turn-key” project allowing operation of the facility upon completion.
• There is not an Engineer within the Contract, the Silver Book is administered by
the Employer (who appoints an Employer’s Representative).
• It is a lump sum contract with payment terms similar to those envisaged under the
Yellow Book.
• The Silver Book is structured similar to the Red and Yellow Book in terms of pro-
gramme, claims, disputes, etc. The Contractor’s Design Clauses are the same as
the Yellow Book, where the Contractor has full design responsibility.
• The Silver Book allocates significant risks to the Contractor including hydrologi-
cal, sub-surface and other conditions which may affect the Site and/or the Works.
The Contractor also holds some risks in respect of the Employer’s Requirements,
specifically for any omissions.
Risk allocation is the key difference between the Yellow Book and the Silver
Book. Employers must appreciate that the allocation of risk to the Contractor
within the Silver Book comes with a price which can be significantly above the
price under the Yellow Book if one were to compare similar tenders under the
two books. However, whilst under the Silver Book the Contractor prices the risk
at tender stage, the Contract Price under the Yellow Book could rise considera-
bly if certain risks held by the Employer materialise during the progress of the
works.
Detailed comparison of the FIDIC 2017 Conditions of Contract for Plant and
Design-Build (The “Yellow Book”) and the Conditions of Contract for EPC/
Turnkey Project (The “Silver Book”)
The structure of the two contracts would at first glance look similar, this is a conscious
effort by FIDIC to make all of the Rainbow Suite (Red, Yellow and Silver Books) have
the same “look and feel”, but there are some notable differences between the Yellow
and Silver Books.
Clause 1 – General Provisions

Priority of Documents – Sub-Clause 1.5
Yellow Book
d The Particular Conditions Part A – Contract Data
e The Particular Conditions Part B – Special Provisions
f The General Conditions
g The Employer’s Requirements
h The Schedules
i The Contractor’s Proposal
j The JV Undertaking (if the Contractor is a JV)
k Any other documents forming part of the Contract
Silver Book
b The Particular Conditions Part A – Contract Data
c The Particular Conditions Part B – Special Provisions
d The General Conditions
e The Employer’s Requirements
f The Schedules
g The Tender
h The JV Undertaking (if the Contractor is a JV)
i Any other documents forming part of the Contract
A critical difference is that Sub-Clause 1.9 [Errors in the Employer’s Requirements] is

included within the Yellow Book, but does not exist within the Silver Book, and this is
a major risk for the Contractor.
Under Sub-Clause 1.9 of the Yellow Book, if the Contractor finds an error, fault or
defect within the Employer’s Requirements as a result of scrutinising them under Sub-
Clause 5.1 (i.e. promptly after receiving the Notice from the Engineer stating the Com-
mencement Date (Clause 8.1)), the Contractor gives a Notice to the Engineer, and the
Engineer agrees or determines whether or not there is an error and whether an expe-
rienced Contractor would have discovered the error, fault or defect before submitting
the tender, and if an experienced Contractor would not have discovered the error, fault
or defect prior to tender, it is judged to be a Variation, and the Contractor, if he suffers
delay and/or incurs Cost as a result, is entitled to an Extension of Time and/or payment
of Cost plus Profit.
Sub-Clause 1.9 is not included within the Silver Book, so the Contractor is responsi-
ble (and liable) for any error, fault or defect within the Employer’s Requirements, and
as stated above, this is a major risk for the Contractor.
Clause 2 – The Employer

Site Data and Items of Reference – Sub-Clause 2.5
Whilst Sub-Clause 2.5 looks very similar under the Yellow and Silver Books, the
final paragraph in the Silver Book states that “the Employer shall have no responsibility
for the accuracy, sufficiency or completeness of such data and/or items of reference except
as stated in Sub-Clause 5.1 [General Design Obligations]” (see also previous item).
Clause 3 – The Employer

In the Yellow Book, the Employer appoints the Engineer, and in the Silver Book, the
Employer appoints the Employer’s Representative. (See Chapter 2 for the actions of
the Engineer/Employers Representative.)
Clause 4 – The Contractor

Sub-Clause 4.7 – Setting Out
Under the Yellow Book and the Silver Book, the Contractor is responsible and liable
for setting out the Works, with the Employer responsible for items of reference e.g.
levels or datums, but the Contractor must verify their accuracy.
The Contractor is required to set out the Works in relation to the items of reference
under Sub-Clause 2.5 [Site Data and Items of Reference].
Under the Yellow Book, any delay and/or cost caused by the Employer providing
incorrect items of reference, e.g. incorrect finished floor levels, is recoverable by the
Contractor.
Under the Yellow Book, the Contractor is required to:
a Verify the accuracy of all these items of reference before they are used for the
Works;
b Promptly deliver the results of each verification to the Engineer;
c Rectify any error in the positions, levels, dimensions or alignment of the Works; and
d Be responsible for the correct positioning of all parts of the Works.
If the Contractor finds an error in any items of reference, he gives a Notice to the En-
gineer describing it, and if there is an error in those items of reference, whether or not
an experienced contractor exercising due care would have discovered such an error
when examining the Site, the Drawings and the Specification before submitting the
Tender, or if the items of reference are specified on the Drawings and/or in the Spec-
ification and the Contractor’s Notice is given after the expiry of the period stated in
sub-paragraph (a) of Sub-Clause 4.7.2, and also, if an experienced contractor would
not have discovered the error, and he suffers delay and/or incurs Cost as a result of the
error, the Contractor is entitled to an Extension of Time and/or payment of such Cost
Plus Profit.
Under the Silver Book the Contractor is required to comply with (a), (c) and (d) above,
but there is no entitlement to an Extension of Time and/or payment of Cost Plus Profit.
Clearly, there is a significant risk held by the Contractor under the Silver Book, and
in order to make a judgement on his liability (if it is possible to be judged) it is clear
that he needs time to make and value that consideration, and this is one of the reasons
(amongst many others) why Contractor tendering under the Silver Book must be given
a significantly longer tender period than under the Yellow Book.
Sub-Clause 4.10 – Site Data
Sub-Clause 4.10 picks up from Sub-Clause 4.7 above.
Under the Yellow Book, the Contractor is responsible for interpreting all data re-
ferred to under Sub-Clause 2.5, and to that extent the Contractor is deemed to have
taken into account all necessary information as to risks and is deemed to inspect the
Site, and to have been satisfied before submitting the tender on the form and nature of
the Site including sub-surface conditions, the hydrological and climactic conditions,
the extent and nature of the works and Goods necessary for the Works, the Laws, pro-
cedures and the Contractor’s requirements for access, accommodation, resources, etc.
The Silver Book has always been very brief in that “the Contractor shall be responsible
for verifying and interpreting all data made available by the Employer under Sub-Clause 2.5”.
Sub-Clause 4.12 – Unforeseeable Physical Conditions (Yellow Book)
Sub-Clause 4.12 – Unforeseeable Difficulties (Silver Book)
Under the Yellow Book, Sub-Clause 4.12 defines “physical conditions” and covers
those which are “Unforeseeable”.
“Physical Conditions” is defined under Sub-Clause 4.12 of the Yellow Book as
natural physical conditions and physical obstructions (natural or man-made) and

pollutants, which the Contractor encounters at the Site during execution of the
Works, including sub-surface and hydrological conditions but excluding climatic
conditions at the Site and the effects of those climatic conditions.
“Unforeseeable” is defined under Sub-Clause 1.1.87 of the Yellow Book as “not reason-
ably foreseeable by an experienced contractor by the Base Date”. “Base Date” is defined
as “the date 28 days before the latest date for submission of the Tender”.
If the Contractor encounters physical conditions which it considers to have been
Unforeseeable and that the finding will have an adverse effect on the progress and/or
increase the Cost of the execution of the Works, the Contractor is required, as soon as
possible, to give a Notice to the Engineer, describing the physical conditions, so that
they can be inspected by the Engineer, setting out the reasons why the Contractor con-
siders the physical conditions to be Unforeseeable, and describe the manner in which
the physical conditions will have an adverse effect on the progress and/or increase the
Cost of the execution of the Works.
The Engineer is then required to inspect and investigate the physical conditions
within seven days (or a longer period agreed with the Contractor) after receiving the
Contractor’s Notice.
The Contractor is then required to comply with any instructions which the Engineer
may give for dealing with the physical conditions, which may be a Variation.
If the Contractor suffers delay and/or incurs Cost due to these physical conditions,
he is entitled to Extension of Time (EOT) and/or payment of such Cost.
Under the Silver Book, “Unforeseeable” is defined the same as under the Yellow
Book i.e. under Sub-Clause 1.1.77 as “not reasonably foreseeable by an experienced con-
tractor by the Base Date”. “Base Date” is defined as “the date 28 days before the latest
date for submission of the Tender”.
Under the Silver Book, Sub-Clause 4.12 [Unforeseeable Difficulties] simply states
that except as stated in the Particular Conditions the Contractor is deemed to have
obtained all necessary information as to risks, contingencies and circumstances which
may influence or affect the Works, and accepts total responsibility for having foreseen
all difficulties and costs of successfully completing the Works, and the Contract Price
is not be adjusted to take account of any Unforeseeable difficulties.
The only possibility for the Contractor to perhaps recover Cost (under certain cir-
cumstances) or gain an Extension of Time is if the event is of such magnitude that it
can be considered to fall within the definition of an Exceptional Event under Clause
18, but that is unlikely.
Sub-Clause 5.1 – Design

After receiving a Notice to commence the Works, the Contractor is required to scru-
tinise the Employer’s Requirements, and if he discovers any error, fault or other defect
Sub-Clause 1.9 [Errors in the Employer’s Requirements] shall apply.
Under Sub-Clause 1.9 (see also Chapter 2) if the Contractor finds an error, fault or
defect in the Employer’s Requirements he gives a Notice to the Engineer within the
period stated in the Contract Data (if not stated, 42 days) calculated from the Com-
mencement Date. The Contractor may notify later than the period stated see (b) below.
The Engineer then determines whether or not there is an error, fault or defect in the
Employer’s Requirements, and also whether or not an experienced contractor exercis-
ing due care would have discovered the error, fault or other defect:
a When examining the Site and the Employer’s Requirements before submit-
ting the Tender; or
b If the Contractor’s Notice is given after the period stated in the Contract
Data, when scrutinising the Employer’s Requirements under Sub-Clause 5.1
[General Design Obligations]; and
c What measures (if any) the Contractor is required to take to rectify the error,
fault or defect.
If, under sub-paragraph (b) above, an experienced contractor would not have discov-
ered the error, fault or other defect:
i Sub-Clause 13.3.1 [Variation by Instruction] applies to the measures that the
Contractor is required to take (if any), and
ii If the Contractor suffers delay and/or incurs Cost as a result of the error, fault
or defect, the Contractor is entitled to an Extension of Time and/or payment
of Cost plus Profit.
Note that Sub-Clause 1.9 is not included within the Silver Book
The Silver Book states that the Employer is not responsible for any error, inaccuracy
or omission with the Employer’s Requirements, and any data or information received
by the Contractor from the Employer does not relieve the Contractor of any obligation
to provide the Works.
The only exclusions are:
a Data and information which is specifically stated within the Contract as being the
responsibility of the Employer;
b Definitions of intended purpose of the Works;
c Criteria for testing and performance of the completed Works;
d Data and information which cannot be verified by the Contractor.
In both the Yellow and Silver Books, the Contractor is responsible for designing the
Works in accordance with the Employer’s Requirements.
The difference in the Contractor’s liability for the correctness of those Employer’s
Requirements has been discussed previously.
As stated previously, under the Yellow Book, if the Contractor, after scrutinising the
Employer’s Requirements, finds errors, those errors can be accepted and remedied by
the Engineer in the form of a Variation. The Contractor would also get an Extension
of Time and/or payment of Cost plus Profit.
The critical difference within the Silver Book is that the Contractor takes responsi-
bility for the Employer’s Requirements including design criteria and calculations, with
only certain exceptions for which the Employer is responsible for those being:
a Portions, data and information which are stated in the Contract as being the re-
sponsibility of the Employer;
b Definitions of intended purposes of the Works, or any parts of the Works;
c Criteria for the testing and performance of the completed Works;
d Portions, data and information which cannot be verified by the Contractor, except
as otherwise stated in the Contract.
Whilst readers may conclude that Employers should use the Silver Book because it
apportions significant risks to the Contractor, it must be remembered that:
As stated above, Employers who choose to employ the Silver Book should do so after care-
ful consideration and careful selection of Contractors to submit bids, ensuring that tender-
ers have correctly interpreted and anticipated (and priced and programmed for) the risks
with the Contract. The Silver Book is “different” to other standard forms of Contract.
Employers using the Silver Book should also recognise the significant costs for a
Contractor to produce a tender and limit the number of tenderers accordingly.
Employers should also allow Contractors the freedom to carry out the works in the
manner and the sequence they wish to use to achieve the required objectives. The Con-
tract is restrictive enough without Employers adding further restrictions!
If Employers are not prepared to take the above into account when using the Silver
Book, it begs the question, is the Silver Book the correct choice? Many Employers may
be unable or unwilling to comply with the above advice, and in hindsight find that they
probably should have used the Yellow Book, or even the Red Book.
In the author’s opinion, and from the Contractor’s point of view, Employers who use
the Silver Book “ring alarm bells” in the minds of tenderers as to why they are using it,
and it is usually because of unknown risks.
Above all both Parties should know the Yellow and Silver Books, and recognise and
manage the risks to avoid disputes!
The author was involved some years ago with a Silver Book Contract, due to
non-disclosure provisions it is not possible to name the Employer or the project, but
the Employer, who was engaged in the “new technology” business, knew exactly what
he wanted from the engineering project, and was able to properly define the perfor-
mance criteria for the completed facility within the Contract.
The Employer was not from a construction-related industry, nor did he intend to
be, and was happy, having chosen what he was advised was the best Contractor, and
not the cheapest, fully trusted the Contractor to deliver, and he did, thereby creating a
model of the type of Employer, and Contractor, who should be using the Silver Book.
The structure of the FIDIC 1999 Contracts

The Red, Yellow and Silver Books have 20 clauses, covering similar subject matter in
all three Books.
Wherever possible, similar wording is used in all three Books in the equivalent
Clauses and Sub-Clauses.
If we take the Conditions of Contract for Construction (Red Book) as an example:

3 The Engineer (The Employer’s Administration – Silver Book)
4 The Contractor



Each book has its own set of tender documents:

Conditions of Contract for Construction (The “Red Book”):
• Letter of Tender
• Conditions of Contract
• Specification
• Drawings
• Schedules
Conditions of Contract for Plant and Design-Build (The “Yellow Book”):
• Employer’s Requirements
• Schedules
• Contractor’s Proposal
Conditions of Contract for EPC/Turnkey Project (The “Silver Book”):
• Tender
A Construction or Plant and Design-Build Contract will also include a Letter of Ac-
ceptance and/or a Contract Agreement, and either document may bring the Contract
into force. Typically, the Contract Agreement will bring an EPC Contract into force.
The Conditions of Contract comprise the “General Conditions”, which form part of
the “Conditions of Contract for…”, First Edition 1999, published by the Federation In-
ternational des Ingenieurs-Conseils (FIDIC), and the “Particular Conditions”, which
include amendments and additions to such General Conditions.
A principle that was applied throughout the drafting has been to facilitate the prepa-
ration of the tender documents, and in particular the preparation of the Conditions of
Contract. Unlike most other published form of Conditions, those published by FIDIC
recognise the reality that the tender documents for a particular project typically have
to include provisions which are not appropriate for other projects. Preparation of the
tender documents has been facilitated by anticipating alternative arrangements (for
example, a lump sum contract under the Construction Book), by stating in the General
Conditions which provisions are subject to what is stated in the Particular Conditions
(because they may not be universally applicable), by maximising the General Con-
ditions so as to minimise Particular Conditions and by identifying one location for
essential contract-specific data.
In all three Contracts the General Conditions were drafted on the principle that
users would find it more convenient if any provisions which they did not wish to apply
could simply be deleted or not invoked, than if additional text had to be written in the
Particular Conditions (because the General Conditions did not cover their require-
ments). If this criterion was considered inapplicable for a Sub-Clause, it is intended to
contain provisions that were considered applicable to most contracts.
It should therefore be noted that some of the provisions contained in the General
Conditions may be inappropriate for an apparently typical contract. The basic con-
cept was to provide maximum convenience for users, particularly those who prepare
the tender documents, for whom a degree of competence is necessary.
Thus, as much text as possible is incorporated into the General Conditions, includ-
ing some from the old Part II. Some provisions cannot apply unless invoked/enabled
by the insertion of the required data, and provisions can readily be disabled by omis-
sion of the data or by deletion.
For Contractor-designed Works, the Employer’s Requirements should include all
relevant criteria, including quality, performance criteria and testing, but need not
specify any matters which would be imposed on the Works by the applicable law.
Quality should be specified in terms that are not so detailed as to reduce the Contrac-
tor’s design responsibilities, not so imprecise as to be difficult to enforce and not sub-
ject to anybody’s future opinions which tenderers may consider impossible to forecast.
Detailed overview of the FIDIC 1999 Contracts

In considering the FIDIC contracts a short review of each Clause within the FIDIC
1999 Contracts follows, with a more detailed analysis of each of the FIDIC 2017
Clauses within Chapters 4–12, with references to the changes from FIDIC 1999 to
FIDIC 2017 Contracts.
Note that this is not a precise review of the FIDIC 1999 Contracts but intended as an
indication of the structure and content of the Red, Yellow and Silver Books.
This short review covers:
• Conditions of Contract for Construction (The “Red Book”)

• Conditions of Contract for Plant and Design-Build (The “Yellow Book”)
• Conditions of Contract for EPC/Turnkey Projects (The “Silver Book”)
Clause 1: General Provisions

This Clause includes the meaning of words or expressions used in the Conditions of
Contract and is divided into “The Contract”; “Parties and Persons”; “Dates, Tests,
Periods and Completion”; “Money and Payments”; “Works and Goods”; and “Other
Definitions”.
It also covers interpretation such as gender, singular/plural, in addition to marginal
words and other headings not forming the Conditions. This is a common provision
within most contracts.
All communications including approvals, certificates, consents, determinations, no-
tices and requests are to be in writing, and sent to the address stated in the Appendix
to Tender. Electronic transmissions e.g. emails, intranets, etc., are as stated in the Ap-
pendix to Tender.
There is also a requirement to copy other Parties into certificates and notices.
FIDIC is an international family of contracts so the applicable laws are critical,
the Contract being governed by the law of the country stated in the Appendix to
Tender. Normally, it is the law of the country in which the project is based. The rul-
ing language and the language for communications are also stated in the Appendix
to Tender.
There is a priority of documents in case of ambiguities or inconsistencies, with the
following descending order of importance:
Red Book
a The Contract Agreement (if any)
d The Particular Conditions
e The General Conditions
f The Specification
g The Drawings
h The Schedules and any other documents forming part of the contract
The Yellow Book
d The Particular Conditions
e The General Conditions
f The Employer’s Requirements
g The Schedules
h The Contractor’s Proposal
The Silver Book
b The Particular Conditions
c The General Conditions
d The Employer’s Requirements
e The Tender and any other documents forming part of the Contract
The Specification and Drawings remain in the custody of the Employer, two copies of
each and every subsequent document is supplied to the Contractor.
Any documents supplied by the Contractor e.g. calculations, software, etc., remain
in the custody of the Contractor.
Any delay in issue of drawings or instructions will give rise to an Extension of Time
and/or recovery of Costs plus Profit.
NB: In the Yellow Book this is replaced with “Errors in the Employer’s Requirements”.
The Contractor retains copyright but gives the Employer a license to copy, use and
communicate the Contractor’s Documents. Note that this applies for the actual or in-
tended working life of the relevant parts of the Works. Similarly, the Employer retains
copyright but gives the Contractor a license to use the Employer’s Documents.
Clause 2: The Employer
Clause 2 covers the role of the Employer, commencing with his obligation to give right
of access and possession of the Site as stated in the Appendix to Tender. This right
may not be exclusive. Rights may be withheld until the Performance Security has been
received.
If this is delayed, the Contractor can give notice with the ensuing rights to Extension
of Time and Cost plus Profit.
The Employer is required to “assist” the Contractor where possible in obtaining
copies of the Laws of the Country and any necessary permits to work in that country.
It is fundamentally the responsibility of the Contractor to obtain these.
Clause 2.4 introduced under the FIDIC 1999 Contracts, required the Employer, if
requested by the Contractor, to provide evidence that he has, or will have the finance
available to pay for the project, the evidence having to be provided within 28 days of
any request by the Contractor.
Note that, under Clause 16.1, if the Employer fails to comply, the Contractor can
give 21 days’ notice to suspend work. If the Employer felt it necessary to constrain
his obligation, he would have to include an amendment (in the Particular Conditions)
saying what if any evidence he would provide, and tenderers would be able to take ac-
count of such an amendment when tendering. Sadly, this Clause is often deleted from
the Contract.
The next Sub-Clause 2.5 sets out the procedure for the Employer to follow in the event
of a claim against the Contractor. Similar procedures apply to claims by either Party.
Clause 3: The Engineer

The Engineer is the person appointed by the Employer to act on his behalf and is
named in the Appendix to Tender. The Engineer and his staff must be suitably quali-
fied and competent to carry out their duties. If there is any limitation on the Engineer’s
level of authority, for example, the need to obtain the Employer’s approval on major
changes then this must be included within the contract.
If the Engineer is to be changed, the Employer must comply with Clause 3.4.
The Engineer may delegate any of his duties at any time by notifying the Contractor
in writing which may later be revoked, again in writing. It is important to note that the
authority of the delegated representative is limited to the authority contained within
the delegation notice.
The Contractor is required to comply with any instruction given by the Engineer.
Instructions should only be taken from that person or any previously notified delegate.
Wherever possible this should be in writing, though there is a fall back situation where
the instruction is oral, it can be confirmed by the Contractor within two working days
and if not dissented from within two further working days it becomes an instruction.
The Engineer is required to notify the Contractor at least 42 days prior to that re-
placement. The Contractor may make reasonable objection to a proposed replacement
Engineer.
Sub-Clause 3.5 sets out the procedure for agreeing or determining various matters
including Employer’s claims, Contractor’s claims and the evaluation of Variations and
of the Works. The Engineer is required to consult with each Party in an attempt to reach
agreement. In the absence of an agreement, the Engineer makes a fair determination.
NB: Clause 3 in the Silver Book is entitled “The Employer’s Administration”, and is
similar to Clause 3 under the Red and Yellow Books, but refers to the Employer and
the Employer’s Representative rather than the Engineer.
Clause 4: The Contractor

Clause 4 covers many of the Contractor’s general obligations.
Sub-Clause 4.1 states the Contractor’s obligation to execute the Works, and requires
any Contractor-designed Works to be (when completed) fit for the intended purpose
defined in the Contract. Note that most design and build contracts provide for the
design to be to reasonable skill and care.
The Contractor is only responsible for the design of the Permanent Works to the ex-
tent specified in the Contract. Sub-paragraphs (a) to (d) specify general requirements
in respect of such designs, unless they are defined otherwise in the Particular Con-
ditions. These general requirements are also stated in 13.3 (b) as being applicable to
any subsequent Contractor-designed “value engineering” proposals, unless otherwise
agreed by both Parties: see below.
Sub-Clause 4.2 requires the Contractor to provide a Performance Security at his
own cost in the amount specified in the Appendix to Tender and in accordance with
the Particular Conditions.
Sub-Clause 4.3 describes the role of the Contractor’s Representative who has all the
authority necessary to act on the Contractor’s behalf and his whole time to running
the project.
Unless the Representative is named in the Contract, the Contractor has to submit
the name of his Representative for the Engineer to give his consent.
In the case of absence, any replacement must be subject to the Engineer’s consent.
In the case of any delegation by the Contractor’s Representative this must be noti-
fied to the Engineer before the delegation takes place.
Sub-Clause 4.4 covers Subcontractors, who are subject to the Engineer’s consent.
The Contractor does not have to have the consent to suppliers or previously named
Subcontractors in the Contract.
Sub-Clause 4.6 is an unusual clause as it requires the Contractor to allow “appropri-
ate opportunities” for carrying out work to various Parties employed by the Employer,
or of any public authority. This is presumably to encourage the use of local labour. The
Contractor is able to recover the cost as “Unforeseeable Cost”.
Any delay and/or cost occasioned by the Employer providing incorrect items of ref-
erence, e.g. finished floor levels, is recoverable by the Contractor.
Sub-Clause 4.8 covers the Contractor’s responsibility to comply with all safety pro-
cedures including local regulations during the Works. This includes provision of all
necessary fencing, lighting and guarding.
The Contractor must institute a quality assurance system which is subject to the
Engineer’s audit.
Under Sub-Clause 4.10, the Employer is deemed to have made available all relevant
data in his possession on sub-surface and hydrological conditions by the Base Date,
which is 28 days before the date of submission of the Tender. The Contractor is respon-
sible for interpreting the data and shall be deemed to have inspected and examined the
Site. This does not actually mean that he MUST visit the Site, but that he is “fixed with
the knowledge” as if he had….there is a subtle difference!
“Unforeseeable” is defined as “not reasonably foreseeable by an experienced Con-
tractor by the date for submission of the Tender”, allowing nearly 28 days after the
Base Date for tenderers to assess the date. The Employer is also required to make
available the same types of date that come into his possession thereafter.
The Contractor is deemed to have satisfied himself as to the correctness and suffi-
ciency of the Accepted Contract Amount.
Sub-Clause 4.12 defines “physical conditions” and covers those which are “Unfore-
seeable”. Under a new provision, the Engineer may also review whether other physical
conditions in similar parts of the Works were more favourable than could reasonably
have been foreseen when the Contractor submitted the Tender.
This provision may be particularly relevant for a tunnel, where there may be adverse
conditions, in respect of similar parts of the Works, will not result in a net reduction
in the Contract Price (otherwise, an Employer might have been tempted to conceal
favourable information from tenderers).
The Contractor is required to bear all costs and charges in respect of rights of way
including access to Site. He may also obtain at his own risk and cost any other facilities.
The Contractor is deemed (whether he has or has not) to have satisfied himself as to
suitability and availability of access routes onto the Site.
The Contractor is to give the Engineer 21 days’ notice prior to the date on which
“any Plant or major item of other goods will be delivered to Site”. The Contractor is
responsible for all associated costs in connection with transporting, unloading, distri-
bution and protection.
Equipment is what is normally known as “Plant” in other contracts, the Contractor
being responsible for provision and care. The Contractor has to have the Engineer’s
consent to remove such Equipment.
The Contractor is required to take all reasonable steps to protect the environment.
The Specification and the Law prescribe limits of any discharges.
Sub-Clauses 4.19 and 4.20, if enabled by details in the Specification, cover the ar-
rangements for the Employer’s provision of power, other services, “Employer’s Equip-
ment” and free-issue material.
Clause 4.30 covers any Equipment to be provided by the Employer. The Contractor
is required to pay at the rates stated in the Specification.
Monthly progress reports are to be prepared by the Contractor and six copies sub-
mitted to the Engineer. The contract prescribes the content of each report which in-
cludes progress to date, photographs, critical documents and health and safety records.
The Contractor is responsible for keeping unauthorised personnel off the Site.
The Contractor is required to confine his operations to the Site and to keep all
Equipment and Personnel within the Site.
On the issue of a Taking-Over Certificate, the Contractor is required to properly
clear away.
All fossils, coins, archaeological finds, etc., are to be placed in the care of the Em-
ployer. The Contractor is required to inform the Engineer upon finding such articles
and is able to recover any delay and/or cost through the contract.
Clause 5: Nominated Subcontractors (Red Book)

Clause 5 covers the appointment of nominated Subcontractors, because they are
sometimes required, not because their use is recommended.
Sub-Clause 5.1 defines a nominated Subcontractor as one stated in the Con-
tract, whom the Engineer under Clause 13 instructs the Contractor to employ as a
Subcontractor.
The Contractor has a right to notify the Engineer of “reasonable objection” for var-
ious reasons e.g. the Subcontractor has insufficient competence or resources, or some
other reason which will place the Contractor at a higher risk.
The Engineer certifies amounts due to the nominated Subcontractor under Clause 14.
The Contractor is also paid for overheads and profit as stated in the Appendix to Tender.
The Contractor is required to prove discharge of amounts due to the nominated
Subcontractor under a previous Payment Certificate.
NB: The Yellow and Silver Books do not have provision for Nominated Subcontrac-
tors, Clause 5 deals with the Contractor’s design obligations.
The Contractor is responsible for carrying out and the design of the Works. He is re-
quired to submit the name of each designer and design Subcontractor to the Engineer.
Once the Contractor is given notice to commence under Clause 8.1, he gives notice to
the Engineer of any errors in the Employer’s Requirements.
The Contractor’s Documents comprise the technical documents specified in the
Employer’s Requirements, documents to satisfy regulatory approvals and as-built
documents.
There is a 21-day review period from submission of a Contractor’s Document during
which the Engineer can give notice to the Contractor that a Contractor’s Document
fails to comply with the contract.
The Contractor is to prepare and update a complete set of “as-built” records and to
issue them to the Engineer.
The Contractor is to supply prior to commencement of Tests on Completion op-
eration and maintenance manuals. The Works are not deemed to be complete for
taking-over until the Engineer has received them.
Clause 5: Design (Yellow and Silver Books)

The Contractor is responsible for carrying out and the design of the Works. He is re-
quired to submit the name of each designer and design Subcontractor to the Engineer.
Once the Contractor is given notice to commence under Clause 8.1 he gives notice to
the Engineer of any errors in the Employer’s Requirements.
The Contractor’s Documents comprise the technical documents specified in the
Employer’s Requirements, documents to satisfy regulatory approvals and as-built
documents.
The Contractor prepares all the documents, and the Employer’s Personnel may in-
spect them during their preparation.
There is a 21-day review period from the submission of a Contractor’s Document
during which the Engineer can give notice to the Contractor that a Contractor’s Doc-
ument fails to comply with the contract.
The Contractor undertakes that the design shall be in accordance with the Laws of
the Country and the documents forming the contract.
The design, the Contractor’s Documents and the execution of the work are to be in
accordance with the contract and the applicable Laws.
The Contractor is to provide training of the Employer’s Personnel in the operation
and maintenance of the Works.
The Contractor is to prepare and update a complete set of “as-built” records and to
issue them to the Engineer.
The Contractor is to supply prior to commencement of Tests on Completion oper-
ation and maintenance manuals. The Works are not deemed to be complete for tak-
ing-over until the Engineer has received them.
Design errors are to be corrected at the Contractor’s cost.
Clause 6: Staff and Labour

Sub-Clause 6.1 requires the Contractor to make all necessary arrangements for his
staff and labour.
The Contractor is required to pay rates of wages and observe labour conditions not
lower than those established for the industry where the work is carried out.
The Contractor cannot recruit staff and labour from the Employer’s personnel.
The Contractor is required to take all reasonable precautions to maintain the health
and safety of his personnel including the appointment of a qualified accident preven-
tion officer.
The Contractor provides all necessary superintendence includes the quantity and
quality of personnel to plan, arrange, direct, manage, inspect and test the work.
The Contractor’s personnel shall be appropriately qualified. The Engineer has the
right to require the Contractor to remove any person for one of four reasons: mis-
conduct, incompetence/negligence, failure to comply with the Contract or health and
safety/protection of the environment.
The Contractor is required to prevent any disorderly conduct by his personnel. This
also extends to preserve “peace and protection” of persons or property near the Site.
Clause 7: Plant, Materials and Workmanship

This Clause generally covers the Contractor’s obligations regarding the quality of the
work and associated testing.
The need for samples should be clear, and the Contractor has an obligation to sub-
mit the necessary samples, either at the Contractor’s cost if specified in the Contract
or as a Variation if the Engineer instructs additional samples.
The Contractor is to provide all apparatus, assistance, documents, etc., to carry out
the specified tests. The Engineer is required to give the Contractor not less than 24
hours’ notice before carrying out such tests. If despite giving the notice the Engineer
does not attend, the tests will be carried out as if the Engineer had attended.
If work fails a test, the Contractor is required to make good the defect and repeat
the test.
The Engineer may instruct the Contractor to remedy any defects within a reasona-
ble time, or immediately if urgency requires.
Sub-Clause 7.7 defines the date when each item of Plant and Materials becomes the
property of the Employer. In the event of suspension, property passes when conditions
8.10 (a) and (b) have been satisfied, without further pre-conditions relation to payment.
Unless the Specification states otherwise, the Contractor is to pay all royalties, rents
and other payments in connection with the Works.
Clause 8: Commencement, Delays and Suspension
Clause 8 covers three time-related subjects:

iii Suspension of work by the Engineer.
The Employer is required to give the Contractor not less than 7 days’ notice of the
Commencement Date, this normally being within 42 days after the Contractor re-
ceives the Letter of Acceptance.
The Contractor is required to complete all the works for take over including the
passing of tests. Any Sections (Sectional Completion) must be described in the Appen-
dix to the Tender.
The Contractor is required to submit a programme to the Engineer within 28 days
of receiving the notice under Clause 8.1.
Sub-Clause 8.3 covers the provision of programmes showing how the Contractor
proposes to execute the Works. Each such programme is to be supported by a report
describing the methods that the Contractor proposes to adopt. Programmes are not
“approved”: the Contractor proceeds in accordance with the Programme, except to the
extent that (i) he has been advised of its non-compliance, or (ii) it does not actually com-
ply with the Contract. Unrealistic programmes do not provide a sound basis for claims.
The contract describes the content of the Contractor’s programme which should
include order and sequence, timing of tests, method statement and details of resource
levels.
There are five grounds for Extension of Time:
a Variations;
b A cause of delay giving rise to an entitlement under the contract;
c Exceptionally adverse climactic conditions;
d Unforeseeable shortages in availability of personnel or goods caused by epidemic
or government action;
e Any delay, impediment or prevention caused by the Employer, the Employer’s
Personnel or the Employer’s other contractors on the Site.
Sub-Clause 8.5 gives the Contractor a right to an Extension of Time for delays caused
by public authorities as long as the Contractor has diligently followed procedures.
If progress is too slow to complete within the Time for Completion or progress has
fallen behind the current programme, the Engineer can instruct the Contractor to
submit a revised programme and proposals to rectify matters.
Sub-Clause 8.7 covers delay damages, previously called liquidated damages (a phrase
which is also applicable to some of the possible types of non-performance damages).
The Engineer may instruct the Contractor to suspend the progress of all or part of
the Works during which time the Contractor must protect, save and store. The Engi-
neer may, but does not have to, notify the Contractor of the reason for the suspension.
If the Contractor suffers delay and/or cost resulting from suspension he can claim it
through the contract.
If the suspension has continued for more than 84 days the Contractor can request
the Engineer’s permission to proceed. If the Engineer does not give such permission
the Contractor could terminate.
After permission to proceed is given, the Contractor and Engineer jointly inspect
the Works and the Contractor makes good any deterioration or defect.
Clause 9: Tests on Completion

The Contractor is required to carry out all tests on Completion. He has to give the
Engineer not less than 21 days’ notice prior to each test.
If the Tests on Completion are delayed by the Employer Clause 10.3 applies giving
the Contractor right to recover delays and/or costs as a result of any delay caused. If
the Tests are delayed by the Contractor, the Engineer can give the Contractor 21 days
to carry out the Tests.
If the Works fails the Tests on Completion, the Engineer is entitled to order further
repetition of tests, reject the Works and issue a Taking-Over Certificate if the Em-
ployer requests.
Clause 10: Employer’s Taking Over

Clause 10 specifies the conventional procedures for certification of completion and for
the Employer’s Taking Over.
The Works are taken over by the Employer when they have been completed in accord-
ance with the contract and a Taking-Over Certificate has been issued. The Contractor
may apply for a Taking-Over Certificate not earlier than 14 days prior to completion.
The Contractor is able to recover any additional costs associated with this action.
If the Contractor is prevented for more than 14 days from carrying out Tests on
Completion, the Employer is deemed to have taken over the Works and the Engineer
issues a Taking-Over Certificate. Any delay and/or cost incurred by the Contractor as
a result is paid by the Employer.
Clause 11: Defects Liability

Defects Liability obligations are specified in Clause 11.
The Contractor is required to complete any work which is outstanding on the dates
stated in a Taking-Over Certificate including rectifying defects or damage.
Sub-Clause 11.3 entitles the Employer to claim (under Sub-Clause 2.5) an extension
of the Defects Notification Period if the Works, a Section or a major item of Plant can-
not be used due to a defect or damage.
The Contractor is required to remedy defects within a reasonable time, failing
which the Employer can give the Contractor a specific date to remedy, failing which
the employer may carry out the work himself and charge the Contractor, or require
the Engineer to determine a reduction in the Contract Price or terminate the contract
as a whole.
Further tests may be required on the same basis as the original tests.
The Contractor has the right of reasonable access to the Works until the Perfor-
mance Certificate has been issued.
The Engineer has a right to issue instructions to search for a defect. If the search
shows that work was in accordance with the contract, the Contractor is entitled to be
paid the Cost plus reasonable Profit.
The issue of the Performance Certificate confirms that the Contractor has fulfilled
all his obligations under the contract. The Certificate is issued within 28 days after the
latest of the expiry dates of the Defects Notification Periods.
Although this seems a contradiction in terms as the Contractor has fulfilled his ob-
ligations, there may be outstanding items such as clearance of the Site, Final Payment
Certificate and the possibility of latent defects.
The Contractor leaves Site and removes any remaining Equipment, surplus mate-
rial, etc., upon receiving the Performance Certificate. If he does not, the Employer may
sell or dispose of remaining items.
Clause 12: Measurement and Evaluation (Red Book)

The Works are to be measured and valued for payment in accordance with the Con-
tract. The Engineer decides what is to be measured and when, the Contractor then at-
tends by giving him reasonable notice. If the contractor fails to attend, the Engineer’s
measurement is deemed to be accepted as accurate.
The method of measurement is in accordance with the Bills of Quantities or other
Schedules.
However, Clause 12 covers the measurement and valuation of the Works. Irrespec-
tive of a “Variation”, a Bill rate or price for an item of work may be amended if:
iii This change in quantity directly changes the Cost per unit quantity of this item by
more than 1%;

The cost which has been incurred and is not covered within the omission of any work
is determined by the Engineer.
NB: Clause 12 under the Yellow and Silver Books is entitled “Tests after Completion”.
If Tests after Completion are specified in the contract, the Clause applies. The Em-
ployer provides all electricity, equipment, suitably qualified staff, etc. the tests are re-
quired as soon as possible after the Works or a Section have been taken over by the
Employer.
If the Employer delays tests, the Contractor gives notice and can recover Costs plus
reasonable Profit.
If the Works fail to pass Tests after Completion, the tests are repeated.
Clause 12: Tests after Completion (Yellow and Silver Books)

If Tests after Completion are specified in the contract, the Clause applies. The Em-
ployer provides all electricity, equipment, suitably qualified staff, etc., the tests are
required as soon as possible after the Works or a Section have been taken over by the
Employer.
If the Employer delays tests, the Contractor gives notice and can recover Costs plus
reasonable Profit.
If the Works fail to pass Tests after Completion, the tests are repeated.
If the Works fails the Tests after Completion, the Engineer is entitled to order fur-
ther repetition of tests, reject the Works and issue a Taking-Over Certificate if the
Employer requests.
Clause 13: Variations and Adjustments

Clause 13 covers Variations and Adjustments for changes in legislation and in cost.
Variations are not binding if the Contractor promptly notifies that he cannot readily
obtain the required “Goods”.
The Engineer may vary the works, and the Contractor being bound to carry out the
Works subject to the above exceptions.
Sub-Clause 13.2 allows the Contractor to submit a proposal to the Engineer which
could accelerate completion, reduce cost, improve the efficiency or value of the Works
or provide some other benefit. The Contractor shares the benefit of any betterment to
the Employer as a fee.
The general procedure for variations is described in Sub-Clause 13.3. The Engineer
may request a proposal for the Contractor, which may have resulted from his initiative
under Sub-Clause 13.2 or from the request mentioned in the first sentence of Sub-
Clauses 13.1 and 13.3.
The Engineer instructs regarding Provisional Sums with the Contract Price being
adjusted accordingly.
Works of a minor or incidental nature which cannot be valued by measurement
may be executed on a time and materials basis. This Clause contains the details of the
resources to be recorded.
Increases or decreases in cost due to changes in legislation after the Base Date are
paid to the Contractor.
Sub-Clause 13.8 specifies the adjustments for changes in cost, so as to avoid users
having to write the necessary text in the Particular Conditions.
Clause 14: Contract Price and Payment

Clause 14 describes the procedures for payments to the Contractor. Payment procedures
commence with the Contractor’s submission of a (monthly or other) Statement, with
supporting documents which are to include the progress report under Sub-Clause 4.21.
Sub-Clause 14.2 provides for the possibility of an advance payment, and Sub-Clause
14.5 provides for the possibility of making payment for Plant and Materials which have
been shipped to the Country and/or have arrived at the Site.
The Contractor is required to submit a Statement (six copies) to the Engineer show-
ing in detail the amounts to which he considers himself entitled.
The Statement includes:
a The estimated value of Works executed;

b Any amounts due to changes in legislation;
c Any amount to be deducted for retention;
d Any amounts to be included for advance payments;
e Any amounts due for Plant and Materials intended for the Works;
f Any amounts due in respect of claims, disputes and arbitration;
g Deduction of any amounts certified in previous Certificates.
This Sub-Clause provides for listed Plant and Materials listed in the contract and de-
livered to Site for incorporation into the Works to be paid.
Provided the Employer has received and approved the Performance Security, the
Engineer certifies payments within 28 days of receiving each Contractor’s Statement.
There is provision in the Contract for a minimum amount of Payment Certificate to
be stated in the Appendix to Tender to prevent the issuing of Certificates for minor
amounts.
The Employer is required to pay the advanced payment within 56 days of Letter of
Acceptance or 21 days of the Performance Security and Interim Payments within 56
days of the Engineer receiving the Contractor’s Statement.
The entitlement to financing charges under Sub-Clause 14.8 is based upon when the
Engineer received the Statement, progress report and other supporting documents,
irrespective of the date on which the interim Payment Certificate (if any) was issued.
Such certification date could, for example, be after the date defined in Sub-Clause 14.7
(b) by which payment should have been made.
Normal rules of retention apply. The first half of retention money is certified by the
Engineer upon the issue of the Taking-Over Certificate, the outstanding balance being
certified upon the expiry of the Defects Notification Periods.
Sub-Clause 14.10 provides for a Statement at completion, which is to include all
amounts to which the Contractor considers he has or will become entitled. Under Sub-
Clause 14.14, the Employer’s Liability is limited to amounts included in this Statement
and amounts arising after the issue of the Taking-Over Certificate for the Works.
Within 56 days of receiving the Performance Certificate, the Contractor submits a
draft Final Statement (six copies). Once agreed this is called the Final Statement.
The Contractor when submitting the Final Statement confirms the amount consti-
tutes full and final settlement of all monies due.
Within 28 days after receiving the Final Statement and discharge from the Contrac-
tor, the Engineer issues a Final Payment Certificate.
The Employer is not liable to the Contractor for any matter not included within the
Final Statement.
The currency which constitutes the Contract price is named in the Appendix to
Tender.
Clause 15: Termination by Employer

The Engineer may notify the Contractor of any failure under the contract requiring
him to remedy within a reasonable period of time.
There are six grounds for the Employer to terminate the Contractor’s employ-
ment. Subject to giving the Contractor 14 days’ notice to remedy, the Employer may
terminate.
As soon as possible after termination, the Engineer determines the value of Works
completed by the Contractor.
Following termination, the Employer may withhold further payments from the
Contractor till the cost of execution, defects, etc., has been established. The Employer
may recover any damages incurred as a result of the termination.
The Employer may terminate at will, but he cannot terminate to complete the Works
himself or to arrange for it to be completed by another Contractor.
Clause 16: Suspension and termination by Contractor

Under Sub-Clause 16.1, the Contractor is entitled to give notice of suspension in the
event of specified defaults, which include the Engineer’s failure to issue a Payment
Certificate.
There are seven grounds for the Contractor to terminate his own employment. Sub-
ject to giving the Employer 14 days’ notice to remedy, the Contractor may terminate.
Once a notice of termination has taken effect, the Contractor leaves the Site.
Following termination, the Employer returns the Performance Security to the Con-
tractor and pays any losses resulting from the termination.
Clause 17: Risk and Responsibility

Sub-Clause 17.1 defines the extent to which the Employer and the Contractor indem-
nifies the other in respect of claims for personal injury or damage to property which
occurs as a result of the actions of personnel or other for which they are responsible
during the “design, execution and completion of the Works”. Property excludes the
Works itself which is dealt with separately at Sub-Clause 17.2.
As a general statement, unless risks are specifically allocated to the Employer and
those defined as being under its responsibility, events are the risk and responsibility of
the Contractor.
Depending upon the matters stated in Clause 19, some of the risks listed in Sub-
Clause 17.3 may be so exceptional as to be Force Majeure.
This Sub-Clause defines the Contractor’s responsibility for care of the Works.
Sub-Clause 17.2 provides for the Contractor’s care of the Works, for which it is fully
responsible until such time as the Taking-Over Certificate (or Taking-Over Certifi-
cates in the case of Sectional Completion) is issued or deemed to be issued.
Whilst this Sub-Clause specifically deals with the care of the Works until a Tak-
ing-Over Certificate has been issued or earlier termination, but it does not mention
suspension by either the Contractor or the Employer possibly leading to termination.
The obligations of the Contractor to care for the Works should remain throughout
a suspension, irrespective of responsibility for the events leading to the suspension,
until such time as work recommences and a Taking-Over Certificate is issued or Ter-
mination takes place and the Contractor is released from its obligations in this respect.
Sub-Clause 17.3 covers Employer’s Risks, which are the risks that the Contractor
has no control over and if they occur, entitle the Contractor to compensation in re-
spect of loss or damage to the Works, Goods or Contractor’s Documents.
If any of the risks in Sub-Clause 17.3 occur, the Contractor is entitled to an Exten-
sion of Time and/or payment of Cost.
Sub-Clause 17.5 specifies general provisions for intellectual and industrial prop-
erty rights, defining the extent of each Party’s indemnity and describing procedures
in the event of claims for infringement. Sub-Clause 17.6 specifies limits to each Party’s
liability.
Neither Party is liable for loss of use, loss of profit or any indirect or consequential
loss other than that covered by the Contract.
Clause 18: Insurance

Clause 18 covers insurances, most of which are required to be arranged by the “insur-
ing Party”.
The insuring Party is subsequently named as the Contractor unless otherwise stated
in the Particular Conditions (in this case, the second paragraph makes Clause 18 subject
to any insurance terms agreed between the Parties). The provisions thus provide for the
possibility that, for some of the insurances (typically those for the Works), the Employer
may wish to effect insurance: by defining himself (in the Particular Conditions) as the
insuring Party in respect of the relevant insurances (in this case, the third paragraph
makes Clause 18 subject to the details annexed to the Particular Conditions).
The Works are to be insured in the joint names of the Contractor and Employer.
The insurer should make each claims payment jointly to both the Parties, although
this seldom happens.
If a Subcontractor is named in the insurance policy as additional insured, the in-
surer would thus make each claims payment jointly to each such additional insured
as well as the two Parties: which could require a physically large cheque to make the
payment. The situation is covered in the fourth paragraph of Sub-Clause 18.1.
Some Employers require payments to be made wholly to them, with the Engineer
determining how much the Contractor should receive (often allocating blame), which
is considered to be unwise and possibly wrong. Insurers only compensate a Party for
actual loss, so the Party who bore the loss claimed should then be reimbursed, even if
he appears blameworthy.
If the insuring Party fails (or is unable) to effect and keep in force its insurance,
the other Party may effect the insurance at the cost of the defaulting Party. For vari-
ous reasons, such other Party may not do so, possibly because insurance is no longer
available at commercially reasonable terms. Sub-Clause 18.1 therefore concludes with
provisions that address these circumstances.
Under Sub-Clause 18.2 (d), the insuring Party is required to effect insurance in re-
spect of some of the Employer’s Risks, excluding (in each case) risks which are not
insurable at commercially reasonable terms and the exclusions described in sub-par-
agraph (e). If this cover ceases to be available, the last paragraph of Sub-Clause 18.2
comes into effect.
The insuring Party insures the Works, Plant and Materials for not less than full
reinstatement costs including professional fees and profit.
The insuring Party insures against each Party’s liabilities with respect to any loss,
death or bodily injury (Public Liability), the indemnity limit set within the Appendix
to Tender.
This covers the Contractor’s liability for his own workforce (Employer’s Liability).
Clause 19: Force Majeure

Clause 19 covers Force Majeure, which is defined in Sub-Clause 19.1 as an event which
a Party could not have provided against, and could not control, avoid or overcome.
The Clause includes general protection to the Contractor in respect of legal or physical
impossibility.
Either Party may give a notice to the other, within 14 days of becoming aware, spec-
ifying the obligations which cannot be performed.
Each Party is obliged to use all reasonable endeavours to minimise any delay caused
by a Force Majeure.
The Contractor is entitled to an Extension of Time and/or recovery of costs as a
result of a Force Majeure.
Any subcontract should provide relief form Force Majeure. NB: The FIDIC subcon-
tracts do not provide for Force Majeure.
If the execution of the Work is prevented for a period of 84 days (continuous) then
either Party may terminate.
Any matter, in addition to Force Majeure, can give rise to release from performance.
Clause 20: Claims, Disputes and Arbitration

Clause 20 covers the submission of claims and the settlement of disputes.
If the Contractor considers himself entitled to an Extension of Time and/or addi-
tional payment, he gives notice to the Engineer not later than 28 days of becoming
aware (this 28 day period has a time bar). The Contractor is required to give the En-
gineer full details, and within 42 days of receiving it the Engineer responds giving the
extension of time/award of costs as appropriate.
Below is a list of the Sub-Clauses which entitle the Contractor to claim an Extension
of Time and possible additional payment, including in some cases the Contractor is
also entitled to a “reasonable profit”.
Sub-Clause 1.9 – Delayed Drawings or Instructions (Red Book only)

If delay or disruption is caused or likely to be caused as a result of late drawings or
instructions the Contractor is entitled to claim:
• Extension of Time;
• Cost plus reasonable Profit.
Sub-Clause 1.9 – Errors in the Employer’s Requirements (Yellow Book only)

If delay is caused or Cost is incurred as a result of Errors in the Employer’s Require-
ments which were not previously discoverable the Contractor is entitled to claim:
Sub-Clause 2.1 – Right to Assess to the Site

If delay is caused or Cost incurred as a result of the Employer failing to give the Con-
tractor access to the Site at the prescribed time the Contractor is entitled to claim:
Sub-Clause 4.7 – Setting Out
If delay is caused or Cost incurred as a result of errors in the original setting out points
and levels of reference notified by the Engineer the Contractor is entitled to claim:
Sub-Clause 4.12 – Unforeseeable Physical Conditions

If delay is caused or Cost incurred as a result of the Contractor encountering physical
conditions which are Unforeseeable the Contractor is entitled to claim:
• Cost only.
It is worth noting that Unforeseeable is a defined term meaning “not reasonably fore-
seeable by an experienced contractor by the date for the submission of the Tender”.
Sub-Clause 4.24 – Fossils

If delay is caused or Cost incurred as a result of the Contractor’s compliance with in-
structions issued by the Engineer to deal with the discovery of fossils and the like the
Contractor is entitled to claim:
• Cost (only).
Sub-Clause 7.4 – Testing

If delay is caused or Cost incurred as a result of testing being delayed by the Employer
or on behalf of the Employer the Contractor is entitled to Claim:
Sub-Clause 8.5 – Delays caused by Authorities

If delay or disruption is caused or Cost incurred as a result of the actions or non-
actions of Authorities the Contractor is entitled to claim:
• Cost, with or without Profit, appears not to have been specifically considered.
Sub-Clause 8.9 – Consequences of Suspension

If delay is caused or is likely to be caused or Cost incurred as a result of the Engineer’s
instructions to suspend work the Contractor is entitled to claim:
• Cost (only).
Sub-Clause 10.2 – Taking Over of Parts of the Works

If the Contractor incurs Cost as a result of the Employer taking over or using a part of
the Works the Contractor is entitled to claim:
Sub-Clause 10.3 – Interference with Tests on Completion

If delay is caused or Cost incurred as a result of tests being delayed by a reason for
which the Employer is responsible the Contractor, amongst other remedies, is entitled
to claim:
Sub-Clause 11.8 – Contractor to Search

If the Contractor incurs Cost as a result of searching for a defect for which it was not
liable the Contractor is entitled to claim:
Sub-Clause 12.2 – Delayed Tests (Yellow Book only)

If the Contractor incurs Cost as a result of carrying out Tests delayed by the Employer
until after Completion the Contractor is entitled to claim:
Sub-Clause 12.4 – Failure to Pass Tests after Completion (Yellow Book only)
If the Contractor incurs Cost as a result of the Employer delaying access to allow Tests
to be carried out the Contractor is entitled to claim:
Sub-Clause 13.7 – Adjustments for Changes in Legislation

If delay is caused or is likely to be caused or Cost incurred or likely to be incurred as a
result of changes in the Laws of the Country the Contractor is entitled to claim:
• Cost (only).
It is worth noting that Country is a defined term meaning the Country in which the
Site (or most of it) is located, where the Permanent Works are to be executed.
Thus, this definition is very limited in the field of international contracting where
Contractors, Suppliers and Sub-Contractors may all have originated from Countries
other than where the project is being carried out and may suffer as a result of changes
in legislation.
Sub-Clause 16.1 – Contractor’s Entitlement to Suspend Work

If delay is caused or Cost incurred as a result of the Contractor properly suspending
work (or reducing the rate of work) the Contractor is entitled to claim:
Sub-Clause 19.4 – Consequences of Force Majeure

If delay is caused or Cost incurred as a result of Force Majeure events the Contractor
is entitled to claim:
• Cost (only) in respect of the events listed at Sub-Clauses 19.1 (ii), 19.1 (iii) and 19.1 (iv)
In any event at some point the Contractor and the Engineer, and sometimes also the
DAB or Arbitrator if it becomes a dispute, have to consider the causes of delay, estab-
lish periods of Extension of Time against those causes and also establish if there are
any associated payment entitlements.
In respect of the Contractor declaring its required profit, it is suggested that in-
stead of waiting until such time as a claim exists and the Employer and its Engineer/
Representative negotiating a percentage, the Parties follow the lead given by FIDIC
within the MDB Harmonised Edition (the Pink Book) and agree a fixed percentage
applicable to all claims.
The Pink Book states “in these Conditions, provisions including the expression
‘Cost plus profit’ require this profit to be one twentieth (5%) of this Cost unless other-
wise indicated in the Contract Data”.
Contractors, when drafting Sub-Contracts, should also take note of the differing
provisions within the entitlement clauses such that there is a consistent approach
“downstream” as well as “upstream”.
There is no definition of Cost relative to the Employer’s claims towards the Contrac-
tor, and therefore, it must be left to the Engineer or the Employer’s Representative, to
determine if profit should be passed on as a legitimate claim item.
Disputes may be referred to the DAB jointly appointed by the Parties.
If the Parties cannot agree on a member of the DAB, the Party named in the Par-
ticular Conditions resolves the matter.
Any dispute may be referred to the DAB which responds within 84 days.
Both Parties attempt to settle disputes amicably before the commencement of arbi-
tration. Arbitration commences within 56 days of a notice of dissatisfaction.
Any dispute can be settled by reference to arbitration.
Any failure to comply can be referred to arbitration.
If a dispute arises and there is no DAB in place, the dispute can be directly referred
to arbitration.
Which FIDIC contract for which project?

From the contracts described above and on Chapter 1, you can see that over the years
FIDIC has developed very specialist contracts, but if we can consider the three most
commonly used:
• Red Book = Construction Contract

• Yellow Book = Plant and Design-Build Contract
• Silver Book = EPC/Turnkey Contract
FIDIC provides guidance in terms of which of these FIDIC contracts should be used for
which projects, and further, more detailed guidance being contained later in this book.
Is the project a larger or more complex project, or does the project have a relatively
small value, a short construction time, or does it involve simple or repetitive work?
For larger or more complex projects:
• Red Book
• Yellow Book
• Silver Book
For relatively small value, short construction time or involving simple or repetitive
projects:
• Green Book
• The Green Book is suitable for a small contract (say, under £250,000 or equivalent
local currency) if the construction time is short (say, less than six months), or for
relatively simple or repetitive work, irrespective of whether the design is provided
by the Employer or the Contractor, and of whether the project involves civil, elec-
trical, mechanical and/or construction works.
• Again, as with the Red Book, the Price can be set as a lump sum, by remeasure-
ment or cost reimbursable.
• It does not matter whether the design is provided by the Employer (or his Engineer/
Architect if he has one) or by the Contractor.
• It does not matter whether the project involves construction, electrical, mechani-
cal, or other engineering work.
Let us examine larger or more complex projects in a little more detail:

As stated above, for these projects, the Employer has a choice of the Red Book, the
Yellow Book or the Silver Book.
The next question to ask is:
Who is going to be responsible for all or most of the design of the project?
If the Employer is responsible for most or all of the design, use the Red Book (though
the Contractor can be made responsible for some design), or if the Contractor is re-
sponsible for all of the design, use the Yellow Book or the Silver Book.
As stated previously the Red Book is recommended for building or engineering
works where most of the design is provided by or on behalf of the Employer however,
the Works may include some Contractor-designed civil, mechanical, electrical and/or
construction works.
The Yellow Book or the Silver Book should be used where the Contractor will be
responsible for all or most of the design.
In many projects involving large-scale electrical and mechanical works, the Con-
tractor does the majority of the design, e.g. the detailed design of the plant or equip-
ment, so that the plant meets the outline or performance specification prepared by the
Employer, and in the relatively more recent design-build and turnkey-type projects,
the Contractor also does the majority of the design, not only of plant projects but
also of various infrastructure and other types of projects, and the project is required
to fulfil the “Employer’s Requirements”, i.e. an outline or performance specification
prepared by the Employer
• And an Engineer is required to administer the Contract, monitor the manufacture

and erection on Site or construction work and certify payment,
• And with payment according to achieved milestones generally on a lump sum basis.
The Yellow Book is probably the best choice.

The Silver Book is suitable for the provision on a turnkey basis of a process or power
plant, of a factory or similar facility or of an infrastructure project or other type of
development, where
• A higher degree of certainty of final price and time is required, and

• The Contractor takes total responsibility for the design and execution of the
project.
However, Employers should consider using the Yellow Book, rather than the Silver
Book where:
• There is insufficient time, or insufficient information at tender stage, for tender-

ers to properly scrutinise and check the Employer’s Requirements, or for them to
carry out their designs, risk assessment studies and estimating.
• Under the Silver Book, the Contractor is responsible for the consequences of en-
countering unforeseeable ground conditions, and also he is responsible for certain
aspects of the Employer’s Requirements, such as the applicability of ISO stand-
ards, so tenderers need information on the matters related to such risks and they
need time to assess it and to evaluate all risks.
These matters will be discussed in detail later in the book:
• Construction will involve substantial work underground or work in other areas

which tenderers cannot inspect for these types of works, and the risks of encoun-
tering unforeseen conditions may be so great that the lowest tender is the one
submitted by the least knowledgeable tenderer or most reckless gambler.
• The Employer intends to supervise closely or control the Contractor’s work, or
to review most of the construction drawings: with the more Contractor’s risks,
he needs to have greater freedom of action and less interference by the Employer.
• The amount of each interim payment is to be determined by an official or other in-
termediary. The Silver Book does not provide for an “Engineer” to administer the
Contract and determine the amount of each monthly (or other) interim payment,
which needs to be determined in advance and defined in a Schedule of Payments.
Is it the sort of project where the Concessionaire takes total responsibility for the financ-
ing, construction and operation of the Project?
In this case, the Concessionaire (the “Employer”) probably requires an EPC (Engi-
neer, Procure, Construct) Contract with the construction Contractor, where the Con-
tractor takes total responsibility for the design and construction of the facility, and
where there is a higher degree of certainty that the agreed Contract Price and time will
not be exceeded.
Also, that the Employer does not wish to be involved in the day-to-day progress of
the work, provided the end result meets the performance criteria he has specified.
And also, the Parties concerned, e.g. sponsors, lenders and the Employer, are willing
to pay more for the construction of the Project in return for the Contractor bearing the
extra risks associated with enhanced certainty of final price and time.
If this is what is wanted choose the Conditions of Contract for EPC/Turnkey Projects
(EPC/Turnkey Contract) (Silver Book).
Is it a Process or Power Plant or Infrastructure Project (e.g. highways, rail, water or
drainage/sewage treatment plant, electrical power line) where the Employer wishes the
Project to be delivered on a Fixed-Price Turnkey Basis?
Note if the Employer wishes the Contractor to take total responsibility for the de-
sign and construction of the process or power facility and hand it over ready to operate
“at the turn of a key” it is normally referred to as a Turnkey Project.
The Employer:
• Wishes to have a higher degree of certainty that the agreed Contract Price and
time will not be exceeded;
• Wishes the Project to be organised on a strictly two-party approach i.e. without
an “Engineer” being involved;
• Does not wish to be involved in the day-to-day progress of the construction work,
provided the end result meets the performance criteria he has specified;
• Is prepared to pay more for the construction of his Project (compared to a simple
Design and Build Contract) in return for the Contractor bearing the extra risks
associated with enhanced certainty of final price and time.
If this is what is wanted, the Employer should choose the Conditions of Contract for
EPC/Turnkey Projects (Silver Book).
Is it a Building Project where the Employer wishes to have his building(s) constructed
on a Fixed-Price Turnkey Basis complete with all furniture, fittings and equipment al-
ready installed?
In the case of a building, the Employer or his Architect may have done some or
most of the design prior to appointing the Contractor, but with suitable modification
regarding design responsibility the Silver Book may be chosen.
3 Obligations and responsibilities
of the Employer, the Employer’s
Representative, the Engineer and the
Contractor
This chapter will review the roles and responsibilities of the various parties under the
FIDIC Red, Yellow and Silver Books:
• The Employer;
• The Engineer (Red and Yellow Books)/The Employer’s Representative (Silver
Book);
• The Contractor.
The Employer
Clause 2 in the FIDIC 2017 Contracts contains the primary roles and responsibilities
of the Employer under the FIDIC 2017 Contracts.
The Employer and the Contractor are the contracting parties (referred to in the
Contract as a “Party” or the “Parties”).
Although the Employer is a contracting party, like other construction contracts, the
Employer has very few direct actions stated under the FIDIC 2017 Contracts.
The Employer’s fundamental responsibilities under any construction contract are:
• Giving the Contractor right of access to, and/or possession of, parts of the Site as
required;
• Making payment to the Contractor as certified by the Engineer/Employer’s
Representative;
• Not preventing or hindering the Contractor in meeting his contractual obligations;
• Not interfering with the duties of the Engineer/Employer’s Representative or with
certification.
Note, however, that the Silver Book refers frequently to “the Employer”, but the ac-
tions under which the Employer is named will usually be carried out by the Employer’s
Representative (see below).
In writing this book, for clarity, the author has consistently used the word “Em-
ployer” where the Contract states that though the inference is that the Employer’s
Representative may actually carry out the actions on behalf of the Employer.
Right of access
Under Sub-Clause 2.1, the Employer is required give the Contractor right of access to,
and possession of, all parts of the Site within the times stated in the Contract Data. In
reality the Employer may not be able to give access and possession to all parts of the
Site, and the Contractor might not need it all at once either.
NB: “Contract Data” is in Part A of the Particular Conditions, formerly referred to
in the FIDIC 1999 Contracts as the “Appendix to Tender”.
Note that this right of access and possession of the Site may not be exclusive to the
Contractor, and particularly with a large project, he may have to share the Site with
other contractors and other occupants of the Site.
This is an important point, as the Contractor may need to co-ordinate its activities
with other contractors or occupants and is deemed to have priced and programmed
the Works accordingly.
Note also that the Employer may withhold any such right or possession until the
Performance Security has been received. Most Employers tend to insist on the Perfor-
mance Security having been received before the Contractor starts work.
If no such time is stated in the Contract Data, the Employer is required to give the
Contractor right of access to, and possession of, those parts of the Site within such
times as may be required to enable the Contractor to proceed in accordance with the
Contractor’s Programme submitted under Clause 8.3.
Giving access and possession of the Site is a fundamental obligation upon the Em-
ployer. Late possession is an Employer Risk Event, and if the Employer does not give
access and possession, and the Contractor suffers delay and/or incurs cost as a result
of the failure, the Contractor is entitled to an Extension of Time and/or payment of
Cost plus Profit.
Note that the Contractor is not entitled to an Extension of Time and/or payment
of Cost plus Profit, purely because the Employer is late in giving possession and the
amount of that delay e.g. 1 week delay in giving possession = 1 week Extension of Time
with all Costs, the Contractor has to prove that he suffers delay and/or incurs Cost, to
which Profit is added.
Under the FIDIC 2017 Contracts, the Employer has some additional duties and re-
sponsibilities, which are quite wide ranging and broadly covered by Clause 2 of the
Contract.
Employer’s use of Contractor’s Documents

The Employer may use the Contractor’s Documents under a non-terminable transferable
non-exclusive royalty-free licence to copy, use and communicate as required under the
Contract, but the Contractor retains the copyright and any intellectual property rights in
these documents. The licence applies throughout the operational life of the relevant parts
of the Works and extends to anyone who is in possession of the relevant part of the Works.
In the event of termination of the Contract by the Employer, the Employer may
copy, use and communicate the Contractor’s Documents for which the Contractor has
received payment for the purpose of completing the Works and/or arranging for any
other entities to do so.
The Contractor’s Documents must not, without the Contractor’s prior consent, be
communicated to a third party by other than those permitted under the Contract.
Contractor’s use of Employer’s Documents

Similarly, the Contractor may at his own cost, copy, use and communicate these doc-
uments for the purposes of the Contract.
Obligations and responsibilities 81
The Employer’s Documents must not, without the Employer’s prior consent, be cop-
ied, used or communicated to a third party by the Contractor, except as necessary for
the purposes of the Contract.
The Employer retains copyright and other intellectual property rights in the Speci-
fication and Drawings and other documents made by (or on behalf of) the Employer.
Assistance
Under Sub-Clause 2.2, if the Contractor requests, the Employer is required to provide
reasonable assistance to allow the Contractor to obtain:
a Copies of the Laws of the Country which may not be readily available. They
should be available, and it is the Contractor’s responsibility to obtain them, but
the Employer, particularly if in the public domain e.g. a government department,
may be in the position to assist and expedite that availability.
b Any permits, permissions, licences or approvals required by the Laws of the Coun-
try, which the Contractor is required to obtain for the delivery of Goods and/or for
the export of Contractor’s Equipment when it is removed from the Site. Again, it
is the Contractor’s responsibility to obtain them, the Employer is only assisting.
As stated, the Employer is only giving assistance if requested, it is fundamentally the

Contractor’s obligation to obtain them and to be fully aware of their content.
Employer’s Personnel and other Contractors

Sub-Clause 2.3 requires that the Employer is responsible for ensuring that the Employ-
er’s Personnel and the Employer’s other contractors (if any) on or near the Site co-op-
erate with the Contractor’s efforts under Sub-Clause 4.6 [Co-operation], and comply
with the same obligations which the Contractor is required to comply with in terms of
health and safety and/or environmental issues.
The Contractor may also require the Employer to remove any of the Employer’s
Personnel or of the Employer’s other contractors who is found to have engaged in cor-
rupt, fraudulent, collusive or coercive practice. Terms such as “corrupt, fraudulent,
collusive or coercive practice” have legal connotations so the Parties should seek legal
advice in this respect.
Employer’s financial arrangements

The FIDIC 1999 Contracts introduced a new provision that, if requested by the Con-
tractor, the Employer must provide evidence that he has, or will have the finance avail-
able to pay for the project, the evidence having to be provided within 28 days of any
request by the Contractor. Also, if the Employer makes any material change to his
financial arrangements he had to notify the Contractor with details.
Under Clause 16.1, if the Employer failed to comply, the Contractor can give 21 days’
notice to suspend work. Also, if the Contractor did not receive reasonable evidence within
42 days of giving a notice to suspend work, the Contractor could terminate the Contract.
Under FIDIC 2017, Sub-Clause 2.4 has been expanded in that the Employer is re-
quired to describe his financial arrangements within the Contract Data and must no-
tify the Contractor if there is a material change.
Also, if the Contractor requests that financial arrangements are in place for payment
of Variations if they exceed the stated thresholds i.e. 10% of the Accepted Contract
Amount, or the accumulated total of Variations exceeds 30% of the Accepted Contract
Amount, or if the Contractor does not receive payment in accordance with Sub-Clause
14.7, or if the Contractor becomes aware of a material change in the Employer’s financial
arrangements of which the Contractor has not received a Notice giving details.
For any of the above issues the Contractor may request and the Employer within 28
days after receiving this request, must provide reasonable evidence that financial ar-
rangements have been made and are being maintained which will enable the Employer
to pay the part of the Contract Price remaining to be paid at that time.
Note that many Employers delete this provision from their contracts.
Site Data and items of reference

Under Sub-Clause 2.5, the Employer must have made available to the Contractor for
his information, before the Base Date (which is 28 days before the tender submission
date), all relevant data in the Employer’s possession on the topography (the general
arrangement, levels and physical features) of the Site and on sub-surface, hydrological,
climatic and environmental conditions at the Site.
The Employer is also required to promptly make available to the Contractor all such
data which comes into his possession after the Base Date.
Note that this provision only requires the Employer to share the information he
already has in his own possession, and he does not have to obtain any additional in-
formation to fulfil the requirement.
Items of reference such as levels will normally be shown on the Drawings.
Note that, whilst Sub-Clause 2.5 looks very similar under the Yellow and Silver
Books, the final paragraph which has been added in the Silver Book states that “the
Employer shall have no responsibility for the accuracy, sufficiency or completeness of
such data and/or items of reference except as stated in Sub-Clause 5.1 [General Design
Obligations]”. This additional paragraph can present a high risk to the Contractor!
Employer-Supplied Materials and Employer’s Equipment

If there are Employer-Supplied Materials and/or Employer’s Equipment which are
listed in the Specification for the use of the Contractor in carrying out the Works (Sub-
Clause 2.6), the Employer must make them available to the Contractor in accordance
with the details, times, arrangements, rates and prices as stated in the Specification.
The Contractor is responsible for each item of Employer’s Equipment and for any
loss or damage occurring whilst any of the Contractor’s Personnel is operating it, driv-
ing it, directing it, using it or in control of it.
The Engineer/Employer’s Representative

