AN INTRODUCTION TO FIDIC CONDITIONS OF CONTRACT PART (I) FOR E.P.C.

/ TURNKEY PROJECTS

INTRODUCTORY
FIDIC’s Red and Yellow Books have been in widespread use for several decades, and have been recognised for their principles of balanced risk sharing between the Employer and the Contractor. The employer signing a contract at a lower price and the Contractor avoiding pricing such risks which are not easy to evaluate. During recent years it has been noticed that much of the construction market required a form of contract where certainty of final price, are of extreme importance. Employers on such turnkey projects are willing to pay more. Among such projects can be found many projects financed by private funds. For such projects it is necessary for the Contractor to assume responsibility for a wider range of risks than under the traditional Red and Yellow Books. If the Contractor is to carry such risks, the Employer must also realize that asking responsible contractors to price such risks will increase the construction cost. Even under such contracts the Employer does carry risks of war, terrorism and the other risks of Force Majeure. In the case of BOT (Build-Operate-Transfer) type projects, the allocation of risk provided for in the turnkey construction Contract may need to be adjusted in order to make into account the final allocation of all risks. Apart from the privately financed projects demanding contract terms ensuring increased certainty of price, time and performance, the public sector, in a wide range of countries have demanded similar contract terms, at least for turnkey contracts. By providing a standard FIDIC form for use in such contracts, the Employer’s requirements for more risk to be taken by the Contractor are clearly stated. Clearly the Contractor will rightly increase his tender price to account for such extra risks. This form EPC/Turnkey Projects is thus intended to be suitable for EPC Contracts within a BOT or similar type venture. Employers using this must realise “Employer’s Requirements” should describe the principle and basic design of the plant on a functional basis. The Tenderer shall also carry out any necessary design and detailing of the specific equipment and plant he is offering. Therefore the tendering procedure has to permit discussions between the Tenderer and the Employer about technical matters and commercial conditions.

FOREWORD The Federation international des ingenieurs-Conseils (FIDIC) published, in 1999, First Editions of four new standard forms of Contract :CONDITIONS OF CONTRACT FOR CONSTRUCTION Which are recommended for building or engineering works designed by the Employer or by his representative, the Engineer. Under the usual arrangements for this type of contract, the Contractor constructs the works in accordance with a design provided by the Employer. However, the works may include some elements of Contractor – designed civil, mechanical, electrical and / or construction works. CONDITIONS OF CONTRACT FOR PLANT AND DESIGN-BUILD Which are recommended for the provision of electrical and / or mechanical plant, and for the design and execution of building or engineering works. Under the usual arrangements for this type of contract, the Contractor designs and provides, in accordance with the Employer’s requirements, plant and / or other works; which may include any combination of Civil, Mechanical, Electrical and/or construction works. CONDITIONS OF CONTRACT FOR EPC / TURNKEY PROJECTS Which may be suitable for the provision on a turnkey basis of process or power plant, of a factory or similar facility, or of an infrastructure project or other type of development, where (I) a higher degree of certainty of final price and time is required, and (ii) the Contractor takes total responsibility for the design and execution of the project, with little involvement of the Employer. Under the usual arrangements for turnkey projects, the Contractor carries out all the engineering, Procurement and Construction (EPC) : providing a fully equipped facility, ready for operation (at the “turn of the key”). SHORT FORM OF CONTRACT Which is recommended for building or engineering works of relatively small capital value. These forms are recommended for general use where tenders are invited on an international basis. Modifications may be required in some jurisdictions, particularly if the Conditions are to be used on domestic contracts. FIDIC considers the official and authentic texts to be the versions in the English language.

Thereafter the Contractor should be given freedom to carry out the work in his chosen manner, provided the end result meets the performance criteria specified by the Employer. Consequently, the Employer should only exercise limited control and should in general not interfere with the Contractor’s work. A feature of this type of contract is that the Contractor has to prove the reliability and performance of his plant and equipment. FIDIC recognizes the privately-financed projects are usually subject to more negotiation than publicly-financed ones and that therefore changes are likely to have to be made in any standard form of contract proposed for projects within a BOT or similar type venture. These Conditions of Contract for EPC/Turnkey Projects are not suitable for

If there is insufficient time or information for tenderers to scrutinize and
check the Employer’s Requirements to carry out their designs and risk assessment studies. If construction will involve substantial work underground or work tenderers cannot inspect. If the Employer intends to supervise closely or control the Contractor’s work. If the amount of each interim payment is to be determined by an official or other intemediary. FIDIC recommends that the Conditions of Contract for Plant and Design-Build be used in the above circumstances for works designed by (or on behalf of) the Contractor.

GENERAL CONDITION
1.0 General Provision 1.1.1 THE CONTRACT “Employer’s Requirements” means the document entitled employer’s requirements, as included in the Contract. 1.1.2 PARTIES AND PERSON “DAB” means the person or three persons so names in the Contract, under Sub-Clause 20.2 (Appointment of the Dispute Adjudication Board) “FIDIC” means Federation international des ingenieurs-Conseils. 1.1.3 DATES, TESTS, PERIODS AND COMPLETIONS “BASE DATE” the date 28 days prior to the latest date for submission of the tender “COMMENCEMENT DATE” means (Commencement of Works) means the time for completing the works (with any extension) “TESTS ON COMPLETION” means the tests which are specified in the Contract “TAKING-OVER CERTIFICATE” (Employer’s Taking Over) “DEFECTS NOTIFICATION PERIOD” means the period for notifying defects in the Works calculated from the date on which is works or section is completed as certified. 1.1.4 MONEY AND PAYMENTS “COST” means all expenditure reasonably incurred including overhead and similar charges but does not include profit. “STATEMENT” means an application for payment. 1.1.5 WORKS AND GOODS CONTRACTOR’S EQUIPMENT excludes Temporary Works “PLANT” means intended to form or forming part of the Permanent Works “TEMPORARY WORKS” means all temporary works of every kind (other than Contractor’s Equipment)

1. manuals.6 OTHER DEFINITIONS “CONTRACTOR’S DOCUMENTS” means the calculations.7 ASSIGNMENT Neither party will assign without express consent . drawings. models and other documents supplied by the Contractor 1. Delivered.3 COMMUNICATIONS Communications shall be a.2 INTERPRETATION The marginal words and other headings shall not be taken into consideration in the interpretation of these Conditions. In writing and delivered (against receipt) b. 1. sent or transmitted to the address 1.1.1.6 CONTRACT ARRANGEMENT The Contract shall come into full force on the date stated in the Contract Agreement. computer programs and other software.5 PRIORITY OF DOCUMENTS * the Contract Agreement * the Particular Conditions * these General Conditions * the Employer’s Requirements * the tender and any other documents forming part of the Contract.4 LAW AND LANGUAGE The Contract shall be governed by the law of the country. The ruling language stated in the Particular Conditions shall prevail. 1. 1.

