1. What is Contract?

contract, in the simplest definition, a promise enforceable by law.

A contract is an agreement, either written or spoken, between two or more parties that creates a legal
obligation.

2. What is FIDIC simplified?

FIDIC is a French language acronym for Fédération Internationale Des Ingénieurs-Conseils, which means the
international federation of consulting engineers. It was started in 1913 by the trio of France, Belgium and
Switzerland. The United Kingdom joined the Federation in 1949.

3. What are FIDIC General Conditions of the Contract (GCC)?

Part A or General Conditions of the Contract defines risk allocation between the Parties. More precisely, it
defines the rights and obligations of each Party, procedures for payments, variations, certifications, disputes
resolution etc. They are published by the FIDIC organization and should not be modified.
In conclusion, all changes, additions/ omissions and amendments of General Conditions of the Contract should
be done using Particular Conditions of the Contract.
the General Conditions of the respective FIDIC BOOK, wherein the. Definitions clause should always be
consulted

4. What are FIDIC Particular Conditions of the Contract (PCC)?

In the first place, Part B or Particular Conditions of the Contract defines conditions that are specific to a Project
and the Country where the works are executed. Usually, they are used for addition/ omission and change of
General Conditions of the Contract. Having in mind that, the purpose of the Particular Conditions of the
Contract is to define everything that could not be defined in the General Conditions of the Contract.
However, it is important to highlight that in General Conditions of the Contract there is no provision that
defines that Particular Conditions of the Contract should exist. On the other hand, the author is not aware of
any FIDIC Contract which is signed without Particular Conditions of the Contract.
the Particular Conditions for the respective project(for any changes that might have been made to the General
Conditions).

5. Why hierarchy of documents is important in FIDIC?

FIDIC is clear that all parts of the Contract should be read together and that their original purpose is to be
mutually explanatory. However, if there is a discrepancy between the information provided, the General
Conditions of the Contract provide a default hierarchy (‫ )درجہ بندی‬for the documents forming the Contract. For
example, in FIDIC Red Book 1999, the order of priority of contract documents is as stated below:
1. the Contract Agreement (if any),
2. the Letter of Acceptance (this is the formal acceptance of the contractor’s tender and usually presents the
point in time when Contractual Parties enter into the Contract, but this depends on the local regulations),
3. the Letter of Tender,
4. the Particular Conditions of the Contract,
5. the General Conditions of the Contract,
6. the Specification,
7. the Drawings, and
8. the Schedules and any other document forming part of the Contract
6. how many types of Fidic books are there?
The FIDIC books are differentiated based on common procurement techniques and assigned with a color name
that is popularly used around the world.
(1) Green Book
(2) Red Book
(3) Yellow Book
(4) Orange Book
(5) Silver Book
(6) Gold Book

(1) Green Book- Short Form of Contract:

The first edition of the Green Book was published in 1999. The Short Form of Contract is intended for
engineering and construction projects with a small capital value. The Green Book Guidance Notes recommend
that it not be employed on projects with a contract value higher than US$500,000.
The Green Book is likely to be best suited for projects which are too simple or include repetitive work or work
of short duration that does not necessitate the use of specialized subcontractors.

(2) Red Book:

Conditions of Contract for Construction For Building and Engineering works designed by the Employer.
The first edition of the Red Book was published in 1999. The Red Book provides contract conditions for
construction works where the Employer provides the design.
In Red Book, the administration of the project and supervision of the works is carried out by an Engineer who
the Employer employs. The Engineer is in charge of providing directions, validating payments, and assessing
completion, among other responsibilities.
The Contract Conditions are made up of the General Conditions and the Particular Conditions. The Red Book
contains instructions for preparing Particular Conditions if the General Conditions must be modified. The
guideline also includes other types of security, such as a parent company guarantee, an advance payment
bond, and a retention guarantee, which may be specified as appropriate to the contract via the Particular
Conditions. This Red Book concludes with standard forms for the Letter of Tender, the Contract Agreement, the
Appendix to Tender, and a Dispute Adjudication Agreement.

(3) Yellow Book-(Conditions of Contract for Plant and Design-Build)

The Yellow Book provides contract conditions for construction works where the Contractor carries out the
design. The Yellow Book applies to the provision of mechanical and/or electrical plants, and for the design and
execution of engineering or building or works.
Typically, the Contractor develops and provides the works in line with the Employer's specifications, which may
involve civil, electrical, mechanical, and/or construction services.
An engineer employed by the Employer is in charge of project administration and work management. The
Engineer is in charge of providing directions, validating payments, and assessing completion, among other
things.

(4) Orange Book- (Conditions of Contract for Design-Build and Turnkey)

The Orange Book is intended for usage in scenarios where the contractor is solely responsible for the design.
Such single-point responsibility may be advantageous for the Employer, but the benefits may be countered by
having less influence over the design process and greater difficulty implementing different requirements.
The Orange Book is intended to be used on turnkey contracts. The Employer's needs often involve delivering a
fully-equipped facility that is ready to go with the turn of a key. Therefore, the specific Employer requirements
must be properly documented to specify the design, building, fixtures, fittings, and equipment that the
Contractor's design must deliver.
(5) Silver Book- Conditions of Contract for EPC/Turnkey Projects
The Silver Book is appropriate for use in the process, power, and private infrastructure projects where a
Contractor will assume complete responsibility for the project's design and execution.

(6) Gold Book- Conditions of Contract for Design, Build and Operate Projects
In 2008, the first version of the Red Book was released. It became evident that a contract that combined a
design-build responsibility with a long-term operating commitment was in high demand.

7. For which projects yellow and silver book used?

The projects are to be designed by the Contractor, and for such projects, the Yellow Book or Silver Book shall
be referred.

8. What is EPC procurement?

An EPC (Engineering, Procurement, and Construction) Contract in the construction industry is a contractual
agreement between a project owner and the contractor. The contractual framework in an EPC contract enables
the owner to transfer the complete risk of design, procurement, and construction to the contractor.

9. What is PMC in EPC?

What is the difference between EPC & PMC?
Project Management Consultancy (PMC) or Project Management Services is a contract where a consultant will
oversee the EPC contractors' work to ensure compliance and execution of the project in accordance with the
client's scope of work.

10. What is the difference between FIDIC 1987 and 99?

According to the FIDIC-99 it should give lesser notice period of 21 days compared to 28 days in FIDIC-87.

11. structure of the book?

The Red Book is divided into three sections, namely:
1 - General conditions
2 - Guidance for the Preparation of Particular Conditions
3 - Forms of Letter of Tender, Appendix to Tender, Contract Agreement & Dispute Adjudication Agreement
The clauses referred to in this article are from the general conditions, or standard form of contract. These may
be amended in particular conditions. It is advised to read the contract’s particular conditions in conjunction
with general conditions, and to read the contract as a whole for better interpretation of the terms.

