Contracts: Basic Questions Question/Answer: Remeasurement Modified To Lump Sum

Contracts: basic questions Question/Answer | International Federation of Consulting Engineers
Search
Login
ABOUT FIDIC
BOOKSHOP
EVENTS
CONTRACTS: BASIC QUESTIONS QUESTION/ANSWER
Contracts: basic questions Question/Answer

Remeasurement modified to Lump Sum
Question
The following query is in relation to a situation which has occurred in the context of the execution of a Lump
Sum contract, regulated by a standard FIDIC (Red Book) terms and conditions. The Specifications call for "Cast
Iron" pipes, while the BOQ calls for "UPVC" pipes. The Contractor and upon the approval of the Engineer, and
without having any instructions to do so, executed the Works in UPVC. Does this entitle the Employer to
request cost saving on this item? And on what basis? Your response to the above is highly appreciated.
Answer
You say that you have a Lump Sum Contract. The FIDIC Construction Contract Book is a remeasurement
contract so the payment provisions must have been changed to provide for the Lump Sum. The answer to your
question will depend on the wording of these Lump Sum provisions. I regret that FIDIC can only comment on
questions which on the interpretation of the FIDIC General Conditions, so we are unable to answer your
question. We fear that this is an indication of what happens if General Conditions are modified by Special
Provisions without due care.
Subcontrcator's experience
Question
I would like your advice on the definition of a subcontractor, and of the following tender criteria: "subcontractors'
experience and resources shall not be taken into account in determining the bidder's compliance with qualifying
criteria". In other words, does this mean that if a bidder has worked as a subcontractor, he is not permitted to
add that experience as part of his qualification? I would like your clarification.
http://fidic.org/node/911[3/24/2013 7:26:18 PM]
Answer
The FIDIC definition of a subcontractor is given at Sub-Clause 1.1.2.8 of the 1999 Contract for Construction as:
"Subcontractor" means any person named in the Contract as a subcontractor, or any person appointed as a
subcontractor, for a part of the Works; and the legal successors in title to each of these persons. Different
clients have different criteria when evaluating tenders. FIDIC would certainly expect that any client will want to
ensure that the tenderer has adequate experience as a main contractor and has not just worked as a
subcontractor. However, in FIDIC's opinion, this would normally be worded as "Experience as a subcontractor
....". FIDIC has also known clients to be concerned that tenderers have relied on a proposed subcontractor's
experience and resources when preparing a tender and then the named subcontractor is withdrawn and
another, less experienced, company is proposed after the tender has been accepted. However, for an
international tender, some clients require that a certain percentage of the Works must be subcontracted to local
companies. In this case the experience and resources of the proposed subcontractors will be an important part
of the tender. The client's criteria when evaluating tenders depend on a number of different factors, including
the past experience of the particular client. In order to ascertain the exact intentions for evaluating your
particular tender you would need to raise the question with the client.
Free-issue materials
Question
I have a question regarding Clause 69.1 for Default of Employer. We are executing a Contract for a Project in
Pakistan under FIDIC Fourth Edition, 1987. The Employer has assigned The Engineer and also an Employer's
Representative. The Employer's Representative is form time-to-time acting like The Engineer and would like to
physically check the works at site. They are also applying deductions on the certificates of The Engineer, such
as retention money on escalation, and also Quantities, etc. The amount of the unauthorized deductions are
around 5 % of the total amount certificates issued by The Engineer. We have served a notice under Clause
69.1 and 69.4, of the Conditions of Contract to reduce the rate of work and furthermore, clarify that the Clause
69.1 explains the default of the Employer, regardless of the quantum of amount in case of Employer's failure to
pay to the Contractor total amount due under any certificate of the Engineer. Do you think that the above
statement is true and it is a case of default of the Employer ?
Answer
Depending on what is written in the Contract and the Particular Conditions, generally speaking you have a case
against the Employer. The damages which the Contractor may claim would include interest and/or financing
charges. However, you must check the provisions of the Sub-clause 2.1 Engineer's duties and authority ,to see
what is mentioned there. It is not very clear what is this Employer's Representative and what are his duties
under the Contract,. However, one would suspect that you have a case against the Employer.
Bogus claims
Question
I request to give me clarification about the correct interpretation of Clause 60.6 Final statement in the FIDIC
Conditions of Contract 1987 revised in 1992. This is about submission by the Contractor of final statement
containing the following (a) 'the value of all work done in accordance with the contract, and (b)any further sums
which the contractor considers to be due to him under the contract or otherwise'. I want clarification with respect
to (b) above. Does it include the Claims which the Contractor has never raised during the currency of contract
according to provisions of the contract? I am confronted with a dispute In which the contractor for a value of
total work of Rs 70 million has submitted final accounts of Rs 280 millon by including various type of claims
which he never claimed during the contract period and now claims in the final statement and since the
Engineer/Employer failed to respond, the Contractor claims that the final account has become final. I would
request for an early response as to the true and intended purpose of the sub-clause (b) of Clause 60.6 of the
General Conditions of the above mentioned FIDIC version for civil works construction. Should I include all
bogus claims what I intend to include for the purpose that if I claim USD 100 I would at least get USD 1. How I
can rebut this?
Answer
The provisions of Sub-clause 60.6 have to be read together with the provisions of Sub-clause 60.5 and of
course with the provisions of the Sub-clause 60.9. In order for the Contractor to maintain any claim, he must
include it in his Statement at Completion, if it has arisen by then, and in his Final Statement. There are a
number of incidences under the contract when the Employer gives to the Contractor indemnities or is otherwise
responsible to the Contractor. Clauses in which this occurs and where the Contractor's resulting claims against
the Employer could arise for the first time after the Statement at Completion or Final Statement have been
submitted by the Contractor include the following: Clause 19.2 (Employer's responsibilities) in relation to safety;
Clause 21.3 (Responsibility for amounts not recovered); Clause 22.3 (Indemnity by Employer); Clause 24.1
(Accident or injury to workmen); Clause 25.4 (Compliance with policy conditions); Clause 26.1 (Compliance with
statutes, regulations); Clause 70.2 (Subsequent legislation); and Clause 71.1 (Currency restrictions). In each of
the above cases, it is conceivable that the Contractor would wish to make a claim against the Employer after
the date of the Final Statement. Further, if the Contractor was made liable under the applicable law to a third
party in respect of design which had been carried out by the Engineer, the Contractor would wish to bring a
claim against the Employer to recover any damages paid out. Sub-clause 60.9 in fact bars the claims not
mentioned in the Statement at Completion and in the Final Statement. The purpose of the sub-clause is
sensible, namely to enable the Employer to achieve a reasonable degree of certainty as to his ultimate liability.
Appointing an Engineer
Question
Is it recommended to have in a contract based on FIDIC's Electrical and Mechanical Works Contract an
external expert acting as the Engineer? Or is there no problem in recruiting the Engineer from amongst the
Beneficiary (in our case a "public" authority)? We are signing a contract shortly. The Engineer is according to
the Red Book, Clause 2.4 Part I bound to act impartially. The question is if there is an internal incompatibility in
the relationship to his Employer.
Answer
The basis upon which the 1987 Yellow Book and Red Book is written is that the Engineer is appointed by the
Employer, but that he is independent of both parties - i.e., he is an independent third party. In many cases he
is required to give impartial decisions - in fact under Clause 2.4 of the Yellow Book he is required to act
impartially at all times when exercising his discretion. If the Engineer is an employee of the Employer - e.g.,
someone from the Employer's Engineering Division - there is a big risk that he will not be in a position to act
impartially. Although he may be very experienced and capable from a technical point of view, and able to
handle all technical matters, he may not be free to make decisions which involve financial arrangements, etc. in
a fair and impartial manner. It is not impossible, nor unknown, for the Employer to nominate himself or one of
his own staff as Engineer, but it is rare and certainly causes problems. The text of any clauses referring to the
impartiality of the Engineer will probably need revising at some stage, as will the provisions for handling claims
and disputes (Clauses 2 and 50). The principle of using an employee of the Employer as Engineer would be
more acceptable if a Dispute Adjudication Board (DAB) was introduced to replace the principal provisions of
Clauses 2 and 50.1 to deal with claims and disputes.
Standard Letters
Question
I am a Civil Engineer, presently working as Contracts Manager. Foreign (non-British nationality) engineers
usually have an understanding of the contract document and the associated entitlements/obligations, but
always express difficulty in composing (or responding to, if they are on "the other side" , correctly worded
"standard" letters to the RE, Engineer or Employer in compliance with the requirements of the various subclauses. Do you have such a publication?
Answer
The only book which we can recollect is "Musterbriefe in Englisch" (ISBN 3-7625-2607-9) although its standard
letters are not such as we would prefer to endorse. Although we will review the situation with regard to the new
FIDIC Contracts Guide, FIDIC lack enthusiasm for the very concept of standard letters, which seems to be tied
up with the concept of avoiding thinking about the situation. However, we do recognise the validity of concerns
expressed by those whose first language is not English. Thus, "Musterbriefe in Englisch" has been republished
as an electronic edition (it goes with the 1987 Red Book civil works contract). An updated version for use with
the Construction Contract 1st Edition, 1999, the Red Book successor, will be published by FIDIC in 2009 (FIDIC
has acquired the copyright of Musterbriefe in Englisch). It should be noted that Edward Corbett's book "FIDIC
4th "contains some standard letters. These have been incorporated with permission in the electronic version of
"Musterbriefe in Englisch" published by FIDIC.
Appendix to Tender data mission (continued)

