FIDIC 2001 White Book Guide

8/9/2019 FIDIC 2001 White Book Guide

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FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS

INTERNATIONAL FEDERATION OF CONSULTING ENGINEERSINTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE

FEDERACION INTERNACIONAL DE INGENIEROS CONSULTORES

The White Book Guide

with other Notes on Documents for

Consultancy Agreements

Second Edition 2001


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FIDIC is an international federation of national associations of consulting

engineers.

FIDIC was founded in 1913 by three national associations of consulting

engineers within Europe. The objectives of forming the federation were to

promote in common the professional interests of the member associations

and to disseminate information of interest to members of its component

national associations.

Today FIDIC membership numbers more than 60 countries from all parts of

the globe and the federation represents most of the private practice

consulting engineers in the world.

FIDIC arranges seminars, conferences and other events in the furtherance of

its goals: maintenance of high ethical and professional standards; exchange

of views and information; discussion of problems of mutual concern among

member associations and representatives of the international financial

institutions; and development of the engineering profession in developing

countries.

FIDIC publications include proceedings of various conferences and seminars,

information for consulting engineers, project owners and international

development agencies, standard pre-qualification forms, contract documents

and client/consultant agreements. They are available from the secretariat in

Switzerland.

Copyright FIDIC 2001 Published byFdration Internationale des

Ingnieurs-Conseils (FIDIC)

All rights reserved P.O. Box 86

No part of this publication CH-1000 Lausanne 12

may be reproduced or Switzerland

transmitted in any form or Phone +41 21 654 44 11

by any means Fax +41 21 653 54 32

without permission of the E-mail [email protected]

publisher. WWW http://www.fidic.org

FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS

INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS

INTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE

FEDERACION INTERNACIONAL DE INGENIEROS CONSULTORES

The White Book Guide

with other Notes on Documents for

Consultancy Agreements

Second Edition 2001


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Acknowledgements

FIDIC wishes to acknowledge the efforts of those who have

contributed to the preparation of the succeeding editions of the WhiteBook and the White Book Guide.

The development of the White Book started in early 1986 when Povl

Ahm of Ove Arup and Partners was the Chairman of FIDIC's

Client/Consultant Relationships Committee, continued under the

Chairmanship of Eigil Steen Pedersen of COWl, and completed and

published in 1990 under the chairmanship of Mario Asin, Partner of

Tippetts-Abbett-McCarthy-Stratton (TAMS).

Godfrey L. Ackers, formerly a Consultant to Mott Mc Donald, Ltd. and

formerly a Partner of Sir Murdoch MacDonald and Partners, was the

principal drafter of the 1st Editions of the White Book and of the

Guide. Godfrey Ackers' wife, Wendy, typed many early drafts of these

documents.

Mario Asin, assisted by Peter Batty, formerly TAMS, and now with

Sheladia Associates, provided extensive reviews, comments and re-

editing of the White Book and of the First Edition of the Guide.

Geoffrey Coates, formerly Chairman of Sir Alexander Gibb and

Partners, Ltd., was FIDIC's Executive Committee Member in charge

of overseeing the preparation of the 1st Editions of the White Book

and of the Guide.

Mark Griffiths of Griffiths and Armour and Paul Taylor of Berrymans

Lace Mawer provided liability insurance and legal advice duringpreparation of the two documents, and of all subsequent

amendments including this 2nd Edition of the Guide.

Important comments on draft versions of the White Book were

provided by the World Bank and the Asian Development Bank. In

1989, a particularly valuable and extremely thorough commentary on

the semi-final draft was provided by a joint committee from the Arab

Funds under the coordination of Ismael El-Zabri of the Arab Fund for

Economic and Social Development.


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FIDIC 2001a

Contents

1 Introduction 1

A Background 1

B General Approach 2

C Application to Types of Assignment 2

D Documents to Complete the Agreement 3

E Format of this Guide 4

2 THE WHITE BOOK

General and Particular Conditions 6

A Definitions and Interpretations 7

Clauses 1 i, ii & iii Projects, Works and Services 7

Clauses 1 iv & v Client and Consultant 7

Clauses 1 viii & ix Day and Month 8

Clause 1 x Currencies of Payment 8

Other Definitions 8

Clause 2 iii Document Precedence 9

B Obligations of the Consultant 9

Clause 5 i Skill, Care and Diligence 9

Clause 5 ii As Administrator of Contracts 10

Clause 6 Clients Property 10

C Obligations of the Client 11

Clause 9 v Foreign Currency 11

Clause 10 Equipment and Facilities 11

Clause 11 & 12 Clients Personnel and Services 11

of Others

D Personnel 11

Clause 13 Supply of Personnel 12

The Checklists of services have drawn heavily on the Conditions of

Engagement published by The Association of Consulting Engineers

(United Kingdom), and on a checklist of environmental services

prepared by Howard Schirmer in collaboration with FIDIC's former

Environment Committee that was chaired by Iksan van der Putte ofBKH Consulting. FIDIC is grateful for permission to make use of

these documents.

