FIDIC 2001 White Book Guide

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
Fdration Internationale des
Ingnieurs-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.
Introduction
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
Definitions and Interpretations
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
Skill, Care and Diligence

As Administrator of Contracts
Clients Property
9
10
10
11
Foreign Currency
Equipment and Facilities
Clients Personnel and Services
of Others
Personnel
Clause 13
Obligations of the Client

Clause 9 v
Clause 10
Clause 11 & 12
Document Precedence
Obligations of the Consultant

Clause 5 i
Clause 5 ii
Clause 6
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 Clients Contractors
Exceptions
17
Insurance for Liability and
Indemnity
17
Insurance of Clients Property
18
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
General Provisions
Clause 36
Clause 37
24
24
Definition and Interpretation
31
Clause 1 i, ii & iii

Clause 1 v
31
31
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
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
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
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
Books 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
45
General Provisions
Clause 39
E.
Commencement & Completion

55
1
2
3
4
5
55
55
55
55
56
47
6
48
7
8
9
10
49
50
Copyright
50
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).
FIDIC 2001
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
5
6
7
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
Appendix B: Personnel, Equipment, Facilities & Services 83

of Others to be Provided by the Client
Appendix C: Remuneration and Payment
84
1
2
84
85
3
4
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
90
90
91
Annex 1 Common Payment Terminology
97
1
2
3
4
5
6
7
8
9
10
11
12
13
93
94
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
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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
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.
FIDIC 2001
General Approach
Particular Conditions and the Appendices, including questions of the

legal admissibility of all terms in local, applicable law and legal systems.
As far as practicable, the construction of the White Book took note of

a number of underlying general precepts, namely that:
D
Documents to Complete the Agreement
it should be even-handed between Client and Consultant;
it should be capable of wide application;
its language should be simple and therefore more reliably

translatable;
it should promote cooperation and mutual trust and avoid

promoting adversarial attitudes;
- Appendix A
it should recognize the realities of international commerce and take

account of the circumstances and difficulties peculiar to
consultancy assignments;
Scope of Services - including Checklists of

both normal Consulting Engineering Services
and specialist Environmental Services
- Appendix B
Personnel, Equipment, Facilities and

Services of Others to be Provided by the
Client
- Appendix C
Remuneration and Payment
Clause I (vii) of the White Book defines the documents forming the
Consultancy Agreement namely:
- General Conditions
- Particular Conditions
legal jargon or other terms and expressions which are common

only to particular geographic regions should be avoided; and
it should cause the parties to consider the risks and

responsibilities each will assume rather than merely the technical
content of the assignment.
It is recommended that Clients' initial invitations be analyzed under

the above headings and that proposals be prepared to fit into this
format because this will facilitate making agreed amendments without
oversight arising from inconsistent treatment of the original.
Application to Types of Assignment

The Particular Conditions of the White Book provide in Section A for
entering particulars necessary to complete the General Conditions,
and in Section B for entering additional clauses of a general and
commercial nature appropriate to the particular assignment. This
would cover such matters as joint ventures, powers of a manager in a
management consultancy, liquidated damages, etc. Chapters II and III
in this Guide deal with some of these matters, giving suggestions for
wording some of the provisions.
As indicated in its foreword, the General Conditions of the White Book

provide general rules common to most consultancy agreements.
Therefore, it omits some of the detail included in the documents
which it now supersedes, namely IGRA 1979 D&S, IGRA 1979 PI and
IGRA 1980 PM. It is one of the objectives of these Notes to indicate
what material may be needed to complete the commercial, nontechnical, part of an agreement for particular circumstances and types
of assignment.
Although the recital in the Agreement Form refers to the Consultant's

proposal having been accepted, it will be noted that the proposal is
not included in the printed list of agreement documents. This is
It is recommended that legal counsel be taken at an early stage

during preparation of an Agreement, on all terms but especially on the
2
FIDIC 2001
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".
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.
FIDIC 2001
FIDIC 2001
THE WHITE BOOK
Definitions and Interpretation
2 The General and Particular Conditions

Clauses 1
The following are notes arising from aspects of the text of the White
Book. Subtitles in this chapter closely conform with the relevant
clause numbers in the General Conditions of the White Book.
Readers may refer to the actual clauses of the White Book.
Separate definitions are required for Project and Works.

The definition of Works is consistent with that of the "Permanent
Works" in the Red Book, but not entirely with that of "Works" in
the Yellow Book. See References (13) and (14) in Chapter 8. The
definition has one application in the General Conditions, namely in
Clause 42 with regard to publicity. It lends itself to defining the
extent of Services for design and contract administration in
Appendix A and for use in Appendix C if fees are to be related in
some way to the construction cost of the Project.
The Particular Conditions of the White Book comprise:

-
Section A where material necessary to complete the clauses of the

General Conditions is to be inserted; and
Section B where additional clauses can be added if necessary.
i, ii & iii: Project, Work and Services
The definition of Services does not necessarily link them to the

Works, which permits the application of the General Conditions to
such aspects of Project requirements as investigation, training, or
research not directly connected with the Works.
Accordingly, the completion of Section A is necessary to give effect to

any Agreement incorporating the General Conditions. The comments
below include reference to this where applicable.
For further details, please refer to Chapter 3 under the same

heading.
In some cases texts are suggested and in others there are

introductory discussions which may also have a bearing on the
Appendices of the Consultancy Agreement. Additional discussion on
a select number of White Book clauses is given in Chapter 3.
Clauses 1
iv & v: Client and Consultant
Note that neither the Client nor the Consultant is named in the
General Conditions or Section A of the Particular Conditions. They
are named in the Agreement Form, or in the absence of a formal
Agreement can be named in Section B of the Particular Conditions
as follows:
With reference to Clause I (iv) of the General Conditions the Client
is ... of ...
With reference to Clause I (v,) of the General Conditions the
Consultant is . of .
The term "Consulting Engineer" previously used in the superseded
IGRA documents, is now replaced by "Consultant". This accords
6
FIDIC 2001
FIDIC 2001
with the general practice of Clients and permits other professionals

to use the document. This wider use should be encouraged, for
example, when Consulting Engineers are contributing to proposals
by firms of other disciplines.
Clause 2
If the order of precedence, or other rules for resolving conflicts

between the provisions are not specified, then, in accordance with
Clause 2 (iii), the Particular Conditions rule over the General
Conditions, and the documents will govern in reverse
chronological order.
Terms such as master and servant, principal and agent are avoided.
"Independent professional firm" is the desired description of the
Consultant's status for FIDIC members. A firm is expected; where
the Consultant is a single person or a joint venture, additional and
amending provisions are required in the Particular Conditions.
For further details, please refer to Chapter 3 under the heading
"The Consultant".
Clauses 1
iii: Document Precedence

heading.
viii & ix: Day and Month
Obligations of the Consultant

Clause 5
i: Skill, Care and Diligence
Although definitions are given for both "day" and "days" only are
used in the General Conditions. It is recommended that this
practice be followed wherever practicable. However, "month" is
defined in anticipation of its use in Appendix C for fees based on
staff time.
The Consultant's responsibility is to exercise reasonable skill, care

and diligence. Many attempts have been made to clarify this, e.g,
by reference to best professional practice, recognition by reputable
representative international professional bodies, employment of
appropriate advanced technology and sound practices, etc.
The definition of day specifies midnight to midnight to conform

with most banking and insurance practice. Where some question
arises on how to treat parts of a day, that is for Appendix C (or the
Particular Conditions) to specify. The question usually arises in
connection with payment terms and can be overcome by defining
an hourly rate or by specifying that a part of a day shall be treated
as a day.
These attempts all introduce further terms which are subject to

further dispute, e.g., What is the best professional practice?
What is an appropriate professional body, and what happens if
two such disagree? Why should an advanced technology be
appropriate (when a primitive one may be better), etc? It should
be left to the courts or arbitration to decide according to the
applicable law.
Clause 1
However, detailed attention is needed where the TOR include or

imply a requirement that the Consultant has a higher duty of a
different kind, e.g., what is sometimes called a guarantee of fitness
for purpose or of product performance to a guaranteed duty. In
this case, Section B of the Particular Conditions needs to include
appropriate amendments to this Clause and to the Liability and
Insurance Clauses; expert advice is recommended; these Notes
do not give it.
x: Currencies of Payment
The definitions of local and foreign currencies are self-explanatory

and provisions dealing with them are included under Clause 32
below.
Other Definitions
Please refer to the appropriate section in Chapter 3 under the
same heading.
8
FIDIC 2001
FIDIC 2001
Clause 5
ii: As Administrator of Contracts
them and for recovering the cost against his fee or some arbitrary
allowance. Supply by the Client on demand by the Consultant
involving accountability by the Consultant should be avoided. One
only has to think of fuel and its potential use and abuse to realize
the strength of this recommendation.
This sub-clause provides for the situation where the Consultant is

administrator of an implementation contract. The following two
points are noted:
a) The Consultant, in estimating the extent and cost of his
Services, will have to assume what duties he will be expected
to exercise and the effect of any restraints on him. Clearly much
of the uncertainty can be removed by reference in the
Agreement to the duties as expressed in the relevant FIDIC
Conditions of Contract: see Chapter 4, Paragraph 12.
Clause 9
v: Foreign Currency
See Clause 32 below regarding currency problems.
b) Sub-Clause 5 (ii) (b) requires the Consultant to act fairly when

administering implementation contracts - see Clause 3.5 of the
Conditions of Contract for Construction, 1st Edition (1999),
Reference (15) in Chapter 8.
Clause 10
Equipment and Facilities
This Guide does not attempt to examine in detail the possible

scope of Appendix B to the White Book. Attention must be given
to the problems of a division between responsibility for provision
and accountability for cost. Moreover, provisions for backup
options should be considered, especially where the matter is
fundamental to satisfactory performance (e.g., accommodation
and transport).
However, to harmonize with what is thought to be almost universal

practice, there is a restraint in Sub-clause 5 (ii) (c) on the
Consultant's power to order important changes without the
Client's approval. This may be given more specific detail in
Appendix A, and in any case the provisions should be repeated in
the terms of any subsequent implementation contract; see Clause
3.1 in the of the Conditions of Contract for Construction, 1st
Edition (1999), Reference (15) in Chapter 8.
Clauses 11 & 12
Clients Personnel and Services of Others
These Clauses do not anticipate what the other services are, or

what the personnel are supplied for. There are many categories,
e.g. drivers, clerical staff, in-line staff who are neither experts nor
counterparts, trainees, even Client departments or local firms.The
General Conditions of the White Book cover none of these
matters, except that seconded personnel take instructions in
connection with the Services only from the Consultant, and that
the Consultant shall cooperate with (which is not the same as
coordinate) suppliers of other services.
The Red Book is still widely used (at the time of publication of this
2nd Edition). However, the Red Book and the Yellow Book have
been replaced by the four FIDIC publications listed as References
15 - 18 in Chapter 8 of this Guide. In the case of Reference 15,
which are the current Conditions of Contract most similar to the
Red Book, the Consultant's duties requiring fair judgment are
described in Clause 3.
Clause 6
Obligations of the Client
Clients Property
With regard to the Consultant's consumables, it is to be preferred

that the Client be responsible for supplying and monitoring them.
Otherwise, the Consultant should be responsible for obtaining
10
FIDIC 2001
11
FIDIC 2001
Personnel
Clause 13
assessing payment for providing what the Client fails to supply;

see also Clause 28 below. Attention may also have to be given to
the requisite contingency budgets, because what the Client may
have planned to fund in Local Currency may now require Foreign
Currency. It is important that the matter be dealt with in writing so
that the extent of agreement and disagreement, and of the related
services, is clearly set out.
Supply of Personnel
Approval by Client
The first paragraph of this Clause deals with personnel supplied by
the Consultant, recognizing that inevitably in most cases the Client
will wish to approve individuals, notwithstanding that it is the
Consultant who is responsible for performing the task, except
when he is seconding staff to the Client.
Clause 14
This clause refers to the individuals who are the points of contact
for the parties under the Agreement.
It also recognizes the usual requirement for fitness to be certified,

but uses the term "physically examined and found fit". If the Client
wishes to see the certificate, the provision can be made in the
Particular Conditions.
If it is a requirement of the Client that the Consultant should have

a local representative with delegated authority to act on behalf of
the Consultant in matters pertaining to the Agreement (as distinct
from the Services), an appropriate clause must be completed in
the Particular Conditions. Such a Clause should expressly allow
the representative to refer a delegated duty back to the
Consultant.
Finally, the first paragraph confines these requirements for approval

and fitness to personnel visiting the country of the Project. These
requirements should not be extended to other locations of the
Consultant's staff, since compliance in the Consultant's home
country would likely represent a breach of employment and/or
anti-discriminatory laws.
The Consultant may, himself, think it desirable or necessary to

have the facility to delegate, in which case a clause should be
provided as follows.
Client Cannot Supply
The Consultant may from time to time delegate any of the duties
and authorities vested in the Consultant to personnel approved by
the Client and he may at any time revoke such delegation. Any
such delegation or revocation shall be in writing and shall not take
effect until a copy of it has been delivered to the Client.
The second paragraph is important, because it sets out what

happens if the Client finds himself unable to supply, as promised,
the personnel or services of others. The "services of others"
refers back to Clause 12, not to Clause 9 - Assistance, or 10 Equipment and Facilities, instancing another occasion when
consistency of phraseology is important. If they are, by
agreement, still required, it is the obligation of the Consultant to
provide them as an Additional Service, but, obviously,
discussions between the Consultant and the Client would be
expected to precede the Consultant's mobilization or
procurement.
The Consultant's delegate may at his discretion choose not to

exercise any such delegation and can refer to the Consultant for
any necessary action
Note that if the individual is delegated with administrative duties in
a contract where the Consultant is named administrator (the
Engineer in the Red Book), Reference (13) in Chapter 8, that
contract will require the relevant delegations to be separately
advised to the contractor.
It is, therefore, necessary that Appendix C contain provisions for

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Representatives
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Clause 15
Changes in Personnel
Clause 16
The cost of replacing personnel at one party's justifiable request is

at the cost of the other party if the reason is misconduct or
inability to perform. Both items are open to subjective
interpretation. It has not been thought helpful to elaborate. If the
parties have good relationships they will be able to agree; if they
have bad relationships, further definition will not help.
The provisions are even-handed. The word "compensation" is

used instead of the more usual string of legal terms, because it is
financial compensation that is envisaged, and the conditions
governing its assessment are defined in Clause16.3.
Sub-clause 16.3 (iii) is intended to prevent a party bearing the
whole liability if another or third party is partly responsible but
unavailable (e.g., no longer trading).
The provisions of clauses, frequently seen, requiring observance of

the law and respect for customs are unnecessary because no one
is above the law and disrespect would constitute misconduct.
Division of Responsibilities between Consultants

Apart from Clause 16.3 (iii) there are no express provisions to
cover those circumstances when there may be divided
responsibility between different Consultants engaged by the Client
for different phases of the Project. It is important that at the time of
entering the Agreement both parties address the question so that
the Consultant knows what responsibilities he is undertaking and
can price for them.

