Assignment 3

Comparing and Contrasting FIDIC white book

and PPPAA for consultancy services
Group 7 & 8

Department of Construction Technology and Management

ADVANCED CONSTRUCTION PROCUREMENT AND CONTRACT
MANAGEMENT

Submitted to –

Inst. Wubshet Jekale (Dr. Eng)

Prepared by 1. Abel Abere GSR/2179/13

2.Kassahun Abera GSR/3607/13
3.Tesfagaber G/Georgis GSR/1099/13
4. Teshager Gedammu GSR/9461/13

July 26, 2021

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

Abstract

This paper is concerned about reviewing, comparing, and contrasting FIDIC white book 2017
and PPPAA 2011 (for consultancy services) condition of contract on selected clauses and
parameters of the contract. The paper also recommends clauses that should be amended and
anticipated to fill the gap of the FDRE contract conditions. To achieve the objective of the
study a desk study has been conducted to identify the difference of the clauses in FIDIC and
PPA conditions of contracts and due to limitations, the study focuses on a few of the clauses.

The main results and findings implicate that both contracts have commendable features and
advantages and can be used successfully anywhere. However, there are certain areas of
concern and sometimes limitations in both contracts. FIDIC has many advantages over
PPPAA particularly in clarity, flexibility, explicit project management procedures, partnering
and teamwork, risk allocation

Key Words- Commencement date, Liabilities, Termination, Good faith, Dispute resolution
procedure, and Risk allocation.

Prepared by- Group 7 & Group 8 i

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

Table of Contents
Abstract ................................................................................................................................................ i
1. Quick Review on Main Features of FIDIC and PPA.......................................................................... 1
Special Conditions of FIDIC and PPPAA............................................................................................... 1
2. Comparing and Contrasting ....................................................................................................... 2
Bases of comparison ........................................................................................................................... 2
Similarities and Differences on Effective date and Commencement date’s ...................................... 2
Performance and Force majeure ........................................................................................................ 3
Payments and Securities ..................................................................................................................... 4
Good Faith........................................................................................................................................... 4
3. Differences .................................................................................................................................... 4
Clarity and Simplicity of clauses .......................................................................................................... 4
Work Program ..................................................................................................................................... 4
Variations and Price adjustments ....................................................................................................... 5
Compensation due to late payments and Termination ...................................................................... 5
Risk and Obligation ............................................................................................................................. 5
Dispute and Arbitration ...................................................................................................................... 6
4. Features that should be anticipated for the FDRE use .......................................................... 7
Proper Risk Allocation ......................................................................................................................... 7
Settlement of Dispute ......................................................................................................................... 7
Client Entitlement to Change services provided by the consultant ................................................... 7
5. References ..................................................................................................................................... 8

Prepared by- Group 7 & Group 8 ii

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

1. Quick Review on Main Features of FIDIC and PPA

Application Areas and Contents of FIDIC white book and PPPAA (consultancy service)

Both PPPAA (consultancy services) and FIDIC white book are suitable for general use for
most services provided by consulting engineers, including pre-investment and feasibility
studies, detailed design, construction administration, and project management, both for
Employer-led design teams, and for Contractor-led design teams on design and build
commissions.

But FIDIC is suitable for international projects but can equally be used on domestic projects.

There are generally two forms of conditions.

 General Conditions of Contract /GCC/

 Special Condition of Contract /SCC/ or Particular Conditions /PC/

Numerous clauses will be generally applicable in most situations; some provisions must
necessarily vary to take account of the circumstances and locality in which the Services are to
be performed. The General Conditions are linked with the Particular Conditions by the
corresponding numbering of the clauses so that the General Conditions and Particular
Conditions together comprise the conditions governing the rights and obligations of the
parties

Table 1, Contents of PPPAA and FIDIC white book (2017)

PPPAA General Condition of Contract FIDIC General Condition of Contract

A. General Provision
B. The Contract
C. Obligations of The Public Body
D. Payments to the consultant
Content
E. Obligations of the Consultant
F. Performance Of the Contract
G. Fairness and Good Faith
Special Condition
Particular Condition of contract
1. Definitions and Interpretation
2. Obligation of the Consultant
3. Obligation of the Client
4. Personnel
5. Liability Insurance
6.Commencement, Completion, Alteration
and Termination of the Agreement
7. Payment
8. General Provision
9. Settelement of Disputes

It would not be advisable to change or adjust GCC as these terms and conditions might have
a long-term legal implication and therefore need to be vested by the legal team. It is more
strategic in nature.

