FIDIC® Conditions of Contract for

EPC/TURNKEY PROJECTS

Guidance for The Preparation of

Particular Conditions
 Guidance
for the Preparation of Particular Conditions

CONTENTS
INTRODUCTORY GUIDANCE NOTES..................................................................................... 2
CONTRACT DATA .............................................................................................................. 3
INTRODUCTION .............................................................................................................. 8
NOTES ON THE PREPARATION OF TENDER DOCUMENTS...............................................10
NOTES ON THE PREPARATION OF SPECIAL PROVISIONS...............................................13

1 General Provisions.............................................................................. 14

2 The Employer...................................................................................... 18

3 The Employer’s Administration............................................................ 20

4 The Contractor..................................................................................... 22

5 Design................................................................................................. 29

6 Staff and Labour.................................................................................. 30

7 Plant, Materials and Workmanship...................................................... 34

8 Commencement, Delays and Suspension........................................... 35

9 Tests on Completion............................................................................ 36

10 Employer’s Taking Over...................................................................... 36

11 Defects after Taking Over.................................................................... 37

12 Tests after Completion......................................................................... 37

13 Variations and Adjustments................................................................. 38

14 Contract Price and Payment................................................................ 40

15 Termination by Employer..................................................................... 47

16 Suspension and Termination by Contractor......................................... 48

17 Care of the Works and Indemnities..................................................... 48

18 Exceptional Events.............................................................................. 49

19 Insurance............................................................................................. 49

20 Employer’s and Contractor’s Claims.................................................... 50

21 Disputes and Arbitration.......................................................................50

ADVISORY NOTES TO USERS OF FIDIC CONTRACTS WHERE THE PROJECT USES BUILDING
INFORMATION MODELLING SYSTEMS.................................................................................55

ANNEXES FORMS OF SECURITY 58

Particular Conditions Part A – Contract Data

INTRODUCTORY GUIDANCE NOTES

These Introductory Guidance Notes are for use in completing the Contract Data and shall not form part
of the Contract Data.

Certain Sub-Clauses in the General Conditions require that specific information is provided in the
Contract Data.

The Employer should amend as appropriate and complete all data and should insert “Not Applicable”
in the space next to any Sub-Clause which the Employer does not wish to use.

The Employer should insert “Tenderer to Complete” in the space next to any Sub-Clause which the
Employer wishes Contract Data to be completed by the tenderers. Except where indicated “Tenderer
to Complete” tenderers shall not amend the Contract Data as provided by the Employer.

All italicised text and any enclosing square brackets are for use in preparing the Contract Data and
should be deleted from the final version of the Contract Data.

Failure by the Employer to provide the information and details required in the Contract Data could
mean either that the documents forming the Contract are incomplete with vital information missing, or
that the fall-back provisions to be found in some of the Sub-Clauses in the General Conditions will
automatically take effect.

In the case of EPC / Turnkey contracts the Parties usually negotiate many elements of the Contract
Documents including the Contract Data, and then execute (sign) the Contract Agreement. Thus, the
users of the FIDIC EPC / Turnkey form of contract shall make sure that each entry (or absence of an
entry) in the Contract Data is agreed by both Parties.
CONTRACT DATA
Sub-Clause Data to be given Data

1.1.17 where the Contract allows for Cost Plus Profit,

percentage profit to be added to the Cost: ________%

1.1.24 Defects Notification Period (DNP): ________days

1.1.30 The Employer’s Representative:

1.1.77 Time for Completion: ________days

1.3 (a)(ii) agreed methods of electronic transmission:

1.3(d) address of Employer for communications:

1.3(d) address of Employer’s Representative for

communications:

1.3(d) address of Contractor for communications:

1.4 Contract shall be governed by the law of:

1.4 ruling language:

1.4 language for communications:

1.8 number of additional paper copies of Contractor’s

Documents

1.14 total liability of the Contractor to the Employer under

or in connection with the Contract ________(sum)

2.1 After the Contract comes into full force and effect, the
Contractor shall be given right of access to all or part
of the Site within ________days
2.4 Employer’s financial arrangements

4.2 Performance Security (as percentages of the Contract

Price in Currencies):
percent ________%
currency
percent ________%
currency

4.4(a) maximum allowable accumulated value of work

subcontracted (as a percentage of the Contract ________%
Price):

4.4(b) parts of the Works for which subcontracting is not

permitted

4.4
(i) Subcontractors for which the Contractor shall give
Notice before appointment ……………………..

(ii) Subcontractors for which the Contractor shall give

Notice before commencement of work ……..…

(iii) Subcontractors for which the Contractor shall give

Notice before commencement of work on Site

4.19 ________days
period of payment for temporary utilities
4.20
number of additional paper copies of progress reports
6.5
normal working hours on the Site
8.3
number of additional paper copies of programmes
8.8
Delay Damages payable for each day of delay
8.8
maximum amount of Delay Damages
13.4(b)(ii)
percentage rate to be applied to Provisional Sums for ________%
overhead charges and profit
14.2
total amount of Advance Payment (as a percentage of ________%
the final Contract Price)
14.2
currency or currencies of Advance Payment

14.2.3
percentage deductions for the repayment of the
Advance Payment
14.3 ________days
period of payment
14.3(b)
number of additional paper copies of Statements
14.3(iii) ________%
percentage of retention
14.3(iii)
limit of Retention Money (as a percentage of Contract ________%
Price)
14.5(b)(i)
Plant and Materials for payment when shipped
14.5(c)(i)
Plant and Materials for payment when delivered to the
Site
14.6.2
minimum amount of interim payment
14.7(b)(i)
period for the Employer to make interim payments to
the Contractor under Sub-Clause 14.6 [Interim ________days
Payment]
14.7(b)(ii)
period for the Employer to make interim payments to ________days
the Contractor under Sub-Clause 14.13 [Final
14.7(c) Payment]
________days
period for the Employer to make final payment to the
14.8 Contractor

financing charges for delayed payment (percentage ________%

points above the average bank short–term lending
14.11.1(b) rate as referred to under sub-paragraph (a))

number of additional paper copies of draft Final

14.15 Statement

currencies for payment of Contract Price

14.15(a)(i)

proportions or amounts of Local and Foreign

Currencies are:
Local
14.15(c) Foreign

Currencies and proportions for payment of Delay

Damages
14.15(g)

17.2(g) rates of exchange

forces of nature, the risks of which are allocated to the

19.1 Contractor

permitted deductible limits:

insurance required for the Works
insurance required for Goods
insurance required for liability for breach of
professional duty
insurance required against liability for fitness for
purpose (if any is required)
insurance required for injury to persons and
damage to property
insurance required for injury to employees

other insurances required by Laws and by local

practice:

19.2(1)(b)
________%
additional amount to be insured (as a percentage of
19.2(1)(iv) the replacement value, if less or more than 15%)

list of Exceptional Risks which shall not be excluded

from the insurance cover for the Works

19.2.2

extent of insurance required for Goods

19.2.3(a) amount of insurance required for Goods

amount of insurance required for liability for breach of

19.2.3(b) professional duty yes / no
(delete as
insurance required against liability for fitness for appropriate)
19.2.3 purpose

period of insurance required for liability for breach of

professional duty
 19.2.4

amount of insurance required for injury to persons and

19.2.6 damage to property

other insurances required by Laws and by local

21.1 practice (give details)
________days
21.1 time for appointment of DAAB
________members
21.1 the DAAB shall comprise

list of proposed members of DAAB 1.

- proposed by Employer 2.
3.

1.
- proposed by Contractor 2.
3.
21.2

Appointing entity (official) for DAAB members

(Unless otherwise
stated here, it shall
be the President of
FIDIC or a person
appointed by the
President)

Definition of Sections (if any):

Description of parts of the Works Value: Percentage* Time for Delay
that shall be designated a of Contract Price Completion Damages
Section for the purposes of the (Sub-Clause 14.9) (Sub-Clause (Sub-Clause
Contract 1.1.76) 8.8)
(Sub-Clause 1.1.66)

* These percentages shall also be applied to each half of the Retention Money under Sub-Clause 14.9.
Particular Conditions Part B – Special Provisions

INTRODUCTION

The terms of the Conditions of Contract for EPC/Turnkey Projects have been prepared by the
Fédération Internationale des Ingénieurs-Conseils (FIDIC) and are recommended where one entity
takes total responsibility for an engineering project, including design, manufacture, delivery and
installation of Plant, and for the design and execution of building or engineering works, and where
tenders are invited on an international basis.

Modifications to the General Conditions may well be required to account for local legal requirements,
particularly if they are to be used on domestic contracts.

Turnkey projects generally require some negotiation between the parties during the tender stage of the
project. Having studied the variety of options offered by tenderers, the Employer may consider it
essential to meet and discuss with them the technical and commercial options which the Employer
considers preferable. Under the usual arrangements for this type of contract, the Contractor carries out
the Engineering, Procurement and Construction, and provides a fully-equipped facility, ready for
operation (at the “turn of the key”).

These Conditions allow for the possibility that the Employer may include (in the Employer’s
Requirements) an outline design for the Works, but they are not intended for use where the Contractor
is to construct the Works in accordance with a detailed design by the Employer. In this latter case, it is
recommended that the Employer consider using FIDIC’s Conditions of Contract for Construction,
Second Edition 2017.

The guidance hereafter is intended to assist drafters of the Special Provisions (Particular Conditions –
Part B) by giving options for various sub-clauses where appropriate. In some cases example wording
is included between lines, while in other instances only an aide-memoire is given.

FIDIC strongly recommends that the Employer, the Contractor and all drafters of the Special
Provisions take all due regard of the five FIDIC Golden Principles:

GP1: The duties, rights, obligations, roles and responsibilities of all the Contract Participants
must be generally as implied in the General Conditions, and appropriate to the
requirements of the project.

GP2: The Particular Conditions must be drafted clearly and unambiguously.

GP3: The Particular Conditions must not change the balance of risk/reward allocation
provided for in the General Conditions.

GP4: All time periods specified in the Contract for Contract Participants to perform their
obligations must be of reasonable duration.

GP5: All formal disputes must be referred to a Dispute Avoidance/Adjudication Board (or a
Dispute Adjudication Board, if applicable) for a provisionally binding decision as a
condition precedent to arbitration.
 These FIDIC golden principles are described and explained in the publication FIDIC’s Golden
Principles (http://http://fidic.org/bookshop †), and are necessary to ensure that modifications to
the General Conditions:
- are limited to those necessary for the particular features of the Site and the project, and
necessary to comply with the applicable law; and
- the Contract remains recognisable as a FIDIC contract.

Before incorporating any new or changed sub-clauses, the wording must be carefully checked to
ensure that it is wholly suitable for the particular circumstances. Unless it is considered suitable,
example wording should be amended before use.

Where any amendments or additions are made to the General Conditions, great care must be taken to
ensure that the wording does not unintentionally alter the meaning of other clauses in the Conditions
of Contract, does not inadvertently change the obligations assigned to the Parties or the balance of
risks shared between them and/or does not create any ambiguity or misunderstanding in the rest of
the Contract documents.

Each time period stated in the General Conditions is what FIDIC believes is reasonable, realistic and
achievable in the context of the obligation to which it refers, and reflects the appropriate balance
between the interests of the Party required to perform the obligation, and the interests of the other
Party whose rights are dependent on the performance of that obligation. If consideration is given to
changing any such stated time period in the Special Provisions (Particular Conditions – Part B), care
should be taken to ensure that the amended time period remains reasonable, realistic and achievable
in the particular circumstances.

There are a number of Sub-Clauses in the General Conditions which require data to be provided by
the Employer and/or the Contractor and inserted into the Contract Data (Particular Conditions – Part
A). However, there are no Sub-Clauses in the General Conditions which require data or information to
be included in the Special Provisions (Particular Conditions – Part B).

Provisions found in the Contract documents under Special Provisions (Particular Conditions – Part B)
indicate that the General Conditions have been amended or supplemented.

In describing the Conditions of Contract in the tender documents, the following text can be used:

“The Conditions of Contract comprise the “General Conditions”, which form part of the
“Conditions of Contract for EPC/Turnkey Projects “ Second Edition 2017 published by the
Fédération Internationale des Ingénieurs-Conseils (FIDIC), the Contract Data (Particular
Conditions – Part A) and the following “Special Provisions” (Particular Conditions – Part B),
which include amendments and additions to such General Conditions.”

The provisions of the Special Provisions (Particular Conditions – Part B) will always over-rule and
supersede the equivalent provisions in the General Conditions, and it is important that the changes are
easily identifiable by using the same clause numbers and titles as appear in the General Conditions.
Furthermore, it is necessary to add a statement in the tender documents for a contract that:

“The provisions to be found in the Special Provisions (Particular Conditions – Part B) take
precedence over the equivalent provisions found under the same Sub-Clause number(s) in
the General Conditions, and the provisions of the Contract Data (Particular Conditions –
Part A) take precedence over the Special Provisions (Particular Conditions – Part B).”
†
Please Note: all web links referred to in these guidance notes are up-to-date as of the date of this
publication but it is recommended that users of these guidance notes check online, at the time that
they wish to reference the relevant document, for the most up-to-date version of the document.

NOTES ON THE PREPARATION OF TENDER DOCUMENTS

When preparing the tender documents and planning the tender process, Employers should read the
publication FIDIC Procurement Procedures Guide 1st edition 2011 (http://fidic.org/books/fidic-
procurement-procedures-guide-1st-ed-2011) which presents a systematic approach to the
procurement of engineering and building works for projects of all sizes and complexity, and gives
invaluable help and advice on the contents of the tender documents, and the procedures for receiving
and evaluating tenders. This publication provides internationally acceptable, comprehensive, best
practice procedures designed to increase the probability of receiving responsive, clear and competitive
tenders using FIDIC forms of contract. FIDIC intends to update the FIDIC Procurement Procedures
Guide (planned for publication at a later date) to make specific reference to these Conditions of
Contract for EPC/Turnkey Projects, Second Edition 2017.

The tender documents should be prepared by suitably qualified engineers who are familiar with the
technical aspects of the required works and the particular requirements and contractual provisions of a
design-build project. Furthermore, a review by suitably-qualified lawyers is advisable.

The tender documents issued to tenderers should normally include the following:
- Letter of invitation to tender
- Instructions to Tenderers (including advice on any matters which the Employer wishes
tenderers to include in their Tenders but which do not form part of the Employer’s
Requirements)
- Form of Letter of Tender and required appendices (if any)
- Conditions of Contract: General and Particular
- General information and data
- Technical information and data (including the data referred to in Sub-Clause 2.5 [Site Data
and Items of Reference] of the General Conditions)
- the Employer’s Requirements
- Schedules (and perhaps drawings of outline design) from the Employer
- details of schedules and drawings and other information required from tenderers
- required forms of agreement, securities and guarantees.

The publication FIDIC Procurement Procedures Guide referred to above provides useful guidance as
to the content and format of each of the above.

For this type of contract where the Works are normally valued on a lump sum basis, the Schedules
may include a Schedule of Payments (as referred to under Sub-Clause 14.4 [Schedule of Payments]
in the General Conditions). A Daywork Schedule may also be necessary to cover minor works to be
executed at cost. In addition, each of the tenderers should receive the data referred to in Sub-Clause
2.5 [Site Data and Items of Reference], and the lnstructions to Tenderers should advise them of any
special matters which the Employer wishes them to take into account when pricing the Works but
which are not to form part of the Contract.

When the Contract Agreement is signed by the Employer and the Contractor, the Contract (which then
comes into full force and effect) includes the completed Schedules.

The Employer’s Requirements should specify the particular requirements for the completed Works,
including functional requirements, quality and scope. If the Contractor is required to supply certain
items, such as consumables, these should be listed in a Schedule. Drafters of the Employer’s
Requirements must remember that if any matters are not referred to or covered, the Contractor may
well be relieved of any responsibility in respect of such matters.
The following Sub-Clauses make express reference to matters to be included in the Employer’s
Requirements. However, it may also be necessary under other Sub-Clauses for the Employer to give
specific information in the Employer’s Requirements (for example, under Sub-Clause 7.2 [Samples]).
1.8 Care and Supply of Documents
1.12 Compliance with Laws
2.1 Right of Access to the Site
2.5 Site Data and Items of Reference
2.6 Employer-Supplied Materials and Employer’s Equipment
4.1 Contractor’s General Obligations
4.5 Nominated Subcontractors
4.6 Co-operation
4.8 Health and Safety Obligations
4.9 Quality Management and Compliance Verification Systems
4.16 Transport of Goods
4.18 Protection of the Environment
4.19 Temporary Utilities
4.20 Progress Reports
5.1 General Design Obligations
5.2 Contractor’s Documents
5.4 Technical Standards and Regulations
5.5 Training
5.6 As-Built Records
5.7 Operation and Maintenance Manuals
6.1 Engagement of Staff and Labour
6.6 Facilities for Staff and Labour
6.7 Health and Safety of Personnel
6.12 Key Personnel
7.3 Inspection
7.4 Testing by the Contractor
7.8 Royalties
8.3 Programme
 9.1 Contractor’s Obligations
10.2 Taking Over of Parts of the Works
11.11 Clearance of Site
12.1 Procedure for Tests after Completion

Many Sub-Clauses in the General Conditions make reference to data being contained in the Contract
Data (Particular Conditions – Part A). This data must be provided in the tender documents, and these
Conditions of Contract assume that all such data will be provided by the Employer, except as
expressly noted in the example form of Contract Data included in this publication. If the Employer
requires tenderers to provide any of the other information required in the Contract Data, the tender
documents must make this clear.

If the Employer requires tenderers to provide additional data or information, a convenient way of doing
this is to provide a suitably worded questionnaire with the tender documents.

The Instructions to Tenderers may need to specify any constraints on the completion of the Contract
Data and/or Schedules, and/or specify the extent of other information which each tenderer is to include
with his/her Tender. If each tenderer is to produce a tender security and/or a parent company
guarantee, these requirements should be included in the Instructions to Tenderers: example forms are
included at the end of this publication.

The Instructions to Tenderers may require the tenderer to provide information on the matters referred
to in some or all of the following Sub-Clauses:
4.3 Contractor’s Representative
6.12 Key Personnel
19 Insurance

It is important for the Parties to understand which of the documents included in the tender dossier, and
which of the documents submitted by tenderers, will form part of the Contract and therefore have
continuing effect. For example, the Instructions to Tenderers are not, by definition, a part of the
Contract. They are simply instructions and information on the preparation and submission of the
tender, and they should not contain anything of a binding or contractual nature.

In many EPC/Turnkey Projects the contract includes fixtures, fittings and equipment and other similar
items. In this case, full consideration should be given to including in the Employer’s Requirements the
detailed requirements for these items, such as the extent to which the Works are to be fully equipped,
ready for operation, with spare parts and consumables provided for operation (for a specified period),
typically by the Employer. If the Contractor is required to operate the Works, either for a few months’
trial operation under sub-paragraph (c) of Sub-Clause 9.1 [Contractor’s Obligations] or for some years’
operation, this must also be specified and detailed in the Employer’s Requirements.

