The White Book Guide
with other Notes on Documents for
Consultancy Agreements
Second Edition 2001
FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS
INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS
INTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE
FEDERACION INTERNACIONAL DE INGENIEROS CONSULTORES
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.
The White Book Guide
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.
with other Notes on Documents for
Consultancy Agreements
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.
Second Edition 2001
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
All rights reserved
No part of this publication
may be reproduced or
transmitted in any form or
by any means
without permission of the
publisher.
Published by
Fédération Internationale des
Ingénieurs-Conseils (FIDIC)
P.O. Box 86
CH-1000 Lausanne 12
Switzerland
Phone
+41 21 654 44 11
Fax
+41 21 653 54 32
E-mail
fidic@fidic.org
WWW
http://www.fidic.org
FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS
INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS
INTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE
FEDERACION INTERNACIONAL DE INGENIEROS CONSULTORES
Acknowledgements
FIDIC wishes to acknowledge the efforts of those who have
contributed to the preparation of the succeeding editions of the White
Book 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 reediting 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 during
preparation 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.
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 of
BKH Consulting. FIDIC is grateful for permission to make use of
these documents.
Contents
1
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.
2
Introduction
1
A
B
C
D
E
1
2
2
3
4
Background
General Approach
Application to Types of Assignment
Documents to Complete the Agreement
Format of this Guide
THE WHITE BOOK
General and Particular Conditions
6
A
Definitions and Interpretations
7
Clauses 1 i, ii & iii
Clauses 1 iv & v
Clauses 1 viii & ix
Clause 1 x
Other Definitions
Clause 2 iii
7
7
8
8
8
9
B
Skill, Care and Diligence
As Administrator of Contracts
Client’s Property
9
10
10
11
Foreign Currency
Equipment and Facilities
Client’s Personnel and Services
of Others
Personnel
Clause 13
a
9
Obligations of the Client
Clause 9 v
Clause 10
Clause 11 & 12
D
Document Precedence
Obligations of the Consultant
Clause 5 i
Clause 5 ii
Clause 6
C
Projects, Works and Services
Client and Consultant
Day and Month
Currencies of Payment
11
11
11
11
Supply of Personnel
12
© FIDIC 2001
Clause 14
Clause 15
E
Representatives
Changes in Personnel
Liability and Insurance
Clause
Clause
Clause
Clause
16
17
18.1
18.2
Clause 18.3
Clause 19
Clause 20
13
14
Clause
Clause
Clause
Clause
14
Liability between the Parties
15
Duration of Liability
15
Limit of Compensation
16
Indemnity
16
a) Third Party Claims
b) Liability to Client’s Contractors
Exceptions
17
Insurance for Liability and
Indemnity
17
Insurance of Client’s Property
18
I
J
Commencement, Completion, Alteration and Termination 18
of the Agreement
Clause 21
Clause 22
Clause 24
Clause 25
Clause 26
Clause 27.2 i
Clause 28
H
General Provisions
Clause 36
Clause 37
b
24
24
Definition and Interpretation
31
Clause 1 i, ii & iii
Clause 1 v
31
31
B
25
25
© FIDIC 2001
Project, Works and Services
The Consultant
a) Project Management
b) Secondment of a Project
Manager
c) Technical Assistance
d) An Individual as the
Consultant
e) Consortia, Associates
and Joint Ventures
Agreed Compensation
Other Definitions
Document Precedence
Liability and Insurance
37
38
39
39
a) Liability for Breach of
Contract and to the
Public at Large
b) International Funding
Agency Requirements
25
Languages and Law
Changes in Legislation
30
A
23
Time for Payment
Currency of Payment
28
28
31
Clause 2 iii
Clause 31 ii
Clause 32
Amicable Dispute Resolution
Arbitration
THE WHITE BOOK
Additional Discussion
Agreement Effective
18
Commencement and Completion 19
a) Time for Commencement
b) Time for Completion
Further Proposals
20
Delays
20
a) Delay by Client
b) Delay by the Consultant
Changed Circumstances
21
Due Date for Payment
22
Exceptional Services
22
Payment
27
Possible Additional Subject Matter
Clause 1 ix
G
26
27
27
27
Settlement of Disputes
Clause 43
Clause 44
3
F
39
40
41
42
a) Protection Provided
b) Relevant Legislation
Copyright
Conflict of Interest
Notices
Publication
c
© FIDIC 2001
Clause 16
Clause 18
Clause 19
c) Cost of Insurance for
Breach of Professional Duty
d) Limit of Liability for Breach
of Professional Duty
e) Third Party Liability
Insurance
f) Objectives of the White
Book’s Liability and
Insurance Provisions
Liability between the Parties
a) Division of Responsibilities
between Consultants
b) Consequential Damages
Limit of Compensation and
Indemnity
Insurance for Liability and
Indemnity
a) Continuity of Insurance
b) Project Insurance
Clause 48
Clause 49
Clause 50
4
45
D
General Provisions
Clause 39
E.
