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Blgesel Rekabet Edebilirlik Operasyonel Programnn Uygulanmas iin

Kurumsal Kapasitenin Oluturulmasna Ynelik Teknik Yardm

This project is co-financed by the European


Union and the Republic of Turkey

Technical Assistance on Institutional Building for the Implementation of RCOP


in Turkey

FIDIC
Conditions of Contracts Training
12 14 April 2011

FIDIC Training 12-14 April 2011

This project is co-financed by the European


Union and the Republic of Turkey

Agenda - 1

Day # 1

Introduction

Objective of the Training & Expectations of the participants

FIDIC (What and Why?)

FIDIC Publications

FIDIC Conditions of Contracts for Works Contracts

FIDIC Contracts Comparison Matrix

2 exercises

FIDIC Training 12-14 April 2011

This project is co-financed by the European


Union and the Republic of Turkey

Agenda - 2

Day # 2

Parties of a Works Contract under FIDIC

Contents of a Works Tender Dossier

Introduction to Particular Conditions

Appendix to Tender

Clauses of the Conditions of Contract related to Volume 3

Clauses of the Conditions of Contract related to Volume 5

2 exercises

FIDIC Training 12-14 April 2011

This project is co-financed by the European


Union and the Republic of Turkey

Agenda - 3

Day # 3

Before Contract Signature

Before the Commencement of Works

First 28 days

Project Management Tools under FIDIC Conditions

Financial Management Tools

Limits of Engineers Authority in EU-funded Projects

Exercise

Evaluations

FIDIC Training 12-14 April 2011

This project is co-financed by the European


Union and the Republic of Turkey

Agenda
Session # 1
Day # 1, Morning
Introduction

Objectives of the Training

What is FIDIC?

Why FIDIC?

FIDIC Publications

FIDIC Training 12-14 April 2011

This project is co-financed by the European


Union and the Republic of Turkey

Trainer:

Introduction 1

Kerem Sadklar
Civil Engineer & MBA
> 15 years of experience including EU & UNDP
kerem.sadiklar@grontmij.com.tr

Participants:

25 of FCD + TID of RCP CIC


Knowledge & experience level?

FIDIC Training 12-14 April 2011

This project is co-financed by the European


Union and the Republic of Turkey

Introduction 2
Objective of the Training:
By the end of the course, the trainees should;

have a solid understanding of types of FIDIC Contracts


know contents of a Works Contract
know where to find what
be able to identify the external expertise they need
be able to draft an Appendix to Tender
be able to identify the important clauses of an PC

FIDIC Training 12-14 April 2011

This project is co-financed by the European


Union and the Republic of Turkey

Introduction 3

Therefore the training


will cover
FIDICs institutional structure and bookshop
FIDIC contract types and major differences
Identification of the most appropriate contract type
Issues/clauses which need special attention during tendering.
will be interactive; please be participative
will use exercises
will involve team work

FIDIC Training 12-14 April 2011

Introduction 4
This project is co-financed by the European
Union and the Republic of Turkey

Please always remember;


Management of FIDIC contracts
is a broad and complicated area,

FIDIC experiences improve by


execution,

Studying, Implementation and


Continues Monitoring are the
keys to success.

FIDIC Training 12-14 April 2011

This project is co-financed by the European


Union and the Republic of Turkey

What is FIDIC? - 1

Fdration Internationale des Ingnieurs-Conseils


International Federation of Consulting Engineers
Uluslar aras Mavir ve Mhendisler Federasyonu

Established in Switzerland in 1913, HQs is in Genve

First contract is printed in 1957

FIDIC represents Engineers and Consultants from various countries. E&C


Associations from 75 countries are FIDIC members
Under this umbrella 30.000 firms and 1.000.000 professionals are represented

FIDIC Training 12-14 April 2011

10

This project is co-financed by the European


Union and the Republic of Turkey

What is FIDIC? - 2

TrkMMMB - Trk Mavir Mhendis ve Mimarlar Birlii


ATCEA Association of Turkish Consulting Engineers and Architects

Established in 1980

ATCEA has 200 members

ATCEA is a member of FIDIC since 1987

Sells and distributes its own publications as well as FIDICs

www.tmmmb.org.tr

FIDIC Training 12-14 April 2011

11

This project is co-financed by the European


Union and the Republic of Turkey

What is FIDIC? - 3
Some of the International Institutions using FIDIC;

