The flowchart is designed to visualize the process outlined in Clause 10.2 of the FIDIC contract, which deals with the Taking-Over of Parts of the Works. Here’s a step-by-step explanation of each node in the flowchart:
1. Contractor Completes Part of Works
This is the starting point where the Contractor has completed a part of the Works as per the contract requirements.
2. Engineer May Issue Taking-Over Certificate for Part
At this stage, the Engineer has the discretion to issue a Taking-Over Certificate for the part of the Works that has been completed. This decision is solely at the Employer’s discretion.
3. Employer Uses Part Before Certificate (Deemed Taken Over)
If the Employer starts using a part of the Works before the Taking-Over Certificate is issued, that part is deemed to have been taken over. This triggers several consequences:
- The Contractor is no longer responsible for the care of that part.
- The responsibility for that part passes to the Employer.
4. Engineer Issues Certificate (Part Officially Taken Over)
If the Engineer decides to issue the Taking-Over Certificate, the part of the Works is officially taken over, and the responsibility for it passes to the Employer.
5. Responsibility Passes to Employer
At this point, the Employer assumes full responsibility for the part of the Works that has been taken over, either officially through a certificate or deemed through usage.
6. Contractor Conducts Outstanding Tests
After a part of the Works has been taken over, the Contractor is given the earliest opportunity to conduct any outstanding Tests on Completion. These tests must be carried out before the expiry date of the relevant Defects Notification Period.
7. Contractor May Claim Costs
If the Contractor incurs additional costs due to the Employer taking over a part of the Works (other than what is specified in the Contract), the Contractor has the right to claim these costs plus a reasonable profit.
8. Delay Damages Reduced
If a Taking-Over Certificate has been issued for a part of the Works, the delay damages for the completion of the remaining Works are reduced proportionally. This is calculated based on the value of the part taken over relative to the whole Works or Section.
Purpose:
- Flexibility in Taking Over:
- The clause allows the Engineer, at the Employer’s discretion, to issue a Taking-Over Certificate for parts of the Permanent Works. This means that the Employer can start using parts of the construction before the entire project is completed.
- Controlled Usage:
- It sets out the conditions under which the Employer can use parts of the Works before the whole project is taken over. The intent is to prevent premature or unauthorized use of the project that could lead to disputes or damage.
- Testing and Defects:
- The clause ensures that the Contractor still has the opportunity to carry out any outstanding Tests on Completion, which are essential for verifying that the work meets the contractual standards.
Implications:
- Deemed Taking Over:
- If the Employer uses a part of the Works without a Taking-Over Certificate, that part is considered as taken over from the date it is used. This shifts the responsibility for the care of that part from the Contractor to the Employer.
- Liability Shift:
- Once a part is deemed taken over because of the Employer’s use, the Contractor is no longer liable for that part. This means the Contractor will not be responsible for any damage or maintenance for that part from that point forward.
- Financial Adjustments:
- If the Employer’s use of a part of the Works causes the Contractor to incur additional costs, the Contractor is entitled to claim these costs plus a reasonable profit. This ensures the Contractor is compensated for any additional work or expenses due to the Employer’s actions.
- Reduction in Delay Damages:
- The clause also provides for a reduction in delay damages for the remainder of the Works or Section after a part has been taken over. This is calculated based on the proportion of the value of the taken-over part to the total value of the Works or Section.
- Certification and Claims:
- The Contractor can request the Engineer to issue a Taking-Over Certificate for the part used by the Employer, and if there are additional costs incurred, the Contractor must notify the Engineer, leading to a determination under Sub-Clause 3.5.
In essence, Clause 10.2 is designed to manage and formalize the process of partial taking over of the Works, protecting both the Employer’s interests in using the Works when necessary and the Contractor’s interests in terms of liability and financial compensation. It provides a structured approach to handling situations where the Employer needs to use parts of the Works before the entire project is officially completed and taken over.
Let’s break down the flowchart into a detailed explanation that a novice can understand, step by step:
Starting Point: Engineer’s Discretion
- Engineer’s Discretion: The process begins with the Engineer, who acts on behalf of the Employer, deciding whether to issue a Taking-Over Certificate for parts of the construction project (Permanent Works). This decision is solely up to the Employer.
Two Possible Actions by the Engineer
- Issue Taking-Over Certificate for Part: If the Engineer decides to issue a certificate for a part of the project, it means that this part is considered complete enough to be used for its intended purpose. However, the Contractor should still be given a chance to perform any final tests to ensure everything is working correctly before the official end of the project (the Defects Notification Period).
- Employer Uses Part of Works Without Certificate: If the Employer starts using a part of the project without waiting for the certificate, several things happen automatically:
- The part used is considered as officially handed over from the Contractor to the Employer from the date it was used.
- The Contractor is no longer responsible for the care or maintenance of that part.
- If the Contractor asks for it, the Engineer must issue a Taking-Over Certificate for the part that the Employer has used.
Contractor Incurs Additional Costs
- Contractor Incurs Cost: If the Contractor has to spend extra money because the Employer used part of the project without a certificate (and this was not agreed upon or specified in the contract), the Contractor can ask to be paid back for these costs plus a reasonable profit.
- Contractor Gives Notice to Engineer: The Contractor must inform the Engineer about these extra costs and the need for additional payment.
- Engineer Determines Cost + Profit: The Engineer then has to figure out how much extra money the Contractor should get. This includes the costs and the profit, and this amount will be added to the total price of the contract.
Adjustments to Delay Damages
- Reduction of Delay Damages for Remainder: If a part of the project is officially taken over by the Employer, the money that the Contractor has to pay for any delays in completing the rest of the project is reduced. This is because the Employer is already using part of the project, so the impact of the remaining work being late is less significant.
- Engineer Determines Proportional Reduction: The Engineer calculates how much the delay damages should be reduced. This calculation is based on the value of the part that has been taken over compared to the total value of the entire project or the section it belongs to.
Conclusion: Adjustments Made
- End: Adjustments Made: The process concludes with all the necessary changes made. This includes the Engineer issuing any required Taking-Over Certificates and figuring out any additional costs or changes to delay damages.
Additional Notes for Novices:
- Taking-Over Certificate: This is a document that officially states that a part of the construction project is complete and can be used by the Employer. It’s like a formal acknowledgment that the Contractor has done their job for that part.
- Permanent Works: These are the parts of the construction project that are intended to be permanent, like the buildings or structures.
- Defects Notification Period: This is a set time after the project is completed during which the Contractor must fix any issues that come up.
- Cost + Profit: If the Contractor has to do extra work or faces losses because the Employer used the project early, they are entitled to get back the money they spent plus a little extra for their trouble.
- Delay Damages: If the Contractor finishes the project late, they usually have to pay a penalty. But if the Employer is already using parts of the project, the penalty for the remaining work being late is less.
The colors in the flowchart represent different stages of the process:
- Pink: The starting point where the Engineer’s discretion is considered.
- Green: Successful issuance of certificates and completion of necessary tests.
- Orange: Actions taken by the Employer that lead to deemed taking over and additional costs.
- Yellow: Situations that lead to adjustments in delay damages.
