Practical Use of the Yellow and Silver Books FIDIC training in Dubai 6-7 March 2012 Led by Dr William Godwin Barrister, London ‘wwwsmatrix-seminars.com Overview of FIDIC and the FIDIC Construction Contracts Founded in 1913, Composed of national associations of consulting engineers. + Promotes and implements the consulting engineering industry's strategic goals, + Members endorse FIDIC statutes and policy statements and comply with FIDIC Code of Ethics. + Develops and promotes business practice: Business Integrity Management; Project Sustainability Management; Quality, ‘Management, Risk Management.Organises: ‘+ Extensive programme of seminars and conferences. * Education Programmes (accredited instructors, training suppliers, programmes and events). Publishes: as well as the Construction Contracts © Business practice contracts © International professional services agreements, FIDIC now publishes 5 standard Construction Contracts & distributes ‘over 25000 copies each year+ September 2008 ~ issue of the Design-Build-Operate form (Gold Book). Intended for use in ‘BOT’ type projects (‘Build-Operate-Transfer’). * Characteristics of BOT-type projects: private sector typically designs infrastructure, finances its construction and then operates and maintains it fora tong ‘concession’ period ( typically 20 years or more) before it is transferred over to government or official agency. ‘© Gold Book offers a single standard form for promoters covering not only the design and construction of the plant or other structure but also its operation and maintenance after completion, © The Construction Contract (Red Book) is based on design provided by the Employer, * The Plant and Design Build Contract (Yellow Book), the Design, Build & Operate Contract (Gold Book) and the EPC/Turnkey Contract (Silver Book) are based on design by the Contractor. + Under the 1999 Red Book, the Contractor is paid on a re- measurement basis for constructing works designed by others. * Under the other books, the Contractor is paid on a lump-sum basis for providing works to his own design.Note on the MDB Version © The MDB Harmonised Edition of the FIDIC Red Book, referred to as the “MDB Harmonised Construction Contract” was introduced in May 2005 and revised March 2006. * Standardized form for use where projects were financed by the Multilateral Development Banks. * Engineer must obtain the approval of the Employer before agreeing or determining any extensions of time or additional costs. Employer canalso change the scope of the Engineer’s authority without the agreement of the Contractor. FIDIC: Latest developments ‘Among recent developments in FIDIC are: + Publication in 2011 of the first edition of the subcontract form for the Red Book + FIDICis working on the further development of the Gold Book (Design Build Operate contract) for ‘brown field’ projects, in which an existing facility is upgraded or refurbished.The Yellow and Silver Books: principles and detail Yellow and Red Books both intended for use where there is @ basically traditional project structure of the employer, the ‘administering engineer and the contractor. Position of the Employer, the Engineer and the Contractor broadly similar. The differences between the two Books arise mainly from the fact that, in the Yellow Book, the Contractor undertakes all or most of the design whereas with the Red Book this is undertaken entirely ‘or mainiy by the Employer or on its behalf Yellow Book also a fixed price lump sum contract. ‘Aim of both Red and Yellow Books is broadly to balance risk between Employer and Contractor, taking into account the extent to which each is responsible for design and also each party's ability to control risk. Example: in both Books employer takes risk of delay and extra cost arising from unforeseeable physical conditions (clause 4.12) or ‘operations of nature’ (clause 17.3(h)). Silver Book is intended for projects of a quite different kind: Contractor undertakes all the design, procurement and construction; overriding need is to ensure completion on time and within budget.+ InSilver Book contractor designs to Employer's Requirements ; these can be of a relatively brief ‘performance specification’ type. Contractor has to prove performance and reliability of plant or other structure; there is detailed provision for tests on completion and taking over. + No Engineer to certify or determine claims; instead an Employer's Representative is appointed to act on Employer's behalf. The EPC/Turnkey Model ‘What is it and what is its appeal? + ‘EPC’: Engineer, Procure, Construct. Contractor is responsible for engineering design, the full range of procurement and for construction. EPC contracts are ‘turnkey’ contracts in that the contractor provides a complete package — the employer has the structure ‘at the turn of a key’.