Question
I believe this case does not constitute a question of mistake in contract to be decided under the applicable law.
The schedule of prices of labour and materials is a provision for the tenderer to indicate his price (cost plus
profit) on which he had based his Contract Price, in order for the Engineer to ascertain the value of an item of
work that had been executed (possibly under a variation order) and for which, or for a similar item of work of
which, no price could be found in the Bill of Quantities (BOQ). Thus the schedule of prices of materials and
labour only assists the Engineer to determine the overheads and profits of the Contractor, under the terms of
the contract, that has to be added to the basic cost of executing an item of work, which the Engineer can
always readily determine. If provison had been made in the contract for payment for price escalations, then
such payments had to be determined by reference to price escalation indices, published by an accepted
authority. As to which source or publication is to be used for this purpose, depends on what would have been
reasonably expected to be in the minds of the two parties at the time of entering into contract.
Answer
We assume that this inquiry is about FIDIC 1999 Conditions of Contract where in the 199 Red Book SubClause 13.8 it says: "13.8 (Adjustments for Changes in Cost) - In this Sub-Clause, "table of adjustment data"
means the completed table of adjustment data included in the Appendix to Tender. If there is no such table of
adjustment data, this Sub-Clause shall not apply. If this Sub-Clause applies, the amounts payable to the
Contractor shall be adjusted for rises or falls in the cost of labour. Goods and other inputs to the Works, by the
addition or deduction of the amounts determined by the formulae prescribed in this Sub-Clause. To the extent
that full compensation for any rise or fall in Costs is not covered by the provisions of this or other Clauses, the
Accepted Contract Amount shall be deemed to have included amounts to cover the contingency of other rises
and falls in costs. The adjustment to be applied to the amount otherwise payable to the Contractor, as valued in
accordance with the appropriate Schedule and certified in Payment Certificates, shall be determined from
formulae for each of the currencies in which the Contract Price is payable. No adjustment is to be applied to
work valued on the basis of Cost or current prices. The formulae shall be of the following general type:
Pn=a+bxLn/Lo+cxEn/Eo+dxMn/Mo where: "Pn" is the adjustment multiplier to be applied to the estimated
contract value in the relevant currency of the work carried out in period "n", this period being a month unless
otherwise stated in the Appendix to Tender; "a" is a fixed coefficient, stated in the relevant table of adjustment
data, representing the non-adjustable portion in contractual payments; "b", "c", "d", ... are coefficients
representing the estimated proportion of each cost element related to the execution of the Works, as stated in
the relevant table of adjustment data; such tabulated cost elements may be indicative of resources such as
labour, equipment and materials; "Ln", "En", "Mn",... are the current cost indices or reference prices for period
"n", expressed in the relevant currency of payment, each of which is applicable to the relevant tabulated cost
element on the date 49 days prior to the last day of the period (to which the particular Payment Certificate
relates); and "Lo", "Eo", "Mo", ... are the base cost indices or reference prices, expressed in the relevant
currency of payment, each of which is applicable to the relevant tabulated cost element on the Base Date. The
cost indices or reference prices stated in the table of adjustment data shall be used. If their source is in doubt,
it shall be determined by the Engineer. For this purpose, reference shall be made to the values of the indices at
stated dates (quoted in the fourth and fifth columns respectively of the table) for the purposes of clarification of
the source; although these dates (and thus these values) may not correspond to the base cost indices. In
cases where the "currency of index" (stated in the table) is not the relevant currency of payment, each index
shall be converted into the relevant currency of payment at the selling rate, established by the central bank of
the Country, of this relevant currency on the above date for which the index is required to be applicable. Until
such time as each current cost index is available, the Engineer shall determine a provisional index for the issue
of Interim Payment Certificates. When a current cost index is available, the adjustment shall be recalculated
accordingly. If the Contractor fails to complete the Works within the Time for Completion, adjustment of prices
thereafter shall be made using either (i) each index or price applicable on the date 49 days prior to the expiry
of the Time for Completion of the Works, or (ii) the current index or price: whichever is more favourable to the
Employer. The weightings (coefficients) for each of the factors of cost stated in the table(s) of adjustment data
shall only be adjusted if they have been rendered unreasonable, unbalanced or inapplicable, as a result of
Variations." The clause is very clear and unfortunately the question raised is not related to an interpretation of a
Sub-Slause.
Fairness of deductions
Question
As our project is a lump-sum contract, the client has reduced some of the items and is deducting suome of our
payment amounts from the monthly certificate. Is it fair to deduct an amount?
Answer
Although it is not for FIDIC to comment on the "fairness" of a particular circumstance, it is the FIDIC philosophy
to publish Conditions of Contract that adopt an approach of fairness and balanced risk allocation between the
parties as a primary focus. Further, FIDIC can only comment in general terms on the interpretation of a FIDIC
clauses, and it should be noted that for the application of a clause to a particular problem situation, one should
always consult a specialist. With that being said, in general, the Sub-Clause entitled Variations (Sub-Clause
52.1 in the 4th Edition or 13.1 in the 1999 Edition of the Construction Contract) does provide the right for the
Engineer to vary the work downward; specifically the Engineer may decrease quantities or omit work, provided
of course that this work is not carried out the Employer or another contract. Further, Sub-Clause 51.1 provides
that such variations will be valued in accordance with the Clause 52, in the case of the 4th edition or Clause 12
in the case of the 1999 editions. Both of these clauses provide the rules for the valuation of these variations,
which include the possibility of reduction in price. Please note that the above represents a general answer only,
and specific advice to the particular facts surrounding your situation, we recommend you consult a specialist.
Liquidated Damages
Question
I am working as a Resident Engineer for Highways with consultants. A brief detail of our project is as as
follows: The project is a repair project and is divided in 3 sections. The sections are of varying lengths with
150m for the shortest one and 1.5 Km for the longest one. Completion date for the project has already elapsed
early this year and no time extension has been granted to the contractor owing to delay on his own behalf. Two
sections have already been completed (opened to traffic) and the 3rd section is near completion. No separate
times for completion have been provided in the contract for either section. Clause 47.2 of FIDIC Conditions of
Contract (4th edition) recommends the reduction in penalty subject to taking over of different sections. As sated
above, none of the sections have been acquired by the client contractually. The referred clause also states that
the provisions of the sub clause shall only apply to the rate of liquidated damages and shall not affect the limit
thereof. What I infer from this part is that even after the reduction of penalty, it shall be applicable from the
original date of expiry of the contract. Is this the right interpretation? My second query is regarding the
reduction in liquidated damages. Under the above circumstances where the sections have not been acquired,
but opened to traffic and general public, can the penalties be reduced contractually subject to mutual
agreement with the client? Thirdly, during the currency of the project, some savings have been there (which
couldn't be estimated at design stage due to repairing nature). The savings are less than 15% (considering
Clause 52.3). If penalties are applied and reduced thereof, are they to be calculated on the original contract
price or the revised one?
Answer
If understood correctly, your first question relates to sub-clause 47.2, specifically the last sentence, which reads
"The provisions of this Sub-Clause shall only apply to the rate of liquidated damages and shall not affect the
limit thereof." The meaning of this sentence is that although this clause allows for the amount of liquidated
damages to be reduced proportionately to the work being handed over, if the work is handed over in parts, the
maximum limit of liquidated damages (as specified in the appendix to tender (see Sub-Clause 47.1)) is not
affected. In regard to your second question, Clause 47 should be read in conjunction with Clause 48. In the
background to your question, you stated that none of the sections have been 'acquired by the Client
contractually', yet earlier you state that '2 sections have already been completed (opened to traffic)'. In this
light, we would suggest that you may review both sub-clause 48.2 and 48.3, which, depending on the particular
fact pattern surrounding your contract, may be applicable. In answer to your third question, liquated damages
are not penalties. You are kindly referred to the verbiage contained in Sub-Clause 47.1, which reads, in part "...
and not as a penalty ...". As explained in the Guide to the Red Book, Liquidated damages are an amount
determined by the Employer, before tenders are invited, as a reasonable assessment of the actual damages
which he would suffer in the event of delay in completion of the Works. Hence, in general, Liquadated
Damages should be calculated from the vantage point that will result in a reasonable assessment of the actual
damages.
Value Engineering sub-clause