If tenderers are required to carry out any preliminary design or study for their proposals, the Employer
should bear in mind that tenderers are understandably often reluctant to incur great expense in the
preparation of tender designs. Therefore, when preparing the Instructions to Tenderers, thought
should be given as to the extent of detail which tenderers can realistically be expected to prepare and
include in their proposals. The extent of detail required should be clearly described in the Instructions
to Tenderers (it should be noted that there can be no description in the documents which will later
constitute the Contract, which only comes into full force and effect when the Contract Agreement has
been signed by the Contractor and the Employer). Employers should also consider remunerating
tenderers if, in order to provide a responsive Tender, they have to undertake studies or carry out
preliminary design work.

Finally, when planning the overall programme for the project, Employers must remember to allow a
realistic time for:
- tenderers to inspect the Site, to carry out any survey and sub-surface investigations, to
obtain all necessary information as to risks, contingencies and other circumstances which
may influence or affect the Works (as stated under Sub-Clause 4.12 [Unforeseeable
Difficulties]), and to scrutinise the Employer’s Requirements (as stated under Sub-Clause 5.1
[General Design Obligations]);
- tenderers to prepare and submit a responsive Tender (avoiding time that is either too short
which can reduce competition and result in inadequate submittals, or too long which can be
wasteful to all parties involved); and
- the review and evaluation of tenders and the award of the Contract to the successful
tenderer. This will be the minimum time which tenderers should be asked to hold their
tenders valid and open to acceptance.
NOTES ON THE PREPARATION OF SPECIAL PROVISIONS

It is very important that Employers (and all drafters of the Special Provisions) work with their
professional advisers to review specific terminology in the General Conditions for compliance and
consistency with accepted practice in the legal jurisdiction they are operating in.

For example:
• under a number of legal systems (notably in some common law jurisdictions) the term “gross
negligence” has no clear definition and, as such, is often avoided in legal documents; and
• under English law, the term “indemnity” or “indemnify” has a specific meaning, entitling the
indemnified party to recover certain losses that may not otherwise be recoverable at law. For
example, a Contractor’s indemnity may be construed to permit the Employer to recover
losses or damages that might otherwise be considered indirect or consequential, whereas for
some events which may arise both Parties’ losses or damages are intended to be limited by
Sub-Clause 1.14 [Limitation of Liability] to direct damages only.

The following references and examples show some of the Sub-Clauses in the General Conditions
which may need amending to suit the needs of the project or the requirements of the Employer. The
selected Sub-Clauses and the example wording are included as examples only. They also include, as
an aide-memoire, references to other documents such as the Employer’s Requirements and the
Contract Data, where particular issues may need to be addressed.

The selected Sub-Clauses do not necessarily require changing and the example wording may not suit
the needs of a particular project or Employer. It is the responsibility of the drafter of the Special
Provisions to ensure that the selection of the Sub-Clauses and the choice of wording is appropriate to
the project concerned.

Furthermore, there may be other Sub-Clauses, not mentioned below, which need to be amended.
Great care must be taken when amending the wording of Sub-Clauses from the General Conditions,
or adding new provisions, to ensure that the balance of obligations and rights of the Parties are not
unintentionally compromised.
Clause 1 General Provisions
Sub-Clause 1.1 Definitions

The opening words of Sub-Clause 1.1 mean that the definitions apply, not only to the Conditions
of Contract, but to all the documents of the Contract. Therefore, the Employer should take care
(particularly when drafting the Employer’s Requirements) and the Contractor should take care
(particularly when drafting the documents to be submitted with the Tender) to use terms in
accordance with those as defined in the definitions.

The defined term “Site”, under Sub-Clause 1.1.67, is used for a number of different purposes in
the General Conditions (for example: insurances and security) and so, if it is anticipated that any
item(s) of equipment, Plant, Materials and Temporary Works are to be located or stored in
places other than where the Permanent Works are to be executed, it is recommended that
consideration be given to specifying such places in the Contract (by the Employer in the
Employer’s Requirements and/or by the Contractor in documents to be submitted with the
Tender).
In general, changes should not be made to the definitions as this could have serious
consequences on the interpretation of the documents of the Contract, particularly the Conditions
of Contract.

However, there are limited circumstances where it may be desirable to amend some of the
definitions. For example:

1.1.2 the Base Date could be defined as a particular calendar date

1.1.37 one particular Foreign Currency may be required
1.1.44 a different currency may be required to be the contract Local Currency

Also, some of the defined terms in the General Conditions may not be appropriate and may
need changing or developing.

For example, if the extent of the Site crosses the border between two countries, it is
recommended that consideration be given to the following changes:

EXAMPLE 1.1.18

“ “Country” means either xxxxx or yyyyy depending on the location to

which the reference will apply.”

EXAMPLE 1.1.44

“ “Local Currency” means the currency of (insert name of Country) or (insert name of
Country).”

If it is necessary to introduce new terminology into the text of the Special Provisions, each term
should be carefully and properly defined, using a clear Sub-Clause numbering system for the
new/additional defined terms. It is recommended that the numbering of new definitions does not
interfere with the numbering as originally included in the General Conditions. For example:

EXAMPLE New definition B 1.1.x

“ “Safety Regulations” means the Employer’s safety regulations existing on the Site which the
Contractor is required to follow.”

In some jurisdictions, it may be advisable to add additional definitions to clarify certain

terms/expressions which appear in the General Conditons but are not defined. A typical
example might be:

EXAMPLE New definition B 1.1.’n’

“ “Gross Negligence” means any act or omission of a party which is contrary to the most
elementary rules of diligence which a conscientious employer or
contractor would have observed in similar circumstances, and/or
which show serious reckless disregard for the consequences of such
 act or omission. It involves materially more want of care than mere
inadvertence or simple negligence.”

Sub-Clause 1.2 Interpretation

In relation to the meaning of “consent” under sub-paragraph (g), it should be noted that this
does not mean “approve” or “approval” which, under some legal jurisdictions, may be
interpreted as accepting or acceptance that the requested matter is wholly satisfactory -
following which the requesting party may no longer have any responsibility or liability for it.

Sub-Clause 1.3 Notices and Other Communications

If Notices are only to be given in paper format by post, then consideration may be given to
increasing the particular timescales for Notices in the Conditions of Contract to allow extra days
for the Notice to be delivered to the recipient.

Sub-Clause 1.5 Priority of Documents

An order of precedence is usually necessary, in case a conflict is subsequently found between

the documents of the Contract.

If the Employer’s Requirements are to comprise a number of documents, it may be useful to

amend sub-paragraph (e) of this Sub-Clause 1.5 by adding an order of precedence between the
documents of the Employer’s Requirements.

If no order of precedence of any of the documents of the Contract is to be prescribed, this Sub-
Clause may be varied:

EXAMPLE Delete Sub-Clause 1.5 and substitute:

“The documents forming the Contract are to be taken as mutually explanatory of one another.
If an ambiguity or discrepancy is found, the priority shall be such as
may be accorded by the governing law. The Employer’s
Representative has authority to issue any instruction which he/she
considers necessary to resolve an ambiguity or discrepancy.”

Sub-Clause 1.6 Contract Agreement

It is important that the form of the Contract Agreement be included in the tender documents as
an annex to the Special Provisions: an example form is included at the end of this publication (in
the section “Sample Forms”).

If lengthy tender negotiations were necessary, it is recommended that consideration be given to

recording in the Contract Agreement: the Base Date and/or the Commencement Date.

Sub-Clause 1.9 Employer’s Use of Contractor’s Documents

Additional provisions may be required if all rights to particular items of computer software (for
example) are to be assigned to the Employer. These provisions should take account of the
applicable law.

Sub-Clause 1.12 Compliance with Laws

For a plant contract, alternative arrangements may be appropriate:

EXAMPLE Insert after sub-paragraph (d) of Sub-Clause 1.12:

“The Contractor shall submit, in good time, the details of Goods to the
Employer, who shall then promptly obtain all import permits or
licences required for these Goods.
The Employer shall also obtain or grant all consents including permits-to-work, rights-of-way
and approvals required for the Works.”

In respect of sub-paragraphs (b) and (c) of this Sub-Clause, if (in addition to the provisions of
Sub-Clause 4.18 [Protection of the Environment]) the applicable law requires the Contractor to
apply for and/or comply with particular environmental permits, these permits should be clearly
described in detail in the Employer’s Requirements together with the Contractor’s obligations
associated with each permit.

Sub-Clause 1.13 Joint and Several Liability

If it is likely that one or more of the tenderers will be a Joint Venture, detailed requirements for
the JV may need to be specified in addition to those listed in the definition of “JV Undertaking”
under Sub-Clause 1.1.41. For example, it may be desirable for each member of the JV to
produce a parent company guarantee: an example form is included at the end of this publication
(in the section “Sample Forms”).

These requirements should be included in the Instructions to Tenderers. Normally the Employer
will wish the leader of the JV to be appointed at an early stage, providing a single point of
contact thereafter, and will not wish to be involved in a dispute between the members of a JV.

The Employer should scrutinise the JV Undertaking carefully and, where relevant, check if the
project’s financing institution(s) has/have to give consent.

Sub-Clause 1.14 Limitation of Liability

If it is required that the limitation of each Party’s liability to the other Party is to include certain
“indirect or consequential loss or damage” and is also to take into account liabilities which are to
be insured under Clause 19 [Insurance], the Contract Data and this Sub-Clause may be varied:

EXAMPLE In the Contract Data, add the following:

“ 1.14 Amount of Sum A: _____

Amount of Sum B: _____
Amount of Sum C: _____ “

Delete Sub-Clause 1.14 and substitute:

“Except as stated in this Sub-Clause, neither Party shall be liable to
the other Party for loss of use of any Works, loss of profit, loss of any
contract or for any indirect or consequential loss or damage which
may be suffered by the other Party in connection with the Contract.

The Contractor’s liability to the Employer under or in connection with

the Contract shall be limited as follows:
(a) for failure to comply with Sub-Clause 8.2 [Time for Completion],
the limit shall be the maximum amount of Delay Damages
stated in the Contract Data;
(b) for loss of profit, loss of any contract or loss of use of any part of
the Permanent Works (after taking over under the Contract),
caused by:
(i) defects attributable to the Contractor, the limit shall be
the sum A stated in the Contract Data;
(ii) damage to the Works caused by the Contractor, the limit
shall be the sum B stated in the Contract Data;
(iii) damage caused by the Contractor to the Employer’s
property other than the Works, the limit shall be fifty
percent (50%) of the sum B stated in the Contract Data;
and
(iv) any other matter attributable to the Contractor, the limit
shall be fifty percent (50%) of the sum A stated in the
Contract Data;
(c) for damage caused by the Contractor to the Works, the limit
shall be the required value of cover of the insurance under Sub-
Clause 19.2.1 [The Works];
(d) for damage caused by the Contractor to the Employer’s
property other than the Works, the limit shall be the required
value of cover of the insurance under Sub-Clause 19.2.4 [Injury
to persons and damage to property];
(e) for death or injury to the Employer’s personnel by a cause
attributable to the Contractor, the limit shall be the required
value of cover of the insurance under Sub-Clause 19.2.5 [Injury
to employees];
(f) for the Contractor’s indemnity to the Employer for third party
claims under the first paragraph of Sub-Clause 17.4
[Indemnities by Contractor], there shall be no limit; and
(g) for the Contractor’s indemnity to the Employer under the second
paragraph of Sub-Clause 17.4 [Indemnities by Contractor], the
limit shall be the required value of cover of the insurance under
Sub-Clause 19.2.3 [Liability for breach of professional duty];
(h) for all matters other than those described in sub-paragraphs (b)
to (g) above and other than those under Sub-Clause 17.3
[Intellectual and Industrial Property Rights], the limit shall be the
sum C stated in the Contract Data.

The Employer’s liability to the Contractor under or in connection with

the Contract shall be limited as follows:
(i) for loss of profit, loss of any contract or any other direct
loss caused by termination of the contract under Sub-
Clause 15.5 [Termination for Employer’s Convenience]
and Sub-Clause 16.2 [Termination by Contractor], the
limit shall be twenty percent (20%) of the Contract Price
stated in the Contract Agreement;
(ii) for damage caused by the Employer or Employer’s
Personnel to the Temporary Works or Plant and Materials
not included in the Permanent Works, the limit shall be
thirty percent (30%) of the required value of cover of the
insurance under Sub-Clause 19.2.1 [The Works];
 (iii) for damage caused by the Employer or Employer’s
Personnel to the Contractor’s Equipment, Materials, Plant
and/or Temporary Works, the limit shall be the required
value of cover of the insurance under Sub-Clause 19.2.2
[Goods];
(iv) for death or injury to the Contractor’s Personnel by a
cause attributable to the Employer the limit shall be the
required value of cover of the insurance under Sub-
Clause 19.2.5 [Injury to employees];
(v) for the Employer’s indemnity to the Contractor for third
party claims under Sub-Clause 17.5 [Indemnities by
Employer], there shall be no limit; and
(vi) for all matters other than those described in sub-
paragraph (i) to (v) above and other than under Sub-
Clause 17.3 [Intellectual and Industrial Property Rights],
the limit shall be in accordance with Sub-Clause 14.14
[Cessation of Employer’s Liability] as may be amended
under Sub-Clause 21.4 [Obtaining DAAB’s Decision],
Sub-Clause 21.5 [Amicable Settlement] or Sub-Clause
21.6 [Arbitration].

This Sub-Clause shall not limit liability in any case of fraud, gross negligence, deliberate
default or reckless misconduct by the defaulting Party.”

Clause 2 The Employer

Sub-Clause 2.1 Right of Access to the Site

It may be necessary for the Contractor to have early access to the Site for the purposes of
survey and sub-surface investigations. If so, the details of such early right of access should be
given in the Employer’s Requirements, including any restrictions on such access and whether or
not it shall be exclusive to the Contractor.

If right of access to, and possession of, the Site cannot be granted by the Employer in the
normal way, details should be given in the Employer’s Requirements and appropriate
amendments made to the first paragraph of this Sub-Clause and, if necessary, to the second
paragraph.

Sub-Clause 2.3 Employer’s Personnel and Other Contractors

The provisions concerning co-operation between contractors should be reflected in the

Employer’s contracts with any other contractors working on or near the Site.

Sub-Clause 2.6 Employer-Supplied Materials and Employer’s Equipment

If Employer-Supplied Materials are listed in the Employer’s Requirements for the Contractor’s
use in the execution of the Works, the following provisions may be added:

EXAMPLE After the last paragraph of Sub-Clause 2.6, add:

 “The Employer shall supply to the Contractor the Employer-Supplied
Materials listed in the Employer’s Requirements, at the time(s) stated
in the Employer’s Requirements (if not stated, within the times that
shall be required to enable the Contractor to proceed with execution of
the Works in accordance with the Programme).

When made available by the Employer, the Contractor shall visually

inspect the Employer-Supplied Materials and shall promptly give a
Notice to the Employer’s Representative of any shortage, defect or
default in them. Thereafter, the Contractor shall rectify such shortage,
defect or default to the extent instructed by the Employer’s
Representative. Such instruction shall be deemed to have been given
under Sub-Clause 13.3.1 [Variation by Instruction].
After this visual inspection, the Employer-Supplied Materials shall
come under the care, custody and control of the Contractor. The
Contractor’s obligations of inspection, care, custody, and control shall
not relieve the Employer of liability for any shortage, defect or default
not apparent from a visual inspection.”

In the last paragraph of Sub-Clause 17.1 [Responsibility for Care of

the Works] after the two instances of “Goods” add

“, Employer-Supplied Materials,”.

If Employer’s Equipment is listed in the Employer’s Requirements for the Contractor’s use in the
execution of the Works, the following provisions may be added:

EXAMPLE After the last paragraph of Sub-Clause 2.6, add:

“The Employer shall make the Employer’s Equipment listed in the

Employer’s Requirements available to the Contractor at the time(s)
stated in the Employer’s Requirements (if not stated, within the times
that shall be required to enable the Contractor to proceed with
execution of the Works in accordance with the Programme).

Unless expressly stated otherwise in the Employer’s Requirements,

the Employer’s Equipment shall be provided for the exclusive use of
the Contractor.

When made available by the Employer, the Contractor shall visually

inspect the Employer’s Equipment and shall promptly give a Notice to
the Employer’s Representative of any shortage, defect or default in
them. Thereafter, the Contractor shall rectify such shortage, defect or
default to the extent instructed by the Employer’s Representative.
Such instruction shall be deemed to have been given under Sub-
Clause 13.3.1 [Variation by Instruction].

The Contractor shall be responsible for the Employer’s Equipment

while it is under the Contractor’s control and/or any of the Contractor’s
Personnel is operating it, driving it, directing it, using it, or in control of
it.

The Contractor shall not remove from the Site any items of the
Employer’s Equipment without the consent of the Employer. However,
 consent shall not be required for vehicles transporting Goods or
Contractor’s Personnel to or from the Site.”

In the last paragraph of Sub-Clause 17.1 [Responsibility for Care of

the Works and Indemnities] after the two instances of “Goods” add:

“, Employer’s Equipment”,

Clause 3 The Employer’s Administration

Sub-Clause 3.1 The Employer’s Representative

In the appointment of the Employer’s Representative, the Employer may consider using the
form of agreement FIDIC Clients/Consultants Model Services Agreement fifth Edition, 2017
(http://fidic.org/books/clientconsultant-model-services-agreement-5th-ed-2017-white-
book).
In performing the Employer’s Representative’s duties and in exercising his/her authority under
the Contract, it is recommended that the Employer’s Representative takes due regard of:

a) FIDIC’s Code of Ethics for consulting engineers:

http://fidic.org/about-fidic/fidic-policies/fidic-code-ethics†;
and
b) the duty to prevent corruption and bribery as described in the publications:
- FIDIC Guidelines for Integrity Management (FIM) in the consulting
industry, Part 1- Policies and principles first edition, 2011
(http://fidic.org/books/integrity-management-system-fims-guidelines-1st-
ed-2011-part1†) and
- FIDIC Guidelines for Integrity Management System in the Consulting
Industry 1st Ed (2015) Part 2, FIMS Procedures
(http://fidic.org/books/guidelines-integrity-management-system-
consulting-industry-1st-ed-2015-part-2†).

Sub-Clause 3.2 Other Employer’s Personnel

If it is anticipated that the Employer’s Representative’s assistants may not all be fluent in the
language for communications defined in Sub-Clause 1.4 [Law and Language], consideration
should be given to amending this Sub-Clause:

EXAMPLE In the last paragraph of Sub-Clause 3.2, after “Sub-Clause 1.4 [Law
and Language]” add the following:

“If any assistants are not fluent in this language the Employer’s Representative shall make
competent interpreters available during all working hours, in a number
sufficient for those assistants to properly perform their assigned duties
and/or exercise their delegated authority.”

Sub-Clause 3.4 Instructions

If the applicable law prevents the Contractor from complying with any instruction that may have
an adverse effect on the health and safety of the Contractor’s Personnel, sub-paragraph (b) of
this Sub-Clause may be amended:
EXAMPLE At the end of sub-paragraph (b) of Sub-Clause 3.4, add the following:

“or will adversely affect the health and safety of the Contractor’s Personnel”.

