EXECUTIVE SUMMARY:

This term paper by group 13 explores the responsibilities and risks faced by the key parties in co
nstruction projects under the FIDIC Red Book framework, which are the Employer, Contractor, a
nd Engineer. It outlines the obligations of each party, the allocation of risks, and the impact of the
se dynamics on project outcomes.
The Employer's primary duties involve granting site access, providing assistance with permits, e
nsuring cooperation and safety, maintaining financial stability, and supplying necessary informati
on and materials. The confluence of these responsibilities directly impact the project's timeline, c
ost management, and overall success. Delays or failures in these areas can lead to disputes and cl
aims from contractors.
The Contractor on the other hand is responsible for executing the works according to the contract,
ensuring quality, managing resources, and maintaining safety standards on-site. Additionally, the
Contractor needs to comply with the Engineer’s instructions, manage variations, and maintain ac
curate documentation for any claims. Effective management of these aspects ensures timely proje
ct completion and adherence to budget constraints.
The Engineer acts as the intermediary between the employer and the contractor. S/he oversees co
mpliance with design specifications and project quality. Their roles revolve around issuing instru
ctions, making determinations, and ensuring both parties adhere to the contract terms. They have
to balance their advisory and decision-making roles to ensure impartiality and project integrity.
This research paper also highlights the risks associated with this kind of contractual framework, i
ncluding delays, cost overruns, variations in project scope, and force majeure events. Real-world
cases, such as the Mombasa-Nairobi Pipeline Project and Panther Real Estate Development case
which have been outlined herein, illustrate the complexities of handling claims, delays, and dispu
tes under the FIDIC Red Book.
This comprehensive analysis by the FIDIC red book emphasizes the importance of clear commu
nication, documentation, and adherence to contract provisions to minimize disputes and ensure s
uccessful project outcomes. By understanding these roles and their impact, stakeholders can bette
r navigate the challenges of construction projects and foster a collaborative environment conduci
ve to achieving project goals.
 OBLIGATIONS OF PARTIES
1. The Employer
 Access to site
The employer is required to give possess to the contractor at the agreed times specified in the
contract or in a way that enables him to proceed with the schedule.
This possession may include access to foundation, structure, plant or a means of access as
stipulated by the contract.
 Assistance
Upon request, the employer should provide reasonable assistance to the contractor to allow him
to acquire permits, licenses or approvals.
 Compliance with Laws
The Employer must ensure that all necessary building permits, licenses, and approvals specified
as the Employer's responsibility in the Specification are obtained.
 Cooperation
The employer should ensure his personnel cooperate with the contractor and observe safety
requirements on site.
 Financial Arrangements
The employer is required to notify the contractor on changes to his ability to pay the contract
price as stated in the contract.
Upon request, he is to furnish the contractor with details on his financial arrangements, that show
his ability to pay the contract price, within 28 days.
 Site Data
He is responsible for providing the contractor with all relevant information about the site’s sub
surface, climatic, environmental and hydrological conditions that are available to him before the
base date.
 Supply of Materials
Materials and equipment to be supplied by the employer for the contractors’ use, should be made
available within the specified time, arrangements and price.
These resources are detailed in the Specification.

 Appointment of the Engineer

The employer shall appoint the Engineer who shall perform the duties assigned to the Engineer
in the contract.
The person appointed should be suitably qualified and competent.
  Replacement of the Engineer
The employer should notify the contractor of intention to replace the Engineer not less than 42
days prior to the replacement date.
He shall not replace the Engineer with an entity or person, the contractor has raised a reasonable
objection against.
 Agreement
Unless agreed otherwise, the employer shall sign the contract agreement within 35 days after the
contractor receives the Letter of Acceptance.
 Assignment
Neither party shall assign the whole or any part of the Contract without the prior agreement of
the other party.
 Contractor’s Documents
The Employer shall not use, copy, or communicate the Contractor’s Documents to a third party f
or purposes other than completing, operating, maintaining, altering, adjusting, repairing, or demo
lishing the Works, without the Contractor’s prior consent.
 Confidentiality
The Employer is required to treat all information designated as confidential by the contractor as
private. He should not share the information with any third party
2. The Contractor
 Execution of Works
The contractor must execute and complete the works in accordance with the documents forming
contract.
The Contractor should ensure the completed Works will be in accordance with the documents
forming the Contract.
 Supply of Equipment, Materials, and Labour
The contractor must supply all resources necessary for the project’s execution.
This includes sourcing quality materials, providing appropriate equipment, and employing qualifi
ed personnel.
 Safety and Stability of Operations

The contractor has a primary obligation to ensure that their construction activities and temporary
works are safe, stable, and sufficient to meet the contract's requirements, without posing risks to
personnel or property.

The contractor is obligated to provide the engineer with information about their proposed constru
ction methods, such as work schedules, equipment usage, or temporary structures, before implem
entation.

 Contractor’s Documents

If the contractor is responsible for designing a part of the Permanent Works, they must prepare th
e necessary documents (drawings, specifications, etc.) and submit them to the engineer. These do
cuments should align with the contract's specifications and include everything needed for the pro
per execution and coordination of the design.

The contractor must not begin construction of the part until the engineer has reviewed the
contractor’s documents and issued a Notice of No-Objection.
The contractor must give the Engineer a Notice with reasons if he intends to modify a design in
the Contractors documents.
The contractor is liable for making sure that the part they design will function as intended when c
ompleted.
If required, the contractor is responsible for training the employer's staff in operating and maintai
ning the part they designed.

