FIDIC 2017 CLAIMS

A GUIDE TO CLAIMS FOR EXTENSIONS OF TIME

AND ADDITIONAL PAYMENT UNDER THE RED,
YELLOW AND SILVER BOOKS

ANDY HEWITT
This book is dedicated to the memory of Roger Knowles
 CONTENTS

About the Author

Foreword
Hewitt Decipher Partnership
Claims Class
Institute of Construction Claims Practitioners
Acknowledgements
Section 1
Introduction
Introduction
Claims
Section 2
Employer's Claims
Introduction
Compliance with Laws
Contractor’s Documents
Testing by the Contractor
Defects and Rejection
 Remedial Work
Rate of Progress
Delay Damages
Delayed Tests
Failure to Pass Tests on Completion
Extension of the Defects Notification Period
Failure to Remedy Defects
Contractor to Search for Defects
Clearance of the Site
Retesting
Failure to Pass Tests after Completion
Adjustments for Changes in Laws
Advance Payment
Payment after Termination for Contractor’s Default
Section 3
The Contractor's Entitlement to Claim
Delayed Drawings or Instructions
Errors in the Employer’s Requirements
Compliance with Laws
Right of Access to the Site
Co-operation
Setting Out
Unforeseeable Physical Conditions
Access Route
Archaeological and Geological Findings
Remedial Work
Extension of Time for Completion
Delays Caused by Authorities
Consequences of Employer’s Suspension
Taking Over Parts of the Works
Interference with Tests on Completion
Right of Access after Taking Over
Contractor to Search
Delayed Tests
Variation Proposal
Adjustments for Changes in Laws
Delayed Payment
Suspension by the Contractor
Termination by the Contractor
Contractor’s Obligations after Termination
 Liability for the Works
Exceptional Events
Section 4
Time and Money
Extension of Time
Payment of Cost
Profit
Section 5
Notices
Notices
Section 6
Procedure and Presentation of Claims
Procedure for Claims
Particulars of the Claim
Section 7
Responses and Determinations
The Engineer’s Responses and Determinations
Contact the Author
 ABOUT THE AUTHOR

ANDY HEWITT, FICCP, FCIOB, FCINSTCES, FQSI

Andy Hewitt has over 40 years’ experience in the construction industry,

which has been gained in the UK, Africa and the Middle East. His earlier
career included senior positions with contractors, subcontractors and
consultants in project, commercial and contract-management roles.
During this time, he worked on many major and prestigious projects.
For the past 15 years, Andy has specialised in contractual matters, claims
and disputes, culminating in his becoming a partner and managing
director of Hewitt Decipher Partnership, a consultancy practice offering
services related to contractual and commercial matters, claims and
disputes.
Andy also created the organisation Claims Class, which is now a division
of Hewitt Decipher Partnership, and which provides training and
education on claims, the FIDIC contracts and related subjects. Hundreds
of companies and individuals have benefitted from Andy’s tuition and
training, delivered via Claims Class’s internationally acclaimed
workshops, e-courses, and live online training.
In addition to numerous papers, blogs and articles on his specialisations,
Andy has previously published the following books:
Construction Claims & Responses: Effective Writing & Presentation
(Wiley Blackwell ISBN-10: 1119151856, ISBN-13: 978-1119151852)
The FIDIC Contracts: Obligations of the Parties (Wiley Blackwell ISBN-10:
1119576989, ISBN-13: 978-1119576983)
FIDIC 1999 Notices: A Guide to the Requirements, Content and
Composition of Notices Under the Red, Yellow and Silver Books (ISBN-
9798666454220)
FIDIC 2017 Notices: A Guide to the Requirements, Content and
Composition of Notices Under the Red, Yellow and Silver Books (ISBN-
979-8507877508)
FIDIC 1999 Claims: A Guide to Claims for Extensions of Time and
Additional Payment Under the Red, Yellow and Silver Books (ISBN-979-
8753595928)
 FOREWORD

The FIDIC forms of contract continue to give challenges to the

Employer, Engineer and Contractor with regard to the proper
understanding, interpretation and application of the contract. FIDIC 2017
Claims: A Guide to Claims for Extension of Time and Additional Payment
under the Red, Yellow and Silver books, breaks the FIDIC contracts into
user friendly, clear and concise sections and takes the reader by the
hand thorough the often-complicated requirements for Claims.
The book looks at the Red, Yellow and Silver forms of contract through
the lens of the Employer and the Contractor. This allows for a clear
understanding of the obligations of the Parties and ensures that
requirements under the contract are understood.
The book then goes onto to discuss Claims for time and money and how
to effectively pursue or defend a Claim between the Parties. This is a
very useful section of the book, as it brings together under one section
the obligations under the three forms of contract.
Section 5 provides a clear view on what constitutes a Notice, what form
it should take and how it should be dealt with. The giving of a Notice is
the trigger point for all Claims and without a valid notice, Claims will fail
and lead to possible delays and cost overruns.
I like the fact that Section 6 (Procedure and Presentation of Claims) and
Section 7 (Responses and Determinations), expands on what FIDIC
requires for Claims and provide details on what “good looks like”. In my
time as a dispute resolver and accredited expert witness, I have come
across many badly presented claims which are often coupled with
inadequate responses from the Engineer. What this ultimately leads to is
the Parties becoming entrenched with their views and the matter
escalating to a dispute. In a dispute situation, the mantra of “they who
assert must prove” becomes a difficult hurdle to overcome.
In my opinion, one of the reasons why poorly managed projects lead to
Claims, is down to the administrating professionals on both sides of the
table not understanding what is required by the contract which may be
due to lack of time or lack of knowledge. Andy’s book will assist the
Parties to quickly work around the requirements and obligations of
FIDIC concerning Claims and result in progressive and informed
resolution of the facts and matters that need to be dealt with.
This is a must have book for anyone dealing with FIDIC contracts and
should be used by Employers, Contractors, Lawyers, Engineers,
Consultants, and all those involved with contract administration and
dispute resolution and avoidance. I highly recommend it.

Paul Gibbons

BSc (Hons), MSc (Const Law & Arb Kings), FRICS, FCIOB, FCInstCES,
FICCP, MAE, MCIArb, APAEWE, Expert Determiner.

President of the Institute of Construction Claims Practitioners

Hewitt Decipher Partnership provides hands-on dedicated solutions
from trusted professionals to employers, consultants, contractors, and
subcontractors in the fields of commercial and contractual matters,
claims, dispute management and adjudication.
We work with our clients to ensure that their commercial, contractual,
planning or scheduling-related issues are dealt with efficiently and
effectively. At the heart of our service is our ability to reduce costs, risks
and disputes; our clients derive great benefit from our global experience
and expertise.
Our team of recognised industry experts are here to support our clients
by providing commercial assistance and management, project controls,
programming, planning and forensic delay analysis.
Our services include:
Contractual advice.
Programming, planning and delay analysis.
Claims and responses.
Commercial and quantum.
 Expert witness and advisors.
Dispute management and avoidance.
Education and training.
hewittdecipher.com
Claims Class provides companies and individuals with the skills and
confidence they need to handle construction contractual matters and
claims effectively and professionally.
Claims Class has a range of carefully crafted workshops and online
training and education courses. Each is designed to enhance your ability
to work with construction contracts and claims with confidence and
success. Whatever your level of understanding, Claims Class supports
individuals and companies both online and in person.
E-Courses

Log on anywhere to enjoy round-the-clock access to our e-courses and

study at your own pace. Our courses are derived from real-life content
based on over 40 years of experience. Whether you are new to the
subject or aspire to be a contracts or claims specialist, we have the right
course for you, many of which are tutor-supported.

In-house training
We are dedicated to delivering interactive and engaging in-house
training. Course content focuses on real-life, practical case studies and
scenarios. Work with Claims Class and empower your employees to
perform their jobs more effectively and efficiently. We provide courses
internationally, either in a live setting, or via video conferences.

Live online

Claims Class offers courses consisting of a series of online tutorials.

Typically, these will run over 6-week periods with each tutorial lasting 1–
1½ hours. Some courses include optional assignments to help to embed
the learning process while recordings are available for anyone unable to
join the live sessions.

Courses

Claims Class e-courses are offered at various levels to suit all kinds of
experience, learning outcomes and pockets.
Courses include:
Construction Claims.
The Perfect Claim.
Practical Use of the FIDIC Contracts.
Understanding Claims under the FIDIC Contracts.
Forensic Delay Analysis.
constructionclaimsclass.com
Overview

People who deal with claims within the construction industry invariably
do so after qualifying in some other profession, usually engineering,
design, commercial management, contracts management or project
management. Launched in 2015, the Institute of Construction Claims
Practitioners (ICCP) recognises that in order to prepare, respond to or
manage claims properly, a level of professional expertise must have
been achieved within what has become a specialist sector of the
industry.
Claims and subsequent disputes can run into huge amounts of money
and the Parties involved should be afforded a level of confidence that
those responsible for dealing with such matters on their behalf, whether
employees or consultants, should be suitably qualified and experienced.
The ICCP’s mission is to provide an institute where suitably qualified and
experienced professionals are awarded recognition appropriate to their
skill and experience in the discipline of construction claims.

Professional standards

The institute sets professional standards for its members to ensure that
institute members are suitably qualified and experienced at the specific
membership level awarded.
The institute also encourages and assists members to constantly
improve their professional standards and knowledge and to strive to
achieve membership at the next level within the institute.

Information sharing

The claims profession, especially in comparison to other professions

within the construction industry, is in its infancy. Consequently, research
and reference material are often in short supply. The institute maintains
a knowledge centre of information where papers, case studies, articles,
presentations and document templates are made available to the
members for reference. Members also have access to information on
relevant books and higher education and training courses; a mentorship
scheme is available for those wishing to gain full membership. A
members’ magazine is also published which contains information
relevant to this sector of the industry while a members’ discussion
forum allows members to seek and give advice to fellow members.

Training and Continuing Professional Development

The ICCP provides regular webinars and training sessions for members
and non-members and is often invited to present training for other
professional organisations. Presenters and trainers are either fellows of
the ICCP or invited specialists.

Criteria for membership

There are three grades of membership within the institute:

Associate (AICCP);
Member (MICCP);
Fellow (FICCP).
The level of membership is dependent on qualifications in other industry
disciplines, together with specific and verifiable experience within the
claims sector of the industry.

Further information

Institute of Construction Claims Practitioners

Kissack Court
20 Parliament Street
Ramsey
Isle of Man
British Isles
Email: [email protected]
Website: instituteccp.com
 ACKNOWLEDGEMENTS

I wish to thank and acknowledge the Fédération Internationale des

Ingénieurs-Conseils (FIDIC) for kindly allowing me to reproduce sections
from the following FIDIC conditions of contract:
FIDIC Conditions of Contract for Construction Second Edition
2017 (the Red Book);
FIDIC Conditions of Contract for Plant and Design-Build Second
Edition 2017 (the Yellow Book);
FIDIC EPC/Turnkey Projects Second Edition 2017 (the Silver
Book).
My gratitude goes to Paul Gibbons, President of the Institute of
Construction Claims Practitioners for contributing the foreword.
I also wish to acknowledge the many professionals who give their time
and make their expertise available to FIDIC, whether by serving on
committees, drafting contracts, speaking at conferences or providing
training. Much of this is done on a voluntary basis for no other reward
than the satisfaction of making our industry better and helping fellow
professionals.
My thanks also go to Les Glazier for copy editing the manuscript and to
Kat Harvey for formatting the manuscript for publishing.
 Section 1
Introduction
 INTRODUCTION

Every contract contains obligations, rights, remedies and the liabilities of

the Parties. The FIDIC contracts are, however, more than legal contracts
– they are written by Engineers for the use of construction professionals
and contain procedures and obligations related to the administration of
construction projects. Construction projects are almost always unique –
the design will be different from project to project; the locations are
different; ground conditions vary; climatic conditions may have an
influence; and the personnel contributing to the project will inevitably
change. It is almost impossible to contemplate that any sizeable project
will be completed without design errors, omissions, or changes, that
delays will not occur for a variety of reasons, or that the final price will
be the same as the tendered price. Therefore, the important parts of
any construction project are the rights and remedies of the Parties when
things don't go according to plan and how to deal with matters when
such a situation arises and some form of compensation is required.
FIDIC deals with almost all project risks and sets out which Party will
bear the consequence of such risks should they occur. If either Party
wishes to receive compensation from the other, they must submit a
formal Claim for the compensation and the Claim must be responded to
and formally agreed or determined. An important part of the FIDIC
contracts is therefore the submission of Claims together with the
subsequent responses. If such matters are not dealt with correctly and
in accordance with the contract, they are likely to escalate into time-
consuming and costly disputes to the detriment of both the project and
the Parties involved.
Whether you are working for an employer, contractor, consultant, or
subcontractor, if you are dealing with Claims on projects that are based
on one of the FIDIC contracts, it is vital that you fully understand the
provisions of the contracts in relation to Claims. Possessing good
knowledge of how to deal with Claims, whether dealing with
contractual matters on a day-to-day basis, dealing with Claims as a
speciality or managing such matters, such people are assets to their
employers because they can significantly affect their company’s or the
project’s profitability.
This book deals with all matters related to Claims included in the 2017
editions of the following FIDIC forms of contract:
Conditions of Contract for Construction (the Red Book).
Conditions of Contract for Plant and Design-Build (the Yellow
Book).
Conditions of Contract for EPC/Turnkey Projects (the Silver
Book).
FIDIC prepares its forms of contract to be harmonious and consistent
wherever possible. Whilst the wording of clauses is frequently identical
across the three forms of contract, there are some differences
appropriate to the usage of the particular contract. Where there is only
a slight difference, this has not been noted herein, but where the
difference is significant or is material to the provisions relating to Claims,
the clauses from each form of contract have been quoted under each
subject.
It should be noted that under the Red and Yellow Books an Engineer is
appointed by the Employer to administer the Contract. Under the Silver
Book, however, although the Employer may appoint an Employer’s
Representative to act on their behalf, it is the Employer who retains
responsibility for contractual obligations. When the term ‘the Engineer’
is used herein, this should generally be regarded as meaning ‘the
Employer’ under the Silver Book.
In the Red Book, the quality of the Work, design criteria (if appropriate),
contractual arrangements, procedures and the like are included in the
Specification. In the Yellow and Silver Books, such matters are included
in the Employer’s Requirements. The clauses examined herein generally
include quotations from the Red Book, so when the term ‘the
Specification’ is used, this should be regarded as meaning ‘the
Employer’s Requirements’ under the Yellow and Silver Books.
Where parts of the extracts from the contracts contained herein appear
in bold or have been underlined, this is for emphasis and is not in
accordance with the text from the contracts. For ease of understanding
and clarity, some parts of clauses that are not relevant to the subject
matter have been omitted from the clauses quoted herein. The omitted
sections are shown thus ‘…’.
This is a reference book, so each section herein has generally been
written to provide the reader with guidance on the subject in question
on a stand-alone basis. Consequently, there is a certain amount of
repetition between sections so as to provide a complete understanding
of each subject without the necessity to refer to other sections of the
book.
Much of the generic advice contained herein is also applicable to other
forms of contract in common use within the industry. If using a form of
contract other than FIDIC, the advice contained herein should be used
as guidance only and the actual conditions should be checked carefully.
If using a FIDIC contract, the Particular Conditions should always be
checked for any changes to the standard conditions that are discussed
herein.
Each clause that is related to Employer’s and Contractor’s Claims is
examined and explained in non-contractual language to provide an
understanding of the meaning and application of the provisions. In
addition to the contractual requirements, this book discusses what
FIDIC does not say about Claims and offers sound, practical advice about
how to prepare and respond to Claims, not only to comply with the
contract, but to do so in a professional manner that will help to achieve
timely settlement and agreement. This book will provide you with a
thorough knowledge of Claims under the 2017 FIDIC Red, Yellow and
Sliver Books in a way that you can immediately put what you have
learned into practice. It will also provide an invaluable reference for
when you are dealing with Claims, either at a supervisory level or at a
hands-on, practical level.Introduction to the FIDIC contracts
FIDIC has created forms of contract for just about every conceivable
type of project. There are contracts available for build only, design and
build, turnkey, remeasurable price, lump-sum price, risk-averse
employers, large projects, minor works, specialist operations,
consultancy services and contracts that contain special requirements for
multilateral development banks. This book examines Claims from the
perspective of the Red, Yellow and Silver Books; firstly, because these
are the most commonly used; secondly, because an understanding of
the principles, obligations and procedures contained within them is
easily transferred to the remaining forms of contract.
The Red Book

The form of contract known as the Red Book is the Conditions of

Contract for Construction. This book examines the Second Edition 2017.
The Red Book is probably the most used FIDIC form of contract and is
intended for use in the traditional form of contracting where the
Employer provides the design, and the Contractor constructs the Works
in accordance with the design and any further instructions that may be
given by the Engineer. The Works may include some elements to be
designed by the Contractor, although these will usually be for specialist
items where detailed design is specifically required.
The Contract Price is determined by remeasurement and evaluation at
the rates and prices contained within the Contract. This allows tenders
to be based on estimated quantities (possibly before detailed design for
all the project elements has been completed) and the final price to be
based on the ‘as-built’ design.
An Engineer is appointed to administer the Contract on behalf of the
Employer. The allocation of risk between the Contractor and the
Employer is made in a balanced manner.

The Yellow Book

The form of contract known as the Yellow Book is the Conditions of

Contract for Plant and Design-Build. This book examines the Second
Edition 2017.
The Yellow Book is recommended for use in two situations: firstly, for
the provision of electrical and/or mechanical plant and secondly, for the
design and execution of building or engineering works. Under the usual
arrangements for this type of contract, the Employer provides details of
the project requirements and the Contractor designs and provides the
works in accordance with these requirements. The Yellow Book may be
used for plant, civil, mechanical, electrical or construction works or any
combination thereof.
The Contract Price is the lump sum amount accepted at the time of
entering into the Contract, subject to adjustments in accordance with
the Contract.
An Engineer is appointed to administer the Contract on behalf of the
Employer. The risk between the Contractor and the Employer is
allocated in a balanced manner.

The Silver Book

The Silver Book is more formally known as the Conditions of Contract

for EPC/Turnkey Projects, where ‘EPC’ means ‘Engineer, Procure,
Construct’. The Second Edition 2017 is examined herein.
The Silver Book was created by FIDIC for the provision of process or
power plants, factories or similar facilities, infrastructure projects or
other types of development on a turnkey basis, where a higher degree
of certainty of final price and time is required by the Employer than with
other forms of contract. The Contractor takes total responsibility for the
design and execution of the project, with minimum involvement of the
Employer. Under the arrangements for turnkey projects, the Contractor
carries out all the Engineering, Procurement and Construction (EPC) to
provide a fully equipped facility, ready for operation at the ‘turn of the
key’.
The Contract Price is the lump sum amount accepted at the time of
entering into the Contract, subject to adjustments in accordance with
the Contract.
To reflect the ‘hands-off’ approach of the Employer under this type of
contracting arrangement, there is no Engineer appointed to administer
the Contract on behalf of the Employer, although the Employer may
appoint an Employer’s Representative to act on their behalf.
To reflect the Employer’s requirement to have a higher degree of
certainty of final price and time than with other forms of contract,
certain events for which the Employer bears the risk under the Red and
Yellow Books are transferred to the Contractor in the Silver Book.

Abbreviations used by FIDIC and included herein

FIDIC uses the following abbreviations within the clauses that are
referenced within this book.
EOT – an extension of the Time for Completion under Sub-
Clause 8.5 (Extension of Time for Completion).
DAAB – Dispute Avoidance/Adjudication Board.
DNP – Defects Notification Period.
NOD – Notice of Dissatisfaction.

Defined terms used herein

Certain terms used within the contracts are defined by the FIDIC
contracts and most of these are capitalised in the General Conditions.
The terms referred to herein are reproduced below.
Advance Payment Guarantee means the guarantee under Sub-Clause
14.2.1 (Advance Payment Guarantee).
Base Date means the date 28 days before the latest date for
submission of the Tender.
Bill of Quantities means the document entitled bill of quantities (if
any) included in the Schedules.
Claim means a request or assertion by one Party to the other Party
for an entitlement or relief under any Clause of these Conditions or
otherwise in connection with, or arising out of, the Contract or the
execution of the Works.
Commencement Date means the date as stated in the Engineer’s
Notice issued under Sub-Clause 8.1 (Commencement of Works).
Contract means the Contract Agreement, the Letter of Acceptance,
the Letter of Tender, any addenda referred to in the Contract
Agreement, these Conditions, the Specification, the Drawings, the
Schedules, the Contractor’s Proposal, the JV Undertaking (if
applicable) and the further documents (if any) that are listed in the
Contract Agreement or in the Letter of Acceptance.
Contract Agreement means the agreement entered into by both
Parties in accordance with Sub-Clause 1.6 (Contract Agreement).
Contract Data means the pages entitled contract data that
constitute Part A of the Particular Conditions.
Contract Price means the price defined in Sub-Clause 14.1 (The
Contract Price).
Contractor means the person(s) named as contractor in the Letter of
Tender accepted by the Employer and the legal successors in title of
such person(s).
Contractor’s Documents means the documents prepared by the
Contractor as described in Sub-Clause 4.4 (Contractor’s Documents),
including calculations, digital files, computer programs and other
software, drawings, manuals, models, specifications and other
documents of a technical nature.
Contractor’s Equipment means all apparatus, equipment, machinery,
construction plant, vehicles and other items required by the
Contractor for the execution of the Works. Contractor’s Equipment
excludes Temporary Works, Plant, Materials and any other things
intended to form or forming part of the Permanent Works.
Contractor’s Personnel means the Contractor’s Representative and
all personnel used by the Contractor on Site or other places where
the Works are being carried out, including the staff, labour and other
employees of the Contractor and of each Subcontractor; and any
other personnel assisting the Contractor in the execution of the
Works.
Contractor’s Representative means the natural person named by the
Contractor in the Contract or appointed by the Contractor under
Sub-Clause 4.3 (Contractor’s Representative), who acts on behalf of
the Contractor.
Cost means all expenditure reasonably incurred (or to be incurred)
by the Contractor in performing the Contract, whether on or off the
Site, including taxes, overheads and similar charges, but does not
include profit. Where the Contractor is entitled under a Sub-Clause of
these Conditions to payment of Cost, it shall be added to the
Contract Price.
Cost Plus Profit means Cost plus the applicable percentage for profit
stated in the Contract Data (if not stated, five per cent (5%)). Such
percentage shall only be added to Cost, and Cost Plus Profit shall
only be added to the Contract Price where the Contractor is entitled
under a Sub-Clause of these Conditions to payment of Cost Plus
Profit.
Country means the country in which the Site (or most of it) is
located, where the Permanent Works are to be executed.
DAAB or Dispute Avoidance/Adjudication Board means the sole
member or three members (as the case may be) so named in the
Contract, or appointed under Sub-Clause 21.1 (Constitution of the
DAAB) or Sub-Clause 21.2 (Failure to Appoint DAAB Member(s)).
Date of Completion means the date stated in the Taking-Over
Certificate issued by the Engineer; or, if the last paragraph of Sub-
Clause 10.1 (Taking Over the Works and Sections) applies, the date on
which the Works or Section are deemed to have been completed in
accordance with the Contract; or, if Sub-Clause 10.2 (Taking Over
Parts) or Sub-Clause 10.3. (Interference with Tests on Completion)
applies, the date on which the Works or Section or Part are deemed
to have been taken over by the Employer.
Defects Notification Period or DNP means the period for notifying
defects and/or damage in the Works or a Section or a Part (as the
case may be) under Sub-Clause 11.1 (Completion of Outstanding Work
and Remedying Defects), as stated in the Contract Data (if not stated,
one year), and as may be extended under Sub-Clause 11.3 (Extension
of Defects Notification Period). This period is calculated from the Date
of Completion of the Works or Section or Part.
Delay Damages means the damages for which the Contractor shall
be liable under Sub-Clause 8.8 (Delay Damages) for failure to comply
with Sub-Clause 8.2 (Time for Completion).
Dispute means any situation where:
(a) one Party makes a claim against the other Party (which may
be a Claim, as defined in these Conditions, or a matter to be
determined by the Engineer under these Conditions, or
otherwise);
(b) the other Party (or the Engineer under Sub-Clause 3.7.2
(Engineer’s Determination) rejects the claim in whole or in
part; and
(c) the first Party does not acquiesce (by giving a NOD under
Sub-Clause 3.7.5 (Dissatisfaction with Engineer’s
determination) or otherwise),
provided that a failure by the other Party (or the Engineer) to oppose
or respond to the claim, in whole or in part, may constitute a
rejection if, in the circumstances, the DAAB or the arbitrator(s), as
the case may be, deem it reasonable for it to do so.
Drawings means the drawings of the Works included in the Contract,
and any additional and modified drawings issued by (or on behalf of)
the Employer in accordance with the Contract.
Employer means the person named as the Employer in the Contract
Data and the legal successors in title to this person.
Employer’s Equipment means the apparatus, equipment, machinery,
construction plant and/or vehicles (if any) to be made available by
the Employer for the use of the Contractor under Sub-Clause 2.6
(Employer- Supplied Materials and Employer’s Equipment) but it does
not include Plant that has not been taken over under Clause 10
(Employer’s Taking Over).
Employer’s Personnel means the Engineer, the Engineer’s
Representative (if appointed), the assistants described in Sub-Clause
3.4 (Delegation by the Engineer) and all other staff, labour and other
employees of the Engineer and of the Employer engaged in fulfilling
the Employer’s obligations under the Contract; and any other
personnel identified as Employer’s Personnel, by a Notice from the
Employer or the Engineer to the Contractor.
Employer-Supplied Materials means the materials (if any) to be
supplied by the Employer to the Contractor under Sub-Clause 2.6
(Employer-Supplied Materials and Employer’s Equipment).
Engineer means the person named in the Contract Data appointed
by the Employer to act as the Engineer for the purposes of the
Contract, or any replacement appointed under Sub-Clause 3.6
(Replacement of the Engineer).
Engineer’s Representative means the natural person who may be
appointed by the Engineer under Sub-Clause 3.3 (Engineer’s
Representative).
Exceptional Event means an event or circumstance as defined in Sub-
Clause 18.1 (Exceptional Events).
Extension of Time or EOT means an extension of the Time for
Completion under Sub-Clause 8.5 (Extension of Time for Completion).
FIDIC means the Fédération Internationale des Ingénieurs-Conseils,
the International Federation of Consulting Engineers.
Goods means Contractor’s Equipment, Materials, Plant and
Temporary Works, or any of them as appropriate.
Interim Payment Certificate or IPC means a Payment Certificate
issued by the Engineer for an interim payment under Sub-Clause 14.6
(Issue of IPC).
Laws means all national (or state or provincial) legislation, statutes,
acts, decrees, rules, ordinances, orders, treaties, international law
and other laws, and regulations and by-laws of any legally
constituted public authority.
Letter of Acceptance means the letter of formal acceptance, signed
by the Employer, of the Letter of Tender, including any annexed
memoranda comprising agreements between and signed by both
Parties. If there is no such letter of acceptance, the expression
‘Letter of Acceptance’ means the Contract Agreement and the date
of issuing or receiving the Letter of Acceptance means the date of
signing the Contract Agreement.
Materials means things of all kinds (other than Plant), whether on
the Site or otherwise allocated to the Contract and intended to form
or forming part of the Permanent Works, including the supply-only
materials (if any) to be supplied by the Contractor under the
Contract.
Notice means a written communication identified as a Notice and
issued in accordance with Sub-Clause 1.3 (Notices and Other
Communications).
Notice of Dissatisfaction or NOD means the Notice one Party may
give to the other Party if it is dissatisfied, either with an Engineer’s
determination under Sub-Clause 3.7 (Agreement or Determination) or
with a DAAB’s decision under Sub-Clause 21.4 (Obtaining DAAB’s
Decision).
Part means a part of the Works or part of a Section (as the case may
be) that is used by the Employer and deemed to have been taken
over under Sub-Clause 10.2 (Taking Over Parts).
Party means the Employer or the Contractor, as the context
requires. Parties means both the Employer and the Contractor.
Payment Certificate means a payment certificate issued by the
Engineer under Clause 14 (Contract Price and Payment).
Performance Certificate means the certificate issued by the Engineer
(or deemed to be issued) under Sub-Clause 11.9 (Performance
Certificate).
Performance Security means the security under Sub-Clause 4.2
(Performance Security).
Permanent Works means the works of a permanent nature that are
to be executed by the Contractor under the Contract.
Plant means the apparatus, equipment, machinery and vehicles
(including any components) whether on the Site or otherwise
allocated to the Contract and intended to form or forming part of
the Permanent Works.
Programme means a detailed time programme prepared and
submitted by the Contractor to which the Engineer has given (or is
deemed to have given) a Notice of No-objection under Sub-Clause
8.3 (Programme).
Review means examination and consideration by the Engineer of a
Contractor’s submission in order to assess whether (and to what
extent) it complies with the Contract and/or with the Contractor’s
obligations under or in connection with the Contract.
Schedules means the document(s) entitled schedules prepared by
the Employer and completed by the Contractor, as attached to the
Letter of Tender and included in the Contract. Such document(s) may
include data, lists and schedules of payments and/or rates and prices,
and guarantees.
Site means the places where the Permanent Works are to be
executed and to which Plant and Materials are to be delivered, and
any other places specified in the Contract as forming part of the Site.
Special Provisions means the document (if any) entitled special
provisions that constitutes Part B of the Particular Conditions.
Specification means the document entitled specification included in
the Contract, and any additions and modifications to the
specification in accordance with the Contract. Such document
specifies the Works.
Taking-Over Certificate means a certificate issued (or deemed to be
issued) by the Engineer in accordance with Clause 10 (Employer’s
Taking Over).
Temporary Works means all temporary works of every kind (other
than Contractor’s Equipment) required on Site for the execution of
the Works.
Tender means the Letter of Tender, the Contractor’s Proposal, the JV
Undertaking (if applicable), and all other documents that the
Contractor submitted with the Letter of Tender, as included in the
Contract.
Tests after Completion means the tests (if any) that are stated in the
Specification and which are carried out in accordance with the
Special Provisions after the Works or a Section (as the case may be)
are taken over under Clause 10 (Employer’s Taking Over).
Tests on Completion means the tests that are specified in the
Contract or agreed by both Parties or instructed as a Variation, and
which are carried out under Clause 9 (Tests on Completion) before
the Works or a Section (as the case may be) are taken over under
Clause 10 (Employer’s Taking Over).
Time for Completion means the time for completing the Works or a
Section (as the case may be) under Sub-Clause 8.2 (Time for
Completion), as stated in the Contract Data as may be extended
under Sub-Clause 8.5 (Extension of Time for Completion), calculated
from the Commencement Date.
Unforeseeable means not reasonably foreseeable by an experienced
contractor by the Base Date.
Variation means any change to the Works that is instructed as a
variation under Clause 13 (Variations and Adjustments).
Works mean the Permanent Works and the Temporary Works, or
either of them as appropriate.
 CLAIMS

A claim is an assertion of a Party’s right under the contract or at law. If

the contract is a well-drafted construction-industry form of contract,
such as the FIDIC contracts, the circumstances under which either Party
may make a claim and the compensation to which they are entitled will
be clearly set out, so it is unusual to have to resort to a claim under law
under such circumstances.
Claims are typically associated with the allocation of risk under the
terms of the contract, risk being the occurrence of something that could
not be foreseen when the Contract was entered into. The Contract
defines the risk events for which the Employer takes responsibility,
whereas the Contractor is responsible for certain specifically defined
risks. All other risks remain with the Contractor.
The Contract also defines the compensation to be awarded to the other
Party if a risk event affects them adversely. Typically, under FIDIC, Claims
will be for the following compensation:
Payment for additional or changed work.
Extensions of time.
Recovery of Costs for prolongation associated with extensions
of time.
Recovery of Costs caused by disruption.
Recovery of Costs for acceleration.
Delay damages.
 Recovery of Costs arising from various defaults by the
Contractor.
An extension of the Defects Notification Period.
In order to be compensated for a risk event, the Party seeking
compensation is obliged to submit a Claim. The Claim should be
submitted firstly, within the time frame stipulated in the Contract and
secondly, be submitted in such a way and contain sufficient detail to
justify to the Engineer and the other Party that an award should be
made and, additionally, the resulting amount of compensation.