If the Conditions of Contract are to allow for the giving of oral instructions by the Employer’s
Representative, this Sub-Clause may be amended:

EXAMPLE At the end of Sub-Clause 3.5, add the following:

“If the Employer’s Representative or a delegated assistant:

(a) gives an oral instruction;
(b) receives a written confirmation of the instruction, from the
Contractor, within two working days after giving the oral
instruction; and
(c) does not reply by issuing a written rejection and/or instruction
within two working days after receiving the confirmation
then the Contractor’s confirmation shall constitute the written instruction of the Employer’s
Representative or delegated assistant (as the case may be).”

Sub-Clause 3.5 Agreement or Determination

The Employer’s Representative shall not delegate any of his/her duties under this Sub-Clause
to any assistant, as stated under Sub-Clause 3.2 [Other Employer’s Personnel].

As an alternative to determination of a matter or Claim by the Employer’s Representative

envisaged under this Sub-Clause, the Parties may prefer that, where agreement cannot be
reached in respect of any Claim or matter, it is referred to the DAAB for a decision in which case
the following amendments will be needed:

EXAMPLE Delete the last paragraph of Sub-Clause 3.5.1 [Consultation to reach

agreement], and replace with:

“If:
(a) no agreement is achieved within the time limit for agreement
under Sub-Clause 3.5.3 [Time limits]; or
(b) both Parties advise the Employer’s Representative that no
agreement can be achieved within this time limit
whichever is the earlier, the matter or Claim shall be deemed to be a
Dispute which may be referred by either Party to the DAAB for its
decision under 21.4 [Obtaining DAAB’s Decision] and sub-paragraph
(a) of 21.4.1 [Reference of a Dispute to the DAAB] shall not apply.”;

delete Sub-Clause 3.5.2 [Employer’s Representative’s determination];

delete the second and last paragraphs of Sub-Clause 3.5.3 [Time

Limits] and replace with:
“If the Employer’s Representative does not give the Notice of
agreement within this time limit, the matter or Claim shall be deemed
to be a Dispute which may be referred by either Party to the DAAB for
its decision under 21.4 [Obtaining DAAB’s Decision] and sub-
 paragraph (a) of 21.4.1 [Reference of a Dispute to the DAAB] shall not
apply.”;

in Sub-Clause 3.5.4 [Effect of the agreement or determination]:

• in the first paragraph, delete the words “or, in the case of a
determination, it is revised under Clause 21 [Disputes and
Arbitration]”; and
• replace all instances of “agreement or determination” with
“agreement”; and

delete Sub-Clause 3.5.5 [Dissatisfaction with Employer’s Representative’s determination].

Sub-Clause 3.6 Meetings

It may be useful to give information in the Employer’s Requirements of a planned timetable of meetings
such as management meetings, site meetings, technical meetings, and progress meetings.

Clause 4 The Contractor

Sub-Clause 4.1 Contractor’s General Obligations

FIDIC strongly recommends that the Employer ensures that the Employer’s Requirements
contain a clearly identified, defined and described specific purpose or purposes for which the
facility will be used when complete, in order that the Contractor can comply with the obligation to
provide Works which are “fit for the purpose(s) for which they are intended” as stated in this
Sub-Clause.

Sub-Clause 4.2 Performance Security

The acceptable form(s) of Performance Security should be included in the tender documents.
Example forms are included at the end of this publication (in the section “Sample Forms”). They
incorporate two sets of Uniform Rules published by the International Chamber of Commerce
(the “ICC”, which is based at 33-43 Avenue du Président Wilson, 75116 Paris, France), which
also publishes guides to these Uniform Rules.

These example forms and the wording of the Sub-Clause may have to be amended to comply
with applicable law.

EXAMPLE At the end of the first paragraph of Sub-Clause 4.2.1 [Contractor’s

Obligations], insert:

“If the Performance Security is in the form of a bank guarantee, it shall be issued either (i) by
a bank located in the Country, or (ii) directly by a foreign bank to which
the Employer gives consent. If the Performance Security is not in the
form of a bank guarantee, it shall be issued by a financial entity
registered, or licensed to do business, in the Country.”

The example forms of Performance Security that are included at the end of this publication (in
the section “Sample Forms”) provide for the option to reduce the amount of the Performance
Security following issue of the Taking-Over Certificate for the whole of the Works under Clause
10. If neither of the example forms is to be used, consideration should be given to adding
provisions for this option to Sub-Clause 4.2.1.

Sub-clause 4.3 Contractor’s Representative

If the Contractor’s Representative is known at the time of submission of the tender, the tenderer
may propose that person in his/her tender. The tenderer may wish to propose alternatives,
especially if the contract award seems likely to be delayed.

The “main engineering discipline applicable to the Works” in which the Contractor’s
Representative is required to be qualified, experienced and competent should be the
engineering discipline of the Works which is of highest value proportionate to the value of the
Works. If it is necessary to stipulate that the Contractor’s Representative shall be qualified,
experienced and competent in a particular engineering discipline in relation to the Works, the
following amendment will need to be made to this Sub-Clause:

EXAMPLE In the second paragraph of Sub-Clause 4.3 delete “the main

engineering discipline applicable to the Works” and replace with:

[Insert description of engineering discipline],

If it is necessary that the Contractor’s Representative shall also be fluent in a particular

language other than the language for communications defined in Sub-Clause 1.4 [Law and
Language], the following amendment may be made:

EXAMPLE At the end of the second paragraph of Sub-Clause 4.3, add:

“The Contractor’s Representative shall also be fluent in ____________________(insert name

of language).”

If it is permissible that the Contractor’s Representative is not fluent in the language for
communications defined in Sub-Clause 1.4 [Law and Language], consideration should be given
to amending this Sub-Clause:
EXAMPLE Insert at the end of the second paragraph of Sub-Clause 4.3:

“If the Contractor’s Representative is not fluent in this language the Contractor shall make
competent interpreter(s) available during all working hours, sufficient
for the Contractor’s Representative to properly perform his/her duties
and exercise his/her authority under the Contract.”

If it is permissible that the Contractor’s Representative’s delegates are not all fluent in the
language for communications defined in Sub-Clause 1.4 [Law and Language], consideration
should be given to amending this Sub-Clause:

EXAMPLE Insert at the end of the last paragraph of Sub-Clause 4.3:

 “If any of these persons is not fluent in this language the Contractor shall make competent
interpreters available during all working hours, in a number sufficient
for those persons to properly perform their delegated powers,
functions and/or authority.”

Sub-clause 4.4 Subcontractors

It may be appropriate and/or desirable, taking account of the circumstances and locality of the
project, to encourage the Contractor to employ local contractors in the execution of the Works:

EXAMPLE At the end of the second paragraph of Sub-Clause 4.4, add:

“The Contractor shall give reasonable opportunity to contractors from the Country to tender for
subcontracts for the Works, and shall use reasonable endeavours to
employ such contractors as Subcontractors.”

If the Employer requires that all the Contractor’s subcontracts should provide for assignment of
the subcontract to the Employer in the event that Sub-Clause 15.2 [Termination for Contractor’s
Default] applies, the following amendment will need to be made to this Sub-Clause:

EXAMPLE Insert at the end of the last paragraph of Sub-Clause 4.4:

“All subcontracts relating to the Works shall include provisions which entitle the Employer to
require the subcontract to be assigned to the Employer under sub-
paragraph (a) of Sub-Clause 15.2.3 [After Termination].”

If the Employer requires that the Contractor assigns the benefit of the relevant subcontract in
the event that a Subcontractor’s obligations continue after expiry of the DNP relating to that
Subcontractor’s work, the following amendment will need to be made to this Sub-Clause:

EXAMPLE Insert at the end of the last paragraph of Sub-Clause 4.4:

“If a Subcontractor’s obligations to the Contractor extend beyond the expiry date of the DNP
which is applicable to the Subcontractor’s work and if the Contractor
receives an instruction from the Employer’s Representative to do so
not less than 7 days before this expiry date, the Contractor shall
assign the benefit of such obligations to the Employer. Unless
otherwise stated in the assignment, the Contractor shall have no
liability to the Employer for work carried out by the Subcontractor after
the assignment takes effect.”

Sub-Clause 4.5 Nominated Subcontractors

Normally the Contractor will select and employ subcontractor(s), (subject to any constraints
stated in the Contract), but this Sub-Clause provides for the situation where the Employer may
wish to select a particular subcontractor or subcontractors to be employed by the Contractor in
the execution of the Works.

If this is the case, it is recommended that the Employer names the particular subcontractor(s) in
the Employer’s Requirements so that tenderers are aware of this requirement before submitting
their tenders - although this Sub-Clause also makes provision for the Employer to instruct the
Contractor to employ a subcontractor or subcontractors after contract award.
It should be noted that:
a) once the Contractor has employed a subcontractor who has been nominated by the
Employer, the second paragraph of Sub-Clause 4.4 [Subcontractors] applies; and
b) sub-paragraph (b) of Sub-Clause 13.4 [Provisional Sums] should provide for payment
to the Contractor for works or services to be purchased by the Contractor from a
nominated Subcontractor.
If the Employer anticipates that a Subcontractor is to be instructed under Sub-Clause 13.3
[Variation Procedure] but is not to be a nominated Subcontractor this Sub-Clause should be
amended, describing the particular circumstances.

Sub-Clause 4.8 Health and Safety Obligations

If the Contractor is sharing occupation of the Site with others, it may not be appropriate for
him/her to provide some of the listed items. In these circumstances:
- this Sub-Clause should be amended to specify exactly what health and safety
obligations are the Contractor’s under the Contract, and
- the health and safety obligations which are to be fulfilled by the Employer and/or others
should be specified in the Employer’s Requirements
so that it is clear which Party is responsible for what in respect of the health and safety
obligations for the Site and for the Works.

Sub-Clause 4.9.1 Quality Management System

In the performance of the Contractor’s obligations under this Sub-Clause, it is recommended

that the Contractor and the Employer take due regard of the FIDIC publication Improving the
Quality of Construction - a guide for actions, 2004 (http://fidic.org/books/improving-quality-
construction-2004†).

If the Employer requires the Contractor to have a Quality Manager employed on the Site, such
position should be specified in the Employer’s Requirements as one of the positions of Key
Personnel.

If the Employer requires the Contractor to interface with others and/or with the Employer, the
Employer’s Requirements should clearly describe all such interfaces and should specify the
extent in which the Contractor shall allow for such interfaces in the QM System.

Sub-Clause 4.12 Unforeseeable Difficulties

If the Works include tunnelling or other substantial sub-surface construction, it is usually

preferable for the risk of unforeseen ground conditions to be allocated to the Employer.

Responsible contractors will be reluctant to take the risks of unknown ground conditions which
are difficult or impossible to estimate in advance. FIDIC’s Conditions of Contract for Plant and
Design-Build, Second Edition 2017 should be used in these circumstances for works designed
by (or on behalf of) the Contractor.

Sub-Clause 4.16 Transport of Goods

In some cases, the Contractor may be required to get permission prior to delivery of Goods to
the Site. In such cases those Goods for which permission is required should be stated in the
Employer’s Requirements, and the following wording may be added to this Sub-Clause:
EXAMPLE Insert at the end of Sub-Clause 4.16:

“The Contractor shall obtain the Employer’s Representative’s permission prior to delivering to
the Site any item of Goods which is identified in the Employer’s
Requirements as requiring such permission. No such Goods shall be
delivered without this permission, which shall not relieve the Contractor
from any duty, obligation or responsibility under or in connection with
the Contract.”

Sub-Clause 4.17 Contractor’s Equipment

If the Contractor is not to provide all the Contractor’s Equipment necessary to execute the
Works, the Employer’s obligations should be specified: please see Sub-Clause 2.6 [Employer-
Supplied Materials and Employer’s Equipment] and the guidance notes for Sub-Clause 2.6
above.

If vesting of Contractor’s Equipment to the Employer is required, and such vesting is consistent
with the Laws of the Country, further paragraphs may be added to this Sub-Clause:

EXAMPLE At the end of Sub-Clause 4.17, add the following paragraphs:

“Each item of Contractor’s Equipment shall become the property of the

Employer (free from liens and other encumbrances) when it arrives on
the Site.

This vesting of property from the Contractor to the Employer shall not:
(a) affect the responsibility or liability of the Employer under the
Contract;
(b) prejudice the Contractor’s right to exclusive use of all items of
Contractor’s Equipment for the purpose of the Works; and/or
(c) relieve the Contractor from any duty, obligation or responsibility
to operate and maintain all items of Contractor’s Equipment.

The property in each item of Contractor’s Equipment shall be deemed to re-vest in the
Contractor (free from liens and other encumbrances) when he/she is
entitled to remove it from the Site or to receive the Taking-Over
Certificate for the Works, whichever is the earlier.”

Sub-Clause 4.18 Protection of the Environment

If the applicable environmental law requires the Contractor to prepare project-specific

environmental management plans, for review by the Employer’s Representative and/or the
Employer and approval by regulatory authorities, these plans should be clearly described in
detail in the Employer’s Requirements together with the review/approval process associated
with each plan.

Sub-Clause 4.19 Temporary Utilities

If services are to be available on the Site for the Contractor to use, details of such services
should be set out in the Employer’s Requirements, including a description of each utility, the
capacity of each utility that is available for the Contractor’s use, its location and the price per
unit of consumption.

Sub-Clause 4.21 Security of the Site

 If the Contractor is sharing occupation of the Site with others, it may not be appropriate for the
Contractor to be responsible for its security. In these circumstances, it is recommended that:
a) this Sub-Clause should be amended to specify exactly what security obligations are the
Contractor’s under the Contract,
and
b) the security obligations which are to be fulfilled by the Employer and/or others should
be specified in the Employer’s Requirements
so that it is clear which Party is responsible for what in respect of the security of the Site.

Sub-Clause 4.22 Contractor’s Operations on Site

If the Contractor is sharing occupation of the Site with others, it is recommended that this Sub-
Clause is amended by identifying and allocating responsibility for clearance and removal from
the Site of any wreckage, rubbish, hazardous waste, temporary works and surplus material.

Additional Sub-Clause Milestones

If the Employer wishes to have certain parts of the Works completed within certain times but
does not wish to take over such parts when completed (as distinct from the parts of the Works
which the Employer wishes to take over after completion, which should be defined as Sections
in the Contract Data), such parts of the Works should be clearly described in the Employer’s
Requirements as ‘Milestones’ and it is recommended that the following provisions are added to
the Contract Data and to the Conditions of Contract:

EXAMPLE PROVISIONS FOR MILESTONES

In the Contract Data, add the following:

“4.24.......... Definition of Milestones:

Description of a part Time for Completion Delay Damages

of the Plant or of the (as a percentage of
Works that shall be final Contract Price
designated a per day of delay)
Milestone for the
purposes of the
Contract

_____ days __ %

_____ days __ %

_____ days __ %

_____ days __ %

Maximum amount of Delay Damages for Milestones (percent of final

Contract Price) ….. ____ %.”

Insert two new definitions under Sub-Clause 1.1:

“ “Milestone” means a part of the Plant and/or a part of the Works

stated in the Contract Data (if any), and described in detail in the
Employer’s Requirements as a Milestone, which is to be completed by
the time for completion stated in Sub-Clause 4.24 [Milestone Works]
but is not to be taken over by the Employer after completion.
“Milestone Certificate” means the certificate issued by the
Employer’s Representative under Sub-Clause 4.24 [Milestones].”
Add new Sub-Clause 4.24...Milestones

“If no Milestones are specified in the Contract Data, this Sub-Clause

shall not apply.

The Contractor shall complete the works of each Milestone (including

all work which is stated in the Employer’s Requirements as being
required for the Milestone to be considered complete) within the time
for completion of the Milestone, as stated in the Contract Data,
calculated from the Commencement Date.

The Contractor shall include, in the initial programme and each

revised programme, under sub-paragraph (a) of Sub-Clause 8.3
[Programme], the time for completion for each Milestone.

Sub-paragraph (d) of Sub-Clause 8.4 [Advance Warning] and Sub-

Clause 8.5 [Extension of the Time for Completion] shall apply to each
Milestone, such that “Time for Completion” under Sub-Clause 8.5 shall
be read as the time for completion of a Milestone under this Sub-
Clause.

The Contractor may apply, by Notice to the Employer’s

Representative, for a Milestone Certificate not earlier than 14 days
before the works of a Milestone will, in the Contractor’s opinion, be
complete. The Employer’s Representative shall, within 28 days after
receiving the Contractor’s Notice:
(a) issue the Milestone Certificate to the Contractor, stating the
date on which the works of the Milestone were completed in
accordance with the Contract, except for any minor outstanding
work and defects (as shall be listed in the Milestone Certificate);
or
(b) reject the application, giving reasons and specifying the work
required to be done and defects required to be remedied by the
Contractor to enable the Milestone Certificate to be issued.
The Contractor shall then complete the work referred to in sub-
paragraph (b) of this Sub-Clause before issuing a further Notice of
application under this Sub-Clause.

If the Employer’s Representative fails either to issue the Milestone

Certificate or to reject the Contractor’s application within the above
period of 28 days, and if the works of a Milestone are complete in
accordance with the Contract, the Milestone Certificate shall be
deemed to have been issued on the date which is 14 days after the
date stated in the Contractor’s Notice of application.

If Delay Damages for a Milestone are stated in the Contract Data, and
if the Contractor fails to complete the works of the Milestone within the
time for completion of the Milestone (with any extension under this
Sub-Clause):
(i) the Contractor shall, subject to Sub-Clause 20.1 [Claims], pay
Delay Damages to the Employer for this default;
(ii) such Delay Damages shall be the amount stated in the Contract
Data, for every day which shall elapse between the time for
completion for the Milestone (with any extension under this
Sub-Clause) and the date stated in the Milestone Certificate;
 (iii) these Delay Damages shall be the only damages due from the
Contractor for such default; and
(iii) the total amount of Delay Damages for all Milestones shall not
exceed the maximum amount stated in the Contract Data (this
shall not limit the Contractor’s liability for Delay Damages in any
case of fraud, gross negligence, deliberate default or reckless
misconduct by the Contractor).”

If certain payment(s) to the Contractor is/are to be made on completion of each Milestone, such
payment(s) should be specified in a Schedule of Payments in the Contract and consideration
should be given to amending Sub-Clause 14.4 [Schedule of Payments] to make express
reference to the Milestone payments.

Clause 5 Design
Sub-Clause 5.1 General Design Obligations

It is recommended that the Instructions to Tenderers require tenderers to include the name,
address, detailed particulars and relevant experience of each proposed designer/design
Subcontractor so that the Employer can assess whether and to what extent each tenderer’s
proposed designers/design Subcontractors comply with the three conditions set out in sub-
paragraphs (a) to (c) of this Sub-Clause.

If the Employer’s Requirements include an outline design, tenderers should be advised of the
extent to which the Employer’s outline design is a suggestion or a requirement.

If there are to be portions of the Employer’s Requirements, and/or data and information
provided by (or on behalf of) the Employer, which are to be immutable or are to be the
responsibility of the Employer, then these should be stated in the Contract (by the Employer in
the Employer’s Requirements or by the Contractor in the documents to be submitted with the
Tender),

Sub-Clause 5.2 Contractor’s Documents

It is important that the Employer’s Requirements should clearly specify which Contractor’s
Documents the Employer requires the Contractor to prepare, which may not necessarily include
(for example) all the technical documents which the Contractor’s Personnel will need in order to
execute the Works.

