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Overview of the FIDIC
FORMS OF CONTRACT
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Michel francis
Chief Architect, LEED AP, PQP
Lecturer
History
Founded in 1984
In Abu Dhabi since 1995
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DEC Introduction
Our Services
Building & Infrastructure Design and Engineering
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Project Management
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LEED & Estidama Consultancy
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Oil & Gas Fields Services
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Specialized Engineering Services
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FIDIC TRAINING
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3FOLD DUCATION
http://3foldtraining.com/
3 DAYS TRAINING
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DETAILED ANALYSIS OF THE FIDIC FORM OF CONTRACTS
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PROJECT MANAGEMENT UNDER FIDIC CONTRACTS
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CLAIMS MANAGEMENT AND AVOIDANCE
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CASE STUDIES
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AVAILABLE IN ABU DHABI AND DUBAI
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About FIDIC
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 FIDIC - International Federation of Consulting
Engineers
 Founded in 1913
 Charged with promoting strategic
 Membership covers 98 countries
 Publishes international standard forms of contracts
 Publishes business practice documents
 Organizes annual conference and seminars
FIDIC OBJECTIVES
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1. Be recognized
2. Promote ethics and integrity
3. Maintain representation
4. Enhance image
5. Promote development
6. Promote FIDIC Forms of Contract
7. Improve and develop training
8. Encourage Young Professionals
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About FIDIC
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The 1999 Suite of Standard Conditions of Contract
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• Conditions of Contract for Construction - design by
Employer: The Construction Contract (Red Book)
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• Conditions of Contract for Plant and Design-Build - design
by Contractor: The Plant and Design/Build Contract
(Yellow Book)
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• Conditions of Contract for EPC Turnkey Projects: The
EPC/Turnkey Contract (The Silver Book)
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• Short Form of Contract: The Short Form (The Green
Book)
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Why the FIDIC Forms
Risk allocation
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Compensation and time extension
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Engineer
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Principles behind the 1999 Books
Consistancy
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Clarity
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Balance
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Law compatibility
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Prepared by Engineers
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Role of Engineer
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Employer Representative
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Priority to WORK
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Financial Management
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Suits Local and International Law
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Adjudication
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Principles
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Distinction between the Books
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• Risk?
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• Design?
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Who does the DESIGN
Competitive TENDERING
RISK balance
CLAIMS follow procedure
ENGINEER no longer ‘impartial’
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The 1999 Red and Yellow Books
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Design by the Employer
Need modern multi-discipline
contracts
Partial Contractor design possible
Payment based on remeasurement
DAB instead of Engineer Decision
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The 1999 Red Book
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The 1999 Yellow Book
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payment based on lump sum
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DAB instead of Engineer Decision
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For E&M plant, & Designed by the
Contractor
Multi-discipline contracts recognised
Partial Employer design
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The Silver Book (EPCT Contract)
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E & M and Plant
All Types of Employers
Civil law jurisdictions
Fixed price and two-party approach
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More certain price and time
Contractor covers most risks
Employer pays more
Completely new Book - ‘unbalanced’ risk
Suitable for:
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Design by Contractor
Employer’s Requirements functional basis
Contractor carries out all EPCT
No Engineer
Lump Sum Price
Thorough Testing
Contractor carries risks, so Employer pays more
Final price and time more certain
Small number of tenderers
Contractor uses own methods
Has to prove reliability and performance
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Special Features of the Silver Book
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Silver Book Not Suitable when…
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insufficient time or information
underground work
Employer supervision
Intermediary party
Partly designed by Employer
public bidding
GO FOR P&DB (yellow book) instead
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US$ 500,000 and 6 months
Simple works
15 clauses
Simple Language
Balanced risk
No Engineer
Design by either party
All types of construction
Payment method varies
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The Green Book (Short Form of Contract)
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Dredging and Reclamation
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 Design by Employer or Contractor
 Valuation – all main methods
available
 Engineer to act “fairly”
 No defects liability on dredging
 Special insurance provisions
 Adjudication by DAB first
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Red Book MDB Harmonised Version
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 Based on 1999 Red Book
 Changes required by MDBs
 Use subject to special licence
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DBO (Gold Book), First Edition 2008
Assumes ~20y operation period
Modern approach to risk and insurance
Employer’s Representative
Adjudication by DAB first
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Design, Build and Operate Projects
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Subcontracts
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 Conditions of Subcontract for
Construction, 1st Edition 2011
 Intended for use with 1999 Red
Book
 General Conditions – Particular
Conditions
 Annexes require provision of
relevant information
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Consultant Agreement
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 Client-Consultant Agreement
(White Book), 4th Ed 2006
 Intended for use for Feasibility,
design, administration and PM
 Intended for international use but
adaptable for domestic use.