12. what is difference between 1999 and 2017 Fidic red book?
In December 2017, FIDIC launched its 2nd Edition of the Red, Yellow and Silver Books after more than 18 years
of the release of the previous 1999 versions. This Article will shed the light on the main changes FIDIC has
made to the new Red Book.
Generalities: There are many changes and improvements in the 2017 form. The single most obvious change is
the new language used in this edition in addition to the size of the General Conditions, which are now over
50,000 words spread over 106 pages. This version is now:
50% longer than the 1999 forms, and
100% longer than the 1987 4th Edition form.
A new vocabulary has been introduced that users need to get acquainted with which is included in the
definitions clause. For instance, “Notices”, “Claims”, and “Disputes” which were not defined in the previous
versions, are now defined in the 2017 form. Moreover, “Notice of No-objection” which in the language of the
previous version meant “consent” is now a defined term.
Whereas the 1999 form had an Appendix to Tender and Particular Conditions, the 2017 form has Particular
Conditions which are further divided into “Contract Data” (replacing the long-standing Appendix to Tender)
and “Special Provisions”.
Notification for Claim and Time Barring: The 2017 Red Book includes notice requirements in approximately 80
places. As mentioned earlier, the term ‘Notice’ is now defined and distinguished from other forms of
communication; whereas the latter must reference the clause under which it is issued, a Notice does not. In
addition, all notices and communications must “not be unreasonably withheld or delayed”.
Cost Plus Profit: In terms of Cost-Plus Profit for relief events, unless stated otherwise, the Contractor will be
entitled to a 5% profit (whilst under the 1999 Red Book, there was no stated figure and the Profit only had to
be reasonable). The 2017 Red Book also specifically entitles the Contractor to “any loss of profit or other losses
and damages suffered” for variations and termination for convenience.
The Role of the Engineer: Greater clarity is given to the role of the Engineer. The 2017 version specifies that the
Engineer must be a professional engineer holding suitable qualifications, experience, and competence to act as
the Engineer. There is a reminder now included in the drafting that when making a determination, the
Engineer is obliged to “act neutrally” as between the Parties, and shall not be deemed to act for the Employer.
Overall, the manner in which the Engineer is required to administer the contract has become more prescriptive
in the 2017 version and a greater onus is placed on the Engineer to administer claims efficiently.
Advance Warning: For the first time, the 2017 Red Book introduces advance warning provisions, which require
each Party to advise the other “in advance of any known or probable future events which may (a) adversely
affect the work of the Contractor’s Personnel; (b) adversely affect the performance of the Works when
completed; (c) increase the Contract Price; and/or (d) delay the execution of the Works or a Section (if any).”
There is no time limit for giving an advance warning, nor is there any express remedy for failing to do so.
Extension of Time: At least four important changes have been made to the EOT provision. First, unlike the 1999
Red Book, the Contractor is not required to give a separate notice of a claim for an EOT for a delay caused by a
Variation (as this notice has been built into the Variation clause at 13.3). Second, delay for “exceptionally
adverse climatic conditions” has been qualified to be “Unforeseeable having regard to climatic data.” Third, the
Contractor has an express entitlement to an EOT if the delay is caused by an increase of more than 10% of an
estimated quantity included in the Bill of Quantities. Fourth, the clause specifically and expressly considers the
Contractor’s entitlement to an EOT in case of a concurrent delay.
Claims: The provisions relating to Claims and Disputes have been separated and redrafted substantially. Clause
20 (Claims) sets out a procedure for (a) Employer Claims (“additional payment from the Contractor (or
reduction in the Contract Price) and/or to an extension of the DNP”); (b) Contractor claims for “additional
payment from the Employer and/or to EOT”; and (c) either Party for “another entitlement or relief against the
other...of any kind whatsoever…except (a) and (b).” Notably, the existing 28-day time requirement for notifying
claims now applies to the Employer as well, and the old 42-day timeframe for the “fully detailed claim” has
been increased to 84 Days.
Exceptional Events: Force Majeure has been replaced with Exceptional Event. According to Corbett & Co, this
should enable users who have the doctrine of force majeure in their national law to read the clause without
preconceptions. The risk allocation remains the same.
Dispute Resolution Procedures: Disputes and Arbitration are now dealt with in a separate Clause. The DAB has
become DAAB or Dispute Avoidance/Adjudication Board and is now a standing Board appointed from the
beginning of the Project.
The newly introduced DAAB brings with it a number of important procedures. First, unless the Parties agree
otherwise, the DAAB members are to be appointed within 28 days after the Contractor receives the Letter of
Acceptance; there are also detailed procedures for resignation, termination, and new appointments. Second,
the DAAB may provide “Informal Assistance” if jointly requested by the Parties, who are not bound to act on
the DAAB’s advice. Third, in terms of time bars (a) the DAAB must give its decision within 84 days after
receiving the reference; (b) a Party must refer a Dispute to the DAAB within 42 days after giving or receiving a
Notice of Dissatisfaction with the Engineer’s determination, and (c) a Party that is dissatisfied with the DAAB’s
decision must give a Notice of Dissatisfaction to the other within 28 days or else the decision becomes final
 and binding on both Parties. Fourth, arbitral tribunals are empowered to order the enforcement of a DAAB
decision, by way of summary or other expedited procedure, whether by an interim or provisional measure or
award.
Guidance to the Particular Conditions: Various guidance has been provided for the drafting of the Particular
Conditions. For instance, guidance for the inclusion of Milestones in the Contract is now available. Milestones
differ from Sections in that they have to be completed by a certain timeframe but will not result in the issuance
of a Taking-Over Certificate.
More guidance has been provided for the incorporation of Building Information Modelling (BIM) in the
Contract, but FIDIC mentions that a separate publication will be provided to help users incorporate BIM in the
Particular Provisions. More importantly, the guidance clearly mentions the Clauses that will be affected in case
BIM was incorporated.
Conclusion:
The above changes reflect only some of the key changes introduced by the revised 2017 FIDIC Red Book
Contract, and the reader is invited to acquaint themselves as appropriate. It is fair to say that the changes
introduced in the new suite of contracts are significant, and undoubtedly it will take some time for contracting
parties to become familiar with the revised contracts. The revisions are intended to bring greater clarity to the
contracts and to encourage increased collaboration between the Parties. However, the more prescriptive
nature of many of the provisions may result in a greater burden on the Parties in administering the contract. It
remains to be seen how the 2017 suite of contracts will be viewed by Employers, Contractors, and Engineers,
and the extent to which these will be used in the market in the next coming years.

13. what is difference between Design and Build and EPC?

In both cases, the owner has a single point of contact on the construction side. In both cases, the contractor is
responsible for the design. In both cases, the contractor takes on more risk than a traditional design-bid-build
delivery.

14. what is a design and build contract?

A design-build contract is a single agreement between the owner and the contractor that covers both the
design and the construction phases of a project. The contractor is responsible for delivering the project
according to the owner's specifications and budget, and for hiring and managing the design team and the
subcontractors. The owner has a single point of contact and communication, and can avoid the conflicts and
disputes that may arise between the designer and the builder in a separate contract arrangement.

15. What are the benefits of design-build contracts?

Design-build contracts offer several advantages for owners and contractors, such as faster delivery, better
quality, and lower cost. The contractor can ensure that the design meets construction standards and
specifications, as well as optimize the design and construction processes.

16. What are the risks of design-build contracts?

Design-build contracts come with some risks and challenges for both owners and contractors. For example, the
owner may have fewer options and less leverage to select a contractor, as the design-build market could be
dominated by a few large firms. The contractor also assumes more responsibility and liability for the design
and construction aspects of the project, which can lead to higher legal and financial risks. Additionally, the
owner may have less control and flexibility over the design and construction decisions, as the contractor has
more influence over the project scope, schedule, and budget. Furthermore, changes or modifications to the
project requirements or specifications could incur additional fees or claim extensions from the contractor.

17. How to choose a design-build contract?

Design-build contracts may not be suitable for every project or owner. Before deciding on a design-build
contract, you should take into account several factors, such as the complexity and uncertainty of the project,
 the level of involvement and risk-sharing you want, and the qualifications and reputation of the contractor. If
the project has many unknowns or variables, you may prefer a more flexible and collaborative contract model.
Similarly, if you want to have more control over the project or share more of the risks and rewards with the
contractor, you may opt for a different contract model. Additionally, it is important to choose a contractor with
proven experience in design-build projects, a strong portfolio and references, and a compatible culture and
vision with yours.

18. What is an EPC contract?

An EPC contract is a type of construction contract used in the engineering, procurement, and construction
(EPC) industry. In an EPC contract, the contractor is responsible for the entire project, from designing and
engineering to procuring materials and equipment to constructing and installing the project. The contractor is
responsible for delivering a completed project to the owner, typically for a fixed price and within a fixed
timeframe.
Key stakeholders:
There are three key parties involved in an EPC contract:
Owner: The owner is the entity that hires the EPC contractor to design, engineer, and construct the project.
The owner is ultimately responsible for paying for the project and ensuring that it meets their requirements.
EPC contractor: The EPC contractor is responsible for designing, engineering, procuring materials and
equipment, constructing, and installing the project. The EPC contractor typically hires subcontractors and
suppliers to perform certain portions of the work.
Subcontractors and suppliers: Subcontractors and suppliers are hired by the EPC contractor to perform certain
portions of the work, such as electrical or mechanical work or supplying materials or equipment.

