Lecture 5:

“Engineering Contracts in Pakistan-

FIDIC & PEC Contract Clauses”

Prof. Rizwan Farooqui

FIDIC Federation Internationale des Ingenieurs- Counseils

GCC PART-
(International Federation of Consulting Engineers)
I: 1987 reprinted in 1992 with further
amendments

Pakistan Standard Conditions of Contract
(Civil), 1st Edition reprinted in July 1993

Standard Bidding Documents finalized by
WAPDA in 1987 for use on medium sized
contracts

National Highway Authority Contract No. 1,
Indus Highway Project (N-55) 2

Prof. Rizwan U. Farooqui, Ph.D.

1
 Background of the PEC Documents:

Asian Development Bank-Sample Bidding

Documents

World Bank Standard Bidding Documents-
Procurement of Works May 2005 (based on FIDIC
99 Second Edition)

Harmonized with PPRA Rules, 2004

Notified by Planning Commission, PPRA and PEC
as the only country document

Salient Features of the PEC Documents:

Framework document including all ingredients

Instruction to users for guidance

The General Conditions of Contract and Particular
Conditions of Contract prepared by the PEC (PEC
varied FIDIC Provisions) should be retained as
such.

Any amendment in the Particular Conditions of
Contract can be made by the users only as
indicated by the PEC in Para E or within the
Particular Conditions of Contract.

Prof. Rizwan U. Farooqui, Ph.D.

2
 1 Instructions to Bidders.
2. Bidding Data.
3. General Conditions of Contract, Part-I (GCC).
4. Particular Conditions of Contract, Part-II (PCC).
5. Specifications - Special Provisions.
6. Specifications - Technical Provisions.
7. Form of Bid & Appendices to Bid.
8. Sample Bill of Quantities.
9. Form of Bid Security.
10. Form of Agreement.
11. Form of Performance Security/Bond & Mobilization
Advance Guarantee/Bond.
12. Drawings. 5

The user is required to prepare the following for

completion of the Bidding Documents:
(i) Particular Conditions of Contract.
(ii) Specifications - Special Provisions.
(iii) Specifications - Technical Provisions.
(iv) Bill of Quantities.
(v) Drawings.

Prof. Rizwan U. Farooqui, Ph.D.

3

Carefully read the Instructions as check list

Part – I of GCC to remain unchanged

Amendments in Part – II are guided

Any amendment in Part – II shall not alter the
spirit of the documents

All the spaces to be filled in and instructions
within parenthesis to be deleted appropriately

Instructions to Bidders and Bidding Data may not
form part of the contract

Publication in the newspapers, PEC & PPRA

Website.
Time for preparation & submission of bids may
range from 42 to 154 days depending on the
size of the Works.
Non-refundable fee of Bidding Documents
should be nominal.
Bid Security, 1% to 3% of the Bid Price.

Prof. Rizwan U. Farooqui, Ph.D.

4

Item – 2 calls for PEC license and pre-qualification
/ enlisting requirement (IB-3)

Blank spaces for the following to be filled by
employer:
Name of employer, funding detail, name of
project and brief project descriptions
Employer’s mailing address
Bid Security amount; delivery address; hours
and date; time for bid opening on same date

IB will not be part of the Contract and will cease to have

effect once the contract is signed.

Scope of Bid

The successful bidder will be expected to complete the Works within the
time specified in Appendix-A to Bid.

Eligible Bidders

Bidders meeting the following requirements:

Duly licensed by PEC in the relevant category.

Duly prequalified / enlisted with the Employer.

One Bid per Bidder

Only one bid either by bidder himself, or as a partner in a joint venture.

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Prof. Rizwan U. Farooqui, Ph.D.

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Cost of Bidding

Bidders have to bear all costs associated with preparation & submission
of bids.

Site Visit

Bidders are advised to visit & examine the Site of Work and its
surroundings.

Clarification of Bidding Documents

For any clarification (s) bidder may notify the Employer in writing.

Requests received earlier than 28 days prior to the deadline will be
responded by Employer.

11

Amendment of Bidding Documents

Employer may modify the Bidding Documents by issuing addendum
any time prior to the deadline for submission of bids.

