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General Principles of Contract ManagementTraining to DEME (2016)
Ernst Jan de Jong – Sr [email protected]
What we do
Provides multi-disciplinary consultancy services:
Commercial and
contract management
Planning,
programming and
scheduling
Dispute resolution
support services
The Group’s Expert Witness support service provider.
World-class quantum,
delay, and technical
experts for litigation
Internationally
experienced
adjudicators,
arbitrators, and
mediators
Provides customer focusedproject controls solutionsthroughout a project lifecycle.
Commercial
management, quantity
surveying, and planning
services
Long term support and
commitment for the
duration of projects
• Driver Group is a global construction consultancy, providing
construction and engineering focused services since 1978
• Stock exchange listed plc. – AIM (2005)
• Driver Trett established in 2012 when Trett Consulting became
part of the Driver Group.
• Market leader in expert witness, planning, commercial and
disputes.
• Over 500 global staff. > £40m turnover.
• Network of offices across Europe, Africa,
Americas, Asia Pacific, and the Middle East.
• Global reach with projects undertaken
worldwide.
GROUP OVERVIEW
General principles of contract management
Workshop Objectives
On days 1 and 2, to:
Increase your awareness and understanding of contract management.
Demonstrate how you can improve the DEME Group’s contractual and commercial position in both the pre-contract and post-contract phases of projects.
On day 3, to:
Introduce the main FIDIC standard forms of contract.
Explain the philosophy of the main FIDIC standard forms of contract and what their use means.
5
7
Q: What is a Contract?
A: Simply speaking, it is an agreement.
Q: What is the objective of a contract?
A: To define the relationship and how the
parties act – the ‘rules of the game’.
Q: What is common to every project?
A: Contracts, whether with a client, a
supplier or a subcontractor.
8
Q: What is contract management and
what does it cover?
A: Management of:Risks & opportunities
Change
Entitlement
Claims
The Client or Subcontractor
It should include the avoidance of Disputes
Is this not project management?
9
Q: When should the management of
contracts begin?
A: At the conception of a contract.
Q: When should the management of
contracts end?
A: At the finalisation of all matters.
Contracts involve a process – from ‘conception to grave’
Understanding the clients’ needs and the risks involved
Making an offer, or tender
Forming a legal agreement
Understanding the parties’ obligations under the agreement
Monitoring the parties’ actions against these obligations
Identifying any variance
Invoking the terms of the contract according to the circumstances
Issuing and / or receiving requests for payment and additional time
Agreeing financial and other matters
10
11
From time to time, you may have experienced a bad
contract. What do we mean by the term ‘bad
contract’?
Discrepancies / anomalies
Unclear wording
Too much risk
Technical difficulties
Price too low
Schedule too tight
etc11
1212
Q: Is it true (or fair) to say that a bad
contract is the fault of those involved
at the tender stage?
A: No. Why?
Q: Is it true (or fair) to say that an
unprofitable project is the fault of those
involved at the implementation stage?
A: No. Why?
Q: Who is involved in managing a contract?
A: Everyone within the business...
13
I suggest that this could be the key
challenge with respect to contract
management
Revised Q: Who should be involved in
managing a contract?
As managing contracts must be ‘from conception to grave’;
course agenda follows this.
Days 1 and 2 Tendering Procurement and sub-contracting Construction contracts and letters of intent Setting up the project Planning & progress Financial issues Management of change Dispute resolution
Day 3 FIDIC introduction Overview of differences between different standard forms Specific requirements of FIDIC contracts
14
The tender stageWhat is its main purpose?
Photograph credits to FreeDigitalPhoto.net & Grant Cochrane
The priority is for a tenderer to understand what will beexpected of him.
This involves:
Studying all parts of the RFQ or tender documents. Verify all documents have been received
Verify the correct documents have been received
Recognising the responsibilities to be placed on the parties.
Risk and opportunity management. Identification
Quantification
Evaluation
16
The client will have considered risk allocation.
Remember:
Risk should be allocated to the party best able to manage it.
Standard Forms of Contract (such as one of the FIDIC or
BIMCO forms) generally allocate risk reasonably and fairly.
What type of risks should be considered?
17
Some Contracting Risks
1. Clear scope of work
2. Provision of bonds, guarantees
3. Security for payment
4. Physical conditions and access
5. Practicality of schedule dates
6. Use of specialist suppliers/ sub contractors/ third parties
7. Extension of time provisions
8. Safety provisions
More Contracting Risks
1. Clarity of the contract wording and provisions (no
discrepancies)
2. Wording and provisions that can be easily understand
by all concerned
3. Document submittals at, or just after commencement
4. Conditions precedent clauses
5. Notice requirements
6. Requirement for record keeping
7. Change process
8. Claims process
Manner in which contract was secured
The consultants and their roles
The level of definition of the works
Feasibility
The procurement status
Financial circumstances
Political aspects
Legal / contractual
New concept
20
Contracting risks are often indicated by:
Apart from risk allocation, why else should major revisions
to Standard Forms of Contract be considered carefully by
tendering contractors?
21
The revisions may prevent the contract from working in certain circumstances.
In other words, links from one clause to another may be broken.
22
To understand the customer’s needs
To see whether the proposed contract describes the same
thing
To influence the customer’s way of thinking
To influence the provisions of the contract (terms and
conditions)
To influence the allocation of risk
To agree the duration for undertaking the works
To agree the price for undertaking the works
To agree security of payment
etc
What opportunities exist at tender stage?
Management of the tender stage also requires:
Clarifying the responsibilities and / or risks. Document control essential – single point communication?
Register of questions and answers – summarises status
Records of any verbal discussions and meetings – how?
Establishing a commercial strategy for the project.
23
Risk should be allocated to the party best able to manage it.
In sub-contract relationships, risk that is passed on should be stepped down.
Sometimes risk is retained at main contractor level.
Risk sharing and allocation
Examples of typical risks
Clear scope of work (including design) and interface
Provision of bonds and guarantees
Practicality of programme dates within overall duration
Extension of time provisions
Notice and reporting provisions
Safety provisions
If we are main contractor, what do we want to happen with these risks in our subcontracts?
If we are a subcontractor, what do we want to happen with the contents of the main contract?
Which terms and conditions are to be used for a subcontract?
The ‘main’ contract conditions?
Revised ‘main’ contract conditions? If so, how to revise?
The DEME standard terms?
Revised DEME standard terms? If so, how to revise?
The phrase ‘back to back with the main contract’? If so, what
does it mean?
28
Back to back
A commonly used phrase that can lead to practical problems
How can ‘applying the provisions of a main contract to a
subcontract’ work in practice?
Is Contract Price the same as Subcontract Price?
Are all the main contract conditions applicable?
Involvement of the client (i.e. approvals)?
Values of bonds?
Insurance coverage?
It’s not a shortcut for proper drafting of sub-contracts
Can create a strong potential for disputes29
30
Examples of subcontract wording…
Article 3.1 says that ‘Subcontractor shall be deemed to have full knowledge of the provisions of the Main Contract...Contractor shall (if requested) make available a copy of the Main Contract.
Article 3.2 says ‘Subcontractor shall carry out and complete Subcontract Works so that no act or omission of the Subcontractor shall result in any breach of the Main Contract by the Contractor.
Article 3.3 says ‘to the extent that such obligations and liabilities relate to the Subcontract Works, the Subcontractor shall perform the obligations and assume the liabilities of the Contractor under the Main Contract.’
Article 3.4 says ‘Subcontractor shall indemnify the Contractor against any claim, arising from any breach or non observance of such obligations or non compliance therewith.’
31
An example of main contract wording…
Article 15 (c) says that ‘Contractor must make all the terms and
conditions of Contract (as far as the same are applicable ) terms and
conditions of Subcontract and must not permit any alteration of the
Subcontract without the prior written consent of Company and must
enter into a Subcontract with the Subcontractor accordingly.’
Which terms and conditions are to be used for the subcontract ?
The ‘main’ contract conditions ?
Revised ‘main’ contract conditions? If so, how to revise ?
The DEME standard terms ?
Revised DEME standard terms ? If so, how to revise ?
All can work but in all cases, the parts of the main contract relevant to the subcontract need identifying (and possibly revising), and then be incorporated into the subcontract.
32
34
A contract is an agreement, which
should be based upon the mutual
understanding that was built up in
the tender stage.
‘Contractual agreement’
But, to be a legal contract, there must be:
Capacity (i.e. authority)
Offer, acceptance and consideration
What is what?
What is a counter offer?
35
36
You receive a Purchase Order from a customer that does not
refer to a DEME quotation or terms.
The Purchase Order includes certain terms and has on the
back of the document, the customer’s general terms and
conditions.
The first general term and condition says that “acceptance of
this order constitutes unconditional acceptance of these conditions”.
What is the Purchase Order?
What should you do?
Offer and Acceptance with POs
‘Contractual agreement’
But, to be a legal contract, there must be:
Capacity (i.e. authority)
Offer, acceptance and consideration
What is what?
What is a counter offer?