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(FIDIC GREEN BOOK)
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Which Format
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(FIDIC GREEN BOOK)
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(FIDIC RED BOOK)
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(FIDIC YELLOW BOOK)
(FIDIC SIVER BOOK)
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Structure of the 1999 FIDIC contracts
The main clauses:
• General
Cl 2 – 4
• The Parties & the Engineer
4Cl 5 – 7
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Cl 1
• Sub, staff, labour, materials, workmanship, quality (testing)
• Time
Cl 9 - 11
• Testing, taking-over, defects liability
Cl 12 – 14
• Measurements, variations and payment
Cl 15 and 16
• Termination
Cl 20
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Cl 17
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Cl 8
• Risks, Insurance and Force Majeure
• Claims and disputes
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Main Parties to the Contract and
Responsibilities
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The basic (typical) contract layout
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Structure of the 1999 FIDIC contracts
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Main Parties to the Contract and Responsibilities
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The Employer
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Main Parties to the Contract and Responsibilities
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The Contractor
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Main Parties to the Contract and Responsibilities
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The Engineer
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FIDIC PROJECT SETTING
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Programming of the project – set your aim
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 What are the answers to Project Considerations
And thus, what Project Strategy does this generate?
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 Project Strategy
The answers to this should form a solid base for
which delivery methods and contract forms to use.
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Choice of Delivery method – type of contract
• Construction and Sub-Contractor
• Construction (MDB)
• Plant, Design & Build
• Turn Key (EPC)
• Dredging
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• Client/Consultant
• Joint Venture
• Sub-Consultant
• Representative
Form of contract for works:
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Model agreements for
professional services:
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Use the appropriate Delivery Methods:
Form of contract for works
and operations:
• Design, Build & Operate (DBO)
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Choice of Delivery method – type of contract
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Contract Preparation: Choice of appropriate form
GREEN BOOK
STRAIGHTFORWARD?
RED BOOK
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YES
EMPLOYER DESIGN?
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CONTRACTOR
DESIGN
NO
PLANT AND/OR HIGH
RISK?
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NO
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YES
NO
YELLOW BOOK
Fixed price,
YES
Little employer
involvement,
No major
unforeseen
risks?
NO
SILVER BOOK
DISCUSS IN DETAIL
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Choice of Delivery method – type of contract
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Construction contract vs. Design-build contract
The Contractor’s role regarding the designs
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Contract documents as per FIDIC
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Contract Agreement (Contract Form)
Letter of Tender (Tender Form)
Appendix to Tender
Conditions of Contract
Specifications (Red Book) / Employer’s Requirements (Yellow Book)
Drawings
Bill of Quantities (Red Book) / Schedule of Payments (Yellow Book)
Any other document forming part of the Contract (Addenda, Q/A)
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Contract documents as per FIDIC
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Payment Under FIDIC
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Payment Contract Documents as per FIDIC
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 Bill of Quantities (Red Book)
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 Schedule of Payments (Yellow Book)
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Claims Under FIDIC
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Scope in FIDIC
Recognition
Provisions
Requirements
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Claims under FIDIC
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Identify actions that caused it
Identify entitlement in cost or time
Establish link to contract
Create support by documentation
Base on project schedules
Create Cause and Effect links
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Contractor Claim
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Employer Claim
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 Employers are entitled
claim. Example: Rejection
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 Procedure for Employer claim
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Claim Settlement Procedure
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CLAIM SETTLEMENT PROCEDURE
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FIDIC Specifies multi-tier
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Cost goes up with tier level
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Early resolution is best
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CLAIM SETTLEMENT PROCEDURE
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Tier 1: Engineer Determination
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Tier 2: Dispute Adjudication Board
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Tier 3: Amicable Settlement
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Tier 4: Arbitration
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The Dispute Adjudication Board
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THE DISPUTE ADJUDICATION BOARD
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DAB in Practice
What is a Dispute Board (“DB”)?
