Course Notes 1.| i i | | a Session 1 jew of Design & Build as a procures thod ‘The principles of design and build © Whats design and build? Why and when should you consider, or not consider, design and build for a project? © Design responsibility and tiability © The risks, perils and pitfalls Overview of Design and Build Whilst many believe “design and build” to be a recent innovation, it is a procurement method which has been in use for a long time. Before the emergence of architecture as a profession clients used to procure buildings by a process of design and build. It was the separation of responsibility for fabrication from responsibility for design that led to the emergence of so called “traditional general contracting” in the nineteenth century. This separation of design from construction in the building industry has, for a long time, been the source of many problems. Background Itwould seem, then, that design and build is what would happen if the construction industry were suddenly to come into being, without the evolution of professional institutions which pre-define certain roles in the process. It could be seen as the most logical way to procure a building, given a clean slate to start with. Unfortunately, such a “clean slate’ does not exist, and over the last 150 years the construction professions have carved out their respective niches, much to the detriment of construction clients. ‘The roles of the professional consultants continue to develop and change. Consequently, the methods of procuring buildings also change. Because the contractual relationships in the construction process are difficult and complex, most people who participate in the process prefer to standardise the contracts, Examples of successfully completed design and build projects are too numerous to mention. They range from housing, through industrial and commercial projects, to major complexes. It is clear that this procurement method has a very wide applicability. ‘The Client's Experience Unlike some forms of procurement, it is not necessary for the design and build client to be an “expert” client: He engages the Contractor as a single point of responsibility fo provide that expertise.......at a price.i i 7 i { | i i | i | | Novice clients who know nothing of the construction industry, particularly clients requiring small works, will often “stumble” into design and build without realising it as many smaller construction projects involve the Contractor carrying out an element of design work. Pr A feature that is sometimes present in design and build deals is a guaranteed maximurn price (GMP). This helps clients to feel reassured that they are not signing a blank cheque! As an incentive to the Contractor, any savings made completing the project for a price below the GMP may sometimes be shared between the Employer and the Contractor. Advantages and disadvantages of Design and Build The most important advantage with design and build is that the Contractor is responsible for everything in terms of design and the construction. This “single-point” responsibility is very attractive to clients, particularly those who may not be interested or able to distinguish the difference between a design fault and a workmanship fault. This single point responsibility also means that the Contractor is not relying on other firms (e.g. architects) for the execution of design or for the supply of information The design and build process increases the opportunities for harnessing the benefit of the Contractor's experience during the design stages of the project, Many of the developments in procurement processes, and much of the work in the field of study known as "buildabilty’, have had this purpose in mind ‘The benefits of the integration of designers and builders are more economic buildings as well as a more economic and effective production process. One reported disadvantage of design and build is where there is a conflict between aesthetic quality and ease of fabrication; the requirements for fabrication will override. A further criticism has-been that a design and build Contractor will put in the minimum design effort required to win the contract. These two criticisms suggest strongly that quality, particularly architectural quality, will suffer under this procurement process. However, this is not a valid criticism of the process, itself, but rather of some of the people who may exercising it. As such, itis a criticism which can be made about any process. Relationships with Consultants The relationships between the consultants can be of several types. For example, the Employer may employ an Architect (or other designer) to put together some initial proposals. These would form the basis of the Employer's Requirements, and the Employer could subsequently assign or novate the Architect's contract to the builder. Alternatively the client may approach ditectly a design and build 23S Contractor who employs in-house consultants. Its this inherent flexibility Which is one of the strengths of design and build as a method of procurement, This flexibility happens not just between projects, but also within projects. For ‘example, a commercial client with a prestigious office building may have 3 some very detailed requirements, comprehensively designed by an architectural team, concerning the facade and the entrance lobby to the building. Other less prestigious parts, such as the corridors, staircases, toilets and lifts, may then be left to the Contractor to design. 3 Technical Complexity of the Pr | | i i | i i | i j j When dealing with technically complex projects, the solution adopted by the construction industry, like any other industry, is to specialise. The range of specialists in construction is extensive and comprehensive. Design and build is one of the few procurement processes which is not conducive to the Employer's selection of specialist sub-contractors. In general } contracting the process of nomination has emerged so that the Employer may reserve the right to select particular specialists which the Contractor must employ. In construction management the Employer appoints all of the trade and specialist Contractors directly. This cannot be done under a design and build i contract. The Empioyer who wishes to specify particular Contractors to i undertake particular parts of the work must do this in parallel with the design and build agreement but beyond the terms of the design and build contract. This means that if technical compiexity is to be confronted by the use of specified (nominated) specialists, design and build is unsuitable. Even though most design and build Contractors will accommodate such specialists if they are named within the Employer's requirements, careful drafting will be required to establish a direct relationship between the Employer and the named sub-contractors. The technical complexity of the client's process may lead to solutions which are more akin to engineering than to building. While this does not mean that design and build is unsuitable, itis likely that in such circumstances the use of other forms of procurement will be favoured. This is because of the more comprehensive pre-contractual documentation which may be required by the client with a technically complex project.| | i | i | i | | > FIDIC CONDITIONS OF CONTRACT FOR DESIGN AND BUILD 1995 (ORANGE BOOK) & 1999 (YELLOW BOOK AND SILVER BOOK). 3 9 Session 2 : Using the FIDIC Family of Contracts for Design and Build : * Advice on when it is appropriate to use each member of the family, 5 including potential pitfalls. « FIDIC 1999 Yellow Book v Silver Book. «Preparing & assessing Design & Build tenders. Whatis FIDIC? FIDIC is "Federation Internationale des ingenieurs - Conseils”, the French acronym for the “International Federation of Consulting Engineers”. Of all the contracts in use today, FIDIC is the nearest to 2 truly “international” form of contract and is the contract mostly recognised by international funders such as the World Bank 999 F. fC In September 1999, FIDIC published four new First Editions: () Conditions of Contract for Construction This is recommended for building or engineering works where most of the design is provided by the Employer or his Representative. The Contractor undertakes the construction work in accordance with the Employer's design, however, the Works may include some Contractor-designed civil, mechanical, electrical and/or construction works. The basis of payment to the Contractor is through rates and prices in the Bills of Quantities. (ii) Short Form of Contract This is suitable for a small contract (say, under INR 20 million or nearest equivalent local currency) if the construction time is short (say, less than 6 months), or for relatively simple or repetitive work, irrespective of whether the design is provided by the Employer or the Contractor, and of whether the project involves civil, electrical, mechanical and/or construction works. (iii) Conditions of Contract for Plant and Design-Build This is recommended for the provision of electrical and/or mechanical plant, and for the design and execution of building or engineering works. The Contractor designs and provides in accordance with the Employer's Requirements.{iv) Conditions of Contract for EPC/Turnkey Projects ("the EPC Book" or EPCT”) This may be suitable for the provision on a turkey basis of a process or power plant, of a factory or similar facility, or of an infrastructure project or other type of development, where * ahigher degree of certainty of final price and time is required, and © the Contractor takes total responsibility for the design and execution of the project. However, in the following circumstances, the EPC Book is not suitable and the Plant & D-B Book is considered preferable. + If there is insufficient time, or insufficient information, for tenderers to scrutinise and check the Employer's Requirements or for them to carry out, their designs, risk assessment studies and estimating: tenderers need to take particular account of Sub-Clause 4.12 (under which the Contractor is responsible for the consequences of encountering unforeseeable ground conditions) and Sub-Clause 5.1 (under which the Contractor is responsible for certain aspects of the Employer's Requirements, such as the applicability of ISO standards), so tenderers need information on the matters related to such risks and they need time to assess it and to evaluate all risks; + If construction will involve substantial work underground or work in other areas which tenderers cannot inspect: for these types of works, the risks of encountering unforeseen conditions may be so great that the lowest tender is the one submitted by the least knowledgeable tenderer or most reckless gambler; + Ifthe Employer intends to supervise closely or control the Contractor's work, or to review most of the construction drawings: with the more Contractor's risks, he needs to have greater freedom of action and less interference by the Employer, + Ifthe amount of each interim payment is to be determined by an official or other intermediary: the EPC Book does not provide for an "Engineer" to administer the Contract and determine the amount of each monthly (or other) interim payment, which needs to be determined in advance and defined in a Schedule of Payments.Details of the 4 ks for Major We The 1999 Books have 20 clauses, covering similar subject matter in all three 7 Books. If we take the Conditions of Contract for Construction as an example: General Provisions The employer The Engineer (The Employer's Administration - EPC) The Contractor Nominated Subcontractors (Design - P & DB & EPC) Staff and Labour ) Plant, Materials and Workmanship Commencement, Delays and Suspension ? Tests on Completion 10. Employer's Taking Over 11. Defects Liability 12. Measurement and Evaluation (Tests after Completion - P & DB & EPC) 13. Variations and Adjustments 14. Contract Price and Payment 15. Termination by Employer 46. Suspension and Termination by Contractor 77. Risk and Responsibility 18. Insurance 19. Force Majeure 20. Claims, Disputes and Arbitration CEIOMAON=> Wherever possible, similar wording is used in all the 1999 Books in the equivalent Sub-Clauses. Each New Book has its particular set of tender documents: + Construction: Letter of Tender, Conditions of Contract, Specification, Drawings & Scheduled; + Plant & D-B: Letter of Tender, Conditions of Contract, Employer's Requirements, Schedules & Contractor's Proposal, + EPC Book: Conditions of Contract, Employer's Requirements & Tender. A Construction or Plant & D-B Contract will aiso include a Letter of Acceptance and/or a Contract Agreement, and either document may bring the Contract into force. Typically, the Contract Agreement will bring an EPC Contract into force. For Contractor-designed Works, the Employer's Requirements should include all relevant criteria, including quality. performance criteria and testing, but need not specify any matters which would be imposed on the Works by the applicable law. Quality should be specified in terms that are not so detailed as223see to reduce the Contractor's design responsibilities, not so imprecise as to be difficult to enforce, and not subject to anybody's future opinions which tenderers may consider impossible to forecast. The Books in the new suite are all marked “First Edition 1999” (Test Editions were published in 1998, and while these remain valid for contracts, significant changes were made in some cases). The new Books are not to be regarded as direct updates of the existing Books. The existing Books wil stil be available as long as there is a demand, but it is expected that the new suite will supercede and expand the range of the existing Books, Which FIDIC Contract should | use? Factors to consider in deciding which Form of Contract to use: Relatively small value, short construction time or involving simple or repetitive work IF the price for the contract is relatively small, say under INR 20 million, or the construction time is short, say less than 6 months, or the work involved is relatively simple or repetitive, then consider using the Short Form of Contract, which is a completely new FIDIC Book specially prepared for such projects It does not matter whether the design is provided by the Employer (or his Engineer/Architect if he has one) or by the Contractor, It does not matter whether the project involves construction, electrical, mechanical, or other engineering work. Larger or more complex projects Is the Employer (or the Engineer) going to do most of the design? As in traditional projects, e.g., infrastructure, buildings, hydropower, ete., the Employer does nearly all the design, perhaps not construction details, reinforcement, etc: + the Engineer administers the Contract, monitors the construction work and certifies payment + the Employer is kept fully informed, could make variations, etc. + and with payment according to bills of quantities or lump sums for approved work done. If this is what is wanted - choose the Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer (The Construction Contract), which effectively updates and supercedes the existing Red Book from 1987.