Question
In terms of the FIDIC 1987 Red Book, is the Contractor entitled to a portion of the saving as provided for in the
terms of Sub-Clause 13.2 (Value Engineering) in the 1999 Red Book?
Answer
The FIDIC 1987 eRed Book does not have a similar provision as the one mentioned in the FIDIC 1999 edition
Value Engineering, Sub-Clause 13.2 However you may find in the 1987 Red Book a so called bonus for early
completion.
Additional works
Question
Being a project manager from the client side, I would like to know as per FIDIC can I force a contractor to carry
out additional works prior to approval of his financial claim?
Answer
The basic answer is YES, provided you follow the correct contract procedures. There are a number of SubClauses which are relevant including, from the 1999 Construction Contract: a) S/Cl 3.1: The Employer may
have imposed constraints on the Engineer's authority in the Particular Conditions. b) S/Cl 3.3: The Contractor
shall comply with instructions given by the Engineer. c) S/Cl 13.1: The Contractor shall execute and be bound
by each Variation initiated by the Engineer. Subject to exceptions as stated in the Sub-Clause. d) S/Cl 13.3:
Procedures for the Engineer to value the Variation. The Engineer may have asked for and accepted a
proposal, or he proceeds as Clause 12.
New rates
Question
In a civil marine work contract of FIDIC conditions, disputes quite often occurs on fixing of revision of rates.
though clauses 51 and 52 of Fourth Edition - Red Book - clearly provide causes for variation and valuation of
rates, ambiguity still persists with respect to adoption of revised rates for varied quantities only or for full
quantity executed as long asthere are no major changes in deployment of workmen, equipment and materials.
Leaving the decision to engineer may not give an appropriate solution as persons holding the post of engineer
may have different views and their decisions may not exactly match with the views of FIDIC authors. Please
clarify the situations when revised rates are applicable for the entire quantity or for increased quantities only.
Answer
The decision whether a new rate applies to the total quantity of an item, or just to the Variation quantity, will
depend on the reason why a new rate is necessary. This may depend on the reason and details of the change
to the Contractor's cost. Sometimes the original quantity will already have been executed and paid at the BQ
rate, before the Variation is ordered. However, sometimes the fact of the quantity being changed by the
Variation will change the circumstances and costs and makes it reasonable to pay the total quantity at the new
rate. The new rate may differ if it is being applied to the total quantity or just to the Variation quantity. The
Engineer will, of course, take all these factors into account when calculating a new rate. You should also refer
to the commentary on Clauses 51 and 52 in the FIDIC Guide to the Fourth Edition. The commentary
emphasises the importance of consultation with both the parties.
Appendix to Tender data missing

Question
A contract was signed under the FIDIC Conditions of Contract which require that indices for the skilled and
unskilled labour should be filled by the Contractor in the relevant Appendix while submitting the tender. This
requirement including the source of the indices was however not fulfilled by the Contractor. This fact was noted
but employer failed to get this requirement met and the contract was signed without this information. The
dispute arose when the contractor submitted escalation claim due change in prices of the labour component
according to relevant provision. The contractor insists the use source indices issued by the local government for
calculation of adjustment which is near the place of the construction and because this condition is more
profitable to contractor. The Client insists that he will use the indices issues by a gevernment office which are
normally used in government contracts. I am the Arbitrator in one such case and need advice of FIDIC what will
be the judicious coarse of action in this scenario. I however feel that entire responsibility of not providing this
information cannot be placed on the Contractor and the Employer should have insured that Contractor provide
this information before signing of the contract. omission was made and the contract was signed without this
information (source of indices). I will be anxiously waiting for advice from your expert what reasonable coarse
of action should be adapted in this dispute resolution as the Contractor has gone in dispute on this issue.
Answer
It seems that the Contractor made a mistake by not adding the information to the Appendix to Tender. The
Employer then accepted the Tender and the Parties signed a Contract which included the mistake.
Unfortunately you say that they cannot agree on the information which should be added to the Appendix to
Tender. To correct the mistake requires a change to the signed Contract to add this information. Correcting a
mistake in a Contract is a legal question which must be studied under the applicable law. FIDIC cannot
comment on such legal questions.
Engineer's decision
Question
Our firm has a contract for consulting services with the Government of El Salvador for the construction of major
transportation infrastructure in the country. The project is divided into three packages that are governed by
FIDIC Conditions of Contract for Works of Civil Engineering (Red book, 4th Ed. 1987). The construction of the
first package of project, which included two 400-meter bridges over the most important river in El Salvador, was
completed last April.The Contractor is a Joint Venture of firms that is now claiming additional payments based
on the contract documents. In order to have a clear interpretation of the documents, we would like to clarify the
following: Clause 67.1 Engineer's Decision - we would like to confirm if under this Clause the Contractor can
claim for matters that happened during the construction period, even after the Take-Over Certificate has been
issued and the Statement at Completion has been certified and paid.
Answer
Regarding Clause 67.1: if the Contractor is dissatisfied with an Engineer's evaluation of a claim under Clause
53, he may refer the matter at any time (before or after completion) to the Engineer under Clause 67.1 for an
"Engineer's Decision". He can do this any time up to his Final Statement and there is no time limit. The
Engineer then has 84 days to respond. The Contractor cannot submit a "new'" claim for normal determination
under this clause. The claim must first be processed under Clause 53, and only when a Clause 53
determination has been given which the Contractor finds to be unacceptable do we have a "dispute" situation
which can be handled under Clause 67.1.
Calculation of claims
Question
I would like to know if you can help me find information regarding the procedure and calculation of claims (of
any kind) arising out of a Civil Engineering Construction contract.
Answer
FIDIC publishes guides to each of its forms of construction contract, which may provide the guidance you
require on the procedures for claims. You would need to order the Guide for the use of whatever Conditions
you are using. If your enquiry relates to October 2000. FIDIC's guides do not elaborate on the calculation of
claims, so you might need to consult other publications. Personally, I am only aware of "Building and Civil
Engineering Claims in Perspective" by Geoffrey Arthur Hughes, which was first published by Longman in 1983.
It may have been republished and fulfil your needs.
Not in pre-handover list

Question
I have the following problem and I can not find a solution in the FIDIC Red Book Fourth Edition 1887. The
problem is as follows: we have made a contract with a pre-hand over list made, with the Engineer, in April
2000. A new contract, given to another company in the same building was given in May 2000, it was an
obligation for me to give the keys of the building. As the Engineer is in Zimbabwe and the Building is in
Burundi, no engineer was there for the hand over of the inside of the building. Now, the Engineer asks us to
repair some things which were not on the pre-hand over list. Can you please tell me what I have to do.
Answer
FIDIC does not undertake to proffer advice relating to every situation which may arise under a FIDIC-based
contract. However, it appears that the answer to your question depends upon whether a Taking Over
Certificate has been issued. If so, the pre-hand over list presumably advised you of the work described in SubClause 49.2(a), and the Engineer has asked you to repair some things as described in Sub-Clause 49.2(b). If
not, the Engineer may be "specifying all the work which ... is required to be done ... before the issue of such
Certificate" under Sub-Clause 48.1. In either case, you have not indicated any reason for not complying with
the Engineer's instructions.
Additional payments
Question
Our firm has a contract for consulting services with the Government of El Salvador for the construction of major
transportation infrastructure in the country. The project is divided into three packages that are governed by
FIDIC Conditions of Contract for Works of Civil Engineering (Red book, 4th Ed. 1987). The construction of the
first package of project, which included two 400-meter bridges over the most important river in El Salvador, was
completed last April.The Contractor is a Joint Venture of firms that is now claiming additional payments based
on the contract documents. In order to have a clear interpretation of the documents, we would like to clarify the
following: Clause 53.1 Notice of Claims - it is important to confirm if the Contractor can invoke this Clause to
claim for additional payment owing to construction works that were performed before the Take-Over Certificate,
once this Certificate has been issued. In other words, if the Contractor can claim for matters that happened
during the construction period even after the Take-Over Certificate has been issued.
Answer
Regarding the application of Clause 53.1. This clause requires the Contractor to give Notice of a potential claim
within 28 days of the event occurring. This establishes his right to claim and he should then proceed to
substantiate the claim according to Clause 53.3. He can claim at any time - before or after Taking-over - if
events occur (before or after taking-over) which he considers entitle him to claim. The intention of Clause 53.1
is to try to make sure claims are dealt with as and when they occur so that everyone is familiar with the
circumstances (thus the 28 day provision) - and not to leave them to the end - when people have probably
forgotten all the details. If he did this within the time limits, then the claim should be evaluated according to the
Contractor's submissions. If he did not - as would appear to be the case - and has come in with a claim a
considerable time after the event, then we would suggest that you have two courses of action. Firstly you
should perhaps try to establish why he did not give notice within the 28 days. Either you can reject his claim on
the ground that he did not submit it within 28 days as required by Clause 53.1, or, under Clause 53.4 you can
make an assessment based on records which were kept at the time. Normally I would suggest it depends on
the circumstances. If the claim appears to be frivolous and confused with no substantiation (possibly an event
you knew nothing about) you may well decide to reject it. But if it concerns an event of which you were aware
which you knew had disrupted the Contractor, then maybe you could consider it under Clause 53.4.
New rates for remeasurement

