Contract Management For Engineers and Technical Professionals

FIDIC,
NEC3, JBCC, GCC, 2016/02/25
Contract Management for

Engineers and Technical
Professionals
FIDIC NEC3 JBCC & GCC
Outcomes
• Relevance of the fours suites of contracts
• Contract, Law, & Formation
• The ‘works’ contracts natural and incidental terms
• Contract Management
• Provisions of these contracts including, but not
limited to,
o Usage, formation and composition
o Communications (contract management)
o Instructions and changes (variations)
o Valuation and payment
o Compensation processes
o Disputes and Terminations
Contract Centric Systems 2
(c) 2016 Gavin C Weiman 1

FIDIC, NEC3, JBCC, GCC, 2016/02/25
Relevance of the four suites

of contracts
CIDB Standardization Gazette July 2015
CIDB Prescribed
Standard
Contracts

Normative Reference
2.1 Conditions of Contract for Construction for Building and
Engineering Works designed by the Employer (“Red Book”)
(1999) as published by the International Federation of
Consulting Engineers (FIDIC).
2.2 Conditions of Contract for Plant and Design-Build for
Electrical and Mechanical Plant and for Building and
Engineering Works, designed by the Contractor (“Yellow
Book”) (1999) as published by the International Federation
of Consulting Engineers (FIDIC).
i.e most of FIDIC
2.3 Conditions of Contract for EPC Turnkey Projects (“Silver
Book”) (1999) as published by theNew Suite - “First Edition
International 1999”
Federation
of Consulting Engineers (FIDIC). • The Construction Contract
• The Plant and Design-Build
2.4 Conditions of Contract for Design, Build and Operate
Contract
Projects (“Gold Book”) (2008) as •published by the
The EPC/Turnkey Contract
International Federation of Consulting Engineers
• Gold Book
(FIDIC).
• The Short Form
Normative Reference
2.5 Contract for the Supply and Delivery of Goods as
published by the Construction Industry Development Board
(1019).
2.6 General Conditions of Contract for Construction Works
(Third Edition 2015) as published by the South African
Institution of Civil Engineering.
2.7 General conditions Of purchase as published by the
Construction Industry Development Board (1018).
2.8 JBCC Series 2000 Principal Building Agreement (Edition
6.1: March 2014) as published by the Joint Building Contracts
Committee.
2.9 JBCC Series 2000 Minor Works Agreement (Edition 5.1:
GCC 2015
March 2014) as published by the Joint Building Contracts
(Third Edition)
Committee. JBCC 6.1
CIDB Supply

Normative Reference
2.10 NEC3 Engineering and Construction Short
Contract as published by the Institution of Civil
Engineers.
32.11 NEC3 Engineering and Construction Contract
as published by the Institution of Civil Engineers.
NEC3
• ECC3
2.12 NEC3 Professional Services Contract as• published
ECSC3
by the Institution of Civil Engineers. • PSC3
• TSC3
2.13 NEC3 Term Services Contract as published by the
• TSSC3
Institution of Civil Engineers
2.14 NEC3 Term Services Short Contract as published
by the Institution of Civil Engineers
The Contracts, their

components and formation

Think of Contract Law and

Contracts as being layered
Incidental Contract
- Text Agreement
Nominate Conditions of
Contracts Contract
General
Specifications
principles
What is a Contract?
Contract is a binding legal
relationship that may Six (6) Requirements Tool
be defined as -
• An Agreement
• Between two or more 1. Agreement
legally competent 2. Contractual Capacity
persons (often a buyer
and a seller) 3. Intention to be bound
• Intending to create 4. Lawful
binding obligations
• To make some lawful 5. Possible
and possible
performance 6. Formalities
• That Complies with any
legal or agreed
formalities (if any)

Parties to a Contract
• Natural
o Major
o Minor
• Artificial
o Company
o Close Corporation
• Partnership
• Joint Ventures
• Agents
Agreement
Offer Acceptance
l Statement of Intention l In Response to Offer
l Communicated
l Unconditional
l Definite and Complete
l Contemplate Acceptance l Communicated
l Open for Acceptance l By Offeree
l To Offeror
l Revocability of Offer
l Rejection l Manner Prescribed (if any)
l Counter offer l Express
l Acceptance is unclear or not
communicate in the time or l Tacit
manner stipulated
l Expiry of the prescribed or l Postal (Expedition)
reasonable time l Deemed
l Revocation
l Death or legal incapacity of l Principle of Finality of
either party Acceptance
l Impossibility

Lawful & Possible

Lawful Possible
• conclusion • Absolute
• performance • Ab Initio /
• object Supervening
• legislative enactment • Relative
• common law
• Obligation
• good morals/public policy o alternative
o facultative
o generic
• Divisible
Formalities
Generally
Verbal
None
Implied Tacit

Writing
l Risk
• Alienations of land
l Performance, Schedule,
• Credit agreements Cost
• Contracts of l Primacy of Verbal
apprenticeship l Form of Written
Agreements
• Executory donations
l Parol Evidence Rule
• Contracts of suretyship l Alterations
• Government Tendering l Typing Errors
l Signature
l Integration
l Battle of the Forms
l Letter of Intent
What is a works Natural

contract?
terms
Essential Terms • Duties of Contractor (Lessee)
• Agreement to let o Commence work in a reasonable time
and hire work o Complete work in a reasonable time
o Use reasonable skill, care and diligence
• Work relates to a o Use suitable materials
corporeal thing o Comply with legislation
• Time (agreed or o Repair patent defects
determinable) o Warranty against latent defects
o Return premises in similar condition in
• Remuneration which received
(agreed or • Duties of Lessor (Employer)
determinable) o Provide access to site in reasonable time
• Independence o Co-operate to enable completion and
delivery
o Pay Remuneration

Contracts are projects

• Project Knowledge Areas
o Integration Management
o Scope Management PMBoktm
o Time Management
Project Knowledge Areas
o Cost Management
o Quality Management
o Human Resource Management
o Communication Management
o Risk Management
o Procurement Management
Triangle of Contract Risk
Scope
[aka
Performance
Quality
Technical]
Risk
Time
Schedule
Cost
Negative Mal-
performance
Damages

Contracts are …
• Business inputs and outputs
• Risk & Quality Management Accept
documents
• Customer services tools
• Performance management tools
Transfer Avoid
Control
The Basis of
Contract Management & Drafting
The Risk Management Process Model

Contract Management,
Tenders & Formation
As recommended by FIDIC
As Prescribed by the CIDB
Contract Management
Life-Cycle
The Contracting Process
Pre-award Award Post-award
or or or
Contracting Post -
Pre- contractual
contractual Phase
Phase
Phase
Reaching Contract
Activities agreement and Administration
leading up to finalizing the through
the contract contract Termination

Conrtact Management Process

Buyer & Seller Views
Phase 1. Pre –Award
1. 2. Solicitation 3.
Procurement Planning Solicitation
Buyer Planning
1. Presales 2. 3.
Seller Activity Bid/No Bid Bid or
decision Proposal
making Preparation
Conrtact Management Process

Buyer & Seller Views
Phase 2. Award Phase 3. Postaward
4. 5. 6.
Buyer Source Contract Contract
Selection Administration Closeout
4. 5. 6.
Seller Contract Contract Contract
Negotiation Administration Closeout
and
formation

Source Selection Criteria

(Attributes)
• Attributes are features or qualities of a product,
service, or supplier
• Importance depends on customer’s needs
• Evaluation of product, service, or supplier is the sum
of weighted attribute evaluations
Attribute Categories
• Three general categories
o Technical
o Management
o Price
• Selection and weighting of attributes must reflect

buyer’s needs

Technical Criteria
• Relate to features or qualities of offered product or
service
• Examples
o Functions and capabilities
o Nature and quality of design
o Level and quality of performance
Management Criteria
• Features or qualities of seller as an Organisation
• Examples
o Reputation
o Qualifications of employees
o Capability and capacity of facilities and equipment
o Financial strength
o Labour relations
o Policies
o Management systems

Price Criteria
• Main consideration: Reasonableness
• Two components to reasonableness
o Realism
o Competitiveness
Seller’s Past Performance

as an Evaluation Factor
• There is an increasing trend toward the evaluation
of past performance of sellers
• Past performance reduces the emphasis on merely
writing good proposals
• Past performance can be evaluated as a separate
evaluation factor or as a sub-factor under technical
excellence or management capability

Evaluation Standards
• Relate to attribute values
• Comparison to standards is basis for proposal
evaluation
• Three approaches
o Absolute standards
o Minimum standards
o Relative standards
Evaluation Procedures
• Collect information about potential sources
• Read and analyze information
• Make comparisons based on standards
• Assign scores
• Apply weights
• Rank alternatives
• Select best alternative
• Keep records for justification (if necessary)

Evaluation Procedure
Example
Car/Mini-Van Evaluation
Proposal Weighted
Criterion Standard Value Score Weight Score
Number of seats Minimum (5) 7 (of 9) 60 20% 12.0
Safety rating Minimum (Good) Excellent 100 20% 20.0
Cargo capacity Absolute (50-80 cu ft 57cu ft 65 10% 6.5
Fuel economy Relative 18 70 10% 7.0

(city)/24
(highway)
mpg
Price Relative R260,500 50 40% 20.0
Total 65.5
Contract Management Process: Award Phase -
Contract Negotiation and Formation

Buyer’s view and seller’s view
• The process of reaching agreement on the
technical, schedule, price, and other terms and
conditions

Contract Negotiation: A Complex Activity for

Both Buyers and Sellers
Successful negotiators must -
• Exhibit behavioural and analytical skills to diagnose
problems and adapt winning strategies
• Understand their own personalities and personal
ethics and values
• Know their products and services, desired terms and
conditions, and pricing strategy
Impact on Long-Term
Relationships
• Win-win negotiations result in win-win relationships
where both parties gain from the relationship
• Win-lose negotiations frequently result in lose-lose
relationships where both parties, even the one that
“won” the negotiation, are worse off than they
would have been with a different deal (remember
John and Rachel)

We all Negotiate Every

Day
• Personal: Family and friends
• Professional
o Internal Organisation
o External: Buyers and subcontractors
Questions:
How well do you negotiate?
Are your negotiations win-win or win-lose?
Negotiation Approaches
• Intuitive approach
o Nonstructured
o Informal - not written
o Inconsistent results
• Process approach
o Structured, planned
o Documented actions
o More consistent results

Getting to “Yes”
Getting to “yes” means -
• Getting around “yes, but-”
o Focusing on common interests not positions
o Using joint problem solving, both internally and externally
o Realising that the right solution is a matter of perspective-buyer or seller
• Getting past “no”
Buyer’s Negotiation
Objectives (Interests)
• Acquire necessary supplies and services of the
desired quality, on time, and at the lowest
reasonable price
• Establish and administer a pricing arrangement that
results in payment of a fair and reasonable price
• Satisfy needs of the end user (customer)

Seller’s Negotiation
Objectives (Interests)
• Profitability (long-term vs. short-term)
• Market share
• Satisfying the needs of the customer
The Key to Successful

Negotiation Is
Preparation
• Prepare, prepare, prepare
• Five important points to reach a mutually
satisfactory agreement
o Determine each party’s interests
o Create options
o Select fair standards
o Know your alternatives
o Develop a solid proposal (team plan)

Contract Negotiation
Process: Best Practices
Prenegotiation Planning Conducting Negotiations Postnegotiation Actions
1. Prepare yourself and your team 11. Determine who has authority 21. Prepare the negotiation
2. Know the other party 12. Prepare the facility memorandum
3. Know the big picture 13. Use an agenda 22. Send the memorandum to the
4. Identify objectives 14. Introduce the team other party
5. Prioritize objectives 15. Set the right tone 23. Offer to write the contract
6. Create options 16. Exchange information 24. Prepare the contract
7. Select fair standards 17. Focus on objectives 25. Prepare negotiation results
summary
8. Examine alternatives 18. Use strategy, tactics, and
26. Obtain required reviews and
9. Select your strategy, tactics, countertactics
approvals
and countertactics 19. Make counteroffers
27. Send the contract to the other
10. Develop a solid and approved 20. Document the agreement or party for signature
team negotiation plan know when to walk away
28. Provide copies of the contract
to affected Organisations
29. Document lessons learned
30. Prepare the contract
administration plan
Importance of Terms and

Conditions

Importance of Price
Categories and Types of

Contracts
Categories
Time-and-
Fixed Price materials or
or ‘Lump Sum’ Cost-Reimbursement Unit Price
Firm-Fixed-Price (FFP) Cost-Sharing (CS) Time-and
Materials (T&M)
Fixed-Price with Cost-Reimbursement
economic price (CR) Unit Price
adjustment (FP/EPA)
Cost-plus-award fee
Fixed-Price Incentive (CPAF)
(FPI)
Types of
Cost-plus-incentive fee
Contracts (CPIF)
Cost-plus-fixed fee
(CPFF)
Cost-plus-a-
percentage-of-cost
(CPPC)

Tender process
As recommended by FIDIC
FIDIC’s process for obtaining tenders

FIDIC’s process for opening & evaluating

tenders

Tender Process
A prescribed by the CIDB




Maxi Security / SA Post

Office 2013 (2) SA SCA
• Claim by Maxi Security R14million breach of
contract, losses as a result of Post Office
repudiation of contract.
• TENDER, LETTER OF ACCEPTANCE, send by
Post Office to Maxi Security.
• LETTER OF ACCEPTANCE – contained words
“subject to”.
• COURT HELD:- the words subject to in a letter of
acceptance was understood in the contractual
context as introducing some other condition –
which then makes the LETTER OF 60
ACCEPTANCE
Contract Centric Systems
a COUNTER OFFER.

The FIDIC Rainbow

FIDIC & Their Contracts
About
• FIDIC = Fédération Internationale Des Ingénieurs-

Conseils (International Federation of Consulting
Engineers)
• 1955 – 4th Edition of ICE Conditions of Contract
adopted for International use and published as the
FIDIC Contract.

FIDIC Contracts
New Suite - “First Edition 1999”
• The Construction Contract
• The MDB Construction Contract
• The Plant and Design-Build Contract
• The EPC/Turnkey Contract
• The Short Form
• Dredgers Contract
• Gold Book
• Client/Consultant Model Services Agreement
• Sub-Consultancy Agreement
• Joint Venture Agreement
& a Conrtacts Guide
A Rainbow
published 1999
Guide
Published in
2001

Which contract?
Short form
• new FIDIC Book
– Price small (< US$ 500,000), or
– Construction time is short (< 6 months), or
– Work is relatively simple or repetitive (dredging)
• Irrelevant whether design provided by

– the Employer (or his Engineer/Architect if he has one) or
– the Contractor,
• Irrelevant that project is

– construction,
– electrical,
– mechanical, or
– other engineering work.

