01 - Project Management Guidelines For Supervision of International Construction Contracts PDF

PROJECT MANAGEMENT
GUIDELINES
FOR
SUPERVISION OF
INTERNATIONAL
CONSTRUCTION CONTRACTS
WITH PARTICULAR REFERENCE
TO FIDIC CONTRACTS
Originally issued: December 2005
Revision No.1: August 2011
Louis Berger
1250 23rd Street, NW
Washington, DC 20037,
USA Tel: +1 202 331-7775
Fax: +1 202 293-0787
August 2011
PROJECT MANAGEMENT GUIDELINES

FOR
SUPERVISION OF INTERNATIONAL
WITH PARTICULAR REFERENCE
TO FIDIC CONTRACTS
Introductory Note:
These Guidelines have been prepared by The Louis Berger Group, Inc. (LBG)
solely for the internal use of LBG and its authorized representatives.
The first edition of these Guidelines was dated December 2005, and posted on
LBGs internal website. A revision with minor amendments, dated January
2007, was liberally distributed in hard copy, but not posted on LBGs internal
website.
This edition of the Guidelines, as posted on LBGs internal website, supersedes
the previous edition and amendments.
It must be noted that FIDIC itself does not respond to requests for legal
interpretation of its various forms of contract.
Any comments upon or requests for clarification of these Guidelines, or for
interpretation of contract clauses, or concerning LBGs policies, should be
directed to:
Kent O. Lande, P.E., Vice President & Chief Engineer
2445 M Street NW, Suite 400, Washington, DC 20037, USA
Tel: +1 202 331-7775 Fax: +1 202 293-0787
Email: klande@louisberger.com
Acknowledgements
The Louis Berger Group, Inc. extends special thanks to the following authors
and publishers who gave their permission to quote some of their works to
support these Guidelines:
-
Fdration Internationale des Ingnieurs-Conseils (FIDIC)

Word Trade Centre II, PO Box 311, 1215 Geneva 15, Switzerland.
THOMAS TELFORD PUBLISHING, Thomas Telford Ltd.

1 Heron Quay, London E14 4JD, England, UK, and
BRIAN W. TOTTERDILL, author of FIDIC users guide a practical guide to
the 1999 red book.
Project Management Guidelines ~

Supervision of International Construction Contracts
Table of Contents
TABLE OF CONTENTS
FOREWORD
Purpose & Scope of these Guidelines
Overview of FIDIC Contracts
PART I PROJECT ADMINISTRATION

I-1.
START OF PROJECT
I-1.1
I-1.2
I-1.3
I-1.4
I-1.5
I-1.6
I-1.7
I-1.8
I-1.9
I-1.10
I-1.11
Appointment of Head Office Supervisor

Project Manager Briefing
Service Contract Documents
Project Organization
Client / Employer Contacts
LBG Representatives
Staffing & Sub-consultancy Agreements
Office, Living Accommodations & Transport
LBG Financial Support & Accounting Procedures
LBG Administration Procedures
Delegation of Responsibilities & Authorities
+ CHECK LIST
I-2.
MANAGEMENT OF SERVICE CONTRACT
I-2.1
I-2.2
I-2.3
I-2.4
Review & Clarification of Service Contract Documents

Milestones & Reporting Requirements
Rules for Staff Mobilization
Rules for Time Charges & Reimbursable Expenditures
- Time Charges
- Living Allowances & Per Diems
- Travel / Mobilization Allowances or Expenditures
- Other Reimbursable Project Expenditures
Inception Report
Management of Service Contract Budget
Amendments to Service Contract
Invoicing for Services
- General Requirements
- Advance Payment
I-2.5
I-2.6
I-2.7
I-2.8
+ CHECK LIST
The Louis Berger Group, Inc.

I-3.
I-3.1
I-3.2
I-3.3
I-3.4
I-3.5
I-3.6
I-3.7
I-3.8
I-3.9
I-3.10
I-3.11
I-3.12
I-3.13
Table of Contents
PROJECT SET-UP & EXECUTION

Formal Communications
- Regarding LBGs Service Contract
- Regarding JV or Consortium Contract & Sub-consultancy Agreements
- Regarding Works Contract(s)
Letterhead
Correspondence Identification
- Outgoing Correspondence
- Incoming Correspondence
- File Referencing
Correspondence Registers
Informal Communications
Records of Meetings
Document Control / Project Filing System
Project Reports
- Project Progress Reports
- Construction Completion Report
Sub-consultants
- Preparation of Sub-consultancy Agreements
- Management of Sub-consultants
Computer Facilities & Maintenance
Staff Records for Emergency
Confidentiality
Technical Resources, Promotional Materials & Conferences
+ CHECK LIST
I-4.
END OF PROJECT
I-4.1
I.4.2
I-4.3
Staff Retention for Project Completion

Hand-over & Retention of Documents
Hand-over & Retention of Equipment
+ CHECK LIST
PART II WORKS CONTRACT SUPERVISION

II-1.
WORKS CONTRACT DOCUMENTS
II-1.1
Works Contract Award & Tender Security

- Contract Award
- Tender Security
ii

II-1.2
II-1.3
II-1.4
II-1.5
II-1.6
II-1.7
II-1.8
Compilation of Works Contract Documents

Works Contract Documents Sufficiency & Discrepancies
- General Discussion
- Employer & Contracting Authority
Contradictions between Works Contract & LBG Service Contract,
and Limitations of the Engineers Authorities
Contradictions between Works Contract & Funding Agreement
Conditions of Contract & Interpretation
Contract Definition of The Engineer
Engineer Must Adhere to Works Contract
+ CHECK LIST
II-2.
WORKS CONTRACT START-UP
II-2.1
II-2.2
Appointment of The Engineer

Engineers Delegation of Duties & Authorities
- Under Older Forms of FIDIC Contract
- Under Recent Forms of FIDIC Contract
Pre-commencement Meeting
Contractors Representative
Commencement Date
Performance Security
Advance Payment Security
Insurance
Breakdowns of Lump Sums & Unit Rates
Statutory Approvals & Permits
Works Programme & Cash Flow
- Works Programme
- Cash Flow Estimate
Quality Assurance & Control
- Overview
- Quality Assurance
- Quality Control
Access to & Possession of Site
Construction License
Issuing Drawings
Meteorological Records
Contractors Reports
- Records of Contractors Personnel & Equipment
- Contractors Monthly Progress Report
Price Adjustment Formula & Indices
II-2.3
II-2.4
II-2.5
II-2.6
II-2.7
II-2.8
II-2.9
II-2.10
II-2.11
II-2.12
II-2.13
II-2.14
II-2.15
II-2.16
II-2.17
II-2.18
Table of Contents
iii

Table of Contents
II-2.19 Consent for Subcontractors

- Limit of Value of Works to be Subcontracted
II-2.20 Nominated Subcontractors
II-2.21 Compliance with Local Law
II-2.22 Rules of Origin & Nationality
II-2.23 Imports & Taxes
- Exemption Procedures
- Export after Completion of Works
II-2.24 Contractors Mobilization
II-2.25 Safety, Security & Protection of the Environment
- Safety of Engineers Staff
II-2.26 Diaries & Events Log
- Diaries
- Events Log
+ CHECK LIST
II-3.
VARIATIONS & FINANCIAL CONTROL OF WORKS
II-3.1
II-3.2
Bill of Quantities & Unit Prices

Provisional Sums
- Definition & Payment Entitlement
- Differences between Older & Recent Forms of FIDIC
Red Book Contract regarding Payment for Work
performed by a Nominated Subcontractor
- Provisional Sum for Contingency
Variations
- Permitted Variations
- Variations arising from Design Modifications
- Agreement of Original Designer
- Employers Pre-approval
- Contractors Compliance
- Variations after Substantial Completion of the Works
Valuation of Variations
- General Principles of Valuation
- Additional Principles Sometimes Included
- Adjustments Arising from Variations in Quantities
- Incorporating Variations into the Bill of Quantities by Establishing New
BoQ Items for New & Varied Rates
- Adjustments of the Contract Price
Variation Orders
Value Engineering
II-3.3
II-3.4
II-3.5
II-3.6
iv

II-3.7
II-3.8
II-3.9
II-3.10
II-3.11
II-3.12
II-3.13
II-3.14
II-3.15
II-3.16
II-3.17
II-3.18
Table of Contents
Daywork
Measurement of Works
Valuation of Plant and Materials Intended for the Works
Contractors Interim Payment Statements
Interim Payment Certificates
- Price Adjustments
- Repayment of Advance Payment
- Deductions for Retention Money
- Payment of Retention Money
- Security for Retention Money
Interim Payments
Delayed Payments
- Overview
- Interest (Financing Charges) on Late Payments
Records of Statements, Certifications & Payments
Estimates of Cost of Works to Completion
Work Quantities Management
- Bill of Quantities
- Quantity Take-offs
- Monitoring Quantity Trends
Monitoring & Reporting Works Progress
- Percentage of Progress
- Progress Charts
Contract Addenda & Amendments
+ CHECK LIST
II-4.
ONGOING SUPERVISION
II-4.1
II-4.2
II-4.3
Engineers Instructions
Regular Progress Meetings
Continuing Validity of Securities & Insurance
- Performance Security
- Advance Payment Security
- Insurance
Verification of Contractors Personnel & Equipment
Sampling & Testing of Materials, Workmanship & Plant
Works Inspection, Testing & Acceptance
Unacceptable Works, Defects Notification & Remedies
- Defects Notification
- Acceptance of Non-complying Works with Payment Deductions
- Remedies
II-4.4
II-4.5
II-4.6
II-4.7

II-4.8
II-4.9
II-4.10
II-4.11
II-4.12
II-4.13
II-4.14
II-4.15
Table of Contents
Works Programme & Cash Flow Revisions

- Works Programme Revisions
- Cash Flow Revisions
Contractors Slow Progress
- Remedies to Comply with Time for Completion
- Increased Working Hours
Works Suspensions
- Suspension of Works by the Engineer
- Suspension of Works by the Contractor
Claims
- Contractors Claims
- Employers Claims
Documentation, Determination & Evaluation of Claims
- Documentation of Claims
- Procedures for Determination
- Principle & Quantum
- Due Consultation
- Limits of the Engineers Authority
Delays, Extension of Time for Completion & Associated Costs
- Completion of Works within the Time for Completion
- Grounds for Extension of Time
- Procedures for Extension of Time Claims
- Consideration of Contractors Float in Time Extension Claims
- Time Extension arising from Concurrent Delay
- Costs associated with Extension of Time
- Responsibility for Delay affects Entitlement to Costs
- Prolongation Costs
- Loss of Profit
- Overhead Recovery
- Price Adjustment after Original Time for Completion
Liquidated Damages & Bonus
- Liquidated Damages for Delay
- Bonus for Early Completion
Disputes & Dispute Resolution
- Contract Provisions
- Engineers Decision
- Dispute Adjudication Board
- Amicable Settlement
- Arbitration
+ CHECK LIST
II-5.
DESIGN REVIEWS & MODIFICATIONS
II-5.1
II-5.2
Contractual Responsibility for Design

Review of Contractors Design under Design-Build Contract
vi

Table of Contents
II-5.3
II-5.4
II-5.5
Review of Contractors Design under Construction Contract

Co-ordination of Employers & Contractors Designs
Employers Requirements for Contractors Design:
Contractors Notices of Faults or Requests for Clarification
II-5.6 Modification of Employers Requirements for Contractors Design
II-5.7
Design by Nominated Subcontractors under Provisional Sums
II-5.8 Design Modifications arising from Unforeseen Physical Conditions
II-5.9 Employers Design: Contractors Notices of Faults or Requests for Clarification,
& Design Modifications arising therefrom
II-5.10 Review of Contractors Value Engineering Proposals
II-5.11 Review of Contractors Shop Drawings
II-5.12 Engineers Authority to Instruct Design Modifications
+ CHECK LIST
II-6.
TAKING OVER THE WORKS
II-6.1
II-6.2
Substantial Completion
Taking-Over Certificate
- Taking-Over Certificate for the Whole of the Works
- Taking-Over Certificates for Sections and/or Parts of the Works
- Form of Taking-Over Certificate
Inspection at Completion & Snag List
Contractors Statement at Completion
Interim Payment Certificate at Completion
- Engineers IPC at Completion
- Supplementary Report to IPC at Completion
Interim Payment at Completion
+ CHECK LIST
II-6.3
II-6.4
II-6.5
II-6.6
II-7.
DEFECTS NOTIFICATION PERIOD & CONTRACT COMPLETION
II-7.1
II-7.2
II-7.3
II-7.4
II-7.5
II-7.6
II-7.7
II-7.8
II-7.9
II-7.10
II-7.11
Defects Notification Period

Completion of Remaining Works & Rectification of Defects
Inspections & Notification of Defects
Cost of Rectifying Defects & Damage
Remedies for Non-Performance in Defects Notification Period
Extension of Defects Notification Period
Further Tests
Final Acceptance of Works
Performance Certificate
Clearance of Site
Contractors Application for Final Payment
vii

Table of Contents
II-7.12 Contractors Discharge

II-7.13 Final Payment Certificate
II-7.14 Final Payment
+ CHECK LIST
II-8.
CONTRACT TERMINATION
II-8.1
II-8.2
II-8.3
II-8.4
Termination by Employer arising from Contractors Default

Termination by Contractor arising from Employers Default
Termination resulting from Force Majeure
Employers Termination for Convenience
viii

Table of Contents
APPENDICES
Examples for:
Section/Text References:
Computation of Time Charges, Allowances

& Reimbursable Expenditures
I-2.4
Inception Report
I-2.5
Format for Monitoring Service Contract Budget
I-2.6
Format for Invoicing Client
I-2.4 & I-2.8
I-3.7
Project Progress Reports
I-3.8, II-3.5, II-3.14 &

II-3.17
Construction Completion Report
I-3.8 & II-6.5
Preambles to BoQ of Works Contract
II-1.3, II-3.1 & II-3.8
Method of Measurement
II-1.3, II-3.1 & II-3.8
Quality Control Forms
II-2.12, II-3.7, II-4.1,

II-4.6, & II-4.7
Daily Diary Forms & Events Log
II-2.26
Variations
II-3.4, II-3.5, II-3.16

& II-3.17
Interim Payment Statements & Certificates
II-3.10, II-3.11 & II-6.5
Cost Estimates to Completion
II-3.15
II-6.2
II-7.9
II-2.2 & II-5.12
Comparison of Sub-Clauses Numbers

between Fourth Edition of Red Book and
1999 Conditions of Contract for Construction
Foreword
ix

Foreword
FOREWORD
Purpose & Scope of these Guidelines
These Guidelines have been prepared to assist Project Managers in their role
as LBGs senior construction site representative with direct responsibility for
administration and supervision of international construction contracts. The
official title for this role may depend on the complexity of the project which
could range from a single construction contract with one project/site office, to
several independent contracts each with its own site office and construction
supervision staff but administered from a separate, common project office.
Thus, alternative role titles might be Project Director, Project Manager, Team
Leader or Resident Engineer. The actual organization will generally follow the
provisions of the Clients Terms of Reference and/or LBGs Service Contract
that likely refers to LBGs Proposal for the Project.
These Guidelines, based upon FIDIC Conditions of Contract and good
practice, are intended to cover the main essentials of project management for
supervision of as-measured construction contracts or design/build contracts in
a foreign country.
These Guidelines are divided into two parts:
Part I: PROJECT ADMINISTRATION
- Procedures at start of Project, including requirements for briefing the
Project Manager.
- Management of LBGs Service Contract and, if applicable, LBGs Joint
Venture (or Consortium) and Sub-consultancy Agreements.
- Project Set-up and Execution.
- Procedures at end of Project.
Part II: WORKS CONTRACT SUPERVISION
- Start-up requirements.
- Financial control.
- Ongoing supervision.
- Taking Over the Works.
- Defects Notification Period and Contract Completion.
- Contract Termination.
The Service Contract, as discussed in these Guidelines, is the written
contract between The Louis Berger Group (LBG) and its Client, under which
LBG (referred to as the Engineer) is supervising one or more international
Works Contracts.
A Works Contract, as discussed herein, is a written contract between an
owner (referred to as the Employer) and a Contractor, under which the
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Foreword
Contractor undertakes building or construction works. [The Employer under

the Works Contract is typically LBGs Client under the Service Contract.]
There are no standard contracts for Services or Works they all vary.
Most international Works Contracts are based on FIDIC General Conditions
of Contract, of which there are several forms and editions being used. FIDIC
stands for International Federation of Consulting Engineers. The acronym
represents the French version of the name Fdration Internationale des
Engnieurs-Conseils.
The Part I General Conditions of a FIDIC-based contract is standard for
the form/edition of FIDIC contract adopted (see below for the different forms
and editions), but will be modified and augmented by Part II Particular
Conditions to suit the needs of the Project. Therefore the Conditions of
Contract will vary from contract to contract.
Most works contracts procured under international competitive tendering
procedures are based on one form or another of FIDIC Conditions of
Contract. As part of their standard bidding documents, most Multilateral
Development Banks require their borrowers or aid recipients to adopt FIDIC
Conditions of Contract, albeit either in a harmonized edition or with Particular
Conditions to reflect the banks procurement requirements.
These Guidelines are, therefore, primarily orientated to FIDIC-based
contracts and use FIDIC terminology. However, the general principles of
project management and contract administration are applicable to other types
of contract.
There are many forms and editions of FIDIC contract. Under some forms, the
Contract is administered by the Engineer who is appointed by the Owner and
named as such in the contract documents. Under other forms, the Contract is
administered directly by the Employer (unless he appoints an Employers
Representative). However, these Guidelines relate only to those forms of
FIDIC contract for Construction and Design/Build under which project
administration and supervision of the Works are performed by the Engineer;
wherein LBG is defined as performing the role of the Engineer. Those forms
of FIDIC contract relating to Construction and Design/Build are referred to
herein as:
Older forms of FIDIC contract:
Works of Civil Engineering Construction
(old Red Book: 4th Edition 1987, last amended 1992)
Electrical and Mechanical Works
including Erection on Site
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Foreword
(old Yellow Book: 3rd Edition 1987)

Recent forms of FIDIC contract:
Construction
for Building and Engineering Works designed by the Employer
(new Red Book: 1st Edition 1999)
Construction
(new Red Book MDB Edition: 1st Edition 2005, amended 2010)
[Note: This is often referred to as the Harmonized Edition, prepared
by FIDIC in association with the Multilateral Development Banks
(MDB) to incorporate, within the General Conditions of Contract, the
banks procurement practices and requirements.]
Plant and Design-Build
for Electrical and Mechanical Plant, and for Building and Engineering
Works, designed by the Contractor
(new Yellow Book: 1st Edition 1999)
[Note: At the time of drafting this current revision to these Guidelines,
FIDIC had not published an MDB Harmonized edition of this Yellow
Book, although FIDIC has proposed Particular Conditions of Contract
to modify the FIDIC MDB Harmonized Construction Contract (Red
Book, 2006 edition) from design by the Employer (with remeasurement) to design by Contractor (with lump-sum payment).]
The intent of the new Red and Yellow Books is to replace their predecessors.
Certainly the Multilateral Development Banks insist on their adoption (in
harmonized form). However, at the time of drafting this current revision to
these Guidelines, the older forms of contract remain in use on some projects
and/or continue to be the contracts of choice in some parts of the world. For
this reason, these Guidelines cover both the older and recent forms of Red
and Yellow Book contracts.
There are significant differences between these older and recent forms of
FIDIC contract, both in respect of contractual requirements and of the
role/duties of the Engineer (the most significant of which are explained in
these Guidelines), but also in format. Whereas the older Red Book contains
72 main clauses and the older Yellow Book contains 51 main clauses (with
little consistency in nomenclature), the new Red and Yellow Books are more
consistently formatted each with 20 clauses (of which 19 have common
nomenclature and only one is differently titled to reflect the differing purposes
of the Red and Yellow Books). As an example of formatting differences, a
Comparison of Sub-clause Numbers between the Fourth Edition Red Book
and 1999 Conditions of Contract for Construction is presented in Appendix
R. This Comparison may be useful to Project Managers experienced in the
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Foreword
old Red Book and wishing to identify equivalent clauses in the new 1999 Red
Book.
Due to these formatting differences, FIDIC clause numbers are generally not
referenced nor quoted in these Guidelines. The Project Manager must read
fully, understand and constantly refer to the detailed terms of the respective
contracts during his administration thereof.
These Guidelines, based on previous experience, identify typical important
requirements of Service Contracts and Works Contracts; and pitfalls to be
avoided by good management practices. The following convention is used:
means a required or recommended action of LBGs representatives
(usually the Project Manager).
o means something that should be taken into consideration by the Project
Manager.
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Foreword
Overview of FIDIC Contracts

Founded in 1913, FIDIC now represents the membership of national
associations of consulting engineers of more than 75 countries. One of
FIDICs key activities is the preparation of internationally recognized forms of
contract for infrastructure works, the provisions of which are fairly balanced
between the Employer and the Contractor.
At the time of drafting this revision of these Guidelines, the range of Works
Contracts for which FIDIC has published standard General Conditions of
Contract is:
Older forms of FIDIC contract for:
Works of Civil Engineering Construction
Electrical and Mechanical Works
Design-Build and Turnkey
(old Orange Book: 1st Edition 1995)
Recent forms of FIDIC contract for:
Construction
[Intended to supersede old Red Book]
Construction
for Building and Engineering works designed by the Employer
Plant and Design-Build
[Intended to supersede old Yellow Book]
EPC/Turnkey Projects
(new Silver Book: 1st Edition 1999)
[Intended to supersede old Orange Book]
Short Form of Contract
(new Green Book: 1st Edition 1999)
Dredging and Reclamation Works
(new Turquoise Book: 1st Edition 2006)
Design, Build and Operate Projects
(new Gold Book: 1st Edition 2008)
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Foreword
The Red Book is intended primarily for the construction of works for which
detailed design is provided by the Employer to the Contractor, and the
Contractor is paid by the Employer based on measurement of the constructed
works and valuation in accordance with tendered unit rates and prices. Earlier
versions of the Red Book were drafted for use on civil engineering projects;
but the current edition drops those words from the title, signifying a move
away from only being applicable to civil engineering works.
FIDIC has recently published a Red Book - MDB Edition, commonly
referred to as the Harmonized version of the Red Book. This resulted from
requirements of the Multilateral Development Banks (MDBs) to modify certain
of FIDICs General Conditions of Contract to suit the MDBs commonly
agreed procurement practices. Prior to publication of this MDB Edition, an
MDBs requirements were incorporated into a Red Book contract by means of
added Part II Particular Conditions. In this recent MDB Edition the MDBs
requirements are incorporated into the Part I General Conditions. Changes
included in this MDB Edition include, the right of the funding bank to audit
the Contractors accounts, minor changes to the provisions for dispute
resolution, and limitations upon the Engineers authorities.
The MDBs that participated in the preparation of the Red Book - MDB
Edition are:
- African Development Bank
- Asian Development Bank
- Black Sea Trade & Development Bank
- Caribbean Development Bank
- European Bank for Reconstruction & Development
- Inter-American Bank
- International Bank for Reconstruction & Development (World Bank)
- Islamic Bank for Development
- Nordic Development Fund
Whereas the Red Book contracts allow some elements of a project to be
designed by the Contractor, they are not suitable when most of the works are
to be designed by the Contractor, and for such projects the Yellow or Silver
Book would be more appropriate.
The Yellow Book provides conditions of contract for construction works for
which the detailed design (to satisfy Employers Requirements embodied in
the contract documents) is performed by the Contractor, and the Contractor is
paid on a lump sum basis. Originally intended for contracts involving electrical
and mechanical works and the installation of plant manufactured off-site, the
reference is removed from the title of the current edition to reflect its suitability
to any combination of civil, mechanical, electrical and/or construction works
designed by the Contractor.
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Foreword
Both the Red and Yellow Books provide that the Contract shall be
administered and the Works supervised by the Engineer who is
appointed by the Employer and named in the contract documents. The
Engineer can be an individual but is more typically a firm of consulting
engineers.
Under the older forms of Red Book and Yellow Book contracts, the Engineer
(although hired by the Employer) is required to act independently, fairly and
unbiased in the performance of his duties which include issuing instructions,
certifying payments, verifying quality compliance and determining completion.
Under these older forms of contract, the Engineer has responsibility to render
determinations of any claims for time extension or additional payment arising
from variations of and/or delays to the Works. In the event of disagreement
with the Engineers determination, an Engineers Decision is sought; and only
if the Engineers Decision is disputed can the dispute be referred to
arbitration.
Under the current editions of the Red and Yellow Books, the Engineer is no
longer independent and he is defined as being part of the Employers
Personnel, but he is still required to perform his duties fairly in accordance
with the Contract. The older Engineers Decision is replaced by provision for
a Dispute Adjudication Board (DAB). That is, if any Engineers determination
is not agreed by either of the Parties, then the dispute shall be referred to the
DAB; and only if the DABs Decision is not accepted by either of the Parties
can the dispute be referred to arbitration.
The Turquoise Book, especially for Dredging & Reclamation Works, is the
only other form of FDIC contract administered by the Engineer. Before its
publication, there was little to choose from in the way of suitable standard
forms of contract. A common international practice was to adapt the Red
Book, with inherent difficulties of doing so.
Under all other forms of FIDIC contract (described below), there is no
reference to the Engineer; the Contract is administered directly by the
Employer (unless he appoints an Employers Representative).
The Green Book Short Form of Contract is recommended for engineering
and building work of relatively small capital value (say not greater than
US$500,000) and of relatively short construction period (say not greater than
6 months) without need of specialist sub-contracts. The usual arrangement
for this contract is that the Contractor constructs the Works in accordance
with design provided by the Employer. However, it may also be suitable for
contracts which include, or wholly comprise, the Contractors design. Prior to
this publication, some of the Multilateral Development Banks used their own
short forms of contract.
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Foreword
The Orange Book for Design-Build & Turnkey was published, in 1995, at a
time when the existing Red and Yellow Books were still aimed at procurement
of civil engineering and plant installation respectively. At the time, the Orange
Book offered a clear design-build and turnkey option to the then-available
suite of contracts, for use where the Contractor carries total liability for design
as well as construction. With publication in 1999 of the new suite of contracts
(and in subsequent publications), FIDIC has focused less on the type of
project and more on the implementation of different procurement strategies. It
is now likely that an Employer requiring a design-build or turnkey project
under a FIDIC contract would adopt either the recent Yellow Book for designbuild or the recent Silver Book for Turnkey. The Orange Book can be adapted
to provide for Contractor-financing. The contract may impose a requirement
for the Contractor to operate the Works, either for a few months
commissioning period, or for some years on a build-operate-transfer basis. In
the latter case, the recent Gold Book might be more appropriate.
The Silver Book, for EPC/Turnkey Projects, is intended for the provision on
a turnkey basis of a process or power plant, a factory or similar facility, or an
infrastructure project or other similar type of development, where (i) a higher
degree of certainty of final price and time is required, and (ii) the Contractor
takes total responsibility for the design and execution of the project, with little
involvement of the Employer. Under usual arrangements for turnkey projects,
the Contractor carries out all Engineering, Procurement and Construction
(EPC): providing a fully equipped facility, ready for operation (at the turn of
the key). The Employers higher degree of price/time certainty is achieved by
the Contractor accepting a higher level of risk (no doubt reflected in his
tendered price) than is typical under most other forms of FIDIC contract. For
example, the Silver Book transfers risk of ground conditions to the Contractor.
Similarly, the Contractor also assumes responsibility, subject to some
exceptions, for the accuracy of the Employers Requirements, which is a
major difference to usual design-build contracts. However, not all risk is
transferred to the Contractor, and the Employer still retains risks for war,
terrorism and force majeure. Under a Silver Book contract the Contractor has
freedom to perform the work in his chosen manner, provided that the end
result meets the performance criteria specified by the Employer as verified by
tests on completion. Given the high level of risk to be undertaken by the
Contractor, the Employer must allow sufficient time in its procurement
program for the Contractor to obtain and consider all relevant information.
The Silver Book can be adapted to provide for Contractor-financing.
The Gold Book, for Design, Build & Operate Projects, combines the need
for a contract having a design-build obligation with a long-term operation
requirement. This DBO contract adopts a green-field scenario with a 20-year
operation period and a single contract awarded to a single contracting entity
(which will almost certainly be a consortium or joint venture) to optimise
innovation, quality and performance, rather than award separate contracts for
August 2011
8 of 9

Foreword
design-build and for operation. In its General Conditions, this contract

attempts to include all conditions of a general nature which are likely to apply
to the majority of DBO contracts. However, in recognition that DBO contracts
can vary significantly under different scenarios and objectives, FIDIC provides
guidelines and suggestions on how various issues may be addressed and
amendments made by Special Provisions.
August 2011
9 of 9
PROJECT MANAGEMENT
GUIDELINES
FOR
SUPERVISION OF
INTERNATIONAL
PART I
PROJECT ADMINISTRATION

I-1.
I-1: Start of Project
START OF PROJECT
This Chapter deals with:
o Appointment of a Head Office Supervisor who shall be available
throughout the Project to advise and support the Project Manager in the
execution of his duties.
o The necessary briefing of the Project Manager at the start of the Project,
to provide him/her with the information, documents, delegations of
authority and responsibility, and powers of attorney necessary to set up
and manage the Project.
I-1.1

The Vice President (VP) responsible for the Project shall appoint a person
who shall have ongoing responsibility to monitor and mentor LBGs services
of supervising the construction contract(s). The VP may retain that
responsibility or delegate it to another person. It is essential that the
appointed person has the time availability to support the project when
required. It is preferable that the appointed person shall have a budgeted and
reimbursable position on the Project, such as the Engineer (if the Works
Contract is administered under older FIDIC Conditions of Contract), Project
Coordinator, or a Short-term Contracts Specialist. For purposes of these
Guidelines he/she shall be referred to as the Head Office Supervisor (HO
Supervisor). A responsibility of the HO Supervisor is to be a direct contact for
the Project Manager to consult and resolve any problems that might arise
during Project execution.
I-1.2
Project Manager Briefing

At the start of his assignment the Project Manager shall be fully briefed in
regard to his duties and authorities to fulfil LBGs Terms of Reference. The
briefing shall be conducted by the HO Supervisor and/or the VP responsible.
Documents and information to be provided to the Project Manager at the
briefing should include, as further described in these following sections:
In regard to LBGs Service Contract and Administrative Procedures:
Service Contract Documents. [See Section I-1.3]
Project Organization. [See Section I-1.4]
Client / Employer Contacts. [See Section I-1.5]
LBG Representatives. [See Section I-1.6]
Staffing & Sub-consultancy Agreements. [See Sections I-1.7 & I-3.9]
Office, Living Accommodations & Transport. [See Section I-1.8]
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LBG Financial Support & Accounting Procedures. [See Section I-1.9]

LBG Administration Procedures.[See Section I-1.10]
Delegation of Responsibilities & Authorities. [See Section I-1.11]
Allowances & Per Diems. [See Section I-2.4]
A copy of these Project Management Guidelines for Supervision of
International Construction Contracts.
In regard to Construction Contracts:

Tender Documents and Tender Evaluation Reports
Works Contract Documents - if yet prepared. [See Section II-1.2]
Standard General Conditions of Contract (in hard copy or electronic form)
on which the Works Contract(s) are intended to be based, but which are
usually only referenced and not included in the Works Contract documents
(e.g. FIDIC). [See Section II-1.6]
Published Guides (in hard copy or electronic form) for the interpretation of
standard Conditions of Contract (e.g. FIDIC) on which the Works
Contract(s) are intended to be based. [See Section II-1.6]
Project Managers intended role under the Works Contract(s) (e.g. the
Engineer, Engineers Representative, Resident Engineer, etc.) [See
Section II-2.1]
Intended Delegation of Responsibilities & Authority to the Project Manager
under the Works Contract(s). [See Section II-2.2]
I-1.3
Service Contract Documents

The Project Manager should be provided with LBGs Service Contract
documents that may include:
The Clients Terms of Reference and Request for Proposals.
Pre-proposal clarifications and correspondence.
LBGs Proposal for the Project (Technical & Financial).
Pre-contract clarifications and correspondence.
LBGs Service Contract with the Client (as signed by LBG and the Client),
including final Terms of Reference.
Governing Funding Agreement between the Client and Funding Institution.
Other standard Guidelines of the Client and/or Funding Institution.
I-1.4
Project Organization
The Project Manager should be provided with:
August 2011
I-1 /2

A chart (or charts) showing the project inter-relationship and reporting lines
between the Client / Contracting Authority / Employer, LBG (and its joint
venture or consortium partners, if relevant), and sub-consultants.
The chart should show names and titles of the persons in key positions.
The Client under LBGs Service Contract might be the same as or different
from the Contracting Authority under the Works Contracts. It is possible that
LBGs Service Contract might be directly with a Funding Institution.
Under the Works Contract, the Contracting Authority who signs the Works
Contract and will pay the Contractor (called the Employer under FIDIC forms
of contract) and the Beneficiary of the Works might be different entities.
The Project Organization charts should delineate these entities, as
appropriate, according to their functions.
I-1.5
Client / Employer Contacts

The Project Manager should be provided with the names, titles, functions,
addresses and contact numbers (tel. / fax / E-mail) for key representatives of:
LBGs Client under the Service Contract.
Funding Institution for LBGs Service Contract (if different from Client).
Contracting Authority for the Works Contract.
Employer (and Beneficiary, if a separate entity) under the Works Contract.
Funding Institutions for the Works Contract.
All of this information should be included in an LBG Project Data Sheet
(PDS) prepared by the responsible VPs office, copy of which should be
provided to the Project Manager. The Project Manager should be requested
to update this PDS to reflect any changes as the project progresses.
I-1.6
LBG Representatives
The Project Manager should be provided with names, titles, functions,
addresses and contact particulars (tel./ fax / E-mail) for:
Vice President responsible.
Head Office Supervisor.
LBG contact person for medical problems and evacuations.
In-country representatives of LBG (e.g. who may have assisted LBG with
its Proposal and/or are available for advice and support). The basis of
such relationships and availability should be made clear.
August 2011
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I-1.7
Copies (sufficient for Project staff needs) of the latest pocket-book Berger
Group Directory (also down-loadable from LBG website).
Staffing & Sub-consultancy Agreements

The Project Manager should be informed of or, as relevant, provided with:
arrangements for staffing the Project (in accordance with LBGs original
Proposal or otherwise), including proposed staff of LBG, of LBGs joint
venture or consortium partners (if relevant), and of sub-consultants.
copies of any joint venture or consortium agreements.
copies of any existing or proposed sub-consultancy agreements for
provision of services or of local staff. In the event that the Project Manager
will be authorized to negotiate and/or prepare such sub-consultancy
agreements, he should be provided with standard formats.
names, titles, functions, addresses and contact particulars (tel./ fax / Email) for:
- Project representatives of joint venture or consortium partners;
- Sub-consultants (as committed in LBGs Proposal or potential).
Clients procedures for pre-approvals for mobilization of staff. Some clients
and/or funding institutions require receiving written application for each
and every staff mobilization, and will not authorize payment for the
services of staff for whom they have not given written pre-approval to
mobilize. [See Section I-2.3]
conditions of employment for project staff who are direct regular or
contract employees of LBG. This will be necessary if the Project Manager
is authorized to approve payments of per diems, living allowances,
mobilization/ demobilization, travel costs, etc. [See Section I-2.4]
I-1.8
Office, Living Accommodations & Transport

The Project Manager shall be fully informed of:
LBGs provisions (per Service Contract or otherwise) for a Project Office,
Site Offices, Living Accommodations on Site and Site Transport, and the
procedures for and extent to which the Project Manager is expected and
authorized to procure such facilities. Furnishings, equipment, operating
and maintenance should also be considered.
I-1.9
LBG Financial Support & Accounting Procedures

The Project Manager will likely receive financial support, by monthly transfer
of cash advances, from LBGs Head Office for expenses which could include,
subject to need and agreement of the responsible VP, the following:
August 2011
I-1 /4

o Procurement, operation & maintenance of Project Office & Site Offices.

o Procurement and maintenance of office equipment and furniture.
o Procurement and maintenance of communication facilities (radio,
telephone, facsimile, E-mail)
o Procurement, operation and maintenance of vehicles.
o Payment to staff of living allowances and per diems.
o Payment to staff for mobilization/demobilization, home and local travel,
visas, residence/working permits, etc.
o Salaries and payments to local staff.
o Business entertainment (in selected cases).
o Petty cash.
A cash advance for kick-starting the Project.
Arrangements or proposal for LBG banking at the Project location (where
banking is available).
Powers of Attorney for managing and, if necessary, setting up LBG bank
accounts at the Project location.
Procedures and format for requesting monthly Project cash advances.
Name, title and contact information of the LBG administrator to whom
cash advance requests are to be made.
Requirements for receipts for expenditures.
Procedures and format for submitting monthly reports and accounts of
Project expenditures.
monthly account reports are to be submitted.
If Project bank accounts are to be opened at the Project location, the Project
Manager should be informed of LBGs requirements or preferences in regard
to the banking institution itself, currencies of accounts, and who are to be
signatories for those accounts. Generally it is preferred that bank accounts
would be in LBGs name, and that the Project Manager and the responsible
Vice President (and/or his designate) will be signatories for those accounts. If
bank accounts will be in the Project Managers name, then the VP and/or HO
Supervisor shall be included as alternative signatories. For this purpose LBG
should provide a Power of Attorney to the Project Manager.
If monthly project expenditures are expected to be stable, a fixed monthly
cash advance might be determined. This arrangement is easier to administer
than a variable monthly cash advance.
August 2011
I-1 /5

If monthly expenditures will vary according to circumstance, then a format

should be decided whereby the Project Manager will estimate and submit
requests for monthly cash advance requirements. In general, requests for a
cash advance should be submitted at least 15 calendar days prior to the
beginning of the month that the cash advance is intended to cover.
I-1.10
LBG Administration Procedures

* Standard format and procedures for personal Time Sheets.
Time Sheets are to be submitted.
Standard format and procedures for personal Expense Claims.
Expense Claims are to be submitted (unless paid by Project Manager from
in-Country Project Office).
Project Numbers and sub-numbers to which time charges and expenses
are to be charged.
LBG administration contact(s) for questions or clarifications regarding
Conditions of Employment, Salaries and Benefits [see Section I-1.5].
** LBG website Login passwords.
* Client invoicing format and procedures, including records to be retained
for audit purposes.
*
The Project Manager should also check with the Client on the
acceptability of formats for Time Sheets and Invoices.
** LBGs website (louisberger.com) contains information regarding

Company Organization, Standard Forms, Employee Benefits
(Human Resources), Legal Resources, Health & Safety, Quality
Assurance, Personnel Directory, News Bulletins and past issues of
BergerWorld (LBGs quarterly theme brochure).
It is advantageous for the Project Manager to have a dedicated personal LBG
E-mail address (e.g. aname@louisberger.com), in addition to E-mail accounts
that he will set up on Site for general project communications.
The Project Manager can establish a personal LBG E-mail address by
request to dchelpdesk@louisberger.com
It is possible that personal Time Sheets required by LBG to be prepared for
salary payment purpose may be of different format than Time Sheets
prepared for Client invoicing. If this is the case, a Time Sheet format for Client
invoicing should be agreed with the Client.
August 2011
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Various Clients and/or Funding Institutions have different rules for

computation of billable Project time charges. Generally, LBGs supervision
staff are expected to work 5 or 6 days per week, as necessary to cover the
Contractors working schedule. Typically, a standard 8-hour day is applied,
whatever hours are worked in that day (i.e. no overtime). Usually Sundays,
Saturdays and Public Holidays, if worked, cannot be charged additional to
normal work days or as overtime. Most often, billable time is computed as the
proportion of a month engaged at the Project location (e.g. 18 calendar days
on location within a calendar month = 18/30 or 0.60 months). But other rules
might apply. Also, computation of time might be different for long-term and
short-term Project staff. The Project Manager should be informed of these
rules, or should be required to establish such rules with the Client. [For further
discussion see Section I-2.4 Rules for Time Charges.]
The Project Manager may be authorized to approve, and pay from Project
cash resources, Expense Claims (including subsistence allowances and/or
per diems) of LBG Project staff. Alternatively, it may be decided that Expense
Claims will be submitted to and paid by an LBG Regional or Head Office. In
this latter case, the Project Manager must be informed of the name, title and
contact information of the LBG administrator to whom such Expense Claims
are to be submitted.
The Project Manager must be briefed of his responsibilities for approving and
submitting Time Sheets and for collecting other documents required for
invoicing purposes. If Client invoicing is to be performed by the Project
Manager from the Project Office, the formats and procedures for submitting
and approving timesheets and invoices must be determined. [See Section I2.8 for further discussion.]
I-1.11
Delegation of Responsibilities & Authorities

The Project Manager should receive in writing (from the VP responsible or
HO Supervisor) the duties, responsibilities and authorities delegated to him
for administration and performance of services under LBGs Service Contract,
which will include as a minimum but not necessarily be limited to:
Management and fulfilment of services and deliverables of LBGs Service
Contract.
Accountability for LBG financial support to Project.
Administrative procedures.
Quality assurance requirements.
Interface with Client and Funding Institution.
Authorities (if any) for preparing and signing Service Contract addenda
and subcontracts.
August 2011
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Administration of subcontract agreements.

Employee administration.
Internal LBG reporting requirements.
Formal written Powers of Attorney, for the Project Manager to act on behalf of
LBG, should be provided as necessary.
It must be noted that the duties, responsibilities and authorities delegated to
the Project Manager for his administration of LBGs Service Contract are quite
separate from duties, responsibilities and authorities delegated to him as the
Engineer, Engineers Representative or other designated member of the
Engineers staff under the Works Contract between the Employer and
Contractor. [See Sections II-2.1 & II-2.2 for further discussion.]
August 2011
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Project Management Guidelines
I-1: START OF PROJECT - CHECK LIST

Guideline
I-1.1
I-1.2
I-1.3
I-1.4
I-1.5
I-1.6
I-1.7
I-1.8
I-1.9
I-1.10
I-1.11
Requirement
Provide to Project Manager at PROJECT BRIEFING:
Service Contract Documents:
Client's TOR & Request for Proposals
Pre-proposal clarifications & correspondence
LBG Proposal (Technical & Financial)
Pre-contract clarifications & correspondence
LBG Service Contract
Governing Funding Agreement
Standard Guidelines of Client and/or Funding Institution
Project Organization:
Organization chart(s)
Names/titles of Key Personnel
Client/Employer Contacts & coordinates:
Contracting Authority & Beneficiary for LBG Service Contract
Funding Institution for LBG Service Contract
Contracting Authority & Beneficiary for Works Contract(s)
Funding Institution(s) for Works Contract(s)
LBG Representatives (names/titles/coordinates):
VP responsible
Head Office Supervisor
Contact person for medical problems & evacuations
In-country representatives
Berger Group Directory
Staffing & Sub-consultancy Agreements:
Joint Venture or Consortium Agreement (if applicable)
Sub-consultancy Agreements
Project staffing arrangements
Procedures for staff mobilizations
Conditions of employment for LBG Project staff
Office, Living Accommodation & Transport:
LBG provisions & procedures
Project Manager's authority for procurement
LBG Financial Support & Accounting Procedures:
Project kick-off cash advance
Arrangements for Project banking
Power of Attorney for Project Manager for Project banking
Procedures for monthly Project cash advances
Person(s) to receive Project cash advance requests
Requirements for expenditure receipts
Procedures and format for submitting Project monthly accounts
Person to receive monthly reports of Project accounts
LBG Administration Procedures:
Project Numbers for Time Sheets & Expense Claims
Standard format & procedures for submitting Time Sheets
Person(s) to receive Time Sheets
Standard format & procedures for submitting Expense Claims
Person(s) to receive Expense Claims
Person to consult on employment conditions, benefits, problems
Access to LBG Website
Delegation of Responsibilities & Authority (to Project Manager):
Interface with Client & Funding Institution
Management & services under Service Contract
Preparing/signing Service Contract Addenda
Administration of Subcontract Agreements
Preparing/signing Subcontract Agreements/Addenda
Financial accountability & reporting
Administrative procedures
Quality assurance
Internal LBG reporting requirements
Check
Comment
August 2011

I-2.
I-2: Management of
Service Contract
MANAGEMENT OF SERVICE CONTRACT

This Chapter provides guidelines for managing LBGs Service Contract in
respect of:
o Familiarization with the Service Contract documents.
o Organization and planning project services to comply with LBGs Terms of
Reference for LBGs services.
o Staffing and Sub-consultants.
o Contract budget management and invoicing for services
Service Contract means the written Contract between LBG and its Client,
under which LBG provides its services to the Client and is paid by the Client.
I-2.1
Review & Clarification of Service Contract Documents

At Commencement of his assignment the Project Manager shall perform a
detailed review of the Service Contract Documents which might include:
Clients Terms of Reference.
Pre-proposal clarifications.
LBGs Proposal for the Project.
Pre-contract clarifications.
LBGs Services Contract with the Client, including any Memoranda of
Understanding and final Terms of Reference.
Governing Funding Agreement between the Client and Funding Institution.
Other Guidelines of the Client and/or Funding Institution (which might
affect administrative or billing procedures).
The purpose of this review will be for the Project Manager to:
o become fully conversant with the services to be provided under LBGs
Service Contract, including time plan, milestones, staffing, reporting
requirements and deliverables;
o become fully conversant with the Contract budget for the services and with
billing procedures;
o identify any contradictions that might exist between the documents, or
other matters needing clarification.
The Project Manager shall report to the HO Supervisor (with copy to the
responsible Vice President) any apparent or discovered contradictions
between the various Service Contract documents, or other matters needing
clarification.
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I-2: Management of
Service Contract
If these matters cannot be resolved internally, the Project Manager and HO

Supervisor (and, if necessary, the responsible VP) will decide upon and
implement the manner of obtaining clarification and agreement with the
Client.
I-2.2
Milestones & Reporting Requirements

From his review of the Service Contract documents, the Project Manager will
determine the schedule of the Projects service phases, including any
milestone dates for deliverables. Such plan may have been included in LBGs
Proposal, but must be updated, and expanded in detail, to reflect current
circumstances that may differ from assumptions made at Proposal time.
The schedule (in bar chart form) should include, as relevant, time allotments
and milestones for:
Preparation and submission of Inception Report.
Preparation and submission of Quality Assurance System /Programme
[see Section II-2.12 Quality Assurance & Control].
Submission of periodic Progress Reports (monthly, quarterly, etc.).
LBG site investigations and design functions.
LBG design reviews and preparation/submission of design review reports.
LBG review of Works Contract Tender Documents.
LBG compilation of Works Contract Tender Documents.
LBG preparation of Works Contract cost estimates (Engineers Estimates).
Assisting the Employer in pre-qualifying contractors.
Assisting Employer at pre-Tender meetings and site visits.
Assisting the Employer in soliciting and evaluating contractors Tenders for
the Works Contract(s); including answering contractors queries during the
Tender Period and preparing any necessary addenda to the Tender
Documents.
Preparation of Tender Evaluation Report(s).
Assisting the Employer in any pre-Contract negotiations.
Compilation of Contract Documents, and assisting the Employer in the
award of Works Contract(s).
Commencement Date(s) of Works Contract(s).
Any pre-construction design functions of the Contractor(s), and any LBG
responsibilities for review of Contractors design.
Any phased construction milestone dates.
Any formal training of counterpart staff.
August 2011
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I-2: Management of
Service Contract
Environmental monitoring and preparation/submission of Environmental

Mitigation reports.
Project performance data collection and preparation/submission of Project
Performance Monitoring reports.
Time(s) for Completion of Works Contract(s).
Preparation and submission of Interim Payment Certifications at
Completion (after issuing Taking-Over Certificates).
Preparation and submission of Post-construction Reports (e.g.
Construction Completion Report, Construction Cost Summary Report,
Report on Contractors Performance, etc.).
Preparation and submission (or review) of Operating & Maintenance
Manuals.
Preparation and submission (or review) of As-built Drawings.
Services during each Works Contracts Defects Notification Period
(Defects Liability Period under older forms of FIDIC contract).
Final Payment Certifications at end of Defects Notification Periods.
Contract Summary Report(s) at end of Works.
Final Report at end of Service Contract.
Against this schedule the Project Manager should apply the budgeted time
(per Service Contract) of the intended Project staff in order to:
Establish intended mobilization and demobilization dates for Project staff
and sub-consultants.
Confirm the sufficiency of budgeted Project staff provisions.
The Project Manager should send a copy of this schedule (with comments
and recommendations) to the HO Supervisor and the responsible VP. In case
of conflicts with provisions of the Service Contract, the Project Manager and
HO Supervisor (and, if necessary, the responsible VP) will decide upon and
implement the manner of resolving such conflicts with the Client.
The above process should be completed before finalization of any Inception
Report to be submitted to the Client [see Section I-2.5].
I-2.3
Rules for Staff Mobilization

The Project Manager must be cognisant of any Service Contract provisions
for obtaining Client pre-approvals of Project staff mobilizations. If not clear
under the Service Contract, the Project Manager should establish with the
Client rules to be followed for:
August 2011
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I-2: Management of
Service Contract
Clients pre-approvals required of the candidature of proposed Project

staff substitutions and replacements, including staff of sub-consultants (i.e.
staff different from those designated in LBGs Proposal).
[There might be provision in the Service Contract that substitutions or
replacements of key staff named in the Proposal, even if accepted by the
Client, may be subject to approval and/or a fee reduction.]
Clients pre-approvals required of mobilizations of individual Project staff

(even though they may have been named in LBGs proposal accepted by
the Employer, or are substitutions approved by the Employer).
Eligibility of time charges for off-site staff services (e.g. home country
Project staff services for, say, Project overview, design and/or design
reviews, technical support, construction claim determinations.), and if
Client pre-approvals are required.
Client pre-approvals required for extension of budgeted (per Service
Contract) time allotments for designated Project staff positions and/or
categories.
Client requirements for end-of-mission reports of Short-term Experts to
justify eligibility for payment.
Procedures necessary to amend the Service Contract in respect of staff
changes and/or budgeted staff time allotments.
Some Clients and/or Funding Institutions might decline payment for Project
staff services provided without or prior to the Clients written approval of
mobilization. Funding Institutions might not permit retroactive Client approvals
of staff mobilizations. Therefore it is important that such rules be established
or clarified (as necessary) in writing. Equally, so as to maintain an audit trail,
LBG applications (normally by the Project Manager) for staff changes and
mobilizations must be in writing, and staff mobilizations should not be effected
until the Clients written approval has been received.
I-2.4
Rules for Time Charges & Reimbursable Expenditures

Time Charges
The rules for computation of Project staff time charges (that will be eligible for
payment by the Client) might not be stated in the Service Contract; and if they
are, they are often open to interpretation. In order to avoid disagreement or
dispute with the Client (which might arise in retrospect following an audit), the
Project Manager must establish the rules with the Client at the beginning of
the Project; preferably before any Time Sheets or invoices are submitted to
the Client.
Various Clients and/or Funding Institutions have different rules for
computation of billable Project time charges. Generally, LBGs supervision
August 2011
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I-2: Management of
Service Contract
staff are expected to work 5 or 6 days per week, as necessary to cover the
Contractors working schedule. Usually a standard 8-hour day is applied,
whatever hours are worked in that day (i.e. no overtime). Sundays, Saturdays
and Public Holidays might not be chargeable, even if worked, without prior
approval of the Client. Billable international travel time may be restricted.
Sometimes billable time has to be computed as the proportion of a month
engaged at the Project location (e.g. 18 calendar days on location within a
calendar month = 18/30 or 0.60 months). Alternatively, under different rules a
full month may be eligible if a total of 22 days have been worked in that
month; and a part month is computed from the eligible work-days worked
(e.g. 18 days worked on location = 18/22 or 0.82 months). The methods of
computing time charges might be different for long-term and short-term
Project staff; and these may need to be defined.
Also, it cannot be assumed that the same interpretation of time computation
rules of any one Funding Institution will be consistently applied from one
country to another. The rules may be interpreted differently from one incountry agency to another. The time computation rules need to be
established for each project.
In establishing these time computation rules, the Project Manager should
check that either they comply with or can be accommodated within the
requirements of any in-country legislation concerning the employment of local
staff, either directly or through sub-consultants.
An example of the clarification of rules, as agreed with the Client for a
previous project, is presented in Appendix A.
It may be expedient to submit for the Clients approval at the end of each
month the staff time sheets and, based thereon, a summary of the
computation of the Project staff time for that month. Thus, with the Clients
approval in hand, there should be no disagreement with LBGs subsequently
submitted invoices for services. This may be particularly advisable when
invoices will significantly post-date time sheets, such as when invoices are
due quarterly. An example of such client-approved Project staff time summary
is presented in Appendix D.
The same rules imposed by the Client for computation of Project staff time
should also be followed by the Project staff (including consortium partners
and sub-consultants) in their internal time sheets for salary payment purpose.
Living Allowances & Per Diems
Similarly, rules for charging (to the Client) per diems and monthly living
allowances are not consistent from project to project. A monthly Living
Allowance for long-term staff (sometimes referred to as Accommodation
August 2011
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I-2: Management of
Service Contract
and/or Subsistence Allowance) may be chargeable only for the periods when
a consultant is engaged at the Project location (i.e. excluding while on
vacation); or alternatively the allowance may be chargeable for the whole
period of assignment including vacation time. Per diems might be chargeable
only if an overnight stay is involved. Amounts of allowances and per diems
may differ for different locations of a multi-contract project. These rules need
to be established with the Client for each project.
An example of the clarification of rules, based on a previous project, is
presented in Appendix A.
Unless otherwise established by LBG employment contracts or other
agreements, LBG employees should receive the amounts of allowances and
per diems that will be invoiced to the Client according to the computation
rules imposed by the Client.
On some projects, allowances and per diems are included in LBGs Service
Contract charge rates for the Project staff and are not, therefore, separately
chargeable to the Client. In this case, internal LBG rules must be established
for payment of allowances and per diems to Project staff (which should be
reflected in their respective employment contracts).
Travel / Mobilization Allowances or Expenditures
If billable under the Service Contract, but not clearly described therein, the
Project Manager should clarify with the Client the basis and rules for travel
and mobilization/demobilization expenditures, and confirm them in writing.
Either the allowances in LBGs Proposal or the actual costs (which may be
restricted to the maximum limit of the Proposal allowances) might be
chargeable.
The Project Manager should establish such particulars as:
Restrictions on air line carriers (e.g. US carriers only).
Restrictions on air travel class (usually economy only).
Home base limitations (e.g. travel cost might only be eligible from
countries of eligible citizenship).
Restrictions on train travel class.
Eligibility of other transport modes.
Requirements for air travel receipts and/or ticket stubs as back-up to
invoices (e.g. original boarding passes may be required).
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I-2: Management of
Service Contract
Other Reimbursable Project Expenditures

The Service Contract may include procurement of any manner of equipment
and vehicles for the Client, or for LBGs use during the Project but which
become the Clients property at the end of the Project.
The Client or Funding Institution might have specific procurement rules such
as:
Funding Agency restrictions on sources of purchase or of manufacture
arising from Tied Aid or embargos of the donor country.
[Tied Aid means foreign aid that must be spent in the country providing the
aid or in a group of selected countries. Thus, Untied Aid has no geographical
limitations - other than embargos that the funding agency may be enforcing.]
Requirements to:
- first submit and obtain Client approval of procurement specifications;
- obtain a minimum number of quotations;
- submit an evaluation of the quotations and receive the Clients
approval before committing to the purchase.
Requirement to provide a Certificate of Origin as well as receipts for the
purchases.
In order that LBG will be reimbursed for such expenditures, the Project
Manager must obtain, in writing, any necessary clarification of procurement
rules and follow them rigidly.
I-2.5
Inception Report
An Inception Report is typically required by the Terms of Reference (TOR) to
be prepared and submitted to the Client within, say, one to three months after
commencement of the Consultants services. Any format and detail of the
Inception Report specified in the TOR must be complied with. Alternatively, if
not specified in the TOR, the Project Manager should ascertain if the Client
has a required format. A purpose of the Inception Report is to demonstrate
the Consultants understanding of the Project, by describing his start-up
actions and plans to fulfil the Project objectives. In general the Inception
Report should:
Summarize the Project background, objectives and status.
Summarize the background and purpose of LBGs Service Contract.
Provide a Project Organization showing reporting lines and interface
between the Funding Institution(s), Client, Consultant (LBG), Subconsultants, site offices and contractors.
Describe LBGs mobilizations of Project staff, facilities and equipment (to
date and projected to anticipated demobilization).
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I-2: Management of
Service Contract
Describe LBGs activities (to date and projected) until the end of the
Service Contract.
Summarize the status of preparations for or execution of the Works
Contract(s).
Provide a Project schedule for the Works Contract(s) and LBGs activities.
An Inception Report also provides the opportunity to identify:

o Changes in Project objectives, scope or plans since the time of LBGs
Proposal.
o Consequential changes in the Clients Terms of Reference and
requirements for amendment of LBGs scope and/or schedule of services.
o Anticipated problems which could affect LBGs scope and/or schedule of
services.
Even though an Inception Report may not be required by the Client, it shall be
prepared by the Project Manager; incorporated, say, as a combined
Inception & (first) Progress Report. After review and approval of the HO
Supervisor, it should be copied to the Funding Institution(s), Client, and LBGs
responsible VP and HO Supervisor. Thus, it will serve to give confidence to
LBGs head office management, as well as to the Client, that the Project
Manager understands the Project requirements, and that his actions and
plans will meet those requirements.
An example of a Table of Contents for an Inception Report, prepared for a
previous project, is presented in Appendix B.
I-2.6
Management of Service Contract Budget

The Project Manager must maintain a detailed and up-to-date record of
expended (and as-invoiced) monthly and accumulative Project staff
time/rates/amounts and other Project reimbursable allowances and
expenditures, and monitor these amounts against budgeted items of the
Service Contract and against amounts invoiced to and received from the
Client.
This continuous exercise is essential to:
Monitor performance against the Project schedule and deliverables.
Provide early warning of not being able to perform necessary services
within Contract budgets, in which case the involvement of the HO
Supervisor and responsible VP will be required.
Monitor Project staff time expenditures for each budgeted staff position
and/or category, and thereby identify (well in advance) requirement either
for staff demobilizations or Service Contract amendments for budget
extensions or reallocations. [This is particularly important when Project
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I-2: Management of
Service Contract
staff are entitled to minimum notice (usually 1 month) of termination of

assignment.]
Identify any non-full (short) payments by the Client, which may have
arisen from error, misunderstanding, disagreement or dispute. If resolution
cannot be achieved by the Project Manager directly with the Client,
involvement of the HO Supervisor or responsible VP will be necessary.
Monitor if Client payments are made in due time (per Service Contract)
and, if not, to notify the HO Supervisor and responsible VP to determine
what actions LBG will take. LBG may be contractually entitled to interest
on late payments and might decide to invoice the Client therefor.
An example of the format for monitoring the Service Contract budget is

presented in Appendix C.
A recurring problem on Service Contracts for construction supervision arises
when Extensions of Time for Completion of Works Contracts are granted, for
which an unbudgeted extension of supervision services is required. It may be
that a Funding Institutions budget for the construction supervision services is
limited, and the Client has to find other sources to finance the cost of
extended services. Alternatively, the Funding Institution might decline to fund
additional costs arising from an Extension of Time attributable to the
Employers delay of the Works Contract. A similar problem might arise if the
Time Extensions exceed the Funding Institutions time deadline for
disbursement of its funds for construction supervision.
Another problem can arise when the Contractor, due to his slow progress, is
required to increase his rate of progress of the Works in order to achieve their
completion within the Time for Completion. This may entail working on more
construction fronts, and/or increasing working hours from those anticipated in
the Works Contract (e.g. working most weekends and nights). In any such
circumstance LBG might not be able to provide an adequate level of
supervision without increasing either the normal working hours of its existing
supervision staff or the number of supervision staff and, thereby, requiring a
budget extension for provision of supervision services. [It may be possible for
the Employer to recover such additional supervision costs from the
Contractor; see Section II-4.9 Contractors Slow Progress, Additional
Working Hours]
The Client should be advised well in advance of impending insufficiencies in
the Service Contract budget for supervision services. The Project Manager
should prepare and, subject to HO Supervisors agreement, submit to the
Client estimates of the costs of required extensions of services, and request
that the Client prepare Service Contract addenda (or new contracts) to
facilitate LBGs extension of services.
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I-2: Management of
Service Contract
The Project Manager must similarly monitor the time/rates/amounts of Project

staff of LBGs Sub-consultants against the budgetary provisions of Subconsultancy Agreements, so as to be able to recommend or implement
extending addenda to those Sub-consultancy Agreements. A situation must
not be allowed to develop where Sub-consultant staff services are allowed to
continue beyond the budgetary provisions of LBGs main Service Contract,
whereby LBG would become obligated to pay for Sub-consultants services
for which LBG is unable obtain payment from the Client under the main
Service Contract. The Project Manager must keep the Sub-Consultants
representatives fully informed of planned demobilizations of their Project staff
with sufficient notice thereof in accordance with terms of the Sub-consultancy
Agreements.
I-2.7
Amendments to Service Contract

The terms and conditions of the Service Contract cannot be changed except
by formal Contract Addenda signed by the Parties to the Contract (and
endorsed by the Funding Institution, if required) or, for minor amendments, by
other formal procedures (e.g. a Contract Side Letter) specified in the
Contract documents or the Clients or Funding Institutions Guidelines for
Service Contracts.
Amendments to the Terms of Reference, Conditions of Contract, Contract
time period or expiry, Contract budget or other financial terms, and payment
terms invariably require a Contract Addendum.
Minor amendments that might be permitted by other specified procedures
may include such changes as: change of address, change of Project staffing,
and Contract budget reallocations that do not change the overall Contract
budget.
The Project Manager must consult with the Client and, where necessary, the
Funding Institution to ascertain what procedures (Addenda, Side Letters, etc.)
are required for various types of changes to the Service Contract. Prior to
discussing this issue with the Client or Funding Institution, the Project
Manager must obtain, read and become familiar with the Clients or Funding
Institutions Guidelines for Service Contracts (if any). Consultants are
expected to know such Guidelines.
It often happens that, as a Project develops, the scope of the Clients
requirements for services will change from the original Contract Terms of
Reference. For example, the Client may request design services not specified
in the original Terms of Reference. Under such circumstance that could affect
LBGs professional liability or ability to remain within Contract budget, the
Project Manager must formally request a Contract Addendum, and not
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I-2: Management of
Service Contract
proceed with provision of the additional services without the Clients written
undertaking that he will sign the necessary Addendum.
The Project Manager should be particularly careful when the Client is a dual
entity (e.g. Contracting Authority and Beneficiary). The Beneficiary, who is
technically orientated, might well request additional or different technical
services without considering Service Contract implications, and without
referring to the Contracting Authority whose signature would be required to
the necessary Addendum. The Project Manager must ensure by written
communications to/from the Contracting Authority (copied to the Beneficiary)
that the Contracting Authority agrees to the amended services and terms, and
will sign an Addendum. Approval might also be required of the Funding
Institution (if any), whose endorsement of an Addendum will be necessary.
The Project Manager should also be careful to comply fully with the Contract
Terms of Reference. Contracted services or deliverables cannot be changed
or omitted without a Contract Addendum. For example, omission of
contracted services or deliverables, based on the Beneficiarys informal
advice that he no longer requires them, might affect LBGs entitlement to
certain payments under the Service Contract unless an Addendum has been
effected.
The Project Manager must ensure that any of LBGs Consortium and/or Subconsultancy Agreements that are affected by amendments to the main
Service Contract are amended accordingly.
I-2.8
Invoicing for Services

General Requirements
Unless LBGs Service Contract stipulates otherwise, LBGs invoices for
services shall be submitted to the Client not less often than monthly.
If an Advance Payment is permitted under the Service Contract, then it must
be claimed through an invoice whether together with or separate from
service fees. [See further comments below.]
Client invoicing might be performed off-site by LBGs Regional or Head
Office, or by the Project Manager from the Project Office. Typically, invoices
(together with back-up material) will be prepared by the Project Manager onsite, then forwarded to LBGs Regional or Head Office for checking and
onward transmission to the Client. The Project Manager must be briefed of
his responsibilities for preparing and submitting Client invoices.
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I-2: Management of
Service Contract
If Client invoicing is to be performed by the Project Manager from the Project

Office, the Project Manager must determine, with the Client, the procedures
and format for invoicing. Experience shows that almost nothing will frustrate a
Client more than the Consultants inability to invoice on time, accurately and
with full supporting records, justifications and receipts. If the Consultant
cannot invoice properly for his own services, the Client may well wonder if he
is reliably able to manage Interim Payment Certifications of far greater value
for the Works Contracts.
Subject to the Clients requirements for supporting documents, each invoice
should be submitted:
in as short a time as is practicable after the end of the period to which the
invoice applies (say, within 10 days);
together with a Project Staff Time Summary for the invoice period, and
supporting time sheets;
together with full and complete supporting Client authorizations (if
relevant), receipts, vouchers, etc.
Each invoice shall state:
Name and address of person/organization receiving the invoice.
Invoice date the date the invoice will be submitted.
The Clients Service Contract number and title to which the invoice relates.
Invoice number this should contain LBGs project number and a
sequential invoice number (e.g. BQ147 /3).
Billing Period (e.g. Period ending 29 February 2004).
Advance Payment and Repayment thereof (as appropriate).
Gross amount of invoice.
Retention if any.
Net amount of invoice gross amount less retention.
Payment due date (in accordance with the Service Contract);
Complete particulars of LBGs bank account to which payment is to be
made.
Each invoice should be submitted together with:
A Contract Financial Status (corresponding with the end of the invoice
period) showing against all budget items:
- accumulated charges to end of previous invoice period;
- accumulated charges to end of current invoice period;
- Contract budget amounts;
- Budget remaining.
A Summary of LBG Invoices showing:
- submission date for each invoice;
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I-2: Management of
Service Contract
payment due date (according to Contract) for each invoice;

date of payment by Client for each invoice;
gross amount, retention and net amount of each invoice;
payment received in respect of each invoice;
cumulative amount of all invoices submitted;
cumulative amount of all payments received.
Copies of each invoice shall be distributed, in its entirety, to:

the VP responsible;
the LBG office responsible for financially administering the project (if
different than that of the VP responsible the VP responsible must advise
the Project Manager);
An example of an invoice and supporting documents is presented in
Appendix D.
Advance Payment
The Service Contract will usually have provision for an Advance Payment of
specified amount, and contract terms for its progressive repayment as
deductions in LBGs invoices for services. An Advance Payment Security,
from a bank or financial institution acceptable to the Client, will inevitably be
required to be submitted to the Client before LBG can invoice for the Advance
Payment. The form and wording of the required Security will likely be included
in the Service Contract documents. The Security entitles the Employer, in the
event of LBGs default under the Contract, to reimbursement from the surety
of that part of the Advance Payment remaining to be repaid by LBG to the
Client.
It is desirable that the Advance Payment be received as soon as possible at
the beginning of the Contract, for which purpose the Project Manager shall:
Request LBGs HO Supervisor to obtain (or make arrangements to obtain)
an Advance Payment Security in the required form, wording and amount,
and to courier the Security:
either (a) to the Project Manager for onward transmittal to the Client;
or
(b) directly to the Client with copy to the Project Manager.
Check that the Security is in the correct form, wording and amount.
Submit the Security to the Client under a covering letter requesting his
written acceptance.
Submit an invoice (usually the first) to the Client for the Advance Payment
together with, as supporting documents, copies of the LBGs submission
letter and the Clients acceptance letter.
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I-2: MANAGEMENT OF SERVICE CONTRACT - CHECK LIST

Guideline Requirement
I-2.1
Review & Clarification of Service Contract Documents:
Become familiar with:
Client's Terms of Reference
Pre-Proposal clarifications
LBG's Proposal for Project
Pre-Contract clarifications
LBG Service Contract with Client
Governing Funding Agreement between Client/Funding Institution
Other Guidelines of Client/Funding Institution
Identify & clarify any contradictions between documents
I-2.2
Milestones & Reporting Requirements:
Prepare bar chart time schedule of necessary Project activities, e.g.:
Prepare/submit Inception Report
Prepare/submit Quality Assurance System /Programme
Prepare/submit periodic Project Progress Reports
LBG site investigations & design functions
LBG review of design & Works Contract(s) Tender Documents
Prepare/submit Design Review Reports
Prepare cost estimates for Works Contracts
Pre-qualification of Contractors
Compilation of Works Contract(s) Tender Documents
Services for Works Contract(s) Tender Period & Evaluation Report
Compilation of Works Contract(s) Documents
Works Contract(s) award(s)
Works Contract(s) Commencement Date(s)
Pre-construction design functions of Contractor(s)
Phased construction milestone completion dates
Formal training of counterpart staff
Environmental monitoring & Environmental Mitigation Reports
Project Performance Monitoring: Data collection & reports
Time(s) for Completion
Prepare/submit As-built Drawings
Prepare/submit Operating & Maintenance Manuals
Payment Certificates & Reports after Taking-Over Certificates
Services during Defects Notification Period(s)
Final Payment Certificate(s)
Prepare/submit End-of-Project Report(s)
I-2.3
Rules for Staff Mobilization:
Establish rules & procedures with Client
I-2.4
Rules for Time Charges & Reimbursable Expenditures:
Establish rules & procedures with Client for:
Project staff time charges
Living allowances & per diems
Travel/mobilization allowances or expenditures
Other Reimbursable Project expenditures
I-2.5
Inception Report:
Prepare & submit
Management of Service Contract Budget: (ongoing)
I-2.6
Establish spreadsheet format for recording & monitoring
I-2.7
Amendments to Service Contract:
Monitor necessity arising from:
Changes in scope of Services
Service Contract Budget needs
Invoicing for Services: (ongoing)
I-2.8
Establish format & procedures
Check
Comment
August 2011

I-3.
I-3: Project Set-up & Execution
PROJECT SET-UP & EXECUTION

This Chapter provides guidelines for setting up and maintaining effective and
efficient practices for project execution, in respect of:
o Formal and informal communications with the Client, funding institutions,
sub-consultants and contractors.
o Correspondence management and an effective document control system.
o Records of meetings and preparation of Project reports.
o Management of sub-consultants.
o Computer facilities & maintenance.
o Records for emergency.
o Confidentiality.
o Technical resources.
There are proprietary software packages available for managing many
aspects of construction projects, generically described as Management
Information Systems (MIS), which include capabilities for developing a Work
Breakdown Structure (WBS) and project database, document control and
tracking, monitoring and presenting physical and financial progress, work
variations, critical path scheduling, etc. These Guidelines do not comment
upon such software systems. The purpose of these Guidelines is to
recommend good practices by which effective project management can be
achieved whether by manual or software systems.
In this Chapter, recommendations are given for correspondence identification
and establishment of Work Breakdown Structures to facilitate document
control and efficient retrieval. Documents can be stored manually (as hard
copies in file folders), or as a digital database but both require diligence to
be effective. A purely manual system of project files will entail duplication of
many documents and, therefore, require sufficient office space to
accommodate the files. A digital database will require a large volume of digital
scanning. Also, the effectiveness of a digital database for document retrieval
will only be as good as its WBS, subject codes or key word identification.
Recommendations given herein should foster effective management whether
by manual or digital systems, or a combination of both.
I-3.1
Formal Communications
This Section, and Sections I-3.2, I-3.3 & I-3.4, deal with formal
communications for the Project Managers management of the Service
Contract, Sub-consultancy Agreements and Works Contract(s), which must
August 2011
I-3 /1

be in writing (i.e. by letter). Informal E-mail communications are discussed

under Section I-3.5.
Formal communications should, except under exceptional circumstances, be
between the designated, authorized representatives of the parties of the
respective contracts.
All LBGs written communications should bear:
The full address of the intended recipient party.
The representative of the recipient party and his Project title.
(Attention: Mr/Ms.., Title).
The Contract Title and Subject of the letter.
Example: Reference: Service Contract number and title
Subject: .. [see below]
Example: Reference: Works Contract number and title
Subject: .. [see below]
The date of the letter.
A unique LBG file number for the letter.
[See Section I-3.3, Correspondence Identification]
The parties to whom the letter and any attachments have been copied.
Example: cc*: A.Smith, Title, IBRD
cc: A.Jones, Title, LBG, Panama
* with attachments
It is preferable to confine letters to single subjects. If a multi-subject letter is
written, then all subjects should be included in the letter title.
Subjects: 1 ...
2
This practice will thereby facilitate future file searches of the Correspondence
Registers [see Section I-3.4], or by key word searches of a digital control
system. The text of the letter should then be subdivided under subject
headings. Text should not ramble from one subject to another.
In cases where it is prudent to develop and present a data base for a subject
(such as all communications relating to a Contractors particular claim), it is a
useful practice to list previous correspondence on the subject matter of the
letter, at the top of the letter (after Subject).
Example: Previous Correspondence:
Letter ref./ date / Contractor to Engineer
Letter ref./ date / Engineer to Contractor
Letter ref./ date / Engineer to Employer
Letters should contain:
An introductory paragraph stating the reason for the letter.
August 2011
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The beef of the letter.

Concluding paragraphs stating the conclusion, notification, proposed
action, or required action of the recipient (as appropriate).
If LBGs letter is in response to another partys communication it should:

Refer to the previous communication.
Example: We respond to your letter ref.(number) dated
Example: We respond to your verbal request by (name) on (date)
The person signing the letter should do so under his official Project title
(under the relevant contract):
Yours faithfully / sincerely,
Signature
Persons title
[see below]
Regarding LBGs Service Contract
All LBGs formal communications with the Client must be in writing
i.e. by formal letter. For expedition, the letters may be first transmitted
as an E-mail attachment or by Fax, but must always be delivered in hard
copy (with original signature) as soon as possible thereafter, preferably
against receipts.
A typical manner of obtaining receipts would be to
RECEIVED BY:
Party Date Initial
stamp a copy of the front page of the letters, and
request the recipient to initial/date them. These
receipt pages should then be kept on LBGs Project
files. Such receipt system will obviate any disputes
over the actual delivery or date of delivery of formal
notices or applications for approval for which time is of contractual essence.
LBG letters from the Project Office to the Client should be signed only by or
on behalf of the Project Manager. Letters can only be signed on behalf of the
Project Manager by a designated person to whom the Project Manager has
delegated such authority in writing to the Client (for example when the Project
Manager is on leave). The manner of signing would be:
Yours faithfully / sincerely
Signature..
Name..
Project Manager
August 2011

Signature..
Name..
Persons title..
On behalf of
Name..
Project Manager
I-3 /3

Contractually significant letters to the Client concerning the Service Contract

must be copied to the LBGs HO Supervisor.
LBGs letters to the Client under the Service Contract should be copied to the
Funding Institution if in response to Clients letters that also were copied to
the Funding Institution; or otherwise at the Project Managers discretion,
depending on the importance of the communication.
Regarding JV or Consortium Contract &
Sub-consultantancy Agreements
LBG letters from the Project Office to LBGs JV or Consortium partners, and
to Sub-consultants, should be signed only by or on behalf of the Project
Manager. Letters can only be signed on behalf of the Project Manager by a
designated person to whom the Project Manager has delegated such
authority. The manner of signing should be as above for LBGs Service
Contract.
Contractually significant correspondence should be copied to the HO
Supervisor, but should not, except under exceptional circumstances, be
copied to the Client and/or Funding Institution.
Regarding Works Contract(s)
All forms of FIDIC contract require that the giving or issuing of approvals,
certifications, consents, determinations, notifications and requests shall be in
writing. The older Red Book says nothing more than that. The older Yellow
Book defines written as any hand-written, type-written, or printed
communication, including telex, cable and facsimile transmission. The recent
Red and Yellow books prescribe that such communications shall be delivered
by hand (against receipt), sent by mail or courier, or transmitted by any of the
agreed systems of electronic transmission stated in the Appendix to Tender.
Thus, FIDIC permits electronic transmission of formal communications only if
such agreed system is stated in the Contract (Appendix to Tender). Otherwise
formal communications between the Parties and the Engineer should be in
writing and delivered by hand (against receipt) or sent by mail or courier.
Nevertheless, even if electronic transmission is permitted, it is recommended
that any formal communication shall be followed by delivery, in hard copy
against receipt, of the original signed letter. The form of receipt could be as
suggested in the sub-section above in respect of the Service Contract. Such
receipt system will obviate any disputes over the actual delivery or date of
delivery of formal communications for which time is of contractual essence.
The signatory of LBGs letters to the Contractor(s) or Employer will depend on
the complexity of the Project and LBGs delegation of authorities [see Section
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II-2.1 Appointment of the Engineer & Section II-2.2 Engineers Delegation of

Duties & Authorities]. The Project Manager might be designated as the
Engineer or Engineers Representative for the Works Contract(s), in which
case he should sign all formal Works Contract communications under that
title. On a multi-contract project, where LBG has a supervising Resident
Engineer at each of the Site Offices, the Resident Engineer can sign (under
that title) only communications for Works Contract functions that he has been
specifically delegated authority by the Engineer or Engineers Representative.
Letters from LBGs Project Office should be copied to the Resident Engineer
at the Site Office, and vice versa.
Thus the manner of signing would be:
Signature..
Name..
The Engineer
(or Engineers Representative)
(or Resident Engineer)

Signature..
Name..
Persons title..
On behalf of
Name..
The Engineer
(or Engineers Representative)
(or Resident Engineer)
LBG communications to the Contractor must be addressed to the person

formally appointed by the Contractor under the Works Contract, as the
Contractors Representative who is authorized to act on behalf of the
Contractor. [see Section II-2.4 Contractors Representative]
LBG letters to the Contractor of technical or contractual significance should
be copied to the Employer. For some projects it may happen that the
Employer, as defined under the Works Contract, is a Contracting Authority
administratively separate from the Beneficiary of the Works. For example
(hypothetically), a governments Ministry of Transport might be the
Contracting Authority (who also pays the Contractor), but the National Roads
Agency might be the beneficiary who is responsible (under the Works
Contract) for technical direction and approvals. Under such circumstance, the
Project Manager should agree with the Employer what types of
correspondence will be copied to each entity. For example, the Contracting
Authority may only be interested in contractual and financial issues, but not in
day-to-day technical matters [also see Section II-1.3 for Employer &
Contracting Authority]. Copies should not be sent to the Funding Institution
unless it is the Contracting Authority for the Works Contract.
Care must be taken, when writing to the Contractor, to reference any specific
clause(s) of the Conditions of Contract in accordance with which the letter is
August 2011
I-3 /5

written. Some clauses might require that such references be given. For
example:
In accordance with Clause(s)... of the Conditions of Contract, we
hereby give notice that ....
LBG communications to the Employer must be addressed to the person(s)
designated by name or title in the Works Contract, or formally appointed from
time to time by the Employer under the Works Contract, as the person(s)
authorized to act on behalf of the Employer.
LBG formal communications to the Employer need only be copied to the
Contractor if specifically required by any of the clauses of the Conditions of
Contract.
I-3.2
Letterhead
The Project Manager should prepare a standard LBG letterhead (for the
Project Office and each of the Site Offices, as appropriate) to be used for all
Project correspondence, including letters and faxes.
The letterhead should be in a digitized frame that can be pulled down for
computer-generated letters and faxes. In this electronic world, the use of preprinted letterheads is not economical. The Project Manager should ensure
that any coloured letterheads will photocopy in black-and-white without loss of
detail or definition.
Letterheads for each of the Project Office and Site Office(s) should include:
The Project name.
LBGs name (or, in the case that LBG is part of a Joint Venture or
Consortium, the name of the Joint Venture or the names of the
Consortium partners).
LBGs logo (if LBGs name is used in the letterhead).
The address, tel., fax and E-mail of the office.
The Project Manager should request the HO Supervisor to provide a digitized
file of LBGs logo.
I-3.3
Correspondence Identification
Outgoing Correspondence
All Outgoing Correspondence, to whomsoever, must bear a unique,
consecutive, reference number, such as:
August 2011
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From LBG Project Office: ref. po/OUT/924

where: po denotes Project Office
OUT denotes outgoing letter
924 is the consecutive number of all letters sent from the
Project Office.
From LB Site Office: ref. so2/OUT/326
where: so2 denotes Site Office for, say, Works Contract No.2
OUT denotes outgoing letter
326 is the consecutive number of all letters sent from the
Site Office.
Outgoing Correspondence computer files: All formal outgoing letters

should have been computer-generated. A computer directory should be
established for Outgoing Correspondence. Under that directory, each
outgoing letters filename should contain its Origin, Destination and Reference
Number. The filename should also contain the documents date and a very
brief (2 or 3 words) description of its contents (e.g. po-OUT924_23Jan04_Mobilization Schedule). The directory will then display the
letters in the consecutive order of their reference numbers and have
additional information for rapid retrieval.
Incoming Correspondence
All Incoming Correspondence, from whomsoever, must be given a unique,
consecutive, IN number, in the order they are received, such as:
To LB Project Office: ref. po/IN/135

where:
po denotes Project Office.
IN denotes incoming letter.
135 is the consecutive number of all letters received by the
Project Office (including copies to Project Office of letters
between other parties, or between Site Offices and other
parties).
To LB Site Office: ref. so2/IN/459

where:
so2 denotes Site Office for, say, Works Contract No.2.
IN denotes incoming letter.
459 is the consecutive number of all letters received by the
Site Office (including copies to Site Office of letters between
other parties, or between the Project Office and other
parties).
All Incoming Correspondence must be stamped

to show date of receipt and the IN number.
August 2011
RECEIVED ON
Date
IN No....................
I-3 /7

Scanning Incoming Correspondence:

All Incoming Correspondence
should be scanned. A computer directory should be established for Incoming
Correspondence. Under that directory, each incoming letter should be filed
by its letter IN number. The directory will display the letters in the consecutive
order of their reference numbers.
Each incoming letters filename should contain its Origin, Destination and
Reference Number. The filename should also contain the documents date
and a very brief (2 or 3 words) description of its contents (e.g. po-IN-135_24
Feb04_Work Program). The directory will then display the letters in the
consecutive order of their reference numbers and have additional information
for rapid retrieval.
File Referencing
All Outgoing & Incoming Correspondence,
to/from whomsoever, should receive a stamp upon which
can be entered the Project File Numbers in which the
correspondence is (to be) filed.
FILE Nos.
A
The stamp could be marked A against files in which

A with attachments
correspondence and attachments are included.
(Otherwise without)
For example, a transmittal letter with an attachment
might be wholly filed in a subject file, while a general
correspondence file will contain only the transmittal letter. For large
submissions, such as drawings, two lines should be entered if the documents
are to be filed in different locations; for example, the subject file and the
drawing file.
I-3.4
Correspondence Registers
Correspondence registers, both in the Project Office and each Site Office,
should be kept; one for incoming correspondence, and one for outgoing.
While this can be achieved electronically, it is preferred also to have hard
copy registers into which the correspondence chronology and data is entered
manually. Since the registers will be in constant use for the duration of the
Project (perhaps for several years), they should preferable be bound in book
form with hard covers. They should be readily available for supervision staff to
consult.
Examples for such registers (in landscape format) follow:
August 2011
I-3 /8

Hard Cover Title:
Project Name
PROJECT OFFICE
OUTGOING CORRESPONDENCE
Start Date:
Finish Date:
Content Pages:
Ref.
No.
Date
To
Subject
Copies to
File
Numbers
Comment
e.g.In reply to
Hard Cover Title:
Contract Name
SITE OFFICE
INCOMING CORRESPONDENCE
Start Date:
Finish Date:
Content Pages:
IN
No.
Date
From
To
Letter Ref.No.
& Subject
File
Numbers
Comment
e.g.In reply to
I-3.5
Informal Communications
Other than formal communications (i.e. formal, signed letters delivered in hard
copy, although they may also have been transmitted electronically), informal
communications will likely pass by E-mail between project participants. These
E-mails must be restricted to informal matters. Approvals, consents,
agreements, certifications, determinations, decisions, notifications,
instructions and requests cannot be given by E-mail (unless permitted
under the respective contracts, which is unlikely).
Examples of such informal communications might be:
- passing drafts of proposed formal correspondence or documents for
review and comment;
- exchange of ideas or opinions;
- enquiries of availability for meetings;
- confirmation of travel plans.
It is suggested that informal E-mail communications need not follow the
recommended procedures for Correspondence Identification [Section I-3.3]
and Correspondence Registers [Section I-3.4] of formal communications.
August 2011
I-3 /9

Indeed, it will likely be unpractical and too time consuming to apply or

coordinate such procedures.
However, it is recommended that the Project Office and each Site Office:
maintain hard copy chronological files of all informal E-mails and
attachments sent and received;
devise a practical and convenient system and procedures (including
regular back-up) for establishing directory structures and electronically
filing informal E-mails and attachments sent and received.
I-3.6
Records of Meetings
All formal meetings (excluding day-to-day meetings for liaison) in respect of
the Service Contract, Sub-consultancy Agreements and Works Contracts
must be recorded as Minutes that are distributed to the designated
representatives of the parties who attended or were invited to attend the
meetings.
Agenda for formal meetings should be pre-distributed to invited participants at
least several days prior to a meeting (in order that participants can come
prepared).
It is recommended that such regular meetings as, say, Monthly Progress
Meetings have pre-established standard agenda, in which case predistribution of such agenda will be unnecessary.
The first item heading on standard agenda for such regular meetings should
be:
- Minutes of Previous Meeting whereunder participants are asked to
record their agreement or specific disagreement with those minutes of
previous meeting.
This is a more expeditious procedure than issuing draft minutes for comment
before finalization and/or trying to get minutes signed as accepted by the
participants.
Minutes of Meetings should include:
The Project name.
Service Contract name or Works Contract name (as appropriate).
A caption for the meeting.
Example: Monthly Progress Meeting No between Employer,
Engineer and Contractor
Example: Site Meeting No between Engineer and Contractor
Example: Meeting to discuss Schedule & Costs of Repairs to
Damaged Utilities
August 2011
I-3 /10

The date and venue of the meeting.

A list of attendees, including names, titles and affiliations.
A brief description of the purpose of the meeting (if necessary).
Example: Purpose: Whereas the Works are disrupted by damages to
electrical distribution utilities caused by the Contractor that
can only be repaired by the Utility Owner, the purpose of this
meeting was to establish a schedule for these repairs and to
establish liability for and the basis of costs for the repairs.
Minutes of the meeting, under subject headings, of the statements made
by participating parties, discussions, agreements (and disagreements),
and requested or planned actions. The prepared Minutes should have an
adjacent Action Column or other format to highlight the name of the
party responsible for future action and the date by which the action is to be
taken.
Minutes of regular meetings (e.g. Monthly Progress Meetings) should
conclude by giving the agreed venue and date of the next such meeting.
Minutes should, at their end, record their author (name/title/affiliation), and
the list of parties/representatives to whom the minutes are distributed.
Minutes of Meetings are not Formal Contract Communications:

Under FIDIC-based contracts, minutes of meetings cannot be used for giving
formal approvals, consents, determinations, notifications and requests, which
communications are required under the Contract to be given in writing. The
Minutes may record intent to deliver such communications, but the
communications must be rendered separately in writing.
In the event that agreements of contractual significance are made at
meetings (e.g. clarification of otherwise unclear contract terms or
procedures), they should be recorded in protocols signed by the designated
representatives of the parties to such agreements. Each party should retain
an original, fully-signed copy of such protocols.
I-3.7

A good Work Breakdown Structure (WBS) or project filing system is essential,
especially for large, long-term, complex projects, and must be set up at the
beginning of the Project.
It is essential, during the project, that correspondence on any particular
subject matter pertaining to any contract can be conveniently and quickly
retrieved.
August 2011
I-3 /11

Communications will invariably fall into 4 categories which should be kept

separate in the filing system:
Correspondence pertaining to the Service Contract usually between
Client / LBG.
Internal LBG correspondence.
This is confidential to LBG alone and such letters should not be given
reference numbers nor entered in the Project File Registers. This
correspondence should be kept in a separate chronological file.
Correspondence between LBG and its sub-consultants.
This is confidential to the respective parties to the Sub-consultancy
Agreements.
Correspondence pertaining to each Works Contract usually between
Employer / Contractor / Engineer / Funding Institution.
At the end of the Works Contract, this correspondence may have to be
handed over to the Employer.
An example of a comprehensive WBS (for digital application) or filing system
(for manual application) is presented in Appendix E.
As stated in Section I-3.3 Correspondence Identification:
All outgoing correspondence should be stored in a Main Outgoing digital
database (scanned copies) and/or file folders (photocopies).
All incoming correspondence should be stored in a Main Incoming digital
database (scanned originals) and/or file folders (originals).
In a manual filing system, copies of correspondence (with attachments)
should also be filed in the relevant Subject files.
For example: A Contractors Notice of Claim for delay, arising from the
Employers failure to grant Possession of part of the Site, would be filed in
the Main Incoming file, Works Contract Incoming file, Works Contract
Claims file and Works Contract Possession of Site file.
In a digital database, there must be facility to sort and retrieve documents
by relevant Subject.
As a suggestion, manual File Folders could be colour coordinated. For
example: White for Main Correspondence; Black for Service Contract, Internal
and Sub-consultants; Red for Works Contract No.1; Blue for Works Contract
No.2; etc.
I-3.8
Project Reports
The various reports required by the Client to be prepared by LBG should be
listed in the Terms of Reference. They will likely include:
Inception Report [see Section I-2.5].
August 2011
I-3 /12

Project Progress Reports (usually monthly and/or quarterly).

