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FIDIC Conditions of Contracts Training 12 – 14 April 2011

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1 FIDIC Conditions of Contracts Training 12 – 14 April 2011
Bölgesel Rekabet Edebilirlik Operasyonel Programı’nın Uygulanması için Kurumsal Kapasitenin Oluşturulmasına Yönelik Teknik Yardım Technical Assistance on Institutional Building for the Implementation of RCOP in Turkey This project is co-financed by the European Union and the Republic of Turkey FIDIC Conditions of Contracts Training 12 – 14 April 2011 FIDIC Training April 2011

2 Agenda - 1 Day # 1 Introduction
This project is co-financed by the European Union and the Republic of Turkey Agenda - 1 Day # 1 Introduction Objective of the Training & Expectations of the participants FIDIC (What and Why?) FIDIC Publications FIDIC Conditions of Contracts for Works Contracts FIDIC Contracts Comparison Matrix 2 exercises FIDIC Training April 2011

3 Agenda - 2 Day # 2 Parties of a Works Contract under FIDIC
This project is co-financed by the European Union and the Republic of Turkey Agenda - 2 Day # 2 Parties of a Works Contract under FIDIC Contents of a Works Tender Dossier Introduction to Particular Conditions Appendix to Tender Clauses of the Conditions of Contract related to Volume 3 Clauses of the Conditions of Contract related to Volume 5 2 exercises FIDIC Training April 2011

4 Agenda - 3 Day # 3 Before Contract Signature
This project is co-financed by the European Union and the Republic of Turkey Agenda - 3 Day # 3 Before Contract Signature Before the Commencement of Works First 28 days Project Management Tools under FIDIC Conditions Financial Management Tools Limits of Engineer’s Authority in EU-funded Projects Exercise Evaluations FIDIC Training April 2011

5 Agenda Session # 1 Day # 1, Morning Introduction
This project is co-financed by the European Union and the Republic of Turkey Agenda Session # 1 Day # 1, Morning Introduction Objectives of the Training What is FIDIC? Why FIDIC? FIDIC Publications FIDIC Training April 2011

6 Introduction – 1 Trainer: Participants: Kerem Sadıklar
This project is co-financed by the European Union and the Republic of Turkey Introduction – 1 Trainer: Kerem Sadıklar Civil Engineer & MBA > 15 years of experience including EU & UNDP Participants: 25 of FCD + TID of RCP – CIC Knowledge & experience level? FIDIC Training April 2011

7 Introduction – 2 Objective of the Training:
This project is co-financed by the European Union and the Republic of Turkey Introduction – 2 Objective of the Training: By the end of the course, the trainees should; have a solid understanding of types of FIDIC Contracts know contents of a Works Contract know where to find what be able to identify the external expertise they need be able to draft an «Appendix to Tender» be able to identify the important clauses of an PC FIDIC Training April 2011

8 Introduction – 3 Therefore the training will cover
This project is co-financed by the European Union and the Republic of Turkey Introduction – 3 Therefore the training will cover FIDIC’s institutional structure and bookshop FIDIC contract types and major differences Identification of the most appropriate contract type Issues/clauses which need special attention during tendering. will be interactive; please be participative will use exercises will involve team work FIDIC Training April 2011

9 Introduction – 4 Please always remember;
This project is co-financed by the European Union and the Republic of Turkey Please always remember; Management of FIDIC contracts is a broad and complicated area, FIDIC experiences improve by execution, Studying, Implementation and Continues Monitoring are the keys to success. FIDIC Training April 2011

10 What is FIDIC? - 1 Fédération Internationale des Ingénieurs-Conseils
This project is co-financed by the European Union and the Republic of Turkey What is FIDIC? - 1 Fédération Internationale des Ingénieurs-Conseils International Federation of Consulting Engineers Uluslar arası Müşavir ve Mühendisler Federasyonu Established in Switzerland in 1913, HQs is in Genève First contract is printed in 1957 FIDIC represents Engineers and Consultants from various countries. E&C Associations from 75 countries are FIDIC members Under this umbrella firms and professionals are represented FIDIC Training April 2011

11 This project is co-financed by the European Union and the Republic of Turkey
What is FIDIC? - 2 TürkMMMB - Türk Müşavir Mühendis ve Mimarlar Birliği ATCEA – Association of Turkish Consulting Engineers and Architects Established in 1980 ATCEA has 200 members ATCEA is a member of FIDIC since 1987 Sells and distributes its own publications as well as FIDIC’s FIDIC Training April 2011

