owen_2004_dab_provisions_course_intro

ADBFIDIC Training 8-10 June 2004Manila : 

ADBFIDIC Training 8-10 June 2004Manila

FIDIC Contracts for Construction Works and Dispute Resolution Mechanisms in Project AdministrationGwyn OwenBSc MSc CEng FICE FConsE FCIArbChartered Arbitrator, Adjudicator, Mediatorwww.gwynowen.com : 

FIDIC Contracts for Construction Works and Dispute Resolution Mechanisms in Project AdministrationGwyn OwenBSc MSc CEng FICE FConsE FCIArbChartered Arbitrator, Adjudicator, Mediatorwww.gwynowen.com

Contents : 

Contents Introduction FIDIC Documents Risk Procurement Strategy First 100 days Responsibilities Nominated s/c Staff & labour Plant & Materials Commencement Delays Taking Over Measurement Guarantees Claims Short Form Disputes

FIDIC AN INTRODUCTION : 

FIDIC AN INTRODUCTION Founded in 1913 Expanded in 1945 to include 40 national associations Published first Conditions of Contract in 1957 In 2004 has 64 member associations Headquarters in Switzerland Web Site : www.fidic.org

FIDIC AN INTRODUCTION : 

FIDIC AN INTRODUCTION Pre 1957 – no internationally recognised contract conditions First “red book” based on UK ICE conditions FIDIC has international committees to improve contracts

FIDIC Documents : 

FIDIC Documents Old “rainbow books” needed revision Changes within International Projects & Contracting Standardisation Clauses to meet current practice Update “Engineer” Introduce “Disputes Adjudication Board”

Contract Documents 1999 : 

Contract Documents 1999 Conditions of Contract for Construction (Red Book) Conditions of Contract for Plant & Design Build (Yellow Book) Conditions of Contract for EPC Turnkey Projects (Silver Book) Short Form of Contracts (Green Book)

FIDIC Contracts What’s Changed? : 

FIDIC Contracts What’s Changed? Simple Language 20 Clauses & 163 Sub Clauses Engineer instead of Employer’s Representative Cl.1.1.2.4 Employer's Claims Cl.2.5 Contractor’s Claims Cl.20.1 Value Engineering Cl.13.2 QUALITY & PROCEDURES: Cl.4.9, 4.18, 6.7, 8.3, 13.2 & 13.3

FIDIC Document Format : 

FIDIC Document Format Acknowledgements Foreword & Charts General Conditions DAB Conditions Guidance Notes Forms of Agreement Appendix to Tender

FIDIC Document UsageConditions of Contract for Construction : 

FIDIC Document UsageConditions of Contract for Construction Works designed by Employer or Engineer Contractor Constructs in accordance with designs provided May include some design elements

FIDIC Document UsageConditions of Contract for Plant & Design Build : 

FIDIC Document UsageConditions of Contract for Plant & Design Build Electrical & Mechanical Plant May include building and engineering Design & Execution of works Contractor designs and constructs in accordance with Employer’s Requirements Engineer Administers

Plant & Design Build : 

Plant & Design Build General Comments: Contractor will economise Employer will supervise No good for Employer Variations Good for Lump Sum Design Savings Employer responsible for ER errors Risk Shared

FIDIC Document UsageConditions of Contract for EPC/Turnkey Projects : 

FIDIC Document UsageConditions of Contract for EPC/Turnkey Projects Process or Power Plant Infrastructure Projects High Degree of Certainty Contractor has total responsibility for Design & Execution Administered by Employer

EPC/Turnkey : 

EPC/Turnkey General Comments Not suitable when: No time to tender Much underground works If Employer wishes to supervise If payments need to be administered

FIDIC Document UsageShort Form of Contract : 

FIDIC Document UsageShort Form of Contract Small capital value projects Simple content Contractor constructs to Employer’s designs No “Particular Conditions” No “Impartial” Engineer

FIDIC Document UsageCOMMUNICATIONS : 

FIDIC Document UsageCOMMUNICATIONS Cl.1.3: Approvals, Certificates, Consents, Determinations, Notices, Requests In Writing Delivered Not be unreasonably withheld or delayed Copies

RISK : 

RISK

ALLOCATION OF RISK : 

ALLOCATION OF RISK

Scope / Cost of Change : 

Scope / Cost of Change

CONTRACTUAL RISKS : 

CONTRACTUAL RISKS All contracts contain risks FIDIC allocates responsibilities Key Requirement: Understand General Conditions Understand Particular Conditions Set out responsibilities

RISK OVERVIEW : 

RISK OVERVIEW Contractual Risk Overview: Strategy Identify Evaluate Mitigate Plan Response Report Management Close out review

CLAIMS RISKS LOCAL LAWS : 

CLAIMS RISKS LOCAL LAWS Incorporate provisions of local laws into Particular Conditions FIDIC Guidance Notes give general advice Complex task