A requirement (i.e. the scope of work)
A willingness to undertake the requirement
Terms of contract for the requirement
37
Contract terms comprise:
Express terms
Implied terms – generally from Statute or Civil Code
to allocate responsibilities and risksto set out who does what and whento provide for:
1. time and money
2. changes in scope i.e. variations
3. changes in duration i.e. EoT
Contract Considerations
40
Type of industry:
Dredging
Energy
Building
Industrial
Infrastructure
Type of payment:
Lump sum
Target price
Unit rates / re-measurement
Reimbursable
Type of arrangement:
Employer & contractor
Contractor & subcontractor
Turnkey
Design & build
Contracts vary in contents but they should however:
Allocate functions / responsibilities
Define remuneration (payment)
Allocate risk between the parties
Including defining limitations on liability
Identify the applicable law and language
Provide for changes in scope
Provide for changes in duration
Failure to comply is a breach of contract
Follow contractual procedures if an express term
If an implied term, potential claim for damages
Stated damages for delay
Stated damages for late completion allow definition of risk, if it is the only remedy for delay.
If none stated, damages still apply.
Note; Liquidated damages (LDs) has a particular meaning under English Law.
Who’s problem is it?
Who should resolve it?
What can you do / ensure happens?
It is the customer’s problem.
It may however, be in your interest to start.
Resolution needs to be undertaken together.
But you must ensure the basis upon which work is
started should be defined in writing
One available option is....
Letters of Intent
Advantages:
When customers / employers are faced with time constraints in negotiating full contract documentation
To enable the start of the procurement process where there are long lead in times, the start of engineering or mobilisation
Alternative to delaying contract commencement
Offers protection to the contractor
Letters of Intent
Difficulties:
Sometimes unclear as to the extent of the parties’ commitment (i.e. entire project, initial works)
Are they binding? Often, one party’s intention towards another and no agreement.
Sometimes the description of work to be performed or material to be procured is inadequate
Letters of Intent
Required inclusions for agreement:
A full description of the work to be done and a direction to start work
The time period or end date that the work must be done by
The payment to be made – maybe a maximum
The terms and conditions governing the work
Part 1
Example Letter of Intent sent by main contractor to sub-contractor
“As you know from our meeting this morning, we have just received a letter of intent
from [X] for the [Y] project, which includes your [equipment].
In our turn, we are pleased to confirm that it is our intention to enter into a sub
contract with [you] for your [equipment], this will be generally be on the basis of the
Sub Contract document that we discussed this morning (ref…)
We also agreed that we would incorporate your final comments on the draft Sub
Contract and that you would provide details of the Advance Payment Bond, on-
demand Performance Bond and insurance that you can offer.
The main contract commencement date is…
Please acknowledge receipt.”
Consider what this letter is saying and what your response would be
Part 2
Second example Letter of Intent sent by main contractor to sub-contractor
“This is to place a letter of intent (LOI) for [W] works to [X] ... by [Y] … strictly in
accordance with the following terms and conditions and to give an authorisation to
proceed immediately with the engineering, procurement and manufacturing in
accordance with this requisition.”
Sections then cover matters including:
Scope and Price
Payments Terms
Delivery Terms and Date
Contract Documents
Etc.
Consider what this letter is saying and what your response would be
Internal issues to be addressed
Organisational At project level Inter company conflict Role of Project Manager
Project definition Specified time, cost, quality Risk management Available resources
What happens at DEME?
54
Have a process for transferring knowledge internally;
from tender to implementation personnel?
If so, what is discussed? Who is involved?
Do you?
Does this process repeat when more implementation
personnel join the project?
Does it repeat again prior to the offshore phase?
Review your contract to identify obligations and the need for
project-specific systems?
If so, what for?
Notices Deliverables Discrepancies Securities and guarantees; insurance requirements Planning Payments Correspondence and reporting
Do you?
Have a kick off meeting with the client?
If so, what do you cover:
Confirmation and clarification of scope or uncertainties Agreement of formats / procedures for reporting and coordination Communication routes / details
How useful is a kick off meeting with the client when considering commercial strategy for a project?
Do you?
The Planning process
The planning process involves deciding
What to do
How to do it
When to do it
What resources to use
Planning and Programming
A programme is a project management tool used to monitor and control the project
It is not just a ‘picture’
60
61
Consider
Should the contractor submit a programme (schedule) early in the implementation stage?
On what basis should this programme (schedule) be put together?
Should the submitted programme (schedule) be the ‘real’ one?
How should the programme (schedule) show sub-contracted works?
Should the programme (schedule) be agreed?
62
The programme (schedule) should:
Reflect contract requirements (the baseline)
Show contract milestones
Show intended sequence of works
Incorporate any resource constraints
Show the critical path
63
The Critical Path - Why it is important?
Determines the earliest completion date for the project.
Determines the earliest and latest completion dates for
individual activities.
Calculates float.
Identifies which activities are important to the completion of
the project.
Identifies areas of risk.
Identifies areas where action should be taken to reduce the
project duration or recover from delays.
Critical path
The Critical Path - Shortest route between work and the pub
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Link Activity
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Critical Link
Critical Activity
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Critical Link
Critical Activity
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
Total Float
73
Make a programme (schedule) for:
When you are alone
When you have a friend helping
When you have two friends helping
Activity No Description Duration010 Apply hand brake 0020 Find spare wheel 2 min030 Check that there is air in the spare wheel 1 min
(if 020 & 030 are unsuccessful the whole sequence is obsolete)
040 Find something to chock wheels 2 min(safety should be planned into a project)
050 Chock car wheels 1 min060 Find car jack & wheel brace 2 min070 Loosen wheel nuts 6 min080 Position jack 3 min090 Raise car 4 min100 Remove wheel nuts 1 min 110 Remove wheel 1 min120 Install spare wheel 1 min130 Replace wheel nuts 1 min140 Tighten wheel nuts 2 min150 Lower car 1 min160 Final tighten wheel nuts 2 min170 Remove jack 1 min180 Stow jack, wheel brace & punctured wheel 2 min190 Remove chocks 1 min200 Wipe hands 1 min210 Complete 0
74
When you are alone
Barchart for Wheel Change - Alone (35 minutes)Activity Activity Description Duration Hour 1
No Minutes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
10 Apply hand brake 0
20 Find and remove spare w heel 2
30 Check air in spare tyre 1
40 Find something to 'chock' w heels 2
50 Chock car w heels 1
60 Find and remove jack & brace 2
70 Loosen w heel nuts 6
80 Position jack 3
90 Raise car 4
100 Remove w heel nuts 1
110 Remove w heel 1
120 Install spare w heel 1
130 Replace w heel nuts 1
140 Tighten w heel nuts 2
150 Low er car 1
160 Final tighten w heel nuts 2
170 Remove jack 1
180 Stow jack, brace & punctured w heel 2
190 Remove chocks 1
200 Wipe hands 1
210 Wheel change complete 0
Legend :
Project : Wheel Change Current Plan
Date : 1 Jan 2015
Prepared by : Superplan
75
When you are with a friend
Barchart of Wheel Change - With a Friend (26 minutes)Activity Activity Description Duration Hour 1
No Minutes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
10 Apply hand brake 0
20 Find and remove spare w heel 2
30 Check air in spare tyre 1
40 Find something to 'chock' w heels 2
50 Chock car w heels 1
60 Find and remove jack & brace 2
70 Loosen w heel nuts 6
80 Position jack 3
90 Raise car 4
100 Remove w heel nuts 1
110 Remove w heel 1
120 Install spare w heel 1
130 Replace w heel nuts 1
140 Tighten w heel nuts 2
150 Low er car 1
160 Final tighten w heel nuts 2
170 Remove jack 1
180 Stow jack, brace & punctured w heel 2
190 Remove chocks 1
200 Wipe hands 1
210 Wheel change complete 0
Legend :
Project : Wheel Change Driver Passenger
Date : 1 Jan 2015
Prepared by : Superplan
76
When you are with two friends
Barchart for Wheel Change - With 2 Friends (24 minutes)Activity Activity Description Duration Hour 1
No Minutes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
10 Apply hand brake 0
20 Find and remove spare w heel 2
30 Check air in spare tyre 1
40 Find something to 'chock' w heels 2
50 Chock car w heels 1
60 Find and remove jack & brace 2
70 Loosen w heel nuts 6
80 Position jack 3
90 Raise car 4
100 Remove w heel nuts 1
110 Remove w heel 1
120 Install spare w heel 1
130 Replace w heel nuts 1
140 Tighten w heel nuts 2
150 Low er car 1
160 Final tighten w heel nuts 2
170 Remove jack 1
180 Stow jack, brace & punctured w heel 2
190 Remove chocks 1
200 Wipe hands 1
210 Wheel change complete 0
Legend :
Project : Wheel Change Driver Passenger
Date : 1 Jan 2015
Prepared by : Superplan 2nd Passenger
77
Resource planning and critical pathBarchart for Wheel Change - With 2 Friends (24 minutes)
Activity Activity Description Duration Hour 1
No Minutes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
10 Apply hand brake 0
20 Find and remove spare w heel 2
30 Check air in spare tyre 1
40 Find something to 'chock' w heels 2
50 Chock car w heels 1
60 Find and remove jack & brace 2
70 Loosen w heel nuts 6
80 Position jack 3
90 Raise car 4
100 Remove w heel nuts 1
110 Remove w heel 1
120 Install spare w heel 1
130 Replace w heel nuts 1
140 Tighten w heel nuts 2
150 Low er car 1
160 Final tighten w heel nuts 2
170 Remove jack 1
180 Stow jack, brace & punctured w heel 2
190 Remove chocks 1
200 Wipe hands 1
210 Wheel change complete 0
Legend :
Project : Wheel Change Driver Passenger
Date : 1 Jan 2015
Prepared by : Superplan 2nd Passenger Critical path
Driver
Passenger
2nd Passenger
78
Cha
ngin
g w
heel
40 2 50 1
10 0 20 2 30 1 80
60 1 70 1 90 3 100 4
110 1 120 1 130 1 140 1 150 2
170 2 190 1
160 1 180 1 200 1 220 1 230 0
210 1
zoek blokken
blokkeer de wielen
zoek krik en
verwijder wieldop
los de wielbouten
Trek handrem
zoek het reserve
controleer druk in
krik de auto
verwijder wiel
verwijder wiel
plaats reserve
maak handen
wiel is verwisseld
trek wielbouten
plaats wieldop
laat auto zakken
Plaats de krik
verwijder blokken/st
verwijder krik
berg krik, de sleutel
plaats wiel bouten
zet bouten vast
Progress reporting
Involves:
Measuring actual progress
Updating your plan or schedule for this actual progress
Forecasting the impact in the future
Making a report
This has to be done in context of the contract with your client.
