Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
Rights, Obligations & Remedial Rights of the Employer, of the Contractor,
and
of the Role of the Engineer
Under the Public Procurement Agency (PPA) Conditions of Contract
For Works
(Based on National Competitive Bidding)
(January, 2006)
Clauses
2
2.1
3
3.1
4
4.1
5
5,1
Description of Subject Matter
Interpretation
Providing instruction to clarify queries
about the General Conditions of Contract
(GCC)
Language & Law
Law governing the Contract
Engineer’s Decision
Deciding on contractual matters between
the the Employer & the Contractor
Representing the Employer
Delegation
Delegating duties & responsibilities
Employer
Engineer
Contractor
Remarks
Obligation
It gives the legal
framework of the
Contract
Obligation
Obligation
Obligation
Obligation
Right
Right
1
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
6.
6.1
7
7.1
8.
8.1
9
9.1
9.2
10
10.1
Communications
Communicating in writing
Subcontracting
Subcontracting Works by securing prior
approval from the Engineer
Approving subcontracting
Other Contractors
Cooperating & sharing the Site with other
Contractors, public authorities, utilities,
and the Employer
Providing with facilities for other
Contractors…
Modifying Schedules of other Contractors
Notifying such modifications to the
Engineer
Personnel
Employing key personnel named in the
Schedule of Key Personnel
Employing other personnel with the
approval of the Engineer
Approving the replacement of Key
Personnel
Asking the removal of the Contractor’s
personnel, on the ground of misconduct of
the Personnel
Ensuring the removal of such Personnel
Employer’s & Contractor’s Risk
Carrying the risks designated as
Employer’s risks
Carrying the risks designated as
Obligation
Obligation
Obligation
Right
Obligation
Obligation
Right
Obligation
Right
Obligation
Right
Right
Obligation
Obligation
Obligation
2
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Zewdu Tefera Worke, Engineering Contracts Lawyer
11
11.1
11.2
12
12.1
13
13.1
Contractor’s risks
Employer’s Risks
Lists of Employer’s risks
Time framework for the obligation:
from the Completion Date until the
Defects Correction Certificate been issued
Contractor’s Risks
Risks excluding risks of the Employer
Responsible from the Start Date until the
Defects Correction Certificate been issued
by the Engineer
Insurance
Providing insurance cover for risks
responsible for it
Ensuring the insurance cover from the
Start Date until the end of Defects
Liability Period
Obligation
The risks are
related to injury to
persons, damage
to property & to
the Works
excluding the
Contractor’s
responsibility
Obligation
Obligation
Responsible for
injury to person,
damage to
property, to
Works, Materials
& Plant &
Equipment
Obligation
Obligation
Obligation
3
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Zewdu Tefera Worke, Engineering Contracts Lawyer
13.2
13.3
13.4
13.5
14
14.1
15
15.1
16
16.1
17
17.1
18
18.1
18.2
Delivery of insurance policies for the
approval of the Engineer
Approving policies & certificates
Assuring compensation to be payable in
the types & proportion of currencies
Arranging the insurance by the Employer
at the cost of the Contractor
Deducting from any monies due to the
Contractor
No alteration of the terms of the insurance
without the approval of the Engineer
Complying with any conditions of the
insurance
Site Investigation Reports
Relying on any Site Investigation Reports
Queries about the Special Conditions of
Contract (SCC)
Clarifying queries on the SCC
Contractor to Construct the Works
Constructing & installing the Works, as
per the Specification & Drawings
The Works to be Completed by the
Intended Completion Date(ICD)
Completion of the Works by the ICD
Approval by the Engineer
Submitting the design for Temporary
Works for the approval for the Engineer
Approving the Temporary Works
Taking design responsibility for
Obligation
Before Start Date
Right
Obligation
Right
If the Contractor
fails to provide
same
Remedial Right
Right
Obligation
Obligation
Obligation
Obligation
Obligation
Obligation
Obligation
Obligation
Right
Obligation
4
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Zewdu Tefera Worke, Engineering Contracts Lawyer
18.3
18.4
18.5
19
19.1
20
20.1
21
21.1
22
22.1
Temporary Works
Approval of the Temporary Works by the
Engineer
No alteration of responsibility by approval
of the Engineer
Obtaining approval of third parties for
the design of Temporary Works
Submitting drawings for the approval of
the Engineer
Safety
Assuring the safety of all activities on the
Site
Discoveries
Notifying the discovery of historical &