CONTRACTUAL RISKS : 

CONTRACTUAL RISKS Cl.1.5 Priority of Documents Employer’s Documents have priority Care in Prequalification PDB & EPCT – note that Financial Risk for design with Contractor but resolution will be in favour of Employer “Contract Agreement” is high priority – Commencement Date binding under Cl.1.1.3.2 & 8.1 Cl.3.3 PDB & Cons empower Engineer to make Decisions – EPC no such authority

FIDIC RELATIONSHIPS : 

FIDIC RELATIONSHIPS

CONTRACTUAL RISKS : 

CONTRACTUAL RISKS Cl.1.9 Drawings Cl.2.1 Site Cl.4.7 Setting Out Cl.4.12 Unforeseeable Cl.4.24 Fossils Cl.7.4 Testing Cl.8.4 EoT Cl.8.4 Adverse Climatic Conditions Cl.13.7 Legislation Cl.13.8 Changes in Cost Cl.14.8 Delayed payments Cl.19.4 Force Majeure

Contract SelectionBasic Principles – Red Book : 

Contract SelectionBasic Principles – Red Book Design by Employer Works to be Re-Measured Employer appoints Engineer Engineer can vary the works – but not change the Contract Engineer’s “Determinations” Cl.3.5 DAB appointed within 28 days

Contract SelectionBasic Principles – Red Book : 

Contract SelectionBasic Principles – Red Book Additional Documents – Cl.1.5 Priority Importance of Particular Conditions PCC priority over GC PCC provides all relevant conditions and Law Contradictions between documents BoQ – re-measured works

Contract SelectionBasic Principles – Yellow Book : 

Contract SelectionBasic Principles – Yellow Book Employers Requirements Contractor Designs & Builds ER errors – Employer’s risk Fixed sum contract Administered by Engineer Variations by Engineer Cl.5 & 12 differ from Red Book

PROCUREMENT : 

PROCUREMENT

PROCUREMENT PROCEDURE : 

PROCUREMENT PROCEDURE Establish Strategy Procurement method Form of Tender Time Schedules Prequalify Invitation Documents Analysis Selection Notify

PROCUREMENT PROCEDURE : 

PROCUREMENT PROCEDURE Prepare tender Documents Issue Site Visit Questions Submission & Opening Adjudication

PROCUREMENT PROCEDURE : 

PROCUREMENT PROCEDURE Award Contract Issue Letter of Acceptance Performance Security Contract Agreement Notify unsuccessful tenderers

PROJECT STRATEGYDefinitions : 

PROJECT STRATEGYDefinitions General Provisions Cl.1 Definitions of words Persons include corporations & other legal entities Letter of Acceptance Employer’s Requirements (YB) Goods – Contractor Cl.1.3

PROJECT STRATEGYDefinitions : 

PROJECT STRATEGYDefinitions Cl.1.4 Law & Language Compatibility Cl.1.9 Delays to drawings (RB) Errors to ER (YB) Confidentiality (SB)

PROJECT STRATEGYProject Control Issues : 

PROJECT STRATEGYProject Control Issues Cl.1.9 Delay to details Cl.2.4 Finance Details Cl.2.5 Employers Claims Cl.3.3 Instructions by Engineer Cl.4.1 Method Statement Cl.4.21 Reporting Cl.8.3 Programme

PROJECT STRATEGYProject Control Issues : 

PROJECT STRATEGYProject Control Issues Cl.12.1 Measurement Cl.13 Variations & Value Engineering Cl.14 Payments Planning Funding & Budget Disbursement approval Cl.18 Insurances Cl.20 Contractor’s Claims / Records

FIDIC -THE FIRST 100 DAYS AN INTRODUCTION : 

FIDIC -THE FIRST 100 DAYS AN INTRODUCTION

The First Hundred Days of a New FIDIC contract : 

The First Hundred Days of a New FIDIC contract Pre Award Phase Award to Commencement Date Commencement Date to CD + 28 Days

THE FIRST 100 DAYS : 

THE FIRST 100 DAYS

Pre Award Check List General : 

Pre Award Check List General Document negotiated changes Prioritise and sign changes – Cl 1.5 Agree terms of insurances – Cl 18.2 Agree DAB membership Confirm communication and addresses – Cl 1.3

Pre Award Checklist Engineer’s Duties & Authority : 

Pre Award Checklist Engineer’s Duties & Authority Employer names Engineer Employer’s constraints on Engineer’s Authority – Cl 3.1 Delegation of Engineer’s Authority to Resident Engineer – Cl 3.2 Engineer’s Determination – Cl 3.5

Pre Award ChecklistEmployer’s Risks : 

Pre Award ChecklistEmployer’s Risks Right of Access - Cl 2.1 Provision of Specifications – Cl 1.8 Supply of Drawings – Cl 1.9