19. What is Differences between EPC and Design-Build Delivery?

EPC and Design-Build Delivery have both existed as mainstream delivery methods for decades. In both cases,
the partner has a point of contact. In both cases, the company is responsible for the design, and the contractor
takes on more risk than a traditional design-bid-build delivery. However, several essential differences
differentiate the two:
Active Participant:
An EPC project results in a turnkey facility. The EPC contractor heads the working of the project facility.
A design-build contract finishes off comparatively to configuration offer form contracts, with the proprietor
and its development director or fashioner playing a functioning job in punching out the office.

20. what is turnkey project in roads construction?

A turnkey project is a delivery method in which a contractor works with a project owner under a single
contract to complete all project stages from detail engineering through construction.

21. What is the difference between turnkey and EPC contracting?

Turnkey contracting is an EPC (Engineering Procurement Construction Contract) contracting that always
includes the complete scope of project work, right from design to construction and, often, commissioning of
the facility. On the contrary, EPC contracting may or may not include the complete project scope.

22. What is a turnkey contract also known as?

This type of contracts is also known as EPC Contracts (Engineering, Procurement and Construction).

23. What is the opposite of turnkey project?

Design-Bid-Build: The Opposite of Turnkey
 This process is pretty much the opposite of what you'll find with a turnkey project. Design-bid-build has been
used by the construction industry for hundreds, if not thousands of years. With this type of project
management, the project owner acts as the general contractor.

24. What is Included in 'Lump Sum'?

A simple matter that often causes confusion is exactly what a lump-sum price includes.
Take a typical contract designed by the employer. The contractor is required under the contract to provide the
works defined on the drawings and in the specification. In other words, the drawings show the extent and the
configuration of the design. The specification describes the composition and quality of the work

25. what is design bid build contract?

Design−bid − build (DBB) is the traditional method of project delivery and has been the most widely used since
ancient times. It is also the one with which project owners are most familiar.

26. what is design build contract?

A design-build contract is a single agreement between the owner and the contractor that covers both the
design and the construction phases of a project.

27. how many clauses in Fidic red book 2017?

21 clauses
Designed as a companion for both the first-time and also more experienced user, the book presents an
accessible guide to the 21 clauses of the 2017 FIDIC Conditions of Contract, using the Conditions of Contract
for Construction (Red Book) as a basis.

28. why red book is most important among all Fidic books?
The FIDIC Red Book is the standard, and most commonly used, construction contract form in all projects where
the design is provided by the Employer, following the traditional procurement route of Design, Bid and Build.
The Contractor is paid on a measurement basis for the actual quantities of work performed.

29. Define term Employer?

FIDIC's term 'Employer' means the purchaser, owner or client who employs the 'Contractor' to physically carry
out the project 'Works'.

30. Define term Engineer?

the Engineer named in the Contract is an individual, can be a company, the Engineer will usually appoint
Assistants or Delegates to do the work on site (e.g. a Resident Engineer), who usually are qualified engineers
the powers of these Assistants or Delegates are described in Sub Clause 3.2

31. define the term letter of acceptance?

An acceptance letter is a document that an individual or organization sends to officially accept an offer or
request.

32. define the term letter of tender?

the document entitled Letter of Tender, which was completed by the Supplier and includes the signed offer to
the Purchaser for the Goods.

33. define the term bill of quantities?

A Bill Of Quantities is a document that outlines the various materials, units of work and costs associated with a
construction project.
34. Who is the employer's representative under the FIDIC?
Under Sub-Clause 3.1 of the 1999 FIDIC forms of contract, the Engineer is deemed to act for the Employer and
thus authorized to act as the Employer's representative.

35. What is the commencement date?

The commencement date is the date on which an agreement, such as a contract or lease, becomes binding.
This is the date on which the parties are legally obligated to perform their respective duties under the
agreement.

36. What is called variation?

Variation can be defined as any difference between the individuals in a species or groups of organisms of any
species.

37. What is a mobilization advance?

Mobilization Advance is a monetary payment made by the client to the contractor for initial expenditure in
respect of site mobilization, and a fair. proportion of job overheads or preliminaries.

38. What is procedure to get mobilization advance?

(1) CONTRACTOR PREPARES THE BILLS
(2) After award of the contract/acceptance letter, the contractor will apply for Mob. Advance under the provisions
of contract to the Engineer concerned. It is the responsibility for the contractor to attach the following
documents along with the payment:
(3) Request for Mob. Advance.
(4) Performance Guarantee.
(5) Mob. Advance Bank Guarantee.
(6) Guarantees in accordance to the format provided in the contract documents.
(7) Guarantees from the scheduled banks or acceptable to NHA.

(8) CONSULTANT RECORD THE BILLS IN THE M.B

(9) The Consultant will check 100% of the amounts of Mob. Advance requested by the contractor according to the
provisions of contract. He will record the payment in the measurement book with the following details:
(10) Name of the Project.
(11) Name of the contractor.
(12) Total Contract Cost less Provisional Sums.
(13) Bank Guarantee No, date, validity and amount.
(14) Performance Bank Guarantee No./10% Insurance Bond No., date, validity and amount.
(15) Contract Clause for Mob. Advance.
(16) Ensure the correctness of Mob. Advance under contract clauses.
(17) Signature and stamp on Measurement Book.
(18) Forward the case with a covering letter to the concerned Project Director.

39. what is performance certificate &when will be it issued?

Performance Certificate is the certificate issued under sub-clause 11.9 of the FIDIC contract to constitute
acceptance of the Works by the Engineer. This will enable the Contractor to submit to the Engineer within 56
days a draft final statement with supporting documents.
When the Engineer verifies the statement, the Contractor will issue a final statement (sub-clause 14.11) and a
discharge for full and final settlement (sub-clause 14.8). In addition, insurance cover will no longer be required
to be maintained by the Contractor (sub-clause 18.2).
 The Engineer will issue the Performance Certificate within 28 days after the latest of the expiry dates of the
Defects Notification Period.

40. what is defect liability notification period?

Defects Notification Period means the period for notifying defects in the Works or a Section (as the case may
be) under Sub-Clause 11.1 [Completion of Outstanding Work and Remedying Defects], which extends over the
days stated in the Special Conditions of Contract.
The Defects Notification Period starts when the Engineer issues the Taking Over Certificate if works are
completed according to the contract. The Contractor may submit a notice to the Engineer not earlier than 14
days before expected completion or take over requesting take over (sub-clause 10.1).
Usually this period is one year, but it sometimes is extended to two years.

41. what is taking over certificate?

Under the FIDIC red book contract, the taking over certificate is issued by the Engineer in accordance with
Clause 10 (Employer's Taking Over) to confirm that the works have been satisfactorily completed by the
contractor except for minor defects and outstanding items of works.

42. What is the meaning of test on completion?

Tests on Completion means the test specified in the Contract or otherwise agreed by the Employer and the
Contractor to be performed before the Works are taken over by the Employer.(Clause-9).

43. What is the meaning of test after completion?

Clause 12 deals with Tests after Completion.
It is more common overall for Tests on Completion to be the final test required rather than Tests after
Completion. However, tests after completion are commonly required for process and power contracts.

44. What should the Contractor do if the Interim Payment Certificates are not paid under the 1999 FIDIC Red
Book?
the Contractor submits its application for Interim Payment Certificate (IPC). However, the application is
returned by the Engineer due to lack of information in the Statement.
The Contractor re-submits the IPC in accordance with Sub-Clause 14.3 [Application for Interim Payment
Certificates].Afterwards, the Engineer issues the IPC to the Employer. But, the Employer refuses to pay the
certified amount. The Contractor informs the Employer that its financial position is critical. However, nothing
changes.
The Contractor gives Notice to the Employer. The Employer does not pay the amount despite the Notice.
As a consequence of the above, the Contractor terminates the contract, stops the work and removes the
equipment.

At the end, the Employer pays the Contractor in accordance with Sub-Clause 19.6 [Optional Termination,
Payment and Release].

45. What is procedure of IPC?

1. 1-The Contractor Applies for the IPC
The Contractor submits six copies of the statement to the Engineer after the end of each month.
The Engineer approves the form of the Statement.
The amounts are to be demonstrated in detail.
 Progress report which is provided regarding the relevant month in accordance with Sub-Clause 4.21 [Progress
Reports] and other supporting documents are to be included.

2. The Contractor Submits the Statement

The Statement should include;
The estimated contract value of the Works and the Contractor’s Documents processed till the end of the
month.
Variations should be included.

