What’s the purpose of Clause 5.4?
In simple terms, Clause 5.4 acts as your legal & technical compass: it keeps the Contractor’s design and execution aligned with the right technical standards and applicable Laws throughout the project — and, in the 2017 edition, it plugs into Clause 13 when new standards or regulations arrive mid-project.
1️⃣ Clause 5.4 as your contract compass
Think of Clause 5.4 as the contract’s legal and technical compass. It makes sure that everything the Contractor designs and builds stays on course with the right technical standards, local laws, and regulations — not just at the start, but all the way through until handover.
If the design or execution drifts away from those standards or Laws, Clause 5.4 is the provision the Employer will point to first.
2️⃣ Why this matters on real projects
In design-build projects, the Contractor isn’t just constructing — they’re also doing the design. That means the risk of non-compliance sits much closer to them.
If the design doesn’t meet building codes, or if outdated technical standards are used, you can end up with:
- ⏳ Project delays while designs, approvals or tests are redone.
- 💸 Costly redesigns and re-work to bring the project back into compliance.
- 👨⚖️ Legal and regulatory exposure if authorities or third parties raise issues.
Clause 5.4 forces the Contractor to keep looking over their shoulder (in a good way!) to check they are following the standards and Laws that really matter.
Clause 5.4 keeps the design & execution aligned where these four circles meet: Laws, standards, technical codes and the specific FIDIC Contract.
3️⃣ 1999 vs 2017 — quick comparison YB 1999 / 2017
Sets the basic rule: the Contractor must comply with the technical standards and Laws stated in the Contract and those applicable to the Works.
Less explicit about how to handle new standards or changes in law — you often jump to Clause 13.7 (Changes in Legislation) or Variations by interpretation.
Gives sharper wording on which Laws/standards apply and when, so it’s clearer what the Contractor must track and follow during the project.
Builds in a clearer route for new standards or regulatory changes that appear mid-project, and signposts you towards Clause 13 where compliance has time/cost consequences.
Works together with the more structured claims machinery in Clauses 20–21, making it easier to link compliance changes to EOT and money.
Breakdown of Clause 5.4 (1999 vs 2017)
Clause 5.4 tells you what must comply, with which standards and Laws, and at which point in time. The 2017 Yellow Book keeps the core logic from 1999 but sharpens the list, adds explicit ESG, and ties changes more cleanly into Clause 13 Variations and change-in-law relief.
Scope of compliance — what must comply?
1999 Yellow Book – Clause 5.4 (paraphrased)
In the 1999 edition, Clause 5.4 requires that the design, the Contractor’s Documents, the execution and the completed Works must comply with:
- The Country’s technical standards and building / construction / engineering Laws.
- Any standards specified in the Employer’s Requirements.
- Any standards or requirements defined by applicable Laws.
The effect is that the Contractor is anchored to Country standards + Employer’s Requirements + applicable Laws. Environmental and product-related Laws are covered, but only as part of that broad “applicable Laws” umbrella, not called out by name.
2017 Yellow Book – Clause 5.4 (modernised)
In the 2017 edition, Clause 5.4 upgrades and sharpens the list. It requires that the Contractor’s Documents, execution and completed Works comply with:
- Technical standards specified in the Employer’s Requirements.
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Applicable Laws, with explicit reference to:
- Health and safety Laws,
- Environmental Laws, and
- Laws applicable to the product being produced from the Works.
- Any other standards specified in the Employer’s Requirements or defined by applicable Laws.
The 2017 text assumes design is already picked up via Clauses 5.1–5.3 and through Contractor’s Documents, but the compliance net is now clearly ESG-flavoured.
Changed or new standards after the Base Date
Both the 1999 and 2017 editions contemplate what happens if new or changed technical standards / Laws come into force in the Country after the Base Date.
The Contractor must:
- Notify the Engineer promptly about the new or changed standards or Laws.
- If appropriate — or if the Engineer requests it — submit proposals for how to comply (technical solution, programme impact, cost impact).
Then the ball passes to the Engineer:
- If the Engineer decides that compliance is required and compliance requires changes to the execution of the Works,
- and the Contractor’s proposals amount to a Variation, the Engineer must initiate a Variation under Clause 13.
