FIDIC conditions of contract

 

FIDIC

MCQ in AFA 2025 70% Exam

What is an integral part of FIDIC conditions ?

 

A. Risk Allocation 

B. Dispute Resolution 

C. Rights and obligations of parties 

D. all of these

The correct answer is: D. all of these*

Explanation:

Each of the listed elements is an integral part of FIDIC Conditions of Contract:

* Risk Allocation – FIDIC contracts are known for their clear and balanced allocation of risks between the Employer and the Contractor, tailored according to the contract type (Red Book, Yellow Book, etc.).

* Dispute Resolution – A structured mechanism for resolving disputes (including Dispute Adjudication Boards and arbitration) is embedded in all FIDIC contracts to maintain project continuity.

* Rights and Obligations of Parties – FIDIC clearly defines the roles, responsibilities, rights, and duties of the Employer, Contractor, and Engineer (if applicable) to avoid ambiguities.

Hence, *all of these elements* form the foundation of FIDIC Conditions.

FIDIC Conditions of Contract

• What is FIDIC?

FIDIC stands for the Fédération Internationale Des Ingénieurs-Conseils (International Federation of Consulting Engineers). It is a globally recognized organization known for publishing standard forms of contract widely used in the construction and engineering industry, especially in international projects.

• Purpose of FIDIC Contracts:

FIDIC Conditions of Contract are designed to provide a balanced and fair framework for contract administration and dispute resolution. They define the roles, responsibilities, and liabilities of parties involved in construction and engineering projects.

• Popular FIDIC Books:  FIDIC contracts are color-coded for different types of projects:
  
  

• Red Book – For Building and Engineering Works (Employer-Design)
  
  

• Yellow Book – For Plant and Design-Build (Contractor-Design)
  
  

• Silver Book – For EPC/Turnkey Projects
  
  

• Green Book – For Short Form Contracts
  
  

• Gold Book – For Design-Build-Operate projects
  
  

• Key Parties in FIDIC Contracts:  Typically, FIDIC contracts involve three main parties:
  
  

• The Employer (client/owner)
  
  

• The Contractor (executing the work)
  
  

• The Engineer (acts as the contract supervisor on behalf of the employer) 

• Role of the Engineer:

Under the Red and Yellow Books, the Engineer plays a central role in overseeing the project, certifying payments, resolving claims, and ensuring compliance with contract terms. However, in the Silver Book, the Engineer’s role is significantly reduced or eliminated.

• Risk Allocation:

FIDIC contracts are structured to fairly distribute risks between the Employer and the Contractor, depending on the type of contract used. For example, the Red Book places design risk on the Employer, whereas the Yellow and Silver Books shift this risk to the Contractor.

• Payment Terms:

FIDIC contracts include detailed provisions regarding interim payments, advance payments, final payments, and the procedure for payment certification by the Engineer or Employer’s Representative.

• Time for Completion & Extensions:

These contracts define a specific time for project completion, including provisions for Extensions of Time (EOT) if delays occur due to reasons not attributable to the Contractor (e.g., force majeure, late instructions by the Employer, etc.).

• Claims and Dispute Resolution:

FIDIC contracts lay out a formal procedure for submitting claims and resolving disputes. This includes the use of a Dispute Adjudication/Avoidance Board (DAB/DAB), followed by arbitration under international rules if necessary.

• Variations and Changes:

The contracts allow for changes in the work (variations), which may affect time and cost. The Engineer or Employer has the authority to initiate variations and adjust the contract price accordingly.

• Governing Law and Language: 

FIDIC contracts allow for the selection of governing law and official contract language to ensure enforceability in different jurisdictions.

• Suitability for International Projects:

Due to their neutrality, adaptability, and clarity, FIDIC contracts are often the preferred choice for international projects funded by multilateral banks such as the World Bank, ADB, and others.

• Recent Updates:

FIDIC released a new edition in 2017 for the Red, Yellow, and Silver Books, aiming to improve clarity, dispute avoidance, and contract management practices.