For this, you will require details from your subcontractors but who
should report in the context of their contract with you.79
The need for progress records & monitoring
Accurate assessment of status of project Accurate & agreed records in case of dispute Record and keep results
How deal with changes?
Plot and compare results Analyse trends - predict the future Compare different trends
Contractor may not want to declare the actual status of project Contractor may not want accurate & robust records – confuse
the issue
Contractors Progress Records & Monitoring
Consider…
The items the contractor should include in its progress reports.
Should the contractor prepare different progress reports for
internal circulation to that submitted to the customer?
If so, what would be the differences?
81
Other required records
These include, for example:
Correspondence
As-built, it’s easier to do as the project advances
Daily reports including weather and numbers of resources
The reasons for decisions to move resources
Effects of changes
Consider how and where they are kept.
Remember, for subcontract and main contract activities.82
Common valuation options
On a lump sum basis
On a lump sum basis with schedule of rates
On a lump sum basis with bill of quantities
On a re-measurable basis with bill of quantities
Cost plus
What do each mean?84
For lump sum contracts
Only changed for adjustments allowed the contract (i.e. instructed variations and claims)
No change resulting from a contractor revising its design
85
For re-measurement contracts
Changed for adjustments allowed the contract (i.e. re-measurement, instructed variations and claims)
Is there a difference between re-measurement and variations?
Needs a method of measurement What does re-measurable on a ‘net’ basis mean?
86
Common interim payments options
Based on actual value of work undertaken
Based on a pre-agreed schedule
Based on achieving milestones
88
Issues to be addressed
How calculate value of work undertaken?
Front loading of schedule Effect of poor progress
Variations – how much and when? Completed/part completed Agreed/disputed
Definition of each milestone – is it clear or controllable? Achievement of milestone means what?
89
Timing of Payments
Are these milestones clear? Controllable by the contractor?
10% of purchase price at order confirmation
10% of purchase price at order of main materials
10% of purchase price at mobilisation onsite
20% of purchase price at completion of section 1
20% of purchase price at completion of section 2
20% of purchase price at completion of all works onsite
10% of purchase price at issue of ‘as builts’
90
Issues to be addressed
Remember, the client’s primary obligation is to pay the contractor for the work undertaken.
Late payments – recourse?
Adherence to contract procedures is essential Agreed format in the contract, or one to be agreed? Issue a request for payment or an invoice? Agreed procedure, or one to be agreed? Timing of request and / or invoice
91
Indicators of potential problems-at tender
Manner in which contract was secured
The consultants and their roles
The level of definition of the works
Feasibility
The procurement status
Financial circumstances
Political aspects
Legal / contractual
93
Early days of project execution
Drawings, information and ‘Holds’
Approvals
Relationships
Consultants’ performance
Access to works
Local authority / government bodies
Payment
The manner in which early problems are dealt with
Performance of nominated sub-contractors
94
The project under way
95
Major design changes Policy changes by client Many variations Lots of day work Long information
outstanding list Inability to procure long
lead items Payment problems Valuation problems Interim payments not
detailed
Widening gap between application and certification
Programme slippage Problems with
sub-contractors Labour disputes Poor drawings Arguments about
consultants’ responsibilities
Acceleration Tone of letters Relationships
Example areas of ‘change’
97
Additional or omitted work
Varied or modified work Substituted work Standard of work Physical or geological or
marine conditions Time of year work
carried out Location work is carried
out
New or revised drawings being issued
Holds being placed on drawings
Identity of owner representative/ consultants/ subcontractors/ vendors
Identity of contractors personnel
Late access to site Late issue of material
So can affect scope and/ or schedule and/ or conditions
The customer can ‘change’
The scope of work
The location of the work / equipment within
The timing and extent of access to site
The amount of information available to the Contractor
The period for drawing review / approval
The period for responding to requests for information
The extent of interference
The amounts and timing of payment
The supervisory staff or personnel
The type of equipment or materials it provides 98
The contractor can ‘change’ its:
Method of working
Sequence of working
Coordination of the work processes
Timing of undertaking the works
Quality or standard of the permanent works
Submission of required records and notices
Workers, staff or supervision personnel
Provision of access / facilities / materials to Subcontractors
Design
Use of Subcontractors99
The subcontractor can ‘change’ its:
Method of working
Sequence of working
Timing of undertaking the works
Quality or standard of the permanent works
Submission of required records and notices
Workers, staff or supervision personnel
Manning levels
Price of work
Location of off site works
Design 100
In Construction / Engineering projects, ‘change’ means what?
Something different from the contractual agreement.
It can affect scope and/ or schedule and/ or conditions
And can be initiated by:
subcontractor’s
and/ or
contractor’s
and/ or
customer’s.101
102
Management of change
Involves awareness that change will occur, recognition of the change itself and
the subsequent actions - 5 steps
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
103
Contracts contain obligations and responsibilities
What if the obligations within the contract are unclear?
Is there a contract clause for dealing with anomalies?
Does it matter whether such a clause exists?
104
“The documents forming the Contract are to be taken as mutually explanatory of one another. For the purposes of interpretation, the priority of the documents shall be …:
[a] The Contract Agreement (if any)[b] The Letter of Acceptance[c] The Letter of Tender[d] The Particular Conditions[e] These General Conditions[f] The Employer’s Requirements[g] The Schedules, and[h] The Contractor’s Proposal and any other documents
forming part of the Contract
If an ambiguity or discrepancy is found … the Engineer shall issue any necessary clarification or instruction.”
As an example…
105
Contracts contain obligations and responsibilities
What if the obligations within the contract are unclear?
Is there a contract clause for dealing with anomalies?
Does it matter whether such a clause exists?
Contracts also foresee / allow certain types of changes
What types?
106
The various types of foreseeable changes can include:
1) Failure of the client to give the contractor right of access to site.
2) Failure of the client to provide the contractor with free-issue materials.
3) The existence of unforeseeable physical conditions.
4) Suspension of part or all of the works.
5) Instructed variations.
6) The contractor proposes value engineering.
7) The whole or part use of Provisional Sums.
8) Force Majeure.
As an example…
107
Allowable and foreseeable changes - issues
What constitutes each type of change?
Has the correct procedure been followed?
Who has the authority to initiate each type of change?
Are there any limitations or restrictions?
108
In the case of instructed variations, further relevant details are often contained elsewhere and can include:
1) The definition of a variation (i.e. what can it comprise).
2) The communications rules (i.e. for the instruction).
3) The language for these communications.
4) Who has the authority to issue instructions that are a variation.
5) Who has the authority to receive instructions that are a variation.
6) Whether instructions need to be complied with; or if not, in what
situations.
7) Variation valuation rules.
As an example…
109
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
110
Early identification is essential
Be aware that changes will occur
Appreciate that the correct contractual process may not always
be followed
Refer back to the baseline as a reference point
Constantly monitor events, occurrences and communications to
identify the cause or effect of change
Drawings – new ones, revisions and holds
Progress updates
Cost reports
111
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
112
Contractual processes- issues
What type of change has occurred?
What is the correct procedure to be followed in this case?
Written notification is often required.
113
Notices Notices must often be submitted to the client when a contractor
is aware (or sometime worded as ‘should have been aware’) of
an event or circumstance that gives rise to entitlement to a
possible claim for time and / or money.
The notices are sometimes subject to restrictions on timing and
can also be condition precedent to payment of additional money
and / or award of more time.
Notices must state the event and be clear it’s notice of a
potential claim
Notices are for the benefit of the recipient.
Notices cannot be refused.
114
Compliance with instructions Properly given instructions must sometimes be complied
with without agreement of the time and money effect.
There may be circumstances however, in which this is not
the case. For example:
If the materials and / or equipment cannot be procured.
If it impacts on any overall guarantees that are part of the
contractors obligations.
115
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
116
Record Keeping
Why?
What type?
Should they be agreed?
How should they be maintained for future use?
117
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
118
Valuation of change
What type of change has occurred?
Any procedural requirements for the valuation?
Time frames for submission
Time frames for response
What is the correct method for valuation to be followed?
Money – value, cost or cost and profit?
Time – prospective or respective?
Consider direct and indirect effects.
120
And a ‘claim’?
