You are on page 1of 14

THE MAIN CAUSAL FACTORS OF CONSTRUCTION CLAIMS UNDER FIDIC CONTRACT IN INDONESIA1

Dr. Sarwono Hardjomuljadi Special Advisor to the Minister, Ministry of Public Works Jl. Pattimura 20 Jakarta Selatan Indonesia
2

ABSTRACT
In the construction industry in Indonesia, most of claims submitted by the contractor especially in the public sector construction will finally create disputes between the employer and the contractor. Claims and disputes arising during the construction were largely due to the uncertainties inherent in the projects and were not due to the use of certain conditions of contract. This paper presents the causal factors of Construction Claims in Indonesia, based on the research through the questionnaire distributed among the users of FIDIC Conditions of Contract from the construction society i.e. employer, engineer and contractor. The result showed that the possession of site and the changing in design were the main causal factor of claims in Indonesia. Besides those causal factors, the different interpretation also created disputes Construction Contract using the FIDIC Conditions of Contract accommodates all variations through the clauses of variation and sets up the procedure on how to submit a claim related to the variation and/or the impact of variations by the contractor. That is the reason why the multilateral development bank endorse and support the development of FIDIC Conditions of Contract for Construction, MDB Harmonised Edition as a fair and balanced conditions of contract.. No matter what kind of conditions of contract was used, the bad understanding of the contract, particularly General Conditions of Contract was one of the main causal factors of disputes often occurred and became an obstacle to the construction services development in Indonesia. This could be avoided only by a good knowledge and deeper understanding generally on the philosophy of the construction contract and particularly on the FIDIC Conditions of Contract. Key Words: Main causal factors, Claims, FIDIC Conditions of Contract.

1 2

Presented at FIDIC-JICA International Construction Management Training, Jakarta, 26th – 29th July 2010. Special Advisor to the Minister of Public Works Republic of Indonesia. Vice Chairman, Indonesian National Board for Construction Services Development. Lecturer on Construction Contract Administration, S2 & S1 Tarumanagara University, Jakarta Lecturer on Construction Contract Administration, S2 Parahyangan University, Bandung

1
Electronic copy available at: http://ssrn.com/abstract=1898436

000 IDR 294.333.700. roads.561.480 IDR 180.686. Since a hydro power project consists of many field of civil engineering construction i. Both parties i.500. channels. is firstly to understand the main causal factors of claims and then the employer should try to find the pre contract strategy and to improve the monitoring system of the project. waterways.687.760.050.931 110. mainly due to the unavailability of contemporary record and the different interpretation on contract. 3 4 State Electricity Corporation of Indonesia (1988-2005): “Completion Reports”.543. Document of claims should be presented in a clear and less complicated way to ensure that it could be easily understood by the parties including the third party appointed as the ADR board member (if any).978.374 79.910 120.com/abstract=1898436 . it could be considered as suitable and proper to be used as a comprehensive reference for various construction projects. The result was validated by the experts and experienced engineers involved in various civil engineering construction projects.909.088.000 129.305.291.760 IDR 752.000 164.840. the writer considers that it may represent the construction in general and it could be used as the basis of further discussion.294. buildings etc. the employer with the assistance of the engineer and the contractor should have good and organized records and detailed particulars to be kept as the supporting tool for the negotiation.657. Jakarta. buildings.734. The best way to avoid the disputes. Main causal factors of the claims Disputes in the construction industry arise from the unsettled claims.1.890 IDR 151.625.161.371.322.027 Appraisal 235.498.387 IDR 413. Sarwono (2009): “Pre Contract Strategy for Minimizing Construction Claims Impact on Hydro Electric Power Plant Projects in Indonesia” .561. tunnels. Hardjomuljadi. This paper will present the result of the research by Sarwono (2008)4 on the main causal factors of the construction claims in Indonesia with reference to the hydro power projects.185.000 IDR 106.868.912. 2 Electronic copy available at: http://ssrn..673. dams etc.000 325.713.568 IDR 259.000 203.043.541.887.010 IDR 223.375. particularly to reduce its impact.805.750 147.1.454.780 163.799.563. IDR) Original Final 112. Background Most of the final contract prices for large projects in Indonesia are higher than the original contract prices but still under the appraisal cost prepared by the lending institution-borrowerdesign consultant as seen in the table below with the example of hydro electric power plants projects in Indonesia.732.e. Table.435. Jakarta.793. Dissertation. Since a hydro electric power plant project covers most of construction such as dam.314.000 399.000.666.990.481. 1: Original and final contract prices of the hydro electric power plants construction in Indonesia3 No 1 2 3 4 5 6 7 8 9 Project Name Saguling HEPP Cirata HEPP Bakaru HEPP Singkarak HEPP Kotapanjang HEPP Besai HEPP Musi HEPP Sipansihaporas HEPP Renun HEPP Contract Price (Equivalent.611.e.079.285 IDR 274.000 46.617.756. roads.363.000 IDR IDR IDR IDR IDR IDR IDR IDR IDR IDR IDR IDR IDR IDR IDR IDR IDR IDR 1.000 206.290.745 161.363.050 169.725. and/or other Alternative Dispute Resolution (ADR) or for the litigation.200 227. tunnels.500 590.542.