The revision of the 1st Edition of the Guide to give this 2nd Edition

was undertaken by the FIDIC Client/Consultants Relationship

Committee under the chairmanship of Peter Batty. The Committee

wishes to acknowledge important amendments from Mark Griffiths

and Paul Taylor, and from Howard Schirmer of Transnational

Associates.


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FIDIC 2001c

a) Protection Provided

b) Relevant Legislation

Clause 39 Copyright 26

Clause 40 Conflict of Interest 27

Clause 41 Notices 27Clause 42 Publication 27

I Settlement of Disputes 27

Clause 43 Amicable Dispute Resolution 28

Clause 44 Arbitration 28

J Possible Additional Subject Matter 30

3 THE WHITE BOOK

Additional Discussion 31

A Definition and Interpretation 31

Clause 1 i, ii & iii Project, Works and Services 31

Clause 1 v The Consultant 31

a) Project Management

b) Secondment of a Project

Manager

c) Technical Assistance

d) An Individual as the

Consultant

e) Consortia, Associates

and Joint Ventures

Clause 1 ix Agreed Compensation 37Other Definitions 38

Clause 2 iii Document Precedence 39

B Liability and Insurance 39

a) Liability for Breach of

Contract and to the

Public at Large

b) International Funding

Agency Requirements

b FIDIC 2001

Clause 14 Representatives 13

Clause 15 Changes in Personnel 14

E Liability and Insurance 14

Clause 16 Liability between the Parties 15

Clause 17 Duration of Liability 15

Clause 18.1 Limit of Compensation 16

Clause 18.2 Indemnity 16

a) Third Party Claims

b) Liability to Clients Contractors

Clause 18.3 Exceptions 17

Clause 19 Insurance for Liability and

Indemnity 17Clause 20 Insurance of Clients Property 18

F Commencement, Completion, Alteration and Termination 18

of the Agreement

Clause 21 Agreement Effective 18

Clause 22 Commencement and Completion 19

a) Time for Commencement

b) Time for Completion

Clause 24 Further Proposals 20

Clause 25 Delays 20

a) Delay by Client

b) Delay by the Consultant

Clause 26 Changed Circumstances 21

Clause 27.2 i Due Date for Payment 22

Clause 28 Exceptional Services 22

G Payment 23

Clause 31 ii Time for Payment 24

Clause 32 Currency of Payment 24

H General Provisions 25

Clause 36 Languages and Law 25

Clause 37 Changes in Legislation 25


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FIDIC 2001e

Clause 48 Patents and Inventions 53

Clause 49 Performance Evaluation 53

Clause 50 Severability 53

4 Appendix A: Scope of Services 55

1 General 55

2 Terms of Reference (TOR) 55

3 Classification of Requirements 55

4 Phases 55

5 Responsibilities 56

a) Task and Adviceb) Training

6 Technology and Location 57

a) Location

b) Headquarters Back-up

7 Administration 58

a) Programme

b) Reporting

c) Powers

8 Pre-Investment Studies 599 Feasibility Studies 61

10 Planning and Design Phases 61

a) Planning

b) Design

c) Terminology

d) Payment and Level of Design

e) Development of Design

Responsibilitiesf) Site Investigation

11 Procurement 64

12 Implementation 65

a) General

b) Duties in Respect of Contracts

c) The Consultant as Contract Administrator

13 Operation 68

14 Sub-Consultants 69

15 Project Cost Estimating 69

d FIDIC 2001

c) Cost of Insurance for

Breach of Professional Duty

d) Limit of Liability for Breach

of Professional Duty

e) Third Party LiabilityInsurance

f) Objectives of the White

Books Liability and

Insurance Provisions

Clause 16 Liability between the Parties 45

a) Division of Responsibilities

between Consultants

b) Consequential Damages

Clause 18 Limit of Compensation andIndemnity 47

Clause 19 Insurance for Liability and

Indemnity 48

a) Continuity of Insurance

b) Project Insurance

C Commencement, Completion, Alteration and Termination 49

of the Agreement

Clause 22 Commencement & Completion 49

a) Time for Commencement

b) Time for Completion

D General Provisions 50

Clause 39 Copyright 50

E. Possible Additional Subject Matter 51

Clause 45 Payments to Contractors, etc. 51

Clause 46 Participation of IFA* 51

Clause 47 Performance Guarantee and

Payment Security 52

*Abbreviation: in this Guide, IFA means International Funding Agency (or

Agencies).