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GST: Composition Scheme

 

Composition Scheme in GST

• Simplified compliance scheme for small taxpayers 

Eligibility: 

 

• Applicable to Businesses with annual turnover up to Rs. 1.5 Crores (Rs. 75 Lakhs for NE - North Eastern States)

• Can be opted voluntarily at the time of GST registration or beginning of the Financial Year. 

Features:  

• Fixed low tax rate on Turnover.

• Reduced compliance burden i.e., Quarterly returns instead of monthly. 

• No ITC - Input Tax Credit is allowed.

• Service providers are not eligible.  However, restaurants are eligible.

GST Rates under Composition Scheme: 

Type of Business	CGST	SGST	Total
Manufacturer and Trader	0.5 %	0.5%	1 %
Restaurants	2.5%	2.5%	5 %

Ineligible Categories:

• Service providers (except restaurants)

• Manufacturers of ice cream, pan masala, or tobacco

• Dealers making inter-state supply

• Suppliers through e-commerce operators

Advantages:

• Lower tax rate (1% or 5%)

• Easier compliance — less paperwork and filing

• Higher liquidity due to limited tax liability

Disadvantages:

• No inter-state sales allowed

• No input tax credit (ITC) eligibility

• Cannot deal in exempted goods or online platforms (e-commerce)

Indian Railways & Composition Scheme: 

• Indian Railways invites participation from vendors, canteens, and contractors for supply of goods/services.
  
  

• Vendors or contractors registered under the Composition Scheme must keep in mind the restrictions:
  
  

• Cannot supply inter-state, while railways have zonal and pan-India operations.

• Cannot issue tax invoices with ITC, which may be required by the Railway Accounts Department.

• For railway contractors, input tax credit ineligible under Composition Scheme may raise cost of operations.

Railway Procurement Consideration:

• In tenders, preference is often given to regular GST registered suppliers who can pass ITC benefits to Indian Railways.

• Railways may not accept suppliers under composition schemes for certain categories where inter-state or exempt goods are involved.

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How to Prepare Bookkeeping Exam for Appendix3 Exam of Accounts Department

 

How to Prepare for the Advanced Book Keeping Paper 

(Part I of Appendix III-A Examination)

Many candidates find the Advanced Book Keeping paper in Part I of the Appendix III-A Examination quite challenging. Interestingly, a large number of those who fail this paper are commerce graduates. One possible reason is overconfidence, leading to underestimation of the paper’s depth and complexity.

Recommended Books:

1. Official Textbook:
   
   

• “The Students’ Complete Commercial Book-Keeping, Accounting and Banking” by Arthur Fieldhouse
  This is the officially prescribed book for this paper. However, candidates are advised to check its availability with publishers or suppliers, as it may not be easily accessible.
  
  

2. Reference from Appendix II-A:
   
   

• “Double-Entry Book-Keeping” by Jamshed R. Batliboi (Standard Accountancy Publications).  Although recommended for Appendix II-A, this book can serve as a helpful reference. Please verify its availability.
  
  

3. Suggested by Experts:
   
   

• “Advanced Accounts” by Shukla & Grewal (S. Chand & Co. Pvt. Ltd., New Delhi) -  This book is easy to understand, widely used by students of commerce, and offers clear explanations suitable for exam preparation.
  
  

4. Additional Suggestion:
   
   

• Consult students pursuing B.Com, CA, or ICWA to explore more effective and updated book options.
  
  

Key Chapters to Look for in Any Selected Book:

Even if you opt for a different book, ensure that it covers the following essential topics (many of which are part of the Appendix II-A syllabus):

• Elements of Double Entry
  
  

• Rules for Journalizing
  
  

• Ledger Accounts
  
  

• Sub-Divisions of Journal
  
  

• The Cash Book
  
  

• Banking Transactions
  
  

• Bill Transactions
  
  

• The Journal Proper
  
  

• The Trial Balance
  
  

• The Trading Account
  
  

• The Profit and Loss Account
  
  

• The Balance Sheet
  
  

• Depreciation, Reserve, and Other Funds
  
  

Important Tips for Preparation:

• Thoroughly analyze previous question papers to understand the pattern and frequently asked topics.
  
  

• Begin preparation early. Do not wait for the official notification of the Appendix III-A examination to start studying. Starting ahead gives you a strategic advantage.