Construction Contracts:

Construction works are mainly carried out through a written contract. A contract determines the
rights and obligations of the respective parties, through the technical, financial and legal
provisions of the contract. A contract determines the expected actions from the respective
contracting parties. The contracting parties are bound to each other for a certain period of time by
a unique and exclusive relationship they have created for their mutual benefit, which gives them
both obligations which they have agreed to abide by for a shared advantage.

Like any other groups of contract, construction contracts, are also supposed to fulfill the
following primary elements:

 Mutual Agreement & Genuine Intentions

 Offer and Acceptance

 Capacity to contract

 Consideration in a contract

 Lawful object

 Contract time

Mutual Agreement (consent) is the basic requirement which is normally expressed by the
contracting parties during the offer and acceptance process, as offer and acceptance of the offer
are natural expressions of mutual agreement.

Capacity to contract refers to the competency of the contracting party to make a valid and
enforceable contract. A person who is not under the age of minor, sane, and not drunkard, not
under legal control, etc has a freedom to enter into and make contracts.

Consideration: can be a promise to do some thing such that the result will be of value to the other
party, or else it is some thing of value given by one party to the other one, in exchange for the
valuable services rendered to it pursuant to the contract made. In contract law, consideration can
be any thing of value and the law usually is not concerned with the amount of value, as that is up
to the parties to bargain and reach in to terms.

Lawful object: The object of a contract must be lawful, for the law will not enforce a contract for
an illegitimate purpose.

Contract time: Time affects contract sum since most costs depend on time {cost of materials,
labor, equipment use, overhead costs etc}.

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Written contracts: Contracts need not necessarily be in writing to be valid, but they may need
to be in writing to be enforceable. Almost all construction projects however, require a written
contract as an oral contract is unsubstantial and difficult to prove entailing extensive
misunderstanding among the contracting parties.

Performance of Contract: Means fulfilling the respective obligations under the contract

Essentials of Contract validity:

 The parties to the contract must be competent and legally capable of playing their
intended part;

 The subject matter of the contract must be lawful and definite in respect of requirements
and duties of each party

 Proposal and acceptance

 Free consent of parties to the contract

Construction Law: As has been discussed earlier “Construction law” is a body of law that
deals with all legal matters relating to construction. Construction law builds upon general legal
principles and methodologies; it covers a wide range of legal issues including contract law,
bonds and bonding, guarantees, tendering, construction claims, dispute resolution and avoidance
and related consultancy contracts.

“Construction law” Affects Many participants in the construction industry, including:

 Financial institutions,
 Architects/Consultants,

 Builders/Contractors,

 Engineers,

 Construction workers,

 Employers etc.

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 Construction Law International Experience: Case Study: Country-Vietnam
This Law was passed on 26 November 2003.

Having= {9 Chapters: 121 Articles}

CHAPTER I: General provisions

CHAPTER II: Construction Master Planning

CHAPTER III: Investment Projects for Construction of Works

CHAPTER IV: Construction Survey and Design

CHAPTER V: Construction of Works

CHAPTER VI: Selection of Contractors and Construction Contracts

CHAPTER VII: State Administration of Construction

CHAPTER VIII: Commendations and Rewards and Dealing with Breaches

CHAPTER IX: Implementing Provisions

Article 1 Governing scope

Rights & Obligations of individuals/organization investing on sector

Article 2 Applicable entities

Both Foreign & Domestic stakeholders

Article 3 Interpretation of terms

Construction activities, Construction standards design, boundary, etc

Article 4 Fundamental principles in construction activities

Compliance with construction regulations and construction standards;

Ensure that works are built in accordance with master plans

Ensure quality, schedule and safety of construction works

Ensure synchronous construction of each building works, etc

Article 5 Types and levels of construction works

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Construction works shall be classified into types and levels of works

Types of construction shall be fixed in accordance with their use &function.

Article 6 Construction regulations and construction standards

The system of construction regulations &standards must be promulgated

Construction activities must comply with construction regulations & standards

Article 7 Capability for construction practice, construction activities

With respect to individuals participating in construction activities; practice of individuals shall be

determined in accordance with grades on the basis of professional levels, Capability for
construction activities of organizations

Article 8 Supervision of implementation of laws on construction

Article 9 Policy of encouragement in construction activities

Article 10 Conduct which is strictly prohibited in construction activities

Constructing works in areas in which construction is prohibited; Construction works contrary to

master plans or in violation of construction boundaries Construction works which fail to comply
with construction regulations and construction standards

Construction Survey and Design

Article 46 Construction survey

 Shall comprise survey of topography, geology, hydro-geological survey, survey & other
surveying work which services construction activities.

 May only be carried out pursuant to approved surveying tasks.

 It must be truthful, objective, and correctly reflect the realities.

Article 50 Rights and obligations of investors in construction of works during construction

survey

 To carry out themselves the construction survey when they satisfy the conditions on
capability for construction survey;
 To negotiate, sign and supervise implementation of a contract;

 To change surveying tasks upon reasonable request from the designer;

Article 52 Design for Construction of Works

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 It must conform with the construction master plan, the landscape, natural conditions and
the regulations on architecture;

 The foundations of the works must be strong and must not sink, crack or be deformed
outside the permissible limits, thereby affecting the life span of the works and of adjacent
works.

 The contents of the design for construction of works must comply with the requirements
for each design step, must satisfy the requirements on use function, and must ensure a
beautiful design and a reasonable prime cost.

 It must be safe and economical; it must comply with the applicable construction
regulations and construction standards, the standards on fire fighting and prevention and
explosion prevention, and the standards on protection of the environment and other
relevant standards.

 The design of public works must comply with standards on design to assist disabled
persons.

 The contents of the design for construction of works must comply with the requirements
for each design step, must satisfy the requirements on use function, and must ensure a
beautiful design and a reasonable prime cost.

 Architecture must be in conformity with the habits and customs and cultural and social
conditions of each area and each locality;

 Safety of persons if there is an incident; safe, favorable and effective conditions for fire
prevention and rescue operations; distance between buildings; use of fire-proof materials
and facilities in order to minimize loss to adjacent buildings and the surrounding
environment in the event that a fire occurs;

 Favorable, hygienic and healthy conditions for users of the works;

 Maximum use of favorable natural conditions and minimization of unfavorable natural

conditions in order to save energy.

Article 53 Contents of design for construction of works

 Use function;
 Architectural plan;

 Life span of works;

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  Structural and technical plan;

 Plan for fire fighting and prevention and for explosion prevention;

 Plan for use of energy to achieve high productivity;

 Solutions on protection of the environment;

 Total estimated budget and estimated costs of construction in conformity with each step
of design of construction.

Article 55 Competitions to select architectural designs for construction works

 A competition must be held to select an architectural design

 The Government shall provide detailed regulations on competitions to select architectural
designs for construction works.

 Organizations which undertake design for construction of works must satisfy the
following conditions:

 Be registered for the activity of design for construction of works;

 Have full capability for the activity of design for construction of works;

CHAPTER V Construction of Works

Prior to commencing construction work, an investor must have a construction permit,

Depending on the nature and scale of works, an application file for a construction permit shall
include the following basic documents:

(a) Application for issuance of a construction permit;

(b) Design drawings for construction of the works;

(c) Documents on land use right in accordance with the laws on land.

Article 72 Conditions for commencement of construction

 There is a surface area for construction ready to be handed over,

 There is a construction permit

 There are approved design drawings for execution

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  There is a construction contract. Etc.

Article 82 Warranty of constructed works

 Contractors for execution of building works shall be responsible to provide a warranty for
the constructed works, and contractors for procurement of equipment for works shall be
responsible to provide a warranty for such equipment.
 The warranty period shall be fixed depending on the type and level of works.

 The Government shall provide detailed regulations on the warranty period of constructed
works.

Article 83 Maintenance of construction works

 Maintenance of works shall be implemented in accordance with the directions and rules
of the designer and the manufacturer.
 The maintenance of works shall be fixed depending on the type and level of works.

 The Government shall provide detailed regulations on maintenance of works.

Article 87 Supervision of Execution of Building Works

 During the process of execution of building works, all construction works shall be subject
to the supervisory regime.

 Supervision of execution of building works shall be carried out in order to monitor and
inspect quality, volumes, schedule, labour safety and environmental hygiene during
execution of building works.

 Investors in construction of works shall hire a consultant supervisor or may they

themselves carry out supervisory work when they satisfy the conditions on capability for
supervision of execution of building works.

 Any individual undertaking supervision of execution of building works must have a

practicing certificate for supervision of execution of building works appropriate for the
type and level of works.

Article 88:

Requirements Applicable to supervision

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Supervision of execution of building works must satisfy the following requirements:

 It must be conducted immediately as from the date of commencement

 It must be conducted regularly and continuously during the process

 Must be based on the approved design and on the applicable construction regulations and
construction standards.

 Must be honest, objective and not conducted with a hidden motive.

Article 91 Special building works

Special building works shall comprise:

1. State secret works;

2. Works constructed pursuant to an emergency order;

3. Temporary works.

Article 96 Selection of contractors in construction activities

The selection of contractors must ensure the following:

 Satisfy effectiveness of the investment project for construction of works;

 The selected contractor must have full capability for construction activities and full capability
for the relevant construction practice,

 The tender price of the contractor must be reasonable;

 Selection of contractors must be conducted objectively, publicly, impartially and

transparently.

Article 97 Forms of selection of contractors in construction activities

Depending on:

 The scale,
 Nature and

 Funding source of the particular construction works,

The contractors may be selected by the following forms:

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  Open tendering, limited tendering;
 Appointment of a contractor;

 Selection of a contractor for architectural design for construction of works

Article 98 Requirements applicable to tendering in construction activities

 The objective of tendering in construction activities for selection of an appropriate

contractor shall be to ensure competitiveness.
 Tendering shall only take place after the funding source to perform the work has been
fixed.

 A successful tenderer must have a technical plan, optimal technology and a reasonable
tender price.

 Domestic tenderers participating in international tenders shall be entitled to preferential

treatment in accordance with regulations

Article 99 Open tendering in construction activities

 O.T. shall be conducted in order to select a contractor for execution of works, & the
number of participating tenderers shall be unlimited
 The party calling for tenders must widely announce on the mass media the conditions &
time-limits for participation in the tendering

 A tenderer may only participate in a tender if it has full capability for construction
activities & full capability for construction practice

Article104 Rights and obligations of parties calling for tenders

A party calling for tenders shall have the following rights:

 To require tenderers to provide necessary information;

 Select a successful tenderer in accordance with laws on tendering;

 Other rights in accordance with law.

A party calling for tenders shall have the following obligations:

 To prepare consistent tender invitation documents;

 To notify tenderers of any necessary requests and to implement correctly notified items;

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 To check the selected tenderer regarding its capability for construction activities, practice, &
financial status

 To provide in a timely manner, the capital funds required in order that the work is able to be
done on schedule;

 To compensate for loss caused to tenderers when such loss was the fault of the party calling
for tenders;

 To be responsible before the law for any act of making illegal arrangements:

 In tendering,

 Of buying or selling a tender,

 Of disclosing information during tender consideration, or

 Of collusion with contractors or

 Any other breach of the laws on tendering;

Article105 Rights of tenderers

Tenderers shall have the following rights:

 To participate in tendering as an independent contractor or in partnership with other

contractors;
 To request that information be provided and to conduct a site survey in order to prepare a
tender;

 To lodge a complaint upon discovery of a breach of the regulations on selection of

contractors;

 Other rights in accordance with law.