Special Conditions of FIDIC and PPPAA

Special Conditions of Contract will mostly consist of clauses that are applicable only to the
particular job or contract. Although it is important to get the SCC vested by legal also but

Prepared by- Group 7 & Group 8 1

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

since it is generally specific to one contract and more of tactical (operational) nature, its
implications may not be as deep as the GCC.

The following clause may be inserted in the special condition of the contract or the Technical
Specifications.

Any complementary information, which may be needed, shall be introduced only through the
Special Conditions of Contract.

 Duration of liability (FIDIC Particular condition)

 Project commencement and Completion date (In both contracts)
 Limit of Compensation (FIDIC Particular condition)

2. Comparing and Contrasting

Bases of comparison

Due to page limits, the general theme and some critical parameters and clauses of the contract
are reviewed compared, and contrasted. These parameters include Basic Timelines,
Payments, Liabilities, Force majeure, Termination, Good Faith, and Risk Allocation.

 Since our paper has limitations to give the whole picture, we recommend that further
detailed research has to be conducted to review, compare and contrast the condition of
contracts in both PPPAA and FIDIC in-depth for a holistic conclusion.

Similarities and Differences on Effective date and Commencement date’s

The agreement is in force as of the Effective Date – date of latest signature of the Agreement
(PPA GCC cl 27 & PPA GCC

Assignments or Services which are stated in Appendix 1 of FIDIC and Section 9, Appendix
A of PPPAA, Should be performed by the consultant with due diligence from the
Commencement Date and shall complete those within the Time for Completion.

Both FIDIC and PPPAA 2011 edition has adopted a more usual industry position in that the
Scope of Services shall be defined and any changes will be variations under the new (FIDIC
clause 5 and PPPAA ).

Services are subject to possible Variations & excusable delays are defined and can provide
for an Extension of Time/EOT/.

 The client is liable for information provided to the Consultant, who is under a duty to
review it and promptly notify of any adverse finding
 FIDIC express grounds for extension of the Time for Completion, with possible
corresponding compensation for Exceptional Costs (Cl. 4.4)

Prepared by- Group 7 & Group 8 2

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

GCC Cl. 27.1

Effective Date of Provide service with care and diligence
the Agreement
Commencement Date of Completion of the Whole
the Services Services
Return of Performance
As mentioned in the SCC Time for Completion of the Services security
Default 21 days, Clause 27.3 Clause 55, 28 days
As specified in the special condition

Performance
15 days Security Audit
Clause 55 GCC Cl. 52

Payment as per SCC

Figure 1, Basic timelines in PPPAA for consultancy services

Clause 4.1
Effective Date of
the Agreement
Commencement Date of Completion of the Whole
the Services Services

As per the particular C. Time for Completion of the Services Duration of Liability
Default 14 days As per the particular condition Clause 8.2

14 days Resubmit
Programme 14 days Audit
Clause 4.3 Proceed Clause 7.6

Payment as per Cl 7.1 and Appendix

Figure 2, Basic Timelines in the FIDIC white book

Performance and Force majeure

Standard of performance is a reasonable skill, care, and diligence, although function &
purpose of Services is taken into account

Exceptional Events in FIDIC (formerly referred to as Force Majeure) and Force majeure in
PPPAA are considered to be excused for Parties of performing their obligations.

