FIDIC for PRACTITIONERS
Fidic Conditions of Contract
FIDIC is a French acronym for (Fédération Internationale des Ingénieurs-Conseils) literally translated in English as “International Federation of Consulting Engineers”. It was founded in 1913 by three National associations of Consulting Engineers in Europe (Belgium, France and Switzerland). As of October 2011 it had 89 National Member Associations representing over 1.5 million professionals around the world. The mission of FIDIC is: “To promote the business interest of members providing technology-based intellectual services for the built and natural environment, and while so doing, accept and uphold our responsibility to the society.” It is thus the international voice of the consulting engineers.
FIDIC has published:
- FIDIC's selection of contracts and agreements (the backbone of the body of FIDIC's publications)
- Business practices information for consulting engineers on risk management, project sustainability management, environment, quality management, integrity management, dispute resolution techniques, insurance, capacity building, transfer of technology, law and other business issues.
- Guides for quality based selection, procurement and tendering procedures, consultant selection, quality of construction and other documents about the use of consulting engineers.
The FIDIC suite of Contract forms is predominatly used for international civil engineering work and for major international building projects. The books allocate risks in a blanced manner and provide for a contractual machinery regarding the management of issues and claims.
In 1999 FIDIC introduced a new suite of Contracts for international civil engineering and large building projects, including the new Red Book together with the new Yellow Book, Silver Book and Green Book. However, the previous edition of the Red Book (the fourth edition) still continues to be used in some parts of the world but it seems likely that the 1999 edition will replace it in the medium term.
FIDIC forms of Contract are balanced, well tried and supported by various institutions (for instance World Bank, JICA, ADB, etc.). They promote a transparent and effective contract management.
The FIDIC Red Book
The FIDIC Red Book is recommended where the Employer intends to be responsible for the design and where payments to the Contractor shall be contingent upon measurement and evaluation by the Engineer (as defined by Contract). The Engineer shall form its professional opinion regarding any payments to be done to the Contractor.
The FIDIC Yellow Book
The Yellow Book is appropriate where the Employer intends to shift the design responsiblity to the Contractor. Thus under the FIDIC Yellow Book the Contractor assumes the responsiblity for the design and the execution of the works in accordance with the Employer´s Requirements. Any payments shall become due subject to the Engineer´s determination and certification. Moreeover the Contractor bears the full risk of exceeding quanties whilst the Employer bears the risk of less quantities as contemplated by the Parties at tender stage.
The FIDIC Silver Book
The FIDIC Silver Book is a design and build contract form which allocates much more ordinary risk to the Contractor than the FIDIC Yellow Book does. Furthermore the Employer has full control on contract management since he responsibility for the contract administration will be assigned to an Employer´s Representative rather than to the Engineer (the latter being deemed to form an independent opinion).
Its subtitle EPC/Turnkey should not be misunderstood as a recommendation to use the Silver Book for EPC contracts. The subtitle merely suggests that it can be suitable for such purposes. Nevertheless it is possible to use the FIDIC Yellow Book for EPC/Turnkey contracts.
The FIDIC Green Book
The FIDIC Green Book is appropriate for starightforward projects where the construction budget is relatively small and the expected time for completion is relatively short. Contract Management will not be assigned to a third person. On the other hand the FIDIC Green Book is a quite flexible instrument. However, users should not believe that the FIDIC Green Book does not require any contract management. Also the Green Book follows clear concepts.
The FIDIC Subcontract
The FIDIC Subcontract can be used back-to-back with the FIDIC Red Book. It is suitable for use with the FIDIC Red Book. The FIDIC Subcontract for Works provides for new features like a fully harmonised claims´ and dispute clause. Main Contractors will have the benefit of a subcontract which subcontracts everything down the line while the Subcontratcor will enjoy the benefit of claims like under the Main Contract.
Nestor offers a course on the Subcontract.
A FIDIC Subcontract for design and build is in the pipeline.
The Subcontract course was first held on 8th and 9th October 2013.
The FIDIC Gold Book
The FIDIC Gold Book meets an increasing demand for design, build & operate contracts. Under this type of contract the Contractor assumes responsiblity for the design, the construction and the operation of thd Works. Users should use it with the understanding that it promotes a sustainable design concept and that it requires a diligent and careful preparation of the Employer´s Requirements. The FIDIC Gold Book is also important in that it promotes new claims´management features and dispute resolution concepts which will presumably become adopted under the 1999 FIDIC suite of contracts.
The FIDIC White Book
The FIDIC White Book is the appropriate stand form for the award of consultancy services to a consultant engineer or architect.
The correct choice of the the appropriate standard form depends on the answer to various questions. Consultant engineers are usually involved in the choice of the appropriate standard form and should only do so after having carefully studied and acquainted themselves with the full range of FIDIC products.
The FIDIC Guidance Memorandum to Users of the 1999 Conditions of Contract is designed to make explicit the intentions of FIDIC in relation to the enforcement of the DAB decisions that are binding and not yet final and binding. Meanwhile, a judgment of May, 2015 of the Singapore Court of Appeal enforcing a “binding” but not “final” decision of a dispute adjudication board under the FIDIC Conditions of Contract for Construction 1999 (the so-called “Red Book”) is to be welcomed - PT Perusahaan Gas Negara (Persero) v CRW Joint Operation (Indonesia)  SGCA 30 (Perusahaan), released on 27 May 2015. The decision confirms that also under the current wording it is possible to enforce a merely binding DAB decision. Hence, there is no urgent need to amend the current FIDIC wording by referring to the memorandum.
FIDIC forms of contract use clear and coherent wording and are known as balanced. FIDIC follows the core principle "drafted by engineerss for engineers". Other forms of contract may look attractive for various purposes but it may be necessary to look at the details and in particular at the legal environmentin which they shall become used. The multilateral development banks nowadays allow more flexibility in th selection of standard forms of contract. References to NEC and ENAA standard forms have been made. Nestor trainers will be able to explain pros and cons of FIDIC.