| he cor f the design? As in traditional projects, e.g., electrical and mechanical works, including erection on site (The Yellow Book) the Contractor (or Supplier) does the majority of the design, eg., the detail design of the plant or equipment, so that the plant meets the outline or performance specification prepared by the Employer, and in the relatively more recent design-build and turnkey type projects the Contractor also does the majority of the design, not only of plant projects but also of various infrastructure and other types of projects, and the project was required to fulfil the "Employer's Requirements’, ie., an outline or performance specification prepared by the Employer (The Orange Book) * and the Engineer (Employer's Representative in the Orange Book) administered the Contract, monitored the manufacture and erection on site or construction work and certified payment, + and with payment according to achieved milestones generally on a lump sum basis. if this is what is wanted - choose the Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant and for Building and Engineering Works Designed by the Contractor (Plant and Design-Build Contract) which effectively updates and supercedes both the existing Yellow Book from 1987 and the Orange Book from 1995. Is it a Privately Financed (or Public/Private Financed) Project of BOT or similar type where the Concessionnaire takes total responsibility for the fi (ruction and operatio: Then the Concessionnaire (the "Employer") probably requires to have a contract with the construction Contractor, i.e., an EPC (Engineer, Procure, Construct) Contract, where the Contractor takes total responsibility for the design and construction of the infrastructure or other facility, and where there is a higher degree of certainty that the agreed contract price and time will not be exceeded, + and the Employer does not wish to be involved in the day-to-day progress of the work, provided the end result meets the performance criteria he has specified * and the parties concerned (e.g., sponsors, lenders and the Employer) are willing to see the Contractor paid more for the construction of the Project in retum for the Contractor bearing the extra risks associated with enhanced certainty of final price and time. If this is what is wanted - choose the Conditions of Contract for EPC/Turnkey Projects (EPC/Turnkey Contract) - a completely new FIDIC Book suitable for this purpose.> Js ita Process Plant or a Power Plant (or a factory or similar) where the = who provides the finance - to implement the Proje ona Fixed-Price Turnkey Basis? Then the Employer wishes the Contractor to take total responsibility for the design and construction of the process or power facility and hand it over ready to operate “at the turn of a key’, ° and the Employer wishes a higher degree of certainty that the agreed contract price and time will not be exceeded + and the Employer wishes - or is used to - the Project being organised on a strictly two party approach, i.e. without an "Engineer" being involved + and the Employer does not wish to be involved in the day-to-day progress of the construction work, provided the end result meets the performance criteria he has specified + and the Employer is willing to pay more for the construction of his Project, (than would be the case if the Conditions of Contract for Plant and Design- Build were used) in return for the Contractor bearing the extra risks associated with enhanced certainty of final price and time. If this is what is wanted - choose the Conditions of Contract for EPC/Tumkey Projects (EPC/Turnkey Contract) Js it an Infrastructure Project (e.q., road, rail link, bridge, water or sewage treatment plant, transmission line, even dam or hydropower lant) or similar lover ~ rovides the finance - wishes to implement the Project on a Fixed-Price Turnkey Basis? Then the Employer wishes the Contractor to take total responsibility for the design and construction of the infrastructure facility, + and the Employer wishes a higher degree of certainty that the agreed contract price and time will not be exceeded, except that if underground works in uncertain or difficult ground conditions are likely then the risk of unforeseen ground conditions should be bome by the Employer. + and the Employer wishes - or is used to - the Project being organised on a strictly two party approach, i.e. without an “Engineer” being involved + and the Employer does not wish to be involved in the day-to-day progress of the construction work, provided the end result meets the performance criteria he has specified, + and the Employer is willing to pay more for the construction of his Project (than would be the case if the Conditions of Contract for Plant and Design- Build were used) in return for the Contractor bearing the extra risks associated with enhanced certainty of final price and time.{f this is what is wanted - choose the Conditions of Contract for EPC/Turnkey Projects (EPC/Turnkey Contract). Is ita Building Project where the Employer wishes to have his ildinu instructed on a Fixed-Price Turnkey Basi Mm complete with all furniture, fittings and equi) 2 As for 2 above In the case of a building or building development Project, the Employer or his Architect may have done some or most of the design, but - with suitable modification regarding design responsibilty - the Conditions of Contract for EPC/Turnkey Projects (EPC Turnkey Contract) may be chosen. Preparing design and build tenders For a construction project to be carried out successfully under design and construction procedures the following are prerequisites + The Employer should appoint an appropriately experienced and qualified agent and necessary professional consultants. + Design responsibility should be clearly defined + A standard form of contract should be used unamended + The Employer's Requirements should be clearly formulated by the time tenders are invited and set out in the Employer's Requirements upon which the Contractor's Proposals will depend. + Care and attention should be paid to the procedure for the selection of Contractors to be invited to tender. + Information contained in the preliminary enquiry to prospective tenderers should be as full and as clear as possible. + Conditions of tendering should be clear so that all tenders are ‘submitted on the same basis. + Adequate time should be given to selected tenderers to prepare their proposals. + Tenders should be assessed and adjusted in accordance with the terms of the formal invitation to tender. Cri ‘When compiling the list of tenderers, the following criteria should be considered: + Tenderers financial standing and record + Experience of designing and constructing work of a similar nature. + Whether the Contractor's customary design capability is in-house. If not what method will be used to provide a design capability. + The tenderers general experience and reputation in the area in question + Adequacy of the management structure of the tenderer for the type of contract envisaged 10+ Tenderers work capacity at the relevant time. + Tenderers competence and resources in respect of statutory health and safety requirements. Tenderers should be invited to tender and indicate their ability or inability to tender based upon information provided by the Employer. Invitation to Tender ‘Once the date stated in the preliminary invitation arrives all tender documents should be dispatched to the tenderers. The conditions of tendering should be clear and unambiguous. The Employer's Requirements should be clearly stated and include a statement on the priority of factors that will determine the successful tender should be given and include as appropriate. As a minimum the Employer should include the following Appearance Functional requirements Capital cost Expected lifespan Flexibility of use Quality Running and maintenance costs Time of construction Statement of the extent and detail of information required in the Contractor's proposals. * Any other evaluation factors. Contractor's Proposals ‘The Contractor's Proposals should be submitted with his tender. These ‘should comply with the Employer's Requirements and incorporate the following Plans, elevations, sections or typical details Information about the structural design Layout drawings of incorporated services ‘Specifications for materials and workmanship, Any alternative solutions departing from the brief A method statement and construction programme The contract sum analysis A staged payment schedule Proposed main sub-Contractors and suppliers Contract Sum Analysis ‘The contract is a lump sum price payable in stages or by valuation. There is, no provision for a priced bill of quantities or schedule of rates, so a Contract ‘Sum Analysis is prepared by the Contractor. This assists the Employer in "checking the Contractor's application for interim payments, assists in valuing changes in Employer's Requirements and where applicable formula (escalation) adjustment Itis desirable that separate figures for the value of design work to be carried out before and after construction commences is shown in the analysis. The Employer should determine the nature and scope of the Contract Sum Analysis. Session 3 The Contract Documents The General Conditions The Particular Conditions ~ when should they be used, how should they be included? The Employer's Requirements, the Contractor's Proposal and dealing with any conflict between them General Conditions and Particular Conditions The Conditions of Contract comprise the "General Conditions”, which form part of the "Conditions of Contract for..." First Edition 1999 published by the Federation International des Ingenieurs-Conseils (FIDIC), and the following "Particular Conditions", which include amendments and. additions to such General Conditions. A principle that was applied throughout the drafting has been to facilitate the preparation of the tender documents, and in particular the preparation of the Conditions of Contract. Unlike most other published form of Conditions, those published by FIDIC recognise the reality that the tender documents for a particular project typically have to include provisions which are not appropriate for other projects. Preparation of the tender documents has been facilitated by: Flexibility () by anticipating alternative arrangements (for example, a lump-sum contract under the Construction Book), and (i) by stating in the General Conditions which provisions are subject to what is stated in the Particular Conditions (because they may not be universally applicable); and User-friendliness (by maximising the General Conditions so as to minimise Particular Conditions(ii) _ by identifying one location for essential contract specific data In all the 1999 Books, their Forewords state that the General Conditions were drafted on the principle that users would find it more convenient if any provisions which they did not wish to apply could simply be deleted or not invoked, than if additional text had to be written in the Particular Conditions (because the General Conditions did not cover their requirements). If this criterion was considered inapplicable for a Sub-Clause, it is intended to contain provisions that were considered applicable to most contracts. It should therefore be noted that some of the provisions contained in the General Conditions may be inappropriate for an apparently-typical contract ‘The basic concept was to provide maximum convenience for users, particularly those who prepare the tender documents, for whom a degree of competence is necessary. ‘Thus, as much text as possible is incorporated into the General Conditions, including some from the old Part Il. Some provisions cannot apply unless invoked/enabled by the insertion of the required data; and provisions can readily be disabled by omission of the data or by deletion. Employer's Requirements and Contractor's Proposal The first of the essential features of a design and build contract is that the Employer approaches a Contractor with a set of requirements defining what the Employer wants. The Contractor responds with proposals which will include production as well as design work The scale of design work included depends on the extent to which the Employer has already commissioned such work from others. The Contractor's design input varies from one contract to another, ranging from the mere detailing of a fairly comprehensive design to a full design process including proposals, sketch schemes and production information. There will usually be some negotiation between the Employer and the Contractor, with the aim being to settle on an agreed set of Contractor's Proposals. These proposals will include the contract price, as well as the manner in which it has been calculated. Once the Employer's Requirements and the Contractor's Proposal match, the contract can be executed and the Contractor can implement the work. The Contractor wil be totally responsible for undertaking the design work including the appointment of consultants if the Contractor does not have the necessary skills in-house. The Employer may also choose to appoint consultants in order to monitor the various aspects of the work, but this is not always the case.i i z i i | | Fe IONS QA CONSIDERING THE FIDIC 1995 (ORANGE) IN ADDITION TO THE 1999 (YELLOW) CONTRACTS, WE WILL. Y CONSIDER THE SPECIFIC CI INDER EACH OF THE CONTRACTS: Session 4 1e parties’ roles and responsibil ‘The duties and responsibilities of the Employer, the Engineer and the Contractor. Employer's obligation to provide access, and the consequences of failure Employers claims. Site data — the relevance and potential for claims. Delegation by the Engineer ~ what can be delegated and to whom? Engineer's instructions — the proper format and relevance of instructions, The Contractor’s Representative. Subcontractors and Nominated Subcontractors. Roles and Responsibilities One of the most significant features of design and build arrangements is the lack of an independent certification role in the contract. There is no Architect/Contract Administrator to settle differences between the parties and there is no independent quantity surveyor responsible for preparing the basis upon which Contractors tender. The role of the Quantity Surveyor is as a provider of financial and/or contractual advice to the Employer, there is not the need for traditional quantity surveying in this form of procurement as there is no standard method of measurement, no bill of quantities, and no contractual role for the Quantity ‘Surveyor. Many Quantity Surveyors have welcomed the departure from traditional bills of quantities and the traditional approach to cost control which may be seen as counter-productive in serving the best interests of the client, Such Quantity Surveyors have seized the opportunity of becoming specialist client advisers in all aspects of the economics of building and the procurement process. ‘There are a large number of consultants who are qualified to advise the client during the whole of the process. ‘These consultants come into the category of Employer's Representatives and would be used by the Employer when dealing with the Contractor. Itis often the case that Employers who are more experienced in traditional general contracting will set up their own project team, with a counterpart for each of the professional advisers in the Contractor's project team. The Contractor's team may or may not be in house.ee Employer's obligation to provide access 3 The Employer has a fundamental obligation to provide access to the site, to ? enable the Contractor to carry out the work covered by the contract, failure or delay giving rise to entitlement to an extension of time plus recovery of cost plus profit. 