Question
I have a question regarding adoption of FIDIC Red Book Fourth Edition reprinted 1992. The particular Contract
contains Clause 51/52 "Variations" and also contains Clause 56 "Works to be Measured" and has BOQ.
Design and Construct Services for Electrical and Mechanical were tendered as diagramatic designs and are to
be developed to the Approval of Engineer as part of obligations under the Contract and have various BOQ
items. This Design Development for Mechanical/Electrical services is his obligation under the Contract, and in
this way would not seem to qualify as a Variation to the Contract. However new items to the original BOQ have
been necessitated by DD. Under which Clause can new rates be established for the re-measure of these
Works?
Answer
The Conditions of Contract for Works of Civil Engineering Construction (1992) do not contain express provision
for new rates being established for the re-measurement of non-varied Contractor-design works, where new
items to the original BoQ have been necessitated by Design Development. Typically, Contractor-design works
are priced on a lump-sum basis, and are not subject to re-measurement after Design Development, so such
express provision would be inappropriate in the Conditions of Contract which FIDIC intended to be suitable for
Employer-design works.
Termination before completion

Question
Has Employer got an authority according to FIDIC to terminate the contract of Engineer before completion of
project and appoint another engineering company or continue with its own resources? I know that that
Employer cannot do this according to Red Book FIDIC Clause 1.1 Definitions by referring to Part II of the
contract. What should we do as a contractor at this stage?
Answer
You appear to understand FIDIC's provisions, as summarised at the top of page 41 of the Red Book Guide: "It
should be noted that ... the effect of ... [1.1(a)(iv)] is to prevent the Employer from changing the Engineer
without the consent of the Contractor." In effect, provided the legal person defined as "Engineer" continues to
exist, such legal person continues to be the Engineer for the purposes of the Contract, and the Employer has
no power to name someone else as Engineer. By "continues to exist", we mean does not (as a natural person)
die, or is not (as a company) dissolved. FIDIC cannot give specific advice in respect to the actions a party
should take, and only undertakes to clarify aspects of its own provisions. You do not seem to need such
clarification, but may need to obtain advice from a lawyer with expert knowledge of construction law.
There is always a possibility that some aspect of the situation (which you have not mentioned) would entitle the
Employer to replace the Engineer under the law governing the Contract. For FIDIC, it seems that you should
first decide whether the replacement "Engineer" is acceptable as such because, if not, you could inform the
Employer accordingly and seek to resolve the matter before it escalates into a major dispute.
Employer replaces the Contractor

Question
Regarding the correct application of the Red Book Contract, the Employer in compliance with sub-clause 63.1,
after giving written notice to the Contractor upon his contravention of provision in sub-clause 4.1, enetered
upon the site and the works, and terminated the employment of the Contractor. The Employer wants to employ
another Contractor, which took second place in the initial, public tender, to complete the works. The further
procedure will be in compliance with sub-clauses 63.2, 63.3, 63.4 and 64.1.The questions is: is this procedure
in compliance with the General Conditions of the Red Book 4th Edition?
Answer
We refer to your query whether a proposed procedure complies with the fourth edition of the General
Conditions of Contract for Works of Civil Engineering Construction.
FIDIC cannot undertake to provide advice on actual circumstances, and is only prepared to clarify and explain
the meaning and purpose of the provisions it publishes in its Conditions of Contract. In the case of serious
matters such as termination, legal advice should be sought.
However, we would make the following observations, without concluding whether the Employer is entitled to
proceed as you have described. For these purposes, we start by assuming that the Employer's termination was
valid by reason of the Contractor's breach of sub-clause 4.1. Such validity may, of course, be challenged by the
Contractor.
Following a valid termination, the Employer's options on employing another contractor would not appear to be
constrained by the General Conditions, other than under Clause 63 (with which you state the further procedure
will comply), although they may be constrained by the applicable law. You mention compliance with sub-clause
63.4, which relates to assignment of subcontracts. Applicable law may constrain the Employer's rights in
respect of subcontracts which were associated with the Contractor's breach of sub-clause 4.1.
You mention compliance with sub-clause 64.1, which relates to urgent remedial work which the Contractor is
unwilling or unable to do, prior to termination. After termination, his previous unwillingness or inability would not
seem to entitle the Employer to invoke sub-clause 64.1. As regards employing a contractor which took "second
place ... in the initial public tender", this is not a matter to be decided by the General Conditions of the Contract
under which the termination was effected. The choice of replacement contractor is a matter to be decided by
the law relevant to the procurement procedures and any constraints imposed by those providing funds for the
project.
Delayed payment
Question
I am an Architect registered with the RIBA in the UK since 1978 and the UAE Authorities in Abu Dhabi, UAE
since 1981.
I have recently been Engineer under a FIDIC Red Book 4th Edition Building Contract between a UAE
Government Agency and a local Contractor, and Employer's Representative/Adviser under a FIDIC Design and
Build Contract, same Employer but different Contractor.
Clauses of Particular Application have been prepared by a third party advising the Employer direct in both
cases, but largely ignored, the Employer paying late throughout, not paying the final Interim Certificates on
Taking Over the Works in either case, threatening the imposition of Penalties by ignoring and/or rejecting the
cases for Extensions of Time in both cases, and not paying at all until forced agreement to reduced amounts
has been accepted by the Contractors through barter.
As you may know, there is very limited recourse to the law here, especially for foreigners. Both Contractors are
likely to weigh the costs of Courts and further Delay against the benefit of any payment at all; one has already
given in, but the other is still fighting, or perhaps more realistically, negotiating.
What should I do, please: indeed, is there anything that can be done ? This is the worst case of abuse of
Contract I have come across in more than 20 years here, though the amounts are relatively small.
Answer
Whilst we can sympathise with the situation described in the question, there is not a lot FIDIC can recommend
or that he can do as Engineer in this case.
The situation described is, unfortunately, not all that uncommon in some Middle East countries and the ultimate
decision of what to do lies with the Contractor. If he feels the situation warrants extreme measures, then he can
terminate under Clause 69.1 (unless of course 69.1 has been changed - as it very often is in these countries).
Otherwise there is not a lot you can do.
Being fair and impartial the Engineer could (and perhaps should) write to the Employer reminding him of the
terms of the Contract - but he will probably bring down the wrath of the Employer on his shoulders, and that
may not help anybody.
You should perhaps also bear in mind that Contractors who choose to work in these countries are usually (or
should be) rather familiar with this situation and may well have allowed something in their price to cover this
sort of thing - especially, as the person asking the question says, the amount is not very large.
Expiry of Defects Liability Period

Question
For the Red Book, can the Engineer issue instructions under Clause 13.1 after the expiry of the Defects
Liability Period ?
Answer
After the Defects Liability Period expires, the Engineer may issue instructions under Clause 49, and cannot rely
upon Clause 13 as authority to issue other instructions.
Performance security
Question
Please inform us about the validity of the performance security if the duration of the contract is 90 days.
Answer
These principles would probably apply whichever FIDIC document is being used.
Priority of tender documents

Question
The question refers to FIDIC Conditions of Contract for Works of Civil Engineering Construction (4th Edition
1987, reprinted 1988 with editorial amendments, reprinted 1992 with further amendments). I am an employer
who is negotiating with the contractor now. I have a trouble in using the FIDIC conditions, and ask for your help
urgently. Sub-Clause 1.1 (b)(v) "Tender" means the Contractor's priced offer to the Employer for the execution
and completion of the Works and the remedying of any defects therein in accordance with the provision of the
Contract, as accepted by the Letter of Acceptance." And Sub-Clause 5.2 specifies the priority of the contract
document, of which the Tender is listed as third. Are those two "Tender" have the same meaning? Can we
explain that the Tender only refer to the document entitled letter of tender (maybe 1 or 2 pages, very short and
simple anyway), or all the documents submitted by the Contractor along with the letter of tender as response
upon the Bidding Document (a lot of documents, such as appendix to tender, priced BOQ, technical proposal,
evidence for construction experience and financial capacity)?
Answer
The Tender at Sub-Clauses 1.1(b)(v) and 5.2(3) means the form of Tender which is given at the end of Part 1
of the Red Book. The form of Tender, at paragraph 2, confirms that the Appendix to Tender forms part of the
Tender and Sub-Clause 1.1(b)(iv) confirms that the priced bill of quantities forms part of the Tender. If the
Employer requires other documents to be included in the Contract as part of the Tender then he must state this
clearly in the Instructions to Tenderers and in the form of Tender.
Obtaining Contract Data