Simply, a request for reimbursement, from one party to another, of
the money and / or time consequences flowing from an event that
the contractor was not required to anticipate.
Valuation rules will normally again apply – money mainly cost or
cost and profit; time either prospective or respective.121
Under many contracts a ‘variation’ is:
Simply, an instructed change to the baseline scope of work.
Valuation should include time impact as well as money impact.
Valuation rules will normally apply – money is value or cost plus
profit; time either prospective or respective.
Good Quantity Surveying Practice
Use contract unit rates for valuing work of similar character undertaken
under similar conditions
Use contract unit rates as a basis for valuing work of a dissimilar
character or undertaken under dissimilar conditions
Do not use contract unit rates for quite different work. Consider cost
plus reasonable profit.
123
Extension of Time
An Extension of Time does not mean an entitlement to
additional money
An Extension of Time relieves contractor liability to pay
damages for delay
An Extension of Time establishes a new completion date
An Extension of Time allows the client to impose damages for
any delay after the new completion date
125
Extension of Time - considerations
Contract provisions define the basis of entitlement
Delay to be on the critical path
‘Ownership’ of float
Effect of concurrency
Choice of delay analysis technique
126
Delay analysis techniques
Time extensions after completion of project (retrospective): Collapsed As-built As-planned –v- As-built Windows Analysis
Retrospective or Actual Based Analysis
128
ACTIVITY A
ACTIVITY B
ACTIVITY C
1 2 3 4 5 6 7 8 9 10 11Activity
Why Delay?
OriginalCompletion
Delay analysis techniques
Time extensions after completion of project (retrospective): Collapsed As-built As-planned –v- As-built Windows Analysis
Time extensions during currency of project (prospective) Impacted As-Planned Time Impact Analysis
Prospective or Model Based Analysis
130
ACTIVITY A
ACTIVITY B
ACTIVITY C
1 2 3 4 5 6 7 8 9 10 11Activity
Event
Estimate of Delay
OriginalCompletion
Delay analysis techniques
Time extensions after completion of project (retrospective): Collapsed As-built As-planned –v- As-built Windows Analysis
Time extensions during currency of project (prospective) Impacted As-Planned Time Impact Analysis
Activity AActivity BActivity CActivity DActivity ECompletion
• The as-planned programme
Impacted as-planned method
Activity AActivity BActivity CActivity DActivity ECompletion
• Impact (add) the delaying event
Impacted as-planned method
Delaying event
Activity AActivity BActivity CActivity DActivity ECompletion
• Reschedule the programme
Impacted as-planned method
Delaying event
Impacted completion date
(extension of time)
Advantages Quick Simple to carry out and understand Transparent As-built programme not required Can demonstrate acceleration and mitigation
Disadvantages Theoretical conclusions Requires a reasonable and robust as-planned programme Ignores actual progress Can hide concurrent delay
Impacted as-planned method
Activity AActivity BActivity CActivity DActivity ECompletion
• The as-planned programme
As-planned v as-built method
Activity AActivity BActivity CActivity DActivity ECompletion
• Plot the as-built programme
As-planned v as-built method
Activity AActivity BActivity CActivity DActivity ECompletion
• Identify the employer delay events
As-planned v as-built method
Activity AActivity BActivity CActivity DActivity ECompletion
• Assess delaying effect of events
As-planned v as-built method
(extension of time)(contractor culpable)
Advantages Simple to understand Transparent Does not require a networked programme Relies upon actual progress
Disadvantages Subjective assessment of critical delays Depends also on opinion Requires as-built programme
As-planned –v- as-built method
Which technique should be used?
Consider: Contract conditions Records available Time available Applicable law Value of dispute Most practical and common sense approach in circumstances
Delay analysis methods
X
or X or X
Delay analysis techniques
From SCL Delay and Disruption Protocol, paragraph 4.13
As-planned programme
without network
Networkedas-planned programme
Updatedas-planned networked programme
As-built records
As-planned v as-built
Impacted as-planned
Collapsed as-built
Time impact analysis
X and X
X
and X
X or X and X
Factual material
Type of analysis
An ‘X’ indicates the factual material that is required for a particular analysis
in some cases there are alternatives, as indicated in the table:
Task
Taking the position of the sub-contractor, contractor or client, your team has to prepare a presentation (max 5 minutes).
This presentation is then to be explained to the other party, the presentation should include:
Current status of the project and anticipated future programme.
The factual background to the delay and the over-run on man-hours.
The contractual situation.
Your team will be required to present its case based upon an analysis of the technical, factual and contractual aspects. 144
Recovery of entitlement
Requires timely notice
Require a well drafted document, showing:
Contractual entitlement
Narrative / story
Cause and effect
Apportionment
Quantum of time or money
Requires recognition of strengths and weaknesses
6 Steps for making an Extension of Time Claim
1. The contract
2. The records
3. The facts
4. The planning analysis
5. The Scott Schedule
6. The Statement of Claim
147
6 Steps for making an Extension of Time ClaimStep 4 – The planning analysis
148
1 2 3 4 5 6 7 8 9 10 11 12 13 14
1 STEEL FRAME
2 WALLS & ROOF
3 SWITCH GEAR
4 ACCESS GANTRY
200T CRANE
Sub-Contractor A
Main Contractor
Sub-Contractor B
Main Contractor
Main Contractor
Approved Programme
PlannedCompletion
Delay 3Inherent Design Fault
Discovered
plus1 week’s float
6 Steps for making an Extension of Time ClaimStep 5 – The Scott Schedule
149
Event No
Description Brief Facts Clause Notice Ref Relevant Docs
Activity Affected
Period of Delay
1 Design Fault to Access Gallery
The connection detail for the upper part of the gantry was identified as being underspecified on 10.10.01. The engineer was immediately notified. A revised drawing was issued on 22.10.01 and the works proceeded on 24.10.01.
26.4(ii) Letter 10.10.01
MOM 31.10.01Drg 201 rev A dated 27.10.01Progress report 30.11.01
Act 4.AG 2 wks
6 Steps for making an Extension of Time Claim
Step 6 – The Statement of Claim
In accordance with clause x, the contractor claims a 2 week extension of time arising from Event 1, notified on 10.10.01, all as particularised in the Scott Schedule and planning analysis.
150
Dispute avoidance
1. A clear, comprehensible contract
The enquiry Scope Conditions Risks
The negotiated agreement
Shared understanding
153
Dispute avoidance – the basics
Have a commercial strategy
Work procedures
Agree records
Encourage, submit and respond to notices
Publish in compliance with the contract
154
Dispute resolution - generally
155
Non-binding
Negotiation us Mediation us with help Conciliation us with more help Mini trial us with even more help Expert determination them Adjudication them
Binding Arbitration them Litigation them
156
Ernst Jan de JongRegional Managing Director
Photograph credits to FreeDigitalPhoto.net & David Castilo Dominici
General Principles of Contract ManagementTraining to DEME (2016)
Ernst Jan de Jong – Senior [email protected]
As managing contracts must be ‘from conception to grave’;
course agenda follows this.
Days 1 and 2 Tendering Procurement and sub-contracting Construction contracts and letters of intent Setting up the project Planning & progress Financial issues Management of change Dispute resolution
Day 3 FIDIC introduction Overview of differences between different standard forms Specific requirements of FIDIC contracts
2
FIDICFédération Internationale des Ingénieurs-Conseils
Federation of national associations of consulting engineers Based in Geneva Founded in 1913 with original founding members from France,
Belgium and Switzerland UK joined 1949, USA joined 1958 Seen as international from 1970s and members from about 70
counties
FIDIC aims
High ethical standards
High professional standards
Development of engineering profession in developing countries
FIDIC documents
Standard Forms of Contracts – since 1957
Guides to Standard Forms of Contracts
Tendering procedures
Model Agreements
General principles of FIDIC Standard Forms of Contract - 1
Often known by their colour i.e. red, yellow, silver, blue.
Historically based on Anglo Saxon type contracts. So, more reliance on documentation.
Drafted for general use on an international basis. So,applicable law and ruling language needs to be stated.
Modifications may be required in some jurisdictions. These should be included as revisions.
General principles of FIDIC Standard Forms of Contract - 2
FIDIC standard forms are generally accepted to be well-written and capable of being understood by users.
They recognise there will be problems and potential for conflict and dispute on projects but set out processes to resolve them including:
Placing a significant administrative burden on the parties and;
Requiring the parties to deal with issues at the time.
Current FIDIC Main Standard Forms of Contract
Green (1999)Blue (2006) Red (1999) Pink (2010)
Yellow (1999) Silver (1999) Gold (2008)
Current FIDIC Main Standard Forms of Contract
Green book:Short Form
Blue book:Dredgers Contract
Red book:Construction Contract
Pink book:MDBConstruction Contract
Current FIDIC Main Standard Forms of Contract
Yellow book:Plant and Design-Build Contract
Silver book.EPC/Turnkey Contract
Gold book:DBO Contract
Straightforward project ? < € 500K or < 6 months
Employer Design ?
ContractordesignAll types of project withhigh unforeseen risks
Little employer involvement,no major unforeseen risks
nono
yes
Which contract for which situation ?
yes
yes
Ongoingoperation ? no
yes
no
yes
Generally – Blue Book
FIDIC produces the General Conditions (15 clauses) and does not anticipate separate Particular Conditions to be used (however notes for guidance are included).