3 Employer's Claims 8 The FIDIC contracts expressly provide for the Employer to make a claim > against the Contractor, for example the Contractor nay not have remedied a . defect, or the Contractor may have damaged the Employer's propery. ‘ Site Data The Employer is deemed to have made available all relevant data in his possession on sub-surface and hydrological conditions by the Base Date. The > Contractor is responsible for interpreting the data and shall be deemed to have inspected and examined the Site. This does not actually mean that he MUST visit the Site, but that he is “fixed with the knowledge” as if he { had....there is a subtle difference! “Unforeseeable" is defined as "not reasonably foreseeable by an experienced Contractor by the date for submission of the Tender’, allowing nearly 28 days : after the Base Date for tenderers to assess the date. The Employer is also required to make available the same types of data that comes into his possession thereafter. Delegation by the Engineer lo ‘The Engineer may delegate any of his duties at any time to assistants by notifying the Contractor in writing which may later be revoked, again in writing, Itis important to note that the Engineer is sharing the authority with the other person, not "shedding" it onto them, the Engineer always retaining the full responsibility and authority given to him under the contract. The delegated representative is limited to the authority contained within the delegation notice. Instructions of the Engineer ‘The Contractor is required to comply with any instruction given by the Engineer. Instructions should only be taken from that person or any previously notified delegate. These instructions shall be in writing, The Contractor’s Representative ‘The Contractor's Representative must have all the authority necessary to act on the Contractor's behalf and devote his whole time to running the project.Unless the Representative is named in the Contract, the Contractor has to submit the name of his Representative for the Engineer to give his consent. In the case of absence, any replacement must be subject to the Engineer's consent. In the case of any delegation by the Contractor's Representative this must be notified to the Engineer before the delegation takes place. Note also, that the Contractor's Representative (and any delegated representatives) must be fluent in the language of the Contract, Subcontrae! nd Nominated ‘The Contractor cannot sub-let the whole of the Works, and subcontractors are subject to the Engineer's consent. The Contractor does not have to have the consent to suppliers or previously named Subcontractors in the Contract. Itis a normal requirement in contracts for subcontractors to be assigned to the Employer in the event of termination by the Employer. There is a definition of a nominated subcontractor. The Contractor has a reasonable right of objection. Session 5 Design Responsibility and Liability Contractor's design obligations ~ who is responsible for what? Contractor's Documents ~ what does the Contractor need to submit? Errors and defects in design ~ how are they defined and dealt with, and who pays? © Professional Indemnity (Pl) insurance. ¢ As-built documents ~ what is required? Contractor's design obligations ~ who i ible for what? ‘The Contractor has full responsibility for the design and construction of the Works. This will include dealing with third party regulating bodies such as town planners, building regulate inspectors, etc The fundamental obligation and risk on the Employer is to correctly compile the Employer's Requirements. 16 3i | | i | j q Errors and defects in design — how are they defined and dealt with, and who pays? Design errors, however they are caused are rectified at the Contractor's expense. This will include where a regulatory authority may require something different to what has been listed within the Employer's Requirements. Professional Indemnity (PI) insurance. Where the Contractor is designing all or parts of the Works, it would be advisable for the Employer to include a requirement for Professional Indemnity (PI) Insurance. If a Contractor or Consultant providing a service to an Employer makes a mistake, is found to be negligent, or gives inaccurate advice, then he will be liable to the Employer in event that the Employer incurs a loss as a result. This loss can be very significant where the design has to be corrected, parts of the structure have to be taken down and reinstated, a facility has to be closed down whilst the remedial measures take place, and there are also legal costs. Pl claims can arise where there is negligence, misrepresentation or inaccurate advice which does not give rise to bodily injury, property damage or personal injury, but does give rise to some financial toss As-built documents — what is required? ‘The Contractor is to prepare and update a complete set of “as built” records and to issue them to the Engineer. itis important to consider whether the provision of as built records, and also maintenance manuals, training of staff, etc is a condition of completion of the works, in which case the Contractor ‘would be liable for delay damages if the project was complete, but the as built documents, etc were not! Session 6 Variations and Adjustments © Variation instructions and procedures ~ pricing the effect. «Provisional Sums — when should they be used, and how should they be managed? * Adjustments for changes in legislation and cost, + Dealing with claims for extensions of time, Cost and profit how to prevent and/or deal with Contractors’ claims structions and procedures jon. ina tt ‘The general procedure for variations is described in Sub-Clause 13.3. The Engineer may request a proposal for the Contractor, which may have resulted from his initiative under Sub-Clause 13.2 or from the request mentioned in the first sentence of Sub-Clauses 13.1 and 13.3. 7Provisional Sums ~ when should they be used, and how should tt managed? The Engineer instructs regarding Provisional Sums with the Contract Price being adjusted accordingly. Provisional Sums are used where there are elements of work which cannot be sufficiently defined at the time of tender and therefore a sum of money is inoluded by the Employer in the bill of quantities or other pricing document to cover the item. When the item is defined or able to be properly defined the Contractor is given the information which allows him to price it, the Provisional Sum is omitted and the price included in its stead. ‘The problem with Provisional Sums is that they reduce the competition amongst tenderers as they are not priced at tender stage, the actual price of what is required is not known for some time, and there may also be programme implications. dius! in legislation and cost. Increases or decreases in cost due to changes in legistation after the Base Date may be paid to the Contractor. ims for extensions of time, Cost and profit — prevent and/or deal with Contractors’ claims. If we take FIDIC 1999 as an example ‘Sub-Clause 8.4 defines the Contractor's entitlement to extensions of time: (i) "The Contractor shall be entitled... "which is not stated as being subject to anyone's opinion. (i)... subject to Sub-Clause 20.1 ..." the second and the final paragraphs of which may affect the entitlement to an extension of time. (il). fo an extension ... if and to the extent .. that completion ...is delayed..."" so the extension should typically be calculated by reference to the delay in completion attributable to a listed cause: It may have disrupted progress but may not itself have been the cause of any delay in completion. For example, a listed cause may only delay works which are not on the critical path and thus do not, delay "completion for the purposes of Sub-Clause 10.1" (iv) *.. completion for the purposes of Sub-Clause 10.1..." its first sentence (sub-paragraph (i) defines the extent of the work which is to be completed within the Time for Completion, and which is relevant when considering extensions of time. The work must include the matters described in Sub-Clause 8.2 (a) & (b) but may 18i i | | i | 8 exclude, as permitted in Sub-Clause 10.1 (a), “any minor outstanding work and defects which will not substantially affect the use of the Works or Section of their intended purpose". ‘There are 5 grounds for extension of time’ (2) Variations (b) A cause of delay giving rise to an entitlement under the contract (©) Exceptionally adverse climactic conditions () __Unforeseeable shortages in availability of personnel or goods caused by epidemic or government action. (e) Any delay, impediment or prevention caused by the Employer, the Employer's Personnel or the Employer's other contractors on the Site. How can claims and thei lation be avoided? {a) Tender Documents. It is generally found that an appropriate contract strategy together with a competent, robust, and unambiguous tender document is the key to avoiding or minimising contractual problems. The tender documents should clearly set ‘out the respective responsibilities of the parties to the contract in clear and unambiguous terms with a clear definition of risks and which party is carrying which risk and how. Any physical, financial or time constraints should also be set down with any required parameters. (b) Administration of Claims. During construction it is understandable that the Contractor has to register the possibility of a claim (if he is not to prejudice his rights or prejudice its consideration) though he may subsequently not pursue it. Claims should not be put aside to be dealt with later, in the hope that they may go away, the facts tend to be come obscured (particularly with the dispersal of staff) and attitudes tend to harden. In short claims do not improve with keeping (c) Changes during construction The cause of claims generally lies in the effects of change. This may be due to unforeseen conditions or unexpected events or imposed change such as change in the works to be carried out ie. variations. Contracts recognise that unforeseen conditions can arise and have a contractual mechanism to deal with the effects of that situation. Imposed changes are generated by the issue of variations, but too often only the direct cost issues are considered and little attention is given to the delay and disruption effects of the changed work. This can often be mitigated by discussion with the Contractor prior to the issue of the variation, 19itis important that when a Contractor notifies a claim that he is required to state the clause in the contract under which he considers he has an entitlement. If the Engineer agrees then this establishes the procedures for the evaluation of that claim. If this cannot be established then itis possibly a claim that is founded in a breach of contract, is outside the contract and therefore cannot be administered by the Engineer. (a) Communication. Communication and poor claims administration are still seen as significant problems in most disputes. It is important that the procedures and spirit required by the contract are followed and that the parties demonstrate that they are actively seeking resolution of the matters in dispute. {e) The Keeping of Records. A pre requisite to problem avoidance is for the parties to understand the contract and be clear as to their respective obligations and responsibilities. It has also been said that every dispute should be considered at the time as though it were going to arbitration or tigation. Probably the most usual reason why many potentially valid claims are abandoned is the claimant's failure to maintain adequate records of events or costs. Without proper relevant and contemporaneous records, the evidence needed to establish the claim is not available, the claim is doomed and the proceedings become fractious. itis vital that comprehensive records are kept so that the Contractor can substantiate claims and also that the Engineer/Employer can defend them in the event that they arise. These can include: Correspondence Instructions Programmes (Planned versus Actual) Site Diaries Site Meeting Minutes Photographic Evidence Meteorological Records NOGPONA In the event that the claim proceeds to adjudication, arbitration and/or litigation, then proper records are absolutely vital to prove a case. Good records are fundamental to the resolution of claims. As soon as the Contractor becomes aware that he has, or may have, a claim under the contract, he must ensure that full and detailed records relating to the history of the claim ate prepared and maintained throughout the period during which conditions giving rise to the claims remain in existence. These records should be submitted to the Engineer for his agreement 20Where the Engineer refuses or fails to check the Contractor's records that fact should be recorded by the Contractor. 