 Performance Security
The contractor must obtain a Performance Security in the amount and currencies specified in the
Contract Data to guarantee proper performance of the contract.
The contractor must deliver the Performance Security to the Employer, with a copy to the
Engineer, within 28 days after receiving the Letter of Acceptance.
The contractor must ensure that the Performance Security remains valid and enforceable until the
Performance Certificate is issued and the contractor has cleared the site
If the contract price increases by more than 20% due to variations, the contractor must increase
the Performance Security accordingly, at the employer’s request.
If the contract price decreases by more than 20% due to variations, the contractor may reduce the
Performance Security, with the employer’s prior consent.
 Contractor's Representative
The contractor must appoint a Contractor's Representative who has the authority to act on behalf
of the contractor.
The contractor must notify the employer and engineer of the appointment of the Contractor's
Representative.
The Contractor shall not revoke the appointment of the Contractor’s Representative or appoint a
replacement without the Engineer’s prior consent.
The Representative may delegate any powers, functions and authority, however he is the only
with the authority to receive and issue instructions and notices from the Engineer
3. The Engineer
 Duties and Authority
While carrying out his responsibilities specified in the contract, he shall act as a skilled
professional and be deemed to act for the employer.
 Representative
The engineer may appoint a representative to act on his behalf at the site.
The representative shall be on site during execution of works.
The assistant should be suitably qualified and competent.
 Delegation
The Engineer shall give notice to parties on appointed representatives, their assigned duties or
revocation of delegation.
The Engineer shall not delegate issues pertaining determination of conflicts between parties.
 Instructions
He may at any time issue instructions to the Contractor that facilitate the execution of works
according to the contract.
 Determinations
When determining any matter or claim, the engineer shall act neutrally between parties and shall
not be deemed to act for the employer.
 Consultation to reach Agreement
If a conflict or claim arises during execution of works;
 The Engineer shall consult with both Parties, either jointly or separately, to encourage discus
sion aimed at reaching an agreement.
 The Engineer shall commence such consultation promptly to allow adequate time for an agre
ement within 42 days or a time limit proposed by the engineer and agreed by both parties.
 The Engineer shall provide both Parties with a record of the consultation, unless proposed by
the Engineer and agreed by both parties.
 The Engineer shall issue a Notice of Agreement to both parties, if agreement is reached withi
n 42 days or a time limit proposed by the Engineer and agreed by both parties.This Notice sh
all state that it is a “Notice of the Parties’ Agreement” and shall include a copy of the agreem
ent.

 Determinations
If an agreement is not reached within the time limits or both parties see no conclusion before tim
e limit, the Engineer shall make a fair determination of the matter or Claim, in accordance with t
he Contract, taking due regard of all relevant circumstances.

The Engineer shall give a Notice to both Parties of his/her determination. This Notice shall state t
hat it is a “Notice of the Engineer’s Determination”, and shall describe the determination in detai
l with reasons and detailed supporting particulars.

The Engineer should give the Notice of his/her determination within 42 days or within such other
time limit as may be proposed by the Engineer and agreed by both Parties

 Meetings
The Engineer shall keep record of management meetings, and supply copies of the record to thos
e attending and to the Employer.

The roles and responsibilities of the Engineer:

● The Employer appoints the Engineer, who carries out duties assigned to them
in the contract. The Engineer's staff shall include suitably qualified engineers
and other professionals who are competent to carry out these duties.

● The Engineer does not have the authority to amend the contract.

● The Engineer may exercise the authority attributable to the Engineer as specified in
or necessarily to be implied from the Contract. If the Engineer is required to obtain
the approval of the Employer before exercising a specified authority, the
requirements shall be as stated in the Particular Conditions. The Employer shall
promptly inform the Contractor of any change to the authority attributed to the
Engineer.

● The Engineer shall act for the Employer when carrying out duties or exercising
authority specified in or implied by the contract. The Engineer does not have the
authority to relieve either party of any duties, obligations, or responsibilities under
the contract.
● Any approval, check, certificate, consent, examination, inspection, instruction,
notice, proposal, request, test, or similar act by the Engineer (including
absence of disapproval) shall not relieve the Contractor from any
 responsibility they have under the Contract, including responsibility for errors,
omissions, discrepancies and non- compliances.
● The Engineer shall obtain the specific approval of the Employer
before taking action in a number of specific areas, including but not limited to:
agreeing or determining an extension of time and/or additional cost, instructing a
Variation, approving a proposal for Variation submitted by the Contractor, and
specifying the amount payable in each of the applicable currencies.

● If, in the opinion of the Engineer, an emergency occurs affecting the safety of life
or of the Works or of adjoining property, they may instruct the Contractor to
execute all such work or to do all such things as may be necessary to abate or
reduce the risk. The Contractor shall comply with any such instruction, despite
the absence of approval of the Employer. The Engineer shall determine an
addition to the Contract Price, in respect of such instruction, in accordance with
Clause 13 and shall notify the Contractor accordingly, with a copy to the
Employer.
● The Engineer may assign duties and delegate authority to assistants, including a
resident engineer and/or independent inspectors appointed to inspect and/ or test
items of Plant and/or Materials. The assignment, delegation or revocation shall be
in writing and shall not take effect until copies have been received by both Parties.

● The Engineer may issue instructions and additional or modified Drawings which
may be necessary for the execution of the Works and the remedying of any
defects, all in accordance with the Contract.

● Whenever these Conditions provide that the Engineer shall proceed in

accordance with Sub- Clause 3.5 to agree or determine any matter, the
Engineer shall consult with each Party in an endeavor to reach agreement. If
agreement is not achieved, the Engineer shall make a fair determination in
accordance with the Contract, taking due regard of all relevant circumstances.

● The Engineer shall give notice to both Parties of each agreement or

determination, with supporting particulars. Each Party shall give effect to each
agreement or determination unless and until revised under Clause 20 [Claims,
Disputes and Arbitration].

● If an ambiguity or discrepancy is found in the documents, the Engineer shall

issue any necessary clarification or instruction.
● The Engineer is responsible for preparing records when any Permanent Works are
to be measured from records. The Contractor shall, as and when requested, attend
to examine and agree the records with the Engineer, and shall sign the same when
agreed. If the Contractor does not attend, the records shall be accepted as accurate.

● Unless otherwise stated in the Contract, the Engineer shall agree or determine
the Contract Price by evaluating each item of work, applying the measurement
agreed or determined and the appropriate rate or price for the item.

● The Contractor shall pay to the nominated Subcontractor the amounts which
the Engineer certifies to be due in accordance with the subcontract.
● Before issuing a Payment Certificate which includes an amount payable to a
nominated Subcontractor, the Engineer may request the Contractor to supply
reasonable evidence that the nominated Subcontractor has received all amounts
due in accordance with previous Payment Certificates, less applicable
deductions for retention or otherwise.

