Conditions of Contract

for CONSTRUCTION
FOR BUILDING AND ENGINEERING WORKS
DESIGNED BY THE EMPLOYER

Multilateral Development Bank Harmonised Edition

June 2010

General Conditions

This publication is exclusive for use as provided under a Licence

Agreement between a Participating Bank and FIDIC, and, consequently,
no part of this publication may be reproduced, translated, adapted, stored
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indicates otherwise.

FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS

INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS
INTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE
FEDERACION INTERNACIONAL DE INGENIEROS CONSULTORES
 or

(b) (i) the work is instructed under Clause 13 [ Variations and Adjustments ],
(ii) no rate or price is specified in the Contract for this item, and
(iii) no specified rate or price is appropriate because the item of work is not
of similar character, or is not executed under similar conditions, as any
item in the Contract.

Each new rate or price shall be derived from any relevant rates or prices in the
Contract, with reasonable adjustments to take account of the matters described in
sub-paragraph (a) and/or (b), as applicable. If no rates or prices are relevant for the
derivation of a new rate or price, it shall be derived from the reasonable Cost of
executing the work, together with profit, taking account of any other relevant matters.

Until such time as an appropriate rate or price is agreed or determined, the Engineer
shall determine a provisional rate or price for the purposes of Interim Payment
Certificates as soon as the concerned work commences.

12.4
Omissions Whenever the omission of any work forms part (or all) of a Variation, the value of which
has not been agreed, if:

(a) the Contractor will incur (or has incurred) cost which, if the work had not been
omitted, would have been deemed to be covered by a sum forming part of the
Accepted Contract Amount;
(b) the omission of the work will result (or has resulted) in this sum not forming part
of the Contract Price; and
(c) this cost is not deemed to be included in the evaluation of any substituted work;

then the Contractor shall give notice to the Engineer accordingly, with supporting
particulars. Upon receiving this notice, the Engineer shall proceed in accordance with
Sub-Clause 3.5 [ Determinations ] to agree or determine this cost, which shall be
included in the Contract Price.

13.1
13
Variations and Adjustments

Right to Vary Variations may be initiated by the Engineer at any time prior to issuing the Taking-Over
Certificate for the Works, either by an instruction or by a request for the Contractor to
submit a proposal.

The Contractor shall execute and be bound by each Variation, unless the Contractor
promptly gives notice to the Engineer stating (with supporting particulars) that (i) the
Contractor cannot readily obtain the Goods required for the Variation, or (ii) such
Variation triggers a substantial change in the sequence or progress of the Works.
Upon receiving this notice, the Engineer shall cancel, confirm or vary the instruction.

Each Variation may include:

(a) changes to the quantities of any item of work included in the Contract (however,
such changes do not necessarily constitute a Variation),
(b) changes to the quality and other characteristics of any item of work,
(c) changes to the levels, positions and/or dimensions of any part of the Works,
(d) omission of any work unless it is to be carried out by others,
© FIDIC 2010. Conditions of Contract for Construction MDB Harmonised Ed. June 2010 - General Conditions.
For participating development bank financed contract use only. No reproduction of this document is permitted.
41
 (e) any additional work, Plant, Materials or services necessary for the Permanent
Works, including any associated Tests on Completion, boreholes and other
testing and exploratory work, or
(f) changes to the sequence or timing of the execution of the Works.

The Contractor shall not make any alteration and/or modification of the Permanent
Works, unless and until the Engineer instructs or approves a Variation.

13.2
Value Engineering The Contractor may, at any time, submit to the Engineer a written proposal which (in
the Contractor’s opinion) will, if adopted, (i) accelerate completion, (ii) reduce the cost
to the Employer of executing, maintaining or operating the Works, (iii) improve the
efficiency or value to the Employer of the completed Works, or (iv) otherwise be of
benefit to the Employer.

The proposal shall be prepared at the cost of the Contractor and shall include the
items listed in Sub-Clause 13.3 [ Variation Procedure ].

If a proposal, which is approved by the Engineer, includes a change in the design of

part of the Permanent Works, then unless otherwise agreed by both Parties:

(a) the Contractor shall design this part,

(b) sub-paragraphs (a) to (d) of Sub-Clause 4.1 [ Contractor’s General Obligations ]
shall apply, and
(c) if this change results in a reduction in the contract value of this part, the
Engineer shall proceed in accordance with Sub-Clause 3.5 [ Determinations ] to
agree or determine a fee, which shall be included in the Contract Price. This fee
shall be half (50%) of the difference between the following amounts:

(i) such reduction in contract value, resulting from the change, excluding
adjustments under Sub-Clause 13.7 [ Adjustments for Changes in
Legislation] and Sub-Clause 13.8 [Adjustments for Changes in Cost], and
(ii) the reduction (if any) in the value to the Employer of the varied works,
taking account of any reductions in quality, anticipated life or operational
efficiencies.

