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Amana Group

CONTRACTS PRESENTATION 27 TH SEPTEMBER 2018

Amana Contracting Group


Contracts Presentation
FIDIC Red Book (RB)
For Building and Engineering Works Designed by the Employer (First Edition, 1999)

FIDIC Yellow Book (YB)


For Plant and Design-Build for Electrical and Mechanical Plant, and for Buildings and
Engineering Works Designed by the Contractor (First Edition, 1999)

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Contracts Presentation
Elements of Contract
 Based on offer and acceptance
 Defines the parties
o Employer and Contractor
 Defines others involved in the Contract
o Engineer
o Contractor’s Representative
o Subcontractors
 Allocates responsibilities
o Employer
o Contractor
o Engineer

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Contracts Presentation
Advantage of a Standard Form of Contract
 Drafted and reviewed by industry experts and lawyers
 Clearly written for ease of understanding
 Based on real world experience
 Continual improvement
 Saves time and cost in preparation
 Tried and tested in real situations
 Familiarity by users

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Contracts Presentation
Advantage of a Standard Form of Contract cont..
 Common understanding through frequent use
 Common use of definitions, wording and phraseology
 Applicable to different legal jurisdictions
 Training on usage is available
 User guides are available
 No ambiguities or contradictions
 Clear allocation of risk

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Contracts Presentation
Disadvantages of Bespoke Contracts
• Drafted by lawyers with limited knowledge of the design and construction process
• Drafted by construction personnel with limited knowledge of legal requirements and/or contractual
language
• Not suitable for the type of project
• Not tried and tested in real situations
• Expensive and time consuming to produce
• Contain ambiguities and conflicts
• Users have no previous experience
• Unclear and inequitable allocation of risk
• No training or reference materials available

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Contracts Presentation
Additional Documents Required for the Contract
Contract
Agreement

For a contract to be Appendix to Letter of


Tender Acceptance

complete, certain
information must be
Contract
Documents
provided by other Letter of
Schedules
Tender
documents in addition
to the contract
Employer’s
conditions: Contractor’s
Proposal
Requiremen
ts

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Contracts Presentation
The Parties Referred to in FIDIC Forms of Contract
 Employer - one of the two contracting parties and named in the Appendix to Tender

 Contractor - one of the two contracting parties and named in the Letter of Tender accepted by the
Employer

 Engineer - the company appointed by the Employer to act as the Engineer for the purposes of the
Contract (Red and Yellow), the Engineer’s Representative is the person nominated to carry out the
Engineer’s duties.

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Contracts Presentation
The Parties Referred to in FIDIC Forms of Contract cont..

 Contractor's Representative - the person named by the Contractor to act on behalf of the
Contractor

 Subcontractor - any person named in the contract as a subcontractor

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Contracts Presentation

General Provisions of the FIDIC


Forms of Contract

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Contracts Presentation
Clause 1 – General Provisions
1.1 Definitions
 Lists words and phrases used in the Contract and defines their meaning
 Categorised as follows:
o 1.1.1 The Contract
o 1.1.2 Parties and Persons
o 1.1.3 Dates, Tests, Periods and Completion
o 1.1.4 Money and Payments
o 1.1.5 Works and Goods
o 1.1.6 Other definitions

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Contracts Presentation
Clause 1 – General Provisions
1.4 Laws and Languages

• The Contract shall be governed by the law of the country stated in the Appendix to Tender

• In case that more than one language is used, the language stated in the Appendix to
Tender shall prevail

• The language for communications shall be that stated in the Appendix to Tender

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Contracts Presentation
Clause 1 – General Provisions
1.5 Priority of Documents

• Documents are mutually explanatory

• Provides a list of documents in order of priority

• In the case of ambiguity or discrepancy, the Engineer shall issue clarifications

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Contracts Presentation
Clause 1 – General Provisions
1.9 Delayed Drawings or Instructions (Red Book)

• If the Contractor shall give notice when the Works are likely to be delayed in necessary
drawings or instructions are not issued within a particular time
• Contractor suffers delay or incurs Cost he shall give a further notice and be entitled to an
extension of time and the payment of Cost plus reasonable profit
• Engineer required to agree or determine the matters

