Darko Spasevski, Ph.

D1

The Role Of The Engineer In The Fidic Conditions Of Contracts

Abstract

The engineer has sifnificant role in the process of construction

contract administration. In general he can act as agent of the employer.
But his role is not restricted to agency relathionships. At the same tame he
is acting as independent arbitrator in the relations between the employer
and the contractor. The position of the engineer is defined by the
mandatory rules of the public law (for example in Macedonia that is Law
on Construction). If we extract the mandatory rules of public law, the next
most important document which is defining the role of engineer is the
contract itself. The international practice, first of all FIDIC, is plaing crutial
role in setting of the rules determining the engineers role. A lot of his
obligations towards the employer are rasing from the contract.

Key words: Engineer, Contractor, Employer

1. Position of the Engineer according to the FIDIC Conditions

of Contract

The engineer has specific role into the process of execution of

construction contracts. He has large specter of responsibilities which are
determining his crucial role in the administration of construction contracts.
Contract administration involves making decisions and timely flow of
information and decisions to enable competion of the project as
required by the contract documents including review and observation of
the construction project.2 This is important to the Employer and the
Contractor because this is determining that the work is proceeding in
conformity with the agreement, and it allows a possibility to inspect if
there are inaccuracies, ambiguities or inconsistencies in the design.3 As it
can be seen, there are few terms describing the engineer, which including
architect and consultant. The termus used in this text, i.e. engineer,

1
Assistant Professor, Faculty of Law Iustinianus Primus - Skopje
2
http://csc-dcc.ca/Education/Construction+Contract+Administration/
3
Ibid.
2 Iustinianus Primus Law Review Vol. 6:1

architect and consultant are considered as a synonyms.

Contract administration handles daily contractual issues in a

contract execution and copes with them in accordance with the progress
of the whole project. Contractual issue may be related to time, cost,
quality and other obligations set out in the contract.4

The basic structure of the engineers role in to the administration

of construction contracts is set by the the FIDIC Conditions of Contacts.
FIDIC is founded in 1913, and is charged with promoting and
implementing the consulting engineering industrys strategic goals on
behalf of its Member Associations and to disseminate information and
resources of interest to its members.5 Today, FIDIC membership covers
97 countries of the world. FIDIC, in the furtherance of its goals, publishes
international standard forms of contracts for works and for clients,
consultants, sub-consultants, joint ventures and representatives, together
with related materials such as standard pre-qualification forms.6 FIDIC
also publishes business practice documents such as policy statements,
position papers, guidelines, training manuals and training resource kits in
the areas of management systems (quality management, risk management,
business integrity management, environment management, sustainability)
and business processes (consultant selection, quality based selection,
tendering, procurement, insurance, liability, technology transfer, capacity
building).7

In this part of the text, next FIDIC documents worth to be

mentioned: 1) Conditions of Contract for Construction, 1999; 2)
Conditions of Contract for Plant and Design-Built, 1999; 3) Conditions
of Contract for EPC/Turnkey Projects,1999; 4) The Short Form
of Contract,1999; 5) ultilateral Development Banks (MDB) Harmonised
Conditions of Contract for Construction, 2005 and 6) Conditions of
Contract for Design, Build and Operate Projects, 2007.

The Red Book of 1999 is containign norms which are

representing equal balanced risk allocation between the Contractor and
Employer, especially in the parts concerining drawings and designs.
The Yellow Book (Conditions of Contract for Plant and
Design-Built) also is based on balanced risk allocation clauses, where the
risk for the drawings is on the side of the Contractor.
In the Conditions of Contract for EPC/Turnkey Projects or
the Silver Book, the large amount of the contractual risk is shift to the
Contractor. This is acceptable if we take in to consideration of the

4
Niralula Rajenda, Kusajagani Sjujni, ontract administration for a construction
project under FIDIC Red Book contract in Asian developing countries, aviable
at
http://management.kochi-tech.ac.jp/ssms_papers/sms11-
8874_26c77ee7398a284f7160e5ef1a6f075e.pdf, accesed on 10.10.2014.
5
http://fidic.org/about-fidic, accesed on 1.10.2014.
6
Ibid.
7
Ibid.
2014 Iustinianus Primus Law Review 3