See also specific roles of the Engineer or Employer’s Representative in later chapters.
Note as stated above, the Silver Book refers frequently to “the Employer”, but the
actions under which the Employer is named will usually be carried out by the Employ-
er’s Representative. For clarity as stated previously, the author has consistently used
the word “Employer” where the Contract states that.
The roles are essentially the same, but the Engineer has certain qualifications and
experience as required by the Contract, which the Employer’s Representative may not
have. Note that an Engineer by profession may act as the Employer’s Representative,
but he is not acting as “the Engineer” under the Contract. An Employer’s Representa-
tive cannot act as the Engineer, unless he actually is an Engineer.
One question to be considered is when should the Engineer (Red and Yellow Books)
or Employer’s Representative (Silver Book) be appointed?
Whilst the Contract can only refer to the Engineer/Employer’s Representative act-
ing from the point when the Contractor is appointed i.e. when the FIDIC contract
comes into existence, they are not necessarily appointed at that stage, though their role
is fundamentally different if they are not.
Concept/design stage
This is not strictly the stage at which an Engineer/Employer’s Representative is ex-
pected to be appointed, it is more often the role of Designers formulating design alter-
natives and Quantity Surveyors/Cost Consultants producing budgets and cost plans,
but if it is the case, it may require the Engineer/Employer’s Representative to be in-
volved in the design process and various decisions related to it.
The Engineer/Employer’s Representative would be appointed in advance of the de-
sign team in most instances, and would assist the Employer in the selection and ap-
pointment of the design team, the Designer(s) and the Contractor.
Tender stage
The Engineer/Employer’s Representative may be appointed at tender stage when the
Employer may have developed the design, or at least the requirements, and wishes
the Engineer/Employer’s Representative to manage the tender process and following
appointment of the Contractor into the construction phase, though often a Quan-
tity Surveyor is appointed to support the Employer and the Engineer/Employer’s
Representative.
The Engineer/Employer’s Representative would provide assistance in selection of
the Contractor and continue with the contract role of the Engineer/Employer’s Repre-
sentative for the remainder of the contract.
Contract stage
In some instances, the Employer will progress the design, or at least the requirements,
and appoint a Contractor, but require an Engineer/Employer’s Representative to un-
dertake the contract role of the Engineer/Employer’s Representative for the remainder
of the process, and in accordance with the FIDIC contract.
The roles and responsibilities of the Engineer/Employer’s Representative

Before discussing specific issues and differences regarding the FIDIC 2017 Red, Yel-
low and Silver Books it is worth noting that FIDIC has amended the role of the Engi-
neer in the Red and Yellow Books (the Silver Book has an Employer’s Representative)
from the impartial, quasi-arbitral role of previous editions.
Note that under the FIDIC 2017 Silver Book the Employer is obliged to appoint an
“Employer’s Representative”, whereas under FIDIC 1999 it was just an option.
It is now an obligation, so that the Contractor and the Contractor’s Representative
have a single point of contact acting for the Employer, rather than a corporate entity
called the “Employer”, which is particularly important for giving of instructions, valu-
ing the Works, making decisions on quality, etc., also there is a focal point for dealing
with the Parties’ claims, whether they be from the Contractor or the Employer.
The duties of the Employer’s Representative are similar to that of an Engineer, but
because the Contractor is responsible for all of the design it is felt that there is no need
for a qualified Engineer to act for the Employer.
If the Engineer/Employer’s Representative is a legal entity i.e. a company, then a
person employed by the Engineer/Employer’s Representative acts on its behalf.
It is very important that when carrying out his duties under the Contract, the Engi-
neer/Employer’s Representative acts neutrally between the Parties and not to act solely
for the Employer.
There is no problem with the Engineer/Employer’s Representative being from the
same organisation as the Employer, so there is no requirement to be truly independent,
but he must be impartial on all matters.
The Engineer/Employer’s Representative must have the necessary authority to act
for the Employer on all matters under the Contract.
The Contract specifically provides that the Engineer is required to be:
a A professional Engineer having suitable qualifications experiences and compe-

tences to act as the Engineer under the Contract. This is a critical requirement
on that someone who is not a qualified Engineer cannot take the title “Engineer”
under the contract. The Engineer is not specifically required to be based on Site,
unlike an Engineer’s Representative who is required to be based on Site;
b Fluent in the ruling language defined in the Contract.
If the Engineer is to be changed, the Employer must comply with Sub-Clause 3.4.
The Engineer may delegate any of his duties at any time by notifying the Contractor
in writing which may later be revoked, again in writing. It is important to note that the
authority of the delegated representative is limited to the authority contained within
the delegation notice.
The Contractor is required to comply with any instruction given by the Engineer.
Instructions should only be taken from that person or any previously notified delegate.
Wherever possible this should be in writing, though there is a fallback situation where
the instruction is oral, it can be confirmed by the Contractor within two working days
and if not dissented from within two further working days it becomes an instruction.
The Engineer has no authority to amend the Contract.
If there is any requirement for the Engineer to obtain the consent of the Employer
on any matter this must be stated in the Particular Conditions.
There is a new provision that if an Engineer exercises a specified authority for which
the Employer’s consent is required, then consent is deemed to have been given.
Any acceptance, agreement, approval, check, certificate, Notice, No-objection, etc.,
by the Engineer, the Engineer’s Representative or any assistant does not relieve the
Contractor from any duty, obligation or responsibility he has under the Contract.
Notices
One of the key changes within the FIDIC 2017 Contracts is the issue of Notices, of
which there are far more than in the FIDIC 1999 Contracts, some with time limits for
giving, or not giving, Notices.
The FIDIC 2017 Contracts define Notices under Sub-Clause 1.1.56 (Silver Book
Sub-Clause 1.1.48) as a written communication identified as a Notice and issued in
accordance with Sub-Clause 1.3 [Notices and Other Communications].
So, the Notice must be in writing, and clearly identifiable as a “Notice”, not just a
communication between the Parties.
For example, under new Sub-Clause 3.5 (Yellow/Red) and Sub-Clause 3.4 (Silver),
if an instruction is a Variation the Engineer (Yellow/Red) or Employer (or Employer’s
Representative) (Silver) should state explicitly that it is a Variation.
If it is not stated as a Variation, but the Contractor thinks that the instruction con-
stitutes a Variation, then the Contractor must immediately give a Notice to the Engi-
neer/Employer’s Representative to that effect, and give reasons.
If the Engineer (Employer under the Silver Book) does not respond within seven
days, by giving another Notice (confirming, reversing or varying the instruction), he is
deemed to have revoked the instruction.
Sub-Clause 1.3 (Notices and Other Communications) also reinforces the Contract
requirements in terms of Notices.
• Sub-Clause 1.3(a) requires a Notice to be a paper-original, signed by the Con-

tractor’s Representative, the Engineer or the authorised representative of the Em-
ployer, or an electronic original generated from any of the systems of electronic
transmission stated in the Contract Data.
• Sub-Clause 1.3(b) also states that a Notice should be identified as a Notice as op-
posed to another form of communication. A Notice need not refer to the clause
under which it is issued, whereas another form of communication must do so.
However, it is important to bear in mind that a Notice given under certain clauses must
state that it is given under the relevant clause, for example, Sub-Clauses 15.2.1 [Termi-
nation for Contractor’s Default: Notice], 15.5 [Termination for Employer’s Conveni-
ence], 16.1 [Suspension by Contractor] and 16.2.1 [Termination by Contractor Notice].
Also, all notices and other types of communication shall “not be unreasonably
withheld or delayed”.
If a Notice is issued by a Party or the Engineer, the Notice must also be issued to the
other Party and/or the Engineer as appropriate.
There are certain actions required of the Engineer/Employer’s Representative in
FIDIC 2017 Contracts.
The FIDIC 2017 Contracts introduce a new term “No-objection”, which is defined
in Sub-Clause 1.1.55 (Silver Book Sub-Clause 1.1.48) as meaning that “the Engineer/
Employer has no objection to the Contractor’s Documents, or other documents submitted
by the Contractor under these Conditions, and such Contractor’s Documents or other
documents may be used for the Works”.
No-objection is a term frequently experienced by the author when working on pro-
jects in the Middle East, where the Engineer or Employer’s Representative, having
reviewed the work or document(s) submitted, does not actually “approve” or “accept”,
but does not object to it.
Cynics may say that the Engineer/Employer’s Representative is trying to absolve
himself of liability, by only giving “No-objection” rather than formally approving or
accepting or even rejecting, but what he is doing by giving No-objection is not absolv-
ing the Contractor of his liability, and this is how the FIDIC 2017 No-objection Notice
should be viewed and applied.
“Review” is defined as an “examination and consideration by the Engineer/Employ-
er’s Representative of a Contractor’s submission in order to assess whether (and to what
extent) it complies with the Contract and/or with the Contractor’s obligations under or in
connection with the Contract”.
The Engineer’s Representative

The Engineer may appoint an Engineer’s Representative and delegate to him the au-
thority necessary to act on the Engineer’s behalf at the Site, except to replace the En-
gineer’s Representative.
The Engineer’s Representative (if appointed) is required to be based at the Site for
the whole time that the Works are being executed at the Site.
The role of Engineer’s Representative existed in older versions of the FIDIC con-
tracts, but this was not included within the FIDIC 1999 Contracts, and it has been
reintroduced into the FIDIC 2017 Contracts.
The Engineer’s Representative is not required to be an Engineer but must be based
at the Site for the whole time the Works are being executed, and therefore, the Engineer
should consider this requirement in appointing an Engineer’s Representative.
It is important to recognise that in delegating, the Engineer is sharing an authority
with the delegate, be they an Engineer’s Representative or an assistant, who will then
represent him, it is not passing ultimate responsibility on to them. The authority is
shared, and the Engineer may still take an action which they have delegated, but ulti-
mately responsibility will remain with the Engineer as the principal.
It is also important to note that one can only delegate outwards from the principal
i.e. no-one can assume authority possibly because, within an organisation, they are
senior to the Engineer.
Delegation by the Engineer

There is only one Engineer for the Contract, but he may delegate authority to assis-
tants by giving a Notice to the Parties, describing the duties and the delegated author-
ity of each assistant, for example designers, inspectors, etc. The delegation must not
take effect until this Notice has been received by both Parties.
However, there are two matters which the Engineer cannot delegate to anyone else:
a Acting under Sub-Clause 3.7 [Agreement or Determination]; and/or

b Issuing a Notice to Correct under Sub-Clause 15.1 [Notice to Correct].
Assistants shall be suitably qualified natural persons, who are experienced and com-
petent to carry out these duties and exercise this authority, and who are fluent in the
language defined in the Contract.
Engineer’s instructions
The Engineer (Employer under the Silver Book), or his delegated representative, may
issue instructions to the Contractor, which may be necessary for the execution of the
Works.
It is critical that the Contractor only takes instructions from the Engineer (Em-
ployer under the Silver Book), or from the Engineer’s Representative, or an assistant
to whom the authority has been delegated to give instructions.
If the instruction constitutes a Variation, Sub-Clause 13.3.1 applies and it is dealt
with as a Variation in the normal way.
If the Engineer (Employer under the Silver Book) does not state that the instruction
constitutes a Variation, and this could be quite a common occurrence, and the Con-
tractor considers that the instruction constitutes a Variation, or does not comply with
applicable Laws, or will reduce the safety of the Works, or is technically impossible
issues a Notice to the Engineer (Employer under the Silver Book) giving reasons.
If the Engineer (Employer under the Silver Book) does not respond to the Notice
within seven days after receiving it, the Engineer is deemed to have revoked the in-
struction. If the Engineer responds, the Contractor is required to comply with the
response.
This is a change from FIDIC 1999, and it is hoped that it will bring matters to a
head quicker and will give the matter of Engineer’s (Employer under the Silver Book)
Instructions, and their status, some clarity, which is an advantage to the Contractor,
the Engineer (Employer under the Silver Book) and also to the Employer who has to
plan and budget for the changes.
Note that if a Contractor believes that an instruction from the Engineer (Employer
under the Silver Book) constitutes a Variation, but the Engineer (Employer under the
Silver Book) does not, although the Contract does not expressly deal with the issue,
the Contractor should not refuse to comply with the instruction unless or until the
Engineer confirms that it constitutes a Variation. The Contractor should comply with
the instruction and raise the question of whether it is a Variation as a Claim and/or
Dispute.
Replacement of the Engineer

The Engineer is required to notify the Contractor at least 42 days prior to replacing
the Engineer including the name, address and relevant experience of the intended re-
placement Engineer.
The Contractor is given a right of objection, but if he does not respond within 14
days after receiving the Notice, by stating any objection with reasons, the Contractor
is deemed to have accepted the replacement. The Employer must not replace the En-
gineer with a person against whom the Contractor has raised reasonable objection by
a Notice.
Often this Sub-Clause is amended as the Employer would prefer the Contractor to
have no right of objection, or to be seen as having any choice as to who should be the
replacement Engineer, but deletion of this provision would give tenders reasonable
concern regarding the Employer’s intentions.
If the Engineer is unable to act as a result of death, illness, disability or resignation,
the Employer is entitled to immediately appoint a replacement by giving a Notice to
the Contractor with reasons and the name, address and relevant experience of the
replacement. This appointment is treated as a temporary appointment until this re-
placement is accepted by the Contractor, or another replacement is appointed, under
this Sub-Clause. This is a new feature within FIDIC 2017.
Agreement or Determination
The process of Agreement or Determination is dealt with in detail within Chapter 10
Employer’s and Contractor’s Claims.
As stated above, it is critical that the Engineer (Employer’s Representative under the
Silver Book) acts neutrally between the Parties and not to act for the Employer.
Whenever these Conditions provide that the Engineer is required to agree or deter-
mine any matter or Claim, the following procedures apply:
Consultation to reach agreement

The Engineer (Employer’s Representative under the Silver Book) is required to consult
with both Parties jointly and/or separately and encourage discussion between the Par-
ties in an endeavour to reach agreement on the matter.
The Engineer (Employer’s Representative under the Silver Book) provides both Par-
ties with a record of the consultation.
If agreement is achieved, within the time limit for agreement, the Engineer (Employ-
er’s Representative under the Silver Book) gives a Notice to both Parties of the agree-
ment, the agreement is signed by both Parties. This Notice is required to state that it is
a “Notice of the Parties’ Agreement” and must include a copy of the agreement.
If:
a No agreement is achieved within the time limit for agreement, or

b Both Parties advise the Engineer (Employer’s Representative under the Silver
Book) that no agreement can be achieved within this time limit whichever is the
earlier, the Engineer (Employer’s Representative under the Silver Book) shall give
a Notice to the Parties accordingly proceeds to make a determination.
Engineer’s (Employer’s Representative under the Silver Book) determination

The Engineer (Employer’s Representative under the Silver Book) is required to make
a fair determination of a matter or Claim, and give a Notice to both Parties of his
determination.
The Notice must state that it is a “Notice of the Engineer’s/Employer’s Represent-
ative’s Determination” and describes the determination in detail with reasons and
supporting particulars.
Time limits
The Engineer (Employer’s Representative under the Silver Book) is required to give a
Notice of agreement within 42 days or within such other time limit as proposed by the
Engineer and agreed by both Parties.
The Engineer (Employer’s Representative under the Silver Book) must give the No-
tice of his determination within 42 days or within such other time limit as may be
proposed by the Engineer and agreed by both Parties.
If the Engineer (Employer’s Representative under the Silver Book) does not give the
Notice of agreement or determination within the relevant time limit:
ii The matter is deemed to be a Dispute which may be referred by either Party to the
DAAB for its decision.
Effect of the agreement or determination

Each agreement or determination is binding on both Parties and the Engineer (Em-
ployer’s Representative under the Silver Book) unless and until it is corrected or, in
the case of a determination, it is revised under Clause 21 (Disputes and Arbitration).
If, within 14 days after giving or receiving the Engineer’s (Employer’s Represent-
ative under the Silver Book) Notice of agreement or determination, any error of a
typographical or clerical or arithmetical nature is found by the Engineer (Employer’s
Representative under the Silver Book), then he immediately advises the Parties.
If found by a Party, then that Party gives a Notice to the Engineer (Employer’s Rep-
resentative under the Silver Book) identifying the error. If the Engineer (Employer’s
Representative under the Silver Book) does not agree there was an error, he immedi-
ately advises the Parties.
The Engineer (Employer’s Representative under the Silver Book) shall, within seven
days of finding the error or receiving a Notice under sub-paragraph (b) above (as the
case may be), give a Notice to both Parties of the corrected agreement or determi-
nation. Thereafter, the corrected agreement or determination shall be treated as the
agreement or determination for the purpose of these Conditions.
Dissatisfaction with Engineer’s (Employer’s Representative under the Silver

Book) determination
If either Party is dissatisfied with a determination of the Engineer (Employer’s Repre-
sentative under the Silver Book) the dissatisfied Party may give a Notice of Dissatisfac-
tion (NOD) to the other Party, with a copy to the Engineer (Employer’s Representative
under the Silver Book) setting out the reason(s) for dissatisfaction, this NOD must be
given within 28 days after receiving the Engineer’s determination (Employer’s Repre-
sentative under the Silver Book).
If no NOD is given by either Party within the period of 28 days, the determination
of the Engineer (Employer’s Representative under the Silver Book) is deemed to have
been accepted by both Parties and is then final and binding.
If the dissatisfied Party is dissatisfied with only part(s) of the Engineer’s (Employer’s
Representative under the Silver Book) determination the part(s) must be clearly iden-
tified in the NOD and this part(s) is deemed to be severable from the remainder of the
determination, and the remainder of the determination becomes final and binding on
both Parties.
In the event that a Party fails to comply with an agreement of the Parties under this
or a final and binding determination of the Engineer (Employer’s Representative un-
der the Silver Book), the other Party may refer the failure itself directly to arbitration.
Meetings
The FIDIC 2017 Contracts have new provision for meetings, to try to promote effec-
tive communication, co-operation and collaboration between the parties.
The Engineer (Employer under the Silver Book) or the Contractor’s Representative
may require the other to attend meetings. This is another example of the more collab-
orative wording of the FIDIC 2017 Contracts.
Others, for example the Employer’s other contractors, the personnel of legally con-
stituted public authorities and/or private utility companies and/or Subcontractors,
may also attend any such meeting, if requested by the Engineer (Employer under the
Silver Book) or the Contractor’s Representative.
The Engineer (Employer under the Silver Book) is required to keep a record of each
management meeting and supplies copies of the record to those attending, and to the
Employer. There is no requirement for the Contractor to sign or accept the record,
though he should notify the Engineer (Employer under the Silver Book) of anything
that is incorrect or inaccurate.
At any such meeting, and in the record, responsibilities for any actions to be taken
must be in accordance with the Contract.
Issue of drawings or instructions

Under the Red Book, the Engineer has a fundamental obligation to provide drawings
and/or instructions to the Contractor to allow him to make progress in executing the
Works.
If a delay occurs due to the Contractor not receiving any drawings or instruction
in time, the Contractor must, under Sub-Clause 1.9, notify the Engineer, including
details of what drawing and/or instruction is late, and the delay or disruption caused
by that lateness likely to be suffered if it is late.
The Contractor is entitled to an Extension of Time and/or payment of Cost plus
Profit; however, the Contractor would not be entitled to any relief if the delay and/or
disruption was caused by an error in, or delay in the submission of, any of the Con-
tractor’s Documents.
Note that under the Yellow Book and the Silver Book, the Engineer and the Em-
ployer, respectively, have different obligations, as they both refer to the Employer’s Re-
quirements, so in a sense although there is a Sub-Clause 1.9 it has different obligations.
Under Sub-Clause 1.9 of the Yellow Book, if the Contractor finds an error, fault
or defect within the Employer’s Requirements as a result of scrutinising them under
Sub-Clause 5.1 (i.e. promptly after receiving the Notice from the Engineer stating the
Commencement Date (Clause 8.1)), the Contractor gives a Notice to the Engineer, and
the Engineer agrees or determines whether or not there is an error and whether an
experienced Contractor would have discovered the error, fault or defect before submit-
ting the tender and if an experienced Contractor would not have discovered the error,
fault or defect prior to tender, it is judged to be a Variation, and the Contractor, if he
suffers delay and/or incurs Cost as a result, is entitled to an Extension of Time and/or
payment of Cost plus Profit.
A critical difference is that Sub-Clause 1.9 [Errors in the Employer’s Requirements]
is included within the Yellow Book, but does not exist within the Silver Book, and this
is a major risk for the Contractor.
Other specialists
One role that people often question is that of the “Quantity Surveyor” or “Cost
Consultant”.
Whilst the FIDIC contracts do not expressly refer to the role of a Quantity Surveyor
or a Cost Consultant, it is not unusual, particularly on larger or more complex pro-
jects, for the Employer to appoint one pre-contract and/or post-contract to deal with
financial matters including the following:
• Pre-contract
• Preparation of Bills of Quantities;
• Pre-contract Cost Planning;
• Preparation of Tender Documents.
Post-contract (on behalf of the Engineer/Employer’s Representative)

• Preparing Valuations and dealing with payments;
• Evaluating Variations;
• Evaluating Loss and Expense claims;
• Financial Reporting.
It is important not to expect the Quantity Surveyor or Cost Consultant to deal with all
matters of a financial nature.
Employers should also consider employing other specialists on major projects,
for examples a forensic delay analyst for complex delays, and a quantum analyst for
quantifying additional or changed resources and/or disruption, due to major design
changes. These can be appointed as and when required.
The Contractor
The Contractor and the Employer are the contracting parties (referred to in the Con-
tract as a “Party” or the “Parties”).
Clause 8 provides the basic statement of what the Contractor agrees to do.
Essentially, this is to complete the Works, and this is an absolute obligation not just
that he will do his best. However, the absolute nature of this is substantially reduced
by the Works “subject to the provisions of the Contract”.
Sub-Clause 4.1 of the Red Book states the Contractor’s obligation to execute the
Works and requires any Contractor-designed Works to be (when completed) fit for the
intended purpose defined in the Contract. Note that most design and build contracts
provide for the design to be reasonable skill and care.
This is an important matter to be borne in mind when the tender documents are be-
ing written, in particular because of the absence of any reference to purposes which may
reasonably be inferred from the Contract. Although the risk is fairly allocated to the Con-
tractor, he may not be able to be indemnified by his insurers or his subcontract designers.
Contractor’s design
Under the Red Book, the Contractor is only responsible for the design of the Perma-
nent Works to the extent specified in the Contract.
Note that Contractor’s design is discussed in detail in Chapter 5 but is also summa-
rised here.
In the Red Book, Clause 4.1 sub-paragraphs (a) to (f) specify general requirements
in respect of such designs, unless they are defined otherwise in the Particular Condi-
tions. These general requirements are also stated in 13.3 (b) as being applicable to any
subsequent Contractor-designed “Value Engineering” proposals, unless otherwise
agreed by both Parties.
If the Contract specifies that the Contractor is required to design any part of the
Permanent Works, then unless otherwise stated in the Particular Conditions:
a The Contractor prepares, and submits to the Engineer for Review, the Contrac-
tor’s Documents for this part and implements the design during the execution of
the Works.
b The Contractor’s Documents are required to be in accordance with the Specifi-
cation and Drawings and to include additional information required by the Engi-
neer to add to the Drawings for the co-ordination of each Party’s designs.
If the Engineer instructs that further Contractor’s Documents are reasonably
required to demonstrate that the Contractor’s design complies with the Contract,
the Contractor prepares and submits them promptly to the Engineer at the Con-
tractor’s cost.
c Construction of this part cannot commence until a Notice of No-objection is
given by the Engineer for all the Contractor’s Documents which are relevant to its
design and construction of such part.
d If the Contractor has commenced construction of the part of the Works to which
such design or Contractor’s Documents are relevant, work on this part is sus-
pended, and work shall not resume until a Notice of No-objection is given by the
Engineer for the revised documents.
e The Contractor shall be responsible for this part and it shall, when the Works are
completed, be fit for such purpose(s) for which the part is intended as are specified
in the Contract.
f In addition to the Contractor’s undertaking above, the Contractor undertakes
that the design and the Contractor’s Documents for this part will comply with the
technical standards stated in the Specification and Laws (in force when the Works
are taken over.
Performance Security
Sub-Clause 4.2 requires the Contractor to provide a Performance Security at his own
cost in the amount specified in the Appendix to Tender. Provisions are included for
extending the security, and for the Employer’s indemnity in respect of any claim which
he was not entitled to make.
The contract specifies that “the Performance Security shall be … in the form annexed
to the Particular Conditions or…”. When preparing the tender documents, the Em-
ployer must decide what wording to annex.
The Employer may instruct the Contractor to increase or decrease the Performance
Security in the event of Variations that result in a cumulative increase or decrease by
more than 20% of the Contract Price.
The Contractor must obtain (at his own cost) a Performance Security to secure
his proper performance of the Contract, in the amount and currencies stated in the
Contract Data. If no amount is stated in the Contract Data, the Sub-Clause does not
apply.
The Contractor is required to deliver the Performance Security to the Employer,
with a copy to the Engineer, within 28 days after receiving the Letter of Acceptance.
The Performance Security is to be issued by an entity (e.g. a Bank), and from within
a country (or other jurisdiction) to which the Employer gives consent and must be in
the form referred to in the Particular Conditions, or in another form agreed by the
Employer (but such consent and/or agreement shall not relieve the Contractor from
any obligation under this Sub-Clause).
The Contractor must ensure that the Performance Security remains valid and en-
forceable until the issue of the Performance Certificate and the Contractor has cleared
the Site.
If the terms of the Performance Security specify an expiry date, and the Contractor
is not entitled to receive the Performance Certificate by the date 28 days before the
expiry date, the Contractor extends the validity of the Performance Security until the
issue of the Performance Certificate.
Whenever Variations and/or adjustments under Clause 13 [Variations and Adjust-
ments] result in an accumulative increase or decrease of the Contract Price by more
than 20% of the Accepted Contract Amount:
a At the Employer’s request the Contractor must promptly increase the amount of
the Performance Security by a percentage equal to the cumulative increase. If
the Contractor incurs Cost as a result of this Employer’s request, it is classed as a
Variation as if the increase had been instructed by the Engineer.
b In the case of such a decrease, subject to the Employer’s prior consent, the Con-
tractor may decrease the amount of the Performance Security in that currency by
a percentage equal to the cumulative decrease.
The Employer must not make a claim under the Performance Security, except for
amounts to which the Employer is entitled under the Contract in the event of:
a Failure by the Contractor to extend the validity of the Performance Security,

as described in this Sub-Clause, in which case the Employer can claim the full
amount of the Performance Security;
b Failure by the Contractor to pay the Employer an amount due, as agreed or
determined under Sub-Clause 3.7 [Agreement or Determination] or agreed or
decided under Clause 21 [Disputes and Arbitration], within 42 days after the
date of the agreement or determination or decision or arbitral award (as the case
may be);
c Failure by the Contractor to remedy a default stated in a Notice given under Sub-
Clause 15.1 [Notice to Correct] within 42 days or other time (if any) stated in the
Notice;
d Circumstances which entitle the Employer to terminate the Contract, or if the
Contractor removes any defective or damaged Plant from the Site, failure by the
Contractor to repair such Plant, return it to the Site, reinstall it and retest it by
the date of expiry of the relevant duration stated in the Contractor’s Notice. The
Employer indemnifies and holds the Contractor harmless against and from all
damages, losses and expenses resulting from a claim under the Performance Secu-
rity to the extent that the Employer was not entitled to make the claim.
Any amount which is received by the Employer under the Performance Security must
be taken into account:
The Employer must return the Performance Security to the Contractor:
a Within 21 days after the issue of the Performance Certificate;

b Promptly after the date of termination if the Contract is terminated.
Subcontractors
Clause 5/ Sub-Clause 4.4 covers Subcontractors, who are subject to the consent. Note
that the Contractor does not have to have consent of the Engineer to suppliers or
previously named Subcontractors in the Contract.
It is a normal requirement in contracts for subcontractors to be assigned to the
Employer in the event of termination by the Employer.
The Contractor is required to execute the Works in accordance with the Contract,
as altered or modified by Variations.
Contractor’s Representative
The Contractor is required to appoint a qualified, experienced and competent full-
time Contractor’s Representative, fluent in the language of the Contract, and with full
authority to act for the Contractor.
The Contractor’s Representative is responsible for issuing and receiving Notices and
other communications on behalf of the Contractor.
The Contractor is required to submit the name and particulars of the Contractor’s
Representative to the Engineer for consent prior to the Commencement Date.
If the Engineer (Employer under the Silver Book) does not respond within 28 days
after receiving the submission, by giving a Notice to the Contractor objecting to the
proposed person or replacement, the Engineer (Employer under the Silver Book) is
deemed to have given his/her consent.
The Contractor must not, without the Engineer’s (Employer under the Silver Book)
prior consent, appoint a replacement.
The Contractor’s Representative may delegate any powers except the authority to
issue and receive Notices and instructions.
Any delegation does not take effect until the Engineer (Employer under the Silver
Book) has received a Notice from the Contractor’s Representative, naming the person;
specifying the powers, functions and authority being delegated or revoked; and stating
the timing of the delegation or revocation.
Contractor’s Documents
The Contractor provides the Plant and Contractor’s Documents specified in the
Contract, and all Contractor’s Personnel, Goods, consumables and other things and
services, whether of a temporary or permanent nature, required to fulfil the Contrac-
tor’s obligations under the Contract.
The Contractor is be responsible for the adequacy, stability and safety of all the
Contractor’s operations and activities, of all methods of construction and of all the
Temporary Works.
Except to the extent specified in the Contract, the Contractor:
The Contractor shall, whenever required by the Engineer, submit details of the ar-
rangements and methods which the Contractor proposes to adopt for the execution of
the Works. No significant alteration to these arrangements and methods shall be made
without this alteration having been submitted to the Engineer.
Preparation and Review

The Contractor’s Documents consist of the documents:
a Stated in the Specification;

b Required to satisfy all permits, permissions, licences and other regulatory ap-
provals which are the Contractor’s responsibility;
c Described in Sub-Clause 4.4.2 [As-Built Records] and Sub-Clause 4.4.3 [Opera-
tion and Maintenance Manuals].
Unless otherwise stated in the Specification, the Contractor’s Documents are written
in the language for communications defined in the Contract.
The Contractor prepares all the Contractor’s Documents, and the Employer’s Per-
sonnel shall has the right to inspect during the preparation of all these documents,
wherever they are being prepared.
If the Specification states that a Contractor’s Document is to be submitted to the
Engineer (Employer under the Silver Book) for Review, it must be submitted with
a Notice from the Contractor stating that the Contractor’s Document is ready for
Review and that it complies with the Contract.
The Engineer (Employer under the Silver Book) within 21 days after receiving
the Contractor’s Document and this Notice from the Contractor gives a Notice to
the Contractor of No-objection (which may include comments concerning minor
matters), or that the Contractor’s Document fails to comply with the Contract, with
reasons.
If the Engineer gives no Notice within 21 days, the Engineer (Employer under the
Silver Book) is deemed to have given a Notice of No-objection to the Contractor’s
Document.
After receiving a Notice, the Contractor revises the Contractor’s Document and re-
submits it to the Engineer (Employer under the Silver Book) for Review in accordance
with this Sub-Clause and the period of 21 days for Review shall be calculated from the
date that the Engineer receives it.
As-built records
The Contractor must prepare a complete set of “as-built” records if required by the
Contract. The format, referencing, system of electronic storage and other relevant de-
tails of the as-built records must be as stated within the Specification.
The number of copies of as-built records to be submitted by the Contractor
under this Sub-Clause is as required under Sub-Clause 1.8 [Care and Supply of
Documents].
The as-built records must be kept on the Site and used exclusively for the purposes
of the relevant Sub-Clause.
The as-built records are required to be submitted to the Engineer (Employer under
the Silver Book) for Review, and the Works are not considered complete, for the pur-
poses of taking-over, until the Engineer has given (or is deemed to have given) a Notice
of No-objection to the as-built records.
Operation and maintenance manuals

If no operation and maintenance manuals to be prepared by the Contractor are stated
in the Specification, this Sub-Clause shall not apply.
The Contractor is required to prepare the operation and maintenance manuals in
the format stated in the Specification.
The operation and maintenance manuals must be submitted to the Engineer (Em-
ployer under the Silver Book) for Review, and the Works are not complete for the pur-
poses of taking-over until the Engineer has given (or is deemed to have given) a Notice
of No-objection.
Training
The Contractor may be required to carry out training for the Employer’s Personnel in
the operation and maintenance of the Works if the Specification states.
If training is required, the Contractor is required to provide qualified and experi-
enced training staff, training facilities and all training materials as necessary or as
stated in the Specification.
If the Specification requires training to be carried out before taking over, the Works
are not considered to be completed for the purposes of taking over until the training
has been completed.
Assignment of benefit of subcontract

Should a Subcontractor’s obligations extend beyond the expiry of a Defects Notifica-
tion Period (DNP), and the Engineer (Employer under the Silver Book) instructs the
Contractor to assign the benefit of such obligations to the Employer, the Contractor is
required to do so.
Co-operation
This is an unusual clause as it requires the Contractor to allow “appropriate opportu-
nities” for carrying out work to various parties employed by the Employer, or of any
public authority. This is presumably to encourage the use of local labour. The Con-
tractor is able to recover any associated cost as “Unforeseeable Cost”.
The Contractor must, if stated in the Specification or as instructed by the Engineer,
co-operate with and allow appropriate opportunities for carrying out work by:
a The Employer’s Personnel;

b Any other contractors employed by the Employer; and
c The personnel of any legally constituted public authorities and private utility com-
panies, who may be employed in the carrying out, on or near the Site, of any work
not included in the Contract. Such appropriate opportunities may include the use
of Contractor’s Equipment, Temporary Works, access arrangements which are
the responsibility of the Contractor, and/or other Contractor’s facilities or ser-
vices on the Site.
The Contractor is responsible for all construction activities on the Site and is required
to use all reasonable endeavours to co-ordinate these activities with those of other
contractors as stated in the Specification or as instructed by the Engineer (Employer
under the Silver Book).
Note that, if the Contractor suffers any delay and/or incurs Cost as a result of an
instruction, to the extent that co-operation, allowance of opportunities and coordi-
nation was Unforeseeable, the Contractor is entitled to an Extension of Time and/or
payment of such Cost plus Profit.
Setting out
The Contractor is responsible, and liable, for setting out the Works as required.
The Employer is responsible for providing items of reference e.g. levels or datums,
but the Contractor must verify their accuracy.
Any delay and/or cost occasioned by the Employer providing incorrect items of ref-
erence, e.g. finished floor levels, is recoverable by the Contractor as an Extension of
Time and/or payment of Cost plus Profit.
The Contractor is required to set out the Works in relation to the items of reference
under Sub-Clause 2.5.
Accuracy
The Contractor is required to:
a Verify the accuracy of all these items of reference before they are used for the
Works.
b Promptly deliver the results of the verification to the Engineer.
c Rectify any error in the positions, levels, dimensions or alignment of the Works.
d Be responsible for the correct positioning of all parts of the Works.
So, ultimately, although the Employer provides the items of reference, it is the Con-
tractor’s responsibility to ensure that he is working with the correct information.
Errors
Following the Contractor verifying the accuracy of the items of reference, if he finds
an error, he is required to give a Notice to the Engineer describing it:
a Within the period stated in the Contract Data, this period is calculated from the
Commencement Date;
b As soon as practicable after receiving the items of reference.
Agreement or determination of rectification measures, delay and/or Cost

After receiving a Notice from the Contractor, the Engineer must agree or determine:
a Whether or not there is an error in the items of reference;

b Whether or not an experienced contractor exercising due care would have discov-
ered such an error when examining the Site, the Drawings and the Specification
before submitting the Tender, or when examining the items of reference within the
period stated in sub-paragraph (a) of Sub-Clause 4.7.2 if the items of reference are
specified on the Drawings and/or in the Specification; and
Note the wording has been changed from the published Contract by the Errata
(see Appendix).
The previous wording within the published Contract was “whether or not (taking
account of cost and time) an experienced contractor exercising due care would have
discovered such an error when examining the Site, the Drawings and the Specifica-
tion before submitting the Tender; or if the items of reference are specified on the
Drawings and/or in the Specification and the Contractor’s Notice is given after the
expiry of the period stated in sub-paragraph (a) of Sub-Clause 4.7.2; and”
c What measures (if any) the Contractor is required to take to rectify the error.
The date the Engineer (Employer under the Silver Book) receives the Contractor’s
Notice under Sub-Clause 4.7.2 [Errors] shall be the date of commencement of the time
limit for agreement under Sub-Clause 3.7.3).
If, under sub-paragraph (b) above, an experienced contractor would not have dis-
covered the error, Sub-Clause 13.3.1 [Variation by Instruction] applies to the measures
that the Contractor is required to take, and if the Contractor suffers delay and/or
incurs Cost as a result of the error, the Contractor is entitled to an Extension of Time
and/or payment of such Cost plus Profit.
Under the Silver Book, the Contractor is required to verify the accuracy of the items of
reference as with the Red and Yellow Books in accordance with (a), (c) and (d) above i.e.
• Verify the accuracy of all these items of reference before they are used for the Works.
• Rectify any error in the positions, levels, dimensions or alignment of the Works.
• Be responsible for the correct positioning of all parts of the Works.
But there is no requirement to deliver the results to the Employer/Employer’s Repre-
sentative, and there is no relief in terms of an Extension of Time and/or payment of
Cost plus Profit if there are any errors by the Employer!
Health and safety obligations

FIDIC 2017 contains a further developed version of the “safety procedures” required
within FIDIC 1999.
a Comply with all applicable health and safety regulations and Laws, so it is not just
any regulations contained within the Contract.
b Comply with all health and safety obligations specified in the Contract.
c Comply with all directives issued by the Contractor’s health and safety officer.
d Take care of the health and safety of all persons entitled to be on the Site and other
places where the Works are being executed.
e Keep the Site, Works and where the Works are being executed, clear of unneces-
sary obstruction so as to avoid danger to these persons.
f Provide fencing, lighting, safe access, guarding and watching of the Works, until
the Works are taken over, and any part of the Works where the Contractor is exe-
cuting outstanding works or remedying any defects during the DNP.
g Provide any Temporary Works which may be necessary, because of the execution
of the Works, for the use and protection of the public and of owners and occupiers
of adjacent land and property.
Within 21 days of the Commencement Date and before commencing any construc-
tion on the Site, the Contractor is required to submit to the Engineer for information
a health and safety manual which has been specifically prepared for the Works, the
Site and other places (if any) where the Contractor intends to execute the Works (it is
project specific, not a generic document). This is an additional requirement introduced
within the FIDIC 2017 Contracts.
This manual is required to be in addition to any other similar document required
under applicable health and safety regulations and Laws.
The health and safety manual must set out all the health and safety requirements,
stated in the Specification, comply with all the Contractor’s health and safety obliga-
tions under the Contract and as necessary to effect and maintain a healthy and safe
working environment for all persons entitled to be on the Site and other places (if any)
where the Works are being executed.
This manual is required to be revised as necessary by the Contractor or the Con-
tractor’s health and safety officer, or at the reasonable request of the Engineer. Each
revision of the manual shall be submitted promptly to the Engineer.
In addition to the reporting requirement above, the Contractor must submit to the En-
gineer details of any accident as soon as practicable after its occurrence and, in the case
of an accident causing serious injury or death, must inform the Engineer immediately.
The Contractor is required, as stated in the Specification and as the Engineer may
reasonably require, maintain records and make reports (in compliance with the ap-
plicable health and safety regulations and Laws) concerning the health and safety of
persons and any damage to property.
Quality Management and Compliance Verification Systems
This is a new provision within FIDIC 2017, in that the Contractor is required to pre-
pare and operate a Quality Management (QM) System in order to demonstrate that
the Works, Materials, Plant and workmanship comply with the requirements of the
Contract.
This is a further developed version of the “quality assurance system” required
within the FIDIC 1999 Contracts, and mirrors the increasing need for detailed and
formal QM and associated reviews to verify compliance.
A QM System is a set of interrelated or interacting elements that companies, and in
this case the Contractor, will use to direct, manage and control how quality policies
are implemented, and quality objectives are achieved on the project.
In many parts of the world, the QM System will be to ISO 9000 standards, ISO
9000 defining a QM System as “co-ordinated activities to direct and control an organ-
ization with regard to the degree to which a set of inherent characteristics fulfills the
requirements”.
ISO 9001 sets out the basic requirements for a QM System, generally that it enables a
company to consistently provide products or services that enhance customer satisfac-
tion whilst meeting applicable statutory and regulatory requirements. It is essentially
about providing quality assurance to customers.
It can be used by any organisation, large or small, regardless of its field of activity.
In fact, ISO 9001 is implemented by over one million companies and organisations in
over 170 countries.
The QM System within FIDIC 2017 must be specifically prepared for the Works and
submitted to the Engineer within 28 days of the Commencement Date, also whenever
the QM System is updated or revised.
The details of the QM System required are stated in the Specification and shall
be in accordance with the details stated in the Specification (if any) and includes the
Contractor’s procedures to ensure that all Notices and other communications, Con-
tractor’s Documents, as-built records, operation and maintenance manuals and con-
temporary records can be traced to the part of the Works to which they relate.
Also, to ensure the proper co-ordination and management of interfaces between the
stages of execution of the Works, and between Subcontractors, and for the submission
of Contractor’s Documents to the Engineer for Review.
The Engineer carries out a Review of the QM System and may give a Notice to the
Contractor stating the extent to which it does not comply with the Contract.
Within 14 days after receiving the Notice, the Contractor must revise the QM Sys-
tem to rectify the non-compliance. If the Engineer does not give such a Notice within
21 days of the date of submission of the QM System, he is deemed to have given a
Notice of No-objection.
The Engineer may, at any time, give a Notice to the Contractor stating the extent to
which the Contractor is failing to correctly implement the QM System to the Contrac-
tor’s activities under the Contract. After receiving this Notice, the Contractor imme-
diately remedies such failure.
The Contractor must carry out internal audits of the QM System regularly, and at
least once every six months. Checking that the system works is a vital part of ISO 9001.
An organisation must perform internal audits to check how its QM System is working.
An organisation may decide to invite an independent certification body to verify
that it is in conformity to the standard, but there is no requirement for this. Alterna-
tively, it might invite its Clients to audit the quality system for themselves.
The Contractor must submit to the Engineer a report listing the results of each
internal audit within seven days of its completion. Each report includes, where appro-
priate, the proposed measures to improve and/or rectify the QM System.
If the Contractor is required by the Contractor’s quality assurance certification to
be subject to external audit, the Contractor immediately gives a Notice to the Engineer
describing any failing(s) identified in any external audit.
Compliance Verification System

The Contractor is required to prepare and implement a “Compliance Verification System”
to demonstrate that any design, Materials, Employer-Supplied Materials (if any), Plant,
work and workmanship comply in all respects with the requirements of the Contract.
The Compliance Verification System must be in accordance with the details stated
in the Specification and must include a method for reporting the results of all inspec-
tions and tests carried out by the Contractor.
It is not specific as to what the Compliance Verification System should look like, but
that is inferred through the wording of the Sub-Clause.
It is essential that the Compliance Verification System is project specific and not
generic in nature, so it can be used to manage all aspects of the Works.
The Contractor is required to prepare and submit to the Engineer (Employer un-
der the Silver Book) a complete set of compliance verification documentation for the
Works or Section, fully compiled and collated in the manner described in the Specifi-
cation or, if not so described, in a manner acceptable to the Engineer.
Compliance with the QM System and/or the Compliance Verification System does
not relieve the Contractor from any duty, obligation or responsibility under or in con-
nection with the Contract, it is merely a reporting and managing system.
Site Data
Under Sub-Clause 4.10, the Employer is deemed to have made available all relevant
data in his possession on sub-surface and hydrological conditions by the Base Date,
which is 28 days before the date of submission of the Tender.
The Contractor is responsible for interpreting the data and is be deemed to have
inspected and examined the Site. “Deemed to have inspected and examined the Site”
does not actually mean that he MUST visit the Site, but that he is “fixed with the
knowledge” as if he had…. there is a subtle difference!
As with previous editions of the FIDIC contracts the provisions regarding Site Data
and Unforeseeable Physical Conditions need to be read and construed together.
There is an increased obligation upon the Employer to provide information about
the effects of climatic conditions at the Site.
“Unforeseeable” is defined as “not reasonably foreseeable by an experienced Con-
tractor by the date for submission of the Tender”, allowing nearly 28 days after the
Base Date for tenderers to assess the data.
Note that FIDIC 1999 referred to the “date for submission of the Tender” rather
than the Base Date.
The Employer is also required to make available the same types of data that comes
into his possession thereafter.
The Contractor is responsible for interpreting all data referred to under Sub-Clause
2.5 [Site Data and Items of Reference].
To the extent, which was practicable, the Contractor is deemed to have obtained all
necessary information as to risks, contingencies and other circumstances which may
influence or affect his Tender or the Works.
To the same extent, the Contractor is deemed to have inspected and examined the
Site, access to the Site, its surroundings, the above data and other available informa-
tion, and to have been satisfied before submitting the Tender as to all matters relevant
to the execution of the Works, including:
a The form and nature of the Site, including sub-surface conditions;

b The hydrological and climatic conditions, and the effects of climatic conditions at
the Site;
c The extent and nature of the work and Goods necessary for the execution of the
Works;
d The Laws, procedures and labour practices of the Country;
e The Contractor’s requirements for access, accommodation, facilities, personnel,
power, transport, water and any other utilities or services.
Sufficiency of the Accepted Contract Amount

The Contractor is deemed to have satisfied himself as to the correctness and suffi-
ciency of the Accepted Contract Amount.
Unforeseeable Physical Conditions

The provisions in respect of Unforeseeable Physical Conditions within the Red and
Yellow Books have been restructured, and significant further detail added in a struc-
tured format to give clarity to the provisions and their operation.
The principle of Unforeseeable Physical Conditions is a subject which often causes
much debate!
Sub-Clause 4.12 defines “physical conditions” and covers those which are
“Unforeseeable”.
“Physical Conditions” is defined as
natural physical conditions and physical obstructions (natural or man-made) and

pollutants, which the Contractor encounters at the Site during execution of the
Works, including sub-surface and hydrological conditions but excluding climatic
conditions at the Site and the effects of those climatic conditions.
“Unforeseeable” is defined as “not reasonably foreseeable by an experienced contractor

by the Base Date”.
“Base Date” is defined as “the date 28 days before the latest date for submission of the
Tender”.
If the Contractor encounters physical conditions which it considers to have been
Unforeseeable and that the finding will have an adverse effect on the progress and/or
increase the Cost of the execution of the Works, the Contractor is required to give a
Notice to the Engineer, which shall:
a Be given as soon as practicable to allow the Engineer opportunity to inspect the

physical conditions promptly and before they are disturbed;
b Describe the physical conditions, so that they can be inspected by the Engineer;
c Set out the reasons why the Contractor considers the physical conditions to be
Unforeseeable as defined under the Contract; and
d Describe the manner in which the physical conditions will have an adverse effect
on the progress and/or increase the Cost of the execution of the Works.
The Engineer is then required to inspect and investigate the physical conditions within
seven days (or a longer period agreed with the Contractor) after receiving the Contrac-
tor’s Notice.
The Contractor is then required to comply with any instructions which the Engineer
may give for dealing with the physical conditions, which may be a Variation.
If the Contractor suffers delay and/or incurs Cost due to these physical conditions,
he is entitled to an Extension of Time and/or payment of such Cost.
The agreement or determination, under Sub-Clause 20.2.5 [Agreement or determina-
tion of the Claim], of any Claim under Sub-Clause 4.12.4 [Delay and/or Cost] includes
consideration of whether, and to what extent, the physical conditions were Unforeseeable.
The Engineer may review whether other physical conditions in similar parts of the
Works were more favourable than could reasonably have been foreseen when the Con-
tractor submitted the Tender.
This provision may be particularly relevant for a tunnel, where there may be adverse
conditions, in respect of similar parts of the Works, will not result in a net reduction
in the Contract Price (otherwise, an Employer might have been tempted to conceal
favourable information from tenderers).
Under the Silver Book, Sub-Clause 4.12 which is titled “Unforeseeable Difficulties”
rather than the Red and Yellow Book’s Unforeseeable Physical Conditions, the Sub-
Clause simply states that except as stated in the Particular Conditions:
The Contractor is deemed to have obtained all necessary information as to risks,

contingencies and circumstances which may influence or affect the Works, the
Contractor accepts totally responsibility for having foreseen all difficulties and
costs of successfully completing the Works and the Contract Price shall not be
adjusted to take account of and Unforeseeable or unforeseen difficulties or costs.
Clearly, the Contractor could not, when compiling and pricing his tender, “foresee all
difficulties and costs” so this is a major risk for the Contractor.
The only possibility for the Contractor to perhaps recover Cost (under certain cir-
cumstances) or gain an Extension of Time is if the event is of such a magnitude that it
can be considered to fall within the definition of an Exceptional Event under Clause
18, for example an earthquake or extreme weather event such as a hurricane, but that
is very unlikely, and in an area probe to earthquakes and hurricanes, would not be
deemed as “exceptional”.
Rights of way and facilities
The Contractor is required to bear all costs and charges in respect of temporary rights
of way, including access to Site. He may also obtain at his own risk and cost any other
facilities outside the Site.
Avoidance of interference
The Contractor may not interfere “unnecessarily or improperly” with the public, or
access to all roads and footpaths.
It does not mean he cannot do it, and there is every likelihood of some disrup-
tion to road traffic and pedestrian flows, etc., but he cannot do it “unnecessarily or
improperly”!
The Contractor is required to indemnify and hold the Employer harmless against
and from all damages, losses and expenses (including legal fees and expenses) resulting
from any such “unnecessary or improper” interference.
Access route
The Contractor is deemed to have satisfied himself, at the Base Date (28 days prior to the
Tender Date), as to the suitability and availability of the access routes to and from the Site.
The Contractor is now required to take on an additional risk from the previous
FIDIC contracts by being required to take all necessary measures to prevent any road
or bridge from being damaged by the Contractor’s traffic or by the Contractor’s Per-
sonnel. These measures would include the proper use of appropriate vehicles (con-
forming to legal load and width limits (if any) and any other restrictions) and routes.
Except as otherwise stated in these Conditions:
a The Contractor is responsible for repair of any damage and any maintenance
which may be required for the Contractor’s access routes.
b The Contractor provides all necessary signs or directions along access routes, and
obtains any permissions or permits which may be required from the relevant au-
thorities, for the Contractor’s use of routes, signs and directions.
c The Contractor is responsible for any third-party claims which may arise from its
use or otherwise of any access route.
d The Employer does not guarantee the suitability or availability of particular ac-
cess routes.
e All Costs due to non-suitability or non-availability, for the use required by the
Contractor, of access routes shall be borne by the Contractor.
There is now a new provision for a Contractor to claim time and money to the extent
that non-suitability or non-availability of an access route arises as a result of changes
to that access route by the Employer or by a third party after the Base Date, and if as
a result the Contractor suffers delay and/or incurs Cost, the Contractor is entitled to
an Extension of Time and/or payment of such Cost.
Transport of goods
The Contractor is required to give the Engineer 21 days’ notice prior to the date
on which “any Plant or major item of other Goods will be delivered to Site”. The
Contractor is responsible for all associated costs in connection with transporting, un-
loading, distribution and protection. What constitutes a “major item of other Goods”
is not defined, and could be the subject of debate.
The Contractor is responsible for packing, loading, transporting, receiving, unload-
ing, storing and protecting all Goods and other things required for the Works, and
for customs clearance, permits, fees and charges related to the import, transport and
handling of all Goods, including all obligations necessary for their delivery to the Site.
Contractor’s Equipment
Equipment is what is normally known in other contracts as “Plant” or “Contractor’s
Plant”, the Contractor being responsible for its provision and care. The Contractor has
to have the Engineer’s consent to remove major items of Equipment.
The Contractor is required to give a Notice to the Engineer of the date on which
any major item of Contractor’s Equipment has been delivered to the Site. This Notice
must be given within seven days of the delivery date, must identify whether the item
of Contractor’s Equipment is owned by the Contractor or a Subcontractor or another
person and, if rented or leased, identify the rental or leasing entity.
Again, what constitutes a “major item of Equipment” is not defined, and could be
the subject of debate.
Clearly there needs to be a “common sense” approach by the Contractor and the
Engineer in terms of giving consent, especially on a large Site when there are numer-
ous and frequent equipment movements, deliveries and removals, so there are no de-
lays to progress caused by waiting for consent.
Protection of the environment

The Contractor is required to take all reasonable steps to protect the environment, to
comply with the environmental impact statement for the Works (if any) and to limit
damage and nuisance to people and property resulting from pollution, noise and other
results of the Contractor’s operations or activities.
The Contractor is also required to ensure that emissions, surface discharges, efflu-
ent and any other pollutants from the Contractor’s activities do not exceed either the
values indicated in the Specification or those prescribed by applicable Laws.
Note that if the law imposes stricter values than the Specification, the legal require-
ment will prevail.
Temporary utilities
The Contractor is responsible for the provision of all temporary utilities, including
electricity, gas, telecommunications, water and any other services, he may require for
the execution of the Works.
If the Employer is to provide utilities for the Contractor’s use, the Contractor uses
the utilities on the Site for which details and prices are given in the Specification.
The Contractor at its own risk and cost provides any apparatus necessary for the
Contractor’s use and for measuring the quantities consumed.
The apparatus provided for measuring quantities consumed is subject to the Engi-
neer’s consent. The quantities consumed during each period of payment stated in the
Contract Data is to be measured by the Contractor, and the amount to be paid by the
Contractor for such quantities (at the prices stated in the Specification) is included in
the relevant Statement.
Employer’s Equipment and free-issue material

This covers any Equipment to be provided by the Employer. The Contractor is re-
quired to pay at the rates stated in the Specification.
Progress reports
The Contractor is required to prepare monthly progress reports, in the format stated
in the Specification, and to submit them to the Engineer.
Note that the FIDIC 1999 Contracts required monthly progress reports to be pre-
pared by the Contractor and six copies submitted to the Engineer, so there was also
a significant amount of printing/photocopying to be done. The author was never
convinced why the Contractor should have to submit six copies of a considerable
quantity of paper, in an age where many reports are submitted electronically.
Many Contractors do not have the staff or other resources to comply with the pro-
gress reporting obligations within the FIDIC contracts, which will also cascade down
the supply chain to Consultants, Subcontractor and Suppliers, who must also provide
the numerous and substantial amounts of information required to allow the Contrac-
tor to comply.
It is also a substantial task for Engineers to examine and review the progress reports
submitted.
In reality, Employers, Engineers and Contractors under the FIDIC 1999 Contracts
usually agreed on a “number of copies as required by the parties” rather than “number
of copies as required by the contract” though the Contractor would technically be in
breach of contract if he did not submit six copies!
Under the FIDIC 2017 Contracts, each progress report is required to be submitted
in one paper original, one electronic copy and additional paper copies (if any) as stated
in the Contract Data.
The contract prescribes the content of each report which includes progress to date,
photographs, critical documents and health and safety records.
The first report shall cover the period up to the end of the first month following the
Commencement Date. Reports shall be submitted monthly thereafter, each within
seven days after the last day of the month to which it relates.
Reporting shall continue until the Date of Completion of the Works or, if outstand-
ing work is listed in the Taking-Over Certificate, the date on which such outstanding
work is completed.
Most of the progress report content will be related directly to the programme sub-
mitted under Sub-Clause 8.3, and unless otherwise stated in the Specification, each
progress report shall include:
a Charts, diagrams and detailed descriptions of progress, including each stage of design
by the Contractor (if any), Contractor’s Documents as defined under Sub-Clause 4.4,
procurement, manufacture, delivery to Site, construction, erection and testing;
b Photographs and/or video recordings showing the status of manufacture and of
progress on and off the Site;
c For the manufacture of each main item of Plant and Materials, the name of the
manufacturer, manufacture location, percentage progress and the actual or ex-
pected dates of:

d The details described in Sub-Clause 6.10 [Contractor’s Records];
e Copies of QM documents, inspection reports, test results and compliance verifica-
tion documentation;
f A list of Variations, and any Notices given (by either Party);
g Health and safety statistics, including details of any hazardous incidents and ac-
tivities relating to environmental aspects and public relations;
h Comparisons of actual and planned progress, with details of any events or circum-
stances which may adversely affect the completion of the Works in accordance
with the Programme and the Time for Completion, and the measures being (or to
be) adopted to overcome delays.
It is critical that the Engineer/Employer’s Agent independently and accurately moni-

tors the Contractor’s progress and reports objectively to the Employer.
Whilst the Contractor may issue progress reports they should be fully interrogated
and challenged where appropriate, and phrases such as “progress is in line with the
programme” may imply that the operation is not in delay, but this may not be the
case…… “progress is in line with” what programme?
A Contractor reporting that an operation is say 50% complete can be misleading.
Unless it is a repetitive or linear operation, e.g. 50 similar piles completed out of 100,
this form of reporting can be meaningless particularly with complex operations such
as Mechanical and Electrical Works.
Also, if a Contractor reports that an operation is 100% complete it should be be-
cause it is totally complete….barring any very minor Defects.
Security of the Site

The Contractor is at all times in executing the Works, responsible for the security of
the Site, and for keeping unauthorised persons off the Site, and authorised persons
being limited to the Contractor’s Personnel, the Employer’s Personnel and any other
personnel identified as authorised personnel by a Notice from the Employer or the
Engineer to the Contractor.
Contractor’s operations on Site

The Contractor is required to confine his operations to the Site and to keep all Equip-
ment and Personnel within the Site, and off adjacent land.
The Contractor is also required to keep the Site free from all unnecessary obstructions,
and to properly store or remove from the Site any Equipment and/or surplus materials.
The Contractor is also required to clear away and remove from the Site any wreck-
age, rubbish, hazardous waste and Temporary Works which are no longer required.
The term “wreckage” has always been a curious term, but one would assume it would
refer to anything damaged beyond repair or any demolished items.
On the issue of a Taking-Over Certificate, the Contractor is required to properly
clear away all Contractor’s Equipment, surplus material, wreckage, rubbish, hazard-
ous waste and Temporary Works. The Contractor shall leave that part of the Site and
the Works in a clean and safe condition. However, the Contractor may retain at lo-
cations on the Site agreed with the Engineer, during the DNP, such Goods as are re-
quired for the Contractor to fulfil obligations under the Contract.
Archaeological and geological findings

In the event that the Contractor finds fossils, coins, articles of value or antiquity, etc.,
on the Site they must be placed under the care and authority of the Employer.
There may also be legislative requirements in terms of what has been found.
The Contractor is required to take all reasonable precautions to prevent anyone
from removing or damaging any of these findings and is required to give a Notice to
the Engineer, allowing the Engineer to promptly inspect the finding as soon as possible.
If the Contractor suffers delay and/or incurs Cost from complying with the Engi-
neer’s instructions, he is entitled to an Extension of Time and/or payment of such Cost.
Subcontractors
Clause 5 of the FIDIC 1999 Contracts only dealt with nominated Subcontractors,
whereas Clause 5 of FIDIC 2017 now deals with subcontracting and Subcontrac-
tor generally, and also has specific limitations as to the value of work that can be
subcontracted.
This Clause has been extended from that in the FIDIC 1999 Contracts.
The Contractor must not subcontract:
a Works with a total accumulated value greater than the percentage of the Accepted
Contract Amount stated in the Contract Data (if not stated, the whole of the
Works); or
b Any part of the Works for which subcontracting is not permitted as stated in the
Contract Data.
This is a new provision limiting the value of subcontracted work for a particular by
providing a cap within the Contract Data.
The Contractor is fully responsible and liable for the work of all Subcontractors as
if they were his own workforce including managing and co-ordinating the acts or de-
faults of any Subcontractor, any Subcontractor’s agents or employees, being as if they
were the acts or defaults of the Contractor.
The Contractor is required to obtain the Engineer’s prior consent by submitting not
less than 28 days before the intended Commencement Date of each Subcontractor’s
work, the name, address, detailed particulars and relevant experience of each Subcon-
tractor including the work intended to be subcontracted.
The Contractor is not required to get the Engineer’s consent to suppliers of Materi-
als, or a subcontract for which the Subcontractor is named in the Contract.
Note that if the Engineer (Employer under the Silver Book) does not respond within
14 days after receiving the Contractor’s submission, by giving a Notice objecting to the
proposed Subcontractor, the Engineer is deemed to have given his/her consent.
Nominated Subcontractors
A Nominated Subcontractor under the FIDIC contracts is a Subcontractor named in
the Specification or whom the Engineer when instructing the expenditure of Provi-
sional Sums instructs the Contractor to employ as a Subcontractor.
The Contractor is not under any obligation to employ a nominated Subcontractor as
the Engineer instructs and against whom the Contractor raises “reasonable objection”
by giving a Notice to the Engineer, with detailed supporting particulars, no later than
14 days after receiving the Engineer’s instruction.
An objection is deemed reasonable if it arises from (among other things) any of the
following matters, unless the Employer agrees to indemnify the Contractor against
and from the consequences of the matter (this is an important provision as the Em-
ployer may take the risk from the Contractor; however, it is difficult to see how the
Employer could indemnify the Contractor regarding the proposed Subcontractor, for
example, not having sufficient competence, resources, financial strength to carry out
the Sub-Contract Works):
a There are reasons to believe that the nominated Subcontractor does not have suf-
ficient competence, resources or financial strength.
b The subcontract does not specify that the nominated Subcontractor shall indem-
nify the Contractor against and from any negligence or misuse of Goods by the nom-
inated Subcontractor, the nominated Subcontractor’s agents and employees. Or
c The subcontract does not specify that, for the subcontracted work (including de-
sign, if any), the nominated Subcontractor shall:

The Contractor is required to pay the nominated Subcontractor the amounts due in
accordance with the subcontract, the amounts being included in the Contract Price.
Before issuing a Payment Certificate which includes an amount payable to a nomi-
nated Subcontractor, the Engineer may request the Contractor to supply “reasonable
evidence” that the nominated Subcontractor has received all amounts due in accord-
ance with the previous Payment Certificates, less applicable deductions for retention
or otherwise.
Unless the Contractor:
a Submits this reasonable evidence to the Engineer, or

b
i Satisfies the Engineer in writing that the Contractor is reasonably entitled to
withhold or refuse to pay these amounts, and

as are due to the nominated Subcontractor and for which the Contractor has
failed to submit the evidence described in sub-paragraphs (a) or (b) above.
Thereafter, the Engineer shall give a Notice to the Contractor stating the amount paid
directly to the nominated Subcontractor by the Employer and, in the next IPC after
this Notice, shall include this amount as a deduction under sub-paragraph (b) of Sub-
Clause 14.6.1 [The IPC].
Staff and labour

Except as otherwise stated in the Specification, the Contractor is required to make
arrangements for the engagement of all Contractor’s Personnel, and for their payment,
accommodation, feeding, transport and welfare.
The Contractor is required to pay rates of wages and observe conditions of labour,
which comply with all applicable Laws and are not lower than those established for the
trade or industry where the work is carried out.
If no established rates or conditions are applicable, the Contractor shall pay rates of
wages and observe conditions which are not lower than the general level of wages and
conditions observed locally by employers whose trade or industry is similar to that of
the Contractor.
Recruitment of persons
The Contractor must not recruit, or attempt to recruit, staff and labour from amongst
the Employer’s Personnel.
Neither the Employer nor the Engineer can recruit, or attempt to recruit, staff and
labour from amongst the Contractor’s Personnel.
The inclusion of the reference to the Engineer is a new provision under the FIDIC
2017 Contracts.
Labour laws
The Contractor must comply with all the relevant labour laws applicable to the Con-
tractor’s Personnel, including Laws relating to their employment (including wages and
working hours), health, safety, welfare, immigration and emigration, and shall allow
them all their legal rights.
The Contractor must require the Contractor’s Personnel to obey all applicable
Laws, including those concerning health and safety at work.
Working hours
No work shall be carried out on the Site on locally recognised days of rest, or outside
the normal working hours stated in the Contract Data, unless:
a Otherwise stated in the Contract;

b The Engineer gives consent; or
c The work is unavoidable or necessary for the protection of life or property or for
the safety of the Works, in which case the Contractor shall immediately give a
Notice to the Engineer with reasons and describing the work required.
Previously under FIDIC 1999, if the Contractor had to unavoidably work out of hours
he had to advise the Engineer, now he has to give a Notice with reasons and describing
the work required.
Facilities for staff and labour

Except as otherwise stated in the Specification, the Contractor must provide and main-
tain all necessary accommodation and welfare facilities for the Contractor’s Personnel.
If such accommodation and facilities are to be located on the Site, except where the
Employer has given the Contractor prior permission, they are to be located within the
areas identified in the Contract.
If any such accommodation or facilities are located elsewhere within the Site, the Con-
tractor must immediately remove them at the Contractor’s risk and cost. The Contractor
must also provide facilities for the Employer’s Personnel as stated in the Specification.
Health and safety of personnel

In addition to the requirements listed under Sub-Clause 4.8, the Contractor is re-
quired, at all times, take all necessary precautions to maintain the health and safety
of its own personnel.
In collaboration with local health authorities, the Contractor is also required to
ensure that:
a Medical staff, first aid facilities and other medical facilities as stated in the Spec-
ification are available at all times at the Site and at any accommodation provided
for Contractor’s and Employer’s Personnel; and
b Suitable arrangements are made for all necessary welfare and hygiene require-
ments, and for the prevention of epidemics.
The Contractor must also appoint a dedicated health and safety officer at the Site,
responsible for maintaining health, safety and protection against accidents.
This person is required to be qualified, experienced and competent, and to have the
authority to issue directives for the purpose of maintaining health and safety, and the
prevention of accidents. Having the authority is very important, as responsibility must
come with authority, that person normally reporting direct to the Contractor’s Project
Director and/or the Contractor’s main board.
FIDIC 1999 previously required an accident prevention officer at the Site, and
FIDIC 2017 now amplifies the role of the health and safety officer.
Contractor’s superintendence
From the Commencement Date until the issue of the Performance Certificate, the
Contractor shall provide all necessary superintendence to plan, arrange, direct, man-
age, inspect, test and monitor the execution of the Works.
Superintendence shall be given by a sufficient number of persons:
a Who are fluent in or have adequate knowledge of the language for communica-
tions (defined in Sub-Clause 1.4 [Law and Language]); and
b Who have adequate knowledge of the operations to be carried out (including the
methods and techniques required, the hazards likely to be encountered and meth-
ods of preventing accidents), for the satisfactory and safe execution of the Works.
Contractor’s Personnel
The Contractor’s Personnel (including Key Personnel, if any) shall be appropriately
qualified, skilled, experienced and competent in their respective trades or occupations.
The Engineer may require the Contractor to remove (or cause to be removed) any
person employed on the Site or Works, including the Contractor’s Representative and
Key Personnel (if any), who:
a Persists in any misconduct or lack of care;

b Carries out duties incompetently or negligently;
c Fails to comply with any provision of the Contract;
d Persists in any conduct which is prejudicial to safety, health or the protection of
the environment;
e Is found, based on reasonable evidence, to have engaged in corrupt, fraudulent,
collusive or coercive practice; or
f Has been recruited from the Employer’s Personnel in breach of Sub-Clause 6.3
[Recruitment of Persons].
If appropriate, the Contractor shall then promptly appoint (or cause to be appointed)
a suitable replacement. In the case of replacement of the Contractor’s Representative,
Sub-Clause 4.3 [Contractor’s Representative] shall apply. In the case of replacement of
Key Personnel (if any), Sub-Clause 6.12 [Key Personnel] shall apply.
Contractor’s records
The requirement for the Contractor to keep records and submit each calendar month
has been enhanced from FIDIC 1999 and now includes a specific list of records which
are to be kept for each work activity shown in the Programme, at each work location
and for each day of work.
Unless otherwise proposed by the Contractor and agreed by the Engineer, in each
progress report, the Contractor must include records of:
a Occupations and actual working hours of each class of Contractor’s Personnel,

b The type and actual working hours of each of the Contractor’s Equipment,
c The types of Temporary Works used,
d The types of Plant installed in the Permanent Works, and
e The quantities and types of Materials used.
Clearly, this enhanced requirement is quite an onerous administration requirement for

the Contractor and also for the Engineer to check.
Disorderly conduct
The Contractor shall at all times take all necessary precautions to prevent any unlaw-
ful, riotous or disorderly conduct by or amongst the Contractor’s Personnel, and to
preserve peace and protection of persons and property on and near the Site.
Key Personnel
Sub-Clause 6.12 of the FIDIC 2017 Contracts introduces a new requirement for the
Employer to identify Key Personnel where stated within the Specification.
If no Key Personnel are stated in the Specification, Sub-Clause 6.12 does not apply.
The Contractor is also required to appoint the persons named in his Tender to the
positions of Key Personnel under the Contract.
If none are named, or if an appointed person fails to act in the relevant position of
Key Personnel, the Contractor must submit to the Engineer for his consent the name
and particulars of another person the Contractor proposes to appoint to such a posi-
tion. If consent is withheld or revoked by the Engineer, the Contractor must similarly
the name and particulars of a suitable replacement for such position.
If the Engineer does not respond within 14 days after receiving the submission, by
giving a Notice stating his objection to the appointment of the person with reasons,
the Engineer is deemed to have given his consent.
The Contractor must not, without the Engineer’s prior consent, revoke the appoint-
ment of any of the Key Personnel or appoint a replacement (unless a temporary emer-
gency replacement in the case of death, illness, disability or resignation of the Key
Personnel).
All Key Personnel must be based at the Site for the whole time that the Works are
being executed.
Finally, all Key Personnel must be fluent in the language for communications de-
fined in Sub-Clause 1.4.
Joint Ventures
On many major international projects where FIDIC contracts are used, the Contrac-
tor may be a Joint Venture (JV) consisting of, maybe, a local Contractor joining up
with a major overseas Contractor (the author has personal experience of this when
working on projects in the Middle East).
Under Sub-Clause 1.14 of the FIDIC 2017 Contract, if the Contractor is a JV:
a The members of the JV are jointly and severally liable to the Employer for the per-
formance of the Contractor’s obligations under the Contract, so each can be held
liable for the others performance or non-performance, and any liabilities arising,
b The JV leader (who has to be named) has the authority to bind the Contractor and
each member of the JV,
c Either the composition of the members or the scope and parts of the Works to be
carried out by each member, or the legal status of the JV, can be altered without
the prior consent of the Employer.
Limitation of liability
Neither Party shall be liable to the other Party for loss of use of any Works, loss of profit
and loss of any contract, nor for any indirect or consequential loss or damage which may
be suffered by the other Party in connection with the Contract, other than under:
a Sub-Clause 8.8 [Delay Damages];

b Sub-paragraph (c) of Sub-Clause 13.3.1 [Variation by Instruction];
c Sub-Clause 15.7 [Payment after Termination for Employer’s Convenience];
d Sub-Clause 16.4 [Payment after Termination by Contractor];
e Sub-Clause 17.3 [Intellectual and Industrial Property Rights];
f The first paragraph of Sub-Clause 17.4 [Indemnities by Contractor]; and
g Sub-Clause 17.5 [Indemnities by Employer]. The total liability of the Contractor to
the Employer under or in connection with the Contract, other than:

This Sub-Clause shall not limit liability in any case of fraud, gross negligence, deliber-
ate default or reckless misconduct by the defaulting Party.
Assignment
Under a FIDIC 2017 Contract, neither Party can assign the whole nor any part of the
Contract except with the prior agreement of the other Party. However, a Party may
assign its right to a payment due without the prior agreement of the other Party.
Care and supply of documents

The Specification and Drawings remain in the custody and care of the Employer, but
two copies of the Contract and of each subsequent Drawing are supplied to the Con-
tractor, who may request further copies at its own cost.
The Contractor’s Documents remain in the custody and care of the Contractor,
unless and until submitted to the Engineer.
The Contractor is required to supply to the Engineer one paper original, one elec-
tronic copy and additional paper copies (if required) as stated in the Contract Data.
The Contractor is required to keep on the Site, a copy of:
a The Contract;
b The records under Sub-Clause 6.10 [Contractor’s Records] and Sub-Clause 20.2.3
[Contemporary records];
c The publications (if any) named in the Specification;
d The Contractor’s Documents;
e The Drawings; and
f Variations, Notices and other communications given under the Contract. The
Employer’s Personnel shall have right of access to all these documents during all
normal working hours, or as otherwise agreed with the Contractor.
If either Party (or the Engineer) becomes aware of an error or defect in a document
which was prepared for use in the execution of the Works, the Party (or the Engineer)
promptly gives a Notice of such error or defect to the other Party (or to the Parties if
it is the Engineer).
Delayed drawings or instructions
The Contractor is required to give a Notice to the Engineer whenever the Works are
likely to be delayed or disrupted due to any necessary drawing or instruction not being
issued to the Contractor within a particular time.
The Notice is required to include details of the drawing or instruction, details of
why and when it should be issued and details of the nature and amount of the delay or
disruption likely to be suffered because it is late.
The Contractor is entitled to an Extension of Time and/or payment of such Cost
plus Profit, but only if the delayed issue was not caused by any error or delay by the
Contractor.
Notices and other communications

All Notices and other communications required by the Contract are required to be in
writing and:
a
i A paper-original signed by the Contractor’s Representative, the Engineer or
the authorised representative of the Employer (as the case may be); or

b If it is a Notice, it shall be identified as a Notice. If it is another form of communi-

cation, it shall be identified as such and include reference to the provision(s) of the
Contract under which it is issued where appropriate;
c Delivered by hand (against receipt), or sent by mail or courier (against receipt), or
transmitted using any of the systems of electronic transmission under sub-para-
graph (a)(ii) above; and
d Delivered, sent or transmitted to the address for the recipient’s communications
as stated in the Contract Data. However, if the recipient gives a Notice of another
address, all Notices and other communications shall be delivered accordingly af-
ter the sender receives such Notice.
Where these Conditions state that a Notice or NOD or other communication is to be

delivered, given, issued, provided, sent, submitted or transmitted, it shall have effect
when it is received (or deemed to have been received) at the recipient’s current address
under sub-paragraph (d) above. An electronically transmitted Notice or other com-
munication is deemed to have been received on the day after transmission, provided
no non-delivery notification was received by the sender.
All Notices, and all other types of communication as referred to above, shall not be
unreasonably withheld or delayed.
When a Notice or NOD or certificate is issued by a Party or the Engineer, the paper
and/or electronic original shall be sent to the intended recipient and a copy shall be
sent to the Engineer or the other Party, as the case may be. All other communications
shall be copied to the Parties and/or the Engineer as stated under these Conditions or
elsewhere in the Contract.
Confidentiality
Contracts by their nature are confidential agreements, and the Parties are required to
respect that, but the Contract requires that the Contractor discloses all confidential
and other information as the Engineer may reasonably require in order to verify the
Contractor’s compliance with the Contract. This can be details of staff and other re-
sources being employed, costs and other information which may be required.
Again, due to the confidential nature of contracts, the Contractor must not publish
or disclose any particulars of the Contract, except with the Employer’s prior consent.
Equally, the Employer and the Engineer must treat all information provided by
the Contractor and marked “confidential”, as confidential. The Employer must not
disclose any such information to third parties, except as may be necessary when ex-
ercising the Employer’s rights under Sub-Clause 15.2 [Termination for Contractor’s
Default].
Law and language

The Contract is governed by the law of the country, or other jurisdiction, stated in the
Contract Data. If nothing is stated, it is the law of the country where the Site is located.
The ruling language of the Contract is also stated in the Contract Data. The lan-
guage for communications is that stated in the Contract Data.
The Parties use of each other’s documents

The Contractor retains the copyright and other intellectual property rights in the
Contractor’s Documents and other design documents, made by (or on behalf of) the
Contractor.
Similarly, the Employer retains the copyright and other intellectual property rights
in the Specification and Drawings and other documents made by (or on behalf of) the
Employer.
These documents (in whole or in part) shall not, without the Employer’s prior con-
sent, be copied, used or communicated to a third party by the Contractor, except as
necessary for the purposes of the Contract.
The Contractor may at its own cost, copy, use and communicate these documents
for the purposes of the Contract.
The Contractor is deemed to give to the Employer a non-terminable transferable
non-exclusive royalty-free licence to copy, use and communicate the Contractor’s
Documents (and such other design documents, if any), including making and using
modifications of them.
This licence:
a Applies throughout the actual or intended operational life (whichever is longer) of

the relevant parts of the Works;
b Entitles any person in proper possession of the relevant part of the Works to
copy, use and communicate the Contractor’s Documents (and such other design
documents, if any) for the purposes of completing, operating, maintaining, alter-
ing, adjusting, repairing and demolishing the Works;
c In the case of Contractor’s Documents (and such other design documents, if any)
which are in the form of electronic or digital files, computer programs and other
software, permits their use on any computer on the Site and/or at the locations of
the Employer and the Engineer and/or at other places as envisaged by the Con-
tract; and
d In the event of termination of the Contract:

The Contractor’s Documents (and other design documents, if any, made by (or on
behalf of) the Contractor) shall not, without the Contractor’s prior consent, be used,
copied or communicated to a third party by (or on behalf of) the Employer for pur-
poses other than those permitted under this Sub-Clause.
4 Quality and Defects Liability
Quality and Defects Liability are covered in the FIDIC 2017 Contracts by:

• Clause 7 – Plant, Materials and Workmanship
• Clause 9 – Tests on Completion
• Clause 10 – Employer’s Taking Over
• Clause 11 – Defects after Taking Over
• Clause 12 – Tests after Completion (Clause 12 is only included within the Yellow
and Silver Books)
• Conditions of Contract for EPC/Turnkey Project (The “Silver Book”)
• Clause 12 – Tests after Completion (Clause 12 is only included within the Yel-
low and Silver Books)
Before considering the provisions within the FIDIC 2017 Contracts it is worth review-
ing the subject of “Quality” and “Quality Management”, particularly in relation to
construction.
What is quality?
The term “quality” is often used to describe expensive or prestige products such as
opulent jewellery or luxury cars.
However, the term “quality” does not necessarily refer to prestigious products, but
merely to the fitness of the product or service to the customer’s requirements, whatever
those requirements may be.
Quality is therefore best described as “meeting the specific requirements of the
customer”.
Quality and Defects Liability 119
Quality management
Quality management is a major management function within the construction industry.
Unless a Contractor can guarantee the Employer a quality product, whether it be a
project, a product or a service, the Contractor cannot compete effectively with others
in the modern market.
Quality often stands alongside price as a major factor in Contractor selection by
Employers, and comprehensive scoring systems which rate quality alongside price,
and other critical matters such as health and safety and financial stability have played
a greater part in the past few years and are very much a decider in selecting the right
Contractor for the project.
To be competitive and to sustain robust and sustainable business prospects, quality
systems need to be designed and maintained which are efficient, and also are able to
be proven by evidence, when tendering for work as well as when executing that work.
The role of quality management for a contractor is not an isolated activity, but inter-
twined with all the operational and managerial processes of that company, effectively
this is where the term “total quality management” (TQM) came from.
What is quality control?