Redbook & MDB

Conditions of Contract for Construction for Building and
Engineering Works Designed by the Employer (The
Construction Contract)
• Employer (his Engineer) does most of the design
(traditional projects, e.g., infrastructure, buildings,
hydropower, etc.)
• Engineer
– administers Contract,
– monitors the construction work
– certifies payment
• Employer kept fully informed, makes variations, etc.
• Payment according to
– bills of quantities or
– lump sums
• for approved work done.
Yellow & Orange Books

• Employer creates outcome or performance specification
• Contractor (or Supplier) does majority of design,
– Yellow Book - traditionally electrical , mechanical works, & erection on site
– Orange Book - more recent design-build and turnkey type projects (plant projects,
infrastructure and other types of projects)
• Engineer (Employer’s Representative in the Orange Book)
– administered the Contract,
– monitored the manufacture and erection on site or construction work and
– certified payment,
• Payment according to achieved milestones generally on a
lump sum basis.
• Conditions of Contract for Plant and Design-Build for Electrical

and Mechanical Plant and for Building and Engineering Works
Designed by the Contractor (Plant and Design-Build Contract)
• updates and supersedes both the existing Yellow Book from
1987 and the Orange Book from 1995.

EPC/Turnkey
• Contractor designs and takes full responsibility
• Employer may appoint a Representative
• Fixed price, to cover risks taken on by Contractor
• Payments according to progress
• No certification of payments
Application of FIDIC
Suitable for
• Engineering and
Construction Works
o Design by
Employer/Consultant &
Construct
o Design & Build by the
contractor [P&DB] &
Turnkey
o Building Work
o Combination
• Fixed price (Lump
Sum) or
• Re-measurement
(ad-measured)
• Not suitable for Cost
Contracts
• Not suitable for time
based assignments

What’s in a (FIDIC) book?

• General Conditions
• Guidance for Preparation of Particular Conditions
• Forms
o Securities
• Parent Company Guarantee
• Performance (demand) Guarantee
• Tender Security (Silver)
• Performance (Surety) Bond
• Advance Payment Guarantee
• Retention Money Guarantee
• Payment Guarantee
o Letter of Tender
o Appendix to Tender
o Contract Agreement
o Dispute Adjudication Agreement
Documents forming a
FIDIC Contracts
a) Red Book a) Yellow Book a) Silver Book
a) the Contract Agreement a) the Contract Agreement a) the Contract Agreement
(if any) (if any)
b) the Letter of Acceptance b) the Letter of Acceptance
c) the Letter of Tender c) the Letter of Tender
d) the Particular d) the Particular b) the Particular
Conditions Conditions Conditions
e) these General e) these General c) these General
Conditions Conditions Conditions
f) the Specifications f) the Employer ’s d) the Employer ’s
g) the Drawings, and Requirements Requirements
h) the Schedules and g) the Schedules and e) The Tender
i) any other documents h) The Contractor ’s
Proposal f) any other documents
order i) any other documents
mutually explanatory
ambiguity

Letter of Tender
“Letter of Tender” means the
document entitled letter of tender,
which was completed by the
Contractor and includes the signed
offer to the Employer for the
Works.
“Appendix to Tender”
means the completed pages
entitled appendix to tender
which are appended to and
form part of the Letter of
Tender.

“Letter of Acceptance” means the letter of formal

acceptance, signed by the Employer, of the Letter
of Tender, including any annexed memoranda
comprising agreements between and signed by
both Parties. If there is no such 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
Contract Centric Systems of signing the Contract Agreement. 75
“Contract Agreement” means the

contract agreement (if any) referred to
in Sub Clause 1.6 [Contract Agreement]
One Pager
Compiles
these
document

1.5 Priority of Documents

The documents forming the Contract are to be taken as mutually
explanatory of one another. For the purposes of interpretation,
the priority of the documents shall be in accordance with the
following sequence:
(a) the Contract Agreement (if any),
(b) the Letter of Acceptance,
(c) the Letter of Tender,
(d) the Particular Conditions,
(e) these General Conditions,
(f) the Employer’s Requirements,
(g) the Schedules, and
(h) the Contractor’s Proposal and any other documents
forming part of the Contract.
If an ambiguity or discrepancy is found in the documents, the
Engineer shall issue any necessary clarification or instruction.
General Layout of
General Conditions
1. General Provisions 10. Employer Taking Over
2. The Employer 11. Defects Liability
3. The Engineer 12. Measurement and
Evaluation
4. The Contractor 13. Variations and Adjustments
5. Nominated 14. Contract Price and
Subcontractors Payment
6. Staff and Labour 15. Termination by Employer
7. Plant Materials and 16. Suspension and Termination
Workmanship by Contractor
17. Risk and Responsibility
8. Commencement
Delays and Suspension 18. Insurance
19. Force Majeure
9. Tests on Completion 20. Claims, Disputes and
Arbitration

Particular Conditions
1. At the end of Sub-Clause 1.2, insert:
In these Conditions, provisions including the expression
"Cost plus reasonable profit" require this profit to be one-
twentieth (5%) of this Cost.
2. The Engineer shall obtain the specific approval of the

Employer before taking action under the following Sub-
Clauses of these Conditions:
(a) Sub-Clause **
(b) Sub-Clause **
3. etc
Altering FIDIC contracts

• Guiding Principles
• Preparing Tender Documents – The FIDIC Contracts
Guide –Guidance for the Preparation of Particular
Conditions
• Complementary Terms of Contract
• Recommendations
• Pitfalls and Issues
• Definitions in FIDIC & harmonising with CIDB

Analysis and Important

Provisions
Definitions
1.1 Definitions
In the Conditions of Contract (“these Conditions”), which
include Particular Conditions and these General
Conditions, the following words and expressions shall have
the meanings stated. Words indicating persons or parties
include corporations and other legal entities, except where
the context requires otherwise.
1.1.1 The Contract

1.1.2 Parties and Persons
1.1.3 Dates, Tests, Periods and Completion
1.1.4 Money and Payments
Conrtact Centric Systems 82

1.2 Interpretation
In the Contract, except where the context requires
otherwise:
(a) words indicating one gender include all genders;
(b) words indicating the singular also include the plural and
words indicating the plural also include the singular;
(c) provisions including the word “agree”, “agreed” or
“agreement” require the agreement to be recorded in
writing, and
(d) “written” or “in writing” means hand-written, type-
written, printed or electronically made, and resulting in a
permanent record.
The marginal words and other headings shall not be taken
into consideration in the interpretation of these Conditions.
Some other rules

• Words and numbers
• Handwriting and printing
• Inclusive lists
• Non-Inclusive lists (etc. lists)
• General & Specific Provisions
• Ambiguity
o Reasonable vs unreasonable
o Commercial Sense vs Commercially Senseless
o Contra Proferentum

Communication &
Consensus
Common Law
Fair but
Uncertain
Reception
Theory Expedition
Hearing + Theory
Understanding
1.3 Communications
Wherever these Conditions provide for the giving or issuing of
approvals, certificates, consents, determinations, notices and
requests, these communications shall be:
(a) 1) In writing and 2) delivered by hand (against receipt), sent by
mail or courier, or transmitted using any of the agreed systems of
electronic transmission as stated in the Appendix to Tender; and
(b) 3) delivered, sent or transmitted to the address for the recipient’s
communications as stated in the Appendix to Tender. However:
(i) if the recipient gives notice of another address, communications
shall thereafter be delivered accordingly: and
(ii) if the recipient has not stated otherwise when requesting an
approval or consent, it may be sent to the address from which the
request was issued.
Approvals, certificates, consents and determinations shall not be
unreasonably withheld or delayed. When a 4) certificate is issued to
a Party, the certifier shall send a copy to the other Party. When a 4)
notice is issued to a Party, by the other Party or the Engineer, a copy
shall be sent to the Engineer or the other Party, as the case may be.
Consider
• What about Instructions and other communications not listed in
clause 1.3?
• What is the effect of these 4 requirements are not met?

3.3 Instructions of the Engineer

The Engineer may issue to the Contractor (at any time) instructions and additional or
modified Drawings which may be necessary for the execution of the Works and the
remedying of any defects, all in accordance with the Contract. The Contractor shall
only take instructions from the Engineer, or from an assistant to whom the appropriate
authority has been delegated under this Clause. If an instruction constitutes a
Variation, Clause 13 [ Variations and Adjustments ] shall apply.
The Contractor shall comply with the instructions given by the Engineer or delegated
assistant, on any matter related to the Contract. Whenever practicable, their
instructions shall be given in writing. If the Engineer or a delegated assistant:
(a) gives an oral instruction,
(b) receives a written confirmation of the instruction, from (or on behalf of) the
Contractor, within two working days after giving the instruction, and
(c) does not reply by issuing a written rejection and/or instruction within two working
days after receiving the confirmation, then the confirmation shall constitute the written
instruction of the Engineer or delegated assistant (as the case may be).
Consider
• How to whom and where must these instructions be given?
• What does ‘practicable’ mean?
• Can a Instruction under Clause 13 be given orally
13.1 Right to Vary

Variations may be initiated by the Engineer at any time prior to issuing the Taking-
Over Certificate for the Works, either by an instruction or by a request for the
Contractor to submit a proposal.
The Contractor shall execute and be bound by each Variation, unless the Contractor
promptly gives notice to the Engineer stating (with supporting particulars) that the
Contractor cannot readily obtain the Goods required for the Variation. Upon
receiving this notice, the Engineer shall cancel, confirm or vary the instruction.
Each Variation may include:
(a) changes to the quantities of any item of work included in the Contract
(however, such changes do not necessarily constitute a Variation),
(b) changes to the quality and other characteristics of any item of work,
(c) changes to the levels, positions and/or dimensions of any part of the Works,
(d) omission of any work unless it is to be carried out by others,
(e) any additional work, Plant, Materials or services necessary for the Permanent
Works, including any associated Tests on Completion, boreholes and other testing
and exploratory work, or
(f) changes to the sequence or timing of the execution of the Works.
The Contractor shall not make any alteration and/or modification of the Permanent
Works, unless and until the Engineer instructs or approves a Variation.

13.3 Variation Procedure

If the Engineer requests a proposal, prior to instructing a Variation, the Contractor shall
respond in writing as soon as practicable, either by giving reasons why he cannot
comply (if this is the case) or by submitting:
• a description of the proposed work to be performed and a programme for its
execution,
• the Contractor ’s proposal for any necessary modifications to the programme
according to Sub-Clause 8.3 [Programme] and to the Time for Completion, and
• the Contractor ’s proposal for evaluation of the Variation.
The Engineer shall, as soon as practicable after receiving such proposal (under Sub-
Clause 13.2 [Value Engineering] or otherwise), respond with approval, disapproval or
comments. The Contractor shall not delay any work whilst awaiting a response.
Each instruction to execute a Variation, with any requirements for the recording of
Costs, shall be issued by the Engineer to the Contractor, who shall acknowledge
receipt.
Each Variation shall be evaluated in accordance with Clause 12 [Measurement and
Evaluation], unless the Engineer instructs or approves otherwise in accordance with this
Clause.
Consider
• How (in writing or what) where, to whom must these instructions approvals or
comments be addressed?
Employer’s Duties
• Arrangement for Payments [2.4]
• Duty to Pay
o Introduction
o Contract Price
o Provisional Sums
• Duty to Co-operate
o Access to the Site [2.1]
o Permits, Licences or Approvals
o Duty to Minimise Delay
o Duty to Make Financial Arrangements
o Duty to Provide Information
o Estoppel
• Duty to Compensate
o Compensation for Interference by Employer

Design Responsibility
• Employer’s Design
• Contractor’s Design
• Contractor’s Design Liability
• Design Procedure
• Design Warranties
• Design Update
• Deliverables
Time for Completion

• Legal approaches
• Time Control
• Extension of Time
• Concurrent Delay
o Common Law
o Civil Law
o FIDIC
• SCL
• Liquidated Damages and Penalties
o Validity of Liquidated Damages Clauses
o Delay Damages
• Milestone Damages

Tests
• Tests Until Completion
• Tests on Completion
• Tests After Completion
• Tests During the Defects Notification Period
• Delayed Tests
• ISO Standard
• Tailoring Test Procedures
Certificates
• Taking Over
• Performance
• Payments
o Measurement
o Valuation
o Payment Procedures
o Payment Delays
o Late Payment
o Retention Monies
• Disputes

Discharge, Frustration
and Force Majeure
• Risk and Risk Allocation
• Normal Discharge
• Rebus Sic Stantibus
• Force Majeure
Risk, Insurance and

Exceptional Risk
• Legal Risk Allocation
• Risk Assessment
o Overview
o Employer’s Risk
o Care for the Works
o Sub-contractor’s Risk
o Fencing, Lighting and Guarding
o Misinterpretation of Data
o Bodily Injury
o Caps
• Insurance
• Contractor’s All Risk Insurance
• Uninsurable Risk

Claims
• Procedural Rules
• Claim Review and Preparation
• Claim Notice
• Documentation Requirements
• Presentation of Claims
• Claim Avoidance
• Extension of Time Claims
• Money Claims
o Cost
o Profit
o Loss of Productivity Claims
o Legal Claims
• Gold Book
Employers claims
• Employers Claims [2.5]
• “considers himself to be entitled to any payment under
any Clause of these Conditions or otherwise in
connection with the Contract, and/or to any extension
of the Defects Notification Period, the Employer shall
give notice and particulars to the Contractor”.
o The Employer or the Engineer may give notice and
o “The notice shall be given as soon as practicable” and
o give particulars of the claim,
• after which the Parties may agree the claim or failing
which the Engineer may then make a determination in
accordance with Sub-Clause 3.5 [Determinations

Contractor’s claims
Event
Claim
Notice
28d
Event
Claim
Notice
28
Claim
+14=42
Response
42

Event
Claim
Notice
28
Claim
+14=42
Response
42
Determinations 3.5

Contractors Claims
Sub-Clause Contractor’s Entitlement Employer’s Entitlement
1.9 CONS Delayed Contractor may claim extension
Drawings or Instructions of time. Cost and reasonable
profit if Engineer fails to instruct
within notified reasonable time
1.9 P&DB Errors in the Contractor may claim extension