World Bank (WB)

European Bank of Restructuring and Development (EBRD)

European Investment Bank (EIB)

European Commission (EC)

KfW Bankengruppe (KfW)

Islamic Development Bank (IDB)

African Development Bankas (ADB)

Asian Development Bank (ADB)

FIDIC Training 12-14 April 2011

12

This project is co-financed by the European


Union and the Republic of Turkey

Why FIDIC? 1
FIDIC Conditions of Contracts
cover almost all the major issues that needs to be addressed under a contract

have a consistent and easy to follow structure

distribute the risks fairly amongst parties

designed by a third party (Consultant) but not an Employer; therefore conditions are
more objective and fair

can be adopted easily for many type of investments projects

FIDIC Training 12-14 April 2011

13

This project is co-financed by the European


Union and the Republic of Turkey

Why FIDIC? 2

FIDIC has committees formed of international members to improve its


publications.
Committees do continuous monitoring to improve and/or revise the existing
publications (contract types, guidelines, etc.) and to introduce new books.
Very well known by international Contractors and Consultants, therefore
creates confidence and encourages tenderers.

FIDIC Training 12-14 April 2011

14

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications - 1

Types of Contracts;

Client/Consultant Model Services Agreement (White Book)

Joint Venture Agreements

Sub Contracting Agreements

Various Types of Conditions for Works Contracts

FIDIC Training 12-14 April 2011

15

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications - 2

Other Publications;

Business Integrity

Risk Management

Quality Management

Environment Management

Sustainability Guide

FIDIC Contracts Guide to the Construction, Plant and Design-Build and


EPC/Turnkey Contracts

FIDIC Training 12-14 April 2011

16

This project is co-financed by the European


Union and the Republic of Turkey

Exercise # 1
Please go to web site www.fidic.org
list the types of publications available.
Note: Based on the availability of internet in the training center, this exercise
may be done as a joint activity.

FIDIC Training 12-14 April 2011

17

This project is co-financed by the European


Union and the Republic of Turkey

Agenda
Session # 2
Day # 1, Afternoon
Types of FIDIC Conditions of Contracts for
Works

Exercise # 2

Comparison Matrix

FIDIC Training 12-14 April 2011

18

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications 3;
Conditions of Contracts for Works

Conditions of Contract for Construction for Building and Engineering Works Designed by
the Employer; 1999 Edition RED BOOK
Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant,
and for Building and Engineering, Designed by the Contractor; 1999 Edition YELLOW
BOOK
Conditions of Contract for EPC Turn-key Projects (First Edition, 1999) - SILVER BOOK
EPC Turn-key : Engineering Procurement Construction

Short Form of Contract 1st Ed (1999 Green Book) GREEN BOOK

FIDIC Training 12-14 April 2011

19

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications 4;
Conditions of Contracts for Works

Conditions of Contract for Construction (Multilateral Development Bank


Harmonised Ed. Version 3: June 2010). For Building and Engineering Works
designed by the Employer. Harmonised RED BOOK
Conditions of Contract for Design, Build and Operate Projects (1st Ed, 2008) GOLD BOOK

FIDIC has adopted the scenario, with a 20- year operation period, and has opted for a single
contract awarded to a single contracting entity (which will almost certainly be a consortium or
joint venture) to optimise the coordination of innovation, quality and performance, rather than
award separate contracts for design-build and for operation. The contractor has no
responsibility for either financing the project or for its ultimate commercial success. The
document, as written, is not suitable for contracts which are not based on the traditional
Design-Build-Operate sequence, or where the Operation Period differs significantly from the
20 years adopted.

FIDIC Training 12-14 April 2011

20

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications 5;
Conditions of Contracts for Works
RED BOOK 1
Design and Engineering (incl. BoQs) is done by Employer or
Employers Representative.

Tenderers fill in their unit prices into the existing BoQs.

Final amount is not fixed, payments are done based on the real
amounts executed. (Exceptions are available eg: lump-sum
conracts).

FIDIC Training 12-14 April 2011

21

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications 6;
Conditions of Contracts for Works
RED BOOK - 2
Employer carries the risk for contract amount increases.