other significant value to the Engineer
Instructing the Contractor how to manage
the discoveries
Complying the instruction of the Engineer
Possession of the Site
Giving possession of the Site to the
Contractor
Presumption of delay against the
Employer
Access to the Site
Allowing access to the Engineer & any
other persons authorized by the Engineer
Authorizing the Contractor for such
purpose
Right
Obligation
Obligation
If required
Obligation
Both for
Permanent Works
& Temporary
Works
Obligation
Obligation
Right
Obligation
Obligation
Obligation
Obligation
Right
5
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Zewdu Tefera Worke, Engineering Contracts Lawyer
23
23.1
24
24.1
25
25.2
25.3
26
26.1
27
27.1
27.3
Instructions
Carrying out of all instructions of the
Engineer
Disputes
Referring the disputes to the Adjudicator,
within 14 days of the Engineer’s decision
Procedure for Disputes
Sharing the fee & reimbursable of the
Adjudicator equally & jointly
Referring the decision of the Adjudicator
within 28 days from the Adjudicator’s
decision
To be bound by the decision of the
Adjudicator, if the decision of same were
not referred to arbitration
Conduction the arbitration
Replacement of Adjudicator
Replacing the Adjudicator
Jointly appointing a new Adjudicator
Designating a new Adjudicator by an
Appointing Authority, in case of
disagreement
Program
Submitting a program for approval by the
Engineer
Submitting an updated program for the
approval of the Engineer
Withholding a payment, if an updated
program not submitted by the Contractor
Continuation of withholding payment
Obligation
Right
Right
Obligation
Obligation
Right
Right
Obligation
Obligation
Obligation
Obligation
Right
Right
Right
Right
Right
Right
Obligation
Obligation
Right
Right
6
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
27.4
28
28.1
28.2
29
29.1
30
30.1
31
until the next program
Approval of program by the Engineer, no
effect on the obligation of the Engineer
Observing the contents of the revised
Program
Extension of the Intended Completion
Date
Extending the Intended Completion
Date(ICD), If the Compensation
Events(CE) occurred or Variation issued
Deciding on the extension of ICD within
21 days from request by the Contractor
Submitting full supporting information to
the Engineer(upon the effect of CE or
Variation instruction)
Acceleration
Wishing the finishing of the Works before
the ICD
Obtaining priced proposal from the
Contractor
Adjusting & confirming the new ICD
Acceptance or rejection of the proposal
Delays Ordered by the Engineer
Instructing to delay the start or progress
of the activities
Management Meetings
Obligation
Obligation
Right
It shall show the
effects of
Variations &
Compensation
Events
Right
Obligation
Obligation
Right
Right
Right
/Obligation
Right
For acceleration
measure
Right/Obligation
Right
7
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
31.1
31.2
32.
32.1
32.2
33
33.1
34
34.1
Requiring to attend a management
meeting by the Contractor or the
Engineer
Recording & providing copies of the
meeting(also to the Employer)
Deciding on the actions to be taken by the
Employer or by the Contractor
Early Warning
Warning the Engineer of specific likely
future events or circumstance that may
adversely affect the quality, increase the
Contract Price or delay
Requiring the Contractor to provide an
estimate of the expected effect of the
events on the Contract Price &
Completion Date
Providing the estimate as soon as
reasonably possible
Cooperating with the Engineer to avoid or
reduce the effects of events…
Identifying Defects
Checking the Works & notifying any
defects to the Contractor
Instructing the Contractor to search for a
defect
Instructing the Contractor to uncover &
test any work that the Engineer considers
may have a defect
Tests
Instructing the Contractor to carry out
Right
Right
Obligation
Right
Obligation
Obligation
Right
Obligation
Obligation
Right
Right
Right
Right
8
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
35
35.1
36
36.1
37
37.4
37.5
tests not specified in the Specification
Carrying out the instruction
Effects of carrying out the tests
 Defects observed:
 Covering the costs by the
Contractor
No defects observed
 No defects:
 Considering the test as
Compensation Event
Correction of Defects
Giving notice to the Contractor of any
defects before the end of Defects Liability
Period(DLP)
Correcting the notified Defect within the
time specified in the notice
Uncorrected Defects
Assessing the cost of having the defects
corrected, if the defect uncorrected by the
Contractor
Paying the cost of the correction
Bill of Quantities or Activity Schedule