Commencement & Completion
a) Time for Commencement
b) Time for Completion
55
1
2
3
4
5
55
55
55
55
56
47
6
48
7
8
9
10
49
50
Copyright
50
Possible Additional Subject Matter
51
Clause 45
Clause 46
Clause 47
51
51
Payments to Contractors, etc.
Participation of IFA*
Performance Guarantee and
Payment Security
11
12
52
13
14
15
* Abbreviation: in this Guide, “IFA” means International Funding Agency (or
Agencies).
d
© FIDIC 2001
e
53
53
53
Appendix A: Scope of Services
C Commencement, Completion, Alteration and Termination 49
of the Agreement
Clause 22
Patents and Inventions
Performance Evaluation
Severability
General
Terms of Reference (TOR)
Classification of Requirements
Phases
Responsibilities
a)
Task and Advice
b)
Training
Technology and Location
a)
Location
b)
Headquarters Back-up
Administration
a)
Programme
b)
Reporting
c)
Powers
Pre-Investment Studies
Feasibility Studies
Planning and Design Phases
a)
Planning
b)
Design
c)
Terminology
d) Payment and Level of Design
e)
Development of Design
Responsibilities
f)
Site Investigation
Procurement
Implementation
a)
General
b) Duties in Respect of Contracts
c)
The Consultant as Contract Administrator
Operation
Sub-Consultants
Project Cost Estimating
57
58
59
61
61
64
65
68
69
69
© FIDIC 2001
Annex 1 Services of the Consulting Engineer in Relation to
Civil/Structural Engineering Projects
A
B
Typical Normal Services
Typical Additional Services
Annex 2 Checklist/Menu of Environmental Services
1
2
3
4
5
6
5
7
8
9
11
11
12
f
70
75
75
Waste Management Facilities
Landfill Services
Landfill Engineering
Pollution Remediation/Brownfields Redevelopment
Environmental Services
Fisheries Services
Forensic Services
Potable Water
Wastewater Studies and Design
Water Resources Study and Design
Industrial Wastewater
Construction Services for Environmental Works
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
2
84
85
3
4
5
6
7
70
Introduction
Terms of Payment
a)
Definitions
b)
General
c)
Options
Advances and Stage Payments
Methods of Payment
a)
Letter of Credit
b) Direct Disbursement by IFA
c)
Other Systems
d)
Sub-Consultants
e)
Typical Clauses
93
94
Annex 1 Common Payment Terminology
97
1
2
3
4
5
6
7
8
9
10
11
12
13
g
90
90
91
95
96
96
Advance
Advisory Services
Budget Cost
Ceiling Cost
Contractor
Cost
Emoluments
Expenses
Multiplier
Qualified Technical Staff
Stage or Interim Payment
Task Services
Tender Dossiers
Annex 3 Lump Sum Fees
100
Annex 2 Staff - Time Based Fees
101
1
2
3
4
5
6
7
86
© FIDIC 2001
Technical Assistance
Administration of Contracts
Expenses
a)
In Foreign Currency
b)
In Local Currency
8
Currency
9
Price Variation
a)
Rates of Exchange
b)
Prices
10 Recovery of Import Duties
11 Taxation
12 Contingencies
Named Staff
Unnamed Staff
Substitutes for Named Staff
Salary Reviews
Discussion
Time
Typical Clauses
© FIDIC 2001
7
Annex 4 Fees as a Percentage of Cost of Works
107
Terms of Reference and their Preparation
109
A
B
108
109
1 Introduction
A
8.
Terms of Reference
General Principles for Preparing Proposals and
Agreements
References
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.
110
In the second stage, alterations were made in principle to take
account of written comments received on IGRA 1979 D&S and to
accord 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 Arab
Funds. 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.
1
© FIDIC 2001
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.
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.
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 be
altered. 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.
4
© FIDIC 2001
5
© FIDIC 2001
J
Possible Additional Subject Matter
THE WHITE BOOK
3 Additional Discussion
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.
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
30
© FIDIC 2001
31
© FIDIC 2001
7 Tendering and Award
10 Defects Liability Period
a
b
c
d
Advertise and issue tender documents
Conduct site visit and pre-bid conference
Issue addenda and clarifications
Perform analysis of proposals/bids received and make
recommendations for award
e Assist client in negotiations with selected contractor(s)
f Prepare contract documentation.
a
b
c
d
e
f
Provide periodic or continuous inspection services
Arrange for remedial work as required
Prepare all necessary close-out documentation
Assist with negotiations to settle final account
Perform defects inspection and punch-lists
Prepare defects free certificate.