The White Book provides for reciprocal liability in contract for
breach of contract duty [Clauses 16.1 & 2]. This liability is to be
discharged by way of financial compensation for reasonably
foreseeable loss or damage [Clause 16.3 (i)], limited in amount
[Clause 18.1] and to the proportional responsibility in case of joint
liability with others [Clause 16.3 (iii)].
Please refer to the appropriate section in Chapter 3 for further details.
Liability is limited in time [Clause 17]. The Consultant is indemnified

by the Client against all claims out of time and which are not
covered by insurance [Clause 18.2], but neither limit nor indemnity
apply if the Consultant is wilfully or recklessly in default [Clause
18.3].
Clause 17
While there is, superficially, no difficulty in choosing a duration for

liability, the applicable law may prescribe it with or without options
or modify it for some or all risks. In the absence of a clear
indication under the applicable law, it is suggested that 10 years is
a figure both reasonable and likely to be accepted in a number of
jurisdictions.The principal difficulty is how to put some finality on
the risk by specifying when duration begins to elapse. One of the
more certain entries could be:
A general discussion covering this topic is provided in the

appropriate section of Chapter 3.
FIDIC 2001
Duration of Liability
For a claim by one party against the other to be valid, formal

notice must be given within the period stipulated in the Particular
Conditions. The degree of formality is not specified in the White
Book as it will depend on the applicable law. In some cases a
Clause 41 notice may be sufficient; in others it may need to be
given by a process of law.
The Consultant is expected to take out insurance cover, if available

at reasonable commercial rates, for breach of contractual duty and
breach of duty to the public at large (non-contractual and statutory
duty) all as may be required by the Client. This will be at the
Client's expense to the extent that it exceeds the normal cover (if
any) carried by the Consultant [Clause 19].
14
Liability Between the Parties
15
FIDIC 2001
such date as is prescribed by the applicable law but not later

than the completion or termination of the Services.
b) Liability to Client's Contractors

It would be as well, when approving the duties of the Engineer
under a contract between the Client and a third party such as a
construction contractor, to remove any questions of liability of the
Consultant to the third party by inserting in the relevant documents
a disclaimer to the following effect:
It is recommended that whenever possible a lawyer or broker,

specializing in insurance under the applicable law, be consulted.
Clause 18.1 Limit of Compensation
The text allows for possible pre-agreed compensation over and
above the limits set here; delayed payment Clause 31 (ii) provides
an example. This aspect needs to be remembered when fixing
others, e.g. for delayed performance.
Neither the Engineer nor any of his staff nor the Engineer's
representative nor any of his staff shall be liable in any way to the
Contractor for their acts or omissions in the Performance of their
duties under the Contract.
The text allows for possible pre-agreed compensation over and

above the limits set here; delayed payment Clause 31 (ii) provides
an example. This aspect needs to be remembered when fixing
others, e.g. for delayed performance.
Clause 18.3 Exceptions

To comply with prevalent current practices, the limits of liability and
indemnity do not apply if liability results from deliberate default or
reckless misconduct. After considerable debate this phrase was
chosen in substitution for such phrases as "gross negligence" or
"willful misconduct", because gross negligence is believed to have a
special meaning in some jurisdictions but is meaningless in others,
and willful misconduct confuses deliberate default with recklessness.
"Agreed Compensation" is used where "liquidated damages" or

"interest" would be more familiar expressions to some. This is to
facilitate translation and to promote wider application. See, also
Clause 25 below.
Clause 18.2 Indemnity
The Yellow Book, Reference (14), combined both into "gross

misconduct" defining it as "any act or omission in violation of the
most elementary rules of diligence which a conscientious
contractor in the same position and under the same circumstances
would have followed". Whether this was helpful remains to be
proved. The applicable law will ultimately decide whether a default
is such as to negate the limits of liability and indemnity.
a) Third Party Claims

The limit of the cover required to be insured and terms (e.g., in
joint names) for third party liability should be set or agreed by the
Client. However, the TOR may not state exactly what amount is
required to be taken out by the Consultant, and, if urgency
prevents inquiry, it would be prudent to name in the proposal the
amount for which the Consultant is normally insured. No express
Provision is made in Section A of the Particular Conditions.
The Consultant's liability is not limited under the White Book other
than in connection with the performance of obligations under the
Agreement.
Some IFA* take exception to the inclusion of a specific

indemnification as stipulated in Clause 18.2
Clause 19
Clause 19 requires the Client to fund any increase in cover over

that normally carried by the Consultant or for the cost of such
cover if the Consultant is not already insured for the particular risk.
* In this Guide "IFA" means International Funding Agency (or Agencies)
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Insurance for Liability and Indemnity
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The Consultant is not entitled to separate or direct reimbursement

for the cost of his insurances normally carried.
orders or by the law. In case of doubt, there are two solutions:

- to obtain the Client's confirmation whether or not a formal
agreement is required;
Generally, the Consultant must obey the applicable law, and unless
otherwise specified it will be his duty to acquaint himself with, and
comply with, any legal obligations to insure the personnel working
under his direction, and vehicles and accommodation, etc. used by
him and by those working under his direction.
- to obtain a written undertaking from the Client, before starting

the Services, that the Client will perform his obligations,
including those of payment pending execution of any formal
agreement that may subsequently be required.
For the avoidance of doubt, the Consultant should disclose in his

proposal or at the time of Agreement the amounts and renewal
dates of his current insurances so that the Client can consider
what extra may be required.
Clause 22
Further details on this topic are provided in the appropriate section

of Chapter 3.
Clause 20
There are many possible approaches to completing the entry

required in the Particular Conditions of which the following are
examples:
Insurances of Clients Property

within "x" days after:
- the date when the Agreement is effective;
It is the purpose of Clause 20 to cover the circumstances when

the facilities are provided by the Client for the Consultant's use but
remain the Client's possessions.
Commencement and Completion
or
- receipt by the Consultant of the first payment due under the
Agreement;
Commencement, Completion, Alteration and

Termination of the Agreement
or
Clause 21
Agreement Effective
- confirmation by the Consultant's bankers that an irrevocable
letter of credit has been established in accordance with the
Agreement.
It is not recommended that the effectiveness of the Agreement

should be subject to approval of an IFA. The Consultant has no
control over the pace of any Client/IFA negotiations and is at risk
while this continues. It should be the duty of the Client to obtain
any necessary third party approval to the draft Agreement before
the parties sign.
The Services will be deemed to have commenced on the date of

arrival in (name of country) of the first member of the Consultant's
staff which shall be on or before (specified date).
Clause 21 of the White Book does not cover the problems which
may arise if the Consultant receives a letter of acceptance and an
instruction to proceed, but is subsequently denied payment because
a formal agreement has not been executed as required by standing
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Completion will usually be expressed as within so many days after

commencement, but it may be necessary to sub-divide the
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Services for completion by stages, especially where administration

of contracts is involved.
low by comparison with any likely loss or damage due to delayed

performance, the Consultant himself should consider carefully
whether or not an Agreed Compensation should be stipulated.
Care should be taken in the wording of this entry if there is no

intention of making an Agreement where time is a fundamental
condition ("of the essence"). The presence of an "Agreed
Compensation" clause in Section B of the Particular Conditions for
delayed performance will support such a condition, as might some
performance or payment condition in Appendix A or C.
For example, if a high limit of compensation to the Client is

prescribed under Clause 18.1 and the direct consequences of a
delay might lead to claims on or by the Client for loss of valuable
production, it might be sensible to limit the damage for delay to a
reasonable amount by stipulating an Agreed Compensation and
the fact that no other damages will be payable for delay. By the
first paragraph of Clause 18.1 this would be an extension to the
limit of liability under Clause 18.1. Such a provision could be
included in Part II along the following lines:

heading.
Clause 24
Further Proposals
Further to Clause 25 in the General Conditions, where in
Appendix A the Services or any part of them are to be completed
within a specified time, and they are not so completed for reasons
which are solely the responsibility of the Consultant, the Client
shall be entitled to agreed compensation at the following rates per
day of delay in completion which is the responsibility of the
Consultant, and no other damages or compensation will be
payable for delay.
As projects progress, the Client's perceptions of his needs

sometimes change, whether arising from the Consultant's findings,
from policy, or from funding limitations. This Clause provides
expressly for payment to the Consultant for what can often be
substantial extra work involved in preparing proposals for the
changed content of his Services. Clause 26 may also give some
protection, since the requirement to prepare proposals would stem
from a changed circumstance, but it was not designed for this
type of circumstance, and it was thought best to have an express
provision.
Clause 25
Services
.............
.............
Rate/Day
..............
..............
Delays
a) Delay by Client
The total of such agreed compensation shall not in any event

exceed ....
This Clause provides for delays which are the responsibility of the
Client. If there are any, it provides that the Consultant has a duty
to advise the Client. See, also, Clauses 13 and 23 above.
The rates per day should be capable of being supported by

calculations made before the date of the Agreement, however
imprecise the estimates have to be.
Clause 26
Changed Circumstances
b) Delay by the Consultant

The concept of Clause 26 comes from Paragraph 88 in the United
Nations Guide for Drawing up International Contracts on
Consulting Engineering, Publication No. ECE/TRADE/I 45. 1983;
Where time is a fundamental term of the Agreement, the Client

may require a provision for compensation for delayed
performance by the Consultant. Unless the limits of liability are
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Both ECE/TRADE/145 and IFA sample forms provide elaborate

and specific provisions for serving notices after the Force
Majeure occurrence, in default of which the Consultant would be
in breach and lose protection provided by the clauses. These are
exactly the circumstances when it may be physically impossible
to serve such notices. Clause 26 requires prompt "dispatch" of a
notice only.
Also, the Clause is not only applicable when a circumstance is not
the responsibility of the Consultant and such as to prevent him
performing his obligations, but also applies if continued
performance, although possible for the time being, is irresponsible;
for example, when the Consultant as an employer of his staff
would be considered negligent in exposing them to possible
danger, after his government has advised evacuation. In such
circumstances the Consultant would then be liable for damages
for staff subsequently injured or would be likely to breach the
terms of an insurance policy.
while other expenses are recoverable net. This has two

consequences on Appendix C:
- if the Agreement is a lump sum Agreement, there should be a
priced schedule for staff time; and
- any provisions in Appendix C for a mark-up on the net cost of
reimbursable expenses to cover administration and financing
charges will not be applicable.
It is considered that the above arrangements give some measure
of fairness when misfortune strikes both parties.
G
Payment
It is important to distinguish the difference between:
- terms of payment;
This Clause also provides the basis for the Consultant to suspend,
and ultimately discontinue, his services if the Client declines to
adapt measures reasonably considered to be essential to comply
with environmental requirements.
- method of payment; and

- liability for payment.
At the same time it is necessary to consider security for payment.
Another aspect of the Clause is that, unlike many Force Majeure

clauses, it recognizes the often available possibility of continuing
performance for a part of, or all, the Services, albeit more slowly.
as an alternative to suspension.
Terms and Method of Payment

The terms and method of payment are a matter for Appendix C;
see Clause 30 and Chapter 6.
Clause 27.2 i: Due Date for Payment

Liability
The phrase "due date for payment" should be read in the context
of Clause 31 (i) and (ii) and the period stated in Part II.
Clause 28
If the inclusion of any provision, such as a possible IFA type clause

(as shown under Clause 46 in Chapter 3), is likely to raise doubts
about liability for payment, the following clause can be inserted in
the Particular Conditions:
Exceptional Services
Exceptional Services, consequent on changed circumstances as

defined by Clause 26, are recoverable so far as staff time is
concerned at the commercial rates applicable to the Agreement,
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FIDIC 2001
Notwithstanding any agreed method of payment the Client shall

be, and shall remain, responsible for making payments to the
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Consultant in accordance with his entitlement under the

Agreement and shall be liable for any default in such payment.
Such liability shall be in addition to any liability under Clause 16 (of
the White Book).
Clause 36
Languages and Law
The law to which the Agreement will be subject should be given

full consideration. It will generally be the law of the country where
the Project will be implemented, or the country of the Client.
Clause 31 ii: Time for Payment