Tenderers shall have the following obligations:

 To prepare tenders which are truthful and accurate and which satisfy the requirements set out
in the tender invitation documents;

 To be responsible before the law for any conduct in breach Law;

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 To compensate for loss caused by any conduct in breach which results in extension of the
tendering or in re-tendering;

 To perform tender guarantees

Article108 Basic contents of contracts in construction activities

Contracts in construction activities shall be prepared in writing and shall comply with the
provisions of this Law & other relevant laws.

A contract in construction activities shall contain:

 Contents of the work to be performed;

 Quality and other technical requirements of the work;

 Duration and schedule for implementation;

 Conditions on check and acceptance and hand-over;

 Price and method of payment;

 Warranty period;

 Liability for contractual breach;

 Other agreements depending on each particular type of contract;

 Language to be used in the contract

Article109 Changes to Contracts in construction Activities

A contract in construction activities may only be changed with permission from the person
having made the investment decision in the following circumstances:

 When the State changes the relevant policies;

 In a case of force majeure

Article 110 Resolution of Contractual disputes in construction Activities

If a contractual dispute arises in construction activities, the parties shall be responsible to resolve
it by negotiation. If the parties are not able to negotiate a settlement, the dispute shall be resolved
by: Conciliation or Arbitration, or A court shall resolve the dispute in accordance with law.

Article120 Dealing with Breaches

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Any person in breach of the laws on construction and other relevant laws shall: Depending on the
nature & seriousness of the breach, be:

 Disciplined,
 Be subject to Administrative Penalty or

 Be subject to Criminal Prosecution;

If such person causes loss and damage to the interests of the State or to the lawful rights and
interests of organizations and individuals, compensation shall be payable.

Any construction works which are:

 Contrary to construction master plans,

 Were built without a construction permit, While the law requires, or

 Are incorrect in terms of the provisions of an issued permit

Must be completely dismantled or the section in breach must be dismantled in accordance with
regulations.

Construction Law and Contracts in Ethiopian Context

The “Civil Code of The Empire of Ethiopia Proclamation No 165 of 1960” Book IV under its
Title “XII –Contracts in General” describes contracts including construction contracts as part of
its law in its third chapter.

As per the cited Code “Contracts in General” are defined in Article 1675-1676: as

A contract is an agreement whereby two or more persons as between themselves create, vary or
extinguish obligation of a proprietary nature”. The provision shall apply to contracts regardless
of the nature thereof and the parties thereto.

Art. 1731 further states that “The provision of a contract lawfully formed shall be binding on the
parties as though they were law”: That means when parties make a contract agreement; by
default legally binding accord is concluded between them.

“Elements of a valid contract” are also covered under the code in Art. 1678-1686 as:

 The parties are capable of contracting and give their consent sustainable at law;

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  The object of the contract is sufficiently defined and is possible and lawful;

 The contract is made in the form prescribed by law, if any

A contract shall depend on the consent of the parties who define the object of their undertakings
and agree to be bound thereby.

Invalidation of contracts is also discussed in Art.1696-1707 of the Ethiopian Code as:

A contract may be invalidated where a party gave his consent by mistake or under deceit or
duress (pressure). The party who appeal to his mistake shall establish that he would not have
entered into the contract, had he known the truth.

A contract may be invalidated on the ground of mistake where:

 Such mistake relates to an element of the contract which the parties deem to be fundamental
or which is fundamental;

 Such mistake relates to the identity or qualifications of the other party and such identity or
qualifications are a fundamental element of the contract;

 Arithmetical mistakes in a contract shall not affect its validity and shall be corrected.

A contract may be invalidated on the ground of fraud where:

 A party resorts to deceitful practices so that the other party would not have entered in to a
contract, had he not be deceived;

 A contracting party who has been deceived by a third party shall be bound by the contract
unless the other contracting party knew or should have known of the fraud on the making
of the contract and took advantage thereof;

A contract may be invalidated on the ground of duress where:

 The acts of the duress led a party to believe that he, one of his ascendants, or descendants
were threatened with a serious and imminent danger to the life, honor or property

The Code discusses about Contents of Contract, and object in Article 1713-1718 as:

 The parties shall be bound by the terms of the contract;

 A contract shall be of no effect where the obligations of the parties or of one of them
cannot be determined with sufficient precision;

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  Unlawful or immoral object: A contract shall be of no effect where the obligations of the
parties or one of them are unlawful or immoral.

Art.1732 Interpretation of contracts: Contracts shall be interpreted in accordance with good

faith, having regard to the loyalty and confidence which should exist between the parties
according to business practices;

Art. 1793: Cases of force majeure: The following occurrences may, according to
circumstances, constitute the cases of force majeure:

 An official prohibition preventing the performance of the contract;

 A natural catastrophe such as an earth quake, lightening, or floods;

 International or civil war;

 The death or a serious accident or unexpected serious illness of the defaulter

Contract of Works & Labour Relating to Immoveable

(Construction Contracts), Ethiopian Context

Art. 3019-3023: The provisions of this chapter (chapter 3 Contract of works & labour
relating to immoveable) shall apply to contracts of work and labor relating to work to be done
in connection with the building, repair or installation of immoveable.

 The contract shall be complete where the parties have agreed on the work to be done and
on the price.

 The works to be done may be described by means of a plan, scheme or other documents.
The contractor shall in such cases comply with the indications given in such documents.

 Prior to undertaking a work, the contractor shall, whenever this appears reasonable,
satisfy himself that the client agrees to the work to be undertaken.

 Contracts relating to immoveable shall be executed in writing as per Art.1723:

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Rights of client to check quality, progress & payment issues are cited in Art. 3027-3030 as:

The client may at any time require that the amounts appearing in the accounts of the contractor to
be checked by experts.

 The client may at any time cause to be examined by experts the progress achieved in the
work,

 The quality of the materials used and the work completed.

 The contractor may require that part of the price corresponding to the work completed to
be paid to him on completion of such works,

Rights of client for supplementary works/omission are discussed in Art.3031-3034 as:

 The client may demand that alterations be made in the work as originally planned where such
alterations can technically be made and are not such as to impair the solidity of the work.

 The client may require a reduction in the price as originally agreed where the alterations
required by him reduce the expenses of the contractor.

 The contractor may require an increase in price and his remuneration as originally agreed,
where the alterations required by the client increase his expense, work or liability.

 Where the parties do not agree, such reduction or increase shall be settled by arbitrators
appointed by the parties or, failing such, by courts.

Rights of the contractor for refusal of Variation works:

The aforementioned article also reveals the following points as valid grounds for refusal of
variation on the contractors’ side:

 The contractor may refuse the alterations required by the client where such alterations
affect plans, schemes or other documents on which the parties had agreed.

 The contractor may also refuse the alterations where they are of such a nature or
importance that they constitute a work absolutely different to the agreed work.

The work shall be deemed to be absolutely different to the agreed work where it implies:

 An alteration exceeding by twenty percent the value at which the original work was
estimated.

Where it appears necessary for technical reasons to make alterations in the work as originally
agreed, the contractor shall, except in urgent cases, give notice thereof to the client.

Procedures for Termination of contracts are also addressed in Art. 3035-3038 of the Ethiopian
Civil Code;

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Art.3039 Warranty due by contractor:

 The contractor shall guarantee during ten years from its delivery the proper execution and
the solidity of the work done by him;

 He shall be liable during this period for such loss or deterioration of the work as is due to
a defect in its execution or to the nature of the soil on which the work has been done;

 Any provision shortening the period cited above or excluding the warranty due by the
contractor shall be of no effect;

Administrative Contract

Art. 3132 A contract shall be deemed as an administrative contract when:

 It is connected with an activity of the public service and implies a permanent participation of
the party contracting with the administrative authorities in execution of such
contracts/services.

 Administrative contract formation and other provisions are codified from Article 3134-3171
of the Ethiopian Civil Code.

Contracts made with a public administration shall be in writing as per Art.1724:

 Any contract binding the Government or a public administration shall be in writing and
registered with a court, public administration or notary.

When performing An Administrative Contract, the officer shall follow:

 Model specifications,

 General clauses & Conditions and

 Common directives. These may be drawn up by each interested Administrative Authority.

These Procedures are briefed as of below:

 Model specifications need to constitute standard specifications, formulated in advance

and in general way, for the concession of public services;

 General clauses and conditions have to fix the provisions applicable to all or some of the
contracts concluded by specified administrative authority.

 Common directives shall fix the technical provisions applicable to all contracts relating to
a given kind of works or supplies

The invitation to bid is covered in “Art. 3148-3150 as Notice of allocation by tender”

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The allocation which is to take place shall be notified to the public in the manner prescribed by
administrative regulations, in the manner which appears the most appropriate.

The Notice of allocation shall show:

 The place where the specifications may be consulted; and

 The authorities who are to proceed to the allocation; and

 The time prescribed for sending in the tenders; and

 The place, day and hour fixed for the allocation; and

 The amount of security or the other guarantees required from the tenders

 The notice of allocation shall be published, except in cases of urgency, not less than one
month before the expiration of the time prescribed for sending in the tenders.

Art 3152-3164 Specification, allocation

 The specification shall contain an indication of the conditions required from the
tenderers. The administrative authorities may impose in such specifications all the
conditions relating to technical and professional qualifications which they consider
desirable. They shall specify, where appropriate, the qualifications which are required for
admission to tender and the eliminating tests to which the projects or samples submitted
will be subjected;

 The contractors who intend to present themselves as tenderers shall deposit in the place
indicated and within the time specified by the specifications, a deceleration of their
intention to tender and their tender. Such intention shall indicate the name, qualification
and address of the candidate.

 The tender shall contain an offer of the price and the undertakings of the candidate. It
shall be deposited in a sealed envelope according to the conditions fixed in the
specification.

 The proceedings of allocation shall be held in public. The envelopes containing the
tenders shall be opened in public and the tenders shall be readout.

 The results of the allocation shall be recorded in a minute which shall state all the
circumstances of the allocation.

 The office of allocation shall declare the tenderer who has made the tender which is most
advantageous for the administrative authorities to be provisionally the successful
tenderer. For this purpose the office shall take in to account the price offered and all
modalities of the tender in conformity with the specifications.

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  The administrative authorities, who have caused the allocation to be made, May in their
discretion, approve or refuse to approve the result thereof. The contract shall be complete
where such approval is given.

Contract of Public Works:

As per Article 3244 (1) of the Ethiopian Civil Code:

“A contract of public works is a contract whereby a person, the contractor, binds himself in favor
of an administrative authority to construct, maintain or repair a public work in consideration of a
price”.

Formation of contract, normal performance of contract, non performance of contract and

assignment of or giving the contract security is detailed in the Articles 3246 through 3296.

Provisional and Final Acceptance of public works are cited in Art.3274 -3282

 A provisional Acceptance is a joint ascertainment of the works made immediately after

the completion of the works;

 A provisional acceptance shall not pardon the contractor from any defect which may
appear after it is made; indemnify

 It shall mark the beginning of the period of warranty at the expiration of which the final
acceptance is made;

 Destructions or damage resulting from force majeure shall be borne by the contractor so
long as the works have not been provisionally accepted by the administrative authorities.

 The period of warranty is a period during which the administrative authorities have the
possibility of controlling the proper performance of the works before their final
acceptance. Its duration shall be fixed by the contract;

 During the period of warranty, the contractor shall maintain the works. He shall be liable
for defects and shall repair them when he receives from the administrative authorities a
requisition order to this effect;

 The final acceptance is the act whereby the administrative authorities definitively
appropriate the works after having ascertained that the contractor has performed his
obligations and their entirety. It shall be made jointly and a record shall be drawn up. The
final acceptance shall release the contractor from his obligation to maintain the works;

 Unless otherwise provided, the contractor shall be liable to the administrative authorities
for the defects of construction of the works during ten years from the day on which they
have entered into possession of the works.