8 An Engineer's refusal to agree records, usually where he does not admit the existence of the claim does not help his client if there is a valid claim. If the claim is ultimately referred to arbitration, the arbitrator can only consider the evidence before him. Where a Contractor has maintained accurate and contemporaneous records, which the Engineer has refused to check or agree, it may be difficult for the Contract Administrator to produce convincing evidence to refute the claim. Where, as is often the case, the Engineer maintains a separate set of records a probiem will arise, if and to the extent that, they are different to the Contractors. In such a situation, the arbitrator can only weigh the evidence before hi and decide which is the more convincing, The fact that the Engineer refused to consider the Contractor's records would, in all probability, weigh in the Contractor's favour. There is no logical reason not to agree a set of contemporaneous records of events or any contentious issue. These records can be qualified if the claim at > that point in time is not admitted or for any relevant reason, [oO (f) Agreeing Cost and Price The issue of agreeing cost is quite clear in that the Contractor must provide ee whatever information and records are necessary to reach that agreement, i ‘What is more problematical is that Contractors are often reluctant to provide proof of overhead and profit levels included in the contract. There is no reason for the pricing notes not to be made available and their confidentiality recognised. if the dispute goes to arbitration the pricing notes would be subject to discovery anyway. In establishing rates for changes or additional works the contract requires contract rates, or rates based on contract rates, should be used wherever | possible. It is insufficient, however, to use rates where the item description is i the same without taking into account the circumstances under which the changed work was carried out. A\ll too often the disruptive effects of changed or altered works is not recognised. It is appropriate to analyse the constituent elements of the relevant rates and adjust those elements to reflect the new requirements {including differences in location, timing, sequence etc. and both quantity- related and time-related costs). Cost information is a matter of record in most cases particularly in relation to labour and materials. Plant costs can cause difficulty particularly with contractor owned plant of plant on internal company hire, The Contractor may seek to charge daywork rates or internal hire rates, both of which may be inappropriate. 2Summary Claims Claims are often seen as an inevitable consequence of working in the construction industry, They are pot inevitable and can be avoided by some simple rules () Clearly state in all tender and contract documentation what is required of all parties. Claims often arise because the parties are not aware of their responsibilities. (i) Communicate effectively with all parties. Claims usually escalate when the parties do not speak to each other! (ii) Put everything in writing, in the event that a claim arises you have documentary evidence to support or dismiss it, Every claim submitted deserves some time spent in analysing and constructively responding to it, Rarely is a claim totally fictitious or unwarranted, but the onus is upon the claimant to prove a loss, not for the recipient to disprove it. Claims usually fail because the claimant does not have factual evidence of his claims or did not give proper written notification at the time of the problem. Session 7 Contract Price and Payment Procedures The Contract Price - how is this defined? «Advance payments ~ how and when are they paid and repaid? «Interim payments ~ certifying and making payments, remedies for late payment. © Final accounts and final payments. ract Price — The contract sets out the financial principles of the contract, remeasurement Using bills of quantities or a lump sum using.a payment schedule. The contract also describes the procedures for payments to the Contractor. - they paid and repaid? The contracts provide for the possibility of an advance payment, and for the possibility of making payment for Plant and Materials which have been shipped to the Country and/or have arrived at the Site 2oOo @ Interi = certifying and making paym edies for late payment, Payment procedures commence with the Contractor's submission of a (monthly or other) Statement, with supporting documents which are to include the progress report, The Contractor is required to submit the Statement (6 copies) to the Engineer showing in detail the amounts to which he considers himself entitled. The Statement includes: () The estimated value of Works executed (i) Any amounts due to changes in legislation (i) Any amount to be deducted for retention. (i) Any amounts to be included for advance payments. () Any amounts due for Plant and Materials intended for the Works. (v) Any amounts due in respect of claims, disputes and arbitration (i) Deduction of any amounts certified in previous Certificates. Payment due to the Contractor may be pre-defined as a schedule within the Contract. ‘The contract may provide for listed plant and materials listed in the contract and delivered to site for incorporation into the Works to be pai. Provided the Employer has received and approved the Performance Security, the Engineer certifies payments within 28 days of receiving each Contractor's Statement. There is provision in the Contract for a minimum amount of Payment Certificate to be stated in the Appendix to Tender to prevent having to issue Certificates for minor amounts. ‘The Employer is required to pay the advanced payment within 56 days of Letter of Acceptance or 21 days of the Performance Security and interim Payments within 56 days of the Engineer receiving the Contractor's Staternent. ‘The entitlement to financing charges for late payments is based upon when the Engineer received the Statement, progress report and other supporting documents, irrespective of the date on which the interim Payment Certificate (if any) was issued The first half of retention money is certified by the Engineer upon the issue of the Taking Over Certificate, the outstanding balance being certified upon the expiry of the Defects Notification Periods, 2Final accounts and final payments. The contract provides for a Statement at completion, which is to include all amounts to which the Contractor considers he has or will become entitled. T > ‘The Employer's liability is limited to amounts included in this Statement and amounts arising after the issue of the Taking-Over Ceriificate for the Works, Within 56 days of receiving the Performance Certificate, the Contractor submits a draft final statement (6 copies). Once agreed this is called the Final Statement. ) ‘The Contractor when submitting the Final Statement confirms the amount constitutes full and final settlement of all monies due, Within 28 days after receiving the Final Statement and discharge from the Contractor, the Engineer issues a Final Payment Certificate. ‘Session § Commencement, Delays and Suspension © Commencement of work — how is this enacted? The Contractor's programme ~ what is the Contractor required to submit and how should it be dealt with? «Progress reports ~ their form and content. © Dealing with extensions of time - what should the Contractor submit, and how should they be dealt with? © Suspension and termination — how and when is this used? Commencement of work — how is this enacted? The Employer is required to give the Contractor not less than 7 days’ notice of the Commencement Date, this normally being within 42 days after the Contractor receives the Letter of Acceptance. The Contractor’s programme — what is the Contractor required to submit and how should it be dealt with? ‘The Contractor is required to submit a programme to the Engineer. The Contractor must submit a programme showing how he proposes to execute the Works. Each such programme is to be supported by a report describing the methods that the Contractor proposes to adopt Programmes are not "approved": the Contractor proceeds in accordance with the Programme, except to the extent that (i) he has been advised of its non- compliance, or (ii) it does not actually comply, with the Contract. Unrealistic programmes do not provide a sound basis for claims See a et at ete Rita Sth Stitt tet abet tears ti tat bee Stet 24| i i i i | i a 3 The contract describes the content of the Contractor's programme which should include order and sequence, timing of tests, method statement and details of resource levels. Progress reports ~ their form and content, Monthly progress reports are to be prepared by the Contractor and 6 copies submitted to the Engineer. The contract prescribes the content of each report which includes progress to date, photographs, critical documents and health and safety records. 1s of time — e Contractor submit, ow should the with? ‘The contracts provide for extensions of time to be awarded for matters which are not the Contractor's fault. These various matters will be discussed during the course. ‘Time is central to any contract, the Contractor must complete the works on or before the date in the contract. if he fails to achieve completion within this stated period, without having any grounds for an extension of time, then the Employer may deduct delay damages. The FIDIC Contracts provide for extensions of time to be awarded for specific reasons such as late information, adverse weather, or unforeseen conditions. The granting of an extension of time relieves the Contractor from liability of damages such as delay damages up to the extended contract completion date. For the Employer, the early establishment of an extended contract completion date prevents the contract period becoming “at large”. The conditions and events that the Contractor is entitled to a claim for extension of time will be documented in the contract and these events will have been acknowledged by the Employer as matters affecting regular progress. The contract will also require notification of delaying events to be given as close a time as possible to the event, a failure to provide timely notification can affect the Contractor's claim for an extension of time. In theory, an extension of time should be granted as the delaying event occurs and even before, to maintain a feasible contract programme for co- ordination of the project. In practice, the responsible parties for assessing and granting of the extension of time is seldom given the authority to grant extensions at an early stage and many contracts extend well beyond their contract completion date without even the beginning of an extension of time process. This reluctance to accept responsibility for delays and grant extensions of time is often disastrous to the project and the employer.i | i i | i Suspension and termination — how and when is this used? The Engineer may instruct the Contractor to suspend the progress of all or part of the works during which time the Contractor must protect, save and store. The Engineer may, but does not have to, notify the Contractor of the reason for the suspension ’ If the Contractor suffers delay and/or cost resulting from suspension he can 3 claim it through the contract. ‘The Contractor may also suspend for a breach by the failure. The contracts provide grounds for the Employer to terminate the Contractor's employment. Subject to giving the Contractor notice to remedy, the Employer may terminate As soon as possible after termination, the Engineer determines the value of Works completed by the Contractor. Following termination, the Employer may withhold further payments from the Contractor till the cost of execution, defects, etc has been established. The Employer may recover any damages incurred as a result of the termination, ‘The Employer may terminate at will, but he cannot terminate to complete the Works himself or to arrange for it to be completed by another Contractor. Session 9 ‘Testing and Take Over © Inspection and testing obligations ~ how are these incorporated into the contract? * Failure and retesting ~ how are these managed? Defects liability and the Defects Notification Period «Employer's taking over of all or parts of the Works - the process of taking over. * Performance Certificate ~ the effect of the certificate Inspection and testing obligations — how are these incorporated into the Testing can be related to individual plant and materials on site, factory testing outside the site, testing of individual sections of work, welds and joints once they have been assembled or a multitude of mechanical and electrical tests. Itis critical that the Employer's Requirements set out the parties’ obligations as to how criteria are to be met and the consequences of failure to meet them.Performance testing is usually applicable where the design of plant and materials is the responsibility of the Contractor. This can include the operation of the completed plant and the checking of product quality and quantity, fuel consumed, use of energy, waste and by-products, environmental conditions and other aspects such as may be required Liability for defects should be defined in the contract together with the period of time for which such liability is to apply and the length of time within which defects are to be remedied. Itis imperative that the Employer's Requirements, produced at tender stage define the full extent and timing of tests and inspections required and the subsequent correction of any defects, This is very often not covered in sufficient detail, itis important for the compiler of the Employers Requirements to consider a number of key questions: (i) Whatis the purpose of the test? (i) Whats to be tested? (ii) How is the test to be