+ Single point of responsibility for design, procurement and construction and, connected with that, much greater certainty about time and cost. Under the model the contractor agrees a lump sum fixed price and has very limited scope for claiming additional time or money. + But can be relatively expensive as the contractor will price for risk in the lump sum, Main distinguishing features of the FIDIC EPC/turnkey form of contract + The Silver Book has the same basic 20 clause format as the other FIDIC Books and the topics covered are in many cases dealt with inthe same or similar ways + What above all distinguishes the Silver Book general conditions from those of the other Books is its near total allocation of risk to the Contractor. Unforeseeable Difficulties Clause 4.12 of the Silver Book general conditions:4.12 Except as otherwise stated in the Contract: (a) the Contractor shall be deemed to have obtained ol! necessary information as to risks, contingencies and other circumstances which may influence or affect the Works; (b) by signing the Contract, the Contractor accepts total responsibility for having foreseen all difficulties and costs of successfully completing the Works; and (c) the Contract Price shall nat be adjusted to take account of any unforeseen difficulties or costs. + This contrasts with the corresponding provision in the other FIDIC design-build forms. + Byclause 4.12 of the Yellow and Gold Book general conditions the Contractor may claim both additional time ‘and money if he encounters physical conditions which ‘were unforeseeable in the sense that no experienced contractor at the date of tender could be expected to have foreseen them.‘Operations of the forces of Nature’ ‘Whereas in the Yellow Book ‘any operation of the forces of, nature which is Unforeseeable or against which an experienced contractor could not reasonably have been expected to have taken adequate preventative precautions! may entitle the Contractor to additional time and money under clause 17.3 (and the Gold Book contains a similar provision), this is not so in the Silver Book. Design responsibility +The design-build forms all impose on the Contractor the obligation to ‘design, execute and complete the works in ‘accordance with the Contract’ so that when complete the Works will be ‘fit for the purposes for which [they] are intended as defined in the Contract’ (clause 4.1). Contractor gives same undertaking as to compliance with the contract documents (and applicable laws - clause 5.3),Under the Silver Book, however, the Contractor is responsible even where the Employer's Requirements contain errors and even where the Contractor could not reasonably have been expected to detect them, with certain very limited exceptions. ‘The fact that the Employer might actually have led the Contractor to believe the information contained in its Requirements was accurate or complete does not relieve the Contractor of his responsibility in relation to those matters: he must make his own checks and satisfy himself independently. ‘Thus by clause 5.1 of the Silver Book general conditions: “The Contractor shall be deemed to have scrutinised, prior to the Base Date [that is, 28 days prior to the latest date for submission of Tenderlthe Employer's Requirements (including design criteria and cafculations, if any). The Contractor shall bbe responsible for the design of the Works and for the accuracy of such Employer's Requirements (including design Criteria and calculations), except as stated below. The Employer shall not be responsible for any error, inaccuracy or omission of any kind in the Employer's Requirements as originally included in the Contract and shall ‘not be deemed to have given any representation of accuracy ‘or completeness of any data or information, except as stated below. Any data or information received by the Contractor, from the Employer or otherwise, shall not relieve the Contractor from his responsibility far the design and execution of the Works. 10The only exceptions to the Contractor's comprehensive responsibility are the four circumstances set out in sub- paragraphs (a)-(d) of clause 5.1: .. the Employer shall be responsible for the correctness of the Joliowing portions of the Employer's Requirements and of the ‘following data and information provided by (or on behalf of) the Employer: (a) portions, data and information which are stated in the Contract as being immutable or the responsibility of the Employer, (b) definitions of intended purposes of the Works or any parts thereof, (c) criteria for the testing and performance of the completed Works, and (d) portions, data and information which cannot be verified by the Contractor, except as otherwise stated in the Contract. + This contrasts with the position under the Yellow Book, where pursuant to clause 5.1 the Contractor is able to claim ‘more time and money if the error, fault or defect in the Employer's Requirements was not one which ‘an experienced contractor exercising due care’ would have discovered before submitting the Tender. The Gold Book contains similar provisions at clauses 5.1 and 1.10. "EXERCISE (1) ‘A Government of india development Agency is Employer under a USD 20million irrigation project in Uttar Pradesh. Magnum e V Is Contractor under a Silver Book based contract. During the phase 1 ground excavations irregular strata of hard rock are discovered. These cause Magnum to suffer delay and substantial extra cost. At bidding stage the Agency had provided ground surveys which should have shown the hard rock strata. The Agency demands proposals for ‘rectifying the situation’. Magnum replies that the ‘Agency is responsible because the data it provided was inaccurate, Do you think Magnumis correct? Would your answer be different if (a) the Agency had not provided the survey data and (b) Magnum could show that the ground conditions could not have been foreseen at tender stage? EXERCISE (2) + The Brno transport authority (BTA) in Czech Republic invited tenders for a major vehicle underpass in the city centre on the basis of the Silver Book general conditions. + The tunnelling method to be used was the New Austrian Tunnelling Method (NATM), which depended critically on accurate geotechnical measurements to assess relevant stresses for each section. + There was political pressure to begin the works as soon as possible and the tender period was very short. The BTA had obtained a geotechnical report which appeared to provide the necessary data and made this report available to all tenderers. 