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 Art. 3283 Unilateral modification of contracts:

 The administrative authorities may, against payment of an additional remuneration,

require the contractor to perform works which were not mentioned in the contract.

 They may not, however, require him to perform a work which by its object:

 Would be totally different to the work mentioned in the contract; or

 Which would have no relation to such works, or

 A work under conditions entirely different to those which have been mentioned in the
contract.

Art. 3285 Rights of contractor:

 Unless otherwise provided in the contract, the contractor may cancel the contract where
the increase or reduction of the works as a whole required by the administrative
authorities involves a variation of more than one-sixth of the cost mentioned in the
contract.

 In case of reduction of the works as a whole, he shall be entitled to compensation equal to

the loss suffered by him and profit of which he is deprived by reason of variation of the
contract.

Art. 3286 Unforeseen difficulties:

 Where, in the performance of his contract, the contractor encounters material difficulties
of an absolutely abnormal nature, unforeseeable at the time of the conclusion of the
contract, he may require that the contract be revised.

 The administrative authorities with whom he has contacted shall in such case assume at
their charge a part of the exceptional expenses due to such unforeseen difficulties, unless
they prefer to cancel the contract.

Art. 3287 Duty to consult administrative authorities

 Where the difficulty compels the contractor to perform a supplementary work not
mentioned in the contract, the contractor may initiate such work only after having
obtained a requisition order from the administrative authorities enjoying him to perform
such work.

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  However, where the work is absolutely necessary for the performance of the contract and
it is of an urgent nature, the contractor may and shall initiate it even in the absence of a
requisition order.

 In such case, he shall be entitled to compensation in accordance with the provisions of

this code relating to the voluntary management of another person’s affairs (Art. 2257-
2265).

Federal Law

The Federal Laws are categorized into the traditional classification of substantive and procedural
laws. The distinction is only a matter of convenience. In the substantive law category, the
provisions of the various codes and other piecemeal legislations are included.

The Construction Permit Guideline of Addis Ababa City Administration

Pursuant to the City’s Code No.17/1997, The Addis Ababa City Administration Infrastructure
and Construction Works Authority has drafted a standard guideline with respect to construction
permit, to be applied within the city, issued in the month of “Yekatit, 1997”.

The cited guideline is structured in to 10 main sections.

Section I: General Description

Under this section topics like scope, definition, interpretation etc are covered.

Section II: Preconditions & Procedures for obtaining construction permit

Some of the salient points covered under this topic include:

 Every design should ensure the safety of the beneficiaries and neighboring community;

 The compulsoriness of having a construction permit prior to commencing any

construction activity within the City;

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  Every design to be submitted for approval should ensure that it is made in accordance to
the acceptable codes, standards and regulations & also needs to be as descriptive as
possible

 Designs to be submitted for approval should not contradict with master plan, LDPs etc
and appropriate care should be taken to maintain minimum requirements & standards like
spacing set for boundaries, adjacent structures etc;

Cancellation of construction Permit:

 As per the cited guideline, once a construction permit is given it would be valid for a
period of 3 years (for small to medium construction works) & 5 years for complex
projects.

 Notwithstanding this fact, if the developer is not commencing the agreed project within
1year period (1 and half year for complex) or if the construction work is completely
stopped for successive six months then the given construction permit shall be cancelled.

Section III: Standards for Design & Construction

Design Requirements

 Site plan should be presented as descriptive as possible, showing all boundaries,

neighboring facilities, spacing, accesses, contour plan, proposal for location of septic
tanks, solid waste containers, etc and indicating the North direction as well.

 Dimensions indicated on proposed site plans should not contradict with the dimensions
endorsed for the same on the Title deeds, Metric system (SI-system) should be used for
dimensioning;

 Complete Architectural Designs should be submitted { Floor plan, Elevations, Sections

and appropriate details where required etc}

 Complete Structural Design {Slab, beam, column, foundation/footing, retaining wall,

roof truss, soil investigation report etc with sufficient details like statical calculation and
detailed bar schedules for reinforcing these structures}

 Complete Electrical & Sanitary Designs, Fire fighting systems etc

 Engineering estimation of the project in concern etc.

Design Standards

Standards to be followed for site plan, fence, room sizes, room height, openings, circulation area,
lifts, consideration for disabled groups in public buildings, land use standard, car parking,
sanitary standard, emergency way-out, etc are addressed

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Construction Standards

 Projects with a total cost exceeding 15 million and obliged to be constructed by

GC2/BC2 or GC1/BC1 or buildings with G+5 and above must use steel formwork and
steel scaffolding instead of timber/eucalyptus poles.

 The developer should take appropriate action to minimize possible disruptions of the
adjacent community in connection with his activity (construction by-products, littering
materials etc);

 Construction materials dumped out side the boundary of the developer (sands, stone etc)
should be transported to its territory with in 6hrs time unless a special permission is
issued;

Section IV Renovation and Demolition of structures

Generally covers about the procedures for renovations/demolition of wall, roof, fence etc

Section V Construction Supervision & Control

Pursuant to this guideline the office has the right to stop any construction work till appropriate
rectification is made provided that:

 The construction work was commenced with out legal construction permit

 Substantial service change/design change/ is made without prior approval

 There is a proof that the construction work is being carried out with incompetent
(unprofessional) body. Projects costing more than 2.5 million need to be executed by
registered contractors only, as per this guideline;

 If there is evidence that adjacent structures are endangered, etc.

 If the supervisors deployed by the authority are prohibited from supervising the project
etc,

Projects to be stopped within 15 days of warning period:

 Expansion works or changes in room height without prior permit

 Executing construction with a permit the period of which is already expired

 Unavailability of copies of important documents, like construction permit, on site etc.

The guideline clearly states that “Projects up to 2.5 Million costs may be executed by hiring
qualified professionals, but those with more than 2.5 million should be carried out by registered
contractors only”.

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 Section VI Consultants’ category and responsibility

Architectural Design Consultancy

Class Project cost Minimum Consulting firms’ Minimum Professional for designing
category

1 >50 Million CAE I or CA I PPAR, PAR

2 Up to 50 Million CAE II or CA II PPAR, PAR

3 Up to 30 Million CAE III or CA III PPAR, PAR

4 Up to 20 Million CAE IV or CA IV PPAR, PAR

5 Up to 10 Million CAE V or CA V PPAR, PAR, GAR

6 Up to 5 Million PPAR PPAR, PAR, GAR

7 Up to 2 Million PPAR,

8 Up to 1 Million PPAR, PAR,

9 Up to 500,000 PPAR, PAR, GAR

10 Up to 250,000 PPAR, PAR, GAR, PTP, PUP

11 Up to 100,000 PPAR, PAR, GAR, PTP, PUP GUP,

GTP, AUE, AE, EA

Structural Design Consultancy

Class Project cost Minimum Consulting firms’ Minimum Professional for designing
category

1 >30 Million CAE I or CE I PPE, PE, PPST, PST

2 Up to 30 Million CAE II or CE II PPE, PE, PPST, PST

3 Up to 20 Million CAE III or CE III PPE, PE, PPST, PST

4 Up to 15 Million CAE IV or CE IV PPE, PE, PPST, PST

5 Up to 7 Million CAE V or CE V PPE, PE, PPST, PST, GCE

6 Up to 5 Million PPE, PPST PPE, PE, PPST, PST, GCE

7 Up to 2 Million PPST, PPE

8 Up to 1 Million PPST, PPE, PE, PST

9 Up to 500,000 PPST, PPE, PE, PST, GCE

10 Up to 250,000 PPST, PPE, PE, PST, GCE

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 11 Up to 100,000 PPST, PPE, PE, PST, GCE

Sanitary Design Consultancy

Class Project cost Minimum Consulting firms’ Minimum Professional for

category designing
1 >50 Million CAE I or CSN I PPSN, PSN
2 Up to 50 Million CAE II or CSN II PPSN, PSN, PE
3 Up to 30 Million CAE III or CSN III PPSN, PSN, PE, GSN
4 Up to 20 Million PPSN PPSN, PSN, PE, GSN, GCE
5 Up to 10 Million PPSN
6 Up to 5 Million PPSN, PSN, PE
7 Up to 2 Million PPSN, PSN, PE, GCE

ETHIOPIAN BUILDING PROCLAMATION, PROCLAMATION NO 624/2009

It has been found necessary to determine the minimum national standard for the
construction or modification of buildings or alteration of their use in order to ensure public
health and safety.
Accordingly, the “Ethiopian Building Proclamation No. 624/2009”is hereby proclaimed.
This proclamation is subdivided in to 7 parts:
 Part I- General
 Part-II- Administration
 Part-III- Land Use, Related Studies & Design
 Part-IV-Water Supply & Sanitation
 Part-V-Fire Protection & Fire Fighting Installation
 Part-VI- Culpable Infringements of Building Rules
 Part-VII- Miscellaneous Provisions

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 1. PART ONE: GENERAL
2. Definitions
Pursuant to this Proclamation:
 “Category ‘A’ building” means a one story building with a span of 7 meters or less between
two reinforced concrete, steel or other structural frames or any dwelling house not exceeding
two stories;
 “Category ‘B’ building” means a building with a span of more than 7 meters between two
reinforced concrete, steel or other structural frames or of two or more stories not covered in
category ‘C’ or a real estate development of category ‘A’;
 “Category ‘C’ building” means any public or institutional building, factory or workshop
building or any building with a height of more than 12 meters;
 “Dangerous building” means a building that is structurally unsafe or constitutes a special fire
hazard or health risk;
3. Scope of Application
This Proclamation shall apply to:
 Urban centers that have 10,000 or more dwellers;
 Other urban centers that have less than 10,000 dwellers and to which this Proclamation shall
be applicable;
 Public buildings or buildings which could be used for industrial or commercial scale
agricultural occupancy or real-estate outside of urban centers.

This Proclamation may not apply to any building:

 Completed on or before the effective date of this Proclamation;

 Which is under construction with a building permit issued before the effective date of this
Proclamation;
 Exempted by the decision of the Council of Ministers for reasons related with national
security and other purposes.

PART TWO: ADMINISTRATION

4. Submission of Application and Plans

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Any person intending to carry out construction shall submit an application & the application to
carry out construction shall be made on an application form prepared & shall consist of a design
and report. The applicant shall submit proof of possession rights to the land or property on which
the construction will take place.

5. Planning Consent

Any person intending to carry out construction shall secure a planning consent prior to
submitting application for construction permit. After having received an application for a
planning consent a building officer shall grant a written declaration for compliance or non-
compliance with the urban planning of the urban center.
6. Approval of Plans
A building officer shall check submitted plan documents to ensure compliance with the
provisions of this Proclamation and other laws. Approval of plans shall not be withheld on
account of requirements not included in this Proclamation or other laws.
Approved plans shall be stamped “APPROVED” and shall bear a registration number and date of
approval and shall be signed by a building officer.
Application forms submitted with approved plans shall be stamped “APPROVED” in the
appropriate space provided & shall bear a registration number and date of approval. Comments if
any, shall be entered on the form in the space provided and shall be signed by a building officer.
Upon approval, one set of application form and accompanying plan, shall be returned to the
applicant and the other set shall be retained by the urban administration.
 A copy of the signed and sealed application form and approved plans shall be
permanently displayed at the building site.
7. Plan Review Period

A building officer shall review documents submitted and approve or reject within the time limit.
The time limit shall be determined by Regulation to be issued for the implementation of this
Proclamation.