For example, it may be appropriate for the Employer’s Requirements for a plant contract to
specify that the Contractor’s Documents shall include drawings showing how the Plant is to be
installed and any other information required for:
• preparing suitable foundations or other means of support,
• providing suitable access on the Site, for the Plant and any necessary equipment, to the
place where the Plant is to be erected, and/or
• making necessary connections to the Plant.

Sub-Clause 5.2.2 Review by Employer

The “Contractor’s Documents” under this Sub-Clause 5.2.2 are the documents that the Contractor
must submit to the Employer for review, as specified in the Employer’s Requirements or as stated
in the Conditions of Contract (namely, as-built records under Sub-Clause 5.6 [As-Built Records]
and O&M Manuals under Sub-Clause 5.7 [Operation and Maintenance Manuals]). It is important,
 therefore, that the Employer’s Requirements clearly identify which of the Contractor’s Documents
the Employer requires the Contractor to submit to the Employer for review.

If a different Review Period than that stated under this Sub-Clause 5.2.2 is considered
necessary, or different Review Periods are considered necessary for different (types of)
Contractor’s Documents, taking account of the time required to review the different types of
Contractor’s Documents and/or of the possibility of substantial submissions at particular stages
of the design-build process, such different Review Period(s) should be clearly stated in the
Employer’s Requirements.

In some jurisdictions there may be a requirement under the applicable law for the mandatory
review/checking of certain elements of design (by an authorised professional or other legally
recognised individual) and/or verification that such design is in accordance with the applicable
law, before such design can be implemented in the Works. If this is the case, it is essential that
it is drawn to tenderers’ attention in the Instruction to Tenderers and necessary amendments will
need to be made to this Sub-Clause – taking due care and attention that the following is clear
and unambiguous:
a) the mandatory review/checking and/or verification process(es) required by the
applicable law, and details of the submission procedure(s) associated with such
process(es);
b) which element(s) of design, and which type(s) of Contractor’s Documents associated
with such element(s), shall be subject to the mandatory review/checking and/or
verification process(es);
c) whether, and to what extent, the mandatory review/checking and/or verification
process(es) of an element of design (and the Contractor’s Documents associated with
such element) shall replace the Employer’s review under this Sub-Clause;
d) a statement that any Notice of No-objection (or deemed Notice of No-objection) from
the Employer with respect to any Contractor’s Document shall not replace the
mandatory review/checking and/or verification of the design (or a revised design).
It is strongly recommended that the Employer is advised by legal and engineering professionals
with extensive experience in the mandatory review/checking and/or verification process(es)
required by the applicable law when preparing the revised wording of this Sub-Clause.

Sub-Clause 5.5 Training

If the Works include Plant that comprises (in whole or in part) new or innovative technology in
the Country or at the Employer’s location, it is recommended that the Parties consider including
in the Contract provision for training (by the Employer in the Employer’s Requirements and/or by
the Contractor in the documents to be submitted with the Tender) of the Employer’s Personnel
at the location of another plant facility, or at a number of other plant facilities, that are similar in
nature to the Works.

Sub-Clause 5.7 Operation and Maintenance Manuals

If the Contractor is required to supply spare parts under the Contract, these should be detailed
in the Employer’s Requirements, which should also specify the required guarantee period for
these spare parts.

Clause 6 Staff and Labour

Sub-Clause 6.3 Recruitment of Persons
It may be necessary to review and revise this Sub-Clause (or delete it in its entirety) if the
relevant labour Laws applicable to the Contractor’s Personnel and/or the Employer’s Personnel
do not permit any restriction on the right of any worker to seek other positions.

Sub-Clause 6.6 Facilities for Staff and Labour

If the Employer plans to make any facilities and/or accommodation (for example, office
accommodation) available for the Contractor’s occupation and/or use, the Employer’s
obligations to do so and details of such facilities and/or accommodation should be specified in
the Employer’s Requirements. See also the guidance under Clause 17 [Care of the Works and
Indemnities] below for the suggested additional sub-clause in respect of responsibility for care of
such facilities and/or accommodation.

Sub-Clause 6.8 Contractor’s Superintendence

If it is permissible that the Contractor’s superintending staff are not all fluent in the language for
communications defined in Sub-Clause 1.4 [Law and Language], then consideration should be
given to amending this Sub-Clause:

EXAMPLE Insert at the end of sub-paragraph (a) of Sub-Clause 6.8:

“or, if not, the Contractor shall make competent interpreters available during all working hours,
in a number sufficient for those persons to properly perform their
superintendence duties.”

If it is necessary to stipulate that the Contractor’s superintending staff shall be fluent in a

particular language, the following sentence should be added.

EXAMPLE Insert at the end of Sub-Clause 6.8:

“A reasonable proportion of the Contractor’s superintending staff shall

have a working knowledge of

[Insert name of language],

or the Contractor shall make interpreters available on Site during all working hours in a
number deemed sufficient by the Employer’s Representative.”

Sub-Clause 6.12 Key Personnel

If it is permissible that all Key Personnel are not fluent in the language for communications
defined in Sub-Clause 1.4 [Law and Language], then consideration should be given to
amending this Sub-Clause:

EXAMPLE Insert at the end of the last paragraph of Sub-Clause 6.12:

“If any of the Key Personnel are not fluent in this language the Contractor shall make
competent interpreter(s) available during all working hours, sufficient
for that person to properly perform his/her duties under the Contract.”

Additional Sub-Clauses

It may be necessary, appropriate and/or desirable to include additional sub-clauses to take

account of the circumstances and locality of the Site:
EXAMPLE SUB-CLAUSE FOR FOREIGN PERSONNEL

“The Contractor may bring into the Country any foreign personnel who
are necessary for the execution of the Works to the extent allowed by
the applicable Laws. The Contractor shall ensure that these personnel
are provided with the required residence visas and work permits. The
Employer shall, if requested by the Contractor, use all reasonable
endeavours in a timely and expeditious manner to assist the
Contractor in obtaining any local, state, national, or government
permission required for bringing in the Contractor’s personnel.

The Contractor shall be responsible for the return of these personnel

to the place where they were recruited or to their domicile. In the event
of the death in the Country of any of these personnel or members of
their families, the Contractor shall similarly be responsible for making
the appropriate arrangements for their return or burial.”

EXAMPLE SUB-CLAUSE FOR SUPPLY OF FOODSTUFFS

“The Contractor shall arrange for the provision of a sufficient supply of

suitable food as may be stated in the Employer’s Requirements at
reasonable prices for the Contractor’s Personnel for the purposes of
or in connection with the Contract.”

EXAMPLE SUB-CLAUSE FOR SUPPLY OF WATER

“The Contractor shall, having regard to local conditions, provide on the

Site an adequate supply of drinking and other water for the use of the
Contractor’s Personnel.”

EXAMPLE SUB-CLAUSE FOR MEASURES AGAINST INSECT AND PEST NUISANCE

“The Contractor shall at all times take the necessary precautions to

protect the Contractor’s Personnel employed on the Site from insect
and pest nuisance, and to reduce the danger to their health. The
Contractor shall comply with all the regulations of the local health
authorities, including use of appropriate insecticide.”

EXAMPLE SUB-CLAUSE FOR ALCOHOLIC LIQUOR OR DRUGS

“The Contractor shall not, other than in accordance with the Laws of the Country, import, sell,
give, barter or otherwise dispose of any alcoholic liquor or drugs, or
permit or allow importation, sale, gift, barter or disposal thereto by the
Contractor’s Personnel.”

EXAMPLE SUB-CLAUSE FOR ARMS AND AMMUNITION

 “The Contractor shall not give, barter, or otherwise dispose of, to any
person, any arms or ammunition of any kind, or allow the Contractor’s
Personnel to do so.”

EXAMPLE SUB-CLAUSE FOR FESTIVALS AND RELIGIOUS CUSTOMS

“The Contractor shall respect the Country’s recognised festivals, days

of rest and religious or other customs.”

EXAMPLE SUB-CLAUSE FOR FUNERAL ARRANGEMENTS

“The Contractor shall be responsible, to the extent required by local

regulations, for making any funeral arrangements for any of the
Contractor’s local employees who may die while engaged upon the
Works.”

EXAMPLE SUB-CLAUSE FOR FORCED LABOUR

“The Contractor shall not employ forced labour, which consists of any
work or service, not voluntarily performed, that is exacted from an
individual under threat of force or penalty, and includes any kind of
involuntary or compulsory labour, such as indentured labour, bonded
labour or similar labour-contracting arrangements.”

EXAMPLE SUB-CLAUSE FOR CHILD LABOUR

“The Contractor shall not employ children (any natural persons under
the age of eighteen years) in a manner that is economically
exploitative, or is likely to be hazardous, or to interfere with the child’s
education, or to be harmful to the child’s health or physical, mental,
spiritual, moral, or social development. Where the relevant labour
Laws of the Country have provisions for employment of minors, the
Contractor shall follow those Laws applicable to the Contractor.”

EXAMPLE SUB-CLAUSE FOR EMPLOYMENT RECORDS OF WORKERS

“The Contractor shall keep complete and accurate records of the

employment of labour at the Site. The records shall include the
names, ages, genders, hours worked and wages paid to all workers.
These records shall be summarised on a monthly basis and submitted
to the Employer’s Representative. These records shall be included in
the details to be submitted by the Contractor under Sub-Clause 6.10
[Contractor’s Records].”

EXAMPLE SUB-CLAUSE FOR WORKERS’ ORGANISATIONS

“In countries where the relevant labour Laws recognise workers’ rights
to form and to join workers’ organisations of their choosing without
interference and to bargain collectively, the Contractor shall comply
with such Laws. Where the relevant labour Laws substantially restrict
workers’ organisations, the Contractor shall enable alternative means
for the Contractor’s Personnel to express their grievances and protect
 their rights regarding working conditions and terms of employment. In
either case described above, and where the relevant labour Laws are
silent, the Contractor shall not discourage the Contractor’s Personnel
from forming or joining workers’ organisations of their choosing or
from bargaining collectively, and shall not discriminate or retaliate
against the Contractor’s Personnel who participate, or seek to
participate, in such organisations and bargain collectively. The
Contractor shall engage with such workers’ representatives. Workers’
organisations are expected to fairly represent the workers in the
workforce.”

EXAMPLE SUB-CLAUSE FOR NON-DISCRIMINATION AND EQUAL OPPORTUNITY

“The Contractor shall not make employment decisions on the basis of personal characteristics
unrelated to inherent job requirements. The Contractor shall base the
employment relationship on the principle of equal opportunity and fair
treatment, and shall not discriminate with respect to aspects of the
employment relationship, including recruitment and hiring,
compensation (including wages and benefits), working conditions and
terms of employment, access to training, promotion, termination of
employment or retirement, and discipline. In countries where the
relevant labour Laws provide for non-discrimination in employment,
the Contractor shall comply with such Laws. When the relevant labour
Laws are silent on non-discrimination in employment, the Contractor
shall meet the requirements under this Sub-Clause. Special measures
of protection or assistance to remedy past discrimination or selection
for a particular job based on the inherent requirements of the job shall
not be deemed discrimination.”

Clause 7 Plant, Materials and Workmanship

Sub-Clause 7.7 Ownership of Plant and Materials

If the Contractor is to provide high-value items of Plant and/or Materials under the Contract,
consideration may be given to amending this Sub-Clause:

EXAMPLE Insert at the end of Sub-Clause 7.7:

“No Plant and/or Materials that is the property of the Employer shall be
removed from the Site. If it becomes necessary to:

(i) remove any item of such Plant from the Site for the purposes of
repair, the Contractor shall give a Notice, with reasons, to the
Employer’s Representative requesting consent to remove the
defective or damaged item off the Site. This Notice shall clearly
identify the item of defective or damaged Plant, and shall give
details of: the defect or damage to be repaired; the place to
which defective or damaged item of Plant is to be taken for
repair; the transportation to be used (and insurance cover for
such transportation); the proposed inspections and testing off
the Site; and the planned duration required before the repaired
item of Plant shall be returned to the Site. The Contractor shall
also provide any further details that the Employer may
reasonably require; or
 (ii). replace any item(s) of such Plant and/or Materials, the
Contractor shall give a Notice, with reasons, to the Employer’s
Representative clearly identifying the item(s) of Plant and/or
Materials to be replaced, and giving details of the due date of
delivery to the Site of the replacement item(s).

Where any item of Plant and/or Materials has become the property of
the Employer under this Sub-Clause before it has been delivered to
the Site, the Contractor shall ensure that such an item is not moved
except for its delivery to the Site.

The Contractor shall indemnify and hold the Employer harmless against and from the
consequences of any defect in title or encumbrance or charge (except
any reasonable restriction arising from the intellectual property rights
of the manufacturer or producer) on any item of Plant and/or Materials
that has become the property of the Employer under this Sub-Clause.”

Additional Sub-Clause

If the Contract is being financed by an institution whose rules or policies require a restriction on
the use of its funds, a further sub-clause may be added:

EXAMPLE SUB-CLAUSE FOR GOODS FROM ELIGIBLE SOURCE COUNTRIES

“All Goods shall have their origin in eligible source countries as

defined in
[Insert name of published guidelines for procurement].

Goods shall be transported by carriers from these eligible source countries, unless exempted
by the Employer in writing on the basis of potential excessive costs or
delays. Surety, insurance and banking services shall be provided by
insurers and bankers from the eligible source countries”.

Clause 8 Commencement, Delays and Suspension

Sub-Clause 8.2 Time for Completion

If the Works are to be completed and taken over in stages it is important that each stage is
defined as a Section, and the Time for Completion of each Section is stated, in the Contract
Data (please also see the guidance below under Sub-Clause 10.1 [Taking Over the Works and
Sections].

Sub-Clause 8.3 Programme

It is strongly recommended that the programming software that is preferable to the Employer be
clearly identified in the Employer’s Requirements, and that such software is drawn to the
attention of tenderers in the Instructions to Tender.

For less complex projects, the Employer may consider simplifying the requirements for the
Contractor’s programme as listed in sub-paragraphs (a) to (k) in this Sub-Clause (for example,
by replacing sub-paragraphs (a) to (k) in this Sub-Clause with sub-paragraphs (a) to (d) as they
appear under Sub-Clause 8.3 [Programme] of FIDIC’s Conditions of Contract for EPC/Turnkey
Projects, First Edition 1999).

Sub-Clause 8.5 Extension of Time for Completion

It should be noted that this Sub-Clause does not entitle the Contractor to any extension of the
Time for Completion for adverse climatic conditions. If it is preferable that the Contractor is to be
entitled to EOT for “exceptionally adverse climatic conditions”, consideration may be given to:
• adding the provisions of sub-paragraph (c) of Sub-Clause 8.5 [Extension of Time for
Completion] of FIDIC’s Conditions of Contract for Plant and Design-Build, Second
Edition 2017 to this Sub-Clause; and
• setting out in the Employer’s Requirements what constitutes an “exceptionally adverse”
event - for example, by reference to available weather statistics and return periods. It
may also be appropriate to compare the adverse climatic conditions that have been
encountered with the frequency with which events of similar adversity have previously
occurred at or near the Site. For example, an exceptional degree of adversity might be
regarded as one which has a probability of occurrence of once every four or five times
the Time for Completion of the Works (for example, once every eight to ten years for a
two-year contract).

The final paragraph of this Sub-Clause provides that the rules and procedures for assessing the
Contractor’s entitlement to an EOT where there is concurrency between delays attributable to
both Parties shall be stated in the Special Provisions. This provision has been drafted by FIDIC
in this manner because there is no one standard set of rules/procedures in use internationally
(though, for example the approach given in the Delay and Disruption Protocol published by the
Society of Construction Law (UK):
https://www.scl.org.uk/sites/default/files/SCL_Delay_Protocol_2nd_Edition_Final.pdf† is
increasingly being adopted internationally) and different rules/procedures may apply in different
legal jurisdictions.)

In preparing the Special Provisions, therefore, it is strongly recommended that the Employer be
advised by a professional with extensive experience in construction programming, analysis of
delays and assessment of extension of time in the context of the governing law of the Contract.

Sub-Clause 8.8 Delay Damages

Under the laws of many countries or other jurisdictions, the amount of these pre-defined
damages must be a reasonable estimate of the anticipated or actual loss caused to the
Employer by the delay. Therefore if the Delay Damages are fixed at an unreasonably large
amount, they may be unenforceable in common law jurisdictions or subject to downward
adjustment in civil law jurisdictions.

If the Contract Price stated in the Contract Agreement is to be quoted as the sum of figures in
more than one currency, it may be preferable to define these damages (per day) as a
percentage to be applied to each of these figures. If the Contract Price stated in the Contract
Agreement is expressed in the Local Currency, the damages per day may either be defined as a
percentage or be defined as a figure in Local Currency: see Sub-Clause 14.15(c).

Additional Sub-Clause

Incentives for early completion may be included (in addition to sub-paragraph (a) of Sub-Clause
13.2 [Value Engineering] which refers to accelerated completion):

EXAMPLE SUB-CLAUSE FOR INCENTIVES FOR EARLY COMPLETION

“The Contractor shall be entitled to a bonus payment if the Works

and/or each Section is completed earlier than the Time for Completion
for the Works or Section (as the case may be). The amount of bonus
 for early completion of the Works and/or each Section is stated in the
Employer’s Requirements.

For the purposes of calculating any bonus payment, the applicable Time for Completion
stated in the Contract Data is fixed and no adjustments of this time by
reason of granting an EOT will be allowed.”

Clause 9 Tests on Completion

Sub-Clause 9.1 Contractor’s Obligations

The Employer’s Requirements should describe the tests which the Contractor is to carry out
before being entitled to a Taking Over Certificate. It may also be appropriate for the Contractor
to include, in documents submitted with the Tender, detailed arrangements, instrumentation,
etc.

If the Works are to be tested and taken over in Sections, it is strongly recommended that
consideration be given to testing requirements in the Employer’s Requirements that take due
account of the effect of other parts of the Works being incomplete.

The Employer may wish the Employer’s permanent operating and maintenance personnel to
witness the operational tests and/or trial operation (including during the training of the
Employer’s Personnel under Sub-Clause 5.5 [Training]), in which case, this should be clearly
stated in the Employer’s Requirements.

The wording in sub-paragraphs (a) to (c) of this Sub-Clause includes the conditions which are
typically applicable for a plant contract, but otherwise may require amendment. In particular,
sub-paragraph (c) refers to trial operation, during which any product produced by the Works
becomes the property of the Employer. As such, the Employer becomes responsible for
disposing of such product, and entitled to retain the proceeds if the product is sold. If the
product is to be retained by the Contractor, this Sub-Clause should be amended accordingly.

For less complex projects, the Employer may consider simplifying the testing requirements
under this Sub-Clause.

Clause 10 Employer’s Taking Over

Sub-Clause 10.1 Taking Over the Works and Sections

If the Works are to be completed and taken over in stages it is important that each stage is
defined as a Section in the Contract Data. Precise geographical definitions are advisable, and
the Contract Data should include a table to also define for each Section:
• the relevant percentage for release of Retention Money,
• the Time for Completion, and
• the applicable Delay Damages.
An example form of such a table is shown in the example form of Contract Data included in this
publication.
Clause 11 Defects after Taking Over
Sub-Clause 11.3 Extension of Defects Notification Period

Depending on the complexity of the project and the nature of the Works, the Employer may
consider amending the period of “two years” stated at the end of the first paragraph of this Sub-
Clause to be a longer or a shorter period.