 Cases that are deemed and cases that shall not be deemed to be cases of Force Majeure are
stated and the measures are also elaborated. (Clause 18, of PPPAA & Clause 4.6 of FIDIC)

 Failure to exercise the requisite degree of skill and care: constitutes the tort of
negligence or breach of contract

Prepared by- Group 7 & Group 8 3

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

Payments and Securities

Both contracts specify all the conditions in which the contract price is payable, In
consideration of the Services performed by the Consultant under the contract, the

 The client is to pay the Consultant as per the details stated in Appendix 3 of FIDIC
 Public Body shall make to the Consultant such payments and in such manner, as is
provided by GCC Paragraph D and the special condition of contract the PPPAA
Contract.
 If requested the advance payment may be paid by the Public Body in an amount not
exceeding 30% of the total contract price. (PPPAA 40.3)

(PPPAA clause)

“The Consultant shall, within fifteen (15) days from signing the contract, provide a
Performance Security for the due performance of the Contract in the amount specified in
the SCC.”

“The Performance Security shall be discharged by the Public Body and returned to the
Consultant not later than twenty-eight (28) days following the date of completion of the
Consultant’s performance obligations under the Contract, including any warranty
obligations unless specified otherwise in the SCC.”

Good Faith

The other common thing that PPPAA and FIDIC have is the obligation on the parties to act in
good faith and the spirit of mutual trust. Its meaning and effect will differ from jurisdiction to
jurisdiction, but its interpretation will depend on its context and certainty of drafting. Based
on recent case law it is unlikely to be interpreted to infer a positive requirement for a party to
act against its own interests or to trump an absolute contractual right. (PPPAA clause 69 &
70, FIDIC)

3. Differences

Clarity and Simplicity of clauses

In terms of the design, layout, and structure of contract documents, logical sequence of
clauses, and structure of sentences, PPPAA is better than FIDIC.

Whereas in terms of simplicity order of words and the choice of vocabulary FIDIC is more
understandable than PPPAA.

Work Program

According to FIDIC consultant shall proceed in accordance with the Program, which is to
comply with requirements stated in the Appendix and which it submits within 14 days from

Prepared by- Group 7 & Group 8 4

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

the Commencement Date. When we come to PPPAA There is no detail for what is to be
contained in neither the schedule nor any obligation that the consultant submits or even
complies with a program.

Variations and Price adjustments

The white book of FIDIC deals with variation in a more comprehensive manner than PPAA.
Clause 5 of FIDIC follows the traditional variation clauses seen in construction contracts. It
provides that variations must be relevant to the services without substantially changing the
extent or nature of the services.

The client has the right to:

 amend the Scope of Services

 omit services (though only if no longer required by the client)
 Change the sequence or timing of the services.

These rights are limited in PPPAA. According to FIDIC Value of Variation should be agreed
before Variation proceeds, but if not possible/practicable to do so Client can instruct
commencement, Consultant is compensated on a time-spent basis as stated in the particular
conditions. (FIDIC Cl. 5.2, )

According to PPPAA where the time for completion of a consultancy service under a contract
is extended for a reason not attributable to the fault of the consultant, the Public Body may
make a price adjustment, if it considers that such adjustment is appropriate but the price
adjustment allowed for Consultant will not exceed 15% (fifteen percent) of the total contract
price. (PPPAA clause 42.4)

Compensation due to late payments and Termination

Both PPPAA and FIDIC give permission for the consultant to terminate the contract if the
Public Body/client fails to pay any money due to the Consultant pursuant to the Contract,
within forty-five (45) days after receiving written notice from the Consultant that such
payment is overdue.
FIDIC states that consultant shall be paid Agreed Compensation at the rate defined in the
Particular Conditions compounded monthly on the sum overdue and in its currency reckoned
from the due date for payment of the invoice. (FIDIC Clause31) When we come to PPPAA
There is no detail of compensation.

FIDIC clause (6.3) states the detailed effects of suspension, with possible entitlements to
extension of Time for Completion and compensation for Exceptional Costs incurred.

Risk and Obligation

Both FIDIC and PPA 2011 conditions of contract have tried to state explicitly the parties’
obligation and responsibility to be measurable and attainable.

