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Construction Contract: Conditions of Contract for Construction

FOR BUILDING AND ENGINEERING WORKS DESIGNED BY THE EMPLOYER
First Edition; 1999

 General Conditions
 Guidance for the Preparation of the Particular
Conditions
 Forms of Tender, Contract Agreement and
Dispute Adjudication Agreement

ACKNOWLEDGEMENTS
FIRST EDITION
FOREWORD
INTRODUCTION TO THE GUIDANCE FOR THE
PREPARATION OF PARTICULAR CONDITIONS
CONTENTS
Conditions of Contract for Construction, which are
recommended for building or engineering works designed
by the Employer or by his representative, the Engineer.
Under the usual arrangements for this type of contract, the
Contractor constructs the works in accordance with a
design provided by the Employer. However, the works may
include some elements of Contractor-designed civil,
mechanical, electrical and/or construction works.
(Soft cover; 100 pages)
ISBN 2-88432-017-2
Code: FC-RA-A-AA-10
Acknowledgements
Fédération Internationale des Ingénieurs-Conseils (FIDIC) extends special thanks to the following
members of its Update Task Group: Christopher Wade (Group Leader), SWECO-VBB, Sweden; Peter L
Booen (Principal Drafter), GIBB Ltd, UK; Hermann Bayerlein, Fichtner, Germany; Christopher R
Seppala (Legal Adviser), White & Case, France; and José F Speziale, IATASA, Argentina.
The preparation was carried out under the general direction of the FIDIC Contracts Committee
comprising John B Bowcock, Consulting Engineer, UK (Chairman); Michael Mortimer-Hawkins,
SwedPower, Sweden; Axel-Volkmar Jaeger, Schmidt Reuter Partner, Germany; and Hiroyuki Endo,
Pacific Consultants, Japan.
Various drafts were reviewed by the following persons or organisations: Mushtaq Ahmad, NESPAK,
Pakistan; Peter Batty, Post Buckley International, USA; Manfred Breege, Lahmeyer International,
Germany; Pablo Bueno, TYPSA, Spain; Nael G Bunni, Consulting Engineer, Ireland; Ian Fraser, Beca
Carter Hollings & Ferner, New Zealand; Roy Goode, Oxford University, UK; Dan W Graham, Bristows
Cooke & Carpmael, UK; Mark Griffiths, Griffiths & Armour, UK; Geoffrey F Hawker, Consulting
Engineer, UK; Hesse & Steinberger, VDMA, Germany; Poul E Hvilsted, Elsamprojekt, Denmark;
Gordon L Jaynes, Whitman Breed Abbott & Morgan, UK; Tonny Jensen (Chairman of FIDIC Quality
Management Committee), COWI, Denmark; Philip Loots & Associates, South Africa; Neil McCole, Merz
and McLellan, UK; K B (Tony) Norris, Consulting Engineer, UK; Eric Petersen, CEGELEC, France;
Matthew Needham-Laing, Victoria Russell & Paul J Taylor, Berrymans Lace Mawer, UK; David R
Wightman & Gerlando Butera, Nabarro Nathanson, UK; the Association of Japanese Consulting
Engineers; European International Contractors; Organisme de Liaison Industries Métalliques
Européennes ("ORGALIME"); the International Association of Dredging Contractors; the International
Bar Association; the Asian Development Bank; and the World Bank.
FIDIC wishes to record its appreciation of the time and effort devoted by all the above.
The ultimate decision on the form and content of the document rests with FIDIC.
Foreword
The Fédération Internationale des Ingénieurs-Conseils (FIDIC) is publishing First Editions of four new
standard forms of contract:
 Conditions of Contract for Construction, which are recommended for building or engineering
works designed by the Employer or by his representative, the Engineer. Under the usual
arrangements for this type of contract, the Contractor constructs the works in accordance
with a design provided by the Employer. However, the works may include some elements of
Contractor-designed civil, mechanical, electrical and/or construction works.
 Conditions of Contract for Plant and Design-Build, which are recommended for the provision
of electrical and/or mechanical plant, and for the design and execution of building or
engineering works. Under the usual arrangements for this type of contract, the Contractor
designs and provides, in accordance with the Employer’s requirements, plant and/or other
works; which may include any combination of civil, mechanical, electrical and/or
construction works.
 Conditions of Contract for EPC/Turnkey Projects, which are recommended where one entity
takes total responsibility for the design and execution of an engineering project. Under the
usual arrangements for this type of contract, the entity carries out all the Engineering,
 Procurement and Construction: providing a fully-equipped facility, ready for operation (at
the "turn of the key"). This type of contract is usually negotiated between the parties.
 Short Form of Contract, which is recommended for building or engineering works of
relatively small capital value. Depending on the type of work and the circumstances, this
form may also be suitable for contracts of greater value, particularly for relatively simple or
repetitive work or work of short duration. Under the usual arrangements for this type of
contract, the Contractor constructs the works in accordance with a design provided by the
Employer or by his representative (if any), but this form may also be suitable for a contract
which includes, or wholly comprises, Contractor-designed civil, mechanical, electrical and/or
construction works.

