Engineer’s Role & Function in FIDIC’s Red Book 2017KEY CHANGES CONCERNING ENGINEER IN VERSION 2017 OF CONDITIONS OF CONTRACT FOR CONSTRUCTION

Miranda C. Liu, Formosan Brothers (Taiwan)

OverviewRED BOOK 1999

3.1 Engineer’s Duties and Authority

3.2 Delegation by the Engineer

3.3 Instructions of the Engineer

3.4 Replacement of the Engineer

3.5 Determinations

RED BOOK 2017

3.1 The Engineer

3.2 Engineer’s Duties and Authority

3.3 The Engineer’s Representative

3.4 Delegation by Engineer

3.5 Engineer’s Instructions

3.6 Replacement of the Engineer

3.7 Agreement or Determination

3.8 Meetings

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Key Changes in 2017 Red Book

Engineer’s Qualification Requirement

Engineer’s Representative

Engineer’s Neutrality

Expanded Procedures of Agreement & Determination

Numerous Deeming Provisions Added

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Engineer’s QualificationRED BOOK 1999

Para. 1, Sub-Clause 3.1

The Employer shall appoint the Engineer who shall carry out the duties assigned to him in the Contract. The Engineer’s staff shall include suitably qualified engineer and other professionals who are competent to carry out these duties.

Para. 2, Sub-Clause 3.2

Assistants shall be suitably qualified persons, who are competent to carry out these duties and exercise this authority, and who are fluent in the language for communications defined in Sub-Clause 1.4 [Law and Language].

RED BOOK 2017

Para. 3 - 5, Sub-Clause 3.1 The Engineer

If the Engineer is a legal entity, a natural person employed by the Engineer shall be appointed and authorised to act on behalf of the Engineer under the Contract.

The Engineer (or, if a legal entity, the natural person appointed to act on behalf) shall be:

(a) a professional engineer having suitable qualifications, experience and competence to act as the Engineer under the Contract; and

(b) shall be fluent in the ruling language defined in Sub-Clause 1.4 [Law and Language].

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Engineer’s Representative RED BOOK 1999

No “Representative”

RED BOOK 2017

Sub-Clause 3.3 The Engineer’s Representative

The Engineer may appoint an Engineer’s Representative and delegate to him/her in accordance with Sub-Clause 3.4 [Delegation by the Engineer] the authority necessary to act on the Engineer’s behalf at the Site, except to replace the Engineer’s Representative.

The Engineer’s Representative (if appointed) shall comply with sub-paragraphs (a)and (b) of Sub-Clause 3.1 [The Engineer] and shall be based at the Site for the whole time that the Works are being executed at the Site.

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Engineer’s NeutralityRED BOOK 1999

Para. 5, Sub-Clause 3.1

Except as otherwise stated in

these Conditions:

(a) whenever carrying out

duties or exercising authority,

specified in or implied by the

Contract, the Engineer shall be

deemed to act for the

Employer…

RED BOOK 2017

Para. 1, Sub-Clause 3.2 Engineer’s Duties and Authority

Except as otherwise stated in these Conditions, whenever carrying out

duties or exercising authority, specified in or implied by the Contract, the

Engineer shall act as a skilled professional and shall be deemed to act for

the Employer…

Para. 1, Sub-Clause 3.7 Agreement or Determination

When carrying out his/her duties under this Sub-Clause, the Engineer shall act neutrally between the Parties and shall not be deemed to be act for the Employer.

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Engineer’s Instructions

RED BOOK 1999

Sub-Clause 3.3 Instructions of the Engineer

…The Contractor shall only take instructions from the Engineer, or from an assistant to whom the appropriate authority has been delegated under this Clause. If an instruction constitutes a Variation, Clause 13 [Variations and Adjustments] shall apply.

…If the Engineer or a delegated assistant:

(a) gives an oral instruction,

(b) receives a written confirmation of the instruction, from (or on behalf of) the Contractor, within two working days after giving the instruction, and

(c) does no reply by issuing a written rejection and/or instruction within two working days after receiving the confirmation;

then the confirmation shall constitute the written instruction of the Engineer or delegated assistant (as the case may be).

RED BOOK 2017

Para. 2, Sub-Clause 3.5 Engineer’s Instructions

Subject to the following provisions of this Sub-Clause, the Contractor shall comply with the instructions given by the Engineer or the Engineer’s Representative (if appointed) or delegated assistant, on any matter related to the Contract.

If an instruction states that it constitutes a Variation, Sub-Clause 13.3.1 [Variation by Instruction] shall apply.

If not so stated, and the Contractor consider that the instruction:

(a)constitutes a Variation (or involves work that is already part of existing Variation); or

(b) does not comply with applicable Laws or will reduce the safety of the Works or is technically impossible

the Contractor shall immediately, and before commencing any work related to the instruction, give a Notice to the Engineer with reasons. If the Engineer does not respond within 7 days after receiving this Notice, by giving a Notice confirming, reversing or varying the instruction, the Engineer shall be deemed to have revoked the instruction. Otherwise, the Engineer shall comply and be bound by the terms of the Engineer’s response.