Construction Completion Report(s).
Performance Report(s) on Contractor(s).
Service Contract Completion Report.
Project Progress Reports

At the start of the Project the Project Manager should prepare and submit to
the Client and Funding Institution, for their approval, a proposed standard
Table of Contents.
An example of a Table of Contents, together with suggested standard report
sheets to monitor and report progress, is presented in Appendix F.
The Project Manager will have full editorial responsibility for the Project
Progress Reports. On a multi-contract project with Resident Engineers for
each Works Contract, the Project Manager should require each Resident
Engineer to prepare a draft of the sections of the report pertaining to the
Works Contract for which he is responsible, but which sections follow the
established standard report format. The Project Manager must, however,
retain editorial privilege to amend and mould the draft sections into a
consistent, well-written, coherent, whole report.
Progress Photographs included as an appendix to the Reports should
convey an overview of the Works Contracts, so that the reader can get an
overall impression of Works progress. Pictures looking down manholes are
not wanted - however technically interesting. The pictures should convey the
prevailing appearance of the Site and the typical quality of the Works. The
main purpose of the Reports is to record progress, not defects; although
pictures of defects might sometimes be appropriate to support narrative within
the Reports on such problems. Pictures should be taken from the same
vantage points each month to illustrate progress. The Works Contract will
normally require the Contractor to submit monthly progress photographs, from
which a selection of the best quality should be chosen for inclusion in the
Reports.
The Table of Contents presented in Appendix F includes Report Appendices
for Minutes of Meetings and Significant Correspondence during the
Report period. This is strongly recommended for the following reasons:
The purpose of the Reports is to inform the Client/Employers and Funding
Institutions senior representatives who are not involved in the Project on a
day-to-day basis. Provision of Minutes of Meetings and Significant
Correspondence will give them a more comprehensive insight.
August 2011
I-3 /13

The Reports will also be copied to LBGs responsible VP and HO

Supervisor. Provision of Minutes of Meetings and Significant
Correspondence will give them a more comprehensive insight.
The Reports will also, thereby, provide the Project Manager and his
Resident Engineers with a readily available source for subject material
searches (additional to the Correspondence Registers and Project Files).
Construction Completion Report

A Report is usually required for each individual Works Contract. Such Report
is prepared when the Works have been substantially completed; after a
Taking-Over Certificate has been issued for the whole of the Works [see
Section II-6 Taking Over the Works], and shortly after the Engineers
Interim Payment Certificate at Completion has been issued [see Section II6.5].
The main body of the Report should be prepared, at least in draft, before the
senior site supervision staff are demobilized. Otherwise, the necessary
detailed knowledge for Report preparation might be lost. The report format
should be established and early sections drafted as soon as possible. The
Project Manager should consider this activity in his plans for staff
demobilizations.
The Report should provide an Estimate of the Works Contract final costs
[see Section II-6.5 for Supplement Report to IPC at Completion]. At the time
of Report preparation, most of the Defects Notification Period (usually 12
months, otherwise called the Defects Liability Period in older forms of FIDIC
contract) will have yet to run. The Contractor will likely have outstanding
minor works to complete and defects to remedy, as recorded in the TakingOver Certificate [see Section II-6.2]. There may be further defects identified
during the Defects Notification Period which the Contractor will be instructed
to remedy and could influence final costs. There might be Contractors claims
and disputes yet to be resolved that could affect final costs. Not until the
Defects Notification Period has expired, and all claims/disputes have been
resolved, can the final Works Contract costs be accurately determined.
Therefore, in this Report, the Project Manager can only provide an estimate of
final costs.
An example of a Table of Contents, together with suggested formats for cost
reports and estimates, is presented in Appendix G.
August 2011
I-3 /14

I-3.9
Sub-consultants
The Project Manager should have received at the Start of Mission, Project
Briefing [see Section I-1.2], copies of existing or proposed Sub-consultancy
Agreements.
Preparation of Sub-consultancy Agreements
In the event that Sub-consultancy Agreements are anticipated but not
prepared, the Project Manager should have been briefed regarding:
whether or not the Project Manager has responsibility and authority to
select sub-consultants, and to negotiate, prepare and sign Subconsultancy Agreements. And if he does not who does?
the extent to which the Project Manager is responsible for administering
the Sub-consultancy Agreements.
If the Project Manager has responsibility for preparing Sub-consultancy
Agreements, then he shall:
obtain, from LBGs HO Supervisor, LBGs standard or other form of Subconsultancy agreement to be adopted.
[FIDIC has as standard form of Sub-consultancy Agreement, but it may be
used only with the HO Supervisors pre-approval.]
Each Sub-consultancy Agreement should clearly and unequivocally state:
- the services to be provided;
- the location of services;
- the time duration of the Agreement (linked to the main Service
Contract);
- the General Conditions of Contract and Conditions of Particular
Application, including provisions for dispute resolution;
- the not-to-be-exceeded time budget for various categories of the subconsultants staff;
- rates and prices per day, per month, per service, as appropriate
(typically rates and prices should be stated as including any costs of
staff selection and mobilization, accommodations and/or living
allowances, non-work-related travel, vacations and statutory holidays,
statutory employment benefits, overtime which may be reasonably be
required and is consistent with the construction industry, professional
indemnity insurance, accident insurance, any other overheads and
incidentals none of which costs shall be paid separately or
additionally);
- any lump sum prices for services;
- the not-to-be-exceeded monetary budget for the sub-consultants
services;
August 2011
I-3 /15

rules for LBG selection, approval, mobilization and demobilization of

sub-consultant staff (as per main Service Contract)
[see Section I-2.3 Rules for Staff Mobilization];
rules for staff time charges (as per main Service Contract)
[see Section I-2.4 Rules for Time Charges ];
invoicing and invoice approval procedures;
payment terms (typically that LBG will pay the Sub-consultant within a
stated number of days after LBG has received payment from the Client
under the main Service Contract for the services to which the Subconsultants invoice relates);
the Sub-consultants and LBGs designated representatives for
administration of the Sub-consultancy Agreement;
the Sub-consultants bank account particulars for payments;
powers of attorney of the Sub-consultants and LBGs representatives
authorized to sign the Agreement.
Procedures should be established between LBGs HO Supervisor and the

Project Manager for finalizing and signing Sub-consultancy Agreements.
If the Project Manager is to have authority for signing any Sub-consultancy
Agreements on behalf of LBG, he must be given an appropriate power of
attorney.
Management of Sub-consultants
Typically the Project Manager will be given responsibility for managing the
Sub-consultancy Agreements, including, as appropriate:
Interview and select Sub-consultant staff.
Coordinate sub-consultant staff mobilizations to meet Project schedule
requirements.
Establish standard monthly timesheets.
Establish and follow procedures for submission, and for the Resident
Engineers and/or Project Managers approval of timesheets.
Monitor performance against the Project schedule and deliverables.
Provide early warning of not being able to achieve deliverables within
Project schedule and/or budget for sub-consultants services, and propose
appropriate actions.
Monitor Sub-consultants staff time expenditures for each budgeted staff
position and/or category, and thereby identify (well in advance)
requirement either for staff demobilizations or Sub-consultancy Agreement
addenda for budget extensions or reallocations. A situation must not be
allowed to develop where Sub-consultant staff services are allowed to
continue beyond the budgetary provisions of LBGs main Service
Contract.
August 2011
I-3 /16

[See Section I-2.6 Management of Service Contract Budget]

Establish and follow procedures for submission, Project Managers
approval and LBGs payments of Sub-consultants invoices.
Monitor and record dates of submission, approval and payment of Subconsultants invoices.
Prepare addenda, as necessary, to Sub-consultancy Agreement.
I-3.10
Computer Facilities & Maintenance

Adequate computers, with a common operating system, and peripherals must
be provided at the Project Office and each Works Contract Site Office,
including:
One computer for each of the Project Manager, Project Engineer, Resident
Engineer, each secretary/administrator/translator, Deputy Resident
Engineer, Materials Engineer, Quantity Surveyor, Land Surveyor, and
each Section Engineer. Depending on the nature of the Works, some
computers could be shared between Inspectors.
The computer system in each office should be networked with a main
server.
Each office should have:
- system protection;
- at least two plain-paper, communal, B/W printers. A third colour printer
is advisable;
- internet connection and E-mail (high-speed if available);
- mass-production scanner;
- CD re-writable or tape system (for regular back-up).
A services contract, for maintenance and trouble-shooting, with a
reputable local company.
Anti-virus software must be installed and updated. Nevertheless, rules
must be established and rigidly enforced not to download files of unknown
or dubious source, and to prohibit use of unauthorized software or games
diskettes.
The necessity of peripherals for regular back-up of all project files cannot be
over-emphasised it should be performed at least weekly.
Provisions might have been included for supply and maintenance of computer
hardware and software by LBG under its Service Contract and/or by
contractors under Works Contracts. In the former case, or in the event of
insufficiency in the latter case:
The Project Manager must get pre-approval of the LBGs HO Supervisor
for LBG Site expenditures for computer facilities.
August 2011
I-3 /17

All short-term experts must be advised, prior to their mobilization, that they
are required to bring with them laptops and any specialist software they
might require.
For information on LBGs website (louisberger.com) and how the Project

Manager can obtain a dedicated personal LBG E-mail address (e.g.
aname@louisberger.com) see Section I-1.10 LBG Administration
Procedures.
I-3.11

Regrettably, accidents may happen and emergencies arise. The Project
Manager must be prepared to handle such emergencies.
The project Manager must ensure that the following up-to-date information is
kept on file at each of the Project Office and Site Office(s). The relevant
information must be obtained from each member of the supervision staff (both
LBG employees and Sub-consultants employees) when they mobilize:
Copies of passports (including relevant visa pages) of expatriate staff.
Copies of residence permits of expatriate staff (if applicable).
Copies of identity cards of local staff.
Names, addresses and contact numbers of next-of-kin.
Particulars of medical and emergency evacuation insurance, including
contact numbers.
Details of any medical preconditions that would affect medical treatment.
Blood type.
In addition, the Project Manager should arrange and keep on file:
Contact information of a reputable in-Country physician and dentist
(recommendations are often available from embassies or consulates).
Contact information for hospital, ambulance, fire brigade and police.
LBG head office contact person for assistance in liaison with LBG insurers
in case of medical emergency and evacuation.
The Project Manager must require that all the above information is kept in
each of the Project Office and Site Offices, and monitor that it is up-to-date.
I-3.12
Confidentiality
The Project Manager must impress upon his supervision staff that all Project
documents are confidential to the parties of the Contracts, and shall not be
divulged to third parties.
August 2011
I-3 /18

Communications between the Client and LBG, and other information

pertaining to LBGs Service Contract, shall not be divulged to the Contractors
or their agents.
Communications between the Engineer/Employer and the Contractors, and
other information pertaining to the Works Contracts, shall not be divulged to
the Contractors subcontractors and suppliers.
Whether or not LBGs services under the Service Contract include publicity
services, the Project Manager or any of the Project staff shall not, without the
Clients prior written permission, give information, interviews or press releases
to the media.
I-3.13
Technical Resources, Promotional Materials & Conferences

The Project Manager should consult LBGs HO Supervisor for references to
contact sources to obtain:
Technical advice, materials, publications and other resources.
LBG promotional and marketing materials.
Registrations to represent LBG at conferences.
Approval of budget for non-billable time, materials and conference costs must
be obtained through LBGs HO Supervisor.
August 2011
I-3 /19
I-3: PROJECT SET-UP & EXECUTION - CHECK LIST

I-3.1
Formal Communications:
Read contract provisions and clauses for Communications for:
Service Contract
JV or Consortium Agreement (if applicable)
Sub-consultancy Agreement(s)
Works Contract(s)
Prepare "RECEIVED BY" stamp
I-3.2
Letterhead:
Prepare standard LBG (or JV) letterheads (incl. letters, memos & faxes)
Project Office
Each Site Office
I-3.3
Correspondence Identification:
Establish correspondence reference numbering system:
Outgoing correspondence
Incoming correspondence
Prepare "RECEIVED ON" stamp
Prepare "FILE Nos." stamp
I-3.4
Correspondence Registers:
Prepare/acquire Correspondence Registers for:
Outgoing correspondence
Incoming correspondence
I-3.5
Informal Communications:
Retention & filing system
I-3.6
Records of Meetings:
Prepare standard formats
I-3.7
Document Control / Project Filing System:
Establish Work Breakdown Structure / Filing System for:
Project Office
Site Office(s)
Adequacy of Work Breakdown Structure / Filing System:
Linked system for Project & Site Offices
Separate files for different contracts
Sufficient 'Subject" files
I-3.8
Project Reports:
Establish standard format
I-3.9
Sub-consultants:
Establish responsibility/ format for preparation of Agreements/ Addenda
Establish procedures & format for:
Interviews & selection of Sub-consultant staff
Approval for candidature & mobilization of Sub-consultant staff
Submission & approval of monthly timesheets
Monitoring performance & time expenditures against budget
Submission/ approval/ payment/ record of Sub-consultant invoices
I-3.10 Computer Facilities & Maintenance:
Establish inventory of needs
Service contract for maintenance & trouble-shooting
I-3.11 Staff Records for Emergency:
Maintain files at each office of information of LBG & sub-consultants' staff:
Passports, visas, identity cards, resident permits
Medical preconditions, blood type, medical/evacuation insurance
Names/coordinates of next-of-kin
Maintain files at each office of information of:
Recommended local physicians /dentists
Contact data for hospital, ambulance, fire, police
LBG head office contact for assistance with insurers
I-3.12 Confidentiality:
Memorandum of instruction to all Project staff
I-3.13 Technical Resources, Promotional Materials & Conferences
Consult LBG's HO Supervisor
Check
Comment
August 2011

I-4.
I-4: End of Project
END OF PROJECT
This Chapter provides guidelines for:
o Supervision staff retention to complete services at Project completion.
o Hand-over (to the Client) and retention (by LBG) of documents and
equipment at the conclusion of project services.
I-4.1

It is to be expected that Project supervision staff will be incrementally reduced
as construction works near completion and after the construction Works have
been taken over by the Employer. However, staff retention will be necessary
throughout and after the Defects Notification Period of each Works Contract
until the Engineer has issued the Final Payment Certificate for the Works.
It is essential that full-time and/or part-time staffing is planned to perform the
following functions:
After the Taking-Over Certificate for the whole of the Works is issued
[see Section II-6 Taking Over the Works]:
The Engineers staff have yet to:
- prepare and submit an Interim Payment Certificate (IPC) at
Completion.
- prepare and submit a Report at Completion (as usually required by
LBGs Service Contract).
FIDIC contracts require the Engineer to submit his IPC at Completion
within 28 days after receipt of the Contractors Statement at Completion;
but the Contractor (depending on the version of FIDIC contract being
used) has up to *56 or *84 days to submit his Statement after a TakingOver Certificate has been issued certifying substantial completion of the
whole of the Works.
[* Recent Red and Yellow Books: 84 days; Older Red Book: 56 days; Older
Yellow Book: does not require the Contractor to submit a specific application
for payment related to and following the Taking-Over Certificate.]
Thus, it may not be possible to process the IPC at Completion until 3 or 4

months after the Works have been certified as substantially completed.
The Project Manager must retain sufficient and appropriate staff to

perform any necessary measurement of works, execution of any
outstanding Variation Orders and preparation of the IPC at Completion
for each Works Contract.
August 2011
I-4 /1

I-4: End of Project
During and after the Defects Notification Period (DNP)

(Defects Liability Period under older forms of FIDIC contract)
[see Section II-7 Defects Notification Period & Contract Completion]
The Engineers staff have to:
- perform periodic inspections of the Works during the DNP:
a) check that any remaining works and recorded defects have been
completed/rectified, together with any necessary measurement of
those works for payment certification;
b) check for any latent defects that might appear and notify/instruct
the Contractor of requirements for rectification.
- perform a final inspection at the end of the DNP, to ensure that all
remaining works and rectification of defects have been satisfactorily
completed (and notify/ instruct the Contractor if otherwise), together
with any measurement of works for purpose of final payment
certification.
- issue a Performance Certificate (known as Defects Liability
Certificate under older forms of FIDIC contract).
- prepare and submit a Final Payment Certificate.
- prepare and submit a Final Report (if required by LBGs Service
Contract)
FIDIC contracts require the Engineer to submit his Final Payment
Certificate within 28 days after receipt of the Contractors Final Statement
at Completion; but the Contractor has up to *56 days to submit his
Statement after the Performance Certificate has been issued.
[* Older/recent Red Books and recent Yellow Book: 56 days; Older Yellow
Book: 28 days.]
Thus, it may not be possible to process the Final Payment Certificate until
up to 3 months after the end of the Defects Notification Period.
The Project Manager must:
Plan sufficient and appropriate staff to perform these periodic functions
until the Final Payment Certificate is issued for each Works Contract.
Consult with the Client to arrange the retention (or alternative
provision) of office accommodations, facilities and equipment adequate
for fulfilment of these remaining services.
I.4.2

The majority of records and documents prepared or received by LBG under
its Service Contract with the Client, and in LBGs role as the Engineer under
the Works Contracts, is the property of the Client and must be handed over to
the Client at the end of the Service Contract. Those documents relating to the
August 2011
I-4 /2

I-4: End of Project
Works Contracts could be handed over at the earlier completion of those

Works Contracts (after issuing the Final Payment Certificate).
It should not be necessary to hand over to the Client copies of Progress
Reports and other reports that had been submitted directly to him.
Documents to be retained by LBG and not handed over to the Client include:
o Signed originals or copies of LBGs Service Contract (including addenda
or modifications thereto) and other Agreements. The Client should have
his own originals of these documents.
o Copies of LBG invoices to the Client (including all supporting documents).
The Client should have his own originals of these.
o Internal LBG communications and records.
o Documents pertaining to LBGs Joint Venture (or Consortium) Agreement,
Sub-consultancy Agreements, and correspondence between LBG and its
JV partners or sub-consultants.
o Informal notes and records.
Of those documents handed over to the Client, it is recommended that copies
should be retained by LBG of certain documents relating to the Works
Contracts including:
o Claims files, including Determinations and Decisions of the Engineer,
Amicable Settlements between the Employer and Contractor, Dispute
Adjudication Board decisions, and arbitral decisions.
o Copies of the Engineers certifications for Payment and Taking-Over,
records of Tests after Completion (if applicable), outstanding defects
liability issues, and in respect of contractual default.
o Documents relating to any remaining issues of contention or dispute.
The Project Manager shall, in respect of documents to be handed over to the
Client:
Consult with the Client to arrange the manner of handing over documents.
Box, label and hand over the files of documents to be handed over
(itemization should follow the project filing system).
The hand-over of documents to the Client shall be itemized by written
protocol signed jointly by authorized representatives of LBG and the Client,
and an original copy retained by LBG.
The Project Manager shall, in respect of documents to be retained by LBG:
Consult with LBGs HO Supervisor to arrange the manner of delivery of
documents, including arrangements for where they will be stored.
Box, label and deliver the files of documents to be handed over
(itemization should follow the project filing system).
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I-4.3
I-4: End of Project
Hand-Over & Retention of Equipment

LBG may have procured under its Service Contract with the Client various
equipment that will become the property of the Client at the end of LBGs
Service Contract, or sooner when LBGs project use thereof has ended.
Such equipment might include motor vehicles, office equipment (computers,
photocopiers, telephones, fax machines), survey instruments, testing
instruments, and the like.
It is essential that such equipment hand-over be fully documented, as
appropriate, by:
Hand-over and transfer of ownership of motor vehicles in accordance with
legal or statutory requirements of the country. LBGs responsibility for
insurance, if any, of the vehicles will end when ownership transfer has
been effected, and any such insurance policies should then be terminated.
Hand-over of other equipment by written protocol signed jointly by
authorized representatives of LBG and the Client. The protocols must
clearly describe the items handed over including name, model number,
condition (the Client must accept fair wear and tear), and reference to
purchase documents. The original purchase documents should be
attached.
Deliver to LBGs HO Supervisor originals of all ownership-transfer
documents and hand-over protocols
For equipment owned by LBG and not contractually required to be handed
over to the Client, arrangements need to be made for their retention and the
Project Manager shall:
Consult with LBGs HO Supervisor to arrange the manner of delivery of
equipment or where it is to be stored.
Where equipment was purchased by LBG for the project, provide to LBGs
HO Supervisor originals of the purchase documents.
Box, label and deliver (or store) the equipment.
August 2011
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I-4: END OF PROJECT - CHECK LIST

Guideline
I-4.1
I-4.2
I-4.3
Requirement
Plan staff retention to complete services (after issuing TakingOver Certificate) of:
Further works inspections & measurement (if any)
Determination of outstanding claims & disputes (if any)
Report at Completion of Works
Plan staff retention to complete services during & after Defects
Notification Period of:
Periodic inspections of Works & Notification of Defects
Measurement of works (if necessary)
Determination of outstanding claims & disputes (if any)
Performance Certificate (or Defects Liability Certificate)
Final Payment Certificate
Final Report at end of LBG Services (if required)
Plan hand-over of documents to Client:
Consult with Client to arrange
Implement hand-over
Retain copies of hand-over records
Plan retention of documents by LBG
Consult with LBG to arrange
Deliver or store documents
Hand-over & Retention of Equipment
Plan hand-over /ownership-transfer of equipment to Client:
Consult with Client to arrange
Implement hand-over/ownership-tranfer
Retain copies of hand-over /ownership-transfer records
Plan retention /delivery of LBG-owned equipment:
Consult with LBG to arrange
Deliver or store equipment
Check
Comment
August 2011
PROJECT MANAGEMENT
GUIDELINES
FOR
SUPERVISION OF
INTERNATIONAL
PART II
WORKS CONTRACT SUPERVISION

II-1.
II-1: Works Contract Documents
WORKS CONTRACT DOCUMENTS

The term Works Contract, as used in these Guidelines, means the
construction contract between the Employer and the Contractor that LBG,
as the Engineer, will supervise and administer.
This Chapter describes:
o the documents that comprise the Works Contract;
o procedures for Works Contract Award and Tender Securities;
and stresses the importance that the Project Manager shall:
become fully familiar with documents of the Works Contract;
identify (and seek to resolve) any contradictions between documents of
the Works Contract and LBGs Service Contract;
assist/advise the Employer at the Contract Award stage.
Since most international Works Contracts are based on FIDIC Conditions of
Contract, FIDIC terminology is used in these Guidelines.
FIDIC stands for the International Federation of Consulting Engineers (the
acronym represents the French version of the name). Founded in 1913, it
represents firms belonging to Member Associations of engineering-based
consulting companies throughout the world. FIDIC strives to develop and
promote international contracting standards for the implementation and
sustainability of construction projects.
FIDIC has published many standard forms of contract, but these Guidelines
pertain only to FIDIC Red Book and Yellow Book contracts [see Section II1.6 Conditions of Contract & Interpretation].
II-1.1
Works Contract Award & Tender Security

Contract Award
A Letter of Acceptance means the letter of formal acceptance, signed by
the Employer, of a contractors Letter of Tender, including any annexed
memoranda comprising agreements between and signed by both Parties.
This offer and acceptance constitute a legally binding agreement of the
Parties to enter into a Contract based on the terms of the Letter of
Acceptance.
The Works Contract comes into force on the date when the Contract is signed
by the Employer and Contractor (which would be the date of the last signature
applied).
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Under standard forms of FIDIC contract, the Letter of Acceptance applies

unless omitted by the Particular Conditions. If there is no such provision for a
letter of acceptance, the expression Letter of Acceptance means the
Contract Agreement, and the date of issuing or receiving the Letter of
Acceptance means the date of signing the Contract Agreement.
The date on which the Contract comes into force is not necessarily the date
on which the Time for Completion of the Works starts [see Section II-2.5
Commencement Date].
Tender Security
A Tender Security (sometimes referred to as a Tender Bond) is provided by
each of the tenderers together with his tender. Without submission of a
Tender Security, a tenderers tender would be invalid. The Tender Security
entitles the Employer to monetary compensation from the selected tenderer in
the event that he:
o withdraws his tender after the latest time specified for its submission and
before expiry of its required validity period;
o refuses to accept the correction of errors in his tender in accordance with
the tender conditions;
o fails to sign the Contract within the time specified in the Tender
Documents; or
o fails to submit a Performance Security within the period specified (after the
date of the Letter of Acceptance) in the Tender Documents.
The required minimum period of validity of Tender Securities, and also of the
Tenders themselves, is stated in the Tender Documents.
If the periods of validity of the Tenders and the Tender Securities are allowed
to expire before the Contract Agreement is signed or before the
Performance Security is provided, then the Employer will, in the event of
the selected tenderer not performing his obligations in those regards:
o lose entitlement to monetary compensation from the selected (but nonperforming) tenderer;
o potentially lose the opportunity to select another tenderer based on
another tender.
Clearly it is in the Employers interest to either:
o issue the Letter of Acceptance (or sign the Contract Agreement) in such
time that the Contractors obligation to submit an acceptable Performance
Security falls due before expiry of the tender securities; or
August 2011
II-1 /2

o request tenderers to extend the validity of their tenders and tender

securities until the projected latest date of the selected tenderers
obligation to submit his Performance Security.
In the event that Contractor selection and/or Contract Award is delayed for
any reason, but the Employer wishes to keep the tenders alive, the Employer
would have to request the tenderers to extend the validity of their tenders and
tender securities. Failure to do so might nullify the tenders. The Employer
need only request extension of conforming tenders (i.e. tenders that, having
conformed with the Employers Instructions to Tenderers, are not
disqualified).
The Project Manager should monitor the post-tender activities and formally
advise the Employer of:
any need to request tenderers to extend the date of expiry of their tenders
and tender securities until the projected date of the selected tenderers
obligation to submit a Performance Security.
The Project Manager should formally advise and, as necessary, assist the
Employer in his obligations when an acceptable Performance Security has
been received from the selected tenderer, immediately to:
inform unsuccessful tenderers that their tenders were unsuccessful, and to
whom the Contract has been awarded;
return to the Contractor and the unsuccessful tenderers their tender
securities (except that tender securities must be returned to tenderers
immediately after they expire, in the event that the date of expiry precedes
the provision of the Performance Security).
II-1.2
Compilation of Works Contract Documents

LBG might have responsibility, under its Service Contract, for preparing
certain of the Works Contract documents, or for reviewing such documents
that have been prepared by the Client (or by others on the Clients behalf), or
for compiling them prior to Contract award.
The Works Contract documents should include, as appropriate:
o The signed Agreement between the Employer and the Contractor.
o Letter of Acceptance (if any; a FIDIC definition meaning the letter of
formal acceptance, signed by the Employer, of the Letter of Tender)
o Completed Form of Tender and Appendix to Tender (by FIDIC definition,
the Contractors Letter of Tender).
o The General Conditions of Contract.
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II-1 /3

o Particular Conditions (amplifications, amendments or additions to the

General Conditions of Contract).
[Under older forms of FIDIC contract, these were called Conditions of
Particular Application.]
o Clarifications of the Tender documents (issued during the Tender Period)

and/or pre-Contract negotiated amendments.
o Required formats for Performance Security and Advance Payment
Security.
o The governing Funding Agreement and/or Financing Memorandum
between the Funding Institution and the Employer (if its terms are
applicable to the Works Contract).
o Standard Guidelines of the Client or Funding Institution or reference
thereto (if applicable to the Works Contract).
If the Contractor is to construct the Works according to design provided by the
Employer (as under a FIDIC Red Book contract), the Works Contract
documents should also include:
o Technical Specifications
o Drawings
o Priced Bills of Quantities
o Method of Measurement
Alternatively, if the Contractor is responsible for both the design and
construction of the Works (design/build, as under a FIDIC Yellow Book
contract), then the Works Contract documents should also include:
o The Employers Requirements
o Schedule of Lump Sum Prices and their breakdowns
o The Contractors Proposal
II-1.3
Works Contract Documents Sufficiency & Discrepancies

General Discussion
The Conditions of a Works Contract should state the priority of the various
component documents of the Works Contract in order to establish, in the
event of discrepancy between them, what takes precedence.
The order of precedence for a construction-only contract (FIDIC Red Book)
may be stated, for example, as:
1. Contract Agreement
2. Letter of Acceptance (if any)
3. Completed Form of Tender and Appendix to Tender
4. Particular Conditions
5. General Conditions of Contract
August 2011
II-1 /4

6.
7.
8.
9.
Specifications
Drawings
Priced Bill of Quantities (including Method of Measurement)
Schedules (proposals/undertakings) of the Contractors Tender
For a design/build contract the order of precedence might be:

1. Contract Agreement
2. Letter of Acceptance (if any)
3. Completed Form of Tender and Appendix to Tender
4. Particular Conditions
5. General Conditions of Contract
6. Employers Requirements
7. Breakdown of Lump Sum Prices
8. Proposals and Schedules of the Contractors Tender
If the Works Contract is funded by a Funding Institution and subject to the
terms of a Funding Agreement (and/or Financing Memorandum) between the
Funding Institution and Employer, then it may be advisable to include such
Funding Agreement in the Works Contract and also include it in the order of
priority of the Works Contract documents.
check that there is consistency between these various documents,
hopefully during their preparation and/or review prior to finalization.
Insofar as the Particular Conditions may amend the General Conditions of
Contract it is recommended that the Project Manager should:
cut & paste clauses of the Particular Conditions against the clauses of
the General Conditions of Contract.
For a construction-only (FIDIC Red Book) contract, a Method of
Measurement (MoM) should always accompany the Bill of Quantities (BoQ).
Preambles to the BoQ should state that the MoM shall be read in
conjunction with the BoQ. An example of typical Preambles, from a previous
project, is presented under Appendix H.
The MoM may be a standard publication (e.g. Civil Engineering Standard
Method of Measurement of the Institution of Civil Engineers or a Countrys
own standard publication) which specifies principles of measurement and is
incorporated (by reference) into the BoQ Preambles. Alternatively, the MoM
might have been especially prepared for the Contract. An MoM should only
have been omitted from a contract which does not contain many or complex
items of work, and wherein the principles of measurement are included in the
item descriptions of the BoQ or stated in the Technical Specifications.
August 2011
II-1 /5

The MoM should clearly state what works are included under items or
categories of items of the BoQ. For example, does an item for excavation of
unsuitable material include haulage and disposal of that material off Site to an
approved deposition area? Does such excavated material become the
property of the Employer, or can the Contractor dispose of it to his own
financial advantage?
The MoM should clearly state how each measured quantity under line items
of the BoQ is to be measured. For example, is the volume of excavation for a
new underground concrete foundation measured to the neat vertical lines of
that foundation, or is an allowance permitted for subsequent working room to
construct the foundation? For example, is the area of asphalt paving
measured with or without consideration of the feathered edges of the
pavement?
Examples of typical item coverages of a Method of Measurement for items of
a Bill of Quantities are presented in Appendix I.
Contradiction or lack of clarity should not exist between the various Works
Contract documents. A dispute could arise, for example for asphalt works, if
the Specifications state that Tack Coat shall be applied between bituminous
bound courses and may only be omitted with the Engineers written consent,
the Bill of Quantities includes a payment item for Tack Coat, but the Method
of Measurement states that Tack Coat is included in the item coverage for
bituminous bound courses! Will the Tack Coat be separately measured and
paid or not?
Employer & Contracting Authority
It may be an intention that the Contracting Authority (who will sign the Works
Contract and make payments to the Contractor and is, therefore, the
Employer under the Works Contract) is a different arm of Government of the
Country from that intended as the Beneficiary of the Works. Hypothetically,
for example, the Contracting Authority may be a contracting agency of the
Ministry of Transport, and the Beneficiary is the National Roads
Administration.
To avoid confusion (and potential future contractual disputes) in such
circumstance, it is important to define in the Works Contract the roles to be
performed by the respective arms of the Employer. Under a FIDIC-based
Works Contract, for example, it would be advisable to include clauses in the
Particular Conditions that define the dual identity of the Employer, and identify
which of them (either one or the other or both) has jurisdiction for each of the
clauses of the Conditions of Contract (or other Contract documents) under
which the Employers actions are required.
August 2011
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The Project Manager should:

in the circumstance that a Contract has already been signed wherein such
dual identity and jurisdiction is not so defined, seek retroactively to clarify
and formalize with the Employer the respective roles of the Contracting
Authority and Beneficiary under the Contract.
II-1.4
Contradictions between Works Contract & LBG Service

Contract, and Limitations of the Engineers Authorities
Whatever is LBGs responsibility for preparation of Works Contract
documents, the Project Manager must check for any discrepancies between
the provisions of the Works Contract and LBGs Service Contract.
Discrepancies in respect of LBGs responsibilities and authorities, under the
respective contracts, could precipitate contractual disputes and could expose
LBG to liability. Examples of such dangerous discrepancies are given below.
It is not uncommon for the Client to limit, under the Service Contract, LBGs
authorities in respect of supervising construction contracts to vary the Works,
issue Variation Orders, determine unit payment rates for new work items,
award Extensions of Time for Completion, and/or render determinations of
Contractors claims, etc., without the Clients prior written approval. Such
limitations might contradict the Conditions of the Works Contract that place
such obligations on the Engineer without reference to any required preapproval of the Employer. What if, for example, the Engineer assesses that
the Contractor is entitled to an Extension of Time, arising (say) from delays
clearly attributable to the Employer, but the Employer does not accept such
recommendation and withholds approval for the Engineer to grant Extension
of Time to the Contractor under the Works Contract? Would the Engineer
render his assessment of entitlement but concurrently advise the Contractor
that he is not authorized by the Employer, under terms of the Service
Contract, to grant Extension of Time without the Employers approval, and
that the Employer is withholding approval? Such circumstance might
precipitate not only dispute between the Employer and Contractor under the
Works Contract, but also threats from the Contractor of legal suits against
LBG for professional negligence.
review the provisions of the Works Contract (in regard to the Engineers
responsibilities and obligations thereunder) to identify any contradictions
with LBGs Service Contract.
fully inform LBGs HO Supervisor of the existence of such aforementioned
contradictions, and thereby seek advice as to the manner of resolution to
be adopted with the Client.
And thereafter:
August 2011
II-1 /7

II-1.5
recommend to the Employer that any such contradictions be removed;

either by amendment to the Service Contract, or by incorporation within
the Works Contract of limitations of the Engineers authorities.
in the event that the executed Service Contract and Works Contract do
contain contradictions, inform the Client in writing (copied to the Funding
Institution) with recommendations as to how the contradictions could be
resolved, together with advice of the potential contractual repercussions of
not doing so. If the contradictions are not subsequently resolved, LBG will
at least have a record trail to counter future potential negligence claims.
Contradictions between Works Contract &

Funding Agreement
If the Works Contract is funded by an external Funding Institution and
governed by a Funding Agreement (which might include a Framework
Agreement and/or Financing Memorandum), the Project Manager should:
check that there are no discrepancies or contradictions between such
document(s) and the Works Contract.
For example:
- Will the funding disbursement deadline of the Funding Agreement expire
before the final payment is due to the Contractor under the Works
Contract?
If the Funding Agreement is not included in the Works Contract documents,
the Project Manager should
check that Funding Agreement provisions relevant to the Works Contract
are included in the Conditions of Contract.
For example:
- Are any requirements of the Funding Agreement for the Contractors tax
exemptions within the Country (e.g. of income tax, value added tax,
customs and excise duties, etc.) reflected in the Works Contract and
permitted under the local Law? Does such exemption mean exemption
from paying or entitlement to reimbursement?
- Are any restrictions of the Funding Agreement regarding the citizenship of
the Contractors Personnel reflected in the Works Contract?
- Are any restrictions of the Funding Institution regarding origin of materials
or equipment for the Project included in the Works Contract?
formally inform the Employer of any such discrepancies and inadequacies,
with recommendations for their contractual resolution.
August 2011
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II-1.6
Conditions of Contract & Interpretation

It is likely that the Works Contract(s) will be based on published, standard,
international General Conditions of Contract such as FIDIC. It is usual only to
reference such General Conditions in the Works Contract; i.e. not to
reproduce them in hard copy. Contractors are expected to have these
published Conditions.
It is essential that the Project Manager has the relevant Conditions of
Contract, in sufficient numbers of copies for reference in his Project Office
and all Site Offices.
As discussed in the Foreword to these Guidelines, there are many forms and
editions of FIDIC Conditions of Contract for a variety of different types of
contract (construction for which design is provided by the Employer,
design/build, turn-key, etc.).
For reasons also discussed in the Foreword, these Guidelines are limited to
consideration of construction-only contracts for which design is provided by
the Employer (FIDIC Red Book contracts) and contracts for which the
Contractor is responsible for design as well as for construction (FIDIC Yellow
Book contracts). These forms of FIDIC contract are:
o Works of Civil Engineering Construction
o Electrical and Mechanical Works
o Construction
o Construction
[Note: This is often referred to as the Harmonized Edition, prepared
by FIDIC in association with the Multilateral Development Banks to
incorporate, within the General Conditions of Contract, the banks
procurement practices and requirements.]
o Plant and Design-Build
August 2011
II-1 /9


[Note: At the time of drafting this current revision to these Guidelines,
FIDIC had not published an MDB Harmonized edition of this Yellow
Book, although FIDIC has proposed Particular Conditions of Contract
to modify the FIDIC MDB Harmonized Construction Contract (Red
Book, 2006 edition) from design by the Employer (with remeasurement) to design by Contractor (with lump-sum payment).]
The General Conditions for those contracts are available in hard copy or
electronic form, either without or together with Forms of Tender & Agreement
and Guides for preparation of Particular Conditions. The 1999 new Red and
Yellow books (together with the Silver book) are also available in a
compendium edition.
Also FIDIC has published guidelines, in hard copy and electronic form, for
the use and interpretation of its Red and Yellow Book General Conditions,
although such guidelines for the older forms of contract may be out-of-print.
Apart from publishing those guidelines, FIDIC does not respond to requests
for legal interpretation of its standard forms of contract.
The Project Manager will be required (by his duties under the Works
Contract(s)) to render, on behalf of the Engineer, his own contractual
Determinations, which will require his sound interpretation of the meaning
and intent of the Conditions of Contract. Such Determinations could be
disputed by the Employer or Contractor, and lead to potential dispute
adjudication, arbitration or litigation between them.
Given the importance of this responsibility, it is recommended that:
the Project Manager shall have readily available to him FIDICs published
Guides for use and interpretation of relevant standard General Conditions
of Contract and for preparation of Particular Conditions.
Information on FIDIC publications (including on-line orders and payments)
can be found on website www.fidic.org
II-1.7
Contract Definition of The Engineer

In the event that LBG has responsibility for reviewing the Conditions of
Contract prior to their finalization, or for preparing them, it is important to get
the definition of the Engineer right.
The Engineer is usually defined generically in Conditions of Contract as
meaning the person appointed by the Employer to act as the Engineer for the
purposes of the Contract and named as such in (reference to other part of
August 2011
II-1 /10

the Contract, e.g. Particular Conditions or Appendix to Tender), or other

person appointed from time to time by the Employer and notified to the
Contractor .
Such definition is clarified in FIDIC Conditions that the word person shall
include corporations and other legal entities, but recent forms of FIDIC
contract add the words except where the context requires otherwise. With or
without these added words, context is important. It is difficult to imagine,
under older forms of FIDIC contract, that an Engineers Decision could be
given by a firm rather than an individual person. Under recent forms of FIDIC
contract, wherein it is stated that the Engineer shall not delegate the
authority to determine any matter in accordance with Sub-Clause 3.5 Determinations, it is hard to imagine that the Engineer can be represented by
other than an individual person. Given the multitude of determinations that the
Engineer has to make under recent forms of FIDIC contract, it would be
impracticable for the Engineer to be other than an individual person resident
on Site. In contracts wherein the Engineer is defined as an entity (e.g. The
Louis Berger Group, Inc.), then the answer is for the Engineer to appoint an
individual person to perform the role of the Engineer on behalf of the entity
[see Section II-2.1 Appointment of the Engineer].
The Engineer is typically defined in a Works Contract as:
a) an entity (e.g. The Louis Berger Group, Inc.); or
b) a representative of that entity (e.g. The Louis Berger Group, Inc., as
represented (Name) holding the position of ; or
c) The Louis Berger Group, Inc., as represented by the person appointed
from time to time to act as the Engineer for the purposes of the
Contract).
(a), (b) and (c) are appropriate under older forms of FIDIC contract.
(a) and (c) are appropriate under recent forms of FIDIC contract.
(b) is not appropriate under recent forms of FIDIC contract if the appointed
individual person will not be resident on Site full-time.
In drafting contract documents, definition (c) is preferred; because it
provides flexibility and, in the event of a change of the person, the Contractor
would have no cause for objection.
II-1.8
Engineer Must Adhere to Works Contract

Except as may be specifically provided by various clauses of the Conditions
of Contract, the following Works Contract documents cannot be amended
without formal Contract Addenda and Amendments [see Section II-3.18]
signed by the Parties to the Contract (and, if applicable and necessary,
formally endorsed by the Funding Institution):
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II-1 /11

o
o
o
o
o
o
o
o
The Contract Agreement and Appendix to Tender

Conditions of Contract
Specifications
Drawings
Bill of Quantities
The Employers Requirements (under a design/build contract)
Unit rates and lump sum prices incorporated in the Contract
The Project Manager (as, say, representing the Engineer under a Works
Contract) has no power of discretion in this matter. LBG is not a party to the
Works Contract. In their administration of the Works Contract:
the Project Manager and his supervision staff must adhere to the
provisions of those Contract documents.
Accordingly, for example, the Project Manager cannot agree with the
Contractor to change technical Specifications for the Works. He may
recommend such change to the Employer, but any change requires, before it
is effected, a written Agreement signed by the contracting Parties.
Similarly the Project Manager or any of his supervision staff do not have any
power of discretion to accept and certify payment for works that do not
comply with the Specifications. They cannot accept, for example, concrete
that is only marginally below the specified strength requirement. If any work
does not comply with the Specifications, it must be rejected - unless and until
the contracting Parties sign a written Agreement for acceptance of the
deficient work and the terms of acceptance (which might include, for example,
a price reduction and/or extended warranty period).
A development on externally funded Works Contracts is that some Funding
Institutions Guidelines for as-measured Works (if such Guidelines are
included in the Contract) might require that quantities of the Bill of Quantities
may only be exceeded by Contract Addenda. Under such requirement, the
Project Manager and Resident Engineer must be careful not to consent to the
Contractors execution of exceeding works quantities (except at the
Contractors risk) and not to certify payment for such exceeding quantities
until any necessary Addendum has been effected.
August 2011
II-1 /12
II-1: WORKS CONTRACT DOCUMENTS - CHECK LIST

II-1.1 Works Contract Award & Tender Security:
Extend validity of Tenders & Tender Securities (as necessary)
Inform unsuccessful tenderers of Contract Award
Return Tender Securities to Contractor & unsuccessful tenderers
II-1.2 Compilation of Works Contract Documents:
Documents should include:
Signed Agreement between Employer & Contractor
Letter of Acceptance (if applicable)
Completed Form of Tender & Appendix to Tender
General Conditions of Contract
Particular Conditions
Clarifications of Tender Documents issued during Tender Period
Format for Performance Security
Format for Advance Payment Security
Funding Agreement between Employer and Funding Institution
Standard Guidelines of Funding Institution (if applicable)
For Design/Build Contract:
For Construction Contract:
Technical Specifications
Employer's Requirements
Drawings
Schedule of Lump Sum Prices
Priced Bills of Quantities
Breakdowns of Lump Sums
Contractor's Proposal
II-1.3 Works Contract Documents Sufficiency & Discrepancies:
Check precedence of documents
Check for sufficiency & discrepancies
Resolve problems with Employer
II-1.4 Contradictions between Works Contract & LBG Service Contract,
and Limitations of the Engineer's Authorities:
Check for contradictions or inconsistencies
Check consistency of limitations of Engineer's authority
Resolve problems with Employer/Client
II-1.5 Contradictions between Works Contract & Funding Agreement:
Check for contradictions or inconsistencies
Resolve problems with Employer/Funding Institution
II-1.6 Conditions of Contract & Interpretation:
If standard form of contract (e.g. FIDIC) ensure you have copies of:
Correct edition of standard General Conditions of Contract
Published Guidelines (User's Guides) for interpretation
II-1.7 Contract Definition of the Engineer:
a) "LBG"
b) "LBG as represented by the person holding the position of "
c) Preferred: "LBG as represented by the person appointed from
time to time to act as the Engineer for the purposes of the
Contract"
II-1.8 Engineer Must Adhere to Works Contract:
Engineer cannot, except by Variation and/or by written agreement of
the Parties, make changes to provisions of the Contract documents.
Check
Comment
August 2011

II-2.
II-2: Works Contract Start-Up
WORKS CONTRACT START-UP

This Chapter provides guidelines for the many obligations of the Employer,
Contractor and Engineer at the beginning of the Works Contract. In regard to
the Employers and Contractors obligations, the guidelines describe the
Engineers contractual responsibilities and/or administrative input.
o Appointment & delegation of authority to the Engineers staff.
o Appointment of Contractors Representative.
o Engineers notification of Commencement Date.
o Contractors provision of:
- Performance Security, Advance Payment Security & Insurance;
- Breakdowns of Lump Sums & Unit Prices;
- Works Programme & Cash Flow;
- Quality Assurance System.
o Employers provision of:
- Possession of Site;
- Construction License;
- Drawings.
This Chapter also describes requirements to be established and procedures
to be set up at the beginning of the Works Contract in respect of:
o Obtaining Meteorological Records.
o Contractors Reports.
o Price Adjustment Formula & Indices.
o Consent for Subcontractors.
o Nominated Subcontractors.
o Compliance with Local Law.
o Rules of Origin & Nationality.
o Imports & Taxes.
o Contractors Mobilization.
o Safety, Security & Protection of the Environment.
o Engineers Diaries.
II-2.1
Appointment of The Engineer

If the Engineer is defined in the Contract as an entity (e.g. The Louis Berger
Group, Inc.), then the Engineer must:
notify the Employer and Contractor of the name of the individual person
appointed to represent the entity in the role of the Engineer. Pre-approval
of the Employer would be necessary if the person to be appointed is
August 2011
II-2 /1

different than stated in LBGs proposal on which LBGs Service Contract is

based.
If the Engineer is defined in the Contract as a defined representative of the
entity (e.g. The Louis Berger Group, Inc., as represented by the person
holding the position of ), then the Engineer need only notify the
Employer and Contractor of the name and contact information of that person.
The Engineer cannot appoint a person other than the defined representative
to act as the Engineer. Unless the Employer and Contractor formally agree to
a Contract amendment, the Engineer cannot appoint another person to act as
the Engineer on behalf of LBG. Unless the Employer and Contractor make a
formal amendment to the Contract they are stuck with that defined person,
and the defined person is stuck with his role as the Engineer. Under this
circumstance the Engineer can delegate most, but not all, of his
duties/authority to other person(s) [see Section II-2.2]. This would be a
serious problem under recent forms of FIDIC contract (whereunder the
Engineer is not permitted to delegate authority to render Determinations) if
the defined representative of the Engineer is not resident on Site and not
engaged full-time on the Project [also see Section II-2.2].
If the Engineer is defined in the Contract as an undefined representative of
the entity (e.g. The Louis Berger Group, Inc., as represented by the person
appointed from time to time to act as the Engineer for the purposes of the
Contract), then LBGs Head Office Supervisor must:
notify the Employer and Contractor of the name of the person so
appointed who shall represent the entity to act as the Engineer. Preapproval of the Employer would be necessary only if the person to be
appointed is different than stated in LBGs proposal on which LBGs
Service Contract is based.
Under older forms of FIDIC contract the Engineer is contractually
independent of the Parties to the Works Contract, even though the Engineer
may have been employed by the Employer, under a separate Service
Contract, to perform the role of the Engineer. Under recent forms of FIDIC
contract the Engineer is not independent; he is defined as part of the
Employers Personnel.
II-2.2

The duties and authorities of the Engineer are cited in many clauses of the
Conditions of Contract. These range from receiving documents to taking
actions (e.g. The Contractor shall submit to the Engineer for his consent ...).
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The Engineer must delegate duties/authorities, as expedient, to his

supervision staff.
If an individual person is named in the Contract as the Engineer, or
appointed by the Engineer [see Section II-2.1] as the individual to act for the
Engineer on behalf of LBG, then no delegation of duties/authorities to him is
required. He is, de facto, the Engineer. His duties/authorities are already
described in the Conditions of Contract.
The Engineers delegation of duties/authorities to his assistants, notified in
writing to the Contractor, will invariably be required. But the extent of these
delegations, and any necessary sub-delegations, will depend on the specific
Conditions of Contract, as exemplified by the following references to FIDICbased contracts.
Under Older Forms of FIDIC Contract (pre-1999)
Delegation to the Engineers Representative:
It is not necessary for the individual person acting as the Engineer to be
engaged in the day-to-day supervision of a Works Contract. The Engineer
can appoint an Engineers Representative and delegate to him most of
his duties/authorities. On a single-contract project, the Engineers
Representative would be the senior representative of the Engineer on
Site, otherwise customarily called the Resident Engineer. On a multicontract project, the Engineers Representative might have responsibility
in that role for each and every contract, but with an on-site Resident
Engineer responsible for day-to-day supervision of each individual
contract.
The Engineer must:
formally delegate duties and authorities to the Engineers
Representative.
notify the Contractor of that delegation in writing, copied to the
Employer.
The Engineer cannot delegate all duties/authority to the Engineers
Representative. If the Engineer were to transfer full authority to the
Engineers Representative, and if the Employer or Contractor disagreed
with a determination of the Engineers Representative, they would have no
contractual recourse to an independent Engineers Decision [see Section
II-4.15 Dispute Resolution]. The Engineer should consider carefully the
clauses of the Conditions of Contract under which authorities are not to be
delegated to the Engineers Representative, but authority to render
Engineers Decisions under the old FIDIC Red and Yellow Book
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contracts would be one of them. In deciding what authorities to withhold

from the on-Site Engineers Representative, the Engineer (who will likely
not be located on-Site or even in-Country) must be careful not to create a
management overview bureaucracy that could delay the Contractors
progress and potentially give rise to entitlement to extension of the Time
for Completion.
If the Engineers delegation to the Engineers Representative is extensive
(with respect to all but a few clauses of the Conditions of Contract), then it
will be sufficient to state:
Pursuant to Cl of the Conditions of Contract I hereby appoint Mr.
as Engineers Representative for the (name of Contract), and hereby
delegate to him all duties and authority of the Engineer except in
respect of the following Clauses of the Conditions of Contract for which
I will retain responsibility for:
If using FIDIC old Red Book contract, example:
- Rendering Engineers Decisions pursuant to Sub-clause 67.1
- Certifying Default of the Contractor pursuant to Sub-clause 63.1
- Any other limitations.
Or if using FIDIC old Yellow Book contract, example:
- Confirming Engineers Decisions pursuant to Cl.2.7
- Any other limitations.
Delegation by the Engineer or Engineers Representative to other
supervision staff:
The many on-site duties of the Engineer cannot (on any contract of
significant value) be performed by the Engineers Representative alone.
Such duties include, for example, works inspections, signing
measurement and Dayworks forms, etc. Duties/authorities need to be
delegated to individual members of the supervision staff (called
Engineers Representatives Assistants under FIDICs old Red Book
form of contract) according to their supervision functions. In fact the old
Red Book contract requires that the Engineers Representative shall notify
the Contractor of the duties and authorities delegated to his Assistants,
but that the authorities shall be limited to those necessary to secure
acceptance of workmanship, Plant and materials in accordance with the
Contract.
Curiously, FIDICs old Yellow Book form of contract does not even
mention supervision staff other than the Engineers Representative, let
alone delegation of duties and authorities to such assistant staff. However,
that omission does not preclude the appointment of and delegations to
Engineers Representatives Assistants. As a matter of practicability, these
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Guidelines recommend that the provisions of the old Red Book contract be
followed on old Yellow Book contracts.
The Engineer, or the Engineers Representative (if he has been delegated
a general authority), must:
appoint by name and delegate duties/authorities to each of the
categories of the Engineers Representatives Assistants: Resident
Engineer, Deputy Resident Engineers, Section Engineers, Materials
Engineer, Inspectors, Geodetic Surveyor, Quantity Surveyor, etc.;
notify the Contractor in writing (copied to the Employer) of these
appointments and delegations.
These sub-delegations should be limited in extent. The Engineers
Representative should retain major contractual authorities such as issuing
Interim Payment Certificates and other certifications, instructing variations
and issuing Variation Orders, rendering Engineers determinations of the
Contractors claims, etc.
The notifications must state each of the clauses of the Conditions of
Contract under which duties/authorities are sub-delegated. This requires
painstaking review of all the Conditions of Contract.
For example:
Pursuant to Cl of the Conditions of Contract I hereby appoint
Mr as an Engineers Representatives Assistant for the (name of
Contract), and hereby delegate to him the duties and authority of the
Engineer in respect of the following Clauses of the Conditions of
Contract:
- receiving submissions under Cl.;
- issuing notices under Cl.;
- performing measurements under Cl.
If the Resident Engineer has been delegated the appropriate authority,
then he can notify to the Contractor the further sub-delegations in the
manner prescribed above.
Alternatively, and more efficiently, it is recommended that the subdelegations be effected by preparing a chart of delegations to all the
Engineers Representatives Assistants (identified by name and position),
related to specific clauses of the Conditions of Contract, which chart is
then formally copied to the Assistants themselves, the Contractor and the
Employer. [See Appendix Q for example of a delegations chart under
FIDICs old Red Book form of contract.]
Under Recent Forms of FIDIC Contract (from 1999)
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The Engineers duties & authorities:

Under FIDICs recent Red and Yellow Book forms of contract, the
Engineer is part of the Employers Personnel and there is no such
defined position as the Engineers Representative. Further, the extent to
which the Engineer can delegate duties/authorities is limited; Sub-clause
3.2 specifically states that he cannot delegate authority for rendering
Engineers Determinations under Sub-Clause 3.5. Since there are some
40 other Sub-clauses under which the Engineer may have to make
determinations pursuant to Sub-clause 3.5, the only practicable solution is
that the person acting as the Engineer shall be full-time on the
Project.
The individual person appointed to act as the Engineer [see Section II2.1] might be the Project Manager for a multi-contract project, or the
Resident Engineer for a single contract. No delegation of duties/
authorities to this individual person is required, since he will act as the
Engineer. He would sign Works Contract communications as for the
Engineer, The Louis Berger Group, Inc..
Delegation by the Engineer to other supervision staff:
The many on-site duties of the Engineer cannot (on any contract of
significant value) be performed by one person. Such duties include, for
example, works inspections, signing measurement and Dayworks forms,
etc. Duties/authorities need to be delegated to individual members of the
supervision staff according to their supervision functions; and Sub-Clause
3.2 provides for such delegations to assistant supervision staff.
The Engineer must:
appoint by name and delegate duties/authorities to each of the
categories of his supervision staff: Resident Engineer, Deputy
Resident Engineers, Section Engineers, Materials Engineer,
Inspectors, Geodetic Surveyor, Quantity Surveyor, etc.;
notify the Contractor in writing (copied to the Employer) of these
appointments and delegations.
These delegations should be limited to those necessary to secure
acceptance of workmanship, Plant and Materials in accordance with the
Contract; but excluding authority to make determinations pursuant to Subclause 3.5. It is recommended that the Engineer should also retain major
contractual authorities such as for issuing Payment Certificates and other
contractual certifications, instructing Variations and issuing Variation
Orders.
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The written delegations would be in similar form to examples given above

in regard to older forms of FIDIC contract. It is recommended that the subdelegations be effected by preparing a chart of delegations to all the
Engineers Assistants (identified by name and position), related to specific
clauses of the Conditions of Contract, which chart is then formally copied
to the Assistants themselves, the Contractor and the Employer. [See
Appendix Q for example of a delegations chart under FIDICs recent Red
Book form of contract.]
II-2.3
Pre-commencement Meeting
Preferably prior to the Engineers issuing a Notice of the Commencement
Date [see Section II-2.5], it is recommended that the Parties and the
Engineer convene a meeting to discuss and record matters including:
The role and authority of each entity participating in the Contract.
Appointment of the Engineer and (if appropriate) the Engineers
Representative [see Section II-2.1 and Section II-2.2].
Appointment of the Contractors Representative [see Section II-2.4].
Where the Contract provides for delegating duties and authorities to
persons, these should be clearly established.
Status of availability for Access to and Possession of Site [see Section
II-2.13].
Requirement and procedures for obtaining Construction License [see
Section II-2.14].
Status of availability for Issuing Drawings [see Section II-2.15].
Status of Contractors Performance Security [see Section II-2.6] and
Advance Payment Security [see Section II-2.7].
Status of Contractors Insurance [see Section II-2.8].
Commencement Date [see Section II-2.5].
Requirements for Safety, Security and Protection of the Environment [see
Section II-2.25].
Requirements for Quality Assurance and Control [see Section II-2.12].
Status of the Works Programme, key dates for information and
submissions, periods for approval, long delivery periods and special
problems [see Section II-2.11].
Requirements for subcontractors named, nominated and yet to be
proposed by the Contractor [see Section II-2.19 Consent for
Subcontractors and Section II-2.20 Nominated Subcontractors].
Works or materials to be provided by the Employer.
Procedures for measurement, notices, instructions, submissions and
responses.
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II-2.4
Requirement (under recent forms of FIDIC contract) that no Interim

Payment Certificate will be processed until the Contractor has submitted a
Monthly Progress Report pertaining to the relevant period of the IPC [see
Section II-2.17].
Procedures for interim valuations, certifications and payments [see
Section II.3.10 Contractors Interim Payment Statements, Section II-3.11
Interim Payment Certificates and Section II-3.12 Interim Payments].
Procedures for monitoring the progress of the Works [see Section II-2.11
Cash Flow], Regular Progress Meetings [see Section II-4.2],
Contractors Reports [see Section II-2.17] and updating the Works
Programme [see Section II-4.8 Works Programme & Cash Flow
Revisions].
FIDIC Red and Yellow Book forms of contract require that the Contractor
shall appoint a Contractors Representative, and give him authority to act on
the Contractors behalf under the Contract. Further, the Contractors
Representative shall be full-time on Site, give his whole time to directing the
Contractors performance of the Contract, and shall, on behalf of the
Contractor, receive instructions and notices from the Engineer.
Unless the Contractors Representative is named in the Contract, the
Contractor is required to submit to the Engineer for consent or approval
the name and particulars of the person the Contractor proposes to appoint as
Contractors Representative. Recent forms of FIDIC contract use the term
consent; older forms of FIDIC contract use approval. The Engineer
should be careful to use the appropriate term.
Older forms of FIDIC contract do not specify any time limits for submission
and appointment of the Contractors Representative. Recent forms of FIDIC
contract require that the Contractor shall submit his proposal prior to the
It is important that the Contractors Representative be appointed as soon as
possible after the Contract has come into force [see Section II-1.1 for
Contract Award], to enable the many communications necessary at the start
of the Contract.
The Engineer should, in writing:
Immediately after the Contract comes into force, prompt the Contractor to
submit his written proposal for appointment of the Contractors
Representative;
Promptly review the Contractors proposal and:
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either give consent/approval (as appropriate);

or advise the Contractor of the reasons that the proposal is
unacceptable, and require the Contractor to propose an alternative.
The Engineer cannot unreasonably withhold consent/approval. However, the

Engineer can reasonably expect that the Contractors Representative shall
have appropriate background experience on contracts of similar nature and
extent, and that he shall be fluent in the language of the Contract (which
requirement may have been stipulated in the Contract as it is in the recent
forms of FIDIC contract). It is recommended that the Engineer should meet
or, at least, have a discussion with the proposed Contractors Representative
to ascertain his fluency in the language of the Contract.
It often occurs that the proposed Contractors Representative is not fluent in
the language of the Contract. For an otherwise well-experienced candidate,
the Engineer might accept him on condition that the Contractor shall provide a
full-time, on-Site interpreter/translator to facilitate communications with the
Engineers representatives. However, in the case that language fluency is a
Condition of Contract, then the Engineer can only give such recommendation
to the Employer (which should be in writing), and only give conditional
consent/approval to the Contractor after receipt of the Employers written
agreement. The Engineer cannot unilaterally override a Condition of Contract.
Forms of FIDIC contract usually provide that the Engineer can revoke his
consent/approval of the Contractors Representative and require the
Contractor to submit a proposal for a replacement. Other than in the case of
some gross or flagrant misconduct, it is implicit that the Engineer would need
substantiation for such action; for example, the Contractors failure to remedy
insufficiencies or inadequacies previously notified by the Engineer to the
Contractor.
Recent forms of FIDIC contract provide that the Contractor shall not,
without the Engineers prior consent, revoke the appointment of the
Contractors Representative.
II-2.5
Commencement Date
The signing date of the Works Contract is not necessarily the date for
commencement of the Time for Completion of the Works. Most forms of
Works Contract (certainly FIDIC) require that the Engineer shall give to the
Contractor a Notice of Commencement Date.
The Commencement Date marks the start of the Time for Completion, and
therefore determines the date by which the Contractor shall substantially
complete the Works. Insofar as the Contract may provide for the Employers
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entitlement to Liquidated Damages if the Contractor does not substantially

complete the Works on time, the importance of unambiguously defining the
start and finish dates of the Time for Completion is obvious.
The Engineer, or Engineers Representative (if delegated that authority),
must:
give Notice of Commencement Date to the Contractor in writing.
The Contract will likely state, within its Conditions or Appendix to Tender, the
period within which the Engineer shall give such Notice to the Contractor.
Recent forms of FIDIC contract require the Engineer to give the Notice not
less than 7 days but not more than 42 days after the Works Contract came
into force [see Section II-1.1 Works Contract Award]. However, such
provisions in the Contract do not preclude the Employer and Contractor
agreeing a mutually convenient Commencement Date. For example, for a
contract with an 18-month Time for Completion and signed in October, it
might not be sensible to establish a Commencement Date whereby the Time
for Completion would cover two winter periods and only one construction
season; it would be more sensible to establish a later Commencement Date
so that the Time for Completion covers one winter and two construction
seasons.
Also, the Engineer should obtain the Employers confirmation that he will be
able to fulfil his obligations at the Commencement Date, or as appropriate
soon thereafter, in regard to:
completing procedures for Statutory Approvals and Permits (if any) [see
Section II-2.10];
giving the Contractor Access to and Possession of Site [see Section II2.13];
issuing a Construction License to the Contractor (if such is required and
the Employer has responsibility) [see Section II-2.14];
providing Contract Drawings to the Engineer (if the Employer is
responsible for design) in order that the Engineer can issue them to the
Contractor [see Section II-2.15 Issuing Drawings].
The Engineer should:
consult with the Employer and Contractor before issuing the Notice of
Commencement Date.
The Commencement Date is not necessarily the date on which the Contractor
may start any work. The Contractor may be restricted by other Conditions of
Contract. Older forms of FIDIC contract require that the Contractor cannot
start any work until he has provided evidence of effective insurances required
by the Contract [see Section II-2.8]. Recent forms of FIDIC contract
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provide that the Employer will not give Access to and Possession of Site
[see Section II-2.13] until he has received an acceptable Performance
Security from the Contractor [see Section II-2.6]. The Contractor cannot start
work on Site until those obligations have been fulfilled. Regardless of such
delays, however, the Commencement Date remains unchanged and the Time
for Completion continues to be counted from that date. If the delay is outside
the Contractors control, then the Contractor might be entitled to claim an
extension of the Time for Completion [see Section II-4.13 Delays, Extension
of Time for Completion & Associated Costs].
Under recent forms of FIDIC contract the Engineer should, as necessary:
at the time of giving notice of the Commencement Date, formally advise
the Contractor of his obligation to submit his proposal for appointment of
the Contractors Representative [see Section II-2.4].
II-2.6
The Contract will require that the Contractor shall obtain and provide to the
Employer, copied to the Engineer, a Performance Security (sometimes called
a Performance Bond). The Performance Security, from a bank or financial
institution acceptable to the Employer, entitles the Employer to monetary
compensation (to the limit of the amount of the security) in the event and to
the extent that the Contractor fails to execute the Contract satisfactorily. The
amount and currency of the Performance Security will be stated in the
Contract, usually in the Appendix to Tender.
There are many forms of performance security used in the construction
industry (including unconditional/on-demand forms and conditional forms).
The actual form to be provided will have been included in the Contract
documents.
The Performance Security is required to be valid until the Works have been
satisfactorily completed, the Defects Notification Period has expired, defects
have been rectified, and a Performance Certificate [see Section II-7.9] has
been issued.
[Note: Defects Notification Period and Performance Certificate are defined
terms of recent forms of FIDIC contract. Defects Liability Period and Defects
Liability Certificate are the equivalent terms in older forms of FIDIC contract.]
The Contract should, but might not, state the required period of validity of the
Performance Security. Sureties usually insist on a stated expiry date. If not
stated in the Contract, the required period of validity should be until the
anticipated date computed from Commencement Date + Time for Completion
+ Defects Notification Period + 28 days.
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The Contract should state the period within which the Contractor shall provide
the Performance Security to the Employer. Old and recent forms of FIDIC
contract require that an acceptable Performance Security shall be provided
within 28 days after the Employers Letter of Acceptance.
Acceptance of the Performance Security is the Employers contractual
obligation, but the Employer might expect the Engineers assistance. The
Engineer should:
prompt the Contractor, as necessary and in writing, to deliver the
Performance Security on time.
if the Contractor does not submit the Performance Security on time, give
formal notice to the Contractor to remedy his default, failing which the
Employer may consider termination of the Contract.
check, word-by-word, that the Performance Security complies with the
Contract proforma and is in the correct amount and currencies, and advise
the Employer accordingly and in writing.
if the submitted Performance Security complies with Contract
requirements, advise the Employer that he should confirm acceptance in
writing to the Contractor, with a copy to the Engineer.
This last requirement is important. Both old and recent forms of FIDIC
contract stipulate that the Engineer shall not issue any Interim Payment
Certificates [see Section II-3.11 Interim Payment Certificates], including for
an Advance Payment [see Section II-2.7], until the Performance Security has
been received and approved by the Employer. FIDIC Conditions require that
all approvals shall be in writing, and the Engineer needs evidence of that
approval. Furthermore, the recent forms of FIDIC contract state that the
Employer may withhold Access to and Possession of Site [see Section II2.13] until the Performance Security is received.
A copy of the Performance Security should be retained by the Engineer; not
the original. The original must be retained safely by the Employer throughout
the Contract, and returned by him to the Contractor within the specified period
after the Performance Certificate has been issued.
During the Contract, the Engineer must:
monitor that the validity of the Performance Security is maintained in the
appropriate amount until the Performance Certificate (called the Defects
Liability Certificate under old forms of FIDIC contract) is issued.
[See Section II-4.3 Continuing Validity of Securities & Insurance]
II-2.7

If the Contract provides for an Advance Payment by the Employer to the
Contractor, it will state the amount and currencies in the Appendix to Tender,
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and should include within the Contract Documents a proforma of the Advance
Payment Security (often called a Bank Guarantee for Advance Payment) to
be delivered by the Contractor to the Employer before the Advance Payment
can be authorized.
Both old and recent forms of FIDIC contract also require that the Advance
Payment cannot be authorized for payment until after the Employer has
received and approved the Contractors Performance Security [see Section
II-2.6].
The Advance Payment Security, from a bank or financial institution
acceptable to the Employer, entitles the Employer, in the event of the
Contractors Default under the Contract, to reimbursement from the surety of
that part of the Advance Payment remaining to be repaid to the Employer by
the Contractor. Therefore, the validity of the Advance Payment Security must
be maintained in an appropriate amount until the Advance Payment has been
completely repaid to the Employer [see Section II-3.11 IPCs: Repayment of
Advance Payment and Section II-4.3 Continuing Validity of Securities &
Insurance].
The Advance Payment Security should be provided directly to the Employer,
copied to the Engineer. Acceptance of the Advance Payment Security is the
Employers contractual obligation, but the Employer might expect the
Engineers assistance. The Engineer should:
check, word-by-word, that the Advance Payment Security complies with
the Contract proforma and is in the correct amount and currencies, and
advise the Employer accordingly and in writing.
A copy of the Advance Payment Security should be retained by the Engineer;
not the original. The original must be retained safely by the Employer, and
returned by him to the Contractor after the Advance Payment has been repaid
by the Contractor.
It is recommended (and recent forms of FIDIC contract require) that the
Engineer authorize payment of the Advance Payment in an Interim Payment
Certificate (usually the first). For this purpose the Engineer needs written
evidence from the Employer that he has received and accepted the Advance
Payment Security.
The Contract will contain provisions for repayment of the Advance Payment
through deductions in the Engineers Interim Payment Certificates [see
Section II-3.11 IPCs: Repayment of Advance Payment].
During the Contract, the Engineer must:
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monitor that the validity of the Advance Payment Security is maintained in

an amount not less than the value yet to be repaid by the Contractor. [See
Section II-4.3 Continuing Validity of Securities & Insurance]
It is recommended (and recent forms of FIDIC contract require) that:

if the Advance Payment has not been repaid by the date 28 days prior to
the expiry date of the Advance Payment Security, then the Contractor be
required to extend the validity of the Security failing which the Engineer
would effect repayment in his next Interim Payment Certificate(s).
II-2.8
Insurance
General Conditions of Contract, including older and recent forms of FIDIC
contract, typically prescribe that insurances will be obtained by the
Contractor. Sometimes the Particular Conditions may provide for Employerprovided insurance. This Section deals with the usual requirement for
Contractor-provided insurance.
Older and recent forms of FIDIC contract require the following equivalent
insurances to be provided:
A
Insurance of
/against:
B
C
Evidence to be
provided:
Copies of Policies
to be provided:
Older FIDIC
Works & Contractors
Equipment
3rd Party Insurance (including
Employers Property)
Accident or Injury to Workmen
Prior to start of any work on
Site
Red Book: Within 84 days after
Commencement Date.
Yellow Book: When required by
the Employer.
Recent FIDIC
Works & Contractors Equipment
Injury to Persons & Damage to
Property
Contractors Personnel
Within period stated in Appendix
to Tender
Only for A &B: within period
stated in Appendix to Tender
If, under the Contract, the Contractor designs major parts of the Works, he
may also be required to effect professional indemnity insurance.
FIDIC forms of contract require that evidence and, subsequently, copies of
insurance policies be submitted by the Contractor directly to the Employer. In
the older forms of FIDIC contract it is required that the Contractor notify the
Engineer that he has done so. Such notification is not necessary under recent
forms of FIDIC contract where the Engineer is part of the Employers
Personnel.
Older forms of FIDIC contract require that all insurances shall be in terms
approved by the Employer. In recent forms of FIDIC contract there is no
provision for the Employers approval. However, it is implicit that the
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insurances shall comply with the Contract requirements, and the Employer is
entitled to insist on the Contractors compliance. The Employer should
formally notify the Engineer whether or not the Contractors insurance
submissions comply, so that:
in the event of compliance: the Engineer can allow the Works to proceed
and certify any payment entitlements under the Contract for insurance;
in the event of non-compliance: the Engineer can issue to the Contractor
notice of requirement to remedy this default within the time stipulated in
the Contract or, if none is stated, within a reasonable time.
If the Contractor fails to comply, there is provision that the Employer may (but
is not bound to) effect and maintain the prescribed insurances, and to recover
the premiums therefor from the Contractor (e.g. by deductions from certified
payments owing to the Contractor). This situation, however, would be risky at
the beginning of the Contract when no monies are owing to the Contractor.
FIDIC forms of contract do not address the consequences of prescribed
insurances not being effected by either Party, except that the Contractor, as
the defaulting Party, is liable for any monies which (following an insurable
event) should have been recoverable under the insurances that the
Contractor failed to effect. But would the Employer escape liability in the
event that the Contractor becomes bankrupt? It is likely that the Employer
does not wish to take such risk, and would prefer to terminate the Contract.
An Engineers notice to the Contractor, requiring remedy of the default, would
be a prerequisite to the Employer later serving a valid notice of termination of
the Contract.
Older forms of FIDIC contract require that the Contractor shall provide prior
to the start of work at the Site evidence that the insurances required under
the Contract have been effected. This does not mean just Permanent Works;
it means any work, including temporary site installations. The Project
Manager must ensure that this requirement is observed.
Recent forms of FIDIC contract contain no such provision. It can only be
hoped that the period stated in the Appendix to Tender, within which the
Contractor must provide evidence of insurances, is sufficiently short to
preclude the possibility of the Contractor starting work. In any event, the
Contractor cannot start works on the Site until the Employer gives him
Possession of Site, which the Employer should not do until he receives an
acceptable Performance Security from the Contractor. The Engineer should
not unilaterally suspend any work by reason that evidence of insurances has
not been provided, which action could give the Contractor justification to claim
delay. The Engineer should formally advise the Employer that work is starting
before evidence of insurance has been provided and that the Engineer has no
authority to prevent work starting. It will be up to the Employer to choose what
to do, if anything.
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Although it is the Employers responsibility to accept (or not) the Contractors

insurance submissions, the Employer may request the Engineers review
assistance and advice.
The following recommendations are offered:
Satisfactory evidence of insurances should be in a form, such as
appropriate certificates from the insurer, that insurance premiums have
been paid and that the required insurances become fully effective by the
date that the evidence is required to be submitted.
The insurance policies must be scrutinized in detail against the stated
requirements of the Contract in all respects including:
Limits of insurance per event and in aggregate (except where the
Contract does not permit limitation of the number of events).
Limits of deductibles.
Limits of location. Locations should be included of the Contractors site
office installations, maintenance facilities, storage yards and
fabrication/manufacturing sites (which might be out-of-Country), natural
material source locations (e.g. quarries), disposal locations, access
roads and Goods in transit. The Site as described in the Contract
may be an insufficient definition for insurance purposes.
Under a Contract where the Employer is multi-faceted, with (say)
separate arms as contracting authority and beneficiary, the Employer
must be adequately covered as insured Principals.
Are any and all subcontractors employed under the Contract covered
by the Contractors insurances? If named subcontractors are covered,
then insurance amendments will be required whenever new
subcontractors are employed, and the Employer/ Engineer need to
monitor that the Contractor provides such amendments during the
Contract. If subcontractors are not covered by the Contractors
insurance policies, then the Contractor would be required to
demonstrate that his subcontractors have their own effective insurance
complying with the Contract requirements.
Policy exclusions should not be accepted, other than those identified in
the Contract as Employers Risks, unless the Contractor
demonstrates that insurance coverage of such other excluded risks is
not available at commercially reasonable terms.
The terms of duration of validity of the insurance policies: The
Contractor is required to maintain his insurances throughout his
execution of Works and, to a lesser extent, during the Defects
Liability/Notification Period, but he might not (and is not required to)
effect insurances with such effective periods at the beginning of the
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Contract. He may, for example, provide insurances with a stated expiry

date (say, one year duration), which the Employer would have no
justification to reject. Insurers might be reluctant to provide insurance
linked to events of extendable duration (Time for Completion of Works,
Defects Liability/Notification Period). Thus, insurers might only agree to
link insurance policies to the projected expiry dates of the Time for
Completion and Defects Liability/ Notification Period.
However, the Engineer should confine his advice to the Employer to matters
concerning compliance with his understanding of the insurance terms of the
Contract. He should not profess to be an insurance expert which could
place LBG into a potential liability situation. Under a FIDIC contact, it is the
Employers obligation to accept (or not) the Contractors insurance provisions.
Any Engineers advice to the Employer must be qualified by a statement that
the Engineer is not an insurance expert, together with a recommendation that
the Employer engage his own expertise.
During the Contract the Employer/Engineer must:
monitor that the Contractor maintains adequate insurance in accordance
with Contract requirements.
[See Section II-4.3 Continuing Validity of Securities & Insurance.]
II-2.9
Breakdowns of Lump Sums & Unit Rates

The Conditions of Contract may require that, at the beginning of the Contract,
the Contractor shall submit to the Engineer for his approval, a breakdown of
lump sum prices and unit rates. FIDICs older Red Book and recent
Red/Yellow Book forms of contract include provision only for submitting
breakdowns of lump sums. The older forms require submission within 28 days
of the date on which the Contract came into force [see Section II-1.1
Contract Award]; the recent forms require submission within 28 days after
the Commencement Date [see Section II-2.5]. The Particular Conditions
may contain provision for submission of breakdowns of unit rates (as
appropriate to a traditional as-measured contract).
Unit rates and prices for new or varied works should, wherever possible, be
derived from Contract unit rates and prices for similar works. Both older and
recent forms of FIDIC contract stipulate this as a requirement. Thus, having
the Contractors breakdowns of Contract rates and prices provides a valuable
tool for establishing rates and prices for new or varied works. Therefore:
If LBGs Service Contract includes preparation of the Works Contract
Conditions, the inclusion of requirement in the Contract for the
Contractors submission of breakdowns for all rates and prices is
recommended.
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The Engineer should, in writing, prompt the Contractor to submit his

breakdowns on time in accordance with the Conditions of Contract, and
advise him of the manner and form the breakdowns are to be prepared in
order to obtain the Engineers approval. Such letter might be (as
appropriate):
Pursuant to Cl. of the Conditions of Contract we respectfully remind
you of your obligation to submit to us breakdowns of the Contract lump
sum prices (and unit rates and prices, if appropriate) by (appropriate
date). Please be advised that we require the breakdowns to include
details, estimated costs and allowances for:
Cost:
Cost:
Cost:
Cost:
Cost:
Cost:
Subtotal:
Traditional definitions:
- Materials incorporated
into Permanent Works
- Plant incorporated
into Permanent Works
- Equipment
- Labour
- Temporary Works
- Other (explain)
Allowance: % for Site Overhead

Allowance: % for Head Office O/H
Allowance: % for Risk & Profit
Total:
New FIDIC definitions:

- Materials
- Plant
-
Contractors Equipment
Labour
Temporary Works
Other (explain)
% for Site Overhead

% for Head Office O/H
% for Risk & Profit
The Contractors % allowances will also be valuable information later in the

Contract for establishing any prolongation costs which the Contractor might
claim and be entitled during Extension of Time for Completion [see Section
II-4.13].
II-2.10

Unless the Contract contains specific provisions in regard to required
statutory approvals and/or permits, the Engineer should consult with the
Employer and Contractor to identify any:
approvals and procedures required for entry and residence permits for
foreign personnel.
approvals and procedures for importation of materials, plant and
equipment, including (if relevant under the Contract) procedures for dutyfree importation.
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approvals/permits required before work can start/proceed generally or in

particular parts of the Site, and establish responsibilities of the respective
Parties and procedures for obtaining such. Approvals/ permits might be
required from environmental agencies, owners of rights-of-way (e.g. utility,
railway or highway authorities), international border police, etc.
statutory approvals/permits and procedures required for the Contractors
installation and maintenance of temporary offices, storage yards,
accommodations, etc. (e.g. building permits and health & safety
requirements);
statutory approvals/permits and procedures required for the Contractor to
operate his construction equipment (e.g. approvals for installation and
operation of an asphalt production plant and monitoring emissions
therefrom);
statutory approvals and procedures required for executing any necessary
permanent or temporary utilities relocations (including cases where they
are to be executed by the Contractor or the utility owner);
statutory approvals and procedures required for traffic control and
diversions.
The Contractors Works Programme [see Section II-2.11] should take into
account the lead times necessary for procedures that are the Contractors
responsibility to obtain statutory approvals and permits.
Delays caused by the Employer in failing to perform actions for which he has
responsibility for obtaining statutory approvals and permits could give the
Contractor justification to claim extension of the Time for Completion and/or
additional costs. The Engineer should, as necessary and appropriate, formally
prompt the Employer in this regard.
II-2.11
Works Programme & Cash Flow

Works Programme
The Conditions of Contract will require that, at the beginning of the Contract,
the Contractor shall submit to the Engineer a Programme.
The detail and comprehensiveness of the submitted Programme will be the
first demonstration of the Contractors ability to plan the execution of the
Works within the Time for Completion. An undetailed, ill-considered
Programme might be a forewarning of potential disorganized execution of the
Works.
The Programme is important to the Engineer and Employer. It is the basis
against which the Engineer will monitor the Contractors progress. It is the
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basis on which the Employer/Engineer will plan their activities and obligations
including issuing Drawings, handing over possession of Site and, possibly,
mobilization of the Engineers supervision resources.
The Programme will also become a base reference for the Engineers
determination of any Contractors claims for extension of the Time for
Completion arising from alleged disruption or delay.
A comprehensive Programme would show:
The order in which the Contractor intends to execute the Works, including
timing for each stage of design (if any), Contractors Documents,
procurement, off-site manufacture and fabrication, delivery to Site,
construction, erection and testing.
The timing and sequencing of the Works, taking into account the lead time
of procedures for obtaining any necessary Statutory Approvals and
Permits for which the Contractor has responsibility [see Section II-2.10].
Similar detail of works to be performed by Nominated Subcontractors
[see Section II-2.20].
A general description of the methods the Contractor intends to adopt in
execution of each major stage of the Works.
A reasonable estimate, for each major stage of the Works, of the
number/class of Contractors Personnel and number/type of Contractors
Equipment to be mobilized.
The Programme must show the Works will be completed within the Time for
Completion.
A problem could arise if a programme submitted with the Contractors Tender
is included in the Contract documents and, thereby, is part of the Contract.
Tenderers are invariably required to submit an outline programme with their
tenders. The Employers acceptance of the Contractors tender may have
been influenced by his ability to release Possession of Site or issue Drawings
in accordance with requirements of the tender programme. If the Contractors
submits a detailed Programme so different from his tender programme that it
brings forward required release of Possession of Site or Drawings (with which
the Employer might not be able to comply), then the Engineer should not
(except with the Employers written no objection) accept such Programme.
However, in the event that the Contractors tender programme was not
practicable, it would be unwise for the Employer to impose unnecessary
compliance with the tender programme.
The Contract might require that the Programme be computer generated using
proprietary software (which might be specifically stated), showing the critical
path between activities.
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insist that the Contractors Programme complies with the Contracts stated
requirements.
Requirements in respect of the Programme differ between older and recent
forms of FIDIC contract.
Older forms of FIDIC contract require that:
o The Contractor shall submit his Programme within:
Red Book: the stated period of time after the Employers Letter of
Acceptance.
Yellow Book: 28 days after the Commencement Date.
o The Programme shall be submitted:
Red Book: for the Engineers consent, in such form and detail as the
Engineer shall reasonably prescribe. The General
Conditions of Contract do not prescribe any form and detail,
although Particular Conditions might.
Yellow Book: for the Engineers approval, in the form stated in the
Preamble to the General Conditions.
The old Red Book gives the Engineer the opportunity to prescribe the form
and detail of the Programme that is required from the Contractor, and he
should do so. It would be unreasonable for the Engineer later to withhold
consent because the submitted Programme does not comply with his
previously unstated wishes.
To fulfil the objectives of the Programme, the requirements of a
comprehensive Programme suggested at the beginning of this Section are
reasonable. Additional requirements for, say, a computer-generated Gantt
chart, critical path, early start/late start, format using proprietary software
would also be considered reasonable nowadays. On the other hand it
might be considered unreasonable to require a specific proprietary
software programme that was not specified in the Contract.
The Engineers consent to the Programme is required under FIDICs old
Red Book, and approval under the old Yellow Book the Engineer
should be careful to use the correct term under the Contract. However, in
the event that the Engineer does not respond within a reasonable time
(undefined, but 21 days maximum is suggested), then the Contractor
would have justification to claim the Programme to be deemed as having
been accepted. Therefore, if the Engineer does have reasonable objection
to the submitted Programme, he should, within a reasonable time, notify
the Contractor that consent/approval (as appropriate) is withheld and the
reasons therefor. When the Engineers consent/approval is given (or, by
lack of response, deemed to have been given), the Programme becomes
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a document upon which the Contractor could base claims for extension of
the Time for Completion due to delays arising from late issue of Drawings,
late Possession of Site, instructed Variations, etc.
The older standard forms of FIDIC contract have no provisions addressing
repercussions of the Engineers continuing objection to the Contractors
Programmes and the Contractors inability to obtain the Engineers
consent/approval. This would appear to be an omission considering that
Possession of Site may be required on the basis of the Programme [see
Section II-2.13]. The Contractors ability to substantiate later claims for
delay might be diminished without a Programme to which the Engineer, by
having objection thereto, withheld consent/approval. However, the
Engineer cannot unreasonably withhold consent.
Considering the contractual significance of the Programme, the Engineer
must:
ensure that the Programme is reviewed in detail to judge its adequacy
and, based on the Contractors proposed resources, its attainability.
As soon as practicable after receipt of the Programme, the Engineer must:
give to the Contractor in writing either his consent/approval (as
appropriate) or comment on its deficiencies and inconsistencies. In the
latter case he should require the Contractor to resubmit an improved
Programme to obtain the Engineers consent/approval.
Only when a Programme has received the Engineers consent/approval
(or deemed consent/approval if the Engineer failed to respond), could the
Contractor use it for validation of a claim for extension of the Time for
Completion.
Under older forms of FIDIC contract, after consent/approval has been
given to the initial Works Programme, the Contractor is contractually
obligated to submit Works Programme Revisions only if the Engineer so
requires [see Section II-4.8]. Unlike the initial Programme, the Engineers
consent or approval is not required for Works Programme Revisions.
Recent forms of FIDIC contract require that:
o The Contractor shall submit his Programme within 28 days after the
Commencement Date [see Section II-2.5]. But there is no provision for
the Employers or Engineers approval or consent.
o The Programme shall be prepared in such detail described at the
beginning of this Section II-2.11 Works Programme.
There is no provision for the Programme to be prepared in such form and
detail as the Engineer might require; only that the Programme shall
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conform to the Contract requirements. Thus, the Engineer can only give
notice to the Contractor of the extent to which his Programme does not
comply with the Contract. The Contract states that if the Engineer does
not give such notice within 21 days after receiving the Programme, then
the Contractor shall proceed in accordance with that Programme, subject
to his other obligations under the Contract.
The Engineer must:
review the Programme in detail and give notice to the Contractor,
within the prescribed time, of the extent to which the Programme does
not comply with the Contract.
If the Programme does comply with the Contract, then the Engineer
should just acknowledge receipt. For reasons given below, he should
definitely not give nor imply any consent or approval.
Recent forms of FIDIC contract have deliberately omitted provision for
consent or approval. By doing so:
- consent or approval cannot be unreasonably withheld;
- if the Contractor submits an over-optimistic Programme, there is no
approved Programme to be used thereafter for the unquestionable
validation of a claim for extension of the Time for Completion;
- therefore, neither Party can misuse the Programme to achieve an
unfair advantage over the other.
Under recent forms of FIDIC contract, the Contractor is contractually
obligated to submit Works Programme Revisions whenever his current
programme becomes inconsistent with his actual progress [see Section II4.8 for Works Programme Revisions].
Cash Flow Estimate
Older forms of FIDIC contract require the Contractors submission, within a
stated time after the Contract has come into force [see Section II-1.1
Contract Award], of a Cash Flow Estimate, in quarterly periods, of all
payments to which he will become entitled under the Contract
Recent forms of FIDIC contract require (unless the Contract includes a
Schedule of Payments in accordance with which the Contractor will be paid in
instalments) the Contractors submission, within 42 days after the
Commencement Date [see Section II-2.5], of an estimate, in quarterly
periods, of payments he expects to become due under the Contract.
Both are only for the Engineers/Employers information, and are the nonbinding Contractors estimates of the payments to which he will become
August 2011
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entitled under the Contract during each quarterly period. Neither older nor
recent forms of FIDIC contract require that the estimates be based on the
Contractors Programme, but this can be reasonably inferred. The older forms
of FIDIC contract require the estimate to be detailed which, although
interpretable, does indicate more than a single estimated quarterly amount.
These estimates of future payment entitlements, based on the Programme,
are very useful information:
o for the Employer to ensure that funding will be in place to enable interim
payments to the Contractor;
o against which the Engineer can monitor progress of the Works.
It is recommended that the Engineer encourage the Contractor to submit
estimates:
based on monthly projections tied to the activities and production rates of
the Programme;
broken down to segregate the value of Works intended to be completed
from other payments and deductions including Advance Payment and
repayment, Retention Money and other adjustments.
The value of Works completed is the only reliable criterion for quantifying
and charting the overall % progress of the Works compared to the
Programme. The Engineer will be expected to provide such progress charts in
his Project Progress Reports [see Section I-3.8 Progress Reports]. Under
recent forms of FIDIC contract the Contractor is obligated to submit Monthly
Progress Reports including charts comparing actual and planned progress
[see Section II-2.17]. Cooperation between the Engineer and Contractor in
establishing the breakdown of estimates necessary to facilitate a common
basis for both of their progress reporting obligations would be mutually
beneficial.
Under older forms of FIDIC contract, the Contractor is required to submit
revised estimates at quarterly intervals only if the Engineer so requires.
Under recent forms of FIDIC contract, the Contractor is obligated to submit
revised estimates at quarterly intervals. [See Section II-4.8 Cash Flow
Revisions.]
II-2.12
Quality Assurance & Control

Overview
The following definitions are useful:
Quality Policy: The overall quality intentions and direction of an
organization regarding quality, as expressed by top management.
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Quality Management: That aspect of the overall management function

that determines and implements the Quality Policy.
Quality Assurance: The planned and systematic actions necessary to
provide adequate confidence that a product or service will satisfy given
requirements for quality.
Quality Control: The operational techniques and activities that are used
to fulfil requirements for quality.
Quality Surveillance: The continuing monitoring and verification of the
status of the procedures, methods, conditions, processes, products and
services, and analysis of records in relation to stated references to ensure
that specified requirements for quality are being met.
Older forms of FIDIC contract refer neither to Quality Assurance nor Quality
Control, apart from the implicit requirement that Works shall comply with
Contract requirements.
Recent forms of FIDIC contract state only that the Contractor shall institute
a Quality Assurance System which the Engineer is entitled to audit, but
without any specific requirement that the Contractor shall submit his System
to the Engineer. However, the Contractor is required to submit details of all
procedures and compliance documents to the Engineer for information
before each stage of design or construction commences. Procedures and
compliance documentation could be construed to apply to Quality Assurance
and/or Quality Control.
Quality Assurance
It is common for Particular Conditions to require that the Contractor shall
submit, within a prescribed time at the beginning of the Contract, his Quality
Assurance System for the Engineers consent; and perhaps therein to
describe the required features of such System. It is a common requirement
that the Contractor shall designate an on-Site, full-time Quality Control
Manager.
In reviewing the Contractors Quality Assurance System, the Engineer should
be cognisant of the above definitions. The Contractors provision of an ISO
certification is not sufficient. Neither is the submission of a Quality Policy.
What is required is a Quality Assurance System directly referenced and
applicable to the Works Contract, and to the specific Works to be designed (if
applicable) and constructed by him thereunder. It should not just reiterate the
Specification clauses with which he must comply.
The Quality Assurance System must describe:
o The organization and procedures that the Contractor will implement to
ensure Quality Control specifically on the subject Works Contract. The
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o
o
o
o
organization should include the Site person responsible for Quality

Assurance, Control and Surveillance, and the Head Office person with
overall responsibility for Quality Management and Assurance to whom he
can appeal and obtain action in case of conflict with the Contractors onSite production management. There should be an organizational line of
Quality Management independent of or additional to the management line
for production.
A list of all Standards and Codes of Practice with which the Works must
comply, as referenced in the Specifications, together with a statement of
those already available on Site, and/or a procurement plan for delivery to
Site in advance of their requirement for the works to which they relate.
The personnel, equipment, apparatus, instruments and resources the
Contractor will use for sampling and testing the various materials required
for or incorporated into the Works, including descriptions and locations of
intended installations on Site (e.g. Site laboratory and services) and
detailed plans for their mobilization, procurement, delivery and installation.
CVs should be provided of key personnel.
Procedures for provision of certifications of quality and source-of-origin of
manufactured materials (e.g. cement, bitumen, steel bars) and proprietary
products (e.g. bridge bearings, expansion joints).
Requirements of the local Law in respect of jurisdiction for and statutory
certification of testing facilities, and the Contractors plans for compliance
therewith in advance of the Works.
The location, resources, relevant experience and certifications of
subcontractors that the Contractor intends to engage for Quality Control,
specifying the types of work to which their activities will relate. CVs should
be provided of the subcontractors key personnel to be engaged on the
Works.
Detailed plans and schedules for Quality Control at off-Site fabrication or
manufacturing shops/yards.
The Contractors plans for Quality Surveillance of Quality Control activities
performed off-Site and/or by subcontractors.
The Contractors procedures for Quality Control documentation and
analysis.
Requirements of the local Law in respect of Quality Control documentation
(as may be necessary to permit hand-over of the Works to the Employer
under local Law), and the Contractors plans and procedures to comply
therewith.
The Contractors procedures and schedules for delivering Quality Control
documents to the Engineer in accordance with Contract requirements.
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Quality Control
As part of his Quality Assurance System the Contractor should submit, at the
beginning of the Contract, the standard forms he proposes to use as Quality
Control documents, including:
o Standard forms for recording results of the various materials tests
prescribed in the Contract.
o Standard forms for summarizing test results and, where required,
presenting statistical analyses of the test results.
o A format for regular submission of test reports to the Engineer.
o Standard forms for submission of samples of materials to be incorporated
into the Works;
o Standard forms whereby the Contractor will request the Engineers
inspection and (as appropriate) testing and/or measurement of completed
stages of the Permanent Works or Temporary Works:
- before works are covered up (e.g. layers of earthwork fill, base
formations, asphalt courses, below-ground foundations);
- before works are incorporated into further work stages (e.g. steel bar
reinforcement placements to be incorporated into concrete work);
- for Temporary Works that are critical to proper execution of Permanent
Works, before they are used for their function (e.g. formwork for
concrete);
- before natural materials that are intended to be incorporated into the
Works are transported to Site;
- before fabricated items are transported to Site (e.g. fabricated
steelwork, precast concrete);
- before manufactured Plant is packaged for storage or transport.
The Contractors motivation to provide comprehensive Quality Control
documentation should be to establish an unquestionable record
demonstrating his compliance with Contract requirements.
The Engineer must:
be satisfied with the Contractors Quality Control documentation, as it
affects acceptance of the Works and his certification of payments therefor.
It behoves the Engineer and the Contractor to cooperate in the development
of formats for the various standard Quality Control forms to their mutually
satisfaction.
Older forms of FIDIC contract do not require that the Engineer shall give
approval of or consent to test results or completed stages of Works, although
they do provide that the Engineer may reject such.
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Recent forms of FIDIC contract require the Engineers consent to Materials

samples, the Engineers endorsement of tests that he has witnessed, but
nothing in respect of inspections. But there is provision for the Engineers
rejection.
However, it would be an unreasonable interpretation of the Contract that the
Engineer need say nothing (except to reject). There should be, and the
Contractor can reasonably expect there to be, a record of the inspections
performed, that the Engineer had no cause for rejection, and that the
Contractor could proceed with successive stages of the Works with some
confidence that the Engineer would not retroactively express dissatisfaction.
It is recommended that the standard forms to be submitted by the Contractor
have provision thereon for the Engineers supervision staffs signatures as
ACCEPTED / NOT ACCEPTED, the Engineers reasons for nonacceptance, and the Engineers requirements for remedial action.
The term Approved should not be used.
Quality Control forms must be in the Contract language. However, whereas
the Contract language may be, say, English, the Contractors and Engineers
representatives involved in Quality Control activities on an international
contract may not be proficient in that language. It is recommended that all
standard Quality Control forms be prepared dually in the Contract language
and local language. Indeed, this may be necessary in countries in which the
local Law requires Quality Control documentation in the local language.
Nonetheless, in the event of conflict between the languages, the Contract
language must be deemed to prevail.
Examples of standard forms, based on previous projects, are presented in
Appendix J.
II-2.13
Access to & Possession of Site