Appendix used to contain project-specific information.
Rules for Adjudication, Adjudicator’s Agreement and Forms of Securities are included.
Agreement records offer and acceptance and signifies a contract has been entered into.
Tenders issued with Specification and Drawings
Clause 1 - General Provisions
Clauses 2 to 4 - The Employer, the Engineer and the Contractor
Clause 5 - Design by Contractor
Clause 6 - Defined Risks
Clauses 7 and 8 – Time for Completion and Taking Over
Clause 9 - Remedying Defects
Clauses 10 and 11 – Variations, Claims, Contract Price and Payments
Clause 12 - Default
Clauses 13 and 14 – Risk, Responsibility and Insurance
Clause 15 – Resolution of Disputes
Blue Book General Conditions
Generally – Blue Book
Clause 1 includes:
Definitions (sub-clause 1.1).
Priority of documents provisions (sub-clause 1.3).
Applicable law and ruling language stated in Appendix (sub-clauses 1.4 and 1.5).
Communications shall be in writing, transmitted using methods and issued to addresses stated in Appendix (sub-clause 1.5).
Generally – Blue Book
Employer has a limited role after contract is signed (clause 2).
Engineer appointed as representative of Employer acting after contract is signed (clause 3).
Engineer can delegate specific duties and authority to assistants (sub-clause 3.1).
Contractor shall comply with instructions in respect of the Works given by the Engineer (sub-clause 3.2).
Contractor appoints Contractor’s Representative who is the only person authorised to receive instructions (sub-clause 4.2).
Generally – Blue Book
Responsibility of design (and fitness for purpose) with the Contractor for those parts specified in the Appendix (clause 5).
Responsibility for Defined Risks with Employer (sub-clause 6.1).
Contractor to commence Works on the Commencement Date and complete within the Time for Completion (sub-clause 7.1).
Employer issues Taking Over Certificate to signify works are ready for taking over and not necessary complete (sub-clause 8.2).
Period for remedying defects stated in the Appendix (sub-clause 9.1).
No period for remedying defects for dredging works defined in the Appendix (sub-clause 9.2).
Generally – Blue Book
Only the Engineer (or delegated assistants) can vary the Works (sub-clause 10.1).
Variations is a defined term.
Early warning notices shall be issued by either Party as soon as they are aware of any delay or disruption to the Works or any possible claim for additional money (sub-clause 10.3).
The claim procedure is to be followed when a Defined Risk occurs and Contractor incurs Cost or suffers delay (sub-clauses 10.4, 10.5).
Valuation / payment to be as specified in the Appendix (sub-clause 11.1).
The Engineer certifies the monthly interim payments to be paid to the Contractor (sub-clause 11.4).
DAB appointed to resolve disputes on an ad-hoc basis(clause 15)
Generally – Red Book
FIDIC produces the General Conditions (20 clauses) and anticipates separate Particular Conditions to be used (notes for guidance are included).
Appendix to Tender used to contain project-specific information.
Forms of Letter of Tender, Contract Agreement (including Appendix to Tender), Dispute Adjudication Agreement and Forms of Securities are included.
Letter of Acceptance signifies a contract has been entered into.
Tenders issued with Specification, Schedules (includes Bill of Quantities) and Drawings
Clause 1 - General Provisions
Clauses 2 to 4 – The Employer, the Engineer and the Contractor
Clause 5 – Nominated Subcontractors
Clauses 6 and 7 - Staff, labour, plant, materials and workmanship
Clause 8– Commencement, delays and suspension
Clauses 9 and 10 – Tests on Completion and Employer’s Taking Over
Clause 11 - Defects Liability
Clause 12 – Measurement and Evaluation
Clause 13 – Variations and Adjustments
Clause 14 – Contract Price and Payment
Clauses 15 and 16 – Termination and suspension
Clauses 17 to 19 – Risk, Insurance and Force Majeure
Clause 20 – Claims, Disputes and Arbitration
Red Book General Conditions
26
Generally – Red Book
Clause 1 includes:
Definitions (sub-clause 1.1).
Communications shall be in writing, transmitted using specific methods and to the addresses stated in Appendix to Tender. Allowable electronic systems of transmission also stated in Appendix to Tender (clause 1.3).
Applicable law and ruling language stated in Appendix to Tender (sub-clause 1.4).
Priority of documents provisions (sub-clause 1.5).
Contract Agreement to be put into place after contract entered into if Letter of Acceptance used (sub-clause 1.6).Otherwise, signifies contract entered into.
Generally – Red Book
Employer has a limited role after contract is signed (clause 2).
Engineer appointed as representative of Employer acting after contract is signed (sub-clause 3.1).
Engineer can delegate specific duties and authority to assistants (sub-clause 3.2).
Contractor shall comply with instructions in respect of the Works given by the Engineer (sub-clause 3.3).
Contractor appoints Contractor’s Representative who is the only person authorised to receive instructions (sub-clause 4.3).
Generally – Red Book
Contractor to commence Works on the Commencement Date and complete within the Time for Completion (sub-clauses 8.1 and 8.2).
Provision for Tests on Completion (clause 9).
Employer issues Taking Over Certificate to signify works are ready for taking over and not necessary complete (sub-clauses 10.1 and 10.2).
Period for undertaking outstanding work and remedying defects stated in the Appendix to Tender (sub-clause 11.1).
Performance Certificate issued at the end of Defects Notification period and confirms Employer acceptance of the Works (sub-clause 11.9)
Generally – Red Book
Works to be valued on a re-measurable basis (clause 12).
Only the Engineer (or delegated assistants) can vary the Works (sub-clause 13.1).
Variations is a defined term.
The Engineer certifies the monthly interim payments to be paid to the Contractor (clause 14).
Notice shall be issued by Contractor whenever it considers it to be entitled to more time and / or money and within 28 days of being aware (or should have been aware). Failure to comply means a loss of rights to claim (sub-clause 20.1).
Subsequent procedure for submission of any claims also subject to timescales (sub-clause 20.1).
DAB appointed to resolve disputes (sub-clause 20.2).
Generally – Yellow Book
FIDIC produces the General Conditions (20 clauses) and anticipates separate Particular Conditions to be used (notes for guidance are included).
Appendix to Tender used to contain project-specific information.
Forms of Letter of Tender, Contract Agreement (including Appendix to Tender), Dispute Adjudication Agreement and Forms of Securities are included.
Letter of Acceptance signifies a contract has been entered into.
Tenderers issued with Employer’s Requirements
Clause 1 - General Provisions
Clauses 2 to 4 – The Employer, the Engineer and the Contractor
Clause 5 – Design
Clauses 6 and 7 - Staff, labour, plant, materials and workmanship
Clause 8– Commencement, delays and suspension
Clauses 9 and 10 – Tests on Completion and Employer’s Taking Over
Clause 11 - Defects Liability
Clause 12 – Tests after Completion
Clause 13 – Variations and Adjustments
Clause 14 – Contract Price and Payment
Clauses 15 and 16 – Termination and suspension
Clauses 17 to 19 – Risk, Insurance and Force Majeure
Clause 20 – Claims, Disputes and Arbitration
Yellow Book General Conditions
33
Generally – Yellow Book (as Red Book)
Clause 1 includes:
Definitions (sub-clause 1.1).
Communications shall be in writing, transmitted using specific methods and to the addresses stated in Appendix to Tender. Allowable electronic systems of transmission also stated in Appendix to Tender (clause 1.3).
Applicable law and ruling language stated in Appendix to Tender (sub-clause 1.4).
Priority of documents provisions (sub-clause 1.5).
Contract Agreement to be put into place after contract entered into if Letter of Acceptance used (sub-clause 1.6).Otherwise, signifies contract entered into.
Generally – Yellow Book (as Red Book)
Employer has a limited role after contract is signed (clause 2).
Engineer appointed as representative of Employer acting after contract is signed (sub-clause 3.1).
Engineer can delegate specific duties and authority to assistants (sub-clause 3.2).
Contractor shall comply with instructions in respect of the Works given by the Engineer (sub-clause 3.3).
Contractor appoints Contractor’s Representative who is the only person authorised to receive instructions (sub-clause 4.3).
Generally – Yellow Book
Contractor to design and construct the Works so they are fit for the purposes for which the Works are intended as defined in the Contract (sub-clause 4.1).
Intended purpose must be specified in the Employer’s Requirements as defined in sub-clause 1.1.1.5.
Treatment of errors in the Employer’s Requirements provided for by the ‘experienced contractor test’ (sub-clause 5.1).
Resolution could be as a Variation or a claim.
Procedure for the Engineer to review and / or approve submitted documents (sub-clause 5.2).
Generally – Yellow Book (mainly as Red Book)
Contractor to commence Works on the Commencement Date and complete within the Time for Completion (sub-clauses 8.1 and 8.2).
Provision for Tests on Completion (clause 9) and Tests after Completion (clause 12).
Employer issues Taking Over Certificate to signify works are ready for taking over and not necessary complete (sub-clauses 10.1 and 10.2).
Period for undertaking outstanding work and remedying defects stated in the Appendix to Tender (sub-clause 11.1).
Performance Certificate issued at the end of Defects Notification period and confirms Employer acceptance of the Works (sub-clause 11.9)
Generally – Yellow Book (mainly as Red Book)
Only the Engineer (or delegated assistants) can vary the Works (sub-clause 13.1).
