ADDIS COLLEGE

S C H O O L O F G R A D U AT E S T U D I E S
D E PA R T M E N T O F C O N S T R U C T I O N T E C H N O L O G Y
AND MANAGEMENT
Construction Contracts Law (COTM 6104)

Role and Liability of the Engineer:

Its Regulation & Management under the MDB FIDIC (2006) & the PPA (2011)
Conditions of Construction & under the relevant Consultancy Contract including
the Applicable Law: with special emphasis to its Selection: and Its Role & Liability
as related to Design, Project Supervision & Contract Administration.
 Instructor: Ato. Amlaku Melese (M.Sc.)

Presented by :
Group #6

October 23, 2022

 Purpose of Presentation
►To orally elaborate findings of the written assignment
namely,

Role and Liability of the Engineer:

Its Regulation & Management under the MDB FIDIC (2006) & the
PPA (2011) Conditions of Construction & under the relevant
Consultancy Contract including the Applicable Law: with special
emphasis to its Selection: and Its Role & Liability as related to
Design, Project Supervision & Contract Administration.

 
 Content of the written Assignment

The paper comprises eleven (9) chapters

Chapter 1, Chapter 2 and Chapter 3 cover the
introduction, literature review and selection of consultant part of the
paper
Chapters 4, 5, and 6 are fully dedicated to role of the consultant in
terms of its
- Design
- Supervision
- Contract Administration
- Completion
Chapters 7 Gives brief explanation about the liability of the engineers
in Construction Contract
 Content of the written Assignment (Contd)

Chapter 8 Presents a comparative Analysis on Role and

Liability of Consultant under
- MDB FIDIC 2006,
- PPA 2011 (NCB) and
- Applicable Law

Chapter 9 Presents a Summary of the paper by concluding the

findings of the group and suggesting recommendations
 CHAPTER 1 - INTRODUCTION
1.1 GENERAL INTRODUCTION
The paper generally presents role and Liability of the
Consultant, its regulation and Management under
 Conditions of Construction Contracts (MDB-FIDIC
(2006) & PPA (2011)
 Applicable Laws (Civil code, Commercial code,
Proclamations, Directives, e.t.c)
Gives emphasis to-Its Selection: Its Role & Liability as related to
Design, Project Supervision & Contract Administration
Written considering
 DBB delivery system
 Road construction projects in Ethiopia under DBB delivery
system
 CHAPTER 1 – INTRODUCTION (CONTD)

1.2 SCOPE OF THE STUDY

The paper is limited to
 DBB delivery system,
 Projects under (MDB-FIDIC (2006) & PPA (2011) COC,
 Applicable laws, rules, and regulations of Ethiopia
 Road construction projects practices under DBB system, MDB-FIDIC (2006) &
PPA (2011) COC,
Hence applicable laws of international practice or construction practices other
than the road sector have not been analyzed
1.3 OBJECTIVE OF THE STUDY
• Discuss and define the Engineer’s specific Role and associated Liabilities of the
engineer with the context of a Construction Contract specifically as related to
Design, Project Supervision, and Contract Administration.
 CHAPTER 2 – LITRATURE REVIEW

2.1 Definition of Engineer’s (Consultant)

 In this sub section the
 According to the World Bank Guide 2006,
‘‘Consulting Services’’ means services of an intellectual & advisory
nature provided by consultants using their professional skills to study,
design, and organize specific projects, advise clients, conduct training
and transfer knowledge;
 According to Proclamation. No. 649/2009 Article 2(4),
‘‘Consultancy Service’’ mean a service of an intellectual & advisory
nature provided by consultants using their professional skills to study,
design and organize specific projects, advice clients, conduct training &
transfer knowledge;
 CHAPTER 2 – LITRATURE REVIEW (CONTD)

The term ‘Consultant’ used interchangeably with

‘Engineer’ in most contract documents.
FIDIC (1987), Sub-Clause 2.1 defines
“Engineer” means the person appointed by the
Employer to act as Engineer for the purposes of
the Contract.
 CHAPTER 2 – LITRATURE REVIEW (CONTD)