The earliest and most basic form of quality management is quality control (QC), the
term being defined by an interpretation of its two elements – “quality” and “control”.
The concept of being “in control”, or having something “under control”, is readily
understood, we mean we know what we intend to happen, and we have systems in
place so that we are confident that we can ensure that it does happen as we intend.
QC introduces inspection and testing to the work being carried out in ensuring that
it is undertaken to specified requirements. The quality is often measured by compar-
ing the work actually carried out against the sample provided.
Inspection is the process of checking that what is produced is what is required. It is
about the identification and early correction of defects.
The major objectives of QC can be defined as follows:

iii To improve the reliability of services delivered;

QC is primarily concerned with defect detection and correction.

The main QC technique is that of inspection, testing and statistical QC techniques,
for example sampling, to ensure that what is delivered and the materials used are
within the tolerances specified. However, some of these limits are left to the inspector’s
judgement and this can be a source of difficulty.
The outcome of an inspection can be viewed in both objective and subjective ways:
Objective inspection
That which is quantifiable and measurable – line, levels, verticality and dimensions.
There are some precise quantified inspections including the testing of plant and ma-
chinery, pressure tests in pipework and tests on electrical installations.
Subjective inspection
That which is open to the inspector’s interpretation, e.g. cleanliness, fit, tolerances and
visual checks.
Traditionally, in construction contracts, there are two sets of documents that are
used to determine the required quality of a construction project, these are the specifi-
cation and the drawings. The Contractor uses these documents during the site opera-
tions stage of any project to facilitate “quality” in construction.
The majority of quality checks are undertaken visually. Visual quality checks of
each section of construction are undertaken by the Contractors’ managers and trades-
men, and then by the Employer’s Engineers and Representatives, to ensure it complies
with the Drawings and Specification.
Quantifiable and measurable quality checks are also made during the construction
stage. These include testing the strength of concrete cubes, checking alignment of
brickwork and commissioning of services installations.
The results of these quality checks are recorded and passed to the appropriate
authority.
The weakness of QC is the development of the inspection mentality or culture,
whereby the construction contractors’ operatives and engineers set their standards to
that which can “achieve a certain score”.
It would be much better if the Contractors’ staff and operatives had a clear under-
standing of the quality required, were able to recognise it themselves and were able to
achieve it first time and/or regulate it by self-inspection.
This brings in the concept of quality assurance (QA), which potentially reduces the
risks of producing unsatisfactory work and being involved in expensive re-work.
Quality assurance
Whereas QC focuses on defect detection and correction during the execution of the
Works, QA focuses on defect prevention.
QA is the process of ensuring that standards are consistently met thereby preventing
defects from occurring in the first place.
“Fit for purpose” and “right first time, every time” are the principles of QA, and
the reference point for QA is the International Quality Standard ISO 9000 family of
standards.
To be certified as operating to the ISO 9000 standard is now virtually seen as es-
sential in today’s construction industry. Many clients simply will not do business with
companies not certified to ISO 9000.
QA concentrates on the delivery methods and procedural approaches to ensure that
quality is built into the system.
Total quality management

This is the third stage and is based on the philosophy of continuously improving goods
or services within a company. The key factor is that everyone in the company should
be involved and committed from the top to the bottom of the organisation.
The successful total quality managed company ensures that their goods and ser-
vices can meet the following criteria:

iii Supply a quality service that is so much better than the competition that custom-
ers want it regardless of price.
The pursuit of total quality is seen as a never-ending journey of continuous improvement.
Defining quality within Contracts

The Contractor is required to execute the Works in accordance with the Contract,
so that the completed Works will be in accordance with the documents forming the
Contract.
The Contract must therefore define clearly what is expected of the Contractor in
executing the Works. It must cover all aspects of the work, either specifically or by
implication, otherwise it may be deemed to be excluded from the contract.
A comprehensive description should therefore be considered, which should be sup-
plemented by specific detailed requirements in the form of Drawings and Specifica-
tion. If reliance is placed solely on the scope of Works, there is a danger that an item
may be missed and could be the subject of later contention.
The Contract will normally be comprised of the following:
Description of the Works

The Contract must include a clear description of what is expected of the Contractor in
executing the Works. It must cover all aspects of the project, either specifically or by
implication, otherwise it may be deemed to be excluded from the Contract.
A comprehensive description should therefore be considered, which should be sup-
plemented by specific detailed requirements in the form of a specification. If reliance
is placed solely on the description of the service, there is a danger that an item may be
missed and could be the subject of later contention.
Drawings
The drawings should detail all the work to be carried out by the Contractor and be
complementary to the description of the Works and the specification.
Specification
The specification is a written technical description which describes the character
and quality of services, materials and workmanship, for work to be executed. It
may also lay down the sequence in which various portions of the project are to be
executed.
As far as possible, it should describe the outcomes required, rather than how to
achieve them, criteria or standards which are required for the work, and complemen-
tary to the other constituents of the Contract and any notes or other text on the draw-
ings, and the provisions of the contract.
Responsibilities of the parties
The responsibilities of the contracting parties and their representatives should be
clearly defined within the Contract in a manner which will leave no doubt as to the ob-
ligations that each is accepting, whilst also considering the written terms of the Condi-
tions of Contract. This will also allow the procedures necessary to enable the contract
to progress satisfactorily from inception to completion to be established at the outset
of the service.
The contract as a whole will also define the responsibilities for the planning of the
Works, timings, resources, the supply of any free issue materials, the issuing of in-
structions and the form which these instructions are to take, the programming of the
Works, the method of measuring and evaluating the Works, the circumstances which
will constitute a Variation to the Works and the duties of the parties during the deliv-
ery of the project.
Defining testing within Contracts

Testing is a key requirement within a Contract and is usually defined through the spec-
ification and often also through applicable law and standards.
Any materials facilities and samples for testing, including who provides them, are
also stated within the specification.
Testing can be related to individual Plant and Materials on Site or off Site, including
factory testing, testing of individual sections of work, welds and joints once they have
been assembled or a multitude of mechanical and electrical tests.
Whilst the specification will set out the procedures and parameters for testing and
commissioning, the Contract will set out the Parties’ contractual obligations and
the consequences of failure to meet them. Many activities, for example electrical
testing, will have to comply with current statutory requirements independent of the
contract.
Performance testing is usually applicable where the design of Plant and Materials is
the responsibility of the Contractor. This can include the operation of the completed
plant and the checking of product quality and quantity, fuel consumed, use of energy,
waste and by-products, environmental conditions and other aspects such as may be re-
quired. In such instances time limits for the rectification of performance defects must
be stated together with penalties for failure.
The documentation required in the form of test certificates, warranties and guaran-
tees to enable proper records to be maintained should be stipulated, as will the effect
in relation to the guarantee or warranty period and the extent to which it will apply.
Many such records are only maintained electronically so access to the relevant asset
management systems should be specified for the Client together with the requirements
for data transfer at expiry of the service period.
Liability for defects should be defined in the contract together with the period of
time for which such liability is to apply and the length of time within which defects are
to be remedied.
It is imperative that the specification, produced at tender stage, defines the full ex-
tent and timing of tests and inspections required, and the subsequent correction of
any defects.
Testing is very often not covered in sufficient detail within the Scope, so it is impor-
tant for the compiler of the Scope to consider a number of key questions:
iii How is the test to be carried out, and who is to provide the materials, facilities and
equipment to do the test?
Whether the test is a well-known “industry standard” test or not, the exact nature of
the test must be clearly defined. Who supplies the equipment, who pays for the power
or fuel for the equipment, etc.? It is also important to detail who is to provide the ma-
terials and facilities to do the test, and who meets the costs.

vi What is the expected result or outcome from the test?

What is the test expected to prove? What results are needed to be gathered once the
test has been carried out?
vii Who should be advised of the outcome of the test?
The Engineer/Employer’s Representative will normally be advised of the outcome
of a test, but sometimes a Subcontractor, or a third party outside the contract may
need to be informed.
viii What should be done in the event of a successful test e.g. certification.
Does a certificate have to be issued following successful completion of a test? Does
that successful outcome mean that the Contractor can proceed to the next stage of the
service? Is payment to the Contractor dependent on successful completion of the test?

The main documents within the Scope in respect of testing and inspection will nor-
mally be the Drawings and Specification.
Limitation periods
Whilst the FIDIC contracts, which we will discuss shortly, have a Time for Comple-
tion, then a Defects Notification Period (DNP) following that, during which the Con-
tractor is liable for correcting Defects, most countries also have a statutory limitation
period for latent defects which are discovered at a later date, beyond which a claim
cannot be made for defective work.
In the UK, for example, statute governs time limits for bringing different types of
legal claims, for example, the time limit for actions founded on simple contract is 6
years and for a specialty contract or deed, the time limit is 12 years, in both cases this
is measured from the date on which the cause of action accrued.
So the relevant law needs to be considered as well as the Contract, when assessing
long-term liability for defects.
Patent and latent defects

Note that within the FIDIC 2017 Contracts a Defect is not defined within Clause 1.
The Engineer’s schedule of defects will only list “patent defects” i.e. those that are
observable from reasonable inspection at the time, and will not include “latent de-
fects”, which may be hidden from reasonable inspection and may come to light at a
much later date.
The Contractor’s liability for correction of latent defects will depend on the applica-
ble law, and liability is likely to remain despite the issue of the Performance Certificate.
Latent defects are likely to arise after the Engineer/Employer’s Representative em-
ployment has ended. The Engineer/Employer’s Representative may therefore be re-
called at a later date to provide information and advice pertaining to any claim against
the Contractor relating to a latent defect.
The specific requirements under the FIDIC 2017 Contracts

Manner of Execution
The quality of work including the manufacture, supply, installation, testing and com-
missioning of Plant and Materials must be as specified in the Contract, executed in a
proper and workmanlike manner in accordance with good practice, and with properly
equipped facilities and non-hazardous materials.
The author often queries what would be termed a “proper and workmanlike manner”,
which is actually a quite common terms in construction contracts.
This term would appear to suggest that the Contractor uses a degree of effort, effi-
ciency, knowledge and experience in executing the Works as required by the Contract,
probably akin to a designer using reasonable skill and care in carrying out his design.
You cannot strictly define it, but practitioners will have an opinion as to whether the
Contractor is, or is not doing it!
Note that the FIDIC 1999 Contracts only applied to the manufacture of Plant, pro-
duction and manufacture of materials and generally to the execution of the Works.
Samples
Sub-Clause 7.2 has not changed from the FIDIC 1999 Contracts in requiring the Con-
tractor to submit samples to the Engineer (Employer under the Silver Book) for con-
sent, properly labelled.
Inspection
The Employer’s Personnel (note the Employer’s Personnel rather than the Engineer)
have the right to full access to all parts of the Site during normal working hours as
stated in the Contract Data, and at all other times.
The Contractor is required to give a Notice to the Engineer (Employer under the
Silver Book) whenever Materials, Plant or work are ready for inspection and before
they are covered up, the Employer’s Personnel then respond promptly. If they do not,
the Engineer (Employer under the Silver Book) may give Notice to the Contractor that
they do not require to do so.
Note that, although the Notice goes to the Engineer (Employer under the Silver
Book), it is the Employer’s Personnel who carry out the inspection, not the Engineer
(or the Employer under the Silver Book).
If the Engineer (Employer under the Silver Book) does not issue the Notice, the
Contractor may proceed with covering up that part of the Works.
Note that FIDIC 2017 now requires the Contractor to make available records in-
cluding photographs and and/or video recordings.
If the Contractor fails to give the Notice to the Engineer (Employer under the Silver
Book), then it is required to uncover, reinstate and make good at its own expense.
Finally, there is now an express right for the Contractor to cover up work or mate-
rial which would otherwise need to be inspected if the Engineer (Employer under the
Silver Book) does not respond to the Contractor’s Notice advising that an inspection
may be carried out, or the Employer’s Personnel do not attend to make the inspection
at the notified time.
Testing by the Contractor

The Contractor must provide all apparatus, assistance, documents, temporary sup-
plies of electricity and water, experienced and competent staff, etc., to carry out the
specified tests. The requirement for temporary supplies of electricity and water, and
that the Contractor’s staff must be competent enough to ensure the tests are carried
out properly, is additional to that within the FIDIC 1999 Contracts.
The Contractor is required to give a Notice to the Engineer (Employer under the
Silver Book) within a reasonable time before carrying out such tests, previously under
the FIDIC 1999 Contracts he just had to carry out the tests.
Note that, although the Notice is issued to the Engineer (Employer under the Silver
Book), it is actually the Employer’s Personnel who may attend.
The Engineer (Employer under the Silver Book) may instruct as a Variation, a changed
location and/or timing of tests, or additional testing, unless what is tested is shown not to
be in accordance with the Contract. Obviously, a Variation may give rise to a payment
to the Contractor unless it shows that the work was not in accordance with the Contract.
It would seem that instructing a changed location/timing of a test is somewhat bu-
reaucratic, unless the tests are critically changed,
The Engineer (Employer under the Silver Book) is required to give not less than 72
hours’ notice (this was formerly 24 hours under the FIDIC 1999 Contracts) if he wishes
to attend the tests. If the Contractor is delayed or incurs costs in respect of this, he can
claim an Extension of Time and/or Cost plus Profit under Clause 20.2.
If the Contractor causes any delay to tests and the delay causes the Employer to
incur costs, the Employer is entitled payment of these costs from the Contractor under
Sub-Clause 20.2. This is a new provision.
The Contractor is required to forward certified reports of the tests to the Engineer (Em-
ployer under the Silver Book). When the tests have been passed, the Engineer (Employer
under the Silver Book) endorses the Contractor’s test certificate, or issues a test certificate
to the Contractor, to that effect. If the Engineer (Employer under the Silver Book) has not
attended the tests, he is deemed to have accepted the test results as accurate.
Defects and rejection

If any work fails a test, the Engineer (Employer under the Silver Book) gives a Notice
to the Contractor describing the failure. The Contractor is then required to make and
submit a proposal for remedial work, which the Engineer (Employer under the Silver
Book) may review and state if the proposal does not comply with the Contract. The
Contractor then submits a further proposal for the Engineer’s Review if required.
If the Engineer (Employer under the Silver Book) does not give a Notice within
14 days after receiving the Contractor’s proposal (or revised proposal), the Engineer
(Employer under the Silver Book) is deemed to have given a Notice of No-objection.
If the Contractor fails to submit a proposal, or fails to carry out the proposed re-
medial work to which the Engineer (Employer under the Silver Book) has given (or is
deemed to have given) a Notice of No-objection, the Engineer may:
a Instruct the Contractor to carry out remedial work.

b Reject the Plant, Materials, Contractor’s design (if any) or workmanship by giving
a Notice to the Contractor, with reasons, in which case Sub-Clause 11.4 [Failure
to Remedy Defects] applies.
After remedying defects, if the Engineer (Employer under the Silver Book) requires
any items to be retested, the tests are repeated in accordance with requirements, and
at the Contractor’s risk and cost.
If the rejection and retesting causes the Employer to incur additional costs, the Em-
ployer is entitled to payment of these costs from the Contractor.
Remedial work
The Engineer (Employer under the Silver Book) may instruct the Contractor to:
a Repair or remedy (which may require its removal and return to Site), or perma-
nent removal from the Site;
b Replace any Plant or Materials which are not in accordance with the Contract;
c Repair or remedy, or remove and re-execute, any other work which is not in ac-
cordance with the Contract;
d Carry out any remedial work which is urgently required for the safety of the
Works, whether because of an accident, unforeseeable event or otherwise.
The Contractor is required to comply with the instruction at its own cost, except any
work under sub-paragraph (c) above which is attributable to:


This is a “softening” of the FIDIC 1999 Approach which was that the Contractor was re-
quired to carry out remedial work at its own cost, now he can recover the Cost plus Profit.
If the Contractor fails to comply with the Engineer’s (Employer under the Silver
Book) instruction, the Employer may employ and pay others to carry out the work.
The Employer is entitled to payment by the Contractor of all costs arising from this
failure.
Ownership of Plant and Materials

Sub-Clause 7.7 defines the date when each item of Plant and Materials becomes the
property of the Employer i.e. at the earlier of:
a When the Plant or Materials are delivered to the Site;

b When the Contractor is paid the value of the Plant and Materials after Employer’s
Suspension;
c When the Contractor is paid the amount determined for unfixed Plant and
Materials.
Note the reference to the Laws of the Country, which may determine at what point
the Plant and Materials become the Employer’s property. The issue of “title” can be
significantly different under differing legislations.
Also, note that 80% of the amount determined is included in an Interim Payment
Certificate (IPC) (the balance will only be paid when the Plant or Materials are incor-
porated into the Works).
Royalties
Unless the Specification (Employer’s Requirements in the Yellow and Silver Books)
states otherwise, the Contractor must pay all royalties, rents and other payments in
connection with the Works for:
a Natural Materials obtained from outside the Site;

b The disposal of material from demolitions and excavations and of other surplus
material (whether natural or man-made), except to the extent where disposal areas
within the Site are stated in the Specification (Employer’s Requirements in the
Yellow and Silver Books).
Tests on Completion
Contractor’s obligations
The Contractor is required to carry out all Tests on Completion after submitting the
As-Built Records (if applicable) and Operation and Maintenance Manuals (also if
applicable).
There is a new provision under FIDIC 2017 in that the Contractor must submit, not
less than 42 days before the tests commence, a detailed test programme giving details
of when each test is carried out, its duration and the resources that it intends to use to
complete the tests. This is a useful addition for clarity purposes.
The Engineer (Employer under the Silver Book) may review the proposed test pro-
gramme and may give a Notice to the Contractor stating the extent to which it does
not comply with the Contract.
The Contractor must then respond to that Notice within 14 days revising the test
programme to rectify the non-compliance.
If the Engineer (Employer under the Silver Book) does not give a Notice within 14 days
after receiving the test programme, he is deemed to have given a Notice of No-objection.
The Contractor must not commence the tests until a Notice of No-objection is given (or
is deemed to have been given) by the Engineer (Employer under the Silver Book).
The Contractor should also give a Notice to the Engineer (Employer under the Sil-
ver Book), of not less than 21 days, of the date after which the Contractor will be ready
to carry out each of the Tests on Completion.
The Contractor then commences the tests within 14 days after this date, or whatever
the Engineer (Employer under the Silver Book) instructs to proceed in accordance
with his test programme.
Unless otherwise stated within the Employer’s Requirements, the Yellow and Silver
Books prescribe three testing stages which must be carried out in sequence:
iii Trial operation to demonstrate that the Works perform reliably.
Again, a new provision under the FIDIC 2017 Contracts, as soon as the Works or any
specified Section have passed the Tests on Completion, the Contractor submits a certi-
fied report of the results to the Engineer (Employer under the Silver Book).
The Engineer (Employer under the Silver Book) carries out a Review of the report
and may give a Notice to the Contractor stating the extent to which the results of the
tests do not comply with the Contract. If the Engineer (Employer under the Silver
Book) does not give a Notice within 14 days after receiving the test results, the Engineer
(Employer under the Silver Book) is deemed to have given a Notice of No-objection.
In considering the results of the Tests on Completion, the Engineer (Employer under
the Silver Book) is required to make allowances for the effect of any use of (any part of)
the Works by the Employer on the performance or other characteristics of the Works.
Delayed tests
Sub-Clause 9.2 deals with delayed tests, whether the delay is caused by the Engineer
(Red Book), the Employer’s Personnel (Yellow and Silver Books) or the Contractor.
If the tests are “delayed” by the Engineer or by the Employer’s Personnel, or by a
cause for which the Employer is responsible, and the Contractor has given a Notice to
that effect, Sub-Clause 10.3 [Interference with Tests on Completion] applies (see below).
If the Tests on Completion are delayed by the Contractor, the Engineer (Employer
under the Silver Book) may give a Notice to the Contractor requiring him to carry out
the tests within 21 days after receiving the Notice.
The Contractor must carry out the tests within this period of 21 days, and must give
not less than 7 days prior Notice of dates to the Engineer (Employer under the Silver
Book).
If the Contractor fails to carry out the Tests on Completion within the period of 21
days:
a After a second Notice is given by the Engineer (Employer under the Silver Book)
to the Contractor, the Employer’s Personnel may proceed with the tests.
b The Contractor may attend and witness the tests.
c Within 28 days of these tests being completed, the Engineer (Employer under the
Silver Book) sends a copy of the test results to the Contractor.
d If the Employer incurs additional costs as a result of the testing, he is entitled to
payment by the Contractor of the costs reasonably incurred.
Whether or not the Contractor attends, the Tests on Completion are deemed to have
been carried out as if they were in the presence of the Contractor and the results of the
tests are accepted as accurate.
Retesting
If any work fails a test, the defect must be repaired and the test repeated under the
same conditions.
Failure to pass Tests on Completion

If the Works, or any Section fails the Tests on Completion, the Engineer (Employer un-
der the Silver Book) is entitled to order further repetition of tests, to reject the Works, to
reject the relevant Section or to issue a Taking-Over Certificate if the Employer requests.
If the Engineer (Employer under the Silver Book) issues a Taking-Over Certificate
the Contractor is required to proceed with his obligations under the Contract, and
the Employer may claim payment from the Contractor, or a reduction to the Contract
Price.
If the Works, or a Section, are rejected, the Employer can recover costs as if the re-
jected part of the Works or Section had been omitted, as a Variation.
Employer’s Taking Over

Clause 10 specifies the procedures for certification of completion and for the Employ-
er’s Taking Over.
Taking Over of the Works and Sections

The Works are taken over by the Employer when:
a The Works have been completed in accordance with the Contract, including the
passing of the Tests on Completion.
b If applicable, the Engineer (Employer under the Silver Book) has given (or is
deemed to have given) a Notice of No-objection to the As-Built Records submitted.
c If applicable, the Engineer (Employer under the Silver Book) has given (or is
deemed to have given) a Notice of No-objection to the operation and maintenance
manuals.
d If applicable, the Contractor has carried out the training as described under Sub-
Clause 4.5 [Training]. Obviously, this may not be applicable, but again another
important provision.
(b), (c) and (d) are critical pre-requisites; it is not just a requirement to have
physically constructed the Works.
e A Taking-Over Certificate for the Works has been issued, or is deemed to have
been issued in accordance with this Sub-Clause.
The Contractor may apply for a Taking-Over Certificate by giving a Notice to
the Engineer (Employer under the Silver Book) not more than 14 days before the
Works will, in the Contractor’s opinion, be complete and ready for taking over.
If the Works have been divided into Sections, the Contractor may similarly ap-
ply for a Taking-Over Certificate for each Section.
The reference to the supply of As-Built Records, Operation and Maintenance Man-
uals and associated No-objection by the Engineer (Employer under the Silver Book),
and also training is a new provision under FIDIC 2017.
If any Part of the Works is taken over, the remaining Works or Section is not be
taken over until all the conditions described in sub-paragraphs (a) to (e) above have
been fulfilled.
Note that “Part” is under FIDIC 2017 a defined term under Clause 1 meaning “a
part of the Works or Section (as the case may be) which is used by the Employer and
deemed to be taken over under Sub-Clause 10.2”.
The Engineer (Employer under the Silver Book) is required, within 28 days after
receiving the Contractor’s Notice, either to:
ii Reject the application by giving a Notice to the Contractor, with reasons.
This Notice should specify in detail the work, which is required to be done, the defects
required to be remedied and/or the documents required to be submitted by the Con-
tractor (whichever are applicable) to enable the Taking-Over Certificate to be issued.
The Contractor then completes this work, remedies the defects and/or submits
such documents (whichever are applicable) before giving a further Notice under this
Sub-Clause.
If the Engineer (Employer under the Silver Book) does not issue the Taking-Over
Certificate or reject the Contractor’s application within this period of 28 days, and if
the conditions described in sub-paragraphs (a) to (d) above (where applicable) have
been fulfilled, the Works or Section is deemed to have been completed in accordance
with the Contract on the 14th day after the Engineer (Employer under the Silver Book)
receives the Contractor’s Notice of application and the Taking-Over Certificate is
deemed to have been issued.
Taking-Over Parts
This is the equivalent of “partial possession” in other Contracts, allowing the Em-
ployer to take over part of the Works before the Taking-Over Certificate has been
issued for the whole of the Works or for a Section.
If the Employer does so, the Part taken over is deemed to be taken over, the Con-
tractor is no longer responsible, but he is liable (see Chapter 9) for the care of that Part,
and the Engineer (Employer under the Silver Book) issues a Taking-Over Certificate.
The Contractor is able to recover any additional Cost plus Profit associated with
this action.
The Engineer (Employer under the Silver Book) may, at the sole discretion of the
Employer, issue a Taking-Over Certificate for any part of the Permanent Works. Note
the term “sole discretion”, the Employer does not have to ask anyone.
Note that the Employer must not use any Part of the Works until the Engineer (Em-
ployer under the Silver Book) has issued a Taking-Over Certificate for this Part.
However, if the Employer does use any Part of the Works before the Taking-Over
Certificate is issued the Contractor gives a Notice to the Engineer (Employer under the
Silver Book) to that effect, identifying the Part and describing its use, and:
a That Part is deemed to have been taken over by the Employer as from the date on
which it is used.
b The Contractor ceases to be responsible for the care of that Part from this date,
when responsibility passes to the Employer.
c The Engineer (Employer under the Silver Book) immediately issues a Taking-Over
Certificate for the Part, and any outstanding work to be completed (including Tests on
Completion) and/or defects to be remedied is listed in the Taking-Over Certificate.
After the Engineer (Employer under the Silver Book) has issued a Taking-Over Cer-
tificate for a Part, the Contractor must be given the earliest opportunity to take such
steps as necessary to carry out the outstanding work and/or remedial work for any
defects listed in the Taking-Over Certificate.
The Contractor must carry out these Works as soon as practicable and, in any case,
before the expiry date of the relevant DNP.
If the Contractor incurs Cost as a result of the Employer taking over and/ or using a
Part, the Contractor can, as stated above, claim payment of Cost plus Profit.
If the Engineer (Employer under the Silver Book) issues a Taking-Over Certificate
for any Part of the Works, or if the Employer is deemed to have taken over a Part the
Delay Damages for completion of the remainder of the Works are reduced. Similarly,
the Delay Damages for the remainder of the Section.
This reduction is calculated as the proportion which the value of the Part (except the
value of any outstanding works and/or defects to be remedied) bears to the value of the
Works or Section as a whole. This is a lot easier to calculate than some contracts which
reefer to valuing the “usefulness” of the Part which has been taken over in comparison
to the whole of the Works or a Section, dependent on how the Delay Damages have been
calculated.
The Engineer (Employer under the Silver Book) agrees or determines this reduction
in the Delay Damages.
The date the Engineer (Employer under the Silver Book) receives the Contractor’s
Notice is the date of commencement of the time limit for agreement. The provisions
of this paragraph shall only apply to the daily rate of Delay Damages, and shall not
affect the maximum amount of these damages.
Interference with Tests on Completion

In the event that the Contractor is prevented, for more than 14 days, from carrying out
the Tests on Completion by the Employer’s Personnel or by any cause for which the
Employer is responsible:
a The Contractor is required to give a Notice to the Engineer (Employer under the
Silver Book) describing the prevention.
b The Employer is deemed to have taken over the Works or Section on the date when
the Tests on Completion would “otherwise” have been completed.
c The Engineer (Employer under the Silver Book) is required to immediately issue a
Taking-Over Certificate for the Works or Section.
What about the As-Built Records, Drawings, etc.?
Also, note there is “deemed” take-over, but not a deemed Taking-Over Cer-
tificate, it still relies on the Engineer (Employer under the Silver Book) issuing
the Taking-Over Certificate, though it should be done “immediately”, but what
happened if the Engineer (Employer under the Silver Book) does not issue it im-
mediately, or at all?
Note that the Sub-Clause refers to the failure to carry out any “performance test that
is not possible due to available operating conditions during trial operation”.
It is not clear what this refers to, but subject to the Contractor issuing a Notice, there
will be a deemed Taking Over of the Works or Section.
NB: The Contract refers to the 14 Days either being a continuous period or mul-
tiple periods which total more than 14 Days, so this Clause could be difficult to
administer.
After the Engineer (Employer under the Silver Book) has issued the Taking-Over
Certificate, the Contractor is required to carry out the Tests on Completion as soon as
practicable and, in any case, before the expiry date of the DNP.
The Engineer (Employer under the Silver Book) must give a Notice to the Contrac-
tor, of not less than 14 days, of the date after which the Contractor may carry out each
of the Tests on Completion.
If the Contractor suffers delay and/or incurs Cost as a result of being prevented
from carrying out the Tests on Completion, the Contractor is entitled to an Extension
of Time and/or payment of such Cost plus Profit.
Surfaces requiring reinstatement (Red and Yellow Books only)

A Taking-Over Certificate (unless stated otherwise) does not include for completion of
surfaces requiring reinstatement.
Sub-Clause 11.11 deals with the Contractor being required to clear the Site after the
issue of the Performance Certificate.
Note that this Sub-Clause does not exist under the Silver Book.
Defects after Taking Over
Completion of outstanding work and remedying defects

a Complete any work which is outstanding on the relevant Date of Completion,

within the time(s) stated in the Taking-Over Certificate, or within any other rea-
sonable time instructed by the Engineer (Employer under the Silver Book).
b Execute all work required to remedy defects or damage, of which a Notice is given
to the Contractor by (or on behalf of) the Employer on or before the expiry date of
the DNP for the Works or Section or Part (as the case may be).
Note that the provision applies not just to the DNP for the Works or Section, but also
to a Part (as the case may be).
If a defect appears, or damage occurs during the relevant DNP, a Notice is given to
the Contractor by (or on behalf of) the Employer.
Promptly:
iii The second, third and fourth paragraphs of Sub-Clause 7.5 [Defects and Rejec-
tion] apply i.e. the Engineer (Employer under the Silver Book) reviews the Con-
tractor’s proposal stating whether the proposal complies with the Contract, and
the Contractor may be required to submit a revised proposal.
The author is not positive towards cross-referencing Clauses and Sub-Clauses within
Contracts as this could lead to confusion between the parties, and particularly when
Clauses/Sub-Clauses are amended (which is not encouraged!) the links can be lost.
This is an important matter, so for clarity, why not just repeat what Sub-Clause
7.5 states, within this Sub-Clause?
Cost of remedying defects

All defects are to be rectified at the Contractor’s cost. If the defect has arisen which is
not the Contractor’s fault, or for which he is not responsible, it is treated as a Variation
and the Contractor is paid according to the rules for valuing Variations.
Note that the Contractor is also responsible for remedying defects that arise from
improper operation and maintenance which was attributable to matters for which the
Contractor is responsible (i.e. As-Built Records, Operation and Maintenance Manuals
and Training).
If the Contractor considers that the defect is attributable to any other cause, the
Contractor is required to promptly give a Notice to the Engineer (Employer under the
Silver Book) and the Engineer (Employer under the Silver Book) then agrees or deter-
mines the cause, the date of the Notice is the date of commencement of the time limit
for agreement under Sub-Clause 3.7.3.
If it is agreed or determined that the work is attributable to a cause other than those
listed above, Sub-Clause 13.3.1 [Variation by Instruction] applies as if the work had
been instructed by the Engineer.
Extension of DNP
Under Sub-Clause 1.1.27 (Sub-Clause 1.1.24 under the Silver Book) “Defects Notifica-
tion Period” or “DNP” is defined as
the period for notifying defects and/or damage in the Works or a Section or a Part
(as the case may be) under Sub-Clause 11.1 [Completion of Outstanding Work
and Remedying Defects], as stated in the Contract Data (if not stated, one year),
and as may be extended under Sub-Clause 11.3 [Extension of Defects Notification
Period]. This period is calculated from the Date of Completion of the Works or
Section or Part.
So, the default period is “one year”, and applies to the Works, a Section or a Part.
Employers should consider carefully what they require for, DNP for the Works, each
Section or each Part, rather than relying on this “deemed provision”.
The Employer is entitled to an extension of the DNP for the Works, or a Section
or a Part, if the Works, Section, Part or a major item of Plant cannot be used for the
intended purpose(s) by reason of a defect or damage which is attributable to any of
the matters under sub-paragraphs (a) to (d) of Sub-Clause 11.2 [Cost of Remedying
Defects]. This would be subject to Sub-Clause 20.2 [Claims For Payment and/or EOT].
This is more restrictive than the FIDIC 1999 Contracts which allowed the Employer
to have an extension to the DNP wherever the defects or damage affected the Works;
however, this has now been changed within the FIDIC 2017 Contracts in that the Em-
ployer is only entitled to extension of the DNP if the Works, Section, Part or a major
item of Plant cannot be used for the intended purposes, and it is attributable to any of
the matters under Sub-Clause 11.2 as stated above and also it is subject to Clause 20.2.
Also, a DNP cannot be extended by more than a period of two years after the expiry
of the DNP stated in the Contract Data.
If delivery and/or erection of Plant and/or Materials was suspended under Sub-
Clause 8.9 [Employer’s Suspension] or Sub-Clause 16.1 [Suspension by Contractor],
the Contractor’s obligations under this Clause shall not apply to any defects or damage
occurring more than two years after the DNP for the Works, of which the Plant and/or
Materials form part, would otherwise have expired. This is an important point.
Failure to remedy defects

Under a new provision within FIDIC 2017, if the Contractor delays remedying any de-
fect or damage, a date may be fixed by (or on behalf of) the Employer, on or by which
the defect or damage is to be remedied.
A Notice of this date must be given to the Contractor by the Employer allowing the
Contractor a reasonable time to remedy the defect or damage.
If the Contractor fails to remedy the defect or damage by the date stated in this No-
tice, the Employer may (and each of these could generate some debate!):
a Carry out the work or have the work carried out by others at the Contractor’s
cost, but the Contractor then has no responsibility for this work. The Employer
is entitled to payment by the Contractor of the costs reasonably incurred by the
Employer in remedying the defect or damage (costs reasonably incurred always
being subjective).
b Accept the damaged or defective work, in which case the Employer is entitled to a
reduction in the Contract Price.
What that reduction in the Contract Price amounts to could be the subject of much
debate!
c Require the Engineer to treat any part of the Works which cannot be used for its
intended purpose(s) under the Contract by reason of this failure as an omission.
“Cannot be used for its intended purpose(s)”, how would this be defined and
calculated?
d Terminate the Contract as a whole with immediate effect if the defect or damage
deprives the Employer of substantially the whole benefit of the Works. The Em-
ployer is then entitled to recover from the Contractor all sums paid for the Works,
plus financing charges and any costs incurred in dismantling the same, clearing
the Site and returning Plant and Materials to the Contractor.
Presumably, the Contractor then owns the Plant and Materials, through it is
unlikely that he will be able to do anything with them!
If the Employer terminates, presumably it is not subject to the rules under
Clause 15 [Termination by Employer].
As stated these provisions are quite subjective in terms of calculating the outcome, so
it is important that the Contractor prevents such debates by executing the Works prop-
erly and if necessary remedying defects properly as required by the Contract.
Remedying of defective work off Site

If, during the DNP, the Contractor considers that any defect or damage in any Plant
cannot be remedied on the Site and it has to be dismantled and taken off Site, the Con-
tractor may give a Notice to the Employer requesting consent to remove the defective
or damaged Plant off the Site for the purposes of repair.
The change under FIDIC 2017 is in the Contractor considering that the defect or
damage cannot be remedied on Site and also having to give details as listed below.
Within the Notice, the Contractor is required to clearly identify each item of defec-
tive or damaged Plant, and also to give full details of:
a The defect or damage to be repaired;

b The location where the defective or damaged Plant is to be taken for repair;
c The transportation which is to be used (and the insurance cover for such
transportation);
d The proposed inspections and testing that will be carried out off Site;
e The planned duration required before the repaired Plant can be returned to the Site;
f The planned duration for reinstallation and retesting of the repaired Plant.
When the Employer gives consent, the Contractor may remove from the Site such
items of Plant as are defective or damaged.
Note that the Employer may require the Contractor to increase the amount of the
Performance Security by the full replacement cost of the defective or damaged Plant.
Further tests after remedying defects

Within seven days of completing the remediation of any defect or damage, the Con-
tractor must give a Notice to the Engineer (Employer under the Silver Book) describ-
ing the remedied Works, Section, Part and/or Plant and the proposed repeated tests.
Within seven days after receiving this Notice, the Engineer (Employer under the
Silver Book) gives a Notice to the Contractor either:
a Agreeing with the proposed testing; or

b Instructing that repeated tests are necessary to demonstrate that the remedied
Works, Section, Part and/or Plant comply with the Contract.
If the Contractor fails to a Notice within the seven days, there is a default provision
in that the Engineer (Employer under the Silver Book) may give a Notice to the Con-
tractor within 14 days after the defect or damage is remedied, instructing the repeated
tests that are necessary to demonstrate that the remedied Works, Section, Part and/or
Plant comply with the Contract.
All repeated tests under this Sub-Clause, if applicable, are to be carried out in ac-
cordance with the terms applicable to the previous tests i.e. by the Contractor giving
Notice and the Engineer (Employer under the Silver Book) responding, except that they
are carried out at the risk and cost of the Party liable for the cost of the remedial work.
Right of access after taking over

Until 28 days after issue of the Performance Certificate, the Contractor has the right
of reasonable access to the Works as reasonably required in order to comply with
this Clause, except as may be inconsistent with the Employer’s reasonable security
restrictions.
Under new provisions within the FIDIC 2017 Contracts, whenever the Contractor
intends to access any part of the Works during the relevant DNP:
a The Contractor is required to request access from the Employer by giving a No-
tice, describing the parts of the Works to be accessed, the reasons for such access
and the Contractor’s preferred date for access.
This Notice is required to be given in reasonable time in advance of the pre-
ferred date for access, taking due regard of all relevant circumstances including
the Employer’s security restrictions; and
b Within seven days after receiving the Contractor’s Notice, the Employer is re-
quired to respond, giving a Notice to the Contractor either:

If the Employer fails to give this Notice within seven days, the Employer is
deemed to have given consent to the Contractor’s access on the preferred date
stated in the Contractor’s Notice, so it is critical that this is dealt with by the
Employer within the required time scale.
Note that, if the Contractor incurs additional Cost as a result of any unreasonable
delay (how long it has to be to be delayed to be an “unreasonable delay” is tested on
its merits for each request) is by the Employer in permitting access to the Works by the
Contractor, the Contractor is entitled to payment of Cost plus Profit.
Contractor to search
Within the FIDIC 1999 Contracts, the Engineer (Employer under the Silver Book)
may require the Contractor to search for the cause of a Defect, under the FIDIC 2017
Contracts it becomes a specific instruction by the Engineer (Employer under the Silver
Book). This is common in other construction contracts, and is often referred to as
“opening up” or “uncovering”.
If instructed, the Contractor must search for the cause of any defect, under the di-
rection of the Engineer (Employer under the Silver Book).
The Contractor is required to carry out the search on the date(s) stated in the En-
gineer’s (Employer under the Silver Book) instruction or other date(s) agreed with the
Engineer (Employer under the Silver Book).
Unless the defect is to be remedied at the cost of the Contractor, the Contractor is
entitled to payment of the Cost plus Profit of carrying out the search.
If the Contractor fails to carry out the search in accordance with the instruction, the
search may be carried out by the Employer’s Personnel, and may be at the Contractor’s
Cost.
The Contractor is given a Notice of the date when such a search will be carried out,
and the Contractor may attend at his own cost.
Under a new FIDIC 2017 Contract provision, if the defect is to be remedied at the
cost of the Contractor, the Employer is entitled to payment by the Contractor of the
costs of the search reasonably incurred by the Employer.
Performance Certificate
The issue of the Performance Certificate confirms that the Contractor has fulfilled all
his obligations under the Contract (FIDIC 1999 referred to the Contractor “complet-
ing his obligations”).
The Certificate is issued within 28 days after the latest of the expiry dates of the DNPs.
The Engineer (Employer under the Silver Book) issues the Performance Certificate
to the Contractor (with a copy to the Employer and to the DAAB) within 28 days after
the latest of the expiry dates of the DNPs, or as soon as the Contractor has:
a Supplied all the Contractor’s Documents.

b Completed and tested all the Works (including remedying any defects) in accord-
ance with the Contract.
It is curious that the Performance Certificate now has to be issued not only to the
Parties (Employer and Contractor) but also to the Dispute Avoidance/Adjudication
Board (DAAB), presumably in case there is a dispute about it, or a related matter?
Presumably, the Contractor’s Documents must have not only been supplied, but
have received “No-Objection” to its contents.
Under a new provision within the FIDIC 2017 Contracts, if the Engineer (Employer
under the Silver Book) fails to issue the Performance Certificate within the period of
28 days, the Performance Certificate is deemed to have been issued on the date 28 days
after the date on which it should have been issued i.e. a total of 56 days.
Unfulfilled obligations
Although this seems a contradiction to mention “unfulfilled obligations” as the Con-
tractor has surely fulfilled his obligations, but there may be outstanding items such as
clearance of the Site, Final Payment Certificate and the possibility of latent defects.
The FIDIC 1999 Contracts were silent on liability for latent defects, so it was left to
whatever the relevant legislation stated.
Under the FIDIC 2017 Contracts, the Contractor is not liable for any defects or
damage occurring more than two years after expiry of the DNP for the Plant, except
if prohibited by law or in any case of fraud, gross negligence, deliberate default or
reckless misconduct.
As stated above, the Parties should be particularly aware of the relevant legislation,
particularly in respect of future long-term liability for latent defects, and take legal ad-
vice accordingly. In most cases statutory liability will prevail over contractual liability.
Clearance of Site
After the issue of the Performance Certificate, the Contractor must:
a Remove any Contractor’s Equipment, surplus material, wreckage, rubbish and

Temporary Works from the Site. (The term “wreckage” has often caused some
discussion amongst practitioners, but it clearly something that is damaged and/or
surplus to requirements!)
b Reinstate all parts of the Site which were affected by the Contractor’s activities
during the execution of the Works.
c Leave the Site and the Works in the condition stated in the Specification (Employ-
er’s Requirements in the Yellow and Silver Books) (and if not stated, in a clean and
safe condition).
If the Contractor fails to comply with the above within 28 days after the issue of the Per-
formance Certificate, the Employer may (where permitted by the Law, and this must be
checked as it could vary under differing legislations) sell or otherwise dispose of any remain-
ing items and/or may reinstate and clean the Site (as necessary), at the Contractor’s cost.
The Employer is entitled to payment by the Contractor of the costs reasonably in-
curred in connection with, such sale or disposal and reinstating and/or cleaning the
Site, less an amount equal to any proceeds from the sale.
Tests after Completion (Clause 12) (Yellow and Silver Books only)
Note that Clause 12 “Tests after Completion” is only included within the Yellow
and Silver Books, Clause 12 under the Red Book being entitled “Measurement and
Valuation”.
For building and civil engineering works “Tests on Completion” tend to be more
critical to show that the project is complete in terms of construction and is able to be
used as intended.
“Tests after Completion” are normally more specific to process contracts where
there is a requirement for the Contractor to prove “tests in use” in that the facility
continues to be working and performing reliably as it should for some time after it is
all completed. These tests could be carried out on different occasions under different
conditions.
Clause 12 under the Yellow and Silver Books is, like many of the FIDIC 2017 Con-
tract Clauses, significantly more detailed than FIDIC 1999 in terms of what is required
of the Parties.
The Clause now refers specifically to the “Employer’s Requirements” rather than,
more generically to “the Contract”, so the Parties know where to look within the Con-
tracts, and this also highlights the criticality of drafting the Employer’s Requirements
to cover all of what is required with the Contract.
For clarity, the Engineer (Employer under the Silver Book) also now has to provide
a test programme to the Contractor showing the estimated timing of the tests, in order
that the Contractor can plan to attend as required.
Also, for clarity, the Contractor has to provide and submit a detailed test pro-
gramme to the Employer, who then has the opportunity to notify the Contractor of
any non-compliance with the requirements of the Contract.
Procedure for Tests after Completion

If Tests after Completion are specified in the Employer’s Requirements:
Under the Yellow Book

The Employer must:
a Provide all electricity, water, sewage (if applicable), equipment, fuel, consumables,
instruments, labour, materials, and suitably qualified, experienced and compe-
tent staff, as are necessary to carry out the Tests after Completion efficiently and
properly.
b Carry out the Tests after Completion in accordance with:

So, the responsibility for hosting and carrying out these tests is placed on the
Employer.
The timing of the Tests after Completion is as stated in the Employer’s Require-
ments (if not stated, as soon as is reasonably practicable) after the Works or Section
(as the case may be) has been taken over under Clause 10 [Employer’s Taking Over].
The Engineer must give a Notice to the Contractor, of not less than 21 days, of the
date on which, and place at which, the Tests after Completion will be carried out.
This Notice must also include a test programme showing the estimated timing for
each of the tests. Unless otherwise agreed with the Contractor, these tests are required
to be carried out on this date.
If the Contractor does not attend at the time and place stated in the Engineer’s
(Employer under the Silver Book) Notice (or otherwise agreed with the Contractor),
the Employer may proceed with the Tests after Completion, and they are deemed to
have been made in the Contractor’s presence, and the Contractor is deemed to have
accepted the results as accurate.
The results of the Tests after Completion are compiled and evaluated by both Parties,
with appropriate account taken of the effect of the Employer’s prior use of the Works.
Under the Silver Book

The Employer must provide all electricity, water, sewage (if applicable), equipment,
fuel, consumables, instruments, labour, materials, and suitably qualified, experienced
and competent staff, as are necessary to carry out the Tests after Completion effi-
ciently and properly.
The Contractor must:
a Provide all apparatus, assistance, documents, etc., to carry out the test.
b Submit to the Employer not less than 42 days before the testing is intended to start,
and detailed test programme showing the timing and resources for the tests.
c Give a Notice to the Employer of not less than 21 days of the date when the Con-
tractor is ready to carry out the tests.
d Not commence the tests until after a Notice of No-objection is given to the Con-
tractor’s test programme.
e Commence the tests within 14 days after the date stated in the Notice (see (c)).
f Carry out the tests in accordance with the test programme, the Employer’s Re-
quirements and then if applicable the O&M manuals for which the Employer has
given his No-objection.
The testing must all be done in the presence of the Employer’s Personnel.
The results of the Tests after Completion are compiled and evaluated by both Parties,
with appropriate account taken of the effect of the Employer’s prior use of the Works.
Delayed tests
If the Contractor incurs Cost as a result of any unreasonable delay by the Employer in
carrying out the Tests after Completion, the Contractor is entitled to payment of Cost
plus Profit.
If, for reasons not attributable to the Contractor, a Test after Completion on the
Works or any Section cannot be completed during the DNP (or any other period
agreed by both Parties), then the Works or Section is deemed to have passed this Test
after Completion.
Retesting
If the Works, or a Section, fail to pass the Tests after Completion:
a Sub-paragraph (b) of Sub-Clause 11.1 [Completion of Outstanding Work and

Remedying Defects] applies; and
b After remedying any defect or damage, Sub-Clause 11.6 [Further Tests after Rem-
edying Defects] applies.
If this failure and retesting are attributable to the Contractor and cause the Employer
to incur additional costs, the Employer is entitled to payment of these costs by the
Contractor.
Failure to pass Tests after Completion

If:
a The Works, or a Section, fail to pass any or all of the Tests after Completion; and
b If applicable Performance Damages are set out in the Schedule of Performance
Guarantees, the Employer is entitled subject to payment of these Performance
Damages by the Contractor in full satisfaction of this failure.
Note that the Employer has to recover the Performance Damages by way of a
Claim, with the Notice requirements that entail, including the 28 day time bar
(when does the 28 days start?). If the Contractor pays these Performance Damages
to the Employer during the DNP, then the Works or Section is deemed to have
passed these Tests after Completion.
If the Works, or a Section, fail to pass a Test after Completion and, by giving a Notice
to the Employer, the Contractor proposes to make adjustments or modifications to the
Works or such Section:
iii If the Contractor does not receive a Notice during the relevant DNP, the Contrac-
tor is relieved of the obligation to make such adjustments or modifications and the
Works or Section is deemed to have passed this Test after Completion.
If the Contractor incurs additional Cost as a result of any unreasonable delay by the Em-
ployer in permitting access to the Works or Section by the Contractor, either to investigate
the causes of a failure to pass a Test after Completion or to carry out any adjustments or
modifications, the Contractor is entitled to payment of any such Cost Plus Profit.
5 Design responsibility and liability
Contractor’s design is covered in the FIDIC 2017 Contracts by:

• Sub-Clause 4.1
• Clause 5
• Clause 5
Introduction
The general principle with the FIDIC 2017 Contracts is that when using the Red Book,
the Contractor undertakes the construction work in accordance with the Employer’s
design. However, the Works may include some Contractor-designed civil, mechanical,
electrical and/or construction works.
When using the Yellow Book and the Silver Book, the Contractor designs and pro-
vides the Works in accordance with the Employer’s Requirements.
Before considering the specific design provisions under the FIDIC 2017 Contracts,
let us first consider the principles of Design and Build.
The concept of Design and Build

Whilst many believe “Design and Build” where the Contractor is wholly responsible
for the design as well as the building of the project, to be a recent innovation, it is a
procurement method which has been in use for a very long time.
Design and Build can be used for any construction project, whether it be buildings,
infrastructure, process plants, etc.
In the building industry, for example, before the emergence of architecture as a pro-
fession, Employers used to procure buildings by a process of Design and Build, the Ar-
chitect appointing the various artisans, labour and materials to construct the projects,
so the Architect was effectively acting as the Contractor. In the nineteenth century
there was a separation of responsibility for design from responsibility for constructing
the project that led to the emergence of so called “traditional contracting”.
The separation of “Design” from “Build” generally within the construction indus-
try has been the source of many problems however, and has for a long time been the
source of many issues and disputes, particularly in managing and co-ordinating the
Design responsibility and liability 143
two doilies, and remains so, despite the more recent efforts of many to combine the
two disciplines.
As recently as the 1970s it became increasingly apparent to Employers that the “tra-
ditional contracting” process, where the design team was managed by the Architect or
the Engineer, who remained in the Employer’s team for the full duration of the project,
did not always fulfil their needs.
In response to this, many Employers who undertook construction work regularly
began to look to contracts that reduced their risk, and more specifically in this case
that transfer design responsibility to the Contractor, hence the growth of the design
and build concept, with its inherent advantages at operational level:
• The design and construction periods can overlap, leading to faster delivery of the
project.
• The Contractor can utilise its experience and preferred methods of construc-
tion to build rationally designed projects which minimise costs and programme
durations.
• The Temporary Works/Permanent Works interface and influence of design is
rationalised as both remain with the Contractor, and therefore, the Permanent
Works should be more “buildable”.
• The traditional design/construction interface and the risks associated with it are
transferred to the Contractor.
• The management of the design risk by the Contractor can result in greater cer-
tainty of the time, cost and performance and project objectives being met.
When Design and Build first came into use, Employers provided Employer’s Require-
ments, which specified what was required, so that the Contractor carried out the de-
sign from the start and then continued into the construction phase.
More recently and now common practice, the Employer’s design team who had
taken the design to a certain stage is novated to the Contractor, who is then responsi-
ble for completing the design and construction of the project using that design team.
From the Employer’s perspective, there are several advantages and disadvantages in
carrying out work using Design and Build:
Advantages of Design and Build
Price certainty
Design and Build Contracts are lump sum, where the Contractor commits himself to
a lump sum price, which includes the cost of Consultants to deliver the design element
for the project. Although it is a lump sum price the Contract Price can be adjusted to
incorporate Variations, Claims and any other express provisions within the Contracts
such as price escalation, changes in Laws, etc.
Single point responsibility

The primary interface is between the Employer (and/or the Engineer or Employer’s
Representative) and the Contractor. There is no need (or right) for the Employer
(and/or the Engineer or Employer’s Representative) to appoint, liaise with, manage
or pay for separate design consultants and external third parties such as regulatory
authorities. If there is an issue that issue is primarily between the Employer and the
Contractor.
Good For “Non Expert” clients

Appointing, liaising with and managing a wide range of Consultants requires a high
degree of knowledge and experience by Employers, who then find themselves having to
appoint expert advisors to enable them to make these appointments.
Most Employers do not wish to “become actively involved in the construction indus-
try”, they just want the Contractor to design and build the project.
Contractor’s Expertise
Many Contractors have a wealth of knowledge and experience, not only of construction,
but also of design and the co-ordination with construction, statutory requirements,
value engineering, etc. The Design and Build process capitalises on that knowledge
and experience. The emergence of Design and Build and more recently Early Contrac-
tor Involvement (ECI) has brought to the fore that knowledge and experience.
The Design and Build process increases the opportunities for harnessing the benefit
of the Contractor’s experience during the design stages of the project.
Many of the developments in procurement processes, and much of the work in fields
of study on value management, value engineering and buildability have had this pur-
pose in mind. The benefits of the integration of designers and builders are more eco-
nomic buildings as well as a more economic and effective production process.
Quicker Build Time

The traditional contracting process requires the design to be complete, or at least at
an advanced stage, then Bills of Quantities and other tender documents have to be
prepared before going out to tender.
With Design and Build, the Employer’s Requirements are drafted, there is no re-
quirement to provide Bills of Quantities, tender documents are prepared, then the
project goes out to tender. Design has either already commenced prior to tender and
the designers are novated to the successful Contractor, or the Contractor commences
the design process from the point he is appointed and manages the design process as
construction progresses, thereby leading to time savings in the tender process and also
during the construction phase.
Disadvantages of Design and Build

The author is of the opinion that these disadvantages below are “perceived” ather than
reality, and can be largely resolved:
Contractor designs and builds to a price

One reported disadvantage of Design and Build is that where there is a conflict be-
tween aesthetic quality and ease of fabrication, the latter will take precedence.
A further criticism has been that a Design and Build Contractor will put in the min-
imum design effort required to win the contract.
These two criticisms suggest strongly that quality, particularly design quality, will
suffer under this procurement process. However, this is not a valid criticism of the
process itself, but rather the quality of Employer’s Requirements and of some of the
people who may exercising it. As such, it is a criticism which can be made about any
process.
Clear, concise and complete Employer’s Requirements will enable the brief to be
met at the right price.
As stated above, Design and Build Contracts are lump sum where the Contractor
commits himself to a lump sum price, usually in competition with others with the Con-
tract Price only changed under various provisions under the Contract.
The Contractor will use the Employer’s Requirements as a basis for his pricing. He
is not going to include additional features which could increase his tender price.
It is important that when assessing tenders, Employers should consider what the Con-
tractor is offering for the price, and any additional value within the offer, for example
durable materials, low energy costs, low maintenance cost, rather than just the price itself.
Employer’s reduced control of design and quality

Many Employers perceive a loss of control of design and quality as a disadvantage.
Again, it starts with a robust set of Employer’s Requirements that are sufficiently ro-
bust, and also if the right Contractor is appointed, this should not be a disadvantage.
Also, if the Employer is novating the designer(s), the design needs to have been de-
veloped sufficiently before the novation.
Also, on larger projects, the Employer may retain its own shadow design team to
check on design and quality of construction.
If we consider the appointment of an Employer’s shadow design team, whilst the
Contractor carries full responsibility for completing the design and carrying out and
completing the construction, it is not unusual, particularly on larger and/or more com-
plex projects, for the Employer to retain his original design team or to appoint a new
team, where the original team has been novated, to advise him on design, quality and
other compliance issues.
If something goes wrong in the future, and there have been cases of structural collapse
or major fires which have involved deaths and major injuries, it is not sufficient to merely
state that “the design was the Contractor’s responsibility” as a problem may arise which
may lead to legal action where the Employer and other parties may also be implicated,
sometimes many years later in the case of incorrect design or latent defects.
This would be further complicated in cases where the Contractor has ceased trading
since carrying out the design and construction of the building or facility.
Conversely, some Employers perceive reduced control of design and quality as re-
duced involvement in design and quality and therefore an advantage because, as stated
previously, they do not wish to become involved in the construction process.
Employer’s reduced control of change costs

Again, because Design and Build is a lump sum procurement method, there is no
Bill of Quantities to check on the price of changes. Essentially, the best advice to
Employers in this respect is not to change the Employer’s Requirements once they
have appointed the Contractor.
There will never be the amount of detail that you would have within a bill of quan-
tities, but a well-structured pricing schedule will assist the Employer to obtain some
certainty of the value of a change.
Not good for complex projects

There is a perception amongst some Employers that Design and Build is good for more
straightforward projects, but for larger, more complex projects they would rather have
the design team “on their side”.
There is a wealth of large, complex projects around the world that have been carried
out successfully using Design and Build as the procurement method.
The key is again clear, concise and complete Employer’s Requirements.
Longer tender period

Employers must allow a longer period for Contractors to prepare their tender as they
are not pricing Bills of Quantities as with traditional contracts, but considering design
issues, planning, other statutory requirements and the ensuing costs.
Expensive for contractors to prepare tenders

As stated above, Employers must allow a longer period for Contractors to prepare
their tender as they are carrying out significantly more work in preparing their ten-
ders, and often liaising with design and consultants who offer their services on a “no
win – no fee” basis; however, Consultants can only survive on this basis if the Contrac-
tor has a successful strike rate in winning tenders.
Dealing with planning permission and other statutory consents

One issue that needs to be considered with Design and Build is the matter of planning
permission and various consents required prior to building a project and which Party
should be responsible for obtaining them.
There are various consents that may be required for a project, for example:
Planning permission/planning consent

Outline planning permission (permission to build something in a certain location) is
usually the responsibility of the Employer, but on a Design and Build contract, de-
tailed planning permission (permission to build something for which details are given)
may be the responsibility of the Employer, or may be assigned to the Contractor.
In some cases, the Contractor may also be responsible for gaining outline planning
permission for the project; however, this should be a “two stage” process so that if
outline planning permission is not obtained, the second stage would not proceed.
The Employer’s Requirements must clearly state the status of any planning permis-
sion, and who is responsible for obtaining any further consents and for discharging
any planning conditions.
Some Planning Conditions, such as colour or type of external materials, must be
discharged by the Contractor in designing and building the project….but the Contrac-
tor must be made aware of them.
However, other Planning Conditions, such as future use of the development and
maintaining access for others, can only be discharged by the Employer.
Building Control/Building Regulation Approval

Again, on a Design and Build contract it is usually the Contractor’s responsibility to
ensure that the design, and the construction of the project ultimately complies with
Building Control requirements, including the various statutory regulations.
Depending on what stage the design is at Contractor appointment stage, and any
novation provisions, the responsibility for building control can change from initially
the Employer to the Contractor.
Rights of Light/Oversailing Rights

A right to light is separate from planning permission. It is the Contractor’s responsi-
bility to ensure that the design and construction comply with these requirements.
Environmental ratings
If the Employer requires the design and construction of the building to achieve certain
environmental ratings, then this must be clearly stated within the Employer’s Require-
ments. The Contractor’s design and construction, then, has to meet the required rating.
Reasonable Skill and Care v Fitness for Purpose

Another area to consider with Design and Build is the terms “Reasonable Skill and
Care” and “Fitness for Purpose”.
“Reasonable skill and care” means designing to the level of an ordinary competent
person exercising a particular skill.
This is normally achieved by a Consultant designer following accepted practice and
complying with British Standards, Codes of Practice, etc.
In the absence of any express terms to the contrary, a designer will normally be re-
quired to design using “reasonable skill and care”.
“Fitness for purpose” means producing a building, part of a project or a product
fit, for its intended purpose. This is an absolute duty independent of negligence. In
the absence of any express terms to the contrary, a Contractor or Subcontractor will
normally be required to design “fit for purpose”.
Defining the purpose of a project or parts of it is extremely difficult, it is not suf-
ficient to state that the project is a highway for vehicles, a hospital for sick people or
a drainage scheme to drain water and/or reprocess water. It has to be defined in an
objective way, so it can be measured as to whether the Contractor’s design and con-
struction was truly fit for the intended purpose. The Contractor’s design then has to
satisfy the requirements, including statutory compliance.
Contrast this, as stated above, with the level of liability of a consultant (whether
acting for an Client or a Contractor) in providing a design service, where there is an
implied term that the consultants will carry out the service, in this case design, with
reasonable care and skill, which means designing to the level of an ordinary, but com-
petent person exercising a particular skill.
Some contracts will limit the Contractor’s Liability to that of a consultant i.e. rea-
sonable skill and care.
So, in the absence of any express terms to the contrary, a designer will normally be
required to design using “reasonable skill and care”. This is normally achieved by the
designer following accepted practice and complying with national standards, codes of
practice, etc.
In a Design and Build contract clearly, despite the Contractor believing that it has
offset its design obligations and liability to its designing consultant, it has to be aware
that it and its consultant have differing levels of care and liability.
Within the FIDIC contracts, note the differing Sub-Clause 4.1.
The differing wording of Clause 4.1:
• FIDIC 1999 Clause 4.1 (Contractor’s General Obligations) states that

the Contractor shall design, execute and complete the Works in accordance
with the Contract, and shall remedy any defects in the Works. When com-
pleted, the Works shall be fit for the purposes for which the Works are in-
tended as defined in the Contract.
• FIDIC 2017 Clause 4.1 (Contractor’s General Obligations) states that
the Contractor shall execute the Works in accordance with the Contract.
When completed, the Works (or Section or Part or major item of Plant, if
any) shall be fit for the purpose(s) for which they are intended, as defined and
described in the Employer’s Requirements (or, where no purpose(s) are so de-
fined and described, fit for their ordinary purpose(s)).
So FIDIC 1999 provided a far wider obligation on the Contractor by stating “as de-
fined in the Contract” rather than the FIDIC 2017 principle of “as defined and de-
scribed in the Employer’s Requirements”, which is more specific, though if no purpose
is defined in the Employer’s Requirements, or a purpose is stated outside the Employ-
er’s Requirements it rests on a potentially far wider “fit for their ordinary purposes”.
It is vital that Employers fully describe the purpose of the Works within the Em-
ployer’s Requirements objectively rather than subjectively so the Contractor knows
what his obligations are, rather than have any reliability on the fall back “fit for their
ordinary purposes”.
Note also that under Sub-Clause 17.4 (Indemnities by Contractor) the Contractor is
required to indemnify the Employer against all acts, errors or omissions by the Con-
tractor that result in the Works (or Section or Part or major item of Plant) not being fit
for the purpose(s) under Sub-Clause 4.1 [Contractor’s General Obligations].
Note that the burden of proof is on the Employer to identify a relevant act, error or
omission as opposed to simply demonstrating that the works are not fit for purpose.
Novation of designers
It is common, as stated above, for Employers to appoint Consultants to carry out early
design, prior to inviting tenders.
These designers may be involved in obtaining planning consents, preparing feasibil-
ity proposals, and also alternative design proposals.
The tenderers then prepare their bids on the basis that the Consultant’s team will be
novated to the successful Contractor, who will then be responsible for appointing the
team under a new agreement.
It is critical that the Employer, and his advisors, ensure that the wording of all nova-
tion agreements is established and agreed with Consultants before going out to tender,
so that the Contractor, the Employer and the Designers who are to be novated are fully
aware of the requirements, and in particular the Contractor is able to fully allow in
their price and programme for that novation.
Employer’s Requirements and Contractor’s Proposals