Award to Commencement Date : 

Award to Commencement Date Formal Letter of Acceptance signed – Cl 1.1.1.3 Contract Agreement - Cl 1.1.1.2, 1.6 Date on which the Contract becomes legally binding Instruction of Commencement Date – Engineer Cl 8.1 – 7 days notice Time for Completion – Cl 1.1.3.3

Award to Commencement Date Check List Contractor’s obligations : 

Award to Commencement Date Check List Contractor’s obligations Performance Security – Cl 4.2 Consent for sub-contractors Commencement of sub-contract wks Compliance with applicable laws, etc prior to Commencement

Award to Commencement Date Check List Employer’s obligations : 

Award to Commencement Date Check List Employer’s obligations Obtaining planning, zoning etc permits for the Permanent Works – Cl 1.13 Ensuring that the Contractor will have right of access to and possession of all parts of the Site

Commencement Date to + 28 Employer’s Actions : 

Commencement Date to + 28 Employer’s Actions Right of access & possession – Cl 2.1 Ensuring Employer’s personnel are aware of responsibilities – Cl 2.3 Preparing evidence of Employer’s financial arrangements – Cl 2.4 Provision of copies of the Contract and Drawings Cl 1.8 & 1.9

Commencement Date to + 28 Engineer’s Responsibilities : 

Commencement Date to + 28 Engineer’s Responsibilities Advising Contractor of Engineer’s Authority and Delegations – Cl 3.2 Ensuring assistants are suitably qualified Providing reference survey points, lines and necessary data – Cl 4.7

Commencement Date to + 28 Contractor’s Responsibilities : 

Commencement Date to + 28 Contractor’s Responsibilities General obligations – adequacy, stability & safety – Cl 4.1 Provide Performance Security prior to access to Site – Cl 4.2 Submit name of Contractor’s Representative for consent – Cl 4.3

Commencement Date to + 28 Contractor’s Responsibilities : 

Commencement Date to + 28 Contractor’s Responsibilities Give notice of any delegation of CR’s responsibilities Obtain consent for sub-contractors not named in Contract – Cl 4.4 Give notice of commencement of sub-contract work

Commencement Date to + 28 Contractor’s Responsibilities : 

Commencement Date to + 28 Contractor’s Responsibilities Provide details of suppliers not named in Contract (see Cl 4.16) Make objections to any Nominated Sub-contractors who the Contractor does not wish to employ Submit detailed time programme within 28 days of receipt of the notice to commence – Cl 8.3

Commencement Date to + 28 Contractor’s Responsibilities : 

Commencement Date to + 28 Contractor’s Responsibilities Give notice of probable future events or circumstances which may increase price or delay completion Confirm working hours – Cl 6.5 Site health & safety facilities – Cl 6.7 Appoint Accident Prevention Officer

RESPONSIBILITIES : 

RESPONSIBILITIES

Responsibilities Employer : 

Responsibilities Employer Cl.2 Provides Access to the Site (not access & other areas – Cl.14.15 & 14.23) Assists Contractor with Permits Financial Arrangements See Variations & Cl.16.1 Suspension (strike out??) Notice of Claims Appoints the Engineer Cl.3.1

Responsibilities Employer : 

Responsibilities Employer Cl.14.7 make Payments !! Cl.20.2 appointment of DAB members

Responsibilities Engineer : 

Responsibilities Engineer Exercises stated authority Employer’s Approval – PC When he exercises specific authority deemed to have Employer’s approval Acts for Employer Cl.3.5 – “Fair Determination”

Responsibilities Engineer : 

Responsibilities Engineer Cl.3 Employer undertakes not to impose further constraints (Breach of Contract) No authority to amend contract Acts for Employer No authority to relieve the parties of duties or obligations etc.

Responsibilities Engineer : 

Responsibilities Engineer Cl.3 Delegation – except Cl.3.5 Instructions in writing Oral – confirmation by contractor – written Employer instructions to Engineer Determination Consult – agreement – fair determination Give notice Give effect unless Cl.20

Responsibilities Engineer : 

Responsibilities Engineer Cl.4.1 Method Statements Cl.8.1 Give Commencement Notice Cl.8.6 Rate of Progress Cl.12.1 Measurement Cl.13.1 Variations Cl.14.6 Interim Payment Certificates Cl.20.1 Records / Determination

Responsibilities Contractor : 

Responsibilities Contractor Cl.4 Execute & Complete the Works Cl.8.1 due expedition & without delay Adequacy & safety Method Statement Fit for purpose Performance Bond Engineer’s Approval of Representative May delegate Fluent in language Sub Contractor approval

Responsibilities Contractor : 

Responsibilities Contractor Setting Out to lines & levels of Engineer Quality Assurance Details in Specification Procedures Compliance documents

