FIDIC for PRACTITIONERS

ABOUT FIDIC

FIDIC, the international voice of Consulting Engineers,
presents in cooperation with Nestor:

 

VBI, the German member association of FIDIC, together with FIDIC have secured the expertise of Mr. Axel Volkmar Jaeger who is an experienced consultant and the former past Chairman of the FIDIC Contracts Committee and a current special adviser of the Contracts Committee, and Dr. Götz-Sebastian Hök, who is a well known and skilled and experienced lawyer and FIDIC approved adjudicator specialising in FIDIC contract forms 1999 and 2017, having published German and French translations of 1999 FIDIC standard forms and a considerable number of articles in German and English, such as Hök, The FIDIC Red Book harmonised version, ICLR 2006, 405; Hök, Difficulties encoutered in the English-French translation of FIDIC´s Standard Form Contracts, ICLR 2007, 27; Hök, Chinese Arbitration requirements - A trap for FIDIC-ICC arbitration, ICLR 2008, 190; Hök, Relationship between FIDIC Conditions and Public Procurement Law - Reliability of Tender Documents, ICLR 2009, 23; Hök/Jaeger, FIDIC Conditions of Contract for Design, Build and Operate Projects - A new approach, ICLR 2010, 36; Hök, Phantom or effective Dispute Resolution Method?, ICLR 2011, 412; Hök, Employer´s requierements in Design-Build Contracts under FIDIC - A comparative Study, ICLR 2012, 121 et seq.; Hök, Dispute Adjudication Boards - The International or Third Dimension, ICLR 2012, 420 et seq., Hök/ Fahey, Observations on the FIDIC Subcontract 2011 - Part 1: a paper on the FIDIC Subcontract for Works published in the International Construction Law Review (ICLR), Volume 32 [2015], Part 3, 325 et seq. 
Hök / Fahey, Observations on the FIDIC Construction Subcontract 2011 - Part 2, ICLR 2015, 366 et seq.

 

FIDIC forms of Contract have a widespread dissemination and this for several and good reasons. The World Bank and other mulitlateral development banks (such as ADB, EBRD etc.) recommend FIDIC forms of Contract for projects where the banks lend the money. FIDIC standard forms of Contract make contratcs bankable, transparent and auditable. The third person involved, the so called "Engineer" as defined in the General Conditions of Contract, is subject to further qualification strictly bound to the Contract and the contractual procedures as per Contract. This makes it a reliable contract administrator. Since 2017 the Engineer is even bound to act neutrally in matters of determination.

The Engineer shall be a professional engineer with experience in the field of FIDIC contract administration. He / she shall have a good knowlegde about the Contract and the integrated step-by-step procedures. In various occasions he she shall form its professional mind and give reasons for this. Thus, when making a determination of a claim or when issuing a Payment Certificate the Engineer shall not only do so because the Contract gives it authority to do so but it shall do so because the Contract provides for such an entitlement. Hence, only if and when the Engineer believes that the requirements under the Contract are met, it shall grant relief. As the Engineer has to give reasons for each of its determinations as per Sub-Clause 3.5 FIDIC 1999 or Sub-Clause 3.7 FIDIC 2017 the Parties may then quickly assess whether the Engineer was wrong or whether its determination should be upheld.

However, if the Parties are dissatisfied with any of the Engineer´s determination they may then refer a dispute (a definition of the term "dispute" can be found in the FIDIC Gold Book [2008] and in the 2017 Edition) to the Dispute Adjudication Board. By consequence the Engineer shall exercise its powers in accordance with the Contract, but subject to further control and review.

The Parties shall assist the Engineer by following the Contract procedures and by complying with its terms. It becomes apparent that all of the notice giving requirements, the duty to keep records and the duty to submit reports serve a valuable purpose. Only a full set of data and information enables the Engineer to make up its mind with regard to all relevant circumstances as required by the Contract.

Hence, it is critical to know the procedures and to become familiar with the Contract terms and concepts. Also FIDIC trainings serve therefore a valuable purpose. They enable the Parties and the Engineer to comply with the procedures and the Contract. Finally a well managed and administered Contract also allows for a proper and easy auditing of the Contract.

A lot of Contractors, in praticular those coming from Civil Law countries quite often believe that FIDIC forms create burdensome duties without purpose. However this is wrong. All of the contract management duties under a FIDIC contract are of benefit for Contractors. A detailed programme as per Sub-Clause 8.3 helps the Engineer to identify planned workman power and equipment. In the event of delay and disruption the Engineer may quickly see which additional resources become necessary which whelps to determine additional Cost. FIDIC contracts have been drafted by Engineers who know about the difficulty to manage a construction project for engineers. Thus, FIDIC Contracts do not establish burdens, rather they provide guidance and support. To this end FIDIC forms of Contract establish a set of rules which if followed will help to assess problems, claims, etc. and to find solutions. Contractors will appreciate a reliable and foreseeable contract administration by Engineers.

Employers quite frequently question the need for an independent Engineer. They believe the Engineer´s role can be easily handled by themselves. However the Engineer may ensure quality and strict compliance with the contract administration procedures much better than sometimes believed. Also he / she is liable of any of its acts and/or ommissions which ensures that that there not only responsiblity but also liability. Finally a strict, straightforward and transparent contract administration allows for transparency and easy auditing.

In a summary, proper use of FIDIC forms of Contract may create a win-win situation. However, the use of FIDIC forms of Contract requires a good knowledge and in depth studies of the contract features.

Since FIDIC is continuously improving its contract forms and enlarging the suite of contracts Nestor has decided to include a FIDIC Subcontract course in the current training programme. Under the new FIDIC Subcontract, claim and contract management has been harmonised and structured back-to-back. Hence, Subcontractors and Main Contractors sit on one boat sharing the risks and benefits of the main contract. Particular features like the related and unrelated claims´ clause as well as the related and unrelated dispute resolution clause shall ensure an effective contract and claim management which truly reflects the back-to-back approach.

Also, drafting Subcontracts has become easier since FIDIC published the first edition of the FIDIC Subcontract form. However, the project requirements and the laws may require slight changes and additions. For instance in Bosnia, France and some of the Gulf States subcontractors may have direct enforceable entitlements to be paid by employers.

Proceeding properly under a FIDIC Subcontract and preparing accurate Subcontract tender documents require definitive skills and expertise. Nestor has engaged experienced eminent and well known FIDIC accredited trainers in order to provide an excellent two days´ training on the FIDIC Subcontract form.

The new Subcontract training is geared towards Main Contractors and Subcontractors, and also Consulting Engineers and lawyers being involved in major Subcontracts.