● The Engineer may, after receiving any notice under Sub-Clause 20.1, monitor
the record-keeping and/or instruct the Contractor to keep further contemporary
records. The Contractor shall permit the Engineer to inspect all these records, and
shall (if instructed) submit copies to the Engineer.

● Within 42 days after receiving a claim or any further particulars supporting a

previous claim, or within such other period as may be proposed by the Engineer
and approved by the Contractor, the Engineer shall respond with approval, or with
disapproval and detailed comments. They may also request any necessary further
particulars, but shall nevertheless give their response on the principles of the claim
within such time.
 RISK UNDERTAKEN BY PARTIES UNDER FIDIC RED BOOK.
The FIDIC Red book seeks to allocate risks to the parties that are best suited and most capable to
handle them. The FIDIC Red Book provides conditions for construction contracts where the
design is primarily carried out by the Employer. It, however still allows for part of the design to
be done by the contractor. Risks are allocated between the Employer and Contractor as follows:

1. Contractor’s Risks.
 Care of the Works
Care of the works, goods and contractor’s documents falls to the contractor until such a time that
a taking over certificate is issued or is deemed to be issued (as according to Sub-Clause 10.1) for
the works. If a taking over certificate is issued then responsibility falls to the employer.
If any loss or damage occurs to the works, goods or contractor’s documents before a taking over
certificate is issued the contractor shall be held liable and be required to rectify the loss or
damage at their own cost. This is exempt for situations in which the loss arises from the actions
of the Employer, employer's employees or agents (Sub-clause 17.3).
 Defects.
The contractor is responsible for remedying any defects that occur in the works and are reported
within the relevant defects notification period, as long as the do not arise from the employer’s
actions. In the event defects occur the employer may opt to:
i. Remedy the defects on their own but at a reasonable manner and at the contractor’s cost.
However, the contractor shall not be liable for these works.
ii. Have the engineer decided a reasonable amount to be deducted from the contract sum to
allow the defects be remedied.
iii. In the event that the defect deprives the employer of substantially the whole benefit of the
works or a substantial part of the works, terminate the contract as a whole or with respect to
the defective works. Without any prejudice to any other rights under the contract or
otherwise, the employer shall be entitled to recover the sum paid for the works or for such
part plus financing cost, dismantling the same, clearing the site and returning the plant and
materials to the contractor.
  Delays.
The contractor shall be liable for any delays except those arising for the employer’s actions or
listed under the employer’s risks or those catered for in Sub-Clause 8.4. In the event of these
delays, the contractor shall be required to pay delay damages to the employer as under Sub-
Clause 2.5. The delay damages shall be as stipulated under the contract data and shall be paid for
every day of delay between the stipulated time of completion and the time stated in the taking
over certificate. However, the total amount due for delays shall not exceed the maximum delay
damages as stated in the contract data.
 Sufficiency of the Accepted Contract Amount.
The Contractor is deemed to:
i. have satisfied himself as to the correctness and sufficiency of the accepted
contract Amount, and
ii. have based the accepted contract Amount on the data, interpretations,
necessary information, inspections, examinations and satisfaction as to all
relevant matters referred to in Sub-Clause 4.1.
Unless otherwise stated in the contract, the accepted contract amount covers all the contractor’s
obligations under the Contract and all things necessary for the proper execution and completion
of the works, and the remedying of any defects

 Revision of Methods.
Where the contractor’s methods are found to be substandard or unsuitable as they may, for
example, cause delays, the engineer may require the contractor to submit a revised program to
meet the set deadline. The revised program is to be supported by a revised description of the
methods to be used. The methods revision is at the risk and cost of the contractor (Sub-Clauses
8.6). In the event the revision of methods causes the employer to incur additional cost the
contractor is liable to pay under the employer’s claims (Sub-Clause 2.5).
 Losses after Taking Over.
In the event that there are losses or damages to the works after the Taking over certificate is
issued, that can directly be attributed to negligence or willful act of the contractor the contractor
shall be responsible for the rectification of the damage or losses that have occurred.

2. Employer’s Risks.
 Design Risk.
In the FIDIC red book the employer provides the design thus any deficiencies or errors in the
design that can lead to delays, cost increases or disputes are at the employer’s risk.
 Changes in Law.
Changes in the law that make the requirements of the contract to be fulfilled illegal are the
employer’s risk. A good example is a situation where the site under construction is declared
riparian land and further development becomes prohibited. Some changes in the law also lead to
increased costs in the completion of the works. This also falls under the employer’s risks.
  Force Majeure.
Force Majeure” means an exceptional event or circumstance:
a. which is beyond a party’s control,
b. which such party could not reasonably have provided against before entering into the
Contract,
c. which, having arisen, such party could not reasonably have avoided or
overcome, and
d. which is not substantially attributable to the other party.
So long as the above conditions are satisfied, force majeure may include but is not limited to;
riots, wars and hostilities, rebellions, terrorism, the use of munitions and natural catastrophe. If
the contractor is hindered from performing their contractual duties by force majeure, the are to
submit a notice to the engineer for determination. If the contractor incurs cost due to being
hindered by force majeure the are entitled to claim the increased costs (Sub-Clause 20.5).
If the execution of works is prevented for a continuous period of 84 days by reason of force
majeure of which notice has been given (Sub-Clause 19.2), or for multiple periods which total
more than 140 days due to the same notified force majeure, then either Party may give to the
other Party a notice of termination of the Contract. In this case the engineer makes a valuation of
the works done and issues a payment certificate.
 Use and Occupation of the works.
The employer assumes responsibility of the works once the Taking over certificate is issued. The
employer thus assumes the risks resulting from occupancy and use of the works.
 Financial Risks.
In the event that the employer faces cash flow issues or a change in the availability of funds, they
may fail to meet their contractual obligations. When payment is delayed the contractor is entitled
to receive financing charges compounded monthly on the unpaid amount during the period of
delay starting from the expected date of payment regardless of any interim payment certificates
that have been issued. The contractor is entitled to this payment without any formal notice or
certificate, and without any prejudice to any right or remedy (Sub-Clause 14.8).
 Delay in Employer Action.
The employer is expected to allow the contractor access to site in the period stipulated in the
contract. In the event access is not allowed within the given time, the contractor is entitled to
additional time for the completion of works and where losses have been incurred, the employer
will be required to pay any such costs plus profit (Sub-Clause 2.1). Where the employer is in a
position to help the contractor in securing necessary documents or approvals, they are expected
to at the request of the contractor (Sub-Clause 2.2).
 Unforeseeable Physical Conditions.
Physical conditions int his case refers to natural or man-made physical conditions, obstructions
or pollutants which the contractor may encounter on site. Including sub-surface and hydro-
logical conditions excluding climatic conditions. The employer is expected to make available to
the contractor all such data (Sub-Clause 4.1).
However, where the contractor feels certain physical conditions were unforeseeable they may
issue a notice to the engineer, stating why the conditions were unforeseeable, for determination.
If the engineer determines that the conditions were indeed unforeseeable the contractor is
allowed to demand additional pay to handle the conditions for the works to progress.
CHALLENGES ENCOUNTERED BY THE PARTIES UNDER THIS CONTRACT
FRAMEWORK
1. Client
 Cost Overruns: Clients may face unexpected increases in project costs due to changes in
scope, delays, or unforeseen circumstances.
 Delay Management: Ensuring the project is completed on time can be challenging,
especially if the contractor faces delays.
 Quality Control: The client must ensure that the work meets the required standards and
specifications, which can be difficult to enforce.
 Dispute Resolution: While FIDIC provides mechanisms for dispute resolution, such as
adjudication and arbitration, the process can be lengthy and costly, leading to frustration
among parties.

