FIDIC Financial Procedures, Suspension

& Termination

GENERAL CONDITIONS
FIDIC 1999 RED BOOK

By M. Edwin Wiranegara
Jakarta 02 April 2022 (Session 4)
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2
12.3 EVALUATION

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 13 VARIATION
Fidic 99 General Condition in relation to Variation Works procedure (Clause 13 & associates)

Variations initiated
no C shall execute &
by Engineer
C can do? be bound unless
(s.c 13.1)
@@
@
yes
yes C proceed to
Works (provided
EI issued? Eng instructs a 56d
Variation -
explicitly) *
no

C submit Monthly
Engineer to IPC
C comply to Once approved – Progress
respond as soon issued by Payment
submit proposal EI issued – Works Statements (s.c 28d 28d
as practicable PM to due
** proceed 14.3)
# Employer
##
© M. Edwin Wiranegara 14.6 14.7 b

@ condition:
 Prior to issuing Taking Over Cert
 Either by an instruction or by a request for Contractor to submit a proposal
@@ condition:
 C promptly gives notice (with supporting particulars) that C cannot readily obtain the Goods (13.1 para 2) or New Permanent Works / out of Scope of Works
(13.1 e) or even acceleration due to S.C 8.2 [Time for Completion] changes then EI insufficient (must Addendum straight away which is equal to Contract, rather
than (13.1 f) change to sequence or timing where this sub clause (13.1 f) is valid only for any changes part thereof existing tasks instead of the overall Works for
the acceleration purposes). UNLESS IN F99 BECAUSE THERE IS A SU.C 13.2 PARA 1 (i) ACCELERATE COMPLETION
* condition:
- if a Variation affects the work which is currently being executed by C then Eng would need to issue instruction immediately, without waiting for a proposal.
- C must not delay any work during this process (tidak akan menunda pekerjaan apa pun, berarti C tetap jalan menjaga komitmen kontraknya atas target waktu
maupun komitmen SoW nya. Dan disini bisa diartikan bahwa ‘pekerjaan apa pun’ adalah semua existing Permanent Works & diluar calon pekerjaan Variation),
unless which could result in a need for Variation to include removal of completed work, means additional cost on top of estimated Variation cost then Eng must
instruct including to stop a certain portion in his EI.
- should there be a Variation not affects the work which is currently being executed by C then advisable that Eng to go to ‘proposal’ option in order to accommodate
fair judgement for Parties & to reduce potential disputes by encouraging agreement of consequences variation before instruction is issued as apparently Sub-Clause
13.3 purposes in the first place.
** condition:
 Consisting Programme modif [8.3] + Evaluation Proposal for Variation
 Proposal can be either as a VE [13.2] or according to Engineer original direction
 Proposal is equal to RVO (Request for VO) or Estimate (in practical languange)
# condition:
Engineer response either approved – not approved – comments
## condition:
- Content of Contractor Monthly Progress Statements submission includes Variations [s.c 14.3 a].
- In s.c 12.3 last para that ‘until such time as an appropriate rate or price is agreed or determined, the Engineer shall determine a provisional rate or price for the
purposes of Interim Payment Certificates (IPC)’. This clause shall be utilised as a reference for any VO Works to be claimed progressively & interim whilst the Works
still going on.
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13 VARIATION

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13 VARIATION

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Overall understanding shall be understood
Variation Claim
Initiated by Engineer / Employer Contractor
Engineer’s Instruction √
(EI)
Procedure / Sub-Clause 13.3 Sub-Clause 20.1
Mechanism [Variation Procedure] [Contractor’s Claim]
Payment Procedure for
Variation & Claim are √ √
same?
Relevant Clauses of Sub-Clause 14.3 Sub-Clause 14.3
above Row (a) Row (f)
© M. Edwin Wiranegara

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Why have variations clauses?
a. there is no authority to order variations unless the contract makes provision for such
b. to allow the Employer to vary the work.
c. Without a variations clause, the Employer has no right to vary the works and must stick with the
original design…OR …. required to reach an agreement as to any changes of the works and the
time and cost consequences
d. Enter into a new contract with the existing contractor or other for the varied work- Expensive?
e. Allows the contract to continue without becoming “frustrated”
i. Ground conditions found need a change in design
ii. Shortage/non availability of materials/services allows change in specification
iii.Change in market conditions- more beneficial materials etc
f. Allows varied work to be brought into the contract and be covered by the project insurance

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 Variation

• Note; FIDIC also states The Contractor shall not make any alteration and/or modification of the
Permanent Works, unless and until the engineer instructs or approves a Variation. .. (JANGAN
KERJA SEBELUM RESMI KELUAR EI FOR VARIATION)
• statement in the 2nd para of Sub-Clause 13.3 [Variation Procedure] …..the Contractor shall not
delay any work whilst awaiting a response.. (TETAP KERJAKAN PEKERJAAN EXISTING
SAMPAI DENGAN ADA RESMI KELUAR APPROVAL UNTUK PROPOSAL)

