Fédération Internationale des Ingénieurs-Conseils

” FIDIC”
Mohammed Said Fatha
Consultant Engineer
M C I Arb-London
Member of the Arabic translation Task Group
of FIDIC Contracts
Member of the Arab Center Of Arbitration Cairo.
 Contents of this presentation.
Fédération Internationale des Ingénieurs-Conseils

1- What is FIDIC?
2-Types of standard
forms of contracts
Issued by FIDIC &
their main features.
 HISTORY OF FIDIC
Fédération Internationale des Ingénieurs-Conseils

FEDERATION INTERNATIONALE DES

INGENIEURS-CONSEILS
 Initial foundation in 1913 by French,
Belgium& Switzerland consultants
Engineers comities.
 Expanded in 1945 to include 40 National
Associations of Consulting Engineers.
 Published first Conditions of Contract in
1957
 In 2012 has 94 National Association
Members .
 International Federation of Consulting Engineers

To be the Founded in
Fédération Internationale des Ingénieurs-Conseils

recognized 1913 with

global voice for headquarters
the consulting in Geneva
engineering
industry

To promote the
business interests of
suppliers of
technology-based
intellectual services for
the built and natural
environment
Fédération Internationale des Ingénieurs-Conseils – World Trade Center 2 –
CH-1215 Genève 15 – www.FIDIC.org
Fédération Internationale des Ingénieurs-Conseils
 Strategic Objectives

What FIDIC does

Fédération Internationale des Ingénieurs-Conseils

Represent globally the consulting engineering industry

Enhance the image of consulting engineers

What FIDIC offers the industry

Be the authority on issues relating to business practice
Promote the development of a global and viable consulting engineering industry

What are FIDIC’s governing principles

Promote quality
Actively promote conformance to a code of ethics and to integrity
Promote commitment to sustainable development
 Quality Services High Standards
Fédération Internationale des Ingénieurs-Conseils

Value for the client Performance

Cost efficiency Know how
Impartiality Integrity
Principles

Best Practice Selection by Ability

Standard contract documents Quality of proposals
Policies and guidelines Skills and experience
Fair allocation of risks and responsibilities Fair remuneration

Sustainability Capacity Building

Long-term perspective International co-operation
Respect for the environment Training & transfer of know-how
Project-level focus Manuals
 Annual conferences
Fédération Internationale des Ingénieurs-Conseils

Provide a meeting place for Publications

clients, Establish best practice procedures
contractors and consultants Publish contracts for the
involved in development infrastructure industry
Activities

International agencies Training

Keep the consulting engineering Capacity building for the
industry’s concerns on the consulting
agenda industry in both developed and
Strategic partnerships developing economies
Liaison
Communication between www.FIDIC.org
members, Distribute updated information
committees & other & services to members &
organizations society
 Business Practice - Guide to Business Practice Manual

Training Modules
Fédération Internationale des Ingénieurs-Conseils

- The consulting industry Each module

- Organising a consulting firm specifies:
- Administration of the firm’s activities - Content
- Business development - Resources
- Case studies
- Human Resources Management
- Financial Management
- Client relationships and communications
- Project execution
- Risk Management
- Quality Management
- Business Integrity Management
- Performance Management
 Training Modules
Fédération Internationale des Ingénieurs-Conseils

Works Contracts - Contracts Training Manual

- Professional Services
Agreements
- Practical Use of FIDIC contracts
Recommended for FIDIC
- Claims and Dispute Resolution National Adjudicator President’s List
Lists
- Dispute Adjudication
- Contract Management

Each module specifies:

- Content
- Resources
- Case studies
 FIDIC Services - Events

Integrated Programme
Fédération Internationale des Ingénieurs-Conseils

Conferences
- Formal presentations
- Flexible programme
- Many topics

Seminars
- Formal presentations
- Flexible programme
- Several topics

Workshops
- Flexible programme
- One topic
- Break-out discussion

Courses
- Highly structured
- One topic
 History of FIDIC
Fédération Internationale des Ingénieurs-Conseils

Conditions of Contract

 Prior to 1957, there were no

internationally recognised contract
conditions for construction work.

 1957 first edition of ”Conditions of

Contract for Works of Civil Engineering
Construction” known as the ‘Red Book’
was published.
 History of FIDIC Conditions of Contract
Fédération Internationale des Ingénieurs-Conseils

Red Book based upon British form of

contracts, used by Institution of Civil
Engineers and reflects British
traditions, language and legal system.
FIDIC maintains committees to
improve documents and to add
further Contract Conditions for other
types of construction.
Fédération Internationale des Ingénieurs-Conseils

FIDIC is now best known as : the

organisation which publishes standard
forms of contract documents related to
the procurement of engineering works.
 These standard forms include those for
use by consulting engineers, such as the
“White Book” (Client / Consultant Model
Services Agreement) and other forms which
are suitable for the procurement of building
and engineering works.
Fédération Internationale des Ingénieurs-Conseils

Hereafter are
some Standard
form of contracts
issued By FIDIC.
 The White Book.
Fédération Internationale des Ingénieurs-Conseils

