The FIDIC Suite Of Contracts
The FIDIC Suite of ContractsLess well know FIDIC contracts are alsoavailable such as the Turquoise Book forDredging and Reclamation Works published inJanuary 2006 and the White Book modelservices agreement published in October 2006IntroductionThe FIDIC suite of contracts now covers awide range of projects and methods ofprocurement. It is therefore likely that anyinternational contractor or consultant workingoutside of the UK will frequently encounterFIDIC conditions of contract.The FIDIC suite of contractsThe FIDIC suite of construction contracts iswritten and published by the InternationalFederation of Consulting Engineers. The FIDICacronym stands for the French version of theFederation’s name (Federation Internationaledes Ingenieurs-Conseil).The best known of the FIDIC contracts are theRed Book (building and engineering worksdesigned by the Employer) and the YellowBook (M&E, building and engineering worksdesigned by the Contractor). The originaledition of the Red Book dates back to 1957.In recent years FIDIC has published manynew contracts to complement the suite. Thefirst of the new contracts was the OrangeBook for design, build and turnkey workspublished in 1995.In 1999 FIDIC published a revised suite ofcontracts with updated versions of the Redand Yellow books together with a Green Bookas the short form of contract and a SilverBook for turnkey contracts.More recently in 2005 FIDIC published anamended version of the Red Book for use byMultilateral Development Banks and in 2007published a seminar edition of the Gold Bookfor Design, Build and Operate contracts.Sub-contractors will similarly encounter FIDICderived conditions of contract where they areoperating internationally. Even subcontractorsthat only operate within a particular countrywill from time to time encounter FIDICderived conditions where they are operatingwithin a supply chain governed by a FIDICmain contract.Employers may also use FIDIC conditionswhere the local standard conditions ofcontract are not suited to the procurementroute and there is a need to avoid the risksand expense of preparing a bespoke contract.The different forms of contract within theFIDIC suite are organised around the extentof design and other responsibilities assumedby the Employer and the Contractor. The suiteis therefore now aligned with commonprocurement strategies rather than the natureof the construction works.Where works are predominantly designed bythe Employer, then the Red Book is theappropriate form of contract. Where worksare predominantly designed by the Contractorthe Yellow Book is appropriate regardless ofwhether the works were heavy civils or M&E.The Silver Book is clearly intended for use onTurnkey projects and the Gold Book wherem ak ing the d if f eren ce
The FIDIC Suite of Contractsthe contractor operates the asset in additionto designing and building.Employers may benefit from utilising FIDICconditions where potential bidders are fromdifferent countries. In such cases the biddersmay perceive the use of the familiar FIDICconditions as increasing the attractiveness ofenquiry. This could translate into lowertenders as the contract risks should be betterunderstood by the bidders.The FIDIC forms can therefore be applied to awide range of differing engineering andconstruction projects; from traditional civilengineering to hi-tech windmills and heavyduty oil and gas process plants.FIDIC has reduced the number of clauses inall of the recent contracts. The Orange Bookcontained 20 clauses, as now do the Red,Yellow and Silver Books. Previously, the RedBook had 72 clauses.taken to ensure that no ambiguity is created,either with the General Conditions or betweenthe clauses in the Particular Conditions. It isessential that all these drafting tasks, and theentire preparation of the contract documents,are entrusted to personnel with the relevantexperience of the contractual, technical andprocurement aspects of the project.The suite does not currently include astandard form of subcontract although in2004 FIDIC stated that a Subcontract formwould be a desirable addition to suite. It isexpected that if a subcontract form ispublished that a version for use with the RedBook main contract will be first.The main forms of contract are describedfurther in some detail belowFIDIC has also standardised the terms acrossthe full suite so that wherever possible thesame words and definitions have the samemeanings and the clauses are now grouped ina logical manner across all the contracts.Knowledge of one form of FIDIC conditions istherefore of immediate benefit in respect ofother forms.Each of the main conditions of contract in thesuite now contains a core of commonconditions with little significant differencebetween them.Amendments to the standard published FIDICcontracts are incorporated by the inclusion ofParticular Conditions and guidance on how toprepare the Particular Conditions is publishedby FIDIC. Where Particular Conditions areincorporated into the contract care must bem ak ing the d if f eren ce
