This article is intended to provide a general introduction to FIDIC contracts and their management and administration. FIDIC is an organization comprising Engineer’s from around the world, from Contractors, Consultant’s and Employer’s 

Its title translates from French to English as “The International Federation of Consulting Engineers” and it is generally recognized as the world’s leading publisher of Construction Contracts 

It is the Contract of choice of most Asian Governments and many private Employers. FIDIC publishes a wide range of standard contracts, providing for the following construction related situations 

• Traditional Employer Designed Projects
• Design and Build Projects including EPC Projects ( Engineering, Procurement, and Construction)
• Dredging / Tunnelling Works

FIDIC has always used a color code system to identify and distinguish its Contracts. Over the years various contract editions have been published, which are best summarized as pre and post-1999 

Pre 1999 

Red Book – 1987 4^th Edition – Traditional Employer Design Contract for Civil Works 

Orange Book – 1995 1^st Edition – Design Build Contract

Post 1999 

Red Book – 1st Edition – Traditional Employer Design Contract for Civil Works 

Yellow Book – 1^st Edition – Design Build Contract

Silver Book – 1^st Edition – EPC Contract 

At present, the most common forms used are the Red Books (Both the 1987 4^th Edition and the 1999 1^ST Edition). In recent years it is noticeable that the 1999 1^st Editions is being more widely used.  However, in recent years large projects are often using the new Yellow and Silver Book Contracts.

FIDIC Contracts are generally accepted in their base form to represent a fair sharing of construction risks between the Contractor and the Employer. 

Firstly, let's look at the Red Book

The Red Book, both the 1987 4^th Edition and the 1999 1st Edition  are suitable for Traditional Civil Engineering Projects for which the design is prepared by the Employer

The Key Principles of both Contracts are

• Fair and reasonable apportionment of construction risks between the Employer and the Contractor.
• An Engineer is appointed to administer the  contract on behalf of the Employer
• The contractor is required to inform the Engineer / Employer of problems in the project
• The contractor’s entitlements are linked to the timely issue of notices and claim details

Both Contracts provide for the following

• Base Contract can be amended in the Particular Conditions
• Employer is responsible for the Design
• The contract price can be adjusted for
  • Remeasurement of Final Quantities
  • Inflation of material, labour , and equipment prices
• Extensive grounds for adjustment of the Contract Period ( Extension of Time ) ,  including Adverse Weather Conditions
• Extensive grounds for Contractors Cost Claims
• Adverse Ground Conditions are not a Contractor Risk
• Monthly Payment based on actual progress

The key differences between the 1987 4^th Edition and the 1999 1^st  Edition can be summarized as follows

In terms of  the 1987 4^th Edition, the key clauses and issues of note  are considered to be 

In terms of  the 1999 1^st  Edition, the key clauses are considered to be 

Next a brief look at the Yellow and Silver Books . The Yellow Book is for Design and Build Projects and is essentially the same as the Red Book with the exception of 

• Contractor to prepare design based on Employer’s Requirements
• Employer is responsible for cost and time effects of errors in his requirements
• Lump Sum Price

The Silver Book is for EPC / Turnkey Projects and is essentially the same as the Red and Yellow Books with the exception of 

• Contractor to prepare design based on Employer’s Requirements
• Contractor to check that Employer’s Requirements are correct/sufficient
• Lump Sum Fixed Price
• Contractor takes the risk of  adverse site, ground, and climatic conditions
• The Employer administers the Contract

In terms of the general administration of  FIDIC Contracts, the following are considered the key issues 

PRE CONTRACT TENDER STAGE

• Do not assume that just because the Contract is based on FIDIC that it will be fair or the same as a previous project. Most Employers make changes in the Particular Conditions to amend the risk apportionment balance.

           POST CONTRACT EXECUTION STAGE

• Maintain detailed project records ( labour / plant / equipment etc )
• Maintain and monitor a drawing submission/approval schedule and use Clauses 6.3 / 6.4 of the 1987 4^th Edition and Clause 1.9 of the 1999 1^st Edition to the full
• For Red Book Contracts do not undertake any design works without clear instruction from the Employer / Engineer
• Follow the 28 day notice periods for all cost and time claims

CONCLUSION AND CLOSING 

Since most of our projects will involve the use of a FIDIC Contract or similar clauses it’s important for us to understand their principles and key aspects, and requirements

It is hoped that this presentation has given you an introduction to these issues and has stimulated your interest to research them in more detail

Author: James Bristow