The terms of the Client Consultant

Model Services agreement (The
White Book) have been prepared by
FIDIC and are recommended for
general use for the purposes of:
 Pre-investment and feasibility
studies, designs and administration
of construction and project
management.
Where proposals for such services
are invited on an international basis:
They are equally adaptable for
domestic agreements.
 The White Book Guide.
Fédération Internationale des Ingénieurs-Conseils

The purpose of the White Book

Guide is twofold, namely :
a) To assist those who wish to
draft Consultancy Agreements
using the White Book
(Client-Consultant Agreement)
as published or as the main
reference, and
b)To provide some insights into
the rationale for the White
Book's provisions and the
content of the Guide dealing
with completing an Agreement
based on the White Book.
 Consultant Selection
Guidelines.
Fédération Internationale des Ingénieurs-Conseils

The purpose of these

guidelines is:
1. To present the commonly
used methods of consultant
selection.
2. To explain the respective
procedures and to combine
them all in one compact
document.
3. As well as to emphasize and
explain FIDIC's policies on the
subject of selection.
 Representative Agreement.
Fédération Internationale des Ingénieurs-Conseils

• The terms of the FIDIC Model Representative

Agreement are intended for Consultants wishing
to enter into a contract with a Representative for
the provision of services in a foreign country.
• Following the Agreement, the clauses of general
application have been grouped together in this
publication and are referred to as General
Conditions.
• They are intended for incorporation as printed in
the documents comprising the Agreement.
• The General Conditions are linked with data given
in the Particular Conditions, identified by the
corresponding numbering of the sub-clauses, and
Appendices, so that General Conditions and
Particular Conditions (with Appendices) together
comprise the conditions governing the rights and
obligations of the Parties.
• Given as Appendices to the Particular Conditions
are Scope of Services, Basis for Remuneration,
Consultant’s Code of Conduct and Consultant’s
Business Integrity Policy Statement.
• Guidance Notes assist in the preparation of an
Agreement.
 Sub-consultancy Agreement .
Fédération Internationale des Ingénieurs-Conseils

• The model Sub-Consultancy Agreement

has been developed essentially with a view
to its operation between an international
firm and a local firm in a developing
country, where:
- Either the local firm will be a Sub-
Consultant providing certain specific
services and inputs for the international
firm;
- Or the international firm will be a Sub-
Consultant providing specific specialist or
general advisory services to the local firm;
and
- The Main Consultancy Agreement will
embody FIDIC’s Client/ Consultant Model
Services Agreement (i.e. The White Book).
 Joint Venture (Consortium)
Agreement.
Fédération Internationale des Ingénieurs-Conseils

• The Joint Venture (Consortium) Model

Agreement was prepared essentially to be
used for the association between two or more
Consultants, when:
- The association is for marketing and/or
performing the Services required for a
specific project, rather than for a more
permanent type of arrangement; and
- One party will be an international firm and
one may well be a local firm in the country of
the Project.
• It is recommended, but not essential to the
wording of the Joint Venture (Consortium)
Model Agreement, that FIDIC's
Client/Consultant Model Services Agreement
(the White Book) will be the basis of the
Agreement for Professional Services with the
Client .
 Guide to the joint venture and
sub-consultancy agreements .
Fédération Internationale des Ingénieurs-Conseils

•The Joint Venture (Consortium)

Model Agreement was prepared
essentially to be used for the
association between two or more
Consultants, when:
• Services required for a specific
project, rather than the
association is for marketing
and/or performing a more
permanent type of arrangement ;
• And one party will be an
international firm and one may
well be a local firm in the country
of the Project.
 Quality Based Selection.
Fédération Internationale des Ingénieurs-Conseils

• Quality Based Selection for the

Procurement and Consulting Services.
• (QBS=Quality. Based. Selection).
• This brochure sets out to help all
those responsible for the selection
of consultants.
• It explains how to assess the ability
of consulting firms and what
method to use to select the best firm
for the projects.
• The phrase „‟ Quality-based selection‟‟
has been chosen because it best
represents the process of selection of
consulting firms on the basis of
qualifications, experience, ability and
integrity.
 Business Practice - Consultant Selection

Quality is paramount in the selection of

Fédération Internationale des Ingénieurs-Conseils

consultants, and Quality Based Selection is the

recommended method for procurement.

Best practice principles

Quality is Pre-eminent Harmonisation
Informed Purchaser Liability to be limited
Transparency Insurance
Capacity building Life-cycle costs to be considered
Integrity Monitoring outcomes
Fair competition Design for safety

Updated 2009
 Quality Based Selection (QBS)
Guidelines (2011) brochure
Fédération Internationale des Ingénieurs-Conseils

• This is a guidelines
Brochure for the
Quality Based
Selection (QBS).
 Business Integrity Management
Fédération Internationale des Ingénieurs-Conseils

System (BIMS) Guidelines .