Delays in giving Access to and Possession of Site to the Contractor are a
common cause for contractors claiming extension of the Time for Completion.
It is recommended that, before the Notice of Commencement Date is given
[see Section II-2.5], the Engineer should:
formally ask the Employer if there are any reasons (e.g. uncompleted land
acquisitions or rights-of-way) that could affect the Employers ability to
give access to and possession of Site to the Contractor.
Contracts vary in their provisions for when the Employer shall give the
Contractor Access to and Possession of Site.
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Older forms of FIDIC contract provide that, save insofar as the Contract
may prescribe otherwise, the Employer shall, from time to time, give access
to and possession of portions of the Site:
- as may be required to enable the Contractor to commence and
proceed, with due dispatch, with execution of the Works in accordance
with his Works Programme [see Section II-2.11];
- otherwise in accordance with such proposals as the Contractor shall
make by notice to the Employer copied to the Engineer.
Under such Contract provisions, the obligation for giving possession of Site in
a timely manner is the Employers; but the Engineers assistance should be
provided, since it is the Engineer who receives and reviews the Contractors
Programme.
Recent forms of FIDIC contract provide that the Employer shall give to the
Contractor right of access to and possession of all parts of the Site within the
time(s) stated in the Appendix to Tender. Except that, if no such times are
stated, the Employer shall give right of access to and possession of Site as
may be required to enable the Contractor to proceed in accordance with his
Programme. In this latter case the Engineer should act as recommended
above. Recent forms of FIDIC contract also provide that the Employer will not
give right of access to and possession of Site until the Contractor has
submitted an acceptable Performance Security [see Section II-2.6].
Thus, if specific time(s) within which the Employer shall give access to and
possession of Site are prescribed in the Contract, the Engineer should:
formally advise the Employer of this obligation, giving the actual dates as
derived from the Contract provisions.
If the Contract does not stipulate any such time(s), the Engineer should,
based on a review of the Contractors first submitted Programme, (whether or
not the Programme is acceptable as complying with Contract requirements):
interpret when the Contractor will require access to and possession of
either the whole of or successive portions of the Site, and obtain the
Contractors confirmation of that interpretation;
formally advise the Employer of the date(s) by which he should give
access to and possession of the whole of or successive portions of the
Site (as agreed by the Contractor based on his Programme), unless and
until he receives written requests otherwise from the Contractor.
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II-2.14
Construction License
In many countries the local Law requires that the Contractor shall obtain a
construction license to execute construction works, and there may be
Contract requirements in this respect. Standard forms of FIDIC contract do
not address this issue, but they do require compliance with local Law. Any
such required license should be obtained/issued not later than when the
Employer gives to the Contractor Access to and Possession of Site [see
Section II-2.13].
Unless the Contract contains provisions therefor, the Engineer should:
consult with the Employer and Contractor to establish responsibilities of
the respective Parties and procedures for obtaining/issuing a construction
license;
thereafter monitor that the procedures are followed and obligations
performed.
II-2.15
Issuing Drawings
Drawings included in the Tender documents are for the purpose of tendering
only. Tender drawings do not constitute Contract Drawings.
Under contracts where design has been performed by or on behalf of the
Employer, it is typically stipulated (as in forms of FIDIC contract) that the
Engineer shall issue two copies of the Contract Drawings (and subsequent
Drawings) to the Contractor. If the Engineer has not been involved in the
design, then obviously the Engineer must first obtain the Drawings from the
Employer.
Delay in the issuing of any or all of the Drawings could provide the Contractor
with justification to claim extension of the Time for Completion and/or
additional costs. To avoid such circumstance arising, the Drawings should be
issued to the Contractor not later than the Commencement Date [see
Section II-2.5].
Before issuing a notice of Commencement Date, ascertain that:
- the Drawings have been prepared in the Contract language;
- the Drawings are suitably identified by title and reference number, and
stamped or labelled approved for construction;
- the Employer is able to hand over to the Engineer the requisite
numbers of Drawings.
Insist that the Employer transmits the Drawings to the Engineer in writing,
with every Drawing identified by title and reference number.
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II-2.16
Upon receipt from the Employer, promptly issue to the Contractor the
requisite numbers of copies of the Drawings. The transmittal must be in
writing, with every Drawing identified by title and reference number.
Most forms of contract provide that the Contractor is:
o deemed to have obtained all available data on climatic conditions of the
Site and its surroundings, and based his tender, amongst other things,
thereon;
o entitled to extension of the Time for Completion in the event of
exceptionally adverse climatic conditions.
This does not mean that the Contractor is entitled to a time extension
whenever adverse weather conditions slow his progress. The climatic
conditions have to be exceptionally adverse.
It is hoped that the Contract provides a definition of exceptionally adverse
climatic conditions. If not, it will be necessary to adopt one. A reasonable
definition to be adopted by the Engineer, in rendering determinations, would
be that suggested in FIDICs guidelines on its recent (1999) forms of
contract:
o Exceptionally adverse climatic conditions are conditions having a
probability of occurrence, at or near the Site, less than five times the Time
for Completion.
For example, where the Time for Completion is 2 years and the Contractor in
his Programme has planned in November to perform asphalt works (which
cannot be performed when the temperature falls below 5oC) and the
maximum daily temperature is below 5oC on 10 days: If statistical records
show, over the past 10-year period, that maximum daily temperatures were
below 5oC for a maximum 7 days in November of any one year, then the
Contractor would be entitled to a 3-day extension of the Time for Completion
if this particular activity is defined on the Works Program as a critical-path
activity.
The importance of keeping detailed records of climatic conditions is obvious.
Contracts usually place responsibility upon the Contractor to obtain/record
and provide such data monthly to the Engineer, and the Engineer should
monitor that the Contractor fulfils such obligation from the Commencement
Date. The Engineer should require, if not already stipulated in the Contract,
that
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the Contractor shall submit records of climatic conditions together with, or

incorporated within, the Contractors Monthly Progress Reports.
It is recommended that the Contractor be encouraged to arrange with a local

Meteorological Station, if such exists and is in a location representative of the
Site, to provide such records. Such official records would not be contentious.
If no provision exists in the Contract for recording climatic conditions, then the
Engineer should persuade the Employer of the advisability of instructing a
Variation for such provision.
The meteorological data/records to be collected for each calendar month
should reflect the climatic conditions that will affect the Works. For a road
construction contract they might include:
Maximum /minimum daily air temperatures.
Maximum /minimum daily ground surface temperatures.
Number of days with maximum temperature below 5oC.
Number of days with heavy rain (>15mm).
Number of days with light rain (1-15mm).
Number of workdays lost.
II-2.17
Contractors Reports
Records of Contractors Personnel & Equipment
These records are essential to facilitate the evaluation of claims and
Variations. It is necessary to establish basic record-keeping from the
Recent forms of FIDIC contract require that the Contractor shall submit for
each calendar month until a Taking-Over Certificate is issued for the whole of
the Works, in a form approved by the Engineer:
o Details showing the number of each class of the Contractors Personnel
and each type of the Contractors Equipment on Site.
General Conditions of older forms of FIDIC contract require this information
to be submitted only if required by the Engineer, at such intervals as he may
prescribe. The Engineer should:
at the beginning of the Contract, instruct the Contractor to submit this
information at least monthly.
By definition of recent FIDIC forms of contract:
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- Contractors Personnel means the Contractors Representative and all

personnel whom the Contractor utilizes on Site, who may include the staff,
labour and other employees of the Contractor and each Subcontractor; and
any other personnel assisting the Contractor in the execution of the Works.
- Contractors Equipment means all apparatus, machinery, vehicles and
other things used for the execution and completion of the Works and the
remedying of any defects, excluding Temporary Works, and excluding Plant
and Materials intended to form part of the Permanent Works.
The Engineer should formally instruct the Contractor, at the beginning of the
Contract, the required form for submission of records of the Contractors
Personnel and Equipment. The following contents and submission schedule
are recommended:
For the Contractor and each Subcontractor, a listing of the classes of
Personnel showing, for each class:
- Number at beginning of month
- Numbers and dates of new mobilizations
- Numbers and dates of demobilizations
- Number at end of month
Protracted absences from the Site of the Contractors Representative
should be recorded.
Equipment: As for Personnel, except that types of Equipment should be
subcategorized, as necessary, to describe their capacities. For example:
20t trucks, 40t trucks, etc. The listings should also state whether owned or
hired.
Submission is to be made not later than 7th day after the end of the subject
calendar month (together with the Contractors Monthly Progress Report, if
applicable).
The first submission is to be made within 7 days after the last day of the
first full calendar month following the Commencement Date. The period to
which this first submission relates shall be the period commencing from
the Commencement Date.
It is not sufficient for the Engineer to rely on the information submitted by the
Contractor. During any report period the Engineer should:
ensure that one (or more) of his Site staff is charged with the responsibility
of performing spot checks of the numbers of Contractors Personnel and
Equipment on Site that are dedicated for use on the Contract (i.e. not for
use or shared use on other contracts).
Should the Engineer, based on his spot-check records, disagree with the
details submitted by the Contractor, he should:
promptly notify such disagreement in writing to the Contractor (failing
which the Contractors information would be deemed as accurate).
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attempt to obtain the Contractors agreement to submit corrected records.

in the event that the Contractor fails to justify his submitted records and
declines to amend them, confirm the Engineers disagreement and the
Engineers records to the Contractor (copied to the Employer).
Contractors Monthly Progress Report

The requirement in recent standard forms of FIDIC contract for the Contractor
to submit Monthly Progress Reports is new. Older standard forms of FIDIC
contract do not include this requirement; although reporting elements are
often required in Conditions of Particular Application or Specifications.
Recent forms of FIDIC contract require the Contractor, until a Taking-Over
Certificate for the whole of the Works has been issued, to submit Monthly
Progress Reports to the Engineer within 7 days after the last day of the period
to which each report relates. The detailed requirements are thorough, as
summarized below:
Charts and description of progress, including design, Contractors
Documents, procurement, manufacture, deliveries to Site, construction,
erection and testing, and works of each Nominated Subcontractor.
Photographs showing the status of manufacture and progress on Site.
For each main item of manufacture: the name and location of
manufacturer; percentage progress; actual or estimated dates of
commencement of manufacture; Contractors inspections, tests, shipment
and delivery to Site.
Records of Contractors Personnel and Equipment.
Copies of quality assurance documents, tests results and certificates for
Materials.
List of notices of claims (both Employers and Contractors claims).
Safety statistics; including details of hazardous incidents.
Comparisons of actual and planned progress; including details of events
or circumstances which may jeopardize completion in accordance with the
Contract, and measures to overcome delays.
Under older forms of FIDIC contract, there was little (if anything) the
Engineer could do to make the Contractor submit his records of Personnel
and Equipment and/or monthly reports. However, recent forms of FIDIC
contract do provide the means of inducement: the Engineer can withhold an
Interim Payment Certificate in respect of a Contractors Statement until the
Contractor has submitted his Monthly Progress Report for the period to which
the Statement relates.
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Under any recent form of FIDIC contract the Engineer should, at the
beginning of the Contract, advise/remind the Contractor that:
Monthly Progress Reports are to be submitted for each calendar month
within 7 days after the last day of the month to which the reports relate.
The first Monthly Progress Report is to be submitted within 7 days after
the last day of the first full calendar month following the Commencement
Date. The period to which this first report relates shall be the period
commencing from the Commencement Date. (For example: if the
Commencement Date is 15 April, the first Report, covering the period 15
April to 31 May, is required to be submitted by 7 June.)
Interim Payment Certificates in respect of the Contractors Statements will,
in accordance with (state relevant clause of Contract) be withheld until
the Contractor has submitted a Monthly Progress Report for the period to
which a Contractors Statement relates.
Should the Engineer disagree with any facts of the Contractors Monthly
Reports, he must:
promptly notify such disagreement in writing to the Contractor (failing
which the Contractors information would be deemed as accurate), copied
to the Employer.
attempt to obtain the Contractors agreement to submit corrected records.
in the event that the Contractor fails to justify his submitted records and
disagrees to amend them, confirm the Engineers disagreement and the
Engineers records to the Contractor (copied to the Employer).
II-2.18
Price Adjustment Formula & Indices

The Contract will provide, as do FIDIC forms of contract, that:
Either:- Subject to (the clause relating to adjustment arising from change in
Laws of the Country), the Contract Price shall not be subject to any
adjustment in respect of the rise or fall in the cost of labour, materials
or any other matters affecting the cost of execution of the Works.
Or:-
A formula whereby the amounts payable to the Contractor shall be

adjusted for the rise and fall of the costs of labour, specified materials
and other inputs to the Works, such as:
Pn = a + b (Ln / Lo) + c (En / Eo) + d (Mn / Mo) + .
where:
Pn = adjustment multiplier applied to the estimated contract value,
in the relevant currency, of work carried out in period n, this
period being a month unless otherwise stated in the Appendix
to Tender.
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a = fixed coefficient stated in table of adjustment data included in

the Appendix to Tender, representing the non-adjustable
portion of contractual payments.
b = coefficients representing the estimated portion of each cost
c
element related to execution of the Works, as stated in
d the table of adjustment data. For example b-unskilled
labour, c-cement, d-bitumen.
Ln = current cost indices or reference prices for the period n,
expressed in the relevant currency of payment, each of
En
Mn which is applicable to the tabulated cost element on the date
49 days prior to the last day of the period (to which the
particular Payment Certificate relates).
Lo = base cost indices or reference prices, expressed in the
Eo
relevant currency of payment, each of which is applicable
Mo to the relevant tabulated cost element on the Base Date
(defined by FIDIC as the date 28 days prior to the latest date
for submission of Tenders).
Typically the Employer would have defined the fixed (non-adjustable)
coefficient a in the tender documents, but may have also defined the other
coefficients b, c, d, etc., and also all the sources of the cost indices in the
table of adjustment data for each currency. Alternatively the Employer may
have left it to the Contractor, in his tender, to define the other coefficients and
their sources.
If such formula for Contract Price adjustment is included in the Contract, the
Engineer must, at the beginning of the Contract, establish that:
a+b+c+d does not exceed 1.
The sources of the indices are readily and reliably accessible.
The definition of each index, as stated in the table of adjustment data, is
uniquely identifiable from the source definitions (e.g. cost indices may be
quoted for different types of bitumen).
The indices are available for the Base Date.
The indices will be reliably available during the Contract.
Reason for this precaution derives from experience on previous contracts
where it was found that stipulated sources in the Country (such as a Statistics
Institution) did not monitor all indices defined in the formula, did not have
indices for the Base Date, or did not (due to budgetary problems) regularly
publish the indices.
In case of such problems, it will be necessary for the Engineer to:
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Consult with the Employer and the Contractor to achieve an agreeable

resolution.
Conform the agreed resolution by a jointly signed Contract Addendum
[see Section II-3.18 Contract Addenda & Amendments ].
In the event that the Contractor does not complete the whole of the Works
within the Time for Completion, the adjustment multiplier for works executed
after the Time for Completion must be capped at its value applicable to the
month during which the Time for Completion expired [see Section II-3.11
IPCs: Price Adjustment]
In the event that the Contract excludes provision for price adjustment but an
extension of the Time for Completion is granted as a result of delay caused
by the Employer, the Contractor may be entitled to introduction of price
adjustment upon the value of works so delayed and performed after expiry of
the original Time for Completion [see Section II-4.13 Delays, Extension of
Time for Completion & Associated Costs].
II-2.19
Consent for Subcontractors

Most forms of contract, including FIDIC forms, require that:
o The Contractor shall obtain the Engineers consent prior to employing any
Subcontractor; except that consent is not required for Subcontractors
named in the Contract, nor for suppliers of Materials or labour.
o The Contractor shall not subcontract the whole of the Works, or shall not
subcontract more than a specified percentage of the value of the Contract
Price.
Particular Conditions may provide that the Engineer shall obtain the
Employers consent for subcontracts above a stated value, before the
Engineer can give consent to the Contractor.
Recent forms of FIDIC contract require that the Contractor shall give the
Engineer not less than 28 days notice of the intended date of commencement
of each Subcontractors work, and of the commencement of such work on
Site. There is no such requirement in older forms of FIDIC contract.
The Engineer should, at the beginning of the Contract:
remind the Contractor of the Contract requirements in respect of:
- the maximum value of Works that may be subcontracted;
- consent of the Engineer before any Subcontractor is permitted to
perform any work.
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The Contractors proposals for subcontracting works must be in writing, and

the Engineer should require any submission to include:
The proposed Subcontractors:
- Company name, head office address, tel/fax/etc.;
- Name and contact information of the Subcontractors on-Site
representative proposed for the subcontracted works.
A description of the types, extent and locations of works intended to be
performed under the subcontract.
Experience (of the company and proposed key personnel) in works of
types and extent similar to the works intended to be performed under the
subcontract.
A listing and description of the Subcontractors resources.
A listing and description of the equipment, materials and labour that the
proposed Subcontractor would provide under the subcontract.
The intended start date(s) of works (both off-site and on-Site if relevant).
The Contractors intentions for his superintendence of the Subcontractors
works, including Quality Assurance and Control [see Section II-2.12].
The estimated total value of the works to be executed under the
subcontract.
A copy of the draft Subcontract Agreement (excluding any measurement,
payment and financial terms which are confidential between Contractor
and Subcontractor) that should include:
- Provisions whereby works to be executed by the Subcontractor shall
be subject to the provisions of the Contract for performance, quality,
workmanship, and acceptance. The subcontract should refer
specifically to the relevant Contract documents (Specifications,
Drawings, etc.).
- Provisions for insurance relating to the Subcontractors equipment,
personnel and 3rd party injury and damage. Whether insurance is to be
provided by the Contractor or the Subcontractor, the provisions must
comply with requirements of the Contract [see Section II-2.8
Insurance & Section II-4.3 Continuing Validity of Insurance].
- If required under the Contract, provisions that would entitle the
Employer to require that the subcontract be assigned to the Employer
(under stated relevant clauses of the Conditions of Contract) if and
when applicable or in the event of termination of the main Contract by
the Employer.
In the case of proposed subcontracts for works that will include:
- off-Site fabrication of structural steel or precast concrete elements (e.g.
bridge girders, road kerbs),
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and designs for preparing and testing composite materials to be

incorporated into the Works (e.g. bituminous and concrete mixes),
the Engineer, or his representatives, should:
visit the proposed Subcontractors off-Site facilities to assess the
Subcontractors ability to comply with Contract requirements;
formally request the Contractor to make arrangements for such visit, and
request the Contractors participation in the visit.
On no account shall the Engineer enter into any formal communications
directly with the proposed Subcontractor. Written communications must be
between the Engineer and Contractor. Submissions to the Engineer of
information concerning a proposed Subcontractor must be directly from the
Contractor.
The Engineers response to a proposed subcontract should be:
Require the Contractor to provide, as necessary and relevant, the abovelisted information.
Visit proposed off-Site production facilities if necessary to assess the
Subcontractors capabilities to comply with Contract requirements.
If necessary, formally request the Contractor to supplement his
submission in the event that it leaves doubts of the Subcontractors
capabilities. Such requests should be reasonable, not nitty-gritty.
If within the Engineers unilateral contractual authority (subcontracts
below a specified value or of unlimited value):
- either give written consent (with comment, if appropriate) to the
Contractor;
- or withhold consent, stating the reasons.
If not within the Engineers unilateral contractual authority (any
subcontracts or those above a specified value):
- give written recommendations to the Employer, and request his written
agreement (or otherwise) before giving consent to or withholding
consent from the Contractor.
The Engineer should be careful to use the term consent, not approval.
The Engineers consent cannot be unreasonably withheld. Doubts of the
proposed Subcontractors abilities are not sufficient reason to withhold
consent. It is a matter of degree. It would be reasonable to withhold consent
of a proposed Subcontractor for, say, heavy steelwork fabrication, whose
previous experience has only been in light metalwork. It would be
unreasonable to withhold consent of a proposed Subcontractor for heavy
steelwork fabrication because he has no prior experience of, say, welding
unusually thick steel plate, but for which he has the resources. Under such
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latter circumstance the Engineer should, when giving consent, advise the
Contractor of his superintendence obligations.
Limit of Value of Works to be Subcontracted
Many contracts require that the Contractor shall not subcontract more than a
specified percentage of the Contract Price. Such requirement begs the
question What is a subcontract?
Older forms of FIDIC contract define a Subcontractor as:
any person named in the Contract as a Subcontractor for a part of the
Works or any person to whom a part of the Works has been subcontracted
with the consent of the Engineer
However, since these contracts state that the Contractor is not required to
obtain consent for the provision of labour or Materials, therefore suppliers of
labour or Materials do not fall within the definition of Subcontractor unless
named as such in the Contract. Nothing is said about suppliers of Equipment.
In so far as Nominated Subcontractors obviously have the consent of the
Engineer, therefore they must fall within the definition of Subcontractor.
Recent forms of FIDIC contract merely define a Subcontractor as:
any person named in the Contract as a subcontractor, or any person
appointed as a subcontractor, for part of the Works
without mentioning Engineers consent. Nominated Subcontractors obviously
fall within this definition. Since these contracts state (under a clause entitled
Subcontractors) that the Contractor is not required to obtain consent to
suppliers of Materials, it could be inferred that such suppliers are
nevertheless deemed as subcontractors. But what about suppliers of labour,
Plant or Equipment?
The Engineer should be careful not to jump to a determination of Contractors
breach of Contract for subcontracting works exceeding the specified limit. He
should fully discuss the matter with the Employer, hopefully to agree what
reasonably constitutes a subcontract for the purpose of assessing if this limit
has been exceeded. It should be remembered that the Contractor is himself
capable of applying his own interpretation of the Contract against which it
might be difficult to argue contractually and conclusively.
The following guidelines are suggested:
o The value of works undertaken by Nominated Subcontractors should be
included, but only to the limit of Provisional Sums provided in the original
Contract for works intended to be undertaken by Nominated
Subcontractors.
o The value of any subcontract for execution of Permanent and/or
Temporary Works, together with any supply of Materials, Plant, Equipment
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and labour included in the subcontract to execute those Works, should be

included.
o The value of supply-only contracts for provision of Materials, Plant,
Equipment and/or labour (i.e. not for execution of Works) should be
excluded.
II-2.20
Nominated Subcontractors
Nominated Subcontractors are subcontractors nominated by the Employer or
imposed upon the Contractor not, as is sometimes misunderstood,
subcontractors nominated by the Contractor in his Tender.
Nominated Subcontractors, if required at all under the Contract, are typically
specified for specialist works which a general contractor is unable or not
permitted to perform. For example, an electrical utility owner might permit
relocation of a transmission line (required under the Contract) only to be
executed by a specialist contractor pre-approved by the utility owner to
perform such works. Provisional Sums may be included in the Contract to
cover such works, the primary cost of which is not under the Contractors
control.
The basic definition of a Nominated Subcontractor (as in recent forms of
FIDIC contract) is that of a Subcontractor who is stated in the Contract as a
Nominated Contractor, or who the Engineer instructs the Contractor to
employ to execute certain works under a Provisional Sum or as a Contract
variation. Older forms of FIDIC contract both extend and restrict the definition
to meaning any Subcontractor who is nominated, selected or approved by the
Employer or Engineer to perform works or services for which Provisional
Sums are included in the Contract.
Under FIDIC contracts the definition of a Provisional Sum is a sum
described as a Provisional Sum and included in the Contract for any part of
the Works, which may be used in whole or in part or not at all on the
instructions of the Engineer, but to which the Contractor has entitlement only
to payment for works so instructed by the Engineer. [See Section II-3.2
Provisional Sums.]
Thus, the Engineer must be careful to read the specific Contract clauses
relating to Nominated Subcontractors, in respect of:
definition;
provisions for the Contractors objection;
any required terms of the subcontract;
provisions for the Nominated Subcontractors indemnification of the
Contractor from and against:
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failure of the Nominated Subcontractor to discharge such obligations

and liabilities as will enable the Contractor to fulfil his own obligations
and liabilities under the Contract,
- consequences of negligence by the Nominated Subcontractor;
payments to the Nominated Subcontractor;
requirement for evidence of payments;
responsibility for coordination of the Nominated Subcontractors work;
provision for the Contractors mark-up for overhead and profit as a
percentage of the amounts he pays to the Nominated Subcontractor.
If the Contract does specify a Nominated Subcontractor, the Engineer should,

as soon as possible at the beginning of the Contract, consult with the
Employer and Nominated Subcontractor to:
determine that no problems will arise from any reluctance of the
Nominated Subcontractor to conform to Contract requirements for
indemnification of the Contractor;
determine that the Nominated Subcontractor has the resources to execute
the intended subcontract works in accordance with reasonable
Programme requirements of the Contractor;
and thereafter:
formally advise the Contractor of any anticipated problems and a proposal
for resolution;
otherwise advise the Contractor of a contact person and coordinates of
the Nominated Subcontractor (if not already included in the Contract)
If Provisional Sums are included in the Contract but no Nominated
Subcontractors are identified, the Engineer should consult with the Employer
and, if necessary, the Funding Institution to determine:
any requirements under Law or of the Employer or the Funding Institution
for invitation, submission and evaluation of competitive tenders for the
works to be undertaken under a Provisional Sum and/or by a Nominated
Subcontractor;
formally advise the Contractor of any procedures to be adopted for
appointment of Nominated Subcontractors to execute works under
Provisional Sums, and of any requirement for the Contractors
participation in such procedures.
For guidelines concerning Design by Nominated Subcontractors under
Provisional Sums see Section II-5.7.
It is recommended, subject to the Employers agreement, that appointment of
Nominated Subcontractors be avoided:
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unless the Contract specifically requires works under Provisional Sums to

be performed by Nominated Subcontractors;
unless there are other circumstances (such as a utility owner insisting on
performing utility relocations with his own forces or by a specialist
approved by him).
Unless Nominated Subcontractors are unavoidable, works instructed by the

Engineer under Provisional Sums can executed by the Contractor at existing
rates and prices of the Contract (where applicable), or otherwise at negotiated
rates and prices.
In the event that the Law, the Employer or the Funding Institution requires
that works to be performed under Provisional Sums shall be competitively
tendered, then this could be achieved by participation of the Contractor in the
process and the Contractors agreement to appoint the successful company
as a normal Subcontractor with a suitable mark-up on the Subcontractors
rates and prices for the Contractors overhead and profit.
II-2.21
Compliance with Local Law

At an early stage of the Contract, the Engineer should ascertain, with the
Employers assistance, if there are local laws, regulations or ordinances (in
the country, state or regional districts in which the construction is being
performed) governing the administration of the Contract and handing-over the
Works on completion.
Such laws, regulations or ordinances may pertain to:
o Maintenance of a Site Book to record instructions of design changes
(perhaps to be signed by the original designer for any such change).
There might be a requirement for preparation in the language of the
country.
o Maintenance of Quality Control & Assurance records in a particular format
and/or in the language of the country.
o Documentation required to be compiled and handed over before the
Employer can accept the completed Works or parts thereof.
o Requirements for inspections and acceptance by national authorities such
as a National Construction Control Directorate and/or a National
Environmental Agency.
o Requirements for statutory Commissions for formal acceptance of the
Works and hand-over documentation, before the Works can be handed
over to the Employer on completion.
o Requirements, on completion, for documents to handed over to different
regional authorities (in the event, for example, of Works spanning different
regional districts of the Employer).
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If there is a Contract clause, as in forms of FIDIC contract, that the law of the
country shall apply to the Contract (according to which the Contract shall be
construed), then the Contract must be administered in accordance with that
law. The Engineer cannot insist that only the Contract provisions need prevail
for example, under a form of FIDIC contract, that documentation need only
be prepared in the Contract language, or that the Contracts Taking-Over
provisions prevail over local law requirements for Hand-Over of the Works on
completion.
Problems might arise where requirements of the applicable law contradict
prescribed provisions of the Contract. Under such circumstance, such
contradictions should be identified early in the Contract, in order that agreed
resolution or compromise may be established, formally agreed (between the
Employer, Contractor and Engineer) and recorded.
Otherwise, if provisions of the Contract and local law are not in conflict
(although they may be different), then provisions of both references should be
satisfied in tandem.
II-2.22
Rules of Origin & Nationality

The Engineer should check if the Employer or Funding Institution has specific
rules for:
Origin of Materials and Plant to be incorporated into the Works.
Equipment and vehicles to be provided under the Works Contract (such as
for the Engineers use for supervision) that become the property of the
Employer.
Nationality of the Contractors Personnel.
On a contract funded by Tied Aid, such rules are typically stipulated in the
Funding Agreement between the Funding Institution and the beneficiary
Country. Tied Aid means foreign aid that must be spent in the country
providing the aid or in a group of stated or other beneficiary countries. Also,
multilateral funding institutions (e.g. Asian Development Bank, World Bank,
etc.) will invariably have embargos against certain countries from which
importation of Goods (Contractors Equipment, Materials, Plant or Temporary
Works) is disallowed.
A Funding Agreement with such rules may be part of the Contract documents;
but if not, the rules should have been included or referenced elsewhere in the
Contract documents. Such rules might require that:
o Materials and Plant must be procured from eligible countries. The
Contractor may be required to provide, to the Engineer, Certificates of
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Origin for the various Materials and Plant. The Engineer may not be
permitted to accept (and, therefore, not to certify payments for) Materials
and Plant for which Certificates of Origin have not been provided.
o Ditto for equipment and vehicles that will become the property of the
Employer.
o The Contractors Personnel engaged in the Country of the Project must be
citizens of, and carry passports of, an eligible country.
The Engineer must, at the beginning of the Contract:
be conversant with any such rules;
remind the Contractor of these requirements;
establish procedures to demonstrate and record compliance;
and, during the Contract:
ensure that acceptable compliance documents are provided before works
are accepted and certified for payment.
II-2.23
Imports & Taxes

Exemption Procedures
The Engineer should check if the Contract, such as by virtue of a Funding
Agreement between the Funding Institution and the beneficiary Country, has
provision for the Contractors exemption in the Country from:
Value Added Tax (VAT);
import/excise duties, levies, etc. on Materials and Plant to be incorporated
into the Works, and on equipment and vehicles provided under the
Contract that become the Employers property;
import/excise duties, levies, etc. on consumables used in the execution of
the Works (e.g. fuel, formwork, equipment spare parts);
import/excise duties, levies, etc. on temporary imports of Contractors
Equipment;
income taxation of Contractors expatriate personnel.
Contracts financed by multilateral banks often prescribe such exemptions.
However, the governmental agencies responsible for collecting such taxes
and levies may not be amenable to granting such exemptions without
intervention and facilitation by the Employer or even by the Funding
Institution itself. Complications may arise if Contract provisions for such
exemptions conflict with the Law of the Country.
Also the Contract provisions, as affected by local Law, may need to be
clarified. For example, does exemption from VAT mean that the Contractor
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is obliged to pay VAT, but will be reimbursed VAT within a certain period after
compliance with certain application procedures?
The Engineer should, at the beginning of the Contract, consult with the
Employer and Contractor to establish procedures to be followed respectively
by the Contractor, Employer and Engineer:
to achieve the Contractors exemption from VAT;
to facilitate, without unreasonable delays, cross-border imports of
Materials, Plant and Equipment for execution of the Works;
to achieve the Contractors exemption from import/excise duties, levies,
etc.
Export after Completion of Works
It must be remembered that Contractors Equipment imported, under Contract
provisions, free of import/excise duties, levies, etc., has been so imported
solely for executing works under the Contract. Such Equipment must not be
used for other purposes, and must be exported after the works for which it is
used are completed.
II-2.24
Contractors Mobilization
The beginning of the Contract is a period during which the Contractor and
Employer each have several obligations to fulfil including:
Contractor:
Employer:
Appointment of Contractors
Appointment of Engineer
Representative
Mobilization of Engineers Personnel
Submissions of/for
Provision of Drawings
Acceptance of:
- Insurances
- Breakdowns of Lump Sums
- Insurances
& Unit Rates
Giving Access to & Possession of Site
- Works Programme &
Issuing Construction License
Cash Flow
- Quality Assurance System
(if relevant)
- Subcontractors
Establishment of Procedures for
Obtaining Statutory Approvals
Imports and Taxes
& Permits (if relevant)
General Mobilization
This early period is often invoked by the Contractor, in subsequent claims for
extension of the Time for Completion, for the Employer having not fulfilled an
obligation (e.g. late or problematic possession of Site). The Engineer, in
August 2011
II-2 /46

rendering determinations of such claims, should weigh the Contractors

contribution to such delay by his own failure to fulfil obligations, or if he was
sufficiently mobilized to perform works had it not been for the Employers
delay.
It is therefore important that the Engineer and his staff keep detailed daily
records of the Contractors mobilization activities on Site until fully mobilized
to perform the Works, including:
dates of mobilizations of Contractors Representative and numbers/
categories of Contractors Personnel (incl. Subcontractors);
dates of mobilization of numbers/categories of Contractors Equipment,
and any necessary materials for temporary works;
dates of delivery of Materials and Plant;
progressive dates of Contractors site installations (office, yards,
laboratories, etc.);
progressive dates of Contractors installations and provisions for
supervision by the Engineer;
dates of necessary Statutory Approvals and Permits (if relevant).
[Also see Section II-2.17 Contractors Reports.]
II-2.25
Safety, Security & Protection of the Environment

The General Conditions of FIDIC forms of contract require the Contractor
to:
o comply with local safety regulations;
o take care for the safety of all persons entitled to be on the Site;
o keep the Site and Works clear of unnecessary obstruction to avoid danger
to these persons;
o keep unauthorized persons off the Site;
o provide fencing, lighting, guarding and watching of the Works until
completion;
o provide any Temporary Works (e.g. roadways, footways, guardrails,
fences) for the use and protection of the public and owners and occupiers
of adjacent land;
o take all reasonable steps to protect the environment on and off the Site
and to avoid damage and nuisance to people and property resulting from
pollution, noise and other causes of his operations;
o ensure that emissions, surface discharges and effluent from the
Contractors activities do not exceed values indicated by the Specifications
or prescribed by local Law.
August 2011
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The General Conditions of FIDIC forms of contract do not specifically

require the Contractor to submit for the Engineers consent any plan or
procedures for safety and protection of the environment. However, the
Particular Conditions and or the Specifications might include such provisions
which may be more onerous, or less onerous than the local regulations. The
Contract documents may require the Contractor to appoint a full-time,
resident Safety Officer who shall be responsible for implementing
procedures and actions for safety and protection of the environment.
The burden of responsibility rests with the Contractor to obtain information on
the Laws and procedures of the Country, and to comply with the applicable
Laws. Nevertheless, LBG, in its role as the supervising Engineer, has
responsibility to check that the Contractor does comply, and to take
appropriate action under the Contract if the Contractor is not complying.
The Engineer should, before Works commence in earnest on Site:
Check that the Contractor has obtained information on the Laws of the
Country applicable to safety and protection of the environment. Obtain
copies of such information from the Contractor, and consult with the
Employer to determine any other applicable Law or regulations.
In the event that the Contractor commences construction activity before
providing such information, consult with the Employer to identify and
obtain the information.
Thereafter monitor that the Contractor complies with the requirements of
the Contract documents and local Laws, whichever might be the most
onerous.
Check that the Contractor has provided for his Personnel (including
subcontractors), as appropriate for the Works:
- hard hats, harnesses (for high works), life jackets (for water transport
or working over water), reflective vests (for night work or working under
road traffic), earphones (noise-suppressing), gloves, footwear, eye
protection, etc;
- first aid facilities readily accessible on Site;
- evacuation procedures in the event of accidents;
- procedures and emergency contact numbers, in the event of accidents,
for mobilizing professional medical attention, fire brigade, ambulance
(or other evacuation transport to hospitals), police, etc.
Safety of Engineers Staff
While safety of all persons on the Site is the Contractors responsibility, the
Project Manager must ever be conscious of the safety of the Engineers staff
in the execution of their supervision duties.
August 2011
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Hopefully the Contract includes provisions that the Contractor shall provide
safety apparel for the Engineers staff.
Either ensure that the Contractor provides for the Engineers staff, or
procure from LBG petty cash:
- hard hats and reflective vests
- life jackets (as necessary)
- protective footwear, eyewear, earphones, gloves (as necessary)
Either ensure that the Contractor provides & maintains in each of the
Engineers offices, or procure/maintain from LBG petty cash:
- first aid kit
- fire extinguishers
Prepare and post memoranda conspicuously at each of the Engineers
offices instructing staff of:
- availability of hard hats, reflective vests and other protective
apparel;
- LBG requirement to wear hard hats (and, as appropriate, other
protective apparel) at all times during their supervision of Works;
- availability of first aid kit;
- contact numbers of the Contractors Safety Officer and other
emergency numbers (doctor, hospital, fire brigade, police);
- location and operation of fire extinguishers;
- emergency evacuation procedures.
II-2.26
Diaries & Events Log

Diaries
It is important that the Engineer and each of his Site supervision staff
(Resident Engineer, Deputy Resident Engineers, Section Engineers,
Materials Engineers, Surveyors and Inspectors for each Works Contract)
keep daily diaries of the Contractors and their own activities. Book-type
diaries (not loose-leaf) would be appropriate for senior supervisory positions.
Standard daily diary forms should be used wherever possible for subordinate
supervisory positions, based on the delegations of responsibility. The daily
diary forms should be submitted not later than the morning after the day of
record. Where staff are not proficient in the Contract language, the forms can
be bilingual; such that the staff complete them in the language of the Country
and a Site interpreter/translator provides a Contract language translation on
the same form.
An example for a standard Inspectors Daily Site Diary form is presented in
Appendix K. Such standard forms would need to be tailored to staff positions
and to the nature of the Works.
August 2011
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Events Log
The Resident Engineer on each Works Contract (i.e. the most senior of the
Engineers on-Site representatives) should keep a running Events Log,
chronologically recording significant events from the beginning of and
throughout the execution of the Works. Such Events Log will be invaluable as
a readily available reference, when writing progress reports and reviewing the
Contractors claims, to the sequence of events and any delays.
On a multi-contract project, the Project Manager could request the Resident
Engineers to submit their Events Logs at the end of each month with their
draft Monthly Progress Reports [see Section I-3.8]; perhaps more regularly
at the beginning of the Works Contracts until the format and detail are
established. The Project Manager could then augment the Log with
submission events of which the Resident Engineer might be unfamiliar.
It is suggested that the Events Logs be in Excel spreadsheet format, in such
form as presented in Appendix K.
August 2011
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II-2: WORKS CONTRACT START-UP - CHECK LIST

II-2.1 Appointment of the Engineer:
Employer's notice to Contractor of Appointment of "Engineer" (if necessary)
Engineer's notice of person who will act for the Engineer
Engineer's Appointment of the Engineer's Representative (if applicable)
II-2.2 Engineer's Delegation of Duties & Authorities:
Engineer's notice to Contractor (copied to Employer) of Delegation of:
Duties & Authorities to Engineer's Representative (if applicable)
Engineer's or Engineer's Representative's (as applicable) notice to
Contractor (copied to Employer) of Appointment, Duties & Authorities of:
Each & every member of Site supervision staff
II-2.3 Pre-commencement Meeting:
Agenda & Meeting
II-2.4 Contractor's Representative:
Contractor's appointment & Engineer's approval/consent
II-2.5 Commencement Date:
Identify with Employer any problems affecting Commencement Date
(e.g. Environmental approvals, Possession of Site, Drawings)
Consult Employer & Contractor to decide Commencement Date
Engineer's notice to Contractor of Commencement Date
II-2.6 Performance Security:
Contractor's submission
Check format, amount & period of validity
Engineer's recommendation & Employer's acceptance
II-2.7 Advance Payment Security:
Check format, amount & period of validity
II-2.8 Insurance:
Contractor's submission of evidence of insurances:
Insurers' certifications /effective dates /premiums paid
Contractor's submission of insurance policies
Compliance with Contract requirements: effective dates /principals
/coverage (incl. Subs) /exclusions /locations /limits /validity
II-2.9 Breakdowns of Lump Sums & Unit Rates:
Instruct Contractor of required form & detail
Contractor's submission of Breakdown of Lump Sums
Contractor's submission of Breakdown of Unit Rates (if applicable)
II-2.10 Statutory Approvals & Permits:
Consult Employer & Contractor to identify approvals/ permits required:
Before Works can start & responsibility for obtaining
For Contractor's Equipment & temporary Site installations
For executing utilities relocations
For traffic control & diversions
II-2.11 Works Programme & Cash Flow:
Works Programme:
Instruct Contractor of required form & detail (if applicable)
Engineer's consent (if applicable)
Cash Flow:
Establish with Contractor form & detail
II-2.12 Quality Assurance & Control:
Quality Assurance System:
Contractor's submission (if applicable)
Engineer's consent (if applicable)
Quality Control:
Establish with Contractor standard forms to be used
II-2.13 Access to & Possession of Site:
Review Contractor's Programme to establish needs & inform Employer
Employer gives PoS to meet requirements of Contract and/or Programme
Check
Comment
August 2011
II-2.14 Construction License:
Consult Employer /Contractor to establish requirement /responsibility
II-2.15 Issuing Drawings: (if design is Employer's responsibility)
Before notice of Commencement Date, ensure that Drawings available
Engineer obtain from Employer & issue to Contractor
II-2.16 Meteorological Records:
Obtain from local Meteorological Station (if available & representative)
II-2.17 Contractor's Monthly Reports (incl. Labour /Equipment returns):
Instruct Contractor of required form /detail /frequency (if not in Contract)
Engineer's staff perform own regular counts of Labour /Equipment on Site
II-2.18 Price Adjustment Formula & Indices: (if applicable)
Check sources of indices are readily available & accessible
Check each index description is uniquely identifiable in source data
Obtain indices at Base Date
II-2.19 Consent for Subcontractors: (except those named in Works Contract)
Check Contract limit of value of Works that can be subcontracted
Check limit of Engineer's authority for consent without Employer approval
Instruct Contractor of form & detail required for Engineer's consent
Contractor's submissions for consent
Engineer's consent (with /without Employer approval as appropriate)
II-2.20 Nominated Subcontractors: (if applicable)
Read & follow Contract provisions for:
Definitions of Nominated Subcontractors & Provisional Sums
Contractor's objection
Nominated Subcontractors' indemnification of Contractor
Contractor's coordination of Nominated Subcontractor's work
Contractor's mark-up for overhead & profit
II-2.21 Compliance with Local Law:
Check requirements for:
Maintenance of 'Site Book' to record instructions & design changes
QC documents in local language as well as Contract language
Requirements for inspection by State Inspectorate
Documents required for 'Hand-Over' of Works
Requirements for statutory 'Commissions' for Hand-Over of Works
Hand-Over to different Regional Authorities (if Works span Regions)
II-2.22 Rules of Origin & Nationality: (if applicable)
Check & determine requirements /procedures for certification of:
Origin of Plant /Materials /equipment to become Employer's property
Nationality of Employer's Personnel
II-2.23 Imports & Taxes: (if applicable)
Check & determine Contract provisions /procedures for exemption from:
Value Added Tax
Import/excise duties on Materials /Plant
Construction consumables
Contractor's Equipment to be exported after use
Income taxation of expatriate personnel
II-2.24 Contractor's Mobilization:
Monitor & keep detailed records of:
Contractor's mobilization activities
Contractor's performance of obligations at start of Contract
Employer's performance of obligations at start of Contract
II-2.25 Safety, Security & Protection of the Environment:
Obtain applicable Laws of Country
& compare with Contract provisions to determine governing requirements
Check Contractor provides safety clothing, first aid facilities, emergency
& evacuation procedures
Safety of Engineer's Staff:
Provision of safety clothing & first aid facilities
Post instruction for safety compliance & emergency procedures
II-2.26 Diaries & Events Log:
All supervision staff to maintain daily diaries of Contractor's & own activities
Prepare standard diary forms for subordinate Site staff
Maintain Events Log starting at beginning of Contract
Check
Comment
August 2011

II-3.
II-3: Variations & Financial

Control of Works
VARIATIONS & FINANCIAL CONTROL OF WORKS

This Chapter provides guidelines for the Engineers financial control of Works
Contracts, including:
o Bill of Quantities & Unit Prices
o Provisional Sums
o Instruction & Evaluation of Variations to the Works
o Issuing Variation Orders
o Value Engineering
o Dayworks
o Measurement of Works
o Interim Payment Certificates & Payments to the Contractor
o Estimates of Cost of Works to Completion
o Works Quantity Management
o Monitoring & Reporting Works Progress
o Contract Addenda & Amendments
II-3.1
Bill of Quantities & Unit Prices

For an as-measured contract (such as based on the FIDIC Red Book) the
Bill of Quantities and Unit Prices (BoQ) is a Bill of estimated Quantities and
fixed Unit Prices.
By reference above to fixed Unit Prices is meant that the Unit Price for any
unique BoQ Item number with its corresponding unique Description of work
should not be changed. If a new unit price for a work item is determined as
warranted by some changed circumstance (for example, in case of a
significant quantity change for which the Contract permits establishment of a
new unit price), then a new unique BoQ Item number must be established
with its own unique Description (describing the new circumstance) against
which the new Unit Price is applied. [see Section II-3.3 Variations]
The Quantities set forth against Items in each bill are estimates of each kind
of work included in the Contract, given for convenience of forming a common
basis for contractors tenders. There is no guarantee to the Contractor that he
will be required to perform the quantities under any particular item in the BoQ
or that the quantities will not differ in magnitude from those stated in the BoQ.
The brief descriptions of items given in the BoQ are purely for purpose of
identification and shall not modify or supersede the detailed description given
in the Technical Specifications and Drawings. The BoQ must be read in
conjunction with the Preambles to Bill of Quantities [see also Section II-1.3
August 2011
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Control of Works
Works Contract Documents & Appendix H] and with the Method of

Measurement [see also Section II-1.3 & Appendix I].
Except where specifically and expressly otherwise stated in the Contract, only
the Permanent Works shall be measured for payments to the Contractor. The
Method of Measurement (MoM) should, in detail, describe the coverage of
works and activities (including preparatory, temporary, associated and
finishing works) under each item (or each category of items) of the BoQ. In
addition, as should be stated in the Preambles to the BoQ, the prices for
operations not provided for in separate items of the BoQ (e.g. for preparatory
building, technological plant, temporary facilities, administration, planning,
scheduling, coordination, etc.) shall be deemed to be distributed among the
rates and prices entered against items of the BoQ. If any item of the BoQ has
not been priced by the Contractor in his tender, then the price thereof shall be
deemed to be covered by other priced items of the BoQ.
In any Engineers determinations concerning works coverage of priced BoQ
items, the Engineer should refer (in addition to the BoQ Preambles and MoM)
also to the Instructions to Tenderers of the Tender Documents that should
have given rules for pricing BoQ items.
Insofar as the Engineers Interim Payment Certificates for an as-measured
contract will be based on BoQ computations, one of the first priorities of the
Engineer must be to:
obtain an electronic file of the complete, priced BoQ (and/or any other
priced schedules) or, if such is unavailable, prepare one.
II-3.2
Provisional Sums
Definition & Payment Entitlement
Older forms of FIDIC contract define a Provisional Sum as:
a sum included in the Contract and so designated in the Bill of
Quantities for the execution of any part of the Works or for the supply of
goods, materials, plant or services, or for contingencies, which sum may
be used, in whole or in part, or not at all, on the instructions of the
Engineer, but to which the Contractor has entitlement only to payment for
works so instructed by the Engineer. The Contractor shall be entitled to
only such amounts to which the Provisional Sums relate as the Engineer
shall determine The Engineer shall notify the Contractor of any
determination , with a copy to the Employer.
Recent forms of FIDIC contract define a Provisional Sum as:
a sum (if any) specified in the Contract as a provisional sum, for the
execution of any part of the Works or for the supply of Plant, Materials or
services Each Provisional Sum shall be used, in whole or in part, in
August 2011
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Control of Works
accordance with the Engineers instructions The total sum paid to the
Contractor shall include only such amounts, for the work, supplies or
services to which the Provisional Sum relates, as the Engineer shall have
instructed.
All forms of FIDIC contract provide that for each Provisional Sum the
Engineer may instruct work to be executed, or for goods, materials, Plant or
services to be supplied:
o by the Contractor. In which case the Contractor is entitled to payment in
accordance with the Contract provisions for Variations [see Section II-3.4
Valuation of Variations].
o For Red Book contracts: by a Nominated Subcontractor [see Section II2.20 for definition and discussion of Nominated Subcontractors]. In this
case the Contractor is entitled to payment of the actual amount due to the
Nominated Subcontractor, plus a sum for the Contractors overhead and
profit calculated from the relevant percentage rate (if any) stated in the Bill
of Quantities.
o For Yellow Book contracts: the evidenced actual amounts paid by the
Contractor, plus a sum for the Contractors overhead and profit calculated
from the relevant percentage rate (if any) stated in the appropriate
Contract Schedule (recent FIDIC) or Preamble to the General Conditions
(old FIDIC). [Note: Yellow Book contracts have no provision for
Nominated Subcontractors.]
o Recent forms of FIDIC contract add that If there is no such rate, the
percentage stated in the Appendix to Tender shall be applied.
Under FIDIC forms of contract:
o Works to be performed by the Contractor under Provisional Sums are
dealt with as Variations.
For discussion of Daywork being considered as a Provisional Sum, see
Section II-3.7.
Differences between Older & Recent Forms of FIDIC Red Book Contract
regarding Payment for work performed by a Nominated Subcontractor:
Under older forms of FIDIC contract, in regard to work instructed to be
performed by a Nominated Subcontractor:
o The Contractor is entitled to a percentage mark-up for overhead and
profit only if there is provision in the Bill of Quantities against which the
Contractor placed a percentage in his accepted Tender regardless of
any provision in the Appendix to Tender.
But under the recent form of FIDIC Red Book contract:
August 2011
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Control of Works
o The Contractor is entitled to a percentage mark-up for overhead and

profit either if there is provision in the Bill of Quantities or appropriate
Contract Schedule against which the Contractor placed a percentage
in his accepted Tender, or if there is a percentage stated in the
Appendix to Tender.
Provisional Sum for Contingency:
From the above definitions of a Provisional Sum it can be seen that:
o Older forms of FIDIC contract include reference to an amount
designated in the Contract as a Provisional Sum for Contingency.
o Recent forms of FIDIC contract omit reference to Contingency.
It is submitted that:
- Contingency (although lacking a contractual definition) is inherently
understood, and should be so understood by the Parties, to mean a
reserve amount that may be utilised (in whole, in part or not at all) for
any varied work which may be instructed.
- Thus, Contingency should be deemed as a Provisional Sum, even if
not described as a Provisional Sum for Contingency.
- The omission of Contingency in the definition of recent forms of FIDIC
contract does not preclude inclusion in the Contract of a Provisional
Sum for Contingency, nor treatment of a designated Contingency as a
Provisional Sum.
II-3.3
Variations
In any construction project there will be a need to change the initial
requirements as construction proceeds on Site. This may be a matter of the
Employer changing his mind about some requirement, or the Engineer may
need to issue further information which involves changes to the initial
requirements, or it may be necessary to correct a mistake in the information
which has been issued to the Contractor.
It must be remembered, however, that the Engineer is only authorized to
instruct Variations under (pursuant to) the Contract. The Engineer is not
empowered to instruct a variation of the Contract. A variation of the Contract
can be made only by the Parties to the Contract who are the Employer and
Contractor, either by Contract Addendum or other written agreement.
The Contractor cannot make any variation to the Works without the
Employers or the Engineers instruction or consent. FIDIC Conditions of
August 2011
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Control of Works
Contract allow the Engineer, but not the Employer, to instruct a Works
Variation. In this context a Works Variation means:
o For an As-measured (FIDIC Red Book) Works Contract:
Any change to the Works described in the Specifications and
Drawings, or to the sequencing or timing of the Works.
o For a Design/Build (FIDIC Yellow Book) Works Contract:
Any change to the Works described in the Employers Requirements,
the Specifications and the Contractors Proposal, or to the sequencing
or timing of the Works.
As part of the Engineers instruction of a Variation the Engineer must:
Inform the Contractor of the basis of payment for the varied works.
This need only be a simple, but important, statement that the varied works will
be valued:
o at existing unit prices of the Bill of Quantities; and/or
o in accordance with Contract provisions (quote clause) for Valuation of
Variations [see Section II-3.4].
Alternatively the Engineer may instruct that some or all of the varied works be
performed:
o as Daywork [see Section II-3.7].
Permitted Variations
Most contracts (including standard forms of FIDIC contract) provide that the
Engineer may make any variation of the form, quantity or quality of the Works
that he considers necessary or appropriate, and that he has authority (subject
to any limitation of that authority specified in the Contract as requiring the
Employers pre-approval) to instruct the Contractor to:
a) Increase or decrease the quantity of any Works included in the Contract.
Caveats: ~ Except that such changes do not necessarily constitute a
Variation.
~ No instruction is required for any increase/decrease in
quantities that does not result from an instructed Variation,
unless:
- the Contract requires that any quantity increase of any item
of Works requires a formal Variation or Addendum;
- the Contract requires a formal Variation or Contract
Addendum if the sum of the values of quantity
increases/decreases would increase the Contract Price.
b) Omit any Works.
August 2011
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c)
d)
e)
f)

Control of Works
Caveats: ~ Except that the Engineer may not be empowered to change

the scope of Works (see further explanation below).
~ Except that works cannot be omitted to be carried out by the
Employer or others.
Change the character or quality of any such work.
Caveat: ~ Except that the Engineer cannot unilaterally change the
Specifications or (in the case of a Design/Build Contract) the
Employers Requirements, and must obtain the Employers
pre-approval of such Variation.
Change the levels, positions and/or dimensions of any part of the Works.
Caveats: ~ Except that for As-measured contracts the Engineer should
obtain pre-approval of the Employer in cases of:
- significant change that could affect the appearance or
function of the completed Works;
- requirement to break out and rebuild completed works.
Execute additional works necessary for or to complete the Works.
Caveats: ~ Except that the Engineer may not be empowered to change
the scope of Works (see further explanation below).
~ Except that the Engineer must obtain the Employers preapproval if:
- the Contract requires such pre-approval and/or a Contract
Addendum;
- the Contract requires a formal Variation or Contract
Addendum if the value of such additional work would
increase the Contract Price.
Change any specified sequence or timing of construction/execution of any
part of the Works.
[Note that the word specified can only mean the requirements set out in
the Contract. Also the words construction or execution mean that the
Engineer is only authorized to instruct changes of the timing of the
execution operations, not of the timing of completion. The Engineer is not
empowered to instruct changes to any specified milestone completion
dates for major sections of the Works or the Time for Completion of the
Works.]
Caveats: ~ Except that the Employers pre-approval should be obtained if
the Variation is likely to precipitate a valid Contractors Claim
for extension of the Time for Completion and/or costs that
would increase the Contract Price.
~ Except that the Engineer is not authorized to instruct
acceleration at the Employers expense under a Variation (nor
at all under any standard forms of FIDIC contract).
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Control of Works
It should be noted that under standard forms of FIDIC contract, the

Engineer is restricted to instructing only additional works that are necessary
for or to complete the Works. The Engineer cannot, therefore, instruct
additional works that are unconnected with the scope of Works as defined by
the Contract. If the Employer wants to change the scope of Works then he
must negotiate with the Contractor a change to the Contract, usually by
Contract Addendum. This may present the Engineer with a dilemma. The
distinction between new work and additional work will depend on the nature of
the project and the capacity of the Contractor. For example: on a 100km road
construction contract between specified reference points and including
several bridges, would an instruction to construct an additional bridge
constitute a permitted Variation? If the new bridge is of a type similar to the
other bridges, is located within the project boundaries, and its addition does
not dramatically increase the Contract Price, then its addition would be a
permitted Variation. On the other hand, if the proposed additional bridge is to
be located outside the reference points delineating the scope of Works,
and/or if the additional bridge requires construction technology entirely
different from the other bridge types and not within the Contractors capacity,
then the additional bridge would not be a permitted Variation.
Variations arising from Design Modifications
For guidance on Variations arising from design modifications see:
Section II-3.6 Value Engineering
Section II-5.6 Modification of Employers Requirements for
Contractors Design
Section II-5.8 Design Modifications arising from Unforeseen Physical
Conditions
Section II-5.12 Authority to Instruction Design Modifications
Agreement of Original Designer
Under contracts for which design of the Works is provided by the Employer
(FIDIC Red Book contracts), the Engineer must refer any proposals for design
changes to parts of the Works (other than minor changes to line, level or
position that will not affect the integrity of the Works and will not cause any
significant increase to the Contract Price) to the Employer for onward referral
to his original designer. In the case that the original designer was/is LBG
under a contract separate from LBGs construction supervision contract, then
it is recommended that the referral shall still be made through the Employer.
Employers Pre-approval
The above caveats demonstrate that the Employers pre-approval should be
obtained for Variations, except in matters of insignificant cost or emergency,
August 2011
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Control of Works
notwithstanding the Engineers authority under the Contract. It is possible that

the Employer could disown an instructed Variation which he considers
unnecessary or inappropriate. The Employer can certainly disown an
instructed Variation that exceeds the Engineers authority under the Contract.
The Employer may have an ability to recover from the Engineer costs
incurred of executing a Variation which the Engineer instructed in breach of
the terms of his engagement or of the construction Contract. Similarly the
Contractor may have an ability to recover from the Engineer costs incurred
but not recovered from the Employer of executing a Variation which the
Engineer instructed in breach of the terms of the construction Contract.
A further reason for obtaining the Employers pre-approval of Variations is
connected with the law of the Contract, which will usually have been
nominated as the Law of the Country that may impose limits on the value of
variations that may be ordered. For example, the law of some countries
requires proposed variations of more than a certain percentage of the
Contract Price to be referred back to a Central Tenders Board that might
require such works to be competitively tendered.
In order to obtain the Employers pre-approval it will probably be necessary
for the Engineer to inform the Employer of the likely cost repercussions of a
proposed Variation. For this purpose the Engineer should:
Provide the Employer with a cost estimate of the Variation. Estimated
rates for new work items could be used as provisional rates until such
rates are agreed or, in the event of eventual disagreement, fixed by the
Engineer. [See Section II-3.4 Valuation of Variations.]
If, under an As-measured (FIDIC Red Book) Contract, the Employer has
handed over to the Engineer revised Drawings or revised Specifications for
parts of the Works, then such provision constitutes the Employers preapproval. However, the Engineer must:
before instructing a Variation, insist that the hand-over is accompanied by
a clear, written instruction that itemises the revised documents. [See also
Section II-2.15 Issuing Drawings.]
The Engineer must:
not instruct a Variation based on changes requested by the Employers
designer, unless the Employer has in writing confirmed to the Engineer
that his designer is authorized by the Employer to require such changes or
any changes in general.
Contractors Compliance
Except under such following circumstances, the Contractor is bound to
comply with the Engineers instructed Variations:
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Control of Works
o Under recent forms of FIDIC contract the Contractor is not so obligated

if he promptly gives notice to the Engineer stating (with supporting
particulars) that:
- he cannot readily obtain the Goods (Contractors Equipment, Materials,
Plant and/or Temporary Works) required for the Variation; or
for a Plant & Design/Build (Yellow Book) Contract that:
- the Variation will reduce the safety or suitability of the Works; or
- the Variation will have an adverse affect on the achievement of the
Schedule of Guaranties.
Upon receipt of such notice, the Engineer shall cancel, confirm or vary the
Variation.
o Under older forms of FIDIC contract the Contractor could challenge that
the instructed Variation is not necessary and/or appropriate, in which case
the Engineer would be wise to reconsider and then to cancel, confirm or
vary the Variation.
Variations after Substantial Completion of the Works
A question often arises as to whether or not Variations can be instructed after
hand-over of the Works; i.e., in FIDIC terminology, after a Taking-Over
Certificate (TOC) for the Works has been issued. The terms of the Contract
must be consulted.
o Recent standard forms of FIDIC contract state that:
Variations may be initiated by the Engineer at any time prior to issuing
the Taking-Over Certificate, either by an instruction or by a request for
the Contractor to submit a proposal.
An interpretation of this wording is that an instruction may not be given
after the TOC has been issued; but that the Engineer may, after issuing
the TOC, approve a change in works proposed by the Contractor (that will
constitute a Variation) if the Engineer had requested the proposal prior to
issuing the TOC! The wording does not make clear the drafters intent.
o If the Contract says nothing on the matter, such as older forms of FIDIC
contract, then there is nothing to prevent Variations being instructed after
issuing the TOC.
However, as a general rule of thumb, instructions of Variations after issuing a
TOC are not recommended. Such late instruction, when the Contractor is
demobilizing or has substantially demobilized, would likely be expensive. The
Contractor may well be able to substantiate higher costs for such works.
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II-3.4

Control of Works
General Principles of Valuation
Contract provisions for Valuation of Variations apply to all variations of:
o For construction-only contracts (FIDIC Red Book): unit rates & prices, or
lump sums, for changed or new items of work;
o For design/build contracts (FIDIC Yellow Book): the Contract Price.
All forms of contract should contain provisions for valuing Variations. All forms
of FIDIC contract do. The principles of evaluation in both the older and
recent forms of FIDIC Red Book contract are similarly expressed as:
o Variations shall be valued at the rates and prices set out in the Contract
(i.e. the Bill of Quantities & Unit Prices - BoQ) if, in the opinion of the
Engineer, the same shall be appropriate.
o If the Contract does not contain any rates and prices applicable to the
varied work, the rates and prices set out in the Contract shall be used as
the basis for valuation so far as may be reasonable.
o Failing which, after due consultation by the Engineer with the Employer
and the Contractor, suitable rates or prices shall be agreed upon between
the Engineer and the Contractor.
o In the event of disagreement the Engineer shall fix such rates and prices
as are, in his opinion, appropriate and shall notify the Contractor
accordingly, with a copy to the Employer.
o Until such time as rates or prices are agreed or fixed, the Engineer shall
determine provisional rates to enable the Engineers certification of onaccount payments to the Contractor.
o Provided that where an instruction to vary the Works is necessitated by
some default or breach of Contract by the Contractor or for which he is
responsible, any additional cost so attributable shall be borne by the
Contractor.
Breakdowns of Lump Sums & Unit Rates, submitted by the Contractor at the
beginning of the Contract [see Section II-2.9] should be used as a source for
establishing new rates and prices based on the rates and prices set out in the
Contract.
It should be noted that the above principles state the requirement for due
consultation by the Engineer with the Employer and the Contractor. Under
recent forms of FIDIC contract, the requirement for consultation is given in
Sub-clause 3.5 Determinations, which also states that in the case of failure
to reach agreement the Engineer shall make a fair determination in
accordance with the Contract, taking due regard of all relevant circumstances.
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Control of Works
It should be further noted that under older forms of FIDIC contract, any
representative of the Engineer, if so formally delegated authority by the
Engineer [see Section II-2.2 Engineers Delegation of Duties & Authorities],
can determine new rates and prices, or other adjustments to the Contract
Price.
Under recent forms of FIDIC contract, however, the Engineer cannot
delegate authority to render determinations [also see Section II-2.2
Engineers Delegation of Duties & Authorities] and must render such
determinations himself. However, it is submitted that an Engineers
determination is required only if the Parties cannot agree. The establishment
by agreement of new rates and prices, or adjustments of the Contract Price,
does not constitute a determination and, therefore, the Engineer can
delegate authority to do so.
Additional Principles Sometimes Included
In addition to the above general principles, older forms of FIDIC Red Book
contract (but not the recent one) provide that:
if the nature or amount of any varied work relative to the nature or
amount of the whole of the Works or to any part thereof, is such that, in
the opinion of the Engineer, the rate or price contained in the Contract for
any item of the Works is, by reason of the varied work, rendered
inappropriate or inapplicable, then, after due consultation a suitable
rate or price shall be agreed In the event of disagreement the Engineer
shall fix such other rate or price, as is, in his opinion appropriate Until
such time as rates or prices are agreed or fixed, the Engineer shall
determine provisional rates or prices , and
Provided also that no varied work instructed to be done by the Engineer
shall be valued (accordingly) unless, within 14 days of the date of
such instruction and, other than in the case of omitted works, before the
commencement of the varied work, notice shall have been given either:
(a) by the Contractor to the Engineer of his intention to claim extra
payment or a varied rate or price, or
(b) by the Engineer to the Contractor of his intention to vary a rate or
price.
Such additional principles provide amplification to the general principle that:
o Variations shall be valued at the rates and prices set out in the Contract
(i.e. the Bill of Quantities & Unit Prices - BoQ) if, in the opinion of the
Engineer, the same shall be appropriate.
For example, if the Contract has provision in the BoQ for construction of one
manhole and the Engineer is instructing a Variation to construct, say, twenty
manholes of similar kind, then the Engineers opinion may be that the unit
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Control of Works
price for one manhole is inappropriately high to be applied to the significantly

greater number of manholes now required, and that a new, lower unit price
should be established. However, unless the Engineer gives the required
notice to the Contractor of his intention to vary the unit price, then opportunity
to establish such lower unit price is lost. The Engineer cannot later (after the
specified 14 days or after commencement of the varied work) establish a new
rate. Considering that the Contractor could commence the varied works at
any time, it behoves the Engineer to give such notice immediately; i.e. at the
time of issuing the instruction for the Variation.
If the Engineer wishes to vary a unit price under such additional principles of
valuation, he must:
give notice to the Contractor, concurrently with or as part of the instruction
to execute a Variation, of the Engineers intention to vary any established
unit price affected by a Variation.
Similarly in a case where, for example, the Contract has provision in the BoQ
for construction of twenty manholes of similar kind and the Engineer is
instructing a Variation to construct, say, only one such manhole, then the
Contractor has no entitlement to claim additional cost or a higher unit price
unless he has given notice as prescribed. No doubt this provision (requiring
the Contractors notice) is to warn the Engineer/Employer of an impending
claim so as to enable them to reconsider the necessity of the varied works.
It should be noted that additional principles such as quoted above are not
restricted to rates and prices for the varied works alone. Although difficult to
conjure a clear example, these additional principles could permit the re-rating
of work items affected by the varied works but not included in the varied
works.
Adjustments Arising from Variations in Quantities
Many contracts provide that new rates may be established for any items of
the Bill of Quantities (BoQ) whose measured quantities exceed or fall below a
specified percentage of the quantities stated in the original BoQ. Such
provision might be qualified as being applicable only if, as for example in the
1999 edition of the FIDIC Red Book, all of the following criteria apply:
a) the measured quantity of the item is changed by more than 10% from the
original BoQ quantity;
b) this change in quantity multiplied by the specified unit rate for this item
exceeds 0.01% of the Accepted Contract Amount;
c) the change in quantity directly changes the Cost per unit quantity of this
item by more than 1%, and
d) this item is not specified in the Contract as a fixed rate item.
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Control of Works
Particular Conditions or other forms of contract may have different or more

restrictive criteria; for example: 25% in (a), 2% in (b).
In the case of diminished quantities, the Contractor may claim a higher unit
price, alleging that the lower quantity of a particular work item has prevented
full recovery of his overhead applied in his tendered unit price for that work
item. It is submitted that the Contractor should be required to substantiate
such claim, taking into consideration other quantity over-runs and under-runs,
and other price adjustments made pursuant to the Contract. If so
substantiated, a new unit price could practicably only be applied to the full,
but diminished, quantity.
A question arises, in the case of exceeding quantities, as to whether a new
unit price should apply to:
- the full quantity of work performed under the subject item, or
- only the quantity exceeding 100% of the estimated quantity of the original
BoQ, or
- only the quantity exceeding the limit stipulated in (a) above; i.e. in the
given example, only the quantity exceeding 110% of the estimated
quantity of the original BoQ.
It will depend on the circumstances.
For example, consider the case of a road construction contract that contains
no provision for Price Adjustment for the rise and fall of the costs of labour
and materials [see Section II-3.11 IPCs: Price Adjustment], but the cost of
bitumen has risen significantly during the Time for Completion. The Contract
may have a standard clause permitting adjustment of the Contract Price for
any increase or decrease arising from a change in the Law of the Contract
[see also Section II-3.11], but the rise in cost of bitumen may solely have
resulted from market forces. In such circumstance it is submitted that the
Contractor, by virtue of the terms of the Contract, is not entitled to increased
unit prices for all executed quantities of eligible BoQ items requiring bitumen.
It is submitted that the Contractor, when signing the contract, knew or should
have known that the risk of rising bitumen prices was his up to the quantities
limit beyond which the Contract permitted price adjustment arising from
quantity variation (110% in the above quoted limit of the recent standard form
of FIDIC Red Book contract). Therefore the Engineer should determine that
an increased unit price for such BoQ items can only be applied to the
quantities in excess of (per that example) 110%.
Assuming that there have been no market or Law changes, the Engineer
and/or Employer might argue that a new lower unit price is warranted
because the Contractors allowance in his tendered unit price for overhead
recovery will, by virtue of the increased quantities, be over-recovered.
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Control of Works
However, the onus will be upon the Engineer and Employer to substantiate
such case it will not be the Contractors obligation to substantiate otherwise.
Incorporating Variations into the Bill of Quantities by Establishing New
BoQ Items for New & Varied Rates
The following recommendations are offered for incorporating variations and
new and varied unit prices into the Bill of Quantities (BoQ) as the Works
proceed.
Existing unit prices of the BoQ should be considered as fixed in so far as
they each apply only to a unique BOQ Item number with its unique
Description of work.
Item No. ~ Unit ~ Quantity ~ Description ~ Unit Price ~ Amount
No one or any of the underlined item parameters should be changed.
If a new unit price for a work item is determined as warranted by some
changed circumstance (for example, in case of a Variation and/or significant
quantity change for which the Contract permits establishment of a new unit
price), then a new unique BoQ Item number should be established with its
own unique Description (describing the new circumstance) against which the
new Unit Price is applied.
Consequently any re-rated work item will have:
New
~ Unit ~ Estimated ~ New Unique ~ New
~ Amount
Item No.
Quantity
Description
Unit Price
Similarly, if by a Works Variation new works are introduced into the Contract,
then a new BoQ item must be established:
~ Unit ~ Estimated ~ Unique
~ Unit Price ~ Amount
New
Item No.
Quantity
Description
If any work item is, by Variation, omitted entirely from the Contract (by
Variation or Addendum), then the subject BoQ Item should be retained in the
BoQ (together with its Item No., Unit, Description and Unit Price) but with its
original Quantity demonstrably reduced (by Variation) to zero. The BoQ Item
Number should not be re-used for other works.
Recommendations for Incorporating Variations and New Unit Prices into
the Bill of Quantities, by use of the above principles, are presented in
Appendix L. Following these recommendations will facilitate:
o Immediate identification and estimated costs of each Variation;
o A summary of aggregate cost of all Variations;
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Control of Works
o A Revised Contract Amount against which the Contractors progress can

be measured and reported.
The question of when or not to present the value of Daywork as a variation in
the BoQ is addressed in Section II-3.7.
Adjustments of the Contract Price
Contracts may provide for adjustments of the Contract Price that might be
impracticable to effect by varying original Bill of Quantities (BoQ) rates or
establishing new rates, and will need a more global approach. Such
provisions may include adjustments arising from:
a) Change in legislation.
b) Aggregate value of Variations exceeding a stated percentage of the
Contract Price.
c) Other settlements for example, prolongation costs during extension of
the Time for Completion, settlement of Contractors claims, and settlement
to cover omitted works.
Such adjustments, derived from global assessments, would be added to the
BoQ in Payment Certifications as a separate item under, say, Agreed
Settlements and Claims.
a) Most contracts provide that in the case of a change in the Country of
legislation which causes additional or reduced cost to the Contractor, then
such additional or reduced cost shall, after due consultation with the
Employer and the Contractor, be determined by the Engineer and shall be
added to or subtracted from the Contract Price. Such provision is usually
stipulated as arising from any such change in legislation occurring after
the date 28 days prior to the latest date for submission of tenders for the
Contract. [See Section 3.11 IPCs: Price Adjustment arising from Change
in Law]
An example would be legislated increases of taxation on diesel fuels that
increase the cost of the Contractors mechanized operations. Adjustment
for increased costs would require a global but detailed analysis of the
mechanized operations, taking into consideration the types, consumption
and times of usage of the Contractors Equipment.
Care must be taken not to make adjustments under this provision that
have already been effected under other Contract provisions for price
adjustments derived from Price Adjustment Indices [see Section II-3.11
IPCs: Price Adjustments: In accordance with Price Adjustment Formula].
b) Older standard forms of FIDIC Red Book contract provide that:
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Control of Works
If, on the issue of the Taking-Over Certificate for the whole of the Works,
it is found that as a result of:
a) all varied work valued under Cl, and
b) all adjustments upon measurements of the estimated quantities set out
in the Bill of Quantities, excluding Provisional Sums, dayworks and
adjustments of price made under Cl (rise or fall in the cost of labour
and/or materials by use of price adjustment indices),
but not from any other cause, there have been additions to or
deductions from the Contract Price which taken together are in excess
of 15% of the Effective Contract Price (which. shall mean the
Contract Price, excluding Provisional Sums and allowance for
dayworks, if any) then. (subject to any action already taken under
Cl...), after due consultation. there shall be added to or deducted
from the Contract Price such further sum as may be agreed. or
failing agreement, determined by the Engineer having regard to the
Contractors Site and general overhead costs of the Contract. Such
sum shall only be based on the amount by which such additions or
deductions shall be in excess of 15 per cent of the Effective Contract
Price.
c) Other settlements might include lump sum or time-related settlements of
Contractors claims.
Examples:
- Prolongation costs during extension of the Time for Completion to
cover the Contractors extension of overhead costs. Care should taken,
however, that the Contractor is not doubly benefiting through recovery
of some or all of such overhead costs from the unit prices of additional
works for which the Time extension was granted. [See Section II-4.13
Delays, Extension of Time for Completion & Associated Costs:
Prolongation Costs]
- Lump Sum settlements of Claims [see Section II-4.11], sometimes in
Amicable Settlement to avoid litigation or arbitration;
- Lump Sum settlements to compensate the Contractor for loss of
overhead recovery from omitted works.
II-3.5
Variation Orders
FIDIC Conditions of Contract provide that variations of the Works shall be
instructed and valued by the Engineer. Variation Orders, in the context of
formal contractual documents (other than the Engineers written instruction of
a Variation), are not required nor even mentioned in FIDIC Conditions of
Contract. Variations Orders (VOs) are, however, a commonly used
mechanism in the construction industry of formalizing and providing an audit
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Control of Works
trail of Variations. Other forms of contract and some Employers may require
formalizations of Variations by VOs.
If VOs are to be issued, it is recommended that the agreed procedures for
submittal to the Employer (for approval) and issue to the Contractor be
summarized in an introduction to the presentation of VO summaries in the
Engineers Progress and Completion Reports. An example of such
explanatory introduction is presented in Appendix L.
At the time of instructing a Variation, the full cost implications of the Variation
may not be known. The quantities of the varied works may not have been
comprehensively estimated. New or varied unit rates/prices for additional or
changed works may not have been agreed or fixed. In the circumstance that
any delay to execution of the Variation could cause delay to the overall
progress of the Works, it would be wise for the Engineer to obtain
Employer/Contractor agreement to proceed with the varied works while they
are being quantified and evaluated.
The preparation and issuing of VOs, with provision for the Employers
signature of approval, is recommended. In this respect:
VOs of significant value should be prepared and submitted in writing to the
Employer for approval as soon as possible after an instruction for a
Variation has been issued to the Contractor.
Each VO must be identified by a consecutive, unique number (e.g. VO
No.14)
Each VO must clearly describe the varied works and the reasons for their
requirement.
A VO must reference the relevant clause(s) of the Conditions of Contract
pursuant to which each Variation was instructed.
Each VO should provide estimated quantities of the varied works.
The Variation must be valued at the unit rates and prices agreed or fixed
after due consultation by the Engineer with the Parties.
Copies of records of documents relevant to the VO must be referenced in
and appended to the VO including, as appropriate:
- Employers instruction; or
- Engineers recommendation and Employers approval; or
- Contractors proposal, Engineers review comments and
recommendations, and Employers approval.
- Records of Engineers consultations with the Employer and Contractor.
- Detailed analysis and calculations from which varied or new unit rates
and prices were derived.
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Control of Works
The Employer must be asked to sign the VO as approved and return it to

the Engineer, upon receipt of which the Engineer will promptly issue it to
the Contractor.
An example of such a VO is presented in Appendix L.

It is not necessary for the Engineer to prepare and issue a VO for every minor
Variation instructed. If he did so, there could be hundreds of such minor VOs.
It is recommended that the Engineer bundle such minor variations under
various work categories as construction proceeds (e.g. miscellaneous
structural variations, drainage variations, etc.).
The Engineer should maintain a running record of VOs submitted showing:
VO number, title and total value.
Date of submission to Employer.
Date of receipt from Employer of VO signed as approved.
Date of issue to Contractor.
Summation of value of all VOs submitted and all VOs issued.
This record should be included in the Engineers Progress Reports [see
Section I-3.8]. An example is presented in Appendix L.
The Engineer should ensure that:
the summarized value of the issued VOs matches the summarized total of
the value of Variations incorporated into the Bill of Quantities [see
Section II-3.4 Valuation of Variations, and Appendix L];
the summarized value of the submitted/issued VOs matches the
summarized total of the value of pending/issued VOs entered on the
Works Progress Synopsis of Progress Reports [see Section I-3.8 Project
Reports and Appendix F]. [Note: A VO submitted to the Employer for his
approval is a pending VO until the Employers approval is received and
the VO is issued to the Contractor.]
For comment on whether Daywork should be included in Variation Orders,
see Section II-3.7.
II-3.6
Value Engineering
Recent forms of FIDIC contract include provisions for Value Engineering
whereby:
The Contractor may, at any time, submit to the Engineer a written
proposal that (in the Contractors opinion) will, if adopted:
i) accelerate completion;
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Control of Works
ii) reduce the cost to the Employer of executing, maintaining or operating

the Works;
iii) improve the efficiency or value to the Employer of the completed
Works; or
iv) otherwise be of benefit to the Employer.
The proposal shall be prepared at the cost of the Contractor
The incentive to the Contractor is that he too stands to benefit from adoption
of the proposal if, according to Contract provisions, adoption of the proposed
change:
results in a reduction of the contract value, the Engineer shall proceed
in accordance with Sub-Clause 3.5 [Determinations] to agree or determine
a fee, which shall be included in the Contract Price. This fee shall be half
(50%) of the difference between the following amounts:
i) such reduction in the contract value, resulting from the change
[excluding price adjustments see Section II-3.11 IPCs: Price
Adjustments], and
ii) the reduction (if any) in the value to the Employer of the varied works,
taking into account any reductions in quality, anticipated life or
operational efficiencies.
Except that if amount (i) is less than (ii), there shall not be a fee.
Sub-Clause 13.3 of recent (1999) FIDIC requires that the Engineer shall
respond to a Value Engineering proposal with approval, disapproval or
comments, but that does not mean the Engineers approval, disapproval or
comments. It means that approval, disapproval or comments shall be
conveyed to the Contractor by the Engineer. The Engineer has no unilateral
authority to approve a design change. Indeed, the Engineer has no
contractual duty to undertake a check of the Contractors design for a Value
Engineering proposal.
Clearly, the Engineer must obtain the Employers approval (or rejection)
before responding to the Contractor. In considering the proposal, the
Employer will undoubtedly want to know the benefits and costs savings to
him. It is essential therefore, that the Contractor quantifies those benefits and
savings in his proposal.
Guidelines for Review of Contractors Value Engineering Proposals are
presented in Section II-5.10.
If approved, the proposed change would be effected as a Variation
instructed by the Engineer [see Section II-3.3]. Valuation of the changed
works, for purpose of determining the Contractors fee, would be in
accordance with Section II-3.4 Valuation of Variations. A Variation Order
for the change would be required in accordance with Section II-3.5.
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Control of Works
Under older forms of FIDIC contract there is no provision for Value

Engineering, but that does not mean that Value Engineering is precluded.
The Contract can, after all, be amended at any time by joint agreement of the
Employer and Contractor (subject, perhaps to endorsement of any Funding
Institution).
It is recommended that under any contract that does not contain provision for
Value Engineering, such principles (as above described) could be adopted for
the mutual benefit of the Employer and Contractor.
II-3.7
Daywork
As stated in Section II-3.3 Variations, the Engineer can instruct varied works
to be executed on a daywork basis. This means payment will be made
according to rates and prices of the Daywork Schedule of the Contract,
based on daily records submitted by the Contractor of resources used in the
execution of the previous days work, including:
o Names, occupations and time of the Contractors Personnel;
o Types and times of Contractors Equipment and Temporary Works;
o Descriptions and quantities of Materials and Plant incorporated in the work
(supported by receipts or other vouchers).
Unless the Engineer conscientiously verifies the resources applied to
Daywork, the Contractor might be tempted to exaggerate those resources.
For this reason, emphasis is put on the verification of Materials used and on
provision of daily records of other resources applied. The Engineer must
ensure that:
Daywork and resources applied thereto are monitored closely by the
supervision staff.
Complete daily records are submitted by the Contractor of resources used
in the execution of the previous days work.
The daily records are signed daily by the Engineer as accepted.
Examples of standard forms that could be prepared and used for recording
and accepting daywork records are presented at the end of Appendix J.
If the Contract does not include a Daywork Schedule, then payment cannot
be made on a daywork basis. A Contract Addendum would be required to add
a Daywork Schedule to the Contract.
Generally the Engineer would instruct varied works that are minor and
incidental to be performed by Daywork when there are no appropriate workitem rates/prices in the Bill of Quantities (BoQ). Generally a contractor is
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Control of Works
pleased to be able to perform works on a daywork basis because he has no

risk he is paid time and materials for what he does and provides. However,
since there is no cost-motivation of the Contractor to be efficient, the Engineer
should attempt to establish rates and prices for any substantial work.
Recent forms of FIDIC contract restrict the use of Daywork to work of a
minor or incidental nature, but there may be some items of work which are
not minor or incidental for which Daywork would be in the interest of both the
Contractor and the Employer. Daywork may be appropriate when the difficulty
of the works cannot be pre-assessed (e.g. investigative works).
In the event that reasonable work-item rates cannot be pre-assessed,
Daywork could be instructed in order to establish work-item rates/prices
based on the daywork records.
In some cases the Daywork Schedule bears no estimated quantities and,
therefore, Daywork is not included in the Accepted Contract Amount. In this
case the value of Daywork must be valued as a Variation in the BoQ and
included in Variation Orders.
In other cases the Daywork Schedule is included as a bill of the BoQ with
estimated quantities, and the summation of extended Daywork amounts
included in the Accepted Contract Amount in effect as a Provisional Sum
[see Section II-3.2]. In this case the value of the dayworks is not classified as
a Variation and is not included in Variation Orders. The dayworks will be
accounted in the Daywork bill of the BoQ.
II-3.8
Measurement of Works
For as-measured (FIDIC Red Book) contracts, interim payments to the
Contractor are typically based upon monthly measurement of quantities of
work executed, applying the rates and prices from the Bill of Quantities (BoQ).
A Method of Measurement (MoM) should always accompany the BoQ.
Preambles to the Bill of Quantities should state that the MoM shall be read
in conjunction with the BoQ. An example of typical Preambles is presented
under Appendix H. Examples of typical item coverages of an MoM for items
of the BoQ are presented in Appendix I.
On some contracts the MoM might have been included in the contract
Specifications; either Specifications specially prepared for the Contract, or
referenced, published, Standard Specifications of the Employer. Alternatively,
it might be a published Standard Method of Measurement (e.g. *ICE CESMM,
or a Countrys own standard publication) which specifies principles of
measurement and is incorporated (by reference) into the BoQ Preambles.
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Control of Works
[*ICE CESMM = Institution of Civil Engineers, Civil Engineering Standard Method of

Measurement]
Contracts invariably require that works shall be measured by the Engineer.