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FIDIC 2001g

5 Technical Assistance 90

6 Administration of Contracts 90

7 Expenses 91

a) In Foreign Currency

b) In Local Currency8 Currency 93

9 Price Variation 94

a) Rates of Exchange

b) Prices

10 Recovery of Import Duties 95

11 Taxation 96

12 Contingencies 96

Annex 1 Common Payment Terminology 97

1 Advance

2 Advisory Services

3 Budget Cost

4 Ceiling Cost

5 Contractor

6 Cost

7 Emoluments

8 Expenses9 Multiplier

10 Qualified Technical Staff

11 Stage or Interim Payment

12 Task Services

13 Tender Dossiers

Annex 3 Lump Sum Fees 100

Annex 2 Staff - Time Based Fees 101

1 Named Staff

2 Unnamed Staff

3 Substitutes for Named Staff

4 Salary Reviews

5 Discussion

6 Time

7 Typical Clauses

f FIDIC 2001

Annex 1 Services of the Consulting Engineer in Relation to 70

Civil/Structural Engineering Projects

A Typical Normal Services 70

B Typical Additional Services 75

Annex 2 Checklist/Menu of Environmental Services 75

1 Waste Management Facilities

2 Landfill Services

3 Landfill Engineering

4 Pollution Remediation/Brownfields Redevelopment

5 Environmental Services

6 Fisheries Services5 Forensic Services

7 Potable Water

8 Wastewater Studies and Design

9 Water Resources Study and Design

11 Industrial Wastewater

11 Construction Services for Environmental Works

12 Operation and Maintenance for Environmental

Works

5 Appendix B: Personnel, Equipment, Facilities & Services 83

of Others to be Provided by the Client

6 Appendix C: Remuneration and Payment 84

1 Introduction 84

2 Terms of Payment 85

a) Definitionsb) General

c) Options

3 Advances and Stage Payments 86

4 Methods of Payment

a) Letter of Credit

b) Direct Disbursement by IFA

c) Other Systems

d) Sub-Consultants

e) Typical Clauses


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FIDIC 20011

1 Introduction

A Background

The White Book has been prepared in three stages. The objective of

the first stage was to edit FIDIC's International General Rules of

Agreement (IGRA) 1979 D&S document into simpler language and a

more logical order, and to develop it into a format consistent with the

FIDIC style traditionally adopted for its other standard forms of

conditions of contract. See References (13) to (19) in Chapter VIII.

In the second stage, alterations were made in principle to take

account of written comments received on IGRA 1979 D&S and toaccord with current practice and the intent of drafts of sample

documents for consulting services prepared by International Funding

Agencies (IFA).

The last, more difficult, stage was to refine the provisions for liability,

insurance and indemnity.

A draft version of the White Book was reviewed by the World Bank,

the Asian Development Bank and a joint committee from the ArabFunds. Many comments resulting from these reviews were

incorporated into the final document.

The purpose of the White Book Guide is twofold, namely:

- to assist those who wish to draft Consultancy Agreements using

the White Book as published or as the main reference; and

- to provide some insights into the rationale for the White Book's

provisions and the content of the Guide dealing with completing

an Agreement based on the White Book

In 1998, the White Book was updated to the 3rd Edition and this

Guide reflects the amendments made.

Annex 4 Fees as a Percentage of Cost of Works 107

7 Terms of Reference and their Preparation 109

A Terms of Reference 108B General Principles for Preparing Proposals and 109

Agreements

8. References 110


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FIDIC 200154 FIDIC 2001

Chapter 7 contains a few general comments on Terms of Reference

(TOR) and on their preparation.

Chapter 8 lists the details of publications referred to in the other

chapters of the Guide.

because experience indicates that proposals are often amended to

such a degree during subsequent negotiations that it is better to

prepare the Agreement incorporating terms as finally agreed and

following the prescribed format.

Clause 1 (vii) of the White Book, however, permits inclusion of the

proposal by reference in the Particular Conditions. In such cases, if a

formal agreement is also required, paragraph 2 of the Agreement

Form should be extended to include it, e.g.

d) The Consultants proposal dated .