Employer’s Requirements
The Employer sets out his or her needs in whatever degree of detail is deemed ap-
propriate within the “Employer’s Requirements”. This can be anything from a
performance-related statement of objectives to a detailed and prescriptive statement
of what the Contractor is to provide.
The Employer’s Requirements should include all relevant criteria, including quality,
performance criteria and testing, but need not specify any matters which would be
imposed on the Works by the applicable law. Quality should be specified in terms that
are not so detailed as to reduce the Contractor’s design responsibilities, not so impre-
cise as to be difficult to enforce, and not subject to anybody’s future opinions which
tenderers may consider impossible to forecast.
The Contractor responds with the “Contractor’s Proposals”, which set out the way
he or she proposes to design and construct the Works.
When preparing the Employer’s Requirements, it is important that the correct balance
of information should be considered. If it is too prescriptive it will lead to all the tendering
Contractors submitting similar designs and prices. If not detailed enough, then none of the
tendering Contractors will produce a design which is as the Employer intended.
The scale of design work required from the Contractor depends on the extent to
which the Employer has already commissioned such work from others. The Contrac-
tor’s design input varies from one contract to another, ranging from the development
of a schematic design provided by others into a workable final design for construction,
to a full design process including proposals, sketch schemes and production infor-
mation based on a schedule of requirements and/or performance criteria. There will
usually be some negotiation between the Employer and the Contractor, with the aim
being to settle on an agreed set of Contractor’s Proposals.
These proposals will include the Tender Price, as well as the way it has been calculated.
The relationships between the consultants can be of several types, for example, an
Architect may be employed (or other designer) to put together some initial proposals.
These would form the basis of the Employer’s Requirements, and the Employer
could subsequently assign or novate the Architect to the Contractor.
Alternatively, the Employer may approach directly a Design and Build Contractor
who employs in-house consultants.
It is this inherent flexibility that is one of the strengths of Design and Build as a
method of procurement. This flexibility happens not just between projects, but also
within projects. For example, an Employer with a prestigious office building may
have some detailed requirements, comprehensively designed by an architectural team,
concerning the facade and the entrance lobby to the building. Once the Employer’s
Requirements and the Contractor’s Proposals are consistent, the Contract can be exe-
cuted, and the Contractor can implement the work.
The Contractor will be responsible for undertaking the design work in the Contrac-
tor’s Proposals, including the appointment of consultants if the Contractor does not
have the necessary skills in-house. As stated already, the Employer may also choose
to appoint consultants to monitor the various aspects of the work, essentially as a
“shadow” design team, but this is not always the case.
Some practitioners state that the disadvantage of Design and Build is where there is
a conflict between aesthetic quality and ease of fabrication, the latter will take prece-
dence. A further criticism has been that a Design and Build Contractor will put in the
minimum design effort required to win the contract.
These two criticisms suggest strongly that quality, particularly architectural quality,
will suffer under this procurement process. However, this is not a valid criticism of the
process itself, but rather the quality of Employer’s Requirements and of some of the
people who may exercise it.
As the Employer’s Requirements will be the primary document of reference it is
important that this document is as complete as possible at the point of tender.
It is the responsibility of the Engineer (or Employer’s Representative under the
Silver Book) to check that the Employer’s Requirements typically cover the following:
• Details of the Site, its boundaries and any site surveys or reports;
• Project description including any drawings/specifications already prepared;
• Purpose for which the building or facility is to be used;
• Statements of functional requirements, e.g. type and number of buildings, density
and mix of accommodation, schematic layouts and/or drawings;
• Specific requirements as to finishes and any other elements;
• The pricing schedule;
• Requirements regarding submission of the Contractor’s Documents;
• Requirements regarding records the Contractor’s Representative is to keep;
• Requirements for “as-built” drawings and other post-completion documents;
• Functions to be carried out by the Engineer (Employer’s Representative under the
Silver Book) and any other members of the Employer team;
• Details of any Provisional Sums;
• Statement of any planning restraints, e.g. restrictive covenants, and any permis-
sions already granted;
• Access restrictions;
• Availability of public utilities;
• Form of Contract and any amendments and any legal documents;
• Method of presentation of the Contractor’s Proposals within the Tender and
post-award;
• Various other information to be included in the contract, e.g. Project control re-
quirements and templates;
• Any other matters likely to affect the preparation of the Contractor’s Proposals.
As an example, the Employer wishes to invite tenders for the Design and Build of a
major government office building.
The Employer has certain essential requirements, but wishes to attract some inno-
vation in that Contractors will interpret the shape, size and appearance of the office
building in different ways subject to the approval of external bodies such as the local
planners and other legislative bodies.
The Employer’s Requirements should therefore comprise the following groups:
Essentials – Requirements that the Employer must have, for example, any specific
requirements including the purpose of the building; the number of people using the
office and the mix of needs such as open plan/cellular offices; and the need for other
facilities within the office, for example restaurant/canteen facilities, meeting rooms,
fitness rooms, car parking, etc.
Any other essentials should also be clearly stated, otherwise a tenderer may not
include them.
Preferences – Requirements that the Employer would prefer to have. For ex-
ample, the Employer may have a preference for a certain type of heating or cool-
ing system, but the Contractor may offer an alternative which is more efficient,
cheaper to run, etc.
The Employer may also state within his preferences that “equal and approved” may
be acceptable subject to the Contractor proving that it truly is “equal” and also that he
is prepared to approve it. As part of this proof the Contractor should consider issues
such as life cycle costing. For example, if the Contractor can prove that the alternative
heating or cooling system is equally efficient and easy to operate, but in the longer
term the alternative requires a higher level of maintenance then the Employer will
need to be made aware of this requirement. It is suggested that the preferences should
not apply to critical aspects of the Project.
Innovations – Something the Employer may not have thought of that the Contractor
believes could win the tender for him!
This is open to the Contractor to provide as added value his particular bid. For
instance, one Contractor may offer additional facilities, or particularly “green” en-
vironmental design/construction over and above the requirements of the Employer’s
Requirements and/or the relevant legislation.
If a Contractor feels that he can exceed the Employer’s Requirements it is essential
that the Contractor’s Proposals comply with the document (a compliant bid), but list
separately how he could exceed it, and any time and/or price implications should the
Employer wish to take up the options.
With regard to the Contractor’s Proposals, he will wish to demonstrate that his bid
is compliant with the Employer’s Requirements, though it is important that he is not
prescriptive about exactly what he will provide, as his design may evolve and develop
as the construction progresses. He may find new equipment and materials, or he may
wish to use some monies to offset any problems that may arise.
The author has been recently involved with drafting the Employer’s Requirements
for a major office project.
The Employer was interviewed and a questionnaire drafted to consider the follow-
ing as a basis for the Employer’s Requirements:
Quality
What are the overall requirements?
1 The size and use of the building. If no specific size of building is known, details of
exactly what the Employer intends to use the proposed building for and expected
number of occupants.
2 Open plan or cellular offices;
3 Any specific requirements, for example canteen facilities, gym, etc. Number of
floors, clear span or sub-divisions;
4 Need for future flexibility and expansion;
5 Specific heating requirements, lighting levels for various parts of the building, air
conditioning requirements, running costs and energy conservation requirements;
6 Car parking facilities;
7 Maintenance, running costs and life cycle cost factors. How long is the building
expected to last?
Time
1 When will the Employer require the building?
2 Is the starting date and/or completion date critical to the Employer?
3 Consider pre-tender activities such as planning consents, preparation of tender
documents and also other operations which need to be carried out before the Con-
tractor can be appointed and start on Site.
Cost
1 What is the budget for the building? How restricted is that budget? Is there a cost
plan and expected cash flow projections for the building? How long will it take to
prepare one?
2 Is the project being wholly funded by the Employer or is partial funding coming
from another source, for example grant aid? How much influence do the funders
have in terms of the design and construction of the building?
From these initial considerations the documentation to be prepared for tender can be
established:


From the above it can be readily seen that it is vital that the Employer defines how
much information and detail is required in the returned tender and it is crystallised
within the Employer’s Requirements.
The Contractor’s Proposals (where relevant)

In simple terms, the Contractor’s Proposals should reflect and directly respond to the
Employer’s Requirements.
The representative of the Employer must check that the Employer’s Requirements
clearly, concisely and correctly interpret the Employer’s brief.
If the Employer’s Requirements are detailed, the Contractor’s Proposals will be de-
tailed, if they are vague then the Contractor’s Proposals will also be vague, so the
Employer may not get what he or she expected.
As stated above, it is important to note that if the Contractor’s Proposals differ, or
fall short of the Employer’s Requirements.
The Contractor’s Proposals within his tender should incorporate the following:
• Plans, elevations, sections or typical details;

• Information about the structural design;
• Outline drawings of incorporated services;
• Specifications for materials and workmanship;
• Any alternative solutions departing from the brief;
• A method statement and construction programme;
• The price;
• A staged payment schedule (if appropriate);
• Proposed main Subcontractors and Suppliers.
It is important to note that in most contracts, if the Contractor’s Proposals subse-

quently fall short of the Employer’s Requirements then the Employer’s Requirements
will prevail.
The FIDIC 2017 requirements in respect of design
Red Book – Clause 4.1

Within the Red Book, specifically in respect of any design to be carried out by the
Contractor, Sub-Clause 4.1 states that except to the extent specified within the Con-
tract, the Contractor:

So, the default is that the Contractor does not have responsibility for the design of the
Permanent Works.
Sub-paragraphs (a) to (d) (below) specify the general requirements in respect of any
design to be carried out by the Contractor, unless otherwise defined in the Particular
Conditions.
These general requirements are also stated in 13.3 (b) as being applicable to any sub-
sequent Contractor-designed “value engineering” proposals, unless otherwise agreed
by both Parties.
Under the Red Book, if the Contractor is required to design any part of the Perma-
nent Works then unless the Particular Conditions state otherwise:
a The Contractor is required to prepare and submit to the Engineer for Review the
Contractor’s Documents (see below) for the part that the Contractor is respon-
sible for designing, and any other documents necessary for him to complete and
use the design during the execution of the Works and to instruct the Contractor’s
Personnel.
b The Contractor’s Documents are required to be in accordance with the Specifica-
tion and Drawings (so the Employer should make sure he has clearly stated the re-
quirements within the Specification and Drawings) and also to include additional
information which may be required by the Engineer to add to the Drawings for
co-ordination of each Party’s designs.
Very often design problems arise, not within each Party’s designs, but at the
interface between them and the co-ordination between different designers.
c Construction must not commence until a Notice of No-objection is given.
Note that the Engineer does not approve the Contractor’s design, but he may
issue a Notice stating that he does not object to the design.
As noted in Chapter 2, the FIDIC 2017 Contracts have a new term “No-
objection”, which is defined in Sub-Clause 1.1.55 (Silver Book Sub-Clause 1.1.48)
as meaning that “the Engineer/Employer has no objection to the Contractor’s Docu-
ments, or other documents submitted by the Contractor under these Conditions, and
such Contractor’s Documents or other documents may be used for the Works”.
The Engineer, having reviewed the Contractor’s Documents, does not actually
“approve” or “accept” them, but does “not object” to them.
In doing so the Engineer is not trying to absolve himself of liability, by only giv-
ing “No-objection”, but what he is doing is not objecting to the design, but at the
same time not absolving the Contractor of his liability in this case for his design
responsibility and the associated Contractor’s Documents, and this is how the
FIDIC 2017 No-objection notice should be viewed and applied.
d The Contractor may modify any design or Contractor’s Documents which have
previously been submitted for review by giving a notice to the Engineer, with rea-
sons for the modification.
e The Contractor must ensure that when the Works are completed they are fit for
the intended purpose, or where no purpose is intended or prescribed, fit for their
ordinary purpose (see also above)
This is an important matter to be borne in mind when the tender documents are
being written, in particular because of the absence of any reference to purposes
which may reasonably be inferred from the Contract. Although the risk is fairly
allocated to the Contractor, he may not be able to be indemnified by his insurers
or his subcontract designers.
f The Contractor undertakes that the design and the Contractor’s Documents com-
ply with the technical standards stated within the Specification and Laws.
Again, an important point, the Contractor’s design does not just have to comply
with the Contract, but also with the relevant Laws.
g If the Contractor has to submit As-Built Records and/or Operation and Mainte-
nance Manuals, then he must do so in sufficient detail for the Employer to operate,
maintain, dismantle, reassemble, adjust and repair the relevant part.
h If the Contractor is required to provide Training, the Contractor carries out train-
ing of the Employer’s Personnel in the operation and maintenance of this part.
Yellow and Silver Books – Clause 5
General Design Obligations

Within the Yellow and Silver Books, Clause 5 is entitled “Design” and covers all Con-
tractor’s design-related provisions.
As stated above, when using the Yellow Book and the Silver Book, the Contractor
designs and provides the Works in accordance with the Employer’s Requirements.
The requirement under FIDIC 2017 for the Contractor to provide details of his de-
signers is significantly more than in FIDIC 1999.
Under FIDIC 2017, the Design must be prepared by designers who:
a Are qualified, experienced professionals and competent in the disciplines of the

design for which they are responsible;
b Comply with the criteria stated in the Employer’s Requirements (if any are stated);
c Are qualified and entitled under applicable Laws to design the Works. This ob-
viously covers the basic qualifications, but there may also be a requirement for
specific permits or licences or grades to be able to carry out design in a specific
country.
The Contractor must also submit to the Engineer (Employer under the Silver Book) for
his consent, the name, address, particulars and experience of each proposed designer,
unless otherwise stated in the Employer’s Requirements.
Finally, the Contractor warrants that the Contractor, the Contractor’s designers
and design Subcontractors all have the experience, capability and competence neces-
sary to carry out the design as required.
The Contractor is also required to undertake that the designers (and any design
Subcontractors where relevant) will be available to attend discussions with the Engi-
neer and/or the Employer at all reasonable times until the issue of the Performance
Certificate.
So, in all there are quite prescriptive and significant requirements within the FIDIC
2017 in respect of the designers themselves.
After receiving a Notice to commence the Works, the Contractor is required to scru-
tinise the Employer’s Requirements, and if he discovers any error, fault or other defect
Sub-Clause 1.9 [Errors in the Employer’s Requirements] shall apply.
Under Sub-Clause 1.9 (see also Chapter 2) if the Contractor finds an error, fault or
defect in the Employer’s Requirements he gives a Notice to the Engineer within the
period stated in the Contract Data (if not stated, 42 days) calculated from the Com-
mencement Date. The Contractor may notify later than the period stated see (b) below.
The Engineer then determines whether or not there is an error, fault or defect in the
Employer’s Requirements, and also whether or not an experienced contractor exercis-
ing due care would have discovered the error, fault or other defect:
a When examining the Site and the Employer’s Requirements before submitting the
Tender; or
b If the Contractor’s Notice is given after the period stated in the Contract Data,
when scrutinising the Employer’s Requirements under Sub-Clause 5.1 [General
Design Obligations]; and
c What measures (if any) the Contractor is required to take to rectify the error, fault
or defect.
If, under sub-paragraph (b) above, an experienced contractor would not have discov-
ered the error, fault or other defect:
Note that Sub-Clause 1.9 is not included within the Silver Book.
The Silver Book states that the Employer is not responsible for any error, inaccuracy
or omission with the Employer’s Requirements, and any data or information received
by the Contractor from the Employer does not relieve the Contractor of any obligation
to provide the Works.
The only exclusions are:
a Data and information which is specifically stated within the Contract as being the
responsibility of the Employer;
b Definitions of intended purpose of the Works;
c Criteria for testing and performance of the completed Works;
d Data and information which cannot be verified by the Contractor.
Sub-Clause 5.2 within the FIDIC 1999 Contracts was one long clause, but has now
been subdivided within the FIDIC 2017 Contracts into three parts:
5.2.1 – Preparation by Contractor

5.2.2 – Review by Engineer (Employer under the Silver Book)
5.2.3 – Construction
Contractor’s Documents
The provisions related to Contractor’s design and submission and review of the Con-
tractor’s Documents have been restructured from the FIDIC 1999 Contracts, and
further detail added in a structured format, so that the Contractor submitting the
documents, and the Engineer (under the Yellow Book 2017) or the Employer (under
the Silver Book 2017) reviewing the documents know exactly what to do, and by when.
The Contractor’s Documents consist of the documents:
a Specified in the Employer’s Requirements (this needs to be carefully drafted with

the Employer’s Requirements);
b Required for the Contractor to satisfy all permits, permissions, licences and other
statutory/regulatory approvals which are his responsibility under the Contract;
c Described in respect of all “As-Built Records” and “Operation and Maintenance
Manuals”.
Unless otherwise stated in the Employer’s Requirements, the Contractor’s Documents

must be written in the language for communications defined in the Contract.
The Contractor must prepare all the Contractor’s Documents, and any other docu-
ments necessary to complete and implement the design during execution of the Works
and to instruct the Contractor’s Personnel. The Employer’s Personnel have the right to
inspect the preparation of all these documents.
Review by Engineer (Employer under the Silver Book)

The Engineer (Employer under the Silver Book) has a Review Period of not exceeding
21 days, which is calculated from the date on which the Engineer (Employer under the
Silver Book) receives a Contractor’s Document and a Contractor’s Notice.
“Contractor’s Document” excludes any of the Contractor’s Documents which are
not specified in the Employer’s Requirements as being required to be submitted for
Review, but includes all documents on which a specified Contractor’s Document relies
for completeness.
“Contractor’s Notice” means the Notice which states that the relevant Contractor’s
Document is considered by the Contractor to be ready for Review, and that it complies
with the Employer’s Requirements and the Conditions, or the extent to which it does
not do so.
The Engineer (Employer under the Silver Book), within the 21 day Review Period,
must give a Notice to the Contractor:
a Of No-objection (which may include comments); or

b That the Contractor’s Document fails to comply with the Employer’s Require-
ments and/or some other part of the Contract, with reasons.
Note, as previously stated, that the Engineer no longer approves the Contractor’s Doc-
uments, he gives a Notice of no-Objection.
If the Engineer (Engineer under the Silver Book) gives no Notice within the 21-day
Review Period, the Engineer is deemed to have given a Notice of No-objection to the
Contractor’s Document (provided that all other Contractor’s Documents on which
that Contractor’s Document relies (if any) have been given, or are deemed to have been
given, a Notice of No-objection).
If the Engineer (Employer under the Silver Book) instructs that further Contractor’s
Documents are reasonably required to demonstrate that the Contractor’s design com-
plies with the Contract, the Contractor must prepare them and submit them promptly
to the Engineer at the Contractor’s cost.
If the Engineer (Employer under the Silver Bok) gives a Notice that the Contractor’s
Documents fail to comply with the Employer’s Requirements and/or the Contract, the
Contractor must revise the Contractor’s Document and resubmit it to the Engineer for
Review, and the Review Period is calculated from the date that the Engineer receives it.
The Contractor is not entitled to an Extension of Time for any delay caused by this
resubmission and subsequent Review by the Engineer.
If the Employer incurs additional costs as a result of the resubmission and subse-
quent Review, the Employer shall be entitled subject to Sub-Clause 20.2 [Claims for
Payment and/or EOT] to payment by the Contractor of the costs reasonably incurred.
Construction
Except for Contractor’s Documents under Sub-Clause 5.6 [As-Built Records] and Sub-
Clause 5.7 [Operation and Maintenance Manuals], for each part of the Works requir-
ing Contractor’s Documents to be submitted for Review:
a Construction of such a part cannot commence until a Notice of No-objection is

given (or is deemed to have been given) by the Engineer for all the Contractor’s
Documents which are relevant.
This is a very critical provision.
b Construction of such a part shall be in accordance with these Contractor’s
Documents.
c The Contractor may modify any design or Contractor’s Documents which have
previously been submitted for Review, by giving a Notice to the Engineer with
reasons. If the Contractor has commenced construction of the part of the Works
to which such design or Contractor’s Documents are relevant:

Contractor’s undertaking
The Contractor is required to undertake that the design is in accordance with the Laws
of the Country, in addition to the documents forming the Contract. This is critical.
Technical standards and regulations

The Contractor’s Documents and the execution of the work are to be in accordance
with the Contract, and the applicable Laws in force when the Works or Section or Part
is taken over.
References in the Contract to published standards are to the edition applicable
on the Base Date i.e. 28 days prior to the tender submission date, unless stated
otherwise.
If changed standards come into force in the Country after the Base Date, the Con-
tractor promptly gives a Notice to the Engineer and submits proposals for compliance
with those changed standards. Note that changed standards do not always apply to
existing contracts.
To the extent that:
a The Engineer (Employer under the Silver Book) considers that compliance is re-
quired, and compliance requires change(s) to the execution of the Works; and
b The Contractor’s proposals for compliance constitute a Variation, then the Engi-
neer (Employer under the Silver Book) initiates a Variation.
Training
The Contractor is required to provide training of the Employer’s Personnel in
the operation and maintenance of the Works if and as required by the Employer’s
Requirements.
The Contractor is required to provide qualified and experienced staff to carry out
the training, also adequate training facilities and all training materials as necessary
and/or as stated in the Employer’s Requirements.
As-Built documents
The Contractor’s obligations to provide “As-Built Records” and “Operation and
Maintenance Manuals” have been expanded and are now set out separately in Sub-
Clauses 4.4.2 and 4.4.3.
The Contractor is required to prepare and update a complete set of “As-Built” Re-
cords and to issue them to the Engineer (Employer under the Silver Book). This would
be in the form of drawings, specifications, contact details, etc.
The format of the documents, any referencing system, electronic storage and other
relevant details of the As-Built Records must be strictly as stated in the Employer’s
Requirements.
The Contractor is required to submit to the Engineer (Employer under the Silver
Book):
a The As-Built Records for the Works or Section before the commencement of the
Tests on Completion; and
b Updated As-Built Records to the extent that any work is executed by the
Contractor:

Operation and Maintenance Manuals

The Contractor is to supply, prior to commencement of Tests on Completion, Opera-
tion and Maintenance Manuals. The Works are not deemed to be complete for taking
over until the Engineer (Employer under the Silver Book) has received them.
The format of the Operation and Maintenance Manuals is stated in the Employer’s
Requirements and must be in sufficient detail for the Employer to:

ii Operate and maintain the Works to ensure that the performance of the Works,
Section and/or Plant continues to comply with the performance criteria specified
in the Employer’s Requirements and the Schedule of Performance Guarantees.
It must also include an inventory of spare parts required for the Employer’s future
operation and maintenance of the Plant.
Before commencement of the Tests on Completion, the Contractor must submit pro-
visional operation and maintenance manuals for the Works or Section (as the case may
be) to the Engineer.
If, during the Tests on Completion, any error or defect is found in the provisional
Operation and Maintenance Manuals, the Contractor must promptly rectify the error
or defect at the Contractor’s risk and cost.
Before the issue of any Taking-Over Certificate, the final operation and mainte-
nance manuals must be submitted to the Engineer (Employer under the Silver Book).
Design error
Any design errors, ambiguities, inconsistencies, etc., in the Contractor’s Design or
Contractor’s Documents are to be corrected by the Contractor at his own cost.
6 Variations, Measurement
and Payment Procedures
Variations, Measurement and Payment Procedures are covered in the FIDIC 2017
Contracts by:

• Clause 12 – Measurement and Valuation
• Clause 13 – Variations and Adjustments
• Clause 14 – Contract Price and Payment
Clause 12 is only included within the Red Book, is entitled “Measurement and Valua-
tion” and covers all payment-related subjects:
Measurement and Valuation

The Works are to be measured and valued for payment in accordance with the
Contract.
The Engineer decides what is to be measured and when, and issues a Notice to the
Contractor not less than seven days before it is to be measured, stating what is to be
measured and when.
The Contractor’s Representative is then required to attend, and to supply any par-
ticulars required by the Engineer.
If, having been given notice, the Contractor fails to attend, the Engineer’s measure-
ment is deemed accepted as accurate.
If the Contractor attends, or examines the measurement records and the Engineer
and Contractor are unable to agree the measurement, then the Contractor gives a
Notice to the Engineer setting out the differences.
If the Contractor fails to give Notice within 14 days after attending the measurement
or receiving the measurement records the Contractor is deemed to have accepted.
If the Contractor issues a Notice, the Engineer proceeds to agree or determine the
measurement under Sub-Clause 3.7 and within the time limit for agreement.
162 Variations, Measurement and Payment Procedures
Until such time as the measurement is agreed, the Engineer issues a provisional
measurement for the purpose of payment.
In reality, it is usually the Contractor who physically carries out the measurement
of the Works and submits it to the Engineer, rather than the Engineer actually doing
the measurement.
The method of measurement is stated within the Contract Data, or in accordance
with the Bills of Quantities or other Schedule.
Valuation of the Works

A rate in the Bills of Quantities or price for an item of work may be amended if:
a The item is not included within the Bills of Quantities or other Schedule (so there
was never a rate or price for it);
b
i The measured quantity of the item is changed by more than 10% from the
quantity of this item in the Bill of Quantities or other Schedule;

c The work is instructed as a Variation.
The amended rate may be from relevant similar work in the Bill of Quantities or other
pricing schedule (with adjustments where necessary), for example dependent on the
quantity or the conditions under which the work is carried out, or by assessing reason-
able Cost plus Profit.
The cost which has been incurred and is not covered within the omission of any
work is determined by the Engineer.
Variations and Adjustments

Right to vary
The Engineer (Employer under the Silver Book) may vary the Works any time before
the issue of the Taking-Over Certificate for the Works.
The Contractor is required to comply with the Variation, subject to the following
exceptions:
a The varied work was Unforeseeable (note that “Unforeseeable” has a strict defini-
tion i.e. “not reasonably foreseeable by an experienced contractor by the Base Date”,
which is 28 days before the tender submission date).
b The Contractor cannot obtain the required Goods for the Variation.
c It will adversely affect the Contractor in terms of Health and Safety Obligations
or Protection of the Environment.
Variations, Measurement and Payment Procedures 163
There are two additional exceptions under the Yellow and Silver Books:

This express right of the Contractor, to object via a Notice to the Engineer (Em-
ployer under the Silver Book), is new to FIDIC 2017, previously the clause was open
ended.
Once the Contractor has given a Notice to the Engineer (Employer under the Silver
Book), the Engineer (Employer under the Silver Book) may then cancel, confirm or
vary the instruction.
Note that the FIDIC 1999 Contracts (Sub-Clause 13.1) only allowed the Contrac-
tor to object to a Variation if it could not readily obtain the Goods required for the
Variation.
The FIDIC 2017 Yellow and Silver Books also include that the Variation may ad-
versely affect the Contractor’s fitness for purpose obligation in respect of the com-
pleted Works.
Note that Sub-Clause 13.1 now expressly provides for the Parties to agree to the
omission of any work to be carried out by the Employers or others.
Under Clause 13.3, if the Parties agree to an omission of any work which is to be
carried out by others, the Contractor is entitled to loss of profit and any other losses
as a result of the omission. Note that this is specifically excluded from Sub-Clause 1.15
which states that neither Party is liable to the other for loss of profit.
Value engineering
The principle of value engineering is about eliminating or reducing unnecessary costs,
while also maintaining or improving function and quality of the finished product, es-
sentially increasing the value of that product.
But value engineering is not just about reducing costs, for example, there may be time
savings during construction, or capital cost may be increased initially to give cost savings,
efficiencies or other enhancements over the design life of a product i.e. life cycle costs.
Sub-Clause 13.2 allows the Contractor to submit a proposal to the Engineer (Em-
ployer under the Silver Book) which could
a Accelerate completion of the Works.

Acceleration can either mean increasing resources, working faster or working
longer hours so that Completion can be achieved by the Completion Date, in ef-
fect the Contractor is catching up to mitigate or recover a delay.
However, acceleration in this case is where the Contractor includes within his
proposal for increasing resources, working faster or working longer hours so that
Completion can be achieved before the Completion Date. It should be established
that as the Employer is paying or part paying for the acceleration measures, the
Contractor is not seeking to cover his own delays “under cover” of a proposal to
accelerate completion of the Works.
b Reduce the cost to the Employer of executing, maintaining or operating the Works.
This could be a short-term saving, or a long-term saving over the design life of a
component, for example, energy savings on electrical components.
c Improve the efficiency or value of the completed Works.
d Or provide some other benefit.
The Contractor is required to prepare and submit a proposal at his own expense, and
the Engineer (Employer under the Silver Book) responds as soon as practicable with
his consent or otherwise.
If the Engineer (Employer under the Silver Book) gives his consent, it is treated as
a Variation by Instruction, and will include consideration by the Engineer (Employer
under the Silver Book) of any sharing of benefit, costs or otherwise as stated in the
Particular Conditions.
Note that as any benefit to the Contractor is established through the Engineer’s
(Employer under the Silver Book) consideration, this may conclude with zero benefit
to the Contractor!
Note that the FIDIC 1999 Red Book provided for the Contractor to be paid a fee
equalling half (50%) of the difference between:
If (ii) exceeds (i) no fee is applicable.

It may be appropriate for a fixed percentage of any cost savings to be included
within the Contract as previously included within the FIDIC 1999 Contracts, so that
the Contractor may be motivated to submit value engineering proposals knowing the
financial benefit, not only to the Employer, but also to himself, as proposals may have
a significant costs in their drafting and submission, particularly where it may involve
a re-design by the Contractor.
Unless otherwise agreed, the Contractor is responsible for any re-design at his own
cost and the rules regarding Contractor’s design.
Variation procedure
Note first that the valuation of a Variation does not require the Contractor to give a
Notice under Clause 20.2 as if it was a claim, or to deal with it in that manner.
However, any claim for a breach of contract does require a Notice. So, if a Contrac-
tor has given Notice and the Engineer (Employer under the Silver Book) has confirmed
the instruction, the Contractor should immediately give notice under Clause 20.2 to
entitle a claim for additional payment and/or an extension of time if the Engineer (Em-
ployer under the Silver Book) later declines or fails to include the costs in its valuation
of the Variation.
Significantly, if the Engineer (Employer under the Silver Book) issues the Contrac-
tor with a Notice but it is not referred to as a Variation, but the Contractor consid-
ers that it is a Variation, the Contractor can immediately notify the Engineer that it
considers that a Variation has been instructed. This prevents any misunderstanding
between the Parties.
If the Engineer (Employer under the Silver Book) does not respond either to confirm
or revoke the instruction within seven days, the Engineer (Employer under the Silver
Book) will be deemed to have revoked the instruction.
The Engineer (Employer under the Silver Book) may initiate Variations of two types:
NB: the FIDIC 1999 Contracts provided for a Variation to be instructed, or a proposal
requested, the FIDIC 2017 Contracts deal with the matter in two parts: in greater de-
tail and in a more defined way.
Variation by Instruction
The Engineer (Employer under the Silver Book) may instruct a Variation by giving a
Notice to the Contractor in accordance with the Contract.
The Contractor is required to proceed with the work as instructed subject to the ex-
ceptions stated above, and within 28 days to submit to the Engineer (Employer under
the Silver Book) detailed particulars including:

iii The Contractor’s proposal for adjustment to the Contract Price, with supporting
particulars, including any prolongation costs to be incurred as a result of carrying
out the work.
As stated above, if the instruction is an omission of work, the Contractor may include
within his proposal an amount for loss of profit or any other losses as a result of the
omission. Note that the Contract generally excludes liability for loss of profit, conse-
quential loss, etc., but this is one of the few exceptions.
The Engineer (Employer under the Silver Book) then, under Sub-Clause 3.7, agrees
or determines:
i Any Extension of Time;

Variation by Request for Proposal

The Engineer (Employer under the Silver Book) may request a proposal, before in-
structing a Variation, by giving a Notice to the Contractor.
This facility was available to the Engineer (Employer under the Silver Book) under
the FIDIC 1999 Contracts, but is now more defined under the FIDIC 2017 Contracts.
The Contractor is required, similar to a Variation by Instruction, to respond to the
Notice as soon as practicable, by either:
a Submitting a proposal, which include the matters previously stated i.e.

i A description of the varied work which is to be carried out, including details
of the resources and methods which the Contractor proposes to adopt;

b Giving reasons why the Contractor cannot comply.
If the Contractor submits a proposal, the Engineer (Employer under the Silver Book)
must, as soon as practicable, respond by giving a Notice to the Contractor giving his
consent to the proposal, or otherwise.
If the Engineer (Employer under the Silver Book) accepts the proposal, which can
be with or without comments, the Engineer (Employer under the Silver Book) then
instructs the Variation based on that proposal.
Note that, if the Engineer (Employer under the Silver Book) does not accept the
proposal, again with or without comments, and if the Contractor has incurred Cost as
a result of submitting the proposal, the Contractor is entitled to payment of such Cost.
Provisional Sums
Provisional Sums are used in contracts where there are elements of work which are not
designed or cannot be sufficiently defined at the time of tender but may be required to
be done by the Contractor, and therefore, a sum of money is included by the Employer
within the Bill of Quantities or other pricing document to cover the item.
When the item is defined or able to be properly defined, the Engineer instructs re-
garding the Provisional Sum, the Contractor is given the information which allows
him to price it, the Provisional Sum is omitted and the price included in its stead (see
also Chapter 12).
The Engineer (Employer under the Silver Book) may give instructions regarding
Provisional Sums with the Contract Price being adjusted accordingly.
For each Provisional Sum, the Engineer (Employer under the Silver Book) may
instruct:
a Work to be executed by the Contractor, and for which adjustments to the Contract
Price are agreed or determined as a Variation by Instruction (see above); and/or
b Plant, Materials, works or services to be purchased from a nominated Subcon-
tractor (see Clause 5) or otherwise, and which there is included in the Contract
Price.
Note that in the case of (b) the amount due to the Contractor includes:
The Engineer’s (Employer under the Silver Book) instruction may include a require-
ment for the Contractor to submit quotations from the Contractor’s suppliers and/or
subcontractors for all, or some, of the work. This is a new provision within the FIDIC
2017 Contracts.
The Engineer (Employer under the Silver Book) may then give a Notice either in-
structing the Contractor to accept one of these quotations or revoking the instruction.
If the Engineer (Employer under the Silver Book) does not respond within seven
days of receiving the quotations, the Contractor is entitled to accept any of these quo-
tations at his discretion.
Daywork
For work of a minor or incidental nature, particularly where nothing exists within the
Contract to compare a price with (perhaps some minor demolition which is covered by
a Variation), the Engineer (Employer under the Silver Book) may instruct that a Varia-
tion be executed on a daywork basis and the work is valued according to the Daywork
Schedule. Note that such work has to be specifically instructed to be carried out on a
Daywork basis.
Before ordering Goods for such work (other than any Goods already priced in the
Daywork Schedule), the Contractor submits one or more quotations from the Con-
tractor’s suppliers and/or subcontractors to the Engineer (Employer under the Silver
Book).
The Engineer (Employer under the Silver Book) may instruct the Contractor to ac-
cept one of these quotations. It is not common for quotations to be required for work
carried out on daywork basis, but this provision is within the FIDIC 1999 and now
2017 Contracts.
If the Engineer (Employer under the Silver Book) does not instruct the Contractor
differently within seven days of receiving the quotations, the Contractor is entitled to
accept any of these quotations at his discretion.
The Contractor is required to deliver each day to the Engineer (Employer under
the Silver Book) accurate statements in duplicate (and one electronic copy), including
records of the resources used in executing the previous day’s work.
One copy of each statement, if correct and agreed, is be signed by the Engineer (Em-
ployer under the Silver Book) and promptly returned to the Contractor.
If not correct or agreed, the Engineer (Employer under the Silver Book) agrees or
determines the resources, and the date the Works are completed by the Contractor is
the date of commencement of the time limit for agreement under Sub-Clause 3.7.3.
In the next Statement submitted for payment, the Contractor then submits priced
statements of the agreed or determined resources to the Engineer (Employer under the
Silver Book), together with all applicable invoices, vouchers and accounts or receipts
in substantiation of any Goods used in the daywork (other than Goods priced in the
Daywork Schedule).
Unless otherwise stated in the Daywork Schedule, the rates and prices in the Day-
work Schedule are deemed to include taxes, overheads and profit.
Adjustments for Changes in Laws

This Sub-Clause was formerly titled in FIDIC 1999 “Adjustments for Changes in
Legislation”.
Under Sub-Clause 1.4 (Law and Language), the Contract is governed by the law of
the country stated in the Contract Data. The ruling language of the Contract and the
language for communications are also stated in the Contract Data.
Sub-Clause 1.13 (Compliance with Laws) requires that the Parties comply with all
applicable laws (which is obvious), but specifically that (unless stated within the Spec-
ification) the Employer is responsible for obtaining planning, zoning, building permit,
licences and/or approvals for the Permanent Works, and any other permits, permis-
sions, licenses and/or approvals described in the Specification as being obtained by the
Employer, and indemnifies the Contractor against the failure to do so.
The Contractor is required to give all notices, pay taxes, duties and fees, etc., and
to and obtain all other permits, permissions, licences and/or approvals in relation to
the execution of the Works and indemnifies the Employer against the failure to do so.
The Contractor is required to provide any assistance and all documentation, as
stated in the Specification, or reasonably required by the Employer, to allow the Em-
ployer to obtain any permit, permission, licence, approval, etc.
The Contractor is also required to comply with all permits, permissions, licences
and/or approvals obtained by the Employer.
If the Contractor suffers delay and/or incurs Cost as a result of the Employer’s delay
or failure to obtain any permit, permission, licence, approval, etc., the Contractor is
entitled to an Extension of Time and/or payment of Cost plus Profit.
The Changes in Laws provisions have been extended to apply to changes in permits
to be obtained by the Employer or a change in the requirements for any permit to be
obtained by the Contractor.
Similarly, if the Employer incurs additional costs as a result of the Contractor’s
failure to comply, the Employer is entitled to payment of these costs by the Contractor.
Note that the Contract Price that is increased or decreased due to changes in Laws
of the Country after the Base Date is paid to the Contractor.
The Sub-Clause defines what constitutes changes in laws, including the introduction
of new Laws, judicial or governmental interpretation of Laws, any permit, permission
of approval required to be obtained by the Employer or the Contractor. This is an
expansion of what was previously provided under FIDIC Sub-Clause 13.7 and could
now include changes in laws outside the country where the project is located so could
include for materials and/or plant purchased from abroad.
If the Contractor suffers delay, he is entitled to an Extension of Time and/or pay-
ment of Cost, subject to giving the appropriate Notice under Sub-Clause 20.2.
There is a change under the FIDIC 2017 Contracts in that, if there is a decrease in
Cost, the Employer is entitled to a reduction in the Price, so it provides a remedy either
way.
Note that if there is a Change in the Laws which requires an adjustment to the exe-
cution of the Works, the Contractor can promptly give a notice to the Engineer (Em-
ployer under the Silver Book) or the Engineer (Employer under the Silver Book) can
give a Notice to the Contractor. There is no time scale for issuing such Notice, other
than promptly.
This may then be dealt with as a Variation.
Adjustments for changes in cost

The FIDIC 1999 Contracts (Sub-Clause 13.8) contained a complex formula for cal-
culating the adjustments for changes in cost, based upon the assumed availability of
suitable cost indices. The formula defined the adjustment multiplier (Pn) to be applied
to the contract value of each month’s work.
This has now been replaced within the FIDIC 2017 Contracts with a reference to
“Schedule(s) of cost indexation” which may (or may not if the Sub-Clause is not appli-
cable) be included in the Contract, the Contractor being paid within Payment Certif-
icates for increases/decreases in cost by reference to the Schedule(s) calculated in the
currencies in which the Contract Price is payable.
The new provision provides a degree of flexibility for the Parties to agree on pay-
ment for fluctuations.
The Contractor is responsible, and is deemed to have allowed, for any increases/
decreases in cost not covered by the Schedule(s).
The Engineer (Employer under the Silver Book) uses a provisional index when issu-
ing Payment Certificates until the current cost index is available.
If the Contractor fails to complete the Works within the Time for Completion, the
adjustment of prices beyond the Time for Completion is calculated using either:
a Each index or price applicable on the date 49 days before the expiry of the Time
for Completion of the Works; or
b The current index or price, whichever is more favourable to the Employer.
The Contract Price

Sub-Clause 14.1 sets out the financial principles of the Contract:

a The Contract Price is set by the value of the Works in accordance with Sub-
Clause 12.3 (Valuation of the Works) (see above), and subject to adjustments,
additions and/or deductions, for example, for Variations, Claims, adjustments
for Changes in Laws or Costs, etc., in accordance with the Contract.
b The Contractor is required to pay all taxes, duties and fees.
c Any quantities in the Bills of Quantities are estimated, and subject to remeas-
urement. Although they are estimated they must reasonably reflect the type of
work to be done, and the relevant quantity is expected, though it may not be
possible to be totally accurate.
d The Contractor is required to submit to the Engineer within 28 days of the
Commencement Date a breakdown of each lump sum in the Schedules that
the Engineer (Employer under the Silver Book) can take account of for the
purpose of preparing Payment Certificates.

a The Contract Price is the lump sum Accepted Contract Amount, and subject
to adjustments, additions and/or deductions again, for example, for Varia-
tions, Claims, adjustments for Changes in Laws or Costs, etc., in accordance
with the Contract.
c Any quantities which may be set out in a Schedule are estimated quantities
and not to be taken as actual and correct.
d Any quantities or price data set out in a Schedule shall only be used for the
purposes stated within the Schedule.
iii Silver Book
a Payment for the Works is based on the lump sum Contract Price stated in
the Contract Agreement, and subject to adjustments, additions and/or deduc-
tions, for example, for Variations, Claims, adjustments for Changes in Laws
or Costs, etc., in accordance with the Contract.
c Any quantities which may be set out in a Schedule are estimated quantities
and not to be taken as actual and correct, and are only to be used for the pur-
poses stated within the Schedule.
Whilst the Contract Price for the Red, Yellow and Silver Books is different, the payment
process for the Red and Yellow Books is the same, but for the Silver Book is different.
Advance payment
Sub-Clause 14.2 is only applicable if an advance payment is stated in the Contract
Data.
The advance payment is an interest-free loan normally to cover mobilisation, ena-
bling work, placing orders for materials and subcontractors, and also for early design.
If an advance payment is to be made, the Contractor is required to obtain an ad-
vance payment Guarantee at its own cost, valid and enforceable until the advance
payment has been repaid and submits it to the Employer with a copy to the Engineer.
Note that the Advance Payment Guarantee is “in the form annexed to the Particular
Conditions”.
This was originally stated in the published Contracts as “based on the sample form
within the tender documents” but has been amended through the Errata (see Appendix).
If the advance payment specifies its expiry date, and the Contractor has not repaid
it within 28 days prior to its expiry date, the Contractor may extend the validity of the
Advance Payment Guarantee, and provide documentary evidence to the Employer
of that extension. If the Contractor does not issue this documentary evidence seven
days prior to the expiry date, the Employer is entitled to claim the full amount of the
advance payment that has not been repaid at the time.
The Engineer, under the Red and Yellow Books, issues an Advance Payment Cer-
tificate (note that under the Silver Book, the Employer makes the payment) within 14
days after:
a The Employer has received the Performance Security and the Advance Payment
Guarantee, and
b The Engineer (Employer under the Silver Book) has received a copy of the Con-
tractor’s application for advance payment.
The advance payment is repaid through pre-agreed percentage deductions in Payment

Certificates:
a Deductions commence within the Interim Payment Certificate (IPC) in which the
total of all certified interim payments the same as the currency of the advance
payment exceeds 10% of the portion of the Accepted Contract Amount payable in
that currency less Provisional Sums.
b Deductions are made at the amortisation rate of one quarter of the amount of
each IPC in the currencies and proportions of the advance payment until the ad-
vance payment has been repaid.
If the advance payment has not been repaid before the issue of the Taking-Over Cer-
tificate for the Works, or before termination under Clause 15 or Clause 16 or Clause 18
(Exceptional Events), the whole of the balance then becomes due and payable by the
Contractor to the Employer.
Application for interim payment

The Contractor is required to submit a Statement (one paper copy, one electronic copy
and any additional copies stated in the Contract Data) to the Engineer (in a form
acceptable to the Engineer) (under the Silver Book it is submitted to the Employer in
a form acceptable to the Employer) at the end each period of payment stated in the
Contract Data, showing in detail the amounts to which he considers himself entitled.
Note the FIDIC 1999 Contracts required that the Contractor submit a Statement in
six copies to the Engineer (Employer under the Silver Book).
As has been stated previously in Chapter 2 within the section on Progress Reports,
the author has never understood why six copies were required, and who needed them.
These Statements require a considerable amount of effort to compile them, then
there was also a significant amount of printing/photocopying to be done using a con-
siderable quantity of paper, in an age where many reports are submitted electronically.
The Statement must include:

iii Any amount to be deducted for retention;
iv Any amounts to be added/deducted for advance payments;

vi Any other amounts to added/deducted;
vii Any amounts to be added for Provisional Sums;
viii Any amounts to be added for release of Retention Money;
ix Any amounts to be deducted for the Contractor’s use of utilities provided by the
Employer;

Note that under the FIDIC 1999 Contracts, any monies awarded to the Contractor
by the Dispute Adjudication Board (DAB) had to be included within the Statement,
whereas under the FIDIC 2017 Contracts if the Contractor is awarded any money by a
Dispute Avoidance/Adjudication Board (DAAB) (Clause 21) no Statement is required
to be issued by the Contractor.
Schedule of Payments
Payment due to the Contractor may be pre-defined within the Contract as a Schedule
of Payments which become an estimate of contract values for the purposes of pay-
ment. There is then no provision for payment for unfixed materials.
If the Engineer (Employer under the Silver Book) does not agree that progress of
the Works is in accordance with the Schedule of Payments, he can agree or determine
revised instalments.
Within the FIDIC 1999 Contracts, the Engineer (Employer under the Silver Book)
could revise a Schedule of Payments only if progress was slower than expected, but the
Engineer (Employer under the Silver Book) may now amend the Schedule of Payments if
it “differs”, which could include the Contractor making faster progress; however, it is the
Engineer (Employer under the Silver Book) who “finds” the difference rather than the
Contractor informing him, although there is of course no problem with the Contractor
informing the Engineer (Employer under the Silver Book) of his faster progress.
If there is no Schedule of Payments, the Contractor submits estimates of the pay-
ments which it expects to become due during each period of three months.
The first estimate is submitted within 42 days after the Commencement Date, with
revised estimates submitted at intervals of three months, until the issue of the Taking-
Over Certificate for the Works.
Plant and Materials intended for the Works

This Sub-Clause provides for Plant and Materials where listed in the Contract Data
when shipped and/or payment when delivered to Site for incorporation into the Works
to be paid.
The Contractor is required to include:
• An amount to be added for Plant and Materials which have been shipped or deliv-
ered to the Site for incorporation in the Permanent Works;
• An amount to be deducted when the contract value of such Plant and Materials is
included as part of the Permanent Works.
These provisions were previously included within the FIDIC 1999 Contracts, provided
the Contractor could provide satisfactory evidence to the Engineer (Employer under
the Silver Book).
The Engineer (Employer under the Silver Book) agrees or determines each amount
to be added for Plant and Materials if the following conditions are fulfilled:
a The Contractor has:

b The Plant and Materials:


• Evidence of payment of freight and insurance;

• any other documents reasonably required by the Engineer (Employer under
the Silver Book);
• a written undertaking by the Contractor that the Contractor will deliver
to the Employer (prior to submitting the next Statement) a bank guarantee
in a form and issued by an entity to which the Employer gives consent, in
amounts and currencies equal to the amount due under this Sub-Clause.
• This guarantee is required to be in a similar form to the form described in
Sub-Clause 14.2.1 [Advance Payment Guarantee] and valid until the Plant
and Materials are properly stored on Site and protected against loss, damage
or deterioration.
a The Plant and Materials:

The amount agreed takes account of the evidence and documents required, and of the
contract value of the Plant and Materials.
Note that the Engineer (Employer under the Silver Book) has no obligation to cer-
tify any payment under this Sub-Clause until the Employer has received the bank
guarantee.
The sum to be certified by the Engineer (Employer under the Silver Book) in an IPC
is to be the equivalent of 80% of this agreed or determined amount.
Note that property in Materials and Plant does not pass to the Employer until they
are fully paid for, so this 80% provision means that the Contractor retains ownership
far longer than one might expect or wish for.
The currencies for this certified sum must be the same as those in which payment
will become due when the contract value is included.
At that time, the Payment Certificate includes the applicable amount to be deducted
which must be equivalent to, and in the same currencies and proportions as, this addi-
tional amount for the relevant Plant and Materials.
Issue of the IPC (Red and Yellow Book)/Interim Payments (Silver Book)
Sub-Clause 14.6 has been restructured and expanded within the FIDIC 2017 Con-
tracts, which introduce the phrase “IPC” (Interim Payment Certificate).
Note that no IPC is issued under the Silver book, the Employer issues a Notice.
Provided the Employer has received and approved the Performance Security, and
the Contractor has appointed the Contractor’s Representative (additional require-
ment from FIDIC 1999), the Engineer (Employer under the Silver Book) issues an IPC
to the Employer (copied to the Contractor) (under the Silver Book, a Notice from the
Employer) within 28 days of receiving each Contractor’s Statement. The IPC must
clearly show any difference between the Contractor’s Statement and the amount cer-
tified for payment.
Note that under FIDIC 1999 the Certificate was only issued to the Employer, and
the Engineer was not expressly required to explain the difference to the Contractor
between what the Contractor had applied for, and what it was to be paid.
There is provision in the Contract for a minimum amount of Payment Certificate to
be stated in the Appendix to Tender to prevent having to issue Certificates for minor
amounts.
An IPC (interim payment under the Silver Book) must not be withheld for any other
reason, although:
a If anything supplied or work done by the Contractor is not in accordance with the
Contract, the estimated cost of rectification or replacement (whichever is relevant)
may be withheld until it has been completed (a quite subjective calculation).
b If the Contractor fails to perform anything in accordance with the Contract, the
value of this failure may be withheld until the work or obligation has been per-
formed (another subjective calculation).
c Note that, if the Engineer (Employer under the Silver Book) finds any significant
error or discrepancy in the Statement or supporting documents, the amount of
the IPC may take account of the extent to which this error or discrepancy has
prevented or prejudiced proper investigation of the amounts in the Statement un-
til such error or discrepancy is corrected in a subsequent Statement. This can be
quite another quite subjective provision in terms of what the Engineer (Employer
under the Silver Book) can do, rather than a simple adjustment of the error.
For each amount withheld, in the supporting particulars for the IPC the Engineer
(Employee under the Silver Book) is required to detail his calculation of the amount
and state the reasons for it being withheld.
The Engineer (Employer under the Silver Book) may, within any Payment Certifi-
cate, make any correction or modification that should properly be made to any previ-
ous Payment Certificate.
Note that a Payment Certificate is not deemed to indicate the Engineer’s (Employer
under the Silver Book) acceptance, approval, consent or Notice of No-objection to any
Contractor’s Document or to (any part of) the Works (this is a common provision). The
Contractor remains responsible (and liable) for all of his obligations under the Contract
There is a new provision in that if the Contractor considers that an IPC does not in-
clude any amounts to which it is entitled, these amounts are to be identified in the next
Statement. The Engineer (Employer under the Silver Book) then makes any correction
or modification that should properly be made in the next Payment Certificate.
If:
a The Contractor is not satisfied that this next Payment Certificate includes the
identified amounts, and
b The identified amounts do not concern a matter for which the Engineer (Employer
under the Silver Book) is already carrying out his/her duties under Sub-Clause 3.7
[Agreement or Determination],
For example, there may be a claim by the Employer against the Contractor
which is in the process of being determined by the Engineer (Employer under the
Silver Book). The Employer or Engineer cannot deduct an amount for the claim
until it has been properly determined.
the Contractor may, by giving a Notice, refer the matter to the Engineer for Agreement
or Determination.
Payment
• The Employer is required to pay the advanced payment (in accordance with the
Advance Payment Certificate) and within the period stated in the Contract Data,
and if none is stated, within 21 days after the Employer receives the Advance Pay-
ment Certificate.
• Payments certified within each IPC are made within the period stated in the Con-
tract Data, if no period is stated, within 56 days after the Engineer (Employer
under the Silver Book) receives the Statement with supporting documents from
the Contractor, for an IPC and 28 days after the Employer receives the IPC for a
Partially Agreed Final Statement (PAFS, which is at best confusing!).
• Payments certified within the Final Payment Certificate (FPC) (note there is no
FPC under the Silver Book) within the period stated in the Contract Data if no pe-
riod is stated, within 56 days after the Engineer (Employer under the Silver Book)
receives the Statement with supporting documents from the Contractor.
Payment of the amount due in each currency is to be made into the bank account,
nominated by the Contractor, and in the payment country for this particular currency
as specified in the Contract.
Delayed payment
If the Contractor does not receive payment from the Employer as required by the Con-
tract (above), then he is entitled to be paid financing charges on the amount due until
that amount due has been paid in full.
The amount of the financing charges is calculated from the date the payment period
expired, rather than the date of the IPC and is calculated at the annual rate of 3%,
unless a different rate is stated in the Contract Data.
Note that the financing charges are due to the Contractor who is entitled to payment
from the Employer, without the need for the Contractor to submit a Statement or any
formal Notice.
Note also that under some legislations the Contractor may suspend the Works or
terminate the Contract for late payment, subject to certain conditions, so this should
be considered by both Parties.
Release of retention money

Normal rules apply here i.e. first half of Retention Money repaid on completion of the
Works; second half repaid at the end of the Defects Notification Period.
The first half of Retention Money is certified by the Engineer (Employer under the
Silver Book) upon the issue of the Taking-Over Certificate, the outstanding balance
being certified upon the expiry of the Defects Notification Periods.
After the issue of the Taking-Over Certificate for:
a The Works, the Contractor includes for release of the first half of the Retention
Money in a Statement;
b A Section, the Contractor includes for release of the relevant percentage of the
first half of the Retention Money in a Statement.
After the latest of the expiry dates of the Defects Notification Periods, the Contrac-
tor includes the second half of the Retention Money in a Statement promptly after
such latest date.
If a Taking-Over Certificate was (or was deemed to have been) issued for a Section,
the Contractor includes the relevant percentage of the second half of the Retention
Money in a Statement promptly after the expiry date of the Defects Notification Pe-
riod for that Section.
In the next IPC after the Engineer (Employer under the Silver Book) receives such a
Statement, the Engineer (Employer under the Silver Book) certifies the release of the
corresponding amount of Retention Money.
However, when certifying any release of Retention Money, if any work remains to be
executed under Clause 11 [Defects after Taking Over], the Engineer (Employer under
the Silver Book) is entitled to withhold certification of the estimated cost of this work
until it has been executed.
Note, the relevant percentage for each Section is the percentage value of the Section
as stated in the Contract Data.
If the percentage value of a Section is not stated in the Contract Data, no percentage
of either half of the Retention Money is to be released under this Sub-Clause in respect
of such Section.
Note that under the FIDIC 1999 Contracts, the Engineer (Employer under the
Silver Book) certified the payment of the first portion of Retention Money when the
Taking-Over Certificate was issued then the final portion after the latest of the expiry
dates of the Defects Notification Periods, but under the FIDIC 2017 Contracts the
Contractor has to issue a Statement first, so payment will be later under the FIDIC
2017 Contracts. This new provision marks a considerable negative change as far as
Contractors are concerned.
Statement at Completion
Within 84 days after the Date of Completion of the Works, the Contractor submits to
the Engineer (Employer under the Silver Book) a Statement, with supporting docu-
ments, showing:
a The value of all work done in accordance with the Contract up to the Date of
Completion of the Works;
b Any further sums which the Contractor considers to be due at the Date of Com-
pletion of the Works;
c An estimate of any other amounts which the Contractor considers will have
become due after the Date of Completion of the Works under the Contract or
otherwise.
These estimated amounts are shown separately (to those of sub-paragraphs (a) and
(b) above) and include estimated amounts for:

iii Any matter for which a Notice of Dissatisfaction has been given under Sub-Clause
21.4.
This Sub-Clause has always been required to include any amounts the Contractor
considers to be due, but within the FIDIC 2017 Contracts it has been expanded to in-
clude estimated amounts for which the Engineer (Employer under the Silver Book) is
considering, or which has been, or is about to be referred to the DAAB.
The Engineer (Employer under the Silver Book) then issues an IPC in accordance
with Sub-Clause 14.6 [Issue of IPC].
Final Statement
The provision for a Final Statement has been restructured from the FIDIC 1999
Contracts.
Submission by the Contractor of any Statement is not to be delayed by reason of any
referral under Sub-Clause 21.4 for a DAAB’s Decision, or any arbitration under Sub-
Clause 21.6, it must be issued anyway.
(i) Draft Final Statement

Within 56 days after the issue of the Performance Certificate, the Contractor must
submit to the Engineer (Employer under the Silver Book), a draft Final Statement.
This Statement must:
a Be in the same form as Statements previously submitted by the Contractor under

the Contract;
b Be submitted in one paper-original, one electronic copy and additional paper cop-
ies (if any) as stated in the Contract Data;
c Show in detail, with supporting documents:

Except for any amount under sub-paragraph (iii) above, if the Engineer (Employer un-
der the Silver Book) disagrees with or cannot verify any part of the draft Final Statement,
the Engineer (Employer under the Silver Book) promptly gives a Notice to the Contractor.
The Contractor is then required to submit further information as the Engineer (Em-
ployer under the Silver Book) may “reasonably” require within the time stated in the
Notice, and must make such changes in the draft as may be agreed between them.
(ii) Agreed Final Statement

If there are no amounts under Sub-Clause 14.11.1 [Draft Final Statement], the Con-
tractor prepares and submit to the Engineer the Final Statement as agreed.
However if:
a There are amounts, and/or

b Following discussions between the Engineer (Employer under the Silver Book)
and the Contractor, it becomes evident that they cannot agree any amount(s) in
the draft Final Statement, the Contractor prepares and submits to the Engineer a
Statement, identifying separately: the agreed amounts, the estimated amounts and
the disagreed amount(s), referred to as the “Partially Agreed Final Statement”.
Whilst the notion of a “Partially Agreed Final Statement” seems to introduce a level of
uncertainty it does formalise what is agreed and what is not agreed, so it does provide
a workable part-time solution.
Note the difference between payment for an FPC which is 56 days after receipt by
the Employer, whereas a PAFS which then falls under the IPC process is paid 28 days
after receipt by the Employer.
Discharge
The FIDIC 1999 Contracts required that the Contractor, when submitting the Final
Statement, submitted a written discharge confirming that the Final Statement rep-
resented full and final settlement of all monies due under the Contract. And became
effective when the Contractor had received the Performance Security and the out-
standing balance of monies due.
Under the FIDIC 2017 Contracts, the discharge can exclude amounts in respect of
any Dispute for which a DAAB is proceeding or any arbitration which is in progress,
but not amounts still being dealt with by the Engineer (Employer under the Silver
Book) and have not yet become Disputes, which would be a risk for Contractors, but
is required before a FPC is issued!
When submitting the Final Statement, or the PAFS, the Contractor is required to sub-
mit a discharge which confirms that the total of such Statement represents full and final
settlement of all monies due to the Contractor under or in connection with the Contract.
As stated, this discharge may state that the total of the Statement is subject to any
payment that may become due in respect of any Dispute for which a DAAB proceed-
ing or arbitration is in progress under Sub-Clause 21.6 [Arbitration] and/or that it be-
comes effective after the Contractor has received:
a Full payment of the amount certified in the FPC; and

b The Performance Security.
If the Contractor fails to submit this discharge, it is deemed to have been submitted
and to have become effective when the conditions of sub-paragraphs (a) and (b) have
been fulfilled.
Note that if the Contractor does not submit a discharge, there is a deeming provi-
sion that if the Contractor has received full payment of the amount certified in the
FPC and the Performance Security then the discharge is deemed to have been fulfilled.
Note, however, that the FPC cannot be issued until the discharge is provided!
A discharge under this Sub-Clause does not affect either Party’s liability or enti-
tlement in respect of any Dispute for which a DAAB proceeding or arbitration is in
progress under Clause 21.
Issue of the FPC (Final Payment under the Silver Book)

The FPC is issued by the Engineer to the Employer, with a copy to the Contractor within
28 days after receiving the Final Statement or the PAFS, and the discharge under Sub-
Clause 14.12 (under the Silver Book the Employer gives a Notice to the Contractor).
The FPC (Notice under the Silver Book) states:
a The amount which the Engineer (Employer under the Silver Book) considers is
finally due, including any additions and/or deductions which have become due
under Sub-Clause 3.7 [Agreement or Determination].
b After giving credit to the Employer for all amounts previously paid by the Employer
and for all sums to which the Employer is entitled, and after giving credit to the Con-
tractor for all amounts (if any) previously paid by the Contractor and/or received by
the Employer under the Performance Security, the balance (if any) is due from the
Employer to the Contractor or from the Contractor to the Employer. (This is a new
provision not previously provided for within the FIDIC 1999 Contracts.)
If the Contractor has not submitted a draft Final Statement within the time specified,
the Engineer requests the Contractor to do so.
If the Contractor fails to do so within a period of 28 days, the Engineer (Employer un-
der the Silver Book) issues the FPC (Employer under the Silver Book gives a Notice), for
such an amount as the Engineer (Employer under the Silver Book) considers to be due.
If:
Cessation of Employer’s liability

The Employer is not liable to the Contractor for any matter or thing under or in con-
nection with the Contract or execution of the Works, except to the extent that the
Contractor shall have included an amount expressly for it in:
a The Final Statement or PAFS; and

b (except for matters or things arising after the issue of the Taking-Over Certificate
for the Works) the Statement under Sub-Clause 14.10 [Statement at Completion].
Note that under FIDIC 2017, unless the Contractor makes or has made a Claim under
Sub-Clause 20.2 [Claims for Payment and/or EOT] in respect of an amount or amounts
under the FPC within 56 days of receiving a copy of the FPC the Contractor is deemed
to have accepted the amounts so certified. The Contractor is again strongly minded to
submit his claims in a timely manner to prevent this occurring.
The Employer then has no further liability to the Contractor, other than to pay the
amount due under the FPC and to return the Performance Security to the Contractor.
However, this Sub-Clause does not limit the Employer’s liability under the Employ-
er’s indemnification obligations, or the Employer’s liability in any case of fraud, gross
negligence, deliberate default or reckless misconduct by the Employer.
Note that “gross negligence” can be interpreted in differing ways under differing
legislations.
Currencies of payment
As FIDIC is an international contract it provides for stating, within the Contract
Data, the currency that the Contract Price is to be paid in.
Sometimes the Contract Price may be paid in more than one currency, for example,
in the Middle East it may be paid in U.S. Dollars ($), which reflects the oil price, and
also in the country’s local currency.
If the Contract Price is paid in more than one currency, the proportions or amounts
of the Local and Foreign Currencies, and the fixed rates of exchange to be used for
calculating the payments, are as stated in the Contract Data. If there are no rates of
exchange stated within the Contract Data, the rates are prevailing on the Base Date
and published by the central bank of the Country.
If an amount is agreed in respect of a Variation, value engineering, Delay Damages
and any other payments to or from the Parties, the payment is in the applicable cur-
rencies also specified.
7 Progress, Delays, Extensions
of Time and Completion
Progress, Delays, Extensions of Time and Completion are covered in the FIDIC 2017
Contracts by:

• Clause 8 – Commencement, Delays and Suspension
Introduction
Commencement of Works
The Engineer (Employer under the Silver Book) is required to give the Contractor not
less than 14 days’ notice before the Commencement Date, this normally being within
42 days after the Contractor receives the Letter of Acceptance.
Previously, within the 1999 FIDIC contracts, the notice period required was seven
days.
Note that the Contractor is not specifically required to start the Works on the Com-
mencement Date, but as soon as practicable after it.
The Contract requires that the Contractor proceeds with the Works with “due ex-
pedition” which is an old term which means that the Contractor has to apply him-
self to continuing with the work throughout the project through to completion. Other
contracts use the phrase “regularly and diligently”, which essentially means the same
thing.
Time for Completion

The Contractor is required to complete the whole of the Works within the Time for
Completion, which is stated in the Contract Data as a specific period of days.
Any Sections must also be described within the Contract Data, which defines what
the Section is, the percentage of the Accepted Contract Amount that the Section rep-
resents (for the purpose of calculating release of Retention), the time scale (in days) for
completing each Section and any Delay Damages applicable to that Section.
182 Progress, Delays, Extensions of Time, Completion
The issue of whether a construction project has achieved physical Completion has
long been the source of many disputes within the construction industry, and can often
be quite subjective.
This is a critical event as most of the Standard Forms of Contract rely upon the
issue of a Certificate issued by the Employer’s Contract Administrator (in the case of
FIDIC contracts the Engineer or the Employer/Employer’s Representative) to trigger
such matters as the release of the first half of retention, and stop liability for liquidated
damages/delay damages, and care and insurance of the Works.
Given the importance of this matter it is somewhat surprising that contracts used
throughout the construction industry do not define “completion” and also, they use
terms such as “Practical Completion” or “Substantial Completion”, which then leaves
the matter to the discretion of the Employer’s Contract Administrator.
Various attempts have been made by practitioners, the courts and others over the years
to form a definitive opinion for Completion, conclusions including that the obligation on
the Contractor to complete the Works by the Date fixed for Completion must be an obliga-
tion to complete the Works in the sense in which the words are “practically complete” i.e. it
can be used as intended. If completion meant “down to the last detail”, however trivial and
unimportant, it would constitute a penalty clause and would be unenforceable.
Because a project can seldom if ever be built as precisely as required by the Con-
tract, and if completion is something which occurs only after all defects, shrinkages
and other faults have been remedied and a Certificate to that effect has been given, it
would make the liquidated damages/delay damages provision unworkable”.
Under the FIDIC contracts, the Contractor not only has to physically complete the
Works, but the Works have to pass various tests, and also, amongst other provisions,
there may be a requirement for As-Built documentation before a Taking-Over Certif-
icate can be issued.
The Contractor’s programme generally

The programme often referred to in the geographical areas FIDIC covers as “the sched-
ule” is an often understated, and to be honest, undervalued element of a construction
contract, some published contracts saying very little about what the Contractor should
produce and submit, and the status of that programme within the Contract.
Having said that, what the Contractor should produce and submit should be at least
what the Contract requires, in order to properly describe in advance what he is going
to do, what he requires others to do in order that he can do it, when and how he is
planning to do it and with what resources.
This then allows for effective progress forecasting and reporting, and is the Con-
tractor’s best ally should he submit a claim, not only for delays, but also for additional
cost recovery.
In fact, a properly constructed and maintained programme will make life very diffi-
cult for the Contractor who wishes to submit a claim, and for the Engineer/Employer’s
Representative who has to determine any entitlement.
The FIDIC 2017 contracts, which we will be discussing shortly in terms of pro-
gramme requirements, have been substantially enlarged in terms of programme re-
quirements, which is a welcome improvement, and the author believes that the FIDIC
2017 contracts are starting to appear as more of a “best practice project management”
Progress, Delays, Extensions of Time, Completion 183
tool in terms of programme, risk management and claims, rather than just a series of
obligations upon the Parties.
Whilst programme should be updated on a regular basis, it is essential that the
Parties never lose sight of the baseline programme, the one that was submitted at the
commencement of the work, before all the changes, delays, risks, etc., came into being,
so that if necessary it can be compared with a current programme when submitting
claims, i.e. what was intended at the commencement of the Works versus what actually
occurred.
The type of programme to be submitted by the Contractor to fulfil his obligations
under Clause 8.3 of the FIDIC 2017 contracts is not prescribed within the contract,
other than that the Sub-Clause refers to one paper copy, one electronic copy and addi-
tional copies stipulated in the Contract Data.
Also, that the programme is required to be prepared and submitted using the soft-
ware stated in the Specification, or the software acceptable to the Engineer.
A variety of techniques are available for programming a project, and these need to
be considered in the light of the type of project in hand, the Contractor’s preferences
and any stipulations in the contract documentation.
Briefly, the types of programme in common use include:

iii Project Network Techniques Precedence Diagrams, Network Analysis, Critical
Path Analysis.
Bar charts
The bar chart (Gantt chart) is the most commonly used programme within the con-
struction industry, introduced by Henry Laurence Gantt in the early 1900s, and they
have now become the basis of the modern bar chart, developed as a graphical rep-
resentation of construction sequences.
Bar charts are the most commonly used method of depicting relationships between
construction activities. They are a simple format readily understood at all levels of
management and can be used to show all stages of the planning process, from pre-
tender/pre-contract and on into contract planning. They also assist in showing the
relationship between the pre-tender programme, master programme and short-term
programmes.
Bar charts are well suited to depicting construction sequences and can be used to
link the programme prepared at the tender stage with the master programme and
likewise with the short-term planning throughout the contract period. Bar charts are
easily and readily updated at weekly and monthly time intervals. A colour coding sys-
tem may be introduced for progress recording which provides an accurate record of
the contract’s progress for future reference purposes.
They can also be easily updated, at weekly/monthly time intervals for review pur-
poses and progress reports.
Resources may be readily related to the rate of working – labour histograms, value
forecasts (value/time), and cumulative labour and plant forecasts in the form of project
budgets.
The programme may also form the basis of financial/cash flow forecasting for both
the Employer and the Contractor.
The use of computer software enables bar chart relationships to be readily developed
and amended on the computer screen. Major projects within the larger construction
organisations are currently being managed with the aid of such software. The software
allows the master programme, stage programmes and short-term planning procedures
to be linked together to form a comprehensive planning and reporting tool.
Developments in project management computer software have led to resurgence in
the use of bar charts – especially linked bar chart relationships.
The software enables the user to present bar charts in a professional manner for the
pre-tender and master programmes which can be readily updated on site with the aid
of a notebook computer.
Relationships used on linked bar charts include:
• Finish to start relationships;

• Start to start relationships;
• Finish to finish relationships.
Elemental Trend Analysis (“Line of Balance”)

A line of balance diagram comprises a series of inclined lines which represent the rate
of working between repetitive activities in a construction sequence.
The application of line of balance to construction was pioneered in the 1960s, and
became recognised as being the best planning method for repetitive work.
It is not unusual to see bar chart displays incorporating a line of balance diagram to
illustrate the programming of any repetitive sections of the Works.
Line of balance is a visual display of the rate of working from one activity to another.
The ideal line of balance display shows all balance lines running parallel to each
other; in practice this is often difficult to achieve.
Project Network Analysis – The Critical Path Method

In early 1957, the basic principles of CPM (Critical Path Method) were developed.
A test group was set up to apply the new technique to a chemical plant project in
Kentucky.
The development of PERT (Program Evaluation and Review Technique) was origi-
nated by the Special Projects Office for the Polaris missile programme.
In the UK, development work on CPM was undertaken by the Building Research
Establishment and a number of papers were published by Nuttall and Jeans in 1960.
The initial applications developed were only suitable for the large complex projects,
and required the assistance of a mainframe computer to analyse the data.
Through the discipline of CPM, the user can achieve better planning due to the
logical approach undertaken during the development of the construction sequence.
Identification of critical activities on which effort and resources can be applied aids
the Contractor’s management. This enables “management by exception” to be applied
to critical activities.
CPM allows the planner to express his ideas in graphical form. Recent developments
in project management software allow networking on the screen to be carried out.
The planner has the facility to assign priorities to labour, plant, material and Sub-
contractor resources to each activity on the network.
Bar chart analysis aids understanding at site management level for both the Con-
tractor and Client.
The effect of changes and variations can be evaluated, and time cost optimisation
analysis undertaken.
Cash flow assessments and valuation forecasting information may be output in
graphical format and readily updated during the project.
Using notebook and site-based computers, the progress situation may be speedily
analysed, and a variety of management reports made available.
Some terms used in programming

Float
Float is spare time in a programme, normally shown between activities (free float) and
at the end of the project (terminal float). There is no legal or contractual definition of
float, but the Contractor will normally build some float in the programme to allow
some flexibility within that programme in case of variations to the work, risks which
may materialise or his own incorrect forecasts or inefficiencies.
Float is affected by many things including re-sequencing, fluctuation in outputs and
resources, varied and additional works or relaxed contractual constraints which could
also benefit the project programme as a whole.
Most people interpret that “float” belongs to the Contractor as it is his programme,
and he has the right to finish in accordance with his programme. In effect, it depends
on what the float is for and where it appears in the programme that will determine any
ownership of that float. Many practitioners are of the opinion that free float is availa-
ble to whoever needs it first, whereas terminal float belongs to the Contractor, which
the author is in agreement with.
Critical path
In a programme there will be a series of activities for which there is no float, these
activities are “critical” to the work being completed on time.
The critical path is simply the longest path of work activities through the programme
from start to end. It is the shortest duration of the contract programme. Critical path
activities have no float. If critical path activities are delayed, they will lead to a delay to
the overall completion of the project; this is a factor we will consider in the next section
when we look at extension of time claims.
Time and any delays are very important aspects of any construction contract.
The FIDIC 2017 programme requirements

The FIDIC 1999 Contracts had fairly detailed provisions regarding time and the sub-
mission of the Contractor’s Programme, those provisions have now been significantly
increased within the FIDIC 2017 Contracts.
The Contractor is required to submit an initial programme to the Engineer (Em-
ployer under the Silver Book) within 28 days of receiving the Notice stating the Com-
mencement Date under Clause 8.1.
The new Clause 8.3 now refers to an “initial programme” and “each revised pro-
gramme”, whereas the FIDIC 1999 Contracts only referred to a “detailed time pro-
gramme”, which was revised whenever the previous programme was inconsistent with
actual progress.
The initial programme is to be submitted by the Contractor in one paper copy, one
electronic copy and additional copies where stipulated in the Contract Data.
The Contract stipulates that the Contractor prepares the programme using the soft-
ware stated in the Specification (Employer’s Requirements under the Silver Book), or
the software acceptable to the Engineer (Employer under the Silver Book).
The Contractor is also required to submit revised programmes showing the actual
progress of the works. The programme will change as Variations, delays, risks, etc.,
come on stream so the previous programme becomes, in effect, out of date and does
not reflect the manner in which the Contractor will achieve its obligations.
Note that whenever the programme is revised it is resubmitted, and must show the
elements required in the initial programme submission (stated below).
The requirements within the programme submission have been expanded consider-
ably, and are much more detailed than within FIDIC 1999, which only required details
of the order in which the Contractor intended to carry out the Works including any
design, stages of work for Nominated Subcontractors, the sequence and timing of in-
spections and tests and a supporting report which included a general description of
the methods which the Contractor intended to adopt, and details of the Contractor’s
estimate of Personnel and Contractor’s Equipment.
Under FIDIC 2017 Clause 8.3, the Contractor is required to include within his initial
and revised programmes (changes from the FIDIC 1999 Contracts shown):
a The Commencement Date (as referred to in the Engineer’s Notice), and the Time
for Completion of the Works and each Section (where applicable) as stated within
the Contract Data. These dates were not expressly required in FIDIC 1999, but
they are critical and Contractors included them.
b The date access and possession of each part of the Site is to be given to the Con-
tractor in accordance with the Contract Data. Note that if these dates are not
included within the Contract Data, the date(s) the Contractor requires the Em-
ployer to provide them. Again, these were not expressly required in FIDIC 1999,
but Contractors included them.
c The order or sequence in which the Contractor intends to carry out the Works
including anticipated timing of design stages (under the Red Book the Contractor
may have design responsibility, under the Yellow and Silver Books the Contractor
has full design responsibility), preparation and submission of Contractor’s Docu-
ments, procurement, manufacture, inspection, delivery to Site, construction, erec-
tion, installation, any work to be undertaken by any Nominated Subcontractor
and testing. These requirements were previously included in FIDIC 1999.
d The Review periods for any submissions stated in the Specification (Employer’s
Requirements under the Silver Book) or required by the Conditions. It is critical
that the Contractor allows sufficient time for submission of documents for Review
by the Engineer, and for any comments or rejections to be dealt with. These were
not expressly required in FIDIC 1999, but Contractors tended to include them.
e The sequence and timing of inspections or tests specified in the Contract. Again, it
is critical that the Contractor allows sufficient time for inspection and tests by the
Engineer, and for any comments or rejections to be dealt with. This was required
in FIDIC 1999. These were not expressly required in FIDIC 1999.
f For a revised programme, the sequence and timing of any remedial work to which
the Engineer has given a Notice of No-objection. These were not expressly re-
quired in FIDIC 1999.
g All activities (to the level of detail stated in the Specification) logically linked and
showing the earliest and latest start and finish dates for each activity the float (if
any) and the critical path(s). These were not expressly required in FIDIC 1999, and
are a welcome addition.
h The dates of all locally recognised days of rest and holiday periods (if any). These
were not expressly required in FIDIC 1999, but many Contractors included them,
for example Christmas, and Eid holidays together with Ramadan working restric-
tions and shortened working hours.
i All key delivery dates of Plant and Materials. These were not expressly required in
FIDIC 1999.
j For a revised programme and for each activity, the actual progress to date and
the effects of delay on other activities. These were not expressly required in FIDIC
1999.
k A supporting report which includes:
In this respect, FIDIC 1999 required a supporting report, but only in respect of a
general description of the methods which the Contractor intended to adopt, and es-
timates of the Contractor’s expected resources for each major stage of the Works.
FIDIC 2017 Contracts are therefore much more prescriptive of what is required from
the Contractor.
Whilst Contractors would often provide information within their programmes ad-
ditional to what the Contract required, the author welcomes the more comprehensive
requirements within FIDIC 2017, to reflect the importance of the Contractor’s pro-
gramme as a management tool, in terms of reviewing the Contractor’s intentions, his
actual progress, and for assessment of claims.
Under FIDIC 1999 the Engineer (Employer under the Silver Book) did not have
to carry out a review of the Contractor’s programme, he only had to state if the pro-
gramme was not in accordance with the Contract. If he did not respond, the Contrac-
tor could then proceed in accordance with the programme.
The Engineer (Employer under the Silver Book) under FIDIC 2017 is now required
to Review (i.e. “examination and consideration by the Engineer of a Contractor’s
(and to what extent) it complies with the Contract and/or the Contractor’s under or in
connection with the Contract”) the Contractor’s submission, and may give a Notice to
the Contractor stating the extent to which it does not comply with the Contract, ceases
to reflect actual progress or is otherwise inconsistent with the Contractor’s obligations.
It is unclear what a programme which “does not comply with the Contract” actually
means. Obviously, if Contract dates on the programme are incorrect, then that pro-
gramme is not compliant, but is a programme which does not show ALL the “ingredi-
ents” listed in Sub-Clause 8.3, a programme that “does not comply with the Contract”?
Or, is a programme where the Engineer (Employer under the Silver Book) does not
agree that the Contractor has shown sufficient resources to complete the Works which
form the Contract, a programme that “does not comply with the Contract”?
Essentially, the Engineer (Employer under the Silver Book) should use his own
knowledge, experience and common sense to make that call.
If the Engineer (Employer under the Silver Book) does not give a Notice to the Con-
tractor within:
• 21 days after receiving the initial programme,

• 14 days after receiving a revised programme,
the Engineer (Employer under the Silver Book) is deemed to have given a Notice of
No-objection and the programme is then the Programme required by the Contract
(even though it may not comply with the Contract!).
If the Engineer (Employer under the Silver Book) at any time gives a Notice to the
Contractor that the programme ceases to reflect his actual progress or is otherwise
inconsistent with the Contractor’s obligations, the Contractor within 14 days after
receiving such notice submits a revised programme.
Note that programmes are never “approved” by the Engineer (Employer under the
Silver Book), the Contractor proceeds in accordance with the Programme, except to
the extent that

ii It does not actually comply, with the Contract.
Note that if the Contractor submits a programme to the Engineer (Employer under the
Silver Book) which shows himself completing outside the Time for Completion that is
not a Notice of delay required under the contract (Clause 8.4 and 20.1) in respect of
an Extension of Time, and equally, the Engineer (Employer under the Silver Book)
accepting the programme is not awarding an Extension of Time.
The Engineer (Employer under the Silver Book) is merely confirming that the pro-
gramme submitted by the Contractor is a fair representation of the Contractor’s actual
progress. FIDIC 2017 now clarifies that point.
There are specific procedures and Notices required in terms of Extensions of Time
and Claims.
Advance Warning
Advance Warning is a new (and in the author’s opinion welcome) provision similar to
the “Early Warning” provisions in the NEC contracts, each Party being required to
advise the other (and the Engineer under the Red and Yellow Books), in advance of
any known or probable future events which could:
• Adversely affect the work of the Contractor’s Personnel,

• Adversely affect the performance of the Works when completed,
• Increase the Contract Price, and/or
• Delay the execution of the Works or a Section.
so, it could be any combination of the above four.