Prepared by- Group 7 & Group 8 5

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

In preparing the contract document bid package, the employer will be in a position to decide
on its intended risk allocation. While there may be a temptation to allocate all or most major
risks to the consultant. PPPAA uses this power to allocate

PPPAA’s clause 47.1 states a higher risk and an unfair risk on the consultant. According to
PPA the clients can take comfort from the fact that, they now have a fighting chance of
holding a poorly performing consultant liable for its defaults.

PPPAA clause 47.1,

“the Consultant shall indemnify, protect and defend, the Public Body, its agents and
employees, from and against all actions, claims, losses or damage arising from any act or
omission by the Consultant in the performance of the Consultancy Services, including any
violation of any legal provisions, or rights of third parties, in respect of patents, trademarks
and other forms of intellectual property such as copyrights.”

Dispute and Arbitration

FIDIC (clause 10) states a detailed dispute resolution procedure as; any disputes not resolved
amicably will first need to be referred to adjudication, prior to any referral to arbitration.
When we come to PPPAA There is no such detail for dispute resolving procedure.

Table 2, Summary of comparison

PPPAA 2011 FIDIC 2017

Item (consultancy) (white book)
no. Key Parameters Yes No Yes No
1 Availability of commentaries and literature  
Specify hierarchy of between contract
2 documents.  
Clearly show obligations of the contracting
3 parties  
4 Specify risks to the contracting parties  
5 Balanced Risk allocation b/n parties  
Express all the condition in which the
6 contract price is payable  
7 Suitable for domestic and international use  
8 Specify termination provision and reason  
9 Specify dispute resolution procedure  
10 Specifying compensation procedure  
11 Specify insurance and liability requirement  
12 Flexibility to variations  
13 Encourages parties to act in good faith  

Prepared by- Group 7 & Group 8 6

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

4. Features that should be anticipated for the FDRE use

Due to dynamic nature of the construction industry especially here in Ethiopia, Construction
contracts should be amended frequently. Positive amendments will enable the construction
industry to grow. But for the time being here are some useful issues that might enhance the
PPPAA if adopted after conducting a research.

Proper Risk Allocation

Improper risk allocation may result in prolongation of construction completion times,

wastage of resources and/or increased likelihood of disputes. Imposing an unfair risk on
consultant may also affect the bid price.

Proper risk identification and equitable distribution of risk is the essential ingredient to
increasing the effective, timely and efficient design and construction of projects

Literatures suggest that in order to achieve a fair and equitable allocation of the risks inherent
in construction projects, a risk should be allocated to a party if:

 the risk is within the party's control;

 the party can transfer the risk, for example, through insurance, and it is most
economically beneficial to deal with the risk in this fashion;

 the preponderant economic benefit of controlling the risk lies with the party in
question;

 to place the risk upon the party in question is in the interests of efficiency, including
planning, incentive and innovation; and/or

 The risk eventuates, the loss falls on that party in the first instance and if it is not
practicable, or there is no reason under the above principles, to cause expense and
uncertainty by attempting to transfer the loss to another.

Settlement of Dispute

The dispute resolution provisions include a detailed adjudication procedure set out in an
appendix of the 2017 White Book. Under these revised provisions, any disputes not resolved
amicably will first need to be referred to adjudication, prior to any referral to arbitration.
(Clause 10 of FIDIC)

Client Entitlement to Change services provided by the consultant

According to the new edition, the client is entitled to change the list of services provided by
the consultant under the contract. To do this, the client must contact the consultant by making
an appropriate statement. However, such a change should not affect the scope or nature of the
services provided by the consultant.

Prepared by- Group 7 & Group 8 7

 Comparing and Contrasting FIDIC White book (2017) and PPPAA (consultancy) 2011

5. References

 PPPAA 2011 for consultancy services

 FIDIC White Book 5th edition (2017), from ONLINE
 The new FIDIC white book for consultancy services review by Julian bailey and
Michale Turini (April, 2017)
 The FIDIC 2017, Suite of Agreements, Webinar by Vincent Leloup FIDIC Contracts
Committee

Prepared by- Group 7 & Group 8 8