Changes since 1999

Many readers will be familiar with the 1999 editions of the FIDIC
contracts and will wish to know what has changed in the 2017 editions.
In some respects, the new editions are quite similar, especially in terms
of layout, clause numbering and overall clause content; however, in
other respects, there have been significant changes. The major changes
are outlined below.
1. The Red Book now has 106 pages of General Conditions as
opposed to the 62 pages in the 1999 Edition; the Yellow and
Silver Books have a similarly increased number of pages. The
increased volume is said by FIDIC to bring greater clarity and
include more procedures to be followed as a matter of
contract.
2. The word ‘Claim’ is now defined as ‘a request or assertion by
either Party to the other Party for an entitlement of relief under
any Clause of these Conditions or otherwise in connection with,
or arising out of, the Contract or the execution of the Works’.
3. The term ‘No-objection’ has been introduced and defined.
4. ‘Notice’ is now formally defined as ‘a written communication
identified as a Notice and issued in accordance with Sub-Clause
1.3 (Notices and Other Communications)’.
5. There are many more requirements for the participants to
submit Notices.
6. A Notice of Dissatisfaction may be issued by either Party if they
are dissatisfied with an Engineer’s determination.
7. There are more detailed requirements for the Contractor’s
Programmes, including programmes to show actual progress.
8. Advance-warning provisions have been included.
9. The procedures for evaluating and agreeing Variations are
much more prescriptive.
10. The types of event previously included under the Employer’s
Risks and Force Majeure clauses have been consolidated into a
single clause: ‘Exceptional Events’, which reflects the previous
similarities between these clauses.
11. Under Sub-Clause 3.7 (Agreement or Determination), if the
Engineer does not give Notice of agreement or rejection of a
Claim within 42 days, the Engineer shall be deemed to have
given a Notice rejecting the Claim.
12. The procedure to be followed for Employer’s and Contractor’s
Claims is now dealt with in both cases under Clause 20
(Employer’s and Contractor’s Claims).
13. Specific provisions for the requirements of Claim submissions
are included under Sub-Clause 20.2.4 (Fully detailed Claim).
 14. Under Sub-Clause 20.2.4 (Fully detailed Claim), the Claim
submission period has been extended from 42 days to 84 days,
but submission of a statement of the contractual and/or other
legal basis of the Claim has now become a condition precedent
to entitlement.
15. The provisions for dealing with disputes have been separated
from the Claims provisions and are included in a new Clause 21
(Disputes and Arbitration). This reinforces the fact that Claims
are not disputes and only become so if agreement cannot be
reached and a Party gives a Notice of Dispute.
16. The former Dispute Adjudication Board (DAB) is now referred
to as the Dispute Avoidance/Adjudication Board (DAAB) to
reflect enhanced requirements for the DAAB to be proactive in
dispute avoidance.
17. All Dispute Avoidance/Adjudication Boards are now standing
boards.
18. There are many more ‘deeming’ provisions, whereby if a Party
does not act in accordance with an obligation, the provisions
will state that a specific action is deemed to have taken place.
19. FIDIC has introduced several abbreviations and acronyms into
the wording of the conditions, which, in the author’s opinion,
reduces the ease of understanding for the reader.
On the face of it, if all the new procedures and requirements are to be
complied with, the 2017 forms of contract require more contract
administration but, if we think about things for a moment, this is not
necessarily the case.
Industry reports by organisations that deal with disputes have for
several years cited contract-management failure and/or administration
failure – failure to serve notices required by the contract and failure of
the Parties to understand and comply with their contractual obligations
– as leading causes of time-consuming and costly disputes. Another
notable factor recorded was poor levels of skill and/or experience when
dealing with contractual matters. FIDIC also monitors the causes of
disputes and what is happening within the industry and it came to
similar conclusions. Many of the changes have therefore been
introduced by FIDIC as a reaction to this situation and because feedback,
coupled with the number of disputes, showed that the Parties and those
appointed to administer the contracts simply failed to act in the way
that the 1999 contracts prescribed. For example, contractors did not
submit claims within 42 days of the event giving rise to the claim and
Engineers did not respond to claims within 42 days; this occurred
possibly because there were no consequences for failure to do so.
Claims were therefore often left until late in the project and in many
cases became difficult to resolve, resulting in end-of-project disputes,
which required additional and costly resources to resolve. The 2017
editions of FIDIC therefore require the same amount of contract
administration as the previous editions did if they are managed to an
appropriate standard, but because the participants have often failed in
the past to manage matters correctly, FIDIC has now introduced more
prescriptive procedures for administration and more consequences for
failure to carry out obligations. This may be illustrated by the
significantly increased number of obligations or options for the Parties
and/or the Engineer to give Notices. Table 1 compares the number of
requirements or options for Notices to be given between the 1999 and
2017 editions of the Red Book.
1999 2017
The Contractor: 33 51
The Engineer or 19 64
Employer:
Either Party: 6 8
58 123
Table 1: Notice provisions for the 1999 and 2017 Red Books
Table 1 demonstrates that not only have the overall requirements and
options for the giving of Notices more than doubled but also that the
Engineer’s and/or Employer’s requirements have increased by almost
two-and-a-half times. This huge increase is a reaction to the behaviour of
a significant number of Engineers who did not comply with their
obligations and/or did not follow the contractual procedures set out in
the 1999 editions. Most of the deeming provisions introduced in 2017 are
also related to situations whereby the Engineer fails to take action;
FIDIC has now introduced consequences for such failures.
The cost of arbitration is currently between US$150,000 and US$200,000
per day, so with an average arbitration taking around ten days, we are
looking at a cost between US$1.5M and US$2.0M to resolve disputes
caused by contract-administration failures. The Dispute Review Board
Foundation calculates that this may be 10–15% of project value, so it is
not difficult to work out that if a project ends up in dispute, any profit
margins will be eaten up by the dispute itself. Isn’t it therefore
preferable to spend a relatively small amount on employing the
necessary skilled and experienced resources to ensure that the contract
is managed and administered efficiently by all participants from the very
outset of the project? Apart from the financial risks of failing to employ
adequately qualified and experienced personnel to manage contractual
matters, projects that are efficiently managed from a contractual point
of view tend to be the ones that are finished on programme, on budget
and to the required quality by participants who act collaboratively to
resolve problems as they occur.
 Section 2
Employer's Claims
 INTRODUCTION

The Red, Yellow and Silver Books provide entitlement to the Employer
to Claim from the Contractor as a result of the following events or
circumstances:
Additional Costs incurred as a result of rejection of design,
Plant, Materials or workmanship.
Costs incurred as a result of employing others to carry out
remedial work in a case where the Contractor fails to comply
with obligations to carry out such work.
Costs incurred as a result of the Contractor’s revised methods
to recover progress.
Additional Costs as a result of retesting if the Works, or a
Section, fail to pass the Tests on Completion or the Tests after
Completion.
A reduction to the Contract Price as a result of failure to pass
Tests on Completion or Tests after Completion.
Delay damages.
Costs incurred as a result of employing others to carry out
remedial work in a case where the Contractor fails to remedy
Defects.
An extension of the Defects Notification Period in the case that
the Works, Section or a major item of Plant cannot be used for
 the purposes for which they are intended by reason of a defect
or damage after taking over.
Recovery of losses or damages incurred by the Employer and
any extra Costs of completing the Works after Termination by
the Employer due to the Contractor’s default.
This section examines each of the clauses that provide the Employer
with entitlement to make a Claim.
 COMPLIANCE WITH LAWS

Applicable to the Red, Yellow and Silver Books.

References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow and Silver Books.
Sub-Clause 1.13 of the Red and Yellow Books and 1.12 of the Silver Book
(Compliance with Laws) provides that:

The Contractor and the Employer shall, in performing the Contract,

comply with all applicable Laws. Unless otherwise stated in the
Specification:
(a) the Employer shall have obtained (or shall obtain) the
planning, zoning or building permit or similar permits,
permissions, licences and/or approvals for the
Permanent Works, and any other permits, permissions,
licences and/or approvals described in the Specification
as having been (or being) obtained by the Employer. The
Employer shall indemnify and hold the Contractor
harmless against and from the consequences of any
delay or failure to do so, unless the failure is caused by
the Contractor’s failure to comply with sub-paragraph
(c) below;
(b) the Contractor shall give all notices, pay all taxes, duties
and fees, and obtain all other permits, permissions,
licences and/or approvals, as required by the Laws in
 relation to the execution of the Works. The Contractor
shall indemnify and hold the Employer harmless against
and from the consequences of any failure to do so unless
the failure is caused by the Employer’s failure to comply
with Sub-Clause 2.2 [Assistance];

(c) within the time(s) stated in the Specification the

Contractor shall provide such assistance and all
documentation, as described in the Specification or
otherwise reasonably required by the Employer, so as to
allow the Employer to obtain any permit, permission,
licence or approval under sub-paragraph (a) above; and

(d) the Contractor shall comply with all permits,

permissions, licences and/or approvals obtained by the
Employer under sub-paragraph (a) above …

If the Employer incurs additional costs as a result of the

Contractor’s failure to comply with:

(i) sub-paragraph (c) above; or

(ii) sub-paragraph (b) or (d) above, provided that the

Employer shall have complied with Sub-Clause 2.2
[Assistance],

the Employer shall be entitled subject to Sub-Clause 20.2 [Claims For

Payment and/or EOT] to payment of these costs by the Contractor.

Any construction project will be required to comply with the Laws of the
Country, including local authority and municipality by-laws, building
regulations, codes and such like. Sub-Clause 1.13 requires the Parties to
obtain the necessary permits, permissions, licences, approvals and the
like. Broadly speaking, the Employer is obliged to provide such matters
in respect of the project as a whole and the Contractor is obliged to deal
with matters in relation to the execution of the works.
Such matters are often complicated and the procedures to be followed
by the authorities may be onerous, so inevitably the Parties will need to
cooperate to enable each to carry out their obligations. The provisions
require the Contractor to provide the assistance and documentation
described in the Specification or the Employer’s Requirements and also
what is reasonably required by the Employer to allow the Employer to
obtain any necessary permit, permission, licence or approval.
If the Contractor fails to carry out their obligations and provided that
the Employer has complied with the Employer’s obligations to assist the
Contractor in doing so and the Employer incurs additional Costs as a
result of the Contractor’s failure, the Employer is entitled to payment of
these Costs by the Contractor.
 CONTRACTOR’S DOCUMENTS

Applicable to the Yellow and Silver Books.

Sub-Clause 5.2 (Contractor’s Documents), Sub-Clause 5.2.2 (Review by
Engineer) provides that:
The Engineer shall, within the Review Period, give a Notice to the
Contractor:
(a) of No-objection (which may include comments
concerning minor matters which will not substantially
affect the Works); or
(b) that the Contractor’s Document fails (to the extent
stated) to comply with the Employer’s Requirements
and/or the Contract, with reasons ...

If the Engineer instructs that further Contractor’s Documents are

reasonably required to demonstrate that the Contractor’s design
complies with the Contract, the Contractor shall prepare and
submit them promptly to the Engineer at the Contractor’s cost.

If the Engineer gives a Notice under sub-paragraph (b) above, the

Contractor shall:

(i) revise the Contractor’s Document;

(ii) resubmit it to the Engineer for Review in accordance with
this Sub-Clause 5.2.2, and the Review Period shall be
calculated from the date that the Engineer receives it …
 If the Employer incurs additional costs as a result of such
resubmission and subsequent Review, the Employer shall be entitled
subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to
payment by the Contractor of the costs reasonably incurred.

Sub-Clause 5.2 obliges the Contractor to prepare the Contractor’s

Documents specified in the Employer’s Requirements, those documents
required to be submitted by the Contractor for regulatory approvals,
the as-built records and the operation and maintenance manuals. The
Employer’s Requirements should also specify those documents that are
to be submitted to the Engineer for Review and the Contractor should
submit these documents by way of a Notice.
The Engineer has the right to give Notice that a Contractor’s Document
fails to comply with the Employer’s Requirements or the Contract, or to
instruct that further Contractor’s Documents are reasonably required to
demonstrate that the Contractor’s design complies with the Contract.
After receiving such a Notice or instruction, the Contractor is obliged to
revise the Contractor’s Document(s) and resubmit for Review.
If the Employer incurs additional Costs as a result of such resubmission
and subsequent Review, the Employer shall be entitled to Claim for the
Costs reasonably incurred.
 TESTING BY THE CONTRACTOR

Applicable to the Red, Yellow and Silver Books.

References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow and Silver Books.
Sub-Clause 7.4 (Testing by Contractor) provides that:
This Sub-Clause shall apply to all tests specified in the Contract,
other than the Tests after Completion (if any).
The Contractor shall provide all apparatus, assistance, documents
and other information, temporary supplies of electricity and water,
equipment, fuel, consumables, instruments, labour, materials, and
suitably qualified, experienced and competent staff, as are
necessary to carry out the specified tests efficiently and properly. All
apparatus, equipment and instruments shall be calibrated in
accordance with the standards stated in the Specification or defined
by applicable Laws and, if requested by the Engineer, the Contractor
shall submit calibration certificates before carrying out testing.
The Contractor shall give a Notice to the Engineer, stating the time
and place for the specified testing of any Plant, Materials and other
parts of the Works. This Notice shall be given in reasonable time,
having regard to the ___location of the testing, for the Employer’s
Personnel to attend …

If the Contractor causes any delay to specified tests (including

varied or additional tests) and such delay causes the Employer to
 incur costs, the Employer shall be entitled subject to Sub-Clause 20.2
[Claims For Payment and/or EOT] to payment of these costs by the
Contractor.
The Contractor is responsible for arranging all testing included in the
Contract, including the provision of everything necessary to carry out
the testing and giving Notice to the Engineer of the ___location and time
that the testing will take place. The Engineer has the option to attend
the testing and the Employer may elect to send their own personnel or
third-party experts to attend the testing.
Testing may take place on Site, at places providing raw materials such as
quarries and, in the case of Plant, equipment or Goods being
manufactured for the Works, at factories, at the manufacturer’s own
premises or at third-party testing facilities. Some of these locations may
be remote from the Site or even in different countries. In such cases, it is
likely that the Employer will incur Costs for travel and accommodation
expenses for their personnel and, in the case of third parties, will
probably need to make specific arrangements regarding the timing and
___location of the tests. If the Contractor causes delay to the tests and this
causes the Employer to incur costs, the Employer is entitled to Claim for
payment of these Costs by the Contractor.
 DEFECTS AND REJECTION

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 7.5 (Defects and Rejection) provides that:

If, as a result of an examination, inspection, measurement or

testing, any Plant, Materials, Contractor’s design (if any) or
workmanship is found to be defective or otherwise not in
accordance with the Contract, the Engineer shall give a Notice to
the Contractor describing the item of Plant, Materials, design or
workmanship that has been found to be defective. The Contractor
shall then promptly prepare and submit a proposal for necessary
remedial work …
If the Contractor fails to promptly submit a proposal (or revised
proposal) for remedial work, or fails to carry out the proposed
remedial work to which the Engineer has given (or is deemed to
have given) a Notice of No-objection, the Engineer may:
(a) instruct the Contractor under sub-paragraph (a) and/or (b)
of Sub-Clause 7.6 [Remedial Work]; or
(b) reject the Design (in the Yellow and Silver Books), Plant,
Materials, Contractor’s design (if any) (Red Book) or
workmanship by giving a Notice to the Contractor, with
reasons, in which case sub-paragraph (a) of Sub-Clause 11.4
[Failure to Remedy Defects] shall apply.
 After remedying defects in any Plant, Materials, design (if any) or
workmanship, if the Engineer requires any such items to be
retested, the tests shall be repeated in accordance with Sub-Clause
7.4 [Testing by the Contractor] at the Contractor’s risk and cost. If
the rejection and retesting cause the Employer to incur additional
costs, the Employer shall be entitled subject to Sub-Clause 20.2
[Claims For Payment and/or EOT] to payment of these costs by the
Contractor.

The Engineer is entitled to give Notice to the Contractor in the case of

any Design, Plant, Materials or workmanship not being in accordance
with the Contract and require the Contractor to submit a proposal for
remedial work or corrective action.
If the Contractor fails to submit a proposal or fails to carry out the
remedial work consented to by the Engineer, the Engineer may instruct
the Contractor to repair, remedy, remove from Site, replace or re-
execute the non-compliant items, work or the like. The Engineer may
also reject the non-compliant items, work or the like.
After the rejected Design, Plant, Materials or workmanship has been
rectified, it is possible that such items will require to be retested. If the
rejection and retesting cause the Employer to incur additional Costs, the
Employer shall be entitled to payment of such Costs by the Contractor.
 REMEDIAL WORK

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 7.6 (Remedial Work) provides that:

In addition to any previous examination, inspection, measurement

or testing, or test certificate or Notice of No-objection by the
Engineer, at any time before the issue of the Taking-Over Certificate
for the Works the Engineer may instruct the Contractor to:
(a) repair or remedy (if necessary, off the Site), or remove
from the Site and replace any Plant or Materials which
are not in accordance with the Contract;

(b) repair or remedy, or remove and re-execute, any other

work which is not in accordance with the Contract; …

(c) carry out any remedial work which is urgently required

for the safety of the Works, whether because of an
accident, unforeseeable event or otherwise.

The Contractor shall comply with the instruction as soon as

practicable and not later than the time (if any) specified in the
instruction, or immediately if urgency is specified under sub-
paragraph (c) above ...

If the Contractor fails to comply with the Engineer’s instruction, the

Employer may (at the Employer’s sole discretion) employ and pay
other persons to carry out the work. Except to the extent that the
 Contractor would have been entitled to payment for work under
this Sub-Clause, the Employer shall be entitled subject to Sub-Clause
20.2 [Claims For Payment and/or EOT] to payment by the Contractor
of all costs arising from this failure. This entitlement shall be
without prejudice to any other rights the Employer may have, under
the Contract or otherwise.
The Engineer has the authority to instruct the Contractor to repair,
remedy, remove from the Site or replace any Plant or Materials and to
repair, remedy or re-execute work that is not in accordance with the
Contract. The Engineer also has the authority to instruct the Contractor
to carry out work that is urgently required for the safety of the Works.
The Contractor is obliged to comply with any such instruction within the
time frame required by the instruction. If the Contractor fails to comply
with such an instruction, the Employer may employ others to carry out
the work.
If the instruction is necessary because of a reason for which the
Contractor is not responsible, such as an accident, an unforeseeable
event, an act of the Employer or the Employer’s Personnel or the like,
the Contractor is entitled to Claim for compensation from the Employer.
In the case of an instruction requiring remedial measures to be
undertaken because of the Contractor’s non-compliance with the
Contract, the Employer shall be entitled to payment by the Contractor
of all Costs arising from this failure.
 RATE OF PROGRESS

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 8.7 (Rate of Progress) provides that:

If, at any time:

(a) actual progress is too slow to complete the Works or a
Section (if any) within the relevant Time for Completion;
and/or
(b) progress has fallen (or will fall) behind the Programme
(or the initial programme if it has not yet become the
Programme) under Sub-Clause 8.3 [Programme],

other than as a result of a cause listed in Sub-Clause 8.5 [Extension

of Time for Completion], then the Engineer may instruct the
Contractor to submit, under Sub-Clause 8.3 [Programme], a revised
programme describing the revised methods which the Contractor
proposes to adopt in order to expedite progress and complete the
Works or a Section (if any) within the relevant Time for Completion.

Unless the Engineer gives a Notice to the Contractor stating

otherwise, the Contractor shall adopt these revised methods, which
may require increases in the working hours and/or in the numbers
of Contractor’s Personnel and/or the Goods, at the Contractor’s risk
and cost. If these revised methods cause the Employer to incur
additional costs, the Employer shall be entitled subject to Sub-
 Clause 20.2 [Claims For Payment and/or EOT] to payment of these
costs by the Contractor, in addition to Delay Damages (if any) …

It is not unusual for the Contractor’s progress to fall behind the

programme. In such circumstances and provided that there are no
extension-of-time Claims that remain unresolved that may extend the
time to the extent of the delay, the Engineer may instruct the
Contractor to submit a revised programme (often referred to as a
‘recovery programme’) to demonstrate how it is intended to achieve the
prevailing Time for Completion. The Contractor may propose to mobilise
additional resources, work longer shifts, work at weekends, or a
combination of such acceleration measures.
Depending on the Employer’s agreement with the Engineer and any
other consultants or contractors who have been engaged by the
Employer for the project, such actions may cause the Employer to incur
additional Costs, possibly because of the deployment of additional
personnel or because existing personnel will be required to work longer
hours. In such a case, the Employer is entitled to Claim the additional
Costs from the Contractor.
 DELAY DAMAGES

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 8.8 (Delay Damages) provides that:

If the Contractor fails to comply with Sub-Clause 8.2 [Time for

Completion], the Employer shall be entitled subject to Sub-Clause
20.2 [Claims For Payment and/or EOT] to payment of Delay Damages
by the Contractor for this default. Delay Damages shall be the
amount stated in the Contract Data, which shall be paid for every
day which shall elapse between the relevant Time for Completion
and the relevant Date of Completion of the Works or Section. The
total amount due under this Sub-Clause shall not exceed the
maximum amount of Delay Damages (if any) stated in the Contract
Data.

These Delay Damages shall be the only damages due from the
Contractor for the Contractor’s failure to comply with Sub-Clause
8.2 [Time for Completion], other than in the event of termination
under Sub-Clause 15.2 [Termination for Contractor’s Default] before
completion of the Works. These Delay Damages shall not relieve the
Contractor from the obligation to complete the Works, or from any
other duties, obligations or responsibilities which the Contractor
may have under or in connection with the Contract …

Delay damages are a right given to the Employer to Claim for

compensation in the case that the Contractor fails to complete the
project by the Time for Completion, which may or may not have been
adjusted for any extension-of-time Claims. The amount of damages is to
be calculated for each day of delay at the rate per day stated in the
Contract Data. It is usual that a maximum amount of delay damages is
also included in the Contract Data.
It is a common misconception that in a case of late completion, the
Engineer may just make a deduction for such damages when calculating
the value of Interim Payment Certificates. This is not the case and a
calculation of the damages for each deduction must be prepared and
submitted as a Claim by either the Employer or the Engineer before any
such deduction may be made.
 DELAYED TESTS

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 9.2 (Delayed Tests) provides that:

… If the Tests on Completion are unduly delayed by the Contractor,

the Engineer may by giving a Notice to the Contractor require the
Contractor to carry out the tests within 21 days after receiving the
Notice. The Contractor shall carry out the tests on such day or days
within this period of 21 days as the Contractor may fix, for which the
Contractor shall give a prior Notice to the Engineer of not less than 7
days.
If the Contractor fails to carry out the Tests on Completion within
this period of 21 days:

(a) after a second Notice is given by the Engineer to the

Contractor, the Employer’s personnel may proceed with
the tests;

(b) the Contractor may attend and witness these tests;

(c) within 28 days of these tests being completed, the

Engineer shall send a copy of the test results to the
Contractor; and

(d) if the Employer incurs additional costs as a result of such

testing, the Employer shall be entitled subject to Sub-
Clause 20.2 [Claims For Payment and/or EOT] to
 payment by the Contractor of the costs reasonably
incurred …

The Tests on Completion are required to have been successfully passed

before a Taking-Over Certificate may be issued to enable the Employer
to take over the Works or a Section.
The Contractor is required to provide a detailed test programme
showing the intended timing and resources required for the tests. The
Contractor is further required to give a Notice of the date after which
the Contractor will be ready to carry out each of the Tests on
Completion.
If the Contractor delays the testing unduly, the Engineer may give
Notice requiring the tests to be carried out within 21 days. If the
Contractor fails to carry out the tests within this period, the Employer’s
Personnel may proceed with the tests.
In such a situation, it is likely that the Employer will incur additional
Costs and if this is the case, the Employer is entitled to payment by the
Contractor of the Costs reasonably incurred.
FAILURE TO PASS TESTS ON COMPLETION

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 9.4 (Failure to Pass Tests on Completion) provides that:

If the Works, or a Section, fail to pass the Tests on Completion

repeated under Sub-Clause 9.3 [Retesting], the Engineer shall be
entitled to:
(a) order further repetition of Tests on Completion under
Sub-Clause 9.3 [Retesting];

(b) reject the Works if the effect of the failure is to deprive

the Employer of substantially the whole benefit of the
Works in which event the Employer shall have the same
remedies as are provided in sub-paragraph (d) of Sub-
Clause 11.4 [Failure to Remedy Defects];
(c) reject the Section if the effect of the failure is that the
Section cannot be used for its intended purpose(s)
under the Contract, in which event the Employer shall
have the same remedy as is provided in sub-paragraph
(c) of Sub-Clause 11.4 [Failure to Remedy Defects]; or

(d) issue a Taking-Over Certificate, if the Employer so

requests.
In the event of sub-paragraph (d) above, the Contractor shall then
proceed in accordance with all other obligations under the
 Contract, and the Employer shall be entitled subject to Sub-Clause
20.2 [Claims For Payment and/or EOT] to payment by the Contractor
or a reduction in the Contract Price as described under sub-
paragraph (b) of Sub-Clause 11.4 [Failure to Remedy Defects],
respectively. This entitlement shall be without prejudice to any
other rights the Employer may have, under the Contract or
otherwise.
This clause is applicable to a situation where the Tests on Completion
demonstrate that the Contractor has not achieved the performance
specification included in the Contract. It may also be applicable to
situations where the Contractor has provided or constructed something
that is otherwise not in accordance with the Contract. In such a
situation, the Contract provides the Engineer or Employer with three
courses of action:
Repeat the tests if applicable.
Reject the Works or Section, in which case the Contractor is
obliged to rectify the failure, and if such rectification does not
take place, the Employer may employ others to do so at the
cost of the Contractor.
Accept the work as completed and take over the Works.
There may be valid reasons that would make it more expedient for the
Employer to accept the Works, Section or part of the Works, even if it is
not in accordance with the Contract. In such a situation, however, the
Employer would clearly not be obtaining the full value of what they are
obliged to pay within the Contract Price. This clause therefore provides
that the Employer is entitled to payment from the Contractor, or to a
reduction in the Contract Price, as compensation for the reduced value.
Sub-Clause 11.4 defines the amount that the Employer may Claim as
being ‘in the amount as shall be appropriate to cover the reduced value
to the Employer as a result of this failure’. This could possibly be
established by calculating the Cost of the remedial work that the
Contractor would otherwise have been obliged to carry out if the
Employer had not elected to accept the work.
 EXTENSION OF THE DEFECTS
NOTIFICATION PERIOD

Applicable to the Red, Yellow and Silver Books.

FIDIC uses the following abbreviation in this Sub-Clause, which is defined
as follows:
DNP – Defects Notification Period.
Sub-Clause 11.3 (Extension of the Defects Notification Period) provides
that:

The Employer shall be entitled to an extension of the DNP for the

Works, or a Section or a Part:
(a) if and to the extent that the Works, Section, Part or a
major item of Plant (as the case may be, and after
taking over) cannot be used for the intended purpose(s)
by reason of a defect or damage which is attributable to
any of the matters under sub-paragraphs (a) to (d) of
Sub-Clause 11.2 [Cost of Remedying Defects]; and

(b) subject to Sub-Clause 20.2 [Claims For Payment and/or

EOT].

However, a DNP shall not be extended by more than a period of two

years after the expiry of the DNP stated in the Contract Data.