6% ORAL CHANGES ORDER BY EMPLOYER + 64. Inefficiency and disruption From the diagram below.e.7% POSSESSION OF SITE Figure 01: Relationship between claim and its causal factors in hydro electric power projects 5 5 Hardjomuljadi. Sarwono (2009): “Pre Contract Strategy for Minimizing Construction Claims Impact on Hydro Electric Power Plant Projects in Indonesia” . the first layer causal factors or the most frequent circumstances are Constructive Changes Order and Inadequate Site Investigation which are affected by the second and third layer causal factors i. 90.4% CLAIM + INADEQUATE SITE INVESTIGATION + 72. Other contractors’ interference and delay 9.com/abstract=1898436 .2% + VARIATION ORDER 55. Variation orders 3. Constructive change orders 2.7% CHANGES IN DESIGN + + - 88. Oral Changes Order by the Employer. Changes in design 7. Possession of Site but on the other side Variation Order is a means of claim settlement. it was proved that the main causal factors of construction claims under the contracts using FIDIC Conditions of Contract are as follows: 1. Subsurface conditions of geology 8. special attention should be given to such circumstances and an engineered conditions contract is undoubtedly required.Based on the study conducted by Sarwono (2008). Those causal factors are related to contractual or legal matters and in order to minimize claim and dispute. Oral change orders by employer 5. Dissertation. Possession of site 6.3% + CONSTRUCTIVE CHANGES ORDER 81. 3 Electronic copy available at: http://ssrn. Jakarta. Inadequate site investigation 4. Changes in Design.

1302 Staff Capability 1401 BEYOND THE CONTROL 1402 MANAGEMENT DECISION Figure 03: Possession of Site – Land Acquisition 6 Sarwono Hardjomuljadi (1999): “The Importance of Management Decision in the Applications of FIDIC Conditions of Contract for Civil Engineering Works 4th edition”. possession of site and changes in design found that there are some causal factors able to be controlled through the management decision but other causal factors lie beyond the control. 4 . 1202 Cultural Approach 1301 Regional Government Action. the availability of infrastructure and the availability of other utilities those should be planned and provided in due time.e. there are three major elements related to the possession of site i.2. Pikitring Sumut & Aceh.e.1. The analysis of the third layer causal factors The analysis on the third layer casual factors i. Possession of site Based on the research by Sarwono (1999) 6.1. 0000 Additional Cost & Extension of Time 1000 Possession of Site 1101 Land Acquisition 1201 Planning/Regulation of Land Use. 1.2. the land acquisition.