The forms are recommended for general use where tenders are invited on an international basis.
Modifications may be required in some jurisdictions, particularly if the Conditions are to be used on
domestic contracts. FIDIC considers the official and authentic texts to be the versions in the English
language.
In the preparation of these Conditions of Contract for Construction, 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 many (but not all) contracts have been
included in the General Conditions, which will facilitate their incorporation into each contract. The
General Conditions and the Particular Conditions will together comprise the Conditions of Contract
governing the rights and obligations of the parties. It will be necessary to prepare the Particular
Conditions for each individual contract, and to take account of those sub-clauses in the General
Conditions which mention the Particular Conditions.
For this publication, the General Conditions were prepared on the following basis:

(i) interim and final payments will be determined by measurement, applying the
rates and prices in a Bill of Quantities;

(ii) if the wording in the General Conditions necessitates further data, then (unless
it is so descriptive that it would have to be detailed in the Specification) the sub-
clause makes reference to this data being contained in the Appendix to Tender,
the data either being prescribed by the Employer or being inserted by the
Tenderer;

(iii) where a sub-clause in the General Conditions deals with a matter on which
different contract terms are likely to be applicable for different contracts, the
principles applied in writing the sub-clause were:

(a) users would find it more convenient if any provisions which

they did not wish to apply could simply be disregarded or
deleted, than if additional text had to be written (in the
Particular Conditions) because the General Conditions did not
cover their requirements; or

(b) in other cases, where the application of (a) was thought to

be inappropriate, the sub-clause contains the provisions which
were considered applicable to most contracts.