Sub-Clause 11.10 Unfulfilled Obligations

It may be necessary to review the effect of this Sub-Clause in relation to the period of liability
imposed by the applicable law.
In particular, the second paragraph of this Sub-Clause may require amending to take account of
the applicable law.

Additional Sub-Clause

If the Works include the Plant that comprises (in whole or in part) new or innovative technology
in the Country or at the Employer’s location, consideration may be given to including in the
Employer’s Requirements a requirement for the Contractor to provide supervisory assistance to
the Employer’s permanent operating personnel in the operation and maintenance of the Plant
during the DNP of the Works.

EXAMPLE SUB-CLAUSE FOR SUPERVISORY ASSISTANCE DURING DNP

“The Contractor shall provide supervisory assistance to the Employer during the DNP for the
Works. Such supervisory assistance shall be as described in the
Employer’s Requirements for the purpose of supporting the
Employer’s operation and maintenance of the Plant for the period of
[insert number of months] after the Date of Completion.”

Clause 12 Tests after Completion

Sub-Clause 12.1 Procedure for Tests after Completion

In an EPC turnkey project, the Contractor is typically required to prove the reliability and
performance of the Plant during the Tests on Completion, and the Works are only taken over
after successful completion of these tests. Exceptionally, it may be considered necessary for
Tests after Completion to be carried out after the Employer has taken over and operated the
Works, so that the guaranteed performance can be demonstrated under normal operating
conditions: for example, after operational fouling of the plant.

The Employer’s Requirements should describe the tests the Employer requires the Contractor
to carry out after taking-over to verify that the Works fulfil the Employer’s performance
requirements. For some types of Works, these Tests may be the most difficult to specify well,
although they are critical to a successful outcome. It may be appropriate for the Instructions to
Tenderers to require tenderers to include, in the documents to be submitted with the Tender,
detailed arrangements, and/or to define and allow for the provision of any instrumentation or
other items required in addition to that included in the Plant, to demonstrate compliance with the
Employer’s performance requirements.

With many types of Works, it is essential to specify, in the Schedule of Performance

Guarantees, the performance criteria which the Plant will be required to achieve. In such cases,
 the Instructions to Tenderers should include information on the base physical input conditions
(such as raw water quality for a water treatment Plant) the Contractor can rely on to design and
construct the facility to achieve such performance criteria.

The provisions in the General Conditions are based upon the Tests after Completion being
carried out by the Contractor, with the assistance of the Employer as regards personnel,
consumables, etc. These details may need to be specified in the Employer’s Requirements. If
other arrangements are envisaged, they should be specified in the Employer’s Requirements,
and this Sub-Clause should be amended accordingly. For example, the provisions of Sub-
Clause 12.1 in FIDIC’s Conditions of Contract for Plant and Design-Build, Second Edition 2017
are based upon these Tests being carried out by the Employer and his operating personnel,
with guidance from the Contractor’s staff.

If the works of a Section are to be tested under this Sub-Clause, it is strongly recommended that
consideration be given to testing requirements in the Employer’s Requirements that take due
account of the effect of other parts of the Works being incomplete.

The Tests after Completion may comprise:

(a) performance tests – to be carried out shortly after taking-over (the exact timing of such
tests should be specified in the Employer’s Requirements or as otherwise stated in the
O&M Manuals referred to under sub-paragraph (f)(iii) of this Sub-Clause), to measure
the performance of the Works or Section against the performance criteria specified
under the Contract; and
(b) availability tests – to be carried out during an initial period of the DNP (which period
should be specified in the Employer’s Requirements), to measure the availability of the
Works or Section during that period.
In some jurisdictions there may be a requirement under the applicable law for mandatory testing of
the Works after taking-over and before operation. If this is the case, it is essential that it is drawn to
tenderers’ attention in the Instruction to Tenderers, giving details of such mandatory testing.

Sub-Clause 12.4 Failure to Pass Tests after Completion

If the first paragraph of this Sub-Clause is to apply, the method of calculating the Performance
Damages (based on the extent of the failure) should be defined in the Schedule of Performance
Guarantees, which should also clearly specify the minimum acceptable performance criteria.

Clause 13 Variations and Adjustments

Variations can be initiated by any of three ways:

a) the Contractor may initiate his own proposals under Sub-Clause 13.2 [Value
Engineering], which are intended to benefit both Parties;
b) the Employer may instruct Variations under Sub-Clause 13.3.1 [Variation by
Instruction]; or
c) the Employer may request a proposal from the Contractor under Sub-Clause 13.3.2
[Variation by Request for Proposal].

Sub-Clause 13.4 Provisional Sums

Provisional Sums may be required for parts of the Works which are not required to be priced at the
risk of the Contractor. For example, a Provisional Sum may be necessary to cover goods or services
which the Employer wishes to select after award of the Contract, or to deal with a major uncertainty
regarding sub-surface conditions. It is essential to define the scope of each Provisional Sum (it is
recommended that this be included in a Schedule prepared by the Employer), since the amount of
each Provisional Sum corresponding to the defined scope will then be excluded from the other
elements of the Contract Price stated in the Contract Agreement.

Sub-Clause 13.7 Adjustments for Changes in Cost

The provision for adjustments under this Sub-Clause may be required if it would be
unreasonable for the Contractor to bear the risk of escalating costs due to inflation.

If the amounts payable to the Contractor are to be adjusted for rises or falls in the cost of labour,
Goods and other inputs to the Works, for this Sub-Clause to apply it is important that a
Schedule (or Schedules) of cost indexation is (are) included in the Contract and that such
Schedule(s) include a formula or formulae for calculation of the applicable adjustment under this
Sub-Clause.

For a plant contract, it may be preferable to adopt a formula or formulae which is/are more
directly related to the timing of the costs incurred by manufacturers.

It is recommended that the Employer be advised by a professional with experience in

construction costs and the inflationary effect on construction costs when preparing the contents
of the Schedule(s) of cost indexation.

SCHEDULE OF COST INDEXATION: EXAMPLE FORMULA FOR ADJUSTMENT FOR

CHANGE IN COST

Pn = a+b Ln +c En +d Mn +......

Lo Eo 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;

“a” is a fixed coefficient, 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, such
tabulated cost elements may be indicative of resources such as
labour, equipment and materials;
(particular care should be taken in the calculation of the
weightings/coefficients (“a”, “b”, “c”,...,) the total of which must not
exceed unity)

“Ln”, “En”, “Mn”, … are the current cost indices or reference prices
(stated in the Schedule of cost indexation) 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 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 weightings (coefficients) for each of the factors of cost stated in

the following table(s) of adjustment data shall only be adjusted if they
have been rendered unreasonable, unbalanced or inapplicable, as a
result of Variations.

Table(s) of adjustment data for payments each month/[YEAR] (delete

as appropriate) in …………. (currency)

Coefficient; Country of Source of Value on

scope of index origin; index; stated date(s)*
currency of Title/ Value.....Date
index definition

a= 0.10

Fixed

b= ____Labour

c=

d=

e=

* These values and dates confirm the definition of each index, but do not define Base Date
indices

Clause 14 Contract Price and Payment

The procedures and timing for making payments under this Clause 14 should be checked to
ensure that they are acceptable to both the Employer and any financing institution the Employer
may be using to fund the project.

Sub-Clause 14.1 The Contract Price

When writing the Special Provisions, consideration should be given to the amount and timing of
payment(s) to the Contractor. A positive cash-flow is clearly of benefit to the Contractor, and
tenderers will take account of the interim payment procedures when preparing their tenders.

Normally, an EPC/turnkey contract is based on a lump sum price, with little or no measurement.
The Contractor thus takes the risk of changes in cost arising from the Contractor’s design. The
lump sum price may consist of two or more amounts, quoted in the currencies of payment
(which may, but need not, include the Local Currency).

In order to value Variations, tenderers may be required to include in their Tenders detailed price
break-downs, including quantities, unit rates and other pricing information. This information can
also be useful for the assessment of interim payments but may not have been priced
competitively. When the tender documents are being prepared, the Employer must therefore
decide whether he/she will accept being bound by the tenderer’s price break-downs. If not, the
Employer should ensure that the Employer’s Representative has the necessary expertise to
value any Variations which may be required.

Additional Sub-Clauses may be required to cover any exceptions to the provisions set out in
Sub-Clause 14.1, and any other matters relating to payment.

If the Contractor is not required to pay import duties on Goods imported by the Contractor into
the Country, an additional Sub-Clause should be added and sub-paragraph (b) of Sub-Clause
14.1 [The Contract Price] of the General Conditions should be amended accordingly:

EXAMPLE SUB-CLAUSE FOR EXEMPTION FROM DUTIES

“All Goods imported by the Contractor into the Country shall be

exempt from customs and other import duties, if the Employer’s prior
written approval is obtained for import. The Employer shall endorse
the necessary exemption documents prepared by the Contractor for
presentation in order to clear the Goods through Customs, and shall
also provide the following exemption documents:

(describe the necessary documents, which the Contractor will be

unable to prepare)

If exemption is not then granted, the customs duties payable and paid
shall be reimbursed by the Employer.

All imported Goods, which are not incorporated in or expended in

connection with the Works, shall be exported on completion of the
Contract.

If not exported, the Goods will be assessed for duties as applicable to

the Goods involved in accordance with the Laws of the Country.

However, exemption may not be available for:

(a) Goods which are similar to those locally produced, unless they
are not available in sufficient quantities or are of a different
standard to that which is necessary for the Works; and
(b) any element of duty or tax inherent in the price of goods or
services procured in the Country, which shall be deemed to be
included in the Contract Price stated in the Contract Agreement.
Port dues, quay dues and, except as set out above, any element of tax or duty inherent in the
price of goods or services shall be deemed to be included in the
Contract Price stated in the Contract Agreement.”

If expatriate staff are exempted from paying local income tax, a suitable Sub-Clause should be
added and sub-paragraph (b) of Sub-Clause 14.1 [The Contract Price] of the General
Conditions should be amended accordingly. However, advice should be sought from a qualified
tax expert before drafting any such additional Sub-Clause.
EXAMPLE SUB-CLAUSE FOR EXEMPTION FROM TAXES

“Expatriate (foreign) personnel shall not be liable for income tax levied
in the Country on earnings paid in any foreign currency, or for income
tax levied on subsistence, rentals and similar services directly
furnished by the Contractor to Contractor’s Personnel, or for
allowances in lieu. If any Contractor’s Personnel have part of their
earnings paid in the Country in a foreign currency, they may export
(after the conclusion of their term of service on the Works) any
balance remaining of their earnings paid in foreign currencies.

The Employer shall seek exemption for the purposes of this Sub-Clause. If it is not granted,
the relevant taxes paid shall be reimbursed by the Employer.”

Sub-Clause 14.2 Advance Payment

When writing the Particular Conditions, consideration should be given to the benefits of the
Employer making an advance payment to the Contractor. Unless this Sub-Clause is not to
apply, the advance payment and the currencies in which it is to be paid must be specified in the
Contract Data. The rate of deduction for the repayments should be checked to ensure that
repayment is achieved before the Contractor’s completion of the Works. The typical figures in
sub-paragraphs (a) and (b) of Sub-Clause 14.2.3 [Repayment of Advance Payment] of the
General Conditions are based on the assumption that the advance payment is less than 22% of
the Contract Price stated in the Contract Agreement.

The acceptable form of Advance Payment Guarantee should be included in the tender
documents, annexed to the Particular Conditions: an example form is included at the end of this
publication (in the section “Sample Forms”).

If the Employer wishes to provide the advance payment in instalments, the Contract Data and
this Sub-Clause will need to be amended.

EXAMPLE The Contract Data:

- delete the words “14.2 ………. Amount of Advance Payment. (percent of

Contract Price stated in the Contract Agreement): ……….” and replace
with:
“14.2 ………….Total Advance Payment ___% of the Contract Price
stated in the Contract Agreement
14.2 ………….Number and timing of instalments: ________________”.

- delete the words “14.2 ………. Currencies of payment if different to the

currencies quoted in the Contract ………” and replace with:

“14.2 ………Currencies and proportions ….. ___% in ____________

___% in _________”.

Delete the second sentence of the second paragraph of Sub-Clause 14.2 and
replace with:

“The total amount of the advance payment, the number and timing of
instalments, and the applicable currencies and proportions shall be as
stated in the Contract Data.”.
 _
Sub-Clause 14.2.1 [Advance Payment Guarantee]:

- delete the words “equal to the advance payment” from the first sentence
and replace with: “equal to the total amount of the advance payment”.

- in the second paragraph before “the advance payment has been repaid”
add the words: “the total amount of”.

- in the third paragraph before “the advance payment has not been repaid”
add the words: “the total amount of”.

- in sub-paragraph (a) before “the advance payment has been repaid” add
the words: “the total amount of”.

- in the last sentence, before “the advance payment” add the words: “the
first instalment of”

Sub-Clause 14.2.2 [Advance Payment]:

- in the first sentence before “the advance payment” add the words: “the
first instalment of”.

- delete sub-paragraph (b) replace with: “(b) the Employer has received a
copy of the Contractor’s application for the first instalment of the advance
payment.”

- at the end of this Sub-Clause add the following wording: “Thereafter, the
Employer shall pay each subsequent instalment of the advance payment,
which the Contractor is entitled to under the Contract, within 14 days after
the Employer has received the Contractor’s application (in the form of a
Statement) for that instalment of advance payment.”

Sub-Clause 14.2.3 [Repayment of Advance Payment]:

- in the last sentence before “the advance payment has not been repaid”
add the words: “the total amount of”.

Sub-Clause 14.4 Schedule of Payments

The General Conditions contains provisions for interim payments to the Contractor, which may
be based on a Schedule of Payments. If another basis is to be used for determining interim
valuations, details should be added in the Special Provisions.

If payments are to be specified in a Schedule of Payments, consideration may be given to the

Schedule of Payments being in one of the following forms:
a) an amount, or percentage of the estimated final Contract Price, for each month (or other
period) during the Time for Completion (but this can prove unreasonable if the
Contractor’s progress differs significantly from the expectation on which the Schedule
was based); or
b) amounts based on the actual progress achieved by the Contractor in executing the
Works, which necessitates careful definition of the payment milestones (but
disagreements may arise when the work required for a payment milestone is nearly
achieved but the balance of the work, albeit minor, cannot be completed until some
months later).
The figures inserted by a tenderer in the Schedule of Payments may be compared with his/her
tender programme (if any), in order to assess whether they are reasonably consistent with each
other.

Alternatively, if the Works consist of only a few different types of operations, a simple
measurement approach for interim valuations may be appropriate.

EXAMPLE SUB-CLAUSE FOR INTERIM VALUATION PROCEDURE

Prior to commencing construction of the Permanent Works, the

Contractor shall submit a bill of principal quantities of the Permanent
Works (the “BPQPW”), together with any supporting information and
calculations reasonably required by the Employer. The BPQPW shall
include the anticipated final quantities of the principal items of
Permanent Works, which shall have been priced using all-in rates
such that the total amount equals the estimated final Contract Price.
The BPQPW shall not contain priced items for design or for
Temporary Works. The value of each element of this work, and of any
other work elements not described in the BPQPW, shall each be
included in the rates for Permanent Works which are to be constructed
after the element is carried out.

The BPQPW shall be subject to review and a Notice of No-objection

by the Employer, and shall be without prejudice to the final amount
due under the Contract. The BPQPW shall be revised and reissued by
the Contractor if it appears at any time before Taking-Over that it will
not fully represent the Permanent Works when complete.

During the Time for Completion, the contract value for the purposes of
sub-paragraph (i) of Sub-Clause 14.3 [Application for Interim
Payment] shall not exceed the amount calculated from the current
BPQPW, based on the quantities of Permanent Works which have
been constructed in accordance with the Contract. Each Statement
shall:
(a) be in the same form as that of the current BPQPW,
(b) include statement signed by the Contractor’s Representative
that the current BPQPW (including anticipated final quantities)
and the as-constructed quantities are all correct, and
(c) be accompanied by a certificate signed by the Contractor’s
Representative, certifying that the part of the Permanent Works
constructed to date complies with the Contract.

Sub-Clause 14.7 Payment

Periods for payment should be long enough for the Employer to meet, but not so long as to
prejudice the Contractor’s positive cash-flow.

If the country or countries of payment need to be specified, details may be included in a Schedule.

Sub-Clause 14.8 Delayed Payment

As an alternative to the second paragraph of this Sub-Clause, consideration may be given to the
payment of the Contractor’s actual financing Costs, taking account of local financing
arrangements.
Sub-Clause 14.9 Release of Retention Money

If part of the Retention Money is to be released and substituted by an appropriate guarantee, an

additional Sub-Clause may be added. The acceptable form(s) of guarantee should be included
in the tender documents, annexed to the Particular Conditions: an example form is included at
the end of this publication (in the section “Sample Forms”). Also, a limit of Retention Money
should be stated in the Contract Data.

EXAMPLE SUB-CLAUSE FOR RELEASE OF RETENTION

When the Retention Money has reached three-fifths (60%) of the limit
of Retention Money stated in the Contract Data, after the Employer
has received the guarantee referred to below the Employer shall make
payment of half (50%) of the limit of Retention Money to the
Contractor.
The Contractor shall obtain (at the Contractor’s cost) a guarantee in
amounts and currencies equal to half (50%) of the limit of Retention
Money stated in the Contract Data, and shall submit it to the
Employer. This guarantee shall be issued by an entity and from within
a country (or other jurisdiction) to which the Employer gives consent,
and shall be based on the sample form included in the tender
documents or on another form agreed by the Employer (but such
consent and/or agreement shall not relieve the Contractor from any
obligation under this Sub-Clause).

The Contractor shall ensure that the guarantee is valid and

enforceable until the Contractor has executed the Works, as specified
for the Performance Security in Sub-Clause 4.2.1. If the terms of the
guarantee specify an expiry date, and the Contractor has not so
executed the Works by the date 28 days before the expiry date, the
Contractor shall extend the validity of the guarantee.

The release of Retention Money under this Sub-Clause shall be in lieu of the release of the
second half of the Retention Money under the second paragraph of
Sub-Clause 14.9 [Release of Retention Money].

Sub-Clause 14.15 Currencies of Payment

If all payments are to be made in Local Currency, this currency must be named in the Contract
Agreement, and this Sub-Clause may be replaced:

EXAMPLE SUB-CLAUSE FOR A SINGLE CURRENCY CONTRACT

All payments made in accordance with the Contract shall be in Local Currency. The Local
Currency payments shall be fully convertible, except those for local
costs. The percentage attributed to local costs shall be as stated in the
Contract Data.

Financing Arrangements

For major contracts in some markets, there may be a need to secure finance from entities such
as aid agencies, development banks, export credit agencies, or other international financing
institutions. If financing is to be procured from any of these sources, the Special Provisions may
need to incorporate the financing institution’s special requirements. The exact wording will
depend on the relevant institution, so reference will need to be made to the institution to
ascertain its requirements, and to seek approval of the draft tender documents.