Question
Sub-Clause 11.1 tell us that the hired contracting party is responsible for the data contained in his proposal
based on the data supplied by the Contractor. Could you please tell me how I can obtain the data?
Answer
The Contractor must have based his tender on information: 1) which was provided to all tenderers by the
Employer from the investigations which had been carried out by the Employer; 2) which the Contractor obtained
from his own inspection and examination of the Site and its surroundings. Where the Contractor obtained this
information will depend on the circumstances but he must have satisfied himself that his tender was correct and
sufficient to meet his obligations under the Contract.
Interim certificates
Question
Sub-Clause 60.4 stipulates that the Engineer may correct any error in an interim certificate in subsequent
certificates. Are there any limitations in the application of this provision?
Answer
You are referring to Sub-Clause 60.4 of the 1987 Contract for Civil Engineering Works. There is a similar
provision at Sub-Clause 14.6 of the 1999 Contracts. The Contract does not put any limitation on this provision.
However, under Sub-Clause 60.2 the Engineer has previously certified the amount which he considered to be
due and payable. If he has now found an error and changed his mind he should explain the reasons for the
change.
Refixing of rate
Question
I am interested in application of Clause 52.2 (Power of the Engineer to fix Rate). If circumstances allow a
refixing of rate, would it apply to the varied quantity(increased/decreased) or to the entire quantity, i.e.,
quantities in the bid plus increase/decrease?
Answer
You are referring to the 4th Edition 1987 of the Contract for Works of Civil Engineering, Sub-Clause 51.1 (a)
allows the Engineer to issue an instruction to increase or decrease the quantity of any work included in the
Contract. The rate which the Engineer agrees or fixes under Sub-Clause 52.2 would only apply to the varied
quantity (increased or decreased). The original quantity is not part of the Variation and would be paid at the
original rate.
Recovery of Costs
Question
Working with 1987, 4th Edition, reprinted in 1992 FIDIC form of contract on a project where Clause 70, whist
being modified does permit the recovery of changes in the prices of labour and materials. Are there any legal
precidents which reflect the provision reflected in the 1999 form of contract to allow the recovery of costs, post
the stated contract completion where the contractor has failed to complete the works in the specified time? Or
are there any precidents to reflect the recovery of costs per sec, post the contract completion date? If there are
any precidents, if there are in electronic, format, could you forward them or, advise where they could be
obtained.
Answer
FIDIC is unable to provide legal guidance or information on legal precedents. However, to be helpful, the
federation has asked an expert to comment so that your future research can guided in the approriate direction.
You are correct that the 1987 4th Edition does not include specific provision for the recovery of price changes
after the contract completion date when the Contractor has failed to complete the work in the specified time.
Alternative clauses can be found in the FIDIC Guide to the 4th Edition and in the 1999 Contracts. The problem
with legal precedents is that no two dispute situations are ever exactly the same and so need legal advice.
Guidance and summaries of some arbitration awards can be found in the international legal journals,
newsletters from law firms and the publications of the international arbitration centres such as the ICC Paris,
the London Court of International Arbitration and other centres in different parts of the world.
Engineer's instructions
Question
A FIDIC standard Contract for civil engineering (Red Book 4th Edition 1987) is basis of a Contract for a Wharf
and Approach Bridge Construction and Causeway Reclamation project (The Contrac). The Contract is a
Lumpsum Agreement and the BOQ refers as follows: All works in this section except Provisional Quantities will
be paid for as LumpSums. Quantities are estimates only. If the Contractor wishes, additional items may be
added to the Bill or quantities amended. Rates nominated will be used only to assess variations (if any) to the
Contract and to assess progress claims and payments. Provisional Quantities and Items will be paid for as
described in the Conditions of Contract. One of the BoQ item was pertaining to Crane Rails to be provided by
the Contractor. Later the Company organized the Rails on their own and the Contractor is not required to
provide the Crane Rails as per the BoQ. In view of this the Crane Rail related Amount as stated in the BoQ is
proposed to be deducted out of the BoQ. Please confirm that this is proper approach under Article 51 and 52 or
any other conditions of FIDIC standard contract.
Answer
Under a FIDIC Contract, any change to add or omit work must be made by an instruction from the Engineer
under the appropriate sub-clause. You mention Sub-Clauses 51 and 52, which are from the 1987 4th Edition of
the Contract for Civil Engineering Works. Sub-Clause 51.1, item (b) allows the Engineer to issue instructions to
omit work, but this is qualified by the statement in brackets "(but not if the omitted work is to be carried out by
the Employer or by another contractor)". Your proposal for the crane rails would appear to contravene this
requirement. Hence the change and price adjustment may need to be negotiated between the Parties and
would probably involve legal advice.
Variations exceeding 15 percent of the effective Contract Sum

(Clause 52.3)
Question
We are in the process of preparing a claim under Clause 52.3 of the FIDIC Conditions of Contract for Works of
Civil Engineering Construction and are seeking clarification on the application of the clause especially as
regards to which amount do we apply the percentage which is in excess of the 15%. Do we apply it to: - The
effective contract sum; or, - The difference between the amounts calculated using the actual percentage by
which the effective contract sum shall have been exceed by and the 15%. Please note that In this particular
contract, the majority of Preliminary and General Items were stated as provisional sums (as stated in the Bill of
Quantities by the Engineer) it is not easy for us to accurately determine the contractor's on-costs. We have
since acquired a copy of the "Guide to the Use of Fidlic Conditions of Contract for Works of Civil Engineering
Construction" and the explanation given does not adequately cover us, refer page 117 of the guide. Please
advise us on how this clause is to be applied.
Answer
The precise problem is not clear and we can only comment in general terms on the interpretation of SubClause 52.3. The Sub-Clause allows the Contractor and Engineer to discuss and agree a lump sum addition or
deduction to the Contract Price when the additions/deductions as described at (a) and (b) are more than 15%
of the "Effective Contract Price". It will be up to the Contractor to prove the changes to his Site and general
overhead costs. The details and calculation of the lump sum will dependant on the reasons for the increase or
decrease to the Contract Price.
Unit rates
Question
1. The following addition has been made in Clause 52.2 (FIDIC 1987, Contract for Works of Civil Engineering)
in our contract by the Employer: "..Provided further that no change in the Unit Rates or prices quoted shall be
considered for any item in the Schedules to the Bill of Quantities, unless such item individually accounts for an
amount of more than 2 percent of the sum named in the Letter of Acceptance, and the original billed quantity
by more than 30 percent. Not withstanding above, for variation exceeding 10% in quantity of any item of BOQ
with respect to original BOQ quantities, the following shall apply to the unit rate of that item: a) For rates quoted
below CSR 2000 rates, no change in quoted unit rate shall be allowed. b) For rates quoted above CSR 2000
rates, the quantity exceeding 10% from original BOQ quantity of the items shall be paid to the contractor as per
NHA CSR 2000 rates applicable in the relevant district. Provided further that for non BOQ items appearing in
NHAs CSR 2000, CSR 2000 rates shall apply whereas the rates of non CSR & non BOQ items shall be
determined by the Engineer as stipulated in General Conditions of Contract." 2. The Situation BOQ Item
No.108b(i) Formation of embankment from roadway excavation in Rock material (Hard Rock) and BOQ Item
No. 106d(i) Excavate Surplus Rock material (Hard Rock) has increased up to 453 % and 77.8 % respectively
from the Original Billed Quantity and these Items are individually accounting for more than 2.55% and 4.99 %
respectively of the sum named in the Letter of Acceptance. Therefore, we desire to request the Employer/The
Engineer that the Unit Rates for the said items as quoted in the BOQ for the entire quantity be changed and till
the time new rates are fixed, the provisional rates or prices be determined in accordance with CSR-2005 with
25% Premium to enable on-account payment. 3.Questions a) Will the revision of rates be based on composite
schedule of rates 2005 (CSR- 2005) with 25% premium as requested by us? b) Are sub- paragraphs a and
b of the addition made in the said clause (refer to para 1 above ) applicable to us as we consider that the said
sub paragraphs are not relevant to us because our variation is over 30%. c) Will Revised Rates be applicable
to the entire quantity or only on varied quantity? d) With so much variation, is it alright to ask for determination
of Provisional rates?
Answer
As a general principle, FIDIC expressly prohibits users of its contracts to add and adjust Clauses in the General
Conditions. Any adjustments and changes should be made in the Particular Conditions. However, since your
Organization may not be responsible for misuse and breach of copyright we shall attempt to help you. But here
again, FIDIC is able to offer advice on interpreation of clauses, but of course only on the clause of the
contracts General Conditions, not on someone else's clauses. This said, once again, we shall try to be helpful
on the understanding that in future you try to impress on clients that they should use the GCs correctly, and not
risk legal action and contract invalidity owing to breach of copyright. The changes to the GC mean that the
interpretation of the FIDIC Sub-clause 52.2 may not be relevant to the amended contract. However the
following may be helpful. a) Impossible to answer because of the changes to the GC. b) Impossible to answer
because of the changes to the GC. c) Revised rates are normally only applicable to the additional quantity but
this depends on the circumstances and the make up of the revised rates. In determining revised rates the
Engineer should take all factors into consideration. d) The Contractor is entitled to be paid for work done in
accordance with Sub-Clause 60.2. If the revised rates cannot be agreed in time for the next Interim Payment
Certificate then the Engineer should determine provisional rates as the last sentence of the first paragraph of
Sub-Clause 52.2. If the final rate is different to this provisional rate then Interim Payment Certificates can be
corrected as Sub-Clause 60.4.
Additional sum for replacement cost

