025

UNIVERSITY OF MORATUWA

REVIEW OF ICTAD CONDITIONS OF CONTRACT

FOR BUILDING CONSTRUCTION WORKS

BY

N. LOGESWARAN

SUPERVISED BY MR. M.W.J.A. DE SILVA

I DEPARTMENT OF CIVIL ENGINEERING,

UNIVERSITY OF MORATUWA,
MORATUWA, SRI LANKA.
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U N I V E R S I T Y OF M O R A T U W A
THESES & D I S S E R T A T I O N S
REVIEW OF ICTAD CONDITIONS OF CONTRACT
FOR BUILDING CONSTRUCTION WORKS

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BY

N. LOGESWARAN

A REPORT SUBMITTED IN PARTIAL FULFILMENT

OF
THE REQUIREMENT FOR THE DEGREE OF
MASTER OF ENGINEERING

PERMANENT
R KK K M !.

REMOVED FRCM ' P D O O O

THE LIBB>RY. | {

THE FACULTY OF ENGINEERING '

DEPARTMENT OF CIVIL ENGINEERING

SUPERVISED BY IHR. M.WJ.A. DE SILVA

University of Moratuwa
November 1994
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63058
CONSTRUCTION fi-STfJUCTUR^
ENGINEERING
O E P A R T ^ E M T OF CIVIL E N G I N E E R S
UNlVERSiTI © f MORATUWA.
 CONTENTS

Page

ACKNOWLEDGEMENTS Hi

ABSTRACT iv

LIST O F TABLES v

ABBREVIATIONS vi

CHAPTER 1 - INTRODUCTION 1

1.1 Background PERMANENT 1

1.2 Objectives REFER KM K 2
1.3 Methodology NOT iO L ; 2
1.4 Guide to the report REMOVED PRC M 3
1.5 Summary of main findings THE LIBRARY. 4
n*-
CHAPTER 2 - P R O C U R E M E N T M E T H O D S A N D TYPES O F CONTRACTS 6
FOR BUILDING CONSTRUCTION W O R K S

2.1 Introduction 6
2.2 Building procurement methods in practice in the U.K. 7
2.3 Types of contracts in relation to the traditional 7
method of procurement in the U.K.
2.4 Types of contracts in relation to the alternative 19
method of procurement in the U.K.
2.5 Types of contracts in use in Sri Lanka 33

CHAPTER 3 - CONDITIONS OF CONTRACTS FOR BUILDING CONSTRUCTION 34

WORKS

3.1 Introduction 34
3.2 Standard form of conditions of contract 34
3.3 Conditions of contracts in practice in the U.K. 35
3.4 Historical background of the JCT conditions of contract. 50
3.5 The general conditions of government cotracts for building and 56
civil engineering works

CHAPTER 4 - HISTORICAL B A C K G R O U N D OF T H E FIDIC CONDITIONS O F 58

C O N T R A C T A N D ITS APPLICATIONS T O BUILDING CONSTRUCTION
WORKS

4.1 Introduction 58
4.2 What is FIDIC 58
4.3 FIDIC conditions of contract 60
4.4 FIDIC conditions of contract (First Edition - August 1957) 62
4.5 FIDIC conditions of contract (Second Edition - July 1969) 63
4.6 FIDIC conditions of contract (Third Edition - March 1977) 63
4.7 FIDIC conditions of contract (Fourth Edition - September 1987) 64
4.8 Application of FIDIC conditions of contract for 67
building construction works

CHAPTER 5 - BUILDING CONSTRUCTION INDUSTRY IN SRI L A N K A A N D 73

T H E D E V E L O P M E N T OF ICTAD CONDITIONS OF C O N T R A C T

5.1 Introduction 73
5.2 Building construction industry in Sri Lanka 73
5.3 ICTAD and its role in the local construction industry 82
5.4 ICTAD conditions of contract 87
5.5 Conditions of contracts in use for local building construction work 89
5.6 Need for a separate conditions of contract for building construction works 91

CHAPTER 6 -VIEWS OF T H E CONSTRUCTION INDUSTRY

O N T H E ICTAD CONDITIONS O F C O N T R A C T 93

6.1 Introduction 93
6.2 Analysis of data from the survey 93

6.3 Views of the building industry professionals on the ICTAD conditions 97

of contract

CHAPTER 7 - COMPARISON OF SELECTED CONDITIONS O F 99

CONTRACTS

7.1 Introduction 99
7.2 Presentation of the comparison of selected conditions of contracts 100
7.3 Modifications proposed to the ICTAD 89 101

CHAPTER 8 - CONCLUSIONS A N D R E C O M M E N D A T I O N S 120

8.1 Conclusions 120

8.2 Recommendations 123

REFERENCES

INTERVIEWS A N D DISCUSSIONS

APPENDICES

Appendix A

Appendix B

ii
 ACKNOWLEDGEMENTS

I wish to take this opportunity to express my sincere thanks to my Supervisor, Mr. M.W.J.A.De Silva,
Senior Lecturer, Department of Civil Engineering, University of Moratuwa for his valuable guidance
throughout the research work.

I would also like to extend by gratitude to the Department of Civil Engineering, University of Moratuwa
for granting opportunity to follow the post graduate degree course in construction management.

Special thanks should go to Mr. Anura Nanayakkara, Assistant Director (ICTAD) who assisted me in
many ways during the literature survey and the questionnaire survey.

Finally, I would like to thank all those who assisted in numerous ways, in particular, staff of the
Department of Civil Engineering, University of Moratuwa, those who have responded to my
questionnaire survey, those who allocated their valuable time for interviews and discussions and all others
who provided invaluable information and assistance to make this research work a success.

N. LOGESWARAN
November 1994

iii
 ABSTRACT

The objective of this research project is to review the ICTAD conditions of contract suitable for local
building construction works. The Government of Sri Lanka had approved the said document in August
1988 to use in the state sector for both building and civil engineering construction works, which was
prepared by the ICTAD, commonly known as the 'ICTAD conditions of contract'.

Since the building and civil engineering construction works have some differences in their character and
contract administration, which are described in chapter 4, the use of one document is not a desirable
approach given the diversity of practices and traditions prevailing in both works.

The ICTAD conditions of contract is a document far from perfect and there are plenty of scope for
improvements, because this was prepared based on the FIDIC conditions of contract (Third edition) which
is 17 years old document. Use of a single document to cover the both construction works is not a
practice in the international construction scene.
By considering all the above action was taken to review the ICTAD conditions of contract mainly through
literature survey, questionnaire survey and the comparison of selected conditions of contracts.

Chapter 7 gives the necessary modifications to the ICTAD conditions of contract. ICTAD should also
take necessary steps to review its conditions of contract for building construction works in association
with the ACCSL, the Institute of Architects, the Institution of Engineers and the Institute of Quantity
Surveyors.

iv
 LIST O F TABLES

Page

Table 5.1 Various conditions of contracts in use in Sri Lanka 90

Table 6.1 ICTAD clauses for modification 95

v
 ABBREVIATIONS

1. ACA - Association of Consultant Architects.

2. ACCSL - Association of Construction Contractors of Sri Lanka.
3. AGCA - Associated General Contractors of America.
4. ASI - Architects and Surveyors Institute.
5. BPF - British Property Federation.
6. CASEC - Committee of Associations of Specialist Engineering Contractors.
7. CECC - Civil Engineering Contracts Committee.
8. CESMM - Civil Engineering Standard Method of Measurement.
9. CICA - Confederation of International Contractors'Associations.
10. CITP - Construction Industry Training Project.
11. EIC - European International Contractors.
12. FAS - Faculty of Architects and Surveyors.
13. FASS - Federation of Associations of Specialists and Sub-Contractors.
14. FIBTP - International Federation of Building and Public works
(Federation Internationale du Batiment et des Travaux Publics).
15. FIDIC - International Federation of Independent Consulting Engineers. (La Federation
Internationale De Ingenieurs Conseils).
16. FIDIC 3 - FIDIC Conditions of Contract (International) for Works of Civil Engineering
Construction, Third Edition, March 1977.
17. FIDIC 4 - FIDIC Conditions of Contract for Works of Civil Engineering Construction,
Fourth Edition, September 1987.
18. FIEC - Federation Internationale Europeenne de La Construction.
19. FIIC - Inter-American Federation of the Construction Industry.
20. GCW1 - General Conditions of Contract for Building and Civil Engineering
GC/WORKS/1 (Edition 3)(Lump-sum with quantities), (December 1989, Revised
1990).
21. GNP - Gross National Product.

vi
22. ICE - Institution of Civil Engineers.
23. ICTAD - Institute of Construction Training And Development.
24. ICTAD 89 - ICTAD Conditions of Contract for Works of Building and Civil Engineering -
Sri Lanka. Revised Edition, January 1989.
25. IDA - International Development Agency.
26. IFAWPCA - International Federation of Asian and Western Pacific Contractors' Associations.
27. IMF - International Monitory Fund.
28. IOB - Institute of Builders.
29. JCLI - Joint Council for Landscape Industries.
30. JCT - Joint Contracts Tribunal.
31. JCT 80 - Joint Contracts Tribunal Standard Form of Building Contract 1980 Edition.
(Local Authorities with Quantities.)
32. JV - Joint Venture.
33. MMRB - Method of Measurement for Roads and Bridge Works.
34. NEC - New Engineering Contract.
35. NFBTE - National Federation of Building Trades Employers.
36. PIP - Public Investment Programme.
37. PWD - Public Works Department.
38. RIBA - Royal Institute of British Architects.
39. RICS - Royal Institution of Chartered Surveyors.
40. SBCC - Scottish Building Contract Committee.
41. SEC - State Engineering Corporation.
42. SLCC - Sri Lanka Construction Consortium.
43. SMM - Standard Method of Measurement.
44. UDA - Urban Development Authority.
45. U.K. - United Kingdom.
46. UNDP - United Nations Development Programme.
47. WB - World Bank.

vii
CHAPTER - 1
CHAPTER 1 - INTRODUCTION

1.1 Background

Conditions o f contract for works of building and civil engineering - Sri Lanka was prepared by

the Institute of Construction Training And Development (ICTAD) and the Government of Sri

Lanka had approved the adoption of the said conditions of contract (Commonly referred as

I C T A D conditions of contract) for state sector construction activities since August 1988. It can

be seen clearly that the ICTAD conditions of contract is very similar to the International

Federation of Independent Consulting Engineers (FIDIC) conditions of contract (International)

for works of civil engineering construction (Third edition), March 1977 (Commonly referred as

FIDIC conditions of contract third edition) except few modifications to suit local conditions.

In the United Kingdom(U.K.), there are different standard conditions of contracts used for

building and civil engineering works. At the same time there are instances when the FIDIC

conditions of contract (Third edition) which was specifically developed for civil engineering

works, is being used for building works in many countries.

One could argue whether it is right to use one standard conditions of contract for both building

and civil engineering works as there are some differences in the construction and administration

of these two types. On the other hand, as the ICTAD conditions of contract is based on

conditions of contract specifically applicable for civil engineering works, the argument seems

justifiable.

The private sector consultants in Sri Lanka have been slow to adopt the I C T A D conditions of

contract for building works. Different conditions of contracts are being used by different

consultants in the private sector. Some are modified Joint Contracts Tribunal (JCT) conditions

of contract and some are Royal Institute of British Architects (RIBA) conditions of contract.

1
A s there are large scale investments by the private sector in the building industry it is very

important to have a standard conditions of contract acceptable to private sector consultants in Sri

Lanka.

Therefore, it is considered appropriate to undertake a study to look into the problems of using

I C T A D conditions of contract for both building and civil engineering works. Necessary action

can be initiated by the relevant authorities if a change is required for the development of the

construction industry.

1.2 Objectives

The main objectives of this study are

(i) T o investigate the available procurement methods and types of conditions of contracts for

building construction works.

(ii) T o assess the applicability of the ICTAD conditions of contract for building construction

works.

(iii) T o propose revisions or modifications to the ICTAD conditions of contract to suit local

building construction works.

1.3 Methodology

The methodology adopted to achieve the objectives stated in 1.2 are briefly described

below.

(i) L i t e r a t u r e survey

A detailed literature survey was carried out by referring books, journals, publications etc.

to investigate different procurement methods and conditions of contracts available for

building construction works.

2
(ii) S t u d y o f various conditions of contracts a n d comparison

A number of different conditions of contracts were studied and compared in detail to

identify the differences of those conditions for building and civil engineering works.

(iii) Q u e s t i o n n a i r e survey

A questionnaire was developed (See Appendix A) to get information from various

organisations involved in building construction on the acceptability and problems

associated with the ICTAD conditions of contract.

(iv) Interviews

Senior professionals in the industry were interviewed for their views on the acceptability

of I C T A D conditions of contract for building construction works and to ascertain whether

there is a need for a different conditions of contract for building construction works.

1.4 G u i d e to t h e R e p o r t

The report is structured as follows to present the findings of this study.

Chapter 1 - Deals with the reasons to undertake this study specifying the problem and

outlining the method adopted to achieve the desired results.

Chapter 2 - Deals with various procurement methods and types of contracts for building

construction works in the U.K. and in Sri Lanka.

Chapter 3 - Deals with various conditions of contracts for building construction works used

in the U.K. for different types of contracts and historical background of the J C T

conditions of contract.

3
Chapter 4 - Deals with historical development of FIDIC conditions of contract and its

acceptance for building construction works.

Chapter 5 - Deals with the history of building construction industry from ancient times in Sri

Lanka, role of ICTAD and ICTAD conditions of contract together with its

acceptance for building construction works.

Chapter 6 - Deals with the results of questionnaire surveys and interviews.

Chapter 7 - Deals with the comparison of conditions of contracts and modifications proposed

to ICTAD conditions of contract.

Chapter 8 - Covers the conclusions and recommendations made from the research study.

1.5 S u m m a r y o f M a i n Findings

From this research work it is identified that various procurement methods and types of contracts

are available in the international construction scene to cover the various value of works and

scope of works for the building construction works. To achieve a balanced contract management

these are also different standard conditions of contracts available for building construction

works.

In Sri Lanka, the I C T A D 89 is now mostly used for all building construction works, except in

some private organisations, which is based on the FIDIC 3 . From the survey it is found that

most of the professionals involved in the building construction works are preferable to use

FIDIC 3 (now FIDIC 4) rather than ICTAD 89 due to some errors in wordings, headings,

changes made in Part I and Part II. Another important factor is that FIDIC 3 is 17 years old

document which is the base document for ICTAD 89.

There are also some notable differences found in the character and contents of building and civil

4
engineering construction works.

Most of the professionals have indicated very few ICTAD 89 clauses for modification which are

general and not specific for building construction works. The notified clauses are 1, 15, 5 1 , 5 2 ,

5 6 , 6 0 , 67 and 7 0 .

There is a considerable outcome from the comparison of selected conditions of contracts rather

than literature survey, questionnaire survey and interviews. As a result of this comparison it is

identified that 25 clauses of the ICTAD 89 can be used without any modification, 12 clauses of

the I C T A D 89 have to be replaced fully by the relevant clause of FIDIC 4 and 35 clauses of the

I C T A D 89 have to be modified/revised.

5
CHAPTER - 2
CHAPTER 2- PROCUREMENT METHODS AND TYPES O F CONTRACTS FOR

BUILDING CONSTRUCTION WORKS

2.1 Introduction

The main aim of this chapter is to study the various types of procurement methods and types of

contracts in use in the U.K. and to survey the types of contracts in use in Sri Lanka for building

construction works. In addition, advantages and disadvantages of various types of contracts will

also be studied.

Building construction today often entails complex and intensive site operations, with huge sums

of money locked into development programmes. Contractors may have partial or total design

responsibilities, and in addition may undertake demanding management and co-ordinating roles.

This change of emphasis, together with the increasing range and scale of work, has inevitably

led to a proliferation of alternative forms of building contract. The three most important

considerations for a client are usually cost, time and quality. The business of building

procurement invariably calls for some compromise or conscious balancing of these priorities.

The following factors decide the type of procurement method and type of contract to adopt for

any building project, since the building project may be a new multi-million warehouse or for

reinstating a church damaged by fire or for constructing a luxury hotel with sophisticated

services and high quality finishes.

(i) Nature of work.

(ii) Design responsibility.

(iii) Whether full and accurate tender documents are to be prepared.

(iv) Whether there is enough time to prepare full information at tender stage.

(v) Documents required.

(vi) Method of selecting the contractor.

(vii) Whether the employer is able to state his requirements in detail before work commences.

(viii) Whether the employer needs to know a precise contract sum before work commences.

(ix) Co-ordination responsibility.

(x) Type of client (Whether public or private).

(xi) Size of project.

(xii) Complexity of project.

(xiii) Nature and status of local construction industry.

(xiv) Risk allocation objectives.

(XV) Post-design changes.

(xvi) Degree of control to be retained by client.

(xvii) Level of competition required.

(xviii) Economy needed.

(xix) Cost certainty required.

(XX) Urgency to commence design.

(xxi) Urgency to complete construction.

(Gunasekara, 1990) and (Hugh at el 1990).

2.2 B u i l d i n g P r o c u r e m e n t M e t h o d s i n Practice i n the U.K.

The choice of form of contract cannot usually be considered until the procurement method and

the type of contract have been established. There are two main methods of procurement

currently practiced in the U . K . , which is likely to prove the most appropriate in a given situation

and will depend upon how and where responsibility for design is to be placed, how the work is

to be co-ordinated, and on what price basis the contract is to be awarded. These procurement

methods are

(i) Traditional method.

(ii) Alternative method. (Hugh at el 1990).

2.3 T y p e s of C o n t r a c t s i n R e l a t i o n to the T r a d i t i o n a l M e t h o d of P r o c u r e m e n t i n the

U.K.

From the early 19th century until about the 1950 s, the ways by which building projects were

promoted and carried out in the U.K. conformed to straightforward and well tried procedures.

If the project was small, the building owner (or 'employer' as he is often called) employed a

7
building contractor to design and construct the building for him. Because buildings generally

conformed to a well-defined pattern, contractors had within their organisation the full range of

expertise and skills normally required for such work.

In the case of larger projects the employer appointed an architect to design the building,

and he then produced drawings and specification. If the architect considered it necessary (and

the employer approved), he then appointed a quantity surveyor to prepare a bill of quantities.

Then, on the basis of either the specification and drawings or the bill of quantities, contractors

were invited to tender in competition to carry out the work. Usually the lowest tenderer was

awarded the contract.

Since the mid - 1940 s the architect's nomination and/or appointment of the quantity

surveyor has been gradually superseded by direct appointment by the employer, sometimes

before the selection of the architect and, in some cases, the latter's selection is made on the

recommendation of the quantity surveyor.

The traditional methods of building procurement are still widely used and their respective

characteristics are as described below.

Normally there are mainly two types of contracts under the traditional procurement

method. These are

(i) Fixed price contracts.

(ii) Cost reimbursement contracts. (Ramus, 1989).

The main difference between the above is the transfer of financial risk to the employer

or the contractor.

In fixed price contracts, the contractor is paid for work done in accordance with rates,

prices or lump sum tendered by him before-hand.

8
 In cost reimbursement contracts, the contractor is paid the actual ascertained cost incurred

by him under pre-defined heads plus a fee to cover his administration and profit.

The fixed price contracts are divided as follows

(i) Based on bills of firm quantities and drawings - (Bill of quantities type lump sum

contract).

(ii) Based on bills of approximate quantities and drawings - (Bill of quantities type measure

and pay contract)

(iii) Based on drawings and specification - (Lump sum contract)

(iv) Based on a schedule of rates and drawings - (Measurement contract)

The cost reimbursement contracts may also have few types. All these will be described

in detail in 2 . 3 . 1 , 2 . 3 . 2 , 2 . 3 . 3 , 2 . 3 . 4 and 2 . 3 . 5 .

2.3.1 Based on Bills of F i r m Q u a n t i t i e s a n d D r a w i n g s - (Bill of Q u a n t i t i e s T y p e L u m p

Sum Contract)

The employer appoints an architect to prepare a design and, upon virtual completion of the

design, the quantity surveyor prepares a bill of quantities based upon the architect's drawings

and specification. Contractors are invited to price the bill of quantities and submit competitive

tenders for carrying out the work. The contractor submitting the lowest tender is usually

awarded the contract.

The essential characteristics of this method are

(i) That both the quantities and the unit rates in the bill form part of the contract.

9
(ii) That completion of the design precedes the signing of the contract.

(iii) The lump sum contract can be employed either with or without a bill of quantities.

Advantages

(i) Both parties have a clear picture of the extent of their respective commitments.

(ii) The unit rates in the bills provide a sound basis for the valuation of any variations to the

design.

(iii) A detailed breakdown of the tender sum is readily available.

Disadvantages

(i) The length of time taken in the design of the project, and in the preparation of the bill

of quantities.

(ii) The problem of dealing with those variations which are so fundamental or extensive as

to change the character of the remainder of the work or the conditions under which it has

to be carried out. (Ramus, 1989).

2.3.2 Based o n Bills of A p p r o x i m a t e Quantities a n d D r a w i n g s - ( B i l l of Q u a n t i t i e s T y p e

Measure a n d Pay Contract)

This method is largely similar to 2.3.1 (Based on bills of firm quantities and drawings), except

that the quantities given in the bill are approximate only and are subject to later adjustment.

The essential characteristics of this method are

(i) That only the unit rates form part of the contract.

10
(ii) The signing of the contract and the beginning of work on site may proceed before the

design is complete.

The bill of quantities is normally prepared for the particular project and descriptions of work are

as detailed as in a bill of firm quantities, but the time otherwise required for detailed

measurement of the quantities is saved, the quantities given being estimates of likely

requirements. Sometimes the bill re-uses the quantities which were prepared for an earlier

project of a sufficiently similar kind and size.

This type of contract is sometimes regarded as a lump sum contract although it is not strictly so,

there being no total price stated in the contract. In effect, it is very similar to a schedule of

rates contract described in 2.3.4.

Advantages
(i) Construction on site may begin earlier.

(ii) The extra expense of preparing firm quantities is avoided.

Disadvantages

(i) The bill of quantities cannot be relied upon as giving a realistic total cost at tender stage

and in consequence, the parties to the contract are less certain of the extent of their

commitment.

(ii) The construction works have to be measured completely as actually carried out, which

may prove more costly than to have prepared bills of firm quantities initially.

(iii) The architect may feel less pressure to make design decisions which ought to be taken

at an early stage.

(Ramus, 1989).

11
2.3.3. Based o n D r a w i n g s a n d Specifications - ( L u m p S u m C o n t r a c t )

This method closely resembles that described in 2.3.1 (Based on bills of firm quantities and

drawings), the difference being that no bill of quantities is supplied to tenderers, who have to

prepare their own quantities from the drawings provided.

This procedure is intended to be used for relatively small works of short duration and for sub

contract works, although it is not unknown for quite large contracts to be tendered for on this

basis. The essential characteristics of this method are

(i) That tenderers are supplied only with complete working drawings and a full specification.

(ii) That completion of the design must precede the signing of the contract.

The price is often sub divided in relation to phases of work to facilitate stage payments.

In some contracts there will be some adjustments in price in labour and material as agreed by

the employer and the contractor before-hand.

Advantages

(i) The time required for the preparation of tender documents is reduced, as the time -

consuming process of preparing bill of quantities is eliminated.

(ii) Both parties can have a clear picture of their respective commitments at the time of

signing the contract.

Disadvantages

(i) N o breakdown of the tender sum is immediately available (Although the tenderers may

be asked to provide a contract sum analysis, either as a part of their tender submission

12
 or subsequently).

(ii) The valuation of variations presents problems, as indicated above.

(iii) There is little, if any, control over the percentage rates for additions for overheads and

profit to the prime cost of labour, materials and plant elements in day works. The

tenderers are normally asked to state percentage rates to be used in the event of day

works arising. Where such rates have no effect on the tender sum, there is little

incentive to the tenderer to moderate them.

(iv) Any changes of works by the employer during the construction phase is restricted.

(Ramus, 1989).

2.3.4 Based o n a Schedule of Rates a n d D r a w i n g s - ( M e a s u r e m e n t C o n t r a c t )

This method operates in a similar way to that described in 2 . 3 . 2 (Based on bills of

approximate quantities and drawings), tenders being based upon a schedule of rates such as

standard schedule, 'ad hoc' schedule, and bill of quantities from previous contracts. A particular

advantage arising from its use is that it allows for a contract to be signed and work to start on

site when the design is only in outline form, and in consequence the pre-contract period is

reduced considerably. The tenderer is requested to submit a unit price or rate against a list of

work items typical of those expected for the work. Outline drawings, and sometimes a soil

report, are provided together with approximate quantities. Payment to the contractor for the

actual work done is made on a similar basis to a bill of quantities contract with items measured

and paid at the quoted rate.

N e w items are renegotiated. This type of contract is suitable for ;

(i) minor works of repair and maintenance works;

(ii) when the details of the design have not yet been worked out or there is considerable

uncertainty in regard to them;

13
(iii) when time is short; and

(iv) where a limited range of repetitive work is required to be carried out, such as external

redecoration of an estate of houses. The contractor tenders on the basis of unit rates,

which are to remain current for the stated period which is usually one year or the

estimated period which the proposed work will take.

(a) S t a n d a r d Schedule

A standard schedule lists under appropriate trade headings all the items likely to arise in any

construction project, with a unit rate against each item. Tenderers are asked to tender

percentage additions (or deductions) to the listed rates, usually by sections or sub-sections, thus

allowing for variations in construction costs since the date of the preparation of the schedule

used.

Advantages

(i) Tenderers using a particular schedule often soon become familiar both with the item

descriptions and the rates and are able to assess percentage adjustments relatively easily.

Disadvantages

(i) In comparing and assessing a range of tenders, the employer's quantity surveyor has the

task of gauging the effect of a series of variables, making the choice of the most

favourable tender difficult.

(ii) The parties are unable to have a precise indication of their respective commitments.

(Ramus, 1989).

(b) ' A d hoc* Schedule

This is a schedule specially prepared for a particular project and lists only those items which are

appropriate to that project, including any special or unusual items. An 'ad hoc' schedule may

14
be pre-priced by the employer's quantity surveyor or the rate column may be left blank by the

employer's quantity surveyor for the tenderer to insert individual rates against each item.

Because of the absence of quantities, the latter method makes the comparison and assessment

of tenders much more difficult.

Advantages

(i) Tenderers are only required to concern themselves with a restricted range of items, thus

enabling them to assess rates or percentages more accurately.

(ii) Tenderers are able to obtain a clearer picture of the scope of the work from the items

listed in the schedule.

Disadvantages

These are similar to those applying to standard schedule.

(Ramus, 1989).

(C) B i l l o f Q u a n t i t i e s f r o m Previous C o n t r a c t

The bill o f quantities used will normally be for a comparable type of building of similar

constructional form to the proposed project. It is in effect, a pre-priced 'ad hoc' schedule and

will be used in the same way. This is the method of tendering normally used in serial tendering.