It is suggested that in most cases Local Currency payments
should be made within 42 days, but Foreign Currency payments
may need longer, say, 56 days, especially when the method of
payment involves applications by the Client through another
department of Government to an IFA.
This is important since the law will generally overrule any

conflicting provisions of the Agreement. In particular, any
substantive issues in dispute which, according to the Agreement
are to be referred to arbitration, will be decided upon in conformity
with the law to which the Agreement is subject
The percentage of Compensation for overdue payment can be

entered as a numeral or by reference to some institutional
published rate; the White Book provides that Compensation will be
compounded monthly, unless express provision is made
otherwise.
Clause 32
General Provisions
In light of the above, it is essential that the Consultant should

make himself aware of the relevant law. Time spent on this may be
more important than the same amount of time devoted to fine
tuning the Agreement itself. If the law of the country concerned is
not clearly defined, consideration should be given to nominating
the law of a third country.
Currency of Payment
It should be noted, however, that the arbitration proceedings

themselves, in matters such as submission of evidence, rules of
cross-examination, etc., are more likely to be governed by the law
of the country in which the arbitration proceedings are conducted.
Clause 32 anticipates that all rates and sums of money will be first
expressed in one currency, namely the currency of the Agreement,
which will usually be that of the Client's country, but in certain
circumstances may be that of the funding agency or of the
Consultant's country. Provision is then made for insertion in
Section A of the Particular Conditions of the rate(s) of exchange
applicable to the amount(s) to be paid in other currencies. See
discussion in Chapter 6, paragraphs 8 and 9.
Clause 37
Changes in Legislation
a) Protection Provided
The White Book provision stipulates that, unless otherwise stated,

there should be no restraints on currency movements and requires
that details of any such restraints be included in Appendix C.
This Clause provides for the impact (up and down) of changes in
legislation outside the Consultant's own country; this protects local
as well as foreign consultants when local consultants take the lead
and import (i.e., subcontract) services which they themselves
cannot supply.
Sub-clause 32 (ii) attempts to deal with currency problems which

may arise, but for which Clause 37 is inapplicable when the
applicable law fails to recognize them.
b) Relevant Legislation
Clients should be encouraged to make prospective consultants
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aware, at the invitation stage, of relevant legislation, particularly

with regard to taxation, insurance, employment, exchange
controls, imports and exports.
Clause 40
Conflict of Interest
Earlier version of the White Book included as Clause 40 a simple

"Conflict of Interest" provision. In answer to calls to eliminate
corrupt practices from the award and conduct of public works
contracting, the 1998 version has a new Clause 40 therefore
supports the imposition of sanctions in case the Consultant is
found to have:
However, unless there is a warranty from the Client or indemnity

such as a provision that Clause 37 applies to the information
supplied by the Client, prospective consultants should perform
whatever investigations they feel are necessary to satisfy
themselves concerning relevant legislation.
- resorted to corrupt practice to secure its assignment, or

Clause 39
Copyright
- misrepresented facts.
In principle, FIDIC's position is that the Consultant should retain

the power to re-use the expertise and non-confidential products of
his Services for the benefit of economic pricing and application of
skill to future users of his services. There may be occasion when
the Client has a legitimate interest in retaining control of some
special product, which would generally be of a unique nature,
such as some artistic or architectural feature or treatment, where
the emphasis will be more on denying the right to copy than on
the right to re-use.
Clause 41
In the latter circumstances there should be little difficulty in

modifying Clause 39 to cover some identifiable exclusion from the
general provision.
Clause 42
An illustration of the illogicality of the position that copyright should

belong to the Client is that strict application of such provisions
would mean that a Consulting Engineer, having performed
Services in one assignment financed by an IFA, would be unable in
a subsequent assignment to use any of that library of type
designs, standard design details and model specifications, which it
had developed over years of practice and had used in the former
assignment.
The new Clause 40, therefore supports the imposition of sanctions

to prevent or discourage corruption.
The Consultant's records of delivery of notices and other material

requiring the Client's attention should be systematically recorded,
preferably after delivery by hand against the written receipt of the
Client's authorized registry.
Settlement of Disputes
Earlier versions of the White Book provided for any dispute between
the Parties to be resolved, in the first place, by discussion between
the Parties and, failing resolution, by binding arbitration.
The 1998 version, Reference (23) in Chapter 8,provides for the
intervention of a neutral mediator, if direct discussion between the
Parties fails to resolve the dispute, before any matter is referred to
For further details see Chapter 3 of this Guide.

FIDIC 2001
Publication
Clause 42 requires an express condition in the Particular

Conditions if their provisions need to be varied in respect of any
particular matters arising from the performance of the Services.
The copyright provisions of Clause 39 may not always be

acceptable to Client or IFA. Any amendment should go into the
26
Notices
27
FIDIC 2001
arbitration. This reflects the general success achieved in curtailing

the cost of dispute resolution when mediation is used.
Clause 43
the Rules of Arbitration of the International Chamber of

Commerce", Reference (2) in Chapter 8.
Amicable Dispute Resolution
It is possible to qualify this matter further, e.g., by stipulating the

number of arbitrators, or to substitute some other administration.
E.g., the London Court of International Arbitration, Reference (3)
in Chapter 8.
This Clause specifies the requirement for the Parties to make a

good faith attempt to resolve any disputes between themselves. It
further stipulates that, failing direct resolution, the dispute will be
referred to a neutral mediator.
For ad hoc arbitrations:
The Clause further specifies a time schedule for mediation to

avoid excessive delay resulting from the requirement for
mediation, but allows that the schedule may be modified if both
parties agree.
- the UNCITRAL Arbitration Rules", Reference (4) in Chapter 8.
Sub-Clauses 43.6 and 43.8 provide for the situation where

mediation fails to resolve the dispute, while Sub-Clause 43.7
stipulates that the Parties will each bear their own costs involved in
mediation, unless the mediator finds that one Party has initiated
the mediation frivolously or vexatiously, when that Party will be
assessed the costs by the mediator.
- The appointing authority shall be ....
It may be advisable to stipulate in the Particular Conditions who

will pay the mediator.
- The number of arbitrators shall be ....
In this case it is desirable to complete four other requirements,

namely:
This can be the International Chamber of Commerce, Reference

(5) in Chapter 8, or the Chief Justice of the Client's country., or
the President of some professional institution (including FIDIC),
etc.
Normally one or three.

Clause 44
Arbitration
- The place of arbitration shall be ....
a) Waiver of Appeal at Law

Care is needed in choosing this to ensure enforceability of the
award. Regard should be given to whether the countries of the
parties are signatories to any of the bilateral or multilateral
conventions on enforcement of arbitral awards.
Note that whatever system and rules are adopted the parties
intend the arbitration to result in finality without recourse to law so
far as the applicable law permits. This accords with the practice of
the International Chamber of Commerce's Rules of Arbitration
[Reference (2) in Chapter 8].
- The language to be use in the arbitral proceedings shall be ....

This can cause difficulties depending on the likely nature of oral
and written evidence, but normally the ruling language of the
Agreement is the first choice.
b) Selection of Rules for Arbitration

Two options are given below:
For administered arbitrations:
28
Doubtless there are other positions.

FIDIC 2001
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FIDIC 2001
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.
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
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FIDIC 2001
General Conditions or additions in the Particular Conditions unless

those Services extend beyond the advisory function to the function
of incurring liability for final cost or duration of the Works
themselves, for example: to the direct employment of labour or
contractors or the direct purchase of materials etc. or to having
discretion for the placing of orders and executing of contracts as
agent of the Client.
but it is not necessary.

In any event, it would seem good practice not to use the term
"Project Manager" for the head of the Consultants' team. A better
title would be "Services Manager" or "Services Director".
b) Secondment of a Project Manager

a) Project Management
If the Consultant is to supply an individual to act under the Client's
direction and overall management as Project Manager, the terms
of that secondment will need to be defined; in particular it will be
necessary to specify the relationship between the Consultant and
the Project Manager concerning supply, servicing, supervision and
replacement, and also concerning supplying technical advice and
Services.
The title Project Manager encompasses a wide range of

applications. At one extreme he (whether an organization or an
individual) is completely responsible for delivering a constructed
project in response to the Client's wishes. At the other extreme he
merely acts as a conventional consultant advising the Client and
performing administrative duties.
In the latter case, no changes or additions are required in the
White Book. It is beyond the scope of these Notes to consider the
former case, but it is not on the face of it difficult to specify terms
covering any well defined departures, e.g., for making a site
investigation or for the purchase of required materials or
equipment, other than by procuring contractors for the Client,
while still retaining liability only for skill, care and diligence in the
performance of his Services. This is the touchstone.
It may be desirable to include in Appendix A or in Section B of the

Particular Conditions certain general provisions governing the
Project Manager, and suggestions for this are given below:
The Project Manager seconded by the Consultant to the Client as
part of the Services shall take instructions concerning the Project
only from the Client.
The Project Manager shall for the purposes of the Project:
If liability is to extend beyond this, e.g. to liability for fitness,

performance, cost or timely delivery of a product (the Works), then
that is a different matter altogether for which the White Book and
other common forms of Consultancy Agreements are not suitable.
1. arrange for the provision of expert and professional services as

may be required but in so far as such services are part of the
Services in the Agreement shall obtain them from the
Consultant;
Thus, whether the Consultant is called the Project Manager, or

whether one of his Services is to supply an individual to be called the
Project Manager, perhaps heading the Client's in-house team,
nothing further needs to be said in the Particular Conditions about
the Consultant, provided that the Consultant's responsibility remains
that of exercising skill, care and diligence. One could, perhaps, say:
2. have authority to enter into contracts on behalf of the Client but

only after having the Client's written approval for each such
contract;
3. be subject to the provisions of the following clauses in respect
of his services as if he were the Consultant in respect of them:
(e.g., White Book Clauses
In the General Conditions delete the word "Consultant" wherever

it appears and substitute the words "Project Manager"
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- 5.
Duty of Care and Exercise of Authority
- supply of personnel to assist the Client in the preparation or

administration of a Project in an advisory capacity; and
- 40. Conflict of Interest

- supply of personnel to assist the Client in training.
- 42. Publication);
For further comment see Paragraphs 52 to 55 in the United
Nations Guide, Reference (1) in Chapter 8.
4. not be required to make payments on behalf of the Client to

contractors;
5. be indemnified by the Client against all claims against him for
loss or damage arising from a breach of his duty in the
performance of his services and from any instruction error or
omission by the Client, or employees or contractors of the
Client.
d) An Individual as the Consultant

The important point here is to ensure that the Agreement is what
is sometimes known as a "personal" contract, that is to say one
for personal services where only the person concerned is intended
to perform them.
See Footnote 1.
The White Book is not drawn up with this in view. However, IGRA
(D&S) 1979 included certain relevant provisions which, in an edited
form, are partly given below for inclusion in the Particular
Conditions. Other provisions, notably relating to insurance and
indemnity, may need to be altered.
c) Technical Assistance
Technical assistance should be distinguished from:
- seconding personnel for executive duties, e.g., as Project
Manager; and
With reference to Clause 1 (v) in the General Conditions, the

Consultant is not a firm but an individual, and with reference to
Clause 26 in the General Conditions, if his own circumstances are
altered such that he himself is disabled from performing the
Services, the Agreement shall terminate without prejudice to the
accrued rights of either party against the other. In that case the
Client shall pay the Consulting Engineer or his successors and
assigns, upon surrender of any available documents necessary
for the continuation of the Services, such outstanding
remuneration as corresponds to the state of the Services at
disablement.
- the supply of Services to the Client as an independent task.

Where the Project is itself a training project, and the Consultant's
task is to train, the Services may or may not include technical
assistance.
It is recommended that Technical Assistance be used in two senses:
The wording suggested above does not expressly provide for the
reimbursement of direct costs from contracts already entered into
in respect of the Agreement. If the White Book is used, it is
necessary to set out in Appendix C the terms of reimbursement
for such contracting, if any, in the event that they become accrued
rights in this context.
1 In as much as he takes directions only from the Client there is little need to specify his
services (as opposed to those of the Consultant) unless the Consultant's remuneration for
them is not on a time charge basis. However, a description of them is desirable so that the
Consultant can appoint a suitably qualified person where not already named in the Agreement.
Such a description should go in Appendix A. See also paragraph 12 in Chapter 4.
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e) Consortia, Associates and Joint Ventures
as the lead firm, to act on their behalf in all matters in connection

with or arising out of the Agreement."
There is some variety in the use of these words. It is suggested

that, at least for the purposes of the Particular Conditions, they
should be distinguished as follows:
In this case all Members must sign the Agreement.
- An association or consortium is an ad hoc arrangement

between two parties (an association) or more (a consortium),
each to contribute his part to the Services and to be liable to
the Client only for his part. The association or consortium would
have some agreement on the definition of their several activities
and administrative arrangements for their coordination.
The Client will usually want an express undertaking for joint and
several liability and, especially at the proposal or prequalification
stage, may wish to see a power of attorney and the joint venture
agreement. Many Consultants are of the opinion that the nontechnical arrangements between the Members should be
confidential but that the Client has a justifiable interest in how the
Services will be allocated. The allocation can best be set out in
Appendix A, subject to a proviso that:
- A joint venture is a formal arrangement between two or more

parties, jointly at risk, to provide the Services, not always
expressly formed for a particular Project.
reallocation is at the discretion of the joint venture should it prove

necessary for the performance of the Services in accordance with
the Agreement.
The former class is unlikely to be acceptable in most projects of

the sort for which the White Book is primarily designed. Joint
Ventures, however, are increasingly common, and clauses would
then be required in the Particular Conditions.
The joint and several liability is most convincingly expressed by a

term in the Particular Conditions (Joint Venture agreements
between Members can be changed by agreement!)
The following text may assist:
The Members of the joint venture undertake together and

individually (jointly and severally) the obligations of the joint venture
under the Agreement,
With reference to Clause I (v) of the General Conditions the

Consultant is not a firm but a joint venture of the following Member
firms:
again with all Members signing the Agreement".
A an independent firm of Consulting Engineers

B (etc., as appropriate)
C (etc., as appropriate)
One word of caution: Clients sometimes require that all payments to

the joint venture are made through the lead firm (for subsequent
distribution in accordance with the joint venture agreement). This
can cause dire problems if the lead firm is a firm in a country with
restraints on holding and exporting foreign exchange; see also
paragraph 4 (d) in Chapter 6 and FIDIC's Guide to the Joint Venture
and Sub-Consultancy Agreements, Reference (22) in Chapter 8.
Some administrative arrangements ought to be covered. These will

depend partly on whether the joint venture is itself a registered
legal entity or whether it is merely the sum of its parts. In the
former case nothing else needs to be done to the White Book. In
the latter case the Client will require some line of management to
be set up in the Agreement. This might take the form:
Clause 1
It will be noted that there is no definition of cost or expense in the

General Conditions.
The Members authorize (name of one Member Firm), to be known

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ix: Agreed Compensation
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"Cost" is used in the White Book:
Particular Conditions can define sub-consultant, and Appendix A

should list those sub-consultants who are approved when making
the Agreement and the Services to be performed by them.
a) in Clauses 7, 10, 11 and 12 in the context of free of cost to the

Consultant, where definition is unimportant;
Clause 2
b) in Clauses 15, 18 (1), 19 and 20 in a sense where
reimbursement by one party to another may be involved.
It is important to avoid the likelihood of conflict which arises when

the TOR issued by the Client are incorporated in the Agreement as
well as the agreed Scope of Services, generally an expansion of
the TOR. The whole should be rewritten as one mutually
consistent document (Appendix A).
"Expense" is used in Clauses 19, 20, 28 and 35.