9 CONFIDENTIALITY Both Parties shall treat the details of the Contract as private and confidential 1. a copy of the Contract and other communications given under the Contract. 1. The Contractor shall give all notices.1. The Employer’s Personnel shall have the right of access to documents at site on all reasonable times 1.10 EMPLOYER’S USE OF CONTRACTOR’S DOCUMENTS Contractor shall retain the copyright and other intellectual property rights 1.8 CARE AND SUPPLY OF DOCUMENTS * Employer will have access to all the Contract * The Contractor shall keep. pay all taxes duties and obtain all permits and approvals.11 CONTRACTOR’S USE OF EMPLOYER’S DOCUMENTS Employer shall retain the copyright and other intellectual property rights in the employer’s requirement documents 1. The Employer shall obtain permission for the Permanent Works. on the Site. .13 COMPLIANCE WITH LAWS The Contractor shall. consortium these person shall be deemed to be jointly and severally liable to the Employer for the performance of the Contract. Contractor shall indemnify and hold the Employer harmless.12 CONFIDENTIAL DETAILS The Contractor shall not be required to disclose any information which Contractor has described in the Tender as being confidential 1.14 JOINT AND SEVERAL LIABILITY If the Contractor constitutes joint venture. comply with applicable Laws. in performing the Contract.

LICENCES OR APPROVALS The Employer shall provide reasonable assistance to the Contractor for clearance through customs. Delay in handling over Site by Employer may result in claims by Contractor for time and cost. reasonable evidence that financial arrangements have been made to pay the Contract Price.1 RIGHT TO ACCESS TO THE SITE The Employer shall give the Contractor right of access to and possession of all parts of the Site within the time stated in the Particular Conditions. when any claims or extension to defects notification is sought by him.3 EMPLOYER’S PERSONNEL Employer’s Personnel to co-operate with the Contractor’s efforts. However. 2. The notice to specify the clauses or basis for claims and substantiation of amount and extent of extension.2.0 The Employer 2. 2. . and for the export of Contractor’s Equipment at the end. 3. This Representative shall be deemed to have the full authority of the Employer under the Contract.0 The Employer’s Administration 3.19. except for payments under 4. 2. Employer may withhold any such right until the Performance Security has been received. 3.4 EMPLOYER’S CLAIMS Employer will give notice to Contractor. the Employer shall give notice to the Contractor.2 PERMITS. 2.4 EMPLOYER’S FINANCIAL ARRANGEMENTS The Employer shall submit.1 THE EMPLOYER’S REPRESENTATIVE The Employer may appoint an Employer’s Representative. within 28 days after receiving request from the Contractor. If the Employer intends to make any change to financial arrangements.2 OTHER EMPLOYER’S PERSONNEL The Employer or the Employer’s Representative may assign duties and delegate authority to assistants.

Any failure to disapprove any work. * failure by the Contractor to remedy a default within 42 days after receiving the Employer’s notice requiring the default to be remedied. Performance Security is to be extended if the Performance Certificate is not obtained by expiry date of the Contract. 4.5 DETERMINATIONS The Employer shall give notice to the Contractor of each agreement or determination. 4.3. Plan or Materials shall not constitute approval. The Contractor whenever required by Employer to prepare and get approved Methods Statement.4 (obtaining Dispute Adjudication Board’s Decision).0 The Contractor 4.1 CONTRACTOR’S GENERAL OBLIGATIONS The Contractor shall design. 3. Either Party may refer the dispute to the DAB in accordance with Sub Clause 20.2 CONTRACTOR’S GENERAL OBLIGATIONS The Contractor shall obtain a Performance Security for proper performance of Contract. The Contractor shall deliver the Performance Security to the Employer within 28 days after the Contract Agreement. stability and safety of all site operations. The Performance Security shall be issued by an entity / bank approved by the Employer.3 DELEGATED PERSONS All these persons shall only be authorised to issue instructions to the Contractor to the extent defined. .4 INSTRUCTIONS The Contractor shall take instructions from the Employer or from the Employer’s Representative. execute and complete the works in accordance with the Contract. The Contractor shall be responsible for the adequacy. 3. * failure by the Contractor to extend the validity of the Performance Security as the Employer may claim the full amount.

lines and levels of reference specified in the Contract. * the personnel of any legally constituted public authorities Above request may constitute a variation to the extent it causes the Contractor to incur cost which was not reasonably roreseeable at the time of Tendering. CO-OPERATION The Contractor shall allow appropriate opportunities for carrying out work to * the employer’s Personnel. Nominated Subcontractor can be opposed by Contractor with particulars supporting his contentions.7 * Circumstances which entitle the Employer to termination under subclause 15. SUBCONTRACTORS The Contractor shall not subcontract the whole of the works. .5 4. NOMINATED SUBCONTRACTORS Nominated Subcontractor means a Subcontractor whom the Employer under Clause 13 instructs the Contractor to employ as a Subcontractor. CONTRACTOR’S REPRESENTATIVE Contractor shall submit to the Employer for consent. The Employer shall return the Performance Security to the Contractor within 21 days after the Contractor has become entitled to receive the Performance Certificate back.4. particulars of the person the Contractor proposes to appoint as Contractor’s Representative. Contractor shall give the Employer not less than 28 days’ notice of the intended appointment of the SubContractor with detailed particulars.2 (Termination by Employer).6 4. SETTING OUT The Contractor shall set out the works in relation to original points. * any other Contractors employed by the Employer.3 4.4 4.

UNFORESEEABLE DIFFICULITES The Contractor shall be deemed to have obtained all necessary information as to risks.9 4. including those for access to the site.8 4. AVOIDANCE OF INTERFERENCE The Contractor shall not interfere unnecessarily or improperly with the convenience of the public.12 4.14 4. The Employer shall have no responsibility for the accuracy. sufficiency or completeness of such data. QUALITY ASSURANCE The Contractor shall institute a quality assurance system to demonstrate compliance with the requirements of the Contract.4. RIGHTS OF WAY AND FACILITIES The Contractor shall bear all costs for rights-of-way. The Contractor shall be responsible for verifying and interpreting all such data. contingencies and other circumstances which may influence or affect the Works. The Employer shall be entitled to audit any aspect of the system.10 4.11 4. all relevant data on subsurface and hydrological conditions at the Site. . ACCESS ROUTE The Contractor shall be responsible for any maintenance which may be required for his use of access routes.15 SAFETY PROCEDURES The Contractor shall comply with Safety Regulations and create safety environment for workers and public.13 4. SITE DATA The Employer shall have made available to the Contractor prior to the Base Date. SUFFICIENCY OF THE CONTRACT PRICE The Contractor shall be deemed to have satisfied himself as to the correctness and sufficiency of the Contract Price.

4. provide free issue materials at the time and place specified in the Contract. The Contractor will pay for the same if provided by the Employer. the free-issue materials shall come under the care. 4. .21 PROGRESS REPORT Contractor to submit Monthly Progress Report. * Each report shall include : * Charts and detailed descriptions of progress.18 PROTECTION OF THE ENVIRONMENT The Contractor shall take all reasonable steps to protect the environment. 4. custody and control of the Contractor. 4. After visual inspection. * Records of Contractor’s Personnel and Equipment. * Comparisons of actual and planned progress and the measures being adopted to overcome delays. WATER AND GAS The Contractor shall be responsible for the provision of all power.17 CONTRACTOR’S EQUIPMENT When brought to the Site. * List of Variations.16 TRANSORT OF GOODS Contractor shall give the Employer not less than 21 days’ notice of the date on which any plant or a major item of other Goods will be delivered to the Site. * Safety Statistics. 4. at his risk and cost. * Report on major equipment and materials arrivals. 4. water and other services he may require. Contractor’s Equipment shall be deemed to be exclusively intended for the execution of the Works. * Copies of quality assurance documents.19 ELECTRICITY. The Employer shall. * Photographs showing progress on the site.20 EMPLOYER’S EQUIPMENT AND FREE-ISSUE MATERIAL Employer’s equipment can be used by Contractor and pay for it along with proper care and responsibility.