Clause 5.4 is therefore a trigger and routing clause. It doesn’t itself grant money or time; it pushes you into the Variations and change-in-law machinery.
Routing for entitlements:
- 1999 → Clause 13.1 / 13.3 / 13.7 (Variations & adjustments for changes in legislation).
- 2017 → Clause 13.1 / 13.3 / 13.6 (Variations + Adjustments for Changes in Laws).
Which edition / time reference actually applies?
Both the 1999 and 2017 texts address “which version” of the standards and Laws must be used.
1999 Yellow Book
- “All these Laws” for the Works / Section are those prevailing when the Works or Section are taken over under Clause 10.
- References to published standards are references to the edition applicable on the Base Date, unless the Contract states otherwise.
2017 Yellow Book
- “All these technical or other standards and Laws” for the Works / Section / Part are those prevailing when the Works, Section or Part are taken over under Clause 10.
- Again, published standards are deemed to refer to the edition applicable on the Base Date, unless stated otherwise.
🧠 This creates a two-layer time logic:
- Design baseline — you price and design using the edition of published standards in force at the Base Date.
- Compliance obligation — at Taking-Over, the Works must comply with the Laws and standards then in force.
The “gap” between those two moments is where change-in-law / Variation entitlements live.
Mini visual — 1999 vs 2017 snapshot
Here is a side-by-side snapshot of the key moving parts in Clause 5.4:
| Aspect | 1999 Yellow Book – 5.4 | 2017 Yellow Book – 5.4 |
|---|---|---|
| Who must comply? | Design, Contractor’s Documents, execution, completed Works. | Contractor’s Documents, execution, completed Works (design picked up via 5.1–5.3 and Docs). |
| What with? | Country standards + Laws + standards in Employer’s Requirements. | Employer’s Requirements standards + applicable Laws (including HSE, environmental, product Laws). |
| Time reference – standards edition | Published standards → edition applicable on the Base Date (unless stated otherwise). | Same — Base Date edition applies, unless the Contract says otherwise. |
| Time reference – Laws / standards | “All these Laws” are those prevailing when the Works / Section are taken over under Clause 10. | “All these technical or other standards and Laws” prevailing when the Works / Section / Part are taken over under Clause 10. |
| Changed / new standards after Base Date | Contractor notifies & proposes; if compliance needs changes to the Works and proposals amount to a Variation, Engineer initiates Variation under Clause 13. | Same overall logic, with more explicit wording and a clearer bridge into Clause 13 for time / cost. |
| ESG emphasis | Implicit — environmental / product Laws are just part of “applicable Laws”. | Explicit — health & safety, environmental and product Laws called out by name. |
When explaining this to a team, walk row-by-row: “scope”, then “time logic”, then “what happens when standards move”.
Key Interpretations & Risk Implications
Clause 5.4 makes the Contractor responsible for compliance at Taking-Over, but it does not force them to foresee every future technical change. Instead, it works together with Clause 13.6/13.7 and the Variation mechanism so that post–Base Date changes in Laws and mandatory standards are complied with and priced, provided the Contractor follows the notice and procedure steps.
Who actually carries the “compliance risk”?
Baseline rule:
The Contractor is on the hook to ensure that the design, Contractor’s Documents, execution and completed Works comply with the applicable technical standards and Laws at the time of Taking-Over. That is true even though their tender design and pricing were based on Base Date standards.
Does that mean the Contractor must magically foresee all future technical changes?
- ❌ No. Clause 5.4 says they must comply at Taking-Over.
- ✅ But Clause 13.6/13.7 (change in Laws) plus the Variation machinery say that post–Base Date impacts in time and cost from those new mandatory requirements are compensable, if the Contractor gives notice and follows the procedure.
In simple terms: the Contractor carries the operational duty to comply, but the financial/time consequences after Base Date are shared through the Variations and change-in-Laws clauses.
What about voluntary or “nice-to-have” standards?
Clause 5.4 is keyed to “applicable” standards and Laws. That normally means mandatory requirements, not every guidance note or recommended practice that appears in your discipline.