The FIDIC Suite of ContractsUnder the usual arrangements for this type ofcontract, the Contractor constructs the Worksin accordance with design provided by theEmployer. However it may also be suitable forcontracts which include, or wholly comprise,the contractor’s design.An area of potential concern for Contractors isthat there is no reference to an impartialEngineer in the contract. The contractnominates a member of the Employer’spersonnel as the authorised person to fulfilthe traditional duties of the Engineer.Green BookShort Form of ContractFirst Edition 1999Contents of Contract Book AgreementGeneral ConditionsRules for AdjudicationNotes for GuidanceThe Short Form of Contract is recommendedfor engineering and building work of relativelysmall capital value. The Guidance Notes forthe Green Book recommended that generallyit should not be used on projects with acontact value greater than US 500,000.However, depending on the type of work andthe circumstances, the Green Book may besuitable for contracts of considerably greatervalue.The intention is that all contract documentswill be incorporated in the Appendices to theAgreement. The Appendices will thereforeinclude such documents as the Contractor’soffer and the Employer’s acceptance togetherwith all the correspondence in between.The standard General Conditions are intendedto be applicable to the majority of projectsalthough it is possible to introduce ParticularConditions if these are required to amend theGreenBookandprovideforspecialcircumstances of the project.To assist in the preparation of tender andcontract documents Notes for Guidance areincluded within the Green Book. Howeverthese notes do not form part of the Contract.It is interesting to note that the Green Bookincludes Rules for Adjudication which is aninnovation for a suite of contracts that istraditionally thought of as being relevant tothe international market and not domestic tothe UK.It is a flexible document containing all theessential administrative and commercialarrangements. It is possible to easily amendand supplement the provisions of the GreenBook with differing options incorporated viathe Appendix.The Green Book is likely to be most suitedfairly simple or repetitive work or work ofshort duration without the need for specialistsub-contracts.m ak ing the d if f eren ce
The FIDIC Suite of Contractssuch projects it would be more appropriate touse the Yellow Book or Silver Book.As with earlier versions of the Red Bookadministration of the project and supervisionof the works is carried out by an Engineerwho is employed by the Employer. Theengineer is responsible, amongst other things,for issuing instructions, certifying paymentsand determining completion.Red BookPayments are normally determined bymeasurement and applying the rates andprices from the bill of quantities. There is anoption for payment to be on the basis of alump sum.Conditions of Contract for ConstructionFor Building and Engineering worksdesigned by the EmployerFirst Edition 1999Contents of Contract Book General Conditions Guidance for the Preparation of theParticular Conditions Forms of Tender and Contract Agreement Dispute Adjudication AgreementThe Red Book provides conditions of contractfor construction works where the design iscarried out by the Employer. The current RedBook bears little resemblance toitspredecessors. Earlier versions of the Red Bookwere drafted for use on civil engineeringprojects. The current edition drops the words“civil engineering” from the title and thissignifies a move away from the Red Book onlybeing applicable to civil engineering works.Where the engineer is required to determine amatter or settle a claim he is required toconsult with each of the parties to try andreach an agreement. If agreement cannot bereached the engineer must make a fairdetermination taking due regard of allrelevant circumstances.If an engineer’s determination is not agreedby either of the parties then the dispute willbe referred to a Dispute Adjudication Boardfor a decision. The DAB is formed of one orthree people who are jointly appointed by theparties. If the decision of the DAB is notaccepted by any of the parties then the finalstep will be resolution via an internationalarbitration.In line with the rest of the FIDIC suite thefocus is now more on type of procurementrather than the nature of the works. The RedBookisthereforeapplicabletoanyconstruction works were the Employer carriesout the design.The General Conditions and the ParticularConditions together comprise the Conditionsof Contract. Guidance is provided in the RedBook for the preparation of ParticularConditions should it be necessary to modifythe General Conditions. The Guidance alsocontains various forms of security such asparent company guarantee, advance paymentbond and a retention guarantee which can beselected as applicable to the contract via theParticular Conditions.The Red Book is intended for use on projectswhere the employer carries out the design butit also allows for some elements of the projectto be Contractor designed. The Red Book isnot suitable for use where most of the worksare to be designed by the Contractor and forThis Red Book concludes with example formsfor the Letter of Tender, the Appendix toTender (providing a check-list of the subclauses which refer to it), the ContractAgreement, and a Dispute AdjudicationAgreement.m ak ing the d if f eren ce