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Contracts Presentation
Clause 1 – General Provisions
1.9 Error in the Employer’s Requirements (Yellow Book)

 If the Contractor suffers delay or incurs Cost as a result of an error in the Employers’ Requirements,
he shall give notice and be entitled to an extension of time and the payment of Cost plus
reasonable profit
 The test for entitlement is 'that an experienced Contractor exercising due care would not have
discovered the error when scrutinising the Employer's Requirements under Sub Clause 5.1
(General design Requirements)'
 Engineer required to agree or determine the matters

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Contracts Presentation
Clause 3 – The Engineer
3.1 Engineer's Duty and Authority

 The Employer shall appoint the Engineer


 The Engineer shall carry out the duties assigned to him in the Contract
 The Engineer's staff shall include suitably qualified engineers and other professionals who are
competent to carry out these duties
 The Engineer shall have no authority to amend the Contract
 The Engineer may exercise the authority attributable to the Engineer as specified in the
Contract
 If the Engineer is required to obtain the approval of the Employer before exercising a
specified authority, the requirements shall be stated in the Particular Conditions

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Contracts Presentation
Clause 3 – The Engineer
3.1 Engineer's Duty and Authority Cont.

 The Employer undertakes not to impose further constraints on the Engineer's authority
 Whenever the Engineer exercises a specified authority for which the Employer's approval is
required, the Employer shall be deemed to have given approval
 The Engineer shall be deemed to act for the Employer
 Engineer has no authority to relieve either Party of any duties, obligations or responsibilities
 Any approval, check, certificate, consent, examination, inspection, instruction, notice,
proposal, request, test, or similar act by the Engineer shall not relieve the Contractor from any
responsibility he has under the Contract

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Contracts Presentation
Clause 3 – The Engineer
3.2 Delegation by the Engineer

 The Engineer may assign duties and delegate authority to assistants


 Assistant's authority shall be limited to that delegated
 Assistants shall be suitably qualified, competent to carry out the duties and fluent in the
language for communications
 Assignment shall be in writing to both Parties
 The Engineer shall not delegate the authority to determine any matter in accordance with Sub-
Clause 3.5 (Determinations)

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Contracts Presentation
Clause 3 – The Engineer
3.3 Instructions of the Engineer

 The Engineer may issue instructions and additional or modified Drawings which may be necessary for the
execution of the Works
 The Contractor shall only take instructions from the Engineer; or from an assistant to whom the
appropriate authority has been delegated
 If an instruction constitutes a Variation, Clause 13 (Variations and Adjustments) shall apply
 The Contractor shall comply with the instructions
 Instructions shall be in writing
 If oral instructions are given and the Contractor confirms in writing within 2 days and the Engineer does
not reject, the confirmation shall constitute a written instruction (Red Book only)

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Contracts Presentation
Clause 3 – The Engineer
3.5 Determinations

 Various Clauses require the Engineer to proceed in accordance with Sub-Clause 3.5
(Determinations)
 The Engineer shall consult with each Party in an endeavour to reach agreement
 If agreement is not achieved, the Engineer shall make a fair determination in accordance with
the Contract, taking due regard of all relevant circumstances
 The Engineer shall give notice to both Parties of each agreement or determination, with
supporting particulars
 Each Party shall give effect to each agreement or determination unless and until revised under
Clause 20 (Claims, Disputes and Arbitration)

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Contracts Presentation
Clause 4 – The Contractor
4.1 Contractor's General Obligations
 The Contractor shall:
o Design (to the extent specified in the Contract), execute and complete the Works in
accordance with the Contract and with the Engineer's instructions and remedy any defects
in the Works (RB)

o Design, execute and complete the Works in accordance with the Contract and remedy any
defects in the Works (YB)

o Provide the required Plant and Contractor's Documents specified in the Contract and all
Contractor's Personnel, Goods, consumables and other things and services, whether of a
temporary or permanent nature (RB)

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Contracts Presentation
Clause 4 – The Contractor
4.1 Contractor's General Obligations cont.
o Provide the required Plant and Contractor's Documents specified in the Contract
and all Contractor's Personnel, Goods, consumables and other things and services,
required for this design, execution and remedying of defects (YB)
o Be responsible for the adequacy, stability and safety of all Site operations and of all
methods of construction
o Be responsible for all Contractor's Documents, Temporary Works, and such design
of each item of Plant and Materials as is required for the item to be in accordance
with the Contract
o Submit details of the arrangements and methods proposed for the execution of the
Works

