Introduction to FIDIC - Manuals Motto: “Little knowledge is more dangerous than no knowledge at all!” Brief Introduction to FIDIC - Types of Manuals -

FIDIC Conditions of Contract FIDIC – stands for “Fédération Internationale des Ingénieurs Conseils” Headquarters in Geneva, Switzerland Further information at www.fidic.org

The Parties in a FIDIC Contract Contracting Authority/ Employer Contractor - Contract between Employer & Contractor under Red/ Yellow FIDIC Engineer - Contract between Employer & Engineer Engineer to administer FIDIC Contract on behalf of Employer

The Parties in a FIDIC Contract

FIDIC Conditions of Contract Types of Manuals FIDIC “New Red Book”: The Conditions of Contract for Construction “Which are recommended for building or engineering works designed by the Employer, or by his representative, the Engineer. Under the usual arrangements for this type of contract, the Contractor constructs the works in accordance with a design provided by the Employer. However, the works may include some elements of Contractor – designed, civil, mechanical, electrical and/or construction works”

OLD NEW Construction Civil (mainly) ‘Red Book’ Employer- 4th Edition Design 1999 Civil ‘Red Book’ 4th Edition 1987,1992

FIDIC Conditions of Contract Types of Manuals Introduction to FIDIC - Manuals FIDIC Conditions of Contract Types of Manuals FIDIC “New Yellow Book”: Conditions of Contract for Plant Design – Build “Which are recommended for the provision of electrical and mechanical plant, and for the design and execution of building or engineering works. Under the usual arrangements for this type of contract, the Contractor designs and produces, in accordance with the Employer’s Requirements, plant and/or other works; which may include any combination of civil, mechanical, electrical and/or construction works”.

OLD NEW Plant and Electrical & Design Mechanical Build ‘Yellow Book’ (Mainly Contractor design) Yellow ?! Electrical & Mechanical ‘Yellow Book’ 3th Edition 1987,1988 Design-Build and Turnkey ‘Orange Book’ First Edition 1995 EPC Turnkey Projects Silver Book

FIDIC Conditions of Contract Types of Manuals FIDIC “New Silver Book”: Conditions of Contract for EPC (Engineering, Procurement, Construction)/ Turnkey Projects “Which may be suitable for the provision on a turnkey basis of a process or power plant or factory or similar facility, or of an infrastructure project or other type of development, where (i) a higher degree of certainty of firm price and time is required, and (ii) the Contractor takes total responsibility for the design and execution of the project, with little involvement of the Employer. Under the usual arrangements for turnkey projects, the Contractor carries out all engineering, procurement, and construction EPC: providing a fully equipped facility, ready for operation at the “turn of a key”.

FIDIC Conditions of Contract Types of Manuals FIDIC “New Green Book” – the “Mini-Red Book”: Short Form of Contract. “Which is recommended for building or engineering works of relatively small capital value. Depending on the type of work and circumstances, this form may also be suitable for contracts of greater value, particularly for relatively simple or repetitive work or work of short duration. Under the usual arrangements for this type of contract the Contractor constructs the works in accordance with a design provided by the Employer or his representative (if any), but this form may also be suitable for a contract which includes, or wholly comprises, Contractor-designed civil, mechanical, electrical and/or construction works.

0% 100% Green Book - Low value, simple works Silver Yellow Risk transfer to Contractor Certainty of outturn price Red 0% 100% Amount of design by Contractor

FIDIC “Pink Book” -Harmonised Conditions of Contract for Constructions Introduction to FIDIC - Manuals Issued after several Multilateral Development Banks (MDB) agreed certain modifications for some Clauses, for better reflecting their financing principles. Used for construction and engineering works, designed by the Employer (as in the Red Book) Allows the Bank to suspend payments to Borrower – Sub-Clauses 2.4, 14.7 and 16.1 Engineer’s Authority may be unilaterally changed by the Employer – Sub-Clause 3.1 Modifications concerning selection and activity of DAB

Basic Principles and Selection of FIDIC Documents – New Red Book Design primarily undertaken by Employer or his agent Works are to be re-measured Employer appoints Engineer to administer contract on his behalf Engineer has power to vary works, but not change contract DAB appointed within 28 days of commencement date and has powers to resolve any dispute and change “determinations” of Engineer

Basic Principles and Selection of FIDIC Documents – New Yellow Book The Employer provides project requirements as defined under item “Employer’s Requirements” (ER) The “ER” are the basis for the contractor to design and build the project. Errors within the “ER” are the liability of the Employer. The contract is for a fixed sum and not re-measured. The contract is administered on behalf of the Employer by the Engineer, Provision is made for variations by the Engineer. The general conditions (clauses 1 to 20), except clauses 5 & 12, are principally the same as red book.

Selection of FIDIC Documents – Risk Management All contracts contain risks for both Contracting Authorities/ Employers and Contractors – There is no risk-free contract FIDIC attempts to rationalise and allocate responsibilities for main risks A key requirement is for the Contract Parties to fully understand the FIDIC General and Particular Conditions of Contract that set out their Responsibilities and Risks within a Project Every risk given to the other party has its cost, no Party assumes a risk for free

FIDIC - Risk Distribution

Who takes the financial risk? Priced with Bill of quantities Employer’s Risk ... and Flexibility Lump Sum Contractor’s Incentive ... and Risk

Main differences from previous FIDIC editions The Engineer is no longer to act impartially, but is acknowledged to be the representative of the Employer The Contractor is entitled to require the Employer to provide a proof of funds availability Disputes Adjudication Board (DAB) Motto: “Little knowledge is more dangerous than no knowledge at all!”