The better the design, the flawless the project implementation.

Tender evaluations are relatively simpler.

FIDIC Training 12-14 April 2011

22

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications 7;
Conditions of Contracts for Works

YELLOW BOOK - 1
Employer prepares only the Employers Requirements.

Employer Requirements includes only; Draft layout, Operational


Parameters, Technical Specifications and Financial Proposal Format
(Schedule of Prices).

Tenderers submit their technical proposals together with their financial


proposals. Technical proposals cover at minimum methodology, basic
design and drawings, bill of and similar supporting documents.

FIDIC Training 12-14 April 2011

23

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications 8;
Conditions of Contracts for Works
YELLOW BOOK - 2
Generally lump-sum price contracts are used.

Price increase and other risks are distributed amongst both parties.

Tender evaluation process is more complicated and requires technical expertise.

FIDIC Training 12-14 April 2011

24

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications 9;
Conditions of Contracts for Works

SILVER BOOK - 1
Two-party contracts (No Engineer)

Employer defines design parameters, quality measures and functional requirements.

Tenderers submit comprehensive technical proposals supported with designs.

Lump-sum contracts are used and all risk lies with the Contractor.

FIDIC Training 12-14 April 2011

25

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications 10;


Conditions of Contracts for Works
SILVER BOOK - 2
More suitable for projects like; refinery, petrochemical facilities, power plants.

Implemented if the employer foresees high risk for the supply and assembly of
mechanical and electrical components.

Tender evaluations are very complicated and requires continuous negotiations.

Not suitable for public and EU-funded projects in Turkey.

FIDIC Training 12-14 April 2011

26

This project is co-financed by the European


Union and the Republic of Turkey

FIDIC Publications 11;


Conditions of Contracts for Works

GREEN BOOK

For low contract values (< 500,000 USD)

Simple but repetitive works

Short term assignments

Usually Employer takes over the design responsibility.

FIDIC Training 12-14 April 2011

27

This project is co-financed by the European


Union and the Republic of Turkey

Exercise # 2
Please fill in the given table based on
your best assumptions.

FIDIC Training 12-14 April 2011

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Comparison Matrix - 1

This project is co-financed by the European


Union and the Republic of Turkey

Parameters

RED

YELLOW

Employer or
Contractor

Employer

Design Approval

Engineer approves
Only Contractors or rejects before
Design (If any)
executions
N.a.

Only Contractors
Design (If any

Unit Price

Unit Price / Lumpsum Price

Payment Schedules

Engineer
FIDIC Training 12-14 April 2011

Measured
quantities

Yes

Lump-sum Price

Payment
percentages

Yes

Employer

GREEN

Design

Financial Proposal

Contractor

SILVER

Lump-sum Price
Payment
Calendar /
Payment
percentages

Generally No

Measured
quantities or
Percentages
No. Employer
representative may
assign if needed.
29

This project is co-financed by the European


Union and the Republic of Turkey

Parameters

Comparison Matrix - 2
RED

YELLOW

SILVER

GREEN

Tests during
Construction

Significant number Relatively less and


of tests
simpler
Generally no tests

Tests at completion

Very detailed and


Relatively less and complicated
simpler
performance tests

Very detailed and


complicated
performance tests. Limited or no tests

Risk Distribution

Employer carries
the design risks

Contractor carries
the risks

FIDIC Training 12-14 April 2011

Distributed

Limited or no tests

Varies
30

This project is co-financed by the European


Union and the Republic of Turkey

Agenda
Session # 3
Day # 2, Morning
Parties of a Works Contract under FIDIC

Contents of a Works Tender Dossier

Introduction to Particular Conditions

Exercise # 3

FIDIC Training 12-14 April 2011

31

This project is co-financed by the European


Union and the Republic of Turkey

Parties of a Contract - 1
3 parties under a typical FIDIC Contract :
The Employer

The Contractor

The Engineer (Supervisor)

FIDIC Training 12-14 April 2011

32

This project is co-financed by the European


Union and the Republic of Turkey

Parties of a Contract - 2

Relations in a EU-funded Project


Employer Contractor

FIDIC Conditions of Contract


Employer Engineer

Service Contract
EU/PRAG General Conditions
Engineer Contractor

Engineer supervises the


construction and manages the
project with limited authority.