2. Engineer
 Role Clarity: The engineer's role can sometimes lead to conflicts between acting as an
advisor and a decision-maker, affecting project dynamics.
 Decision-Making Pressure: Engineers may face pressure from both clients and
contractors, making impartial decision-making challenging.
 Site Conditions: Unforeseen site conditions can complicate the engineer's ability to
manage the project effectively.
 Time Constraints: Engineers often work under tight timelines, which can impact the
quality of their assessments and decisions.

3. Contractor
 Risk Management: Contractors must manage risks associated with delays, cost overruns,
and changes in project scope, which can be challenging.
 Cash Flow Issues: Delayed payments from clients can create cash flow problems,
affecting project execution.
 Compliance with Standards: Meeting the technical and safety standards specified in the
contract requires diligent oversight and can lead to disputes if not adhered to.
 Resource Allocation: Balancing the allocation of labour and materials while adhering to
project timelines can be a significant challenge.
Common Challenges
1. Complexity and Ambiguity:
The language and structure of the contract can be complex, leading to misunderstandings
and differing interpretations.
2. Sustainability and Environmental Regulations:
Increasingly stringent regulations can lead to conflicts over compliance, especially when
the contract does not adequately address these issues.
3. Cultural Differences:
In international projects, cultural differences can affect negotiation styles,
communication, and expectations, complicating contract execution.
 Communication Gaps: Miscommunication among the client, engineer, and contractor
can lead to misunderstandings and project delays.
 Change Orders: Managing changes in project scope can create friction and lead to
disputes over costs and timelines.
 Dispute Resolution Mechanisms: While FIDIC provides frameworks for resolving
disputes, the process can be lengthy and costly.
Effective collaboration, clear communication, and proactive management of risks and
expectations are essential for mitigating these challenges.
KEY RESPONSIBILITIES FOR EMPLOYERS IN CONSTRUCTION PROJECTS
The FIDIC Red Book establishes a clear framework for construction projects by outlining the
duties and expectations of both the Employer (project owner) and the Contractor. This summary
focuses on the specific obligations placed on Employers to ensure a smooth and successful
project execution.
 Granting Timely Site Access
A fundamental aspect of the Employer’s responsibility is granting the Contractor timely access to
the designated work area. This access should be provided within the timeframe stipulated in the
Contract Data. Any delays in granting access can entitle the Contractor to claim an Extension of
Time (EOT) on the project schedule, along with compensation for additional costs incurred due
to the delay.
 Providing Necessary Assistance
The Employer is obligated to offer reasonable assistance to the Contractor upon request. This
assistance primarily involves helping the Contractor obtain the permits, licenses, and approvals
mandated by local laws. This includes providing relevant legal documents and supporting the
application process for permits related to construction activities, customs clearance for materials
delivery, and even the export of the Contractor’s equipment upon project completion.
 Ensuring Cooperation and Safety
The Employer holds the responsibility to ensure that their staff and any other contractors
working on or near the site cooperate effectively with the Contractor’s team. This cooperation
fosters a productive work environment and facilitates the smooth execution of the project.
Additionally, the Employer must guarantee that their personnel and other contractors adhere to
the same health and safety regulations that the Contractor is bound by. This creates a safe
working environment for everyone involved in the project.
 Maintaining Financial Stability
The FIDIC Red Book emphasizes the importance of the Employer’s financial stability
throughout the project. Details regarding the Employer’s financial arrangements for fulfilling
their contractual obligations must be clearly outlined in the Contract Data. In the event of any
significant changes to these financial arrangements that could potentially affect their ability to
pay the remaining Contract Price, the Employer is obligated to promptly notify the Contractor
and provide detailed supporting documentation.
Furthermore, the Contractor has the right to request and receive reasonable proof of the
Employer’s financial capability under specific circumstances. These situations include:
* When the Contractor receives an instruction to execute a significant variation order exceeding
10% of the agreed-upon Contract Price.
* When the cumulative value of all variation orders surpasses 30% of the initial Contract Price.
* When the Contractor becomes aware of any substantial changes in the Employer’s financial
situation that haven’t been communicated through a formal Notice.
In any of these scenarios, the Employer is required to provide the Contractor with evidence,
within 28 days of the request, demonstrating sufficient financial resources to cover the remaining
Contract Price.
 Sharing Site Information
Before the project’s official commencement date (Base Date), the Employer must provide the
Contractor with all relevant data they possess concerning the site conditions. This information
encompasses details on the site’s topography, subsurface characteristics, hydrological factors,
climatic conditions, and environmental considerations. Sharing this data empowers the
Contractor to effectively plan and execute the construction works. Additionally, the Employer is
obligated to promptly disclose any new site-related information that comes into their possession
after the Base Date.
 Supplying Materials and Equipment (if applicable)
If the Contract specifies that the Employer will be supplying materials and/or equipment for the
Contractor’s use during construction, the Employer is responsible for making these resources
available according to the agreed-upon details in the Contract Data. This includes outlining
specific timeframes, arrangements, rates, and prices for the provision of these materials and
equipment. When using Employer-supplied equipment, the Contractor assumes full
responsibility for its care and maintenance throughout the period it remains in their possession.
 ROLES OF THE CONTRACTOR IN THE FIDIC REDBOOK