Employers Requirements of time. Cost and reasonable
profit for error in Employer ’s
Requirements which was not
previously discoverable
2.1 Right of Access to the Contractor may claim extension

Site of time, Cost and reasonable
profit if Employer fails to give
right of access to Site within time
stated in the Contract
2.5 Employer’s Claims Procedure with which

Employer must comply when
claiming payment from the
Contractor and when claiming
an extension to the Defects
Notification Period
4.7 Setting Out Contractor may claim extension
of time. Cost and reasonable
profit for errors in original
setting-out points and levels of
reference
4.12 Unforeseeable Physical Contractor may claim extension
Conditions of time and Cost if he
encounters physical conditions
which are unforeseeable

4.19 Electricity, Water and Gas Employer entitled to payment

if Contractor uses power water
or other services provided by
the Employer. If any, without
prior notice under Sub-Cause
2.5
4.20 Employer’s Equipment Employer entitled to payment if
and Free-Issue Material Contractor uses the Employer ’s
Equipment, if any, without
prior notice under Sub-Clause
2.5
4.24 Fossils Contractor may claim extension
of time and Cost attributable to
an instruction to Contractor to
deal with an encountered
archaeological finding
7.4 Testing Contractor may claim

extension of time, Cost and
reasonable profit if testing is
delayed by (or on behalf of)
the Employer
7.5 Rejection Employer may claim costs if
defective Plant, Materials or
workmanship is rejected and
subsequently retested
7.6 Remedial Work Employer may claim costs if

Contractor fails to carry out
remedial work and if he
would not have been entitled
to be paid for it

8.4 Extension of Time for Contractor may claim extension of time if

completion (see Sub-Clauses 8.2 & 10.1) is or
Completion
will be delayed by a listed cause (a) a
Variation (unless an adjustment to the Time
for Completion has been agreed under Sub-
Clause 13.3 [Variation Procedure]) or other
substantial change in the quantity of an item
of work included in the Contract,
(b) a cause of delay giving an entitlement to
extension of time under a Sub-Clause of
these Conditions,
(c) exceptionally adverse climatic conditions,
(d) Unforeseeable shortages in the
availability of personnel or Goods caused by
epidemic or governmental actions, or
(e) any delay, impediment or prevention
caused by or attributable to the Employer,
the Employer’s Personnel, or the Employer’s
other contractors on the Site.
8.5 Delays Caused by Contractor may claim

Authorities extension of time if Country’s
public authority causes
Unforeseeable delay
8.6 Rate of Progress Employer may claim costs

attributable to revised methods
which Contractor adopts in
order to overcome a delay for
which no extension of time is
due
8.7 Delay Damages Employer may claim prescribed
delay damages if Contractor
fails to achieve completion
within Time for Completion

8.9 Consequences of Contractor may claim

Suspension extension of time and Cost
if Engineer instructs a
suspension of progress
9.4 Failure to Pass Tests on Employer may claim costs

Completion if Works or Section
repeatedly fails Test on
Completion
10.2 Taking Over of Parts Contractor may claim Cost Employer ’s entitlement to
of the Works and reasonable profit prescribed delay damages
attributable to the taking is reduced by a proportion
over of a part of the works related to the contract
value of the part taken over
10.3 Interference with Tests on Contractor may claim

Completion extension of time. Cost and
reasonable profit if Employer
delays a Test on Completion
11.3 Extension of Defects Employer may claim extension

Notification Period of the Defects Notification
Period if Works or Section or
major Plant cannot be used for
intended purpose because of
any defect
11.4 Failure to Remedy Employer may claim costs if

Defects Contractor fails to remedy a
defect for which Contractor is
responsible

11.8 Contractor to Search Contractor may claim Cost

and reasonable profit if
instructed to search for cause
of a defect for which he is not
responsible
12.2 P&DB Delayed Tests Contractor may claim Cost and

reasonable profit if Employer
delays a Test after Completion
12.3 CONS Evaluation Engineer evaluates each item of work, applying measurement
and appropriate rate or price
12.3 P&DB Retesting Employer may claim costs
attributable to repeated failures
of Test after Completion
12.4 CONS Omissions Contractor may claim a Cost

which, although it had been
included in a BoQ item, he would
not recover because the item was
for work which has been omitted
by Variation
12.4 P&DB Failure to Pass Tests Contractor may claim Cost and Employer may claim prescribed
after Completion reasonable profit if Employer non-performance damages in event
delays access to the Works or Plant of failure to pass Test after
Completion
13.2 CONS Value Engineering Contractor may claim half of the

saving in contract value of his
redesigned post-contract
alternative proposal, which was
approved without prior agreement
of such contract value and of how
saving would be shared

13.3 Variation Procedure The Contract Price shall be adjusted as a result of Variations
13.7 Adjustments for Changes Contractor may claim extension Employer may claim payment
in Legislation of time and Cost attributable to of reduction in Contractor ’s
a change in the Laws of the Cost attributable to a change in
Country the Laws of the Country
14.4 Schedule of Payments If interim payment instalments were not defined by reference to
actual progress, and actual progress is less than that on which the
schedule of payments was originally based, these instalments
may be revised
14.8 Delayed Payment Contractor may claim financing

charges if he does not receive
payment in accordance with
Sub-Clause 14.7
15.3 Valuation at Date of Works, Goods and

Termination Contractor’s Documents are
valued after Employer has
terminated Contract
15.4 Payment after Employer may claim losses and

Termination damages after terminating
Contract
16.1 Contractor’s Entitlement Contractor may claim extension
to Suspend Work of time, Cost and reasonable
profit if Engineer fails to certify
or if Employer fails to pay
amount certified or fails to
evidence his financial
arrangements, and Contractor
suspends work
16.4 Payment on Terminations Contractor may claim losses
and damages after terminating
Contract

Contractor Claims
17.1 Indemnities Contractor may claim cost Employer may claim cost
attributable to a matter attributable to a matter
against which he is against which he is
indemnified by Employer indemnified by Contractor
17.4 Consequences of Contractor may claim

Employer’s Risks extension of time, Cost and (in
some cases) reasonable profit if
Works, Goods or Contractor ’s
Documents are damaged by an
Employer ’s risk as listed in
Sub-Clause 17.3
18.1 General Requirements Contractor may claim cost of Employer may clam cost of
for insurances premiums if Employer fails to premiums if Contractor fails to
effect insurance for which he is effect insurance for which he is
the “Insuring Party” the “Insuring Party”
Contractor Claims
18.2 Insurance for Works and Employer may claim payment of

Contractor’s Equipment (last reduction in cost of premiums if
paragraph) the Contractor’s insurance of an
Employer’s risk becomes
unavailable at commercially
reasonable terms
19.4 Consequences of Force Contractor may claim extension of

Majeure time and (in some cases) Cost if
Force Majeure prevents him from
performing obligations
19.6 Optional Payment, Contractor’s work and other Costs are valued after progress is prevented
Termination and Release by a prolonged period of Force Majeure and either Party then gives notice
of termination
20.1 Contractor’s Claims Procedure with which the
Contractor must comply when
claiming an extension of time
and/or additional payment

Disputes
• Dispute Resolution Methods
o Mediation
o Dispute Review
o Dispute Adjudication
o Arbitration
• FIDIC Dispute Adjudication
o Function and Role of the DAB
o Appointment
o Dispute Adjudication Agreement
o Dispute Avoidance
o Referral of a Dispute
o Jurisdiction
o Procedure
o Applicable Law
o Reaching a Decision
NEC 3

About
• Established 1818
• First President Thomas
Telford (1820 – 1834)
• 85,000 members
spanning 164 countries
• 12officesworldwide
• 1991
• OGC
• Constructing the team
• Lord Latham
• (Bloat Ware)
conrtact centic systems 119
ICE Contracts
• 1945 - 1st Edition of ICE Conditions of Contract
• adopted for International use and published as the
FIDIC Contract
• 1991 – First publication of NEC contract
• 1995 – 2nd Edition of NEC contract
• 2005 – 3rd Edition of NEC family of contracts
• 2011 – Support for ICE conditions withdrawn

The nec Grand Plan

Stimulus to
Good
Project
Management
OBJECTIVES
Flexibilit
Clarity y
NEC3 …
• is a relational contract
• has best practice early warning provisions
• allows for a real time programme
• allows for real time change control
• has an effective procedure for dealing with defects
• offers a range of pricing mechanisms (main
Options) and other matters such as retention,
sectional completion, Key Performance Indicators
(secondary Options)
• offers flexibility, clarity and simplicity and stimulus to
good management

Flexibility – the NEC Family

Supply Contract
Supply Supply Short Contract
High ECC TSC

Engineering & Construction Contract
Professional Services Contract
Term Services Contract

ECS
Complexity
Engineering & Construction

Subcontract
PSC
ECSC
Short Contract TSSC
Term Services Short Contract
ECSS
Low Short Subcontract
Framework Contract
Adjudicator’s Contract
business
Contract Centric Systems design construction operation 123
case
NEC 3 contracts suite

So to summarise ….
• NEC3 Engineering and Construction Contract
• NEC3 Engineering and Construction Short Conrtact
• NEC3 Subcontracts for the above
• NEC3 Term Service Contract
• NEC3 Term Service Short Contract
• NEC3 Supply Contract
• NEC3 Professional Services Contract
• NEC3 Adjudicator’s Contract

Decomposition Drating
• Take ICE General Conditions
• Remove Price
– Lump Sum ... Option A
– Remeasurable ... Option B
– Then add a number of new pricing options C- F
• Remove all non-core elements

o Call these Secondary Options X1-19
o Remove Dispute resolution
o Particular terms numbersZ1 etc
• Rename what’s left “Core’

• Compile the Conditions of Contract in the Contract
Data
NEC3 ECC Structure

• General Conditions, Particular Conditions & Data
(e.g. FIDIC)
• Now Compiled in Contract Data (Data / Variables
are in italics)
o Begin with the Core Clauses (9 of them) & add
o One of a selection a Pricing Option (called a Main Option numbered A-F)
o Select required Secondary Options (Number X1 X2 etc)
o Write any Additional Terms (called Z ‘clauses’ (instead of Particular Terms))
o Prepare ‘Works Information’ which can also contain contractual
provisions, constraints etc. under which the works must be done.
o Prepare Site Information
o Prepare Pricing Information

Agreement
The Employer and Contractor agree as follows
1. The Contractor will Provide the Works in accordance with the

conditions of contract identified in the Contract Data.
2. The Employer will pay the Contractor the amount due and
carry out his duties in accordance with the conditions of
contract identified in the Contract Data.
3. The documents forming part of this agreement are
o the Contractor’s tender

o the Employer’s letter of acceptance
o the Contract Data part one
o the Contract Data part two
o the following documents
Signed at etc. .

Core Clauses
1 General
2 The Contractor’s main responsibilities
3 Time
4 Testing and Defects
5 Payment
6 Compensation events
7 Title
8 Risks and insurance
9 Termination

Main options
• Contract strategy
o Option A – priced contract with activity schedule
o Option B – priced contract with bill of quantities
• Target contracts generally
o Options C and D – target contracts
• Option E – cost reimbursable contract
• Option F – management contract
• Option W1 – dispute resolution

• Option W2 – dispute resolution
Secondary options
• Option X1 – price adjustment for inflation
• Option X2 – changes in the law
• Option X3 – multiple currencies
• Option X4 – parent company guarantee
• Option X5 – sectional completion
• Option X6 – bonus for early completion
• Option X7 – delay damages
• Option X12 – partnering
• Option X13 – performance bond

NEC3
Some Pertinent Clause
Definitions, Communications, Instructions, Variations Claims
1) Partnering & Risk

1 General
Actions 10
10.1 The Employer, the Contractor, the Project Manager and the Supervisor shall
act as stated in this contract and in a spirit of mutual trust and co-operation.
Consider
What is ‘a spirit of mutual trust and co-operation’?
Is it the same a ‘fiduciary duty’ or a duty to act in a boni fide way?
If a Party failed to act this way would it be a breach of contract. (Remember a breach
of contract is a ‘compensation event’
Identified and defined terms 11
11.1 In these conditions of contract, terms identified in the Contract Data are in
italics and defined terms have capital initials.
Consider
Why is ‘conditions of contract’ not in italics (its identified in the Contract Data)
Why is ‘Contract Data’ not a listed definition (it has initial capitals)

Communications 13
13.1 Each instruction, certificate, submission, proposal, record, acceptance,

notification, reply and other communication which this contract requires is
communicated in a form which can be read, copied and recorded. Writing is in
the language of this contract.
13.2 A communication has effect when it is received at the last address notified by
the recipient for receiving communications or, if none is notified, at the address
of the recipient stated in the Contract Data.
13.3 If this contract requires the Project Manager, the Supervisor or the Contractor to
reply to a communication, unless otherwise stated in this contract, he replies
within the period for reply.
13.4 The Project Manager replies to a communication submitted or resubmitted to

him by the Contractor for acceptance. If his reply is not acceptance, the Project
Manager states his reasons and the Contractor resubmits the communication
within the period for reply taking account of these reasons. A reason for
withholding acceptance is that more information is needed in order to assess
the Contractor’s submission fully.
Consider
What does “received” mean, how is ‘received’ established an who must ‘receive’ it
Communications
Replies and acceptances & reasons if the reply is not acceptance [1.4]
• clause 15.1 – proposals to add to the working areas
• clause 21.2 – particulars of the contractor’s design
• clause 23.1 – particulars of design of equipment
• clause 24.1 – replacement persons
• clause 26.2 – names of subcontractors
• clause 26.3 – conditions of contract for subcontracts
• clause 31.1 – the first programme
• clause 31.3 – regular programmes
• clause 32.2 – revised programmes
• clause 62.3 – quotations for compensation events
• clause 85.1 – insurance policies
• clause X13.1 – performance bond
• clause X14.2 – advanced payment bond
• each has its own list of reasons for non-acceptance
• failure to reply may be a compensation event
• withholding acceptance for a state reason is not a compensation event
• some give a stated reason as 'more information is required' can be abused
• Period for reply extended by Project Manager with agreement of Contractor [13.6]

Communications
Notifications [13.7]
• clause 14.2 – delegation
• clause 14.4 – replacement of the project manager or supervisor
• clause 16.1 – early warning
• clause 17.1 – ambiguities and inconsistencies
• clause 18.1 – illegal or impossible requirements
• clause 31.3 – programmes
• clause 40.3 – tests and inspections
• clause 42.2 – defects
• clause 61.1 – compensation events
• clause 61.5 – decisions on compensation events
• clause 61.6 – assumptions on compensation events
• clause 62.6 – quotations for compensation events
• clause 64.3 – assessment of compensation events
• clause 64.4 – late assessment of compensation events
• clause 65.1 – implementation of compensation events
• clause 73.1 – discovery of objects of value etc
Collaboration on risk
Definition
(14) The Risk Register is a register of the risks which are listed in the Contract Data and
the risks which the Project Manager or the Contractor has notified as an early warning
matter. It includes a description of the risk and a description of the actions which are to
be taken to avoid or reduce the risk.
Early warning 16
16.1 The Contractor and the Project Manager give an early warning by notifying the
other as soon as either becomes aware of any matter which could
increase the total of the Prices,
delay Completion,
delay meeting a Key Date or
impair the performance of the works in use.
The Contractor may give an early warning by notifying the Project Manager of any
other matter which could increase his total cost. The Project Manager enters early
warning matters in the Risk Register. Early warning of a matter for which a
compensation event has previously been notified is not required.