8. Rejection of Plans

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  Upon rejection of submitted plans a building officer shall state in brief which provision of
the law is not complied with, in the space provided on the application form.
 An application and plan rejected by a building officer shall be stamped “REJECTED”
and shall bear the date and signature of the building officer.
 Upon rejection of submitted plans a building officer shall return one copy of the duly
signed and sealed application form and the two copies of the duly signed and sealed plans
to the applicant and the urban administration shall retain one copy of the duly signed and
sealed application form.

9. Construction Permit
A plan which has been approved in accordance with Article 6 of this Proclamation shall
constitute a construction permit.

10. Validity Period of Plans

 The validity of approved plans shall expire after six months from the date of issuance
where construction work has not been started.
 The validity of approved plans with which construction work has been started within six
months from the date of issuance shall expire after five years from the date of issuance, if
the construction work has not been completed.
 Upon expiry of the validity period as set out above an application for extension of the
validity period of approved plans shall be submitted for re-approval of plans in
accordance with this Proclamation.

11. Building Officers

 Every urban administration shall appoint a building officer, with the required educational
and professional qualifications to enforce, on its behalf, the provisions of this
Proclamation and other laws.
 A building officer shall inspect all buildings under the territorial jurisdiction of the urban
administration to ascertain conformity with this Proclamation and other laws.

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  A building officer is empowered to order inspection of exempted buildings erected before
the effective date of this Proclamation and to order the demolition or rectification of such
buildings if public safety is at risk.
 Without prejudice to his criminal liability, the building officer shall bear civil liability for
any damage he causes to third parties in the course of implementing this Proclamation
and the regulation and directives issued there under as a result of his own fault.
 The city administration shall make good the damage incurred by third parties where such
act of the building officer is regarded as a professional fault. In such cases, the city
administration shall have the right to reimburse from the building officer to the extent it
has paid to third parties.

12. Delegation
A building officer may delegate another body or an approved person to carry out duties in
connection with review of plans for which he is incapable of undertaking fully or partially. The
delegation for review of plans may be extended to cover inspection duties.

13. Appeals
Each administration shall establish a board of appeal which shall have members with the relevant
qualification. The board shall have the power to hear, and decide on, decisions taken by building
officers regarding construction. The decision of the board on technical matters shall be final.

14. Non-compliance
 A Building officer may order a building constructed without approved plans to be
demolished, if the plans utilized to construct such building does not comply with the
provisions of this Proclamation or other laws.
 In the event that the owner of a building fails to comply with the order, the administration
may demolish the building and claim the incurred expenses from the owner.
 A building officer may order rectification works on parts of a building executed without
approved plans, and may suspend all works on such building until the owner complies
with the order.

15. Notice

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  A person who has an approved plan for construction of a building falling under category
“B” or “C” shall give notice to the concerned building officer indicating the time within
which the construction is to be carried out.
 A person who has received an order from a building officer to rectify certain works
carried out in contravention of approved plans shall give notice to the building officer in
writing on completion of such rectification work.

16. Inspection
An urban administration shall issue special identification badges to building officers and
inspection staff working under their supervision. Inspectors carrying badge shall be permitted
access to any building completed or under construction at any working hours. Inspectors may
issue stop orders, with regard to construction not conforming to this Proclamation or other laws.

17. Materials
A building officer may order defective materials intended for use and stored on site or
incorporated in the works, to be removed from the sits or the works. Use of improper materials
or exceptional cases of poor workmanship may be considered as grounds for rejection of certain
items or work. A building officer may require test certificates for materials which have been
incorporated in building works;

18. Occupancy Permit

A newly constructed category “C” building shall not be put to use before it has been inspected
for compliance with this Proclamation and a certificate of occupancy has been issued. A building
officer may provide occupancy permit for partially completed building provided safety is
ensured. Legal measures may be taken on any person occupying a category “C” building without
a valid occupancy certificate.

19. Plan Review Fees

When plans or other documents are required to be submitted for review, a plan review fee shall
be paid. Plan review fees shall be charged on the basis of total gross floor area of one unit of
each type in case of repetitive units. When rejected plans are re-submitted for approval,
additional plan review fee shall be charged, the rate of such fee shall be determined by
Regulation to be issued for the implementation of this Proclamation.

29
20. Plan Approval Fees
A building officer shall charge fees for the approval of plans relating to the erection, extensions
or alteration of buildings. Plan approval fees shall be charged on the basis of cumulative gross
floor area in case of repetitive floors of units.

21. Inspection Fees

For inspection visits a fee per visit shall be paid in accordance with the category of buildings.
22. Refund of Fees
A building officer may, upon a request in writing by the applicant, authorize the refund of fees
where services applied for are not rendered.
23. Fines
An urban administration may impose administrative fines on persons who violate the provisions
of this Proclamation. The payment of fines may not relief the offender from complying with the
requirements of this Proclamation and of additional legal measures to be taken by the urban
administration.

24. Temporary Constructions

Where an application is made to erect a building which the applicant has declared to be a
temporary building, the urban administration may grant provisional authorization to the
applicant to proceed with the erection of such building in accordance with this Proclamation and
other laws.

25. Alteration of Service, Extension, Repair or Demolition

 A building officer shall grant permission to proceed with alteration of service, extension,
repair or demolition of a building provided that it complies with the provisions of this
Proclamation. No person shall, at any time, during the course of or after demolition of a
building leave it in a condition dangerous to the public or any adjoining property.
 Prior written consent from the appropriate government organ shall be required before
repairing or extending buildings of historical value.

26. Employment of Registered Professionals

30
A person intending to erect a building shall employ a qualified registered professional for each
type of design required for the category of the building and retain their services for the purpose
of supervising the erection thereof. Upon completion of building works, a certificate of
completion signed by the registered professionals, shall be submitted to a building officer.
Any registered professional who has contracted to carry out the design work of category “A” and
“B” buildings shall produce guarantee for any damage resulting from any defective work due to
the design.

27. Employment of Registered Contractors

 A person intending to erect a building shall employ a registered contractor with the necessary
qualification for the category of building in question.
 Any contractor who has contracted to carry out category “A” and “B” buildings shall produce
a guarantee for any damage resulting from any defective work due or negligence.
 The form and the amount of the guarantee to be produced for each category of building shall
be determined by Regulation.

28. Responsibility of Contractors and Registered Professionals

 Without prejudice to his criminal liability, any registered professional, contractor or sub
contractor shall be liable for any damage he causes to his employer in accordance with the
provisions of the Civil Code due to his defective design or construction work.
 A contractor shall be responsible for the workmanship of the construction of a building or an
element of a building.

PART THREE: LAND USE, RELATED STUDIES AND DESIGNS

29. Land Use and Related Studies

A national, regional or an urban plan approved by federal, regional or urban administration shall
have precedence on aspects of land use and related studies stipulated in this Proclamation.

30. Designs
 Any building shall have designs required for the category it belongs.

31
 Any building or components thereof shall be designed according to acceptable building
design codes to ensure safety, conform and unconstrained services.
 Any building shall be designed and constructed in such a way that it ensures safety for
people, other construction and properties.

31. Precautionary Measures during Construction

 Any building shall be designed and constructed in such a way that it shall not impair the
safety of people moving around, other constructions and properties;
 The load from any newly constructed foundation shall not affect existing foundations, utility
lines or any other structure.

32. Site Operations

 In cases where danger or serious inconvenience to the public may ensue from the erection or
demolition of a building on any site, the urban administration may require that the owner of
the site, before such work is commenced, shall do all the necessary preventive works.
 Where construction materials or residues thereof are accumulated around a construction site,
the urban administration or designated organ may by written notice, order the owner of the
site to have the materials removed within the period specified in the notice.
 No person shall commence or continue the erection or demolition of any building unless
approved sanitary facilities are availed for all personnel employed for or in connection with
such work, at the site or, with the permission of the urban administration, at some other
place. The construction activity shall be interrupted till such facilities are provided.

33. Architecture
Any room or space shall have dimensions that shall ensure that such room or space is fit for the
purpose for which it is intended. The floor area of any dwelling unit may not be less than that
necessary to provide one habitable room and a separate room containing toilet facilities.
Any habitable room in any dwelling building or dwelling unit, or any bedroom in any building
used for residential or institutional occupancy shall, in addition to the provision of artificial
lighting, be provided with at least one opening for natural light. Any building, which is more
than 20 meters above the ground floor, shall be provided with a lift or other similar service.
3 4 . S t r u c t u re
Any building and any structural element or component thereof shall be designed to provide
strength, stability, serviceability and durability in accordance with accepted principles of

32
structural design. Such buildings may not exhibit signs of structural failure during their life span
under normal loading. Any building shall be designed and constructed in such a way that it shall
not impair the integrity of any other building or property.

35. Electrical installation

Electrical installation to buildings and materials used thereof shall comply with the
requirements of safety standards so that no danger associated with the electrical installations
exists.

PART FOUR: WATER SUPPLY AND SANITATION

36. Facilities for Physically Impaired Persons

 Any public building shall have a means of access suitable for use by physically
impaired persons, including those who are obliged to use wheelchairs and those who
are able to walk but unable to negotiate steps.
 Where toilet facilities are required in any building, as adequate number of such
facilities shall be made suitable for use by physically impaired persons and shall be
assessable to them.

37. Water Supply

 Any building intended for occupancy by people shall be provided with adequate water
supply. Such water supply shall have adequate distribution and storage system.
 Water supply systems to any building shall comply with health standards.
 Water supply systems to any building shall be accessible for inspection and testing.

38. Sewerage

Where in respect of any building a suitable means of sewage disposal is available, the owner
of such building shall provide a sewerage installation. Where there is not any suitable sewage
disposal in his vicinity he shall use any other acceptable means to discharge his waste water.
39. Control of Objectionable Discharge

33
No person may cause or permit sewage discharged from any sanitary fixture to enter any
water drain or constructed watercourse, river, stream, street or any other site. No person may
cause or permit any drainage water to enter a sewerage installation.

40. Industrial Effluent

Where a person has obtained approval to discharge into any drain any liquid or solid
matter, other than soil water or waste water, & where any additional drainage and other
installations including storage, pre-treatment and metering installations are required by the urban
administration as a condition of such approval, such person shall submit any plans and other
details of such installations required by the urban administration .

41. Non-Water Borne Means of Sanitary Disposal

Where water-bone sewage disposal is not available, other means of sewage disposal shall be
permitted by the urban administration or designated organ; provided however, that in the
case of chemical or pail closets an acceptable means shall be available for the removal and
disposal of sewage from such closets.

42. Storm Water Disposal

The owner of any site shall provide acceptable means for the control & disposal of storm
water that may run off from any earth works, building or pavement. The owner of any site shall
provide suitable means to absorb part of the run off water within the site.

43. Refuse Disposal

Any building, excluding dwelling house, in which refuse is generated, shall be provided with an
adequate storage area for refuse containers.

PART FIVE FIRE PROTECTION AND FIRE FIGHTING INSTALLATION

34
44. General Requirement

Any public building shall be designed and constructed in accordance with acceptable fire
protection design standards so that it becomes fire resistant and, if fire occurs, it minimizes
accident to its users and its surroundings.

45. Fire Fighting Installation

Any approved fire fighting installation may be connected to the water supply system of the urban
administration; provided, however, that the urban administration may, allow such fire
fighting installation to be connected to any approved alternative source of supply; or any source
of non potable water, where such water is not to be used for domestic or any other purpose
which might give rise to health hazard.

46. Supply of Water for Fire Protection

Water may not be taken from a supply system for use by any fire fighting installation, unless:
The use of such fire protection installation and water complies with any conditions prescribed
by the urban administration. The permission of the urban administration has been obtained
upon submitting an application for the supply of such water.