In the FIDIC Red Book ("Conditions of Contract for Construction" – 1999 edition), the
Contractor has several key roles and responsibilities, which are crucial to the successful
execution of the construction project. These responsibilities are aimed at ensuring that the work
is completed in accordance with the contract specifications, on time, and to the required quality.
Below is an overview of the Contractor's roles and responsibilities as outlined in the FIDIC Red
Book:

 Compliance with Engineer's Instructions (Clause 3.3)

The Contractor must comply with all instructions given by the Engineer, who acts as the
Employer's representative. This includes adjusting the work methods, resolving issues, and
following directives that ensure the project adheres to contractual requirements.

 Execution of Works (Clause 4.1)

The Contractor is responsible for the construction and completion of the works in accordance
with the contract. This includes adhering to all drawings, specifications, schedules, and other
documents provided by the Employer or Engineer. They must manage the project to
ensure timely and quality execution, staying within the agreed scope and schedule.

 Provision of Materials, Labor, and Equipment (Clause 4.2)

The Contractor is responsible for providing all necessary materials, labor, machinery, and
equipment to carry out the works. All materials and workmanship must comply with the
contract’s quality standards and be sourced or produced in line with the project specifications.

 Subcontracting (Clause 4.4)

The Contractor may subcontract portions of the work, but they remain fully responsible for the
performance and quality of the subcontracted work. Subcontractors must meet the same
standards required by the contract, and any subcontracting typically requires prior approval from
the Engineer.

 Setting Out and Accuracy (Clause 4.7)

The Contractor is responsible for the accurate setting out of the works, including ensuring the
works are executed at the correct locations, elevations, and alignments according to the design
and specifications.
  Health, Safety, and Environmental Protection (Clause 4.8)

The Contractor must take necessary steps to ensure health, safety, and environmental protection
at the site. They must implement safety measures, provide protective equipment, ensure safe
working conditions, and minimize the environmental impact of construction activities.

 Design Responsibilities (if applicable) (Clause 5)

Although the Red Book is traditionally used for projects where the Employer is responsible for
the design, if any design responsibility is assigned to the Contractor (e.g., temporary works,
specific elements), the Contractor must ensure the design meets the specifications and standards
stipulated in the contract.

 Site Management and Supervision (Clause 6.9)

The Contractor is responsible for the day-to-day site management and supervision. They must
ensure that the site is adequately staffed with experienced personnel, including skilled labor,
supervisors, and managers, to carry out the work efficiently and safely.

 Quality Control and Testing (Clause 7.4)

The Contractor must implement a system of quality control, including inspections and tests, to
verify that materials and workmanship meet the standards required by the contract. The
Contractor must cooperate with the Engineer during tests and provide access to inspect the works
at any reasonable time.

 Program of Works (Clause 8.3)

The Contractor must prepare and submit a detailed program (schedule) of the works to the
Engineer. This program should include the sequence of activities, key milestones, resources
allocation, and timing for completion. The Contractor must update the program if significant
deviations occur and notify the Engineer of any delays.

 Completion and Handover (Clause 10)

Upon completion of the works, the Contractor must handover the completed project to the
Employer, ensuring that all works are finished according to the contract. A Taking Over
Certificate will be issued by the Engineer once the works are completed satisfactorily.

 Rectification of Defects (Clause 11)

During the Defects Liability Period, the Contractor is required to rectify any defects in the
work, whether identified by the Employer or the Engineer. The Contractor must make good the
defects within a specified time frame, usually at their own cost.
  Variations and Adjustments (Clause 13)

The Contractor must implement any variations or adjustments to the works as instructed by the
Engineer, subject to the procedures outlined in the contract. These variations could involve
changes in the scope, design, materials, or methods of construction.

 Payment Applications (Clause 14)

The Contractor is responsible for preparing and submitting payment applications based on the
progress of the work. The applications must include details of the work completed, costs
incurred, and any claims for additional payments due to variations or delays.

 Insurance and Indemnity (Clause 18)

The Contractor must provide and maintain the required insurance policies, including for the
works, equipment, third-party liability, and employees. The Contractor is also responsible for
indemnifying the Employer against claims arising from the construction activities.

 Force Majeure (Clause 19)

The Contractor is responsible for managing risks related to Force Majeure events (unforeseeable,
exceptional circumstances like natural disasters). They must take reasonable actions to minimize
delays and mitigate the impact of these events on the project.

 Dispute Resolution (Clause 20.6)

The Contractor is involved in the dispute resolution process if disagreements arise between the
Employer and Contractor. The contract provides for alternative dispute resolution methods, such
as amicable settlement, adjudication by the Dispute Adjudication Board (DAB), and arbitration.