8 Construction Supervision
a
b
c
d
e
f
g
h
i
j
k
l
m
n
Perform additional designs
Review additional designs (including shop drawings)
Design control
On-going constructibility review
On-going value engineering review
Document Control
Schedule Control
Cost Control
Contract Administration
Verify compliance with bond insurance requirements
Quality control record
Measurement and certifications
Assistance to Client concerning Variations and Claims
Reporting.
9 Take-Over and Commissioning
a Carry out inspections/preparing punch lists and certification on
completion 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.
72
© FIDIC 2001
73
© FIDIC 2001
74
B
Typical Additional Services
ANNEX 2
1
Cork consequent upon a decision by the Client to seek statutory
powers.
1
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 submitted
by 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 of
Reference, or, if not, in the Consultant's proposal and/or
eventually in Appendix A of the Agreement.
© FIDIC 2001
Checklist/Menu of Environmental Services
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 planning
Waste 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 treatment
Process 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
75
© FIDIC 2001
Submittal reviews
Construction administration and monitoring
Performance testing and evaluations
Operations monitoring and efficiency evaluations
Competitiveness/tipping fee analysis
2
Due diligence
Site Investigations
Closure/Post-closure
Risk Assessments
Hydrogeologic studies
Corrective Measures Design/Corrective Action
Site 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 planning
Infrastructure/Redevelopment
Site utility design
Site facilities design
Landscape design
Financial consulting ownership transfer assistance
Regulatory negotiations
Public participation assistance
Landfill Services
Planning and Analysis
Service rate and market evaluations
Landfill planning
Alternative evaluations
Technology assessments
Integrated system planning
Optimization of landfill space
Landfill 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
5
3
Mapping Sciences Services
Geographic positioning system data acquisition
Geospatial database management
Multidimensional visualization
Raster to vector data conversion Image processing
Land type classification
Environmental Planning
Environmental impact statements
Environmental assessments
Endangered species
Air quality analysis
Noise analysis Natural resource impacts
Socio-economic issues
Cultural resource evaluation
Ecosystem plans and management
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 facilities
Closure and post closure plans
4
Pollution Remediation/Brownfields Redevelopment
Environmental and Site Audits
Toxicity evaluations
Resource damage assessment
Order of magnitude cost estimation
76
Environmental Sciences
Landfill Engineering
© FIDIC 2001
77
© FIDIC 2001
Interpretive planning
Mitigation plans
Environmental Compliance
Regulatory review
National local law compliance studies
Air/noise water quality analysis
Compliance schedules Inspections Audits
Permitting/Licensing
Air emission
Air quality modelling
Hydropower
Special use
Discharge
Natural Environmental Services
Aesethic resource inventories
Visual 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 evaluation
Wetland delineations and evaluations
Endangered species surveys
Vegetation mapping
Riparian community investigations
Wildlife Services
Wildlife ecology research
Species inventories and surveys
Impact assessment Monitoring plans
78
Habitat Evaluation Procedure (HEP) studies
Habitat mapping
6
Fisheries Services
Fish population surveys
Entrainment 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 consultation
Fluvial 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
© FIDIC 2001
79
© FIDIC 2001
Distribution system
System rehabilitation
Master planning computer modelling
Telemetry systems/SCADA
Water storage
Pumping stations
Transmission mains
Geographic Information System (GIS) interface
Water Treatment Studies and Design
Source protection
Pilot testing
Capacity evaluation
Corrosion control
Residuals management
Regulatory compliance
Water quality analysis
Operations and maintenance
Wells
9
Operations and maintenance services
Odour control Facility optimisation
Contract operation
Laboratory design
Administration/operation/maintenance buildings
Telemetry systems/SCADA
Leachate treatment
10 Water Resources Studies and Design
Surface Water supply
Flood Control studies
Dams
Water quality evaluation/mode ling
Raw water intakes and pumping
Feasibility 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
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 reuse
Nutrient removal
Effluent filtration and disinfection
Land disposal
Biosolids management
Facilities planning
Energy use evaluations
Outfalls Value engineering
Permits Receiving water quality evaluations
80
11 Industrial Wastewater
Plant Studies and Design Pilot plant studies
Economic analyses
Wastewater 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
© FIDIC 2001
81
© FIDIC 2001
APPENDIX B
Engineering evaluation
Facilities planning
Energy conservation and management
Value engineering
Water quality analysis
Financial evaluation and rate analysis
Operation and maintenance assessments
Regulatory compliance
5 Personnel, Equipment, Facilities and Services
of 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.
12 Construction Services for Environmental Works
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.
Construction management
Bidding assistance
Construction period inspection
Engineer of record services
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.
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
82
© FIDIC 2001
83
© FIDIC 2001
APPENDIX C
2. Terms of Payment
6 Remuneration and Payment
1
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.
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.