The FIDIC Suite of Contracts International Bank for Reconstruction andDevelopment (The World Bank)Islamic Bank for Development BankNordic Development FundIt is expected that all of the participatingMDBs will adopt this edition of the FIDICdocumentintheirstandardbiddingdocuments in the future.Use of these MDB conditions shouldsignificantly reduce the number of additionsand amendments to be included in theParticular Conditions.Red Book (MDB edition)Conditions of Contract for ConstructionFor Building and Engineering worksdesigned by the EmployerMDB Edition 2005Contents of Contract Book General ConditionsGuidance for the Preparation of theParticular ConditionsForms of Tender and Contract AgreementDispute Adjudication AgreementAs part of their standard bidding documentsthe Multilateral Development Banks (MDBs)have for a number of years required theirborrowers or aid recipients to adopt the FIDICConditions of Contract.The FIDIC MDB edition of the Red Booksimplifies the use of the FIDIC contract for theMDBs, their borrowers and others involvedwith project procurement, such as consultingengineers, contractors and contract lawyers.Nevertheless, most projects will have specialrequirements which will necessitate somespecific changes. The contract thereforeretains provision for Particular Conditions as iscommon with other FIDIC contracts.As with the main Red Book this MDB editionalso includes sample forms for Contract Data,Securities, Bonds, Guarantees and DisputeBoard agreements.In most cases, the amendments which havebeen made to produce the MDB edition arethose arising from the requirements of theMDBs, except for some minor changes of aneditorial nature.However, in the case of the dispute provisionscontained in Clauses 20.2 to 20.8 and in theassociated Appendix, the opportunity hasbeen taken to make other amendments whichFIDIC considered an improvement on theearlier wording as contained in the Red Book1999 edition.The following MDBs that have all participatedin the preparation of this edition of the RedBook: African Development BankAsian Development BankBlack Sea Trade and Development BankCaribbean Development BankEuropean Bank for Reconstruction andDevelopmentInter-American Development Bankm ak ing the d if f eren ce
The FIDIC Suite of ContractsAdministration of the project and supervisionof the works is carried out by an Engineerwho is employed by the Employer. TheEngineer is responsible, amongst otherthings, for issuing instructions, certifyingpaymentsanddeterminingcompletion.Interim payments of the lump sum ContractPrice are made as work proceeds, and aretypically based on instalments specified in ascheduleYellow BookConditions of Contract forPlant and Design-BuildFor electrical and mechanical plant, and forbuilding works, designed by the ContractorFirst Edition 1999Contents of Contract Book General Conditions Guidance for the Preparation of theParticular Conditions Forms of Tender and Contract Agreement Dispute Adjudication AgreementThe Yellow Book provides conditions ofcontract for construction works where thedesign is carried out by the Contractor. Thecurrent Yellow Book bears little resemblanceto its predecessors. The current edition dropsthe words “electrical and mechanical works”from the title and in line with the rest of theFIDIC suite the focus is now more on type ofprocurement rather than the nature of theworks.The Yellow Book is therefore applicable to theprovision of electrical and/or mechanicalplant, and for the design and execution ofbuilding or engineering works. Under theusual arrangements for this type of contract,the Contractor designs and provides theworks in accordance with the ion of civil, mechanical, electricaland/or construction works.Where the engineer is required to determine amatter or settle a claim he is required toconsult with each of the parties to try andreach an agreement. If agreement cannot bereached the engineer must make a fairdetermination taking due regard of allrelevant circumstances. If an engineer’sdetermination is not agreed by either of theparties then the dispute will be referred to aDispute Adjudication Board for a decision. TheDAB is formed of one or three people who arejointly appointed by the parties. If thedecision of the DAB is not accepted by any ofthe parties then the final step will beresolution via an international arbitration.The General Conditions and the ParticularConditions together comprise the Conditions.Guidance is provided for the preparation ofParticular Conditions should it be necessary tomodify the General Conditions. The Guidancealso contains various forms of security suchas parent company guarantee, advancepayment bond and a retention guaranteewhich can be selected as applicable.The General Conditions as drafted may notsuit the Employers particular needs (forexample the standard inclusion of advancepayments). Care must be taken in thepreparation of the Particular Conditions andcompletion of the Appendix to avoid creatingambiguities around such conditions. A majorarea for consideration when preparingParticular Conditions is the risk allocation forground conditions which is an Employer risk inthe standard draft.The Yellow Book concludes with exampleforms for the Letter of Tender, the ContractAgreement, and a Dispute AdjudicationAgreement.m ak ing the d if f eren ce