In summary, the Contractor's roles and responsibilities under the FIDIC Red Book are
comprehensive, covering all aspects of managing the construction project, from procurement and
execution of works to quality control, safety, and the resolution of disputes. These
responsibilities are essential to ensuring that the project is completed successfully, on time, and
in accordance with the contract.
 HOW THESE OBLIGATIONS AFFECT PROJECT OUTCOMES
In construction and engineering projects, governed by the FIDIC Red Book, the interplay
between the employer, engineer, and contractor is vital for success. Each party has distinct roles
and responsibilities that directly influence project outcomes. Here’s a detailed examination of
these roles:
1. Employer
Key Responsibilities:
• Project Initiation: Clearly define the project’s scope, budget, and timeline to set the foundation
for all subsequent activities. This ensures that the contractor understands the scope and
expectations of the project.
•Funding: Secure necessary financing and manage the budget effectively to ensure resources are
available throughout the project.
•Stakeholder Management: Engage with stakeholders consistently to understand their concerns
and expectations, facilitating smooth communication.
•Decision-Making: Make timely and informed decisions regarding design changes, budget
adjustments, and overall project direction to avoid delays.
•Compliance: Ensure that the project adheres to all legal and regulatory requirements, reducing
the risk of complications later.
Impact on Project Outcomes:
•Establishing clear objectives and securing adequate funding streamlines project execution and
minimizes disruptions.
•Proactive engagement with stakeholders fosters support and mitigates potential conflicts.
•Timely decision-making is crucial in maintaining momentum and keeping the project on track.
Delays in decision-making can lead to project stagnation and increased costs.
2. Engineer
Key Responsibilities:
•Design Development: Create comprehensive plans and specifications that align with the
employer’s vision and requirements.
•Technical Oversight: Ensure construction adheres strictly to design specifications and industry
standards, maintaining the integrity of the project.
•Quality Assurance: Implement quality control measures to monitor progress and ensure
materials and workmanship meet required standards.
•Problem Solving: Swiftly address any technical issues that arise during construction to prevent
setbacks.
•Administration of the Contract: Acts as the intermediary between the employer and the
contractor, overseeing contract administration and compliance.
•Coordination: Collaborate effectively with contractors, the employer, and other stakeholders to
ensure all aspects of the project align. Instructions to the contractor regarding variations and
changes in work scope should be provided.
Impact on Project Outcomes:
•Effective design and oversight minimize the likelihood of costly alterations and rework, saving
time and resources.
•Strong communication with contractors enhances efficiency and streamlines processes,
contributing to smoother operations and relations between parties.
•Proactive problem-solving helps sustain project momentum, preventing delays and keeping
deadlines intact.
3. Contractor
Key Responsibilities:
•Execution of Work: Carry out construction tasks as per the provided designs and specifications,
ensuring fidelity to the project vision.
•Resource Management: Efficiently manage labor, materials, and equipment to optimize
productivity and reduce waste.
•Scheduling: Develop and adhere to a project schedule to guarantee timely completion of tasks
and overall project delivery.
•Safety Compliance: Ensure all work complies with quality standards, health and safety
regulations, protecting workers and minimizing risks. Adheres to environmental considerations
throughout the project.
•Variation Management: Handles changes in scope or design, ensuring that all variations are
documented and approved.
•Communication: Regularly report progress, challenges, and any necessary changes to the
employer and engineer, fostering transparency.

Impact on Project Outcomes:

•Effective resource management and adherence to schedules directly influence project timelines
and cost efficiency. The contractor’s competency directly affects the quality and durability of the
project.
•Compliance with safety standards not only reduces accident risks but also cultivates a positive
work environment.
•Transparent communication builds trust and facilitates quick resolutions to issues, enhancing
collaboration.
Overall Impact on Project Success
The collaborative dynamic among the employer, engineer, and contractor is crucial for project
success. When each party fulfills their responsibilities diligently, projects are more likely to
remain on budget, adhere to timelines, and meet quality standards. Conversely,
miscommunication, unclear roles, or delays in addressing issues can lead to significant setbacks,
including cost overruns and compromised quality.
In conclusion, clearly defined roles and strong collaboration among the employer, engineer, and
contractor are essential to achieving successful outcomes in construction and engineering
projects.
For a student civil engineer, grasping these dynamics will be invaluable in future professional
practice and project management roles
 KEY RISKS AND CHALLENGES OF THE ROLES
There is an abundance of risks and challenges in every business. The contract explains on
various ways to control them in the case of occurrence. In the event of:
 Delayed payment
The Contractor is entitled to receive financing charges compounded monthly on the amount
unpaid during the delay period. (Sub-clause 14.7[Payment])
 Extension on time
A Contractor shall be entitled to Sub-clause 20.1[ Contractor’s Claims] to an extension of the
Time for Completion if and to the extent that completion for the purposes of Sub-Clause
1.1[Taking Over of the Works and Sections] is or will be delayed by any of the following causes:
1) A Variation under Sub-Clause 13.3[Variation Procedure] or other substantial change
in the quantity of an item of work included in the Contract.
2) A cause of delay giving an entitlement to extension time.
3) Exceptionally diverse climatic conditions.
4) Unforeseeable shortages in the availability of personnel or Goods caused by epidemic
or government actions.
5) Any delay, impediment or prevention caused by or attributable to the Employer, the
Employer’s Personnel, or the Employer’s other contractors on the Site.
A notice to the Engineer should be made only if:
a) The Contractor has followed all necessary procedures laid down by the relevant
legally constituted public authorities in the Country.
b) These authorities delay or disrupt the Contractor’s work.
c) Delay or disruption was Unforeseeable.