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Contracts Presentation
Clause 4 – The Contractor
4.1 Contractor's General Obligations cont.

o Design any part of the Permanent Works if specified in the Contract (RB)
o Submit Contractor's Documents for design elements (RB)
o Be responsible for Contractor designed parts and ensure that they are fit for purpose
(RB)
o Submit to the Engineer the "as-built" documents and operation and maintenance
manuals prior to the Tests on Completion (RB)

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Contracts Presentation
Clause 4 – The Contractor
4.3 Contractor's Representative

The Contractor shall:

o Appoint the Contractor's Representative with authority to act on the Contractor's


behalf
o Submit particulars of the Contractor's Representative to the Engineer for consent
o If consent is withheld or subsequently revoked, or if the appointed person fails to act,
submit the name and particulars of another suitable person for such appointment
o Not, without the prior consent of the Engineer, revoke the appointment or appoint a
replacement

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Contracts Presentation
Clause 4 – The Contractor
4.3 Contractor's Representative Cont..

o If the Contractor's Representative is to be temporarily absent from the Site,


appoint and notify a suitable replacement
 The Contractor's Representative shall be dedicated to the project
 The Contractor's Representative shall receive instructions on behalf of the
Contractor
 The Contractor's Representative may delegate authority and power to others by
giving notice
 The Contractor's Representative and delegated persons shall be fluent in the
language for communications

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Contracts Presentation
Clause 5 – Nominated Subcontractors (RB)
5.1 Definition of "nominated Subcontractor”

• A nominated Subcontractor means a subcontractor:


o Who is stated in the Contract as being a nominated Subcontractor
o Whom the Engineer instructs the Contractor to employ as a Subcontractor

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Contracts Presentation
Clause 5 – Nominated Subcontractors (RB)
5.2 Objection to Nomination
• The Contractor shall not be under any obligation to employ a nominated Subcontractor
against whom the Contractor raises reasonable objection by notice
• Reasonable objection may be:
o Subcontractor does not have sufficient competence, resources or financial
strength
o The subcontract does not specify that the nominated Subcontractor shall
indemnify the Contractor against failures of the Subcontractor
o The subcontract does not undertake to the Contractor such obligations and
liabilities as will enable the Contractor to discharge his obligations and liabilities

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Contracts Presentation
Clause 5 – Design (YB)
5.1 General Design Obligations
• The Contractor shall:
o Carry out and be responsible for the design of the works
o Use designers who are suitably qualified
o Comply with the criteria stated in the Employer’s Requirements
o Submit the Engineer for consent, the name and particulars of each proposed designer and design
subcontractor
o Scrutinise the Employer’s Requirements and setting out references within the period stated in the
Appendix to Tender
o Give notice to the Engineer of any error, fault or other defect found in the Employer’s Requirements or
other references

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Contracts Presentation
Clause 5 – Design (YB)
5.1 General Design Obligations

• In the case of a notice of any error, fault or other defect found in the Employer’s Requirements, the
Engineer shall determine whether Clause 13 (Variations and Adjustments) shall be applied and give
notice to the Contractor.
• The test for a Variation or adjustment is whether an experienced contractor exercising due care would
have discovered the error, fault or other defect when examining the Site and the Employer’s
Requirements before submitting the Tender
• The Contractor warrants that his designers have the experience and capacity necessary
• The Contractor undertakes that the designers will be available to attend discussions with the Engineer
until the expiry of the defects Notification Period.

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.1 Commencement of Work

• The Engineer shall give the Contractor not less than 7 days notice of the
Commencement Date
• The Commencement Date shall be within 42 days after the Contractor receives the
Letter of Acceptance
• The Contractor shall commence and proceed with due expedition and without delay

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.2 Time for Completion

• The Contractor shall complete the Works and each Section within the times specified
in the Contract
• Completion is defined in Sub-Clause 10.1 (Taking Over of the Works and Sections)

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.3 Programme
• The Contractor shall:
• Submit a detailed programme within 28-days of notice to commence
• Submit a revised programme whenever the previous programme is inconsistent with actual
progress
• Proceed in accordance with the programme
• Give notice to the Engineer of probable future events or circumstances which may
adversely affect the work, increase the Contract Price or delay the execution of the Works.
• Submit a revised programme on receiving a notice from the Engineer that a programme
fails to comply with the Contract or to be consistent with actual progress

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.3 Programme cont.

