Typical Sequences and Notices under FIDIC Red Book 99
FIDIC contracts contains lots of sequences and processes to ensure smooth performance of the contractual obligations of all parties of the contract.
The following charts and timelines highlights the basic flow of the contract activities under FIDIC Conditions of Contract for Construction of Works Designed by the Employer (Red Book) 1999:
During the tender stage, a very important date, the Base Date, is defined as "the date 28 days prior to the latest date for submission of the Tender."
The Base Date is referenced to in Sub-Clause 13.7 "Adjustment Changes in Legislations" which entitles the Contractor for additional payment and/or time due to changes in legislations made after the Base Date.
After the Employer issues to the Contractor a Letter of Acceptance, the Contractor shall within 28 days issue a Performance Security to the Employer (Sub-Clause 4.2). Failure of the Contractor to issue such Performance Security shall entitle the Employer, until Performance Security is received, to:
- With-hold site access (in accordance with Sub-Clause 2.1)
- Not certify and pay any payments (in accordance with Sub-Clause 14.6)
- Terminate the contract (in accordance with Sub-Clause 15.2)
Moreover, the Engineer shall give the Contractor not less than 7 days notice of the Commencement date, which shall be not later than 42 days after the issue of Letter of Acceptance (unless otherwise stated in the Contract).
Failure of the Engineer to issue the IPC in due time entitles the Contractor to:
- Suspend the Works or reduce the rate of progress, after giving not less than 21 days notice to the Employer (in accordance with Sub-Clause 16.1)
- Terminate the Contract, if the Engineer fails to issue an IPC within 56 days after receiving the IPA (in accordance with Sub-Clause 16.2)
Failure of the Employer to pay the Contractor in time entitles the Contractor to:
- Terminate the Contract, if the Engineer fails to pay the amount due within 42 days after the expiry of the time due in accordance with Sub-Clause 14.7
- Additional interest on unpaid amounts due to delayed payments (in accordance with Sub-Clause 14.8)
In case of disagreement between the Engineer and Contractor in verification of the Final Statement (or part of), the agreed part shall be issued as an IPC, and after the dispute is resolved, the Contractor shall submit to the Employer a Final Statement.
The Defects Notification Period (DNP) starts after issuing of the Taking Over Certificate (TOC) to the Contractor.
The Contractor shall complete any work which is outstanding on the date of the TOC, within such reasonable time as instructed by the Engineer, and remedy defects or damage notified by the Employer before the expiry of the DNP.
The Employer is entitled to extend the DNP (to a limit of 2 years) if the Works, or part of, after taking over cannot be used for the purposes for they are intended due to a defect or damage.
The Engineer shall issue the Performance Certificate to the Contractor, with a copy to the Employer, either:
- Within 21 days after the latest expiry dates of the DNP, or
- As soon thereafter as the Contractor supplied all the Contractor's Documents, completed and tested all Works including remedying any defects
The Employer shall return the Performance Security to the Contractor within 21 days after receiving a copy of the Performance Certificate.
The Contractor shall, within 56 days after receiving the Performance Certificate, submit final statement to the Engineer to verify. The Engineer shall, within 28 days after receiving the Final Statement and written discharge, issue Final Payment Certificate (FPC) to the Employer, who shall make payment within 56 days from receiving the FPC from the Engineer.
The above is a summary of the major events and activities under the contract. Events such as Variations, Claims, Termination, Disputes etc. shall be discussed in much depth individually later on.