This document provides an overview of variations and adjustments, termination by employer and contractor, risks and responsibilities, and insurance clauses based on FIDIC contracts. It discusses topics like the engineer's right to vary works, value engineering, grounds for termination by employer or contractor, risks assumed by each party, intellectual property rights, limitations of liability, and general insurance requirements.

1. international federation of national associations of independent consulting Engineers
FIDIC Training Riyadh 1020 BTA - Dr. Moustafa Ismail March 2018 LEC- VII 1
FIDIC Forms of Contracts
Training Course:
Saudi Council of Engineers
March 2018
LECTURE 08
‫وبركاته‬ ‫هللا‬ ‫ورحوة‬ ‫عليكن‬
2018
.

2. Variations and Adjustments
• Cl.13.1 Engineer has the right to vary
o Prior to issue of TO certificate
o List of variation inclusions
• Value Engineering Cl.13.2
o Development risk with Contractor
o Savings 50/50 after deductions.
FIDIC Training Riyadh 1020 BTA - Dr. Moustafa Ismail March 2018 LEC- V 2March 2018

3. Clause15
Termination
by Employer
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 326 July 2017
PM World Journal Practical Guide for Termination of
Construction Projects Hands on application in FIDIC and NEC3
Contracts - Vol. V, Issue XII – December 2016
www.pmworldjournal.net
Moustafa I.Abu Dief

4. Clause 15 Termination by Employer
15.1 Notice to Correct
• If the Contractor fails to carry out any obligation / The Eng.
Notify for making good within a specified reasonable time.
15.2 Termination by Employer
The Employer shall be entitled to termination if Contractor:
a) fails to submit PS or with NT Proceed.
b) abandons the Works or demonstrates the intention not to
continue.
c) without excuse fails :
• (i) to proceed with the Works or
• (ii) to comply with a notice [Rejection] or [Remedial Work].
within 28 days after receiving it.
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 426 July 2017

5. Clause 15 Termination by Employer - continued
d) subcontracts without E consent/ agreement.
e) becomes bankrupt or in solvent. goes into
liquidation. has a receiving or administration order
made against him- no 14d
f) gives or offers to give (directly or indirectly) to any /
person any bribe. gift. gratuity. no 14d
• the Employer issue 14 days notice to the Contractor,
terminate the Contract and expel the Contractor from
the Site. a,b,c,d e,f without notice
. SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 526 July 2017

6.  Termination does not prejudice any other rights
 Contractor leaves Site and deliver required Goods, documents.
 After termination. the Employer may complete the Works
and/or arrange for any other entities to do so.
 The Employer shall then give notice that the Contractor's
Equipment and Temporary Works will be released to the
Contractor at or near the Site. ( or to be sold and the Employer
get back his due amounts if any).
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 6
Clause 15 Termination by Employer - continued
26 July 2017

7. • 15.3 Valuation at Date of Termination
 As soon as practicable after a notice of termination
under S. Cl. 15.2. the Engineer proceeds in
[Determinations] the value of the Works. Goods &
Contractor's Documents. and other sums due to
Contractor for work executed in accordance to
theContract.
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Clause 15 Termination by Employer - continue
26 July 2017

8. 15.4 Payment after Termination
Upon notice of termination/ S.Cl.15.2, the Employer may:
(a) proceed in accordance with Sub-Clause 2.5 [Employer's Cl.].
(b) No further payments to the Contractor until costs of
execution, remedying. damages for delay, other costs. and/or.
(c) recover any losses and damages incurred by the Employer.
after allowing for any sum due to the Contractor under Sub-
Clause 15.3 [Valuation at Date of Termination]. The Employer
shall pay any balance to the Contractor
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Clause 15 Termination by Employer - continued
26 July 2017

9. 15.5 Employer's Entitlement to Termination
• The Employer shall be entitled to terminate the Contract. at
any time for the Employer's convenience. by giving notice.
• take effect 28 days after the later of: the date of the notice or
the Employer returns the Performance Security.
• The Employer shall not terminate the Contract to execute the
Works himself or to be executed by another contract.
• Cessation/removal of C. equipment (16.3) of work- and
payment [optional termination, payment and release]S.Cl. 19.6
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Clause 15 Termination by Employer - continued
26 July 2017

10. You are the project Contractor for a private school construction project which
includes hundreds of activities, valued 4.50 M SAR and the contract is FIDIC
Red Book 1999, the value of the school buildings is 4.0 M SAR while the
fence and car shades are 0.50 M SAR, total duration 8 months.
It was reported that the Contractor offered a new vehicle to the Employer
representative as a free gift.
Discuss the following in case you are the project Engineer/Employer
1. What is the proper action and sequence to be followed as per FIDIC R Book 99
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Analyzed by Eng. …………
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VII 10
Event Analysis 6
25 July 2017

11. Suspension and
Termination by
Contractor
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12. 16.1 Contractor's Entitlement to Suspend Work
• Delay in IP Certificates or Employer fails with S. Cl. 2.4 [E.
Financial Arrangements]/[Payment] Contractor may. by notice
21 d.: THEN
 Suspend/(or reduce the rate of work) unless and until the
Contractor has received the IP. Certificate.
 No prejudice to Entitlements to financing charge or
termination
 If Contractor receive the payment before notice of T. .resume
 contractor is entitled to EOT/ cost incur for suspension
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 1226 July 2017