The below mentioned items should be excluded;

Any amounts to be added and deducted for;
Changes in legislation in accordance with Sub-Clause 13.7 [Adjustments for Changes in Legislation]
Changes in cost in accordance with Sub-Clause 13.8 [Adjustments for Changes in Cost]
The advance payment and repayments in accordance with Sub-Clause 14.2 [Advance Payment]
Plant and Materials in accordance with Sub-Clause 14.5 [Plant and Materials intended for the Works]
Which may have become due under the Contract or otherwise, including those under Clause 20 [Claims,
Disputes and Arbitration]
The deduction of amounts;
Certified in all previous Payment Certificates or retention.

3. The Engineer Issues the IPC

Within 28 days after receiving the statement and supporting documents the Engineer issues the Interim
Payment Certificate to the Employer.
The Interim Payment Certificate demonstrates the amount which should be determined by the Engineer.

4. The Employer Fails to Make Payment

In accordance with sub-paragraph (b) of the Sub-Clause 14.7 [Payment] the amount certified in the Interim
Payment Certificate should be paid to the Contractor;
Within 56 days after the Engineer receives the Statement and supporting documents.
But, the Employer does not pay the amount which is certified in the Interim Payment Certificate to the
Contractor.

5. Contractor’s Entitlement to Terminate

The Contractor is to be entitled to terminate the Contract, if [1];
The Contractor does not receive the amount due under an Interim Payment Certificate within 42 days after the
expiry of the time stated in Sub-Clause 14.7 [Payment] within which payment is to be made (except for
deductions in accordance with Sub-Clause 2.5 [Employer’s Claims]).
6. Notice to the Employer and Termination
In accordance with Sub-Clause 16.2 [Termination by Contractor];
Upon giving 14 days’ notice to the Employer, the Contractor may terminate the contract.
Termination by the Contractor will not prejudice any other rights of the Contractor.
The Work Ends and Contractor’s Equipment is Transferred
The Contractor is to promptly;
End all further work, other than the work instructed by the Engineer for the protection of life or property or for
the safety of the Works.
Transfer the Contractor’s Documents, Plants, Materials and other work for which the Contractor has received
payment.

7. The Required Form of Payment

The Employer is to pay to the Contractor;
 In accordance with Sub-Clause 19.6 [Optional Termination, Payment and Release].
The amount of any loss of profit, loss or damage suffered by the Contractor as a result of this termination.
The Employer is to return the Performance Security to the Contractor.

46. what is retention money?

Retention money is held as a percentage of interim payments. Retention money is returned in parts after issue
of taking over certificate and after expiry of defects notification period.(Refer Clause 14.9).

47. How to deduct Retention Money from the progress claim?

In most of the construction contracts, the amount of Retention Money to hold in each progress claim is 10% of
the work done and up to 5% of the contract sum. However these figures can be different from contract to
contract.
The sum due to Interim Payment Certificate shall be calculated at the rate of 90% for the value of work done &
at the rate of 80% for the properly protected materials or goods delivered on site. (Generally)

48. How to Release of Retention money Construction Contracts?

Usually, retention monies are released in 2 stages of the project.
1. Release of the first half of the Retention Monies:
at the time of issuing the Completion Certificate, The first half of the Retention Monies will be certified and
released. If there is any outstanding work for the project, those will be stated in the Completion Certificate.
If there are outstanding work available and if the contractor doesn’t accept to complete such rejected work or
any outstanding work, QS can deduct a reasonable amount for completing such remaining work.
This reasonable cost will be the amount of money to cover the costs of completing the remaining work by
engaging a 3rd party.

2. Release of the second half of the Retention Monies:

The second half of Retention Monies will be certified and released upon the expiry of defects liability period. In
most construction contracts, the Defects Liability period is 12 months which the contractor is liable to
complete any defects arise due to the poor workmanship.
Upon issuance of Maintenance Certificate, the 2nd half of Retention Money will be released.

49. After completion of agreement documentation which party provide Specification and drawings at Site?
The Specification and Drawings shall be in the custody and care of the Employer. Two copies of the Contract
and of each subsequent Drawing shall be supplied to the Contractor, who may make or request further copies
at the cost of the Contractor.
the Contractor shall supply to the Engineer six copies of each of the Contractor’s Documents.
The Contractor shall keep, on the Site, a copy of the Contract, publications named in the Specification.
Could Sub-Clause 1.9 Delayed Drawings or Instructions be used against RFIs (requests for information), shop
drawings, material submittals, or any sort of instruction / information?

50. what things are affected by Delayed Drawings or Instructions (1.9)?

The contractor shall notify the engineer for the required drawing or instruction and the expected delays or
money loss if these drawing or instruction not provided within a reasonable time in details. in the events of
engineer failure to provide the requested drawing and the contractor suffered delayed or money loss. then the
contractor will be entitled to claims the delay or cost incurred as a result of engineer failure to provide
required documents within a reasonable time.
the contractor shall give further notice and will be entitled to contract claim:
extension of time for any such delay if completion will be delayed
 payment for any such cost with reasonable profit as included in the contract price.
Good contract administration will ensure that requests for information, submittals and the like contain a
‘response required by date’. That way, the Engineer is aware of matters which may cause delay.

51. According to Fidic red book what is the procedure to submit the progress (report Clause 4.21)?
Monthly progress reports shall be prepared by the Contractor and submitted to the Engineer in six copies.
The first report shall cover the period up to the end of the first calendar month following the Commencement
Date. Reports shall be submitted monthly thereafter, each within 7 days after the last day of the period to
which it relates.
Under sub-clause 4.21, the monthly progress report shall include:
(1) Charts and detailed descriptions of progress, including each stage of design, contractor’s documents,
procurement, manufacture, delivery to site, construction, erection and testing.
(2) Photographs showing the status of manufacture and of progress on the site.
(3) for the manufacture of main item, the name of the manufacturer, manufacture location, percentage progress,
and the actual or expected dates of commencement of manufacture, contractor’s inspections, tests, and
shipment and arrival at the site.
(4) The details of contractor’s personnel and equipment.
(5) Copies of quality assurance documents, test results and certificates of materials.
(6) List of notices of “Employer’s Claims” and “Contractor’s Claims”.
(7) Safety statistics, including details of any hazardous incidents and activities relating to environmental aspects
and public relations.
(8) Comparisons of actual and planned progress, with details of any events or circumstances which may jeopardize
the completion.