carried out? (iv) Who should do the test? (v)_. When and where will the test take place? (vl) Who should be advised of the outcome of the test? (vil) What should be done in the event of a successful or unsuccessful test, eg. certification? The Contractor is to provide, all apparatus, assistance, documents, etc to carry out the specified tests. The Engineer is required to give the Contractor not less than 24 hours’ notice before carrying out such tests. If despite giving the notice the Engineer does not attend, the tests will be carried out as if the Engineer had attended. E ting — how are thes If the Works fail to pass Tests after Completion, the tests are repeated, If the Works fails the Tests after Completion, the Engineer is entitled to order further repetition of tests, reject the Works and issue a Taking Over Certificate if the Employer requests. The Contractor is required to complete any work which is outstanding on the dates stated in a Taking Over Certificate including rectifying defects or damage, All defects are to be rectified at the Contractor's cost. If the defect has arisen which is not the Contractor's fault it is treated as a Variation. The Contractor is required to remedy defects within a reasonable time, failing which, the Employer can give the Contractor a specific date to remedy, failing which, the employer may carry out the work himself and charge the arContractor or, require the Engineer to determine a reduction in the Contract Price or terminate the contract as a whole. ’s taki forks ~ the process of faking over, ‘The Works are taken over by the Employer when they have been completed in accordance with the contract and a Taking Over Certificate has been issued. The Employer may take over a part of the Works before the Taking Over Certificate has been issued. If the Employer does so, the part taken over is deemed to be taken over, the Contractor is no longer responsible for the care of that part, and the Engineer issues a Taking Over Certificate. The Contractor is able to recover any additional costs associated with this action. Performance Certificate — the effect of the certificate. ‘The issue of the Performance Certificate confirms that the Contractor has fulfilled all his obligations under the contract. The Certificate is issued within 28 days after the latest of the expiry dates stated in the contract 28a OVERVIEW OF THE FIDIC 1995 CONDITIONS OF CONTRACT FOR DESIGN-BUILD AND TURNKEY (ORANGE BOOK) The Condition of Contract have been prepared by the Federation internationale des Ingenieurs-Conseils (FIDIC) and are recommended for general use for the purpose of the design and construction of works. There are no universally-accepted definitions of the terms “design-build” and "turnkey", except that both involve the Contractor's total liability for design. For the Employer, such single-point responsibility may be advantageous, but the benefits may be offset by having less control over the design process and more difficulty in imposing varied requirements. Under the usual arrangements for a design and build contract, the Contractor is responsible for the design and provision, in accordance with the Employer's Requirements, of works which may include any combination of Employer's Representative (including civil, mechanical, electrical, etc) and building works, and interim payments are made as construction proceeds. ‘The Conditions are also intended for use on turnkey contracts, under which the Employer's requirements usually include provision of a fully-equipped facility, ready for operation (at the turn of the "key"); such contracts are often Contractor financed. Tumkey contracts typically include design, construction, fixtures, fittings and equipment, the scope of which would be defined in other contract documents. in addition, the contract may impose a Tequirement for the Contractor to operate the Works, either for a few months’ commissioning period, or for some years’ operation on a build-operate- transfer contract. Advice on turnkey arrangements is included in Part Il, together with sample wording for Contractor finance In the preparation of the Conditions it was recognised that, while there are many Sub-Clauses which will be generally applicable, there are some Sub- Clauses which must necessarily vary to take account of the circumstances relevant to the particular contract. The Sub-Clauses which were considered to be applicable to the majority of contracts have therefore been presented in Part | - General Conditions, which will facilitate their incorporation into the contract. Part |- General Conditions and Part |! - Conditions of Particular Application will together comprise the Conditions governing the rights and obligations of the parties. It will be necessary to prepare the Part II for each individual contract, taking particular account of the references to Part I! which are contained in some Sub-Clauses in Part | In order to assist in the preparation of Part Il and the other tender documents, ‘explanatory material and example wording are published with these Conditions in the Guidance for the Preparation of Conditions of Particular Application. ‘The Conditions of Contract for Design-Build and Turnkey (The ‘Orange Book’) is recommended for the provision of electrical and/or mechanical plant, and for the design and execution of building or Employer's Representativeworks. The Contractor designs and provides in accordance with the Employer's Requirements. > ‘The structure of the contract is as follows: The Contract 3 The Employer The Employer's Representative ‘The Contractor Design Staff and Labour Plant, Materials and Workmanship Commencement, Delays and Suspension Tests on Completion 40. Employer's Taking Over 11. Tests after Completion 12. Defects Liability 43. Contract Price and Payment 44. Variations 18. Default of Contractor 16. Default of Employer 17. Risk and Responsibility 18, Insurance 419. Force Majeure 20. Claims, Disputes and Arbitration CONOarens immary of the FIDI ns of Contract fe ign- Build and Turnkey st Book") CLAUSE 1: GENERAL PROVISIONS 1.4 Definitions This Sub-Clause defines the meaning of 45 words or expressions used in the Conditions of Contract and is divided into “Documents”, “Persons”, “Dates, Times and Periods", “Tests and Completion’, “Money and Payments” and “Other Definitions” 4.2 Headings and Marginal Notes Headings and marginal notes are not part of the Conditions. 1.3 Interpretation This Sub-Clause covers interpretation such as singular/plural, gender, etc.| i | i i i i | i i j 3 4.4 Law and Language ‘The Contract is governed by the law of the country stated in the Appendix to Tender. Normally itis the faw of the country in which the project is based. ‘The ruling language and the language for day to day communications are stated in the Appendix to Tender. 1.5 Contract Agreement Each party shall if requested by the other party execute a Contract Agreement, the cost of stamp duties and similar charges being borne by the Employer. 1.6 Priority of Documents. This Sub-Clause prioritises the documents in case of ambiguities or inconsistencies into the following order of importance (2) The Contract Agreement (b) The Letter of Acceptance (c) The Employer's Requirements (3) The Tender (@) The Conditions of Contract, Part It () The Conditions of Contract, Part | (9) The Schedules, and (h) The Contractor's Proposal The Employer's Representative is required to clarify any ambiguity or discrepancy 4.7 Documents on Site ‘The Contractor must keep on the Site one complete set of the documents forming the Contract, the Construction Documents, Variations, other ‘communications under Sub-Clause 1,8, and the documents mentioned in Sub-Clause 5.4 (Technical Standards and Regulations). The Employer, the Employer's Representative and assistants shall have the right to use them at all reasonable times. 1.8 Communications All notices, instructions, consents, approvals, certificates or determinations shall be in writing, “In writing” means hand written, type written or printed communication, including electronic transmission as stated in the Appendix to Tender.1.9 Provision of Construction Documents The Construction Documents shall be in the custody of the Contractor. The Contractor provides 6 copies for the use of the Employer's Representative and assistants. 4.10 Employer's Use of Contractor's Documents The Contractor retains copyright but gives the Employer a license to copy, use and communicate the Contractor's Documents. 4.11 Contractor's Use of Employer's Documents The Employer retains copyright but gives the Contractor a license to use the Employer's Documents. > { 1.12 Confidential Details The Contractor is not required to disclose confidential information listed in the Appendix to Tender. 1.13 Compliance with Laws The Contractor is required to comply with applicable laws and shall issue all notices, pay taxes, duties and fees, indemnifying the Employer against any failure to do so. 1.44 Joint and Several Liability If the Contractor is a joint venture, each is jointly and severally liable to the Employer for the performance of the Contract. CLAUSE 2: THE EMPLOYER Clause 2 covers the role of the Employer, commencing with his obligation to give right of access and possession of the Site. 2.4 General Obligations ‘The Employer provides the Site and pays the Contractor in accordance with Clause13. 2.2 Access to and Possession of the Site ‘The Employer is required to give the Contractor right of access to, and possession of the site in accordance with the Appendix to Tender. if there are no specific times within the Appendix, the Employer must give access to enable the Contractor to progress the works in accordance with the programmei | | | | oo we If this is delayed, the Contractor can give notice with the ensuing rights to extension of time and cost plus reasonable profit. 2.3 Permits, Licences or Approvals The Employer is required to ‘assist’ the Contractor where possible in obtaining copies of the Laws of the Country and any necessary permits to work in that county. It is fundamentally the responsibility of the Contractor to obtain these. 2.4 Employer's Entitlement to Terminate The Employer shall be entitled to terminate the Contract at his convenience by giving 56 days’ notice to the Contractor. If this is done the Contractor (2) proceeds in accordance with Clause 16.3 (b) shall be paid in accordance with Clause 19.6 CLAUSE 3: THE EMPLOYER'S REPRI 3.1 Employer's Representative's Duties and Authority The Employer's Representative is the person appointed by the Employer to act on his behalf and is named in the Appendix to Tender. The Employer's Representative and his staff must be suitably qualified and competent to carry out their duties. If there is any limitation on the Employer's Representative's, level of authority for example the need to obtain the Employer's approval on major changes then this must be included within the contract. 3.2 Requirements for Employer’s Representative’s ‘The Employer's Representative and his staff must be suitably qualified and competent to carry out their duties. 3.3 Employer's Representative’s Authority to Delegate ‘The Employer's Representative may delegate any of his duties at any time to assistants by notifying the Contractor in writing which may later be revoked, again in writing. itis important to note that the authority of the delegated representative is limited to the authority contained within the delegation notice. Any determination, instruction, inspection, examination, testing, consent or approval by an assistant has the same effect as ifit had been issued by the Employer's Representative,| | | | 3.4 Employer's Representative’s instructions The Contractor is required to comply with any instruction given by the Employer's Representative. Instructions should only be taken from that person or any previously notified delegate 3.5 Employer's Representative to Attempt Agreement ‘The Employer's Representative is required to consult with the Contractor in an endeavour to reach agreement on value, Cost or extension of time. If agreement is not achieved the Employer's Representative is required to determine fairly and in accordance with the Contract CLAUSE 4: THE CONTRACTOR Clause 4 covers many of the Contractor's general obligations, 4.1 General Obligations Sub-Ciause 4.1 states the Contractor's obligation to execute the Works in accidence with the Contract including compliance with the Employer's Requirements, Contractor's Proposal and Schedules. The Contractor is also required to design the Works, including providing Construction Documents within the Time for Completion. The obligation includes all superintendence and Temporary Works. Before commencing and design the Contractor is required to satisfy himself regarding the Employer's Requirements including design criteria and notify the Employer's Representative of any error, fault or other defect within them. 4.2 Performance Security Sub-Clause 4.2 requires the Contractor to provide a Performance Secutity at his own cost in the amount specified in the Appendix to Tender provided by an entity to be approved by the Employer. ‘The Performance Security must be valid until the Contractor has executed and completed the Works. 4.3 Contractor’s Representative Sub-Clause 4.3 describes the role of the Contractor's Representative who has all the authority necessary to act on the Contractor's behalf and his whole time to running the project. Unless the Representative is named in the Contract, the Contractor has to submit the name of his Representative for the Employer's Representative to give his consent.In the case of absence, any replacement must be subject to the Employer's, Representative's consent, In the case of any delegation by the Contractor's Representative this must be notified to the Employer's Representative before the delegation takes place. Note also, that the Contractor's Representative (and any delegated representatives) must be fluent in the language of the Contract. 4.4 Co-ordination of the Works The Contractor is responsible for the co-ordination and proper execution of the Works including co-ordination of other Contractors to the extent specified in the Employer's Requirements. Unusually, the Contractor is also required to afford all reasonable opportunities for carrying out the work to any other Contractors employed by the Employer, workmen of the Employer and workman of any legally constituted public authorities. 