Construction Web guide: infrastructure, buildings, engineering, architectureThelen Reid Brown Raysman & Steiner
Web directory of federal, state, local governments; courts; legislatures; Congress; trade groups; businesses; colleges; libraries; publications; international agencies affecting construction, engineering, architecture, infrastructure Web directory of resources on licensing, registration, building codes, new projects, bidding, financing, environment, specifications, e-commerce, laws, regulations, insurance, bonds, jobs, safety, best practices, engineering, architecture, training Web guide to dictionaries; encyclopedias; reference materials; business and international travel resources; people finders; telephone numbers; Web addresses; postal codes; currency, metric converters; time zones; calendars; travel; news
More than 500 online news and legal reports on construction law, including claims, payment remedies, damages, government contracting, insurance, building codes, licensing, technology, arbitration, engineering, architecture, infrastructure
Site Search Site Map Registration About Thelen ConstructionWebLinks Contact Us
The Grove Report: APPENDIX B, Treatment of Specific Risks Under Selected International Standard Forms of Contract

 
Contract Forms Referenced (below)

Specific Risks and Relevant Positions (below)

Ground Conditions (below)

Legal and Physical Impossibility (below)

Care of the Works (below)

Third Party Interferences (below)

Changes in the Law (below)

Subcontractor Relations (below)

Notice and Time Bar Provisions (below)

Variation Valuation (below)

Dispute Resolution (below)

Value Engineering (below)


A.   Contract Forms Referenced:

1.   Fédération Internationale des Ingénieurs-Conseils (International Federation of Consulting Engineers or FIDIC), Conditions of Contract for Works of Civil Engineering Construction, Part I, General Conditions, Fourth Edition (1987, reprinted in 1988 and 1992 with amendments) (hereinafter "FIDIC");

2.   Australian Standard, AS 4000--1997, General Conditions of Contract (1997) (hereinafter "Australian Standard");

3.   The Institution of Civil Engineers (United Kingdom), The Engineering and Construction Contract, Second Edition (1995, reprinted with corrections May, 1998)
(hereinafter "ECC");

4.   Federal Acquisition Regulation (United States), Title 48, Subpart 52.2, Code of Federal Regulations, Text of Provisions and Clauses (1997) ("FAR");

5.   American Institute of Architects (United States), AIA Document A201-1997, General Conditions of Contract for Construction (1997) (hereinafter "AIA");

6.   Engineering Advancement Association of Japan (Japan), ENAA Model Form International Contract for Power Plant Construction (Turnkey Lumpsum Basis), Vol. I, General Conditions (1996) (hereinafter "ENAA");

7.   Construction Industry Development Board (Singapore), Public Sector Standard Conditions of Contract for Construction Works (1995) (hereinafter "Singapore");

8.   GC/Works/1 Without Quantities, Contract for Building and Civil Engineering Major Works, General Conditions (England, 1998) ("GC/Works/1");

9.   The Institution of Civil Engineers (United Kingdom), The New Engineering Contract, First Edition (1993) ("EC 1993");

10.   The World Bank, Standard Bidding Documents, Procurement of Works (1995) ("World Bank").

11.   Joint Contracts Tribunal for the Standard Form of Building Contract (United States), Standard Form of Building Contract, Private With Quantities (1980 Edition, incorporating Amendments issued through April, 1998) ("JCT 80");

12.   Joint Contracts Tribunal for the Standard Form of Building Contract (United States), Standard Form of Building Contract With Contractor's Design (1981 Edition, incorporating Amendments issued through April, 1998) ("JCT 81"); and

13.   Institution of Civil Engineers, Association of Consulting Engineers and Federation of Civil Engineering Contractors, ICE Conditions of Contract (Sixth Edition, January 1991; reprinted with amendments, November 1995; reprinted November 1997) ("ICE 6th Edition").


B.   Specific Risks and Relevant Provisions

Ground Conditions

FIDIC: Contractor entitled to additional costs for expenses and time extension for delays resulting from physical obstructions or conditions except climatic conditions not reasonably foreseeable by an experienced contractor (Sub-Clause 12.2) or resulting from fossils, coins, articles of value or antiquity, and structures and other remains or things of geological or archaeological interest discovered at site (Sub-Clause 27.1).

Australian Standard: Contractor entitled to additional costs incurred upon encountering minerals, fossils or relics (Subclause 24.3). Contractor entitled to variation pricing (set by agreement, in contract or as otherwise reasonable, including amount for overhead and profit) for costs resulting from latent physical conditions on or near site, including artificial things but excluding weather conditions, that differ materially from physical conditions which reasonably should have been anticipated by competent contractor after reviewing tender information (Subclauses 25.1-25.3, 36.4). Time extension also is provided as a form of relief for delays resulting from such conditions (Subclause 34.3).

ECC: Contractor entitled to adjustment of contract price and/or schedule for costs/delays resulting from physical conditions within site, other than weather conditions, which an experienced contractor would have judged at time of contracting to have such a small chance of occurring that it would have been unreasonable for it to have allowed for them (Clause 60.1.12).

FAR: Contractor entitled to equitable adjustment of contract price and/or time for costs/delays resulting from sub-surface or latent physical conditions at site differing materially from those indicated in contract, or unknown physical conditions at site which are of unusual nature and differ materially from those ordinarily encountered and generally recognized as inhering in work of character provided for in contract (Section 52.236-2).