FIDIC Training 12-14 April 2011

33

This project is co-financed by the European


Union and the Republic of Turkey

Parties of a Contract - 3
Employer

Defines the requirements and specifications

Provides the construction site

Provides the financial resources (usually)

Provides the necessary conditions to the Contractor for the execution of works

Some of these tasks are shared by OPs and ERs (not party to the contract) in EUfunded projects.

FIDIC Training 12-14 April 2011

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This project is co-financed by the European


Union and the Republic of Turkey

Parties of a Contract - 4

Contractor:

Responsible from executing the works

Provides the necessary securities and guarantees

Held responsible from his and/or his sub contractors actions

Responsible from the quality of the executed works as well as the security of the
construction site

Prepares the interim payment reports

May use sub contractors as allowed in the conditions of the contract

FIDIC Training 12-14 April 2011

35

This project is co-financed by the European


Union and the Republic of Turkey

Parties of a Contract - 5

Engineer:

Assigned by the Employer to represent the Employer


Name, contact information and authorities of an Engineer are stated in relevant parts
of the Works Contract
After consulting with the Employer and the Contractor, should propose fair and
objective solutions for claims.

Checks the quality of the appropriateness of the workmanship and the materials used

Approves the payment certificates of the Contractor

FIDIC Training 12-14 April 2011

36

This project is co-financed by the European


Union and the Republic of Turkey

Contents of a Works TD - 1

A Works tender dossier comprises of 5 Volumes;

Volume 1: Instructions to Tenderers - PRAG rules apply. Terminology should


be adopted in line with FIDIC.

Volume 2: Conditions of Contract FIDIC

Volume 3: Technical Specifications / Employers Requirements

Volume 4: Financial Offer Format, Schedule of Prices

Volume 5: Drawings

FIDIC Training 12-14 April 2011

37

This project is co-financed by the European


Union and the Republic of Turkey

Contents of a Works TD - 2

Volume 1:

Instructions to Tenderers (ITT)

Tender Form and Annexes (Appendix to Tender)

Tender Guarantee Format

Forms

Glossary of Terms

Evaluation Grid

FIDIC Training 12-14 April 2011

38

This project is co-financed by the European


Union and the Republic of Turkey

Contents of a Works TD - 3

Volume 2:

Draft Contract

General Conditions of Contract (RED / YELLOW BOOK))


Based on the nature and design responsibility.

Particular Conditions of Contract

Security Samples (Pre-finance, Performance & Retention)

FIDIC Training 12-14 April 2011

39

This project is co-financed by the European


Union and the Republic of Turkey

Contents of a Works TD 4
Particular Conditions 1
FIDIC General Conditions of Contracts (RED or YELLOW) for any type of project
anywhere in the world.
Contract will be customized by using the particular conditions of contract.

Particular conditions prevail the General Conditions.


Particular Conditions changes / replaces / revises / deletes the Clauses of the
General Conditions.

FIDIC Training 12-14 April 2011

40

This project is co-financed by the European


Union and the Republic of Turkey

Contents of a Works TD 5
Particular Conditions 2

Clauses in Particular Conditions should not be conflicting with the


clauses of the General Conditions.
FIDIC Guidelines may be used while drafting Particular Conditions.
Particular Conditions should be in line with the local law and law of the
contract.
Any revisions / additions / omissions done by the Particular Conditions
should be based on rational reasoning.

FIDIC Training 12-14 April 2011

41

This project is co-financed by the European


Union and the Republic of Turkey

Contents of a Works TD 6

Particular Conditions 3
Very complex PCs may harm the completeness and structure of a works Contract.

PCs should be drafted by a team of experts who have relevant works and contract
management experience.

PCs should be assessed / evaluated by local lawyers.

Appendix to Tender may be used as control tool.

Clause 1.5 of PCs; Priority of Documents is important and should be re-addressed


for every project.

