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Pillar 01
FIDIC 99 — Contract Conditions
Red · Yellow · Silver Book
⚖️ UAE Civil Code Impact
Art.880 decennial liability overrides Cl.11 DLP — structural defects covered 10 years. Arts.246–248 good faith supplements Cl.20 claims. Force majeure Arts.273–274 interacts with Cl.19 and Cl.8 extension rights.🏛️ Stakeholders Impact
Funding Bank controls Cl.14 IPC drawdowns — each certificate must match loan milestones. Bond Bank issues Cl.4.2 Performance Security. Civil Defense & Municipality NOCs are conditions precedent to Cl.10 Taking-Over.🛡️ GRC Impact on FIDIC
Risk register must capture Cl.20 notice time-bar as Critical risk. Governance framework defines Engineer approval thresholds. Compliance matrix maps every FIDIC clause to UAE regulatory requirement. Risk appetite defines LD tolerance under Cl.8.7.Cl.1
General Provisions & Definitions
Contract Agreement, Price, Time for Completion, Employer, Contractor, Engineer, Base Date.
Cl.3
The Engineer — Role & Authority
Impartial administrator; issues Instructions, IPCs, Engineer's Determinations & Variation Orders.
Cl.8
Commencement, Delays & Programme
EOT entitlement Cl.8.4; LD accrual Cl.8.7; programme 28-day submission obligation.
Cl.13
Variations & Adjustments
VO instructions, Variation by Request, valuation, cost-index adjustments Cl.13.8.
Cl.20
Claims, Disputes & Arbitration
28-day notice — TIME-BARRED IF MISSED. 42-day claim. DAB. Amicable. ICC Arbitration.
Cl.14
Contract Price & Payment
Monthly IPC, 5% retention, advance payment 10% against bond, Finance Charges Cl.14.8.
Cl.11
Defects Liability Period
DLP 365 days from TOC; remediation obligations; Performance Certificate = final release.
Cl.4
Contractor's General Obligations
Performance Bond Cl.4.2, sub-contracting approvals, QA/QC, as-built drawings, safety.
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Pillar 02 & 03
UAE Civil Code & Stakeholders
Law No.5/1985 · Banks · Authorities
📄 FIDIC Impact
Cl.14 monthly IPC triggers Funding Bank drawdown. Cl.4.2 Performance Bond maintained by Bond Bank. Cl.10 TOC requires all authority NOCs. Cl.13 significant VOs need Lender Engineer approval.🛡️ GRC Impact
Art.880 is a non-waivable compliance risk — mandatory standing item on every project risk register. LD exposure under Arts.389–390 must be financially quantified. Governance defines escalation when LD exposure exceeds risk appetite threshold.UAE Civil Code — Key Articles
Muqawala Contract
Arts. 872–896
Construction contract, contractor liability, completion duties.
10-Year Liability
Art. 880
Decennial liability — mandatory law, cannot be contractually waived.
Breach & LDs
Arts. 389–390
Penalty clauses, LD enforceability, courts may reduce disproportionate LDs.
Good Faith & Hardship
Arts. 246–249
Good faith performance, hardship doctrine, implied duties.
Key Stakeholders
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Funding Bank
Project Finance Lender · Milestone IPC drawdowns
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Performance Bond Bank
Guarantee Issuer · URDG 758
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Civil Defense Authority
Fire & Safety NOC — 4–8 weeks
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Municipality (DM / ADCD)
Building Permit Authority
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DEWA / ADDC / EWA
Utilities · 6–16 weeks for connection
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RTA — Roads & Transport
Road NOC · TMP · Reinstatement Bond
EPC Focus · GRC Integration Hub
Governance
Risk & Compliance
Risk & Compliance
FIDICLAWAUTHGRC
4-Pillar integrated framework
contract · legal · regulatory · risk
contract · legal · regulatory · risk
Governance Framework
Policies · DoA · Oversight
Risk Register
Identify · Assess · Mitigate
Security Obligations
Bonds · Insurance · Retention
Compliance Matrix
FIDIC · UAE Law · NOCs
Contract Administration
IPC · Variations · Claims
EOT & Claims
Notice · Records · Assessment
NOC & Permits
CD · Municipality · RTA
Internal Audit & KRIs
Board Pack · Assurance
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4-Pillar
Interaction ⟺
Interaction ⟺
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Risk by Stakeholder
Authority & Financial Risk
Programme · Financial · Regulatory
🛡️ GRC Impact on Stakeholders
Funding Bank triggers financial covenant risk if IPC delayed. Bond calls are Critical financial risk events requiring immediate escalation. Each authority NOC is a compliance milestone tracked in GRC dashboard with KRI threshold alerts.🏦Funding Bank — Drawdown RiskCRITICAL
IPC rejection or delay breaches loan covenant. Lender step-in rights triggered if milestone missed.
