COMPARISON BETWEEN FIDIC RED BOOK AND IEM

Definition and Interpretation

FIDIC RED BOOK IEM

Clause 1.1 Clause 1.0
The definition of contract include: The definition of contract include:
 contract agreement  Articles of agreement
 Letter of Acceptance  Form of Tender
 Specifications  Letter of Acceptance of Tender
 Drawings  Conditions of contract and the
 Schedules Appendix
 Tender  Special provisions to the Conditions
 Appendix to Tender of Contract
 Bill of Quantities and Day Work  Contract drawing
Schedule  Bill of Quantities
Duties and Persons include:  Specifications
 Party Duties and Persons include:
 Employer  Employer
 Contractor  Contractor
 Engineer  Engineer
 Contractor’s Representative  Engineer’s Representative
 Employer’s Personnel However, in this contract there are the
 Contractor’s Personnel definition of contract include site, contract
Subcontractor sum, constructional plant, temporary works,
 Works and Goods permanent works

Engineer’s Duties and Authority

FIDIC RED BOOK IEM

Clause 3.1 Clause 2
The employer shall appoint the Engineer The Engineer shall be responsible for all the
who shall carry out the duties assigned to overall supervision and direction of the
him in the Contract. The Engineer’s staff works. All questions regarding any work
shall include suitably qualified engineers and under this Contract shall be taken up by the
other professionals who are competent to Contractor with the Engineer.
carry out these duties.
However, in this contract Engineer’s
representative shall responsible to the
Engineer and his duties are to coach and
supervise the works and to the test and to
examine any materials. He shall have no
authority to relieve the Contractor of any of
his duties or obligations under the Contract.

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Plant, Materials and Workmanship

FIDIC RED BOOK IEM

Clause 7 Clause 9
The contractor shall carry out the All materials, goods and workmanship shall
manufacture of plant, the production and be of the respective kinds and standard
manufacture of materials and all execution described in the Bill of Quantities and
of the works include: Specifications. The contractor shall upon the
 Samples instruction of engineer entirely at his own
 Inspection cost provide samples of materials and good
 Testing for testing. Furthermore, the contractor shall
 Rejection upon the instruction of the Engineer open up
 Remedial Work for the inspection any work covered or
 Ownership of Plant and Materials arrange.
 Royalties

Setting Out
FIDIC RED BOOK IEM
Clause 4.7 Clause 13
If the Contractor suffers delay or incurs cost If any time during the progress of the works
from executing work which was necessitated any error shall appear in the position, levels,
by an error in this item, the contractor could alignment of any part of the works, the
not reasonably have discovered such error Contractor on being required so to do by the
and avoided this delay. The contractor shall Engineer or the Engineer’s Representative
give notice to the Engineer and shall be shall at his own cost unless such error based
entitled subject to Sub Clause 20.1: on incorrect data supplied.
 An extension of time for any such
delay.
 Payment of any such Cost plus
reasonable profit, which shall include
in the Contract Price.

Delay and Extension of Time

FIDIC RED BOOK IEM

Clause 8.4 and 8.5 Clause 43
The extension of time completion in FIDIC It is different with IEM in clause 43 in delay
has only occurred when there are a lot of and extension of time which the reason for
changes in the quantity of an item which are delay and extension of time only occur or
written or included in the contract, such as when there is cause by the weather. Besides
the causes by the employer or other that, it is also will be considered if there are
Contractor on site. For example, they need too much lost and damage. Engineer only
to follow the Contractor if the Contractor issued the delay and extension of time if

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considers himself to make an extension of there are any requests from the contractor,
time. Besides that, they need to follow the sub-contractor or nominated sub-contractor
decision and the Contractor. Before the followed with the reason which affects their
Contractor wants to entitle the Time for work that has been stating in the contract
completion the contractor must give notice .Moreover, in IEM Engineer will estimate the
to the engineer. delay of the extension of time and also
engineer will issue the condition.