AIA: Contractor entitled to equitable adjustment of contract price and/or time for costs/delays resulting from sub-surface or otherwise concealed physical conditions which differ materially from those indicated in contract documents, or unknown physical conditions of unusual nature which differ materially from those ordinarily found to exist and generally recognized as inherent in similar construction activities (Subparagraphs 4.3.4, 8.3.1; Paragraph 10.3).

ENAA: Contractor entitled to additional costs for expenses and time extension for delays resulting from physical conditions, other than climatic conditions, or artificial obstructions on site not reasonably foreseeable by experienced contractor on basis of information provided by owner and information obtainable through visual site inspection (GC 35.1-35.3).

Singapore: Contractor entitled to additional costs for expenses and time extension for delays resulting from artificial obstructions which are encountered while carrying out sub-surface works and are not reasonably foreseeable by experienced contractor (Clauses 5.2; 22.1 (g)).

GC/Works/1: Contractor entitled to adjustment of contract sum for value of work carried out or omitted and/or extension of time for delays due to ground conditions (excluding those caused by weather but including artificial obstructions) which he did not know of, and which he could not reasonably have foreseen having regard to any information which he had or ought reasonably to have ascertained. (Condition 7 (2) to (5); Condition 36 (2)(d)). Contractor entitled to variation pricing for actions taken upon discovery of fossils, antiquities or objects of interest or value (Condition 40 (2)(n)).

JCT 80 and 81: These are remeasurement forms that effectively place much of the ground condition risk on the employer. The only express provision requires that the amount of Contractor's direct loss and/or expense resulting from discovery and specified treatment of fossils, antiquities and other objects of interest or value at site shall be added to Contract Sum, and time may extended for delays resulting from Architect's variation instructions with respect to such items (Clause 34.3).

ICE 6th Edition: Contractor entitled to additional costs plus reasonable profit and an extension of time for delays resulting from physical conditions (other than weather conditions or conditions due to weather conditions) or artificial obstructions which conditions or obstructions could not reasonably have been foreseen by an experienced contractor (Clauses 12 (1), 12 (6)). Even if Engineer believes such conditions were reasonably foreseeable, any resulting variation ordered by Engineer shall be valued according to specified rates or prices, or approximations thereof, and included in contract price (Clause 12 (5)).


Legal and Physical Impossibility

FIDIC: Contractor released from performance obligations under contract if legally or physically impossible to fulfill such obligations (Sub-Clauses 13.1, 66.1).

Australian Standard: Legal or physical impossibility, per se, not addressed. Contract may be terminated for "frustration" (not defined), with incident costs payable to Contractor (Clause 40).

ECC: Contractor to notify Project Manager if contract data requires it to do anything illegal or impossible; Project Manager, upon agreement, will give instruction to change contract data accordingly (Clause 19.1).

FAR: Legal or physical impossibility not addressed expressly. Contractor shall not be in default for any failure to perform the contract if such failure arises from causes beyond contractor's control (Section 52.249-14).

A201: Legal or physical impossibility not addressed expressly. Contract provides that it shall not limit rights and remedies otherwise available by law (Subparagraph 13.4.1). Hence, availability of defense or excuse of impossibility depends on applicable law.

ENAA: Legal or physical impossibility not addressed expressly. Contractor excused from performance to extent that such performance is prevented by specified force majeure events (GC 37.3).

Singapore: Legal or physical impossibility not addressed expressly. Contract provides that it shall not affect Contractor's responsibilities under common law to complete works (Clause 4.1). Hence, defense or excuse of impossibility depends on applicable law (which is law of Singapore, per Clause 36.1).

GC/Works/1: Not addressed expressly.

JCT 80 and 81: Either party may terminate contract if work is suspended for specified period by reason of force majeure ("force majeure" events not defined) (Clause 28A.1.1.1).

ICE 6th Edition: Contractor shall construct and complete the work in strict accordance with the contract and to Engineer's satisfaction "[s]ave insofar as it is legally or physically impossible" for Contractor to do so (Clause 13(1)).


Care of the Works

FIDIC: Contractor responsible for care of works during construction, plus any outstanding works that Contractor undertakes to finish during specified defects liability period, excluding loss or damage caused by specified excepted risks (Sub-Clauses 20.1 - 20.4). All risk insurance required (Clause 21.1).

Australian Standard: Contractor responsible for care of works from commencement to practical completion, plus outstanding work until final completion, excluding loss or damage caused by specified excepted risks (Subclauses 14.1, 14.3). All risk insurance required. (Clause 16).

ECC: Contractor responsible for loss or damage to works until defects certificate issued (Clause 82.1). All risk insurance required (Clause 84.2).

FAR: Contractor responsible for care of works until completion and acceptance of all work except for any portion thereof which has been completed and accepted (Section 52.236-7). Insurance coverages specified individually for each contract.

A201: Contractor shall provide reasonable protection to prevent damage, injury or loss to the work and materials and equipment to be incorporated therein which are under the care, custody or control of Contractor or subcontractors (Subparagraph 10.2.1). Employer to provide all risk insurance (Clause 11.4.1).

ENAA: Contractor responsible for care of works during construction plus any outstanding works that Contractor undertakes to finish during specified defects liability period, excluding loss or damage caused by specified excepted risks (GC 32.1, 32.2, 38.1). All risk insurance required (Clause 34.1 (b)).

Singapore: Contractor fully responsible for care of the works but entitled to reimbursement for damage caused by excepted risks (Clause 25.1). All risk insurance required (Clause 28.1).