Advantages

(i) The time required to prepare tender documents is reduced to the minimum.

(ii) Tenderers have to consider only a restricted range of items.

15
Disadvantages

(i) The parties are unable to have a precise indication of their respective commitments.

(ii) There may be a considerable discrepancy between the successful tender and the real cost

of the work, owing to the approximate nature of the quantities.

(Ramus, 1989).

2 . 3 . 5 . Based o n Cost R e i m b u r s e m e n t - (Also k n o w n as P r i m e Cost o r Cost Plus)

There are three variants of this type of contract, distinguished by the way in which the fee is

calculated. 'Prime Cost' means the total cost to the contractor of purchasing materials, goods

and components, of using or hiring plant and of employing labour, in order to carry out

construction works. Of all the types of contract, this produces the most uncertainty regarding

the financial outcome.

Tenders contain no total sum and it may be very difficult to form any reliable estimate of the

final cost. It is widely recognized as the most uneconomical type of contract and therefore is

one which normally should be used only in circumstances where none of the other types is

appropriate. Because of the possibility of inefficiency and waste of resources, contracts of this

type need to embody provisions giving the architect/engineer some control over the level of

labour and plant employed. This type of contract is suitable where, to a client, cost is a less

important factor than time. Consequently, a start on site at the earliest possible time may be

financially more advantageous in the long term than a lower final cost of construction which

might have resulted from the use of another type of contract.

It should be noted that no site measuring is necessary other than as checks on the quantities of

materials for which the contractor submits invoices, and for purposes of checking nominated

sub-contractors' and nominated suppliers' accounts.

16
The process of calculating and verifying the total prime cost involves a vast amount of

investigation and checking of invoices, time sheets, sub-contractors' accounts, etc., which can

be both tedious and time-consuming. It is therefore in the interests of both the client's quantity

surveyor and the contractor that at the outset a proper system of recording, verifying and valuing

the prime cost is agreed and strictly implemented. In addition, it is vitally important to define

clearly what is intended to be included as prime cost and what is intended to be covered by the

fee.

This type of contract is suitable for;

(i) when time is short and cost is not as important as time;

(ii) when the client wishes to use a contractor who has worked satisfactorily for him before

and who can be trusted to operate efficiently, while being prepared to pay the higher

cost entailed in return for the advantages;

(iii) in cases of emergency, such as repairs to a dangerous structure;

(iv) maintenance contracts; and

(v) alteration jobs where there is insufficient time or it is impracticable to produce the

necessary documentation.

Advantages

(i) The time required for preparation of tender documents and for obtaining tenders is

minimized, thus enabling an early start on site to be made.

(ii) Work on site may proceed before the detailed design is complete.

Disadvantages

(i) The parties have the least precise indication of their respective commitments.

17
(ii) The cost of construction to the client is likely to be higher than if other types of contract

were to be used.

(iii) The computation and verification of the total prime cost is a long and tedious process.

The variants of this type of contract are as follows:- (Ramus, 1989).

(i) Cost plus percentage fee

The contractor is paid a fee equal to an agreed percentage of the prime costs of labour, materials

and plant used in carrying out the work.

The outstanding disadvantage (to the client) is that the more inefficient the contractor's

operations are and the greater the waste of resources, the higher the fee paid to the contractor

will be. T o counter this, the percentage is sometimes made to vary inversely as the prime cost.

(ii) Cost plus f i x e d fee

The contractor is paid a fixed fee, which may be decided on at the initial stage, in addition to

the total prime cost. The only ground on which the fee might be varied is if either the scope

of the work or the conditions of carrying it out were to be materially altered after the contractor

tendered.

(iii) T a r g e t cost ( P r i m e cost plus fixed fee or percentage fee)

A s an incentive to reducing the total prime cost, the agreement provides for a bonus to be paid

to the contractor if the total cost is less than an agreed sum (the 'target') and also a penalty to

be paid by him if the total cost exceeds that sum.

The bonus and penalty are commonly 5 0 percent of the difference between the total amounts,

but may be any agreed percentages. The target cost is an estimate of the likely total cost.

18
 O d e 3<J»oC&s. § C ' ® ^

(iv) Cost plus f l u c t u a t i n g fee

The contractor is paid the actual cost of the work plus a fee, with the amount of the fee being

determined by reference to the allowable cost by some form of sliding scale. Thus, the lower

the final cost of the works (Prime cost), the greater will be the value of the fee that the

contractor receives. An incentive then exists for the contractor to carry out the work as quickly

and cheaply as possible, and it does constitute the most efficient of the three types of prime cost

contract.

2.4 T y p e s of C o n t r a c t s i n R e l a t i o n to the A l t e r n a t i v e M e t h o d of P r o c u r e m e n t i n the

U.K.

Since the early 1960 s, various alternative ways of promoting and carrying out construction

projects have been devised with varying degrees of success. The reasons why many building

owners and developers considered that the traditional procedures were no longer satisfactory

were

(i) The rapidly spiralling cost of construction meant that large sums of money had to be

borrowed to finance projects.

(ii) High interest rates meant that the time occupied by the traditional procedures resulted in

substantial additions to the construction cost.

(iii) Clients were becoming more knowledgeable on construction matters and were demanding

better value for money and an earlier return on their investment.

(iv) High technology installations required a higher quality of construction.

(Ramus, 1989)

Attention has focused on reducing the time traditionally occupied in producing a design and

preparing tender documentation, thus enabling construction work to begin sooner.

19

63058
Another important factor has been bringing the contractor in at an early stage in the design of

a project. The increasing complexity of projects, however led to the realization that it was in

the interests of clients and architects to use the vast amount of knowledge and practical

experience of contractors early in the design process, and that this would make a valuable

contribution to a successful outcome.

There are seven main types of building contracts under the alternative method of procurement.

These are

(i) Design and build.

(ii) Management contracting.

(iii) British Property Federation (BPF) system.

(iv) Construction management.

(v) Project management.

(vi) Joint venture.

(vii) Design, manage, construct.

(Ramus, 1989) and (Hugh at el 1990).

2.4.1 B u i l d i n g C o n t r a c t s u n d e r 'Design a n d B u i l d '

In this method of procurement, some times referred to as 'turnkey' or 'design and build' or

'design and construct' or 'package deal' or 'all-in' or grass-root contract, the contractor accepts

responsibility for some or all of the design. There should be express reference to this in the

contract, and the extent of design liability should always be set out as clearly as possible.

Unless the contractor states otherwise, it seems that the liability for design is an absolute liability

under which the contractor warrants fitness for the purpose intended.

Sometimes design and build forms limit the design liability of the contractor to the normal

professional duty to exercise reasonable care and skill. Independent consultants engaged by the

20
contractor are therefore under a liability no greater than normal. An indemnity or acceptance

of liability is likely to be worthless unless backed by adequate indemnity insurance, and this is

something that should be checked before a contractor is appointed. Where the contractor does

not have in-house designers and intends to use outside consultants, their identity should be

established before a tender is accepted.

Design liability can be affected by the extent to which there is reliance on the contractor's skill

and experience. The employer's requirements might be stated briefly and simply, perhaps little

more than a site plan and schedule of accommodation. On the other hand there may be a

document of several hundred pages with precise specifications. The contractor's design input

might be restricted to taking a scheme design supplied by the employer and developing details

and production information.

Generally it is better to specify in terms of the performance requirement rather than prescribe

in detail, because this leaves the responsibility for design and selection firmly with the

contractor.

It is claimed that design and build contracts offer certainty on the contract sum and bring cost

benefits. The close integration of design and working methods, and the relative freedom of the

contractor to use his purchasing power and the market knowledge most effectively might suggest

this, although it is often virtually impossible to know just how competitive the figures are.

On the matter of speed, it should be possible to ensure a quicker start on site, and the close

integration of design and construction should result in more effective programming. The

desirable benefits of early contractor participation might be brought about when the contractor

is appointed directly by the client and made responsible for the whole process from initial

briefing to the production of the finished building and the contractor effectively takes on the role

of 'Leader of the team'. However time is needed for the employer's consultants to prepare an

adequate set of requirements, and time is also needed to compare and evaluate offers and

schemes from competing tenderers. The success or otherwise of a design and build operation

21
depends to a large extent on the employer properly setting out the requirements in the first place

and then carefully evaluating the contractor's proposals. Once the contract is signed, any

changes are likely to prove costly and the employer has little further opportunity to comment on

how the requirements are to be met.

The procedure is initiated by the client (or an architect on his behalf) preparing his requirements

in as much or as little detail as he thinks fit. These are then sent to a selection of suitable

contractors, each of whom prepares his proposals on design, time and cost, which he submits

together with an analysis of his tender sum. The client then accepts the proposals he is satisfied

best meet his requirement and enters into a contract with the successful tenderer.

The latter then proceeds to develop his design proposals and to carry out and complete the

works. The client may use the services of an independent architect and quantity surveyor to

advise him on the contractor's proposals as to design and construction methods and as to the

financial aspects respectively. He may also appoint an agent to supervise the works and

generally to act on his behalf to ensure that the contractor's proposals are complied with.

Advantages

(i) Single point responsibility is provided, i.e., the contractor is solely responsible for failure

in the design and / or the construction.

(ii) The client has only one person to deal with, namely, the contractor, whose design team

includes architects, quantity surveyors, structural engineers, etc.

(iii) The client is aware of his total financial commitment from the outset.

(iv) Close inter communication between the contractor's design and construction teams

promotes co-operation in achieving smoother running of the contract and prompt

22
 resolution of site problems.

Disadvantages

(i) Variations from the original design are discouraged by the contractor and, if allowed, are

expensive.

(ii) The client has no means of knowing whether he is getting value for money unless he

employs his own independent advisers, which adds to his costs.

(iii) If the contractor's organisation is relatively small, he is unlikely to be as expert in design

as he in on construction, and the resulting building may be aesthetically less acceptable.

(Ramus, 1989).

2.4.2 Building Contracts under 'Management Contracting'

This method has been increasing in popularity since the early 1970 s. The client appoints an

independent professional team, and also a management contractor. His involvement at pre-

construction stages will be as an adviser to the team, and during construction he will be

responsible for executing the works using direct works contractors.

The principal characteristics of management contracting is that the management contractor does

none of the construction work himself but it is divided up into work packages which are sub-let

to sub-contractors, each of whom enters into a contract with the management contractor. The

management contractor is normally either nominated by the client on the basis of the contractor's

previous experience of management contracting or is selected by competition based upon tenders

obtained from a number of suitable contractors for ;

(i) the management fees; and

(ii) prices for any additional services to be provided before or during the construction period.

23
The management contractor's role therefore is that of providing a construction management

service on a fee basis as part of the client's management team - organizing, co-ordinating,

supervising and managing the construction works in co-operation with the client's other

professional consultants.

As part of his service, he provides and maintains all the necessary site facilities, such as offices,

storage and mess huts, power supplies and other site services, common construction plant,

welfare, essential attendances on the works contractors (e.g.: Unloading and storing materials,

providing temporary roads and hard standings and removing rubbish and debris) and dealing

with labour relations matters. The management contractor undertakes the work on the basis of

a contract cost plan prepared by the quantity surveyor, project drawings, and a project

specification. The employer accepts most of the risk because there is no certainty about costs

and programme.

Advantages

(i) Work can begin on site as soon as the first one or two work packages have been

designed.

(ii) Overlapping of design and construction can significantly reduce the time requirement,

resulting in an earlier return on the client's investment.

(iii) The contractor's practical knowledge and management expertise are available to assist

the design team.

(iv) Where the nature and extent of the work may be uncertain, as in refurbishment contracts,

the design of later work packages may be delayed until more information becomes

available as the work progresses, without extending the construction period.

(v) The contractor, being part of the client's team, is able to identify the client's needs and

24
 interests.

(vi) Because works contracts are entered into close to the time of their commencement on

site, they can be based on firm price tenders.

Disadvantages

(i) Uncertainty as to the final cost of the project until the last of the works contracts has

been signed.

(ii) The number of variations and re-measurements required may be greater than on

traditional contracts because of the greater opportunity to make changes in design during

the construction period, due to problems connected with the interface between packages,

and because packages are sometimes let on less than complete design information.

(Ramus, 1989).

2.4.3 B u i l d i n g C o n t r a c t s u n d e r "British P r o p e r t y F e d e r a t i o n ( B P F ) System"

This system was introduced at the end of 1983 by the BPF, which represents property,

development, insurance and financial organisations who are the customers of the construction

industry. The system claims to produce good buildings more quickly and at 'lower cost' and

'to remove as much as possible of the overlap of effort between designers, quantity surveyors

and contractors' . It operates by a progression through five stages, as follows:

(i) Concept.

(ii) Preparation of the brief.

(iii) Design development.

(iv) Tender documentation and tendering.

(v) Construction.

The BPF system broadly follows the traditional procurement pattern but is different in the

25
following respects

(i) The client's representative, who is named in the contract, is in control in the role of

project manager, no architect, as such, being named in the contract.

(ii) The client's representative may delegate any or all of his duties to any number of

persons or firms.

(iii) A priced schedule of activities may replace the traditional bill of quantities, with the

intention of reducing the length of time necessary to prepare contract documents.

(iv) A proportion of the design work is transferred to the contractor, the amount depending

on the extent of design included in the tender documents.

(v) Variations, it is claimed, are reduced to a minimum; by all concerned being encouraged

to make prompt decisions.

(vi) There is no provision for nominated sub-contractors or nominated suppliers but certain

work or certain goods may be stipulated to be carried out or supplied by a person or one

of a list of persons named in the contract documents.

(vii) The design leader and other consultants are paid a lump sum fee instead of a percentage

of the value of the project.

(viii) Disputes are settled by a named adjudicator in order to speed up settlement, with

arbitration in reverse if the parties are not satisfied with his decisions and for those

matters not specified in the contract as referable to the adjudicator.

26
Advantages

(i) S o m e or most of the design work may be transferred to the contractor, thereby obtaining

the benefits of his expertise and also shortening the pre-contract period.

(ii) All those working on a project are aware of their respective duties and responsibilities,

as they are clearly defined in detail in the BPF manual.

(iii) The matters to be specified or shown in the brief, the master cost plan and in the tender

documents are fully detailed in the appendixes to the manual.

(iv) The prescribed management structure is calculated to induce a greater sense of urgency

in the minds of the consultants, and the system is designed to reduce as far as possible

the total project period.

Disadvantages

(i) Where a bill of quantities is not provided by the client, the scope of the work covered

by the contractor's price is less precisely defined.

(ii) If a bill of quantities is not provided, errors of omission by a successful tenderer

inevitably lead to claims and/or to cutting corners in an attempt to recover the

consequential loss.

(iii) The pricing of variations will lead to more protracted negotiations between the client's

representative and the contractor .where a bill of quantities is not used.

(iv) S o m e contractors may not be sufficiently competent in interpreting and developing

designs from conceptual information.

(v) The use of one contractor in the design process inevitably brings in also those sub-

27
 contractors with whom that contractor normally works, which may leave the client in a

position of obligation to use those sub-contractors subsequently without competition.

(vi) The dominant role of the client's representative could lead to contractors being somewhat

less than satisfied that they will be treated with the same impartiality as they have come

to expect from independent architects and quantity surveyors.

(Ramus, 1989).

2.4.4 Building Contracts under 'Construction M a n a g e m e n t '

Construction management is not a procurement system in itself but is only part of the total

process. It is a professional consultant service to the client, provided on a fee basis , with the

design and construction services being provided by other organizations.

The construction manager is responsible for the organization and planning of the construction

work on site and for arranging for it to be carried out in the most efficient manner. The

construction work itself is normally carried out by a number of contractors, each of whom is

responsible for a defined work package. All the work packages together constitute the total

project. Each works contractor enters into a direct contract with the client.

The construction manger's duties normally include any or all of the following

(i) Co-operation and consultation with the other members of the client's professional team.

(ii) Preparation and updating of a detailed construction programme.

(iii) Preparation of materials and components flows and arranging for advance ordering.

(iv) Determining what site facilities and services are required and their location.

(v) Breaking down the project into suitable work packages in consultation with the other

28
 members of client's team and recommending suitable contractors to be invited to tender

for work packages.

(vi) Obtaining tenders from contractors and suppliers.

(vii) Evaluating tenders and making recommendations on them to the client's team.

(viii) Co-ordinating the work of the works contractors to ensure that it is carried out in

accordance with the master programme.

(ix) Establishing all necessary management personnel on site with responsibility to manage

and supervise the project.

(x) Dealing with any necessary variations to the work, providing the design manger with

estimates of their likely cost and subsequently issuing instructions to works contractors.

(xi) Submitting to the quantity surveyor applications from works contractors for periodic

payments and all necessary documentation enabling the final accounts of works

contractors to be settled.

This type of contract is not much used in the U.K. and no standard forms are available.

Advantages

(i) The construction work is more closely integrated into the management of the project.

(ii) Close liaison between the construction manager and design manager leads to prompt

identification of and decisions relating to practical problems.

(iii) Detailed design can continue in parallel with construction, work packages being let in

29
 succession as the design of each is completed, thus shortening the project time.

(iv) Privity of contract between the client and each of the works contractors provides the

client with a ready means of redress when difficulties such as delays arise.

Disadvantages

(i) The client has one more consultant and a number of contractors with whom to deal

instead of only one main contractor.

(ii) The client's financial commitment is uncertain until the last of the works contracts has

been signed.

(Ramus, 1989).

2.4.5 B u i l d i n g C o n t r a c t s u n d e r 'Project M a n a g e m e n t '

Project management is not a procurement system in itself, in that it does not include the site

construction process but only its general supervision. It has been defined as 'the overall

planning, control and co-ordination of a project from inception to completion aimed at meeting

a client's requirements and ensuring completion on time, within cost and to required, quality

standards'.

A number of project management organizations came into existence during the late 1970 s and

1980 s to meet the need for the management of projects which were becoming larger and

increasingly complex. Many clients do not have the in-house skills and experience necessary

for the successful management of construction projects and so need to employ an independent

project management company to do it for them.

Quantity surveyors, by their training and experience in financial and contractual matters, coupled

with a detailed knowledge of construction processes, are well qualified to offer a project

nianagement service, and a number of established quantity surveying practices have set up

associated companies offering such a service. Other groups of professionals, such as architects,

engineers and building and valuation surveyors, are also now filling this role.

30
The project manager, in effect, becomes the client's representative, with authority to supervise

and control the entire planning and building operation from acquisition of the site to completion

of the project and settlement of the accounts. The service he provides is essentially one of

planning, organizing and co-ordinating the services provided by surveyors and lawyers in

relation to site acquisition; the architect, engineers and quantity surveyor in relation to project

planning and design; and the contractor and sub-contractors in carrying out the site construction

work; but does not include the carrying out of any of their duties himself.

(Ramus, 1989).

2.4.6. Building Contracts under 'Joint V e n t u r e '

This is an arrangement for building procurement which has developed out of the increasing

complexity of construction projects, often with unorthodox methods or sequences of

construction. It is applicable to large-scale projects, where there is a higher than normal

proportion of engineering and other specialist services. It has been defined as follows:

A partnership between two or more companies covering building, mechanical and electrical

engineering, or other specialist services for the purpose of tendering for, and executing a

building or civil engineering contract, each of the participating companies having joint and

several liability for their contractual obligations to the employer.

The basis of such projects is a single contract to which all the partner companies to the joint

venture (JV) are signatories. Any of the standard forms of contract in current use may form the

contract document. Modifications will need to be made to cover joint and several liability of

the participating companies and to provide for any performance warranty which the employer

may require.

JV has the effect of making specialist contractors who under more orthodox arrangements would

be sub-contractors, partners with the building contractor. This does not preclude the use of sub­

contractors (Whether nominated, named or listed), a role which is filled by secondary specialist

contractors who are not partners in the JV.

31
Advantages

(i) The combined resources of participating companies result in greater economy in the use

of specialist manpower, design and equipment.

(ii) There is a greater degree of unified action between the contracting parties.

(iii) Lines of communication between the employer's professional advisers and the building

contractor and specialist contractors are shorter and better defined.

(iv) Improved integration of work sequences results in a shorter contract time and fewer

management problems.

Disadvantages

(i) If one JV partner withdraws, the remaining partner or partners must accept total liability

to complete the project.

(ii) A separate, unified JV bank account must be arranged and maintained by all the partners.

(iii) Separate insurance policies must be taken out on behalf of all the JV partners,

specifically for the proposed project.

(iv) A board of management with a single managing director needs to be appointed jointly

by the JV partners to ensure unified actions.

(Ramus, 1989).

32
2.4.7 B u i l d i n g Contracts u n d e r 'Design, M a n a g e , C o n s t r u c t '

This variant is a relatively recent development of the management approach, offering a

total integrated service from a single source. It can be led by the contractor, or by some other

professional. The latter is more likely when the design aspects of the project are a high priority.

There are no standard forms available as yet, although some contracting organizations

may have their own forms. Architects adopting this approach will need a specialist lawyer to

prepare a form suitable for the circumstances in question.

Contracts where the architect administers a series of separate trades contracts where there

is no main or general contractor, may also fall into this category. As well as being the designer,

the architect assumes the managing and co-ordinating roles for the project. The trades contracts

will ordinarily be direct between the employer and the firms concerned. (Hugh at el 1990).

2.5 T y p e s of C o n t r a c t s i n use i n S r i L a n k a

The contract types mainly used in Sri Lanka are;

(i) Under the traditional procurement method such as measure and pay, lump sum,

cost plus fixed fee basis, cost plus percentage fee basis and target cost; and

(ii) Under the alternative procurement method such as design and build contracts.

There are also occasions, procurement using management methods for high quality finish works

such as luxury hotel projects etc.

In general, the admeasurement type contracts (measure and pay) are used in almost all

government contracts. But there are instances, the public and private sector organisations used

sthe design and build or cost reimbursement type contracts.

33
CHAPTER - 3
CHAPTER 3 - CONDITIONS OF CONTRACTS FOR BUILDING

CONSTRUCTION WORKS

3.1 Introduction

After studying the various procurement methods and types of contracts for the building

construction works in chapter 2, the next step will be to study the conditions of contracts for

building construction works.

This chapter covers various types of conditions of contracts in practice in the U . K . for building

construction works.

Since the JCT family conditions of contracts are widely used in the U . K . and most of the

english speaking countries (i.e. with or without modifications), the historical development of JCT

is also studied. In addition, a brief description of the general conditions of government

contracts for building and civil engineering works are also included in this chapter.

3.2 S t a n d a r d F o r m of Conditions of C o n t r a c t

The advantages of using detailed contract provisions based upon a standard form of contract

which holds a reasonable balance between the requirements and interests of the parties concerned

and in particular allocates fairly the risks and responsibilities between the contracting parties.

The use of standard conditions of contract will not only facilitate the successful completion of

a contract but will, in all probability, result in lower tender prices, as tenderers will be familiar

with the conditions that will apply under the contract. This implies that they will not need to

make financial provision for contract conditions with which they are not familiar and whose

consequences they may have difficulty in assessing. The wide spread use of standard conditions

of contract also provides a stable basis for training and educating personnel responsible for

34
contract management and avoids their having to work with ever changing contract conditions.

The use of standard forms of contract is recommended because,

(i) Their contents will be well known and understood by the parties involved.

(ii) Their wording embodies much experience in resolving difficulties of interpretation and

enforcement.

(iii) They will usually have been tested in law.

(iv) The preparation of new forms of contract is expensive and time-consuming.

(Hugh at el 1990).

Generally in the selection of the standard form of conditions of contract the following factors

are considered.

(i) Availability.

(ii) Sector.

(iii) Familiarity.

(iv) Personal preference.

(v) Effect on contract for services.

(vi) Status of the designer.

(vii) The size of the project.

(viii) Circumstances surrounding the project, etc.

(Hugh at el 1990).

3.3 C o n d i t i o n s of C o n t r a c t s i n Practice i n the U . K .

For the majority of building contracts which concern architects, standard printed forms are

readily available in the U . K . , and these should be used without alternations. There is also the

practical point that if a contractor is asked to tender knowing that it is proposed to use a special

or amended form of contract, his first action will be to pass it to his legal advisers for checking.

The cost of this will then be reflected in his tender. It is sound advice to resist alterations and

35
amendments whereever possible.

However, there may be instances where no standard form of building contract fits the client's

requirements and a specially drafted agreement is needed. There is an increasing trend towards

non-standard agreements in the U.K. Any such drafting should be entrusted to a lawyer with

the appropriate specialist knowledge, and he or she should always be engaged direct by the

client.

The standard forms of conditions of contracts currently in use for the building construction

works in the U.K. are described in this section.

3.3.1 T h e Standard L u m p Sum Forms

( T r a d i t i o n a l M e t h o d of P r o c u r e m e n t )

3.3.1.1 J C T S t a n d a r d F o r m of B u i l d i n g C o n t r a c t

1 9 8 0 E d i t i o n ( J C T 80)

This form is suitable for major building works. There are 4 recitals, 5 articles and 41

clauses in all. There is also an appendix which requires very careful attention to complete

properly. The conditions are set out in 4 parts. Part 1 will normally apply in all cases. Part

2 covers nomination which may or may not be applicable. Part 3 refers to the fluctuations

alternatives, although the actual detailed clauses are published separately and incorporated by

reference. Part 4 refers to 'settlement of disputes - arbitration'.

There are six different versions, however, very similar in content. These are

(i) Private with quantities.

(ii) Private without quantities.

(iii) Private with approximate quantities.

(iv) Local authorities with quantities.

36
(v) Local authorities without quantities.

(vi) Local authorities with approximate quantities.

These forms are suitable for contract types 2.3.1 (Based on bills of firm quantities and

drawings), 2 . 3 . 2 (Based on bills of approximate quantities and drawings) and 2 . 3 . 3 (Based on

drawings and specifications) described in chapter 2.

(Hugh at el 1990).

Nominated sub-contractor forms under JCT 80

NSC/1 NSC/la Forms of nominated sub-contract

tender and agreement.

NSC/2 NSC/2 a Employer/NSC agreement.

NSC/3 NSC/3 a Standard form of nomination

of sub-contractor.

NSC/4 NSC/4 a Nominated sub-contract.

Nominated suppliers forms of tender under JCT 80

TNS/1 Standard form of tender by nominated supplier tender and schedules 1 and 2 .

TNS/2 Form of tender by nominated supplier schedule 3 .

37
3.3.1.2 T h e G e n e r a l Conditions of G o v e r n m e n t C o n t r a c t s f o r B u i l d i n g a n d C i v i l

E n g i n e e r i n g W o r k s - F o r m G C / W o r k s / 1 : E d i t i o n 3 , D e c e m b e r 1 9 8 9 (Revised

1990)

This form is suitable for major works of central government contracts. The form GC/Works/1

was produced in 1973, and the second edition first appeared in September 1977. It was drafted

unilaterally on the part of government for use specifically by crown departments. The current

third edition is dated December 1989 and revised in 1990.