• Programmes shall include:


o The order in which the Contractor intends to carry out the Works, including design (if
any), Contractor's Documents, procurement, manufacture, delivery, construction,
erection and testing
o Work by nominated Subcontractors in similar detail (RB)
o The periods for reviews of the Contractor's Documents and any other specified
submissions, approvals or consents (YB)
o The sequence and timing of inspections and tests

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.3 Programme cont.
• A supporting report including:
o Method statements
o Major stages of execution
o An estimate of the number of Personnel
o An estimate of Contractor's Equipment
• Unless the Engineer gives notice that the programme does not comply with the Contract within
21 days, the Contractor may proceed in accordance with the programme
• The Engineer may only give notice that the programme does not comply with the Contract

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.4 Extension of Time for Completion cont.

o Delay, impediment or prevention caused by, or attributable to, the Employer, the Employer's
Personnel, or the Employer's other Contractors

• If the Contractor considers himself to be entitled to an extension of the Time for Completion, he
shall give notice

• The Engineer may increase, but shall not decrease, the total extension of time

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.5 Delays Caused by Authorities

• Delays by authorities will be considered under Sub-Clause 8.4


(Extension of Time for Completion) if:
o The Contractor has followed the procedures of the relevant public authorities
o These authorities delay or disrupt the work
o The delay or disruption was unforeseeable

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.6 Rate of Progress

• lf, at any time (other than as a result of a cause listed in Sub-Clause 8.4):
o Progress is too slow to complete within the Time for Completion
o Progress has fallen behind the current programme, taking into account any extension of time
awards
• The Engineer may instruct the Contractor to submit:
o A revised programme
o A report describing proposals to expedite progress and complete within the Time for
Completion

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.7 Delay Damages
• If the Contractor fails to comply with the Time for Completion, he shall pay delay damages
• Delay damages shall be in the sum stated in the Appendix to Tender
• Delay damages are based on every day between the Time for Completion and the date of Taking
Over
• Delay damages may be capped at an amount stated in the Appendix to Tender
• Delay damages shall be the only damages due from the Contractor for delay, except for
termination by the Employer
• Delay damages shall not relieve the Contractor from his obligations

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.8 Suspension of Work

• The Engineer may instruct the Contractor to suspend part or all of the Works
• The Contractor shall protect the Works against deterioration, loss or damage during
suspension
• If the cause of suspension is attributable to the Contractor, the Contractor may not
make any claims

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.9 Consequences of Suspension

• If the Contractor suffers de lay or incurs Cost as a result of complying with instructions
for suspension and/or resuming work, he shall give notice and be entitled to an
extension of time and the payment of Cost
• The Engineer shall agree or determine the matters

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.11 Prolonged Suspension

• If the suspension has continued for more than 84 days, the Contractor may request the
Engineer's permission to proceed
• If the Engineer does not give permission within 28 days, the Contractor may treat the
suspension as an omission under Clause 13 (Variations and Adjustments} of the
affected part of the Works
• If the suspension affects the whole of the Works, the Contractor may give notice of
termination

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Contracts Presentation
Clause 8 – Commencement, Delays and Suspension
8.12 Resumption of Work

• When works resumes, the Contractor and the Engineer shall examine the Works and
the Plant and Materials affected by the suspension
• The Contractor shall make good any deterioration or defect

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Contracts Presentation
Clause 10 – Employer's Taking Over
10.1 Taking Over of the Works and Sections

• The Works shall be taken over by the Employer when:


o The Works have been completed in accordance with the Contract
o Tests on Completion have been carried out and accepted
o A Taking-Over Certificate has been issued
• The Contractor may apply for a Taking-Over Certificate not earlier than 14 days before the
Works will ready for taking over
• If the Works are divided into Sections, the Contractor apply for a Taking-Over Certificate for
each Section

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Contracts Presentation
Clause 10 – Employer's Taking Over
10.1 Taking Over of the Works and Sections cont.