Variations is a defined term.
Works to be valued on a lump sum basis (clause 14).
The Engineer certifies the monthly interim payments to be paid to the Contractor (clause 14).
Notice shall be issued by Contractor whenever it considers it to be entitled to more time and / or money and within 28 days of being aware (or should have been aware). Failure to comply means a loss of rights to claim (sub-clause 20.1).
Subsequent procedure for submission of any claims also subject to timescales (sub-clause 20.1).
DAB appointed to resolve disputes (sub-clause 20.2).
Generally – Silver Book (as Yellow Book)
FIDIC produces the General Conditions (20 clauses) and anticipates separate Particular Conditions to be used (notes for guidance are included).
Appendix to Tender used to contain project-specific information.
Forms of Letter of Tender, Contract Agreement (including Appendix to Tender), Dispute Adjudication Agreement and Forms of Securities are included.
Letter of Acceptance signifies a contract has been entered into.
Tenderers issued with Employer’s Requirements
Clause 1 - General Provisions
Clauses 2 to 4 – The Employer, the Employer’s Administration and the Contractor
Clause 5 – Design
Clauses 6 and 7 - Staff, labour, plant, materials and workmanship
Clause 8– Commencement, delays and suspension
Clauses 9 and 10 – Tests on Completion and Employer’s Taking Over
Clause 11 - Defects Liability
Clause 12 – Tests after Completion
Clause 13 – Variations and Adjustments
Clause 14 – Contract Price and Payment
Clauses 15 and 16 – Termination and suspension
Clauses 17 to 19 – Risk, Insurance and Force Majeure
Clause 20 – Claims, Disputes and Arbitration
Silver Book General Conditions
41
Generally – Silver Book (as Yellow Book)
Clause 1 includes:
Definitions (sub-clause 1.1).
Communications shall be in writing, transmitted using specific methods and to the addresses stated in Appendix to Tender. Allowable electronic systems of transmission also stated in Appendix to Tender (clause 1.3).
Applicable law and ruling language stated in Appendix to Tender (sub-clause 1.4).
Priority of documents provisions (sub-clause 1.5).
Contract Agreement to be put into place after contract entered into if Letter of Acceptance used (sub-clause 1.6).Otherwise, signifies contract entered into.
Generally – Silver Book (different to Yellow Book)
Employer has a limited role after contract is signed (clause 2).
Employer’s Representative may be appointed to act on Employer’s behalf after contract is signed (sub-clause 3.1).[Prime duties restricted to monitoring progress, quality and testing]
Employer or Employer’s Representative can delegate specific duties and authority to assistants (sub-clause 3.2).
Contractor shall comply with instructions in respect of the Works given by the Employer or Employer’s Representative (sub-clause 3.4).
Contractor appoints Contractor’s Representative who is the only person authorised to receive instructions (sub-clause 4.3).
Contractor to design and construct the Works so they are fit for the purposes for which the Works are intended as defined in the Contract (sub-clause 4.1).
Intended purpose must be specified in the Employer’s Requirements as defined in sub-clause 1.1.1.5.
Contractor generally responsible for the accuracy of the Employer’s Requirements (sub-clause 5.1).
Procedure for the Employer to review submitted documents (sub-clause 5.2).
Generally – Silver Book (different to Yellow Book)
Generally – Silver Book (as Yellow Book)
Contractor to commence Works on the Commencement Date and complete within the Time for Completion (sub-clauses 8.1 and 8.2).
Provision for Tests on Completion (clause 9) and Tests after Completion (clause 12).
Employer issues Taking Over Certificate to signify works are ready for taking over and not necessary complete (sub-clauses 10.1 and 10.2).
Period for undertaking outstanding wok and remedying defects stated in the Appendix to Tender (sub-clause 11.1).
Performance Certificate issued at the end of Defects Notification period and confirms Employer acceptance of the Works (sub-clause 11.9)
Generally – Silver Book (different to Yellow Book)
Only the Employer (or delegated assistants) can vary the Works (sub-clause 13.1).
Variations is a defined term.
Works to be valued on a lump sum basis (clause 14).
The Employer assesses the monthly interim payments to be paid to the Contractor (clause 14).
Notice shall be issued by Contractor whenever it considers it to be entitled to more time and / or money and within 28 days of being aware (or should have been aware). Failure to comply means a loss of rights to claim (sub-clause 20.1).
Subsequent procedure for submission of any claims also subject to timescales (sub-clause 20.1).[Responsibility for nearly all risk with the Contractor]
DAB appointed to resolve disputes (sub-clause 20.2).
Employer design
Contractor design
Re-measurable
Lump Sum
Low High
Q for each book:
1. Who has design responsibility?
2. What is the basis of valuation?
3. Who supervises the Works?
4. Where do you find the project specific data?
5. Arrange in the order of risk to Contractor (low to
high).
Exercise
Engineer
Employer’s Representative
Appendix
Appendix to Tender
Particular Conditions
Risk to Contractor
Employer designContractor
design
Re-measurable Lump Sum
Answer – 1 - 4
Engineer Engineer Employer’s Representative
Design responsibility project specific
Engineer
Valuation project specific
Appendix
Particular Conditions
project specific
Appendix to Tender
Particular Conditions anticipated
Appendix to Tender
Appendix to Tender
Particular Conditions anticipated
Particular Conditions anticipated
Contractor design
Lump Sum
Low High
Q: But, where should the Blue Book be placed?
Answer - 5
A: It depends on the specific project
Burden of risk on Contractor
FIDIC Blue Book Form of Agreement
Printed form to avoid letters of intent.
Step 1: Employer part completes for tender documents:
53
Formation of a contract
FIDIC Blue Book Form of Agreement
Step 2: Contractor completes offer as part of tender:
54
Formation of a contract
FIDIC Blue Book Form of Agreement
Step 3: Employer completes acceptance to effect a Contract:
55
Formation of a contract
56
So, Employer signing the Acceptance part of the Agreement and the Contractor receiving a copy signifies the contract coming into full force
Any changes from negotiations should be noted and initialled
Formation of a contract
FIDIC Yellow Book Letter of Tender
Contains statements including:
“We accordingly offer to design, execute and complete the Works and remedy any defects therein, in conformity with this Tender [name] for the lump sum of [amount of money]”
“We agree to abide by this Tender until [date] and it shall remain binding upon us and may be accepted at any time before that date.”
“If this offer is accepted, we will provide the specified Performance Security, commence the Works [name] and complete the Works [name] within the Time for Completion. We guarantee that the Works will then conform with the Schedule of Guarantees.”
“Unless and until a formal Agreement is prepared and executed, this Letter of Tender, together with your written acceptance thereof, shall constitute a binding contract between us.”
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Formation of a contract
Employer Letter of Acceptance signifies the contract coming into full force
Refer definition at sub-clause 1.1.1.3 – includes annexed memoranda
Contract Agreement either follows, or used instead of a Letter of Acceptance
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Formation of a contract
Specification & Drawings
According to Sub-clause 1.1.2, Specification includes the Employers requirements in respect of design to be carried out by the Contractor
According to Sub-clause 1.1.3, Drawings are the Employers drawings of the Works
Design
Note: satisfying the Employer’s Requirements shown by successful Tests on Completion
Employer’s Requirements
According to Sub-clause 1.1.1.5, ERs must specify (cannot imply) for each part of the works
The purpose
The scope
The design
Other technical criteria
Design
Yellow book - Sub-clause 5.1 provides for a period for the Contractor to identify
errors in the Employer's Requirements
If any found within period, corrected and treated as Variation if it is deemed that “an experienced contractor exercising due care” would not have found it pre-tender submission.
Under Sub-clause 1.9, if any found outside of period, becomes a claim if it is deemed that an experienced contractor would not have found it pre-tender submission.
Responsibility for errors in the Employer’s documents
Blue book -
Sub-clause 5.2 states that Employer shall be responsible for Specification and Drawings
Design
The obligation for fitness for purpose is more onerous that designing with “due skill and care”
i.e. Suitability of end product versus design process
Plus, responsibility for fitness for purpose cannot be passed to anyone else or insured
Fitness for purpose
Blue book sub-clause 5.2 provides an obligation that the Contractor’s design under the contract (if any)“shall be fit for the intended purpose to be inferred from the Contract”
Yellow book sub-clause 4.1 provides an obligation that the Works be “fit for the purposes for which the Works are intended as defined in the Contract”
Design
Yellow book sub-clause 4.1 also provides an obligation to provide all Works “necessary for stability or for completion, or safe and proper operation of the Works”
Fitness for purpose continued
Remember: satisfying Fitness for Purpose is shown by successful Tests on Completion
Design
Yellow book
Clauses 5.2 deals with submission of documents
Yellow book provides for submission for “review and/or for approval”
Contractor design submittals
Blue book
Clauses 5.1 deals with submission of design
Blue book provides for submission for “comment or rejection”
Note the detailed procedure.
What’s the difference between the Engineer's obligations?
The Engineer Clause 3.1 states (blue book)
“The Engineer and any assistants shall exercise their duties and authority
in a fair manner and in accordance with the Contract.”
Clause 3.1 states (yellow book)
“…Except as otherwise stated in these conditions:
Whenever carrying out duties or exercising authority, specified in or
implied by the Contract, the Engineer shall be deemed to act for the
Employer. …”
The Engineer Clause 3.5 gives the exception …
“Whenever these Conditions provide that the Engineer shall proceed in accordance with this Sub-Clause 3.5 to agree or determine any matter, the Engineer shall consult with each Party in an endeavour 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.”