 The Guidelines set out:

1. Why consultants should
apply Business Integrity
Management in all of their
work.
2. And provide an introduction
to initiating the business
integrity management
process in their firms.
 FIDIC Guide to Practice
The business of a professional services firm.
Fédération Internationale des Ingénieurs-Conseils

• This training manual

forms part of the FIDIC
Guide to Practice
Collection that includes
documents related to
best practice that are
published by FIDIC .
 Project Sustainability
Management guidelines .
Fédération Internationale des Ingénieurs-Conseils

This guidelines aim to commit to the

principles of sustainable development
by building or refurbishing facilities and
infrastructure that make more efficient
use of resources, protect ecological
systems and account for community
needs.
PSM enables project owners and
consulting engineers to devise and
customize indicators to meet
stakeholder concerns and issues, while
demonstrating a rigorous , causal link
to the fundamental concerns and goals
of sustainable development.
 Guide to Quality Management in
the consulting engineering
Fédération Internationale des Ingénieurs-Conseils

industry.
 The FIDIC Quality Management
Guide has been developed as a
living document, subject to
periodic review and update in
order to provide Consulting
Engineers with a comprehensive
document on Quality Management.
 The document sets out reasons
why Consulting Engineers must
apply Quality Management in all
their work, and provides an
introduction to initiating this
Quality Management process in a
firm.
 The Red Book.
Fédération Internationale des Ingénieurs-Conseils

 The terms of the Fourth

Edition of the Conditions
of Contract for Works of
Civil Engineering
Construction are
recommended for general
use for the purpose of
construction of such works
where tenders are invited
on an international basis.
 The Conditions , subject to
minor modifications, are
also suitable for use on
domestic contracts.
 FIDIC RED BOOK
SUB-CONTRACTS.
Fédération Internationale des Ingénieurs-Conseils

Red Book Subcontract

(Condition of subcontract for work of
civil engineering construction).
For use in conjunction with the
Conditions of Contract for Works of
Civil Engineering Construction.
Part I: General Conditions .
Part II: Guidance for the Preparation
of the Particular Conditions .
Part III: With Forms of Tender, and
Agreement.
 The Yellow book.
Fédération Internationale des Ingénieurs-Conseils

• The Yellow Book,

( condition of
contract for
electrical and
mechanical works).
 Design-Build and Turnkey
(Orange Book).
Fédération Internationale des Ingénieurs-Conseils

 Conditions of Contract for Design-

Build and Turnkey (1st Edition, 1995).
 Part 1: General Conditions;
Part 2: Guidance for the Preparation
of Conditions of Particular
Application. With Forms of Tender
and Agreement.
 The terms of the Conditions of
Contract for Design - Build and
Turnkey have been prepared by
(FIDIC) and are recommended for
general use for the purpose of the
design and construction of works
where tenders are invited on an
international basis;
 The Orange Book Guide.
Fédération Internationale des Ingénieurs-Conseils

 Design-Build and
Turnkey
(Orange Book) Guide .
 Insurance of large
civil engineering projects.
Fédération Internationale des Ingénieurs-Conseils

 The FIDIC Committee which reported in 1981 this

paper was appointed to discuss dissatisfaction with the
gaps in insurance cover for large scale engineering
projects. Particular attention was focused on the
position of the owner who may not always be
sufficiently experienced to realise the uninsured losses
he faces.
 The position was reviewed in the light of the Contract
Conditions which were in general use at the time ,i.e.
between owner and contractor-FIDIC Conditions of
Contract( International) For Works of civil Engineering
Construction, and between owners and engineer- FIDIC
IGRA Agreement for design and supervision of
construction of works.
 Insurance of large
Fédération Internationale des Ingénieurs-Conseils

civil engineering projects.

The 1997 edition. The 2005 edition.

 Business Practice – Risk Management
Fédération Internationale des Ingénieurs-Conseils

Business Practice Guides

Risk Management Manual

Risk Management Primer
Professional Indemnity
Insurance
Professional Liability Insurance
Insurance of Large Projects
Managing Risk
 Risk Management Manual
Fédération Internationale des Ingénieurs-Conseils

This Manual discusses in detail and at

length the many aspects which should
be kept in mind and suggests sound
management procedures which should
be followed in a professional practice to
minimize risk exposure.
Systematic risk management involves
identification, assessment and
mitigation of risk, minimization of
potential damage and setting up of
realistic mechanisms to finance the
residual risk on project by project basis.
This Manual touches on all these
issues.
 FIDIC Tendering Procedure .
Fédération Internationale des Ingénieurs-Conseils

This Tendering Procedure is

primarily addressed procedures
which FIDIC recommended for:
1. the selection of tenderers.
2. and the preparation and
evaluation of tenders for civil
engineering contracts.

“FIDIC recommends that users of

the new contracts (Construction,
Plant and EPC/Turnkey) refer to
the FIDIC Contracts Guide for
advice on tendering procedures”.
 FIDIC’S Reasons for
Introducing
Fédération Internationale des Ingénieurs-Conseils

New Suite of Conditions of

Contract Documents

1. Expansion of types of projects to be

covered that reflects changes within
the International construction sector.
2. Attempt to standardise format of main
FIDIC contract documents .
Fédération Internationale des Ingénieurs-Conseils

3. Introduction of new clauses and

update of certain clauses to meet
current practice within the
construction industry .
4. Update the role of ”The Engineer”
and develop use of ”Disputes
Adjudication Board- DAB ”.
Fédération Internationale des Ingénieurs-Conseils

New FIDIC Contract Conditions

first published in September 1999
 Conditions of Contract for Construction
(New Red Book) .
 Conditions of Contract for Plant and
Design-Build (New Yellow Book).
 Conditions of Contract for EPC/ Turnkey
Projects (Silver Book) .
 Short Form of Contract (Green Book) .
 The New Red Book.
Fédération Internationale des Ingénieurs-Conseils