Procedure at a ‘partnering’ meeting
16.2 Either the Project Manager or the Contractor may instruct the other to attend a
risk reduction meeting. Each may instruct other people to attend if the other
agrees.
16.3 At a risk reduction meeting, those who attend co-operate in

• making and considering proposals for how the effect of the registered risks
can be avoided or reduced,
• seeking solutions that will bring advantage to all those who will be affected,
• deciding on the actions which will be taken and who, in accordance with
this contract, will take them and
• deciding which risks have now been avoided or have passed and can be
removed from the Risk Register.
Consider
What is a ‘proposal’? Is it a proposal if its not in a form that can be “read, copied and
recorded”?
Can you consider a proposal if it does not have effect or before it has effect? (Remember:
‘A communication has effect when it is received at the last address notified by the
recipient for receiving communications’)
How then, should these proceedings be conducted?
What happens with the decision reached at the risk reduction meeting?
16.4 The Project Manager revises the Risk Register to record the decisions made at
each risk reduction meeting and issues the revised Risk Register to the
Contractor. If a decision needs a change to the Works Information, the Project
Manager instructs the change at the same time as he issues the revised Risk
Register.
Consider
What would happen if the Project Manager DID NOT instructs the change at the same
time as he issues the revised Risk Register. Would an instruction given some tome later
be in accordance with the contract?
27.3 The Contractor obeys an instruction which is in accordance with this contract and is
given to him by the Project Manager or the Supervisor.
Consider
Does this mean that the Contractor must disobeys instructions that are not in
accordance with the contract?

2 Contractor’s
Responsibilities
• Contractor’s obligations
• Subcontractors & personnel
• Employer’s access
3 Time, 4 Defects & 5

Payment
• Stating and completion dates
• Programme
• Finding an correcting defects
• Malperformance
• Assessment of moneys due
• Payment

6 Compensation Events
• Events – core
• Events relating to physical conditions
• Notice of Compensation Event
• Effect of failure to give an early warning
• Quotation for Compensation Event
• Assessment of a Compensation Event
• Employer’s assessment
• Implementation
7 Title & 8 Insurance

• Materials and objects on site
• Limitation of Liability
• Indemnities
• Insurances

9 Termination &
Adjudication
• Termination
• Procedures
• Settlement
• Adjudicator
• Adjudication
• Tribunal review
Ambiguities and inconsistencies

• Clause 17.1 requires the project manager or the contractor to
notify the other as soon as either becomes aware of any
ambiguity or inconsistency in or between the documents forming
the contract. The project manager is then required to give an
instruction resolving the matter.
• Other contracts usually limit the power of engineers to resolve
ambiguities in interpreting the works i.e. to change the works
‘information’
• This clause is wide enough to extend to interpretation (or
alteration) of the contract itself.
• However clause 12.3 suggests the project manager can NOT
change the contract (which includes the works information) – an
apparent contradiction.
• If an instruction is not a change to the works information it is not a
remuneration event
• And .. Can the Project Manager remove an ambiguity in works
information that relates to the contractors own ‘design’??

Works Information
Schedule of clauses referring to the works information
Common core clauses

• Clause 11.2(2) – completion is when the contractor has done all the work the
works information states is to be done by the completion date
• Clause 11.2(5) – a part of the works not in accordance with the works
information is a defect
• Clause 11.2(7) – equipment is defined by reference to what the works
information does not require to be included in the works
• Clause 11.2(19) – definition of works information
• Clause 14.3 – the works information can be changed by instruction of the
project manager
• Clause 18.1 – if the contractor is required by the works information to do
anything illegal or impossible the contractor gives notice and the project
manager instructs appropriately
• Clause 20.1 – the contractor is to provide the works in accordance with the
works information
• Clause 21.1 – the contractor is to design such parts of the works as stated in
the works information
Works Information
• Clause 21.2 – the contractor is to submit for acceptance such particulars of his
design as the works information requires – a reason for the project manager
not accepting the design is that it does not comply with the works information
• Clause 22.1 – the employer’s entitlement to use the contractor’s design may
be restricted or expanded in the works information
• Clause 23.1 – a reason for the project manager not accepting the design of
an item of equipment is that it will not allow the contractor to provide the
works in accordance with the works information
• Clause 25.1 – the contractor is to share the working areas with others as stated
in the works information
• Clause 25.2 – the employer and the contractor are to provide such services
and other things as are stated in the works information
• Clause 27.4 – the contractor is to act in accordance with health and safety
requirements stated in the works information
• Clause 31.2 – the contractor is to show on each programme the work of the
employer and others as stated in the works Information – the contractor is to
show on each programme any other information which the works information
requires

Works Information
• Clause 31.3 – a reason for the project manager not accepting a programme
is that it does not comply with the works information
• Clause 35.2 – the employer is deemed to take over any part of the works he
uses before completion unless the use is for a reason stated in the works
information
• Clause 40.1 – clause 40 applies only to tests and inspections required by the
works information (or the applicable law)
• Clause 40.2 – the contractor and the employer are to provide materials,
facilities and samples for tests and inspections as stated in the works
information
• Clause 41.1 – the contractor is not to bring to the working areas plant and
materials which the works information requires to be tested before delivery
• Clause 42.1 – searching may include doing tests and inspections which the
works information does not require
• Clause 44.1 – the works information may be changed so that a defect does
not have to be corrected
• Clause 44.2 – the project manager gives an instruction changing the works
information if he accepts that a defect need not be corrected
Works Information
• Clause 45.1 – if the project manager assesses the cost to the employer of
having a defect corrected by others and the contractor pays the cost, the
works information is treated as having been changed to accept the defect
• Clause 45.2 – if the contractor is not given access to correct a defect the
project manager assesses the cost to the contractor of correcting the defect,
and if the contractor pays this cost the works information is treated as having
been changed to accept the defect
• Clause 60.1(1) – an instruction changing the works information is a
compensation event unless it is:
o a change to accept a defect
o a change to the contractor’s design at his request or to comply with other works
information
• Clause 60.1(5) – failure by the employer or others to work within the times
stated in the works information is a compensation event
• Clause 60(1)(16) – failure by the employer to provide materials, facilities and
samples for tests as stated in the works information is a compensation event
• Clause 63.8 – the assessment of a compensation event which is an instruction
to change the works information in order to resolve an ambiguity or
inconsistency is made having regard to which party provided the works
information

Works Information
• Clause 63.9 – if changes to the works information make descriptions of

conditions for key events incorrect, the project manager corrects the
descriptions and takes such corrections into account in assessing
compensation events
• Clause 71.1 – payment for plant and materials outside the working areas is
dependent upon the contractor preparing them for marking as the works
information requires
• Clause 73.2 – the contractor has title to materials from excavation and
demolition only as stated in the works information
Works Information
Clauses in Options A and B

• Clause 63.10 – the prices are reduced if a change to the works information is a
compensation event which reduces total defined cost
Clauses in Options A and C
• Clause 54.1 – information in the activity schedule is not works information
Clauses in Options B and D
• Clause 55.1 – information in the bill of quantities is not works information
• Clause 60.4 – a difference between the final total quantity of work and the
quantity stated in the bill of quantities is not a compensation event if it results
from a change in the works information

Works Information
Clauses in Options C, D, E and F

• Clause 52.2 – the contractor is to keep accounts and records as stated in the
works information
• 6 Clauses in Options C, D and E
• Clause 11.2(25)
o cost incurred because the contractor did not follow an acceptance or procedure
stated in the works information is disallowed cost
o cost of correcting a defect caused by the contractor not complying with the works
information is disallowed Cost
o plant and materials not used to provide the works is disallowed cost unless resulting
from a change in the works information
Clauses in Options C and D
• Clause 63.11 – the prices are reduced if a change in the works information,
other than a change proposed by the contractor, is a compensation event
which reduces total defined cost
Works Information
Clauses in Option F
• Clause 11.2(26) – cost incurred because the contractor did not follow an
acceptance or procedure stated in the works information is disallowed cost
Secondary Option clauses
• Clause X4.1 – parent company guarantee – the contractor gives a parent
company guarantee in the form set out in the works information
• Clause X13.1 – performance bond – the contractor gives a performance
bond in the form set out in the works information
• Clause X14.2 – advanced payment – the bond for advanced payment is in
the form set out in the works information
• Clause X15.1 – contractor’s design – the contractor is not liable for defects in
his design if he proves that he used reasonable skill and care to ensure it
complied with the works information

Subcontracting
• Contractor must submit names for acceptance by the
project manager before their appointment (clause 26.2).
• Subconractor [11.2(17)]
o a person or organisation
o who has a contract with the contractor
o to construct or install part of the works
o to provide a service necessary to provide the works
o to supply plant and materials which he has wholly or partly
designed specifically for the works ???
• Why is latter not merely a supplier or if such a specialist is
unwilling to work as a subcontractor??
Others
• Others - defined by exclusion.
‘Others’ are people or organisations who are not the employer, project
manager, supervisor, adjudicator, contractor, or any employee,
subcontractor or supplier of the contractor. [Clause 11.2(10)]
• clause 25.1 – the contractor is to co-operate with others in obtaining

and providing information they need in connection with the works –
the contractor is required to co-operate with and to share the
working areas with others as stated in the works information
• clause 27.1 – the contractor is responsible for obtaining approval of
his design from others where necessary
• clause 27.2 – the contractor provides access to others notified to him
by the project manager

Others
• clause 31.2 – the contractor is required to show on his programme
the work of others as stated in the works information and dates
relating thereto
• clause 60.1(5) – failure by others to work within the times or conditions
stated in the accepted programme and/or in the works information is
a compensation event if others carry out work on the site not stated
in the works information that is a compensation event
• clause 80.1 – loss or damage to plant or materials supplied by others
on the employer’s behalf is an employer’s risk until the contractor
receives them
• clause 91.3 – reason for termination of the contract by the employee
is that the contractor has substantially hindered others
Employer
• A legal party acts only through the PM (Like JBCC a
'principal agent‘?
o clause 14.3 – only the project manager may give an
instruction which changes the works information, and
o clause 21.3 – the contractor is required to obey instructions
given only by the project manager or the supervisor
• Are the common law duties of the employer (to assist
etc.) implied or excluded?

Obligations of Employer
Core clauses
• 10.1 – to act as stated in the contract and in a spirit of mutual trust and co-
operation
• 14.4 – to give notice to the contractor before replacing the project manager
or the supervisor
• 25.2 – to provide services and other things as stated in the works information
• 33.1 – to allow access to and use of each part of the site necessary for the
work included in the contract, and to do so before the later of the access
date and the date for access shown on the accepted programme
• 35.1 – to take over the works not more than two weeks after completion
• 35.2 – to take over any part of the works put into use (subject to exceptions)
• 40.2 – to provide materials, facilities and samples for tests and inspections as
stated in the works information
• 43.4 – to give access to the contractor after take over if needed for the
correction of a defect
• 51.1 – to pay amounts due to the contractor
Obligations of Employer
• 51.2 – to pay within three weeks of the assessment date or to pay interest on
late payment
• 83.1 – to indemnify the contractor against claims etc. from employer’s risks
• 84.1 – to provide insurances as stated in the contract data
• 85.3 – to comply with the terms and conditions of insurance policies
• 90.1 – to notify the project manager giving reasons before terminating
• 90.2 – to follow the procedures in the termination table when terminating
• W1.3(1)/ – to notify disputes in accordance with the adjudication table
• W1.3(9)/ – to proceed as normal until the dispute is decided in adjudication
Option X7 – delay damages
• X7.2 – to repay any overpayment of delay damages with interest
Option X14 – advanced payment
• X14.1 – to make the advanced payment of the amount stated in the contract
data
• X14.2 – to make the advanced payment within four weeks of the contract
date or receipt of the advanced payment bond

Project Manager
• The project manager can be
o External consultant
o In-house employee
o Natural person
o Firm
• Is notified in part one of the contract data

• Not to be replaced before notice of replacement is given
[14.4]
• Can delegate any of his functions [14.2]
• Not expressly required to be impartial
o House of Lords said its implied anyway
o [Costain Ltd and Others v. Bechtel Ltd (2005)]
Project Manager
Core clauses
operation
• 13.1 – to communicate in a form which can be read, copied and recorded
• 13.3 – to reply to a communication within the period for reply
• 13.4 – to reply to a communication submitted or re-submitted for acceptance
and to state reasons for non-acceptance
• 13.5 – to notify any agreed extension to the period for reply
• 13.6 – to issue certificates to the employer and to the contractor
• 13.7 – to communicate notifications separately from other communications
• 14.2 – to notify the contractor of delegation of any actions
• 16.1 – to give early warning of matters with delay, cost or performance
implications
• 16.3 – to co-operate at risk reduction meetings
• 16.4 – to record decisions taken at risk reduction meetings, to revise the risk
register and to give instructions changing the works information if necessary