52. What are the main causes of extension of time?

Extension of Time (EOT) is a contractual term that allows the contractor to claim for additional time to
complete the project. However, not every delay or problem encountered by the contractor entitles them to
claim an EOT. There are certain criteria that must be met in order to claim an EOT.
Let's explore the different reasons why a contractor can claim an EOT and the criteria that must be met.
1. Employer's Instruction to Stop Work
If the employer issues an instruction to stop work for reasons unrelated to the contractor, such as rethinking
the design or allowing the employer's work or their contractors to proceed, the contractor may claim an EOT.
However, if the instruction was due to a fault by the contractor, such as unsafe working conditions, poor
quality work, or failure to obtain design approvals or the required construction permits, the contractor cannot
apply for an EOT unless they can prove that the employer was wrong to stop the work and that the contractor
was compliant.
2. Late Provision of Construction Information
If the employer provides construction information late, the project will be delayed, and the contractor can
claim an EOT. The employer should know when the information is required, and there is no excuse for it being
issued late. Providing an Information Schedule, which links back to the Construction Schedule and allows for
procurement Lead Times, is a valuable aid.
3. Late Access
Contractors are often dependent on the employer providing access to the work area in accordance with the
agreed Construction Schedule. If the dates are not met, the contractor is entitled to claim for these delays.
When accepting access to a work area, the contractor should ensure that the area is safe and meets the
specified dimensions and heights as laid out in the Contract Document. Failure to do so may mean that the
contractor does additional work at an extra cost and which invariably requires extra time.
4. Changes in Specification
If there are changes in specifications, it could increase the price of items and could also have longer
manufacturing Lead Times. Sometimes Employers and their designers are not aware of the implications of
these changes to the project. If they are immediately made aware, they could revert back to the original
specifications to avoid delays and additional costs.
5. Scope Increases
If the project's scope increases, contractors need to continually compare the actual scope with the scope they
priced. Increased scope usually means they need more time to complete the project or additional resources to
complete it in the original time frame. Contractors need to timeously notify their employer of scope increases
as these usually add to the project cost, which is detrimental to the employer's budget as well as possibly
impacting the project's Completion Date.
6. Employer's Activities Cause Delays
Sometimes the Contract Document includes customer activities and constraints that the contractor has to
work around and accept. In these cases, the Construction Schedule should take these impacts into account.
However, often during the course of construction, the employer's activities cause delays.
7.Additional Quality Tests and Inspections:
Sometimes, employers may introduce additional quality tests or inspections that were not originally
mentioned in the Tender Documents or Contract Document. These additional requirements can lead to
increased costs and delays. Employers may also require specific inspection periods or 'hold' points, which can
add further complications. It is important for the employer to be notified immediately about the impact of
these requirements so that they can reassess whether the additional costs and time are worth the benefit.
8. Late Drawing or Design Approval:
The Construction Schedule and Contract Document should specify the maximum turn-around time for the
employer to approve the contractor's drawings and designs. However, some employers may not adhere to
these timeframes, causing delays. In some cases, contractors may be responsible for further delays due to
incorrect drawings, incorrect submission channels, or incorrect formats.
9. Delayed Response to Requests for Information (RFI) and Drawing Queries:
At times, there may be missing or conflicting information in drawings that require clarification through
requests for information or drawing queries. Unfortunately, this process can be tedious and time-consuming,
leading to project delays. These delays should be brought to the employer's attention, and a list of all
outstanding queries should be included in project meetings.
10. Employer's Failure to Provide Facilities and Utilities
Employers may not provide the necessary facilities and utilities, such as water, in the required quantities and
within the agreed time frame. This can cause delays in the project and increase the contractor's costs.
11. Impact of Other Contractors on the Work Area
Other contractors employed by the employer may impact the contractor's work by restricting access to the
work area, damaging completed work or causing delays in areas where they are required to interface with the
contractor.
12. Changes to Drawings and Sequencing
Employers may revise drawings or change the sequencing in the schedule, which could require the contractor
to redo work that is already completed, or to re-order materials or equipment, causing delays in the project.
13. Unforeseen Site Conditions
Unforeseen site conditions, such as existing services or difficult ground conditions, may cause delays in the
project. These conditions may require further detection and uncovering work, relocation of services, or the
removal of unsuitable materials or contaminated ground. The contractor may not be entitled to an Extension
of Time if they are responsible for the design and geological survey, depending on the terms of the Contract
Document.
14. Extreme weather events
This includes floods, storms, and other severe weather conditions that are more intense than the average
climate for the region. Contractors may be able to claim for weather-related delays, but typically only for direct
time lost above the recorded averages.
15. Excluded items
 Contractors may exclude certain items from their bid submission, such as cyclones in an area prone to
cyclones. By doing so, the employer only compensates the contractor for actual time lost when the excluded
event impacts the project.
16. Change in legislation
Changes in laws or regulations can impact the construction project, such as a special holiday or new fire
legislation that requires different building materials.
17. National strikes or work stoppages
Delays can occur if the contractor's employees stop working or if critical materials, such as fuel, are disrupted.
Employer's employees can also cause interruptions in the project.
18. Late or damaged employer-supplied equipment or materials
While the onus is typically on the contractor to check the items when they arrive on site, delays can occur if
the items are late, damaged, or unfit for purpose.
19. Errors on employer-issued drawings
Mistakes on drawings can cause delays if work needs to be redone or if clashes and missing information need
to be resolved.

20. Drawing coordination problems

Conflicting information or services on different drawings can cause clashes and delays, requiring additional
rework and costs.

21. Failure to obtain statutory permits

If the employer fails to obtain necessary permits, the contractor may be unable to carry out work on the
Critical Path, causing delays in the project.
These are only some of the common reasons for Extension of Time, EoT scenarios may also raise due to many
other uncommon of special reasons varies from project to project which has to be dealt under the contract
provisions. The above is just a guide to understand the reasons for Extension of Time, however doesn't takes
any liability or legal entitlements.

53. What are the common causes and types of construction claims?
Construction projects are complex and often involve multiple parties, contracts, and risks. Sometimes, disputes
arise between the parties over the project's scope, cost, quality, or duration. These disputes can lead to
construction claims, which are formal requests for compensation or extension of time due to some
circumstance affecting the project.

Causes of claims
One of the main causes of construction claims is changes in the project scope or design. These changes can
result from errors, omissions, ambiguities, or inconsistencies in the contract documents, or from the owner's
requests for additional or different work. Changes can affect the cost, schedule, and quality of the project, and
may require adjustments to the contract terms. Delays in the project delivery can also bring on construction
claims. Factors like weather, labor or material shortages, site conditions, coordination issues, or other
unforeseen events can cause delays. These delays can impact the project completion date and cash flow.
Another factor causing claims is workmanship or material defects. These can result from poor quality control,
non-compliance with specifications, or negligence. Defects can affect project performance, safety, and
aesthetics, and may require repairs or replacements.

Types of Claims
Different types of construction claims exist depending on the nature of the issue.
(1) Variation claims are for additional payment or time due to changes in the scope or design of the work.
(2) Delay claims are for extension of time or compensation for loss of profit or productivity after delays in the
project delivery.
(3) Disruption claims are for compensation for increased costs or inefficiencies because of workflow disruptions.
Acceleration claims are for compensation for extra resources or overtime required to speed up the work to
meet the project deadline.
(4) Termination claims are for compensation for the costs or damages incurred due to one of the parties
terminating the contract.
(5) Lastly, defect claims are for compensation for the costs or damages caused by workmanship or material
defects.

54. What are variations and changes?

Variations and changes are any alterations or modifications to the original scope, design, specifications, or
conditions of a construction project. They can be initiated by the client, the contractor, the consultant, or
external factors such as weather, regulations, or unforeseen circumstances. Variations and changes can affect
the cost, time, quality, and performance of the project, and may require contractual adjustments or
compensation.

55. Why do variations and changes lead to claims?

Claims are demands for additional payment or time extension by one party to another due to variations and
changes. These claims can arise from a variety of sources, such as errors or omissions in the contract
documents, differing site conditions, changes in design or specifications, delays or disruptions caused by a third
party, force majeure events, defective workmanship, or disputes over interpretation. Unfortunately, these
claims can lead to conflicts, disputes, and litigation which can damage the relationship between the parties,
increase project risks, and incur additional costs and time.

56. How can you assess and quantify the impact of variations and changes?
To accurately assess and quantify the impact of variations and changes, you need to follow a systematic and
transparent process. This process includes identifying and documenting the variations and changes as they
occur, evaluating the entitlement and liability of each party, measuring and calculating the cost and time
implications, negotiating fair compensation or adjustment, and implementing and monitoring the agreed
outcomes. To support this assessment and quantification, you should use change order forms and registers,
variation orders and instructions, cost breakdowns and estimates, time impact analysis and schedules, delay
analysis and claims, as well as records of communications.

57. What are some construction claims case studies and lessons learned?
Case studies of construction claims demonstrate the difficulties and complexities of dealing with variations and
changes. For example, a contractor claiming for additional costs and time due to changes in design was
rejected by the client and lost in arbitration. In contrast, a client claiming for liquidated damages from the
contractor was settled by mediation. Additionally, a contractor claiming for additional costs due to differing site
conditions was awarded some compensation and an extension of time by an expert determination. These
cases illustrate the importance of clarifying the scope of work, conducting thorough site investigations, and
communicating effectively throughout the project. Furthermore, they demonstrate that disputes should be
resolved promptly and amicably.

58. How can you manage variations and changes effectively and avoid claims?
To prevent or minimize disputes and claims, it’s important to manage variations and changes effectively. This
can be done by planning and defining the project scope, objectives, requirements, and deliverables accurately.
Additionally, you should select and contract with qualified and experienced parties who share a common vision
for the project. Establishing a robust change management system that defines the roles, responsibilities,
procedures, and criteria for initiating, approving, implementing, and documenting variations and changes is
 also key. Furthermore, communication and collaboration with all parties involved in the project should be
regular and open. Additionally, you should monitor and control the project progress, performance, quality, and
costs as well as anticipate and mitigate any potential risks or issues that could cause variations or changes.
Finally, feedback should be sought and provided for improvement. If variations or changes are unavoidable or
necessary, they should be managed in a fair and reasonable manner that respects the rights of all parties while
preserving trust and cooperation among them. All variations and changes should be documented and recorded
with their impacts noted. Additionally, any disputes or claims should be resolved amicably and promptly.