The Agreement Form provides for a two-party agreement. If other

parties are to be joined in the Agreement, the wording will need to bealtered. Two circumstances, at least can give rise to this:

a) When the Consultant is a Joint Venture; see Clause I (v) (e) in

Chapter 3 of this Guide;

b) When the Client is not the ultimate beneficiary, e.g. the Client is

the "National Planning Commission" and the beneficiary is the

"Roads and Bridges Public Corporation".

E Format of this Guide

Chapter 2 is devoted to the subject matter of the General Conditions

of the White Book and to related matters for consideration in

completing Section A and compiling Section B of the Particular

Conditions.

Chapter 3 includes additional discussion on a selected number of

those White Book Clauses presented in Chapter 2.

Chapters 4, 5 and 6 include comments relevant to compiling

Appendices A (Scope of Services, including checklists of both normal

and additional Consulting Engineering Services and of specialist

Environmental Services), Appendix B (Personnel, Equipment, Facilities

and Services of Others) and Appendix C (Remuneration and Payment)

of the Agreement, respectively.


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THE WHITE BOOK

3 Additional Discussion

A Definitions and Interpretation

Clause 1 i, ii & iii: Project, Works and Services

Special provisions will be required in the Particular Conditions or (i)

& (iii) Appendix A of the White Book if any of the Services in

respect of the Works are:

- limited to a part only of the Works;

- to include design responsibility for temporary works.

Note that "comprise" and "include" have different meanings,

although draftsmen often use the former when the latter is more

appropriate. Under a lump sum agreement, however, it would be

wise to use " comprise", thus carefully defining the limits for

application of the Services; "include" on the other hand is an

adequate abbreviation for the phrase "include but are not limited to"

The Works as described in Section A of the Particular Conditions

comprise/include the following: ....

Clause 1 v: The Consultant

It is important to distinguish clearly between what the Consultant

is, i.e. between what constitutes him and what he is to do.

- He may be an individual, a firm (partnership or company), a

consortium or joint venture.

- He may have to study, design, administer contracts, manage, or

operate, even perhaps arrange finance

Each of the latter performance requirements is matter for the

Scope of Services and, generally, does not warrant changes in the

J Possible Additional Subject Matter

Section E of Chapter 3 provides a discussion of the additional

contractual clauses that may need to be incorporated in an

Agreement for Professional Services.


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10 Defects Liability Period7 Tendering and Award


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a Provide periodic or continuous inspection services

b Arrange for remedial work as required

c Prepare all necessary close-out documentation

d Assist with negotiations to settle final accounte Perform defects inspection and punch-lists

f Prepare defects free certificate.

a Advertise and issue tender documents

b Conduct site visit and pre-bid conference

c Issue addenda and clarifications

d Perform analysis of proposals/bids received and makerecommendations for award

e Assist client in negotiations with selected contractor(s)

f Prepare contract documentation.

8 Construction Supervision

a Perform additional designs

b Review additional designs (including shop drawings)c Design control

d On-going constructibility review

e On-going value engineering review

f Document Control

g Schedule Control

h Cost Control

i Contract Administration

j Verify compliance with bond insurance requirements

k Quality control record

l Measurement and certifications

m Assistance to Client concerning Variations and Claims

n Reporting.

9 Take-Over and Commissioning

a Carry out inspections/preparing punch lists and certification oncompletion of the works

b Supervising commissioning and carrying out testing during

commissioning

c Monitoring contractor's work during commissioning period

d Verifying that Client staff are appropriately trained and receive

specified certificates during the training period

e Prepare certification of handing-over.

ANNEX 2 Checklist/Menu of Environmental ServicesB Typical Additional Services


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1 Waste Management Facilities

Planning and Analysis

Environmental management system design and training

Waste stream composition/characterization

Collection system evaluations

Service rate and market evaluations

Waste management planning

Waste management alternative evaluations

Technology assessments

Integrated system planningWaste reduction

Recycling

Facility siting evaluations is election

Facility capital and operating cost estimates

Transportation master plans

Public/private participation evaluations

Public involvement

Project feasibility studies

Permitting and regulatory compliance assistance

Facility Engineering

Design plans and specifications

Material recovery facilities

Transfer stations Incinerators

Waste-to-energy facilities

Compost facilities

Existing facility retrofits/rehabilitation

Wastewater treatmentProcess instrumentation and control systems

Equipment procurement

Site development and ancillary facilities

Project Implementation

Full service procurement

Request For Proposals (RFP) development

Vendor liaison

Bidding assistance

1 Cork consequent upon a decision by the Client to seek statutory

powers.

2 Advise the Client following the taking of any step in or towards the

resolution of any dispute or difference or towards any

adjudication, arbitration or litigation in connection wit the Project

or the Works.