If delivery and/or erection of Plant and/or Materials was suspended

under Sub-Clause 8.9 [Employer’s Suspension] (other than where
 the cause of such suspension is the responsibility of the Contractor)
or Sub-Clause 16.1 [Suspension by Contractor], the Contractor’s
obligations under this Clause shall not apply to any defects or
damage occurring more than two years after the DNP for the
Works, of which the Plant and/or Materials form part, would
otherwise have expired.
This clause considers a situation whereby the Works, a Section or a
major item of Plant becomes defective during the Defects Notification
Period as a result of something for which the Contractor is responsible
and prevents the Employer from using it as intended. Whilst the
Contract obliges the Contractor to make good the defect, the Employer
is given the comfort of having the Defects Notification Period extended
for the defective Works, Section or item of Plant in question. An
equitable period would be the time included in the Contract for the
original Defects Notification Period, applied from the time that the
defect was remedied. The clause also imposes restrictions on the time
this option may be applied to Plant and/or Materials that were affected
by a suspension of work.
If the Employer wishes to invoke this provision, they are obliged to
submit a Claim for an extension of the Defects Notification Period.
 FAILURE TO REMEDY DEFECTS

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 11.4 (Failure to Remedy Defects) provides that:

If the remedying of any defect or damage under Sub-Clause 11.1

[Completion of Outstanding Works and Remedying Defects] is
unduly delayed by the Contractor, a date may be fixed by (or on
behalf of) the Employer, on or by which the defect or damage is to
be remedied. A Notice of this fixed date shall be given to the
Contractor by (or on behalf of) the Employer, which Notice shall
allow the Contractor reasonable time (taking due regard of all
relevant circumstances) to remedy the defect or damage.
If the Contractor fails to remedy the defect or damage by the date
stated in this Notice and this remedial work was to be executed at
the cost of the Contractor under Sub-Clause 11.2 [Cost of Remedying
Defects], the Employer may (at the Employer’s sole discretion):
(a) carry out the work or have the work carried out by
others (including any retesting), in the manner required
under the Contract and at the Contractor’s cost, but the
Contractor shall have no responsibility for this work. The
Employer shall be entitled subject to Sub-Clause 20.2
[Claims For Payment and/or EOT] to payment by the
Contractor of the costs reasonably incurred by the
Employer in remedying the defect or damage;
(b) (The Red Book) accept the damaged or defective work,
in which case the Employer shall be entitled subject to
Sub-Clause 20.2 [Claims For Payment and/or EOT] to a
reduction in the Contract Price. The reduction shall be in
full satisfaction of this failure only and shall be in the
amount as shall be appropriate to cover the reduced
value to the Employer as a result of this failure;
(c) (The Yellow and Silver Books) accept the damaged or
defective work, in which case the Employer shall be
entitled subject to Sub-Clause 20.2 [Claims For Payment
and/or EOT] to:

i. payment of Performance Damages by the

Contractor in full satisfaction of this failure;
or

ii. if there is no Schedule of Performance

Guarantees under the Contract, or no
applicable Performance Damages, a
reduction in the Contract Price. The
reduction shall be in full satisfaction of this
failure only and shall be in the amount as
shall be appropriate to cover the reduced
value to the Employer as a result of this
failure;

(d) require the Engineer to treat any part of the Works

which cannot be used for its intended purpose(s) under
the Contract by reason of this failure as an omission, as
 if such omission had been instructed under Sub-Clause
13.3.1 [Variation by Instruction]; or

(e) terminate the Contract as a whole with immediate effect

(and Sub-Clause 15.2 [Termination for Contractor’s
Default] shall not apply) if the defect or damage
deprives the Employer of substantially the whole benefit
of the Works. The Employer shall then be entitled
subject to Sub-Clause 20.2 [Claims For Payment and/or
EOT] to recover from the Contractor all sums paid for
the Works, plus financing charges and any costs incurred
in dismantling the same, clearing the Site and returning
Plant and Materials to the Contractor.

The exercise of discretion by the Employer under sub-paragraph (c)

or (d) above shall be without prejudice to any other rights the
Employer may have, under the Contract or otherwise.

The Contractor is obliged to remedy defects discovered within the

Defects Notification Period within a reasonable time. If the Contractor
fails to comply with this obligation, the Employer may, by giving Notice,
fix a reasonable date by which the defect shall be remedied. If the
Contractor subsequently fails to remedy any defect for which the
Contractor is responsible, then this clause gives the Employer the
following rights:
The Employer may remedy the defect or employ others to do
so, including any retesting. In such a case the Employer is
entitled to payment by the Contractor of the Costs reasonably
incurred by the Employer in remedying the defect or damage.
The Employer may accept the damaged or defective work, in
which case, under the Red Book, the Employer shall be entitled
to a reduction in the Contract Price by an amount appropriate
to cover the reduced value to the Employer. In the case of the
Yellow and Silver Books and where a Schedule of Performance
Guarantees is included in the Contract, the Employer shall be
entitled to the payment of pre-agreed Performance Damages. If
no Schedule of Performance Guarantees is included in the
Contract, the reduction in the Contract Price shall be by an
amount appropriate to cover the reduced value to the
Employer.
The Employer may treat any part of the Works that cannot be
used for its intended purpose(s) by reason of this failure as an
omission from the Contract price.
If the defect or damage deprives the Employer of substantially
the whole benefit of the Works, the Employer may terminate
the Contract. The Employer shall then be entitled to recover
from the Contractor all sums paid for the Works, plus financing
charges and any Costs incurred in removing the Works.
 CONTRACTOR TO SEARCH FOR DEFECTS

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 11.8 (Contractor to Search) provides that:

The Contractor shall, if instructed by the Engineer, search for the

cause of any defect, under the direction of the Engineer. The
Contractor shall carry out the search on the date(s) stated in the
Engineer’s instruction or other date(s) agreed with the Engineer …
If the Contractor fails to carry out the search in accordance with this
Sub-Clause, the search may be carried out by the Employer’s
Personnel. The Contractor shall be given a Notice of the date when
such a search will be carried out and the Contractor may attend at
the Contractor’s own cost. If the defect is to be remedied at the
cost of the Contractor under Sub-Clause 11.2 [Cost of Remedying
Defects], the Employer shall be entitled subject to Sub-Clause 20.2
[Claims For Payment and/or EOT] to payment by the Contractor of
the costs of the search reasonably incurred by the Employer.

If the cause of a defect cannot be found, the Engineer may instruct the
Contractor to search for the cause. The Contractor is obliged to carry
out the search on the date specified by the Engineer, or any other
agreed date. If the Contractor fails to carry out the search, the search
may be carried out by the Employer’s Personnel.
If the defect is subsequently discovered to be the fault of the
Contractor, the Employer shall be entitled to payment by the Contractor
of the Costs of the search reasonably incurred by the Employer.
 CLEARANCE OF THE SITE

Applicable to the Red, Yellow and Silver Books.

References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow and Silver Books.
Sub-Clause 11.11 (Clearance of the Site) provides that:
Promptly after the issue of the Performance Certificate, the
Contractor shall:
(a) remove any remaining Contractor’s Equipment, surplus
material, wreckage, rubbish and Temporary Works from
the Site;
(b) reinstate all parts of the Site which were affected by the
Contractor’s activities during the execution of the
Works and are not occupied by the Permanent Works;
and

(c) leave the Site and the Works in the condition stated in
the Specification (if not stated, in a clean and safe
condition).

If the Contractor fails to comply with sub-paragraphs (a), (b) and/or

(c) above within 28 days after the issue of the Performance
Certificate, the Employer may sell (to the extent permitted by
applicable Laws) or otherwise dispose of any remaining items
 and/or may reinstate and clean the Site (as may be necessary) at the
Contractor’s cost.

The Employer shall be entitled subject to Sub-Clause 20.2 [Claims For

Payment and/or EOT] to payment by the Contractor of the costs
reasonably incurred in connection with, or attributable to, such sale
or disposal and reinstating and/or cleaning the Site, less an amount
equal to the moneys from the sale (if any).

The issue of the Performance Certificate after the Defects Notification

Period signifies the completion of the Contractor’s obligations. Once the
Performance Certificate has been issued, the Contractor is obliged to
remove any materials, rubbish and Temporary Works, carry out any
necessary reinstatement and leave the Site in a clean and safe condition.
If the Contractor fails to comply with these requirements within 28 days
of the issue of the Performance Certificate, the Employer may sell or
dispose of any remaining items and/or may reinstate and clean the Site.
The Costs reasonably incurred by the Employer in doing so may be
claimed from the Contractor after making allowance for money
recovered from the sale of any items.
 RETESTING

Applicable to the Yellow and Silver Books.

Sub-Clause 12.3 (Retesting) provides that:

Subject to Sub-Clause 12.4 [Failure to Pass Tests after Completion], if

the Works, or a Section, fail to pass the Tests after Completion:

(a) sub-paragraph (b) of Sub-Clause 11.1 [Completion of

Outstanding Work and Remedying Defects] shall apply;
and

(b) after remedying any defect or damage, Sub-Clause 11.6

[Further Tests after Remedying Defects] shall apply.

If and to the extent that this failure and retesting are attributable
to any of the matters listed in sub-paragraphs (a) to (d) of Sub-
Clause 11.2 [Cost of Remedying Defects] and cause the Employer to
incur additional costs, the Employer shall be entitled subject to Sub-
Clause 20.2 [Claims For Payment and/or EOT] to payment of these
costs by the Contractor.

Tests after Completion are required to demonstrate that the plant,

production facility or other works will perform under operating
conditions in accordance with the Contract. Such tests must be specified
in the Contract. The tests will be carried out after taking over and shall
be carried out by the Employer.
If the Works, or a Section, fail to pass the tests, then the Contractor is
obliged to remedy any defects and either Party may require that the test
be repeated to demonstrate that the remedial work has been effective.
If the defect is found to be something for which the Contractor is
responsible under the Contract, then the Employer may recover any
additional Costs incurred through retesting from the Contractor. Such
Costs may include the Cost of fuel and/or raw materials or additional
Costs for consultants, third-party inspectors or internal personnel who
are required to witness the tests. They may also include Costs incurred
due to loss of production while the additional tests were being
undertaken.
 FAILURE TO PASS TESTS AFTER
COMPLETION

Applicable to the Yellow and Silver Books.

FIDIC uses the following abbreviation in this Sub-Clause, which is defined
as follows:
DNP – Defects Notification Period.
Sub-Clause 12.4 (Failure to Pass Tests after Completion) provides that:
If:
(a) the Works, or a Section, fail to pass any or all of the
Tests after Completion; and
(b) applicable Performance Damages are set out in the
Schedule of Performance Guarantees

the Employer shall be entitled subject to Sub-Clause 20.2 [Claims For

Payment and/or EOT] to payment of these Performance Damages
by the Contractor in full satisfaction of this failure. If the Contractor
pays these Performance Damages to the Employer during the DNP,
then the Works or Section shall be deemed to have passed these
Tests after Completion …

Tests after Completion are required to demonstrate that the plant,

production facility or other works will perform under operating
conditions in accordance with the Contract and such tests must be
specified in the Contract. The tests will be carried out after taking over
and shall be carried out by the Employer.
The Contract may include an option for Performance Damages, which
means ‘the damages to be paid by the Contractor to the Employer, for the
failure to achieve the guaranteed performance of the Plant and/or the
Works or any part of the Works (as the case may be), as set out in the
Schedule of Performance Guarantees’. If Performance Damages are
included, the Employer may Claim such damages from the Contractor as
compensation for the reduced value of the Works.
 ADJUSTMENTS FOR CHANGES IN LAWS

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 13.6 (Adjustments for Changes in Laws) provides that:

Subject to the following provisions of this Sub-Clause, the Contract

Price shall be adjusted to take account of any increase or decrease
in Cost resulting from a change in:
(a) the Laws of the Country (including the introduction of
new Laws and the repeal or modification of existing
Laws);
(b) the judicial or official governmental interpretation or
implementation of the Laws referred to in sub-
paragraph (a) above;

(c) any permit, permission, licence or approval obtained by

the Employer or the Contractor under sub-paragraph (a)
or (b), respectively, of Sub-Clause 1.13 [Compliance with
Laws]; or

(d) the requirements for any permit, permission, licence

and/or approval to be obtained by the Contractor under
sub-paragraph (b) of Sub-Clause 1.13 [Compliance with
Laws],
made and/or officially published after the Base Date, which affect
the Contractor in the performance of obligations under the
 Contract. In this Sub-Clause ‘change in Laws’ means any of the
changes under sub-paragraphs (a), (b), (c) and/or (d) above.

If the Contractor suffers delay and/or incurs an increase in Cost as a

result of any change in Laws, the Contractor shall be entitled subject
to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or
payment of such Cost.

If there is a decrease in Cost as a result of any change in Laws, the

Employer shall be entitled subject to Sub-Clause 20.2 [Claims For
Payment and/or EOT] to a reduction in the Contract Price …

When the Contractor prices the work, they are obliged to include for
complying with the Laws of the Country in which the work is carried out.
The Laws of the Country include local authority or municipality by-laws
as well as statutory building regulations and codes. The requirements
may vary from country to country and possibly within the same country.
If the Laws change after the time that the Contractor prices the Works
(as defined by the Base Date) and the Contractor is delayed or incurs an
increase in Cost, the Contractor may make a Claim. This provision
reflects the balanced nature of the FIDIC contracts in that, whilst it
allows the Contractor to Claim for an Extension of Time and the
payment of additional Cost, it also allows the Employer to Claim for a
reduction in the Contract Price in a case where there is a decrease in
Cost as a result of any changes in Laws.
 ADVANCE PAYMENT

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 14.2.1 (Advance Payment Guarantee) provides that:

The Contractor shall obtain (at the Contractor’s cost) an Advance

Payment Guarantee in amounts and currencies equal to the advance
payment, and shall submit it to the Employer with a copy to the
Engineer. This guarantee shall be issued by an entity and from
within a country (or other jurisdiction) to which the Employer gives
consent, and shall be based on the sample form included in the
tender documents or on another form agreed by the Employer (but
such consent and/or agreement shall not relieve the Contractor
from any obligation under this Sub-Clause).
The Contractor shall ensure that the Advance Payment Guarantee is
valid and enforceable until the advance payment has been repaid,
but its amount may be progressively reduced by the amount repaid
by the Contractor as stated in the Payment Certificates.

If the terms of the Advance Payment Guarantee specify its expiry

date, and the advance payment has not been repaid by the date 28
days before the expiry date:

(a) the Contractor shall extend the validity of this guarantee

until the advance payment has been repaid;

(b) the Contractor shall immediately submit evidence of this

extension to the Employer, with a copy to the Engineer;
 and

(c) if the Employer does not receive this evidence 7 days

before the expiry date of this guarantee, the Employer
shall be entitled to Claim under the guarantee the
amount of advance payment which has not been repaid
…

If an advance payment is provided for in the Contract, the Contractor is

obliged to provide an Advance Payment Guarantee. This provides surety
to the Employer for any outstanding repayment made against the
advance in a case where the Contractor’s default would otherwise make
it difficult for the Employer to recover. The Contractor is required to
keep the guarantee in force until such time as the advance payment has
been fully recovered by the Employer and, if necessary, provide
evidence that it has been extended.
If the Employer does not receive such evidence 7 days before the expiry
date of the guarantee, the Employer shall be entitled to Claim under the
guarantee the amount of advance payment that has not been repaid.
 PAYMENT AFTER TERMINATION FOR
CONTRACTOR’S DEFAULT

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 15.4 (Payment after Termination for Contractor’s Default)
provides that:
The Employer may withhold payment to the Contractor of the
amounts agreed or determined under Sub-Clause 15.3 [Valuation
after Termination for Contractor’s Default] until all the costs, losses
and damages (if any) described in the following provisions of this
Sub-Clause have been established.

After termination of the Contract under Sub-Clause 15.2

[Termination for Contractor’s Default], the Employer shall be
entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT]
to payment by the Contractor of:

(a) the additional costs of execution of the Works, and all

other costs reasonably incurred by the Employer
(including costs incurred in clearing, cleaning and
reinstating the Site as described under Sub-Clause 11.11
[Clearance of Site]), after allowing for any sum due to
the Contractor under Sub-Clause 15.3 [Valuation after
Termination for Contractor’s Default];
 (b) any losses and damages suffered by the Employer in
completing the Works; and

(c) Delay Damages, if the Works or a Section have not been

taken over under Sub-Clause 10.1 [Taking Over the
Works and Sections] and if the date of termination
under Sub-Clause 15.2 [Termination for Contractor’s
Default] occurs after the date corresponding to the
Time for Completion of the Works or Section (as the
case may be). Such Delay Damages shall be paid for
every day that has elapsed between these two dates.

This clause is applicable to circumstances whereby the Employer

terminates the Contract because of serious default by the Contractor.
The legitimate reasons for such termination are detailed under Sub-
Clause 15.2 (Termination for Contractor’s Default) and do not include
termination for the Employer’s convenience.
If the Employer takes such a step, it will be necessary to make
alternative arrangements to complete the Works. Such arrangements
will probably include the preparation of tender documents for the
remaining work, a re-tendering process, higher Costs to carry out the
remaining Works than were included in the original Contract, additional
Costs to employ the Engineer and other consultants for longer periods
and/or to provide additional services, and many other less obvious
Costs. As may be seen from this brief list, the additional Costs to the
Employer due to the Contractor’s default are likely to be considerable.
This clause provides the Employer with entitlement to recover any
losses or damages and any extra Costs for completing the Works from
the Contractor by way of a Claim.
 Section 3
The Contractor's Entitlement
to Claim
 DELAYED DRAWINGS OR INSTRUCTIONS

Applicable to the Red Book.

Sub-Clause 1.9 (Delayed Drawings or Instructions) provides that:

The Contractor shall give a Notice to the Engineer whenever the

Works are likely to be delayed or disrupted if any necessary drawing
or instruction is not issued to the Contractor within a particular
time, which shall be reasonable. The Notice shall include details of
the necessary drawing or instruction, details of why and by when it
should be issued, and details of the nature and amount of the delay
or disruption likely to be suffered if it is late.
If the Contractor suffers delay and/or incurs Cost as a result of a
failure of the Engineer to issue the notified drawing or instruction
within a time which is reasonable and is specified in the Notice with
supporting details, the Contractor shall be entitled subject to Sub-
Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or
payment of such Cost Plus Profit.

However, if and to the extent that the Engineer’s failure was caused
by any error or delay by the Contractor, including an error in, or
delay in the submission of, any of the Contractor’s Documents, the
Contractor shall not be entitled to such EOT and/or Cost Plus Profit.

Under the Red Book, the Employer is responsible for the provision of
the design and the Contractor will require the design information in
order to carry out any required engineering, procurement and the
construction of the Works. This information will be needed by the
Contractor in such time so as to avoid any delay to the programme.
Whilst FIDIC specifically mentions drawings and instructions, Sub-Clause
1.9 may also be applied to the following matters when an action is
required by the Engineer:
Instructions, the lack of which will prevent or delay progress.
Responses to shop-drawing submittals.
Responses to material submittals.
Responses to design submittals if the Contract contains design
obligations.
Responses to requests for approval of subcontractors.
Instructions for the expenditure of provisional sums.
Instructions for the nomination of subcontractors and/or
suppliers.
Any other responses that may be interpreted as being
instructions.
Sub-Clause 1.9 requires the Contractor to give Notice if the Works are
likely to be delayed or disrupted if a necessary drawing or instruction is
not issued within a particular time. This Notice must be submitted within
a reasonable time and provide:
Details of the necessary drawing or instruction.
Details of when it should be issued.
Details of the delay or disruption likely to be suffered if the
issuing is late.
If the Engineer does not provide the information by the notified time
and this causes the Contractor to suffer delay that will extend the Time
for Completion, the Contractor will be entitled to Claim for an Extension
of Time.
Examples of delay and the incurrence of Costs under these
circumstances are as follows:
Delayed drawings could cause the Contractor to incur Costs due
to standing time for resources that have been mobilised to
start programmed activities. Such delay could also
subsequently lead to delays to the Time for Completion and
prolongation Costs.
Delayed responses to requests for information, material
submittals and shop-drawing submittals could cause delays to
procurement and subsequently to the construction activities.
Such delays could also lead to delays to the Time for
Completion and prolongation Costs.
Delayed subcontract nominations or approvals could lead to
delays to the Time for Completion and associated prolongation
Costs.
If the Contractor incurs additional Costs as a result of the late receipt of
information, the Contractor will be entitled to Claim for the Cost Plus
Profit.
The clause ends with a proviso that if the Contractor caused the
Engineer to issue the instruction or information later than was required,
the Contractor’s entitlement to Claim is removed.
 ERRORS IN THE EMPLOYER’S
REQUIREMENTS

Applicable to the Yellow Book.

Sub-Clause 1.9 (Errors in the Employer’s Requirements) provides that:
If the Contractor finds an error, fault or defect in the Employer’s
Requirements as a result of scrutinising them under Sub-Clause 5.1
[General Design Obligations], the Contractor shall give a Notice to
the Engineer within the period stated in the Contract Data (if not
stated, 42 days) calculated from the Commencement Date.
If, after expiry of this period, the Contractor finds an error, fault or
defect in the Employer’s Requirements, the Contractor shall also
give a Notice to the Engineer describing the error, fault or defect.

The Engineer shall then proceed as specified under Sub-Clause 3.7

[Agreement or Determination] to agree or determine:
(a) whether or not there is an error, fault or defect in the
Employer’s Requirements;

(b) whether or not (taking account of cost and time) 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; or
 if the Contractor’s Notice is given after the expiry of
the period stated in the first paragraph of this Sub-
Clause, when scrutinising the Employer’s
Requirements under Sub-Clause 5.1 [General Design
Obligations]; and

(c) what measures (if any) the Contractor is required to

take to rectify the error, fault or defect …

If, under sub-paragraph (b) above, an experienced contractor

would not have discovered the error, fault or other defect:

(i) Sub-Clause 13.3.1 [Variation by Instruction] shall

apply to the measures that the Contractor is
required to take (if any); and

(ii) if the Contractor suffers delay and/or incurs Cost as

a result of the error, fault or defect, the Contractor
shall be entitled subject to Sub-Clause 20.2 [Claims
For Payment and/or EOT] to EOT and/or payment
of such Cost Plus Profit.

Sub-Clause 5.1 (General Design Obligations) of the Yellow Book requires

the Contractor, after being given notice of the commencement of
works, to scrutinise the Employer’s Requirements including design
criteria and calculations. The Contractor will have already studied the
Employer’s Requirements during the tender period but, following the
issue of a Notice of Commencement of Works, this further period allows
the Contractor and their designers to undertake a much more in-depth
scrutiny in preparation for commencement of the design.
If, either during or after the period for additional scrutiny, the
Contractor discovers any error, fault or other defect, they are obliged to
give Notice to the Engineer. The Engineer is then obliged to determine
whether an error does exist, whether an experienced contractor should
have discovered the error, fault or defect during the tender period or
during the period for scrutiny, what measures the Contractor should
take to correct the error and whether a Variation is applicable.
The test for this clause to become applicable is that ‘an experienced
contractor exercising due care would not have discovered the error’ either
before submitting the Tender or during the further review period
required by Sub-Clause 5.1. The resolution of such an error could cause
delay to the design and/or could result in extra or additional work that
would delay the Time for Completion and/or cause the Contractor to
incur additional Costs to carry out such work.
If such an error causes delay that will affect the Time for Completion,
the Contractor is entitled to an Extension of Time and/or if the error
causes the Contractor to incur Cost, the Contractor is entitled to Claim
for payment of the Cost Plus Profit.
 COMPLIANCE WITH LAWS

Applicable to the Red, Yellow and Silver Books.

References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow and Silver Books.
Sub-Clause 1.13 of the Red and Yellow Books and 1.12 of the Silver Book
(Compliance with Laws) provides that:

The Contractor and the Employer shall, in performing the Contract,

comply with all applicable Laws. Unless otherwise stated in the
Specification:
(a) the Employer shall have obtained (or shall obtain) the
planning, zoning or building permit or similar permits,
permissions, licences and/or approvals for the
Permanent Works, and any other permits, permissions,
licences and/or approvals described in the Specification
as having been (or being) obtained by the Employer. The
Employer shall indemnify and hold the Contractor
harmless against and from the consequences of any
delay or failure to do so, unless the failure is caused by
the Contractor’s failure to comply with sub-paragraph
(c) below;
(b) the Contractor shall give all notices, pay all taxes, duties
and fees, and obtain all other permits, permissions,
licences and/or approvals, as required by the Laws in
 relation to the execution of the Works. The Contractor
shall indemnify and hold the Employer harmless against
and from the consequences of any failure to do so unless
the failure is caused by the Employer’s failure to comply
with Sub-Clause 2.2 [Assistance];

(c) within the time(s) stated in the Specification the

Contractor shall provide such assistance and all
documentation, as described in the Specification or
otherwise reasonably required by the Employer, so as to
allow the Employer to obtain any permit, permission,
licence or approval under sub-paragraph (a) above; and

(d) the Contractor shall comply with all permits,

permissions, licences and/or approvals obtained by the
Employer under sub-paragraph (a) above.

If, having complied with sub-paragraph (c) above, the Contractor

suffers delay and/or incurs Cost as a result of the Employer’s delay
or failure to obtain any permit, permission, licence or approval
under sub-paragraph (a) above, the Contractor shall be entitled
subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT
and/or payment of such Cost Plus Profit.

Any construction project will be required to comply with the Laws of the
Country, including local authority and municipality by-laws, building
regulations, codes and such like. Sub-Clause 1.12/1.13 requires the Parties
to obtain the necessary permits, permissions, licences, approvals and
the like. Broadly speaking, the Employer is obliged to provide such
matters in respect of the project as a whole and the Contractor is
obliged to deal with matters in relation to the execution of the works.
Such matters are often complicated and the procedures to be followed
by the authorities may be onerous so, inevitably, the Parties will need to
cooperate to enable each one to carry out their obligations. The
provisions require the Contractor to provide the assistance and
documentation described in the Specification or the Employer’s
Requirements and also what is reasonably required by the Employer to
allow the Employer to obtain any necessary permit, permission, licence
or approval.
If, having complied with these requirements, the Contractor suffers
delay and/or incurs Cost as a result of the Employer’s delay or failure to
obtain any permit, permission, licence or approval, the Contractor shall
be entitled to Claim for an Extension of Time and/or the payment of
such Cost Plus Profit.
 RIGHT OF ACCESS TO THE SITE

Applicable to the Red and Yellow Books.

References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow Book.
Sub-Clause 2.1 (Right of Access to the Site) provides that:
The Employer shall give the Contractor right of access to, and
possession of, all parts of the Site within the time (or times) stated
in the Contract Data. The right and possession may not be exclusive
to the Contractor. If, under the Contract, the Employer is required
to give (to the Contractor) possession of any foundation, structure,
plant or means of access, the Employer shall do so in the time and
manner stated in the Specification. However, the Employer may
withhold any such right or possession until the Performance
Security has been received.
If no such time is stated in the Contract Data, the Employer shall
give the Contractor right of access to, and possession of, those parts
of the Site within such times as may be required to enable the
Contractor to proceed in accordance with the Programme or, if
there is no Programme at that time, the initial programme
submitted under Sub-Clause 8.3 [Programme].
If the Contractor suffers delay and/or incurs Cost as a result of a
failure by the Employer to give any such right or possession within
such time, the Contractor shall be entitled subject to Sub-Clause
 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of
such Cost Plus Profit.

However, if and to the extent that the Employer’s failure was

caused by any error or delay by the Contractor, including an error in,
or delay in the submission of, any of the applicable Contractor’s
Documents, the Contractor shall not be entitled to such EOT and/or
Cost Plus Profit.

Applicable to the Silver Book.

Sub-Clause 2.1 (Right of Access to the Site) of the Silver Book is slightly
different and provides for the following:

The Employer shall give the Contractor right of access to, and
possession of, all parts of the Site within the time (or times) stated
in the Contract Data. The right and possession may not be exclusive
to the Contractor. If, under the Contract, the Employer is required
to give (to the Contractor) possession of any foundation, structure,
plant or means of access, the Employer shall do so in the time and
manner stated in the Employer’s Requirements. However, the
Employer may withhold any such right or possession until the
Performance Security has been received.

If no such time is stated in the Contract Data, the Employer shall

give the Contractor right of access to, and possession of, the Site
with effect from the Commencement Date.

If the Contractor suffers delay and/or incurs Cost as a result of a

failure by the Employer to give any such right or possession within
such time, the Contractor shall be entitled subject to Sub-Clause
 20.2 [Claims For Payment and/or EOT] to EOT and/or payment of
such Cost Plus Profit.

However, if and to the extent that the Employer’s failure was

caused by any error or delay by the Contractor, including an error in,
or delay in the submission of, any of the applicable Contractor’s
Documents, the Contractor shall not be entitled to such EOT and/or
Cost Plus Profit.

If, under the Contract, the Employer is required to give (to the
Contractor) possession of any foundation, structure, plant or means
of access in accordance with the Contractor’s Documents, the
Contractor shall submit such Contractor’s Documents to the
Employer in the time and manner stated in the Employer’s
Requirements.

The Contractor will require access to the Site, or possibly parts of the
Site, to set up the site establishment and to start construction activities.
Under a Red Book contract, this will be almost immediately after the
Commencement Date because the design will have already been
completed by the Employer. Under the Yellow and Silver Books, the
Contractor will generally need to carry out the design and have it
reviewed or approved (at least for the early stages of construction)
before the need for such access, although earlier access may be
required to set up the site establishment or carry out surveys and other
investigations.
The timing of the right of access and possession of the Site and of any
foundation, structure, plant or means of access may be included in the
Contract but, if not so included, the Employer is obliged to provide
access and possession at the time(s) shown in the Contractor’s
programme under the Red and Yellow Books and from the
Commencement Date under the Silver Book.
Access to and possession of the Site will be crucial to the Contractor’s
operations and it is likely that any associated delay will have a
corresponding effect on the Time for Completion. If the Contractor has
mobilised resources in anticipation of receiving access and possession
by a particular date and is then unable to utilise them because of lack of
access, this will undoubtedly incur Cost. If the Contractor does suffer
delay that affects the Time for Completion and/or incurs additional Cost,
the Contractor is entitled to Claim for an extension of the Time for
Completion and/or payment of the additional Cost Plus Profit.
 CO-OPERATION

Applicable to the Red, Yellow and Silver Books.

References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow and Silver Books.
Sub-Clause 4.6 (Co-operation) provides that:
The Contractor shall, as stated in the Specification or as instructed
by the Engineer, co-operate with and allow appropriate
opportunities for carrying out work by:
(a) the Employer’s Personnel;

(b) any other contractors employed by the Employer; and

(c) the personnel of any legally constituted public

authorities and private utility companies,
who may be employed in the carrying out, on or near the Site, of
any work not included in the Contract. Such appropriate
opportunities may include the use of Contractor’s Equipment,
Temporary Works, access arrangements which are the responsibility
of the Contractor, and/or other Contractor’s facilities or services on
the Site.
The Contractor shall be responsible for the Contractor’s
construction activities on the Site, and shall use all reasonable
endeavours to co-ordinate these activities with those of other
 contractors to the extent (if any) stated in the Specification or as
instructed by the Engineer.