1503 Government Decision 1504 BEYOND THE CONTROL 1601 MANAGEMENT DECISION 1602 BEYOND THE CONTROL Figure 04: Possession of Site – Infrastructure availability 5 . 1502 Bid Evaluation.0000 Additional Cost & Extension of Time 1000 Possession of Site 1102 Infrastructure Availability 1203 Contractor’s Capability 1204 Planning of Interfacing 1303 Financial Ability 1304 Human Resources 1305 Equipment Availability 1306 Planning Capability 1407 BEYOND THE CONTROL. 1408 MANAGEMENT DECISION 1403 Financial Management 1404 Contract’s Price 1405 Contract’s Escalation Clause 1406 Recruitment / Employment System 1501 BEYOND THE CONTROL.

0000 Additional cost & Extension of Time 1000 Possession of Site 1103 Other Utilities 1205 Telecommunication Availability 1206 Electric Power Supply Availability 1307 Condition in the Specification 1409 Specification’s Preparation. 1503 MANAGEMENT DECISION . Figure 05: Possession of Site – Other utilities 6 .

4202 Ammend Previously Approved Drawing Drawing 4301 MANAGEMENT DECISION 4203 Change the Quality of Material 4204 Any kind Necessary for Completion of the Work 4205 Constructive Acceleration 4206 Unspecified Administrative Requirement 4207 Inaccurate Information 4208 Overinspection 4209 Improper Rejection 4302 BEYOND THE CONTROL 4303 Data/information Collected during Tender Preparation 4304 Knowledge and Experience of Supervisor 4401 Staff Capability 4501 MANAGEMENT DECISION Figure 06: Changes/ Variations 7 .2. or Decrease of quantity. Increase.1.2. Changes in design 0000 Additional Cost & Extension of Time 4000 Variations 4101 Formal Change 4102 Constructive Change 4201 Ommission.

The General Conditions of Contract for public sector projects currently used in Indonesia vary from Algemene Voorwarden Voor De Uitvoering Bij Aaneming Van Openbare Werken known as AV 41 (translated into Indonesian by Soekarsono Malangjoedo) to FIDIC Conditions of Contract for Works of Civil Engineering Construction published by Federation Internationale des Ingenieurs Conseils. The use of standardized conditions of contract in public sector construction contract in Indonesia will make the parties get familiar to the contract. In this case FIDIC Conditions of Contract explicitly defined all liabilities of the parties and also supported by the so called “claim management rules”12 in order to avoid disputes. Construction Contracts Dictionary (Chow Kok Fong. Oxford University Press 9 Chow Kok Fong (2006):” Construction Contracts Dictionary”. while Oxford Dictionary of Law (Elizabeth A. the liabilities of each of the parties and the respective risk s to be taken by them are usually implicit in the defined responsibilities. Elsevier Applied Science. Sweet & Maxwell Asia 10 John Adriaanse (2007): “Construction Contract Law” 11 Henry Henkin (2005): “ Drafting Engineering Contracts”. 7 8 Bryan A. Martin and Jonathan Law. Geneva. Most of conditions of contract for public sector and private sector construction work in Indonesia was “tailor-made” and has not been standardized. Contract is based on some conditions established. Agreement arises as a result of “offer and acceptance”. In several standards conditions of contract. 12 Axel-Volkmar Jaeger and Gotz-Sebastian Hok (2010):”FIDIC – A Guide for Practitioners”. 2004) 7 “Contract is an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law”. Besides the above definitions. but because of the complexity it is preferable to those liabilities to be explicitly defined”. Conditions of Contract 3.3. Definitions Based on Black Law Dictionary (Bryan A. reduce the unnecessary effort in the procurement process and improve the efficiency in the contract administration activity. 2006)8 mentioned “Contract is a legally binding agreement. Springer 8 . (John Adriaanse 2007)10 said that “A variety of factors makes a construction contract different from most other types of contracts.Garner (2004): “Black’s Law Dictionary”. its size and the fact that the price agreed and the amount of work done may change as it proceeds”.1. Thomson West Elizabeth A Martin and Jonathan Law (2006): “Oxford Dictionary of Law”. its complexity. an uncertain act or event that triggers or negates a duty to render a promised performance” Henkin 2005 11 said “The Conditions of contract is intended to regulate the relationship between the parties to the contract. Garner stated that “Conditions is a future and uncertain event on which the existence or extent of an obligation or liability depends. Garner. The use of standardized conditions of contract will be advantageous for both the employer and the contractor since the parties need not spend too much time in examining the conditions of contract of different projects. but a number of other requirements must be satisfied for an agre ement to be legally binding”. These include the length of the project. 2006)9 mentioned that “Contract is a legally binding agreement formed when one party accepts an offer made by another and which fulfills the conditions”. it defines the parties and their responsibilities to each other as well as their responsibilities for various aspects of the contract. Switzerland.