12 What is FIDIC? - 3 Some of the International Institutions using FIDIC;
This project is co-financed by the European Union and the Republic of Turkey What is FIDIC? - 3 Some of the International Institutions using FIDIC; World Bank (WB) European Bank of Restructuring and Development (EBRD) European Investment Bank (EIB) European Commission (EC) KfW Bankengruppe (KfW) Islamic Development Bank (IDB) African Development Bankası (ADB) Asian Development Bank (ADB) FIDIC Training April 2011

13 Why FIDIC? – 1 FIDIC Conditions of Contracts
This project is co-financed by the European Union and the Republic of Turkey Why FIDIC? – 1 FIDIC Conditions of Contracts cover almost all the major issues that needs to be addressed under a contract have a consistent and easy to follow structure distribute the risks fairly amongst parties designed by a third party (Consultant) but not an Employer; therefore conditions are more objective and fair can be adopted easily for many type of investments projects FIDIC Training April 2011

14 This project is co-financed by the European Union and the Republic of Turkey
Why FIDIC? – 2 FIDIC has committees formed of international members to improve its publications. Committees do continuous monitoring to improve and/or revise the existing publications (contract types, guidelines, etc.) and to introduce new books. Very well known by international Contractors and Consultants, therefore creates confidence and encourages tenderers. FIDIC Training April 2011

15 FIDIC Publications - 1 Types of Contracts;
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications - 1 Types of Contracts; Client/Consultant Model Services Agreement (White Book) Joint Venture Agreements Sub Contracting Agreements Various Types of Conditions for Works Contracts FIDIC Training April 2011

16 FIDIC Publications - 2 Other Publications; Business Integrity
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications - 2 Other Publications; Business Integrity Risk Management Quality Management Environment Management Sustainability Guide FIDIC Contracts Guide to the Construction, Plant and Design-Build and EPC/Turnkey Contracts FIDIC Training April 2011

17 Exercise # 1 Please go to web site www.fidic.org
This project is co-financed by the European Union and the Republic of Turkey Exercise # 1 Please go to web site list the types of publications available. Note: Based on the availability of internet in the training center, this exercise may be done as a joint activity. FIDIC Training April 2011

18 Agenda Session # 2 Day # 1, Afternoon
This project is co-financed by the European Union and the Republic of Turkey Agenda Session # 2 Day # 1, Afternoon Types of FIDIC Conditions of Contracts for Works Exercise # 2 Comparison Matrix FIDIC Training April 2011

19 FIDIC Publications – 3; Conditions of Contracts for Works
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications – 3; Conditions of Contracts for Works Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer; 1999 Edition – RED BOOK Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant, and for Building and Engineering, Designed by the Contractor; 1999 Edition – YELLOW BOOK Conditions of Contract for EPC Turn-key Projects (First Edition, 1999) - SILVER BOOK EPC Turn-key : Engineering – Procurement – Construction Short Form of Contract 1st Ed (1999 Green Book) – GREEN BOOK FIDIC Training April 2011

20 FIDIC Publications – 4; Conditions of Contracts for Works
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications – 4; Conditions of Contracts for Works Conditions of Contract for Construction (Multilateral Development Bank Harmonised Ed. Version 3: June 2010). For Building and Engineering Works designed by the Employer. Harmonised RED BOOK Conditions of Contract for Design, Build and Operate Projects (1st Ed, 2008) - GOLD BOOK FIDIC has adopted the scenario, with a 20- year operation period, and has opted for a single contract awarded to a single contracting entity (which will almost certainly be a consortium or joint venture) to optimise the coordination of innovation, quality and performance, rather than award separate contracts for design-build and for operation. The contractor has no responsibility for either financing the project or for its ultimate commercial success. The document, as written, is not suitable for contracts which are not based on the traditional Design-Build-Operate sequence, or where the Operation Period differs significantly from the 20 years adopted. FIDIC Training April 2011

21 FIDIC Publications – 5; Conditions of Contracts for Works
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications – 5; Conditions of Contracts for Works RED BOOK – 1 Design and Engineering (incl. BoQs) is done by Employer or Employer’s Representative. Tenderers fill in their unit prices into the existing BoQs. Final amount is not fixed, payments are done based on the real amounts executed. (Exceptions are available eg: lump-sum conracts). FIDIC Training April 2011

22 FIDIC Publications – 6; Conditions of Contracts for Works
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications – 6; Conditions of Contracts for Works RED BOOK - 2 Employer carries the risk for contract amount increases. The better the design, the flawless the project implementation. Tender evaluations are relatively simpler. FIDIC Training April 2011