If the Contractor suffers delay and/or incurs Cost as a result of an

instruction under this Sub-Clause, to the extent (if any) that co-
operation, allowance of opportunities and co-ordination was
Unforeseeable having regard to that stated in the Specification, the
Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For
Payment and/or EOT] to EOT and/or payment of such Cost Plus
Profit.
It is not unusual on a construction project for the Employer to require
other Parties to have access to the Site or to carry out work while the
Site is in the Contractor’s possession, and it is a normal occurrence for
the Employer’s own personnel to require access. Such arrangements
should be either included in the Contract or instructed to the Contractor
and may require the Contractor to make their facilities available to the
other Parties or personnel.
The Contractor is obliged to co-ordinate and co-operate with other
contractors to a reasonable extent or to the extent stated in the
Contract. If such arrangements exceed those stated in the Contract or
are instructed by the Engineer and were Unforeseeable and the
Contractor suffers delay or incurs Cost, the Contractor shall be entitled
to Claim for an Extension of Time and/or the payment of Cost Plus Profit.
 SETTING OUT

Applicable to the Red and Yellow Books.

References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow Book.
Sub-Clause 4.7 (Setting Out) provides that:
The Contractor shall set out the Works in relation to the items of
reference under Sub-Clause 2.5 [Site Data and Items of Reference].
4.7.1 Accuracy
The Contractor shall:

(a) verify the accuracy of all these items of reference before

they are used for the Works;

(b) promptly deliver the results of each verification to the

Engineer;
(c) rectify any error in the positions, levels, dimensions or
alignment of the Works; and
(d) be responsible for the correct positioning of all parts of
the Works.

4.7.2 Errors

If the Contractor finds an error in any items of reference, the

Contractor shall give a Notice to the Engineer describing it:
 (a) within the period stated in the Contract Data (if not
stated, 28 days) calculated from the Commencement
Date, if the items of reference are specified on the
Drawings and/or in the Specification; or

(b) as soon as practicable after receiving the items of

reference, if they are issued by the Engineer under Sub-
Clause 2.5 [Site Data and Items of Reference].

4.7.3 Agreement or Determination of rectification measures, delay

and/or Cost

After receiving a Notice from the Contractor under Sub-Clause 4.7.2

[Errors], the Engineer shall proceed under Sub-Clause 3.7
[Agreement or Determination] to agree or determine:

(a) whether or not there is an error in the items of

reference;
(b) whether or not (taking account of cost and time) an
experienced contractor exercising due care would have
discovered such an error

when examining the Site, the Drawings and the

Specification before submitting the Tender; or

if the items of reference are specified on the

Drawings and/or in the Specification and the
Contractor’s Notice is given after the expiry of the
period stated in sub-paragraph (a) of Sub-Clause
4.7.2; and

(c) what measures (if any) the Contractor is required to

take to rectify the error …
 If, under sub-paragraph (b) above, an experienced contractor would
not have discovered the error:

(i) Sub-Clause 13.3.1 [Variation by Instruction] shall apply to

the measures that the Contractor is required to take (if
any); and

(ii) if the Contractor suffers delay and/or incurs Cost as a

result of the error, the Contractor shall be entitled
subject to Sub-Clause 20.2 [Claims For Payment and/or
EOT] to EOT and/or payment of such Cost Plus Profit.

Sub-Clause 2.5 (Site Data and Items of Reference) provides that ‘The
original survey control points, lines and levels of reference (the “items of
reference” in these Conditions) shall be specified on the Drawings and/or in
the Specification or issued to the Contractor by a Notice from the
Engineer’. Under Sub-Clause 4.7, the Contractor is obliged to verify the
accuracy of the items of reference before they are used for the Works.
If the Contractor discovers an error, they are obliged to give a Notice to
the Engineer within either the period stated in the Contract Data, or
within 28 days of the Commencement Date, or, if the items of reference
are issued after the Commencement Date, as soon as possible. The
Engineer is obliged, within a specified time limit, to agree or determine
whether there is an error in the items of reference, whether the
Contractor should have discovered the error during the tender period or
within the Notice period, and what measures the Contractor is required
to take to correct the error.
If it is determined that the error could not have reasonably been
discovered during the tender period or within the Notice period, the
correction measures shall be treated as a Variation. If the Contractor
suffers delay and/or incurs Cost as a result of the error, the Contractor
shall be entitled to Claim for an Extension of Time and/or the payment of
such Cost Plus Profit.
 UNFORESEEABLE PHYSICAL CONDITIONS

Applicable to the Red and Yellow Books.

Sub-Clause 4.12 (Unforeseeable Physical Conditions) provides that:

In this Sub-Clause, “physical conditions” means natural physical

conditions and physical obstructions (natural or man-made) and
pollutants, which the Contractor encounters at the Site during
execution of the Works, including sub-surface and hydrological
conditions but excluding climatic conditions at the Site and the
effects of those climatic conditions.
If the Contractor encounters physical conditions which the
Contractor considers to have been Unforeseeable and that will have
an adverse effect on the progress and/or increase the Cost of the
execution of the Works, the following procedure shall apply:
4.12.1 Contractor’s Notice

After discovery of such physical conditions, the Contractor shall give

a Notice to the Engineer, which shall:

(a) be given as soon as practicable and in good time to give

the Engineer opportunity to inspect and investigate the
physical conditions promptly and before they are
disturbed;
(b) describe the physical conditions, so that they can be
inspected and/or investigated promptly by the Engineer;
 (c) set out the reasons why the Contractor considers the
physical conditions to be Unforeseeable; and

(d) describe the manner in which the physical conditions

will have an adverse effect on the progress and/or
increase the Cost of the execution of the Works.
4.12.2 Engineer’s inspection and investigation

The Engineer shall inspect and investigate the physical conditions

within 7 days, or a longer period agreed with the Contractor, after
receiving the Contractor’s Notice.

The Contractor shall continue execution of the Works, using such

proper and reasonable measures as are appropriate for the physical
conditions and to enable the Engineer to inspect and investigate
them.
4.12.3 Engineer’s instructions
The Contractor shall comply with any instructions which the
Engineer may give for dealing with the physical conditions and, if
such an instruction constitutes a Variation, Sub-Clause 13.3.1
[Variation by Instruction] shall apply.

4.12.4 Delay and/or Cost

If and to the extent that the Contractor suffers delay and/or incurs
Cost due to these physical conditions, having complied with Sub-
Clauses 4.12.1 to 4.12.3 above, the Contractor shall be entitled
subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT
and/or payment of such Cost.

4.12.5 Agreement or Determination of Delay and/or Cost

 The agreement or determination, under Sub-Clause 20.2.5
[Agreement or Determination of the Claim], of any Claim under Sub-
Clause 4.12.4 [Delay and/or Cost] shall include consideration of
whether and (if so) to what extent the physical conditions were
Unforeseeable.

The Engineer may also review whether other physical conditions in

similar parts of the Works (if any) were more favourable than could
reasonably have been foreseen by the Base Date. If and to the
extent that these more favourable conditions were encountered,
the Engineer may take account of the reductions in Cost which were
due to these conditions in calculating the additional Cost to be
agreed or determined under this Sub-Clause 4.12.5. However, the net
effect of all additions and reductions under this Sub-Clause 4.12.5
shall not result in a net reduction in the Contract Price.
The Engineer may take account of any evidence of the physical
conditions foreseen by the Contractor by the Base Date, which the
Contractor may include in the supporting particulars for the Claim
under Sub-Clause 20.2.4 [Fully detailed Claim], but shall not be
bound by any such evidence.

Under Sub-Clause 2.5 (Site Data and Items of Reference), the Employer
has an obligation to make available to the Contractor, prior to the Base
Date, all relevant data in the Employer’s possession on the topography
of the Site, and on sub-surface, hydrological, climatic and environmental
conditions at the Site. The Contractor under the provisions of Sub-
Clause 4.10 (Use of Site Data) is responsible for interpreting such data.
The Contractor is deemed, to the extent that it was practicable during
the tender period, taking into account time and Cost, to have inspected
the Site, its surroundings, the data provided by the Employer and other
available information, including the form and nature of the Site and sub-
surface and hydrological conditions, and to have made due allowances
when preparing the Tender.
Sub-Clause 4.12 (Unforeseeable Physical Conditions) describes the type of
conditions that may be considered under this sub-clause as ‘natural
physical conditions and physical obstructions (natural or man-made) and
pollutants, which the Contractor encounters at the Site during execution
of the Works, including sub-surface and hydrological conditions’ but
specifically excludes climatic conditions. The second test that must be
applied to this sub-clause is that the conditions must be ‘Unforeseeable’.
Unforeseeable is defined under Sub-Clause 1.1.85 as ‘not reasonably
foreseeable by an experienced contractor by the Base Date’.
If the Contractor encounters physical conditions that they consider
comply with these criteria, they are obliged to give Notice to the
Engineer so that the Engineer may inspect the conditions and give such
instructions as considered necessary. The clause provides that such
instructions may constitute a Variation.
If the Contractor suffers delay and/or incurs Cost due to Unforeseeable
physical conditions, having complied with the Notice provisions and the
Engineer’s instructions, the Contractor shall be entitled to Claim for an
Extension of Time and/or payment of such Cost.
The provisions allow the Engineer to take into account any conditions in
similar parts of the Works that have been encountered and which were
more favourable than could reasonably have been foreseen, and the
Engineer may set off a reduction for such favourable conditions when
calculating the additional Cost due to the Contractor.
 ACCESS ROUTE

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 4.15 (Access Route) provides that:

The Contractor shall be deemed to have been satisfied, at the Base

Date, as to the suitability and availability of the access routes to the
Site. The Contractor shall take all necessary measures to prevent
any road or bridge from being damaged by the Contractor’s traffic
or by the Contractor’s Personnel. These measures shall include the
proper use of appropriate vehicles conforming to legal load and
width limits (if any) and any other restrictions and routes.
Except as otherwise stated in these Conditions:
(a) the Contractor shall (as between the Parties) be
responsible for repair of any damage caused to, and any
maintenance which may be required for the
Contractor’s use of, access routes;

(b) the Contractor shall provide all necessary signs or

directions along access routes, and shall obtain any
permissions or permits which may be required from the
relevant authorities, for the Contractor’s use of routes,
signs and directions;

(c) the Employer shall not be responsible for any third party
Claims which may arise from the Contractor’s use or
otherwise of any access route;
 (d) the Employer does not guarantee the suitability or
availability of particular access routes; and

(e) all Costs due to non-suitability or non-availability, for the

use required by the Contractor, of access routes shall be
borne by the Contractor.
To the extent that non-suitability or non-availability of an access
route arises as a result of changes to that access route by the
Employer or a third party after the Base Date and as a result the
Contractor suffers delay and/or incurs Cost, the Contractor shall be
entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT]
to EOT and/or payment of such Cost.

This clause is mainly applicable when the Site is in a remote ___location. The
Contractor is deemed to have inspected the suitability and availability of
access routes to the Site during the tender period. Once the project has
commenced, the Contractor is responsible for protection, maintenance
and repair of such routes and to have allowed for doing so within the
Tender.
If the availability or suitability of an access route changes after the Base
Date and the Contractor suffers delay or incurs Cost, the Contractor
shall be entitled to Claim for an Extension of Time and/or payment of
such Cost.
 ARCHAEOLOGICAL AND GEOLOGICAL
FINDINGS

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 4.23 (Archaeological and Geological Findings) provides that:
All fossils, coins, articles of value or antiquity, and structures and
other remains or items of geological or archaeological interest
found on the Site shall be placed under the care and authority of
the Employer. The Contractor shall take all reasonable precautions
to prevent Contractor’s Personnel or other persons from removing
or damaging any of these findings.

The Contractor shall, as soon as practicable after discovery of any

such finding, give a Notice to the Engineer in good time to give the
Engineer opportunity to promptly inspect and/or investigate the
finding before it is disturbed. This Notice shall describe the finding
and the Engineer shall issue instructions for dealing with it.
If the Contractor suffers delay and/or incurs Cost from complying
with the Engineer’s instructions, the Contractor shall be entitled
subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT
and/or payment of such Cost.
 TESTING BY THE CONTRACTOR

Applicable to the Red, Yellow and Silver Books.

References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow and Silver Books.
Sub-Clause 7.4 (Testing by the Contractor) provides that:
This Sub-Clause shall apply to all tests specified in the Contract,
other than the Tests after Completion (if any).
The Contractor shall provide all apparatus, assistance, documents
and other information, temporary supplies of electricity and water,
equipment, fuel, consumables, instruments, labour, materials, and
suitably qualified, experienced and competent staff, as are
necessary to carry out the specified tests efficiently and properly. All
apparatus, equipment and instruments shall be calibrated in
accordance with the standards stated in the Specification or defined
by applicable Laws and, if requested by the Engineer, the Contractor
shall submit calibration certificates before carrying out testing.
The Contractor shall give a Notice to the Engineer, stating the time
and place for the specified testing of any Plant, Materials and other
parts of the Works. This Notice shall be given in reasonable time,
having regard to the ___location of the testing, for the Employer’s
Personnel to attend.

The Engineer may, under Clause 13 [Variations and Adjustments],

vary the ___location or timing or details of specified tests, or instruct
 the Contractor to carry out additional tests. If these varied or
additional tests show that the tested Plant, Materials or
workmanship is not in accordance with the Contract, the Cost and
any delay incurred in carrying out this Variation shall be borne by
the Contractor.

The Engineer shall give a Notice to the Contractor of not less than 72
hours of his/her intention to attend the tests. If the Engineer does
not attend at the time and place stated in the Contractor’s Notice
under this Sub-Clause, the Contractor may proceed with the tests,
unless otherwise instructed by the Engineer. These tests shall then
be deemed to have been made in the Engineer’s presence. If the
Contractor suffers delay and/or incurs Cost from complying with any
such instruction or as a result of a delay for which the Employer is
responsible, the Contractor shall be entitled subject to Sub-Clause
20.2 [Claims For Payment and/or EOT] to EOT and/or payment of
Cost Plus Profit …

The Contract may specify tests, including Tests on Completion, to be

carried out by the Contractor on Materials, Plant, equipment and
workmanship and the Engineer has the right to attend such tests at an
agreed time and place. Tests may be an important means of verifying
that Plant, Materials and Works are fit for their intended purpose and
have been provided in accordance with the Contract; tests may be
required at several stages of manufacture, construction and
commissioning. The Engineer is entitled to vary the ___location or details of
the specified tests or to require additional tests by instruction.
If the Contractor suffers delay and/or incurs Cost from complying with
such instructions or as a result of any other delay for which the
Employer is responsible, the Contractor is entitled to Claim for an
Extension of Time to the extent that the delay affects the Time for
Completion and the reimbursement of additional Cost Plus Profit.
 REMEDIAL WORK

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 7.6 (Remedial Work) provides that:

In addition to any previous examination, inspection, measurement

or testing, or test certificate or Notice of No-objection by the
Engineer, at any time before the issue of the Taking-Over Certificate
for the Works the Engineer may instruct the Contractor to:
(a) repair or remedy (if necessary, off the Site), or remove
from the Site and replace any Plant or Materials which
are not in accordance with the Contract;

(b) repair or remedy, or remove and re-execute, any other

work which is not in accordance with the Contract; and

(c) carry out any remedial work which is urgently required

for the safety of the Works, whether because of an
accident, unforeseeable event or otherwise.

The Contractor shall comply with the instruction as soon as

practicable and not later than the time (if any) specified in the
instruction, or immediately if urgency is specified under sub-
paragraph (c) above.

The Contractor shall bear the cost of all remedial work required
under this Sub-Clause, except to the extent that any work under
sub-paragraph (c) above is attributable to:
 (i) any act by the Employer or the Employer’s Personnel. If
the Contractor suffers delay and/or incurs Cost in
carrying out such work, the Contractor shall be entitled
subject to Sub-Clause 20.2 [Claims For Payment and/or
EOT] to EOT and/or payment of such Cost Plus Profit; …

The Engineer has the authority to instruct the Contractor to repair,

remedy, remove from the Site or replace any Plant or Materials and to
repair, remedy or re-execute work that is not in accordance with the
Contract. The Engineer also has the authority to instruct the Contractor
to carry out work that is urgently required for the safety of the Works.
The Contractor is obliged to comply with any such instruction within the
time frame required by the instruction.
If the instruction is necessary due to a circumstance for which the
Contractor is not responsible, such as an accident, an unforeseeable
event, an act of the Employer or the Employer’s Personnel or the like,
the Contractor is entitled to Claim for an Extension of Time and/or
payment of such Cost Plus Profit.
 EXTENSION OF TIME FOR COMPLETION

Applicable to the Red, Yellow and Silver Books.

FIDIC uses the following abbreviation in this Sub-Clause, which is defined
as follows:
EOT – an extension of the Time of Completion under Sub-Clause
8.5 (Extension of Time for Completion).
Sub-Clause 8.5 (Extension of Time for Completion) provides that:
The Contractor shall be entitled subject to Sub-Clause 20.2 [Claims
For Payment and/or EOT] to Extension of Time if and to the extent
that completion for the purposes of Sub-Clause 10.1 [Taking Over
the Works and Sections] is or will be delayed by any of the following
causes:

(a) a Variation (except that there shall be no requirement to

comply with Sub-Clause 20.2 [Claims For Payment and/or
EOT]);

(b) a cause of delay giving an entitlement to EOT under a

Sub-Clause of these Conditions;

(c) exceptionally adverse climatic conditions, which for the

purpose of these Conditions shall mean adverse climatic
conditions at the Site which are Unforeseeable having
regard to climatic data made available by the Employer
under Sub-Clause 2.5 [Site Data and Items of Reference]
and/or climatic data published in the Country for the
 geographical ___location of the Site; (not applicable to the
Silver Book)

(d) Unforeseeable shortages in the availability of personnel

or Goods (or Employer-Supplied Materials, if any)
caused by epidemic or governmental actions; (not
applicable to the Silver Book) or

(e) any delay, impediment or prevention caused by or

attributable to the Employer, the Employer’s Personnel,
or the Employer’s other contractors on the Site.

(The following paragraph is not applicable to the Yellow or Silver

Books.)
The Contractor shall be entitled subject to Sub-Clause 20.2 [Claims
For Payment and/or EOT] to EOT if the measured quantity of any
item of work in accordance with Clause 12 [Measurement and
Valuation] is greater than the estimated quantity of this item in the
Bill of Quantities or other Schedule by more than ten per cent (10%)
and such increase in quantities causes a delay to completion for the
purposes of Sub-Clause 10.1 [Taking Over the Works and Sections].
The agreement or determination of any such Claim, under Sub-
Clause 20.2.5 [Agreement or Determination of the Claim], may
include a review by the Engineer of measured quantities of other
items of work which are significantly less (by more than 10%) than
the corresponding estimated quantities in the Bill of Quantities or
other Schedule. To the extent that there are such lesser measured
quantities, the Engineer may take account of any favourable effect
on the critical path of the Programme. However, the net effect of all
 such consideration shall not result in a net reduction in the Time for
Completion.

When determining each EOT under Sub-Clause 20.2 [Claims For

Payment and/or EOT], the Engineer shall review previous
determinations under Sub-Clause 3.7 [Agreement or Determination]
and may increase, but shall not decrease, the total EOT.
If a delay caused by a matter which is the Employer’s responsibility
is concurrent with a delay caused by a matter which is the
Contractor’s responsibility, the Contractor’s entitlement to EOT
shall be assessed in accordance with the rules and procedures
stated in the Special Provisions (if not stated, as appropriate taking
due regard of all relevant circumstances).

Sub-Clause 8.5 (Extension of Time for Completion) includes six causes

under the Red Book, five causes under the Yellow Book and three
causes under the Silver Book for which the Contractor is entitled to
Claim for an Extension of Time if the circumstances cause delay to the
Time for Completion. These will be examined in turn.

A Variation (Red, Yellow and Silver Books)

Sub-Clause 13.1 (Right to Vary) allows the Engineer to initiate a Variation

either by an instruction or by a request for a proposal. If the Variation is
instructed under Sub-Clause 13.3.1 (Variation by Instruction) or a
proposal is requested under Sub-Clause 13.3.2 (Variation by Request for
Proposal), the Contractor is obliged to provide a programme for its
execution and a proposal for any modifications to the current
programme. Such a programme and proposal would include any
necessary Extension of the Time for Completion. Subject to the
Engineer’s agreement, or determination in the case of an instruction,
and the Engineer’s instruction following a proposal, there would be no
need for the Contractor to submit a Claim because any Extension of
Time will have been pre-agreed.

A Cause of Delay Giving Entitlement under Another Clause of the

Conditions (Red, Yellow and Silver Books)

This provision underlines entitlement to an Extension of Time contained

in several other clauses within the contracts where it is stated that ‘If the
Contractor suffers delay … from (the type of event detailed in the
relevant clause) the Contractor shall be entitled subject to Sub-Clause 20.2
[Claims For Payment and/or EOT] to EOT’. Sub-Clause 8.5 firstly reminds
us of the requirements contained in the individual clauses that
entitlement is ‘subject to Sub-Clause 20.2 [Claims For Payment and/or
EOT]’ and further defines delay to mean ‘if and to the extent that
completion for the purposes of Sub-Clause 10.1 [Taking Over of the Works
and Sections] is or will be delayed’. In other words, the Time for
Completion is the date of Taking Over of the Works, and the Contractor
is entitled to an Extension of Time only to the extent that the claimable
event delayed or will delay this date.

Exceptionally Adverse Climatic Conditions (Red and Yellow Books)

The key word in this provision is ‘exceptionally’. The Contractor may not
Claim for delays caused by climatic conditions if they are conditions that
may be normally expected according to ___location and season. FIDIC
advises us that exceptionally adverse means ‘adverse climatic conditions
at the Site which are Unforeseeable having regard to climatic data made
available by the Employer under Sub-Clause 2.5 [Site Data and Items of
Reference] and/or climatic data published in the Country for the
geographical ___location of the Site’. The Contractor is advised to examine
the data and the meteorological records to ascertain whether the
conditions may be reasonably regarded as exceptional and submit them
in support of any Claim under this clause.

Unforeseeable Shortages in Personnel or Goods Caused by Epidemic or

Governmental Actions (Red and Yellow Books)

This provides that if an epidemic or governmental action that an

experienced contractor could not have reasonably foreseen by the Base
Date causes the Contractor to suffer delay to the Time for Completion,
the Contractor is entitled to Claim for an Extension of Time. FIDIC uses
the defined term ‘Unforeseeable’ here, so any Claim submitted under
this provision will need to justify why the event was ‘not reasonably
foreseeable by an experienced contractor by the Base Date’.

Delay, Impediment or Prevention Caused by or Attributable to the

Employer or their Agents or Contractors (Red, Yellow and Silver Books)

The Parties to a contract are obliged under most legal jurisdictions to act
proactively toward the other and to do everything possible to help the
other Party fulfil their obligations and this clause underlines this
principle. Unfortunately, projects exist where the Employer and their
agents and/or other contractors do not adopt this attitude, and this may
manifest itself in many forms. Not responding to requests for
information or submittals in a timely manner, obstruction of the works,
the issue of unclear information and/or instructions, failure to respond
to Claims or to make awards in a timely manner and a general lack of
cooperation are just a few examples. Whilst it is not always the case that
individual delays caused by such actions will have a great effect on the
Contractor’s programme, collectively such actions may contribute to
disruption and a delay to the Time for Completion.
This clause may also be used to support other clauses that provide
entitlement. Sub-Clause 1.9 (Delayed Drawings or Instructions) of the Red
Book, for example, gives entitlement to an Extension of Time if the
Contractor is delayed due to failure of the Engineer to issue drawings or
instructions by the time that the Contractor requires them. Such a
failure could also be viewed as delay, impediment or prevention caused
by the Engineer.

Increase in Quantities (Red Book)

The Red Book contains a provision that if the quantity of any item of
work included in the estimated Bill of Quantities or other Schedule
increases by more than 10% and this causes a delay to the Time for
Completion, then this will entitle the Contractor to an Extension of Time.
This provision also allows the Engineer to take into account any items on
the critical path for which the quantity has decreased by more than 10%
and would therefore result in a negative effect on the Time for
Completion and set this off against any Extension of Time Claimed for an
increase in quantities. The Engineer may take this action only if it does
not result in a net reduction in the Time for Completion.

Extension of Time Awards

Sub-Clause 8.5 prevents the Engineer from decreasing any previous

Extension of Time award. This is necessary because the Parties involved
in the project must have a completion date to work towards and if this is
reduced, existing planning, programming and efforts to achieve such a
date will have been wasted. Additionally, a late reduction of the time
remaining before completion may make it impossible to achieve such a
date when it has not been planned for.

Concurrent Delay

The final paragraph goes some way towards directing the Parties as to
how to deal with concurrent delay. Concurrent delay is a situation where
an Employer-responsible delay and a Contractor-responsible delay occur
at the same time. It is generally accepted that concurrent delay should
not negate the Contractor’s entitlement to an Extension of Time but
should not be a cause for the Contractor to receive payment for Cost
associated with the Extension of Time. FIDIC gives the opportunity to
the Parties to include rules and procedure for dealing with concurrency
within the Special Provisions and if no such provisions are included, it
should be dealt with ‘as appropriate taking due regard of all relevant
circumstances’. Given the fact that the definition of concurrent delay is
often misunderstood, that the amount of concurrent delay is often
calculated incorrectly, and that Delay Damages and Claims of Cost
associated with Extensions of Time may be considerable, the Parties
would be well advised to ensure that agreed rules and procedure for
dealing with such a situation are included in the Special Provisions to
avoid future contention.

Additional Payment
It should be noted that Sub-Clause 8.5 (Extension of Time for
Completion) provides entitlement only to an extension of the Time for
Completion and not to additional payment.
 DELAYS CAUSED BY AUTHORITIES

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 8.6 (Delays Caused by Authorities) provides that:

If:
(a) the Contractor has diligently followed the procedures
laid down by the relevant legally constituted public
authorities or private utility entities in the Country;
(b) these authorities or entities delay or disrupt the
Contractor’s work; and
(c) the delay or disruption was Unforeseeable,

then this delay or disruption will be considered as a cause of delay

under
sub-paragraph (b) of Sub-Clause 8.5 [Extension of Time for
Completion].
It is not unusual for authorities to cause delay or disruption to the
Contractor, and the Contractor often has little power to control such
circumstances. Provided that the Contractor has diligently complied
with the authorities’ procedures and the authorities do cause delay or
disruption that delays the Time for Completion, then the matter shall be
considered as a cause providing entitlement to an Extension of Time
under the provisions of Sub-Clause 8.5 (Extension of Time for
Completion), but not as a cause for the payment of Cost.
This sub-clause includes a proviso that such delay or disruption should
have been Unforeseeable. This is another possible cause of contention
because Contractors may argue that any delay was Unforeseeable, and
Engineers may counter this with the position that authorities frequently
cause delay and/or disruption, so such a situation may not be regarded
as being Unforeseeable. This is therefore a clause that requires
justification from the Contractor in their Claim and a certain amount of
reasonableness on the Engineer’s part whenever it is invoked.
 CONSEQUENCES OF EMPLOYER’S
SUSPENSION

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 8.10 (Consequences of Employer’s Suspension) provides that:
If the Contractor suffers delay and/or incurs Cost from complying
with an Engineer’s instruction under Sub-Clause 8.9 [Employer’s
Suspension] and/or from resuming the work under Sub-Clause 8.13
[Resumption of Work], the Contractor shall be entitled subject to
Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or
payment of such Cost Plus Profit.

The Contractor shall not be entitled to EOT, or to payment of the

Cost incurred, in making good:

(a) the consequences of the Contractor’s faulty or defective

design (if any), workmanship, Plant or Materials; and/or
(b) any deterioration, loss or damage caused by the
Contractor’s failure to protect, store or secure in
accordance with Sub-Clause 8.9 [Employer’s
Suspension].

Sub-Clause 8.9 (Employer’s Suspension) allows the Engineer to instruct

the Contractor to suspend progress of part, or all, of the Works. This
could sometimes be when a design change is being considered and
further progress would result in abortive work or rework, but it could
also be caused by circumstances that are external to the project.
Obviously, if all the work is stopped, it is likely that there will be an effect
on the Time for Completion and if part of the work is stopped, this could
also have a similar effect. If the Contractor has resources standing idle,
this will incur Cost, and if the suspension period is lengthy, the
Contractor may be obliged to demobilise and subsequently remobilise
resources which will again incur Cost. Sub-Clause 8.10 (Consequences of
Employer’s Suspension) therefore entitles the Contractor to Claim for an
Extension of Time if the suspension delays the Time for Completion and
for any incurred Cost Plus Profit.
The sub-clause ends with a qualification that if the suspension were
attributable to the Contractor, they would not be entitled to an
Extension of Time or the payment of Cost. Additionally, if the Contractor
fails to protect, store or secure any part of the Works against
deterioration, loss or damage during the period of suspension, the
Contractor shall not be entitled to Claim for time or Cost in making good
the consequences of such a failure.
 TAKING OVER PARTS OF THE WORKS

Applicable to the Red and Yellow Books.

FIDIC uses the following abbreviation in this Sub-Clause, which is defined
as follows:
DNP – Defects Notification Period.
References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow and Silver Books.
Sub-Clause 10.2 (Taking Over Parts) provides that:
The Engineer may, at the sole discretion of the Employer, issue a
Taking-Over Certificate for any part of the Permanent Works.
The Employer shall not use any part of the Works (other than as a
temporary measure, which is either stated in the Specification or
with the prior agreement of the Contractor) unless and until the
Engineer has issued a Taking-Over Certificate for this part. However,
if the Employer does use any part of the Works before the Taking-
Over Certificate is issued, the Contractor shall give a Notice to the
Engineer identifying such part and describing such use, and:

(a) that Part shall be deemed to have been taken over by

the Employer as from the date on which it is used;

(b) the Contractor shall cease to be liable for the care of

such Part as from this date, when responsibility shall
pass to the Employer; and
 (c) the Engineer shall immediately issue a Taking-Over
Certificate for this Part, and any outstanding work to be
completed (including Tests on Completion) and/or
defects to be remedied shall be listed in this certificate.

After the Engineer has issued a Taking-Over Certificate for a Part,

the Contractor shall be given the earliest opportunity to take such
steps as may be necessary to carry out the outstanding work
(including Tests on Completion) and/or remedial work for any
defects listed in the certificate. The Contractor shall carry out these
works as soon as practicable and, in any case, before the expiry date
of the relevant DNP.