See Annex I to this Guide for possible definitions.
Other Definitions
Even if a prescribed order of precedence of documents is included

in the Particular Conditions, one difficulty which remains is that the
last amendment to one of the documents may well be in conflict
with an item in the same document. Similarly, a late amendment to
one document, which will be the intent of the parties, may well be
in conflict with a specified precedent document.
Definitions of other terms abound in documents and sample

documents prepared by others, e.g.,
a) "The Bank", naming some funding agency. This is not
necessary as, unless they are the Client, they are not a party to,
or administrator of, the Consultancy Agreement. However, if the
Client is under some restraint from an "IFA" in the execution of
his obligations under the Agreement, that restraint should be
noted in the Particular Conditions, and provisions as necessary
made in Appendix C for any financial effect, e.g. of delayed
approvals, or suspension of payments; see Paragraph 4 in
Chapter 6.
If no order of precedence is given and the documents are to

govern by reverse chronological order, it may be difficult to
establish their chronological order unless the method of drawing
up the final agreement is to date each amendment, modification or
clarification made a part of the Agreement.
B
b) Effective Date and Starting Date. The General Conditions
defines these in Clause 21 and, by reference to the Particular
Conditions, in Clause 22, respectively; see Clauses 21 and 22
in Chapter 2.
- Faulty studies and designs detected prior to implementation,

which require re-performance of the Consultant's services.
- Faulty designs only detected during implementation leading to
delays and additional costs including those of possible
dismantling and reconstruction of parts of the Works.
d) Sub-contractor in the sense of a sub-consultant can cause

confusion. The General Conditions avoids the term "subcontractor": see Clause 38 in Chapter 2. If appropriate, the
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The most important risks involved in project development can be
summarized as follows:
c) Personnel, Special Definitions of Personnel (e.g., by categories

for payment or for training) should be kept to the appropriate
Appendix. The General Conditions, Clauses 13 to 15, cover the
general requirements.
38
iii: Document Precedence
- Faulty designs only detected after implementation which result

in uneconomic or unserviceable projects, or in potential or
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actual major failures affecting the integrity of the Works and the
lives and property of third parties.
- Clients may require a range of additional covers including

advance profit covers, see Insurance of Large Civil Engineering
Projects, Reference (11) in Chapter 8.
- Careless actions of the Consultant's or contractor's employees,

which result in injury, death or property damage to the
employees of the Client, the Consultant or the contractor, or to
third parties.
The White Book respects the position that Clients are entitled to
protect themselves against the aforementioned project risks to the
extent possible, but also realizes that there are practical limitations
imposed by law and the insurance market, which must be
accepted.
- Careless construction operations or the actions of third parties

causing damage to the Works during construction.
Accordingly, the White Book's provisions regarding responsibility,

liability and insurance are as follows:
- Improper construction resulting in potential or actual premature

failure of part or all of the Works.
- The Consultant should be fully responsible for performing its

work with due skill, care and diligence, and Clauses 3, 4, and 5
of the White Book reflect this requirement.
Clients, knowledgeable of the aforementioned project risks, will

normally try to protect themselves to the extent possible, typically
as follows:
- Clients will require Consultants to specifically guarantee to reperform any services necessary due to faulty performance at no
additional cost.
- The liability of the Consultant in case of failure to discharge its

responsibilities has to be defined in terms of duration and
amount of compensation and this is reflected in Clauses 16.1,
16.3, 17 and 18.1.
- Clients will require Consultants to carry Professional Liability

Insurance to protect against delays to and defects in the Works
or damage or injury to third parties caused by failure of the
Works due to Consultants' negligence.
- Since the Consultant's liabilities are to be stated in the

Agreement, the Client, in law, will effectively indemnify the
Consultant against claims in excess of the stated liability
amounts as reflected in Clause 18.2.
- Clients will require Consultants and contractors to carry third

party, workers compensation, automobile, etc., insurance to
guard against damages resulting from the actions of
Consultants' or contractors' employees.
- Because most independent Consultants have small realizable

assets, when compared with the order of loss or damage which
can arise from failure to exercise due skill, care and diligence or
from the actions of its employees, the Client's interests can only
be satisfactorily secured by appropriate insurance. Clause 19 of
the White Book dealing with Third Party and Professional
Liability Insurance reflects this situation.
- Clients will require contractors to provide insurance of the

Works or builders risk insurance to protect against damage to
the Works during construction.
- Clients will require contractors to provide, if obtain-able,
performance bonds to guarantee the proper completion of the
Works and to provide some protection against premature
failures due to improper construction.
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a) Liability for Breach of Contract and to the Public at Large

The provisions of Clauses 16 to 19 in the General Conditions
distinguish liability from breach of contractual duty between the
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parties from liability for breach of non-contractual duty (i.e. to the

public at large which in some jurisdictions can also include the
parties).
c) Cost of Insurance for Breach of Professional Duty

The cost of insurance for breach of professional duty, howsoever
defined, is no longer just another item in a firm's overheads. It is
an increasingly large and significant proportion such that
competitive edge can easily be lost by taking greater cover than
competitors, which may not be in the best interests of Clients.
In each case, liability for breach of the duty by the Consultant is a

matter to be covered by insurance, but the clauses do not
expressly refer to what is commonly known as professional
indemnity insurance.
However, because many firms have global insurance, (i.e.,

insurance which is carried as a matter of course and is part of the
Consultant's overhead), and because each assignment involves
different risks the White Book does not provide for a fixed
insurance cover to be provided; rather, it compromises by
permitting the Client at his cost to require the global cover to be
increased, if possible, to that required by him.
This, according to choice and the insurance market, can cover

professional duty both to Client and third party, leaving third party
liability insurance to cover the gaps, or it can give a narrower
professional cover, with a possible need for a correspondingly
greater cover in the third party or public liability insurance.
The contractual duty of the Consultant is the classical one,
discussed in Chapter 2, Clause 5, of reasonable skill, care and
diligence. The other duty, at large, will be governed by the
applicable law.
When selection is by way of price competition it may be important

for the cost of increased cover to be included in the price
comparison. In these circumstances competing Consultants
should encourage the Client to name in the TOR the minimum
insurance cover required.
b) International Funding Agency Requirements
42
Some IFA favour unlimited liability backed up by insurance, but

stipulate that if the Consultant's liability to the Client is to be
limited then the Client's liability should be similarly limited. This
even-handedness is reflected in the White Book, which also
recognizes that unlimited uninsured liability of the Consultant is of
little value to the Client. Moreover, it can mislead Clients into
thinking that the Consultant will "pick up the whole tab" for a
catastrophe, while really allowing them only the doubtful
satisfaction of being able to ruin the only other party with an
incentive to mitigate the damage.
d) Limit of Liability for Breach of Professional Duty
Another requirement of some IFA may be that the Consultant's

own assets must be at risk. FIDIC thinks that they are sufficiently
at risk by the "excess" (deductibles) which Consultants must bear
under most insurance policies currently available together with the
direct costs which would inevitably arise either in re-performing or
otherwise.
On the other hand, having regard to the equal limitation of the

Clients' liability, it would be a mistake to think that under the terms
of the White Book a Consultant should keep the limit as low as
possible. There are many occasions when the Client's duty, if
wrongly performed, could involve serious consequences for the
Consultant. Examples would include the supply of information on
FIDIC 2001
It is recommended that the limit for breach of duty to the Client

should not be restricted to re-performing satisfactorily the Services
negligently performed. This is unlikely to be acceptable in
internationally aided work. The minimum limit likely to be
acceptable is the remuneration for the whole of the Services,
including fees and expenses. It should, clearly, not be more than
the professional indemnity insurance cover available on the
market.
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FIDIC 2001
which the Consultant is expected to rely, such as out-of-date aerial

photographs, erroneous hydrometric data, or the findings of the
soils laboratory specified by the Client.
joint names of the Consultant and the Client (especially where,

as owner/ occupier of the site of the Project, the Client may be
strictly liable to third parties, whether or not the Consultant
could be sued directly by the third parties); and
e) Third Party Liability Insurance
- if the Project and the Services are so hazardous as to be

uninsurable, it is totally unreasonable for the Consultant to bear
the risk. If the Consultant is uninsurable, he obviously cannot be
relied on to bear the risk, and the Client should not employ him.
While the Consultant's liability to the Client is limited in contract to

breach of duty of skill, care and diligence, and is covered by
professional indemnity insurance, that similar duty in law to the
public at large (which may include the Client) can be covered by
the same policy. However, it may in some cases be more
economical or appropriate to include this duty of professional care
to third parties in the third party or public liability insurance, which
may also include strict liability, e.g. for personal injury or breach of
patent, whether or not there was a breach of the duty of
professional care.
f) Objectives of the White Book's Liability and Insurance

Provisions
One objective of the document is met, namely to prompt the
parties to decide consciously, at the time of making the
Agreement, what risks there are and how to cover them. This is
surely preferable to waiting on the event and then finding that
some standard prescription is inappropriate.
The White Book provides for this possibility by limiting liability to

the Client to breach of professional duty and providing for other
liability to be limited to the insured amount, the limit and terms
being set by the Client and insured to the extent available on the
market. This is reasonable; it is the Client's Project, and he is likely
to be more familiar with the risks which ought to be considered in
the light of local statutory and civil requirements.
For example, one only has to consider the difference in risks (and
cost of insurance cover) between a pre-feasibility study for the siting
of a rural water treatment plant and the design of a large chemical
process plant with toxic by products in a metropolitan area.
One other important objective is to provide some certainty so that
underwriters can know for insurance purposes when their risk
ends so that the cost of premiums included in the price or payable
by the Client can be controlled. See Clause 17 in Chapter 2.
It is thus open to the Consultant in consultation with the Client to

include for breach of duty of professional care to third parties in
the professional indemnity insurance or in the public liability
insurance: see Clause 19 below and in Chapter 2.
Clause 16
No express statement is made in the White Book as to liabilities
other than in contract, since this is a matter for the applicable law.
However, subject to the applicable law, the White Book does limit
liabilities to third parties by way of an indemnity for claims made
out of time or outside the insurance cover arranged at the request
of the Client, because:
a) Division of Responsibilities between Consultants

Clarity is needed in the Scope of Services as to where
responsibility starts and ends, when, in the implementation phase,
either the Consultant's design work is inherited by another
Consultant or he inherits another's designs. In the absence of
appropriate provisions, e.g., either a continuing design duty or a
duty to cheek or adopt designs as the case may be, a clause is
- after the Project is completed, the Client could be unprotected

unless there was adequate insurance cover, preferably in the
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Liability Between the Parties
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needed to avoid the problems of divided responsibility.
Implementing Consultant inherits designs:
FIDIC's policy is that the same Consultant should be engaged for

both the design and the implementation phases, and this accords
with the Guidelines: Selection and Employment of Consultants by
World Bank Borrowers (1997), Reference (12) in Chapter 8.
Where the Services do not include the preparation of the designs

delivered into the control of the Consultant for the implementation
of the Works or part of the Works the Consultant shall only be
liable under Clause 16.1 (of the White Book) for those designs if
the Services expressly require him to accept that liability.
There will be assignments where a complete design is required in

the certain knowledge that another party will administer its
implementation. However, it is often impractical to prepare, or
uneconomic to require, complete designs at the pre-contract
stage. In such circumstances the following draft clauses are
offered for consideration:
or as the case may require:

Where the Consultant has not prepared the designs for the
Works or part of the Works he shall only be liable for a breach of
his duly under Clause 5 (i) (of the White Book) if the Services
expressly require him to accept responsibility for them.
Designer does not control implementation

Clearly, in the situation where the designer will not control
implementation it is important to specify in the Agreement the
purpose of the designs, and the extent to which they will be
prepared. See paragraph 10 (d) in Chapter 4.
When the Services do not include the control of the designs for
the implementation of the Works throughout the implementation
period, the Consultant shall only be liable under Clause 16.1 (of
the White Book) in respect of his designs of the relevant Works if
they do not satisfy the purpose for which they are to be prepared
and are not completed as may be reasonably practicable for that
purpose.
b) Consequential Damages
Liability between the parties, Clause 16.3 (iii) of the White Book,
extends to consequential damages, as required by some sample
bid documents, but is limited both by reasonable foreseeability
and by time.
or as the case may require:

Where the Consultant has prepared the designs for the Works or
a part of the Works he shall only be liable for breach of his duty
under Clause 5 (i) (of the White Book) if he has a duty under the
Agreement or another agreement with the Client to examine and
make recommendations in respect of
In some jurisdictions, consequential damages, sometimes referred

to as indirect damages, are not recoverable at law, and insertion of
a correction in Section B of the Particular Conditions should be
considered in such cases.
- the designs
Clause 18
Limit of Compensation and Indemnity
- all amendments and additions to them

Clause 18.2 of the White Book
- all changes in their purpose
- recognizes that in some jurisdictions the Consultant may not
legally be indemnified against claims arising in connection with
its services;
throughout the period which results in the completion of the

relevant Works.
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- requires the Client, where such indemnification is legal, to

indemnify the Consultant against the effect of claims by the
Client or third parties which are not covered by insurance and
which are not made within a specified period; and
terms of the required insurances.

