Contract conditions produced by the UK Institution of Civil Engineers

ICE Conditions of Contract for Works of Civil Engineering Construction

These are generally known as the ICE conditions and have for many years been the most widely used conditions for UK civil engineering works. They have a long history of satisfactory usage and have been tested in the courts  meaning and interpretation to be placed on these conditions. The latest edition is the 7th, published in 1999 together with guidance notes, reprinted with amendments in 2003. This edition is known as the Measurement Version to distinguish it from other ICE types of contract based on this established standard.

The principal provisions of the Measurement Version are as follows:
• The contractor constructs the works according to the designs and details given in drawings and specifications provided by the employer.
• The contractor does not design any major permanent works, but may be required to design special items (such as bearing piles whose choice may depend on the equipment he owns) and building services systems, etc.
• An independent engineer, designated ‘the Engineer’ is appointed by the employer to supervise construction, ensure compliance with the contract, authorize variations, and decide payments due; but his decisions can be taken by the employer or contractor to conciliation procedures, adjudication and/or arbitration.
• The contractor can claim extra payment and/or extension of time for overcoming
unforeseen physical conditions, other than weather, which ‘could not…reasonably have been foreseen by an experienced contractor’ (Clause 12) and for other delays for which the employer is responsible.
• Payment is normally made by re-measurement of work done at rates tendered against items listed in bills of quantities, which can also include lump sums.
A particular advantage of the ICE conditions is that interpretation of the provisions of the contract lies in the hands of an independent Engineer, who is not a party to the contract, but is required to ‘act impartially within the
terms of the contract having regard to all the circumstances’ (Clause 2(7)).
This gives assurance to both employer and contractor that their interests and obligations under the contract will be fairly dealt with. Also the contractor is paid for overcoming difficulties he could not reasonably have foreseen. Both these matters reduce the contractor’s risks, making it possible for him to bid his lowest economic price. This benefits the employer, since the initial price is low and he does not pay out to cover risks which may not occur.
The ICE conditions contain many other provisions that have stood the test of time. These include requirements for early notice of potential delays and problems such as adverse ground conditions and provisions for submission and assessment of claims and valuation of variations. Properly drawn up and administered, a contract under these conditions appears fair to both parties, and the  percentage of contracts ending in a dispute which goes to arbitration is very small.

 

ICE Conditions for Ground Investigation

These conditions are based on those described under (a) but allow for the investigative nature of the work and the need for reports and tests. Aschedule

of rates may be used instead of a bill of quantities (see Section 3.1(a)). The need
for a maintenance period and for retention money is left to the drafter, and will depend on whether permanent works, such as measuring devices, are included. The existing (1983) edition is now out of date and a new version is being drafted for issue in 2003 with provisions for dealing with any contaminated land discovered.

 

ICE Minor Works Conditions

These are a shorter and re-written form of the ICE conditions (a) above for use on works which are fully defined at the tender stage and are generally of low value or short duration. The conditions can be successfully used for larger works, but the standard ICE conditions cover many more of the potential problems that can occur on more complex or longer-term projects. Payment arrangements are left open to be chosen prior to tendering, but are suitable for a single lump sum bid or priced bill of quantities. The 3rd edition of these conditions was published in 2001.

ICE Design and Construct Conditions

These conditions were newly produced in 1992 with a 2nd edition in 2001.
Known as ‘the design and construct (D&C) conditions’ they follow much of the wording of the Measurement Version but differ significantly from many of the principles of that version. Some of the principal differences are the following:
• The employer sets out his required standards and performance objectives for both design and construction in a document entitled ‘the Employer’s Requirements’.
• The Contractor develops these requirements and designs and constructs the Works in accordance with them.
• The Contractor is responsible for all design matters except any specifically identified in the Contract to be done by others.
• An ‘Employer’s Representative’ is appointed who supervises the design and construction on behalf of the employer to ensure compliance with the Requirements and that the purpose of the works will be met. He has many duties similar to those of the Engineer under the ICE Measurement Version and is required to behave impartially in regard to certain decisions (Clause 2(6)).
• The Employer’s Representative can issue instructions to vary the Requirements in reply to which the contractor must submit a quotation for any extra cost or delay in complying with these.
• Payment is normally on the basis of a Lump Sum payable in stages, although other means of valuation can be included. However, care is needed if work is re-measured against billed rates, since the contractor could then choose to adopt forms of design that suit the more profitable bill rates he has quoted.