For example, Sub-Clause 14.2 [Advance Payment] is included for convenience, not because of any
FIDIC policy in respect of advance payments. This Sub-Clause becomes inapplicable (even if it is not
deleted) if it is disregarded by not specifying the amount of the advance. It should therefore be noted
that some of the provisions contained in the General Conditions may not be appropriate for an
apparently-typical contract.
Further information on these aspects, example wording for other arrangements, and other
explanatory material and example wording to assist in the preparation of the Particular Conditions
and the other tender documents, are included within this publication as Guidance for the Preparation
of the Particular Conditions. Before incorporating any example wording, it must be checked to ensure
that it is wholly suitable for the particular circumstances; if not, it must be amended.
Where example wording is amended, and in all cases where other amendments or additions are
made, care must be taken to ensure that no ambiguity is created, either with the General Conditions
or between the clauses in the Particular Conditions. It is essential that all these drafting tasks, and
the entire preparation of the tender documents, are entrusted to personnel with the relevant
expertise, including the contractual, technical and procurement aspects.
This publication concludes with example forms for the Letter of Tender, the Appendix to Tender
(providing a check-list of the sub-clauses which refer to it), the Contract Agreement, and alternatives
for the Dispute Adjudication Agreement. This Dispute Adjudication Agreement provides text for the
agreement between the Employer, the Contractor and the person appointed to act either as sole
adjudicator or as a member of a three-person dispute adjudication board; and incorporates (by
reference) the terms in the Appendix to the General Conditions.
FIDIC intends to publish guides to the above Conditions of Contract. Another relevant FIDIC
publication is "Tendering Procedure", which presents a systematic approach to the selection of
tenderers and the obtaining and evaluation of tenders.
In order to clarify the sequence of Contract activities, reference may be made to the charts on the
next two pages and to the Sub-Clauses listed below (some Sub-Clause numbers are also stated in the
charts). The charts are illustrative and must not be taken into consideration in the interpretation of
the Conditions of Contract.
 1.1.3.1 & 13.7 Base Date
 1.1.3.2 & 8.1 Commencement Date
 1.1.6.6 & 4.2 Performance Security
 1.1.4.7 & 14.3 Interim Payment Certificate
 1.1.3.3 & 8.2 Time for Completion (as extended under 8.4)
 1.1.3.4 & 9.1 Firsts on Completion
 1.1.3.5 & 10.1 Taking-Over Certificate
 1.1.3.7 & 11.1 Defects Notification Period (as extended under 11.3)
 1.1.3.8 & 11.9 Performance Certificate

 1.1.4.4 & 14.13 Final Payment Certificate

INTRODUCTION TO THE PARTICULAR CONDITIONS
The terms of the Conditions of Contract for Construction have been prepared by the Fédération
Internationale des Ingénieurs-Conseils (FIDIC) and are recommended for general use for the purpose
of the construction (excluding most design) of building or engineering works where tenders are
invited on an international basis. Modifications to the Conditions may be required in some legal
jurisdictions, particularly if they are to be used on domestic contracts.
Under the usual arrangements for this type of contract, the Contractor constructs the works in
accordance with design details provided by the Employer or his representative, the Engineer.
Although these Conditions allow for the possibility that the Contractor may be required to design
parts of the permanent works, they are not intended for use where most of the works are designed
by the Contractor. For these Works, it would be more appropriate to utilise FIDIC’s Conditions of
Contract for Plant and Design-Build or Conditions of Contract for EPC Turnkey Projects.
The guidance hereafter is intended to assist writers of the Particular Conditions by giving options for
various sub-clauses where appropriate. As far as possible, example wording is included, in italics. In
some cases, however, only an aide-memoire is given.
Before incorporating any example wording, it must be checked to ensure that it is wholly suitable for
the particular circumstances. Unless it is considered suitable, example wording should not be used
without amendment.
Where example wording is amended, and in all cases where other amendments or additions are
made, care must be taken to ensure that no ambiguity is created, either with the General Conditions
or between the clauses in the Particular Conditions.
In the preparation of the Conditions of Contract to be included in the tender documents for a
contract, the following text can be used:

The Conditions of Contract comprise the "General Conditions", which form

part of the "Conditions of Contract for Construction" First Edition 1999
published by the Fédération Internationale des Ingénieurs-Conseils
(FIDIC), and the following "Particular Conditions", which include
amendments and additions to such General Conditions.