It is usually, but not necessarily, used with firm quantities, and it can be applicable to re-

measurement contracts for work of civil engineering rather than building contracts. There are

no recitals and articles, but the contract incorporates the tender and the written acceptance.

There is no appendix, but detail is carried in the abstract of particulars. There are 61

conditions. The form is complex in parts, but the drafting is relatively clear. The contract

expressly includes the specification as well as bill of quantities and drawings as forming part of

one contract.

It has been used for private jobs in the private sector, but substantial amendments are

needed, and its use under such circumstances is definitely not advised.

(Hugh at el 1990).

Related documents are

(i) Government works sub-contract condition (GW/SC) for use with (GC/WKS/1)

(ii) Government woks sub-contract articles of agreement and appendix (GW/SA)

(iii) GW price adjustment formula provisions (GW/S/FR) for use with (GW/Sc)

Also there is a general conditions of government contract for building and civil

engineering works for lump sum without quantities dated August 1991.

38
3.3.2 T h e S h o r t e r L u m p S u m F o r m s ( T r a d i t i o n a l M e t h o d of P r o c u r e m e n t )

3.3.2.1 J C T Agreement for M i n o r Building W o r k s

( 1 9 8 0 E d i t i o n ) - ( J C T M W 80)

The minor building works form of contract (MW 80) has proved very popular ever since it was

first published in 1968. Following the publication of the 1963 edition of the JCT standard form

of building contract, it became clear that a form was needed for a lump sum form more

appropriate in minor building and repair work, and for which quantities were not necessary.

A s a result, a condensed set of conditions was published in 1968.

There are 3 recitals which will always apply. The fourth recital allows for the naming of a

quantity surveyor, although the conditions ascribe no particular role for this person. The fifth

recital applies where a guarantee/warranty scheme is to be part of the contract. There are 4

articles and 37 clauses in all, listed and numbered under nine section headings. There is no

appendix, but entries may be required in upto ten places in the actual conditions.

There is only one version of MW 80 for use in either the private or local authority sector. JCT

M W 80 is designed for use where minor building works are to be carried out for an agreed lump

sum and where an architect/supervising officer has been appointed on behalf of the employer.

The form is not for use for works

(i) With bill of quantities.

(ii) Where the employer wishes to nominate sub-contractors or suppliers.

(iii) Where allowance is made for fluctuations.

(iv) Of complex nature or complex services or require more period.

JCT M W 80 requires the employer to appoint an architect/contract administrator. There may

or may not be 'contract drawings', a 'contract specification' and schedules which are also

contract documents.

39
The contractor will price a detailed contract document, or may provide a lump sum price

supported by a schedule of rates. There is no published sub-contract. Also this is not suited

for Scottish Law.

(Hugh at el 1990).

3.3.2.2. J C T I n t e r m e d i a t e F o r m of B u i l d i n g C o n t r a c t f o r W o r k s of S i m p l e C o n t e n t

(1984 Edition ) - ( J C T I F C 84 )

In October 1981 the JCT established a working party to prepare an intermediate form and the

intermediate form was published in 1984. This is not suitable for contracts subject to Scottish

Law. There are 2 recitals, 5 articles and 74 clauses in all. There is an appendix. The

conditions are set out under 9 main section headings.

JCT IFC 84 refer to

(i) Building works of simple content and without complex services installations.

(ii) Lump sum contract to be priced entirely by the contractor and that therefore the job must

be fully designed and billed or specified at tender stage.

(iii) Contract period not exceeding 12 months, but experience has shown that the form can

be used successfully on considerably larger projects.

There is only one version of the form to cover for both local authority and private sectors, and

it can be used with or without quantities. The employer is required to appoint an

architect/contract administrator, and to name the quantity surveyor appointed. The contract

documents are the contract drawings, and either the bill of quantities or the

specification/schedules of work.

(Hugh at el 1990).

Named sub-contractors for use with IFC 84 are

(i) NAM/T Form of tender and agreement.

(ii) NAM/SC Sub-contract conditions.

40
(iii) NAM/FR Formula rules for named sub-contractors.

(iv) IFC/SCS Sectional completion supplement.

(v) ESA/1 Employer/Specialist agreement.

3.3.2.3 T h e Association of Consultant Architects

( A C A ) F o r m of B u i l d i n g A g r e e m e n t 1982

(Second E d i t i o n 1984)

This is suitable for use on a very wide range of jobs of various sizes and types. ACA

contract working party claimed that their intention was to produce a form which was a flexible

and fairly balanced contract for an efficient architect working with an efficient contractor for an

efficient client'. Early criticism was that the form was drafted unilaterally without any

contribution from contractors. However, it has been used successfully on a wide variety of jobs,

including fast-track. Major client bodies appear to have used the form without problems, and

the BPF co-operated over a version of the form suitable for use under the BPF system. There

is little evidence of problems with the form. The second edition (1984) included a number of

significant improvements on the first.

A feature of the contract is its flexibility, made possible by the use of alternatives. There is no

restriction as to the size or type of job for which form is suitable. It can be used with or

without bill of quantities and where no quantity surveyor is appointed. It can be used where the

employer is private or is a local authority.

The contract can be fixed price, or fluctuations based on a simple A C A index can be

incorporated. The form is suitable for use under English or Scots Law.

(Hugh at el 1990).

Related documents are

(i) ACA Form of sub-contract 1982.

41
(ii) AC A Architect's instructions.

(iii) ACA Interim certificate.

(iv) ACA Taking over certificate.

(v) ACA Final certificate.

3.3.2.4 T h e G e n e r a l Conditions of G o v e r n m e n t C o n t r a c t s f o r B u i l d i n g a n d C i v i l

Engineering M i n o r W o r k s - F o r m G C / W o r k s / 2

T h e form GC/Works/2 is currently in edition 2, dated 1990. It was drafted unilaterally

for use specifically by crown departments for small works. It is not intended for use with

quantities. There are no recitals or articles, but the contract incorporates the tender and written

acceptance. There is no appendix, but detail is carried in the abstract of particulars. There are

37 conditions, and the wording of many of the conditions is similar to GC/Works/1 ( Second

edition). T h e contract refers to documents as being the specification and the drawings. The

contract is based on a fixed price which does not even allow for increases in levies and taxes.

Also there are

(i) A general conditions of contract for demolition works dated September 1990.

(ii) A general conditions of government contracts for building, civil engineering, mechanical

engineering and electrical engineering of small works dated September 1990.

(Hugh at el 1990).

3.3.2.5 T h e Joint C o u n c i l f o r Landscape Industries (JCLI) Standard Form of

A g r e e m e n t a n d Conditions of C o n t r a c t f o r L a n d s c a p e W o r k s

T h e JCLI originally had two standard forms for landscape works based on JCT 1963 with and

without quantities. In 1978 these were replaced by a single form modelled on the then current

JCT minor works agreement 1968. In 1985 the JCLI published a supplement to the JCT

intermediate form (IFC 84) for use on larger landscape contracts.

(Hugh at el 1990).

42
Related documents are

(i) Amendment to insurance provisions June 1987.

(ii) Form of tender and conditions of sub-contract.

(iii) Supplement to the JCT intermediate form (IFC 84).

3.3.2.6 T h e Architects a n d Surveyors Institute ( A S I ) F A S F o r m s of C o n t r a c t

The ASI came into being in 1989 as a result of the amalgamation of the Faculty of Architects

and Surveyors (FAS) and the Construction Surveyors Institute. The several contracts

recommended to its members are those issued by the F A S . The forms issued are

(i) F A S building contract (1986 edition)

- For larger, more complex work, and the same form can be used with or without

quantities.

(ii) FAS small works contract (1981 edition)

- For domestic work, extensions, alterations, etc.

(iii) FAS minor works contract (1980 edition)

- For straightforward jobs of a relatively simple character or a fixed price basis.

There is also an F A S sub-contract (1981 edition), and various contract administration form, all

F A S copyright.

All these forms of contract are set out in a similar manner with recitals, articles of agreement,

and contract conditions under ten headings.

(Hugh at el 1990)

43
3.3.2.7 T h e Scottish B u i l d i n g C o n t r a c t C o m m i t t e e ( S B C C ) F o r m s of C o n t r a c t

There are important differences between the Law of England and Wales, and Scots Law. A

Scottish supplement is published which adapts the various editions of JCT 80 for use under Scots

Law, and adapted forms for nominated sub-contractors are available. There is also a Scottish

building contract with contractor's design, and a Scottish management contract.

The SBCC also publishes its own building contract for minor building works. It is intended for

building works of a simple, straight forward content, and when the contract is not likely to

exceed 12 months duration. The SBCC forms are not suitable for use other than under Scots

Law.

(Hugh at el 1990).

Related documents are

(i) Scottish supplement to JCT 80 with quantities edition.

(ii) Scottish supplement to JCT 80 without quantities edition.

(iii) Scottish supplement to JCT 80 with approximate quantities edition.

(iv) Scottish supplement to JCT 80 with contractor's design.

(v) Scottish management contract.

(vi) Scottish minor works contract, 1987.

(vii) Scottish minor works sub-contract, 1987.

3.3.3 M e a s u r e m e n t F o r m s ( T r a d i t i o n a l M e t h o d of P r o c u r e m e n t )

3.3.3.1 J C T S t a n d a r d F o r m of B u i l d i n g C o n t r a c t 1980 E d i t i o n w i t h A p p r o x i m a t e

Quantities

This version of the standard JCT form was first produced in 1979 in response to pressure from

property developers. They wanted a traditional method of building procurement, with as early

a start on site as possible. This form still allows for some design development in parallel with

construction work. There are two versions for local authorities and private use. This form is

44
suitable for contract type 2 . 3 . 2 (Based on bills of approximate quantities and drawings)

described in chapter 2 .

(Hugh at el 1990).

3.3.3.2 T h e I n s t i t u t i o n of C i v i l Engineers ( I C E ) Conditions of C o n t r a c t ( F i f t h E d i t i o n )

The full title of the document is "Conditions of contract and forms of tender agreement and bond

for use in connection with works of civil engineering construction".

This is a form which is clearly suited to the scale and relatively imprecise nature of civil

engineering operations, which make re-measurement inevitable. The conditions show that the

form is not really intended for building work and that it is not appropriate for lump sum

contracts.

The first edition was produced in 1945 jointly by the ICE, the Association of Consulting

Engineers and the Federation of Civil Engineering Contractors. The conditions are contained

in 72 clauses. The form of agreement identifies which documents will be part of the contract -

drawings, specification, or priced bill of quantities. The appendix to the tender carries the

important details about time, and any requirements about completion by sections.

The key person in terms of contract administration is 'the engineer', who must be named.

The sixth edition of the conditions of contract was published in January 1991. There are no

separate edition for public and private use. ICE conditions of contract creates a re-measurement

or measure and value type contractual arrangement.

(Hugh at d 1990)

The N e w Engineering Contract (NEC)

In 1991, the ICE published the N E C to provide maximum flexibility with a core contract and

six main options. These are

(i) Conventional contract with activity schedule.

45
(ii) Conventional contract with bill of quantities.

(iii) Target contract with activity schedule.

(iv) Target contract with bill of quantities.

(v) Cost reimbursable contract.

(vi) Management contract.

With a variety of secondary options for use where necessary, the employer is free to choose the

version most appropriate to his needs.

3.3.3.3. T h e I C E C o n d i t i o n s of C o n t r a c t f o r M i n o r W o r k s - ( F i r s t E d i t i o n 1988)

The full title is "Conditions of contract, agreement and contract schedule for use in connection

with minor works of civil engineering construction". It is produced under the name of the ICE,

but the sponsoring authorities include the Association of Consulting Engineers and the Federation

of Civil Engineering Contractors.

It is intended for use where the risks are small, the contract period six months or less, there are

no nominations, and for smaller value of jobs. Reports indicate that it is being used where both

the contract period and cost limit exceed considerably.

The conditions are conveniently grouped under 12 headings, and are commendably straight

forward and easy to read. The form is suitable for lump sum or re-measurement. Further

flexibility is possible because it can also be used with or without a priced bill of quantities. This

form is ideal for relatively simple engineering works of short duration.

(Hugh at el 1990).

46
3.3.4 Cost Plus F o r m s ( T r a d i t i o n a l M e t h o d of P r o c u r e m e n t )

3.3.4.1 J C T F i x e d Fee F o r m of P r i m e Cost C o n t r a c t 1 9 6 7

For making good damage arising during and after the 1939 - 45 war, contracts based on the cost

of labour and materials plus an addition to cover the contractor's overheads and profit were an

obvious solution. In 1967 the JCT published a prime cost form which incorporated a 'fixed fee',

although revised in 1976, it is still basically this 1967 form which is current.

The agreement includes 5 recitals, although these are not headed as such. There are no articles

identified, but clause 1 requires entries to indicate those persons who will act as 'architect' and

'quantity surveyor'. The contract conditions are set out in 32 clauses. It is followed by 6

schedules and the appendix. There are also private and local authority editions. This form is

suitable for contract type 2 . 3 . 5 (Based on cost reimbursement) described in chapter 2 .

There is a general conditions of government contracts for prime cost contract for building and

civil engineering works dated September 1990.

(Hugh at el 1990).

3.3.5 Design a n d B u i l d F o r m s ( A l t e r n a t i v e M e t h o d of P r o c u r e m e n t )

3.3.5.1 J C T S t a n d a r d F o r m of B u i l d i n g C o n t r a c t w i t h C o n t r a c t o r ' s Design 1 9 8 1

E d i t i o n ( J C T W C D 81)

In the mid - 1970 s , when idustrialised building was at a peak, contractor-led design and build

became an important method of building procurement. For this purpose, drafting the new form

continued for six years.

However, when it was finally published as the JCT standard form of building contract with

contractor's design 1981 edition (JCT W C D 81), it was an immediate success and has been

47
generally accepted by the building industry.

There are 4 recitals, 5 articles, and 39 clauses in all. There are three appendices. Also many

of the clauses are similar to JCT 80, but special clauses are included to meet and deal with this

type of arrangement. This form is suitable for contract type 2 . 4 . 1 (Building contracts under

Design and Build) described in chapter 2.

(Hugh at el 1990).

3.3.5.2 J C T S t a n d a r d F o r m of B u i l d i n g C o n t r a c t W i t h Q u a n t i t i e s , 1 9 8 0 E d i t i o n -

C o n t r a c t o r ' s Designed P o r t i o n Supplement 1 9 8 1 . - ( J C T 8 0 w i t h C D P S 81)

Many projects for which a lump sum contract is otherwise appropriate still require design input

from the contractor for some part of the work. It should be emphasised that this does not turn

it into a design build form, but merely modifies a 'work and materials' contract by importing

a restricted design obligation. The JCT Contractor's Designed Portion Supplement (CDPS) is

for use in conjunction with the standard form of building contract with quantities (Local

authorities and private 1980 editions). The CDPS is a 9 page document. It includes a

substituted agreement, 8 recitals, and a modified article 1.

(Hugh at el 1990).

3.3.5.3 F o r m s of C o n t r a c t a d a p t e d f o r use W i t h the B P F system f o r B u i l d i n g Design

a n d Construction

The manual of the BPF system was published in 1983 and immediately attracted a great deal of

attention. It formalised a new way of working, and was a response to what many saw as a

tangle of responsibilities created by the traditional system. It called for a change of attitudes and

working methods on the part of designers and contractors in the interests of efficiency and

profitability.

(Hugh at el 1990).

48
 T h e A C A F o r m (1984) B P F E d i t i o n

This is a specially produced version of the ACA form which is intended for use only

under the BPF system.

(Hugh at el 1990).

3.3.5.3.2 J C T S t a n d a r d F o r m of B u i l d i n g C o n t r a c t 1 9 8 1 E d i t i o n W i t h C o n t r a c t o r ' s

Design a n d I n c o r p o r a t i n g O p t i o n a l S u p p l e m e n t a r y Provisions. S I t o S 7

The JCT, unlike the A C A , has not produced a special edition of a form for use with the BPF

system. Instead it has made various general improvements to the C D 81 form, and published

optional supplementary provisions SI to S7 under amendment 3: 1988

(Hugh at el 1990).

3.3.6 M a n a g e m e n t F o r m s ( A l t e r n a t i v e M e t h o d of P r o c u r e m e n t )

3.3.6.1 J C T S t a n d a r d F o r m of M a n a g e m e n t C o n t r a c t ( 1 9 8 7 E d i t i o n ) J C T M C 8 7

For 'fast-track' projects, where the employer nevertheless wants design by the professional team

and specified standards of quality, management contracts are a solution.

In December 1979 the RIBA Council, on the advice of its contracts committee, asked the JCT

to prepare a standard form of management contract. At that time numerous forms existed

prepared by contractors for their own projects, and many firms would only enter into a

management contract on their own unilaterally produced versions.

In December 1987 the JCT issued the standard form of management contract together with a

number of documents which together comprise the management contract.

There is one contract between the employer and the management contractor and this can cover

49
the pre-construction and the construction period.

The standard form of management contract consists of 5 recitals and 8 articles of agreement, the

conditions of contract and an appendix. This form is suitable for contract type 2.4.2.(Building

contracts under Management Contracting) described in chapter 2 .

(Hugh at el 1990).

3.3.6.2 J C T W o r k s C o n t r a c t ( W K S I , W K S 2 , W K S3) f o r Use W i t h t h e S t a n d a r d

F o r m of M a n a g e m e n t C o n t r a c t

When the JCT published its management contract in 1987, it also published the related standard

forms of works contract at the same time. There are three parts, these are

(i) Works contract WK SI

Consists of the invitation to tender, the tender by the works contractor, and the

agreement between the management contractor and the works contractor.

(ii) Works contract WK S2

Consists of the conditions (In 10 sections)

(iii) Works contract WK S3

Which is an employer/works contractor agreement.

(Hugh at el 1990).

3.4 H i s t o r i c a l B a c k g r o u n d of the J C T Conditions of C o n t r a c t

Several bodies in the U.K. produce their own building contracts and sub-contracts forms, but

by far the greatest number is published by the JCT. A whole family of documents is now

available to cover a wide variety of work which ranges from construction or maintenance and

repair work on the one hand to management contracting on the other. These various forms are

50
described in 3 . 3 . (Hugh at el 1990).

The following are the events of the building contract formation in the U.K. (Spiers, 1983).

(i) In 1866, the meeting in Edinburgh of 'the General Builders Association' (Representing

buildings in the North of England and Parts of Scotland), by considering the industrial

expansion increasing trend and a widening social circle, recommended that the contracts

should be specific, defined in their terms, the provisions and stipulation of contract

agreements be perfectly mutual ( The consideration on one side being money and the

other money's worth.)

(ii) In 1870, the establishment of 'the Builders Society' and the RIBA (Formed in 1834)

combined to produce a form of contract for use in London, whereby now both bodies had

consolidated their positions.

(iii) Following the demise of the General Builders Association (1865 - 1871), a representative

group of contractors chose to meet in the railway junction town of Crewe in 1878 and

formed 'the National Association of Master Builders of Great Britain' (Today it is the

NFBTE).

(iv) In 1901, the Building Employers' Organisation adopted a more representative structure,

and changed its title to "the National Federation of Building Trades Employers (NFBTE)

of Great Britain and Ireland".

(v) T w o years later, following a long struggle in which it had issued its own version of the

1870 'London form of contract', a settlement was reached with the RIBA after mediation

by the 'Institute of Builders' (IOB) (Formed in 1834).

(vi) The 1903 form of contract was a considerable step forward, and although it became

51
 known as the 'National' form. There was no intention on the part of either party to

produce a standard form of contract for all building works nor is there any evidence to

suggest that any of the parties was trying to secure unfair advantage.

(vii) All records point to the contrary within their own disciplines, the RIBA, the IOB and the

N F B T E were in a minority, but their 'National' contract was a prize others did not have,

and would not be given. That is, until 1908 when the builders changed their minds and

wanted its use extending.

(viii) The RIBA disagreed and amended clause 30 (Final certificate) without reference to

others. This brought resentment, but once resolved, it established the principle of the

'agreed' form of 1909.

(ix) D u e to the impact of following technical changes the N F B T E union membership was

falling, and matters were made worse. Those were

(a) The introduction of reinforced concrete reduced the work of the mason.

(b) Plumbers grew depressed as asphalt roofing and iron piping replaced lead work.

(c) Machinery took joinery into a factory away from the site.

(d) Electrical work came into its own, as did hot water systems.

The Building unions were unable to cope with it all and became rather isolated from the

militancy of unions in other industries and were somewhat subdued. These changes left their

mark on the quantity surveyor. Previously he had been known as the 'measurer', working

within the guidelines of the established trades.

(x) The new technology created specialists where those were employed as nominated sub­

contractors the contractor received no discount.

(xi) In 1918, the National Federation of Building Trade Operatives opened joint negotiations

52
 with employers. Dissatisfaction with the agreed conditions of contract grew under the

stress of war conditions.

(xii) In 1919, there was no form and contract generally acceptable to the industry as a whole

and there was no established machinery through which the position could be remedied.

The N F B T E gave notice to the RIBA to rescind the agreement of 1903 regarding the

issue of an agreed form of contract. This was the period of the Building Code issued by

the N F B T E and stated to be inorder to standardise contracts.

(xiii) In 1922, the first edition of the Standard Method of Measurement (SMM) was published

and also the contract conference was established in the same year.

(xiv) In 1925, amalgamation of the RIBA with the Society of Architects.

(xv) In 1928, the chairman of the contract conference in his conclusion stated that it is

difficult to measure the advantages that will follow from the general adoption of this

standard form of contract.

(xvi) Although approved by the council of the RIBA, the 1928 form was rejected by its wider

membership. The builders were persuaded to postpone their campaign in support. The

1928 form had been too great a break with tradition and it was now for the architects to

prepare a new draft which followed more closely the form of the clauses in the 1909

form. Whatever the architects motives the position reached in 1903 and confirmed in

1909 was re-established.

(xvii) The next three years (1928-1931) covered the search for a solution in which each of the

parties could be honestly convinced that their interpretation was precisely the same as the

others. The essence of agreement lay with the presumed unwritten qualities of individual

colleagues. The JCT founded in 1931 that enabled the N F B T E and IOB to accept the

1931 form. The JCT, which initially consisted of the representatives from the RIBA and

53
 the predecessors of the NFBTE, was setup to be responsible not only for the publication

of a standard form but also its continual revision.

(xix) Ironically, the IOB sanctioned the 1931 form along with the RIBA and N F B T E , but

unlike those two bodies it did not became a member of the JCT.

(xx) In 1931, the Architects Act was passed to establish the criteria to protect the public

against 'unqualified' persons practicing as architects.

(xxi) At the beginning of thirties, contracting firms varied generally in size, area of operations

and type of work undertaken. The depression affected the building industry most

severely in 1933 when tens of thousands of workers were unemployed, but a year later

it had passed its peak, as a private enterprise housing boom developed.

In the years which have followed, representatives from other bodies such as the Royal

Institution of Chartered Surveyors (R1CS), delegates from the local authority

associations, the SBCC, the two main organisations representing specialist sub­

contractors and the Association of Consulting Engineers have joined the JCT and two

members of the Confederation of British Industry attended meetings as observers.

(xxii) In 1937, when the first standard form specially adapted for use by local authorities was

issued, the JCT had received sufficient feed back from the use of 1931 form to be able

to issue a new edition.

(xxiii) Although the 1939 standard forms were issued in both private and local authority

editions, they were not to be used until after the war.

(xxiv) Since 1931, new editions of the contract have been published in 1937, 1939, 1950, 1957

and 1963 and amendments and revised clauses to the contract have followed at

increasingly frequent intervals. The latest edition 1963 was made between RIBA, RICS,

54
 County Councils Associations, Association of Municipal Corporations, Urban District

Councils Association, Rural District Councils Association, Greater London Council and

the N F B T E . Also since 1963, membership of the JCT has been increased by

representatives of the SBCC, the Federation of Association of Specialist Sub-Contractors

and the Committee of Associations of Specialist Engineering Contractors.

The RIBA was only one body among eleven.

The 1963 edition was published in 4 versions - with and without quantities, and for

private and local authorities use. In 1964 the arbitrary contract procedures situation

existed when there was an adequate financial return.

(xxv) Revised form of building contract published in July 1977 with the amendments to

retention fund provisions. This revision was based on the original 1963 edition.

(xxvi) The forms of prime cost contract for use in the repair of war damaged property were

issued in 1946 and revised in 1956 to provide for a cost plus percentage contract and a

cost plus fixed fee contract.

(xxvii)Re-measurement contracts were published in October 1975, by the JCT designed for use

with approximate quantities and applicable in both the private and local authorities

sectors.

(xxvii)JCT 80 is the latest in a series of standard forms prepared by the JCT and replaces the

July 1977 revision of the 1963 edition. JCT 80 is nearly twice as long as the 1963

edition and contains many new procedural requirements. The volume of the new

contract, its language and the unfamiliar style and presentation all combine to make its

content difficult to assimilate.

The principal reason for the publication of the new edition of the standard form was to

introduce major changes in the treatment of nominated sub-contractors.

55
 In 1966, the Federation of Associations of Specialists and Sub-Contractors (FASS) and

the Committee of Associations of Specialist Engineering Contractors (CASEC) joined the

JCT which thereupon assumed responsibility for the production of the standard form or

forms of sub-contract. Consideration of the new nominated sub-contract and its

associated documents, with the consequent amendments to the main contract, have

occupied the JCT more or less continuously ever since.

In the 1970s and 1980s, other interested professional bodies (Other than JCT) published their

own contract forms in response to the increasing variety of contractual and building

requirements. Bodies responsible for forms in general use today are

(i) Institution of Civil Engineers.

(ii) Property Services Agency, Department of the Environment.

(iii) Architects and Surveyors Institute (Formerly the Faculty of Architects and Surveyors).

(iv) Association of Consultant Architects.

(v) Scottish Building Contract Committee.

(vi) Joint Council for Landscape Industries. (Hugh at el 1990).

3.5 The General Conditions of Government Contracts for Building and Civil

Engineering W o r k s

This form which generally used by government departments and for government corporations

differs from the JCT contract forms for private or local authorities use. The very origin of the

form is quite different as the government form originates from an Inter-Departmental Committee

representing the Ministries involved with construction who consult with the Employers

Federations in the construction industry. The responsibility of the form primarily rests with the

Property Services Agency of the Department of the Environment.

The position of the architect, surveyor, or other supervising officer under the JCT contract form

is replaced by the term "The Project Manager". These forms are used even when an

56
independent consultant is employed to design and supervise the building works.

