This is the second in a four-part series named Typical Sequence of Activities and Events. Part one dealt with the project lifecycle based on FIDIC Red, Yellow, and Silver 2017 editions.

In this second part, we will move to the sequence of payments as indicated in Clause 14. The Engineer shall issue an Advance Payment Certificate (APC) for the advanced payment within 14 days after either a) the Engineer has received both the Performance Security and the Advance Payment Guarantee, b) receiving the Contractor’s application for the advanced payment under Sub-clause 14.2.1.

After receiving the Advance Payment Certificate, the Employer should make an advanced payment for mobilization. The advance payment shall be replayed through percentage deductions in the payment certificates. If the percentage is not stated, then a deduction shall apply in the interim payment certificate in which the total of all certified interim payments exceed 10% of the Accepted Contract Amount and deductions shall be made at the rate of 25% of the amount of each payment certificate until the advanced payment has been repaid.

The Interim or Monthly Payments Process

The Contractor submits payment application supporting documents to the Engineer. The Engineer then verifies and receives any additional information and he will issue the payment certificate within 28 days from the date of the Contractor’s statement. The Employer must make payment to the Contractor within 56 days from the date of receiving the Contractor’s interim payment statement with supporting documents for the final payment.

The Contractor submits the draft final statement to the Engineer. If there is no dispute in the Contractor’s draft final statement, he should proceed and submit the final statement within 28 days after receiving the final statement and right to discharge. The Engineer shall issue the final payment certificate to the Employer stating the amount due. The Employee shall pay the Contractor within 56 days of receiving the final payment certificate from the Engineer.

In the Silver Book, there is no reference to an Engineer, so the duration of 28 days plus 56 days is reduced to only 56 days for the Employer to pay the Contractor from the final statement submission date.

Moving on to the sequence of dispute events envisaged in Clause 21. The parties shall jointly appoint a Dispute Adjudication/Avoidance Board (DAAB) within 28 days after the Contractor receives the Letter of Acceptance (LoA) or after signing the agreement.

In the case of the Silver Book, a dispute must be referred to the DAAB for decision and the Board must give its decision to the parties within 84 days. If a party is not satisfied with the decision, Notice of Dissatisfaction (NoD) shall be given within 28 days after receiving the DAAB’s decision.

Where a NoD has been given, the parties will attempt to settle the dispute amicably. Unless settled amicably, any dispute shall be finally settled by arbitration. Arbitration may be commenced on or after the 28th day after the day on which the NoD was given.

The Typical Sequence of Events in Agreement or Determination Under Sub-Clause 3.7

In the first scenario, agreement is reached within 42 days. Errors found in the Engineer’s Notice of Agreement are subsequently corrected as soon as the situations arise. The Engineer performs the duties of consultation and within 42 days, the Engineer provides the Notice of Agreement.

If there is an error observed by either party, notice shall be made within 14 days. Within another seven days, the Engineer shall provide the corrected agreement. In the Silver Book, the Engineer is replaced by the Employer’s Representative.

A second scenario is that the Parties’ early advice that agreement cannot be reached and so the Engineer’s determination is necessary (no error in the Engineer’s determination). Here, after the 42 days of consultation with no agreement reached, the Engineer moves to determination and within another 42 days. If there is an error, notice shall be made within 14 days. However, if the determination is not acceptable, then a Notice of Dissatisfaction (NoD) is to be given within 28 days’ time from the Engineer’s determination. Otherwise, this determination will be final and binding.

In another scenario, there is no agreement within 42 days. The Engineer makes determination within 42 days. If errors are found in the Engineer’s determination and corrected here again, after the 42 days of consultation upon no agreement reached, the Engineer moves to determination within another 42 days. If there is an error, the party shall notify within 14 days and the Engineer shall make corrections within seven days. However, if this correct determination is not acceptable then Notice of Dissatisfaction (NoD) is to be issued within 28 days’ time after receiving the corrected determination from the Engineer.

So that completes the typical sequences of activities and events in FIDIC Red, Yellow, and Silver Books 2017 edition.

The next post in this series will focus on the sequence of activities and events in the Gold Book 2008 edition.

This guest post was written by Mansoor Ali, FICCP. It is the second in a four-part series and was originally published as a LinkedIn video, viewable here. The previous post can be found here.