59. How do you manage construction project setbacks?

1. Plan ahead
The best way to prevent or minimize setbacks is to plan ahead and anticipate potential risks and problems.
Before you start a project, make sure you have a clear scope, budget, timeline, and quality standards. Review
the contract and specifications carefully and identify any gaps, ambiguities, or inconsistencies. Communicate
with your client and stakeholders regularly and set realistic expectations. Also, prepare a contingency plan for
possible scenarios and have backup resources and suppliers ready.
2. Document everything
One of the most important steps to manage construction project setbacks is to document everything that
happens on the site. This includes daily reports, progress photos, change orders, invoices, receipts,
correspondence, and any issues or incidents that occur. Documentation can help you track the status and
performance of your project, as well as provide evidence and support in case of disputes or claims. Use a
reliable and secure system to store and organize your records and make them accessible to your team and
client.
3. Communicate effectively
Communication is key to resolving construction project setbacks and maintaining good relationships with your
client and contractors. When a setback occurs, inform your client and stakeholders as soon as possible and
explain the cause, impact, and solution. Be honest and transparent and avoid blaming or hiding information.
Listen to their feedback and concerns and address them promptly and professionally. Also, communicate with
your contractors and subcontractors regularly and ensure they understand their roles and responsibilities and
follow the contract terms and safety standards.
4. Negotiate fairly
Sometimes, construction project setbacks can lead to disputes or claims with your client or contractors over
issues such as delays, defects, payments, or variations. In such cases, it is important to negotiate fairly and try
to reach a mutually acceptable solution. Review the contract and documentation and identify the source and
extent of the problem. Avoid escalating the conflict or resorting to legal action unless necessary. Instead, use
alternative dispute resolution methods such as mediation, arbitration, or adjudication to resolve the issue
quickly and amicably.

60. How do you handle disputes and claims related to change orders?
Change orders are inevitable in any construction project, but they can also be a source of disputes and claims if
not handled properly. As a construction manager, you need to know how to manage change orders effectively
and avoid costly and time-consuming conflicts. Here are some tips to help you do that.
1. Define the scope and terms
Define the scope and terms of the original contract clearly and comprehensively. This will help establish the
baseline for any changes that may arise during the project and the criteria for evaluating their impact. Also
include clauses that specify how change orders will be requested, approved, documented, and paid for, as well
as how disputes and claims will be resolved.
2. Communicate and negotiate
Communicate and negotiate with all the parties involved, such as the owner, the contractor, the
subcontractors, and the suppliers. Inform them of any changes that may affect their work, schedule, or budget,
and seek their input and feedback. Negotiate the terms and conditions of the change orders in good faith and
 in accordance with the contract. Avoid making unilateral decisions or imposing unreasonable demands that
may lead to resentment or litigation.
3. Document and track
Document and track them diligently and accurately. Keep a record of all the change orders that are issued,
approved, rejected, or pending, and the reasons behind them. Update the project plan, schedule, budget, and
quality standards accordingly. Use a standardized format and system for documenting and tracking change
orders, like a change order log, a change order form, or a software tool.
4. Manage the risks and impacts
Manage the risks and impacts that they may create or exacerbate. Assess the potential effects of the change
orders on the project scope, time, cost, quality, safety, and performance, and identify and mitigate any risks
that may arise. Monitor and control the implementation of the change orders and ensure that they are
executed according to the specifications and expectations. Report and communicate the progress and results
of the change orders to the stakeholders.
5. Learn and improve
Learn and improve from the experience. Review and evaluate the change order process and outcomes, and
identify the lessons learned, the best practices, and the areas for improvement. Solicit and incorporate
feedback from the stakeholders and the team members, and use it to enhance your skills and knowledge.
Apply the lessons learned and the best practices to future projects and change orders.
6. Seek professional help
Seek professional help when necessary. Sometimes, despite your best efforts, you may encounter complex or
contentious change orders that require legal or technical expertise. In such cases, consult with a lawyer, an
engineer, an arbitrator, or a mediator who can help you resolve the issues and protect your interests. Be
prepared to escalate the matter to a higher authority or a court of law if the dispute or claim cannot be settled
amicably or fairly.

61. If you experience concurrent delay are you entitled to prolongation costs?
The general principle is that the Contractor is entitled to time but not prolongation costs. The principle being
that had the Contractor not caused delay, the project would have be in delay anyway because of the Employer
risk events. Therefore you cannot apply delay damages. The Contractor, however, may not benefit from his
own mistakes so may therefore not recoup costs when he has also contributed to the delay.

62. prolongation costs?

Prolongation costs encompass the additional expenses incurred due to project extensions.

63. What is the difference between variation and claim?

A variation will normally alter the permanent works. On the other hand, a claim will normally involve a change
to the manner in which the permanent works are delivered.

64. what are employers claims in fidic red book?

FIDIC 99 Red Book is a Standard Form of Contract, it provides rooms not only for the Contractor’s claims but
also setouts the procedures for the Employer’s claims. Sub-clause 2.5 of the FIDIC 99 Red Book provides the
room for the Employer’s claim. As per this sub-clause, the Employer shall serve Notice of claim as soon as
practicable. Unlike the Contractor’s claim under sub-clause 20.1, procedures for the Employer’s claim do not
articulate such any specific time limit for issuance ‘Notice’ and submission of detailed justification.
FIDIC 2017, insists that both parties should issue Notice of claim as soon as practicable, and no later than 28
days after the claiming Party became aware or should have become aware, of the event or circumstance.
Even though the Employer’s claims are managed under the sub-clause 2.5, there are several clauses/ sub-
clauses which give rights to Employer claims under the FIDIC 99 Red Book, as discussed below.

1. The Contractor use the Employer’s Facilities and Free issue of Materials
In practice, sometimes, the Contractor uses the Employer's services such as Electricity, Water, and the
Employer's Equipment. In such situations, the Employer is not required to issue the Notice of Claim. Further, in
some contracts, the Employer supplies the construction materials fully or partly. Also, in such a situation, the
Notice of Claim is not required. As per the FIDIC 99 Red Book, the Employer is not required to serve notice for
payment related to sub-clauses 4.19 [Electricity, Water and Gas] and 4.20 [Employer Equipment and Free issue
material].

The primary purpose of the Notice of Claim is to alert the contract parties about the potential claims;
therefore, the responsible party can take necessary actions in advance. For that reason, a Notice is not
essential for this category of Claim as the Contractor is well aware of his own action, i.e., usage of the
Employer's facilities and the free issue of materials.

2. Repetitive Effort by the Employer because of the Contractor’s cause of action

If the Contractor’s Workmanship, Plant, and Materials fail to meet the quality requirements insisted in the
contract, then the Contractor must rectify the shortfalls until meets the required standard, and therefore, the
Engineer need to repeat the test and inspections. Because of such a repetition of tests and inspection, the
Employer needs to compensate the Engineer for the additional effort, which is not originally accounted for in
the consultancy service agreement. Also, the Employer may incur additional costs for his added administration.
The FIDIC 99 Red Book provides a platform to raise the claim related to the above-discussed issue. As per the
clause 7.5 [Rejection], the Employer shall issue claim notice for recovery of the cost associated with the
repeated examination, inspection, and testing of Plant, Material, and Workmanship due to Contractor’s fault/
cause of action.

3. The Contractor’s failure to Rectify the Defects

The Contractor is obligated to discharge contractual obligations. One of the obligations is complying with
quality standards insisted on the contract. The Contractor is expected to complete a project at the required
standard by satisfying the Client’s requirements communicated in the agreed contract.
Therefore, if any of the Contractor’s work fails to meet the requirements, he is liable to rectify at his own cost.
But, sometimes, the Contractors are reluctant to attend the defective works within a reasonable time.
If so, under the provision of sub-clauses 7.6 [Remedial Work] and 11.4 [Failure to Remedy Defects], if the
Contractor fails to comply with the Engineer’s Instruction to rectify the Works, the Employer is entitled to
rectify such defects by himself or appoint a third party for such task. The cost incurred by the Employer shall
be back charged from the Contractor.
It should be noted that if the defect is significant enough to deny the Employer to enjoy the benefit of the
whole or major part of the work, the Employer grasps the right to terminate the contract if he wishes to do so.
The claims associated with the Termination of a Contract has been discussed in a later section below.