The contract form is suitable for use with or without quantities or with approximate quantities

or for use in conjunction with a schedule of rates either for measurement of work as it is carried

out, or to assist with costing variations in the case of lump sum contract without quantities.

Prime cost contracts are excluded.

Under the government contract the contractor has to give notices and pay all fees and indemnify

the authority (Employer) but there is no provision for the sums due to be added to the contract

sum. The contractor must accordingly make provision for them when he submits his tender.

Another provision relates to the status of the superintending officer. Under the terms of this

contract the decision of the officer appointed is final and conclusive.

The forms available under this are described in 3.3.

57
!

CHAPTER - 4
CHAPTER 4 - HISTORICAL BACKGROUND OF THE FIDIC CONDITIONS OF

CONTRACT AND ITS APPLICATIONS TO BUILDING

CONSTRUCTION WORKS

4.1 Introduction

The main aim of this chapter is to;

(i) Study the history of FIDIC and FIDIC conditions of contract; and

(ii) Find out the applicability of FIDIC conditions of contract for building

construction works. Also this chapter covers some of the notable characteristics

of building and civil engineering construction works in general.

4.2 W h a t is F I D I C

FIDIC is the acronym of the French title of the International Federation of Independent

Consulting Engineers - La Federation Internationale Des Ingenieurs Conseils. FIDIC was

founded in 1913 by 5 National Associations of Independent Consulting Engineers within Europe.

It was not until the end of the world war in 1945 that the FIDIC began to expand and include

among its membership those countries which contained the largest Associations of Consulting

Engineers. Today FIDIC membership numbers 5 3 , countries from all parts of the world.

FIDIC is a non-profit association, representing consulting engineers throughout the world and

facilitating the achievement of projects by the three principal parties namely client, contractor

and consultant.

FIDIC arranges seminars, conferences and other events in furtherance of its goals which are

(i) Maintenance of high ethical and professional standards.

(ii) Exchange o f views and information.

(iii) Discussion of problems of mutual concern among member associations and

58
 representatives of the international financing organisations.

(iv) Development of the engineering profession in developing countries.

(v) T o act as a central source of information for the member associations.(Campbell, 1986).

During its development it has become apparent that the FIDIC must jealously guard the standard

of the service which the members of its constituent member associations can offer, and a

substantial contributing factor to this has been its insistence on the maintenance of strict

independence so that the counsel and advice given to clients are unaffected by any possibility

of gain from other sources.

With the ever-growing interest to aid developing and less developed countries and with the

tendency of lands which were formerly not industrialised to see their future supported by

industrialisation.

FIDIC has an obviously expanding part to play in the international picture which can be a major

contribution to world development and, through that, to peace and prosperity. FIDIC is actively

working to encourage the development of the profession in countries which are in the process

of development and much of the practical help is being provided by member associations in the

industrialised countries.

FIDIC has prepared standard forms for contracts for the construction of civil works and for

electrical and mechanical works and these are the best recognised standard conditions available

for international contracts. They have done much to establish the working pattern between the

client, consulting engineer and contractor which in itself has been of great advantage to each of

the parties concerned. (Campbell, 1986).

Those who are already familiar with both the fourth and the fifth editions of the conditions of

contract issued by the ICE will be well aware of points of similarity contained in clauses in both

of these ICE conditions and FIDIC conditions. They should not, however because of their

knowledge of the ICE conditions, assume that the FIDIC is equally applicable in usage- It is

59
not. FIDIC is a form of contract not necessarily subject to the laws of England, nor in the

wording precisely the same as the ICE conditions either in syntax or definition, and because of

this the FIDIC contract must be regarded separately in its own right and should be read and fully

understood with these points in mind. FIDIC is established through the laws of the land which

govern the contract and it is therefore of primary importance that the identification of the law

applicable to the contract is made clear, as well as the ruling language where the contract

documents are written in more than one language. In FIDIC condition of contract

(i) Principals or parties to the contract; Employer and contractor.

(ii) Supported by; The engineer, his representative and assistants, nominated and other sub­

contractors and suppliers.

(iii) Others involved; Insurers, providers of geological details etc. designers and specialist

engineers.

(iv) By invitation; Arbitrator or Arbitrators.

FIDIC has also developed standard forms of agreement between client and consulting engineer

for pre-investment studies, design and supervision and project management services.

4.3 F I D I C conditions of contract

For a project to be achieved successfully the first essential is to have available competent

designs, drawings and specifications together with either a bill of quantities or a schedule of

rates, to facilitate the computation of the cost of the works. Taken together with these

documents, the conditions of contract establish a working relationship within which an employer

can expect to receive from an efficient contractor a soundly executed project within a reasonable

time and at an economic cost.

To achieve optimum results it is essential that when tenders are invited, the tenderers are not

asked to cover in their quoted rates for risks which an experienced contractor could not

reasonably be expected to foresee at the time of preparing his tender.

60
It is in the employers interest for him to assume responsibility under the contract for costs

arising from events which may never occur, which lie outside contractors control and which

cannot be covered by insurance, or where the cost of insurance is prohibitive. These events may

arise from the "excepted risks" and the "special risks".

Competent and experienced contractors are then able to submit competitive tenders without

having to include contingency sums to cover unpredictable hazards and the employer will only

have to meet the cost of dealing with events which actually occur, arising from special risks.

Close co-operation and team work between employer, contractor and engineer with a mutual

desire to produce a satisfactory product by well organised, safe and efficient methods, will

reduce to a minimum the risk of delays or misunderstandings. Whatever may be the extent of

the engineers delegated duties, he will inevitably consult the employer before taking action which

will have a significant effect on the nature of the works, their cost or the time for their

completion. It is when mistrust or lack of confidence creeps in that troubles arise and a contract

runs into difficulties. N o wording in the conditions of contract will prevent this from happening

if the team work is faulty and one or more of the parties fails to perform.

The degree to which the employer will allow the engineer to act without first consulting him will

depend on the degree of mutual confidence, the technical and managerial capacity of both parties

and the extent to which the employer wishes to retain responsibility.

The FIDIC conditions of contract (Wallace, 1974) is intended for works of civil engineering

construction which are to be measured and evaluated by bill of quantities. It consists of a single

printed document commencing with a short explanatory memorandum, and six separate minutes,

all of which are signed on behalf of various sponsoring bodies. It is then followed by 72 general

conditions in part I (one of which, the fluctuations clause, is merely an uncompleted heading),

and then by a number of similar uncompleted heads for separate agreement by the parties in

parts II and III (Part II - Special conditions, Part III - Relating to dredging and reclamation

work.). These two latter parts are refered to somewhat misleadingly as "Conditions of Particular

61
Application", but are in reality only suggested subject on which the parties are required to make

their own express agreements. Like the English ICE condition, the document also contains a

(Virtually identical) form of tender and appendix, and also a form of agreement. Like the

English ICE conditions, the contract contemplates the existence of drawings, and a specification

and bill of quantities as additional contract documents.

FIDIC is not suitable, without alteration, for works using a lump sum, fixed price or target cost

contract where the basis for payment is not admeasurement nor in their present form for design

and build work.

4.4 F I D I C Conditions of C o n t r a c t (First E d i t i o n - August 1957)

Based on the considerations described in 4.3 and applying their knowledge of civil engineering

contracts being carried out throughout the world, the FIDIC and the International Federation of

Building and Public Works (FIBTP - "Federation Internationale du Batiment et des Travaux

Publics") now known as the International European Construction Federation drafted and issued

in August 1957, conditions of contract (International) for works of civil engineering

construction.

Upto that time there were no conditions (Refer 12) which had been specifically prepared to

govern international contracts. The first edition of the FIDIC conditions (The red book as it

quickly became known because the title was long and the cover was red) was published at a time

when international contracting was in its boom period and the need for a standard set of

conditions became apparent. The first edition was based on a form of contract in use in the

U.K. which was published by the ICE (Conditions of contract - Fourth edition) and thus very

much reflected traditions and a legal system that were specifically British. Subsequently the

document, which is the only standard conditions of contract for works of civil engineering

construction in use on a worldwide basis, was approved and ratified by the International

Federation of Asian and Western Pacific Contractors' Associations (IFAWPCA) in 1969, and

by the Associated General Contractors of America (AGCA) and the Inter-American Federation

62
of the Construction Industry (FIIC - La Federation Inter-Americana de La Industria de La

Construction) in 1971.

4.5 F I D I C C o n d i t i o n s of C o n t r a c t (Second E d i t i o n - J u l y 1969)

There is no difference in the wording of the conditions in the second edition, published in 1969.

(Wallace, 1974). The purpose of this edition was merely to record the slight change in the

present name of the FIBTP organisation, and the addition of the IFAWPCA as a further

sponsoring body, and to include a list of suggested headings for special clauses for dredging and

reclamation work. (i.e. The Part III of the contract conditions - This Part III was drafted to

provide particular changes to the general conditions when the document was to be used for

dredging and land reclamation contracts).

A print of this latter edition in 1973 added minutes of approval and ratification by two new

sponsoring bodies - the AGCA and the FIIC. FIDIC conditions of contract (second edition) is

firmly based with only minimal alterations on the fourth edition of the ICE conditions of

contract. (ICE is based on English Law but the FIDIC is not).

4.6 F I D I C Conditions of C o n t r a c t ( T h i r d E d i t i o n - M a r c h 1977)

The terms of the third edition of the conditions of contract (International) for works of civil

engineering construction which did involve a complete revision, was published in March 1977,

prepared by the Federation Internationale Europeenne de la construction (FIEC) and the FIDIC

are approved by those organisations, and also by the AGCA, the FIIC and the I F A W P C A , and

are recommended by them for general use for the purposes of contracts for the construction of

such works where tenders are invited on an international basis. It is further agreed that;

63
(i) Without the derogating from the provisions of clause 5(1) of the said conditions as to the

designation in any contract of any specified language as the "Ruling language" for the

purposes of such contract the version in English of the said conditions shall be considered

as the official and authentic text thereof for the purposes of translation there of into any

other language.

(ii) Official translations from English of the said conditions shall be prepared into French,

German and Spanish and into such other languages as FIDIC and FIEC may from time

to time jointly agree.

Employers should not be encouraged to meddle with the words of the standard Part I portion of

the FIDIC form. Evidence collected in 1973 from 113 projects, carried out under the FIDIC

form (Second edition) in 5 0 different countries indicated that difficulties had arisen where

standard clauses had been modified.(Jones, 1979).

FIDIC conditions of contract (Third edition) incorporates some of the changes made in the fifth

edition of the ICE conditions of contract published in 1973 but has still retained much of its

fourth edition pedigree.

4.7 F I D I C C o n d i t i o n s of C o n t r a c t ( F o u r t h E d i t i o n - S e p t e m b e r 1987)

In 1983 the executive committee of FIDIC appointed a drafting committee comprised of

members of the Civil Engineering Contracts Committee (CECC) which upto that time had been

charged with monitoring the use of the third edition. (Refer 12).

The results of the work of the drafting committee, which comprised the members from the

following countries such as Denmark, Germany, U . S . A , Sweden and U . K . , were approved in

1987 and the fourth edition of the conditions of contract for works of civil engineering

construction was published at the annual conference of FIDIC held in Lausanne, Switzerland in

64
September 1987. There are many important differences between the third and the fourth edition

(Refer 12).

The executive committee decided to drop the word "International" from the title of the document

as with slight modification in Part II it is also suitable for domestic contracts. FIDIC also

strongly recommends all users of the conditions to insist the Part I of the document should be

in the form published by the FIDIC.

Also FIDIC conditions of contract (Third edition) was being criticised by employers (owners)

for being too anglo-saxon in its concept and language, presumably the result of a far wider use

than it had previously enjoyed. Certain amendments were identified which were being applied

almost consistently by employers and it was considered advisable to being the conditions into

line with current practice. Another factor was that in many cases where the conditions are being

used for projects in developing countries, the representative of the employer did not have the

breadth of authority to delegate duties to the engineer which it had been envisaged that they

would have when the third edition was prepared and it was felt desirable to reconcile the

conditions with current circumstances.

Considering the above fact the following were taken into account for the preparation of the

fourth edition.

(i) Change only where change is necessary.

(ii) Maintain the basic role of the engineer.

(iii) Pay close attention to some specific topics such as bonds and guarantees, apportionment

of risk, insurance, claim procedures, certificates and payments and dispute procedures.

(iv) Endeavor to update the language so that it is more understandable to those charged with

administering the conditions on site.

There were some procedural differences in the drafting process as compared with the third

65
edition. (Refer 12).

In the preparation of the third edition, representatives of the Contractors' Associations had

participated almost as co-drafters and it had been indicated on the cover of the conditions that

the document was approved by the various contractors throughout the world. For the fourth

edition it was agreed that the contractors representatives would have consultative status during

the drafting process but the final comment would be the sole responsibility of FIDIC.

European International Contractors (EIC) were mandated by the Confederation of International

Contractors' Associations (CICA) to represent CICA in this consultative role and the EIC

representative were assisted by two representatives of the AGCA.

In addition, during the course of the revision there was considerably more consultation with the

World Bank (WB) than had been the case in previous revisions.

The most notable changes in FIDIC fourth edition from all previous revisions are as follows

(Sawyer at el 1990).

(i) Previous revisions (First, Second and Third) did not give the employer many

duties but the fourth edition allocates certain matters to him more specifically.

Clause 2.1 in Part II lists some of the engineer's duties for which the specific

approval of the employer must be obtained before they are carried out. There are

23 occasions when the engineer must consult the employer and the contractor (For

extra works and extension of time etc.) and only one occasion when the employer

consults the contractor on a matter of settlement. The employer is the more

important party to the contract because it is his project and his money which

provide employment for the engineer and the contractor.

(ii) The style of the language and the layout of the clauses has been modernised to

some degree but the sequence numbering of the clauses has been preserved.

66
(iii) Part II (Conditions of particular application) has been greatly expanded by going

from an aide memoire to a fairly comprehensive set of fully developed example

clauses.

(iv) Part II has been printed as a separate volume. This enables Part I (General

conditions) to be attached to the tender documents in their printed form. This

provides satisfactory evidence that no changes have been made therein and that

whatever changes are require will be affected by an entry in Part II.

(v) The previous Part III (Dredging and reclamation works) has been incorporated

into Part II.

(vi) Current practice has been reflected in the new edition.

(vii) Procedures have been set out in greater detail and in an action oriented way.

(viii) The conditions cater for a larger degree of plant.

(ix) Greater recognition has been made of the fact that some design of permanent

works are, on occasion made the responsibility of the contractor.

4.8 A p p l i c a t i o n of F I D I C Conditions of C o n t r a c t f o r B u i l d i n g Construction

Works

4.8.1 I n t e r n a t i o n a l B u i l d i n g Construction W o r k s

In most of the countries FIDIC conditions of contract is not used for their building construction

works whereas other conditions of contracts are in practice based on their o w n or modification

of some other building contracts. Those are namely conditions of contracts in the U . K . practice,

conditions of contract of the American Institute of Architects, modified versions of conditions

67
of contracts based on the U.K. or the United States of America, their own standard conditions

of contracts etc. Because of these there are no evidence in the application of FIDIC conditions

of contract for international building construction works except in the middle east. (Rush

Brooke, 1983).

There are number of problems associated with a civil engineering contract in general use for

both civil engineering and building construction works. The two operations are markedly

different and are described in 4 . 8 . 3 .

According to Rush Brooke(Rush Brooke, 1983), FIDIC conditions of contract is not appropriate

for building construction works in the middle east and a completely redrafted equivalent of

FIDIC conditions of contract suitable for building construction work is required to avoid the

considerable, present undesirable redrafting of the engineering contract. FIDIC in also not

suitable for contracts with a mixture of multi-disciplinary activities involving mechanical and

electrical work.

4.8.2 Local Building Construction Works

Adoption o f FIDIC conditions of contract for local building construction works in the past and

present is not unusual, although it is a civil engineering contract document and the contract is

administrated by the engineer.

Very few projects get involved separate consultancy firms and specialised sub-contractors. The

use o f FIDIC conditions of contract in principal is acceptable among local professionals involved

in building construction works and their argument is that it will be difficult to draw a line

between civil engineering and building construction works for most of the local building

construction works. The use of FIDIC conditions of contract was in practice among most of

the private building consultancy organisations (Architectural firms), although some were using

their own or modified versions of the U.K. based building conditions of contracts.

68
4.8.3 B u i l d i n g a n d C i v i l E n g i n e e r i n g Construction W o r k s

Since the use of separate conditions of contracts and separate contract administrators (Engineers

and Architects) for both works, it will be necessary to see the notable characteristics between

the two construction works. The following are some of the notable characteristics

(Austen at el 1990) and (Wallace, 1974).

(i) Civil engineering construction works usually incorporate large foundations or

earthmoving operations, together with reinforced concrete works on a massive

scale (eg. Dams, harbours, road ways etc.).

(ii) Civil engineering construction works contain little specialist works and some of

the temporary works are often designed by the consulting engineer.

(iii) Building construction works consist hopefully of work fully detailed before the

work starts and with a great variety of finishes, services and sub-contractors'

work.

(iv) Civil engineering construction works frequently take place over wide areas,

perhaps already occupied by the employer or other persons and of which the

works may form only a small part, and with no readily recognisable limitations

or boundaries, as in the case of most of the building sites.

(v) Civil engineering measurements are based on Civil Engineering Standard Method

of Measurement (CESMM), or alternatively the Method of Measurement for

Roads and BridgeWorks(MMRB) whereas building works are based on S M M .

(vi) The scope of civil engineering work is vast, and encompasses the whole of main

endeavour to shape and improve man's physical environment. Roads, railways,

docks, dams, land reclamation, bridges, power stations and pipe lines are all the

responsibility of the civil engineer, together with tunnels, sea defences and

69
 sewerage schemes. He will also be called upon to design and carry out the

construction of the foundations and structure of large buildings.

(vii) The design and supervision of civil engineering works are usually carried out by

firms of consulting engineers or by professional civil engineers in the public

service.

(viii) The engineer referred in the civil engineering contract standard form will usually

a civil engineer appointed by the employer to design and supervise the works and

act as the employer's agent.

(ix) The services of architects on civil engineering contracts are generally required for

landscaping and the design of subsidiary buildings.

(x) The civil engineering contract forms do not mention by name the quantity

surveyor, but the engineer can, if he wishes, delegate his duties in regard to

measurement and valuation to a quantity surveyor but not in regard to the final

certificate. Some civil engineers still prepare their own quantities, but with the

increasing complexity of engineering schemes, many civil engineers now employ

the services of the professional quantity surveyor.

(xi) The courts generally imply into building and civil engineering contracts the terms

that the employer will give the contractor possession of the site within a

reasonable time, that the employer will appoint an engineer or architect, that the

employer will not prevent the contractor from completing the works, and the

contractor will do the work in a good and workmanlike manner. In the standard

forms of civil engineering contract all these matters are the subject of express

terms.

(xii) In a building project, the client may be an individual or government, whereas in

70
 a civil engineering project, the client is mostly government.

(xiii) Buildings are construction works in which people will work or dwell.

(xiv) Civil engineering works are more concerned with controlling the natural

environment to provide what is sometimes called the "infrastructure" for example,

roads, dams and airports.

(xv) Because civil engineering work is concerned with changing the natural

environment, it is highly susceptible to the unpredictable forces of nature,

whereas building works are not susceptible. For example, the building of a dam

may be seriously disrupted by a sudden storm causing a flash flood. But once the

foundation of a building is complete, the elements cause minor interference to the

erection of the superstructure. Civil engineering works thus require a more

flexible approach as well as an increased contingency allowance for unexpected

costs.

Most civil engineering schemes are large, extensive and expensive, obvious

examples being road and irrigation developments. These characteristics often

require a high rate of expenditure during the construction stage and a high level

of managerial expertise. This may in turn require a high level of investment by

the contractor. In developing countries these characteristics have resulted in

much civil engineering work being funded by the international developing

agencies, designed by international consultants, and constructed by major

international contractors using plant-intensive methods.

(xvi) Building contracts are mostly supervised by architects, it is the structural engineer

who will assist as consultant responsible for the design and inspection of the

foundation and structure. There will be other consultants for service installations,

lifts etc.

71
(xvii) Quantity surveyors either in private practice or in the public service, are almost

invariably employed on building contacts. Their duties extend from preparing

preliminary estimates from the sketch design to the preparation of the final

account, and will include, among other services, the preparation of the bill of

quantities, and valuations for interim certificates. The quantity surveyor receives

official recognition and his duties are partially defined in the building contract

forms such as JCT conditions of contract etc.

72
CHAPTER - 5
CHAPTER 5 - B U I L D I N G C O N S T R U C T I O N I N D U S T R Y IN S R I L A N K A AND

T H E DEVELOPMENT OF ICTAD CONDITIONS O F C O N R A C T

5.1 Introduction

This chapter covers briefly the historical development of the building construction industry in

Sri Lanka from ancient time, ICTAD and its role in the local construction industry, development

of I C T A D conditions of contract, conditions of contracts in use for local building construction

works and the need for a separate conditions of contracts for local building construction works.

5.2 Building Construction Industry in Sri Lanka

5.2.1 Ancient Building Construction Works

Of the early form of buildings in Sri Lanka, the cave monastries indicate a methodical and

deliberate attempt at construction. These monastic buildings comprised of either a natural or

man made cavity in a rock face protected by a drip ledge and a screen wall and often a lean to

roof. A wall in front of the opening consisting of a doorway and windows provided the facade

to this type of monastic building. This form of structure could be attributed to the period third

century B . C . to the first century A . D . The other forms of buildings which can be historically

authenticated are residential buildings constructed using wattle and daub techniques with a

thatched roof.

The next phase in the development in the art of construction is the extensive use of brickwork

in Sri Lanka. Historical evidence of which is available in the form of the mahastupa, the

mirisaveti stupa and the lohapasada.

The development of the monastic buildings around the stupas took place around the fourth

century A . D . The basic concept of the vihara was the central stupa surrounded on three or four

sides by pirivenas or residential buildings. The residential units are mostly pasadas of various

73
sizes arranged in a quadrangle around the central shrine. The architecture of the pasada is

important as habitational buildings. The pasada consisted of a rectangular walled edifice

constructed on a elevated platform with regularly placed columns. The super-structure of the

roof and of the upper storeys, if any, was of lighter and more perishable material than the brick

and stone facings of the sub-structure which is all that remains today.

T w o special developments in the materials and methods used in construction can be distinguished

in the period seventh to the tenth century. Firstly the increasing use of stone and secondly the

employment of lime mortar in brick masonry. The use of stone in extra architectural features

and such details as steps was not unknown in the earlier periods, but the overwhelming

impression of the fifth century buildings at Sigiriya were of exclusively brick and timber

architecture. From this time onwards stone was increasingly used in the base mouldings

entrance, stairs and pillars of major structures. The soft lime-stone techniques were replaced

by the much harder and more common granite around the sixth century. The wooden pillars of

the ground floor were also progressively replaced by stone columns. After the mid eighth

century most of the construction of buildings were entirely of brick masonry.

These construction works were done directly under the directions of kings and their Ministers

in different periods of time. The works were assigned to master craftsmen in different trades

and they had to find assistants from their castes to complete the job. It must be noted that

craftsmen belonged to different castes depending on their trades. The major work was co­

ordinated by a Minister appointed by the king and in most of the projects the king himself visited

the sites to monitor the work. These craftsmen were rewarded with grants in land for the work

done by them. This system existed until the arrival of Portuguese in A . D . 1505.

(Weerakkody,1986).

5.2.2 C o n s t r u c t i o n i n the C o l o n i a l Period

Portuguese started getting the services of locals for daily wages. Firstly this system was started

in the army, and later it spread to other areas like construction. During the Portuguese and

74
Dutch periods the significant construction work comprised of the army encampments

urbanization, building construction and the Dutch canal system. In this period both brought

engineers and skilled craftsmen from their countries to construct buildings, seafortresses and

canals to transport goods, and at the same time, local craftsmen were also employed to work

with these engineers for daily wages.

The major change in the construction industry occurred during the British rule (1796-1948)

especially during the period of industrialization in England. The governments' main objectives

during this period in Sri Lanka were the preservation of law and order in the country and the

collection of revenue. Any development was, therefore, related to the increase of revenue to

Britain.

During the British rule, construction was mainly to develop roads and railways to serve the tea

and rubber plantations which were the main revenue earners and the infra-structure development

to serve those plantations were given the highest priority and was carried out using the direct

labour system. All the engineering functions were handled by the British through the following

establishments

(i) Ceylon Government Railway.

(ii) The Public Works Department.

(iii) The Department of Irrigation.

(iv) The Colombo Port Commission.

(Balasooriya, 1992.)

The construction of houses was purely an individual effort during this period, which later

developed into a contracting system due to the increase in quantum, and the changes in

technologies adopted. The building activities were mainly in the hands of the government

departments except for traditional housing and smaller buildings of not more than two storeys

which were either owner built or built by the insignificant private sector that existed at that time.

A few large firms of British origin existed (Walkers, Browns, Colombo Commercial Co. etc.)

75
which provided for the building and other engineering needs, mainly of the plantation industry.

The Public Works Department (PWD) was responsible for the design, construction and

maintenance of all public buildings. This department was originally staffed by British engineers

who were gradually replaced by Sri Lankans who them-selves were trained in Britain. The

design for most buildings followed "Type - plans" developed in the department. (Gunasekara,

1990) and (Balasooriya, 1991).

5.2.3 C o n s t r u c t i o n i n the Post Independence P e r i o d ( 1 9 4 8 - 1 9 7 7 )

After 1948 the same (Similar to colonial period) construction system existed in this country and

some of the sizeable new buildings designed and constructed in the post - independence years

by the P W D are the office buildings for the then department of government electrical

undertakings, national savings bank building, the new central telegraph office building, all in

Colombo. The design and construction of the university scheme in Peradeniya during the same

period was the largest building project of the time. Construction works were handled mainly

by private contractors using known technologies of in-situ concrete construction and brick-work.

But, British engineers in the government sector were gradually replaced by local engineers and

technical staff. At the same time, ownership of their companies was also gradually passed on

to the locals. In addition to this, local construction companies, small scale contractors who got

themselves registered with government departments to undertake construction work and

contractors of donor countries also got into the construction industry.

The government's action after 1948, in relation to the construction industry was the outcome of

the policies of the government and was very keen to improve the agricultural sector of the

country by bringing large acres of lands under cultivation, developing major irrigation schemes

and to constructing the houses for its employees. Therefore, the government had been a client

in the construction industry.

The local authorities were engaged in construction of houses. While the government was

engaged in the construction of houses, it took some fiscal measures or policy decisions to

76
encourage the private individuals and societies to construct houses. The first action taken was

the formation of a Board with funds in 1949 and authority to grant loans for the execution of

housing schemes not to individual housing units. Societies and individuals who could put

forward housing schemes and those who could supply building materials for the execution of

housing schemes were entitled to obtain loans from this Board.