 Variation in opinion
Variations may be initiated by the Engineer at any time prior to issuing the Taking Over
Certificate for the Works, either by instruction or request for the Contractor to submit a
proposal;
a) changes in quantities of any item of work included in the Contract
b) changes in quality & characteristic of any type of work
c) changes to levels, positions or dimensions of the works
d) omission of any work unless its to be done by another party.
e) Any additional work, Plant, Materials or services necessary for the Permanent
Works, including any associated Tests on Completion, boreholes and other testing
and exploratory work
f) Change to the sequence or timing of execution works
The Contractor shall not make any alteration or modification of the Permanent Works, unless and
until the Engineer instructs or approves a Variation.
 Suspension of works
If the Contractor suffers delays or incurs Cost from complying with the Engineer’s instructions
from resuming work, the Contractor is entitled to;
a) A time extension for any delay if completion will be delayed [Sub-clause 8.4]
b) Payment of any such cost, which shall be included in the Contract Price
The Contractor will not be eligible if the cause of suspension of works was due to the
Contractor’s faulty design, workmanship or materials, or of the Contractor’s failure to protect,
store or secure in accordance with Sub-Clause 8.8 [Suspension of Work]
 Prolonged suspension
A Contractor can request the Engineer permission to resume if the Suspension of Work has gone
for 84 days. If the Engineer doesn’t respond within the 28 days of filling the request, the
Contractor may treat the suspension as an omission under clause 13 [Variations and Adjustments]
of the affected part of the works. If the suspension affects the whole works, the Contractor may
give notice of termination Sub-Clause 16.2[Termination by Contractor].
 Delay in Tests
If Tests on Completion are being unduly delayed by the Contractor, the Engineer may by notice
require the engineer to carry out the Tests within 21 days after receiving the notice. If this again
doesn’t happen, the Employer’s Personnel may proceed with the necessary tests at the risk and
cost of the Contractor.
 Failure to Remedy Defects
If a Contractor fails to remedy a defect within reasonable time, a date maybe fixed by the
Employer for the remedy to be done or by the degree of damage.
If the Contractor also fails to deliver again, the Employer may;
1) Carry out the work himself or by others at the Contractor’s cost
2) Require the Engineer to agree to a reduced contract price
3) If the defect denies life to the project, the Employer may terminate the contract as a whole.

 Force Majeure
This is an exceptional event or circumstance which:
1) Is beyond control of a Party
2) A Party couldn’t avoid before entering into contract
3) Having risen, such Party could not reasonably have avoided or overcome
4) Its isn’t attributable to the other party

REAL LIFE EXAMPLES:

 1. Panther Real Estate Development LLC v. Modern Executive Systems
Contracting LLC
Contractual Background:
Parties
i. Panther Real Estate Development LLC (Employer)
ii. Modern Executive Systems Contracting LLC (Contractor).
Project
Construction of a residential tower with 112 units in Dubai. The contract value was AED
40,331,550.
FIDIC Conditions:
The contract included the FIDIC Conditions (1999) as part of the General Conditions, with
specific Particular Conditions added.
Key Provisions:
Performance Security:
A performance guarantee of AED 4,033,155 provided by MESC.
Time for Completion:
Initially set for 16 months, with a completion date of 16 December 2018.
Extension of Time (EOT):
MESC applied for four EOTs, citing various delays (such as design approvals and third-party
issues), which were mostly rejected by the Engineer.
Delay Damages:
Under Sub-Clause 8.7, MESC faced liquidated damages of AED 42,500 per day for delays,
capped at 10% of the contract price.
Dispute:
The primary contractual issue was the delay in completion. MESC’s works were significantly
delayed, overshooting the agreed completion date by more than six months by mid-2019. Despite
four EOT applications being rejected, MESC argued that the delays were largely attributable to
Panther and the Engineer, and that it was entitled to more time. Panther, in turn, sought delay
damages and invoked the contract’s termination clause after liquidating the performance and
advance payment guarantees due to MESC’s slowdown and non-performance.

Key Contractual Issues:

EOT Rejections:
The Engineer rejected MESC’s EOT applications based on Sub-Clause 8.4 (Extension of Time)
of the FIDIC conditions.
MESC submitted four applications for Extensions of Time (EOTs) under Sub-Clause 8.4 of the
FIDIC Conditions, citing various delays. The Engineer, NAGA, rejected these applications,
which became a central issue in the dispute.:
 EOT No. 1 (Submitted: 18 February 2018)
This was the first request for an extension, where MESC cited five delay events. The Engineer
rejected this EOT application, primarily because MESC did not provide adequate supporting
documentation and failed to comply with the contract’s procedural requirements under Sub-
Clause 20.1 for timely notification and claim submission.
 EOT No. 2 (Submitted: 27 June 2018)
In this submission, MESC consolidated and revised its delay events from EOT No. 1.This EOT
was also rejected by the Engineer. The reasons for rejection were similar to those for EOT No. 1
—insufficient evidence to substantiate the delays and failure to provide timely and detailed
claims as required under Sub-Clause 20.1.
 EOT No. 3 (Submitted: 27 June 2019)
This was MESC’s most detailed submission, listing 11 delay events.The Engineer once again
rejected this EOT, arguing that most of the delays cited by MESC were either not notified in
time or not substantiated properly. Additionally, the Engineer did not find the delay events
justifiable under Sub-Clause 8.4 for extensions of time since they did not affect the overall
completion date as claimed.
 EOT No. 4 (Submitted: 30 January 2020)
In this final EOT submission, MESC claimed an extension of time until the end of February
2020 due to delays in finalizing the Balcony Glass Balustrade Design. The Engineer rejected
this EOT, stating that MESC failed to properly manage the subcontractor responsible for the
balustrades and did not meet its obligations to finalize and get approval for the designs in a
timely manner.
Reasons for the EOT Rejections
The primary contention was that MESC failed to provide adequate notifications and
documentation within the prescribed timelines (28 days for notice, 42 days for detailed claims as
per Sub-Clause 20.1).
The following are the factors that led to the rejection of the EOT
● Sub-Clause 8.4 (Extension of Time): MESC sought extensions under this clause, but the
Engineer found that they did not comply with the contract’s procedural requirements.
● Sub-Clause 20.1 (Contractor’s Claims): A key point of contention was that MESC failed
to provide timely notices and detailed claims as required under Sub-Clause 20.1, which
 acted as a condition precedent for granting an extension of time. The court ruled that
MESC’s claims for extensions were invalid due to non-compliance with these provisions.
● Engineer’s Role: The Engineer’s determinations were final as MESC failed to challenge
them within the required time frame under Sub-Clause 3.5. This further undermined
MESC’s position in the dispute.