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 Construction
(Multilateral Development Bank Harmonised Ed. May 2005).
For Building and Engineering Works designed by the Employer
Fédération Internationale des Ingénieurs-Conseils

 The MDB Harmonised Conditions of

Contract for Construction, are
recommended for building or
engineering works designed by the
Employer or by his representative, the
Engineer.
 The Conditions are for use under
licence for projects financed by the
Multilateral Development Banks.
 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.
 The New Yellow Book.
Fédération Internationale des Ingénieurs-Conseils

 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.
 The New Silver Book.
Fédération Internationale des Ingénieurs-Conseils

 Conditions of Contract for EPC

Turnkey Projects .
 Which are recommended where one
entity takes total responsibility for the
design and execution of an
engineering project.
 Under the usual arrangements for this
type of contract , the entity carries out
all the Engineering, Procurement and
Construction: providing a fully-
equipped facility , ready for operation
(at the "turn of the key").
 This type of contract is usually
negotiated between the parties.
 The New green Book.
Fédération Internationale des Ingénieurs-Conseils

 These Conditions of Contract are

recommended for engineering and
building work of relatively small capital
value( 500,000$ -1,000,000$).
 However, depending on the type of work
and the circumstances, the Conditions
may be suitable for contracts of
considerably greater value.
 They are considered most likely to be
suitable for fairly simple or repetitive
work or work of short duration without
the need for specialist sub-contracts.
 This form may also be suitable for
contracts which include , or wholly
comprise contractor-designed civil
engineering , building, mechanical
and/or electrical works.
 The FIDIC Contracts Guide.
Fédération Internationale des Ingénieurs-Conseils

 Each of the three new FIDIC contracts

(Construction, Plant and Design-Build and
EPC/Turnkey) is in three parts :
 - General Conditions , the part which is
intended to be incorporated (by reference)
into each contract , and whose Sub-Clauses
are often referred to in this Guide without the
use of the word "Sub-Clause" (for example :
"CONS 1.1");
 Guidance for the Preparation of the Particular
Conditions, the part which is referred to in
this Guide as "GPPC", which commences by
proposing suitable wording to incorporate the
appropriate General Conditions into a
contract , and which concludes with annexed
example forms of securities;
 And - Forms of Letter of Tender, Contract
Agreement and Dispute Adjudication
Agreement , the part which is referred to in
this Guide as "the Example Form (s)".
 DBO Contract
Fédération Internationale des Ingénieurs-Conseils

 FIDIC has chosen to adopt the green-field

Design-Build-Operate scenario, with a 20- year
operation period, and has opted for a single
contract awarded to a single contracting entity
(which will almost certainly be a consortium or
joint venture) to optimise the coordination of
innovation, quality and performance, rather than
award separate contracts for design-build and
for operation.
 The contractor has no responsibility for either
financing the project or for its ultimate
commercial success.
 This is the basis upon which this document has
been prepared.
 The document, as written, is not suitable for
contracts which are not based on the traditional
Design-Build-Operate sequence, or where the
Operation Period differs significantly from the
20 years adopted.
 FIDIC DBO Contract Guide
Fédération Internationale des Ingénieurs-Conseils

• The FIDIC DBO Contract Guide For the FIDIC

Conditions of Contract for Design, Build and
Operate Projects. First Edition 2011.The purpose
of this guide is to provide users with some
commentary by the drafting committee as to their
thoughts and intentions when preparing the
document.
• The DBO form of contract is based on the same
structure and layout as the earlier (1999)
documents published by FIDIC, with General
Conditions, Particular Conditions and a variety of
Sample Forms. It is based on a 20-clause layout
and, where appropriate, it uses the same
terminology and same definitions as are found in
the 1999 documents. However, the documents
contains a number of improvements and
innovations not found in the earlier documents
which make the document more user-friendly and
more aligned to the requirements of today's
construction industry.
 FIDIC DBO Contract Guide (Cont)
Fédération Internationale des Ingénieurs-Conseils

• These can be briefly identified as

follows:
– up-graded visual timelines
showing key activities;
– definitions listed alphabetically;
– risk and insurance provisions
restructured and up-dated;
– claims procedures up-dated with
emphasis on dispute avoidance;
– Particular Conditions containing
two Parts;
• Part A - Contract Data
• Part B - Special Provisions
Additional sample forms provided.
• Each of these aspects, and much
more, is covered in this guide
 Condition of Subcontract for Construction
(1st Edition 2011)
Fédération Internationale des Ingénieurs-Conseils

• For use in conjunction with the FIDIC

Conditions of Contract for Construction, 1st
Edition 1999.General Conditions
• Guidance for the Preparation of the Particular
Conditions
• Forms of Letter of Subcontractor's Offer,
Contractor's Letter of Acceptance and
Subcontract Agreement
• Foreword The terms of the Conditions of
Subcontract for Construction have been
prepared by the Fédération Internationale des
Ingénieurs-Conseils (FIDIC) and are
recommended for use in conjunction with the
FIDIC Conditions of Contract for Construction
for Building and Engineering Works Designed
by the Employer, 1st Edition 1999, and with
the Multilateral Development Bank
Harmonised Edition of the FIDIC Conditions of
Contract for Construction for Building and
Engineering Works Designed by the Employer
 CONDITIONS OF CONTRACT
published 1999
Fédération Internationale des Ingénieurs-Conseils