from the Employer shall not relieve the Contractor from his responsibility for the design. c. Data and information which cannot be verified by the Contractor. Data and information stated in the Contractor as being immutable. 4. surplus material.0 Design 5. coins. the Contractor shall clear away and remove all Equipment. articles of value or antiquity. Each review period shall not exceed 21 days. Definitions of intended purposes of the Works.24 FOSSILS All fossils. Any delays and costs due to handling of above issues. Criteria for the testing and performance. as per Employer’s Instruction will be under contractor’s Claims.1 GENERAL DESIGN OBLIGATIONS The Contractor shall be deemed to have scrutinised. . rubbish and Temporary Works. However. b. Employer’s Requirements. found on the Site shall be placed under the care and authority of the Employer.2 CONTRACTOR’S DOCUMENTS The Contractor shall prepare all Contractor’s Documents for submission. and to any additional areas agreed by the Employer as working areas. Upon Taking-Over Certificate. 5. Any data or information received by the Contractor.22 SECURITY OF THE SITE The Contractor shall be responsible for keeping unauthorised persons the site. d. The Contractor’s Documents which are to be submitted to the Employer for review shall be submitted accordingly.4. 4.23 CONTRACTOR’S OPERATIONS ON SITE The Contractor shall confine his operations to the Site. 5. Contractor shall keep the Site free from all unnecessary obstruction. the Employer shall be responsible for the correctness of the following. a.

CONTRACTOR’S UNDERTAKING The Contractor undertakes that the design and the completed works will be in accordance with a.4 5. or other defects are found in the Contractor’s Documents. then the Employer shall initiate a variation in accordance with Clause 13. Laws in the Country b. Any review shall not relieve the Contractor from any obligation or responsibility. give notice to the Contractor that a Contractor’s Document fails (to the extent stated) to comply with the contract. References in the Contract for published standards shall be understood to be references to edition applicable on the Base Date. If changed or applicable standards come in to force in the Country after the Base Date. DESIGN ERROR If errors. The documents forming the Contract TECHNICAL STANDARDS AND REGULATIONS The design shall comply with the Country’s technical standards. It shall be rectified and submitted.5 5.5.3 5. omissions.8 The Employer may. notwithstanding any consent or approval under this Clause. AS-BUILT DOCUMENTS Contractor shall supply to the Employer operation and maintenance manuals.6 5. Construction and Environmental Laws. they shall be corrected at the Contractor’s cost. Building. . TRAINING The Contractor shall carry out the training of Employer’s Personnel in the operation and maintenance of the Works to the extent specified.

WORKING HOURS The Contractor shall keep normal working hours. safety. any accident reports and details concerning health. welfare and immigration. LABOUR LAWS The Contractor shall comply with all the relevant labour Laws of the country including health.1 6. unless a.8 Staff and Labour ENGAGEMENT OF STAFF AND LABOUR Contractor shall make arrangements for the engagement or all staff and labour. safety and welfare. The Contractor shall send to the Employer. CONTRACTOR’S SUPERINTENDENCE Contractor shall provide all necessary superintendence to manage the work. housing. For the safety of the Works. HEALTH AND SAFETY The Contractor shall maintain the health and safety of the Contractor’s personnel.7 6. PERSONS IN THE SERVICE OF OTHERS The Contractor shall not recruit staff and Labour amongst the Employer’s Personnel. Employer gives consent. Otherwise stated in the Contract. for their salary. c. RATES OF WAGES AND CONDITIONS OF LABOUR Contractor shall pay rates of wages and observe conditions which are not lower than general level of wages and conditions. The Contractor shall appoint an accident prevention officer at the Site. FACILITIES FOR STAFF AND LABOUR Contractor shall provide and maintain all necessary welfare facilities.5 6. .6.4 6.6 6.0 6.3 6.2 6. feeding and transport. b.

9 CONTRACTOR’S PERSONNEL The Contractor’s Personnel shall be appropriately qualified. 7. who is incompetent and fails to conform to contract and safety of works.4 TESTING The Sub-Clause shall apply to all tests other than the tests after Completion (if any). The Employer may instruct the Contractor carry out additional tests. if applicable. including the Contractor’s Representative. The Contractor shall provide all assistance to carry out the specified tests efficiently. Contractor may proceed with the tests shall then be deemed to have been made in the Employer’s Presence.2 SAMPLES The Contractor shall submit samples to the Employer. 7. If the Employer does not attend the test at the time and placed agreed.11 DISORDELY CONDUCT The Contractor shall prevent any unlawful. 6. details of personnel and type of equipment on the Site.0 Plant. Materials and Workmanship 7. 7. The Employer may require Contractor to remove any person employed on the Site or Works. The Contractor shall give notice when ready for Inspection and Employer shall carry it out without unreasonable delay. for review in accordance with the procedures. . skilled and experienced. manufacture and construction. 7. If materials or workmanship is not in accordance with the Contract. cost of carrying out Variation shall be borne by the Contractor.3 INSPECTION The Employer’s Personnel shall have full access to all parts of the Site during production. 6.10 RECORDS OF CONTRACTOR’S PERSONNEL AND EQUIPMENT The Contractor shall submit to the Employer. riotous or disorderly conduct and preserve peace.1 MANNER OF EXECUTION The Contractor shall execute the work in proper workmanlike manner and as per contract.6.

8 If the Employer does not attend the test at the time and placed agreed. If the Contractor suffers delay and / or incurs cost as a result of a delay for which the Employer is responsible. REMEDIAL WORK The Employer may instruct the Contractor to : Remove from the Site and replace any Plant or Materials which is not in accordance with the Contract. . The Contractor shall then promptly make good the defects.7. REJECTION If as a result of an examination of materials. ROYALTIES Contractor shall pay all royalties. subject to payment for plant and materials. If the Employer requires this Plant to be retested if the rejection and retesting cause the Employer to incur additional costs the Contractor shall pay these costs to the Employer. the Contractor shall give notice to the Employer subject to Sub-Clause 20.1 (Contractor’s Claims). rents for natural Materials obtained from outside the Site.5 7. If the Contractor fails to comply the Employer shall be entitled to employ and pay other persons to carry out the work.6 7. Contractor may proceed with the tests shall then be deemed to have been made in the Employer’s Presence. design or workmanship if found to be defective the Employer may reject the Plant. OWNERSHIP OF PLANT AND MATERIALS Each item of Plant and Materials shall become the property of the Employer when it is delivered to the Site.7 7.