nature of turnkey concept of construction project. Here the role of contract

administration is complety different from the Red Book and the Yellob
Book because almost whole amount of the risk is in the hands of the
Contractor.
According to FIDIC Red and Yellow Book from 1999, clause
3.1., the employer shall appoint the engineer who shall carry out the
duties assigned to him in the contract. The Engineer according to this
FIDIC clause shall have no authority to amend the contract. But, the
engineer may exercise the authority attributable to the engineer as
specified in or necessarily to be implied from the contract. If the Engineer
is required to obtain the approval of the employer before exercising a
specified authority, the requirements shall be as stated in the particular
conditions. The employer undertakes not to impose further constraints on
the engineers authority, except as agreed with the contractor. However,
whenever the engineer exercises a specified authority for which the
employers approval is required, then (for the purposes of the contract)
according to FIDIC RED and Yeloow Book, the employer shall be
deemed to have given approval. Except as otherwise stated in clause 3.1.
of FIDIC Red and Yellow Book: a) whenever carrying out duties or
exercising authority, specified in or implied by the contract, the engineer
shall be deemed to act for the employer; (b) the engineer has no authority
to relieve either party of any duties, obligations or responsibilities under
the contract; and (c) any approval, check, certificate, consent,
examination, inspection, instruction, notice, proposal, request, test, or
similar act by the engineer (including absence of disapproval) shall not
relieve the contractor from any responsibility he has under the contract,
including responsibility for errors, omissions, discrepancies and non-
compliances.
According to clause 3.2 of the FIDIC Red and Yellow Book, the
engineer may from time to time assign duties and delegate authority to
assistants, and may also revoke such assignment or delegation. These
assistants may include a resident engineer, and/or independent inspectors
appointed to inspect and/or test items of plant and/or materials. The
assignment, delegation or revocation shall be in writing and shall not take
effect until copies have been received by both parties. However, unless
otherwise agreed by both parties, the engineer shall not delegate the
authority to determine any matter in accordance with Sub-Clause 3.5 of
the FIDIC Red and Yellow Book.
Assistants shall be suitably qualified persons, who are competent
to carry out these duties and exercise this authority, and who are fluent in
the language for communications defined in the contract.
Each assistant, to whom duties have been assigned or authority
has been delegated, shall only be authorised to issue instructions to the
contractor to the extent defined by the delegation. Any approval, check,
certificate, consent, examination, inspection, instruction, notice, proposal,
request, test, or similar act by an assistant, in accordance with the
delegation, shall have the same effect as though the act had been an act of
the Engineer. However according to clause 3.2 of FIDIC Red and Yellow
Book: (a) any failure to disapprove any work, plant or materials shall not
constitute approval, and shall therefore not prejudice the right of the
4 Iustinianus Primus Law Review Vol. 6:1

engineer to reject the work, plant or materials; (b) if the contractor

questions any determination or instruction of an assistant, the contractor
may refer the matter to the Engineer, who shall promptly confirm, reverse
or vary the determination or instruction.
The Engineer according to clause 3.3 of FIDIC Red and Yellow
Book may issue to the contractor (at any time) instructions which may be
necessary for the execution of the works and the remedying of any defects,
all in accordance with the contract. The contractor shall only take
instructions from the engineer, or from an assistant to whom the
appropriate authority has been delegated under this Clause. The contractor
shall comply with the instructions given by the engineer or delegated
assistant, on any matter related to the contract. These instructions shall be
given in writing.
According to clause 3.4 of the FIDIC Red and Yelow Book, if the
Employer intends to replace the engineer, the employer shall, not less
than 42 days before the intended date of replacement, give notice to the
contractor of the name, address and relevant experience of the intended
replacement engineer. The employer shall not replace the engineer with a
person against whom the contractor raises reasonable objection by notice
to the employer, with supporting particulars.

2. Structuring the position of the Engeneer between the

Contractor and the Employer

Usualy will be expected that the mutual trust position will allow
any party to notifies to other of any events which may be reasons for
delay in the execution of the contract and will result with extra cost.
However, a contract requires the Contractor to notify the
Owner/Employer/Project Manager of the event or circumstances which
needs additional time and cost.8 The architect serving as a construction
administrator observes construction for conformity to construction
drawings and specifications.9 These documents are part of the legal
contract between the owner and general contractor.10 When interpreting
these legal documents, the architects role shifts. The architect serves not
as the owners direct agent but in a quasi- judicial capacity, showing
partiality to neither owner nor contractor.11 At other times during the
construction phase the architect acts as the owners representative and