Guide
published
2001
 CONTRACT CONTINUITY
Fédération Internationale des Ingénieurs-Conseils

Employer /
consultant
design

Contractor
design

Various Uniform format and

formats contents
 WHICH BOOK TO USE?
Fédération Internationale des Ingénieurs-Conseils

STRAIGHTFORWARD yes
no EMPLOYER
PROJECT
yes DESIGN

no

CONTRACTOR DESIGN
Fixed price - lump sum Plant and/or high
no
Little employer involvement unforeseen risks
No major unforeseen risks
no yes Maintenance

DISCUSS IN DETAIL
Employer’s
requirements with the
Contractor, and
negotiate a modified
FIDIC contract
Fédération Internationale des Ingénieurs-Conseils
 Contract for Dredging and Reclamation Works.
Fédération Internationale des Ingénieurs-Conseils

 Form of Contract for Dredging and Reclamation Works .

 It contain:
1. Agreement.
2. General Conditions.
3. Rules for Adjudication .
4. and Notes for Guidance.
 It has been issued With collaboration of The
International Association of Dredging Companies
(IADC), and for dredging and reclamation work.
 The aim has been to produce a straightforward
document which includes all essential commercial
provisions, and which may be used for all types of
dredging and reclamation work and ancillary
construction with a variety of administrative
arrangements.
 Under the usual arrangements for this type of contract,
the Contractor constructs the Works in accordance with
design provided by the Employer or by his Engineer.
 However, this form may also be suitable for contracts
that include, or wholly comprise, contractor-designed
works. In addition, the Employer has a choice of
valuation methods,
 Operation, maintenance and
training.
Fédération Internationale des Ingénieurs-Conseils

 Operation, Maintenance and

Training (OMT) guidelines for the
provision of OMT services.
 This guidelines set out proper
planning to ensure:
1. Successful project commissioning.
2. Planning for training for operation
and maintenance .
3. The training of personnel must be
accomplished prior to project
start-up and testing.
 Quality of Construction.
Fédération Internationale des Ingénieurs-Conseils

 A best-practice approach to
help solve a worldwide lack
of Quality of Construction.
Contents:
1. Introduction
2. FIDIC Quality of Construction
Survey
3. Policy and strategy
4. Approach to Quality
5. Recommended actions
6. Appendices
 Work in Progress
Fédération Internationale des Ingénieurs-Conseils

Contracts & Agreements

- Construction and Plant Sub-contracts (new)
- Client - Architect (new)
- Joint venture (update)
- Sub-consultant (update)
- Project Procurement (replaces Tendering Procedure)

Business Practice
- Quality Based Selection guide (update)
- Risk Management guide (update)
- Definitions of Scope guidelines (new)
- Design for Safety guidelines (new)
 FIDIC Contracts
Fédération Internationale des Ingénieurs-Conseils

Engineer

Contractor Employer

Powers of Engineer
Contractual Relations
61
 FIDIC Contracts
Fédération Internationale des Ingénieurs-Conseils

• Common Law v. Civil Law

– FIDIC Conditions of Contracts have
their roots in the common law.
– Lots of concepts are not understand
without référence to common law.
– Most of the notions are issued from
the anglo-saxon legal vocabularies .

62
 FIDIC Contracts
Fédération Internationale des Ingénieurs-Conseils

• Common Law v. Civil Law (mots clé)

– Taking over certificate v. réception
– Defects Notification Period v. responsabilité pour
non conformité et garantie de parfait achèvement
– Delay Damages v. Pénalités
– Time for Completion v. Délai d´achèvement
– Engineer v. Maître d´oeuvre
– Claim v. Avenant

63
 FIDIC Contracts
Fédération Internationale des Ingénieurs-Conseils

• Understanding FIDIC

Liquidated damages
v. penalties
Legal background Common law
Substantial completion
v. acceptation
Implied Definitions Reasonable/Shall

Defects Notification
Definitions
Period

Context To give notice

Way
of
working Check
Identify Check Check
Legal
term definitions context
background