because the contractor would obviously try to minimize the loss. FIDIC General Conditions of Contract. the employer will always become the looser. The international lending institutions usually require the use of FIDIC Conditions of Contract for Works of Civil Engineering Construction published by Federation Internationale des Ingenieurs Conseils. If the disputes cannot be solved by the parties and then come to the litigation process i.Short Form of Contract (1999) – Construction (1999) – EPC/Turnkey Project (1999) until MDB Harmonised Edition (2006) and others”. which ca be seen in the comparison as follows. Asian Development Bank (ADB). JICA in particular still adopt I their Standard Bidding Document. the employer has to pay the penalties and if the decision is for the employer’s sake. but the latest clause some times interpreted by the contractor as the entry gate to the claim. FIDIC Conditions of Contract is an engineered conditions of contract required by the international lending institution. With such understanding. it meant that no time adjustment is required. it means that additional and/or extra works are placed and consequently cost and time adjustment are required. The easiest and fastest way is by using the acknowledged international standard conditions of contract i. The writer experienced in using FIDIC GCC for Works of Civil Engineering Construction. Switzerland. As explained above.e. there is a possibility that the completion will be delayed since the contractor has no enough resources to conduct the construction until completion and another possibility is the bad quality of construction result due to the financial difficulties. big projects in Indonesia were constructed and financed by international lending institutions such as the World Bank. where some clauses in the FIDIC Conditions of Contract were deleted or replaced by newly made clauses for Employer’s sake and the Contractor was in the position of “take it or leave it”. the 3rd edition 1977 for Cirata Hydro Electric Power Plant Project. the last three conditions of contract were translated and published in Bahasa Indonesia which in the future will become the embryo of such National Standards. The clause allowing the contractor to submit claim and the clause of Unforeseeable Physical Conditions and the like are clauses provided so the contractor can recover their loss. from “Work of Civil Engineering Construction (1987) . If during the construction period there are no changes in the scope of work as well as the contract itself.e. most conditions of contract in public sector being used in Indonesia was “tailor made”. If the decision is for the contractor’s sake. the FIDIC Conditions of Contract 4th edition (1987 amended 1992) which is actually have some difference in the philosophy. this action was mostly than none creating the disputes in the future. To come to the National Standards. the court. the best effort should be given to establish a fair and balanced conditions of contract. The clauses in FIDIC GCC give room for the contractual changes but the parties should first understand the original scope of works or the original extent of the contract agreed by both parties at the time of bid and was signed as a contract agreement. Geneva. It should be clearly recognized that once the original scope of works was changed during the construction period. starting from the 2nd edition 1969 for Saguling Hydro Electric Power Plant Project. In the writer’s opinion the spirit of equality between employer and contractor should not allow such misperception. Even though the intention was to protect the employer. unfortunately in Indonesia there is a misperception in the employer side that the use of FIDIC Conditions of Contract facilitates the contractor in submitting their claims which used to create disputes.So far. whatever the decision is. the 4th edition 1987 amended 1992 for Renun Hydro Electric Power Plant Project and the FIDIC GCC for Construction 1st edition 1999 for 9 . New JICA formerly Japan Bank for International Cooperation (JBIC).

