FIDIC-contracts-guide

168 Pages·2011·0.66 MB·English

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Fédération Internationale des Ingénieurs-Conseils
International Federation of Consulting Engineers
Internationale Vereinigung Beratender Ingenieure
Federación Internacional de Ingenieros Consultores
The FIDIC Contracts Guide

SUPPLEMENT
WITH GUIDANCE ON USING FIDIC’S
CONDITIONS OF CONTRACT FOR CONSTRUCTION
MULTILATERAL DEVELOPMENT BANK HARMONISED EDITION
ISBN 2 – 88432 – 045 – 8 MDB HARMONISED EDITION 2006
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The FIDIC Contracts Guide
SUPPLEMENT
CONDITIONS OF CONTRACT FOR CONSTRUCTION
MULTILATERAL DEVELOPMENT BANK HARMONISED EDITION
First released May 2005
Amended March 2006
2006
FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS
INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS
INTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE
FEDERACION INTERNACIONAL DE INGENIEROS CONSOLTORES
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Contents
INTRODUCTION
Introduction to the Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Introduction to the Conditions of Contract for Construction,
MDB Harmonised Edition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Summary of the License Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
Notes on the Preparation of Conditions of Contract . . . . . . . . . . . . . . . . . 1.10
Notes on the Preparation of Tender Documentation . . . . . . . . . . . . . . . . . 1.12
GENERAL CONDITIONS: Changes
Changes to the Construction Contract 1st Edition 1999 . . . . . . . . . . . . . . . 2.1
Notes to the MDB Harmonised General Conditions . . . . . . . . . . . . . . . . . 2.21
Words and Phrases replaced in the General Conditions . . . . . . . . . . . . . . .2.28
GENERAL CONDITIONS: Comparison
Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Index of Sub-Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2
Clause 1 Defined Words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8
Clauses 1 - 20 Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10
PARTICULAR CONDITIONS
Notes on the Preparation of Particular Conditions . . . . . . . . . . . . . . . . . . . . 4.1
© FIDIC 2006
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The FIDIC Contracts Guide

SUPPLEMENT
Conditions of Contract for Construction
Multilateral Development Bank Harmonised Edition
First released May 2005
Amended March 2006
2006
INTRODUCTION
© FIDIC 2006
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Introduction to the Supplement
The use of standard conditions of contract for all civil Works ensures comprehensiveness of
coverage, an improved balance of rights or obligations between Employer and Contractor,
general acceptability of their provisions, and savings in time and cost for bid preparation and
review, leading to more economic prices.
The International Bank for Reconstruction and Development (IBRD) and other Multilateral
Development Banks (MDBs) started releasing in May 2005 Standard Bidding Documents for
the procurement of works that conformed, “to the extent possible without contravening their
procurement guidelines”, to the model provided by the Master Procurement Document for
Procurement of Works & User’s Guide harmonised among the various MDBs and approved
by the Heads of Procurement of the MDBs and International Financial Institutions (IFIs) in
October 2004. The Master Bidding Documents reflect “best practices” by these institutions.
These Standard Bidding Documents for the procurement of works are to be used for the
procurement of admeasurement (unit price or rate) type of works through International
Competitive Bidding (ICB) in projects that are financed in whole or in part by an MDB. These
bidding documents are not suitable for lump sum contracts without substantial changes to
the method of payment and price adjustment, and to the Bill of Quantities, Schedules and
so forth.
The MDB harmonised Master Procurement Document for Procurement of Works & User’s
Guide incorporates General Conditions of a harmonised edition of contract conditions which
text has been agreed by the International Federation of Consulting Engineers (FIDIC) and
various MDBs for its inclusion in the Master Procurement Documents for Procurement of
Works & User’s Guide.
The harmonisation of the General Conditions has made unnecessary the great number of
deviations to the General Conditions of Contract (FIDIC’s “Conditions of Contract for
Construction”), introduced in, for example, the World Bank’s SBD for the procurement of
works through Particular Conditions of Contract to account for all non-applicable general
conditions.
Given that the harmonised General Conditions are based extensively on the “Conditions of
Contract for Construction”, 1st Edition, published by FIDIC in 1999, and FIDIC being the
sole copyright owner of the publication, the MDBs subscribed to a license agreement with
FIDIC that authorizes the use of the harmonised edition of such conditions of contract by
the MDBs when preparing bidding documents in accordance with their various SBD for the
procurement of works.
By virtue of a license agreement subscribed between Participating Banks and FIDIC, a
Bank’s Borrowers and their implementing agencies are authorized to reproduce the MDB
Harmonised Edition of FIDIC’s General Conditions of Contract for the exclusive purpose of
preparing bidding documents. Therefore, Borrowers and their implementing agencies must
abstain from making any use of the Harmonised Edition of FIDIC’s General Conditions of
Contract, distinct from the use indicated in the license agreement with the Banks.
The harmonised Master Procurement Document for Procurement of Works & User’s Guide
also contains Particular Conditions, now consisting of two Parts: Part A, comprising the
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Contract Data and Part B, Specific Provisions, containing clauses specific to each contract.
There is also a section containing Sample Forms.
The MDB Harmonised Edition of the FIDIC Conditions of Contract for Construction, referred
to as the “MDB Harmonised Construction Contract”, comprising General Conditions,
Particular Conditions and Sample Forms taken from the MDB harmonised Master
Procurement Document for Procurement of Works & User’s Guide is published by FIDIC in
accordance with the terms of the license agreement between FIDIC and the MDBs.
The present Supplement to the FIDIC Contracts Guide provides information and guidance
for preparing contracts using the MDB Harmonised Construction Contract. The information
and guidance is taken from the 1st Edition 1999 of the FIDIC Conditions of Contract for
Construction (the “Construction Contract, 1st Edition 1999” and from elements of the MDB
harmonised Master Procurement Document for Procurement of Works & User's Guide that
were published in the World Bank Standard Bidding Document for Works & Users Guide,
May 2005. Included are:
- a table of the changes to the Construction Contract General Conditions;
- a list of words and phrases that have been replaced in the Construction Contract
General Conditions;
- an index of the MDB Harmonised Construction Contract General Conditions;
- a side-by-side comparison of the General Conditions of the Construction Contract, MDB
Harmonised Edition, with those of the Construction Contract, 1st Edition 1999;
- Notes on preperation of Particular Conditions.
The Supplement to the FIDIC Contracts Guide was first published in May 2005 to
accompany the publication of the MDB Harmonised Construction Contract. A second
version of the contract was released in March 2006, and the present guide was updated to
reflect the changes.
The Supplement to the FIDIC Contracts Guide was prepared by the FIDIC Secretariat under
the guidance of the FIDIC Executive Committee and the FIDIC Contracts Committee which
comprises Christopher Wade (Chairman), Nael Bunni, Axel-Volkmar Jaeger, Philip
Jenkinson, and Michael Mortimer-Hawkins together with John B Bowcock as Special
Adviser and Christopher R Seppala as Legal Adviser.
FIDIC wishes to record its appreciation of the time and effort devoted by all the above.
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Introduction
MDB Harmonised Edition of the Conditions of Contract for Construction
The introduction to the Multilateral Development Bank’s Harmonised Edition of FIDIC’s
Conditions of Contract for Construction.