The FIDIC Suite of ContractsThe Orange Book is drafted for use where theContractor carries total liability for design. Forthe Employer, such single-point responsibilitymay be advantageous, but the benefits maybe offset by having less control over thedesign process and more difficulty in imposingvaried requirements.Under the usual arrangements for a designbuild contract, the Contractor is responsiblefor the design and provision of works. Theworks may include any combination ofengineering (including civil, mechanical,electrical, etc) and building works.Orange BookConditions of Contract forDesign-Build and TurnkeyFirst Edition 1995Contents of Contract Book General Conditions Guidance for the Preparation of theParticular Conditions Forms of Tender and AgreementThe Orange book was published in 1995 toprovide a design and build option to the thencurrent FIDIC suite. The Orange Book was thefirst FIDIC contract to adopt the now currentFIDIC style of drafting and was a template forthe drafting teams when preparing the 1999suite of contracts.When the Orange book was published the Redand Yellow Books were still aimed atprocurement of civil engineering and plantinstallation respectively. At the time it addeda clear design and build and turnkey optioninto the available suite of contracts.Since the publication in 1999 of the latest Redand Yellow Books there is now less focus onthe type of project and more focus on theimplementation of different procurementstrategies. It is now likely that an Employerrequiring a design and build or turnkeyproject under a FIDIC contract would use a1999 edition of the Yellow Book for designand build or a Silver Book for Turnkey.The Orange Book is intended for use onturnkeycontracts,underwhichtheEmployer's requirements usually includeprovision of a fully-equipped facility, ready foroperation at the turn of a key. The exactEmployer requirements will need to be fullydetailed to describe the design, construction,fixtures, fittings and equipment required to beprovided by the Contractor’s design.When used for turnkey projects it may benecessary to impose a requirement for theContractor to operate the Works, either for afew months' commissioning period, or forsome years' operation on a build-operatetransfer basis. If this is the case then theFIDIC Gold Book may now be moreappropriate.There are many sub-clauses within theOrange Book which FIDIC decided weregenerally applicable and these are included inPart I - General Conditions. The Orange Bookis arranged to accommodate modification andsupplementing of the General Conditions bythe inclusion of Part II - Conditions ofParticular Application. The Orange Bookcontains a section of guidance on preparingthe Part II conditions. The Part I and Part IIconditions together govern the rights andobligations of the parties.m ak ing the d if f eren ce
The FIDIC Suite of Contractsassumes responsibility, subject to someexceptions, for the accuracy of the EmployersRequirements which is a major difference tousual design and build contracts.Given the high level of risk transfer theEmployer must allow time sufficient time in itsprocurement programme for the Contractor toobtain and consider all relevant informationbefore signing the contract.Silver BookConditions of Contract forEPC/Turnkey ProjectsFirst Edition 1999Contents of Contract Book General Conditions Guidance for the Preparation of theParticular Conditions Forms of Tender and Contract Agreement Dispute Adjudication AgreementThe Silver Book is suitable for use on process,power and private-infrastructure projectswhere a Contractor is to take on fullresponsibility for the design and execution ofa project. Risks for completion to time, costand quality are transferred to the Contractorand so the Silver Book is only suitable for usewith experienced Contractors familiar withsophisticated risk management techniques.For many large projects construction is onlyone part of a wider complicated commercialventure and financial or other failure of theconstruction project will jeopardize the wholeventure. The Silver Book approach may suitsuch projects as it will provide
In 1999 FIDIC published a revised suite of contracts with updated versions of the Red and Yellow books together with a Green Book as the short form of contract and a Silver Book for turnkey contracts. More recently in 2005 FIDIC published an amended version of the Red Book for use by Multilateral Development Banks and in 2007File Size: 313KB
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FIDIC’s Contracts Committee has updated the FIDIC 1999 Suite of Contracts (Red Book, Yellow Book and Silver Book) and the Second . Edition 2017 of each of these three FIDIC contracts are being launched at this conference. In th
In addition to the three contracts mentioned above, an updated FIDIC White Book to be applied for consultancy/advisory services was pub-lished in the spring of 2017. FIDIC also offers a wide variety of other standard contracts. We find that the FIDIC Yellow Book and the FIDIC Silver Book ar
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FIDIC contracts more popular in recent years due to the influence of international players, multilateral investment agencies and promotion by FIDIC. The Red Book and Silver Book contracts are particularly common. FIDIC contracts common. Same contracts apply as for construction projects.