These requirements may include tendering procedures which need to be adopted in order to
render the eventual contract eligible for financing, and/or additional Sub-Clauses which may
need to be incorporated into the Special Provisions. The following examples indicate some of
the topics which the institution’s requirements may cover:

• prohibition from discrimination against the shipping companies of any one country;
• ensuring that the Contract is subject to a widely-accepted neutral law;
• provision for arbitration under recognised international rules and at a neutral location;
• giving the Contractor the right to suspend/terminate in the event of default under the
financing arrangements;
• restricting the right to reject Plant;
• specifying the payments due in the event of termination;
• specifying that the Contract does not become effective until certain conditions
precedent have been satisfied, including pre-disbursement conditions for the financing
arrangements; and
• obliging the Employer to make payments from his own resources if, for any reason, the
funds under the financing arrangements are insufficient to meet the payments due to
the Contractor, whether due to a default under the financing arrangements or otherwise.
The financing institution may wish the Contract to include references to the financing
arrangements, especially if funding from more than one source is to be arranged to finance
different elements of supply. It is not unusual for the Special Provisions to include particular
provisions identifying different categories of Works and specifying the documents to be presented
to the relevant financing institution to obtain payment. If the financing institution’s requirements are
not met, it may be difficult (or even impossible) to secure suitable financing for the project, and/or
the institution may decline to provide finance for part or all of the Contract.

Where the financing is not tied to the export of goods and services from any particular country
but is simply provided by commercial banks lending to the Employer, those banks may need to
ensure that the Contractor’s rights are very restricted.

Alternatively, the Contractor may be prepared to initiate financing arrangements for the Contract
and retain responsibility for them, although the Contractor would probably be unable or unwilling
to provide finance from the Contractor’s own resources. The Contractor’s financing bank’s
requirements are then likely to affect the Contractor during contract negotiations. For example,
the financing bank may require the Employer to make interim payments, although a large
proportion of the Contract Price might be withheld until the Works are complete. Since the
Contractor would then have to arrange financing to cover the shortfall between the payments
and the Contractor’s outgoings, the Contractor (and the financing bank) would probably require
some form of security from the Employer, guaranteeing payment when due.

It may be appropriate for the Employer, when preparing the tender documents, to anticipate the
latter requirement by undertaking to provide a guarantee for the element of payment which the
Contractor is to receive when the Works are complete. The acceptable form(s) of guarantee
should be included in the tender documents, annexed to the Particular Conditions: an example
form is included at the end of this publication (in the section “Sample Forms”). The following
Sub-Clause may be added.
 EXAMPLE SUB-CLAUSE FOR CONTRACTOR FINANCE

“The Employer shall obtain (at the Employer’s cost) a payment

guarantee in the amount and currencies, and provided by an entity, as
stated in the Contract Data. The Employer shall deliver the guarantee
to the Contractor within 28 days after both Parties have entered into
the Contract Agreement. The guarantee shall be in the form annexed
to these Special Provisions, or in another form acceptable to the
Contractor. Unless and until the Contractor receives the guarantee,
the Employer’s Representative shall not give the notice under Sub-
Clause 8.1 [Commencement of Works].

The guarantee shall be returned to the Employer at the earliest of the

following dates:

(a) when the Contractor has been paid theContract Price;

(b) when obligations under the guarantee expire or have been
discharged; or
(c) when the Employer has performed all obligations under the
Contract.”

Clause 15 Termination by Employer

Sub-Clause 15.2 Termination for Contractor’s Default

Before inviting tenders, the Employer should verify that the wording of this Sub-Clause, and
each anticipated ground for termination, is consistent with the law governing the Contract.

Sub-Clause 15.2.1 Notice

Sub-paragraph (h) in this Sub-Clause is intended to include situations where the Contractor or
any of the Contractor’s employees, agents, Subcontractors or Contractor’s Personnel gives or
offers to give (directly or indirectly) to any person any bribe, gift, gratuity, commission or other
thing of value, as an inducement or reward for showing or forbearing to show favour or disfavour
to any person in relation to the Contract. However, this is not intended to include lawful
inducements and rewards by the Contractor to the Contractor’s Personnel.

Sub-Clause 15.2.3 After termination

If the Employer has made available any Employer-Supplied Materials and/or Employer’s
Equipment in accordance with Sub-Clause 2.6, consideration should be given to an additional
sub-paragraph under this Sub-Clause:

EXAMPLE Insert the following new sub-paragraph at the end of sub-paragraph

(b) of Sub-Clause 15.2.3:

“(iv) all Employer-Supplied Materials and/or Employer’s Equipment

made available to the Contractor in accordance with Sub-
Clause 2.6 [Employer-Supplied Materials and Employer’s
Equipment], and”.
 Sub-Clause 15.5 Termination for Employer’s Convenience

In many jurisdictions under the applicable law it may not be permissible for the Employer to
terminate the Contract for convenience (termination of the Contract only being permitted in the
event of default on the part of the Contractor and, thereafter, arranging an equitable, non-
discriminatory and transparent procurement process to select a replacement contractor).
Therefore, before inviting tenders the Employer should verify that the wording of this Sub-
Clause is consistent with the law governing the Contract.
Clause 16 Suspension and Termination by Contractor
Sub-Clause 16.2 Termination by Contractor

Before inviting tenders, the Employer should verify that the wording of this Sub-Clause is
consistent with the law governing the Contract.

Sub-Clause 16.2.1 Notice

Sub-paragraph (i) in this Sub-Clause is intended to include situations, where the Employer or
any of the Employer’s employees, agents or Employer’s Personnel gives or offers to give
(directly or indirectly) to any person any bribe, gift, gratuity, commission or other thing of value,
as an inducement or reward for showing or forbearing to show favour or disfavour to any person
in relation to the Contract. However, this is not intended to include lawful inducements and
rewards by the Employer to the Employer’s Personnel.

Sub-Clause 16.3 Contractor’s Obligations After termination

If the Employer has made available any Employer-Supplied Materials and/or Employer’s
Equipment in accordance with Sub-Clause 2.6, consideration should be given to amending this
Sub-Clause:

EXAMPLE Delete sub-paragraph (c) in Sub-Clause 16.3 and replace with:

“(c) deliver to the Employer’s Representative all Employer-Supplied Materials

and/or Employer’s Equipment made available to the Contractor in
accordance with Sub-Clause 2.6 [Employer-Supplied Materials and
Employer’s Equipment]; and
(d) remove all other Goods from the Site, except as necessary for safety, and
leave the Site.”

Clause 17 Care of the Works and Indemnities

Sub-Clause 17.4 Indemnities by Contractor

In respect of the Contractor’s obligation to indemnify under the second paragraph of this Sub-
Clause, it should be noted that:
a) as this liability is not excluded under the first paragraph of Sub-Clause 1.14 [Limitation
of Liability], the Contractor has no liability for any indirect or consequential loss or
damage suffered by the Employer as a result of any negligence by the Contractor in
designing the Works to be fit for purpose;
 b) as this liability is not excluded under the second paragraph of Sub-Clause 1.14
[Limitation of Liability], it falls within the Contractor’s limitation of liability under Sub-
Clause 1.14; and
c) this liability may be covered by the insurance to be taken out by the Contractor under
Sub-Clause 19.2.3 [Liability for breach of professional duty], in which case a statement
to this effect should be included in the Contract Data.

Additional Sub-Clause

If the Contractor is to be allowed to use and/or occupy any of the Employer’s facilities and/or
accommodation temporarily during the Contract, it is recommended that an additional sub-
clause be added to Clause 17 to cover the responsibility for care of such facilities and/or
accommodation:

EXAMPLE SUB-CLAUSE FOR CONTRACTOR’S USE OF EMPLOYER’S

FACILITIES/ACCOMMODATION

“The Contractor shall take full responsibility for the care of the items of
the Employer’s facilities and/or accommodation listed below, from the
date of use and/or occupation by the Contractor until the date on
which such use and/or occupation is re-vested in the Employer.

[List of items and details]

If any loss or damage happens to any of the above items during a time when the Contractor is
responsible for its care, arising from any cause other than a cause for
which the Employer is responsible or liable, the Contractor shall
promptly rectify the loss or damage at the Contractor’s risk and cost.”

Clause 19 Insurance
If the Employer wishes to change the insurance provisions of this Clause – for example by
providing some of the insurance cover under the Employer’s own policy(ies) – it will be
necessary to review and revise the relevant Sub-Clause(s) under this Clause 19.

If this is the case, it is strongly recommended that:

a) the tender documents include details of such insurances as an annex to the Special
Provisions so that tenderers can estimate what other insurances they may wish to have
for their own protection. The details should include the conditions of insurance, limits,
exceptions and deductibles; preferably in the form of a copy of each insurance policy;
and
b) the Employer is advised by a professional with extensive experience in construction
insurance and liability in the preparation of the wording of the revised sub-clauses. If
the insurance provisions are changed without due care and attention, there is a risk that
the Employer will inadvertently carry liabilities for which the Employer is neither
prepared nor covered by insurance.

Clause 20 Employer’s and Contractor’s Claims

Sub-Clause 20.1 Claims
 In respect of any Claim under sub-paragraph (c) of this Sub-Clause, it should be noted that
“another entitlement or relief …or the execution of the Works” may include such matters as:

- interpretation of a provision of the Contract,

- rectification of an ambiguity or discrepancy found in the Contract documents,
- a declaration in favour of the claiming Party,
- access to the Site or to places where the Works are being (or to be) carried out, and/or
- any other matter of entitlement under the Conditions of Contract or in connection with,
or arising out of, the Contract that does not involve payment by one Party to the other
Party and/or EOT and/or extension of the DNP.
Consideration may be given to replacing the words “within a reasonable time” in the last
paragraph of this Sub-Clause by a specified time period.

Clause 21 Disputes and Arbitration

Sub-Clause 21.1 Constitution of the DAAB

It is generally accepted that construction projects depend for their success on the avoidance of
Disputes between the Employer and the Contractor and, if Disputes do arise, the timely
resolution of such Disputes.

Therefore, the Contract should include the provisions under Clause 21 which, while not
discouraging the Parties from reaching their own agreement on Disputes as the Works proceed,
allow them to bring contentious matters to an independent and impartial dispute
avoidance/adjudication board (“DAAB”) for resolution.

The provisions of this Sub-Clause are intended to provide for the appointment of the DAAB, and
FIDIC strongly recommends that the DAAB be appointed, as a ‘standing DAAB’
– that is, a DAAB that is appointed at the start of the Contract who visits the Site on a regular
basis and remains in place for the duration of the Contract to assist the Parties:
a) in the avoidance of Disputes,
and
b) in the ‘real-time’ resolution of Disputes if and when they arise
to achieve a successful project.
It is for this reason that, under the first paragraph of this Sub-Clause, the Parties are under a joint
obligation to appoint the member(s) of the DAAB within 28 days after the Parties signed the Contract
Agreement if no other time is stated in the Contract Data. That said, it is preferable that the
member(s) of the DAAB are appointed before signing the Contract Agreement.

At an early stage in the Employer’s planning of the project, consideration should be given as to
whether a sole-member DAAB or a three-member DAAB is preferable for a particular project,
taking account of its size, duration and the fields of expertise which will be involved.

This Sub-Clause provides for two alternative arrangements for the DAAB:

- a sole-member DAAB of one natural person, who has entered into a tripartite
agreement with both Parties;
or
 - a three-member DAAB of three natural persons, each of whom has entered into a
tripartite agreement with both Parties.
The tripartite agreement above is referred to as the DAAB Agreement under the Conditions of
Contract. It is recommended that the form of this agreement be one of the two alternative
example forms included at the end of this publication (in the section “Sample Forms”), as
appropriate to the arrangement adopted.

It should be noted that both forms of the DAAB Agreement incorporate (by reference) the
General Conditions of Dispute Avoidance/Adjudication Agreement with its Annex DAAB
Procedural Rules, which are included as the Appendix to the General Conditions in this
publication.

Under either of these alternative forms of DAAB Agreement, each natural person of the DAAB is
referred to as a DAAB Member.

A very important factor in the success of the dispute avoidance/adjudication procedure is the
Parties’ confidence in the agreed individual(s) who will serve on the DAAB. Therefore, it is
essential that candidates for this position are not imposed by either Party on the other Party.
The appointment of the DAAB is facilitated by the provision in the Contract Data for each Party
to name potential DAAB Members. It is important that the Employer and the Contractor each
avail himself/herself of the opportunity at the tender stage of the Contract to name potential
DAAB members in the Contract Data.

The Contract Data includes two lists for potential DAAB Members to be named: one for the
Employer to list three names, the other for the Contractor to list three names. This ensures that
both Parties have equal opportunity to put forward (the same number of) names for potential
DAAB Members, and so avoid any question that DAAB Member(s) may be imposed on one
Party by the other Party.

This provides a total of six potential DAAB Members from which the sole member or three
members (as the case may be) can be selected by the Parties. If it is considered necessary to
have a wider selection of DAAB Member(s) to choose from, then provision may be made for
longer lists in the Contract Data for both the Contractor and the Employer to name (the same
number of) additional DAAB Members.

If the Parties cannot agree on any DAAB member, Sub-Clause 21.2 [Failure to Appoint DAAB
Member(s)] applies and the selection and appointment of the DAAB member(s) should be made
by a wholly impartial entity with an understanding of the nature and purpose of a DAAB. The
President of FIDIC is prepared to perform this role if this authority has been delegated in
accordance with the example wording in the Contract Data. FIDIC maintains a list of approved
and experienced adjudicators for this specific purpose: The FIDIC President’s List of Approved
Dispute Adjudicators (http://fidic.org/president-list†).

If no potential DAAB members’ names are given in the Contract Data, consideration should be
given to stating a time period in the Contract Data that is greater than the default period of 28
days stated in the first paragraph of this Sub-Clause.

The period of 224 days stated in sub-paragraph (i) of this Sub-Clause has been arrived at by
taking account of certain time allowances, as follows:
 date of termination + 28 days to give a Notice of Claim under Sub-Clause 20.2.1 [Notice of
Claim]

+ 84 days to submit detailed particulars for the Claim under Sub-Clause 20.2.4 [Fully
detailed Claim]

+ 84 days for the Employer’s Representative’s agreement/determination of the Claim under

Sub-Clause 3.5 [Agreement or Determination]

+ 28 days for a NOD under Sub-Clause 3.5 [Agreement or Determination]

= 224 days after the date of termination.

As noted above, FIDIC strongly recommends that the DAAB be appointed at the start of the
Contract and remain in place for the duration of the Contract. However, as an alternative to the
‘standing DAAB’ envisaged under this Sub-Clause, the Parties may prefer the dispute board to
be appointed on an ‘ad-hoc’ basis. In such case, the dispute board would be appointed when a
Dispute arises, its appointment would be limited to resolution of the Dispute, it would have no
role to play in the avoidance of Disputes between the Parties, and its appointment would cease
when it had given its decision on that Dispute. Should a new Dispute arise, a new ad-hoc DAAB
would be appointed. Given that such a dispute board would have no role in dispute avoidance, it
is more correctly referred to as a “Dispute Adjudication Board” or “DAB”. If the Parties wish to
provide for an ‘ad-hoc DAB’, rather than the recommended ‘standing DAAB’, then the following
amendments will be needed:

EXAMPLE Delete the definitions under Sub-Clause 1.1.22 and 1.1.23 and
replace with:

“ “Dispute Adjudication Board” or “DAB” means the person or three

persons (as the case may be) so named in the Contract, or appointed
under Clause 21.”

and replace all references in the Conditions of Contract to “DAAB”

with “DAB”.

Sub-Clause 21.1, plus the Appendix General Conditions of Dispute

Avoidance/Adjudication Agreement with its Annex DAAB Procedural
Rules, should be amended to comply with the wording contained in
the corresponding provisions of FIDIC’s Conditions of Contract for
EPC/Turnkey Projects, First Edition 1999.

Delete Sub-Clause 21.3 [Avoidance of Disputes];

in the first paragraph of Sub-Clause 21.4 [Obtaining DAAB’s

Decision]:
• after the words “If a Dispute arises between the Parties then, ”
add:
“after a DAB has been appointed”;
• delete the words “(whether or not any informal discussions have
been held under Sub-Clause 21.3 [Avoidance of Disputes])”;
and
delete sub-paragraph (a) of Sub-Clause 21.4.1 [Reference of a Dispute to the DAAB].
To facilitate the appointment of the member(s) of an ‘ad-hoc DAB’, it is important that the
Employer and the Contractor each avail themselves of the opportunity at the tender stage of the
Contract to name three potential members in the Contract Data.

Sub-Clause 21.5 Amicable Settlement

In circumstances where the DAAB has given its decision but one or both Parties is/are
dissatisfied with the decision, the provisions of this Sub-Clause are intended to encourage the
Parties to settle a Dispute amicably, without the need for arbitration.

Rather than considering the 28 day period stated in this Sub-Clause as a ‘cooling-off period’,
FIDIC recommends that the Parties avail themselves of this opportunity to actively engage with
each other with a view to settling their Dispute.

Such active engagement may be by, for example:

• direct negotiation by senior executives from each of the Parties;
• mediation (please see below);
• expert determination (using, for example, the Expert Rules published by the
International Chamber of Commerce (the “ICC”, which is based at 33-43 Avenue du
Président Wilson, 75116 Paris, France) https://iccwbo.org/publication/icc-expert-rules-
english-version/ †);
• or other form of alternative dispute resolution that is not as formal, time-consuming and
costly as arbitration.
In this regard, it is recommended that consideration be given by the Parties to agree to a longer
time period than the period of 28 days stated in this Sub-Clause in an effort to arrive at an
amicable settlement procedure chosen by the Parties.
Amicable settlement procedures typically depend for their success on the consensual involvement
of both Parties, on confidentiality and on both Parties’ acceptance of the particular procedure.
Therefore, while it is recommended that both Parties engage actively to settle the Dispute
amicably, neither Party should seek to impose the procedure on the other Party.

If the Parties wish to adopt a mediation procedure in their attempt to settle the Dispute amicably,
then consideration may be given to the Mediation Rules, 2017 published by the International
Chamber of Commerce (the “ICC”, which is based at 33-43 Avenue du Président Wilson, 75116
Paris, France) https://iccwbo.org/dispute-resolution-services/mediation/mediation-rules/ †

or, alternatively, to the following mediation rules:

EXAMPLE MEDIATION RULES

Appointment of Mediator

If the Parties are unable to agree on the choice of an independent and

impartial mediator, or if the chosen mediator is unable or unwilling to
act, then either Party may immediately apply to the appointing entity or
official named in the Contract Data to appoint a mediator.

Once the mediator has been appointed, the Dispute shall immediately
be referred to the mediator by the Parties or by either Party.

Obligations of the Parties

 In addition to the Parties’ obligations as set out in the provisions that
follow below, during the mediation process the Parties shall engage
with the mediator and with each other in co-operation, in a timely
manner and in good faith.

Agreement of the Mediation Timetable

The mediator shall, within 7 days of his/her appointment, or other

period as may be proposed by the mediator and agreed by both
Parties, consult with the Parties to agree a timetable for the exchange
of any relevant information, the date/time/venue of the mediation
meeting, and the procedure to be adopted for the negotiations. The
agreement of the timetable shall have regard to the period stated
under Sub-Clause 21.5 [Amicable Settlement] of the Conditions of
Contract or as may be amended by the agreement of the Parties.

