FIDIC ‘RED BOOK’ USER GUIDE - MCA Namibia

1 WELCOME TO10 MARCH 2011 VENUE: OSHAKATI TIME: 09H301 BIDDERS CONFERENCESECTION 2:USER GUIDE TO FIDIC RED book WHO IS OMUGONGO?A Joint Venture Consortium formed between: JordaanOosthuysenNangoloQuantity Surveyors LithonProject Consultants (Pty) Ltd KweziV3 Engineers (Pty) Ltd Consulting Services Africa CC Mackintosh LautenbachArchitects Marley TjitjoArchitectsWindhoek Office:OngwedivaOffice: 47 Nelson Mandela, Windhoek, NamibiaDavid ShikombaBusiness Park, PO Box 90680, Windhoek, NamibiaPO Box 2367, Ongwediva, Namibia Tel: +264 61 220081Te l : +264 65 231509 Fax: +264 61 221333 Fax: +264 65 2315252 ABOUT THIS PROJECT IFB/TENDER No. MCAN/COM/IFB 1A01002(LOT 1 & 2) /1D01002/3 (LOT3)(OHANGWENA REGION) LOT 1(NANGHONA CS,OMAKONDO CS,ONANGULO CS,SHIKUDULE CS,TULILONGENI CS) LOT 2(ETSAPA CS,IIKELO CS,ONAMUKULO CS,ONANKALI NORTH CS,OUPILI CS) LOT 3(HELAO NAFIDI CS,OSHAKATI REGIONAL)3 FIDIC RED book USER GUIDECONDITIONS OF CONTRACT FOR CONSTRUCTION : For Building and Engineering Works Designed by Employer4 Background of the Red book A globalyaccepted contract A common basis for comparing tenders Genesis: After World War II a need for a common contract was felt to procure projects, 1945.

2 Institution of Civil Engineers and the Federation of Civil Engineering Contractors in the United Kingdom, produced ICE Form (General Conditions of Contract and Forms of Tender, Agreement and Bond for use in connection with Works of Civil Engineering Construction) In August 1957, the Conditions of Contract ( international ) for Works of Civil Engineering Construction was published. This was based on the ICE Form described above, and was also published in two parts. The publisher was Federation Internationaledes IngenieursConseils(the international Federation of Consulting Engineers, FIDIC ). Because of the long name it was referred based on its cover colour red as Red book 5 Background ( ) FIDIC is the international federation of duly elected associations of Consulting Engineers representing the profession in their respective qualify for membership, an association must demonstrate that its statutes.

3 Bylaws and regulations ensure that its members comply with the ethics and professional code of practice of a Consulting Engineer as outlined and according to the principles endorsed by FIDIC6 Concepts of the Red book Its legal concepts are based on the common lawsystem Consulting Engineer named by the Employer but trusted by both parties to the contract and referred to as the Engineer =Principal agent Remuneration principal is based on a re -measurement contract with a provisional bills of quantitieswhich serves as a basis for final re-measurement and payment as certificated by the Engineer responsibilities and liabilities are based on risks sharing Diversify applicationof legal principle with option for the applicable law of contract whether local (Namibian) or international . There are three alternativesin respect of the determination of applicable law of the contract: where there is an express choiceof the applicable law, where there is an inferred choice of applicable law; Where there is no choiceof the applicable Applicable Contract Law TherearefourclausesintheRedBookwhichdofo rmthelegalframeworkof 13,1.

4 4, 6. 4, Clause1. 4 oftheRedBookprovidesforthelawofthecontra ct,usuallyreferredtoas applicablelawofthecontract tobespecifiedin PartIIof theconditions. Clause1. 13and6. 4 requirestheContractortoconforminallrespe ctswithallnationalstatutes,ordinances,la ws,regulationsandbylawsofanylocalorother dulyconstitutedauthorityinconnectionwith theexecutionandcompletionoftheworksandth eremedyingofanydefectstherein. providesforthepossibilityoftheirintroduc ingormakingchangestoalreadyexistingnatio nalorstatestatute,ordinance,decreeorothe rlaworanyregulationorbylawof anylocalorotherdulyconstitutedauthorityi nthecountryinwhichtheworksarebeing,orare tobe, General Principles the Contractor gets paid for the work performed and the Employer gets the right to work in return (reciprocity) Prerequisites of a binding Contract : To be legally binding and enforceable under the common law system, the contract must satisfythe following prerequisites: Intent Agreement Consent Legal priority Legal capacity Legality of Objectives9 Performance of a Contract Contractperformancesmeandischargingofres ponsibility toeachpartyof thecontract.

5 Contractors responsibilitiesaretwofold: firstlycompletionofwork,andsecondlyremed yof contractualdefects. Employers responsibilityis toeffectpaymenttimely,within56days, Contractoristolodgeaperformancesecurityw ithin28daysofreceivingtheLetterof acceptanceas perclause4. 2 Engineer(Employeragent)mustissueaperform ancecertificate certificateofcompletion Engineer Services Services of Engineer/Principal Agent may consist of the following as per clause 3: Consulting services inclPre-investment studies Design, preparation of documents and supervision Specialized design and development services Project management Engineer as a Designer/Employer s Principal Agent Engineer as an active/reactive/passive duties and authority Engineer as a Supervisor Engineer as Certifier/Adjudicator or Quasi arbitrator Engineers duty is to be responsible and liable Towards the Employer, the third parties, Contractor and society.

