Failure to Pass Tests on Completion: Understanding the Engineer's Choices

N/A / 16 Feb, 2025

In construction projects, especially those governed by the FIDIC (International Federation of Consulting Engineers) conditions of contract, tests on completion play a critical role in ensuring the works meet the required specifications and standards. When these tests are unsuccessful, the Engineer is granted three options to address the situation, each offering a distinct course of action depending on the severity of the failure.

A) Order Further Tests Under Sub-Clause 9.3

The first option available to the Engineer is to order further tests under Sub-Clause 9.3. FIDIC guidelines suggest that there is no limit on the number of repetitions that can be conducted. This allows the Engineer to explore whether the failure stems from minor issues that could be easily remedied through additional testing. In such cases, only minor adjustments might be needed to bring the works into compliance with the contractual requirements.

B) Reject the Works and Terminate the Contract

The second option, a more severe measure, allows the Engineer to reject the works and terminate the contract, particularly if the failure deprives the Employer of substantially the whole benefit of the Works or a particular section. This provision has often been referred to as a "nuclear option" for Employers, providing them with significant power to address defects. However, the notion of an Employer being able to terminate a contract in such a manner is considered controversial under traditional English contract law. It is often believed that the Employer should only be entitled to damages, subject to the duty to mitigate losses, rather than the ability to terminate the contract outright.

The legal background to this issue, particularly regarding the concept of "substantially the whole benefit," is discussed further in Clause 11 of the contract, where the exact implications of this term are elaborated upon.

C) Permit a Taking-Over Certificate to Be Issued

The third option permits the issuance of a Taking-Over Certificate, even if the works have not fully passed the tests on completion. In this scenario, while the Contractor may receive a certificate of completion, they remain obligated to fulfill all contractual duties, including carrying out any necessary remedial work. The Employer retains the right to issue a notice to correct under Sub-Clause 15.1 or may negotiate a reduction in the contract price if the remedial work cannot be completed.

In practice, before issuing a Taking-Over Certificate, the Employer may seek the Contractor’s agreement on the necessary reductions to the contract price. If an agreement cannot be reached, the Employer may revert to the first or second option to enforce compliance with the contract.