12+ Ifyou were a contractor considering tendering for this contract, ‘what factors would you take into account ? Would you be prepared to contract on the basis of the Silver Book? + From an employer's point of view, would any other FIDIC form be acceptable for a project of this type? Structure of the Yellow and Silver Books Each includes: + General Conditions (20 clauses) + Guidance for the Preparation of the Particular Conditions + Examples forms and dispute adjudication agreements Amendments to General Conditions should be by way of suitably drafted Particular Conditions. Direct changes are a breach of copyright unless a licence i obtained from FIDIC. 13in any commercial contract, what are the main areas to be considered? + Identification of the Parties; + Identifying the work or services to be provided; + Ensuring that what is provided complies with the contract (inspection; rectification of defects; testing; acceptance); ‘+ Timing (commencement; programme; delivery/completion; delay); * Price and payment (definition of price; amount of payments; timing of payments; method of payment; delayed payment); Damage & Injury (to supplies or Works during transport or during erection; to employees; to third parties; intellectual property); » Social & Environmental Issues; * Failure to perform (delay damages; default; termination; security); + Standard or “Boilerplate” clauses (law of the contract; language Of the contract; order of priority of documents; assignment; ‘amendment; notices under the contract); + Resolution of Disputes (what steps if any need to be taken before commencing a formal and binding process, such as court ‘or arbitration) FIDIC contracts, like other commercial contracts, address all these issues, largely under the same groupings. 14Clauses 1-3: General, and the Employer ions ~ priority of documents; co-ordinating the the particular conditions; importance of governing law. 4 The Contract shall be governed by the law of the country (or other jurisdiction) stated in the Particular Conditions. + The ‘governing law’ of the contract is the system of law according to which the rights, obligations and liabilities of the parties to the contract are to be determined. A contract may be governed by English law, for example, or Chinese law. + The governing law affects the way in which the terms of the contract are interpreted. For example: ‘fit for the purposes for which the Works are intended as defined in the Contract.’ (Clause 4.1) 15+ The governing law is to be distinguished from the law that applies to the procedure for resolving any disputes between the parties to a contract: for example, the law that applies to an arbitration between the parties. + This body of law is normally that of the place where the arbitration takes place. tt determines such matters as the right of a party to challenge an award made by the arbitral tribunal (because, for example, the party ‘concerned was not given 2 reasonable opportunity to present its case). + The governing law of the contract, however, is the law according ‘to which the substantive rights and liabilities of the parties are decided: for example, is party A entitled to an additional payment from party B; or has party A established that it is entitled to an extension to the contract period ? 16Priority of Documents + Contract needs to provide for relating the various contract documents together and for inconsistencies between them. Both Yellow and Silver Books do this in similar ways. + Silver Book clause 1.5 :The documents forming the Contract are to be taken as mutually explanatory of one another. For the purposes of interpretation, the priority of the documents shall be in accordance with the following sequence: (a) the Contract Agreement, (b) the Particular Conditions, (c) these General Conditions, {4) the Employer's Requirements, (e) the Tender and any other documents forming part of the Contract ‘= List is similar in clause 1.5 of the Yellow Book, but includes other contract documents (in particular, the Letter af Acceptance, Letter of ‘Tender and Schedules). ‘+ Allthe FIDIC Books specify an order of priority which (broadly speaking) is intended to make the more specific documents have priority over the less. Compliance with laws: clause 1.13 1.13 The Contractor shall, n performing the Contract, comply with ‘applicable Laws. Unless otherwise stated in the Particular Conditions: (a) the Employer shall have obtained (or shall obtain) the planning, zoning ‘or similar permission for the Permanent Works, and any other permissions described in the Employer's Requirements as having been {or being) obtained by the Employer; and the Employer shall indemnify ‘and hold the Contractor harmless against and from the consequences of ‘ony failure to do so; and 7(b) the Contractor shall give all notices, pay all