Deep Analysis of Clause 4.7 ‘Setting Out’ from FIDIC Yellow Book 1999

Diverse Interpretations of Clause 4.7

Purpose

The Purpose of Clause 4.7 Setting Out is to delineate the responsibilities between the Contractor and the Employer when it comes to setting out the works in relation to original points, lines, and levels of reference. In essence, it serves as a guide to avoid or rectify errors in the construction process.

Implications

The Implications of Clause 4.7 are far-reaching, affecting the timeline, cost, and even the legal obligations of both parties. For example, in the United States, failure to comply with this clause could lead to lawsuits under construction law, especially if it leads to violations of building codes like the International Building Code (IBC) or environmental regulations such as the Clean Water Act.

Primary Aspects

Primary Aspects include the Contractor’s responsibility for correct positioning, the Employer’s responsibility for any errors in the specified or notified items of reference, and conditions under which the Contractor can claim for delay and/or cost.

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Expert Opinion

From an Expert Opinion, Clause 4.7 acts as a balancing mechanism that equally distributes responsibility. It allows for flexibility in case of genuine errors but also holds each party accountable, making it a critical clause in risk management.

Interaction with Other Clauses

Clause 4.7 has strong interactions with Sub-Clause 20.1 (Contractor’s Claims) regarding the Contractor’s rights to claim for delays or additional costs. It also relates to Sub-Clause 8.4 (Extension of Time for Completion), underlining how time extensions should be handled if errors lead to delays. Lastly, it ties into Clause 3.5 (Determinations), which dictates the procedure for resolving disputes over such matters.

Main Points to Keep in Mind

1. Due Diligence: Contractors must exercise due diligence in verifying the accuracy of the points, lines, and levels specified or notified by the Employer.
2. Rights to Claim: This clause explicitly provides the Contractor with the right to claim for both time and cost, provided they meet certain conditions.
3. Shared Responsibility: While the Contractor is mainly responsible for the correct setting out of the works, the Employer also shares responsibility for any errors in the items of reference they provide.
4. Regulatory Compliance: Especially in the United States, adherence to Clause 4.7 can also ensure compliance with various technical standards and regulations, such as ASCE standards for civil engineering or ASTM standards for materials and testing.

FLowchart

Detailed Explanation of the Flowchart

1. Start: The process begins with the receipt of the Engineer’s reference points for setting out the Works.
2. Verify Accuracy of Reference Points: The Contractor verifies the accuracy of these reference points.
3. Error in Reference Points?: A decision point to determine if there is an error in the reference points provided by the Engineer.
   • Yes:
     • Notify Engineer: The Contractor notifies the Engineer of the error.
     • Submit Claim under Sub-Clause 20.1: The Contractor submits a claim for additional time or cost.
     • Engineer Proceeds under Clause 3.5: The Engineer proceeds to make a determination under Clause 3.5.
     • Resolve via Extension of Time or Additional Cost: The issue is resolved either by granting an extension of time or by compensating for the additional cost.
   • No:
     • Set Out Works: The Contractor proceeds to set out the Works based on the verified reference points.
     • Correct Positioning of All Parts: The Contractor ensures the correct positioning of all parts of the Works.
     • Rectify Any Errors in Positioning: Any errors in the positioning are rectified by the Contractor.
4. End: The process ends once the Works have been correctly set out and any errors rectified.

Real-World Case Studies

• Case Study 1: Skyscraper Construction in New York City

  Scenario

  A Contractor was tasked with constructing a skyscraper in Manhattan. After initial work, they realized that the original points and lines provided by the Employer were inaccurate.

  Application of Clause 4.7

  Here, Clause 4.7 comes into play. The Contractor is responsible for the correct positioning of the building but the Employer holds responsibility for the errors in the original reference points.

  Outcome

  Under Clause 4.7, the Contractor was entitled to an extension of time and payment of additional costs incurred due to the Employer’s error. The Employer was also liable for any violations of New York City Building Codes as they had provided incorrect information.

  Case Study 2: Highway Expansion in California

  Scenario

  A Contractor was working on a highway expansion project in California. After beginning the work, they discovered that the lines and levels provided by the Employer conflicted with local environmental regulations.

  Application of Clause 4.7

  The Contractor used reasonable efforts to verify the accuracy of the Employer’s reference items, discovering the issue. They gave notice to the Engineer, as required by Clause 4.7.

  Outcome

  The Engineer proceeded with Sub-Clause 3.5 (Determinations) to agree on the extent of the error and its implications. The Contractor received an extension of time and additional payment to modify the project to comply with environmental laws, such as the California Environmental Quality Act (CEQA).

  Case Study 3: University Campus Building in Texas

  Scenario

  A Contractor was building a new academic building on a university campus in Texas. Midway through the project, they realized an error in the original points which could potentially lead to a failure in complying with the Americans with Disabilities Act (ADA).

  Application of Clause 4.7

  The Contractor promptly gave notice to the Engineer, adhering to the protocol under Clause 4.7.

  Outcome

  The Engineer confirmed that an experienced contractor could not have reasonably discovered such an error. Therefore, under Clause 4.7, the Contractor was granted an extension of time and additional payment to rectify the issue and comply with ADA standards.

  These case studies demonstrate how Clause 4.7 Setting Out can be applied in various real-world scenarios, covering different types of projects and regulatory frameworks.

Sample Letters:

Sample Letter 1: Notice of Error in Reference Points

[Contractor’s Company Letterhead]
[Date]

[Employer’s Name]
[Engineer’s Name]
[Addresses]

Subject: Notice of Error in Reference Points as per Clause 4.7 of FIDIC Contract

Dear [Employer’s and Engineer’s Names],

We have identified an error in the original reference points provided for [Project Name]. According to **Clause 4.7 Setting Out**, we are responsible for correct positioning, but the Employer holds responsibility for errors in the original points, lines, or levels.

We request that this issue be addressed promptly to prevent further delays and costs.

Sincerely,
[Your Name]
[Your Position]

Sample Letter 2: Request for Extension of Time and Additional Costs

[Contractor’s Company Letterhead]
[Date]

[Employer’s Name]
[Engineer’s Name]
[Addresses]

Subject: Request for Extension of Time and Additional Costs under Clause 4.7 of FIDIC Contract

Dear [Employer’s and Engineer’s Names],

Due to the errors in the original points of reference for [Project Name], we have incurred additional costs and delays. As per **Clause 4.7 Setting Out**, we are formally requesting an extension of time and additional payment to rectify these issues.

Please find attached the details of the additional costs and the estimated delay.

Sincerely,
[Your Name]
[Your Position]

Sample Letter 3: Confirmation of Rectification

[Contractor’s Company Letterhead]
[Date]

[Employer’s Name]
[Engineer’s Name]
[Addresses]

Subject: Confirmation of Rectification of Errors in Setting Out – Clause 4.7 of FIDIC Contract

Dear [Employer’s and Engineer’s Names],

We are pleased to inform you that the errors in setting out for [Project Name] have been rectified as per **Clause 4.7 Setting Out**. We request a review to confirm that the rectifications are in accordance with the contract specifications.

Thank you for your attention to this matter.

Sincerely,
[Your Name]
[Your Position]

Checklist

1. Checklist for Proficient Execution of Clause 4.7:

2. Checklist to Assist in Applying and Overseeing Clause 4.7:

3. Checklist to Guide and Monitor the Execution of Clause 4.7:

By adhering to these checklists, you can ensure a proficient execution, deployment, and supervision of Clause 4.7, while also fostering a culture of collaboration, accountability, and ownership among team members.