Confidentiality

The Parties’ negotiations facilitated by the mediator shall be

conducted on a strictly private and confidential basis. Neither Party
shall disclose to any third party any detail of the mediation process,
including but not limited to: the fact of the mediation, the identity of the
mediator, any matter discussed during the mediation process, any
information or document exchanged with the mediator, any
negotiations during the mediation meeting and/or the outcome of the
mediation.

The mediation, and/or any negotiations taking place during the

mediation meeting, shall not be referred to by either Party in any
concurrent or subsequent proceedings, unless such negotiations
conclude with a written legally binding agreement.

Written Agreement to be Binding

If the Parties accept the mediator’s recommendations, or otherwise

reach agreement on the settlement of the Dispute, such agreement
shall be recorded in writing and, once signed by the designated
representative(s) of both Parties, shall be binding on the Parties.

Mediator’s Opinion

If no agreement is reached by the Parties after negotiations have been

facilitated by the mediator, either Party may invite the mediator to
provide to both Parties a non-binding opinion in writing. Such opinion
shall not be used in evidence in any concurrent or subsequent
proceedings.

Costs of Mediation

The Parties will bear their own costs of participating in the mediation,
including but not limited to the costs of preparing and submitting
evidence to the mediator and attending the mediation meeting.

Each Party shall be responsible for paying one-half of the

remuneration of the mediator (and, if the mediator has been appointed
by the appointing entity or official named in the Contract Data, the
remuneration of such appointing entity or official).
However, if the mediator finds that a Party has initiated the mediation, or has engaged in the
mediation, in a frivolous or vexatious manner, then the mediator shall
have the power to order that Party to pay the reasonable costs of the
 other Party for preparing for and attending the mediation meeting. If
these costs cannot be agreed, they will be assessed by the mediator,
whose assessment shall be binding on the Parties.

Sub-Clause 21.6 Arbitration

The Contract should include provisions for the resolution by international arbitration of any
Dispute which is not settled amicably by the Parties. In international contracts, international
commercial arbitration has numerous advantages over litigation in national courts and is likely to
be more acceptable to the Parties.

Careful consideration should be given to ensuring that the international arbitration rules that are
chosen are compatible with the provisions of Clause 21 and with the other elements to be set
out in the Contract Data. The Arbitration Rules published by the International Chamber of
Commerce (the “ICC”, which is based at 33-43 Avenue du Président Wilson, 75116 Paris,
France) https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/† are
frequently incorporated by reference in international contracts.

It is important that the Parties agree on the number of arbitrators and the language of
arbitration. In the absence of specific stipulations as to the number of arbitrators and the place
of arbitration in the Contract, the International Court of Arbitration of the ICC will decide these
matters.

If the arbitration rules published by the United Nations Commission on International Trade Law
(“UNCITRAL” which is based at the Vienna International Centre, A-1400 Vienna, Austria)
http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules-revised/arb-rules-revised-2010-
e.pdf† or other non-ICC arbitration rules are preferred, it may be necessary to designate, in the
Contract Data, an institution to appoint the arbitrators or to administer the arbitration, unless the
institution is named (and their role specified) in the arbitration rules. It may also be necessary to
ensure, before so designating an institution in the Contract Data, that the institution is prepared
to appoint or administer.
For major projects tendered internationally, it is desirable that the place of arbitration be situated
in a country other than that of the Employer or Contractor. This country should have a modern
and liberal arbitration law and should have ratified a bilateral or multilateral convention (such as
the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards), or both, that would facilitate the enforcement of an arbitral award in the states of the
Parties.

It may be considered desirable in some cases for other Parties to be joined into any arbitration
between the Parties or for two or more pending arbitrations to be consolidated, thereby creating
a multi-party arbitration. While the ICC Arbitration Rules address multi-party arbitration, such
arbitration may in some cases be feasible only if the parties have included multi-party arbitration
clauses in their contracts. Such clauses require skilful drafting, and usually need to be prepared
on a case-by-case basis.

It is not unusual that the arbitration of a complex dispute is concluded sometime after
performance of the Contractor’s obligations under the Contract have been completed, in which
case it may not be fair and reasonable in the circumstances for any arbitral award which
requires the payment of an amount by one Party to the other Party to be in the currencies of
payment and in the proportions provided for under Sub-Clause 14.15 [Currencies of Payment].
For example, the Contractor may no longer have any need for local currency after completion of
 the Works; or the local currency may have declined in value in the interim or be a ‘blocked
currency’ that, consequently, cannot be removed from the country concerned.

Advisory Notes to Users of FIDIC Contracts Where the Project Uses

Building Information Modelling Systems

Building Information Modelling (BIM), is a process which is changing many elements of the
design profession, the construction industry and, possibly, even the operation and maintenance
of a facility.

BIM is one of the digital data technologies used in all aspects of project planning, investigation,
design, construction and operation. Digital data technologies include systems for: data
acquisition; document management; design and process management; estimating, planning,
and scheduling; contract management; performance management; and building information
modelling.

BIM has varying degrees of complexity ranging from rather isolated use of computer aided
design tools to full sharing of models and information by the entire project team. Currently, BIM
is more often used and better understood in developed countries, many of which are
encouraging or even mandating its use to improve quality, accuracy and delivery times for
projects as well as to provide cost savings. BIM has the potential to dramatically improve
productivity in the construction industry and reduce operational costs of facilities as well.

BIM is not a set of contract conditions; it is a mechanism to provide an environment where all
parties have access to information relevant to their role in the design and construction of a
project. Wherever possible, a combined (sometimes called federated or collaborative) model is
developed for all parties to share, even if, as is often the case, various designers have used
different computer aided design programs to develop their respective designs. Drawings and
specifications are held in a common database accessible to everyone which can be used for
clash detection, coordination of designs, communication of changes, and construction
sequencing.

Coordination of goals and effort is essential and is generally achieved by a BIM Protocol and a
BIM Execution Plan, both key documents to access and understand work in this environment. A
designer needs to understand and work to the Levels of Design (or Detail) (LOD) that will be
spelled out in these documents to ensure that there is sufficient detail at each level to allow all
designs to progress efficiently and avoid unnecessary changes.

BIM is founded on a team approach and successful projects utilising BIM encourage
collaboration. FIDIC contracts are designed to be fair to all parties and are considered suitable
for use with projects featuring the use of BIM - providing that the parties recognise the
difference in approach and use the contract appropriately. This starts with proper planning and,
unless an employer has appropriate expertise in house, they are well advised to retain an
engineer who is appropriately qualified to assist them in the solicitation of interest, proposals,
selection and negotiation of contracts with the selected project team. Legal advice is also
necessary, of course, especially during the latter steps. The request for proposal (RFP) must
clearly outline what the client’s (employer’s) expectations of the consultant are. The
expectations should focus on the specific BIM goals and benefits desired. If properly developed,
the RFP will help the proposers be responsive and the employer select the consultant (or in the
case of a design build project, the project team) best qualified to deliver the desired BIM
outcome. This process will in turn help all parties develop appropriate contract terms and
conditions. Ideally the selection process would use FIDIC’s Quality Based Selection (QBS)
guideline.

It should be noted that the improved quality of information in projects utilising BIM can result in a
significant reduction in variations. It is worth thinking about how the traditional roles of
Contractor and Employer fit into this structure. In general, BIM is well suited for integrated
project delivery, including Design Build and especially Design Build Operate projects where
early proactive involvement of the design engineer, contractor and employer are essential. If
advanced levels of BIM are anticipated for the project, the possibility of adding operation and
maintenance elements of the constructed facility might be considered.

For advanced levels of BIM where fully open sharing of information is required, a qualified
individual needs to be assigned the duty of managing the combined model. This should be
separate from the project manager’s role to ensure clear delineation of project responsibilities.
This may require special outsourcing, if such skills are not available from the employer.
Managing the BIM elements of a project may also involve risks that are beyond the normal
coverage of professional indemnity (PI) insurance policies. Specialist advice should be sought
from PI insurers if there is any doubt on coverage for this role. The competence and
responsibilities of this position need to be understood and should include experience in data
back-up and integrity, continuity planning and cyber security.

All parties involved in a project utilising BIM should take special care in checking their assigned
scope and contract to ensure that they are aware of their BIM related responsibilities. The risks
that FIDIC has identified in working in a BIM environment arise from these key features:

• misunderstanding of scope of services

• use of data for an inappropriate purpose and reliance on inappropriate data
• ineffective information, document or data management
• cyber security and responsibility for “holding” the models or data
• definition of deliverables, approval, and delivery
To manage these and other digital technology related risks, the consultant is encouraged to
clearly define adequately their proposed services, addressing such issues as:
• the systems and versions or releases they propose and the management processes
they will adopt
• access rights and limitations of the client, other consultants and contractors
• reliance other parties in the project may place on data in the digital environment
• limitations in terms of uptime and access and potential exclusion of liability for down-
time
• potential exclusion of liability in the event of cyber attack
• potential exclusion or limitations on professional liability in respect of the actions of
others
• access to the current and previous issues of the combined model and to the complete
audit trail of changes to the model
At the completion of the project the model may need to be brought up to as-built status. This
involves not only the drawing elements but also the embedded data. Experience shows that this
is a significant effort, so responsibilities for completing this task should be clear and appropriate
allowances provided.

The process for the delivery of contractual notices should be checked to determine if this will be
through the common data environment or by more traditional means.

If sub-contractors are to be utilised, they should be bound by the BIM Protocol and Execution
Plan.

The dispute resolution processes in the agreement should be appropriate, considering the
collaborative nature of the BIM process. Professionals with engineering, construction and legal
expertise should be consulted in this regard.

Legal counsel should review the contract to ensure that it does not create an unintended joint
venture which may be a risk in some jurisdictions.

If there is a fitness for purpose clause, make sure that it is clear who is responsible for ensuring
compliance and how responsibility for rectification is spread between participants.
Make sure that audit trails for modifications to the composite or federated model are controlled
by a process which can generate an audit trail that is preserved during and after completion.
The audit trail should be accessible by appropriate parties during and after project completion.
Given that there will be many parties the design and construction effort, ensure that there are
appropriate limits of liability in place for each participant and for the project as a whole.

For EPC/Turnkey projects involving BIM, in addition to considering the general principles as
introduced above, the following (non-exhaustive) list of Sub-Clauses of the General Conditions
of Contract for EPC/Turnkey Projects [ ©FIDIC 2017 Second Edition ] should be thoroughly
reviewed when drafting the Particular Conditions:
Sub-Clause No. Sub-Clause Title

1.1 ____________________________________________________Definitions
1.3 ________________________________Notices and Other Communications
1.5 ___________________________________________Priority of Documents
1.9 __________________________Employer’s Use of Contractor’s Documents
1.10__________________________Contractor’s Use of Employer’s Documents
1.14____________________________________________Limitation of Liability
2.3 _________________________Employer’s Personnel and Other Contractors
2.5 __________________________________Site Data and Items of Reference
3.1 ___________________________________The Employer’s Representative
3.2 ______________________________________Other Employer’s Personnel
4.1 __________________________________Contractor’s General Obligations
4.6 __________________________________________________Co-operation
4.7 ____________________________________________________Setting Out
4.9 ______________Quality Management and Compliance Verification Systems
4.20_______________________________________________Progress Reports
5.1 _______________________________________General Design Obligations
5.2 _________________________________________Contractor’s Documents
5.6 _______________________________________________As-Built Records
5.7 _______________________________Operation and Maintenance Manuals
5.8 __________________________________________________Design Error
6.8 _____________________________________Contractor’s Superintendence
6.10____________________________________________Contractor’s Records
8.3 ___________________________________________________Programme
9.1 _______________________Contractor’s Obligations (Tests on Completion)
13.3_____________________________________________Variation Procedure
17.3____________________________Intellectual and Industrial Property Rights
17.4________________________________________Indemnities by Contractor
17.5_________________________________________Indemnities by Employer
17.6_____________________________________________Shared Indemnities
19.2.6______________Other insurances required by Laws and by local practice

FIDIC intends to publish a “Technology Guideline” and a “Definition of Scope Guideline Specific
to BIM” with the aim of providing further detailed support. These documents are under
preparation and expected to be released shortly after the publication of the updates of the 1999
suite of FIDIC contract forms.
Annexes FORMS OF SECURITIES

Acceptable form(s) of security should be included in the tender documents: for Annex A and/or B, in
the Instructions to Tenderers; and for Annexes C to G, annexed to the Particular Conditions. The
following example forms, which (except for Annex A) incorporate Uniform Rules published by the
International Chamber of Commerce (the “ICC”, which is based at 33-43 Avenue du Président Wilson,
75116 Paris, France, www.iccwbo.org), need to be carefully reviewed against, and may have to be
amended to comply with, applicable law. Although the ICC publishes guides to these Uniform Rules,
legal advice should be taken before the securities are written. Note that the guaranteed amounts
should be quoted in all the currencies, as specified in the Contract, in which the guarantor pays the
beneficiary.
Annex A EXAMPLE FORM OF PARENT COMPANY
GUARANTEE

Name of Contract/Contract No.:____________________________________________________

Name and address of Employer:____________________________________________________

__________________________________________________ (together with successors and

assigns).

We have been informed that ____________________________________ (hereinafter called the

“Contractor”) is submitting an offer for such Contract in response to your invitation, and that the
conditions of your invitation require his/her offer to be supported by a parent company guarantee.

In consideration of you, the Employer, awarding the Contract to the Contractor, we (name of parent
company) irrevocably and unconditionally guarantee to you, as a primary obligation, the due
performance of all the Contractor’s obligations and liabilities under the Contract, including the
Contractor’s compliance with all its terms and conditions according to their true intent and meaning.

If the Contractor fails to so perform his/her obligations and liabilities and comply with the Contract, we
will indemnify the Employer against and from all damages, losses and expenses (including legal fees
and expenses) which arise from any such failure for which the Contractor is liable to the Employer
under the Contract.

This guarantee shall come into full force and effect when the Contract comes into full force and effect.
If the Contract does not come into full force and effect within a year of the date of this guarantee, or if
you demonstrate that you do not intend to enter into the Contract with the Contractor, this guarantee
shall be void and ineffective. This guarantee shall continue in full force and effect until all the
Contractor’s obligations and liabilities under the Contract have been discharged, when this guarantee
shall expire and shall be returned to us, and our liability hereunder shall be discharged absolutely.

This guarantee shall apply and be supplemental to the Contract as amended or varied by the
Employer and the Contractor from time to time. We hereby authorise them to agree any such
amendment or variation, the due performance of which and compliance with which by the Contractor
are likewise guaranteed hereunder. Our obligations and liabilities under this guarantee shall not be
discharged by any allowance of time or other indulgence whatsoever by the Employer to the
Contractor, or by any variation or suspension of the works to be executed under the Contract, or by
any amendments to the Contract or to the constitution of the Contractor or the Employer, or by any
other matters, whether with or without our knowledge or consent.

This guarantee shall be governed by the law of the same country (or other jurisdiction) as that which
governs the Contract and any dispute under this guarantee shall be finally settled under the Rules of
Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in
accordance with such Rules. We confirm that the benefit of this guarantee may be assigned subject
only to the provisions for assignment of the Contract.

SIGNED by: SIGNED by(1):

(signature) (signature)

(name) (name)
 (position in the company) (position in the company)

Date:

(1)
Whether one or more signatories for the parent company are required will depend on the parent
company and/or applicable law.
Annex B EXAMPLE FORM OF TENDER SECURITY

Guarantee No.: ________________________[insert guarantee reference number]

The Guarantor:_________________________________________________________________
[insert name and address of place of issue, unless indicated in the letterhead]

Name of Contract/Contract No.:____________ [insert reference number or other information identifying

the contract with regard to which the tender is submitted]

The Beneficiary (the “Employer”):_______________[insert name and address of the Beneficiary]

We have been informed that ____________________________________________________ [insert

name and address of the Tenderer] (hereinafter called the “Applicant”) is submitting an offer for such
Contract in response to your invitation, and that the conditions of your invitation (the “Conditions of
Invitation”, which are set out in a document entitled Instructions to Tenderers) require his/her offer to
be supported by a tender security.

At the request of the Applicant, we _________________________________________ [insert name of

Guarantor] hereby irrevocably undertake to pay you, the Beneficiary/Employer, any sum or sums not
exceeding in total the amount of ___________________________ [insert in figures and words the
maximum amount payable and the currency in which it is payable] upon receipt by us of your demand
in writing and your written statement (in the demand) that:
(a) the Applicant has, without your agreement, withdrawn his/her offer after the latest time
specified for its submission and before the expiry of its period of validity, or
(b) the Applicant has refused to accept the correction of errors in his/her offer in
accordance with such Conditions of Invitation, or
(c) you entered into the Contract with the Applicant and he/she has failed to deliver a
performance security complying with Sub-Clause 4.2.1 of the Conditions of Contract.
Any demand for payment must contain your signature(s) which must be authenticated by your bankers
or by a notary public. The authenticated demand and statement must be received by us at the
following office [insert address of office] on or before ________________________ [insert the date 35
days after the expiry of the validity of the Letter of Tender], when this guarantee shall expire.

The party liable for the payment of any charges: ______________________________________

____________________________________[insert the name of the party].

This guarantee shall be governed by the laws of _________________________ [insert the law
governing the guarantee], and shall be subject to the Uniform Rules for Demand Guarantees (URDG)
2010 Revision, ICC Publication No. 758.

SIGNED by: SIGNED by(1):

(signature) (signature)

(name) (name)

Date:________________________________
(1)
Whether one or more signatories for the bank are required will depend on the bank and/or applicable
law.
Annex C EXAMPLE FORM OF PERFORMANCE SECURITY -
DEMAND GUARANTEE

Guarantee No.:________________________[insert guarantee reference number]

The Guarantor:_________________________________________________________________ [insert

name and address of place of issue, unless indicated in the letterhead]

Name of Contract/Contract No.: __________________________________________________[insert

reference number or other information identifying the contract between the Applicant and the
Beneficiary on which the guarantee is based]

The Beneficiary (the “Employer”): __________________________________________________

_________________________________________ [insert name and address of the Beneficiary]

We have been informed that ____________________________________________________ [insert

name and address of the Contractor] (hereinafter called the “Applicant”) is your Contractor under such
Contract, which requires him/her to obtain a Performance Security.

At the request of the Applicant, we __________________________________________ [insert name

of Guarantor] hereby irrevocably undertake to pay you, the Beneficiary/Employer, any sum or sums
not exceeding in total the amount of __________________________________ [insert in figures and
words the maximum amount payable and the currency in which it is payable] (the “Guaranteed
Amount”) upon receipt by us of your demand in writing and your written statement indicating in what
respect the Applicant is in breach of its obligations under the Contract.

[Following receipt by us of an authenticated copy of the Taking-Over Certificate for the whole of the
Works under Clause 10 of the Conditions of Contract, the Guaranteed Amount shall be reduced by
________________ % and we shall promptly notify you that we have received such certificate and
have reduced the Guaranteed Amount accordingly.] (1)

Following receipt by us of an authenticated copy of a statement issued by you that, pursuant to Sub-
Clause 4.2.1 of the Conditions of Contract, variations or adjustments under Clause 13 of the
Conditions of Contract have resulted in an accumulative increase or decrease of the Contract Price by
more than twenty percent (20%) of the Contract Price stated in the Contract Agreement, and that
therefore the Guaranteed Amount should be adjusted by the percentage specified in the statement
equal to the accumulative increase or decrease, respectively, we shall promptly inform you that we
have received such statement and have adjusted the Guaranteed Amount accordingly. In the case of
a request for a decrease of the amount of the Performance Security, the above statement shall be
accompanied by your written consent to such decrease.

