Clause 4.7 [Setting Out] from FIDIC Yellow Book

At its core, Clause 4.7 tackles how the Contractor is expected to “set out” the Works. That means marking out locations, lines, elevations, and levels based on reference points provided by the Employer or Engineer. Think of it as GPS for construction—without the precision, the whole thing can veer off course.

Why is this important? Because any mistake in these early stages—no matter how small—can snowball into design clashes, compliance issues, and costly rework. So, it’s no exaggeration to say that this clause is mission-critical.

🕰️ What Changed from 1999 to 2017?

• 1999 Edition: Simple, concise, and left much to interpretation. It states:” The Contractor shall set out the Works in relation to original points, lines and levels of reference specified in the Contract or notified by the Engineer… The Employer shall be responsible for any errors in these specified or notified items of reference, but the Contractor shall use reasonable efforts to verify their accuracy before they are used.” Relief is granted if errors couldn’t reasonably have been discovered:”…the Contractor shall give notice to the Engineer and shall be entitled subject to Sub-Clause 20.1 to: (a) an extension of time… (b) payment of any such Cost plus reasonable profit…”
• 2017 Edition: Rebooted and reorganized. Now it’s split into three sub-clauses:
  • 4.7.1 Accuracy4.7.2 Errors4.7.3 Agreement or Determination
  This not only improves clarity, but also builds a more robust process for resolving issues if and when they arise.

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🧩 Let’s Break Down the 2017 Version

Now, let’s dive into how the 2017 version of Clause 4.7 works—broken down into three user-friendly, action-driven sub-clauses. And to make this extra practical, we’ll bring in the actual clause text so you can see exactly what the contract says alongside our interpretation. Think of this like your three-step guide for avoiding layout-related disasters.

📌 4.7.1 – Accuracy

“The Contractor shall:

• verify the accuracy of all these items of reference before they are used for the Works;
• promptly deliver the results of each verification to the Engineer;
• rectify any error in the positions, levels, dimensions or alignment of the Works; and
• be responsible for the correct positioning of all parts of the Works.”

Here, the spotlight is on diligence. This sub-clause is essentially a pre-flight checklist for the Contractor:

• ✅ Verify the reference points. Don’t just assume they’re correct—double-check before putting shovels in the ground.
• 📝 Report your findings. Once you verify the accuracy, send those results to the Engineer. This is key documentation that may protect you later.
• 🔧 Fix your own mistakes. If the error is due to your own misinterpretation or mishandling, you’re on the hook.
• 📍 You own the positioning. Ultimately, you are responsible for aligning every bolt, beam, and boundary.

The emphasis here is accountability before action. It’s all about preventing errors from cascading into larger issues.

📌 4.7.2 – Errors

“If the Contractor finds an error in any items of reference, the Contractor shall give a Notice to the Engineer describing it:

• within the period stated in the Contract Data (if not stated, 28 days) after the Commencement Date in the case of any item in the Employer’s Requirements; or
• as soon as practicable after receiving the items of reference in any other case.”

This one’s all about timing and communication. If you spot an error in the original reference points:

• 📬 Send a Notice to the Engineer. Be clear and detailed about what’s wrong.
• ⏱️ Mind the deadline. If the error is in the Employer’s Requirements, you’ve got 28 days from the Commencement Date. If it’s from later-issued data, the clock starts ticking from the day you received it.

Miss this window, and you may forfeit your right to claim. It’s not just about what you know, but how fast you act.

📌 4.7.3 – Agreement or Determination

“After receiving a Notice under Sub-Clause 4.7.2, the Engineer shall proceed under Sub-Clause 3.7.1 [Consultation to reach agreement] to agree or under Sub-Clause 3.7.2 [Engineer’s Determination] to determine:

• whether or not there is an error in the items of reference;
• whether or not, before the error was used or relied upon by the Contractor, an experienced contractor exercising due care would have discovered such error; and
• if an error is found and would not have been discovered by such experienced contractor, the measures (if any) to rectify the Works and any delay and/or Cost Plus Profit to which the Contractor is entitled.”

Once the Notice is sent, the Engineer becomes the referee:

• 👨‍⚖️ Is it really an error? The Engineer first checks whether the reference points are incorrect.
• 🧠 Could you have caught it? If an experienced contractor should’ve spotted it with reasonable care, the blame might come back to you.

If the Engineer rules that the error was unforeseeable, good news:

• 💸 You may get compensated. Under Sub-Clause 13.3.1, this rectification becomes a Variation.
• ⌛ You can get more time and money. That means an Extension of Time (EOT) and/or Cost Plus Profit via the claims procedure under Clause 20.2.