Project Manager
• 17.1 – to give notice of ambiguities or inconsistencies in the documents and to
give instructions resolving ambiguities or inconsistencies
• 18.1 – to give instructions changing the works information in the event of
illegality or impossibility in the works information
• 19.1 – to give instructions stating how the contractor is to deal with prevention
events
• 21.2 – to accept particulars of the contractor’s design or to give reasons for
non-acceptance
• 23.1 – to accept particulars of the design of equipment or to give reasons for
non-acceptance
• 24.1 – to accept replacement persons proposed by the contractor or to give
reasons for non-acceptance
• 25.2 – to assess the cost incurred by the employer if the contractor fails to
provide services and other things
• 25.3 – to assess the additional cost incurred by the employer if the contractor
fails to meet key dates
Project Manager
• 36.1 – to state changes to key dates to be included in any quotation for
acceleration
• 40.6 – to assess the cost incurred by the employer in repeating a test of
inspection after a defect is found
• 26.2 – to accept proposed subcontractors or to give reasons for non-
acceptance
• 26.3 – to accept proposed subcontract conditions or to give reasons for non-
acceptance
• 30.2 – to decide the date of completion and to certify completion within one
• week of completion 90 5.7 Express duties of the project manager
• 31.3 – to accept the contractor’s programme within two weeks of submission
or to give reasons for non-acceptance
• 32.2 – to accept a revised programme or to give reasons for non-acceptance
• 35.3 – to certify within one week the date when the employer takes over any
part of the works

Project Manager
• 43.4 – to arrange for the employer to give access and use to the contractor of
any part of the works needed for the correction of defects after taking over
and to extend the period for correcting defects if suitable access and use is
not arranged within the defect correction period
• 44.2 – to change the works information, the prices and the completion date if
a quotation for not correcting defects is accepted
• 45.1 – to assess the cost of having defects corrected by others if the
contractor fails to correct notified defects within the defect correction period
• 45.2 – to assess the costs the contractor would have incurred to correct
defects for which he is not given access
• 50.1 – to assess the amount due for payment at each assessment date and to
decide the first assessment date to suit the procedures of the parties
• 50.4 – to consider any application from the contractor when assessing
amounts due for payment and to give the contractor details of how amounts
due have been assessed
Project Manager
• 50.5 – to correct any wrongly assessed amounts due in a later payment certificate
• 51.1 – to certify payment within one week of each assessment date
• 61.1 – to notify the contractor of compensation events which arise from the giving
of instructions or changing of earlier decisions and to instruct the contractor to
submit quotations
• 61.4 – to decide within one week of notification (or such longer period as the
contractor agrees) whether the prices, the completion date and key dates should
be changed when the contractor notifies a compensation event and to instruct
the contractor to submit quotations
• 61.5 – to decide whether the contractor did not give any early warning of a
compensation event which should have been given and to notify the contractor of
his decision
• 61.6 – to state assumptions for the assessment of compensation events in the event
that the effects are too uncertain to be forecast reasonably and to correct any
assumptions later found to have been wrong
• 62.1 – to discuss with the contractor different ways of dealing with compensation
events
• 62.3 – to reply within two weeks to quotations for compensation events submitted
by the contractor

Project Manager
• 62.4 – to give reasons to the contractor when instructing the submission of a revised
quotation
• 5.7 Express duties of the project manager 91
• 62.5 – to extend the time allowed for the submission of quotations and replies if the
contractor agrees and to notify the contractor of any agreed extensions for the
submission of quotations or replies
• 64.1 – to assess a compensation event: — if the contractor has not submitted a
quotation within the time
• allowed — if the project manager decides the contractor has not assessed the
compensation event correctly — if the contractor has not submitted a required
programme — if the project manager has not accepted the contractor’s latest
programme
• 64.2 – to assess a compensation event using his own assessment of the programme:
— if there is no accepted programme — if the contractor has not submitted a
revised programme for acceptance as required
• 64.3 – to notify the contractor of any assessments made of a compensation event
within the period allowed to the contractor for his quotation
• 65.1 – to implement compensation events by notifying the contractor of accepted
quotations or his own assessments
Project Manager
• 73.1 – to instruct the contractor how to deal with objects of value, historical or
other interest
• 85.1 – to accept policies and certificates of insurance submitted by the
contractor or to give reasons for non-acceptance
• 87.1 – to submit to the contractor policies and certificates for insurances to be
provided by the employer
• 90.1 – to issue a termination certificate when either party gives notice of
termination for reasons complying with the contract
• 90.4 – to certify final payments within thirteen weeks of termination

Project Manager
• Option A clauses
• 36.3 – to change the completion date, key dates and prices when a
quotation for acceleration is accepted and to accept the revised
programme
• 54.2 – to accept a revision to the activity schedule or to give reasons for non-
acceptance
• 65.4 – to include changes to the prices, key dates and to the completion date
when notifying implementation of a compensation event
• Option B clauses
• 36.3 – to change the completion date, key dates and prices when a
quotation for acceleration is accepted
• 60.6 – to correct mistakes in the bill of quantities
• 65.4 – to include changes to the prices, to key dates and to the completion
date when notifying implementation of a compensation event
Project Manager
Option C clauses
• 11.2(25) – to decide disallowed cost
• 26.4 – to accept proposed contract data for subcontracts or to give reasons
for non-acceptance
• 36.3 – to change key dates, the completion date and prices when a
• 53.1 – to assess the contractor’s share
• 53.3 – to make a preliminary assessment of the contractor’s share at
completion
• 53.4 – to make a final assessment of the contractor’s share in the final amount
due
• 54.2 – to accept a revision to the activity schedule or to give reasons for non-
acceptance
• 65.4 – to include changes to the prices and to the completion date when
notifying implementation of a compensation event
• 93.4 – to assess the contractor’s share after certifying termination

Project Manager
Option D clauses
• 11.2(25) – to decide disallowed costs
for non-acceptance
• 36.3 – to change the completion date and prices and key dates when a
• 53.5 – to assess the contractor’s share
• 53.7 – to make a preliminary assessment of the contractor’s share at
completion
• 53.8 – to make a final assessment of the contractor’s share in the final amount
due
• 60.6 – to correct mistakes in the bill of quantities
• 65.4 – to include changes to the prices, to key dates and to the completion
date when notifying implementation of a compensation event
• 93.5 – to assess the contractor’s share after certifying termination
Project Manager
Option E clauses
for non-acceptance
• 36.4 – to change the completion date and key dates when a quotation for
acceleration is accepted
• 65.3 – to include changes to the forecast amount of the prices, key dates and
the completion date when implementing a compensation event
• 5.7 Express duties of the project manager 93
Option F clauses
for non-acceptance
• 36.4 – to change the completion date and key dates when a quotation for
acceleration is accepted
• 65.3 – to include changes to the forecast amount of the prices, key dates and
the completion date when implementing a compensation event

Project Manager
Dispute resolution clauses
• W1.3(1) – to notify the employer of disputes relating to quotations treated as
having been accepted
• W1.3(2) – to notify agreed extensions of the times for referring disputes to
adjudication
• W1.3(9)/ – to proceed with matters in dispute as though they were not
disputed until notification of the adjudicator’s decision
Secondary option clauses
• X7.3 – to assess the benefit to the employer of taking over parts of the works in
order to proportion down delay damages
• X13.1 – to accept a performance bond or to give reasons for non-
acceptance
• X14.1 – to accept an advanced payment bond or to give reasons for non-
acceptance
Supervisor
• Separate independent roles !
• Named in Data part 1
• No restriction on appointment can be
o same person
o from different firms
• Express duties
o 10.1 – to act as stated in the contract and in a spirit of mutual trust and co-operation
o 13.1 – to communicate in a form which can be read, copied and recorded
o 13.3 – to reply to a communication within the period for reply
o 13.6 – to issue certificates to the project manager and the contractor
o 40.3 – to notify the contractor of his tests and inspections before they start and
afterwards of the results
o 40.5 – to do tests and inspections without causing unnecessary delay
o 41.1 – to notify the contractor when plant and materials have passed pre-delivery
tests and inspections
o 42.1 – to give reasons for searches which are instructed
o 42.2 – to notify the contractor of defects found
o 43.3 – to issue the defects certificate
o 71.1 – to mark equipment, plant and materials outside the working areas for
payment purposes

Key Role players

The project manager and the supervisor
• Acceptance by either the project manager or the

supervisor of a communication from the contractor or of
his work does not change the contractor’s responsibility
to provide the works or his liability for his design [14.1]
• Delegation [14.2] by Project Manager and Supervisor
unrestricted. NEC silent on effect of delegation.
• Clause 14.3 The project manager may give an
instruction to the contractor which changes the works
information. – is the ‘Variations Clause’
Contractor
• Design obligations, responsibilities and liabilities
• Providing the works
• The contractor’s design
• Using the contractor’s design
• Design of equipment
• People
• Working with the employer and others
• Subcontracting
• Other responsibilities
• Express obligations of the contractor
• Express prohibitions on the contractor

Unstated Contractor
Obligations
• Confidentiality
• To proceed with care and diligence
• To Inspect the site [is it implied by 60.2 in judging physical
conditions the contractor is assumed to have taken into
account information obtainable from a visual inspection
of the site]
• To Set out the works [implied by 11.2 in Provide the
Works]
• To perform variations
• To submit interim application for payment
• To notify on completion
• To conform to statutes
Design obligations, responsibilities

and liabilities
Key Questions
• How is the obligation to undertake the design allocated between
the parties?
o Obligation – the contractor designs the part of the works which the
works information says he is to design
o Can such an obligation be imposed by a change instruction?
• How is the responsibility for the effectiveness of the design to be
allocated between the parties?
o Responsibility - each party is generally responsible for the design which it
undertakes
• What standard of liability attaches to the party responsible for
design
o implied term in design and build contracts that the finished works will
be reasonably fit for their intended purpose – is strict liability
o The law does not normally imply terms of fitness for purpose into
contracts for the supply of professional services – reasonable skill –
negligence must be proven
• NEC3 has no limitation on Liability for design – thus strict liability is
probable

Obligations of the
contractor
• The contractor [20.1]
o Provides the Works [def]
o in accordance with the Works Information [def]
• Management obligations [20.2] Option F
o The contractor manages his own design, the provision of services and the
construction and installation of the works,
o The contractor is to subcontract all of these except work which the
contract data states that he is to do himself
Options C, D, E and F - i.e. cost reimbursable options
• Practical implications of design and subcontracting [20.3]
o The contractor
o advises the project manager on the practical implications of the design of
the works
o and on subcontracting arrangements
• Forecasts of total actual cost [20.4]
o prepare, in consultation with the project manager, regular forecasts of the
total defined cost at intervals as stated in the contract data for submission
to the project manager
Express obligations of the

contractor
Core clauses
operation
• 13.1 – to communicate in a form which can be read, copied and recorded
• 13.3 – to reply to a communication within the period for reply
• 13.4 – to resubmit a communication which is not accepted within the period
for reply
• 13.7 – to communicate notifications separately from other communications
• 16.1 – to give early warning of matters with delay, cost or performance
implications
• 16.3 – to co-operate at risk reduction meetings
• 17.1 – to give notice of ambiguities or inconsistencies in the documents
• 18.1 – to give notice of any illegality or impossibility in the works information
• 20.1 – to provide the works in accordance with the works information
• 21.1 – to design such parts of the works as stated in the works information
• 21.2 – to submit particulars of his design for acceptance


contractor
• 23.1 – to submit when instructed particulars of design of items of equipment
• 24.1 – to employ key persons as stated in the contract data or acceptable
replacements. To submit relevant details of proposed replacements
• 24.2 – to remove any employee on the project manager’s instructions
• 25.1 – to co-operate with others in obtaining and providing information. To co-
operate with others and to share the working areas with others as stated in the
works information
• 25.2 – to provide services and other things as stated in the works information
• and to pay the assessed cost of not providing such services and other things
• 25.3 – to pay any additional cost incurred by the employer as a result of failure
to achieve key dates

contractor
• 26.2 – to submit the names of proposed subcontractors for acceptance
• 26.3 – to submit the proposed conditions of contract for each subcontract for
acceptance
• 27.1 – to obtain approval of his own design from others where necessary
• 27.2 – to provide access to the works to the project manager, supervisor and
others
• 27.3 – to obey instructions given by the project manager or the supervisor
which are in accordance with the contract
• 27.4 – to act in accordance with health and safety requirements stated in the
works information
• 30.1 – to do the work so that completion is on or before the completion date


contractor
• 30.3 – to do the work so that the condition stated for each key date is met by
the key date
• 31.1 – to submit a programme for acceptance within the period stated in the
contract data
• 31.2 – to show various details in each programme
• 32.1 – to show various details in revised programmes
• 32.2 – to submit a revised programme when instructed to or at intervals as
required in the contract data
• 36.1 – to submit details of assessment with each quotation for acceleration

contractor
• 36.2 – to submit a quotation for acceleration when so instructed or to give
reasons for not doing so
• 40.2 – to provide materials, facilities and samples for tests and inspections as
stated in the works information
• 40.3 – to notify the supervisor of tests and inspections before they start and to
notify the supervisor of the results of tests and inspections. To notify the
supervisor before doing work which would obstruct tests or inspections
• 40.4 – to correct defects revealed by tests or inspections and to repeat such
tests or inspections
• 40.6 – to pay the assessed cost incurred by the employer in repeating tests or
inspections
• 42.1 – to carry out searches as instructed by the supervisor
• 42.2 – to notify the supervisor of defects found before the defects date


contractor
• 43.1 – to correct defects
• 43.2 – to correct notified defects before the end of the defects correction
period
• 44.2 – to submit a quotation for reduced prices or earlier completion in the
event of a change to the works information being considered to avoid
correcting a default
• 45.1 – to pay the assessed costs of having defects not corrected within the
defects correction period corrected by others
• 45.2 – to pay the assessed costs of defects not corrected because access was
not given
• 51.1 – to pay the employer if an interim assessment reduces the amount due
from that already paid
• 61.1 – to put instructions or changed decisions into effect

contractor
• 61.3 – to give notice of any event believed to be a compensation event and
to do so within eight weeks of becoming aware of the event
• 61.4 – to submit instructions for compensation events if instructed to do so
• 61.6 – to base assessments for compensation events on any assumptions
stated by the project manager
• 62.1 – to submit alternative quotations for compensation events if instructed to
do so
• 62.2 – to submit detail of assessments with quotations for compensation events
• 62.3 – to submit quotations for compensation events within three weeks of
being instructed to do so
• 62.4 – to submit revised quotations for compensation events within three
weeks of being instructed to do so