Responsibilities Contractor : 

Responsibilities Contractor Site data Costs included Risk Inspections All relevant data – obligation Care in Tender – failure to provide Sufficiency of Contract Amount

Responsibilities Contractor : 

Responsibilities Contractor Unforeseeable Physical Conditions Excludes climatic conditions Cl.8.4 & 17.3h Extension of time Payment of cost (see Cl.1.1.4.3 includes off site) No profit (as a general rule not included where risk is not the fault of either party)

Responsibilities Contractor : 

Responsibilities Contractor Transport to site Protection of the Environment Emissions Surface discharges Effluent Local Law

Responsibilities Contractor : 

Responsibilities Contractor Progress Report Monthly – 6 copies See also (Cl.4.9 procedures) and: Cl. 6.7 Accident Records Cl. 6.10 Personnel Cl.14.3 Application for payment Cl.20.1 Contemporary records

Responsibilities Contractor : 

Responsibilities Contractor Progress Report: Charts Photographs Manufacturing report Personnel QA documents Claims Cl.2.5 & 20.1 Safety statistics Progress

Responsibilities Contractor : 

Responsibilities Contractor Security Staff & Labour Facilities / Health & Safety Tests on Completion Cl.9.1 Value Engineering Cl.13.3 Application for Payment Cl.14.3 Contemporary records Cl.20.1

Nominated Subcontractors : 

Nominated Subcontractors Clause 5 Applies to Subcontractors and suppliers nominated by Employer or as instructed by the Engineer under Cl.13 Payment Cl.5.3

Nominated Subcontractors : 

Nominated Subcontractors Grounds to object Cl.5.2 Reasonable Objection Supporting details Lack of competence, recourses, financial strength Lack of indemnity Lack of obligations and liability

Staff & Labour : 

Staff & Labour Clause 6 Engagement of Staff & Labour Payment, housing feeding & transport Cl.8.4d & 13.7 Rates of pay & conditions NO Poaching !! (Cl.6.3)

Staff & Labour : 

Staff & Labour Labour Laws (including immigration) Working Hours (days of rest) Facilities (including Employer’s Personnel) Health & Safety Medical staff & facilities Accident prevention officer Records

Staff & Labour : 

Staff & Labour Cl.4.3 – Contractor’s Representative Cl.6.8 – Superintendence (Language) Personnel – qualified, skilled, experienced Records monthly (cl.4.9 procedures)

PLANT & MATERIALS : 

PLANT & MATERIALS

Plant Materials& Workmanship : 

Plant Materials& Workmanship Cl.7 Execution of works as specified Recognised good practice Proper facilities Non hazardous materials Samples For consent Labelled origin / intended use

Plant Materials& Workmanship : 

Plant Materials& Workmanship Inspection: Access to locations of natural materials Place of manufacture Provide access, facilities, permissions, safety equipment Give notice and provide opportunity Testing – may proceed after notice Delay claim Test Reports & Certificates

Plant Materials& Workmanship : 

Plant Materials& Workmanship Rejection – Retest – costs Cl.2.5 Remedial works Ownership of Plant & Materials Local law When delivered When contractor entitled to payment under Cl.8.10 (suspension) Royalties

COMMENCEMENT& DELAYS : 

COMMENCEMENT& DELAYS

Commencement, Delays & Suspension : 

Commencement, Delays & Suspension Contract becomes effective when Letter of Acceptance has been received by Contractor Cl.8.1 Commencement Date Engineer SHALL Contractor SHALL Engineer determines the date or 42 days after the LA

Completion : 

Completion Cl.8.2 Fundamental obligation to complete within Time for Completion Includes all of Works Includes all tests See Cl.10.1

Programme : 

Programme Programme of Works Cl.8.3 Within 28 days Specific requirements of programme Methods of execution Details of personnel & equipment Engineer does not approve (21 days) Employer may rely on programme

Programme : 

Programme Specific, Probable, Future events Revisions to programme Monthly progress charts Engineer may request a revised programme

Extension of Time : 

Extension of Time Contractor SHALL be entitled Not dependant upon further decision If no extension then “time at large” Variation Sub Clause giving delay Exceptionally adverse climatic conditions Unforeseeable shortages personnel & goods Employer’s delay Cl.20.1 Cl.3.5 Engineer’s Determination

Extension of Time : 

Extension of Time Cl.20.1 & 3.5 give time limits to Engineer to Determine – or Cl.13 shall not be unreasonably withheld or delayed Delays by authorities

Rate of Progress : 

Rate of Progress Engineer may instruct submission of revised programme Contractor to proceed with due expedition and without delay Delay Damages Failure to complete by due date Delay damages Limit of damages Suspension – Engineer may instruct

TESTS, DEFECTS& TAKING OVER : 

TESTS, DEFECTS& TAKING OVER

Tests on Completion : 