FIDIC has published a document entitled "Tendering Procedure" which presents a systematic
approach to the selection of tenderers and the obtaining and evaluation of tenders; the second
edition was published in 1994. The document is intended to assist the Employer to receive sound
competitive tenders with a minimum of qualifications. FIDIC intends to update Tendering Procedure
and to publish a guide to the use of these Conditions of Contract for Construction.
Contents
1: GENERAL PROVISIONS
1.1 Definitions
1.2 Interpretation
1.3 Communications
1.4 Law and Language
1.5 Priority of Documents
1.6 Contract Agreement
1.7 Assignment
1.8 Care and Supply of Documents
1.9 Delayed Drawings or Instructions
1.10 Employer’s Use of Contractor’s Documents
1.11 Contractor’s Use of Employer’s Documents
1.12 Confidential Details
1.13 Compliance with Laws
1.14 Joint and Several Liability
2 THE EMPLOYER
2.1 Right of Access to the Site
2.2 Permits, Licences or Approvals
2.3 Employer’s Personnel
2.4 Employer’s Financial Arrangements
2.5 Employer’s Claims
3 THE ENGINEER
3.1 Engineer’s Duties and Authority
3.2 Delegation by the Engineer
3.3 Instructions of the Engineer
3.4 Replacement of the Engineer
3.5 Determinations
4 THE CONTRACTOR
4.1 Contractor’s General Obligations
4.2 Performance Security
4.3 Contractor’s Representative
4.4 Subcontractors
4.5 Assignment of Benefit of Subcontract
4.6 Co-operation
4.7 Setting Out
4.8 Safety Procedures
4.9 Quality Assurance
4.10 Site Data
4.11 Sufficiency of the Accepted Contract Amount
4.12 Unforeseeable Physical Conditions
4.13 Rights of Way and Facilities
4.14 Avoidance of Interference
4.15 Access Route
4.16 Transport of Goods
4.17 Contractor’s Equipment
4.18 Protection of the Environment
4.19 Electricity, Water and Gas
4.20 Employer’s Equipment and Free-Issue Material
4.21 Progress Reports
4.22 Security of the Site
4.23 Contractor’s Operations on Site
4.24Fossils
5 NOMINATED SUBCONTRACTORS
5.1 Definition of "nominated Subcontractor"
5.2 Objection to Nomination
5.3 Payments to nominated Subcontractors
5.4 Evidence of Payments
6 STAFF AND LABOUR
6.1 Engagement of Staff and Labour
6.2 Rates of Wages and Conditions of Labour
6.3 Persons in the Service of Others
6.4 Labour Laws
6.5 Working Hours
6.6 Facilities for Staff and Labour
6.7 Health and Safety
6.8 Contractor’s Superintendence
6.9 Contractor’s Personnel
6.10 Records of Contractor’s Personnel and Equipment
6.11 Disorderly Conduct
7 PLANT, MATERIALS AND WORKMANSHIP
7.1 Manner of Execution
7.2 Samples
7.3 Inspection
7.4 Firsting
7.5 Rejection
7.6 Remedial Work
7.7 Ownership of Plant and Materials
7.8 Royalties
8 COMMENCEMENT, DELAYS AND SUSPENSION
8.1 Commencement of Works
8.2 Time for Completion
8.3 Programme
8.4 Extension of Time for Completion
8.5 Delays Caused by Authorities
8.6 Rate of Progress
8.7 Delay Damages
8.8 Suspension of Work
8.9 Consequences of Suspension
8.10 Payment for Plant and Materials in Event of Suspension
8.11 Prolonged Suspension
8.12 Resumption of Work
9 FirstS ON COMPLETION
9.1 Contractor’s Obligations
9.2 Delayed Firsts
9.3 ReFirsting
9.4 Failure to Pass Firsts on Completion
10 EMPLOYER’S TAKING OVER
10.1 Taking Over of the Works and Sections
10.2 Taking Over of Parts of the Works
10.3 Interference with Firsts on Completion
10.4 Surfaces Requiring Reinstatement