FIDIC contracts stipulate that:
o Whenever the Engineer requires any part of the Works to be measured, he
shall give reasonable notice to the Contractors Representative who shall:
- promptly attend or send another qualified representative to assist the
Engineer in making the measurement, and
- supply any particulars requested by the Engineer.
o Should the Contractor not attend, then the measurement made by the
Engineer shall be considered the correct measurement.
And in regard to measurement by calculation from drawings and records that:
o Wherever any Permanent Works are to be measured from drawings and
records, the Engineer shall prepare such records as the Works proceed.
o The Contractor shall, when requested by the Engineer, attend to examine
and agree the records, and sign them as agreed.
o If the Contractor does not attend to examine and agree such records, they
shall be considered correct.
o If the Contractor examines but does not agree the same or does not sign
them, they shall be considered correct unless the Contractor, within a
prescribed time (14 days in FIDIC contracts) after his examination, gives
notice to the Engineer of the respects in which he claims the records are
incorrect.
To repeat:
It is the Engineer who performs measurement, either physically or by
calculation from drawings and records not the Contractor.
The Engineer must give written notice to the Contractor of such
measurements.
In practice, it is recommended that:
The Engineer and Contractor perform physical measurements together.
Records of the physical measurements are signed/dated as agreed by the
Engineer and Contractor. Standard measurement forms should be
prepared and used.
The Engineer and Contractor pre-agree any methods or software
programmes for the calculation of measurements from drawings and
records. The Engineer must perform these computations based on the
agreed records, but the Contractor will thereby be able to perform his own
checking computations. The measurements by calculation, including the
records on which they are based, are signed/dated as agreed by the
Engineer and Contractor.
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It will be necessary for the Engineer to perform measurements during each

month for which the Contractor will submit an Interim Payment Statement
(IPS). Measurements should be made by the Engineer:
At the time of completion of any item of Permanent Works or of completion
of such item in any particular distinct location.
At the end of the month (the cut-off date for the works to be claimed for
payment in the Contractors Interim Payment Statement) for items of work
in progress.
In the event that measurements are not performed before the cut-off date for
the Contractors Interim Payment Statement (IPS), then on-account,
conservative, estimated quantities may be agreed. However, such situations
should not be allowed to persist from month to month.
As a general principle:
Measurements should be made of the quantities of works executed to
date not the quantities performed during the month to the end of which
an IPS refers.
This is because the addition of monthly executed quantities to derive a
quantity-to-date could result in accumulative error (particularly if on-account
estimates of executed quantities have been used). The subject month
quantity must be derived from the total quantity-to-date less the quantity
certified in the previous IPS.
II-3.9
Valuation of Plant and Materials Intended for the Works

Most contracts provide that the Contractor may claim and the Engineer may
certify interim payments of a stated percentage (typically 80%) of the value of
Plant and Materials sent to or delivered to Site, which Plant and Materials are
required to be incorporated into the Works but have not yet been so
incorporated. The amounts so certified are deducted in subsequent Interim
Payment Certificates to reflect incorporation of the Plant and Materials into
the Works.
Also, contracts typically state that the relevant Plant and Materials (for which
such interim payment can be certified) are those listed in the Appendix to
Tender.
The purpose of these provisions is to minimise the Contractors financing
costs. The Contractor is deemed to have taken these provisions into account
when preparing his Tender, and any unreasonable withholding of such interim
payments, or certifications thereof, could give the Contractor valid grounds to
claim that his planned cash flow has been disrupted.
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The Engineer must carefully read the Contract provisions in order to

administer them properly:
If the Contract provides that the relevant Plant and Materials are those
listed in the Appendix to Tender, then interim payment can only be
certified for the listed Plant and Materials, but for no others. Expansion of
the list after the Contract has commenced would require formal approval
of the Employer.
If the Contract provides that the relevant Plant and Materials are those
listed in the Appendix to Tender, but there is no list in the Appendix to
Tender, then interim payment cannot be certified for any Plant and
Materials. Introduction of a list after the Contract has commenced would
require formal approval of the Employer.
The Contract might provide that relevant Plant and Materials are limited
either to those delivered to Site or to those sent to Site.
The Contract definition of Site must be read. If no such definition is
provided, then for this purpose it should be considered as meaning the
places where the Permanent Works are to be executed and to which Plant
and Materials are to be delivered, and any other places as may be
specifically designated in the Contract as forming part of the Site.
Nevertheless, judgement will be required in some circumstances. For
example, it is submitted that:
- crushed aggregates stockpiled at a quarry remote from the Works,
and/or remote from the Contractors concrete mixing plants to which
they are destined, would not be relevant.
- crushed aggregates stockpiled at the Contractors own quarry on or
near the Site would be relevant.
- crushed aggregates stockpiled at a ready-mix concrete suppliers
mixing plant (i.e. not the Contractors plant) would not be relevant
unless the Contractor can provide evidence that he has delivered such
aggregates to the ready-mix concrete supplier under a contract to do
so.
- crushed aggregates delivered to the Contractors own concrete mixing
plant, being used to supply concrete to the Works, would be relevant.
Where the Contract provides for interim payment only of Plant and
Materials delivered to Site, the valuation may include delivery cost.
Where the Contract provides for interim payment of Plant and Materials
sent to Site, then the Contractor must provide a bill of lading or other
evidence of shipment, together with evidence of payment of freight and
insurance, and any other documents reasonably required. The recent
standard form of FIDIC Plant and Design/Build (Yellow Book) contract
requires also that the Contractor provide a bank guarantee in a form
approved by the Employer. However, it is submitted that, subject to the
Employers agreement, a bank guarantee need only be required for high
cost items imported into the Country. The bank guarantee should be in a
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form similar to, but not more onerous than, that required as security
against the Advance Payment, and be valid until the relevant Plant and
Materials are properly stored on Site and protected against loss, damage
or deterioration.
The Contractors intent should be to maintain sufficient working stocks of
Materials on Site, such that interrupted deliveries will not delay execution of
the Works. As Works execution progresses, stockpile quantities will fluctuate
as material is taken for incorporation into the Works, while new material is
delivered. Therefore delivery receipts and vouchers will not reflect stockpile
quantities after commencement of their use in the Works.
The Engineer must ensure that:
Stockpile quantities are measured by the Engineer on or about the cut-off
date to which an Interim Payment Certificate will apply.
The principles for Measurement of Works described under Section II-3.8
are followed regarding:
~ The Engineer must give reasonable notice to the Contractors
Representative who shall:
- promptly attend or send a qualified representative to assist the
Engineer in making the measurement, and
- supply any particulars requested by the Engineer.
~ Should the Contractor not attend, then the measurement made by the
Engineer shall be considered the correct measurement.
~ If the Engineer and Contractor cannot agree the estimated quantities,
the Engineers estimate shall prevail.
II-3.10
Contractors Interim Payment Statements

For as-measured contracts under FIDIC Red Book Conditions of
Contract, interim payments to the Contractor are typically based upon
monthly measurement of quantities of work, applying the unit rates and prices
from the Bill of Quantities (BoQ).
Terminology differs between various forms of contract. Older FIDIC forms
refer to Monthly Statements, and recent FIDIC forms to Application for
Interim Payment Certificates. For purpose of reference herein the term
Contractors Interim Payment Statement (IPS) is adopted.
An as-measured contract will typically require that the Contractor shall
submit an IPS to the Engineer (in the prescribed number of copies, typically
6) showing the amounts to which he considers himself entitled (up to the end
of the subject month) in respect of:
o Value of Works executed, including Works Variations and Daywork.
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o Any other items in the BoQ for which there is provision for payment.
o Amount for the percentage of the invoice value of Plant and Materials
sent/delivered to Site for incorporation into the Works but not yet so
incorporated [see Section II-3.9 Valuation of Plant & Materials Intended
for the Works].
o Adjustments for changes in costs of labour, Materials or other inputs to the
Works [see Section II-3.11 IPCs: Price Adjustments: According to Price
Adjustment Formula].
o Any other amounts to which the Contractor may be entitled under the
Contract or otherwise, including, for example, in respect of:
- adjustments for costs arising from changes in legislation [see Section
II-3.11 IPCs: Price Adjustments: Arising from Change in Law];
- adjustment for aggregate value of Variations exceeding a stated
percentage of the Contract Price [see Section II-3.4 Valuation of
Variations: Adjustments of the Contract Price];
- other settlements - for example, prolongation costs during extension of
the Time for Completion, settlement of claims and disputes, and
settlement to cover omitted works.
o Amounts to be added or deducted for the Advance Payment and
repayments [see Sections II-2.7 Advance Payment Security & Section
II-3.11 IPCs: Repayment of Advance Payment].
o Amounts to be deducted or added for Retention Money and its partial or
full release [see Section II-3.11 IPCs: Deductions for Retention Money,
and Payment of Retention Money].
o Application of Value Added Tax (if applicable).
o Deduction of amounts certified in all previous Payment Certificates.
The Contractors IPS must be accompanied by supporting documents
necessary for the Engineer to verify amounts claimed, including:
o Invoices or vouchers to verify claims for Materials and Plant yet to be
incorporated into the Works.
o Invoices to substantiate costs claimed under Provisional Sums.
o Records of agreed measurements.
o Detailed estimates of the value of executed Works yet to be measured by
the Engineer, for which on-account payment is requested.
Recent standard forms of FIDIC contract also require that the supporting
documents to the Contractors IPS must include:
o The Contractors Monthly Progress Report for the period to which the IPS
corresponds [see Section II-2.17 Contractors Reports].
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Contracts typically require that the Contractor shall submit IPSs in such form
approved by the Engineer or, alternatively, as the Engineer may prescribe. It
is important that the Engineer:
Establish, in consultation with the Contractor, a standard format for IPSs
that will match the format to be used by the Engineer in his Interim
Payment Certificates [see Section II-3.11].
Require the Contractor to provide with each IPS details of the bank
account(s) to which payment(s) are to be made.
A recommended format for as-measured contracts is discussed in Section II3.11 and presented in Appendix M.
It is recommended that the Engineer require that:
The Contractors IPSs are consecutively numbered.
The first IPS (if applicable) is submitted for the Advance Payment.
Design/Build contracts may require the Contractors IPS to follow the same
principles as for as-measured contracts except that:
o The value of Works executed will be based on estimates (often derived
from an estimated percentage of progress) of the value of those parts of
the Works for which the Contract contains prices into which the Contract
Price has been broken down. For example, design will invariably have
been priced separately from construction.
o The value of completed Variations and Daywork will be added.
Alternatively, Design/Build contracts may include a Schedule of Payments
specifying the instalments in which the Contractor will be paid. In this case:
o If the instalments are not defined by reference to actual progress, and if
the progress is less than that on which the Schedule of Payments was
based, then the Engineer may, after due consultation with the Employer
and Contractor, determine revised instalments taking account of the extent
to which progress is less than that on which the instalments were
previously based.
o Payments shall not be made for Material and Plant sent/delivered to Site
for incorporation into the Works but not yet so incorporated.
II-3.11
Interim Payment Certificates

General Conditions of FIDIC contracts typically provide that:
The Engineer shall within 28 days after receiving the Contractors Interim
Payment Statement (IPS) (alternatively called Monthly Statement or
Application for Interim Payment Certificate) [see Section II-3.10], deliver
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to the Employer (with copy to the Contractor) an Interim Payment

Certificate (IPC) stating the amount of payment which the Engineer
determines due and payable in respect of the IPS.
Provided that no IPC shall be issued until the Contactor has submitted and
the Employer has accepted the Performance Security. [See Section II2.6.]
Provided that the Engineer shall not be bound to issue an IPC if the net
amount thereof, after all retentions and deductions, would be less than the
Minimum Amount of Interim Payment Certificates stated in the
Appendix to Tender, in which case the Engineer shall give notice to the
Contractor accordingly.
In recent forms of FIDIC contract this provision only applies until the
Taking-Over Certificate is issued.
And in recent forms of FIDIC contract:
Provided that the supporting documents submitted by the Contractor with
(or preceding) his IPS include the Contractors Monthly Progress
Report for the period to which the IPS corresponds [see Section II-2.17
Contractors Reports].
It is recommended that:
The Engineers IPCs be consecutively numbered corresponding to
numbers of the Contractors IPSs.
The first IPC (if applicable) should certify payment of the Advance
Payment, subject to the Employers acceptance of the Advance Payment
Security submitted by the Contractor [see Section II-2.7].
Each IPC should indicate the due date for payment by the Employer in
accordance with payment terms of the Contract.
Examples of the form of IPCs, which the Contractor should also use for his
IPSs, are presented in Appendix M.
Older standard forms of FIDIC contract do not specifically provide any
recourse for the Contractor in the event that the Engineer fails to issue an IPC
within the prescribed time following receipt of the Contractors IPS and
supporting documents. However, in so far as the Employers payment is
invariably conditional upon receipt of the Engineers certification, it is
submitted that the Contractor would be entitled to suspend the Works or even
terminate his employment under the Contract if payment is not made because
of the Engineers failure to certify [see Section II-4.10 Works Suspensions:
Suspension of Works by Contractor & Section II-8.2 Termination by
Contractor arising from Employers Default].
Recent standard forms of FIDIC contract provide, if the Engineer fails to
issue an IPC on time, that the Contractor may, after giving not less than 21
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days notice to the Employer, suspend work (or reduce the rate of work) [see
Section II-4.10 Works Suspensions] unless and until he receives the IPC or
evidence of payment in respect thereof before expiry of the 21-day notice
period. Such action by the Contractor would probably incur additional cost
and/or delay that would likely precipitate a subsequent claim, costs of which
the Employer might have ability to subrogate to the Engineer. If the Engineer
fails to issue the IPC within 56 days after receipt of the IPS and supporting
documents, the Contractor would be entitled to terminate the Contract [see
Section II-8.2 Termination by Contractor arising from Employers Default].
The Engineer must ensure that:
IPCs are issued as soon as possible, and never later than the time limit
A question often arises as to whether or not the Engineer should certify
payment for Works executed but not yet confirmed as complying with the
Contract or for unfinished or defective Works. For example, should executed
concrete works be certified for payment until strength test results show
compliance with Contract requirements? Should certification be withheld for
concrete whose formwork has not been removed or whose surface finish is
unacceptable? The following principles should apply:
o Certification for payment should not be withheld for executed works which
the Engineer has no reason to believe will not, after testing, satisfy
Contract requirements. If later tests show the works to be defective, then
appropriate corrections of certified amounts can be made in subsequent
IPCs until the defects are corrected
o In case of executed works that are unfinished or defective, the Engineer
should give consideration to:
- whether or not the defect can be remedied;
- if the defect cannot be remedied, then payment therefor cannot be
certified;
- if the defect is correctable, what is the estimated cost of remedial work;
- if the estimated cost of remedial work is close to or greater than the
contract value of the work, then payment should not be certified;
- if the estimated cost of remedial work is less than the contract value of
the work, then the contract value should be certified but with a
deduction of the estimated cost of remedial work (such deduction could
be effected by certifying a lesser quantity);
- if the work is unfinished, then its contract value should be certified with
a deduction of the estimated cost of the finishing works (such
deduction could be effected by certifying a lesser quantity);
Notwithstanding those principles, if the Contractors performance is such that
there is a record of many executed works having been defective, then the
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Engineer would be justified in withholding the contract value of any executed

but untested works until the Contractors performance improves.
For the possibility of joint agreement of the Employer and Contractor for
Acceptance of Non-complying Works with Payment Deductions see Section
II-4.7.
If the Engineer makes corrections and/or adjustments to the Contractors IPS,
then the following procedures are recommended:
Clearly mark the Contractors IPS to show the corrections and
adjustments, and obtain the Contractors Representatives agreement
signature thereto before issuing the corresponding IPC. This should be
done through consultation with the Contractor, rather than presenting him
with an accomplished deed.
If the Contractor is uncooperative or will not sign his agreement to some or
all of the Engineers corrections and adjustments, then the Engineer
should in writing notify the Employer and Contractor of the Engineers
reasons and justifications for making the not-agreed corrections and
adjustments. This notification should be sent concurrently with or as soon
as possible after issue of the IPC. The onus will then be upon the
Contractor to give formal notice of disagreement or claim.
Any consultation or disagreement between the Engineer and Contractor
regarding an IPS must not delay issuing the corresponding IPC by due
date.
Under a contract based on a Bill of Quantities (BoQ) or Schedule of
Payments, the Engineer should not rely merely upon checking and correcting
the progress quantities and amounts of the BoQ or Schedule submitted by the
Contractor as support documents to his IPS. Undoubtedly the Contractors
BoQ or Schedule will have been computer generated, and errors will not
reliably be discerned from visual and manual checks.
In order to check the accuracy of the Contractors progress quantities and
extended amounts, the Engineer should independently prepare his own
spread sheet of the BoQ (or Schedule of Payments, as appropriate).
In the event that any sections of the Contractors BoQ are so extensively
corrected or otherwise unclear, then the Engineer should issue his
independently generated sections as supporting particulars to the IPC.
Price Adjustments
Arising from Change in Law:
The Contract may contain, as FIDIC forms of contract do, provision for
adjustment of the Contract Price for any increase or decrease in Cost arising
from a change in the Laws of the Country made after the Base Date defined
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as the date 28 days prior to the latest date for submission of Tenders. The
Engineer should only certify payment of such increased/decreased costs after
receiving and verifying particulars of a claim therefor. Since the Engineer is
not an expert on law (and should not be expected to be) it behoves the
Contractor to submit a claim for increased costs, and the Employer to submit
a claim for decreased costs. Invariably the Engineer would need the
Contractors breakdown of unit rates/prices to determine the effect of such
changes in Law upon those rates/prices (for example, to determine the effect
of an increased fuel tax on the various rates/prices of the Bill of Quantities).
The Engineers requirement for the Contractor to have submitted breakdowns
of his rates and prices at the beginning of the Contract [see Section II-2.9,
Breakdown of Lump Sums & Unit Rates] would greatly assist such
determination.
Price adjustment shall, in general, be inadmissible for changes in Law
occurring after the Time for Completion (including any granted extensions of
Time) has expired. Exceptions to this general rule would be in respect of
varied works instructed during the Defects Notification (Liability) Period, or
varied works instructed so late during the Time for Completion that they could
only practicably be executed or finished during the Defects Notification
Period.
In accordance with a Price Adjustment Formula:
The Contract may contain a Price Adjustment Formula whereby the amounts
payable to the Contractor shall be adjusted for the rise and fall of the costs of
labour, specified Materials or other inputs to the Works. Such formula [see
Section II-2.18, Price Adjustment Formula & Indices] is typically expressed
as:
where:
Pn = adjustment multiplier applied to the estimated contract value,
in the relevant currency, of work carried out in period n, this
period being a month unless otherwise stated in the Appendix
to Tender.
a = fixed coefficient stated in table of adjustment data included in
the Appendix to Tender, representing the non-adjustable
portion of contractual payments.
b = coefficients representing the estimated portion of each cost
c
element related to execution of the Works, as stated in
d the table of adjustment data. For example b-unskilled
labour, c-cement, d-bitumen.
Ln = current cost indices or reference prices for the period n,
expressed in the relevant currency of payment, each of
En
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Mn which is applicable to the tabulated cost element on the date

49 days prior to the last day of the period (to which the
particular Payment Certificate relates).
Lo = base cost indices or reference prices, expressed in the
Eo
relevant currency of payment, each of which is applicable
Mo to the relevant tabulated cost element on the Base Date.
It will be necessary for the Contractor to have submitted with each of his
Interim Payment Statements, for the Engineer to verify, the documentary
evidence of the values of the indices and a calculation of the adjustment
multiplier.
However, in the event that the Contractor does not complete the whole of the
Works within the Time for Completion, the adjustment multiplier for works
executed after the Time for Completion must be capped at its value
applicable to the month during which the Time for Completion expired.
Adjustment of prices certified for payment of works executed after expiry of
the Time for Completion, will be computed either (a) from that capped
multiplier or (b) from the multiplier based on current indices/prices, whichever
is more favourable to the Employer.
The only exception to this rule would be for varied works instructed after
expiration of the Time for Completion, or so late during the Time for
Completion that they could not practicably be completed during the Time for
Completion. Under such circumstance, the Contractor should be entitled to
price adjustment on such late-instructed works based on current
indices/prices.
Repayment of Advance Payment
The Advance Payment is repaid to the Employer during the performance of
Works, as incremental deductions applied in the Interim Payment Certificates
(IPCs). The Contract will contain provisions specifying:
- the time when repayment will start (usually either when a certain
percentage of the Time for Completion has elapsed, or when Works
certified for payment have reached a certain percentage of the Contract
Price, whichever comes first):
- the amounts to be repaid, usually expressed as a percentage of
completed Works certified for payment in the Interim Payment Certificates;
- the time when repayment must be completed (usually either when a
certain percentage of the Time for Completion has elapsed, or when
Works certified for payment have reached a certain percentage of the
Contract Price, whichever comes first). Recent forms of FIDIC contract
require that the Advance Payment shall be repaid prior to expiry of the
Time for Completion.
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As the Advance Payment is repaid, the amount of the Advance Payment

Security [see Section II-2.7] can, and should be, reduced accordingly.
Authorize payment of the Advance Payment by Interim Payment
Certificate; after receiving evidence of the Employers acceptance of the
Advance Payment Security.
Apply deductions in Interim Payment Certificates, in accordance with
Contract provisions, for repayment of the Advance Payment.
With each Interim Payment Certificate in which an Advance Payment
deduction is made, inform the Employer (copied to the Contractor) of the
amount to which the Advance Payment Security may be reduced. This
advice can be given in the Engineers transmittal letter for the IPC.
Deductions for Retention Money
Retention Money is the accumulated retention money retained by the
Employer (from moneys otherwise due to the Contractor) under Contract
provisions therefor, effected by:
o deducting in Interim Payment Certificates the amount calculated by
applying the percentage of Retention stated in the Appendix to Tender to
the contract value of certain executed Works;
o until the amount retained reaches the Limit of Retention Money (if any)
stated in the Appendix to Tender.
Most contracts include in the Appendix to Tender provision for 10% Retention
until reaching a Limit of Retention Money expressed as 5% of the Contract
Price.
Contracts may vary in the contract amounts to which the percentage of
Retention applies. For example:
o In older forms of FIDIC contract the % of Retention is applied to:
- the value of Works executed, including Variations and Daywork;
- any other items for which there is provision for payment in the BoQ;
o In recent forms of FIDIC contract the % Retention is applied to:
- the value of Works executed, including Variations and Daywork;
- the value of Contractors Documents produced;
- any amounts to be added or deducted for changes in legislation and
changes in costs.
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The Engineer must:

check that the % Retention is applied only to the amounts stipulated in the
Contract.
ensure that retention is applied only to the Limit of Retention Money (if
any) stipulated in the Contract.
Payment of Retention Money
The Engineer will certify payment to the Contractor of the Retention Money
upon completion of the Works, in accordance with Contract provisions that
will typically be:
Upon issue of the Taking-Over Certificate [see Section II-6.2] for the
whole of the Works, the Engineer shall certify for payment one half (50%)
of the Retention Money.
Upon issue of a Taking-Over Certificate for a part of the Works (if
permitted under the Contract), the Engineer shall certify for payment a
proportion of the Retention Money as the Engineer shall determine from
the calculation:
(50% of Retention Money) x (Estimated value of part of Works)
(Estimated final value of Works)
Note that FIDICs recent Red Book contract prescribes the proportion
as:
(40% of Retention Money) x (Estimated value of part of Works)
(Estimated Contract Price)
Upon expiration of the Defects Notification (Liability) Period, the

Engineer shall certify for payment the remainder of the Retention Money,
provided that:
- in the event that any Works remain to be executed, completed and/or
rectified upon expiry of the Defects Notification Period, then the
Engineer may (and should) withhold certification of the value of so
much of the value of the balance of Retention Money as shall, in his
opinion, represent the cost of completing the remaining work.
Such certifications must be made under Interim Payment Certificates, either

separately or together with other payment entitlements.
Most contracts provide that the Contract shall not be considered as
completed until the Engineer signs and delivers to the Employer a
Performance Certificate (so called by recent forms of FIDIC contract) or (as
called in older FIDIC forms) a Defects Liability Certificate [see Section II-7.9
Performance Certificate]. It should be noted, however, that the issue of such
certificate is not a condition precedent to payment of the Retention Money.
The remainder of Retention Money (less any withholding in respect of
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uncompleted works) must be certified for payment by the Engineer promptly

upon expiration of the Defects Notification Period [see Section II-7.1].
Security for Retention Money
Some contracts contain provisions that payment of Retention Money may be
made upon the Employers receipt from the Contractor of a Security for
Retention Money (i.e. a bank guarantee) acceptable to the Employer:
o either: when deductions for Retention have reached the Limit of Retention
Money (in this case for the full amount of Retention Money). The Engineer
must later, at times of issuing the Taking-Over Certificate(s) and at the
end Defects Notification Period(s), certify that the Contractors Security
may be reduced to the appropriate amount.
o or: after a Taking-Over Certificate has been issued for the whole of the
Works (in this case for the remaining amount of Retention Money). The
Engineer must later, at time(s) of the end of the Defects Notification
Period(s), certify that the Contractors Security may be reduced to the
appropriate amount.
Even if the Contract contains no such provisions, this option is available if the
Employer and Contractor so decide by written agreement (usually by Contract
Addendum). The latter of the above alternatives might be a desirable solution
when the disbursement period of external funds (from which payment of the
remaining Retention Money would normally be paid) will expire before the
end(s) of the Defects Notification Period(s).
II-3.12
Interim Payments
The Contract will specify the period within which the Employer is obligated to
pay the Contractor. Contract provisions vary:
o Older standard forms of FIDIC contract prescribe that payment shall be
made within 28 days after an Interim Payment Certificate has been
delivered by the Engineer to the Employer.
o Recent standard forms of FIDIC contract prescribe that payment shall
be made within 56 days after receipt by the Engineer of the Contractors
Application for Interim Payment (i.e. irrespective of the date when the
Engineer issues an Interim Payment Certificate).
o Both older and recent forms of FIDIC contract prescribe that payment
shall be made within 56 days after the Engineers Final Payment
Certificate has been delivered to the Employer.
Other forms of contract may have different provisions. Standard forms of
FIDIC contract may have been superseded by Particular Conditions. Such
Particular Conditions might even include provisions whereby amounts
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certified by the Engineer as eligible for payment by the Employer to the

Contractor are subject to approval and prepayment (to the Employer) by an
external Financing Institution under a primary contract.
Unless otherwise amended by Special Conditions, under a conventional
FIDIC-based contract:
The Employer must make payment in full of the amounts certified by the
Engineer in his Payment Certificates, irrespective of any claim which the
Employer may have against the Contractor until such claim has been
agreed or determined.
II-3.13
Delayed Payments
Overview
Making payments to the Contractor in full and on time is the Employers
contractual obligation, in default of which Contract provisions may entitle the
Contractor to interest (called financing charges in recent forms of FIDIC
contract).
Also the Contractor may be entitled to take such actions as:
o In the event that payment is not made by due date, the Contractor may
give prescribed notice to the Employer (copied to the Engineer) of intent to
suspend work or reduce the rate of work, either of which could give the
Contractor valid grounds to claim extension of the Time for Completion
and/or additional costs. [See Section II-4.10 Works Suspensions:
Suspension of Works by Contractor.]
o Where the Contractor suspends work or reduces the rate of work, having
given the prescribed notice, and the Employer subsequently pays the
amount due, including interest (financing charges) to which the Contractor
is entitled, the Contractor shall resume normal working as soon as is
reasonably possible.
o In the event that the Employer fails to pay the Contractor the amount due
under any certificate within the stipulated period after the due date, the
Contractor may give prescribed notice to the Employer (copied to the
Engineer) of termination of his employment under the Contract [see
Section II-8.2 Termination by Contractor arising from Employers
Default]. It is important to note that even if the Employer subsequently
makes payment after the Contractor issues a notice of termination, the
Contractor is still entitled to terminate upon expiration of the notice period.
The Contractor may, however, withdraw his notice of termination in the
event that payment is made before expiration of the notice period. Also,
the Contractor could, at any time prior to expiration of the notice period,
extend the notice period for termination. Failing any action by the
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Contractor prior to expiration of the notice period, the termination shall

take effect upon expiration of the notice period.
Under recent forms of FIDIC contract, it should be remembered that the
Contractor is also entitled to give notice of termination of the Contract if the
Engineer fails to issue an Interim Payment Certificate within 56 days after
receipt of an Interim Payment Statement.
To avoid the potential repercussions of late payment, the Engineer should:
be fully aware of the Contract provisions for timely payments and the
potential contractual repercussions of delayed payments.
together with submitting any Payment Certificate, advise the Employer of
the due date for payment.
request that the Employer immediately advise the Engineer when any
payment is made, and in what amount.
if, by say 10 days prior to a due date, the Engineer receives no
confirmation from the Employer that a payment has been made, request
the Employer to clarify the payment status.
if payment has not been made by, say, 7 days prior to a due date, prompt
the Employer in writing of the requirement to make payment by the due
date and remind him of the potential contractual repercussions of not
doing so.
These recommendations should be followed such that, in the event that
serious consequences develop (such as additional costs, extension of the
Time for Completion, or even termination of Contract), there will be a record
of the Engineer having dutifully advised the Employer.
A question often arises as to what defines the date on which payment is
made. Most contract provisions merely state that the Employer shall pay to
the Contractor in relation to contractual deadlines for payment, without
further amplification. Unless the Contract contains wording relating payment
to receipt by the Contractor, then it is recommended that:
o the date of payment shall be deemed as the date on which the Employer
instructs his bank to make payment to the Contractor, as evidenced by
record documents.
In the event that a late payment has been made, or to establish if such
payment was late, the Engineer should, in order to be able to administer the
Contract properly:
request the Employer to provide evidence of his dated instruction to his
bank to make payment to the Contractor; failing which the Engineer will
accept the later date of documented receipt by the Contractor.
Interest (Financing Charges) on Late Payments
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Control of Works
Contracts invariably provide that the Employer shall pay interest on late
payments (i.e. payments made after the payment due date) at the rate
specified in the Appendix to Tender or elsewhere in the Contract. In recent
forms of FIDIC contract, and in contracts for Works in Islamic countries
influenced by the Shariah law (wherein payment of interest may be illegal),
this is called financing charges. In the following discussion interest also
means financing charges.
Most contracts stipulate interest as an entitlement to the Contractor, without
any requirement for formal notice by the Contractor or certification by the
Engineer. Interest charges are damages deemed to have been incurred as a
consequence of the Employers breach of Contract.
In respect of the Engineers certification of interest:
o The Contractor may, under Contract provisions relating to Interim Payment
Statements entitling him to claim any other amounts to which the
Contractor considers himself entitled under the Contract, include interest
in his Statements.
The Engineer should not certify payment of interest unless the Contractor
has claimed interest entitlement in his Interim Payment Statement.
However, this does not negate the Contractors entitlement or the
Employers obligation to pay.
If the Contractor has included interest in an Interim Payment Statement,
the Engineer is obliged to certify such valid and correct interest in his
corresponding Interim Payment Certificate.
Unless payment of interest is illegal or unenforceable under the Law of the
Contract, the Employers failure to pay such interest is a breach of Contract
subject to the same contractual repercussions (interest, slow-down or
suspension of Works, and Contract termination) as apply to late payment or
non-payment of any other amounts due under the Contract. Thus, if the
Contractor has submitted an Interim Payment Statement for or including
interest, in respect of which the Employer has not paid such interest by due
date, then a situation arises whereby the Employer has obligation to pay
interest on unpaid interest!
II-3.14
Records of Statements, Certifications & Payments

It is recommended that the Engineer maintain, in spreadsheet form, a record
of each and every Interim Payment Statement submitted by the Contractor
showing:
Number, date of receipt by Engineer, and amount of Interim Payment
Statement;
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Control of Works
Number, date of delivery to Employer, and amount of Engineers

corresponding Interim Payment Certificate;
Due date for Employers payment to the Contractor;
Date and amount of Employers Payment to Contractor.
Such record will:

o enable the Engineer to monitor commitments for certifications and
payments, particularly as a supporting document when advising the
Employer of imminent payment obligations to avoid breach of Contract.
o provide the data base of dates for calculation of any interest (financing
charges) due to the Contractor in respect of late or delayed payments.
It is recommended that this tabular record be included in Engineers Project
Progress Reports [see Section I-3.8 Project Reports]. An example is
presented in Appendix F.
II-3.15
Estimates of Cost of Works to Completion

It is essential that the Engineer maintains:
an estimate of the final cost of each Works Contract throughout its
execution.
Sometimes the Clients Terms of Reference for LBGs services may include
provision for submission of such estimates at stages of construction progress
or at stated periodic times. However, it would not be unreasonable for the
Employer to expect the Engineer to be able at any time to submit an up-dated
cost estimate at short notice.
Preparation of such cost estimate at any time can be time-consuming if a cost
estimate has not continually been maintained.
It must be remembered that the Employer invariably has a funding budget for
each construction contract or for a basket of such contracts. Funding may be
external (World Bank, ADB, etc.) or internal (Government), or a combination
of both, and is likely to be limited. Anticipated cost over-runs may require
funding increases, applications for which are time-consuming and may not be
successful. New funding sources may have to be sought. A parliamentary
decision could even be required.
A situation must not arise whereby the Engineer loses sight of costs and overruns are incurred, or are necessary to complete the Works, of which the
Employer has not been forewarned by the Engineer.
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Control of Works
The Employers primary obligation is to pay the Contractor for Works

executed, and the Contractor needs assurance that the Employer has the
financial resources to fulfil that obligation. It is submitted that the Engineer, if
independent of the Parties (such as under older forms of FIDIC contract),
might have a deemed responsibility to advise the Contractor if continuing
payment is endangered by funding limitations either of amount or
disbursement period.
It is worthwhile to note that recent forms of FIDIC contract (under which the
Engineer is part of the Employers Personnel and not independent) include
the provision:
Employers Financial Arrangements: The Employer shall submit, within 28
days after receiving any request by the Contractor, reasonable evidence
that financial arrangements have been made and are being maintained
which will enable the Employer to pay the Contract Price (as estimated at
that time) . If the Employer intends to make any material change to his
financial arrangements, the Employer shall give notice to the Contractor
with detailed particulars.
Other clauses of recent forms of FIDIC contract provide that if the Employer
fails to comply with this requirement (for providing evidence of financial
arrangements) by due date, then the Contractor can give 21 days notice to
suspend work or reduce the rate of work [see Section II-4.10 Works
Suspensions: Suspension of Works by Contractor]. If the Contractor does not
receive reasonable evidence within 42 days of giving such notice, he is
entitled to terminate the Contract [see Section II-8.2 Termination by
Contractor arising from Employers Default].
In order to maintain a cost estimate to completion:
the Engineer should maintain a Cost Estimate to Completion in
spreadsheet form such as presented in Appendix N.
The example in Appendix N is based on an as-measured contract with a Bill
of Quantities.
It is recommended that the Cost Estimate to Completion be updated:
each time a Variation is instructed (or Variation Order issued);
immediately after each Interim Payment Certificate is issued for works
executed.
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II-3.16

Control of Works
Work Quantities Management

Bill of Quantities
Quantities of the original Bill of Quantities (BoQ) of an as-measured contract
will (or should) have been based on take-offs from the design. Although these
quantities are, by definition, only estimates, the Engineer may not be able to
rely upon them. In some circumstances the quantities may have been
estimated from a preliminary design for tender purposes, and the final design
completed later. The original quantities may have been based on design code
requirements that have changed since the BoQ was prepared. There may
simply be mistakes.
Furthermore, executed quantities may vary from the original BoQ because of
misjudged or unforeseen Site conditions.
Quantity Take-offs
As far as is practicable and as early as possible, the Engineer should require
his supervision staff to:
perform Engineers take-offs, from Issued Drawings [see Section II-2.15
Issuing Drawings] to confirm or revise work item quantities;
in case of significant difference from BoQ quantities, discuss and resolve
with the Employer and his designer;
in case of confirmed significant quantity differences, instruct a Variation
[see Section II-3.3] and issue a Variation Order [see Section II-3.5];
incorporate the quantity variations into the Revised Contract as
exemplified in Appendix L.
This exercise is important:
o as early warning of increased Contract costs.
o in regard to works items for which the Contractor has to pre-order
materials.
Monitoring Quantity Trends
Executed quantities may vary from estimated quantities of the original Bill of
Quantities (BoQ), because of design changes or unforeseen Site conditions.
Earthwork quantities are particularly prone to such variation. For example,
rock may be encountered where earth had been assumed; whereby earth
excavation quantities diminish while more expensive rock-blasted excavation
exceeds original BoQ provision therefor. Also BoQ provisions for soft-spot
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Control of Works
excavation might be exceeded. The designed cut-fill balance may be affected,

requiring greater quantities of imported fill material.
Monitoring of quantity trends will give an indication for projection of final
executed quantities. These projections will, of course, become more reliable
as the Works progress.
It is recommended that the Engineer shall:
Monitor executed quantity trends as the Works progress.
Institute an early warning system of potential quantity over-runs.
When any executed work quantity reaches 80% of its BoQ quantity (either
the original BoQ or Revised Contract BoQ), then a re-estimate should be
performed to confirm or revise the projected final quantity.
The warning should be readily apparent by reference to the Certified to
Date column of each Interim Payment Certificate. See Appendix L for
illustration of a spreadsheet Incorporating Variations & New Unit Rates
into Bill of Quantities.
In case of projected quantity increases, check if there are projected
decreases of other related work items (e.g. decreased earth excavation as
consequence of increased rock excavation).
In case of confirmed significant quantity differences, instruct a Variation
[see Section II-3.3] and issue a Variation Order [see Section II-3.5].
Incorporate the quantity variations into the Revised Contract as
exemplified in Appendix L.
II-3.17
Monitoring & Reporting Works Progress

Percentage of Progress
The best and most reliable method of monitoring and reporting construction
progress is on the basis of Value of Works Completed. On an as-measured
contract this is the value of completed quantities of work items of the Bill of
Quantities (BoQ) and Dayworks. On a Design/Build contract with a schedule
of Lump Sum Prices, it is the aggregate value of estimated completion
percentages of those Prices.
Thus:
% Progress =
Value of Works Completed

Contract Value of Works
The Contract Value of Works should exclude any Provisional Sum for
Contingency and Value Added Tax that may have been included in the
Accepted Contract Amount (i.e. the Original Contract Price).
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Control of Works
The Value of Works Completed and Contract Value of Works should

exclude any:
-
Advance Payment or Repayment;

Retention or Payment of Retention Money;
Adjustments to Contract Price arising, for example, from Contract
provisions for Rise & Fall of Costs, Legislation Changes, Work
Omissions;
Settlements of Contractors claims and disputes, except as they may be
included as work items in the Revised BoQ or Schedule of Prices;
Prolongation Costs during extension of the Time for Completion; and
Other adjustments.
At the beginning of the Contract, before any Variations have been instructed
[see Section II-3.3]:
Contract Value of Works = Accepted Contract Amount (i.e. Original
Contract Price) less any amounts therein of
Provisional Sum for Contingency and Value
Added Tax.
As the Contract progresses, Variations will invariably be instructed and those
Variations incorporated into the BoQ [see Section II-3.3, Section II-3.4, &
Appendix L] as Revised Contract.
Contract Value of Works = BoQ value of Revised Contract, including
Variations incorporated therein.
Thus the Contract Value of Works is a moving target. It is not sufficient to
report progress only in relation to the Value of Works of Original Contract
(called the Accepted Contract Amount in recent forms of FIDIC contract, or
the Contract Price in older forms). It is not a reliable indication of progress to
completion.
It is recommended that the Engineer should report progress of the Works (in
his periodic Progress Reports to the Client/Employer) in 2 ways:
Progress = % of Value of Works of Original Contract
(achieved in X% of the Original Time for Completion)
Progress = % of Estimated Final Value of Works
(achieved in Y% of the Extended Time for Completion)
This data should be presented in the Executive Summary of Project Progress
Reports and the Project Synopsis [see Section I-3.8 Project Reports &
Appendix F].
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Control of Works
It is likely, at the time the Project Manager is preparing a Progress Report,

that an Interim Payment Certificate will not have been prepared for Works
completed to the full time period covered by the Report. In this case:
Value of Works Completed = Value of works previously certified for
payment + estimated value of works subsequently executed.
Progress Charts
A typical Progress Chart is presented in Appendix F.
The Progress Chart should plot the Value of Works Planned and Value of
Works Executed.
Planned progress is based on the Contractors Works Programme and
Cash Flow submitted at the beginning of the Contract [see Section II-2.11].
The curve should be adjusted to reflect Works Programme & Cash Flow
Revisions subsequently submitted by the Contractor [see Section II-4.8]. If
acceptable Revisions are not submitted, then the chart should at least show
the Engineers most recent Estimated Final Value of Works if different from
the Value of Works of Original Contract.
The charts time scale must show the Original Time for Completion and any
extensions thereto.
Actual progress is shown by plotting, month-by-month, the total Value of
Works Completed at the end of each month. Thus, Actual progress can
graphically be compared to the Contractors Planned progress.
II-3.18
Contract Addenda & Amendments

Section II-3.3 and Section II-3.4 discussed how Variations to the Contract
are made under (pursuant to) the Contract; such Variations formalized by
issuing Variations Orders discussed in Section II-3.5.
Changes or variations to the Contract cannot be made by the Engineer. They
can only be made by written and signed agreements between the Parties to
the Contract the Employer and Contractor. Formal Contract Addenda may
be required. Some Funding Institutions might require to sign, as endorsed,
each Contract Addendum before it can be executed. Consequently the
procedure might be:
o Preparation of Addendum by the Engineer (or by the Employer with or
without the Engineers assistance).
o Agreement signature of the Employer.
o Endorsement signature of the Funding Institution (if required).
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Control of Works
o Agreement signature of the Contractor.

o Distribution of original signed copies to the Employer, Contractor and (if
required) the Funding Institution.
o Copy to the Engineer.
The circumstances under which Contract Addenda must be issued vary
according to the Employers and/or Funding Institutions practice and
requirements. For example, Contract Addenda might be required for:
o any increase of the Contract Price above the Accepted Contract Amount;
o any change in the currency split of payments;
o any change in the funding split of a jointly funded contract;
o any change (or relaxation) of Technical Specifications;
o any change to the Conditions of Contract;
o any extension of the Time for Completion;
o any extension of the funding disbursement period.
It is possible that some changes will require Contract Addenda, whereas
others (perhaps relating to Technical Specifications) can be effected by a
more simple written Employer/Contractor agreement that does not require
endorsement of the Funding Institution.
At the beginning of the Contract the Engineer must:
check Contract provisions and Funding Institution Guidelines (if any) to
determine requirements and procedures for making any changes to the
Works Contract.
In the case that there are no contractual or Funding Institution requirements
and procedures, the Engineer must:
establish with the Employer (and, if necessary, also with the Funding
Institution) requirements and procedures that will be followed for making
changes to the Works Contract.
August 2011
II-3 /45
II-3: VARIATIONS & FINANCIAL CONTROL OF WORKS - CHECK LIST

II-3.1 Bill of Quantities and Unit Prices (for as-measured contracts):
Obtain from Employer (or prepare) electronic copy of priced BoQ
II-3.2 Provisional Sums:
Check Contract definition & provisions
Are Provisional Sums designated in Contract for:
Contingency?
Nominated Subcontractors?
Is Percentage for 'Overhead & Profit' (to be applied to PS works stated:
in items of BOQ?
in Appendix to Tender?
II-3.3 Variations:
Check/implement Contract provisions for:
Permitted Variations
Engineer's authority to instruct Variations
Employer's pre-approval of Variations
II-3.4 Valuation of Variations:
Check/implement Contract provisions for Principles of Valuation
Check/implement Contract provisions for price adjustments arising from:
Executed quantities exceeding original BoQ quantities
Changes in legislation
Aggregate value of Variations exceeding specified limit
Incorporate Variations into BoQ (for Revised Contract Price)
II-3.5 Variation Orders:
Check/implement Contract provisions for VOs (if any)
Establish with Employer procedures for VOs:
Format & preparation
Submission to / approval of Employer before issue to Contractor
Prepare & report summary of VOs (in Engineer's Progress Reports)
Check sum of issued VOs = sum of Variations incorporated in BoQ
II-3.6 Value Engineering:
Are there 'Value Engineering' provisions in Contract?
Understand shared benefit to Employer & Contractor
Implemented on this Contract?
II-3.7 Daywork:
Is priced Daywork Schedule incorporated in Contract?
Are quantified Dayworks included in Contract Price? (part of BoQ)
Prepare standard daily Daywork record forms
Work executed by DW only on Engineer's written instruction
Engineer monitors/verifies DW materials & applied resources
Contractor submits DW forms daily for Engineer's approval signature
Engineer signs approval of DW record sheets daily (or disputes)
II-3.8 Measurement of Works:
Field measurement always performed by Engineer
(jointly with Contractor, but not accepted from Contractor alone)
Notice always given to Contractor of intended field measurement
Quantity computations from records/drawings performed by Engineer
(jointly with Contractor, but not accepted from Contractor alone)
Engineer always requests Contractor to examine and sign as agreed
(or dispute) quantity computations from records/drawings
Measurement for monthly Interim Payment purpose always made of
total quantities executed to date (less quantity last certified)
- not quantity executed in the month
II-3.9 Valuation of Plant and Materials Intended for the Works:
Check/implement Contract provision for payments for Materials on Site:
List of Plant/Materials for which payment permitted
Specified % of value to be applied
Payment permitted only for Plant/Materials delivered to Site?
Measurement or evidence provided for delivered Plant/Materials
Payment permitted for Plant/Materials sent to Site?
Check
Comment
August 2001
Guideline
II-3.10
II-3.11
II-3.12
II-3.13
II-3.14
II-3.15
II-3.16
II-3.17
II-3.18
Requirement
Evidence & bank security for Plant/Materials sent to Site?
Same principles of 'Measurement of Works' applied to Material on Site
Contractor's Interim Payment Statements:
Establish with Contractor standard format for IPSs
(same as Engineer will use for IPCs)
Establish with Contractor the Engineer's requirements for support
documents (vouchers, records of agreed measurements, & other)
Advance Payment to be claimed by IPS (supported by copy of Security
& Employer's acceptance of Security)
IPSs consecutively numbered
Details provided of bank accounts to which payments to be made
Interim Payment Certificates:
Check/implement Contract provisions for IPCs:
IPCs not permitted until Performance Security submitted by
Contractor & approved by Employer
Period within which Engineer must prepare & submit
Advance Payment and deductions for repayment
% deduction for Retention & Limit of Retention Money
Partial payment of Retention Money at completion of parts of Works
for which a Taking-Over Certificate is issued
Bank security in lieu of Retention Money
IPCs consecutively numbered (corresponding to Contractor's IPSs)
Cover letter to IPC includes:
Payment due date
Details of Contractor's bank to which payment to be made
Amount to which Advance Payment Security can be reduced
Reasons for correction of Contractor's IPSs
Interim Payments:
Check Contract provisions for:
Period within which Employer must make payment
Request Employer to notify payment date & amount
Delayed Payments:
Check Contract provisions - Contractor's entitlements if payment delayed
If payment notification not within 10 days of due date, prompt Employer
If payment notification not within 7 days of due date, warn Employer
of Contractor entitlements if payment delayed
Records of Statements, Certifications & Payments:
Maintain records of:
Receipt date & amount of Contractor's IPSs
Due date, submission date & amount of Engineer's IPCs
Due date, payment date & amount of Employer's payments
Present records in Engineer's Progress Reports
Estimates of Cost of Works to Completion:
Check Service Contract requirements for submission of Estimates
Maintain Estimate continuously:
Update Estimate after Variation instruction or VO issue
Update Estimate after each IPC
Present latest Estimate in Engineer's Progress Reports
Work Quantities Management:
Perform quantity take-offs from drawings to verify BoQ quantities
Monitor quantity trends during construction
Early warning system to verify final estimated quantity when executed
quantity reaches 80% of BoQ quantity
Prepare VOs to reconcile significant quantity variations
Monitoring & Reporting Works Progress:
% Progress based on "Value of Works" completed
Prepare Progress Charts
Present Progress Charts in Engineer's Progress Reports
Contract Addenda & Amendments:
Establish with Employer (& Funding Institution if necessary) & implement
requirements & procedures for making changes to the Contract
Check
Comment
August 2001

II-4.
II-4: Ongoing Supervision
ONGOING SUPERVISION
This Chapter provides guidelines for ongoing supervision during execution of
a Works Contract, including:
o Engineers Instructions
o Regular Progress Meetings
o Continuing validity of the Contractors Performance Security,
Advance Payment Security, and Insurance
o Verification of the Contractors Personnel and Equipment
o Sampling & Testing of Materials, Workmanship and Plant
o Works Inspection, Testing and Acceptance
o Unacceptable Works, Defects Notification and Remedies
o Works Programme and Cash Flow Revisions
o Remedies for Contractors Slow Progress
o Works Suspensions
o Documentation, Determination & Evaluation of Claims
o Delays, Extension of Time for Completion and Associated Costs
o Liquidated Damages and Bonus for Early Completion
o Disputes and Dispute Resolution
II-4.1
Engineers Instructions
Without proper agreed procedures and consistency for issuance of
instructions, the effectiveness for monitoring of cost, schedule, progress and
delay will be diminished. Very often, the full effects of all instructions issued
during the execution of Works do not come to light until the final account is on
the table and the Contractor is reconstructing (with hindsight) the history of
events in order to support claims for extension of Time for Completion (to
avoid application of Liquidated Damages) and/or for additional costs. To
adequately assess such claims the Engineer should have records of all
instructions given.
Instructions given by the Engineer, or by his delegated assistants [see
Section II-2.2 Engineers Delegation of Duties & Authorities], to the
Contractor must be in writing. This can be achieved by letter, but it is
recommended that a standard-format Engineers Site Instruction be used,
which should be consecutively numbered, and to which (if appropriate) a
sketch or photograph should be attached. An example is presented in
Appendix J.
Verbal site instructions should be given in emergency only. Where verbal
instruction is given, the Engineer must:
August 2011
II-4 /1

follow up with a written instruction, also recording the date/time when the
verbal instruction was given by/to whom.
Older forms of FIDIC contract provide that if the Contractor confirms in

writing a verbal instruction within 7 days of the instruction, and the Engineer
does not contradict the confirmation within 7 days of receipt, then it shall be
deemed as an instruction of the Engineer authorizing the Contractor to
proceed therewith. The same provision exists in recent forms of FIDIC
contract, but with response periods reduced to 2 days.
It is essential that those of the Engineers assistants (e.g. Resident Engineer,
Section Engineers, inspectors) who are authorized to give instructions on
behalf of the Engineer to the Contractor, are so authorized in writing (copied
to the Contractor). [See Section II-2.2 for Engineers Delegation of Duties
and Authorities]
II-4.2
Regular Progress Meetings

Progress meetings should be sufficient to suit the needs of the Contract but, it
is recommended, should not be less frequent than monthly. In so far as the
Contract may require the Contractor to submit monthly reports to the
Engineer (as may the Engineer also be required to submit monthly reports to
the Employer and Funding Institution), it is recommended that:
regular progress meetings are convened at the end of each month.
The meetings should be attended by representatives of the Employer,
Contractor and Engineer - chaired and recorded by the Engineer. The
persons who should attend the Monthly Progress Meetings are those who are
authorized to inform, to make decisions on issues and to delegate action.
Draft agenda should be prepared by the Engineer and distributed to the
Employer and Contractor (and, if appropriate, to the Funding Institution) prior
to each meeting, with a request to advise of other matters that the Parties
wish to raise. It may be appropriate to have standard agenda to which other
matters are added as needed.
Important features of effective progress meetings are:
o Agreed agenda and effective chairmanship;
o Records of actions taken (or outstanding) in respect of previous meetings;
o Accurate and full reporting;
o Decisions taken;
o Identification of responsibility for actions to be taken;
o Accurate forecasts or projections;
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o Accurate minutes and prompt distribution.

Guidelines for the preparation of Minutes of meetings are presented in
Section I-3.6 Records of Meetings.
In addition to the Monthly Progress Meetings (to which the Employer and, if
possible, the Funding Institution should be invited to attend), more frequent
Site meetings will likely be required between the Engineer and Contractor.
These will probably be weekly, preferably to coincide with established times
when the Contractor is required to submit his weekly work schedules,
equipment/labour returns, etc. These also should be chaired and minuted by
the Engineer.
It must be remembered that Minutes of meetings are not formal contract
communications. Minutes of meetings cannot be used for giving formal
instructions, approvals, consents, determinations, decisions, notices and
requests, which communications are required (at least under FIDIC
Conditions of Contract) to be given in writing. The Minutes may record intent
to deliver such communications, but the communications must be rendered
separately in writing.
In the event that agreements of contractual significance are made at
meetings (e.g. clarification of otherwise unclear contract terms or
procedures), they should be recorded in protocols signed by the designated
representatives of the Parties (Employer & Contractor) to such agreements.
Each Party should retain an original, fully-signed copy of such protocols.
II-4.3
Continuing Validity of Securities & Insurance

The requirement for the Contractors submission of a Performance Security
to the Employer at the beginning of the Contract is discussed in Section II2.6. However, the validity of the Performance Security must be maintained
until the Performance Certificate (called the Defects Liability Certificate
under older forms of FIDIC contract) [see Section II-7.9] has been issued.
During the Contract, the Engineer should:
monitor that the Performance Security is adequate and still valid.
If, say, extensions of the Time for Completion have been granted or the
Contractor has not fulfilled his obligations within the Time for Completion or
Defects Notification Period, then the Engineer should:
advise the Employer of the contractual need for the Contractor to extend
the validity of his Performance Security;
August 2011
II-4 /3

assist the Employer in drafting a letter whereby the Employer requires the
Contractor to provide from his surety the required validity extension of the
Performance Security.
Under FIDIC contracts the amount of the Performance Security is expressed,

in the Appendix to Tender, either as a fixed amount or as a percentage of the
Contract Price.
Under older forms of FIDIC contract, the Contract Price is defined as:
the sum stated in the Letter of Acceptance as payable to the Contractor
for the execution of the Works
which is a fixed amount based on the Contractors tender. Therefore the
amount of the Performance Security, if expressed as a percentage of the
Contract Price, is also a fixed amount.
Under recent forms of FIDIC Contract, however, the Contract Price is
defined as:
the Accepted Contract Amount including adjustments made in
accordance with the Contract.
and Accepted Contract Amount (based on the Contractors tender) is defined
as:
the amount accepted in the Letter of Acceptance for the execution ... of
the Works.
Thus, under recent FIDIC, the Contract Price can vary according to Contract
addenda, Variations to the Works, valuations of as-measured quantities of
works actually executed, and any other variables and adjustments.
Consequently, if the Performance Security is expressed in the Appendix to
Tender as a percentage of the Contract Price, then the derived amount of the
Performance Security might also be subject to adjustment. In this case the
Engineer must:
monitor if adjustments to the Contract Price, by Contract Addenda,
Variations or other adjustments, will require an increase of the
Performance Security amount in accordance with provisions of the
Contract, and formally advise the Employer;
Contractor to provide from his surety the required increased amount of the
Performance Security.
The requirement for the Contractors submission of an Advance Payment
Security to the Employer at the beginning of the Contract is discussed in
Section II-2.7.
August 2011
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The Advance Payment Security must be maintained in an appropriate amount

until the Advance Payment is completely repaid to the Employer. However, as
the Advance Payment is incrementally repaid to the Employer by deductions
in the Engineers Interim Payment Certificates [see Section II-3.11 IPCs:
Repayment of Advance Payment], the amount of the Security may be
reduced accordingly.
During the Contract, until the Advance Payment is fully repaid, the Engineer
must:
monitor that the validity of the Advance Payment Security is maintained at
least in the amount remaining to be repaid;
advise the Employer of the contractual need for the Contractor to extend
the validity of his Advance Payment Security;
Contractor to provide from his surety any required validity extension of the
Advance Payment Security.
Insurance
The requirement for the Contractors provision of Insurance at the beginning
of the Contract is discussed in Section II-2.8. However, the validity of the
Contractors Insurance policies must be maintained until the Works have
been fully completed.
During the Contract the Employer/Engineer must:
monitor that the Contractor maintains his insurance policies, including
those covering his subcontractors for Accident or Injury to Workmen, in
the appropriate amounts.
in the event that the Contractors policies do not cover Accident or Injury
to Workmen of Subcontractors, require that the Contractor provides
evidence of his Subcontractors insurance policies therefor in accordance
with Contract requirements.
require that the Contractor provides copies of new or extended insurance
polices before the previous policies expire.
II-4.4
Verification of Contractors Personnel & Equipment

Accurate records of the Contractors (including Subcontractors) on-Site
Personnel (including labour force) and Equipment are essential to facilitate
evaluation of the Contractors Works progress and/or claims.
The Engineers instruction (under older forms of FIDIC contract) and the
contractual obligation (under recent forms of FIDIC contract) for the
Contractor to submit regular returns of his on-Site Personnel and Equipment
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are discussed in Section II-2.17 Contractors Reports. Submissions should

be required at least monthly (as required by recent forms of FIDIC contract)
but, depending on the size and complexity of the Works and according to
circumstances, the Engineer may require such returns to be submitted
weekly.
Any change of instruction of the form, details and intervals (from that
instructed at the beginning of the Contract see Section II-2.17) should be
conveyed in writing by the Engineer to the Contractor.
It is not sufficient for the Engineer to rely on the information submitted by the
Contractor. During any report period he should ensure that one or more of his
Site staff is charged with the responsibility of performing spot checks of the
numbers of Contractors Personnel and Equipment on Site that are dedicated
for utilization on the Contract (i.e. not for use or shared use on other
contracts).
Should the Engineer, based on his spot-check records, disagree with the
details submitted by the Contractor, he must promptly record such
disagreement in writing to the Contractor, requesting that the Contractor
either correct or justify his submitted records (failing which the Engineers
records will be deemed as accurate).
II-4.5
Sampling & Testing of Materials, Workmanship & Plant

All samples of Materials are to be supplied by the Contractor at his own cost if
the supply thereof is clearly intended by or provided for in the Contract.
Samples requested by the Engineer additional to Contract requirements
would have to be the subject of a Variation instructed by the Engineer, for
which the Contractor could be entitled to payment.
All samples submitted by the Contractor must be labelled as to origin,
description and intended use in the Works.
Unless stated otherwise in the Contract, all tests required by the Contract or
clearly necessary to show compliance with the Contract are to be performed
by the Contractor. Unless there is provision in the Contract for payment for
any particular test, the cost of making tests is borne by the Contractor.
Unless otherwise stated in the Contract, tests are deemed to be required to
be carried out, as appropriate, on Site, in situ, or at the place of manufacture,
fabrication or preparation of the Materials, components or Plant. The
Engineer and Contractor should pre-agree the locations and times for all
tests.
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The Engineer may instruct the Contractor to perform additional testing or vary
the locations or details of specified tests. But such instruction might constitute
a Variation for which the Contractor could be entitled to additional payment or
even an extension of the Time for Completion if the tests results show
compliance with the Contract.
In the event that test results show non-compliance with the Contract, the cost
of retesting is borne by the Contractor.
All forms of FIDIC contract require that:
the Contractor shall agree, with the Engineer, the time and place for the
specified testing of any Plant, Materials and other parts of the Works; and
the Engineer shall give the Contractor not less than 24 hours notice of his
intention to attend tests.
But, since it is the Contractors responsibility to perform the tests, it is
therefore incumbent upon him to have given prior notice of the tests, and
his readiness therefor, and obtained the Engineers agreement to the
timing and location of the tests.
If an authorized representative of the Engineer does not attend at the time
and place agreed, the Contractor may proceed with the tests, which shall be
deemed as having been performed in the presence of the Engineer.
The Contractor must promptly forward to the Engineer duly certified reports of
the tests. When the specified tests have been passed, the Engineer is
required to endorse the Contractors test certificate, or issue a certificate to
him. If the Engineer has not attended the tests, he shall be deemed to have
accepted the test results as accurate.
The Employer, should he so require, may witness any testing and countersign
test certificates. The beneficiary (if not the Employer) of parts of the Works
(e.g. utility owners in respect of utility relocations) may also require to witness
testing and countersign test certificates.
II-4.6
Works Inspection, Testing & Acceptance

Procedures for Works inspection, testing and acceptance should have been
established at the beginning of the Contract, as recommended in Section II2.12 Quality Assurance & Control.
Standard forms should be used by the Contractor and Engineer for recording
inspection, testing and acceptance. Examples of standard forms (based on
previous projects) are presented in Appendix J. The actual standard forms to
be adopted must be tailored to the actual works to be performed. In so far as
submission of some forms will be initiated by the Contractor (e.g. Requests
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for Inspection), the Contractors agreement should have been obtained to the
standard forms to be used.
Where adopted standard forms for inspections provide for multiple and
sequential activities (for example: formwork & rebar fixing concrete
placement), a work item (concrete placement) must not be permitted to
commence before the preceding work items (formwork & rebar fixing) have
been inspected and accepted by the Engineer, as recorded on the inspection
forms. Similarly, paving of an asphalt wearing course is not permitted before
the underlying asphalt binder course has been inspected, tested and
accepted, and a tack coat acceptably applied.
All FIDIC forms of contract require the Contractor to give notice to the
Engineer whenever any part of the Works is ready, or about to be ready, and
before it is covered up or put out of sight; in order to afford the Engineer full
opportunity to examine, inspect, test and measure the work before it is
covered up.
The Engineer must perform such examination, inspection, testing and
measurement without unreasonable delay (or promptly give notice to the
Contractor that the Engineer does not require to do so).
Consequently the notice to be given by the Contractor must also be
reasonable according to the circumstances. Obviously the pressure testing of
a water main (prior to backfilling its trench) would require more time than, say,
simply inspecting a drainage pipe. In order to obviate claims for delay:
The Engineer and Contractor should, during the course of the Works
execution, pre-agree what will constitute adequate notice and response
time of the Engineer for the different types of work.
The above requirements apply also to the Contractors off-Site manufacture of
Plant, production of Materials, or fabrication of components of the Works. If
the Engineer does not provide full-time supervision at such off-Site locations,
then the Engineer and Contractor should pre-agree what will constitute
adequate notices of the Contractor and response times of the Engineer at
such locations, for the purposes of inspection and testing of works in progress
and before packaging and transportation to Site.
In the event that the Contractor covers up work without giving notice (or
without adequate notice for the purpose of inspection, testing and
measurement):
the Engineer is entitled to require the Contractor to uncover work to
facilitate inspection, testing and measurement, and thereafter to reinstate
and make good at the Contractors expense.
The Engineer may at any time require the Contractor to uncover any part of
the Works or make openings in or through the same. However, if the
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Contractor did comply with the Contract requirement to give adequate notice
before covering up, and if the uncovered work is found to have been executed
in accordance with the Contract, then the Contractor is entitled to his costs of
uncovering, making openings, reinstating and making good. If the uncovered
work is found not to be in accordance with Contract requirements, then the
Engineer shall issue a Defects Notice [see Section II-4.7 Unacceptable
Works, Defects Notification & Remedies] and instruct the Contractor to bring
the works within compliance at his own expense.
It is essential that the various assistants of the Engineer (Resident Engineer
and/or inspectors, surveyors, laboratory or other technicians) are authorized
in writing (copied to the Contractor) as having the delegated duties and
authorities to perform the inspections and/or testing and to accept such
inspected/tested works on behalf of the Engineer. [See Section II-2.2
Engineers Delegation of Duties & Authorities.]
II-4.7
Unacceptable Works, Defects Notification & Remedies

Defects Notification
If, as a result of an examination, inspection, measurement or testing, any
Plant, Materials or workmanship is found to be defective or otherwise not in
accordance with the Contract, the Engineer may reject the Plant, Materials or
affected works. FIDIC contracts require that such rejection be by written
notice, with stated reasons therefor, to the Contractor.
It is recommended that a standard form of rejection be used by the Engineer:
a Defects Notice, for which an example is presented in Appendix J. Such
standard Defects Notice should include:
A consecutive number (for each Defects Notice).
The date of issuance of the Notice.
Location(s) of the defective Plant, Materials or works.
The Contract clause under which the Notice is given.
A description of the defective Plant, Materials or works (with reference to
the Specifications or Drawings in contravention of which they are
defective).
Attachments as necessary (drawings, sketches, photographs, etc.).
A stated requirement that the Contractor shall correct the defects (with
reference to the Contract clause under which he is required to do so).
Description of a solution acceptable to, or required by, the Engineer for
correction of the defects.
In some cases the Engineer might dictate the remedial actions required;
such as, say, removal of incompliant Material from Site, or removal and re-
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execution of defective works. If other solutions are possible, the Engineer

should give the Contractor opportunity to propose his own solution for the
Engineers consideration and consent.
Time constraints for remedial action.
This would be necessary when the execution of remedial works is urgently
required for safety or maintenance of the Works, or for safety of site
personnel or the public.
Provision for signing by a person authorized to issue the Notice on behalf
of the Engineer.
Provision for acceptance, on behalf of the Engineer, of the remedial
actions/works when completed, by signature of a person so authorized.
The use of a standard form for Defects Notices will facilitate the Engineers
record-keeping during the construction period when compiling works to be
executed before and after the Works are deemed substantially completed and
formally handed over to the Employer, and during the Defects Notification
Period. Contract provisions typically provide that the Contract cannot be
concluded until all contractual obligations have been fulfilled, including the
correction of any and all defects.
Acceptance of Non-complying Works with Payment Deductions
Some contracts provide that works with minor defects can be accepted at
reduced payment rates or with payment deductions; formulae are sometimes
included in contracts to derive such reductions or deductions. In contracts
without such provision, there is still the possibility of acceptance with
negotiated payment deductions; but only if the Employer and Contractor
agree, which agreement must be in writing signed by both Parties. The
Engineer has no unilateral powers of discretion under the Contract in this
regard, although he could recommend such solution to the Parties. For
example, in road construction the Engineer might recommend that
acceptance, with payment deductions, of asphalt concrete wearing course
with some minor thickness deficiencies (that do not affect the integrity and life
of the road structure) is preferable to instructing the removal and replacement
of defective areas that would result in a patchwork quilt with poorer rideability. However, in the absence of Contract provisions therefor, acceptance
of defective works with price deductions should be resisted particularly early
in the Contract when emphasis should be upon the Contractors
establishment of effective quality control and quality assurance to prevent
defective works.
Remedies
The Contractor is required to comply with an instruction to correct defective
works within a reasonable time, which should be the time stated (if any) in the
instruction, or immediately if urgency is required.
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All forms of FIDIC contract provide that the Contractor is in default if he fails
to carry out the instruction within the time specified (or, if none, within a
reasonable time), and the Employer shall be entitled to employ and pay other
persons to perform the corrective actions or works. In such eventuality the
Contractor is entitled to payment for the works (per Contract provisions) but
the Employer is entitled to recover from the Contractor the Employers costs,
as verified by the Engineer in consultation with the Employer and Contractor,
of the remedial actions/works performed by others. A dispute could arise, in
such circumstance, from the lack of definition of reasonable time or if
urgency was necessitated. A dispute avoidance strategy would be to advise
the Employer not to take such action without first warning the Contractor in
writing (either directly or through the Engineer) that such action will be
implemented unless the Contractor fulfils his contractual obligations with due
diligence.
All forms of FIDIC contract also provide that the Employer is entitled to
terminate the Contract [see Section II-8.1 Termination by Employer arising
from Contractors Default] if the Contractor is in contractual default by failing
within 28 days to comply with a notice of rejection issued by the Engineer and
instructing remedial work. It is recommended, however, that the Engineer
should formally advise the Employer (if necessary) only to take such
precipitous action if the Contractor has, despite several written warnings,
been in continuous flagrant breach of Contract that demonstratively and
adversely affects the Employers or publics use of the works or safety.
II-4.8
Works Programme & Cash Flow Revisions

Works Programme Revisions
At the beginning of the Contract the Contractor is obligated to submit to the
Engineer a Works Programme [see Section II-2.11]. Older forms of FIDIC
contract require that the first Programme be in such form and detail as the
Engineer may reasonably prescribe, and require the Engineers consent.
Recent forms of FIDIC contract require that the Programme conforms to
requirements described in the Contract, and the Engineers consent is not
required.
Most contracts, including FIDIC forms of contract, require that the Contractor
shall submit a revised programme whenever actual progress fails to comply
with his previous programme. The usual inference is that a revised
programme is required when actual progress falls behind the previous
programme; which is true. But the Contractor could also submit a revised
programme proposing to accelerate intended progress ahead of the original
Programme. However:
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the Engineer should raise objection to an accelerated programme if it

would impose:
- greater obligations on the Employer (for example, sooner granting of
Possession of Site or of Drawings preparation) than the original
Programme unless, of course, the Employer has no objection (which
should be expressed in writing); or
- increased costs to the Employer.
A revised programme will invariably be required when the Time for

Completion is extended. A revised programme must always show Works
completion within the original or extended (as appropriate) Time for
Completion.
Revisions under older forms of FIDIC contract are required whenever:
o the Engineer considers that actual progress does not conform to the
Programme to which the Engineer has given consent, and requests the
Contractor to submit a revised programme.
Older forms of FIDIC contract do not obligate the Contractor to submit
revised programmes unless the Engineer so requests; but there is no
provision precluding the Contractor from submitting a revised programme
at any time.
Older forms of FIDIC contract contain no provision that programme
revisions require the consent of the Engineer; therefore no consent need
be given. However, in later disputes it could be deemed that the Engineer
had no objection to the programme revision if he did not, within a
reasonable time, notify any objections to the Contractor. If the Engineer
does have objections to the revised programmes form and detail (which
should comply with the Engineers stated requirements at the beginning of
the Contract) or its conformity with contractual obligations, the Engineer
should notify the Contractor in writing of such objections and require the
Contractor to submit a further revised programme.
Revisions under recent forms of FIDIC contract are required whenever:
o the previous programme is inconsistent with actual progress or with the
Contractors obligations;
o the Engineer gives notice to the Contractor that a programme fails (to the
extent stated) to comply with the Contract or is inconsistent with actual
progress.
Under recent forms of FIDIC contract it is the Contractors obligation to
submit a revised programme whenever his progress is inconsistent with
his present programme or when he receives a notice to that effect from
the Engineer. This obligation of the Contractor is not predicated on receipt
of an Engineers notice.
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Under recent forms of FIDIC contract, the Engineers consent is not

required to programme revisions, and should not be given. However, in
later disputes it could be deemed that the Engineer had no objection to the
programme revision if he did not, within a reasonable time, notify any
objections to the Contractor. If the Engineer does have objections to the
revised programmes form and detail (which should comply with Contract
requirements), the Engineer should notify the Contractor of such
objections and require the Contractor to submit a further revised
programme.
Cash Flow Revisions
Except where the Contract provides that the Contractor shall be paid by
instalments according to a Schedule of Payments, the Contractor is obligated,
at the beginning of the Contract, to have submitted to the Engineer an
estimate of payments, in quarterly periods, to which he expects to become
entitled under the Contract [see Section II-2.11 Works Programme & Cash
Flow].
Under older forms of FIDIC contract, the Contractor is obliged to submit
revised estimates at quarterly intervals only if the Engineer so requires.
Under recent forms of FIDIC contract, the Contractor is obligated to submit
revised estimates at quarterly intervals (whether or not the Engineer so
requires) until the Taking-Over Certificate has been issued for the Works.
It is recommended that the Engineer request a revised Cash Flow estimate
each time that he requests a Works Programme revision; but he cannot so
instruct unless there is specific Contract provision therefor.
It is also recommended that the Engineer request the Contractor to prepare
and submit his Cash Flow revisions in the level of detail recommended under
Section II-2.11 Works Programme & Cash Flow. With such level of detail,
the Engineer and Contractor would have a common basis for both of their
progress reporting obligations.
II-4.9
Contractors Slow Progress

Remedies to Comply with Time for Completion
Most contracts provide that, if the Contractors progress is too slow to comply
with the Time for Completion:
the Engineer shall notify (or instruct) the Contractor to expedite progress
at his cost.
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There are slight differences between older and recent forms of FIDIC
contract, as described below. Where Time for Completion is mentioned, it
means including any Time extensions that have been awarded to the
Contractor.
Older forms of FIDIC contract provide that if, for any reason that does not
entitle the Contractor to a Time extension, the rate of progress of the Works is
at any time, in the Engineers opinion, too slow to complete the Works within
the Time for Completion:
the Engineer shall notify the Contractor who shall thereupon take such
steps as are necessary, subject to the consent of the Engineer, to
expedite progress so as to comply with the Time for Completion.
The Contractor shall not be entitled to any additional payment for taking
such steps (which, subject to the consent of the Engineer, may include
longer working hours, additional working shifts and/or working at night or
on locally recognized days of rest). If the steps taken by the Contractor
involve the Employer in additional supervision costs, such costs shall be
determined by the Engineer (after due consultation with the Parties) and
shall be recoverable from the Contractor by the Employer, and may be
deducted by the Employer from any monies due or to become due to the
Contractor, and the Engineer shall notify the Contractor accordingly.
Note, in respect of older forms of FIDIC contract, that:
The Engineer is required only to notify the Contractor of too-slow progress
in order to obligate the Contractor to expedite the Works.
Insofar as the Contractor is so obligated, the Engineers notice is
tantamount to an instruction. It is recommended that the Engineer make
clear in his notice that the Contractor is instructed to take such steps as
necessary to comply with the Time for Completion.
The Engineer is not required to request or the Contractor to submit a
revised Programme of Works. However, the Engineer should so request,
as he is entitled to do [see Section II-4.8 Works Programme & Cash Flow
Revisions], whereby the Contractor would be obligated to respond.
The steps to be taken by the Contractor are subject to the consent of the
Engineer.
The Engineer should make it clear in his notice that he requires the
Contractor to submit (together with the revised Programme), for the
Engineers consent, the Contractors written proposals of how he intends
to expedite the Works progress (which might not be clear from, say, a barchart revised Programme).
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In order for the Engineers supervision resources to be adequate to cover

the revised working methods of the Contractor (which could include
working at night, on holidays, on rest days or increased hours), it is
essential that the Engineer be informed of the Contractors proposals. The
Engineers consent to such proposals may be subject to agreement,
arising from due consultation with the Parties, of procedures for the
Contractors payment to the Employer of increased supervision costs.
It should be noted that the Engineers delay in responding to the
Contractors proposals, or the Engineers objection thereto, could give
grounds to the Contractor claiming that he was not permitted to take
actions to expedite progress. Having issued the notice in the first place,
the Engineer should not delay his written response to the Contractors
proposals, and his objections (if any) must be reasonable.
Most forms of contract, including older FIDIC, provide for the imposition of
Liquidated Damages [see Section II-4.14] if the Contractor fails to comply
with the Time for Completion or any prescribed periods within which Sections
of the Works are required to be completed. FIDIC provisions state that the
imposition of liquidated damages shall not relieve the Contractor from any
other of his obligations and liabilities under the Contract. Thus, in the event
that the Contract has provision for liquidated damages to be applied to
missed milestone dates within the Time for Completion (for completion of
parts of the Works), then, it is submitted, the Contractor would be obligated to
pay the Employers additional costs arising from the Contractors asinstructed expedition of the Works progress as well as the liquidated
damages.
Recent forms of FIDIC contract provide that if, for any reason that does not
entitle the Contractor to a Time extension, the rate of progress of the Works is
at any time in the Engineers opinion:
- too slow to complete the Works within the Time for Completion, or
- has fallen (or will fall) behind the current Programme,
then the Engineer shall instruct the Contractor to submit a revised
Programme and supporting report describing the revised methods he
proposes to adopt, at his own risk and cost, to expedite progress and comply
with the Time for Completion. Unless the Engineer notifies otherwise, the
Contractor shall adopt these revised methods, which may include increasing
his working hours. The Contractor shall not be entitled to any additional
payment for taking such steps. If the steps taken by the Contractor involve the
Employer in additional costs, such costs shall, subject to compliance with the
Employers Claims provisions of the Contract [see Section II-4.11 Claims],
be recoverable from the Contractor by the Employer, in addition to delay
damages [see Section II-4.14 Liquidated Damages & Bonus].
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Note, in respect of recent forms of FIDIC contract, that:

The Engineer shall instruct the Contractor if he has fallen (or will fall)
behind the current Programme.
It is submitted that the Engineer should not instruct the Contractor to
expedite his progress in the event that the Contractors current
Programme is based on an early finish (e.g. to earn a bonus) but
compliance with the Time for Completion is still achievable.
However, in the event that the Contract contains prescribed Milestones
(for completion of parts of the Works), the Engineer should issue an
instruction if achievement of the Milestones is endangered
(notwithstanding that compliance with the overall Time for Completion is
still achievable).
The Contractor shall adopt his revised methods unless the Engineer
notifies otherwise.
The Engineers consent is not required, but clearly the onus is upon the
Engineer to quickly state any objections he may reasonably have; failing
which the Contractor is entitled to proceed with his proposals. Under the
circumstance that the Contractors proposals include additional working
hours that might affect the Engineers ability to provide an adequate level
of supervision (remedy for which might increase the Employers costs), it
is essential that the Engineer responds that the Contractor could have
obligation to pay any additional supervision costs to the Employer. Since
the Contractors adoption of his proposals are stated in the Contract as
being at his risk and cost, it is submitted that increased costs of
supervision would not be a reasonable objection to the Contractors
proposal to increase working hours, but the Engineers warning to the
Contractor that he could be liable to such costs might give him cause to
reconsider his proposals. The actual liability would be subject to
compliance with the Employers Claims provisions of the Contract [see
Section II-4.11].
The Contractor is obligated to pay the Employers additional costs
subject only to the compliance with the Employers Claims provisions of
the Contract. It is implicit that additional costs would include any
additional supervision costs, even though not specifically stated.
The Contract procedures for Employers Claims [see Section II-4.11]
require that the Employer or the Engineer (who is part of the Employers
Personnel) give to the Contractor, as soon as is practicable, notice and
particulars of any claim for additional costs. Therefore, if the Contractors
proposals to expedite the Works are likely to incur additional costs, the
Engineer should immediately give notice; and, as soon as is practicable
thereafter, to follow up with particulars of claim if additional costs are
incurred.
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Recent forms of FIDIC contract provide for the imposition of Delay

Damages [see Section II-4.14 Liquidated Damages] if the Contractor fails to
comply with the Time for Completion or any prescribed periods within which
Sections of the Works are required to be completed. The provisions state that
the imposition of delay damages shall not relieve the Contractor from any
other obligations which he may have under the Contract. Thus, in the
event that the Contract has provision for delay damages to be applied to
missed milestone dates within the Time for Completion (for completion of
Sections of the Works), then, it is submitted, the Contractor would be
obligated to pay the Employers additional costs arising from the Contractors
as-instructed expedition of the Works progress as well as the delay damages.
Increased Working Hours
In the following discussion, the term increased working hours includes:
- working more hours per normal work day than stated in the Contractors
Tender (if included in the Contract as such or by reference);
- at night, on locally recognized rest days, and on public holidays (unless
included in the Contractors Tender and permitted under the Contract).
If, as a result of the Engineers instruction to expedite performance to
overcome Slow Progress, the Contractor works increased working hours,
there might be a necessity to increase the Engineers supervision activities at
additional cost to the Employer. As aforesaid, under FIDIC-based contracts
the Contractor is contractually liable to pay such additional costs to the
Employer, and the Employer may deduct his additional costs from payments
otherwise due from the Employer to the Contractor as certified by the
Engineer. Indeed, by joint agreement of the Parties the Engineer may be
required to certify the deductions in his Interim Payment Certificates.
Whatever the adopted mechanism for the Employer to recover additional
costs from the Contractor to pay the Engineer, an essential requirement will
be a protocol, jointly signed by Employer/Contractor/Engineer (and, if
necessary, endorsed by the Funding Institution) establishing:
- the limit of the Engineers normal supervision staff commitment and
work regime beyond which the Contractor is liable for the cost of
additional supervision staff and/or overtime working;
- the payment rates for additional supervision staff and overtime hours;
- procedures for the Contractors payment for additional supervision
costs;
- remedies if procedures not followed (which could be the withdrawal of
permission for the Contractor to work increased working hours).
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The use of payment deductions (from the Contractor) in order for the
Employer to pay the Engineer, may be conveniently implemented if the
financing sources for the Works Contract and LBGs Service Contract are the
same, except that pre-approval of the funding institutions would be required,
and an addendum may be required to the Service Contract.
Due to accounting mechanisms however, the Employer might not easily be
able to use payment deductions from the Contractor under one funding
source to pay the Engineer under a different funding source. A solution, if
acceptable, could be that:
- the Engineer submits invoices directly to the Employer (copied to
Contractor) for the additional supervision costs;
- the Employer submits invoices directly to the Contractor for the
additional supervision costs (per Engineers invoice to the Employer);
- on receipt of payment from the Contractor, the Employer promptly pays
the Engineer.
Again, however, either an addendum to LBGs Service Contract may be
required or even an additional Service Contract.
Under no circumstance should payment be made by the Contractor directly to
the Engineers staff; this would create a conflict of interest for the staff.
Payment should not be made directly by the Contractor to LBG a separate
contract would be required (since LBG is not a Party to the Works Contract)
but this would also create a conflict of interest. Payment of additional
supervision costs must be made directly by the Contractor to the Employer
under the Works Contract so that the force of the Works Contract can be
invoked in the event of non-compliance; and thereafter payment made by the
Employer to LBG, either under LBGs Service Contract or a separate contract.
In the case of occasional overtime working by the Contractor, an adequate
level of supervision may be possible by the Engineers staff working overtime
and/or in work shifts. However, it is recommended that the Engineers staff
not be requested (nor permitted) to work excessive overtime hours that could
cause lack of effectiveness (through tiredness) or potential burn-out. If the
Contractor proposes continuously to work excessively more than regular
hours, then it is recommended that an adequate supervision be achieved by a
combination of additional supervision staff mobilization and shift-working.
In any case of overtime working, the requirements of local Law should be
ascertained and adhered to both in respect of overtime premiums payable
and any rules for compensatory time-off.
A problem could arise if the Employer will not approve (and therefore not pay
for) overtime premiums and/or additional staff to provide an adequate level of
supervision; yet at the same time would object to (or not allow) limiting the
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Contractors working hours. Under such circumstance it would be necessary

for the Engineer to advise the Employer in writing (copied to the funding
institution, if any) that the Engineer would not be able to provide an adequate
level of supervision nor, therefore, to fulfil his duties and obligations under the
Works Contract and LBGs Service Contract. Before writing such letter the
Project Manager shall discuss such issue with his Head Office Supervisor.
II-4.10
Works Suspensions
Suspension of Works by the Engineer
Most contracts, including standard forms of FIDIC contract, provide that the
Engineer may at any time instruct the Contractor to suspend progress of part
or all of the Works and, during the suspension, to protect, store and secure
the suspended Works against any deterioration, loss or damage.
Curiously, FIDIC forms of contract do not require the Engineer to state, in his
instruction, the reason for or possible time extent of the suspension. However,
clearly it would be reasonable for the Engineer to do so; so that the
Contractor can decide how best to meet his obligation to protect, store and
secure the suspended Works.
FIDIC forms of contract give no guidance as to the circumstances under
which the Engineer can or should instruct a suspension of Works. Therefore,
unless the Contract limits the Engineers authority (for example, requiring the
Engineer to obtain prior approval of the Employer), the exercising of this
power is at the discretion of the Engineer. This is an onerous responsibility.
Insofar as suspensions may entitle the Contractor to additional costs and/or
extension of the Time for Completion (EoT), the Engineer should exercise this
power only when absolutely necessary and, except in emergency, preferably
with the Employers concurrence. Furthermore, the Engineers Delegation of
Authority [see Section II-2.2], for instructing suspensions should be limited to
the Engineers senior representative on the project.
Circumstances under which the Contractor could be entitled to additional
costs and/or EoT arising from the Engineers instruction of a Works
suspension, would include:
o Events prescribed in the Contract as constituting Force Majeure, such as:
- War, hostilities, invasion or act of foreign enemies;
- Rebellion, terrorism, revolution, insurrection, military or usurped power,
or civil war, within the country;
- Riot, commotion or disorder within the country (other than by
employees of the Contractor, his subcontractors or suppliers);
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Munitions of war, explosive materials, ionising radiation or

contamination by radio-activity (except as attributable to the
Contractors use thereof);
- Use or occupation by the Employer of any section or part of the
Permanent Works (except as may be specified in the Contract);
- Arising from the design of any part of the Works (except for design
which is the Contractors responsibility under the Contract);
- Any operation of the forces of nature which was unforeseeable or
against which an experienced contractor could not reasonably have
been expected to have taken adequate precautions.
o Necessity for proper execution or safety of the Works arising from any act
or default by the Engineer or the Employer.
o Any reason for suspension not attributable to the Contractors contractual
risk or default.
In those circumstances entitling the Contractor to EoT and/or costs arising
from a Works suspension, procedures for the Engineers determination of the
Contractors entitlement, as affected by the Contractors compliance with
prescribed claims procedures, are explained in Section II-4.11 Claims,
Section II-4.12 Determination of Claims, and Section II-4.13 Delays,
Extension of Time for Completion & Associated Costs.
Circumstances under which the Contractor would not be entitled to additional
costs and/or EoT arising from the Engineers instruction of a Works
suspension, include:
o Suspensions otherwise provided for in the Contract.
o Necessity by reason of some default or breach of Contract by the
Contractor or for which he is responsible.
o Necessity by reason of climatic conditions on Site (except that the
Contractor may be entitled to EoT, but not costs, arising from
Exceptionally Adverse Climatic Conditions [See Section II-2.16
Meteorological Records and Section II-4.13 Delays, Extension of Time
for Completion & Associated Costs: Responsibility for Delay affects
Entitlement to Costs: In regard to Exceptionally Adverse Climatic
Conditions].
o The Contractors (or his Subcontractors) flagrant disregard (despite
previous notices of instruction or warning) of Contract requirements for
safety, security, execution, quality, accuracy, workmanship, protection of
the environment, etc. [see Section II-4.7 Unacceptable Works, Defects
Notification & Remedies].
Since contracts generally do not provide guidance as to when the Engineer
should instruct a Works suspension, a question arises as to whether or not he
should exercise this power at the Employers request. A request is not an
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instruction, and can be interpreted as a submission to the Engineers

discretion. The Engineers response, it is submitted, should depend on the
reason for the Employers request, which might range from a few hours shutdown to facilitate VIP security, to an indeterminate suspension to enable the
Employer to overcome funding problems. In any case the Engineer should
require the Employers written instruction. Before ordering an indeterminate
suspension, the Engineer should advise the Employer in writing of the
possible contractual consequences of such action, and require the
Employers confirmation of instruction.
Under FIDIC forms of contract, if a suspension of Works instructed by the
Engineer (other than attributable to climatic conditions or to the Contractors
default) has continued for more than 84 days, the Contractor is given options
to bring the matter to a head or not. The Contractor may give notice to the
Engineer requesting permission, within 28 days, to proceed with the
suspended work. If the Engineer does not give permission within that period,
the Contractor may:
o where the suspension applies only to a part of the Works, by notice to the
Engineer treat the suspension as an omission of that part of the Works
from the Contract;
o where the suspension affects the whole of the Works, give notice to the
Employer of termination of his employment under the Contract [see
Section II-8.2 Termination by Contractor arising from Employers
Default].
Alternatively the Contractor may elect to allow the suspension to continue
indefinitely and be content to be awarded extension of the Time for
Completion (EoT) and associated costs [see Section II-4.13 Delays,
Extension of Time for Completion & Associated Costs].
Suspension of Works by the Contractor
Most contracts provide that if the Employer fails to pay the Contractor within
the times prescribed by the Contract [see Section II-3.12 Interim Payments],
the Contractor shall be entitled, by giving notice to the Employer (copied to
the Engineer), to reduce his rate of work or to suspend the Works.
The wording of contracts is usually that the Contractors entitlement to
suspend Works arises from the Employers failure to pay the amount due
under any certificate of the Engineer. That means the full amount certified by
the Engineer; subject, of course, to any deductions the Employer is entitled to
make in accordance with the Contract. The Employers underpayment (if
arising, say, from his disagreement with the Engineers certification) does not
affect the Contractors entitlement; even if the amount of underpayment is
small. In the event of underpayment by the Employer, the Engineer should
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immediately advise the Employer in writing of his risks of underpayment,

which could include the Contractors suspension of Works and/or even
termination of his employment under the Contract [see Section II-8.2
Termination by Contractor arising from Employers Default].
Older forms of FIDIC contract provide that the Contractor may give notice of
suspension if the Employer fails to make payment within 28 days after the
contractual payment due date [see Section II-3.12 Interim Payments]; and
that the suspension may take effect not sooner than 28 days after giving such
notice.
Older forms of FIDIC contract do not specifically provide any remedy in the
event of the Engineers failure to issue an Interim Payment Certificate by the
certification due date [see Section II-3.11 Interim Payment Certificates].
However, it would be an unreasonable interpretation of the Contract that no
remedy is available to the Contractor. A reasonable and fair interpretation is
that the Contractor would have entitlement to give notice of suspension 28
days after the contractual payment date, as computed from the contractual
date by which the Engineer should have issued his Interim Payment
Certificate.
Recent forms of FIDIC contract provide that the Contractor may give notice
of suspension immediately upon the Engineers failure to issue an Interim
Payment Certificate by the certification due date [see Section II-3.11], or
immediately upon the Employers failure to make payment by the contractual
payment due date [see Section II-3.12]; and that the suspension may take
effect not sooner than 21 days after giving such notice.
Any such suspension by the Contractor (due to the Employers payment
default) would entitle the Contractor to extension of the Time for Completion
(EoT) and associated costs [see Section II-4.13 Delays, Extension of Time &
Associated Costs], and would not prejudice his entitlement either to interest
on delayed payments [see Section II-3.13 Delayed Payments] or also to
terminate his employment under the Contract [see Section II-8.2 Termination
by Contractor arising from Employers Default].
II-4.11
Claims
Contractors Claims
All contracts invariably prescribe procedures for submitting claims. Both older
and recent forms of FIDIC contract prescribe that:
o The Contractor shall give notice to the Engineer of his intention to submit
a claim within *28 days after the event or circumstance giving rise to the
claim has first arisen.
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[* Note: By Standard FIDIC definition, days mean calendar days.]
o The Contractor shall, within a prescribed further period, submit to the

Engineer the grounds upon which the claim is based and detailed
particulars of the amount claimed.
o The Engineer shall then proceed to make a determination of the claim in
accordance with provisions of the Contract [see Section II-4.12
Documentation, Determination & Evaluation of Claims].
The purpose for giving notice is to allow the Engineer to investigate the
principle of the claim and to inspect or order records to be kept at the time of
the event giving rise to the claim. The Contract provides that the Engineer
shall, on receipt of notice without necessarily admitting to the Employers
liability inspect such contemporary records of the Contractor and may
instruct the Contractor to keep additional and/or further contemporary records
as are reasonable and may be material to the claim.
There are, however, significant differences between older and recent forms of
FIDIC contract.
Under older forms of FIDIC contract:
o The Contractor shall give notice to the Engineer (copied to the Employer)
of his intention to submit a claim, within 28 days after the event giving rise
to the claim has first arisen.
It should be noted that:
- If the Contractor can demonstrate that at the relevant time he did not
intend to claim because he was unaware of the effect of the event or
its potential for a claim, then the Contractor could argue that the notice
requirement is inapplicable.
- However, the counter-argument would be that the 28-day period does
not run from the date on which the intention was formed, nor from the
date on which the effect manifested itself to the Contractor, but the
date on which the event giving rise to the claim occurred.
o The Contractor shall submit detailed particulars of claim within 28 days (or
such other reasonable time as may be agreed by the Engineer) after the
submission of notice therefor.
o If the Contractor fails to comply with the time provisions for submission of
notice and particulars, then the Contractors entitlement is limited to such
amount that the Engineer (or, subsequently, an arbitrator) considers to be
verified by contemporary records. [See Section II-4.15 Disputes &
Dispute Resolution.]
Under recent forms of FIDIC contract:
o If the Contractor considers himself entitled to any extension of Time for
Completion and/or additional payment, he shall give notice to the
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Engineer, describing the event or circumstance giving rise to the claim,

within 28 days after the Contractor became aware, or should have
become aware, of the event or circumstance.
o If the Contractor fails to give notice within the requisite 28 days, he shall
not be entitled to any extension of Time and/or additional payment, and
the Employer shall be discharged from all liability in connection with this
claim.
Upon first reading this would appear to be clear that the Engineer has no
discretion in the matter; if the Contractors notice is late, then a
subsequent claim is inadmissible.
But the Engineer must be careful not to jump prematurely to timebarring a claim without consideration of the circumstance. Over recent
years many decisions of Dispute Adjudication Boards and Arbitrators have
overturned the Engineers time-barring of Contractors claims. Such
decisions have been based on consideration that the circumstance from
which the claim arises post-dated the event giving rise to the claim based
upon which the Engineer computed the requisite notice period.
In respect of time-barring claims under recent forms of FIDIC contract it is
recommended that:
If, in the Engineers opinion, the Contractor clearly was or should
have been aware at the time of an event of the circumstance that
would give rise to a claim, then the Engineer should time-bar such
claim for which the notice was not given within 28 days after that
event.
If, in the Engineers opinion, there was or may have been a
circumstance whereby the Contractor might reasonably not have
become aware of the adverse effect of a previous event or its
potential for a claim until later than the event, then the Engineer
should discuss the matter with the Employer (the Engineer is, after
all, part of the Employers Personnel) before deciding to time-bar a
claim.
If, in the Engineers opinion (preferably with the Employers
agreement) the Contractor should have become aware by a certain
date of the circumstance that a previous event would give rise to a
claim, then the Engineer should time-bar a claim for which requisite
notice was not given within 28 days of the circumstance.
o The Contractor shall submit his fully detailed claim (including full
supporting particulars of the basis of the claim) to the Engineer within 42
days after the Contractor became aware, or should have become aware,
of the event or circumstance (or within such other period as may be
proposed by the Contractor and approved by the Engineer).
The reasonableness of a Contractors request for an extension of the 42day period will depend on the complexity of the claim, and the Engineer
should not unreasonably withhold approval. However, it would be
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reasonable for the Engineer to predicate his approval upon a requirement

for the Contractors approval of a similar extension to the prescribed 42day period within which the Engineer must render a determination of the
claim [see Section II-4.12 Documentation, Determination & Evaluation of
Claims].
FIDIC forms of contract provide, if the event or circumstance giving rise to a
claim has a continuing effect, that:
o The fully detailed claim, as first submitted, shall be considered as interim.
However, it is incumbent upon the Contractor to state and explain such
circumstance in his first-submitted claim, failing which the Engineer could
reasonably disallow the Contractors subsequent up-dating of his detailed
particulars.
o The Contractor shall submit further interim particulars giving the
accumulated delay and/or amount claimed.
Older FIDIC requires these interim particulars to be submitted at intervals
that the Engineer may reasonable require; time limits are not specified.
The Engineer must remember to instruct the Contractor of these time
intervals which, it is suggested, should be not less often than every 28
days or monthly.
Recent FIDIC requires interim particulars to be submitted monthly.
o The Contractor shall submit his final claim within 28 days after the end of
the effects resulting from the event or circumstance giving rise to the
claim.
It should be noted that older FIDIC does not specifically permit relaxation
of this 28-day requirement, but neither does it prescribe any penalty or
disqualification in the event of late submission. It is recommended that the
final claim should be admissible, but that the Contractors entitlement
would be limited to such amount that the Engineer (or, subsequently, an
arbitrator) considers to be verified by contemporary records.
Recent FIDIC allows relaxation of this period if the Contractor so requests
and the Engineer approves.
Employers Claims
Older forms of FIDIC contract do not provide any procedures for, nor even
mention, Employers claims. Recent forms of FIDIC contract do.
Recent forms of FIDIC contract provide that if the Employer considers
himself entitled to any payment under the Contract, or to any extension of the
Defects Notification Period:
o The Employer or the Engineer shall give notice and particulars to the
Contractor; but no time limits are prescribed.
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o The notice shall be given as soon as practicable after the Employer

became aware of the event or circumstance giving rise to the claim,
except that notice relating to any extension of the Defects Notification
Period shall be given before expiry of such period.
o The particulars shall specify the Clause or other basis of the claim, and
shall include substantiation of the amount or extension to which the
Employer considers himself entitled.
o The Engineer shall then proceed to make a determination of the claim in
accordance with provisions of the Contract [see Section II-4.12].
II-4.12
Documentation, Determination & Evaluation of Claims

The Engineer is invariably responsible and authorized under standard forms
of FIDIC contract for determining the validity and justified amounts of claims,
whether of time extensions or additional payment entitlements. But the
Contract must be read carefully to identify any limitations upon the Engineers
authority.
Older forms of FIDIC contract contain provisions only for the determination
of Contractors claims. Recent forms of FIDIC contract contain provisions
for the determination of both Employers and Contractors claims.
Documentation of Claims
It is imperative that claims be well documented, and separate files should be
kept and maintained for each and every claim. There are several reasons for
this:
o Time is of essence. When a claim is presented, the Engineer should not
be searching general chronological files for records pertaining to a claim;
he might miss crucial information. Full records should already be
available, so that he can respond to the claim without undue delay.
o If the Employer or Contractor disputes a determination and requests an
Engineers Decision or a Decision of the Dispute Adjudication Board
(DAB) (whichever is contractually relevant, see Section II-4.15 Disputes
& Dispute Resolution), it will inevitably be necessary to submit to the
Engineer or DAB all documentation pertaining to the claim and its disputed
determination. Full records must be available for this purpose.
o If the Employer or Contractor disputes an Engineers Decision or a DABs
Decision and refers the dispute to arbitration (see Section II-4.15), it will
inevitably be necessary to submit to the arbitrator(s) all documentation
pertaining to the claim, its original determination and the Engineers or
DABs Decision. Full records must be available for this purpose.
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The Engineer should establish/maintain separate claim files:

Establish a separate claim file as soon as a notice of claim is received,
whether or not the Engineer considers it has justifiable grounds.
Give each claim a title and consecutive number, requesting the
Contractor and Employer henceforth to refer to the claim title/number in
subsequent correspondence and documentation.
In the event that a notice is unclear (for example, if the Contractor submits
a notice of Disruption or Delay but without notifying his intent to claim),
maintain a file of potential claims. Such documents can be transferred to
an active claim file when the intent to claim is clarified.
Maintain in each claim file, as relevant:
- all correspondence pertaining thereto;
- contemporary records (including photographs, testing reports, weather
data, inspection reports, labour/equipment records, etc., as
appropriate);
- submitted interim and final particulars of claim;
- the Engineers or Engineers Representatives determination of the
claim (including any formal record of the Parties agreement on which
the determination was based);
- if relevant, any Engineers Decision or DABs Decision;
- if relevant, any agreement of the Parties made in amicable settlement
after notice of arbitration has been given.
- if relevant, any arbitral decision.
Procedures for Determination
These will be set out in the Contract.
Older forms of FIDIC contract prescribe that:
The Engineer shall, after due consultation with the Employer and the
Contractor, determine the amount of time extension and/or payment due
to the Contractor, and shall notify the Contractor (copied to the Employer)
accordingly.
It is noteworthy that the purpose of due consultation is not stated as being
to reach agreement of the Parties. The Engineer could, under the wording
of older FIDIC, use the consultation merely to obtain information and
arguments that might influence his determination, but maintain the
authority to render his own determination. It is submitted, however, that
the Engineer should not take this authority upon himself unless the Parties
cannot agree.
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To avoid later dispute of his determination, the Engineers priority should

be to arrive at a reasonable determination that is justifiable under the
Contract and is agreeable to both Parties..
If the Contractor has not complied with prescribed time limitations or other
Contract requirements for submission of notice and/or detailed particulars
of claim, the Contractors entitlement shall be limited to such amount as
the Engineer considers to be verified by contemporary records.
Consequently (unlike under recent forms of FIDIC contract) the Engineer
cannot reject a claim for such non-compliance. Nonetheless, entitlement, if
any, would be severely limited (unless the Employer agrees otherwise) in
the event of a claim submitted so late that the particulars of claim cannot
be verified.
No time limit is placed upon the Engineer within which to render his
determination of a claim. However, it would be a reasonable expectation
that the Engineer should render a determination within a period similar to
that within which the Contractor was obliged to submit his claim and
supporting particulars; i.e. within 28 days after receiving a fully supported
claim. This would be particularly relevant in the case of a claim that has a
continuing effect and for which the Contractor has submitted interim
particulars.
o The Contractor is entitled to have included in any Interim Payment
certified by the Engineer such amount as the Engineer may determine,
after due consultation with the Parties, in respect of any claim; provided
that the Contractor has submitted sufficient particulars. If submitted
particulars are insufficient to substantiate fully the claimed amount, the
Contractor is entitled to payment in respect of such part of the claim as
such particulars may be substantiated to the Engineers satisfaction.
Recent forms of FIDIC contract prescribe that:
o Procedures for the determination of the Contractors or Employers claims
are identical.
The Engineer shall consult with the Employer and the Contractor in an
endeavour to reach agreement for resolution of the claim. If agreement is
not achieved, the Engineer shall make a fair determination in accordance
with the Contract, taking due regard of all relevant circumstances.
The Engineer shall give notice (in writing) to both Parties of each
agreement or determination, with supporting particulars.
In respect of the Contractors claims not submitted on time: any claim for
which the Contractor has not complied with prescribed requirements for
timely submission of notice and particulars shall be inadmissible.
In respect of the Contractors claims properly submitted, the Engineer
shall, within 42 days after receiving a claim or any further particulars of a
previous claim (or within such other period as the Engineer may propose
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and the Contractor accepts), respond to the claim. The Engineer may
request further particulars, but shall nevertheless give response on the
principles of the claim within such time.
In respect of the Employers claims, no time limit is stipulated for the
Engineers response. However it would be a reasonable expectation for
the Engineer to respond within the same 42-day period as is applicable to
the Contractors claims.
Each Payment Certificate shall include such amounts for any claim as
have been reasonably substantiated. Unless and until the particulars
supplied are sufficient to substantiate the whole of a claim, the Contractor
shall be entitled to payment for such part of the claim as he has been able
to substantiate.
o Each party shall give effect to each agreement or determination unless
and until it is revised in the process of Dispute Resolution [see Section
II-4.15 Disputes & Dispute Resolution].
Principle & Quantum
The Engineers determination of a claim will be based on the particulars
submitted, but not necessarily confined thereto. Since the Engineer is
required to pay due regard to all relevant circumstances, he should take into
consideration events or circumstances of which he is aware and that are
known at large.
The particulars of claim must include:
- A description of the event or circumstance giving rise to the claim.
- The contractual basis for the claim, which should reference the specific
clauses of the Contract under which entitlement is claimed; hereinafter
called the Principle of claim.
- A detailed substantiation with, as necessary or appropriate, supporting
documentation of the amounts (of time extension or payment) that are
claimed; hereinafter called the Quantum of claim.
The Engineer might be wasting his time by focusing on the Quantum of a
claim before considering the contractual eligibility of the Principle of the claim.
If the Principle is ineligible, the Quantum need not be considered.
So, first the Engineer should:
determine if the Principle of claim is eligible. If, after due consultation with
the Parties, the Engineer considers it is not, then he should notify the
claiming party, copied to the other Party, accordingly.
If, after due consultation with the Parties, the Engineer considers the Principle
of claim is eligible (in whole or in part), then he may notify the claiming party,
copied to the other Party, accordingly. The Engineer might consider doing
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this, before assessing the Quantum of claim, in the event that he is running
out of any time prescribed for responding to a claim, and/or if he requires the
submission of more particulars to substantiate the Quantum.
Having established the contractual eligibility of the Principle of claim, only
then should the Engineer assess the Quantum of the claim. His assessment
should establish how much of the Quantum, if any, is justified by the
submitted particulars as are verifiable by contemporary records, and request
further particulars for any remaining part. In this respect it must be
remembered that the Engineer had opportunity, after notice of claim had been
submitted, to inspect contemporary records kept by the Contractor. Therefore
the Engineer cannot later argue that the contemporary records later submitted
(unless they are different from or supplementary to the records he was given
to inspect) are no longer verifiable.
Subject to any contractual requirement for the Employers approval, the
Engineer will render his determination of the claim. This determination must
be in writing, reasoned and with detailed comments. In the event that either
Party disputes the determination [see Section II-4.15 Disputes & Dispute
Resolution], a well-presented and well-reasoned determination is less likely
to be overturned in the next prescribed level of dispute resolution. The
determination should be structured to present/contain:
A description of the event and/or circumstance giving rise to the claim.
A summary of the Contractors (or Employers, as appropriate)
submissions of notice and particulars of claim in compliance (or not) with
Contract requirements.
A summary of correspondence (and minutes) pertaining to the claim.
A summary of the basis and amount of claim.
A summary of the Engineers consultation with the Parties prior to
rendering the determination, the effects of those consultations on the
determination, and/or agreements upon which the determination is based.
The Engineers determination of the contractual eligibility of the Principle of
claim, with reference to appropriate clauses of the Contract.
The Engineers determination of the Contractors (or Employers, as
appropriate) entitlement arising from the claim.
In appendix: copy of the claim and other significant correspondence and
records.
Due Consultation
In assessing a Contractors claim, FIDIC forms of contract require the
Engineer to consult with both the Contractor and the Employer, before
rendering a determination. However, under any other form of contract, it is
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strongly recommended that the Engineer should perform such consultation.