If the Contractor incurs Cost as a result of the Employer taking over

and/or using a Part, the Contractor shall be entitled subject to Sub-
Clause 20.2 [Claims For Payment and/or EOT] to payment of such
Cost Plus Profit …

The Contractor is responsible for the Works until such time as a Taking-
Over Certificate is issued. Responsibility for maintenance, security, risk,
insurance and the like transfers from the Contractor to the Employer at
the date of taking over. Sectional completion may be specified in the
Contract, which would allow the Employer to take over each Section
individually but if sectional completion is not specified, then the whole
of the Works should be taken over at the same time.
It is not unusual, however, for the Employer to wish to start to use or
take possession of parts of the Works that are complete but are not
defined as Sections. Sub-Clause 10.2 (Taking Over Parts) allows for this
type of occurrence by providing that, if the Employer so wishes, the
Engineer may issue a Taking-Over Certificate for any part of the
Permanent Works. This allows the Employer to use the part of the
Works in question and transfers liability from the Contractor to the
Employer.
This sub-clause also deals with a situation where the Employer does not
wait for a Taking-Over Certificate to be issued and starts to use a part of
the Works without the Contractor’s agreement. If this is the case, the
part shall be deemed to have been taken over, liability for care shall pass
to the Employer, and the Engineer shall issue a Taking-Over Certificate
from the date that the part was used by the Employer.
If the Contractor incurs Cost as a result of the Employer’s taking over or
using a part of the Works, the Contractor is entitled to the payment of
any such Cost Plus Profit. Time is not an issue here, because taking over
signifies completion of the part of the Works in question.
 INTERFERENCE WITH TESTS ON
COMPLETION

Applicable to the Red, Yellow and Silver Books.

FIDIC uses the following abbreviation in this Sub-Clause, which is defined
as follows:
DNP – Defects Notification Period.

The Red and Yellow Books

Sub-Clause 10.3 (Interference with Tests on Completion) provides that:

If the Contractor is prevented, for more than 14 days (either a

continuous period, or multiple periods which total more than 14
days), from carrying out the Tests on Completion by the Employer’s
Personnel or by a cause for which the Employer is responsible:

(a) the Contractor shall give a Notice to the Engineer

describing such prevention;

(b) the Employer shall be deemed to have taken over the

Works or Section (as the case may be) on the date when
the Tests on Completion would otherwise have been
completed; and

(c) the Engineer shall immediately issue a Taking-Over

Certificate for the Works or Section (as the case may
be).
 After the Engineer has issued this Taking-Over Certificate, the
Contractor shall carry out the Tests on Completion as soon as
practicable and, in any case, before the expiry date of the DNP. The
Engineer shall give a Notice to the Contractor, of not less than 14
days, of the date after which the Contractor may carry out each of
the Tests on Completion. Thereafter, Sub-Clause 9.1 [Contractor’s
Obligations] shall apply.
If the Contractor suffers delay and/or incurs Cost as a result of being
prevented from carrying out the Tests on Completion, the
Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For
Payment and/or EOT] to EOT and/or payment of such Cost Plus
Profit.

The issue of the Taking-Over Certificate is dependent on any specified

Tests on Completion being carried out. This date of taking over is
important because on taking over, the Contractor passes responsibility
for the Works to the Employer. The taking over also defines the Time for
Completion and would be used to calculate any delay penalties that may
be applicable.
If the Employer delays the Tests on Completion for more than 14 days, or
for a combination of periods totalling more than 14 days, the Employer
is deemed to have taken over the Works or Section on the date when
the Tests on Completion would otherwise have been completed and the
Engineer is obliged to issue the Taking-Over Certificate recording the
Time for Completion on this date. The Contractor is entitled to an
Extension of Time to the extent that the delay affected the Time for
Completion and the payment of any Cost Plus Profit.

The Silver Book

The Silver Book is slightly different and contains the following
provisions.

If the Contractor is prevented, for more than 14 days (either a

continuous period, or multiple periods which total more than 14
days), from carrying out the Tests on Completion by the Employer’s
Personnel or by a cause for which the Employer is responsible
(including any performance test that is not possible due to available
operating conditions during trial operation):

(a) the Contractor shall carry out the Tests on Completion

as soon as practicable and, in any case, before the expiry
date of the relevant DNP; and

(b) if the Contractor suffers delay and/or incurs Cost as a

result of being so prevented, the Contractor shall be
entitled subject to Sub-Clause 20.2 [Claims For Payment
and/or EOT] to EOT and/or payment of such Cost Plus
Profit.
The Silver Book is different from the Red and Yellow Books to reflect the
fact that the Employer has the obligation to issue the Taking-Over
Certificate. Once again, however, if the Employer delays the Tests on
Completion, the Contractor is entitled to Claim for an Extension of Time
and the payment of Cost Plus Profit.
 RIGHT OF ACCESS AFTER TAKING OVER

Applicable to the Red, Yellow and Silver Books.

FIDIC uses the following abbreviation in this Sub-Clause, which is defined
as follows:
DNP – Defects Notification Period.
Sub-Clause 11.7 (Right of Access After Taking Over) provides that:
Until the date 28 days after issue of the Performance Certificate, the
Contractor shall have the right of access to the Works as is
reasonably required in order to comply with this Clause, except as
may be inconsistent with the Employer’s reasonable security
restrictions.
Whenever the Contractor intends to access any part of the Works
during the relevant DNP:
(a) the Contractor shall request access by giving a Notice to
the Employer, describing the parts of the Works to be
accessed, the reasons for such access, and the
Contractor’s preferred date for access. This Notice shall
be given in reasonable time in advance of the preferred
date for access, taking due regard of all relevant
circumstances including the Employer’s security
restrictions; and

(b) within 7 days after receiving the Contractor’s Notice, the

Employer shall give a Notice to the Contractor either:
 (i) stating the Employer’s consent to the Contractor’s
request; or

(ii) proposing reasonable alternative date(s), with

reasons. If the Employer fails to give this Notice
within the 7 days, the Employer shall be deemed to
have given consent to the Contractor’s access on
the preferred date stated in the Contractor’s
Notice.

If the Contractor incurs additional Cost as a result of any

unreasonable delay by the Employer in permitting access to the
Works by the Contractor, the Contractor shall be entitled subject to
Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment of any
such Cost Plus Profit.

The Contractor remains responsible for making good any defects during
the Defects Notification Period until 28 days after the Performance
Certificate is issued. During this period, the Works will be being used or
operated by the Employer, so the Contractor will require to arrange
access to the Works to carry out any necessary remedial works.
When the Contractor does require such access, they are obliged to give
Notice to the Employer to enable the Employer to make the necessary
arrangements. The Employer is obliged to give consent or to propose
alternative dates. If the Employer fails to respond, consent to the
Contractor’s proposed date of access is deemed to have been given.
Having confirmed the dates, the Contractor would need to mobilise the
necessary resources and, in some cases, may be required to travel to the
Site and arrange local accommodation while carrying out the work and
could possibly have to arrange for materials or equipment to be
delivered.
If, after the Contractor has made such arrangements, the Employer
delays access unreasonably and this causes the Contractor to incur
additional Cost, the Contractor shall be entitled to payment of any such
Cost Plus Profit.
 CONTRACTOR TO SEARCH

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 11.8 (Contractor to Search) provides that:

The Contractor shall, if instructed by the Engineer, search for the

cause of any defect, under the direction of the Engineer. The
Contractor shall carry out the search on the date(s) stated in the
Engineer’s instruction or other date(s) agreed with the Engineer.
Unless the defect is to be remedied at the cost of the Contractor
under Sub-Clause 11.2 [Cost of Remedying Defects], the Contractor
shall be entitled subject to Sub-Clause 20.2 [Claims For Payment
and/or EOT] to payment of the Cost Plus Profit of the search …
If, during the Defects Notification Period, the cause of a defect is not
apparent, the Engineer has the right to instruct the Contractor to search
for the cause of the defect. If subsequent investigation demonstrates
that the defect is not the responsibility of the Contractor, the
Contractor is entitled to Claim for payment of the Cost Plus Profit
incurred in carrying out the search.
 DELAYED TESTS

Applicable to the Yellow Book.

Sub-Clause 12.2 (Delayed Tests) of the Yellow Book provides that:

If the Contractor incurs Cost as a result of any unreasonable delay
by the Employer in carrying out the Tests after Completion, the
Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For
Payment and/or EOT] to payment of such Cost Plus Profit.

This clause refers to the Tests after Completion, which are, if specified, a
requirement of the Yellow Book. At this time, the Employer will be using
or operating the Works and the tests are required to ensure that the
facility is working in accordance with the Contract under normal
operating conditions. Under Sub-Clause 12.1 (Procedure for Tests after
Completion) of the Yellow Book, the tests are to be carried out by the
Employer, who shall provide all the resources, materials and the like that
are necessary for the tests. The Employer is obliged to give Notice of the
date and the place at which the tests will be carried out and the
Contractor may attend the tests.
If the Contractor incurs Cost as a result of any unreasonable delay by the
Employer in carrying out the Tests after Completion, the Contractor shall
be entitled to payment of such Cost Plus Profit.

Applicable to the Silver Book

FIDIC uses the following abbreviation in this Sub-Clause, which is defined
as follows:
DNP – Defects Notification Period.
Sub-Clause 12.2 (Delayed Tests) of the Silver Book provides that:

If the Contractor has given a Notice under sub-paragraph (c) of Sub-

Clause 12.1 [Procedure for Tests after Completion] that the Works or
Section (as the case may be) are ready for Tests after Completion,
and the Contractor is prevented from carrying out the Tests after
Completion, or these tests are unduly delayed, by the Employer’s
Personnel or by a cause for which the Employer is responsible:

(a) the Contractor shall carry out the Tests after Completion
as soon as practicable and, in any case, before the expiry
date of the relevant DNP; and

(b) if the Contractor incurs Cost as a result of any such

prevention and/or delay, the Contractor shall be entitled
subject to Sub-Clause 20.2 [Claims For Payment and/or
EOT] to payment of such Cost Plus Profit.

If, for reasons not attributable to the Contractor, a Test after

Completion on the Works or any Section cannot be completed
during the DNP (or any other period agreed by both Parties), then
the Works or Section shall be deemed to have passed this Test after
Completion.
This clause refers to the Tests after Completion, which are, if specified, a
requirement of the Silver Book. At this time, the Employer will be using
or operating the Works and the tests are required to ensure that the
facility is working in accordance with the Contract under normal
operating conditions. Under Sub-Clause 12.1 (Procedure for Tests after
Completion) of the Silver Book, the Employer is required to provide all
electricity, water, sewerage, fuel, consumables, materials and the like
and make the Employer’s Personnel and Plant available. The tests are to
be carried out by the Contractor, who shall provide all other apparatus,
materials and the like that are necessary for the tests. The Contractor is
obliged to provide a test programme and give Notice of the date and
the place at which the tests are to be carried out in the presence of the
Employer’s personnel.
If the Contractor incurs Cost as a result of any unreasonable delay by the
Employer in carrying out the Tests after Completion, the Contractor shall
be entitled to payment of such Cost Plus Profit.
 VARIATION PROPOSAL

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 13.3.2 (Variation by Request for Proposal) provides that:

The Engineer may request a proposal, before instructing a Variation,

by giving a Notice (describing the proposed change) to the
Contractor.
The Contractor shall respond to this Notice as soon as practicable,
by either:

(a) submitting a proposal, which shall include the matters

as described in sub-paragraphs (a) to (c) of Sub-Clause
13.3.1 [Variation by Instruction]; or
(b) giving reasons why the Contractor cannot comply (if this
is the case), by reference to the matters described in
sub-paragraphs (a) to (c) of Sub-Clause 13.1 [Right to
Vary].

If the Contractor submits a proposal, the Engineer shall, as soon as

practicable after receiving it, respond by giving a Notice to the
Contractor stating his/her consent or otherwise. The Contractor
shall not delay any work whilst awaiting a response.

If the Engineer gives consent to the proposal, with or without

comments, the Engineer shall then instruct the Variation.
Thereafter, the Contractor shall submit any further particulars that
 the Engineer may reasonably require and the last paragraph of Sub-
Clause 13.3.1 [Variation by Instruction] shall apply.

If the Engineer does not give consent to the proposal, with or

without comments, and if the Contractor has incurred Cost as a
result of submitting it, the Contractor shall be entitled subject to
Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment of
such Cost.

Sub-Clause 13.3 (Variation Procedure) provides that Variations shall be

initiated by the Engineer by either instructing the Variation by giving
Notice or requesting a proposal from the Contractor before instructing
the Variation.
Sub-Clause 13.3.2 (Variation by Request for Proposal) deals with a
situation whereby the Contractor incurs Cost when preparing a proposal
that is subsequently not consented to and allows the Contractor to
Claim for such Cost.
 ADJUSTMENTS FOR CHANGES IN LAWS

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 13.6 (Adjustments for Changes in Laws) provides that:

Subject to the following provisions of this Sub-Clause, the Contract

Price shall be adjusted to take account of any increase or decrease
in Cost resulting from a change in:
(a) the Laws of the Country (including the introduction of
new Laws and the repeal or modification of existing
Laws);
(b) the judicial or official governmental interpretation or
implementation of the Laws referred to in sub-
paragraph (a) above;

(c) any permit, permission, licence or approval obtained by

the Employer or the Contractor under sub-paragraph (a)
or (b), respectively, of Sub-Clause 1.13 [Compliance with
Laws]; or

(d) the requirements for any permit, permission, licence

and/or approval to be obtained by the Contractor under
sub-paragraph (b) of Sub-Clause 1.13 [Compliance with
Laws],
made and/or officially published after the Base Date, which affect
the Contractor in the performance of obligations under the
 Contract. In this Sub-Clause “change in Laws” means any of the
changes under sub-paragraphs (a), (b), (c) and/or (d) above.

If the Contractor suffers delay and/or incurs an increase in Cost as a

result of any change in Laws, the Contractor shall be entitled subject
to Sub-Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or
payment of such Cost …

When the Contractor prices the Works, there is an obligation to include

for complying with the Laws of the Country in which the work is carried
out. The Laws of the Country include local authority or municipality by-
laws as well as statutory building regulations and codes. The
requirements may vary significantly from country to country and
possibly within the same country. If the Laws change after the time that
the Contractor prices the Works (as defined by the Base Date) and the
Contractor’s performance is affected, the Contract Price shall be
adjusted.
Under the Red Book, where the design is provided by the Employer, any
changes to the design that become necessary because of a change in
the Laws of the Country should be initiated by the Engineer and
instructed as a Variation. Payment for the extra or changed work would
be taken into account in the measurement and evaluation process set
out in Sub-Clause 12.3 (Evaluation). Under the Yellow and Silver Books,
the additional or changed works will need to be designed by the
Contractor, submitted for review and approval, and measured and
evaluated separately to provide the sum by which the Contract Price
shall be adjusted.
Whether the changes in the Laws of the Country result in design
changes and Variations or they otherwise cause the Contractor to suffer
delay that affects the Time for Completion or cause the Contractor to
incur additional Cost, the Contractor shall be entitled to an Extension of
Time and reimbursement of the Cost incurred.
 DELAYED PAYMENT

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 14.8 (Delayed Payment) provides that:

If the Contractor does not receive payment in accordance with Sub-

Clause 14.7 [Payment], the Contractor shall be entitled to receive
financing charges compounded monthly on the amount unpaid
during the period of delay. This period shall be deemed to
commence on the expiry of the time for payment specified in Sub-
Clause 14.7 [Payment], irrespective (in the case of sub-paragraph (b)
of Sub-Clause 14.7) of the date on which any IPC is issued. (The last
sentence is not included in the Silver Book.)
Unless otherwise stated in the Contract Data, these financing
charges shall be calculated at the annual rate of three percent (3%)
above:
(a) the average bank short-term lending rate to prime
borrowers prevailing for the currency of payment at the
place of payment, or
(b) where no such rate exists at that place, the same rate in
the country of the currency of payment, or

(c) in the absence of such a rate at either place, the

appropriate rate fixed by the law of the country of the
currency of payment.
 The Contractor shall by request be entitled to payment of these
financing charges by the Employer, without:

(i) the need for the Contractor to submit a Statement or

any formal Notice (including any requirement to comply
with Sub-Clause 20.2 [Claims For Payment and/or EOT])
or certification; and

(ii) prejudice to any other right or remedy.

FIDIC recognises that the Contractor’s cash flow is vital to a successful

project and gives the Contractor entitlement to the payment of
financing charges in the case of late payment. The Contractor is not
obliged to give Notice of such a Claim. Additionally, the Contract
provides that the Contractor does not have to go through the
formalities of Sub-Clause 20.2 (Claims For Payment and/or EOT) but shall
be entitled to payment ‘by request’. Whilst the Contractor is not
required to submit a detailed Claim and particulars, the Contractor
should submit calculations of the amount Claimed.
This sub-clause sets out the method of calculation of the financing
charges by way of the amount unpaid during the period that the
payment is delayed at a rate of 3% over the average bank rate in the
country of the currency of payment. The financing charges may be
compounded monthly, which is to say that the financing charges
themselves may be added to subsequent calculations if they remain
unpaid.
This sub-clause applies not only to a situation whereby the full amount
to which the Contractor is entitled is unpaid but also to shortfalls in such
payment. The amount to which the Contractor is entitled to be paid
would be in accordance with the Engineer’s Payment Certificate under
the Red and Yellow Books and be fairly calculated by the Employer
under the provisions of Sub-Clause 14.6 (Interim Payments) of the Silver
Book.
If the Engineer fails to issue a Payment Certificate under the Red and
Yellow Books, then it is assumed that the Contractor may base their
calculations on the amount included in their application for payment.
 SUSPENSION BY THE CONTRACTOR

Applicable to the Red, Yellow and Silver Books.

FIDIC uses the following abbreviations in this Sub-Clause, which are
defined as follows:
EOT – an extension of the Time of Completion under Sub-Clause
8.5 (Extension of Time for Completion).
DAAB – Dispute Avoidance/Adjudication Board.
Sub-Clause 16.1 (Suspension by Contractor) provides that:
If:

(a) the Engineer fails to certify in accordance with Sub-

Clause 14.6 [Issue of IPC];

(b) the Employer fails to provide reasonable evidence in

accordance with Sub-Clause 2.4 [Employer’s Financial
Arrangements];

(c) the Employer fails to comply with Sub-Clause 14.7

[Payment]; or
(d) the Employer fails to comply with:

(i) a binding agreement, or final and binding

determination under Sub-Clause 3.7 [Agreement or
Determination]; or
 (ii) a decision of the DAAB under 21.4 [Obtaining
DAAB’s Decision] (whether binding or final and
binding)
and such failure constitutes a material breach of the Employer’s
obligations under the Contract,
the Contractor may, not less than 21 days after giving a Notice to the
Employer (which Notice shall state that it is given under this Sub-
Clause 16.1), suspend work (or reduce the rate of work) unless and
until the Employer has remedied such a default.

This action shall not prejudice the Contractor’s entitlements to

financing charges under Sub-Clause 14.8 [Delayed Payment] and to
termination under Sub-Clause 16.2 [Termination by Contractor].

If the Employer subsequently remedies the default as described in

the above Notice before the Contractor gives a Notice of
termination under Sub-Clause 16.2 [Termination by Contractor], the
Contractor shall resume normal working as soon as is reasonably
practicable.

If the Contractor suffers delay and/or incurs Cost as a result of

suspending work (or reducing the rate of work) in accordance with
this Sub-Clause, the Contractor shall be entitled subject to Sub-
Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or
payment of such Cost Plus Profit.
Whilst Sub-Clause 14.8 (Delayed Payment) entitles the Contractor to the
payment of financing charges in the case of delayed payment (see the
previous section herein), Sub-Clause 16.1 (Suspension by Contractor)
introduces a further measure whereby the Contractor is entitled, after
giving 21 days’ Notice, to suspend or reduce the rate of work if any of
the following situations occur:
Failure of the Engineer to certify payment (under the Red and
Yellow Books).
Failure of the Employer to provide evidence of the financial
arrangements that will enable the Employer to pay the contract
Price if such evidence has been requested by the Contractor.
Failure of the Employer to make payment in accordance with
the Contract.
Failure of the Employer to comply with a final and binding
agreement or determination.
Failure of the Employer to comply with a decision of the
Dispute Avoidance/Adjudication Board.
It is likely that any prolonged suspension or reduction in the rate of
work will have an effect on the Time for Completion and that such a
situation will cause the Contractor to incur Cost. If this is the case, the
Contractor is entitled to Claim for an Extension of Time and
reimbursement of the Cost Plus Profit.
 TERMINATION BY THE CONTRACTOR

Applicable to the Red, Yellow and Silver Books.

FIDIC uses the following abbreviation in this Sub-Clause, which is defined
as follows:
DAAB – Dispute Avoidance/Adjudication Board.
Sub-Clause 16.2 (Termination by Contractor) provides that:
The Contractor shall be entitled to give a Notice (which shall state
that it is given under this Sub-Clause 16.2.1) to the Employer of the
Contractor’s intention to terminate the Contract or, in the case of
sub-paragraph (g)(ii), (h), (i) or (j) below a Notice of termination, if:

(a) the Contractor does not receive the reasonable evidence

within 42 days after giving a Notice under Sub-Clause
16.1 [Suspension by Contractor] in respect of a failure to
comply with Sub-Clause 2.4 [Employer’s Financial
Arrangements];

(b) the Engineer fails, within 56 days after receiving a

Statement and supporting documents, to issue the
relevant Payment Certificate; (not included in the Silver
Book)

(c) the Contractor does not receive the amount due under
any Payment Certificate within 42 days after the expiry
of the time stated in Sub-Clause 14.7 [Payment];
(d) the Employer fails to comply with:

(i) a binding agreement, or final and binding

determination under Sub-Clause 3.7 [Agreement or
Determination]; or

(ii) a decision of the DAAB under 21.4 [Obtaining

DAAB’s Decision] (whether binding or final and
binding)

and such failure constitutes a material breach of the

Employer’s obligations under the Contract;

(e) the Employer substantially fails to perform, and such

failure constitutes a material breach of the Employer’s
obligations under the Contract;

(f) the Contractor does not receive a Notice of the

Commencement Date under Sub-Clause 8.1
[Commencement of Works] within 84 days after
receiving the Letter of Acceptance;

(g) the Employer:

(i) fails to comply with Sub-Clause 1.6 [Contract

Agreement], or

(ii) assigns the Contract without the required

agreement under Sub-Clause 1.7 [Assignment];

(h) a prolonged suspension affects the whole of the Works

as described in sub-paragraph (b) of Sub-Clause 8.12
[Prolonged Suspension];
 (i) the Employer becomes bankrupt or insolvent; goes into
liquidation, administration, reorganisation, winding-up
or dissolution; becomes subject to the appointment of a
liquidator, receiver, administrator, manager or trustee;
enters into a composition or arrangement with the
Employer’s creditors; or any act is done or any event
occurs which is analogous to or has a similar effect to
any of these acts or events under applicable Laws; or

(j) the Employer is found, based on reasonable evidence, to

have engaged in corrupt, fraudulent, collusive or
coercive practice at any time in relation to the Works or
to the Contract.

Sub-Clause 16.2.1 sets out the circumstances under which the Contractor
may terminate the Contract. They are:
Failure of the Employer to provide evidence of the financial
arrangements that will enable the Employer to pay the contract
Price if such evidence has been requested by the Contractor.
Failure of the Engineer to certify payment (under the Red and
Yellow Books).
Failure of the Employer to make payment in accordance with
the Contract.
Failure of the Employer to comply with a final and binding
agreement or determination.
Failure of the Employer to comply with a decision of the
Dispute Avoidance/Adjudication Board.
A material breach of the Employer’s obligations under the
Contract.
 If the Contractor does not receive a Notice of the
Commencement Date within 84 days after receiving the Letter
of Acceptance.
If the Employer fails to sign the Contract agreement within 35
days after the Contractor receives the Letter of Acceptance.
If the Employer assigns the Contract without the prior
agreement of the Contractor.
If a prolonged suspension affects the whole of the Works.
If the Employer has financial difficulties.
If the Employer is found to have engaged in corrupt, fraudulent,
collusive or coercive practice.
If the Contractor intends to terminate, the Contractor is obliged to give
a Notice of intention to terminate. Such a Notice provides the Employer
with a 14-day period to remedy the situation.
Sub-Clause 16.2.2 (Termination) provides that:

Unless the Employer remedies the matter described in a Notice

given under Sub-Clause 16.2.1 [Notice] within 14 days of receiving
the Notice, the Contractor may by giving a second Notice to the
Employer immediately terminate the Contract. The date of
termination shall then be the date the Employer receives this
second Notice.
However, in the case of sub-paragraph (g)(ii), (h), (i) or (j) of Sub-
Clause 16.2.1 [Notice], by giving a Notice under Sub-Clause 16.2.1 the
Contractor may terminate the Contract immediately and the date of
termination shall be the date the Employer receives this Notice.
 If the Contractor suffers delay and/or incurs Cost during the above
period of 14 days, the Contractor shall be entitled subject to Sub-
Clause 20.2 [Claims For Payment and/or EOT] to EOT and/or
payment of such Cost Plus Profit.

If the Employer, having received a Notice of intention to terminate, fails

to remedy the situation within 14 days, the Contractor may immediately
terminate the Contract by giving a second Notice. In a case whereby the
Employer assigns the Contract, becomes bankrupt, insolvent or the like
or engages in corrupt or fraudulent practice, the Contractor may
terminate immediately on giving Notice.
If the Contractor suffers delay and/or incurs Cost during the 14-day
period, the Contractor shall be entitled to an Extension of Time and/or
payment of such Cost Plus Profit.
 CONTRACTOR’S OBLIGATIONS AFTER
TERMINATION

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 16.3 (Contractor’s Obligations After Termination) provides
that:
After termination of the Contract under Sub-Clause 15.5
[Termination for Employer’s Convenience], Sub-Clause 16.2
[Termination by Contractor] or Sub-Clause 18.5 [Optional
Termination], the Contractor shall promptly:
(a) cease all further work, except for such work as may have
been instructed by the Engineer for the protection of life
or property or for the safety of the Works. If the
Contractor incurs Cost as a result of carrying out such
instructed work the Contractor shall be entitled subject to
Sub-Clause 20.2 [Claims For Payment and/or EOT] to be
paid such Cost Plus Profit; …

Sub-Clause 15.5 (Termination for Employer’s Convenience) allows the

Employer to terminate the Contract for their own convenience. Sub-
Clause 16.2 (Termination by Contractor) provides that the Contractor
may terminate for various defaults of the Employer and Sub-Clause 18.5
(Optional Termination) allows either Party to terminate if an Exceptional
Event prevents progress of the Works for an extended period or for a
combination of periods.
Sub-Clause 16.3 provides that after termination, the Contractor shall
cease all further work but allows the Engineer to instruct the Contractor
to carry out work for the protection of life or property or for the safety
of the Works. Typically, this may include for safeguarding and protecting
the Works so that it may be recommenced in the future with minimal
damage or deterioration.
If the Contractor incurs Cost as a result of carrying out such instruction,
the Contractor is entitled to Claim for such Cost Plus Profit.
 LIABILITY FOR THE WORKS

Applicable to the Red, Yellow and Silver Books.

References in the Red Book to the Specification are replaced with
Employer’s Requirements in the Yellow and Silver Books.
Sub-Clause 17.2 (Liability for the Works) provides that:
The Contractor shall be liable for any loss or damage caused by the
Contractor to the Works, Goods or Contractor’s Documents after
the issue of a Taking-Over Certificate. The Contractor shall also be
liable for any loss or damage, which occurs after the issue of a
Taking-Over Certificate and which arose from an event which
occurred before the issue of this Taking-Over Certificate, for which
the Contractor was liable.
The Contractor shall have no liability whatsoever, whether by way
of indemnity or otherwise, for loss or damage to the Works, Goods
or Contractor’s Documents caused by any of the following events
(except to the extent that such Works, Goods or Contractor’s
Documents have been rejected by the Engineer under Sub-Clause 7.5
[Defects and Rejection] before the occurrence of any of the
following events):

(a) interference, whether temporary or permanent, with

any right of way, light, air, water or other easement
(other than that resulting from the Contractor’s
method of construction) which is the unavoidable result
 of the execution of the Works in accordance with the
Contract;

(b) use or occupation by the Employer of any part of the

Permanent Works, except as may be specified in the
Contract;
(c) fault, error, defect or omission in any element of the
design of the Works by the Employer or which may be
contained in the Specification and Drawings (and which
an experienced contractor exercising due care would
not have discovered when examining the Site and the
Specification and Drawings before submitting the
Tender), other than design carried out by the
Contractor in accordance with the Contractor’s
obligations under the Contract; (Red Book)

(c) fault, error, defect or omission in any element of the

design of the Works by the Employer or which may be
contained in the Employer’s Requirements (and which
an experienced contractor exercising due care would
not have discovered when examining the Site and the
Employer’s Requirements before submitting the
Tender), other than design carried out by the
Contractor in accordance with the Contractor’s
obligations under the Contract; (Yellow Book)

(c) fault, error, defect or omission in any element of the

design of the Works by the Employer, other than design
carried out by the Contractor in accordance with the
 Contractor’s obligations under the Contract; (Silver
Book)

(d) any operation of the forces of nature (other than those

allocated to the Contractor in the Contract Data) which
is Unforeseeable or against which an experienced
contractor could not reasonably have been expected to
have taken adequate preventative precautions;

(e) any of the events or circumstances listed under sub-

paragraphs (a) to (f) of Sub-Clause 18.1 [Exceptional
Events]; and/or

(f) any act or default of the Employer’s Personnel or the

Employer’s other contractors.

Subject to Sub-Clause 18.4 [Consequences of an Exceptional Event],

if any of the events described in sub-paragraphs (a) to (f) above
occurs and results in damage to the Works, Goods or Contractor’s
Documents the Contractor shall promptly give a Notice to the
Engineer. Thereafter, the Contractor shall rectify any such loss
and/or damage that may arise to the extent instructed by the
Engineer. Such instruction shall be deemed to have been given
under Sub-Clause 13.3.1 [Variation by Instruction].

