FIDIC 2017 Silver Book EPC/Turnkey Contract | Clause 13 Variations & Adjustments explained

Описание: Mastering the complexities of international construction contracts requires a deep understanding of how changes are managed during a project’s lifecycle.

🌐 Visit CMC shop https://ko-fi.com/klinkercontracts/shop

This video provides a comprehensive exploration of Clause 13: Variations and Adjustments from the FIDIC 2017 Conditions of Contract for EPC/Turnkey Projects (Silver Book). Understanding these provisions is essential for employers and contractors alike to ensure financial stability and project success in large-scale infrastructure and engineering works.

The Right to Vary and Contractor Obligations According to the sources, the Employer holds the Right to Vary the works at any time before the issuance of the Taking-Over Certificate. However, there are strict limitations: a Variation generally cannot involve omitting work simply to have it performed by the Employer or another party. While the Contractor is usually bound by these instructions, they have the right to provide a Notice of objection if certain conditions are met. These grounds for objection include the varied work being Unforeseeable based on the original Employer’s Requirements, the unavailability of required Goods, or adverse impacts on Health and Safety and Environmental Protection. Furthermore, a Contractor can object if the change impacts their ability to meet Performance Guarantees or affects the fundamental requirement that the Works be fit for the purpose intended under the contract.

Value Engineering: Innovation from the Contractor The sources highlight the Value Engineering provision, which allows the Contractor to submit written proposals that could benefit the project. These proposals are designed to accelerate completion, reduce costs for the Employer, or improve the overall efficiency and value of the completed Works. While the Contractor bears the cost of preparing these proposals, a successful implementation may lead to a sharing of the resulting benefits, costs, or time savings as defined in the Particular Conditions.

The Variation Procedure The Variation Procedure is divided into two primary paths: Variation by Instruction and Variation by Request for Proposal. Under an instruction, the Contractor must proceed with the work and submit detailed particulars within 28 days. These particulars must include a description of the resources and methods used, a revised programme, and a proposal for adjusting the Contract Price. If the Variation involves omitting work, the Contractor can include costs they would have otherwise recovered and, in some cases, lost profit.

When the Employer uses the Request for Proposal route, the Contractor responds first with a proposal or reasons why they cannot comply. If the Employer accepts, an instruction is then issued. Importantly, if the Employer rejects a requested proposal, the Contractor may still be entitled to payment for the Costs incurred in preparing it.

Financial Adjustments and Provisional Sums The sources detail how Provisional Sums are managed, noting they are only used upon the Employer’s instruction. These sums can cover work executed by the Contractor or specialized items purchased from Nominated Subcontractors. Adjustments to the Contract Price for these items are based on actual amounts paid plus a percentage for overhead and profit. For minor or incidental work, the Daywork procedure may be utilized, requiring the Contractor to deliver daily accurate records of resources used to the Employer for agreement.

Adjusting for External Factors Project budgets are often affected by external shifts. The sources specify that the Contract Price shall be adjusted for Changes in Laws of the Country that occur after the Base Date. This includes changes in judicial interpretations or requirements for permits and licenses. If such changes cause delays or increased costs, the Contractor is entitled to an Extension of Time (EOT) and payment of those costs.

Finally, for projects where costs may fluctuate significantly, the sources provide for Adjustments for Changes in Cost. This is typically managed through cost indexation schedules in the Particular Conditions, covering rises or falls in labor, goods, and other inputs. If a Contractor fails to complete the works within the designated time, price adjustments are calculated using the index most favorable to the Employer, ensuring that the Contractor does not benefit from their own delay.

This detailed breakdown of Clause 13 ensures that project managers and legal professionals can navigate the FIDIC Silver Book with confidence, maintaining the balance of risk and reward throughout the construction process.

#Construction #ContractManagement #ProjectManagement #Contractor #Contracts #Contract #constructionmanagement #engineering #legal #Procurement #Engineering #SupplyChain