contractor
• 72.1 – to remove equipment from the site when it is no longer needed
• 73.1 – to notify the finding of any object of value, historical or other interest
• 81.1 – to carry risks which are not the employer’s risk from the starting date
until the defects certificate is issued
• 82.1 – to make good loss or damage to the works until the defects certificate
is issued
• 83.1 – to indemnify the employer against claims due to contractor’s risks
• 84.1 – to provide insurances as required by the contract
• 85.1 – to submit insurance policies and certificates for acceptance
• 85.3 – to comply with the terms and conditions of insurance policies
• 86.1 – to pay the costs incurred by the employer in covering insurances which
are the contractor’s responsibility
• 92.2 – to leave the working areas and remove equipment on termination

contractor
Option B
• NIL
• Options C, D, E, & F
• 20.3 – to advise the project manager on the practical implications of the design of
the works and on subcontracting arrangements
• 20.4 – to prepare forecasts of the total actual cost for the whole of the works
• 26.4 – to submit the proposed contract data for each subcontract for acceptance
• 36.3/36.4 – to submit a subcontractor’s proposal to accelerate for acceptance
• 52.2 – to keep records of costs and payments
• 52.3 – to allow the project manager to inspect accounts and records
Option F (only)
• 20.2 – to manage the contractor’s design and the construction and installation of
the works. To subcontract such design, construction and installation as not stated in
the works information to be done by the contractor. To do work not stated in the
works information to be subcontracted himself or to subcontract it


contractor
Options W1 and W2
• W1.2(1)/ – to appoint any adjudicator under the NEC Adjudicator’s Contract
• W1.3(1) – to notify disputes and to refer to adjudication in accordance with
the ‘Adjudication Table’
• W2.3(1) – to give notice to the employer before referring a dispute to the
adjudicator
• W1.3(6)/ – to copy to the employer any communication with the adjudicator
• W1.3(9)/ – to proceed with matters in dispute as though not disputed until the
adjudicator’s decision is notified

contractor
Option X4 – Parent company guarantee
• X4.1 – to give the employer a parent company guarantee in a form set out in
the works information
Option X7 – Delay damages
• X7.1 – to pay delay damages as stated in the contract data from the
completion date until completion or take over
Option X13 – Performance bond
• X13.1 – to give the employer a performance bond for the amount stated in
the contract data and in the form set out in the works information
Option X14 – Advance payment to the contractor
• X14.3 – to repay advanced payments to the employer in instalments as stated
in the contract data
Option X17 – Low performance damages
• X17.1 – to pay low performance damages as stated in the contract data for
defects included in the defects certificate showing low performance

Express prohibitions on
the contractor
• 21.2 – not to proceed with work until the project manager has accepted the
design
• 26.2 – not to appoint a subcontractor without the project manager’s
acceptance
• 26.3 – not to appoint a subcontractor without the project manager’s
acceptance of the terms of the subcontract
• 30.1 – not to start work on site before the first access date
• 41.1 – not to bring to the working areas, plant and materials to be tested or
inspected before delivery
• 61.2 – not to put into effect a proposed instruction or a proposed changed
decision
• 90.5 – not to do further work after a termination certificate has been raised
• W1.3(2) – not to refer disputes to adjudication unless notified and referred
within the times in the adjudication table
• W1.4(1)/ – not to refer a dispute to a tribunal unless it has first been referred to
adjudication
• W1.4(6)/ – not to call the adjudicator as a witness in tribunal proceedings
Time
• Starting and completion
• Programmes
• Revision of programmes
• Shortened programmes
• Access to and use of the site
• Instructions to stop or not to start work
• Take-over
• Acceleration

Commencement and
progress
NEC 3 does not expressly provide
• the contractor should start on or about a particular date
• that the contractor should proceed with due expedition
and/or regularly and diligently
• that the contractor should use his best endeavours to
prevent or reduce delay
Damages for delay
• No express provision – you must include option X7 for
liquidated damages – other wise you would have to
apply common law rules relating to breach and
repudiation (or use a z clause to make time of the
essence
Commencement and
progress
NEC 3 does not expressly provide
• For Sectional Completion – use option X5
Suspension of work
• Project manager may give instruction to stop or
start and is deal with as a compensation event.
• No self help provisions for contractor if not paid
Take over
• Usually when risk transfer from contractor to
employer
• NEC follow but provides no formality, ‘completion’
defined not ‘take over’

Testing and defects

• Definitions and certificates
• Tests and inspections
• Testing and inspection before delivery
• Searching and notifying defects
• Correcting defects
• Accepting defects
• Uncorrected defects
Payments
• Assessing the amount due
• Payments
• Defined cost
• Payments – main option A
• Payments – main option B
• Payments – main option C
• Payments – main option D
• Payments – main option E
• Payments – main option F

Compensation events
• Clause 60.1 lists nineteen compensation events
which are intended to apply to all the main options.
Clauses 60.2 and 60.3 provide clarification of some
of the events but do not add to the list.
o Clauses 60.4, 60.5 and 60.6 are compensation events applicable only to
NEC3 contracts with bills of quantities – main options B and D. The
secondary options list five more compensation events:
o clause X2.1 – a change in the law occurring after the contract date
o clause X12.3(6) – change in partnering information
o clause X14.2 – delay by the employer in making an advanced payment
o clause X15.2 – correction by contractor of a defect for which he is not
liable
o clause Y2.4 – suspension of performance under HGCR Act 1996
Compensation events
These can be summarised and Categorised
Summary
• clause 60.1(1) – changes in works information
• clause 60.1(2) – late access/use of site
• clause 60.1(3) – late provision of specified things
• clause 60.1(4) – stopping/suspension of work
• clause 60.1(5) – late/additional works
• clause 60.1(6) – late reply to communications
• clause 60.1(7) – finding of objects of interest

Claim Entitlement under

NEC3®
compensation events
• clause 60.1(8) – changes of decisions
• clause 60.1(9) – withholding of acceptances
• clause 60.1(10) – searches for defects
• clause 60.1(11) – tests or inspections causing delay
• clause 60.1(12) – physical conditions
• clause 60.1(13) – weather conditions
• clause 60.1(14) – employer’s risk
Compensation events
• clause 60.1(15) – take-over before completion
• clause 60.1(16) – failure to provide materials etc.
• clause 60.1(17) – correction of assumptions
• clause 60.1(18) – breach of contract by employer
• clause 60.1(19) – prevention
• clause 60.4 – final quantity differences
• clause 60.5 – increased quantities causing delay

Works related
compensation events
Clause 60.1(1) – changes to the works information
• Clause 60.1(1) states that an instruction given by the
project manager changing the works information is
a compensation event unless it is a change:
• made to accept a defect, or
• is a change to the works information provided by
the contractor for his design made either at the
contractor’s request or to comply with works
information provided by the employer
Employer’s default events

• clause 60.1(2) – late access/use of the site
• clause 60.1(3) – late provision of specified things
• clause 60.1(5) – late/additional works
• clause 60.1(16) – failure to provide materials etc.
• clause 60.1(18) – breach of contract

Employer’s risk event

Clause 60.1(14) provides that an event which is an
employer’s risk as stated in the contract is a
compensation event. The employer’s risks are detailed
in clause 80.1 and can broadly be described as:
• 12.6 Project manager/supervisor related events
o general – use of the works, unavoidable loss or damage
o loss or damage of employer supplied goods
o war, riots and similar non-insurable events
o loss or damage after take-over
o loss or damage after termination
o additional risks as listed in the contract data
Project manager/supervisor
related events
• clause 60.1(4) – stopping/suspension of work
• clause 60.1(6) – late reply to communications
• clause 60.1(7) – finding of objects of interest
• clause 60.1(8) – changes of decisions
• clause 60.1(9) – withholding of acceptances
• clause 60.1(10) – searches for defects
• clause 60.1(11) – tests or inspections causing delay
• clause 60.1(15) – take-over before completion
• clause 60.1(17) – correction of assumptions

Physical conditions
• clause 60.1(12) – compensation event for physical
conditions
• clause 60.2 – judging physical conditions
• clause 60.3 – ambiguity or inconsistency in site
information
Under clause 60.1(12) it is a compensation event if the

contractor encounters physical conditions which are:
• within the site
• not weather conditions
• conditions which an experienced contractor would
have judged at the contract date to have such a small
chance of occurring that it would have been
unreasonable to have allowed for them
Judging physical
conditions
Clause 60.2 supports clause 60.1(12) by stating the
factors the contractor is assumed to have taken into
account in judging physical conditions. These are:
• the site information
• publicly available information referred to in the site
information
• information obtainable from visual inspection of the
site
• other information which an experienced contractor
could reasonably be expected to obtain

Adverse weather
The wording of clause 60.1(13) does not of itself lead
to identification of the compensation event. The
clause needs to be read in conjunction with the
contract data, part one, entries for the compensation
event. These state:
• the place where weather is to be recorded
• the weather measurements to be recorded
• the location of the historic weather records
• assumed values where there are no historic records
Prevention
The clause states as a compensation event, an event
which:
• stops the contractor completing the works, or
• stops the contractor completing by the date shown
on the accepted programme
• and which neither party could prevent
• and which an experienced contractor would have
judged at the contract date to have had such a
small chance of occurring that it would have been
unreasonable to have allowed for it
• and which is not one of the other compensation
events

Measurement related
events
This covers four clauses found in main options B and D
only, all relating to measurement of the works by bill of
quantities:
• clause 60.4 – final quantity differences
• clause 60.5 – increased quantities causing delay
• clause 60.6 – correction of mistakes in bill of
quantities
• clause 60.7 – assessment of events resulting from
inconsistencies
Secondary option clause

events
• clause X2.1 – changes in the law
• clause X12.3(6) – changes in partnering information
• clause X14.2 – delay in making advanced payment
• clause X15.2 – correction of a defect not
contractor’s liability
• clause Y2.4 – suspension under HGCR Act 1996

NEC3 compensation
event procedures:
• Events
o Core clauses 60.1 to 60.7
o Secondary options X2, X14 and X15
o Additional events may also be stated by the employer in the contract
data.
• The project manager is required to notify the

contractor
o of compensation events arising from instructions or the changing of earlier
decisions.
• The contractor is required to notify the project

manager within eight weeks
o of other events or events not notified by the project manager.
NEC3 compensation
event procedures:
• The contractor is required to submit quotations for
compensation events showing both time and
money implications. He may be required to submit
alternative quotations.
A revision of the accepted programme must be
submitted with each quotation if there are time or
disruption implications.
• Quotations for changes to the contract price are
based on assessments of Defined Cost incurred or
forecast to be incurred.

NEC3 compensation
event procedures:
• In circumstances where the project manager does
not reply to a quotation within a stipulated period a
quotation is treated as having been accepted.
• The project manager is permitted to make his own
assessment if
o the contractor does not submit his quotation on time or
o if the contractor’s programme is not in order or
o if he (the project manager) decides that the contractor’s assessment is
incorrect.
NEC3 compensation
event procedures:
• In circumstances where the project manager does
not accept a quotation but fails to make his own
assessment within a stipulated period, the quotation
is treated as having been accepted.
• The project manager is required to notify the
contractor when a quotation is accepted or his
own assessment is made. The contract price and
the times for completion and key dates are
changed accordingly.

Assessment of
compensation events
• General assessment rules
• Particular assessment rules
• The project manager’s assessments
• Implementing compensation events
• Other financial remedies
Title
• Employer’s title to equipment, plant and materials
• Marking equipment, plant and materials
• Removing equipment
• Objects and materials within the site

Risks and insurances

• Employer’s risks
• Contractor’s risks
• Repairs
• Indemnity
• Insurance cover
• Insurance policies
• Contractor’s failure to insure
• Insurance by the employer
Termination
• Summary of NEC 3 termination provisions
• Termination for ‘any reason’
• Termination under section 9
• Reasons for termination
• Procedures on termination
• Amounts due on termination

Dispute resolution
• Developments in dispute resolution
• Meaning of dispute
• Adjudication under Option W1
• Adjudication under Option W2
• Review by the tribunal
• The Adjudicator’s Contract
JBCC Contracts
Joint Building Contracts
Committee
Principal Building Agreement 6.1
March 2014
conrt
act
220 centic
syste
ms

Joint Building Contracts

Committee
JBCC formed in 1984
• Association of Construction Project Managers
• Association of South African Quantity Surveyors
• Master Builders South Africa
• South African Association of Consulting Engineers
• South African Institute of Architects
• South African Property Owners Association
• Specialist Engineering Contractors Committee
JBCC Versions
• 1931 – RIBA Blue Form (Royal Institute of British Architects)
• 1984 – JBCC established
• 1991 – JBCC Principal Building Agreement 1st Edition
• 1998 – JBCC Series 2000
• JBCC Series 2000 Edition 2000 July
• JBCC Series 2000 Edition January 2003
• JBCC Series 2000 Edition 4.0 March 2004
• JBCC Series 2000 Edition 4.1 March 2005
o Preliminaries May 2005
• JBCC Series 2000 Edition 5.0 July 2007
o Contract Data includes preliminaries
• Edition 6.0 September 2013 (Recalled)
• Edition 6.1 March 2014 (CIDB Gazette July 2015)

JBCC Series 2000

Current Documents
• Principal Building Agreement 6.1 March 2014
o PBA Contract Data
• Nominate/Selected Subcontract Agreement

o N/S Contract Data
• Minor Works Agreement 5.1 March 2014

o MWA Contract Data
• Ancillary administration forms

o Forms: Tender
o Guarantees: Construction, Payment, Advanced, Variable
o Certificates: Site Possession, Payment, Completion
Application of Contracts
Suitable for
• Engineering and
Construction Works
o Design by
Construct
contractor [P&DB] &
Turnkey
o Building Work
o Combination
Sum) or
• Re-measurement
(ad-measured)
Contracts
based assignments

WHY A NEW EDITION

Principal Building Agreement EDITION 6.1
Since 5.0 2007 Edition, there has been
changes in the law
• CPA Consumer Protection Act
• Amendments to building regulations
• OSH ACT
Resulting in a 30 Clause agreement – from
a 42 Clause agreement
Consider
Perhaps 5.0 was just a mess?
General Layout of the

PBA
Version 5.0 – Had EC & Version 6.1 – Has CONTRACT
CE parts to complete DATA [CD]
• Principal Building • Principal Building

Agreement Agreement
o Definitions (and o Interpretation
interpretation) o Insurance & Security
o Objectives and
preparation o Execution
o Execution o Completion
o Completion o Payment
o Payment o Suspension & Termination
o Termination o Dispute Resolution
o Dispute
o Contract Agreement Agreement (is severed)