• The Engineer shall issue the Taking-Over Certificate, or reject the Contractor's application,
giving reasons and specifying the work required to be done
• In case of rejection, the Contractor shall complete the work and reapply
• If the Engineer fails either to issue the Taking-Over Certificate or to reject the Contractor's
application within 28 days, and if the Works are substantially in accordance with the
Contract, the Taking-Over Certificate shall be deemed to have been issued on the last day
of that period

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Contracts Presentation
Clause 10 – Employer's Taking Over
10.2 Taking Over Parts of the Works
• The Engineer may, at the discretion of the Employer, issue a Taking-Over Certificate for any
part of the Works
• The Employer shall not use any part of the Works until the Engineer has issued a Taking-
Over Certificate for this part
• If the Employer does use any part of the Works before the Taking-Over Certificate is issued:
o The part which is used shall be deemed to have been taken over as from the date on
which it is used
o The Contractor shall cease to be liable for the part of the works in question
o The Engineer shall issue a Taking-Over Certificate for this part if requested by the
Contractor

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Contracts Presentation
Clause 10 – Employer's Taking Over Contd..
10.2 Taking Over Parts of the Works
• After a Taking-Over Certificate for a part of the Works has been issued, the Contractor shall be
given the earliest opportunity to carry out any outstanding Tests on Completion
• The Contractor shall carry out these Tests on Completion as soon as practicable before the
expiry date of the Defects Notification Period
• If the Contractor incurs Cost as a result of the Employer taking over and using part of the Works,
he shall give notice and be entitled to the payment of Cost plus reasonable profit
• The Engineer shall agree or determine the matters
• If a Taking-Over Certificate has been issued for a part of the Works, delay damages for the
remainder of the Works shall be reduced proportionally to the value of the part taken over
• The Engineer shall agree or determine the proportion

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Contracts Presentation
Clause 11 – Defects Liability
11.9 Performance Certificate
• Performance of the Contractor's obligations is not completed until the Engineer has issued the
Performance Certificate
• The Performance Certificate shall state the date on which the Contractor completed his
obligations
• The Engineer shall issue the Performance Certificate within 28 days after the expiry dates of the
Defects Notification Periods
• The Performance Certificate may be withheld if the Contractor has not supplied all the
Contractor's Documents, or completed and tested all the Works, including remedying any defects
• A copy of the Performance Certificate shall be issued to the Employer
• Only the Performance Certificate shall be deemed to constitute acceptance of the Works

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Contracts Presentation
Clause 13 - Variations
13.1 Right to Vary

• Variations may be initiated by the Engineer at any time prior to issuing the Taking-Over
Certificate, either by:
o An instruction
o By a request for a proposal
• The Contractor shall execute and be bound by each Variation
• Variations may include:
o Changes to the quantities of work
o Changes to the quality and other characteristics of work

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Contracts Presentation
Clause 13 - Variations
13.1 Right to Vary Contd..

o Changes to the levels, positions and/or dimensions


o Omission of any work unless it is to be carried out by others
o Additional work, Plant, Materials or services necessary for the Works
o Changes to the sequence or timing of the execution
• The Contractor shall not make any alteration and/or modification of the Permanent
Works, unless and until the Engineer instructs or approves a Variation

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Contracts Presentation
Clause 13 - Variations
13.2 Value Engineering

• The Contractor may submit proposals for:


o Acceleration
o Reduction in cost to the Employer for execution, maintenance or operation
o Improved efficiency or value
• If approved, the Contractor shall design any affected changes
• If the proposal results in a reduction in the Contract Price, the saving shall be shared
50/50
• The Engineer shall agree or determine the matters

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Contracts Presentation
Clause 13 - Variations
13.2 Variation Procedure
• If the Engineer requests a proposal, the Contractor shall:
o If necessary, advise why he cannot comply
o Provide a description of the proposed work to be performed
o Provide a programme for its execution
o Provide a proposal for any necessary modifications to the programme
o Provide a proposal for evaluation of the Variation
o Not delay any work whilst awaiting a response
o Acknowledge receipt of Variation instructions

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Contracts Presentation
Clause 13 - Variations
13.2 Variation Procedure Contd..

