How do the Unforeseen Ground Conditions Evolve to Variation under the 2017 FIDIC Red Book?

“One of the most important risks that occur in Construction Contracts is the difference between the existing and the expected ground conditions.”

The Contractor encounters unforeseen adverse ground conditions.

To inform the Engineer, the Contractor gives a Notice describing the negative effects of the ground conditions.

The Engineer investigates the situation and instructs the Contractor to carry out the remedial work.

The structure of the remedial work constitutes Variation.

And the Variation causes delay and cost increases.

After all, the Contractor will be entitled to Extension of Time and Contract Price adjustment, without any requirement to comply with Sub-Clause 20.2 [Claims For Payment and/or EOT].

In this document, you will find the key issues and the process when the Unforeseen Ground Conditions evolve to Variation in accordance with the 2017 FIDIC Red Book.

1   The Contractor gives Notice to the Engineer 

The Notice should;

Be given as soon as practicable and enable the Engineer to investigate the physical conditions.

Describe the situation, so that the Engineer can investigate effectively.

Describe the  reasons why it should be considered as Unforeseeable.

Describe how the situation will have adverse effects on the progress and increase the Cost of the execution of the Works.

2   The Engineer Investigates the Situation

After receiving Contractor’s Notice;

Within 7 days or a longer period agreed with the Contractor, the Engineer is to investigate the situation.

The Contracot is to;

Continue to the execution of the Works with the help of proper measures.

Enable the Engineer to investigate the situation.

3   The Engineer Instructs Variation

The Engineer instructs Variation via giving Notice to the Contractor.

In accordance with Sub-Clause 3.5 [Engineer’s Instructions], the Engineer gives a Notice that defines and describes the required changes and requirements for the recording of the Costs.

4   The Contractor Executes the Variation

The  Contractor proceeds with execution of the Variation.

5   The Contractor Submits Detailed Particulars

The Contractor is to submit detailed particulars to the Engineer within 28 days (or another period agreed) of receiving the instruction, including [1];

(a) A description of the varied work performed or to be performed, including details of the resources and methods adopted or to be adopted by the Contractor.

(b) A programme for its execution and the Contractor’s proposal for any necessary modifications (if any) to the Programme according to Sub-Clause 8.3 [Programme] and to the Time for Completion; and

(c) The Contractor’s proposal for adjustment to the Contract Price by valuing the Variation in accordance with Clause 12 [Measurement and Valuation], with supporting particulars (which shall include identification of any estimated quantities and, if the Contractor incurs or will incur Cost as a result of any necessary modification to the Time for Completion, shall show the additional payment (if any) to which the Contractor considers that the Contractor is entitled). If the Parties have agreed to the omission of any work which is to be carried out by others, the Contractor’s proposal may also include the amount of any loss of profit and other losses and damages suffered (or to be suffered) by the Contractor as a result of the omission.

6   Agreement or Determination

The Engineer is to proceed under Sub-Clause 3.7 [Agreement or Determination] to agree or determine:

The Extension of Time (if any)

The Contract Price adjustment in accordance with Clause 12 [Measurement and Payment].

FOOTNOTES

1. The same Sub-Paragraph letters are used as in Sub-Clause 13.3 [Variation Procedure] of the 2017 FIDIC Red Book.

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