FIDIC Silver Book Free Issue Items | EPC Contract | Podcast Episode

Understanding Free Issue Items: A Comprehensive Guide for Construction and EPC Projects

Are you working on an EPC project and confused about how Free Issue Items impact your contract? In this video, we break down the complexities of materials, equipment, and services provided by the Employer to the Contractor.

What are Free Issue Items? Free Issue Items consist of Materials, Equipment (Plant), and Services supplied by the Employer to the Contractor. Once received, the Contractor is responsible for installing these items into the permanent works or using the provided services to perform the work.

Types of Free Issue Items Covered in This Video:
• Materials: Includes special metals for catalysts, special alloy pipe materials, or high-demand bulk materials.
• Plant/Equipment: We differentiate between critical equipment essential for asset performance and long-lead equipment with extensive delivery times, such as compressors, electrolysers, or transformers.
• Services: Common examples include temporary utilities (power, water, telecoms), site security, instrument calibration, and start-up assistance.
• Start-Up Items: Specific materials like demin water and chemicals required for the commissioning phase.

Why Use Free Issue Items? The primary reason an Employer provides these items is to minimize the overall EPC schedule. By performing early procurement activities (often pre-FID or Final Investment Decision), the Employer secures long-lead items that would otherwise delay the project.

Key Management and Risk Factors:
• Interface Risk: Free issue items are a serious interface risk for the Employer and must be closely monitored and managed.
• Contract Transfers: Employers may mitigate risk by transferring purchase contracts to the Contractor through novation or assignment as Nominated Subcontractors.
• Logistics & INCOTERMS: Understanding delivery responsibility is vital. We look at how EXW (Ex Works) and DDP (Delivered Duty Paid) determine who handles transport, permits, and duties.

Whether you are a project manager or a contract administrator, understanding these requirements—including the documentation and planned delivery schedules—is essential for avoiding "cancelation fees" and ensuring seamless project execution.

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