6 So as impartial, honesty and professional : engineer has noauthority to amendthe of works Employeracceptstheriskofvariationinthequ antitiesfinallymeasuredoverthoseoriginal lyestimatedaswellastheriskofvariationin someof theratesandpricestendered. Thisis practicallyrelevantin ,onlyearthworks,foundations,andexternals ervicesuchaselectrical,mechanical,watera ndseweris applicable. TheRedBook,likeitsICEmodule,isbasedonthi scategoryofcontractwiththeBillsofQuantit ies( ) whichis s obligation Contractor sobligationsundertheRedBookrevolvearound fivemainareas,clause4: ObtainAccesstosite( ) within28days. theconstructionandcompletionoftheworkswi thduediligenceandwithinthetimeforcomplet ionas contemplatedin theuseofmaterials,plantandworkmanshipasd escribedinthecontractandinaccordancewith theEngineer sinstructions: theprovisionofsecurities,indemnities( ) andinsurances( , , & )inrespectof suchworkduringthecontractperiod; thesupplyofinformationandnoticesrequired fortheexecutionandcompletionofworks; theperformanceofcertainadministrativeand otherfunctions, (including,if explicitlyrequired,thedesignofcertainele ment)tofacilitatetheprocessofconstructio nanditsvariousactivities.

7 Theaboveobligationscanbecategorizedas: Pre-constructionstage During constructionand up to substantial completion of the works After substantial completionof the and Counterclaims Aclaimis definedasa generaltermofassertionofa righttomoney,property, (theOxfordCompaniontoLaw). Claims in construction contracts may be based on any one of five legal and non-legal concepts(clause ). Aclaimunderthecontractbasedonthegroundst hata particularprovisionofthatcontractentitle sa claimanttoremedywhichisspecifiedif a certaineventoccurs. A claimarisingoutofthecontractbasedonthegr oundsthatthetermofthecontracthadbeenbrea chedbutwheretheremedyisnotdesignated. AclaimunderthelawofTo r t /Delictoftheapplicablelawofcontract, basedonthegroundsof aspecificlegalruleorprinciple. Aclaimwherenocontractexitsbetweenthepart ies, if oneexistedit is deemedtobevoid,basedontheprinciplethatan individualhastherighttobepaida reasonableremunerationforworkdone.

8 Exgratiaclaims(outofkindness)wheretherei s nolegalbasisbutrathersomecommercialsense in makinga Completion & Claims for Extension of Time If timeisnot oftheessence in constructioncontracts,it is at leastoffundamentalimportance! A substantiatedclaimmustbelodgedwithin28da ysotherwiseit isdisallowed, Theengineer/principalagentshallreacttoth eclaimwithin42days. Theredb oo k sclauses8. 4 givegroundforextensionoftimeforcompletio nbycontractoraswellasextensionofdefectsn otificationperiodbyemployers(howevernotm orethan2 years)15 Works ProgrammingProgramminginvolvesprovidingp arametersoftimeintotheworkactivitiesandu ltimatelyintotheprojectitself. Thedetailswhichcanbehighlightedin a network(activities)programmeare(clause8. 3): Independenceofoneactivityfromanotherrequ iringthatneitherthestartnorthecompletion timeof eachis affectedbytheother.

9 Sequenceofactivitiesshowingwhenoneactivi tycannotstartbeforethecompletionof another. Burst describingrestrictiveactivitieswhichwhen completedallowtwoormoreactivitiestostart . Merge describinganactivitywhichcannotstartunle ssanduntiltwoormoreotheractivitieshaveen ded. Subcontractorsworks Timingofactivitiesin a unitoftimewhichusuallydependsonthedurati onofthewholeproject,andasgeneralruleexpr essedas onetotwopercentof thetime-scaleof thewholeproject. Thisoperationalsoincludesanidentificatio nof thestartandtheendof eachactivity. AswellasidentificationofCriticalpath Contractorhas28daysfromtheappointmentday stoprovidePG16 Dispute Settlement: Amicable Redbookallowsforpartiestosettleadisputea micably, withouttheneedforarbitrationforexampleth roughdirectnegotiation,conciliation,medi ationandotherformsof alternativedisputeresolutions.

10 Thereshouldbetrustandconfidentialityonbo thpartiesfortheretobeamicablesettlemento f a dispute. Amicablesettlementhasbeenintroducedfromt heFourthEditionof theRedBookas a necessarystepin encouragingpartiestoresolvethedisputeami cablybeforea disputecanbereferredtoarbitration. Amicablesettlementis themosteffectiveandleastcostlyforparties intendingonhavingdisputesresolvedpromptl y! NEXTS TAG EALLOWEDINTHEREDBOOKIS REFERTHEDISPUTETODISPUTEADJUDICATIONBOAR D(DAB). Thenameofindividualsformingthisboardwill benominatedbyEngineer(onbehalfofEmployer andcontractor) Settlement: Arbitration Manymethodsofresolvingdisputeshaveevolve doverthecenturies. Themostfamiliarin civilizedsocietiesare: Negotiation;Litigation;Conciliation;Medi tation;andArbitration. Wherenegotiationfailsintheconstructionco ntractsandinparticularinthecivilengineer ingandbuildingworksfields,arbitration( ) istraditionallychosenastheappropriateand themosteffectivemethodofresolution.