(Quantity based v. Lump Sum)
Providing updated Activity Schedules
within 14 days of being instructed to by
the Engineer
Showing delivery of Materials to the Site
separately on the Activity Schedule
Obligation
Obligation
Remedial Right
Right
Obligation
Right
Obligation
Alternative types
of contract under
the conditions of
contract
Obligation
Obligation
If payment on
Materials on Site
9
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
shall be made
separately
39
39.1
40
40.1
40.2
Variations
Inclusion of Variations in the updated
Program
Payment for Variations
Providing with quotation for carrying out
the Variation
Assessing the quotation before the
variation ordered
Using the rate in the BOQ to calculate the
value of Variation
Obligation
Consider the type
of contract
Obligation
Obligation
Right
Quoting in the form of new rates for the
relevant item of work,
Obligation
40.3
Ordering the variation & making a
change to the Contract Price, if the
Contractor’s quotation is unreasonable
Right
40.4
Deciding that the urgency of varying the
work would prevent a quotation being
given & considered without delaying the
work
Effect of the decision:
Right
Remedial Right
For
admeasurements
contracts
If the cost per unit
of quantity
changes, or if the
nature or timing
of the work in the
variation does not
correspond with
items in the BOQs
Both for
admeasurements
& Lump Sum
Contract
Both for
admeasurements
& Lump Sum
Contract
Both for
10
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
40.5
41
41.1
42
42.1
42.2
42.3
42.5
42.6
43
43.1
44
44.1
44.2
No quotation by the Contractor &
treating the Variation as Compensation
Event
Entitlement to no additional payment for
costs, if the Contractor fails to give early
warning
Cash Flow Forecasts
Providing an updated Cash flow forecast
Payment Certificates
Submitting monthly statements of the
estimated value of the Works executed
Checking the Statement & certifying the
Payment
Determination of the value of the Works
Valuation of the value of the work
executed including Variations &
Compensation Event
Excluding any items certified by the
Engineer, due to latter information
Payments
Paying the Contractor the amounts
certified by the Engineer within 30 days of
each certificate
Getting payment of interest for late
payment, in the next payment
Compensation Events-CE
Declaration of CE
Deciding by the Engineer on the
additional Contract Price & on the
No Remedial
Right
admeasurements
& Lump Sum
Contract
Both for
admeasurements
& Lump Sum
Contract
Obligation
Obligation
Obligation
Right
Obligation
Right
Obligation
Remedial Right
Obligation
11
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
44.3
44.4
45
45.1
47
47.1
47.2
48
48.1
48.2
48.3
extension of time to the ICD
Providing information demonstrating the
effect of CE up on the Contractor’s
forecast cost
Assessing the situation & adjusting the
Contract Price
No entitlement to compensation, in not
giving early warning
Tax
Not adjusting the Contract Price , if taxes,
duties & other levies are changed that
affect the Contract Price
Price Adjustment
Adjustment of price, if allowed under the
Special Conditions of Contract(SCC) by
applying the respective price adjustment
factor
Submission (with its Bid) tabulation of
Weightings & sources of Indices, subject
to the approval of the Engineer
Retention
Retaining from each payment due to the
Contractor
Releasing half of the retained money to
the Contractor
Releasing the remaining half of the
retained money upon the expiry of the
DLP, provided all the defects have been
remedied
Substituting the retention money with an
Obligation
Obligation
No Remedial
Right
No
Obligation
No Remedial
Right
Remedial Right
Obligation
Right
Obligation
Right
Obligation
Right
Right
12
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
49
49.1
49.2
50
50.1
51
51.1
51.2
“on demand” Bank Guarantee
Liquidated Damages
Paying Liquidated Damages(LD) at the
rate per day stated in the SCC
Deducting the LD from the payments due
to the Contractor
Correcting any overpayment of LD by
adjusting the next payment certificate, if
the ICD is extended after the LD have
been paid
Entitlement to interest for such
overpayment
Bonus
Getting bonus at the rate per calendar day
stated in the SCC for each day that the
completion is earlier than the ICD
Advance Payment
Making advance payment
Providing unconditional Bank Guarantee
Keeping the Guarantee valid & effective
until the advance payment fully repaid
Reduction of the amount of the Guarantee
by the amount repaid by the Contractor
Paying no interest for the advance
payment
Using the advance money only to pay for
Equipment, Plant & Materials &