GC/Works/1: Contractor shall during execution of work take all reasonable measures and precautions needed to take care of site and works and shall have custody of all goods and materials on site intended to form part of works against loss or damage from fire and any other cause (Condition 13 (1)). Contractor responsible for protection and preservation of works and all goods and materials on site intended to form part of works until completion of works or contract termination (Condition 30 (3)). All Risk coverage required in alternative clause 8 (3).

JCT 80 and 81: "Care of works," per se, not addressed. Contractor responsible for loss or damage to unfixed materials and goods on- or off-site intended for use in work and paid for by Employer (Clauses 16.1, 16.2). Parties to agree on which of them will bear obligation to insure the work (Clause 22.1); such obligation terminates upon earlier of specified completion date or Contractor's termination (Clauses 22A.1, 22B.1, 22C.1).

ICE 6th Edition: Contractor responsible for care of the work and the materials, plant and equipment to be incorporated therein from specified commencement date to substantial completion (Clause 20 (a)), plus any outstanding work and materials, plant and equipment which Contractor undertakes to finish during specified defects correction period until such outstanding work completed (Clause 20 (c)), excluding any loss or damage caused by specified excepted risks (Clause 20 (2)). Employer assumes such care of any portion of work upon substantial completion of such portion (Clause 20 (b)). All risk insurance required (Clause 21).


Third Party Interferences

FIDIC: Third-party interferences not addressed expressly, but Contractor entitled to time and money if Employer fails to assure site availability (Clause 42.2).

Australian Standard: Third-party interferences not addressed expressly. Contractor entitled to undisturbed possession of the site (Subclause 24). Contractor also entitled to extension of time for delays except those resulting from Contractor's breach, industrial conditions or inclement weather occurring after practical completion date, or other causes expressly identified by parties at time of contracting (Subclause 34.3; Item 23 of Annexure Part A). Thus, it appears that Principal bears risk of third-party interference unless specifically excepted in the contract.

ECC: Contractor entitled to adjustment of contract price and/or schedule for costs/delays resulting from Compensation Events, which include where third parties "do not work within the times shown on the Accepted Programme or do not work within the conditions stated in the Works Information" (Clause 60.1.5).

FAR: Third-party interferences not addressed expressly. Contractor entitled to time extension for delays due to causes beyond its control and not resulting from its fault or negligence (Section 52.249-14).

A201: Third-party interferences not addressed expressly. Contractor entitled to time extension for delays by act or neglect of Owner's other contractors as well as "causes beyond the Contractor's control... or by other causes which the Architect determines may justify delay."

ENAA: Third-party interferences not addressed expressly. Contractor entitled to schedule adjustment for events beyond either parties' reasonable control (force majeure), which may be read to encompass third-party interferences though such events are not identified specifically in force majeure definition (GC 37.1).

Singapore: Contractor entitled to time extension for "compliance with requirements of any... public service company" (Clause 14.2 (e)) and to additional compensation for failure of the employer to give possession of the site (Clause 22.1 (c)).

GC/Works/1: Employer must provide Contractor possession of site by specified date (Condition 34 (1)). Contractor entitled to an increase in contract sum for expenses incurred by reason of delay in being given possession of any part of site (Condition 46 (1)(b)).

JCT 80 and 81: Employer shall give Contractor possession of site by specified date (Clause 23.1.1), and Contractor is entitled to retain possession through practical completion (Clause 23.3.1), but the form does not specify Contractor's remedy if Employer breaches this obligation. Additional time is allowed for delay due to "the carrying out by a local authority or statutory undertaker of work in pursuance of its statutory obligations or the failure to carry out such work" (Clause 25.4.1).

ICE 6th Edition: Contractor entitled to additional costs (plus profit in respect of any additional permanent or temporary work) and extension of time for delays resulting from Employer's failure to give possession of site at specified times (Clause 42(3)).


Changes in Law

FIDIC: Contractor entitled to price adjustment for costs resulting from change in or introduction of national or state statute, ordinance, decree or law or regulation or by-law of local or other duly constituted authority (Sub-Clause 70.2). Time extension is not specified as relief in change in law provision. Contractor is entitled to time extension for "special circumstances which may occur" (Sub-Clause 44.1), though it is not clear whether this would be read to include changes in law.

Australian Standard: Contractor entitled to price adjustment for costs resulting from change in legislative requirements, including acts, ordinances, regulations, by-laws, orders, awards and proclamations of jurisdiction, and certificates, licenses, consents, permits, approvals and requirements of organizations with jurisdiction in connection with work (Subclause 11.2). Time extension not specified as relief in change in law provision. Contractor is entitled to time extension for specified qualifying causes of delay, which would normally include changes of law.

ECC: Contractor entitled to adjustment of contract price and/or schedule for costs/delays resulting from change in law of country in which site located which occurs after contract date (Optional Clause T1.1).

FAR: Contract price shall be increased by the amount of any new or increased federal excise tax or duty on transactions or property covered by contract (Section 52.229-3). Changes in other laws not addressed expressly. Contractor entitled to time extension for delays arising from causes beyond its control and not due to its fault or negligence (Section 52.249-14).

A201: Changes in law not addressed expressly. Contractor is entitled to time extension for delays from "causes beyond the Contractor's control... or by other causes which the Architect determines may justify delay" (Subparagraph 8.3.1).