10 . 42 (1) Save in so far as the Contract may prescribe the extent of portions of the Site of which the Contractor is to be given possession from time to time and the order in which such portions shall be made available to him and subject to any requirement in the Contract…………………… as may be required to enable the contractor to commence and poceed with the construction of the Works in accordance with the programme referred to in Clause 14 hereof. the Engineer shall.Upper Cisokan Pumped Storage Power Plant Project.2 If the Contractor suffers delay and/or incurs costs from failure on the part of the Employer to give possession in accordance with the terms of Sub-Clause 42.1. Based on the writer’s observation. FIDIC GCC for Work of Civil Engineering Construction 3rd edition (1977) Clause 42 (1): Possession of Site 42 (1) Save in so far as the Contract may prescribe the extent of portions of the Site of which the Contractor is to be given possession from time to time and the order in which such portions shall be made available to him and subject to any requirement in the Contract…………………… as may be required to enable the contractor to commence and proceed with the construction of the Works in accordance with the programme referred to in Clause 14 hereof…………………. after due consultation with the Employer and the Contractor.from time to time as the Works proceed give to the Contractor possession of such further portion of the site. determine: (a) any extension of time to which the Contractor is entitled under Clause 44.1 Safe insofar as the Contract may prescribe: (a) the extent of portions of the Site of which the Contractor is to be given possession from time to time.. THE CLAUSES OF MAIN CAUSAL FACTOR OF CLAIM: POSSESSION OF SITE FIDIC GCC for Work of Civil Engineering Construction 2nd edition (1969) Clause 42 (1): Possession of Site. FIDIC GCC for Work of Civil Engineering Construction 4th edition (1987 amended 1992) Clause 42.. If the contractor suffers delay or incurs expense from failure on the part of the Employer to give possession in accordance with the terms of this clause the Engineer shall grant an extension of time for the completion of the Works and certify such sum as in his opinion shall be fair to cover the expense incurred which sum shall be paid by the Employer. The Employer will. which shall be added to the Contract Price. and (b) the order in which such portions shall be made available to the Contractor and subject to any requirement in the Contract as to the order in which the Works shall be executed… give the Contractor possession of: (c) so much of the Site (d) such access as. if any…. is to be provided by the Employer as may be required to enable the Contractor to commence and proceed with the execution of the Works in accordance with the programme referred to in Clause 14.……………… from time to time as the Works proceed give to the Contractor possession of such further portion of the site If the contractor suffers delay or incurs expense from failure on the part of the Employer to give possession in accordance with the terms of this clause the Engineer shall grant an extension of time for the completion of the Works and certify such sum as in his opinion shall be fair to cover the expense incurred which sum shall be paid by the Employer. and (b) the amount of such costs. many clauses had been developed and become more fair and balanced. give to the Contractor possession of such further portions of the Site as may be required to enable the Contractor to proceed with the execution of the Works with due dispatch………… 42.2.1: Possession of Site and Access Thereto 42. for example: 3. from time to time as the Works proceed. in accordance with the Contract.