Tests on Completion Cl.9 Contractor shall give 21 days notice Tests carried out within 14 days of notice Certified report Delayed tests Employer Cl.7.4 or 10.3 apply Contractor to complete 21 days after notice Failure Retest Cl.11.4

Taking Over Responsibilities : 

Taking Over Responsibilities Responsibilities under Financing Agreement Proper use of funds Proper management of construction Final payment Responsibilities under the Contract: Before Taking Over After Taking Over

Taking Over Responsibilities : 

Taking Over Responsibilities Before Taking Over: Take over on Completion Tests on Completion Contractor’s request for TO Certificate Cl.10.1 The Employer SHALL take over when: Works completed Tests completed TO certificate issued

Employer’s Taking Over : 

Employer’s Taking Over Cl.10 TO Certificate issued when works completed and ready for intended purpose Minor outstanding work may be completed after issue of TOC Contractor may apply for TOC within 14 days of Works being complete Sectional Completion Engineer may Issue TOC Reject application giving reasons Failure of Engineer to issue TOC or reject Within 28 days TOC deemed to be issued

Employer’s Taking Over : 

Employer’s Taking Over Sectional Taking Over Tests Cost due to STO Delay Damages reduced after STO Certificate issued Reduction in ratio of value of STO Works No difference to maximum damages Reinstatement of ground or surface

Employer’s Taking Over : 

Employer’s Taking Over Taking Over Certificate Appendix listing all minor defects Listing all works yet to be carried out Contractor responsible to carry out repairs before end of Defects Notification Period

Defects Liability : 

Defects Liability Cl.11 Provides procedures and responsibilities under the Defects Notification Period Works are accepted by Engineer on the issuance of Performance Certificate

Defects Liability : 

Defects Liability Works & Documents completed Fair wear & tear accepted Complete all o/s work in TOC Remedy defects & damage notified by the end of the DNP Remedy works at Contractor’s cost Extension to DNP Max 2 years, or Suspension Cl.8.8 or 16.1

Defects Liability : 

Defects Liability Failure to Remedy Reasonable notice Carry out work himself or by others Contractor has no responsibility Reduction in Contract Price Recover all sums paid & costs Removal Further Tests Right of access Contractor to search

Performance Certificate : 

Performance Certificate Performance Certificate Contractor’s obligations complete Engineer to issue Date Issue within 28 days of DNP expiry After submission of all documentation All tests complete All remedying works complete Constitutes Acceptance of Works Liability for fulfilment of obligations Removal of equipment, rubbish etc… Contractor may be liable for latent defects

Measurement, Evaluation & Variations : 

Measurement, Evaluation & Variations This clause only applies to Red Book Yellow Book Cl.12 deals with tests after completion Measurement by Engineer Standard method of measurement as specified in schedules

Measurement, Evaluation & Variations : 

Measurement, Evaluation & Variations Cl.12.3 Basis of evaluation Rates in contract will apply New rates may be determined Qty changed more than 10% Variation Not specified No appropriate rate Reasonable Cost & Profit Cl.12.4 Compensation

Measurement, Evaluation & Variations : 

Measurement, Evaluation & Variations Under Yellow Book no such clauses Cl.13.3 Determinations Means of measurement may be necessary Payment schedule linked to “milestones” Cl.14.4

Variations : 

Variations Cl.13.1 Engineer has the right to vary Prior to issue of TO certificate List of variation inclusions Value Engineering Cl.13.2 Development risk with Contractor Savings 50/50

Variation Procedure : 

Variation Procedure Engineer requests proposal from Contractor Contractor responds with: Description Programme Evaluation Work proceeds without delay

Variation due to Legislation : 

Variation due to Legislation Local law at Base Date Cl.20.1 claim Extension of time Payment of cost

Contract Price & Payment : 

Contract Price & Payment Considerations: Payment schedules Disbursement approval Particular Conditions Budgeting Funding availability Additional Costs / Variations

Contract Price & Payment : 

Contract Price & Payment Advance payment Design Mobilisation Funding facilitation Interim payments 56 days Final Payment 84 days

Contract Price & Payment : 

Contract Price & Payment Aid funding requires: Authority approval Timing Variations Routine audit checks Time to transfer funds Advance notice of change

Contract Price & Payment : 

Contract Price & Payment Cl.14 requires prompt action within time constraints Finance costs will lead to claims Alter Cl.14 by Particular Conditions to suit funding authority

Contract Price & Payment : 

Contract Price & Payment Financial planning: Check estimates & budgets Prepare draft payment schedules Update estimates & programme Check funding Cl.14.4 estimates each 90 days

Budget Forecast : 

Budget Forecast Engineer prepares for Employer Regular intervals Updated budget Report of changes Data for report: Cl.2.4, 2.5, 3.5, 4.21, 8.3, 13.1, 13.3, 14.3, 13.8, 14.3, 14.6, 20.1, 20.4