If the loss or damage to the Works or Goods or Contractor’s

Documents results from a combination of:

any of the events described in sub-paragraphs (a) to (f) above, and

a cause for which the Contractor is liable,

and the Contractor suffers a delay and/or incurs Cost from rectifying
the loss and/or damage, the Contractor shall subject to Sub-Clause
 20.2 [Claims for Payment and/or EOT] be entitled to a proportion of
EOT and/or Cost Plus Profit to the extent that any of the above
events have contributed to such delays and/or Cost.
Sub-Clause 17.1 (Responsibility for Care of the Works) requires the
Contractor to take full responsibility for the care of the Works, Goods
and Contractor’s Documents from the Commencement Date until the
Date of Completion of the Works when responsibility passes to the
Employer.
Sub-Clause 17.2 (Liability for the Works), however, lists events for which
the Contractor has no liability for loss or damage. In brief, these are:
Unavoidable interference with rights of way.
Use or occupation by the Employer of the Works.
Fault, error, defect or omission in the Employer’s Design or
Employer’s Requirements.
Forces of nature.
War, hostilities, invasion or act of foreign enemies.
Rebellion, terrorism, revolution, insurrection, military or
usurped power or civil war.
Riot, commotion or disorder.
Strike or lockout.
Encountering munitions of war, explosive materials, ionising
radiation or contamination by radioactivity.
Natural catastrophes.
If any of the events listed above results in loss or damage to the Works,
Goods or Contractor’s Documents, the Contractor is obliged to comply
with any instructions for rectification issued by the Engineer. Such an
instruction will be treated as a Variation, which entitles the Contractor
to appropriate payment for carrying out the instructed work.
The final part of Sub-Clause 17.2 deals with a situation whereby an event
of the kind listed and a cause for which the Contractor is liable occur
together and provides that the Contractor shall be entitled to Claim for
an Extension of Time and Cost Plus Profit to the extent that any of the
listed events have contributed to such delays and/or Cost.
 EXCEPTIONAL EVENTS

Applicable to the Red, Yellow and Silver Books.

Sub-Clause 18.1 (Exceptional Events) defines an Exceptional Event or
circumstance as follows:
“Exceptional Event” means an event or circumstance which:

(i) is beyond a Party’s control;

(ii) the Party could not reasonably have provided against
before entering into the Contract;

(iii) having arisen, such Party could not reasonably

have avoided or overcome; and

(iv) is not substantially attributable to the other

Party.
An Exceptional Event may comprise but is not limited to any of the
following events or circumstances provided that conditions (i) to
(iv) above are satisfied:

(a) war, hostilities (whether war be declared or not),

invasion, act of foreign enemies;
(b) rebellion, terrorism, revolution, insurrection, military or
usurped power, or civil war;
(c) riot, commotion or disorder by persons other than the
Contractor’s Personnel and other employees of the
 Contractor and Subcontractors;

(d) strike or lockout not solely involving the Contractor’s

Personnel and other employees of the Contractor and
Subcontractors;

(e) encountering munitions of war, explosive materials,

ionising radiation or contamination by radio-activity,
except as may be attributable to the Contractor’s use of
such munitions, explosives, radiation or radio-activity;
or

(f) natural catastrophes such as earthquake, tsunami,

volcanic activity, hurricane or typhoon.
Sub-Clause 18.4 (Consequences of an Exceptional Event) provides that:

If the Contractor is the affected Party and suffers delay and/or incurs
Cost by reason of the Exceptional Event of which he/she gave a
Notice under Sub-Clause 18.2 [Notice of an Exceptional Event], the
Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For
Payment and/or EOT] to:

(a) EOT; and/or

(b) if the Exceptional Event is of the kind described in sub-

paragraphs (a) to (e) of Sub-Clause 18.1 [Exceptional
Events] and, in the case of sub-paragraphs (b) to (e) of
that Sub-Clause, occurs in the Country, payment of such
Cost.

Sub-Clause 18.1 (Exceptional Events) sets the following criteria for an

event to be considered as an Exceptional Event:
 Beyond a Party’s control.
The Party could not reasonably have provided against before
entering into the Contract.
The affected Party could not reasonably have avoided or
overcome.
Not substantially attributable to the other Party.
Provided the above conditions are satisfied, the Contract then illustrates
the types of event that may be considered as Exceptional Events as
follows:
War, hostilities, invasion or act of foreign enemies.
Rebellion, terrorism, revolution, insurrection, military or
usurped power or civil war.
Riot, commotion or disorder.
Strike or lockout.
Encountering munitions of war, explosive materials, ionising
radiation or contamination by radioactivity.
Natural catastrophes.
Sub-Clause 18.4 provides that if the Contractor suffers delay as a result
of an Exceptional Event, the Contractor is entitled to Claim for an
Extension of Time.
Sub-Clause 18.4 also provides that if the Contractor incurs Cost as a
result of the type of event listed in Sub-Clause 18.1, the Contractor is
entitled to Claim for payment of such Cost. There are, however,
qualifications to Cost Claims. Firstly, the Contractor may not Claim for
Costs incurred as a result of natural catastrophes. Secondly, the
Contractor may Claim for Cost caused by rebellion, terrorism, revolution,
insurrection, military or usurped power, civil war, riot, commotion,
disorder, strike, lockout, munitions of war, explosive materials, ionising
radiation or contamination by radioactivity only if the event occurs in
the Country where the Site is located.
 Section 4
Time and Money
 EXTENSION OF TIME

FIDIC uses the following abbreviation in this Sub-Clause, which is defined

as follows:
EOT – an extension of the Time of Completion under Sub-Clause
8.5 (Extension of Time for Completion).
The various clauses that provide the Contractor with entitlement to an
Extension of Time include the wording ‘If the Contractor suffers delay …
as a result of [the type of event described in the sub-clause] the
Contractor shall be entitled … to EOT’.
Sub-Clause 8.5 (Extension of Time for Completion) provides that:
The Contractor shall be entitled … to Extension of Time if and to
the extent that completion for the purposes of Sub-Clause 10.1
[Taking Over the Works and Sections] is or will be delayed …
Sub-Clause 10.1 (Taking Over the Works and Sections) prescribes a list of
requirements for completion after which taking over is defined as when
‘a Taking-Over Certificate for the Works has been issued, or is deemed to
have been issued in accordance with this Sub-Clause’.
Sub-Clause 8.2 (Time for Completion) includes for the following:

The Contractor shall complete the whole of the Works, and each
Section (if any), within the Time for Completion for the Works or
Section (as the case may be), including completion of all work which
is stated in the Contract as being required for the Works or Section
 to be considered to be completed for the purposes of taking over
under Sub-Clause 10.1 [Taking Over the Works and Sections].

From the above provisions, we can ascertain that:

For the Contractor to be entitled to an Extension of Time, any
delay suffered by the Contractor must be of the type described
in the various provisions of the Contract.
For an Extension of Time to be warranted, the Time for
Completion must have been delayed or may be predicted to be
delayed.
The Time for Completion is when the Works or a Section have
been taken over by the Employer.
Taking over by the Employer shall take place when the Works
have been completed in accordance with the Contract, passed
the Tests on Completion and a Taking-Over Certificate has been
issued, or has been deemed to have been issued.
With regard to the Contractor’s entitlement to an Extension of Time, it is
not sufficient for an activity or a sequence of activities to have been
delayed, or for additional work to be instructed to the Contractor. For
the Contractor to be entitled to an Extension of Time, the delay or
additional work must affect the Time for Completion.
Any programme will include float, or spare time, which will need to be
consumed before delays will start to have an effect on the Time for
Completion. If non-critical activities are delayed, there will be no effect
on the Time for Completion, although if sufficient float is consumed by
the delay, the activity may then become critical. In such a situation, a
sequence of activities affected by a delay event of 30 days may contain
20 days of float, so that the net effect on the Time for Completion would
be only 10 days. Activities with no float will comprise the critical path,
which is a series of activities for which delays will have a direct effect on
the Time for Completion. In other words, every day’s delay to a critical
activity will result in a corresponding delay to completion. Consequently,
to demonstrate that entitlement to an Extension of Time exists, it is
necessary firstly, for the event to be something for which the Contract
provides such entitlement and secondly, to demonstrate that the event
has affected, or is predicted to affect, the Time for Completion and by
how long. This provides the linkage between cause and effect, which is
vital for an Extension of Time Claim to succeed. To demonstrate this
linkage, it is necessary to carry out a delay analysis.
It is outside the scope of this book to delve into the complicated matter
of delay analysis but the following overview is appropriate for guidance.
Delay-analysis techniques broadly fall into two categories:
Predictive – where an activity or a fragnet of activities
representing the delay is added to the Contractor’s programme
or updated programme to forecast the effect on the Time for
Completion. A forecast of the effects of the delay on the Time
for Completion will usually be required to comply with FIDIC’s
stated obligation to submit Claims within 84 days of the
occurrence of the delay event.
Retrospective – where the actual or as-built programme is
compared to the Contractor’s planned programme by taking
time segments or windows (usually monthly) to identify any
delays that occurred during each window and the effect on the
Time for Completion. A retrospective form of delay analysis
may be appropriate when the Contractor has not followed the
obligation to submit Claims within the time frames prescribed
 by FIDIC or has left the submission of Claims until the end of the
project – a situation that is neither good practice nor
recommended.
An appropriate form of delay analysis will:
Maintain the logic included within the programme on which the
delay analysis is based or amend the logic only where
appropriate and necessary.
Take into account progress before the delay in question began
to have an effect.
Provide an analysis of the existence or otherwise of concurrent
delay.
The wording used by FIDIC in Sub-Clause 8.5 (Extension of Time for
Completion) is ‘The Contractor shall be entitled … to Extension of Time if
and to the extent that completion for the purposes of Sub-Clause 10.1
[Taking Over the Works and Sections] is or will be delayed …’ (emphasis
added). This is supported by Sub-Clause 20.2.4 (Fully Detailed Claim)
which provides that a ‘fully detailed Claim’ should be submitted within
84 days of the event or circumstance giving rise to the Claim. If the
event has a continuing effect, Sub-Clause 20.2.6 (Claims of Continuing
Effect) obliges the Contractor to submit an interim Claim within 84 days
and further interim Claims at monthly intervals until the final effects may
be ascertained. These provisions indicate that FIDIC places great
emphasis on Claims being submitted in a timely manner. The contracts
do not specify that the Contractor shall wait and see what the effect of a
delay on the Time for Completion will be before submitting the Claim.
There are important reasons for Claims to be submitted as the project
progresses rather than being deferred:
 If an Extension of Time is justified, all the project participants
need to know the revised Time of Completion so that they may
plan to achieve it.
The Employer will be expecting to occupy or use the Works
from the Time for Completion and will need to know if this date
will be delayed.
If the Contractor is entitled to an Extension of Time, this will
negate the Employer’s right to Claim for delay damages, which
will remove any unnecessary negative effects on the
Contractor’s cash flow.
The issue of concurrent delay is a matter that is often misunderstood.
Concurrent delay occurs when a delay event for which the Employer
bears the risk takes place at the same time as a delay event for which
the Contractor is responsible. Such a situation is not generally accepted
as a reason to negate the Contractor’s entitlement to an Extension of
Time for the effect of the Employer’s risk event, because the Time for
Completion would have been delayed by the Employer’s delay even if it
were not for the Contractor’s delay. The important thing to recognise is
that it is not sufficient for an Employer’s delay event and a Contractor’s
delay event to occur at the same time. Concurrent delay does not exist
unless the Employer’s risk event and the Contractor’s delay event both
affect the Time for Completion, which is quite a rare occurrence.
FIDIC, however, provides an option to the Parties under Sub-Clause 8.5
(Extension of Time for Completion), which provides that:

If a delay caused by a matter which is the Employer’s responsibility

is concurrent with a delay caused by a matter which is the
Contractor’s responsibility, the Contractor’s entitlement to EOT
 shall be assessed in accordance with the rules and procedures
stated in the Special Provisions (if not stated, as appropriate taking
due regard of all relevant circumstances).

Consequently, the Parties are free to agree their own rules on

concurrent delay prior to entering into the Contract. Presumably, if this
issue is not pre-agreed, current accepted practice within the industry
should then prevail. This open-ended guidance from FIDIC could lead to
contention, so it is recommended that the Parties ensure that pre-
agreement of the matter is included within the provisions.
In summary, therefore, the following principles must be remembered
when dealing with extension-of-time Claims:
The Contract must provide entitlement to an extension of the
Time for Completion.
The Time for Completion must have been delayed or must be
predicted to be delayed.
Cause and effect must be demonstrated by carrying out a delay
analysis to establish that the delay will affect the Time for
Completion and by how much time.
FIDIC provides that extensions of time may be predicted.
The effect of the delay on the Time for Completion may be
demonstrated by performing a predictive form of delay
analysis.
For concurrent delay to exist, the risk event of both the
Employer and the Contractor must affect the Time for
Completion.
Concurrent delay should be dealt with in accordance with the
contractual requirements.
 PAYMENT OF COST

Many clauses allow one of the Parties to Claim for the reimbursement of
Cost. Cost is a word that is sometimes misinterpreted and is incorrectly
used to describe the rates and/or prices included in the Contract that are
used to calculate the Contract Price and Variations. Such prices are not
Cost but are the Contractor’s estimates of the Cost of carrying out the
work to which overheads and profit have been added. Such prices are
therefore value and not Costs. All the FIDIC forms of contract include
the following definition of Cost under Sub-Clause 1.1.19:
Cost means all expenditure reasonably incurred (or to be incurred)
by the Contractor in performing the Contract, whether on or off the
Site, including taxes, overheads and similar charges, but does not
include profit. Where the Contractor is entitled under a Sub-Clause
of these Conditions to payment of Cost, it shall be added to the
Contract Price.
Cost is therefore the actual Cost incurred by the Contractor and may not
be derived from estimated prices included in the bill of quantities or
other pricing Schedules. This is in line with the legal principle that a Party
that has incurred damage, be it for a breach of contract, an act of
prevention, an act that is permitted under the contract, or for which the
contract provides a remedy, should be put back in the position it would
have been in if the act or event had not occurred.
The various Costs that are claimable under FIDIC may be summarised
within the following broad categories:
Employer’s Claims:

The Cost of electricity, water, gas and Employer’s Equipment.

Additional Costs associated with retesting.
The Cost of remedial work carried out as a result of the
Contractor failing to remedy work or defects.
Additional Costs associated with revised methods of working to
recover progress by the Contractor.
The Cost of completing the Work following termination.

Contractor’s Claims:

Costs associated with extensions to the Time for Completion.

Costs incurred following the discovery of errors in the
Employer’s Requirements.
Costs incurred for dealing with unforeseeable physical
conditions, fossils, articles of value or antiquity and the like.
Costs associated with instructions to vary the specified tests or
with delays to testing caused by the Employer.
Costs incurred because of the Engineer’s instructions to
suspend progress of the Works or part of the Works.
Costs incurred as a result of the Employer’s taking over and/or
using a part of the Works.
Costs incurred because of a delay for which the Employer is
responsible to the carrying out of the Tests on Completion or
the Tests after Completion.
 Costs incurred as a result of any unreasonable delay by the
Employer in permitting access to the Works or Plant in order to
carry out remedial work, adjustments or modifications after
taking over.
Additional Cost associated with changes in legislation.
Financing Costs for delayed payment.
Costs incurred due to suspending work or reducing the rate of
work following failure of the Employer or Engineer to pay,
certify payment or provide details of financial arrangements.
Costs incurred from complying with the Engineer’s instructions
to rectify loss or damage incurred as a result of an Exceptional
Event.
The Employer’s Costs and many of the Contractor’s Costs for the
situations described above may generally be easily established and
substantiated by reference to invoices and payroll information, and
many Claims for such matters will not be substantial in value. The major
exception to this is Claims for Costs incurred by the Contractor
associated with Extensions of Time. These are the most frequently made
Cost Claims and often constitute Claims of high value. The computation
and demonstration of such Claims are also more complicated, so Claims
for prolongation Costs deserve further examination.
If the Contractor completes the project later than envisaged by the
original Time for Completion, there is an obligation to maintain the site
establishment, provide insurances and guarantees, pay financing
charges and contribute to head-office overheads for an additional
period of time equivalent to the delay. If the Contractor is entitled to an
Extension of Time for all or part of the period of delayed completion,
then, under the majority of the clauses allowing for an Extension of
Time, the Contractor is also entitled to the payment of incurred Costs.
Such payment would generally be for the reimbursement of time-
related Costs, otherwise known as prolongation Costs, and would
include the following:
Site management and administration staff.
Time-related hourly paid staff such as drivers, non-productive
plant and machinery operators, timekeepers, storekeepers,
security personnel and the like.
Offices, office equipment, workshops, stores, site hoardings,
temporary works and the like.
Office consumables, water, electricity, telephones, internet and
the like.
Guarantees and insurances.
Bank charges for financing the delayed release of retention.
Head-office overheads.
The important thing to remember here is that a Claim for prolongation
Costs should, in most cases, be based on time-related, as opposed to
production-related, resources and expenditure. For example, a forklift
utilised for materials handling may be deployed for most of the project’s
duration and the Contractor will incur Costs whether it is standing idle or
working but will have allowed in the price for full-time deployment over
a fixed period: this is a time-related Cost. On the other hand, an
excavator would usually be brought to the site to carry out a particular
task and then be demobilised. Unless the operation for which the
excavator is required is delayed or loss of production occurs because of
the Claimable event, then this is a production-related Cost, and not a
time-related one.
One of the principles of Cost recovery is that the Claimable Costs are
those incurred at the time when the delay occurred. This is in line with
the rationale that the Contractor should be put in the position in which
they would have been if the delay had not occurred. Therefore,
prolongation Cost Claims should be based on the resources deployed
and expenditure incurred during the period when the delay occurred
and not for the extended period. The following example illustrates the
correct principles of the calculations:
The contract period is from 1 January to 31 December.
A Claimable delay occurred from 1 June to 30 June (30 days).
After float was consumed, the delay extended the Time for
Completion by 15 days to 15 January.
The prolongation Cost Claim should therefore be for 15 days of
time-related Costs for the Costs incurred during June.
If a delay occurs to activities that are not on the critical path, such delay
will not entitle the Contractor to Claim for an Extension of Time.
Prolongation Costs may, however, occasionally be claimable for a
matter that causes a delay that does not extend the Time for
Completion. To ascertain whether such Costs have been incurred, it is
necessary to carefully examine cause and effect. Certain time-related
resources may be deployed for part of the project’s life and if the
Contractor is prevented from demobilising such resources because of a
claimable delay, then Costs will have been incurred for the additional
time that the resources were kept on the project. This would be a
claimable time-related Cost.
Concurrent delay was discussed in the previous section in which it was
explained that unless stipulated otherwise by the Contract, concurrent
delay should not affect the Contractor’s entitlement to an Extension of
Time. This principle does not, however, apply to the payment of
prolongation Costs. It is accepted within the industry and upheld by
courts and arbitrators that in all but exceptional circumstances, if true
concurrent delay occurs, i.e. an Employer’s delay and a Contractor’s
delay both occur at the same time and both affect the Time for
Completion, the Contractor will not be allowed to Claim for Costs for the
period of concurrency. The principle behind this is that if the Employer’s
delay had not occurred, the Contractor would still have been obliged to
pay for the prolongation Costs because of their own delay.
The wording used by FIDIC in the definition of Cost under Sub-Clause
1.1.19 is as follows:

Cost means all expenditure reasonably incurred (or to be incurred)

by the Contractor in performing the Contract, whether on or off the
Site, including taxes, overheads and similar charges, but does not
include profit (emphasis added).
This provision establishes that FIDIC does not require the Contractor to
wait until all the Cost has been incurred before submitting a Claim. This
is supported by Sub-Clause 20.2.4 (Fully Detailed Claim) which provides
that particulars of the Claim should be submitted within 84 days of the
event or circumstance giving rise to the Claim and, if the event has a
continuing effect, to submit an interim Claim within 84 days and further
interim Claims at monthly intervals until the final Costs may be
ascertained. Consequently, if future Costs can be reasonably predicted,
then the Contractor may do so within the Claim. The reason behind this
is that, provided that the Contractor is entitled to additional payment,
the Engineer and Employer will need to know the amount within a
reasonable time so that necessary provisions may be made.
In summary, therefore, the following principles must be remembered
when dealing with Cost Claims:
The Contract must provide entitlement to Claim for the
payment of Cost.
Cost is actual expenditure incurred, or to be incurred, and may
not be derived from the Contract rates and prices.
Prolongation Costs are generally claimable where entitlement
to an Extension of Time exists under the Contract.
Prolongation Costs are time-related Costs and expenditure.
Prolongation Costs are those incurred during the time when the
delay occurred.
The time period for which prolongation Costs are claimable
equates to the number of days’ Extension of Time.
Prolongation Costs are not claimable for a period of true
concurrent delay.
 PROFIT

Some of the clauses that entitle the Contractor to an extension of the

Time for Completion and payment of Costs incurred contain the
following wording:

If the Contractor suffers delay and/or incurs Cost as a result of …

the Contractor shall be entitled subject to Sub-Clause 20.2 [Claims
For Payment and/or EOT] to … payment of such Cost Plus Profit
(emphasis added).

The clauses that allow for reasonable Cost Plus Profit are as follows:
Red Book: 1.9 (Delayed Drawings or Instructions).
Yellow Book: 1.9 (Errors in the Employer’s Requirements).
Red and Yellow Books: 1.13 and Silver Book: 1.12 (Compliance
with Laws).
Red and Yellow Books: 2.1 (Right of Access to the Site).
Red, Yellow and Silver Books: 4.6 (Co-operation).
Red and Yellow Books: 4.7 (Setting Out).
Red, Yellow and Silver Books: 7.4 (Testing).
Red, Yellow and Silver Books: 7.6 (Remedial Work).
Red, Yellow and Silver Books: 8.10 (Consequences of Employer’s
Suspension).
Red and Yellow Books: 10.2 (Taking Over of Parts).
 Red and Yellow Books: 10.3 (Interference with Tests on
Completion).
Red, Yellow and Silver Books: 11.7 (Right of Access After Taking
Over).
Red, Yellow and Silver Books: 11.8 (Contractor to Search).
Yellow and Silver Books: 12.2 (Delayed Tests).
Red, Yellow and Silver Books: 16.1 (Suspension by Contractor).
Red, Yellow and Silver Books: 16.2 (Termination by Contractor).
Red, Yellow and Silver Books: 16.3 (Contractor’s Obligations
After Termination).
Red, Yellow and Silver Books: 17.2 (Liability for the Works).
From an examination of the above provisions, it may be seen that the
circumstances under which the Contractor is entitled to Claim for Cost
Plus Profit are for events over which the Employer has some measure of
control. The clauses that do not allow profit are for neutral events such
as unforeseeable physical conditions or Exceptional Events, the latter
being events over which the Employer has no control but accepts
responsibility for the risk under the Contract.
Sub-Clause 1.1.20 of the Red and Yellow Books and 1.1.17 of the Silver
Book define Cost Plus Profit as follows:

“Cost Plus Profit” means Cost plus the applicable percentage for
profit stated in the Contract Data (if not stated, five percent (5%)).
Such percentage shall only be added to Cost, and Cost Plus Profit
shall only be added to the Contract Price, where the Contractor is
entitled under a Sub-Clause of these Conditions to payment of Cost
Plus Profit.
Consequently, profit shall be calculated based on a pre-agreed
percentage that is stated in the Contract Data or, if not stated in the
Contract Data, at 5%.
Section 5
Notices
 NOTICES

FIDIC uses the following abbreviations in this Sub-Clause, which are

defined as follows:
EOT – an extension of the Time of Completion under Sub-Clause 8.5
(Extension of Time for Completion).
DNP – Defects Notification Period.

General Requirements for Notices

There are numerous clauses contained in the FIDIC contracts that

require the Employer, the Contractor or the Engineer to give Notice to
the other Party and the giving of Notices is invariably related to matters
of importance that need to be formally recorded. This is so that the
Notice will trigger an action that should be taken: to make the other
Party or the Engineer aware of something that may affect the project; to
provide a record of the giving and receipt of the Notice; and to ensure
that there is a record of the events giving rise to the Notice.
The requirements to give Notice fall into the following general
categories:
Notice that an action required by the Contract needs to be
taken.
Notice that an action required or permitted under the Contract
has been, or will be, taken.
 Notice that an event has occurred that could cause, or is
causing, delay.
Notice that an event has occurred that could cause, or is
causing, the occurrence of additional Cost.
Notice that the Contractor considers that they are entitled to
an Extension of Time.
Notice that either Party considers that the Party is entitled to
additional payment from the other Party.
Notice of instructions by the Engineer.
Notice of an error or default by one of the Parties.
Notice of an agreement or determination.
Notice of disagreement or dissatisfaction with a determination
or decision.
In the author’s experience, when dealing with Claims, contractual
matters and disputes, one of the major failings on the part of the project
participants is that they do not comply with the contractual provisions
regarding the giving of Notices or, if they do comply, the Notices do not
contain the necessary information required to adequately record the
events for future reference, or even to clearly present the facts on a
contemporaneous basis.
Sub-Clause 1.1.56 states that: ‘“Notice” means a written communication
identified as a Notice and issued in accordance with Sub-Clause 1.3 [Notices
and Other Communications]’. Notices are therefore given a high
contractual level of importance and, as such, they are formal documents
that are to be signed by an authorised representative and delivered to
the address and by the means of communication stated in the Contract.
Sub-Clause 1.3 (Notices and Other Communications) states that:
Wherever these Conditions provide for the giving of a Notice
(including a Notice of Dissatisfaction) … the Notice or other
communication shall be in writing and:
(a) shall be:

(i) a paper-original signed by the Contractor’s

Representative, the Engineer, or the authorised
representative of the Employer (as the case may
be); or

(ii) an electronic original generated from any of the

systems of electronic transmission stated in the
Contract Data (if not stated, system(s) acceptable
to the Engineer), where the electronic original is
transmitted by the electronic address uniquely
assigned to each of such authorised
representatives,

or both, as stated in these Conditions; and

(b) if it is a Notice, it shall be identified as a Notice …

(c) delivered by hand (against receipt), or sent by mail or

courier (against receipt), or transmitted using any of the
systems of electronic transmission under sub-paragraph
(a)(ii) above; and

(d) delivered, sent or transmitted to the address for the

recipient’s communications as stated in the Contract
Data. However, if the recipient gives a Notice of another
address, all Notices and other communications shall be
 delivered accordingly after the sender receives such
Notice …
Thus, the Contract includes specific requirements for the format and
delivery of Notices, which are summarised below:
1. Notices shall be in writing.
2. Notices shall be paper originals signed by the authorised
representative of the originator of the Notice, or
3. Electronic documents generated by any of the systems stated
in the Contract Data and sent to the electronic addresses of the
authorised representatives of the other two participants in the
Contract.
4. Notices should be specifically identified as Notices.
5. Notices should be delivered:
a. By hand, in which case a receipt should be obtained, or
b. By mail, or
c. By courier, in which case a receipt should be obtained, or
d. Via any of the systems stated in the Contract Data.
e. To the addresses stated in the Contract Data or to an
alternative address of which Notice has been given.
Other than the fact that Notices shall be written communications
identified as Notices, FIDIC does not offer any advice as to the format or
content of a Notice. Given the fact that Notices have such high
importance and will play an important part in any Claims and dispute
proceedings, it is advisable to ensure that Notices conform to the
following criteria:
Submitted in the format of a letter or other formal document.
 Clearly state that the communication is a Notice.
Contain reference to the contractual clause or clauses under
which the Notice is given.
Clearly describe the events or circumstances giving rise to the
Notice.
Record the dates of the relevant events or circumstances
where appropriate.
Word the Notice so that it may be clearly understood if relied
upon in a Claim or during future dispute proceedings by
someone with no prior knowledge of the events or
circumstances.
Be signed by a person authorised by the Party issuing the
Notice to do so.