mobilization expenses
Providing evidence that the advance
Obligation
Remedial
Right
Obligation
Remedial Right
Right
Less any days for
which the
Contractor is paid
for acceleration
Obligation
Obligation
Obligation
Right
Right
Obligation
Obligation
13
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
51.3
52
52.1
53
53.1
53.2
54
54.1
money has been used for the purpose
intended
Repaying the advance money from
payments due to the Contractor
Deducting from monies due to the
Contractor
Securities
Providing Contract Securities to the
Employer no latter than 15 days after
receipt of the Letter of Acceptance
Providing Performance Bond by the
Domestic Contractors
Providing Performance Bank Guarantee
by the international Contractors
Making the security valid until a date of
issue of the Certificate of Completion
Making the security valid until one year
from the date of issue of the Certificate of
Completion
Day works
Using Day work for small additional
work, if with the approval of the Engineer
Recording all work to be paid for as Day
works on forms approved by the Engineer
Verifying & signing the completed form
within 2 days of the Day work being done
Cost of Repairs
Remedying loss or damage to the Works
or Materials provided the loss or damage
arises from the Contractor’s acts or
Obligation
Right
Obligation
Right
Obligation
Obligation
Obligation
In case of a Bank
Guarantee
In the case of a
Performance Bond
Right
/Obligation
Obligation
Obligation
Obligation
14
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
55
55.1
56
56.1
57
57.1
58
58.1
omissions
Completion
Requesting the Engineer to issue a
Certificate of Completion (CC)of the
Works
Issuing a CC upon deciding that the
Works have been so completed
Taking Over
Taking Over of the Works & the Site
within 7 days of the Engineer’s issuing a
CC
Final Account
Supplying a detailed account of the total
amount payable under the Contract
before the end of the DLP
Issuing a Defects Liability
Certificate(DLC) & certifying any final
payment due to the Contractor
Issuing a Schedule that states the scope of
the corrections or additions that are
necessary(if DLC not issued)
Deciding on the amount payable to the
Contractor by issuing payment certificate
Operating & Maintenance Manual
Supplying “as-built” Drawings and/or
Operating & Maintenance manuals
Right
Obligation
Obligation
Obligation
Obligation
Right
Right
If the Final
Account
resubmitted by the
Contractor found
unsatisfactory
Obligation
If required by the
dates specified in
the SCC
15
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Zewdu Tefera Worke, Engineering Contracts Lawyer
58.2
59
59.1
59.2
59.3
59.4
59.5
60
60.1
60.2
Withholding of payment for not
submitting the said documents by the
Contractor
Termination
Terminating the Contract for
fundamental breach of Contract caused
by the Contractor
Terminating the Contract for
fundamental breach of Contract caused
by the Employer
List of fundamental breach of the
Contract by the Contractor or by the
Employer
Giving notice to the Engineer for the
grounds of termination other than
specified in the Contract
Deciding whether or not the breach is
fundamental
Terminating the Contract for convenience
Stopping the work making the Site safe &
secure & leaving the Site
Payment upon Termination
Issuing a certificate for the value of work
done & Materials ordered
Applying no additional LD
Issuing a certificate for the value of work
done, Materials ordered, reasonable cost
of removal of Personnel, Costs for
protecting & securing the Works, less
Right
Right
Right
Right
Right
Obligation
Obligation
Obligation
Right
If the Contract is
terminated
Obligation
Obligation
Obligation
In case of
termination due to
the Contractor
Right
16
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Zewdu Tefera Worke, Engineering Contracts Lawyer
61
61.1
62
62.1
62.2
advance payment
Property
Taking presumption in favour of the
Employer that all Materials on the Site,
Plant, Equipment, Temporary Works,
and Works shall be the property of the
Employer
Release from Performance
Certifying that the Contract has been
frustrated
Making the Site safe and stopping the
work quickly as possible after receiving
from the certificate from the Engineer
Getting payment for all work carried out
before receiving the certificate & for any
work carried out afterwards to which a
commitment was made
Right
Obligation
Grounds of
Frustration:
outbreak of war or
any other event
entirely outside
the control of the
parties
Obligation
Remedial Right
17
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Zewdu Tefera Worke, Engineering Contracts Lawyer
18