Consultation should be documented in written minutes, distributed to both
Parties, as a back-up and future reference to the eventual determination of a
claim.
Recent forms of FIDIC contract state that the purpose of consultation is to
attempt to obtain agreement of the Parties. Even if the purpose of obtaining
agreement is not so stated (as it is not in older forms of FIDIC contract), it is
strongly recommended that this should be a priority of the Engineers
consultation. To avoid later dispute of his determination, the Engineer should
always try to arrive at a determination agreeable to both Parties, even if such
determination would not otherwise have been his own. However, if such
agreement is obtained in consultation, the Engineers determination must
state and provide records of the agreement of the Parties. In the event that
agreement is not obtained during the process of consultation, then the
Engineer must make a determination that he considers fair and reasonable,
under which circumstance records of the prior consultations should be
retained in case such determination is later disputed.
In the case that the Engineer experiences difficulties getting the Parties to
initiate the process of consultation, or to foreshorten the process when time is
of essence, the Engineer should, on the basis of his review of the
Contractors particulars, render (in writing) his assessment of the claim to
both Parties and request (within a stated, reasonable period) their respective
agreement to, or comments on, such assessment; advising that this
procedure is intended as the process of due consultation. Depending on the
nature of the responses (or lack thereof), the Engineer can then convert his
assessment into a formal determination.
To re-emphasize: Under FIDIC-based contracts the Engineers
consultation with the Parties is a contractual requirement. The validity of
an Engineers determination could be disputed if it is rendered without the
requisite consultation.
Limits of the Engineers Authority
The Contract may include provisions (as, say, under Particular Conditions)
that require the Engineer to obtain the specific (which means written)
approval of the Employer before granting to the Contractor, for example:
- any extension of the Time for Completion;
- any payment entitlements that would increase the Contract Price
(including determination of the value of any Contractors claims).
Under such circumstance, it is recommended that the Engineer prepare and
submit to the Employer his assessment of the claim, requesting the
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Employers written approval to render it as a determination pursuant to the

Contract. It is recommended that the assessment be submitted under a cover
letter to the Employer, with the cover letter copied to the Contractor (but not
including the assessment). In case the Employer declines approval, it is
reasonable that the Contractor should know that the Engineer is performing
his obligations under the Contract. If the Employer grants approval, then the
Engineer should immediately render the determination to the Contractor,
copied to the Employer. If the Employer declines approval, then the Engineer
can only re-instigate the process of consultation.
If the Employer continues to decline to give a required approval to a claim
assessment that the Engineer is unprepared (for reasons professional or of
fairness under the Contract) to diminish, then the Engineer could:
- render to the Contractor a determination that the Employer does approve,
but advising that it is a determination of the Employer; or
- advise the Contractor that, consequent upon the Employers declination to
give approval, he is unable to render a determination.
It would then be up to the Contractor to seek redress under the Contracts
provisions for Dispute Resolution [see Section II-4.15] (except that an
Engineers Decision under older forms of FIDIC contract would be
inapplicable since such Decision would still require the Employers approval).
II-4.13
Delays, Extension of Time for Completion

& Associated Costs
Completion of Works within the Time for Completion
The Contract will likely contain (as in standard forms of FIDIC contract)
provision that, if the Contractor does not substantially complete the whole of
the Works within the Time for Completion, the Contractor shall pay to the
Employer Liquidated Damages (called Delay Damages under recent forms
of FIDIC Contract) [see Section II-4.14]. The Contract might also provide that
Liquidated Damages are payable if the Contractor does not complete
specified sections of the Works within prescribed milestone periods.
However, the Contract must be read carefully. Some contracts require that
the Works shall be totally completed before they will be taken-over by the
Employer, and that Liquidated Damages are payable if the Works are not so
totally completed within the Time for Completion. Even a FIDIC-based
contract may have been modified from its standard form to require total
completion instead of substantial completion.
In the event that the Works are not substantially completed within the Time for
Completion (or totally completed as the case may be), with no delays outside
the Contractors control (i.e. due only to the Contractors slow progress or
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other default), the Contract still remains in force together with all obligations of
the Parties under the Contract. The Contractor remains obligated to complete
the Works, unless and until the Employer exercises prescribed contractual
entitlement to terminate the Contract [see Section II-8.1 Termination by
Employer arising from Contractors Default]; and the Employer remains
obligated to pay the Contractor for works executed.
In the event of delays occurring outside the Contractors control, the Contract
will provide that the Contractor is entitled to extensions of the Time for
Completion (EoT). Then:
It is the Engineers obligation, subject to the Contractors compliance with
prescribed claim procedures, to determine the amount of such extensions
to which the Contractor is entitled under the terms of the Contract.
EoT for the whole of the Works (or of milestones for completion of Sections of
the Works) automatically extends the date(s) after which the Employer would
be entitled to apply Liquidated Damages.
Care must be exercised when assessing and awarding EoT (including interim
EoT) once awarded, it cannot be subsequently diminished or withdrawn.
Grounds for Extension of Time
The Contractor will be entitled to extension of the Time for Completion (EoT)
to compensate for delays arising from:
- events described under the Contract as risks to be borne by the Employer;
- events of force majeure;
- the Employers failure to comply with his obligations under the Contract;
- neutral events such as exceptionally adverse climatic conditions.
Common grounds for EoT typically include:
o Instructed Variations to the Works (except as resulting from a default of
the Contractor).
o Additional quantities of Works.
o Delayed issuing of Drawings (except works for which the Contractor has
design responsibility).
o Delayed access to or possession of Site.
o Exceptionally adverse climatic conditions on Site.
o Adverse physical obstructions or physical conditions (other than climatic
conditions), which were unforeseeable by an experienced Contractor.
o Delay due to suspensions of the Works instructed by the Engineer (other
than provided for in the Contract or attributable to the Contractors
default).
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o Delay due to suspensions of the Works by the Contractor (or his reduction
of the rate of works execution) in consequence of the Employers payment
default.
o Delays arising from discovery, protection or removal on Site of fossils,
articles of value or antiquity, structures and other remains of
archaeological interest.
o The Engineers instruction of tests, not provided for in the Contract, of
Materials, Plant and works.
o Unforeseeable shortages in the availability of personnel, materials plant or
temporary works caused by epidemic or governmental action.
o Delays or disruptions due to events or circumstances constituting Force
Majeure [see Section II-4.10 Works Suspensions].
o Delay, impediment or prevention caused by or attributable to the Employer
or the Engineer.
o Delays at ports of entry to the country, or delays not attributable to the
Contractor of customs clearance of Plant, Equipment, Materials or
supplies.
o Delays not attributable to the Contractor of processing visas and work
permits.
o Or as the Parties shall mutually agree.
Procedures for Extension of Time Claims
Under the provisions of most contracts, the Contractor is required to submit a
formal claim for an extension of the Time for Completion (EoT) of the Works
or for any Section or part thereof, failing which the Engineer (depending on
the terms of the Contract) either is not bound to make a determination of EoT
or cannot do so. [See Section II-4.11 Claims: Contractors Claims & Section
II-4.12 Documentation, Determination & Evaluation of Claims]
To establish entitlement to EoT, the mere citation of events and
circumstances causing delay or disruption to the Contractors work is
insufficient; the Contractor must demonstrate that the delays prevented
completion of the Works, with the resources stated in his Tender, within the
Time for Completion. This requires the Contractor to have mitigated delay or
disruption to the extent that was practicable and within his control, such as by
changing his planned sequencing of the Works (for which he may be entitled
to additional costs incurred by such mitigation).
EoT is determined by the Engineer from his assessment of particulars of
claim submitted by the Contractor, and from contemporary records. However,
Particular Conditions sometimes prescribe that the Engineer cannot award
EoT to the Contractor without the prior specific (i.e. written) approval of the
Employer.
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For discourse on claims and determinations of EoT on contracts with

provision for a Bonus for Early Completion, see Section II-4.14.
Under FIDIC-based contracts the Contractor has to follow claim submission
procedures described under Section II-4.11 Claims. He is required to give to
the Engineer written notice of his intention to submit a claim for EoT within a
prescribed period: under older FIDIC provisions within 28 days after the
event giving rise to the claim had first arisen; under recent FIDIC within 28
days after the Contractor became aware, or should have become aware, of
the event or circumstance giving rise to the claim. The Contractor is then
required to submit to the Engineer detailed particulars, to substantiate the
EoT he is claiming, within a prescribed period: under older FIDIC within 28
days after having given notice of claim; under recent FIDIC within 42 days
after the Contractor became aware, or should have become aware, of the
event or circumstance giving rise to the claim. The purpose of these
requirements is to ensure that a claim for EoT can be investigated, by the
Engineer, at or near the time of the event giving rise to the claim.
If an event has a continuing effect, such that it is not practicable for the
Contractor to submit final particulars within the prescribed period, his
entitlement to EoT is unaffected if he submits interim particulars within that
time and, under continuing circumstances, at time intervals until final
particulars are submitted. Older FIDIC prescribes time intervals as the
Engineer may require (it is suggested that the Engineer should require
intervals not less often than every 28 days or monthly). Recent FIDIC
requires monthly interim submissions unless the Engineer agrees otherwise.
Upon receipt of such interim particulars the Engineer should, without undue
delay, make an interim determination of EoT. Upon receipt of the final
particulars, which the Contractor is obliged to submit within 28 days after
effects of the event giving rise to the claim have ended, the Engineer should
review all circumstances and determine an overall EoT in regard to the event.
The final review, however, cannot result in a decrease of previously
determined interim EoT.
Under older forms of FIDIC contract, the Engineer is not obligated to make
any determination of EoT if the Contractor has failed to comply with the
prescribed requirements for submitting notice and particulars. However, it is
recommended that the Engineer should not reject a claim, out of hand, for this
reason. In the event of disputation [see Section II-4.15 Disputes & Dispute
Resolution], an adjudication board or arbitrator might overturn such
determination. Rather, the Engineers determination should be limited by the
sufficiency of the detailed particulars submitted and the extent to which they
can be verified, based on contemporary records, by the Engineer. Obviously
the later the Contractor submits a claim (with or without prior notification) after
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the event alleged to have caused delay, then less likely will be the Engineers
ability to verify the Contractors particulars and assess entitlement to EoT.
It must be particularly noted that recent forms of FIDIC contract
(whereunder the Engineer is part of the Employers Personnel) require that
the Engineer shall not determine any EoT (or costs associated therewith)
unless the Contractor has complied with the prescribed requirements for
submitting notice and particulars of claim. The Engineer cannot independently
exercise any discretion [see Section II-4.11 Claims: Contractors Claims for
discussion regarding time-barring claims for which notice of claim was not
given within prescribed time limitations]. Only if the Employer is sympathetic
to the Contractors non-complying claim and instructs the Engineer in writing
to make a determination, may the Engineer do so.
In assessing a Contractors claim for EoT, FIDIC forms of contract require
the Engineer to consult with both the Contractor and the Employer before
rendering a determination. However, under any other from of contract, it is
strongly recommended that the Engineer perform such consultation.
Consultation should be documented in written minutes, distributed to both
Parties, as a back-up and future reference to the eventual determination.
Recent forms of FIDIC contract state that the purpose of this consultation is
to attempt to obtain agreement of the Parties. Even if the purpose of obtaining
agreement is not so stated in the Contract, it is strongly recommended that
this should be a priority of the Engineers consultation. To avoid a later
dispute of his determination, the Engineer should always try to arrive at a
determination agreeable to both Parties, even if such determination would not
otherwise have been his own. However, if such agreement is obtained, the
Engineers determination must state, and provide records of, the agreement
signed by the Parties. In the event that an agreement is not obtained during
the process of consultation, then the Engineer must make a determination
that he considers fair and reasonable pursuant to the Contract, under which
circumstance records of the prior consultations should be retained in case
such determination is later disputed.
In the case that the Engineer experiences difficulties getting the Parties to
initiate the process of consultation, or to foreshorten the process when time is
of essence, the Engineer should, on the basis of his review of the
Contractors particulars, render (in writing) his assessment of the EoT claim
to both Parties and request (within a stated, reasonable period) their
respective agreement to or comments on such assessment; advising that this
procedure is intended as the process of due consultation. Depending on the
nature of the responses (or lack thereof), the Engineer can then convert his
assessment into a determination.
If the Conditions of Contract require that the Engineer must obtain the
Employers approval before rendering a determination of EoT, then the
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Engineer must formally submit his claim assessment to the Employer,

requesting the Employers written approval to render it as a determination
pursuant to the Contract. It is recommended that the assessment be
submitted under a cover letter to the Employer, with the cover letter copied to
the Contractor (without the assessment). In case the Employer declines to
give approval, it is reasonable that the Contractor should know that the
Engineer is performing his obligations under the Contract. If the Employer
grants approval (which the Engineer should require in writing), then he should
immediately render the determination to the Contractor, copied to the
Employer. If the Employer declines to give approval, then the Engineer should
re-instigate the process of consultation.
Consideration of Contractors Float in Time Extension Claims
The Contractors Programme might have included float time, indicating the
amount of time by which an activity or group of activities may be shifted in
time without causing delay to a contract completion date.
Unless there is express provision to the contrary in the Contract, where there
is remaining float in the Programme at the time of an Employer delay:
an EoT should only be granted to the extent that the Employer delay
is predicted to reduce to below zero the total float on the activity
paths affected by the Employer delay.
[Reference: the UK-based Society of Construction Law.]
Time Extension arising from Concurrent Delay
Concurrent Delay means the circumstance where Contractor delay to
Completion occurs concurrently with Employer delay to Completion.
When delay is entirely due to the Contractor, then the Contractor has no
entitlement to EoT. He is only entitled to EoT arising from delays outside his
control.
However:
where Contractor delay to Completion occurs concurrently with
Employer delay to Completion, the Contractors concurrent delay
should not reduce EoT entitlement arising from delays outside his
control. [Reference: the UK-based Society of Construction Law.]
Costs associated with Extension of Time
The Contractor may also claim costs arising from the delay in respect of
which he is claiming extension of the Time for Completion (EoT).
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The costs to which the Contractor would be fairly entitled will be contingent on
the cause of delay giving rise to EoT entitlement. Types of cost may be
categorized as follows:
o Costs of standby of the Contractors Site resources affected by the delay
at the time of the delay. These are referred to herein as Direct Costs.
o Costs of prolongation, during the EoT period, of the Contractors Site
Overheads and Head Office Overheads. These are referred to herein as
Prolongation Costs.
o Costs of extended provision during the EoT period of General Items of the
Bill of Quantities (e.g. performance bond, insurances, provision &
maintenance of facilities for the Engineer) that are not included in the
Contractors overheads. These are referred to herein as Preliminary
Costs.
Responsibility for Delay affects Entitlement to Costs
When assessing a claim for extension of the Time for Completion (EoT), it is
vital to determine responsibility for the delay in respect of which the
Contractor is claiming EoT entitlement. This responsibility will determine the
Contractors entitlement to EoT, and also to types of permitted costs.
In general, cause of delay will fall into one of four categories:
a) Solely attributable to the Contractor with no fault attributable to the
Employer.
In this case the Contractor has no entitlement to EoT or to any costs.
b) Solely attributable to the Employer with no fault attributable to the
Contractor.
In this case the Contractor is entitled to EoT and to costs.
c) Concurrently attributable to the Contractor and the Employer i.e.
delays attributable to the Employer overlapping with delays attributable to
the Contractor.
In such case the Contractor is entitled to EoT, but his entitlement to costs
would be limited.
d) Exceptionally adverse climatic conditions (sometimes referred to as
Neutral Delay).
In this case the Contractor is entitled to EoT but not to any costs.
In case of a single claim arising from several events, the Engineers
determination should differentiate what parts of the total EoT entitlement are
within categories (b), (c) and (d). Such differentiation will assist the
assessment of costs to which the Contractor may be fairly entitled.
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In regard to Concurrent Delay [Category (c)]:

There is some opinion in the industry that there should be no entitlement
to costs associated with EoT awarded on the basis of concurrent delay.
This opinion is based on consideration, where both Parties have
concurrently caused a delay, that the Contractor should forgo his costs
because the Employer loses his entitlement to Liquidated Damages.
However, such opinion is not supported by legal expertise, as exemplified
by the following quotation of the UK-based Society of Construction Law:
If the Contractor incurs additional costs that are caused both by
Employer Delay and Contractor Delay, then the Contractor should
only recover compensation if it is able to separate the additional
costs caused by the Employer Delay from those caused by the
Contractor Delay.
In other words, the Contractor is entitled to additional costs arising from
the Employers delay, but only to the extent that he can demonstrably
separate them from costs arising from his own delay that he must bear.
The Engineer has a duty, when making determinations, to exercise
discretion impartially within the terms of the Contract and having regard to
all the circumstances. Thus, according to the circumstances, the
Contractor might be fairly entitled to some costs. It is recommended that
the Engineer should not apply a hard rule in respect to costs associated
with concurrent delay, but should assess each claim on its merit.
In general, if the causes of a delay are equally attributable to both Parties
(as would be the case if possession of the Site was unavailable but the
Contractor was not mobilized to perform any Works), then it is submitted
that the Contractor would have no entitlement to any costs. Alternatively, if
possession of Site was unavailable and the Contractor had partially but
sufficiently mobilized to perform some works, then the Contractor might be
fairly entitled to Direct Costs (say of equipment standby during the period
of delay), and also to Prolongation Costs and Preliminary Costs for that
portion of the EoT determined by the proportion of the assessed value of
work he could have preformed with the resources he had mobilized
compared to the value of work he had programmed to execute if he had
been fully mobilized.
In regard to Exceptionally Adverse Climatic Conditions [Category (d)]:
This cause of delay is a risk shared by the Employer and Contractor,
whereby the Contractor is entitled to EoT but not to any costs associated
with the time of delay or with the EoT granted in consequence thereof. It
must be noted that EoT should only be granted for exceptionally adverse
conditions; not for conditions which happen to be adverse to construction
August 2011
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operations but are not statistically abnormal at the Site. [For more
discussion see Section II-2.16 Meteorological Records.]
Common Examples of Contractors Delay:
- Contractors delay in providing a Performance Security [see Section II2.6.]
- Contractors delay in providing Insurance [see Section II-2.8.]
- Failure to mobilize sufficient construction resources (as proposed in his
Tender and/or Programme of Works) to perform programmed works.
- Delay arising from his own failure to meet his programmed objectives.
Common Examples of Employers Delay:
- Employers delay in providing Possession of Site [see Section II-2.13]
- Employers delay in providing Drawings [see Section II-2.15.]
- Suspension of the Works, or parts thereof [see Section II-4.10.]
- Instructed Variations of the Works [see Section II-3.3 Variations]
affecting the critical path of the Contractors programme to complete the
Works on time (if the Variations did not result from the Contractors
default). Such cases would include additional works (additional to the
scope of Works tendered) and/or increased quantities of the tendered
scope of Works.
- Late instruction of works to be performed under Provisional Sums [see
Section II-3.2] included in the Contract. That is, instructions given so late
that they affected the Contractors ability to complete such works within
the Time for Completion.
Common Example of Concurrent Delay:
- Employers delay in providing possession of Site and/or working drawings,
overlapping with the Contractors delay in mobilizing to perform the
delayed works.
An Example of Differentiating between Causes of Delay:
Assume that:
- The Contractor had programmed to perform earthworks and paving works
but was prevented from so doing because possession of Site was
unavailable.
- The Contractor had completed his site office installations and obligations
to provide a Performance Security and Insurance.
- The Contractor was partially mobilized to perform some of the
programmed earthworks.
- The Contractor had also mobilized some asphalt equipment. However, in
his Tender the Contractor had proposed to install his own asphalt plant
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but, during the delay period, had not done so and had made no alternative
commitment for asphalt supply.
During the delay period, no conditions occurred that would have prevented
earthworks. However, temperatures were below +5oC (the limit below
which paving operations would not have been permitted) for 3 days more
than the maximum 1-in-10 year occurrence (based on historical
meteorological records for the Site) for the delay period.
In this example, the following determination might be reasonable and

acceptable to the Parties:
- The Contractor is entitled to EoT representing the period of delay from
when the Employer should have handed over possession of the Site
(pursuant to the Contract) until he did so without any deduction for the
Contractors concurrent delay.
- For the whole of the delay period the Contractor is entitled to standing
costs (Direct Costs) of his mobilized, but unused, earthworks equipment (if
such equipment could not practicably have been deployed to other
contract works).
- During the period of delay the Contractor is not entitled to standing costs
of his mobilized asphalt equipment simply because it was insufficient to
lay any asphalt.
- For the portion of the delay period computed as representing that part of
the programmed earthworks that the Contractor could have performed
with the earthworks equipment he had mobilized, he is entitled to
Prolongation Costs for such equivalent portion of the EoT period.
- The Contractor is entitled to an extension of his Preliminary Costs during
the whole period of EoT.
- Because the Contractor was not mobilized to perform paving works, no
additional EoT is warranted for exceptionally adverse climatic conditions
that would have affected paving operations. Even if the Contractor had
been mobilized to pave on the adverse days, he would not be entitled to
an overall EoT exceeding the whole period of delay arising from the
Employers delay in giving possession of Site.
- Thus, in summary, the Contractor is granted a period of EoT equivalent to
the whole delay period. During the whole period of delay he receives the
Direct Costs of standby of his mobilized earthworks equipment (but not for
the asphalt plant or equipment). During the EoT the Contractor is entitled
to: Preliminary Costs during the whole period of awarded EoT;
Prolongation Costs during a portion of the EoT period, representing the
earthworks he could have completed (but for the Employers delay) with
the equipment he had mobilized.
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Prolongation Costs
Prolongation Costs are variously addressed in books on the subject of EoT as to whether they relate to the Contractors costs during the period of delay
or to his costs during the period of awarded extension of the Time for
Completion (EoT).
Prolongation Costs, as defined herein, are the Contractors Site Overhead
and Head Office Overhead costs during the period of EoT; to which the
Contractor would be entitled during that portion of the awarded EoT
determined as attributable to sole Employer delay (i.e. separate from the
Contractors concurrent delay).
Generally, Prolongation Costs should be limited to the lesser costs of the
actual resources provided by the Contractor or of those included in his
Tender.
The Contractors Tender provisions for % Site Overheads, % Head Office
Overheads, and % for Risk & Profit might be known either from:
o the Contractors Tender (if required to be stated by the Employers
Instructions to Tenderers) or
o the Contractors submission of Breakdowns of Lump Sums and Unit
Prices submitted (if required) at the beginning of the Contract [see
Section II-2.9.]
Thus, Prolongation Costs of Site and Head Office Overheads (if known as
aforesaid) could be computed as:
(% Site O/H + % H.O.O/H)
100
(Orig.Contract Sum)
(Orig.Time for Completion)
(Period of EoT eligible

for Prolongation Costs)
Where:
Site O/H = Site Overhead cost as % of direct cost of performing work.
H.O.O/H = Head Office overhead cost as % of direct cost of performing work.
Orig.Contract Sum = Accepted Contract Amount less Provisional Sums, Dayworks
and Contingencies.
[Accepted Contract Amount being the recent FIDIC definition
of the Contractors tendered amount (corrected as necessary)
accepted in the Employers Letter of Acceptance of the
Contractors tender. In older forms of FIDIC contract this was
call the Contract Price.]
Orig.Time for Completion = Original Time for Completion before time extensions.
This formula is an extension of the application of the Hudson Formula,

originally formulated to evaluate Head Office Overhead costs, but extended
here to include Site Overhead costs.
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Otherwise the Engineer should require the Contractor to submit verifiable

records and valuation of his actual Site and Head Office Overheads. The Site
Overheads should be verified by contemporary records submitted to and
checked by the Engineer during that portion of the period of EoT for which the
Contractor is, in the Engineers determination, entitled to Prolongation Costs.
The valuation of Head Office Overheads, if a percentage therefor was not
submitted by the Contractor with his Tender or his unit rate breakdowns,
could be contentious. Indeed, even the admissibility of a contractors claim for
H.O. Overheads could be contended. However, where the Contractor can
provide evidence to support his contention that his resources were prevented
from earning (during EoT) a contribution to H.O. Overheads and an
appropriate percentage for valuation, then one of the following recognized
formulae could be used:
Emdens Formula: Same as the Hudson Formula except that the
Contractors Head Office Overhead percentage is the actual percentage
based on the Contractors accounts:
(Total H.O. Overhead Cost)
(Orig. Contract Sum)
x
x
(Total Turnover)
(Orig. Time for Completion)
Eichleays Formula: Same as Emdens Formula except that the Final

Contract Sum and Final Time for Completion is used:
(Total H.O. Overhead Cost)
(Final Contract Sum)1
x
x
(Total Turnover)
(Final Time for Completion)2
1: Including variations and final measurement
2: Including final extension of Time for Completion
All the above formulae have found favour, depending on the circumstances,
and been accepted by law courts in litigation disputes.
Loss of Profit
The principles of a claim by the Contractor for loss of profit, arising from an
extension of the Time for Completion (EoT), are similar to those applicable to
a claim for Overheads, and could be assessed based on the above-described
formulae but with % Profit replacing % Overhead.
However, before considering such claim the Engineer should check that:
there are no Contract provisions limiting the Contractors entitlement to
recovery of costs only, which would exclude alleged loss of profit;
there are no restrictions under the Law of the Contract to the Contractors
entitlement to recover lost profit.
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If a contractual or Law-of-Contract right is established to recover lost profit,

the burden of substantiation then rests solely with the Contractor. The
Engineer should require the Contractor to provide evidence, with his
particulars of claim, of either (1) or (2), as follows:
(1) If an allowance for profit was included in the Contractors tender
documents:
o The Contractors tender documents indicating his expected profit on
the Contract. The Contractor is not entitled to claim a higher profit
margin than he expressed in his tender.
(2) If no allowance for profit was indicated in the Contractors tender
documents:
o The Contractors audited accounts for a period (say 5 years) sufficient
to demonstrate the percentage profit he achieved on previous
contracts of similar nature and size.
o All tenders submitted and awarded to him over a period, say, of 1 or 2
years prior to the event giving rise to the delay for which EoT was
granted so as to establish a success ratio.
o All contracts for which the Contractor was qualified and invited to
tender (since the event giving rise to delay for which EoT was granted),
but which he was obliged to decline because his resources were tied
up on the subject delayed Contract.
Overhead Recovery:
If an extension of Time for Completion (EoT) is granted together with
Prolongation Costs, but the Accepted Contract Amount (original Contract
Price) has increased as a result of Variations and/or final measurement
(whether or not the EoT was granted therefor), then it would not be fair for the
Contractor to recover his overheads (and profit, if applicable) from both the
Prolongation Costs and the payment items for the additional works. In effect
the Contractor would be doubly paid his overheads on the additional works.
In such case the principle of Overhead Recovery should be applied, whereby
the overheads (and profit, if applicable) earned on the additional works is
deducted from the Prolongation Costs awarded to the Contractor. Simply
stated, the equation would be:
(1)
(2)
Gross Prolongation Costs:

LESS Overhead Recovery on Additional
Works:
Net Prolongation Costs:
X
Y
X-Y
(not less than zero)
Note: There must be consistency between (1) & (2).
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The elements of Prolongation Costs included in (1) (for Site Overhead, Head
Office Overhead & Profit, and the percentages from which they are derived) must
identically be used in (2).
Price Adjustment after Original Time for Completion:

Many forms of contract (including FIDICs Old/Recent Red Book and Recent
Yellow Book) contain provision whereby amounts payable to the Contractor
are adjusted for the rise and fall of the costs of labour, specified Materials and
other inputs to the Works. The adjustments are derived from a Price
Adjustment Formula such as:
where:
Pn is the adjustment multiplier
a is a fixed coefficient.
b, c, d etc. are coefficients representing various inputs to the Works
Ln, En, Mn etc. are current price indices
Lo, Eo, Mo etc. are base price indices (at time of Contractors tender)
For more detailed discussion of such formula and its application see Section
II-2.18 Price Adjustment Formula & Indices and Section II-3.11 Interim
Payment Certificates: Price Adjustments.
As explained under Section II-2.18, the multiplier of such formula would be
capped at its value applicable when the Time for Completion (as may have
been extended) expires.
However, under a contract that does not include such Price Adjustment
provision for the rise and fall of the costs of labour and specified materials
(either by omission or, in FIDIC-based contracts the deletion by Particular
Conditions of the price adjustment provisions of the General Conditions), it is
not uncommon for the Contractor to claim entitlement to introduce such price
adjustment provision during the period of granted extension of the Time for
Completion - to commence upon expiry of the original Time for Completion.
The Contractors claim might be predicated upon:
- the fact that he had committed to execute the Works at his tendered rates
and prices (without price adjustment) only during the original Time for
Completion (and had made allowances in his tendered prices
accordingly).
- the Time for Completion was extended for reasons of delay attributed the
Employer, which the Contractor could not have anticipated when
preparing his Tender.
- he is at risk only for the rise and fall of prices during the original Time for
Completion.
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and therefore he should be entitled to claim compensation for the rise and
fall of prices during extensions of the Time for Completion, by
establishment of a price adjustment formula to be applied after expiry of
the original Time for Completion.
Unless there are specific Contract Conditions to disallow such claim, it is

submitted that such claim would be valid and admissible.
However, if during the Employers delay that gave rise to extension of the
Time for Completion (EoT) the Contractor was in concurrent delay, then:
the Contractor would be entitled to Price Adjustment for works performed
during the period of EoT (after expiry of the original Time for Completion);
but only for those works that could not be performed during the original
Time for Completion because of delays caused by the Employer, and for
additional works (beyond the tendered scope of Works) resulting from
Variations.
the Contractor is not entitled to Price Adjustment for works performed
during the period of EoT that the Contractor could have performed (but for
his own delay) during the original Time for Completion.
II-4.14
Liquidated Damages & Bonus

Liquidated Damages for Delay
If the Contractor does not substantially complete the Works within the Time
for Completion (or totally complete if so stated in the Contract), or any part of
the Works within the relevant time specified in the Contract, most contracts
provide that the Contractor shall pay contractually agreed damages to the
Employer.
The Time for Completion is that stated in the Contract (usually the Appendix
to Tender) as adjusted by extensions thereto granted by the Engineer [see
Section II-4.13 Delays, Extension of Time for Completion & Associated
Costs].
Older forms of FIDIC contract refer to these damages as Liquidated
Damages. Recent forms of FIDIC contract refer to them as Delay
Damages.
These Liquidated (or Delay) Damages, expressed as percentages, are
usually stated in the Appendix to Tender as:
Liquidated (or Delay)
Damages for the Works
Contract Cl.
reference
August 2011
.% of *Contract Price per

day, in the currencies and
proportions in which the
II-4 /46

Contract Price is payable.

Maximum amount of
Liquidated (or Delay)
Damages.
Contract Cl.
reference
.% of *Contract Price.
[Note: * In recent forms of FIDIC contract final Contract Price is used]
Recent forms of FIDIC contract differentiate between Contract Price and

Accepted Tender Amount. The Contract Price is the amount stated in the
Contract Agreement as adjusted to include, by agreement or the Engineers
determination, the sum of valuations of each item of work (i.e. as-measured),
any Variations and other adjustments under the Contract. Thus, Delay
Damages are to be based on the final Contract Price.
Under older forms of FIDIC contract, the Contract Price is the amount
stated in the Letter of Acceptance (or otherwise in the Contract Agreement)
as the sum payable to the Contractor for execution and completion of the
Works. Therefore, since the Contract Price is a fixed sum and does not
include any adjustments for instructed Variations to the Works, etc., then the
amount of Liquidated Damages is also fixed.
Most contracts, including FIDIC forms, invariably provide that:
o the Contractor shall pay to the Employer the relevant sum stated in the
Appendix to Tender as Liquidated (or Delay) Damages;
o if a Taking-Over Certificate has been issued for only a part of the Works
as having been completed within the Time for Completion, the per diem
Liquidated (or Delay) Damages for delay of the remainder of the Works
shall be reduced in the proportion that the value of the part so certified
bears to the value of the whole of the Works;
o the provision for reduction of per diem damages (if a Taking-Over
Certificate has been issued for a part of the Works completed) shall not
affect the stated maximum amount of Liquidated Damages;
o the Employer may, without prejudice to any other method of recovery,
deduct the amount of such damages from monies due or to become due
to the Contractor (although under recent forms of FIDIC contract the
Employer is obliged to give notice to the Contractor of such intention); and
o the payment or deduction of Liquidated (or Delay) Damages shall not
relieve the Contractor from his obligation to complete the Works, or from
any other of his obligations under the Contract.
Thus, it is essential for the Engineer to understand that:
It is not the Engineers function nor within his discretion to apply
Liquidated (or Delay) Damages.
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It is the Contractors contractual obligation to pay the Liquidated (or Delay)

Damages.
It is at the Employers discretion whether or not to deduct damages from
monies due or to become due to the Contractor.
Only if instructed in writing by the Employer (which should be copied to the
Contractor) would the Engineer make such deductions in his payment
certifications.
Liquidated (or Delay) Damages are usually considered as an estimate of

damages that the Employer would suffer as a result of delay to completion of
the Works, which estimate the Contractor accepts when signing the Contract;
although the statement of a maximum amount might give rise to an argument
that it is a penalty rather than an accurate pre-estimate. In most cases,
however, this argument would be irrelevant, since there are few jurisdictions
in which the concept of a penalty would not be enforceable.
The maximum limit of damages is not expressly optional in contracts.
However, if the relevant section in the Appendix to Tender has been left
blank, then, unless the Parties agree otherwise, the only reasonable
interpretation would be that there is no maximum limit of damages.
A problem of interpretation might arise from wording in contracts that
Liquidated (or Delay) Damages
shall be paid for every day which shall elapse between the relevant Time
for Completion and the date stated in the Taking-Over Certificate.
From such wording the Contractor might argue that payment does not
become due, or the Employer cannot make deductions, until after the final
Taking-Over Certificate has been issued and final extension of Time for
Completion (EoT) awarded. Under FIDIC contracts, the Employer could
counter that such standard wording as
These damages shall not relieve the Contractor from his obligation to
complete the Works
establishes that deductions can be made before the Works are completed.
However, Time for Completion is elastic. Situations are not uncommon
whereby the Engineers determination of the Contractors claims for EoT
remains unresolved or has been disputed by the Contractor. In such
situations the Employer should be advised not to make deductions
prematurely.
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Bonus for Early Completion

Some contracts provide that the Contractor can earn an agreed bonus if he
completes the Works early. The calculation of the bonus is normally based on
the time between the date of substantial completion (as stated in the TakingOver Certificate) and the expiry date of the Time for Completion.
This may present difficulties when, as a result of delays to the progress of the
Works, the Contractor is entitled to an extension of the Time for Completion
(EoT).
To establish entitlement to EoT [see Section II-4.13] the Contractor must
demonstrate that the delays prevented completion of the Works, with the
resources stated in his Tender, within the Time for Completion. However, if a
bonus for early completion is at stake, the Contractor may require the
Engineer to consider and award EoT which may be theoretical, on the basis
that he would have finished early had it not been for the delay giving
entitlement to EoT.
Difficulty may be compounded if the Contractor had submitted, at the
beginning of the Contract, a Works Programme [see Section II-2.11] that
was accelerated to obtain the bonus. Was such Programme unachievably
optimistic?
No hard rules can be given, but the following considerations are offered for
assessing EoT entitlement when a bonus is at stake:
o In so far as the Engineer should determine EoT to which the Contractor is
fairly entitled under the circumstances, the determination and award of a
theoretical EoT is not precluded.
o If the Contractors Programme submitted at the beginning of the Contract
did not show an early completion, then the Contractor would have to
demonstrate that during the course of the Works he had mobilized
resources additional to those stated in his Tender and additional to those
on which his Programme was based; and further, that those applied
additional resources achieved an increased productivity that (save for the
delay) would have achieved an early completion. However, there would be
no EoT entitlement if the delay arose from the increased obligations
placed on the Engineer, Employer or others as a result of the accelerated
progress that they failed to meet (e.g. early release of Possession of Site
or of Drawings).
o If the Contractor did submit an accelerated Programme at the beginning of
the Contract to which the Engineer gave consent (as required under older
forms of FIDIC contract) or raised no objection (in the case of recent
forms of FIDIC contract), then it would be fair to determine EoT in
reference to that Programme; not in reference to the Contractors
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obligation to complete the Works within the Time for Completion.

Nevertheless, the Contractor must still demonstrate that he was achieving
a rate of progress and/or had mobilized resources on which the
accelerated Programme was based that, save for the delay, would have
achieved early completion.
II-4.15
Disputes & Dispute Resolution

Contract Provisions
The term dispute is often used inappropriately. Mere disagreement on a
matter is not a dispute. Dispute, in the contractual sense of the word, arises
only when the Contractor or the Employer formally (in writing) disputes a
matter that has arisen between them in connection with the Contract, or
formally disputes any opinion, instruction, determination, certificate or
valuation of the Engineer (or the Engineers Representative), and gives notice
of referral of (or intention to refer) the dispute to the next level of authority
Provisions and procedures for dispute resolution vary from contract to
contract. They must be read and understood.
Under older standard forms of FIDIC contract the procedures for dispute
resolution are:
o Engineers Decision: Referral (by one Party) of the dispute to the
Engineer (copied to the other Party) for a decision. The referral has to be
made specifically pursuant to the clause of the Conditions of Contract
pertaining to an Engineers Decision (e.g. Cl.67.1 of the older FIDIC Red
Book).
The Engineer is required to render his decision to the Contractor and the
Employer within 84 days after receipt of the notice of referral. The decision
also has to be referenced as being pursuant to the Engineers Decision
clause of the Conditions of Contract.
The Engineers Decision is final and contractually binding if neither the
Contractor nor the Employer give, within 70 days after receipt of the
decision, written notice of intention to commence arbitration in respect of
the matter on which the Engineers Decision was given.
o Amicable Settlement: Where notice of intention to commence arbitration
of a dispute has been given, arbitration shall not commence unless an
attempt has first been made by the Parties to settle the dispute amicably.
Provided that, unless the Parties agree otherwise, arbitration may be
commenced on or after the 56th day after notice to commence arbitration
was given, whether or not an attempt at amicable settlement has been
made.
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Requirements for attempted amicable settlement do not apply prior to

commencing arbitration in the event of failure by either Party to comply
with an Engineers Decision that became binding.
o Arbitration: If the Contractor or Employer is dissatisfied with an
Engineers Decision, or if the Engineer fails to render a requested decision
within the prescribed 84 days, then either Party may, within 70 days after
the date on which the decision was received (or by which it should have
been received), give notice to the other Party of his intention to commence
arbitration.
If no notice to commence arbitration was given within 70 days of receipt of
the Engineers Decision (which therefore became binding) but one Party
fails to comply with the Engineers Decision, the other Party may, without
notice to the other Party, afterward refer the failure to arbitration.
Under recent standard forms of FIDIC contract the procedures for dispute
resolution are:
o Dispute Adjudication Boards Decision (DAB): Referral of the dispute
to the DAB (copied to the other Party and the Engineer) for a decision.
The referral has to be made specifically pursuant to the clause of the
Conditions of Contract pertaining to a DABs Decision (e.g. Cl.20.4 of the
FIDICs recent Red & Yellow Books). For a DAB comprising more than
one person, the notice of referral is deemed to be effective when received
by the appointed chairman of the DAB.
The DAB is required to render its reasoned decision to the Contractor and
the Employer within 84 days after receipt of the notice of referral. The
decision also has to be referenced as being pursuant to the DABs
Decision clause of the Conditions of Contract.
The DABs Decision is final and contractually binding if neither the
Contractor nor the Employer give to the other, within 28 days after receipt
of the decision, written notice of dissatisfaction with the DABs Decision.
o Amicable Settlement: Where notice of dissatisfaction with the DABs
Decision has been given, both Parties are required to attempt to settle the
dispute amicably before commencement of arbitration. However, unless
the Parties agree otherwise, arbitration may be commenced on or after the
56th day after the day on which notice of dissatisfaction was given, even if
no attempt at amicable settlement was made.
Requirements for attempted amicable settlement do not apply prior to
commencing arbitration of failure by either Party to comply with a DABs
Decision that became binding.
o Arbitration: If the Contractor or Employer is dissatisfied with a DABs
Decision, or if the DAB fails to render a requested decision within the
prescribed 84 days, then either Party may, within 28 days after the date on
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which the decision was received (or by which it should have been
received), give notice to the other Party of his dissatisfaction. After giving
such notice of dissatisfaction either Party may, subject to requirements to
attempt amicable settlement, commence arbitration.
Neither Party is entitled to commence arbitration of a dispute unless he
has first given such notice of dissatisfaction within the prescribed time.
If no notice to commence arbitration was given within 28 days of receipt of
the DABs Decision (which therefore became binding) but one Party fails
to comply with the DABs Decision, the other Party may, without notice to
the other Party afterward refer the failure to arbitration.
The above provisions are summarised from standard forms of FIDIC contract,
but these may have been modified by the Contracts Particular Conditions.
For example, sometimes older forms of FIDIC-based contracts are modified
by replacement of the Engineers Decision with appointment of a DAB and
provision for a DABs Decision.
It should be emphasized that a matter cannot be referred to the Engineers or
DABs Decision (as appropriate to the Contract), unless it is a matter formally
in dispute.
Engineers Decision
Older forms of FIDIC contract provide that either Party may request an
Engineers Decision on any dispute of any kind that arises between the
Employer and the Contractor in connection with the Contract or the execution
of the Works (whether during the execution of the Works or after their
completion), including any dispute as to any opinion, instruction,
determination, certificate or evaluation of the Engineer.
In older forms of FIDIC contract, the Engineer is typically represented on
Site by the Engineers Representative [see Section II-2.2 Engineers
Delegation of Duties & Authorities]. The Engineers Representative, during
the course of the Contract, makes many determinations (including
instructions, certifications and valuations), any of which can be disputed by
the Contractor or Employer by requesting an Engineers Decision. In essence,
if the Contractor or Employer is dissatisfied with a determination of the
Engineers Representative, the request for an Engineers Decision is an
appeal to the Engineer to reconsider that determination before arbitration can
be commenced. It is for this reason that authority for rendering an Engineers
Decision should be retained by the person acting for the Engineer, and not
delegated to the Engineers Representative [see Section II-2.2].
Older forms of FIDIC contract do not prescribe that the Engineers Decision
shall be reasoned but it should be. If the Contractor or Employer disputes
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the Engineers Decision by giving notice of intention to commence arbitration,

and arbitration does commence, the arbitrator(s) will surely review the
Engineers Decision. The arbitrator(s) would be less likely to overturn a wellreasoned Engineers Decision that had professionally, fully, clearly and fairly
set forth its argument with reference to the Contract provisions and the
circumstances. If the arbitral decision does differ from the Engineers
Decision, it does not necessarily mean the Engineers Decision was wrong.
However, if an arbitral decision significantly differs from an Engineers
Decision, the Contractor or Employer might try to seek redress from the
Engineer, arising from a cursory and not well-reasoned Engineers Decision
(subject to all the same facts and circumstances being known and presented).
It is also vital that the Engineer clearly defines, in his Decision, the matter of
dispute upon which the Decision is given. This is necessary to minimize
possibility of a future dispute over what disputes may not be referred to
arbitration following an Engineers Decision which, from lack of response
thereto, has become binding.
An Engineers Decision is typically requested when the Contractor or
Employer disputes the Engineers Representatives determination of a claim
(usually the Contractors, for extension of the Time for Completion and/or
additional costs, or regarding disagreement of a payment certificate or the
quality of works). Although the prescribed 84-day period within which the
Engineer is required to render his decision might sound generous, this may
not be so if adequate records of the events, circumstances and
consequences of the dispute are not readily available. It is essential that the
Engineers Representative shall have maintained full records, in a separate
file, of the matter in dispute. For this reason it is essential that the Engineers
Representative shall have maintained, in separate files, full records of each
claim from the time that a notice of claim is given [see Section II-4.12
Documentation, Determination & Evaluation of Claims].
Dispute Adjudication Board

If the Contract includes provisions for a Dispute Adjudication Board (DAB),
they should include:
o The number of persons that the DAB will comprise; probably stated in the
Appendix to Tender.
o Possibly (but not often) a list of persons from whom members of the DAB
shall be selected.
o Procedures for appointment of members of the DAB.
o Procedures for replacement of DAB members.
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o The General Conditions of the Dispute Adjudication Agreement between

the Parties and each member of the DAB. This would normally be
included in the Contract as an Appendix to the General Conditions.
o Procedures for referral of disputes to the DAB and for obtaining the DABs
Decision.
Typically a 3-member DAB is specified; although, for small contracts, a single
Adjudicator is often specified. The usual rules of appointment for a 3-person
DAB are that the Employer and Contractor each nominates, for the others
approval, one member; and then the Parties and those two members consult
and agree upon the third member who shall be appointed to act as chairman
of the DAB. In the case of a single Adjudicator, the person should be
appointed by mutual agreement of the Parties.
Typically the Employer and Contractor are equally responsible for paying onehalf the remuneration (fees and expenses) of the DAB members. Therefore
the terms of remuneration of the DAB members (including that of any expert
whom the DAB may consult) should be mutually agreed by the Parties when
agreeing the appointments. The Engineer might be responsible for certifying
such payment entitlements.
Some contracts prescribe (in the Appendix to Tender) a date by which the
Parties shall jointly appoint the DAB, and the General Conditions of Dispute
Adjudication Agreement prescribe that the DAB members shall visit Site at
regular intervals (usually about every 3 or 4 months) to familiarize themselves
with the execution of the Works, including times of critical construction activity
at the request of the Employer or Contractor. This is often referred to as a
Full-Term DAB.
Where a Full-Term DAB has been appointed, some contracts provide that the
Contractor and Employer may jointly refer a matter to the DAB for it to give an
opinion. This permits the Parties to obtain an opinion on a matter upon which
they have disagreeing views, but before the matter develops into a dispute
(for example, in respect of interpretation of the Contract). Such opinion is not
a decision and, therefore, is not binding neither upon the Parties nor upon
the DAB. Use of such consensual procedures could be successful in
preventing differences from developing into time-consuming disputes.
Under some contracts, a DAB is appointed only after one Party gives to the
other Party notice of intent to refer a dispute to a DAB. Typically such
contracts stipulate that a DAB shall be appointed within 28 days after the
giving of notice. The DABs appointment may, but need not, expire after it has
given its decision on the dispute. This is often called an Ad-hoc DAB.
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Amicable Settlement
It is obviously desirable for the Employer and Contractor to resolve disputes
amicably without recourse to potentially expensive and time-consuming
arbitration. Unfortunately it often happens that the Parties have become so
entrenched that initiation of a process of amicable settlement is avoided for
fear that it might be perceived as a sign of weakness.
Although the Engineer may have no prescribed duties in regard to the
process of amicable settlement, it is recommended (and Funding Institutions
might expect) that the Engineer attempt to initiate and facilitate the process. It
is recommended that the Engineer:
Request the disputing Party to prepare a written summary of its dispute
and supporting argument, and request the other Party to provide a written
rejoinder. [They would have to do this in any case if the dispute were to
proceed to arbitration.] This will help focus the issue.
Convene a meeting to attempt to initiate an amicable settlement process.
Explain the process, rules and potential costs of arbitration.
Offer to act as a facilitator and/or mediator to an ongoing amicable
settlement process; although this might not be acceptable to the Party
disputing an Engineers Decision. Otherwise recommend that the Parties
engage the services of an independent mediator.
In the event that amicable settlement is unsuccessful, the Engineer should at
least have records to demonstrate that he had attempted to facilitate the
process.
If a settlement is successfully reached, the Engineer cannot certify payments
relating thereto under the Contract unless a written Settlement Agreement is
prepared and signed by authorized representatives of the Employer and
Contractor. The Settlement Agreement must state:
A full description of the matter of dispute;
The Settlement Agreement, clearly stating the agreed actions and
obligations of the Parties thereunder;
Any extension granted to the Time for Completion;
The amounts and details of any payments to be made in full settlement of
the dispute from one Party to the other, and the terms of payment (in
accordance with the Contract or otherwise).
The Engineer may offer to draft the Settlement Agreement, but, if he does
not, he should check that the Agreement is sufficiently clear and
comprehensive that he is able to administer the Contract in accordance with
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its terms. If the Agreement is not clear, the Engineer should refer back to the
Parties for their written and joint clarification.
In the event that the Settlement Agreement involves payments from the
Employer to the Contractor intended to be paid from funds provided by an
external Funding Institution, it may be necessary that the Agreement be
submitted to the Funding Institution for prior approval and endorsement
signature before it can become effective.
In the event that the Contract is funded by an external Funding Institution, but
payments to be made from the Employer to the Contractor under the
Settlement Agreement are ineligible under the governing Funding Agreement,
then it will be necessary that the Settlement Agreement states the source of
funding for such payments. For example, the payments may be made by the
Employer from his internal financial resources. This consideration will affect
the Engineers form of certification of such payments.
Arbitration
If an arbitration clause is included in the Contract, it should prescribe:
o the court or forum of arbitration to which, and under whose rules, disputes
shall be referred and decided;
o the language of the arbitral proceedings;
o the number of arbitrators;
o the place of arbitration; and
o the law applicable to the arbitration.
Some contracts prescribe that arbitration shall be under the jurisdiction and
rules of the arbitration institute of the country in which the Works are
performed if the Employer and Contractor are both national entities of that
country; but that if the Contractor is foreign to that country, the arbitration
shall take place under the jurisdiction and rules of an international court of
arbitration.
All standard forms of FIDIC contract prescribe that disputes shall be finally
settled under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce (ICC), which is based in Paris, France. The
following guidelines are related to the ICC Rules.
It is strongly recommended that the Project Manager become familiar with the
ICC rules, in order for the Engineer to be able to advise the Employer of the
process and costs of arbitration. ICC Rules of Arbitration are available from:
ICC Publishing
International Chamber of Commerce
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38, cours Albert 1er, 75008 Paris, France

(Tel: 49.53.28.28; Fax: 49.53.29.33; Web site: www.iccwbo.org)
The Rules are down-loadable from the website.
The ICC International Court of Arbitration does not itself decide the disputes
submitted to ICC arbitration. Rather, it confirms or appoints arbitrators who
are charged with responsibility for rendering an award which is final and
binding with respect to the dispute. In addition to constituting the arbitral
tribunal, the Court makes such decisions as may be necessary for the setting
into motion of the arbitral procedure, supervises its progress, seeks to ensure
that the Rules are respected, and scrutinizes all awards before they are
finalized and notified to the Parties.
The advantages of ICC arbitration are:
o The arbitration proceedings are confidential.
o The Parties are free to choose the arbitrator or arbitrators.
o The Court, if requested, appoints independent arbitrators.
o The Parties have complete freedom to decide which law is applicable.
o The place of arbitration can be anywhere in the world.
o Arbitration proceedings are held under a set of self-contained Rules.
o The arbitral process is supervised by the Court of Arbitration.
o The arbitrators remuneration is fixed by the Court of Arbitration.
Under ICC rules, the arbitration procedure starts with a written Request for
Arbitration to the Secretariat of the ICC International Court of Arbitration,
which must be accompanied by a non-refundable advance on administrative
costs. The Request must include:
- the names and addresses of the Parties;
- a statement of the facts of the case and the nature of the dispute (together
with copies of documents relating to the case and the Contracts
arbitration clause);
- the number of arbitrators requested and, if appropriate, the arbitrator(s)
nominated.
The ICC Secretariat notifies the defendant of the Request, transmitting to him
the Request documents. The defendant has to provide an Answer to the
Request, setting out his defence, within 30 days. The defendant may also
make a counterclaim. The claimant this time as defendant to the
counterclaim may then submit a Reply to the counterclaim. After the initial
30-day time limit has expired, the Secretariat may present the case to the
Court even if the defendant has not answered.
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The Parties are free to choose the arbitrators. The Parties may decide that
one or three arbitrators shall deal with their dispute. If there is to be one
arbitrator, and the Parties do not agree upon a person, the Court will make
the decision (appointing a person who is not a national of either of the Parties
countries). If there are to be three arbitrators (constituting an arbitral tribunal),
normally each Party will nominate one, and the third arbitrator (who will act as
chairman) is designated by the Court unless the Parties agree upon such
person or ask the co-arbitrators to do so. If the Contract does not stipulate
and/or the Parties have not agreed on the number of arbitrators, the Court will
appoint a sole arbitrator unless the amount in dispute or the complexity of the
case justifies appointment of three arbitrators.
After receipt of the Request (and Answer, if submitted by the defendant) from
the Secretariat, the Court fixes an Advance on costs, based on its estimate of
the arbitrators fees and expenses together with the ICCs administrative
costs in accordance with a Schedule of Costs based on the amount in
dispute. The amount in dispute is calculated on the basis of the total of the
principal claims and counterclaims submitted. The amount of the advance is
provisional and may always be adjusted before the end of the proceedings.
Each Party is required to pay 25% of the Advance to the Secretariat before
the file is transmitted to the arbitral tribunal. If one Party fails to pay the first
25% instalment of the Advance, the other Party (in order that arbitration
procedures may proceed) must pay in full the share due from the Party in
default.
Before commencing the arbitration procedures, the arbitrators first task is to
draw up a document entitled Terms of Reference that describe the Parties
claims to which he will confine his deliberations and awards. In order to avoid
late or abusive claims, no new claims whether counterclaims or otherwise
may be presented during the arbitration except by written joint agreement of
the Parties. Preparation of these Terms of Reference would preferably be
conducted by meetings, but could be effected by written dispositions. The
failure of a Party to participate does not prevent the Terms of Reference from
being drawn up. In such case, the arbitrator gives the Party concerned a final
time limit for submitting documents, failing which the arbitrator draws up the
Terms of Reference solely on the basis of the information submitted to him.
The arbitrator submits the Terms of Reference to the Parties (or their counsel)
for signature or comment. He may take into account any suggestions that
may be made and amend his draft accordingly. The arbitrator transmits the
Terms of Reference, signed by the Parties and himself, to the Court, which
takes note thereof. If a Party refuses to sign the Terms of Reference, the
arbitrator nonetheless submits them signed by the other Party and himself,
and the Court will approve them if satisfied that they have been prepared in
accordance with the Rules. The refusal by one Party to sign the Terms of
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Reference does not affect the validity of the proceedings; nor does it prevent
that Party from participating in the proceedings.
The Terms of Reference do not prejudge the case; they merely record the
Parties respective claims and describe the arbitrators mission. Similarly,
approval of the Court does not constitute approval of all the matters described
therein, but merely permits the arbitration to proceed.
The balance of the Advance (a further 25% from each Party) is due after
communication to the Court of the Terms of Reference for the dispute, and
the Terms of Reference come into force only after the Advance has been fully
paid.
If a defaulting Party persists in not paying its share of the Advance after
communication or approval of the Terms of Reference, the other Party may
either pay the remaining 50% or supply a bank guarantee therefor.
When, in addition to the principal claim, one or more counterclaims have been
submitted, the Court may fix separate advances for the principal claim and
counterclaim(s). In such case the Secretariat invites each Party to pay the full
amount of the separate Advance corresponding to its own claims. Thus, if a
request for an Advance is not complied with, the claim to which the delinquent
advance relates whether the principal claim or a counterclaim is deemed
to have been withdrawn and cannot be referred to the arbitrator for a
decision.
The arbitrator shall decide whether to hear the Parties and any witnesses.
However, if one Party so requests, the arbitrator shall hear the Parties
together in person. The arbitrator may only rule on the basis of documents
only if the Parties so agree.
The arbitrator may appoint expert witnesses, either at his own motion or at
the request of a Party. The arbitrator may request assistance of the ICC
International Centre for Expertise for this purpose. The arbitrator defines the
experts brief, but before expert witness can be provided it is up to the Parties
to advance such sums as may be required to cover the experts fees and
expenses in whatever proportions the arbitrator determines. Unless precluded
by provisions of the Works Contract, the Engineers staff may be called upon
to give evidence or opinion.
An arbitral award is rendered unanimously or by majority decision or, failing
either of these, by the chairman of an arbitral tribunal. The award must be in
writing and should be reasoned.
The final award must contain a decision on all matters referred to the
arbitrator as required by the Terms of Reference. If the Parties reach an
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amicable settlement during the arbitration proceedings, they may request the
arbitrator to record the terms of their agreement in an award made by consent
of the Parties.
The award must be submitted in draft form to the Court of Arbitration for
approval. The draft award is not communicated to the Parties. The Court
scrutinizes the draft award as regards both to form and substance. The Court
has the power solely to lay down modifications as to the form of the award,
but may also draw the arbitrators attention to substance without, however,
affecting the arbitrators liberty of decision. This scrutiny is intended to
enhance the awards enforceability and represents an additional guarantee of
the quality of the decision.
The award is deemed to be rendered at the place of arbitration and on the
date subsequent to approval by the Court when it is signed by the
arbitrator. The award is notified by the Court Secretariat to each of the Parties
only after all of the costs of arbitration have been fully paid by the Parties.
The award is final and binding on the Parties. If one Party refuses to carry out
the award voluntarily, the other Party may obtain its enforcement by instituting
enforcement proceedings before any court of competent jurisdiction.
The costs of ICC arbitration will be based on the aggregate amount of the
principal claims and counterclaims in dispute, but will also depend on the
number of arbitrators and the Courts assessment of the complexity of the
case. Separate arrangements between the Parties and the arbitrator are not
permitted under ICC Rules. The following tables indicate the ranges of costs
that might be expected, based on the ICCs Scales of Administrative
Expenses and Arbitrator Fees effective in May 2010. The ICC Scales are
always designated in US$. Arbitrators expenses (including travel,
accommodation & meals) and fees/expenses of experts would be additional
to these costs.
Amount in Dispute: A to B
(in US$)
Up to 50,000
50,000 to 100,000
100,000 to 200,000
200,000 to 500,000
500,000 to 1 million
1 million to 2 million
ICC Administrative Expenses

(in US$)
3,000
(3,000) + (4.7300% of B-A)
(5,365) + (2.5300% of B-A)
(7,895) + (2.0900% of B-A)
(14,165) + (1.5100% of B-A)
(21,715) + (0.9500% of B-A)
(31,215) + (0.4600% of B-A)
(45,015) + (0.2500% of B-A)
August 2011
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Over 500 million
(57,515) + (0.1000% of B-A)

(77,515) + (0.0900% of B-A)
(95,515) + (0.0100% of B-A)
(98,515) + (0.0035% of B-A)
(99,215) + (0.0035% of B-A)
113,215
Amount in Dispute:
A to B
(in US$)
Minimum
Maximum
Up to 50,000
50,000 to 100,000
100,000 to 200,000
200,000 to 500,000
500,000 to 1 million
Over 500 million
3,000
(3,000) + (2.650% of B-A)
(4,325) + (1.431% of B-A)
(5,756) + (1.367% of B-A)
(9,857) + (0.954% of B-A)
(14,627) + (0.689% of B-A)
(21,517) + (0.375% of B-A)
(32,767) + (0.128% of B-A)
(39,167) + (0.064% of B-A)
(51,967) + (0.059% of B-A)
(63,767) + (0.033% of B-A)
(73,667) + (0.021% of B-A)
(77,867) + (0.011% of B-A)
(121,867) + (0.010% of B-A)
18.020% of dispute amount

(9,010) + (13.568% of B-A)
(15,794) + (7.685% of B-A)
(23,479) + (6.837% of B-A)
(43,990) + (4.028% of B-A)
(64,130) + (3.604% of B-A)
(100,170) + (1.391% of B-A)
(141,900) + (0.910% of B-A)
(187,400) + (0.241% of B-A)
(235,600) + (0.228% of B-A)
(281,200) + (0.157% of B-A)
(328,300) + (0.115% of B-A)
(351,300) + (0.058% of B-A)
(583,300) + (0.040% >5 mill.)
Arbitrator Fees (in US $)
An up-to date Schedule of costs is down-loadable from the ICCs website

(www.iccwbo.org). Such anticipated costs may motivate the Parties to settle
their disputes amicably, without recourse to arbitration.
August 2011
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II-4: ONGOING SUPERVISION - CHECK LIST

Check
II-4.1 Engineer's Instructions:
All instructions to Contractor in writing
Standard-format 'Engineer's Site Instruction'
Verbal site instructions always confirmed in writing
II-4.2 Regular Progress Meetings:
Regular end-of-month Progress Meeting (Engineer /Employer /Contractor)
Standard Agenda (modified as necessary)
Agenda distributed (additions requested) prior to Meetings
Weekly (or as necessary) Site Meetings (Engineer /Contractor)
Minutes of Meetings
Standard format
Acceptance of minutes of previous Meeting
Action column
Progress review of actions prescribed by Minutes of previous Meeting
Minutes promptly prepared & distributed to attending parties
II-4.3 Continuing Validity of Securities & Insurance:
Check validity and (as necessary) require Contractor to extend validity of:
Insurance Policies
II-4.4 Verification of Contractor's Personnel & Equipment:
Instruct Contractor of required form /detail /frequency (if not in Contract)
Submitted by Contractor at end of each month (or more frequently)
Form /detail adequate?
Engineer's staff perform regular counts to verify Contractor's submissions
II-4.5 Sampling & Testing of Materials, Workmanship & Plant:
Contractor provides Materials samples according to Contract requirements
Samples properly labeled (description /origin /intended use)
Contractor gives (to Engineer) adequate prior notice of tests
Engineer gives (to Contractor) min. 1-day notice of intent to attend tests
II-4.6 Works Inspection, Testing & Acceptance:
Contractor gives (to Engineer) notice when work ready for inspection
& testing before it is covered up
Standard form for Contractor's 'Request for Inspection'
Engineer's Site Staff authorized (by formal delegation) to accept work
II-4.7 Unacceptable Works, Defects Notifications & Remedies:
Defects Notifications given in writing by Engineer to Contractor
Standard form of 'Defects Notice' used
Contract provision (if any) for acceptance of non-complying
work with payment deduction
II-4.8 Works Programme & Cash Flow Revisions:
Works Programme Revisions:
Engineer requests Programme Revisions if progress lags Programme
Contractor submits Programme Revision when requested
Contractor's Programme Revisions in acceptable detail
Cash Flow Revisions:
Engineer requests Cash Flow Revisions when required (older FIDIC)
Contractor submits Quarterly Cash Flow Revisions
(an obligation under recent FIDIC)
Cash Flow submissions sufficiently detailed for progress monitoring
II-4.9 Contractor's Slow Progress:
Engineer notifies Contractor of slow progress & instructs Contractor to
expedite progress to comply with Time for Completion
Review of Contractor's proposal to expedite work:
Increased working hours?
Supervision costs increased as result? (Contractor must bear costs)
Formal Agreement for Contractor to pay increased cost to Employer
Formal Agreement for Employer to pay Engineer for increased costs
Eng. gives consent (with Employer agreement) to Contractor's proposal
Eng. formally rejects (with Employer agreement) Contractor's proposal
(failing which proposal is deemed to have been accepted)
Comment
August 2011
Check
II-4.10 Works Suspensions:
Suspension by the Engineer:
Restrict delegated authority to instruct suspension
Instruct suspension only when absolutely necessary
Get /record Employer's prior concurrence (except in emergency)
II-4.11 Claims:
Contractor's Claims: Contractor responsible to comply with Contract
provisions for submission of Notice & Particulars of Claim
(failing which Claim is inadmissible under recent FIDIC)
Employer's Claims (under recent FIDIC): Employer responsible to comply
with Contract provisions for submission of Notice & Particulars of Claim
II-4.12 Documentation, Determination & Evaluation of Claims:
Documentation:
Consecutively number claims when Notice given
Maintain separate file for each claim, including all correspondence,
contemporary records, particulars, consultation records,
notices of dispute, Engineer's (or DAB's) decisions
Limit of Engineer's Authority to render Determinations:
Check if Contract requires Engineer to obtain Employer approval to
increase Contract Price, award Extension of Time or other limitation
Procedures for Engineer's Determination:
Engineer must consult with Parties before rendering Determination
Base Determination on joint agreement (if any) of Parties
Otherwise Determination must be fair /reasonable pursuant to Contract
First check 'Principle' of Claim is valid pursuant to Contract
Check 'Quantum' of Claim only if Principle is valid
If Engineer's authority limited by Contract, submit 'Assessment' of
Claim for Employer approval before rendering Determination
II-4.13 Delays, Extension of Time for Completion & Associated Costs:
[Procedures same as for II-4.11 & II-4.12]
Engineer's Determination:
First check 'Principle' of Claim is valid pursuant to Contract
Consideration of 'Concurrent Delay' & 'Contractor's Float' in EoT claims
Establish responsibility for delay (Employer /concurrent /climatic)
which will affect Contractor entitlement to costs
Review costs claimed by Contractor (if any) are appropriate to
attributed responsibility for 'Concurrent Delay'
If Prolongation Costs claimed:
Consider standard formulae (Hudson, Emden, Eichleay)
And/or require Contractor to provide evidence /substantiate
Apply 'Overhead Recovery' if EoT granted for additional work
Engineer must consult with Parties before rendering Determination
Base Determination on joint agreement (if any) of Parties
Otherwise Determination must be fair /reasonable pursuant to Contract
If Engineer's authority limited by Contract, submit 'Assessment' of
Claim for Employer approval before rendering Determination
Consideration of 'Price Adjustment' after original Time for Completion
II-4.14 Liquidated Damages & Bonus:
Liquidated Damages (also called Delay Damages):
Read /understand Contract provisions for Liquidated Damages
Engineer cannot apply Liquidated Damages (Employer's prerogative)
Engineer only certifies Liquidated Damages in Interim Payment
Certificates if instructed in writing by Employer
Bonus for Early Completion
May affect entitlement to Extension of Time for Completion
II-4.15 Dispute & Dispute Resolution:
Read /understand /follow Contract procedures for Dispute Resolution:
Recent standard FIDIC
Older standard FIDIC (pre 1999)
Appointment of DAB
Engineer's Decision
DAB's Decision
Amicable Settlement
Amicable Settlement
Arbitration
Arbitration
Comment
August 2011

II-5.
II-5: Design Reviews

& Modifications
DESIGN REVIEWS & MODIFICATIONS

These Guidelines are directed to LBGs services in the administration and
supervision of a Construction or Design/Build contract between an
Employer (owner) and Contractor (constructor). Under a Construction
contract the Contractor constructs the Works in accordance with design
provided by the Employer. Under a Design/Build contract the Contractor
performs both design and construction. Under FIDIC forms of Construction
(Red Book) contract or Design/Build (Yellow Book) contract, LBG would be
administering and supervising the contract as the Engineer.
Under FIDIC forms of Construction and Design/Build contracts, the
Engineer is given certain duties relating to variations (if any) of the Employers
design and/or review of the Contractors design. This chapter provides
guidance in the performance of those duties, in respect of:
o Contractual responsibility for design
o Review of Contractors design under a design-build contract
o Review of Contractors design under a construction contract
o Co-ordination of Employers & Contractors designs
o Response to Contractors notifications of faults in, or requests for
clarification of, the Employers requirements for Contractors design
o Modification of Employers requirements for Contractors design
o Design by Nominated Subcontractors under Provisional Sums
o Design modifications arising from unforeseen physical conditions
o Response to Contractors notifications of faults in, or requests for
clarification of, the Employers design
o Modification of Employers design to correct faults
o Review of Contractors Value Engineering proposals
o Review of Contractors shop drawings
o Engineers authority to instruct Variations
II-5.1
Contractual Responsibility for Design

The main responsibility for design should be implicit in the form of contract
adopted in the contract documents.
The relevant standard forms of FIDIC contract (administered and supervised
by the Engineer) are:
FIDIC Yellow Book Design/Build Contract:
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& Modifications
[Older form of contract, 3rd Edition (1987) entitled Electrical and Mechanical
Works. Recent form of contract, 1st Edition (1999) entitled Plant and DesignBuild.]
The Yellow Book contract is intended for the provision of electrical and/or
mechanical plant, and for the design and execution of building or
engineering works. Under the usual arrangements for this type of contract,
the Contractor designs and provides, in accordance with the Employers
Requirements, plant and/or other works; which may include any
combination of civil, mechanical, electrical and/or construction works.
The Contractor has full design responsibility for the Works, including
the Permanent Works and any Temporary Works the Contractor requires
to construct the Permanent Works. This design responsibility is not
diminished by any reviews or approvals of the Engineer or the Employer.
No doubt the Contractor will wish to economise, in terms of his costs,
which may be at the expense of quality. It is expected, therefore, that the
Employer has (or procures) the necessary technical expertise to ensure
that his requirements (Employers Requirements) have been clearly
specified in the Contract documents, and that this expertise remains
available during the design/build contract to ensure that those
requirements are achieved in practice.
Any modification of the Employers Requirements during the Contract
would require a Variation to be instructed, pursuant to the Contract
provisions, by the Engineer. But since the Engineer has no unilateral
authority make any changes to the Contract provisions, the Employers
written agreement would be required to such Variation [see Section II-3.3
Variations]. A Variation of the Employers Requirements might also result
from a Value Engineering proposal submitted by the Contractor [see
Section II-3.6 Value Engineering].
FIDIC Red Book Construction Contract:
[Older form of contract, 4th Edition (1987) entitled Works of Civil Engineering
Construction. Recent form of contract, 1st Edition (1999) entitled
Construction for Building and Engineering Works.]
The Red Book contract is intended for building or engineering works
designed by the Employer. Under the usual arrangements for this type of
contract, the Contractor constructs the Permanent Works in accordance
with a design provided by the Employer.
The Contractor is responsible for designing any Temporary Works
required to construct the Permanent Works.
The Permanent Works design may have been performed by the Employer
himself or by a firm (or firms) engaged by the Employer. The designer may
have been LBG.
Customarily, the Drawings and Specifications comprising the Permanent
Works design are included in the contract documents for the construction
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& Modifications
contract. At the beginning of the Contract, the Approved for Construction

Drawings are issued by the Engineer to the Contractor. If LBG is the
Engineer but was not the original designer, then clearly the Employer
must provide the Drawings before they can be issued by the Engineer to
the Contractor.
The Contractor has no responsibility or liability for design provided by the
Employer. The Contractors contractual responsibility is only to construct
the Works in accordance with the Employers design, as described by the
Drawings and Specifications. Under the construction contract, design
responsibility is carried by the Employer; although the Employer could
subrogate liability to his designer for damages arising from faulty design.
However, the Contract may prescribe that the design of some elements of
the Permanent Works be designed by the Contractor, in accordance with
requirements included in the Specifications. The Contractor carries
responsibility and liability for his own design of those elements of the
Permanent Works, notwithstanding any reviews or approvals of the
Engineer or the Employer.
Also, those elements of the Works for which the Employer provided the
design might, during the Contract, be subject to modifications enacted as
Variations by the Engineer or Employer (for whatever reason) or as a
result of a Value Engineering proposal submitted by the Contractor [see
Section II-3.3 Variations and Section II-3.6 Value Engineering].
II-5.2
Review of Contractors Design under Design-Build Contract

The recent FIDIC Yellow Book specifies procedural requirements for
Contractors Documents, which include design calculations, computer
software (programs), drawings, manuals, models and other documents of a
technical nature; and requires that the Employers Personnel (which includes
the Engineer) have the right to inspect the preparation of these documents
wherever they are being prepared.
FIDIC describes Contractors Documents as comprising:
- technical documents specified in the Employers Requirements;
- documents which are required to satisfy regulatory approvals, irrespective
of whether they are specified in the Employers Requirements; and
- As-built documents and Operation & Maintenance manuals, irrespective of
whether they are specified in the Employers Requirements, but as may
be elaborated therein.
Employers Requirements is defined as meaning:
the document, as included in the Contract, and any additions and
modifications to such document in accordance with the Contract
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& Modifications
(which) specifies the purpose, scope, and/or design and/or other technical
criteria, for the Works.
In other words: the criteria in accordance with which the Contractor is
required to prepare his design of the Works.
The General Conditions (Sub-Clause 5.2 Contractors Documents) state
that:
If the Employers Requirements describe the Contractors Documents
which are to be submitted to the Engineer for review and/or for approval,
they shall be submitted accordingly
and also that:
In the case of a Contractors Document which has (as specified) been
submitted for the Engineers approval the Engineer shall give notice to
the Contractor that the Contractors Document is approved, or that it fails
(to the extent stated) to comply with the Contract.
Clearly then, it is the Employers Requirements that should specify:
- which documents are to be supplied by the Contractor as Contractors
Documents;
- which (if any) of such Contractors Documents are to be submitted to the
Engineer for review, and/or for acceptance or approval.
The General Conditions also require that the Contractor shall include the
periods for reviews, consents and approvals (as specified in the Employers
Requirements) in his Works Programme [see Section II.2.11 Works
Programme & Cash Flow and Section II-4.8 Works Programme & Cash
Flow Revisions]. Unless otherwise stated in the Employers Requirements,
each review period shall not exceed 21 calendar days, calculated from the
date the Engineer receives a Contractors Document.
The Contractor is required to give written notice that each submitted
Contractors Document complies with the Contract and is considered ready
for review (and, if so specified in the Employers Requirements, for consent
or approval).
The General Conditions [Sub-Clause 5.2 Design: Contractors Documents] of
FIDICs recent Yellow Book state:
Any such approval or consent, or any review shall not relieve the
Contractor from any obligation or responsibility,
and FIDICs older Yellow Book [Sub-Clause 6.1 Contractors Drawings]
contains similar wording.
The General Conditions of FIDICs recent Yellow Book [Sub-Clause 3.1(c)
Engineers Duties and Authority] also state that:
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& Modifications
any approval, check, consent, examination, notice or similar act by

the Engineer (including absence of disapproval) shall not relieve the
Contractor from any responsibility he has under the Contract, including
responsibility for errors, omissions, discrepancies and non-compliances.
However, even FIDICs own guidelines [*] recognize that it might be difficult
under the governing law of the Contract (if a dispute arises) for the Employer
(or the Engineer acting on the Employers behalf) to refute all liability for an
approved submission. Even a deemed approval (meaning a required
approval deemed to have been given if the Engineer fails to respond to the
Contractors submission within the time prescribed by the Contract) could give
rise to such problem.
[* The FIDIC Contracts Guide, published 2000, providing detailed
guidance on using the first editions (1999) of FIDICs Conditions of
Contract for Construction (Red Book), Plant & Design-Build (Yellow Book)
and EPC/Turnkey Projects (Silver Book)]
Clearly, LBG, as the Engineer, should not risk professional liability by giving
consent or approval, where neither is required by the Employers
Requirements.
Clearly, it would be in the Engineers best interest (regarding professional
liability) if the Employers Requirements omit any requirement for the
Engineers consent or approval. If, prior to contract procurement, LBG assists
the Employer in drafting the Employers Requirements (especially in
anticipation of later providing services as the Engineer), then LBG should
attempt to omit such requirements.
It is submitted that the purpose of pre-construction review is not to
check the Contractors design; but the purposes are:
to permit the Engineer (and other Employers Personnel) to verify that the
Contractors Documents comply with the Contract (as expressed in the
Employers Requirements); and
to give the earliest possible opportunity to consider whether the proposed
works are what the Employer actually wants. If the Employer decides, on
the basis of a complying design submission, that he wishes to change the
Employers Requirements, it would typically be necessary to initiate a
Variation [see Section II-3.3 Variations].
The general procedure for review (excluding consent or approval) is specified
in Sub-Clause 5.2 of FIDICs recent Yellow Book in such a way as not to
impose on the Engineer any duty to give consent or approval for the
Contractor to proceed with execution (i.e. execution of the next phase of
design or construction as may be the case). To that extent it would only be
August 2011
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& Modifications
necessary for the Engineer, after his review, to give notice to the Contractor
(which notice must be in writing):
- that the Engineer has no objection to the relevant Contractors
Document(s); or
- the extent to which the Engineer considers that a Contractors Document
fails to comply with the Contract.
[Note: For minor non-compliances, the Engineer could require the
Contractors correction without a resubmission. For other than minor noncompliances, the Engineer should require the Contractor to revise and
resubmit.]
However, if the Employers Requirements do require the Engineers consent
or approval, then the Engineer cannot side-step this requirement (unless
provisions of his Service Contract contradict provisions of the Works
Contract). [See Section II-1.4 Contradictions between Works Contract and
LBGs Service Contract ]
Under the circumstance that the Engineer has no objection to the Contractors
submission but consent or approval is stated as being required, then it is
recommended that the Engineers written notice to the Contractor be
accompanied by such words as:
The basis of the review on which this approval [*] is given, has been to
ascertain the general suitability of the design and its general compliance
with the Contract. This approval [*] shall not be interpreted to imply the
Employers or Engineers approval of the Contractors design and shall not
relieve the Contractor of any responsibility for his design.
[* approval or consent, as appropriate]
It is recommended, when the Contractor has submitted an acceptably full
and complete Contractors Document, that:
The Engineer shall provide to the Employer a copy of the Contractors
submission, at the time or soon after it is submitted (for which purpose the
Engineer might request the Contractor to submit an additional copy of his
design submissions).
When providing a copy of the Contractors submission to the Employer:
the Engineer shall advise that he is proceeding to review the submission
for compliance with the Employers Requirements, but request that the
Employer also sufficiently review the proposed design to ensure his
satisfaction.
If the Engineer or Employer identify any non-compliance with the
Employers Requirements, or the Employer has any other objection to the
Contractors Document, they should meet during the review period to
discuss such problems and formulate a mutual response.
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& Modifications
The Engineer, following his review of the Contractors Document, should,

before notifying the Contractor of his review comments, forward those
intended comments to the Employer (regarding compliance of the
Contractors proposed design with Contract requirements). The Engineer
should request the Employers no-objection to the Engineers intended
comments.
The Engineer must notify the Contractor of the extent to which the
Contractors Document fails to comply with the Contract, requiring the
Contractor to revise and resubmit the Document with correction of such
non-compliances.
If the Engineer and Employer have no objection to a Contractors
Document, then the Engineer should notify the Contractor accordingly:
with a no objection or, if the Contract so requires, with consent or
approval.
The Engineer and Employer must be cognizant of FIDICs provision that if,
in accordance with the Employers Requirements, a Contractors
Document is submitted for the Engineers approval, then such approval
shall be deemed to have been given upon expiry of the specified review
period of all Contractors Documents relevant to the design and execution
of the works to which the subject Contractors Document relates.
If the Employer fails to respond to the Engineer within the time period
specified in the Contract for the Engineers review, then the Engineers
notification to the Contractor should state that the Employer has had
opportunity to review the Contractors design submission and the
Engineers response, and has raised no objection thereto.
All submissions and responses must be in writing.
The Employers Requirements should specify the procedures for submission

and review of different types of Contractors Documents. For example, the
Contractor may be required to submit general arrangement drawings for
approval, and drawings of concrete reinforcement for review, but not to
submit bending schedules detailing this reinforcement.
Also, for some types of Works, the Employers Requirements may specify
submissions and reviews of certain types of documents at preliminary and/or
intermediate stages of design development. These documents may not be
required for construction, but for verification of acceptability before
progressing to the next stage of design.
II-5.3
Review of Contractors Design under Construction Contract

As noted in Section II-5.1 above, FIDICs forms of Red Book contract are
intended for building or engineering works for which design is provided by the
Employer (issued to the Contractor through the Engineer).
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& Modifications
However, the Works may include some elements of Contractor-designed civil,

mechanical, electrical and/or construction works. Provision is made for such
Contractor design (if required) under Sub-Clause 7.2 Permanent Works
Designed by the Contractor of FIDICs older Red Book contract (4th Edition,
1987), and under Sub-Clause 4.1 Contractors General Obligations of
FIDICs recent Red Book contract (1st Edition, 1999). The Contractor carries
responsibility for his own design.
FIDICs older Red Book contract (Sub-Clause 7.2) requires the Contractor
to submit to the Engineer for approval:
- such drawings, specifications, calculations and other information as shall
be necessary to satisfy the Engineer as to the suitability and adequacy of
the Contractors design, and
- operation and maintenance manuals together with drawings of the
Permanent Works as completed .
but also states (Sub-Clause 7.3 Responsibility Unaffected by Approval) that:
Approval of the Engineer .... shall not relieve the Contractor of any of his
responsibilities under the Contract, which responsibility is stated to
include execution, with due care and diligence, of any required design in
accordance with the provisions of the Contract.
Although older FIDIC does not so state, it is obvious that the Employers
requirements in respect of those parts of the Works to be designed by the
Contractor must be included in the Contract documents, customarily the
Specifications and Drawings.
The above wording of older FIDIC General Conditions implies that the
required approval shall indicate the Engineers satisfaction, from his review,
as to the suitability and adequacy of the Contractors design not that the
approval is predicated upon a check of the Contractors design having been
performed by the Engineer. Unless otherwise stated in the Contract (such as
in the Specifications or Conditions of Particular Application), it is submitted
that the Engineers duty is to verify that the Contractors design conforms with
specified Contract requirements not to perform a check of the Contractors
design.
FIDICs recent Red Book contract (Sub-Clause 4.1), in respect of any part
of the Works specified to be designed by the Contractor, requires that:
- the Contractor shall submit to the Engineer the Contractors Documents
[*] for this part in accordance with procedures specified in the Contract;
- these Contractors Documents [*] shall be in accordance with the
Specifications and Drawings, and shall include additional information
required by the Engineer to add to the Drawings for co-ordination of each
Partys design;
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& Modifications
the Contractor shall be responsible for this part and it shall, when the
Works are completed, be fit for such purpose for which the part is
intended and specified in the Contract; and
prior to Tests on Completion, the Contractor shall submit to the
Engineer as-built documents and operation and maintenance manuals in
accordance with the Specifications of the Contract.
[* Contractors Documents are defined as meaning calculations,
computer programs, and other software, drawings, manuals, models and
other documents of a technical nature to be supplied by the Contractor
under the Contract, and therefore includes documents relating to the
Contractors design.]
It should be noted that the General Conditions of FIDICs recent Red Book
contract do not state what Contractors Documents must be submitted to the
Engineer, the procedures for submission, the purpose of submission
(Engineers and/or Employers review, consent or approval?), or time periods
allowed for the Engineers review and response. All these requirements
should have been specified elsewhere in the Contract, typically in the
Specifications and/or Particular Conditions; and may include (as in older
FIDIC) that submissions be made for the Engineers approval.
FIDICs recent Red Book contract (Sub-Clause 3.1(c) Engineers Duties and
Authority) also states that:
However, notwithstanding this provision (and the similar provision under older
FIDIC), it might be difficult under the governing law of the Contract (if a
dispute arises) for the Employer (or the Engineer acting on the Employers
behalf) to refute all liability for an approved submission. Even a deemed
approval (meaning a required approval deemed to have been given if the
Engineer fails to respond to the Contractors submission within the time
prescribed by the Contract) could give rise to such problem.
Clearly, LBG, as the Engineer, should not risk professional liability by giving
consent or approval, where neither is required under the Contract.
Under recent FIDIC, it would be in the Engineers best interest (regarding
professional liability) if the Contract omits any requirement for the Engineers
consent or approval. If, prior to contract procurement, LBG assists the
Employer in drafting the Contract documents (especially with anticipation of
later providing services as the Engineer), then LBG should attempt to omit
such a requirement.
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& Modifications
Unless the Contract expressly states otherwise, it is submitted that the

purpose of pre-construction review of the Contractors design is not to
perform a check of the Contractors design; but that the purposes are:
to permit the Engineer to verify that the Contractors design is suitable and
adequate in compliance with Contract requirements; and
to give opportunity to consider whether the proposed works are what the
Employer actually wants. If the Employer decides, on the basis of a
complying design submission, that he wishes to change the Employers
Requirements, it would typically be necessary to initiate a Variation [see
Section II-3.3 Variations].
It is recommended, when the Contractor has submitted an acceptably full
and complete design submission, that:
The Engineer shall provide to the Employer a copy of the Contractors
design submission, at the time or soon after it is submitted (for which
purpose the Engineer might request the Contractor to submit an additional
copy of his design submissions).
When providing a copy of the Contractors design submission to the
Employer: the Engineer should advise that he is proceeding to review the
submission for compliance with Contract requirements, but request that
the Employer also sufficiently review the proposed design to ensure his
satisfaction.
If the Engineer or Employer identify any non-compliance with the Contract
requirements, or the Employer has any other objection to the Contractors
design submission, they should meet during the review period to discuss
such problems and formulate a mutual response.
The Engineer, following his review of the Contractors design submission,
should, before notifying the Contractor of his review comments, notify his
intended comments to the Employer (regarding compliance of the
Contractors proposed design with Contract requirements) and request the
Employers written no-objection to the Engineers intended comments.
The Engineer must notify the Contractor of the extent to which the
Contractors design submission fails to comply with the Contract, requiring
the Contractors resubmission with correction of such non-compliances.
The Contractor should not be permitted to proceed with execution of
works for which the Engineer has notified non-compliances.
If the Engineer and Employer have no objection to a Contractors
Document, then the Engineer should notify the Contractor accordingly:
with a no objection or, if the Contract so requires, with consent or
approval.
If the Employer fails to respond to the Engineer within the time period
specified in the Contract for the Engineers review, then the Engineers
August 2011
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& Modifications
notification to the Contractor should state that the Employer has had
opportunity to review the Contractors design submission and the
Engineers response and has raised no objection thereto.
If the Contract has no requirement for design submissions to be made to the