• DEFINITIONS .
• INTERPRETATION
1.0 Definitions and
Interpretation 1.0 Interpretation
• OBJECTIVE AND 1.1 Definitions
PREPARATION 1.2 Interpretation
2.0 Offer, Acceptance and
Performance Obligations 2.0 Law regulations & notices
3.0 Documents 3.0 Offer & Acceptance
4.0 Design Responsibility 4.0 Assignment
5.0 Employer's Agents 5.0 Contract documents
6.0 Contractor's Site
Representative 6.0 Employer's Agents
7.0 Compliance with Laws and 7.0 Design Responsibility
Regulations
8.0 Works Risk
• INSURANCE & SECURITY
9.0 Indemnities
10.0 General Insurances 8.0 Works Risk
11.0 Special Insurances 9.0 Indemnities
13.0 Assignment 10.0 Insurances
14.0 Security 11.0 Securities
• EXECUTION • EXECUTION
15.0 Preparation for and 12.0 Duties of Parties
Execution of the Works
13.0 Setting Out
16.0 Site and Access
14.0 Nominated
17.0 Contract Instructions
Subcontractors
18.0 Setting out of the
15. Selected
Works
Subcontractors
19.0 Temporary Works and
Plant 16.0 Direct Contactors
20.0 Nominated 17.0 Contract Instructions
Subcontractors
21.0 Selected
Subcontractor
22.0 Employer's Direct
Contractors
23.0 Contractor's Domestic
Subcontractors

• COMPLETION • COMPLETION
24.0 Practical 18.0 Interim Completion (!)
Completion 19.0 Practical completion
25.0 Works Completion 20.0 Sectional Completion
26.0 Final Completion 21.0 Final completion
27.0 Latent Defects 22.0 Latent Defects Liability
Liability Period Period
28.0 Sectional 23.0 Revision Of The Date
Completion for Practical Completion
29.0 Revision of Date for 24.0 Penalty for Late or
Practical Completion Non-Completion
30.0 Penalty for Late or
Non-Completion !Interim Completion
In The NSA
.
• PAYMENT • PAYMENT
31.0 Interim Payment 25.0 Payment
32.0 Adjustment to the 26.0 Adjustment Of The
Contract Value Contract Value & Final
33.0 Recovery of Account
Expense and Loss 27.0 Recovery of Expense
34.0 Final Account and and Loss
Final Payment
35.0 Payment to Other
Parties

• TERMINATION • SUSPENSION &

36.0 Termination by TERMINATION
Employer - Contractor's
Default
37.0 Termination by 28.0 Suspension of the
Employer - Loss and
Damage contractor
38.0 Termination by
Contractor - Employer's
Default 29.0 Termination
39.0 Termination -
Cessation of the Works
• DISPUTE 30.0 Dispute Resolution
40.0 Settlement of
Disputes
• CONTRACT AGREEMENT
41.0 Post Tender
Provisions
42.0 Contractual
Agreement
Examination of Clauses of
Interest

GCC 2015
Contract
South African Institution of Civil
Engineers
General Conditions of Contract for
Construction Work (Third Edition) 2015
Contr
act
Centri
233
c
Syste
South African Institution

of Civil Engineers
SAICE has been in existence since (at least) 1954
SAICE document versions include –
• SAICE GCC for Civil & Engineering Works 6 th Ed 1990
• SAICE GCC COLTO 1998
• GCC 2004
• GCC 2010 (Second Edition)
& Management Guide
• GCC 2015 (Third Edition)
• Intent – part of Standard of

Uniformity in Construction
Procurement
o FIDIC
o NEC3
o JBCC 5.0 Series 2000 (now 6.1)
o GCC 2010 (now 2015)

Other documents used

with GCC 2015
CIDB / SANS 294-2004
•
o Standard form of tender
• Documents not
invitation provided by SAICE
o Form of Offer and Acceptance with GCC 2015
• Contract Data o Small works [none
o Part 1: Data provided by
Employer
suggested]
o Part2: Data provided by o Subcontract
Contractor • SAFCEC - General
• GCC 2015 – The General Conditions of
Condition of Contract Subcontract
• Performance Guarantee • BIFSA – Standard
Subcontract Agreement
• Adjudication 2000
o Disclosure statement
(adjudication board member) o Professional Services
o Adjudication Board Member • PROCSA – Client
Agreement Consultant Professional
o Adjudication Board Rules Services Agreement
Application of GCC 2015

Suitable for
• Engineering and
Construction Works
o Design by
Construct
contractor [P&DB]
o Building Work
o Combination
Sum) or
• Re-measurement
(ad-measured)
Contracts
based assignments

SANS 294
1. General 3. Employers undertakings
1. Actions
2. Tender Documents [see next slide] 1. Opening of tender submissions
2. Tenderers obligations 2. Two envelope system
1. Eligibility
2. Cost of tendering 3. Non-disclosure
3. Check Documents 4. Grounds for rejection and
4. Confidentiality
5. Reference documents
disqualification
6. Acknowledge addenda 5. Tests for responsiveness
7. Site visit and clarification meeting
8. Seek clarification
6. Arithmetic errors
9. Insurance 7. Clarification of tender offer
10. Pricing tender offer
11. Alteration of documents 8. Evaluation of tender offers
12. Alternative tender offers 9. Insurance provided by the
13. Submitting the tender offer
14. Information and data to be completed in all respects
employer
15. Closing time 10. Acceptance of tender offer
16. Tender offer validity
17. Clarification of tender after submission
11. Notice to unsuccessful tenderers
18. Provide other material 12. Prepare contract documents
19. Inspections tests and analysis
20. Submit securities, bonds policies etc. 13. Issue final contract
Check final draft 14. Complete adjudicators contract
21. Return of other tender documents
22. Certificates 15. Provide copies of the contract
General 1.2 [Tender

T1
documents]
Tendering procedures
T1.1 Tender Notice and Invitation to
Tender
T1.2 Tender Data
T2 Returnable documents
T2.1 List of Returnable Documents
T2.2 Form of Offer and Acceptance
T2.3 Contract Data
T2.4 Activity Schedule / Bill of Quantities
T2.5 Returnable Schedules
C1 Agreement and Contract Data
C1.1 Form of Offer and Acceptance
C1.2 Contract Data(if not included in
volume 2)
C2 Pricing data
C2.1 Pricing Instructions
C3 Scope of Work
C3.1 Scope of Work
C4 Site information (engineering and
construction works contracts only)
C4 Site Information

General Layout of a GCC

2015 Contract
• Form of Offer and Acceptance (CIDB/SANS 294)
• Contract Data
o Prepared by Employer
o Prepared by Contractor
• General Conditions
1. General
2. Basis of Contract
3. Engineer
4. Contractor’s general obligations
5. Time and related matters
6. Quality and related matters
7. Risk and related matters
8. Termination of contract
• Pricing data
• Scope of Work
• Site Information
Contract Data the Employer

provides when requesting tenders
CONDITIONS OF CONTRACT
The General Conditions of Contract for Construction Works, Second Edition, 2010, published by the
South African Institution of Civil Engineering, Private Bag X200, Halfway House, 1685, is applicable to
this Contract and is obtainable from www.saice.org.za .
CONTRACT SPECIFIC DATA
The following contract specific data, referring to the General Conditions of Contract for Construction
Works, Second Edition, 2010, are applicable to this Contract:
Compulsory Data
Clause 1.1.1.13: -The Defects Liability Period is ... A time measured from the date of the Certificate of
Completion.
Clause 1.1.1.14: - (Omit if the Contractor is to state the time for achieving Practical Completion).
The time for achieving Practical Completion is ... A time measured from the
Commencement Date.
Or, if Practical Completion in portions is required,
The times for achieving Practical Completion for the portions as set out in the Scope
of Works are: For portion 1 within …. followed by further portions as required
The time for achieving Practical Completion of the whole of the Works is ...
Clause 1.1.1.15: - The name of the Employer is ... The legal name of the Employer.
Clause 1.1.1.26: - The Pricing Strategy is ... Either Re-measurement Contract or Fixed Price
Contract.
Clause 1.2.1.2: - The address of the Employer is ... The physical address, postal address, e-mail address
and/or fax number where the Employer will receive notices.
Contract The
Clause 1.1.1.16: Centric
name Systems
of the Engineer is ... The legal name of the Engineer 240


provides
Clause 1.2.1.2: - The address of the Engineer is ... The physical address, postal address, e-
mail address and/or fax number where the Engineer will receive notices
Clause 5.3.1: - The documentation required before commencement with Works execution
are:
:Health and Safety Plan (Refer to Clause 4.3)
:Initial programme (Refer to Clause 5.6)
:Security (Refer to Clause 6.2)
:Insurance (Refer to Clause 8.6) . .. Other requirements
Clause 5.3.2: - The time to submit the documentation required before commencement with
Works execution is ... days. A reasonable time is 28 days.
Clause 5.8.1: - The non-working days are ... Usually Sundays
The special non-working days are:
(1) Usually the public holidays or a selection of the public holidays, for example
certain religious holidays.
(2) The year end break commencing on ... and ending on ....
Clause 5.13.1: - The penalty for failing to complete the Works is ... Monetary value per day
Or, if completion in portions is required,
The penalty for failing to complete portion 1 of the Works is .... followed by
further portions as required.
The penalty for failing to complete the whole of the works is .....
Clause 5.16.3: - The latent defect period is ... Usually 10 years for civil engineering works, 5
years for building works but shorter for certain electrical and mechanical
engineering works.
Clause 6.5.1.2.3: - The percentage allowance to cover overhead charges is ... Omit if the
Contractor is to state the overhead charges, otherwise state the percentage
Contract value.
Centric Systems 241

provides
Clause 6.10.1.5: - The percentage advance on materials not yet built into the Permanent Works is ... A percentage.
Clause 6.10.3: - The limit of retention money is ... A monetary value usually decided in conjunction with the security to be
provided in terms of Clause 6.2. 1. For financially stronger contractors the liability for the performance
guarantee is usually a higher percentage with the limit of retention money at a lower amount
Clause 8.6.1.1.2: - The value of Plant and materials supplied by the Employer to be included in the insurance sum
is ... Monetary value.
Clause 8.6.1.1.3: - The amount to cover professional fees for repairing damage and loss to be included in the
insurance sum is ... Monetary value.
Clause 8.6.1.3: - The limit of indemnity for liability insurance is ... Monetary value.
Clause 10.5.3 - The number of Adjudication Board Members to be appointed is ... Either one or three.
Optional data Only the statements applicable to the options chosen should be completed
Clause 1.3.2: - If the governing law is not the law of South Africa then: The governing law is ... the law of the applicable
country or jurisdiction.
Clause 1.3.3: - If the language of the Contract and for written communications is not English, then:
The language of the Contract and for written communications is ... the applicable language.
Clause 3.1.3: - If the Engineer must get specific approval from the Employer for the execution of any part of his functions
or duties then:
The Engineer shall obtain the specific approval of the Employer before executing any of his functions or
duties according to the following Clauses of the General Conditions of Contract:
1.Clause ... number, function or duty and if required, the financial or other limit applicable.
2 Further Clauses as required
Please note that getting specific approval from the Employer will delay decision-making and this may
increase the completion time and cost of the Works.
Clause 5.4.2: - If the access and possession of the Site is not exclusive to the Contractor then:
The access and possession of Site shall not be exclusive to the Contractor but as set out in the Site
Information.

Contract Data the

Employer provides
Clause 6.8.2: - If the value of payment certificates is to be adjusted by a Contract Price Adjustment Factor then:
The value of the certificates issued shall be adjusted in accordance with the Contract Price
Adjustment Schedule with the following values: If the value of x is not 0.1 then:
The value of “x” is ... the portion, expressed as a decimal of unity, not subject to adjustment.
The values of the coefficients are:
a = … Labour
b = … Contractor's equipment
c = …. Material
d = … Fuel Please note that the total of all the coefficients must equal 1.0
The province wherein the larger part of the Site is located is ... Select the province for which the
Labour Index would be applicable from Statistical News Release, P0141, Table A.
The applicable industry for the Producer Price Index for materials is ... Select the applicable industry
from Statistical News Release, PO 142. 1, Table 11.
The area for the Producer Price Index for fuel is ... Select the area from Statistical News Release,
P0142. 1, Table 12.
The base month is ... month and year prior to the closing of the tender.
Clause 6.8.3: - If price adjustments for variations in the costs of special materials are allowed then:
Price adjustments for variations in the costs of special materials are allowed.
Clause 8.6.1: - If a completely different type of insurance scheme than the scheme, with additions, stated in the
General Conditions of Contract is required, then:
Delete Clause 8.6.1 and replace it with ... The requirements and/or details of the insurance scheme.
If the Employer is to arrange the insurance, details of the insurance should be given to allow the
Contractor to arrange further insurance he might require.
Clause 8.6.1.2: - If special risk insurance from SASRIA is not required then:
A Coupon Policy for Special Risks Insurance issued by the South African Special Risks Insurance
Association is not required.
Clause 8.6.1.5: - If additional insurance is required then:
In addition to the insurances required in terms of General Conditions of Contract Clauses 8.6.1.1 to
8.6.1.4 the following insurance is also required ... The requirements and/or details of the additional
insurance.
Clause 8.6.5: - If insurance is to be effected with an insurance company not necessarily in South Africa then:
The insurances shall be effected with an insurance company registered in ... any country or name
of country. Clause 10.5.1:- If the preferred method of dispute resolution is by standing
adjudication instead of ad-hoc adjudication then: Dispute resolution shall be by standing
adjudication.
ClauseContract
10.7.1: - Centric Systems
If the preferred method for the determination of disputes is arbitration instead of litigation then: The 243
determination of disputes shall be by arbitration.
Contract Data the Contractor

gives when tendering
Clause 1.1.1.9:- The name of the Contractor is ... The legal name of the Contractor.
Clause 1.2.1.2: - The address of the Contractor is ... The physical address, postal address, e-mail
address and/or fax number where the Contractor will receive notices.
Clause 1.1.1.14:- (Omit if the Employer is to state the time for achieving Practical Completion).
The time for achieving Practical Completion is ... A time measured from the Commencement
Date.
Or, if Practical Completion in portions is required,
The times for achieving Practical Completion for the portions as set out in the Scope of Works
are:
For portion 1 within … followed by further portions as required
The time for achieving Practical Completion of the whole of the Works is ...
Clause 6.2.1 : -