23 FIDIC Publications – 7; Conditions of Contracts for Works
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications – 7; Conditions of Contracts for Works YELLOW BOOK - 1 Employer prepares only the «Employer’s Requirements». Employer Requirements includes only; Draft layout, Operational Parameters, Technical Specifications and Financial Proposal Format (Schedule of Prices). Tenderers submit their technical proposals together with their financial proposals. Technical proposals cover at minimum methodology, basic design and drawings, bill of and similar supporting documents. FIDIC Training April 2011

24 FIDIC Publications – 8; Conditions of Contracts for Works
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications – 8; Conditions of Contracts for Works YELLOW BOOK - 2 Generally lump-sum price contracts are used. Price increase and other risks are distributed amongst both parties. Tender evaluation process is more complicated and requires technical expertise. FIDIC Training April 2011

25 FIDIC Publications – 9; Conditions of Contracts for Works
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications – 9; Conditions of Contracts for Works SILVER BOOK - 1 Two-party contracts (No Engineer) Employer defines design parameters, quality measures and functional requirements. Tenderers submit comprehensive technical proposals supported with designs. Lump-sum contracts are used and all risk lies with the Contractor. FIDIC Training April 2011

26 FIDIC Publications – 10; Conditions of Contracts for Works
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications – 10; Conditions of Contracts for Works SILVER BOOK - 2 More suitable for projects like; refinery, petrochemical facilities, power plants. Implemented if the employer foresees high risk for the supply and assembly of mechanical and electrical components. Tender evaluations are very complicated and requires continuous negotiations. Not suitable for public and EU-funded projects in Turkey. FIDIC Training April 2011

27 FIDIC Publications – 11; Conditions of Contracts for Works
This project is co-financed by the European Union and the Republic of Turkey FIDIC Publications – 11; Conditions of Contracts for Works GREEN BOOK For low contract values (< 500,000 USD) Simple but repetitive works Short term assignments Usually Employer takes over the design responsibility. FIDIC Training April 2011

28 Please fill in the given table based on your best assumptions.
This project is co-financed by the European Union and the Republic of Turkey Exercise # 2 Please fill in the given table based on your best assumptions. FIDIC Training April 2011

29 Comparison Matrix - 1 Parameters RED YELLOW SILVER GREEN Design
This project is co-financed by the European Union and the Republic of Turkey Parameters RED YELLOW SILVER GREEN Design Employer Contractor Employer or Contractor Design Approval Only Contractor’s Design (If any) Engineer approves or rejects before executions N.a. Only Contractor’s Design (If any Financial Proposal Unit Price Lump-sum Price Unit Price / Lump-sum Price Payment Schedules Measured quantities Payment percentages Payment Calendar / Payment percentages Measured quantities or Percentages Engineer Yes Generally No No. Employer representative may assign if needed. FIDIC Training April 2011

30 Comparison Matrix - 2 Parameters RED YELLOW SILVER GREEN
This project is co-financed by the European Union and the Republic of Turkey Comparison Matrix - 2 Parameters RED YELLOW SILVER GREEN Tests during Construction Significant number of tests Relatively less and simpler Generally no tests Limited or no tests Tests at completion Very detailed and complicated performance tests Very detailed and complicated performance tests. Risk Distribution Employer carries the design risks Distributed Contractor carries the risks Varies FIDIC Training April 2011

31 Agenda Session # 3 Day # 2, Morning
This project is co-financed by the European Union and the Republic of Turkey Agenda Session # 3 Day # 2, Morning Parties of a Works Contract under FIDIC Contents of a Works Tender Dossier Introduction to Particular Conditions Exercise # 3 FIDIC Training April 2011

32 Parties of a Contract - 1 3 parties under a typical FIDIC Contract :
This project is co-financed by the European Union and the Republic of Turkey Parties of a Contract - 1 3 parties under a typical FIDIC Contract : The Employer The Contractor The Engineer (Supervisor) FIDIC Training April 2011

33 Parties of a Contract - 2 Relations in a EU-funded Project
This project is co-financed by the European Union and the Republic of Turkey Parties of a Contract - 2 Relations in a EU-funded Project Employer – Contractor FIDIC Conditions of Contract Employer – Engineer Service Contract EU/PRAG General Conditions Engineer – Contractor Engineer supervises the construction and manages the project with limited authority. FIDIC Training April 2011

34 Parties of a Contract - 3 Employer
This project is co-financed by the European Union and the Republic of Turkey Parties of a Contract - 3 Employer Defines the requirements and specifications Provides the construction site Provides the financial resources (usually) Provides the necessary conditions to the Contractor for the execution of works Some of these tasks are shared by OPs and ERs (not party to the contract) in EU- funded projects. FIDIC Training April 2011