3 Contamination investigations on site.

4 Work in considering alternative designs for the Works submittedby Contractors.

5 Prepare drawings for shop fabrication of structural steelwork,

ductwork or metal, timber or plastics frameworks or other

specialist supplied components.

6 Prepare detailed drawings and bar bending schedules for

reinforced concrete work.

7 Check and/or advise upon any part of the Works not designed by

the Consulting Engineer.

8 Negotiate any contract or sub-contract selected other than by

competitive tendering.

9 Which services are normal and which are additional will vary from

project to project and should defined in the Client's Terms ofReference, or, if not, in the Consultant's proposal and/or

eventually in Appendix A of the Agreement.

Due diligence

Site Investigations

Submittal reviews

Construction administration and monitoring


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Site Investigations

Closure/Post-closure

Risk Assessments

Hydrogeologic studies

Corrective Measures Design/Corrective ActionSite planning & design

Spill Prevention & containment engineering

Groundwater & surface water treatment engineering

Underground storage tank (UST) management

Site redevelopment engineering

Site Planning/Economic Sustainability

Coastal zone management

Site assessment Market analysis

Master planningInfrastructure/Redevelopment

Site utility design

Site facilities design

Landscape design

Financial consulting ownership transfer assistance

Regulatory negotiations

Public participation assistance

5 Environmental Sciences

Mapping Sciences Services

Geographic positioning system data acquisition

Geospatial database management

Multidimensional visualization

Raster to vector data conversion Image processing

Land type classification

Environmental PlanningEnvironmental impact statements

Environmental assessments

Endangered species

Air quality analysis

Noise analysis Natural resource impacts

Socio-economic issues

Cultural resource evaluation

Ecosystem plans and management

Construction administration and monitoring

Performance testing and evaluations

Operations monitoring and efficiency evaluations

Competitiveness/tipping fee analysis

2 Landfill Services

Planning and Analysis

Service rate and market evaluations

Landfill planning

Alternative evaluations

Technology assessments

Integrated system planning

Optimization of landfill spaceLandfill siting evaluations/selection

Landfill capital and operating cost estimates

Public/private participation evaluations

Project financing evaluations

Public involvement

Project feasibility studies

Permitting and regulatory compliance

Operations assessment and efficiency evaluations

3 Landfill Engineering

Design plans and specifications

Cell development and master plan

Liners and covers

Landfill gas collection and energy generation systems

Leachgate and storm water management systems

Site development and ancillary facilitiesClosure and post closure plans

4 Pollution Remediation/Brownfields Redevelopment

Environmental and Site Audits

Toxicity evaluations

Resource damage assessment

Order of magnitude cost estimation

Habitat Evaluation Procedure (HEP) studies

Habitat mapping

Interpretive planning

Mitigation plans


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Habitat mapping

6 Fisheries Services

Fish population surveysEntrainment and impingement monitoring

Population modelling

In stream flow incremental methodology (IFIM)