ENAA: Contractor entitled to equitable adjustment of contract price for expenses and extension of time for delays caused by change in or enactment of any law, regulation, ordinance, order or by-law having force of law in country where site located or any portion of plant is manufactured (GC 14.4, 36, 40.1(d)).

Singapore: Contractor entitled to time extension for "compliance with the requirements of any law, regulation, by-law or public authority or public service company as stipulated in Clause 7.1" (Clause 14.2 (e)).

GC/Works/1: Not addressed expressly.

World Bank: The World Bank replaces FIDIC Sub-Clause 70.2, as well as the rest of Clause 70, with a clause containing substantially more elaborate formulae for adjusting Contractor's payments in the event that a change in law results in additional or reduced costs to Contractor; however, the basic risk allocation under FIDIC Sub-Clause 70.2, whereby Contractor gets a price adjustment for a change in law, remains the same in the World Bank's replacement clause.

JCT 80 and 81: Any alteration or modification to work necessitated by change in defined statutory requirements after a specified base date shall be treated as a variation instructed by Architect (Clause 6.1.7), which may entitle Contractor to adjustment of contract sum (Clauses 13.2.1, 13.4) and/or extension of time (Clauses 13A.3.2.3, 25.3, 25.4.5.1). Contractor also entitled to time extension for delays due to UK government's exercise of any statutory power after base date which directly affects execution of works by restricting availability or use of necessary labor or preventing/delaying the securing of necessary goods or materials (Clauses 25.3, 25.4.9).

ICE 6th Edition: Changes in law not addressed expressly.


Subcontractor Relations

FIDIC: Employer's Engineer entitled to pay directly to nominated subcontractors all payments, less retentions, which Contractor fails to make to such subcontractors and to deduct by way of set-off the amount paid from sums due from Employer to Contractor (Sub-Clause 59.5).

Australian Standard: Principal may pay directly to subcontractor any sums which Contractor fails to pay to subcontractor where permitted by law, given in a court order or upon Contractor's written request. Such payment by Principal is deemed to satisfy in part its payment obligation to Contractor (Subclause 38.3).

ECC: Employer may establish trust fund for benefit of subcontractors, among others. Trustees (paid and presumably appointed by Employer) may make discretionary payments from fund to subcontractors in amounts up to the value of payments due from but not paid by Contractor (Optional Clauses V1-V3).

FAR: Contractor shall furnish payment bond in an amount varying according to contract price for all contracts over US$100,000 (Section 52.228-15 (b)(2)).

A201: Owner may terminate contract if Contractor fails to pay subcontractors (Clause 14.2.1.2) and accept assignment of subcontracts (Subparagraph 5.4.1), whereupon subcontractor's compensation shall be equitably adjusted for cost increases resulting from suspension of work greater than 30 days (Subparagraph 5.4.2). Unless Contractor provides Owner with payment bond, Contractor shall hold for subcontractors any payments received from Owner for work performed by subcontractors, though Contractor need not hold such sums in a separate account (Subparagraph 9.6.7).

ENAA: Contractor shall provide advanced payment bond (GC 13.2.1).

Singapore: As in the Hong Kong GCCs and FIDIC.

GC/Works/1: Employer entitled to order and pay for specified materials directly from nominated subcontractors or suppliers and to deduct such payments from contract sum, less Contractor's profit adjusted pro-rata on such payment (Condition 63 (2)).

JCT 80: Employer entitled to pay nominated subcontractors all amounts due under subcontract that Contractor fails to pay (Clause 35.13.5.2).

JCT 81: JCT 81 does not appear to address the matter of sub-contractor payment problems.

ICE 6th Edition: Employer entitled to pay directly to nominated subcontractors all payments (less retentions provided for in subcontracts) that Contractor fails to make (Clause 59 (7)).


Notice and Time Bar Provisions

FIDIC: Contractor must provide to Employer's Engineer written notice of claim for additional payment within 28 days after occurrence of event giving rise to claim (Sub-Clause 53.1). If Contractor fails to comply with notice requirement, its entitlement to payment shall not exceed amount that Engineer or arbitrator assessing claim considers verified by records (Sub-Clause 53.4).

Australian Standard: Contractor must provide to Principal's Superintendent written notice of claim for time extension within 28 days of point when Contractor should reasonably have become aware of event giving rise to claim (Subclause 34.3). Contractor must provide to Principal written notice of any other claim regarding contract as soon as practicable after becoming aware of claim (Subclause 41.1). Failure to comply with notice requirements shall entitle Principal to damages for breach of contract but shall neither bar nor invalidate claim (Subclause 41.2).

ECC: Contractor notifies Project Manager of an event which has happened or which it expects to happen that Contractor believes will entitle it to extra time or money and if "it is less than two weeks since [Contractor] became aware of the event." (Clause 61.3). If the Project Manager has notified the Contractor of his decision that the Contractor did not give an early warning of a compensation event which an experienced contractor could have given, the event is assessed as if the Contractor had given early warning. (Clause 63.4)

FAR: Contractor must provide Contracting Officer written notice of differing site conditions promptly and before disturbing such conditions. No claim for equitable adjustment for differing site conditions shall be allowed absent such notice, though Government may extend the time prescribed for notice (Section 52.236-2). Claims for delays caused by Contracting Officer shall not be allowed for any costs incurred more than 20 days before Contractor notifies Contracting Officer in writing and unless the claim is asserted in writing as soon as practicable after delay ends but not later than final payment date (Section 52.242-17).

