Clause 11.9 Performance Certificate: The Ultimate Guide to Project Closure in FIDIC Yellow Book 1999

Diverse Interpretations of Clause 11.9 Performance Certificate

1. Purpose: This clause serves as the formal closure of the Contractor’s obligations under the contract. It acts as the ultimate seal of approval for the Contractor’s work.

2. Implications: Issuance of the Performance Certificate is not just a procedural formality; it has financial, legal, and reputational implications. For instance, it can trigger final payments and release of securities.

3. Primary Aspects: The key elements are the timing of the certificate issuance and its criteria, which include the completion and testing of all works and the expiry of the Defects Notification Periods.

4. Expert Opinion: Legal experts often advise both Contractors and Employers to pay special attention to the conditions under which a Performance Certificate can be issued. This is because the certificate has the potential to resolve or create disputes.

5. Relevant Illustrations: In a U.S. federal construction project, failure to issue a Performance Certificate within the stipulated time resulted in legal ramifications, affecting the Contractor’s ability to bid for future projects.

   

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Interactions with Other Clauses

1. Clause 11.8 Contractor to Search: The issuance of the Performance Certificate generally follows the completion of any investigations into defects, as required under Clause 11.8.

2. Clause 14.7 Payment: The issuance often triggers the final payment to the Contractor, as stipulated in payment clauses.

3. Clause 4.2 Performance Security: The return of any performance bonds or guarantees often hinges on the issuance of the Performance Certificate.

Main Points to Keep in Mind

1. Timing: Be aware of the 28-day window for issuance after the expiry of the Defects Notification Periods.

2. Criteria: Ensure all contractual obligations, including defect rectifications and document submissions, are fulfilled before expecting the certificate.

3. Legal Implications: Understand that the certificate is the formal acceptance of the Works, and its issuance or lack thereof can have legal consequences.

Interactions with Other Clauses

Clause 11.2 Cost of Remedying Defects

This clause dictates who is responsible for the costs associated with fixing defects. The remediation of these defects must be completed to the Engineer’s satisfaction before the Performance Certificate can be issued, making this clause directly related to Clause 11.9.

Clause 3.5 Determinations

This clause outlines how costs and reasonable profits will be determined in various scenarios, including those that might be outstanding at the time of issuing the Performance Certificate. Therefore, Clause 3.5 can influence what is considered “completion” of the Contractor’s obligations.

Clause 12.0 TESTS AFTER COMPLETION

This clause is vital because the Performance Certificate can only be issued once all post-completion tests are satisfactorily completed. If additional tests are required after the works are deemed complete, they must be successfully passed before the Performance Certificate is issued.

Clause 14.7 Payment

Often the issuance of the Performance Certificate triggers the final payment to the Contractor. This makes it inherently linked to Clause 11.9.

Clause 4.2 Performance Security

The return or release of any performance bonds or guarantees often depends on the issuance of the Performance Certificate, making these clauses interconnected.

This updated section should provide a more comprehensive understanding of how Clause 11.9 interacts with other clauses within the FIDIC framework.

Flowchart

 

• Project Initiation: The project starts.
• Work Execution by Contractor: The Contractor starts executing the work.
  • Defects Identified During Inspection: During the inspection, if defects are identified, the process moves to the next stage.
• Invoke Clause 11.2: Cost of Remedying Defects: This clause is invoked to determine who will bear the cost of remedying the defects.
• Invoke Clause 3.5: Determinations: After the defects are remedied, this clause is invoked to determine costs and reasonable profits.
• Invoke Clause 12.0: Tests After Completion: After all work is completed and costs are determined, tests after completion are conducted.
  • If the tests fail, the process loops back to “Invoke Clause 11.2: Cost of Remedying Defects” for corrections and retesting.
• Invoke Clause 11.9: Issue Performance Certificate: If the tests are passed, the Performance Certificate is issued.
• Invoke Clause 14.7: Final Payment: The issuance of the Performance Certificate triggers the final payment to the Contractor.
• Invoke Clause 4.2: Release Performance Security: The Performance Certificate also triggers the release of any performance bonds or guarantees.
• Project Closure: The project is officially closed.

Real-World Case Studies on Clause 11.9 Performance Certificate

Case Study 1: The Delayed Certificate in a Chicago Infrastructure Project

Scenario: In a massive road construction project in Chicago, the Contractor fulfilled all obligations, including defect rectifications. However, the Engineer delayed issuing the Performance Certificate.

Application of Clause 11.9: The delay had financial implications for the Contractor, as final payment and the release of performance bonds were contingent upon the certificate’s issuance.

Outcome: Eventually, the matter was taken to arbitration. The Contractor was compensated for the financial losses incurred due to the delayed issuance, which was against the terms set in Clause 11.9.

Case Study 2: The Disputed Certificate in a Texas Housing Project

Scenario: In a housing project in Texas, the Engineer issued a Performance Certificate despite pending defect rectifications.

Application of Clause 11.9: This raised disputes as the Employer argued that the certificate should not have been issued until all defects were rectified according to Clause 11.2 Cost of Remedying Defects.

Outcome: Legal consultation led to the withdrawal of the Performance Certificate until all criteria, including defect rectifications, were met as per Clause 11.9.