35 Parties of a Contract - 4 Contractor:
This project is co-financed by the European Union and the Republic of Turkey Parties of a Contract - 4 Contractor: Responsible from executing the works Provides the necessary securities and guarantees Held responsible from his and/or his sub contractors actions Responsible from the quality of the executed works as well as the security of the construction site Prepares the interim payment reports May use sub contractors as allowed in the conditions of the contract FIDIC Training April 2011

36 Parties of a Contract - 5 Engineer:
This project is co-financed by the European Union and the Republic of Turkey Parties of a Contract - 5 Engineer: Assigned by the Employer to represent the Employer Name, contact information and authorities of an Engineer are stated in relevant parts of the Works Contract After consulting with the Employer and the Contractor, should propose fair and objective solutions for claims. Checks the quality of the appropriateness of the workmanship and the materials used Approves the payment certificates of the Contractor FIDIC Training April 2011

37 This project is co-financed by the European Union and the Republic of Turkey
Contents of a Works TD - 1 A Works tender dossier comprises of 5 Volumes; Volume 1: Instructions to Tenderers - PRAG rules apply. Terminology should be adopted in line with FIDIC. Volume 2: Conditions of Contract – FIDIC Volume 3: Technical Specifications / Employer’s Requirements Volume 4: Financial Offer Format, Schedule of Prices Volume 5: Drawings FIDIC Training April 2011

38 Contents of a Works TD - 2 Volume 1: Instructions to Tenderers (ITT)
This project is co-financed by the European Union and the Republic of Turkey Contents of a Works TD - 2 Volume 1: Instructions to Tenderers (ITT) Tender Form and Annexes (Appendix to Tender) Tender Guarantee Format Forms Glossary of Terms Evaluation Grid FIDIC Training April 2011

39 Contents of a Works TD - 3 Volume 2: Draft Contract
This project is co-financed by the European Union and the Republic of Turkey Contents of a Works TD - 3 Volume 2: Draft Contract General Conditions of Contract (RED / YELLOW BOOK)) Based on the nature and design responsibility. Particular Conditions of Contract Security Samples (Pre-finance, Performance & Retention) FIDIC Training April 2011

40 Contents of a Works TD – 4 Particular Conditions – 1
This project is co-financed by the European Union and the Republic of Turkey Contents of a Works TD – 4 Particular Conditions – 1 FIDIC General Conditions of Contracts (RED or YELLOW) for any type of project anywhere in the world. Contract will be customized by using the particular conditions of contract. Particular conditions prevail the General Conditions. Particular Conditions changes / replaces / revises / deletes the Clauses of the General Conditions. FIDIC Training April 2011

41 Contents of a Works TD – 5 Particular Conditions – 2
This project is co-financed by the European Union and the Republic of Turkey Contents of a Works TD – 5 Particular Conditions – 2 Clauses in Particular Conditions should not be conflicting with the clauses of the General Conditions. FIDIC Guidelines may be used while drafting Particular Conditions. Particular Conditions should be in line with the local law and law of the contract. Any revisions / additions / omissions done by the Particular Conditions should be based on rational reasoning. FIDIC Training April 2011

42 Contents of a Works TD – 6 Particular Conditions – 3
This project is co-financed by the European Union and the Republic of Turkey Particular Conditions – 3 Very complex PCs may harm the completeness and structure of a works Contract. PCs should be drafted by a team of experts who have relevant works and contract management experience. PCs should be assessed / evaluated by local lawyers. Appendix to Tender may be used as control tool. Clause 1.5 of PCs; «Priority of Documents» is important and should be re-addressed for every project. FIDIC Training April 2011

43 Contents of a Works TD – 7 Priority of Documents the contract,
This project is co-financed by the European Union and the Republic of Turkey Contents of a Works TD – 7 Priority of Documents the contract, the Tender Form with its appendix, the Particular Conditions, the General Conditions, the Technical Specifications, the design documentation (drawings), the bill of quantities (after arithmetical corrections)/breakdown, any other documents forming part of the contract FIDIC Training April 2011

44 Particular Conditions – 1
This project is co-financed by the European Union and the Republic of Turkey Particular Conditions – 1 Clauses which must be revised / added during the preparation of a PCs Clause 1.3 Communication Should be revised in line with all the communication tools allowed for the specific project Clause 1.4 Law and Language If different languages will be used under certain circumstances this should be defined here Clause 1.5 Priority of Documents Amendments and additions can be made here. Please be extremely careful, and do not change unless you have to. FIDIC Training April 2011