4. The Contractor’s failure to meet the Completion date other than excusable reasons
As mentioned above, the Contractor is not only obligated to fulfill the quality requirements, but also obligated
to complete the whole of the Works, and each Section (if any), within the Time for Completion. However, the
Contractor is entitled to Extension of Time for Completion, for the delay events which are attributable to the
Employer (such as Variations and any delay, impediment or prevention) and the delay causing events which are
beyond the Contractor’s control, generally unforeseeable acts of nature, governmental actions, and political
and social unrest. Other than those excusable delays, if the Contractor failed to meet the completion date of
the whole work or the dates of the sections, the Employer is entitled to recovery of damages caused by the
late completion. The sub-clause 8.7 [Delay Damages] of FIDIC 99 Red Book provides the platform to claim delay
damages if the Contractor fails to comply with sub-clause 8.2 [Time for Completion] due to inexcusable delay.
The purpose of the Delay Damage Clause is to provide an idea to the Contractor about the sum payable to the
Employer in case of delay in completion. The proving actual loss suffered by the innocent party is not only
difficult but also expensive. Therefore, the adoption of a delay damage clause is less expensive and minimizes
the dispute among the parties. Generally, the amount per day delay and the maximum limit of the delay
damages shall be mentioned in the contract itself.
In addition to compensation available under the delay damage clause, the Employer may be entitled to general
damages too. It is a general understanding that if a party breaches a contract, the other party is able to recover
the loss in respect of the breach. To assess the compensation amount, the Courts consider what would be
sufficient for the innocent party to hold the same position if the contract had not been breached. Since this
process of proving the actual loss suffered is difficult, it is always advisable to include a clause for delay
damages and the predetermined genuine estimate of the expected loss in case of any delay. However, the
absence of Delay Damage clause does not release the contract breaching party from its obligation to
compensate the innocent party.

5. Failure to meet the intended function/ benefit of the Project or Section

The completed project should serve the intended purpose. Generally, the project can be handed over to the
Employer with minor outstanding works and defects which do not substantially affect the use of the project.
The sub-clause 9.4 sets out the mechanism for the Employer’s claim by means of reduction of Contract Price if
the Contractor’s work fails to meet the intended function/ benefit of the Project or Section.
The sub-clause 9.4 [Failure to Pass Tests on Completion] articulates that if the Works, or a Section, fail to pass
the Tests on Completion repeated under Sub-Clause 9.3 [Retesting], the Engineer shall be entitled to:
a) order further repetition of Tests on Completion under
b) if the failure deprives the Employer of substantially the whole benefit of the Works or Section, reject the
Works or Section (as the case may be), in which event the Employer shall have the same remedies as are
provided in sub-paragraph (c) of Sub-Clause 11.4 [Failure to Remedy Defects]; or (We have discussed about
this clause before)
c) issue a Taking-Over Certificate, if the Employer so requests
In the event of Sub-paragraph (c), the Contractor shall proceed in accordance with all other obligations under
the Contract, and the Contract Price shall be reduced by such amounts as shall be appropriate to cover the
reduced value to the Employer as a result of this failure.
In simple words, if the Contractor’s work fails to serve the intended purpose of the project, the Contract price
shall be reduced by the value equal to the drop in value for the Employer.
Though the Contractor is allowed to hand over the project with minor outstanding works and snags, the
Contractor is obligated to complete those pending works and rectify the defects during the Defect Notification
Period. Sometime the defect might be significant enough to deny the Employer to enjoy the benefit of the
whole or major part of the work. That is the basis that the sub-clause 11.3 [Extension of Defects Notification
Period] articulates that the Employer may extend the ‘Defects Notification Period’ for the Work or Section if
the Work or Section cannot be used for their intended purposes due to significant defects. However, ss per the
FIDIC 99 RB, the Defect Notification Period cannot be extended by more than 2 years.

6. Termination of Contract (because of Contractor’s default) and associated Claims

The sub-clause 15.2 [Termination by Employer] lists outs the circumstances which entitle the Employer to
choose the termination option. This sub-clause articulates in detail about the Contractor’s failures, Notice
requirements, and the time frames. I have summarized the circumstance which entitles the Employer to go for
termination option. You are advised to study your respective contracts to determine the entitlements in your
case. Below is general guidance.
1) The Contractor fails to comply with the contract obligations even after the Engineer’s Notice to Correct
2) Contractor’s unwillingness to continue the contract
3) Unreasonable delay in the Construction program
4) Failure to attend the remedial work
5) Subcontracting whole of the work (100 % subcontracting is prohibited under the FIDIC 99 RB, but you
need to check your particular contract to determine the entitlements)
6) The Contractor becomes bankrupt or insolvent
7) The Contractor gives bribes, illegal gifts, and commission to any person to show favor or disfavor in
relation to the contract activities.
The sub-paragraph15.4 (c) provides mechanisms for the Employer’s claim in case of termination by the
Employer. An Employer can claim losses and damages incurred by him because of the termination of contract
due to any of the Contractor’s faults identified above.

7. Work beyond the Normal Working Hours

Generally, the contract itself specifies the standard working hours and rest days. Therefore, the Contractor
plans the construction program taken into consideration of such restrictions. However, in practice, the
contractors may propose to work on-site beyond the normal working hours and days to expedite progress and
mitigate their own delay. If so, the Engineer MAY gives consent for working outside the normal hours and on
holidays while not overstepping the country’s legal obligations. As a result, the Employer and the Engineer’s
personnel required to work outside the normal working hours. If so, the Employer shall recover the additional
cost incurred, such as overtime salaries of the Employer’s and Engineer’s personnel and any other
administrative costs from the Contractor. The FIDIC 8.6 [Rate of Progress] provides room for such Employer’s
claim associated with the Contractor’s proposal to increase the working hours.
These are the general circumstances which may entitle an employer to put forward the claims. However, the
determination of entitlement varies from case to case. Therefore, professionals who raise the claims should
scrutinize their respective contracts and the legal systems under which their contracts are governed.
Under FIDIC suite of contracts (1999 edition) could you please advise what options the contractor has in case
of force majeure conditions (i.e. Arab Spring in North Africa) if they continue to occur charges for the
project. For instance, should the contractor continue to pay for renewing his Advance Payment guarantee
and performance bond from a Local Bank?

Please consider that the Contractor cannot perform his duties under contract in concern due to status quo in
the country. Consider the following:

Does this situation provide enough grounds to submit a claim?

If yes, could this be considered ‘Owner’s risk’?
If contractor is in a position to submit a claim, what would be your recommendation to contractor to put
into body of the claim as a supporting document?
If the Contractor is prevented from performing his duties because of events associated with the Arab Spring,
then this would qualify as a force majeure event under the provisions of Sub-Clause 19.1 (Definition of Force
Majeure). Sub-Clause 19.4 (Consequences of Force Majeure)allows the Contractor to claim for Cost incurred.
Without the termination of the Contract, the Contractor must continue to provide the guarantees and bonds.
Therefore you may claim for the costs of doing so.
The situation would probably provide sufficient grounds to claim for an extension of time and the recovery of
any Cost incurred.
FIDIC provides entitlement to the Contractor to claim, so yes, this would be an owner’s risk.
It is difficult to advise you in sufficient detail in this forum on the compilation of the claim. However, we will be
discussing this in forthcoming webinars.

Changes in Legislation is an Adjustment pursuant to Sub-Clause 13.6 of the FIDIC conditions, i.e. it is a
Variation/Adjustment but not a Claim as presented in this webinar. As a thorough contract professional, I
can confirm that there is a lot of difference between the terms “Variation/Adjustment” and “Claim”. Please
let me add, we do not have claims for variations. “Variation” is Clause 13 of the FIDIC conditions, whereas
“Claim” is Clause 20. Both are completely different?
As mentioned in the webinar ‘A claim is an assertion of a party’s right under the terms of a contract or at law’.
If a Variation or other adjustment to the Contract Price are paid without having to assert such a right, this is
how it should be under FIDIC. But, if the Engineer does not do so, then it will be necessary to ‘ask’ for
payment. It may be just semantics, but in my view, ‘asking’ for something is the same as making a claim for
something.

