FIDIC regulations. Yellow book.

[Natasha13]

Hello,

Maybe somebody had to deal with FIDIC regulations and knows where I can get additional information about Yellow Book interpretations.

Here is the specific question we had:

An employee of Hydro-Ingenieure consulting company is the Engineer in accordance with Yellow Book (1999 edition) for a project in Slovakia. The following questions arose during his business trip to Slovakia.

The questions refer to Clause 13 in the Yellow book.

Clause 13.2 states: “The Contractor may, at any time, submit to the Engineer a written proposal which (in the Contractor’s opinion) will, if adopted, (i) accelerate completion, (ii) reduce the cost to the Employer of executing, maintaining or operating the Works, (iii) improve the efficiency or value to the Employer of the completed Works, or (iv) otherwise be of benefit to the Employer”

1 Does the Contractor’s proposal have to satisfy all three clauses (i.e. “accelerate completion” AND “reduce the cost” AND “improve the efficiency or value” ) or only one of them is sufficient (“accelerate completion” OR “reduce the cost” OR “improve the efficiency or value”)?

2 In general, does “value engineering” allow Variations tht increase Contract Price?

3 Is it possible to increase the Contract Price solely with clause 13 (without filing a Claim using Clause 20.1) or does the “adjustment to the Contract Price” in 13.3 c) implies lowering the price only?


Any information will be greatly appreciated.

Thanks,


Natasha
Natasha@hydro-ing.at

 

[Fizzhead]

Natasha:

To answer your question briefly, the Contractor does not have to satisfy all the criteria with every submittal, one is sufficient. Each can be beneficial to the Owner on it's own. The Contractor must be clear in the proposal which benefit is to be provided and should quantify that benefit and clearly delineate the changes to Contract Price. In general, value engineering is not undertaken with the intention to create cost increases. However, if the benefits outweigh the costs and the Owner decides favorably, it has been known to occur and does not create problems under FIDIC contractual conditions. So, it is entirely possible to increase Contract Price under Clause 13, without resorting to the filing of a claim under Clause 20.