taxes, duties and fees, and obtain all permits, licences and approvals, as required by the Lows in relation to the design, execution and completion of the Works and the remedying of any defects; and the Contractor shall indemnify and hold the Employer harmless against and from the consequences of ony failure to do so. EXERCISE (3) + Contractor under Yellow Book based contract for phase 2 work package on greenfield Nigerian petrochemical plant project, Bonney Island. + As work proceeds Contractor's personnel challenged by local people living near the site who say the land is theirs. They camp on site and refuse to move. Preparatory work is halted. + Following further investigation, Contractor's site manager is told to stop work as Employer appears not to have obtained the necessary purchase orders or permits from the relevant authorities to commence the work.+ Ifthe works delayed as a result, is the Contractor entitled to ‘an extension of time ? If extra cost is incurred, is it entitled to additional payment? + Would your answer be different if the contract had been a Silver Book based contract? Tailoring the Contract: the Particular Conditions The general conditions of any of the FIDIC forms, including riskallocation, can be and frequently are altered by particular conditions. ‘The contract permits the parties to make specific provision for the needs of their particular project by use of particular conditions- not by directly altering the general conditions. All the FIDIC Books provide guidance on the preparation of particular conditions 19‘The particular conditions: (i) enable the parties to complete the general conditions by adding project-specific details, such as the governing law; the ‘amount of delay-related damages; the commencement date; ‘the ruling language; adjustments for cost fluctuations; anda host of other details relevant to their project; and (ii) enable the parties to change the terms of the general conditions to reflect their particular bargain or agreements about the project. ‘This second possibility might be expressly contemplated by a specific general condition: clause 14.1, for example, provides that ‘Unless otherwise stated in the Particular Conditions’, certain rules relating to payment and the Contract Price shall apply, depending on the contract form. But in principle the parties may vary the terms of a Silver Book ‘or other FIDIC contract in any way they consider appropriate to the needs of their particular project by suitably worded particular conditions They must however ensure that any such variations are both consistent with the other provisions of the FIDIC contract and also with each other, 20Particular conditions should ensure maximum clarity and any necessary detail, E.g. what exactly is expected of the Contractor's programme under clause 8.3 including software used; any special requirements or flexibility in testing on completion. Such issues will nearly always require the parties’ technical and legal teams to work closely together to make the wording of the particular conditions match as far as possible their respective needs and expectations for the project. ‘The Employer — obligations of Employer as to - + access + possession of the site + permits, licences and approvals + 2.1 The Employer shall give the Contractor right of access to, and possession of, all parts of the Site within the time (or times) stated in the Particular Conditions. The right and possession may not be exclusive to the Contractor... 212.2 The Employer shall (where he is in a position to do so) provide reasonable assistance to the Contractor at the request of the Contractor: (0) by obtaining copies of the Laws of the Country which are relevant to the Contract but are not readily available, and (b) for the Contractor's applications for any permits, licences or ‘approvals required by the Laws of the Country: (i) which the Contractor is required to obtain under Sub-Clause 1.13 [Compliance with Laws}, (ii) for the delivery of Goods, including clearance through customs, and (il) for the export of Contractor's Equipment when it is removed from the Site. Employer's financial arrangements — obligation on Employer to provide evidence 2.4 The Employer shall submit, within 28 days after receiving ‘any request from the Contractor, reasonable evidence that, financial arrangements have been made and are being ‘maintained which will enable the Employer to pay the Contract Price (as estimated at that time) in accordance with Clause 14 (Contract Price and Payment]. if the Employer intends to make ‘any material change to his financial arrangements, the Employer shall give notice to the Contractor with detailed particulars 22Employer's Claims ‘The Employer (or the Engineer) must give notice and particulars to the Contractor of any claim by the Employer for payment in connection with the Contract and/or for any extension of the Defects Notification Period (DNP): clause 2.5. The notice must be given as soon as practicable after the Employer became aware of the event or circumstances giving rise to the claim. The notice must specify the basis for the claim and substantiate the amount and/or extension claimed. ‘Any claim for an extension of the DNP must be made before the expiry of the ONP Clause : Administration In the Yellow Book the Employer must appoint the Engineer: clause 3.1 In the Silver Book there is no Engineer. instead the Employer may {but need not) appoint a representative to act on his behalf. (clause 3.1) Employer's Representative authority does not extend to termination of the Contract under clause 15. Determinations: In the Yellow Book the Engineer makes determinations (formal decisions about such matters as the Contractor's entitlement to an extension of time) under clause 35. 