Question
We are requesting a clarification of the intention of Clause 21.1 (b) Insurance of Works and Contractor's
Equipment of the FIDIC Civil Engineering Construction 1987 (4th Edition) Part1. There appears to be a mixed
Insurance market view as to whether the additional sum of "15% of such replacement cost" for Professional
Fees, Demolition and Removal of Debris applies to: (1) each of these costs individually, or (2) as a combined
amount, and (3) whether this amount should be applied as a percentage of loss or a percentage of the sum
insured (contract value). Our Contractors are keen to have clarification.
Answer
The wording of Sub-Clause 21.1 (b) should be clear. The insurance shall cover the full replacement cost as (a),
plus an additional 15% of that figure. This additional 15% is to cover any additional and incidental costs,
INCLUDING professional fees etc. This figure may be changed in the Particular Conditions and you should
also refer to the FIDIC Guide to the 4th Edition, at page 72.
Excess quantities of work (Sub-clause 52.3)

Question
I am "The Engineer" of Project and have recommended re-rating of certain items of work under the provisions
of Clauses 52.2 of the Contract. I have however failed to understand from the given provision is that: a) The
Engineer shall evaluate at the time of Taking Over, if the Contract Cost has increased or decreased () 15% of
the original cost of contract, as a result of: i) all work executed & measured is in excess of BOQ qualities. b)
Then the Engineer shall determine such further "Sum" that may be added or deducted from the contract price,
taking into regard the Contractor's site and general overhead costs of the Contract based upon only the amount
by which such additions/deductions will be in excess of 15% of the Effective Contract price. In my opinion the
Excess quantities of work have been taken care of by re-rating under Clause 52.2 and no further Sum may be
added to the Contract. Does the Clause 52.3 intend to apply the re-rating on quantities that are more than
15%of the BOQ quantities thus re-rated. I quote an example: let us assume the cost of Contract as USD
100000. A BOQ item costing USD 20000 is increased to value USD 50000 at contract rates. Hence re-rating
under Clause 52.2 becomes applicable. On re-rating the value of (original + increased) qty of work becomes
USD 55000. Now the total value of contract, i.e., USD 55000. The value of work beyond 15% of contract price
is $ 40,000. Is the Contractor entitled to additional premium under Clause 52.3 for Executing work beyond 15%
of Contract price. Is this what is meant by the provision of the Clause 52.3?
Answer
Clause 52.2 refers to the re-rating of an individual variation. Clause 52.3 refers to the situation when the total
effect of all variations, plus the remeasurement of the approximate quantities in the BoQ results in an increase
or decrease of more than 15%. It is possible that each individual variation did not have a significant effect on
the Contractor's overheads but the total effect of all variations and the remeasurement was significant. It is
necessary to consider the actual effect of the additional quantities on the Contractor's overheads. For example,
part of the allowance for overheads may be a fixed, or lump sum, figure which is not related to the quantity of
work which has been carried out. A substantial increase in the total quantity of work may not increase this part
of the overheads. Hence, the overheads per unit quantity would decrease. The allowance for overheads in the
rates would need to be reconsidered. Any re-rating under Clause 52.2 would be taken into account when
considering Clause 52.3. The Guide to the Fourth Edition published by FIDIC gives useful guidance and
examples at pages 115 and 117.
Free haulage
Question
My inquiry is: are their any guidlines for maximum FREE HAULAGE distance ... for the TERM BORROW
materials to be engaged in EMBANKMENT CONSTRUCTION .... sinilarly....what free distance limits are
set/provided in FIDIC for any transportation of material .... from BORROW, from the site of e.g., asphalt mixing
or concrete mixing plant to the site of accomodating the finished product in the road construction projects.
Answer
The FIDIC Conditions of Contract give the legal rights and obligations of the Parties to the Contract. Matters
such as the maximum free haulage distance will depend on the requirements and details of the project. They
will vary for different projects and should be given in the technical specifications and/or bills of quantities.
Enforcing a claim
Question
I am requesting an interpretation of Clause 63.2 and 63.3 of the FIDIC Red Book, 4th Edition. a) When a
Contractor has sums due to it arising out of a valuation under Clause 63.2 at the time of termination, and the
Employer/ Engineer delays certification of possible claims under Clause 63.3, how does FIDIC envisage that
the terminated Contractor may enforce its claim/obtain those sums certified by the Engineer as being due to it?
b) Once a new contractor has been engaged, is the date scheduled for completion under the new contract
relevant, and when is the new contractor liable for further delays to the completion date? c) Is there a duty on
the Employer or Engineer to inform the first Contractor that the project has been completed? When the defects
liability period is over? d) Is there a duty on the Employer/Engineer to issue a certificate in accordance with
Clause 63.3 within a reasonable time? What may be considered a reasonable period for issuing such a
certificate? e) What are the possibilities for a Contractor to obtain the monies due under Clause 63.2 if the
Engineer fails to issue a certificate under Clause 63.3.?
Answer
This is really a legal question, but the key seems to be that the first sentence of Clause 67.1 says that it
continues after termination. A few additional comments may be helpful. One assumes the enquiry is referring to
the Fourth Edition, amended 1992, without any significant amendments. Matters arising from termination under
Clause 63.1 will depend on the provisions of the applicable law as well as FIDIC Contract Clauses. Most legal
systems include requirements for the termination of a contract and also contain provisions based on the
concept of "good faith" which may be applicable. Any comments based on the FIDIC Contract must be
reviewed in relation to the applicable law, but some general comments may be helpful. a) Clause 67.1, first
sentence, says that it continues after termination. b) Clause 63.1 enables the Employer to "terminate the
employment of the Contractor". The Clause is clear that this does not release the Contractor from any of his
obligations or liabilities. So does the law require that the Employer also is not released from his obligations? If
so then other Clauses will also be relevant. c) The new contractor is presumably liable for delays which he
causes and which are not attributable to the previous contractor. d) Clause 1.5, final sentence, requires that
any consent, approval, certificate or determination shall not unreasonably be withheld or delayed. e) Clauses
60.6 and 60.8 give time periods for the Contractor's Final Statement and the Engineer's Final Payment
Certificate. Clause 63.3 requires the Engineer to issue a certificate, without stating a time period. By reference
to Clause 1.5, this must be issued in a reasonable time. Reasonable might be based on the Clause 60.6 and
60.8 time periods unless there are special circumstances. f) It certainly seems necessary for the Contractor to
be informed, or his questions to be answered, in order that he knows when the construction and Defects
Liability Periods are completed. g) The Contractor's rights and procedures for obtaining payment are covered
by Clause 67 and the applicable law.
New rate or price

Question
We are a consulting firm providing Contract Administration Services to Contractors in Pakistan. While seeking
assistance from the FIDIC website FAQ Section, we have come across the advice upon Sub-Clause 52.2 of
Red Book 4th Edtion Conditions of Contract Part II stating therein that: the rate which the Engineer agrees or
fixes under Sub-Clause 52.2 would only apply to the varied quantity (increased or decreased). The original
quantity is not part of the Variation and would be paid at the original rate. The rationale being used in
construing the Sub-Clause 52.2 in terms that the Revised Rates under Sub-Clause 52.2 will be applied to the
varied quantity only has created much confusion in some of the on-going projects with the National Highway
Authority, Pakistan. As per the advice of FIDIC Secretariat FAQ Section, if for instance, a Contractor's original
BOQ work increases from 100m3 to 140m3 , then he shall be paid for 100m3 as per original rates and for the
remaining 40m3, revised rates shall be applicable. If we apply the same logic in a case where the Contractor's
original BOQ work decreases from 100m3 to 60m3, then he shall be paid for 100m3 as per original quantity of
work. Whereas, for the decreased quantity, he should be paid at the revised rates (although he shall be
actually executing 60m3 work.). The same is true for the case when total executed quantity exceeds by more
than 30% and the new rate shall be applicable to the total executed quantity. The same Clause cannot be
construed differently. If this does not happen, then it shall cause prejudice to the interest of the Contractor.
Answer
Under Sub-Clause 52.2, the Engineer only fixes a new rate or price when the BOQ rate or price has become
inappropriate or inapplicable for a particular Variation. In fixing the new rate or price he will consider the
reasons why the original rate or price should be changed. He will not fix a new rate or price until he knows
whether it involves an increase or decrease in quantity. The new rate or price will probably be different for a
decrease to that for an increase. It may be different for a large increase to a small increase. The anomalies
which you mention should not occur because the Engineer will have considered these situations before he fixes
the new rate or price.
New BoQ rates

