Engineering Contract Conditions.
The standard conditions emerged after the Second World War in the United Kingdom. Prior to this, there are divergent forms of contract used by various public and private bodies. The Engineers Institute General Conditions date from 1980. They largely restate the UK ICE conditions of contract. These may been replaced in the UK by the NEC’s new engineering contract forms which later emerged.
The following are the principal headings in the EI General Conditions
- Definition and interpretation
- engineers representative
- assigning and subletting
- contract documents,
- general obligations,
- workmanship materials,
- time and delay,
- liquidated damages,
- completion certification,
- maintenance and defects
- alterations and additions,
- property in plant and materials,
- provisional and prime costs sums
- nominated subcontracts,
- certificate of payments,
- remedies and powers
- work laws,
- settlement of disputes,
- special conditions.
The tender total is the total of the priced bill of quantities as of the date of acceptance. The contract price is the sum to be ascertained and paid under the contract in respect of the works. The default position is that the works are to be valued on a measurement basis.
The contractors must obtain the engineer’s written consent to sublet any part of the work.
The contract confirms that all documents are to be given equal weight. The engineers is to explain and adjust discrepancies or ambiguities and may give directions and instructions for this purpose.
The requirement for a performance bond may be specified in the tender. It may provide that a formal bond is be entered when called on by the employer.
The engineer may order any variation in the works which is in his opinion necessary for the completion of the works or desirable for their satisfactory completion and functioning.
The contractor is deemed to have inspected the site and its surroundings and to be satisfied prior to submitting the tender as to the ground and soil conditions relative to the tender. The contractor agrees that the tendered rates and price are sufficient to complete his obligations under the contract.
There is provision for adverse physical conditions and artificial obstructions encountered during the execution of works that an experienced contractor could not have reasonably foreseen. It allows for additional payment and extension of time. The procedure for setting out claims is provided.
The contractor must set out the permanent works. Any rectification required must be undertaken by the contractor unless it is due to incorrect information supplied by the engineer or his representative.
Specification and Works
The specification is defined by the tender, but subject to modifications and additions from time to time ordered in writing by the engineer. The drawings may be modified and additional drawings may be issued by the engineers. This may trigger variations in the price.
Provision is made for the contractor’s obligation in respect of site safety.
The contract provides the control by the engineer over the execution of the work. He may issue directions on any matter connected with the work. Directions must be physically possible and lawful.
Provision is made for the submission of a program of works and method statements by the contractor. There is a procedure for submission to the engineer for approval and consent and for further matters arising in consequences. The contractor’s overall responsibility for the work is not altered or affected by the engineer’s approval or consent.
Provisions for insurance.
The contract provides for risks and insuring responsibilities. Certain risks are uninsurable. Generally, the contractor is responsible for the works whether or not insured. There are various options and provisions in relation to insurance which are set out in a separate section.
Provision is made for the avoidance of damage to roads and bridges by being subject to extraordinary construction transport of materials to the site. Action may be required including strengthening of bridges and improvements to roads. The contract provides for the manner in which the damages costs and expenses arising from extraordinary traffic, are to be dealt with.
The engineer may direct the contractor to give reasonable facilities for other contractors employed by the employer and persons authorised, undertaking contract work or otherwise persons at or near the site. The contractor must leave the site and permanent works in a clean and workmanlike manner on completion.
The contracts require compliance with industry wage standards, at a minimum. The engineer may require plant and labour returns from the contractor or any subcontractor
The contract provides for the quality of materials and workmanship to be provided and the contractor’s obligations in relation to samples and testing. The cost of tests are to be borne by the contractor if the test fails but to be borne by the employer otherwise.
The engineer or persons authorised by him are entitled to access to the site and the contractor’s place of works.
Engineer’s approval is required before covering up works. The engineer may direct the contractor to uncover works. If defective works are uncovered or discovered the cost of uncovering and making them good is borne by the contractor. Otherwise, it is borne by the employer.
The engineer may order variations in the works. They must be necessary for the completion of the works. This will have implications in terms of time and cost. The contract makes provision for valuation of variations, the engineer’s powers to fix rates, the manner of execution of day works, that procedures for claims or additional sums lodged made by the contractor.
It is provided that the contractor’s plant and materials vest in the employer when brought on site. Goods may be identified in the tender appendix for the purpose of obtaining payment in advance of their being brought on site.
The engineer is to issue the employer with a maintenance certificate after the expiry of the maintenance period. It sets out confirmation of the completion by the contractor of its obligations to complete the works to the satisfaction of the engineer.
The time for commencement of the works may be specified in the contract. The default position is that it is the date on which the engineer notifies the contractor in writing. It is to be within the reasonable time of the tender acceptance.
The whole of the works or any relevant section is to be completed within the time specified in the appendix to the tender. If there is extended time, this is to be added to the commencement date. Most time periods are made with reference to the commencement date.
There are procedures for extensions of time. They may arise where there are
- adverse physical conditions or artificial obstructions
- further drawings and instructions,
- suspension of the works,
- issues with possession of the site
- issues with program revision,
- certain delays.
The procedure for valuation of variations is provided. The engineer may fix rates and provide for the method of works carried out under day work provisions. The engineer determines and values the work in accordance with the contract on a measurement basis.
The contract provides for certification by the engineer by monthly statements and obligations on the employer to pay on foot of them. There are provisions for the engineers to issue a final account. There are provisions with the retention money. There is interest on overdue payments.
Impact on Payment
Other clauses may impact the payment obligations including
- provisions regarding quantities and correction of errors,
- payment of provisional sums and prime costs items,
- payments for works done by subcontractors,
- tax variations,
There are liquidated damages or delays. They are subject to the common law principle of a penalty and must reflect the employer’s genuine and realistic pre-estimate of possible loss likely to be suffered by reason of delay. The quantum of liquidated damages is specified in the appendix.
The employer may on the advice of the engineer undertake urgent repairs which the contractors are willing to undertake to be, If the contractor is responsible for such repairs, he must bear the costs.
The contractor may be expelled from the site in accordance with a procedure. The engineer certifies that the employer’s committed certain types of breaches and the employer is empowered to expel the contractor pursuant to the procedure.
There are provisions for the resolution of disputes by arbitration. See other sections in this regard. There are provisions for dealing with frustration and other force majeure.
FIDIC civil conditions of contract have gone through o a number of editions. Part one is a general condition. Part two is the conditions specific to the contract. The contracts terms are broadly similar to the ICE engineering contracts.
The ICE contract and the FIDIC conditions of contract are measurement contracts with a bill of quantities included. In the case of a lump sum, target sum or cost-reimbursement contracts, the forms are modified in the circumstances. Modifications are reflected in the special condition.
The FIDIC form of agreement incorporates a letter of acceptance, the tender, conditions of contract, specification the drawing and the bill of quantities.