A201: Contractor must provide Owner's Architect written notice of claim for time or money within 21 days after occurrence of event giving rise to claim or first recognizing condition giving rise to claim, whichever is later (Subparagraphs 4.3.1, 4.3.2). There is no time bar.

ENAA: Contractor must submit to Owner written notice of claim for time extension as soon as reasonably practicable after commencement of event giving rise to claim (GC 4.1, 40.2) unless otherwise specified (e.g., force majeure events must be noticed within 14 days of event (GC 37.2); unforeseen physical conditions must be noticed promptly and before additional work is performed (GC 35.1)). There is no time bar.

Singapore: Contractor must submit to Superintending Officer written notice of event that Contractor believes entitles it to time extension within 60 days of occurrence of event as prerequisite to any such entitlement (Clause 14.3(1)). If Superintending Officer considers Contractor's notice insufficient, Superintending Officer may require Contractor to provide further particulars of event within 14 days or such other period as Superintending Officer selects (Clause 14.3(2)). There is no time bar.

GC/Works/1: As condition precedent to any right or remedy in respect of unforeseeable ground conditions, Contractor must immediately notify Project Manager of such conditions and state his proposed responsive measures (Condition 7 (3)). Contractor not entitled to an increase in contract sum for specified prolongations and disruptions unless he provides notice thereof to Project Manager immediately upon becoming aware that progress of Works will be impacted thereby. (Condition 46 (3)(a)).

JCT 80 and 81: Contractor must submit a quotation regarding estimated price adjustments for specified variations within 21 days from the later of the date of receipt of variation instruction or the date of receipt of sufficient further information to enable Contractor to provide such quotation (Clause 13A.1.2). Contractor must make application for reimbursement of losses and/or expenses resulting from specified events as soon as it has become or reasonably should have become apparent to Contractor that the progress of work has been or was likely to be affected by such events (Clause 26.1.1). Contractor must give notice whenever it becomes reasonably apparent that the work is being or is likely to be delayed if delay caused by specified events (Clauses 25.2.1.1, 25.3.1). JCT 80 and 81 do not address implications of Contractor's failure to timely provide the quotation, application and notice discussed above.

ICE 6th Edition: If Contractor intends to claim a higher rate or price for a variation than that notified to him by Engineer or to claim any additional payment under the contract, Contractor shall notify Engineer within 28 days of the variation notice or the event giving rise to the claim for additional payment (Clause 52 (4)(a) and (b)). If Contractor fails to comply with this notice requirement, then Contractor entitled to payment only to extent such failure has not prejudiced Engineer or prevented Engineer from investigating claim (Clause 52 (4)(e)).

Contractor also shall within 28 days after the cause of any delay has arisen or as soon thereafter as is reasonable notify Engineer thereof (Clause 44 (1)). Contract does not indicate implications of Contractor's failure to comply with this latter notice requirement, though it does provide that Engineer may in the absence of any such claim make his own assessment of the delay he believes Contractor has suffered and shall determine whether time extension is warranted (Clause 44 (2)(b)).


Variation Valuation

FIDIC: Contractor entitled to additional costs (including overhead but excluding profit (Sub-Clause 1.1 (g)(i)) for expenses resulting from Engineer's failure to timely issue specified drawings or instructions (Sub-Clause 6.4); encountering unforeseeable physical obstructions or conditions (Sub-Clause 12.2); encountering fossils or other specified objects of archeological or geological interest (Sub-Clause 27.1); tests required by Engineer but not provided for in contract (36.4); uncovering work where no defect exists (Sub-Clause 38.2); suspensions ordered by Engineer for reasons other than Contractor's default or because needed for proper execution of works or by reason of climatic conditions (Sub-Clauses 40.1, 40.2); Employer's failure to give Contractor possession (Sub-Clause 42.2); damage to works or Contractor's equipment or other expenses arising from specified force majeure risks (Sub-Clauses 65.3, 65.5); termination upon outbreak of war (Sub-Clause 65.8) or termination or suspension upon Employer's default (Sub-Clauses 69.3, 69.4); rise in costs of labour or materials (Sub-Clause 70.1); subsequent legislation (Sub-Clause 70.2); and subsequent currency restrictions (Sub-Clause 71.1).

Variations ordered by Engineer valued at contract rates where applicable and reasonable or, failing that, rates agreed upon between Employer's Engineer and Contractor (Sub-Clause 52.1). If disagreement, Engineer fixes rates. Engineer may elect to have varied work performed on daywork basis (Sub-Clause 52.4). If variations result in additions to or deductions from contract price in excess of 15 percent of such price, contract price shall be adjusted accordingly by agreement of Engineer and Contractor or, failing such agreement, by Engineer with regard for Contractor's overhead and site costs (Sub-Clause 52.3).

Australian Standard: Contractor entitled to additional costs resulting from discrepancies in contract documents (Subclause 8.1); changes in legislation (Subclause 11.2); loss or damage resulting from specified risks for which Principal is liable, including Superintendent's negligence, war or similar hostilities, nuclear radiation, Principal's use of project, and defects in designs provided by those other than Contractor (Subclauses 14.2, 14.3); encountering valuable minerals, fossils or other specified objects of archeological or geological interest (Subclause 24.3); errors in setting out work caused by incorrect information from Superintendent (Subclause 26.2); disturbances to survey marks caused by Superintendent (Subclause 26.3); Superintendent's directions regarding sequence of construction program (Subclause 32); suspensions ordered by Superintendent for safety reasons or pursuant to court order not made necessary by Contractor or because of act or default of Superintendent, Principal or other contractors (Subclause 33.4); and termination by frustration (Clause 40).