If the insurance to be continued after completion of the Services
involves a policy or an increase in cover for which the Client pays
under Clause 19, it would be desirable to ensure that the Client pays
the premium in advance, so that if payment is not forthcoming, the
relevant insurance lapses and the Consultant's liability in respect of
the cover concerned ceases in accordance with Clause 18.2 (i).
- states that the indemnification is not valid in case of claims

arising from deliberate default or reckless misconduct.
Clause 18.2 has been developed after much drafting, comments,
consideration and redrafting to reflect exactly what, in practice, is
the current situation in the insurance market and thus to enable
Clients to protect themselves by understanding and managing
their risks realistically.
Clause 19
b) Project Insurance
If the Client takes out "whole Project insurance" himself, because the
insurer could make a subrogated claim for reimbursement, it will be
necessary to reconsider White Book Clauses 16 to 19, but the
Consultant may still need to insure to the extent that the whole Project
insurance does not indemnify him. FIDIC has a number of publications
on liability and insurance, but in particular see 2nd Edition of Insurance
of Large Civil Engineering Projects, Reference (11) in Chapter 8.
Insurance for Liability and Indemnity
a) Continuity of Insurance
One point of difficulty is how to satisfy the Client that the
insurances will remain in force until the time limit for liability, and it
is a difficulty common to all policies which are not "paid up", as is
frequently the case.
It remains to be seen whether the insurance market will move in

the direction of issuing "paid up" policies or whether whole Project
insurance by the Client/promoter will become more popular. For
the moment there does not seem much that can be done. A
clause expressing intention may be included in the Particular
Conditions on the lines:
Clause 22
Delays in adjudication and award, over which the Consultant has

little or no control, often result in risk of missing the planned
"window" in annual cycles (finance, seasonal rains, crop calendar,
etc.) for an optimum start, with the Consultant under pressure to
begin work before formalities are concluded. It is not the province
of this Guide to comment on the risks involved.
but the first sentence presupposes an otherwise allowable

cessation of the requirement to insure (which is not the case in the
White Book), and is probably not helpful, except as a reminder
that the White Book provisions do not of themselves expressly
cover the point. This needs to be considered when sorting out the
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Commencement and Completion
The Consultant shall make all reasonable endeavors to maintain in

force the insurances required under the Agreement throughout his
period of liability. Whenever requested by the Client, the
Consultant shall submit evidence of the relevant insurance.
48
Commencement, Completion, Alteration and

Termination of the Agreement

There are, of course, difficulties in fixing a time for completion of the
Services when they include administering implementation contracts.
If fixed time limits have to be stated for the implementation phase,
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FIDIC 2001
c) The Client indemnifies and shall be deemed to indemnify the

Consultant against all claims for loss or damage arising out of
the use of such documents for any purpose other than that
intended by the Consultant.
Clause 25 provides for delay.

It is important to remember that Services in the implementation
phase often continue until after both agreement of the final
account and decisions on disputed matters. In doing so they can
continue beyond the time limit for disbursement from the relevant
loan or credit account.
The corollary to this is that each document should clearly specify

on its face the purpose for which it is intended, e.g., for
illustrations, for obtaining tenders only, for construction of the
(specified) Works only, for cost estimates only. Such specification
is advisable anyhow in this increasingly litigious climate.
While the Client is still liable, he may be unable to pay. The

application of Clauses 27 (2) and 32 (ii) can prevent damage going
too far, especially if there is an advance payment equivalent to two
or three months estimated costs.
One possibility is to include an item in Appendix C stating the

charge for transfer of copyright. This could be considerable for a
design suitable for repetitive use.
When fixing times for completion it is important to stipulate when

time starts to run.
E
D
Clause 39
Following are suggested clauses which may be useful to include in

Section B of the Particular Conditions of the Consultancy
Agreement.
Copyright
Clause 39 refers only to copyright, not to ownership. Unless

otherwise specified, ownership is to be determined by the terms
on which documents pass, e.g., on loan or as a term of the
Agreement specified in Appendix A.
Clause 45
The Consultant shall not be required, on behalf of the Client:
Clause 39 in the General Conditions (of the White Book) is deleted.

The Client shall have the copyright in all documents prepared by the
Consultant in performing the Services provided that:
- to accept any tender in respect of the Works; and

- to make any payment to any Contractor or employee of the client.
a) The Consultant can retain copies of all such documents.
Clause 46
b) The Consultant can use the contents of all such documents for
his professional purposes.
FIDIC 2001
Payments to Contractors, etc.
If the Agreement does not expressly require the Consultant to

make payments on behalf of the Client to his contractors or
employees it should expressly forbid it either, in terms similar to
those given above under Clause 1 (v), paragraph (b) 4 of this
Chapter, or possibly expanded as follows:
Against the run of traditional custom and law for intellectual

property, it is becoming increasingly common for Clients and their
IFA advisers to require that copyright in the products of the
Services passes to the Client. In this case, a clause on the
following lines can be considered:
50
General Provisions
Participation of IFA
In contracts and agreements which are to be financed by an IFA, it

is often a requirement that a clause be included to that effect. Its
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FIDIC 2001
wording should be prefaced by "The Client warrants that ..."

because the Consultant at the proposal/agreement stage is not
always in a position to know, and does not wish to prejudice his
right to payment, if, for example, the IFA suspends the Loan or
Credit Agreement.
guarantee. In this connection, the United Nations Guide,

Reference (1) in Chapter VIII, at Paragraph 108 indicates that
agreements may "exceptionally provide that the consultant be
required to execute a performance bond", while Paragraph 113
provides that the parties may agree that the Client should provide
a bank guarantee. It is suggested that this is not an unreasonable
quid pro quo.
The full clause could read as follows:
For guarantees and bonds see the ICC publication 325, Reference
(7) in Chapter 8. References to guarantees for advance payments
should be in Appendix C.
The Client warrants that ... (name of Borrower, which may not be
the same as the Client) ... has received a loan from (name of IFA)
in various currencies equivalent to
(
) towards the cost of
the Project, and intends to apply a proportion of the proceeds of
this loan to eligible payments under the Agreement. Payments by
the .... (name of IFA) .... will be made only at the request of ....
(name of Borrower)... and upon approval by .... (name of IFA) ....
and will be subject in all respects to the terms and conditions of
the Loan Agreement. No party other than .... (name of Borrower)
.... shall derive any rights from the Loan Agreement or have any
claim to loan proceeds".
Clause 48
The White Book makes no specific mention of either patents or

inventions as they are seldom applicable to consultancy
agreements. The remedy for breach of patent by the Consultant
under the White Book is in Clauses 16, 17 and 18 for want of
reasonable skill, care and diligence.
Benefits from patents by way of royalties, etc, may not be
available to the Consultant by Clause 40. If in the course of the
Project it is expected that the Consultant will devise patentable
inventions, which he will wish to exploit in future Work, a clause
must be inserted in the Particular Conditions:
If the Client's management of the Agreement is restricted by

agreements with third parties (e.g. IFA) or rules of a superior
department of government, the restraints should be detailed in the
Clause 47
Performance Guarantee and Payment Security

The Consultant can patent any inventions made by him in the
performance of the Services and sell or keep or derive benefit from
it. and the Client shall have no rights in it
The Consultant may be required to provide, or consider it

appropriate to offer, a consideration in ex change for guaranteed
payment; see paragraph 4 (a) in Chapter VI. This may involve
reimbursing the Client for the cost of the guarantee.
or otherwise as the case may be.
See Footnote 2.
Clause 49
Alternatively (or additionally), it may involve a performance bond or
the extra costs of an unqualified commitment procedure, which are usually of the order of 1/2
% of the amount which was committed and which is still outstanding at that time.
FIDIC 2001
Performance Evaluation
Particularly where costs of the Services are met from an IFA loan,
there may be instituted some form of detailed evaluation of the
Consultant's performance. Consultants would normally wish to be
party to such evaluation, and a clause may well be considered
necessary to enable the Consultant to rebut or act on criticisms.
Such a clause might possibly be of the following form:
2 e. g., the Client's costs in establishing a confirmed Letter of Credit or, in case of IFA loans,
52
Patents and Inventions
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FIDIC 2001
If the Client undertakes alone or in consultation with .... (name of

IFA) .... any evaluation of the Consultant's performance the
Consultant shall be informed of each such evaluation and be
permitted to comment on it before it is finalized. Such evaluation
shall be confidential to the Client and (name of IFA).
APPENDIX A
4 Scope of Services
Presented below are some general points which may be useful in
completing Appendix A, but they are not intended to be
comprehensive or exhaustive.
The last words in parenthesis cannot have contractual effect on

the IFA, but there is no harm in putting them there. A further
sentence might be added to the Clause:
1
Such evaluation shall be in accordance with the provisions of

"Guidelines for the Evaluation of Consultants' Performance" as
published by FIDIC:
Having regard to Clause 4 in Part I, it is essential that Appendix A

expressly describes Normal Services, and very desirable that the
more common and any foreseeable Additional Services are
separately described.
see Reference (10) in Chapter 8.

Clause 50
General
Severability
It is important to bear in mind that Appendix A embodies the Scope

of Services to be performed. It provides an opportunity to limit or
define that scope when circumstances make it desirable, e.g. when
performance is heavily dependent on a fixed timetable for availability
of key staff, or when, for one reason or another, the Consultant is
prepared to take on an assignment at less than his usual rates.
It may be considered desirable to add a Clause on the following

lines:
If any part of any provision in the Agreement is found by a
competent authority to be void or unenforceable, such part shall
be deemed to be deleted from the Agreement and the remainder
of such provision and the remaining provisions of the Agreement
shall continue in full force.
Terms of Reference (TOR)

A useful paper is that given by Michael Lewis on "Preparing the
Consultant's Terms of Reference" to the FIDIC Nairobi Conference
and ADB Seminar in April 1985, Reference (8) in Chapter 8.
The TOR, so far as they relate to technical services and
associated administrative procedures (approvals, powers,
programme, reporting etc.), will form the basis of Appendix A.
They will need to be analyzed carefully and classified according to
the nature of the expense of time and money which will be
incurred so that in Appendix C the cost of every activity will be
provided for either expressly or inclusively.
Classification of Requirements
The classification of the Services will normally fall into a pattern
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dictated by phase of the Project, responsibility, technology,

location and administration.
b) Training
Training may be considered either as a separate class of
responsibility or as a sub-division of one of the above two classes
according to circumstances. Unless the Project is itself a training
project, it is perhaps best to consider it as a separate class of
responsibility. This is because the importance of the function tends
to be hidden in generalities without a clear recognition of the
adverse effects it can have if it is not dealt with separately but is
incorporated with other task responsibilities. See Annex C in the
paper "Training in Consultancy Contracts" by G.L.E. Spier,
Annexes 1 and 2 comprise checklists or schedules of the services

that might be provided for typical development projects and
environmental projects, respectively.
4
Phases
Phases are conventionally divided into: pre-investment, detailed
planning, design, procurement, implementation, and operation, to
which may be added funding at one or other stage. Although this
is a natural classification by chronological function, it also happens
that the pricing risks in each class can be different leading to
separate consideration of the terms of payment.
Technology and Location

a) Location
It should be noted that many projects proceed to implementation

and operation without following all the above noted phases, and
often several phases are combined under a single contract, such
as design, procurement, implementation and operation. The White
Book is intended to be applicable to Consultancy Assignments
regardless of how a Project is planned to be phased
5
Location is often an issue, particularly when the work may be

done more efficiently in the Consultant's headquarters but the
Client is expecting his staff or local firms to benefit from a transfer
of technology. This bears on Paragraph 5 (b) above.
In this case the objective may be better met sometimes by
sending Client's nominees to the Consultant's headquarters.
When it would be cheaper to do the work at headquarters, the
additional arrangements for, and cost of, working overseas if
requested should be clearly identified.
Responsibility
a) Task and advice
The two conventional classes of responsibility are task and
advisory. The difference is that:
b) Headquarter's Back-up
- In a task responsibility, the Consultant is responsible for
managing the performance of the Services necessary for
completing the pre-set task.
The members of a team of personnel assigned in the field are

unlikely to be so fully competent in all aspects of a project that
their performance cannot be improved by back-up from the
Consultant's headquarters; see paragraph 5 in Chapter 6. Since
there is sometimes resistance to paying direct compensation for
headquarters back-up staff, the Appendices should clearly specify
what headquarters staff will be involved and how their cost will be
compensated.
- In an advisory responsibility, the Consultant or his staff take

instructions from the Client in connection with some task which
he has set himself. Whether or not he takes any resulting advice
is the Client's prerogative and responsibility.
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Administration
c) Powers
a) Programme
There are two principal areas where these need attention in

Appendix A:
While Part I at Clause 25 provides for delays which are the Client's
responsibilities it is much better to avoid recourse to it as far as
possible by making appropriate and realistic provisions in the
programme, such as:
- project management: See Clause 1 (v) in Chapters 2 and 3 for

secondment of a person to be Project Manager as distinct from
the Consultant's Services Manager,
- identifying the points where the Client has the right to intervention;
- administration of contracts for works and supplies.
- allowing sufficient time for that intervention, which may involve

consultation with an IFA; and
In both cases it is important to specify the nature of the interface

between the Services of that part of his organization which is
engaged on Project Management or contract administration and
the Consultant's remaining Services. Transferring duties between
one or other, as exigencies (or financial advantage) of the
circumstances suggest, can lead to considerable irritation and loss
of goodwill.
- providing for inception reports, criteria, proposals etc., so that,

when they are approved, the Consultant can proceed with
confidence to the next planned point for Client intervention.
Apart from the obvious advantages in working relationships, this
process helps to identify where liability lies for any changes which
may subsequently be requested or found necessary.
The scope of services of the Project Manager can, of course,

cover any or all of the Services connected with one or more, but
usually all the phases referred to in Clause 1 (v) in Chapters 2 and
3.
- Where a programme is likely to be seriously affected by some

seasonal event, e.g. rains, religious holiday, parliamentary
session, there is much to be gained by stipulating the
consequences of any delays.
Where the Consultant is Project Manager, a similar approach to

that given in model clause provisions presented under Clause 1 (v)
in Chapter 3 can go a fair way to avoiding problems.
- See also Clause 22 in Chapter 2.