8
Niralula Rajenda, Kusajagani Sjujni, ontract administration for a construction
project under FIDIC Red Book contract in Asian developing countries, aviable
at
http://management.kochi-tech.ac.jp/ssms_papers/sms11-
8874_26c77ee7398a284f7160e5ef1a6f075e.pdf, accesed on 10.10.2014
9
Mays Patrick, Contract Administration, avialble at
http://www.aia.org/aiaucmp/groups/aia/documents
/pdf/aiab089226.pdf, accesed on 10.8.2014.
10
Ibid.
11
Ibid.
2014 Iustinianus Primus Law Review 5

agent.12

The law presumes that the architect is aware of the whole of

the terms of the building contract under which he or she is acting.
That is fundamental to the architect s responsibilities.13 Unfortunately
too many architects have very limited knowledge of the contracts which
they purport to administer.14 The architect has no intrinsic powers by
virtue of being the architect under a particular contract, still less by virtue
of simply being an architect.15
The continuing involvement of the architect during the
construction phase helps assure the client that the completed building will
reflect the design intent, and further ensures the quality of materials and
workmanship.16 When the architect is retained by the owner to administer
the construction contract, the architect is the owners representative in
dealing with the contractor.17
A construction administrator needs substantial design and
construction experience, a thorough understanding of construction
techniques and methods, and the ability to interpret the intent of
construction documents.18 The construction administrator also needs a
thorough understanding of building codes, standards, and regulations as
well as the ability to communicate, negotiate, and resolve disputes with
trade personnel.
So far as claims are concerned, the architect may only act in the
way set out in the contract. If there is a pre - condition which must be
satisfied before the architect can act, such as the giving of notice by the
contractor, an architect who acts without that pre - condition is acting
without authority and may become liable to the employer. The exercise of

12
Ibid.
13
Chappell David, Building Contract Claims Fifth Edition, Wiley-Blackwell,
2011
14
Ibid.
15
Ibid.
16
Mays Patrick, Contract Administration, avialble at
http://www.aia.org/aiaucmp/groups/aia/documents
/pdf/aiab089226.pdf, accesed on 10.8.2014.
17
The architect will be available for advice and consultation with the owner. In
monitoring the construction, the architect will be alert to whether the contractor
has carried out the design intent and the contract requirements relating to quality
of workmanship and materials. The architect will endeavor to guard the owner
against defects and deficiencies in the work. A general rule of thumb is that about
25 percent of the architects total compensation for services accounts for
construction administration. This fee percentage is generally sufficient to
compensate the architect for the following services during construction: 1)
Spending one day per week on site, attending a meeting and observing the
progress of construction, 2) Responding to questions from the contractors and
material suppliers, 3) Reviewing shop drawings and submittals, 4) Reviewing
and certifying monthly applications for payment, 5) Authoring clarifications and
minor changes to the documents, 6) Assisting consultants with construction
administration duties, 7) Record keeping and 8) Project closeout responsibilities.
Ibid.
18
Ibid.
6 Iustinianus Primus Law Review Vol. 6:1

that discretion is so circumscribed by the terms of that provision of the

contract as to emasculate the element of discretion virtually to the point of
extinction.19
Architect and the quantity surveyor, if so instructed, have an
implied duty to carry out the ascertainment of direct loss and/or expense
within a reasonable time from the time that reasonably sufficient
information is received from the contractor.20
Very interesting for analysing is the case of Pacific Associates v
Baxter. Halcrow International Partnership were the engineers for work in
Dubai for which Pacific Associates were in substance the contractors
under a FIDIC contract. During the course of the work, the contractors
claimed that they had encountered unexpectedly hard materials and that
they were entitled to extra payment of some 31 million. Halcrow
refused to certify the amount and in due course, Pacific Associates sued
them for the 31 million plus interest and another item. It was claimed
that Halcrow acted negligently in breach of their duty to act fairly and
impartially in administering the contract. At fi rst instance, the court
struck out the claim, holding that Pacifi c Associates had no cause of
action. The court noted that: there was provision for arbitration between