Variations directed by Superintendent are priced by agreement, by applicable rates or prices in contract, or by using otherwise reasonable rates or prices, which include reasonable amount for profit and overhead (Subclause 36.4). Contractor entitled to variation pricing for differing site conditions (Subclause 25.3).

ECC: Contractor entitled to adjustment of contract price for additional costs resulting from specified compensation events (Clauses 60 to 65). Price adjustment assessed as to effect of compensation event upon actual cost of work completed, forecasted cost of work to be completed and resulting fee (Clause 63.1). Adjustment depends on contract pricing (e.g., assessments for price adjustment for compensation events occurring under contract with bill of quantities are in form of changes to bill of quantities, with rates and lump sums to be used at parties' option instead of actual cost and resulting fee (Optional Clause B63.9)).

FAR: Contractor entitled to adjustment in contract price, excluding profits, for additional costs resulting from unreasonable suspensions, delays or interruptions of work caused by Contracting Officer (Sections 52.242-14, 52.242-17).

Contractor entitled to equitable adjustment of contract price and time for costs/delays resulting from change orders (Section 52.243-4); stop-work orders (Section 52.242-15); and property furnished in unsuitable condition by government (Section 52.245-2). Contract price shall be equitably adjusted based on variations between actual and estimated quantity of unit-priced items greater than 15 percent above or below estimated quantity (Section 52.211-18).

A201: Contractor entitled to additional costs resulting from errors, omissions or inconsistencies in contract documents (Subparagraph 3.2.3); written interpretations from Architect (Subparagraph 4.3.6); Owner's order to stop work where Contractor not at fault (id.); written order for minor change in work issued by Architect (id.); Owner's failure to pay (id.); Owner's termination of contract (id.); Owner's suspension (id.); shut-down, delay and start-up in connection with discovery and disposal of hazardous materials not brought to site by Contractor (Subparagraph 10.3.2); emergencies affecting safety of persons or property (Subparagraph 10.6.1); and uncovering and replacement of work as ordered by Architect where no defect exists (Subparagraph 12.1.2).

Where changes require adjustment of contract price, such adjustment shall be based on mutually agreed lump sum; unit prices stated in contract or otherwise agreed upon; cost plus a fixed or percentage fee; or as determined by Architect on basis of cost plus allowance for overhead and profit (Subparagraphs 7.3.3, 7.3.6).

Contractor entitled to adjustment of contract price, including profit, upon Owner's suspension or termination for convenience (Subparagraphs 14.3.2, 14.3.3). Contractor entitled to equitable adjustment of contract price for costs resulting from concealed or unknown physical conditions (Subparagraph 4.3.4).

ENAA: Contractor entitled to costs resulting from tests or inspections ordered by Owner and not provided for under contract (GC 23.5); compliance with Owner's instructions as to procession of work in event of disputes regarding tests or inspections or Owner's disapproval of specified documents, which disputes are resolved in contractor's favor (GC 20.3.5, 23.7); uncovering and replacement of work as ordered by Owner where no defect exists (GC 24.8); unforeseen physical conditions (GC 35.2); changes in tax rate or other legislation (GC 14.4, 36); war and other specified hostilities (GC 38.4); preparation of statement of adjustment of price, time and scope necessitated by change that Owner requests and subsequently withdraws (GC 39.9); suspension of work ordered by Owner for reasons other than Contractor's breach or default (GC 41.3); and termination for Owner's convenience (GC 42.1.3).

Changes priced according to unit rates, including overhead and profit, specified in contract or such other rates as agreed to by Owner and Contractor (GC 39.5 and App. 3). Where no agreement reached, price disputes to be referred to Engineer (GC 39.8).

Singapore: Contractor entitled to costs resulting from discrepancies and ambiguities in contract documents (Clause 4.4) and unforeseeable artificial obstructions (Clause 5.2). Contractor also entitled to recover loss and expense incurred as result of other specified events (Clause 22.1). Variations valued according to rates in contract if applicable; market rates and prices; or cost plus 15 percent for overhead, profit and other related expenses (Clause 20.1).

GC/Works/1: Contractor entitled to adjustment of contract sum for extra work carried out as a result of unforeseeable ground conditions (Condition 7 (5)); and expenses incurred as a result of Employer's execution of other work, Employer's delay in providing Contractor any part of site or any delays due to (i) design information provided by Project Manager, (ii) directions by Employer or Project Manager regarding site access passes or nominations or (iii) advice from Planning Supervisor other than that required by Construction Design and Management Regulations (Condition 46 (1) and (2)).

Contractor entitled to reimbursement for costs or expenses incurred in replacing or repairing any loss or damage caused by: negligence or default of Employer or Employer's other contractors; specified risks; unforeseeable ground conditions (contract distinguishes between extra work performed because of such conditions, for which Contractor entitled to adjustment of contract sum, and loss or damage resulting from such conditions, for which Contractor entitled only to reimbursement of resultant expenses and costs); or other circumstances beyond the control of and not reasonably foreseeable by Contractor (Condition 19 (5)).

Variations valued as lump sum proposed by Contractor, scheduled rates, measurements at rates deduced from scheduled rates or at fair market rates, or materials used and labor employed on daywork charge basis (Condition 42 (2), 42 (5)).