EXTENTION OF TIME FOR COMPLETION The Contractor shall be entitled to an extension of the Time for Completion if delayed by any of the following causes : a.4 8. Any delay attributable to the Employer DELAYS CAUSED BY AUTHORITIES If Contractor follows conditions of public authorities. Delays and Suspension COMMENCEMENT OF WORKS a. TIME FOR COMPLETION The Contractor shall complete the whole of the Works.5 8.6 Commencement.1 8.3 8. of personnel. Contractor to advise employer about probable delays and to resubmit revised schedule to the employer.3 (Variation Procedure) b. and b. and each Section within the Time for Completion for the Works or Section including : a. Employer to comment within 21 days or accept the programme as it is. . The passing of the Tests on Completion . then extension of time for completion under sub-clause 9.8.4 is applicable. A variation under Sub-Clause 13.2 8. PROGRAMME The Contractor shall submit a time program to the Employer within 28 days after the Commencement Date. Including methods for major stages of work and details of equipment and type and nos. RATE OF PROGRESS Actual progress is too show to complete within the Time for Completion. The Commencement Date shall be within 42 days after the date on which the contract comes into full force. but authorities delay his work.0 8. and b. The Employer shall give Contractor not less than 7 day’s notice of the Commencement Date. Completing all work which is stated in the Contract. A cause of delay under a Sub-Clause of these Conditions c.

the total amount due shall not exceed the maximum amount of delay damages. by giving notice to the Employer. These damages shall not relieve the Contractor from his obligation to complete the Works. and the Contractor has marked the Plant and/or Materials as Employer’s property. If the Employer does not give permission within 28 days. treat the suspension as an omission.Employer may instruct the Contractor to submit a revised program to expedite progress and complete within the Time for Completion. if the work has been suspended for more than 28 days.7 DELAY DAMAGES If the Contractor fails to coply with time for completion. the Contractor shall pay delay damages to the Employer. However. 8. Contractor may request the Employer’s permission to proceed. These delay damages shall be the sum stated in the Particular Conditions per day.2 may be given. notice of termination under Sub-Clause 16.9 CONSEQUENCES OF SUSPENSION If the Contractor suffers delay and/or incurs Cost.11 PROLONGED SUSPENSION If the suspension has continued for more than 84 days. The Contractor shall adopt these revised methods at the risk and cost of the Contractor. During such suspension. 8. 8.8 SUSPENSION OF WORK The Employer may at any time instruct the Contractor to suspend progress of part or all of the Works. 8. the Contractor shall protect. the Contractor shall give notice to the Employer for an extension of time for any such delay and payment of any such Cost. store and secure the Works against any deterioration.10 PAYMENT FOR PLANT AND MATERIALS IN EVENT OF SUSPENSION The Contractor shall be entitled to payment of the value of Plant and/or Materials. loss or damage. the Contractor may. If suspension affects whole of work. 8. .

Issue a Taking-Over Certificate subject to reduced value of Contract based on agreement with contractor about reduced lowered specification . Trial operation which shall demonstrate that the Works of Section perform reliably. 9. Tests to be repeated under the same terms and conditions. Tests on Completion shall be carried out in the following sequence.0 Tests on Completion 9.8. Order further repetition of Tests. a. b. the Contractor shall give notice to the Employer that the Works are ready for any other Tests on Completion.12 RESUMPTION OF WORK On resumption. 9. 9. c. Reject the Works or Section. Commissioning tests to demonstrate that the Works or Section can be operated safely and as specified. c.2 DELAYED TESTS If the Tests on Completion delayed by Contractor.3 RETESTING If the Works or a Section fail to pass the Tests on Completion. Employer to give notice of 28 days to Contractor to conduct Test otherwise Employer carry on with Testing at risk and cost to the Contractor. a. During trial operation. b. Tests on Completion shall be carried out within 14 days after this date.4 FAILURE TO PASS TESTS ON COMPLETION If the Works or a Section fail to pass Tests on Completion.1 CONTRACTOR’S OBLIGATIONS The Contractor shall give to the Employer not less than 21 days’ notice to carry out each of the Tests on completion. Pre-commissioning tests to demonstrate that each item of Plant can safely undertake the next stage. both sides to examine the work and the Contractor to make good any deterioration. including performance tests to demonstrate Performance Guarantees. 9.

10. Reject the application.1 TAKING OVER OF THE WORKS AND SECTIONS The Works shall be taken over by the Employer when the Works have been completed in accordance with the Contract. The Contractor may apply by notice to the Employer for a Taking-Over Certificate within 14 days. giving reasons and specifying the work required to be done by the Contractor.2 COST OF REMEDYING DEFECTS All work referred to in Sub-Clause 11. it is deemed to have been taken over.10.0 Defects Liability 11. the Contractor shall carry out the Tests. 10. And execute all work required to remedy defects on or before the expiry date of the Defects Notification period. for more than 14 days. Issue the Taking-Over Certificate to the Contractor. b. If Contractor suffers delay and incurs cost due to delay extension of time and contractor’s claim will be applicable.1 COMPLETION OF OUTSTANDING WORKS AND REMEDYING DEFECTS a. from carrying out the Tests for which the Employer is responsible. within 28 days after receiving the Contractor’s application – a. Contractor shall complete any work which is outstanding within reasonable time as is instructed by the Employer.2 TAKING OVER OF PARTS OF THE WORKS No taking-over of part of the Works unless stated in Contract or agreed by both the parties. If Employer fails to take-over within 28 days of properly completed works. The Employer shall.0 Employer’s Taking Over 10.1 shall be executed at the risk and cost of the Contractor. 11. b.3 INTERFERENCE WITH TESTS ON COMPLETION If the Contractor is prevented. 11. .

5 REMOVAL OF DEFECTIVE WORK Contractor may remove Plant for repairs with Employer’s consent. clearing the Site and returning Plant and Materials to the Contractor. 11. Terminate the Contract as a whole to recover all sums paid for the Works plus financing costs and the cost of dismantling the same.7 RIGHT OF ACCESS Until the Performance Certificate has been issued. .8 CONTRACTOR TO SEARCH The Contractor shall search for the cause of any defect and cost of search may have to be borne by the Employer unless it relates to Defect in Contractor’s work. b. the Contractor shall have the right of access to all parts of the works. 11. a.6 FURTHER TESTS Remedied work may require further retests at the risk and cost of the Party liable. c. the Performance Certificate shall be deemed to have been issued.4 FAILURE TO REMEDY DEFECTS If the Contractor fails to remedy any defect or damage within a reasonable time.2 (Cost of Remedying Defects). Agree or determine a reasonable reduction in the Contract Price. under Sub-Clause 11. if the Employer fails to issue the Performance Certificate.3 EXTENSION OF DEFECTS NOTIFICATION PERIO The Employer shall be entitled to an extension of the Defects Notification period for the Works or a Section if it cannot be used for the purposes for which they are intended however. 11. Carry out the work himself or by other at the Contractor’s cost. 11.9 PERFORMANCE CERTIFICATE The Employer shall issue the Performance Certificate within 28 days or as soon thereafter as the Contractor has supplied Contractor’s documents and completed and tested all the Works. 11. a Defects Notification period shall not be extended by more than two years after excluding any delays due to suspension of Work by the Employer. the Employer.11. 11.