Contract Price & Payment : 

Contract Price & Payment Cl.14 Contract Price Measured and will vary – Red Book Fixed Lump Sum – Yellow Book Fixed Lump Sum – Silver Book Lump Sum or Remeasure – Green Book

Advance Payment : 

Advance Payment Cl.14.2 Advance payment Interest free loan for mobilisation Guarantee Application Cl.14.3 Performance Security – approved by Employer Repayment Commence after when certificates >10% Deductions 25% of each Certificate

Interim Payment : 

Interim Payment Cl.14.3 Application 6 copies In a form approved (Cl.4.9) Cl.4.21 List of items (a) – (g) Note : Cl.20 items included

Interim Payment : 

Interim Payment Cl.14.4 Schedule of payments: Payment dates not recommended Engineer determination Cl.3.5 Cross guarantees Milestones preferred

Interim Payment : 

Interim Payment Cl.14.6 Issue of IPC Engineer determines FAIRLY IPC SHALL not be withheld Cl.14.7 Payment IPC paid within 56 days after Engineer receives Statement Cl.14.8 Interest on late payments

Non Payment : 

Non Payment Cl.16.1 Suspension Engineer fails to certify Employer does not provide Cl.2.4 details Non payment 21 days notice Cl.16.2 Termination

Guarantees & Bonds : 

Guarantees & Bonds Cl.4.2 Performance Security Contractor finance Guarantee by Employer No Cl.8.1 notice before Guarantee Cl.14.2 Advance Payment Guarantee

Risk & Responsibility : 

Risk & Responsibility Cl.17.1 Basis for Indemnity Cl.17.2 Full responsibility for Works & Goods until TO Certificate Cl.17.3 Employer’s Risks Cl.17.4 Compensation & Claims

Insurance : 

Insurance Cl.18 Employer to approve insurers Agreed terms Currency Payments to be used to rectify loss Cl.18.3 – Appendix minimum amount

Force Majeure : 

Force Majeure Basic Principles: Exceptional event Not reasonably provided against Not reasonable to overcome / avoid Not attributable to either party Beyond control of affected party

Force Majeure : 

Force Majeure Cl.19.1 Definitions (i) – (iv) man made Cl.19.4 Consequences EoT Man made – cost Man made in country – cost Cl.19.6 Termination

CLAIMS & CONTRACTUAL PROCEDURES : 

CLAIMS & CONTRACTUAL PROCEDURES

CAUSES OF CLAIMS FOR CONTRACTORS : 

CAUSES OF CLAIMS FOR CONTRACTORS Unforeseeable ground conditions Delayed drawings Delayed payment Lack of possession of site Consequence of risk Suspension Force Majeure

CONTRACTOR’S CLAIM PROCEDURE : 

CONTRACTOR’S CLAIM PROCEDURE Clause 20.1 Sets out Contractor procedure Condition Precedent Not later than 28 days Sets out Engineer procedure

CONTRACTOR’S CLAIM PROCEDURE : 

CONTRACTOR’S CLAIM PROCEDURE Contractor gives notice Within 28 days Contractor keeps contemporary records Engineer may monitor Engineer may instruct further records Fully detailed claim Supporting documents Within 42 days of event

CAUSES OF CLAIMS FOR EMPLOYERS : 

CAUSES OF CLAIMS FOR EMPLOYERS Quality below Specification Delay in Completion Date Slow Rate of Progress Defective Materials Failures of Tests

EMPLOYER’S CLAIM PROCEDURE : 

EMPLOYER’S CLAIM PROCEDURE Employer gives notice As soon as practicable Contractor Receives Notice No obligation to respond Engineer proceeds with Cl.3.5 Contractor can dispute if dissatisfied Engineer’s determination applied to Certificate of Payment

CONTEMPORARY RECORDS : 

CONTEMPORARY RECORDS Crucial for determination of claim Records for any future dispute Contractor obliged to keep records Procedure for this work Employer & Engineer to agree Engineer’s actions

CONTRACTOR’S CLAIM PROCEDURE : 

CONTRACTOR’S CLAIM PROCEDURE Cl.20.1 continuing procedure After 42 days: Claim submission is considered interim Further monthly claims Final claim with 28 days of end of effects

CONTRACTOR’S CLAIM PROCEDURE : 

CONTRACTOR’S CLAIM PROCEDURE Engineer’s Response: Within 42 days of receiving claim Approval / Disapproval Detailed comments May ask for further details Proceed with Cl.3.5 May certify interim sums

CLAUSE 3.5 DETERMINATIONS : 

CLAUSE 3.5 DETERMINATIONS Engineer makes a Determination Makes his own evaluation Shall NOT delegate Cl.3.5 authority

CLAUSE 3.5 DETERMINATIONPROCEDURE : 