World Bank: Under FIDIC, Contractor entitled to additional costs (including overhead but excluding profit) for expenses resulting from, inter alia, loss or damage to Contractor arising out of termination upon Employer's default (Sub-Clause 69.3). The World Bank deletes this provision from Sub-Clause 69.3.

JCT 80: Contract sum shall be increased by amount of Contractor's direct loss and/or expense incurred as a result of (i) Architect's late submission of instructions, drawings, details and levels for which Contractor applied; (ii) uncovering and testing of work and making good the consequences thereof, at Architect's instruction where no defect exists; (iii) discrepancies between contract drawings and specified documents; (iv) work performed by Employer or its other contractors, or material supplied by Employer which Employer agreed to provide or the failure to so supply; (v) Architect's instructions to postpone work; (vi) Employer's failure to timely provide ingress to or egress from site upon notice or as otherwise agreed; (vii) Architect's instructions requiring variations or regarding expenditure of provisional sums; (viii) execution of work for which the amount specified in bills of quantities is an inaccurate forecast of quantity of work required; or (ix) Employer's compliance or non-compliance with obligations regarding planning supervisor and principal contractor under Construction (Design and Management) Regulations of 1994 (Clauses 26.1, 26.2, 26.5, including Amendment No. 14 issued March 1995).

Variations priced according to specified rules (Clauses 13, 13A).

JCT 81: Contract sum shall be increased by amount of Contractor's direct loss and/or expense incurred as a result of (i) uncovering and testing of work, and making good the consequences thereof, at Employer's instruction where no defect exists; (ii) delay in receipt of permission or approval for purposes of Development Control Requirements necessary for execution of work; (iii) work performed by Employer or its other contractors, or material supplied by Employer which Employer agreed to provide or the failure to so supply; (iv) Employer's instructions to postpone work; (v) Employer's failure to timely provide ingress to or egress from site upon notice or as otherwise agreed; (vi) Employer's instructions effecting a change or regarding expenditure of provisional sums; (vii) Employer's delay in providing Contractor necessary instructions, decision, information or consents; or (viii) Employer's compliance or non-compliance with obligations regarding planning supervisor and principal contractor under Construction (Design and Management) Regulations of 1994 (Clauses 26.1, 26.2, 26.3, including Amendment No. 8 issued March 1995).

Changes priced according to specified rules (Clause 12.5).

ICE 6th Edition: Contractor entitled to costs incurred as a result of (i) Engineer's failure to timely issue specified drawings, specifications or instructions (Clause 7 (4)(a)); and (ii) uncovering and replacing work at Engineer's instruction where no defect exists (Clause 38 (2)).

Contractor entitled to costs (plus profit in respect of any additional permanent or temporary work) incurred as a result of (i) delays or disruption in Contractor's arrangements or methods of construction caused by Engineer's instructions to the extent such costs could not reasonably have been foreseen by an experienced contractor at the time of tender (Clause 13 (3)); (ii) Engineer's unreasonable delay in consenting to Contractor's proposed construction methods (Clause 14 (8)); (iii) Engineer's requirements regarding such methods or limitations imposed by any of the design criteria supplied by Engineer, which requirements or limitations could not reasonably have been foreseen by an experienced contractor at the time of tender (Clause 14 (8)); (iv) affording all reasonable facilities for other contractors employed by Employer and other specified entities pursuant to Engineer's requirements to the extent such costs were not reasonably foreseeable by experienced contractor at time of tender (Clause 31 (2)); and (v) suspensions ordered by Engineer, except to the extent such suspension is otherwise provided for in Contract, necessary by reason of weather or Contractor default or necessary for proper execution or safety of work and necessity does not arise from specified excepted risks (Clause 40 (1)).

Variations valued according to specified rates and prices or fixed by Engineer based on such rates and prices (Clause 52 (1) and (2)). Engineer may elect to have additional or substituted work performed on a daywork basis (Clause 52 (3)).


Dispute Resolution

FIDIC: Disputes determined initially by Engineer within 84 days of reference, then by arbitration under ICC Rules (Sub-Clauses 67.1, 67.3). Arbitration to be noticed within 70 days of Engineer's decision or after period for such decision has expired (Sub-Clause 67.1) and may proceed on or after 56 days from notice date (Sub-Clause 67.2).

Australian Standard: Disputes initially referred to party representatives within 14 days of notice of dispute (Subclause 42.1). If no resolution within 28 days of notice, dispute referred to arbitration (Subclause 42.2).

ECC: Disputes initially referred to independent adjudicator, who must determine dispute within four weeks from notice and submission of information. Party dissatisfied with decision or lack thereof may then refer dispute to tribunal (arbitration or otherwise based on parties' agreement) for final determination upon notice within four weeks after adjudicator notifies or should have notified parties of decision (Clauses 90-93).

FAR: Specified disputes initially must be referred to Contracting Officer within six years of accrual date. Time limits for decision vary based on claim amount. Upon mutual consent, parties may use alternative dispute resolution. Contractor may appeal Contracting Officer's decision to an agency board of contract appeals or file suit in U.S. Court of Federal Claims; decisions of either of these entities then may be appealed within U.S. federal court system (Section 52.233-1).