Kenapa saya angkat isu ini karena sering terjadi 2 pendapat / persepesi yang berbeda

Contractor has an obligation to perform the original work unless a proper variation authorises a change
Otherwise he is in breach of contract
Vs
S.C 3.3 – The C shall comply with the instructions given by the Eng on any matter related to the Contract
Opsi:
• langsung execute dg parallel Claim (agar hak tidak hilang sesuai 20.1), or
• Request for Confirmation sesuai 3.3

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 Hal variation yang cukup penting untuk
diingat !
1. Cannot do global changes on scope of works;
harganya cocok), MANAGE UNDER S.C 12.3
(kalau detail boleh eg keramik ganti marmer provided

2. New Permanent Work (vs S.C 13.1 (e));

spk/contract)
mirip dg no.1 eg: open parking space  mscp (berarti new nego or new

3. If no Goods – see definition of Goods

4. Shall not make any alteration and/or modif of permanent works unless
& until Engineer instructs or approves variation – artinya juga berarti
perlu must expressly states ‘instruction for variation’; (kalau tidak maka jangan jalan dulu – krn
secara kontrak malah kontraktor bias dianggap breaching)

5. Instruksi turun hanya oleh engineer or his rep

6. Tidak bisa instruksi setelah bast 1
7. Tidak boleh omit lalu diberikan ke kontraktor lain
8. Vo dengan harga baru (sesuai 12.3 evaluation)
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11
VARIATION

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EACH VARIATION MAY INCLUDE:

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14
Sub-Clause 13.2
Value
Engineering

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Procedures
for
Advance
Payment

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Procedures
for
Payment

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 IPC FORMAT
BASED ON S.C 14.6

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14.8 DELAYED PAYMENT

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 Procedures
for
Payment
at
Completion of
Works

Note: Sanctions for failure to certify or pay the Interim Payment21

Certificates are as previous
Note: Sanctions Figure
for failure to certify or pay the Interim Payment
Certificates are as previous Figure
 Procedures
for
Final Payment

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SOP for payment at Completion of Works (14.10) & SOP for final payment (14.11)

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SOP for payment at Completion of Works (14.10) & SOP for final payment (14.11) – cont’d

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 Fidic 99 General Condition Sub-Clause 16.1 [Contractor’s Entitlement to Suspend
Work] including all associated clauses – TOWARDS SUSPENSION due to FAILS
TO CERTIFY-IPC [s.c 14.6]; FAILS TO COMPLY WITH EMPLOYER FINANCIAL
ARRANGEMENTS/EFA [S.C 2.4] & Option Towards TERMINATION Sub Clause
16.2
# Notes:
 This clause applied when C wish to complete the
contract
C submit Monthly
 Resume normal work work as soon as
Progress
reasonably possible when the cause resolved
Statements (s.c 28 d IPC / EFA
 Compensation for any delay (time extension)
14.3) / C request fails
 Any extra costs occurred (Cost plus reasonable
evidence of EFA GC 14.6
profit)
(s.c 2.4)
GC 2.4  Interest/Financing Charges (s.c 14.8)
To Suspend
Suspend or
21 d
Serve Slowdown/ Entitle to: ## Notes:
Notice to reduce rate EoT &  This clause applied when C wish not to
Suspend take Effect Costs complete the contract
(NoS) GC 16.1 (if still not (see #)  ‘Relevant’ meaning here is too general.
settled) Interfering / Obstructing / Refusing like in Fidic
87 s.c 69.1 (b) is more clearer for any case of
Employer cuts the real/actual progress
percentages
To Terminate

42 d 14 d
In a case C consider
EFA still
fails
towards Notice of Termination
Termination Termination take effect
(see ##) GC 16.2 (c)

GC 16.2

28 d 14 d
C consider ‘Relevant’
In a case IPC still fails towards IPC still fails Termination
Termination – Notice of take effect 27
(see ##) GC 16.2 (b) Termination
GC 16.2
 Fidic 99 General Condition Sub-Clause 16.1 [Contractor’s Entitlement to Suspend
Work] including all associated clauses – TOWARDS SUSPENSION due to FAILING
TO PAY & Option Towards TERMINATION Sub Clause 16.2
To Suspend

C submit Monthly Interim

Still
Progress 28 d Payment 28 d Paid 0d haven’t
Statements (s.c Certificate due
paid
14.3) GC 14.6 (IPC) GC 14.7