19
However, more recently, it has been said: in the administration of a complex
contract, however, it is not uncommon to fi nd that the procedural requirements
of the contract are not followed to the letter. This is hardly surprising; if matters
seem straightforward or if the practical result that is desired is clear, the niceties of
procedure may not seem important, and there is an obvious temptation to ignore
them. In a construction contract most of the procedural requirements will be
matters with which the architect is directly involved on the employer s behalf.
Consequently the decision to dispense with procedural requirements is likely to be
that of the architect.Partington & Son (Builders) Ltd v Tameside Metropolitan
Borough Council (1985) 5 Con LR 99 at 108. Chappell David, op.cit. pp.143.
20
A reasonable time is a notoriously variable concept and the precise period
will depend on the relevant circumstances. However, it seems that an architect or
quantity surveyor who unreasonably delayed in the ascertainment of loss and/or
expense might be liable personally to either the employer or even to the
contractor. This proposition has received judicial support from an obiter
observation: [If] the period was unreasonable the chain of causation would be
completely broken. This might give rise to a claim against the architect . It is
tentatively believed that this is a correct statement of the law and it appears to be
supported by a clutch of other cases. In Michael Salliss & Co Ltd v ECA Calil ,
25 the contractor sued Mr and Mrs Calil and the architects, W F Newman &
Associates. It was claimed that the architects owed a duty of care to the contractor.
The claim fell into two principal categories: 1) failure to provide the contractors
with accurate and workable drawings and 2) failure to grant an adequate
extension of time and under - certifi cation of work done. The court held that the
architect had no duty of care to the contractors in respect of surveys, specifi
cations or ordering of variations, but that he did owe a duty of care in certifi
cation. It was held to be self - evident that the architect owed a duty to the
contractor not to negligently under - certify: If the architect unfairly promotes
the building employer s interest by low certification or merely fails properly to
exercise reasonable care and skill in his certification it is reasonable that the
contractor should not only have the right as against the owner to have the certifi
cate revised in arbitration but also should have the right to recover damages
against the unfair architect. Ibid.
2014 Iustinianus Primus Law Review 7

employer and contractor; and there was a special exclusion of liability

clause in the contract (clause 86) to which, of course, the engineers were
not a party, whereby the employers were not to hold the engineers
personally liable for acts or obligations under the contract, or answerable
for any default or omission on the part of the employer. The question of
whether a duty of care exists does not depend on the existence or absence
of an exclusion of liability clause although it may be one factor to be
considered.
Legally, the architect occupies three different positions as the
professional service phases progress from inception of design to
completion of construction contract administration. The three separate
and distinct roles recognized in law are: 1) as an independent contractor,
2) as an agent of the owner and 3) as a quasi-judicial officer.21
An independent contractor is one who contracts to do something
for another according to its own means and methods and not under control
of the employer except as to the end result.22
An agent is one who has the authority to act for another, called
the principal. After a contract has been entered into between the owner
and the contractor, the architects position changes.23
Some architects are inclined to shield the owner from some of the
unpleasant technical details that plague the construction process.24 This
could very well be a mistake, as some owners or their legal counsel might
interpret this to be a violation of the architects duty, as an agent, to
disclose. Concealment of relevant information from the owner could be
construed as fraud when there is a duty to disclose. Silence is often
interpreted as concealment.25
The architects third position is one of judge of the performance
of the owner and the contractor under terms of the contract. Some have

21
Mays Patrick, Contract Administration, avialble at
http://www.aia.org/aiaucmp/groups/aia/documents
/pdf/aiab089226.pdf, accesed on 10.8.2014.
22
During the time the architect is conferring with the owner, designing the
project, preparing the contract documents, and administering the contract, the
architects relationship to the owner is as an independent contractor. The
architect contracts with the owner to furnish architectural services for which the
owner agrees to pay a fee. The architects and owners duties are spelled out in
the owner-architect agreement. Mays Patrick,
Contract Administration, avialble at
http://www.aia.org/aiaucmp/groups/aia/documents
/pdf/aiab089226.pdf, accesed on 10.8.2014.
23
During the construction period, when the architect deals with the contractor
and others in behalf of the owner, the architect is serving as the owners agent.
However, the architects powers to obligate the owner are restricted to the extent
provided in the owner-architect agreement. When dealing with the contractor, the
architect acts in a fiduciary capacity for the owner and in this position of trust
must represent the owners best interests. As a fiduciary, the architect has the duty
to disclose to the owner all information that is material to the owners interests.
See: Mays Patrick, Contract Administration, op.cit.
24
Ibid.
25
Ibid.
8 Iustinianus Primus Law Review Vol. 6:1

termed this position of the architect as being a friend of the contract.26

Arbitration tribunals and courts are inclined to look with suspicion
on contracts where final decisions on the performance of the parties are
made by a person under the control of one of the parties.27 Thus an
architects decision that is not fair, and is not seen to be fair, will be easily
overturned by arbitrators and judges on appeal.