Notices Relating to Claims

The submission of Notices relating to Claims is a very important

obligation and the consequences of non-compliance are extremely
serious. Sub-Clause 20.2 (Claims For Payment and/or EOT) has this to say
on the subject of Notices of Claim:

If either Party considers that he/she is entitled to any additional

payment by the other Party (or, in the case of the Employer, a
reduction in the Contract Price) and/or to EOT (in the case of the
Contractor) or an extension of the DNP (in the case of the
Employer) under any Clause of these Conditions or otherwise in
connection with the Contract, the following Claim procedure shall
apply:
 20.2.1 Notice of Claim

The claiming Party shall give a Notice to the Engineer, describing the
event or circumstance giving rise to the cost, loss, delay or
extension of DNP for which the Claim is made as soon as practicable,
and no later than 28 days after the claiming Party became aware, or
should have become aware, of the event or circumstance (the
“Notice of Claim” in these Conditions).
If the claiming Party fails to give a Notice of Claim within this period
of 28 days, the claiming Party shall not be entitled to any additional
payment, the Contract Price shall not be reduced (in the case of the
Employer as the claiming Party), the Time for Completion (in the
case of the Contractor as the claiming Party) or the DNP (in the case
of the Employer as the claiming Party) shall not be extended, and
the other Party shall be discharged from any liability in connection
with the event or circumstance giving rise to the Claim. (emphasis
added)

Simply put, this means that if either Party fails to submit a Notice of
Claim, entitlement to additional time and/or payment will be lost.
Therefore, failure to submit Notices in the correct form and within the
time frame specified in the Contract could prevent the Contractor from
being awarded an Extension of Time, leading to the application of delay
damages or prevent either Party from Claiming payment.
So, why does FIDIC attach such importance to the submission of Notices
of Claim? The answer is simple – it is to make the other Party and the
Engineer aware that the Contractor is suffering delay; that either Party is
incurring Cost; and that either Party intends to make a Claim. Timely
issue of Notices will allow the Employer, the Engineer or the Contractor
to mitigate the circumstances or, if mitigation is not possible, to make
provisions for additional time and/or Cost. If a Notice of Claim is not
submitted, then the claiming Party may have prevented the other Party
from taking such actions and the claiming Party could cause actual
damage to the other Party.
It is a popular misconception that in some legal jurisdictions the law
does not support the provision of time bars and therefore the
requirements for Notices of Claim may be ignored. This is incorrect and
is also an extremely dangerous assumption. Firstly, it may be argued
that if a Party has entered into a contract that makes the giving of a
Notice a condition precedent to entitlement, then the law of contract
will supersede any other legal considerations and the Party will be held
to the provisions contained in the contract. Secondly, failure to comply
with a contractual obligation is a breach of contract for which, if the
failure to perform the obligation causes the other Party to suffer harm,
the other Party may Claim for damages. Thirdly, whilst legal matters may
be put forward and argued during dispute proceedings, it is infinitely
preferable to avoid such a necessity by simply complying with the
contractual obligations and submitting the Notices that are required by
the Contract. The writing and submission of a Notice is not an onerous
task but the referral of a matter to dispute proceedings because of
arguments about the legal application of conditions precedent for the
submission of Notices will be extremely time-consuming and costly.
Contractors are often reluctant to submit Notices of Claim because they
can be regarded negatively by the Engineer and the Employer, and also
because they do not wish to be regarded as being ‘claims conscious’.
Notices often contain what may be regarded as undesirable news by the
Engineer and the Employer, so a negative reaction is a matter of human
nature and may be expected. It must be remembered, however, that it
is the Employer who selects the form of contract, often on the advice of
the Engineer, and if they did not wish the Contractor to submit Notices,
then they would not have made it an obligation to do so. Therefore,
when the Contract contains obligations to submit Notices, they must be
complied with. Engineers who react negatively to the submission of
Notices often do so because the Notices highlight their failings to carry
out their own obligations. Conversely, these same Engineers will often
cite any failure of the Contractor to submit Notices as a reason for
rejecting Claims. If the Contractor is in any doubt as to whether or not to
submit a Notice of Claim and when to submit it, the best course of
action is always to submit a Notice and to do so as soon as possible. If
subsequent events prove that the Notice was not actually called for or
the Contractor decides that they will not follow up with a Claim, then it
is much easier to advise the Engineer that no further action will be taken
than to try to fight a rearguard action because the required Notice of
Claim was not submitted.
Whilst it is important to include information related to the event in a
Notice of Claim, it is advisable not to include more information than is
necessary to comply with the Contract. If a Notice of Claim includes
details of amounts of time or money, or details of a future Claim, it will
more than likely elicit a response that will escalate into a time-wasting
‘ping-pong’ exchange of correspondence. The place to set out the
details of cause, effect, entitlement and quantum of the matter is not in
the Notice of Claim, but in a properly presented and substantiated Claim
after such matters have been carefully investigated and calculated. It is
therefore advisable to comply with Sub-Clause 20.2.1 (Notice of Claim)
and ensure that the Notice includes the required information, but to
refrain from adding anything else unless it is necessary for the proper
recording of the matter. Notices of Claim should be confined to factual
information that cannot be challenged.
Sub-Clause 20.2.1 (Notice of Claim) provides that the claiming Party shall
give a Notice of Claim ‘as soon as practicable, and no later than 28 days
after the claiming Party became aware, or should have become aware, of
the event or circumstance’. There is sometimes contention over when
the Party became aware or should have become aware that an event
would lead to a Claim. For example, the Contractor might not know
when an item required by a Variation instruction will be manufactured
and delivered until finalisation of the details with the supplier. In such a
situation, it would only be at this point in time that any effect on the
Time for Completion could be assessed. The Contractor would
reasonably consider that they became aware of entitlement to an
Extension of Time when the supply details were finalised. The Engineer,
on the other hand, might reasonably consider that the Contractor
became aware on the day that they received the instruction. This type of
situation could lead to the Contractor expending time and effort in
preparing a Claim and having it rejected immediately because the
Engineer considers that the Notice requirements have not been met.
Sub-Clause 20.2.2 (Engineer’s initial response) deals with such a situation
as follows:
If the Engineer considers that the claiming Party has failed to give
the Notice of Claim within the period of 28 days under Sub-Clause
20.2.1 [Notice of Claim] the Engineer shall, within 14 days after
receiving the Notice of Claim, give a Notice to the claiming Party
accordingly (with reasons).
 If the Engineer does not give such a Notice within this period of 14
days, the Notice of Claim shall be deemed to be a valid Notice. If the
other Party disagrees with such deemed valid Notice of Claim the
other Party shall give a Notice to the Engineer which shall include
details of the disagreement. Thereafter, the agreement or
determination of the Claim under Sub-Clause 20.2.5 [Agreement or
Determination of the Claim] shall include a review by the Engineer
of such disagreement.
If the claiming Party receives a Notice from the Engineer under this
Sub-Clause and disagrees with the Engineer or considers there are
circumstances which justify late submission of the Notice of Claim,
the claiming Party shall include in its fully detailed Claim under Sub-
Clause 20.2.4 [Fully detailed Claim] details of such disagreement or
why such late submission is justified (as the case may be).

If the Engineer receives a Notice of Claim which he/she considers does

not comply with the 28-day Notice period and consequently would lead
to any subsequent Claim being time-barred, he/she is obliged to give a
Notice stating the reasons. If the Engineer does not give such a Notice
within 14 days, the claimant’s Notice is deemed to be valid. If the
Engineer does not give a Notice of disagreement, but the other Party
considers that the Notice of Claim does not comply with the 28-day
period, then the other Party may give a Notice to the Engineer with
details of the disagreement. If the claiming Party disagrees with the
Engineer’s Notice or has justifiable reasons for a late submission, then
the claiming Party may include details of such disagreement in the
subsequent Claim. The Engineer is obliged to take into account such
Notices from either Party in this respect when agreeing or determining
the Claim.
Sub-Clause 20.2.4 (Fully detailed Claim) requires the claiming Party to
submit a ‘fully detailed Claim’ that includes ‘a statement of the
contractual and/or other legal basis of the Claim within 84 days after the
claiming Party became aware, or should have become aware, of the event
or circumstance giving rise to the Claim’. Whilst there are no
consequences for failure to submit a fully detailed Claim within the 84-
day period, Sub-Clause 20.2.4 contains the following:
If within this time limit the claiming Party fails to submit the
statement under sub-paragraph (b) above, the Notice of Claim shall
be deemed to have lapsed, it shall no longer be considered as a valid
Notice, and the Engineer shall, within 14 days after this time limit
has expired, give a Notice to the claiming Party accordingly.

Consequently, if the claiming Party fails to submit a statement of the

contractual and/or other legal basis of the Claim within the 84-day
period, the provisions of Sub-Clause 20.2.1 (Notice of Claim) may be
applied and the claiming Party’s entitlement to additional time and/or
payment will be lost. The Engineer is obliged to give Notice of such a
situation to the claiming Party within 14 days of the expiry of the 84-day
submission period.
Sub-Clause 20.2.4 continues:

If the Engineer does not give such a Notice within this period of 14
days, the Notice of Claim shall be deemed to be a valid Notice. If the
other Party disagrees with such deemed valid Notice of Claim the
other Party shall give a Notice to the Engineer which shall include
details of the disagreement. Thereafter, the agreement or
determination of the Claim under Sub-Clause 20.2.5 [Agreement or
 Determination of the Claim] shall include a review by the Engineer
of such disagreement.

If the Engineer does not give a Notice of disagreement but the other
Party considers that the submission of the contractual and/or other legal
basis of the Claim was not given within the 84-day period, then the
other Party may give a Notice to the Engineer with details of
disagreement. In this situation the Engineer must take the other Party’s
disagreement into consideration when agreeing or determining the
Claim.
This clause also deals with a situation where the claiming Party disagrees
with an Engineer’s Notice concerning the late submission of the
statement of the contractual and/or other legal basis of the Claim as
follows:
If the claiming Party receives a Notice from the Engineer under this
Sub-Clause 20.2.4 and if the claiming Party disagrees with such
Notice or considers there are circumstances which justify late
submission of the statement under sub-paragraph (b) above, the
fully detailed Claim shall include details of the claiming Party’s
disagreement or why such late submission is justified (as the case
may be).

Therefore, if the claiming Party disagrees with the Engineer’s Notice or

has justifiable reasons for submitting the statement of the contractual
and/or other legal basis of the Claim after the 84-day period, then the
claiming Party may include details of such disagreement in the Claim.
The Engineer is obliged to take into account Notices from either Party in
respect of late submissions when agreeing or determining the
subsequent Claim.
Detailed advice on the Notice requirements of all the FIDIC 2017
contracts, including examples of Notices for each clause, may be found
in FIDIC 2017 Notices: A Guide to the Requirements, Content and
Composition of Notices Under the Red, Yellow and Silver Books.
 Section 6
Procedure and Presentation
of Claims
 PROCEDURE FOR CLAIMS

FIDIC uses the following abbreviations in this Sub-Clause, which are

defined as follows:
EOT – an extension of the Time of Completion under Sub-Clause 8.5
(Extension of Time for Completion).
DNP – Defects Notification Period.
Sub-Clause 20.1 (Claims) states that:
A Claim may arise:

(a) if the Employer considers that the Employer is entitled

to any additional payment from the Contractor (or
reduction in the Contract Price) and/or to an extension
of the DNP;

(b) if the Contractor considers that the Contractor is

entitled to any additional payment from the Employer
and/or to EOT; or

(c) if either Party considers that he/she is entitled to

another entitlement or relief against the other Party.
Such other entitlement or relief may be of any kind
whatsoever (including in connection with any
certificate, determination, instruction, Notice, opinion
or valuation of the Engineer) except to the extent that
it involves any entitlement referred to in sub-paragraph
(a) and/or (b) above.
 In the case of a Claim under sub-paragraph (a) or (b) above, Sub-
Clause 20.2 [Claims For Payment and/or EOT] shall apply.

In the case of a Claim under sub-paragraph (c) above, where the

other Party or the Engineer has disagreed with the requested
entitlement or relief (or is deemed to have disagreed if he/she does
not respond within a reasonable time), a Dispute shall not be
deemed to have arisen but the claiming Party may, by giving a
Notice refer the Claim to the Engineer and Sub-Clause 3.7
[Agreement or Determination] shall apply. This Notice shall be given
as soon as practicable after the claiming Party becomes aware of
the disagreement (or deemed disagreement) and include details of
the claiming Party’s case and the other Party’s or the Engineer’s
disagreement (or deemed disagreement).
This clause separates Claims into two categories:
Claims for an extension to the Defects Notification Period,
Claims for additional payment from the other Party, and Claims
for Extensions of Time. For such Claims, the Contract directs
that the provisions of Sub-Clause 20.2 (Claims For Payment
and/or EOT) shall apply, and
Any other entitlement or relief against the other Party or, in
other words, a Claim comprising a relatively simple or
straightforward matter. If there is disagreement with such a
Claim by the other Party or the Engineer, or the claiming Party
disagrees with an opinion of the Engineer, the claiming Party
may refer the matter directly to the Engineer for review under
Sub-Clause 3.7 (Agreement or Determination).
The various clauses that provide entitlement to the Employer to Claim
contain wording similar to the following:

If the Employer incurs additional costs as a result of [the event], the

Employer shall be entitled subject to Sub-Clause 20.2 [Claims For
Payment and/or EOT] to payment by the Contractor of the costs
reasonably incurred.
Similarly, the clauses providing entitlement to the Contractor include
the following or similar directions:

If the Contractor suffers delay and/or incurs Cost as a result of [the

event] in accordance with this Sub-Clause, the Contractor shall be
entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT]
to EOT and/or payment of such Cost Plus Profit.

Consequently, in the case of Claims for an extension to the Defects

Notification Period, Claims for additional payment from the other Party,
and Claims for Extensions of Time, the claiming Party is obliged to
comply with Sub-Clause 20.2 (Claims For Payment and/or EOT) when
making the Claim.
Sub-Clause 20.2.1 (Notice of Claim) includes requirements for Notices
related to Claims. Please refer to ‘Section 5 Notices’ herein for a detailed
examination of these requirements.
Sub-Clause 20.2.3 (Contemporary records) states that:

In this Sub-Clause 20.2, “contemporary records” means records that

are prepared or generated at the same time, or immediately after,
the event or circumstance giving rise to the Claim.

The claiming Party shall keep such contemporary records as may be

necessary to substantiate the Claim.
 Without admitting the Employer’s liability, the Engineer may
monitor the Contractor’s contemporary records and/or instruct the
Contractor to keep additional contemporary records. The
Contractor shall permit the Engineer to inspect all these records
during normal working hours (or at other times agreed by the
Contractor), and shall if instructed submit copies to the Engineer.
Such monitoring, inspection or instruction (if any) by the Engineer
shall not imply acceptance of the accuracy or completeness of the
Contractor’s contemporary records.
The Contract here directs the claiming Party to keep contemporary
records that may be necessary to substantiate a Claim and defines
‘contemporary’ as records that are prepared at the time of the event.
The Engineer is entitled to inspect the records and also to instruct the
claiming Party to keep additional or specific records.
It must be remembered that the onus is on the claiming Party to prove
that a Claim is just. Many Claims have failed, not because the claiming
Party is not entitled, but because the Claim has not proved either that
the entitlement exists or that the amount claimed is correct. In order to
prove the case and depending on the type of Claim, the Claim must
therefore demonstrate that the event on which the Claim is based
actually occurred, when it occurred, what effect it had on the
programme and the Time for Completion, why the claiming Party
incurred additional Cost, the amount of such Cost, the quantity of
changed work or the value of Variations and the like. All facts relied
upon, statements made, calculations and the like included within the
Claim must therefore be substantiated; substantiation of all such
matters should be available from the records. If robust contract-
administration systems have been created, the keeping of records
should be a matter of everyday procedure but it is always wise to
consider additional records to be kept when a Claim situation arises.
Sub-Clause 4.21 (Progress Reports) obliges the Contractor to submit
monthly reports containing the following information, much of which
could also become valuable for use as substantiation of future claims:
Description of progress.
Photographs or video recordings showing status.
The status of the manufacture and delivery of Plant and
Materials.
Quality-management documents, inspection reports, test
results and compliance verification.
A list of Variations.
A list of Notices of Claim.
A comparison of actual and planned progress.
Details of events or circumstances that may affect progress.
Additionally, Sub-Clause 6.10 (Contractor’s Records) requires the
following to be included with the progress reports:
(a) occupations and actual working hours of each class of
Contractor’s Personnel;

(b) the type and actual working hours of each of the

Contractor’s Equipment;
(c) the types of Temporary Works used;

(d) the types of Plant installed in the Permanent Works; and

(e) the quantities and types of Materials used

 For each work activity shown in the Programme, at each work
___location and for each day of work.

If the Contractor maintains accurate records of the above, the monthly

progress reports will contain much of the information that may later be
relied upon in Claim situations. A word of warning, however! Because
contractors sometimes don’t wish to report delays and receive criticism,
they are tempted to report progress more favourably than it actually is.
It then becomes difficult to subsequently justify a delay to the Time for
Completion when monthly reports have reported that no delay had
occurred. When reporting progress, it should be remembered that
delays might be attributable to either Party and that accurate reporting
of the predicted effect of all delays on the Time for Completion will
allow the Contractor to identify and mitigate their own delays (and
advise the Engineer of the steps that are being taken) and to provide
early warning of the effect of Employer-responsible delays prior to a
Claim being finalised and submitted.
In addition to the above contractual requirements, contemporary
records may consist of:
Correspondence.
Notices.
Meeting minutes.
Submittal logs.
Marked-up drawings.
Daywork records.
Additional resources mobilised and demobilised.
Orders placed.
 Material deliveries.
Invoices.
Payroll records.
Whilst it is tempting to prepare records, particularly reports,
correspondence, Notices, meeting minutes and the like to be read and
understood contemporaneously by those actively involved in the
project, it is important to remember that if such records are
subsequently to be relied upon in a Claim, they must be able to be
understood by someone without this intimate day-to-day knowledge,
perhaps several months, or even years, later. They must therefore
contain a complete, stand-alone record of the matter in question.
Sub-Clause 20.2.4 (Fully detailed Claim) states that:

In this Sub-Clause 20.2, “fully detailed Claim” means a submission

which includes:

(a) a detailed description of the event or circumstance

giving rise to the Claim;
(b) a statement of the contractual and/or other legal basis
of the Claim;

(c) all contemporary records on which the claiming Party

relies; and

(d) detailed supporting particulars of the amount of

additional payment Claimed (or amount of reduction of
the Contract Price in the case of the Employer as the
claiming Party), and/or EOT Claimed (in the case of the
Contractor) or extension of the DNP Claimed (in the case
of the Employer) …
The requirements for a fully detailed Claim are discussed in detail in the
next section herein.
Sub-Clause 20.2.4 continues as follows:

Within either:
(i) 84 days after the claiming Party became aware, or should
have become aware, of the event or circumstance giving
rise to the Claim,

or

(ii) such other period (if any) as may be proposed by the

claiming Party and agreed by the Engineer, the claiming
Party shall submit to the Engineer a fully detailed Claim.
This imposes an 84-day time limit from the occurrence of the event
giving rise to the Claim for the submission of a fully detailed Claim,
although it also allows the claiming Party to request an extended period.
It is certainly not an onerous task to prepare even a complicated
Contractor’s Claim and to submit it within the 12-week period allowed by
the Contract, but contractors frequently fail to comply with this
obligation because:
They want to wait to see what happens and whether an actual
delay will occur.
They think that it is acceptable to leave Claims until the end of
the project and then to ‘negotiate’.
They do not start to prepare the Claim in a timely manner.
They prefer to consolidate several delay events into one Claim.
They prefer to wait to see if they ‘need’ an extension of time.
 They do not have suitably qualified and experienced resources
available to produce an adequately expressed Claim, so it falls
between the cracks.
Contractors with this approach to Extension of Time Claims will often
disregard the submission period stipulated and then, towards the end of
the project, when it becomes apparent that they will be faced with the
imposition of Delay Damages, they will submit a consolidated Claim for
multiple events. Apart from the fact that late submission is a breach of
contract, this is just not a sensible course of action to adopt. If Claims
are prepared and submitted as the project progresses on the basis of a
stand-alone Claim for each separate delay event, both the preparation
and response to the Claims are relatively easy to carry out. If, on the
other hand, an Extension of Time Claim is for multiple events, then this
becomes a complicated and onerous matter to deal with and settlement
will undoubtedly take a long time. Additionally, if just one of the delay
events in the Claim is disputed by the Engineer, the whole Claim will be
held up until the contested matter is resolved. It should also be
remembered that if Claims are submitted towards the end of the
project, the Engineer’s staff may have started to be demobilised and,
once the Employer has taken over the project, the incentive to consider
the Contractor’s financial situation becomes much less of a concern.
Finally, if the Time for Completion has not been extended as a result of
Extension of Time Claims and the Contractor does not meet the original
Time for Completion, the Employer is within their rights to Claim Delay
Damages. Good practice therefore dictates that Claims be submitted
within the 84-day period prescribed in the Contract and, unless the
events are interconnected, that separate Claims be submitted for each
delay event.
Sub-Clause 20.2.4 continues:

If within this time limit the claiming Party fails to submit the
statement under sub-paragraph (b) above, the Notice of Claim shall
be deemed to have lapsed, it shall no longer be considered as a valid
Notice, and the Engineer shall, within 14 days after this time limit
has expired, give a Notice to the claiming Party accordingly.
If the Engineer does not give such a Notice within this period of 14
days, the Notice of Claim shall be deemed to be a valid Notice. If the
other Party disagrees with such deemed valid Notice of Claim the
other Party shall give a Notice to the Engineer which shall include
details of the disagreement. Thereafter, the agreement or
determination of the Claim under Sub-Clause 20.2.5 [Agreement or
Determination of the Claim] shall include a review by the Engineer
of such disagreement.

If the claiming Party receives a Notice from the Engineer under this
Sub-Clause 20.2.4 and if the claiming Party disagrees with such
Notice or considers there are circumstances which justify late
submission of the statement under sub-paragraph (b) above, the
fully detailed Claim shall include details of the claiming Party’s
disagreement or why such late submission is justified (as the case
may be).

Sub-Clause 20.2.4 requires the claiming Party to submit a ‘fully detailed

Claim’ that includes ‘a statement of the contractual and/or other legal
basis of the Claim’. Whilst there are no consequences for failure to
submit a fully detailed Claim within the 84-day period, Sub-Clause 20.2.4
provides that if the claiming Party fails to submit a statement of the
contractual and/or other legal basis of the Claim within the 84-day
period, the provisions of Sub-Clause 20.2.1 (Notice of Claim) may be
applied and the claiming Party’s entitlement to additional time and/or
payment will be lost.
The Engineer is obliged to give Notice of such a situation to the claiming
Party within 14 days of the expiry of the 84-day submission period. If the
Engineer does not give a Notice of disagreement, but the other Party
considers that the submission of the contractual and/or other legal basis
of the Claim was not given within the 84-day period, then the other
Party may give a Notice to the Engineer with details of disagreement. In
this situation the Engineer must take the other Party’s disagreement
into consideration when agreeing or determining the Claim.
This clause also deals with a situation where the claiming Party disagrees
with an Engineer’s Notice concerning the late submission of the
statement of the contractual and/or other legal basis of the Claim and
provides that if the claiming Party disagrees with the Engineer’s Notice
or has justifiable reasons for submitting the statement of the
contractual and/or other legal basis of the Claim after the 84-day period,
then the claiming Party may include details of such disagreement in the
Claim. The Engineer is obliged to take into account Notices from either
Party in respect of late submissions when agreeing or determining the
subsequent Claim.
Please refer to the preceding section, ‘Notices’, for a more detailed
examination of Notices related to Claims.
Finally, Sub-Clause 20.2.4 directs us to Sub-Clause 20.2.6 as follows:

If the event or circumstance giving rise to the Claim has a continuing

effect, Sub-Clause 20.2.6 [Claims of continuing effect] shall apply.
Although 84 days should be more than enough time to prepare and
submit the vast majority of Claims, FIDIC recognises that there may
sometimes be occasions where the final effects of a Claim event might
not be ascertained within the 84-day period for the submission of the
fully detailed Claim. Sub-Clause 20.2.6 (Claims of continuing effect) deals
with such eventualities as follows:
If the event or circumstance giving rise to a Claim under this Sub-
Clause 20.2 has a continuing effect:
(a) the fully detailed Claim submitted under Sub-Clause
20.2.4 [Fully detailed Claim] shall be considered as
interim;

(b) in respect of this first interim fully detailed Claim, the

Engineer shall give his/her response on the contractual
or other legal basis of the Claim, by giving a Notice to
the claiming Party, within the time limit for agreement
under Sub-Clause 3.7.3 [Time limits];

(c) after submitting the first interim fully detailed Claim the
claiming Party shall submit further interim fully detailed
Claims at monthly intervals, giving the accumulated
amount of additional payment Claimed (or the
reduction of the Contract Price, in the case of the
Employer as the claiming Party), and/or extension of
time Claimed (in the case of the Contractor as the
claiming Party) or extension of the DNP (in the case of
the Employer as the claiming Party); and

(d) the claiming Party shall submit a final fully detailed

Claim within 28 days after the end of the effects
 resulting from the event or circumstance, or within such
other period as may be proposed by the claiming Party
and agreed by the Engineer. This final fully detailed
Claim shall give the total amount of additional payment
Claimed (or the reduction of the Contract Price, in the
case of the Employer as the claiming Party), and/or
extension of time Claimed (in the case of the Contractor
as the claiming Party) or extension of the DNP (in the
case of the Employer as the claiming Party).
Consequently, if the final effects of a Claim may not be ascertained, the
Contractor must submit an interim Claim within 84 days and further
monthly interim Claims until the final effects may be determined.
After receipt of the first interim Claim, the Engineer is obliged, within 42
days, to give a Notice to the claiming Party containing his/her response
to the contractual and/or other legal basis of the Claim.
Each interim Claim should be based on the best information that the
claiming Party has available at the time, and each update should be
based on additional and/or more accurate information as it becomes
available. The claiming Party should submit a final Claim within 28 days
after the effects have ended. This procedure ensures that the Engineer
and the other Party are kept updated as to the latest estimates of time
and/or Cost to enable them to take appropriate action.
Sub-Clause 20.2.7 (General Requirements) states that:

After receiving the Notice of Claim, and until the Claim is agreed or
determined under Sub-Clause 20.2.5 [Agreement or Determination
of the Claim], in each Payment Certificate the Engineer shall include
such amounts for any Claim as have been reasonably substantiated
 as due to the claiming Party under the relevant provision of the
Contract.
This provision obliges the Engineer to certify amounts that he/she
considers have been reasonably substantiated as being payable to the
claiming Party in each Payment Certificate. Consequently, payment may
not be withheld until all the details of the Claim are finalised. This is in
keeping with FIDIC’s philosophy that the Contractor should be paid
promptly for what they are fairly entitled to. The amount ‘reasonably
substantiated’ would not, however, be available until such time as the
claiming Party has submitted the fully detailed Claim. Payment and cash
flow are, therefore, another incentive for the claiming Party to comply
with the time frame for submission of the Claim.
Sub-Clause 20.2.7 continues:
The Employer shall only be entitled to Claim any payment from the
Contractor and/or to extend the DNP, or set off against or make any
deduction from any amount due to the Contractor, by complying
with this Sub-Clause 20.2.

This provides that the Employer must follow the procedures and
provisions of Sub-Clause 20.2 before making any deductions from, or
setting off against, any monetary amounts that are due for payment.
This also applies to any extension of the Defects Notification Period.
Finally, this sub-clause includes the following additional condition to
entitlement:
The requirements of this Sub-Clause 20.2 are in addition to those of
any other Sub-Clause which may apply to the Claim. If the claiming
Party fails to comply with this or any other Sub-Clause in relation to
the Claim, any additional payment and/or any EOT (in the case of
 the Contractor as the claiming Party) or extension of the DNP (in
the case of the Employer as the claiming Party) shall take account of
the extent (if any) to which the failure has prevented or prejudiced
proper investigation of the Claim by the Engineer.
The individual requirements of the clauses that provide entitlement to
Claims must, therefore, also be complied with in addition to the
requirements of Sub-Clause 20.2.
If the claiming Party fails to keep records or to submit the Claim within
the time frame specified, the Engineer may take into account the extent
that this has prevented him/her from undertaking a proper investigation
into the matter – a situation that could result in a reduced award.
In summary, the procedure to be followed by the claiming Party after
giving a Notice of Claim is as follows:
The claiming Party must keep contemporary records to
substantiate the Claim.
The claiming Party should comply with any requirements
contained elsewhere in the Contract in relation to the Claim.
The claiming Party should submit a fully detailed Claim within
84 days of the occurrence of the event giving rise to the Claim.
If the final effects of the Claim may not be ascertained within
the 84-day submission period, the Claim should be submitted
on an interim basis.
Further interim Claims should be submitted on a monthly basis
until the final effects may be ascertained.
In the case of interim Claims, a final Claim should be submitted
within 28 days of the end of the effects.
 PARTICULARS OF THE CLAIM

FIDIC uses the following abbreviations in this Sub-Clause, which are

defined as follows:
EOT – an extension of the Time of Completion under Sub-Clause 8.5
(Extension of Time for Completion).
DNP – Defects Notification Period.
Sub-Clause 20.2.4 (Fully detailed Claim) states that:
In this Sub-Clause 20.2, “fully detailed Claim” means a submission
which includes:
(a) a detailed description of the event or circumstance
giving rise to the Claim;
(b) a statement of the contractual and/or other legal basis
of the Claim;

(c) all contemporary records on which the claiming Party

relies; and
(d) detailed supporting particulars of the amount of
additional payment Claimed (or amount of reduction of
the Contract Price in the case of the Employer as the
claiming Party), and/or EOT Claimed (in the case of the
Contractor) or extension of the DNP Claimed (in the case
of the Employer) …
It is a fundamental principle that the onus is on the claiming Party to
prove that the Claim is just. Failure to submit adequately expressed
Claims is, however, one of the major reasons for the rejection of Claims
and for Claims to become escalated into time-consuming and costly
disputes. The Engineer certainly does not have an obligation to go
looking for reasons why a Claim should be awarded if the Claim itself
does not clearly set out those reasons.
FIDIC goes a little way to describe what ‘a fully detailed Claim’ should
consist of, but the content of the Claim is where many Claims fail. The
object of a Claim is to convince the Engineer and ultimately the other
Party that the claiming Party is entitled to an award and the amount of
such an award in terms of time and money. As an absolute minimum,
therefore, the detailed particulars of the Claim should include the
following:
Examination of the cause, i.e. what happened to give rise to the
Claim.
Examination of the effect of, and linkage to, the cause, i.e. a
delay to existing activities, the introduction of additional
activities, the incurrence of Cost or the entitlement to
additional payment for a Variation.
In the case of an extension-of-time Claim, a demonstration of
the final effect of the delay on the Time for Completion by way
of a delay analysis accompanied by an explanatory narrative.
In the case of a Cost Claim or a Claim for additional payment
because of a Variation, calculations of the additional payment
with explanations.
 Examination and demonstration of the contractual entitlement,
expressed by FIDIC as ‘a statement of the contractual and/or
other legal basis of the Claim’.
Demonstration of compliance with the conditions precedent
for Notices.
Substantiation of all the above by the inclusion of copies of the
contemporary records within the Claim.
However, it is not sufficient to include the bare details of the above
within the Claim without further explanation. If the Engineer is going to
be convinced that an award is warranted, the information contained
within the Claim must be able to be clearly understood and the Claim
must contain justifiable reasons for an award. There are, therefore, four
key points to bear in mind when compiling and presenting Claims:
Make the respondent’s job as easy and as pleasant as possible.
If the respondent cannot understand the Claim, cannot find
documents that are referenced within the Claim, is unable to
understand calculations, then they will not be well disposed
towards the Party that has caused them such difficulties and
will not be sympathetic to the Claim itself.
Ensure that the Claim submission is a stand-alone document.
The Claim should be presented in such a way that the person(s)
reviewing the Claim may reach a full understanding of the
matter. The submitted information should therefore include an
explanatory narrative, substantiation of the facts relied upon,
programmes, delay analyses, drawings, measurements,
evaluations, Cost calculations and the like, as are appropriate
for the Claim in question.
 Assume that the respondent has no prior knowledge. A Claim
should be addressed to someone who is not familiar with the
project or the circumstances of the Claim. The rationale to be
adopted is that if the Claim is not responded to equitably, it is
likely to be further reviewed in dispute proceedings.
Consequently, it must be able to be understood from A to Z by
someone with no prior knowledge of the matter.
Do not include any irrelevant information. Whilst it is tempting
to include masses of information within a Claim, this is not good
practice. An overload of information will, at best, make the
respondent’s job tedious and difficult and, at worst, confuse
the respondent. If the respondent is confused, they will not be
sufficiently confident to conclude that entitlement to an award
exists. Remember that quantity is never a substitute for quality;
efforts should be made to explain the matter as clearly and
concisely as possible in such a way as to leave the respondent in
no doubt as to the conclusions that should be reached.
Whilst the FIDIC contracts do not give much guidance on the content or
format of the particulars of a Claim, if the Contractor has a just Claim
and this basic advice is followed, it is likely that Claims will be agreed at
project level in a timely manner. If the Engineer fails to comply with
his/her obligations to deal with Claims equitably and the matter is
escalated to a dispute, then experience shows that the Dispute
Avoidance/Adjudication Board will usually decide in favour of the
Contractor.
Finally, even when contractors are faced with delay penalties,
prolongation Costs and Variations that comprise huge sums of money,
they are often reluctant to invest in the resources necessary to produce
professionally prepared Claims. In such cases, they will therefore often
fail to secure their entitlement because their Claims have been
inadequately expressed. This is undoubtedly a penny-wise-pound-foolish
strategy because if a cheaply produced and poorly compiled Claim is
submitted, there is a very good chance that either no award will be
forthcoming, or the matter will need to be escalated to a time-
consuming and costly dispute to obtain entitlement. In the latter case, if
the Dispute Avoidance/Adjudication Board or arbitrators are to be
convinced of the Claim’s merits, it will then become necessary to
improve the Claim’s submission. It is therefore undoubtedly a better
strategy to ensure that properly qualified and experienced resources are
utilised for the Claim’s preparation in the first instance.
 Section 7
Responses and
Determinations
 THE ENGINEER’S RESPONSES AND
DETERMINATIONS

FIDIC uses the following abbreviations in this Sub-Clause, which are

defined as follows:
EOT – an extension of the Time of Completion under Sub-Clause
8.5 (Extension of Time for Completion).
DAAB – Dispute Avoidance/Adjudication Board.
DNP – Defects Notification Period.
NOD – Notice of Dissatisfaction.
In this section, references to ‘the Engineer’ should generally be
regarded as being to ‘the Employer’s Representative’ under the Silver
Book contract.
Sub-Clause 20.2 (Claims For Payment and/or EOT) states that:

If either Party considers that he/she is entitled to any additional

payment by the other Party (or, in the case of the Employer, a
reduction in the Contract Price) and/or to EOT (in the case of the
Contractor) or an extension of the DNP (in the case of the
Employer) under any Clause of these Conditions or otherwise in
connection with the Contract, the following Claim procedure shall
apply:
The following is extracted from Sub-Clause 20.2 and examines the
Engineer’s responsibilities and obligations after a Claim is submitted.
Sub-Clause 20.2.5 (Agreement or Determination of the Claim) states that:

After receiving a fully detailed Claim either under Sub-Clause 20.2.4

[Fully detailed Claim], or an interim or final fully detailed Claim (as
the case may be) under Sub-Clause 20.2.6 [Claims of continuing
effect], the Engineer shall proceed under Sub-Clause 3.7
[Agreement or Determination] to agree or determine:

(a) the additional payment (if any) to which the claiming

Party is entitled or the reduction of the Contract Price
(in the case of the Employer as the claiming Party);
and/or

(b) the extension (if any) of the Time for Completion

(before or after its expiry) under Sub-Clause 8.5
[Extension of Time for Completion] (in the case of the
Contractor as the claiming Party), or the extension (if
any) of the DNP (before its expiry) under Sub-Clause
11.3 [Extension of Defects Notification Period] (in the
case of the Employer as the claiming Party),

to which the claiming Party is entitled under the Contract.