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Engineer’s Consultation to Reach AgreementRED BOOK 1999

Sub-Clause 3.5 Determination

Whenever these Conditions provide that the Engineer shall proceed in accordance with this Sub-Clause 3.5 to agree or determine any matter, the Engineer shall consult with each Party in an endeavour to reach agreement. If agreement is not achieved, the Engineer shall make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances.

RED BOOK 2017

Sub-Clause 3.7.1 Consultation to reach agreement

The Engineer shall consult with both Parties jointly and/or separately, and shall encourage discussion between the Parties in an endeavor to reach agreement….

If agreement is achieved, within the time limit for agreement under Sub-Clause 3.7.3 [Time Limits], the Engineer shall give a Notice to both Parties of the agreement, which agreement shall be signed by both Parties. This Notice shall state that it is a “Notice of the Parties’ Agreement” and shall include a copy of the agreement.

If:

(b) No agreement is achieved within the time limit for agreement under Sub-Clause 3.7.3 [Time Limits]; or

(b) both Parties advise the Engineer that no agreement can be achieved within this time limit

whichever is the earlier, the Engineer shall give a Notice to the Parties accordingly and shall immediately proceed as specified under Sub-Clause 3.7.2 [Engineer’s Determination].

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Engineer’s DeterminationRED BOOK 1999

Sub-Clause 3.5 Determination

Whenever these Conditions provide that the Engineer shall proceed in accordance with this Sub-Clause 3.5 to agree or determine any matter, the Engineer shall consult with each Party in an endeavour to reach agreement. If agreement is not achieved, the Engineer shall make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances.

RED BOOK 2017

Para. 3, Sub-Clause 3.7.1 Consultation to reach agreement

If:

(a) no agreement is achieved within the time limit for agreement under Sub-Clause 3.7.3 [Time Limits]; or

(b) both Parties advise the Engineer that no agreement can be achieved within this time limit

whichever is the earlier, the Engineer shall give a Notice to the Parties accordingly and shall immediately proceed as specified under Sub-Clause 3.7.2 [Engineer’s Determination].

Sub-Clause 3.7.2 Engineer’s Determination

The Engineer shall make a fair determination of the matter or Claim, in accordance with the Contract, taking due regard of all relevant circumstances.

Within the time limit for determination under Sub-Clause 3.7.3 [Time Limits], the Engineer shall give a Notice to both Parties of his/her determination. This Notice shall state that it is a “Notice of the Engineer’s Determination”, and shall describe the determination in detail with reasons and detailed supporting particulars.

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Engineer’s Failure to Give Notice of Agreement or DeterminationRED BOOK 1999

No time limit for making

determination

RED BOOK 2017

Sub-Clause 3.7.3 Time Limits

The Engineer shall give the Notice of his/her determination within 42 days or within such other time

limit as may be proposed by the Engineer and agreed by both Parties (the “time limit for determination”

in these Conditions)…

If the Engineer does not give the Notice of agreement or determination within the relevant time limit:

(a) In the case of a Claim, the Engineer shall be deemed to have given a determination rejecting the

Claim; or

(b) In the case of a matter to be agreed or determined, the matter shall be deemed to be a Dispute

which may be referred by either Party to the DAAB for its decision under Sub-Clause 21.4 [Obtaining

DAAB’s Decision] without the need for NOD (and Sub-Clause 3.7.5 [Dissatisfaction with Engineers

determination] and sub-paragraph (a) of Sub-Clause 21.4.1 [Reference of a Dispute to the DAAB] shall not

apply).

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Failure to Comply with Agreement or Determination

RED BOOK 1999

Sub-Clause 3.5

The Engineer shall give notice to both Parties of each agreement or determination, with supporting particulars. Each Party shall give effect to each agreement or determination unless and until revised under Clause 20 [Claims, Dispute and Arbitration].

20.4

If a dispute (of any kind whatsoever) arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works, including any dispute as to any certificate, determination, instruction, opinion or valuation of the Engineer, either Party may refer the dispute in writing to the DAB for its decision, with copies to the other Party and the Engineer. Such reference shall state that it is given under this Sub-Clause.

RED BOOK 2017

Sub-Clause 3.7.4 Effect of the agreement or determination

Each agreement or determination shall be binding on both Parties (and shall be complied with by the Engineer) unless and until corrected under this Sub-Clause or, in the case of a determination, it is revised under Clause 21 [Disputes and Arbitration].

…

Para. 4, Sub-Clause 3.7.5

In the event that a Party fails to comply with an agreement of the Parties under this

Sub-Clause 3.7 or a final and binding determination of the Engineer, the other Party may,

without prejudice to any other rights it may have, refer the failure itself directly to

arbitration under Sub-Clause 21.6 [Arbitration] in which case the first and the third

paragraphs of Sub-Clause 21.7 [Failure to Comply with DAAB’s Decision] shall apply to

such reference in the same manner as these paragraphs apply to a final and binding

decision of the DAAB.