Note that the above four items are all related to negative events, there is no pro-
vision for either Party to advise of positive events such as potential time, quality or
cost savings or opportunities, though the Contract does include for value engineering
proposals.
Note that FIDIC 1999 required the Contractor under Clause 8.3 to promptly give
notice to the Engineer (Employer under the Silver Book) of any:
• Specific future events or circumstances which may adversely affect the work (note
the Works is not used),
• Increase the Contract Price,
• Delay the execution of the Works.
However, it is also worth noting that the Employer or Engineer did not have a similar
obligation, it was an obligation solely upon the Contractor.
The Contractor also had to submit estimates relative to these occurrences and/or a
proposal under the Variation Procedure if applicable.
The Sub-Clause under the FIDIC 2017 Contracts requires each Party (i.e. the Em-
ployer and the Contractor) to advise each other and the Engineer (under the Red and
Yellow Books), and the Engineer (under the Red and Yellow books) to advise the Par-
ties. It is not for the Contractor and the Engineer to directly advise each other.
There is no prescribed format for such notifications, though Parties should adopt
some form of template for such warning, which can then be sequentially numbered for
the project (see Figure 7.1).
The author uses “Early Warning Notices” under the NEC Contracts as a “lessons
learned” exercise on completion of the project, identifying who raised the notice, what
the reason was, whether there was repetition of the same issues and how quickly they
were closed out. It is hoped that FIDIC 2017 users will adopt a similar post-completion
review.
The Engineer (Employer under the Silver Book) may also request the Contractor to
submit a proposal to avoid or minimise the effect of such events.
Although this provision is new to the FIDIC contracts, early warnings have always
been a feature of NEC contracts, and is a useful and simple risk management tool al-
lowing risks to be notified and give the Parties and the Engineer (Employer under the
Silver Book) maximum time to consider their effect quality, price and/or time, and to
collaboratively work together to resolve them, without escalating immediately into the
claims provisions within the Contract.
The clause does not prescribe a time scale for advising advance warnings other than
“in advance of any known or probable future events”, rather than as soon as they become
Contract: …………………………………. ADVANCE WARNING
Contract No: …………………………….. AW No…………………………………..

Section A: Enquiry
To : Employer/Contractor
Description
This matter could:
Adversely affect the work of the Contractor’s Personnel

Adversely affect the performance of the Works when completed
Increase the Contract Price
Delay the execution of the Works or a Section
Signed:……………………………(Employer/Contractor) Date: ……………
Action by: Date required:
Section B: Reply
To: Employer/Contractor
Signed:……………………………(Contractor/Project Manager) Date: ……………
Copied to:
Employer Contractor Engineer File Other ……………..…
Figure 7.1 Example of Advance Warning Notice.

aware of them, and also there does not appear to be any remedy should either Party
fail to give advance warning.
The NEC contracts reflect any failure to give early warning within the Contractor’s
entitlement to compensation, so it is likely that there may be some amendments to this
clause to specifically penalise the Contractor for not giving advance warning of some-
thing which later becomes a Claim! There may also be some amendments removing
the Employer’s responsibility to give advance warnings.
The author believes that a Contractor who diligently complies with what the Con-
tract states and submits advance warnings will certainly put himself in a better po-
sition if a claim arises, and especially if it escalates into a dispute, but the advance
warning provision should be seen as a claim and dispute avoidance process rarer than
stocking up evidence for when the claim or dispute inevitably arises!
As with the NEC contracts, the advance warning procedure obliges people to be
“proactive”, notifying and dealing with risks as soon as the parties become aware of
them, rather than “reactive” waiting to see what effect they have, then trying to deal
with them when it is often too late. It is hoped that encouraging the early identification
of problems by both parties, puts the emphasis on joint solution finding rather than
blame assignment and contractual entitlement after the event.
It is hoped that FIDIC practitioners will fully embrace this new provision within its
contracts.
The author has encountered situations where Employers and Engineers appear hos-
tile to the receipt of early/advance warnings from Contractors. Sometimes they are
viewed as the first stage toward a claim. That may be so, but not always, and in effect
could prevent a claim occurring, or at least lessen its effect.
Statistically speaking one would expect an equal number of early warnings to be
issued by the Employer and the Contractor. Typically, though, the ones issued by the
Contractor frequently outnumber the ones issued by the Employer.
Employers and Engineers are often criticised for seeing advance warnings as some-
thing the Contractor has to do, and in fact most advance warnings are actually issued
by the Contractor. However, the Employer and the Contractor are obliged to give ad-
vance warnings, so it is critical that they play their part in the process.
As an example, if the Employer or Engineer becomes aware that it will be late in
delivering some design information to the Contractor, the Employer should issue the
advance warning as soon as becomes aware that the information will not be delivered
to the Contractor, not wait and subsequently blaming the Contractor for not giving an
advance warning stating that it has not received the information!
The nature and format of advance warnings can have an impact of how they are
received and what reaction is prompted. Contractual parties are often keen to identify
each other’s failings, but the obligation here potentially requires parties to identify
and record their own failures. Common sense is therefore needed in how these are
identified.
The “matters” which require an advance warning to be given are essentially the
three criteria for success in any project i.e. price, time and quality. Therefore, the con-
tract recognises the importance of managing “matters” that may impact on these.
A schedule of Advance Warnings should be kept (see Figure 7.2), identifying and
numbering each Advance Warning, with additional information about each one.
The author has found the schedule useful for tracking advance warnings as the pro-
ject progresses, but also at the end of each project to review the schedule and each
Contract: ………………………………………………………………….. SCHEDULE OF ADVANCE WARNINGS
Contract No: ………………………………………………………………
Ref. Date Origin?

notified Employer Description of event Relevant Action Date Notes
or Clauses with Resolved
Contractor Employer
or
Contractor
1
2
3
4
5
6
7
8
9
10
Figure 7.2 Example of Schedule of Advance Warnings.

advance warning notified during the life of the project as “lessons learned” to consider
in drafting Scopes for future contracts.
Extension of Time for Completion generally

Time is central to any contract, as stated above, the Contractor under the FIDIC con-
tracts must complete the Works within the Time for Completion.
There are two types of delays which can occur on construction projects:
• Delay in activities for which there is a programme float available e.g. they can be
delayed without impacting on the completion date.
• Delays in activities that will impact the completion date, these are sometimes re-
ferred to as critical delays.
Construction contracts tend to provide three different categories for delay:
Delays resulting from neutral causes

Neutral events are not the fault of any party involved in the project. The Contractor
might be entitled to an Extension of Time.
Delays that are, directly or indirectly, the fault of the Employer or his agents
e.g. Engineer/Employer’s Representative
Where the progress of the works is materially affected by matters for which the Em-
ployer is responsible, the Contractor may be entitled to an Extension of Time, but also
to claim cost incurred, and also possibly profit.
Delays that are the fault of the Contractor

Where a delay impacts on the Completion Date and is caused by the Contractor, the
Contractor will be liable to pay liquidated damages/delay damages to the Employer.
The granting of an Extension of Time relieves the Contractor from liability of dam-
ages such as delay damages up to the extended Time for Completion. For the Em-
ployer, the early establishment of an extended contract completion date prevents the
contract period becoming “at large” (see below).
The conditions and events that the Contractor is entitled to a claim for extension
of time will be documented within the Contract, and these events will have been ac-
knowledged by the Employer as matters affecting regular progress.
Contracts also require notification of delaying events to be given as close a time as
possible to the event, a failure to provide timely notification can affect the Contractor’s
claim for an Extension of Time.
Note that there are several methods or “prospective” and “retrospective” delay anal-
ysis which may be used by the Contractor in formulating his claim and the Engineer/
Employer’s Representative in assessing entitlement, but it is outside the scope of this
book to review or evaluate them.
The “prospective” approach is favoured as it considers the critical path at any par-
ticular point in time as viewed contemporaneously, whilst the “retrospective” approach
considers subsequent events to determine whether the material event actually delayed
completion.
Briefly some methods are:
“As-Planned v As-Built”
This takes the original “as-planned” programme and compares it with the final “as-
built” programme. This method simply illustrates the impact of all delays rather than
each individual delay, or delays caused by each party.
“Impacted As-Planned”
This is an “additive” method which takes the original as-planned baseline programme
and impacts the effect of Employer (excusable delays) and Contractor delays to cal-
culate project completion date/duration. It can also be used to calculate Contractor
entitlement, and used widely, fairly simple to do and understand, but becomes compli-
cated/unreliable when sequences and/or durations change.
“Windows Analysis”
This method breaks the as-planned programme down into time slices or “windows”
(weeks/months/phases) and analyses the progress and the effect of any delays within
those windows as the project progresses, and any delays develop. It is felt to be the
most accurate method of analysing delays to a project, but it involves a lot of analysis.
“Collapsed As-Built”
This is a “subtractive” or “retrospective” method which takes the “as-built” pro-
gramme and works backwards, subtracting delays caused by the Employer, to show
when the project could have been completed but for those delays.
The delays caused by the Employer are the difference between the “as-built” and the
“collapsed as-built” programme.
This is fairly simple to construct and analyse, but it is a retrospective method and
will often make subjective assumptions that the as-built programme including se-
quence and durations is a fair reflection of how the project was built and in retrospect
that they were the correct sequence and durations.
In theory, an extension of time should be granted as the delaying event occurs
and even before i.e. prospectively, to maintain a feasible contract programme for co-
ordination of the project. In practice, the responsible parties for assessing and grant-
ing of the Extension of Time are seldom given the authority to grant extensions at an
early stage and many contracts extend well beyond their contract completion date
without even the beginning of an extension of time process.
This reluctance to accept responsibility for delays and grant extensions of time is
often disastrous to the project and to the Employer.
What is “Time at Large”?

Before examining the Extension of Time provisions under the FIDIC 2017 Contracts it
is worth considering the principle of “Time at Large”.
The requirement within the FIDIC contracts is for the Contractor to commence the
execution of the Works on, or as soon as reasonably practicable after the Commence-
ment Date, and to complete the whole of the Works within the Time for Completion
(some construction contracts express the requirement to complete the Works by a spe-
cific date).
The term “Time at Large” is not a legal term but describes the situation where there
is no identified Date for Completion or Time for Completion, either by absence from
the contract terms or arising from events during the execution of the Works and/or the
operation of law.
The term “Time at Large” is usually used in construction contracts in the situation
where liquidated damages/delay damages are an issue. If time is at large then liquidated
damages/delay damages cannot be applied, because there is no time or date fixed from
which the liquidated damages/delay damages can be calculated. In some situations,
the date for completion may be relevant to termination and the issue whether or not
there has been a breach of contract by failure to complete.
Time can be made at large in any of four situations:
iii The Employer has waived the obligation for the Contractor to complete by the
Works by the specified Time or Date.
An alternative situation is that the Employer is faced with a breach of contract by
the Contractor which would entitle to Employer to terminate the employment of the
Contractor and/or to bring to an end the primary obligations of the Parties to perform,
but instead the Employer elects to continue with the performance of the Contract.

Extension of Time under the FIDIC 2017 Contracts
Sub-Clause 8.5 defines the Contractor’s entitlement to Extension of Time:
iii “… to Extension of Time… if and to the extent … that completion … is … de-

layed…”: so the extension should typically be calculated by reference to the delay
in completion attributable to a listed cause. It may have disrupted progress but
may not itself have been the cause of any delay in completion. For example, a listed
cause may only delay works which are not on the critical path and thus do not
delay “completion for the purposes of Sub-Clause 10.1”.

There are five grounds for Extension of Time under Clause 8.5:
a Variations
Note that there is now no requirement to comply with Clause 20.2 in terms of
Claims linked to Variations. Variations on their own do not necessarily give the
Contractor entitlement to an Extension of Time, the timing, size, long lead in
times, etc. will determine that, rather than the fact that a Variation exists
b A cause of delay giving rise to an entitlement to an Extension of Time under the
contract under a Sub-Clause of the Conditions. (These are scheduled in Chapter 10,
Figure 10.1.)
See also the other chapters of this book giving details of the relevant Extension
of Time Clauses within the FIDIC 2017 Contracts.
c Exceptionally adverse climactic conditions at the Site, by reference to climatic
data, made available by the Employer under Sub-Clause 2.5 (note that this is ex-
cluded from the Silver Book).
Note that the reference to exceptionally adverse climactic conditions is at the
Site, so bad weather in another location, which then delays, for example, transpor-
tation/shipping of materials would not constitute an Extension of Time.
NB: In previous editions of the FIDIC contracts the words “exceptionally ad-
verse climactic conditions” have been subject to Parties’ own interpretations and
opinions, which in some cases have led to disputes.
Additional words have now been added within FIDIC 2017 allowing the Em-
ployer to make available information on climatic data within the Site Data to give
an element of objectivity rather than subjectivity.
d Unforeseeable shortages in availability of personnel or goods, or Employer-
supplied Materials caused by epidemic or government actions (this is new to the
FIDIC 2017 Contracts, but is excluded from the Silver Book).
Employer-supplied Materials have been added to this item.
e Any delay, impediment or prevention caused by the Employer, the Employer’s Per-
sonnel or the Employer’s other contractors on the Site.
This could be quite subjective, but highlights that the Employer or his agents
should not unnecessarily impede the Contractor’s progress.
Under the Red Book, the Contractor is also entitled to an Extension of Time if the
measured quantity of work is greater than the estimated quantity of the same item
within the Bill of Quantities, or other Schedule by more than 10% AND the increase
in quantities causes a delay to Completion.
Concurrent delay
The FIDIC 1999 Contracts (and those before them) were silent on the issue of concurrent
delays, so it was left to common practice and any relevant legislation to deal with it.
The FIDIC 2017 Contracts have not prescribed a mechanism for dealing with con-
current delay, but there is now a statement within the Sub-Clause that where there is
concurrent delay the Contractor’s entitlement to any Extension of Time is assessed
within the rules and procedures stated in the Special Provisions, where there are rules
and procedures stated, due regard must be taken of all relevant circumstances.
Within the guidance on Special Provisions there is reference to the Society of Con-
struction Law Delay and Disruption Protocol (SCL Delay and Disruption Protocol
2nd Edition: February 2017).
This is a new provision and although it does not deal with the assessment of concur-
rent delay it is welcomed, bearing in mind the various issues and reported outcomes
with concurrent delay.
Sometimes delays exist, not in isolation but at the same time, in the case of the
FIDIC contracts one an Employer Risk Event, one a Contractor Risk Event and with
equal effect, each of which is an effective cause of delay to Completion (i.e. both on the
critical path) so each on its own could delay completion by the same amount, these are
termed “concurrent” delays.
True concurrent delay is actually rare, in that both the conditions “at the same time”
and “with equal effect” in the previous paragraph have to apply.
An example would be where an Engineer was late in providing design information
to the Contractor, but at the same time exceptionally bad weather prevented the Con-
tractor from progressing with the Works, or the Contractor has insufficient resources
on Site. Which delay would take precedence?
Unfortunately, there is no readily identifiable definition, along with a failure by
international courts to give any clear guidance on the most suitable or appropriate
method for considering an Extension of Time award when there is a current delay
when one is the responsibility of the Contractor and the other his employer.
It is not particularly surprising that concurrent or simultaneous delays cause con-
siderable confusion and even the term itself can often be understood differently in
different quarters.
Notwithstanding that there is no clear definition of its meaning the problems may
start much earlier in determining the inherent reasons for the cause of the concurrent
delays, which often create their own factual problems such as the event in question is
not critical.
There are quite a few methods for trying to determine an extension of time, each
having varying degrees of success in the courts.
With regard to the effect on entitlement to recovery of costs for prolongation, where
the Employer Delay and the Contractor Delay to Completion are concurrent and, as a
result of that delay the Contractor incurs additional costs, then the Contractor should
only be able to recover costs if it is able to separate the additional costs caused by the
Employer Delay from those caused by the Contractor Delay.
If it would have incurred the additional costs in any event as a result of Contractor
Delay, the Contractor will not be entitled to recover those additional costs.
Some examples of methods for trying to determine an extension of time where there
is concurrent delay, each having varying degrees of success in the courts.
The more common ones used are:
a Apportionment;
b The “but for” test;
c The dominant cause approach.
Taking each in turn to consider and review their applicability:
Apportionment
Where there are two competing causes of delay of equal or relative effect a fairly nat-
ural response would be to suggest that the overrun and its consequences should be
“apportioned” between the Contractor and the Employer on the basis of their relative
cause and effect.
This would appear to be a reasonable approach but this method has attracted little
support in jurisdictions where there is a tendency to apply principles of cause and ef-
fect in an “all or nothing” way. Consequently, the courts tend to link a single event to
a cause and the claimant would either win or lose.
Some jurisdictions involve concepts of fairness and reasonableness, and arguably
the apportionment approach is dependent on the court’s interpretation of the facts and
the application of difficult concepts of cause and effect.
The “but for” test

This method tends to attract the most support from the contracting fraternity as it
tends to support the claimant (the Contractor). It is based on a simple concept that
the overrun would not have occurred “but for” a default by the Employer or its
representative.
It has, however, been given unsympathetic support in the courts, and this method
can therefore generally be discounted.
The Dominant Cause approach

This became a popular method during the 1980s and gained popularity as the most
appropriate method of calculating and dealing with concurrent delays.
Keating on Building Contracts defined it as:
It there are two causes, one the contractual responsibility of the Defendant and
the other the contractual responsibility of the Plaintiff, the Plaintiff succeeds if he
establishes that the cause for which the Defendant is responsible is the effective,
dominant cause. Which cause is dominant is a question of fact, which is not solved
by the mere point of order in time, but is to be decided by applying common sense
standards.
The dominant cause principle is based on the parties having intended that in the event
of a delay one of them must be responsible.
Where you have competing delays and with the absence of apportionment one claim
either for an extension of time or a cross-claim for liquidated damages must succeed.
Finally, there are other examples:
Delays caused by authorities

This Sub-Clause gives the Contractor a right to an Extension of Time for delays caused
by public authorities or private utility entities, provided that the Contractor has dili-
gently followed procedures laid down by those public authorities.
Rate of progress
If the Contractor’s progress is too slow to complete the Works or a Section within the
Time for Completion or progress has fallen behind the current programme, the Engi-
neer (Employer under the Silver Book) can instruct the Contractor to submit a revised
programme and proposals to rectify matters.
Unless the Engineer (Employer under the Silver Book) states otherwise, the Con-
tractor must adopt the revised programme and proposals, including any increases in
working hours and/or resources.
There is an additional paragraph within the FIDIC 2017 Contracts, allowing the
Engineer (Employer under the Silver Book) to issue instructions for the Contractor to
apply revised methods, including acceleration to reduce delays resulting from causes
which could entitle the Contractor to an Extension of Time under Sub-Clause 8.5.
Delay damages
Delay damages are defined under Clause 1.1.28 (Clause 1.1.25 under the Silver Book) as
“damages for which the Contractor shall be liable under Sub-Clause 8.8 [Delay Dam-
ages] for failure to comply with Sub-Clause 8.2 [Time for Completion]”.
The FIDIC 2017 Contracts provide for the levying of delay damages by the Em-
ployer in the event that the Contractor does not complete the Works, or a Section,
within the Time for Completion.
Before examining the FIDIC 2017 provisions, it is worth considering what these
damages are, how are they calculated and how they are applied in the event that the
Contractor is late in completing the Works.
Delay damages within the FIDIC contracts are essentially the same as “liquidated
damages” under other contracts.
The general definition of liquidated damages is “fixed monetary compensation for
a loss, detriment, or injury to a person or a person’s rights or property, awarded by a
court judgment or by a contract stipulation regarding breach of contract”, in the case
of the FIDIC contracts, the Contractor failing to complete the Works on time, and the
damages are not awarded by a court but are a contractual obligation.
Generally, contracts that involve the promise of performance have a liquidated
damages/delay damages provision. The purpose of this is to establish a predetermined
sum that must be paid if a defaulting party fails to perform as promised.
Liquidated damages/delay damages within most countries’ legislations should be
assessed as a “genuine estimate of likely loss”…….and not constitute a penalty, so the
Employer can only receive what he estimated he would have lost at tender stage when
he set the amount. Should the Employer lose more or less then he is limited to the
amount set in the contract.
A penalty is a sum that is disproportionate to the actual harm i.e. a fine awarded by
a court.
It is basically to put the Employer, at least financially, in the position that he would
have been had the delay not occurred and serves as a deterrent to the Contractor not
to complete late (some say to motivate the Contractor to complete on time).
These damages are determined by the Employer prior to inviting tenders, and serve
as protection for both parties that will enter the contract, whether they are an Em-
ployer/Contractor, Employer/Consultant, etc.
A typical example would be an Employer who requires a commercial building to be
constructed by a certain date, and if it is not, then he may be liable for costs in renting
existing premises.
The Employer would then set the liquidated damages/delay damages at an amount,
say per day, in order to recover those damages from the Contractor.
There are several reasons for liquidated damages/delay damages provisions:
iii They establish some predictability involving costs, so that parties can balance the
cost of anticipated performance against the cost of a breach.
For example, Contractors who believe they may be late in completing the works
may weigh up the risk of paying liquidated damages against paying for additional
resources to complete on time.
Whilst this may seem a negative view, as the Contractor is required to complete on
time, it is commercial reality.
Note that if the Employer chooses not to include liquidated damages within the con-
tract, he may still be able to claim unliquidated damages from the Contractor.
Unliquidated damages are not fixed in advance, they remain at large and are yet to
be proven, so if the Employer wishes to levy them against the Contractor he will have
to prove actual loss at the time and probably take legal action against the Contractor
to levy them as they cannot be deducted from monies otherwise due to the Contractor.
Note that an Employer inserting words such as “Zero” or “Nil” within the relevant
part of the contract will only be able to claim for whatever the delay is multiplied
by “Zero” or “Nil” as liquidated damages/delay damages, not to claim unliquidated
damages as an alternative.
Sub-Clause 8.8 covers delay damages, previously called in FIDIC contracts “Liqui-
dated Damages”, which are paid by the Contractor in the event that he fails to com-
plete the Works, or a Section within the Time for Completion.
The amount of delay damages is stated in the Contract Data and is applicable for
every day between the relevant Time for Completion and the relevant Date of Comple-
tion of the Works or Section.
Note as stated above that under some jurisdictions, the amount of delay damages is
required to be limited to “a genuine pre-estimate of likely loss”.
Notwithstanding this, the total amount due for delay damages must not exceed the
maximum amount stated in the Contract Data, unless the delay is due to fraud, gross
negligence, deliberate default or reckless misconduct of the Contractor in which case
the maximum amount would not apply.
So, if the Contractor is guilty of one these types of misbehaviour it will not be able
to “take advantage” of the cap on delay damages.
Note the Employer should take legal advice in respect of this provision as the mean-
ing of terms like “gross negligence” can be different under differing legislations.
The Employer may terminate the Contract under Sub-Clause 15.2.1(c) if the Con-
tractor is sufficiently late to exceed that figure.
This provides some clarity in terms of how late the Contractor could be before
the Employer can terminate, rather than the Employer having to make a subjective
judgement.
The delay damages are the only damages due from the Contractor for the Contrac-
tor’s failure to complete the Works or a Section within the Time for Completion.
Employer’s suspension
The Engineer (Employer under the Silver Book) may under Sub-Clause 8.9 instruct
the Contractor to suspend the progress of all or part of the Works stating the date and
cause of the suspension, during which time the Contractor must protect, store and
secure the Works or the relevant part of the Works.
Note that the Engineer (Employer under the Silver Book) may, but does not have to,
notify the Contractor of the reason for the suspension.
If the Contractor suffers delay and/or cost resulting from complying with the
Engineer’s (Employer’s under the Silver Book) instruction to suspend the carrying out
of the Works, he can claim an Extension of Time and/or payment of Cost plus Profit.
Formerly, FIDIC 1999 only allowed only for an Extension of Time and Cost.
The Contractor is not entitled to the Extension of Time, or to payment of the Cost
plus Profit as a consequence of the Contractor’s faulty or defective (design, if any)
workmanship, Plant or Materials, and/or any deterioration, loss or damage caused by
the Contractor’s failure to protect, store or secure.
The Contractor can recover the value of any Plant and/or Materials which have not
been delivered to Site if the work on the Plant and/or Materials has been suspended for
more than 28 days, the Plant and/or Materials were scheduled to have been completed
and ready for delivery to the Site during the suspension period, the Contractor pro-
vides the Engineer (Employer under the Silver Book) with reasonable evidence that the
Plant and/or Materials comply with the Contract and the Contractor has marked the
Plant and/or Materials as the Employer’s property in accordance with the Engineer’s
(Employer under the Silver Book) instructions.
If the suspension has continued for more than 84 days, the Contractor can request
the Engineer’s (Employer’s under the Silver Book) permission to proceed.
If the Engineer (Employer under the Silver Book) does not give permission, the Con-
tractor and Engineer could agree to a further suspension, in which case the Parties
may agree the Extension of Time and/or Cost plus Profit (if the Contractor incurs
Cost), after giving a (second) Notice to the Engineer (Employer under the Silver Book),
treat the suspension as an omission of the affected part of the Works.
If the suspension affects the whole of the Works, the Contractor may give a Notice
of termination.
After a Notice is received from the Engineer (Employer under the Silver Book) to
proceed with the Works, the Contractor and Engineer (Employer under the Silver
Book) jointly inspect the Works and the Contractor makes good any deterioration or
defect.
8 Suspension and Termination
Suspension and Termination are covered in the FIDIC 2017 Contracts by:

• Clause 15 – Termination by Employer
• Clause 16 – Suspension and Termination by Contractor
Suspension or Termination?
“Suspension” is one Party (in the case of Clause 16, the Contractor) temporarily halt-
ing the execution of the Works due to a breach by the other Party (in this case the Em-
ployer), the Works then being restarted and resumed upon the ceasing of that breach.
“Termination” is the permanent ending of the contract by either Party. Note that
certain Clauses and Sub-Clauses will survive after termination to give the Parties cer-
tain rights and obligations after termination has taken place.
FIDIC gives rights of termination for the Employer for certain breaches by the
Contractor, and rights of suspension and/or termination for the Contractor for certain
breaches by the Employer.
Termination by the Employer

The FIDIC contracts allow the Employer to terminate the Contract for a default by the
Contractor, the Engineer (Employer under the Silver Book) giving a Notice (“Notice
to Correct”) to the Contractor, requiring him to make good/remedy the default within
a specified time.
Sub-Clause 15.1 states that the Notice is required to describe the Contractor’s fail-
ure; state the relevant Sub-Clause and/or provisions of the Contract under which the
Contractor has the obligation and to which it has failed; and specify the time within
which the Contractor is required to remedy the failure, and the work and/or other
action required to remedy it.
After receiving the Notice, the Contractor is required to respond immediately by
giving a Notice to the Engineer (Employer under the Silver Book) describing the meas-
ures he will take to remedy the failure, stating the date on which such measures will be
commenced in order to comply with the time specified within the Notice.
Note that the term “Notice” has a strict definition under the Contract it must be
in writing and defined as a Notice, and both Parties should ensure that they strictly
comply in that respect.
So, the Engineer (Employer under the Silver Book) lays down the rules under which
the Contractor is to put matters right, and how he expects him to do it, but it is then up
to the Contractor to respond with what he is actually going to do and when he will do
it, to suit the Engineer’s (Employer’s under the Silver Book) timeline.
As stated in the Preface to this book, it is not proposed to reference-specific court
cases, as FIDIC operates under a multitude of different legislations worldwide, but the
timeline for the Contractor to make the correction should be reasonable, dependent on
what the work is and the relevant conditions at the time.
It is hoped that with all matters of termination, which is a very serious action and
can be very complex, that the Employer and the Contractor take a sensible approach
in deciding whether to terminate.
The Employer is not required to terminate, it is an option available to him and
essentially it should be a material breach of the Contractor’s obligations, where the
Employer has no other options available to him.
It is often a matter of debate as to what constitutes a “material breach” under these
provisions, and generally where it is stated within a Contract.
Clearly each case has to be taken on its merits, dependent on the project, the actual
breach, the timing of that breach and the effect on the Parties, this matter being the
subject of many discussions, debates and even disputes.
A Dispute Avoidance/Adjudication Board (DAAB) (see Chapter 10) may also take
the Employer’s decision to terminate into account where it was judged to be premature
or wrongful.
Note that the Employer (and during the termination process it is the Employer not
the Engineer which has some of the actions during the termination process) is entitled
to give a Notice to the Contractor of his intention to terminate the Contract if the
Contractor:
a Fails to comply with:

as stated above, the failure has to constitute a “material breach” of the Contrac-
tor’s obligations.
b Abandons the Works or demonstrates an intention not to continue performance of
any of its obligations under the Contract. “Demonstrating an intention” could be
quite subjective, and could be real or perceived, but there may be indications that
the Contractor could be about to leave Site.
Suspension and Termination 205
c Without reasonable excuse (what is a “reasonable excuse”?) fails to proceed with
the Works in accordance with Clause 8, or if there is a maximum amount of delay
damages stated in the Contract Data, failure to comply, such that the Employer
would be entitled to delay damages that exceed this maximum amount (the second
part is a new reason not previously included within FIDIC 1999).
Note that the provision states that the Employer “would be entitled to Delay
Damages”, there is no requirement for the Employer to have actually deducted
those delay damages.
It is not clear what will happen if the Contractor claims an Extension of Time,
and it is granted by the DAAB or Arbitrator after termination so that the Delay
Damages would be reduced below the maximum amount. Would the termination
then be retrospectively judged as wrongful or unlawful?
d Without reasonable excuse (again, what is a “reasonable excuse”?) fails to comply
with a Notice of rejection given by the Engineer (Employer under the Silver Book)
under Sub-Clause 7.5 [Defects and Rejection] or an Engineer’s (Employer under
the Silver Book) instruction under Sub-Clause 7.6 [Remedial Work], within 28
days after receiving it. Again, common sense should prevail.
e Fails to comply with Sub-Clause 4.2 i.e. the Contractor did not obtain the required
Performance Security.
f Subcontracts the whole of, or any part of, the Works in breach of Sub-Clause 5.1
(Sub-Clause 4.4 under the Yellow and Silver Books), which includes subcontract-
ing works over the percentage values stated within the Contract Data, or any part
of the Works for which subcontracting is not permitted, fails to get the Engineer’s
(Employer’s under the Silver Book) consent in writing (for Subcontractors for
which consent is required) or assigns the Contract without the required agreement
(see Sub-Clause 1.7);
g Becomes bankrupt or insolvent, or if the Contractor is a Joint Venture (JV):

h Is found, based on reasonable evidence, to have engaged in corrupt, fraudu-

lent, collusive or coercive practice at any time in relation to the Works or to the
Contract.
Note that (h) was, in previous FIDIC contracts, only a breach by the Contractor in
terms of termination, which is surprisingly common as a “one sided breach” in other
standard forms of contract, but under the FIDIC 2017 Contracts it can now also be a
breach by the Employer allowing the Contractor to terminate under Clause 16.
Unless the Contractor remedies the matter described in the Notice within 14 days of
receiving the Notice (in which case the termination does not take place), the Employer
may by giving a second Notice to the Contractor immediately terminate the Contract.
However, in the case of sub-paragraph (f), (g) or (h) above, the Employer may by
giving a Notice under Sub-Clause 15.2.1 immediately terminate the Contract and the
date of termination is the date the Contractor receives this Notice. These are the only
three provisions where ONE notice is required, rather than TWO, the principle being
that the Contractor could remedy the other matters and put them right, but not (f), (g)
or (h), which cannot be remedied, at least in the short term.
The date of termination is the date the Contractor receives this second Notice.
After termination of the Contract the Contractor is required to:
a Comply immediately with any reasonable instructions included in a Notice given

by the Employer (note the Employer gives the instructions, not the Engineer, even
under the Red and Yellow Books):

This is firmer and more prescriptive than the FIDIC 1999 Contracts which only
required the Contractor to “use his best efforts to comply with any reasonable
instruction included in the notice”.
b Deliver to the Engineer (Employer under the Silver Book):

c Leave the Site and, if the Contractor does not do so, the Employer has the right to
expel the Contractor from the Site.
Completion of the Works

After termination, the Employer may complete the Works and/or arrange for anyone
else to do so.
Obviously that is entirely up to the Employer, once the original Contractor has been
terminated. The Employer may also use any Goods and Contractor’s Documents
made by or on behalf of the Contractor to complete the Works, obviously the matter
of “title”, particularly to Goods would have to be considered.
After completion of the Works (not upon termination, so it could be a considerable time
later), the Employer gives another Notice to the Contractor that the Contractor’s Equip-
ment and Temporary Works can be released to the Contractor at or near the Site. The
Contractor then promptly arranges their removal, at the risk and cost of the Contractor.
Note that in many cases the initial Contractor’s Equipment and Temporary Works
are removed at termination possibly by the hire companies who own them, and the
second Contractor provides his own.
However, if the Contractor has failed to make any payment due to the Employer
which he is required to make under the termination provisions, these items may be
sold by the Employer in order to recover this payment. Any balance of monies is then
paid to the Contractor.
Valuation after termination for Contractor’s Default

After termination of the Contract, the Engineer (Employer under the Silver Book)
agrees or determines the value of the Permanent Works, Goods and Contractor’s Doc-
uments, and any other sums due to the Contractor for work executed in accordance
with the Contract (note that the date of termination is the date of commencement of
the time limit for agreement under Sub-Clause 3.7.3 (Sub-Clause 3.5.3 under the Silver
Book)).
For anyone who has carried out this valuation exercise in practice, it is a considera-
ble task to value the Works, Goods and other matters at the time of termination!
Note that the valuation does not include the value of any Contractor’s Documents,
Materials, Plant and Permanent Works that do not comply with the Contract.
Payment after termination for Contractor’s Default

The Employer may withhold payment to the Contractor of all amounts agreed or de-
termined until all the costs, losses and damages (if any) described in the following list
have been established.
After termination of the Contract, the Employer is entitled to payment by the Con-
tractor of:
a Any additional costs of execution of the Works by the Employer himself or using
another Contractor, and all other costs reasonably incurred by the Employer (in-
cluding costs incurred in clearing, cleaning and reinstating the Site), after allowing
for any sum due to the Contractor under Sub-Clause 15.3 (see above). This is often
very difficult to calculate, and the subject of many disputes!
b Any losses and damages suffered by the Employer in completing the Works.
Again, this is often very difficult to calculate, and the subject of many disputes!
c Delay damages, if the Works or a Section has not been taken over under Sub-
Clause 10.1 [Taking Over the Works and Sections] at the time of termination, and
if the date of termination under Sub-Clause 15.2 [Termination for Contractor’s
Default] occurs after the date corresponding to the Time for Completion of the
Works or Section, delay damages are required to be paid for every day that has
elapsed between these two dates.
Again, as stated above, this is a considerable task requiring quite specialist knowledge
to calculate the cost of someone else completing the Works including clearing the Site,
any losses and damages suffered by the Employer. The calculation of delay damages
however is reasonably straightforward.
Termination for Employer’s Convenience

This is a new provision within FIDIC 2017, allowing the Employer at any time and
without giving a reason, to terminate the Contract which is essentially where no fault
exists on the part of the Contractor.
Typically, an Employer may wish to terminate for his own convenience because he
no longer needs the project; the market for which the building or facility was to be
used has changed; or there may have been severe budget cutbacks or even a change of
government, for example, on a publicly funded project,
However, it is worth mentioning that, although the Employer may terminate for
convenience, which normally means that he no longer requires the Works to be carried
out, he can then appoint another Contractor to carry out the Works, which does not
seem equitable, even though the first Contractor is paid for loss of profit.
Depending on the legal jurisdiction applicable, this action may not be allowable
under law where no breach (material or otherwise) has been committed by the Con-
tractor, so it is strongly advised that the Employer seeks legal advice on this provision
when drafting the tender documents dependent on the location of the project and the
relevant legislation.
After giving a Notice to terminate for convenience under this Sub-Clause, the Em-
ployer immediately:
a Has no further right to use any of the Contractor’s Documents, which must be
returned to the Contractor, except any for which the Contractor has received pay-
ment from the Employer and therefore they belong to the Employer, or for which
payment is already due under a Payment Certificate. This will include any design
documentation.
b Has no right to allow the continued use or shared use (if any) of any Contractor’s
Equipment, Temporary Works, access arrangements and/or other of the Contrac-
tor’s facilities or services, if Sub-Clause 4.6 [Co-operation] applies.
c Makes arrangements to return or repay the Performance Security to the
Contractor.
Termination under this Sub-Clause takes effect 28 days after the later of the dates on
which the Contractor receives this Notice, or the Employer returns the Performance
Security.
Note that until the Contractor has received payment of the amount due after Termi-
nation for Employer’s Convenience under this Sub-Clause, the Employer must NOT
execute (any part of) the Works or even arrange for (any part of) the Works to be exe-
cuted by any other entities.
After the termination, the Contractor proceeds in accordance with Sub-Clause 16.3
[Contractor’s Obligations after Termination].
Valuation after termination for Employer’s Convenience

After termination the Contractor submits detailed supporting particulars (as reason-
ably required by the Engineer) (Employer under the Silver Book) of:
a The value of work done, which includes:

b The amount of any loss of profit or other losses and damages suffered by the Con-
tractor as a result of this termination. Note that the entitlement is not just to loss
of profit, but any other losses or damages resulting from the termination (which
can be a considerable amount and a considerable task to calculate). Note that the
entitlement and calculation of losses and damages, and any limitations, may also
be different under differing legislation.
The Engineer (Employer under the Silver Book) then agrees or determines the matters
described above, and the date the Engineer (Employer under the Silver Book) receives
the Contractor’s particulars is the date of commencement of the time limit for agree-
ment under Sub-Clause 3.7.3.
The Engineer (Employer under the Silver Book) must issue a Payment Certificate
for the amount agreed or determined, without the need for the Contractor to submit
a Statement.
Payment after termination for Employer’s Convenience

The Employer is required to pay the Contractor the amount certified in the Payment
Certificate within 112 days after the Engineer (Employer under the Silver Book) re-
ceives the Contractor’s submission.
Suspension by Contractor
If:
a The Engineer fails to certify a payment as required (in terms of timing and
amount),
(Note that (a) is omitted from the Silver Book)
b The Employer fails to provide “reasonable evidence” in accordance with Sub-
Clause 2.4 [Employer’s Financial Arrangements], this can be quite an onerous re-
quirement for Employers, and is often omitted from the Contract anyway,
c The Employer fails to comply with Sub-Clause 14.7 [Payment] (again in terms of
timing and amount),
d The Employer fails to comply with:

and the failure constitutes a “material breach” (again, what is a “material breach”?)
of the Employer’s obligations under the Contract, the Contractor may, not less than
21 days after giving a Notice to the Employer (not then Engineer under the Red and
Yellow Books), wholly or partially suspend work (or reduce the rate of work) until the
Employer has remedied the default. Note that if the Employer remedies the matter,
suspension does not take place.
The Contractor is also still entitled to financing charges under Sub-Clause 14.8 [De-
layed Payment] and to termination under Sub-Clause 16.2 [Termination by Contrac-
tor] because the payment is late.
In some countries, failure of payment to be certified on time and/or the Employer to
pay on time will allow the Contractor to suspend the Works under a statutory entitle-
ment by giving a notice, which may be shorter than the 21 days (in many cases 7 days)
in the Contract. It is important to note that rights of statute will normally prevail over
rights within the Contract.
If the Employer subsequently remedies the default as described in the above Notice
before the Contractor gives a Notice of termination under Sub-Clause 16.2, the Con-
tractor is required to resume normal working as soon as is reasonably practicable.
If the Contractor suffers delay and/or incurs Cost as a result of suspending work (or
reducing the rate of work) in accordance with this Sub-Clause, the Contractor shall be
entitled to an Extension of Time and/or Cost plus Profit.
Termination by Contractor
Notice
The FIDIC 2017 Contracts now include several new grounds under which the Contrac-
tor may terminate the Contract (see below).
The Contractor is entitled to give a Notice to the Employer of the Contractor’s in-
tention to terminate the Contract or, in the case of sub-paragraph (g) (ii), (h), (i) or (j)
below a Notice of termination, if:
a The Contractor does not receive the “reasonable evidence” within 42 days after
giving a Notice under Sub-Clause 16.1 [Suspension by Contractor] in respect of
a failure to comply with Sub-Clause 2.4 [Employer’s Financial Arrangements]
(again as stated above, this can be quite an onerous requirement for Employers,
and is often omitted from the Contract anyway).
b The Engineer fails, within 56 days after receiving a Statement and supporting doc-
uments, to issue the relevant Payment Certificate.
Note (b) is omitted from the Silver Book.
c The Contractor does not receive the amount due (in full) under any Payment
Certificate within 42 days after the expiry of the time stated in Sub-Clause 14.7
[Payment] (this previously only applied to the non-payment of Interim Payment
Certificates, but now relates to a failure by an Employer to pay the amount due
under any Payment Certificate i.e. Advance, Interim or Final Payment).
d The Employer fails to comply with:

e The Employer substantially fails to perform, and such failure constitutes a “ma-
terial breach” of the Employer’s obligations under the Contract. Note that again
the reference to a “material breach” which is a serious and/or major breach, in the
FIDIC 1999 Contracts, the relevant clause merely stated, “the Employer substan-
tially fails to perform his obligations under the Contract”.
f The Contractor does not receive a Notice of the Commencement Date under Sub-
Clause 8.1 [Commencement of Works] within 84 days after receiving the Letter of
Acceptance (this is a new provision under the FIDIC 2017 Contracts and is similar
to the provision within the “FIDIC Pink Book”).
This protects the Contractor from fluctuations in the rates and prices where there is
an extended delay to the commencement of the Works, although the Contractor could
be entitled to damages for breach of contract anyway. Note that the Contractor could
claim for loss of profit on the entire project!
g The Employer:

h A prolonged suspension (more than 84 days and the work is not resumed) affects
the whole of the Works as described in sub-paragraph (b) of Sub-Clause 8.12.
i The Employer becomes bankrupt or insolvent; goes into liquidation, administra-
tion, reorganisation, winding-up or dissolution; becomes subject to the appoint-
ment of a liquidator, receiver, administrator, manager or trustee; enters into a
composition or arrangement with the Employer’s creditors; or any act is done or
any event occurs which is analogous to or has a similar effect to any of these
acts or events under applicable Laws (the definitions have been widened from the
FIDIC 1999 Contracts).
j The Employer is found, based on “reasonable evidence”, to have engaged in cor-
rupt, fraudulent, collusive or coercive practice at any time in relation to the Works
or to the Contract.
Note, under FIDIC 1999, only the Employer could terminate for corrupt prac-
tices engaged in by the Contractor, but now under FIDIC 2017, the equivalent
entitlement exists for the Contractor where the Employer has engaged in such
practices.
Note that in some countries, extended failure of payment to be certified on time and/
or the Employer to pay on time will allow the Contractor to terminate the Contract
under a statutory entitlement by giving a notice, which may be shorter than the period
in the Contract. It is important to note that rights of statute will normally prevail over
rights of Contract.
Termination
Unless the Employer remedies the matter described in a Notice within 14 days of
receiving the Notice (in which case termination would not take place), the Con-
tractor may by giving a second Notice to the Employer immediately terminate the
Contract.
The date of termination is then the date the Employer receives this second Notice.
However, in the case of sub-paragraph (g) (ii), (h), (i) or (j) of Sub-Clause 16.2.1
[Notice], by giving a Notice under Sub-Clause 16.2.1 the Contractor may terminate the
Contract immediately, without giving a second Notice, and the date of termination is
the date the Employer receives this Notice.
These are the only three provisions where ONE notice is required, rather than TWO,
the principle being that the Contractor could remedy the other matters and put them
right, but not (g), (h), (i) or (j) which cannot be remedied, at least in the short term.
If the Contractor suffers delay and/or incurs Cost during the above period of
14 days, the Contractor is entitled subject to an Extension of Time and/or payment of
Cost plus Profit.
Contractor’s obligations after termination

After termination of the Contract under Sub-Clause 15.5 [Termination for Employ-
er’s Convenience], Sub-Clause 16.2 [Termination by Contractor] or Sub-Clause 18.5
[Optional Termination], the Contractor is required to promptly:
a Cease all further work, except for any work which may have been instructed by the
Engineer for the protection of life or property or for the safety of the Works;
Note that whilst it is the subject of an instruction, the Contractor should not
abandon a dangerous structure because he never received an instruction!
If the Contractor incurs Cost as a result of carrying out such instructed work
the Contractor shall be entitled subject to be paid such Cost plus Profit.
b Deliver to the Engineer all Contractor’s Documents, Plant, Materials and other
work for which the Contractor has received payment;
c Remove all other Goods from the Site, except as necessary for safety, and leave
the Site.
Payment after termination by Contractor

After termination by the Contractor, the Employer is required to promptly:
a Pay the Contractor in accordance with Sub-Clause 18.5 [Optional Termination];

b Pay the Contractor any loss of profit or other losses and damages suffered by the
Contractor, as a result of the termination.
Contract termination
Under Sub-Clause 1.16, subject to any mandatory requirements under the govern-
ing law of the Contract, termination of the Contract under any Sub-Clause of these
Conditions requires no action of any kind by either Party, other than as stated in the
Sub-Clause.
Note that under many legislations, the Contract can only be terminated by approval
or by an order of a Court. Parties should seek legal advice in that respect.
9 Care of the Works and Indemnities,
Exceptional Events and Insurance
1 Care of the Works and Indemnities is covered in the FIDIC 2017 Contracts by:
• Clause 17 – Care of the Works and Indemnities
2 Exceptional Events is covered in the FIDIC 2017 Contracts by:
• Clause 18 – Exceptional Events
3 Insurance is covered in the FIDIC 2017 Contracts by:
• Clause 19 – Insurance
In the FIDIC 1999 Contracts, Clause 17 was titled “Risk and Responsibility”, but it
is now entitled “Care of the Works and Indemnities”, and although the Sub-Clauses
within the FIDIC 2017 Contracts have been re-arranged, and clarification has been
added, the Clause itself is broadly similar to the Clause in the previous FIDIC contracts.
Note that there is no definition in the Contract of the term “Care of the Works”, but
it can be readily seen from the relevant Sub-Clauses as the documents which form the
Contract, as to what it covers.
Responsibility for care of the Works

The Contractor is fully responsible for the care of the Works, Goods and Contrac-
tor’s Documents, including rectifying any loss or damage during the period from the
Commencement Date until the issue of the Taking-Over Certificate for the Works (as
stated within the Taking-Over Certificate or when it is deemed to be issued), at which
214 Care of the Works and Indemnities
time that responsibility passes to the Employer. The exception is if the Contract is
terminated when the responsibility runs from the Commencement Date until the date
of termination.
Note that the published Errata (see Appendix to this Book) has changed “Date of
Completion of the Works” with “issue of the Taking-Over Certificate for the Works”.
The Contract has separate Sub-Clauses for “Responsibility for Care of the Works”
and “Liability for Care of the Works”, “responsibility” and “liability” often being seen
as having the same meaning as each other.
As stated above, the Contractor is fully responsible for the care of the Works from
the Commencement Date until the issue of the Taking-Over Certificate for the Works.
During that period, he has possession of the Site and therefore is in control of what
happens on the Site.
However, liability covers the period after the Taking-Over Certificate has been is-
sued, when the Contractor no longer has possession and control of the Site, but he still
may be liable for matters that arise after that time, or that arose before that time but
possibly materialise after that time.
Note that when the Contractor is “responsible” he has to rectify the loss or damage
at his own cost, whereas the Contract is silent on what the Contractor has to do when
he is “liable”, other than taking liability. Possibly the Employer will claim for any
losses for which the Contractor is liable.
Note also that if something occurs after the issue of the Taking-Over Certificate
(or earlier termination), for which the Contractor was responsible prior to the Date
of Completion, and obviously dependent on what the issue is, the Contractor would
likely still be liable, so the Contractor does not absolve himself of all liability once the
Date of Completion arises.
The Contractor would obviously still be liable for correction of Defects occurring
after the Date of Completion.
Responsibility for a Section or Part passes to the Employer if a Taking-Over Certif-
icate is issued for that Section or Part.
If the Contract is terminated in accordance with these Conditions or otherwise,
the Contractor shall cease to be responsible for the care of the Works from the date of
termination.
Liability for care of the Works

There are exceptions to the Contractor’s liability, in that it holds no liability for loss
or damage to the Works, Goods or Contractor’s Documents caused by any of the fol-
lowing events, essentially because he did not cause them or have any control of them:
a Interference with any right of way, light, air, water or other easement which is the
unavoidable result of the execution of the Works. This is an important provision,
as there may be an inevitable consequence, whether temporary or permanent of
the Contractor having to execute the Works.
b Use or occupation by the Employer of any part of the Permanent Works, except as
specified in the Contract. The Employer becomes liable for care of the Works if he
occupies it, as the provisions state, unless states otherwise.
c A fault, error, defect or omission in any element of the design of the Works by the
Employer, which an “experienced Contractor” exercising due care would not have
Care of the Works and Indemnities 215
discovered when examining the Site and the Specification and Drawings before
submitting the Tender, other than design carried out by the Contractor (under the
Red Book, the Contractor may have partial responsibility for design of the Works,
but under the Yellow and Silver books, the Contractor has full responsibility for
the design of the Works). Note the reference to “an experienced Contractor”.
d Any operation of the “forces of nature” (other than those allocated to the Con-
tractor in the Contract Data) which is Unforeseeable, or against which an ex-
perienced Contractor could not “reasonably” have been expected to have taken
adequate preventative precautions. By using the word “reasonably” and “forces of
nature”, without being specific, there is an element of subjectivity.
e Any of the events or circumstances listed as Exceptional Events (See Clause 18)
(below).
f Any act or default of the Employer’s Personnel or the Employer’s other Contractors.
If any of the six events above results in damage to the Works, Goods or Contractor’s
Documents the Contractor must immediately give a Notice to the Engineer (the Em-
ployer under the Silver Book), and the Contractor rectifies any loss and/or damage as
instructed by the Engineer (the Employer under the Silver Book).
The instruction is then deemed to be a Variation; therefore, the Contractor is enti-
tled to be paid for rectifying any loss.
If the loss or damage to the Works or Goods or Contractor’s Documents results
from a combination of any of the six events above, and is a cause for which the Con-
tractor is liable or partially liable, and the Contractor suffers a delay and/or incurs
Cost from rectifying the loss and/or damage, the Contractor is only entitled to a pro-
portion of the Extension of Time and/or payment of Cost plus Profit to the extent that
for any of the above events he may have contributed to such delays and/or Cost, so
there may be a partial recovery for the Contractor.
Intellectual and Industrial Property Rights

Whenever a Party receives a claim, but fails to give Notice to the other Party of the
claim within 28 days of receiving the Notice, the first Party is deemed to have waived
any right to indemnity under the Sub-Clause.
There is then an indemnity on both sides.
The Employer is required to indemnify the Contractor against any claim alleging an
infringement which is:
a An “unavoidable” result of the Contractor’s compliance with the Specification

and Drawings and/or any Variation;
b A result of any Works being used by the Employer for a purpose other than that
indicated by, or reasonably to be inferred from (which is very subjective), the Con-
tract, or in conjunction with anything not supplied by the Contractor, unless such
use was disclosed to the Contractor before the Base Date or is stated in the Con-
tract (quite a complex provision!);
The Contractor is required to indemnify the Employer against any other claim (in-
cluding legal fees and expenses), alleging an infringement which arises out of or in rela-
tion to the Contractor’s execution of the Works, or the use of Contractor’s Equipment.
If a Party is entitled to be indemnified, the indemnifying Party (the other Party) may
assume overall responsibility for negotiating the settlement of the claim, and/or any
litigation or arbitration which may arise from it.
The other Party, at the request and cost of the indemnifying Party, assists in con-
testing the claim.
The other Party must not make any admission which might be prejudicial to the
indemnifying Party, unless the indemnifying Party failed to promptly assume overall
responsibility for the conduct of any negotiations, litigation or arbitration after being
requested to do so by the other Party.
Indemnities by Contractor
The Contractor is required to indemnify the Employer and his agents against all third-
party claims, damages, losses and expenses (including legal fees and expenses) in re-
spect of:
a Bodily injury, sickness, disease or death of any person arising in the course of the
Contractor’s execution of the Works;
b Damage to or loss of any property, real or personal (other than the Works), to the
extent that the damage or loss arises in the course of the Contractor’s execution of
the Works, and is attributable to any negligence, wilful act or breach of the Con-
tract by the Contractor.
Note that within this Sub-Clause, the Contractor’s indemnities strictly relate to injury
or death to persons and damage to property other than the Works.
This is similar to FIDIC 1999, but the Contractor’s and the Employer’s indemnities
are now limited to “third-party” claims, thereby preventing the Parties from claiming
against each other, so the reference to third parties is critical.
Clearly, the reference to third-party claims is intended to exclude any claims for
damage to the Employer’s property, but one could envisage a claim coming from a
third party in respect of something of which the Employer has ownership but the third
party has liability.
Note the new provision under the FIDIC 2017 Contracts that if the Contractor is
responsible for the design of part of the Permanent Works (under the Red Book he may
be, under the Yellow and Silver Books he will be), he indemnifies the Employer against
all acts, errors or omissions by the Contractor in carrying out the Contractor’s design
obligations that result in the Works (or Section or Part or major item of Plant, if any),
when completed, not being fit for the purpose(s) for which they are intended. That is a
particularly onerous risk for Contractors (see also Chapter 5).
In considering indemnities provided by both Parties one should also consider the
critically important Sub-Clause 1.15 [Limitation of Liability], which has been moved
from the old FIDIC 1999 Contracts Clause 17.
Note that neither Party is liable to the other Party for loss of use of any Works, loss of
profit and loss of any contract, or for any indirect or consequential loss or damage which
may be suffered by the other Party in connection with the Contract, other than under:
a Sub-Clause 8.8 [Delay Damages]

b Sub-paragraph (c) of Sub-Clause 13.3.1 [Variation by Instruction]
c Sub-Clause 15.7 [Payment after Termination for Employer’s Convenience]
d Sub-Clause 16.4 [Payment after Termination by Contractor]
e Sub-Clause 17.3 [Intellectual and Industrial Property Rights]
f The first paragraph of Sub-Clause 17.4 [Indemnities by Contractor]
g Sub-Clause 17.5 [Indemnities by Employer]
The total liability of the Contractor to the Employer under or in connection with the
Contract, other than:

iii Under Sub-Clause 17.3 [Intellectual and Industrial Property Rights]

must not exceed the sum stated in the Contract Data or (if a sum is not so stated) the
Accepted Contract Amount.
Note that the Sub-Clause does not limit liability in any case of fraud, gross negli-
gence, deliberate default or reckless misconduct by the defaulting Party, which clearly
is a sensible exclusion (note that “gross negligence” has been added to the FIDIC 2017
Contracts).
It is advised that Parties take legal advice as to what constitutes, for example, “gross
negligence” as this can be interpreted differently under differing legislations.
Within the Yellow and Silver Books the Contractor has full design responsibility
anyway, and Sub-Clause 17.4 is worded accordingly.
Indemnities by Employer
The Employer’s indemnities have been expanded within the FIDIC 2017 Contracts,
and now cover the Contractor against all third-party claims, damages, losses and ex-
penses in respect of:
a Bodily injury, sickness, disease or death, or loss of or damage to any property

other than the Works, which is attributable to any negligence, wilful act or breach
of the Contract by the Employer, the Employer’s Personnel or any of their respec-
tive agents (this indemnity has been expanded from FIDIC 1999); and
b Damage to or loss of any property, real or personal (other than the Works), to
the extent that such damage or loss arises out of any event described under sub-
paragraphs (a) to (f) of Sub-Clause 17.2 [Liability for Care of the Works] (again
this indemnity has been expanded from FIDIC 1999).
Shared indemnities
The Contractor’s liability to indemnify the Employer is reduced proportionately to
the extent that any event described under sub-paragraphs (a) to (f) of Sub-Clause 17.2
[Liability for Care of the Works] the Employer may have contributed to the damage,
loss or injury.
The Employer’s liability to indemnify the Contractor is reduced proportionately to
the extent that any event for which the Contractor is responsible under Sub-Clause 17.1
[Responsibility for Care of the Works] and/or under Sub-Clause 17.3 [Intellectual and
Industrial Property Rights] may have contributed to the said damage, loss or injury.
This is a new provision under the FIDIC 2017 Contracts, so the contributory effect
by both Parties is taken into account in assessing liability and any ensuing loss. This
would probably be taken into account anyway under previous FIDIC contracts, but
it is important to spell it out. Notice that liability is “reduced proportionally” which
is the correct thing to do, but the “amount of proportionality” could be the subject of
debate.
Note again that under Clause 1.15 of FIDIC 2017 (see above), neither Party is liable
to the other for loss of use of any of the Works, loss of profit, loss of contract or any
indirect or consequential loss or damage other than for the items listed under (a) to (g),
and liability is capped for items (i) to (iv).
Exceptional Events
In FIDIC 1999, Clause 19 was titled “Force Majeure”, but its equivalent within FIDIC
2017 Clause 18 is now entitled “Exceptional Events” though the Clause itself is broadly
similar to the FIDIC 1999 Clause.
Force Majeure is a well-known internationally known legal/contractual term, so it is
not clear why FIDIC has changed the name of the Clause, particularly as the definition
of an “Exceptional Event” is virtually the same as “Force Majeure”.
Note that the Conditions of Contract for Design, Build and Operate Projects 2008
(“Gold Book”) adopted the term “Exceptional Events” in lieu of “Force Majeure” so
there is precedence within the FIDIC contracts.
The author believes that the use of this new term does not provide any clarity as to
the provision, and in effect could cause confusion to FIDIC 2017 users.
The author has discussed this with various practitioners, and it has been stated that
the term “Force Majeure” is subject to various long held and in some cases incorrect
perceptions as to what it actually means, so practitioners will now have to read the
Contract to interpret what an “Exceptional Event” is, which is always advisable any-
way, but also the concept of Force Majeure is not recognised within some jurisdictions.
Note that the NEC contracts (of which the author has a great deal of experience) do
not use the term “Force Majeure” either, but Sub-Clause 60.1(19), within the compen-
sation event provisions, refers to an event which
• Stops the Contractor completing the whole of the Works, or

• Stops the Contractor completing the whole of the Works by the date for planned
Completion shown on the Accepted Programme,
and which
• Neither Party could prevent,

• An experienced contractor would have judged at the Contract Date to have such
a small chance of occurring that it would have been unreasonable to have allowed
for it, and
• Is not one of the other compensation events stated in this contract.
So, the change within the FIDIC 2017 Contracts is not without precedent in other
published contracts.
“Exceptional Event” is defined within the FIDIC 2017 Contracts as an event which:

iii Having arisen, the Party could not reasonably have avoided or overcome it;

It may comprise (note this is not an exhaustive list) any of the following events which
are listed in the Contract:
a War, hostilities, invasion, act of foreign enemies;

b Rebellion, terrorism, revolution, insurrection, military or usurped power, or civil
war;
c Riot, commotion or disorder by persons other than the Contractor’s Personnel
and other employees of the Contractor and Subcontractors;
d Strike or lockout not solely involving the Contractor’s Personnel and other em-
ployees of the Contractor and Subcontractors;
It is curious that the FIDIC 1999 Contracts previously included “strikes and
lockouts” with riots, commotion and disorder,” but it is now a separate entry.
One could say that “riots, commotion and disorder” are considered violent acts,
whilst a strike or lockout may not be, but note that “riots, commotion and dis-
order” are related to “persons other than the Contractor’s Personnel and other
employees of the Contractor and Subcontractors”, whilst “strikes or lockouts” are
not solely involving the Contractor’s Personnel and other employees of the Con-
tractor and Subcontractors, so there is a subtle difference.
e Encountering munitions of war, explosive materials, ionising radiation or con-
tamination by radio-activity, except as may be attributable to the Contractor’s use
of such munitions, explosives, radiation or radio-activity; or
f Natural catastrophes such as earthquake, tsunami, volcanic activity, hurricane or
typhoon.
NB: Should a pandemic, for example COVID-19, be expressly considered as an “Ex-

ceptional Event”?
As this book is being written in the midst of a COVID-19 lockdown, it is worth re-
viewing the provisions within the Contract.
The Contract states, against the list (a) to (f) above, that the list is not exhaustive,
provided that the conditions within the definition are met i.e. beyond a Party’s con-
trol, the Party could not reasonably have provided against it before entering into the
Contract, the Party could not reasonably have avoided or overcome it, and it is not
substantially attributable to the other Party. In that sense COVID-19 would fall under
the definition.
As with most issues within the Contract, one must also consider the law in respect
of the pandemic, for example, is there a government lockdown, curfew, etc., which pre-
vents the Contractor from working, or does it just make it restrictive and more difficult
for the Contractor to work?
If the Contractor feels that the pandemic is to be classified as an “Exceptional
Event” then he must clearly follow the requirements of the Contract.
The Parties should first discuss the pandemic, and its effect on the progress of the
Works. All too often Parties quote the Contract and rights and obligations, before
they have even spoken to each other about the issues and how to achieve a mutually
agreeable outcome.

iii If the Exceptional Event is continuing for a prolonged period, the affected Party
gives further Notices every 28 days after giving the first Notice.