Contract Data the Contractor

gives when tendering
Note: In the Standard for Uniformity in Construction Procurement in section 4.4.4.4 it
is stated that: “Retention monies that are held shall not exceed 10% of any amount
due to a contractor. Where guarantees of an insurance company or bank that are
provided are equal to or greater than 10% of the contract price, the total amount
of retention monies held shall not exceed 5% of the contract price. “
Clause 6.5.1.2.3: - The percentage allowance to cover overhead charges is ... Omit if the Employer
is to state the overhead charges, otherwise state the percentage value.
Clause 6.8.3: - If price adjustments for a variation in the costs of special materials is allowed then:
The variation in cost of special materials is
Type of special material Unit Rate or price,
(The type of special materials may be listed, leaving the unit and rate or price to
the tenderers to fill in or the tenderers are allowed to state the type of special
materials, the unit and the rate or price.)
Agreement to let and hire

work
• Common Law scope • SANS 294
• Project The terms of the
1.1.1.28 - “Scope of contract, are contained
Work” means the in
document that specifies o Part 1 - Agreements and
and describes the Works Contract Data, (which includes
which are to be this Agreement)
o Part 2 -Pricing Data
provided, and any other
o Part 3 -Scope of Work.
requirements and o Part 4-Site Information
constraints relating to
the manner in which the
work is to be carried out

Time (agreed or
determinable)
• “Day” shall mean a calendar day
• 5.1.1 Time Calculations - Except where otherwise provided by the
Contract, where a specific time-span is stipulated in the Contract
for carrying out any task or for the termination of any right or the
duration of any event or circumstance,
• The special non-working days set out in the Contract Data that fall within the said
time-span, as well as
• The day on which the time-span commences
• shall be excluded from the calculation of the time-span concerned.
• “Commencement Date” means the date that the Agreement,

made in terms of the Form of Offer and Acceptance, comes into
effect. [1.1.1.5]
• “Practical Completion” means that the whole or portion of the
Works has reached a state of readiness, fit for the intended purpose,
and occupation without danger or undue inconvenience to the
Employer, although some work may be outstanding. [1.1.1.24 ]
• “Certificate of Practical Completion” means the certificate issued by
the Engineer stating the date on which Practical Completion was
achieved.
• “Due Completion Date” means the date of expiry of the time stated
in the Contract Data for achieving Practical Completion of the
Works, calculated from the Commencement Date and as adjusted
by such extensions of time or acceleration as may be allowed in
terms of Contract. [1.1.1.14 ]
Time (agreed or determinable)

Commence 3.5
5.3.1 Commencement of the Works - Upon the Engineer's instruction the
Contractor shall, save as may be otherwise provided in the Contract
or be legally or physically impossible, commence executing the
Works. Such instruction shall be subject to the submission by the
Contractor, and approval by the Engineer, of documentation
required before commencement with Works execution, as set out in
the Contract Data.
5.3.2 Unaccepted documentation - If the documentation referred to in
Clause 5.3.1 is not submitted within the number of days stipulated in
the Contract Data from the Commencement Date, or is found to be
unacceptable, the Employer may terminate the Contract in terms of
Clause 9.2. [should be read with the Form of Offer & Acceptance
see next slide]
5.3.3 Time to instruct commencement of the Works - If the Engineer's
instruction to commence executing the Works, or to resubmit
documentation, is not received by the Contractor within 7 days from
the actual date of submission of the documentation referred to in
Clause 5.3.1, commencement of the Works shall be deemed to be
on the expiry of such 7 days.
Agreed or determinable
fee
• “Contract Price” means the Contract Sum subject to such addition thereto or
deduction therefrom as may be made from time to time under the provisionsof the
Contract.
• “Contract Sum” means the accepted amount provided for in the agreement
made in terms of the Form of Offer and Acceptance.
• “Bill of Quantities” means the document so designated in the Pricing Data, if any.
• “Pricing Data” means the document that sets out the Pricing Strategy and provides
the criteria and assumptions which it will be assumed in the Contract were taken
into account by the Contractor when developing the Contract Sum.
• “Pricing Strategy” means the strategy stated in the Contract Data which is
adopted to secure prices and to remunerate the Contractor in terms of the
Contract.
• “Fixed Price Contract” means the Contractor is paid the Contract Sum for
execution of the Works subject to adjustments in accordance with the Contract.
• ''Re-measurement Contract” means the Contractor is paid an amount determined
from the actual quantities of work completed multiplied by the rates or prices for
such work subject to adjustments in accordance with the Contract.

Commencement
Read with the Form of Offer and Acceptance
“The Tenderer shall within two weeks after receiving a
completed copy of this Agreement, including the
Schedule of Deviations (if any), contact the
Employer's agent (whose details are given in the
Contract Data) to arrange the delivery of any bonds,
guarantees, proof of insurance and any other
documentation to be provided in terms of the
Conditions of Contract identified in the Contract
Data at, or just after, the date this Agreement comes
into effect. Failure to fulfil any of these obligations in
accordance with those terms shall constitute a
repudiation of this Agreement.”
Communication
• Reception theory
• “Writing”
• Written communication under GCC
o Hand delivered or
o Delivered at address provided in Contract Data (or the notified changed address)
1.2.1
o In English (or as in Data)1.3.3
• Communications Include
• Types of …
o Notifications for submitting data or information:
o Requests for consent approval of a matter or permission to do something
o Submitting a claim or insisting on a right
o Giving an instruction with authoritative directions as how to take actions
• Party who …
o Written actions required from the Contractor
o Written actions required from the Employer
o Written actions required from the Engineer

Written actions required

from the Contractor
1.2.1.2 Notice of change of address
1.2.3 Notice of authority of persons
2.2.1 Notice of adverse physical conditions
2.5.1 Consent for assignment
4.9.1 Notification of owner of Construction Equipment
5.8.2 Proposal to execute work during non-working times
5.9.3 Requiring drawings and instructions
5.10.1 Demanding compliance by Employer with terms of Contract
5.11.3 Request to proceed with the Works after suspension
5.14.1 Request for Practical Completion
6.3.2.1 Confirmation that an order is a Variation Order
6.4.2 Changing default period for delivery of Variation Order valuation
6.9.1.2 Agreement that Plant and materials may be stored at other
places than on Site
7.5.3 Notice that Plant and Works are ready for testing and examination
8.5.1 Reporting of accidents

from the Contractor
9.1.2 Notice of termination of Contract due to state of emergency,
etc
9.1.4 Notification of increased Cost due to termination
9.3.1.1.3 Notice to remedy default
9.3.1.3 Notice to terminate the Contract
10.1.1.1 Claim for extension of time or additional payment
10.1.1.2.1 Notice of intention to claim
10.1.1.3 Delivering updated particulars of claim
10.1.3.3 Agreement/disagreement regarding correctness of recorded
matters
10.2.1 Notice of dissatisfaction
10.3.1 Notice of dispute
10.4.2 Amicable settlement failure
10.6.1.2 Notice disputing validity of Dispute Board's or Adjudicator's
decision
10.6.3 Notice when Dispute Board or Adjudicator fails to give a
decision
10.9.1 Appointment of dispute resolving persons


from the Employer
1.1.1.16 Replacing the Engineer
1.2.3 Notice of authority of persons
2.5.1 Consent for assignment
6.4.2 Changing default period for delivery of Variation
Order valuation
6.9.1.2 Agreement that Plant and materials may be
stored at other places than on Site
6.10.1.5 Approval of indemnity for Plant and materials for
sequestration/liquidation
7.6.2.2 Consent to accept plant at reduced price
9.1.1 Notice of termination of Contract due to war,
hostilities, etc.

from the Employer
9.1.2 Notice of termination of Contract due to state of
emergency, etc.
9.1.2.2 Accepting additional Cost instead of termination
9.2.1.3 Notice to remedy defect in breach of Contract
10.2.1 Notice of dissatisfaction
10.3.1 Notice of dispute
10.4.2 Amicable settlement failure
10.6.1.2 Notice disputing validity of Dispute Board's or
Adjudicator's decision
10.6.3 Notice when Dispute Board or Adjudicator fails to
give a decision
10.9.1 Appointment of dispute resolving persons


from the Engineer
3.2.1 Nomination/termination of Engineer's Representative
3.2.4 Delegation/termination of Engineers authority to others
4.8.2 Instruction to provide facilities to others
4.9.1 Consent to remove Construction Equipment
4.12.2 Approval of Site Agent
5.7.1 Notice that rate of progress is behind programme
5.7.3 Conditions for payment for acceleration
5.8.1.1 Permission for executing work during non-working times
5.9.7 Approval of and departure from Contractor's designs
5.11.1 Order to suspend the Works
5.14.1 Issuing list of work for Practical Completion
5.14.2 Issuing list of work for Completion
6.3.2 Orders for variations
6.3.2.1 Contradiction that an order is a Variation Order

from the Engineer
6.4.2 Delivery of Variation Order valuation
7.5.2 Authorization for delivery of Plant to Site
7.5.3 Advising non-attendance of testing Plant or examining Works
7.6.1 Ordering making good of Plant that failed testing
7.6.3 Ordering removal of improper work
7.7.1 Ordering search for defects
7.8.1 Ordering making good of defects in Defect Liability Period
7.8.1 Allowing the correction of defects after the Defects Liability
Period
7.9.1 Notice of emergency occurrence
9.2.1.3 Certifying Contractor's breach of Contract
9.2.1.3.2 Notice to proceed with work
9.2.1.3.4 Notice that Plant, material or work have been condemned
10.1.3.3 Agreement/disagreement regarding correctness of recorded
matters
10.1.5 Ruling on claim for extension of time or additional payment
10.2.3 Ruling on dissatisfaction claim

2. BASIS OF CONTRACT
2.1 Available data and information
2.2 Adverse physical conditions
2.3 Technical data
2.4 Ambiguity or discrepancy
2.5 Assignment
Engineer & Contractor

3. ENGINEER
3.1 Functions of the Engineer
3.2 Engineers Representative
4. CONTRACTORS GENERAL OBLIGATIONS
4.1 Extent of obligations and liability
4.2 Engineers instructions
4. 3 Legal provisions
4.4 Subcontracting
4.5 Notices and Fees
4.6 Patent rights
4.7 Fossils
4.8 Facilities for others
4.9 Construction Equipment
4.10 Contractors employees
4.11 Competent employees
4.12 Contractors superintendence

Time & Cost Management

5. TIME AND RELATED MATTERS 6. PAYMENT AND RELATED MATTERS
5.1 Time calculations
5.2 Commencement of the
6.1 Payment to Contractor
Contract 6.2 Security
5.3 Commencement of the Works 6.3 Variations
5.4 Access to the Site 6.4 Value of variations
5.5 Time for Practical Completion 6.5 Dayworks
5.6 Programme 6.6 Provisional sums and prime cost
5.7 Progress of the Works sums
5.8 Non-working times 6.7 Measurement of the Works
5.9 Instructions
5.10 Delays attributable to the
6.8 Adjustment in rates and/or
Employer prices
5.11 Suspension of the Works 6.9 Vesting of Plant and materials
5.12 Extension of time for 6.10 Payments
Practical Completion 6.11 Variations exceeding 15 per
5.13 Penalty for delay cent
5.14 Completion
5.15 Clearance of Site
5.16 Approval
Performance and risk

7. QUALITY AND RELATED
MATIERS 8. RISKS AND RELATED
7.1 Quality of Construction MATTERS
Equipment
7.2 Quality of Plant
8.1 Protection of the
workmanship and Works
materials
7.3 Access to the Works 8.2 Care of the Works
7.4 Samples and testing 8.3 Excepted risks
7.5 Examination of the
Works 8.4 Indemnifications
7.6 Defective Plant 8.5 Reporting accidents
materials and work
7.7 Search for defects
7.8 Defects
7.9 Urgent remedial work

Claims & Closeout

10. CLAIMS AND DISPUTES 9. TERMINATION OF
10.1 Contractors claim CONTRACT
10.2 Dissatisfaction claim
10.3 Dispute notice 9.1 Termination of
10.4 Amicable settlement Contract
10.5 Adjudication
9.2 Termination by
10.6 Disagreement with
Adjudication Boards Employer
decision
9.3 Termination by
10.7 Arbitration
10.8 Court proceedings Contractor
10.9 Appointment
10.10 Common provisions
10.11 Continuing validity
Claims

End

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FIDIC,

NEC3, JBCC, GCC, 2016/02/25

Contract Management for

Contract Centric Systems 2

(c) 2016 Gavin C Weiman 1

Relevance of the four suites

CIDB Standardization Gazette July 2015

Contract Centric Systems 3

Contract Centric Systems 4

(c) 2016 Gavin C Weiman 2

(c) 2016 Gavin C Weiman 3

Contract Centric Systems 7

The Contracts, their

Contract Centric Systems 8

(c) 2016 Gavin C Weiman 4

Think of Contract Law and

(c) 2016 Gavin C Weiman 5

(c) 2016 Gavin C Weiman 6

Lawful & Possible

(c) 2016 Gavin C Weiman 7

What is a works Natural

(c) 2016 Gavin C Weiman 8

Contracts are projects

Triangle of Contract Risk

(c) 2016 Gavin C Weiman 9

(c) 2016 Gavin C Weiman 10

Contract Centric Systems 21

(c) 2016 Gavin C Weiman 11

Conrtact Management Process

Phase 1. Pre –Award

Conrtact Management Process

(c) 2016 Gavin C Weiman 12

Source Selection Criteria

• Selection and weighting of attributes must reflect

(c) 2016 Gavin C Weiman 13

(c) 2016 Gavin C Weiman 14

Seller’s Past Performance

(c) 2016 Gavin C Weiman 15

(c) 2016 Gavin C Weiman 16

Safety rating Minimum (Good) Excellent 100 20% 20.0

Cargo capacity Absolute (50-80 cu ft 57cu ft 65 10% 6.5

Fuel economy Relative 18 70 10% 7.0

Contract Management Process: Award Phase -

Contract Negotiation and Formation

(c) 2016 Gavin C Weiman 17

Contract Negotiation: A Complex Activity for

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We all Negotiate Every

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• Getting past “no”

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The Key to Successful

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Importance of Terms and

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Categories and Types of

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Contract Centric Systems 47

FIDIC’s process for obtaining tenders

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FIDIC’s process for opening & evaluating

(c) 2016 Gavin C Weiman 25

Contract Centric Systems 52