2.2 International Consultancy Service Trends and Culture

Major Projects are broken down into a set of functional packages and the work is
parceled out;
(a) architectural services;
(b) mechanical and electrical services (including acoustics, lighting, heating, and
information technology systems);
(c) structural engineering (involving design for structural integrity and the feasibility
of construction); and
(d) cost consulting services
2.3 Category of Consulting Service as per World Bank Guide
According to World Bank, Guide 2006 Consulting Services is categorized in to
Bodies’ Corporate
Natural persons (individuals)
 CHAPTER 2 – LITRATURE REVIEW (CONTD)
Their services may generally relate to the following three areas
 Project Preparation services : feasibility studies; and design services;
 Project implementation services : tender document preparation;
procurement assistance to the client; construction supervision; and project
management & contract administration;
 Advisory services: Policy and strategy; Reorganization/Privatization;
Institution building; Training/knowledge transfer; Management services;
Technical/operating advice
2.4 Categorization of Consultant in Ethiopia
‘Directives for the Registration of Consultants and Design Professionals’ in
2013
 Building Sector
 Water and Sewerage
 Highway and Bridge
 Construction Management
 CHAPTER 2 – LITRATURE REVIEW (CONTD)
Legal Base of Consultancy Service
In Ethiopia Consultancy Service- the law of Professional Services or Hiring of
Intellectual Services under the Civil Code: see Article 1675 cum Article 2632-2638 cum
2632(2) cum 2610-2631.
Legal Feature of Consulting Services
I. Intellectual/Professional Nature: the law declared it as an intellectual service; see Article 2632 (1) of the
Civil Code
II. Independent Nature: the doctrine of independent contractor applies to the consultant as well, as per
Article 2632 (2) cum 2616 of the Civil Code
III. Personal Nature: required to discharge their professional obligations personally; see Article 2633 (1) of
the Civil Code; Or assign their assistants, in complex project, Article 2633 (2)
IV. Incorporeal Nature: the professional services of consultants is intangible; that is why it is said to be
incorporeal
V. Technical Nature: the services clearly require technical knowledge from the Engineer about the project
to be designed or managed, in 2006 the PPA has prepared & issued separate SBD for technical
consultancy services & non-technical consultancy services
 CHAPTER 2 – LITRATURE REVIEW (CONTD)
2.5 Types of Contracts for Consultancy Services
What is Contract?
Simply a legally binding agreement!
According to the Civil Code of Ethiopia, Article 1675 a contract is
“an agreement whereby two or more persons as between
themselves create, vary or extinguish obligations of a proprietary
nature”
Hence, a Construction contract is a form of agreement made between the Employer and
the Contractor for the purpose of constructing or building things.
Civil Code Article 1678(b) states about the Contract validity
no valid Contract shall exist unless the object of the contract is
sufficiently defined and is possible and lawful
 CHAPTER 2 – LITRATURE REVIEW (CONTD)
Conditions of Contract
 Locally or internationally accepted documents
 Depict the terms and Conditions that set the rights & obligations of contracting
parties. (in construction contract rights & obligations of the employer, the
engineer, the contractor and/ or subcontractor if any)
 The conditions of the contract typically contain
 General Conditions of Contract  applicable to most projects
 Special Conditions of Contract  specific to a particular project
 Widely used general conditions of the contracts in Ethiopia include:
 FIDIC, General Conditions of Construction Contract (various
 Public Procurement Agency (PPA) Conditions of Contract for Works (ICB &
NCB)
 Ministry of Works and Urban Development Conditions of Contract (MoWUD-
1994)
 CHAPTER 2 – LITRATURE REVIEW (CONTD)

