FIDIC

Engaging Others to Remedy Defects Under FIDIC — Procedure and Cost Recovery

When the contractor fails to remedy defects within a reasonable time, the employer can engage third parties — but only if the contractual procedure is followed precisely. Procedural failures defeat the cost deduction, even where the remediation itself is clearly needed.

6 min read · Updated 23/05/2026

In this article

1. The Conditional Right to Engage Others
2. Procedural Requirements — Notice and Opportunity
3. What Constitutes a “Reasonable Opportunity”
4. Assessing Reasonableness of Cost
5. The Deduction Mechanism
6. Challenging Third-Party Remediation Deductions

Key takeaway

The employer’s right to engage third parties is conditional: the contractor must receive notice, must be given a reasonable opportunity to remedy, must fail to do so, and then the employer may engage others and deduct reasonable costs. Missing any procedural step defeats the deduction — even if the remediation is clearly needed and the cost is reasonable.

1. The Conditional Right to Engage Others

FIDIC Red Book 2017, Clause 11.4 provides that if the contractor fails to comply with the Schedule of Defects (the notification of defects requiring remedy) within a reasonable time, the engineer may instruct the contractor that the contractor is in default. If the contractor then fails to comply within a further 14 days, the employer may employ others to carry out the work and deduct the cost from amounts due to the contractor.

This is a powerful remedy — it allows the employer to force remediation and recover the cost — but it is conditional on strict procedural compliance. The employer cannot skip steps or abbreviate the process.

2. Procedural Requirements — Notice and Opportunity

The sequence is prescribed:

• Step 1 — Notification: The engineer issues the Schedule of Defects, clearly identifying the defects and the required remediation
• Step 2 — Reasonable Time: The contractor is given a reasonable time to remedy the defects. FIDIC does not specify what is “reasonable” — it depends on the nature of the defect and the resources required
• Step 3 — Default Notice: If the contractor has not completed remediation within the reasonable time, the engineer notifies the contractor that it is in default and gives a further 14 days to comply
• Step 4 — Second Default: If remediation is still not complete after the additional 14 days, the employer may engage others

Each step must be strictly followed. An employer who attempts to combine or skip steps — for example, by engaging third parties without the 14-day default cure period — may find the deduction challenged and disallowed, even if the remediation is clearly needed.

3. What Constitutes a “Reasonable Opportunity”

The contractor is entitled to a reasonable opportunity to remedy each defect. Reasonableness depends on the nature and urgency of the defect:

• Safety defects: These may require urgent action — a few days may be sufficient notice if the defect poses an immediate risk
• Functional defects: Those that impair use or functionality may require one to two weeks of notice
• Cosmetic or minor defects: These may warrant longer notice periods — the contractor needs to mobilise labour and materials
• Complex remediation: Defects requiring structural work, specialist expertise, or prolonged access may require weeks or months of notice

The determination of “reasonable time” is often disputed. The contractor will argue it was insufficient; the employer will argue it was adequate. The contract should specify timeframes where possible — general silence invites disputes.

4. Assessing Reasonableness of Cost

FIDIC provides that the employer may deduct “the reasonable cost” of the work carried out by others. This is not the actual cost charged by the third party — it is the reasonable cost what a competent contractor should have charged for the work in the circumstances.

If the employer engages a premium contractor to perform work that a standard contractor could have done more cheaply, the deduction is limited to the reasonable (lower) cost, not the actual (higher) cost charged.

To establish reasonableness, the employer should obtain competitive quotes for the remediation work. Multiple quotes demonstrate that the cost selected is reasonable and competitive. A single quote with no competitive reference is weaker evidence of reasonableness.

5. The Deduction Mechanism

The deduction is made from amounts due to the contractor — either from the next interim payment certificate, or from the final account. The employer should provide notice to the contractor that a deduction is being made, identify the cost, and explain the basis for deducting it.

The contractor has the right to challenge the deduction — either by disputing that the defect notification was valid, that a reasonable opportunity was provided, that remediation was necessary, or that the cost is unreasonable. The deduction is not final until these disputes are resolved.

6. Challenging Third-Party Remediation Deductions

A contractor who believes a third-party remediation deduction is improper should challenge it through the contract’s dispute resolution mechanism — typically adjudication or arbitration. The challenge should address:

• Was the defect notification valid and specific?
• Was the reasonable time adequate for the defect type?
• Was the 14-day default cure period followed?
• Was the remediation actually necessary or was the alleged defect not a genuine defect?
• Is the deducted cost reasonable (or was a more expensive contractor engaged than necessary)?

A contractor with a strong procedural challenge — for example, that the 14-day default notice was not given, or that the opportunity to remedy was unreasonably short — may succeed in disallowing the deduction entirely, even if the remediation was necessary.

Third-Party Remediation and Cost Recovery

We advise on the procedures for engaging others, establishing reasonable opportunity, assessing cost, and challenging deductions. Procedural compliance is critical — the steps must be followed precisely.

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