From 1952, the government's objectives were the completion of large housing schemes,

irrigation works, roads and new works such as the development of the Colombo harbour and the

gal oya scheme. During the period 1950's , the government gave tax relief for the expenditure

made by the private sector on capital expenditure such as plant, machinery and buildings to

encourage the private individuals and societies to participate in construction. At the initial stage

there was no apparent increase in investment, the government further continued to extend such

reliefs to get increases in housing and building stock of the country and by which it was

expected to make a contribution to the Gross National Product (GNP) of the nation.

As a result of the government's incentive measures there was a significant change in the

construction during 1950s(1950-1956). The P W D was involved in the maintenance of existing

roads and providing new roads, the maintenance of inland navigation, the maintenance of bridges

and also in construction and maintenance of water supply schemes and building construction.

The government also had a major role to play in the administration of housing, both in the field

of direct construction as well as regulating the housing development by private individuals and

agencies. The capital cost on housing was relatively very much higher in relation to the income

of the average citizen of Sri Lanka. Therefore, it was necessary for the state to help the people

to achieve this basic need as in food and clothing, by means of financial assistance. There are

also facts available that the government had enacted ordinances towards housing before

independence. The government after independence had taken action to construct the houses for

its employees. Hence the government had been a client in the construction industry. The

governments' monitory and fiscal policy decisions and various legislative actions had effected

the industry to a considerable extent.

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In 1953, the policy adopted in 1949 was amended to allow a person not only to erect a house

but also to complete a partly built house or to erect an extension to a house. The first Ministry

of Housing was created in 1953, and the National Housing Department was established under

it. The new Department of Housing engaged in the building of houses and in granting loans to

private parties for housing.

With the planned industrial expansion that took place under the state sector in the post 1956

period, there was the necessity to construct many large factory buildings. It was quite rightly

decided then that the P W D or the Industries Department, which were relatively small

departments then, were not geared to deliver the goods in meeting the enormous requirements

of buildings and infrastructure for the rapid industrialisation.

The State Engineering Corporation (SEC) was established in 1962 under the leadership of Dr.

A . N . S . Kulasinghe to handle the design and construction of buildings and engineering works for

the numerous state sector industrial development projects launched under the then Ministry of

Industries. Subsequently, the SEC expanded its services to other areas including office

buildings, housing, hospitals, new town development, hydropower projects, etc. During the

early days, such as the central bank building, Colombo, were designed and constructed by

foreign consultants and contractors. The PWD then, was probably not considered proficient

enough to be entrusted with such works. The Buildings Department, carved out subsequently

form the P W D in 1969 continued with very conventional buildings for the public sector. A few

tall buildings appeared in Colombo during the period (1968-80) and some of the more notable

ones then were the insurance building, people's bank building, SEC building, CECB building,

national housing secretariat, labour secretariat and inland revenue building. These building

structures were designed and constructed by the local engineers working in various

organisations, and principally in the SEC.

Private sector consultancy firms which were commissioned in the early 1960's were limited to

architectural practice only. There existed however a couple of individual structural engineers

who provided the structural design and drawings to some architects and architectural firms and

78
carried out general supervision of structural construction on an adhoc basis. With the change

in government in 1965, there was a change in policy. Local consultants were entrusted with

civil engineering consultancy assignments for the fist time. The first formal private engineering

consultancy practice was started in 1968 was Engineering Consultants Limited. (Balasooriya,

1991).

Also in the late 1960's there were certain amount of private sector consultancy firms

commissioned to a limited extent for the large volume of state sector projects in the architectural

practice. Several consulting engineering firms were established in the late 1960's and it was

then thought that private consultancy practice had taken root. By the year 1970 all forms of

government financed construction works were highly developed towards the use of contracting

systems. However, with another change of government in 1970 the consulting engineering firms

that were established during the period 1965-1970 took a nose drive in 1970-1971 with many

of the firms putting up their shutters and the principals of such firms seeking employment

abroad. Except for a few architectural firms, most of the other consultancy organisations went

out of business. It was indeed a big sleep as far as consulting engineering was concerned during

the period 1971-1977 with little or no development work being done. What little development

work that was being done, both consultancy and construction, during the period 1971-1977 were

carried out by the public sector, except for a few building projects entrusted to favoured

architectural firms. During this period (1971-1977) the government policy was that the

government financed construction should be through government construction agencies only,

using direct labour, which condition existed until 1977. (Balasooriya, 1992), (Zylva at el 1989)

and (Kulasinghe, 1986).

5.2.4 C o n s t r u c t i o n i n the Post 1977 Period

A s a result of the change of government in 1977 and its "open economy" policy and foreign aid

and grants to finance the new development plans, the then government received W B and

International Monitory Fund (IMF) support and formulated Public Investment Programme (PIP).

Under the first 1977 PIP three of the major projects initiated were

79
(i) One thousand housing programme

(ii) Urban Development Authority programme, and

(iii) Accelerated mahaweli programme

(Zylva at el 1989).

All of these involved massive civil engineering and building works. A change of policy in 1977,

resulted in reverting back once again to contracting systems for all forms of government financed

building and civil engineering construction, due to the inability of the system of construction by

government agencies using direct labour to cope up with the massive development programmes

envisaged by the government.

In accordance with the general trends in the historical changes in the industry, management

during the colonial times was through the Ministry of Public Works. The government by cabinet

decision decided to entrust a part of the heavy development programme to the Ceylon Chamber

of Commerce or to a Consortium of Consultants and Contractors. The Sri Lanka Construction

Consortium (SLCC) which was established in 1980 for this purpose recommended a consultant

for the design through construction supervision and a contractor for the execution of the works

based on the consultants plans and specifications which were often approved by the client. Due

to this, apart from agencies responsible for the construction of buildings in Sri Lanka under the

public sector such as purely public sector department (Dept. of Buildings) and public sector

corporations, with the execution of works placed on the private sector organisations the scenario

in the building industry changed drastically. At this time the private sector organisations as well

as public sector organisations were ill-prepared to, and incapable of undertaking on their own,

the large development projects, viz, multi storey housing, shopping and market complexes,

university expansion and large office complexes. Since the foreign loans and grants were used

to finance these massive projects, foreign consultants and contracting companies were brought

in to various large projects, tied to "Aid" packages. For the design and construction of some

very ordinary office buildings for the government, foreign agencies were commissioned

(Balasooriya, 1991). The heavy development programme resulted in several consultancy

organizations being set up to undertake design and/or construction supervision. Some of these

80
consultancy organizations did neither have the capability nor the expertise of undertaking

challenging consultancy assignments. During this period, even though the government awarded

the contracts on competitive bidding due to the influx of work, not much effort was required

from the contractors to procure jobs. Furthermore, during 1977, the SLCC started assigning

work to both contractors and private consultants registered with them. SLCC contracts were

executed on a cost + basis. The contract sum was negotiated with the technical committee of

the then Ministry of Local Government, Housing and Construction, on the basis of basic cost

+ 35% allowance for overheads and profits. The Consortium received 3 % service charge

deducted from payment to contractors. The other notable problems due to massive development

arised in this period among the private sector organisations were, weakness in their competence

and capability, viz, timeless of performance, quality of performance, reliability of cost estimates,

adherence to budget and commitments and, project management.

After 1977, a few private sector consulting engineering firms have been set up to provide

specialised engineering services in structural engineering, water supply and drainage engineering,

and management services. During the post 1977 period to-date, existing consulting firms grew

and many new practices have appeared on the scene some of which have now established

themselves on sound footings.

As a result of the return to contracting system, it was necessary to register contractors. The

system which was adopted for utilizing private contractors to handle work on a priority basis is

on negotiated rates, rather than on a tender system. Contractors registered with the SLCC.

However, it has been decided to reverse back to the tender system, and contractors are now

being registered with the government.

For large building projects, such as markets, administrative complexes, and large housing

projects, contractors are registered for the specified jobs based on their experience, and short

listed for the purpose of award of tenders.

For jobs which could be handled by local contractors open tendering systems were used and it

81
is generally found that only local contractors would apply for the jobs, since the overheads of

foreign contractors prevent them form being able to provide competitive jobs.

In the post 1977 period (1977-1987) large investments in buildings arising from the policy

changes, also generated much more building activity in the private sector - hotel industry, office

buildings, housing development, factories for the Free Trade Zone, etc. This period was a

boom period for the construction industry in Sri Lanka. (Fernando, 1986), (Joachim, 1988) and

(Balasooriya, 1992).

5.3 I C T A D a n d its R o l e i n the L o c a l Construction I n d u s t r y

A s stated in 5 . 2 , the period from 1977 to 1987 was a boom period for the local construction

industry. The downward trend in investment in construction thereafter required government

intervention to protect in the first place, and thereafter develop and strengthen the construction

industry that had been initiated especially with reference to contractors.

In the beginning of 1980, the government of Sri Lanka made a positive attempt to develop the

domestic construction industry with a firm commitment supported by the W B and the United

Nations Development Programme(UNDP) providing financial and technical assistance.

In January 1981 the Construction Industry Training Project (CITP) under the then Ministry of

Local Government, Housing and Construction was established and initiatives were taken to

establish the Association of Construction Contractors of Sri Lanka (ACCSL). Some of the main

objects of the CITP were

(i) Establish an unified modular training system for construction related trades to improve

the productivity and earning capacity of construction workers and provide opportunities

for new entrants.

(ii) Improve the operations and maintenance of construction plant and equipment by training

operators and mechanics.

82
(iii) Increase the effectiveness of work planning and supervision by training middle and upper

management in contract procedures, site management and quality control.

(iv) Improve and streamline the methods and procedures relating to the construction industry,

to meet the requirements of the national development efforts.

(v) Strengthen the agencies and institutions involved in training for the construction industry.

(Refer 17)

This project was partly financed by the International Development Agency (IDA) and was

supported by consultants from the British Council. A national steering committee for the

construction industry was established under this project to co-ordinate activities under (iii), (iv)

and (v) above. Since 1981 CITP has been in the forefront providing assistance to contractors

and existed as a temporary project under Urban Development Authority ( U D A ) in Ministry of

Local Government, Housing and Construction.

During the period from 1981 to 1986, the government concentrated on the training of

construction skills to meet the project demands created by the construction boom. In addition

to the training function, CITP was also expected to "Implement standardisation of construction

industry contract specification, procedures and documentation".

In April 1986 the CITP was transformed into ICTAD as a permanent institution under U D A to

re-structure the construction industry (i.e. to face up to challenges that had emerged with the

liberalisation of the economy).

I C T A D has three divisions under its umbrella namely construction development division, training

division and resource management division (Tissera, 1990).

The construction industry development division of ICTAD has three sub-divisions. These are

83
(i) Technology development unit

This unit was set up to transfer information on methods, materials and equipment available to

owners as well as in promoting the use of local materials and familiarisation with appropriate

specifications, standards and building regulations suitable for local conditions.

(ii) C o n s t r u c t i o n economics u n i t

This is concerned with the improvement of the operating environment of the construction

industry and would be involved in the quantitative and qualitative analysis of special problems

affecting the construction process and recommending changes in building procedures, contract

conditions, pre-qualification requirements, regulation of foreign contractors, legal and regulatory

requirements, etc.

(iii) I n d u s t r y development u n i t

This is primarily concerned with improving the management capability of national contractors

and developing various project and programmes to improve the efficiency of contractors.

From 1986, the ICTAD took several measures to address its attention to the development of the

domestic construction industry and the domestic contractor.

By about 1986, local contractors were of the opinion that there was a heavy under utilization of

capacities in the construction industry due to a shortage of work. The disturbed civil conditions

and resultant uncertain investment climate were major causes for the contraction in construction

activity. This sense of insecurity was further aggravated by the feeling that foreign contractors

were being given preference over their local counterparts.

A report complied by the ICTAD notes "The basic problem is a lack of defined long term policy

for the development of the local industry. Infact, it is not even treated as a industry in policy

84
formation. The state should formulate a strategy for the long term development of the industry".

As a result the government in mid 1987 appointed a high powered four member committee to

study and identify the problems affecting the local construction contractors to enable the

government to take meaningfull steps to remedy such identified problems.

This committee made an in-depth study and after one year of deliberation, identified six main

areas that affected the development of domestic contractors and the industry. They were

(i) Insufficient work load and lack of continuity of work.

(ii) Delays in payments to contractors.

(iii) Inadequate systems for financing contractors.

(iv) The need for the ACCSL to expand its membership and its activity and establish

an identify if it is to more effectively protect and advance the interests of the

industry.

(v) Poor construction management.

(vi) Indebtedness of contractors to banks and other financial agencies.

It is generally accepted that, inadequacy of working capital is among the serious problems

of the domestic contractors. Each of the above were then analyzed in more detail and several

proposals were made under each head for consideration of the government. These proposals

were formulated, elaborated on and presented in the from of recommendations for the

consideration of the cabinet of ministers by the then Hon. Prime Minister and Minister of

Housing and Construction. These recommendations were approved by the cabinet on 10-08-

1988.

By recognizing the difficulties faced by the local construction industry, the ICTAD started a

number of projects to develop the local construction industry. Some of them are

(i) Assisting the ACCSL.

(ii) Preparing standard conditions of contract.

(iii) Establishing a national grading system for contractors.

(iv) Obtaining cabinet approval for issues which help to improve the local construction

85
 industry.

(e) Providing training facilities etc.

The identification of the capabilities of construction contractors and accordingly categorizing

them was one of the major tasks handled by ICTAD during the year 1989. According to this

grading system the contractors have been graded under categories of five engineering fields.

These engineering fields are

(i) Building construction.

(ii) Highway construction.

(iii) Bridges construction.

(iv) Water supply and drainage construction.

(v) Irrigation and land drainage construction,

and the six categories are

Grade Capacity

1 More than Rs 50 M. (Millions)

2 Rs. 15 M - 50 M.

3 Rs. 5 M - 15 M.

4 Rs. 1 M - 5 M.

5 Rs. 2 5 0 , 0 0 0 - 1 M.

6 less than Rs. 250,000

Furthermore, by a cabinet memorandum, dated 14-06-1988, the cabinet also divided that one of

the pre-requisites for a contractor to take a government job is that the contractor must be a

member of the ACCSL.

I C T A D also had developed and had intention to develop the standard conditions for

(i) Building construction works.

(ii) Minor works less than Rs. 2 Million.

(iii) Project management.

(iv) Design and build.

86
5.4 I C T A D Conditions of C o n t r a c t

5.4.1 ICTAD Conditions of C o n t r a c t (First E d i t i o n - S e p t e m b e r 1986) - CITP

Publication No S C A / 1

As stated in 5 . 3 , one of the objective of the CITP and its successor ICTAD was preparation of

the standard form of conditions of contract and its revision of the effective contract management

for the local construction industry.

The national steering committee, which was established under the CITP project, through an

agreement of a subject area sub-committee and working groups had prepared conditions of

contract for works of building and civil engineering (With forms of tender and agreement),

regulation for tender procedures and several specifications in the field of civil engineering to

meet Sri Lankan conditions and requirements. The Sri Lanka conditions of contract (First

edition) for works of building and civil engineering had been originally prepared by a five

number specialist working group. (Refer 17).

This document had been recommended by the national steering committee for the construction

industry and adopted by the secretaries' committee of the construction industry in 1986. (Refer

17).

The ICTAD conditions of contract (First edition) was based purely on FIDIC conditions of

contract (Third edition) with little modifications made to suit the local construction industry.

Upto this period (Before 1986) there was no standard form of contract for all agencies, each

agency generally had its own contract form for jobs of a non specific nature.

While for jobs of specific nature, specific contract documents are studied and approved by the

Attorney General's Department.

The legal system available to the construction industry is very broad based and has to be drawn

87
out from the civil procedure code. Except common law no special law exists, defined as law

of building contracts or law of construction contracts. This leads to the situation that both

clients and contractors have got to, at every turn, retain legal advisors to identify the areas of

law that cover a particular issue arising out of a contract. (Ganeshan, 1991) and (Zylva at el

1989).

5.4.2 I C T A D Conditions of C o n t r a c t (Revised E d i t i o n - J a n u a r y 1989) - I C T A D

Publication N o . S C A / 1

As stated in 5 . 3 , the cabinet of ministers approved on 10-08-1988, the memorandum dated 14-

06-1988 on "Development of Domestic Construction Contractors" submitted by the Hon Minister

of Local Government, Housing and Construction (Cabinet paper 116 of 1988 continuation 71)

Identified problems by the cabinet are

(i) Poor construction management.

(ii) Insufficient work load and lack of continuity of work.

(iii) Delays in payment to contractors.

(iv) Inadequate system for financing of contractors. (Ganeshan, 1991).

By considering the above, the ICTAD conditions of content had been revised to incorporate the

recommendations. The government had also approved the adoption of the ICTAD conditions

of contract for works of building and civil engineering and further directed the ministries,

government departments, corporations and other state sector agencies to adopt the ICTAD

conditions of contract in the implementation of their construction activities.

The revised edition of the ICTAD conditions of contract also had been based mainly on FIDIC

conditions of contract (Third edition). However, there are few sub-clauses based on FIDIC

conditions of contract (Fourth edition) and ICE conditions of contract (Fifth edition). Following

are the changes made to the revised edition.

88
 Clause N o Description

0) 15 (1) N e w clause - Construction management service.

(ii) 34 (1) Engagement of labour - With the national trade certificate.

(iii) 51 (2) Confirmation of variation by the engineer is reduced from 14 days

to 7 calendar days.

(iv) 53 (6) a N e w clause - Import of machinery.

(v) 60 (1) Amount of mobilisation advance 30% is mentioned.

(vi) 60 (4) Release of retention money by furnishing a combined bond.

(vii) 65 (5) Special risks - Riot, whether directed against the state, persons or

- property is included.

(viii) 69 (1) Default of employer - The period is reduced from 28 days to 10

days.

For projects with total domestic funding and meant entirely for local tendering, ICTAD

conditions of contract is used by most of the institutions in Sri Lanka from 1989 onwards.

ICTAD had also taken steps in 1991 to review the revised edition of the conditions of contract

by comparing the FIDIC conditions of contract (Fourth edition) under the Chairmanship of Dr.

M . E . Joachim, but the work is not completed upto now.

5.5 Conditions of Contracts in use for Local Building Construction W o r k s

From the survey carried out, it has been able to find out that various conditions of contracts have

been used by the private sector consultants (Architects). The following table gives a summary

of conditions of contracts in use for building construction works.

89
Table 5.1 V a r i o u s conditions of contracts in use in S r i L a n k a

Period Sector Conditions of Contracts

Public Sector (i) Department of Buildings conditions of

Before contract(BD 11)

1989
Private Sector (i) RIBA conditions of contract

(ii) FIDIC conditions of contract (Third edition)

(iii) JCT conditions of contract (with or without

modification)

Public Sector (i) ICTAD conditions of contract

After
Private Sector (i) ICTAD conditions of contract
1989
(ii) RIBA conditions of contract

(iii) JCT conditions of contract (with or without

modification)

(iv) FIDIC conditions of contract (Third edition)

(v) FIDIC conditions of contract (Fourth edition)

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5.6 N e e d f o r a S e p a r a t e Conditions of C o n t r a c t f o r B u i l d i n g C o n s t r u c t i o n W o r k s

As stated in earlier chapters in the U.K. and in some other countries separate conditions of

contracts are used for building and civil engineering construction works. However, ICTAD

conditions of contract had been recommended for both building and civil engineering

construction works in Sri Lanka.

It is necessary to study whether there is a need for a separate conditions of contract for building

construction works.

T h e f o l l o w i n g views w i l l s u p p o r t the claim f o r a separate conditions of c o n t r a c t f o r b u i l d i n g

construction w o r k s

(i) The base document for ICTAD conditions of contract is the FIDIC conditions of contract

(Third edition). In the revision of the FIDIC 3 , the ICE conditions of contract (Fifth

edition) had a significance influence. Both FIDIC conditions of contract (Third edition)

and ICE conditions of contract (Fifth edition) are to be used for civil engineering

construction works. Hence there are doubts, about the efficiency of I C T A D conditions

of contract for building construction works in Sri Lanka.

(ii) Rush Brooke had reported (Rush Brooke, 1983) about many problems faced in the

Middle East building construction works for using FIDIC conditions of contract (Third

edition). H e is of the view that the FIDIC conditions of contract (Third edition) should

not be used for building construction works.

(iii) Building and civil engineering construction works have many differences and hence use

of the same conditions of contract may not be correct. (Rush Brooke, 1983).

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(iv) In many countries separate conditions of contracts are used for building and civil

engineering construction works.

(v) A study initiated by ICTAD, undertaken by Dr. S. Ganeshan had recommended that

I C T A D should review its conditions of contract (Revised edition, 1989) and then

formulate separate conditions of contract for building construction works, in the public

sector, private sector and also for sub-contract works. (Ganeshan, 1991).

(vi) For the private sector, ICTAD should support the initiative of the Institute of Architects

to work out standard conditions of contract. ACCSL and others may be associated with

this effort. (Ganeshan, 1991)

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CHAPTER - 6
CHAPTER 6 - VIEWS OF THE CONSTRUCTION INDUSTRY O N T H E ICTAD

CONDITIONS OF CONTRACT

6.1 Introduction

The questionnaire (See Appendix A) developed to get views of the construction industry on the

I C T A D conditions of contract was initially handed over to 2 0 selected senior professionals

involved in the building construction works with a view to get their responses. Subsequently

the questionnaire was posted to another 20 selected senior professionals.

A few professionals responded immediately and the majority had to be reminded several

times. Details of the sample surveyed are given below. In addition to the questionnaire survey

personnel interviews and discussions were held among some of the professionals.

(i) Number of questionnaires handed over = 20

Number responded = 12 (60%)

(ii) Number of questionnaires posted = 20

Number responded = 8 (40%)

6.2 Analysis of Data from the Survey

The data and information gathered were analysed under the following areas

(i) Problems encountered while using the ICTAD conditions of contract for building

construction works and the necessary changes to be made to the I C T A D conditions of

contract to suit local building construction works.

(ii) V i e w s about having separate conditions of contract for building and civil engineering

construction works.

93
(iii) Problems encountered while using the FIDIC conditions of contract for building

construction works.

(iv) Views about the cabinet decision for having one conditions of contract for both building

and civil engineering construction works.

(v) Major differences between the RIBA conditions of contract and the I C T A D conditions

of contract.

6.2.1 Problems encountered while using the I C T A D conditions of contract for building

construction works

(i) 0 6 responded that there is no problem.

(ii) 0 4 responded that the ICTAD conditions of contract is often modified by the

client/consultant to safeguard their interests. The modifications are mainly done in part

II to negate the effect of part I. They have also mentioned some clauses for

modification.

(iii) 10 responded that some of the clauses for modification.

By considering the 14 responses the problematic clauses are summarised in table 6 . 1 .

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 Table 6.1 ICTAD clauses for modification.

Clause Description N o . of

No. responses

1 Definition - (Engineer to consultant) 4

15 Construction management service 2

51 Definition of variation (Include change of sequence or 1

acceleration)

52 Claims - Interim assessment as per the FIDIC conditions of 1

contract(Fourth edition)

56 Joint measurements 1

60 Advance payment 10

60 Retention money 2

67 Arbitration 6

70 Price fluctuation 5

Some of the professionals indicated that it is difficult to comment on the use of ICTAD

conditions of contract for building construction works, without studying the document in detail.

There were also views expressed by some professionals that the ICTAD conditions of contract

is based on the FIDIC conditions of contract and it is a civil engineering document. Therefore,

the I C T A D conditions of contract will not be appropriate for the building construction works.

They have also indicated that in other countries separate conditions of contracts are being used

for building and civil engineering construction works.

S o m e were careful in commenting about the ICTAD conditions of contract, as it is a government

approved document.

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6.2.2 V i e w s a b o u t h a v i n g separate conditions of contract f o r b u i l d i n g a n d civil engineering

construction w o r k s

(i) 11 responded that one document will be sufficient.

(ii) 07 responded that there should be separate conditions of contracts for both construction

works.

(iii) 02 responded that it is too early to have separate conditions of contracts for both

construction works, but it will be proper to take steps at this stage.

6.2.3 P r o b l e m s encountered while using the F I D I C conditions of c o n t r a c t f o r b u i l d i n g

construction w o r k s

(i) All 2 0 responded that there is no problem while using FIDIC conditions of contract.

6.2.4 V i e w s a b o u t the cabinet decision f o r h a v i n g one conditions of c o n t r a c t f o r

b o t h b u i l d i n g a n d civil engineering construction w o r k s

(i) 11 responded that there should be one conditions of contract for both construction works

and the cabinet decision is good.

(ii) 0 7 responded that there should be separate conditions of contract for both construction

works.

(iii) 0 2 did not have any comments.

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6.2.5 M a j o r differences between the RIBA conditions of contract a n d t h e I C T A D

conditions of contract

Few selected senior architects were interviewed in this connection and they told that, the RIBA

conditions of contract stresses more on building construction works than civil engineering works.

Also the RIBA form is more British oriented and it is not really suited for Sri Lanka. Compared

to the I C T A D conditions of contract, the RIBA conditions of contract is very easy to

understand.

6.3 Views of the Building Industry Professionals on the I C T A D Conditions of Contract

The following are the summary of the views of the professionals on the I C A T D conditions of

contract as obtained from the survey.

(i) Implementation of the adoption of the ICTAD conditions of contract.

(ii) If the I C T A D conditions of contract is used without any negate effect on the content by

any modifications to part I or part II, the real problems could be identified.

(iii) The problems identified by the professionals are general and common for the construction

industry.

(iv) Drawing a line between the building work and civil engineering work is difficult unless

a proper study is undertaken.

(v) Having separate conditions of contract will not be an appropriate step at this stage.

ICTAD conditions of contract should be reviewed by a committee representing

consultants, clients and contractors based on the experience obtained after using for a

certain number of years for building construction works.

(vi) The present ICTAD conditions of contract is not proper as it is and there are some errors

in the wordings, headings etc.

(vii) Contractors should be taught and allowed to comment freely on any changes made by the

client/consultant in the ICTAD conditions of contract to safeguard their benefits.

(viii) There is no national policy to use or follow the ICTAD conditions of contract. Therefore,

97
 the private sectors cannot be forced to use.

(ix) There should be separate conditions of contract for major works and minor works.

(x) N o major complaints were reported from the departments and state sector organisations

about the ICTAD conditions of contract.

From the questionnaire survey interviews and discussions with building industry professionals

it was revealed that the present ICTAD conditions of contract can be used with little

modifications to some clauses mentioned in 6.2. However, a detailed analysis should be carried

out by comparing building conditions of contract with the ICTAD conditions of contract before

a revision is undertaken.