 Lump Sum Contract : used for assignments content and duration of the services &
required output of the consultants are clearly defined
 Time-Based Contract : used when difficult to define the scope and the length of
services
 Retainer and/or Contingency (Success) Fee Contract: used when consultants
(banks or financial firms) are preparing companies for sales or mergers in
privatization operations
 Percentage Contract : commonly used for architectural services
 Indefinite Delivery Contract (Price Agreement) : specialized services to provide
advice on a particular activity, the extent and timing of which cannot be defined
 CHAPTER 2 – LITRATURE REVIEW (CONTD)

2.7 Roles of Consultants in Construction Contract in General

 Pre-Design Phase involved in assisting the owner with the task of project budgeting and management, site
selection, space relationship, and environmental studies.
Design Stage: determines the feasibility of the project, then moves to design approval and design
development.
Bidding and Negotiations, the consultant represents the owner and acts as the owner’s agent in the
preparation, issuance and supervision of tender documents.
Construction Contract Administration, the consultant owes a duty to the owner to ensure that the contractor
abides with the terms of its construction contract and that it follows the plans and specifications in
constructing the project.
 Dispute between the Contractor and the Owner, which they are unable to resolve, the first stage in the
dispute resolution process set out for the parties is to involve is the consultant.
 CHAPTER 3 – SELECTION OF CONSULTANT

Purpose of Selection
Selecting a qualified Consultant by the Employer is to ensure that
the consulting firms participating in public procurement are able to
meet the legal, professional, and ethical standards set out in the
local proclamations and directives and other international guidelines.
The requirements for such selection are as stated below; -
 Professional and Technical Capacity
 Legal Capacity
 Financial Capacity and Status
 Taxation Obligation
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
The Selection Process
 The World Bank Approach
The World Bank generally recommends the following selection process to select
consultants.
Preparation of the TOR of the assignment;
Preparation of the cost estimate to determine the budget of the assignment;
Advertising to invite expression of interest from consultants;
Shortlisting to identify consultants qualified for the assignment;
Preparation & issuance of Request for Proposal (RFP);
Preparation & submission of proposals by the consultants;
Evaluation of technical proposals-quality evaluation;
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
The Selection Process
 The World Bank Approach
The World Bank generally recommends the following selection process to select
consultants. (Cont’d)

Evaluation of financial proposal-cost evaluation;

Final combined quality & cost evaluation to select the winning proposal
(QCBS);
Negotiations & signing of the contract between the Borrower & the
consultants;
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
The Selection Process
 The FIDIC Approach
The FIDIC recommends the following selection procedure-process, The process is
presented, in summary, as follows; -

Preparation of terms of reference;

Pre-qualifying consultants;
Shortlisting consultants;
Requesting for proposals (RFP);
Assessment of proposals;
Making an agreement;
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
The Selection Process
 The Ethiopian Context
According to the Guide prepared by the PPA (2011), among the methods
prescribed in the Proclamation and the Directive, the following selection processes
are adopted for the selection of consultants.

Selection of Bidders;
Preparation & Issue of RFP Documents;
Bidding Period & Receipt of Proposals;
Proposal Evaluation;
Proposal Acceptance, Contract Award & Placement;
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
The Selection Process
 The Ethiopian Context (Cont’d)
• Requests for Proposals (RFP) Method
Shall be used by public bodies for procurement of consultancy services,
“Consultancy service” means a service of an intellectual and advisory nature
provided by the Consultant using their professional skills to study, design, and
organize specific objects, advise Employers, conduct training, and transfer
knowledge.
Where a public body opts to procure a Consultant by means of a request for
proposal and the estimated value of such procurement is above 300,000birr, it
shall issue an invitation for expression of interest in accordance with Article 22 of
the directive.
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
The Selection Process
 The Ethiopian Context
• Requests for Proposals (RFP) Method (Cont’d)
The RFP shall include, as a minimum the following information:
• The name and address of the public body;
• A description of the assignment required,
• Letter of Notification (LON);
• Instructions to Consultants (ITC);
• Proposal Data Sheet (BDS);
• General Conditions of Contract (GCC);
• Special Conditions of Contract (SCC);
• Proposal and Contract Forms; and
• Terms of Reference (TOR);
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
Method of Selection
 The World Bank Approach
The World Bank provides the following seven methods of selection of consultants.
These are; -