🔐Performance Bond — Wrongful Call RiskCRITICAL
On-demand bond callable without proof of loss under URDG 758. Reputational & financial impact.
🚒Civil Defense NOC DelayHIGH
Fire system non-compliance delays TOC. LD exposure under Cl.8.7 continues until NOC obtained.
🏛️Municipality Permit RiskHIGH
Permit variations or structural inspection failures cause programme delays & cost overruns.
⚡DEWA Utility Connection DelayMEDIUM
Utility connection delays prevent commissioning & TOC. 6–16 week lead time — apply early.
🚗RTA Road & Access RiskLOW
Road permit or TMP rejection causes site access issues. Manage early in design phase.
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Pillar 04 — GRC
Governance, Risk & Compliance
ISO 31000 · COSO ERM · Employer Rights
📄 FIDIC Impact on GRC
Cl.20 claim management is the highest GRC risk — 28-day notice failure permanently extinguishes entitlement. Governance must mandate claim notices as board-level KRI. Cl.14 payment delays trigger cash flow risk events.⚖️ UAE Civil Code Impact on GRC
Art.880 decennial liability is a standing mandatory compliance obligation on every project risk register. LD exposure (Arts.389–390) requires financial risk quantification. Good faith doctrine (Art.246) must guide all governance decisions.🏛️ Stakeholders Impact on GRC
Each authority NOC is a compliance milestone in GRC dashboard with KRI alerts. Funding Bank covenants impose governance reporting obligations. Bond instruments are financial risk events requiring escalation protocols and board notification.🔐 Employer's Security & Financial Rights
FIDIC 99 · UAE Law
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Performance Security BondCl. 4.210% Contract Sum
Unconditional on-demand bank guarantee required within 28 days of Contract signature. Remains valid through DNP; released within 21 days of Performance Certificate. Failure to provide entitles Employer to terminate under Cl.15.2(a). Governed by URDG 758 in UAE — callable without proving actual loss.
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Advance Payment Bond (APB)Cl. 14.2Up to 10–20% Contract
Employer may advance mobilisation funds ONLY upon receipt of APB for the full advance amount. APB reduces pro-rata as advance is recovered through deductions from each IPC at the agreed repayment percentage. Bond must remain valid until full recovery. Failure to repay entitles Employer to call bond.
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CAR Insurance — Contractor's All RiskCl. 18.1–18.2Full Contract Value + 15%
Joint-names policy covering Works, Plant, Materials and Contractor's Documents for full replacement value plus 15% for demolition & debris removal. In force from Commencement Date through end of DNP. Must cover Employer's Risks under Cl.17.3. In UAE, governed by Insurance Authority Board Decision No.43/2012.
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Professional Indemnity (PI) InsuranceCl. 18.3Min = Contract Price
Mandatory for design-build contracts (Yellow & Silver Books) covering Contractor's design negligence, errors or omissions. Critical in UAE given Art.880 decennial liability — PI must be maintained for the full 10-year post-handover period. Written on a claims-made basis; policy must not lapse. Both Contractor and Consultant carry PI obligations for decennial period.
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Retention Money — Employer's SecurityCl. 14.3 / 14.95% of IPC Values
Employer deducts 5% from each IPC until Retention Limit (5% of Accepted Contract Amount) is reached. 50% released within 14 days of Taking-Over Certificate. Balance released within 14 days of Performance Certificate. Contractor may substitute cash retention with a Retention Money Guarantee Bond at Taking-Over. Key financial security during DLP for defect rectification obligations.
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Delay Damages — Liquidated DamagesCl. 8.7Cap: Maximum 10%
Employer entitled to Delay Damages at the rate stated in Contract Data for each day/week of delay beyond the Time for Completion (as adjusted by any granted EOT). Total LDs capped at maximum 10% of the Accepted Contract Amount per Contract Data. Under UAE Arts.389–390, courts may reduce disproportionate LDs. Once the 10% cap is reached, Employer may consider termination under Cl.15.2. LDs are liquidated — no need to prove actual loss.
Top GRC Risk Register Items
⏰Cl.20 Notice Time-Bar — EOT LostCRITICAL
28-day notice failure permanently extinguishes EOT & money claim. No cure. Board-level KRI required.
🏗️Security Bond Non-ComplianceCRITICAL
Failure to provide Cl.4.2 bond or Cl.14.2 APB enables Employer termination under Cl.15.2. Zero tolerance.
💰LD Accumulation Approaching 10% CapHIGH
Governance escalation mandatory at 7% reached. Board notification at 9%. Termination assessment at cap.
🌧️Force Majeure & External EventsHIGH
Cl.19 & UAE Art.273–274 hardship doctrine. Programme disruption beyond contractor control. EOT available; cost recovery limited.
Risk Heat Map
Impact / Likelihood
Rare
Unlikely
Possible
Likely
Catastrophic
M
H
CR
CR
Major
L
M
H
CR
Moderate
VL
L
M
H
Minor
VL
VL
L
M