Note also the provision for Extension of Time under Clause 8.5 item (d), “Unforeseea-
ble shortages in the availability of personnel or Goods (or Employer-Supplied Materi-
als, if any) caused by epidemic or governmental actions”.
Note also “Adjustments for Changes in Laws” Sub-Clause 13.6, which could give
rise to an Extension of Time and/or payment of Cost.
Again, the Contractor must clearly follow the requirements of the Contract in terms
of Notices and the necessary procedures.
As stated below, (a) to (e) will give rise to an entitlement to an Extension of Time,
(b) to (e) of that Sub-Clause, if it occurs in the Country, will also give rise to payment
of Cost.
Notice of an Exceptional Event

If a Party (the “affected Party”) is prevented from performing any (any, not necessarily
all) of his obligations under the Contract due to an Exceptional Event, then that Party
gives a Notice to the other Party specifying those obligations.
This Notice is given within 14 days after the Party became aware, or should have
become aware (“should have become aware” is always a very subjective decision and
it is not unusual for one Party to assert when the other Party should have become
aware!) of not being able to perform those obligations, the Party then being excused
performance of the prevented obligations from the date the performance is prevented
by the Exceptional Event.
If the Notice is received by the other Party after the period of 14 days, the Party is
only excused performance from the date on which the Notice is received by the other
Party.
Note that the obligation of either Party to make periodic payments to the other
Party is not excused by an Exceptional Event.
Duty to minimise delay

Each Party must at all times use all reasonable endeavours to minimise any delay in the
performance of the Contract as a result of an Exceptional Event. The duty to mitigate is
a common requirement and does not require the Party to put matters right, but to con-
tain the matter as far as they are able, so it does not get worse. It amplifies the fact that
there is no entitlement for the affected Party to “relax” once he has issued the Notice!
If the Exceptional Event has a continuing effect (i.e. more than 28 days) as it is quite
likely to, the affected Party gives further Notices describing the effect every 28 days
after giving the first Notice.
The Party immediately gives a Notice to the other Party when the affected Party
ceases to be affected by the Exceptional Event. It is critical that both Parties are aware
of when it no longer becomes a problem.
If the affected Party fails to do so, the other Party may give a Notice to the affected
Party, stating that the other Party considers that the affected Party’s performance
is no longer prevented by the Exceptional Event, with reasons, so that will close the
matter out.
Consequences of an Exceptional Event

If the Contractor is the affected Party and suffers delay and/or incurs Cost by reason
of the Exceptional Event, the Contractor is entitled to an Extension of Time, and/or
if the Exceptional Event is of the kind described in sub-paragraphs (a) to (e) of Sub-
Clause 18.1 [Exceptional Events] i.e. excepting natural catastrophes, and, in the case of
sub-paragraphs (b) to (e) of that Sub-Clause i.e. war, hostilities, and natural catastro-
phes, and occurs in the Country, payment of Cost.
Optional termination
If the execution of “substantially all the Works in progress” is prevented for a contin-
uous period of 84 days by reason of an Exceptional Event of which Notice has been
given, or for multiple periods which total more than 140 days due to the same Excep-
tional Event, then either Party may give to the other Party a Notice of termination of
the Contract.
The word “substantially” obviously needs to be considered on a case-by-case basis.
Is it major items, high value items and how substantial is “substantial”!
The date of termination is then seven days after the Notice is received by the other
Party.
(See also Chapter 8 on Termination).
After the date of termination, the Contractor submits detailed supporting particu-
lars (as reasonably required by the Engineer (Employer’s Representative under the
Silver Book)) of the value of the work done, which includes:
a The amounts payable for any work carried out for which a price is stated in the
Contract;
b The Cost of Plant and Materials ordered for the Works which have been delivered
to the Contractor, or of which the Contractor is liable to accept delivery. This
Plant and Materials become the property of the Employer only when paid for by
the Employer;
c Any other Cost or liability which, under the circumstances, was reasonably in-
curred by the Contractor in the expectation of completing the Works (this could
be quite subjective and difficult to calculate);
d The Cost of removal of Temporary Works and Contractor’s Equipment from the
Site and the return of these items to the Contractor’s place of business in the Con-
tractor’s country (or to any other destination(s) at no greater cost);
e The Cost of repatriation of the Contractor’s staff and labour employed wholly in
connection with the Works at the date of termination (note the term “wholly in
connection” with the Works).
The Engineer (Employer’s Representative under the Silver Book) then agrees or deter-
mines the value of work done (and for the purpose of Sub-Clause 3.7.3 [Time limits]
(Sub-Clause 3.5.3 under the Silver Book)), and the date the Engineer (Employer’s Rep-
resentative) receives the Contractor’s particulars under this Sub-Clause is the date of
commencement of the time limit for agreement under Sub-Clause 3.7.3. (Sub-Clause
3.5.3 under the Silver Book).
The Engineer (Employer under the Silver Book) then issues a Payment Certificate,
for the amount agreed or determined, without the need for the Contractor to submit a
Statement as he would have done for normal payments.
Release from performance under the law

If any event arises outside the control of the Parties (including, but not limited to, an
Exceptional Event) which:
a Makes it impossible or unlawful for either Party or both Parties to fulfil their con-
tractual obligations, or
b Entitles, under the law of the Contract, the Parties to be released from further per-
formance of the Contract, and if the Parties are unable to agree on an amendment
to the Contract that would permit the continued performance of the Contract
(this needs legal advice), then after either Party gives a Notice to the other Party of
such event:
Obviously, as stated above, legal advice needs to be taken in terms of “the law govern-
ing the Contract” and the provisions within it.
Insurance
Insurance is now covered within the FIDIC contracts by Clause 19.
As with much of the FIDIC 2017 Contracts, the requirements within Clause 19 and
the Contract Data are now considerably wordier and more prescriptive, which is good
in the sense of clarity, but would again lead to the perception that the Contract ap-
pears administratively burdensome.
Under the FIDIC 1999 Contracts and previously in Clause 18 it referred to the “In-
suring Party”, allowing for flexibility in the sense that provisions referred to whichever
Party was required to insure.
Under the FIDIC 2017 Contracts under Clause 19, the FIDIC drafters have discarded
the term “Insuring Party”, and almost all the insurance obligations are on the Contractor,
so if there are exceptions to that principle, then the Contract will have to be amended.
The principle under FIDIC 2017 is that the Employer is required to add “annexed
memoranda” to the Letter of Acceptance at the time of appointment, as stated on the
Letter of Acceptance template.
There is clearly a concern that even where the Parties essentially remain within the
outline of the Clause 19 terms, many typical insurance policies may well not match the
now much more specific requirements within Clause 19.
Items that would need to be considered within any amendments include:
• Joint names insurance cover extending to all parties for their Site interests, par-
ticularly Subcontractors of any tier and other contractors of the Employer, as may
be applicable;
• The Works forming a part of a larger project, all at or near the Site;
• The presence of significant existing property of the Employer at or close to the Site.
In summary the more extensive and prescriptive nature of Clause 19 and the associated
Contract Data is a positive development if the outcome is that Parties will consider the
requirements carefully and take the necessary professional insurance advice…but of-
ten they do not!
Insurance generally
Insurance is the principle of many paying in for the few to be compensated should an
insured event or series of events occur, which cause a loss.
It is basically a contract between the “insured” who offers to pay an agreed sum, a
premium, to the “insurer” who warrants to pay out an agreed sum should a particular
and specified event occur e.g. damage to property, death or injury, etc. In effect, it is
possible to insure against anything, which holds an element of risk.
The required insurances under any construction contract can normally be grouped
under the following headings…….
Loss or damage to Works, Plant or Materials

Insurance of the Works is often covered by a Contractor’s All Risks (CAR) policy.
CAR insurance normally covers damage to property, such as damage to buildings,
infrastructure or other structures being worked on. It also covers liability for third-
party claims for injury and death or damage to third-party property.
This insurance may be taken out in the joint names of the Contractor and the Em-
ployer. Other interested parties, such as funders, often ask to be added as a joint name.
The theory is that if damage occurs to the insured property then, regardless of fault,
insurance funds will be available to allow for reinstatement.
The effect of Joint Names Insurance is that each party has its own rights under the
policy and can therefore claim against the insurer. Each insured should comply with
the duties of disclosure and notification.
The minimum amount of cover for all insurances is stated in the Contract Data;
however, the Contractor is liable for whatever the amount of any claim therefore it
must consider the minimum value in the Contract Data purely as a guide.
This insurance covers loss or damage to the Works and Plant or Materials intended
for the Works, including any unfixed Plant and Materials on Site.
Loss or damage to Equipment

Again, the CAR policy should cover this. Any reference to “replacement cost” means
the cost of replacement with Equipment of similar age and condition rather than “new
for old”.
Public liability
Loss or damage to property (except the Works, Plant or Materials) or bodily injury or
death not to an employee of the Contractor arising in connection with the Contractor
providing the Works.
This requires the Contractor to indemnify the Employer against any loss, expense,
claim, etc., in respect of any personal injury or death caused by carrying out of the
work, other than their own employees. This includes the liability toward members of
the public who may be affected by the construction work, although they have no part
in it. In the case where a party makes a claim directly against the Employer due to a
death or injury the Contractor should either take on that claim, or alternatively the
Employer can sue the Contractor to recover any monies.
Employer’s liability
Death of, or bodily injury to, employees of the Contractor.
In many countries, employers of staff in any company have a statutory obligation
to provide cover for their employees in the event of death, injury or damage caused
during the course of their employment. “Worker’s Compensation” can also form part
of this insurance.
Professional Indemnity Insurance

Particularly where the Contractor is designing parts of the Works, it would be ad-
visable for the Employer to include a requirement for the Contractor to provided
Professional Indemnity (PI) Insurance. Particularly if, in providing the design, the
Contractor makes a mistake, is found in some way to be negligent or gives inaccurate
advice, then the Contractor will be liable to the Employer in event that the Employer
incurs a loss as a result.
Insurance under the FIDIC 2017 Contracts

The Contractor is required to effect and maintain all insurances for which it is respon-
sible with insurers and in terms, both the insurer and the terms of which are subject to
consent by the Employer.
The terms of the insurances are required to be consistent with terms (if any) agreed
by both Parties before the date of the Letter of Acceptance.
Note that the insurances required to be provided under this Clause are the mini-
mum required by the Employer, and the Contractor may, at the Contractor’s own cost,
add such other insurances that he may deem prudent.
Whenever required by the Employer, the Contractor is required to produce the in-
surance policies which it is required to effect and maintain under the Contract. As
each premium is paid, the Contractor then submits either a copy of each receipt or
confirmation from the insurers that the premium has been fully paid.
If the Contractor fails to effect and keep in force any of the insurances required un-
der the Contract then the Employer may effect and keep in force such insurances and
pay any premium as may be necessary and recover the same from the Contractor. This
is a standard provision in most construction contracts.
If either the Contractor or the Employer fails to comply with any condition of the
insurances effected under the Contract, the Party failing to comply indemnifies the
other against all direct losses and claims arising from such failure.
The Contractor is also responsible for:
a Notifying their insurers of any changes in the nature, extent or programme for the
execution of the Works;
b The adequacy and validity of the insurances in accordance with the Contract at
all times during the performance of the Contract.
The permitted deductible (excess) limits allowed in any policy shall not exceed the amounts
stated in the Contract Data (if not stated, the amounts agreed with the Employer).
Where there is a shared liability the loss is borne by each Party in proportion to
each Party’s liability, provided the non-recovery from insurers has not been caused by
a breach of this Clause by the Contractor or the Employer.
In the event that non-recovery from insurers has been caused by such a breach, the
defaulting Party is required to bear the loss suffered.
Insurance to be provided by the Contractor

The Contractor must provide the following insurances:
The Works
The Contractor is required to insure and to maintain the insurance policies in the joint
names of the Contractor and the Employer from the Commencement Date until the
date of the issue of the Taking-Over Certificate for the Works:
a The Works and the Contractor’s Documents, together with Materials and Plant
which are intended for incorporation into the Works. The insurance cover is also
required to extend to include loss and damage of any part of the Works as a con-
sequence of failure of elements defectively designed or constructed with defective
material or workmanship.
b An additional amount of 15% of the replacement value (or any other amount spec-
ified in the Contract Data) to cover any additional costs related to the rectification
of loss or damage, including professional fees, and the cost of demolition and re-
moval of debris.
The insurance cover is required to cover the Employer and the Contractor against all
loss or damage from whatever cause arising until the issue of the Taking-Over Certif-
icate for the Works.
From that point, the insurance is required to continue until the date of the issue
of the Performance Certificate in respect of any incomplete work for loss or damage
arising from any cause occurring before the date of the issue of the Taking-Over Cer-
tificate for the Works, and for any loss or damage occasioned by the Contractor in the
course of any operation carried out by the Contractor for the purpose of complying
with the Contractor’s obligations under Clause 11 [Defects after Taking Over] and un-
der the Yellow and Silver Books, Clause 12 [Tests after Completion].
Note the published Contract included “Clause 12” within the Red Book but this has
been changed by the Errata (see Appendix).
However, the insurance cover provided by the Contractor for the Works may ex-
clude any of the following:
iii Wear and tear, shortages and theft;

Goods
The Contractor is required to insure, in the joint names of the Contractor and the
Employer, the Goods and other things brought to Site by the Contractor to the extent
specified and/or amount stated in the Contract Data (if not specified or stated, for
their full replacement value including delivery to Site).
The Contractor is required to maintain this insurance from the time the Goods are
delivered to the Site until they are no longer required for the Works.
Liability for breach of professional duty

Where the Contractor is designing parts of the Works, it would be advisable for the
Employer to include a requirement for the Contractor to provide PI Insurance.
Particularly if, in providing the design, the Contractor makes a mistake, is found in
some way to be negligent or gives inaccurate advice, then the Contractor will be liable
to the Employer in event that the Employer incurs a loss as a result.
This loss can be very significant where the design has to be corrected, parts of the
structure have to be taken down and reinstated, a facility has to be closed down whilst
the remedial measures take place and there is also likely to be significant also legal costs.
PI claims can arise where there is negligence, misrepresentation or inaccurate ad-
vice, which does not give rise to bodily injury, property damage or personal injury, but
it does give rise to some financial loss.
Additional coverage for breach of warranty, intellectual property, personal injury,
security and cost of contract can be added.
Note that PI Insurance policies are effected on a “claims made” basis, meaning that
the policy only covers claims made during the policy period when the policy is “live”
(and the premiums are being paid), so claims which may relate to events occurring
before the coverage was active may not be covered.
However, these policies may have a retroactive or retrospective date which can op-
erate to provide cover for claims made during the policy period, but which relate to an
incident which occurs after the retroactive date.
The Engineer under the Red and Yellow Books, on behalf of the Employer, should
ensure that the Contractor has taken out and maintained the required insurances for
the full period of its liability and has certificates and other policy documents to prove it.
Note that the Contractor’s liability is likely to extend many years beyond the com-
pletion of the Works, dependent on the relevant law this typically could be 6, 10, 12
years or more.
Under the FIDIC 2017 Contracts, if the Contractor is responsible for the design of
any part of the Permanent Works under Red Book Sub-Clause 4.1 [Contractor’s Gen-
eral Obligations], and/or any other design under the Contract, and of course he is fully
responsible for design under the Yellow and Silver Books, also under the Red, Yellow
and Silver Books, he has to provide certain indemnities under Clause 17 [Care of the
Works and Indemnities]:
a The Contractor must take out and maintain PI Insurance against his liability aris-
ing out of any act, error or omission in carrying out his design obligations.
The insurance must be maintained in an amount not less than that stated in
the Contract Data. Note that if no amount is stated, the insurance must be to an
amount agreed by the Employer.
Also,
b If it is stated in the Contract Data, PI Insurance to indemnify the Contractor
against liability arising out of any act, error or omission by the Contractor in car-
rying out those design obligations results in the Works (or a Section/Part or major
item of Plant), when completed, not being fit for the purpose(s) for which they are
intended under Sub-Clause 4.1 [Contractor’s General Obligations] (see Chapter 5).
The Contractor is required to maintain PI Insurance for the period specified in the
Contract Data, as stated above, this period could be many years after the Contractor
completed the works.
Injury to persons and damage to property

This is Public liability Insurance.
The Contractor must insure, in the joint names of the Contractor and the Employer,
against liabilities for death or injury to any person, or loss of or damage to any prop-
erty other than the Works arising out of the performance of the Contract and occur-
ring before the issue of the Performance Certificate, other than loss or damage caused
by an Exceptional Event.
The insurance policy must include a “cross liability clause” such that the insurance
shall apply to the Contractor and the Employer as separate insured parties.
The insurance is required to be effected before the Contractor begins any work on
the Site and must remain in force until the issue of the Performance Certificate and
must be for not less than the amount stated in the Contract Data (if not stated, the
amount as agreed with the Employer).
Note that some construction contracts have specific and separate provision for in-
suring neighbouring property which may suffer from collapse, subsidence, vibration,
etc., due to damage by, for example, piling, deep excavations or demolition works
during the execution of the Works, and where not caused by the negligence of the
Contractor.
The FIDIC contracts do not have this as a specific requirement, though it could be
covered here.
The Employer should consider its liabilities in respect of neighbouring owners who
may be affected by the Works and if necessary either instruct the Contractor to pro-
vide such insurance or take it out itself.
Such a policy would normally exclude:
iii Where the damage is caused by any Excepted Risks identified in the contract.
These risks will normally be held by the Employer.
Injury to employees
The Contractor must effect and maintain insurance against liability for claims, dam-
ages, losses and expenses (including legal fees and expenses) arising out of the ex-
ecution of the Works in respect of injury, sickness, disease or death of any person
employed by the Contractor, or any of the Contractor’s other personnel.
The Employer and the Engineer must also be indemnified under the policy of insur-
ance, except that this insurance may exclude losses and claims to the extent that they
arise from any act or neglect of the Employer or of the Employer’s Personnel.
The insurance must be maintained in full force and effect during the whole time that
the Contractor’s Personnel are assisting in the execution of the Works.
For any person employed by a Subcontractor, the insurance may be effected by the
Subcontractor, but the Contractor is responsible for the Subcontractor’s compliance
with this Sub-Clause.
Other insurances required by Laws and by local practice

The Contractor is required to provide all other insurances required by the Laws of the
countries where (any part of) the Works are being carried out at the Contractor’s own
cost.
Other insurances required by local practice (if any) are detailed in the Contract
Data, and the Contractor provides the insurances in compliance with the details given
at the Contractor’s own cost.
10 Employer’s and Contractor’s Claims
Employer’s and Contractor’s Claims are covered in the FIDIC 2017 Contracts by:

• Clause 20 – Employer’s and Contractor’s Claims
Before examining the details of the FIDIC 2017 Contracts in terms of Employer’s and
Contractor’s Claims, let us first consider the matter of Claims generally.
What is a Claim?
If an Employer, an agent of the Employer (e.g. Engineer/Employer’s Representative),
delays and/or disrupts a Contractor, or causes him to incur additional expense over
and above what he would have naturally incurred in carrying out the work, or in some
cases, an event happens that is not directly caused by the Employer or his agent, but
is outside the control of the Contractor, then normally a Claim arises, for which con-
tracts provide a direct remedy in the form of Extensions of Time and/or payment of
Cost and in some cases Cost plus Profit.
It is important, particularly in dealing with claims, to appreciate the distinction
between a “claim under the contract” and a “claim for breach of contract”.
A claim under the contract arises when some event occurs (which may or may not be
a breach of contract) for which the contract provides a specific remedy. The remedy is
usually the award of an Extension of Time (EOT) to the Contractor and/or payment of
a sum of money, based on Cost, and sometimes profit in addition.
Often the same event will give rise to claims both under and in breach of contract.
But the consequences of the two are different.
For example, consequential damages may be recovered for a breach, but under the
contract only such remedies as are provided within the contract can be recovered. A
claim under a contract is a way of enforcing its provisions.
A breach of contract may have two principal consequences. First, every breach enti-
tles the innocent party to sue for damages. Second, if the breach is sufficiently serious
it gives the innocent party an option to treat the party in breach as having repudiated
the whole contract, and termination could arise.
In such a case the innocent party may bring the contract to an end by accepting the
repudiation, or he may at his option treat the contract as subsisting, when it will con-
tinue to bind both parties.
The subject of claims is often an emotive subject, tending to polarise the two sides
and making them think badly of each other.
There are those who are prepared to exploit a situation and take advantage of any
loophole, and there are also those who prepare contracts in haste and later attempt to
defend those documents.
There may also be concern as to the impartiality of, for example, the Contract Ad-
ministrator, whether they be an Engineer or an Employer’s Representative, not only
with his “dual” role in representing the Employer and administering the Contract, but
particularly where the Engineer/Employer’s Representative is also the Employer or a
salaried employee of the Employer.
By legal definition a contract is an agreement freely entered into by the two parties.
To tackle the problems of claims and to remove the apparent stigma attached to them
it is necessary for both sides to have a better understanding of the basis and principles of
contracts and, therefore, of the rights and obligations of the contracting parties.
It is necessary for professional representatives to have an understanding of the busi-
ness side of industry in order to appreciate the circumstances in which the Contractor
tenders, the risks which he can properly and contractually be expected to undertake
and the financial consequences if things go wrong. A contract states the obligations
to be undertaken, and no-one is entitled to expect more than compliance with those
obligations.
Types of Claim
A claim is a process where the Contractor considers that certain matters are changed
or fall outside the original basis of contract. It is a request for payment by the Contrac-
tor in respect of some occurrence which he considers was not envisaged in the contract
and for which agreement has not been reached.
The Engineer or Employer’s Representative acts independent of both Employer and
Contractor and is empowered by the terms of the contract to settle claims and certain
disputes between them. He alone must discharge those responsibilities in an independ-
ent and impartial way.
Claims made by the Contractor fall into three general types:
i Contractual claims – within the contract and can be dealt with by the Engineer/
Employer’s Representative under provisions within the contract.
An example would be a delay caused by a Variation, for which the Contractor
would notify a Claim.
ii Extra-contractual claims – outside the contract and can only be negotiated by
Employer and Contractor i.e. there is no express provision within the contract,
and they are therefore founded on a breach of contract and settlement is in terms
of damages.
An example would be negligent design by the Contractor, for which the Em-
ployer would submit a claim.
iii Ex-gratia claims – no basis in contract or common law and is usually an occur-
rence which was unforeseen by either party and was significant. The payments are
totally discretional and are the province of the Employer.
Employer’s and Contractor’s Claims 231
An example would be where an exceptional event occurs such as a pandemic
or severe inflation, or where the Contractor encounters severe hardship, and the
Employer decides to pay the Contractor an amount, for which he would not be
entitled to be paid under the Contract.
Contractual claims
A contractual claim must be made under a specific clause of the contract in order to
establish that it is in accordance with and under the provisions of some condition or
requirement of the Contract.
The basis of all claims is, almost without exception, change e.g. new instructions,
changed circumstances, new requirements, changes in work content, etc. It must be
said that disputes could, in fact, be avoided given sufficient information and with good
communication between the parties involved.
There are basically two important aspects of claims:
i Contractual principal and validity;

ii Quantification of time and/or payment.
and generally contractual disputes fall into three categories which relate to:
• What is to be done;
• The time in which it is, or has had, to be done;
• What is to be paid.
A general review of claims management

Well-conceived, well-presented realistic submissions, based on a clear understanding
of the contract, and forwarded as soon as possible after the circumstances giving rise
to the claim, will speed the resolution including any consideration of interim pay-
ments. The converse will, of course, apply.
The Contractor should be prepared to provide all written evidence and records that the
Contract Administrator may reasonably require to establish the validity of the claim. If
the claim has ultimately to be referred to arbitration the respondent will have the right to
demand such evidence. This applies in particular to the Contractor’s pricing notes, which
are often considered by the Contractor to be confidential, but which would nevertheless
have to be produced at the discovery stage of an arbitration or legal action. The Contractor
may, not unreasonably, require that any confidential information submitted in support of
a claim is used only for that purpose and is not disclosed to third parties.
Whilst claims are never welcomed by the recipient, a well-structured claim will be
better received than a sketchy estimate of alleged monies lost.
There is essentially no right or wrong way to prepare and present a claim for loss and
expense; however, there are certain guidelines, which enable a claim to be presented in
the best possible light.
First, it must be factual, there is nothing worse than a Contract Administrator ana-
lysing a claim and finding that even a minority of elements are untrue, as it will preju-
dice his views against the majority of items that are factual.
Claims generate a mass of correspondence, time sheets, invoices and other paper-
work, all of which must be included in order that the claim can “stand alone” as a
complete document, rather than having to refer to other information stored elsewhere.
Therefore, in order for the recipient to quickly analyse the basis of a claim, it is advis-
able to compile a concise and brief Claim Document, with all the necessary backup
information included within separate appendices.
The Claim Document should be set out as follows:
i Project Details
It is worthwhile to begin the claim by listing the Project Details i.e. Parties to
the Contract, Name and Type of Project, Value, Original Commencement and
Completion Dates. This sets the scene for the claim to follow.
ii Problems
List the matters that brought about the claim e.g. Delays in receipt of Design
Information, delays caused by others, etc., including the efforts which you as the
Contractor made to prevent these delays. Contrast what was included in the Ten-
der Documents and therefore priced for, against what actually happened, and the
consequences.
It is good policy to include within this Section a letter list in date order showing the
letters sent to or from the Employer, Contract Administrator or other party and the
relevant responses. A brief summary of the contents can be included within this list,
and with the actual letters included in a separate volume.
Claim calculations
The “Heads of Claim” can then be addressed, and all calculations included.
Typical items for which the Contractor may seek reimbursement are.....
Prolongation of Preliminaries Costs

This may include Site Management, Site Accommodation, Plant & Scaffolding, which
may be chargeable on a Monthly or Weekly basis.
Disruption
This may include additional labour costs to carry out the work in a different sequence
or under different conditions to those tendered for. A delay may also extend the con-
tract into a winter period with its associated disruption, for example groundwork ex-
ternally, without the delay, may have been completed before the winter. In order to
prove these costs, the Contractor will need to show how his original tender was cal-
culated, and relate this to his actual work sequence and associated costs. It should be
noted that many Contractors might seek to recover additional costs due to their own
failings via this section which they are clearly not entitled to do!
Fluctuations in cost of Labour, Materials or Plant

The Contractor will have made assessments of likely increases over the Contract Period,
but if this period is extended he is entitled to recover any additional costs he has incurred.
N.B: particularly during a recession there may also have been decreases!
Increased Insurances, Bond, etc.
If the Contract Period is extended, the Insurance risk and cover period will also be
extended. Bonds normally apply for a block period such as a year or six months, so
care must be taken in calculating and checking this element.
Prolonged Head Office Costs

In addition to the Direct Site Costs incurred in Item (i) there may also be Head Office
Costs such as Project Managers, Quantity Surveyors and Secretarial Staff including a
proportion of Rent, Heating and Lighting Costs. This is a very difficult cost to assess,
particularly when the Head Office supports a number of Projects, so if prolonged head
office costs have been incurred, and there is NO OTHER WAY to calculate them, a
theoretical calculation such as Hudson’s Formula may be used.......
Percentage Head Office Overheads Contract Sum
× × Delay in Weeks
100 Contract Period
or more rarely the Emden Formula......
Total Overheads Contract Sum

Total Turnover Contract Period
or even more rarely the Eichleay Formula......
Contract Invoices Total Overheads × Contract Sum

Total Invoices Contract Period
Finance Charges
The Contractor may also be involved with financing elements of the project, such as
later release of retention due to delays.
Cost of claim preparation

The cost of preparing a claim is not a legitimate head of claim and must be covered
by the Contractor’s Overheads. The reason is that under many forms of contract the
Contractor is not required to make a detailed loss and expense claim, merely to furnish
such information as may be required for the Contract Administrator to assess loss and
expense. In practice, however, a well-prepared and well-documented claim will repay the
Contractor in terms of recovered amount and will also speed up the settlement of claims.
Record keeping
It is vital that comprehensive records are kept so that the Contractor can substantiate claims
and also that the Contract Administrator can defend them in the event that they arise.
These can include (as stated above):

iii Progress Reports

vi Technical Queries
vii Site Diaries and Daily Reports
viii Site Meeting Minutes
ix Photographic Evidence

In the event that the claim proceeds to adjudication, arbitration and/or litigation, then
proper records are absolutely vital to prove a case.
No records usually means no success!
Consideration of claim by the Engineer/Employer’s Representative

Notwithstanding what the contract states:
• If the claim is acceptable in principle the Contractor should be notified accord-

ingly and as soon as possible.
• Similarly, if the claim is unacceptable the Contractor should be notified as soon
as possible.
• If further information and/or elucidation required the Contractor should be told
promptly.
• There should be an arrangement for the keeping of contemporaneous records. These
are not necessarily admissible but an agreed statement of fact taken at the time.
• If the claim is accepted, payment should be certified promptly of such monies as
can be properly substantiated.
• If the full amount is not certified in full, state this with reasons and add what fur-
ther information would justify reconsideration if this is appropriate.
• Ensure that all information required for verification is obtained from the Contrac-
tor and dealt with promptly to ensure that the certification can be issued.
Claims under the FIDIC 2017 Contracts

The FIDIC 2017 Contracts provide for various types of claims:
Contractor’s Claims against the Employer
• Claims which allow the Contractor an EOT;

• Claims which allow the Contractor an EOT plus Cost;
• Claims which allow the Contractor an EOT plus Cost plus Profit.
Employer’s Claims against the Contractor
• Claims which allow the Employer to claim costs from the Contractor and/or an
extension to the Defects Notification Period.
See Figure 10.1 for relevant Sub-Clauses entitling the Contractor to claim an EOT
only, or an EOT plus “Cost” or an EOT plus “Cost Plus Profit”.
See Figure 10.2 for relevant Sub-Clauses entitling the Employer to claim costs from
the Contractor and/or an extension to the Defects Notification Period.
FIDIC Red Book 2017 FIDIC Yellow Book 2017 FIDIC Silver Book 2017
Clauses giving the Contractor right to claim Extension of Time Only
Clause 8.5 – Extensions of time Clause 8.5 – Extensions of time Clause 8.5 – Extensions of time
Variations Variations Variations
Cause of delay covered by subaclauses Cause of delay covered by sub-clauses Cause of delay covered by sub-clauses
Exceptionally adverse climactic conditions Exceptionally adverse climactic conditions
Unforeseeable shortages Unforeseeable shortages
Any delay, impediment etc caused by the Employer or its agents. Any delay, impediment etc caused by the Employer or its agents. Any delay, impediment etc caused by the Employer or its agents.
Measurement
Clauses giving the Contractor right to claim Extension of Time + Cost
Clause 4.12 – Unforeseeable physical conditions Clause 4.12 – Unforeseeable physical conditions
Clause 4.15 – Access Route Clause 4.15 – Access Route Clause 4.15 – Access Route
Clause 4.23 – Archaeological and Geological Findings Clause 4.23 – Archaeological and Geological Findings Clause 4.23 – Archaeological and Geological Findings
Clause 13.6 – Adjustments for Changes in Laws Clause 13.6 – Adjustments for Changes in Laws Clause 13.6 – Adjustments for Changes in Laws
Clause 18.4 – Consequences of an Exceptional Event Clause 18.4 – Consequences of an Exceptional Event Clause 18.4 – Consequences of an Exceptional Event
Clauses giving the Contractor right to claim Extension of Time + Cost + Profit
Clause 1.9 – Delayed drawings or instructions Clause 1.9 – Errors in the Employer's Requirements
Clause 1.13 – Compliance with Laws Clause 1.13 – Compliance with Laws Clause 1.12 – Compliance with Laws
Clause 2.1 – Right of Access to the Site Clause 2.1 – Right of Access to the Site Clause 2.1 – Right of Access to the Site
Clause 4.6 – Co-operation Clause 4.6 – Co-operation Clause 4.6 – Co-operation
Clause 4.7 – Setting out Clause 4.7 – Setting out


Clause 7.4 – Testing by the Contractor Clause 7.4 – Testing by the Contractor Clause 7.4 – Testing by the Contractor
Clause 7.6 – Remedial Work Clause 7.6 – Remedial Work Clause 7.6 – Remedial Work
Clause 8.10 – Consequences of Employer’s Suspension Clause 8.10 – Consequences of Employer’s Suspension Clause 8.10 – Consequences of Employer's Suspension
Clause 8.12 – Prolonged Suspension Clause 8.12 – Prolonged Suspension Clause 8.12 – Prolonged Suspension
Clause 10.2 – Taking Over Parts Clause 10.2 – Taking Over Parts
Clause 10.3 – Interference with Tests on Completion Clause 10.3 – Interference with Tests on Completion Clause 10.3 – Interference with Tests on Completion
Clause 11.7 – Right of Access after Taking Over Clause 11.7 – Right of Access after Taking Over Clause 11.7 – Right of Access after Taking Over
Clause 11.8 – Contractor to Search Clause 11.8 – Contractor to Search Clause 11.8 – Contractor to Search
Clause 12.2 – Delayed tests Clause 12.2 – Delayed tests
Clause 12.4 – Failure to pass tests Clause 12.4 – Failure to pass tests
Clause 13.3 – Variation Procedure Clause 13.3 – Variation Procedure Clause 13.3 – Variation Procedure
Clause 16.1 – Suspension by Contractor Clause 16.1 – Suspension by Contractor Clause 16.1 – Suspension by Contractor
Clause 16.2 – Termination by Contractor Clause 16.2 – Termination by Contractor Clause 16.2 – Termination by Contractor
Clause 16.3 – Contractor’s Obligations after Termination Clause 16.3 – Contractor’s Obligations after Termination Clause 16.3 – Contractor’s Obligations after Termination
Clause 17.2 – Liability for Care of the Works Clause 17.2 – Liability for Care of the Works Clause 17.2 – Liability for Care of the Works
Figure 10.1 Sub-Clauses entitling the Contractor to make a claim

FIDIC Red Book 2017 FIDIC Yellow Book 2017 FIDIC Silver Book 2017
Clauses giving the Contractor right to claim Extension of Time Only
Clause 8.5 – Extensions of time Clause 8.5 – Extensions of time Clause 8.5 – Extensions of time
Variations Variations Variations
Cause of delay covered by subaclauses Cause of delay covered by sub-clauses Cause of delay covered by sub-clauses
Exceptionally adverse climactic conditions Exceptionally adverse climactic conditions
Unforeseeable shortages Unforeseeable shortages
Any delay, impediment etc caused by the Employer or its agents. Any delay, impediment etc caused by the Employer or its agents. Any delay, impediment etc caused by the Employer or its agents.
Measurement
Clauses giving the Contractor right to claim Extension of Time + Cost
Clause 4.12 – Unforeseeable physical conditions Clause 4.12 – Unforeseeable physical conditions
Clause 4.15 – Access Route Clause 4.15 – Access Route Clause 4.15 – Access Route
Clause 4.23 – Archaeological and Geological Findings Clause 4.23 – Archaeological and Geological Findings Clause 4.23 – Archaeological and Geological Findings
Clause 13.6 – Adjustments for Changes in Laws Clause 13.6 – Adjustments for Changes in Laws Clause 13.6 – Adjustments for Changes in Laws
Clause 18.4 – Consequences of an Exceptional Event Clause 18.4 – Consequences of an Exceptional Event Clause 18.4 – Consequences of an Exceptional Event
Clause 1.9 – Delayed drawings or instructions Clause 1.9 – Errors in the Employer's Requirements
Clause 1.13 – Compliance with Laws Clause 1.13 – Compliance with Laws Clause 1.12 – Compliance with Laws
Clause 2.1 – Right of Access to the Site Clause 2.1 – Right of Access to the Site Clause 2.1 – Right of Access to the Site
Clause 4.6 – Co–operation Clause 4.6 – Co–operation Clause 4.6 – Co-operation
Clause 4.7 – Setting out Clause 4.7 – Setting out


Clause 7.4 – Testing by the Contractor Clause 7.4 – Testing by the Contractor Clause 7.4 – Testing by the Contractor
Clause 7.6 – Remedial Work Clause 7.6 – Remedial Work Clause 7.6 – Remedial Work
Clause 8.10 – Consequences of Employer’s Suspension Clause 8.10 – Consequences of Employer’s Suspension Clause 8.10 – Consequences of Employer's Suspension
Clause 8.12 – Prolonged Suspension Clause 8.12 – Prolonged Suspension Clause 8.12 – Prolonged Suspension
Clause 10.2 – Taking Over Parts Clause 10.2 – Taking Over Parts
Clause 10.3 – Interference with Tests on Completion Clause 10.3 – Interference with Tests on Completion Clause 10.3 – Interference with Tests on Completion
Clause 11.7 – Right of Access after Taking Over Clause 11.7 – Right of Access after Taking Over Clause 11.7 – Right of Access after Taking Over
Clause 11.8 – Contractor to Search Clause 11.8 – Contractor to Search Clause 11.8 – Contractor to Search
Clause 12.2 – Delayed tests Clause 12.2 – Delayed tests

Clause 12.4 – Failure to pass tests Clause 12.4 – Failure to pass tests
Clause 13.3 – Variation Procedure Clause 13.3 – Variation Procedure Clause 13.3 – Variation Procedure
Clause 16.1 – Suspension by Contractor Clause 16.1 – Suspension by Contractor Clause 16.1 – Suspension by Contractor
Clause 16.2 – Termination by Contractor Clause 16.2 – Termination by Contractor Clause 16.2 – Termination by Contractor
Clause 17.2 – Liability for Care of the Works Clause 17.2 – Liability for Care of the Works Clause 17.2 – Liability for Care of the Works
Figure 10.2 Sub-Clauses entitling the Employer to make a claim

Clause 20 of FIDIC 1999 was entitled “Claims, Disputes and Arbitration”, but has
now been split into two Clauses:
• Clause 20 – Employer’s and Contractor’s Claims;

• Clause 21 – Disputes and Arbitration (Clause will be dealt with within Chapter 11).
This is a sensible change as the previous Clause 20 in the FIDIC 1999 Contracts almost
implied that if the Contractor submitted a claim, it was the natural step to escalate it
into a dispute within the same Clause!
Employer’s Claims were also previously covered under Clause 2.5 of the FIDIC 1999
Contracts, now Contractor’s Claims and Employer’s Claims are dealt with under the
same provisions.
Hence, Clause 20 covering the submission of claims by the Employer and by the
Contractor is now significantly longer than in the FIDIC 1999 Contracts.
Employer’s and Contractor’s Claims

Three definitions should be particularly borne in mind when dealing Claims under the
FIDIC 2017 Contracts:
i Under Sub-Clause 1.1.6 (Sub-Clause 1.1.5 Yellow Book/Sub-Clause 1.1.3 Silver

Book) “Claim” means “a request or assertion by one Party to the other Party for
an entitlement or relief under any Clause of these Conditions or otherwise in con-
nection with, or arising out of, the Contract or the execution of the Works”.
All claims, whether they be the Contractor claiming from the Employer, or the Em-
ployer claiming from the Contractor, are now dealt with in exactly the same way and
under the same Clauses.
It is critical that in assessing claims there is a full understanding of what constitutes
“Cost” as many claims refer to payment of “Cost”.
ii Under Sub-Clause 1.1.19 (Sub-Clause 1.1.16 Silver Book) “Cost” means “all ex-
penditure reasonably incurred (or to be incurred) by the Contractor in performing the
Contract, whether on or off the Site, including taxes, overheads and similar charges,
but does not include profit. Where the Contractor is entitled under a Sub-Clause of
these Conditions to payment of Cost, it shall be added to the Contract Price”.
It is also critical that in assessing claims there is a full understanding of what consti-
tutes “Profit” as many claims refer to payment of “Cost Plus Profit”.
iii Under Sub-Clause 1.1.20 (Sub-Clause 1.1.17 Silver Book) “Cost Plus Profit” means
“Cost plus the applicable percentage for profit stated in the Contract Data (if not
stated, five percent (5%)). Such percentage shall only be added to Cost, and Cost
Plus Profit shall only be added to the Contract Price, where the Contractor is entitled
under a Sub-Clause of these Conditions to payment of Cost Plus Profit”.
This percentage may be taken from the Contractor’s tender or may be set by the
Employer.
Previously in the FIDIC 1999 Contracts, certain clauses referred to “Cost Plus
Profit”, but never stated the amount or the percentage that could be claimed as profit,
leaving it to the Contractor and the Engineer or Employer (or the Employer’s Repre-
sentative) to agree an amount or percentage either on a claim-by-claim basis, or more
often, a pre-agreed percentage to be applicable to all Claims.
The Contractor is also now expressly entitled to recover lost profit where Works are
omitted, or where the Contract is terminated for convenience (although the margin of
profit is not stipulated).
Previously, under the FIDIC 1999 Contracts, claims by the Employer against the
Contractor were dealt with under Clause 2.5, where the Employer had to notify its
claim “as soon as practicable after the Employer became aware of the event or circum-
stances giving rise to the claim”, whilst claims by the Contractor against the Employer
were dealt with under Clause 20.1, but now all claims by either Party are dealt with
under Clauses 20.1 and 20.2.
So, the Employer also now has to give notice of a claim within 28 days after it be-
came aware, or should have become aware, of the event or circumstance resulting in
a claim for payment (or reduction of the contract price) or an extension of the Defects
In addition, both the Employer and the Contractor must submit a fully detailed
claim within 84 days. In the FIDIC 1999 Contracts, the time frame for the Contractor
to submit a fully detailed claim was 42 days.
Under Clause 20.1, a Claim is stated as being:
a The Employer considering that it is entitled to any additional payment from the
Contractor or reduction in the Contract Price and/or to an extension of the Defect
As stated previously, within the FIDIC 1999 Contracts, Employer’s Claims were
dealt with separately under Sub-Clause 2.5.
b The Contractor considers that it is entitled to any additional payment from the
Employer and/or EOT.
c Either Party considering that it is entitled to any other relief against the other
Party. As this would exclude any additional payment and/or EOT, it could include
any form of entitlement or relaxation under any part of the Contract.
Sub-Clause 20.2 deals with (a) or (b), in the case of (c), where either Party has disa-
greed with the other, the matter should be referred to the Engineer for Agreement or
Determination.
If a Claim arises under (c), where the other Party or the Engineer has disagreed with
the Claim, then a Notice should be issued by the Claiming Party, a Dispute shall not be
deemed to have arisen but the claiming Party may, by giving a Notice, refer the Claim
to the Engineer and the Engineer must make a determination under Sub-Clause 3.7.
Notice of a Claim
If either Party (Employer or Contractor) considers himself entitled to a claim as de-
tailed above, the Party gives a Notice of Claim to the Engineer (the other Party under
the Silver Book) not later than 28 days after the claiming Party became aware, or
should have become aware (“should have become aware” is very subjective but stresses
that the claiming Party should notify as soon as possible!), of the matter which gave
rise to the cost, loss, delay or extension of the Defects Notification Period which are
the subject of the Claim. The words “should have become aware” are obviously subject
to opinion and possible debate!
If the claiming Party does not give notice within 28 days, it loses its right to a Claim
and the Claim will be time barred (see “Initial Response” below).
It is likely that there may be some “creative drafting” in the 28-day time bar apply-
ing to the Employer as well as to the Contractor so that the claiming Party can comply
with the time limit!
Note that FIDIC 1999 also required the Contractor to give notice of a Claim,
whereas FIDIC 2017 requires the claiming Party to give a Notice of Claim to the En-
gineer, which is more prescriptive.
Notice is now a defined term Sub-Clause 1.1.56 (Sub-Clause 1.1.48 Silver Book) de-
fining “Notice” as “a written communication identified as a Notice and issued in ac-
cordance with Sub-Clause 1.3” (Notices and Other Communications).
Sub-Clause 1.3 requires that a Notice must be:
i A paper-original signed by the Contractor’s Representative, the Engineer or the

authorised representative of the Employer; or
ii An electronic original generated from any of the systems of electronic transmis-
sion stated in the Contract Data or acceptable to the Engineer (Employer under
the Silver Book).
and if it is a Notice, it must be identified as a Notice, not just an email or other com-
munication purporting to be a Notice.
So, the Notice of Claim is now more formal than previously under FIDIC 1999,
where previously Contractors would notify informally through emails, wording within
letters or Meeting Minutes.
The new deadline of 28 days for the Employer to issue a Notice of Claim, now the
same time scale as the Contractor always had, is calculated from the point in time
when the Employer should have become aware and imposes strict obligations on the
Employer which did not exist before, but is likely to be welcomed by Contractors!
Some Employers have amended this time scale within the Contract, on the basis that
they believe that the Employer’s Claims tend to be more complex than the Contractor’s
Claims, but then maybe it is just Employers not being used to preparing and notifying
claims to deadlines!
Initial Response
If the Engineer (the other Party under the Silver Book) considers the Notice of Claim
to be outside the 28-day period and therefore out of time, he must notify the claiming
Party within 14 days of receiving the Notice, with reasons, or the Notice of Claim will
be deemed valid, so for the 28-day time bar for a Notice of Claim time bar to be effec-
tive, the Engineer (the other Party under the Silver Book) must give that Notice to the
claiming Party within 14 days of receiving the Party’s Notice of Claim or the lapse of
the 84 days for the fully detailed Claim (see below).
Notwithstanding this deemed acceptance, the other (non-claiming) Party may, in
turn, give a subsequent Notice disagreeing with the deemed validity, in which case, the
Engineer (the other Party under the Silver Book) is required to review the issue within
his Determination.
Also, if the Engineer (the other Party under the Silver Book) issues its Notice deem-
ing the Notice of Claim invalid i.e. out of time, the claiming Party may include in its
fully detailed Claim of its disagreement or justification of the late submission.
Even if a 14-day Notice has been issued, the Engineer (the other Party under the
Silver Book) is required to agree or determine the substance of the Claim pursuant to
Sub-Clause 3.7 and include a Determination on the validity of the Notice.
The FIDIC 1999 Contracts had a simple time bar, in that a claim notified outside the
28-day period was time barred i.e. “if the Contractor fails to give notice of a claim within
such period of 28 days, the Time for Completion shall not be extended, the Contractor
shall not be entitled to additional payment, and the Employer shall be discharged form all
liability in connection with the claim”, so the Employer absolves himself of all liability
simply because the notice of a claim was outside the 28-day period.
The FIDIC 2017 Contracts, however, although having the same time bar, have “sof-
tened” the approach, allowing a form of appeal against the time bar. The claiming
Party can either argue that the Notice of Claim or the fully detailed Claim was served
within their time limits or submit a justification for why it was late. The Engineer may
consider prejudice to the other Party and prior knowledge by the other Party.
If the Engineer (the other Party under the Silver Book) does not confirm that, it is
deemed to be a valid submission, however the other Party may disagree with that, and
in that case issues a Notice to the Engineer stating that fact.
Various opinions have been published about the effectiveness and enforceability of
time bars in contracts such as FIDIC, commentators particularly debating whether
the clause is a condition precedent to the Party being able to recover time and money,
and whether a Party can benefit from its own breach of contract to the detriment of
the injured Party.
For example, if the Employer does not provide something which it is to provide un-
der the Contract, can the Employer prevent the Contractor from receiving any remedy
because the Contractor failed to notify the Engineer (the other Party under the Silver
Book) within the eight-week limit, and possibly, if Completion is delayed the Contrac-
tor has to pay delay damages?
There are those within the industry, notably within the contracting fraternity, that
consider this time barring clause to be totally unfair and unduly harsh and an ob-
struction to good relationships between the contracting parties since such a clause
promotes a Notice being submitted at the merest hint of a potential claim.
It is also stated that in some jurisdictions such a fatal Notice clause may be contrary
to the intent of the relevant Law. If that is the case, then that would have to be consid-
ered and legal advice sought.
The author, whilst not being a lawyer, is of the opinion that apart from the legal
issue in the previous paragraph, the time bar is correct and enforceable as the parties
are clear as to what the terms of their agreement are at the time the Contract is formed,
it is also clear what happens if the Contractor does not notify a claim in the correct
format within the time stated.
It is advisable that Claimants properly respect the time limits within the Contract
and comply with them, rather than to question whether they are ultimately enforcea-
ble, or whether Claimants can appeal against them.
Considering that the content requirements for the Notice of Claim is quite brief and
straightforward, it would hard to justify why anyone would issue a Notice of Claim
late, possibly apart from the usual difficulty of identifying the start of the period the
delay/cost occurred. Having said that it is likely that Contractors and Employers are
likely to provide very scant detail at the Notice of Claim stage, just to “get their foot
in the door” in time.
The fully detailed Claim is a different matter as it probably requires a significant
amount of evidence, including a statement of the contractual/legal basis of the Claim.
No specific deadline is set out in Clause 20 in respect of other claims than men-
tioned above but if there is a disagreement in respect of such other Claim, the claiming
party may refer the claim to the Engineer (the other Party under the Silver Book),
which shall be done “as soon as practicable after the claiming party becomes aware of
the disagreement”.
These new provisions make it very important to distinguish between Claims for
additional payment, reduction in Contract Price and Extension of the Defects Notifi-
cation Period, and other claims.
Under FIDIC 2017, the provision applies to the claiming Party so it could be the
Contractor or the Employer, which is unusual in that the rules of notifying claims
are the same for the Employer claiming from the Contractor as the Contractor sub-
mitting a contractual claim to the Employer, but also as stated the time bar has been
“softened” in that if the claiming Party disagrees or he/she believes there are circum-
stances which may justify the late notice they detail these circumstances within their
fully detailed claim, and the Engineer is required to proceed with determination of the
Claim, but taking into account the points raised by the claiming Party.
Note that under FIDIC 1999 Clause 2.5 the Employer only had to raise its claim “as
soon as practicable after the Employer became aware of the event or circumstances giving
rise to the claim”. There was no right of the Contractor to be discharged of liability of
the Employer failed to raise its claim as soon as practicable, so effectively the claims
provisions of FIDIC 1999 were biased in favour of the Employer. FIDIC 2017 now pro-
vides equality, in that the 20-day rule applies to either claiming Party.
Contemporaneous records
The claiming Party as with previous FIDIC contracts is required to keep contempo-
raneous records as necessary to substantiate its claim, the term “contemporaneous”
means records that are prepared or generated at the same time, or immediately after
the event or circumstance giving rise to the Claim.
These can include, where appropriate:

iii Progress Reports
iv Programmes (Planned versus Actual)

vii Site Diaries and Daily Reports
viii Site Meeting Minutes

The Engineer has the right to monitor and inspect these records. If additional records
are required to be kept a Notice may be issued for them.
It is likely that a professional Contractor will have the majority of such records in
place in any event as a matter of course, and may only need to focus those records
upon the actual claim submitted.
The Engineer may also instruct the Contractor to keep specific records and monitor
those being kept by the Contractor, although these specific requirements should not be
considered as an admission of liability by the Engineer or the Employer.
It is vital that the Contractor and the Engineer have some documents as to what is
required and both parties are proactive towards concluding the claim as quickly as
possible and for the benefit of all the parties.
Note that if the Engineer chooses to monitor, inspect or instruct, this shall not imply
acceptance of the accuracy or completeness of the Contractor’s contemporary records.
Fully Detailed Claim

The claiming Party is required to submit a fully detailed Claim to the Engineer (the
Employer’s Representative under the Silver Book) within 84 days of when it became
aware or should have become aware of the event giving rise to the Claim.
The detailed Claim includes:
a A detailed description of the event or circumstance giving rise to the Claim;

b A statement of the contractual and/or legal basis of the Claim;
c Contemporary records on which the Claim relies;
d Detailed supporting particulars of the amount of additional payment (or reduc-
tion in the contract price if the Employer is the claiming party), EOT or extension
of the Defects Notification Period claimed.
If fully detailed particulars are not provided within the 84-day period, the Notice of
Claim will lapse and will no longer be valid.
When the Engineer (the Employer’s Representative under the Silver Book) receives
the detailed Claim, he is required to give a Determination under Clause 3.7.
Within either:
i 84 days (previously under FIDIC 1999 it was 42 days) after the claiming Party
became aware, or should have become aware, of the event or circumstance giving
rise to the Claim,
or
ii Such other period as may be proposed by the claiming Party and agreed by the En-
gineer (the Employer’s Representative under the Silver Book), the claiming Party
shall submit to the Engineer a fully detailed Claim.
Again, as stated above, the words “should have become aware” may give rise to pos-
sible debate!
If within this time limit the claiming Party fails to submit the statement under
sub-paragraph (b) above, the Notice of Claim shall be deemed to have lapsed, it shall
no longer be considered as a valid Notice and the Engineer (the Employer’s Represent-
ative under the Silver Book) shall, within 14 days after this time limit has expired, give
a Notice to the claiming Party accordingly.
Under the FIDIC 1999 Contracts the period was 42 days, but there was no time bar,
so there are serious consequences for not complying with the time limit for submitting
a fully detailed Claim in the 2017 Red Book!
However, as with the initial 28-day time limit discussed above, the FIDIC 2017 Con-
tracts provide further provisions to give the provision some balance.
After receiving a fully detailed Claim, or an interim or final fully detailed Claim, the
Engineer (the Employer’s Representative under the Silver Book) is required to agree
or determine:
a Any additional payment to which the claiming Party is entitled or the reduction of
the Contract Price (in the case of the Employer as the claiming Party); and/or
b Any Extension of the Time for Completion, or the extension of the Defects Notifi-
cation Period, to which the claiming Party is entitled under the Contract.
If the Engineer (the Employer’s Representative under the Silver Book) has given a No-
tice under Sub-Clause 20.2.2 [Engineer’s Initial Response] and/or under Sub-Clause
20.2.4 [Fully detailed Claim], the Claim shall nevertheless be agreed or determined in
accordance with this Sub-Clause 20.2.
The agreement or determination of the Claim includes whether or not the Notice of
Claim is to be treated as a valid Notice taking account of the details (if any) included
in the fully detailed claim of the claiming Party’s disagreement with such Notice(s) or
why late submission is justified (as the case may be). The circumstances which may be
taken into account (but shall not be binding) may include:
• Whether or to what extent the other Party would be prejudiced by acceptance of

the late submission;
• In the case of the time limit under Sub-Clause 20.2.1 [Notice of Claim], any evi-
dence of the other Party’s prior knowledge of the event or circumstance giving rise
to the Claim, which the claiming Party may include in its supporting particulars;
and/or
• In the case of the time limit under Sub-Clause 20.2.4 [Fully detailed Claim], any
evidence of the other Party’s prior knowledge of the contractual and/or other le-
gal basis of the Claim, which the claiming Party may include in its supporting
particulars.
If, having received the fully detailed Claim under Sub-Clause 20.2.4 [Fully detailed
Claim], or in the case of a Claim under Sub-Clause 20.2.6 [Claims of continuing effect]
an interim or final fully detailed Claim (as the case may be), the Engineer (the Employ-
er’s Representative under the Silver Book) requires necessary additional particulars:

ii He gives his response on the contractual or other legal basis of the Claim, by
giving a Notice to the claiming Party, within the time limit for agreement under
Sub-Clause 3.7.3 [Time limits].
iii As soon as practicable after receiving the Notice under sub-paragraph (i) above,
the claiming Party submits the additional particulars, and the Engineer (the Em-
ployer’s Representative under the Silver Book) proceeds to agree or determine the
matters.
If the matters giving rise to a Claim have a continuing effect, which is quite common,
for example, with long-term issues with availability of Goods caused by epidemic or
governmental actions:
a The fully detailed Claim is considered as interim, but note that the Claim must
still be dealt with in the normal way, even though it may be interim.
b The Engineer (the Employer’s Representative under the Silver Book) gives his re-
sponse on the contractual or other legal basis of the Claim, by giving a Notice to
the claiming Party, within the time limit under the Contract.
c After submitting the first interim fully detailed Claim the claiming Party is re-
quired to submit further interim fully detailed Claims at monthly intervals, giving
the accumulated amount of additional payment claimed, and/or EOT claimed or
extension of the Defects Notification Period (in the case of the Employer as the
claiming Party).
d The claiming Party is required to submit a final fully detailed Claim within 28
days after the end of the effects resulting from the event or circumstance, or within
such other period as may be proposed by the claiming Party and agreed by the
Engineer.
This final fully detailed Claim is required to give the total amount of additional
payment claimed (or the reduction of the Contract Price, in the case of the Em-
ployer as the claiming Party), and/or EOT claimed (in the case of the Contractor
as the claiming Party) or extension of the Defects Notification Period (in the case
of the Employer as the claiming Party).
After receiving the Notice of Claim, and until the Claim is agreed or determined, in
each Payment Certificate the Engineer (the Employer’s Representative under the Sil-
ver Book) must include such amounts as due to the claiming Party under the relevant
provision of the Contract.
The Employer is only entitled to claim any payment from the Contractor and/or to
extend the Defects Notification Period or set off against or make any deduction from
any amount due to the Contractor, by complying with this Sub-Clause 20.2.
The requirements of Sub-Clause 20.2 are in addition to those of any other Sub-
Clause which may apply to the Claim.
If the claiming Party fails to comply with this or any other Sub-Clause in relation to
the Claim, any additional payment and/or any EOT (in the case of the Contractor as
the claiming Party) or extension of the Defects Notification Period (in the case of the
Employer as the claiming Party) shall take account of the extent (if any) to which the
failure has prevented or prejudiced proper investigation of the Claim by the Engineer
(the Employer’s Representative under the Silver Book).
Agreement or Determination
Previously under FIDIC 1999, Clause 3.5 (Determinations) was very brief, requiring
the Engineer simply to proceed to agree or determine any matter, including consulting
with each Party, but if agreement could not be reached he was required to make a fair
determination and whether there was agreement or the Engineer had to determine he
issued a Notice to both Parties once it had been completed.
FIDIC 2017 Sub-Clause 3.7 (Agreement or Determination) (Sub-Clause 3.5 Silver
Book) is much more comprehensive and prescriptive with a number of new provisions,
and provides for various steps (with time limits) to be taken in agreeing or determining
various matters, with the outcomes of either:
• Agreement,
• Determination in the absence of agreement,
• Effect of the agreement or determination, or
• Dissatisfaction with the determination.
These “matters” are not just Claims, they are any matters for which the Engineer (the
Employer’s Representative under the Silver Book) must try to reach an agreement or
to make a fair determination.
It includes Employer’s Claims, Contractor’s Claims, measurement of the Works where
applicable, the evaluation of Variations including dayworks, where actual progress differs
from planned progress affecting payment in accordance with a Schedule of Payments, the
amount that should be paid to the Contractor in respect of Plant and/or Materials when
shipped or delivered to Site, under Sub-Clause 14.5 [Plant and Materials intended for the
Works], payment issues including where the Engineer (the Employer’s Representative un-
der the Silver Book) states that the Engineer (the Employer’s Representative under the
Silver Book) has undervalued the Works, and also whether work is defective.
An important point stated within this Sub-Clause is that the Engineer (the Employ-
er’s Representative under the Silver Book) is required to act neutrally between the
Parties and not be biased towards, or on behalf of the Employer.
The Engineer (the Employer’s Representative under the Silver Book) is also required
to consult with each Party in an attempt to reach a fair agreement. The Engineer (the
Employer’s Representative under the Silver Book) is also required to provide a record
of that consultation.
The Engineer (the Employer’s Representative under the Silver Book) also gives the
Parties a “Notice of the Parties’ Agreement”.
In the absence of an agreement within the time scales of the Contract, the Engineer
(the Employer’s Representative under the Silver Book) gives a notice to that effect, and
makes a fair determination, referred to as an Engineer’s (the Employer’s Representa-
tive under the Silver Book) Determination.
When agreeing or determining any matter or Claim, the Engineer (the Employer’s Rep-
resentative under the Silver Book) must follow the following steps under the Contract.
Consultation to reach agreement

This is a new provision under the FIDIC 2017 Contracts in that the Engineer (the Em-
ployer’s Representative under the Silver Book) is first required to consult with BOTH
Parties to try to create discussion between them in an effort to reach agreement within
the time limits laid down by the Contract.
The discussion could be with each Party separately or both Parties at the same time.
The Engineer (the Employer’s Representative under the Silver Book) provides both
Parties with a record of the consultation he has had with them.
This is an important point as the Engineer (the Employer’s Representative under the
Silver Book) must seek agreement between the Parties, and must not act unilaterally.
If agreement is achieved within the time limit laid down by the Contract, the Engi-
neer (the Employer’s Representative under the Silver Book) confirms that agreement
by giving a Notice to both Parties describing and quantifying the agreement, both
Parties then sign the agreement.
If:
a No agreement is achieved within the time limit for agreement under the Contract;
or
b Both Parties advise the Engineer (the Employer’s Representative under the Silver
Book) that no agreement can be achieved within this time limit whichever is the
earlier, the Engineer (the Employer’s Representative under the Silver Book) gives
a Notice to the Parties and immediately proceeds to carry out an Engineer’s (the
Employer’s Representative under the Silver Book) Determination.
If agreement cannot be reached between the Parties, the Engineer (the Employer’s
Representative under the Silver Book) makes a determination, and in doing so, take
due regard of all relevant circumstances.
Within the time limit for determination, the Engineer (the Employer’s Represent-
ative under the Silver Book) gives a Notice to both Parties of his determination. The
Notice must state that it is a “Notice of the Engineer’s (the Employer’s Representative
under the Silver Book) Determination” and describe the determination in detail with
reasons and detailed supporting particulars.
Time limits
If agreement is achieved between the Parties, the Engineer (the Employer’s Represent-
ative under the Silver Book) gives a Notice of agreement within 42 days or other time
limit proposed by the Engineer (the Employer’s Representative under the Silver Book)
and agreed by both Parties, after:
a If a matter is not a Claim, i.e. the Employer considering that it is entitled to any
additional payment from the Contractor or reduction in the Contract Price and/
or to an extension of the Defect Notification Period, the date of commencement
of the time limit for agreement as stated in the applicable Sub-Clause of these
Conditions.
b If it is a Claim where the Contractor is considering that it is entitled to any addi-
tional payment from the Employer and/or an EOT, the date the Engineer receives
a Notice under Sub-Clause 20.1 from the claiming Party.
c In the case of a Claim where either Party considers that it is entitled to any other
relief against the other Party e.g. any form of entitlement or relaxation under any
part of the Contract, the date the Engineer (the Employer’s Representative under
the Silver Book) receives a fully detailed Claim under Sub-Clause 20.2.4 [Fully
detailed Claim], or in the case of a Claim under Sub-Clause 20.2.6 [Claims of con-
tinuing effect], an interim or final fully detailed Claim.
The Engineer (the Employer’s Representative under the Silver Book) is required to give
his Notice of determination within 42 days or within such other time limit as may be
proposed by the Engineer (the Employer’s Representative under the Silver Book) and
agreed by both Parties (after the date corresponding to his obligation to proceed).
If the Engineer (the Employer’s Representative under the Silver Book) does not give
the Notice of agreement or determination within the relevant time limit:
The above provision obviously applies to Claims raised by the Employer as well as by
the Contractor.
The time in which the Engineer (the Employer’s Representative under the Silver
Book) must make a determination is now 84 days.
Previously under the FIDIC 1999 Contracts there was an initial 42-day period for
the Engineer (the Employer’s Representative under the Silver Book) to respond to a
claim or any further particulars supporting a previous claim with approval, or with
disapproval and detailed comments. But then to make a fair determination under Sub-
Clause 3.5 for which there was no express time limit.
Note that time limits can be amended/extended if proposed by the Engineer (the
Employer’s Representative under the Silver Book) and accepted by both Parties.
Effect of the agreement or determination

Each agreement or determination is binding on both Parties (and the Engineer (the
Employer’s Representative under the Silver Book)) unless and until it is corrected (see
below), or in the case of a determination, it is revised under Clause 21 (Disputes and
Arbitration).
If an agreement or determination concerns the payment of an amount from one
Party to the other Party, the Contractor includes the amount in the next Statement and
the Engineer (the Employer’s Representative under the Silver Book) includes it in the
Payment Certificate that follows that Statement.
If, within 14 days after giving or receiving the Engineer’s (the Employer’s Repre-
sentative under the Silver Book) Notice of agreement or determination, any error of a
typographical or clerical or arithmetical nature is found:
a By the Engineer (the Employer’s Representative under the Silver Book), then he
immediately advises the Parties; or
b By a Party, then that Party gives a Notice to the Engineer (the Employer’s Repre-
sentative under the Silver Book), clearly identifying the error. If the Engineer does
not agree he immediately advises the Parties.
The Engineer (the Employer’s Representative under the Silver Book) within seven days
of finding the error, or receiving a Notice, gives a Notice to both Parties of the cor-
rected agreement or determination. The corrected agreement or determination is then
treated as the agreement or determination.
Dissatisfaction with the Engineer’s (the Employer’s Representative under the

Silver Book) determination
If either Party is dissatisfied with a determination of the Engineer (the Employer’s
Representative under the Silver Book):
a The dissatisfied Party gives a Notice of Dissatisfaction to the other Party, with a
copy to the Engineer (the Employer’s Representative under the Silver Book).
b The Notice of Dissatisfaction must clearly state that it is a “Notice of Dissatisfac-
tion with the Engineer’s (the Employer’s Representative under the Silver Book)
Determination” and set out the reason(s) for dissatisfaction.
c The Notice of Dissatisfaction is given within 28 days after receiving the Engi-
neer’s (the Employer’s Representative under the Silver Book) Notice of the de-
termination, or his Notice of the corrected determination or, in the case of a
deemed determination rejecting the Claim, within 28 days after the time limit for
determination.
d Either Party may proceed under Sub-Clause 21.4 (Obtaining DAAB’s Decision).
If no Notice of Dissatisfaction is given by either Party within the period of 28 days, the
determination of the Engineer (the Employer’s Representative under the Silver Book)
is deemed to stand and to have been accepted by both Parties and is final and binding
on them.
If the dissatisfied Party is dissatisfied with only part(s) of the Engineer’s (the Em-
ployer’s Representative under the Silver Book) determination:
iii The remainder of the determination becomes final and binding on both Parties as
if the Notice of Dissatisfaction had not been given.
In the event that a Party fails to comply with an agreement of the Parties, or a final
and binding determination of the Engineer (the Employer’s Representative under the
Silver Book), the other Party may refer the failure directly to arbitration in which case
the first and the third paragraphs of Sub-Clause 21.7 [Failure to Comply with DAAB’s
Decision] apply in the same manner as these paragraphs apply to a final and binding
decision of the DAAB.
How can claims and their escalation into disputes be avoided?