45 Particular Conditions – 2
This project is co-financed by the European Union and the Republic of Turkey Particular Conditions – 2 Clause 1.6 Contract Agreement Contract Agreement will also be referred as «Letter of Acceptance» Clause 2.1 Right of Access to Site If there are conditions (time constraints or other) related to this issue, this clause should be drafted accordingly. Clause 3.1 Engineer’s Duty and Authority The limits of Engineer’s authority should be clearly defined here. This article is extremely important for EU funded projects where the authority of the Engineer is limited. This article should be in line with the ToR fo the Engineer’s service contract. Clause 4.1 Contractor’s General Obligations If the Contractor has additional obligations, these should be clearly defined here. FIDIC Training April 2011

46 Particular Conditions – 3
This project is co-financed by the European Union and the Republic of Turkey Clause 4.8 Safety Procedures If there are any additional procedures to be implemented because of EU or local laws they should be defined here Clause 4.19 Electricity, Water and Gas This articled defines where and how the Contractor will obtain the necessary infrastructure. Clause 4.21 Progress Reports If additional reports other than the ones defined in General Conditions are requested, these should be defined here. Clause 7 / Sub Clause 7.9 «Rules of Origin». This sub clause should be added in EU funded projects. Please remember this is only for permanent works. FIDIC Training April 2011

47 Particular Conditions – 4
This project is co-financed by the European Union and the Republic of Turkey Particular Conditions – 4 Clause 8.2 – Time for Completion If there are different milestones for completion and/or taking over parts of the works these should be defined here. Clause 12.1 – Works to be Measured Only RED BOOK If measurements are to be done by records and/or reports, the details should be defined here. FIDIC Training April 2011

48 This project is co-financed by the European Union and the Republic of Turkey
Exercise # 3 Please identify the Clauses which are different in RED and YELLOW FIDIC Books. FIDIC Training April 2011

49 Particular Conditions - 5
This project is co-financed by the European Union and the Republic of Turkey Particular Conditions - 5 Different Clauses in FIDIC Books: RED Book YELLOW Book GREEN Book Clause 3 Engineer Employer’s Administartion Clause 5 Nominated Sub Contractors Design Clause 12 Measurement and Evaluation Tests for Completion FIDIC Training April 2011

50 Agenda Session # 4 Day # 2, Afternoon Appendix to Tender
This project is co-financed by the European Union and the Republic of Turkey Agenda Session # 4 Day # 2, Afternoon Appendix to Tender Clauses of the Conditions of Contract related to Volume 3 Clauses of the Conditions of Contract related to Volume 5 Exercise # 4 FIDIC Training April 2011

51 Appendix to Tender – 1 This project is co-financed by the European Union and the Republic of Turkey Appendix to Tender is prepared as a summary table. Includes Financial and Administrative / Contractual Information Administrative / Contractual Information Contact Details of Parties Contract Duration Law and Language of the Contract Disputes and Arbitration FIDIC Training April 2011

52 Appendix to Tender – 2 Financial Information: Security Amounts
This project is co-financed by the European Union and the Republic of Turkey Financial Information: Security Amounts Delay Penalties Pre-Finance Payments Retention Deductions Minimum Interim Payments Insurance Amounts FIDIC Training April 2011

53 This project is co-financed by the European Union and the Republic of Turkey
Appendix to Tender – 3 It includes summary of the information originating from the Particular and General Conditions of Contract. A different AtT should be prepared for each tender. May be used as a tool to check the completeness and consistency of the particular and general conditions. Numeric values or specific information should be indicated in Appendix to Tender to avoid confusion and mistakes between different values. Appendix to tender should be used to complement the Particular and General Conditions, not to amend or revise them. FIDIC Training April 2011

54 Volume 3 - 1 Technical Specifications / Employer Requirements
This project is co-financed by the European Union and the Republic of Turkey Technical Specifications / Employer Requirements RED Book: Technical Specifications Material quality Material properties Workmanship quality Assembly conditions Locations, etc. are defined in detailed. YELLOW Book: Employer Requirements Performance criteria is defined for the works which will be designed by the Contractor. FIDIC Training April 2011

55 Volume 3 - 2 RED Book; Technical Specifications
This project is co-financed by the European Union and the Republic of Turkey RED Book; Technical Specifications Every detail (material & workmanship) that can not be shown on drawings should be clearly defined here. Definitions should be clear and net. «shall», «will», «must» to be used, «may» «may be» not to be used Location Forms (Room Lists) should be included. The more detailed and clear the specifications, the more flawless the project implementation. FIDIC Training April 2011