23‘These determinations are to be ‘fair, in accordance with the Contract and taking account of all relevant circumstances.” In the Silver Book the Emplayer (or his Representative) makes determinations, which must also be fair. Instructions: In Yellow Book Engineer may issue at any time instructions ‘necessary for the execution of the Works and the remedying of any defects, all in accordance with the Contract’ (clause 3.3). May constitute a variation. Similar power in Employer in Silver Book: clause 3.4 ('..necessary for the Contractor to perform his obligations under the Contract’) Clauses 4 and 5S: The Contractor, and Design ‘The Contractor's general obligation design, execute and complete the Works in accordance with the Contract remedy any defects in the Works when completed the Works shall be fit for the purposes for which the Works are intended as defined in the Contract (Clause 4a) Further: the Works shall include any work which is necessary to satisfy the Employer's Requirements, or is implied by the Contract, and all Works which (although not mentioned in the Contract) are necessary for stability or for the completion, or safe and proper operation, of the Works {clause 4.1 Silver and Yellow Books). 244.1 The Contractor shall design, execute and complete the Works ‘in accordance with the Contract, and shall remedy any defects in the Works. When completed, the Works shall be fit for the purposes for which the Works are intended as defined in the Contract. The Contractor shall provide 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 in and for this design, execution, completion and remedying of defects. The Works shall include any work which is necessary to satisfy the Employer's requirements, or is implied by the Contract, and al works which (although not mentioned in the Contract) are necessary for stability or for the completion, or safe and proper operation, of the Works. EXERCISE (3) + Ramco is contracted to design and construct under 2 Yellow Book bbased contract a hydro-spa at an exclusive seaside resort in Helgoland, a German archipelago in the North Sea. = The site is directly facing the open sea. Employer's Requirements speci steal frame windows of certain dimersions for all se2- facing windows. + Ramco, within the fied price contract sum, supplies and installs carbon stee| frames with much lawer corrosion resistant properties than Inox or chromium-alloy steel. + Following installation the developer sponsor requires the already- Installed frames to be removed and replaced with Inox frames on the basis that carbon steel frames were not ft for the purpose, The reason given is that, In the sea-facing location, they will corrode at ‘more than three times the rate of chromiumalloy steel of a ‘median grade. 25+ Ramco replies that the Employer's Requirements did not include any particular type or grade of stee! and no service life was ever specified. It was entitled to design for the less expensive carbon steel solution and was not in breach of any contract terms. + Do you agree? + Would your answer be different if this had been a Silver Book bbased contract? Performance Security Clause 4.2: obligation to provide security; nature of performance security; safeguards against improper calls under securities 4.2 The Contractor shall abtain (at his cost) a Performance Security {for proper performance, in the amount and currencies stated in the Particular Conditions. fan amount is not stated in the Particular Conditions, this Sub-Clause shall not apply. The Contractor shall deliver the Performance Security to the Employer within 28 days ofter both Parties have signed the Contract Agreement. The Performance Security shall be issued by {an entity and from within a country (or other jurisdiction) approved by the Employer, and shall be in the form annexed to the Particular Conditions ar in another form approved by the Employer. 26‘The Employer shall 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 (b) failure by the Contractor to pay the Employer an ‘amount due (¢) failure by the Contractor to remedy a defauit within 42 days after receiving the Employer's notice requiring the default to be remedied, or (d) Circumstances entitling the Employer to terminate the Contract under clause 15.2, whether or not notice of termination has been given Contractor’s representative- role and authority (4.3) 4,3. The Contractor shall appoint the Contractor's Representative and shall give him ail authority necessary to act on the Contractor's behalf under the Contract. Unless the Contractor's Representative is nomed in the Contract, the Contractor shall, prior to the Commencement Date, submit to the Employer for consent the name and particulars of the person the Contractor proposes to appoint as Contractor's Representative. if consent is withheld or subsequently revoked, or if the appointed person {fails to act as Contractor's Representative, the Contractor shall similarly submit the name and particulars of another suitable ‘person for such appointment. 