The findings of the surveys presented in this chapter are taken into account in chapter 7

to review the ICTAD conditions of contract for building construction works.

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CHAPTER - 7
CHAPTER 7 - COMPARISON OF SELECTED CONDITIONS O F CONTRACTS

7.1 Introduction

Comparison of a few widely used conditions of contracts is a necessity to find out how various

aspects of building construction contracts are covered. This comparison will enable us to

identify necessary revisions, additions and omissions to be made to the ICTAD conditions of

contract, in order to make it suitable for building construction works effectively.

The following widely used conditions of contracts were compared in this study.

(i) FIDIC conditions of contract (International) for works of civil engineering construction,

Third edition, March 1977.

Parts I, II and III, Form of Tender, Appendix and Form of Agreement. (FIDIC 3)

(ii) FIDIC conditions of contract for works of civil engineering construction, Fourth edition,

September 1987.

Parts I and II, Form of Tender, Appendix and Form of Agreement (FIDIC 4)

(iii) ICTAD conditions of contract for works of building and civil engineering - Sri Lanka.

Revised edition, January 1989.

Parts I and II, Form of Tender, Appendix and Form of Agreement ( I C T A D 89)

(iv) Joint Contracts Tribunal (JCT) standard form of building contract 1980 edition (Local

authorities with quantities),

Incorporating amendments of 1984 and 1986, London, RIBA publication Ltd, 1987.

( J C T 8 0 ).

(v) General conditions of contract for building and civil engineering. GC/WORKS/1

(Edition 3) (Lumpsum with quantities), (December 1989, Revised 1990), Department of

the Environment, London, H M S O . ( G C W 1).

In addition, for the comparison of selected conditions of contracts, ICE conditions of contract

(Fifth edition) and ICTAD conditions of contract for building construction works in Sri Lanka

(Draft - unpublished document) were also taken into consideration.

In the comparison the FIDIC 3 was selected as the base document since the I C T A D 89 is based

on the FIDIC 3 .

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The summary of the comparison is presented in Appendix B and the presentation is explained

in 7 . 2 . The analysis and necessary modification to the ICTAD 89 based on the comparison,

questionnaire survey and interview results are presented in 7 . 3 .

7.2 P r e s e n t a t i o n of the C o m p a r i s o n of Selected Conditions of C o n t r a c t s

The summary of the detailed and thorough comparison of the five selected conditions of

contracts is presented in Appendix B. The format of the table of Appendix B is described

below.

Column 1 - Serial number.

Columns 2 to 6 - Each of the five selected conditions of contracts is given a column

to include clause numbers, headings and clause descriptions.

Column 7 - Remarks of the comparison is shown using letters A, B and C

whose meanings are given below.

A - Particular clause of ICTAD 89 can be used without any

modifications.

B - Particular clause of ICTAD 89 has to be replaced by the

relevant clause of FIDIC 4.

C - Particular clause of ICTAD 89 has to be modified/revised

with contributions from FIDIC 4, JCT 80 and GCW 1 as

FIDIC 3 does not cover that area fully.

In addition, the footnotes describe the variations in contents of each clauses from the FIDIC 3

clause.

Footnotes are given only for the clauses which are marked in 'A' and 'B' in the remarks

column.

Footnotes for other clauses which are marked in ' C in the remarks column incorporate in the

modification/revision presented in 7 . 3 .

The comparison reveals that in order to improve the ICTAD 89 for building construction works;

(i) 25 clauses of the ICTAD 89 can be used without any modification (Marked in ' A ' in the

remarks column).

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 The clause numbers are 5 , 9 , 1 3 , 1 5 , 1 8 , 2 4 , 3 1 , 3 2 , 3 5 , 3 8 , 4 1 , 4 3 , 4 5 , 4 7 , 5 4 , 5 5 , 5 6 , 5 7 , 5 8 , 6 1 ,

6 2 , 6 4 , 6 5 , 6 6 , and 7 1 .

(ii) 12 clauses of the ICTAD 89 have to be replaced fully by the relevant clause of FIDIC

4 (Marked in 'B' in the remarks column).

The clause numbers are 8 , 1 0 , 1 1 , 2 3 , 2 9 , 3 3 , 3 6 , 3 9 , 4 0 , 4 2 , 6 8 and 7 2 .

(iii) 35 clauses of the ICTAD 89 have to be modified/revised (Marked in ' C in the remarks

column).

The proposed modifications/revisions are presnted in 7 . 3 .

7.3 Modifications Proposed to the I C T A D 89

The modifications/revisions proposed to the ICTAD 89 are based on the following

(i) Outcome of the detailed comparison of selected conditions of contracts.

(ii) Findings from the questionnaire survey.

(iii) Views expressed by the senior professionals involved in building construction works.

(Through interviews).

(vi) Knowledge gained from the study of conditions of contracts.

The modifications/revisions proposed for each of the clauses identified (Marked in ' C in the

remarks column of the appendix B) are presented in 7 . 3 . 1 .

7.3.1 Presentation of modifications/re visions to the I C T A D 8 9

Clause 1

T h e clause h a s to be changed as follows.

(i) Put all the definitions in alphabetical order.

(ii) The name "Engineer" to "Consultant".

(iii)Include "Clerk of works".

In a d d i t i o n the following sub-clause has to be a d d e d .

Any notices to be given under the contract shall be in writing. They may be given to the

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contractor by delivery to his agent or may be posted to the registered office or last known place

of business of the contractor. A postal notice shall be deemed to have been served on the date

when in the ordinary course of post it would have been delivered.

(GCW1)

Clause 2

T h e following sub-clauses have to be added to this clause.

(i) Sub-clauses 2 . 4 , 2.5 and 2.6 of FIDIC 4.

i.e. 2.4 - Appointment of assistants.

2.5 - Instructions in writing.

2.6 - Consultant to act impartially.

(ii) Sub - clauses 4 . 1 . 2 and 12 of JCT 80.

i.e. 4.1.2 - Compliance with consultant's instructions.

If within 7 days after receipt of a written notice from the consultant requiring compliance

with an instruction the contractor does not comply therewith, then the employer may

employ and pay other persons to execute any work whatsoever which may be necessary

to give effect to such instruction; and all costs incurred in connection with such

employment may be deducted by him from any monies due or to become due to the

contractor under this contract or may be recoverable from the contractor by the employer

as a debt.

12 Clerk of Works.

The employer shall be entitled to appoint a clerk of works whose duty shall be to act solely as

inspector on behalf of the employer under the directions of the consultant and the contractor

shall afford every reasonable facility for the performance of that duty. If any direction is given

to the contractor by the clerk of works the same shall be of no effect unless given in regard to

a matter in respect of which the consultant is expressly empowered by the conditions to issue

instructions and unless confirmed in writing by the consultant within 2 working days of such

direction being given. If any such direction is so given and confirmed then as from the date of

issue of that confirmation it shall be deemed to be a consultant's instruction.

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Clauses 3 a n d 4

T h e clauses 3 a n d 4 have to be replaced fully by 3 . 1 , 4 . 1 a n d 4 . 2 of F I D I C 4 .

In a d d i t i o n the following sub-clauses have to be a d d e d .

(a) Written consent should be extended to both parties, (i.e. Employer and contractor)

(JCT 80).

(b) Where the contract bills provide that certain work measured or otherwise described in

those bills and priced by the contractor must be carried out by persons named in a list

annexed to the contract bills. The list must comprise not less than three persons. Either

the employer (or consultant on his behalf) or the contractor shall be entitled with the

consent of the other, which consent shall not be unreasonably with held, to add additional

persons to the list at any time prior to the execution of a building sub-contract agreement.

(JCT 80)

(c) The employment of the domestic sub-contractor under the sub-contract shall determine

immediately upon the determination of the contractor's employment under this contract.

(JCT 80).

(d) N o part of the sub-contract work shall be further sub-let without the consent of the

contractor. (GCW 1).

Clause 6

T h e following sub-clauses have to be a d d e d .

(i) Unless it is strictly necessary for the purposes of the contract, the drawings,

specifications and other documents provided by the employer or the consultant

shall not without the consent of the consultant, be used for any other contract or

communicated to a third party by the contractor. (FIDIC 4 ) .

(ii) Upon the issue of defects liability certificate the contractor shall return to the

consultant all the documents provided under the contract. (FIDIC 4)

(iii) If the permanent work is designed by the contractor, then he has to supply 4 copies of

such drawings to the consultant. The contractor shall supply any further copies of

drawings and other documents as the consultant may request in writing for the use of tiie

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 1

employer, who shall pay the cost of such additional copies. (FIDIC 4 ) .

The consultant shall after due consultation with the employer and the contractor
(iv)
determine the delay. (FIDIC 4)

(v) All the contract documents shall remain in the custody

of the employer. (JCT 80).

Clause 7

T h i s clause has to be replaced f u l l y by 7 . 1 , 7.2 a n d 7.3 of F I D I C 4 .

I n a d d i t i o n t h e f o l l o w i n g sub-clauses have to be a d d e d .

(i) The consultant shall provide without charge to the contractor with two sets of further

drawings. (JCT 80).

(ii) Schedule for submission of details and shop drawings

The contractor and the consultant, if either one so requests, shall jointly prepare a

schedule subject to change from time to time in accordance with the progress of the

work, fixing the dates at which the various detail drawings will be required, and the

consultant shall furnish them in accordance with the schedule. Also schedule can be

prepared for beginning of manufacture and installation of materials and for the

completion of the various parts of the work.

(iii) Conditions in the preparation of shop drawings

The contractor shall prepare at his own expense and submit with such promptness as to

cause no delay in his own work or in that of any other contractor doing work on the

same building, two copies of all shop or setting drawings, templates, patterns and

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I I

models, as well as schedule required for the work of the various trades, and the

consultant shall pass upon them with reasonable promptness, making desired corrections.

The contractor shall make any corrections required by the consultant in the submitted

copies.

(iv) Checking drawings of sub-contractors

Before submitting shop drawings for approval, the contractor shall check drawings of all

sub-contractors for accuracy.

(v) Identification

Shop drawings shall be numbered consecutively and represent with all relevant details.

(vi) Letter of transmittal

Submission of shop drawings shall be accompanied by a letter of transmittal in duplicate,

containing name of project, contractor's name, serial number of drawings and titles.

(vii)Corrections changes and variations

The contractor shall submit 3 sets of prints of shop drawings to the consultant for

approval. One copy of the satisfactory shop drawings shall be returned to the contractor.

Should shop drawings be disapproved by the consultant one set of such shop drawings

shall be returend to the contractor with necessary corrections and changes to be made as
1
indicated.

(a) The contractor shall make required corrections and changes and re-submit shop drawings

in duplicate until the consultant's approval is obtained.

(b) Upon receipt of approval, the contractor shall insert date of approval on tracings and

promptly furnish the consultant with 3 additional prints of approved drawings.

(c) N o work called for by shop drawings shall be executed until the consultant's approval

is obtained. The consultant shall not unreasonably withheld the approval.

(d) If shop drawings show variation from contract requirements because of standard shop

practice or other reasons, the contractor shall make specific mention of such variations

in his letter of submittal.

(viii)Responsibility for accuracy

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 Approval of shop drawings will be general. It shall not relieve the contractor of

responsibility for accuracy of such shop drawings nor for proper fitting and construction

of work, nor for furnishing of materials or work required by the contract and not

indicated on shop drawings. The consultant's approval of such drawings or schedule

shall not relieve the contractor from responsibility for deviations from drawings or

specifications, unless he has in writing called the consultant's attention to such deviations

at the time of submission and secure his written approval, nor shall it relieve him from

responsibility for errors of any sort in shop drawings or schedules.

Clause 12

T h e f o l l o w i n g sub-clauses have to be a d d e d .

(i) Written notice shall be given to the consultant with a copy to employer regarding

obstructions. The consultant shall, after due consultation with the employer and the

contractor, determine the time delay and cost. (FIDIC 4)

(ii) The contractor shall forward his proposals with the notice to the consultant in regard to

necessary action he wishes to take in order to overcome the obstructions. (GCW 1)

Clause 14

T h e f o l l o w i n g sub-clauses have to be a d d e d .

(i) The contractor shall submit a detailed cash flow estimate in quarterly periods, of

all payments to which the contractor will be entitled under the contract. (FIDIC

4).

(ii) The contractor shall submit two copies of the master programme free of charge

to the consultant and within 14 days of any decisions by the consultant regarding

extension of time, the contractor has to submit two copies of any amendments and

revisions to take account of that decision. (JCT 80).

(iii) The programme should contain the temporary works, method of work, and labour and

plant required for the execution of the work. (GCW 1).

Clause 16

T h e f o l l o w i n g sub-clause has to be a d d e d .

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(i) The contractor shall not make changes in personnel named in his tender in connection

with the contract without the prior approval of the consultant, other than for causes

outside the contractor's control, which shall not be unreasonably withheld by the

consultant. (GCW 1).

Clause 17

T h e f o l l o w i n g sub-clauses have to be a d d e d .

(i) All the details to be given to setout the works, shall be at the ground level. (JCT 80)

(ii) Any discrepancies in or divergences between documents formed by the contractor shall

be notified in writing to consultant's representative for further clarification and

instruction. (JCT 80).

Clause 19 v

IWM1
T h i s has to be replaced f u l l y by clauses 1 9 . 1 a n d 19.2 of F I D I C 4 .

I n a d d i t i o n , t h e following sub-clause has to be a d d e d .

(i) Statutory regulation should be complied in respect of storage and use o f a l l things which

are brought on to the site in connection with the work. ( G C W 1).

Clause 2 0

T h i s has to be replaced f u l l y by clause 2 0 of F I D I C 3 , w i t h t h e a d d i t i o n o f t h e f o l l o w i n g

excepted risks, such as e a r t h q u a k e , riot w h e t h e r directed against t h e state, persons or

p r o p e r t y a n d occupation of p e r m a n e n t works by employer's agents, servants o r other

contractors.

I n a d d i t i o n t h e f o l l o w i n g sub-clauses have to be a d d e d .

(i) If the contractor is unable or unwilling to carryout promptly any emergency work required

by the consultant the employer may make arrangements for that work to be carried out. If the

work carried out by the employer shall be such as the contractor is liable under the contract to

carry out or execute at his own expense then the contractor shall reimburse any costs incurred

by the employer and any loss suffered by the employer, because the contractor has not carried

out the work. ( G C W 1).

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(ii) Existing utilities, if damaged due to negligence or fault of the contractor shall be repaired

by the contractor at his own cost.

(iii) In an emergency during the execution of the works or during any maintenance period

affecting the safety of life or of the work or of adjoining property, the contractor without

special instruction or authorization from the consultant or employer, is hereby permitted

to act, at his discretion, to prevent such threatened loss or injury any he shall so act

without appeal, if so instructed or authorized. Any expenses claimed by the contractor

on account of emergency work shall be determined by the consultant with due

consultation of the employer.

Clauses 2 1 a n d 2 5

T h e a b o v e clauses have to be replaced fully by clauses 2 1 a n d 2 5 of F I D I C 4 .

I n a d d i t i o n t h e f o l l o w i n g sub-clauses have to be a d d e d .

(i) Nominated and domestic sub-contractor have to be included. (JCT 80).

(ii) Insurance cover period should be modified as end of maintenance period or upto

and including the date of determination of the employment of the contractor

which ever is earliest. (JCT 80).

(iii) Contractor shall give written notice both to the consultant and to the employer in the

event of any insurance claims. (JCT 80).

(iv) Additional premium involved in the case of extension of time should be included.

(JCT 80).

(v) Employer's partial possession in regard to insurance should be included. (JCT

80).

(vi) Responsibility of the employer and the contractor in regard to the existing

buildings and structures has to be included. (JCT 80).

Clause 22

T h i s has t o be replaced fully by 2 2 . 1 , 2 2 . 2 a n d 2 2 . 3 of F I D I C 4 .

I n a d d i t i o n t h e f o l l o w i n g sub-clause has to be a d d e d .

(i) Loss of profits or loss of use suffered because of any loss or damage should be included.

(GCW 1).

Clause 2 6

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T h e f o l l o w i n g sub-clauses have to be a d d e d .

(i) Where there is any divergence between the statutory requirements and all or any of the

contract document or between the statutory requirement and any instruction of the

consultant requiring a variation then the contractor shall immediately give to consultant

a written notice. Then the consultant within 7 days on receipt of the notice has to issue

the instruction in relation to the divergence. If any works vary in regards to instructions,

then those instructions will be treated as variation orders issued by the consultant (JCT

80)

(ii) In any emergency compliance, the contractor has to comply with the statutory

requirements and inform the consultant, and this work shall be treated as a variation

order issued by the consultant. (JCT 80).

Clause 2 7

I n a d d i t i o n to this t h e following sub-clauses have to be a d d e d .

(i) The contractor shall inform the consultant or the clerk of works of the discovery

and precise location of the object. (JCT 80).

(ii) The consultant shall issue instructions in regard to what is to be done concerning

an object reported by the contractor and such instructions may require the

contractor to permit the excavation, excavation or removal of the object by a third

party. Any such third party shall be deemed to be a person for whom the

employer is responsible and not to be a sub-contractor. (JCT 80).

(iii) If in the opinion of the consultant compliance with this clause or with an instruction

issued under this clause has involved the contractor in direct loss and/or expense for

which he would not be reimbursed by a payment made under any other provision of this

contract then the consultant shall himself ascertain the amount of such loss and/or

expense. (JCT 80).

(iv) If and to the extent that it is necessary for the ascertainment of such loss and/or

expense the consultant shall state in writing expense the consultant shall state in

writing to the contractor what extension to be granted. (JCT 80).

(v) If any materials found from the excavation shall be used for permanent works,

109
 those will be assessed by the consultant and that amount shall be deducted from

the contract sum as saving. (GCW 1)

Clause 2 8

I n a d d i t i o n to this t h e following sub-clauses have to be a d d e d .

(i) All royalties or other sums payable in respect of the supply and use in carrying

out the works shall be deemed to have been included in the contract sum. (JCT

80).

(ii) All royalties or other sums payable with the consultant's instructions shall be

added to the contract sum. (JCT 80).

(iii) The employer shall reimburse the contractor the amount of any royalty etc, which

(a) was incurred in order to comply with a variation instruction, and

(b) was not reasonably contemplated under the contract. (GCW 1).

Clause 3 0

30.1 - N o change is required.

30.2 - T o be replaced by 30.2 of FIDIC 3

30.3 - N o change is required.

30.4 - T o be replaced by 30.3 of FIDIC 3.

Clause 3 4

I n a d d i t i o n to this clause, the following sub-clause has to be a d d e d .

(i) The employer shall has the power to inspect the wages books and time sheets of the

contractor's employees and the contractor shall recognise the freedom of his work people

to be members of trade unions. (JCT 80).

Clause 3 7

T h i s has t o be replaced fully by 3 7 . 1 , 3 7 . 2 , 3 7 . 3 , 3 7 . 4 a n d 3 7 . 5 of F I D I C 4 .

I n a d d i t i o n to this clause the following sub-clause has to be a d d e d .

110
(i) When the work is to be so prepared in workshops or other places of a domestic sub­

contractor or a nominated sub-contractor the contractor shall by a term in the sub­

contract so far as possible secure a similar right of access to those workshops or places

for the consultant and his representatives for inspection. (JCT 80).

Clause 4 4

I n a d d i t i o n to this clause the following sub-clauses have to be a d d e d .

(i) The extension of time shall be granted with due consultation of employer and the

contractor and shall be notified the contractor with a copy to employer. (FIDIC

4).

(ii) The extension of time claim shall be made in writing to consultant by the

contractor within 28 days. (FIDIC 4).

(iii) The extension of time claim shall be rejected by the consultant if no notification is made

by the contractor. (FIDIC 4).

(iv) Final decision on extension of time shall be made within 60 days after issuing the

certificate of completion. (JCT 80).

(v) Delays of nominated sub-contractors and nominated suppliers or other sub­

contractors outside the contractor's control shall be considered for extension of

time if the claim is reasonable. (JCT 80).

(vi) The consultant shall fix the new completion date within 60 days from the receipt

of the claim. (JCT 80).

(vii) Any dissatisfaction of the consultant's decision by the contractor should be notified within

the reasonable periods. (GCW 1).

(viii) N o requests from the contractor shall be made for extension of time after completion of

the work. (GCW 1).

Clause 4 6

I n a d d i t i o n to this clause the following sub-clause has to be a d d e d .

Ill
(i) If the contractor wants to work at night or on holidays to cover the delay then the

additional supervision charges shall be recovered by the employer from the contractor.

The charges shall be determined by the consultant with due consultation with employer

and contractor. (FIDIC 4).

Clause 4 8

I n a d d i t i o n to this clause t h e following sub-clauses have to be a d d e d .

(i) The contractor shall give the written notice to th consultant with a copy to the

employer (FIDIC 4).

(ii) The contractor shall request the consultant to issue a certificate of practical

completion to any part of the permanent works which the employer has elected

to occupy or use prior to completion. (FIDIC 4).

(iii) The contractor or the employer shall inform the insurers in regard to storage of the

employer's goods or partial possession and any additional premium involved in this shall

be paid by the employer. (JCT 80).

Clause 4 9

T h i s clause has t o be replaced fully by 4 9 . 1 , 4 9 . 2 , 4 9 . 3 a n d 4 9 . 4 of F I D I C 4 .

I n a d d i t i o n t o this t h e following sub-clauses have to be a d d e d .

(i) The "certificate of completion of making good defects" shall be issued by the consultant.

(JCT 80).

(ii) In the case of partial possession by the employer, the insurance premium shall be

deducted with due consultation with the consultant and the contractor. (JCT 80).

Clause 5 0

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T h e following sub-clause has to be added to this clause.

(i) Any defects not rectified by the contractor shall be rectified by another party appointed

by the employer. The cost involve in this shall be recovered from the contractor. (GCW

1).

Clause 51

In a d d i t i o n to this clause, the following have to be included to sub-clause 5 1 . 1 .

i.e. The variations shall be due to,

(i) Change any specified sequence or timing of construction of any part of the works.

(FIDIC 4).

(ii) Restrictions imposed by the employer in regard to

(a) Access to the site or use of any specific parts of the site.

(b) Limitations of working space.

(c) Limitations of working hours.

(d) The execution or completion of the work in any specific order. (JCT 80).

Clause 52

This clause has to be replaced fully by clause 52 of FIDIC 4 .

In addition the following has to be a d d e d .

i.e. Variation on specilised works. (JCT 80).

Clause 5 3

In addition to this clause the following sub-clauses have to be a d d e d .

(i) 5 4 . 5 of FIDIC 4 - Conditions of hire of contractor's equipment in the event of

termination.

113
(ii) 5 4 . 6 of FIDIC 4 - Costs in the case of termination.

(iii) 5 4 . 7 of FIDIC 4 - The contractor shall, where entering into any sub-contract for the

execution of any part of the works, incorporate in such sub-contract in relation to

contractor's equipment, temporary works or materials brought on to the site by the sub­

contractor.

(iv) Any materials or goods included in any interim certificate shall be employer's

property and the contractor shall remain responsible for loss or damage to the

same. (JCT 80).

(v) The contractor shall furnish the schedule of proposed plant and equipment and

their substitutions prior to the signing of the contract for the approval. After

approval, this schedule shall become a part of the contract.

(vi) Although the plant and equipment schedule is approved by the consultant, the

installation and operations of the plant and equipment shall be contractor's

responsible.

(vii) The temporary or trail usage by the employer of any mechanical device, machinery,

apparatus, equipment or any work or materials supplied under contact before final

completion and written acceptance by the consultant shall not be constructed as evidence

of the consultant's acceptance of same.

(viii) The contractor shall furnish and maintain all equipment such as temporary stairs, ladders,

ramps, scaffolds, run ways, derricks, chutes and the like, as required for proper

execution of work by all trades. All such apparatus, equipment, and construction shall

meet all requirements of labour law and other local laws applicable thereto.

Clause 5 9

114
I n a d d i t i o n to this t h e following sub-clauses have to be a d d e d .

(i) In the definition of nominated sub-contractor (i.e. 59.1 of ICTAD 89) the supply of plant

has to be included. (FIDIC 4).

(ii) Provisional sums and prime cost sums has to be included. (JCT 80).

(iii) The contractor shall not grant to any nominated sub-contractor any extension of time

within which the sub-contract works without the written consent of the consultant. (JCT

80).

(iv) If any nominated sub-contractor fails to complete the sub-contract works within

the period specified in the sub-contract or within any extended time granted by

the contractor with the written consent of the consultant, and the contractor so

notifies the consultant with a copy to the nominated sub-contractor, then,

provided that if the consultant is satisfied to grant extension of time then he shall

so certify in writing to the contractor not later than 30 days from the date of

notification. Immediately upon the issue of such a certificate the consultant shall

send a duplicate thereof to the nominated sub-contractor. (JCT 80).

(v) The consultant shall issue a certificate of practical completion to the nominated

sub-contractor. (JCT 80).

(vi) If the original nominated sub-contractor fails to rectify any defect, shrinkage or

other fault in the sub-contract works then the consultant shall appoint another sub­

contractor to rectify those defects, the cost involved in this shall be recovered

from the original nominated sub-contractor by the employer. (JCT 80).

(vii) The contractor shall not be responsible to the employer in respect of any nominated sub­

contract works. (JCT 80).

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(viii) Provision should be made for re-nomination. (JCT 80).

(ix) The contractor shall not determine any nominated sub-contract without an

instruction from the consultant. (JCT 80).

(x) Provision should be made to include nominated supplier. (JCT 80).

Clause 6 0

6 0 . 1 - Advance payment of 20% of the contract sum shall be made at one stage following the

presentation by the contractor to the employer of an approved performance bond and a

guarantee acceptable to the employer for the full value of the advance payment.

6 0 . 3 - Minimum amount of interim certificate should be deleted.

6 0 . 4 - Combined bond should cover the full value of the retention money and the performance

bond.

60.11 To be deleted.

The following sub-clauses have to be a d d e d .

(i) Any cost incurred by the contractor shall not be subjected to retention. (JCT 80).

(ii) Any amount allowable by the contractor to the employer shall not be subjected to

retention. (JCT 80).

(iii) Provision should be made to include off-site materials or goods. (JCT 80).

(iv) Final statement should be submitted by the contractor not later than 5 6 days after

the issue of the defect liability certificate. (FIDIC 4).

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Clause 63

This clause has to be replaced fully by 6 3 . 1 , 6 3 . 2 , 6 3 . 3 and 6 3 . 4 of F I D I C 4 .

In addition the following sub-clauses have to be a d d e d .

(i) Written notice shall be given by registered post or recorded delivery specifying

the default. (JCT 80).