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Engineer’s Deeming Provisions – Part I

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Clause Content

4.3Contractor’s Representative

Unless the Contractor’s Representative is named in the Contract, the Contractor shall, before the Commencement Date, submit to the Engineer for consent the name and particular of the person the Contractor proposes to appoint as Contractor’s Representative. …..If the Engineer does not respond within 28 days after receiving this submission, by giving a Notice to the Contractor objecting to the proposed person or replacement, the Engineer shall be deemed to have given his/her consent.

4.4.1Preparation and Review (4.4 Contractor’s Documents)

If the Engineer gives no Notice within this period of 21 days, the Engineer shall be deemed to have given a Notice of No-objection to the Contractor’s Document.

4.9.1Quality Mangement System

The Engineer may Review the QM System and may give a Notice to the Contractor stating the extent to which it does not comply with the Contract. Within 14 days after receiving this Notice, the Contractor shall revise the QM System to rectify such non-compliance. If the Engineer does not give such a Notice within 21 days of the date of submission of the QM System, the Engineer shall be deemed to have given a Notice of No-objection.

5.1Subcontractors

Where the Contractor is required to obtain the Engineer’s consent to a proposed Subcontractor shall submit the name, address, detailed particulars and relevant experience of such a Subcontractor and the work intended to be subcontracted to the Engineer and further information which the Engineer may reasonably require. If the Engineer does not respond within 14 days after receiving this submission(or further information if requested), by giving a Notice objecting to the proposed Subcontractor, the Engineer shall be deemed to have given his/her consent.

Engineer’s Deeming Provisions – Part II

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Clause Content

6.12Key Personal

If the Engineer does not respond within 14 days after receiving any such submission, by giving a Notice stating his/her objection to the appointment of such person(or replacement) with reasons, the Engineer shall be deemed to have his/her consent.

7.5Defects and Rejection

The Engineer may Review this proposal, and may give a Notice to the Contractor stating the extent to which the proposed work, if carried out, would not result in the Plant, Materials, Contractor’s design(if any) or workmanship complying with the Contract. After receiving such a Notice the Contractor shall promptly submit a revised proposal to the Engineer. If the Engineer gives no such Notice within 14 days after receiving the Contractor’s proposal(or revised proposal), the Engineer shall be deemed to have given a Notice of No-objection.

8.3Programme

The Engineer shall Review the initial programme and each revised programme submitted by the Contractor and may give a Notice to the Contractor stating the extent to which it does not comply with the Contract or ceases to reflect actual progress or is otherwise inconsistent with the Contractor’s obligation. If the Engineer gives no such Notice:-within 21 days after receiving the initial programme, or-within 14 days after receiving a revised programmeThe Engineer shall be deemed to have given a Notice of No-objection and the initial programme or revised programme(as the case may be)shall be the Programme.

Engineer’s Deeming Provisions – Part III

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Clause Content

10.1Taking over the Works and Sections

If the Engineer does not issue the Taking-Over Certificate or reject the Contractor’s application within this period of 28 days, and if the conditions described in sub-paragraghs (a) to (d) above (where applicable) have been fulfilled, the Works or Section shall be deemed to have been completed in accordance with the Contractor’s Notice of application and the Taking-Over Certification shall be deemed to have been issued.

11.9Performance Certificate

If the Engineer fails to issue the Performance Certificate within this period of 28 days, the Performance Certificate shall be deemed to have been issued on the dates 28 days after the date on which it should have been issued, as required by this Sub-Clause.

20.2.2Engineer’s initial response

If the Engineer does not give such a Notice within this period of 14 days, the Notice of Claim shall be deemed to be a valid Notice. If the other Party disagrees with such deemed valid Notice. If the other Party disagree with such deemed valid Notice of Claim the other Party shall give a Notice to the Engineer which shall include details of the disagreement. Thereafter, the agreement or determination of the Claim under Sub-Clause 20.2.5 shall include a review by the Engineer of such disagreement.

20.2.4Fully detailed Claim

If the Engineer does not give such a Notice within this period of 14 days, the Notice of Claim shall be deemed to be a valid Notice. If the other Party disagrees with such deemed valid Notice. If the other Party disagree with such deemed valid Notice of Claim the other Party shall give a Notice to the Engineer which shall include details of the disagreement. Thereafter, the agreement or determination of the Claim under Sub-Clause 20.2.5 shall include a review by the Engineer of such disagreement.

Questions & DiscussionQ1. In terms of Engineer’s qualification, what does it mean “a professional engineer having suitable qualifications, experience and competence to act as the Engineer under the Contract”?

Q2. What are the advantages, if any, to have the position of “Engineer’s Representative” in place?

Q3. Is it practicable to expect that the Engineer act neutrally when it comes to facilitate an agreement or make a determination?

Q4. Consultation for reaching agreement is required before the Engineer can make a determination. Better or worse?

Q.5 Newly added deeming provisions have greatly enhanced the Engineer’s responsibilities. Will engineers be able to catch up?

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END OF PRESENTATIONTHANK YOU FOR YOUR ATTENTION