So, if a standard is voluntary only:
- It does not automatically fall inside the Clause 5.4 / Clause 13.6/13.7 framework.
- The Contractor is not obliged to adopt every new guideline the market produces.
But it moves into 5.4 territory if:
- The Employer’s Requirements say “Use latest version of XYZ Standard”, or “Comply with [New Green Building Guideline]”; or
- The Engineer/Employer later insists on adopting a new voluntary standard as a project requirement.
In that second scenario, you are no longer in “compliance with Law” land, but much more clearly in Variation territory: the Employer is upgrading the brief, not just asking you to obey the Law.
How does Clause 5.4 interact with change in Laws clauses?
In both editions, Clause 5.4 is the technical compliance gateway; the money and time sit in the change-in-Laws clauses:
- 1999 → Clause 13.7 (Adjustments for Changes in Legislation).
- 2017 → Clause 13.6 (Adjustments for Changes in Laws).
Clause 1.13 (Compliance with Laws) tells both Parties they must obey the Law. Clause 5.4 then gives the mechanism for how the Contractor brings that change into the Contract.
If the Engineer decides that compliance is necessary and implementing it changes the execution of the Works, and the Contractor’s proposals amount to a Variation, the Engineer must initiate a Clause 13 Variation.
Ignore Clause 5.4 and you end up in endless arguments: “Is this really a change in Law?”, “Was it already priced?”, “Is this just design risk?”.
What if the Contractor fails to comply?
Non-compliance with mandatory standards or Laws is not a “minor paperwork” issue. Under both 1999 and 2017 forms, it typically becomes:
- A defect under Clause 11 (Tests / Defects Liability), because the Works do not meet the contractual quality / legal standard.
- A potential breach of core duties under Clauses 4.1, 5.3 and 5.4, which deal with Contractor’s responsibilities and undertakings.
- A trigger for serious insurance / indemnity consequences, especially if the issue relates to health and safety, environment or product safety.
The underlying logic of both editions is simple: “You, Contractor, take design and construction responsibility. You must design and build to the applicable technical and legal framework. If that framework moves after the Base Date, we’ll treat that as a Variation.”
Cross-Referencing Clause 5.4 with Other Clauses
Clause 5.4 doesn’t live alone. It sits in the middle of a mini-ecosystem: upstream definitions and design duties feed into it, and downstream Variation and claims clauses turn compliance changes into time and money. Understanding those links is the difference between a neat claim and a messy dispute.
Upstream: definitions & core duties feeding into 5.4
Before Clause 5.4 can “work”, a few earlier clauses set the vocabulary and the design responsibility background.
1. Definitions – Base Date & Laws
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Clause 1.1.3 & 1.1.6 – define Base Date,
Laws and related terms. These definitions tell you:
- Which edition of standards / Laws you priced at tender; and
- What counts as a “Law” when you later argue change-in-Law.
2. Compliance duty – for both Parties
-
Clause 1.13 (1999 & 2017) – Compliance with Laws.
This is the overarching duty sitting above everything:
- Both Employer and Contractor must obey applicable Laws.
- 5.4 is the technical mirror of that duty, focused on design / Works.
3. Design & execution obligations
-
Clause 4.1 – Contractor’s General Obligations
The Contractor must design (where applicable), execute, complete and remedy defects in the Works. 5.4 then says: “and you must do all that in line with Laws & standards”. -
Clause 5.1 – General Design Obligations
Confirms that design must satisfy the Employer’s Requirements and relevant standards – 5.4 then adds the Laws / technical standards compliance overlay. -
Clause 5.3 (2017) – Contractor’s Undertaking
A more explicit confirmation in 2017 that the design + Works will comply with the Contract and Laws. 5.4 is where that undertaking is tested against changing standards.
Downstream: Variations, change-in-Law & claims
Once a change in standards or Laws hits 5.4, it flows into the Variation and claims engine of the contract.
4. Clause 13.1 & 13.3 – Variation mechanism
- Clause 13.1 – Right to Vary – gives the Employer (through the Engineer) the power to change the Works.
- Clause 13.3 – Variation Procedure – the step-by-step process to price, programme and agree the Variation.
