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FIDIC
Conditions of Contracts Training
12 14 April 2011
Agenda - 1
Day # 1
Introduction
FIDIC Publications
2 exercises
Agenda - 2
Day # 2
Appendix to Tender
2 exercises
Agenda - 3
Day # 3
First 28 days
Exercise
Evaluations
Agenda
Session # 1
Day # 1, Morning
Introduction
What is FIDIC?
Why FIDIC?
FIDIC Publications
Trainer:
Introduction 1
Kerem Sadklar
Civil Engineer & MBA
> 15 years of experience including EU & UNDP
kerem.sadiklar@grontmij.com.tr
Participants:
Introduction 2
Objective of the Training:
By the end of the course, the trainees should;
Introduction 3
Introduction 4
This project is co-financed by the European
Union and the Republic of Turkey
What is FIDIC? - 1
10
What is FIDIC? - 2
Established in 1980
www.tmmmb.org.tr
11
What is FIDIC? - 3
Some of the International Institutions using FIDIC;
12
Why FIDIC? 1
FIDIC Conditions of Contracts
cover almost all the major issues that needs to be addressed under a contract
designed by a third party (Consultant) but not an Employer; therefore conditions are
more objective and fair
13
Why FIDIC? 2
14
FIDIC Publications - 1
Types of Contracts;
15
FIDIC Publications - 2
Other Publications;
Business Integrity
Risk Management
Quality Management
Environment Management
Sustainability Guide
16
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.
17
Agenda
Session # 2
Day # 1, Afternoon
Types of FIDIC Conditions of Contracts for
Works
Exercise # 2
Comparison Matrix
18
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
19
FIDIC Publications 4;
Conditions of Contracts for Works
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.
20
FIDIC Publications 5;
Conditions of Contracts for Works
RED BOOK 1
Design and Engineering (incl. BoQs) is done by Employer or
Employers Representative.
Final amount is not fixed, payments are done based on the real
amounts executed. (Exceptions are available eg: lump-sum
conracts).
21
FIDIC Publications 6;
Conditions of Contracts for Works
RED BOOK - 2
Employer carries the risk for contract amount increases.
22
FIDIC Publications 7;
Conditions of Contracts for Works
YELLOW BOOK - 1
Employer prepares only the Employers Requirements.
23
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.
24
FIDIC Publications 9;
Conditions of Contracts for Works
SILVER BOOK - 1
Two-party contracts (No Engineer)
Lump-sum contracts are used and all risk lies with the Contractor.
25
Implemented if the employer foresees high risk for the supply and assembly of
mechanical and electrical components.
26
GREEN BOOK
27
Exercise # 2
Please fill in the given table based on
your best assumptions.
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Comparison Matrix - 1
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
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.
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Parameters
Comparison Matrix - 2
RED
YELLOW
SILVER
GREEN
Tests during
Construction
Tests at completion
Risk Distribution
Employer carries
the design risks
Contractor carries
the risks
Distributed
Limited or no tests
Varies
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Agenda
Session # 3
Day # 2, Morning
Parties of a Works Contract under FIDIC
Exercise # 3
31
Parties of a Contract - 1
3 parties under a typical FIDIC Contract :
The Employer
The Contractor
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Parties of a Contract - 2
Service Contract
EU/PRAG General Conditions
Engineer Contractor
33
Parties of a Contract - 3
Employer
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.
34
Parties of a Contract - 4
Contractor:
Responsible from the quality of the executed works as well as the security of the
construction site
35
Parties of a Contract - 5
Engineer:
Checks the quality of the appropriateness of the workmanship and the materials used
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Contents of a Works TD - 1
Volume 5: Drawings
37
Contents of a Works TD - 2
Volume 1:
Forms
Glossary of Terms
Evaluation Grid
38
Contents of a Works TD - 3
Volume 2:
Draft Contract
39
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.
40
Contents of a Works TD 5
Particular Conditions 2
41
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.
42
Contents of a Works TD 7
Priority of Documents
the contract,
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Particular Conditions 1
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.
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Particular Conditions 2
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Particular Conditions 3
46
Particular Conditions 4
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Exercise # 3
Please identify the Clauses which are different in RED
and YELLOW FIDIC Books.
48
Particular Conditions - 5
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
49
Agenda
Session # 4
Day # 2, Afternoon
Appendix to Tender
Exercise # 4
50
Appendix to Tender 1
Contract Duration
51
Appendix to Tender 2
Financial Information:
Security Amounts
Delay Penalties
Pre-Finance Payments
Retention Deductions
Insurance Amounts
52
Appendix to Tender 3
53
Volume 3 - 1
Material quality
Material properties
Workmanship quality
Assembly conditions
54
Volume 3 - 2
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
The more detailed and clear the specifications, the more flawless the project
implementation.
55
Volume 3 - 3
YELLOW Book; Employer Requirements
56
Volume 3 - 4
4.6 Co-operation
If other contractors share the site
57
Volume 3 - 5
58
Volume 3 - 6
This project is co-financed by the European
Union and the Republic of Turkey
5.5 Training
59
Volume 3 - 7
60
Volume 5
61
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
62
Agenda
Session # 5
Day # 3, Morning
Before Contract Signature
First 28 days
Exercise # 5
63
64
Upon the signature of the Contract certain procedures need to completed before the Contractor can
commence the works;
65
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.
66
67
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.
68
First 28 Days
Clause 4.4 Necessary permissions and procedures are completed for the
Sub Contractors.
Clause 4.1 Contractors General Obligations.
69
Notices
Instructions
Reports
Records
Certificates
70
71
72
73
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.
Reports
Progress reports should include sufficient level of information about cash flows in order
to allow the Employer to make proper planning.
74
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.
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.
75
Exercise # 5
Please calculate the maximum number of contract duration
for the Project using the attached Annex to Tender.
76
Agenda
Session # 6
Day # 3, Afternoon
Financial Management Tools
Evaluations
77
78
Measurements are done by the Engineer in presence of the Contractor. In certain circumstances
records are used instead of measurements.
Clause 12.4 defines the compensations payments to be done to the Contractor for omissions.
79
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13.8 Adjustments for Changes in Cost: Calculates price increases based cost
(material, workmanship, energy etc.) increases. Not implemented in EU
funded projects.
81
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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.
83
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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