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 Must be independent
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 Consists of 1 or 3 persons.
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 For duration of Contract
 Must have access to project
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 Decision Binding
Stats Source: DRBF
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Case Studies
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Case Study 1
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Joint Operation/Administration of multiple
FIDIC Forms – A Case Study
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 Red Book: Construction of Works
design by the Employer or ‘build
only’ contract forms.
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 Yellow Book: Construction of Works
design by the Contractor or
‘Design-Build’ contract forms.
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Case Study 1
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Joint Operation/Administration of multiple
FIDIC Forms – A Case Study
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 Civil Works Contractor (“CIV”):
construction of the civil works
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 Electrical and Mechanical Works
Contractor (“E&M”): design and
construction of the electrical and
mechanical works
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Case Study 1
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Joint Operation/Administration of multiple
FIDIC Forms – A Case Study
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 E&M delay that had a bearing on CIV
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 Recovery plan included temporary civil works
 E&M not required to do it under contract
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 Engineer instructed CIV to carry out works
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 E&M proceeded with his obligation afterwards
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Case Study 1
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Joint Operation/Administration of multiple
FIDIC Forms – A Case Study
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 CIV presented invoice that
Engineer forwarded to E&M
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 E&M refused to reimburse
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 Engineer acted within the
ambit of
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Case Study 1
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Joint Operation/Administration of multiple FIDIC
Forms – A Case Study
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 ED was issued under
Cl 3.5 & Cl 2.5
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 Notice of Employer
Claim in Cl 2.5
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 No direct deduction
in Cl 14.6 (IPC)
 ED stated that E&M was liable &
direct deduction in next IPC
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Case Study 1
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FIDIC Forms – A Case Study
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 Engineers issues ED
pursuant to Cl 20.1
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 CIV claim under Cl 20.1
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 Employer Liable to
reimburse
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Case Study 2
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Misunderstanding of FIDIC contract
A Case Study
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March 2013 J Murphy & Sons
contracted with Beckton Energy
Ltd to design and build a
Combined Heat and Intelligent
Power Plant at Beckton East
London. Contract worth £50m.
Source
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Case Study 2
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Misunderstanding of FIDIC contract
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 The completion date set for 31 January 2015
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 Contractor delay of 409 days, Engineer not
granting any EOT
 Liquidated damages £8,274,000
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 EOT Application late in FIDIC context
 Use of the Yellow Book
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Case Study 2
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Misunderstanding of FIDIC contract
A Case Study
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 In FIDIC notice should be given ASAP. Failure entails loss of right
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 Good management system ensures timely submission
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 Resolution with DAB could have been used to avoid problems
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 Awareness of the FIDIC forms is essential
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Best Practice For Claim
Avoidance
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BEST PRACTICE FOR CLAIM AVOIDANCE
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Claim Atmosphere
Claims should be handled by experts.
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Use tools to identify problems.
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Contracts drafting.
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Construction management practices
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Case Study 3
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Gemasolar - a Case of Success
A Case Study
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 Gemasolar first thermosolar plant to
produce electricity 24 hrs (Spain)
 Owners: Sener & Masdar in DBO
 Operator: Torresol
 Contractor: UTE C.T. Solar Tres & others
 Contract Type: DBO / EPCT
 Won the FIDIC award for best engineering
project in 100 years
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Legislations: The Case of UAE
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LEGISLATIONS: THE CASE OF UAE
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 Civil Law based on Islamic Sharia
 Contracts: Federal Law 5 of 1985
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Notable Articles:
Article 106 Abuse of Rights
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Article 246 Good Faith
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Article 249 Power to adjust oppressive contractual obligations
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Articles 872 to 896 Muqawala (Job) Contracts
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Thank You
Michel francis