13. 16.2 Termination by Contractor
The Contractor shall be entitled to terminate the Contract if:
a) No evidence within 42days after giving notice S-Cl 16.1
b) Engineer fails. within 56 d. to issue the Payment Certificate
c) Contractor not receive amount due IPC within 42 d. (42+56)
after the expiry of the time stated in S.-Cl. 14.7 [Payment].
d) Employer substantially fails to perform contract obligations
e) Employer fails under S.Cl 1.6 Contract Agreement or
Assignment 1.7
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 1326 July 2017

14. 16.2 Termination by Contractor
f) a prolonged suspension affects the Works S. Cl 8.11- no 14 d
g) Employer becomes bankrupt / insolvent. goes into liquidation
 In any of these events or circumstances, the Contractor may.
upon giving 14 days‘ notice to the Employer, terminate the
Contract. However. in the case of subparagraph (f) or (g), the
Contractor may by notice terminate the Contract immediately.
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 1426 July 2017
16.2 Termination by Contractor continued

15. 16.3 Cessation of Work/Removal of Contractor's Equ.
 After a notice of termination S. Cl. 15.5 [Employer's
Entitlement to Termination], S. Cl. 16.2 [Termination by
Contractor] or S. Cl 19.6 [Optional Termination, Payment and
Release] has taken effect. the Contractor shall Promptly:
a) Cease all work, except for protection for safety of the Works.
b) hand over Contractor's Documents, Plant, Materials, all
work. for which the Contractor has received payment, and
• (c) remove all other Goods from the Site, except as necessary.
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 1526 July 2017

16. 16.4 Payment on Termination
• After a notice of termination under S. Cl. 16.2 [Termination by
Contractor] has, the Employer shall promptly:
(a) return the Performance Security to the Contractor.
(b) pay the Contractor in accordance with Sub-Clause 19.6
[Optional Termination, Payment and Release], and
(c) pay to the Contractor the amount of any loss of profit or other
loss / damage sustained by Contractor as a result of termination.
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17. SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 17
Clause 17
Risk
and
Responsibility
26 July 2017

18. Risk & Responsibility
• Cl.17.1 Basis for Indemnity
• Cl.17.2 Full responsibility for Works & Goods until TOC
• Cl.17.3 Employer’s Risks
• Cl.17.4 Compensation & Claims
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 1826 July 2017

19. 17.1 Indemnities
• The Contractor shall indemnify and hold harmless the
Employer, Personnel, their respective agents, against and from
all claims. damages. Losses and expenses in respect of:
a) bodily injury. sickness, disease or death, ………
b) damage to or loss of any property, real or personal
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 19
Clause 17 Risk and Responsibility
26 July 2017

20. 17.2 Contractor’s Care of the Works
 Contractor shall take full responsibility for the care of the
Work/section START to TOC then shall pass to the Employer.
 Care of outstanding works is maintained with the Contractor.
 If any loss to the Works, when the Contractor is responsible
for their care, from any cause not listed in Sub-Clause 17.3
[Employer's Risks]. Remain Contractor's risk and cost.
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Clause 17 Risk and Responsibility - continued
26 July 2017

21. • 17.3 Employer’s Risks
• The risks referred to in Sub-Clause 17.4 below are:
a) war. Hostilities, declared/not. invasion. act of enemies.
b) rebellion. terrorism. revolution. insurrection. military or
usurped power. or civil war, within the Country,
c) pressure waves caused by aircraft or other aerial devices
d) use / occupation by Employer of part of Permanent Works
e) design of any part of the Works by the Employer’s Personnel
or by others for whom the Employer is responsible. And
f) any operation of the forces of nature which is Unforeseeable
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 21
Clause 17 Risk and Responsibility - continue
26 July 2017
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22. 17.4 Consequences of Employer’s Risks
• If any of the risks listed in S. Cl. 17.3 causes loss. the
Contractor shall promptly give notice and rectifies
this loss to the extent required by the Engineer.
• Contractor is entitled to Time and cost
reimbursement.
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 22
Clause 17 Risk and Responsibility -continued
26 July 2017

23. 17.5 Intellectual and Industrial Property Rights
• "infringement'' means an infringement of any patent. registered
design. copyright. trade mark. trade name, ………
• The Employer shall indemnify and hold the Contractor
harmless against and from any claim alleging an infringement
(breach) which is or was:
• (a) an unavoidable result of the Contractor's compliance with
the Contract. or
• (b) a result of any Works being used by the Employer
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 23
Clause 17 Risk and Responsibility - continue
26 July 2017

24. 17.5 Intellectual and Industrial Property Rights-continued
• The Contractor shall indemnify and hold the Employer
harmless against and from any other claim which arises out of
or in relation to
(i) the manufacture. use. sale or import of any Goods. Or
(ii) any design for which the Contractor is responsible.
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Clause 17 Risk and Responsibility - continued
26 July 2017