Conclusion on EOTs:
The rejection of EOTs was central to the case’s outcome. MESC’s failure to provide proper
notices and substantiated claims meant that Panther was entitled to terminate the contract and
recover liquidated damages for the delay, as per Sub-Clause 8.7. Despite MESC’s arguments that
the delays were largely due to Panther’s actions or external factors, the court upheld the
Engineer’s decisions and Panther’s right to enforce the contract’s terms, particularly the
conditions around extensions of time.
Performance Security:
Under Sub-Clause 4.2 of the FIDIC Conditions, the contractor, MESC, was required to provide a
performance security to ensure the proper performance of its obligations under the contract. In
this case:
● The performance security was set at AED 4,033,155, equivalent to 10% of the contract
price, and was issued by Emirates NBD.
● The security was an unconditional on-demand guarantee, meaning Panther, as the
Employer, could claim the security at any time without needing to prove default or breach
of contract by MESC.
Panther liquidated the performance guarantee as allowed under Sub-Clause 4.2 due to MESC’s
breaches and delays. MESC protested this liquidation, arguing that they had been negotiating an
MoU to resolve the delay issues, which Panther rejected.
Termination:
Panther terminated the contract under Sub-Clause 15.2 after the maximum delay damages were
reached. MESC disputed this, claiming that Panther's actions and failure to grant proper
extensions of time constituted a breach of contract.
After encashing the security guarantees and witnessing further delays and non-performance,
Panther formally terminated the contract on 6 November 2019. The key grounds for termination
were:
● The maximum amount of delay damages had been exhausted, reaching the cap of 10% of
the contract price.
● MESC had effectively abandoned the works, as demonstrated by its reduced pace and
communication that it would slow down the project.
The termination of the contract was a critical outcome of MESC’s continued delays, failure to
secure valid EOTs, and slowdown in performance. The FIDIC Red Book’s Sub-Clause 15.2
allowed Panther to terminate the contract once the maximum delay damages were reached and
the works were effectively abandoned by MESC. The court upheld Panther’s decision to
terminate, underlining the importance of contractors adhering to performance timelines and
complying with contractual requirements for EOTs to avoid such severe consequences.
Liquidated Damages:
Panther sought liquidated damages for delay, in addition to claiming general damages for the
costs of completing the project with a new contractor and losses from delayed rental income.
Panther relied on Sub-Clause 15.2 (Termination by Employer) to terminate the contract when the
liquidated damages reached the maximum limit. The delays were significant, and MESC’s failure
to complete the project within the stipulated time and its inability to secure valid EOTs left
Panther with no choice but to terminate the contract and pursue damages.
In addition to liquidated damages, Panther also sought general damages for losses such as the
cost of completing the project with a new contractor, the cost of remedying defective work, and
the loss of potential rental income from the delayed completion of the residential units.
The court ruled that while liquidated damages cover the delay up to the 10% cap, Panther was
also entitled to claim for other non-delay-related damages, such as the cost of completing the
works and rectifying defects.
However, the court rejected Panther’s claim for general damages relating to the loss of rental
income during the period of delay, as this was considered a delay-related loss covered by the
liquidated damages clause (Sub-Clause 8.7).
Contractor’s Claims:
MESC counterclaimed for prolongation costs and the value of work completed before
termination. However, the court emphasized that MESC had failed to meet the conditions
precedent (Sub-Clause 20.1) for claiming EOT, which undermined their case.
Court Decision:
The court ruled against MESC on most points, holding that:
● MESC’s failure to comply with the notice and claims procedures (Sub-Clause 20.1)
barred their claims for EOT.
● Panther was entitled to liquidated delay damages and the recovery of costs to complete
the project with a new contractor.
● The Engineer's determinations were binding as MESC failed to challenge them in a
timely manner under Sub-Clause 3.5.

In summary, the case highlights the importance of adhering to procedural requirements in the
FIDIC Red Book, particularly concerning EOT claims, performance security, and timely
notifications. MESC’s failure to comply with these contractual mechanisms led to its inability to
secure extensions or avoid the financial penalties imposed by Panther.
 2. THE MOMBASA-NAIROBI PIPELINE PROJECT
(Kenya Pipeline Company vs. Zakhem International Construction Ltd)
In July 2014, Zhakem International Construction Company entered into a contract with Kenya
Pipeline Company (KPC) to construct a new 450-kilometre pipeline running from Mombasa to
Nairobi. In January 2020, Zakhem International Construction Ltd filed a civil case against KPC
seeking compensation due to extensive delays emanating from the client’s side, as well as the
associated cost overruns.
Zakhem International attributed laxity on the part of KPC in addressing the issue of the flawed
design drawings submitted by another of the client’s contractors as a major factor that
fundamentally and materially impacted the timely conclusion of the project. Some of the delays
cited in the case include inter alia (KPC’s non-compliance with the National Construction
Authority (NCA) requirements relating to the project), impeded approvals and procurement of
major plant equipment, delayed provision of design drawings and details, and delayed provision
of pre-commissioning engineering information and change of works among others.
Zakhem International’s argument was that it faced significant delays during the construction
process that were primarily caused by variations in the project scope and the client’s instructions
which went beyond the initial agreement. It also argued that the delays and variations led to the
construction costs escalating beyond the initial contract value, and ended up creating
disagreements on who should bear the additional costs. Lastly, it mentioned that the variations in
the design and scope of the project led to time extension, and disputes over the compensation for
the same.
With respects to the FIDIC RED BOOK, some of the clauses that this case brought out are:
 Clause 8.5: Extension of Time for Completion: Zakhem International referenced this
clause to justify their claim for a time extension, attributing the delays to changes in
project scope and unforeseen circumstances.
 Clause 13: Variations and Adjustments: This clause was central to Zakhem’s claims, as
the company argued that KPC’s variations caused the project to go over budget and
beyond the initially agreed-upon timeline.
 Clause 20: Employer’s and Contractor’s Claims: Zakhem International referenced
Clause 20.1 (Contractor’s Claims) which outlines the process by which a contractor can
submit claims for additional payments and extensions. This clause backed their claim for
compensation for additional costs incurred and the delays.
 Clause 21 Claims, Disputes, and Arbitration: The dispute eventually escalated to
arbitration, following the process laid out in this clause.
The case eventually took the arbitration route, and the arbitration panel, in June 2021, ruled in
favour of Zakhem International, granting it compensation for the additional costs incurred due to
the delays and scope changes. KPC was ordered to pay Zakhem International $44 million, which
is approximately Ksh 4.4 billion to cover the delays that hit the project. The key takeaway from
this case is, therefore, the importance of managing project variations and maintaining clear
communication between parties to avoid costly disputes.