Addendum thus issued shall be part of the Bidding Documents.

Amendments should be communicated in writing to all bidders.

To afford reasonable time, Employer may extend deadline for bid
submission

Language of Bid

The bid and all documents shall be in the bid language stipulated in the
Bidding Data.

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Prof. Rizwan U. Farooqui, Ph.D.

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Documents Accompanying the Bid
(a) Written power of attorney authorizing the signatory.
(b) Update on prequalification info:

Evidence of financial resources along with average annual turnover.

Financial predictions for the current year and the two following years.

Work commitments since prequalification;

Current litigation information; and

Availability of critical equipment.
(c) Technical proposal considering Appendices to Bid:

App-E: Proposed Construction Schedule

App-F: Method of Performing the Work

App-G: List of Major Equipment

App-K: Organization Chart for Supervisory Staff, etc.
(d) Proposals of work methods and schedule, in sufficient detail to
demonstrate the adequacy of the Bids w.r.t. technical specs and time.
13

Bid Prices

Contract shall be for whole Works, based on the unit rates and / or
prices submitted by the bidder.

Bidders shall fill in rates & prices for all items of Works described in
BOQ.

Items against which no rate or price is entered by a bidder will not be
paid.

All duties, taxes and other levies payable by the Contractor under the
Contract, as on the date 28 days prior to the deadline for submission of
bids shall be included in the rates and prices and the total bid price

Bid Validity

Bids shall remain valid for the period stipulated in the Bidding Data.

In exceptional circumstances, prior to expiry Employer may request for
extension, which shall, in no case, be more than the original bid validity
period. 14

Prof. Rizwan U. Farooqui, Ph.D.

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Bid Security

Each bidder shall furnish a Bid Security as stipulated in the Bidding
Data.

Any bid not accompanied by an acceptable Bid Security shall be rejected.

The Bid Security shall be in the form of Deposit at Call or a Bank
Guarantee issued by a Scheduled Bank in Pakistan or from a foreign
bank duly counter guaranteed by a Scheduled Bank in Pakistan or an
insurance company having at least AA rating from PACRA/JCR in favour
of the Employer

Bid security should be valid for a period 28 days beyond the Bid Validity
date.

Bid securities of unsuccessful bidders will be returned with in 28 days
after the expiration of the period of Bid Validity.

Bid Security of the successful bidder will be returned when the bidder
has furnished the required Performance Security & signed the Agreement.
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Bid Security (contd.)

The Bid Security may be forfeited:
(a) if the bidder withdraws his bid.
(b) if the bidder does not accept the correction of his Bid Price.
(c) For successful bidder, if he fails within the specified time limit
to:
(i) furnish the required Performance Security; or
(ii) sign the Contract Agreement.

Alternate Proposals by Bidder

Any bidder in addition to his bid may submit any Alternate Proposal(s)
in strict compliance with the Bidding Documents.

Alternate Proposal(s), may only be considered for lowest evaluated
responsive contractor. 16

Prof. Rizwan U. Farooqui, Ph.D.

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Pre-Bid Meeting

Employer may hold a pre-bid meeting to clarify issues if any.

Date, time and venue of meeting, is as stipulated in Bidding Data.

Bidders are requested to submit questions, 7 days before the meeting.

Minutes of the pre-bid meeting will be transmitted to all purchasers.

Absence at the pre-bid meeting will not be a cause for disqualification.

Format and Signing of Bid

All appendices to Bid are to be properly completed and signed.

No alteration is to be made in the Form of Bid nor in the Appendices.

Each bidder clearly mark “ORIGINAL” and ‘COPY” on the forms, In the
event of discrepancy original shall prevail.

Bid shall be signed by a person or persons duly authorized to sign.

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Sealing and Marking of Bids

ORIGINAL and each copy , shall be separately sealed.

If the outer envelope is not sealed and marked Employer will have no
responsibility for the misplacement or premature opening .

Deadline for Submission of Bids

Bids must be received no later than the time and date stipulated.

Employer, at his discretion, may extend the deadline by issuing an
amendment.

Late Bids

Any bid received after the deadline will be returned unopened.