(ii) If the contractor shall have offered or given or agreed to give to any person any

gift or consideration of any kind as an inducement or reward for doing the job,

as a bribe, then the employer shall be entitled to determine the employment. (JCT

80)

(iii) The employer shall pay any supplier or sub-contractor (Nominated or domestic) for any

materials or goods delivered or works executed for the purposes of this contract (Whether

before or after the date of determination) in so far as the price thereof has not already

been paid by the contractor. (JCT 80).

(iv) If the employer appoints a new supplier, new nominated or domestic sub­

contractor then the earlier suppliers or sub-contractors shall be entitled to make

any reasonable objection to any further assignment thereof by the employer. (JCT

80).

(v) The employer shall pay to the contractor any amounts due within a reasonable

time from the completion date. (JCT 80).

Clause 67

(i) Provision should be made in the contract for either party in the event of disagreement

with the consultant and after referring a dispute to the consultant for his final decision

within the specified period, (i.e. 84 days). (FIDIC 4).

117
(ii) I C T A D 89 clause contents should be replaced by FIDIC 4 clause contents, except the

method of appointment of arbitrator.

Method of appointment of arbitrator should be changed from ICTAD 89.

Clause 6 9

This clause has to be replaced fully by 6 9 . 1 , 6 9 . 2 , 6 9 . 3 , 6 9 . 4 a n d 6 9 . 5 of F I D I C 4 .

In addition to this the following sub-clauses have to be a d d e d .

(i) Continuous suspension of work shall be considered for determination by contractor. (JCT

80).

(ii) The reasonable cost of removal of materials or goods from site shall be paid by the

employer. (JCT 80).

(iii) The total value of work completed and additional works carried out at the date of

determination shall be paid by the employer. (JCT 80).

(iv) Any sum ascertained to the contractor or to any nominated sub-contractor in

respect of direct loss and/or expense shall be paid by the employer. (JCT 80).

(v) The cost of materials or goods properly ordered for the wok for which the

contractor shall have paid or for which the contractor is legally bound to pay and

on such payment by the employer any materials or goods so paid for shall become

the property of the employer. (JCT 80).

(vi) The contractor shall with all reasonable dispatch and in such manner and with

such precautions as will prevent injury, death or damage of the classes in respect

of which before the dale of determination he was liable to indemnify the

employer. (JCT 80)

118
(vii) The contractor shall give written notice by registered post or by recorded delivery to the

employer with a copy to consultant. (JCT 80).

Clause 7 0 .

(i) T o be replaced by price adjustment formula method. (De Mel, 1990).

(ii) Price adjustment formula method shall be used by using the ICTAD indices. ICTAD

should take steps to review the indices to cover all the works.

(i.e. Electrical works are not fully covered).

119
CHAPTER - 8
CHAPTER 8 - CONCLUSIONS AND RECOMMENDATIONS

8.1 Conclusions

1. Procurement methods available for building construction works can be divided

into

(i) Traditional methods.

(ii) Alternative methods.

Various types of contracts of the above two methods are described in detail in

chapter 2.

2. In Sri Lanka, the traditional bill of quantities (Measure and pay) types of

contracts are widely used in both the public and private sector in procuring

building construction works.

3. Number of conditions of contracts developed by different institutions are available

in the U.K. for different types of procurement methods. The important feature is

that the building and civil engineering contracts use different conditions of

contracts. The details are explained in chapter 3.

4. FIDIC 3 although intended for measure and pay type civil engineering works,

have been used for building construction works as well in other countries.

5. Problems arising from using FIDIC 3 for building works have been documented.

6. Conditions of contracts used in the public sector work are as follows:

(i) Tenders are international - Conditions of contracts are

FIDIC3/FIDIC4/Modified version of FIDIC 3 or 4.

120
 (ii) Tenders advertise locally:- Conditions of contract is I C T A D 89.

7. Building construction works of the private sector in Sri Lanka uses a modified

version of ICTAD 89, modified version of JCT conditions of contract or RIBA

conditions of contract.

8. Views expressed by professionals involved in the building construction industry

are given in chapter 6. The summary of the views are as follows

(i) About 55% think that the separate conditions of contract for building and

civil engineering construction works are not required. But 35% think

other way.

(ii) Most professionals indicated that it is acceptable to use FIDIC conditions

of contract for building construction works.

(iii) The ICTAD 89 clauses identified by the professionals for modifications

are the general clauses cover for both building and civil engineering

works. These clause numbers are 1, 15, 5 1 , 5 2 , 5 6 , 60, 67 and 7 0 .

(iv) Some consultants have not faced much problems with ICTAD 89. It may

be due to their limited exposure or modifications done in the part II.

9. If ICTAD 89 is to be well accepted by the industry it needs to be modified

considering various differences in building and civil engineering construction

works.

10. Building and civil engineering construction works have some different notable

characteristics. These are

121
In building construction works

(i) More specialist works

(ii) Various finishes, services and more sub-contract works

(iii) Nominated sub-contractor and nominated supplier involvement is

more than in civil engineering construction works

(iv) Measurements are based on SMM

(v) Design and supervision works are usually carried out by chartered

architects, structural engineers and services engineers

(vi) Client (employer) may be an individual or government

(vii) Quantity surveyors involvement here is more than in civil

engineering construction works

In civil engineering construction works

(i) Generally large foundations and massive earth moving operations

(ii) Take place mostly over wide areas

(iii) Measurements are based on CESMM or M M R B

(iv) Design and supervision works are usually carried out by chartered civil

engineers

(v) Client (employer) is mostly government

(vi) More concerned with controlling the natural environment

As a result of the literature survey, interviews, questionnaire survey and

comparison of selected conditions of contracts to review the ICTAD 89, the

comparison gave adequate information to review ICTAD 89.

The following are the summary from the comparison

122
 (i) 25 clauses of the ICTAD 89 can be used without any modifications.

These clause numbers are 5, 9, 13, 15, 18, 2 4 , 3 1 , 3 2 , 3 5 , 38, 4 1 , 4 3 ,

4 5 , 47, 54, 5 5 , 56, 57, 58, 6 1 , 62, 64, 65, 66 and 7 1 .

(ii) 12 clauses of the ICTAD 89 have to be replaced fully by the relevant

clause of FIDIC 4.

These clause numbers are 8, 10, 11, 2 3 , 2 9 , 3 3 , 36, 3 9 , 4 0 , 4 2 , 68 and

72.

(iii) 35 clauses of the ICTAD 89 have to be modified/revised.

These clause numbers are 1, 2, 3 , 4, 6, 7, 12, 14, 16, 17, 19, 2 0 , 2 1 ,

2 2 , 2 5 , 26, 27, 28, 30, 34, 37, 4 4 , 4 6 , 4 8 , 4 9 , 5 0 , 5 1 , 5 2 , 5 3 , 5 9 , 6 0 ,

63, 67, 69 and 70.

8.2 Recommendations

1. ICTAD should take steps to introduce, explain and solve problems arising of the ICTAD

conditions of contract to the private sector clients and consultants.

2. Periodic seminars should be held to discuss experiences and to identify revisions required

to the ICTAD 89.

3. A new conditions of contract for building construction works need to be prepared,

considering the following factors

(i) Local practices and views of the professionals involved in building construction

123
 works.

(ii) Financial regulations of the Government of Sri Lanka.

(iii) Involvement of Project manager.

(iv) Studying other conditions of contract (Make use of the comparison done in this

study).

4. Contractors should be taught and allowed to comment freely on any changes made by the

client/consultant in the ICTAD conditions of contract to safeguard their benefits.

5. There should be a national policy to use ICTAD conditions of contract without changing

its character and contents.

6. There should be separate conditions of contract for major and minor building construction

works.

7. ICTAD conditions of contract should be reviewed by a committee representing

consultants, clients and contractors in association with the ACCSL, the I C T A D , the

Institute of Architects, the Institution of Engineers and the Institute of Quantity

Surveyors.

124
REFERENCES
 REFERENCES

Austen, A.D. and Neale, R.H.(1990). "Managing Construction Projects - A Guide to Processes
and Procedures". Genova, International Labour Office, pp 5-33.

Balasooriya, B.M.A.(1991). "Building consultancy services in Sri Lanka". Seminar notes on

engineering consultancy and contracting practices in the SAARC region held in Colombo,
Organised by the Institution of Engineers Sri Lanka with Federation of Engineering Institutions
of South and Central Asia.

Balasooriya, B.M.A. (1992). "Historical aspects of the building industry in Sri Lanka".
Proceedings of a seminar on engineering research and development, Faculty of Engineering,
University of Peradeniya, (Jubilee 1942-92).

Campbell, Burt (1986). Lecture note delivered at the (World bank/UNDP/FIDIC/The

Association of Consulting Engineers, Sri Lanka) seminar held in Hotel Galadari Meridian,
Colombo.

De Mel, JayanUia (1990). Seminar notes on implementation of a formula method for

reimbursement of price fluctuations in construction contracts. ICTAD Seminar.

Dickason, Ivan (1985). "JCT 80 and the builder an introduction", CIOB publication.

Fernando, C.C.T.(1986). "Consulting practice in Sri Lanka". Lecture note delivered at the
(World bank/UNDP/FIDIC/The Association of Consulting Engineers, Sri Lanka) seminar held
in Hotel Galadari Meridian, Colombo.

FIDIC conditions of contract(International) for works of civil engineering construction, Third

edition, March 1977, FIDIC publication.

FIDIC conditions of contract for works of civil engineering construction, FourUi edition,
September 1987, FIDIC publication.
10. Ganeshan, S.(1991). "Development of the national construction industry - A case study of Sri
Lanka". An ICTAD publication in association with the world bank.

11. General conditions of contract for building and civil engineering- GC/WORKS/1 (Edition 3),
(Lump sum with quantities)(December 1989, Revised edition 1990),HMSO, Department of the
Environment Property Holdings, London.

12. "Guide to the use of FIDIC" (Fourth edition),(1989). Conditions of contract for works of civil
engineering construction, FIDIC publication.

13. Gunasekara, Mervyn. P. (1990) "Procuring construction projects in Sri Lanka - Contractor's view
point". Seminar notes on construction management of Asian Productivity Organisation conducted
by the ICTAD and the NI13M.

14. Hugh Clamp and Stanley Cox. (1990). Which contract? choosing the appropriate building
contract, RIBA publications.

15. ICE conditions of contract and forms of tender, agreement and bond for use in connection with
works of civil engineering construction, Filth edition (June 1973) (Reprinted January 1986).

16. ICTAD conditions of contract for building work, Sri Lanka. Unpublished document (Draft).

17. ICTAD conditions of contract (First edition - September 1986), CITP Publication No. SCA/1.

18. ICTAD conditions of contract (Revised edition - January 1989), ICTAD Publication No. SCA/1.

19. JCT Standard form of building contract 1980 edition (Local authorities with quantities), RIBA
publications Ltd, London.

20. Joachim, M.E.(1988). Survey report on construction industry in Sri Lanka (Phase 1)., Asian
Productivity Organisation.
21. Jones, Glyn P.(1979). " A new approach to the international civil engineering contract". New
York, The Construction Press Ltd.

22. Kulasinghe, A.N.S. (1986). "The Development of Consulting Engineering Practice in Sri Lanka".
Lecture note delivered at the (World bank/UNDP/FlDIC/ The Association of Consulting
Engineers, Sri Lanka) Seminar held in Hotel Galadari Meridian, Colombo.

23. Kumarasinghe, Jaliya and Kumarasinghe, Ananda (1990). "Country paper on the construction
industry in Sri Lanka". Seminar notes on construction management of Asian Productivity
Organisation conducted by the ICTAD and the NIBM.

24. Ramus, J.W.(1989). "Contract Practice for Quantity surveyors". Second edition,
U.K.,Heinemann, Newnes.

25. Ratnayake, A.(1991). "Contract administration practices in Sri Lanka". Seminar notes on
engineering consultancy and contracting practices in the SAARC region held in Colombo,
Organised by the Institution of Engineers Sri Lanka with Federation of Engineering Institutions
of South and Central Asia.

26. Rush Brooke, P.L. (1983). Working with FIDIC", A practical approach to its use in the Middle
East, CIOB publication.

27. Sawyer, John.G. and Arthur Gillott, C. (1990). "The FIDIC Digest - Contractual relationships,
responsibilities and claims under the fourth edition of the FIDIC conditions". First edition,
London, Thomas Telford Ltd.

28. Spiers, G.S.(1983). "The standard form of contract in times of change", CIOB publication.

29. Tissera, CH.de.(1990). "ICTAD Profile". Ministry of Policy Planning and Implementation.

30. Wallace, Duncan I.N. (1974). "The international civil engineering contract". First edition,
London, Sweet and Maxwell Ltd.
31. Weerakkody, Felix (1986). "Historical background of the construction industry in Sri Lanka".
Research paper submitted to the master of business administration degree at University of Sri
Jayawardanapura on managerial analysis of the construction industry in Sri Lanka.

32. Zylva, Eddie De., Weddikkara, Chitra., and Emmanuel, M.P.R.(1989). "Sri Lanka construction
industry in the 80's". (Project SRL/86/001-IDA/UNDP/ILO).
INTERVIEWS AND DISCUSSIONS
 Professionals Participated in the Interviews a n d Discussions

No. Designation Organisation

1. Senior Architect Development Consultants Lanka

(Pvt.)Ltd.

2. Senior Partner Chandrasena & Partners

3. Chief Quantity Surveyor Design Consortium Ltd.

4. Acting Deputy General Central Engineering Consultancy Bureau

Manager(Contracts)

5. General Manager Central Engineering Consultancy Bureau

6. Quantity Surveyor Surath Wickremasinghe Associates

7. Director Department of Civil and Structural

Engineering, University of Hong Kong

8. Deputy Director ICTAD

9. Chief Quantity Surveyor/Additional State Engineering Corporation

General Manager (Consultancy)

10 Senior Engineer Penta Ocean/Wakachiku Joint Venture

11. Principal Architects Associated

12. Engineer(Contracts) Department of Buildings

13. Principal Dudley Waas Associates (Pvt.) Ltd.

14. Principal Planning Consultancy

15. Principal Thurairajah Associates

16. Secretary National Construction Contractors

Association of Sri Lanka

17. Executive Director National Construction Contractors

Association of Sri Lanka

18. Director (Industry Development) ICTAD

19. Assistant Director (Industry ICTAD

Development)

20. Senior Engineer Port Development Consultants

APPENDIX - A
A P P E N D I X A:- QUESTIONNAIRE

A T T E N T I O N OF

Dear Sirs,

QUESTIONNAIRE SURVEY FOR THE M.ENG. DEGREE IN

CONSTRUCTION M A N A G E M E N T AT UNIVERSITY OF M O R A T U W A

I, N . Logeswaran, an Engineer working for M/s. Chandrasena and Partners at

Matara.

Presently I am engaged in research work on "Review of ICTAD conditions of contract

for building construction works" for the M.Eng. Degree.

Therefore I will be very much grateful to you, if you could give information by filling
the attached questionnaire at your earliest convenience and send it to my Colombo address. For
your convenience, I am enclosing a self-addressed stamped envelope.

Since no telephone facilities are available at my working place, it will be very difficult
to contact you over the telephone during working hours.

I may contact you if possible on any Monday when I am in Colombo to get an

appointment to meet you if necessary to get further information.

Please also note that all information provided by you will be treated strictly confidential
and used solely for the specific purpose of the survey.

I hope your kind co-operation and assistance to make this survey a success.

Thanking you,

Yours faithfully,

(signed)
N . Logeswaran
R E S E A R C H PROTECT QUESTIONNAIRE FOR M.Eng. D E G R E E IN C O N S T R U C T I O N
M A N A G E M E N T . D E P A R T M E N T O F CIVIL E N G I N E E R I N G . U N I V E R S I T Y O F
MORATUWA

P R O J E C T :- Review of ICTAD conditions of contract for building construction works

RESEARCHER:- N . Logeswaran, Engineer, M/s, Chandrasena & Partners

SUPERVISOR:- Mr. Justin De Silva, Senior Lecturer, Department of Civil Engineering,

University of Moratuwa

I N T R O D U C T I O N : - This questionnaire is intended to collect data and information from the

building construction industry with a view to finding

(i) The types of conditions of contracts used in Sri Lanka, in the past
and the present.
(ii) The necessity to modify the ICTAD conditions of contract to suit
local building construction works.

1.0 GENERAL

1.1 N a m e and address of your organisation:-

1.2 Nature of business:-

(a) Contracting :-
(b) Consultancy:-
(c) Any other (Please Specify):-

1.3 When was your organisation established?

1.4 Discipline of work:- (If you do work in more than one discipline please indicate the
order of priority)

(a) Building construction works:-

(b) Civil engineering construction works:-
(c) Any other (Please specify):-

1.5 Name, designation, contact address and telephone number of the officer

responding :-

NAME:-
DESIGNATION:-
CONTACT ADDRESS:-
T E L E P H O N E NO:-
2.0 CONDITIONS OF CONTRACTS

2.1 What were/are the types of conditions of contract for building construction works you
or your organisation has used in the past and what are presently being used?

(Eg. FIDIC 3 , FIDIC 4, ICTAD 89, JCT 80 etc., with or without modification or any
other)

PAST:-For the Private Sector

For the Public Sector

PRESENT:- For the Private Sector

For the Public Sector

2.2 If the ICTAD conditions of contract is mentioned in 2.1 above:-

(a) What are the problems you or your organisation encounter while using ICATD
conditions of contract for building construction works?

(b) What are the clauses in the ICTAD conditions of contract do you consider to require
modification with regard to building construction works?

(c) H o w could the ICTAD conditions of contract be modified for the local building
construction works?
(For eg. Based on some other conditions of contract or your own)

2.3 If the ICTAD conditions of contract is not mentioned in 2.1 above:-

(a) Why the ICTAD conditions of contract is not used for building construction works?
 (b) What are the changes to be made to ICTAD conditions of contract in your opinion
to use for building construction works?

(Please specify clause numbers and changes)

2.4 What are your views about having separate conditions of contract for building and civil
engineering construction works?

2.5 ICTAD conditions of contract is the modification of the FIDIC conditions of contract
(Third edition) and the FIDIC is meant only for civil engineering construction works
whereas the ICATD conditions of contract is meant for both building and civil
engineering construction works.

What are your comments in the above regard?

2.6 If you have mentioned the FIDIC conditions of contract at 2.1 above.
What are the specific problems you or your organisation encounter while using it for
building construction works?

2.7 What are your views about the cabinet decision for having one conditions of contract
(ICTAD) for both building and civil engineering construction works?

2.8 If you have mentioned the RIBA conditions of contract at 2 . 1 , what are the main
differences between the RIBA and the ICTAD conditions of contract?
APPENDIX - B
 APPENDIX B
COMPARISON OF CONDITIONS OF CONTRACTS WITH CLAUSE NUMBER AND DESCRITPION

No. FIDIC conditions of contract ICTAD conditions of FIDIC conditions of JCT 80(Local GC/Works/1 (Edition Remarks
(Third edition) = FIDIC 3 contract (Revised edition contract(Fourth Authorities with 3) =GCW1
1989)=ICTAD 89 edition) = FIDIC 4 Quantities)=JCT 80

DEFINITIONS AND DEFINITIONS AND DEFINITIONS AND

INTERPRETATION INTERPRETATION INTERPRETATION 1 Interpretation, 1. Definitions etc.
1. definitions etc.
1.1 Definitions 1.1 Definitions 1.1 Definitions 1.1 Method of
1.2 Singular and Plural 1.2 Singular and Plural 1.2 Headings and Marginal reference to C
1.3 Headings or Notes 1.3 Headings or Notes Notes clauses
1.4 Cost 1.4 Cost 1.3 Interpretation 1.2 Articles etc. to
1.4 Singular and Plural be read as a
1.5 Notices, Consents, whole
Approvals, Certificates 1.3 Definitions
and Determinations

ENGINEER AND ENGINEER AND ENGINEER AND

ENGINEER'S ENGINEER'S ENGINEER'S
REPRESENTATIVE REPRESENTATIVE REPRESENTATIVE 4. Delegations and
2 2.1 Engineer's Duties and 4 Architect's/ Representatives C
2 Duties and Powers of 2 Duties and Powers of Authority Supervising
Engineer and Engineer's Engineer and Engineer's 2.2 Engineer's ^ Officer's
Representative Representative Representative instructions
2.3 Engineer's Authority to
Delegate 12 Clerk of Works
2.4 Appointment of
Assistants
2.5 Instructions in Writing
2.6 Engineer to Act
Impartially
TJ^ - No change.
E* - Similar to FIDIC 3 .
Continued.

No. FIDIC conditions of contract ICTAD conditions of FIDIC conditions of JCT 80(Local GC/Works/1 (Edition Remarks
(Third edition)=FIDIC 3 contract (Revised edition contract(Fourth Authorities with 3) =GCW1
1989)=ICTAD 89 edition) = FIDIC 4 Quantities) = JCT 80

ASSIGNMENT AND SUB­ ASSIGNMENT AND SUB­ ASSINGMENT AND SUB­ 19 Assignment and
LETTING LETTING CONTRACTING Sub- Contracts
3 3 Assignment 3 Assignment 61 Assignment
3.1 Assignment of Contract 19.1 Assignment C
62 Sub-letting
4 4 Sub-letting 4 Sub-letting 19.2 Sub-letting-
4.1 Sub-Contracting Domestic
4.2 Assignment of Sub Sub-Contractors.-
-Contractor's Obligations Architect's/
Supervising
Officer's consent

19.3 Sub-letting-list in
Contract Bills

19.4 Sub-letting
-Determination
of Employment of
Domestic Sub
-Contractor

19.5 Nominated Sub

Contractors
Continued.

CONTRACT DOCUMENTS CONTRACT DOCUMENTS CONTRACT DOCUMENTS

5 5.1 Language and Law 5.1 Language and Law 5.1 Language and Law 2.3 Discrepancies in or 2 Contract Documents A
5.2 Priority of Contract divergences between
5.2 Documents Mutually 5.2 Documents mutually Documents documents GC.5*
Explanatory Explanatory JC5*
F4.5*
IC.5*

6 6.1 Custody of Drawings
6.2 One Copy of Drawings to
be kept on Site
6.3 Disruption of Progress
6.4 Delays and cost of delay of
Drawings
6.1 Custody of Drawings
6.2 One Copy of Drawings to be
kept on Site
6.3 Disruption of Progress
6.4 Delays and Cost of Delay of
Drawings
6.1 Custody and Supply of
Drawings and Documents
6.2 One Copy of Drawings to be
kept on Site
6.3 Disruption of Progress
6.4 Delays and Cost of Delay of
Drawings
6.5 Failure by Contractor to
Submit Drawings
5. Contract Documents - 2 Contract Documents c
other documents - issue of
certificates
5.1 Custody of Contract Bills
and Contract Drawings
5.2 Copies of Documents
5.3 Descriptive Schedules etc-
Master Programme of
Contractor
5.5 Availability of certain
documents
5.6 Return of Drawings etc.
5.7 Limits to use of
documents

7. 7. Further drawings and 7. Further drawings and 7.1 Supplementary drawings and 5.4 Drawings or details No clause c
instructions instructions instructions.

7.2 Permanent works designed by

contractor

7.3 Responsibility unaffected by

approval

1C.5* - Similar to FIDIC 3, but modified to suit local conditions.

F4.5* - Similar to FIDIC 3 . but the additional cost is not included here.
JC.5* - Additional cost involve is omitted here.
GC.5* - Additional cost involve is omitted here.
Continued.

GENERAL OBLIGATIONS GENERAL OBLIGATIONS GENERAL OBLIGATIONS

B
8. 8 Contractor's General 8 Contractor's General 8.1 Contractor's General 2 Contractor's 31.1]
Responsibilities Responsibilities Responsibilities obligations 31.21 Quality
D* 8.2 Site Operations and 2.1 Contract Documents 31.3 J
Methods of Construction JC.8* E*
F4.8*

9 9. Contract Agreement 9. Contract Agreement 9.1 Contract Agreement No clause No clause A

D* D*

10 10. Performance Bond 10. Performance Bond 10.1 Performance Security No clause No clause B
D* 10.2 Period of Validity of
Performance Security
10.3 Claims under
Performance Security
F4.10*

11 11. Inspection of Site 11. Inspection of Site 11.1 Inspection of Site No clause 7.1' Conditions B
D* D* 7.2 . affecting
7.6 Works
E*

12 12. Sufficiency of Tender 12. Sufficiency of Tender. 12.1 Sufficiency of Tender No clause 7.3") Conditions C
Adverse Physical Adverse Physical 12-2. Adverse Physical 7.4( affecting
Conditions and Artificial Conditions and Artificial Obstructions or Conditions 7.5j Works
Obstructions Obstructions

13 13. Work to be to the 13. Work to be to the 13.1 Work to be in Accordance 2.1 Contract Documents No clause A
Satisfaction of Engineer Satisfaction of Engineer with Contract E*
D* * F4.13
33 Programme C
14 14 Programme to be 14 Programme to be 14.1 Programme to be Submitted 5.3.1.2
Furnished Furnished 14.2 Revised Programme Descriptive
14.3 Cash Flow Estimate to be Schedules etc-
Submitted Master Programme
14.4 Contractor not Relieved of of Contractor
Duties or Responsibilities
t-4.8* - Clearly explained and covers more conditions.
JC.8* - Not clearly covered as FIDIC 3 .
E* - Similar to FIDIC3.
D* - No change.
F4.10* - Clearly explained and covers more conditions.
F4.13* - No change, but only the heading differs.
Continued.

15 15. Contractor's 15.1 Construction 15.1 Contractor's 10 Person-in-charge 5 Contractor's A

Superintendence Management Services Superintendence agent
JC.10*
15.2 Contractor's GC.5*
Superintendence
D*
IC.15*

16 16. Contractor's Employees 16. Contractor's Employees 16.1 Contractor's Employees 8.5 Exclusion from 6 Contractor's C
16.2 Engineer at Liberty to the Works of employees
Object persons employed
thereon

17 17. Setting-out 17. Setting-out 17.1 Setting out 7. Levels and setting 9. Setting-out C
out of the Works
and clause 2
(extracts)

18 18. Boreholes and Exploratory 18. Boreholes and Exploratory 18.1 Boreholes and No clause No clause A
Excavation Excavation Exploratory Excavation

D* D*

D* - No change.
IC.15* - 15.1 is a new clause, all others are similar to FIDIC 3.
JC.10* - Differs from FIDIC 3 .
GC.5* - Similar to JCT 8 0 .
Continued.

19 19. Watching and lighting 19. Watching and lighting 19.1 Safety. Security and No Clause 13 Protection of C
Protection of the Works
Environment
14 Nuisance and
19.2 Employer's pollution
Responsibilities

20 20.1 Care of Works 2 0 . 1 . Care of Works 20.1 Care of Works No Clause 54 Emergency C
Work
20.2 Excepted Risks 20.2. Excepted Risks 20.2 Responsibility to Rectify
Loss or Damage

20.3 Loss or Damage Due to

Employer's Risks

20.4 Employer's Risks

Continued.