• The Engineer shall:


o Respond with approval, disapproval or comments
o Issue instructions to execute Variations
• Variations shall be evaluated in accordance with Clause 12 (Measurement and
Evaluation) (Red Book)
• The Engineer shall agree or determine the adjustment to the Contract Price (Yellow
Book)

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Contracts Presentation
Clause 13 - Variations
13.5 Provisional Sums

• Provisional Sums shall only be used in accordance with the Engineer's instructions
• For each Provisional Sum, the Engineer may instruct:
o Work to be executed by the Contractor and valued under Sub-Clause 13.3
(Variation Procedure)
o Plant, Materials or services to be purchased by the Contractor, from a nominated
Subcontractor

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Contracts Presentation
Clause 13 - Variations
13.5 Provisional Sums Cont..
• In the case of a nomination the Contractor shall be paid:
o The actual amounts paid by the Contractor
o A sum for overhead charges and profit, calculated at the percentage stated in the Schedules
o If there is no such rate, the percentage rate stated in the Appendix to Tender shall be applied
• The Contractor shall, when required by the Engineer, produce quotations, invoices, vouchers,
accounts or receipts in substantiation

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Contracts Presentation
Clause 13 - Variations
13.7 Adjustments for Changes in Legislation

• The Contract Price shall be adjusted for any increase or decrease in Cost resulting
from a change in legislation made after the Base Date
• If the Contractor suffers delay or incurs Cost as a result of change in legislation, he
shall give notice and be entitled to an extension of time and the payment of Cost
• The Engineer shall agree or determine the matters

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Contracts Presentation
Clause 14 - Contract Price and Payment
14.1 The Contract Price (Red Book)

• The Contract Price shall be subject to adjustments in accordance with the Contract
• Any quantities which may be set out in the Bill of Quantities or other Schedule are
estimated quantities
• The Contractor shall submit a breakdown of each lump sum price, within 28 days after
commencement

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Contracts Presentation
Clause 14 - Contract Price and Payment
14.1 The Contract Price (Yellow Book)

• The Contract Price shall be the Lump Sum Accepted Contract Amount
• The Contract Price shall be subject to adjustments in accordance with the Contract
• Any quantities which may be set out in a Schedule are estimated quantities
• Quantities or prices set out in any schedule may only be used for the purposes stated in
the Schedule
• If any part of the Works is to be paid according to quantities, the provisions for
measurement and valuation shall be detailed in the Particular Conditions

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Contracts Presentation
Clause 15 – Termination by Employer
15.1 Notice to Correct

• If the Contractor fails to carry out any obligation, the Engineer may, by notice, require
the Contractor to make good the failure within a reasonable time

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Contracts Presentation
Clause 15 – Termination by Employer
15.2 Termination by Employer

 The Employer shall be entitled to terminate the Contract if the Contractor:


o Fails to provide the Performance Security
o Fails to comply with a notice to correct
o Abandons the Works or demonstrates intention not to continue performance of his
obligations
o Fails to commence the Works
o Fails to comply with a notice of rejection or requiring remedial work within 28 days

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Contracts Presentation
Clause 15 – Termination by Employer
15.2 Termination by Employer Cont..

o Subcontracts the whole of the Works or assigns the Contract


o Becomes bankrupt or insolvent, goes into liquidation, has a receiving or
administration order made against him
o Gives or offers any bribe, gift, gratuity, commission as an inducement or reward
• The Employer shall give 14 days' notice to terminate
• In the case of financial conditions or corruption, the Employer may terminate
immediately on giving notice

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Contracts Presentation
Clause 15 – Termination by Employer
15.2 Termination by Employer Cont..
• On being issued with a notice of termination, the Contract shall:
o Leave the Site and deliver any Goods, Contractor's Documents and other design documents
to the Engineer
o Comply with any reasonable instructions included in the notice
o Arrange for the removal of Equipment and Temporary Works
• After termination, the Employer may complete the Works or arrange for others to do so
• The Employer may use any Goods, Contractor's Documents and other design documents

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Contracts Presentation
Clause 15 – Termination by Employer
15.2 Termination by Employer Cont..