PART SIX: CULPABLE INFRINGEMENTS OF BUILDING RULES

47. Application of the Criminal Code

Offences committed by government officials and other civil servants who are entrusted with
the power of issuing construction work permits, or offences committed by registered
professionals, contractors or by building owners in contravention of the provisions of this
Proclamation shall be punishable in accordance with the provisions stipulated.
In spite of the provisions of this Article, the provisions of the General Part of the Criminal
Code relating to the commission of a crime and the sentencing thereof shall be applicable for
crimes specified herein.

48. Improper Granting of Work Permit

35
A building officer or any other person who is vested with the power of granting permit for
construction works intentionally:
 Grants construction work permit to a person who has no legal possession on the land on
which the building is to be constructed; or
 Grants construction work permit to a person whose documents supporting the application are
illegal or falsified; or
 Grants an occupancy permit to a person whose building design or the construction thereof is
not in compliance with the relevant plan of the urban center in which such a building is to be
constructed; is punishable with rigorous imprisonment from five years to ten years and a fine
not less than birr ten thousand and not exceeding fifty thousand birr.
 Where the crime specified above is committed negligently the penalty shall be imprisonment
from one year to five years and a fine not less than one thousand birr and not exceeding birr
five thousand.

49. Breach of Duty to Supervise

Any building officer or other public servant, who is entrusted with supervising a building,
intentionally refrains from stopping or causing the stoppage of the construction of a building the
illegality of which he knows or should have known shall be punishable with rigorous
imprisonment from five years up to ten years and with a fine not less than birr ten thousand and
not exceeding fifty thousand birr. Where the crime specified above is committed negligently, the
penalty shall be imprisonment from one year to five years and a fine not less than one thousand
birr and not exceeding birr five thousand.

50. Undue delay of Matters

A building officer or any other public servant vested with the power of the building officer, or
who is in charge, at any level, of issuing any document under his authority, with intent to
obtain an advantage, directly or indirectly, from any person interested in a matter brought to his
attention by reason of his responsibility, or to benefit or injure any other party interested in such
matter, fails, without good cause to decide on matters related to any construction work to which
specific period is set by Regulation to be issued for the implementation of this Proclamation, or
abuses the interested party contrary to law, or accepted office practices, is punishable with
simple imprisonment extending from six months to three years and a fine from birr five hundred
up to three thousand birr

51. Concealment of Facts and Making False Statements

36
Any public servant who is entrusted with the filing, keeping, or verifying or delivering of
documents related to the possession and use of land, as well as documents related to the
construction of buildings thereon, with intent to injure the rights or interests of an other, or to
procure for himself or to another undue advantage:
 Procures a false statement which is not certified in a document, or contrary to the fact
which is evidenced by such document; or
 Omits to declare or refrains from procuring a substantial fact contained in a document
which is capable of altering the decision to be rendered; is punishable from five years to
ten years and with a fine from birr ten thousand to twenty thousand.
Where such declaration or omission is committed by a public servant whose
professional knowledge or his responsibility permits him to understand the consequences of the
same, the penalty shall be from five years to fifteen years imprisonment and a fine from ten
thousand to fifty thousand birr.
Where the crime specified above is committed negligently, the penalty shall be imprisonment
from one year to five years and a fine from birr one thousand up to birr five thousand.

52. Unauthorized Practice

Any registered contractor or sub contractor who is found to have built a building the type of which
should not have been performed by the qualified level issued to him by the relevant body or a
person, without having any qualified license, is found to engage in construction the kind of which
should have be performed by qualification, is punishable with rigorous imprisonment from five
years up to ten years and with a fine from five thousand to ten thousand birr.

53. Use of Improper Materials or Defective Workmanship

Any registered contractor or sub contractor who is issued with a work permit by the relevant
authority: Performs a construction work with a low quality or below standard material in
contravention of the standard set or the accepted practice for such type of construction; or
Performs a construction work which causes damage as a result of his failure to rectify the
errors on the design or other contract documents which were easily detectable by a
professional of his kind, is punishable with rigorous imprisonment from five years up to ten
years and a fine from fifty thousand to hundred thousand birr.

Any owner of a building who:

37
 Causes the drawing up of the design or t he co ns tr uc ti on w or k of s u ch construction by
a person who is neither qualified nor authorized to perform such works; or.
 Makes use of low quality materials which are not acceptable for the type of construction in
question; or.
 Puts his building into a service to which an occupancy permit is not obtained or to a service
other than to which a permit is obtained from the relevant body, or
 Constructs or causes the construction of his building in any other manner which
endangers public safety; is punishable with imprisonment from five years to ten years and a
fine from birr twenty thousand to fifty thousand.
 Where the crimes specified above are committed negligently, the penalties shall be
imprisonment from one year to five years and a fine from birr one thousand up to birr five
thousand.

54. Breach the Duty of Proper Consultancy

Any registered professional who is involved in a construction work as a design or construction
consultant: Prepares the design or other relevant documents of a construction without having due
regard to the general safety regulations set forth for such specific work; or advises or permits a
contractor or a supplier to procure or use a cheaper or, unwarranted quality or different material
which is not acceptable by normal standards for the specific work, or relieves him of using a
specific material essential thereto; or approves a construction work capable of endangering
public safety or the life, health or person of others or the safety of the property of another; is
punishable with rigorous imprisonment from five to fifteen years or a fine from birr thirty
thousand up to fifty thousand.
Where the crime specified above is committed negligently, the penalty shall be imprisonment
from one year to five years and a fine from birr one thousand up to five thousand.

55. Forgery of Government or Public Documents

Any public servant with intent to obtain for himself or to procure to other undue
advantage or with intent to cause damage in any manner destroys, endangers falsifies, deletes,
or falsifies by modifying, deleting, or altering in whole or in part the terms or f i g u r e s o f
g o v e r n m e n t d o c u m e n t s , instruments related to public interest or similar instruments or
documents under his possession while he is carrying out his official responsibilities, is
punishable with rigorous imprisonment from five years to ten years and a fine from birr twenty
thousand to fifty thousand.
Where the crime is committed by a public servant officially entrusted with filing,
keeping documents specified above, or controlling the same, t h e p u n i s h m e n t s h a l l b e

38
r i g o r o u s imprisonment from five years to twenty five years and a fine from birr twenty
thousand up to birr fifty thousand. Where the crime specified in above of this Article is
committed negligently, the penalty shall be imprisonment from one year to five years and a
fine from birr one thousand up to birr five thousand.
56. Suspension of Professional Certificates or Work Permits
The certificate or the work permit of a registered professional or contractor who is found guilty
under this part of the law shall be suspended for a period from five years up to the maximum period
stipulated under the contravened provision.

Lists of “Ethiopian Building Code of Standards”:

The Ethiopian Ministry of Infrastructure (Works & Urban Development) has also prepared and
issued the following Building Code of standards and practices, readily available for market:

No Code No. Description Remarks

1 EBCS-1 Basis of Design and Actions on Structure 1995 G.C. Editions

2 EBCS-2 Structural Use of Concrete 1995 G.C. Editions

3 EBCS-3 Design of Steel Structure 1995 G.C. Editions

4 EBCS-4 Design of Composite Steel & Concrete Structure 1995 G.C. Editions

5 EBCS-5 Utilization of Timber 1995 G.C. Editions

6 EBCS-6 Design of Masonry Structures 1995 G.C. Editions

7 EBCS-7 Foundations 1995 G.C. Editions

8 EBCS-8 Design of Structures For Earth Quake Resistance 1995 G.C. Editions

9 EBCS-9 Plumbing Services of Building 1995 G.C. Editions

10 EBCS-10 Electrical Installation of Buildings 1995 G.C. Editions

11 EBCS-11 Ventilation & Air Conditioning of Buildings 1995 G.C. Editions

12 ESCP-1 Loading 1998 G.C. Editions

13 ESCP-2 Structural Use of Concrete 1998 G.C. Editions

14 ESCP-3 Foundations 1998 G.C. Editions

15 ESCP-1,2,3 Loading, Structural Use of Concrete & Foundations 1998 G.C. Editions

16 XXXXXX Limit State Design Aids 1991 G.C. Edition

39
Construction Conditions of Contracts in Ethiopia

Construction conditions of contract in practice are for national and international contractors. The
former Building and Transport Construction Design Authority (BaTCoDA) had adopted the
General conditions of Contract for Civil Engineering works from FIDIC.

 The Ministry of Works and Urban development (MoWUD) published “The Standard
Conditions of Contract for Construction of Civil Works Project in December 1994”

 The Public Procurement Agency’s (PPA’s) Standard Bidding Document, January 2006

 The FIDIC(Federation Internationale Des Ingenieurs –Conseils) condition of contract,

1987;

 The FIDIC Condition of Contract is for international Contracts;

Major Clauses of “The MoWUD” Standard Document

The document generally comprises of 75 clauses along with “Forms of Agreement &
Performance Bond;

 The first seven clauses deal about: Definitions, Duties of The Engineer, Assignments
,contract documents, and drawings;

 Clauses 8-33 cover about the General Obligations of Contractors & Employers;

 Clauses 34-50 discuss about: Labor, materials, workmanships, delays, maintenance &
defects;

 Clauses 51-59 describe about variation, Temporary works, measurements, provisional

sums, & Nominating subcontractors;

 Clauses 60-66 Address about payments, remedies and powers, special risks, and events
during frustrations;

 The remaining clauses 67-75 deal about settlement of disputes, Notice, Default of The
Employer, Legislation, and other matters;

40
The PPA’s Standard Bidding Document

In January 2006, The Public procurement Agency has prepared and publicised Standard Bidding
documents (SBDs) both for National competitive Bidding (NCB) as well as International
competitive Bidding (ICB). The two documents are substantially similar only with few
applicabilities like Effecting payments in a Currency other than Birr, and Application of
domestic preferences on the ICB document.

The sutability and limitations in usage of the PPA’s Document

This SBD for the Procurement of Works is suitable for use under Open National Tendering,
either with or without pre-qualification. It is also suitable for use under Restricted Tendering. An
alternative SBD is available for Open and Restricted International Tendering as explained above.

This Document can be used when the Procuring Entity intends to place either an
Admeasurements contract (with a bill of quantities) or a Lump Sum contract (with an activity
schedule). It is essential that the type of contract is specified in the Bid Data Sheet and Special
Conditions of Contract in Sections 2 and 8 of the Bidding Document.

Admeasurements contracts should be used for roads, buildings and other forms of construction,
where the works may not be well defined and quantities cannot be accurately determined and are
subject to change in quantity or specifications resulting from site conditions. Lump sum contracts
should be used for buildings and works, which are well defined and can be accurately quantified
prior to construction.

Scope and Value of the SBD

The SBD is suitable for a standard contract, where the works have been fully designed by or for
the Procuring Entity (Employer), prior to bidding and the Contractor will be responsible for
construction only.

It is suitable for works valued at up to US$10 million.

This SBD for the Procurement of Works is not suitable for the following situations:
 Complex works under US$10 million, such as large water treatment plants;
 Works over US$10 million;
 Works designed by the Contractor, including turnkey contracts.

41
For any of these requirements, the Procuring Entity should find an alternative, more appropriate
document, such as an appropriate FIDIC standard form of contract.