Delays in the mail, transit, or delivery to the wrong office shall not be
accepted as an excuse.

Modification, Substitution and Withdrawal of Bids

Bidder may modify, substitute or withdraw his bid with written notice.18

Prof. Rizwan U. Farooqui, Ph.D.

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Substantially Responsive Bid

A substantially responsive bid is one which (i) meets the eligibility
criteria; (ii) has been properly signed; (iii) is accompanied by the
required Bid Security; and (iv) conforms to all the terms, conditions and
specifications of the Bidding Documents, without material deviation or
reservation.

Correction of Errors

Where there is a discrepancy between the amounts in figures and in
words, the amount in words will govern; and

Where there is a discrepancy between the unit rate and the line item
total resulting from multiplying the unit rate by the quantity, the unit
rate as quoted will govern, unless in the opinion of the Employer there is
an obviously gross misplacement of the decimal point in the unit rate, in
which case the line item total as quoted will govern and the unit rate will
be corrected.
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Notification of Award

Prior to expiration of the period of bid validity prescribed by the
Employer, the Employer will notify the successful bidder in writing
(“Letter of Acceptance”) that his Bid has been accepted.

No Negotiation with the bidder having evaluated as lowest responsive or
any other bidder shall be permitted, however, Employer may have
clarification meetings to get clarify any item in the bid evaluation
report.

The notification of award and its acceptance by the bidder will
constitute the formation of the Contract, binding the Employer and the
bidder till signing of the formal Contract Agreement.

Upon furnishing by the successful bidder of a Performance Security, the
Employer will promptly notify the other bidders that their Bids have
been unsuccessful and return their bid securities.

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Prof. Rizwan U. Farooqui, Ph.D.

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Performance Security

The successful bidder shall furnish to the Employer a Performance
Security in the form and the amount stipulated in the Bidding Data and
the Conditions of Contract within a period of 28 days after the receipt of
Letter of Acceptance.

Signing of Contract Agreement

Within 14 days from the date of furnishing of acceptable Performance
Security, the Employer will send the Contract Agreement

The formal Agreement between the Employer and the successful bidder
shall be executed within 14 days of the receipt of the Contract
Agreement by the successful bidder.

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General Performance of the Bidders

Employer obtain information regarding performance of the bidders on their
previously awarded contracts/works.

The Employer may in case of poor performance reject his bid and/or refer the
case to the (PEC).

Integrity Pact

The Bidder shall sign and stamp the Integrity Pact to Bid.

Failure to provide such Integrity Pact shall make the bidder non-responsive.

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Prof. Rizwan U. Farooqui, Ph.D.

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Bidding Data will not be part of the Contract and
will cease to have effect once the contract is
signed.

The period of bid validity may range from 56 to
182 days depending upon the size of the Works,
as decided by the Employer.

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No change required

Notes on Bidding Data will be deleted

Instructions in parenthesis only will be deleted

In case of conflict , the information in Bidding
Data will supersede those of the Instructions to
Bidders

Documents comprising the bid are listed in IB-7

Other than ITB, GCC and Forms; all other items
in IB-7 to be prepared/reviewed by the employer

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Prof. Rizwan U. Farooqui, Ph.D.

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 Instructions to fill Bidding Data are as under:
1.1 Name and address of the Employer:
[Name of the Employer and his
representative complete with address, tele,
fax, etc.]
1.1 Name of the Project & Summary of the
Works:
[Insert brief summary, including
relationship to other contracts under the
Project. If the Works are to be tendered in
separate contracts, describe all the
contracts.] 25

2.1 Name of the Borrower/Source of Financing/

Funding Agency:
[Insert name of Borrower and statement of
relationship with the Employer, if
different from the Borrower
2.1 Amount and type of financing:

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Prof. Rizwan U. Farooqui, Ph.D.

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 8.1 Time limit for clarification:
[Minimum number of days to seek
clarification by the prospective bidder may
be inserted as 28 days.]
10.1 Bid language:
[The same language in which the Bidding
Documents are written. English, should
be used in National/ International
Competitive Bidding.]