- When 5.4 says “these new standards require a change in execution”, 13.1 / 13.3 are the gears that actually turn.
5. Clause 13.6 (2017) / 13.7 (1999) – change in Laws
- These clauses deal with adjustments for changes in Laws after the Base Date.
- Combined with 5.4, they answer the big question: “If the legal / standards framework moves after tender, who pays and who gets time?”
6. Clause 20 – formal claim procedures
-
Even if a change clearly fits 5.4 + 13.6/13.7, the Contractor still has to use
Clause 20 (Claims):
- 1999: 20.1 notice of claim.
- 2017: 20.2.1 / 20.2.2 notice + fully detailed claim.
- No notice → high risk of losing entitlement, even where the Law genuinely changed.
You can almost see 5.4 as a bridge clause: standards/Laws change ➜ 5.4 compliance trigger ➜ Employer’s Variation under Clause 13 ➜ time/cost via 13.6/13.7 ➜ formal claim procedures under Clause 20.
“What If” Scenarios – Bringing Clause 5.4 to Life
These three scenarios show how Clause 5.4 works when fire codes tighten, Employers chase prestige, and environmental rules toughen. Watch how each one runs through the same logic: Is it Law or preference? → Is a Variation needed? → Do we get time and money?
Fire code changes mid-project 🔥
Change in LawA new national fire code comes into force and now demands:
- Higher fire-rating for doors; and
- Larger escape stairs.
How Clause 5.4 operates:
-
Contractor becomes aware of the new code and promptly issues:
- a 5.4 notice (change in applicable standard / Law); and
- a 20.2.1 notice (change claim / potential EOT & Cost).
-
Contractor submits proposals, including:
- revised door specifications;
- stair redesign and structural impacts; and
- time and cost estimates for implementation.
-
Engineer considers:
- Is the new fire code applicable to this hospital?
- Is there any “grandfathering” or must the Works fully comply?
- Engineer decides: Yes, compliance is required, and the proposals require physical changes to the Works → a Variation under Clause 13.
Result:
- Contractor is instructed via a formal Variation.
- Time and cost are adjusted under Clause 13.6 (change in Laws), together with Clause 8 (programme / EOT) and Clause 20 (claims).
Employer gets a compliant hospital; Contractor does not absorb unpriced change-in-Law risk – if notices and procedures are used correctly.
Employer wants latest standard “for prestige” ⭐
Employer preferenceAfter contract award, the Employer says: “We want to switch to the 2025 Edition of Standard X—our Board wants the latest spec.”
- There is no legal requirement to use the 2025 edition yet – it is a prestige upgrade, not a statutory obligation.
Reading Clause 5.4 together with Clause 13:
- This is not a “change in Law” scenario. Clause 5.4 does not force the Contractor to adopt a newer, voluntary standard at its own cost.
-
It is an Employer-driven design enhancement. The proper route is:
- Engineer issues a Variation under Clause 13.1 to change the spec;
- Time and money are adjusted under the Variation mechanism.
No “you must comply at your cost under 5.4” argument here: this is clearly a Variation, not a change in Law.
New environmental rules after Base Date 🌱
ESG & emissionsThe Country introduces stricter emissions limits that affect the plant being built. The new Law:
- comes into force after the Base Date; and
- is fully applicable before Taking-Over.
How the clauses line up:
- Under Clause 1.13 + Clause 5.4, the Contractor must ensure the Works comply with the new environmental Law – there is no option to ignore it.
-
Under Clause 13.6 (2017) / 13.7 (1999), increased cost and time
caused by that new Law are compensable, subject to the usual requirements:
- timely notice under Clause 20 (20.1 or 20.2.1); and
- properly substantiated claim for EOT and Cost.
If the Employer resists (“environmental risk is yours!”):
- Contractor can point to the Base Date reference in 5.4 and the change-in-Law adjustment provisions in 13.6/13.7.
- The combination shows that post–Base Date environmental Laws sit inside the change-in-Law relief structure – not as unpriced Contractor design risk.
Modern ESG / environmental tightening is exactly what the 5.4 + 13.6/13.7 architecture is designed to handle – provided the claim admin is done properly.