1 PROCEDURE FOR TESTS AFTER COMPLETION If tests after completion are specified.1 will apply. same to be repeated. 12. 12.11 CLEARANCE OF THE SITE Contractor to clear site on receiving Performance Certificate.11. 12.4 FAILURE TO PASS TESTS AFTER COMPLETION If the Works fail to pass a Test after Completion and the Contractor proposes to make adjustments. The Contractor shall provide other plant. modifications.0 Tests after Completion 12. determined after sale proceeds if any being adjusted in favour of the Contractor. the Contractor shall then remain liable to carry out the adjustments or modifications and to satisfy this test. fuel and materials.3 RETESTING If Re-Testing is necessary due to failed Tests. Contract shall be deemed to be in force. Contractor’s claim as per Sub-Clause 20. . within a reasonable period of receiving notice by the Employer. under identical terms and conditions. Works will be deemed to have passed. 11.10 UNFULFILLED OBLIGATIONS Even after Performance Certificate. Employer will be free to dispose at cost. equipment and suitably qualified staff. The Contractor shall carry out the Tests in the presence of Employer’s and/or Contractor’s personnel 12. a. If this Test is not conducted within Defects Liability Period.2 DELAYED TESTS If the Contractor incurs Cost as a result of any unreasonable delay by the Employer to the Tests after Completion. The Employer shall provide all electricity. If not cleared within 28 days. c. b. any obligation if unperformed.

program and price.4 PAYMENT IN APPLICABLE CURRENCIES Any effect of above changes in Currency Component to be identified and agreed. prior to their inclusion in the next Statement under Sub-Clause 14. Plant and Materials to be procured by the Contractor including overheads and profits at agreed rates.3 VARIATION PROCEDURE Contractor to propose value engineering based changes and indicate changes likely in design.6 DAYWORK For minor works variation shall be executed on day work basis as per price schedule in the Contract. The Contractor shall execute and be bound by each variation.3 (Application for Interim Payments) .L.2 VALUE ENGINEERING Contractor may propose ideas to accelerate completion or reduce cost of works and operation (under S. 13.5 PROVISION SUMS Each Provision Sum shall only be used in accordance with the Employer’s instructions for each Provision Sum. 13. of capability safety or performance concern.3) Employer shall respond at the request of Contractor. Employer to respond with approval or otherwise if approved time and cost impact to be determined. 13. a.1 RIGHT TO VARY Variations may be initiated by the Employer at any time prior to issuing the Taking-Over Certificate for the Works.13. the Employer may instruct. 13. Work to be executed b. 13. 13. The contractor shall then submit priced statement of these resources to the Employer. unless the Contractor has reasons.0 Variations and Adjustments 13.

The Statement shall include * the estimated contract value of the works executed. * any amount to be deducted for retention.1 THE CONTRACT PRICE The payment for works shall be a lump sum as per Contract including all Taxes and Duties except for adjustments due to changes in legislation.8 ADJUSTMENTS FOR CHANGES IN COSTS If the Contract Price is to be adjusted for rises or falls in the cost of labour. etc. 13.7 ADJUSTMENTS FOR CHANGES IN LEGISLATION The Contractor Price shall be adjusted to take account of any increase or decrease in Cost resulting from a change in the Laws of the Country. Any such changes or interpretations after Base Date may result in extension of the time & cost. 14. Payment is repaid. 14.0 Contract Price and Payment 14. * any amounts to be added and deducted for the advance payment. as an interest-free loan for mobilization and design.2 ADVANCED PAYMENT The Employer shall make an advance payment. Advance bond guarantee to be valid till the loan repaid. adjustments shall calculated in accordance with the provisions in the Particular Conditions. . Goods and other inputs to the Works.13.3 APPLICATION FOR INTERIM PAYMENTS The Contractor shall submit a Statement in six copies to the Employer after the end of the period of payment stated in the Contract. 14. The advance payment shall be repaid through proportional deductions in interim payments. any amounts to be added and deducted for changes in legislation and changes in cost. The Guarantee to be extended if necessary till adv. when the Contractor submits a guarantee in accordance with this Sub-Clause and as per Particular Condition about the details such as installments and rate of amortisation.

The first installment of the advance payment within 42 days after the date on which the Contract came into full force or within 21 days after the receipt of performance security. Employer shall pay within 28 days of invoice statement unless * if any thing supplied or work done by the Contractor is not in accordance with the contract. b.6 14. to the Employer.5 14. The installments shall be the estimated contract values. PLANT AND MATERIALS INTENDED FOR THE WORKS If no schedule of payments is specified. b. TIMING OF PAYMENTS The Employer shall pay to the Contractor a. If the Contractor is entitled to an interim payment for Plant and Materials which are not yet on the Site.7 * any other additions or deductions. * the deduction of amounts included in previous statements. then only if a. the net amount be released. installments may be revised. INTERIM PAYMENTS No amount will be paid until the Employer has received the Performance Security. Contractor has delivered. quarterly non binding estimates may be submitted for payments to Employer. The relevant Plant and Materials are in the Country and have been marked as the Employer’s property.14. .4 14. * if the contractor was or is failing to perform any work obligation in accordance with the Contract. Subject to these adjustments and any correction to Payments made earlier. evidence of insurance and a bank guarantee valid until the Plant and Materials are properly stored on Site. If based on actual progress. SCHEDULE OF PAYMENTS If the Contractor includes a Schedule of Payments specifying the installments in which the Contract Price will be paid a.

Such financing charges to be 3% more than discount Rate of the Central Bank of that country.10 STATEMENT AT COMPLETION Within 84 days after receiving the Taking-Over Certificate for the Works.9 PAYMENT OF RETENTION MONEY When the Taking-Over Certificate has been issued for the Works the first half of the Retention Money shall be paid to the Contractor. 14. the Contractor shall submit to the Employer six copies of a Statement at completion showing a. Any further sums which the Contractor considers to be due. * the final amount due.8 DELAYED PAYMENT If the contractor does not receive payment in accordance with timing or Payment. An estimate of any other amounts due to him under the Contract.* the amount which is due within 56 days after receiving the Statement of Interim Payment. . 14. c. the Contractor shall submit a draft final statement showing * the value of all work done in accordance with the Contract. 14. In case of completion in sections retention will be proportionate to unfinished portion. The value of all work done up to the date stated in the Taking-Over Certificate. 14. Promptly after the latest of the expiry dates of the Defects Notification Periods. the outstanding balance of the Retention Money shall be paid to the Contractor. and * any further sums which the Contractor considers to be due. the Contractor shall be entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay. within 42 days after receiving the final statement.11 APPLICATION FOR FINAL PAYMENT Within 56 days after receiving the Performance Certificate. b.

* if the contract price was expressed in local currency only the extent of foreign currencies will be paid at pre fixed rate in the contract * payment of the damages shall be made in the currencies specified in the particular conditions * other payments to the employer by the contractor shall be made in the currency in which the sum was expended * if any amount payable by the contractor exceeds the sub payable by the Employer to the Contractor in that currency. 14.14 CESSATION OF EMPLOYER’S LIABILITY The Employer shall not liable to the contractor for any matter or thing under or in connection with the Contract execution of the Works. Employer shall pay the agreed parts of the draft final statement prepared by the Contractor. . less all amounts previously paid by the Employer any deductions in accordance with Sub-Clause 2. if following discussion between the parties it becomes evident that a dispute exists.15 CURRENCIES OF PAYMENT The Contractor price shall be paid in the currency or currencies named in the Contract. 14. This discharge shall be effective on receipt of balance payments.12 DISCHARGE When submitting the Final Statement Contractor shall submit a written discharge that the total of the final Statement represents full and final-settlement.13 FINAL PAYMENT Employer shall pay to the Contractor the amount which is finally due. the Employer may recover in other currencies * if no rates of exchange are stated in the Contract they shall be those prevailing on the Base Date.5 (Employer’s Claims) 14. 14.However.

gratuity. upon giving 14 days notice to the contractor. the Employer may complete the work.0 Termination by Employer 15. Becomes bankrupt or insolvent.1 NOTICE TO CORRECT The Contractor fails to carry out any obligation. commission for going any action related to contract by inducement. After termination.2 TERMINATION BY EMPLOYER The Employer shall be entitled to terminate the Contract if the Contractor : a. 15.3 VALUATION AT DATE OF TERMINATION Employer to proceed with valuation on the date of termination to ascertain money due to contractor for work done till then. Proceed in accordance with employer’s claims. f. employer may ask him to correct within specified time. b. Contractor to remove all equipment unless it is detained by employer to recover payments due for contractor. gift. Employer to release all Contractor’s equipment and temporary work. goes into liquidation.15. . Withhold further payments to the contractor until all costs incurred by the Employer. b. 15. Without reasonable excuse fails to proceed with the works d. Abandons the works c. The contractor to leave by returning all documents and designs. In any of these events Employer may. Subcontracts the whole of the works assigns without agreement e.4 PAYMENT AFTER TERMINATION After a notice of termination a. Offers to give to give any bribe. c. Recover from the Contractor any losses and damages and any extra costs incurred by the employer. terminate the Contract and expel the Contractor from the site. Fails to comply with Performance Security. 15. have been established.