CLAUSE 3.5 DETERMINATIONPROCEDURE Engineer shall consult both Parties Try to reach agreement Give notice with supporting particulars Where no agreement then Engineer makes a FAIR determination

DISSATISFACTION WITH Cl.3.5 DETERMINATION : 

DISSATISFACTION WITH Cl.3.5 DETERMINATION Dispute : Refer to Dispute Adjudication Board No definition of “Dispute” Rejection of Determination No agreement with continued discussion One party declines to discuss No progress in protracted discussion Subsequent procedure - Clause 20.4

FIDIC Short Form : 

FIDIC Short Form Recommended for projects without problems Small Capital Value <$0.5M Simple or repetitive works No specialist subcontractors Short duration No Impartial Engineer Named Adjudicator

FIDIC Short Form : 

FIDIC Short Form Increased responsibility on Employer Define project Undertake design Scope of works Supervision Avoid letters of intent / acceptance Offer & Acceptance in Appendix

FIDIC Short Form : 

FIDIC Short Form Priority of documents – undefined No “ruling language” Cl.2.4 to avoid argument “approval” only used for Cl.4.4 & 14.2 Cl.4.4 Performance Bond - no model

FIDIC Short Form : 

FIDIC Short Form Risk & Claims Cl.6.1 lists all Employers Liabilities No bad weather claim EoT Cl.7.3 to avoid “time at large” Cl.10.3 Early Warning

FIDIC Short Form : 

FIDIC Short Form Taking Over – no sectional handover No defined Defects period – 12mths Employer may vary - Cl.10 Lump sum Rates Daywork

FIDIC Short Form : 

FIDIC Short Form Contract price Cl.11 Lump Sum LS with schedule of rates LS with BoQ Remeasurement with BoQ Cost reimbursable Consider valuation methods

FIDIC Short Form : 

FIDIC Short Form Dispute resolution Amicable settlement Adjudication Dissatisfaction – 28 days Arbitration

Alternative Dispute ResolutionADR - Overview : 

Alternative Dispute ResolutionADR - Overview

Alternative Dispute ResolutionADR - Overview : 

Alternative Dispute ResolutionADR - Overview Confrontational Litigation Win – Win methods ADR Methods: Mediation Conciliation Adjudication Arbitration

DISPUTE RESOLUTIONunder FIDIC : 

DISPUTE RESOLUTIONunder FIDIC “Dispute” not defined by FIDIC Where 2 parties can not agree Where something needs to be decided Certificates, Determinations, Instructions, Variations FIDIC encourages resolution by agreement – Cl.3.5 No agreement - Dispute

Amicable Settlement : 

Amicable Settlement Cl.20.5 – no definition 56 days Direct negotiation Conciliation Mediation Do not involve the DAB Consensual No obligation – costs ??

Mediation : 

Mediation No facility in FIDIC contracts Consensual procedure Confidential Very successful Short time frame Low cost Involve decision makers

ENGINEERS DECISION : 

ENGINEERS DECISION Red & Yellow Books provide for an alternative to the DAB Engineer’s Decision Delete Cl.20.2 & 20.3 make substitute wording Impartiality, Independence ??

ADJUDICATION : 

ADJUDICATION Encourage the resolution of disputes Statutory / non statutory Provides a decision in a short time Binding Give effect May be changed by amicable settlement May be changed by arbitration Contractually enforceable

ARBITRATION : 

ARBITRATION Clause 20.6 Final settlement – ICC 3 arbitrators Language Open up & review No limits to evidence DAB Decision shall be admitted

ICC ARBITRATION : 

ICC ARBITRATION Place to be agreed in Particular Conditions Each party nominates 1 arbitrator and chairman selected or agreed ICC court will formally appoint ICC fee scales & administration costs ICC rules govern initial referral then arbitrators set the procedure

ARBITRATOR’S AWARD : 

ARBITRATOR’S AWARD Final & Binding 1958 New York Convention for enforcement of awards

Dispute Adjudication Board : 

Dispute Adjudication Board Rules set out in Red and Yellow books Ad hoc – rules apply to the resolution of a referred dispute only 1 or 3 person board Independent & Impartial Decisions or advice & opinion

ADVANTAGES OF THE DAB : 

ADVANTAGES OF THE DAB Resolves disputes in 84 days Lower costs than Arbitration or Litigation Impartiality Real time assessment Improves standards Provides clarity Diffuses problems (win – win) Encourages competitiveness in tenders

DISPUTE ADJUDICATION BOARD : 

DISPUTE ADJUDICATION BOARD Functions: Become Familiar Visit the site Keep up to date Encourage resolution of issues When a dispute is referred: Act Fairly & Impartially Convene a hearing Deliberate Prepare a Decision Avoid unnecessary delay or expense

FORMATION OF DAB : 