Spawning/Emergence studies

Reservoir/Lake habitat mapping

Surveys and habitat conservation planning

Radio-tagging and mark recapture studies

Impact Assessment and mitigation planning

Agency consultationFluvial Geomorphology and Sediment Transport

Fluvial geomorphology field investigations

Hydrologic investigations

Sediment loading and transport evaluations

Channel typing and sensitivity ratings

Predictive modelling of sediment grain size

Bank stability assessments

Floodplain/flood control investigations

Hydrologic and hydraulic numerical modelling

Watershed Management

Cumulative watershed effects analyses

Ecological unit inventories

Impact assessments

Environmental monitoring

Habitat conservation planning

Inventories and surveys Hydrologic analysis

7 Forensic Services

Expert Witness Testimony

8 Potable Water

Water Distribution Studies and Design

Distribution system analysis

Mitigation plans

Environmental Compliance

Regulatory review

National local law compliance studies

Air/noise water quality analysisCompliance schedules Inspections Audits

Permitting/Licensing

Air emission

Air quality modelling

Hydropower

Special use

Discharge

Natural Environmental Services

Aesethic resource inventoriesVisual impact analysis

View shed analysis

Biological assessments

Vegetation mapping

Wetland delineation and resource evaluation

Wetland mitigation

Wetland restoration and monitoring

Wetlands creation and design

Wetlands banking Jurisdictional delineations

Protected and endangered species inventories

Habitat evaluation

Cultural resources assessment

Resource agency consultation

Interpretive planning

Botanical Surveys and Vegetation Mapping Services

Natural area surveys

Habitat evaluationWetland delineations and evaluations

Endangered species surveys

Vegetation mapping

Riparian community investigations

Wildlife Services

Wildlife ecology research

Species inventories and surveys

Impact assessment Monitoring plans

Operations and maintenance services

Odour control Facility optimisation

Distribution system

System rehabilitation


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Odou co t o ac ty opt sat o

Contract operation

Laboratory design

Administration/operation/maintenance buildings

Telemetry systems/SCADALeachate treatment

10 Water Resources Studies and Design

Surface Water supply

Flood Control studies

Dams

Water quality evaluation/mode ling

Raw water intakes and pumpingFeasibility studies

Hydrologic and hydraulic studies/modeling

Water rights and permits

Operational analysis and optimisation

Storm water management

Hydropower

Comprehensive basin planning

Groundwater

Three-dimensional modelling

Well field research, analysis and development

Monitoring and management systems

Contamination investigation and remedial programs

11 Industrial Wastewater

Plant Studies and Design Pilot plant studies

Economic analysesWastewater pre-treatment

Waste treatment Process systems

Livestock waste handling and treatment

Water reduction

Waste minimization

Water reconditions for non-potable reuse

Management Services

Evaluation reports

Syste e ab tat o

Master planning computer modelling

Telemetry systems/SCADA

Water storage

Pumping stationsTransmission mains

Geographic Information System (GIS) interface

Water Treatment Studies and Design

Source protection

Pilot testing

Capacity evaluation

Corrosion control

Residuals management

Regulatory complianceWater quality analysis

Operations and maintenance

Wells

9 Wastewater Studies and Design

Collection System

Pumping stations

Sewer systems evaluations

Sewer systems rehabilitation

Sewer interceptors and sewer mains

Lift stations Combined sewer overflow

Geographic Information System (GIS) interface

Treatment Works

Physical chemical treatment

Biological treatment

Reclamation and reuseNutrient removal

Effluent filtration and disinfection

Land disposal

Biosolids management

Facilities planning

Energy use evaluations

Outfalls Value engineering

Permits Receiving water quality evaluations

APPENDIX BEngineering evaluation

Facilities planning


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5 Personnel, Equipment, Facilities and Servicesof Others to be provided by the Client

To complete Appendix B it will be necessary to list the counterpart

and other personnel, equipment, facilities and services which the

Consultant is counting on the Client to provide.

There is not much which can be given by way of Guide to completing

Appendix B, except to note that thoroughness, clarity and

completeness will help to prevent problems during the course of the

Consultant's work.

While it is not too difficult for a Consultant to specify fairly precisely

the facilities, vehicles, etc. that he requires, it is obviously more

difficult to provide a standard to ensure that the personnel provided

by the Client will be capable of carrying out their required

assignments.

p g

Energy conservation and management

Value engineering

Water quality analysis

Financial evaluation and rate analysisOperation and maintenance assessments

Regulatory compliance

12 Construction Services for Environmental Works

Construction management

Bidding assistance

Construction period inspection

Engineer of record services

13 Operations and Maintenance for Environmental Works

Planning

Procurement Refurbishment and upgrades installation

Financial accounting

Billing

Equipment maintenance

Monitoring Laboratory services

Training

Quality control

User interface

2. Terms of PaymentAPPENDIX C

6 R i d P


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a) Definitions

Annex 1 to this Chapter includes suggested definitions of some of

the terms used in this Chapter and the other annexes to it.

b) General

In accepting that price is, with increasing frequency, an important

consideration in the selection process, it is important for an

equitable competition that:

- the TOR are precise in describing the scope of the services andthe responsibilities and obligations to be undertaken by the

Consultant; and

- the invitation explains the evaluation that will be performed and

the weighting that will be assigned to merit versus cost.

c) Options

It is normal practice to divide the remuneration for the Services

into fees and expenses, although sometimes the fees are often

inclusive of some expenses at least. In this practice, the first

clause of general application in Appendix C will be:

The remuneration for the Services comprises fees and expenses.

The following systems are those most generally considered, andany one agreement may incorporate one or more of them

appropriate to the several types of phases of Services to be

supplied:

- Lump sum (see Annex 2), inclusive, or plus certain expenses.

- Time based charges (see Annex 3), inclusive, or plus certain

expenses

6 Remuneration and Payment

1 Introduction

This Chapter does not give guidelines on how to estimate or what

to estimate for. It attempts to address the main elements needed

for a complete presentation. Sample texts of possible clauses are

not intended to be comprehensive in any way.

For convenience, that part of the Agreement devoted to payment

terms and methods is referred to below as Appendix C, in

conformity with the White Book Clause 1 (vii).