The SBD of PPA for Works Comprises of: Three (3) parts with Nine (9) sections:

 Part 1 Comprises the First 5 Sections

 Part 2 Comprises section 6 and

 Part 3 comprises Sections 7, 8 & 9

Accordingly, From part 1

 Section 1-ITB

 Section 2 BDS

 Section 3 Evaluation & Qualification Criteria

 Section 4 Bidding Forms

 Section 5 Eligible Countries

Part 2: Comprises of Schedule of Requirements:

A) Scope of Works

B) Technical Specifications

C) Drawings

D) Bill of Quantities/Activity Schedule

Part 3

 Section 7-GCC (General conditions of Contract)

 Section 8-SCC (Special Conditions of Contract)

 Section 9- Contract Forms

 Agreement

 Contract Security

 Performance Bond

 Advance Payment Security

42
Section 7-GCC (General Conditions of Contract) of PPA:

The GCC generally comprises of 62 clauses

 The first 26 clauses are denoted as “General” describing definition, interpretation,

insurances, risks, safety, disputes, etc;

 Clauses 27-32 are noted as “Time Control” stating about program, acceleration, delays
and early warnings;

 Clauses 33-36 are categorized as “Quality Control” discussing about identifying defects,
Tests, and correction of defects;

 Clauses 37-54 are grouped as “Cost Control” covering variations, payments,

compensation events, liquidated damages, Advance payments & Securities;

 The last clauses 55-62 denoted as “Finishing the Contract” covering topics related with
completion, taking over final accounts, terminations, and release from performance etc.

Major Clauses of “The FIDIC” Standard Document

The Fourth Edition of FIDIC was published in 1987, then reprinted in 1988 with Editorial
Amendments and again reprinted in 1992 with further Amendments.

It incorporates Part-I and Part-II Documents

Part I of FIDIC: “Conditions of Contract for Works of Civil Engineering Constructions”

Contain: The General Conditions with Forms of Tender and Agreement;

Generally comprises of 72 Clauses;

 The first five clauses of FIDIC document focus on definition and interpretation, the role of
Engineer/his representative, subcontracting and about contract documents;

 Clauses 8-33 specify about General Obligations of Employer & Contractors;

 Clauses 34-40 describe about labor, materials, plants, workmanship & suspension of works;

 Clauses 41-50 describes about commencement, delay & defects liability issues;

 Clauses 51-59 discuss about variations, procedures for claims, temporary works,
measurements, provisional sum & nomination for subcontracting issues;

 Clauses 60-66 discuss about payments, remedies, special risks and release from performance;

43
 Clauses 67-72 describe about settlement of disputes, defaults of Employer, Legislation, and
currency issues.

Part II: Named as “Conditions of Particular Applications”

The Part-II clauses may arise for one or more of the following reasons:

 Where the wording in part-I specifically requires that further information is to be

included in part-II and the conditions would not be complete without that information;

 Where the wording in part-I indicates that supplementary information may be included in
part-II but the conditions would still be complete without any such information.

 Where the type, circumstances or locality of the works necessitates additional clauses;

 Where the law of the country or exceptional circumstances necessitates an alteration in

Part-I; Such alterations should be effected by stating in Part-II that a particular clause or
part of a clause in part-I is deleted and giving the substitute clause, or part as applicable;

The Construction Contract usually contains:

 The names and addresses of the contracting parties;

 A brief description of the work;

 The contract amount

 The contract time (dates for commencement and completion)

 Lists of documents: {general & special conditions of the contract, drawings,

specifications, etc}

 The signatures of the contracting parties and witnesses;

The GCC & SCC

The General Conditions of Contract (GCC) contain standard provisions that have been designed
to remain unchanged and to be used without modifying their text. The GCC clearly identify
the provisions that may normally need to be specified for a particular bidding process and require
that such provisions be introduced through the SCC.
The GCC will form part of any resulting Contract.

44
The Special Conditions of Contract (SCC) supplement the GCC by modifying conditions
applicable to an individual contract, such as payment terms or the name of the Engineer. The
SCC prevails over the GCC. The Procuring Entity should include all information that the GCC
indicate shall be provided in the SCC prior to issuing the Bidding Documents. No SCC Clause
should be left blank.
To facilitate the preparation of the SCC, its clauses are numbered with same numbers as the
corresponding GCC clauses. This Guide helps the Procuring Entity with inputting all information
required and includes a SCC format that summarises all information to be provided.
The SCC will form part of any resulting Contract.

“The General Condition of Contract” Ethiopian Context

The Public Procurement Agency’s Standard Bidding Document for works (January 2006) in its
section 7 discusses the General conditions of contract as of underneath:

A – General

1. Definition

The following words and expressions shall have the meanings hereby assigned to them:

 The “Adjudicator” is the person appointed jointly by the Employer and the Contractor to
resolve disputes in the first instance, as provided for in Clauses 24 and 25 hereunder.
 “Compensation Events” are those defined in Clause 44 hereunder.
 The “Contract” is the Contract between the Employer and the Contractor to execute,
complete, and maintain the Works. It consists of the documents listed in Clause 2.3 below.
 “Day works” are varied work inputs subject to payment on a time basis for the
Contractor’s employees and Equipment, in addition to payments for associated Materials
and Plant.

45
  A “Defect” is any part of the Works not completed in accordance with the Contract.
 The “Defects Liability Period” is the period named in the Special Conditions of Contract
and calculated from the Completion Date.
 The “Employer” is the party who employs the Contractor to carry out the Works and
means “Procuring Entity” as defined in the Public Procurement Proclamation.
 The “Engineer” is the person named in the Special Conditions of Contract (or any other
competent person appointed by the Employer and notified to the Contractor, to act in
replacement of the Engineer) who is responsible for supervising the execution of the
Works and administering the Contract.
 “Equipment” is the Contractor’s machinery and vehicles brought temporarily to the Site to
construct the Works.
 “Materials” are all supplies, including consumables, used by the Contractor for
incorporation in the Works.
 “Plant” is any integral part of the Works that shall have a mechanical, electrical, chemical,
or biological function.
 “Site Investigation Reports” are those that were included in the bidding documents and are
factual and interpretative reports about the surface and subsurface conditions at the Site.
 “Specification” means the Specification of the Works included in the Contract and any
modification or addition made or approved by the Engineer.
 “Temporary Works” are works designed, constructed, installed, and removed by the
Contractor that are needed for construction or installation of the Works.
 A “Variation” is an instruction given by the Engineer, which varies the Works.
2. Interpretation

 Words have their normal meaning under the language of the Contract unless
specifically defined. The Engineer will provide instructions clarifying queries about
these General Conditions of Contract.

The documents forming the Contract shall be interpreted in the following order of priority:
(1) Agreement,
(2) Letter of Acceptance,
(3) Contractor’s Bid,
(4) Special Conditions of Contract,
(5) General Conditions of Contract,
(6) Specifications,
(7) Drawings,
(8) Bill of Quantities or Activity Schedule, and

46
 (9) Any other document listed in the Special Conditions of Contract as forming
part of the Contract

3. Language and Law

The language of the Contract is Amharic and the law governing the Contract is that of the
Federal Democratic Republic of Ethiopia.

4. Engineer’s Decision
Except where otherwise specifically stated and subject to any restrictions in the Special
Conditions of Contract, the Engineer will decide contractual matters between the Employer
and the Contractor in the role representing the Employer.

5. Delegation

The Engineer may delegate any of his duties and responsibilities to other people except to
the Adjudicator, after notifying the Contractor, and may cancel any delegation after
notifying the Contractor.
6. Communications

Communications between parties that are referred to in the Conditions shall be effective
only when in writing.

7. Subcontracting

The Contractor may subcontract with the approval of the Engineer, but may not assign the
Contract without the approval of the Employer in writing.

8. Other contractors

The Contractor shall cooperate and share the Site with other contractors, as referred to in the
Special Conditions of Contract. The Contractor shall also provide facilities and services for
them as described in the Schedule. The Employer may modify the Schedule of Other
Contractors, and shall notify the Contractor of any such modification.

9. Personnel

47
 The Contractor shall employ the key personnel named in the Schedule of Key Personnel, to
carry out the functions stated. The Engineer will approve any proposed replacement of key
personnel only if their relevant qualifications and abilities are substantially equal to or
better than those of the personnel listed in the Schedule.
If the Engineer asks the Contractor to remove a person who is a member of the Contractor’s
staff or work force, stating the reasons, the Contractor shall ensure that the person leaves
the Site within seven days and has no further connection with the work in the Contract.

10. Employer’s and Contractor’s Risks

The Employer carries the risks which this Contract states are Employer’s risks, and the
Contractor carries the risks which this Contract states are Contractor’s risks.

11. Employer’s Risks

Unless otherwise specified in the SCC, from the Start Date until the Defects Correction
Certificate has been issued, the following are Employer’s risks:

a. The risk of personal injury, death, or loss of or damage to property, which are due to:
(i) Use or occupation of the Site by the Works (for the purpose of the Works) which
is the unavoidable result of the Works, or
(ii) Negligence, breach of statutory duty, by the Employer or by any person employed
by him except the Contractor;

b. The risk of damage to the Works, Plant, Materials, and Equipment to the extent
that it is due to a fault of the Employer or in the Employer’s design, or due to war
or radioactive contamination directly affecting the country where the Works are to
be executed.

c. The risk of loss of or damage to the Works, Plant, and Materials is an Employer’s
risk except loss or damage due to:
 A Defect which existed on the Completion Date,
 An event occurring before the Completion Date, which was not itself an
Employer’s risk, or
 The activities of the Contractor on the Site after the Completion Date.

48
12. Contractor’s Risk

From the Starting Date until the Defects Correction Certificate has been issued, the risks of
personal injury, death, and loss of or damage to property (including, without limitation, the
Works, Plant, Materials, and Equipment) which are not Employer’s risks are Contractor’s
risks.

13. Insurance

The Contractor shall provide, in the joint names of the Employer and the Contractor,
insurance cover from the Start Date to the end of the Defects Liability Period, for the
following events which are due to the Contractor’s risks:

i. Loss of or damage to the Works, Plant, and Materials;

ii. Loss of or damage to Equipment;
iii. Loss of or damage to property in connection with the Contract; and
iv. Personal injury or death.

Policies and certificates for insurance shall be delivered by the Contractor to the Engineer for
the Engineer’s approval before the Start Date.
All such insurance shall provide for compensation to be payable in the types and proportions
of currencies required to rectify the loss or damage incurred.
If the Contractor does not provide any of the policies and certificates required, the Employer
may effect the insurance which the Contractor should have provided and recover the
premiums the Employer has paid from payments otherwise due to the Contractor or, if no
payment is due, the payment of the premiums shall be a debt due. Alterations to the terms of
insurance shall not be made without the approval of the Engineer. Both parties shall comply
with any conditions of the insurance policies.

14. Site Investigation Reports

The Contractor, in preparing the Bid, shall rely on any Site Investigation Reports referred to
in the Special Conditions of Contract, supplemented by any information available to the
Bidder.

49
15. Queries about the Special Conditions of Contract
The Engineer will clarify queries on the Special Conditions of Contract.

16. Contractor to Construct the Works

The Contractor shall construct and install the Works in accordance with the Specifications
and Drawings;

17. The Works to Be Completed by the Intended Completion Date

The Contractor may commence execution of the Works on the Start Date and shall carry out
the Works in accordance with the Program submitted by the Contractor, as updated with the
approval of the Engineer, and complete them by the Intended Completion Date.

18. Approval by the Engineer

The Contractor shall submit Specifications and Drawings showing the proposed Temporary
Works to the Engineer, who is to approve them if they comply with the Specifications and
Drawings. The Contractor shall be responsible for design of Temporary Works.
The Engineer’s approval shall not alter the Contractor’s responsibility for design of the
Temporary Works. The Contractor shall obtain approval of third parties to the design of the
Temporary Works, where required. All Drawings prepared by the Contractor for the
execution of the temporary or permanent Works, are subject to prior approval by the
Engineer before this use.

19. Safety

The Contractor shall be responsible for the safety of all activities on the Site.