21. 21. Insurance of Works, 21. Insurance of Works, 2 1 . 1 . Insurance of Works 22. Insurance of 8. Insurance C
etc. etc. and Contractor's the Works
Equipment 22A. Erection of
F3.21* IC.21* 21.2. Scope of Cover new buildings
21.3. Responsibility for - Al! Risks
Amounts not Insurance of
Recovered the Works by
21.4. Exclusions the Contractor
22B Erection of
new
buildings
- All Risks
Insurance of
the
Works by the
Employer
22C. Insurance of
existing
structures
- Insurance of
Works or
extensions to
existing
structures
2 2 D . Insurance for
Employer's
ikftftlt*^. loss
of liquidated

* s % damages

F3.21* - Clause 25 can be combined with this clause.

IC.21* - Clause 25 can be combined with this clause.

I ill
Continued.

22 22.1 Damage to Persons 22.1 Damage to Persons 22.1 Damage to Persons 20 Injury to persons 19 Loss or Damage C
and Property and Property and Property and property and
22.2 Indemnity by 22.2 Indemnity by 22.2 Exceptions indemnity to
Employer Employer 22.3 Indemnity by Employer Employer

23 23.1 Third Party Insurance
23.2 Minimum Amount of
Third Party Insurance
23.3 Provision to
Indemnify Employer
23.1 Third Party Insurance
23.2 Minimum Amount of
Third Party insurance
23.3 Provision to
Indemnify Employer
23.1 Third Party Insurance 21 Insurance against 8 Insurance B
(Including Employer's injury to persons or
Property) property
23.2 Minimum Amount of
Insurance
23.3 Cross Liabilities

D* F4.23* E* E*

TJ* - No change.
F4.23* - Similar to FIDIC 3 , but this says that the insurance should be in the joint names of the Employer and the Contractor.
E* - Similar to FIDIC 3 .
Continued.

24 24.1 Accident or Injury to 24.1 Accident or Injury to 24.1 Accident or Injury to 21 Insurance against 8 Insurance A
Workmen Workmen Workmen injury to persons
24.2 Insurance against 24.2 Insurance against 24.2 Insurance against or property
Accident, etc., to Accident, etc., to Accident to
Workmen Workmen Workmen
JC.21* GC.8*
D* D*

25 25 Remedy on Contractor's 25 Remedy on Contractor's 25.1 Evidence and Terms of No clause No clause C
Failure to Insure Failure to Insure Insurances
25.2 Adequacy of Insurances
F3.25* IC.25* 25.3 Remedy on Contractor's
Failure to Insure
25.4 Compliance with Policy
Conditions

D* - No change.
JC.21* and GC.8* - Partly covers the FIDIC 3 contents.
F3.25* and IC.25* - Refer clause 2 1 .
Continued.

26 26.1 Giving of Notices and 26.1 Giving of Notices and 26.1 Compliance with Statutes, 6 Statutory 11 Statutory C
Payment of Fees Payment of Fees Regulations, etc. obligations, notices
notices, fees and
26.21 Compliance with Statutes, 26.2") Compliance with Statutes, charges

26.3 Regulations, etc. 26.3J Regulations, etc.

27 27 Fossils etc. 27 Fossils etc. 27.1 Fossils 34 Antiquities 32 Excavations C

28 28 Patent Rights and 28 Patent Rights and 28.1 Patent Rights 9 Royalties and 12 Patents C
Royalties Royalties 28.2 Royalties patent rights
29 29 Interference with Traffic 29 Interference with Traffic 29.1 Interference with Traffic No clause No clause B
and Adjoining Properties and Adjoining Properties and Adjoining Properties.

D* F4.29*

30 30.1 Extra ordinary Traffic
30.2 Special Loads
30.3 Settlement of Extra
ordinary Traffic Claims
30.4 Water borne Traffic
30.1 Avoidance of Damage to 30.1 Avoidance of Damage to No clause No clause C
Highway, etc. Roads
30.2 Transport of 30.2 Transport of Contractor's
Constructional Plant Equipment or Temporary
30.3 Water bome Traffic Works
30.3 Transport of Materials or
Plant
30.4 Water borne Traffic

D* - No change.
F4.29* - No change, but FIDIC4 covers for execution and completion of the works.
Continued.

31 31. Opportunities for Other 31.1 Facilities for Other 31.1 Opportunities for Other 29 Works by 65 Other works A
Contractors Contractors Contractors Employer or
31.2 Delay and Extra work 31.2 Facilities for Other persons employed
Contractors or engaged by
IC.31* Employer
E*
E* E*

32 32. Contractor to keep Site 32.1 Contractor to keep Site 32.1 Contractor to keep Site No clause 34.2 Commencement A
Clear Clear Clear and Completion

D* D*

33 33. Clearance of Site on 33 Clearance of Site on 33.1 Clearance of Site on No clause 34.2 Commencement B
Completion Completion Completion and Completion

• D* F4.33*

D* - No change.
IC.31* - Similar to FIDIC 3, but 31.2 is a new clause from ICE conditions of contract (5th edition).
F4.33* - Little elaborated. Even contractor shall be entitled to retain on site upto the end of the defects liability period.
Continued.

LABOUR LABOUR LABOUR

34 34.1 Engagement of labour 34.1 Engagement of Labour 34.1 Engagement of Staff and 19A Fair Wages 15 Returns C
34.2 Supply of Water 34.2 Supply of Water Labour
34.3 Alcoholic Liquor or 34.3 Alcoholic Liquor or
Drugs Drugs
34.4 Arms and Ammunition 34.4 Arms and Ammunition
34.5 Festivals and Religious 34.5 Festivals and Religious
Customs Customs
34.6 Epidemics 34.6 Epidemics
34.7 Disorderly Conduct, 34.7 Disorderly Conduct,
etc. etc.
34.8 Observance by Sub 34.8 Rates
-Contractors 34.8 Observance by Sub
34.9 Other Conditions -Contractors
affecting Labour and 34.9 Other Conditions
Wages affecting Labour and
Wages

35 35 Returns of Labour, etc. 35 Returns of labour 35.1 Returns of Labour and

Contractor's Equipment No clause 15 Returns A
D*
F4.35* E*

F4.35* - No change, but the name Engineer's Representative is changed as Engineer.

Continued.

MATERIALS AND MATERIALS AND MATERIALS, PLANT AND

WORKMANSHIP WORKMANSHIP WORKMANSHIP

36 36.1 Quality of Materials and 36.1 Quality of Materials and 36.1 Quality of Materials, Plant 8 Materials, goods No clause B
Workmanship and Tests Workmanship and Tests and Workmanship and Tests and workman
36.2 Cost of Samples 36.2 Cost of Samples 36.2 Cost of Samples ship to conform
36.3 Cost of Tests 36.3 Cost of Tests 36.3 Cost of Tests to description,
36.4 Cost of Tests not 36.4 Cost of Tests not testing and
Provided for, etc. Provided for inspection
IC.36* 36.5 Engineer's Determination 8.1 Kinds and
where Tests not Provided standards
for 8.2 Vouchers -
materials and
F4.36* goods
8.3 Inspection-tests
8.4 Removal from
the site-work.
materials or
goods

JC.8*

37 37 Inspection of Operations 37 Inspection of Operations 37.1 Inspection of Operations 11 Access for 31.4 Quality C
37.2 Inspection and Testing Architect/ 31.5 -do-
37.3 Dates for Inspection and Supervising 31.6 -do-
Testing Officer to the 31.7 -do-
37.4 Rejection works
37.5 Independent Inspection

F4.36* - Similar to HD1C 3 , but the plant is also included here.

IC.36* - Similar to FIDIC 3 , but any test by an independent person is not included here.
JC.8* - Not clearly covered as FIDIC 3 .
Continued.

38 38.1 Examination of Work 38.1 Examination of Work 38.1 Examination of Work 8.3 Inspection-tests 16 Foundations A
before Covering up before Covering up before Covering up 17 Covering work
38.2 Uncovering and Making 38.2 Uncovering and Making 38.2 Uncovering and Making
Openings Openings Openings JC.8.3* GC. 16/17*
F4.38*
D*

39 39.1 Removal of Improper 39.1 Removal of Improper 39.1 Removal of Improper 8.4 Removal from 53 Non B
Work and Materials Work or Materials Work or Materials or Plant the site-work, -compliance with
39.2 Default of Contractor in 39.2 Default of Contractor in 39.2 Default of Contractor in materials or Instructions
Compliance Compliance. Compliance goods
D* F4.39* GC.53*
-
JC.84 *

SUSPENSION
40 40.1 Suspension of Work 40.1 Suspension of work 40.1 Suspension of Work No clause 40.2g PM's B
40.2 Suspension Lasting more 40.2 Suspension lasting more 40.2 Engineer's Determination Instructions
than 90 days ' than 90 days following Suspension
D* 40.3 Suspension Lasting more GC.40*
than 84 Days
F4.40*

D* - No change-
F4.38* - Similar to FIDIC 3 , but the name Engineer is used throughout.
F4.39* - Similar to FIDIC 3, but the plant and the Contractor's design is also included here.
F4.40* - Similar to FIDIC 3, only the days differ.
JC.8.3* and JC.8.4* - Not clearly covered as FIDIC 3.
GC.53*, GC.40* and GC. 16/17* - Not clearly covered as FIDIC 3.
Continued.

C O M M E N C E M E N T TIME C O M M E N C E M E N T TIME COMMENCEMENT AND

AND DELAYS AND DELAYS DELAYS

41 41 Commencement of Works 41 Commencement of Works 41 Commencement of Works No clause No clause A

D* D*

42 42.1 Possession of Site 42.1 Possession of Site 42.1 Possession of Site and 23.1 Date of 34.1 Commencement B
42.2 Wayleaves, etc. 42.2 Wayleaves, etc. Access thereto Possession - and Completion
42.2 Failure to Give Progress to
Possession Completion Date GC.34*
D* 42.3 Wayleaves and Facilities
F4.42* JC.23*

43 43 Time for Completion 43 Time for Completion 43.1 Time for Completion
D* D* No clause No clause A

F4.42* - No change, but the headings are diffemt.

JC.23* - Not covered folly as FIDIC 3 .
GC.34* - Not covered fully as FIDIC 3 .
Continued.

44 44 Extension of Time for 44.1 Extension of Time for 44.1 Extension of Time for 25 Extension of 36 Extensions of C
Completion Completion Completion time time
44.2 Assessment of Extension 44.2 Contractor to Provide
During the Course of Work Notification and Detailed
44.3 Assessment of Due Date Particulars
for Completion 44.3 Interim Determiantion of
Extension

45 45 No Night or Sunday Work 45 No Night or Sunday Work 45.1 Restriction on Working No clause No clause A
Hours
D*
F4.45*

46 46 Rate of Progress 46 Rate of Progress 46.1 Rate of Progress No clause 35 Progress C

meetings

D* - N o change.
F4.45* - Similar to FIDIC3,but (a) The wording Sunday is removed here, and
(b) Engineer's Representative is replaced by Engineer.
Continued.

47 47.1 Liquidated Damages for 47.1 Liquidated Damages for 47.1 Liquidated Damages for 24 Damages for 55 Liquidated A
Delay Delay Delay non-completion Damages
47.2 Reduction of Liquiated 47.2 Reduction of Liquidated 47.2 Reduction of Liquidated
Damages Damages Damages 18.1.4 Liquidated E*
47.3 Bonus for Completion 47.3 Bonus for Completion F4.47» damages -
D* relevant part
E*

48 48.1 Certification of 48.1 Certification of 48.1 Taking-Over Certificate 17.1 Certificate of 37 Early C
Completion of Works Completion of Works 48.2 Taking Over of Sections Practical Possession
48.21 Certification of 48.2] Certification of or Parts Completion
4 8 . 3 \ Completion by Stages 48.3 Completion by Stages 48.3 Substantial Completion of 18.1 Employer's
48.4J 48.4. Parts wish-
48.4 Surfaces Requiring Contractor's
Reinstatement consent
23.3 Possession by
Contractor-use or
occupation by
Employer

D* - No change.
F4.47* - No change, but the bonus clause is omitted here.
Continued.

MAINTENANCE AND MAINTENANCE AND DEFECTS LIABILITY 17.2 Defects, 21 Defects in

DEFECTS DEFECTS 49.1 Defects Liability Period shrinkages or Maintenance C
49 49.1 Definition of "Period of 49.1 Definition of "Period of 49.2 Completion of Out other faults Periods
Maintenance" Maintenance" -standing Work and 17.3 Defects etc.
49.2 Execution of Work of 49.2 Execution of Work of Remedying Defects Architect's 39 Certifying work
Repair, etc. Repair, etc. 49.3 Cost of Remedying /Supervising
49.3 Cost of Execution of 49.3 Cost of Execution of Defects Officers
Work of Repair, etc. Work of Repair, etc. 49.4 Contractor's Failure to instructions
49.4 Remedy on Contractor's 49.4 Remedy on Contractor's Carryout Instructions 17.4 Certificate of
Failure to Carryout Work Failure to Carryout Work Completion of
Required Required Making Good
Defects
17.5 Damage by
frost
18.1.1 Practical
Completion -
relevent part
18.1.2 Defects etc. -
relevant part
18.1.3 Insurance -
relevant part

50 50 Contractor to Search 50 Contractor to Search 50 Contractor to Search 8.3 Inspection - tests 21 Defects in C
17.3 Defects etc. - Maintenance
Architects Periods
/Supervising
Officers instructions

c S «
% £ W
Continued.

ALTERATIONS. ALTERATIONS. ALTERATIONS.

ADDITIONS AND ADDITIONS AND ADDITIONS AND
OMISSIONS OMISSIONS. OMISSIONS

51 51.1 Variations 51.1 Variations 51.1 Variations 13 Variations and 40 PM's C

51.2 Orders for 51.2 Orders for Variations 51.2 Instructions for Variations provisional sums Instructions
Variations to to be in Writing 13.1 Definition of
be in Writing Variation
13.2 Instructions
requiring a
Variation

52 52.1 Valuation of 52.1 Valuation of 52.1 Valuation of 13 Variations and 41 Valuation of C

Variations. Variations Variations. provisional sums Instructions -
52.2 Power of Engineer 52.2 Power of Engineer 52.2 Power of Engineer 13.4 Valuation of Principles
to Fix Rates to Fix Rates to Fix Rates Variations and 42 Valuation of
52.3 Variations 52.3 Variations 52.3 Variations provisional sum Variation
Exceeding 10% Exceeding 10% Exceeding 15% work Instructions
52.4 Day work 52.4 Day work 52.4 Day work 13.5 Valuation rules 43 Valuation of other
52.5 Claims 52.5 Claims 13.7 Valuations- Instructions
Procedure for Claims addition to or
deduction from
53.1 Notice of Claims Contract Sum
53.2 Contemporary Records
53.3 Substantiation of Claims
53.4 Failure to comply
53.5 Payment of Claims
Continued.

P L A N T . TEMPORARY PLANT.TEMPORARY CONTRACTOR'S

W O R K S AND
MATERIALS
53 53.1 Plant, etc.. Exclusive
Use for the Works
53.2 Removal of Plant,
etc.
53.3 Employer not Liable
for Damage to Plant,
etc.
53.4 Re-export of Plant
53.5 Customs Clearance
53.6 Any others shall be
set out in Part 11
WORKS AND
MATERIALS
53.1 Plant, etc.. Exclusive
Use for the Works
53.2 Removal of Vehicles
53.3 Removal of Plant,
etc.
53.4 Employer not Liable
for Damage to Plant,
etc.
53.5 Re-export of Plant
53.6 Customs Clearance
53.6a Import of
Machinery
53.7 Any others shall be
set out in Part II
EOUIPMENT.
TEMPORARY W O R K S
AND MATERIALS 16 Materials and goods 30 Vesting C
54.1 Contractor's unfixed or off-site
Equipment, 16.1 Unfixed materials and
Temporary Works and goods - on site
Materials; Exclusive 16.2 Unfixed materials and
Use for the Works goods - off site
54.2 Employer not Liable
for Damage
54.3 Customs Clearance
54.4 Re-export of
Contractor's
Equipment
54.5 Conditions of Hire of
Contractor's
Equipment
54.6 Costs for the
Purpose of Clause 63
54.7 Incorporation of
Clause in Sub Contracts

54 54 Approval of Materials > 54 Approval of Materials, 54.8 Approval of Materials No clause No clause A
etc., not implied etc., not implied not Implied

D* E*

D* - N o change.
E* - Similar to FIDIC 3 .
Continued.

MEASUREMENT MEASUREMENT MEASUREMENT

55 55 Quantities 55 Quantities 55.1 Quantities No clause 3.4 Bills of Quantities A

D* D* E*

56 56 Works to be Measured 56 Works to be Measured 56.1 Works to be Measured 13.6 Contractor's right to 18 Measurement A
be present at
D* D* measurement GC.18*

JC.13.6*

57 57 Method of Measurement 57 Method of 57.1 Method of No clause No clause A

Measurement Measurement
57.2 Breakdown of Lump
IC.57* Sum Items
F4.57*

TJ' - No change.
IC.57* - Similar to FIDIC 3 , but the Contractor has to submit a cashflow statement
within 28 days to Engineer for approval of all Lump Sum items .
JC.13.6* - Similar to FIDIC 3 , but not fully covered.
GC.18* - Similar to FIDIC 3 , but not fully covered.
F4.57* - Similar to FIDIC 3 .
Continued

PROVISIONAL SUMS PROVISIONAL SUMS PROVISIONAL SUMS 13.3 Instructions on 64 Provisional Sums
58 58.1 Definition of 58.1 Definition of 58.1 Definition of provisional sums
"Provisional Sums" "Provisional Sums" "Provisional Sums"
58.2 Use of Provisional 58.2 Use of Provisional 58.2 Use of Provisional
Sums Sums Sums
58.3 Production of 58.3 Production of 58.3 Production of
Vouchers, etc. Vouchers, etc. Vouchers, etc.
IC.58* F4.58*

NOMINATED SUB­ NOMINATED SUB­ NOMINATED SUB­ Part 2: Nominated Sub­

CONTRACTORS CONTRACTORS CONTRACTORS contractors and Nominated
59 59.1 Definition of 59.1 Definition of 59.1 Definition of Suppliers 63 Nomination
"Nominated Sub- "Nominated Sub- "Nominated Sub-
Contractors" Contractors" Contractors" 35 Nominated Sub-
59.2 Nominated Sub- 59.2 Nominated Sub- 59.2 Nominated Sub- Contractors
ContractorsjObjection to ContractorsjObjection ContractorsjObjection
Nomination to Nomination to Nomination 36 Nominated Suppliers
59.3 Design Requirements 59.3 Design Requirements 59.3 Design Requirements
to be Expressly Stated to be Expressly Stated to be Expressly Stated.
59.4 Payments to 59.4 Payments to 59.4 Payments to
Nominated Sub- Nominated Sub- Nominated Sub-
Contractors Contractors Contractors
59.5 Certification of 59.5 Certification of 59.5 Certification of
Payments to Payments to Payments to
Nominated Nominated Nominated
Sub-contractors Sub-Contractors Sub-Contractors
59.6 Assignment of 59.6 Assignment of
Nominated Nominated
Sub-contractors Sub-Contractors
Obligations Obligations

1C.58* - Similar to FIDIC J, but the construction managment services are also included here.
F4.58* - Similar to FIDIC 3 > u t only the wordings differ.
Continued.

CERTIFICATES AND CERTIFICATES AND CERTIFICATES AND

PAYMENT PAYMENT PAYMENT

60 60.1 Certificates and 60.1 Advance Payment 60.1 Monthly Statements 30 Certificates and Payments 47 Finance Charges C
Payment 60.2 Monthly Statements 60.2 Monthly Payments 48 Advances on Account
60.2 Advances on 60.3 Monthly Payments 60.3 Payment of Retention 49 Final Account
Constructional Plant 60.4 Payment of Retention Money 50 Certifying payments
and Materials Money 60.4 Correction of 51 Recovery of Sums
60.3 Payment in Foreign 60.5 Correction and Certificates 52 Cost Savings
Currencies Withholding of 60.5 Statement at
Certificates Completion
60.6 Final Account 60.6 Final Statement
60.7 Time for Payment 60.7 Discharge
60.8 Currency Account 60.8 Final Certificate
and Rates of Exchange 60.9 Cessation of
60.9 Payments to Employer's Liability
Contractor 60.10 Time for Payment
60.10 Payments to the
Employer
60.11 Advances on
Constructional Plant
and Materials
60.12 Payments in Foreign
Currency

61 61 Approval only by 61 Approval only by 61-1 Approval only by No clause No clause A

Maintenance Certificate Maintenance Defects Liability
Certificate Certificate
D* F4.61*
TJ* - No change.
F4.61* - N o change, but the name differs.
Continued.

62 62.1 Maintenace Certficate 62.1 Maintenace Certficate 62.1 Defects Liability No clause No clause A
62.2 Cessation of 62.2 Cessation of Certificate
Employer's Liability Employer's Liability 62.2 Unfulfilled
62.3 Unfulfilled Obligations 62.3 Unfulfilled Obligations
Obligations
F4.62*
D*

REMEDIES AND REMEDIES AND REMEDIES

POWERS POWERS
63 63.1 Default of Contractor 63.1 Default of Contractor 63.1 Default of Contractor 27 Determination by 24 Corruption C
63.2 Valuation at Date of 63.2 Valuation at Date of 63.2 Valuation at Dale of Employer 56 Determination
Forfeiture Forfeiture Termination 57 Consequences of
63.3 Payment after 63.3 Payment after 63.3 Payment after Determination for
Forfeiture Forfeiture Termination Default
63.4 Assignment of 58 Consequences of
Benefit of Agreement other Determination

64 64 Urgent Repairs 64 Urgent Repairs 64.1 Urgent Remedial 33 War damage 54 Emergency Work A
D* Work
F4.64* JC.33* GC.54*

F4.62* - 62.2 of FIDIC 3 is omitted here. D* - No change.

F4.64* - No change, but Engineer's representative is replaced by Engineer.
JC.33* - This is applicable only in the U.K., but the contents similar to FIDIC 3.
GC.54* - Partly covers the FIDIC 3 contents.
Continued.

SPECIAL RISKS SPECIAL RISKS SPECIAL RISKS

65 65.1 No Liability for War, 65.1 No liability for War, 65.1 No Liability for 32 Outbreak of hostilities No clause
etc., Risks etc.. Risks Special Risks
65.2 Damage to Works, 65.2 Damage to Works, 65.2 Special Risks
etc., by Special Risks etc., by Special Risks 65.3 Damage to Works by
65.3 Projectile, Missile, 65.3 Projectile, Missile, Special Risks
etc. etc. 65.4 Projectile, Missile,
65.4 Increased Costs 65.4 Increased Costs etc.
arising from Special arising from Special 65.5 Increased Costs
Risks Risks arising from Special
65.5 Special Risks 65.5 Special Risks Risks
65.6 Outbreak of War 65.6 Outbreak of War 65.6 Outbreak of War
65.7 Removal of Plant on 65.7 Removal of Plant on 65.7 Removal of
Termination Termination Contractor's
65.8 Payment if Contract 65.8 Payment if Contract Equipment on
Terminated Terminated Termination
65.8 Payment if Contract
IC.65* Terminated

F4.65* St-32*

IC.65* - Special Risks include whether riot is directed against the State, persons or property.
F4.65*- Special risks exclude loss or damage due to (a) the use or occupation by the Employer of any section and (b) the Engineer's design of the works.
IC.32* - Partly covers FIDIC 3 contents.
Continued.

FRUSTRATION FRUSTRATION RELEASE FROM

PERFORMANCE

66 66 Payment in Event of 66 Payment in Event of 66.1 Payment in Event of 32 Outbreak of Hostilities No clause A
Frustration Frustration Release from
D* Performance JC.32*
F4.66*

SETTLEMENT O F SETTLEMENT OF SETTLEMENT O F ARTICLE 5:-

DISPUTES DISPUTES DISPUTES

67 67 Settlement of Disputes 67 Settlement of 67.1 Engineer's Decision Settlement of disputes 59 Adjudication C

- Arbitration Disputes 67.2 Amicable Settlement - Arbitration
67.3 Arbitration 60 Arbitration
67.4 Failure to Comply
with Engineer's Part 4:- Settlement of disputes
Decision - Arbitration

F4.66* No change but only the name differs.

JC.32"- Partly covers FIDIC 3 contents.
 NOTICES NOTICES NOTICES

68 68.1 Service of Notices on 68.1 Service of Notices on 68.1 Notice to Contractor N o clause 1.3 Definitions etc.
Contractor Contractor 68.2 Notice to Employer
68.2 Service' of Notices on 68.2 Service of Notices and Engineer
Employer or Engineer on Employer or 68.3 Change of Address
68.3 Change of Address Engineer
68.3 Change of Address F4.68* GC.l*

DEFAULT OF DEFAULT OF DEFAULT OF

EMPLOYER EMPLOYER EMPLOYER

69 69.1 Default of Employer 69.1 Default of Employer 69.1 Default of Employer 28 Determination by No clause
69.2 - do- 69.2 - do - 69.2 Removal of Contractor
69.2 - do- 69.2 - do- Contractor's
Equipment
69.3 Payment on
Termination
69.4 Contractor's
Entitlement to
Suspend work
69.5 Resumption of Work

M . 6 8 * - No change, but in addition the cable, telex or lacsimile transmission is included here.
G C . l * - Partly covers FIDIC 3 contents.
Continued.

CHANGES IN COSTS CHANGES IN COSTS CHANGES IN COSTS PART 3 : Fluctuations

AND LEGISLATION AND LEGISLATION AND LEGISLATION
37 Choice of fluctuation
70 70.1 Increase or Decrease 70.1 Increase or Decrease 70.1 Increase or Decrease provisions - entry in No clause c
of Costs of Costs of Costs Appendix
70.2 Subsequent Legislation 70.2 Subsequent 70.2 Subsequent
Legislation Legislation

CURRENCY AND CURRENCY AND CURRENCY AND

RATES O F RATES OF RATES OF
EXCHANGE EXCHANGE EXCHANGE

71 71 Currency 71 Currency 71.1 Currency No clause No clause A

Restrictions Restrictions Restrictions

F4.71*
IC.71*

72 72.l]Rates of Exchange 72.1]Rates of Exchange 72.1 Rates of Exchange No clause No clause B

72.2V 72.21 72.2 Currency
72.3J 72.3J Proportions
72.3 Currencies of
IC.72* Payment for
Provisional Sums

F4.72*
rrf\
iocs / Oi \&'A
!*. - &\ t \
! 8
A i|
^ Is
I C 7 1 * , I C 7 2 * , F4.71* and F4.72* - Number of days are changed from 30 to 28.