The chief areas for attention are:

- terms of payment, the basic system or systems;

- methods of payment;

- price changes;

- currency;

- taxation, where the General Conditions Clause 33 (ii) is

applicable; and

- contingencies.

Where practical, suggestions are made on the wording of relevantprovisions.

It is, however, important to distinguish clearly the difference

between terms of payment, for which the Client is liable, and

method of payment, which is an administrative convenience, but

which may nevertheless have contractual effects.


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ANNEX 1 Common Payment Terminology

Some or all of the following definitions may be usefully included,

generally dependent on special paperwork at the time of the

import. When the Client clears customs on behalf of the

Consultant or reimburses him, and expects reimbursement on re-


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So e o a o t e o o g de t o s ay be use u y c uded,

amended as the case may require.

1 Advance

A payment which is due for repayment. (Generally by way of

deduction from stage or interim payments according to some

specified formula).

2 Advisory Services

Those Services which the Consultant provides by way of advice

and assistance at the direction of the Client for accomplishingservices undertaken by the Client.

3 Budget Cost

The amount provided in the Agreement as an estimated cost to be

borne by the Client for completion of the Normal Services (or

specified part of them) or as a contingency for Additional Services

such that it may not be exceeded without written agreement of the

Client prior to any excess being incurred.

4 Ceiling Cost

The cost to the Client within which the Consultant shall complete

the Normal Services (or specified part of them).

5 Contractor

A contractor, other than the Consultant, under contract to the

Client for the supply of goods, equipment or services or for the

construction of works, in respect of which the Services impose

duties on the Consultant.

6 Cost

Expenditure properly incurred, or to be incurred, by a party for the

Co su ta t o e bu ses , a d e pects e bu se e t o e

export, it is especially important that the Consultant satisfies

himself that the necessary formalities are observed.

11 Taxation

When the funds to be used to pay for the Services are from an

IFA, the Loan Agreement often stipulates that proceeds of the

Loan must not be used to finance taxes. This does NOT mean

that the Consultant's revenue is exempt from tax, although in

some cases this can be so.

It is sometimes acceptable to provide that the Client pays certaintaxes and show it separately as an estimated sum in addition to

the base sum. However, this device may result in having to pay tax

on tax.

12 Contingencies

Both parties should be aware of the need to make budgetary

provisions for expenditures above the pricing of Normal Services.

To achieve this, contingent sums, preferably separate sums for

different classes of contingencies (e.g., price variation/inflation,

possible Additional Services and unforeseeable Additional or

Exceptional Services) can be inserted in the Appendix.

However, it is important to clarify that such sums are not to be

regarded as limiting values.

11 Stage or Interim Payment

A payment which goes toward the final cost to the Client of the

purpose of the Services including overhead and other charges

properly allocated to it but excluding profit.


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p y g

Services.

12 Task Services

Those Services, other than Advisory Services, which the

Consultant is responsible for providing.

13 Tender Dossiers

Documents prepared for the purpose of obtaining tenders.

7 Emoluments

Whichever maybe applicable:

- The amount stipulated in the Agreement for the named member

of staff.

- The amount stipulated in the Agreement for the post named in

the Agreement.

- The amount stipulated in the Agreement for the grade named in

the Agreement applicable to the member of staff.

- The salary payable to the member of staff before any deductions

for tax or statutory payments or voluntary payments to insurance

or pension schemes.

8 Expenses

Net direct disbursement by the Consultant to the other party or

to third parties for the purpose of the Services, but excludingemoluments paid to his staff or any expenses which are

deemed covered by the multiplier factor applied to the

emoluments.

9 Multiplier

The factor which, when applied to the emoluments as defined of

approved qualified technical staff or of other staff or of staff

positions named in the Agreement, gives a fee rate payable under

the Agreement.

10 Qualified Technical Staff

Having a degree or diploma from an approved university or an

approved professional qualification relevant to the Services to be

performed.


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- Over-time and working hours; and

- Field trips away from base.

B i l B1

Firm 1

3000 B2

Firm2

4400


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FIDIC 2001105104 FIDIC 2001

6 Typical Clauses

Proceeding from the base that remuneration comprises fees and

expenses, see paragraph 2 (c) in Chapter 6, it is suggested that a

logical progression could be as follows:

The fees for the Services shall be a product of chargeable time

and the charge rate for approved qualified technical staff and other

staff or staff positions named in the Agreement.

The expenses shall, for Normal and Additional Services, be thosedisbursed or incurred under the following named items and in

accordance with the relevant Schedules: ..

The expenses for Exceptional Services shall be all those arising

out of or in connection with the Exceptional Services other than for

the employment of staff for whom charge rates are applicable

under the Agreement.