A201: Disputes initially must be referred to Architect within later of 21 days after occurrence of event giving rise to dispute or 21 days after claimant recognizes condition giving rise to dispute (Subparagraphs 4.3.2; 4.4.1). Disputes then must be referred to mediation under AAA Rules upon the earlier of Architect's decision or 30 days after submission to Architect (Subparagraph 4.5.1). Arbitration or legal/equitable proceedings stayed for 60 days from date mediation request filed (Subparagraph 4.5.2). Disputes then subject to arbitration under AAA Rules unless otherwise specified (Subparagraph 4.6.1). Arbitration to be demanded within specified time limits and no later than expiry of applicable limitations period for legal or equitable proceedings (Subparagraph 4.6.3).

ENAA: Disputes initially referred to parties' representatives for resolution (GC 6.1.1). If no resolution within 30 days of notice, dispute then referred directly to arbitration (GC 6.1.2) unless dispute involves specified matter, in which case it may be referred to Expert for timely determination before being submitted to arbitration (GC 6.2.1).

Singapore: Disputes, unless otherwise specified, initially referred to Superintending Officer, who must decide within 30 days of reference (Clauses 34.1, 34.3). Within 90 days of receipt of Superintending Officer's decision or the date by which such decision should have been made, parties may give notice of intent to refer dispute to arbitration (Clause 34.2). Reference to arbitration shall not be made before substantial completion date (Clause 34.2) except references to arbitration of termination disputes, which shall be made within 60 days of event giving rise to dispute (Clause 34.3).

GC/Works/1: Disputes may be referred on seven days' notice to specified independent adjudicator, who shall notify parties of his decision within 28 days of referral, which period may be extended by any amount if the parties agree or by 14 days if referring party consents. (Condition 59 (1) to (4)). Adjudicator's decision binding until dispute finally determined by legal proceedings, arbitration or agreement (Condition 59 (7)). Financial compensation is Contractor's sole remedy against Employer with respect to certain specified decisions by Employer (Condition 59 (8)).

Disputes shall be referred upon notice to specified arbitrator (i) after completion or abandonment of works or termination of contract, and (ii) where dispute initially was referred to adjudicator, after expiry of specified time period unless party serving notice of arbitration does so later than 56 days after receipt of adjudicator's decision, in which case such decision becomes unchallengeable. (Condition 60 (1) and (2)). Arbitrator shall provide decision within three months from end of scheduled period (not to exceed six months) for pleadings, discovery and hearing. (Condition 60 (2)).

World Bank: Under FIDIC, disputes determined initially by Engineer within 84 days of reference, then by arbitration under ICC Rules (Sub-Clauses 67.1, 67.3). The World Bank includes the following three versions of Clause 67 (Settlement of Disputes):

Version 1: Provides for disputes between parties to be referred to a Disputes Review Board consisting of three members.

Version 2: Like Version 1 except disputes referred to a single Disputes Review Expert.

Version 3: Like FIDIC Clause 67 except Engineer must be independent from Employer.

Version 1 is mandatory for contracts estimated to cost in excess of $US50 million. Employers may select any of the three versions for contracts between $US10 million and $US50 million. Contracts smaller than $US10 million should follow the dispute resolution procedures set forth in World Bank's Standard Bidding Documents, Procurement of Works, Smaller Contracts.

JCT 80 and 81: Parties may specify whether disputes or differences arising under the contract are to be decided by arbitration (Article 7A, Clause 41B) or litigation (Article 7B, Clause 41C). Whichever dispute resolution mechanism is chosen, either party initially may require such disputes or differences to be referred on seven days' notice to specified independent adjudicator (Article 5, Clause 41A). Adjudicator's decision is binding until dispute finally determined by legal proceedings, arbitration or agreement (Clause 41A.7.1)

ICE 6th Edition: Matters of dissatisfaction shall be referred to Engineer, who must decide the matter within one month of referral (Clause 66 (2)). If either party is dissatisfied with Engineer's decision or if a decision has not been given within time allowed, either party may serve a notice of dispute (Clause 66 (3)). Parties have option to conciliate or adjudicate dispute before there is a reference to arbitration (Clauses 66 (5), 66 (6)). All disputes arising under Contract shall be finally determined by arbitration (Clause 66 (9)).


Value Engineering

FIDIC: Value engineering (i.e., alternative designs proposed by Contractor) not addressed.

Australian Standard: Value engineering not addressed.

ECC: Value engineering not addressed.

FAR: Contractor encouraged to prepare and submit value engineering change proposals which will reduce contract price without impairing project's essential characteristics. Contractor shall share in any contract savings realized from acceptance of such proposals (Section 52.248-3).

A201: Value engineering not addressed.

ENAA: Contractor may at any time during performance of work propose to Owner any change it considers necessary or desirable to improve quality, efficiency or safety of the work. Owner may at its discretion approve or reject any such change (GC 39.2). Contract price to be adjusted accordingly per rate schedule or parties' agreement (GC 39.5).

Singapore: Value engineering not addressed.

GC/Works/1: Contractor may at any time during execution of work submit to Project Manager proposals it believes will enhance the buildability, increase the efficiency, reduce the cost of works or reduce the cost of maintenance. Contractor and Employer share in resultant savings and project schedule extended as necessary. (Condition 38 (4) to (7)).

JCT 80 and 81: Value engineering not addressed expressly.

ICE 6th Edition: Value engineering not addressed expressly.

More than 500 online news and legal reports on construction law, including claims, payment remedies, damages, government contracting, insurance, building codes, licensing, technology, arbitration, engineering, architecture, infrastructure

© Thelen Reid Brown Raysman & Steiner LLP
All rights reserved.
Legal notices, and terms and conditions.

Site Search Site Map Registration About Thelen ConstructionWebLinks Contact Us