List of references

1. Borham Atallah, Egypt, Knutson Robert, editor, FIDIC an

analysis of International Construction Contracts, Kluwer Law
International, 2005;
2. Bunni Nael, The FIDIC Forms of Contract, third edition, 2005;
3. Chappelli David, Cowlin Michael, Dunn Michael, Building Law
Encyclopedia, Wiley Blackwell, 2009;
4. Dabi Lj. Ugovor o finansiranju projekta (B.O.T. sistem) i ugovor o
podelji prozidovnje , Pravni ivot, br. 11/1996;
5. Eggleston Brian Liquidated Damages and Extensions of Time: In
Construction Contracts, Third Edition. Blackwell Publishing, 2009;
1. FIDIC Conditions of Contract for Construction, 1999;
2. FIDIC Conditions of Contract for Plant and Design-Built, 1999;
3. FIDIC Conditions of Contract for EPC/Turnkey Projects,1999;
4. FIDIC The Short Form of Contract ,1999;
5. FIDIC he ultilateral Development Banks (MDB) Harmonised
Conditions of Contract for Construction, 2005;
6. FIDIC Conditions of Contract for Design, Build and Operate
Projects, 2007;
7. Frliet Marc, France, FIDIC An Analysis of International

26
All claims by the owner or contractor against each other should be referred to
the architect for initial decision as a condition precedent to more formal
procedures such as mediation and arbitration. Some claims will be those alleging
errors or omissions in the architects own actions or work product. The architect
must make even-handed, fair decisions strictly in accordance with the contract,
not siding with either party. The architect also must be a fair interpreter of the
documents. This can be difficult when the documents are imperfect and the
architects fair ruling will expose the documents to be at fault. When decisions on
the intent of the documents are made, they must be based on some tangible
evidence within the documents as to what is reasonably inferable and not merely
on what is in the architects mind. The architects decisions must be formulated
pursuant to procedural due process. This means that the architect must give
reasonable notice to each party to allow its position to be made known before the
architect makes a final decision.Arbitration tribunals and courts are inclined to
look with suspicion on contracts where final decisions on the performance of the
parties are made by a person under the control of one of the parties. Thus an
architects decision that is not fair, and is not seen to be fair, will be easily
overturned by arbitrators and judges on appeal. Ibid.
27
Ibid.
 2014 Iustinianus Primus Law Review 9

Construction Contracts, Knutson Robert, Kluwer Law,

2006;
8. Gtz-Sebastian Dr. Hk, Are Civil Law Engineers fit for FIDIC?,
http://www.dr-hoek.de/EN/beitrag.asp?t=Germans-Fit-
For-FIDIC, 8.4.2012
9. Huse Joseph, Understanding and Negotiating Turnkey Contracts,
Sweet and Maxwell, London, 1997;
10. , FIDIC ,
Ugovori o graenju u
savremenoj meunarodnoj praksi, Pravni fakultet Beograd, 2011;
11. ICC Model Contract for the Turnkey Supply of and Industrial Plant,
2003;
12. ICC Model Trnkey Contracts for Major Projects 2007 ;
13. ICC Model Subcontract 2011 ;
14. ICE Design and Construction Conditions of Contracts, second
edition, 2001;
15. ICE The New Engineering Contract, edition 1995 and 2006;
16. Kanstatonis Vivian, Georgiades Stavros, Tieder B. John, An
overview of construction contracting under greek law,

http://www.georgiades.com/publications/georgiades3.pdf,
2.11.2011;
17. Knutson Robert, England, FIDIC An Analysis of International
Construction Contracts, Knutson Robert, Kluwer Law,
2006;
18. Myers James, Giffune John, Miller Lisa, United States of America,
Knutson Robert, editor, FIDIC an analysis of International
Construction Contracts, Kluwer Law International, 2006;
19. Mays Patrick, Contract Administration, avialble at
http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aiab089226.p
df, accesed on 10.8.2014.
20. Niralula Rajenda, Kusajagani Sjujni, ontract administration for a
construction project under FIDIC Red Book contract in Asian
developing countries, aviable at http://management.kochi-
tech.ac.jp/ssms_papers/sms11-
8874_26c77ee7398a284f7160e5ef1a6f075e.pdf, accesed on
10.10.2014
21. Powell-Smith&Furmston, Building Contract Casebook third
edition, 2000
22. Schneider Michael, Scherer Matthias, Switzerland, Knutson
Robert, editor, FIDIC an analysis of International Construction
Contracts, Kluwer Law International, 2006;
23. Speaight Anthony (editor), Architects Legal Handbook, Elsver ltd,
2010;
24. Totterdill Brian W., FIDIC users guide: A practical guide to the
1999 red and yellow books, Thomas Thelford, 2009;
25. Vukmir Branko, Ugovori o graenju i uslugama savetodavnih
inenjera, RRIF, Zagreb, 2009;
26. Vukmir Branko, Ugovori o izvodjenju investiciskih radova,
 10 Iustinianus Primus Law Review Vol. 6:1

Zagreb, 1990;
27. Vuevi Milo, Lonar Milo, Ugovr o graenju, Pravni ivot,
br. 11/2002;