The Contractor is entitled to an advance payment. Applying FIDIC Red Book (edition 1999), which two of the following statements are correct? Choose all of the correct answers (multiple possibilities):
Correct Answer: A,D
Under FIDIC Red Book 1999, advance payment is intended to assist the Contractor in financing the mobilization and early works costs before the Contractor begins receiving regular payments for work performed (Option A). It is not a payment for work already completed, so Option B is incorrect. The General Conditions provide that the advance payment is usually made in a lump sum or agreed instalments and that the Employer makes the payment in advance (Option C is partially true but generally it can be one or multiple instalments, depending on contract terms). Importantly, the advance payment must be repaid by the Contractor through deductions from subsequent interim payments (Option D), ensuring the Employer recovers the advanced funds as the work progresses. References: FIDIC Red Book 1999, Sub-Clause 14.2 - Advance Payment FIDIC Contract Manager Study Guide, Module on Payment Procedures and Financial Management
Question 22
There are four reasons that the Employer/Contractor shall advise in advance each other and the Engineer of any known or future events or circumstances. Which two of the following statements areNOTapplicable reasons? (Choose all correct answers - multiple possibilities)
Correct Answer: B,D
Comprehensive and Detailed Explanation: Under the FIDIC Red Book 2017 (similar principles apply in other editions), Sub-Clause 4.1 ("Contractor's General Obligations") and Sub-Clause 3.4 ("Delay Damages") require both Employer and Contractor to notify the Engineer in advance about any events or circumstances which maydelay the worksoradversely affect the Contractor's personnel or progress. This early notification ensures proper management and mitigation of risks that could impact the project timeline or quality. * Option A (Delay the execution of the Works or a Section)is a core reason for notification since delays affect the critical path and programme, requiring possible extensions or adjustments. * Option C (Adversely affect the work of the Contractor's Personnel)is also a valid reason because issues affecting workforce productivity or availability can impact project delivery. On the other hand: * Option B (Decrease the Contract Price)isnota reason to notify. Changes in contract price usually arise from variations or claims but are not a "known or future event" requiring prior notification unless linked to a variation or compensation event. * Option D (Increase the performance of the Works when completed)is positive and does not negatively affect project progress or cost; therefore, it is not a reason for advance notification under these contract provisions. Thus, the twonot applicablereasons are B and D. References: FIDIC Conditions of Contract for Construction, 2017 Edition, Sub-Clause 4.1 - Contractor's General Obligations FIDIC Conditions of Contract for Construction, 2017 Edition, Sub-Clause 3.4 - Delay Damages FIDIC Contract Manager Study Guide, Module on Communication and Reporting
Question 23
A Contractor under the FIDIC Silver Book (edition 1999) has not been able to finish the Works within the Time for Completion as mentioned in the Contract and has overrun the Time for Completion by 3 months. This results in a significant claim of $4,500,000 from the Employer. The Employer has submitted this claim to the Contractor according to the procedures as mentioned in the Contract. The Contractor asks you for advice and refers to Clause 8. Which one of the following statements is NOT true?
Correct Answer: C
Comprehensive and Detailed Explanation: Option C is not true because under the FIDIC Silver Book (1999 edition), the delay damages (liquidated damages) specified in the contract are intended as full compensation for the Employer's loss resulting from late completion. The contract usually excludes other claims for actual losses or extra costs beyond the delay damages. Option A is true; Variations can include extensions of time. Option B is true; identifying delay causes is essential for claims and defences. Option D is true; if the Employer causes suspension not attributable to the Contractor, delay damages claims by the Employer are generally unjustified. Thus, the Employer cannot claim extra costs over and above delay damages as per typical Silver Book provisions. References: FIDIC Silver Book 1999 Edition, Sub-Clause 8 - Time for Completion and Delay Damages FIDIC Silver Book 1999 Edition, Sub-Clause 2.5 - Employer's Claims FIDIC Contract Manager Study Guide, Module on Claims and Delay Damages
Question 24
(Which two FIDIC Books (edition 2017) should especially be considered for use if the Employer needs the Contractor to take responsibility for the design and execution of the project. The construction will involve substantial work underground or work in other areas which tenderers cannot inspect. Choose all of the correct answers (multiple possibilities).)
Correct Answer: A,C
The key issue in this question is the allocation of design responsibility and the treatment of unforeseeable physical conditions (particularly relevant for underground works or inaccessible areas). The Yellow Book 2017 is specifically designed for projects where the Contractor is responsible for both design and execution, while still maintaining a balanced risk allocation. Importantly, Sub-Clause 4.12 [Unforeseeable Physical Conditions] allows the Contractor to claim additional time and/or cost for conditions that could not reasonably have been foreseen. Therefore, for projects involving underground or uninspectable works, the Yellow Book is highly appropriate. Hence, Option A is correct. The Silver Book 2017 (EPC/Turnkey) also places full responsibility for design and execution on the Contractor. However, it adopts a much stricter risk allocation: the Contractor generally bears the risk of unforeseen physical conditions. This makes it less suitable for projects with significant uncertainty-unless amendments are made. By modifying Sub-Clause 4.12 in the Particular Conditions to reallocate risk (e.g., allowing relief for unforeseeable conditions), the Silver Book can be adapted for such projects. Therefore, Option C is correct. Option B (Red Book) is incorrect because design responsibility primarily lies with the Employer, not the Contractor. Option D is incorrect because using the Silver Book without amendment would place excessive and potentially unmanageable risk on the Contractor in cases involving unknown subsurface conditions. This reflects a core FIDIC principle: selecting the appropriate form depends heavily on risk allocation and the degree of uncertainty in site conditions.
Question 25
Which one of the following documents constitutes a contract and is considered binding on both parties, when the Employer wants to award the Contract to the tenderer?