FIDIC Training 12-14 April 2011

42

This project is co-financed by the European


Union and the Republic of Turkey

Contents of a Works TD 7
Priority of Documents

the contract,

the Tender Form with its appendix,

the Particular Conditions,

the General Conditions,

the Technical Specifications,

the design documentation (drawings),

the bill of quantities (after arithmetical


corrections)/breakdown,
any other documents forming part of the contract

FIDIC Training 12-14 April 2011

43

This project is co-financed by the European


Union and the Republic of Turkey

Particular Conditions 1

Clauses which must be revised / added during the preparation of a PCs


Clause 1.3 Communication

Should be revised in line with all the communication tools allowed for the specific
project
Clause 1.4 Law and Language

If different languages will be used under certain circumstances this should be defined
here
Clause 1.5 Priority of Documents

Amendments and additions can be made here. Please be extremely careful, and do
not change unless you have to.

FIDIC Training 12-14 April 2011

44

This project is co-financed by the European


Union and the Republic of Turkey

Particular Conditions 2

Clause 1.6 Contract Agreement


Contract Agreement will also be referred as Letter of Acceptance

Clause 2.1 Right of Access to Site


If there are conditions (time constraints or other) related to this issue, this clause should
be drafted accordingly.

Clause 3.1 Engineers Duty and Authority


The limits of Engineers authority should be clearly defined here. This article is
extremely important for EU funded projects where the authority of the Engineer is
limited. This article should be in line with the ToR fo the Engineers service contract.

Clause 4.1 Contractors General Obligations


If the Contractor has additional obligations, these should be clearly defined here.

FIDIC Training 12-14 April 2011

45

This project is co-financed by the European


Union and the Republic of Turkey

Particular Conditions 3

Clause 4.8 Safety Procedures


If there are any additional procedures to be implemented because of EU or local laws
they should be defined here

Clause 4.19 Electricity, Water and Gas


This articled defines where and how the Contractor will obtain the necessary
infrastructure.

Clause 4.21 Progress Reports


If additional reports other than the ones defined in General Conditions are requested,
these should be defined here.

Clause 7 / Sub Clause 7.9 Rules of Origin.


This sub clause should be added in EU funded projects. Please remember this is only
for permanent works.

FIDIC Training 12-14 April 2011

46

This project is co-financed by the European


Union and the Republic of Turkey

Particular Conditions 4

Clause 8.2 Time for Completion


If there are different milestones for completion and/or taking over parts of the
works these should be defined here.

Clause 12.1 Works to be Measured


Only RED BOOK
If measurements are to be done by records and/or reports, the details should
be defined here.

FIDIC Training 12-14 April 2011

47

This project is co-financed by the European


Union and the Republic of Turkey

Exercise # 3
Please identify the Clauses which are different in RED
and YELLOW FIDIC Books.

FIDIC Training 12-14 April 2011

48

This project is co-financed by the European


Union and the Republic of Turkey

Particular Conditions - 5

Different Clauses in FIDIC Books:

RED Book

YELLOW Book

GREEN Book

Clause 3

Engineer

Engineer

Employers
Administartion

Clause 5

Nominated Sub
Contractors

Design

Design

Clause 12

Measurement
and Evaluation

Tests for
Completion

Tests for
Completion

FIDIC Training 12-14 April 2011

49

This project is co-financed by the European


Union and the Republic of Turkey

Agenda
Session # 4
Day # 2, Afternoon
Appendix to Tender

Clauses of the Conditions of Contract related to Volume 3

Clauses of the Conditions of Contract related to Volume 5

Exercise # 4

FIDIC Training 12-14 April 2011

50

This project is co-financed by the European


Union and the Republic of Turkey

Appendix to Tender 1

Appendix to Tender is prepared as a summary table.

Includes Financial and Administrative / Contractual Information

Administrative / Contractual Information

Contact Details of Parties

Contract Duration

Law and Language of the Contract

Disputes and Arbitration

FIDIC Training 12-14 April 2011

51

This project is co-financed by the European


Union and the Republic of Turkey

Appendix to Tender 2

Financial Information:

Security Amounts

Delay Penalties

Pre-Finance Payments

Retention Deductions

Minimum Interim Payments

Insurance Amounts

FIDIC Training 12-14 April 2011

52

This project is co-financed by the European


Union and the Republic of Turkey

Appendix to Tender 3

It includes summary of the information originating from the Particular and


General Conditions of Contract.
A different AtT should be prepared for each tender. May be used as a tool to
check the completeness and consistency of the particular and general
conditions.
Numeric values or specific information should be indicated in Appendix to
Tender to avoid confusion and mistakes between different values.
Appendix to tender should be used to complement the Particular and General
Conditions, not to amend or revise them.

