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Name: Youssef Hamdy Tawfik

ID: 19107618

Dr. ATEF AbdelMoghny

Eng. Samer Idries
Construction Contracts & law
Course: CB514
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Table of Contents

 Abstract
 Introduction
 cost recoverable
 provisions in the FIDIC Red Book 2017
 conclusion
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Abstract

The FIDIC Red Book 2017, titled "Conditions of Contract for Works of Civil Engineering
Construction," is a comprehensive and widely utilized standard form contract within the global
construction industry. It provides a framework for governing the relationship between
employers and contractors in civil engineering and building construction projects. One
significant aspect of the Red Book 2017 is the presence of provisions that entitle the contractor
to claim costs plus profit under certain circumstances.
These provisions primarily center around specific clauses that address variations, delays,
disruptions, and other events that may impact the contractor's performance and financial
position. Notable clauses include Clause 11 (Delay and Disruption), Clause 13 (Variations and
Adjustments), Clause 20 (Claims, Disputes, and Arbitration), Clause 4 (Contractor’s Claims), and
Clause 15 (Tests on Completion).
Under Clause 11.3, the contractor may be entitled to additional time and payment for costs
incurred due to events beyond its control, such as variations or unforeseeable physical
conditions. Clause 13.3 deals explicitly with variations, allowing the contractor to claim
additional costs, including a reasonable profit margin, when instructed by the employer to carry
out variations.
The general framework for claims is established in Clause 20.1, emphasizing the importance of
timely notification and detailed substantiation of claims. Clause 4.12 outlines the specific
process for submitting claims, and successful claims may result in the contractor receiving
additional payment, which includes a profit element.
Furthermore, Clause 15.2 addresses the costs associated with tests on completion, where the
contractor may be entitled to claim additional costs, including a profit margin, if specific tests
required by the contract result in increased expenses.
These provisions collectively aim to provide a fair and balanced mechanism for the contractor
to recover additional costs incurred during the construction process, ensuring that the
contractor is not unduly burdened by unforeseen circumstances or changes to the original
contract scope. Understanding and adhering to the procedural requirements outlined in these
clauses are crucial for contractors seeking to assert their entitlement to costs plus profit under
the FIDIC Red Book 2017.
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Introduction
The definition of “cost” in the current suite of FIDIC contracts is the same in
every contract. The definition provides that:
“‘Cost’ means all expenditure reasonably incurred (or to be incurred) by
the Contractor, whether on or off the Site, including overhead and similar
charges, but does not include profit.”
“Cost plus profit” is used in the MDB Harmonized Edition of the Red Book
and is further defined to require “this profit to be one-twentieth (5%) of
this Cost unless otherwise indicated in the Contract Data.
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cost recoverable
When is cost recoverable?

The circumstances in which the contractor is able to recover cost varies between the
different forms in the current suite of contracts to reflect the different allocation of
risks. By way of example, under the Red Book the contractor is able to recover cost
for unforeseen ground conditions, whereas under the Silver Book unforeseen ground
conditions is a risk assumed by the contractor and as such cost is not recoverable.

Under the Red Book cost is recoverable under the following provisions:
Clause 11.3
Clause 13.3

Clause 20.1

Clause 4.12

Clause 15.2
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provisions in the FIDIC Red Book 2017 that entitle the

contractor to cost plus profit:

Clause 11 - Delay and Disruption:

Sub-Clause 11.3: This sub-clause identifies certain events that may entitle the contractor to an
extension of time and additional payment for costs incurred. These events include variations,
unforeseeable physical conditions, instructions for suspension, and other causes beyond the
contractor's control. If the contractor experiences delay and disruption due to such events, it
can submit a claim for additional costs, which may include both direct costs and a reasonable
profit margin.

Clause 13 - Variations and Adjustments:

Sub-Clause 13.3: This sub-clause deals with variations to the works. If the employer instructs a
variation that results in additional cost to the contractor, the contractor is entitled to claim for
these additional costs. The claim should include not only the direct costs incurred due to the
variation but also a reasonable profit margin.

Clause 4 - Contractor’s Claims:

Sub-Clause 4.12: This sub-clause specifies the process for the contractor to follow when
submitting claims for additional payment. The contractor needs to notify the engineer of the
claim, providing full supporting documentation. The engineer then reviews the claim and
responds within a specified timeframe. If the claim is approved, the contractor is entitled to
additional payment, including profit.
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Clause 20 - Claims, Disputes, and Arbitration:

Sub-Clause 20.1: This sub-clause outlines the general procedure for notifying and substantiating
claims. The contractor is required to give notice of any claim to the engineer as soon as
practicable and then submit a fully detailed claim within 28 days after the contractor became
aware (or should have become aware) of the event or circumstance giving rise to the claim. The
contractor can claim for additional costs and profit within this framework.

Clause 4 - Contractor’s Claims:

Sub-Clause 4.12: This sub-clause specifies the process for the contractor to follow when
submitting claims for additional payment. The contractor needs to notify the engineer of the
claim, providing full supporting documentation. The engineer then reviews the claim and
responds within a specified timeframe. If the claim is approved, the contractor is entitled to
additional payment, including profit.

Clause 15 - Tests on Completion:

Sub-Clause 15.2: This sub-clause addresses the costs associated with tests on completion. If the
contract requires specific tests to be performed, and these tests result in additional costs for

the contractor, the contractor may be entitled to claim those costs, including a profit element .
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conclusion

In all these cases, the contractor needs to carefully follow the contractual procedures for
notifying and substantiating claims. Failure to comply with these procedures may result in the
loss of entitlement to additional costs and profit. It is recommended that parties involved in a
contract, especially contractors, seek legal advice to ensure a thorough understanding and
proper application of the relevant clauses in the FIDIC Red Book 2017.

These provisions collectively aim to provide a fair and balanced mechanism for the contractor
to recover additional costs incurred during the construction process, ensuring that the
contractor is not unduly burdened by unforeseen circumstances or changes to the original
contract scope. Understanding and adhering to the procedural requirements outlined in these
clauses are crucial for contractors seeking to assert their entitlement to costs plus profit under
the FIDIC Red Book 2017.
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Reference

https://www.howardkennedy.com/latest/article/unintended-consequences-of-the-fidic-2017-
clause-20

https://www.instituteccp.com/notices-under-fidic-silver-book-2017-edition-part-8/
https://fidic.org/sites/default/files/bean_files/2017%20FIDIC%20Red%20-
seperated%20errata.pdf

https://www.fidicterms.org/wiki/index.php/Contracts:Defects_Notification_Period

https://www.academia.edu/50369480/FIDIC_2017_Conditions_of_Contract_for_Construction

https://cms.law/media/local/cms-cmno/files/publications/guides/cms-guide-to-the-fidic-2017-
suite