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:
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 TOR are precise in describing the scope of the services and
the responsibilities and obligations to be undertaken by the
Consultant; and
The chief areas for attention are:
- terms of payment, the basic system or systems;
- the invitation explains the evaluation that will be performed and
the weighting that will be assigned to merit versus cost.
- methods of payment;
- price changes;
c) Options
- currency;
- taxation, where the General Conditions Clause 33 (ii) is
applicable; and
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:
- contingencies.
“The remuneration for the Services comprises fees and expenses.”
Where practical, suggestions are made on the wording of relevant
provisions.
The following systems are those most generally considered, and
any one agreement may incorporate one or more of them
appropriate to the several types of phases of Services to be
supplied:
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.
- Lump sum (see Annex 2), inclusive, or plus certain expenses.
- Time based charges (see Annex 3), inclusive, or plus certain
expenses
84
© FIDIC 2001
85
© FIDIC 2001
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 reexport, it is especially important that the Consultant satisfies
himself that the necessary formalities are observed.
ANNEX 1
Common Payment Terminology
Some or all of the following definitions may be usefully included,
amended as the case may require.
1
Advance
11 Taxation
A payment which is due for repayment. (Generally by way of
deduction from stage or interim payments according to some
specified formula).
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.
2
Advisory Services
Those Services which the Consultant provides by way of advice
and assistance at the direction of the Client for accomplishing
services undertaken by the Client.
It is sometimes acceptable to provide that the Client pays certain
taxes 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.
3
12 Contingencies
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.
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.
4
Ceiling Cost
The cost to the Client within which the Consultant shall complete
the Normal Services (or specified part of them).
However, it is important to clarify that such sums are not to be
regarded as limiting values.
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
96
© FIDIC 2001
97
© FIDIC 2001
purpose of the Services including overhead and other charges
properly allocated to it but excluding profit.
7
11 Stage or Interim Payment
A payment which goes toward the final cost to the Client of the
Services.
Emoluments
Whichever maybe applicable:
12 Task Services
- The amount stipulated in the Agreement for the named member
of staff.
Those Services, other than Advisory Services, which the
Consultant is responsible for providing.
13 Tender Dossiers
- The amount stipulated in the Agreement for the post named in
the Agreement.
Documents prepared for the purpose of obtaining tenders.
- 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 excluding
emoluments 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.
98
© FIDIC 2001
99
© FIDIC 2001
Firm 1
Basic salary
Social Costs
Overheads
B1
20% B1
100% B1
Sub-total
Profit
Overseas allowance
Charge
Multiplier
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
6
104
Over-time and working hours; and
-
Field trips away from base.
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:
8600
660
100
“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.”
8760
1.99
“The expenses shall, for Normal and Additional Services, be those
disbursed 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.”
Which firm presents the better image? Firm 2 with a lower
multiplier and lower percentage overheads and profits, of course.
6
Firm2
A further distorting influence can be that of the respective tax
liabilities of personnel for different types and locations of
emoluments received, where employers will seek to arrange their
wage structures to minimize employee's tax liabilities.
“*Where not stated in the Agreement or otherwise agreed, the fee
rate for chargeable staff shall be calculated by applying to
(definition of relevant emoluments) the following multipliers:
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.
( ............ )
( ............ )
( ............ )
Time
The proportion payable in foreign currency shall be:
Factors to be covered should include:
( ............ )
( ............ )
(100%)
-
Travel time;
-
Absences on holiday, and public holidays;
-
Absences for illness;
For long tours
For visits
For work in the Consultant’s home office
For long tour
For visits
For work in the Consultant’s 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:
© FIDIC 2001
105
© FIDIC 2001
a)
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.
ANNEX 4
Fees as a Percentage of Cost of Works
The simplest approach usually proves the most workable.
The following could, amongst many variants, form the basis of
"percentage fees" terms for the Services or for a component of them.
Price variation provisions, etc., may be needed as in other
systems.
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.
Category/Description
of Works or
Part of Works
Fee Percentage
Design and
Tender Dossiers
Administration of
Contracts
Interim payment shall be made of fees in each category
1. For design and tender dossier
106
© FIDIC 2001
107
%
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)
© FIDIC 2001
2. For administration of contracts
%
a)
on making a contract by Client and contractor
(e.g., 5)
b)
on amount certified for interim payment or paid
to contractor from time to time
(e.g., 85)
c)
7 Terms of Reference & their Preparation
A
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.
on final payment to contractor, balance making
up 100% of the fee due on each contract.
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.
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;
B
2. For administration of contracts:
General Principles for Preparing Proposals & Agreements
or
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.
at the end of the defects liability period.
To this end, but not in any special order of importance:
on substantial completion
108
Terms of Reference
© FIDIC 2001
109
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 overemphasize 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.
© FIDIC 2001