4.5 Subcontractors Sub-Clause 4.5 covers Subcontractors, who are subject to the Employer's Representative's consent not less than 28 days before the intended Subcontractor starts on Site. ‘The Contractor does not have to have the consent to suppliers or previously named Subcontractors in the Contract, {tis a normal requirement in contracts for subcontractors to be assigned to the Employer in the event of termination by the Employer. 4.6 Assignment of Subcontractor's Obligations fa Subcontractor has undertaken a continuing and assignable obligation to the Contractor and if such obligation extends beyond the Contract Period the Contractor shall upon the expiry of the Contract Period assign the benefit to the Employer. 4,7 Setting Out ‘The Contractor is responsible, and liable, for setting out the Works. The Employer is responsible for items of reference e.g. levels or datums provided by the Contractor, but the Contractor must verify their accuracy. Any delay and/or cost occasioned by the Employer providing incorrect items of reference e.g. finished floor levels is recoverable by the Contractor,i i i i i | i | | i j 4.8 Quality Assurance The Contractor must institute @ quality assurance system which is subject to the Employer's Representative’s audit 429 Site Data Under Sub-Clause 4.9, the Employer is deemed to have made available all relevant data in his possession on sub-surface and hydrological conditions by the Base Date, which is 28 days before the date of submission of the Tender. Note that the Employer is required to make available any information he has, not to do an extensive site investigation himself! ‘The Contractor is responsible for interpreting the data and shall be deemed to have inspected and examined the Site its surroundings, and other available information and satisfied himself on matters such as sub-surface conditions, hydrological and climactic conditions, and the extent and nature of the work and works. “Deemed” does not actually mean that the Contractor MUST visit the Site, but that he is “fixed with the knowledge’ as if he had....there is a subtle difference! 4.10 Matters affecting the Execution of the Works ‘The Contractor is deemed to have satisfied himself as to the correctness and sufficiency of the Contract Price which covers all his obligations under the Contract. 4.11 Unforeseeable Physical Conditions Sub-Clause 4.11 defines "unforeseeable" as “not reasonably foreseeable by an experienced Contractor by the date for submission of the Tender” If the Contractor encounters something which is unforeseeable he notifies the Employer's Representative who may award an extension of time and additional Cost. 4.12 Access Route The Contractor is deemed to have satisfied himself as to the suitability and availability of access routes and also obtained any necessary permissions 4.13 Rights of Way and Facilities, ‘The Contractor bears all costs and charges for temporary rights of way required including any additional facilities outside the Site.4.14 Programme Sub-Clause 4.14 covers the provision of programmes showing how the Contractor proposes to execute the Works. Each such programme is to be supported by a report describing the methods that the Contractor proposes to adopt The Contractor is required to submit a programme to the Employer's Representative within the time stated in the Appendix to Tender. The programme is required to show: (a) the order in which the Contractor proposes to carry out the Works (Including design, procurement, manufacture, delivery, installation, testing and commissioning) (b) all major events and activities in the production of Construction Documents (0) periods for pre-construction reviews and for submissions, approvals and consents, and (d) the sequence of tests specified in the Contract ‘The contract describes the content of the Contractor's programme which should include order and sequence, timing of tests, method statement and details of resource levels. ‘There is no clear definition of everything that the Contractor needs to provide, but suffice to say that a clearly detailed, realistic and resourced programme should be submitted. 4.18 Progress Reports Monthly progress reports are to be prepared by the Contractor and 6 copies submitted fo the Employer's Representative. The contract prescribes the content of each report which includes: (a) photographs and detailed descriptions of progress including each stage of design, procurement, manufacture, delivery to Site, construction, erection, testing and commissioning (b) charts showing the status of Construction Documents, purchase orders, manufacture and construction (0) for the manufacture of each main item of Plant and Materials, name of manufacturer, manufacture location, percentage progress and expected dates of commencement of manufacture, inspection, tests and delivery (d) records of personnel and Contractor’s Equipment on Site(€) copies of quality assurance documents, test results, etc (f) safety statistics including details of hazardous incidents and activities related to environmental aspects (g) comparisons of actual and planned progress with details of any aspects which may jeopardize completion 4.16 Contractor's Equipment Equipment is what is normally known as “Plant" in other contracts, the Contractor being responsible for provision and care. The Contractor has to have the Employer's Representative’s consent to remove such Equipment 4.17 Safety Precautions ‘The Contractor is required to comply with all safety regulations in his design, access and operations on Site. He shall also provide (@) fencing, lighting, guarding and watching of the Works (0) temporary roadways, footways, guards and fences for the accommodation and protection of owners and occupiers of adjacent land 4.18 Protection of the Environment The Contractor is required to take all reasonable steps to protect the environment. The Specification and the Law prescribes limits of any discharges, etc, 4.19 Electricity, Water and Gas The Contractor is entitled to use supplies of electricity, water and gas as stated in the Employer's Requirements including payment of any charges. The quantities consumed are determined by the Employer's Representative and amounts deducted from sums otherwise due to the Contractor. The Contractor is required to provide at his own cost any apparatus for such determination. 4.20 Employer Supplied Machinery and Materials This covers any Equipment to be provided by the Employer, such Equipment to be transported to the Site at the cost and risk of the Employer. The Contractor visually inspects the goods upon receipt, any shortage, defect or default if rectified by the Contractor is a Variation. Responsibility for the care, custody and control then rests with the Contractor. 10 Goo egIf the Contractor is required to pay charges these shall be determined by the Employer’s Representative and deducted from monies otherwise due to the Contractor. 4.24 Clearance of Site During the execution of the Works, the Contractor is required to keep the Site free form all unnecessary obstruction and shall clear away from the Site any wreckage, rubbish or Temporary Works not required. Upon the issue of a Taking-Over Certificate the Contractor leaves Site and removes any remaining Equipment, surplus material, etc. The Works are then left in a clean and safe condition to the Satisfaction of the Employer's Representative If the Contractor fails to remove any remaining Equipment, surplus material, etc within 28 days after the issue of a Performance Certificate any remaining Equipment, surplus material, wreckage, rubbish and Temporary Works, the Employer may sell or dispose of remaining items. 4.22 Security of the Site The Contractor is responsible for keeping unauthorized personnel off the site, authorized persons being limited to employees of the Contractor, employees of his Subcontractors and persons authorized by the Employer of the Employer's Representative. 4.23 Contractor's Operations on Site The Contractor is required to confine his operations to the site and to keep all Equipment and Personnel within the Site 4.24 Fossils All fossils, coins, archeological finds, etc are the property of the Employer. The Contractor is required to inform the Employer's Representative upon finding such articles and is able to recover any delay and/or Cost through the contract CLAUSE 5: DESIGN 5.1 General Design Obligations The Contractor is responsible for carrying out the design of the Works. He is i required to submit the name of each designer and design Subcontractor to the Employer's Representative and gain prior consent. ‘The Contractor "holds himself" as having the experience and capability | necessary for the design. ee| | | i 5.2 Construction Documents The Contractor prepares the Construction Documents in sufficient detail to satisfy regulatory approvals and fo provide suppliers and construction personnel with sufficient instruction to execute the Works. The Employer's Representative has the right to review and insect the preparation of the Construction Documents. Each of the Construction Documents is submitted to the Employer's Representative for pre-construction review (this shall not exceed 21 days calculated from the date on which the Employer's Representative receives it), ‘The Employer's Representative may give notice to the Contractor that a Construction Document fails to comply with the contract, in which case it is rectified, resubmitted and reviewed at the Contractor's cost. (@) construction shall not commence prior to the expiry of the review period (b) construction shall be in accordance with the Construction Documents (0) ifthe Contractor wishes to modify any design which has been previously submitted for pre-construction review, the Contractor immediately notifies the Employer's Representative and revised documents shall be submitted 5.3 Contractor's Undertaking ‘The Contractor undertakes that the design shall be in accordance with the Laws of the Country and the documents forming the contract. 5.4 Technical Standards and Regulations The design, the Contractor's Documents, and the execution of the work are to be in accordance with the contract and the applicable Laws. 5.5 Samples The need for samples should be clear within the Employer's Requirements, the Contractor having an obligation to submit the necessary sampies, either at the Contractor's cost if specified in the Contract or as a Variation if the Employer's Representative instructs additional samples. 5.6 As-Built Drawings The Contractor is to prepare and update a complete set of “as built” records and keep them on Site, Two copies are to be submitted to the Employer's Representative prior fo commencement of the Tests on Completion. 2 >In addition, the Contractor must submit “as built’ drawings of the Works which shall be submitted to the Employer's Representative for his inspection. Prior to the issue of any Taking-Over Certificate the Contractor shall submit to the Employer's Representative one microfiche copy, one full size original copy and six printed copies of the relevant “as built” drawings., and any further Construction Documents stated in the Employer's Requirements. NB The Works are not considered complete until this is done. 5.8 Error by Contractor If errors are found in the Construction Documents, they and the Works are to be corrected at the Contractor's cost. 5.9 Patent Rights ‘The Contractor indemnifies the Employer against all claims of infringement of patent, registered design, copyright, trade mark, trade name of other intellectual property right i (@) the claim arises out of the design, construction, manufacture or use of the Works (b) the infringement was not the result of part (or all) of the Works being used for a purpose other than that indicated by the Contract, (0) the infringement was not the result of part (or all) of the Works being used in association with anything not supplied by the Contractor unless such association was disclosed to the Contractor prior to the Base Date (@) the infringement was not the unavoidable result of the Contractor's compliance with the Employer's Requirements The Employer or the Employer’s Representative shall not make any admission which might be prejudicial to the Contractor and the Contractor shall not make any admission that might be prejudicial to the Employer ur the Contractor has given the Employer such security as he may reasonably require, the security being for an amount which is an assessment of the ‘compensation, damages, charges, etc which the Employer may become liable. CLAUSE 6: STAFF AND LABOUR 6.1 Engagement of Staff and Labour This clause requires the Contractor to make all necessary arrangements for his staff and labour, including payment, housing, feeding and transport. 26.2 Rates of Wages and Conditions of Labour The Contractor is required to pay rates of wages and observe labour conditions not lower than those established for the industry where the work is carried out 6.3 Persons in the Service of Others The Contractor cannot recruit or attempt to recruit staff and labour from the Employer's or Employer's Representative’s personnel 6.4 Labour Laws The Contractor is required to comply with all relevant labour laws including payment, health and safety and immigration/emigration laws. 6.5 Working Hours 3 No work is to be carried out outside normal working hours, unless itis unavoidable or the Employer's Representative gives his consent. 6.6 Facilities for Staff and Labour This clause is similar to Cause 6.1 in that it requires the Contractor to provide and maintain all necessary accommodation and welfare except as provided for in Part lI. The Contractor also provides facilities as specified in the Empioyer’s Requirements for the Employer's and Employer's Representative’s personnel, 6.7 Health and Safety The Contractor should take precautions to ensure the safety of his staff and labour. This includes ensuring that medical staff, first aid facilities, sick bay and ambulance service are available at all times. The Contractor is also required to maintain records concerning health, safely and welfare of all persons and damage to properly as the Employer's Representative may require. The Contractor must appoint a member of staff to be responsible for maintaining the safety, and protection against accidents of personnel on The Contractor shall send the Employer's Representative details of any accident as soon as possible affer its occurrence. 