56 Volume 3 - 3 YELLOW Book; Employer Requirements
This project is co-financed by the European Union and the Republic of Turkey Volume 3 - 3 YELLOW Book; Employer Requirements Employer’s Requirements should define the scope and the objective of the project. The requirements, parameters, functions, scope and the quality of the completed works should be defined. All the existing information, relevant technical & administrative regulations and standards should be listed to enable the Contractor to do a proper design. FIDIC Training April 2011

57 Volume 3 - 4 This project is co-financed by the European Union and the Republic of Turkey Clauses of the Conditions of Contract related to Volume 3 - 1 1.9 Errors in the Employer’s Requirements Extension of Time – Contract Amount Increase 1.13 Compliance with Laws (planning vs. construction permits) 4.1 Contractor’s General Obligations Additional security or visibility measures 4.6 Co-operation If other contractors share the site FIDIC Training April 2011

58 Volume 3 - 5 This project is co-financed by the European Union and the Republic of Turkey Clauses of the Conditions of Contract related to Volume 3 - 2 4.7 Setting Out (correct positioning, leveling etc.) 4.14 Avoidance of Interference (interference with third parties) 4.18 Protection of Environment 4.19 Electricity, Water and Gas 8avaliable infrastructure) 4.20 Employer’s Equipment and Free-Issue Material 5.1 General Design Obligations (yellow)/ Nominated Sub Contractors (Red) FIDIC Training April 2011

59 Volume 3 - 6 This project is co-financed by the European Union and the Republic of Turkey Clauses of the Conditions of Contract related to Volume 3 - 3 5.2 Contractor’s Documents (Yellow Book) 5.4 Technical Standards and Regulations 5.5 Training 5.6 As-built Documents 6.6 Facilities for Staff and Labor Facilities for the Employer and Engineer on site 7.2 Samples (material approvals) FIDIC Training April 2011

60 This project is co-financed by the European Union and the Republic of Turkey
Volume 3 - 7 Clauses of the Conditions of Contract related to Volume 3 - 4 7.3 Inspection (Manufacturer Tests) 9.1 Contractor’s Obligations (Tests on Completion) 9.4 Failure to Pass Tests on Completion 12.1 Tests after Completion (Yellow Book) 12.4 Failure to Pass Tests after Completion (Yellow Book) FIDIC Training April 2011

61 Volume 5 Clauses of the Conditions of Contract related to Volume 5:
This project is co-financed by the European Union and the Republic of Turkey Volume 5 Clauses of the Conditions of Contract related to Volume 5: RED and YELLOW Books 1.8 Care and Supply of Documents RED Book 1.9 Delayed Drawings and Instructions YELLOW Book 1.9 Errors in the Employer’s Requirements FIDIC Training April 2011

62 This project is co-financed by the European Union and the Republic of Turkey
Exercise # 4 Please fill in the missing parts of the attached Appendix to Tender in line with the given Particular Conditions of Contract and the General Conditions of a RED FIDIC Book FIDIC Training April 2011

63 Agenda Session # 5 Day # 3, Morning Before Contract Signature
This project is co-financed by the European Union and the Republic of Turkey Agenda Session # 5 Day # 3, Morning Before Contract Signature Before the Commencement of Works First 28 days Project Management Tools under FIDIC Conditions Exercise # 5 FIDIC Training April 2011

64 Before Contract Signature - 1
This project is co-financed by the European Union and the Republic of Turkey Before Contract Signature - 1 Employer gives award notice to the Awardee. Contract Negotiations are done (if necessary). Priority of documents are re-arranged if necessary due to contract negotiations or clarifications during tender period. Contract is signed by the Employer (and endorsed by EUD). Contractor submits the required documents (e.g. performance guarantee) to the Employer together with the signed Contract. FIDIC Training April 2011

65 Before the Construction Works Commerce - 1
This project is co-financed by the European Union and the Republic of Turkey Upon the signature of the Contract certain procedures need to completed before the Contractor can commence the works; 18.2 Submission of All Risk Insurance 20.2 Identification of DAB (Dispute Adjucation Board) member(s). – Sometimes identification is done on «Ad hoc» bases. 3.1 If not already in the Contract, the Employers informs the Contractor about the details of the Engineer. Communication lines and rules are established. 1.8 & 1.9 Supply of Drawings and Instructions (RED Book) Drawings should be an integral part of the Contract and should be provided based on a well structured calendar FIDIC Training April 2011