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11.1(b) Prequalification Information to be

updated:
[Indicate what items of information
submitted with application for
prequalification is to be updated. It
may include: Evidence of access to
financial resources, works awarded
during the interim period, availability of
essential critical equipment etc.]

28

Prof. Rizwan U. Farooqui, Ph.D.

14
 11.1(c) Furnish Technical Proposal:
[The bidder to submit a technical
proposal in sufficient detail to
demonstrate the adequacy of
the bid in meeting requirements for
timely completion of the Works.]
13.1 Currencies of Bid and Payment:

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14.1 Period of Bid validity:

[Insert number of days after the deadline
for Bid submission. Normally the validity
period should not exceed 182 days.]
15.1 Amount of Bid Security:
[This amount should be the same as also
quoted in the Invitation for Bids. A fixed
sum is advisable with 1 to 3% of engineers
estimate]

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Prof. Rizwan U. Farooqui, Ph.D.

15
 17.1 Venue, time, and date of the Pre-Bid
meeting:
[Insert address of venue, or indicate that the
meeting will not take place. The meeting
should take place not later than four weeks
before the deadline for Bid submission. It
should take place concurrently with the
Site visit, if any(see Sub-Clause IB-6).]
18.4 Number of copies of the Bid to be completed
and returned:
[Usually one original and two copies]
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19.2(a) Employer's address for the purpose of

Bid submission:
[Should match the receiving address
provided in the Invitation for Bids.]

19.2(b) Name and Number of the Contract:

[Name and Contract Number, if any]

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Prof. Rizwan U. Farooqui, Ph.D.

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 20.1(a) Deadline for submission of bids:
[The time and date should be the same
as that given in the Invitation for Bids]
23.1 Venue, time, and date of Bid opening:
[Date should be the same as that given
for the deadline in Invitation for Bids
but time for opening of bids shall be at
least thirty minutes after the time for
the deadline for submission of bids].

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32.1 Standard form and amount of

Performance Security acceptable to the
Employer:
[Select the kind of Performance Security
(bank guarantee and / or insurance
bond), and indicate the amount. An
amount equal to 10 percent of the
Contract Price is commonly specified for
bank guarantees, which %age should
match with that stipulated in Appendix-A
to Bid]
34

Prof. Rizwan U. Farooqui, Ph.D.

17
 1. Form of Bid - only Bid Reference to be provided by Employer

2. All other blank spaces shall be filled by the Bidder

3. The amount of the Liquidated Damages for each day of delay in

completion of the whole of the Works, or if applicable for any
Section thereof, shall be a sum equal to 10 % of the likely cost
of the Works divided by one-fourth of the number of days
specified as completion time.

4. Bidder must sign and stamp Form of Bid appropriately

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1. Engineer’s Authority to issue Variation in emergency = 2% of the

Contract Price stated in the Letter of Acceptance
2. Amount of Performance Security = 10% of Contract Price stated in the
Letter of Acceptance.
3. Time for Furnishing Programme = Within 42 days from the date of
receipt of Letter of Acceptance.
4. Minimum amount of Third Party Insurance = Rs. _________ per
occurrence with number of occurrences unlimited.

GC 23.2; Rs. 500,000
5. Time for Commencement = Within 14 days from the date of receipt of
Engineer‟s Notice to Commence which shall be issued within fourteen
(14) days after signing of Contract Agreement.
6. Time for Completion = _______days from the date of receipt of
Engineer‟s Notice to Commence.

GC 43.1 & 48.2, 36.4 36

Prof. Rizwan U. Farooqui, Ph.D.

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 7. a) Amount of Liquidated Damages = Rs. ________for each day of delay in
completion of the Works subject to a maximum of 10% of Contract Price
stated in the Letter of Acceptance.
b) Amount of Bonus = Rs. ________for each day the Works are completed
before the specified completion date of the Works subject to a maximum
of 5% of Contract Price stated in the Letter of Acceptance.

GC 47.3

[If applicable half of the LDs]
8. Defects Liability Period = _________ days from the effective date of
Taking Over Certificate.

GC 47.3; 364

37

9. Percentage of Retention Money = 10 % of the amount of Interim Payment

Certificate.
10. Limit of Retention Money = 5 % of Contract Price stated in the Letter of
Acceptance.
11. Minimum amount of Interim Payment Certificates (Running Bills) = Rs.
__________________

GC 60.2

5 Million (say)

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Prof. Rizwan U. Farooqui, Ph.D.

