(The Employer is a leading company in the hospital and medical care sector who wishes to build a new hospital. The Employer is considering approaching a financial institute to secure most of the funds; therefore, he requires clarity and stability in terms of the Project ' s budget and time for completion. Which book do you recommend?)
Correct Answer: C
The key requirement in this scenario is certainty of cost and time, particularly because the Employer intends to secure financing from a financial institution. Lenders typically require a high degree of predictability regarding project completion date and final contract price. The FIDIC Silver Book 2017 (EPC/Turnkey Contract) is specifically designed for such situations. Under this form, the Contractor assumes full responsibility for both design and construction, as well as a significant portion of project risks, including many that would otherwise remain with the Employer under other FIDIC forms. This results in a lump-sum, fixed-price contract with greater certainty in final cost and schedule. In contrast, the Red Book allocates design responsibility to the Employer and allows for more variability due to remeasurement and variations, making cost less predictable. The Yellow Book, although design-build, still allows more balanced risk sharing and potential adjustments, which can reduce price certainty compared to the Silver Book. From a contract management perspective, the Silver Book is commonly used for privately financed infrastructure or projects requiring strong lender confidence, as it minimizes Employer risk and enhances bankability. Therefore, for a hospital project requiring financial backing and maximum certainty in cost and time, the Silver Book is the most appropriate choice.
Question 17
In the FIDIC Silver Book (edition 1999), if the Employer has instructed the Contractor as per Sub-Clause 8.6 to provide a revised programme to stay within Time of Completion, the Employer can claim additional costs. This only applies if the revised programme is still too slow to complete the Works within the Time for Completion. Is this statement true or false?
Correct Answer: A
This statement is true. Under FIDIC Silver Book 1999, Sub-Clause 8.6, the Employer can instruct the Contractor to submit a revised programme to meet the contractual Time for Completion. If, after such instruction, the revised programme still shows the Works will not complete on time, the Employer may claim additional costs (such as delay damages or compensation) due to continued delay. Thus, the Employer's right to claim additional costs is contingent on the revised programme not enabling timely completion. References: FIDIC Silver Book 1999 Edition, Sub-Clause 8.6 - Revised Programme FIDIC Contract Manager Study Guide, Module on Claims and Delay Damages
Question 18
Under the FIDIC Red Book (edition 2017), if the Contractor fails to comply with Site clearance obligation, what two options does the Employer have? Choose all of the correct answers (multiple possibilities)
Correct Answer: A,C
* Option A is correct: The Employer may sell or dispose of any items left by the Contractor and reinstate the Site, recovering costs from the Contractor. * Option C is correct: The Employer is entitled to recover costs for clearing, reinstatement, and disposal exceeding proceeds from sale. * Option B is incorrect; the Engineer does not hold this authority, but the Employer does under the contract. * Option D is incorrect; if the Contractor fails to clear the Site, the Employer may take action to protect the Site. References: FIDIC Red Book 2017 Edition, Sub-Clause 8.7 - Contractor ' s Use of Site FIDIC Contract Manager Study Guide, Module on Contract Administration Procedures
Question 19
When does discharge become effective under the FIDIC Red Book (edition 1999)? (1 correct answer applies)
Correct Answer: C
Under the FIDIC Red Book 1999, discharge becomes effective when the Contractor has received full payment certified by the Final Payment Certificate and the return of the Performance Security (Sub-Clause 14.10). Both elements must be completed for the contract to be considered fully discharged, releasing the Contractor from further obligations or liabilities under the contract. Option A is incomplete as payment alone does not fully discharge the Contractor. Option B is incomplete as return of Performance Security alone is insufficient. Option D is incorrect because the contract does not require a discharge notice signed by the Employer beyond these conditions. References: FIDIC Red Book 1999 Edition, Sub-Clause 14.10 - Final Payment and Discharge FIDIC Contract Manager Study Guide, Module on Project Close-Out and Final Account
Question 20
Regarding the FIDIC Red Book (edition 1999), which two statements are true?
Correct Answer: A,D
Comprehensive and Detailed Explanation: Option A is true: In emergencies, verbal notices are permitted with the requirement to follow up in writing. Option D is true: Notices and communications may be sent in various formats including handwritten, typed, printed, or electronic systems. Option B is incorrect; a notice does not necessarily have to be signed by all these representatives; it depends on the party issuing the notice. Option C is incorrect; proof of receipt is ideal but not always strictly required for legal validity depending on contract provisions. References: FIDIC Red Book 1999 Edition, Sub-Clause 1.3 - Communications and Notices FIDIC Contract Manager Study Guide, Module on Contract Communication