Engineer specifically for his consent or approval, then it is recommended
that the Engineer need only, as a result of his review, notify the Contractor (in
writing):
- that the Engineer has no objection to the relevant Contractors
Document(s); or
- the extent to which the Engineer considers that a Contractors Document
fails to comply with the Contract.
[Note: For minor non-compliances, the Engineer could require the
Contractors correction without a resubmission. For other than minor noncompliances, the Engineer should require the Contractor to revise and
resubmit.]
However, if the Engineers consent or (as under older FIDIC) approval is
required, then the Engineer cannot side-step such requirement (unless
provisions of his Service Contract contradict provisions of the Works
Contract). [See Section II-1.4 Contradictions between Works Contract and
LBGs Service Contract ] Under the circumstance that consent or approval
is a stated requirement of the Contract, it is recommended that the Engineers
written notice to the Contractor be accompanied by such words as:
ascertain the general suitability of the design and its general compliance
with the Contract. This approval [*] shall not be interpreted to imply the
Employers or Engineers approval of the Contractors design and shall not
relieve the Contractor of any responsibility for his design.
[* approval or consent, as appropriate]
II-5.4
Co-ordination of Employers & Contractors Designs

As noted in Section II-5.3 above [Review of Contractors Design under
Construction Contract], FIDICs recent Red Book contract (Sub-Clause 4.1),
in respect of any part of the Works specified to be designed by the
Contractor, requires that:
- Contractors Documents shall be in accordance with the Specifications
and Drawings of the Contract, and shall include additional information
required by the Engineer to add to the Drawings for co-ordination of each
Partys designs.
There is no such provision in FIDICs older Red Book contract.
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& Modifications
Clearly though, the layout and details of elements of the Permanent Works to
be designed by the Contractor might be affected by or affect the layout and
details of the design provided by the Employer (such as in the case of
electrical/mechanical plant designed by the Contractor to be incorporated
within civil engineering or building works for which design has been provided
by the Employer).
Recent FIDICs definition of Drawings is:
drawings of the Works as included in the Contract, including any
additional and modified drawings issued by (or on behalf of) the Employer
in accordance with the Contract.
Unless there is overriding provision elsewhere in the Contract, the Engineer
has no design-preparation duties under FIDIC Red Book General Conditions.
It is submitted, therefore, that the above Contract provision does not require
that the Engineer make any necessary additions or modifications to the
Drawings but only that the Engineer shall co-ordinate this activity. Any
modifications or additions to the Drawings should be provided by the
Employer, who provided the original Drawings included in the Contract.
It is likely that the original design and Drawings were prepared by designers
(hereinafter the original designer) contracted separately by the Employer for
that purpose prior to the procurement phase of the subject Works Contract.
The original designer may also have assisted the Employer in preparation
and compilation of the tender documents. Indeed, the original designer might
have been LBG.
Thus, unless the Contract contains contrary overriding procedural
provisions, it is recommended that the following procedure be adopted
(either under a recent or older FIDIC Red Book contract) in the event that the
Engineer considers that the Contractors design might necessitate
modifications or additions to the Drawings.
In his review of the Contractors design submission (Contractors
Documents under recent FIDIC), the Engineer should check that the
Contractor has provided sufficient information to identify the technical
and/or physical inter-relationship (if any) between the Contractors design
and the Employers original design.
If the Engineer considers or suspects that modifications or additions might
be necessary to the Drawings, he shall refer the Contractors design
submission to the Employer (in writing) for his no-objection; together with
a recommendation that the matter be referred by the Employer to his
original designer for any necessary detailed design checks and execution
of any necessary modifications or additions to the Drawings.
The Engineers notice of no-objection, consent or approval (as appropriate
in accordance with the Contract) should not be given to the Contractor
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& Modifications
until the Engineer has received the Employers written and clear noobjection to the Contractors design submission.
Responsibility for any necessary modifications or additions rests with the
Employer. If those modifications or additions to the Drawings are prepared
on the Employers behalf by the original designer, then they must be
transmitted by the original designer to the Employer, thenceforward by the
Employer to the Engineer, and finally (pursuant to the Contract) issued by
the Engineer to the Contractor. This formal sequence must be maintained
for reason of contractual authority. Unless specifically authorized under
the Works Contract, the original designer would have no authority to issue
Drawings directly to the Engineer and/or the Contractor.
Any new Drawings should be Approved for Construction. Any modified
Drawings should also bear a revision number, date and description of the
revision.
Even in the event that LBG, in addition to being the Engineer, was also the
original designer and has a contract to provide design-related services
during the Works Contract, it is recommended that these procedures still
be followed.
Problems could arise if the Employers contract with the original designer
(who was not LBG) had no provision for continuation of design-related
services during the Works Contract and has expired, or if the Employer is
unable or reluctant to re-engage his original designer for services during
construction, or if the original designer no longer exists. This would be the
Employers problem to resolve.
If LBG is the Engineer but was not the original designer (or if LBG was the
original designer but has no contract to provide design services during the
Works Contract), then:
the Engineers Site supervision staff must not succumb to entreaty or
pressure of the Employer for the Engineer to undertake any design
functions (and any consequential professional liability which could ensue
from effecting modifications or additions to the Drawings) unless a
contract is conformed between the Employer and LBG under which LBG
would provide such services with appropriately experienced technical
staff;
under such circumstance LBGs Project Manager should seek guidance
from his HO Supervisor [see Section I-1.1 Appointment of Head Office
Supervisor]
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II-5.5

& Modifications
Employers Requirements for Contractors Design:

Contractors Notices of Faults or Requests for Clarification
Under a FIDIC (Yellow Book) Design/Build contract, the Contractor is
responsible for the design and construction of the Works. The design is
required to be in accordance with:
- Under the older Yellow Book contract: the Specifications and Employers
Drawings included in the Contract.
- Under the recent Yellow Book contract: the Employers Requirements
included in the Contract.
Under a FIDIC (Red Book) Construction contract (for which design is provided
by the Employer), the Contractor may be required to perform design of some
elements of the Permanent Works. Each Party has responsibility for his own
design. The elements of Contractor design are required to be in accordance
with:
- Under the older and recent Red Book contract: the Employers
requirements stated in the Contract, typically in the Specifications and
Employers Drawings.
Comments and recommendations hereunder are intended to apply both to
Design/Build (FIDIC Yellow Book) contracts and to Construction (FIDIC Red
Book) contracts containing elements of Contractor-design.
As indicated above, the Employers requirements for the Contractors design
might, in different forms of contract, variously be incorporated as
Specifications, Employers Drawings or Employers Requirements. To avoid
a multiplicity of terminology, the term Employers requirements is used
hereunder, meaning: the purpose, scope, and/or design and/or other
technical criteria in accordance with which the Contractor is required, under
the Contract, to design elements of the Works.
The Employers requirements would have been prepared by the Employer
himself or, more probably, on his behalf by external design experts contracted
separately by the Employer for that purpose prior to the procurement phase of
the subject Contract. Indeed, LBG might previously have been engaged to
assist the Employer in drafting the Employers requirements for the Contract.
Notwithstanding any Contract provision that the Contractor shall have
scrutinized the Employers requirements during the tender stage and/or upon
receipt of the Engineers Notice of Commencement of Works, the Contractor
could at any time during his design execution discover errors, faults, defects,
omissions, inconsistencies, ambiguities or problems of interpretation in the
Employers requirements. In accordance with FIDIC forms of contract, the
Contractor is required to give written notice to the Engineer, requesting
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& Modifications
resolution and/or clarification; and the Engineer is required to respond

accordingly, including determination as to whether a Variation should be
initiated [see Section II-3.3 Variations]. A delay in resolution or an ensuing
Variation could give rise to a valid Contractors claim for extension of the Time
for Completion and/or additional Cost.
Standard forms of FIDIC contract ascribe no design responsibility to the
Engineer, nor authority to change any terms of the Contract (to which the
Engineer is not a Party) unless there is overriding provision to the contrary.
Consequently, although the Engineer is the functionary through whom notices
are given to and received from the Contractor pursuant to the Contract, the
Engineer must refer any notices or questions (concerning the Employers
requirements for the Contractors design) to the Employer. If the Engineer
were to respond to the Contractor without reference to or answer from the
Employer, he could place himself in danger of bearing responsibility and
liability for damages arising therefrom.
Even if LBG assisted the Employer in drafting the Employers requirements
for the Contract, under a previous design-related assignment, LBG would
have no authority in that capacity to respond directly to the Contractor or to
the Engineer.
If, as the Engineer, LBG receives from the Contractor a notice of any alleged
fault with the Employers requirements, or any request for clarification of or
additional information to those requirements:
It is recommended that the following procedure be adopted
(whether or not LBG originally assisted the Employer in drafting the
Employers requirements):
- if, during the Works Contract, LBG has no contract with the
Employer for services relating to the Employers requirements (even
if LBG assisted the Employer, under a previous but expired separate
contract, in drafting the Employers requirements).
The Engineer shall promptly forward the Contractors notice or request
to the Employer, together with the Engineers written request that the
Employer inform the Engineer what response the Employer wishes the
Engineer to convey to the Contractor.
The Engineers referral to the Employer should include advice as to
any potential contractual consequences of the Contractors
notice/request, or of delay in responding to that notice/request (e.g. a
necessary Variation, extension of the Time for Completion, or
additional Cost).
The Engineer shall respond to the Contractor only after receiving the
Employers direction.
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& Modifications
It is recommended that the following procedure be adopted:

- if LBG originally assisted the Employer in drafting the Employers
requirements; and
- if LBG has a continuing responsibility, specifically stated within its
contract to provide services of the Engineer, to resolve any
questions regarding the Employers requirements.
The Engineer shall promptly forward the Contractors notice/request to
the Employer, together with the Engineers written request to mobilize
the necessary technical staff (on-Site or off-Site as the case may be).
[The Engineers request to mobilize short-term technical staff (and the
Employers approval) may be a contractual pre-condition to LBGs
entitlement to payment for such services.]
If mobilization of LBGs technical review staff has been approved, LBG
shall (after its review of the Contractors notice), in its capacity as the
Engineer, convey to the Employer (in writing) recommendations of a
response to the Contractor (which response is intended to be
conveyed by the Engineer to the Contractor if the Employer so
consents).
The Engineers recommendations to the Employer should include
advice as to any potential contractual consequences of the
Contractors notice and the Engineers proposed response (e.g. a
necessary Variation, and/or extension of the Time for Completion,
and/or additional payment). There might be a matrix of solutions to and
consequences of the Contractors notice that might be considered.
[Naturally LBGs technical review staff and LBGs on-Site Engineers
staff would be able to communicate in the formulation of an appropriate
response. And informal communication between LBG and the
Employer might aid this process.]
The Engineer must ask the Employers acceptance of the Engineers
recommendations (or the Employers decision otherwise) before
responding to the Contractors notice (which response must be in
writing).
- if LBG originally assisted the Employer in drafting the Employers
requirements; and
- if LBG has a continuing separate contract (i.e. separate from the
contract under which LBG is providing services as the Engineer)
wherein responsibility to resolve any questions regarding the
Employers requirements is specifically stated.
the Employer, together with the Engineers written request that the
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& Modifications
[If LBG has separate contracts for design-related services and

Engineers services respectively, it is recommended that LBG maintain
separate client-relationships for those contracts. Naturally LBGs staff
on each contract will be able to communicate unofficially with each
other, but their respective communications with the Employer should
be separate.]
[It will be the Employers decision whether or not to refer the
Contractors notice to LBG for design-related services.]
any potential contractual consequences of the Contractors notice or of
delay in responding to that notice (e.g. a necessary Variation,
extension of the Time for Completion, and/or additional payment).
It is hoped that the Employer has retained his expertise and/or the services of
external design experts during the execution phase of the subject Contract
to answer any requests for correction or clarification of the Employers
requirements. If not, the Employer could have a problem, and might entreat or
pressurize the Engineer to undertake such design-related function. For
reason of avoiding professional liability for services not included in the Terms
of Reference of his Service Contract, the Engineer must resist. It may be
necessary for LBGs Project Manager to seek guidance from his HO
Supervisor [see Section I-1.1 Appointment of Head Office Supervisor].
The Engineers response to the Contractors notice or request might be a
contractually non-consequential clarification. Alternatively, it may necessitate
initiation of a Variation [see Section II-3.3 Variations], from which could arise
the Contractors entitlement under the Contract to an extension of the Time
for Completion and/or additional payment. Clearly, to minimize such adverse
repercussions, Contractors notices or requests concerning the Employers
requirements should be dealt with as expeditiously as possible.
II-5.6
Modification of Employers Requirements

for Contractors Design
Contractors design is relevant to Design/Build (FIDIC Yellow Book)
contracts, and possibly also to Construction (FIDIC Red Book) contracts [see
Section II-5.1 Contractual Responsibility for Design].
If the Contractor discovers any errors, faults, defects, omissions,
inconsistencies, ambiguities or problems of interpretation of the Employers
requirements embodied in the Contract, then (under FIDIC General
Conditions of Contract) he is required to give notice thereof to the Engineer.
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& Modifications
The recommended procedure for the Engineers notice of response to the

Contractor is outlined in Section II-5.5 above [Employers Requirements for
Contractors Design: Contractors Notices of Faults or Requests for
Clarification]. The Engineer must refer the matter to the Employer for
resolution.
Similarly, if the Engineer discovers any faults with the Employers
requirements he must also refer the matter to the Employer for resolution.
The Employers requirements (for Contractor design) embodied in the
Contract (as Specifications, Drawings or Employers Requirements)
constitute terms of the Contract and the Engineer has no authority to
change terms of the Contract. Therefore, the Engineer has no unilateral
authority to change the Employers Requirements for Contractors
Design.
It is natural that the Engineer would try to assist the Employer in determining
an appropriate solution to the problem. However, the Engineer must consider
his professional responsibility, scope of work and potential liability. The
Engineer, in trying to assist, may suggest optional solutions (and their
respective, potential, contractual repercussions) to the Employer; but should
not offer recommendations. Only the Employer can decide to change his
own requirements.
Since, under FIDIC-based contracts, it is the Engineer who is required to give
a responding notice to the Contractor, clearly the Employer has first to convey
his decided solution to the Engineer. The Engineer should insist that the
Employer does this in writing.
If the clarification or correction of the Employers requirements would
necessitate a modification to the Contractors intended design, then the
Engineer should initiate a Variation [see Section II-3.3 Variations], from
which could arise the Contractors entitlement to an extension of the Time for
Completion and/or additional payment. Under FIDIC-based contracts,
Variations are instructed to the Contractor by the Engineer, but the
Employers pre-authorization should first be obtained if the Variation includes
provision for (or might precipitate a Contractors claim for) an extension of the
Time for Completion or additional payment [see also Section II-3.5 Variation
Orders].
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II-5.7

& Modifications
Design by Nominated Subcontractors

under Provisional Sums
Provisions for Nominated Subcontractors appear only in FIDIC Red Book
contracts not in Yellow Book contracts. They are discussed in Section II2.20 Nominated Subcontractors.
A Nominated Subcontractor is a Subcontractor who is stated in the Contract
(by the Employer) as a Nominated Contractor, or who the Engineer instructs
the Contractor to employ to execute certain works under a Provisional Sum or
as a Variation.
A Provisional Sum is a sum described as such and included in the Contract
for any part of the Works, which may be used in whole or in part or not at all
on the instructions of the Engineer, but to which the Contractor has
entitlement only to payment for works so instructed by the Engineer. [See
Section II-3.2 Provisional Sums.]
Nominated Subcontractors are typically engaged:
- if the Employer wishes to ensure that part of the Works is executed by a
specific or specialist company under the Contract;
- to undertake specialist works which a general contractor is not permitted
to perform. For example, an electrical utility owner might permit relocation
of a transmission line (required under the Contract) only to be executed by
a specialist contractor pre-approved by the utility owner to perform such
works.
The parts of the Works to be executed by a Nominated Subcontractor might
include elements of design for those parts.
The layout and details of elements of the Permanent Works to be designed by
a Nominated Subcontractor might be affected by or affect the layout and
details of the design provided by the Employer.
The Contractor is responsible, under the Contract, for the co-ordination of a
Nominated Subcontractors work. However, the Contractor is not responsible
for negligence of a Nominated Subcontractor. Indeed, the Contractor is under
no obligation to employ a Nominated Subcontractor unless the subcontract
contains provision that the Nominated Subcontractor indemnifies the
Contractor from and against any negligence of the Nominated Subcontractor.
Thus, it is likely that the Contractor will forward any designs of Nominated
Contractors to the Engineer (or Employer) for review.
Since FIDIC appears not to address procedures specifically for design by a
Nominated Subcontractor, it is recommended that:
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II-5.8

& Modifications
The Engineer should not formally deal directly with Nominated

Subcontractors (as he would not with any other Subcontractors engaged
by the Contractor). Formal communications concerning Nominated
Subcontractors works execution, including design (if any), should be
between the Engineer (or Employer) and the Contractor.
[Any direct communications between the Employer and Contractor, or
between the Employer and Nominated Subcontractor, should be copied to
the Engineer to facilitate performance of his supervisory duties under the
Contract.]
The Engineers review of Nominated Subcontractors designs should
follow procedures outlined in Section II-5.3 Review of Contractors
Design under Construction Contracts.
The Engineers co-ordination of the Employers design with design by
Nominated Subcontractors should follow procedures outlined in Section
II-5.4 Co-ordination of Employers & Contractors Designs
Design Modifications arising from

Unforeseen Physical Conditions
Standard forms of FIDIC contract (both Red and Yellow Books) require the
Contractor to give notice to the Engineer (as soon as is practicable) of any
adverse physical conditions on Site (other than climatic conditions) which, in
his opinion, were not foreseeable by an experienced contractor.
In this context FIDIC describes physical conditions as meaning:
natural conditions and man-made and other physical obstructions and
pollutants, which the Contractor encounters on Site when executing the
Works, including sub-surface and hydrological conditions but excluding
climatic conditions.
The Contractor is required to continue executing the Works, using such
proper and reasonable measures as appropriate for the physical conditions,
and to comply with any instructions which the Engineer may give which
instructions may constitute a Variation under the Contract [see Section II-3.3
Variations], particularly if a design modification is required.
The necessity for a Variation appears to be predicated upon whether or not
(in the Engineers opinion) the physical conditions were foreseeable by an
experienced contractor; not that the conditions were unforeseen by the
Contractor, but that they were unforeseeable. However, that inference will
not always be true.
Under a Design/Build (FIDIC Yellow Book) contract, for which the
Contractor has design responsibility, or for those parts of the Works of a
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& Modifications
Construction (FIDIC Red Book) contract for which the Contactor has design
responsibility, it is submitted that a Variation would be still need to be
instructed if a foreseeable physical condition was unforeseen and if that
unforeseen physical condition necessitates a modification of the Employers
requirements for the Contractors design.
If the Contractors notice of physical conditions also notifies that those
conditions necessitate a modification of the Employers requirements for the
Contractors design, or if the Engineer considers that such modification might
be required, then the Engineer should proceed in accordance with the
procedures recommended in Section II-5.6 [Modification of Employers
Requirements for Contractors Design].
Under a Construction (FIDIC Red Book) contract, for which the Employer
provides the design, it is submitted that a Variation would need to be
instructed if a foreseeable physical condition was unforeseen and if that
unforeseen physical condition necessitates a modification of the Employers
design. But whether or not the matter needs to be referred by the Engineer to
the Employer (and onward by the Employer to his original designer [*]) will
depend on the circumstance, for which the Engineers common sense and
discretion will be required.
[* It is likely that the original design and Drawings were prepared by
designers contracted separately by the Employer for that purpose prior to
the procurement phase of the subject Contract hereinafter called the
original designer. It is also possible that LBG was the original designer.]
The following examples may help:
- For a change in length of a drainage culvert (to suit ground terrain) whose
structural and hydraulic design is otherwise unaffected, it would not be
necessary to refer the matter to the Employer.
The Variation could be instructed by a simple Engineers instruction [see
Section II-4.1 Engineers Instructions] with an attached sketch. If no new
pay items of the Bill of Quantities (BoQ) are required and the change in
quantities of the modified works will not be significant, there would be no
necessity to valuate the Variation [see Section II-3.4 Valuation of
Variations] and issue a Variation Order [see Section II-3.5]. Work
quantities will be subject to measurement [see Section II-3.8
Measurement of the Works].
- But for a change in the cross-sectional dimensions or longitudinal gradient
of a culvert (to suit ground terrain), which modifications could affect the
culverts structural integrity or hydraulic performance, the Engineer must
refer the matter to the Employer (and onward to his original designer, as
appropriate) for resolution.
Depending on the criticality of the subject culvert works within the
Contractors Works Programme, the Engineer may need to suspend
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& Modifications
execution of those works [see Section II-4.10 Works Suspensions] until a

design solution is resolved. The design modification might necessitate
new or revised Drawings to be provided (through the Employer) by the
original designer, which the Engineer would issue as an attachment to his
instruction of the Variation.
If the design is so substantially modified that the works are not adequately
covered by existing BoQ items, new pay items may have to be negotiated
with the Contractor [see Section II-3.4 Valuation of Variations] and a
formal Variation Order will be advisable [see Section II-3.5].
Under FIDIC Red Book General Conditions, the Engineer has no design
responsibility.
Unless the Contract contains contrary overriding procedural provisions, it is
recommended that the following procedure be adopted in the event that
the Engineer considers physical conditions (whether or not notified by the
Contractor) may require modifications to the Employers design and
Drawings:
The Engineer shall refer the matter to the Employer for design resolution;
requesting that the Employer provide any necessary new or revised
Drawings.
If modifications or additions to the Drawings are prepared on the
Employers behalf by the original designer, they must be transmitted by
the original designer to the Employer, thenceforward by the Employer to
the Engineer, and finally issued by the Engineer to the Contractor as a
Variation. This formal sequence must be maintained for reason of
contractual authority. The original designer would have no authority to
issue Drawings directly to the Engineer and/or the Contractor.
Any new or revised Drawings provided by the Employer should be
Approved for Construction.
original designer and has a separate contract to provide design-related
services during the Works, it is recommended that these procedures still
be followed.
Problems could arise if the Employers contract with the original designer
(who was not LBG) had no provision for continuation of design-related
services during the Works Contract and has expired, or if the Employer is
unable or reluctant to re-engage his original designer for services during
construction, or if the original designer no longer exists. This would be the
Employers problem to resolve.
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& Modifications
If LBG is the Engineer but was not the original designer (or if LBG was the
original designer but has no contract to provide design services during the
Works Contract), then:
the Engineers Site supervision staff must not succumb to entreaty or
pressure of the Employer for the Engineer to take responsibility for any
design functions (and any consequential professional liability which could
ensue from effecting design modifications) unless a contract is conformed
between the Employer and LBG under which LBG would provide such
services with appropriately experienced technical staff;
under such circumstance, LBGs Project Manager should seek guidance
from his Head Office Supervisor [see Section I-1.1 Appointment of Head
Office Supervisor].
Should the Employer so choose, an alternative exists to request the
Contractor to submit a design proposal to overcome the unforeseen physical
conditions. Under such circumstance, if the Contractors design is acceptable,
it will be reasonable for the Contractor to expect and be entitled to payment
for the design modification. It is recommended that review and co-ordination
of the Contractors design modification should be in accordance with
procedures outlined under Section II-5.3 [Review of Contractors Design
under Construction Contract] and Section II-5.4 [Co-ordination of
Employers and Contractors Design].
Having instructed a Variation arising from physical conditions, the Engineer
then has to determine, subject to the Contractors compliance with Contract
procedures for claims [see Section II-4.11 Contractors Claims], the
Contractors entitlement to an extension of the Time for Completion and/or
additional Cost. For this purpose, the criterion of unforeseeability is critical.
FIDIC provides that:
- If the Contractor suffers delay and/or increased Cost arising from adverse
physical conditions that the Engineer determines were not foreseeable by
an experienced contractor, then the Contractor shall be entitled to an
extension of the Time for Completion and/or additional Cost.
- FIDIC provides a caveat that the Engineer, in determining the Contractors
entitlement, may take into consideration other physical conditions in
similar parts of the Works (if any) that were more favourable than could
reasonably have been foreseen when the Contractor submitted his
Tender.
And the corollary of that provision is that:
- If the Engineer determines that the physical conditions, although
unforeseen by the Contractor, were foreseeable by an experienced
contractor, then the Contractor is not entitled to any extension of the Time
for Completion or additional Cost.
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& Modifications
In the above examples for modifications to a culvert design, the Engineer

would reasonably determine that minor dimensional modifications to culverts
to suit terrain conditions are common and foreseeable to an experienced
contractor, and do not constitute entitlement to an extension of the Time for
Completion or additional Cost. However, the Engineer would reasonably
determine that a major modification of the type of culvert necessitated by the
physical conditions, which will cause critical procurement or construction
delay, could not reasonably have been foreseeable and, therefore, does
constitute entitlement to an extension of the Time for Completion or additional
Cost.
However, the Engineer must be reasonable in the application of this
unforeseeability criterion, as demonstrated in the following example:
- Consider, under a Construction (FIDIC Red Book) contract, that the
Employer has provided a preliminary design (for tendering purposes), for
piled foundations of structures, but requires the Contractor to perform
localized sub-surface, geotechnical investigations to determine actual pile
lengths. Clearly, physical conditions that would necessitate changes to the
Employers design cannot be considered as unforeseeable. Yet, under
such circumstance, it is submitted that the Contractor would be entitled to
extension of the Time for Completion and additional payment for
additional piling quantities.
II-5.9
Employers Design:
Contractors Notices of Faults or Requests for Clarification,
& Design Modifications arising therefrom
This Section applies to construction contracts (FIDIC Red Book) under which
design for all (or most of) the Permanent Works is provided by the Employer.
The Contractor has no design responsibility for Works for which the Employer
has provided the design (as contained in the Drawings and Specifications)
except in regard to preparation of any required Shop Drawings [see Section
II-5.11] necessary for pre-fabricated components to be incorporated into the
Permanent Works to meet requirements of the Employers design.
The Contractors only other design responsibility is for any Temporary Works
he requires to construct the Permanent Works.
The Contractor should, as soon as is practicable, give notice to the Engineer
of any errors, faults, defects, omissions, inconsistencies, or ambiguities he
discovers in the Drawings and Specifications, which could affect or are
affecting his execution of the Works. Although FIDIC does not place this as
an obligation upon the Contractor, the Engineers determination of any
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Contractors claims of delay arising from such problem may be influenced by

the timeliness of such notice.
However, the Contractor could at any time during the Contract discover and
notify the Engineer of alleged errors, faults, defects, deficiencies, omissions,
inconsistencies, ambiguities or uncertainties in the Employers design; or
request additional information he needs to construct the Works.
FIDIC Red Book contracts place obligation upon the Engineer to clarify or to
issue instruction of any changes to any documents forming the Contract. In
the words of FIDICs recent Red Book contract:
If an ambiguity or discrepancy is found in the documents, the Engineer
shall issue any necessary clarification or instruction.
However, this does not mean that the Engineer shall undertake any design
function or responsibility. Unless there are Contract conditions to the contrary,
standard conditions of FIDIC Red Book contracts ascribe no design function
or responsibility to the Engineer, and the Engineer has no authority to change
terms of the Contract (to which the Engineer is not a Party). The above
provision means only that the Engineer is the functionary through whom
clarification or instruction is issued to the Contractor.
The Employers design may have been performed by the Employer himself
or, more likely, on his behalf by external design experts (hereinafter called the
original designer) contracted separately by the Employer for that purpose
prior to the procurement phase of the subject Contract. Indeed, LBG might
have been the original designer.
In order to respond to the Contractors request or notification, the Engineer
must seek direction from the Employer; and the Employer may need or
decide to refer the Contractors request or notification his original designer. If
the Engineer were to respond to the Contractor without or contrary to the
Employers direction, he could place himself in danger of bearing
responsibility and liability for damages arising therefrom.
Unless the original designer is authorized (in writing, copied to the Contractor
and the Engineer) to act on the Employers behalf in design matters (an
unlikely authorization without consideration of increased costs to the
Employer), then the original designer cannot respond directly to the Engineer.
And, most certainly, the original designer cannot respond directly to the
Contractor. The Employers clarification or decision must be conveyed directly
by the Employer to the Engineer, and onward by clarification or instruction
from the Engineer to the Contractor.
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If, as the Engineer, LBG receives from the Contractor a notice of any alleged
fault with the Employers design, or any request for clarification of or
additional information pertaining to that design:
- if LBG has no contract with the Employer for services relating to the
Employers design during the Works Contract (even if LBG was the
Employers original designer under a previous but expired separate
contract):
The Engineer shall promptly forward the Contractors notice or request
to the Employer, together with the Engineers written request that the
any potential contractual consequences of the Contractors
notice/request, or of delay in responding to that notice/request (e.g. a
necessary Variation, extension of the Time for Completion, or
additional Cost).
- if LBG was the Employers original designer and has a continuing
responsibility, specifically stated within his contract to provide
services of the Engineer, to resolve any questions regarding the
Employers design:
the Employer, together with the Engineers written request to mobilize
the necessary technical staff (on-Site or off-Site as the case may be).
[The Engineers request to mobilize short-term technical staff (and the
Employers approval) may be a contractual pre-condition to LBGs
entitlement to payment for such services.]
If mobilization of LBGs technical review staff has been approved, LBG
shall (after its review of the Contractors notice/request), in its capacity
as the Engineer, convey to the Employer (in writing)
recommendations of a response to the Contractor (which response is
intended to be conveyed by the Engineer to the Contractor if the
Employer so consents).
The Engineers recommendations to the Employer should include
advice as to any potential contractual consequences of the
Contractors notice/request and the Engineers proposed response
(e.g. a necessary Variation, and/or extension of the Time for
Completion, and/or additional payment). There might be a matrix of
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solutions to and consequences of the Contractors notice that might be

considered.
[Naturally LBGs technical review staff and LBGs on-Site Engineers
staff would be able to communicate in the formulation of an appropriate
response. And informal communication between LBG and the
Employer might aid this process.]
The Engineer must ask the Employers acceptance of the Engineers
recommendations (or the Employers decision otherwise) before
responding to the Contractors notice (which response must be in
writing).

- if LBG was the Employers original designer and has a continuing
contract (separate from the contract under which LBG is providing
services as the Engineer) wherein responsibility to resolve any
questions regarding the Employers design is specifically stated:
the Employer, together with the Engineers written request that the
[If LBG has separate contracts for design-related services and
Engineers services respectively, it is recommended that LBG maintain
separate client-relationships for those contracts. Naturally LBGs staff
on each contract will be able to communicate unofficially with each
other, but their respective communications with the Employer should
be separate.]
[It will be the Employers decision whether or not to refer the
Contractors notice to LBG for design-related services.]
any potential contractual consequences of the Contractors notice or of
delay in responding to that notice (e.g. a necessary Variation,
extension of the Time for Completion, and/or additional payment).
The Engineers response (as directed by the Employer) to the Contractors
notice/request might be a contractually non-consequential clarification. But,
on the other hand, the Contractors notice/request might precipitate or
necessitate a modification to the Employers design.
If the Engineer considers that the Contractors notice/request may
require modifications to the Employers design Drawings and
Specifications, the above recommendations should be supplemented as
follows:
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The Engineer shall request the Employer to provide necessary new or

revised Drawings and Specifications to correct any design errors, faults,
defects or omissions.
However, the Engineers discretion should be applied. If the design
change is inconsequential, say a minor dimensional change that does not
affect the integrity and performance of the Works, then there may be no
need to refer the change to the Employers decision. An example (as
presented in Section II-5.8 Design Modifications arising from Unforeseen
Physical Conditions) would be that of a minor, inconsequential change in
the length of a drainage culvert. Such minor adjustments could be detailed
in As-Built Drawings.
It must be remembered that:

If modifications or additions are prepared on the Employers behalf by the
original designer, they must be transmitted by the original designer to the
Employer, thenceforward by the Employer to the Engineer, and finally
issued by the Engineer to the Contractor as a Variation. This formal
sequence must be maintained for reason of contractual authority. As
stated before, unless the Contract states otherwise, the original designer
has no authority to issue additions or revisions to Drawings and
Specifications directly to the Engineer and/or to the Contractor.
Any new or revised Drawings provided by the Employer should be
Approved for Construction.
original designer and has a separate contract to provide design-related
services during the Works, it is recommended that these procedures still
be followed.
Any modification of the Employers design will necessitate that the Engineer
issue a Variation instruction to the Contractor. Depending on the
circumstance:
- If existing rates and prices of the Bill of Quantities (BoQ) are applicable to
the modified Works, a simple, written Variation instruction [see Section II4.1 Engineers Instructions] may be in order.
- If the scope of the Works is substantially affected, or if the Variation
requires new rates or prices to be negotiated for the modified works, it
may be necessary to valuate the Variation [see Section II-3.4 Valuation
of Variations] and issue a Variation Order [see Section II-3.5].
- Depending on the Contractors Programme for performing those parts of
the Works that would be affected by a potential design modification, it may
be necessary for the Engineer to suspend execution of those works [see
Section II-4.10 Works Suspensions]
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For comments and recommendations under a situation that the original

designer is no longer available to Employer, and a contractual option to
request a Contractors design proposal to overcome the Employers design
insufficiency, see Section II-5.8 above [Design Modifications arising from
Unforeseen Physical Conditions]
Having instructed a Variation, the Engineer then has to determine, subject to
the Contractors compliance with Contract procedures for claims [see Section
II-4.11 Claims: Contractors Claims], the Contractors entitlement to an
extension of the Time for Completion and/or additional Cost.
II-5.10
Review of Contractors Value Engineering Proposals

Recent forms of FIDIC contract (Sub-Clause 13.2 Value Engineering)
include provisions that:
The Contractor may, at any time, submit to the Engineer a written
proposal that (in the Contractors opinion) will, if adopted:
i) accelerate completion; and/or
ii) reduce the cost to the Employer of executing, maintaining or operating
the Works; and/or
iii) improve the efficiency or value to the Employer of the completed
Works; and/or
iv) otherwise be of benefit to the Employer.
The concept of Value Engineering, which could be applied also to older
forms of FIDIC contract, is more fully explained under Section II-3.6.
Recent FIDIC provisions [Sub-Clause 13.3 Variation Procedure] require that:
The Engineer shall, as soon as is practical after receiving such proposal
, respond with approval, disapproval or comments.
FIDICs recent Red Book [Sub-Clause 13.2] further provides that:
If a proposal, which is approved by the Engineer, includes a change in
the design of part of the Works, then unless otherwise agreed by both
Parties:
- the Contractor shall design this part;
- the Contractor shall submit to the Engineer the Contractors
Documents for this part ;
- these Contractors Documents [*] shall be in accordance with the
Specifications and Drawings, and shall include additional
information required by the Engineer to add to the Drawings for coordination of each Partys design;
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& Modifications
the Contractor shall be responsible for the part and it shall, when the
Works are completed, be fit for such purposes for which the part is
intended as are specified in the Contract; and
- prior to Test on Completion, the Contractor shall submit to the
Engineer the as-built documents and operation and maintenance
manuals in accordance with the Specification
[* Contractors Documents are defined as meaning calculations,
computer programs, and other software, drawings, manuals, models and
other documents of a technical nature to be supplied by the Contractor
under the Contract, and therefore includes documents relating to the
Contractors design.]
FIDIC General Conditions ascribe no design responsibility to the Engineer.

FIDICs recent Red and Yellow Book contracts (Sub-Clause 3.1(c) Engineers
Duties and Authority) state that:
Taking the above provisions into consideration, it is submitted that:
o The Contractor has full responsibility for execution and provision of design
for a Value Engineering proposal.
o While Sub-Clause 13.3 requires that the Engineer shall respond to a
Value Engineering proposal with approval, disapproval or comments,
that does not mean the Engineers approval, disapproval or comments;
but only that approval, disapproval or comments shall be conveyed to the
Contractor by the Engineer. The Engineer has no unilateral contractual
authority to approve a design change. The final acceptance or rejection of
a Value Engineering proposal is the Employers.
o The Engineer has no contractual duty to undertake a check of the
Contractors detailed design for a Value Engineering proposal.
It is likely, if a Value Engineering proposal requires a design change (which
the Contractor has to undertake), that the Contractor might not wish to
expend effort and cost of detailed design before getting approval in principle.
Under such circumstance he could request approval in principle based on
preliminary design and estimated cost savings. Approval in principle could
be subject to the Contractors later submission of detailed design and cost
evaluation.
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The following procedures are recommended:

If the Contractor submits a conceptual Value Engineering proposal to the
Engineer for approval in principle, the proposal should be sufficiently
detailed (albeit to a preliminary design level) to demonstrate its form and
estimated cost savings (or other benefit to the Employer). The Engineer
shall forthwith forward the Contractors proposal to the Employer, together
with any comment or recommendation of the Engineer. The Engineer
should request the Employers approval in principle, subject to the
Contractors submission of a detailed design submission or rejection, as
the case may be. The Engineer shall then convey this approval in principle
or rejection to the Contractor and, in the case of approval, request the
Contractor to submit his detailed design submission and cost evaluation.
On receipt of the Contractors detailed design submission and cost
evaluation, the Engineer shall forthwith forward the Contractors proposal
to the Employer, together with any comment or recommendation of the
Engineer. The Engineer should request the Employers approval,
disapproval or comments on the Contractors detailed submission. The
Engineer would then convey this approval, disapproval or comments to
the Contractor. In the case of comments, several submissions and
responses may be necessary until a definitive approval or disapproval is
given.
It is recommended that the Engineer, when conveying to the Contractor an
approval of a Value Engineering proposal, should qualify that notification with
such words as:
This approval of the Contractors Value Engineering proposal shall not be
interpreted as an approval of the Contractors design and shall not relieve
the Contractor of any responsibility for his design.
The law of the Contract may influence the above-recommended procedure. In
some countries the law requires that any change of an approved-forconstruction design shall be approved by the original designer. Under such
circumstance the Employer would have to secure this approval before he can
accept the Contractors Value Engineering proposal. And insofar as the
Engineer has a duty to administer the Contract in accordance with the law of
the Contract, he should, under such circumstance, require the Employer to
confirm the original designers approval. This would be applicable even if LBG
was the original designer
If approved, the design change would be effected as a Variation instructed
by the Engineer [see Section II-3.3]. Valuation of the changed works, for
purpose of determining the Contractors fee for the Value Engineering design
change, would be in accordance with Section II-3.4 Valuation of Variations.
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A Variation Order for the change would be required in accordance with

Section II-3.5.
II-5.11
Review of Contractors Shop Drawings

Shop drawings are drawings produced by the Contractor or, on his behalf, by
a subcontractor, supplier, manufacturer or fabricator. Typically shop drawings
are required for pre-fabricated components to be incorporated into the
Permanent Works, such as structural steelwork, metal work, roof trusses,
precast concrete, bar-bending schedules for concrete reinforcing bars, air
handling units, etc. Shop drawings may also be required for mechanical,
electrical and plumbing works, to provide installation details for metal
ductwork, piping, fire protection, electrical circuitry, etc.
FIDIC General Conditions do not contain any mention of shop drawings;
although it is possible that the Employers Requirements under a Yellow
Book (Design/Build) contract or the Specifications under a Red Book
(Construction) contract might include provisions for the preparation and
review of shop drawings. Such procedures, if included in the Contract, must
be followed. However, in the event that procedures are inadequately or not
prescribed in the Contract, the following recommendations are given.
Under a FIDIC-based Design/Build contract, for which the Contractor has
design responsibility for the whole of the Works, the Contractor is required to
design the Works in accordance with the Employers Requirements
embodied in the Contract. Procedures for the submission and review of the
Contractors Documents are required to have been specified in the
Employers Requirements [see Section II-5.2 Review of Contractors Design
under Design-Build Contract.] However, it is unlikely that the Employers
Requirements will have specified the Contractors submission for review (or
consent or approval) of his design to the detail of shop drawings. It is submitted
[see Section II-5.2] that the purpose of pre-construction review is to permit the
Engineer (and other Employers Personnel) to verify that the Contractors
design complies with the Employers Requirements and will be fit for use not
to check fabrication or installation details.
Thus, if a Design/Build contract does not prescribe the Contractors submission
and Engineers review of shop drawings (drawings so called, or fitting the
description of shop drawings) it is recommended that no such submission or
review need be done. The Contractor has full responsibility for his detailed
design and any delays or Costs arising from errors therein.
The foregoing comments also apply to elements of Contractors design (if any)
specified under a Construction contract (FIDIC Red Book).
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Under a Construction (FIDIC Red Book) contract, however, for which design
is provided by the Employer, the Contractors submission and Engineers
review of shop drawings would be required so that the Engineer can verify
(prior to fabrication or installation) that fabrication and/or installation details are
in accordance with the Employers Drawings and Specifications.
Shop drawings submissions must be adequately detailed to demonstrate
compliance with the Contract and jobsite conditions, including (as appropriate):
- Complete fabrication details.
- Design provision and instructions for transportation and handling (i.e.
operations for which design conditions will be different than those after final
incorporation into the Permanent Works).
- Dimensions to fit jobsite as-built details of works into which a fabricated
item is intended to be installed. For example: dimensions of a fabricated
bridge-deck expansion joint must fit the already constructed bridge deck
into which it is to be installed.
- Installation instructions, methodology and details. This may include
information on fasteners, adhesives and other necessary installation
materials, and any required Temporary Works.
- Manufacturers catalogues and specifications.
- Material samples, as may be required, say, for selection of colour or
texture finishes.
Review of the Contractors shop drawings must be performed by someone
who is thoroughly acquainted with the Contract Drawings and Specifications.
The Engineers on-Site supervision team may be able to review those
submissions which do not require a detailed knowledge and understanding of
the design. For example, bar bending schedules for concrete reinforcement
could be checked. So too might fabrication and installation details for a
proprietary expansion joint - if the Employers Drawings adequately specify
the required provision for expansion/contraction.
On the other hand, some shop drawing submissions will require a detailed
knowledge and understanding of the design on which the Contract Drawings
and Specifications were based. For example, shop drawings for structural
steelwork, including joint weld details. These submissions should be referred
to and reviewed by the Employers original designer.
It is recommended that the following procedure be adopted under a
Construction (FIDIC Red Book) contract:
The Engineer should require the Contractor to submit, for the Engineers
review, shop drawings for Permanent Works of items to be prefabricated
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or manufactured, and installation details for mechanical, electrical and

plumbing works.
All submissions shall be made by the Contractor, not by his
subcontractors, suppliers, manufactures or suppliers.
All the Contractors submissions shall be to the Engineer, and all
responses to the Contractor shall be by the Engineer.
All submissions, responses and notices shall be in writing.
For works that do not require a detailed knowledge and understanding of
the design, the Engineer shall review the submission for compliance with
Contract requirements and jobsite conditions and shall give to the
Contractor, copied to the Employer, notice (as appropriate) of the
Engineers:
- requirement to submit additional information.
- objection to the submission and the reasons it fails to comply with the
Contract or jobsite conditions; and requiring the Contractor to revise
and resubmit.
- no objection.
For works that do require a detailed knowledge and understanding of the
Employers design (which the Engineer does not have), the Engineer shall
forward the submission to the Employer, requesting that the Employer
refer it to the original designer to review its appropriateness with the
original design and Contract requirements.
If referring the submission to the Employer, the reference should state
clearly that the Engineer requires the Employers no-objection and/or
review comments before the Engineer can respond to the Contractors
submission. The reference might also include advice that unreasonable
delays by the Employer and his designer could entitle the Contractor to
extension of the Time for Completion and additional Cost.
Upon receipt of the Employers response, the Engineer shall respond
accordingly to the Contractor.
If the Employers design was prepared by designers engaged by the
Employer (the original designer), and if the Employer refers any of the
Contractors submissions to the original designer for review: the original
designers comments must be forwarded to the Employer, and
thenceforward by the Employer to the Engineer. This formal sequence
must be maintained for reason of contractual authority. Unless specifically
authorized under the Works Contract, the original designer has no
authority to communicate acceptance or rejection directly to the Engineer
and/or the Contractor.
If LBG was the original designer (under a contract separate from that under
which LBG is providing services of the Engineer), it is nevertheless
recommended that the Engineer maintain an arms-length relationship with the
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original designer. The Employer on receipt of advice from his original

designer, is still the decision maker. It is the Employer who must convey his
decision to the Engineer who then notifies the Contractor accordingly. Of
course, that is not say that LBG/ the Engineer and LBG/ the original
designer could not communicate informally and share information.
FIDICs recent Red and Yellow Book contracts (Sub-Clause 3.1(c) Engineers
Duties and Authority) state that:
Notwithstanding that Contract provision, in the above recommendations the
term no objection is used for the Engineers notices of response to the
Contractor. This is to avoid using such terms as consent or approved,
approved as noted and disapproved which could, under the law of the
Contract, be interpreted as attributing some professional liability to the
Engineer.
If the Contract contains provision that the Engineers consent or approval
is required of shop drawings, it is recommended that the Engineers notice to
the Contractor include such words as:
ascertain the general suitability of the Contractors submission and its
general compliance with the Contract. This approval [*] shall not be
interpreted to imply the Employers or Engineers approval of the
Contractors submission and shall not relieve the Contractor of any
responsibility for his errors, omissions, discrepancies and noncompliances.
[approval or consent, as appropriate]
II-5.12
Engineers Authority to Instruct Design Modifications

Any design change instructed by the Engineer will constitute a Variation,
either to the Employers Requirements for the Contractors design (as stated
in the Contract) or to the Employers design (as described in the Contract
Drawings and Specifications). [See Section II-3.3 Variations]
As submitted in previous sections of this chapter: standard forms of FIDIC
Design/Build (Yellow Book) or Construction (Red Book) contracts ascribe no
design responsibility to the Engineer. FIDIC recognizes that design (and/or
the Employers requirements for the Contractors design) is provided by the
Employer although the design may have been performed, on the
Employers behalf, by designers (the original designer) engaged by the
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& Modifications
Employer for that purpose prior to the procurement phase of the subject
Contract. And the Engineer has no authority to make changes to the design
(Employers Requirements, Drawings or Specifications) without preauthorization by the Employer, whose design it is and who carries
responsibility for it.
It is possible that the entity providing services of the Engineer during the
Works Contract was also the original designer. But FIDIC does not need to
accommodate such situation, because it is the Employers prerogative, during
the Works Contract, to prepare or agree to any design changes
recommended by his original designer and the Employer would then instruct
the Engineer, who would then instruct the Contractor accordingly.
Under standard forms of FIDIC contract, all instructions are given to the
Contractor through and by the Engineer. Thus, any instructions of design
change given by the Engineer to the Contractor could, unless procedural
safeguards are implemented, reasonably be deemed by the Contractor to be
valid instructions authorized by the Employer.
The Engineer must be careful to tightly control his delegation of
authorities (to the Engineers staff) to issue instructions of design
change Variations to the Contractor. [See Section II-2.2 Engineers
Delegation of Duties & Authorities]
It is recommended that:
Delegated authority to instruct design-change Variations should be
severely restriction (as suggested in Appendix Q) to the person
designated as acting on behalf of the Engineer (the Engineers
Representative under older FIDIC contracts). If the Engineers Site staff
includes another suitably experienced person (say, a person holding the
title of Contracts Engineer or Chief Quantity Surveyor), the authority
could be extended.
The Contractor must be informed in writing (copied to the Employer) of
this limited delegation, and that instructions of Variations (including those
relating to design modifications) shall be valid only if instructed in writing
signed by a duly authorized person. The notice should state that any
instruction, in writing or oral, given by any unauthorized member of the
Engineers staff, shall be null and void until and unless confirmed in
writing by and under the signature of a duly authorized person.
The Engineers decision, whether or not a design modification needs to be
referred by the Engineer to the Employer for resolution, shall be taken only
by a person delegated authority to instruct Variations.
Whether or not a design modification needs to be referred by the Engineer to
the Employer (and onward by the Employer to his original designer) for
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resolution, will depend on the circumstance, for which the Engineers common
sense and discretion will be required.
The following examples under a FIDIC Red Book contract [as also presented
in Section II-5.8 Design Modifications arising from Unforeseen Physical
Conditions] may help:
- For a change in length of a drainage culvert (to suit ground terrain) whose
structural and hydraulic design is otherwise unaffected, it would not be
necessary to refer the matter to the Employer.
The Variation could be instructed by a simple Engineers instruction [see
Section II-4.1 Engineers Instructions] with an attached sketch. If no new
pay items of the Bill of Quantities (BoQ) are required and the change in
quantities of the modified works will not be significant, there would be no
necessity to valuate the Variation [see Section II-3.4 Valuation of
Variations] and issue a Variation Order [see Section II-3.5]. Work
quantities will be subject to measurement [see Section II-3.8
Measurement of the Works].
- But for a change in the cross-sectional dimensions or longitudinal gradient
of a culvert (to suit ground terrain), which modifications could affect the
culverts structural integrity or hydraulic performance, the Engineer must
refer the matter to the Employer (and onward to his original designer, as
appropriate) for resolution.
Depending on the criticality of the subject culvert works within the
Contractors Works Programme, the Engineer may need to suspend
execution of those works [see Section II-4.10 Works Suspensions] until a
design solution is resolved. The design modification might necessitate
new or revised Drawings to be provided (through the Employer) by the
original designer, which the Engineer would issue as an attachment to his
instruction of the Variation.
If the design is so substantially modified that the works are not adequately
covered by existing BoQ items, new pay items may have to be negotiated
with the Contractor [see Section II-3.4 Valuation of Variations] and a
formal Variation Order will be advisable [see Section II-3.5].
The requirement for a Variation, either to the Employers Requirements of a
Design/Build (FIDIC Yellow Book) contract or to the Employers design of a
Construction (FIDIC Red Book) contract, will have arisen from:
a) an initiative of the Employer; or
b) a notification of need from the Contractor; or
c) a discovery of need by the Engineer.
In the case of (b), a notification from the Contractor, the recommended
procedures for referring that notification to the Employer are presented
under Sections:
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II-5.5: Employers Requirements for Contractors Design: Contractors

Notices of Faults or Requests for Clarification
II-5.6: Modification of Employers Requirements for Contractors
Design
II-5.9: Employers Design: Contractors Notices of Faults or Requests for
Clarification, & Design Modifications arising therefrom
In the case of (c), a discovery by the Engineer, the Engineer should follow
procedures similar to those recommended in Sections II-5.5,
II-5.6 and II-5.9.
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II-5: DESIGN REVIEWS & MODIFICATIONS - CHECK LIST

Guideline
II-5.1
II-5.2
II-5.3
II-5.4
II-5.5
II-5.6
II-5.7
Requirement
Check
Contractual Responsibility for Design:
Type of Contract:
FIDIC old (<1999) Yellow Book (Contractor's Design)? Or
FIDIC recent (1999) Yellow Book (Contractor's design)? Or
FIDIC old (<1999) Red Book (Employer's Design)? Or
FIDIC recent (1999) Red Book (Employer's design)? Or
Other?
Review of Contractor's Design under Design-Build Contract:
[FIDIC Yellow Book ]
'Employer's Requirements' included in Contract?
'Employer's Requirements' adequately specify 'Contractor's
Documents' to be submitted to Engineer for review?
'Employer's Requirements' require Engineer's "Approval" of any
'Contractor's Documents'?
Procedure established for review of design?
Procedure established for response to Contractor after review?
Need for Engineer to qualify "Approval" or "Consent" in response?
Review of Contractor's Design under Construction Contract:
[FIDIC Red Book with elements of Contractor's design - If applicable ]
Employer's requirements for Contractor's design included in
Contract Specifications/Drawings?
Employer's requirements adequately specify design documents
to be submitted to Engineer for review?
Employer's Requirements require Engineer's "Approval" of any
of Contractor's design submissions?
Co-ordination of Employer's & Contractor's Designs:
[FIDIC Red Book with elements of Contractor's design - If applicable ]
Procedure established for review of compatibility of Employer's
and Contractor's designs?
Employer's design prepared by others (original designer)?
Conflict between Contractor's design and Employer's design?
Conflict not possible to resolve by Contractor?
Need for Employer to refer conflict to his original designer?
Need for modifications to Employer's design?
Procedure for conveying design modifications to Contractor?
Need for 'Variation'?
Employer's Requirements for Contractor's Design Contractor's Notices of Faults or Requests for Clarification:
[FIDIC Yellow Book, or FIDIC Red Book with elements of Contractor's
design ]
Who prepared Employer's requirements for Contractor's design?:
Employer himself?
LBG on behalf of Employer?
Other entity on behalf of Employer?
Does LBG or other entity have contract with Employer to resolve
and respond to Contractor's notices or requests?
Depending on above 'checks', procedures established for
responding to Contractor's notices or requests?
Modification of Employer's Requirements for Contractor's Design:
[FIDIC Yellow Book, or FIDIC Red Book with elements of Contractor's
design ]
Depending on above 'checks' in II-5.5, procedures established for
making necessary modifications to Employer's requirements
for Contractor's design, and for instructing Contractor?
Design by Nominated Subcontractors under Provisional Sums:
[FIDIC Red Book - if Nominated Subcontractor required, and if that
Nominated Subcontractor required to perform design ]
Employer's requirements for Nominated Subcontractor's design
included in Contract Specifications/Drawings?
Employer's requirements adequately specify design documents
to be submitted (by Contractor) to Engineer for review?
Employer's requirements require Engineer's "Approval" of any
design submissions?
Comment
August 2011
Guideline
II-5.8
II-5.9
II-5.10
II-5.11
II-5.12
Requirement
Check
Design Modifications arising from Unforeseen Physical Conditions:
[FIDIC Yellow Book or Red Book ]
Has Contractor given notice of unforeseeable Site conditions that
require modification of the Employer's requirements for
Contractor's design, or of the Employer's design?
Engineer determines if unforeseen conditions were foreseeable by
an experienced contractor.
Variation may need to be instructed if unforeseen condition
necessitates modification of Employer's requirements for
Contractor's design or of Employer's design.
Should Employer refer to original designer to determine if
unforeseen condition requires modification of Employer's
requirements, or of Employer's design?
Contractor's entitlement to extension of Time for Completion and/or
additional payment depends on Engineer's determination of
whether unforeseen condition was unforeseeable.
Employer's Design: Contractor's Notices of Faults or Requests
for Clarification, & Design Modifications arising therefrom:
[FIDIC Red Book only]
Who prepared Employer's design?:
Employer himself?
LBG on behalf of Employer?
Other entity on behalf of Employer?
Does LBG or other entity have contract with Employer to resolve
and respond to Contractor's notices or requests?
Depending on above 'checks', procedures established for
responding to Contractor's notices or requests?
Review of Contractor's Value Engineering Proposals:
[Recent (1999) FIDIC Red or Yellow Book - but could be applied to
old (<1999) FIDIC]
Value Engineering provisions included in Contract?
Red Book: Provision for Employer/Contractor shared benefit of
cost saving?
Yellow Book: No provision for shared benefit of cost savings.
Value Engineering conceptual proposal submitted by Contractor
for Engineer's "approval in principle"?
Value Engineering detailed proposal submitted by Contractor
for Engineer's "approval"?
Employer's "no objection" required before Engineer can
convey approval to Contractor.
Employer should refer Value Engineering proposal to his
original designer.
Engineer must qualify meaning of "Approval" in positive response
to Contractor.
Review of Contractor's Shop Drawings:
[FIDIC Red Book. Would apply to FIDIC Yellow Book only if
specifically required by 'Engineer's Requirements'] .
Contract contains provisions for Contractor's submission of
Shop Drawings?
Red Book: Shop Drawings, for any prefabricated components of
Permanent Works, required to be submitted to Engineer for
review, to ensure compliance with Employer's design.
Shop Drawings to be submitted by Contractor - not by his
subcontractors of suppliers.
Engineer can review Shop Drawings of works that do not require
detailed knowledge of Employer's design, to verify compliance
with Contract specifications and jobsite conditions.
Shop Drawings of works requiring detailed knowledge of the
Employer's design must be referred to Employer (for
onward referral to original designer, if appropriate).
Procedures established for review of Shop Drawings, including
adoption of review comments: (e.g. "Submit additional
information", "Revise & resubmit", "No objection")?
If Contract requires Engineer's "approval" or "consent" in response
to Shop Drawing submissions, provide disclaimer of those terms.
Engineer's Authority to Instruct Design Modifications:
[FIDIC Yellow Book or Red Book ]
Engineer has no authority, without the Employer's
pre-authorization, to modify Employer's Requirements for
Contractor's design, or to modify Employer's design.
However, if Engineer instructs the Contractor of such modification,
Employer's pre-authorization is deemed to have been given.
Engineer always obtains Employer's authorization to instruct
Variation to modify Employer's Requirements for Contractor's
design, or to modify Employer's design?
Engineer has tightly controlled delegation of authorities (to
Engineer's staff) to instruct design changes to Contractor?
Comment
August 2011

II-6.
II-6: Taking Over the Works
TAKING OVER THE WORKS

This Chapter describes the obligations of the Contractor, Employer and
Engineer (under FIDIC Conditions of Contract) in respect of the Employer
taking over the Works when they have been substantially (or fully) completed
by the Contractor; including:
o Determination of when the Works, or Sections or parts thereof, have been
completed.
o Issuing a Taking-Over Certificate to the Contractor this establishes the
start date of the Defects Notification Period.
o Inspection of the Works at completion, and notification of remaining work
to be completed, or defects rectified, during the Defects Notification
Period.
o The Contractors submission of a Statement at Completion whereby he
must claim all payment entitlements to which he believes himself entitled
(or will become entitled) under the Contract or otherwise.
o Interim payment certification at completion by the Engineer, and payment
by the Employer.
II-6.1
Substantial Completion
Most contracts, including standard forms of FIDIC contract, provide that a
Taking-Over Certificate shall be issued when the whole of the Permanent
Works (or Sections or parts thereof) have been substantially completed.
The Contract must be read carefully. Some standard forms of contract might
have been modified (by Particular Conditions) to require that a Taking-Over
Certificate shall not be issued:
- until the whole of the Works have been completed;
- until the Works (or a Section or part thereof) have been fully completed
(perhaps simply by the removal of the word substantially);
- until statutory procedures and requirements for taking-over the Works (or
hand-over) have been satisfactorily performed [see Section II-2.21
Compliance with Local Law].
Even if the Contract permits the Works (or Sections or parts thereof) to be
taken over upon substantial completion, the Contract might impose specific
requirements to be met, such as:
- the Contractor shall have satisfactorily completed any Tests on
Completion prescribed by the Contract;
- the Contractors submission of As-built Drawings;
August 2011
II-6 /1

in contracts where the Contractor is responsible for designing any part of

the Works, the Contractors submission of acceptable Operations &
Maintenance Manuals.
Otherwise, the lack of contractual definition of substantial might require

clarification and agreement between the Parties and the Engineer.
Substantial completion is typically taken to mean a sufficient degree of
completion to enable the Employer to make beneficial use of the works
concerned. Its meaning should also include requirement for the works to be
completed to the extent that they may be used safely by the Employer (and, if
relevant, by the public), that they do not need thereafter to be closed or shut
down for the purpose executing remaining works, and that remaining works
by the Contractor will not affect the Employers care and maintenance of the
works.
An example may be helpful, in regard to a road or highway construction
contract. It would be reasonable to expect substantial completion to include
all carriageable roadways including all public accesses, lay-bys, road
markings and safety/road signs, and that the correction of any identified
defects will not require closure (except as the Employer may accept) of the
roadways. The completion of remaining works during the Defects Notification
Period could reasonable be permitted of, say, off-road bridgeworks
completion, planting/grassing works to road embankments, or right-of-way
fencing.
Before issuing a Taking-Over Certificate or rejecting the Contractors request
thereof, the Engineer should:
consult with the Employer and Contractor to determine what the Employer
will accept as substantial completion (which should be reasonable in
accordance with the Contract).
II-6.2
All contracts will contain provisions for handing over the Works by the
Contractor to the Employer when the Works have been completed. In FIDIC
terminology the Works are Taken-Over by the Employer when the Engineer
issues a Taking-Over Certificate to the Contractor.
The General Conditions of FIDIC forms of contract state that when the whole
of the Permanent Works (or a Section or part thereof) has been substantially
completed the Contractor may give notice to the Engineer for a Taking-Over
Certificate. Thus, it is not a requirement for the Contractor to give notice. At
his discretion the Engineer can issue a Taking-Over Certificate without the
Contractors notice of request; but, it is recommended, should only do so with
August 2011
II-6 /2

the Employers written concurrence. However, if a notice has been served by

the Contractor, the Engineer must act within a prescribed time, as described
below.
Taking-Over Certificate for the Whole of the Works
The issuing of the Taking-Over Certificate for the whole of the Permanent
Works is a significant event. The date on which the Certificate is issued is the
date from which:
o responsibility for care and maintenance of the Works passes from the
Contractor to the Employer;
o the Contractors obligation to insure the whole of the Works becomes
limited to insuring against loss or damage arising from causes occurring
prior to the Defects Notification Period;
o a portion (50% under FIDIC contracts) of the Retention Money held by the
Employer is paid to the Contractor [see Section II-3.11 IPCs: Payment of
Retention Money] less the value of works remaining to be completed or
defects rectified, as assessed by the Engineer;
o time begins to run for the Contractors submission of a Statement at
Completion [see Section II-6.4 Contractors Statement at Completion].
The date of substantial completion stated in the Certificate is that from which:
o the Employers entitlement (if any) to Delay Damages ends [see Section
II-4.14 Liquidated Damages];
o the Defects Notification Period (for those Works for which Taking-Over
Certificates have not previously been issued for Sections or parts of the
Works) starts to run.
Standard forms of FIDIC contract provide that when:
- the whole of the Works have been substantially completed, and
- the Works have satisfactorily passed any Tests on Completion
prescribed by the Contract:
o The Contractor may give notice to that effect to the Engineer;
The Engineer shall within a prescribed period:
either - issue a Taking-Over Certificate stating the date on which,
in his opinion, the Works were substantially completed in
accordance with the Contract;
or
- give written instruction to the Contractor specifying all the
work which, in the Engineers opinion, is required to be
done by the Contractor before the issue of such Certificate.
August 2011
II-6 /3


o do not place any time restriction on when the Contractor may give to the
Engineer a notice of Works completion and request a Taking-Over
Certificate;
o require that the notice include a written undertaking to finish with due
expedition during the Defects Liability Period [*] any outstanding work
and correction of defects;
[*so called under older forms of FIDIC contract equivalent to Defects
Notification Period under recent FIDIC]
o require the notice to be copied to the Employer;

require the Engineer to respond to the Contractor (as aforesaid) within 21
days of receipt of the Contractors notice;
o provide that the Contractor is entitled to receive a Taking-Over Certificate
within 21 days after completion of the Works to the Engineers
satisfaction.
o require that the Contractor may give notice not earlier than 14 days before
the date on which he believes the Works will be completed and ready for
taking over;
o do not require that the notice include a written undertaking to finish with
due expedition during the Defects Notification Period any outstanding
work and correction of defects (although this would be desirable);
o do not require the notice to be copied to the Employer;
require the Engineer to respond to the Contractor (as aforesaid) within 28
days of receipt of the Contractors notice;
o provide that if the Engineer fails to respond within 28 days of receipt of the
Contractors notice, and the Works are substantially completed, the
Taking-Over Certificate shall be deemed to have been issued on the last
day of that period;
o provide that if the Engineers response to a Contractors notice is to
decline to issue a Certificate until specified works are completed, then the
Contractor is required to complete those specified works before submitting
a further notice of request for a Taking-Over Certificate.
Taking-Over Certificates for Sections and/or Parts of the Works
Standard forms of FIDIC contract permit the Taking-Over of Sections or
parts of the Permanent Works before a Taking-Over Certificate is issued for
the whole of the Works, as follows:
o any Section identified in the Contract as a Section (whether or not a
separate Time for Completion is provided in the Contract for such
Section); or
August 2011
II-6 /4

o any part of the Permanent Works which has been completed to the
satisfaction of the Engineer (older forms of FIDIC contract require the
part to be a substantial part of the Works); or
o any part of the Permanent Works which the Employer has elected to
occupy or use prior to completion (where such prior occupation or use is
not provided for in the Contract or has not been agreed by the Contractor
as a temporary measure).
The procedures for Taking-Over a Section or part of the Works is the same as
those for the whole of the Works, except that:
o responsibility for care and maintenance of only the Section or part of
Works passes from the Contractor to the Employer;
o under recent forms of FIDIC Contract, the portion of retention money to be
paid to the Contractor (upon issue of the Taking-Over Certificate for a
Section or part of Works) is only 40% of the proportional value of the
works of the Section compared to the estimated value of the whole of the
Permanent Works.
[Under older forms of FIDIC contract, the portion is 50%.]
Insofar as the Contractor may be keen to reduce his responsibility and liability
by handing over parts of the Works as soon as possible, he might try to handover small, and possibly non-contiguous, parts of the Works as he completes
them. It is submitted that this would be unreasonable. For example,
completion of a single minor bridge or small intersection on a 50km road
construction contract should not be considered for Taking-Over as a part of
the Works; although a major interchange might. Before considering to issue a
Taking-Over Certificate for a part of the Works, the Engineer should:
consult with the Employer and Contractor to determine what parts of
Permanent Works will reasonably be taken-over.
The date on which a Taking-Over Certificate is issued for a Section or part of
the Works is the date from which:
o responsibility for care and maintenance of that Section or part of the
Works passes from the Contractor to the Employer;
o a portion (*) of the Retention Money, based on the value of the taken-over
works relative to the total estimated final value of the whole of the
Permanent Works, is paid by the Employer to the Contractor (*50% under
older forms of FIDIC contract, or *40% under recent forms of FIDIC
contract) [see Section II-3.11 IPCs: Payment of Retention Money].
The date of substantial completion stated in the Certificate is the date from
which:
o the Employers entitlement to per diem Delay Damages is reduced in the
proportion that the value of the part of works certified as completed bears
August 2011
II-6 /5

to the estimated final value of the Works, but this reduction of entitlement
to per diem damages does not affect the stipulated maximum amount of
damages [see Section II-4.14 Liquidated Damages];
o the Defects Notification Period starts to run for the Section or part of the
Works certified as completed.
Form of Taking-Over Certificate
The Taking-Over Certificate may be a simple letter of certification to the
Contractor. However, some Employers may have a standard format of
Certificate that they wish to be used. The Engineer should consult with the
Employer to determine the form of the Certificate to be used.
Examples of Taking-Over Certificates are presented in Appendix O.
In the event that remaining works and/or defects corrections are permitted to
be completed during the Defects Notification Period, a Snag List of such
works and defects should be referenced in the Taking-Over Certificate and
appended thereto.
II-6.3
Inspection at Completion & Snag List

There is no mechanism under standard forms of FIDIC contract for listing the
outstanding works to be completed or defects to be corrected prior to or after
issuing a Taking-Over Certificate.
Upon receipt of a Contractors notice of substantial (or full) completion of the
Works (or a Section or part thereof) and request for a Taking-Over Certificate,
it is recommended that the Engineer:
give notice to the Contractor (copied to the Employer) of an inspection of
the subject works on or near the date that the Contractor has advised that
those works will be completed and ready for taking-over;
invite the Employer to participate in the inspection;
based on the inspection, prepare a list of works remaining to be completed
or identified defects to be corrected (commonly called a Snag List or
Punch List).
If the list of remaining works and/or defects corrections is, in the Engineers
and Employers opinion, too extensive for a Taking-Over Certificate to be
issued, the Engineer must notify the Contractor how much of those works and
defects corrections must be completed before a Taking-Over Certificate will
be issued. In this case the Engineer should require the Contractor to submit a
further notice of request for a Taking-Over Certificate after he has completed
August 2011
II-6 /6

those required works; following which the Engineer should give notice of the
date for a further inspection to confirm completion of those works.
The list of remaining works and defects corrections that the Contractor is
permitted to complete during the Defects Notification Period (commonly called
a Snag List or Punch List) should be prepared by the Engineer and
appended to the Taking-Over Certificate as a record of what the Contractor
has undertaken to finish with due expedition during the Defects Notification
Period.
II-6.4
Contractors Statement at Completion

Under standard forms of FIDIC contract:
o The Contractor shall, within a prescribed period (*) after the Taking-Over
Certificate has been issued for the whole of the Works (*56 days under
older forms of FIDIC contract, *84 days under recent forms of FIDIC
contract), submit to the Engineer a Statement at Completion with
supporting documents showing in detail, in a form approved by the
Engineer:
a) the value of all work done in accordance with the Contract up to the
date of substantial completion stated in the Taking-Over Certificate;
b) any further sums which the Contractor considers to be due;
c) an estimate of amounts which the Contractor considers will become
due to him under the Contract, with the estimated amounts shown
separately.
The form and detail of the Contractors Statement at Completion should be as
already established, as approved by the Engineer, for the Contractors
previous Monthly Statements (or, in recent FIDIC terminology Applications for
Interim Payment Certificates) [see Section II-3.10 Contractors Interim
Payment Statements]. However, guidance might be required in respect of
items (b) and (c).
b) Further sums which the Contractor considers to be due:
This section of the Contractors Statement at Completion should contain
under separate headings, with supporting documents:
o The value of work done after the date of substantial completion stated
in the Taking-Over Certificate for the whole of the Works.
o Amounts of other payments the Contractor considers due including:
- payment of the portion of Retention Money due after issue of
Taking-Over Certificate [see Section II-3.11 IPCs: Payment of
Retention Money and Section II-6.2 above];
August 2011
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interest (financing charges) entitlements (if any) under the Contract

arising from the Employers previous late payments [see Section II3.13 Delayed Payments: Interest];
price adjustment in accordance with Price Adjustment Formula (if
any) [see Section II-3.11 IPCs: Price Adjustments];
price adjustment arising for change in Law (if any) [see Section II3.11 IPCs: Price Adjustments];
additional payment entitlements arising from previous claims for
which the Engineer has rendered determinations that have not
been disputed by the Parties;
additional payment entitlements arising from binding (non-disputed)
decisions by an Engineers Decision, a Dispute Adjudication
Boards Decision or an arbitral award;
any amounts for which the Parties have made settlement
agreements in respect of any claims;
any damages due from one Party to the other under the Contract,
or otherwise mutually agreed, arising from default or breach of
contract;
bonus for early completion (if prescribed by the Contract).
c) Estimate of amounts which the Contractor considers will become

due under the Contract:
This section of the Contractors Statement at Completion should contain
under separate headings, with supporting documents:
o The estimated value of works remaining to be completed during the
Defects Notification Period (including the value of defective works to be
corrected in respect of which payment has been withheld).
o Price Adjustment in respect of works completed during the Defects
Notification Period [see Section II-3.11 IPCs: Price Adjustments].
o Payment of the remaining portion of Retention Money due upon expiry
of Defects Notification Period [see Section II-3.11 IPCs: Payment of
Retention Money].
o Additional payments the Contractor considers will become due,
including in respect of:
- previous claims yet to be determined by the Engineer;
- previous claims for which the Engineers determination has been
disputed but the dispute has yet to be resolved;
- previous claims for which an Engineers Decision or Dispute
Adjudication Boards Decision has been disputed and awaits
amicable settlement or has been referred to arbitration;
- claims yet to be submitted.
August 2011
II-6 /8

In standard forms of FIDIC contract the clause entitled Cessation of

Employers Liability unequivocally states that (paraphrased):
The Employer shall not be liable to the Contractor for any matter or
thing under or in connection with the Contract or execution of the
Works, except to the extent that the Contractor shall have included an
amount expressly for it (except for matters or things arising after the
issue of the Taking-Over Certificate for the Works) in the Statement of
Completion.
In other words: if the Contractor doesnt claim it in his Statement at
Completion - he loses it.
II-6.5

Engineers IPC at Completion
The Engineer shall, within 28 days after receipt of the Contractors
Statement at Completion, certify to the Employer the amount of payment
to the Contractor which he considers due and payable.
The Certificate should be prepared as previous Interim Payment Certificates
(IPCs) [see Section II-3.11].
Notwithstanding that the Contractors Statement at Completion contains
Estimates of amounts which the Contractor considers will become due
under the Contract,
the Engineers IPC at Completion shall certify for payment only those
amounts (which should be detailed separately in the Contractors Statement)
that he considers due to the Contractor for works already acceptably
completed and other payment entitlements:
- to the date of substantial completion stated in the Taking-Over Certificate
for the whole of the Works;
- after the date of substantial completion stated in the Taking-Over
Certificate for the whole of the Works (as may have been included in the
Contractors Statement at Completion).
An example of format for an IPC at Completion is presented under Appendix
M.
Supplementary Report to IPC at Completion
The purpose of the Contract provision requiring the Contractor to include in
his Statement at Completion a detailed estimate of amounts he considers will
become due to him under the Contract, is to inform the Employer of his
August 2011
II-6 /9

remaining potential payment liability under the Contract. However, the

Contractor, in the knowledge that he could lose payment entitlement unless
he includes everything he can think of in his Statement, might load his
Statement in respect of currently unsettled claims and/or matters currently in
dispute.
The Engineer may disagree with what the Contractor, in his Statement at
Completion, has estimated will become due him. Although the Engineer does
not need to deal with this issue at the time of issuing the IPC at Completion,
he should (in his position also as faithful Consultant to the Employer) advise
the Employer of what, in his opinion, may or may not become the Employers
final payment liability to the Contractor. It is recommended that the Engineer
submit to the Employer, together with or as soon as possible after issue of the
IPC at Completion, a Supplementary Report to Statement at Completion.
The Supplementary Report to Statement at Completion should be the
Engineers estimate of the Employers final payment liability to the Contractor,
including:
payments due to the Contractor in respect of works completed up to the
completion date stated in the Taking-Over Certificate and included in the
IPC at Completion;
payments due to the Contractor in respect of works completed after the
completion date stated in the Taking-Over Certificate and included in the
IPC at Completion;
payments that are known will become due to the Contractor (e.g. payment
of final portion of Retention Money upon expiry of the Defects Notification
Period);
an estimate of the value of remaining works yet to executed during the
Defects Notification Period (including current payment withholdings in
respect of defects to be rectified);
an estimate of potential payment liability in respect of outstanding
Contractors claims and disputes (which should be itemized separately
with an explanation of the basis for each estimate);
the Employers entitlement (if any) to Delay Damages [see Section 4.14
Liquidated Damages].
A summary of this estimate should be prepared in tabular format. An example
of such tabular format is presented in Appendix G Construction Completion
Report. It is recommended that the Supplementary Report to Statement at
Completion also be included as an appendix to LBGs Construction
Completion Report [see Section I-3.8 Project Reports].
August 2011
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II-6.6
Interim Payment at Completion

General Conditions of older forms of FIDIC contract require that the
Employer shall make the Interim Payment at Completion within 28 days after
the date of his receipt of the Engineers Interim Payment Certificate at
Completion.
General Conditions of recent forms of FIDIC contract require that the
Employer shall make the Interim Payment at Completion (based on the
Engineers Interim Payment Certificate at Completion) within 56 days after the
date of the Engineers receipt of the Contractors Statement at Completion.
August 2011
II-6 /11
II-6: TAKING OVER THE WORKS - CHECK LIST

Check
II-6.1 Substantial Completion:
Does Contract prescribe 'Substantial' or 'Full' Completion before
Taking-Over Certificate can be issued?
For Substantial Completion:
Consult with Employer & Contractor to define 'Substantial' what works can be completed during Defects Liability Period?
Any statutory requirements (local Law) affecting Taking Over?
Works have satisfactorily passed Tests on Completion (if any)
Contractor has submitted As-Built Drawings (if required)
Contractor has submitted Operating/Maintenance Manuals (if any)
II-6.2 Taking-Over Certificate (TOC):
Agree format of TOC with Employer
Contractor request for TOC
Snag List (of works remaining to be completed & defects to be
rectified during Defects Notification Period) attached to TOC
Issue TOC within prescribed time of receipt of Contractor's request
(failing which TOC will be deemed to have been issued)
TOCs issued for Sections or parts of Works
II-6.3 Inspection at Completion & Snag List:
Inspection of Works to record works remaining to be completed &
defects rectified during Defects Notification Period (Snag List)
II-6.4 Contractor's Statement at Completion:
Must claim under separate headings:
Value of Works completed to date of Taking-Over Certificate
Further sums which the Contractor considers to be due
Estimates of amounts Contractor considers will become due
(failing which the Contractor will lose entitlement)
II-6.5 Interim Payment Certificate at Completion:
Check Contract provisions for IPC at Completion
Prepare IPC at Completion including:
Value of Works completed to date of Taking-Over Certificate
Value of Works completed after date of Taking-Over Certificate
(as may be included in Contractor's Statement)
Payment of permitted portion of Retention Money
Other payment entitlements:
Price Adjustment for change in Law
Price Adjustment according to Price Adjustment Formula
Other adjustments of Contract Price if prescribed by Contract
Amounts in respect of Claim settlements /determinations
Interest (Financing Charges) if claimed by the Contractor
Deductions:
As agreed for acceptance of non-complying work
Delay Damages (if Employer instructs to be certified)
Prepare /submit to Employer Supplementary Report to give:
Reasons for any disagreement with Statement at Completion
Engineer's estimate of Employer's further payment liabilities
Engineer's estimate of final cost to Completion
Submit IPC within time prescribed in Contract
II-6.6 Interim Payment at Completion:
Advise Employer of time prescribed in Contract for payment
Comment
August 2011

II-7.
II-7: Defects Notification Period

& Contract Completion
DEFECTS NOTIFICATION PERIOD

& CONTRACT COMPLETION
This Chapter describes the obligations of the Contractor, Employer and
Engineer during and at the end of the Defects Notification Period (called
Defects Liability Period under older forms of FIDIC contract) in order to bring
a Works Contract to a successful conclusion, including:
o Completion of remaining works and rectification of defects.
o Engineers inspections and notification of newly identified defects.
o Costs of rectifying defects and damage.
o Remedies for Contractors non-performance during the Defects
Notification Period.
o Extension of the Defects Notification Period.
o Final acceptance of the Works.
o Issuing a Performance Certificate (called Defects Liability Certificate
under older forms of FIDIC contract).
o Contractors clearance of Site.
o Contractors submission of Final Statement and Discharge.
o Engineers Final Payment Certificate.
o Employers Final Payment.
II-7.1

In recent forms of FIDIC contract, Defects Notification Period is defined
as meaning the period named in the Appendix to Tender (typically 12 months
but sometimes longer) for notifying defects, calculated from:
a) the date of completion of the Works certified by the Engineer in the
Taking-Over Certificate for the whole of the Works; or
b) in the event of more than one Taking-Over Certificate having been issued
(i.e. for Sections or parts of the Works), the respective dates so certified.
Under older forms of FIDIC contract it is similarly defined but called the
Defects Liability Period.
The expression Defects Notification Period emphasises the administrative
requirement for notification of defects, rather than only the Contractors
responsibility implied by Defects Liability Period.
In these Guidelines the expression Defects Notification Period (DNP) is
used, but should be read as being synonymous with Defects Liability Period.
August 2011
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II-7.2

Completion of Remaining Works & Rectification of Defects

If a Taking-Over Certificate was issued for Substantial Completion [see
Section II-6.1] of the Works (or a Section or part thereof), the Contractor is
required to complete any remaining works with due expedition during the
respective Defects Notification Period (DNP) applicable to those works taken
over.
The Contractor is also required to rectify, with due expedition during the DNP,
any defects notified by the Engineer to the Contractor before the DNP
commenced.
Those remaining works and previously notified defects should have been
identified in a Snag List (of remaining works and defects) appended to the
Taking-Over Certificate [see Section II-6.3 Inspection at Completion & Snag
List].
In addition, the Contractor is required to rectify, with due expedition during the
DNP, any defects which become manifest during the DNP and are notified by
the Engineer to the Contractor. Insofar as some defects might not be
identified until a final inspection at the end of the DNP, the Contractor is
required to rectify such defects as soon as possible after expiry of the DNP
(older forms of FIDIC contract require rectification within 14 days after its
expiry).
II-7.3
Inspections & Notification of Defects

Inspections of the Works will be necessary during the Defects Notification
Period(s) (DNP) to:
Check (and, if necessary, measure) remaining works completed during the
DNP.
Check that defects notified in the Snag List appended to the Taking-Over
Certificate have been acceptably rectified.
Identify any defects that become manifest during the DNP.
The Contractor must be formally notified of defects identified during the DNP
which he is required, and thereby instructed, to rectify. It is recommended
that:
Any instruction given by the Engineer should state the time within which
the Contractor is expected to correct the notified defects. The stated time
may be immediate in case of emergency, but should otherwise be
reasonable. Such statement of time limitation may later affect the
Employers remedies in the event of the Contractors non-compliance [see
August 2011
II-7 /2


Section II-7.5 Remedies for Non-Performance in Defects Notification

Period]
Older forms of FIDIC contract place responsibility with the Engineer to
notify/instruct the Contractor regarding defects identified as a result of
inspections made by the Engineer (or on his behalf).
Recent forms of FIDIC contract require the Contractor to rectify defects of
which he is notified by (or on behalf of) the Employer during the DNP.
Clearly it must be established between the Engineer and the Employer:
Under older forms of FIDIC contract:
- Who will perform the inspections?
- Only the Engineer may notify/instruct the Contractor.
Under recent forms of FIDIC contract:
- Who will perform the inspections?
- Who will notify/instruct the Contractor?
In the following guidelines it is assumed that the Engineer will be the prime
mover for inspections and notifications.
It is desirable that inspections during the DNP should be performed jointly by
the Engineer, Employer and Contractor.
Plan (with the Employers concurrence) the inspections at regular time
intervals and at critical times. The intended last inspection for each
Section or part of the Works for which a Taking-Over Certificate was
issued should be a shortly before expiry of the relevant DNP.
Give adequate prior notice to the Employer and Contractor of the time,
date and expected duration of each inspection.
During the inspections obtain concurrence of the Parties (or at least of the
Employer) as what of any observed defects constitute defects for which
the Contractor is responsible to rectify (as opposed, say, to defects arising
from design deficiencies or damage for which the Contractor is not
responsible, or from fair wear and tear).
Following each inspection, notify/instruct the Contractor of the defects that
he is required to rectify.
The planned schedule of inspections should be appropriate to the type and
function of the Works. The timing of inspections of a production facility might
be related to critical production, maintenance or close-down periods.
Inspections of roadworks would be preferable: just before winter, so that
August 2011
II-7 /3


defects that could jeopardize safety in winter weather can be rectified before
the onset of winter weather; just after winter, in order that the effects of winter
(which may manifest defects) can be observed; and at the height of summer
when defects might also be manifested.
II-7.4
Cost of Rectifying Defects & Damage

The Contractor can only be held contractually obligated to rectify at his cost
those defects which are attributable to his use and placement of Materials,
Plant and workmanship not in accordance with the Contract, or defects
arising from faults of design for which the Contractor has contractual
responsibility.
The Contractor is not contractually obligated, at his cost, to rectify:
o Fair wear and tear.
o Defects which are attributable to faults of design not performed by the
Contractor.
o Damage not caused by the Contractor (or otherwise attributable to his
negligence) in the Defects Notification Period during which the Employer
is responsible for insuring, caring for and maintaining the Works.
The Employer may choose to rectify defects or damage that are not
attributable to the Contractor by:
o Under older forms of FIDIC contract: an Engineers instruction to the
Contractor of a Variation of the Works requiring the Contractor to perform
the remedial works, together with the basis of payment for the varied
works [see Section II-3.3 Variations].
o Under recent forms of FIDIC contract: a request by the Employer (or on
his behalf by the Engineer) that the Contractor perform the remedial works
under the Contract, to which the Contractors agreement and jointly
agreed payment terms would be necessary.
o The Employer executing the remedial works outside the Contract, by
himself or by others.
Or the Employer may simply choose to do nothing.
The difference between older and recent forms of FIDIC contract should be
noted. Under older FIDIC the right to order Variations is not expressly limited
in time (except that Variations obviously cannot be ordered after the Defects
Liability Certificate has been issued), and the Contractor may have no right to
object to Variations ordered during the Defects Liability Period. However,
recent FIDIC expressly states (under the clause Right to Vary) that
Variations can only be initiated by the Engineer prior to issuing the TakingOver Certificate. [See Section II-3.3 Variations]
August 2011
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Arguments sometimes arise as to whether or not a defect is attributable to the

Contractors non-compliance with Contract requirements (to be rectified at the
Contractors cost) or to some other cause outside the Contractors
responsibility (to be rectified at the Employers cost). All forms of FIDIC
contract provide (under a clause entitled Contractor to Search) that the
Contractor shall, upon instruction of the Engineer, search for the cause of the
defect under the direction of the Engineer. Such search might include, for
example, investigations by making openings in the works, sampling, testing
and reinstatement. If, as a result of the search, it is determined that the defect
is the Contractors responsibility to rectify at his own cost, then the Contractor
shall also bear the cost of the search (which may include costs of the
Employers and/or Engineers participation). If the cause of the defect is not
the responsibility of the Contractor, then the Contractor is entitled to payment
(by the Employer) of his costs of the search, which the Engineer shall
determine after due consultation with the Parties.
II-7.5
Remedies for Non-Performance

in Defects Notification Period
In case of default of the Contractor to carry out instructions to complete
remaining works or rectify defects within a reasonable time [see Section II7.3 Inspections & Notification of Defects] during the Defects Notification
Period (DNP), the Employer is entitled to employ and pay others to execute
such works.
FIDIC-based contracts provide that the Contractor is in default if he fails to
carry out any instruction within the time specified (or, if unspecified, within a
reasonable time), and the Employer shall be entitled to employ and pay other
persons to perform the corrective actions or works.
If, because of the Contractors default, the Employer does employ others to
perform remaining works or correct defects that were the Contractors
responsibility to execute, and if the Contractor would have been entitled (but
for his default) to payment for executing such work, then:
o The Contractors payment entitlement under the Contract would be
certified by the Engineer together with a deduction of the Employers
costs.
o If the Employers costs exceed the Contractors entitlement, the balance
becomes a debt of the Contractor to the Employer.
In the event that the Contractor was required to rectify notified defects at his
own cost but did not do so within the stated or reasonable time, the Employer
is entitled to recover from the Contractor the Employers full costs, as verified
by the Engineer in consultation with the Employer and Contractor, of the
remedial actions/works performed by others.
August 2011
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II-7.6

Extension of Defects Notification Period

The General Conditions of recent forms of FIDIC contract (Red and Yellow
Books) contain provision for Extension of the Defects Notification Period
whereby:
The Employer shall be entitled (subject to compliance with procedures
for Employers Claims) [see Section II-4.11 Claims] to an extension of
the Defects Notification Period for the Works or a Section if and to the
extent that the Works, Section or a major item of Plant (as the case may
be, and after taking over) cannot be used for the purposes for which they
are intended by reason of a defect or damage. However, a Defects
Notification Period shall not be extended by more than two years.
The older FIDIC Yellow Book has similarly a worded provision with respect
to extension of the Defects Liability Period (synonymous with recent FIDICs
Defects Notification Period).
However, the General Conditions of the older FIDIC Red Book contain no
such provision in respect of the Defects Liability Period and, therefore, no
such extension could be enforced under the Contract except with the
expressed agreement of the Contractor. However, the Conditions of Particular
Application should be checked for any added provisions for such extension.
Such contract provision permits extension of the Defects Notification Period
when works cannot be used by reason of a defect or damage attributable to
the Contractors wrongdoing. If any Section, part or Plant of the Works (for
which a Taking-Over Certificate has been issued) cannot be used for a
certain time period, then the relevant Defects Notification Period can be
extended by that time period.
II-7.7
Further Tests
The General Conditions of both older and recent forms of FIDIC contract
require that the issue of a Taking-Over Certificate is predicated on the
successful passing of any Tests on Completion (if any) prescribed by the
Contract.
The General Conditions of FIDICs recent Red/Yellow Book contracts and
older Yellow Book contract provide further that:
- if the work of rectifying any defects after performance of those Tests may
have affected the performance of the Works,
then the Engineer may require a repetition of any such Test so prescribed in
the Contract, and the Works may not be finally accepted until such repeated
Tests have been successfully performed. The cost of performing repeated
Tests shall be borne by the Party liable for the cost of rectifying the defects.
August 2011
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The General Conditions of FIDICs older Red Book contract have no such
provision, but the Engineer should check if added Conditions of Particular
Application do.
II-7.8
Final Acceptance of Works

General Conditions of recent forms of FIDIC contract provide that:
Performance of the Contractors obligations shall not be considered to
have been completed until the Engineer has issued a Performance
Certificate to the Contractor and Only the Performance Certificate
shall be deemed to constitute acceptance of the Works.
General Conditions of older forms of FIDIC contract provide that:
Only the Defects Liability Certificate shall be deemed to constitute
approval of the Works.
The terms Performance Certificate and Defects Liability Certificate are
synonymous, and the net effect of the above quotations is the same.
II-7.9
In these guidelines the following FIDIC terms are used synonymously:
- Defects Notification Period (recent FIDIC) and Defects Liability Period
(older FIDIC);
- Performance Certificate (recent FIDIC) and Defects Liability Certificate
(older FIDIC).
FIDIC contracts require the Engineer to issue a Performance Certificate:
within 28 days after expiry of the Defects Notification Period; or
if different Defects Notification Periods shall have become applicable to
different Sections or parts of the Works, within 28 days after expiry of the
latest such period; or
as soon thereafter as any works instructed by the Engineer (in respect of
rectifying defects) have been satisfactorily completed and tested, and the
Contractor has handed over all documents prescribed to be handed over
pursuant to the Contract.
The Certificate may be a simple letter such as the example presented in
Appendix P. The letter must state the date on which, in the Engineers
determination, the Contractor completed his obligations under the Contract.
August 2011
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However, the statement in the Performance Certificate of the Contractors

completion of his obligations cannot be taken literally. General Conditions of
both recent and older forms of FIDIC contract provide, under a clause entitled
Unfulfilled Obligations, that after the Performance Certificate has been
issued, each Party shall remain liable for the fulfilment of any obligation which
remains unperformed at that time, and for that purpose the Contract shall be
deemed to remain in force. Such obligations could include:
- the Contractors clearance of Site;
- the Contractors submission of a Final Statement; and
- the Employers Final Payment.
It must also be noted that the issue of the Performance Certificate is not a
condition precedent to the Contractors entitlement to payment of the
remainder of the Retention Money. Entitlement to payment of remaining
Retention Money becomes due upon expiry of the latest of the Defects
Notification Periods, except that the Engineer may withhold certification of so
much of the Retention Money as, in his opinion, represents the value of any
works of defects rectification to be carried out after expiry of the latest Defects
Notification Period.
II-7.10
Clearance of Site
General Conditions of recent FIDIC forms of contract state, and those of
older FIDIC forms of contract imply, that upon receiving the Performance
Certificate the Contractor shall:
o Remove from Site any remaining Contractors Equipment, surplus
material, wreckage, rubbish and Temporary Works.
General Conditions of recent forms of FIDIC contract further provide that:
o If these items are not removed from Site within 28 days after the Employer
receives a copy of the Performance Certificate, the Employer may sell or
otherwise dispose of any remaining items.
o The Employer shall be entitled to be paid (by the Contractor) the costs
incurred in connection with such sale or disposal, which cost is deductible
from moneys owing from the Employer to the Contractor.
II-7.11
Contractors Application for Final Payment