8
58
Pre-Investment Studies
b) Reporting
This phase will include:
It is often overlooked how important it is to specify, and make

adequate provisions for, reports other than the task reports, e.g.,
routine progress reports, financial monitoring and budget forecasts
etc., so that any additional reports required become Additional
Services. These can require an effort disproportionate to the
objective of the Services, sometimes taking so much time to
prepare that their usefulness when published is overtaken by
events.
- identification of resources and the potential use of them;
FIDIC 2001
- the technical and economic feasibility of the potential development

- the sizing and ranking of sub-projects;
- the identification of resource shortages and how they may, in
general, best be overcome;
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- an appreciation of the impact of the project on the local and

sustainable global ecologies; and
Feasibility Studies
This phase is generally required, and carried to a level necessary
to attract approval in principle, for the implementation of the
Project, to settle provisional budgets and to provide the basis for
appraisal by interested IFA.
- the impact of the local environment on the needs of the project

for its sustainable welfare.
This phase will also identify further work needed for refinement of
the first sub-project and any technical matter needing further
research and development. It will probably establish baseline data
for future monitoring.
Technical and economic feasibility will be quantitatively established

and a provisional financial plan prepared. Previous work will be
refined, with further investigations as may be necessary, to a level
where costs can be estimated with the required degree of
accuracy. Unique computer programming, physical and analogue
models will be among the several features separately identified for
costing and to determine whether they should be done in-house,
by sub-consultants or by contract with the Client.
The phase may be sub-divided into reconnaissance and feasibility

studies, the reconnaissance study being only or mainly qualitative
and resulting in recommendations for further studies or draft
terms of reference for a feasibility study within set physical
boundaries.
Any options in the selection, size or location of the Project left from
the pre-investment phase will be examined and presented so that
according to financial cost the Client can decide which to promote.
According to the complexity of the Project and the quality of the
pre-investment work, the terms of payment could be for a lump
sum or on time based charges, or involve a mixture of both.
It would normally be inappropriate for this to be on a lump sum

basis. The whole success of subsequent phases depends on the
quality of experience and insight of the selected investigators who
will need to be allowed considerable latitude for optimum
advantage to be obtained from their employment.
It is difficult to provide many specific guidelines for the Agreement
in respect of this phase, but perhaps the following is worth
noting:
10 Planning and Design Phases
Depending on the complexities of the Project, this phase may be

subdivided into sequential or parallel components of planning and
design. The latter component may overlap with the procurement
phase depending on whether funding is certain and whether both
activities are in the Scope of Services of the Consultant.
Procurement is covered in 3.11 below.
- Many independent parties may be contributing from

Government Ministries to independent experts. The Agreement
(Appendix A and B as appropriate) will need to identify them,
who is to coordinate their activities, the Consultant's position in
the scheme and the liaison routes he should follow.
a) Planning
- The Consultant should be careful to separate those
investigation, research or development activities, being part of
his Services, which are to be done in-house (including subletting), which are to be contracted for the Client to pay for, and
those which are to be supplied by the Client on demand, or
under the supervision or responsibility of the Consultant, e.g.,
government or departmental soils testing laboratory.
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The planning component will be chiefly concerned with

organization, programming, adjusting feasibility proposals for
contract packaging to suit the financing plan and eligibility
requirements of IFA, arranging budget allocations for third parties
to perform covenants and statutory duties, arranging any
necessary legislation and satisfying statutory planning and similar
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requirements. Services cannot sensibly be charged on any other

than a time basis.
dossiers is likely to suffer if tender invitation or contract award is

delayed or cancelled!
b) Design
d) Payment and Level of Design
The design component is self-explanatory but some general points

are worth considering special provisions for:
Unless the work is of an unusual nature there is much to be said

for the design phase being paid for on a lump sum basis with
stage payments where the stages can be identified. In this case it
is doubly important to specify the level to which designs will be
taken. For instance:
- the preparation of a note on design criteria before detailed

design commences, identifying any options with different levels
of risk, for approval of the Client (and through him the IFA); and
a careful description.
either
- of the level to which designs will be taken, which is important

not only for conduct of the Agreement and control of liability but
also for parity of tendering because practices differ from country
to country and by type of work.
The designs prepared for the invitations to tender will not be

complete for production purposes, but will be sufficient only to
produce estimates of the quantities of work sufficient for tenderers
to price and for the comparison of tenders.
It will generally terminate with the submission of specifications,

drawings, technical schedules and Bills of Quantities for
incorporation in tender dossiers.
or
c) Terminology
or
It is suggested that the following terminology should be widely

adopted:
Dimensioned general arrangement drawings will be prepared for all

the major components of the Works .... (e.g., as identified in Section
B of the Particular Conditions at Clause 1 (b) of the White Book).
- tender dossiers
Type designs will be prepared for repeated components in the

Works but these will not be related to any specific location.
documents to be issued to prospec

tive tenderers
- tender documents
documents to be returned by tenderers
- contract documents
those making the contract, e.g., as

defined in Clause 1.1 (b) (i) in the Red
Book, Reference (13) in Chapter 8.
The Scope of Services during the implementation phase (and design

liability) should be established if there is any chance that someone
other than the Consultant is to be in charge of administration of
contracts; see Clause 16 in Chapter 2 and Paragraph 12 below.
e) Development of Design Responsibility
The Consultant, whose Agreement stipulates a payment stage at

the completion of contract documents when he meant tender
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Whatever the level of design or method of payment, the

Agreement is the place to stipulate where design responsibility will
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devolve on a future contractor, e.g., for proprietary machinery or

processes, either as turnkey contracts or as turnkey components
of mainly pre-designed contracts. In this case it is also important
to specify the extent of the Consultant's duty for devolved designs
and subsequent liability, if any, in the event that they prove
unsatisfactory.
- the authority of the Consultant in dealing with tenderers' queries

and clarifications of tenders received; and
- the requirement to follow any special procedures, e.g., and
IFA's guidelines for procurement.
As a point of policy, Consultants will no doubt propose the most
beneficial systems of procurement for the Project's circumstances
and only adopt procedural options (e.g., pre-qualification) if there is
a positive argument for them. The automatic application of
procedures designed or recommended by IFA to cover all
circumstances will not necessarily produce the best response,
timely awards and economy of administrative costs.
f) Site Investigation
Site investigations, especially sub-soil, necessary to establish
technical feasibility or design criteria are not always sufficient for
those tendering for construction. The Agreement should establish
the extent of such investigations in the design phase, perhaps by
reference to whether or not the tender dossiers will call for further
investigation to reduce the Employer's risk of having a contractor
encounter unforeseen conditions during construction
This phase will often be suitable for lump sum payment(s)

provided that provision is made for Additional Services after the
first report on tenders received at the first tender call for each
procurement.
11 Procurement
12 Implementation
In this paragraph procurement is taken to mean the process of

inviting tenders, including the establishment of eligibility by pre or
post-qualification as the case may be, for works, supply and
installation of plant, and supply of goods (materials and
equipment). It includes the preparation or completion of tender
dossiers, the conduct of proceedings during the period allowed for
tendering, the comparison of tenders received, and submission of
reports on comparison of tenders with recommendations for
clarification, negotiation or award.
a) General
Issues to be clarified apart from staffing include the following:
- the relationship between the Consultant as Client's adviser and
the Consultant with administrative, testing and inspection duties
prescribed in procurement contracts;
- design responsibility (see Clause 16 in Chapter 2 and
Paragraph 10 (d) above);
Points which may need addressing in the Scope of Services

include:
64
- the preparation of a note on procurement procedure with all

points of principle covered so that after its approval the
preparation of documents, advertisements, procedures etc.,
can be put in hand with confidence;
- division of duties for inspection and testing, especially of plant

and goods before shipments, between the Consultant and
some (specified) independent inspection service(s) and how the
several costs are to be met. Budgets and financing plans
sometimes neglect what can be a significant cost;
- the timing and method of provision of estimates of tender

prices;
- procedures and authorities with regard to variations or extra

works;
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- treatment of duties at the closing stages (see Clause 22 in

Chapter 3) when the main administrative offices are disbanded
and relevant staff demobilized;
There are two sources of difficulty (at least) in the relationship

between Client, Consultant/Engineer, and site staff , which can be
largely overcome in Appendix A.
- the preparation of records, as-constructed drawings, operation

instructions and the disposal of contractual correspondence, etc.;
- Where under the implementation contract the Engineer has a

duty (e.g., to provide further drawings), the Consultant will have
to assume such duty under the Consultancy Agreement. The
implementation contract will often permit, as in FIDIC, the
Engineer to delegate duties to staff, and it is frequently more
efficient to do so. For example, the Engineer will delegate to the
Resident Engineer the duty of issuing further drawings.
- reporting procedures (frequency and content), and whether

progress monitoring is to cover only physical progress and
contract financial progress or also to include monitoring Project
finances and Loan draw-down. Note that some reporting
requirements are excessive, and when they are not made
known until after the Project is under way tend to be underestimated by Client and Consultant when negotiating the
Agreement (see paragraph 7 above); and
- However, if there are time charge rates for the site staff
providing services during construction and a lump sum fee for
the Consultant's design work, the Client can feel cheated if he
sees site staff doing detailed designs, which he thought was
covered by the lump sum fee.
- duties etc. in connection with work done by Client's own

organizations ("force account" or "direct labour").
- The corollary is to make further points in Appendix A, perhaps

on the following lines, as may be appropriate, in addition to
those suggested in Paragraph 10 (d) above:
b) Duties in Respect of Contracts
Either
Serious misunderstanding can arise from the use of the word

"supervision" in connection with the Consultant's duties in the
administration of contracts, and, therefore, such usage should be
avoided. It is notable that, both the Red and Yellow Books,
References (13) and (14), as well as the current Construction
Contract and Orange Books, References (17) and (19) avoid the
use of "watch over and supervise the Works", to be seen in earlier
editions, and refer to the "duties specified (or assigned to him) in
the Contract". If one needs to describe such duties in a short form,
one might use "administer the Contract and inspect the Works".
Supplementary designs necessary for implemen-tation will be

prepared as and when necessary by the Consultant or at his
discretion by staff on contract duties,
and/or
The Consultant shall perform the duties of the Engineer
specified in the respective contracts. Unless otherwise agreed
these shall be the duties of the Engineer as set out in the 1st
Editions of the Conditions of Contract for Construction/Plant
and Design-Build or in the 4th/3rd Editions of the Conditions of
Contract for Works of Civil Engineering Construction/Electrical
and Mechanical Works* published by the Fdration
Internationale des Ingenieurs-Conseils (FIDIC).
c) The Consultant as Contract Administrator

It is necessary to distinguish clearly between the Consultant as adviser
to the Client and the Consultant as the appointed administrator,
sometimes known as "the Engineer" (FIDIC), the "supervisor" (EU),
etc., of contracts. In this Guide the title "Engineer" is used.
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* delete as appropriate
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and/or
14 Sub-Consultants
The Consultant, in performing his duties as Engineer, can at his

discretion delegate duties to his representative(s) under the
contract(s) where such delegation is permitted by the
contract(s).
Appendix A should specify clearly what Services are to be

performed by sub-consultants as sub-contractors of the
Consultant, naming the firms or individuals concerned where
possible.
If the Client intends to restrain the powers of the Engineer

beyond the restrictions stated in the Construction and Plant and
Design-Build contracts, such restrictions must be stated in the
Particular Conditions of the construction contract. The
Consultant will then automatically be so restricted in
accordance with Clause 5 (ii) (a) of the White Book, but it would
still be a good idea to specify such restraints in either the
Particular Conditions or Appendix A of the Consultancy
Agreement.
It might be as well to consider including a proviso to the effect

that:
If a sub-consultant's services are withdrawn by the subconsultant or terminated by the Consultant it shall be the
responsibility of the Consultant to engage a replacement or
otherwise arrange for the performance of the Services affected, to
the satisfaction of the Client.
15 Project Cost Estimating
- The second source of difficulty is where the Consultant, acting

as Engineer in the administration of contracts, finds himself in
the position of having to do or not to do something which he
thinks is not in the best interest of the Project or Client. This is a
matter for internal discipline and clarity. While the Engineer is
governed by the Contract, there is nothing to prevent him as
Consultant advising the Client to consider another course of
action and negotiating it, or authorizing the Consultant to
negotiate it, with the contractor. No provision in Appendix A or
the Particular Conditions is needed for this.
There are several methods of cost estimating and of setting criteria

for physical and price contingencies. They range from use of
global historical experience, through partial design of the
significant elements with appropriate contingencies, to complete
design and detailed costing. Each of these involves a considerable
difference in effort and time, and the Agreement should identify the
method to be adopted.
It is important not only for the Agreement itself but for parity of
tenders at the proposal stage for the TOR to address this element
in some depth, distinguishing the different methods to be adopted
at each phase.
13 Operation
Agreement provisions for the Consultant as operator will be

governed by factors similar to those applying to the Consultant as
Project Manager. Points additional to those mentioned under
Clause 1 (v) in Chapter 3 may involve employment and dismissal
of labour, purchase of and accounting for consumables, meeting
production targets, and any related bonus and penalty,
adjustments for shortfall in raw materials and fluctuations in
demand, etc.; see, for example, the FIDIC paper on the Role of
Consultants in Operation, Maintenance and Training, Reference
(21) in Chapter 8.
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ANNEX 1
Services of the Consulting Engineer in