Together, these sub-clauses spell out a clear, fair process that rewards diligence and penalizes carelessness. If you’re thorough, timely, and communicative, Clause 4.7 becomes your shield—not your sword.. Think of this like your three-step guide for avoiding layout-related disasters.

🔗 Where This Clause Links In

Clause 4.7 doesn’t operate in a vacuum—it’s part of a well-oiled machine. Let’s explore how it syncs up with other key clauses in both the 1999 and 2017 editions:

• Clause 2.5 (2017) – This clause is like the “source code” for any site-related data. It spells out what the Employer has to provide in terms of benchmarks, levels, and boundaries. So, if there’s an error in the data you’re setting out from, it likely originated here.
• Clause 3.7 (2017) / Clause 3.5 (1999) – These are the decision-making engines. When the Contractor raises a flag under Clause 4.7.2 about a possible error, it’s the Engineer who, under Clause 3.7 (2017) or 3.5 (1999), steps in to make the call. Is it really an error? Should the Contractor have noticed it? What’s fair compensation? These questions all land here.
• Clause 5.1 – This clause reminds Contractors to put on their detective hats. It obliges them to thoroughly review the Employer’s Requirements and speak up early if something looks fishy. In other words, if you didn’t scrutinize properly and missed an obvious error, your claim under 4.7 might hit a wall.
• Clause 20.2 (2017) / Clause 20.1 (1999) – When things do go wrong, these are your lifelines. They lay down the roadmap for claims: when to notify, what evidence to gather, how to quantify time and cost. If you’ve followed Clause 4.7 but still incurred delays or costs, you’ll likely be filing under one of these.

So, next time you read Clause 4.7, picture it as the central cog in a wheel of proactive risk management. It’s connected to your rights, your responsibilities, and your remedies—so knowing how it fits into the bigger picture is half the battle won.

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.

🛠️ Real-Life Story Time

Let’s say a Contractor is working on a solar farm in Southern California. The Employer provides geodetic coordinates and elevation markers as part of the tender. Midway through installation, discrepancies are discovered between the actual terrain and the provided data.

Under the 2017 contract:

• The Contractor notifies the Engineer under Sub-Clause 4.7.2.
• The Engineer assesses under Sub-Clause 4.7.3.
• If unforeseeable, the Contractor is entitled to Variation and/or compensation under Clause 20.2.

Under the 1999 version, a similar route follows—notice to the Engineer and reliance on Sub-Clause 20.1 for claims.

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:

No.	Task Description	Instructions/Guidelines	Progress Checkpoint	Aligned with Project Goal
1	Define specific tasks related to Clause 4.7	Organize tasks in a logical order	[ ]	[ ]
2	Gather necessary resources for execution	Ensure all tools and materials are ready	[ ]	[ ]
3	Communicate tasks to team members	Ensure clarity and understanding	[ ]	[ ]
4	Monitor progress of Clause 4.7 execution	Regularly check for updates	[ ]	[ ]
5	Review and update tasks as necessary	Reflect any changes in processes	[ ]	[ ]

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

No.	Task Description	Standard Operating Procedure	Double-Checking Measure	Feedback Loop
1	Initiate application of Clause 4.7	Follow initial setup guidelines	[ ]	[ ]
2	Monitor application progress	Adhere to quality standards	[ ]	[ ]
3	Address any issues or discrepancies	Use troubleshooting procedures	[ ]	[ ]
4	Ensure team members are trained on Clause 4.7	Provide necessary training materials	[ ]	[ ]
5	Review and refine application process	Incorporate feedback and improvements	[ ]	[ ]

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

No.	Task Description	Collaboration Point	Accountability Check	Ownership Check
1	Begin execution of Clause 4.7	Collaborate with relevant departments	[ ]	[ ]
2	Monitor execution milestones	Seek feedback from team members	[ ]	[ ]
3	Address any challenges in execution	Collaborate for problem-solving	[ ]	[ ]
4	Ensure compliance with Clause 4.7 guidelines	Regularly review compliance metrics	[ ]	[ ]
5	Celebrate successful execution milestones	Recognize and reward team achievements	[ ]	[ ]

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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.

⚠️ Common Pitfalls (and How to Dodge Them)

Scenario: Contractor delays checking data, discovers an error too late.

• Risk: Lost entitlement due to missed notice period under Sub-Clause 4.7.2.
• Fix: Conduct early verification and submit findings under 4.7.1.

Tip: Extend notice periods in Particular Conditions for large/complex works.

Challenge: “Due care” is ambiguous.

• Suggestion: Define it using industry standards like ASTM or ISO, and require a setting-out checklist.

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✍️ Room for Improvement

Clause 4.7 is fundamentally sound, but can be enhanced:

• Define “experienced contractor” and “due care.”
• Require setting-out verification protocols.
• Recommend technology use (e.g., GPS, drones).