Can the contractor claim for opportunity cost? For example, the contractor could miss another plausible
project, using resources available, had the contractor not been delayed by the employer. Does the
contractor have to prove this?
Generally, yes. This is typically calculated as part of a prolongation cost claim, using a recognised formula. The
formulas for calculating head office overheads and profit include Emden, Eichleay or Hudson’s. Details exist in
various publications or online.

A delay event was not formally notified. It then turned out to be a critical delay event. Can this be
considered for EoT claim? The Engineer was aware of the delay as a result of progress meetings.

According to Sub-Clause 20.1 (Contractor’s Claims)of FIDIC, if a delay event leading to a claim is not notified
within 28 days for the event then, ‘the Time for Completion shall not be extended, the Contractor shall not be
entitled to additional payment, and the Employer shall be discharged from all liability in connection with the
claim.’ This is very clear and contractors should ignore it at their peril.

Giving and recording advice to the Engineer in meetings does not satisfy FIDIC’s requirements for the
submission of notices. As set out in Sub-Clause 1.3 (Communications) this is not a notice.

Depending on the circumstances, an argument may exist under civil law jurisdictions to defend against such a
time bar. But my recommendation to contractors is always to submit the formal notices required by the
Contract. And to submit them in the way prescribed in the Contract. This will avoid you having to employ
specialists to help to get out of the hole that you have dug yourselves into by disregarding your obligations.

9
: Our Contractor is claiming for road tax increases on material suppliers affecting concrete supply costs. Our
view is this is a rate increase which is contractor’s risk but the contractor claims it’s change in legislation as
Employer risk. What’s your view?

If the causation is the increase in road tax, then this would fall under change in legislation. In my opinion, this
cost would be claimable. However, from the point of view of the Engineer I would only pay for the cost
incurred as a direct result of the road tax increase on the basis of:

Annual increase in tax / number of working days per truck per year / number of deliveries per day per truck x
each delivery to the project.
On this basis, I would doubt that the amount claimable would amount to very much. I am somewhat surprised
that the contractor would make such a claim. Perhaps he is attempting to incorrectly pass on supplier increases
under the guise of the increased tax.

10
: How do we deal with client nominated contractor’s delay? And what is the procedure for claiming delays
due to client nominated contractor’s?

It would depend on the contract and how it allocates delays caused by nominated subcontractors. Sub-Clause
5.2(Objection to Nomination)of theFIDIC Red Book allows the Contractor to object to a nomination at the time
of nomination. FIDIC is somewhat grey about the situation where the Contractor has not objected and a
nominated subcontractor delays the project. I think a reasonable interpretation is to look at Sub-Clause
4.4(Subcontractors). This states that:‘The Contractor shall be responsible for the acts or defaults of any
Subcontractor, his agents or employees, as if they were the acts or defaults of the Contractor’. This does not
exclude nominated subcontractors, so would not allow the Contractor to claim against the Employer. The
correct recourse would be to claim against the subcontractor for losses or costs incurred due to the
subcontractor’s delay.

11
: If a recovery schedule is submitted by the contractor to recover the delay in the project for a particular data
date and after the data date there was a delay in the schedule caused by the employer, will the recovery or
baseline be used for the time impact analysis?

Presumably the recovery programme would include all delays that have occurred and extensions of time that
have been awarded. In such a case, the Contractor’s original programme (or baseline) would no longer be
relevant. The recovery programme would be the programme against which to measure the effect of any
further Employer delays.
 12
: Conditions of the contract say, the value of an Advance Payment Bond shall be reduced by the amount of
the Advance Payment recovered under a Sub-clause relating to the issue of Interim Certificates. What is the
timeline for the reduction of advance payment bond based on this condition of contract? Follow up , the
above-referred sub-clause regarding interim payment, it means that this reduction should happen every
month? What is your opinion on this matter?

The value of the advance payment steadily reduces as the advance is repaid through interim payments. The
timeline for full recovery depends on the conditions of contract. Maybe it is calculated based on a specific
time, or possibly as a percentage work value executed over a period of time.

Check the terms of payment with the bond provider. See if premiums may be reduced as the amount of the
advance reduces. It is probable that the premium calculations assume a reduction of liability as the project
progresses.

13
: What are the limitations of the term, ‘experienced contractor’?

This is almost impossible to define. Debate will always surround it, particularly when time or money is
involved.

14
: Please elaborate on prolongation claims.

Claims for prolongation costs are where the contractor claims for time-related costs incurred from an
extension of time. These will include for such things as site management and administration, non-productive
personnel, site establishment, non-productive plant and equipment, transport, insurances, bonds and head
office overheads.

Interested in learning more about claims? Our brand new e-course, The Perfect Claim, will give you the skills
you need to prepare successful claim documents.

Will Your Contract Admin Stand Up to Future Claims?

Good contract admin (or administration) is key to any successful project. If a claim is to succeed, it must
contain certain essential elements: Cause, effect, entitlement and substantiation.

In other words:

What happened that gave rise to the claim.

The dates that various events occurred.
The effect of delays on the time for completion
In the case of incurred costs: Are they appropriate? Are they calculated correctly?
Does the contract contain entitlement to compensation?
Is every statement or fact in the claim substantiated?
We should also remember that the onus is on the claimant to prove that the claim is just. It is not the
respondent’s job to do this when reviewing the claim.

To achieve this, the contractor’s contract administration systems must be able to support future claims. If they
are not, it will be difficult or impossible to prepare a claim that fulfils these criteria.
 Contract Administration: Things to Consider
Some things to consider in this respect are as follows:

Is your record keeping adequate and can the records be easily retrieved?
Are important and formal records drafted so that they may be understood by a person not familiar with the
project?
Are notices that are required by the contract given within the prescribed time frames? Do they contain the
correct information?
Has a baseline programme been established? Is it prepared in line with good practice?
Are revised programmes prepared when circumstances dictate?
Are progress updates accurate? It is difficult to subsequently claim a delay if progress has been reported
showing no delay.
Do monthly reports adequately record the events, and may they be understood by a person not familiar with
the project?
Are daily records of resources deployed to the project being maintained and submitted to the engineer on a
regular basis?
Do you have adequate and properly qualified and experienced resources to create and maintain efficient
contract administration?
Do you have adequate and properly qualified and experienced resources to prepare your claims?
If you can answer yes, to all these s, there is a good chance of success for your claims. If not, then you may
need to reconsider your approach.

For more help with these subjects, consider one of our e-courses, such as the Perfect Claim. Or, you may wish
to speak to one of the team at Decipher.

What is the difference between a claim and a variation?

As the employer and/or engineer, normally initiate a variation by issuing an instruction, notification by the
contractor is not normally required. A variation will normally alter the permanent works. On the other hand, a
claim will normally involve a change to the manner in which the permanent works are delivered.

Which FIDIC documents take priority?

(1) The Contract Agreement
(2) The Letter of Acceptance (this is the formal acceptance of the contractor's tender and marks the formation of
the contract)
(3) The Letter of Tender
(4) Part II – the conditions of particular application
(5) Part I – general conditions of contract
(6) The Specification and Drawings (Red Book), The Employer’s Requirements (Yellow Book), the Schedules (Red
and Yellow Books)
Further documents (if any), listed in the Contract Agreement or in the Letter of Acceptance.
The Difference Between A Claim to the Engineer & A Claim in Arbitration?
 A guide to the requirements, content and composition of notices under the FIDIC 2017 Red, Yellow and
Silver books:
Some of the biggest mistakes that contractors make when it comes to claims under FIDIC 2017 relate to
notices. Such failures include failure to:

 Give notices when obliged to do so by the contract.

 Give notices within the time frames specified in the contract.
 Properly identify communications as notices.
 Record the necessary information within notices.
 Cite the contractual clause under which the notice is given.
 Address and/or copy the notice to the correct party.
 Deliver to the notice to the place specified in the contract.
 Deliver to the notice by the means of communication specified in the contract.