11 DEFECTS LIABILITY
11.1 Completion of Outstanding Work and Remedying Defects
11.2 Cost of Remedying Defects
11.3 Extension of Defects Notification Period
11.4 Failure to Remedy Defects
11.5 Removal of Defective Work
11.6 Further Firsts
11.7 Right of Access
11.8 Contractor to Search
11.9 Performance Certificate
11.10 Unfulfilled Obligations
11.11 Clearance of Site
12 MEASUREMENT AND EVALUATION
12.1 Works to be Measured
12.2 Method of Measurement
12.3 Evaluation
12.4 Omissions
13 VARIATIONS AND ADJUSTMENTS
13.1 Right to Vary
13.2 Value Engineering
13.3 Variation Procedure
13.4 Payment in Applicable Currencies
13.5 Provisional Sums
13.6 Daywork
13.7 Adjustments for Changes in Legislation
13.8 Adjustments for Changes in Cost
14 CONTRACT PRICE AND PAYMENT
14.1 The Contract Price
14.2 Advance Payment
14.3 Application for Interim Payment Certificates
14.4 Schedule of Payments
14.5 Plant and Materials intended for the Works
14.6 Issue of Interim Payment Certificates
14.7 Payment
14.8 Delayed Payment
14.9 Payment of Retention Money
14.10 Statement at Completion
14.11 Application for Final Payment Certificate
14.12 Discharge
14.13 Issue of Final Payment Certificate
14.14 Cessation of Employer’s Liability
14.15 Currencies of Payment
15 DEFAULT OF CONTRACTOR
15.1 Notice to Correct
15.2 Termination by Employer
15.3 Valuation at Date of Termination
15.4 Payment after Termination
15.5 Employer’s Entitlement to Termination
16 DEFAULT OF EMPLOYER
16.1 Contractor’s Entitlement to Suspend Work
16.2 Termination by Contractor
16.3 Cessation of Work and Removal of Contractor’s Equipment
16.4 Payment on Termination
17 RISK AND RESPONSIBILITY
17.1 Indemnities
17.2 Contractor’s Care of the Works
17.3 Employer’s Risks
17.4 Consequences of Employer’s Risks
17.5 Intellectual and Industrial Property Rights
17.6 Limitation of Liability
18 INSURANCE
18.1 General Requirements for Insurances
18.2 Insurance for Works and Contractor’s Equipment
18.3 Insurance against Injury to Persons and Damage to Property
18.4 Insurance for Workers
19 FORCE MAJEURE
19.1 Definition of Force Majeure
19.2 Notice of Force Majeure
19.3 Time of Notice
19.4 Duty to Minimise Delay
19.5 Consequences of Force Majeure
19.6 Optional Termination, Payment and Release
19.7 Release from Performance under the Law
20 CLAIMS, DISPUTES AND ARBITRATION
20.1 Contractor’s Claims
20.2 Appointment of the Dispute Adjudication Board
20.3 Failure to Agree Dispute Adjudication Board
20.4 Obtaining Dispute Adjudication Board’s Decision
20.5 Amicable Settlement
20.6 Arbitration
20.7 Failure to Comply with Dispute Adjudication Board’s Decision
20.8 Expiry of Dispute Adjudication Board’s Appointment
APPENDIX
GENERAL CONDITIONS OF DISPUTE ADJUDICATION AGREEMENT
INDEX
2. GUIDANCE FOR THE PREPARATION OF THE PARTICULAR CONDITIONS
INTRODUCTION
1 GENERAL PROVISIONS
2 THE EMPLOYER
3 THE ENGINEER
4 THE CONTRACTOR
5 NOMINATED SUBCONTRACTORS
6 STAFF AND LABOUR
7 PLANT, MATERIALS AND WORKMANSHIP
8 COMMENCEMENT, DELAYS AND SUSPENSION
9 FirstS ON COMPLETION
10 EMPLOYER’S TAKING OVER
11 DEFECTS LIABILITY
12 MEASUREMENT AND EVALUATION
13 VARIATIONS AND ADJUSTMENTS
14 CONTRACT PRICE AND PAYMENT
15 DEFAULT OF CONTRACTOR
16 DEFAULT OF EMPLOYER
17 RISK AND RESPONSIBILITY
18 INSURANCE
19 FORCE MAJEURE
20 CLAIMS, DISPUTES AND ARBITRATION
ANNEXES
FORMS OF SECURITIES