6.8 Contractor's Superintendence ‘The Contractor provides all necessary superintendence during the design and execution of the Works. This includes the quantity and quality of personnel to plan, arrange, direct, manage, inspect and test the work.6.9 Contractor's Personnel The Contractor's personnel shall be appropriately qualified. The Employer's Representative has the right to require the Contractor to remove any person for one of 4 reasons, misconduct, incompetence/negligence, failure to comply with the Contract, or health and safety/protection of the environment. 6.10 Disorderly Conduct ‘The Contractor is required to prevent any disorderly conduct by his personnel. This also extends to preserve “peace and protection” of persons or property near the Site CLAUSE 7: IT, MATER! WORKM, This Clause generally covers the Contractor's obligations regarding the quality of the work and associated testing. 7.1 Manner of Execution Quality of materials and standard of workmanship are specified within the contract documents. This includes manufacture of Plant and Materials, and workmanship. Where not specified they shall be executed in a proper, workmantike manner with properly equipped facilities and non hazardous Materials. 7.2 Delivery to Site ‘The Contractor is responsible for procurement, transport, receiving, unloading and safe keeping of all Plant, Materials, Contractor's Equipment and other things required for completion of the Works. 7.3 Inspection ‘The Employer and the Employer's Representative shall be entitled during manufacture, fabrication, and preparation at all places where work is being carried out to inspect, examine, and test the materials and workmanship. The Contractor shall give due notice to the Employer's Representative whenever such work is ready, before putting out of view. The Employer's. Representative then inspects, examines, measures and tesis without unreasonable delay 7.4 Testing The Contractor is to provide, all apparatus, assistance, documents, ete to carry out the specified tests. The Employer's Representative is required to give the Contractor not less than 24 hours’ notice before carrying out such tests.If despite giving the notice the Employer's Representative does not attend, the tests will be carried out as if the Employer's Representative had attended. > The Contractor promptly forwards to the Employer's Representative certified reports of the tests. If the Employer's Representative has not attended he shall accept the readings as accurate. 7.5 Rejection Ifthe Employer's Representative decides that any Plant, Materials, design or workmanship is defective, he notifies the Contractor and may instruct the Contractor who promptly makes good the defect. If the Employer's, Representative decides that a retest is required the tests are repeated. If the > retest causes the Employer to incur costs these shall be recovered from the Contractor and deducted from monies otherwise due i | i i i ' i 7.6 Ownership of Plant and Materials ‘Sub-Clause 7.7 defines the date when each item of Plant and Materials , i becomes the property of the Employer as the earlier of (a) when it is delivered to Site (b) when by virtue of Sub-Ciause 8.9 the Contractor becomes entitled to payment CLAUSE 8: COMMENCEMENT, DELAYS AND SUSPENSION Clause 8 covers three time related subjects: (i) the start and duration of the project (i) programme, delays and extensions of time (iil) suspension of work by the Employer's Representative 8.1 Commencement of Works ‘The Contractor is required to commence the design and execution of the Works as soon as possible after receipt of a notice to this effect from the Employer's Representative. The notice is issued within the time stated in the : Appendix to Tender after the Effective Date 8.2 Time for Completion : The Contractor is required to complete all the work for take over including the passing of tests within the Time for Completion. Any Section (Sectional Completion) must be described in the Appendix to the Tender.3 3 8.3 Extension of Time for Completion ‘Sub-Clause 8.4 defines the Contractor's entitlement fo extensions of time. There are 5 grounds for extension of time: (2) a Variation (uniess an adjustment to the Time for Completion is agreed under Sub-Clause 14.3)) (b) a force majeure event (as defined in Sub-Clause 19.1) (c) a cause of delay giving rise to an entitlement under the contract (2) physical conditions or circumstances on the Site which are exceptionally adverse and not foreseeable by an experienced Contractor, or () any delay, impediment or prevention by the Employer If the Contractor intends to apply for an extension of time he gives notice to the Employer's Representative of such intention as soon as possible and in any event within 28 days of the start of the event. The Contractor keeps contemporary records to substantiate any application and permits the Employer's Representative to inspect all such records. Within 28 days of the first day of the delay, the Contractor submits full supporting details of his application. If the Contractor cannot submit all relevant details within such period because the cause of delay continued for a period exceeding 7 days, the Contractor shall submit interim details at intervals of not more than 28 days and full and final supporting details of his application within 21 days of the last day of the delay, 8.4 Delays Caused by Authorities This Sub-Clause gives the Contractor a right to an Extension of Time for delays caused by public authorities under certain specific conditions. These conditions are: (2) the Contractor has diligently followed the procedures laid down by the relevant legally constituted public authority (b) such authorities delay, impede or prevent the Contract, and (c) the resulting delay to the Works was not foreseeable by an experienced Contractor 8.5 Rate of Progress If progress is too siow to complete within the Time for Completion or progress has fallen behind the current programme, the Employer's Representative can instruct the Contractor to submit a revised programme and proposals to rectify matters. If the Employer incurs and costs, these shall be recovered from the Contractor. ”8.6 Liquidated Damages for Delay Ifthe Contractor fails to comply with Sub-Clause 8.2, he shall pay to the Employer the relevant sum stated in the Appendix to Tender for every day or part of a day elapsed between the relevant Time for Completion and the date stated in the Taking-Over Certificate. Except that the total payment may be limited within the Appendix to Tender. In the event that an extension of time is granted under Sub-Clause 8.3, the amount shall be recalculated accordingly and any over payment refunded, At any time after the Employer has become ented to liquidated damages the Employer's Representative may give notice to the Contractor under Sub- Clause 15.2 requiring the Contractor to complete within a reasonable time for completion. 8,7 Suspension of Work ‘The Employer's Representative may instruct the Contractor to suspend the progress of all or part of the works during which time the Contractor must protect, store and secure. The Employer's Representative may, but does not have to, notify the Contractor of the reason for the suspension. 8.8 Consequences of Suspension If the Contractor suffers delay and/or incurs Cost resulting from suspension and it is not due to a cause attributable to the Contractor he can claim an extension of time and recovery of Cost. No extension of time is due where the Contractor did not take the measures specified in Sub-Clause 8.7, 8.9 Payment for Plant and Materials in Event of Suspension ‘The Contractor can recover the value of any Plant and Materials which have not been delivered to Site if the work on Plant or delivery of Plant and/or materials has been suspended for more than 28 days. This entitlement is if (a) The Contractor has marked the Plant and/or Materials as the Employer's property (b) The suspension is not due to a cause attributable to the Contractor The Employer shall then take over the responsibilty for protection, storage, security and insurance. 8.10 Prolonged Suspension If the suspension under Sub-Clause has continued for more than 84 days the Contractor can request the Employer's Representatives permission to 18| q i proceed within 28 days. If the Employer's Representative does not give such permission the Contractor may terminate under Clause 16.2. 8.12 Resumption of Work After permission to proceed is given, the Contractor and Employer's Representative jointly inspect the Works and the Contractor makes good any deterioration or defect. CLAUSE 9: TE! com 9.4 Contractor's Obligations The Contractor is required to carry out all Tests on Completion. He has to give the Employer's Representative not less than 21 days' notice prior to each Test on Completion. Unless otherwise agreed the Tests shall be carried out within 14 days after this date In considering the results of the Tests on Completion, the Employer's Representative makes allowances for the effect of any use of the Works by the Employer on the performance of the Works. As soon as the Works, or a Section have passed the Tests on Completion the Contractor provides the Employer's Representative and the Employer with a certified report of the Test results. 9.2 Delayed Tests Ifthe Tests on Completion are delayed by the Contractor, the Employer's Representative may require the Contractor to carry out such Tests within 21 days afier receipt of a notice. if the Contractor fails to carry out the Tests on Completion within 21 days, the Employer may proceed with such Tests at the risk and cost of the Contractor. 9.3 Retesting {the Works, or a Section, fail a test, Sub-Clause 7.5 applies, and the Employer's Representative or Contractor may require such failed Test to be completed 9.4 Failure to Pass Tests on Completion if the Works, or a Section, fails the Tests on Completion repeated under Sub- Clause 9.3, the Employer's Representative is entitled to: (a) order further repetition of Tests on Completion, {b) reject the Works or Section, in which case the Employer shall have rights under Sub-Clause 15, 19> (0) issue a Taking-Over Certificate if the Employer requires., the Contract Price will then be reduced by such amount as may be agreed by the Employer and Contractor in full satisfaction of such failure CLAUSE 10: EMPLOYER'S TAKING OVER Clause 10 specifies the procedures for certification of completion and for the . Employer's taking-over 10.1 Taking Over of the Works and Sections ‘The Works are taken over by the Employer when they have been completed in accordance with the contract, have passed the Tests on Completion, and a ) ‘Taking-Over Certificate has been issued. The Contractor may apply by notice to the Employer's Representative for a Taking-Over Certificate not earlier than 14 days prior to completion ‘The Employer's Representative shall within 28 days after receiving the Contractor's application (a) issue the Taking-Over Certificate to the Contractor stating the date on which the works were completed including passing the Tests on Completion (b) reject the application giving his reasons and specifying the work required to be done by the Contractor to enable the Taking-Over Certificate to be issued, the Contractor then completes such work before issuing a further notice under this Sub-Clause If the Employer's Representative fails to either issue the Taking-Over Certificate of to reject the Contractor's application within 28 days, and of the Works are substantially in accordance with the Contract the Taking-Over : Certificate shall be deemed to have been issued. 10.2 Use by the Employer ‘The Employer shall not use any part of the Works unless the Employer's Representative has issued a Taking-Over Certificate. ifa Taking-Over Certificate has been issued for a part of the Works, the liquidated damages are reduced accordingly If the Employer uses part of the Works before the Taking-Over Certificate is issued (2) the part that is used shall be deemed to have been taken over at the date on which it is used (b) the Employer's Representative, shall, when requested by the Contractor issue a Taking-Over Certificate 20SO 8 & (c) the Contractor shall cease to be liable for the care of such part form such date, when the responsibility shall pass to the Employer After the Employer's Representative has issued a Taking-Over Certificate for a part of the Works the Contractor shall be given the earliest opportunity to take such steps as necessary to carry out Tests on Completion before the ‘expiry of the Contract Period. 10.3 Interference with Tests on Completion Ifthe Contractor is prevented from carrying out the Tests on Completion by a > ‘cause for which the Employer is responsible, the Employer is deemed to have taken over the Works or Section and the Employer's Representative issues a ‘Taking-Over Certificate and the and the Contractor shall carry out the tests on Completion. The Employer's Representative shall require the Tests on ‘Completion to be carried out by 14 days’ notice. If the Contractor incurs additional Cost such Cost plus reasonable profit shall be determined by the Employer's Representative. dete 10.4 Surfaces Requiring Reinstatement A Taking-Over Certificate does not include for surfaces requiring reinstatement. CLAUSE 11: TESTS AFTER COMPLETION 14.1 Employer's Obligations If Tests after Completion are specified in the contract, the Clause applies. The Employer provides all necessary labour, materials, electricity, fuel and water and carries out the Tests after Completion in accordance with manuals provided by the Contractor under Sub-Clause 5.7. The Tests after Completion are carried out as soon as possible after the Works or a Section have been taken over by the Employer. The Employer shall give the Contractor 21 days’ notice of the date after which the Tests after Completion will be carried out. The tests after Completion will be carried out within 14 days after that date. If the Contractor does not attend at the time, the Employer may proceed with the Tests after Completion and the Contractor accepts the readings as accurate 11.2 Delayed Tests If the Employer delays tests, the Contractor can recover Costs plus reasonable profit as determined by the Employer's Representative. Ifa test | after Completion cannot be completed during the Contract Period, then the ‘Works or Section shall be deemed to have passed the Test after Completion,11.3 Retesting If the Works, or a Section fail to pass Tests after Completion, the tests may be repeated. If such failure results from the Contractor and causes the Employer to incur additional costs, such costs shall be recoverable from the Contractor by the Employer. 