66 Before the Construction Works Commerce - 2
This project is co-financed by the European Union and the Republic of Turkey Before the Construction Works Commerce - 2 3.2 The limits of the authority of the Engineer and its staff should be defined The authority of the Engineer is limited in projects funded by EU. Please remember that the phrase Engineer refers to the Consultant Firm, not the Consultant’s Team Leader. FIDIC Training April 2011

67 Before the Construction Works Commerce - 3
This project is co-financed by the European Union and the Republic of Turkey Before the Construction Works Commerce - 3 The personnel of the Employer, the Contractor and the Engineer to be deployed on the project site is identified. (4.3 Contractor’s Representative) The limits of authority of each personnel is identified and a line of communication is drafted based on this. It is recommended that the line of communication is signed by all parties. For example: the Team Leader of the Engineer approves the Contractors Interim Payments, but does not have the authority to negotiate amendments on the Consultancy Contract. FIDIC Training April 2011

68 Before the Construction Works Commerce - 4
This project is co-financed by the European Union and the Republic of Turkey Before the Construction Works Commerce - 4 Clause 2.1 Right of Access to Site Employer should give the right to access and possession of the site to the Contractor after the Contract Signature. Employer should complete his responsibilities and should give the possession of the site free of problems. Delays in this task may cause extensions in the contract duration and increases in the contract price. 1.13 Contractor should complete all the necessary local procedures and obtain the necessary permits to start construction works. Clause 8.1 Unless otherwise stated in PCs the commencement date is within 42 days after the contract signature. Engineer shall give the notice not less than 7 days before the Commencement Date. FIDIC Training April 2011

69 This project is co-financed by the European Union and the Republic of Turkey
First 28 Days Clause 4.4 Necessary permissions and procedures are completed for the Sub Contractors. Clause 4.1 Contractor’s General Obligations. Security of the site and works EU Visibility Rules are secured Clause 6 Staff and Labour Sub Clause 6.4 (Local Labour Laws) Sub Clause 6.5 (Working hours) Sub Clause 6.7 (Health and safety) Contractor should take all the necessary precautions to avoid accidents and should assign a safety representative. FIDIC Training April 2011

70 Project Management Tools – 1
This project is co-financed by the European Union and the Republic of Turkey Project Management Tools – 1 Notices Instructions Reports Records Certificates FIDIC Training April 2011

71 Project Management Tools – 2
This project is co-financed by the European Union and the Republic of Turkey Project Management Tools – 2 Clause 1.3 Communication The rules stated in this clause should be followed. Payment certificates, approvals, certifications and similar requests should be processed within the durations stated in the Contract. A copy of the notices should be shared by the Engineer. Clause 1.9 Delayed Drawings and Instructions Delays which will cause claims should be avoided as much as possible. FIDIC Training April 2011

72 Project Management Tools - 3
This project is co-financed by the European Union and the Republic of Turkey Project Management Tools - 3 Clause 3.3 Instructions of the Engineer Engineer should issue instructions in line with its Authority. Instructions can only be issued by the Engineer or its representative. RED Book includes verbal instructions by written confirmations. FIDIC Training April 2011

73 Project Management Tools – 4 Reports
This project is co-financed by the European Union and the Republic of Turkey Clause 4.21 Progress Reports Unless otherwise stated, the Contractor should issue progress reports in certain intervals. Usually as attachments to the interim payment certificates. Reports compare the physical and financial realization with the planned and propose programmes for the remaining duration. Reports should be supported by pictures and test results. Reports should include information about the production, delivery and assembly schedules of the permanent works. FIDIC Training April 2011

74 Project Management Tools – 5 Reports
This project is co-financed by the European Union and the Republic of Turkey Clause 6.10 Records of Contractor’s Personnel and Equipment Contractor should keep daily site records. The records should include site activities as well as weather conditions. Such information should be summarized in the progress reports. Clause 2.5 ve 20.1 Claims Progress reports should list the Claims of both Parties. The contractor should give notice in 28 days after he became aware of the event or the circumstances. And shall submit a detailed claim in 42 days. Engineer shall respond within 42 days after receiving a claim. Clause Contract Price and Payment Progress reports should include sufficient level of information about cash flows in order to allow the Employer to make proper planning. FIDIC Training April 2011

75 Project Management Tools – 6 Certificates
This project is co-financed by the European Union and the Republic of Turkey Project Management Tools – 6 Certificates Clause 10 – Employer’s Taking Over Contractor may apply for Taking Over Certificate 14 days before the works are completed (Notice). Engineer within 28 days after receiving the application (a) issues the certificate or (2) rejects the application. Clause 11 – Defects Liability Upon the full satisfaction of Contractor’s duties and responsibilities and within 28 days after the expiry of the Defects Notification Period; Engineer issues the Final Acceptance Certificate. FIDIC Training April 2011