27Limits on subcontracting; liability of Contractor and position re nominated subcontractors (4.4, 4.5) 44 The Contractor shall not subcontract the whole of the Works. The Contractor shall be responsible for the acts or defaults of any Subcontractor, his agents or employees, as if they were the acts or defaults of the Contractor... 4.5 In this Sub-Clause, ‘nominated Subcontractor" means @ Subcontractor whom the Employer, under Clause 13 [Variations {and Adjustments) instructs the Contractor to employ as a Subcontractor. The Contractor shall not be under any obligation to employ a nominated Subcontractor against whom the Contractor raises reasonable objection by notice to the Employer as soon as practicable, with supporting particulars Setting out ~ importance of setting out; Contractor's obligation to do so to ariginal points, lines and levels of reference specified in the Contract (4.7) 4.7 The Contractor shall set out the Works in relation to original points, lines and levels of reference specified in the Contract. The Cantractor shall be responsible for the correct positioning of all parts of the Works, and shall rectify any error in the positions, levels, dimensions or alignment of the Works. 28Progress reports- obligation to provide; importance of progress reports 4.21 Unless otherwise stated in the Particular Conditions, ‘monthly progress reports shall be prepared by the Contractor and submitted to the Employer in six copies. The first report shall cover the period up to the end of the first calendar month following the Commencement Date. Reports shall be ‘submitted monthly thereafter, each within 7 days after the last day of the period to which it relates. Reporting shall continue until the Contractor has completed alll work which is known to be outstanding at the completion date stated in the Taking-Over Certificate for the Works, + Contents of reports : clause 4.1 sub-paras (a) ~(h. Sufficiency of the Contract Price(Silver Book); Accepted Contract Amount (Yellow Book) : Contractor deemed to have satisfied himself as to correctness and sufficiency — comprehensiveness of the Price/Amount (4.11) + Silver Book 4.11 The Contractor shall be deemed to have satisfied himself as to the correctness and sufficiency of the Contract Price. Unless otherwise stated in the Contract, the Contract Price covers all the Contractor's obligations under the Contract {including those under Provisional Sums, if any) and all things necessary for the proper design, execution and completion of the Works and the remedying of any defects.Unforeseeable difficulties - Contractor bears risk unless otherwise stated in the Contract (Silver Book 4.12) — meaning of ‘unforeseeable’ ; clause 5.1 exceptions relating to data/information provided by Employer + Position under Yellow Book Clause 4.12: ‘Unforeseeable Physical Conditions’: meaning; Contractor's entitlement to extension of time ‘and payment of additional Cost. + Duty of Engineer to assess ; right to take into account other physical conditions in similar parts of the Works Silver Book clause 4,12 : Except as otherwise stated in the Contract: (0) the Contractor shall be deemed to have obtained all, necessary information as to risks, contingencies and other circumstances which may influence or affect the Works; (6) by signing the Contract, the Contractor accepts total responsibility for having foreseen all difficulties and costs of ‘successfully completing the Works; and (6) the Contract Price shall not be adjusted to take account of any unforeseen difficulties or costs. 30Silver Book Clause 5.1: the Contractor is responsible for the design of the Works and for the accuracy of the Employer's Requirements (including, design eteria and aeuaton), except as tated in dause 3.1 sub-paras (a) 10 (4) ‘The clause 5.1 exceptions (a)portions data and information stated to be the Errployer’s responsibility in the Contract (b}definitions of intended purposes of Works or any part thereof (c) criteria for testing and performance of the completed Works (a) portions data or information which cannot be verified by the Contractor, except as otherwise stated in the Contract 5-1. The Contractor shall be deemed to have scrutinised, prior to the ‘Base Date [that is, 28 days prior to the latest dare for submission ‘of tender] , the Employer's Requirements (including design criteria and calculations, if any). The Contractor shall be responsible for the design of the Works and for the accuracy of such Employer's Requirements (including design criteria and calculations), except as stated below. The Employer shall not be responsible for any error, inaccuracy or ‘omission of any kind in the Employer's Requirements as originally included in the Contract and shall not be deemed to have given ‘ony representation of accuracy or completeness of any data or information, except as stated below. Any data or information recelved by the Contractor, from the Employer or otherwise, shall not relieve the Contractor from his responsibilty for the desian ‘nd execution of the Works. 