64
 FIDIC Contracts
Fédération Internationale des Ingénieurs-Conseils

White Book
• Contract Administration

Consultant
shall perform
Services

Contract
Instruction
administration

Determination

Certification

Valuation

65
 FIDIC Contracts
Fédération Internationale des Ingénieurs-Conseils

White Book
• Contract Administration

Contract
authorises
Consultant/Engineer
to act

Contract
Instruction
administration

Determination

Certification

Valuation

66
 FIDIC Contracts
Fédération Internationale des Ingénieurs-Conseils

Legal
Procurement
risk Good faith
law
allocation

Make available all

Sub-Clause
relevant data
4.10
in Employer´s possession

Risk of No duty to
Posession? Relevance?
interpretation make survey

To the extent
which was … shall be deemed to have obtained
practicable

67
 FIDIC Contracts and Dispute Resolution
Fédération Internationale des Ingénieurs-Conseils

Claims and Risques Valuation

Instruction Request
Variation
Presumption

Amendment

EOT
Legal Risk Damages Rescission Adjustment

Contractual Risk EOT Cost Profit

68
 FIDIC Contracts and Dispute Resolution
• Claims
Fédération Internationale des Ingénieurs-Conseils

– Claim Management Advice

Supervision

Input

Legal Advice

Application for
Statement
Action
Calculation

Engineering
Representative

Risk Assesment Management

69
 FIDIC Contracts and Dispute
Resolution
Chart: Contractor´s Claims
Fédération Internationale des Ingénieurs-Conseils

Delay caused Employer´s

EOT
by Employer Risk
Cost caused Employer´s
Cost
by Employer Risk
Breach of Employer´s
Profit
Contract Risk
Legal
Claims
Delay caused Employer´s
EOT
by Employer Risk
Cost caused Employer´s
Cost
by Employer Risk
Breach of Employer´s
Profit
Contract Risk

70
 FIDIC Contracts and Dispute Resolution
Fédération Internationale des Ingénieurs-Conseils

Chart 2: Actions of the Engineer (FIDIC Red Book)

Start A new event becomes apparent

List of events, Cl. 8.6,

Which kind 8.3, 1.5, 9.1 etc. to be
of event? established

Actual progress is too slow to complete

within the Time for Completion (Cl. 8.6)
List of actions to or a Variation seems to be appropriate
be established (Cl. 13)

A claim has been notified by the

Contractor or the Employer
Determination of a claim Application for Payment (Cl. 14)
To approve, certify
The Contractor gives notice of the date
Instruction after which the Contractor will be ready
to carry out Tests on Completion (Cl. 9.1)
To examine, to inspect, to
test, to measure Contractor gives notice that work is ready

Request of proposal Contractor submits a proposal

Action of the Engineer A defect appears or a damage occurs

(Cl. 11.1) or work is not in accordance
Finish with the Contract (Cl. 7.6) etc.

71
 FIDIC Contracts and Dispute
Resolution
Fédération Internationale des Ingénieurs-Conseils

Actions of the Contract Interpretation Cl. 1.5 with

Engineer consequence of
variation
Quality of Works and Cl. 7.4, 7.6, 9.4,
Workmanship 11.1, 11.3, 11.4
List of actions to
be established
Payment Certification Cl. 14

Approval
Check Taking-Over Cl. 10
Certificate
Consent
Determination Variations Cl. 13
Disapproval
Examination
Inspection
Instruction Cost Management White Book
Notice Cl. 13.2
Proposal
Request
Time Management Cl. 8.3, 8.6, 8.1
Suspension
Test
Valuation
Claim Determination Cl. 2.5, 3.5

72
 FIDIC Contracts and Dispute Resolution
• All the claims should be setteled by Binding agreement or by disipute
Fédération Internationale des Ingénieurs-Conseils

resolution decision.
• Every solved Claim should be included in the contractual price
– Ajustement or deduction
Balance
Contractor

Claim Claim
Amount due Balance
Notice Procedure

Claim Claim
Amount due Balance
Notice Procedure

Retention of
Employer uncertified Payment
amounts Payment
Certificate
2.5 excluded

73
 FIDIC Contracts and Dispute Resolution
Fédération Internationale des Ingénieurs-Conseils

• Commencement Date

Engineer Contractor

21 days
Commencement Programme
Date
7 days
Letter of
Acceptance
or Performance
Contract Security
Agreement 28 days

Access to the site

14 days

74
 FIDIC CONTRACTS
Fédération Internationale des Ingénieurs-Conseils

CONSTRUCTION

PLANT AND DESIGN-BUILD

EPC/TURNKEY PROJECTS

SHORT FORM OF CONTRACT

CLIENT/CONSULTANT MODEL SERVICES AGREEMENT

 FEATURES AND ADVANTAGES
Fédération Internationale des Ingénieurs-Conseils

BALANCED
fair apportioning of risks, rights and obligations between the parties

WELL
TRIED
long case history for earlier contracts

ACCEPTED

known and recognised; in wide use for international contracts

SUPPORTED
recommended or required by development banks, ISPA, etc.

EFFECTIVE

clear and complete conditions; time limits; provisions for adjudication

 Key points: CONSTRUCTION
Fédération Internationale des Ingénieurs-Conseils

 Employer designs.

 Engineer, working for the Employer.

 Bill of Quantities.

 Payments based upon measurements.

 Certification of payments by Engineer.

 Key points: PLANT & DESIGN-BUILD
Fédération Internationale des Ingénieurs-Conseils

 Contractor designs.

 Engineer, working for the Employer.

 Lump sum pricing.

 Payments according to progress.

 Certification of payments by Engineer.

 Key points: EPC/TURNKEY PROJECTS
Fédération Internationale des Ingénieurs-Conseils

 Contractor designs and takes full

responsibility.

 Employer may appoint a Representative.

 Fixed price, to cover risks taken on by

Contractor.

 Payments according to progress.

 No certification of payments.
 Key points: SHORT FORM
Fédération Internationale des Ingénieurs-Conseils

 Simple projects.

 Design by either party.

 Employer may appoint a Representative.

 Valuation as appropriate; to be agreed.

 Payments according to value of Works executed

and Materials and Plant delivered to site.