FIDIC Training 12-14 April 2011

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This project is co-financed by the European


Union and the Republic of Turkey

Volume 3 - 1

Technical Specifications / Employer Requirements

RED Book: Technical Specifications

Material quality

Material properties

Workmanship quality

Assembly conditions

Locations, etc. are defined in detailed.

YELLOW Book: Employer Requirements

Performance criteria is defined for the works which will be


designed by the Contractor.

FIDIC Training 12-14 April 2011

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This project is co-financed by the European


Union and the Republic of Turkey

Volume 3 - 2

RED Book; Technical Specifications

Every detail (material & workmanship) that can not be shown on drawings should
be clearly defined here.
Definitions should be clear and net.
shall, will, must to be used,
may may be not to be used

Location Forms (Room Lists) should be included.

The more detailed and clear the specifications, the more flawless the project
implementation.

FIDIC Training 12-14 April 2011

55

This project is co-financed by the European


Union and the Republic of Turkey

Volume 3 - 3
YELLOW Book; Employer Requirements

Employers Requirements should define the scope and the objective of


the project.
The requirements, parameters, functions, scope and the quality of the
completed works should be defined.
All the existing information, relevant technical & administrative
regulations and standards should be listed to enable the Contractor to do
a proper design.

FIDIC Training 12-14 April 2011

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This project is co-financed by the European


Union and the Republic of Turkey

Volume 3 - 4

Clauses of the Conditions of Contract related to Volume 3 - 1

1.9 Errors in the Employers Requirements


Extension of Time Contract Amount Increase

1.13 Compliance with Laws


(planning vs. construction permits)

4.1 Contractors General Obligations


Additional security or visibility measures

4.6 Co-operation
If other contractors share the site

FIDIC Training 12-14 April 2011

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This project is co-financed by the European


Union and the Republic of Turkey

Volume 3 - 5

Clauses of the Conditions of Contract related to Volume 3 - 2

4.7 Setting Out (correct positioning, leveling etc.)

4.14 Avoidance of Interference (interference with third parties)

4.18 Protection of Environment

4.19 Electricity, Water and Gas 8avaliable infrastructure)

4.20 Employers Equipment and Free-Issue Material

5.1 General Design Obligations (yellow)/ Nominated Sub Contractors (Red)

FIDIC Training 12-14 April 2011

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Volume 3 - 6
This project is co-financed by the European
Union and the Republic of Turkey

Clauses of the Conditions of Contract related to Volume 3 - 3

5.2 Contractors Documents (Yellow Book)

5.4 Technical Standards and Regulations

5.5 Training

5.6 As-built Documents

6.6 Facilities for Staff and Labor


Facilities for the Employer and Engineer on site

7.2 Samples (material approvals)

FIDIC Training 12-14 April 2011

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This project is co-financed by the European


Union and the Republic of Turkey

Volume 3 - 7

Clauses of the Conditions of Contract related to Volume 3 - 4

7.3 Inspection (Manufacturer Tests)

9.1 Contractors Obligations (Tests on Completion)

9.4 Failure to Pass Tests on Completion

12.1 Tests after Completion (Yellow Book)

12.4 Failure to Pass Tests after Completion (Yellow Book)

FIDIC Training 12-14 April 2011

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This project is co-financed by the European


Union and the Republic of Turkey

Volume 5

Clauses of the Conditions of Contract related to Volume 5:


RED and YELLOW Books

1.8 Care and Supply of Documents


RED Book

1.9 Delayed Drawings and Instructions


YELLOW Book

1.9 Errors in the Employers Requirements

FIDIC Training 12-14 April 2011

61

This project is co-financed by the European


Union and the Republic of Turkey

Exercise # 4
Please fill in the missing parts of the attached Appendix to
Tender in line with the given Particular Conditions of Contract
and the General Conditions of a RED FIDIC Book

FIDIC Training 12-14 April 2011

62

This project is co-financed by the European


Union and the Republic of Turkey

Agenda
Session # 5
Day # 3, Morning
Before Contract Signature

Before the Commencement of Works

First 28 days

Project Management Tools under FIDIC Conditions

Exercise # 5

FIDIC Training 12-14 April 2011

63

This project is co-financed by the European


Union and the Republic of Turkey

Before Contract Signature - 1

Employer gives award notice to the Awardee.