GC 16.1

Suspend or
Serve 21 d Slowdown/
# Notes: Notice to reduce rate
 This clause applied when C wish to complete the Suspend take Effect
contract (NoS) (if still not
GC 16.1
 Resume normal work work as soon as paid)
reasonably possible when the cause resolved
 Compensation for any delay (time extension)
 Any extra costs occurred (Cost plus reasonable
profit) Entitle to:
 Interest/Financing Charges (s.c 14.8) To Terminate EoT &
Costs
(see #)
## Notes:
 This clause applied when C wish not to
complete the contract
C consider
towards 42 d Notice of 14 d Termination
Termination Termination take effect
(see ##) 28
© M. Edwin Wiranegara GC 16.2 (c) GC 16.2
Cases
• Can a contractor/subcontractor be forced to carry out a variation after practical
completion?
• Where work is omitted from the contract by way of a variation, can a contractor claim
for loss of profit?
• If the engineer issues a variation after the extended completion date but before
practical completion, should an extension of time be granted employing the date the
variation is issued or by adding the net period of delay resulting from the variation to
the existing completion date? Alternatively, does the issue of a variation at this time
render time at large?
• Who owns float time in the contractor’s programme, the engineer or the contractor?
• Can an engineer grant an extension of time after the date for completion has passed?
• does EI for Variation have to be executed immediately?
• Can work be omitted and then given to another party?

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CASE #……. Variation

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CASE #……. Variation

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 One common vo case
• Dragging the vo approval – stuck in consultant
• Employer never validate
• How to do?

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 Further notes

• Utilized properly the ‘proposal provision’ in Sub-Clauses 13.1 & 13.3

(Variation matters) which will be simplified the things.
• Therefore, don’t do the Works (VO) without Engineer Instruction or
approved proposal/estimate/assessment/RVO (Request for Variation Order)
as stipulated in Sub-Clause 13.1 last para.
• WALAUPUN DENGAN SUDAH ADA EI PUN DENGAN SUATU
CONCERN MAKA CONTRACTOR HARUS LANGSUNG
MELAKSANAKANNYA MAKA BERPOTENSI MENGGUNAKAN
PROSEDUR KLAIM YAITU DENGAN MEMBERI NOTICE OF
‘VARIATION’ CLAIM
• Dan yang paling penting adalah buat kesepakatan durasi nego untuk new rate
misal paling lambat 14 hari setelah notice

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Further Cases
• If the engineer issues a variation after the extended
completion date but before practical completion, should an
extension of time be granted employing the date the variation
is issued or by adding the net period of delay resulting from
the variation to the existing completion date? Alternatively,
does the issue of a variation at this time render time at large?
• Who owns float time in the contractor’s programme, the
engineer or the contractor?
• Can an engineer grant an extension of time after the date for
completion has passed?

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DISCLAIMER • The content of these SLIDES ARE not legal advice,
and is intended for educational purposes only.
You should always consult a suitably qualified
professional regarding a particular legal issue.
FURTHERMORE THE CONTENT ARE CONSIDER AS
DYNAMIC SLIDES AND SUBJECT TO CONTINOUS
IMPROVEMENT IN FUTURE
• The content of these SLIDES contains general
information and may not reflect current legal
developments or information. The information is
not guaranteed to be correct, complete or
current. We make no warranty, expressed or
implied, about the accuracy or reliability of the
information at these SLIDES or at any other
SLIDES/NOTES to which it is linked.
• The content is used for education purposes only
• The Cases example will be shared in a very
limited exposure due to confidentiality on each
individual Project

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References:
• FIDIC Red Book – 1st Edition 1999
• FIDIC user’s guide – a practical guide to the 1999 Red Book by Brian W Totterdill
• Contract Administration Handbook (for use w/ FIDIC CoC for Construction) by Euginie Lip,
2009
• FIDIC Red Book – A companion to the 2017 Construction Contract by Jakob B Sorensen
• Michael D. Robinson – An Employer’s & Engineer’s Guide to the FIDIC CoC – Blackwell -
Wiley (2013)
• Michael D. Robinson – A Contractor’s Guide to the FIDIC CoC – Wiley (2011)
• Mr. Mirza Zulfi BSc, MRICS – personal notes and some references
• Mr. Peter Robinson MRICS – intense discussion regarding FIDIC 1999
• From Youtube – 2nd Edition Fidic 2017 Overview Comparison to 1st Edition 1999
• https://fidic.org
• https://www.charlesrussellspeechlys.com
• https://www.thenbs.com/knowledge/a-brief-introduction-to-fidic-contracts
• https://www.pinsentmasons.com/out-law/guides/standard-form-contracts-fidic
• possible other resources not mentioned
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 THANK YOU 🙏
M. Edwin Wiranegara
Ir (Civ/Str) MM (Stra. Mgmt) MSc/LLM candidate (Cons. Law) CPPM FRICS
Email: [email protected], mobile: +62 815 13045431

SENIOR LEGAL MANAGER – TOTAL BANGUN PERSADA Tbk

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