76 This project is co-financed by the European Union and the Republic of Turkey
Exercise # 5 Please calculate the maximum number of contract duration for the Project using the attached Annex to Tender. FIDIC Training April 2011

77 Agenda Session # 6 Day # 3, Afternoon Financial Management Tools
This project is co-financed by the European Union and the Republic of Turkey Agenda Session # 6 Day # 3, Afternoon Financial Management Tools Limits of Engineer’s Authority in EU-funded Projects Evaluations FIDIC Training April 2011

78 Financial Management Tools- 1
This project is co-financed by the European Union and the Republic of Turkey Financial Management Tools- 1 Clause 12 Measurement and Evaluation (RED Book) Clause 13 Variations and Adjustments Clause 14 Contract Price and Payment FIDIC Training April 2011

79 Financial Management Tools – 2
This project is co-financed by the European Union and the Republic of Turkey Financial Management Tools – 2 Clause 12 Measurement and Evaluation Only valid for RED Book Contracts. YELLOW Book has «Tests After Completion». Measurements are done by the Engineer in presence of the Contractor. In certain circumstances records are used instead of measurements. Payments are usually based on net measurements. Clause 12.3 defines the procedures for defining new rates. Clause 12.4 defines the compensations payments to be done to the Contractor for omissions. FIDIC Training April 2011

80 Financial Management Tools – 3
This project is co-financed by the European Union and the Republic of Turkey Financial Management Tools – 3 YELLOW Book; Payment Conditions Usually lump-sum contracts. Sub items are defined for interim payments. Payments are based on completion ratios (percentages). Sub items should be arranged carefully in order not to harm the Contractor’s cash flow. Unfair or unreasonable payment conditions are always reflected to the prices. 14.4 Schedule of Payments and Volume 4 should be in line with each other. FIDIC Training April 2011

81 Financial Management Tools - 4
This project is co-financed by the European Union and the Republic of Turkey Financial Management Tools - 4 Clause 13 Variations and Adjustments 13.1 Engineer can instruct a variation 13.2 Value Engineering 13.3 Variation Procedure 13.8 Adjustments for Changes in Cost: Calculates price increases based cost (material, workmanship, energy etc.) increases. Not implemented in EU funded projects. FIDIC Training April 2011

82 Financial Management Tools - 5
This project is co-financed by the European Union and the Republic of Turkey Financial Management Tools - 5 Clause 14 Contract Price and Payment 14.1 Contract Price 14.2 Advance Payment 14.3 Interim Payment Certificates / Sub Clause 4.21 Progress Reports 14.4 Schedule of Payments 14.7 & 14.8 Payment / Delayed Payment FIDIC Training April 2011

83 Financial Management Tools - 6
This project is co-financed by the European Union and the Republic of Turkey Advance payment and deductions should be in line with the nature of the works. Payment conditions should not put the Employer under risk, but at the same time should not harm the cash flow of the Contractor. In EU funded projects, Beneficiaries are requested to approve the interim payments «Read & Approved». Procedures for Contract Price variations should be clearly defined. And relevant clauses should be drafted accordingly. Payment terms and durations should be calculated after considering the necessary approval procedures. FIDIC Training April 2011

84 Limits of Engineer’s Authority in EU Funded Projects - 1
This project is co-financed by the European Union and the Republic of Turkey Limits of Engineer’s Authority in EU Funded Projects - 1 The Consultant (Engineer) shall obtain the specific approval of the CFCU (Contracting Authority) and the Beneficiary before taking action on matters affecting contract price and duration including but not limited to the following articles of the FIDIC Red Book: Sub-Clause 3.5: Agreeing or determining any matter, which will change the Contract Price; Sub-Clause 4.4: Giving consent to a Subcontractor for a subcontract for which a different subcontractor is named in the Contract; FIDIC Training April 2011

85 Limits of Engineer’s Authority in EU Funded Projects - 2
This project is co-financed by the European Union and the Republic of Turkey Limits of Engineer’s Authority in EU Funded Projects - 2 Sub-Clause 8.4: Agreeing or determining an extension of the Time for Completion; Sub-Clause 8.8: Suspension of work, Clause 13: Instructing Variations and Adjustments effecting Contract Price or Time for Completion. Sub-Clause 13.5: Giving instructions for the use of the provisional sums/contingencies; FIDIC Training April 2011

86 Thank You / Evaluations
This project is co-financed by the European Union and the Republic of Turkey Thank You / Evaluations FIDIC Training April 2011


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