Claims are unfortunately considered as a “necessary evil” when drafting and manag-
ing construction contracts, but there are some basic things that can be done to prevent
claims and/or their escalation into disputes:
Tender Documents
It is generally found that an appropriate procurement strategy, together with a compe-
tent, robust and unambiguous tender document, is the key to avoiding or minimising
contractual problems at a later date.
The tender Documents should clearly set out the respective responsibilities of the
Parties to the contract in clear and unambiguous terms with a clear definition of risks
and which party is carrying which risk and how.
Any physical, financial or time constraints should also be set down with any re-
quired parameters.
Changes during construction

The incidence of claims generally lies in the effects of change. This may be due to
unforeseen conditions or unexpected events or imposed change such as change in the
Works to be carried out i.e. Variations.
Conditions of Contract recognise that unforeseen conditions can arise and have a con-
tractual mechanism to deal with the effects of that situation. Imposed changes are gener-
ated by the issue of Variations, but too often only the direct cost issues are considered, and
little attention is given to the delay and disruption effects of the changed work. This can
often be mitigated by discussion with the Contractor prior to the issue of the Variation.
It is important that when a Contractor notifies a claim that he is required to state the
Clause/Sub-Clause in the Contract under which he considers he has an entitlement.
If the Contract Administrator (Engineer or Employer’s Representative) agrees then
this establishes the procedures for the evaluation of that claim. If this cannot be estab-
lished then it is possibly a claim that is founded in a breach of contract, is outside the
contract and therefore cannot be administered by the Contract Administrator.
Timely submission and assessment of claims

During the construction of the Works the Contractor may register the possibility of a
claim (if he is not to prejudice his rights or prejudice its consideration) though he may
subsequently not pursue it.
Claims should not be put aside to be dealt with later, in the hope that they may go
away, the facts tend to be become obscured (particularly with the dispersal of staff)
and attitudes tend to harden. In short claims do not improve with storage.
Communication
Communication and poor claims administration are still seen as significant problems
in most disputes. It is important that the procedures and spirit required by the con-
tract are followed and that the parties demonstrate that they are actively seeking reso-
lution of the matters in dispute.
The keeping of contemporaneous records

A pre-requisite to problem avoidance is for the parties to understand the contract and
be clear as to their respective obligations and responsibilities. It has also been said that
every dispute should be considered at the time as though it were going to arbitration
or litigation.
Probably the most usual reason why many potentially valid claims are abandoned is
the claimant’s failure to maintain adequate records of events or costs. Without proper
relevant and contemporaneous records, the evidence needed to establish the claim is
not available, the claim is doomed and the proceedings become fractious.
It is vital that comprehensive records are kept so that the Contractor can substanti-
ate claims and also that the Contract Administrator/Employer can defend them in the
event that they arise.
These can include:
1 Correspondence
2 Instructions
3 Programmes (Planned versus Actual)
4 Site Diaries
5 Site Meeting Minutes
6 Photographic Evidence
7 Meteorological Records
Good records are fundamental to the resolution of claims. As soon as the Contractor
becomes aware that he has, or may have, a claim under the contract, he must ensure
that full and detailed records relating to the history of the claim are prepared and
maintained throughout the period during which conditions giving rise to the claims
remain in existence.
These records should be submitted to the Contract Administrator for his agree-
ment. Where the Contract Administrator refuses or fails to check the Contractor’s
records that fact should be recorded by the Contractor.
A Contract Administrator’s refusal to agree or accept records, usually where he
does not admit the existence of the claim does not help the Employer if there is a valid
claim.
If the claim is ultimately referred to Arbitration, the Arbitrator can only consider
the evidence before him. Where a Contractor has maintained accurate and contem-
poraneous records, which the Contract Administrator has refused to check or agree,
it may be difficult for the Contract Administrator to produce convincing evidence to
refute the claim. Where, as is often the case, the Contract Administrator maintains a
separate set of records a problem will arise, if and to the extent, that they are different
to the Contractor’s.
In such a situation, the Arbitrator can only weigh the evidence before him and de-
cide which is the more convincing. The fact that the Contract Administrator refused to
consider the Contractor’s records would, in all probability, weigh in the Contractor’s
favour.
There is no logical reason not to agree a set of contemporaneous records of events or
any contentious issue. These records can be qualified if the claim at that point in time
is not admitted or for any relevant reason.
In the event that the claim proceeds to a formal dispute resolution process, be it
DAAB, arbitration and/or legal proceedings, then proper records are absolutely vital
to prove a case.
The principle is Records, Records, Records! And that is why the author makes no
apology in mentioning the keeping of contemporaneous records three times within
this chapter!
Agreeing cost and price

The issue of agreeing cost is quite clear, in that the Contractor must provide whatever
information and records are necessary to reach that agreement. What is more prob-
lematical is that Contractors are often reluctant to provide proof of overhead and
profit levels included in the contract. There is no reason for the pricing notes not to be
made available and their confidentiality recognised. If the dispute goes to arbitration
the pricing notes would be subject to discovery anyway.
In establishing rates for changes or additional works the contract requires contract
rates, or rates based on contract rates, should be used wherever possible. It is insuffi-
cient, however, to use rates where the item description is the same without taking into
account the circumstances under which the changed work was carried out.
All too often the disruptive effects of changed or altered works are not recognised. It
is appropriate to analyse the constituent elements of the relevant rates and adjust those
elements to reflect the new requirements (including differences in location, timing,
sequence, etc., and both quantity-related and time-related costs).
Cost information is a matter of record in most cases, particularly in relation to la-
bour and materials. Plant costs can cause difficulty particularly with contractor-owned
plant or plant on internal company hire. The Contractor may seek to charge daywork
rates or internal hire rates, both of which may be inappropriate.
Summary
Claims are often seen as an inevitable consequence of working in the construction
industry.
They are not inevitable and can be avoided by some simple rules:
i Clearly state in all tender and contract documentation what is required of all
parties.
Claims often arise because the parties are not aware of their responsibilities.
ii Communicate effectively with all parties.
Claims usually escalate when the parties do not speak to each other!
iii Put everything in writing, in the event that a claim arises you have documentary
evidence to support or dismiss it. Every claim submitted deserves some time spent
in analysing and constructively responding to it. Rarely is a claim totally fictitious
or unwarranted, but the onus is upon the claimant to prove a loss, not for the re-
cipient to disprove it.
Claims usually fail because the claimant does not have factual evidence of what
he asserts within his claims or he did not give proper written notification at the
time of the problem.
11 The Dispute Avoidance/Adjudication
Board and the Resolution of Disputes
The Dispute Avoidance/Adjudication Board and the Resolution of Disputes are

covered in the FIDIC 2017 Contracts by:

• Clause 21 – Disputes and Arbitration
What is a Dispute?
“Dispute” is a defined term under Sub-Clause 1.1.29 (Sub-Clause 1.1.26 in the Silver
Book, of the FIDIC 2017 Contracts), and is any situation where:
• One Party makes a claim against the other Party (which may be a Claim, as defined
in these Conditions, or a matter to be determined by the Engineer (Employer’s
Representative under the Silver Book) under these Conditions, or otherwise);
• The other Party (or the Engineer under Sub-Clause 3.7.2 [Engineer’s Determina-
tion] (Employer’s Representative’s Determination under the Silver Book) rejects
the claim in whole or in part; and
• The first Party does not acquiesce (by giving a NOD (Notice of Dissatisfaction)
under Sub-Clause 3.7.5 [Dissatisfaction with Engineer’s determination] (Employ-
er’s Representative’s Determination under the Silver Book) or otherwise;
provided however that a failure by the other Party (or the Engineer/Employer’s
Representative under the Silver Book) to oppose or respond to the claim, in whole
or in part, may constitute a rejection if, in the circumstances, the DAAB or the
arbitrator(s), as the case may be, deem it reasonable for it to do so.
While an attempt has clearly been made to narrow the scope of the term “Dispute”,
this definition is not particularly straightforward and therefore may be a source of
confusion and possible debate in the future.
Under FIDIC 1999, the “Dispute Adjudication Board” (DAB) was only put in place
if/when a dispute arose between the Parties.
Under FIDIC 2017 the Parties are jointly required to appoint a Dispute Avoidance/
Adjudication Board (DAAB) at the start of the Contract, which must visit the Site on
a regular basis, and will remain in place for the duration of the Contract.
256 DAAB and the Resolution of Disputes
Sub-Clause 1.1.22 (Sub-Clause 1.1.20 under the Silver Book) defines “DAAB” or
“Dispute Avoidance/Adjudication Board” as “the sole member or three members (as the
case may be) so named in the Contract, or appointed under Sub-Clause 21.1 [Constitu-
tion of the DAAB] or Sub-Clause 21.2 [Failure to Appoint DAAB Member(s)]”.
Sub-Clause 1.1.23 (Sub-Clause 1.1.20 under the Silver Book) defines “DAAB Agree-
ment” as
the agreement signed or deemed to have been signed by both Parties and the sole
member or each of the three members (as the case may be) of the DAAB in accord-
ance with Sub-Clause 21.1 [Constitution of the DAAB] or Sub-Clause 21.2 [Failure
to Appoint DAAB Member(s)], incorporating by reference the General Condi-
tions of Dispute Avoidance/Adjudication Agreement contained in the Appendix
to these General Conditions with such amendments as are agreed.
There is a new provision under Clause 21.4.1, in that the reference of a Dispute to the
DAAB shall, unless prohibited by law, be deemed to interrupt the running of any ap-
plicable statute of limitation or prescription period.
“Notice of Dissatisfaction” or “NOD” is defined as the Notice one Party may give to
the other Party if it is dissatisfied, either with an Engineer’s determination (Employer’s
Representative’s determination under the Silver Book) or with a DAAB’s decision.
Note that a Party may draft a NOD in respect of parts of the DAAB’s decision. The
part or parts that the Party is dissatisfied with should be clearly identified in the NOD.
As stated in Chapter 8, Clause 20 of FIDIC 1999 was entitled “Claims, Disputes and
Arbitration”, but has now been split into two Clauses:

Previously, the FIDIC 1999 Contracts only had 20 clauses, Clause 20 being entitled
“Claims, Disputes and Arbitration”. FIDIC 2017 now has 21 clauses, the new Clause
21 being entitled “Disputes and Arbitration”, Claims being included within the new
contracts under Clause 20 entitled “Employer’s and Contractor’s Claims”.
The FIDIC 1999 Contracts provided for a DAB (“Dispute Adjudication Board”),
FIDIC 2017 providing for a DAAB (“Dispute Avoidance/Adjudication Board”) which
can be comprised of a sole member or three members named in the Contract or ap-
pointed under Clause 21.1.
Disputes and Arbitration under the FIDIC 2017 Contracts

FIDIC 1999 provided for a DAB to be appointed by the date stated in the Appendix
to Tender, but would usually be appointed on an “ad hoc” only when a dispute arose
under the Contract and only dealing with the dispute.
It is generally felt within the industry, and by FIDIC, that disputes can be dealt with
better, and with greater consistency if the Board is a “standing board” which is in
place throughout the Contract and essentially acts as part of the “project team”, and
this is how the FIDIC 2017 Contracts have been drafted in terms of the DAAB, unless
the Parties agree otherwise.
DAAB and the Resolution of Disputes 257
There is a debate as to whether the provision of a “standing DAAB” actually does
aid dispute avoidance by engaging with the parties and carrying out regular visits, but
it is felt that it certainly assists with dispute avoidance.
Many Contracts are now including provisions for avoidance as well as resolution
of disputes, and to this end a new provision has been added within the FIDIC 2017
Contracts, to allow the Parties, should they agree, to request the DAAB to provide
assistance in resolving any matter that has not formally escalated into a Dispute. If the
Parties enable these provisions, they are not bound to act on any advice given by the
DAAB. This provision previously existed within the Conditions for Design, Build and
Operate Projects (Gold Book) 2008.
The General Conditions of the Dispute Avoidance/Adjudication Agreement and the
DAAB Procedural Rules have also been amended by including express provisions in
respect of the DAAB’s role in assisting the Parties to avoid Disputes.
Note that it is beyond the scope of those books to examine or review the General
Conditions of the Dispute Avoidance/Adjudication Agreement.
This is why the DAAB has been renamed from its former DAB to stress that its role
is not just to resolve the dispute when it “inevitably” happens.
Disputes under FIDIC 2017 are now decided by the DAAB, the Parties jointly
appointing the members of the DAAB within the time stated in the Contract Data,
the default period being 28 days after the date the Contractor receives the Letter of
Acceptance.
The DAAB consists of either one or three members, the default being three mem-
bers, with members’ names being selected from a list within the Contract Data.
The Parties are required to sign a DAAB Agreement, by which time the composition
of the DAAB must have been agreed together with the remuneration terms.
If a Party fails to agree the appointment of DAAB members or failing to agree the
remuneration or to sign the DAAB agreement, then an entity stated in the Contract
Data (if nothing is stated, the President of FIDIC) to appoint the DAAB member(s)
and set the fees, and a DAAB agreement will be deemed to have been signed by the
Parties.
Each Party is jointly and severally liable for paying half the DAAB fees, so if the
Contractor pays the fees in full, he includes it in a Statement and recovers the differ-
ence from the Employer, if the Employer pays it in full, a deduction for the difference
is made in the Statement from amounts otherwise due to the Contractor.
Obtaining the DAAB’s decision

Either Party (Employer or Contractor) may refer a Dispute to the DAAB for its
decision.
The reference of a Dispute to the DAAB is required:
a If Sub-Clause 3.7 [Agreement or Determination] (Sub-Clause 3.5 under the Silver

Book) applies to the subject in Dispute, be made within 42 days of giving or receiv-
ing a Notice of Dissatisfaction.
If the Dispute is not referred to the DAAB within this period of 42 days, the
Notice of Dissatisfaction is deemed to have lapsed and is no longer valid.
b State that the reference is given under Sub-Clause 21.4.1.
c Set out the referring Party’s case relating to the Dispute.
d Be in writing, with copies to the other Party and the Engineer (note there in no
Engineer under the Silver Book so the copies just go to the other Party).
e For a DAAB of three persons, be deemed to have been received by the DAAB on
the date it is received by the designated chairperson of the DAAB.
Both Parties are required to make available to the DAAB all information, access to
the Site and appropriate facilities, as the DAAB may require for the purposes of de-
ciding on the Dispute.
Whilst the DAAB deliberates on the matter, the Parties are required to continue to
perform their obligations under the Contract (this is a normal requirement).
The DAAB gives its decision on the outcome of the dispute within:
a 84 days after receiving the reference (this is the same as FIDIC 1999); or
b Such period as may be proposed by the DAAB and agreed by both Parties.
However, if at the end of this period, the due date(s) for payment of any DAAB mem-
ber’s invoice(s) has passed but the invoice(s) remains unpaid, the DAAB is not obliged
to give its decision until the outstanding invoice(s) have been paid in full, the DAAB
then gives its decision as soon as practicable after payment has been received.
The decision is given in writing to both Parties with a copy to the Engineer (again
there is no Engineer under the Silver Book so the decision just goes to the Parties), and
must include reasons for the decision.
The decision is binding on both Parties, who are required to comply with it, whether
or not a Party gives a Notice of Dissatisfaction. The Employer is responsible for en-
suring that the Engineer (under the Red and Yellow books) complies with the DAAB
decision.
Note that if the decision of the DAAB requires a payment of an amount by one
Party (Employer/Contractor) to the other Party (Contractor/Employer), the amount is
immediately due and payable without the requirement for any certification or Notice.
The DAAB proceeding is not deemed to be an arbitration, and the DAAB is not
acting as arbitrator(s).
If either Party is dissatisfied with the DAAB’s decision:
a The dissatisfied Party may (if they wish to take the matter further) give a Notice of
Dissatisfaction to the other Party, with a copy to the DAAB.
b The Notice of Dissatisfaction must clearly state that it is a “Notice of Dissatisfac-
tion with the DAAB’s decision” and set out the reason(s) for dissatisfaction.
c This Notice of Dissatisfaction must be given within 28 days after receiving the
DAAB’s decision.
If the DAAB fails to give its decision within 84 days, then either Party may, within 28
days after the period has expired, submit a Notice of Dissatisfaction to the other Party.
Neither Party is entitled to commence arbitration on a Dispute unless and until a
Notice of Dissatisfaction in respect of that Dispute has been given.
If the DAAB has given its decision, and no Notice of Dissatisfaction with the
DAAB’s decision has been given by either Party within 28 days after receiving the
DAAB’s decision, then the decision becomes final and binding on both Parties.
Amicable Settlement
If a Notice of Dissatisfaction with the DAAB’s decision has been given, both Parties
must attempt to settle the Dispute amicably before the commencement of arbitration.
Amicable Settlement could include a meeting between the Parties, or possibly
mediation/conciliation. The key is to exhaust all efforts at resolving the Dispute before
it goes to arbitration if arbitration cannot be avoided altogether.
However, unless both Parties agree otherwise, arbitration may be commenced on
or after the 28th day (FIDIC 1999 had 56 days) after the day on which the Notice of
Dissatisfaction was given, even if no attempt at Amicable Settlement has been made.
Arbitration generally
Before considering the provisions within the FIDIC 2017 Contracts for arbitration it is
worth reviewing the process of arbitration in general terms, for those not familiar with it.
Note that this is a generic summary of the arbitration process, not specifically ap-
plicable to the FIDIC contracts, the exact details of an arbitration being dependent on
where the arbitration is held, and the specific process involved.
Any dispute between two or more parties can be resolved through the Courts, a
process known as “litigation” or “legal proceedings”.
However, litigation has many disadvantages, not least the cost and process of a full
court hearing and in many cases sometimes a number of years waiting time before the
matter actually reaches the Courts, so arbitration is often used as a simpler, more con-
venient (and usually cheaper) method of dispute resolution. But one should not enter
into an arbitration process lightly!
Arbitration is a procedure for the settlement of disputes, under which the parties
agree to be bound by the decision of an Arbitrator or Arbitrator(s) whose decision is,
in general, final and legally binding on both parties.
The Contract should include provisions for the resolution by international arbitra-
tion of any Dispute which is not settled amicably by the Parties.
In international contracts which are covered by the FIDIC contracts, for example,
international commercial arbitration has numerous advantages over litigation in na-
tional courts and is likely to be more acceptable to the Parties.
Careful consideration should be given to ensuring that the international arbitration
rules that are chosen are compatible with the provisions of the Contract.
It is important that the Parties agree on the number of Arbitrators and the language
of arbitration. In the absence of specific requirements as to the number of Arbitrators
and the place of arbitration in the Contract, an International Court of Arbitration will
make the decision.
Sometimes a professional institution recognised by the Parties and the relevant
country will be used to appoint the Arbitrator(s). Such institutions are well equipped
to appoint Arbitrators and have panels of Arbitrators for that purpose, but it may be
prudent to check, before designating an institution in the Contract, that the institution
named is prepared to appoint an Arbitrator, if required.
For major projects tendered internationally, it is desirable that the place of arbitra-
tion be situated in a country other than that of the Employer or Contractor.
This country should have ratified a bilateral or multilateral convention (such as the
1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards), or both, that would facilitate the enforcement of an arbitral award in the
states of the Parties.
Note, however, that in some legislations an award by an Arbitrator may still have to
be ratified by a Court.
It may be considered desirable in some cases for other Parties to be joined into any
arbitration between the Parties or for two or more pending arbitrations to be consoli-
dated, thereby creating a multi-party arbitration.
Some Employers have included multi-party arbitration clauses in their contracts;
however, such clauses require skilful drafting, and usually need to be prepared on a
case-by-case basis.
It is not unusual that the arbitration of a complex dispute is carried out and con-
cluded long after a project has been completed. The author has been involved with
some arbitrations of that nature which extend several years after project completion.
The Arbitrator may be a lawyer, but arbitration is not the premise of lawyers; in fact,
legal qualifications are not necessary if the person has technical qualifications, is an
expert in the field of the dispute and has qualified as an Arbitrator.
He will make a decision according to the rules of arbitration and the applicable laws,
the decision, known as an “award”, is legally binding and can be enforced through the
courts if required.
Arbitration is not a new concept; in fact, it has been in existence for almost as long
as the law itself, the first official recognition being the Arbitration Act 1697, which
largely governed disputes about the sale of livestock.
One does not issue writs in arbitration as one would with litigation, BOTH parties
merely agree to enter into arbitration because it is a provision within the contract be-
tween them, and thus be bound by the decision of the Arbitrator.
Arbitrators are normally appointed by one of THREE methods:
iii By Order of a Court.
The Arbitration Acts (dependent on the country where the arbitration is to be held) set
out procedures in the absence of any agreement to the contrary between the parties.
As arbitration is a more flexible arrangement than litigation, whatever procedure both
parties agree on, then that is often sufficient in an arbitration case.
It may be surprising to hear that arbitration is common as a settlement procedure for
disputes under trade agreements, maritime and insurance, consumer matters such as
package holidays and property valuations, as well as construction industry disputes.
The contracting party that initiated that the dispute be referred to arbitration is
usually referred to as the “Claimant”, whilst the other party is referred to as the “Re-
spondent”. Should there be a Joint Agreement to go to arbitration, the arbitrator will
decide who is the Claimant, and who is the Respondent. It is important that these titles
are clarified as the arbitration rules repeatedly refer to them.
There are several advantages in using arbitration rather than litigation:
iii Speed
The dispute is settled efficiently and usually without the normal delays and procedural
matters involved in litigation, not least the waiting time before actually getting into court.

vi Thoroughness
Because the Arbitrator is a skilled technical person, the dispute can often be dealt
with more thoroughly and matters more rigorously aired than in a confined and for-
mal courtroom atmosphere.
vii Expense
It can readily be seen that arbitration is generally a less expensive option than litiga-
tion, though it must not be seen as a cheap way to resolve a dispute. In some complex
cases where experienced arbitrators demand significant fees, arbitration can be even
more expensive than litigation.
The main disadvantages of using arbitration rather than litigation are:

A dispute may hinge on a difficult point of law, which the Arbitrator has insufficient
legal knowledge to resolve, as he is an expert in the field relating to the dispute, but not
necessarily in the law itself. He is, however, entitled to seek legal advice on a point of
law, but not on the dispute itself, and also the disputing parties can refer a question of
law to a court.
NB: The arbitration award itself cannot be referred to the Courts unless BOTH
parties consent, or the Courts are referred to on a point of law, the resolution of which
could substantially overturn an arbitrator’s decision.
Further, arbitrators cannot be sued for negligence as they do not hold themselves
up as “experts” in the sense of being advisory bodies and therefore liable for giving
wrongful advice.

Arbitration is not subject to rulings in previous cases as with the courts, each case
being judged on its own merits on the day, and also to some extent subject to the
knowledge and experience of the Arbitrator, therefore you have no guide as to how
successful you may be with your action.
It is prudent to always seek professional advice before resorting to arbitration as
whilst it is simpler than Court action, the Arbitrator’s decision is final and binding
therefore you must be confident that you have a strong case.
iii Decision Making
There are some perceptions that Arbitrators, being technical people who may be or have
been previously Contractors or Consultants themselves, tend to be more “empathetic”
than lawyers, and may wish to “split the difference” between the parties when making
their awards as they have possibly been in a similar position themselves, but judges are
inclined to take colder decisions and award wholly in favour of one of the parties.
The author believes that all professionals have a duty to uphold the responsibilities
they are vested with, so it is not a view that he shares.
Notice of reference to Arbitration

Proceedings may begin by either party sending a written notice to the other stating
that they wish to refer the dispute to arbitration, and if they cannot jointly agree on a
person to act as arbitrator, the Appointer named in the contract, usually a professional
body will appoint the Arbitrator. Any correspondence flowing between the two parties
as from the date of appointment must then also be copied to the Arbitrator.
Within a defined period of the notification date i.e. the date the Arbitrator writes to
the parties accepting the appointment, a preliminary meeting may be held between the
parties at a time and venue to be directed by the Arbitrator to decide the form of the
hearing which may be on a documents only basis or an oral hearing.
Documents only tends to be cleaner and quicker as there is less opportunity for the
parties to debate the issue.
The role of the Arbitrator

The role of the Arbitrator is only to examine the evidence before him enabling him
to resolve the dispute, and nothing more, he cannot look into other matters not in
dispute.
He can normally conduct the arbitration as he wishes (within any specified proce-
dures), though he must set the procedures in a way that is not detrimental to either
party.
He must also have a regard for the rules of evidence….
For example, ……….
iii The Arbitrator is not allowed to take into account any evidence he has discovered
himself, which was not provided by either party.

The Hearing
At the Hearing, the parties are entitled to legal representation should they wish,
though they should be made aware that the Arbitrator has the power equivalent to a
judge in litigation.
The Arbitrator normally commences by introducing the parties and summarising
the dispute itself.
Then the Claimant or his legal representative is invited to outline his version of the
dispute and his party’s involvement, emphasising any matters which he feels may be
important. The Arbitrator may also invite the Claimant to call witnesses, though they
must first be sworn in under oath, and both the Claimant and the Respondent must
have the opportunity to cross-examine them, in addition to the Arbitrator should he
so wish.
The Respondent or his legal representative is then invited to outline his version of
the dispute and his party’s involvement, emphasising any matters which he feels may
be important. Again, witnesses may appear, with the same provisos as before.
Finally, the Respondent makes his closing speech, followed by the Claimant, follow-
ing which the Arbitrator closes proceedings and advises the parties as to when he will
make his award.
Inspection by the Arbitrator

The Arbitrator is entitled to inspect any property, work or material at any premises,
and may invite the claimant and/or the respondent to accompany him purely for the
purpose of identifying the work or materials. No-one else is allowed to accompany the
Arbitrator unless he specifically invites him.
The Award
The Award is binding upon both parties and must be served in the appropriate manner
with full headings, summary of issues in dispute, outline of events leading to the dis-
pute, his decision based on the hearing and finally the monetary award.
Arbitrator’s fees and expenses

In all of the above cases both parties will normally incur costs, though it is the
Arbitrator’s decision as to how the costs are apportioned.
Both parties are initially liable to the Arbitrator for payment of his fees and ex-
penses, but the Arbitrator will direct the parties as to the proportion they are liable for
once the decision is reached. Should the parties agree on a settlement of the dispute at
any time during the Arbitration, they will jointly be liable for the Arbitrator’s Costs.
Arbitration under the FIDIC 2017 Contracts
There are four routes to arbitration:

iii Any failure to comply with an agreement or a final and binding determination of
the Engineer (Employer’s Representative under the Silver Book);

Note that the Arbitrator may take into account the extent to which a Party has failed
to co-operate in constituting and appointing a DAAB, in any award dealing with costs
of the arbitration.
Also, where a Party has failed to comply with a DAAB’s decision, whether binding
or final and binding, the arbitral tribunal will have the power to order, by an interim
or provisional measure or an award, the enforcement of that decision.
The provisional measure or an award is subject to the express reservation that the
rights of the parties are reserved until the merits of the dispute are resolved by an
award.
As a further incentive for the Parties to cooperate with each other in the appoint-
ment of the DAAB, under Sub-Clause 21.6 [Arbitration] a new provision has been
added in respect of any award costs, allowing the arbitral tribunal to take account of
a Party’s failure to co-operate in the appointment of the DAAB.
If the Dispute is not settled by the DAAB provisions, or by Amicable Settlement it
is finally settled by international arbitration.
Unless the Parties agree otherwise:
a The Dispute is finally settled under the Rules of Arbitration of the International
Chamber of Commerce.
b The Dispute is settled by one or three arbitrators appointed in accordance with
these Rules.
c The arbitration is conducted in the ruling language defined in the Contract.
The arbitrator(s) have full power to open up, review and revise any certificate,
determination (other than a final and binding determination), instruction, opinion
or valuation of the Engineer (Employer/Employer’s Representative under the Silver
Book), and any decision of the DAAB (other than a final and binding decision) rele-
vant to the Dispute.
In any award dealing with costs of the arbitration, the arbitrator(s) may take ac-
count of the extent (if any) to which a Party failed to cooperate with the other Party in
constituting a DAAB.
Arbitration may be commenced before or after completion of the Works. The obli-
gations of the Parties, the Engineer (under the Red and Yellow Books) and the DAAB
are not altered by reason of any arbitration being conducted during the progress of
the Works.
If an award requires a payment of an amount by one Party to the other Party, this
amount is immediately due and payable without any further certification or Notice.
Failure to comply with the DAAB’s decision
If either Party fails to comply with the DAAB’s decision, then the other Party may
refer the failure directly to arbitration (see above).
The arbitral tribunal may decide on the enforcement of that decision.
No DAAB in place
If there is no DAAB in place and a Dispute arises, the DAAB and Amicable Settle-
ment provisions do not apply, and the Dispute may be referred by either Party directly
to arbitration.
12 Tendering using the FIDIC 2017
Contracts
Deciding the procurement strategy

Prior to drafting the tender documents for a FIDIC 2017 Contract, the Employer must
first decide on his procurement strategy.
This is the process of considering the most optimum way of achieving the Employ-
er’s objectives, taking into account the project itself, its current and future needs and
also the inherent risks in taking a particular route towards achieving those objectives.
The procurement strategy should consider value for money in a holistic way, consid-
ering life cycle costing as well as the capital cost of building the project.
It is not intended to consider procurement strategy and life cycle costs in any detail
within this book.
The initial briefing is the fundamental first step in establishing what is required,
when it is required, what the Employer is proposing and what he can afford to pay.
Through a process of interviewing key members of the Employer’s team and review-
ing its business plans, specific objectives, options and constraints, a procurement strat-
egy is developed which forms the basis for future assessments and recommendations.
Whilst it may sound obvious, it is vital that the Employer understands what he
wants and can convey it clearly. He may not know what he wants, but also he can often
be “persuaded” by Consultants or other third parties into accepting something that
he does not want.
Deciding the procurement strategy is the foundation stone to the successful out-
come to any contract, but this process is very often undervalued, or even overlooked as
Employers (and their advisers), in their urgency to get projects out to tender and com-
menced on site, tend to favour the procurement strategy most familiar to them and the
one that is easiest to comply with, rather than to spend time properly considering each
project on its merits in terms of the Employer’s resources and his objectives in terms of
Time, Price (or Cost) and Quality, with the additional factor of Risk having to also be
considered and evaluated (see Figure 12.1).
Time
Most Employers want their projects to be completed as quickly as possible so they can
start using the building or facility. Some projects also have an absolute deadline e.g.
international sporting events.
If the Employer sees time as being the most important factor, he may have to pay a
higher cost, and quality may lower in order to achieve his time objective.
Tendering using the FIDIC 2017 Contracts 267
Time
Risk
Price Quality
Figure 12.1 “The Time/Price/Quality Triangle”.
The procurement method will have to consider timing through programme require-
ments, but also through provisions such as delay damages. As stated in Chapter 1,
Design and Build could present substantial time savings from project inception to
completion.
Price
All Employers will have some form of budget, some budgets are tighter than others,
but the price they can, or want to pay, will always be a major consideration, particu-
larly if the Employer requires a return on his investment.
The budget may be fixed, representing all that the Employer has available through
its own funds or borrowings in order to fund the project, or it may have some degree of
flexibility. The procurement strategy will need to address the budget and any inherent
flexibility.
Quality
Finally, quality will always be a major factor. Poor quality using cheap materials or
bad design could lead to significant problems and additional costs in the future as well
as a building or facility which is not aesthetically pleasing, which could be particularly
important where customers have a perception of a company by the appearance of its
buildings and other facilities.
If time and price are more important, some Employers will lower the expected
standards. It is important that the design lowers the standards, not that a “cheap”
Contractor is employed who will unilaterally lower the standards himself!
It is rarely achievable for all three to be fully satisfied it is usually a balance.
Open questions that could be used in establishing the correct procurement strategy
include:
• How important to the Employer is certainty of price, particularly if changes are

expected? Lump sum options will give greater certainty of price.
• What resources and expertise does the Employer have?
• Which party is to be responsible for design and/or which party has the neces-
sary design expertise? Using the FIDIC contracts, design can be assigned to the
268 Tendering using the FIDIC 2017 Contracts
Contractor under the Red Book (partial Contractor design), Yellow Book (full
Contractor design) or Silver Book (full Contractor design).
• How important to the Employer is an early start and/or early completion?
• How clearly defined is the scope of the works, and what form does it take, for exam-
ple, is it in the form of detailed drawings and specification, or performance-based
criteria? Again, the FIDIC contracts can be used with detailed drawings or
performance-based criteria, where the Contractor carries out the design.
• What is the likelihood of change to those defined requirements? Many Employers
prefer a lump sum option for price certainly, some prefer a remeasurement option
where there is likelihood of many changes.
• What is the Employer’s attitude towards risk? Who is best placed to manage the
inherent risks within the project?
Lump sum contracts assign the greatest risk to the Contractor, and other types
of contract assign greater risk to the Employer.
It is a poorly acknowledged fact that the Employer always pays for risk, regard-
less of whether it is carried within the contract by the Employer or the Contractor.
If it is the Contractor’s risk he is deemed to have priced and programmed for it
within his tender, if it is an Employer’s risk, the Employer will pay for it if it occurs.
Risk
Whilst “Risk” is a major subject, it is worth briefly reviewing it in the light of construc-
tion projects and deciding on a procurement strategy.
The various risks in a construction project can result in:
• Failure to keep within budget,

• Failure to keep within the required or contracted time scales,
• Failure to meet the required standards for quality or fitness for purpose.
The ultimate consequences are essentially financial, and the need for risk identifica-
tion and control are therefore self-evident.
The important aspect to recognise is that the risks are always there.
The issue is that a risk must be identified, and arrangements made to deal with it,
and that the necessary finance has been provided either by the Contractor within the
contract or by the Employer within his budget.
In very simple terms, the Employer always pays for risk.
As for other areas of commercial activity, risks or their financial consequences can be:
• “eliminated, reduced or controlled” by altering design requirements, construction

methods, materials, increasing investigation, etc.
• “transferred contractually to others”, for example, risks can be transferred
• From Employer to Contractor or insurer,
• From Contractor to Sub-Contractor or insurer,
• From Designer to insurer.
• “retained” by the Employer and financial provision made.
It is considered good commercial practice that the consequences of risk occurring

should be carried by the party who is in the best position to take that risk and mini-
mise its effects.
For instance, if the Contractor is required to include in his pricing for all risks, some
will occur and some will not; The Employer will, however, pay for all risks including
those which have and will not occur.
In most forms of contract, the areas of risk to be borne by the Employer are nor-
mally stated and all other risk is borne by the Contractor.
With the exception of cost inflation or escalation, almost all other risks and uncer-
tainties can be assessed as a change in the demand for resources. Hence, the particular
importance of time-related costs and the need to define all costs correctly.
If a delay or disruption occurs, then the cost of maintaining the relevant resources
for a longer time will increase and the resulting cost can be determined on the time
basis.
The allowance to be made by a tendering contractor for the likely risks which are his
responsibility requires judgement based on experience, but it is important that all risks
and uncertainties are identified and taken into account. Each individual risk should be
considered carefully, and a reasonable probability and impact identified.
It is also important to consider which elements of work account for the major elements
of the total cost together with the appropriate uncertainties and assess their possible
influence on the proposed tender sum. This should also be considered in relation to a
programme in order to assess the delay and disruption effects on time and cost.
Contract Choice
Once these questions have been asked and answered and analysed, if using FIDIC 2017
Contracts, the correct Contract can be chosen whether it be the Red, Yellow or Silver
Book.
As stated in previous chapters:
• The Red Book, or to give it its full title Conditions of Contract for Construction, is
primarily intended for building or engineering works where the Employer bears
the design responsibility; however, the works may include some Contractor-
designed civil, mechanical, electrical and/or construction works.
The basis of payment to the Contractor is through rates and prices in the Bills
of Quantities, though it can be amended to provide a lump sum price or even as a
cost reimbursable contract.
• The Yellow Book, full title Conditions of Contract for Plant and Design-Build, is in-
tended for contracts on electrical/mechanical installations, and for the design and
execution of building or engineering works where the Contractor bears the design
responsibility. The Contractor designs and provides the Works in accordance with
the Employer’s Requirements.
• The Silver Book, full title Conditions of Contract for EPC/Turnkey Projects, is suit-
able for the provision on a turnkey basis of a process or power plant, of a factory
or similar facility or of an infrastructure project or other type of development,
where the Contractor takes total responsibility for the design and execution of the
project, and a higher degree of certainty of final price and time is required.
Whilst many traditional contracts are based on Bills of Quantities with the Employer
designing the project, and detailed bills of quantities being sent to each tendering con-
tractor for pricing, in the past 30 years there has been a movement away from the
use of traditional Bills of Quantities and towards Contractor-designed projects, with
payment mechanisms such as milestone payments and activity schedules, with pay-
ment based on progress achieved, rather than purely on the quantity of work done.
A well-considered and appropriate procurement strategy, together with a clear, ro-
bust and unambiguous tender document, is the key to avoiding or at least minimising
contractual problems at a later date.
Regarding tender documents, the author uses a “3 C’s” approach, in that tender
documents should always be:
• Clear – Unambiguous,
• Concise – Not over wordy,
• Complete – Have nothing missing.
Application of Laws
As FIDIC is an international contract, it is vital that drafters of tender documents
correctly take into account the prevailing Law in the country where the contract is to
be based. The FIDIC contracts provide for the Law of the Contract to be inserted into
the Contract Data.
When using a FIDIC contract, the drafter, and in turn the contracting parties, must
consider how the chosen law of contract and any specific local laws will affect the in-
terpretation of the contract conditions. Will there be a conflict between the contract
terms and the applicable law?
Where necessary, amendments should be made to the contract, although the law
will ultimately prevail over the contract conditions.
The author has had personal experiences of the law when working in the Middle
East, and also in the Caribbean, India, Sri Lanka and Malaysia.
Governing law
In some countries the local courts will uphold a governing law of the Contract, which
is not the local law, as long as it does not directly conflict with the local law.
Whilst the language of the contract may be English, local courts may conduct their
proceedings in a local language, so the documents referred to in the dispute may have
to be translated.
In the UK, where FIDIC is not used to any great extent, the FIDIC dispute res-
olution procedures do not comply with the Housing Grants Construction and Re-
generation Act 1996 amended by the Local Democracy, Economic Development and
Construction Contract 2009 (“The Construction Act”) which allows any party at any
time to refer a dispute under a contract to adjudication. If the contract has not been
amended to provide for adjudication, the parties have a statutory right of referral.
“Pay when paid” is also prohibited by the UK Construction Act.
“Fitness for purpose” is also something to consider within the applicable law, a
fitness for purpose obligation may be implied unless the contract contains an express
alternative standard. In the UK, for example, it is common practice for construction
contracts, including design and build, to include a lower standard of “reasonable skill
and care”.
Parties using FIDIC should look carefully at the limitation on liability clauses and
consider whether they wish to exclude recovery of both direct and indirect losses of
profit claims and whether they are prepared to cap liability in the ways proposed.
Additionally, the parties should consider the FIDIC clause relating to adjustments
for changes in legislation.
Drafters also need to consider long-term liabilities for design and/or construction
defects, which could be, for example, 6, 10, 12 or 15 years, with the associated insur-
ance premiums for Professional Indemnity (PI) insurance.
Good faith
The concept of “good faith” is often applicable to jurisdictions, including require-
ments and restrictions in respect of equity and unjust enrichment.
The requirement to act in good faith is not merely a requirement not to act in bad
faith and not to deceive one another. Each party is instead under a legal obligation
to exercise good faith in the performance of all of its contractual obligations and its
dealings with the other party.
Exports/Imports
One potential situation would be where substantial parts of the Plant/Equipment/Ma-
terials are manufactured in another country and then transported to the Site.
The mechanism in the contract for dealing with any impact on the works (delays
or additional costs) resulting from changes in the law applies only in relation to the
“Laws” of the country where the project is located.
Changes in the law of another country which affect the Plant/Equipment/Materials
being manufactured elsewhere will not be included unless bespoke drafting is included
in the contract.
Delay damages/liquidated damages

The maximum level of delay damages is often capped at 10% of the total Contract
Price, though the local law may not allow capped liabilities, or they may have to be
capped at the total Contract Price.
The amount of delay damages stated within the contracts may be changed by the
local courts, and also the agreed amount may be waived in their entirety if:
• The defaulting party can show that no loss has been suffered by a non-defaulting
party;
• The level of the pre-agreed damages was excessive; or
• The obligation has been partially performed.
Contract Variations
Under some jurisdictions there may be a cap on the value of Variations in relation to
the Contract Price, beyond which a contract may become subject to termination or be
unenforceable.
Force Majeure
Some jurisdictions have differing definitions of Force Majeure (now termed under
FIDIC 2017 as “Exceptional Events”) and their effect on the execution of the Works.
In the event of Force Majeure, the affected party is relieved from performing only
that part of its obligation which is impossible due to reasons beyond its control. Any
other contractual obligation not affected must be performed. As soon as the cause of
Force Majeure ceases, the corresponding obligation must be performed.
Termination
Under some jurisdictions, a construction contract can be terminated if its performance
becomes impossible due to an external reason beyond the control of either party.
A contract may also be terminated on the death of a Contractor, provided that its
heirs are unable to take over the work due to the contractor’s specialist knowledge.
Tendering using FIDIC 2017 Contracts

The FIDIC contracts are based on the assumption that the project (the Works) will
be competitively tendered, and that the Employer will send a Letter of Acceptance in
relation to the accepted tender. Note that the Silver Book does not have a Letter of
Acceptance.
The contract contains the following pro formas:
• Letter of Acceptance.
• Contract Agreement
• Dispute Adjudication Avoidance Agreement
Annexes
The FIDIC 2017 Contracts contain the following Annexes within the contracts:
• Annex A – Example Form of Parent Company Guarantee

• Annex B – Example Form of Tender Security
• Annex C – Example Form of Performance Security – Demand Guarantee
• Annex D – Example Form of Performance Security – Surety Bond
• Annex E – Example Form of Advance Payment Guarantee
• Annex F – Example Form of Retention Money Guarantee
• Annex G – Example Form of Payment Guarantee by Employer
If we could briefly review each in turn:
Annex A – Example Form of Parent Company Guarantee

This form of guarantee is given by the Contractor’s parent company, to guarantee
the proper performance of a contract by one of its subsidiaries (the Contractor), who,
whilst having limited financial resources itself, may be owned by a larger, more finan-
cially sound parent company.
Such a guarantee is cheaper than a performance bond, as the Contractor will nor-
mally just charge an administration fee rather than the case of performance bond,
where the Contractor is actually paying a premium for an insurance policy, but it may
give less certainty of redress because it is not supplied by an independent third party so
it is dependent on the survival, and the ability to pay, of the parent company.
However, whilst accepting less independence, parent company guarantees for the
proper performance of the contract can be more advantageous than bonds. Rather
than receiving a fixed amount in compensation, the parent company is normally
obliged to either complete the works in accordance with the Contractor’s original obli-
gations on behalf of its subsidiary company, or fund the completion of the contract by
others, so effectively completion is guaranteed.
In addition, further recompense can be sought for time delays in completion through
the normal clauses incorporated in the contract. In the case of performance bonds, the
“guarantee” is that a sum of money is available to at least partly compensate the Client
in the event of the Contractor’s default.
Because the financial strength of the parent company may be linked to that of the
Contractor, a parent company guarantee will be acceptable only if the parent com-
pany (or holding company) is financially strong and its financial resources are largely
independent of those of the Contractor.
Obviously, the status of the parent company guarantee and the parent company
itself must be consistent with the Law of the Contract and relevant jurisdiction.
Annex B – Example Form of Tender Security

The Tender Security is required to protect the Employer (the Beneficiary) in the event
that a tendering Contractor (the Applicant) withdraws his offer without the agreement
of the Employer, and has refused to accept correction of errors in his Tender, the offer
has been accepted but the Contractor has failed in respect of Sub-Clause 1.6 to sign a
Contract Agreement, or the offer has been accepted but the Contractor has failed in
respect of Sub-Clause 4.2.1 to deliver the Performance Security.
A specified amount is then guaranteed to be paid by the Guarantor to the
Employer.
Annex C – Example Form of Performance Security – Demand Guarantee

This form of guarantee is given by a Guarantor on behalf of the Contractor where the
Guarantor will pay a fixed sum of money to the Employer in the event the Contractor
is in breach of its obligations.
The amount of the Performance Security is stated in the Contract Data.
The sum is adjusted in the event that the Contract Price increases or decreases by
more than 20%.
Annex D – Example Form of Performance Security – Surety Bond

This Surety Bond is a form of guarantee given by a Guarantor on behalf of Contractor
(the Principal) where, if the Contractor defaults in any of its obligations, the Guaran-
tor will discharge (pay for) any damages incurred by the Employer (the Beneficiary) up
to the value of the Bond Amount.
The amount of the Performance Security is stated in the Contract Data.
Annex E – Example Form of Advance Payment Guarantee
This is a guarantee where the Contractor receives an Advance Payment, but fails to
make the repayments as required, the Guarantor makes the payment on his behalf.
Annex F – Example Form of Retention Money Guarantee

This is a guarantee where the Contractor receives an early repayment of retention
money but fails to carry out his obligations in respect of correcting defects. The Guar-
antor becomes liable for any costs.
Annex G – Example Form of Payment Guarantee by Employer

This is a guarantee where the Employer fails to make a payment as required under the
contract. The Contractor issues a demand a written statement and receives the money
from the Guarantor.
Letters of intent
It is common with a project requiring an early start on site for a Contractor to receive
a letter of intent from the Employer stating that he accepts his tender and that the Em-
ployer is in the process of preparing the contract documents.
The Employer may also include in his letter a requirement to carry out some initial
design work, ordering of materials, or even start, maybe some enabling work on site
prior to a formal contract being drawn up. Caution must be taken when drafting the
letter of intent, and also by the Contractor when he receives one.
It is common for this letter to mark the beginning of on-site works, though negoti-
ations of minor issues have yet to be finalised, it is therefore critical this letter is not
be interpreted as the “Letter of Acceptance”, so drafting must be meticulous, as they
often do not properly constitute an acceptance of tender and therefore do not create
any contractual liability, rarely giving any express undertaking by the Employer to pay
for any work, which could put the Contractor at risk if, for example, the project were
to be abandoned.
The golden rule is to execute contracts as early as possible so all parties know the
ENTIRE terms and conditions, and not rely on letters of intent to provide false se-
curity. If letters of intent are used they should CLEARLY state the intentions of the
parties, particularly who will pay what, and how much if matters do not proceed.
The structure of the FIDIC 2017 Contracts

Within the Conditions of Contract for Construction (The “Red Book”) the “Contract”
is defined under Sub-Clause 1.1.10 as meaning:

iii The Letter of Tender


viii The Schedules

Note that the published Contract refers to “the Contractor’s Proposal”, which has
been deleted by the published Errata.
The documents forming the FIDIC contract are to be taken as mutually explanatory
of one another, which means that they should all be read together and each document
has equal weight.
However, if there is any conflict, ambiguity or discrepancy between the documents,
the priority of the documents is prescribed in each of the Contracts.
Red Book (in descending order)
Note “Contract Data” (d) was formerly referred to in FIDIC 1999 Contracts as “Ap-
pendix to Tender”.
The Red Book has its own set of tender documents:
• Specification
• Drawings
• Schedules
The Red Book also includes a Letter of Acceptance and a Contract Agreement, either
document may bring the Contract into force.
Within the Conditions of Contract for Plant and Design-Build (The “Yellow Book”)
the “Contract” is defined under Sub-Clause 1.1.9 as meaning:

iii The Letter of Tender

viii The Contractor’s Proposal

Note the priority of documents within the Yellow Book (in descending order)

viii The Schedules

x The JV Undertaking (if the Contractor is a JV)

The Yellow Book has its own set of tender documents:
• Schedules
• Contractor’s Proposal
The Yellow Book includes a Letter of Acceptance and a Contract Agreement, either
document may bring the Contract into force.
Within the Conditions of Contract for EPC/Turnkey Projects (The “Silver Book”) the
“Contract” is defined under Sub-Clause 1.1.7 as meaning:

viii The further documents (if any) which are listed in the Contract Agreement or in
the Letter of Acceptance
Note the priority of documents within the Silver Book (in descending order)


viii The JV Undertaking (if the Contractor is a JV)

If either Party finds an ambiguity or discrepancy in the documents (ambiguity is some-

thing unclear, discrepancy is something missing), that Party must promptly give a No-
tice to the Engineer (Employer under the Silver Book), describing the ambiguity or
discrepancy.
After giving or receiving a Notice, the Engineer/Employer must issue the necessary
clarification or instruction to correct matters.
Note that any Special Provisions (Particular Conditions – Part B) will always over-
rule and supersede the equivalent provisions in the General Conditions.
In writing the Particular Conditions it is therefore essential that the changes are easily
identifiable by using the same clause numbers and titles as in the General Conditions. Fur-
thermore, it is necessary to add a statement in the tender documents for a contract that:
Special Provisions (Particular Conditions – Part B) take precedence over the pro-
visions found within the General Conditions, and also that the provisions of the
Contract Data (Particular Conditions – Part A) take precedence over the Special
Provisions (Particular Conditions – Part B).
If we consider each of the contents of the FIDIC 2017 Contracts in turn:

The Silver has its own set of tender documents:
• Tender
Whilst the Red Book and the Yellow Book include a Letter of Acceptance and a Con-
tract Agreement, the Contract Agreement will bring an EPC Contract such as the
Silver Book into force.
The Contract Agreement

The “Contract Agreement” is defined as meaning “the agreement entered into by both
Parties in accordance with Sub-Clause 1.6 [Contract Agreement]”.
The Silver Book also includes the words “including any annexed memoranda”.
A template is included at the back of the Contracts.
This is the Agreement signed by both Parties, and refers to the documents that form
the Contract, the covenant by the Contractor to execute and complete the Works and
remedy any defects, in accordance with the Contract, and the covenant by the Em-
ployer to pay the Contract Price, in accordance with the Contract.
The Letter of Acceptance

The “Letter of Acceptance” is defined in the Red and Yellow Books (but not the Silver
Book) as meaning
the letter of formal acceptance, signed by the Employer, of the Letter of Tender,
including any annexed memoranda comprising agreements between and signed
by both Parties. If there is no such letter of acceptance, the expression “Letter of
Acceptance” means the Contract Agreement and the date of issuing or receiving
the Letter of Acceptance means the date of signing the Contract Agreement.

This is the letter completed and signed by the Employer accepting the Contractor’s
Tender.
Note that the Letter of Tender and the Letter of Acceptance together constitute a
binding contract until the Contract Agreement is executed.
The Letter of Tender

The “Letter of Tender” is defined in the Red and Yellow Books (but not the Silver
Book) as meaning “the letter of tender, signed by the Contractor, stating the Contractor’s
offer to the Employer for the execution of the Works”.
This is the letter completed and signed by the Contractor forming the Contractor’s
offer.
Note that the Letter of Tender and the Letter of Acceptance together constitute a
binding contract until the Contract Agreement is executed.
The Addenda referred to in the Contract Agreement

This is only relevant if there are Addenda referred, and attached, to the Contract
Agreement.
The Conditions of Contract

The “Conditions of Contract” are defined as meaning “the General Conditions as
amended by the Particular Conditions”.
Note that the Particular Conditions will take precedence over the General
Conditions.
General Conditions
The General Conditions as discussed within this book comprise 21 clauses as follows:
CONDITIONS OF CONTRACT FOR CONSTRUCTION (THE “RED BOOK”)


10 Employer’s Taking Over
11 Defects after Taking Over
12 Measurement and Valuation
18 Exceptional Events
19 Insurance
21 Disputes and Arbitration
CONDITIONS OF CONTRACT FOR PLANT AND DESIGN-BUILD (THE “YELLOW BOOK”)
11 Defects after Taking Over

19 Insurance
CONDITIONS OF CONTRACT FOR EPC/TURNKEY PROJECT (THE “SILVER BOOK”)



19 Insurance
Particular Conditions
The FIDIC contracts include “Guidance for the Preparation of Particular Conditions”.
“Particular Conditions” is now defined as comprising of two parts:
• Part A – Contract Data,

• Part B – Special Provisions.
NB: The “Appendix to Tender” document, under the 1999 FIDIC contracts, is now
referred to as “Contract Data”.
The Contract also refers to the five FIDIC Golden Principles:
• GP1: The duties, rights, obligations, roles and responsibilities of all the Contract
Participants must be generally as implied in the General Conditions, and appro-
priate to the requirements of the project.
• GP2: The Particular Conditions must be drafted clearly and unambiguously.
• GP3: The Particular Conditions must not change the balance of risk/reward allo-
cation provided for in the General Conditions.
• GP4: All time periods specified in the Contract for Contract Participants to per-
form their obligations must be of reasonable duration.
• GP5: Unless there is a conflict with the governing law of the Contract, all formal
disputes must be referred to a Dispute Avoidance/Adjudication Board (or a Dis-
pute Adjudication Board, if applicable) for a provisionally binding decision as a
condition precedent to arbitration.
Errata added in the words “Unless there is a conflict with the governing law of the
Contract, …”
The FIDIC contracts include substantial guidance on the use of Particular Condi-
tions together with samples, including references to the equivalent Clause/Sub-Clauses
within the General Conditions.
The Employer may also wish to “copy and paste” provisions within one of the
FIDIC 2017 books into another, though great care must always be taken in amending
contracts.
Drafting and amending contracts is a very skilled process, so it is critical that Em-
ployers, and their advisors, properly review and understand the General Conditions,
and only amend through the Particular Conditions, what is required for the Employ-
er’s specific needs, or perhaps to suit legal requirements within the country where the
contract is to be used.
It is also important that any changes made, for example, to definitions are properly
incorporated and referenced into the various documents that form the Contract, not
just the General Conditions and Particular Conditions.
All additions/amendments to the General Conditions should be included within the
Particular Conditions, rather than amending the General Conditions themselves, so
the General Conditions remain in the Contract, but amended within the Particular
Conditions.
It is also critical that when drafting a Particular Condition, it must be clearly stated
what happens to the original core clause, for example, it is deleted. If the original Gen-
eral Condition is not deleted, then it is more likely than an inconsistency.
It is also important to note that a Particular Condition may modify or add to the
General Condition, to suit any risk allocation or other special requirements of the
particular contract. However, changes should be kept to a minimum, consistent with
the objective of using industry standard, impartially written contracts.
It must be remembered that if an Employer amends a contract to allocate a risk to
the Contractor which may have been intended to be held by the Employer, the Con-
tractor has a right to price it in terms of time and price, therefore the practice of
Employers amending contracts to pass risk to Contractors without considering who
is best able to price, control and manage those risks can in many cases prove to be
unwise and uneconomical.
It is important to spend time considering whether a Particular Condition is appro-
priate in each case, then when that decision has been made, that the clause is drafted
correctly and aligned to the drafting principles and convention of the original contract.
It is critical that whoever drafts Particular Conditions is fully aware of the FIDIC
drafting philosophy.
Suggested Particular Conditions

The FIDIC contracts include a comprehensive list of suggested Particular Conditions.
Particular Conditions bring some flexibility to the contract as they amend the Gen-
eral Conditions.
For example, it is quite common for the Red Book to be made a lump sum contract.
Whilst it is not proposed to consider or review all of the suggestions that have been
included within the guidance on Particular Conditions for the FIDIC 2017 Red, Yel-
low and Silver Books, there are some worth mentioning, which are already detailed,
plus some further suggestions.
Some further points have been raised under the specific Clauses/Sub-Clauses in pre-
vious chapters of this book.
General Provisions
Whilst there is a comprehensive single alphabetical list within the FIDIC 2017 Con-
tracts (previously it was divided into sections rather than a single alphabetical list) of
defined terms within the Contracts, the Employer may wish to include additional defi-
nitions, or to include additional information and/or clarification about the definitions
already included, for example, the Site is defined as “the places where the Permanent
Works are to be executed and to which Plant and Materials are to be delivered, and any
other places specified in the Contract as forming part of the Site” and could include
pieces of land adjacent to the site for storage, lay down areas for pre-assembly, etc.
What constitutes the “Contract” could also be further explained within the Particular
Conditions.
Further details or requirements on respect of Contractor’s and Employer’s Docu-
ments may also feature within the Particular Conditions.
There may also be additional requirements in terms of contractual communications,
in that they have to be sent in paper form in addition to, or instead of, electronic. The
author has worked on contracts where the Employer stipulated (within the Particular
Conditions) that EVERY electronic communication the Contractor submitted had to
also be submitted in hard copy to the Engineer and the Employer within 48 hours.
There may also be a specified form of software onto which communications must be
uploaded, for example, CEMAR.
FIDIC 2017 includes various time scales which the drafters feel are appropriate and
reasonable for the Parties to carry out various obligations and communications, and
in some cases a Party is time barred if they do not take the action, or there is a deeming
provisions, in that something is deemed to happen anyway, for example, No-Objection.
If the Employer wishes to change any of these time scales within the Contract by
extending or reducing them, they can do so through the Special Provisions, but it is
important to maintain appropriate and reasonable time scales.
Also, the meaning and status of various communications such as “Notices”, “No-
objection”, Acceptance, and Reviews may be amended or further clarified.
It is common for Employers to amend the priority of documents that comprise the
Contract, particularly anything provided by the Employer takes precedence over any-
thing provided by the Contractor.
Entry into a formal written Contract Agreement may be mandatory under the ap-
plicable law, before the contract exists, and before any work can commence.
There may be specific terminology or procedures to be adopted within the Contract
dependent on the relevant Laws under which the Contract is operated, for example,
the definition and/or standards to be applied in terms of negligence and also limitation
of liability can be different under different legislations.
There may be also be specific requirements in respect of the Contractors that com-
prise a JV and the status of that JV e.g. Incorporated v Unincorporated requirements.
The Employer
The status of the Employer may be clarified within the Particular Conditions, particu-
larly where an overseas Employer is partnering, say with a local sponsor.
There may also be specific requirements for the Contractor to have right of access
to Site at certain times.
The use of Employer-Supplied Materials may also need to be further developed, in-
cluding liability for those Materials, and at what point title passes from the Employer
to the Contractor (if it does).
The Engineer (Red and Yellow Books)/Employer’s Representative
(Silver Book)
The status of the Engineer/Employer’s Representative and the delegation to Engineer’s
Representatives and/or assistants and what can and cannot be delegated may be clari-
fied or amended within the Particular Conditions.
The principle under the General Conditions is that the Engineer/Employer’s Rep-
resentative has the full authority to act for the Employer on all matters; however, the
Employer may wish to limit that matters of a certain nature or value must be referred
directly to the Employer for a decision, before actioning it with the Contractor.
Engineer’s/Employer’s Instructions are required to be given in writing electroni-
cally/hard copy. There may also be rules on the giving and/or receiving of oral instruc-
tions and also the use of CVIs (Confirmation of Verbal Instructions), and subsequent
deeming of instructions may be defined.
The Contractor
There may be specific requirements in terms of the forms of Performance Security and
conditions as to where it should be obtained from.
There are often words within the Particular Conditions to cover the Contractor’s
Documents, but bear on mind that the Specification indicates what has to be prepared
and when it has to be submitted, and how long the Review Period is.
If the Contractor is required to supply Operation and Maintenance Manuals then
these are covered by the General Conditions with reference to the Specification to-
gether with the need for spare parts and/or parts with limited life.
There may be a requirement for the Contractor to provide training in which case it
may be identified by the Employer on the Specification, and the actual training details
may be included by the Contractor within his tender.
There may also be a need for the Contractor to have a Quality Manager employed
on the Site, again should be stated in the Specification (Key Personnel).
Regarding health and safety, for example, in the UK (which is not a great user of
FIDIC contracts) there may be a requirement to state the role and responsibilities of
the Principal Designer and the Principal Contractor within the Particular Conditions.
With regard to Unforeseeable Physical Conditions, the author has experienced
many instances where the information available at tender stage may be qualified, for
example the Employer may disclaim all liability for its accuracy, or in some cases may
warrant that it is correct, in which case it makes it easier for determining the Contrac-
tor’s entitlement.
Sometimes, in respect of Unforeseeable Physical Conditions arise, the Employer may
amend the wording of Sub-Clause 4.12 to provide what he feels is a more “equitable”
remedy, for example, 50% of Cost incurred by the Contractor rather than “the Cost”.
Alternatively, the Employer may not allow the Contractor any remedy in respect of
Unforeseeable Physical Conditions.
With regard to Transport of Goods, the Employer may wish the Contractor to get
express permission, prior to delivery of Goods to the Site.
The Employer may provide Equipment for the Contractor’s use, so the wording of
the Sub-Clause may be amended to include the Contractor’s car of the Employers’
property.
Dependent on the relevant legislation and environmental law provisions, there
may be a requirement to prepare documentation such as environmental management
plans, for review by the Engineer and/or the Employer/Employer’s Representative and
approval by regulatory authorities, these plans being described within the Specifica-
tion together with the review/approval process associated with each plan.
In respect of temporary utilities, there may be specific requirements to be provided
by the Employer or Contractor. If the Employer provides temporary utilities and their
use is free of charge, the Specification should state that is the case, alternatively if the
Employer is intending to charge the Contractor for its provision and use, again this
should be stated within the Specification.
With regard to security of the Site, if the Contractor is sharing occupation of the
Site with others, including other Contractors, then it may not be appropriate for the
Contractor to be held solely responsible for Site security.
If the Contractor is sharing occupation of the Site with others, it is recommended
that the Contract is amended in terms by identifying and allocating responsibility for
clearance and removal from the Site of any wreckage, rubbish, hazardous waste, etc.,
as stated within the Sub-Clause.
Sometimes the Contractor may be required to carry out certain parts of the Works
by a specified date, though the Employer will not take over that part of the Works at
that date.
If that is the case, the Employer may include “Milestones” by referring to them
within the Specification, and amending the General Conditions within the Particular
Conditions.
Milestones have not been included within General Conditions of the FIDIC con-
tracts, only completion of “the whole of the Works” or specified “Sections” at which
point the Employer takes over the whole of the Works, or that particular part of the
Works.
To include the Milestone within the Particular Conditions there should be a defini-
tion of a Milestone, and also there may be a certificate or some other document issued
by the Engineer or Employer’s Representative confirming that fact.
The complete date for the Milestone should be linked back to the Commencement
Date e.g. within 36 weeks of the Commencement Date, and also there may be delay
damages for a Milestone stated in the Contract Data, so that if the Contractor fails to
complete the works of the Milestone within the time for completion of the Milestone
(with any extension under this Sub-Clause) the Contractor will be liable for delay dam-
ages, possibly with a limit to how much can be claimed as a maximum.
The Contractor should also reflect Milestones within his programme submissions,
including anything he may require from the Employer/Employer’s Representative/En-
gineer to be able to complete the Milestones.
The provision for Extensions of Time and the new Advance Warning should also be
accommodated by reference to the Milestones.
Subcontracting
It is fairly normal for the Contractor to employ a minimum percentage of its domestic
Subcontractors from local labour/businesses in carrying out the Works, with a per-
centage stated within the Contract Data.
However, nominated Subcontractors are chosen by the Employer/Employer’s
Representative/Engineer.
If the nominated Subcontractors are named within the Specification, the Contrac-
tor is aware of them and can price the risk, although they may not be appointed until
after contract award.
If the Employer wishes to name Subcontractors but for them not to be classified as
“nominated Subcontractors” then the Particular Conditions should deal with it.
Design
It is quite common for Employers to require Contractors at tender stage to identify
the name and credentials of their design team, and whether they are internal staff or
external consultants. Clearly the Contract requires them to be identified, but it could
be a key part of the decision making process prior to contract award.
The status and content of the Employer’s Requirements (Yellow and Silver Books)
may also be set out and/or revised, including if the Employer has already employed a de-
sign team, and possibly wishes to novate that design team to the successful Contractor.
The requirement and/or format of the Contractor’s documents may be developed
including the requirements for as-built records after Completion.
The Review period and also the Review process may be further developed as part of
the Particular Conditions.
Local restrictions
Clearly, dependent on location and relevant law there may need to be restrictions included
within the Contract for restrictions on consumption or sale of alcoholic liquor or drugs.
Also, the Contract may need to incorporate religious and other festivals and obser-
vances such as Ramadan, with its associated shortened working hours and restrictions
on consumption of food and drink, etc.
Programme
The Contractor is required to include certain records within its Progress Reports.
These records may have to be a particular type or format. Again, the Particular Con-
ditions should reflect this.
Clause 8 (Commencement, Delays and Suspension) should reflect on the Works and/
or Sections if the Works are to be taken over in stages; also it is important that each
stage is defined as a Section, and the Time for Completion of each Section is stated, in
the Contract Data.
Sub-Clause provides for the programming software to be stated within the Speci-
fication, so this must be clearly defined and drawn to the attention of tenderers in the
Instructions to Tender.
For lower value, less complex projects, the Employer should either consider using
the Green Book or scale down the Red, Yellow or Silver Book, particularly with re-
spect to programme requirements, which, under FIDIC 2017, are significantly more
than under FIDIC 1999.
The provisions under Sub-Clause 8.5 may also be amended in respect of the defini-
tions of the causes and entitlements for Extensions of Time.
Note also the reference to concurrency, which is a new provision within FIDIC 2017,
which has been previously discussed within Chapter 7 and which may need to be fur-
ther developed in terms of assessment and/or entitlement.
As there is reference to the Society of Construction Law, it is recommended that
they Employer appoints programming/delay analyst specialists to advise on these as-
pects. In preparing the Special Provisions, therefore, it is strongly recommended that
the Employer be advised by a professional with extensive experience in construction
programming, analysis of delays and assessment of Extension of Time in the context
of the governing law of the Contract.
In many countries delay damages can only be set at “a genuine pre-estimate of likely
loss” and cannot constitute a penalty. It is vital that particularly if the delay damages
are set at a high level that the Employer can justify the level, and if it is set too high it
may be judged unenforceable under certain jurisdictions.
Also, if the Accepted Contract Amount is to be quoted in more than one currency,
it may be preferable to define delay Damages (per day) as a percentage to be applied
to each of these figures. If the Accepted Contract Amount is expressed in the Local
Currency, the damages per day may either be defined as a percentage or be defined as
a figure in Local Currency.
For projects where it is to the Employer’s advantage to have a project completed
early, it may be appropriate to incentivise the Contractor by including a provision
for a bonus for early completion of the Works or a Section, again set similar to delay
damages as an amount per day and applicable to each of the currencies which may the
Accepted Contract Amount.
If the Works are to be completed and taken over in stages it is important that each
stage is defined as a Section in the Contract Data.
The Contract Data should include a table to define for each Section:
• The relevant percentage for release of Retention Money,

• The Time for Completion,
• The applicable delay damages.
The need for specific records, and who is responsible for keeping those records in re-
spect of measurement and valuation of the Works can be defined within the Particular
Conditions. If they are by the Employer they should be stated within the Specification,
if by the Contractor they should be stated within the Tender.
Provisional Sums may be required for parts of the Works which cannot be defined at
tender stage. It is essential to what is intended to be covered by each Provisional Sum,
and it is recommended that this be included in a Schedule prepared by the Employer,
since the amount of each Provisional Sum corresponding to the defined scope will
then be excluded from the other elements of the Accepted Contract Amount.
The provision for adjustments for changes in cost may be required if it would be un-
reasonable for the Contractor to bear the risk of escalating costs due to inflation, and
may require amendment depending on what the Employer will pay for.
Payment
The procedures and also the timing for making payments under Clause 14 should
be checked and if necessary amended to ensure that they are acceptable to both
the Employer and any financing institution the Employer may be using to fund the
project.
The Red Book is based on a bill of quantities, but the Particular Conditions may
be amended to provide for a differing contract strategy, for example a lump sum, cost
reimbursable contracts.
If the Employer wishes to proceed with a cost reimbursable (cost plus overheads/
profit) option then what is “Cost” must be defined, and also how the overheads and
profit are to be calculated and paid e.g. as a percentage or a fixed lump sum.
Lump sum contracts are preferred where the scope of work can be accurately defined.
However, as noted in the Introduction above, if significant design input by the Con-
tractor is required, it is recommended that the Employer considers using the FIDIC
2017 Yellow or Silver Book.
For a lump sum contract, the tender documents should include a schedule of pay-
ments (see Sub-Clause 14.4 [Schedule of Payments]).
To change the Red Book to a lump sum contract:
• Delete the second paragraph of Sub-Clause 8.5 [Extension of Time for Comple-
tion]. This is in respect of a significant change in quantities.
• Delete Clause 12 (Measurement and Valuation), which is only applicable to the
Red Book.
• Delete other references in other Clauses and Sub-Clauses to Clause 12, for example.
Under Sub-Clause 13.3.1 (Variation by Instruction): delete the words “by valuing the
Variation in accordance with Clause 12 [Measurement and Valuation], with supporting
particulars (which shall include identification of any estimated quantities and, if the Con-
tractor incurs or will incur Cost as a result of any necessary modification to the Time for
Completion, shall show the additional payment (if any) to which the Contractor considers
that the Contractor is entitled), and replace with “with supporting particulars”.
• Delete sub-paragraph (a) of Sub-Clause 14.1 and replace with “(a) the Contract
Price shall be the lump sum Accepted Contract Amount and be subject to adjust-
ments in accordance with the Contract”.
• Delete sub-paragraph (c) of Sub-Clause 14.1 and replace with “(c) any quantities
which may be set out in a Schedule are estimated quantities and are not to be taken
as the actual and correct quantities of the Works which the Contractor is required to
execute; and”.
Termination
Regarding termination provisions, the Employer should verify that the wording of the
relevant Sub-Clauses is consistent with the law governing the Contract.
For example, as stated earlier in the book, in many jurisdictions it may not be per-
missible for the Employer to terminate the Contract for his own convenience without
a material breach by the Contractor.
Exceptional Events
As has been stated, Exceptional Events were previously referred to as “Force Majeure”
which is an internationally known term. As with Force Majeure, Exceptional Events
should be interpreted correctly in terms of what the event is, and their direct impact
upon the Contractor’s progress.
Insurance
Regarding insurance provisions, the Employer should review what is included within
the General Conditions, and if it wishes to change them should do so within the Par-
ticular Conditions, for example the inclusion of Decennial Liability provisions. The
Employer should also take professional advice in wording those additional conditions
so that it does not inadvertently carry liabilities for which the Employer is neither pre-
pared nor covered by its own insurance.
Disputes and Arbitration

In respect of Disputes and Arbitration, there may be some other provisions that could
be considered.
Regarding the role of the DAAB, as the DAAB is formed at the start of the project
and stays in place throughout, they could provide a higher level dispute avoidance
function and the Parties should consider using the DAAB before matters become
disputes.
FIDIC strongly recommends that the DAAB should be appointed at the start of the
Contract and remain in place for the duration of the Contract.
However, the Parties may prefer the DAAB to be appointed on an “ad-hoc” basis,
only when a Dispute arises, and its role to be limited to resolution of the particular
Dispute. It would then have no role to play in the avoidance of Disputes between the
Parties, and its appointment would cease when it had given its decision on that Dis-
pute. Should a new Dispute arise, a new ad-hoc DAAB would be appointed.
If the Parties wish to provide for an “ad-hoc DAB”, rather than the recommended
“standing DAAB”, then the following amendments will be needed:
• Delete the definitions under Sub-Clauses 1.1.22 and 1.1.23 and replace with “Dis-
pute Adjudication Board” or “DAB” means the person or three persons (as the
case may be) so named in the Contract or appointed under Clause 21.” and replace
all references in the Conditions of Contract to “DAAB” with “DAB”.
Sub-Clause 21.1, plus the Appendix General Conditions of Dispute Avoidance/
Adjudication Agreement with its Annex – DAAB Procedural Rules, should be
amended to comply with the wording contained in the corresponding provisions
of FIDIC’s Conditions of Contract for Plant and Design-Build, First Edition 1999.
• Delete Sub-Clause 21.3 [Avoidance of Disputes];
In the first paragraph of Sub-Clause 21.4 [Obtaining DAAB’s Decision], after
the words “If a Dispute arises between the Parties then, add “after a DAB has been
appointed”; delete the words “(whether or not any informal discussions have been
held under Sub-Clause 21.3 [Avoidance of Disputes])”; and delete sub-paragraph
(a) of Sub-Clause 21.4.1 [Reference of a Dispute to the DAAB].
To facilitate the appointment of the member(s) of an “ad-hoc DAB”, it is important

that the Employer and the Contractor each avail themselves of the opportunity at the
tender stage of the Contract to name three potential members in the Contract Data.
In respect of Amicable Settlement where the DAAB has given its decision but one
or both Parties is/are dissatisfied with the decision, the provisions for Amicable Settle-
ment are intended to encourage the Parties to settle a Dispute amicably, without the
need for arbitration.
Rather than considering the 28-day period stated in this Sub-Clause as a “cool-
ing-off period”, FIDIC recommends that the Parties avail themselves of this opportu-
nity to actively engage with each other with a view to settling their Dispute.
Such active engagement may be by, for example:
• Direct negotiation by senior executives from each of the Parties;

• Mediation (please see below);
• Expert determination (using, for example, the Expert Rules published by the
International Chamber of Commerce (the “ICC”, which is based at 33–43 Ave-
nue du Président Wilson, 75116 Paris, France) https://iccwbo.org/publication/icc-
expertrules-english-version/);
• Or other form of alternative dispute resolution that is not as formal, time-
consuming and costly as arbitration.
In this regard, it is recommended that consideration be given by the Parties to agree to

a longer time period than the period of 28 days stated in this Sub-Clause in an effort
to arrive at an Amicable Settlement procedure chosen by the Parties.
Amicable Settlement procedures typically depend for their success on the consen-
sual involvement of both Parties, on confidentiality and on both Parties’ acceptance of
the particular procedure. Therefore, while it is recommended that both Parties engage
actively to settle the Dispute amicably, neither Party should seek to impose the proce-
dure on the other Party.
Dispute escalation provisions

Published construction contracts in the past have always included differing forms
of dispute resolution provisions, including dispute adjudication boards, amicable
resolution, mediation, expert determination, arbitration and legal proceedings, and
in some cases adjudication by contract and/or by statute, expert determination and
mediation.
In recent years, contracting Parties, and in turn contract drafters, have also looked
towards dispute avoidance to try to prevent issues becoming disputes in the first place.
Dispute avoidance can be effected in the form of more balanced contract conditions,
partnering agreements, alternative procurement methods such as target contracts, but
also by including specific dispute avoidance provisions within the contract.
One specific dispute avoidance provision is escalating a dispute internally through
senior management up to the most senior level, rather than immediately referring to a
third party such as the DAAB, or other dispute resolution measures.
The senior management representatives may form a “Dispute Avoidance Board”
in itself, and consist of one or three members (odd number) as identified within the
Contract Data.
A potential dispute under the contract may be referred to the Dispute Avoidance
Board, two to four weeks after notification to the other Party and to the Project
Manager.
The Parties are required to make all relevant information available to the Dispute
Avoidance Board, who visits the Site (where applicable) and helps the Parties to settle
the potential dispute without formal referral as a dispute.
A dispute cannot be referred to arbitration or legal proceedings unless and until the
dispute has first been referred to the Dispute Avoidance Board as a potential dispute.
A party can, following the Dispute Avoidance Board’s recommendation, notify the
other Party that it is dissatisfied. This is a time-barred right, as the dissatisfied Party
cannot refer the dispute to the tribunal unless it is notified within four weeks of the
Dispute Avoidance Board’s recommendation.
What are “tiered” or “stepped” escalation clauses?
1 A tiered or stepped escalation clause is a dispute resolution clause that records the
parties’ agreement that any dispute between them shall be resolved on a staged ba-
sis. Each step (or tier) is designed to handle the dispute if it has not been resolved
by the previous step, and each step then “escalates” the dispute management to a
level above the previous step. An escalation clause typically requires each stage of
the process to be engaged before the parties can move on to the next.
2 If drafted carefully, such clauses provide parties with a commercial and cost-effective
dispute resolution mechanism. If drafted poorly, however, these clauses can lead to
uncertainty – which in itself can give rise to a dispute – and, at worst, can leave the
parties without a mechanism for proper recourse to the courts or arbitration.
3 Typically, escalation clauses involve as an initial step some form of internal/man-
agement resolution followed by a stage (or stages) of alternative dispute resolution
(“ADR”) (such as mediation) and conclude – as a last resort – with formal dispute
resolution, either by legal proceedings or by arbitration. They can also include a
provision for resolution by expert determination, which is particularly suited to
technical disputes.
Other dispute resolution methods which may be adopted
Mediation
Mediation is a consensual method whereby the Parties jointly consent to refer a matter
to mediation, and they also choose the Mediator who will act.
If the Parties cannot agree on the choice of an independent and impartial mediator,
or if the chosen mediator is unable or unwilling to act, then either Party may immedi-
ately apply to an appointing entity such as a professional body or official named in the
Contract Data to appoint a Mediator.
Once the Mediator has been appointed, the Dispute is immediately referred to the
Mediator by the Parties or by each Party.
Obligations of the Parties, in addition to the Parties’ obligations as set out in the
provisions that follow below, during the mediation process the Parties shall engage
with the Mediator and with each other in a spirit of co-operation, in a timely manner
and in good faith.
Many Employers include within their contract for disputes to be referred to Mediation.
• Written submissions are made to the appointed Mediator and other parties.
• The Mediator may, by giving notice to both parties, visit the Site to inform himself
in any way he thinks fit to inform himself of the nature and facts of the dispute.
• Similarly, the Mediator may call a meeting.
• The Mediator will prepare his recommendations and render his fee account to
both parties, when paid in full he will deliver his recommendation to both parties.
• The Mediator shall not be appointed arbitrator on this, or any matter connected
with this contract unless agreed by both parties.
The Mediator, within seven days of their appointment, or other period as may be pro-
posed by the Mediator and agreed by both Parties, consults with the Parties to agree a
timetable for the exchange of any relevant information, the date, time and venue of the
Mediation meeting, and the procedure to be adopted during the meeting and generally
for the negotiations.
The agreement of the timetable must have regard to the period stated under Sub-
Clause 21.5 (Amicable Settlement) of the Conditions of Contract or as may be amended
by the agreement of the Parties.
The Parties’ negotiations facilitated by the Mediator are conducted on a strictly
private and confidential basis. Neither Party shall disclose to any third party any de-
tail of the mediation process, including but not limited to the fact of the mediation,
the identity of the mediator, any matter discussed during the mediation process, any
information or document exchanged with the mediator, any negotiations during the
mediation meeting and/or the outcome of the mediation.
The mediation, and/or any negotiations taking place during the mediation meeting,
shall not be referred to by either Party in any concurrent or subsequent proceedings,
unless such negotiations conclude with a written legally binding agreement.
If the Parties accept the Mediator’s recommendations, or otherwise reach agree-
ment on the settlement of the Dispute, such agreement must be recorded in writing
and, once signed by the designated representative(s) of both Parties, is binding on the
Parties.
If no agreement is reached by the Parties after negotiations have been facilitated
by the Mediator, either Party may invite the mediator to provide to both Parties a
non-binding opinion in writing. Such opinion shall not be used in evidence in any
concurrent or subsequent proceedings.
The Parties will bear their own costs of participating in the mediation, including
but not limited to the costs of preparing and submitting evidence to the mediator and
attending the mediation meeting.
Each Party is responsible for paying 50% of the remuneration of the Mediator (and,
if the mediator has been appointed by the appointing entity or official named in the
Contract Data, the remuneration of such appointing entity or official).
However, if the Mediator finds that a Party has initiated the mediation, or has en-
gaged in the mediation, in a frivolous or vexatious manner, then the Mediator has the
power to order that Party to pay the reasonable costs of the other Party for preparing
and for attending the mediation meeting.
If these costs cannot be agreed, they will be assessed by the Mediator, whose assess-
ment shall be binding on the Parties.
Adjudication
Many countries are considering introducing adjudication as a means to resolve con-
struction disputes, in addition to or instead of a DAAB, and perhaps is worth a men-
tion when speaking of alternative dispute resolution methods.
Adjudication is a quick and relatively inexpensive way of resolving a dispute,
whereby an impartial third-party Adjudicator decides the issues between the parties.
It has been defined as “a summary non judicial dispute resolution procedure that leads
to a decision by an independent person that is, unless otherwise agreed, binding upon the
parties for the duration of the contract, but which may subsequently be reviewed by means
of arbitration, litigation or by agreement”, so disputing parties still have a right to refer
a dispute to arbitration, litigation or of course they can form their own agreement.
It has been used very successfully within the UK for nearly 25 years, where it is also
a statutory provision, with the force of law.
The role of the Adjudicator is to enforce the contract, for example, if the parties
have a dispute over the quality of electrical installations being carried out, it is the
Adjudicator’s task to ascertain whether the electrical installations were installed in
accordance with the contract i.e. drawings, specifications, etc., and the applicable law,
not whether it was a good or bad job.
Adjudication does not necessarily achieve final settlement of a dispute because, as
stated above, either of the parties has the right to have the same dispute heard afresh in
court (or where the contract specifies arbitration, in arbitration proceedings).
Once a dispute has arisen between the parties either party may seek a resolution
through adjudication. The Adjudicator is normally selected within 7 days and must
decide the dispute within further 28 days (subject to any agreed extension).
Once the Adjudicator has made his decision, the other party must comply with it. If he
does not, a court hearing to compel compliance can usually be obtained in a matter of days.
Adjudication is thus very quick in comparison with other methods of dispute resolution
such as arbitration or litigation, and it can also be used during the currency of a contract.
Adjudication can be a simple procedure, so in many cases there is no need to involve law-
yers or other advisers. It is usually more cost-effective than arbitration or litigation.
Starting adjudication
The steps below are simple, but it is absolutely vital to get them right.
Chronologically, they are:
• Notice of Adjudication,
• Appointment of Adjudicator,
• Referral Notice.
Notice of Adjudication
Once a party is satisfied that they have a dispute arising under a construction contract,
they can initiate adjudication by submitting a written Notice of Adjudication to the
other party.
The notice must contain the following details:
• Nature and brief description of the dispute and the parties involved;
• When and where the dispute arose;
• Nature of the redress being sought;
• Names and addresses of the parties to the contract.
The Notice of Adjudication is an important document, as it defines what matters the

Adjudicator has to decide.
Appointment of Adjudicator
All Adjudicators must be impartial, i.e. the Adjudicator should not unfairly regard
with favour or disfavour the case of one of the parties, nor should there be any appear-
ance that the Adjudicator might do so.
Any request for an Adjudicator must be accompanied by a copy of the Notice of
Adjudication, and the appointment of the Adjudicator should take place within seven
days of the submission of the Notice of Adjudication to the other party.
Alternatively, it may be possible to agree with the other party the name of an indi-
vidual who should act as Adjudicator. However, sometimes parties are unwilling to
agree anything once they are in dispute, and you may wish to balance how long you
are likely to spend trying to reach agreement with how likely it is that agreement will
be reached.
The Referral Notice

The next step is for the Referring Party to send a Referral Notice to both the Adjudi-
cator and the other party.
The Referral Notice is the document which contains all the information that the
Referring Party wishes the Adjudicator to consider.
It should:
• Be consistent with the Notice of Adjudication.