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CommunicationClause 1.5 states (blue book)Communications for any matter shall be• In writing• In the language stated in the Appendix• Sent by one of the methods stated in the Appendix
Clause 1.3 states (yellow book)Communications for any matter shall be• In writing• Delivered by hand, mail, courier or one of the electronic means of
transmission stated in the Appendix to Tender
Clause 1.4 states (yellow book)The language for communications shall be that stated in the Appendix to Tender
Assuming a longer duration FIDIC project, list with clause references:
The documents that the Contractor should expect to submitwithin a period of say 28 days of Contract Award
The ‘things’ that the Contractor should expect to receive from the Employer and/or his representative within say 28 days of Contract Award
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Exercise
Exercise - answers
The documents that the Contractor should expect to submit within a period of say 28 days of Contract Award:
Sub-Clause 1.6 [Contract Agreement] says that the Employer and Contractor shall enter into a Contract Agreement within 28 days of the Contractor receiving the Letter of Acceptance.
Sub-Clause 4.2 [Performance Security] states that the Contractor shall provide to the Employer Performance Security.
Sub-Clause 4.3 [Contractor’s Representative] provides for the Contractor to appoint a Representative who will have the authority to act for the Contractor (including issuing and receiving communications).
A detailed time programme (and separate report) under sub-clause 8.3 [Programme].
If Sub-Clause 14.4 [Schedule of Payments] applies and the Contract does not contain a schedule of payments, the Contractor shall submit to the Engineer within 42 days of the Commencement Date, non-binding estimates of the expected payments during each quarterly period.
If Sub-Clause 14.2 [Advance Payment] applies, the Contractor shall provide to the Employer an advance payment guarantee.
Sub-Clause 18.1 [General Requirements for Insurances] requires that the relevant insuring Party shall provide to the other Party evidence that the insurances have been effected, copies of policies and evidence of payment of premiums; and give notice of such to the Engineer.
Exercise - answers
The ‘things’ that the Contractor should expect to receive from the Employer and/or his representative within say 28 days of Contract Award:
• Sub-Clause 1.6 [Contract Agreement] says that the Employer and Contractor shall enter into a Contract Agreement within 28 days of the Contractor receiving the Letter of Acceptance.
• Sub-Clause 2.1 [Right of Access to Site] says that the Employer shall give the Contractor right of access to, and possession of parts of the Site as stated in the Appendix to Tender.
• Sub-Clause 3.2 [Delegation by the Engineer] allows the Engineer to assign duties and / or delegate authority to Assistants; this would include authority to communicate with the Contractor on certain matters.
• Not less than 7 days notice of the Commencement Date (sub-clause 8.1).
• If Sub-Clause 14.2 [Advance Payment] applies, the Employer shall pay the advance payment in accordance with Sub-Clause 14.7 [Payment].
• Sub-Clause 18.1 [General Requirements for Insurances] requires that the relevant insuring Party shall provide to the other Party evidence that the insurances have been effected, copies of policies and evidence of payment of premiums; and give notice of such to the Engineer.
FIDIC requires a Contractor to obtain consent to sub-contract works
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Blue book Clause 4.3“Contractor shall not subcontract the whole of the Works. Contractor shall not subcontract any part of the Works without the consent of the Engineer.”
Yellow book Clause 4.4“Contractor shall not subcontract the whole of the Works.… shall be responsible for the acts and defaults of any Subcontractors… as if they were the acts and defaults of Contractor.… shall not be required to obtain consent for suppliers of Materials, or a subcontract … named in the Contract.The prior consent of the Engineer shall be obtained to other proposed Subcontractors.… shall give the Engineer not less than 28 days notice of the intended date of commencement of each Subcontractor’s work…”
Blue Book - Programmes
Clause 7.1 Contractor shall start on Commencement Date.
Shall proceed expeditiously and without delay.
Shall complete within the Time for Completion.
Clause 7.2 The Contractor shall submit a programme to the
Engineer as stated in the Appendix.
There is no requirement for agreement of the programme.
Is the programme contractual?
Clause 8 – programmes
Clause 8.1 – notice of Commencement Date
Clause 8.2 – Time for Completion
Clause 8.3 – Programme to be provided within 28 days of Notice to
Commence – detailed
Clause 8.3 – Engineer has 21 days to reject
Clause 8.3 – Contractor to proceed in accordance with it
Clause 8.3 – revised programmes to be submitted in various situations
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Clause 4.21 – progress reports
Clause 8.1 – notice of Commencement Date
To be submitted monthly until completion of all work
Comprehensive - shall include:
a) Charts & descriptions of progress for each stage
b) Photographs
c) Manufacture report
d) Contractor’s personnel & equipment
e) QA documents, test results etc
f) Notices of claims
g) Safety statistics
h) Comparisons planned versus actual progress, risks and mitigation measures
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Clause 8.6 – rate of progress
“If, at any time:
a) Actual progress is too slow to complete within the Time for Completion, and / or
b) Progress has fallen (or will fall) behind the current programme under Sub-Clause 8.3…
other than as a result of a cause listed in Sub-Clause 8.4 [Extension of Time]…
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Clause 8.6 – rate of progress continued
…then the Engineer may instruct the Contractor to submit…a revised programme…
Unless the Engineer notifies otherwise, the Contractor shall adopt these revised methods, which may require increases in the working hours and / or in the numbers of Contractor’s Personnel or Goods, at the risk and cost of the Contractor…
If these revised methods cause the Employer to incur additional costs, the Contractor shall subject to Sub-Clause 2.5 [Employer’s Claims] pay these costs to the Employer, in addition to delay damages (if any) under Sub-Clause 8.7 below.”
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Valuation Blue Book
Options – see Appendix:
Payment on a lump sum basis
Payment on a lump sum basis with schedule of rates
Payment on a lump sum basis with bill of quantities
Payment on a re-measurable basis with bill of quantities
Cost plus
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Payment on a re-measurable basis (but option for lump sum)
Payment on a lump sum basis (but option for re-measurable)
Payment on a lump sum basis
Valuation 1999 editions
Blue Book Contract Price and Payments
Clauses 11.1 and 11.2 refer
Works valued as stated in the Appendix
Any advance payment is subject to a guarantee and is progressively reduced as works proceeds
Clauses 11.3 and 11.4 refer
Interim payments subject to issue of Performance Security and evidence of insurance
Contractor submits monthly Statement
Engineer certifies amount within 28 days of receipt of Statement and Employer pays in same timeframe.
Payments subject to retention 87
Blue Book Payments
Clauses 11.5 and 11.6 refer Payment of retention for dredging and other works
Clause 11.7 refers Final payment requires final account submission
Clause 11.9 Entitlement to financing charges for late payments
Clause 12.2 Default by Employer for failure to pay; or for Engineer failure to certify
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Yellow Book Contract Price and Payments
Clauses 14.1 and 14.2 refer
Contract Price is lump sum (option for remeasurement)
Any quantities are estimated but may not be measurable (see particular conditions)
Any advance payment is subject to a guarantee and is progressively reduced as works proceeds
First interim payment also subject to issue of Performance Security
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Yellow Book Payment Procedure
Clause 14.3 Contractor submits Statement at end of stated period – 6 copies in approved form and including supporting details (including progress report)
Clause 14.4 - Schedule of payments may apply. Payments may be adjusted for actual progress.
Clause 14.5 - Payment for plant and materials may apply – certain conditions attached
Clause 14.6 – Engineer issues Interim Payment Certificate within 28 days of receipt of Statement
Certificate does not indicate acceptance or approval
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Yellow Book Payment Procedure
Clause 14.7 – Employer pays within 56 days of receipt of Statement (different for advance payment)
Clause 14.8 - Contractor entitled to interest for late payments withoutgiving notice
Clause 16.1 – Engineer failure to certify or Employer failure to pay also gives rights for Contractor to slow down and / or suspend Works (notice needed)
Clause 14.9 – half retention release at issue of Taking Over certificate and passing Tests on Completion (plus success in the Tests after Completion if appropriate)
Clause 14.9 – remainder of retention release at expiry of Defects Notification Period unless still works to be done
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Yellow Book Payment Procedure
Clause 14.10 – Contractor issues Statement at Completion within 84 days of Taking Over certificate. Engineer certifies as Interim Payment Certificate
Clause 14.11 – Contractor submits draft final statement within 56 days of receipt of Performance Certificate (issued under Clause 11.9 and confirms Contractor has met all obligations and works accepted)
When agreed, Contractor issues Final Statement
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Yellow Book Payment Procedure
Clause 14.12 – At same time Contractor also issues discharge that amount is in full and final settlement
Clause 14.13 – Engineer issues Final Payment Certificate within 28 days of receipt of above
Clause 14.7 – Employer pays within further 56 days
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Variations
The Engineer under clause 10.1:
Has the power to instruct Variations to limits in Appendix.
Cannot instruct omissions from the Works if then done by others.
Has power to reach agreement on valuation.
May request quotation in advance (time and cost).
May instruct without agreement of consequences.
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Variations
The Contractor under clause 10.1 (and 10.5):
Must notify Engineer if instruction requires:
Mobilisation of extra major dredging equipment.