Contract Negotiations are done (if necessary).

Priority of documents are re-arranged if necessary due to contract


negotiations or clarifications during tender period.
Contract is signed by the Employer (and endorsed by EUD).
Contractor submits the required documents (e.g. performance guarantee) to
the Employer together with the signed Contract.

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Before the Construction Works Commerce - 1


This project is co-financed by the European
Union and the Republic of Turkey

Upon the signature of the Contract certain procedures need to completed before the Contractor can
commence the works;

18.2 Submission of All Risk Insurance


20.2 Identification of DAB (Dispute Adjucation Board) member(s). Sometimes identification is
done on Ad hoc bases.
3.1 If not already in the Contract, the Employers informs the Contractor about the details of the
Engineer.

Communication lines and rules are established.

1.8 & 1.9 Supply of Drawings and Instructions


(RED Book) Drawings should be an integral part of the Contract and should be provided based
on a well structured calendar

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This project is co-financed by the European


Union and the Republic of Turkey

Before the Construction Works Commerce - 2

3.2 The limits of the authority of the Engineer and its staff should be defined
The authority of the Engineer is limited in projects funded by EU.

Please remember that the phrase Engineer refers to the Consultant Firm,
not the Consultants Team Leader.

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This project is co-financed by the European


Union and the Republic of Turkey

Before the Construction Works Commerce - 3

The personnel of the Employer, the Contractor and the Engineer to be


deployed on the project site is identified. (4.3 Contractors Representative)
The limits of authority of each personnel is identified and a line of
communication is drafted based on this. It is recommended that the line of
communication is signed by all parties.
For example: the Team Leader of the Engineer approves the Contractors
Interim Payments, but does not have the authority to negotiate
amendments on the Consultancy Contract.

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Before the Construction Works Commerce - 4

Clause 2.1 Right of Access to Site

Employer should give the right to access and possession of the site to the
Contractor after the Contract Signature.
Employer should complete his responsibilities and should give the
possession of the site free of problems.
Delays in this task may cause extensions in the contract duration and
increases in the contract price.

1.13 Contractor should complete all the necessary local procedures and obtain
the necessary permits to start construction works.
Clause 8.1 Unless otherwise stated in PCs the commencement date is within 42
days after the contract signature. Engineer shall give the notice not less than 7
days before the Commencement Date.

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First 28 Days

Clause 4.4 Necessary permissions and procedures are completed for the
Sub Contractors.
Clause 4.1 Contractors General Obligations.

Security of the site and works

EU Visibility Rules are secured

Clause 6 Staff and Labour

Sub Clause 6.4 (Local Labour Laws)

Sub Clause 6.5 (Working hours)

Sub Clause 6.7 (Health and safety)

Contractor should take all the necessary precautions to avoid accidents


and should assign a safety representative.

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Project Management Tools 1

Notices

Instructions

Reports

Records

Certificates

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Project Management Tools 2

Clause 1.3 Communication

The rules stated in this clause should be followed.


Payment certificates, approvals, certifications and similar requests
should be processed within the durations stated in the Contract.
A copy of the notices should be shared by the Engineer.

Clause 1.9 Delayed Drawings and Instructions

Delays which will cause claims should be avoided as much as possible.

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Project Management Tools - 3


Clause 3.3 Instructions of the Engineer

Engineer should issue instructions in line with its Authority.

Instructions can only be issued by the Engineer or its representative.

RED Book includes verbal instructions by written confirmations.

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Project Management Tools 4


Reports

Clause 4.21 Progress Reports

Unless otherwise stated, the Contractor should issue progress reports in


certain intervals. Usually as attachments to the interim payment certificates.
Reports compare the physical and financial realization with the planned and
propose programmes for the remaining duration.
Reports should be supported by pictures and test results.
Reports should include information about the production, delivery and
assembly schedules of the permanent works.

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Contractor should keep daily site records. The records should include site activities as
well as weather conditions.
Such information should be summarized in the progress reports.