31However, the Employer shall be responsible for the correctness of the following portions ofthe Employer's Requirements ond of the following data and information provided by (or on behalf of) the Employer: (0) portions, data and information which are stated in the Contract 45 being immutable or the responsibility of the Employer, (b) definitions of intended purposes of the Works or any parts thereof, (6) criteria for the testing and performance of the completed Works, and (d) portions, data and information which cannot be verified by the Contractor, except as otherwise stated in the Contract. Contrast with Yellow Baok clause 5.1 : Contractor’s claims for ‘any ‘error, fault or defect’ in Requirements, Contractor's Documents Silver Book Clause 5.2: The Contractor's Documents shall comprise the technical documents specified in the Employer's Requirements, documents required to satisfy all regulatory ‘approvals, and the documents described in Sub-Clause 5.6 [AS- Built Documents] and Sub-ClouseS.7 [Operation and Maintenance Manuals). Unless otherwise stated in the Employer's Requirements, the Contractor's Documents shall be written in the language for communications defined in Sub-Clause 1.4 [Law and Language}. The Contractor shall prepare all Contractor's Documents, and shall aiso prepare any other dacuments necessary to instruct the Contractor's Personnel... 32If the Employer's Requirements describe the Contractor's Documents which are to be submitted to the Employer for review, they shall be submitted accordingly... Unless otherwise stated in the Employer's Requirements, each review period shall not exceed 21 days, calculated from the date on which the Employer receives a Contractor's Document ‘and the Contractor's notice. This notice shall state that the Contractor's Document is considered ready, both for review in ‘accordance with this Sub-Clause and for use. The notice shall ‘also state that the Contractor's Document complies with the Contract, or the extent to which it does not comply. The Employer may, within the review period, give notice to the Contractor that a Contractor's Document fais (to the extent stated) to comply with the Contract. If @ Contractor's Document so fails to comply, it shall be rectified, resubmitted and reviewed in accordance with this Sub-Clause, at the Contractor's cost. For each part of the Works, and except to the extent that the Parties otherwise agree: {a) execution of such part of the Works shall not commence prior to the expiry of the review periods far all the Contractor's Documents which are relevant to its design and execution; (b) execution of such part of the Works shall be in accordance with these Contractor's Documents, as submitted for review; and 33(0) the Contractor wishes to mdf any desgn or document which has roots been submten for ehew he Conroe shel medal ove hove tothe Employer Threofer the Contracter shal submit revised documents tote Employer n accordance with the above procedure ‘ny such agreement ander the preceding paragraph) or any revew (under {he Sub-Cause or otherse sha not reheve the Contractor fom ny ‘blgation ar responsi. Yellow Book clause S.2n substantially siar terms; provision for Engineer's approval’ approval does not releve Contractor of obligations Contractor's Undertaking (5.3) ‘53. The Contractor undertakes that the design, the Contractor's Documents, the ‘execution and the completed Warks wil bein accorgance With (othe Laws in the Country, ond {b) the documents forming the Contract, es altered or mosified by Variations. Other design-related obligations (5.4-5.7); design error (5.8) 5.8 Iferrors, omissions, ambiguities, inconsistencies, inadequacies or other defects are found in the Contractor's Dacuments, they and the Works shall be corrected at the Contractor's cost, notwithstanding any consent or approval under this Clause 34Staff and Labour: clause 6 + Clause 6 of the Red, Yellow and Silver Books all place a number of obligations upon the Contractor with respect to the proper treatment of staff and labour. + These cover such matters as compliance with labour laws, ‘minimum wages, reasonable facilities, health and safety protection and proper superintendence of the works by the Contractor to ensure their safe and satisfactory execution. Plant, Materials and Workmanship: clause 7 Clause 7 deals with the requirements for the items of Plant and Materials which the Contractor brings to the Site in order to execute the project, It covers the Contractor's obligations concerning the quality of his, work and the procedures to be followed for tests and in the event that an item of work fails the test. ‘The matter of the time when an item of Plant or Materials becomes the property of the Employer is covered at Sub-Clause 7.7 and Royalties are dealt with at Sub-Clause 7.8,The Contractor must carry out his work: + inthe manner specified in the Contract; + ina workmantike and careful manner; + imaccordance with recognised good practice; ‘+ with properly equipped facilities and using non-hazardous materials, unless otherwise specified in the Contract. (Clause 7.1) ©The quality of materials and standard of workmanship will be specified elsewhere in the contract documents, which will ‘normally refer to the national standard specifications of the country of the project, among many other details. Phrases such as “proper workmanlike and careful manner’, “recognised good practice” and “properly equipped facilities” are not precise. These requirements will have to be interpreted by the Engineer or Employer in relation to the actual goods that are supplied and work that is executed by the Contractor. * The Contractor is to submit samples of Materials, and relevant information, to the Engineer or Employer for consent (if Red Book) or review (if Yellow or Silver Book) prior to using the Materials in or for the Works. (Clause 72)The Employer's Personnel shall: + atall reasonable times have full access to all parts of, the Site and to all places from whic natural Materials are being obtained, and + during production, manufacture and construction (at the Site and elsewhere), be entitled to examine, inspect, measure and test the materials and workmanship, and to check the progress of manufacture of Plant and production and manufacture of Materials, ‘The Contractor must give notice to the Engineer whenever any work is ready and before it is covered up. (7.3) Subject to the law of the place where the Works are sited, items of Plant and Materials will become the property of the Employer either: + when they are delivered to Site; or, + when the Contractor is entitled to be paid for them, whichever takes place first. (Clause 7.7) ‘The Contractor must pay all royalties and similar charges in relation to natural materials obtained outside the Site and for the disposal of materials arising from demolition, excavation , etc. (Clause 7.8) 37Commencement, Delays and Suspension: clause 8 + The Commencement Date must be notified to the Contractor by the Engineer/Employer + The notice must be given at least 7 days prior to the Commencement Date —unless otherwise stated in the Particular Conditions + After receiving the instruction, Contractor must proceed without delay and must complete the whole of the Works and any Section within the Time for Completion of the Works or Section. (Clauses 8.1 & 8.2) Contractor must submit to the Engineer/Employer a Programme within 28 days after receiving the instruction to ‘commence. + The Programme is important because: + itis the basis for monitoring the Contractor's progress and planning Employer/Engineer activities and obligations + it becomes a base reference for the Engineer's or Employer's determination of Contractor's claims for extensions of Time for Completion arising from alleged disruption or delay. * Contents of programme ~ Contractor's obligation to warn of Potential delaying events revisions to programmeDelays and Extensions of Time {fF any of the circumstances listed under Glause 8.4 occurs the Contractor may claim an extension to the contract completion date provided he gives notice under clause 20.1. In the Yellow Book(and Red) these circumstances are: 2 Variation or other substantial change in the quantity of an tem of Works @ cause of delay giving an entitlement under another Sub- clause; exceptionally adverse climatic conditions; + unforeseeable shortages of personnel or Goods caused by epidemic or governmental actions; + any delay, impediment or prevention caused by or attributable to the Employer, the Employer's Personnel or the Employer's other contractors on the Site, In the Silver Book only the first, second and last of these grounds apply (variations, express mention in another clause of the contract or delays attributable to the Employer). Moreaver, in the Silver Book general conditions no additional time is permitted for (a) unforeseeable physical conditions (whereas itis under clause 4.12 of the Yellow and Red Books) or (b) exceptin the limited circumstances we looked at earlier in clause 5.1, errors or omissions in the Employer’s Requirements. 39Ifat any time the rate of progress of the Works is: '* too slow to complete the Works within the Time for Completion; and/or = the Contractor has fallen (or will fall) behind the current Programme ‘the Engineer or Employer can instruct the Contractor to submit a revised programme and supporting report describing the revised methods he proposes to adopt, at his own risk and cost, to expedite progress and comply within the Time for Completion. If the Contractor fails to complete within the Time for Completion (after taking account of any entitlement to extensions of time) he must (subject to clause 2,5 Employer's claims) pay Delay Damages to the Employer at the rate stated in the Contract “..for every day which shall elapse between the relevant time for completion and the date stated in the Taking- Over Certificate. (8.7) ‘However the total amount due shall not exceed the maximum ‘amount of delay damages (if any) stated in [the Appendix to Tender (Yellow Book) or Particular Conditions (Silver Book)|’ (8.7) 40“These delay damages shall be the only damages due from the Contractor for such default, other than in the event of termination under Sub-Clouse 15.2 [Termination by Employer] prior to completion of the Works. These damages shall not relieve the Contractor fram his obligation to complete the Works, or from any other duties, obligations or responsibilities which he may have under the Contract’ (8.7). EXERCISE (5) + Seapure SA were specialist filtration designers and suppliers an 2 desalination plant project in Abu Dhabi. The contract was based on the FIDIC Silver Book. The Employer was Carrie In. Work commenced on 10 January 2010 with completion due 30 July 2021. + In April 2011 defects were revealed in the design of the filtration system membranes, + On 6 May 2011 Seapure and Corrie’s representatives met. They agreed that designing, procuring and installing replacement membranes would delay the works. Corrie assessed that the scale of the remedial work meant that the completion date could not realistically be achieved. 4