D&C contracts are often used when the employer’s main interest is to have some works built as soon as possible, and he need not, or does not wish to be concerned with the details of the design (see Section 1.3). The contractor can therefore start construction as soon as he has enough design ready. But where a project offers a wide range of design options, a design and construct contract may not offer an employer the best service because the options chosen by the contractor may tend to be those which suit his plant and workforce best, rather than the interests of the employer. However, if the ‘Employer’s Requirements’ are sufficiently extensive and carefully specified, they can go a long way to ensuring coverage of all the employer’s needs. It should be the aim of the parties prior to award of contract to arrive at an agreed scheme and specification for the works. Since this form of contract requires extensive input by tenderers their number should be limited to three or four only.

ICE: Term Version

Term contracts have been in use for many years typically to cover repair and maintenance of facilities such as road surfaces or flood defences. This new form, based on the ICE 7th edition and issued in 2002, sets out a background contract which stays in place for a prescribed term of years and under which the Engineer can instruct packages of works to be undertaken as necessary.
Works are ordered through a Works Order which defines what is required and supplies any drawings or specifications not already in the contract. Payment is made by measurement from a schedule of rates in the contract or other agreed means.
The administration and supervision requirements usually follow those of the Measurement Version and will thus be familiar to most engineers. This form can provide a welcome flexibility for employers in procuring irregular items of work or carrying out services which can be called up as and when needed and at short notice. The form may be suitable for some types of framework arrangement (see Section 1.12).

ICE Engineering and Construction Contract

This contract was developed from ‘the New Engineering Contract’ (NEC) which was introduced in 1991 and substantially revised in 1993. The NEC is ‘a family of contracts’ comprising versions for construction, sub-contracted works, provision of professional services, and appointment of an adjudicator.
The main construction contract was developed and renamed the Engineering and Construction Contract (ECC) which went into a second edition in 1995.
The ECC is formed from ‘core clauses’ which set out the general terms of the contract, ‘main option clauses’ which define valuation and payment methods (one of which must be chosen), and ‘secondary options clauses’ for such as  bonus, delay damages, and price adjustment. A short form for minor works and a short sub-contract form are also available.

The contract requirements are defined in separate sets of data – Works Information and Site Information supplied by the Employer, and Contract Data which set out various pieces of information depending on which options have been chosen.
A project manager appointed by the employer administers the contract on behalf of the employer, assisted by a supervisor on site. A separate adjudicator is appointed to whom the contractor (but not the employer) can take disputes with the project manager or the supervisor for adjudication. But if the employer or the contractor disagrees with the adjudicator’s decision either can have the dispute referred to any final tribunal set out in the contract.
The contract attempts to overcome some old problems by several new approaches, but the latter may present some new difficulties. Alist of eighteen Compensation Events is prescribed, each of which entitles the contractor to claim extra payment and delay. They include the usual matters of claim such as variation of work, unforeseen conditions, etc. but add unusual weather. The latter is defined as – Weather recorded ‘within a calendar month…at the place stated in the Contract Data…which by comparison with the weather data, is shown to occur on average less frequently than once in ten years.’ The weather data is that supplied by the employer in the Contract Data, and a ‘weather measurement’, could, for instance be rainfall. This definition could give rise to problems of interpretation and may lead to claims even when the weather causes no delay.
Another provision is that the contractor’s claims when he experiences a compensation event take the form of quotations which the project manager can accept, return for revision, or reject by advising he will make his own assessment in lieu. The problems with this approach are discussed in Section 17.12 below. Strict time limits of 2 weeks apply to stages of action and response by both contractor and project manager in respect of such quotations and other submissions. These times are tight and may cause difficulties; failure of the project manager to reply within a specified time limit being itself a compensation event!
The stated intent of the drafters of the ECC contract is to stimulate good management. This seems to be achieved by requirements for meetings in a variety of situations, so as to seek advantageous solutions to potential problems,
and the tight timetables for responses between the parties.

Partnering Addendum

This addendum has been issued by the ICE in 2003 to provide for the partners setting down their objectives and any risk sharing provisions formally. The addendum acts as an addition to individual contracts, which may be of any type, and allows for revision as partners leave or are added to a project.