Clause 2.5 ve 20.1 Claims

Reports

Clause 6.10 Records of Contractors Personnel and Equipment

Project Management Tools 5

Progress reports should list the Claims of both Parties.


The contractor should give notice in 28 days after he became aware of the event or the
circumstances. And shall submit a detailed claim in 42 days.
Engineer shall respond within 42 days after receiving a claim.

Clause 14 - Contract Price and Payment

Progress reports should include sufficient level of information about cash flows in order
to allow the Employer to make proper planning.

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Project Management Tools 6


Certificates

Clause 10 Employers Taking Over

Contractor may apply for Taking Over Certificate 14 days before the works
are completed (Notice).
Engineer within 28 days after receiving the application (a) issues the
certificate or (2) rejects the application.

Clause 11 Defects Liability

Upon the full satisfaction of Contractors duties and responsibilities and within
28 days after the expiry of the Defects Notification Period; Engineer issues
the Final Acceptance Certificate.

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Exercise # 5
Please calculate the maximum number of contract duration
for the Project using the attached Annex to Tender.

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Agenda
Session # 6
Day # 3, Afternoon
Financial Management Tools

Limits of Engineers Authority in EU-funded Projects

Evaluations

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Financial Management Tools- 1

Clause 12 Measurement and Evaluation (RED Book)

Clause 13 Variations and Adjustments

Clause 14 Contract Price and Payment

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Financial Management Tools 2

Clause 12 Measurement and Evaluation

Only valid for RED Book Contracts.

YELLOW Book has Tests After Completion.

Measurements are done by the Engineer in presence of the Contractor. In certain circumstances
records are used instead of measurements.

Payments are usually based on net measurements.

Clause 12.3 defines the procedures for defining new rates.

Clause 12.4 defines the compensations payments to be done to the Contractor for omissions.

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Financial Management Tools 3

YELLOW Book; Payment Conditions

Usually lump-sum contracts.


Sub items are defined for interim payments. Payments are based on completion
ratios (percentages).
Sub items should be arranged carefully in order not to harm the Contractors cash
flow. Unfair or unreasonable payment conditions are always reflected to the
prices.
14.4 Schedule of Payments and Volume 4 should be in line with each other.

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Financial Management Tools - 4

Clause 13 Variations and Adjustments

13.1 Engineer can instruct a variation

13.2 Value Engineering

13.3 Variation Procedure

13.8 Adjustments for Changes in Cost: Calculates price increases based cost
(material, workmanship, energy etc.) increases. Not implemented in EU
funded projects.

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Financial Management Tools - 5

Clause 14 Contract Price and Payment

14.1 Contract Price

14.2 Advance Payment

14.3 Interim Payment Certificates / Sub Clause 4.21 Progress Reports

14.4 Schedule of Payments

14.7 & 14.8 Payment / Delayed Payment

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Financial Management Tools - 6

Advance payment and deductions should be in line with the nature of the
works.
Payment conditions should not put the Employer under risk, but at the
same time should not harm the cash flow of the Contractor.
In EU funded projects, Beneficiaries are requested to approve the interim
payments Read & Approved.
Procedures for Contract Price variations should be clearly defined. And
relevant clauses should be drafted accordingly.
Payment terms and durations should be calculated after considering the
necessary approval procedures.

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Limits of Engineers Authority in EU Funded


Projects - 1

The Consultant (Engineer) shall obtain the specific approval of the CFCU (Contracting
Authority) and the Beneficiary before taking action on matters affecting contract price
and duration including but not limited to the following articles of the FIDIC Red Book:

Sub-Clause 3.5: Agreeing or determining any matter, which will change the
Contract Price;
Sub-Clause 4.4: Giving consent to a Subcontractor for a subcontract for which a
different subcontractor is named in the Contract;

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Limits of Engineers Authority in EU Funded


Projects - 2

Sub-Clause 8.4: Agreeing or determining an extension of the Time for


Completion;
Sub-Clause 8.8: Suspension of work,
Clause 13: Instructing Variations and Adjustments effecting Contract Price
or Time for Completion.
Sub-Clause 13.5: Giving instructions for the use of the provisional
sums/contingencies;

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Thank You / Evaluations

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