Insurance of Work
FIDIC RED BOOK IEM
Clause 18.2 Clause 33 and 34
In FIDIC, insurance of work and contractor It has a bit similar with the IEM in clause 34
equipment clause 18.2 said that insurance Insurance of work, which all the production
that is provided by the contractor must be of the insurance policy with or without an
agreed with the general term by the excess clause needs to be effected with an
employed. insurance that has been agreed with by the
employer. But for IEM all of the production
In FIDIC all the insurances need to include all must be approved by the engineer and
the detail followed with particular condition contractor.
such as the tenderer will estimate the
insurance followed with their wish for their In IEM for personal injuries and damage
protection. Besides that, the employer property clause 33, they are cover any
should find the most difficult that can be respect personal injuries or dead arriving out
effected the insurance. For example the or if there are any reason of the execution of
contractor equipment and also the the works. The contractor will arrange such
subcontractor equipment. insurance to incorporate such as damage by
the contractor or subcontractor to the
property. Moreover, the insurance is also
cover the architect, surveyor, engineer and
also the third parties. This insurance will only
cover for the whole construction period. For
the insurance of works, the insurance cover
the damage such as the storm, flood lighting,
explosion, fire and all the series services.

Arbitration

FIDIC RED BOOK IEM

Clause 20.6 Clause 55
In arbitration for FIDIC and IEM there are no In the other hand, it is different with IEM
similarities between it. In FIDIC arbitration which it is based on Engineer Malaysia
clause 20.6 it is from an international Arbitration Act 1952.If there are any dispute
arbitration. It is include the provision by the or a difference between the employer the
international. It is an international engineer and the contractor the difference

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commercial which has a lot of advantage shall arise. Besides that, the Engineer needs
with their litigation in national court. to give a decision in writing that have been
Moreover, the arbitration is compatible with issued or with any subject that is binding on
all of the provision in clause 20 with an all the parties until all the work is complete. In
the rule are from the International Chamber addition, if the engineer fails to do that in 48
of Commerce the (ICC)which all of that are days the entire request will be dissatisfied.
base at 38 courses, Albert, Ler , 75008 Paris, All the arbitration should be conduct under
France. In addition, there is no standard the provision of the clause accordance with
form of multi-party arbitration clause for the Rule for arbitration of the institution of
international use. Engineer Malaysia. Finally, all the award of
the arbitration shall be fine between the
parties.

Payment

FIDIC RED BOOK IEM

Clause 14.6 and 14.7 Clause 47
In FIDIC the letter of acceptance will be For IEM, within 14 days the payments to the
issued within 21 days after receiving the contractor are made within 14 days from the
performance security. Besides that, the date of any valuation. It is same with FIDIC
advance payment shall be made within 42 which all the Interim Certificate shall be
days and amount of certificate for each of issued by the Engineer which contractor
interim payment certificate must be paid stating the amount. Besides that, for the
within 56 days of the receipts and its must interim certificate, IEM only give within 30
be issued by the Engineer followed with the days of the issued of any such interim
contractor statement. Moreover, the certificate followed the employer that will
payment must follow with the currency that make a payment to the contractor followed
has been stated in the contract document. the amount of the certificate need.
Which they need to use the local currency
and the contract that have made must be
valuable in a foreign currency. Finally, the
fixed rate of exchange is provided in the
contract and it usually within 28 days before
the base date. It also issued or notice by the
engineer.

For the interim payment certificate clause

14.6.The person who shall issue the Interim
certificate is engineer. It must be issued
within 28 days after receiving the contract
statement.

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Prime Cost and Provisional Cost

FIDIC RED BOOK IEM

Clause 13.5 Clause 30
The contract price shall be adjusted Provisional sum shall mean a sum for work
according to the engineer’s instruction or for the amount of materials which cannot
where to include the provisional sum in the be measure accurately at the time tender
whole or in part of the contract. The amount document is issued. The provisional sum can
payable to the contractor must include only be added or deducted from the total amount
the amount for works, material, supply and of contract sum depending on the cases.
services mentioning the actual amount paid,
and the sum of overhead and profit. Prime cost sum is a sum for all works to be
done or for all goods to be obtained where
the sum can make the determination by sub-
contractor and sub nominal supplier to add
or deduct the cost where necessary.