However, if amount (i) is less than amount (ii), there shall not be a fee.

13.3
Variation Procedure If the Engineer requests a proposal, prior to instructing a Variation, the Contractor shall
respond in writing as soon as practicable, either by giving reasons why he cannot
comply (if this is the case) or by submitting:

(a) a description of the proposed work to be performed and a programme for its
execution,
(b) the Contractor’s proposal for any necessary modifications to the programme
according to Sub-Clause 8.3 [ Programme ] and to the Time for Completion,
and
(c) the Contractor’s proposal for evaluation of the Variation.

The Engineer shall, as soon as practicable after receiving such proposal (under Sub-
Clause 13.2 [ Value Engineering ] or otherwise), respond with approval, disapproval or
comments. The Contractor shall not delay any work whilst awaiting a response.

Each instruction to execute a Variation, with any requirements for the recording of Costs,
shall be issued by the Engineer to the Contractor, who shall acknowledge receipt.
42 © FIDIC 2010. Conditions of Contract for Construction MDB Harmonised Ed. June 2010 - General Conditions.
For participating development bank financed contract use only. No reproduction of this document is permitted.
 Each Variation shall be evaluated in accordance with Clause 12 [ Measurement and
Evaluation ], unless the Engineer instructs or approves otherwise in accordance with
this Clause.

13.4
Payment in Applicable If the Contract provides for payment of the Contract Price in more than one currency,
Currencies then whenever an adjustment is agreed, approved or determined as stated above, the
amount payable in each of the applicable currencies shall be specified. For this
purpose, reference shall be made to the actual or expected currency proportions of
the Cost of the varied work, and to the proportions of various currencies specified for
payment of the Contract Price.

13.5
Provisional Sums Each Provisional Sum shall only be used, in whole or in part, in accordance with the
Engineer’s instructions, and the Contract Price shall be adjusted accordingly. The total
sum paid to the Contractor shall include only such amounts, for the work, supplies or
services to which the Provisional Sum relates, as the Engineer shall have instructed.
For each Provisional Sum, the Engineer may instruct:

(a) work to be executed (including Plant, Materials or services to be supplied) by the

Contractor and valued under Sub-Clause 13.3 [Variation Procedure]; and/or
(b) Plant, Materials or services to be purchased by the Contractor, from a
nominated Subcontractor (as defined in Clause 5 [ Nominated Subcontractors ]
or otherwise; and for which there shall be included in the Contract Price:

(i) the actual amounts paid (or due to be paid) by the Contractor, and
(ii) a sum for overhead charges and profit, calculated as a percentage of
these actual amounts by applying the relevant percentage rate (if any)
stated in the appropriate Schedule. If there is no such rate, the
percentage rate stated in the Contract Data shall be applied.

The Contractor shall, when required by the Engineer, produce quotations, invoices,
vouchers and accounts or receipts in substantiation.

13.6
Daywork For work of a minor or incidental nature, the Engineer may instruct that a Variation shall
be executed on a daywork basis. The work shall then be valued in accordance with the
Daywork Schedule included in the Contract, and the following procedure shall apply. If
a Daywork Schedule is not included in the Contract, this Sub-Clause shall not apply.

Before ordering Goods for the work, the Contractor shall submit quotations to the
Engineer. When applying for payment, the Contractor shall submit invoices, vouchers
and accounts or receipts for any Goods.

Except for any items for which the Daywork Schedule specifies that payment is not
due, the Contractor shall deliver each day to the Engineer accurate statements in
duplicate which shall include the following details of the resources used in executing
the previous day’s work:

(a) the names, occupations and time of Contractor’s Personnel,

(b) the identification, type and time of Contractor’s Equipment and Temporary
Works, and
(c) the quantities and types of Plant and Materials used.

One copy of each statement will, if correct, or when agreed, be signed by the Engineer
and returned to the Contractor. The Contractor shall then submit priced statements of
© FIDIC 2010. Conditions of Contract for Construction MDB Harmonised Ed. June 2010 - General Conditions.
For participating development bank financed contract use only. No reproduction of this document is permitted.
43
 these resources to the Engineer, prior to their inclusion in the next Statement under
Sub-Clause 14.3 [ Application for Interim Payment Certificates ].

13.7
Adjustments for The Contract Price shall be adjusted to take account of any increase or decrease in
Changes in Legislation Cost resulting from a change in the Laws of the Country (including the introduction of
new Laws and the repeal or modification of existing Laws) or in the judicial or official
governmental interpretation of such Laws, made after the Base Date, which affect the
Contractor in the performance of obligations under the Contract.