A number of the Multilateral Development Banks (MDBs) have for many years adopted the
FIDIC Conditions of Contract for Construction as part of the Standard Bidding Documents
which the MDBs require their borrowers or aid recipients to follow. In using the FIDIC
Conditions it has been the regular practice of the MDBs to introduce additional Clauses in
the Conditions of Particular Application (or “Particular Conditions”) in order to amend
provisions contained in the FIDIC General Conditions. These additional clauses in many
cases have standard wording which has to be repeated whenever procurement documents
are being prepared for a new project. Furthermore, the provisions in bid documents,
including the additional clauses contained in the Particular Conditions, varied between the
MDBs, and this created inefficiencies and uncertainties amongst the users of the
documents, and increased the possibilities for disputes.
These problems were recognised by the Heads of Procurement (HOPs) of the MDBs as
significant, as were the benefits of standardisation. In response, the HOPs resolved to
harmonise their bid documents on an international basis, by making use of the FIDIC
General Conditions. For this purpose, the HOPs further resolved that there should be a
modified form of the FIDIC Conditions of Contract for Construction, 1st Edition 1999, in
which the General Conditions would contain the standard wording which previously has
been incorporated by MDBs in the Particular Conditions.
FIDIC also recognised the major benefits to the users of the contracts of harmonisation and
the inclusion in the General Conditions of the main common changes required by Particular
Conditions in MDB contracts. Accordingly, the Federation was pleased to work with the
HOPs to produce this MDB Harmonised Edition of the 1999 Conditions for MDB financed
contracts.
It is believed that the modified, or harmonised document, will simplify use of the FIDIC
Conditions of Contract not only for the MDBs and their borrowers, but also for others
involved with project procurement, such as consulting engineers, contractors and contract
specialists working on MDB financed projects.
Use of the harmonised conditions should significantly reduce the number of additions and
amendments to be included in the Particular Conditions. Nevertheless, most projects will
have special requirements which will necessitate some specific changes. This harmonised
document therefore contains provision for Particular Conditions, as has become the practice
in other FIDIC documents. This MDB Harmonised Edition also includes sample forms for
Contract Data (Particular Conditions - Part A), Securities, Bonds, Guarantees and Dispute
Board agreements.
In general, this harmonised document follows earlier FIDIC risk sharing principles for the
types of contract for which they were prepared. In most cases, the amendments which have
been made to produce the MDB Harmonised Edition of the FIDIC General Conditions for
Construction are those arising from the requirements of the MDBs, except for some minor
changes of an editorial nature.
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However, in the case of the dispute provisions contained in Clauses 20.2 to 20.8 and in the
associated Appendix, the opportunity has been taken to make other amendments which
FIDIC considers an improvement on earlier wording in the Construction Contract, 1st Edition
1999.
The insurance provisions given in Clause 18 of the document remain unchanged from the
1st Edition 1999, although some commentators have suggested an alternative approach to
dealing with this specialised topic. In particular, Employers may wish to consider arranging
for a dedicated single policy for the project which would cover all necessary insurances.
The advantage of such an approach is that it would avoid gaps or other misunderstandings
in the insurances provided, including possible duplication of cover. If an Employer decides
to arrange a single insurance policy, then a copy of that policy should be made available to
tenderers during the tender period. FIDIC recommends that Employers should obtain, at an
early stage of project procurement, expert advice on insurance matters.
The MDBs listed in the section “Participating Banks” have participated in the preparation of
the MDB Harmonised Edition. It is understood that all of them will adopt this edition of the
FIDIC document in their Standard Bidding Documents.
A draft of this MDB Harmonised Edition was circulated for comment to interested parties,
prior to its finalization. All of the comments received were considered by FIDIC and some
have been incorporated. Other comments will be reviewed again when in due course FIDIC
produces a second edition of its Construction Contract.
A first version of the General Conditions was relased to Participating Banks in May 2005,
followed by an amended second version in March 2006.
The contribution of the FIDIC Contracts Committee to the preparation of this Harmonised
Edition is acknowledged. The Contracts Committee comprises Christopher Wade
(Chairman), Nael Bunni, Axel-Volkmar Jaegar, Philip Jenkinson and Michael Mortimer-
Hawkins together with John B Bowcock as Special Advisor and Christopher R Seppala as
Legal Adviser. It is noted that all were also involved, together with others, in the preparation
of the 1999 Edition of the Conditions of Contract for Construction (refer to
Acknowledgements in that document).
FIDIC wishes to record it appreciation of the time and effort devoted by all of the above.
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Summary of the License Agreement
Preamble
FIDIC and the International Bank of Reconstruction and Development (IBRD) and other
Participating Banks collectively known as Multilateral Development Banks (MDBs), have
separately executed a License Agreement in several counterparts, each of which shall be
deemed an original, but all of which together constitute one and the same agreement. The
preamble to the agreement with each of the MDBs indicates that:

- multilateral development agencies, referred to as “Participating Bank(s)”, which
include the International Bank for Reconstruction and Development, the Asian
Development Bank, the Inter-American Development Bank, the European Bank for
Reconstruction and Development, the Islamic Bank for Development Bank, the
African Development Bank, the Caribbean Development Bank, the Black Sea Trade
and Development Bank and the Nordic Development Fund seek to provide
harmonised policies, procedures and standard documents for procurement;
- the Participating Banks generally require the use of standard bidding documents
(SBDs) for international competitive bidding to promote transparency and to support
efficient project preparation and implementation;
- the Conditions of Contract for Construction, published by FIDIC in 1999 (“Conditions
of Contract for Construction”), are widely recognized and in worldwide use, and
contain “General Conditions”;
- the Participating Banks and FIDIC have agreed on a harmonised edition of the
General Conditions hereinafter referred to as the “MDB Harmonised General
Conditions of Contract”. The text of the MDB Harmonised General Conditions of
Contract has been adapted from the General Conditions of the1st Edition 1999 of the
FIDIC’s Conditions of Contract for Construction;
- FIDIC is the sole Copyright Owner of the Conditions of Contract for Construction;
- the Participating Banks wish to allow their borrowers, including any entity
implementing, on behalf of a borrower, an investment project financed by one or more
of the Participating Banks (“Executing Agency”), to use the Harmonised General
Conditions of Contract free of any charges, even if bidders may be required, in some
cases, to pay for the SBDs at cost; and
- FIDIC and the Participating Banks have together negotiated the terms of a License
Agreement so that any Participating Bank that chooses to have the terms and
conditions of this License Agreement apply to it and its borrowers and Executing
Agencies, shall execute a bilateral License Agreement with FIDIC on substantially the
same terms and conditions, upon which execution it will become a Licensed
Participating Bank;
License conditions
By virtue of the License Agreement, FIDIC grants to a participating MDB a non-exclusive
license for the reproduction and translation of the MDB Harmonised General Conditions of
Contract in the MDB’s SBDs for Procurement of Works, and for the corresponding
distribution to and reproduction and translation of the MDB Harmonised General Conditions
of Contract by Executing Agencies where such reproduction and translation is within the
framework of projects financed in whole or in part by the MDB. Conditions for this license
are that:
(a) The MDB Harmonised General Conditions of Contract will be made available by FIDIC
to the MDB in a reproducible electronic format.
(b) The MDB Harmonised General Conditions of Contract will become part of SBDs that
the MDB will make available to Executing Agencies.
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