Fdration Internationale des Ingnieurs-Conseils

THE FIDIC CONTRACTS

AND THEIR USE

Presentation by Daniel Ivarsson

Managing Director of FIDIC

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FIDIC CONTRACTS
CONSTRUCTION

PLANT AND DESIGN-BUILD

EPC/TURNKEY PROJECTS

SHORT FORM OF CONTRACT

CLIENT/CONSULTANT MODEL SERVICES AGREEMENT

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WHICH BOOK TO USE?

STRAIGHTFORWARD
PROJECT ?
yes

no

EMPLOYER DESIGN ?

SHORT

no

FORM
CONTRACT

CONDITIONS
OF
CONTRACT
yes
FOR
CONSTRUCTION

CONTRACTOR DESIGN
fixed price - lump sum
little employer involvement
no major unforeseen risks no
no

yes
Conditions of

DISCUSS IN DETAIL

Contract

Employer s requirements
with the Contractor, and
negotiate a modified
FIDIC contract

for EPC
Turnkey Projects

plant and/or high

unforeseen risks
yes
Conditions of
Contract for
Plant and
Design Build

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FEATURES AND ADVANTAGES

BALANCED

fair apportioning of risks, rights and obligations between the parties

WELL TRIED

long case history for earlier contracts

ACCEPTED

known and recognised; in wide use for international contracts

SUPPORTED

recommended or required by development banks, ISPA, etc.

EFFECTIVE

clear and complete conditions; time limits; provisions for adjudication

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Key points: CONSTRUCTION

Employer responsible for design
Engineer, working for the Employer
Drawings, specifications, Bill of Quantities
Payments based upon measurements
Certification of payments by Engineer

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Key points: PLANT & DESIGN-BUILD

Contractor responsible for design
Engineer, working for the Employer
Employers requirements
Lump sum pricing
Payments according to progress
Certification of payments by Engineer

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Key points: EPC/TURNKEY PROJECTS

Contractor responsible for design and takes full
responsibility
Employer may appoint a Representative
Fixed price, to cover risks taken on by Contractor
Payments according to progress
No certification of payments

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Key points: SHORT FORM

Simple projects
Design by either party
Employer may appoint a Representative
Valuation as appropriate; to be agreed
Payments according to value of Works executed and
Materials and Plant delivered to site
No certification of payments

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Key points: CLIENT/CONSULTANT

Agreed Scope of Services: Appendix A
Normal, Additional and Exceptional Services
Normal Services priced as agreed
Additional and Exceptional Services at rates agreed
Payment schedule as agreed

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STRUCTURE: 3 MAIN CONTRACTS

General Conditions
Guidance for the Preparation of the Particular Conditions
Letter of Tender
Contract Agreement
Dispute Adjudication Agreements
Twenty main clauses, covering similar matters
Exceptions: Clauses 3, 5 and 12:
Construction:

Plant and D-B:

EPC/Turnkey:

3. Engineer

Engineer

Employers Admin.

5. Subcontractors

Design

Design

12. Measurement

Tests after Compl.

Tests after Compl.

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STRUCTURE: SHORT FORM

Agreement
General Conditions
Particular Conditions
Rules for Adjudication
Notes for Guidance

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STRUCTURE: CLIENT/CONSULTANT

Agreement
General Conditions
Particular Conditions
Appendix A: Scope of Services
Appendix B: Personnel, equipment, facilities and services
of others to be provided by the client
Appendix C: Remuneration and payment

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THE 1992 (OLD) AND 1999 (NEW) RED BOOKS

SOME DIFFERENCES

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THE 1992 (OLD) AND 1999 (NEW) RED BOOKS

SOME DIFFERENCES

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INNOVATIONS FAVOURING THE CONTRACTOR

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INNOVATIONS FAVOURING THE EMPLOYER

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SCHEDULE OF RESPONSIBILITIES: FIDIC 1999

Some major responsibilities

EMPLOYER
Clause 2.1

Grant access

Clause 2.2

Assist with Permits, Licenses, Approvals

Clause 2.4

Establish and maintain appropriate financial arrangements

Issue Letter of Acceptance

Clause 3.1

Appoint the Engineer

Clause 3.4

Replace the Engineer

Clause 14.2

Advance Payment

Clause 14.7

Payment

Clause 15.2

Termination

Clause 17.3

Employers Risks

Clause 18.1

Insurance

Clause 20.2

Dispute Adjudication Board Agree in appointment and pay

costs

Clause 20.1 /
20.5

Settle dispute

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SCHEDULE OF RESPONSIBILITIES: FIDIC 1999

CONTRACTOR

Clause 4.1

Execute and complete the Works in accordance with the

Contract (including design to the extent specified).

Clause 4.2

Performance Security

Clause 4.3

Contractors Representatives

Clause 4.4

Sub-Contractors

Clause 4.6

Co-operate

Clause 4.8

Safety Procedures

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SCHEDULE OF RESPONSIBILITIES: FIDIC 1999

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SCHEDULE OF RESPONSIBILITIES: FIDIC 1999

DISPUTE ADJUDICATION BOARD

Clause 20.2

Accept Appointment and the obligations pertaining thereto

Clause 20.4

Adjudicate on Disputes hand down decisions

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SCHEDULE OF RESPONSIBILITIES: FIDIC 1999

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QUALITY OF DESIGN & DOCUMENTATION

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QUALITY OF DESIGN & DOCUMENTATION

Suggestions to Improve:
1.

One boss for design / documentation production.

2.

Avoid over specification; adopt standards.

3.

Take particular care at overlaps between sections

of the work.

4.

Identify RISKS and set down formal procedures

for managing these.

5.

Quality Management System.

6.

Peer Review.

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QUALITY CONTROL
QUALITY ASSURANCE
The traditional contract (eg FIDIC 1992) is based on
Quality Control (QC) that is, materials and operations
are to subject to inspection and acceptance and/or
rejection by the Engineer (or his Representative.
Clauses 36-39 of FIDIC 1992.

Recent contracts have adopted a Quality Assurance

approach, that is, the Contractor is required to put in
place a Quality Management System which is designed
to assure compliance with Contract requirements; and
the Contractor is obliged to ensure that his work so
complies; the Engineer only undertakes an auditing
role, but nevertheless may reject completed works.

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FIDIC GUIDES
The FIDIC Contracts Guide
The White Book Guide
Guide for the preparation of particular conditions
(in the major contracts)
Notes for Guidance (in the Short Form of Contract)
Tendering Procedure and Pre-qualification forms
Quality Based Selection

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USE OF FIDIC CONTRACTS

Match contract and project
Decide early
Appoint DAB early
Draft by professionals
Do not touch the General Conditions
Buy originals

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PREPARATION OF PROCUREMENT

Determination of needs and objectives

Determination of constraints
Identification of parties
Planning, budgeting, financing
Contract type
Selection procedure
Requirements / Specifications / Bills of Quantities /
Terms of Reference
Pre-qualification and evaluation criteria
Particular conditions
Publicity
Tender documents

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CONTRACT ADMINISTRATION
Supervision
Enforcement
Quality and quantity
Invoice verification
Payments
Extensions, variation orders, amendments
Termination
Disputes and their resolution