Claims may therefore be submitted on a final or interim basis for:

Additional payment by the Employer or Contractor.
A reduction of the Contract Price by the Employer.
An extension of the Time for Completion by the Contractor.
An extension of the Defects Notification Period by the
Employer.
When the Engineer receives the fully detailed Claim, he/she is directed
by the above to agree or determine the matter to which the claiming
Party is entitled in accordance with the provisions of Sub-Clause 3.7
(Agreement or Determination). The procedure set out in Sub-Clause 3.7 is
examined later in this section.
Sub-Clause 20.2.5 continues:

If the Engineer has given a Notice under Sub-Clause 20.2.2

[Engineer’s initial response] and/or under Sub-Clause 20.2.4 [Fully
detailed Claim], the Claim shall nevertheless be agreed or
determined in accordance with this Sub-Clause 20.2.5. The
agreement or determination of the Claim shall include whether or
not the Notice of Claim shall be treated as a valid Notice taking
account of the details (if any) included in the fully detailed Claim of
the claiming Party’s disagreement with such Notice(s) or why late
submission is justified (as the case may be).

Sub-Clause 20.2.1 (Notice of Claim) obliges the claiming Party to give a

Notice of Claim to the Engineer within 28 days after the claiming Party
became aware, or should have become aware, of the event or
circumstance giving rise to the Claim. Sub-Clause 20.2.2 (Engineer’s initial
response) requires the Engineer to give Notice to the claiming Party if
he/she considers that the provisions relating to the Notice of Claim have
not been complied with. If the Engineer does not give such a Notice and
the other Party considers that the claiming Party has not complied with
this provision, then the other Party may give a Notice of such to the
Engineer.
Sub-Clause 20.2.4 (Fully detailed Claim) obliges the claiming Party to
submit a fully detailed Claim within 84 days after the claiming Party
became aware, or should have become aware, of the event or
circumstance giving rise to the Claim, or such other period that may
have been agreed. The Claim must include ‘a statement of the
contractual and/or other legal basis of the Claim’. Whilst there are no
consequences for failure to submit the fully detailed Claim within this
time limit, if the claiming Party fails to submit the statement of the
contractual and/or other legal basis of the Claim within the time limit,
this renders the Notice of Claim invalid and removes any entitlement
that the claiming Party may otherwise have had. Sub-Clause 20.2.2
(Engineer’s initial response) obliges the Engineer to give Notice to the
claiming Party if the statement of the contractual and/or other legal
basis of the Claim has not been submitted within the time limit. If the
Engineer does not give such a Notice and the other Party considers that
the claiming Party has not complied with this provision, then the other
Party may give a Notice of such to the Engineer.
If either the Engineer or the other Party has given Notice of non-
compliance with a Notice of Claim or with the statement of the
contractual and/or other legal basis of the Claim and the claiming Party
disagrees with such Notices, or if there are circumstances that justify
late submission, the claiming Party may include details of the
disagreement or justification for late submission within the fully detailed
Claim.
Even if a Notice of non-compliance has been given, Sub-Clause 20.2.5
(Agreement or Determination of the Claim) still obliges the Engineer to
proceed to agree or determine the Claim under the provisions of Sub-
Clause 3.7 (Agreement or Determination). In such a case, the Engineer is
directed to take into account the validity of the Notice of Claim and/or
the late submission of the statement of the contractual and/or other
legal basis of the Claim as well as any disagreement or justification with
regard to such Notices of non-compliance included in the fully detailed
Claim. Sub-Clause 20.2.5 provides the Engineer with further directions in
this regard as follows:

The circumstances which may be taken into account (but shall not
be binding) may include:

whether or to what extent the other Party would be

prejudiced by acceptance of the late submission;

in the case of the time limit under Sub-Clause 20.2.1 [Notice of

Claim], any evidence of the other Party’s prior knowledge of
the event or circumstance giving rise to the Claim, which the
claiming Party may include in its supporting particulars;
and/or

in the case of the time limit under Sub-Clause 20.2.4 [Fully

detailed Claim], any evidence of the other Party’s prior
knowledge of the contractual and/or other legal basis of the
Claim, which the claiming Party may include in its supporting
particulars.

This allows the Engineer to take into account any circumstances that
may render the non-compliance with the time bars excusable and, on
the face of it, provides the claiming Party with some comfort. Claiming
Parties should, however, remain aware that Sub-Clauses 20.2.1 (Notice of
Claim) and 20.2.4 (Fully detailed Claim) clearly state that the claiming
Party shall lose entitlement and the other Party shall be discharged of all
liability in the case of non-compliance. It is doubtful, therefore, that the
Engineer would go against this very strict provision, particularly where
the Contractor is the claimant. Additionally, the above directions to the
Engineer when taking these matters into account are stated as being
non-binding, so any such examination by the Engineer must remain as a
matter of advice to the Parties when agreeing or determining the Claim.
Claiming Parties who seek to rely on this provision as a ‘lifebelt’ will be
treading on very dangerous ground and are advised to always comply
with the time frames for the submission of Notices of Claim and the
statement of the contractual and/or other legal basis of the Claim.
Sub-Clause 20.2.5 (Agreement or Determination of the Claim) directs the
Engineer to agree or determine the additional payment, the reduction
of the Contract Price, the Extension of Time, or the extension of the
Defects Notification Period that the claiming Party may be due as a
result of the Claim.
Sub-Clause 20.2.7 (General Requirements) provides the following:
The requirements of this Sub-Clause 20.2 are in addition to those of
any other Sub-Clause which may apply to the Claim. If the claiming
Party fails to comply with this or any other Sub-Clause in relation to
the Claim, any additional payment and/or any EOT (in the case of
the Contractor as the claiming Party) or extension of the DNP (in
the case of the Employer as the claiming Party) shall take account
of the extent (if any) to which the failure has prevented or
prejudiced proper investigation of the Claim by the Engineer.

Consequently, this provision allows the Engineer to take into account

any failure to comply with the Contract in connection with the Claim,
which may have prevented or prejudiced investigation of the Claim
when agreeing or determining the Claim.
Sub-Clause 20.2.5 deals with situations where the Engineer requires
additional particulars of the Claim as follows:

If, having received the fully detailed Claim under Sub-Clause 20.2.4
[Fully detailed Claim], or in the case of a Claim under Sub-Clause
 20.2.6 [Claims of continuing effect] an interim or final fully detailed
Claim (as the case may be), the Engineer requires necessary
additional particulars:

(i) he/she shall promptly give a Notice to the claiming

Party, describing the additional particulars and the
reasons for requiring them;
(ii) he/she shall nevertheless give his/her response on the
contractual and/or other legal basis of the Claim, by
giving a Notice to the claiming Party, within the time
limit for agreement under Sub-Clause 3.7.3 [Time
limits];

(iii) as soon as practicable after receiving the

Notice under sub-paragraph (i) above, the claiming
Party shall submit the additional particulars; and

(iv) the Engineer shall then proceed under Sub-

Clause 3.7 [Agreement or Determination] to agree or
determine the matters under sub-paragraphs (a)
and/or (b) above (and, for the purpose of Sub-Clause
3.7.3 [Time limits], the date the Engineer receives the
additional particulars from the claiming Party shall be
the date of commencement of the time limit for
agreement under Sub-Clause 3.7.3).

It is often the case that the Engineer will receive a Claim that is poorly
expressed; in fact, inadequately expressed Claims have been one of the
leading causes of disputes for many years. The Engineer, either through
his/her own knowledge or from the details that have been submitted,
may consider that entitlement may exist in principle but that
information is missing from the Claim that prevents a firm conclusion
from being reached. This uncertainty may rest with the contractual
entitlement itself or with the amount of time or payment claimed. FIDIC
deals with such an eventuality and provides an option for the Engineer
to respond with a Notice containing a request for further particulars. In
such a case, the Engineer is obliged to respond on the contractual
and/or other legal basis of the Claim by Notice. When additional
particulars are requested, the Engineer must proceed to agree or
determine the Claim within the time limits set out in Sub-Clause 3.7.3
(Time limits), from the time that the additional particulars are received.
Sub-Clause 20.2.7 (General Requirements) states that:

After receiving the Notice of Claim, and until the Claim is agreed or
determined under Sub-Clause 20.2.5 [Agreement or Determination
of the Claim], in each Payment Certificate the Engineer shall include
such amounts for any Claim as have been reasonably substantiated
as due to the claiming Party under the relevant provision of the
Contract.

The Employer shall only be entitled to Claim any payment from the
Contractor and/or to extend the DNP, or set off against or make
any deduction from any amount due to the Contractor, by
complying with this Sub-Clause 20.2.

The above recognises that cash flow is vital to the Contractor and,
therefore, to the project and it provides that the Engineer shall certify
any amounts for payment that have been reasonably substantiated
pending final agreement or determination of any Claim. This provision
also prevents the Engineer or the Employer from extending the Defects
Notification Period or deducting the value of Employer’s Claims from the
Contractor’s payment certificates or payments until the Claim process
has been followed and a Notice of agreement or determination has
been issued by the Engineer.
Sub-Clause 20.2.5 (Agreement or Determination of the Claim) provides
that the Engineer shall proceed under Sub-Clause 3.7 (Agreement or
Determination) to agree or determine entitlement to additional payment
by the Employer or Contractor, a reduction of the Contract Price by the
Employer, an extension of the Time for Completion or an extension of
the Defects Notification Period.
Sub-Clause 3.7 (Agreement or Determination) directs the Engineer as
follows:
When carrying out his/her duties under this Sub-Clause, the
Engineer shall act neutrally between the Parties and shall not be
deemed to act for the Employer.

Under the provisions of Sub-Clause 3.2 (Engineer’s Duties and Authority),

the Engineer is ‘deemed to act for the Employer’. When the Engineer is
acting under Sub-Clause 3.7, however, note should be made of the
Engineer’s specific obligation to ‘act neutrally between the Parties and
shall not be deemed to act for the Employer’. Sub-Clause 3.7 therefore
dictates that the Engineer does not adopt a defensive position on behalf
of the Employer and obliges the Engineer to deal with Claims equitably
in accordance with the Contract. Engineers who adopt an overly
defensive position to Claims will often cause the Contractor to escalate
matters to disputes to secure their rightful entitlement. Such a situation
is to the ultimate disadvantage of the Employer who will then have to
spend time and substantial amounts of money on dispute proceedings,
only to subsequently find that the outcome is often in favour of the
Contractor.
Sub-Clause 3.7 further directs the Engineer that:

Whenever these Conditions provide that the Engineer shall proceed

under this Sub-Clause to agree or determine any matter or Claim,
the following procedure shall apply:
3.7.1 Consultation to reach agreement

The Engineer shall consult with both Parties jointly and/or

separately, and shall encourage discussion between the Parties in
an endeavour to reach agreement. The Engineer shall commence
such consultation promptly to allow adequate time to comply with
the time limit for agreement under Sub-Clause 3.7.3 [Time limits].
Unless otherwise proposed by the Engineer and agreed by both
Parties, the Engineer shall provide both Parties with a record of the
consultation.
The Engineer is therefore obliged to consult with both Parties to try to
reach agreement on the Claim. Experience has shown that this
obligation is sometimes completely ignored, or that the Engineer
consults only with the Employer to seek their opinion. This means that
both the Contractor and the Employer are denied the opportunity to
discuss the matter and to put forward their opinions. Such a lack of
consultation will more than likely prevent the Parties from agreeing the
matter and will only encourage disputes.
Sub-Clause 3.7.1 continues:
If agreement is achieved, within the time limit for agreement under
Sub-Clause 3.7.3 [Time limits], the Engineer shall give a Notice to
 both Parties of the agreement, which agreement shall be signed by
both Parties. This Notice shall state that it is a ‘Notice of the Parties’
Agreement’ and shall include a copy of the agreement.
If agreement is reached, within the time limits stated within Sub-Clause
3.7.3, the Engineer shall give a Notice of the agreement to both Parties
and then both Parties must sign the agreement.
In the author’s opinion, the procedure mandated by FIDIC omits a very
important step in the process towards reaching agreement. Under Sub-
Clause 20.2.5 (Agreement or Determination of the Claim) FIDIC dictates
that ‘the Engineer shall proceed under Sub-Clause 3.7 [Agreement or
Determination] to agree or determine the matters’ and Sub Clause 3.7.1
(Consultation to reach agreement) obliges the Engineer to ‘consult with
both Parties jointly and/or separately, and shall encourage discussion
between the Parties in an endeavour to reach agreement’. Nowhere in
this process does the Contract oblige the Engineer to examine the Claim
and issue his/her findings to the Parties prior to the consultation to
reach agreement.
It must be remembered that whilst some Employers are experienced in
construction matters with a good understanding of contractual matters
and industry practice, others are not so; consequently, they rely on
advice from the Engineer they employ to protect their interests. If the
claiming Party is the Contractor, the Claim will already contain the
Contractor’s position, but without the Engineer’s advice the Employer
could be at a loss as to what is an equitable position of the matter and,
therefore, what is the starting point when negotiating and attempting
to reach agreement. In the author’s opinion, in order to enable any
agreement to be reached, it is essential that both Parties are made
aware of what the Engineer considers to be the equitable position in
accordance with the Contract. If the Engineer agrees with the Claim,
then the Employer needs this advice before agreeing the matter. If the
Engineer disagrees with the Claim, either entirely or in terms of the
amount of time or money claimed, then the Contractor will need to
know the basis of the disagreement. Without this very important step
and unless the Engineer acts proactively outside FIDIC’s contractual
obligations, agreement of the Claim is unlikely to be reached.
A proactive Engineer who acts professionally will always do whatever is
necessary for the good of the project and to avoid disputes. The
problem is that many Engineers do not act in this way, which is why
FIDIC includes many of the Engineer’s duties and responsibilities as
contractual obligations and why FIDIC has introduced many ‘deeming’
provisions into the contracts, which mean that if the Engineer does not
perform an obligation, he/she is deemed to have taken a prescribed
action. There follows a step-by-step procedure for managing responses
and determinations which, when adopted by Engineers, has proved to
successfully achieve agreement of the Parties and avoid disputes. It is
also in compliance with the Engineer’s obligations under the FIDIC
contracts. The procedure to be followed by the Engineer is as follows:
Perform an initial review of the Claim.
Advise the claiming Party of any shortcomings that prevent the
Engineer from reaching a conclusion or request additional
information to enable an equitable conclusion to be reached.
Following receipt of additional particulars or a revised Claim
submission, prepare a written response comprising a detailed
assessment of the Claim.
Issue the response to both Parties.
 After a suitable time for review by the Parties, meet with the
Parties to accept comments and discuss the Claim and the
response. If appropriate, ask for comments or additional
information to be submitted formally in writing and with
substantiation.
Make any revisions to the response document that are
appropriate following the receipt of comments or additional
information.
Repeat the issue/meet/comments/revise process, if necessary,
until agreement is reached.
If no agreement is reached, proceed with a determination, and
issue a fully detailed document to set out the findings as is
required by Sub-Clause 3.7.1.
Many Engineers fail to achieve agreement on Claims simply because,
even if the Engineer’s findings are correct in principle, they fail to
convince the Contractor and/or the Employer that this is the case
through lack of proper explanation. The ultimate objective should
therefore be to produce a response document that convinces both
Parties that if either Party chooses to escalate the matter to a dispute,
they will ultimately fail. The Engineer’s response must therefore be a
comprehensive written document that sets out the findings clearly and
includes the same criteria as a Claim. In summary, responses should
include the following as a minimum:
Examination of the cause.
Examination of the effect and linkage to the cause.
Examination of the final effect on the Time for Completion,
with explanations and a demonstration if the Engineer finds
 that a reduced Extension of Time is warranted.
Calculations of the additional payment, with explanations in a
case where the Engineer finds that a reduced amount is
appropriate.
Examination of the contractual entitlement.
Verification of compliance with conditions precedent.
Substantiation of facts and matters relied upon by the
Engineer.
The response should be presented in a similar way to a Claim; the four
key points discussed under the Contractor’s Claims section herein
should be remembered:
Make the reviewer’s job as easy and as pleasant as possible.
Ensure that the response is a stand-alone document.
Assume that the reviewer has no prior knowledge of the
project.
Do not include irrelevant information.
Sub-Clause 3.7.1 also deals with the situation where agreement between
the Parties is not achieved as follows:
If:

(a) no agreement is achieved within the time limit for

agreement under Sub-Clause 3.7.3 [Time limits]; or
(b) both Parties advise the Engineer that no agreement
can be achieved within this time limit whichever is the
earlier, the Engineer shall give a Notice to the Parties
accordingly and shall immediately proceed as specified
under Sub-Clause 3.7.2 [Engineer’s Determination].
If the Parties fail to reach agreement within the time limit or both
Parties advise the Engineer that no agreement can be achieved, the
Engineer is obliged to give a Notice to both Parties and proceed with a
determination as set out in Sub-Clause 3.7.2 (Engineer’s Determination)
as follows:

The Engineer shall make a fair determination of the matter or

Claim, in accordance with the Contract, taking due regard of all
relevant circumstances.
Within the time limit for determination under Sub-Clause 3.7.3
[Time limits], the Engineer shall give a Notice to both Parties of
his/her determination. This Notice shall state that it is a “Notice of
the Engineer’s Determination”, and shall describe the
determination in detail with reasons and detailed supporting
particulars.

The Engineer must issue his/her determination within the time limits
specified in Sub-Clause 3.7.3 and issue the determination to both Parties
by Notice. The determination should be described ‘in detail with reasons
and detailed supporting particulars’. In this respect, the Engineer has an
implicit obligation to demonstrate to both the Employer and the
Contractor that his/her determination is equitable in accordance with
the Contract. If the advice contained herein is followed, the Engineer
will have already examined the Claim in detail when preparing his/her
response and the written response will already contain the details,
reasons and detailed supporting particulars required by this clause and
may be issued with the determination.
Sub-Clause 3.7.3 (Time limits) recognises that Claims should be resolved
in a timely manner and includes the following:
 The Engineer shall give the Notice of agreement, if agreement is
achieved, within 42 days or within such other time limit as may be
proposed by the Engineer and agreed by both Parties (the “time
limit for agreement” in these Conditions), after: …

(c) in the case of a Claim under sub-paragraph (a) or (b) of

Sub-Clause 20.1 [Claims], the date the Engineer
receives:
(i) a fully detailed Claim under Sub-Clause 20.2.4
[Fully Detailed Claim]; or

(ii) in the case of a Claim under Sub-Clause 20.2.6

[Claims of continuing effect], an interim or final
fully detailed Claim (as the case may be).
The Engineer shall give the Notice of his/her determination within
42 days or within such other time limit as may be proposed by the
Engineer and agreed by both Parties (the “time limit for
determination” in these Conditions), after the date corresponding
to his/her obligation to proceed under the last paragraph of Sub-
Clause 3.7.1 [Consultation to reach agreement].

Unless another time limit has been agreed, the Engineer must give a
Notice of agreement to the Parties within 42 days of receiving the Claim.
If agreement is not achieved, the Engineer is obliged to issue his/her
determination within 42 days of the expiry of the time limit for
agreement or of the date when he/she is notified by both Parties that no
agreement can be reached within this time limit. Once again, this
provision provides that another time limit may be agreed. Consequently,
the Engineer has 42 days to attempt to facilitate an agreement between
the Parties and if this is not achieved, a further 42 days to issue a
determination.
As is the case with the submission of Claims, the contract requires the
Engineer’s attempt to reach agreement or determination to be
performed within a specific time limit. Once again, this is because
Extensions of Time, if warranted, need to be awarded in a timely
manner to provide an extended completion date, and justifiable
additional project Costs need to be ascertained for the Employer’s
budgeting purposes and for payment to the Contractor. Provided that
the Engineer acts promptly on receipt of the Claim, then the review of a
Claim, consultation with the Parties and, if necessary, the issue of a
detailed determination of all but the most complicated of Claims may
easily be achieved within the stipulated periods. Engineers who fail to
act within the stipulated time frame are not only failing in their
obligations but are harming the project and the Employer’s ultimate
interests.
FIDIC recognises that not all Engineers will follow these obligations, so
Sub-Clause 3.7.3 provides the following remedy for the Parties to be able
to pursue Claims without further delay:
If the Engineer does not give the Notice of agreement or
determination within the relevant time limit:

(i) in the case of a Claim, the Engineer shall be deemed to

have given a determination rejecting the Claim; …

Consequently, if the Engineer fails to act within the prescribed time

limits, he/she is deemed to have rejected the Claim. In such a case, the
claiming Party may issue a Notice of Dissatisfaction and proceed to
obtain the Dispute Avoidance/Adjudication Board’s decision.
Sub-Clause 3.7.4 (Effect of the agreement or determination) explains the
obligations of the Parties after agreement or determination as follows:

Each agreement or determination shall be binding on both Parties

(and shall be complied with by the Engineer) unless and until
corrected under this Sub-Clause or, in the case of a determination,
it is revised under Clause 21 [Disputes and Arbitration].

If an agreement or determination concerns the payment of an

amount from one Party to the other Party, the Contractor shall
include such an amount in the next Statement and the Engineer
shall include such amount in the Payment Certificate that follows
that Statement.

Both Parties are thus obliged to comply with the agreement or

determination unless and until any errors are corrected or it is revised
under the dispute procedure.
Sub-Clause 3.7.4 continues:

If, within 14 days after giving or receiving the Engineer’s Notice of

agreement or determination, any error of a typographical or
clerical or arithmetical nature is found:

(a) by the Engineer: then he/she shall immediately advise

the Parties accordingly; or

(b) by a Party: then that Party shall give a Notice to the

Engineer, stating that it is given under this Sub-Clause
3.7.4 and clearly identifying the error. If the Engineer
does not agree there was an error, he/she shall
immediately advise the Parties accordingly.
 The Engineer shall within 7 days of finding the error, or receiving a
Notice under sub-paragraph (b) above (as the case may be), give a
Notice to both Parties of the corrected agreement or
determination. Thereafter, the corrected agreement or
determination shall be treated as the agreement or determination
for the purpose of these Conditions.

This provision recognises that Claims are often complicated matters

containing detailed, complex supporting calculations and the like, so
that it allows for the correction of human error. It provides that the
Engineer should immediately advise the Parties of the discovery of any
error and allows either Party to give a Notice of the error within 14 days
of the agreement or determination. The Engineer is then required to
correct the error and give Notice of the corrected agreement or
determination within 7 days and the Parties must give effect to the
corrected agreement or determination.
Sub-Clause 3.7.5 (Dissatisfaction With Engineer’s Determination) deals
with situations where one of the Parties does not agree with the
Engineer’s determination as follows:
If either Party is dissatisfied with a determination of the Engineer:

(a) the dissatisfied Party may give a NOD to the other

Party, with a copy to the Engineer;

(b) this NOD shall state that it is a “Notice of

Dissatisfaction with the Engineer’s Determination”
and shall set out the reason(s) for dissatisfaction;

(c) this NOD shall be given within 28 days after receiving

the Engineer’s Notice of the determination under Sub-
 Clause 3.7.2 [Engineer’s Determination] or, if
applicable, his/her Notice of the corrected
determination under Sub-Clause 3.7.4 [Effect of the
agreement or determination] (or, in the case of a
deemed determination rejecting the Claim, within 28
days after the time limit for determination under Sub-
Clause 3.7.3 [Time limits] has expired); and

(d) thereafter, either Party may proceed under Sub-Clause

21.4 [Obtaining DAAB’s Decision].
If no NOD is given by either Party within the period of 28 days
stated in sub-paragraph (c) above, the determination of the
Engineer shall be deemed to have been accepted by both Parties
and shall be final and binding on them.

If the dissatisfied Party is dissatisfied with only part(s) of the

Engineer’s determination:
(i) this part(s) shall be clearly identified in the NOD;

(ii) this part(s), and any other parts of the determination

that are affected by such part(s) or rely on such
part(s) for completeness, shall be deemed to be
severable from the remainder of the determination;
and
(iii) the remainder of the determination shall
become final and binding on both Parties as if the NOD
had not been given.

If either Party is dissatisfied with an Engineer’s determination, they may

give a Notice of Dissatisfaction to the other Party within 28 days of
receiving the determination. If the Engineer does not issue a Notice of
agreement or determination within the 42-day time limit stipulated in
Sub-Clause 3.7.3 (Time Limits), the Engineer is deemed to have issued a
determination rejecting the Claim and, consequently, either Party may
issue a Notice of Dissatisfaction with the rejection. In the latter case, the
Notice of Dissatisfaction should be issued within 28 days of the expiry of
the time limit for the Engineer’s Notice of agreement or determination.
Once a Notice of Dissatisfaction has been issued, the matter may be
referred to the Dispute Avoidance/Adjudication Board for a decision. If
no Notice of Dissatisfaction is issued within the 28-day period, the
Engineer’s determination shall be deemed to have been accepted by the
Parties and shall become final and binding.
If either Party is dissatisfied with only part(s) of the determination, such
part(s) may be identified in the Notice of Dissatisfaction and referred to
the Dispute Avoidance/Adjudication Board in isolation. The remainder of
the determination shall become final and binding.
The final paragraph of Sub-Clause 3.7.5 provides that:

In the event that a Party fails to comply with an agreement of the

Parties under this Sub-Clause 3.7 or a final and binding
determination of the Engineer, the other Party may, without
prejudice to any other rights it may have, refer the failure itself
directly to arbitration under Sub-Clause 21.6 [Arbitration] in which
case the first and the third paragraphs of Sub-Clause 21.7 [Failure to
Comply with DAAB’s Decision] shall apply to such reference in the
same manner as these paragraphs apply to a final and binding
decision of the DAAB.
If either Party fails to comply with an agreement of the Parties or a final
and binding determination, the other Party may refer the failure itself
directly to arbitration.
This final section has examined the Engineer’s obligations following
receipt of a Claim and has provided advice to ensure that Claims are
settled in accordance with the provisions of the Contract and with good
practice. In summary, and supplemented by the Notice provisions
discussed elsewhere herein, the obligations are:
If the Engineer, upon receiving a Notice of Claim, considers
that the Notice has not been submitted within 28 days of the
Party’s becoming aware of the event or circumstance leading
to the Claim, the Engineer shall give Notice to the claiming
Party within 14 days. Failure to give such a Notice will render
the Notice of Claim valid.
If the claiming Party does not submit a statement of the
contractual and/or other legal basis of the Claim within 84 days
of becoming aware of the event or circumstance leading to the
Claim, the Engineer shall give Notice to the claiming Party.
Failure to give such a Notice will render the Notice of Claim
valid.
If applicable, the Engineer shall examine the periods for the
submission of the Notice of Claim and statement of the
contractual and/or other legal basis of the Claim when
agreeing or determining the Claim and take into account the
positions of the Parties.
If, having received the Claim, the Engineer requires further
particulars, he/she shall request the particulars by Notice. If
 this option is taken, the Engineer shall give his/her response on
the contractual and/or other legal basis of the Claim, by Notice
to the claiming Party.
The Engineer shall, within 42 days of receipt of the Claim or
further particulars, consult with both Parties to try to reach
agreement and, if agreement is reached, issue a record of the
agreement and a Notice to the Parties.
If agreement cannot be achieved, the Engineer shall give a
Notice to the Parties and make a fair determination of the
Claim within 42 days of the expiry of the time limit for
agreement. The determination shall be given by Notice and
shall be described in detail with reasons and supporting
particulars.
The Engineer shall certify amounts that he/she reasonably
considers to be due after reviewing a Claim for payment.
If the procedures set out in the Contract and supplemented by the
advice given here are followed by Engineers, most Claims will be settled
amicably and in a timely manner without escalation to time-consuming
and costly disputes. Such a situation is, of course, to the ultimate benefit
of both Parties and the project.
 CONTACT THE AUTHOR

I sincerely thank you for reading this book and hope you found it both
informative and helpful. It would mean a lot to me if you would leave a
reader review on Amazon.
I would be happy to hear your comments and to answer any questions
you may have. Do please get in touch with me by:
Email: [email protected]
Website: www.hewittdecipher.com
I look forward to hearing from you.

Andy Hewitt