Relation to a Civil/Structural Engineering
Project
4 Feasibility Analysis
a Conduct surveys and investigations as required for the
subsequent Group 4 tasks
b Develop the chosen alternatives in accordance with the stated
standards and criteria to prove technical feasibility and permit
costing to the required level of accuracy
c Conduct environmental impact analyses
d Perform financial analysis of the project's expected costs and
revenues
e Perform economic analysis of its project's expected costs and
benefits
f Recommend a single alternative.
Typical Normal Services
1 Inception Stage of Project

a Review existing data and determine its adequacy and
appropriateness
b Hold discussions with Client and obtain consensus on course
to be taken
c Define the work to be done/data required to be collected to
progress the work.
d Submit Inception Report
e Obtain approval of client
f If necessary, and if allowed by agreement, prepare documentation
for adjustment of budget for services for Client's Agreement.
5 Detailed Engineering Design

a Conduct further surveys and investigations as necessary
b Develop design of the selected alternative in accordance with
the stated standards and criteria to the required level of detail
and according to the agreed implementation approach and
packaging (i.e., the designs may be developed to the level
required for construction to proceed, or be developed for
tendering on the assumption that further drawings will be issued
during construction; also, it may be decided to proceed on a
design-build basis or the works may split into packages for
"fast-track" implementation or for other purposes)
c Perform price analysis/cost estimates as construction proceeds.
d Perform constructibility review
e Perform value engineering review
f Prepare Comprehensive Mitigation Plan according to EIA results.
g Obtain approval of Client.
2 Project Definition Stage

a Define, the expected functions of the project (i.e., pertinance
spec, required output, etc.)
b Establish the standards and criteria to be used to fulfill required
functions.
c Define the approach to implementation of the project (i.e., the
project delivery system)
d Obtain approval of Client.
3 Alternative Proposals
6 Tender Documentation
a Devise alternative solutions that can technically meet the

required functions
b Develop alternatives to a level that will permit preliminary global
costing of each estimate.
c Obtain consensus of the Client on the alternatives to be
examined in more detail.
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a Consult with Client concerning Conditions of Contract and

issues such as whether the Works will be let on a lump sum or
unit price basis
b Finalize tender documentation
c Prepare detailed cost estimate
d Obtain Client Approval.
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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.
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74
Typical Additional Services
ANNEX 2
Cork consequent upon a decision by the Client to seek statutory

powers.
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.
Contamination investigations on site.
Work in considering alternative designs for the Works submitted

by Contractors.
Prepare drawings for shop fabrication of structural steelwork,

ductwork or metal, timber or plastics frameworks or other
specialist supplied components.
Prepare detailed drawings and bar bending schedules for

reinforced concrete work.
Check and/or advise upon any part of the Works not designed by
the Consulting Engineer.
Negotiate any contract or sub-contract selected other than by

competitive tendering.
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
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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
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
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Environmental Sciences
Landfill Engineering
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Habitat Evaluation Procedure (HEP) studies

Habitat mapping
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
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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
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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
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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
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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
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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:
- the invitation explains the evaluation that will be performed and

the weighting that will be assigned to merit versus cost.
- terms of payment, the basic system or systems;

- 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
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- Net cost of the Services plus a fee, the fee being either:
providing for payment for Work done since the last stage
payment in the event of termination before the next; for example:
- a fixed sum;
Further to (Clause 29 of the White Book) in the event of
termination or suspension or abandonment of the Agreement
the Consultant shall be entitled to payment for Services
performed in respect of which payment would otherwise have
been due at a later time. Unless otherwise agreed such payment
shall be assessed as if the Services Performed were Additional
Services.
- a fixed percentage of the net cost of the Services; or

- a scale percentage of the net cost, or related to some tar
get cost, of the Services.
- A percentage of the cost of the Works or of some estimate
of it from time to time, either all inclusive, or plus certain
expenses (see Annex 4).
Whichever system is adopted, it is essential to include provisions

for time based charges for use when Additional or Exceptional
Services are subsequently performed.
The method of payment and the security for payment are inter-related.
Advances and Stage Payments
The confirmed letter of credit is the most secure method of payment,

where the scope for insecurity (apart from failure of the Consultant's
bank) is in the terms for release of payments from it. These terms
(Appendix C) might require a percentage, say 90%, payable on
submission of a commercial invoice with appropriate specified
back-up (e.g., time sheets, expense vouchers, etc.) and 10%
balances at specified stages with the written authority of the Client).
a) Letter of Credit
Care should be taken to distinguish between advances, which are

repayable, and stage payments, which go towards the total
remuneration for the Services.
- The first payment can be stipulated to be an advance payment,
in which case it should not be included as a stage payment but
should be separately identified as an advance with conditions
for repayment, e.g. by deduction from the stage payments.
Again, a repayment guarantee will usually be required.
In projects supported by an IFA where the Client's foreign

exchange credit is such that the Consultant's bank is not prepared
to confirm a letter of credit without a third party guarantee, which
may be by an IFA, the method of payment clause must require one
e.g., by way of one of the relevant IFA commitment procedures.
- One system of advances applicable when fees are based on

staff time charge rates is to be paid an advance equivalent to,
say, three months fee for each individual in post, repayable
when his tour of service is interrupted or ended. It has the
advantages of providing simplicity (unless individuals move
frequently) and of providing protection to the Consultant of
approximately the level of expense which might be incurred
under Changed Circumstances (Clause 26) or on suspension or
termination of the Services.
IFA loan agreements can be suspended or canceled by the IFA

under certain conditions which may have nothing to do with the
Project and over which the Consultant has no control. The
procedures for withdrawal of proceeds from the loans often
include commitment to reimburse disbursements from a letter of
credit. This commitment can be qualified or unqualified.
The unqualified commitment means that reimbursement is
guaranteed even if the loan agreement is suspended, but it
- In the case of stage payments it is important to include a clause

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usually means an extra charge on the Borrower. It is up to the

Consultant to consider whether the additional security gained is
worth an offer of some consideration in exchange; see Clause 47
in Chapter 2. For further information see the International
Chamber of Commerce, Paris, Brochure No. 400, Reference (6)
in Chapter 8.
disbursements other than to the Consultant. A joint venture rather

than a sub-consultancy can overcome this difficulty at the risk of
undertaking liability for default by others.
When an assignment is likely to last much longer than a year, a

single letter of credit for the full cost of the assignment is likely to
become expensive. In these circumstances a revolving letter of
credit is a useful compromise; such instrument becomes
enhanced annually after budget approval by the Client. For
administrative convenience the single letter of credit, especially,
should include a contingent sum and a system for giving the bank
authority to disburse from it without having to go through the time
consuming and accident prone procedures of amending the letter
of credit.
According to circumstances, the Particular Conditions or Appendix

C may incorporate one or more of the following provisions:
e) Typical Clauses
either
The method of payment of Foreign Currency by the Client to
the Consultant shall be by way of an irrevocable letter of credit
confirmed by the Consultant's bank incorporating terms as
specified in Appendix C.
and, possibly,
Reimbursement to the Consultant's bank for disbursement
from the letter of credit shall be subject to an unqualified
guarantee from .... (name of IFA) .... or other guarantor
acceptable to the Consultant's bank.
b) Direct Disbursement by the IFA

This is the next most secure method. Insecurity lies in two areas.
Firstly, as mentioned above in the ability of the IFA to suspend or
cancel the loan agreement and, secondly, in the reliability of the
Client's staff to process applications to the IFA for direct
disbursements to the Consultant. Also, some IFA do not favour
permitting disbursements for advance payments.
or
The method of payment of Foreign Currency by the Client to
the Consultant shall, without prejudice to (reference to Clause
suggested in paragraph (ii) of the "General" discussion on
Payment in Chapter II), be by way of direct disbursement to the
Consultant's bank from the .. (name of IFA) ..... in accordance
with its procedures for withdrawal of proceeds of the loan by
the Borrower . provided that failure by the .... (name of IFA)
.... to disburse against applications properly made by the Client
and Borrower shall be and be deemed to be circumstances
within the provisions of White Book Clause 26 in the General
Conditions).
c) Other Systems
The security of any other system of payment depends on the
credit worthiness of the Client and, in the case of a subconsultant, of the Consultant employing him.
d) Sub-consultants
In this connection, prospective sub-consultants should be aware
that IFA may not be able to make direct, nor guarantee,
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Similar provisions can be made in respect of local currency

methods of payment.
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Technical Assistance
- Services during the period after termination or abandonment of

a construction contract or after the substantial completion or
end of defects liability period, if any, up to settlement of the
Contractor's final account bar any claims referred under any
disputes procedure and resolution clause or to litigation or
arbitration; and
Whereas technical assistance teams are almost always charged

on a time basis, it is often the case that the time rate is required to
cover any technical back-up required. Such conditions can be
counterproductive when the nature and extent of such back-up
cannot be accurately estimated before the event so that the markup on the team member's rate is a guess either putting the
Consultant out of competition or, if successful, restraining his
willingness to give back-up necessary for a better performance.
- preparation of "as-constructed" drawings, manuals etc., (the

required detail and content of which varies widely from Client to
Client and project to project).
Faced with such a situation, the Consultant might with advantage

present an alternative proposal with lower site rates together with
a budget sum and a schedule of headquarter's rates for technical
back-up.
6
The definitions of items of expenses which are to be recoverable

under the Agreement can cause as much argument as almost any
other aspect of a consultancy assignment (do travel costs include
travel insurance?) Refinement of definitions carries with it the risk
of excluding certain costs by specific omissions. In other words, a
detailed listing of costs eligible for reimbursement must be
exhaustive.
Administration of Contracts
When the terms of payment for these duties are not wholly time
based but include some fixed fee component (whether lump sum
or percentage of cost of Works), there are at least five elements of
the related Services which should be considered for payment on a
time basis or definition as Additional Services, namely:
Each firm will have developed its preferred system for use when a
system is not imposed on it, and it is beyond the scope of this
Guide to suggest detail for conformity, even if that were desirable.
- monitoring imports of contractor's equipment, spare parts, and

other consumable stores for enforcement of construction
contract provisions relating to import duties and re-export;
Clients are naturally concerned to know with precision what they

will be expected to pay for, and equally naturally the Consultant
will need to know what he will be paid for. The clause suggested
near the start of paragraph 2 (c) above means that if payment is
not recoverable under an expense category it is deemed to be
included in the fee.
- Services in respect of procurement between the first report on

tenders received from the first call for tenders for any one
construction contract and the award of the contract;
Administratively, the most convenient way is to adopt wherever

possible a quoted sum or per diem charge for each event. It is a
system which is prone to least trouble except when there are wide
fluctuations in prices or exchange rates. The former can be
covered by a price variation clause, preferably index related; see
paragraph 8 below for comment on exchange rate.
- Services in respect of inspection and testing prior to export of

goods from the country of manufacture;
- Services in respect of tests on completion of the Works;
- Services in respect of any claim by either party after it is referred to
litigation, arbitration or conciliation or to the operation of any dispute
procedure and resolution clause in the construction contract;
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Expenses
Reimbursement of expenses net, plus some quoted percentage

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for administrative and financing costs, invites massive paperwork,

delays in billing, audits and disputes on eligibility. It also requires a
special clause to provide for the fixing of the exchange rate relative
to the time of the transaction and/or the time of reimbursement;
see paragraph 8.
b) In Local currency
- per diem allowances for staff in Client's country, visiting,
residing, and on field trips;
- cost of necessary items and services procured locally; and
One IFA has suggested the following categories:

- cost of local personnel.
a) In foreign currency
Where applicable, the IFA require that each category is supported
by a detailed Schedule, and eligibility criteria, e.g. length of stay,
age of dependent, etc.
- per diem allowance for staff away from home office but not in
Client's country;
- transportation costs of persons (with definition of entitlements of
staff members and dependents);
Currency
If payment is to be made partly or wholly other than in a freely
convertible currency, it will be necessary to stipulate how the
proportions are to be calculated.
- baggage and excess baggage costs;

- miscellaneous travel expenses at a unit price per round trip;
a) For charges quoted in the Agreement, the necessary provisions

must be made for rates of exchange from the currency of the
Agreement to the currency of payment (e.g., in White Book
Section A of the Particular Conditions). In common with
construction contracts, this allows the Consultant to balance his
fees in currencies to meet expenditures in them.
- cost of communications;
- cost of printing, reproducing and shipping documents etc.;
- cost of acquisition, delivery etc. of required goods;
- special computing costs;
Therefore, unless the proportioning is speculative, the

Consultant avoids the risk to himself of fluctuating exchange
rates but bears the risk of economic problems in his own
country. If the local currency component is index related, the
Client bears the risk of economic problems in his country and
an equitable distribution of risk is achieved
- costs of training Client's personnel outside Client's country

(including make-up of living allowance, etc.),
- costs of approved technical services not covered by
Consultant's fees; and
b) Where payment is by way of reimbursement, a common

provision for the exchange rate is:
- cost of approved facilities in Client's country not provided by