Measurement and Evaluation

FIDIC RED BOOK IEM
Clause 12 Clause 26
Quantity Quantity
All item shall be measured according bill of The estimated quantity in Bill of Quantity
quantity and contractor shall inform should be regards as inaccurate
engineers that the estimated quantity are
inaccurate Work to be measured
All measurement works needed by engineers
Work to be measured shall be notified to the contractor and the
All measurement works needed by engineers contractor shall send a qualified
shall be notified to the contractor and the representative to assist the engineer in
contractor shall send a qualified measuring works. Fail to attend or send
representative to help the engineer in the representative, the measuring works done
measurement works. Fail to attend or send by the engineers shall be deem as a true
representative, the measuring works done measurement
by the engineers shall be considered as a
true measurement Method of measurement
All permanent works shall be measured in
Method of measurement net quantity
All permanent works shall be measured in
net quantity Valuation (clause 24)
Price and rates shall follow as in contract.
Evaluation Suitable rates can be proposed if there is no
Price of estimated items shall be in rate of some additional work in the contract
accordance to the appropriate price, any
new rate or price can be made when in
special cases

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Variation and Adjustment

FIDIC RED BOOK IEM

Clause 13 Clause 23
Engineer can initiate variation at any time Engineer can make any variation of item or
and contractors are bound to do all the works that he think necessary and have
variation works. No variation can be made power to instruct contractor to follow the
for permanent works unless agreed by both variation. Variation order must be in writing.
parties.

Fluctuation of Price

FIDIC RED BOOK IEM

Clause 18.3 Clause 54
If the table of adjustment data exist in the Variation of price in the contract sum shall
appendix of the contract, the amount not be varied by any increase or decrease in
payable to the contractor may increase or the cost of labour, materials, or other factor
decrease depending on the up and down of after such cost prevailing at the date of the
the cost for labour, goods, etc. tender

Nominated Sub-Contractor and Nominated Suppliers

FIDIC RED BOOK IEM

Clause 5 Clause 29
Nominated Sub-Contractor means a The Contractor is responsible to monitor and
Subcontractor. The Engineer instructs the ensure the subcontractor to perform the
Contractor to employ subcontractor. works according to the terms and condition
Objection to Nomination in the contract. The subcontractor should
The Contractor has the right to object to the liable for any default or breach of terms and
engagement of a nominated Subcontractor. condition.
However, he is required to give notice of his Termination of Sub-Contract
objection to the Engineer with reason for his If any abandonment and the Contractor
objection need to terminate the subcontractor, the
Payments to Nominated Contractor shall get permission from the
When comes to the payment, the contractor Engineer to employ another subcontractor
shall pay to the nominated subcontractor or supplier. The Contractor may also
with certifies from the Engineer. The amount undertake to complete the works left by the
is including the overhead and profit subcontractor

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Completion of Work
FIDIC RED BOOK IEM
Clause 8.2 Clause 39
The clause stated that the obligation of the The Contractor shall complete the whole
Contractor to complete the whole of the work as agreed in the contract before or on
works, within the Time of Completion Date of Completion, If any extended time
measured from the Commencement Date. needed, refer Clause 43. As the project is
complete, there will be Defect Liability
Period. Hence, the Engineer fully satisfied
with the project then the Engineer will issue
Certificate Practical Completion.

Day Work
FIDIC RED BOOK IEM
Clause 13.6 Clause 17
Day work cannot be measured because we The labour will not working on the following
cannot predict what will happen in the days:
future. The work shall be evaluated Once a week for rest day
according to the Day work Schedule. The Any public holiday according to the State
Schedule is not in the Tender Document. Between the hours of five in the evening and
Hence, the Contract must include the Day eight in the morning
work Schedule in his own proposal. The
objective Day work Schedule is to keep
records to support his claims when the work
is done. So that the Contractor entitled to
receive payment of cost.