If the Contractor suffers (or will suffer) delay and/or incurs (or will incur) additional Cost
as a result of these changes in the Laws or in such interpretations, made after the
Base Date, the Contractor shall give notice to the Engineer and shall be entitled
subject to Sub-Clause 20.1 [ Contractor’s Claims ] to:

(a) an extension of time for any such delay, if completion is or will be delayed,
under Sub-Clause 8.4 [ Extension of Time for Completion ], and
(b) payment of any such Cost, which shall be included in the Contract Price.

After receiving this notice, the Engineer shall proceed in accordance with Sub-Clause
3.5 [ Determinations ] to agree or determine these matters.

Notwithstanding the foregoing, the Contractor shall not be entitled to an extension of

time if the relevant delay has already been taken into account in the determination of
a previous extension of time and such Cost shall not be separately paid if the same
shall already have been taken into account in the indexing of any inputs to the table
of adjustment data in accordance with the provisions of Sub-Clause 13.8
[ Adjustments for Changes in Cost ].

13.8
Adjustments for In this Sub-Clause, “table of adjustment data” means the completed table of
Changes in Cost adjustment data for local and foreign currencies included in the Schedules. If there is
no such table of adjustment data, this Sub-Clause shall not apply.

If this Sub-Clause applies, the amounts payable to the Contractor shall be adjusted
for rises or falls in the cost of labour, Goods and other inputs to the Works, by the
addition or deduction of the amounts determined by the formulae prescribed in this
Sub-Clause. To the extent that full compensation for any rise or fall in Costs is not
covered by the provisions of this or other Clauses, the Accepted Contract Amount
shall be deemed to have included amounts to cover the contingency of other rises and
falls in costs.

The adjustment to be applied to the amount otherwise payable to the Contractor, as

valued in accordance with the appropriate Schedule and certified in Payment
Certificates, shall be determined from formulae for each of the currencies in which the
Contract Price is payable. No adjustment is to be applied to work valued on the basis
of Cost or current prices. The formulae shall be of the following general type:

Pn = a + 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 unless otherwise stated in the Contract Data;
44 © FIDIC 2010. Conditions of Contract for Construction MDB Harmonised Ed. June 2010 - General Conditions.
For participating development bank financed contract use only. No reproduction of this document is permitted.
 “a” is a fixed coefficient, stated in the relevant table of adjustment data,
representing the non-adjustable portion in contractual payments;

“b”, “c”, “d”, … are coefficients representing the estimated proportion of each
cost element related to the execution of the Works, as stated in the relevant
table of adjustment data; such tabulated cost elements may be indicative of
resources such as labour, equipment and materials;

“Ln”, “En”, “Mn”, … are the current cost indices or reference prices for period
“n”, expressed in the relevant currency of payment, each of which is applicable
to the relevant tabulated cost element on the date 49 days prior to the last day
of the period (to which the particular Payment Certificate relates); and

“Lo”, “Eo”, “Mo”, … are the base cost indices or reference prices, expressed
in the relevant currency of payment, each of which is applicable to the relevant
tabulated cost element on the Base Date.

The cost indices or reference prices stated in the table of adjustment data shall be
used. If their source is in doubt, it shall be determined by the Engineer. For this
purpose, reference shall be made to the values of the indices at stated dates for the
purposes of clarification of the source; although these dates (and thus these values)
may not correspond to the base cost indices.

In cases where the “currency of index” is not the relevant currency of payment, each
index shall be converted into the relevant currency of payment at the selling rate,
established by the central bank of the Country, of this relevant currency on the above
date for which the index is required to be applicable.

Until such time as each current cost index is available, the Engineer shall determine a
provisional index for the issue of Interim Payment Certificates. When a current cost
index is available, the adjustment shall be recalculated accordingly.

If the Contractor fails to complete the Works within the Time for Completion,
adjustment of prices thereafter shall be made using either (i) each index or price
applicable on the date 49 days prior to the expiry of the Time for Completion of the
Works, or (ii) the current index or price, whichever is more favourable to the Employer.

The weightings (coefficients) for each of the factors of cost stated in the table(s) of
adjustment data shall only be adjusted if they have been rendered unreasonable,
unbalanced or inapplicable, as a result of Variations.

14.1
14
Contract Price and Payment

The Contract Price Unless otherwise stated in the Particular Conditions:

(a) the Contract Price shall be agreed or determined under Sub-Clause 12.3
[ Evaluation ] and be subject to adjustments in accordance with the Contract;
(b) the Contractor shall pay all taxes, duties and fees required to be paid by him
under the Contract, and the Contract Price shall not be adjusted for any of
these costs except as stated in Sub-Clause 13.7 [ Adjustments for Changes in
Legislation ];
(c) any quantities which may be set out in the Bill of Quantities or other Schedule are
estimated quantities and are not to be taken as the actual and correct quantities:
© FIDIC 2010. Conditions of Contract for Construction MDB Harmonised Ed. June 2010 - General Conditions.
For participating development bank financed contract use only. No reproduction of this document is permitted.
45