20. Discoveries

Anything of historical or of significant value unexpectedly discovered on the Site shall be

the property of the Employer. The Contractor shall notify the Engineer of such discoveries
and carry out the Engineer’s instructions for dealing with them.

21. Possession of the site

50
 The Employer shall give possession of the Site to the Contractor. If possession of a part is
not given by the date stated in the approved work program, the Employer will be deemed to
have delayed the start of the relevant activities, and this will be a Compensation Event.

22. Access to the site

The Contractor shall allow the Engineer and any person authorized by the Engineer access
to the Site and to any place where work in connection with the Contract is being carried out
or is intended to be carried out.

23. Instructions

The Contractor shall carry out all instructions of the Engineer, which comply with the
applicable laws where the Site is located.

24. Disputes

If the Contractor believes that a decision taken by the Engineer was either outside the
authority given to the Engineer by the Contract or that the decision was wrongly taken, the
decision shall be referred to the Adjudicator within 14 days of the notification of the
Engineer’s decision.
25. Procedure for Disputes

 The Adjudicator shall give a decision in writing within 28 days of receipt of a

notification of a dispute.
 The Adjudicator shall be paid by the hour at the rate specified in the Bid Data Sheet
and Special Conditions of Contract, together with reimbursable expenses of the types
specified in the Special Conditions of Contract, and the cost shall be divided equally
between the Employer and the Contractor, whatever decision is reached by the
Adjudicator.
 Either party may refer a decision of the Adjudicator to an Arbitrator within 28 days
of the Adjudicator’s written decision. If neither party refers the dispute to arbitration
within the above 28 days, the Adjudicator’s decision will be final and binding.
 The arbitration shall be conducted in accordance with the arbitration procedure
published by the institution named and in the place shown in the Special Conditions
of Contract.

51
26. Replacement of Adjudicator

Should the Adjudicator resign or die, or should the Employer and the Contractor agree that
the Adjudicator is not functioning in accordance with the provisions of the Contract, a new
Adjudicator will be jointly appointed by the Employer and the Contractor.
In case of disagreement between the Employer and the Contractor, within 30 days, the
Adjudicator shall be designated by the Appointing Authority designated in the Special
Conditions of Contract at the request of either party, within 14 days of receipt of such
request.

27. Program

Within the time stated, the Contractor shall submit to the Engineer for approval, a Program
showing the general methods, arrangements, order, and timing for all the activities in the
Works.

An update of the Program shall be a program showing the actual progress achieved on each
activity and the effect of the progress achieved on the timing of the remaining work,
including any changes to the sequence of the activities.

The Contractor shall submit to the Engineer for approval an updated Program at intervals no
longer than the period stated in the Special Conditions of Contract. If the Contractor fails to
submit an updated Program, the Engineer may withhold the amount stated in the SCC from
the next payment certificate and continue to withhold this amount until the Program has
been submitted.

The Engineer’s approval of the Program shall not alter the Contractor’s obligations. The
Contractor may revise the Program and submit it to the Engineer again at any time. A
revised Program shall show the effect of Variations and Compensation Events.

28. Extension of the Intended Completion Date

The Engineer shall extend the Intended Completion Date if a Compensation Event occurs or
a Variation is issued which makes it impossible for Completion to be achieved by the
Intended Completion Date without the Contractor taking steps to accelerate the remaining
work, which would cause the Contractor to incur additional cost.

52
The Engineer shall decide whether and by how much to extend the Intended Completion
Date within 21 days of the Contractor asking the Engineer for a decision upon the effect of a
Compensation Event or Variation and submitting full supporting information.

If the Contractor has failed to give early warning of a delay or has failed to cooperate in
dealing with a delay, the delay by this failure shall not be considered in assessing the new
Intended Completion Date.

29. Acceleration

When the Employer wants the Contractor to finish before the Intended Completion Date, the
Engineer will obtain priced proposals for achieving the necessary acceleration from the
Contractor.

If the Employer accepts these proposals, the Intended Completion Date will be adjusted
accordingly and confirmed by both the Employer and the Contractor. If the Contractor’s
priced proposals for an acceleration are accepted by the Employer, they are incorporated in
the Contract Price and treated as a Variation.

30. Delays Ordered by the Engineer

The Engineer may instruct the Contractor to delay the start or progress of any activity within
the Works.
31. Management Meetings

Either the Engineer or the Contractor may require the other to attend a management
meetings. The business of a management meetings shall be to review the plans for remaining
work and to deal with matters raised in accordance with the early warning procedure.

The Engineer shall record the management meetings and provide copies of the record to
those attending the meeting and to the Employer.
The responsibility of the parties for actions to be taken shall be decided by the Engineer
either at the management meeting or after the management meeting and stated in writing to
all who attended the meeting.

32. Early warning

53
The Contractor shall warn the Engineer at the earliest opportunity of specific likely future
events or circumstances that may adversely affect the quality of the work, increase the
Contract Price or delay the execution of the Works.

The Engineer may require the Contractor to provide an estimate of the expected effect of the
future event or circumstance on the Contract Price and Completion Date. The estimate shall
be provided by the Contractor as soon as reasonably posible.

The Contractor shall cooperate with the Engineer in making and considering proposals for
how the effect of such an event can be avoided by anyone involved in the work and in
carrying out any resulting instruction of the Engineer.

33. Identifying Defects

The Engineer shall check the Contractor’s work and notify the Contractor of any Defects
that are found. Such checking shall not affect the Contractor’s responsibilities.

The Engineer may instruct the Contractor to search for a Defect and to uncover and test any
work that the Engineer considers may have a Defect.

34. Tests

If the Engineer instructs the Contractor to carry out a test not specified in the Specification
to check whether any work has a Defect and the test shows that it does, the Contractor shall
pay for the test and any samples. If there is no Defect, the test shall be a Compensation
Event.

35. Correction of Defects

The Engineer shall give notice to the Contractor of any Defects before the end of the Defects
Liability Period, which begins at Completion, and is defined in the SCC. The Defects
Liability Period shall be extended for as long as Defects remain to be corrected.
Every time notice of a Defect is given, the Contractor shall correct the notified Defect within
the length of time specified by the Engineer’s notice.

54
36. Uncorrected Defects

If the Contractor has not corrected a Defect within the time specified in the Engineer’s
notice, the Engineer will assess the cost of having the Defect corrected, and the Contractor
will pay this amount.

37. Bill of Quantities or Activity Schedule

This Contract is either An Admeasurement Contract with a Bill of Quantities, or A Lump

Sum Contract with an Activity Schedule, as indicated in the SCC.

The Bill of Quantities shall contain items for the construction, installation, testing, and
commissioning work to be done by the Contractor. The Bill of Quantities is used to calculate
the Contract Price. The Contractor is paid for the quantity of the work done at the rate in the
Bill of Quantities for each item.

The Contractor shall provide updated Activity Schedules within 14 days of being instructed
to by the Engineer. The activities on the Activity Schedule shall be co-ordinated with the
activities on the Program.

The Contractor shall show delivery of Materials to the Site separately on the Activity
Schedule if payment for Materials on Site shall be made separately.
38. Change in the Bill of Quantities or Activity Schedule

If the final quantity of the work done differs from the quantity in the Bill of Quantities for
the particular item by more than 25 percent, provided the change exceeds 5 percent of the
Initial Contract Price, the Engineer shall adjust the rate to allow for the change.

The Engineer shall not adjust rates from changes in quantities if thereby the Initial Contract
Price is exceeded by more than 15 percent, except with the prior approval of the Employer.

If requested by the Engineer, the Contractor shall provide the Engineer with a detailed cost
breakdown of any rate in the Bill of Quantities.

The Activity Schedule shall be amended by the Contractor to accommodate changes of

Program or method of working made at the Contractor’s own discretion. Prices in the

55
Activity Schedule shall not be altered when the Contractor makes such changes to the
Activity Schedule.

39. Variations

All Variations shall be included in updated Programs produced by the Contractor.

40. Payment for Variations

For both Admeasurements and Lump Sum Contracts, the Contractor shall provide the
Engineer with a quotation for carrying out the Variation when requested to do so by the
Engineer. The Engineer shall assess the quotation, which shall be given within seven days of
the request or within any longer period stated by the Engineer and before the Variation is
ordered.

For Admeasurement Contracts only, if the work in the Variation corresponds with an item
description in the Bill of Quantities and if, in the opinion of the Engineer, the quantity of
work above the limit stated in Clause 38 or the timing of its execution do not cause the cost
per unit of quantity to change, the rate in the Bill of Quantities shall be used to calculate the
value of the Variation.
If the cost per unit of quantity changes, or if the nature or timing of the work in the Variation
does not correspond with items in the Bill of Quantities, the quotation by the Contractor
shall be in the form of new rates for the relevant items of work.

If the Contractor’s quotation is unreasonable, the Engineer may order the Variation and
make a change to the Contract Price, which shall be based on the Engineer’s own forecast of
the effects of the Variation on the Contractor’s costs.

If the Engineer decides that the urgency of varying the work would prevent a quotation
being given and considered without delaying the work, no quotation shall be given and the
Variation shall be treated as a Compensation Event.

The Contractor shall not be entitled to additional payment for costs that could have been
avoided by giving early warning.

41. Cash Flow Forecasts

56
When the Program is updated, the Contractor shall provide the Engineer with an updated
cash flow forecast.

42. Payment Certificates

The Contractor shall submit to the Engineer monthly statements of the estimated value of
the work executed less the cumulative amount certified previously.

The Engineer shall check the Contractor’s monthly statement and certify the amount to be
paid to the Contractor. The value of work executed shall be determined by the Engineer.

The value of work executed shall comprise the value of:

The quantities of the items in the Bill of Quantities completed in the case of Admeasurement
Contracts; or Completed activities in the Activity Schedule in the case of Lump Sum
Contracts.

The value of work executed shall include the valuation of Variations and Compensation
Events.

The Engineer may exclude any item certified in a previous certificate or reduce the
proportion of any item previously certified in any certificate in the light of later information.

43. Payments

Payments shall be adjusted for deductions for advance payments and retention. The
Employer shall pay the Contractor the amounts certified by the Engineer within 30 days of
the date of each certificate. If the Employer makes a late payment, the Contractor shall be
paid interest on the late payment in the next payment.

Interest shall be calculated from the date by which the payment should have been made up
to the date when the late payment is made at the prevailing rate of interest for commercial
borrowing for each of the currencies in which payments are made.

If an amount certified is increased in a later certificate or as a result of an award by the

Adjudicator or an Arbitrator, the Contractor shall be paid interest upon the delayed payment
as set out in this clause.

57
Interest shall be calculated from the date upon which the increased amount would have been
certified in the absence of dispute.
All payments and deductions will be paid or charged in Ethiopian Birr.

Items of the Works for which no rate or price has been entered in will not be paid for by the
Employer and shall be deemed covered by other rates and prices in the Contract.

44. Compensation Events

The following shall be Compensation Events:

 The Employer does not give access to a part of the Site by the Site Possession Date
stated in the Contractor’s approved work program.
 The Employer modifies the Schedule of Other Contractors in a way that affects the
work of the Contractor under the Contract.
 The Engineer orders a delay or does not issue Drawings, Specifications, or
instructions required for execution of the Works on time.
 The Engineer instructs the Contractor to uncover or to carry out additional tests upon
work, which is then found to have no Defects.
 The Engineer unreasonably does not approve a subcontract to be let.
 Ground conditions are substantially more adverse than could reasonably have been
assumed before issuance of the Letter of Acceptance from the information issued to
bidders (including the Site Investigation Reports referred to in GCC 14.1), from
information available publicly and from a visual inspection of the Site.
 The Engineer gives an instruction for dealing with an unforeseen condition, caused
by the Employer, or additional work required for safety or other reasons.
 Other contractors, public authorities, utilities, or the Employer does not work within
the dates and other constraints stated in the Contract, and they cause delay or extra
cost to the Contractor.
 The advance payment is delayed.
 The effects on the Contractor of any of the Employer’s Risks.
 The Engineer unreasonably delays issuing a Certificate of Completion.
 Other Compensation Events described in the Special Conditions of Contract or
determined by the Engineer shall apply.