the Site within such times as required to enable the Contractor to proceed without disruption in accordance with the programme submitted under Sub-Clause 8.1 [Right of Access to the Site].1: Right of Access to the Site 2. the Site within such times as may be required to enable the Contractor to proceed in accordance with the programme submitted under Sub-Clause 8. In case that the Employer cannot fulfill his obligation. all parts of the Site within the time stated in the Appendix to Tender. If no such time is stated in the Contract Data. under Sub-Clause 8. an extension of time and/or payment of any such cost incurred because of the failure to get the access and/or the possession. Cost or profit FIDIC GCC for Construction MDB Harmonised edition (2006) 13 Clause 2. After receiving this notice.3. and possession of. the Employer shall give the Contractor right of access to.3 [Programme] If the Contractor suffers delay and/or incurs Costs as a result of failure by the Employer to give any such right or possession within such time. ……………However t he Employer may withhold any such right or possession until the Performance Security has been received. THE CLAUSES OF MAIN CAUSAL FACTOR OF CLAIM: VARIATIONS Other main causal factor of claims is Changes in Design and/or Variations. Multilateral Development Bank Harmonised Edition 11 . the Engineer shall proceed in accordance with Sub-Clause 3. and possession of. FIDIC GCC for Work of Civil Engineering Construction 2nd edition (1969) Clause 51(1): Variations 51 (1) The Engineer shall make any variation of the form quality or quantity of the Works or any part thereof that may in his opinion be necessary and for that purpose or if for any other reason it shall in his 13 Federation Internationale Des Ingenieur Conseils (2006): “General Conditions of Contract For Construction”. all parts of the Site within the time stated in the Contract Data.1 [Contractor’s Claim] to: (a) an extension of time for any such delay. The spirit of this clause is giving Right of Access to and possession of the Site within such times as may be required to enable the contractor to proceed in accordance with the programme submitted under Clause 8. the contractor shall be entitled to.1 The Employer shall give the Contractor right of access to. and possession of. If no such time is stated in the Appendix to Tender.1: Right of Access to the Site 2. and possession of. the Employer shall give the Contractor right of access to. any of the Contractor’s Documents. and (b) payment of any such Cost plus reasonable profit. including an error in. if completion is or will be delayed. if and to the extent that the Employer’s failure was caused by any error or delay by the Contractor.3 [Programme] FIDIC 1st edition 1999 facilitates this factor by Clause 2.1 [Contractor’s Claim]. the Contractor shall give notice to the Engineer and shall be entitled subject to Sub-Clause 20.FIDIC GCC for Construction 1st edition (1999) Clause 2. or delay in the submission of. ……………However the Employer may withhold any such right or possession until the Performance Security has been received. However. This factor is also accommodated by FIDIC GCC for Construction Clause 13 [Variations and Adjustment].1 The Employer shall give the Contractor right of access to.4 [Extension of Time for Completion]. [Determination] to agree or determine these matters.3 [Programme]. Engineer has an important role in Changes in Design besides the Possession of Site. 3. which shall be included in the Contract Price. the Contractor shall not be entitled to such extension of time. subject to Clause 20.

position and dimensions of any part of the Works (e) execute additional work of any kind necessary for the completion of the Works (f) change any specified sequence or timing of construction of any part of the Works. position and dimensions of any part of the Works. if any. quality or quantity of the Works or any part thereof that may in his opinion be necessary and for that purpose or if for any other reason it shall. Provided that where the issue of an instruction to 12 .. of all such variations shall be taken into account in ascertaining the amount of the Contract Price. but the value. but the effect. No such variation shall in any way vitiate or invalidate the Contract. lines. (c) change the character or quality or kind of any such work (d) change the levels. in his opinion be necessary and for that purpose. lines. and (e) execute additional work of any kind necessary for the completion of the Works and no such variation shall in any way vitiate or invalidate the Contract. Provided that no order in writing shall be required for increase and decrease in the quantity of any work where such increase and decrease is not the result of an order given under this Clause. but is the result of the quantities exceeding or being less than those stated in the Bill of Quantities………………. FIDIC GCC for Work of Civil Engineering Construction 3rd edition (1977) Clause 51(1): Variations 51 (1) The Engineer shall make any variation of the form. quality or quantity of the Works or any part thereof that may. in his opinion be appropriate.1: Variations 51. Provided that no order in writing shall be required for increase and decrease in the quantity of any work where such increase and decrease is not the result of an order given under this Clause. of all such variations shall be valued in accordance with Clause 52. (2) No such variations shall be made by the Contractor without an order in writing of the Engineer. FIDIC GCC for Work of Civil Engineering Construction 4th edition (1987 amende 1992) Clause 51.1 The Engineer shall make any variation of the form. or if for any other reason it shall. he shall have the authority to order the Contractor to do and the Contractor shall do any of the following: (a) increase and decrease the quantity of any work included in the Contract (b) omit any such work (but not if the omitted work is to be carried out by the Employer or by another contractor). he shall have power to order the Contractor to do and the Contractor shall do any of the following: (a) increase and decrease the quantity of any work included in the Contract (b) omit any such work (c) change the character or quality or kind of any such work (d) change the levels. but is the result of the quantities exceeding or being less than those stated in the Bill of Quantities………………. in his opinion be desirable. (2) No such variations shall be made by the Contractor without an order in writing of the Engineer. if any.opinion be desirable shall have power to order the Contractor to do and the Contractorshall do any of the following: (a) increase and decrease the quantity of any work included in the Contract (b) omit any such work (c) change the character or quality or kind of any such work (d) change the levels lines position and dimensions of any part of the Works and (e) execute additional work of any kind necessary for the completion of the Works and no such variation shall in any way vitiate or invalidate the Contract but the value (if any) of all such variations shall be taken into account in ascertaining the amount of the Contract Price.