Procedures for the Contractors submission of an application for final payment
under the Contract are found:
- under FIDICs recent Red/Yellow Books under a sub-Clause entitled
Application for Final Payment Certificate;
August 2011
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- under FIDICs older Yellow Book under a sub-Clause entitled

Application for Final Certificate of Payment;
- under FIDICs older Red Book under a sub-Clause entitled Final
Statement.
In the following guidelines the terms Performance Certificate (recent FIDIC)
and Defects Liability Certificate (older FIDIC) are synonymous.
The Contractor is required under standard forms of FIDIC contract to submit
to the Engineer:
within 56 days after receiving the Performance Certificate a draft final
statement with supporting documents showing in detail, in the form
approved by the Engineer:
a) the value of all work done in accordance with the Contract.
And either:
b) under recent FIDIC: Any further sums which the Contractor considers to
be due to him under the Contract or otherwise.
Or:
b) under older FIDIC: Any further sums which the Contractor considers to
be due to him under the Contract.
FIDIC contracts further provide:
If the Engineer disagrees with or cannot verify any part of the draft final
statement, the Contractor shall submit such further information as the
Engineer may reasonably require and shall make such changes in the
draft as may be agreed between them. The Contractor shall then prepare
and submit to the Engineer the final statement as agreed.
General Conditions of older forms of FIDIC contract do not prescribe a
mechanism in the event that there is no agreement and a dispute arises.
There may still be unresolved claims or disputes. However, the only sensible
way forward would be to follow the mechanism prescribed by General
Conditions of recent forms of FIDIC contract:
if, following discussions between the Engineer and the Contractor and
any changes to the draft final statement which are agreed, it becomes
evident that a dispute exists, the Engineer shall deliver to the Employer
(with a copy to the Contractor) an Interim Payment Certificate for the
agreed parts of the draft final statement. Thereafter, if the dispute is finally
resolved under reference to the Contract provisions for Dispute
Resolution [see Section II-4.15] the Contractor shall then prepare and
submit to the Engineer (with a copy to the Employer) a Final Statement.
August 2011
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II-7.12

Contractors Discharge
FIDICs recent Red/Yellow Books and older Red Book prescribe that at the
time of submitting the Final Statement, the Contractor is required to submit a
Discharge stating that the total of the Contractors Final Statement
represents full and final settlement of all moneys due to the Contractor.
Curiously, FIDICs older Yellow Book has no such provision.
However, there are differences in wording between the General Conditions of
FIDICs older Red Book and its recent Red/Yellow Book contracts.
Under older forms of FIDIC Red Book contract:
Upon submission of the Final Statement, the Contractor shall give to the
Employer, with a copy to the Engineer, a written discharge confirming that
the total of the Final Statement represents full and final settlement of all
moneys due to the Contractor arising out of or in respect of the Contract.
Provided that such discharge shall become effective only after payment
due under the Final Certificate has been made and the performance
security has been returned to the Contractor.
Note: The Discharge is to be provided directly to the Employer.
Under recent forms of FIDIC Red/Yellow Book contracts:
When submitting the Final Statement, the Contractor shall submit a
written discharge which confirms that the total of the Final Statement
represents full and final settlement of all moneys due to the Contractor
under or in connection with the Contract. This discharge may state that it
becomes effective when the Contractor has received the Performance
Security and the out-standing balance of this total in which the discharge
will be effective on such date.
Note: Since the Final Statement is to be submitted to the Engineer, the recent
FIDIC wording implies that the Discharge also is to be submitted to the
Engineer (who is a representative of the Employer). It is recommended,
however, that the Discharge be addressed directly to the Employer, and
copied to the Engineer.
Although there is no requirement for the Contractor to state in his Discharge
that it is predicated on the Employers payment and return of the Performance
Security, it would be wise for the Contractor to so state, as in the following
suggested example:
We, , hereby confirm, in terms of Sub-Clause of the Conditions of
Contract, that the total of the Final Statement, namely , represents full
and final settlement of all moneys due to us under or in connection with
the Contract. This discharge shall only become effective when we have
August 2011
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received the Performance Security and the outstanding balance of the

total of the Final Statement.
II-7.13

The Engineer shall, within 28 days after receipt of the Contractors Final
Statement and the [*] Contractors written Discharge, issue to the
Employer (with copy to the Contractor) a Final Payment Certificate stating:
- the amount that is finally due to the Contractor - after giving credit to the
Employer for all amounts previously paid by the Employer and for all
sums to which the Employer is entitled under the Contract; and
- the balance (if any) due from the Employer to the Contractor or from the
Contractor to the Employer.
[* Note: FIDICs older Yellow Book has no provision for Contractors
Discharge]
General Conditions of recent forms of FIDIC contract provide that if the
Contractor has not applied for a Final Payment Certificate within the
prescribed time period [see Section II-7.11 Contractors Application for Final
Payment], and/or has not submitted a Discharge therewith [see Section II7.12 Contractors Discharge], the Engineer shall request the Contractor to do
so. If the Contractor fails to do so within 28 days after the Engineers request,
the Engineer shall issue the Final Payment Certificate for such amount as he
fairly determines to be due.
II-7.14
Final Payment
Standard forms of FIDIC contract require that the Employer shall make the
Final Payment to the Contractor within 56 days after the date of his receipt of
the Engineers Final Payment Certificate.
August 2011
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II-7: DEFECTS NOTIFICATION PERIOD & CONTRACT COMPLETION - CHECK LIST

Check
II-7.1 Defects Notification Period (DNP):
Check contract for duration of DNP
Compute DNP end date from effective date of Taking-Over Certificate
Different DNPs for Sections/parts of Works for which separate
Taking-Over Certificates were issued
II-7.2 Completion of Remaining Works & Rectification of Defects:
Plan/perform inspections & measurement of works completed in DNP
and of defects rectified (in reference to Snag List)
Interim Payment Certificates (after IPC at Completion) as necessary
if above the minimum amount permitted under the Contract
II-7.3 Inspections & Notification of Defects:
Plan/perform periodic inspections of Works during DNP
(coordinate with Employer & Contractor)
Notification /instruction (to Contractor) of defects manifested in DNP
II-7.4 Cost of Rectifying Defects & Damage:
Defects rectified or damage repaired at Contractor's cost
(only if attributable to his non-compliance)
II-7.5 Remedies for Non-Performance in Defects Notification Period:
Engineer's notification (to Contractor) to expedite remaining work
Engineer's notification (to Employer) if Contractor persists in default
Employer's election (if Contractor in non-performance default)
to complete the Works himself or by others
Engineer's evaluation if Employer completes Works by others
II-7.6 Extension of Defects Notification Period:
Check /implement Contract provisions (if any) for DNP extension
II-7.7 Further Tests:
Instruction of 'Further Tests' in the event that rectification of defects
during the DNP may have affected 'Tests on Completion'
(if any) previously performed as required under the Contract
II-7.8 Final Acceptance of the Works:
Plan/perform final inspection of Works at end of last DNP
(coordinate with Employer & Contractor)
II-7.9 Performance Certificate (also called Defects Liability Certificate) :
If Works acceptably completed, Engineer issues Performance
Certificate within 28 days after end of DNP
II-7.10 Clearance of Site:
Check Contract provisions for Contractor's Clearance of Site
within prescribed period after issue of Defects Notification Certificate
(failing which Employer entitled to deduct costs of disposal from
Final Payment) and remind Contractor (Copied to Employer)
II-7.11 Contractor's Application for Final Payment:
Submission (to Engineer) of 'Draft Final Statement' which must claim
all amounts to which Contractor considers himself entitled
Engineer notifies Contractor of any disagreement with Contractor's
Draft Final Statement
Contractor makes changes requested by Engineer
Contractor submits 'Final Statement'
In event Engineer & Contractor cannot agree on a Final Statement:
Engineer issues an Interim Payment Certificate for agreed parts
Disputed amounts are referred to Dispute Resolution
II-7.12 Contractor's Discharge:
Contractor's written statement that his Final Statement represents
final settlement of all moneys due to the Contractor from the Employer
Comment
August 2011
Check
II-7.13 Final Payment Certificate:
Prepare Final Payment Certificate including:
Total value of Works completed under the Contract
Payment of remaining portion of Retention Money
Other payment entitlements:
Price Adjustment for change in Law
Price Adjustment according to Price Adjustment Formula
Other adjustments of Contract Price if prescribed by Contract
Amounts in respect of Claim settlements /determinations
Interest (Financing Charges) if claimed by the Contractor
Deductions:
As agreed for acceptance of non-complying work
Liquidated Damages (if Employer instructs to be certified)
In respect of works completed and/or
defects rectified by the Employer
Submit Final Payment Certificate within time prescribed in Contract
II-7.14 Final Payment:
Advise Employer of time prescribed in Contract for payment
Comment
August 2011

II-8.
II-8: Contract Termination
CONTRACT TERMINATION
This Chapter describes the contractual provisions under which a Works
Contract may be terminated:
o By the Employer, arising from Contractors Default.
o By the Contractor, arising from Employers Default.
o By either Party, arising from Force Majeure.
o By the Employer, for Convenience.
II-8.1
Termination by Employer arising from Contractors Default

Contracts will state the reasons for which the Employer is entitled to terminate
the Contract and, based on FIDIC contract provisions, will be if the
Contractor:
1) enters into liquidation or dissolution (other than voluntarily for the
purpose of amalgamation or reconstruction).
2) becomes bankrupt or insolvent, has a receiving or administration order
made against him, makes an assignment in favour of his creditors,
carries on business under a receiver, trustee or manager for the benefit
of his creditors, etc.
3) gives or offers any bribe, gift, gratuity or commission in relation to the
Contract (this cause is not cited in older standard forms of FIDIC
contract).
4) fails to provide and maintain an acceptable Performance Security [see
Section II-2.6].
5) fails to commence the Works within a reasonable period after his receipt
of a notice to that effect from the Engineer [see Section II-2.5
Commencement Date].
6) abandons the Works or otherwise plainly demonstrates the intention not
to continue performance of his obligations under the Contract.
7) fails to expedite progress of the Works after receiving a notice to that
effect from the Engineer [see Section II-4.9 Contractors Slow
Progress].
8) fails to comply with a notice given by the Engineer of rejection of any
parts of the Works and/or notice of remedial action required [see
Section II-4.7 Unacceptable Works, Defects Notification & Remedies].
9) despite previous written warnings from the Engineer, persistently or
flagrantly neglects to comply with any of his obligations under the
Contract.
10) subcontracts the whole of the Works or assigns the Contract without the
Employers agreement [see Section II-2.19 Consent for
Subcontractors].
August 2011
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Older forms of FIDIC contract require that the Employer cannot terminate
the Contract for certain reasons (such as items 5 to 10 above) until the
Engineer has certified to the Employer that, in his opinion, the Contractor is in
default thereof. The Engineers Representative (if delegated this responsibility
by the Engineer) must read the Contract provisions carefully, and should so
certify only if there are adequate written records to substantiate the facts, and
only with the specific concurrence of the Engineer. Even so, the Engineer
should be careful to state that it is his opinion that the Contractor is in
default. The Employers subsequent action, if any, should be based on his
own opinion.
Recent forms of FIDIC contract (where the Engineer is part of the
Employers Personnel) do not require any certification by the Engineer.
In any of the above events, under both recent and older forms of FIDIC
contract, the Employer may give 14 days notice to the Contractor of
termination; except that recent forms of FIDIC contract state that immediate
notice may be given in the event of reasons (1), (2) and (3) above.
In any event, if the Employer believes that the Contractors failure of
performance is sufficiently serious to merit termination, he should take legal
advice before giving notice of termination. Under no circumstance should the
Engineer give such advice. A notice of termination that is subsequently
decided in arbitration to have been unjustified would constitute a breach of
Contract by the Employer. The Engineer should not offer nor agree to draft a
notice of termination for the Employer. The Employer would be well advised
to engage a legal advisor (which the Engineer is not) to prepare a notice of
termination.
There are differences of wording between older and recent forms of FIDIC
contract as to what is being terminated, but the intent is the same.
Older FIDIC states that the employment of the Contractor is terminated
without releasing the Contractor from any of his obligations or liabilities under
the Contract and without affecting the rights and authorities conferred on the
Employer or the Engineer by the Contract. The reference to the Contractors
continuing obligations is obviously not intended to be taken literally plainly
the Contractor is relieved of his obligation to execute and complete the Works
rather the words prevent the Contract being determined (in the legal sense
of being brought to an end).
Recent FIDIC states that the Contract is terminated, but the intent cannot
be that it will be determined (in the legal sense of being brought to an end)
since words are included that the Employers rights under the Contract shall
not be prejudiced and prescribe the Contractors continuing obligations.
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If the Employer gives notice and then wishes or agrees to withdraw it, the
Parties may agree that the notice shall be of no effect and that the Contract is
not terminated. Alternatively it may be agreed that the notice be put on-hold
pending certain actions within an appropriate time frame. Obviously, though,
there would need to be a jointly signed agreement or confirmatory exchange
of correspondence to such effect.
What happens after expiry of the Employers notice of termination:
o The Employer may complete the Works himself or arrange for other
contractors to do so.
o The Employer, or his other contractors, may use any of the Contractors
Documents, Contractors Materials, Plant, Equipment, Temporary Works
or on-Site facilities or other documents as they deem fit [ref: Sub-Clause
15.2 of 1999 FIDIC Red and Yellow Books].
Invariably this will necessitate the Engineer instructing the Contractor not
to remove any facilities from Site without the Employers prior approval,
and it would behove the Employer to be able to enforce this requirement
(by official means) and, if necessary, obtain a court restraining order. The
facilities should be released to the Contractor only after his receipt from
the Employer of a notice to that effect, which might not be until the Works
have been completed (although contracts are usually silent as to any
requirement for the Employer to complete the Works diligently).
o Unless prohibited by law, the Employer is entitled to require the Contractor
to assign to him the benefit of any agreements or subcontracts that the
Contractor may have entered into for the supply of any goods, materials or
services for execution of any works under the Contract. [The Employer
should start considering, before notifying termination, whether he would
wish (after termination) to seek agreements to assignments, or to
renegotiate direct contracts with any previous Subcontractors. In either
case, it may be preferable to achieve agreement of the Subcontractor,
rather than relying on a term of the Contract to impose assignment on an
unwilling Subcontractor.]
o The Engineer shall, as soon as is practicable after due consultation with
the Parties, determine the value of the Works completed, Plant &
Materials (i.e. intended for incorporation into the Works) and Temporary
Works, or any other sums due to the Contractor for Works executed in
accordance with the Contract.
o The Employer is entitled to withhold any further payments to the
Contractor until the expiration of the Defects Notification Period and
thereafter until the costs of completing the Works and remedying any
defects attributable to the Contractor, damages for delay in completing the
Works (if any) and all other related expenses of the Employer have been
established.
August 2011
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[Note that older FIDIC requires the Engineer to certify these costs, which
would necessitate his continued close involvement with the Works
completion; but recent FIDIC does not.]
o Upon completion of the Works, the Contractor is entitled to receive the
amount (if any) to which the Contractor would have become entitled if he
had completed the Works himself (which older FIDIC requires to be
certified by the Engineer, but recent FIDIC does not), less the amount of
the Employers costs of completing the Works and his incurred delay
damages (if any). If the Employers costs and damages exceed the
Contractors entitlement, then the excess becomes a debt due by the
Contractor to the Employer.
II-8.2
Termination by Contractor arising from Employers Default

Contracts will state the reasons for which the Contractor is entitled to
terminate the Contract and, based on FIDIC contract provisions, will be if:
1) The Employer fails to pay to the Contractor the amount certified by the
Engineer under any Interim Payment Certificate (except for eligible
deductions) within the stipulated period after the payment due date [see
Section II-3.12 Interim Payments]. It is important to note that even if
the Employer subsequently makes payment after the Contractor submits
a notice of termination, the Contractor is still entitled to terminate upon
expiration of the notice period.
2) The Employer interferes with or obstructs or refuses any approval to the
issuing of an Interim Payment Certificate by the Engineer.
3) The Employer becomes bankrupt or, being a company, goes into
liquidation, other than for the purpose of amalgamation or
reconstruction.
4) After a suspension by the Engineer of the whole of the Works exceeding
84 days, the Employer (through the Engineer) fails to give permission for
the Contractor to resume working within 28 days after the Contractors
request to do so [see Section II-4.10 Works Suspensions, Suspension
of Works by the Engineer].
To which older forms of FIDIC contract add:
5) If the Employer gives notice to the Contractor that it is impossible for him
to continue to meet his contractual obligations.
And recent forms of FIDIC contract add:
6) If the Engineer fails, within the prescribed time after receiving a
Contractors Statement and supporting documents, to issue the relevant
Interim Payment Certificate [see Section II-3.11].
7) If the Employer substantially fails to perform his obligations under the
Contract.
August 2011
II-8 /4

8)
9)
If the Employer fails to provide, if requested by the Contractor,

reasonable evidence within a prescribed period that financial
arrangements have been made and are being maintained which will
enable the Employer to meet his payment obligations under the
Contract.
If, without the Contractors prior agreement, the Employer transfers to a
third party any of its obligations or rights under the Contract.
In such of the above events, depending on the actual terms of the Contract,
the Contractor may give 14 days notice to the Employer of termination;
except that recent FIDIC entitles the Contractor to give notice of immediate
termination for reasons (3) and (4).
The Contractors election to terminate the Contract does not prejudice any
other rights of the Contractor under the Contract or otherwise.
If the Contractor gives notice and then wishes or agrees to withdraw it, the
Parties may agree that the notice shall be of no effect and that the Contract is
not terminated. Alternatively it may be agreed that the notice be put on-hold
pending certain actions within an appropriate time frame. Obviously, though,
there would need to be a jointly signed agreement or confirmatory exchange
of correspondence to such effect.
What happens after expiry of the Contractors notice of termination:
o The Contractor ceases all further work, except as may be instructed by the
Engineer for the safety of life, property and the Works.
o The Contractor hands over to the Employer any documents, Plant,
Materials and other work for which he has received payment.
o The Contractor removes from Site, with reasonable dispatch, all his
Equipment and facilities, and leaves the Site.
o The Employer must return the Contractors Performance Security.
o The Engineer shall determine and the Employer must pay to the
Contractor (less any deductions to which the Employer is entitled under
the Contract):
- amounts payable for works acceptably performed (including preliminary
items of the Bill of Quantities insofar as they have been provided);
- the cost of Plant and Materials delivered to the Contractor, or of which
the Contractor is liable to accept delivery (these become the property of
the Employer when paid for by the Employer);
- any other cost or liability which in the circumstances was reasonably
incurred by the Contractor in the expectation of completing the Works;
- the cost of removal of Temporary Works and Contractors Equipment
from Site and their return to the Contractors home base (or to other
destinations at no greater cost);
August 2011
II-8 /5

- the cost of repatriation of the Contractors staff and labour employed

upon the Works at the date of termination.
o The Employer shall pay to the Contractor the amount of any loss of profit
or other loss or damage sustained by the Contractor as a result of the
termination [ref: Sub-Clause 16.4 of 1999 FIDIC Red and Yellow Books].
II-8.3
Termination resulting from Force Majeure

Most contracts, including FIDIC forms, will provide that the Contract may be
terminated if a Party thereto is or will be prevented by Force Majeure from
performing its obligations under the Contract. An option remains that either
the Employer or Contractor can suspend the Works [see Section II-4.10
Works Suspensions].
Force Majeure means an exceptional event or circumstance:
- which is beyond a Partys control;
- which such Party could not reasonably have provided against when
entering into the Contract;
- which, having arisen, such Party could not reasonably have avoided or
overcome;
- which is not substantially attributable to the other Party.
Force Majeure may include, but not be limited to:
- War, hostilities, invasion or act of foreign enemies.
- Rebellion, terrorism, revolution, insurrection, military or usurped power, or
civil war.
- Riot, commotion, disorder, strike or lock-out by persons other than
employees of the Contractor or his Subcontractors.
- Munitions of war, explosive materials, ionizing radiation or contamination
by radio-activity (except as may be attributable to the Contractors use
thereof).
- Natural catastrophes such as earthquake, hurricane, typhoon or volcanic
activity.
There is a difference between older and recent standard forms of FIDIC
contract.
Older FIDIC provides that, in the event of Force Majeure, the Contractor shall
continue to use his best endeavours to complete the Works; except that the
Employer is entitled at any time after Force Majeure arises to terminate the
Contract by giving notice to the Contractor (although no period of notice is
prescribed). The Contractors continued performance during Force Majeure
would invariably entitle him to an Extension of Time for Completion [see
Section II-4.13].
August 2011
II-8 /6

Recent FIDIC provides that either Party may give notice of termination, but
that the notice shall be given within 14 days after the Party became aware, or
should have become aware, of the event constituting Force Majeure.
Fourteen days may seem a generous period within which to notify an
exceptional event, but it may not be immediately apparent that it will affect a
Partys performance. The notice must specify:
- the event which is considered to constitute Force Majeure;
- the effect by which it will prevent specific performance obligations under
the Contract.
Recent FIDIC appears not to permit a notice of termination given later than
the prescribed 14 days. It is a reasonable interpretation that, after 14 days,
termination would have to be by mutual consent.
What happens after notice of termination arising from Force Majeure:
o The Contractor ceases all further work, except as may be instructed by the
Engineer for the safety of life, property and the Works.
o The Contractor hands over to the Employer any documents, Plant,
Materials and other work for which he has received payment.
o The Contractor removes from Site, with reasonable dispatch, all his
Equipment and facilities, and leaves the Site.
o The Employer must return the Contractors Performance Security.
o The Engineer shall determine and the Employer must pay to the
Contractor (less any deductions to which the Employer is entitled under
the Contract):
- amounts payable for works acceptably performed (including preliminary
items of the Bill of Quantities insofar as they have been provided);
- the cost of Plant and Materials delivered to the Contractor, or of which
the Contractor is liable to accept delivery (these become the property of
the Employer when paid for by the Employer);
- any other cost or liability which in the circumstances was reasonably
incurred by the Contractor in the expectation of completing the Works;
- the cost of removal of Temporary Works and Contractors Equipment
from Site and their return to the Contractors home base (or to other
destinations at no greater cost);
- the cost of repatriation of the Contractors staff and labour employed
upon the Works at the date of termination.
August 2011
II-8 /7

II-8.4
Employers Termination for Convenience

Recent forms of FIDIC contract but not the older forms of FIDIC contract
entitle the Employer to terminate the Contract at any time for his own
convenience, by giving notice to the Contractor. The Employer might consider
to invoke this entitlement if, for example, he encounters unexpected financial
difficulties. The termination takes effect 28 days after the later of the dates on
which the Contractor receives the notice or the Employer returns the
Contractors Performance Security.
However, the Employer cannot terminate the Contract in order to execute the
Works himself or by other contractors.
Recent FIDIC provides that ensuing obligations shall proceed as prescribed
above for termination resulting from Force Majeure [see Section II-8.3].
Although the Contractor may consider that the Employer should also
reimburse him for all losses and damages attributable to such termination,
such claim may be inconsistent with applicable law, or with the requirements
of a public authority Employer or an international Funding Institution.
To repeat: under older forms of FIDIC contract (unless amended by
Conditions of Particular Application) the Employer cannot terminate the
Contract for convenience. It would be necessary for the Employer to negotiate
termination with the Contractor. If such negotiation is unsuccessful, there is
no option but for the Contract to proceed to completion.
August 2011
II-8 /8
Appendix A
COMPUTATION OF
TIME CHARGES,
ALLOWANCES &
REIMBURSABLE EXPENDITURES
Referenced in:
Section I-2.4: Rules for Time Charges & Reimbursable Expenditures
PROJECT TITLE
EXAMPLE
SERVICE CONTRACT (No. / TITLE)

Between THE LOUIS BERGER GROUP, Inc. and (CLIENT NAME)
LBG / (CLIENT NAME) AGREEMENT
of RULES for COMPUTATION Of CONSULTANTS TIME,
ALLOWANCES and REIMBURSABLE EXPENDITURES
As agreed at LBG / (Client Name) / (Funding Institution Name) Meeting on (Date)
1.
REFERENCES:
Terms of Reference (TOR) and LBG Proposal, both as embodied in the Service
Contract:
Article # Working Days of (Funding Institution) Manual, Annex # (copy attached).
Page # of TOR Comments to the Breakdown of Prices (copy attached).
LBG Financial Proposal, (Date):
Units of measurement for Consultants time:
Long-Term Consultants & Staff (> 6 months) designated as per Month.
Consultants & Staff designated as per Day.
Short-Term Experts and Part-Time Consultants designated as per Month.
2.
AGREED ADMINISTRATIVE PROCEDURES:

LBGs eligible time charges for Fees and Direct Costs will be agreed monthly. Their
reconciliation will not be left until the end of the project. Any reconciliation at the end of
the project of payments due to LBG will be based on the agreed month-by-month time
records.
LBG will submit to (Client) as soon as possible at the beginning of each month
timesheets for the preceding month, together with a bar chart summary of the
Consultants Work Days.
LBGs bar chart summary will compute and quantify for each Consultant:
eligible proportions of work month (for staff designated as per Month);
eligible proportions of monthly accommodation allowance or per diems, as
appropriate (for staff designated as per Month);
eligible number of work days (for short-term or part-time staff designated either as
per Day or per Month);
eligible number of per diems (for short-term or part-time staff designated either as
per Day or per Month);
identify international travel days for expatriate staff.
LBGs bar chart summary will also compute and quantify:
Eligible durations of Direct Costs which are designated as per Month.
LBGs bar chart summaries will include LBGs signature of declaration and provision for
(Clients) signature of acceptance.
(Client) will promptly review LBGs monthly submissions. Any corrections necessary to
meet (Clients) approval shall be promptly made by LBG resubmission.
Appendix A
1 of 6
(Client) will sign LBGs bar chart submission as Accepted for Record Purposes and
provide copy to LBG.
Post-acceptance omissions may be corrected by mutual agreement which shall not be
unreasonably withheld (e.g. correction of an obvious mistake or revision for a latesubmitted timesheet).
Rules for computation of Consultants work time, allowances, per diems, and timerelated direct costs are described hereunder.
3.
COMPUTATION OF CONSULTANTS WORK TIME
3.1
Definition of Work Days:

All calendar days worked by a Consultant shall count as Work Days subject to:
Provisions hereunder for Statutory Holidays and Computation of Consultants
Time.
(Client) prior approval is required for Work Days on Sundays.
In addition, international travel by expatriate Consultants shall count as a Work Day
subject to:
Limitation of one Work Day per outbound or inbound travel from the Consultants
home base;
A day on which a Consultant both works and travels shall count as one Work Day
only;
Long-Term expatriate staff shall be entitled to Work Days in respect of one 2-way trip
per year or per part-year of duration of assignment.
3.2
Statutory Holidays:
Long-Term Staff (> 6 months):
Statutory Holidays shall count as Work Days (whether worked or not).
If a Statutory Holiday is worked, it shall only count as a single Work Day.
If (Client) officially moves a Statutory Holiday (i.e. to another day in lieu thereof) the
substitute day will be the Statutory Holiday for purpose of computing Consultants
time.
If (Client) closes its general staff operations for days other than Statutory Holidays or
days in lieu of Statutory Holidays, such days will be counted as Work Days only if
worked by the Consultants with prior (Client) approval.
Short-Term & Part-Time Staff (< 6 months):
Statutory Holidays and other days on which (Client) may close its general staff
operations shall not count as Work Days unless actually worked by the Consultants
with prior (Client) approval.
3.3
Computation of Consultants Time:

Long-Term Staff (> 6 months) / Payment Unit per Month:
Statutory Holiday = Work Day.

Except as clarified hereunder a part month is computed from the formula:
Appendix A
2 of 6
Proportion of Month = (Actual Work Days) / (Work Days Available In Month).

If Consultants Work Days in a calendar month equal or exceed Work Days Available
In Month or 22 days (whichever is the least), then the Consultant is deemed to have
worked a full month. Days worked in excess of Work Days Available In Month or 22
days (whichever is the least) are not counted. If Consultants Work Days are less
than the Work Days Available In Month or 22 days (whichever is the least), then a
part month is computed from the formula:
Proportion of Month = (Actual Work Days) / Work Days Available or 22
(whichever is least)
Computation Examples:
Example: December 1998
Work days available = 23 (including 3 Statutory Holidays)
Statutory Holidays = 3 days (not worked)
Other days worked by Consultant = 17 days
Therefore Proportion of Month = 20 / 22 = 0.91 month
Example: February 1999
Work days available = 20 (no Statutory Holidays)
Days worked by Consultant = 20 days
Example: March 1999
Work days available = 23 (including 1 Statutory Holiday)
Statutory Holidays = 1 day (not worked)
Example: March 1999
Statutory Holidays = 1 day (on which Consultant worked)
Short-Term Staff (< 6 months per assignment) / Payment Unit per Day:
Statutory Holidays do not count as Work Days unless actually worked.

Work Days not limited (no maximum), except that Sundays require (Client) prior
approval.
Short-Term & Part-Time Staff (< 6 months per assignment) / Payment Unit per
Month:
Statutory Holidays do not count as Work Days unless actually worked.

Except as clarified hereunder a part month is computed from the formula:
Proportion of Month = (Actual Work Days) / (Work Days Available In Month).
Appendix A
3 of 6
If Consultants Work Days in a calendar month equal or exceed Work Days Available
In Month or 22 days (whichever is the least), then the Consultant is deemed to have
worked a full month. Days worked in excess of Work Days Available In Month or 22
days (whichever is the least) are not counted.
If Consultants Work Days are less than the Work Days Available In Month or 22
days (whichever is the least), then a part month is computed from the formula:
Proportion of Month = (Actual Work Days) / Work Days Available or 22
(whichever is least)
Computation Examples:
Example: December 1998
Work days available = 23 (including 3 Statutory Holidays)
Statutory Holidays = 3 days (not worked)
Example: March 1999
Statutory Holidays = 1 day (not worked)
Example: March 1999
Statutory Holidays = 1 day (on which Consultant worked)
4.
COMPUTATION OF CONSULTANTS ALLOWANCES & PER DIEMS

Consultants Accommodation Allowances (for Long-Term Staff) and Per Diems (for
Short-Term or Part-Time Staff) shall be based on the number of over-night stays in
(Country), computed as follows:
Monthly Accommodation Allowances for Long-Term Staff, (Main City) or Outside
(Main City):
Except at initial mobilization and end of project demobilization, a full month is eligible
for each calendar month of the duration of a long-term assignment (including staff
vacations not exceeding 1.5 months per year), unless the assignment is interrupted
by staff changes or for other non-project related reasons.
A part month at initial mobilization and end of project demobilization is computed
from the formula:
Appendix A
4 of 6
Proportion of Month = (Number of Over-night stays) / 30

(where 30 = deemed average number of nights in a typical calendar month).
Per Diems for Long-Term Staff when 200km away from Normal Work Base:
A Long-Term Consultant may be based in (Main City) (for which the appropriate
Monthly Accommodation Allowance is eligible), but is required to visit and stay overnight at a construction site. Alternatively a Long-Term Consultant may be based at a
construction site outside (Main City) (for which the appropriate Monthly
Accommodation Allowance is eligible), but is required to visit and stay over-night in
(Main City) or at another construction site. In these cases Per Diems are eligible in
addition to the Monthly Accommodation Allowance:
No. eligible Per Diems = No. over-night stays away from operational base
(Quantities to be differentiated (Main City) or Outside (Main City).
Per Diems for Short-Term and Part-Time Staff:
No. of eligible Per Diems = No. of over-night stays
(Quantities to be differentiated (Main City) or Outside (Main City).
5.
RECORD OF TIME ALLOCATIONS OF DIRECT COSTS:

LBG will show, for record purposes, time allocations for items of Direct Cost for which
the unit of measurement was shown as per Month in LBGs Financial Proposal:
Staff time allocations will follow the rules of 3.3: Computation of Consultants Time:
Long-Term Staff above.
Time allocation for Office Running Cost will follow the following rules:
- Except during the initial and final months of operation if they are part months, a
full month is eligible for each calendar month of the duration of provision for
which LBG was responsible for running costs of the office.
- A part month at initial and final months of operation is computed from the formula:
Proportion of Month = (No. of days LBG responsible for running costs)/ 30
(where 30 = deemed average number of days per month).
Time allocation for Vehicle Running Cost will follow the following rules:
- Except during the initial month of provision and final month of operation by LBG if
they are part months, a full month is eligible for each calendar month of the
period during which LBG is responsible for running costs of a vehicle purchased
by LBG under the Service Contract.
- A part month allocation for running costs for the initial month of provision and
final month of operation by LBG is computed from the formula:
Proportion of Month = (No. of days LBG responsible for running costs)/ 30
(where 30 = deemed average number of days per month).
- The date of commencement of the time allocation shall be the date on which
delivery of the vehicle was formally accepted.
- The date of cessation of the time allocation shall be the date on which the
running costs are taken over by others (e.g. Client).
Time allocation for Office Rent will follow the following rules:
- A full month for each calendar month or part month for which LBG pays rent.
Agreed by:
For Louis Berger ...
For (Client Name)

Appendix A
5 of 6
Project Manager (Name)
(Representatives Name/Title)
Date:
Date:
Appendix A
6 of 6
Appendix B
INCEPTION REPORT
Referenced in:
Section I-2.5: Inception Report
EXAMPLE
INCEPTION REPORT
TABLE OF CONTENTS
Letter of Transmittal
1.
PROJECT BACKGROUND
Purpose and history of Project. Client. Funding Institution. Scope of Project. Scope of services to
be provided.
2.
PRECONSTRUCTION ACTIVITIES PRIOR TO CONSULTANTS APPOINTMENT

Previous Project-related activities of the Client and his other consultants such as: design,
statutory approvals & permits, land acquisition, preparatory site works, preparation of Tender
Documents, prequalification of contractors, preparation of Tender Documents, etc.
3.
BACKGROUND OF SERVICE CONTRACT FOR SUPERVISION

Prequalification. Request for and submission of Proposals. LBG selection.
4.
CHANGES TO TERMS OF REFERENCE & PROPOSED STAFFING

Necessary changes to TOR arising from changed project circumstances since Proposal
submission and/or signing of Service Contract and proposed changes to project staffing and
schedule of services (if any).
5.
PROJECT ORGANIZATION
Description. Present Organization chart in Appendix.
6.
PROJECT SCHEDULE
Present time bar chart in Appendix of main Project/Contract phases. Identify & discuss critical
activities for achievement.
7.
CONSULTANTS MOBILIZATION
Itemize mobilization of staff & facilities to date, and planned mobilizations. Present as time bar
chart.
8.
CONSULTANTS PROGRAMME & ACTIVITIES

Description of Consultants activities to date & ongoing (as appropriate).
For Example:
8.1 Prequalification of contractors
8.2 Format of Tender documents
8.3 Scope Works Contract No.1
8.4 Tender documents for Works Contract No.1
8.5 Scope Works Contract No.2
8.6 Tender documents for Works Contract No.2
8.7 Environmental considerations
8.8 Land acquisition & utility relocations
8.9 Materials source surveys
8.10 Economic Evaluation
Appendices:
A
PROJECT ORGANIZATION
B
PROJECT SCHEDULE
C
CONSULTANTS MOBILIZATION
Appendix B
1 of 2
EXAMPLE
PROJECT SCHEDULE & CONSULTANT'S PROGRAMME
Year 2003
PROJECT SCHEDULE:
Month Mar Apr May Jun
Works Contract No.1
Compile Tender Documents
Tender Period
Tender Evaluation & Report
Funding Institution Approval
Compile Contract Documents & Contract Award
Time for Completion
Final Payment Certificate & Discharge
Works Contract No.2 Ditto
Jul
Aug Sep
Oct
Nov Dec
2004
2005
Jan Feb Mar
Dec
2006
Jan Feb Mar.
Dec
2007
Jan Feb Mar
CONSULTANT'S PROGRAMME & ACTIVITIES:

Procure & set-up Project Office/Vehicles
Engage local support staff
Set-up Project Administration Systems
Assist Employer during Tender Period
Assist Employer in Tender Evaluation/Report
Compile Contract Documents (incl.Drawings)
Set-up Works Contract Supervision Systems
Arrange for mobilization of Site staff
Issue Notice of Commencement Date
Set-up Site Office
Supervision services during Time for Completion
Services during Defects Notification Period
Final Payment Certification & Reports
CONSULTANT'S MOBILIZATION:
Project Office:
Project Manager
Project Engineer
Materials Engineer
Site Office (Works Contract No.1)
Resident Engineer
Deputy Resident Engineer
Materials Engineer
Land Surveyor
Quantity Surveyor
Inspector (Earthworks)
Inspector (Structures)
Inspector (Pavements)
Site Office (Works Contract No.2) Ditto
Intermittent
Intermittent
Appendix B
2 of 2
Appendix C
FORMAT FOR MONITORING
SERVICE CONTRACT BUDGET
Referenced in:
Section I-2.6: Management of Service Contract Budget
SUGGESTED FORMAT FOR MONITORING SERVICE CONTRACT BUDGET

SERVICE CONTRACT BUDGET
STATUS AT END OF:
FEBRUARY 2004
EXAMPLE
Insert next month columns here

Hide columns of previous months' figures for Reports
POSITION
A. FEES
A.1.1 Expatriate Staff:
The Engineer (part time)
Project Manager /Engineer's Representative
Resident Engineer (Contract 1)
Resident Engineer (Contract 2)
Materials Engineer
Short Term Experts
A.1.1 Local Staff
Project Engineer
Deputy Resident Engineers
Quantity Surveyors
Materials Engineer
Land Surveyors
Inspectors
A.1.1 Sub-Totals
A.1.2 ALLOWANCES:
Long-term Expatriate Staff:
Accommodation in (Main City )
Accommodation outside (Main City )
Per Diem away from Base in (Main City )
Per Diem away from Base outside (Main City )
Short-Term Expatriate Staff:
Per Diem in (Main City )
Per Diem outside (Main City )
Local Staff:
Per Diem away from Base in (Main City )
Per Diem away from Base outside (Main City )
A.1.2 Sub-Totals
A. Sub-Totals
B. DIRECT COSTS:
Financial Administrator
Bilingual Secretaries
Interpreters /Translators
Bilingual Office Clerks
Drivers
Vehicle Running Costs
Office Rent & Maintenance
Return Airfares (Expatriates)
Mobilization /Demobilization Allowance
Reports
B. Sub-Totals
Name
Unit
Unit
Rate
Contract
Quantity
Quantity for January 2004

PO
SO.1 SO.2
Total
C1
month
month
month
month
month
day
20,000
20,000
16,000
16,000
14,000
1,000
4
24
24
24
24
12
month
month
month
month
month
month
2,500
2,000
1,500
1,500
1,300
1,000
27
54
54
50
50
120
0.83
month
month
day
day
1,200
700
120
70
60
54
30
60
0.83
day
day
120
70
240
240
day
day
50
30
30
90
month
1,500
month
1,250
month
1,000
month
750
month
500
month
250
month
1,000
No.
750
No.
2,000
LS 100,000
27
75
75
75
30
30
30
12
4
1
D1
E1
0.83
0.30
F 1 =C 1 -E 1
0.83
0.30
Quantity Total
Previous To Date
G 1 =H 0
H 1 =G 1 +F 1
0.83
0.30
Quantity for February 2004

PO
SO.1 SO.2
Total
C2
D2
E2
1.00
F 2 =C 2 -E 2
1.00
1.00
1.00
Quantity Total
Previous To Date
G 2 =H 1
H 2 =G 2 +F 2
0.83
0.30
0.27
0.45
3.00
0.83
0.30
5.00
0.83
1.00
0.27
1.00
0.20
1.83
1.50
1,200.00
840.00
996.00
210.00
5.00
11.00
72,000.00
37,800.00
3,600.00
4,200.00
420.00
350.00
28,800.00
16,800.00
360.00
6.00
3.00
8.00
5.00
13.00
1.00
1.00
1.00
0.50
0.50
1.50
1.00
1.50
1.00
1.50
1.00
1.50
1.00
0.025
1.00
0.83
0.50
1.00
1.00
0.00
2.00
2.33
1.50
2.50
2.00
0.03
1.00
0.50
1.00
0.50
0.50
0.50
1.00
0.83
0.50
1.00
0.83
0.50
1.00
1.00
1.00
0.83
0.50
1.00
1.00
1.00
1.50
1.00
1.00
0.50
0.025
0.50
0.50
0.50
3.00
1,500.00
2,700.00
167,400.00
2,876,400.00
40,500.00
93,750.00
75,000.00
56,250.00
15,000.00
7,500.00
30,000.00
9,000.00
8,000.00
100,000.00
435,000.00
3,311,400.00
2) "PO" = Project Office.

3) "SO.1" = Site Office - Works Contract No.1
4) "SO.2" = Site Office - Works Contract No.2

5) Contract Quantities & Amounts as revised by Addendum No.1.
Appendix C
2,500.00 2,075.00
2,540.00
0.00
750.00
750.00
650.00
500.00
60,680.00 25,550.00
500.00
375.00
1,000.00
1,125.00
2,000.00
2,500.00
11,250.00
36,600.00
20,800.00
750.00
500.00
500.00
207.50
500.00
750.00
2,000.00
Quantity
Remains
=B-H 2
4.00
22.17
22.70
24.00
23.55
9.00
4,575.00
2,540.00
750.00
750.00
650.00
500.00
86,230.00
25.17
52.73
53.50
49.50
49.50
119.50
2,196.00
1,050.00
58.17
52.50
30.00
49.00
770.00
360.00
240.00
150.00
3,060.00 1,706.00
63,740.00 27,256.00
1,500.00
1,250.00
1,000.00
=K+L
6,300.00
3,000.00
0.83
0.30
3.00
0.50
6,300.00
3,000.00
1.00
1.20
6.00
0.50
20,000.00 16,600.00
16,000.00 4,800.00
67,500.00
108,000.00
81,000.00
75,000.00
65,000.00
120,000.00
2,709,000.00
5.00
0.50
L=G 2 *A
1.83
1.27
0.50
0.50
0.50
0.50
5.00
8.00
80,000.00
480,000.00
384,000.00
384,000.00
336,000.00
12,000.00
K=F 2 *A
0.83
1.00
5.00
=B*A
Amount
This Month Previous Total to Date
1.00
1.27
0.50
0.50
0.50
0.50
0.83
0.30
5.00
1.00
0.50
1.00
0.50
0.50
0.50
0.50
0.45
3.00
0.83
0.30
5.00
0.50
0.45
3.00
TOTALS
Notes:
1) All amounts & Rate in (currency).
1.83
1.30
Contract
390.00
4,766.00
90,996.00
2,250.00
1,250.00
1,500.00
5,207.50
1,000.00
582.50
1,500.00
1,875.00
4,000.00
2,500.00
16,457.50
74,990.00 32,463.50
107,453.50
237.00
240.00
0 00
0.00
30.00
77.00
25.50
74.00
73.50
75.00
28.00
27.67
28.50
9.50
2.00
0.98
6) Total Previous = Total to 31 January 2004.

7) Total To Date = Total to 28 February 2004.
1 of 1
Appendix D
FORMAT FOR
INVOICING CLIENT
Referenced in:
Section I-2.4: Rules for Time Charges & Reimbursable Expenditures
Section I-2.8: Invoicing for Services
EXAMPLE FOR CLIENT INVOICE

Client name
Client Address
Date: 10 March 2004

Ref.: po/OUT/085
Attention:
Name /Title
Reference:
Clients Service Contract No. /Title
Subject:
Invoice No.XXXXX/04 for Fees and Direct Costs

Period Ending 29 February 2004
In accordance with Contract No. dated.., between The Louis Berger Group, Inc. and the Government
of, represented by The Ministry of, we request the following payment:
(currency: .)
a
b
c=a+b
d
Fees
Direct Costs
This
Previous
Total to
Contract
Amounts
Invoice
Invoices
Date
Amounts
Remaining
63,740.00
27,256.00
90,996.00 2,876,400.00 2,785,404.00
11,250.00
5,207.50
16,457.50
435,000.00
418,542.50
74,990.00
32,463.50 107,453.50 3,311,400.00 3,203,946.50
0.00 331,140.00 331,140.00
331,140.00
0.00
Advance
Payment
e
Repayment of
0.00
0.00
0.00 -331,140.00 -331,140.00
Advance
f=c+d+e Total (gross)
363,603.5 438,593.50 3,311,400.00 2,872,806.50
74,990.00
g=0.05*c Retention(5%)
1,623.18
5,372.68 If applicable
3,749.50
h=f-g
Total (net)
71,240.50 361,980.32 433,220.82
Fees and Direct Costs for the period ending 29 February 2004: Currency 71,240.50
(Currency seventy-one thousand, two hundred, forty and 50/100)
Payment should be made within 56 days (i.e. by 5 May 2004) to our account:
Name of Account Holder:
IBAN (International Identification):
Bank Name /Address
Bank Code:
Branch Code:
Account No.:
Control Key:
Swift:
.......
..
..
..
..
..
Yours faithfully,
Name
Project Manager
cc: VP responsible
cc: Head Office Administrator
Attachments:
Contract financial status (no.of pages)
Summary Sheets (no.of pages)
Support documents (no.of pages)
Appendix D
1 of 2
DATA FOR LOUIS BERGER INVOICE
MONTH: FEBRUARY 2004
EXAMPLE
SITE OFFICE - WORKS CONTRACT No.1
AVAILABLE WORK DAYS / MONTH: 20
OF BACK-UP TO
CLIENT INVOICE
Sat
1
Resident Engineer
Name
A.1.1 Local Staff
Name
Quantity Surveyor
Name
Materials Engineer
Name
Land Surveyor
Name
Inspectors
Name
Total billable time = 1.00

PO
LB 21/20 = 1.00
PO
LB 10/20 = 0.50
PO
LB 10/20 = 0.50
PO
LB 10/20 = 0.50
PO
LB 10/20 = 0.50
A.1.2 ALLOWANCES:
Name
Total billable = 1.00

month
PO
LB 29/29 = 1.00
B. DIRECT COSTS:
Bilingual Secretaries
Name

month
PO
LB 10/20 = 0.50
Sun Mon
Tue Wed Thu
Fri
Sat
Sun Mon
10
Tue Wed Thu
Fri
Sat
Sun Mon
Tue Wed Thu
Fri
Sat
Sun Mon
Tue Wed Thu
Fri
Sat
11
14
15
16
18
21
22
23
25
28
29
12
13

month
PO
LB 21/20 = 1.00
17
19
20
24
26
27
month
month
month
month
month
SITE OFFICE - WORKS CONTRACT No.2

Sat
1
Resident Engineer
Name
A.1.1 Local Staff
Name

PO
LB
5/20 = 0.27
month

PO
LB
5/20 = 0.00
month
A.1.2 ALLOWANCES:
Name

PO
LB
6/30 = 0.20
month
B. DIRECT COSTS:
Return Airfares (Expatriates)
Name
Mobilization /Demobilization Allowance
Name

PO
LB
0.5
PO
LB
0.50
Sun Mon
Tue Wed Thu
Fri
Sat
Sun Mon
10
Tue Wed Thu
Fri
Sat
Sun Mon
Tue Wed Thu
Fri
Sat
Sun Mon
Tue Wed Thu
Fri
Sat
11
14
15
16
18
21
22
23
25
28
29
12
13
17
19
20
24
26
27
No.
No.
Work Day
Air Flight IN
Air Flight OUT
M
Mobilization
M
Demobilization
H
Public Holiday
R
Report Submitted
Submitted by The Louis Berger Group, Inc.:
Accepted for Record Purposes by Client Name :
Name / Project Manager
Name / Title
Date:
Date:
Appendix D
2 of 2
Appendix E
DOCUMENT CONTROL /
PROJECT FILING SYSTEM
Referenced in:
Section I-3.7: Document Control / Project Filing System
SUGGESTED BREAKDOWN STRUCTURE

for DOCUMENT CONTROL and/or FILING
EXAMPLE
(Modify to Suit Project)

FILE No.
Content
FILE DESCRIPTION
MAIN CORRESPONDENCE FILES
All correspondence, to/from whomsoever (excluding

large attachments which are filed in subject files).
1.1
1.2
OUTGOING
INCOMING
Filed by letter "reference number".

Filed by letter "IN
IN number
number"..
SERVICE CONTRACT FILES
2.1
2.2
2.3
2.4
OUTGOING CORRESPONDENCE TO CLIENT

INCOMING CORRESPONDENCE FROM CLIENT
FUNDING INSTITUTION CORRESPONDENCE
MINUTES OF MEETINGS
SUBJECTS:
2.4
LB PROPOSAL
2.5
CONTRACT DOCUMENTS:
2.5.1
Contract Documents
2.5.2
Contract Changes & Addenda
2.5.3
Contract Clarifications / Protocols
2.5.4
Funding Agreement
2.5.5
Funding Agency Guidelines
2.6
APPROVALS OF STAFF
2.7
2.7.1
2.7.2
27
2.7
2.8
2.8.1
2.9
2.9.1
2.9.2
2 10
2.10
2.12
BUDGET STATUS
2.13
2 13
COST ESTIMATES
2.14.1
2.14.2
2.14.3
2.14.4
2.15
2.15.1
2.15.2
2.15.3
2.15
2.16
2.16
Original Guidelines and updates.

Specifications. LBG applications for approvals of staff
candidature and mobilizations and Client responses.
Notices of demobilizations.
Subfiles for each Sub-consultant. LBG applications for
approvals and Client responses.
Specifications. LBG applications for approval and
Client responses. Quotation invitations and responses.
Quotation analyses. Client authorizations.
File by "month".
Original, monthly, signed Timesheets and Timesheet
Summaries for staff directly reimbursable under Service
Contract. Copied as back-up for LBG invoices to Client.
Original, monthly, signed Timesheets for staff not
directly reimbursable under Service Contract.
Non-reimbursable Staff
2.11
2.14
g
Service Contract documents.
The original
APPROVALS OF SUB-CONSULTANTS:
Name
Name
(as necessary )
PROCUREMENT:
Vehicles
Office Equipment
Other Equipment
TIMESHEETS:
Reimbursable Staff
REIMBURSABLE EXPENDITURES:
Living Allowances
Per Diems
Air Travel
Other Travel
CLIENT INVOICES
2.10.1
2.10.2
2.10.3
2.10.4
Only correspondence & minutes relating to Service

Contract.
Receipts, ticket stubs, etc.; Summaries.

Originals as back-up for LBG invoices to Client.
Copies of invoices to Client (incl. all back-up).
Filed chronologically by "invoice period".
Detailed monthly status based on invoices to Client.
Spreadsheets of all Service Contract payment items
showing month-by month and accumulative totals
compared with Contract budget.
Estimates
under
E ti t off final
fi l costt off services
i
d Service
S i
Contract compared with Contract budget.
PUBLICITY:
General
Brochures
Press Releases
Newspaper Articles
LBG REPORTS:
Inception Report
Progress Reports
Contract Completion Report
(Further sub-divisions for other reports )
REPORTS BY OTHERS
(Sub-divisions for such reports as precontract feasibility studies, environmental
assessment and monitoring, grotechnical
investigations, etc. )
LB INTERNAL FILES (CONFIDENTIAL)
3.1
3.2
Correspondence between LBG offices.
Appendix E
1 of 3
3.3
3.3.1
3.3.2
3.3.3
LB STAFF:
CVs
Employment Agreements
Information on passports, next-of kin, blood type,

medical preconditions, etc.
Vacation Planning
POWERS OF ATTORNEY
PROJECT BANKING:
3.5.1
General
3.5.2
Bank Statements
LB MONEY TRANSFERS:
3.6.1
LB Head Office transfers to Project
(as required )
3.6.
MONTHLY ACCOUNTS:
3.7.1
Monthly Account Reports
3.7.2
Staff Allowances & Per Diems
3.7.3
Staff Expense Reports /Payments
3.7.4
Site Office No.1 Cash /Accounts
3.7.5
Site Office No.2 Cash /Accounts
3.3.4
3.4
3.5
3.6
3.7
SUBCONSULTANTS (CONFIDENTIAL)
4.1
SUB-CONSULTANT
S
CO S
No.1 (Name
(
)
):
Outgoing Correspondence
Incoming Correspondence
Subconsultancy Agreement & Addenda
CVs
Staff Interviews/Selection
Staff Approvals
4.1.1
4.1.2
4.1.3
4.1.4
4.1.5
4.1.6
Requests for transfers from LBG Head Office.
As submitted to LBG Head Office. File by month.

Payments to staff.
Including cash advances. File by month.
Cash advances to Site Offices. Receipts and monthly
accounts from Site Offices. File by month.
Correspondence between LBG and Subconsultant.
Client/LBG approvals: staff candidature &

mobilizations.
4.1.7
4.1.8
4.2
4.3
Timesheets
Subconsultant's Invoices /Approvals
SUB-CONSULTANT No.2 (Name ):
(Sub-files as above )
4.2..
SUB-CONSULTANT No.3 (Name ):
(Sub-files as above )
4.3..
WORKS CONTRACT No.1
5.1
5.2
5.3
5.3.1
5
31
5.3.2
5.3.3
SUBJECTS:
5.4
5.4.1
5.4.2
5.4.3
5.5
5.5.1
5.5.2
5.5.3
5.6
5.6.1
5.6.2
5.6.3
5.7
5.8
5.8.1
5.8.2
5.8.3
59
5.9
5.10
5.11
5.11.1
5.11.2
5.12
5.12.1
5.12.2
5.12.3
5.12.4
5.12.5
Invoices with full back-up documents. File monthly.
All correspondence, (excluding large attachments

which are filed in subject files). These files may be subdivided, as appropriate, according to source and
destination entities.
MINUTES OF MEETINGS
Monthly Progress Meetings
Regular Site Meetings
Subject Meetings
Usually between Client /Contractor /Engineer

/Engineer.
Usually between Contractor /Engineer
PRE-CONTRACT:
Tender Process
Tender Evaluation
Pre-Contract negotiations
WORKS CONTRACT DOCUMENTS:
General
Works Contract Addenda
Other Agreements & Protocols
SECURITIES:
Performance Bond
Guarantee for Advance Payment
Guarantee for Retention Money
INSURANCE
ENGINEER'S FACILITIES:
Project Office
Site Office
Vehicles
WORKS PROGRAMME & CASH FLOW
QUALITY ASSURANCE /QUALITY CONTROL
UNIT PRICES & LUMP SUMS:
Breakdowns of UPs & LSs
Rates /Prices for New Work Items
Invitations to tender, clarifications during tender period.

Tender opening & Tender Evaluation Report.
If relevant.
If relevant: Contractor's provision & maintenance,

including Equipment & Furnishings.
If relevant, Contractor's provision & maintenance.
Original & revised submissions.
submissions
Original & revised submissions.
As submitted by Contractor at start of Contract.
Records of negotiations /agreements during Contract.
EMPLOYER RESPONSIBILITIES:
Tax & Customs Exemptions
Price Adjustment Indices
Applicable Law
Possession of Site
Construction License /Statutory Approvals
Contractor's requests for / given by Employer.
Appendix E
2 of 3
5.13
5.14
5.15
5.16
5.17
5.18
CONTRACTOR'S SUPERINTENDENCE:
5.13.1 Organization
5.13.2 Representative /Personnel
CONTRACTOR'S LABOUR & EQUIPMENT:
5.14 (Sub-divisions as necessary )
TECHNICAL INFORMATION /SUBMISSIONS:
5.15 (Sub-divisions as necessary )
CONTRACTOR'S REPORTS:
5.16.1
Monthly Progress Reports & Labour/Plant
Returns
5.16.2
Contractor's
Contractor
s Progress Photographs
5.16.3
HEALTH & SAFETY:
5.17.1 Safety & Accident Reports
5.17.2 Traffic Management
SUBCONTRACTORS
VARIATIONS:
Variation Instructed
Variation Orders Pending
Variation Orders Issued
5 20
5.20
SUSPENSIONS OF WORKS:
5.20.1
Suspensions by Contractor
5.20.2
Suspensions by Engineer/Employer
5.21
CONTRACTOR'S CLAIMS
Site organization charts, etc.
File by month.
File by month.
File by month.
Contractor's request for & Engineer's approval. Other

correspondence. Sub-file as necessary.
5.19
5.19.1
5.19.2
5.19.3
5.22
5.22.1
5.22.2
5.22.3
5 22 4
5.22.4
5.22.5
5.22.6
5.23
5.24
File by VO No.
Correspondence & detailed records. File by event.
File by Claim Number. Separate file for each Claim
including Notice of Claim, Particulars of Claim,
contemporary records, Engineer's assessment &
determination, notices of Dispute, Dispute Resolution.
PAYMENT CERTIFICATIONS:
Contractor's Interim Statements
Engineer's Interim Certificates
Contractor's Statement at Completion
E i
Engineer's
' Certificate
C ifi
at Completion
C
l i
Contractor's Final Statement
Engineer's Final Certificate
ENGINEER'S INSTRUCTIONS
DEFECTS NOTICES
File by Statement /Certificate No.

Complete
C
l t with
ith supporting
ti b
back-up
k
d
documents,
t
and relevant correspondence.
File by consecutive reference number.
Standard Forms. File by consecutive ref. number.
IF PROJECT & SITE OFFICES SEPARATE, FOLLOWING FILES COULD BE KEPT AT SITE OFFICE ONLY:
5.25
5.26
5.27
5 28
5.28
5.28.1
5.28.2
5.28.3
5.28.4
5.28.5
5.28.6
5.28.7
5.28
5.29
5.29.1
5.29.2
5.29.3
5.29.4
5.29.5
5.29.6
5.29
5.30
RESIDENT ENGINEER'S LOG

INSPECTORS' DAILY SITE DIARIES
DAILY TEMPERATURE /PRECIPITATION
REQUESTS FOR INSPECTIONS /APPROVALS:
Setting Out
Earthworks
Sub-base / Base
Structural Formwork & Rebar
Drainage
Asphalt
Off-Site Steelwork Fabrication
(As required )
QUANTITIES MEASUREMENT:
Procedures
Earthworks
Sub-base / Base
Structural Formwork & Rebar
Drainage
Asphalt
(As required )
DAYWORKS FORMS (Measurement)
Chronology of significant events.

Standard forms.
Standard forms.
Pre-prepared standard forms submitted by Contractor

and approved by Engineer.
Calculations and summaries of quantities of Works

completed and approved for payment.
Standard forms. "Daily" record for each separate main

item of Daywork.
5.31
APPROVAL OF MATERIALS & SOURCES:

(As required )
5.32
APPROVAL OF EQUIPMENT & SOURCES
(As required )
5.32
5.33
TEST RESULTS /ANALYSES /SUMMARIES:
(As required )
5.33
5.34
COMMISSIONING TESTS:
(As required )
5.34
5.31
WORKS CONTRACT No.2
Same file system as Works Contract No.1.
Appendix E
3 of 3
Appendix F
PROJECT PROGRESS REPORTS
Referenced in:
Section I-3.8: Project Reports
Section II-3.5: Variation Orders
II-3.14: Records of Statements, Certifications & Payments
II-3.17: Monitoring & Reporting Works Progress
FOR INCLUSION IN SUGGESTED APPENDIX

TO PROJECT PROGRESS REPORTS
EXAMPLE
FOR PROGRESS
REPORTS
CONSTRUCTION COST STATUS

Works Contract No.1
Summary of Interim Payment Certificates

(Currency )
Name of Contractor
IPC No.
Period Ending
Date
Engineer's Certification
Date Issued
Amount
Date Due
Employer's Payment
Amount
Date Paid
1/1
1/2
1/3
Total
Works Contract No. 2
Summary of Interim Payment Certificates

(Currency )
Name of Contractor
IPC No.
Period Ending
Date
Engineer's Certification
Date Issued
Amount
Date Due
Employer's Payment
Amount
Date Paid
2/1
2/2
2/3
Total
Construction Supervisor
Summary of Invoices
(Currency )
Name
Invoice
No.
XXX/1
XXX/2
XXX/3
Period Ending
Date
LB Invoice
Date Issued
Amount
Date Due
Client's Payment
Amount
Date Paid
Total
6-Months Cash Flow Prediction - Future Certifications / Invoices

Certification
Month
Month/Year
Month/Year
Month/Year
Month/Year
Month/Year
Month/Year
Contract No.1 Contract No.2

Name
Name
A
B
Supervision
Name
C
Total
A+B+C
Explanatory footnotes:
Appendix F
1 of 1
Appendix G
CONSTRUCTION COMPLETION
REPORT
Referenced in:
Section I-3.8: Progress Reports
Section II-6.5: Interim Payment Certificate at Completion
FOR INCLUSION IN CONSTRUCTION COMPLETION REPORT
EXAMPLE
EXAMPLE FOR APPENDIX
ENGINEER'S ESTIMATE FOR OUTSTANDING PAYMENT LIABILITIES AND FINAL COST

Works Contract No.1
Name of Contractor
Bill
No.
Description
1
2
3
4
5
General Items
Site Clearance
Earthworks
10
Dayworks
Sub-total 1
Provisional Sum for Contingency
Retention
Return of Retention
Sub-total 2
Price Adjustment (Rise & Fall of Costs)
Price Adjustment (Change in Law)
Agreed Settlements, Claims, etc. (itemize)
Prolongation Costs during Extension of Time
Interest for Late Payments
Provisional Deductions
Final Deductions
Provision for outstanding Claims & Disputes
VAT
Contract Price / Estimated Final Cost
Contract
Amounts
Engineer's Certifications and Estimations (currency )

Total to date
Estimated
Estimated
certified for payment in outstanding after
Total
Certificate at Completion
date
N.A.
N.A.
N.A.
Contractor's
Statement
at Completion
Total
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Amount to be funded by Funding Institution

Amount to be funded by Employer
VAT on Employer Contribution
Appendix G
1 of 1
Appendix H
PREAMBLES TO
BILLS OF QUANTITIES
OF WORKS CONTRACT
Referenced in:
Section II-1.3: Works Contract Documents Sufficiency & Discrepancies
Section II-3.1: Bill of Quantities & Unit Prices
Section II-3.8: Measurement of Works
PREAMBLES TO BILL OF QUANTITIES

General Directions
Measurement
EXAMPLE
In the Bill of Quantities the sub-headings and item descriptions identify

the works covered by the respective items, read in conjunction with the
matters listed against the relevant marginal headings Item coverage in
Part III, Method of Measurement. The nature and extent of the works is
to be ascertained by reference to the Drawings, Specifications and
Conditions of Contract. The rates and prices entered in the Bill of
Quantities shall be deemed to be the full inclusive value of the work
covered by the several items including the following unless expressly
stated otherwise:
(i)
Labour and costs in connection therewith.
(ii)
The supply of materials, goods, storage and costs in connection

therewith including delivery to Site. Taking delivery of materials
and goods supplied by others, unloading, storage, and costs in
connection therewith.
(iii)
Plant and costs in connection therewith.
(iv)
Fixing, erecting and installing or placing of materials and goods in

position.
(v)
Temporary Works.
(vi)
The effect on the phasing of the Works of alterations or additions

to existing services and supplies to the extent set forth or
reasonably implied in the documents on which the tender is
based.
(vii)
General obligations, liabilities and risks involved in the execution

of the Works set forth or reasonably implied in the documents on
which the tender is based.
(viii)
Establishment charges, overheads and profit.
(ix)
Waste.
(x)
Attendance and transport for sampling and testing carried out by

the Engineer and supplying results of tests carried out by the
Contractor.
(xi)
Complying with Quality Assurance standards.
(xii)
Preparation and supply of detailed working drawings.
The measurement of work shall be computed net from the dimensions

stated in the Contract.
Appendix H
1 of 7
Quantity of Items
The quantities set forth against the Items in each bill are an estimate of
the quantity of each kind of the work included in the Contract and are
given for the convenience of forming a common basis for bids. There is
no guarantee to the Contractor that he will be required to carry out the
quantities of work indicated under any one particular item in the Bill of
Quantities or that the quantities will not differ in magnitude from those
stated in the Bills.
The brief descriptions of items given in the Bill of Quantities are purely for
the purpose of identification and it shall in no way modify or supersede
the detailed description given in the Conditions of Contract or
Specifications. When pricing items, reference should be made to the
Conditions of Contract, Specifications and relevant Drawings for full
directions and descriptions of work and materials involved.
The quantities given in the Bill of Quantities are provisional, as estimated
on the basis of the Plans for Approval, which have been taken as a basis
for the Tender Documents and are given to provide a common basis for
Tendering. The Tenderers shall consider carefully all items and duties in
the Tender Documentation in order to prepare their tenders, being aware
of their responsibilities under the Contract. Accordingly, the quantities
entered against the various items shall be verified.
Comments, if any, concerning the quantities shall be made in the form of
an attachment, following the system of itemisation, quoting the codes and
brief descriptions, as in the present documents, including the rates and
prices.
Except where specifically and expressly otherwise stated in the Technical
Specification or in the Bill of Quantities, the Permanent Works only shall
be measured. The works shall be measured net to the dimensions
shown on the Drawings or ordered in writing by the Engineer, except
where otherwise specifically described or prescribed in the Contract.
In adjusting extras or variations on the Contract, the work shall be
measured on the same basis as that for which the quantities have been
prepared and all works not specifically mentioned in the Bill of Quantities
will be taken as included in the prices of various items valued. The
Contractor, if so directed by the Engineer, shall carry out the work at
daywork rates which shall be the rates shown in the Schedule of
Daywork. All completed Daywork Sheets must be signed by the
Engineer on or before the end of the week in which the work is executed.
No allowance will be made for loss of materials or volume thereof during
transport or compaction.
Units of
Measurement
The calculation units used are the same as specified and allowed in the
International System of Units (SI) and used in the Technical
Documentation herein. No other but the units used in the Technical
Documentation shall be used in measurements, pricing, detail drawings
etc. (Any units not used in the Technical Documentation shall also be
expressed in terms of the SI).
Appendix H
2 of 7
Abbreviations used in the Bills of Quantities shall be interpreted as

follows:
mm
cm
m
mm2
cm2
m2
m3
ha
kg
t
no
h
wk
month
avg
LS
PS
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
shall mean
millimetre
centimetre
metre
square millimetre
square centimetre
square metre
cubic metre
hectare
kilogram
metric tonne (1000 kg)
number
hour
week
calendar month
average
lump sum
provisional sum
The method of measurement of complete work for payment shall be in

accordance with Clause .. of the General Conditions (net
measurement) unless otherwise specified.
Terms in Connection
with Payment
The Provisional Sums included and so designated in the Bill of Quantities

shall be expended in whole or in part at the discretion of the Engineer.
Each item in the Bill of Quantities for which payment is to be made in a
lump sum, and for which no payment schedule is provided, shall be paid
after the work covered by the lump sum has been completed to the full
satisfaction of the Engineer.
Pricing of Items
Each individual item shall have a rate or price entered against it. Rates
and prices shall be expressed in (currency) to two decimal places.
The rates and prices tendered in the priced Bill of Quantities shall be
quoted at the rates current prior to the date of submission, with due
consideration to the changes in price as anticipated up to the time of
completing the Works.
The rates shall be fixed, and shall not be subject to any change during the
contract period. The items in the priced Bill of Quantities shall cover the
total sum of compliance with the Contract. The prices for the items in
each Bill shall be summarised at the place designated for the purpose in
the Instructions to Tenderers. The price sums shall be stated and in the
Summary of the Priced Bill of Quantities.
The price for the Works shall be presented in compliance with those
stated in the Summary of the Priced Bill of Quantities.
Appendix H
3 of 7
The price for jobs not provided for in separate items shall be deemed to
be distributed among the rates and prices entered for the other items of
work. E.g., the price for the preparatory building, technological plant or
other temporary facilities, (such as offices, workers lodgings, amenities or
health service buildings, stores, workshops etc, including all internal
equipment, internal and external public utilities, heating, maintenance,
charges for the use of current, sewerage or water, and all other
expenses).
The Contractors costs of administration, planning, scheduling and coordination of works undertaken by others under Provision Sums will be
deemed to be distributed among the rates and prices entered for the
other items of work, and the Contractor will not be entitled to any mark-up
on the cost of works by others.
The rates and prices shall include, but not be limited to, labour, transport,
quality testing and inspection, materials, the provision, maintenance of all
temporary works of every description and the performance of all services
which may be required for the proper execution, completion and
contractual maintenance of the Works, including insurance, profit, and all
general risk, liabilities in full, completely in accordance with the provisions
of the Contract, and the undertaking of all obligations and responsibilities
therein defined.
The price for the Temporary Works shall be stated by considering that the
materials to be incorporated will fully revert to the Contractor.
The Bidder shall allow in his rates for all preliminary and general items
including temporary diversions and safe passage of traffic, traffic signs
and compliance with all other clauses of the Specifications and
Conditions of Contract which he may feel are not adequately covered
elsewhere in the Bill of Quantities.
Daywork
Labour
Rates entered in the Bill of Quantities for daywork rates labour shall
include all Contractors profit, supervision, insurances, overhead
expenses, transport to the Site of Works and all other costs incurred in
complying with the Contract.
The Contractor shall not be paid for any work at daywork rates unless the
written approval of the Engineer has been obtained prior to such work
being carried out.
Only time engaged in actual work will be allowed. All rates quoted for
daywork should bear reasonable relation to the rates given elsewhere in
the Bill of Quantities and will be considered in conjunction therewith.
Rates shall include for provisions of ordinary hand tools: shovels, brooms,
wheelbarrows, pickaxes, etc.
Appendix H
4 of 7
The definitions of hire terms to be as follows:

1) Hourly hire any hour of any period less than eight hours and any
hour of the 24 hours of the day and on any day of the week;
Daily hire an eight hour day during the 24 hours of the day and on any
day of the week, should more than eight hours be worked consecutively
(excluding normal breaks, etc.), the excess hours will be paid for as a
direct proportion of daily hire rate.
When hourly hire rates are not provided in this schedule, part of a day will
be paid for as a direct proportion of the daily hire rate based on 8 hour
working day (excluding normal breaks, etc.).
Plant
In addition to the provisions of this section: Rates for plant hire shall
include, unless otherwise stated in the Bill of Quantities, the wages of all
necessary drivers, attendants and operators, all fuel, power, oil, greases
and cleaning material and maintenance including all consumable spares
and insurance.
Time engaged in actual work will be allowed only. Payment will not be
made for mechanics or maintenance time, which shall be included in the
rates.
Materials
In addition to the provisions of this section: All required materials shall
conform to the requirements of this Contract and the Specifications
referred to and all rates shall include delivery to the Site of Works.
Errors will be corrected by the Employer for any arithmetical errors in
computation or summation as follows:
Completing the Bills

of Quantities
a) where there is a discrepancy between amounts in figures and in

words, the amount in words will govern, and
b) where there is a discrepancy between the unit rate and the total
amount derived from the multiplication of the unit price and the
quantity, the unit rate as quoted will govern, unless in the opinion of
the Employer, there is an obviously gross misplacement of the
decimal point in the unit price, in which event the total amount as
quoted will govern and the unit rate will be corrected
Use of Alternative
Specified Materials
or Designs
Where in the Contract a choice of alternative materials or designs is

indicated for a given purpose, the description billed and the rates and
prices inserted shall be deemed to cover any of the permitted alternative
materials or designs which the Contractor may elect to use.
Appendix H
5 of 7
Privately and
Publicly Owned
Services or Supplies
The information in the Contract as to the whereabouts of existing services

and mains is believed to be correct but the Contractor shall not be
relieved thereby of his obligations under the Contract. The Contractor
shall include in his rates and prices for locating and taking measures for
the support and full protection of pipes, cables and other apparatus during
the progress of the Works, obtaining the written consent of the
appropriate authority to interrupt the service or supply and for keeping the
Engineer informed of all arrangements he makes with the owners of
privately owned services or supplies, Statutory Undertakers and Public
Authorities as appropriate.
Labour
Labour in connection with Nominated Sub-contractors shall include:

(i)
in the case of work or services executed - for affording the use of
existing working space, access, temporary roads, erected scaffolding,
working shelters, staging, ladders, hoists, storage, latrines, messing,
welfare and other facilities existing on Site and the provision of protection,
water, electricity for lighting and clearing away rubbish and debris arising
from the work;
(ii)
in the case of goods, materials or services supplied - for taking
delivery, unloading, storing, protecting and returning crates, cartons and
packing materials.
Roadworks Overall
Requirements
The Contractor shall allow in his rates and prices for complying with
requirements in respect of Pavement Construction, Horizontal
Alignments, Surface Levels and Surface Regularity of Pavement
Courses, Cold Weather Working, Use of Surfaces by Traffic and
Construction Plant, and General Requirements for Sub-Bases and Road
Bases.
Work Within and

Below Non-tidal
Open Water or Tidal
Water
The Contractor shall allow in his rates and prices for taking measures
required to execute the work separately measured as being within and
below non-tidal open water or tidal water. For the measurement of work
affected by non-tidal open water or tidal water the datum stated in the
Contract shall be used irrespective of the actual level of water
encountered in the Works.
Dealing with Flow
The Contractor shall allow in his rates and prices for taking measures to
deal with the existing flow of water, sewage and the like.
Site Limitations and

Constraints
10
The Contractor shall allow in his rates and prices for complying with
any limitations and constraints on the use of the Site.
Equivalent Product
and Materials
11
Where the Contractor offers an equivalent product or material in place of

the one identified or specified, which is accepted for incorporation into the
Works by the Engineer, then the rates and prices in the Bill of Quantities
shall be deemed to include for all the obligations and costs associated
with the incorporation of the equivalent into the Works, including design,
provision of data and drawings, certificates, awaiting approvals,
resubmissions and modifications and amendments to the Works.
Appendix H
6 of 7
Unless specifically stated to the contrary in the Contract, the

measurement of the Works affected by the incorporation of the equivalent
products and materials shall be based on the Tender documents and not
on the Works as amended and completed to incorporate the equivalent
products and materials.
Appendix H
7 of 7
Appendix I
METHOD OF MEASUREMENT
Referenced in:
Section II-1.3: Works Contract Documents Sufficiency & Discrepancies
Section II-3.1: Bill of Quantities & Unit Prices
Section II-3.8: Measurement of Works
EXAMPLES
METHOD OF MEASUREMENT
SECTION 1: GENERAL ITEMS
Temporary Facilities:
Units
The units of measurement shall be: Item, number, lump sum, month
or provisional sum (as noted in the Bill of Quantities).
Provision of
Temporary Offices and
Laboratories for the
Engineer
The items for provision of temporary offices and laboratories shall in

accordance with the Preambles to Bill of Quantities, General
Directions, including initial provision and eventual dismantling of the
facilities as follows:
Item coverage
(i)
(ii)
Provision of facilities for the Engineer including:

(a)
initial facilities and equipment, maintenance, servicing and

removing;
(b)
sites for the facilities;
(c)
preparation of sites;
(d)
foundations, bases and hard-standings;
(e)
water, sanitation, heating, air conditioning, power and

lighting services;
(f)
fences, notice and direction boards;
(g)
vehicle access, hard-standings, parking areas and

footpaths;
(h)
equipment, furnishings, fittings, supplies and initial

consumable stores;
(i)
telephones, extensions, switchboard and switching

systems separately connected to the telephone system.
Dismantling of facilities including:

(a)
receiving back from the Engineer and removing

equipment, furniture, fittings and supplies off Site;
(b) disconnecting, removing and sealing off disused services;

(c)
demolishing and removing off Site all temporary facilities

and materials;
Appendix I
1 of 20
(d)
Payment
Servicing and
Maintenance of
Temporary Offices and
Laboratories for the
Engineer
Item coverage
transport and delivery to the Employer of equipment,

furnishings and materials which becomes the property of
the Employer.
Payment of lump sum prices for provision of temporary offices and

laboratories shall become due as follows:
(a)
85% of the lump sum on completion of provision of the

facilities;
(b)
15% of the lump sum on completion of removal of the

facilities and restoration of the sites.
The items for servicing and maintenance of offices and laboratories

for the Engineer shall in accordance with the Preambles to Bill of
Quantities, General Directions, including:
(i)
Serving and maintaining temporary offices and laboratories for

the Engineer including:
(a) rental and leasing of any or all facilities including sites,
buildings, equipment (including telephone systems) and
furnishings;
(b) water, sanitation, heating, lighting, air conditioning and
lighting services;
(c) depreciation and financing of any or all facilities;
(d) maintenance, servicing, repairing, calibrating, cleaning
and if necessary, replacing any or all facilities;
(e) moving and re-establishing portable or mobile offices as
required;
(f) replenishment of consumable stores;
(g) disposal of waste.
Mobilization and
Demobilization of
Temporary Site
facilities for Contractor
Item coverage
Payment
The item for mobilization and demobilization of site facilities for the
Contractor shall in accordance with the Preambles to Bill of
(i)
Mobilization shall include provision for everything required by

the Contractor;
(ii)
Demobilization of the Contractors temporary site facilities.
(iii) Payment of lump sum prices for provision of temporary offices

and laboratories shall become due as follows:
Appendix I
2 of 20
(a) 80% of the lump sum on completion of mobilization;

(b) 20% of the lump sum on completion of demobilization and
restoration of the sites.
Provide and Maintain

Survey Equipment
Item coverage
The item for provision of survey equipment shall be in accordance

with the Preambles to Bill of Quantities, General Directions,
including:
(a)
Equipment
(b)
Maintenance, servicing, repair, calibrating, and if necessary,

replacing any or all equipment
(c)
transport and delivery to the Employer of equipment and

materials which become the property of the Employer.
Transportation for the Engineer:

Units
The units of measurement shall be: numbers or month.
Measurement
The measurement of vehicles for the Engineer shall be number of

vehicles for each month or part thereof during which maintenance or
services of vehicle is provided.
10
The items for vehicles for the Engineer shall in accordance with the
preamble to Bill of Quantities, General Directions, including:
Vehicles for the

Engineer
Item coverage
(d)
equipment;
(e)
taxing for use on public highways and for the carriage of goods
and samples;
(f)
comprehensive insurance;
(g)
suitable replacement including equipment;
(h)
depreciation;
(i)
maintenance in a roadworthy condition and in conformity with

the vehicle manufacturers recommendations;
(j)
fuel and oil;
(k)
provision of suitably qualified drivers including associated costs

(as this Section, Paragraph 15);
(l)
keeping clean inside and out;
(m) collection from Site when the vehicle is returned;

(n)
transport and delivery to the Employer of vehicles which
Appendix I
3 of 20
become the property of the Employer.
Cost of Telephone Calls and Communications for the

Engineers Temporary Offices:
Units
11
12
Cost of Telephone
Calls and
Communications of the
Engineer
Item coverage
The units of measurement shall be: Provisional Sum.