*Where not stated in the Agreement or otherwise agreed, the feerate for chargeable staff shall be calculated by applying to

(definition of relevant emoluments) the following multipliers:

( ............ ) For long tours

( ............ ) For visits

( ............ ) For work in the Consultants home office

The proportion payable in foreign currency shall be:

( ............ ) For long tour

( ............ ) For visits

(100%) For work in the Consultants home office.

Note that the definition of emoluments can be referred to those of

the individual concerned or where a recognizable structure exists,

for example, either:

Which firm presents the better image? Firm 2 with a lower

multiplier and lower percentage overheads and profits, of course.

A further distorting influence can be that of the respective tax

liabilities of personnel for different types and locations ofemoluments received, where employers will seek to arrange their

wage structures to minimize employee's tax liabilities.

All that really is required to give confidence to a Client is a

multiplier and a basic figure which can, by audit, be seen to be

consistent with the Consultant's overall wage structure.

6 Time

Factors to be covered should include:

- Travel time;

- Absences on holiday, and public holidays;

- Absences for illness;

Basic salary

Social Costs

Overheads

Sub-total

Profit

Overseas allowance

Charge

Multiplier

B1

20% B1

100% B1

TI

10% TI

50% BI

3000

600

3000

6600

660

1500

8760

2.92

B2

13.6% B2

68% B2

T2

8.25% B2

2.25% T2

4400

6000

3000

8600

660

100

8760

1.99

ANNEX 4 Fees as a Percentage of Cost of Worksa) to a grade payment table given in the Appendix;

b) to the actual average/upper quartile value for the grade of

the individual at the time of employment for the Services


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FIDIC 2001107106 FIDIC 2001

The following could, amongst many variants, form the basis of

"percentage fees" terms for the Services or for a component of them.

The remuneration of the Consultant for the Services comprises

fees and expenses.

The fees for the provision of Normal Services in respect of (e.g.,

design, preparation of tender dossiers, administration of contracts

between the Client and contractor)shall be calculated by applying

the percentages specified in the table below to the cost of the

Works or part thereof as the case may be.

In the case of designs and preparation of tender dossiers the

relevant percentages shall be applied to the estimated cost last

approved before inviting tenders, and in the case of administration

of contracts to the final cost.

Interim payment shall be made of fees in each category

1. For design and tender dossier %

a) on signature of Agreement (e.g., 15)

b) monthly in "x" monthly instalments (e.g., 75)

c) on completion of design and

approval of tender dossier. (e.g., 5)

Category/Description

of Works or

Part of Works

Fee Percentage

Design and Administration of

Tender Dossiers Contracts

the individual at the time of employment for the Services.

The simplest approach usually proves the most workable.

Price variation provisions, etc., may be needed as in other

systems.

7 Terms of Reference & their Preparation

A Terms of Reference

2. For administration of contracts %

a) on making a contract by Client and contractor (e.g., 5)


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FIDIC 2001109108 FIDIC 2001

Clients should carefully prepare the Terms of Reference (TOR) in their

invitation. This is especially important when competition is on a

financial basis or against a ceiling budget.

Consultants faced with incomplete or imprecise TOR should make a

point of seeking clarifications as soon as possible and before being

at a negotiating disadvantage after their proposal has been

submitted. See "Preparing the Consultant's Terms of Reference",

Reference (8) in Chapter 8.

B General Principles for Preparing Proposals & Agreements

It may be useful to suggest some general rules to be followed in

preparing proposals and agreements, the objective being to avoid

disputes and, possibly, litigation. The atmosphere of goodwill

prevailing between Client and Consultant at award will last longer if

the Agreement is well drafted.

To this end, but not in any special order of importance:

1 Words with initial capital letters should be used only in the sense

as defined (e.g., in the White Book), and when that sense is

intended only those words should be used.

2 Consistently using the same word or phrase wherever a

particular meaning is to be conveyed may be useful.

3 It is often better to specifically identify secondary objectives,

responsibilities or obligations as such, rather than to over-

emphasize the importance of the primary ones.

4 When an obligation (duty, responsibility) is stated, it will be

helpful to state precisely where the liability (risk, expense) for

performance lies.

b) on amount certified for interim payment or paid

to contractor from time to time (e.g., 85)

c) on final payment to contractor, balance making

up 100% of the fee due on each contract.

Final payment shall be made of the balance of the fees due

1. For design and tender dossiers:

on completion of design for and approval of all tender

dossiers for Works specified in the Agreement;

2. For administration of contracts:

on substantial completion

or

at the end of the defects liability period.


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