1. Quality & Cost Based Selection (QCBS);

2. Quality Based Selection (QBS);
3. Selection under a Fixed Budget (SFB);
4. Least Cost Selection (LCS);
5. Selection Based on Consultant’s Qualifications (CQS);
6. Single Source Selection (SSS);
7. Commercial Practices (CP)
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
Method of Selection
 The World Bank Approach
1. Quality & Cost Based Selection (QCBS)
QCBS uses a competitive process among short-listed firms that takes into account
the quality of the proposal and the cost of the services in the selection of the
successful firm.
The selection process shall include the following steps:
(A) Preparation of the TOR;
(B) Preparation of cost estimate and the budget;
(C) Advertising;
(D) Preparation of the short list of consultants;
(E) Preparation and issuance of the RFP
(F) Receipt of proposals;
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
Method of Selection
 The World Bank Approach
2. Quality & Cost Based Selection (QCBS)
(G) Evaluation of technical proposals: consideration of quality;
(H) Public opening of financial proposals;
(I) Evaluation of financial proposal;
(J) Final evaluation of quality and cost; and
(K) Negotiations and award of the contract to the selected firm.
3. Quality Based Selection (QCBS)
QBS is based on an evaluation of the quality of the proposals and the subsequent
negotiation of the financial proposal and the contract with the Consultant who
submitted the highest ranked technical proposal.
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
Method of Selection
 The World Bank Approach
4. Selection under a Fixed Budget (SFB)
SFB is based on disclosing the available budget to invited consultants in the RFP
and selecting the consultant with the highest-ranking technical proposal within the
budget. Consultants are subject to cost constraint, they will adapt the scope &
quality of their services to that budget.
5. Least Cost Selection (LCS)
LCS method a minimum qualifying mark for quality is established and indicated in
the RFP. Shortlisted consultants have to submit their proposals in two envelopes.
The technical proposals are opened first & evaluated. Proposals scoring less than
the minimum technical qualifying mark are rejected, and the financial envelopes of
the rest are opened in public. The Consultant with the lowest evaluated price is
selected.
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
Method of Selection
 The World Bank Approach
6. Selection Based on Consultant’s Qualifications (CQS)
This method applies to very small assignments for which the cost of a full-fledged
selection process would not be justified.
7. Single Source Selection (SSS)
Under this method, the Borrower asks a specific consultant to prepare technical &
financial proposals, which are then negotiated. There is no competition.
8. Commercial Practices (CP)
In the case of loans on lent by a financial intermediary to private sector enterprises or
autonomous commercial enterprises in the public sector, the Sub-Borrower may follow
well-established private sector or commercial practices that have been determined by
the Bank to be acceptable to it. Consideration shall also be given to the use of
competitive procedures outlined earlier, particularly for large assignments.
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
Method of Selection
 The FIDIC Approach
FIDIC distinguishes two categories of methods of selection of consultants. These are
Selection by ability and Price as an element of selection.
1. Selection by Ability
For the purposes of selection by ability the following criterion are recommended.
These criterion are: - Technical competence; Managerial ability; Availability of
resources; Profession-al independence; Fairness of fee structure; and Professional
integrity.
2. Price as an Element of Selection
In the case of price as an element of selection, the following methods are
recommended.
These are: - The two-envelope system; the cost-weighted method; the budget method;
the Design comparison method; and the Price negotiation method.
 CHAPTER 3 – SELECTION OF CONSULTANT
(CONTD)
Method of Selection
 The Ethiopian Context
According to the PPA (2006) Guide, the following methods of selection of consultants
have been recommended.
These are : -
1. Quality & Cost Based Selection (QCBS);
2. Quality Based Selection (QBS);
3. Fixed Budget Selection (FSB); and
4. Least Cost Selection (LCS);
THANK YOU