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If a Compensation Event would cause additional cost or would prevent the work being
completed before the Intended Completion Date, the Contract Price shall be increased and/or
the Intended Completion Date shall be extended. The Engineer shall decide whether and by
how much the Contract Price shall be increased and whether and by how much the Intended
Completion Date shall be extended.

As soon as information demonstrating the effect of each Compensation Event upon the
Contractor’s forecast cost has been provided by the Contractor, it shall be assessed by the
Engineer, and the Contract Price shall be adjusted accordingly.

If the Contractor’s forecast is deemed unreasonable, the Engineer shall adjust the Contract
Price based on the Engineer’s own forecast. The Engineer will assume that the Contractor
will react competently and promptly to the event.

The Contractor shall not be entitled to Compensation to the extent that the Employer’s
interest are adversely affected by the Contractor’s not having given early warning or not
having cooperated with the Engineer.

45. Tax

Unless otherwise specified in the SCC, the Engineer shall not adjust the Contract Price if
taxes, duties, and other levies are changed that subsequently affect the Contract Price.

46. Currencies
All payments shall be made in Ethiopian Birr.

47. Price Adjustment

Prices shall be adjusted for fluctuations in the cost of inputs only if provided for in the
Special Conditions of Contract.

If so provided, the amounts certified in each payment certificate, after deducting for
Advance Payment, shall be adjusted by applying the respective price adjustment factor to
the payment amounts due
Ln Mn En
pn  A  b c d  etc.
Lo Mo Eo
Where:

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pn is a price adjustment factor to be applied to the amount for each payment certificate;
A is a constant, specified in the Contractor’s Bid, representing the nonadjustable portion in
contractual payments;
b, c, d, etc., are weightings or coefficients representing the estimated proportion of each cost
element (labour, materials, equipment usage, etc.) in the Works or sections thereof, net of
Provisional Sums, as specified in the Contractor’s Bid; the sum of A, b, c, d, etc., shall be
one;

Ln, Mn, En, etc., are the current cost indices or reference prices of the cost elements at the
date 28 days prior to the deadline for bid submission; and Lo, Mo, Eo, etc., are the base cost
indices or reference prices corresponding to the above cost elements at the date 28 days prior
to the last day of the period to which a particular Interim Payment Certificate is related.

The sources of indices shall be those listed in the Contractor’s Bid, as approved by the
Engineer.

Indices shall be appropriate for their purpose and shall relate to the Contractor’s proposed
source of supply of inputs. As the proposed basis for price adjustment, the Contractor shall
have submitted with his bid the tabulation of Weightings and Source of Indices, which shall
be subject to approval by the Engineer.

If the value of the index is changed after it has been used in a calculation, the calculation
shall be corrected and an adjustment made in the next payment certificate. The index value
shall be deemed to take account of all changes in cost due to fluctuations in costs.

48. Retention

The Employer shall retain from each payment due to the Contractor the proportion stated in
the SCC until Completion of the whole of the Works.

On Completion of the whole of the Works, half the total amount retained shall be repaid to
the Contractor and half when the Defects Liability Period has passed and the Engineer has
certified that all Defects notified by the Engineer to the Contractor before the end of this
period have been corrected.
On Completion of the whole Works, the Contractor may substitute retention money with an
“on demand” Bank guarantee.

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49. Liqudated damages

The Contractor shall pay liquidated damages to the Employer at the rate per day stated in the
SCC for each day that the Completion Date is later than the Intended Completion Date. The
total amount of liquidated damages shall not exceed the amount defined in the SCC.

The Employer may deduct liquidated damages from payments due to the Contractor.
Payment of liquidated damages shall not affect the Contractor’s liabilities.

If the Intended Completion Date is extended after liquidated damages have been paid, the
Engineer shall correct any overpayment of liquidated damages by the Contractor by
adjusting the next payment certificate. The Contractor shall be paid interest on the
overpayment, calculated from the date of payment to the date of repayment, at the rates
specified in Clause 43

50. Bonus
The Contractor shall be paid a Bonus calculated at the rate per calendar day stated in the
Special Conditions of Contract for each day (less any days for which the Contractor is paid
for acceleration) that the Completion is earlier than the Intended Completion Date. The
Engineer shall certify that the Works are complete, although they may not be due to be
complete.
51. Advance Payment

The Employer shall make advance payment to the Contractor of the amount stated in the
SCC by the date stated in the SCC, against provision by the Contractor of an Unconditional
Bank Guarantee in a form and by a bank acceptable to the Employer, denominated in
Ethiopian Birr in the amount of the advance payment.

The Guarantee shall remain effective until the advance payment has been repaid, but the
amount of the Guarantee shall be progressively reduced by the amounts repaid by the
Contractor. Interest will not be charged on the advance payment.

The Contractor is to use the advance payment only to pay for Equipment, Plant, Materials,
and mobilization expenses required specifically for execution of the Contract. The
Contractor shall demonstrate that advance payment has been used in this way by supplying
copies of invoices or other documents to the Engineer.

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The advance payment shall be repaid by deducting proportionate amounts from payments
otherwise due to the Contractor, following the schedule of completed percentages of the
Works on a payment basis.

No account shall be taken of the advance payment or its repayment in assessing valuations
of work done, Variations, price adjustments, Compensation Events, Bonuses, or Liquidated
Damages.

52. Securities

The Contract Security shall be provided to the Employer no later than 15 days after receipt
of the Letter of Acceptance and shall be issued in the form of a Bank Guarantee, or for
Ethiopian Contractors only in the form of a Performance Bond.

The Contract Security shall be issued in the format specified in the contract and in an
amount specified in the SCC and by a bank or surety acceptable to the Employer and
denominated in Ethiopian Birr.

The Contract Security shall be valid until a date 28 days from the date of issue of the
Certificate of Completion in the case of a Bank Guarantee and until one year from the date
of issue of the Certificate of Completion in the case of a Performance Bond.
53. Dayworks

If applicable, the Dayworks rates in the Contractor’s Bid shall be used for small additional
amounts of work only when the Engineer has given written instructions in advance for
additional work to be paid for in that way.

All work to be paid for as Dayworks shall be recorded by the Contractor on forms approved
by the Engineer. Each completed form shall be verified and signed by the Engineer within
two days of the work being done.

The Contractor shall be paid for Dayworks subject to obtaining signed Dayworks forms

54. Cost of Repairs

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Loss or damage to the Works or Materials to be incorporated in the Works between the Start
Date and the end of the Defects Correction periods shall be remedied by the Contractor at
the Contractor’s cost if the loss or damage arises from the Contractor’s acts or omissions.

55. Completion

The Contractor shall request the Engineer to issue a certificate of Completion of the Works,
and the Engineer will do so upon deciding that the work is completed.

56. Taking Over

The Employer shall take over the Site and the Works within seven days of the Engineer’s
issuing a Certificate of Completion.

57. Final Account

The Contractor shall supply the Engineer with a detailed account of the total amount that the
Contractor considers payable under the Contract before the end of the Defects Liability
Period. The Engineer shall issue a Defects Liability Certificate and certify any final payment
that is due to the Contractor within 60 days of receiving the Contractor’s account if it is
correct and complete.

If it is not, the Engineer shall issue within 60 days a schedule that states the scope of the
corrections or additions that are necessary.

If the Final Account is still unsatisfactory after it has been resubmitted, the Engineer shall
decide on the amount payable to the Contractor and issue a payment certificate.

58. Operating & Maintenance Manual

If “as built” Drawings and/or operating and maintenance manuals are required, the
Contractor shall supply them by the dates stated in the SCC.

If the Contractor does not supply the Drawings and/or manuals by the dates stated in the
SCC, or they do not receive the Engineer’s approval, the Engineer shall withhold the
amount stated in the Special Conditions of Contract from payments due to the Contractor.

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59. Termination

The Employer or the Contractor may terminate the Contract if the other party causes a
fundamental breach of the Contract.

Fundamental breaches of Contract shall include, but shall not be limited to, the
following:

 The Contractor stops work for 28 days when no stoppage of work is shown on the
current Program and the stoppage has not been authorized by the Engineer;
 The Engineer instructs the Contractor to delay the progress of the Works, and the
instruction is not withdrawn within 28 days;
 The Employer or the Contractor is made bankrupt or goes into liquidation other than
for a reconstruction or amalgamation;
 A payment certified by the Engineer is not paid by the Employer to the Contractor
within 90 days of the date of the Engineer’s certificate;
 The Engineer gives Notice that failure to correct a particular Defect is a fundamental
breach of Contract and the Contractor fails to correct it within a reasonable period of
time determined by the Engineer;
 The Contractor does not maintain a Security, which is required;
 The Contractor has delayed the completion of the Works by the number of days for
which the maximum amount of liquidated damages can be paid, as defined in the
Special Conditions of Contract; and
 If the Contractor, in the judgment of the Employer has engaged in corrupt,
fraudulent, collusive or coercive practices in competing for or in executing the
Contract.

For the purpose of this paragraph:

 "Corrupt practice" means the offering, giving, receiving or soliciting, directly or

indirectly, of anything of value to influence the action of a public official in the
procurement process or in contract execution.
 "Fraudulent practice" means a misrepresentation of facts in order to influence a
procurement process or the execution of a contract;

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  “Collusive practices” means a scheme or arrangement between two or more Bidders,
with or without the knowledge of the Employer, designed to establish prices at
artificial, noncompetitive levels; and
 “Coercive practices” means harming or threatening to harm, directly or indirectly,
persons or their property to influence their participation in a procurement process, or
affect the execution of a contract.

When either party to the Contract gives notice of a breach of Contract to the Engineer for a
cause other than those listed under Clause 59 above, the Engineer shall decide whether the
breach is fundamental or not.

Notwithstanding the above, the Employer may terminate the Contract for convenience.

If the Contract is terminated, the Contractor shall stop work immediately, make the Site safe
and secure, and leave the Site as soon as reasonably possible.

60. Payment Upon Termination

If the Contract is terminated because of a fundamental breach of Contract by the Contractor,

the Engineer shall issue a certificate for the value of the work done and Materials ordered
less advance payments received up to the date of the issue of the certificate and less the
percentage to apply to the value of the work not completed, as indicated in the SCC.

Additional Liquidated Damages shall not apply. If the total amount due to the Employer
exceeds any payment due to the Contractor, the difference shall be a debt payable to the
Employer.

If the Contract is terminated for the Employer’s convenience or because of a fundamental

breach of Contract by the Employer, the Engineer shall issue a certificate for the value of the
work done, Materials ordered, the reasonable cost of removal of Equipment, repatriation of
the Contractor’s personnel employed solely on the Works, and the Contractor’s costs of
protecting and securing the Works, and less advance payments received up to the date of the
certificate.

61. Property

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All Materials on the Site, Plant, Equipment, Temporary Works, and Works shall be deemed
to be the property of the Employer if the Contract is terminated because of the Contractor’s
default.

62. Release from performance

If the Contract is frustrated by the outbreak of war or by any other event entirely outside the
control of either the Employer or the Contractor, the Engineer shall certify that the Contract
has been frustrated.

The Contractor shall make the Site safe and stop work as quickly as possible after receiving
this certificate and shall be paid for all work carried out before receiving it and for any work
carried out afterwards to which a commitment was made.

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