Case Study 3: The Criteria Conflict in a New York Commercial Building

Scenario: In a commercial building project in New York, the Engineer was reluctant to issue the Performance Certificate due to pending tests outlined in Clause 12.0 TESTS AFTER COMPLETION.

Application of Clause 11.9: The Contractor argued that those tests were not necessary for the issuance of the certificate, leading to a disagreement.

Outcome: After reviewing Clause 12.0 and Clause 11.9, it was agreed that the pending tests were indeed essential, and the Performance Certificate was issued only after their successful completion.

Sample Letters

Sample Letter 1: From Engineer to Contractor

[Date]
[Contractor’s Address]

Dear [Contractor’s Name],

Subject: Prerequisites for Issuance of Performance Certificate Met – Clause 11.9

I am pleased to inform you that all prerequisites for issuing the Performance Certificate, as outlined in **Clause 11.9 Performance Certificate**, have been met. The official Performance Certificate will be issued within the next 28 days.

Please make sure to provide any remaining Contractor’s Documents to complete this process.

Sincerely,
[Engineer’s Name]
[Engineer’s Position]

Sample Letter 2: From Contractor to Engineer

[Date]
[Engineer’s Address]

Dear [Engineer’s Name],

Subject: Request for Issuance of Performance Certificate – Clause 11.9

As per our contractual obligations, we have completed all works, including defect rectifications and tests. We kindly request the issuance of the Performance Certificate under **Clause 11.9 Performance Certificate** within the stipulated 28 days.

Thank you for your prompt attention to this matter.

Best regards,
[Contractor’s Name]
[Contractor’s Position]

Sample Letter 3: From Engineer to Employer

[Date]
[Employer’s Address]

Dear [Employer’s Name],

Subject: Issuance of Performance Certificate – Clause 11.9

This is to inform you that the Performance Certificate for the project has been issued as of [Date], in accordance with **Clause 11.9 Performance Certificate**. A copy of the certificate is attached for your records.

This marks the formal acceptance of the Works and completion of the Contractor’s obligations under the Contract.

Sincerely,
[Engineer’s Name]
[Engineer’s Position]

Checklists

1. Checklist for Proficient Execution and Deployment of Clause 11.9

Task	Responsible Party	Criteria	Status
Complete all Works	Contractor	All Works as per contract are completed	❌
Rectify all defects	Contractor	No outstanding defects	❌
Complete Tests After Completion	Contractor/Engineer	All tests under Clause 12.0 are done	❌
Review Contractor’s Documents	Engineer	All necessary documentation is submitted and reviewed	❌
Issue Performance Certificate	Engineer	All criteria for issuance are met	❌
Notify Employer	Engineer	Send a copy of the Performance Certificate to the Employer	❌

2. Checklist for Applying and Overseeing Clause 11.9

Task	Checklist Item	Notes
Before Issuing Certificate	Verify all Works are completed	Includes tests and defect rectifications
	Check all Contractor’s Documents are submitted	Essential for formal closure
During Issuance	Issue within 28 days of criteria being met	As per Clause 11.9
	Notify all stakeholders	Especially the Employer and Contractor
After Issuance	Mark the formal project closure	In all project documentation
	Release final payments	As per Clause 14.7 Payment

3. Checklist to Guide and Monitor the Execution of Clause 11.9

Phase	Action Item	Done (✅/❌)
Pre-Issuance	Ensure all Works are complete	❌
	Verify all defects are rectified	❌
	Confirm all tests are completed	❌
During Issuance	Issue Performance Certificate	❌
	Notify Employer of issuance	❌
Post-Issuance	Close out project documentation	❌
	Trigger any related financial actions	❌

Frequently Asked Questions (FAQs) about Clause 11.9 Performance Certificate

1. What is the Performance Certificate?
   It’s a document issued by the Engineer that formally marks the completion of the Contractor’s obligations under the contract.

2. When is the Performance Certificate issued?
   The certificate is issued within 28 days after the latest of the expiry dates of the Defects Notification Periods, or as soon thereafter as all obligations are met.

3. Who issues the Performance Certificate?
   The Engineer is responsible for issuing the Performance Certificate.

4. What happens after the Performance Certificate is issued?
   It marks the formal acceptance of the Works and may trigger final payments and the release of performance bonds.

5. Is the Performance Certificate legally binding?
   Yes, it is legally binding and signifies the formal acceptance of the Works.

6. Does the Employer receive a copy of the Performance Certificate?
   Yes, a copy of the Performance Certificate is issued to the Employer.

Common Misunderstandings about Clause 11.9 Performance Certificate

1. It’s Just a Formality: Some may think that the certificate is a mere formality. However, it has significant legal, financial, and reputational implications.

2. Immediate Issuance: A common misunderstanding is that the Performance Certificate is automatically issued once the Works are complete. However, it is subject to various conditions including defect rectifications and sometimes additional tests.

3. Engineer’s Discretion: Some might think the Engineer has complete discretion in issuing the certificate. The issuance is actually bound by specific criteria laid out in the contract.

4. No Employer Involvement: Some may believe the Employer has no role in this clause. While the Engineer issues the certificate, a copy must be provided to the Employer, making them a key stakeholder.

5. Trigger for Final Payment: While it often triggers final payments, the specific financial implications are usually detailed in other clauses, like Clause 14.7 Payment.