 No certification of payments.
 Key points: CLIENT/CONSULTANT
Fédération Internationale des Ingénieurs-Conseils

 Agreed Scope of Services: Appendix A.

 Normal, Additional and Exceptional

Services.

 Normal Services priced as agreed.

 Additional and Exceptional Services at

rates agreed.

 Payment schedule as agreed.

 FIDIC GUIDES
Fédération Internationale des Ingénieurs-Conseils

 The FIDIC Contracts Guide.

 The White Book Guide.

 Guide for the preparation of particular conditions

(in the major contracts).

 Notes for Guidance (in the Short Form of Contract).

 Tendering Procedure and Pre-qualification forms.

 Quality Based Selection.

 USE OF FIDIC CONTRACTS
Fédération Internationale des Ingénieurs-Conseils

 Match contract and project.

 Decide early.

 Appoint DAB early.

 Draft by professionals.

 Do not touch the General Conditions.

 Buy originals.
 PRINCIPLES OF PROCUREMENT
Fédération Internationale des Ingénieurs-Conseils

 Effectiveness.
 Economy.
 Efficiency.
 Accountability.
 Transparency / confidentiality.
 Strong competition.
 Publicity, wide participation.
 Fair and equal conditions.
 Standard procedures.
 Standard documentation.
 PROCUREMENT CATEGORIES
Fédération Internationale des Ingénieurs-Conseils

Goods.

Works.

Consultant services.

Other services.
 TENDERING PROCEDURES
Fédération Internationale des Ingénieurs-Conseils

 Development bank / public procurement procedures.

 Open tendering / International Competitive Bidding.

 Local tendering / National Competitive Bidding.

 Restricted tendering / Limited Bidding.

 Shopping.

 Single source.

 Two stage tendering.

 SELECTION PROCEDURES/CRITERIA
Fédération Internationale des Ingénieurs-Conseils

Criteria defined and published in

advance.

Economically most advantageous

offer.

Quality based selection.

Quality and cost based selection.

 PROCUREMENT STEPS.
Fédération Internationale des Ingénieurs-Conseils

 Preparation.
 Publication.
 Pre-qualification / short-listing.
 Invitation.
 (Submission).
 Evaluation.
 Award, contracting.
 Supervision, contract administration.
 Lessons learned.
 PREPARATION OF PROCUREMENT
Fédération Internationale des Ingénieurs-Conseils

 Determination of needs and objectives.

 Determination of constraints.
 Identification of parties.
 Planning, budgeting, financing.
 Contract type.
 Selection procedure.
 Requirements / Specifications / Bills of Quantities
/ Terms of Reference.
 Pre-qualification and evaluation criteria.
 Particular conditions.
 Publicity.
 Tender documents.
 CONTRACT ADMINISTRATION
Fédération Internationale des Ingénieurs-Conseils

 Supervision.
 Enforcement.
 Quality and quantity.
 Invoice verification.
 Payments.
 Extensions, variation orders, amendments.
 Termination.
 Disputes and their resolution.
 RISKS IN PROCUREMENT
Fédération Internationale des Ingénieurs-Conseils

 Wrong goods, works, services.

 Bad value for money.

 Not available, productive, reliable, maintainable.

 Not used (!)

 Fraud.

 Corruption.
 Construction General Conditions Contents.
Fédération Internationale des Ingénieurs-Conseils

1 - General Provisions .‫احكام عامة‬

2 - The Employer .‫صاحب العمل‬
3 - The Engineer .‫المهندس‬
4 - The Contractor .‫المقاول‬
5 - Nominated Subcontractors . ‫ المقاولون الفرعيون المسمون‬.
6 - Staff and Labour. ‫المستخدمون و العمال‬
7 - Plant, Materials and Workmanship . ‫التجهيزات اآللية و المواد المصنعية‬
8 - Commencement, Delays and Suspension. .‫تأخر اإلنجاز و تعليق العمل‬،‫المباشرة‬
9 - Tests on Completion .‫اإلختبارات عند اإلنجاز‬
10 - Employer's Taking Over .‫تسلم األشغال من قبل صاحب العمل‬
11 - Defects Liability .‫المسؤولية عن العيوب‬
12 - Measurement and Evaluation. ‫كيل األشغال و تقدير القيمة‬
13 - Variations and Adjustments . ‫التغيرات و تعديل األسعار‬
14 - Contract Price and Payment. ‫قيمة العقد و الدفعات‬
15 - Termination by Employer. ‫إنهاء العقد من قبل صاحب العمل‬
16 - Suspension and Termination by Contractor. ‫تعليق العمل و إنهاء العقد من قبل المقاول‬
17 - Risk and Responsibility. ‫المخاطر و المسؤلية‬
18 - Insurance . ‫التأمين‬
19 - Force Majeure . ‫القوة القاهرة‬
20 - Claims, Disputes and Arbitration . ‫الخالفات و التحكيم‬، ‫المطالبات‬
92
 Major steps under FIDIC Explaining the timeline

Construction Contract – 1999 – Red Book

Fédération Internationale des Ingénieurs-Conseils

Tender Stage
– Clause 13.7 – Adjustment for
Changes in Legislation
Base Date – Clause 13.8 – Adjustment for
Changes in Cost