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Stamp “Not Used” if no foreign currency
payment foreseen

If F.C payment foreseen, blank spaces in
Appendix-B to be filled in by Bidder (IB-13.1)

Exchange Rate TT&OD Selling Rates published or
authorized by SBP 28 days prior to Bid (IB-13.2)

Percentage and type of F.C without Provisional
Sums

Equivalent Rupees on the Exchange Rate

39

Data to be filled in accordingly

Modify sub-clauses 72.2 & 72.3 of GCC in PCC
accordingly if, exchange rate for payment is
different and payment of Provisional sums in
F.C

40

Prof. Rizwan U. Farooqui, Ph.D.

20

To be filled in by Employer

Employer may add/delete/modify elements
according to project need

Federal Bureau of Statistics indices apply where,
available

PICC Construction Cost Data will be referred in
updated PEC documents

Appendix-C should be read with Formula under
sub-clause 70.1 PCC

Weightages or coefficients to be prepared on rate
analysis for project to project
41

Price Adjustment apply for any contract having

Contract Price more than the ceiling amount for
a C-5 License.

Only contracts having duration of six months or
more should be liable to price adjustment.

Employer to determine the weightage of Fixed
Portion considering only those cost elements
having cost impact of seven (7) percent or more
on his specific project.

A bidder can submit weightages and source of
indices if they differ with Appendix-C; subject to
approval by Engineer [70.1(c) PCC]
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Prof. Rizwan U. Farooqui, Ph.D.

21

Given bills are example only

PICC (Pakistan Institute of Cost & Contracts)
provided latest formats to include a General/
preliminary Chapter.

Employer should prepare various bills leaving
blank spaces for rates and totals (refer to
examples)

Reasonable accuracy in quantity estimate
required to avoid cost overruns, Price
Adjustment accuracy etc.
43

Construction Schedule to be provided by the

bidder in prescribed manner

Completion by parts/section shall be distinctly
identified by separate Schedule

Sheets to be attached as necessary

Sub-clauses 43.1 & 48 of GCC to be referred

Clause 43.1: completion part or whole of the
works within scheduled time (Clause-48) or
extended time (Clause-44)

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Prof. Rizwan U. Farooqui, Ph.D.

22

Bidder to submit these information

Organization chart of personnel for various
activities

Mobilization Plan/Facilities be provided

Method of executing the work etc

45

To be filled in by Bidder

In three categories
- owned
- To be purchased
- To be arranged on Lease

46

Prof. Rizwan U. Farooqui, Ph.D.

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To be submitted by Bidder

Sub-clause 34(labor, staff, camp by Contractor at
his own cost and responsibility) of GCC apply

Site Preparation

Provision of services

Construction facilities

Construction equipment assembly

Security Services etc

47

To be submitted by the bidder

Name of sub-contractors for each part of the work

Profile of the sub-contractors to be submitted

PEC license for the sub-contractors to be provided
where applicable

48

Prof. Rizwan U. Farooqui, Ph.D.

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To be submitted by the bidder

Quarterly estimates based on his
Programme of works
Rates in BOQS
In Pakistani Rupees

49

To be submitted by bidder for

Supervisory staff
Labor

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Prof. Rizwan U. Farooqui, Ph.D.

25

To be signed and stamped by the bidder

Name of the bidder is to be filled in

Made mandatory under Prime Minister’s
directive and PPRA Rules

Punitive action against non-compliance
stipulated under Clause 74.1 PCC

51

Bid Security IB-15

Form of Performance Security

Insurance guarantee for Bid and Performance to be
tailored accordingly

Form of Contract Agreement

Mobilization Advance Guarantee

52

Prof. Rizwan U. Farooqui, Ph.D.