16. If the Contractor suffers delay and/or incurs cost as a result of suspending work contractors shall be entitled to (Contractor’s Claims) to a. at any time for to employer’s convenience.0 Suspension and Termination by Contractor 16. Payment of Cost plus reasonable profit 16. goes into liquidation .5 EMPLOYER’S ENTITLEMENT TO TERMINATION The Employer shall be entitled to terminate the contract.4 (Employer’s Financial Arrangements) or (Timing of Payments) Contractor may.7 (Assignment) * a prolonged suspension affects the whole of the works * the Employer becomes bankrupt or insolvent.1 CONTRACTOR’S ENTITLEMENT TO SUSPEND WORK If the Employer fails to comply with Sub-Clause 2.2 TERMINATION BY CONTRACTOR The Employer shall be entitled to terminate the Contract if : * the contractor does not receive the evidence within 42 days after giving notice in respect (Employer’s financial Arrangements) * the Employer fails to perform his obligations under the Contract * the Employer fails to comply with Sub-Clause 1. Employer shall not terminate the Contract to do the works himself or to get the work done by another contractor. The termination shall take effect 28 days after the Contractor receives this notice or the employer returns the Performance Security. Extension of time b.15. If the Contractor subsequently receives such evidence or payment the contractor shall resume normal working. after giving not less than 21 days notice to suspend work (or reduce the rate of doing work) until the Contractor has received the reasonable evidence or payment.

Pay the Contractor in accordance with Optional Termination. Cease all further work b.16.3 CESSATION OF WORK AND REMOVAL OF CONTRACTOR’S EQUIPMENT After a notice of termination a. Hand over Contractor’s Documents. except as necessary for safety. c. Remove all other Goods from the Site. and c. Materials for which the Contractor has received payment. 16. Pay to the Contractor the amount of any loss of profit or other loss or damage sustained by the Contractor as a result of this termination. Plant. Return the Performance Security to the Contractor. .4 PAYMENT ON TERMINATION After a notice of termination Employer shall promptly : a. Payment and Release. b.

hostilities rebellion. After taking over. disorder within the country by persons other than the contractor’s personnel. civil war. b) damage to loss property.2 17. RISK AND RESPONSIBILITY 17. execution & completion of the works. EMPLOYER’S RISKS The risks referred to in sub-clause 17. losses in respect of a) bodily injury. of any person by reason of the design. from all claim. diseases or death. execution and completion of works but not due to any in negligence or breach of contract by employer. responsibility or care shall pass on the employer. terrorism.3 (a) (b) (c) War. Riot.4 below are: 17. arising out of design. within the country. . military or usurped power.17. CONTRACTORS CARE OF THE WORK The contractor shall take full responsibility for the care of the works from the commencement date until the taking over certificate is issued. The contractor shall continue to be liable for “actions” taken by him before or after taking over certificate. If any loss or damage happens to the works during the period when the contractor is responsible he shall rectify the loss or damage at the contractor’s risk and cost.1 INDEMNITIES The contractor shall indemnify the employer. damages.

construction or execution. deliberate default or misconduct. 17. explosive materials.4 CONSEQUENCES OF EMPLOYER’S RISKS The contractor shall rectify above loss or damage to the extent required by the employer. 17.5 INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS. within the country. ionizing radiation. The contractor shall indemnify the employer against any claim which arises out of contractor’s design.(d) (e) Munitions of war. If the contractor suffers delay and/or incurs cost from rectifying this loss or damage. contamination by radioactivity. . contractor shall be entitled to an extension of time and cost. 17.6 LIMITATION OF LIABILITY The total liability of the contractor to the employer. This limit to liability shall not apply in case of fraud. under the contract shall not exceed contract price except for services rendered by employer at cost. pressure waves caused by aircraft or other aerial devices. The employer shall indemnify the contractor from any claim alleging an infringement which is due to compliance by contractor of employers’ requirement or use of works for purpose stated in the contract.

each insurance shall be effected in terms approved by the employer. This agreement of terms shall take precedence over provisions of this clause. shall be in currencies required to rectify the damage and the payments received shall be used for rectification only . Wherever the employer is the insuring party. Each insurance related to compensation received. If the insuring party fails to effect and keep in force any of the insurance it is required to effect. . (b) Copies of the policies for the insurance. The other party may effect insurance for the relevant coverage. The relevant insuring party shall submit to the other party: (a) Evidence that the insurances have been effected.1 GENERAL REQUIREMENTS FOR INSURANCE Wherever the contractor is the insuring party. The insuring party shall pay the amount of these premiums to the other party. INSURANCE 18. Neither party shall make any material alteration to the terms of any insurance without the prior approval of the other party.18. and the contract price shall be adjusted accordingly. each insurance shall be effected in terms consistent with the details annexed to the particular conditions.

2 INSURANCE FOR WORKS AND CONTRACTORS EQUIPMENT. The insuring party shall insure the works. This insurance shall be until the date of issue of the takingover certificate for the work. . materials for not less than the full reinstatement cost. plant. 18. for reasons prior to taking over certificate. will be paid the insuring party. the insurance shall be effective while it is being transported to the site until it is no longer required as contractor’s equipment at site. Any amounts not insured or not recovered shall be borne by the contractor and / or the employer. (c) Shall cover all loss and damage from any cause not listed employer’s risks. Insurance under this sub-clause: (a) Shall be effected and maintained by the contractor (b) Shall be in the joint names of the parties. The insuring party shall insure the contractor’s equipment for not less than the full replacement value. liabilities or responsibilities of the contractor or the employer.Nothing in this clause limits the obligations. The insuring party to maintain cover until the issue of performance certificate. In case insuring party fails to keep in force an insurance any monies due under insurance claim.