FORMATION OF DAB

FORMATION OF DABRELEVANT DOCUMENTATION : 

FORMATION OF DABRELEVANT DOCUMENTATION Cl. 20.2 & 20.3 General Conditions of DAA Red Book - full term Yellow Book – ad-hoc Interchangeable Dispute Adjudication Agreement Tripartite Agreement

General Conditions of DAA : 

General Conditions of DAA Employer decides (at tender stage) What type of DAB How many members Period to agree selection Third party nominator List of candidates in tender ?? Employer to be ready to nominate

Formation of DAB : 

Formation of DAB Cl.20.2 Formation 1 or 3 members Each party nominates one member Parties consult members and agree a chairman List of potential members in tender No Agreement FIDIC President will nominate Due consultation with parties

DAB OBLIGATIONS : 

DAB OBLIGATIONS Act Fairly Act Impartially Give parties a reasonable opportunity to pout their case & respond Adopt procedures: Avoid unnecessary delay Avoid unnecessary expense

DAB MEMBERS’ QUALITIES : 

DAB MEMBERS’ QUALITIES Experience Contract Knowledge Language DR Experience Procedural Knowledge Qualifications Availability Impartiality Independence Lawyers

WARRANTIES & OBLIGATIONS : 

WARRANTIES & OBLIGATIONS General Conditions Cl.3 & 4 Warranties: Experienced in Work Experienced in Documentation Fluent in Language of communications Obligations: Independent Confidential Available

PAYMENT OF MEMBERS : 

PAYMENT OF MEMBERS General Conditions Cl.6 Retainer per calendar month Daily Fee Reasonable expenses Taxes in country of contract Retainer reduced by 50% after taking over Ad hoc DAB – no retainer

PAYMENT OF MEMBERS : 

PAYMENT OF MEMBERS Payment method: Retainer & airfares - quarterly in advance Other fees after site visits / hearing Contractor pays in full within 56 days Employer reimburses Contractor

ANNEX : PROCEDURAL RULES : 

ANNEX : PROCEDURAL RULES Monitor progress reports against project documents Site visits Timing Agenda / scheduling / travel arrangements Keep up to date Progress Problems Claims

ANNEX : PROCEDURAL RULES : 

ANNEX : PROCEDURAL RULES Site visits with Parties : co-ordinated by Employer DAB shall prepare a report Contract & Project documents Monthly report

DISPUTE REFERRAL : 

DISPUTE REFERRAL Clause 20.4 – read together with Procedural Rules Referred in writing stating Clause Sent to chairman 84 days to Decide Reasoned Decision Unanimous

DAB DECISION PROCEDURES : 

DAB DECISION PROCEDURES Referral of Dispute Preliminary Issues Claimant’s position paper Respondent’s Response Claimant’s Reply to Response Copies to the other party DAB to set time table

DAB DECISION PROCEDURES : 

DAB DECISION PROCEDURES Parties empower the DAB to: Establish procedure Decide jurisdiction Conduct a hearing Take initiative facts & other matters Specialist knowledge Decide payment of finance charges Decide Relief

DAB OBLIGATIONS IN MAKING A DECISION : 

DAB OBLIGATIONS IN MAKING A DECISION Act Fairly Act Impartially Give parties a reasonable opportunity to pout their case & respond Adopt procedures: Avoid unnecessary delay Avoid unnecessary expense

DAB HEARING : 

DAB HEARING Adopt inquisitorial procedure Refuse admission to hearings Proceed in absence of any party Not formal (no oaths) Evidence Written summaries

DAB HEARING : 

DAB HEARING Typical hearing: Procedural issues Preliminary issues Jurisdictional issues Oral presentation by Claimant Witness submissions Respondent questions Oral presentation by Respondent Witness submissions Respondent questions Respondent’s summing up Claimant’s summing up Chairman does not end meeting until parties have confirmed they have nothing further to add

DAB DECISION : 

DAB DECISION DAB meets in private Endeavour to reach a unanimous decision Failure of a member to attend Decision issued in writing and signed with reasons

FORMAT OF DAB DECISION : 

FORMAT OF DAB DECISION Preambles State given under clause 20.4 Confidential document – state circulation Short document Details of parties and contract Summary of dispute Procedure Reasoning : contract clauses Decision Signed & dated

POST DECISION : 

POST DECISION Shall be binding … promptly give effect May be reversed by amicable settlement or arbitration Dissatisfaction – 28 days Otherwise after 28 days - binding Failure to comply – arbitration Compliance is a contractual obligation

ENFORCEMENT(non statutory) : 

ENFORCEMENT(non statutory) Contractual obligation Cl.20.4 Notice of dissatisfaction Breach of contract Cl.14.3 – application for IPC Cl.14.6 – Issue of IPC Cl.14.7 – Payment Cl.16.1 – Suspension Cl.16.2 - Termination