Fair and Balanced Conditions of Contract, A Key to Success in the Construction of Hydro Electric Power Plants in Indonesia

The development process cannot be separated from the construction process and thus involves owners and contractors who are legally and contractually bound under construction contracts including General Conditions of Contract. Development of hydro electric power plants by Indonesia State Electricity Corporation (PLN), the main institution responsible as the electricity provider for electricity development, obviously requires financing from international lending institutions, either multilateral ones such as World Bank, Asian Development Bank or bilateral ones such as New JICA. Both require the use of fair and balanced General Conditions of Contract as a condition to giving their loans. More often than not the use of FDIC Conditions of Contract is mandatory. Discussions are included indicating that frequently the main factor causing claims to significantly affect the construction costs do not lie in the conditions of contract themselves but rather in the attitudes of the parties involved