Question
A contract was drawn up for a specific length of highway. Re-alignment was required which increased the
length by a few kilometers. Should this additional work be included in a variation order as per Clause 51 or
should a seperate contract be floated. The contractor is asking for single variation order with two different
refixed rates (for the same item of BoQ ), one for the variation in the original work and second for the additional
work. I differ with his views. I feel that if one variation order is considered for the whole work then only only one
refixed rate for varied quantity can be given. I require your advice on this issue.
Answer
If both the change to the original work and the additional work came from the same change of requirement and
instruction then it would be usual to issue a single variation order. However, it is also quite normal for the price
calculations for a variation order to include different rates for the same BoQ item. The contractor's costs and
the reasons why the BoQ rates are inappropriate may be different for the varied work and for the additional
work. It is then fairer and more transparent, to the benefit of both parties, to negotiate different new rates.
New variation order

Question
A contract was drawn for a specific length of highway. Re-alignment was required which increased the length
by few kilometers.should this additional work be included in a variation order as per Clause 51 or should a
seperate contract be floated. The contractor is asking for single variation order with two different refixed rates
(for same item of BoQ),one for the variation in the original work and second for the additional work. I differ with
his views. I feel that if one variation order is considered for the whole work then only only one refixed rate for
varied quantity can be given.irequire your advice on this issue.
Answer
If both the change to the original work and the additional work came from the same change of requirement and
instruction then it would be usual to issue a single variation order. However, it is also quite normal for the price
calculations for a variation order to include different rates for the same BoQ item. The contractor's costs and
the reasons why the BoQ rates are inappropriate may be different for the varied work and for the additional
work. It is then fairer and more transparent, to the benefit of both parties, to negotiate different new rates.
Instructions to vary the Works

Question
We are executing a construction works project (18-floor tower), now there is an addition of two more floors. I
would like to know ... this addition would be dealt as a variation or separate contract required, where we will
have the liberty to revise the price, since this two floor's addition is less than the 25 percent of the contract
value, hence we dont have right to increase the price, incease if we deal it by variation. please clarify.
Answer
Clause 51.1 allows the Engineer to issue instructions to vary the Works. Your question is whether the additional
two floors are just a change to the quantity of the work which is included in the Contract, as Clause 51.1(a), or
are outside the scope of the Works, which should be defined in the Contract. The answer to your question
therefore depends on the exact wording of the Contract Agreement, the other contract documents and perhaps
also the Tender Documents. It will also depend on the interpretation of this wording in accordance with the
applicable law. This is not something which FIDIC can answer and you should obtain specialist advice.
Fixing of a new rate (Red4: 52.2)

Question
We requested for the clarification regarding replies to a couple of questions which appear at the FAQ Section of
FIDIC website. Reply to the first question illustrates that under Sub Clause 52.2, Engineer may fix a new rate or
a price if the BOQ rate becomes inappropriate or inapplicable for a particular variation, keeping in view the
reasons for the change. In reply to the second question, FIDIC says that the original quantity is not a part of
the variation and cannot be paid at the revised rate. Replies to the questions as noted above are contradictory
to each other and we think that the matter should further be clarified. Our elaborate note, which was submitted
to this effect constitutes of our understanding of the Clause 52.2 of the Red Book 4th Edition. The definition of
the varied work trickles to the Clause 52.2 from the Clause 51.1, which gives the definition/scope of the varied
work as following: (a) increase or decrease the quantity of any work included in the Contract, (b) omit any such
work (but not if the omitted works is to be carried out by the Employer or by another contractor), (c) change the
character or quality or kind of any such work, (d) change the levels, lines, position and dimensions of ay part of
the Works, (e) execute additional work of any kind necessary for the completion of the Works, (f) change any
specified sequence or timing of construction of any part of the Works. The given definition thus holds that the
varied work may not essentially comprise of only the change in the quantity of certain item included in the
contract. Varied work may also arise out of the virtue of other reasons as noted above. Hence, restricting the
definition of variation only to the change in quantity may not be appropriate. The reply given at the FIDIC
website to the first question, as has been referred above, seems to hold the same view by the virtue of which
the decision to this effect has been left to the Engineer. However, the reply to the second question forwards
rather a restrictive interpretation of the Clause 52.2 by saying that a new rate would apply only to the
increased/decreased quantity. Such an interpretation falls in contradiction to the definition of the varied work as
well as the open ended spirit of the FIDIC Document in general and that of the Clause 52.2, read in conjunction
with the Clauses 51.1, 51.2 and 52.1 there-before, as well as that of the Clauses 52.3 and 52.4 thereafter. .....
FIDIC's initial reply: FIDIC can only comment in general terms on the interpretation of a FIDIC clause. If you
require a more detailed opinion on the application of a clause to a particular problem situation then you should
consult a specialist. The examples in your letter illustrate the wide range of situations which may arise on a
project and result in the application of Clause 52.2. For this reason, the clause cannot restrict the Engineer in
the way he calculates a new rate. The Engineer is aware of the exact situation and so can make the
appropriate decision to suit the wording and application of the Variation. A Variation normally, but not always,
only applies to work which has not yet been executed. If somew ork has already been carried out on the same
basis as was envisaged for the original bill rate then that work would normally be valued at the bill rate.
However a particular Variation, such as a decrease in quantity,may be worded in such a way as to require a
different approach. ........ Your reply also narrates that our understanding of the issue falls closely to a certain
project specific legal opinion. We believe that such a concurrence on the matter has become evident only
because of the proper understanding of the rationale. This particularly holds when we also consider the
possibility of variation because of the decrease in the quantity of certain items of work. No logic would allow
that the decreased quantity which is not executed may be paid at some revised rate fixed by the Engineer. The
revised rate would certainly apply to the quantity executed. The rationale thus demands the same treatment for
fixing of the rate by the Engineer in case of variation in the quantity of certain items of the work because of an
increase, giving an obvious reason of our understanding of the matter in line with the legal opinion in the similar
context. Your reply dated 7th June 2007 further seems to acknowledge that the exact situation under such a
case may only be determined by the Engineer through an appropriate decision, as has been provided under
the spirit of the FIDIC Document. However, the comments thereafter, once again seem to restrict the definition
of variation. So, to continue: regarding fixing of a new rate (Red4: 52.2) Regarding our query regarding rerating of the varied quantity. We seek the clarification regarding the opinion of FIDIC on re-rating of the varied
quantity, as shown in the FAQ Section of the FIDIC website. Our debate/discussion as appended with our
query is only meant to express our understanding that the Sub-Clause 52.2 only talks of the "varied work" and
not the "varied quantity", which, however, remains subservient to the definition of "varied work". The actual
intention of our query thus remains to seek the clarification in light of the Sub-Clause 52.2 of Civil Works
contract 4th Edition, 1987. To this effect, it may be deemed appropriate that the writers of this particular clause
or the related backup material may be consulted so that the ambiguity or the confusion, as has arisen regarding
the varied work through the opinion of FIDIC in the FAQ section, may be removed and the prestige of the
organization like FIDIC, which is considered as an apex body in contract administration, would be maintained.
Answer
Thank you for your more detailed explanation of your query. Our replies to previous questions were in response
to particular questions, whereas your question is rather different. You are, of course, correct that Variations
under Sub-Clause 52.1 can cover a wide range of situations, including changes to the nature as well as to the
quantity of an item of work. For this reason, Sub-Clause 52.2 must be general to cover the wide range of
potential situations. It is then for the Engineer to assess the particular situation and to agree or fix an
appropriate rate. In deciding the quantum, and also the application, of this rate the Engineer would take into
account the consequences of a change in nature as well as a change in quantity. You should also note the
explanatory remarks in the FIDIC Guide to the use of the FIDIC Conditions of Contract for Works of Civil
Engineering Construction. Sub-Clauses 52.1 and 52.2 are reviewed at pages 114 and 115 of the Guide and
include the statement: If the nature or amount of the work involved differs so much from that included in the
original Contract that the rates and prices are rendered inapplicable, it is the Engineer's task to agree
appropriate rates and prices with the Contractor, or, if agreement cannot be reached, to fix the rates and
prices. We trust this further explanation will answer your query. Any further comments would require details of
the specific contract and problem, which FIDIC could not consider.
Undue delay for claims

Question
Can you please identify what is meant by "without undue delay" under Red Book 4th Edition clause 44.3
considering that the Contractor and the Engineer have mutually agreed, under cl. 44.2(b), to submit detailed
particulars every first week of the month and noting that every month the contractor is submitting the same.
What is the duration needed by engineer to provide his interim/final determination of extension of time claims
under this clause?
Answer
Your question refers to Sub-Clause 44.3 in the Red Book, Fourth Edition 1987. Sub-Clause 44.2 has imposed
time limits for the submission of information by the Contractor, which you say have been agreed. FIDIC does
not impose a time limit on the Engineer because the actual time needed for him to make his determination will
depend on the circumstances and the details in the information provided by the Contractor. However the
"without undue delay" emphasises the need for the determination to be made as soon as possible. Sub-Clause
1.5 also requires that any determination "shall not unreasonably be withheld or delayed". This gives the
Contractor the opportunity to raise a query if he needs the determination in order to plan his work.
Payment on a Clause 63.2 valuation