• The Employer shall give notice that the Contractor's Equipment and Temporary Works
will be released to the Contractor
• The Contractor shall arrange for removal, at the risk and cost of the Contractor
• If the Contractor has failed to make any payment due to the Employer, these items may
be sold by the Employer

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Contracts Presentation
Clause 15 – Termination by Employer
15.3 Valuation at Date of Termination

• After a notice of termination has been issued the Engineer shall agree or determine the
value of the Works, Goods and Contractor's Documents and any other sums due to the
Contractor

63
Contracts Presentation
Clause 15 – Termination by Employer
15.4 Payment after Termination

• After a notice of termination has been issued, the Employer may:


o Claim any incurred costs from the Contractor
o Withhold further payments until all other costs incurred by the Employer have been
established
o Recover any losses and damages incurred by the Employer and any extra costs for
completing the Works
o After recovering any losses, damages and extra costs, the Employer shall pay any
balance to the Contractor

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Contracts Presentation
Clause 15 – Termination by Employer
15.5 Employer's Entitlement to Termination

• The Employer shall be entitled to terminate the Contract, at any time, for the
Employer's convenience
• In the case of termination for convenience, the Employer shall issue a notice 28-days
before termination is to take place
• The Employer shall return the Performance Security before termination takes effect
• The Employer shall not terminate the Contract in order to execute the Works himself or
for the Works to be executed by others

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Contracts Presentation
Clause 16 – Suspension and Termination by Contractor
16.1 Contractor's Entitlement to Suspend Work

• If the Engineer fails to certify payment, the Employer fails to provide details of financial
arrangements, or fails to make payment, the Contractor may, after giving not less than
21 days' notice, suspend or reduce the rate of work
• If the Contractor suffers delay or incurs Cost as a result these matters, he shall give
notice and be entitled to an extension of time and the payment of Cost plus
reasonable profit
• The Engineer shall agree or determine the matters

66
Contracts Presentation
Clause 16 – Suspension and Termination by Contractor
16.2 Termination by Contractor

• The Contractor shall be entitled to terminate the Contract if:


o The Contractor does not receive reasonable evidence within 42 days after giving
notice under Sub-Clause 16.1 (Contractor's Entitlement to Suspend Work) in respect
of the Employer's Financial Arrangements
o The Engineer fails, within 56 days after receiving a Statement, to issue the relevant
Payment Certificate
o The Contractor does not receive the amount due under an Interim Payment
Certificate 42 days after the date that payment should have been made

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Contracts Presentation
Clause 16 – Suspension and Termination by Contractor
16.2 Termination by Contractor Cont.
o The Employer substantially fails to perform his obligations under the Contract
o The Employer fails to enter into a Contract Agreement
o The Employer assigns the Contract without agreement
o A prolonged suspension affects the whole of the Works
o The Employer becomes bankrupt or insolvent, goes into liquidation or has a receiving or
administration order made against him
• The Contractor shall give 14 days' notice of termination
• In the case of bankruptcy etc. or corruption, the Contractor may terminate immediately on giving
notice

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Contracts Presentation
Clause 16 – Suspension and Termination by Contractor
16.3 Cessation of Work and Removal of Contractor’s Equipment

• After a notice of termination has taken effect the Contractor shall:


o Cease all work, except for any work instructed by the Engineer for protection or
safety
o Hand over Contractor's Documents, Plant, Materials and other work, for which the
Contractor has received payment
o Remove all other Goods and leave the Site

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Contracts Presentation
Clause 16 – Suspension and Termination by Contractor
16.4 Payment on Termination

• After a notice of termination has taken effect the Employer shall:


o Return the Performance Security
o Pay the Contractor in accordance with Sub-Clause 19.6 (Optional Termination,
Payment and Release)
o Pay to the Contractor the amount of any loss of profit or other loss or damage
sustained by the Contractor as a result of this termination

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Contracts Presentation
Clause 17 – Risk and Responsibility
17.2 Contractor's Care of the Works

• The Contractor shall:


o Take full responsibility for the care of the Works and Goods until the Taking-Over
Certificate is issued
o Take responsibility for the care of any work which is outstanding on the date stated
in a Taking-Over Certificate
o Rectify loss or damage if any loss or damage happens to the Works, Goods or
Contractor's Documents

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Contracts Presentation
Clause 17 – Risk and Responsibility
17.3 Employer's Risks

• This clause defines the risks referred to in Sub-Clause 17.4 (Consequences of


Employers Risks). The risks include:
o War, hostilities, act of foreign enemies
o Rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war
o Riot, commotion or disorder
o Munitions of war, explosive materials, ionising radiation or contamination by
radioactivity

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Contracts Presentation
Clause 17 – Risk and Responsibility
17.3 Employer's Risks Cont..