(b) changes to the quality and other characteristics of any item of work. (c) changes to the levels. Plant. confirm or vary the instruction. boreholes and other testing and exploratory work. but since the final contract price was lower than the appraisal costs meant that the final contract price was still reasonable. any additional cost attributable to such default shall be borne by the Contractor. (e) any additional work. The Contractor shall execute and be bound by each Variation. whatever the contract is. positions and/or dimensions of any part of the Works. 13 . Especially for the construction contract.1 Variations may be initiated by the Engineer at any time prior to issuing the Taking-Over Certificate for the Works. contract cost and final cost of most projects using FIDIC GCC Indonesia. either by an instruction or by request for the Contractor to submit a proposal. 51. FIDIC GCC for Construction 1st edition (1999) . good conditions of contract should accommodate the possibility of changes which might occur but with the minimum potential disputes occurrence and in this case FIDIC GCC fits the criteria. such changes do not necessarily constitute a Variation).vary the Works is necessitated by some default of or breach of contract by the Contractor or for which he is responsible.Clause 13. In the FIDIC Conditions of Contract there are clauses containing employer. CONCLUSION 1. or (f) changes to the sequence or timing of the execution of the Works. it was found that most of the final costs were higher than contract costs but lower than the appraisal costs. there will be surely no disputes.  the final contract price was higher than the original contract prices because the original contract price was sometimes too low. Comparing the appraisal cost. Provided that no instruction shall be required for increase and decrease in the quantity of any work where such increase or decrease is not the result of an instruction given under this Clause. Upon receiving this notice. The Contractor shall not make any alteration and/or modification of the Permanent Works. but is the result of the quantities exceeding or being less than those stated in the Bill of Quantities. unless and until the Engineer instructs or approves of the Work. 3. the Engineer shall cancel. unless the Contractor promptly gives notice to the Engineer stating (with supporting particulars) that the Contractor cannot readily obtain the Goods required for the Variation. including any associated Tests on Compl.etion. (d) omission of any work unless it is to be carried out by others.1: Right to Vary 13. Each variation may include: (a) changes to the quantities of any item of work included in the Contract (however.2 The Contractor shall not make any such variation without an instruction of the Engineer . 6. engineer and contractor’s obligation to be fulfilled by each parties in completing the project in due manner and if the parties properly execute their duties. It is understandable that the most important thing is that there is an offer and acceptance agreed by parties. 2. The analyses showed that:  the appraisal cost was high because the designer prepared a very conservative price analysis  the contract price was low because the contractor tried to get the project first and get the compensation later through claims. Materials or services necessary for the Permanent Works.