Question
Concerning Clause 63.2 and 63.3 of the FIDIC Red Book 4th Edition . The Contract was terminated by the
Employer pursuant to Clause 63.1 (this is undisputed). It was agreed that the additional costs to the Employer
of executing the works by an alternative contractor has to be deducted from the value of the works executed by
the first Contractor. The wording of Clauses 63.2 and 63.3 was not changed or amended. Contractor now
requests a payment from the Employer calculated pursuant to a Clause 63.2 valuation. In addition Contractor
states that the whole of the Works has not completed and, therefore, the Defects Liability Period has not
expired, which is a precedent to any certification of Employer's costs under Clause 63.3. Therefore, an
Employer's application for Clause 63.3 costs is premature, cannot be considered and Contractor is entitled to
request a payment based on the calculated Clause 63.2 valuation without any deduction pursuant to Clause
63.3. a) Is a contractor entitled to ask for a payment based on a Clause 63.2 valuation, since an employer is
not obliged to make any further payment until the expiration of the Defects Liability Period? b) Is it correct to
interpret that Contractor's request for payment based on Clause 63.2 is not (currently) justified also in cases,
where a completion of the project was delayed due to circumstances caused by an alternative contractor or the
employer, if the terminated and requesting Contractor itself has formally and explicit pleaded that the whole
project is not completed without complaining the delay of completing the project caused by the alternative
contractor or the employer? c) Can the Contractor simultaneously refer to and request a Clause 63.2 calculated
claim and reject (alleged) unmatured Employer's Clause 63.3 costs, if both clauses were agreed?
Answer
This is a complex technical/legal question arising from a specific request by the Contractor on your project.
FIDIC can only answer general questions of interpretation and cannot comment on specific requests or claims.
The FIDIC Guide to the Fourth Edition states at page 146 for Sub-Clause 63.3: "If the Employer terminates the
Contractor's employment, he is not liable to pay the Contractor any further amounts (including damages) until
the expiration of the Defects Liability Period and the certification by the Engineer of the cost of execution and
remedying of any defects, damages for delay in completion (if any) and other expenses incurred by the
Employer as a result of the Contractor's default."
When is payment made

Question
We are seeking a defintion as to when payment is actually made by the employer to the contractor. Is it when
the employer issues his payment instruction to his bank, or is payment deemed to be made once the monies
are received in the contractor's bank account. Are there FIDIC guidelines on this matter?
Answer
your query is really a general legal question about when a payment is "made", rather than a question of
interpretation of a FIDIC contract. The answer may be different under different jurisdictions. You should consult
a lawyer with experience of the applicable law.
Statutory declaration
Question
My firm is executing a Contract with FIDIC terms and conditions and I require a Statutory Declaration document
for international use (Project location is Madagascar). Can you please advise where I can find this in your
documentation, or better yet can you e mail me the appropriate document.
Answer
Your Statutory Declaration would seem to conflict with the principles of the FIDIC Contracts. Progress
payments are referred to as 'interim', which suggests that they are provisional and not final. EPCT Sub-Clause
14.6 allows the Employer to make corrections or modifications to previous amounts considered due, which
suggests that the Contractor can request modifications to a previous valuation. It is only the requirement for the
Application for the Final Payment, as Sub-Clause 14.11, which uses words indicating finality. The Contractor
then confirms the finality by his Discharge, as Sub-Clause 14.12. The equivalent provision in the 1987 Red
Book was Sub-Clause 60.7. The Standard Letter for that Sub-Clause merely repeated the wording of the SubClause. However, this was a contractual letter and not a Statutory Declaration. A Statutory Declaration will
presumably be issued by the Government and will depend on the requirements of the applicable law, which will
vary for different countries.
Final and binding DAB decision

Question
In the 1992 reprinted version of the 1987 FIDIC Conditions as well as in the 1999 FIDIC Conditions it is, in the
relevant DAB Clauses, stated that the Contractor, Employer and Engineer shall give effect forewith to every
decision of the Board unless and until the decision is revised in an amicable settlement or an arbitrational
award. On the other hand it is stated that a Board decision becomes FINAL and BINDING unless either party
gives a notice of dissatisfaction within 28 days after receiving the Board decision. A very basic legal principle is
that only final and binding decisions are enforceable. Are the FIDIC conditions really based on the very
unusual principle that the Employer has, on basis of un unbinding Board decision, to pay to the Contractor a
compensation with the consequence of running the risk of never being able to recover the paid amount from a
foreign contractor when the revised arbitration award is issued (long) after the completion of the works. Please
clarify whether the Employer has to pay a monetary compensation on basis of a Board decision, which is NOT
FINAL AND BINDING.
Answer
Sub-Clause 20.4 of the 1999 Contracts is clear that both parties shall promptly give effect to the DAB Decision.
The Employer must pay any sum awarded to the Contractor although the sum to be paid may be changed by a
later amicable settlement or arbitration. If a Notice of Dissatisfaction has been issued then the dispute, not the
DAB decision, may be reopened and finally determined by the Arbitral Tribunal. The sum to be paid may then
be increased, or decreased, and additional money may need to be paid, or money may need to be repaid. An
Arbitral Award, including such further payment or repayment, would be Final and Binding and would be covered
by arbitration law and the New York Convention. It is normal practice that a DAB or Adjudicator's Decision is
Binding and so must be paid, but is not Final and so may be changed in this way. If no Notice of Dissatisfaction
has been issued then the DAB Decision becomes Final as well as Binding and the dispute cannot be
reopened.
Lump sum calculation

Question
Can you please advise how to calculate the lump sum to be added or dedcuted to the contract price when the
effective contract price execceds 15%. In addition, please advise on when do we deduct, and when do we add
such amount.
Answer
Commentary at page 117 of the FIDIC Guide to the 4th Edition is recommended. The Guide explains that
some of the Contractor's overhead costs are included in the rates for items of work and others are included in
separate items in the Bill of Quantities. Changes to the actual quantities may mean that the overhead content
of items which have paid is not appropriate to the actual overhead costs incurred by the Contractor. In order to
calculate any adjustment the Engineer will need to obtain information from the Contractor, or would have to
make his own assessment. Any calculation must take into account any adjustment which has already been
made under another Sub-Clause and only applies to any increase or decrease in excess of 15% of the
Effective Contract price. The Sub-Clause starts with a reference to the situation "on the issue of the TakingOver Certificate for the whole of the Works". It is also necessary for the value of variations and other
adjustments to have been agreed in order to make the Sub-Clause 52.3 calculations. Any additional payment
or deduction would then be made in the next payment certificate after the figures have been agreed or
determined.
New rate for an increased quantity

Question
I am "The Engineer" for a road construction project. A difference of opinion has arisen on the applicability of
new rates fixed by the Engineer on the quantities, i.e whether the new rate will be applicable only on the
enhanced quantity beyond the original BoQ quantity, Oor it shall apply on the entire quantity. To explain this
further, the BoQ quantity for piles was 2000 cu m. The designer increased the number of piles so that the
quantity became 3000 cu m. The Engineer fixed a new rate for pile work from X to Y. Will Y rate be applicable
to enhanced quantity of 1000 cu m , or should it apply to 3000 cu m?
Answer
FIDIC can only comment in general terms on the interpretation of a FIDIC clauses, and it should be noted that
for the application of a clause to a particular problem situation, one should always consult a specialist. With that
being said, in general, Sub-Clause 52.2 gives the power to the Engineer to fix new rates and states the
conditions when such new rates may be fixed, but Sub-Clause 52.2 does not indicate a calculation method or
the applicability for new rates. The reason for this is because Sub-Clause 52.2 must allow for covering a wide
range of potential situations. So, although it is true that revised rates are normally only applicable to the
additional quantity, it is for the Engineer to assess the particular situation and circumstances surrounding, and
to take all factors into consideration in making his determination regarding the quantum and applicability of the
new rates fixed under Sub-Clause52.2. For reference, see page 127-128 of the FIDIC Red Book Guide to the
use of the FIDIC Conditions of Contract for Works of Civil Engineering Construction, and please note that the
above represents a general answer only, and specific advice to the particular facts surrounding your situation,
we recommend that you consult a specialist.
Privacy policy
Copyright
General Conditions
Contact
FIDIC World Trade Center II Geneva Airport Box 311 29 route de Prs-Bois CH-1215 Geneva 15 Tel +41-22-799 49 00 Fax +41-22-799 49 01 Email fidic@fidic.org

Contracts: Basic Questions Question/Answer: Remeasurement Modified To Lump Sum

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Contracts: Basic Questions Question/Answer: Remeasurement Modified To Lump Sum

Uploaded by

Copyright:

Available Formats

Contracts: basic questions Question/Answer | International Federation of Consulting Engineers