• Explain the nature of the dispute and how it arose.
• Detail the facts that you rely upon.
• Provide the documentary evidence to support those facts.
• Provide sufficient details of the contractual right to the remedy which is sought.
• Not include evidence that the other side has not seen before.
• List the decisions that the Referring Party requires the Adjudicator to make.
The Adjudicator then normally has 28 days from the date of your Referral Notice to
make his decision.
The Adjudicator’s decision

The Adjudicator’s decision may be an order for the payment of money from one party
to another, or it may relate to a disputed fact or technical matter (for example, whether
the workmanship is to the right standard or what the specification means).
The Adjudicator may also decide that any of the parties to the dispute are liable to
make a payment under the contract and decide when that payment is due and the final
date for payment. The Adjudicator also has power to award interest (either simple or
compound) on outstanding payments.
The Specification
Sub-Clause 1.1.76 of the Red Book (but not the Yellow or Silver Books) defines “Spec-
ification” as meaning “the document entitled specification included in the Contract, and
any additions and modifications to the specification in accordance with the Contract.
Such document specifies the Works”.
Examples of entries into the Specification include:
• Requirements for inspections and tests,

• Details of rights of access to the Site,
• Employer Supplied Materials,
• Requirements for Contractor’s Documents,
• Technical Standards,
• Requirements for as-built records,
• Requirements for operation and maintenance manuals,
• Requirements for training,
• Co-operation requirements,
• Activities of other contractors,
• Health and safety requirements,
• Requirement for Quality Management (QM) system/Compliance Verification
System,
• Environmental Issues,
• Temporary utilities,
• Format of monthly progress reports,
• Naming of nominated Subcontractors,
• Any facilities provided by the Employer for staff and labour,
• Key Personnel,
• Programming software requirements,
• Review periods for any submissions,
• Taking over requirements,
• Clearance of Site requirements,
• Measurement requirements,
• Design requirements,
• IPR requirements.
The Drawings
Sub-Clause 1.1.30 of the Red Book (but not the Yellow or Silver Books) defines “Draw-
ings” as meaning “the drawings of the Works included in the Contract, and any addi-
tional and modified drawings issued by (or on behalf of) the Employer in accordance with
the Contract”.
The Schedules
The Red, Yellow and Silver Books define “Schedules” as meaning
the document(s) entitled Schedules prepared by the Employer and completed by

the Contractor, as attached to the Letter of Tender and included in the Contract.
Such document(s) may include data, lists and schedules of payments and/or rates
and prices, and guarantees.
Examples of entries into the Schedules include:
• Bills of Quantities,
• Schedule of Payments.
The JV Undertaking (if applicable)
This is only relevant if the Contractor constitutes an unincorporated JV.
The Red, Yellow and Silver Books define “JV Undertaking” as meaning “the letter
provided to the Employer as part of the Tender setting out the legal undertaking between
the two or more persons constituting the Contractor as a JV. This letter shall be signed by
all the persons who are members of the JV, shall be addressed to the Employer and shall
include:
a each such member’s undertaking to be jointly and severally liable to the Em-
ployer for the performance of the Contractor’s obligations under the Contract
b identification and authorisation of the leader of the JV; and
c identification of the separate scope or part of the Works (if any) to be carried
out by each member of the JV”.
The difference between an “incorporated” and a “unincorporated” JV is that the un-
incorporated JV is not organised as a separate legal entity, it is purely created by Con-
tract and exists only for the purpose of performing the obligations of the Contract.
Any other documents forming part of the Contract

Obviously there may, or many not, be further documents forming part of the Contract.
Note that any such documents take the lowest precedence within the Contract.
Conditions of Contract for Plant and Design-Build (Yellow Book) and

Conditions of Contract for EPC/Turnkey Project (Silver Book) Only
The Employer’s Requirements
The Employer’s Requirements should include all the relevant criteria that the Contrac-
tor is obliged to meet under the Contract.
This will include quality standards, any performance criteria which the Contrac-
tor’s design, and its construction, must meet, together with associated testing to prove
that the criteria have been met, but need not specify any matters which would be im-
posed on the Works by the applicable law.
Quality should be specified in terms that are not so detailed as to reduce the Con-
tractor’s design responsibilities, but not so imprecise as to be difficult to enforce, and
not subject to anyone’s future opinions which tenderers may consider impossible to
forecast.
The Employer sets out his or her needs in whatever degree of detail is deemed
appropriate within the “Employer’s Requirements”. This can be anything from a
performance-related statement of objectives to a detailed and prescriptive statement
of what the Contractor is to provide.
The Contractor responds with the “Contractor’s Proposals”, which set out the way
he or she proposes to design and construct the Works.
The scale of design work required from the Contractor depends on the extent to
which the Employer has already commissioned such work from others.
The Contractor’s design input varies from one contract to another, ranging from the
development of a schematic design provided by others into a workable final design for
construction, to a full design process including proposals, sketch schemes and pro-
duction information based on a schedule of requirements and/or performance criteria.
There will usually be some negotiation between the Employer and the Contractor,
with the aim being to settle on an agreed set of Contractor’s Proposals.
Alternatively, the Employer may approach directly a design and build Contractor
who employs in-house consultants.
It is this inherent flexibility that is one of the strengths of design and build as a
method of procurement. This flexibility happens not just between projects, but also
within projects. For example, an Employer with a prestigious office building may
have some detailed requirements, comprehensively designed by an architectural team,
concerning the facade and the entrance lobby to the building. Once the Employer’s
Requirements and the Contractor’s Proposals are consistent, the Contract can be exe-
cuted, and the Contractor can implement the work.
The Contractor will be responsible for undertaking the design work in the Contrac-
tor’s Proposals, including the appointment of consultants if the Contractor does not
have the necessary skills in-house. As stated already, the Employer may also choose
to appoint consultants to monitor the various aspects of the work, essentially as a
“shadow” design team, but this is not always the case.
As the Employer’s Requirements will be the primary document of reference it is
important that this document is as complete as possible at the point of tender.
Conditions of Contract for Plant and Design-Build (Yellow Book) Only:

The Contractor’s Proposal
The Yellow Book defines “Contractor’s Proposal” as meaning “the part of the Tender
stated or implied as being the Contractor’s proposals for execution of the Works as in-
cluded within the Contract. Such documents may include the Contractor’s preliminary
design”.
Note that the Contractor’s Proposal does not form part of the Silver Book.
Note also that within the Conditions of Contract for Construction (The “Red Book”)
“The Contractor’s Proposal” is included within the definition, but this has been rightly
deleted by the Errata, as it is only applicable to the Yellow and Silver Books.
In simple terms, the Contractor’s Proposals should reflect and directly respond to
the Employer’s Requirements.
The Engineer/Employer’s Representative must check that the Employer’s Require-
ments clearly, concisely and correctly interpret the Employer’s brief. If the Employer’s
Requirements are detailed, the Contractor’s Proposals (Yellow Book) will be detailed,
if they are vague then the Contractor’s Proposals will also be vague, so the Employer
may not get what he or she expected.
Note that the Silver Book does not have Contractor’s Proposals, the Contractor
must execute the Works in accordance with the Employer’s Requirements.
Contract Data
The Contract Data is the section in the Contract which in other contracts, including
FIDIC 1999, is known as the Appendix to Tender.
It contains all the bespoke elements of the Contract specific to the Contract to be
entered into.
Each item on the Contract Data is linked back to a relevant Clause/Sub-Clause in
the General Conditions.
Some examples include:
• Percentage (%) for profit to be added to Cost wherever the contract refers to Cost
plus Profit,
• Defects Notification Period,
• The parties’ contact details,
• Language of the Contract,
• Limits of Liability,
• Performance Security requirements,
• Delay damages,
• Amount of Advance Payment,
• Payment requirements,
• Insurance Amounts,
• DAAB Details.
Provisional Sums
Provisional Sums are used in contracts where there are elements of work which are not
designed or cannot be sufficiently defined at the time of tender, and therefore, a sum
of money is included by the Employer within the Bill of Quantities or other pricing
document to cover the item.
When the item is defined or able to be properly defined, the Contractor is given the
information which allows him to price it, the Provisional Sum is omitted and the price
included in its stead.
The problem with Provisional Sums is that they reduce the competition amongst
tenderers as they are not priced at tender stage.
The Employer should ideally decide what it wants at tender stage so it can be de-
signed and accurately described, and the tendering contractors can properly price and
programme for them.
Building Information Modelling

The FIDIC 2017 Contracts include advisory notes to users where the project uses sys-
tems for Building Information Modelling (BIM).
Building Information Modelling or “BIM” is a process for creating, and also man-
aging information digitally on a construction project across the project life cycle from
design, through construction, operation, future maintenance and eventual demolition.
The BIM is the digital description of every aspect of the built asset, and is compiled
from information assembled by collaboration and updated at key stages of a project,
bringing all the information about every component to one location, so anyone who re-
quires it can easily access it for design, construction, maintenance or eventual demolition.
BIM is designed to give everyone involved with all stages of an asset access to infor-
mation relevant to the whole life cycle.
Co-ordination of goals and effort for all participants and users is essential and is
generally achieved by a “BIM Protocol” and a “BIM Execution Plan”, both key docu-
ments to access and understand.
BIM is founded on a team approach, and successful projects utilising BIM encour-
age collaboration.
It should be noted that the improved quality of information in projects utilising
BIM can result in a significant reduction in Variations with the associated lessening of
delays and other impacts upon the construction process and associated budgets.
At the completion of the project the model may need to be brought up to as-built
status. This involves not only the drawing elements but also the embedded data. Expe-
rience shows that this is a significant effort, so responsibilities for completing this task
should be clear and appropriate allowances provided.
FIDIC state that for construction or building projects involving BIM, in addition to
considering the general principles as introduced above, the following (non- exhaustive)
list of Sub-Clauses of the General Conditions of Contract for Construction (Red
Book) should be thoroughly reviewed when drafting the Particular Conditions:
1.1 Definitions
1.3 Notices and Other Communications
1.5 Priority of Documents
1.10 Employer’s Use of Contractor’s Documents
1.11 Contractor’s Use of Employer’s Documents
1.15 Limitation of Liability
2.3 Employer’s Personnel and Other Contractors
2.5 Site Data and Items of Reference
3.2 Engineer’s Duties and Authority
4.1 Contractor’s General Obligations
4.4 Contractor’s Documents
4.6 Co-operation
4.7 Setting Out
4.9 Quality Management and Compliance Verification Systems
4.20 Progress Reports
6.8 Contractor’s Superintendence
6.10 Contractor’s Records
8.3 Programme
9.1 Contractor’s Obligations (Tests on Completion)
13.3 Variation Procedure
17.3 Intellectual and Industrial Property Rights
17.4 Indemnities by Contractor
17.5 Indemnities by Employer
17.6 Shared Indemnities
19.2.6 Other insurances required by Laws and by local practice
There is a similar list of Sub-Clauses within the Yellow and Silver Books.
Partnering arrangements
The FIDIC contracts do not specifically provide for partnering arrangements, though
they can be set up by including suitable amendments within the Contracts.
The past 20–25 years have seen the growth of partnering and framework agreements
with the global construction industry.
The US Construction Industry Institute defines partnering as:
A long-term commitment between two or more organisations for the purpose

of achieving specific business objectives by maximising the effectiveness of each
participant’s resources… the relationship is based upon trust, dedication to com-
mon goals and an understanding of each other’s individual expectations and
values.
Partnering is a medium- to long-term relationship between contracting parties,

whereby the Contractor, and in turn Consultants and various other parties may not be
required to tender for each project, but are awarded the work, normally by negotiation.
The key with partnering is that it is intended to be a collaborative arrangement be-
tween the parties as if they were one entity.
Advantages of partnering agreements are:
• No rebidding for future projects, a long-term arrangement can extend to several

projects.
• Long-term relationships are developed and based on trust.
• Contractors are appointed earlier and can then contribute to the design and pro-
curement process.
• There is greater cost certainty, particularly where a number of projects have been
carried out by the same team.
• There is continuous improvement to process, time and quality by transferring
learning from one project to another.
• There are improved working relationships.
• There is continuous workflow.
• Procurement is far quicker.
The construction industry is known to be a high risk business, and many projects can
suffer unexpected cost and time overruns frequently resulting in disputes between the
parties.
The risks within a project are initially owned by the Employer, who may choose to
adopt a “risk transfer” approach where the risks are assigned through the Contract to
the Contractor who has the opportunity to price and programme for them, or a “risk
embrace” approach where the Employer retains the risks.
In reality, most contracts are a combination of the two. The traditional approach to
risk management is that of risk transfer, which is fine if the scope of work is clear and
well defined; however, in recent years clients have become more aware that they can
achieve their objectives better by adopting a more “old fashioned” risk embrace culture.
EU Procurement Directives
Whilst not wishing this book to be geographically specific, it is worth some consid-
eration of the European Union (EU) Procurement Directives that apply to all EU
members procuring within the public sector, above minimum monetary thresholds.
These thresholds are reviewed on a regular basis, and subject to EU-wide princi-
ples of non-discrimination, equal treatment and transparency. The regulations affect
government departments, local authorities and health authorities, and also utilities
companies operating in the energy, water and transport sectors.
The purpose of the procurement rules is to open up the public procurement market
and to ensure the free movement of supplies, services and works within the EU.
The rules are enforced by the Members States’ Courts and the European Court of
Justice, and require that all public procurement must be based on value for money,
defined as “the optimum combination of whole-life cost and quality to meet the user’s
requirement”, which should be achieved through competition, unless there are com-
pelling reasons to the contrary.
In addition to the EU Member States, the benefits of the EU public procurement
rules also apply to a number of other countries outside Europe because of an interna-
tional agreement negotiated by the World Trade Organization (WTO) titled the “Gov-
ernment Procurement Agreement” (GPA).
The EU Procurement Directives set out the legal framework for public procurement
when public authorities and utilities seek to acquire supplies, services or works (e.g.
civil engineering or building), procedures which must be followed before awarding a
contract when its value exceeds set thresholds which are reviewed on a regular basis,
unless the contract qualifies for a specific exclusion, for example, on grounds of na-
tional security.
The Directives require contracting authorities to provide details of their proposed
procurement in a prescribed format, which are then published in the Official Journal
of the European Union (OJEU).
All companies replying to an OJEU advertisement have an equal opportunity to
express interest in being considered for tendering. As in all tendering exercises, clients
must ensure that those companies selected to tender receive exactly the same informa-
tion on which to make their bid.
The notice may be issued electronically, and this service may be provided through
an intermediary organisation.
Generally, contracts covered by the Regulations must be the subject of a call for
competition by publishing a Contract Notice in the OJEU.
The OJEU Notice process has associated minimum timeframes for receipt of ten-
ders or requests to participate, dependent on procurement procedure, from the date
the contract notice is sent.
The Pre-Tender Planning Stage

The Contractor Pre-Tender Planning Stage generally follows the following steps:
• Considering the procurement strategy (see above),

• Compiling the shortlist of tenderers,
• Drafting criteria for contractor selection,
• Preparing information for contract tender enquiries,
• Issuing tender documents,
• Receipt of tenders,
• Comparison of tenders,
• Contract award.
Each of the above stages should be dealt with in the form of a checklist so that all
matters are dealt with.
Receipt of tenders to contract award

It is critical that tenderers are given sufficient time in which to prepare and submit
their tenders.
The time and place for the delivery of tenders needs to be clearly stated. It should
also be made clear to all tenderers that late tender returns are invalid and should not
be considered, unless all are given a further opportunity to re-tender. Preferably, late
tenders should be returned to the tenderer unopened.
The tender documentation should also make clear the period over which a tender
may remain open for acceptance. This would normally be three months, giving the
Client time to assess the tenders and make the appropriate award.
Opening tenders
Tenders should not be opened until after the date and time for submission to avoid any
suspicion of collusion. No tenderer should be allowed to alter the terms of a tender
after the closing time.
The opening of tenders in public, or in front of all the tenderers is not recommended,
as it can lead to misunderstandings. If it must be done, the presence (but not the con-
tent) of any qualification should also be indicated.
After opening the tenders and supporting documents they should be evaluated.
Each tender is confidential, and no details should be released to any other tenderer or
to anyone with a financial interest in the tendering.
Tender Analysis
By carrying out detailed checks pre-tender, when tenders are received, the evaluation
criteria should be very straightforward as all the tenders should be capable of being
accepted, so it will normally just include any further information gained from the bid
itself:
• Price,
• Contractor’s ability to complete on time (though this should ideally have been
established prior to issuing tenders for pricing),
• Contractor’s ability to achieve quality standards (again this should ideally have
been established prior to issuing tenders for pricing),
• The Contractor’s proposed team and team structure.
Note that with Design and Build tenders, the comparison of bids is far more com-
plex as the tenders are not being judged on the basis that each has priced the same
project!
There has been a trend in the past 10–15 years for tenders to be accepted largely on
the basis of quality elements of the bid, rather than on price alone.
A tender analysis should be prepared showing details of each of the tenders submit-
ted including:
• Price submitted,
• Any exclusions or qualifications to the price submitted,
• Any arithmetical errors,
• Any technical issues such as design requirements.
There should be clear guidance on how to deal with late, incomplete or qualified bids.
The tender assessment report should present a clear and logically reasoned case for
acceptance of the recommended tender. If the inclusion of technical detail is essential,
sufficient explanation – in plain language – should also be included.
The following may be included in the report:
• A tabular statement of the salient features of all the tenders received; e.g. the name
of the tenderer, the tender sum, whether valid (received by due date, complying
with instructions for tendering, etc.), and qualifying conditions;
• Reference to any discussions that may have taken place with any tenderers regard-
ing the tender;
• A concise summary of the findings following the examination and analysis of each
tender, reasons for considering any tender invalid, discussion of the programme
and methods of execution proposed, and reasons for considering any of these
unsatisfactory;
• Comments on any rates, which appear exceptionally high or low, and forecasts of
the possible effects on the contract price in cases where there are large differences;
• A comparison of the recommended tender sum with the cost plan or budget;
• Recommendation of the most acceptable tender;
• Recommendations for dealing with any qualifications in the recommended tender
prior to acceptance.
Only after a tender has been accepted, should unsuccessful tenderers be advised of the
name and tender price of the successful tenderer.
REMEMBER – THE CHEAPEST PRICE DOES NOT ALWAYS MEAN THE

CHEAPEST COST!
Notification of tender results

It is important that all competing tenderers be informed of the results of their tender
as soon as possible after the tender submission date. This particularly applies to those
whose tenders are not successful, or which are not being given further consideration,
as it allows them to concentrate on other opportunities with other Employers.
Generally, those who represent the Employer (but who are not actually the Em-
ployer), for example Consultants, have no authority to accept tenders, as ultimately
the contract is between the Employer and the Contractor, so it is normal to recom-
mend a choice to the Employer and allow him to make the final decision and inform
the tenderers accordingly only if directly instructed by the Employer.
The representative of the Employer should submit a report to the Employer, which
lists the tenders received, comments on them and recommends a particular one for ac-
ceptance. The scope and detail of this report will vary according to the circumstances.
Awarding the contract

Once the tenders have been assessed, and a decision made as to which tender is suc-
cessful and the contract awarded, it is essential that the contract be executed as soon
as practicable, and also that unsuccessful tenderers be advised accordingly.
At this stage, it is useful to follow a checklist approach to ensure that all the pre-
construction issues are covered.
These will include:
• Confirm successful (and unsuccessful tenders).

• Issue letter of intent (if applicable).
• Prepare contracts for signing.
• Agree key dates, sequence of works and programme including integration with the
project programme.
• Agree timing for issue of drawings or approval of design information.
• Confirm requirements for insurances.
• Agree or obtain Employer/Employer’s Representative approval of subcontracts or
packages where there is a contractual requirement to do so.
• Agree the provision of samples, sample panels and mock ups to be submitted for
Employer approval.
• Agree the facilities to be provided by the Contractor, for example, cabins, stores,
offloading, scaffolding, skips, removing rubbish, etc.
• Agree dates for interim certificates and procedure for requesting payment.
• Agree notification requirements for instructions, variations, dayworks, etc.
• Sign contract (not necessarily the last, and certainly not the least important thing
to do, but check that it has been done).
In order to satisfy the test of offer and acceptance, the acceptance of a tender must be
unconditional. So, a letter of acceptance should not introduce additional conditions
like “your tender is accepted subject to our obtaining the necessary finance within one
month”.
Introducing new conditions such as this would, under most legislations, be a counter
offer, cancelling the original offer and in turn requiring acceptance by the tenderer.
While some negotiation between the parties is not unusual, eventually an uncondi-
tional acceptance of a current offer (or counter-offer) is needed.
Letter of Acceptance of tender

This is a letter from the Employer to the Contractor accepting the offer. If negotiations
between Employer and Contractor take place before a tender is finally accepted, cop-
ies of any other letters giving evidence of the conditions agreed to should also be in-
corporated in the documents. In order to form a contract, there must be a well- defined
offer to which an unconditional acceptance has been given.
Formalising the contract

In some legislations, there is not a strict requirement to sign a contract before it comes
into effect, and the Contractor can commence work, but it is clearly something that
needs to be done as soon as possible.
It is important to ensure that the signed documents incorporate all the documenta-
tion on which tenders and the final offer and acceptance are based i.e. they form the
“entire agreement”.
At the time of signing of the agreement, the Parties should initial every page of
all such other documents, together with initialling any amendments, which may have
been made to printed documents.
When arranging the signing of contract documents, it is critical that a check be
made that the signatories have legal authority to make contracts on behalf of their or-
ganisations, and that the formalities required by the organisation’s rules are followed.
Also, companies, incorporated societies or statutory bodies, typically, may require
the placing of the organisation’s seal and two authorised signatures.
Appendix
Errata to the FIDIC Conditions
of Contract 2017
Important Note
Readers who may be reading this book alongside a copy of a FIDIC 2017 Contract
should be aware that, following publication of the Conditions of Contract for Construc-
tion (The “Red Book”), the Conditions of Contract for Plant and Design-Build (The
“Yellow Book”) and the Conditions of Contract for EPC/Turnkey Project (The “Silver
Book”), FIDIC published an Errata citing various significant changes/errors which
had not been included within their published contracts.
Several minor typographical errors and layout irregularities had also been found
but were not included in the Errata due to their insignificance with regard to the con-
tent of the contracts.
The author has taken into account the Errata (where applicable) when writing this
book, and has indicated where text has changed from the published Contract, for ex-
ample, in the Conditions of Contract for Construction (The “Red Book”):
Page 1 Sub-Clause 1.1.10: On the third and fourth lines, delete “the Contractor’s Pro-
posal”………a note has been made within Chapter 10 on Tendering.
Conditions of Contract for Construction (The “Red Book”)

General Conditions
• Page 1 Sub-Clause 1.1.10: On the third and fourth lines, delete “the Contractor’s
Proposal”.
• Page 6 Sub-Clause 1.1.77: On the second line after “Payment Certificate under”,
add “Sub-Clause 14.2.1 [Advance Payment Guarantee] (if applicable),”.
• Page 7 Sub-Clause 1.1.81: On the first line, delete “the Contractor’s Proposal,”.
• Page 28 Sub-Clause 4.6: On the second-last line of the first paragraph before
“Contractor’s”, add “of the”.
• Page 29 Sub-Clause 4.7.3: In the second bullet-point of sub-paragraph (b), before
“if the items of reference”, add “when examining the items of reference within the
period stated in sub-paragraph (a) of Sub-Clause 4.7.2,” and on the second and
third lines, delete “and the Contractor’s Notice is given after the period stated in
sub-paragraph (a) of Sub-Clause 4.7.2”.
• Page 37 Sub-Clause 4.22: On the third line of the second paragraph before “4.17”,
add “Sub-Clause”.
306 Errata to FIDIC Conditions of Contract 2017
• Page 38 Sub-Clause 5.2.2: In sub-paragraph (a) on the first line before “Subcon-
tractor”, add “nominated”.
• Page 70 Sub-Clause 14.2.1: On the fifth and sixth lines of the first paragraph, re-
place “based on the sample form included in the Tender documents” with “in the
form annexed to the Particular Conditions”.
• Page 78 Sub-Clause 14.12: On the seventh line of the first paragraph, replace “Sub-
Clause 21.6 [Arbitration]” with “Clause 21 [Disputes and Arbitration]”.
• Page 87 Sub-Clause 17.1: On the fourth and fifth lines of the first paragraph, re-
place “Date of Completion of the Works” with “issue of the Taking-Over Certifi-
cate for the Works”.
• Page 88 Sub-Clause 17.3: On the first line of the second paragraph, replace “no-
tice” with “a Notice”.
• Page 94 Sub-Clause 19.2.1: On the last line of the second paragraph, delete “Clause
12 [Tests after Completion]”.
Appendix – General Conditions of Dispute Avoidance/Adjudication

Agreement
• Page 107 Title: Replace “General Conditions of Dispute Avoidance/Adjudication

Agreement” with “General Conditions of DAAB Agreement”.
• Page 107 Sub-Clause 1.2: On both the first and third lines, replace “DAA Agree-
ment” with “DAAB Agreement”.
• Page 107 Sub-Clause 1.3: On the first line, replace ““Dispute Avoidance/Adjudica-
tion Agreement” or “DAA Agreement” means”” with ““DAAB Agreement” is as
defined under the Contract and is”; on the first line of sub-paragraph (c), replace
“DAA Agreement” with “DAAB Agreement”; in sub-paragraph (c) (ii), replace
“chairman” with “chairperson”.
• Pages 107 to 115 Sub-Clause 1.7 to Clause 12: Replace all instances of “DAA
Agreement” with “DAAB Agreement”.
• Page 115 Sub-Clause 11.1: On the second line, delete the text: “, or in the case of a
three-member DAAB the Other Members jointly,”.
Annex – DAAB Procedural Rules

• Page 119 Rule 4.2: On the fourth line, replace “chairman” with “chairperson”.
• Page 121 Rule 8.3: On the sixth line, replace “chairman” with “chairperson”.
Guidance for the preparation of Particular Conditions

• Page 8 INTRODUCTION Insert in the beginning of GP5: “Unless there is a con-
flict with the governing law of the Contract, …” allowing GP5 to read “GP5: Un-
less there is a conflict with the governing law of the Contract, all formal disputes
must be referred to a Dispute Avoidance/Adjudication Board (or a Dispute Adju-
dication Board, if applicable) for a provisionally binding decision as a condition
precedent to arbitration”.
Errata to FIDIC Conditions of Contract 2017 307
• Pages 16 to 47 Guidance for Sub-Clauses 1.6, 1.14, 4.2, 14.2, 14.9, 14.15 and 21.1:
Replace all instances of “Sample Forms” with “Forms”.
• Page 35 Guidance for Sub-Clause 9.1: On the second line of the first paragraph,
replace “Contractor’s Proposal” with “Tender”.
Form of Letter of Acceptance

• Page ii Footnote: Replace “1.1.51” with “1.1.50”.
Form of Dispute Avoidance/Adjudication Agreement

• Pages iv and v: Replace all instances of “DAA Agreement” with “DAAB Agreement”.
• Page iv Recital C: On the first line of sub-paragraph (c), replace “chairman” with
“chairperson”.
Conditions of Contract for Plant and Design-Build

(The “Yellow Book”)
Explanatory Charts
First page, item 2: Replace “above diagram” with “diagram below”.
General Conditions
• Page 4 Sub-Clause 1.1.42: On the third line, replace “Specification” with “Employ-
er’s Requirements”.
• Page 6 Sub-Clause 1.1.69: On the second line after “payment under”, add “Sub-
Clause 14.2.1 [Advance Payment Guarantee] (if applicable),”.
• Page 6 Sub-Clause 1.1.74: On the second line, replace “Specification” with “Em-
ployer’s Requirements”.
• Page 7 Sub-Clause 1.1.78: On the first line, replace “any change to the Works” with
“any change to the Employer’s Requirements or the Works”.
• Page 37 Sub-Clause 6.1: On the first line, replace “Specification” with “Employer’s
Requirements”.
• Page 65 Sub-Clause 13.6: In the fourth paragraph, at the end of sub-paragraph
(ii), delete “(with detailed supporting particulars)”, and at the end of this fourth
paragraph, add “(with detailed supporting particulars)”.
• Page 84 Sub-Clause 17.1: In the first paragraph, on the fourth and fifth lines, replace
“Date of Completion of the Works” with “issue of the Taking-Over Certificate for the
Works”; on the seventh line, delete “or Part”; on the last line, delete “or Part”.
• Page 86 Sub-Clause 17.4: On the third line of the last paragraph, delete “or Part”.
• Page 91 Sub-Clause 19.2.3: In the first paragraph, on the first line, delete “, if any,”
and replace “part of the Permanent Works under Sub-Clause 4.1 [Contractor’s
General Obligations], and/or any other design under the Contract” with “the Per-
manent Works”.
Appendix – General Conditions of Dispute Avoidance/Adjudication Agreement

• Page 103 Sub-Clause 1.3: On the first line, replace ““Dispute Avoidance/Adjudica-
tion Agreement” or “DAA Agreement” means” with ““DAAB Agreement” is as
Agreement” with “DAAB Agreement”.
three-member DAAB the Other Members jointly,”.
Annex - DAAB Procedural Rules
• Page 118 After Rule 10, insert Rule 11: “Rule 11 Challenge Procedure 11.1 If and
when the objecting Party challenges a DAAB Member, within 21 days of learning
of the facts upon which the challenge is based, the provisions of this Rule shall
apply. Any challenge is to be decided by the International Chamber of Commerce
(ICC) and administered by the ICC International Centre for ADR. 11.2 The pro-
cedure for such challenge and information on associated charges to be paid are set
out at http://fidic.org and http://iccwbo. org.”

Errata to FIDIC Conditions of Contract 2017 309
must be referred to a Dispute Avoidance/Adjudication Board (or a Dispute Adju-
• Pages iv and v: Replace all instances of “DAA Agreement” with “DAAB Agreement”.
“chairperson”.

General Conditions
• Page 7 Sub-Clause 1.1.79: On the second line after “Payment Certificate under”,
add “Sub-Clause 14.2.1 [Advance Payment Guarantee] (if applicable),”.
• Page 7 Sub-Clause 1.1.88: On the first line, replace “any change to the Works” with
“any change to the Employer’s Requirements or the Works”.
• Page 42 Sub-Clause 6.1: On the first line, replace “Specification” with “Employer’s
Requirements”.
• Page 64 Sub-Clause 12.1: In sub-paragraph (b) (ii), on the second line, delete “been”.
• Page 71 Sub-Clause 13.6: In the fourth paragraph, at the end of sub-paragraph
(ii), delete “(with detailed supporting particulars)”, and at the end of this fourth
paragraph, add “(with detailed supporting particulars)”.
• Page 90 Sub-Clause 17.1: On the fourth and fifth lines of the first paragraph, re-
place “Date of Completion of the Works” with “issue of the Taking-Over Certifi-
cate for the Works”.
• Page 97 Sub-Clause 19.2.3: On the first line of the first paragraph, replace “the part
of the Permanent Works under Sub-Clause 4.1 [Contractor’s General Obligations],
and/or any other design under the Contract” with “the Permanent Works”.
Appendix – General Conditions of Dispute Avoidance/Adjudication Agreement

• Page 110 Sub-Clause 1.3: On the first line, replace “ “Dispute Avoidance/Adjudica-
tion Agreement” or “DAA Agreement” means” with “ “DAAB Agreement” is as
Agreement” with “DAAB Agreement”
three-member DAAB the Other Members jointly, “.
Annex – DAAB Procedural Rules

must be referred to a Dispute Avoidance/ Adjudication Board (or a Dispute Adju-
Form of Letter of Acceptance
• Page ii Footnote: Replace “1.1.51” with “1.1.50”.
• Pages iv and v: Replace all instances of “DAA Agreement” with “DAAB

Agreement”.
“chairperson”.
Index
acceleration 163, 199 Arbitrator’s fees and expenses 263

acceptance 84, 174, 241, 244–245, 272, 274, Archaeological and Geological Findings
282, 301–303; formal 278; letter of 51, 57, Clause 237
59, 65, 69, 223–224, 272, 274–278, 303, as-built programme 194; collapsed 194
307, 310 as-built records 63–64, 96, 157, 159, 285, 294
Accepted Contract Amount 62, 67, 82, 93, As-Planned v As-Built 194
102, 108, 114, 162, 170, 181, 286 assignment of benefit of subcontract 96
access arrangements 97, 208 assistants 84, 86–87, 283
access restrictions 150 audits, internal 100–101
access routes 62, 104, 235, 237
accident prevention officer 111 bar charts 183–184
Additional coverage for breach Base Date 53–54, 61, 68, 82, 101–102, 104,
of warranty 226 158–159, 162, 168, 180, 215
additional payment 45, 72, 164, 240, 242–246, baseline programme 183; as-planned 194
248, 287 Beneficiary 273
ad-hoc DAAB 288 bids 55, 149, 151, 300–301
adjudication 43, 234, 270, 291–293 Bills of Quantities 41, 67, 91, 144, 146, 162,
Adjudicator 46, 292–293 169, 269, 287, 294
ADR 290, 308 BIM (Building Information Modelling)
advance payment 170, 175, 274, 297 297–298
Advance Payment Guarantee 170, 173, 272, Bond Amount 273
274, 305, 307, 309 breach of contract 106, 164, 195, 200, 211,
advance warnings 188, 190–192 229–230, 242, 251
advantages of design and build 143 Building Control/Building Regulation
Agreed Final Statement 178 Approval 147
ambiguities 59, 160, 275, 277 Building Information Modelling see BIM
Amicable Settlement 259, 264–265, 289, 291 building permit 168
Appendix 40, 43–46, 58–61, 63, 65, 69, 71,
170, 174, 256, 305–306, 308, 310 care and supply of documents 96, 114
Appendix to Tender 80, 275–276, 280 care of the Works 213–228, 236, 238, 279–280
application for interim payment 171 CEMAR 282
application of laws 270 certificate 58–59, 67, 69, 84, 115, 123, 131, 137,
Appoint DAAB Member 256 159, 174, 182; interim 303; performance 66
Appointment of Adjudicator 292–293 changes in cost 171
arbitration 75–76, 89, 177–179, 216, 231, 239, changes in Laws 168
249, 251–253, 255–256, 258–265, 279–280, Chartered Institute of Arbitrators 260
288–290, 292, 306, 308–310; commencement claims 41–43, 45, 60, 65–66, 72–75, 87–89,
of 259; international 259, 264; multi-party 92–93, 103, 124–125, 164, 169–170, 175,
260; place of 259 180, 182–183, 191, 193, 201–202, 214–216,
Arbitration Acts 260 223–234, 238–256
arbitrator 75, 205, 252–253, 255, 258–264; clearance of Site 138
appointed 291 climactic conditions 53, 65, 101–102,
Arbitrator’s Costs 263 196, 235, 237
312 Index
Commencement Date 51, 54, 98–100, 131, Contractor’s Documents 63, 80, 85, 90, 92,
133, 167, 169, 172, 181, 185–186, 207, 209, 94–95, 114, 116–117, 137–138, 153–154,
211, 213–214, 284 156–158, 160, 206–208, 212–215, 298
Commencement of Works 181, 211 Contractor’s entitlement to extensions
communications 43, 58, 85, 94, 100, 114–115, of time 196
241, 252, 282, 298; contractual 282; effective Contractor’s Equipment 81, 97, 105, 108, 112,
90; electronic 282; language for 59, 95, 111, 138, 186, 208, 215, 222; initial 206
113, 116, 157, 167 Contractor’s fitness for purpose obligation 163
Completion 50, 56, 66–70, 74, 106–107, 118, Contractor’s liability for correction of latent
127–129, 131–132, 139–141, 159–160, 163, defects 124
175–177, 181–202, 206, 214, 226–227, 232, Contractor’s offer 278
235–238, 273, 279–280, 284–285 Contractor’s Overheads 233
Completion of outstanding work and Contractor’s parent company 272
remedying defects 133–134, 141 Contractor’s Personnel 64, 94, 104, 107,
Compliance Verification Systems 100–101, 298 110–112, 154, 157, 187, 189, 219, 228
concept/design stage 83 Contractor’s Programme 65, 80, 182, 185, 187
concurrent delays 197–199 Contractor’s progress and reports 107, 197,
Conditions of Contract for Construction 41, 199, 288
47, 56–58, 118, 142, 203, 213, 269, 274, Contractor’s Proposals 51, 57, 59, 126, 133,
296, 305 149–151, 153, 165–166, 187, 276, 295–296
Conditions of Contract for EPC/Turnkey Contractor’s quality assurance
Project 42, 46–47, 57–58, 78, 203, 213, 269, certification 101
276, 295, 305, 309 Contractor’s Records 107, 112, 114,
Conditions of Contract for Plant-Design and 252–253, 298
Build 41, 46, 51, 57–58, 203, 213, 269, 275, Contractor’s Representative 61, 84–85, 90, 94,
295–296, 305, 307 112, 115, 150, 161, 173, 241
Consequences of Employer’s Suspension Contractor’s Representative and Key
235–238 Personnel 112
Consequences of Force Majeure 75 Contractor’s responsibility for care of the
Consequences of Suspension 73 Works 46, 70
Contract Agreement 41, 51, 57, 59, 170, 211, Contractor’s staff and labour 208, 222
272–278, 282 Contractor’s Superintendence 111, 298
Contract Data 51, 54, 79–81, 105–106, 108, Contractor’s test certificate 126
114–116, 166–167, 170–172, 175–177, Contractor to Search 74, 137, 236, 238
180–181, 186, 222–223, 225–228, 257, contractual claims 230–231, 243
273, 275–277, 280, 284–286, 288–291, 296; cost index 169
associated 223 Cost of claim preparation 233
Contract Date 188, 218 Cost of remedying defects 133–134
Contract Price 41, 43, 45, 48, 50, 56, 66, Cost plus Profit 75, 234, 239–240
68–69, 92–93, 103, 143, 145, 165–166, COVID-19, 219
168–170, 180, 189, 239–240, 243–246, 248, CPM 184
279–280 critical path 184, 185, 187, 193, 196–197
contract strategy 287
Contractor 40–56, 59–88, 90–117, 119–189, DAAB (Dispute Avoidance/Adjudication
191–193, 195–244, 246–249, 251–253, Board – FIDIC 2017) 137–138, 171,
257, 259, 268–269, 272–288, 294–299, 177–179, 204–205, 209–210, 249, 251, 253,
301–303, 305 255–258, 264–265, 288–289, 291, 306, 309
Contractor access 72 DAAB Agreement 256–257, 306–310
Contractor appointment stage 147 DAAB fees 257
Contractor Delay 134, 194, 198 DAAB members 257, 308
Contractor-designed Works 58, 61, 91, 269 DAAB Procedural Rules 257, 288, 306,
Contractor Pre-Tender Planning Stage 300 308, 310
Contractor’s access routes 104 DAAB’s decision 177, 251, 256–259, 264–265
Contractor’s Claims 60, 88, 193, 229–254, 256, DAAB’s role 257
279–280 DAB (Dispute Adjudication Board – FIDIC
Contractor’s Claims and Employer’s 1999) 40–41, 75–76, 171, 255–265, 280,
Claims 239 288–289, 306, 309–310
Contractor’s design 41, 91–92, 126, 142, 144, Date of Completion 106, 134, 152, 163,
147, 154–156, 160, 164, 268–269, 295 176–177, 193, 214
Index 313
dayworks 167, 247, 303 electronic transmissions 58, 85, 115, 241
DBO see Design, Build and Operate Elemental Trend Analysis 183–184
Decennial Liability 288 Emden Formula 233
defect detection 119–120 Employer 40–50, 52–56, 59–62, 64–85, 87–88,
defect prevention 120 90–99, 101–111, 113–117, 124–160, 162–181,
defective work 49, 124, 135 184–189, 191–212, 214–217, 219–254,
defects 51–52, 54, 64, 66–67, 90, 114, 118–119, 256–260, 266–269, 272–274, 277–288,
122, 124, 129–131, 133–138, 155–156, 160, 294–299, 302–303
214, 226, 279–280 Employer/Consultant 200
Defects Liability 49, 56, 66, 118–141 Employer/Employer’s Representative 99, 182,
Defects Notification Period 243, 245; 264, 284, 303
see also DNP Employer Risk Event 80, 197
defining quality 121 Employer’s Claims 60, 75, 234, 239–241, 247
delay analysis, retrospective 193 Employer’s Convenience 40, 85, 113, 117,
delay damages 131–132, 180–181, 193, 207–209, 212, 216
199–201, 205, 207, 216, 267, 271, 284, 286 Employer’s Equipment 62, 82, 106, 114, 217
delayed tests 74, 128, 140, 236, 238 Employer’s Financial Arrangements 209–210
Delays in receipt of Design Information 232 Employer’s Liabilities 43–46, 69, 71, 179–180,
delegation 60–61, 84, 86, 94, 283 217, 224
design 41–44, 46–47, 61, 63, 76–78, 83–84, Employer’s Personnel 63–64, 81, 95–97, 107,
91–92, 95, 142–149, 151–155, 157–158, 110–111, 114, 125–126, 128–129, 132–133,
214–215, 226–227, 267–268, 270–271, 279, 137, 155, 157, 159, 215, 217
295–297 Employer’s Representative 40, 43–44, 50, 52,
Design, Build and Operate (DBO) 218, 257 75, 79, 82–85, 88–89, 143, 150, 221–222,
design and build 142–147, 149, 151, 267 244–251, 283–284
Design and Build process 142, 144 Employer’s Requirements 50–52, 54–55, 57–59,
Design-Build Contract 57, 76 63, 72, 77, 90, 127–128, 138–140, 142–153,
design life 163 155–160, 186, 275–277, 295–296, 307, 309
design responsibility 47, 50, 78, 154, 186, Employer’s Risks 70–71, 268
217, 269 Employer’s Taking Over 56, 66, 118, 129, 140
design responsibility and liability 142–160 Employer’s use of Contractor’s Documents
details of rights of access 294 80, 298
determination 41–42, 86, 88–89, 93, 98, 103, Engineer 40–42, 50–56, 60–69, 71–73, 75–79,
174–175, 179, 204, 208–210, 240, 242–245, 82–90, 92–101, 103–117, 124–140, 154–179,
247–250 181–183, 185–189, 191, 199, 201–206,
Dispute Adjudication Agreement 40 208–210, 221–222, 240–251, 258, 282–284
Dispute Adjudication Avoidance Engineer/Employer’s Representative 79, 82–86,
Agreement 272 91, 123–124, 182, 193, 229–230, 234, 255,
Dispute Adjudication Board see DAB 283, 296
Dispute Avoidance/Adjudication Agreement Engineering, Procurement and Construction
256–257, 306–310 (EPC) 47, 50–51, 78
Dispute Avoidance/Adjudication Board see Engineer’s Determination 89, 249, 255–256
DAAB Engineer’s Duties and Authority 298
Dispute Avoidance Board 289–290 Engineer’s/Employer’s Instructions 283
disputes 41, 43, 46, 75–76, 87, 89, 178–179, environmental law provisions 284
191, 207, 230–231, 239–240, 251–253, EOT see Extension of Time
255–265, 270, 288–293 EPC (Engineering, Procurement and
disputes and arbitration 69, 72, 89, 93, 239, Construction) 47, 50–51, 78
249, 255–256, 279–280, 288, 306, 308–309 EPC Contracts 47–50, 57, 76, 78, 277
DNP (Defects Notification Period) 45, 66–67, EPC/Turnkey Project 42, 46–47, 57–58, 78,
69, 96, 99, 124, 132–135, 137–138, 140–141, 203, 213, 269, 276, 279, 305, 309
175–176, 234, 240–241, 244, 246, 248 equipment 42, 62, 67, 77–78, 105–107, 123,
drawings 52, 57, 59, 81–82, 92, 98, 114, 116, 139–140, 187, 224, 283; major items of 105
120–121, 123, 154, 215, 275, 294; issue of Errors in the Employer’s Requirements
90, 303 235–236
example COVID-19 219
Early Contractor Involvement (ECI) 144 Example Form of Advance Payment
Eichleay Formula 233 Guarantee 272, 274
314 Index
Example Form of Parent Company General Conditions of DAAB Agreement 256,
Guarantee 272 306, 308, 310
Example Form of Payment Guarantee by General Conditions of DAB Agreement 40
Employer 272, 274 General Design Obligations 52, 54, 82,
Example Form of Performance Security 155–156
272–273 Gold Book 218, 257
Example Form of Retention Money Green Book 42–43, 76, 285
Guarantee 272, 274 ground conditions 50; unforeseeable 77
Example Form of Tender Security 272–273 Guarantor 273–274
Example of Schedule of Advance
Warnings 192 Head Office Overheads 233
Excepted Risks 228 Henry Laurence Gantt 183
Exceptional Events 54, 127, 213, 215, 218–222, Hudson’s Formula 233
227, 231, 235–238, 271, 279–280, 287 hydrological 46, 50, 53, 82, 102
expert witnesses 261
Extension of Defects Notification Period 134 ICC (International Chamber of Commerce)
Extension of Time (EOT) 41–42, 44, 52–55, 289, 308
59–60, 65, 72–75, 80, 97–99, 103–104, Impacted As-Planned 194
125–126, 158, 164–165, 168, 188, 193–199, Indemnities 114, 213–228, 279–280, 298;
202, 220–221, 229, 234–237, 240, 246 considering 216
Indemnities by Contractor 114, 148,
failure to pass tests 74, 141, 236, 238 216–217, 298
failure to pass Tests on Completion 129 injury to persons and damage to
failure to remedy defects 126, 134 property 227
faith, bad 271 inspections 101, 119, 122–123, 125, 135, 172,
Federation International des Ingenieurs- 186, 263, 294; appropriate 128; quantified
Conseils see FIDIC 120; reasonable 124; timing of 186
FIDIC (Federation International des instructions 44–45, 53–54, 59–60, 72–73,
Ingenieurs-Conseils) 40–81, 83–88, 99–100, 84–85, 87, 90, 97–98, 115, 122, 126–127,
110–114, 124–125, 134–139, 153–156, 137, 163–167, 202, 205–206, 212, 215–216,
163–169, 171–174, 176–183, 185–189, 235–238, 302–303; oral 283; reasonable 206
196–197, 202–207, 210–211, 213, 216–219, Insurance Amounts 297
222–224, 239–245, 255–259, 266–305 insurances 43, 46, 71, 173, 182, 213, 222–228,
FIDIC Conditions of Contract 305–310 271, 279–280, 288, 298
FIDIC contracts 42, 76, 83, 86, 181–182, 193, Insuring Party 71, 222–223
195–197, 200–201, 203, 259, 267–268, 270, Intellectual and Industrial Property Rights
272, 280–281, 283–284 114, 215, 217, 298
Final Payment 179, 210 interim payment 69, 78, 171, 173–174, 231;
Final Payment Certificate see FPC certified 170
Final Statement 69, 177–179; draft 69, Interim Payment Certificate(s) 69, 127, 170,
177–179 173, 210; see also IPC
float 185, 187; free 185; terminal 185 International Chamber of Commerce (ICC)
fluctuations 169, 185, 211, 232 289, 308
Fluctuations in cost of Labour 232 International Court of Arbitration 259
Force Majeure 50, 57, 70–72, 75, 218, International Quality Standard ISO 120
271–272, 287 IPC (Interim Payment Certificate) 69, 110,
Force Majeure events 75, 272 127, 170–171, 173–177, 179, 210
fossils 62, 73, 108 ISO standards 77, 100, 120
FPC (Final Payment Certificate) 67, 69, 94, Issue of FPC 208
138, 175, 178–180, 208 Issue of IPC 177
Free-Issue Materials 62, 106
Joint Agreement 260
Gantt chart 183 Joint Names Insurance 223
General Conditions 51, 57–59, 256–257, Joint Venture see JV
274–278, 280–281, 283–284, 288, 296, 305, JV (Joint Venture) 47, 51, 113, 205, 275–277,
307, 309 282, 295
General Conditions and Particular JV leader 113
Conditions 281 JV Undertaking 51, 275–277, 295
Index 315
Key Personnel 112–113, 283, 294 Obtaining DAAB’s Decision 209, 250, 288
OJEU (Official Journal of the European
latent defects 67, 124, 138, 145 Union) 300
Laws 43, 59–60, 81, 99, 110–111, 116, 138, operation and maintenance manuals 96, 100,
167–168, 219–220, 222, 228, 235–238, 127, 130, 133, 139–140, 155, 158–160, 294
260–261, 270–271, 273; adjustments Optional Termination 117, 208, 212, 221–222
for changes in 167, 169–170, 235–238; Ownership of Plant and Materials 127
applicable 58–59, 63, 105, 110, 122, 124,
149, 155, 158, 270, 292, 295 PAFS 175, 178–179
legislations 68, 75, 175, 180, 200–201, 204, parent company guarantee 272–273
209, 212, 217, 260–261, 303; adjustments Partially Agreed Final Statement 175, 178–179
for changes in 74, 167, 271; relevant 40, 138, Particular Conditions 54, 57–61, 68, 71, 80,
151, 197, 208, 284 84, 92–93, 164, 170, 274–278, 280–288,
Liability for breach of professional duty 226 306–7, 309
Liability for Care of the Works 214, 217, partnering 282, 298–299
236, 238 patent and latent defects 124
Limits of Liability 297 Pay when paid 270
liquidated damages/delay damages 49, 65, 182, payment 41–43, 45, 53–54, 67–71, 77, 113–115,
193, 195, 200–201 125–127, 134–135, 137–138, 141, 161–162,
166–176, 178–180, 206–212, 229–231,
materials 41–42, 68–69, 100–101, 107–108, 239–240, 246–247, 258, 279–280, 293;
121–127, 134–135, 139–140, 151–153, advanced 69, 175; certification of 41–42;
170–173, 202, 207–208, 221, 223–225, 247, delayed 175, 209; late 175; milestone 270;
263, 282 normal 222; outstanding 293; periodic 220;
Materials and Workmanship 56, 64, 118, period of 105, 171, 175; schedule of 78,
278–279 171–172, 247, 287, 294; the Schedule of 172
MDB Harmonised Edition 75 Payment Certificate 70, 109, 169–170,
Measurement and Payment Procedures 173–174, 208–210, 222, 246, 249, 305, 309;
161–180 minimum amount of 69, 174; preparing 169;
measurement records 161 previous 63, 109, 171, 174
mediation/conciliation 259, 289–291 Payment Certificates for increases/decreases in
mediator 290–291 cost 169
Meteorological Records 234, 244, 252 payment of cost plus profit 52–55, 80, 90, 97,
method statement and details of resource 99, 126, 137, 140, 202, 212, 215
levels 65, 103 performance bonds 272–273
Multilateral Development Banks see MDBs Performance Certificate 67, 69, 93–94, 111,
124, 132, 136–138, 155, 159, 177, 227
Naming of nominated Subcontractors 294 performance criteria 48, 56, 58, 78, 149, 160, 295
NEC Contracts 188–189, 191, 218 Performance Damages 141
negligence 109, 147, 216–217, 226, 228, 261, Performance Guarantees 49; the Schedule of
282; gross 40, 114, 138, 180, 201, 217 141, 160, 163
Network Analysis 183 Performance Security 41, 44, 48, 60–61, 69–70,
neutral events 193, 199 80, 92–94, 170, 173, 178–180, 205, 208,
New York Convention 259 272–273, 283
NOD see Notice of Dissatisfaction performance specifications 48, 77, 152; brief 50
nominated subcontractors 56, 62–63, 108–110, Permanent Works 91–92, 95, 143, 153–154,
186, 284–285, 294 168, 172, 206–207, 214, 216, 308, 310
No-objection 84–86, 92, 95–96, 100, 126, 128– PERT 184
130, 138–140, 154, 157–158, 174, 187–188 physical conditions 53–54, 62, 73, 102–103;
Notice of Adjudication 292–293 adverse 41–42; natural 53, 102
Notice of Claim 240–246 PI (Professional Indemnity) 224, 226–227, 271
Notice of Claim time bar 241 Pink Book 75
Notice of Dissatisfaction (NOD) 46, 75, 89, Plant and Design-Build Contract 57, 76
115, 177, 249–250, 255–259, 264 Plant and Materials 68–69, 71, 122–124, 127,
Notice of No-objection 86, 92, 95–96, 100, 126, 135, 171–173, 187, 221, 247, 282
128–130, 139–140, 154, 157–158, 174, 187–188 Plant and Materials on Site 122
Notice of reference to Arbitration 262 possession 60–62, 79–80, 82, 101–102, 116,
Novation of designers 148 186, 214; giving 80; partial 131
316 Index
pre-commissioning tests 128 reasonable skill and care 61, 91, 124,
pre-contract cost planning 91 147–148, 270
Preparation of Bills of Quantities 91 receipt of tenders 300
Pre-Tender Planning Stage 300 Recital 307, 309–310
Principal Contractor 283 records 88, 90, 95–96, 99–100, 112, 114, 122,
Principal Designer 283 129–130, 132–133, 158–159, 233–234,
Procedure for Tests after Completion 139 243–244, 247–248, 252–253, 285–286;
Procurement Directives 299 comprehensive 233, 252; contemporaneous
procurement method 142, 146, 149, 267, 296 234, 243, 252–253; contemporary 100, 114,
procurement strategy 41, 266–268, 300; 244; critical documents and health and
appropriate 251, 270; correct 267 safety 62, 106
Professional Indemnity (PI) 224, 271 Red and Yellow Book’s Unforeseeable Physical
Program Evaluation and Review Conditions 103
Technique 184 Red Book 41–42, 47, 56–59, 76–77, 90–92,
programme 44, 50, 65, 106–107, 112, 165–166, 142, 153–154, 161, 213, 215–216, 268–269,
182–188, 194, 199, 297–299, 302–303; 274–275, 277–278, 287, 293–294, 305
as-planned 194; detailed time 186; initial Referral Notice 292–293
185–186, 188; master 183–184; pre-tender Referring Party 258, 293
183; short-term 183 Remedying Defects 43, 45, 126, 133–134,
programme durations 143 136, 141
programme float 193 replacement Engineer 60, 87
progress reports 68–69, 106, 112, 171, 183, Requirements for Contractor’s Documents 294
234, 243, 285, 298; monthly 62, 106, 294; requirements for inspections and tests 294
required monthly 106 requirements for operation and maintenance
project control requirements and manuals 294
templates 150 Resolution of Disputes 43, 255–265, 292
Project Network Analysis 184 Responsibility for care of the Works
Project Network Techniques Precedence 213–214, 217
Diagrams 183 Retention Money 69, 175–176, 274; release of
Prolongation of Preliminaries Costs 232 171, 175–176, 286
Prolonged Suspension 49, 211, 235–238 Retention Money Guarantee 272, 274
provisional operation and maintenance revised programme 65, 186–188, 199;
manuals 160 each 186
Provisional Sums 68, 109, 150, 166, 170–171, Right of access 79, 136, 235–238
286, 297
Public liability Insurance 227 Schedule of Advance Warnings 192
SCL Delay 197
QA (quality assurance) 100, 120 Sectional Completion 65, 70, 153
QC (quality control) 119–120 sequence and timing of inspections and
QM see quality management tests 186
QM documents 107 Shared Indemnities 217, 298
QM System 100–101 Silver Book 42, 46–47, 50–59, 76–79, 82–85,
quality 58, 64, 118–121, 124, 145, 149–150, 87–90, 94–98, 124–134, 136–140, 155–179,
152, 163–164, 189, 191, 266–268, 292, 295, 185–189, 199, 201–210, 213, 215–217,
299–300 221–222, 239–251, 255–258, 276–279, 293–296
Quality and Defects Liability 118–141 Site Data 52–53, 101–102, 196, 298
quality assurance see QA Site Data and items of reference 52, 82,
quality control see QC 102, 298
quality elements 301 Site Meeting Minutes 234, 243, 252
quality management (QM) 100, 118–120, Society of Construction Law Delay and
294, 298 Disruption Protocol 197
Quality Management and Compliance Special Projects Office 184
Verification Systems 100, 298 Special Provisions 51, 197, 275–277, 280,
Quality Manager 283 282, 286
Split Responsibilities and Insurances 153
Rainbow Suite 41 standing DAAB 257, 288
Rate of progress 199 statutory limitation period 124
Index 317
Subcontractors 61, 63, 90, 94, 100, 105–106, unforeseeable 41–42, 53–54, 62, 73, 97,
108–109, 147, 166–167, 170, 219, 223, 228 101–103, 162, 215
Sub-Contractors 75, 268 Unforeseeable Cost 61, 97
Substantial Completion 182 Unforeseeable Difficulties 53–54, 103
Surety Bond 272–273 unforeseeable events 48, 126
suspension 56, 64–66, 70, 73, 127, 181, Unforeseeable Physical Conditions 53, 73,
201–203, 209, 279–280, 285 101–102, 235, 237, 283
suspension and termination 203–212 Unforeseeable shortages 65, 196, 220,
suspension and termination by Contractor 56, 235, 237
70, 85, 134, 203, 209–210, 236, 238, 279–280 unincorporated JV 295
unliquidated damages 201
Taking-Over Certificate 66, 68–70, 106, 108,
129–133, 160, 162, 171–172, 176, 179, 182, value engineering proposals 61, 92, 154
213–214, 225–226, 306, 309 value management 144
Taking-Over Parts 131 Variation by Instruction 54, 98, 113, 134, 156,
Temporary Works/Permanent Works 95, 97, 164–166, 216, 287
99, 107–108, 112, 138, 143, 153, 206, 208 Variation by Request for Proposal 165
Temporary Works and Contractor’s Variation Procedure 164, 189, 236, 238, 298
Equipment 208, 222 variations 45, 49, 52–53, 64–65, 67–68, 82, 85,
Tender Date 104 87, 92–94, 125, 133, 159, 161–180, 185–186,
tender documents 57–58, 91–92, 144, 154, 196, 215, 235, 237, 251; evaluation of 60,
251, 266, 270, 275–277, 300, 306–307, 309; 247; issue of 251; ordered 47
preparation of 91, 152 Variations and adjustments 56, 68, 93,
tender enquiries 300 161–162, 279–280
Tender Security 272–273 Variations and Adjustments for changes in
termination 56, 69–70, 85, 113–114, 116–117, legislation 68
203–212, 214, 216–217, 220–221, 236, 238, Verbal Instructions 283
271–272, 279–280; date of 94, 205–207, 212,
214, 221–222; notice of 70, 202, 210, 221 warnings 189–191, 193; early/advance
Termination by Contractor 236, 238 45, 189, 191
tests after completion 67, 139 weather event, extreme 103
tests in use 139 White Book 40; updated FIDIC 40
tests on completion 56, 66, 74, 118, 127–129, Windows Analysis 194
131–132, 139, 159–160, 235–238, 279–280, World Trade Organization (WTO) 300
298; commencement of 63, 159 wreckage 107–108, 138, 284
time at large 194–195 WTO (World Trade Organization) 300
time bars 41–42, 72, 242–243, 245; 28-day 241;
simple 242 Yellow and Silver books 40, 42, 51–52, 55–56,
time cost optimisation analysis 185 58, 63, 67, 118, 127–128, 138–139, 155, 163,
the Time/Price/Quality Triangle 267 215–217, 226–227, 294–296
TQM 119 Yellow Book 41–42, 46–47, 50–59, 74, 76–77,
transport of goods 104, 283 83, 90, 142, 155–156, 169–170, 189, 213,
Turnkey Project 51, 78 268–269, 275–279, 295–296

Understanding FIDIC

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Understanding FIDIC

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Understanding FIDIC

• The obligations and responsibilities of the Employer, the Employer’s Representa-

Understanding Quality Assurance in Construction

Understanding Active Noise Cancellation

Understanding the CDM Regulations

Understanding Building Failures, 4th edition

Understanding NEC3: Professional Services Contract

Understanding NEC3: Engineering and Construction Short Contract

Understanding The Building Regulations 6th edition

Understanding JCT Standard Building Contracts 10th edition

Understanding NEC4: Term Service Contract

Understanding the NEC4 ECC Contract: A Practical Handbook

Understanding the NEC4 Professional Service Contract

ISBN: 978-0-367-42791-7 (hbk)

8 Suspension and Termination 203

10 Employer’s and Contractor’s Claims 229

11 The Dispute Avoidance/Adjudication Board and the Resolution

12 Tendering using the FIDIC 2017 Contracts 266

• Conditions of Contract for Construction (The “Red Book”) – for building or

The development of the FIDIC contracts

Conditions of Contract for Works of Civil Engineering Construction:

1 The Contract Agreement

• The Contractor’s obligation is to construct the Works according to the Employer’s

The Orange Book: Conditions of Contract for Design-Build and

a The Contract Agreement

Some relevant Clauses are as follows:

Clause 3: The employer’s representative

Clause 4: The contractor

a Photographs and detailed descriptions of progress including each stage of design,

Clause 8: Commencement, delays and suspension

a A Variation (unless an adjustment to the Time for Completion is agreed under

Clause 9: Tests on completion

If the Employer’s Representative fails to either issue the Taking-Over Certificate or to

Clause 12: Defects liability

Clause 13: The contract price

a Payment for the Works shall be on a lump sum basis.

a The estimated contract value of Construction Documents produced and the

Clause 14: Variations and adjustments

a A description of the proposed design and/or work to be performed and a pro-

Clause 20: Claims, disputes and arbitration

a Incorporate the model terms published by the Federation Internationale des

shall be settled by reference to arbitration.

The Harmonised Red Book (MDB Edition): Conditions of Contract

• The World Bank

• The Contract must be signed by both parties.

• Definition of “Employer’s Equipment” (Clause 1.1.6.3)

• Contractor gives notice to the Employer’s Representatives not later

The White Book: Client/Consultant Model Services Agreement

• Pre-investment and feasibility studies;

The Form of Contract for Dredging and Reclamation Works

Conditions of Contract for Underground Works (2019 Emerald Book)

i They require extensive investment in Contractor’s Equipment.

• Disclosure of all available geological and geotechnical information;

The following contents of the Emerald Book are of particular relevance:

The FIDIC Rainbow Suite

The launch of the FIDIC 2017 Contracts

The first and third of these Contracts were discussed in Chapter 1.

• The General Conditions – Clauses 1–20

The FIDIC 2017 Contracts consist of:

• The General Conditions – Clauses 1–21

FIDIC Conditions of Subcontract

Red Book Yellow Book Silver Book

Clause 1: General Provisions Clause 1: General Provisions Clause 1: General Provisions

1.1 Definitions 1.1 Definitions 1.1 Definitions