Any demand for payment must contain your signature(s) which must be authenticated by your bankers
or by a notary public. The authenticated demand and statement must be received by us at the
following office [insert address of office] on or before _______________________ (insert the date 70
days after the expected expiry of the Defects Notification Period for the Works) (the “Expiry Date”),
when this guarantee shall expire.

The party liable for the payment of any charges: [insert the name of the party].
This guarantee shall be governed by the laws of _________________________ [insert the law
governing the guarantee], and shall be subject to the Uniform Rules for Demand Guarantees, (URDG)
2010 Revision, ICC Publication No. 758.

SIGNED by: SIGNED by(2):

(signature) (signature)

(name) (name)

Date:________________________________

(1)
When drafting the tender documents, the writer should ascertain whether to include the optional text,
shown in parentheses [ ].
(2)
Whether one or more signatories for the bank are required will depend on the bank and/or applicable
law.
Annex D EXAMPLE FORM OF PERFORMANCE SECURITY -
SURETY BOND

Name of Contract/Contract No.: ____________________________________________________

Name and address of Beneficiary (the “Employer”): ___________________________________

_____________________________________________________________________________

We have been informed that ____________________________________________________ [insert

name of the Contractor] (hereinafter called the “Principal”) is your contractor under such Contract,
which requires him/her to obtain a Performance Security.

By this Bond, __________________________________________________________________

_____________________________________________ [insert name and address of contractor]

(who is your Contractor under such Contract) as Principal and: __________________________

____________________________________ [insert name and address of Guarantor] as Guarantor
are irrevocably held and firmly bound to the Beneficiary in the total amount of
_______________________ [insert in figures and words the maximum amount payable and the
currency in which it is payable] (the “Bond Amount”) for the due performance of all such Principal’s
obligations and liabilities under the above named Contract.

[Such Bond Amount shall be reduced by ________________ % upon the issue of the Taking-Over
Certificate for the whole of the Works under Clause 10 of the Conditions of Contract.](1)

This Bond shall become effective on the Commencement Date defined in the Contract.

Upon Default by the Principal to perform any contractual obligation, or upon the occurrence of any of
the events and circumstances listed in Sub-Clause 15.2.1 of the Conditions of Contract, the Guarantor
shall satisfy and discharge the damages sustained by the Beneficiary due to such Default, event or
circumstances.(2) However, the total liability of the Guarantor shall not exceed the Bond Amount.

The obligations and liabilities of the Guarantor shall not be discharged by any allowance of time or
other indulgence whatsoever by the Beneficiary to the Principal, or by any variation or suspension of
the Works to be executed under the Contract, or by any amendments to the Contract or to the
constitution of the Principal or the Beneficiary, or by any other matters, whether with or without the
knowledge or consent of the Guarantor.

Any claim under this Bond must be received by the Guarantor on or before ____________________
[insert the date six months after the expected expiry of the Defects Notification Period for the Works]
(the “Expiry Date”), when this Bond shall expire and shall be returned to the Guarantor.

The benefit of this Bond may be assigned subject to the provisions for assignment of the Contract, and
subject to the receipt by the Guarantor of evidence of full compliance with such provisions.

This Bond shall be governed by the law of _________________________________ [insert the law
governing the bond] being the same country (or other jurisdiction) as that which governs the Contract.
This Bond incorporates and shall be subject to the Uniform Rules for Contract Bonds, published as
number 524 by the International Chamber of Commerce, and words used in this Bond shall bear the
meanings set out in such Rules.

Whereas this Bond has been issued by the Principal and the Guarantor on ________________ [date]
Signatures for and on behalf of the Principal(3):

(signature) (signature)

(name) (name)

Signatures for and on behalf of the Guarantor(4):

(signature) (signature)

(name) (name)

(1)
When writing the tender documents, the writer should ascertain whether to include the optional text,
shown in parentheses [ ].
(2)
Insert: [and shall not be entitled to perform the Principal’s obligations under the Contract.]
Or: [or at the option of the Guarantor (to be exercised in writing within 42 days of receiving the claim
specifying such Default) perform the Principal’s obligations under the Contract.]
(3)
Whether one or more signatories for the Principal are required will depend on the Principal and/or
applicable law.
(4)
Whether one or more signatories for the Guarantor are required will depend on the Guarantor and/or
applicable law.
Annex E EXAMPLE FORM OF ADVANCE PAYMENT
GUARANTEE

Guarantee No.: ___________________________________ [insert guarantee reference number]

The Guarantor: _________________________________________________________________

_____________________________________ [insert name and address of place of issue, unless
indicated in the letterhead]

Name of Contract/Contract No.: ____________________________________________________

____________________________________[insert reference number or other information identifying
the contract between the Applicant and the Beneficiary on which the guarantee is based]

The Beneficiary (the “Employer”): __________________________________________________

_________________________________________[insert name and address of the Beneficiary]

We have been informed that ______________________________________________________

_____________________________________[insert name and address of the Contractor] (hereinafter
called the “Applicant”) is your Contractor under such Contract and wishes to receive an advance
payment, for which the Contract requires him/her to obtain a guarantee.

At the request of the Applicant, we _____________________ [insert name of Guarantor] hereby

irrevocably undertake to pay you, the Beneficiary/Employer, any sum or sums not exceeding in total
the amount of ______________ [insert in figures and words the maximum amount payable and the
currency in which it is payable] (the “Guaranteed Amount”) upon receipt by us of your demand in
writing and your written statement that:
(a) the Applicant has failed to repay the advance payment in accordance with the
Conditions of Contract, and
(b) the amount of the advance payment which the Applicant has failed to repay.
This guarantee shall become effective upon receipt [of the first instalment] of the advance payment by
the Applicant. The Guaranteed Amount shall be reduced by the amounts of the advance payment
repaid to you, as evidenced by your notices issued under Sub-Clause 14.6 of the Conditions of
Contract. Following receipt of a copy of each purported notice, we shall promptly notify you of the
revised Guaranteed Amount accordingly.

Any demand for payment must contain your signature(s) which must be authenticated by your bankers
or by a notary public. The authenticated demand and statement must be received by us at the
following office [insert address of office] on or before ________________________ [insert the date 70
days after the expected expiry of the Time for Completion] (the “Expiry Date”), when this guarantee
shall expire.

The party liable for the payment of any charges: ______________[insert the name of the party].

This guarantee shall be governed by the laws of ___________________________[insert the law

governing the guarantee], and shall be subject to the Uniform Rules for Demand Guarantees (URDG)
2010 Revision, ICC Publication No. 758.
 Signed by: Signed by(1):
(signature) (signature)

(name) (name)

Date:________________________________

(1)
Whether one or more signatories for the bank are required will depend on the bank and/or
applicable law.
Annex F EXAMPLE FORM OF RETENTION MONEY
GUARANTEE

Guarantee No.: ___________________________________ [insert guarantee reference number]

The Guarantor: _________________________________________________________________

_____________________________________ [insert name and address of place of issue, unless
indicated in the letterhead]

Name of Contract/Contract No.: ____________________________________________________

____________________________________ [insert reference number or other information identifying
the contract between the Applicant and the Beneficiary on which the guarantee is based]

The Beneficiary (the “Employer”): __________________________________________________

____________________________________[insert name and address of the Beneficiary]

We have been informed that ______________________________________________________

____________________________________ [insert name and address of the Contractor] (hereinafter
called the “Applicant”) is your Contractor under such Contract and wishes to receive an early payment
of [part of] the retention money, for which the Contract requires him/her to obtain a guarantee.

At the request of the Applicant, we _____________________ [insert name of Guarantor] hereby

irrevocably undertake to pay you, the Beneficiary/Employer, any sum or sums not exceeding in total the
amount of ______________ [insert in figures and words the maximum amount payable and the currency
in which it is payable] (the “Guaranteed Amount”) upon receipt by us of your demand in writing and your
written statement that the Applicant has failed to carry out his/her obligation(s) to rectify the following
defect(s) for which he/she is responsible under the Contract [state the nature of the defect(s)].

At any time, our liability under this guarantee shall not exceed the total amount of retention money
released to the Applicant by you, as evidenced by your notices issued under Sub-Clause 14.6 of the
Conditions of Contract with a copy being submitted to us.

Any demand for payment must contain your signature(s) which must be authenticated by your bankers
or by a notary public. The authenticated demand and statement must be received by us at the
following office [insert address of office] on or before ______________________ [insert the date 70
days after the expected expiry of the Defects Notification Period for the Works], (the “Expiry Date”),
when this guarantee shall expire.

We have been informed that the Beneficiary may require the Applicant to extend this guarantee if the
Performance Certificate under the Contract has not been issued by the date 28 days prior to such Expiry
Date. We undertake to pay you the Guaranteed Amount upon receipt by us, within such period of 28 days,
of your demand in writing and your written statement that the Performance Certificate has not been issued,
for reasons attributable to the Applicant, and that this guarantee has not been extended.

The party liable for the payment of any charges: ______________[insert the name of the party].

This guarantee shall be governed by the laws of _________________________ [insert the law
governing the guarantee] and shall be subject to the Uniform Rules for Demand Guarantees (URDG)
2010 Revision, ICC Publication No. 758.
 Signed by: Signed by(1):
(signature) (signature)

(name) (name)

Date:________________________________

(1)
Whether one or more signatories for the bank are required will depend on the bank and/or
applicable law.
Annex G EXAMPLE FORM OF PAYMENT GUARANTEE BY
EMPLOYER

Guarantee No.: ___________________________________ [insert guarantee reference number]

The Guarantor: _________________________________________________________________

_____________________________________ [insert name and address of place of issue, unless
indicated in the letterhead]

Name of Contract/Contract No.: ____________________________________________________

____________________________________ [insert reference number or other information identifying
the contract between the Applicant and the Beneficiary on which the guarantee is based]

The Beneficiary (the “Contractor”): __________________________________________________

____________________________________[insert name and address of the Beneficiary]

We have been informed that ______________________________________________________

____________________________________ [insert name and address of the Employer] (hereinafter
called the “Applicant”) is required to obtain a bank guarantee.

At the request of the Applicant, we _____________________ [insert name of Guarantor] hereby

irrevocably undertake to pay you, the Beneficiary/Contractor, any sum or sums not exceeding in total
the amount of ______________ [insert in figures and words the maximum amount payable and the
currency in which it is payable] upon receipt by us of your demand in writing and your written
statement that:
(a) in respect of a payment due under the Contract, the Applicant has failed to make
payment in full by the date fourteen days after the expiry of the period specified in the
Contract as that within which such payment should have been made, and
(b) the amount(s) which the Applicant has failed to pay.
Any demand for payment must be accompanied by a copy of __________________________ [insert
list of documents evidencing entitlement to payment and the language in which these documents are
to be submitted], in respect of which the Applicant has failed to make payment in full.

Any demand for payment must contain your signature(s) which must be authenticated by your bankers
or by a notary public. The authenticated demand and statement must be received by us at the
following office [address of office] on or before _____________________ [insert the date six months
after the expected expiry of the Defects Notification Period for the Works] when this guarantee shall
expire.

The party liable for the payment of any charges: ______________[insert the name of the party].

This guarantee shall be governed by the laws of _________________ [insert the law governing the
guarantee] and shall be subject to the Uniform Rules for Demand Guarantees (URDG) 2010 Revision,
ICC Publication No. 758.

Signed by: Signed by(1):

(signature) (signature)
 (name) (name)

Date:________________________________

(1)
Whether one or more signatories for the bank are required will depend on the bank and/or
applicable law.
FIDIC® Conditions of Contract for
EPC/TURNKEY PROJECTS

Forms of Letter of Tender, Contract Agreement and Dispute Adjudication Avoidance

Agreement
LETTER OF TENDER

NAME OF CONTRACT:

TO:

We have examined the Conditions of Contract, Employer’s Requirements, Schedules, the Contract
Data and Addenda Nos ________________________ for the above-named Contract and the words
and expressions used herein shall have the meanings assigned to them in the Conditions of Contract.
We have examined, understood and checked these documents and have ascertained that they
contain no errors or other defects. We accordingly offer to design, execute and complete the Works
and remedy any defects therein, in conformity with such documents and our enclosed Tender
(including this letter), for the lump sum of:

___________________________________________________________________________
[currency and amount in figures]

___________________________________________________________________________
[currency and amount in words]

We agree to abide by this Tender until ___________________ [date] and it shall remain binding upon
us and may be accepted at any time before that date.

If this offer is accepted, we will provide the specified Performance Security, commence the Works as
soon as is reasonably practicable after the Commencement Date, and complete the Works in
accordance with the above-named documents within the Time for Completion. We guarantee that the
Works will then conform with the Schedule of Performance Guarantees.

We understand that you are not bound to accept the lowest or any tender you may receive.

Signature ________________________________________________________in the capacity of

_______________________________

duly authorised to sign tenders for and on behalf of ___________________________________

Address:_________________________________

Date: ________________________________
CONTRACT AGREEMENT

This Agreement made the________________day of__________________ _________________

Between___________of_________________(hereinafter called “the Employer”) of the one part,
and_______________of_________________(hereinafter called “the Contractor”) of the other part

Whereas the Employer desires that the Works known as _______________________________

[name and number of the Contract] should be executed by the Contractor, and has accepted a Tender
by the Contractor for the execution and completion of these Works and the remedying of any defects
therein, for the lump sum Contract Price of:

___________________________________________________________________________
[currency and amounts in figures]

___________________________________________________________________________
[currency and amounts in words]

The Employer and the Contractor agree as follows:

1. In this Agreement words and expressions shall have the same meanings as are respectively
assigned to them in the Conditions of Contract hereinafter referred to.

2. The following documents shall be deemed to form and be read and construed as part of this
Agreement:
(a) The memoranda annexed hereto (which includes a breakdown of the Contract Price)
(b) The Conditions of Contract
(c) The Employer’s Requirements
(d) The completed Schedules
(e) The Tender and
(f) The JV Undertaking.*
* [if the Contractor constitutes an unincorporated JV, otherwise delete]

3. In consideration of the payments to be made by the Employer to the Contractor as hereinafter

mentioned, the Contractor hereby covenants with the Employer to design, execute and
complete the Works and remedy any defects therein, in conformity with the provisions of the
Contract.

4. The Employer hereby covenants to pay the Contractor, in consideration of the design, execution
and completion of the Works and the remedying of defects therein, the final Contract Price at
the times and in the manner prescribed by the Contract.

[5. The Contract shall come into full force and effect on the date when the following conditions are
satisfied:
_____________________________________________________________________
[List of pre-conditions]

The Employer shall promptly confirm to the Contractor the date on which all these conditions
have been satisfied. If any of these conditions has not been satisfied within __________ days of
 the above-mentioned date on which this Agreement is made, this Agreement shall be void and
ineffective and any securities issued in relation to the above Works shall be
returned.______________ optional]

[5. The Commencement Date shall be _____________________ optional]

In Witness whereof the parties hereto have caused this Agreement to be executed the day and year
first before written in accordance with their respective laws.

SIGNED by: Witness:

for and on behalf of the Employer in the Name:

presence of Address:

Date:

SIGNED by: Witness:

for and on behalf of the Contractor in the Name:

presence of Address:

Date:
DISPUTE AVOIDANCE/ADJUDICATION AGREEMENT

[All italicised text and any text within square brackets (except sub-clause headings) in this form of
agreement is for use in preparing the form and should be deleted from the final product].

Name and details of the Contract __________________________________________________

_____________________________________________________________________________

This Agreement made the ______day of ______ [month], _____ [year], between

Name and contact details of the Employer _____________________________________(name)

_____________________________________(address)
___________________________________(telephone)
_____________________(email / other contact details);

Name and contact details of the Contractor_____________________________________(name)

_____________________________________(address)
___________________________________(telephone)
_____________________(email / other contact details);

and

Name and contact details of the DAAB Member_________________________________(name)

_____________________________________(address)
___________________________________(telephone)
_____________________(email / other contact details);
(“DAA Agreement”)

Whereas:
A. the Employer and the Contractor have entered (or intend to enter) into the Contract;

B. under the Contract, the “DAAB” or “Dispute Avoidance/Adjudication Board” means the sole
member or three members (as stated in the Contract Data of the Contract) so named in the
Contract, or appointed under Sub-Clause 21.1 [Constitution of the DAAB] or Sub-Clause 21.2
[Failure to Appoint DAAB Members] of the Conditions of Contract;

C. the Employer and the Contractor desire jointly to appoint the above-named DAAB Member to
act on the DAAB as:
(a) the sole member of the DAAB, and where this is the case, all references to the “Other
Members” do not apply; or
(b) one of three members / chairman [delete the one which is not applicable] of the DAAB
and, where this is the case, the other two persons are:

_______________________________(name) _______________________________(name)

_____________________________(address) _____________________________(address)

___________________________(telephone) ___________________________(telephone)
 _______________________________(email / _______________________________(email /

other contact details) other contact details)

the “Other Members”; and

D. the DAAB Member accepts this appointment.

The Employer, Contractor and DAAB Member jointly agree as follows:

1. The conditions of this DAA Agreement comprise:

(a) Clause 21 [Disputes and Arbitration] of the Conditions of Contract, and any other
provisions of the Contract that are applicable to the DAAB’s Activities; and
(b) the “General Conditions of Dispute Avoidance/Adjudication Agreement”, which is
appended to the General Conditions of the “Conditions of Contract for Construction”
Second Edition 2017 published by FIDIC (“GCs”), as amended and/or added to by the
following provisions.

2. [Details of amendments to the GCs, if any. For example:

In the procedural rules annexed to the GCs, Rule _ is deleted and replaced by: “ … “]

3. The DAAB Member shall be paid in accordance with Clause 9 of the GCs. The currency of
payment shall be ________.

In respect of Sub-Clauses 9.1 and 9.2 of the GCs, the amounts of the DAAB Member’s monthly
fee and daily fee shall be:
monthly fee_________________ per month, and
daily fee of_________________ per day
(or as otherwise set under Sub-Clause 9.3 of the GCs).

4. In consideration of the above fees, and other payments to be made to the DAAB Member in
accordance with the GCs, the DAAB Member undertakes to act as DAAB Member in
accordance with the terms of this DAA Agreement.

5. The Employer and the Contractor shall be jointly and severally liable for the DAAB Member’s
fees and other payments to be made to the DAAB Member in accordance with the GCs.

6. This DAA Agreement shall be governed by the law of _____________ (if not stated, the law that
governs the Contract under Sub-Clause 1.4 of the Conditions of Contract).

SIGNED by: SIGNED by: SIGNED by:

Print name: Print name: the DAAB Member

Title: Title: Title:

for and on behalf of the for and on behalf of the
Employer Contractor

in the presence of in the presence of in the presence of

Witness: Witness: Witness:

Name: Name: Name:

Address: Address: Address:

Date: Date: Date: