FIDIC Contracts Overview PDF

Fdration Internationale des Ingnieurs-Conseils
THE FIDIC CONTRACTS

AND THEIR USE
Presentation by Daniel Ivarsson

Managing Director of FIDIC
FIDIC CONTRACTS
CONSTRUCTION
PLANT AND DESIGN-BUILD
EPC/TURNKEY PROJECTS
SHORT FORM OF CONTRACT
CLIENT/CONSULTANT MODEL SERVICES AGREEMENT

WHICH BOOK TO USE?
CONDITIONS
STRAIGHTFORWARD OF
PROJECT ? EMPLOYER DESIGN ? CONTRACT
no yes FOR
yes
CONSTRUCTION
SHORT no
FORM CONTRACTOR DESIGN
CONTRACT fixed price - lump sum
little employer involvement plant and/or high
no major unforeseen risks no unforeseen risks
no yes yes
Conditions of
Conditions of
DISCUSS IN DETAIL Contract Contract for
Plant and
Employer s requirements for EPC
Design Build
with the Contractor, and
Turnkey Projects
negotiate a modified
FIDIC contract
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

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

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

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
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
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

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.
STRUCTURE: SHORT FORM
Agreement
General Conditions
Particular Conditions
Rules for Adjudication
Notes for Guidance
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
THE 1992 (OLD) AND 1999 (NEW) RED BOOKS
SOME DIFFERENCES
THE 1992 (OLD) AND 1999 (NEW) RED BOOKS
SOME DIFFERENCES
INNOVATIONS FAVOURING THE CONTRACTOR

INNOVATIONS FAVOURING THE EMPLOYER

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 / Settle dispute

20.5
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


DISPUTE ADJUDICATION BOARD
Clause 20.2 Accept Appointment and the obligations pertaining thereto
Clause 20.4 Adjudicate on Disputes hand down decisions


QUALITY OF DESIGN & DOCUMENTATION

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.
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.
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

USE OF FIDIC CONTRACTS
Match contract and project
Decide early
Appoint DAB early
Draft by professionals
Do not touch the General Conditions
Buy originals
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
CONTRACT ADMINISTRATION
Supervision
Enforcement
Quality and quantity
Invoice verification
Payments
Extensions, variation orders, amendments
Termination
Disputes and their resolution

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Fdration Internationale des Ingnieurs-Conseils

THE FIDIC CONTRACTS

Presentation by Daniel Ivarsson

PLANT AND DESIGN-BUILD

SHORT FORM OF CONTRACT

CLIENT/CONSULTANT MODEL SERVICES AGREEMENT

clear and complete conditions; time limits; provisions for adjudication

Employer responsible for design

Engineer, working for the Employer

Drawings, specifications, Bill of Quantities

Payments based upon measurements

Certification of payments by Engineer

Contractor responsible for design

Engineer, working for the Employer

Lump sum pricing

Payments according to progress

Certification of payments by Engineer

Contractor responsible for design and takes full

Employer may appoint a Representative

Fixed price, to cover risks taken on by Contractor

Payments according to progress

Design by either party

Employer may appoint a Representative

Valuation as appropriate; to be agreed

Payments according to value of Works executed and

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

INNOVATIONS FAVOURING THE CONTRACTOR

INNOVATIONS FAVOURING THE 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

Clause 20.1 / Settle dispute

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

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

SCHEDULE OF RESPONSIBILITIES: FIDIC 1999

QUALITY OF DESIGN & DOCUMENTATION

1. One boss for design / documentation production.

2. Avoid over specification; adopt standards.

3. Take particular care at overlaps between sections

4. Identify RISKS and set down formal procedures

5. Quality Management System.

The traditional contract (eg FIDIC 1992) is based on

Recent contracts have adopted a Quality Assurance