The item shall in accordance with the preamble to Bill of Quantities,
General Directions, including:
(a)
the cost of telephone calls and communications from the

Engineers temporary offices.
Operatives for the Engineer:

Units
13
The units of measurement shall be: month.
Measurement
14
The measurement of operatives for the Engineer shall be each

month or part thereof during which the operatives services are
supplied in accordance with the written order of the Engineer.
Operatives for the

Engineer
15
The items for operatives for the Engineer shall in accordance with
the preamble to Bill of Quantities, General Directions, including:
Item coverage
(a)
the wages and other emoluments paid including payment for

overtime;
(b)
working outside the Contractors normal working hours if so

required by the Engineer;
(c)
costs and expenses incurred consequent upon the

employment or hiring;
(d)
occasional overnight accommodation and expenses.
Publicity:
Units
16
The units of measurement shall be: provisional sum.
Information Material
17
The items for Information Material shall in accordance with the

preamble to Bill of Quantities, General Directions, including:
Item coverage
Information material as instructed by the Engineer
Temporary Diversion for Traffic:

Units
18
The units of measurement shall be: lump sum.
Appendix I
4 of 20
Taking Measures for or

Construction of
Temporary Diversion
for Traffic
19
Item coverage
Maintenance of
Measures for or
Construction of
Temporary Diversion
for Traffic
20
Item coverage
Removal of Measures
for or Construction of
Temporary Diversion
for Traffic
21
Item coverage
The items for taking measures for Construction of temporary

diversion for traffic shall in accordance with the Preambles to Bill of
(a)
obtaining licenses and agreements;
(b)
making arrangements with owners and occupiers of land

temporarily required and costs arising therefrom;
(c)
preparing, amending and submitting to the Engineer and other

interested bodies, proposals and programme;
(d)
consulting with Police and other authorities;
(e)
preparation of site;
(f)
site clearance, fencing, drainage, earthworks, pavements,

kerbing, footways, traffic signs, road markings, road lighting,
structures, parapets, ramps and accesses;
(g)
temporary diversion of services.
The items for maintenance of measures for or construction of

temporary diversions for traffic shall in accordance with the
Preambles to Bill of Quantities, General Directions, including:
(a)
continuous adequate provision for traffic flows;
(b)
modifications.
The items for removal of measures for or construction of temporary

diversions for traffic shall in accordance with the Preambles to Bill of
(a)
breaking up diversion;
(b)
disposal of material (as Section 3 Paragraph 28);
(c)
unless otherwise stated in the Contract, reinstatement of the

site to its previous condition.
Traffic Safety and Management:

Units
22
The units of measurement shall be: lump sum.
Traffic Safety and

Management
23
The items for traffic safety and management shall in accordance

including:
Appendix I
5 of 20
Item coverage
(a)
complying with the Highway Authority traffic sign requirements

or submitting proposals for dealing with particular situations to
the Engineer for his consent.
(b)
complying with particular requirements of the Contract;
(c)
consulting with and obtaining approvals of statutory, Police or

other authorities concerned, submitting to the Engineer for his
consent, proposals based on such consultation showing a
scheme of traffic safety and management measures including
details of Emergency Routes and furnishing such details as
necessitated by the Works or as the Engineer may require;
(d)
awaiting Engineers consent to proposals;
(e)
traffic signs, road markings, lamps, barriers and traffic control

signals including maintaining, cleaning, repositioning, covering,
uncovering and removing;
(f)
complying with the requirements for labour and plant working

on or adjacent to a trafficked highway, at entry and exit points
to the Site including signing;
(g)
road lighting, modification and removal;
(h)
giving of notice to the Engineer.
Etcetera
SECTION 3: EARTHWORKS
EXAMPLES
Earthworks Outline:
Definitions
The Earthworks Outline, unless expressly stated otherwise, is

defined as the finished earthworks levels and dimensions (prior to
top-soiling) required by the Contract for the construction, where
specified, of:
(a)
carriageway, hard shoulder, hard-strip, footway, paved area,

central reserve, verge, side slope;
(b)
sub base material, fill on sub base material and roadbase;
(c)
contiguous filter material;
(d)
surface water channels;
(e)
landscape areas, noise bunds.
Appendix I
6 of 20
In all cases of filter drains the Earthworks Outline shall be the top of
the filter material.
Measurement General
Where capping or stabilisation to form capping is required by the

Contract to be constructed in cutting or on embankment - the
Earthworks Outline shall be as defined in Paragraph 1 of this
Section as the top of capping.
Where an embankment is required by the Contract to be surcharged

- the Earthworks Outline shall be as defined in Paragraph 1 of this
Section and exclude the surcharge.
Where permanent storage or stockpiling of topsoil is required by the

Contract - the Earthworks Outline shall be as defined in Paragraph 1
of this Section and exclude stored topsoil.
Where the bottom of a structural foundation for an earth retaining

structure (other than for reinforced earth and an anchored earth
structure) is below Existing Ground Level - the Earthworks Outline
shall be the permanently exposed face of the structure below
Existing Ground Level.
Where the bottom of the facing foundation for a reinforced earth

structure or an anchored earth structure is below Existing Ground
Level - the Earthworks Outline shall be the inside face of the facing
above Existing Ground Level to the underside of the capping unit, or
where no capping unit is required, to the finished earthworks level
prior to top-soiling.
Where the Existing Ground Level has been subjected to treatment

under the Contract in respect of Ground Improvement, Mine
Workings, Swallow Holes and the like, for the purpose of this
Section Existing Ground Level shall be the level obtained upon
completion of any such treatment of the areas affected.
Sub-Soil Level is defined as the level of the ground after the removal
of topsoil required by the Contract.
Surcharge is defined as material placed on embankments for the

purpose of loading the embankment for the periods stated in the
Contract.
10
For the purpose of this Section it shall be assumed that one cubic
metre of material excavated forms one cubic metre of compacted fill.
No allowance shall be made in the measurement for bulking and
shrinkage of any material.
11
For the purpose of this Section no account shall be taken of

excavated material arising from the Works measured in accordance
with Sections 1, 2 and 4 to 8.
12
Where deposition and compaction of an embankment has been

carried out in accordance with the Contract and settlement occurs:
Appendix I
7 of 20
(a)
subsequent to the Earthworks outline having being reached, or

in the case of a surcharged embankment subsequent to the
removal of the surcharge; or
(b)
from settlement of or penetration into the ground beneath the

embankment, then the additional fill, deposition and
compaction required shall be measured immediately prior to
the preparation of formation, provided that the first 75 mm of
settlement or penetration shall not be measured.
In the case of landscape areas, noise bunds and other areas of fill
where settlement or penetration occurs the additional fill deposition
and compaction required shall not be measured.
Excavation:
Units
13
The units of measurement shall be: cubic metre.
Measurement
14
The measurement of excavation shall be, for:

(a)
topsoil - the volume of the void formed by the excavation of

material to Sub-Soil Level;
(b)
cutting and other excavation:

(i)
cutting and bulk excavation - the volume of the void

formed by the excavation of material from Existing Ground
Level down to Earthworks outline, together with the
volume of the void formed by the excavation of material
below that Outline;
or
(ii) under embankments, and other areas of fill - the volume of
the void formed under the excavation of material below
Existing Ground Level;
less in each case the volume of topsoil in the void included in
the measurement under Paragraph 14(a).
(c)
removal of surcharge - the volume of material remaining as

surcharge to be removed down to the datum stated in the
Contract, or if none is stated, to the Earthworks Outline.
(d)
structural foundations - the volume of the void to accommodate

the structural foundation calculated on the basis of the
horizontal area of the bottom of the foundation with the depth
being measured from the bottom of the foundation (including
blinding concrete) to:
Appendix I
8 of 20
(i)
where the bottom of the foundation is below Existing

Ground Level - the Existing Ground Level. Provided that
where the Earthworks Outline is below Existing Ground
Level the depth shall be measured to the Earthworks
Outline;
(ii) where the bottom of the foundation is at or above Existing

Ground Level - the datum stated in the Contract, or where
none is stated to Earthworks Outline;
the measurement under Paragraph 14(a). of this Section shall
not be included.
(e)
foundations for corrugated steel structures and the like - the

volume of the void to accommodate the structure, bedding and
surround down to the outline stated in the Contract from:
(i)
where the bottom of the bedding is below Existing Ground

Level - from Existing Ground Level.;
(ii) where the bottom of the bedding is at or above Existing

Ground Level - from the datum stated in the Contract, or
where none is stated to Earthworks Outline;
the measurement under Paragraph 14 (a).
The classification of stage depths for the excavation of the
foundation shall be the maximum depth of excavation obtained
in accordance with this sub-Paragraph.
Excavation of
Acceptable Topsoil
Material
15
Item coverage
(f)
New and enlarged watercourses, intercepting ditches - the

volume of the void formed from Existing Ground Level down to
the outline stated in the Contract less the volume of topsoil in
the void included in the measurement under Paragraph 14a of
this Section.
(g)
Clearing abandoned watercourses - the volume of the void

formed from existing Ground Level down to the outline stated
in the Contract.
The items for excavation of acceptable material shall in accordance

including:
(a)
loading into transport;
(b)
multiple handling of material;
(c)
keeping earthworks free of water;
Appendix I
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Excavation of
Acceptable Material
Excluding Topsoil
16
Item coverage
(d)
haulage and deposition in temporary stockpiles including the

provision of sites for stockpiles;
(e)
taking preparations to avoid damage to property, structures,

drains, sewers, services, instrumentation and the like;
(f)
grading beds and trimming side slopes of water courses and

the like.
The items for excavation of acceptable material excluding Topsoil

shall in accordance with the Preambles to Bill of Quantities, General
Directions, including:
(a)
loosening or breaking up material before or in the process of

excavation;
(b)
upholding the sides;
(c)
working around and between piles;
(d)
over-break and making good;
(e)
(f)
selection and separation of materials;
(g)
forming and trimming side slopes, benches and berms;
(h)
trimming the bottom and sides of watercourses and the like;
(i)
grading beds and trimming sides of watercourses and the like;
(j)
protection or sub-grade;
(k)
additional excavation the Contractor may require for working

space, timbering, formwork or other temporary works and its
subsequent backfilling with approved materials and
compaction;
(l)
taking precautions to avoid damage to property, structures,

drains, sewers, services, instrumentation and the like;
(m) treatment of faces of cuttings which are not to receive topsoil;
(n)
(o)
(p)
disposal of surcharge material (as this Section Paragraph 28);
(q)
waiting for frozen material to thaw;
(r)
replacing acceptable material rendered unacceptable;
Appendix I
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Excavation of
Unacceptable Material
17
Item coverage
(s)
breaking down material necessary to comply with the

requirements of fill;
(t)
haulage deposition and compaction in temporary stockpiles

including provision of sites for stockpiles;
(u)
complying with any special requirements for the material.
The items for excavation of unacceptable material and

contaminated material shall in accordance with the Preambles to Bill
of Quantities, General Direction, including:
(a)
excavation (as this Section Paragraph 16(a) to (p) inclusive);
(b)
special measures for dealing with contaminated material.
Excavation in Hard Material:

Units
18
Measurement
19
The measurement for extra over excavation for excavation in hard

material shall be the volume of the voids formed by the removal of
the hard material.
Extra Over Excavation

for Excavation in Hard
Material
20
The items for extra over excavation in hard material shall in

Direction, including:
Item coverage
(a)
preliminary site trials of blasting;
(b)
blasting, splitting, breaking and the like;
(c)
cutting through reinforcement;
(d)
saw cutting and trimming;
(e)
treatment to bottoms of foundations.
Deposition of Fill:
Units
21
Measurement
22
The measurement of deposition of fill shall be the volume of

compacted fill, calculated in accordance with Paragraphs 35, 36 and
37 of this Section, less the volume of imported compacted fill
calculated in accordance with Paragraphs 34 and 35 of this Section.
23
Deposition of special fill materials to structures shall be separately

measured only where this material as such is specifically stated by
the Contract to be required to be placed in a particular location.
24
The items for deposition of fill shall in accordance with the

Preambles to Bill of Quantities, General Direction, including:
Deposition of Fill
Appendix I
11 of 20
Item coverage
(a)
as this Section Paragraph 39(a) to (g) inclusive;
(b)
haulage;
(c)
waiting for frozen material to thaw;
(d)
(e)
selection of material of stated Classes and layering or

depositing in locations stated in the Contract;
(f)
depositing fill to slope away from vertical drainage layers and

measures to prevent surface water entering such layers;
(g)
mechanical or chemical treatment of soil as the Contractor may

require to facilitate the use of particular plant;
(h)
trimming and shaping to levels and contours;
(i)
deposition of fill resulting from settlement and penetration of

landscape areas, noise bunds and other areas of fill, and from
the first 75 mm of settlement and penetration of embankments.
Disposal of Material:
Units
25
Measurement
26
The measurement of disposal of acceptable material shall be the

volume of acceptable material excluding topsoil, excavated from
within the Site measured in this Section less the volume of
compacted fill calculated in accordance with Paragraphs 35, 36 and
37 of this Section, after deduction from the latter of the volume of
imported fill calculated in accordance with Paragraphs 30 and 31 of
this Section.
27
The measurement of disposal of unacceptable material shall be the

volume of unacceptable material excavated from within the Site and
measured in this Section.
28
The items for disposal of material shall in accordance with the

Preambles to Bill of Quantities, General Direction, including:
Disposal of Material
Item coverage
(a)
haulage and deposition in tips off Site provided by the

Contractor;
(b)
(c)
special measures for dealing with contaminated material;
Appendix I
12 of 20
(d)
allowing for deposition in lieu of disposal of acceptable fill

resulting from settlement and penetration of landscape areas,
noise bunds and other areas of fill, and from the first 75 mm of
settlement and penetration of embankments.
Imported Fill:
Units
29
Measurement
30
The measurement of imported acceptable fill shall be the volume of

compacted fill, calculated in accordance with Paragraphs 35, 36 and
37 of this Section less the volumes of:
Imported Fill
(a)
acceptable material, excluding topsoil excavated from within

the Site and measured in this Section;
(b)
other stated classes of imported acceptable fill excluding

topsoil.
31
The measurement of other stated classes of imported acceptable fill,

other than topsoil, shall be the volume of the void filled with the
stated class of imported acceptable fill to the outline stated in the
Contract.
32
The measurement of imported topsoil shall be the volume of topsoil

calculated from the areas and thicknesses to be top-soiled less the
volume of topsoil excavated from within the Site and measured in
accordance with Paragraph 14(a) of this Section.
33
The items for imported fill shall in accordance with the Preambles to
Bill of Quantities, General Directions, including:
Item coverage
(a)
as this Section Paragraph 39(a) to (g) inclusive;
(b)
fill provided by the Contractor from sources outside the Site;
(c)
loading into transport and haulage;
(d)
(e)
selection of material of stated Classes and layering or

depositing in locations stated in the Contract;
(f)
depositing fill to slope away from vertical drainage layers and

measures to prevent surface water entering such layers;
(g)
trimming and shaping to levels and contours;
(h)
imported fill resulting from settlement and penetration of

Appendix I
13 of 20
Compaction of Fill:
Units
34
Measurement
35
The measurement of compaction of fill in embankments and other

areas of fill, in strengthened embankments, in reinforced earth
structures, in anchored earth structures, in landscape areas and in
noise bunds shall be the volume of the embankment or void filled
from Existing Ground Level up to the Earthworks Outline plus,
where required by the Contract, the volume of:
(a)
the void formed by the removal of topsoil beneath the fill in

question, and included in the measurement under Paragraph
14(a) of this Section;
(b)
the void formed by excavation for the fill in question;
(c)
(i)
below Earthworks Outline included in the measurement

under Paragraph 14(b)(i) of this Section; and
(ii)
below Existing Ground Level included in the

measurement under Paragraph 14(b)(i) of this Section.
Surcharge, being the void filled from the Earthworks Outline up

to the profile stated in the Contract to which the surcharge is
required to be constructed,
Less in each case the volume of any compaction of fill to structures,

and bedding and surround to corrugated steel structures and the like
included in the volume so obtained and which is measured
separately under Paragraph 37 of this Section.
36
The measurement of compaction of fill above structural concrete

foundations shall be the volume of the void measured in accordance
with paragraph 14(d) of this Section less the volume of the structural
foundations and structure within that void.
37
The measurement of compaction of:

(a)
fill to structures,
(b)
fill on sub base material and roadbase;
(c)
fill on bridges (under footways, verges and central reserves);
(d)
bedding to corrugated steel structures and the like;
(e)
surround to corrugated steel structures and the like;
in each case, shall be the volume of the void filled to the outline
stated in the Contract less the volume of corrugated steel structures
and the like within that void.
Appendix I
14 of 20
Compaction of Fill
38
Compaction of special fill materials to structures shall be separately

measured only where this material as such is specifically stated by
the Contract to be required to be placed in a particular location.
39
The items for compaction of fill shall in accordance with the

Item coverage
(a)
protection of sub grade;
(b)
(c)
(d)
complying with requirements and constraints on the sequence,

timing and rate of deposition and filling, and equalisation of
earth pressures;
(e)
complying with the special requirements for the material;
(f)
complying with the particular requirements and constraints with

regard to reinforced earth structures, strengthened
embankments, anchored earth structures, soil stabilisation,
corrugated steel structures and the like;
(g)
taking precautions to avoid damage to property, structures,

sewers, drains, services instrumentation and the like;
(h)
spreading and levelling;
(i)
compaction trials and demonstrations;
(j)
forming and trimming side slopes, benches and berms;
(k)
blinding and treatment of side slopes, benches and berms;
(l)
compaction of fill resulting from settlement and penetration of

Etcetera
SECTION 4: PAVEMENTS
EXAMPLES
Sub-Base:
Units
Appendix I
15 of 20
Measurement
Sub-Base
The measurement of sub-base shall be the volume of sub-base

measured to the outlines stated in the Contract.
No deduction shall be made for openings of 1 square metre or less.
The items for sub-base shall in accordance with the Preambles to

Bill of Quantities, General Directions, including:
Item coverage
(a)
trial areas and trials, inspection, sampling, classification and

identification of soil types, determination of CBR values and
thickness of sub-base and bituminous base layers in
accordance with the Specifications;
(b)
awaiting Engineers approval;
(c)
making good after sampling and testing;
(d)
protection of material in transit and while awaiting tipping;
(e)
grading, measuring, mixing and depositing materials;
(f)
spreading and compaction;
(g)
cleaning, preparing and working on or up to existing surfaces

and features;
(h)
curing and protection;
(i)
edge support;
(j)
maintenance of surface;
(k)
taking measures to protect the sub-grade and sub-base from

deterioration due to the ingress of water and the use of
constructional plant;
(l)
taking measures to improve the sub-base to protect the subbase and sub-grade from damage due to the Contractors
method of construction and choice of constructional plant;
(m) shaping to camber, falls and crowns.
Pavement:
Units
The units of measurement shall be: square metre.
Measurement
The measurement of bituminous base, binder course, wearing

course and concrete slab shall be calculated using the width of the
top surface of the course or slab.
Appendix I
16 of 20
Note: The width of the top surface of the course or slab shall be
the width required by the Contract and shall exclude sloping sides or
edges.
No deductions shall be made for openings of 1 square metre or less.
Bituminous Base,
Binder Course,
Wearing Course
Item coverage
The items for bituminous base, binder course, wearing course shall
in accordance with the Preambles to Bill of Quantities, General
(a)
trial areas and trials;
(b)
awaiting Engineers approval of trial areas and trials;
(c)
(d)
protection of material in transit and while awaiting tipping;
(e)
designing mixes;
(f)
(g)
spreading and compaction;
(h)
cutting back cleaning, preparing and working on or up to

existing surfaces and features;
(i)
edge support;
(j)
chippings, surface dressing, bituminous spray (tack coats),

slurry sealing and resin based treatment;
(k)
surface texturing;
(l)
making joints;
(m) forming or sawing grooves, clearing, grit blasting, priming,

caulking, temporary and permanent sealing of joints;
(n)
shaping to cambers, falls and crowns;
(o)
forming recesses, openings and bays;
(p)
protection of kerbs, masking and unmasking of drainage

channels, chamber covers, gully gratings, expansion joints,
and the like;
(q)
maintenance of surface;
(r)
taking measures to protect the pavement from deterioration

due to the ingress of water and the use of constructional plant;
(s)
measures required for aftercare and opening the road to traffic.
Appendix I
17 of 20
Profiling and Levelling Courses:

Units
Measurement
The units of measurement shall be:

(i)
bituminous profiling and levelling course : tonne
(ii)
cement bound profiling and levelling course : cubic metre.
The measurement of bituminous profiling and levelling course shall

be calculated from the tonnage of material certified by the Engineer
multiplied by the factor if stated in the item description for the
particular aggregate used.
The tonnage certified by the Engineer shall be only that material
incorporated in the Permanent Works in the locations and to the
extent and thickness required by the Contract as determined by
surveys (using the average density of material) or by other means
as agreed by the Engineer. Material in excess of the requirements
of the Contract and material used for any other purpose shall not be
included within the certified tonnage.
Bituminous and
Cement Bound
Profiling and Levelling
Courses
10
The measurement of cement bound profiling and levelling course

shall be the volume of material measured to the outlines required by
the Contract.
11
The items for bituminous and cement bound profiling and levelling
courses shall in accordance with the Preambles to Bill of Quantities,
General Directions, including:
Item coverage
(a)
bituminous base, binder course and wearing course (as this

Section Paragraph 7);
(b)
weighing, tickets and copies;
(c)
material not laid as regulating course.
Surface Treatment:
Units
12
The units of measurement shall be: square metre
Measurement
13
The measurement of surface treatment shall be calculated using the

width of the top surface to be treated.
14
Surface treatment shall only be measured separately when the

Contract requires a separate or additional surface treatment to be
applied to the pavement. Surface treatment forming an integral part
of any specified group or type of pavement shall not be separately
measured.
No deductions shall be made for openings of 1 square metre or less.
Appendix I
18 of 20
Surface Treatment
15
Item coverage
The items for surface treatment shall in accordance with the

(a)
trials and trial areas;
(b)
awaiting Engineers approval of trial areas and trials;
(c)
(d)
designing mixes;
(e)
(f)
spreading and rolling deposited materials;
(g)
making joints;
(h)
cleaning surfaces;
(i)
tack coats and prime coats
(j)
protection of kerbs, masking and unmasking of drainage

channels, chamber covers, expansion joints, road studs, road
markings and the like and obtaining clean markings;
(k)
in the case of resin based surface treatment certificate of

spraying equipment and supplying copy of certificate at
monthly intervals to the Engineer;
(l)
measures required for aftercare and opening the road to traffic.
(m) cutting back, cleaning, preparing and working on or up to

existing surfaces and features;
(n)
(o)
disposed of material (as Section 3, paragraph 28);
Scarifying, Planing and Burning Off:

Units
16
The units of measurement shall be: square metre.
Measurement
17
The measurement of scarifying, planing (or milling) and burning off

shall be calculated using the required minimum layer thickness for
each layer, the total minimum overlay thickness and the final road
surface level. No deductions shall be made for openings of 1
square metre or less.
Scarifying, planing (or milling) and burning off carried out as part of
a repave recycle process shall not be separately measured.
Appendix I
19 of 20
Scarifying, Planing and

Burning Off
18
Item coverage
The items for scarifying, planing (or milling) and burning off shall in
(a)
re-shaping and rolling;
(b)
shaping to cambers, falls and crowns;
(c)
(d)
(e)
disposal of material (as Section 3 Paragraph 28);
(f)
working around drainage channels, chamber covers,

expansion joints and the like;
Etcetera
Appendix I
20 of 20
Appendix J
QUALITY CONTROL FORMS
Referenced in:
Section II-2.12: Quality Assurance & Control
Section II-3.7: Daywork
Section II-4.1: Engineers Instructions
Section II-4.6: Works Inspection, Testing & Acceptance
Section II-4.7: Unacceptable Works, Defects Notifications & Remedies
Contractor:
Engineer:
Contract:
Name
Name
REQUEST FOR
SURVEYING OR TESTING
Submitted by Contractor (Signature)
EXAMPLE
Date
Time
Date
Time
Date
Time
Date
Time
(Name)
(Signature)
Received by Engineer
(Name)
Contractor's Request:
Engineer's Response:
ACCEPTED
Resident Engineer
(Signature)
(Name)
Comment:
NOT ACCEPTABLE
Resident Engineer
(Signature)
(Name)
Reasons:
Appendix J
1 of 8
Contractor: Name
Engineer: The Louis Berger Group, Inc.
Contract: Name
REQUEST FOR INSPECTION
EARTHWORKS AND ROAD SUBBASE
EXAMPLE
In accordance with Clause (State) of the Conditions of Contract, the Contractor gives notice that the
following work has been constructed in accordance with the Contract requirements and is available
for inspection:
Date
Time
Date
Time
Location:
(Signature)
from km
to km
LHS
RHS
Type of Work
1. Road Sub-grade
2. Embankments
3. Excavation
4. Shoulders
5. Road Widening
6. Sub-base
7. Topsoil
8. Rockfill
9. Geotextile
1. Technical Specification Cl. No.
2. Drawing No.
Comments
Signature
Inspection Points:
1. Inspector:
Compaction
Dimension
Layer thickness
Comments
2. Surveyor:
Signature
Alignment
Levels
Comments
3. Laboratory:
Signature
Sampling
Testing
Comments
ACCEPTED
RESIDENT ENGINEER
Slopes
Signature
NAME:
DATE:
NAME:
DATE:
NOT ACCEPTABLE
Reason
Action
RESIDENT ENGINEER
Appendix J
2 of 8
Contractor: Name
Contract: Name
EXAMPLE
STRUCTURES
In accordance with Clause (State) of the Conditions of Contract, the Contractor gives notice that the following
work has been constructed in accordance with the Contract requirements and is available for inspection:
Date
Time
Date
Time
Structure:
Bridge
Location:
from km
Type of Work
(Signature)
Box Culvert
Arch Culvert
Retaining Wall
to km
LHS
I. Reconstruction
II. Repair
RHS
III. Demolition
1. Piles
2. Foundations
3. Abutments
4. Wing Walls
5. Piers
6. Cross Head
7. Bridge Bearings
8. Main Beams
9. Deck Slab
10. Level. Concrete
13. Waterproofing
14. Guardrails
11. Sidewalk Blocks
12. Expansion Joints
15. Parapet Rails
16. Approach Slabs
2. Drawing No.

Comments
Signature
Inspection Points:
1. Inspector:
Formwork
Fixing
Dimensions
Stability
Reinforcement
Fixing
Dimensions
Concrete cover
Concrete Class
Placing
Compaction
Finish
Ironwork Fixing
Expansion Joints
Waterproofing
Comments
2. Surveyor:
Signature
Alignment
Levels
Comments
3. Laboratory:
Signature
Sampling
Comments
ACCEPTED
RESIDENT ENGINEER
Railings
Signature
NAME:
DATE:
NAME:
DATE:
NOT ACCEPTABLE
Reason
Action
RESIDENT ENGINEER
Appendix J
3 of 8
Contractor: Name
Contract: Name
EXAMPLE
ASPHALT PAVEMENT
Date
Time
(Signature)
Date
Time
Asphalt Work
(Please Tick)
Levelling
Course
Location: from km
Binder
Course
to km
Type of Work
Wearing
Course
Position
Lane
Technical Specification Cl. No.
1. Area ready for asphalt laying
2. Application of Tack Coat
3. Cutting of Joints
4. Applied bitumen to cut Joints
5. Setting Out
6. Cold milling
Comments:
mm ex
6. Design Mix, Nominal Size and reference
Plant
7. Average thickness of layer

8. Maximum thickness of layer
Remarks:
Signature
Inspection Points
1. Cleanliness of area to be paved
3. Condition of Cut Joints
4. Application of bitumen to cut joints
5. Setting Out
Inspectors Remarks
6. Surveyor:
Signature
7. Laboratory:
Signature
2. Application of tack coat
levels
Comments:
Sampling
Comments:
ACCEPTED
RESIDENT ENGINEER
Signature
NAME:
DATE:
NAME:
DATE:
NOT ACCEPTABLE
Reason
Action
RESIDENT ENGINEER
Appendix J
4 of 8
Contractor: Name
Contract: Name
EXAMPLE
DRAINAGE
Date
Time
Date
Time
Location:
(Signature)
form km
to km
LHS
RHS
1. Drains and Sewers
2. Piped Culverts
3. Lined Ditch
4. Cut off Ditch
5. Italian Chutes
6. Headwalls
Type of Work
2. Drawing No.
Comments
Signature
Inspection Points:
1. Inspector:
Formation
Concrete Foundation
Layer thickness
Reinforcement
Pipe laying
Precast Units
Ironwork Fixing
Backfilling
Signature
Comments
2. Surveyor:
Alignment
Levels
Comments
3. Laboratory:
Signature
Sampling
Testing
Comments
ACCEPTED
RESIDENT ENGINEER
Signature
NAME:
DATE:
NAME:
DATE:
NOT ACCEPTABLE
Reason
Action
RESIDENT ENGINEER
Appendix J
5 of 8
Contractor: Name
Contract: Name
DAYWORKS FORM (MEASUREMENT)

In accordance with Clause. of the Conditions of Contract
Date of Works
EXAMPLE
Description of Work Item and Location
Labour
Item
Name
Description
Unit
Rate
(Currency)
Quantity
Amount
(Currency)
SUBTOTAL:
Equipment
Item
Description
Unit
Rate
(Currency)
Quantity
Amount
(Currency)
SUBTOTAL:
Materials
Item
Description
Unit
Rate
(Currency)
Quantity
Amount
(Currency)
SUBTOTAL:
TOTAL:
Submitted by the Contractor:
Accepted by the Engineer:
..................................................
..
Name ........................Date Name Date .........
Project Manager
Resident Engineer
Appendix J
6 of 8
Contractor: Name
Contract: Name
DAYWORKS
APPROVALS OF MATERIALS / PRICES
(In accordance with Clause of the Conditions of Contract)
EXAMPLE
Date of Works .................
Description of Incorporated Work .......

Location ......
Material
BoQ Item
(if any)
Quotation Ref.
Unit
Amount
(Currency)
All quotations /receipts /vouchers attached.

Comments:
Submitted by the Contractor:
.....................................
Name ........................Date
Project Manager
Accepted by the Engineer:
..
Name Date ..........
Resident Engineer
Appendix J
7 of 8
Contractor: Name
Contract: Name
DEFECTS NOTICE No.
EXAMPLE
LOCATION:
In accordance with Clause .. of the Conditions of the Contract, you are notified that the
following works have not been performed in accordance with Technical Specifications or
Drawings:
Description of Defective Plant, Materials or Works:
Attachments (drawings, sketches, photographs, etc.):
An acceptable solution for correction of the defects would be as follows:
In accordance with Sub-Clause .. you are required to correct the above defects as
aforesaid, or to propose an alternative solution for which the Engineers prior
consent is necessary.
Time Constraints for remedial actions:
Instructed on behalf of the Engineer by:

............................................
..
Position
Name
............................................
Signature
Date
Contractors remedial actions/works accepted on behalf of the Engineer by:

................................
.
Position
Name
.............................................
Signature
Date
Appendix J
8 of 8
Appendix K
DAILY DIARY FORMS
& EVENTS LOG
Referenced in:
Section II-2.26: Diaries & Events Log
Contract:
Name
Contractor: Name
EXAMPLE
INSPECTORS DAILY SITE DIARY

Inspector Name:
Date: ..
Weather
Rainfall
Temp. [oC]
Effect on Programme
Slow-down [%]
Time
Fog
AM
MID
PM
Brief description of days operation
No.
Staff / Labour
Foreman
Skilled
Unskilled
Plant operator
Surveyor
Lab. technician
Location
Km + .. Km . + .
Km + .. Km . + .
Km + .. Km . + .
Km + .. Km . + .
Km + .. Km . + .
Work
Equipment
Quantity
Working hours
Delays (including effect of previous inclement weather):

__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
Verbal instructions:
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
Signed ________________________
RE reviewed
Appendix K
______________________
1 of 2
Contractor:
Engineer:
Contract:
Name
The Louis Berger Group. Inc.
Name
EXAMPLE
LOG OF SIGNIFICANT EVENTS

Event (examples given )
Tenders opened
Tender Evaluation Report submitted
ECD endorses Tender Evaluation Report
Employer's Letter of Acceptance
Contract signed (date of last signature)
Contractor submits Performance Security
Employer rejects Performance Security
Contractor submits new Performance Security
Employer accepts Performance Security
Employer appoints The Engineer
Engineer delegates authority to Engineer's Rep.
Contractor appoints Contractor's Representative
Employer provides Section 1 Drawings
Engineer issues Section 1 Drawings
Contractor submits Programme of Works
Employer provides Section 2 Drawings
Engineer issues Section 2 Drawings
Commencement Date
Employer gives Possession of Site
Contractor's Rep & Site Manager mobilize to Country
Contractor occupies temporary office at ..
Contractor provides temporary office for RE & site staff
Contractor starts security fencing for Site compound
Contractor mobilizes backhoe & starts foundation
excavation for Site offices
17/01/04 Contractor's survey team starts setting-out Section 1
Date
09/09/03
23/09/03
10/10/03
13/10/03
20/10/03
27/10/03
04/11/03
15/11/03
19/11/03
21/11/03
24/11/03
13/12/03
13/12/03
16/12/04
18/12/04
18/12/04
22/12/04
01/01/04
05/01/04
06/01/04
10/01/04
15/01/04
15/01/04
17/01/04
Comment
ETC.
Appendix K
2 of 2
Appendix L
VARIATIONS
Referenced in:
Section II-3.4: Valuation of Variations
Section II-3.5: Variation Orders
Section II-3.16: Works Quantities Management
Section II-3.17: Monitoring & Reporting Works Progress
INCORPORATING VARIATIONS & NEW UNIT PRICES INTO BILL OF QUANTITIES

Note: Provisional Rates shown in Italics
until agreed of fixed.
EXAMPLE 4
EXAMPLE 3
EXAMPLE 2
EXAMPLE 1
Item
3103
3104
Description
EARTHWORKS:
Topsoiling 150mm thick to surfaces
sloping 10o
Topsoiling 150mm thick to surfaces
sloping > 10o
PAVEMENT:
Profiling and levelling material, binder
grade, in carriageway and hardstrip
Profiling and levelling material, binder
grade, in carriageway and hardstrip 4511.1
> 110% of original quantity. Varied Rate
pursuant to Cl.
4511
DRAINAGE:
Manhole Type 1, finished depth to invert
not exceeding 2m.
Manhole Type 1, finished depth to invert
5104.1 not exceeding 2m. Varied Rate for
quantity increase pursuant to Cl.
5104
6202
6203
STRUCTURES
In-situ Class B25 concrete in walls and
columns
In-situ Class B35 concrete in walls and
columns
FENCING, SIGNS, MARKINGS
Pedestrian guard rails
ORIGINAL CONTRACT
Amount
(currency)
VARIATIONS
Estimated
Quantity
Amount
(currency)
REVISED CONTRACT
Estimated
Quantity
Amount
(currency)
EXAMPLES
Certified to Date
Amount
(currency)
Previously Certified
% of
Revised
Contract
Amount
(currency)
This Payment
Amount
(currency)
Unit
Rate
(currency)
m2
9.75
2,000
19,500.00
-1,000
-9,750.00
1,000
9,750.00
500
4,875.00
50%
300
2,925.00
200
1,950.00
m2
10.50
0.00
1,200
12,600.00
1,200
12,600.00
200
2,100.00
17%
0.00
200
2,100.00
30.00
50,000 1,500,000.00
5,000
150,000.00
55,000 1,650,000.00
55,000 1,650,000.00
100%
0.00
45.00
0.00
15,000
675,000.00
15,000
675,000.00
12,500
562,500.00
83%
83%
5,000
225,000.00
7,500
337,500.00
no
2,500.00
2,500.00
-1
-2,500.00
0.00
0.00
2,500.00
-1
-2,500.00
no
1,500.00
0.00
20
30,000.00
20
30,000.00
9,000.00
30%
0.00
9,000.00
m3
100.00
300
30,000.00
-100
-10,000.00
200
20,000.00
120
12,000.00
60%
80
8,000.00
40
4,000.00
m3
120.00
0.00
200
24,000.00
200
24,000.00
70
8,400.00
35%
0.00
70
8,400.00
12.00
500
6,000.00
500
6,000.00
420
5,040.00
84%
84%
300
3,600.00
120
1,440.00
Quantity
Quantity
Quantity
Quantity
55,000 1,650,000.00
EXAMPLE 1: Item 3103 is an original BoQ item for topsoiling slopes 10o. A requirement arises for topsoiling slopes > 10o for which there was no original BoQ provision. A Rate for the new work is negotiated based on the
o
original Rate of Item 3103 but with consideration of the increased difficulty of topsoiling slopes > 10 . A new BoQ Item 3104 with new 'Description', estimated 'Quantity' and new 'Rate' is established by Variation
for the additional works. The corresponding estimated quantity reduction of Item 3103 is included in the same Variation.
EXAMPLE 2: Item 4511 is an original BoQ item for profiling/levelling asphalt. There is no provision in the Contract for Price Adjustment arising from the rise or fall of Materials. There is Contract provision for price adjustment
arising from significant increase or decrease of executed quantities (>10% of original BoQ quantities). Market forces have driven up the cost of bitumen and, therefore, the cost of profiling/levelling asphalt. A
new Rate is negotiated based on the original Rate of Item 4511 but with consideration of the higher cost of bitumen prevailing from the time that 110% of the original BoQ quantity was exceeded. By Variation
the quantity of Item 4511 is raised by 10% (at the original BoQ rate), and a new Item 4511.1 with new Rate is established for quantity exceeding 110% of original BoQ Item 4511.
EXAMPLE 3: Item 5104 is an original BoQ item for a single Type 1 manhole. There arises a requirement for a total quantity of 20 Type 1 manholes, for which the Engineer considers that the original BoQ rate is
inappropriately high for the increased number now required. A new lower Rate is negotiated based on the original Rate of Item 5104 but with consideration of economy of significantly increased quantity. By
Variation the original Item 5104 is omitted and a new Item 5104.1 is established with the new Quantity and new Rate.
EXAMPLE 4: Item 6202 is an original BoQ item for B25 concrete. For technical reasons it is decided to increase the concrete strength (and therefore the cement content) to B35 for some parts of the Works, for which the
original BoQ has no provision. A rate is negotiated for B35 concrete, based on the rate for Item 6202 with consideration of the required additional cement content. By Variation a new Item 6203 is established
with estimated quantity and agreed rate. By the same Variation the Quantity of Item 6202 is reduced.
NOTES:
>80%
In accordance with the general 'Principles of Valuation of Variations' new or varied rates are to be based, whenever appropriate, on existing rates of the original BoQ. For this purpose the 'Breakdowns of
Lump Sums & Unit Rates' submitted at the beginning of the Contract are relevant.
Prompt for re-estimate of final quantity: When the executed quantity of any BoQ item reaches 80% of its estimated quantity of the Original or Revised Contract (as appropriate), a re-estimate should be
made of the anticipated final quantity for that item. If the re-estimated final quantity varies by more than, say, 5% of the Revised Contract quantity, a Variation should be issued for an adjustment of the Revised
Final Adjustment of Quantities: Upon completion of the Works, if so required by the Employer, a final Variation Order may be issued to reconcile executed quantities with the Revised Contract quantities.
Appendix L
1 of 8
IT IS RECOMMENDED that procedures for format, preparation, approval

and issuing Variation Orders be established with the Employer at the
beginning of the project. Such procedures should be summarized in
writing.
The following is an example of such procedures from a previous contract
based on FIDIC Red Book (1999 Edition) Conditions of Contract, and on the
specific Particular Conditions for that contract. Thus, this example cannot
be blindly replicated. Procedures must be based on actual Contract
provisions.
IT IS FURTHER RECOMMENDED that the Procedures are included as

an Introduction to the relevant Appendix of the Engineers Progress
Reports wherein Variation Orders are summarized.
For inclusion as an Introduction to an Appendix

of the Engineers Progress Reports:
EXAMPLE
PROCEDURES FOR VARIATION ORDERS

Sub-Clause 13.1 of the FIDIC Conditions of Contract provides that the Engineer shall
make any Variation of the form, quality or quantity of the Works that may be necessary
or appropriate to:
increase or decrease quantities of the Works;
omit any such work (but not if the omitted work is to be carried out by the Employer
or another contractor);
change the character or quality of any such work;
change the levels, lines, positions or dimensions of any parts of the Works;
execute additional work of any kind necessary for completion of the Works.
Sub-Clause 13.1 provides that the Contractor shall not make any such variation without
the instruction of the Engineer, except that no instruction shall be required for increase
or decrease in the quantity of any work where such increase or decrease is not the result
of an instruction given under this sub-clause, but is the result of the quantities exceeding
or being less that those stated in the Bill of Quantities.
Variation Orders, per se, are not required nor even mentioned in FIDIC Conditions of
Contract. Variation Orders are, however, a commonly used method in the construction
industry of formalizing and providing an audit trail of Variations. Following consultation
between the Engineer and Employer it has been agreed that the issuing of Variation
Orders to the Contractor by the Engineer shall be adopted on this project.
At the time of instructing the Contractor to effect a Variation, the cost implications of the
Variation may not be immediately quantifiable. It may, for example, be necessary to
negotiate new rates and prices for new items of work or for existing items whose
quantities are substantially changed.
Appendix L
2 of 8
The Engineer intends, after issuing an instruction constituting a Variation, to prepare a

valuation of the Variation in accordance with Sub-Clause 12.3, to quantify the Variation
by measurement and application of applicable unit rates (or determined new rates, as
may be required), and to estimate a total additional (or negative) cost, which will all be
contained in a formal Variation Order. By keeping a record of these Variation Orders and
adjusting the value of Works, the Employer, Contractor, Engineer and financing
institution are able more readily to keep track of and plan for the anticipated final cost of
the revised Contract.
The Engineer does not advocate issuing a Variation Order at the time of each and every
minor variation in work quantity. However, the Engineer will issue Variation Orders
necessitating new payment rates and/or having a significant overall cost. The
preparation of Variation Orders also serves to discipline the Engineer, Employer and
Contractor in their negotiation and agreement of costs of the varied works.
Whereas FIDIC does not require it, some jurisdictions require that any variation of the
Contract Price be made only under the authorization of a formal Variation Order,
including variations to stated quantities of the Bill of Quantities which, by definition, are
estimated quantities for the Works. If required, the Engineer will prepare, at completion
of the Works, a final Variation Order to reconcile the final as-built quantities.
In accordance with Sub-Clause 3.1 of the Particular Conditions, the Engineer must
obtain the specific approval of the Employer before issuing a Variation under Clause
13 except if such Variation would increase the *Original Value of Works by less than
Euro 100,000, and/or the sum of it and all approved Variations would increase the
Original Value of Works by less than 10 percent. [*Original Value of Works = Accepted
Contract Amount less Provisional Sum for Contingency]
Sub-Clause 12.3 requires that new payment rates for varied works shall be valued at
rates and prices set out in the Contract. Alternatively, if the Contract does not contain
rates or prices applicable to the varied work, the rates and prices in the Contract shall be
used as the basis for valuation, failing which, after due consultation by the Engineer with
the Employer and the Contractor, suitable rates shall be agreed (or fixed by the Engineer
in the case of disagreement).
Given the joint requirements of Sub-Clauses 3.1 and 12.3, it has been agreed that all
Variation Orders shall be endorsed by the Employer to demonstrate that due
consultation has taken place. Thus, each Variation Order will require signatures and
dates as follows:
Prepared by:
(Resident Engineer)
Authorized by:
(on behalf of the Employer)
Issued by:
(on behalf of the Engineer)
In this Appendix we present for each Works Contract a summary of Variation Orders
which records, for each VO, the dates of preparation by the Engineer, authorization by
the Employer, and subsequent issue by the Engineer to the Contractor.
The Accepted Contract Amount for each Works Contract contained a Provisional Sum
for Contingency. This Contingency was incorporated as an allowance for unanticipated
site conditions which could necessitate variations to the Works.
Appendix L
3 of 8
If the Works are to be completed within the Accepted Contract Amount, the total value of
all Variations should not exceed the allowance for Contingency. In effect, the value of
each Variation (if it increases the value of Works) depletes the amount of Contingency
available. In order to monitor this status, each Variation Order will record the amount of
Contingency remaining after issuing the subject VO and preceding VOs.
Regarding the Works Progress Synopsis presented in this Progress Report:
This Synopsis includes on two lines the value of:
-
Variation Orders Issued.
Variation Orders Pending (estimated).
Variation Orders Issued are not entered until they have been authorized by the
Employer and issued to the Contractor.
Variation Orders Pending includes:
Prepared Variation Orders not yet issued.
Minor Variations being accumulated before their aggregate value is worthwhile to

formally issue a Variation Order.
The estimated value of other variations which the Engineer foresees but which
cannot yet be itemised or reliably quantified or valued. An example would be a
foreseen requirement for redesign of a part of the Works which will vary the nature
or scope of that work.
Appendix L
4 of 8
PROJECT OFFICE LETTERHEAD
EXAMPLE
Client Name /Address

Attention:
Name /Title
Reference:
Works Contract No. /Title
Subject:
Variation Order No.X/XXX
Ref.:
Date
po/OUT/205
..
Dear Sirs,
[NOTE: This is an example based on FIDIC Red Book (1999 Ed.) and assumed Particular
Conditions. Text changes needed to suit actual Contract provisions.]
The General Conditions of Contract permit the Engineer to:
- under Cl.13.1, make any Variation of the Works by instruction to the Contractor;
- under Cl.12.3, value Variations including, after due consultation, agreeing or fixing payment rates for
new work items.
Cl.3.1 of the Particular Conditions requires that the Engineer shall:
- obtain the specific approval of the Employer before issuing a Variation under Cl.13.1 of the General
Conditions, except if such variation would increase the *Original Value of Works by less than
(currency) 100,000, or the sum of it and all other approved variations would exceed the *Original
Value of Works by less than 10% [*Original Value of Works = Accepted Contract Amount less
Provisional Sum for Contingency].
- obtain the specific approval of the Employer before agreeing or fixing any rates and prices for varied
works under Cl.12.3 of the General Conditions.
It has been established that all Variations shall be confirmed by Variation Orders.
Given the joint requirements of Cl.3.1, 13.1 and 12.3, it has been established that all Variation Orders
shall be authorized by the Employer before they are issued to the Contractor by the Engineer.
Accordingly we submit herewith this Variation Order for your approval and authorization signature.
For your information, as shown in the attached summary list of Variation Orders:
- Accepted Contract Amount (including Provisional Sum for Contingency) =
- Provisional Sum for Contingency (incl. in Accepted Contract Amount) =
- Total estimated value of approved VOs previously issued =
- Total estimated value of previously issued VOs and this VO =
- Remaining Provisional Sum for Contingency (if any) =
- Estimated Contract Price following this VO =
We request that you sign and return the Variation Order to us; whereupon we will immediately issue it to
the Contractor.
Yours faithfully,
A.N.Other
For The Engineer
Appendix L
5 of 8
Contract Number & Title

To: Name of Contractors Designated Representative
Name of Contractor
EXAMPLE
VARIATION ORDER No. X/XXX

In accordance with Clause of the Conditions of Contract you have been instructed to
perform Variations to the Works as described herein.
These Variations have been valued in accordance with Sub-Clause ... and/or ... of the
Conditions of Contract as appropriate.
Description of Variations:
Ref.
A
Description
Example: Asphalt pavement wearing
course in bus lay-byes: Construct with
Dense Bitumen Asphalt, instead of
Splitt Mastic Asphalt specified on
drawings.
References
Contractors letter ref., dated
Engineers letter ref..., dated ,
recommendation to Employer.
Employers letter ref, dated , approval of
recommendation.
Contractors letter ref, dated , submission
of proposed unit payment rates.
Minutes of Meeting on , discussion/
agreement of unit payment rates.
Engineers Instruction No dated
Example: Between km and km

construct lined drainage ditch on RHS
of road, instead of unlined ditch
specified on drawings.
Engineers letter ref..., dated ,

recommendation to Employer.
Employers letter ref, dated , approval of
recommendation.
Engineers Instruction No dated
Attachments hereto:
- References described in above table;
- Summary of estimated quantities and costs of Variations;
- (A) Unit payment rate breakdown for new BoQ Item for Dense Bitumen
Wearing Course;
- Explanatory notes and justification.
Prepared by:
Authorized by:
Issued by:
Name
Resident Engineer
Date:
Name
for the Employer
Date:
Name
for the Engineer
Date:
Appendix L
6 of 8
Contract Number & Title
VARIATION ORDER No. X/XXX

Summary of Estimated Quantities and Costs:
Ref
A
BoQ
Item
Description
Splitt Mastic Asphalt

wearing course 35mm
thickness
Dense Bitumen Asphalt
*
wearing course 40mm
thickness
Subtotal:
Unlined drainage ditch

Lined drainage ditch,
Type C
Subtotal:
Unit
Rate
(Currency)
m2
m2
Variation Quantity
Add
Deduct
-()
Variation Cost
(Currency)
-()
+
-()
m
-()
+
TOTAL:
* denotes new BoQ Item and new Rate.
New Rate Breakdown:

A: Unit payment rate breakdown for new BoQ Item for Dense Bitumen Wearing
Course:
Explanatory notes and justification:

A: .......
B: .......
Appendix L
7 of 8
EXAMPLE FOR APPENDIX OF PROGRESS REPORTS:
EXAMPLE
SUMMARY OF VARIATION ORDERS

Works Contract No.1
Name of Contractor
VO No.
Description
VO Value * Revised PS for

(currency )
Contingency
Date of
Submission
by Engineer
Date of
Approval by
Employer
Date of
Issue to
Contractor
Original Value
Adjusted Value
Adjusted Value
Adjusted Value
1/001
1/002
1/003
Total Value of Variation Orders Issued:
* Note:
If the Accepted Contract Amount included a Provisional Sum for Contingency, this column would be helpful.
By adding/subtracting the Value of the VO, the remaining Contingency can be monitored.
Appendix L
8 of 8
Appendix M
INTERIM PAYMENT
STATEMENTS & CERTIFICATES
Referenced in:
Section II-3.10: Contractors Interim Payment Statements
Section II-3.11: Interim Payment Certificates
Section II-6.5: Interim Payment Certificate at Completion
EXAMPLE

Attention:
Name /Title
Ref.:
Date
po/OUT/195
..
Reference:
Subject:
Interim Payment Certificate No for Period ending 31 March 2005
Dear Sirs,
In accordance with Cl. of the Conditions of Contract, we submit herewith the original
and copies of our Interim Payment Certificate No. for the Period ending 31 March
2005 in the amount state currencies & amounts.
In accordance with Cl. of the Conditions of Contract, payment should be made no
later than 25 April 2005.
Payment is to be made to the Contractors bank account(s) designated in the
Contractors Interim Payment Statement attached hereto.
Appended to the Interim Payment Certificate is the Contractors Interim Payment
Statement (or Application for Interim Payment Certificate, depending on Contract
terminology) No. , in the amount (state currency & amount) submitted under
cover of the Contractors letter ref. dated .
If certified amount is different from amount claimed by Contractor:
We have marked the Contractors Interim Payment Statement to show the Engineers
corrections and adjustments.
And either: The Engineers justifications for these corrections and adjustments are
appended to the Interim Payment Certificate.
Or:
The Engineers justifications for these corrections and adjustments will be
sent to you as soon as possible, under a separate letter.
And if applicable: Under this Interim Payment Certificate, a deduction has been made
for the Contractors partial repayment of the Advance Payment. Accordingly, please be
advised that the Contractors Advance Payment Security may now be reduced to
(state currency & amount).
Yours faithfully,
Name
For The Engineer
cc *: Contractors Representative
cc *: Resident Engineer
cc: Head Office Supervisor
cc: Others as appropriate
* with attachments
Appendix M
1 of 2
EXAMPLE

Attention:
Name /Title
Contractor: Name
Interim Payment Certificate No for Period ending 31 March 2005
Value of Permanent Works

Dayworks
Subtotal 1
Provisional Sums
Materials on Site
Subtotal 2
Other Costs & Settlements:
Claims (see attached list)
O/H Prolongation Costs
during EoT
Etc. (add rows as necessary)
Subtotal 3
Contingency (if any)
Retention(...%Subtotal 1,2,3)
Return of Retention
Advance Payment
Repayment of Advance
Subtotal 4
Price Adjustment
TOTAL
VAT (at %)
Revised
Contract
Total Certified
to Date
Payment Due
(Currency)
Total
Previously
Certified
(Currency)
(Currency)
N.A.
N.A.
N.A.
(Currency)
N.A.
N.A.
N.A.
Total Value of this Interim Payment Certificate:

(Currency) Amount in numerals
(Currency) Amount in script
Value Added Tax:
(Currency) Amount in numerals
(Currency) Amount in script
Certification Date: ....................
Payment Due Date: ..
Certified by:
...
Name
For The Engineer
NOTE:
cc *: Contractors Representative
* with attachments
Format adjustments may be necessary to suit Contract provisions. For example:

if payments made in different currencies, Amount columns may have to be split into subcolumns (Total Local Currency Foreign Currency)
Appendix M
2 of 2
BACK-UP TO INTERIM PAYMENT

CERTIFICATE AT COMPLETION
If applicable
If applicable
Amount
Amount
Quantity
(currency)
(currency)
Quantity
Amount
Amount
Quantity
(currency)
(currency)
Remaining
after (Date )
Quantity
Estimated Total
to Completion
Amount
Amount
Quantity
(currency)
(currency)
Amounts from individual
Bill summaries
If applicable
Quantity
Estimated Total
to Completion

Bill summaries
Amount
(currency)
Remaining
after (Date )

Bill summaries
Estimated
Quantity
This Payment

Bill summaries
Amount
(currency)
% of
Amount
Amount
Amount
Quantity
Quantity
Quantity
Revised
(currency)
(currency)
(currency)
Contract
CONTRACTOR'S ESTIMATE
ENGINEER'S ESTIMATE
Previous Certified

Bill summaries
Estimated
Quantity
Total Certified
to (Date )

Bill summaries
Amount
(currency)
Total from Date of

Taking-Over Cert.
to (Date )

Bill summaries
Quantity
Total to Date of
Taking-Over
Certificate

Bill summaries
Rate
(currency)

Bill summaries
Unit
REVISED CONTRACT

Bill summaries
Description
GENERAL PROVISIONS
EARTHWORKS
DRAINAGE
STRUCTURES
PAVEMENT
ROADWAY FACILITIES
ENVIRONMENTAL WORKS
UTILITIES RELOCATION
DAYWORKS
VARIATIONS

Bill summaries
1000
2000
3000
4000
5000
6000
7000
8000
9000
ORIGINAL CONTRACT

Bill summaries
Column can be hidden

for presentation
Note: Provisional Rates shown in

Italics until agreed of fixed.
BoQ
Section
/Item
EXAMPLE
SUBTOTAL:
CONTINGENCY (REMAINING)
TOTAL:
As
appropriate
OTHER COSTS:
BILL 1000: GENERAL PROVISIONS:

1001 Insurance
1002 Provision of Engineer's office
1002 Maintenance of Eng's office
1003 Etc.
ADVANCE PAYMENT
ADVANCE REPAYMENT
RETENTION MONEY
PAYMENT OF RETENTION MONEY
PENDING VARIATIONS (Itemise)
PRICE ADJUSTMENTS FOR RISE/FALL OF PRICES
PRICE ADJUSTMENTS FOR LEGISLATION CHANGES
PRICE ADJUSTMENTS FOR WORK OMISSIONS
CONTRACTOR'S CLAIM SETTLEMENTS (Itemise)
PROLONGATION COSTS DURING EXTENSION OF TIME
TOTAL:
LS
LS
Month
TOTAL:
BILL 2000: EARTHWORKS:
TOTAL:
BILL 3000: DRAINAGE:
ETC.
NOTE: Format adjustments may be necessary to suit Contract provisions.
Appendix M
5 of 5
Appendix N
COST ESTIMATES
TO COMPLETION
Referenced in:
Section II-3.15: Estimates of Cost of Works to Completion
COST ESTIMATE TO COMPLETION
Contract No. .
Contractor Name ..
Date of Estimate: ..
b1
Revised
Contract
a1+b1
c1
d1
c1+d1
Site Clearance
a2
b2
a2+b2
c2
d2
c2+d2
Earthworks
a3
b3
a3+b3
c3
d3
c3+d3
Etc.
a4
b4
a4+b4
c4
d4
c4+d4
a5
b5
a5+b5
c5
d5
c5+d5
a6
b6
a6+b6
c6
d6
c6+d6
an
bn
an+bn
cn
dn
cn+dn
N.A.
f1
f1
g1
h1
g1+h1
an
bn+fn
cn+gn
dn+hn
cn+dn+gn+hn
e1
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
i1
Original
Contract
a1
Bill
Description
No.
1 General Items
Etc.
Dayworks (if quantified in BoQ & incl.
in Accepted Contract Amount)
Subtotal:
Dayworks (if Schedule of DW Prices
included in Contract, but no amount
included in Accepted Contract Amount)
Subtotal:
VALUE OF WORKS
Provisional Sum for Contingency (if any)
ACCEPTED CONTRACT AMOUNT
Advance Payment
As appropriate
EXAMPLE
Total:
Variations
Certified to Date
Estimated Remaining
Estimated Final Cost
an+en
N.A.
an+bn+fn
"PS remaining"
(see Note 1)
N.A.
N.A.
N.A.
N.A.
N.A.
i1
Advance Repayment
N.A.
N.A.
N.A.
-( i2 )
N.A.
-( i1-i2 )
Retention
N.A.
N.A.
N.A.
j1
j2
N.A.
N.A.
k1
Applicable only at end of construction

k1
N.A.
-( i1 )
j1+j2
-( j1+j2 )
Pending Variations
N.A.
N.A.
k1
Adjustment for Rise/Fall of Costs
N.A.
k2
k2
l1
m1
l1+m1
Adjustment for Legislation Changes
N.A.
k3
k3
l2
m2
l2+m2
Adjustment for Work Omissions
N.A.
k4
k4
l3
m3
l3+m3
Contractor's Claim Settlements (itemise)
N.A.
k5
k5
l4
m4
l4+m4
Prolongation Costs during EoT
N.A.
k6
k6
l5
m5
l5+m5
Subtotal
N.A.
kn
kn
in+jn+ln
in+jn+mn
in+jn+ln+mn
Total:
N.A.
fn+kn
en+fn+kn
REVISED CONTRACT AMOUNT
k1
dn+hn+in+jn+kn+mn
cn+dn+gn+hn+kn+ln+mn
ESTIMATED COST TO COMPLETION cn+gn+in+jn+ln
Note:
Recommended Contingency for....(itemize)
n
1. If a PS for Contingency was included in the Accepted Contract Amount,
POTENTIAL COST TO COMPLETION cn+dn+gn+hn+kn+ln+mn+n
then in Revised Contract column enter a "PS remaining" as the lesser of
the following:
either: the amount by which Accepted Contract Amount (including PS) exceeds Revised Contract Price (excluding PS)
(whereby Revised Contract Price = Accepted Contract Amount, but with reduced PS)
or:
to zero if Revised Contract Price (excluding PS) exceeds Accepted Contract Amount (including PS).
2. If Contract payments in more than one currency, add columns as necessary. Also add Value Added Tax if relevant.
Appendix N
1 of 1
Appendix O
TAKING-OVER
CERTIFICATE
Referenced in:
Section II-6.2: Taking-Over Certificate
EXAMPLE
SIMPLE LETTER
FORMAT
Contractor Name /Address

Attention:
Name /Contractors Representative
Ref.:
Date
Reference:
Subject:
Taking-Over Certificate for Part of Works
po/OUT/195
..
Dear Sirs,
We refer to your letter ref dated whereby you requested a Taking-Over Certificate
for a Section (or part) of the Works, and undertook to complete with due expedition any
outstanding work and to rectify defects during the Defects Notification Period.
Pursuant to Cl. of the Conditions of Contract we hereby certify that, in the Engineers
opinion, the following Section (or part) of the Works was substantially completed in
accordance with the Contract on (state date):
[Describe relevant section or part of Works]
Pursuant to Cl we hereby notify you that the attached list of outstanding works to be
executed and defects to be rectified are required to be completed by you expeditiously
during the Defects Notification Period.
The Defects Notification Period for this Section (or part) of the Works commenced on
[give date, same as date on which works hereby certified as having been substantially
completed] and will expire on [give date].
Yours faithfully,
Name
For The Engineer
cc:
cc:
cc:
cc:
Appendix O
Employers Representative
Resident Engineer
Others as appropriate
1 of 7
EXAMPLE
SIMPLE LETTER
FORMAT

Attention:
Name /Contractors Representative
Ref.:
Date
Reference:
Subject:
Taking-Over Certificate for the Whole of the Works
po/OUT/295
..
Dear Sirs,
We refer to your letter ref dated whereby you requested a Taking-Over Certificate for the
whole of the Works, and undertook to complete with due expedition any outstanding work and to
rectify defects during the Defects Notification Period.
Pursuant to Cl. of the Conditions of Contract we hereby certify that, in the Engineers opinion,
the whole of the Works was substantially completed in accordance with the Contract on (state
date):
If relevant:
The following Taking-Over Certificates have previously been issued for Sections (or parts) of the
Works:
Description of Section
Effective date of Taking-Over Certificate
Description of Section
Effective date of Taking-Over Certificate
Pursuant to Cl we hereby notify you that the attached list of outstanding works to be executed
and defects to be rectified are required to be completed by you expeditiously during the Defects
Liability Period.
Attached list should show:
For each Section for which a Taking-Over Certificate was previously issued:
- Any works still remaining to be completed;
- Any defects notified with the Certificate but still remaining to be rectified;
- Any defects notified during the Defects Notification Period of the Works Section but still
remaining to be rectified.
For the remainder of Works now substantially completed:
- Any works remaining to be completed;
- Any defects to be rectified;\.
This final Defects Notification Period commenced on [give date, same as date on which works
hereby certified as having been completed] and will expire on [give date].
Yours faithfully,
Name
For The Engineer
cc:
cc:
cc:
cc:
Appendix O
Resident Engineer
2 of 7
CONTRACT NUMBER / TITLE

BETWEEN:
NAME OF EMPLOYER
(The Employer)
AND:
NAME OF CONTRACTOR
(The Contractor)
TAKING-OVER CERTIFICATE
WITH RESPECT TO
THE WHOLE OF THE PERMANENT WORKS
ISSUED BY:
THE LOUIS BERGER GROUP, INC.

(The Engineer)
Appendix O
3 of 7
TAKING-OVER CERTIFICATE
WITH RESPECT TO THE
WHOLE OF THE PERMANENT WORKS
DISTRIBUTION:
Contractor: ..
Employer:
Funding Institution: ...........
PROJECT:
PROJECT TITLE
CONTRACT:
CONTRACT NUMBER /NAME
EMPLOYER:
NAME
CONTRACTOR:
NAME
ENGINEER:
THE LOUIS BERGER GROUP, INC.
DEFINITION OF WORKS COMPLETED

The Permanent Works to which this Taking-Over Certificate applies are defined as the works of:
Section 1:
Description
Section 2:
Description
Section 3:
Description
DATE OF COMPLETION
The Engineer hereby certifies in accordance with Clause of the Conditions of Contract that the whole
of the Permanent Works was substantially completed on (date).
TAKING OVER OF WORKS
In accordance with Clause of the Conditions of Contract the Employer shall take over the care of the
Permanent Works from the date of this Certificate, except that the Contractor shall retain responsibility for
the care of any outstanding Works and materials and Plant for incorporation therein which he undertakes
to finish during the Defects Notification Period until such outstanding Works have been accepted pursuant
to Clause . However, the Employer will allow the Contractor access to the Site as required to complete
or correct work during the Defects Notification Period.
DATE OF COMMENCEMENT OF DEFECTS NOTIFICATION PERIOD
The Date of commencement of the -month Defects Notification Period for the whole of the Permanent
Works is hereby established as (date).
INSURANCE
In accordance with Clause of the Conditions of Contract the Contractor shall, during the Defects
Notification Period, maintain insurance to provide cover until the date of issue of the Performance
Certificate, for loss or damage for which the Contractor is liable arising from a cause occurring prior to the
issue of this Taking-Over Certificate and for loss or damage caused by the Contractor in the course of
any other operations.
Appendix O
4 of 7
RETENTION MONEY
In accordance with Clause of the Conditions of Contract the amount of Retention Money
retained by the Employer until expiration of the Defects Notification Period shall be % of the
Contract Price. Upon issue of this Taking-Over Certificate the amount of Retention Money
previously retained less % of the Contract Price shall be certified by the Engineer for payment
to the Contractor.
WORKS TO BE COMPLETED OR CORRECTED
DURING THE DEFECTS NOTIFICATION PERIOD
A LIST OF WORKS TO BE COMPLETED OR CORRECTED DURING THE Defects Notification
Period is appended hereto as Appendix 1 to the Taking-Over Certificate with respect to the
Whole of the Permanent Works. Omission from this list of any outstanding or defective works
shall not relieve the Contractor of responsibility to complete all Works in accordance with the
Contract.
To the intent that the Works shall be delivered to the Employer in the condition required by the
Contract, fair wear and tear excepted, the Contractor shall execute all work of amendment,
reconstruction, and remedying defects or other fault as the Engineer may as a result of
inspections made by or on behalf of the Engineer during the Defects Notification Period, instruct
the Contractor to execute. The Contractor shall execute such works in accordance with Clause
of the Conditions of Contract.
CERTIFICATION
Signed on behalf of
THE ENGINEER
by:
Name
Title
Date: ....................
Appendix O
5 of 7
PROJECT:
PROJECT TITLE
CONTRACT:
APPENDIX No.1
TO TAKING-OVER CERTIFICATE
WITH RESPECT TO
OUTSTANDING WORKS TO BE COMLETED

AND
DEFECTS TO BE RECTIFIED
DURING
DEFECTS NOTIFICATION PERIOD
Appendix O
6 of 7
PROJECT:
PROJECT TITLE
CONTRACT:
APPENDIX No.2
TO TAKING-OVER CERTIFICATE
WITH RESPECT TO
RELEVANT CORRESPONDENCE
Appendix O
7 of 7
Appendix P
PERFORMANCE
CERTIFICATE
Referenced in:
Section II-7.9: Performance Certificate
EXAMPLE
SIMPLE LETTER
FORMAT
Employer Name /Address

Attention:
Name /Title
Ref.:
Date
Reference:
Subject:
po/OUT/395
..
Dear Sirs,
Pursuant to Cl. of the Conditions of Contract we hereby certify that the date on which
the Contractor completed his obligations to execute and complete the Works and
remedy any defects therein to the Engineers satisfaction was [enter date, which
must be within 28 days after the end of the Defects Notification Period, or if sections
have been taken over the last such period, or when all remedial works were completed
to the Engineers satisfaction].
Yours faithfully,
Name
For The Engineer
cc:
cc:
cc:
cc:
Appendix P
Resident Engineer
1 of 1
Appendix Q
ENGINEERS DELEGATION
OF DUTIES & AUTHORITIES
Referenced in:
Section II-2.2: Engineers Delegation of Duties & Authorities
Section II-5.12: Engineers Authority to Instruct Design Modifications
LETTER RELEVANT TO FIDIC 1999 RED BOOK CONTRACT
EXAMPLE
[ SIMILAR LETTER COULD BE ADOPTED FOR FIDIC OLDER 1987 RED BOOK]
Ref.:
Employer Name Address
Attention:
Attention:
Name
po/OUT/195
Date ..
Name
.
Reference:
Works Contract No. / Title
Subject:
Engineers Appointment of Assistants &

Delegation of Duties and Authorities
Dear Sirs,
Pursuant to Sub-Clause 3.2 [Delegation by the Engineer] of the Conditions of Contract we hereby
notify that the Engineer appoints the following persons to assist him in the performance of the
Engineers duties under the Contract:
Position:
Asst. Resident
Engineer (Highways)
Asst. Resident
Engineer (Structures)
Contract Engineer
Quantity Surveyor
Section Engineers
Name:
Name
Position:
Sr. Materials Engineer
Materials Technicians
Name
Topographic Surveyors
Name
Name
Name
Name
Inspectors
Name:
Name
Name
Name
Name
Name
Name
Name
Name
The Engineer hereby delegates to these assistants duties and authorities as listed in the attached
Table entitled Engineer's Delegation of Duties & Authorities. The assistants shall have shall have
no authority, other than specifically noted in the Table, to issue any instructions to the Contractor
save in so far as such instructions may be necessary to enable them to carry out their duties and to
secure their acceptance of Materials, Plant or workmanship as being in accordance with the
Contract, and any instructions given by them for those purposes shall be deemed to have been
given by the Engineer".
Yours faithfully,
Name
Resident Engineer
for The Engineer
cc:
cc:
cc:
Appendix Q
1 of 13
EXAMPLE
ENGINEER'S DELEGATION OF DUTIES & AUTHORITIES
UNDER RECENT 1999 FIDIC RED BOOK CONDITIONS OF CONTRACT
The following delegations relate to the General Conditions of FIDICs 1999 Red Book Contract. Delegations relating to
Particular Conditions would need to be added.
The Engineer cannot delegate authority to determine claims pursuant to Sub-Clause 3.5.
1.
2.
3.
The Engineer (Resident Engineer)

Asst. Resident Engineer (Highways)
Asst. Resident Engineer (Structures)
4.
5.
6.
Contract Engineer
Quantity Surveyor
7.
8.
9.
10.
Clauses of Conditions of Contract / Particular Conditions
Delegations by Engineer pursuant to Cl.3.2

1.8
1.9
1.12
2.1
2.5
3.1
3.2
3.3
3.5
Issue (on behalf of Employer) Specifications and

Drawings to Contractor.
Engineer's receipt from Contractor of Contractor's
Documents.
Receipt of Contractor's notice (to Engineer) of
anticipated delay or disruption if necessary Drawings
or Instruction not issued within particular time.
Receipt of Contractor's notice of claim (errors in
Employer's documents).
Evaluation of claim:
By Agreement:
Determination pursuant to Cl.3.5:
Engineer's request for Contractor to provide details to
verify compliance with Contract.
Receipt of Contractor's notice of claim arising from late
access to Site.
By Agreement:
Give notice of Employer's claim to Contractor.
By Agreement:
Request Employer's approval to exercise authority
under Contract where Employer's specific approval
required by Special Provisions.
Delegate duties/authorities to Engineers assistants.
Issue additional or modified Drawings to Contractor.
Give oral instructions to Contractor (subject to written
confirmation).
Written confirmation of oral instructions.
Give written instructions to Contractor.
Consultation with Parties in endeavour to achieve
agreement.
Record and notify to Parties their agreement, if
achieved.
Engineer's determination if Parties do not achieve
agreement.
Engineers Staff Positions / Titles

2
3
4
5
6
7
8
9
X
X
Section Engineers
Inspectors
X
X
X
X
X
X
X
X
X
10
X
X
X
X
X
X
X
X
X
X
X
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2 of 13

1.
2.
3.

4.
5.
6.
Contract Engineer
Quantity Surveyor
7.
8.
9.
10.

4.1
4.2
4.3
4.4
4.6
4.7
4.9
4.12
4.16
4.17
Request Contractor to provide details of arrangements

& methods he proposes to adopt for execution of
Works.
Engineer's receipt of Contractor's Documents for parts
of Permanent Works for which Contractor has design
responsibility.
Engineer's receipt of Contractor's "as-built" drawings.
Engineer's receipt of copy of Contractor's Performance
Security.
Receipt of Contractor's submission of name &
particulars of proposed Contractor's Representative.
Engineer's consent (or objection) to proposed
Contractor's Representative.
Revocation of Engineer's prior consent to Contractor's
Representative.
Engineer's receipt of Contractor's proposals for
Subcontractors.
Engineer's consent (or objection) to Contractor's
proposals for Subcontractors (subject to Employer's
approval, if required).
Engineer's instruction to Contractor for cooperation.
Engineer's notification to Contractor of reference
points for setting out the Works.
Receipt of Contractor's notice of claim (errors in
setting out details)
By Agreement:
Engineer's receipt of Contractor's Quality Assurance
procedures and compliance documents.
Engineer's auditing of Contractor's Quality Assurance
& Control.
Receipt of Contractor's notice of claim (unforeseeable
physical conditions).
By Agreement:
Receipt of Contractor's notice of intent to deliver
Goods to Site.
Give consent (or objection) to Contractor's request to
remove Contractor's Equipment from the Site.
Section Engineers
Inspectors

2
3
4
5
6
7
8
9
10
X
X
X
X
X
X
X
X
X
X
X
Appendix Q
3 of 13

1.
2.
3.

4.
5.
6.
Contract Engineer
Quantity Surveyor
7.
8.
9.
10.
4.21
X
X
X
X
X
X
X
4.24
5.1
5.2
5.3
5.4
6.5
6.9
6.10
7.2
7.3
7.4
Engineer's receipt of Contractor's Progress Reports.

Engineer's objection to adequacy of Contractor's
Progress Reports
Instruction to Contractor if fossils found.
Receipt of Contractor's notice of claim (fossils).
By Agreement:
Instruction to Contractor to employ Nominated
Subcontractor.
Receipt of Contractor's objection to employ Nominated
Subcontractor.
Preparation of Engineer's certification of amounts
payable by Contractor to Nominated Subcontractor.
Engineer's certification of amounts payable by
Contractor to Nominated Subcontractor.
Request Contractor to provide evidence that he has
paid Nominated Subcontractor.
Engineer's consent to Contractor's request to work
outside normal working hours.
Engineer's requirement that Contractor remove
Contractor's Representative or other of Contractor's
Personnel from Site.
Engineer's receipt of Contractor's details of Personnel
and Equipment (including giving objection to adequacy
or accuracy).
Receipt from Contractor of Materials samples.
Engineers consent to use Materials in Works.
Request additional samples.
Receipt of Contractors notice of requirement for
inspection before works covered up.
Inspection of work to be covered up.
Measurement of work to be covered up.
Agree with Contractor the time/location of specified
testing (by Contractor) of Plant, Materials & other parts
of Works.
Witness/verify Contractors testing.
Receipt of Contractor's notice of claim (delays caused
by Engineer for testing).
By Agreement:
Section Engineers
Inspectors

2
3
4
5
6
7
8
9
10
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
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X
X
4 of 13

1.
2.
3.

4.
5.
6.
Contract Engineer
Quantity Surveyor
Section Engineers
Inspectors
7.
8.
9.
10.

7.5
7.6
8.1
8.3
8.4
8.6
8.8
8.9
8.11
8.12
9.1
10.1
10.2
10.3
11.1
11.4
11.6
11.9
12.1
Engineers rejection of Plant, Materials or

workmanship (as result of inspection, measurement or
testing.
Engineers instruction for remedial work.
Notification of Commencement Date.
Receipt of Contractors Programme.
Engineers objection to Programme.
Request for revised Programme.
Receipt of Contractor's notice of claim for extension of
Time for Completion.
If progress lags Contractors current Programme,
instruct Contractor to submit revised Programme.
Engineers instruction to suspend works, including
notification of cause.
Receipt of Contractor's notice of claim (delays caused
by Engineers suspension of works).
By Agreement:
Permission to resume works following Engineers
suspension thereof.
Engineers joint examination of works (with Contractor)
following suspension.
Receipt of Contractors notice to undertake Tests on
Completion.
Engineers rejection of Contractors application for
Taking-Over Certificate.
Issue Taking-Over Certificate for the whole or parts or
Sections of the Works.
Receipt of Contractor's notice of claim (Employers
delay to Tests on Completion).
By Agreement:
Notification to Contractor of outstanding work and
defects rectification to be carried out.
If, as result of Contractors failure to remedy defects,
Employer carries out this work: determination of
reduction in Contract Price.
Engineers instruction to repeat tests.
Issue Performance Certificate.
Notice to Contractor of Engineers intention to
measure any part of Works.
Measurement of any parts of Works.

2
3
4
5
6
7
8
9
X
X
X
X
X
10
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Appendix Q
5 of 13

1.
2.
3.

4.
5.
6.
Contract Engineer
Quantity Surveyor
Section Engineers
Inspectors
7.
8.
9.
10.

12.3
12.4
13.1
13.2
13.3
13.5
13.6
13.7
13.8
14.1
14.3
14.5
14.6
14.10
Evaluation of new rates/prices and payments due to

Contractor:
By agreement:
Determination pursuant to Cl.3.5
If parts of Works omitted from Contract, evaluate
Contractors entitlement to compensation:
By agreement:
Instruction of Variation.
Request for Contractor to submit proposal for
Variation.
Receipt of Contractors Value Engineering proposal.
Approval or rejection of Value Engineering proposal.
Evaluation of Contractors fee if Value Engineering
proposal approved: By agreement:
Engineers approval or disapproval of Contractors
proposal for Variation.
Engineers instruction of works to be performed under
Provisional Sum.
Engineers instruction of works to be performed as
Daywork.
Approving Contractors Daywork records.
Evaluation of Dayworks for payment.
Receipt of Contractor's notice of claim for adjustment
for changes in legislation.
By agreement:
Verification of computations for adjustment for
changes in cost.
Receipt of Contractors breakdowns of lump sum
prices.
Receipt of Contractors applications for Interim
Payment Certificates.
Checking/correcting Contractors Statements
Checking quantities of Materials/Plant on Site not yet
incorporated in Works (for payment purpose).
Prepare Interim Payment Certificates.
Issue Interim Payment Certificates.
Receipt of Contractors Statement at Completion

2
3
4
5
6
7
8
9
X
X
X
X
X
X
X
X
X
10
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Appendix Q
6 of 13

1. The Engineer (Resident Engineer)
2. Asst. Resident Engineer (Highways)
3. Asst. Resident Engineer (Structures)
4. Contract Engineer
5. Quantity Surveyor
6. Sr. Materials Engineer

14.11 Receipt of Contractors Application for Draft Final
Payment Certificate.
Liaison with Contractor to verify.
Receipt of Contractors Application for Final
Payment Certificate.
14.12 Receipt of Contractors Discharge.
14.13 Prepare Final Payment Certificate.
Issue Final Payment Certificate.
15.1 Notice to Contractor to correct failure to perform
any obligation under the Contract.
15.3 Valuation at date of Employers termination.
By agreement:
16.1 Receipt of Contractors notice to suspend work.
Receipt of Contractors claim arising from his
suspension of works.
By agreement:
17.4 Receipt of Contractors notice of claim arising
from occurrence of Employers risk events.
By agreement:
19.4 Receipt of Contractors notice of claim arising
from Force Majeure.
By agreement:
19.6 Engineers evaluation of payment entitlement
following termination of Contract after prolonged
Force Majeure:
Issue Payment Certificate after such termination.
20.1 Receive Contractors notice & particulars of claim.
Rejection of claim due to late notice (time-bar).
By agreement:
7.
8.
9.
10.

2
3
4
5
6
7
8
9
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Appendix Q
Section Engineers
Inspectors
10
X
X
7 of 13
EXAMPLE
UNDER OLDER 1987 FIDIC RED BOOK CONDITIONS OF CONTRACT
The following delegations relate to the General Conditions of FIDICs 1987 Red Book Contract. Delegations relating to
Conditions of Particular Application would need to be added.
The Engineer should not delegate authority under Sub-Clauses 2.2, 2.3, 63.1 & 67.1.
1.
2.
3.
The Engineer (Not based on Site)

Engineers Representative /
Resident Engineer
4.
5.
6.
7.
Contract Engineer
Quantity Surveyor
Clauses of Conditions of Contract / Particular Application

Delegations by Engineer pursuant to Cl.2.2/ 2.3/ 2.4
2.2
2.3
2.4
4.1
5.2
6.1
6.2
6.3
6.4
7.1
7.2
8.2
10.1
12.2
13.1
14.1
14.2
14.3
15.1
Appointment of & delegation of duties & authorities to

Engineers Representative.
Appointment & delegation of duties & authorities to
other of Engineers Site staff.
Consent to 'Subcontracting' (with specific approval of
the Employer pursuant to Cl.2.1).
Instruction to Contractor in case of ambiguity or
discrepancy between Contract Documents.
Custody & Supply of Drawings and Documents.
Reference to Drawings retained by Contractor.
Receipt of notice of 'Disruption of Progress'.
Determination of Time extension & costs arising from
Delays in issuing Drawings.
Issuing 'Supplementary Drawings & Instructions'.
Receipt of drawings and manuals for 'Permanent
Works Designed by Contractor'.
Approval of such drawings & manuals.
Approval of 'Site Operations & Methods of
Construction'.
Receipt of Contractor's notification of provision of
'Performance Security' to the Employer.
Request for Contractor to increase value of
'Performance Security'.
Receipt of notice and giving instruction regarding
'Adverse Physical Obstructions or Conditions'.
Determine Time extension & costs arising from
'Adverse Physical Obstructions or Conditions'.
Satisfaction and giving instructions regarding 'Work to
be in Accordance with Contract'
Receipt of Contractors Programme.
Consent to Contractors Programme.
Request for Revised Programme.
Receipt of Contractors Cash Flow Estimate.
Request for revised Cash Flow Estimate.
Objection, approval (or revocation thereof) of
Contractor's Authorized Representative.
8. Section Engineers
9. Topographic Surveyors
10. Inspectors

2
3
4
5
6
7
8
9
10
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Appendix Q
X
X
X
X
X
X
X
8 of 13

1.
2.
3.

Resident Engineer
4.
5.
6.
7.
Contract Engineer
Quantity Surveyor

16.2
17.1
18.1
19.1
20.2
20.3
25.1
27.1
30.3
31.1
31.2
33.1
35.1
36.1
36.4
Objection or consent to Contractor's personnel.

'Setting Out': Handing over of original points, lines and
levels.
Check Contractors Setting out.
Instructions to rectify 'Setting Out' errors.
Determination of Time extension & costs arising from
incorrect 'Setting Out' data provided.
Instruction of 'Boreholes and Exploratory Excavations'.
Instruction of requirement for 'Safety, Security and
Protection of the Environment'.
Satisfaction and giving instructions regarding
Contractor's 'Responsibility to Rectify Loss or
Damage'.
Instruction to rectify 'Loss or Damage due to
Employer's Risks'.
Determination of Contractor's entitlement to costs of
rectifying 'Loss or Damage due to Employer's Risks'.
Receipt of Contractor's notification of provision of
'Evidence and Terms of Insurances' to Employer.
Receipt of notice of discovering 'Fossils'.
Giving instruction for dealing with 'Fossils'.
Giving opinion, notification or determination of costs to
be borne by Contractor arising from damage caused
by Contractors 'Transport of Materials or Plant'.
Giving instruction for affording 'Opportunities for Other
Contractors.
Giving instruction to make available 'Facilities for
Other Contractors'.
Determination of additional costs to make available
'Facilities for Other Contractors'.
Satisfaction of Contractor's 'Clearance of Site on
Completion'.
Requirement for and receipt of Contractor's 'Returns of
Labour and Contractor's Equipment'.
Instructions regarding Contractor's 'Quality of
Materials, Plant and Workmanship'.
Instructions of testing to comply with 'Quality of
Materials, Plant and Workmanship'.
Instruction of 'Tests not Provided for'.
10. Inspectors

2
3
4
5
6
7
8
9
X
X
X
X
X
X
X
X
Appendix Q
10
X
X
X
9 of 13

1.
2.
3.

Resident Engineer
4.
5.
6.
7.
Contract Engineer
Quantity Surveyor

36.5
37.1
37.2
37.3
37.4
37.5
38.1
38.2
39.1
39.2
40.1
40.2
40.3
41.1
42.1
42.2
44.1
44.2
44.3
Determine Time extension and costs, including

notification to Contractor arising from 'Tests not
Provided for'.
Entitlement to access Site and to perform 'Inspection
of Operations'.
Entitlement to access Site and to perform 'Inspection
and Testing'.
Giving instruction of time and place for 'Inspection and
Testing'.
'Rejection' of defective works, notification to
Contractor, and instruction of repetition of testing.
Delegation of 'Independent Inspection' and testing,
and notification thereof.
Receipt of Contractor's notice to cover up work.
Instruction to uncover work or make openings.
Determination of Time extension and costs for
reinstating uncovered work or repairing openings
Instruction of 'Removal of Improper Work, Materials or
Plant'.
Determination of Employer's costs of 'Removal of
Improper Work, Materials or Plant' (arising from
Contractor's default under Cl.39.1) and notification
thereof to the Contractor.
Instruction of 'Suspension of Work'
Engineer's Determination following Suspension' of
Time extension and costs.
Receipt of Contractor's notice regarding his
entitlements regarding "Suspension lasting more than
84 days'.
Giving notice of 'Commencement of Works'.
Receipt of Contractor's notice of request for
'Possession of Site and Access Thereto'.
Determination of Time extension and costs resulting
from Employer's 'Failure to Give Possession' of Site
and access thereto.
Determination of 'Extension of Time for Completion'.
Receipt of Contractors notice and particulars of claim
for Extension of Time for Completion.
'Interim Determination of Extension' of Time for
Completion.
10. Inspectors

2
3
4
5
6
7
8
9
X
X
X
X
X
X
Appendix Q
10
X
X
10 of 13

1.
2.
3.

Resident Engineer
4.
5.
6.
7.
Contract Engineer
Quantity Surveyor

45.1
46.1
48.1
48.2
48.3
49.1
49.2
49.3
49.4
50.1
51.1
52.1
52.2
52.3
52.4
53.1
53.2
Consent to Contractor working outside 'Restriction on

Working Hours'.
Receipt of Contractor's notification of working outside
'Restriction on Working Hours' for reason unavoidable
or absolutely necessary.
Notification to Contractor of inadequate progress to
comply with Time for Completion, and instruction to
expedite progress.
Determine additional supervision costs (to be borne by
Contractor) arising from expediting the Works.
Receive Contractors request for 'Taking-Over Certificate'.
Instruction to Contractor of works to be completed
before Taking-Over Certificate will be issued.
Issuing 'Taking-Over Certificate' for whole, Sections or
parts of the Works.
Establish (from Taking-Over Certificates)
commencement dates of Defects Liability Periods.
Satisfaction of expeditious 'Completion of Outstanding
Work and Remedying Defects' during Defects Liability
Period(s).
Instruction of 'Complete Outstanding Work & Remedy
Defects' during Defects Liability Period(s).
Determine 'Cost of Remedying Defects' arising from
cause not attributable to the Contractor.
Determine Employer's costs of remedying defects
(arising from Contractor's failure to do so), and
notification to Contractor.
Instruction for 'Contractor to Search' under direction of
the Engineer for cause of defects
Determination of costs of Search in the event that the
Contractor is not liable for the defect
Instructions of Variations of Works (subject to any
specific approval of Employer pursuant to Cl.2.1).
Determination for 'Valuation of Variations'.
Determination of provisional rates.
'Power of Engineer to Fix Rates'.
Determination of adjustment to Contract Price arising
from 'Variations Exceeding 15%'.
Instruction for work to be executed by Daywork.
Receipt/signing of Contractor's daywork records.
Receipt of Contractors Notice of Claims'.
Inspect Contractors 'Contemporary Records' of
claims, and instruction to keep records.
10. Inspectors

2
3
4
5
6
7
8
9
X
X
X
X
X
X
X
X
X
X
X
X
Appendix Q
10
X
X
X
X
11 of 13

1. The Engineer (Not based on Site)
2. Engineers Representative /
Resident Engineer
3. Deputy Resident Engineer
4.
5.
6.
7.
Contract Engineer
Quantity Surveyor
10. Inspectors
53.3
Agree to extend time for 'Substantiation of Claims'.

Requirement for Contractor to submit particulars
for claims of ongoing effect at intervals.
Receipt of Contractor's 'Substantiation of Claims'.
Determination of Contractors claims, and
certification for 'Payment of Claims'.
Consent to remove 'Contractor's Equipment,
Temporary Works and Materials'.
Physical measurement of 'Works to be Measured'.
Giving notice to Contractor of time for physical
measurement.
Measurement by records & drawings and
notification to Contractor.
Valuation of Works measured.
Review of Contractor's records of measurement.
Receipt of Contractor's submission of
'Breakdown of Lump Sum Items'.
Instruction of works to be performed under
'Provisional Sums'.
Valuation of works performed under 'Provisional
Sums'.
Receipt of quotations, invoices, vouchers,
accounts and receipts for works performed under
'Provisional Sums'.
Approval or selection of 'Nominated
Subcontractors'.
Receipt of Contractors objection to Nominated
Subcontractor.
Requiring reasonable proof from Contractor of
payments made to Nominated Subcontractors.
Certification of direct Payments to Nominated
Subcontractors'.
Receipt of Contractor's 'Monthly Statements'.
Approval of tabulated form of Contractor's
'Monthly Statements'.
Check Contractors Monthly Statements, and
consult with Contractor to resolve disagreements.
Prepare Engineers Interim Payment Certificates.
Issue Engineers Interim Payment Certificates.
X
X
X
X
X
X
X
X
53.5
54.1
56.1
57.2
58.1
58.2
58.3
59.1
59.2
59.5
60.1
60.2
Appendix Q
10
X
X
X
X
12 of 13

1.
2.
3.

Resident Engineer
4.
5.
6.
7.
Contract Engineer
Quantity Surveyor
10. Inspectors


2
3
4
5
6
7
8
9
60.5
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
60.6
60.7
60.8
62.1
63.1
63.2
63.3
63.4
64.1
65.3
65.5
65.8
67.1
68.3
69.1
69.4
70.2
Receipt of Contractor's 'Statement at Completion'

Check Contractors Statement at Completion, & consult
with Contractor to resolve disagreements.
Prepare Interim Payment Certificate at Completion.
Issue Interim Payment Certificate at Completion.
Receipt of Contractor's 'Draft Final Statement'.
Check Contractors Draft Final Statement, & consult with
Contractor to resolve disagreements.
Receipt of Contractors Discharge.
Prepare Final Payment Certificate.
Issue Final Payment Certificate.
Issue 'Defects Liability Certificate'.
Certifying 'Default of Contractor'.
'Valuation at Date of Termination.
Determination and certification of 'Payment after
Termination'.
Instruction for 'Assignment of Benefit of Agreement'
with suppliers or subcontractors.
Determine Employer's costs of performing 'Urgent
Remedial Work' for which Contractor liable.
Instruction to rectify 'Damage to Works by Special
Risks'
rectifying 'Damage to Works by Special Risks'.
Receipt of Contractor's notification of 'Increased Costs
arising from Special Risks'.
'Increased arising from Special Risks'.
Determination of 'Payment if Contract Terminated'.
Engineers Decision.
Receipt of copy of notice of 'Change of Address'
Receipt of copy of Contractor's notice of termination of
employment under the Contract arising from 'Default of
Employer'
'Contractor's Entitlement to Suspend Work': Receipt of
copy of Contractor's notice to suspend work or reduce
the rate of work
Determination of Contractor's entitlement to Time
extension and costs arising from Contractor's
suspension or reduction of rate of work
Determine costs arising from 'Subsequent Legislation'.
Appendix Q
10
13 of 13
Appendix R
COMPARISON OF
SUB-CLAUSE NUMBERS
BETWEEN
FOURTH EDITION OF RED BOOK

AND
1999 CONDITIONS OF CONTRACT

FOR CONSTRUCTION
Referenced in:
Foreword to these Guidelines
FIDIC CONTRACTS FOR CONSTRUCTION

A COMPARISON OF SUB-CLAUSE NUMBERS
BETWEEN THE FOURTH EDITION OF THE RED BOOK
AND THE 1999 CONDITIONS OF CONTRACT
Equivalent Sub-Clause in 1999
Conditions of Contract for
Construction
Clause in the 1987 fourth

edition of the Red Book
PART 1: GENERAL CONDITIONS

1.1
1.2
1.3
1.4
1.5
Definitions and Interpretation

Definitions
Headings and Marginal Notes
Interpretation
Singular and Plural
Notices, Consents, Approvals, Certificates and Determinations
1.1
1.2
1.2
1.2
1.3
2.1
2.2
2.3
2.4
2.5
2.6
Engineer and Engineers Representative

Engineers Duties and Authority
Engineers Representative
Engineers Authority to Delegate
Appointment of Assistants
Instructions in Writing
Engineer to Act Impartially
3.1
3.2
3.2
3.2
3.3
3.1
3.1
4.1
4.2
Assignment and Subcontracting

Assignment of Contract
Subcontracting
Assignment of Subcontractors Obligations
1.7
4.4
4.5
5.1
5.2
6.1
6.2
6.3
6.4
6.5
7.1
7.2
7.3
Contract Documents
Language and Law
Priority of Contract Documents
Custody and Supply of Drawings and Documents
One Copy of Drawings to be Kept on Site
Disruption and Progress
Delays and Cost of Delay of Drawings
Failure by Contractor to Submit Drawings
Supplementary Drawings and Instructions
Permanent Works Designed by Contractor
Responsibility Unaffected by Approval
1.4
1.5
1.8
1.8
1.9
1.9
1.9
3.3
4.1
3.1
8.1
8.2
9.1
10.1
10.2
10.3
11.1
12.1
12.2
General Obligations
Contractors General Responsibilities
Site Operations and Methods of Construction
Contract Agreement
Period of Validity of Performance Security
Claims under Performance Security
Inspection of Site
Sufficiency of Tender
Not Foreseeable Physical Obstructions or Conditions
Appendix R
4.1
4.1
1.6
4.2
4.2
4.2
4.10
4.11
4.12
1 of 5
13.1
14.1
14.2
14.3
14.4
15.1
16.1
16.2
17.1
18.1
19.1
19.2
20.1
20.2
20.3
20.4
21.1
21.2
21.3
21.4
22.1
22.2
22.3
23.1
23.2
23.3
24.1
24.2
25.1
25.2
25.3
25.4
26.1
27.1
28.1
28.2
29.1
30.1
30.2
30.3
30.4
31.1
31.2
32.1
33.1
Work to be in Accordance with the Contract

Programme to be Submitted
Revised Programme
Cash Flow Estimate to be Submitted
Contractor not Relieved of Duties and Responsibilities
Contractors Superintendence
Contractors Employees
Engineer at Liberty to Object
Setting Out
Boreholes and Exploratory Excavation
Safety, Security and Protection of the Environment
Employers Responsibilities
Care of Works
Responsibility to Rectify Loss or Damage
Loss or Damage Due to Employers Risks
Employers Risks
Insurance of Works and Contractors Equipment
Scope of Cover
Responsibility for Amounts not Recovered
Exclusions
Damage to Persons and Property
Exceptions
Indemnity by Employer
Third Party Insurance (including Employers Property)
Minimum Amount of Insurance
Cross Liabilities
Accident or Injury to Workmen
Insurance Against Accident to Workmen
Evidence and Terms of Insurances
Adequacy of Insurances
Remedy on Contractors Failure to Insure
Compliance with Policy Conditions
Compliance with Statutes and Regulations
Fossils
Patent Rights
Royalties
Interference with Traffic and Adjoining Properties
Avoidance to Damage to Roads
Transport of Contractors Equipment or Temporary Works
Transport of Materials or Plant
Waterborne Traffic
Opportunities for Other Contractors
Facilities for Other Contractors
Contractor to Keep Site Clear
Clearance of Site on Completion
34.1
35.1
Labour
Engagement of Staff and Labour
Returns of Labour and Contractors Equipment
Appendix R
3.3, 19.7
8.3
8.3
14.4
3.1
4.3
6.9
6.9
4.7
13.1
4.8, 4.18, 4.22
2.3
17.2
17.2
17.4
17.3
18.2
18.2
18.1
18.2
17.1
17.1
17.1
18.3
18.3
18.3
18.4
18.4
18.1
18.1
18.1
17.1
1.13
4.24
17.5
7.8
4.14
4.15
4.13, 4.15
4.16
4.15
4.6
4.6
4.23
4.23
6.1
6.10
2 of 5
36.1
36.2
36.3
36.4
36.5
37.1
37.2
37.3
37.4
37.5
38.1
38.2
39.1
39.2
Materials, Plant and Workmanship

Quality of Materials, Plant and Workmanship
Cost of Samples
Costs of Tests
Costs of Tests not Provided for
Engineers Determination where Tests not Provided for
Inspection of Operations
Inspection and testing
Dates for Inspection and Testing
Rejection
Independent Inspection
Examination of Work before Covering up
Uncovering and Making Openings
Removal of Improper Work. Materials or Plant
Default of Contractor in Compliance
40.1
40.2
40.3
Suspension
Suspension of Work
Engineers Determination following Suspension
Suspension lasting more than 84 Days
41.1
42.1
42.2
42.3
43.11
44.1
44.2
44.3
45.1
46.1
47.1
47.2
48.1
48.2
48.3
48.4
Commencement and Delays

Commencement of Works
Possession of Site and Access Thereto
Failure to give Possession
Rights of Way and Facilities
Time for Completion
Extension of Time for Completion
Contractor to Provide Notification and Detailed Particulars
Interim Determination of Extension
Restriction on Working Hours
Rate of Progress
Liquidated Damages for Delay
Reduction of Liquidated Damages
Taking-Over of Sections or Parts
Substantial Completion of Parts
Surfaces Requiring Re-instatement
8.1
2.1
2.1
4.13
8.2
8.4
8.4
8.4, 20.1
6.5
8.6
8.7
10.2
10.1
10.2
10.2
10.4
49.1
49.2
49.3
49.4
50.1
Defects Liability
Defects Liability Period
Completion of Outstanding Work and Remedying Defects
Cost of Remedying Defects
Contractors Failure to Carry Out Instructions
Contractor to Search
11.1
11.1
11.2
11.4
11
51.1
51.2
52.1
52.2
52.3
52.4
Alterations, Additions and Omissions

Variations
Instructions for Variations
Power of Engineer to Fix Rates
Variations Exceeding 15 percent
Daywork
13.1
13.1
12.3
12.3
13
Appendix R
7.1
7.2
7.4
7.4
7.4
7.3
7.3
7.3
7.5
3.2
7.3
7.3
7.6
7.6
8.8
8.9
8.11
3 of 5
53.1
53.2
53.3
53.4
53.5
Procedure for Claims

Notice of Claims
Contemporary Records
Substantiation of Claims
Failure to Comply
Payment of Claims
54.1
54.2
54.3
54.4
54.5
54.6
54.7
54.8
Contractors Equipment, Temporary Works and Materials

Exclusive Use for the Works
Employer not Liable for Damage
Customs Clearance
Re-export of Contractors Equipment
Conditions of Hire of Contractors Equipment
Costs for Purpose of Clause 63
Incorporation of Clause in Subcontracts
Approval of Materials not Implied
55.1
56.1
57.1
57.2
Measurement
Quantities
Works to be Measured
Breakdown of Lump Sums
14.1
12.1
12.2
14.1
58.1
58.2
58.3
Provisional Sums
Definition of Provisional Sum
Use of Provisional Sums
Production of Vouchers
13.5
13.5
13.5
59.1
59.2
59.3
59.4
59.5
Nominated Subcontractors
Definition of Nominated Subcontractors
Nominated Subcontractors: Objection to Nomination
Design Requirements to be Expressly Stated
Payments to Nominated Subcontractors
Certification of Payments to Nominated Subcontractors
60.1
60.2
60.3
60.4
60.5
60.6
60.7
60.8
60.9
60.10
61.1
62.1
62.2
Certificates and Payment

Monthly Statements
Monthly Payments
Correction of Certificates
Statement at Completion
Final Statement
Discharge
Cessation of Employers Liability
Time for Payment
Approval only by Defects Liability Certificate
Defects Liability Certificate
Unfulfilled Obligations
63.1
63.2
63.3
63.4
64.1
Remedies
Default of Contractor
Valuation at Date of Termination
Payment after Termination
Assignment of Benefit of Agreement
Urgent Remedial Work
20.1
20.1
20.1
20.1
20
Appendix R
4.17
4.17, 17.2
2.2
2.2
4.4, 15.2
15.3
4.4
-
5.1
5.2
5.2
5.3
5.4
14.3
14.6
14.9
14.6
14.10
14.11
14.12
14.13
14.14
14.7
11.9
11.9
11.10
15.2
15.3
15.4
4.4, 15.2
7.6
4 of 5
65.1
65.2
65.3
65.4
65.5
65.6
65.7
65.8
Special Risks
No Liability for Special Risks
Special Risks
Damage to Works by Special Risks
Projectile, Missile
Increased Costs arising from Special Risks
Outbreak of War
Removal of Contractors Equipment on Termination
Payment if Contract Terminated
17.4
17.3
17.4
17.4
17.4
19.6
19.6
19.6
66.1
Release from Performance

Payment in Event of Release from Performance
19.7
67.1
67.2
67.3
67.4
Settlement of Disputes
Engineers Decision
Amicable Settlement
Arbitration
Failure to Comply with Engineers Decision
20.1
20.5
20.6
20.7
68.1
68.2
68.3
Notices
Notice to Contractor
Notice to Employer and Engineer
Change of Address
69.1
69.2
69.3
69.4
69.5
Default of Employer
Default of Employer
Removal of Contractors Equipment
Payment on Termination
Contractors Entitlement to Suspend Work
Resumption of Work
16.2
16.3
16.4
16.1
16.1
70.1
70.2
Changes in Cost and Legislation

Increase or Decrease of Cost
Subsequent Legislation
13.8
13.7
71.2
72.1
72.2
72.3
Currency and Rates of Exchange

Currency Restrictions
Rates of Exchange
Currency Proportions
Currencies of Payment for Provisional Sums
1.3
1.3
1.3
Appendix R
14.15
14.15
14.15
5 of 5

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PROJECT MANAGEMENT

PROJECT MANAGEMENT GUIDELINES

Fdration Internationale des Ingnieurs-Conseils (FIDIC)

THOMAS TELFORD PUBLISHING, Thomas Telford Ltd.

Project Management Guidelines ~

PART I PROJECT ADMINISTRATION

Appointment of Head Office Supervisor

MANAGEMENT OF SERVICE CONTRACT

Review & Clarification of Service Contract Documents

Project Management Guidelines ~

PROJECT SET-UP & EXECUTION

Staff Retention for Project Completion

PART II WORKS CONTRACT SUPERVISION

WORKS CONTRACT DOCUMENTS

Works Contract Award & Tender Security

The Louis Berger Group, Inc.

Project Management Guidelines ~

Compilation of Works Contract Documents

WORKS CONTRACT START-UP

Appointment of The Engineer

The Louis Berger Group, Inc.

Project Management Guidelines ~

II-2.19 Consent for Subcontractors

VARIATIONS & FINANCIAL CONTROL OF WORKS

Bill of Quantities & Unit Prices

The Louis Berger Group, Inc.

Project Management Guidelines ~

The Louis Berger Group, Inc.

Project Management Guidelines ~

Works Programme & Cash Flow Revisions

DESIGN REVIEWS & MODIFICATIONS

Contractual Responsibility for Design

The Louis Berger Group, Inc.

Project Management Guidelines ~

Review of Contractors Design under Construction Contract

TAKING OVER THE WORKS

DEFECTS NOTIFICATION PERIOD & CONTRACT COMPLETION

Defects Notification Period

The Louis Berger Group, Inc.

Project Management Guidelines ~

II-7.12 Contractors Discharge

Termination by Employer arising from Contractors Default

The Louis Berger Group, Inc.

Project Management Guidelines ~

Computation of Time Charges, Allowances

Format for Monitoring Service Contract Budget

Format for Invoicing Client

I-2.4 & I-2.8

Document Control / Project Filing System

Project Progress Reports

I-3.8, II-3.5, II-3.14 &

Construction Completion Report

I-3.8 & II-6.5

Preambles to BoQ of Works Contract

II-1.3, II-3.1 & II-3.8

II-1.3, II-3.1 & II-3.8

Quality Control Forms

II-2.12, II-3.7, II-4.1,

Daily Diary Forms & Events Log

II-3.4, II-3.5, II-3.16

Interim Payment Statements & Certificates

II-3.10, II-3.11 & II-6.5

Cost Estimates to Completion