Across all three examples, Clause 5.4 is not about guessing the future – it is about routing changes into the right combination of Clause 13 and Clause 20 so that compliance is achieved and priced fairly.
Suggestions for Clarity & Improvement in PCs
These five tweaks turn Clause 5.4 from a vague “comply with standards” duty into a clear playbook: you define the design basis, separate mandatory vs voluntary standards, bolt 5.4 onto 13.6/13.7 + Clause 20, and use transitional regimes sensibly so nobody pays for over-compliance by accident.
Create a “Standards and Laws Register”
Design basis made visibleAttach an annex to the Contract that acts as the design and compliance spine for Clause 5.4. At minimum, list:
-
All key technical standards with:
- Name & edition (e.g., “Eurocode 2: 2004”, “ASHRAE 90.1: 2019”); and
- whether each is mandatory or an Employer preference.
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All principal Laws / codes / regulations assumed at Base Date:
- building regulations;
- fire and life-safety codes;
- environmental / emissions Laws; and
- sector-specific product / plant regulations.
This dramatically reduces later arguments like: “Was that standard even part of the design basis?” – you simply point to the Register.
Clarify “applicable” vs “voluntary” standards
Avoid stealth upgradesIn the unamended books, “applicable standards” can be argued either way. A simple PC sentence can tidy this up, for example:
“For the purposes of Clause 5.4, ‘applicable standards’ means standards which are legally mandatory or expressly stated in the Employer’s Requirements. New non-mandatory standards shall only apply if instructed as a Variation.”
- The Contractor still has to comply with Laws and named standards; but
- the Contractor does not silently inherit every new guideline or voluntary industry recommendation that appears during the project.
This preserves the risk balance: prestige-driven upgrades stay in the Variation bucket, not the Contractor’s “design diligence” bucket.
Align 5.4 with Clause 13.6 / 13.7
Technical vs commercial rolesTo avoid double-counting or gaps, your PCs should explain how 5.4 and the change-in-Law clauses work together. You can:
- Add a cross-reference such as: “Any adjustment required under Clause 5.4 due to changes in Laws shall be dealt with in accordance with Clause 13.6 (2017) / Clause 13.7 (1999) and the claims provisions of Clause 20.”
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Clarify the division of labour:
- Clause 5.4 = the technical compliance trigger (we must change the design / Works);
- Clause 13.6/13.7 = the commercial adjustment engine (who gets time and money).
That way, everyone knows: if 5.4 says “comply”, then 13.6/13.7 + Clause 20 tell you how the cost/time moves.
Tie 5.4 notices into Clause 20 time limits
Protect entitlementMany disputes come from notices being “wrongly labelled” – a Contractor writes about a change in Laws but forgets to call it a Clause 20 notice. PCs can fix this by saying:
“A Notice under Clause 5.4 shall also be deemed a Notice under Clause 20.2.1 in respect of any associated claim for time or Cost.”
- This creates a single trigger letter for both technical compliance and claim preservation.
- It reduces the risk of losing entitlement just because the subject line said “5.4 – new fire code” instead of “Notice of Claim”.
Especially in live EPC projects, this small sentence often saves an otherwise good claim from a time-bar technicality.
Deal with transitional regimes
No unwanted over-complianceIn many jurisdictions, new codes come with transitional provisions – projects already permitted can stay under the old rules if they wish. PCs can harness this by providing:
-
If a new standard allows existing projects to continue under the old edition, then:
- Compliance with the new standard is only required if the Employer specifically instructs it; and
- such an instruction is treated as a Variation with normal time and cost consequences.
This avoids “gold-plating” the Works where nobody asked for it, and where nobody priced it – especially on long-running infrastructure schemes.
PC quick-check for Clause 5.4
- Do we have a clear Standards and Laws Register as an annex?
- Have we defined “applicable standards” and separated voluntary ones?
- Is there an explicit bridge from 5.4 to 13.6/13.7 and Clause 20?
- Does a 5.4 notice automatically count as a claim notice for time/Cost?
- Have we written in how to use transitional regimes (old vs new codes)?