25. 17.6 Limitation of Liability
• Neither Party shall be liable to the other Party for loss of use
of any Works. loss of profit. loss of any contract or for any
indirect or consequential loss or damage.
• The total liability of the Contractor to the Employer. Shall not
exceed the sum stated in the Particular Conditions or (if a sum
is not so stated) the Accepted Contract Amount.
• No limitation for liability in any case of fraud. deliberate
default or reckless misconduct by the defaulting Party.
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 25
Clause 17 Risk and Responsibility - continued
26 July 2017

26. SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 26
Clause
18
Insurance
26 July 2017

27. Insurance
• Cl.18
o Employer to approve insurers
o Agreed terms
o Currency
o Payments to be used to rectify loss
o Cl.18.3 – Appendix minimum amount
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII
2726 July 2017

28. Clause 18: Insurance
18.1 General Requirements for Insurances
 ··insuring Party" means. the Party responsible for
effecting and maintaining the insurance specified in the
relevant S. Cl.
 If Contractor insuring Party. each insurance shall be
effected with insurers , in terms approved/ Employer,
consistent with terms agreed by both Parties prior LOA.
 This agreement shall take precedence over this Clause
( prevail).
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2826 July 2017

29. Clause 18: Insurance
18.1 General Requirements for Insurances
 Wherever Employer is the insuring Party. insurance shall be
effected with insurers and in terms consistent with details
annexed to the Particular Conditions.
 Parties comply with the conditions of the insurance policies.
The insuring Party shall keep the insurers informed of any
changes to the execution of the Works and ensure that
insurance is maintained as per this Clause.
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII
2926 July 2017

30. Clause 18: Insurance
18.1 General Requirements for Insurances
 If a policy is required to indemnify joint insured. the cover
shall apply separately to
 each insured as though a separate policy had been issued for
each of the JOint
 insured. If a policy indemnifies additional joint insured.
namely in addition to the
 insured specified in this Clause. (i) the Contractor shall act
under the policy on behalf
 of these additional joint insured except that the Employer shall
act for Employer's
 Personnel. (ii) additional joint insured shall not be entitled to
receive payments directly
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII
3026 July 2017

31. Clause 18: Insurance
18.1 General Requirements for Insurances
 from the insurer or to have any other direct dealings with the
1nsurer. and (iii) the
 insuring Party shall require all additional joint insured to
comply with the conditions
 stipulated in the policy.Parties comply with the conditions of
the insurance policies. The insuring Party shall keep the
insurers informed of any changes to the execution of the
Works and ensure that insurance is maintained as per this
Clause.
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3126 July 2017

32. Clause 18: Insurance
18.1 General Requirements for Insurances - continued
 Neither Party shall make any material alteration/inform other P
 If insurer alters the terms- 1st Party first notified/ notifies other
 If the insuring Party fails to effect and keep in force any of the
insurances / other party shall pay and recover.
 Nothing in this Clause limits the obligations of the parties.
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII
3226 July 2017

33. Clause 18: Insurance
18.2 Insurance for Works and Contractor’s Equipment
 insuring Party shall insure the Works. Plant. Materials, ……
for not less than the full reinstatement cost, professional fees
and profit.
 Effective from the date as per ATT, by which the evidence is
to be submitted under 18.1. a (insurances have been effected)
until TOC.
 The insuring Party shall maintain this insurance to provide
cover until date of issue of Performance Certificate./ 1year+
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII
3326 July 2017

34. Clause 18: Insurance
18.2 Insurance for Works and Contractor’s Equipment-continue
 The insuring Party shall insure the Contractor’s equipment for
full replacement value, delivery to Site. – effective in being
transported to the Site and until it is no longer required.
o Insurance shall be effected and maintained by the
Contractor as insuring Party.
o shall be in the joint names of the Parties.
o cover all loss and damage from any cause not in S. Cl
17.3 [Employer's Risks].
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII
3426 July 2017

35. Clause 18: Insurance
18.3 Insurance against Injury/Persons & Damage to Property
• Insuring Party insures against each Party 's liability for loss,
damage, death/bodily injury may occur any physical property
• This insurance shall be/ amount as ATT per occurrence, open
no of occurrences.
• If an amount is not stated in the Appendix to Tender. this Sub-
Clause shall not apply.
SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII
3526 July 2017

36. Clause 18: Insurance
18.4 Insurance for Contractor's Personnel
• The Contractor shall effect and maintain insurance against
liability for claims, damages. arising from injury. sickness, of
any person employed by the Contractor.
• Employer and the Engineer also be indemnified under the
insurance, except that this insurance may exclude losses and
claims to the extent that they arise negligence.
• For a Subcontractor’s employees, the insurance may be
effected by the Subcontractor. the Contractor shall be
responsible for compliance with this Clause.
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37. SCE FIDIC Training 1011 BTA - Dr. Moustafa Ismail July 2017 LEC- VIII 37
END OF
LECTURE EIGHT
Thank You
‫هللا‬ ‫ورحوة‬ ‫عليكن‬ ‫السالم‬
‫هللا‬ ‫أهاى‬ ‫فى‬
26 July 2017