Tender Period 28d Tender Evaluation

Floating Tender
the Tender Submission
Fédération Internationale des Ingénieurs-Conseils Major steps under FIDIC Explaining the timeline

Project Starting – Payments will not be certified – 14.6

– Contract Termination – 15.2
– Employer may withhold the site access
Performance – 2.1
Security – 4.2
Insurance
28d

Project Execution
42d Max. Time for Completion
Issuance of Commencement Extra
LOA Date – 8.1 Cost
 Typical Sequence of Payment
Events Envisaged in Clause 14
Fédération Internationale des Ingénieurs-Conseils

95
 Major steps under FIDIC Explaining the timeline

Interim Payments – Contractor to suspend or reduce the

Fédération Internationale des Ingénieurs-Conseils

Engineer to rate of progress – 16.1

– Contract Termination – 16.2
Certify
Contractor to
21d notice
suspend or reduce
<56d the rate of progress
<28d – 16.1

Contract
Employer to Termination
42d
pay after 14 days
Payment notice – 16.2
Application
 Major steps under FIDIC Explaining the timeline

Statement at Completion
Fédération Internationale des Ingénieurs-Conseils

– Contractor to suspend or reduce

Engineer to the rate of progress – 16.1
Certify – Contract Termination – 16.2

<56d 21d notice Contractor to

suspend or reduce
<84d <28d the rate of progress
– 16.1

Contract
42d Termination
TOC Employer to after 14 days
S@C pay notice – 16.2
 Major steps under FIDIC Explaining the timeline

Final Payment Employer to

Fédération Internationale des Ingénieurs-Conseils

Engineer to
Contractor to Certify FC pay
submit FS
Engineer Verify, <28d <56d
Contractor support

<56d Agree
<56d
Dispute
Disagree <28d 20.4
PC
Draft Engineer to Employer to
FS Certify IPC pay
Fédération Internationale des Ingénieurs-Conseils Major steps under FIDIC Explaining the timeline

Claim Procedure – No EoT

– No additional payment
Notification
of Claim Engineer to
respond Approve
<42d <42d
<28d Disapprove
Further
particulars
Claim
Event Particulars Limited EoT and
Claim
additional
Principals
payment
Fédération Internationale des Ingénieurs-Conseils Major steps under FIDIC Explaining the timeline

Project Closure Performance

Certificate Return of the
Test on
Performance
Completion
Certificate
Remedying of defects
<21d
DNP

TOC
 FIDIC Contracts and Disiputes resolution
Fédération Internationale des Ingénieurs-Conseils

Stages of disiputes resolution

Dispute Clause 20.4

DAB Procedure Clause 20.2, 20.4

Decision Clause 20.4

Amicable Settlement Clause 20.5

Arbitration Clausel 20.6, 20.7

101
 • DAB :How This procedure work?
Fédération Internationale des Ingénieurs-Conseils
28 days

Notice of intention to
Appointment of DAB
refer a dispute to DAB

Reference of the DAB organise the See Procedural

dispute in writing to DAB procedure Rules

112 days
84 days

Submission of Access to
Experts
additional information the site, etc.

See Procedural
Hearing
Rules

DAB gives ist decision Cl. 20.4

102
 Chart: FIDIC système of Disiputes resolution
.
Fédération Internationale des Ingénieurs-Conseils

Dispute

Referral to DAB

Decision by DAB Binding

No
Dissatisfaction Final & binding

Endeavour to Failure to comply

reach Agreement Breach of contract

Arbitration Enforcement

103
 Typical Sequence of Dispute
Events Envisaged in Clause 20
Fédération Internationale des Ingénieurs-Conseils

74
 Major steps under FIDIC Explaining the timeline

Event
Fédération Internationale des Ingénieurs-Conseils

Dispute <28d
– No EoT N Notification of Y Claim
– No additional payment Claim <42d Particulars
<42d
DAB Decision N
<84d DAB Engineer to
20.4 respond
N Y
Y
Notification N Parties
N Parties
20.4 <28d Accepted Y Accepted
Amicable Succeeded Y
Settlement 20.5 56d
Dispute
Arbitration Y Resolved
20.6 N
 • FIDIC Books recommande the ICC
procedure of Arbitration (Clause 20.6).
Fédération Internationale des Ingénieurs-Conseils

Unless otherweise agree …

the dispute shall be settled
under the Rules of Arbitration of the ICC

– The ICC is not a permanent tribunal,but

it is an organisation:
• Who rcommends rules of procedures.
• Who nominates Arbitrators.
• Who is charged of quality control.

106
 FIDIC Contracts and Dispute Resolution
Fédération Internationale des Ingénieurs-Conseils

stage 1

Engineer
Permanent
DAB

Nomination
Determination Rejection DAB
if necessary

Stage 2
Stage 3
DAB Decision Arbitration Decision
Procédure au fond

• Red Book
– General Conditions, Cl. 20.6:
• The arbitrator(s) shall have full power to „open up, review and revise any certificate,
determination, instruction, opinion or valuation of the Engineer, and any decision of the
DAB, relevant to the dispute“.
• Neither Party shal be limited in the proceedings … to the evidence or arguments
previously put before the DAB …

107
 Fédération Internationale des Ingénieurs-Conseils

Thanks