Part of the works which is defective due to a defect in its design. damages. A part of the works which has been taken over by the employer. contractor’s equipment and personnel shall be effected and maintained by the contractor in the joint name of both parties including loss of employer’s property. Iv. A part of the works which is damaged in order to reinstate any other part of the works due to a defect in its design.4 Applicable to works. If after one year from base date of contract. contractor can be asked to compensate for employer’s claim towards full insurance requirement.3 INSURANCE AGAINST INJURY TO PERSONS AND DAMAGE TO PROPERTY Insurance against each party's liability to claims beyond sub clause 18. The employer’s personnel shall also be . iii.Such insurance may however exclude loss or damages due to: i.4 INSURANCE FOR CONTRACTOR’S PERSONNEL The contractor shall effect and maintain insurance against liability for claims. materials or workmanship.2 and 18. 18. 18. disease or death of any person employed by the Contractor. the insurance cover is not available at commercially reasonable rate. losses and from injury. materials or workmanship. Goods while they are not in the country. ii.

hostilities. contamination. Riot. War. Natural catastrophes. ii.1 DEFINITION OF FORCE MAJEURE in this clause. ionising radiation. i. and not provided for. Rebellion. “Force Majeure” means an exceptional event or circumstance beyond party’s control.indemnified under the policy of insurance. The insurance shall be maintained in full force during the whole time that these personnel are assisting in the execution of the works except to the extent of neglect by employer’s personnel. v. lockout by persons other than the contractor’s personnel. Contractor shall remain responsible for compliance by subcontractor. military or usurped power or civil war. Munitions of war. strike. unavoidable. terrorism. iv. 19. disorder. FORCE MAJEURE 19. . iii. Force Majeure may include.

19. notice of termination of 7 days. A party shall give notice to the other party when it ceases to be affected by the force majeure. . Payment of any such Cost. This shall not apply to making payment to the other party when it ceases to be affected by the force majeure.5 FORCE MAJEURE AFFECTING SUBCONTRACTOR Contractor cannot claim relief broader than specified here. If delay in execution due to F.M.19. 19. exceeds 84 days or 140 days for multiple reason. then either party may give to the other.3 DUTY TO MINIMISE DELAY Each party shall minimize any delay in the performance of the contract.4 CONSEQUENCES OF FORCE MAJEURE Contractor can claim due to Force Majeue conditions: (a) (b) An extension of time.2 NOTICE OF FORCE MAJEURE If a party is prevented from performing its obligation. claims of sub contractor.M. due to F. 19. a Notice of Force Majeure is given within 14 days of effects.

1 CONTRACTORS CLAIMS If the contractors himself to be entitled to any extension of the time for completion and/or any additional payment. Each interim payment shall include such amounts for any claim as have been reasonably substantiated as due under the relevant provision of the contract. Within 42 days after the contractor become aware of the event giving rise to the claim the contractor shall send to the employer a fully detailed claim the employer shall respond with approval. The parties shall jointly appoint a DAB by the . or with disapproval and detailed comments. CLAIMS. If the contractor fails to give notice of a claim within such period of 28 days.20. then employer shall be discharged from any liability in this connection. describing the event or circumstance giving rise to the claim.4 (Obtaining Dispute Adjudication Board’s Decision). DISPUTES AND ARBITRATION 20. The notice shall be given not later than 28 days after the contractor become aware. 20. the contractor shall give notice to the employer.2 APPOINTMENT OF THE DISPUTE ADJUDICATION BOARD Disputes shall be adjudicated by a DAB in accordance with sub-clause 20.

Both parties shall promptly make available to the DAB all information.4 OBRAINING DISPUTE ADJUDICATION BOARD’S DECISION If a dispute arise between the parties in connection with the contract either party may refer the dispute in writing to the DAB for its decision. access to the site. The DAB shall comprise either one or three suitably qualified persons. and appropriate facilities. each party shall nominate one member. The DAB shall be deemed to be not acting as arbitrator's. This appointment shall be final and conclusive. The terms of the remuneration of either the sole member of each of three members shall be mutually agreed upon. The appointment of any member may be terminated by mutual agreement. 20. 20.3 FAILURE TO AGREE DISPUTE ADJUDICATION BOARD If parties fail to agree upon the appointment. The parties shall consult both these members and shall agree upon the third member. who shall be appointed to act as chairman. If the DAB is to comprise of three persons.Date 28 days after a party gives notice to the other party of its intention to refer a dispute of DAB. . then the appointing entity or official named in the particular conditions shall appoint this member of the DAB.

which shall be reasoned and shall state that it is given under this sub-clause. who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or an arbitral award as described below.6 AMICABLE SETTLEMENT Parties shall attempt to settle the dispute amicably before the commencement of arbitration. 20. If the DAB has given its decision as to a matter in dispute to both parties. Neither party shall be entitled to commence arbitration of a dispute unless a notice of dissatisfaction has been given in accordance with this sub-clause.Within 84 days after receiving such reference alongwith advance payment for services DAB shall give its decision. give notice to the other party of its dissatisfaction. FAILURE TO COMPLY WITH DISPUTE ADJUDICATION BOARD’S DECISION If Dab’s decision not contested by both parties but is not honored. ARBITRATION Unless settled amicably. then this issue can be taken arbitration for settlement. and no notice of dissatisfaction has been given by either party within 28 days after it received the DAB’s decision. If either party is dissatisfied with the DAB’s decision. If DAB appointment has expired. The decision shall be binding on both parties. then the decision shall become final and binding upon both parties. 20. the dispute may be refereed directly to arbitration. then either party may. any dispute in respect of which the DAB’s decision has not become final and binding shall be finally settled by international arbitration under the rules of arbitration of the International chamber of commerce.5 20.7 . within 28 days after receiving the decision.

P.C./ TURNKETY PROJECTS Presented by Prof.AN INTRODUCTION TO FIDIC CONDITIONS OF CONTRACT PART – (TWO) FOR E. Ajit Patwardhan .

including design. tenders having been invited on an international basis. delivery and installation of plant and the design and execution of building or engineering works. The Employer’s Requirements should specify the particular requirements for the completed works on a functional basis. Notes on the Preparation of Tender Documents. Modifications to the Conditions may be required if they are to be used on domestic contact. including detailed requirements on quality and scope. The instructions may include matters referred to in some or all of the following sub-clauses. . manufacture. The tender documents should be prepared by suitably qualified engineers and a review by suitably qualified lawyers may be advisable. The Instructions to tenderers may need to specify the extent of other information which each tenderer is to include with his tender.Guidance for the Preparation of Particular Conditions NTRODUCTION FOR INTERNATIONAL BIDS OF EPC/TURNKEY PROJECTS The terms of the Conditions of Contract for EPC/Turnkey Projects have been prepared by FIDIC and are recommended where one entity takes total responsibility for an engineering project.

Cost plus reasonable particular percentage. fixtures.3 4. construction. ready for operation.e.1 18 20 Contractor’s Representative (name and curriculum vitae) Quality Assurance System Tests on Completion Tests after Completion Insurances Resolution of disputes Turnkey contracts typically include design.f.1 12. they have to undertake studies of carry out design work of a conceptual nature. the scope of which should be defined in the employer’s requirements. such as the extent to which the works are to be fully equipped. In addition.). CLAUSE 1 : GENERAL PROVISIONS The Particular Conditions should specify the time for Completion for the Works and the Defects Notification Period. profit allowed for some items may be specified with .4. if.9 9.1 © or for some year’s operation. Consideration may be given to offering some remuneration to tenderers. with spare part and consumables provided for operation for a specified period. in order to provide a responsive tender. the Contractor may be required to operate the works. fittings and equipment (f. either for a few months’ trial operation period under sub-clause 9.