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 FIDIC Conditions of Contract

FIDIC- Federation Internationale des Ingenieurs-

Counseils (International Federation of Consulting
Engineers)

Head Quarters based in Geneva

Currently 75 countries are members of FIDIC

In Pakistan ACEP is the member of FIDIC

FIDIC documents can be accessed through FIDIC
website

Original FIDIC document require to be attached
with FIDIC documents
53

FIDIC Conditions of Contract

FIDIC GCC cannot be changed but a provision in

GCC can be amended in PCC

PEC Bidding/ Contract documents is based on
FIDIC 1987 (fourth edition) reprinted in 1992.

PEC obtained permission from FIDIC Geneva for
incorporating FIDIC COC in PEC Documents

FIDIC 1987 reprinted in 1992 contains 72 Clauses and
194 Sub-Clauses

FIDIC 1999 contains 20 Clauses and 163 sub- Clauses

Addition of Dispute Board in FIDIC 1999 is one of the
added feature 54

Prof. Rizwan U. Farooqui, Ph.D.

27
 FIDIC Conditions of Contract

PEC while updated their Bidding documents incorporated

some of the FIDIC 1999 provisions in PCC

In PEC Bidding Documents Notified in 2002 there were
three parts of the Condition of Contracts but in 2008 it
contain only 2 parts GCC & PCC

PEC varied required GCC Clauses in PCC which are
Notified as Country Regulation and left a few items
identified in the document for the users to make change.

55

FIDIC Conditions of Contract: 20 Clauses

General provisions

The employer

The engineer

The contractor

Nominated subcontractors

Staff and labor

Plant, materials and workmanship

Commencement, delays and suspension

Tests on completion

Employer’s taking over
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Prof. Rizwan U. Farooqui, Ph.D.

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 FIDIC Conditions of Contract: 20 Clauses

Defects liability

Measurements and evaluation

Variation and adjustments

Contract price and payment

Termination by employer

Suspension and termination by contractor

Risk and responsibility

Insurance

Force majeure

Claims, disputes and arbitration
57

Change in GCC Guided in “Instructions to User of

the Documents” and space/instructions provided
in PCC

In the PCC following are the spaces/instructions:

1.1(a)(i)Name and address of Employer

1.1(a)(iv)Name and address of the Engineer

2.1(b) Employer may further vary Engineer’s
duties and authorities requiring employer’s
approval

5.2(k)“any other” document in priority of Contract
Documents
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Prof. Rizwan U. Farooqui, Ph.D.

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14.1 Employer to select appropriate (Bar chart)

the Employer should specify the form in which the
Programme is to be submitted by the Bidder, e.g.,
critical path network, simple bar chart or PERT.

21.1 Employer may vary Insurance sub-clause
21.1(b)

54.3 Customs clearance - employer may vary

60.12Financial Assistance to Contractor –
Employer to select one of the three
alternatives and delete the two

67.3 Arbitration – place of arbitration to be
provided 59

68.2 Notice to Employer and Engineer – Names

and addresses of Employer and the
Engineer to be provided

70.1(b) Price adjustment formula – Actual
formula to be prepared

73.2 Customs Duty & Taxes – Employer may
incorporate the provisions

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Prof. Rizwan U. Farooqui, Ph.D.

30
 It can include information about:

Location of project

Site of works

Datum levels

Climate / Data

Utilities

Geology, Hydrology

Extent of work

61

Description of Works

Shop drawings

Right to change

Contractor’s responsibility

Quality of Materials

Use of Standards / Specifications

Quality Control (QC) and Quality Assurance (QA)

Contract close-up

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Prof. Rizwan U. Farooqui, Ph.D.

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Inspection / Tests

Contract Schedule

Layout of works / surveys

Access to site

Facilities by contractors

Facilities by employer

Environmental protection

Lump Sum price breakdown

Measurement / payment

63

Specification shall be generic and shall not include

references to brand names, model numbers,
catalogue numbers or similar classifications.

General items

Care and handling of water including dewatering

Earthwork

Sand and aggregates

Cement Concrete in general

Blinding concrete

Reinforced concrete

Reinforcement
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Stone pitching

Canal lining

Bored cast-in-situ RC piles

Brickwork in general

Gate equipment

Miscellaneous works

Reinforced cement concrete railing

Drainage under concrete lining of canal

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QUESTIONS?

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Prof. Rizwan U. Farooqui, Ph.D.

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