The Author Dr. Geneva. Jakarta and Parahyangan University. The improvement of FIDIC GCC from time to time enables both contractor and employer to protect their interest. Geneva. Susan. Ariono and Takei. “Black’s Law Dictionary”. PT PLN (Persero). “General Conditions of Contract for Civil Engineering Works”. 6. 17. Bandung. Sarwono. He is also the Dispute Adjudication Board and expert witness of some construction projects. we require the sustainable trainings to improve the user’s knowledge and capability in interpreting the conditions those are very essential in handling the construction project. “Pre Contract Strategy for Minimizing Construction Claims Impact on Hydro Electric Power Plant Projects in Indonesia” . “General Conditions of Contract for Construction”. Sydney. Cirata HEPP and Renun HEPP as the project manager. “General Conditions of Contract for Civil Engineering Works”. 20. Sarwono Hardjomuljadi. 14 . Sarwono. 2004 Hardjomuljadi. 2005 Jaeger. The New Japan Engineering Consultant Inc. and Law. Jakarta. St. Elsevier Applied Science. 14. Polagrade. “General Conditions of Contract for Civil Engineering Works”. Badan Penerbit Pekerjaan Umum. Singapore. 1st Edition. providing that the parties strictly follow the contract’s requirement.C. ISBN: 979-99900-8-4. 22. 1999 FIDIC. 2007 Soekarsono Malangjoedo. Since the FIDIC GCC clauses varied from time to time. “Tunneling. 19. graduated in Civil Engineering from University of Parahyangan. 6. Kok Fong. 5. Thomson West.the joint venture company of Pertamina PLN-. “General Conditions of Contract forEPC/Turnkey Project. 10. 12. Henry. Republic of Indonesia. 5. “Renewable Energy: Hydro Power and Notes on Its Development in Indonesia. Nippon Koei Co. 2nd Edition. 4th Edition. Jakarta. Masaru. Parasman and Sarwono. 1 st Edition. 2006 FIDIC. Jonathan. 2008 Hardjomuljadi. 5th Edition. State Electricity Corporation of Indonesia (2005): “Completion Report of Renun HEPP”. “Public Sector Standard Conditions of Contract for Construction Works”. he is the lecturer at the Post Graduate Program at Tarumanagara University. Washington D. 4. Oxford University Press. Jakarta. 3rd Edition. 2006 Garner. 1997 Building and Construction Authority of Singapore. Sweet & Maxwell Asia. 2005 21. In the education field. Geneva. 1999 Henkin. Pikitring Sumut & Aceh. 2006. Jakarta. Gotz S. The different interpretation of the contract is not the problem faced only by the non English speaking countries but also by the English speaking people due to the inadequate capability in interpreting contract and/or legal terms. 2007 Hardjomuljadi.4. 1987. 2. “Dictionary of Law”. 15. Siregar. Axel V and Hok. 2010 Martin. Abdulkadir. 1999 FIDIC. State Electricity Corporation of Indonesia (1988): “Completion Report of Saguling HEPP”. 23. Paul . Bryan A. 1 st Edition. “Construction Claim Strategy based on FIDIC Conditions of Contract”. Jakarta. REFERENCES 1. American Institute of Architect. He was involved in the construction of Saguling HEPP. Amendment 3. ISBN: 978979-1203-08-1. He is the Asean Chartered Professional Engineer (ACPE). 16.. now the Special Advisor to the Minister of Public Works. got the Doctor degree from Tarumanagara University. ”Construction Contracts Dictionary”. ISBN:979-97749-2-6. Jakarta. Bandung. “General Conditions of Contract AS 4000-1997”. Sarwono. 8. Springer. MDB Harmonised Edition. Sarwono. Hardjomuljadi. New York. 13. 1st Edition. The New Japan Engineering Consultant Inc. Sarwono. Dissertation. the Director for General Affair and HRD of Geo Dipa Energi . 3. Polagrade. FIDIC.. “ General Conditions of the Contract for Construction. 11. Vice Chairman of National Construction Services Development Board of Indonesia. Chow. Principal Professional Engineer in Water Resources Development (PU-SDA) and Associate Member of Chartered Institution of Arbitrator (ACIArb). The success in handling construction contract using certain standard conditions of contract depends on the experience in using the similar conditions. “FIDIC-Guide for Practitioners”. amended 1992 FIDIC.Ltd. “Drafting Engineering Contracts”. Singapore. Elizabeth A. A201”. State Electricity Corporation of Indonesia (1990): “Completion Report of Cirata HEPP”. Geneva. 2006 FIDIC. 9. 18. Formerly worked for Indonesia State Electricity Corporation (PLN) up to the position of Deputy Director and then Vice President. 2009 Hardjomuljadi. “The Importance of Management Decision in the Application of FIDIC Conditions of Contract for Civil Engineering Works 4th edition”. 1978 Standards Australia. “Algemene Voorwarden Voor De Uitvoering Bij Aaneming Van Openbare Werken ”.. From Construction Method till Construction Claim Cases”. “General Conditions of Contract for Construction. 7.