11.4 Failure to Pass Tests after Completion If (a) the Works, or a Section fails the Tests after Completion, (b) the relevant sum payable as liquidated damages is stated in the Appendix to Tender, and () the Contractor pays such sum to the Employer during the Contract Period then the Works shall be deemed to have passed such Tests after Completion If the Works, or a Section fails to pass a Test after Completion and the Contractor proposes to make any adjustment or modification the Employer's Representative may instruct the Contractor that such an adjustment or modification shall not be made until a time that is convenient to the Employer. ‘The Contractor shall remain liable to satisfy a Test within a reasonable time of being notified by the Employer's Representative. If the Employer's Representative fails to give any such notice during the Contract Period the Contractor shall be relived of any such obligation and the Works shall be deemed to have passed such Tests after Completion. If the Contractor incurs additional Cost as a result of any unreasonable delay in giving access to the Works either to investigate the causes of failure or to carry out any adjustments, the Contractor shall be paid the additional Cost plus profit. CLAUSE 12: DEFECTS LIABILITY Defects Liability obligations are specified in Clause 12. 42.4 Completion of Outstanding Work and Remedying Defects In order that the Construction Documents and the Works shall be in the condition required by the Contract, at or as soon as practicable after the Contract Period, the Contractor shall (a) complete any work which is outstanding on the date stated in a Taking- Over Certificate and, 22{b) execute all work of amendment, reconstruction and remedying defects as may be instructed by the Employer or Employer's Representative during the Contract Period. 12.2 Cost of Remedying Defects 3 All work referred to in Sub-Clause 12.1(b) shall be executed by the Contractor at his own cost if the necessity for such work is due to: (a) design of the Works (b) Plant, Materials or workmanship not being in accordance with the > Contract, or (0) failure by the Contractor to comply with any other of his obligations if such necessity is due to any other cause, the Employer's Representative shall notify the Contractor and seek agreement to an adjustment to the Contract Price. 412.3 Extension of Contract Period ‘The Contract Period shall be extended by a period equal to the sum of any periods after the Works are taken over during which the Works or any Section or item of Plant cannot be used. Except that the Contact Period shall not be extended by more than two years. When delivery of Plant and/or Materials or erection of Plant has been suspended under Sub-Clause 8.7 the Contractor's, obligations under this Sub-Clause shall not apply to any defects or damage ‘occurring more than three years after the Plant and/or Materials would otherwise have been delivered, erected and taken over. 4 12.4 Failure to Remedy Defects The Contractor is required to remedy defects within a reasonable time, failing which, the Employer can give the Contractor a specific date to remedy. If the Contractor fails to remedy the defect, the Employer may: (a) carry out the work himself at the Contractor's risk and cost (b) require the Employer's Representative to determine a reduction in the Contract Price or (©) if the defect is such that the Employer has been deprived of substantially the benefit of the Works or a part of the Works the Employer may terminate the contract and recover all sums paid for such parts of the Works as cannot be put to use, together with the cost of dismantling, clearing the Site and returning Plant and Materials to the Contractor.i | | 1 i 42.5 Removal of Defective Work If the defect or damage is such that it cannot be remedied on Site, the Contractor may, with the consent of the Employer's Representative remove from the Site for the purposes of repair. 12.6 Further Tests If the remedying of a defect is such that it may affect the performance of the Works the Employer may require that Tests on Completion or Tests after Compietion be repeated to the extent necessary. The requirement shall be made by notice within 28 days after the defect is remedied. 12.7 Right of Access ‘The Contractor has the right of reasonable access to the Works until the Performance Certificate has been issued 42.8 Contractor to Search The Employer's Representative has a right to issue instructions to search for a defect. Ifthe search shows that work was in accordance with the contract, the Contractor is entitled to be paid the Cost plus reasonable profit. 12.9 Performance Certificate ‘The issue of the Performance Certificate confirms that the Contractor has fulfilled all his obligations under the contract. The Certificate is issued by the date 28 days after the expiry of the Contract Period or as soon after such date as the Contractor has provided all the Construction Documents and completed and tested all the Works including remedying any defects. Only the Performance Certificate shall constitute approval of the Works. 42.10 Unfulfilled Obligations Aithough this seems a contradiction in terms as the Contractor has fulfilled his obligations, there may be outstanding items such as clearance of the Site, Final Payment Certificate, and the possibilty of latent defects for which the Contractor may remain liable. CLAUSE 13; CONTRACT PRICE AND-PAYMENT 13.1 The Contract Price Unless otherwise stated in Part Il (a) payment for the Works shall be on a lump sum basis (b) the Contract Price shall not be adjusted for changes in the cost of labour, materials or other matters 24(c) the Contractor shall pay ali duties and taxes and the Contract Price shall not be adjusted for such costs e) (d) any quantities which may be set out in a Schedule are only estimated quantities and not to be taken as actual and correct quantities of the Works to be executed by the Contractor 3 (e) any quantities, prices or rates of payment per unit quantity which may be set out in a Schedule are only to be used for the purposes stated in the > Schedule Fe Ifany part of the Works is to be paid according to quantity supplied or work done, the provisions for measurement and valuation shall be stated on Part I. 43.2 Advance Payment 3 Sub-Clause 13.2 provides for the possibility of an interest-free advance payment for mobilization and design. The total for such advance payment is stated on the Appendix to Tender payable in proportions of currencies to which the Contract Price is payable. The Employer's Representative issues an interim Certificate for the first instalment after the Contractor has delivered to the Employer the performance security. ‘The advance payments shall be repaid through percentage deductions in Interim Payment Certificates. Unless other percentages are stated in the Appendix to Tender: (a) deductions shall commence in the Interim Payment Certificate which ‘exceeds 10% of the Contract Price less Provisional Sums eae (b) deductions shall be made at the amortization rate of 25% of the amount of all Interim Payment Certificates until such time as the payments have been made If the advance payments have not been repaid prior to the issue of the Taking-Over Certificate or prior to termination, the whole of the balance then outstanding shall immediately become due by the Contractor to the Employer. 413.3 Application for Interim Payment Certificates ‘The Contractor is required to submit a Statement (6 copies) to the Employer's Representative after the end of each month showing in detail the amounts to which he considers himself entitled together with supporting documents ‘The Statement includes: (a) the estimated contract value of Construction Documents produced and the Works executed up to the end of the month, (©) any amounts due to changes in legislation (Sub-Clause 13.16)3 i | i (c) any amount to be deducted for retention calculated by applying the retention percentage to the above amounts (d) any amounts to be added or deducted for advance payments, (e) any amounts due for Plant and Materials intended for the Works (Sub-Clause 13.5), () any other additions or deductions which may have become due other than under Sub-Clause 8.6. (@) deduction of any amounts certified in previous Certificates. 13.4 Schedule of Payments Payment due to the Contractor may be pre-defined as a Schedule of Payments within the Contract 13.5 Plant and Materials intended for the Works ‘This Sub-Clause provides for listed Plant and Materials listed in the contract and delivered to site for incorporation into the Works to be paid ‘The Employer's Representative determines ach addition and deduction in accordance with the following rules: (a) no addition shall be included in the Interim Payment Certificate unless in the opinion of the Employer's Representative: () the Plant and Materials are considered to be in accordance with the Contract ) the Plant and Materials have been delivered to Site and are properly stored on Site and protected against loss, damage or deterioration. the Contractor's records of the requirements, orders, etc are kept in a form approved by the Employer's Representative (w) the Contractor has submitted a statement of the Cost of acquiring and delivering the Plant and Materials to the Site () the Plant and Materials are those listed in the Appendix to Tender (b) the additional amount to be certified shail be the equivalent of 80% of the cost of the Plant and Materials delivered to Site as determined by the Employer's Representative (0) the amount of the deduction for any Plant and Materials incorporated in the Permanent Works shall be equivalent to the addition previously certified by the Employer's Representative for Plant and Materials (q) the currencies for such additions and deductions shall be determined by the Employer's Representative as follows(0. in the case of each addition, the currencies shall be those in which the payment will eventually become due for the relevant item (i) in the case of a deduction, the currencies shall be those in which the addition for the respective item had been certified 13.6 Issue of Interim Payment Certificates Provided the Employer has received and approved the Performance Security, the Employer's Representative certifies payments within 28 days of receiving each Contractor's Statement. A copy of the certificate is sent to the Employer and the Contractor. There is provision in the Contract for a minimum amount of Payment Certificate to be stated in the Appendix to Tender to prevent having to issue Certificates for minor amounts. An Interim Payment Certificate shall not be withheld on account of: (a) defects: if anything supplied or work done is not in accordance with the Contract, the cost of rectification shall be deducted by the Employer's, Representative from any amount due (b) part (only) of the payment applied for being disputed, in such case, a payment certificate shall be issued for the undisputed amount The Employer's Representative may in any payment certificate make any correction or modification that should properly be made to any previous certificate. ¥ 13.7 Payment Unless otherwise stated in Part Il, (a) The Employer is required to pay the amount certfed in each interim Payment Certificate within 56 days from the date on which the Employer's Representative received the Contractor's statement and supporting documents, and (b) The Employer shall pay the amount certified in the Final Payment Certificate within 56 days from the date of that certificate Payments shall be made into a bank account nominated by the Contractor in the payment country named as such in the Contract 13.8 Delayed Payment If payment of any sum due under Sub-Clause 13.7 is delayed, the Contractor is entitled to receive financing charges compounded monthly on the amount; i i unpaid during the delay. Unless stated otherwise in Part ll this shall be 3% above the discount rate of the central bank in the country of payment 13.9 Payment of Retention Money Normal rules apply here. The first half of retention money is certified by the Employer's Representative upon the issue of the Taking-Over Certificate, the outstanding balance being certified upon the expiry of the Contract Period 13.10 Statement at Completion Not later than 84 days after the issue of the Taking-Over Certificate, the Contractor shall submit to the Employer's Representative 6 copies of a statement at completion with supporting documents showing (2) the final value of all work done in accordance with the Contract up to the date stated in the Taking-Over Certificate (b) any further sums which the Contractor considers to be due, and (c) an estimate of amounts which the Contractor considers will become due to him under the Contract. ‘The estimated amounts shall be shown separately in the statement. 413.11 Application for Final Paymont Certificate Within 56 days of the issue of the Performance Certificate, the Contractor submits to the Employer's Representative 6 copies of a draft final statement with supporting details showing: (2) the value of all work done in accordance with the Contract, and (b) any further sums which the Contractor considers to be due to him under the Contract or otherwise If the Employer's Representative disagrees with or cannot verify the statement the Contractor shall submit further information as the Employer's Representative may reasonably require. The Contractor shall then send the final statement as agreed, which is then referred to as the "Final Statement’ If following discussions a dispute exists, then the Empioyer’s Representative shall deliver to the Employer an Interim Payment Certificate for those parts of the draft final statement which are not in dispute. The dispute may then be resolved under Clause 20 in which case the Contractor shail submit to the Employer with a copy to the Employer's Representative a Final Statement in accordance with the outcome of the dispute