Early mobilisation of planned major dredging equipment.
Shall comply with instructions from the Engineer (see also clause 3.2)
unless the above occurs and no agreement on time and cost
consequences.
Shall submit a build up of time and cost consequences, if not agreed,
within 28 days of instruction .
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Valuation of variations
Clause 10.1 - to include time and cost consequences.
Clause 10.2 - financial valuation:
An agreed lump sum.
Rates in the Contract.
Using the rates in the Contract as a basis.
Appropriate agreed new rates or as considered appropriate by the
Engineer.
If instructed, at day work rates.
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VariationsClause 13
1. Can no longer be instructed after issue of the Taking Over Certificate
2. New procedure whereby Contractor may be requested to indicate effect on programme and value of works of a proposed change
3. Contractor has limited rights to object to a variation, but can be over ruled
4. Timely notice to claim additional payment is condition precedent to payment
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Variations
Clause 13.1 does not set out the types of changes that can be made i.e. authority for variations
A variation is defined (Clause 1) as “a change to the Employer’s Requirements”
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Procedure
Clause 3.3 states that the Contractor must comply with all instructions from the Engineer
Clause 13.1 does stipulate limited reasons for not doing so
Clause 13.3 also provides for a Contractor’s proposal to be requested prior to an variation being instructed
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Valuation of variations
Adjustments to the Contract Price are to be agreed or determined by the Engineer
Reasonable profit is to be included
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Clause 10.6 – Employer’s claims
Employer to submit particulars to the Contractor and Engineer
No criteria regarding timing of issue is given
Engineer to check the Employer’s submission, consult with Parties and if possible agree the amount.
Otherwise, Engineer shall determine
Can deduct monies due
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Clause 2.5 – Employer’s claims
Employer or Engineer to give notice and particulars to the Contractor
To be given as soon as possible after being aware of the event or circumstance that gives rise to claim
Engineer to agree / fairly determine (clause 3.5)
Can deduct monies due
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Employer’s claims
Clause 2.5 provides for and sets out procedure
Claims include:
Electricity, water & gas consumption – clause 4.19
Equipment & free issue materials – clause 4.20
Rejection / retesting – clause 7.5
Failure to do remedial work – clause 7.6
Revised methods cause additional costs – clause 8.6
Delay damages – clause 8.7
Failure to pass tests on completion – clause 9.4
Extension to Defects Notification Period – clause 11.3
Failure to insure – clauses 18.1 / 18.2
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Clause 10.3 – Early Warning
Either Contractor or Employer to notify other as soon as they
are aware of circumstance that gives rise to entitlement;
Parties to minimise effects;
Entitlement to additional payment / extension of time limited
to what due had Contractor given prompt notice and taken
reasonable steps.
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Contractor’s claims
Clause 10.4 - if Cost caused by the Defined Risks, entitlement to
recover, subject to any more specific provision.
Clause 10.4 - if necessary to change Works, dealt with as a
Variation.
Clause 10.5 - itemised make-up to be submitted within 28 days of
any event that gives rise to entitlement.
Clause 10.5 - Engineer to check, consult and agree time and cost
effects, or determine.
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Clause 6.1 – Defined Risks
Defined Risks include:
Use or occupation by the Employer except as specified.
Design by the Employer / Engineer.
Any unforeseeable operation of the forces of nature.
Any failure by the Employer or Engineer.
Any unforeseeable physical obstructions or conditions.
Adverse climatic conditions (refer to Appendix for baseline).
Delay or disruption caused by a Variation.
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Clause 20.1 – Contractor’s claims
Notice is mandatory and to be submitted within 28 days of being aware of an event or circumstance that gives rise to entitlement
Notice must be worded so the potential for a ‘claim’ is recognised
Notice is condition precedent to additional payment / extension of time
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Clause 20.1 – Contractor’s claims
Records shall be kept, Engineer permitted to view
Fully detailed claim to be submitted within 42 days of any event or circumstance that gives rise to entitlement including full supporting particulars
Further claims to be submitted on a monthly basis if on-going
Late submission of details may prejudice Contractor’s position
Final submission within 28 days of end of effects
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Clause 20.1 – Contractor’s claims
Engineer to respond with 42 days of submission
May request further particulars but must respond on principles of claim
Interim payments allowed for amounts substantiated
Engineer to agree / fairly determine (clause 3.5)
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Contractor’s claims
Clause 20.1 provides for and sets out procedure
Claims include:
Delayed drawings or instruction – clause 1.9
Late access or possession – clause 2.1
Setting out reference point errors – clause 4.7
Adverse unforeseeable conditions – clause 4.12
Extension of Time – clause 8.4
Interference with tests – clause 10.3
Variations – clause 13.3
Change in law – clause 13.7
Force Majeure – clause 19.4
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In both books, Contractor is responsible for interpreting the data and for inspecting Site and making enquiries to the extent “practicable, taking account of time and money”
Site data
Blue book sub-clause 2.3 Employer to provide “all data in Employer’s possession relevant to the execution of the Works…”
Yellow book sub-clause 4.10 Employer to provide “all relevant data in Employer’s possession…”
Blue Book
Clause 2.3 – Employer to make available all relevant site data.
Clause 2.3 – Contractor responsible for interpretation and inspecting Site.
Clause 6.1 – One of the Defined Risks is physical obstructions or conditions, which
were not reasonably foreseeable by an experienced Contractor, and;
The Contractor immediately notified to the Engineer
See also Clause 10.3 Early Warning
Comply with instructions
Submit claim in accordance with clause 10.5
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Yellow Book
Clause 4.10 – Employer to make available all relevant site data.
Clause 4.10 – Contractor responsible for interpretation.
Clause 4.10 – Contractor deemed “to the extent that it was possible”to have identified all risks etc.
Clause 4.11 – sufficiency of tender
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Yellow Book
Clause 4.12 – Unforeseeable (refer clause 1.1.6.8) physical conditions and obstructions.
Notice to be given if adverse conditions met that are considered to be Unforeseeable
Continue with Works and comply with instructions
Submit claim in accordance with clause 20.1
Engineer to agree / fairly determine (clause 3.5)
Money adjustment is Cost and Engineer to take account of morefavourable conditions elsewhere
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Clause 7.3 – Extension of Time
Entitlement if delay caused by the Defined Risks
Contractor to submit an application
Engineer to consider supporting details, consult and extend time as
appropriate.
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Clause 8.4 – Extension of Time
Clause 8.4 - Lists grounds for entitlement Yellow Book (a) to (e)
Clause 8.4 - Refers to clause 20.1 i.e. notice, submissions of details
Clause 8.4 – entitlement if completion for Taking Over is delayed
No provision for Engineer to unilaterally award Extension of Time
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Blue Book - Completion
Clause 8.1 – Notice of Completion
Clause 8.2 – Taking Over Certificate
Clause 8.3 - Taking Over Certificate for Part of the Works
Completion
Clause 8.1 – Notice of Commencement Date
Clause 8.2 – Time for Completion
Clause 9.1 – Contractor’s Obligations for Tests on Completion including provision of As builts and O & M manuals
Clause 10.1 - Taking Over Certificate for the Works and Sections
Clause 10.2 - Taking Over Certificate for Parts of the Works
Clause 12.1 – Contractor’s Obligations for Tests After Completion
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Clause 7.4 – late completion
Amount as agreed between the parties
Subject to reduction for partial completion
Whether Employer has suffered damage is not relevant
Comprises Contractor’s entire liability for delay
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Clause 8.7 – delay damages
Amount as agreed between the parties
Not subject to reduction for partial completion
Whether Employer has suffered damage is not relevant
Refers to sub-clause 2.5 (procedure)
Comprises Contractor’s entire liability for delay
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Period for Notifying Defects
Clause 9.1 – Completion of outstanding work and remedying defects
Period stated in Appendix
127
Defects Liability
Clause 11.1 – Completion of outstanding work and remedying defects
Period stated in Appendix
Clause 11.9 – Performance Certificate
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Resolution of Disputes under Blue Book
If not agreed, Engineer to make a determination (cl. 10.5).
Any dispute can be referred to the procedure in cl. 15:
Adjudication by a Dispute Adjudication Board (DAB) in accordance with the Appendix
If any Party dissatisfied or decision not made when it should, Notice of Dissatisfaction issued within 28 days
Arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (ICC)
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Resolution of Disputes under Yellow Book
If not agreed, Engineer to fairly determination (cl. 3.5).
Any dispute can be referred to the procedure in cl. 20:
Adjudication by a Dispute Adjudication Board (DAB) in accordance with the rules in the standard form
If any Party dissatisfied or decision not made when it should, Notice of Dissatisfaction issued within 28 days
Arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (ICC)
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Yellow Book typical sequence of dispute events envisaged in clause 20
<28d >56d<28d<84d
Parties present submissions to DAB Amicable settlement
General principles of contract management
Workshop Objectives
On days 1 and 2, to:
Increase your awareness and understanding of contract management.
Demonstrate how you can improve the DEME Group’s contractual and commercial position in both the pre-contract and post-contract phases of projects.
On day 3, to:
Introduce the main FIDIC standard forms of contract.
Explain the philosophy of the main FIDIC standard forms of contract and what their use means.
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Ernst Jan de JongSenior Consultant
Photograph credits to FreeDigitalPhoto.net & David Castilo Dominici