• Pressure waves caused by aircraft or other aerial devices travelling at sonic or


supersonic speeds
• Use or occupation by the Employer of any part of the Permanent Works
• Design of any part of the Works by the Employer
• Any operation of the forces of nature which is unforeseeable or against which an
experienced contractor could not reasonably have been expected to have taken
precautions

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Contracts Presentation
Clause 17 – Risk and Responsibility
17.4 Consequences of Employer's Risks

• If an Employer's risk event occurs, the Contractor shall:


o Give notice in the case of an event which results in loss or damage
o Rectify the loss or damage as required by the Engineer
• If the Contractor suffers delay or incurs Cost as a result these matters, he shall give further
notice and be entitled to an extension of time and the payment of Cost
• The Contractor is also entitled to reasonable profit in the case that the damage occurred as a
result of the Employer's actions
• The Engineer shall agree or determine the matters

74
Contracts Presentation
Clause 20 – Claims, Disputes and Arbitration
20.1 Contractor's Claims

• If the Contractor considers himself to be entitled to any extension of the Time for
Completion and/or any additional payment, he shall give notice not later than 28 days
after the Contractor became aware, or should have become aware, of the event
• If the Contractor fails to give notice within such period of 28 days, the Time for
Completion shall not be extended, the Contractor shall not be entitled to additional
payment, and the Employer shall be discharged from all liability in connection with the
claim
• The Contractor shall also submit any other notices which are required by the Contract
• The Contractor shall keep contemporary records to substantiate any claim

75
Contracts Presentation
Clause 20 – Claims, Disputes and Arbitration
20.1 Contractor's Claims Cont.
• The Engineer may monitor the record-keeping and/or instruct the Contractor to keep further
contemporary records
• Within 42 days after the Contractor became aware of the event, the Contractor shall submit
a fully detailed claim which includes full supporting particulars of the basis of the claim and
of the extension of time and/or additional payment claimed
• If the event or circumstance giving rise to the claim has a continuing effect:
o The claim shall be considered as interim
o The Contractor shall send further interim claims at monthly intervals
o The Contractor shall send a final claim within 28 days from the time that the final effects
may be ascertained

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Contracts Presentation
Clause 20 – Claims, Disputes and Arbitration
20.1 Contractor's Claims Cont.
• Within 42 days after receiving a claim or any further particulars supporting a previous
claim, the Engineer shall respond with approval, or with disapproval and detailed
comments
• The Engineer may also request any necessary further particulars, but shall nevertheless
give his response on the principles of the claim 42 days
• Each Payment Certificate shall include amounts that have been reasonably substantiated
as being due
• The Engineer shall agree or determine the matters
• If the Contractor fails to comply with this or another Sub-Clause in relation to any claim,
any award shall take account of the extent to which the failure has prevented proper
investigation. This provision does not apply if the Contractor has failed to provide notices

77
Contracts Presentation
Clause 20 – Claims, Disputes and Arbitration
20.5 Amicable Settlement

• Both Parties shall attempt to settle the dispute amicably before the commencement of
arbitration

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Contracts Presentation
Clause 20 – Claims, Disputes and Arbitration
20.6 Arbitration
• The dispute shall be settled under the Rules of Arbitration of the International Chamber of
Commerce
• The dispute shall be settled by three arbitrators
• The arbitration shall be conducted in the language for communications defined in the
Contract
• The arbitrators shall have power to open up, review and revise any certificate,
determination, instruction, opinion or valuation of the Engineer.

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Claims
Clause 20 – Claims, Disputes and Arbitration
20.6 Arbitration Cont..

• The Engineer may be called as a witness and to give evidence


• The obligations of the Parties and the Engineer not be altered by reason of any
arbitration being conducted

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Amana Contracting Group