Client.
the official rate applicable to the time, place and currency of

the original disbursement.
It is necessary to check that the items above are not wrapped up

in the fee or other charges without identifying them as appropriate
for separate reimbursement in connection with Additional Services.
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This can cause financial embarrassment if there is a dual rate

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Consultant has funded initial expenditure in one currency by

importing another before earnings in the country of import are
sufficient to cover the investment. Clauses 32 (ii) and 37 of the
General Conditions can help in some circumstances, but not
usually without a great deal of effort.
system in operation (whether officially or unofficially). It is hoped

that Clause 32 (ii) in the General Conditions will go some way
toward meeting this difficulty.
In any event, with reference to the General Conditions, Clause
31 (ii), the amount and currency of payment of Compensation
for delayed payment should be specified, e.g.:
When payment cannot be made wholly in a freely convertible hard

currency, the answer is to ensure that as far as possible
expenditures in soft currency are just balanced by earnings in that
currency and that any initial investments are covered by first stage
payments, advances or commercial loans rather than transfer.
the percentage specified in Section A of the Particular

Conditions applied to and in the currency of the amount of the
principal sum.
Where there is room for doubt or ambiguity, the currencies and
proportions payable in the several currencies should be specified,
e.g., proceeds of guarantee, insurance policies and the like.
9
b) Prices
In respect of stage payments of fees, quoted time charge rates
and quoted prices, it is important to have a price fluctuation
provision to avoid difficulties when the Services are delayed, or
Additional Services etc. cause a time over-run.
Price Variation
For long term assignments and as a precaution in short term
assignments it is generally desirable to make provision for
fluctuations in prices and possibly also for rates of exchange.
This is important for a number of reasons:
The provision which seems to cause least difficulty is one which is

index based. Different indices may be required for different parts of
the Services. It does not avoid all problems, particularly those
relating to charges based on staff emoluments when staff are
changed and their salaries are not grade structured.
- When the rate of exchange is fixed by reference to the date of

original disbursement, delayed payment can affect budget
balances.
The example given in Annex 2 for lump sum fees allows no price
variation for the fee for Normal Services but does allow it for
Additional and Exceptional Services. A typical clause might be:
- More importantly, if the original proportioning between

currencies is not proportional to expenditure or is changed as a
result of Additional or Exceptional Services, there can be
significant losses (or gains) in real terms.
"Unit prices for both fees and expenses shall be subject to revision
annually on 1st.January in accordance with the .... (name and date
of reference index or details of formula as the case may be ....
bearing in mind that a different index or formula may be
appropriate for each proportion to be paid in a different currency);
a) Rates of Exchange
- One particular problem is when advances are taken in one

currency and have to be repaid later partly or wholly by transfer
from another currency.
10 Recovery of Import Duties
A general point to be remembered, but difficult to provide for in the

Agreement, is that the recoverability of import duty on re-export is
- Another problem is when the exchange rate devalues after the

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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.
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.
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.
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.
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.
Cost
Expenditure properly incurred, or to be incurred, by a party for the
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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.
- The amount stipulated in the Agreement for the post named in

the Agreement.
13 Tender Dossiers
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.
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.
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ANNEX 2
Lump Sum Fees
ANNEX 3
The following terms could form the basis of a lump sum

agreement or of a lump sum component of the Services:
Staff - Time Based Fees
The provisions need to address the following points:
The fee to be paid to the Consultant for Normal Services is a

fixed price fee of'. . . (figures) ... (words)... The fixed fee is made
up of quantities and unit prices given in Schedule 'Y' attached,
which prices shall be used for the evaluation of Additional and
Exceptional Services. The quantities shall not be subject to
remeasurement for Normal Services.
See paragraph A3.5 of Annex 3 for discussion when the rate is
defined on a "multiplier" basis.
a)
Named staff
b)
Unnamed staff
c)
How time is measured
d)
Work centre, place of residence and absences from each for

purpose of the Services
e)
How the charge is proportioned according to currency of

payment.
- In respect of Additional or Exceptional Services:

1
i) unit prices shall be subject to revision annually on 1 January

in accordance with the .. (name and date of reference index
or details of formula as the case may be .... bearing in mind
that a different index or formula may be appropriate for each
proportion to be paid in a different currency);
In the absence of prescriptions on method and detail of

presentation, there is no difficulty in providing rates for staff named
in the Appendix, separately for the various classes of duty, e.g., at
the Consultant's home office, on short tours and on long tours.
given appropriate definitions.
ii) payment shall not be limited to expenditure in respect of the

items listed in Schedule " X ',
iii) payment for items not covered in Schedule 'Y' shall be at

actual cost plus, in the case of Additional Services only, "y "
percent."
The most recognized system is to relate the charge to a multiplier

of some function, the elements of which are either arbitrarily fixed
in the Agreement, e.g., fixed rate or percentage, or are capable of
audit, e.g., the basic salary of the individual; see Clause 35 of the
General Conditions.
(.... then list a schedule of stage payments, preferably tied to

specific events identified in Appendix A).
Such payments except the last are instalments and the
Consultant shall remain a debtor in respect of them until final
settlement.
FIDIC 2001
Unnamed Staff
The chief difficulties arise when unnamed staff have to be provided
for. Depending on the staff structure this can be approached by
reference to grade, salary, post or qualification.
- The fixed fee for Normal Services shall be payable as follows:
100
Named Staff
Salary based charges nevertheless create difficulties because

different firms and practices in different countries vary in their wage
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structures from an all in wage to a basic wage with sundry

allowances and perquisites. One result is that for the same charge
rate the multiplier can vary widely, from which some adjudicators
can infer that the higher multipliers indicate firms making
excessive profits from underpaid and inferior staff. This in turn can
lead to excessively involved wage structures devised to give a
good impression in proposals by lowering the multiplier rather
than for the efficient management and motivation of staff. The
higher multipliers can also lead to tough negotiation, when
selection is not on a price competition.
the increase is seen to be greater than their own changes or

than changes in some generally recognized price index.
The position is doubly complicated when part of the staff

emoluments is in local currency and part in foreign, with differential
rates of inflation and possibly different pay incentives necessary.
It would seem sensible, where practicable, to relate the foreign
and local component to the individual's salary at the time of the
proposal, or when taken into employment, and inflate it according
to the relevant price index.
It is beyond the scope of these Notes to recommend a solution.

5
3
Discussion
Substitutes for Named Staff

The following items are often required to be provided:
This is a particular aspect of unnamed staff. When, having
selected a Consultant on the basis of staff named in a proposal
submitted three months or more earlier, the fact that named staff
are no longer available causes considerable ill-feeling, not only
with Clients, but also with the unsuccessful tenderers more of
whose named staff may still be, or have again become,
available.
1
2
3
4
5
6
7
8
9
If Clients and their IFA advisers continue to mark proposals heavily

on the basis of named staff and consider that this is the right
policy they should consider offering to pay retainers for any period
of adjudication beyond some reasonable duration, say three
weeks, during which most Consultants would be prepared to
keep named staff in reserve.
4
It is not difficult to see how the numbers can be manipulated,

especially by large firms with a fairly reliable overseas work-load.
Salary Reviews
For example, suppose Firm 1 has a "conventional" system, and
Firm 2 splits its staff into home and overseas employments, the
latter getting a basic salary 46.67% higher than that of the former,
while the former gets a 50% overseas allowance probably in local
currency. For equivalent staff overseas the net social and overhead
costs will be the same.
Where remuneration is on the basis of staff emoluments, Clients

naturally become wary if:
102
Name of staff, position in firm and appointment in Project

Basic salary per unit of chargeable time . . . . . . . . . . . . . . B
Social charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %B
Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %B
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . T
Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %T
Overseas allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . %B
Charge rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R
Multiplier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R/B
they find the charges suddenly increased, especially if there is

an interim salary review as well as the more usual annual one;
there is an apparent discrepancy in the increases for staff

currently employed for the Services; or
FIDIC 2001
103
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
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.
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 Consultants home office
For long tour

For visits
For work in the Consultants 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",
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;
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
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.
Consistently using the same word or phrase wherever a

particular meaning is to be conveyed may be useful.
It is often better to specifically identify secondary objectives,

responsibilities or obligations as such, rather than to overemphasize the importance of the primary ones.
When an obligation (duty, responsibility) is stated, it will be

helpful to state precisely where the liability (risk, expense) for
performance lies.
FIDIC 2001
8 References
1
10
110
11
Insurance of Large Civil Engineering Projects - an update, FIDIC

http://www.fidic.org/consultants/
1997
12
Guidelines: Selection and Employment of Consultants by World

Bank Borrowers, Washington DC
http://www.worldbank.org/html/opr/consult/contents.html
1997
13
Conditions of Contract for Works of Civil Engineering

Construction, 4th Edition, FIDIC
1987
14
Conditions of Contract for Electrical and Mechanical Works

including Erection on Site, 3rd Edition, FIDIC
1987
1985
15
Conditions of Contract for Construction, for Building and

Engineering Works Designed by the Employer, 1st Edition, FIDIC
1999
1976
16
Conditions of Contract for EPC/Turnkey Projects, FIDIC
1999
17
Conditions of Contract for Plant and Design-Build, for Electrical

and Mechanical Plant, and for Building and Engineering Works,
designed by the Contractor, 1st Edition, FIDIC
1999
18
The Short Form of Contract, 1st Edition, FIDIC
1999
19
Conditions of Contract for Design-Build and Turnkey, 1st Edition,

FIDIC
1997
20
Guidelines for ad hoc Collaboration Agreements between

Consulting Firms, FIDIC; http://www.fidic.org/consultants/
1995
21
The Role of Consultants in Operation, Maintenance and Training,

FIDIC; http://www.fidic.org/consultants/
1995
22
Guide to the Use of FIDIC's Sub-Consultancy and Joint Venture

Agreements, FIDIC
1994
23
FIDIC Client/Consultant Model Services Agreement, 3rd Edition
1998
United Nations Guide for Drawing up International Contracts on

Consulting Engineering, including related aspects of technical
assistance: Publication ECE/TRADE/145, United Nations, New
York; http://www.jurisint.org/pub/02/en/doc/66.htm
1983
ICC Rules of Arbitration, International Chamber of Commerce,

Paris; http://www.iccwbo.org/court/english/arbitration/rules.asp
1997
LCIA Rules, London Court of International Arbitration

http://www.lcia arbitration.com/lcia/rulecost/english.htm
UNCITRAL Arbitration Rules, United Nations Commission on
International Trade Law, Vienna
http://www.uncitral.org/english/texts/arbconc/arbitrul.html
ICC as appointing authority under the UNCITRAL Rules,
International Chamber of Commerce, Paris
http://www.iccwbo.org/court/english/
appointing_authority/all_topics.asp
1984
Uniform Customs and Practices for Documentary Credits,

International, Chamber of Commerce, Paris, Revision; No. 400;
http://www.iccbooks.com/
Uniform Rules for Contract Guarantees, International Chamber of
Commerce, Paris; No. 325; http://www.iccbooks.com/
Preparing the Consultant's Terms of Reference: Michael Lewis,
Nairobi 1985, FIDIC; http://www.fidic.org/consultants/
The Engineer as a Local Resource and World Bank Action to
Develop and Utilize the Resource, G.L.E. Spier, Nairobi 1985,
FIDIC; http://www.fidic.org/consultants/
1993
1997
1985
1985
Guidelines for the Evaluation of Consultants' Performance, FIDIC;

http://www.fidic.org/consultants/
1988
FIDIC 2001
FIDIC Guides and Conditions of Contract can be obtained from:

FIDIC Bookshop, International Federation of Consulting Engineers
111
FIDIC 2001

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The White Book Guide

with other Notes on Documents for

Second Edition 2001

FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS

FIDIC is an international federation of national associations of consulting

The White Book Guide

with other Notes on Documents for

FIDIC arranges seminars, conferences and other events in the furtherance of

Second Edition 2001

FIDIC publications include proceedings of various conferences and seminars,

Copyright FIDIC 2001

All rights reserved

FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS

The Checklists of services have drawn heavily on the Conditions of

THE WHITE BOOK

Definitions and Interpretations

Clauses 1 i, ii & iii

Skill, Care and Diligence

Obligations of the Client

Obligations of the Consultant

Projects, Works and Services

Liability and Insurance

Commencement, Completion, Alteration and Termination 18

Definition and Interpretation

Clause 1 i, ii & iii

Project, Works and Services

Liability and Insurance

a) Liability for Breach of

Amicable Dispute Resolution

THE WHITE BOOK

Possible Additional Subject Matter

c) Cost of Insurance for

Commencement & Completion

Possible Additional Subject Matter

Payments to Contractors, etc.

* Abbreviation: in this Guide, IFA means International Funding Agency (or

Appendix A: Scope of Services

C Commencement, Completion, Alteration and Termination 49

Patents and Inventions

Annex 1 Services of the Consulting Engineer in Relation to

Typical Normal Services

Annex 2 Checklist/Menu of Environmental Services

Waste Management Facilities

Appendix B: Personnel, Equipment, Facilities & Services 83

Appendix C: Remuneration and Payment

Annex 1 Common Payment Terminology

Annex 3 Lump Sum Fees

Annex 2 Staff - Time Based Fees

Annex 4 Fees as a Percentage of Cost of Works

Terms of Reference and their Preparation

In the second stage, alterations were made in principle to take

to assist those who wish to draft Consultancy Agreements using

Particular Conditions and the Appendices, including questions of the

As far as practicable, the construction of the White Book took note of

Documents to Complete the Agreement

it should be even-handed between Client and Consultant;

it should be capable of wide application;

its language should be simple and therefore more reliably

it should promote cooperation and mutual trust and avoid

it should recognize the realities of international commerce and take

Scope of Services - including Checklists of

Personnel, Equipment, Facilities and

Remuneration and Payment

legal jargon or other terms and expressions which are common