Sub-Clause 13.2 — Value Engineering

The Contractor may submit proposals that accelerate completion, reduce cost or otherwise improve the value of the works for the Employer.

Applies in: Red BookYellow BookSilver Book

The Contractor may at any time submit a written proposal that, in its opinion, will accelerate completion, reduce the cost of construction, operation or maintenance, improve efficiency or otherwise be of value to the Employer. If accepted, it is implemented as a Variation. Under the 2017 editions a benefit-sharing mechanism may apply where the proposal reduces value, if so provided. The Employer is not obliged to accept the proposal.

Key points

Contractor-initiated: a written value proposal.
Aim — acceleration, lower cost or greater value of the works.
An accepted proposal is implemented as a Variation (Clause 13).
The Employer is not obliged to accept it.

How this works in practice

Value engineering benefits both sides in theory and is rarely used in practice, because the Contractor cannot see what it will get. A proposal requires engineering work and money to prepare, while the mechanism for sharing the benefit is described loosely in base FIDIC and is often further edited in the Particular Conditions. The practical approach: before submitting, establish in writing how the saving is computed, who carries the risk for the changed solution, and within what period the Employer must respond. Without those three answers, preparing a proposal is an investment with an unknown return.

Common traps

The benefit-sharing mechanism is deleted or rewritten so that the whole saving accrues to the Employer.
Responsibility for the changed design passes wholly to the Contractor, including long-term operation.
No response period is fixed for the Employer — the proposal hangs while the work proceeds on the original design.

Versions: 1999 → 2017 → 2022

1999
Sub-Clause 13.2 allowed Contractor proposals with possible benefit-sharing in some cases.
2017
The same Sub-Clause 13.2 with a clearer procedure for submitting and reviewing the proposal.
2022
No substantive change in the 2022 reprint.

Clause FAQ

Which FIDIC books use Sub-Clause 13.2?

The clause applies in Red Book, Yellow Book, Silver Book. Particular Conditions may change the standard risk allocation, so always check the project contract.

How is the saving from a 13.2 proposal shared?

Base FIDIC contemplates sharing the benefit between the parties, but the actual formula is set in the contract, and that is precisely what gets edited most. Variants run from an even split to the whole saving accruing to the Employer. So the first question when considering value engineering is not the technical idea but the wording of the clause in your specific contract.

Who is responsible if the proposed solution turns out worse than the original?

Generally the party proposing the change — the Contractor — since the proposal originates with it and it confirms the solution’s suitability. That is the core reason for caution: the saving is shared, the risk for long-term performance is not. Before submitting, weigh not just the construction cost gain but the consequences for operation during the defects period and beyond.

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Reference material, not legal advice. Always check your contract and the Particular Conditions.