such an appointment may assist the employer’s administration. If the employer wishes to appoint an independent consulting engineer as the employer’s representative. If this sub-clause is considered for plant and design-build may be preferred. tenderers should be advised of the extent to which the outline design is a suggestion or a requirement. it is usually preferable for the risk of unforessen ground conditions to be allocated to the employer. CLAUSE 5 : DESIGN If the employer’s requirements include an outline design. CLAUSE 3:THE EMPLOYER’S ADMINISTRATION Although the employer is not required to appoint a representative. CLAUSE 4 : THE CONTRACTOR Contractor’s representative may be named in tender with alternative names if delay is foreseen in the Award. If the works included tunneling or other substantial sub-surface construction. Contractor may need early access for survey and sub-surface investigation.CLAUSE 2 : THE EMPLOYER The employer to specify when the right of access to site will be available. he may be named in the particular conditions. .

contractor shall similarly be responsible for their return or burial. CLAUSE 7: PLANT. expressed either as an amount or as a percentage. contractor shall have a sufficient number of competent interpreters available on site during all working hours. The particular conditions should specify the daily sum. The contractor may import any personnel who are necessary. The contractor must ensure that these personnel are provided with the required residence visas and work permits. the amount of these pre-defined damages must represent a reasonable pre-estimate of the employer’s probable loss in the event of delay. DELAYS AND SUSPENSION Under many legal systems. for the works and for each section. MATERIALS & WORKMANSHIP If the contract is being financed by an institution whose rules or policies require a restriction on the use of its funds regarding origin of goods.CLAUSE 6 : STAFF AND LABOUR If the ruling language is not the same as the language for day to day communications.. . In the event of the death. CLAUSE 8 : COMMENCEMENT. The dates for bonus due may be fixed and will not apply to any extended dates if granted by employer for completion of works.

which is unusual under a turnkey contract. . CLAUSE 11 : DEFECTS LIABILITY (Unfulfilled obligations) It may be necessary to review this sub clause in relation to the period of liability under the applicable law. CLAUSE 12: TEST AFTER COMPLETION In an EPC turnkey project. but may required amendment to trial operation. minimum performance criteria should also be specified by the employer.CLAUSE 9 : TEST ON COMPLETION The wording in the sub-paragraphs includes the conditions which are typically applicable for a plant contract. the contractor is typically required to prove the reliability and performance of the plant during the test on completion. CLAUSE 10: EMPLOYER’S TAKING OVER If the Works are to be taken over in stages. these stages should be defined. In case of failure to pass test on completion. during which any product produced by the works becomes the property of the employer for disposal or selling it.

3. . Wording for provisions for adjustment may be based on FIDIC book for plant and design-build. Provision for adjustments may be required if it would be unreasonable for the contractor to bear the risk of escalating costs due to inflation. CLAUSE 14: CONTRACT PRICE AND PAYMENT Normally. The contractor thus takes the risk of changes in cost arising from his design.2.1. after the employer has taken over and operated the works. this type of contract is based on a lump sum price. it may be considered necessary for tests after completion to be carried out. a Provisional Sum may be necessary to cover goods which the employer wants to select. so that the guaranteed performance can be demonstrated under normal operating conditions. (b) The employer may request a proposal under sub-clause 13. Although generally inappropriate for this type of contract. CLAUSE 13: VARIATIONS AND ADJUSTMENTS The employer may instruct the variation under sub-clause 13.Exceptionally. (a) The contractor may initiate his own proposals under sub-clause 13.

rentals and similar services. therefore. which may be based on a) An amount (or percentage of the estimated final contract price) could be entered for each hree-month (or other ) period or . the relevant taxes paid shall be reimbursed by the employer. If exemption is not granted.In order to value variations. The employer shall seek exemption for the purpose of this sub-clause. including quantities. Expatriate (foreign) personnel shall not be liable for income tax levied in the country on subsistence. The general conditions contain provision for interim payments to the contractor. decide whether he will accept being bound by the tenderer’s breakdown. The employer may consider it advisable to have some form of security. If it is not granted. All goods imported by the contractor into the country shall be exempt from customs and other import duties. tenders may be required to be accompanied by detailed price breakdowns. consideration should be given to the benefits of stage payments during manufacture. since these payments would not relate to anything in his possession. The employer must. If the contractor is to provide major items of plant. unit rates and other pricing information. the customs duties payable and paid shall be reimbursed by the employer. the information may not have been priced competitively. However.

Financing Arrangements For major contracts there may be a need to secure finance from entities such as aid agencies. g.b) The schedule could be based on actual progress achieved in executing the works. Particular Conditions may need to incorporate its special requirements. Giving the contractor the right suspend/terminate the event of default under the financing arrangements. f. Restricting the fight to reject plant. export credit agencies. d. development banks. b. e. Provision for arbitration under recognized international rules and at a neutral location. other international financing institutions. which necessitates careful definition of the payment milestones. Obliging the employer to make payments from his own resources if the funds under the financing arrangements are insufficient. This requirements may include a. Contract is subject to a widely-accepted neural law. Specifying the payments due in the event of termination. Prohibition from discrimination. h. Specifying that the contract does not become effective. . c.

the Contractor should verify that each anticipated ground for termination is consistent with such law. CLAUSE 17: RISK AND RESPONSIBILITY The Contractor shall take full responsibility for the care of the items of use or occupation by the Contractor. . or by the Contractor. CLAUSE 16: SUSPENSION AND TERMINATION BY CONTRACTOR Before submitting tenders. the Contractor shall. CLAUSE 15: TERMINATION BY EMPLOYER Before inviting tenders. the Contractor may be prepared to initiate financing arrangements and retain responsibility for them. before submitting the Tender. at his won cost. rectify the loss or damage to the satisfaction of the Employer. the Employer should verify anticipated ground for termination. If any loss or damage happens to any of the above items. is consistent with the law governing the Contract. employer. upto the respective dates of hand-over or cessation of occupation. Alternatively. and Contractor) may be initiated by the Employer. such Financial Institutions might require the Employer to make interim payments although a large proportion of the Contract price might be withheld until the Works are complete.The above arrangements (involving financing institutions (s).

the tender documents should include details as an annex to the Particular Conditions. The appointment of the DAB may be facilitated by including an agreed list of potential members in the Contract. DISPUTES AND ARBITRATION The contract should include provisions which. allow them to refer contentious matters to an impartial dispute adjudication board (“DAB”). The provisions of this Sub-Clause for Amicable Settlement are intended to encourage the parties to settle a dispute amicably. . CLAUSE 19: FORCE MAJEURE Before inviting tenders. by direct negotiation. whilst not discouraging the Parties from reaching agreement on disputes as the works proceed. the Employers should verify that the wording of this Clause is compatible with the law governing the Contract. CLAUSE 20 : CLAIMS.CLAUSE 18: INSURANCE Insurances provided by the Contractor are to be consistent with the general terms agreed with the Employer. so that tenderers can estimate what other insurances they wish to have for their own protection. If the Employer is to arrange any of the insurances under this Clause.

If the UNCITRAL arbitration rules are preferred. it may be necessary to designate.Conciliation. it is desirable that the place of arbitration be situated in a country other than that of the Employer or Contractor. international commercial arbitration has numerous advantages over litigation in national courts. mediation or other forms of alternative dispute resolution. For major projects tendered internationally. . In international construction contracts. and may be more acceptable to the Parties. as institution to appoint the arbitrators. in the Particular Condition. This country should have a modern and liberal arbitration law and should have ratified a bilateral or multilateral convention on the Recognition and Enforcement of Foreign Arbitral Awards.