Procurement and Contract
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FIDIC Contract Documents:
Introduction and Principles
FIDIC Contract Documents:
Introduction
1. Introduction to FIDIC
International Federation of Consulting Engineers
Fédération Internationale des Ingénieurs-Conseils.
• Founded in 1913 by 5 national consulting firms
• At Present FIDIC membership covers 97 countries
• Society of Consulting Architectural and Engineering Firms,
Nepal (SCAEF ) is also a member
• Composed of national associations of consulting engineers.
• Promotes and implements the consulting engineering
industry’s strategic goals
• Members endorse FIDIC statutes and policy statements
and comply with FIDIC Code of Ethics.
FIDIC Contract Documents:
Introduction
1. Introduction to FIDIC
Organises:
• Extensive programme of seminars and conferences.
• International Training Programme (courses; workshops)
• Capacity Development Programme (accredited trainers,
training suppliers, programmes and events).
Publishes:
• Business practice contracts
• International professional services agreements
• Works Contracts
FIDIC Contract Documents:
Introduction & Principles
Background to FIDIC Contracts
• First FIDIC Works Contract was published in 1957 –
“Conditions of Contract (International) for Works of
Civil Engineering Construction” – known as the “Red
Book”.
• Second edition was published in 1969 & reprinted in
1973.
Introduction & Principles
Background to FIDIC Contracts contd.
• Consisted of General Conditions and Conditions of
Particular Application - which were suggestions upon
which the Parties were required to make their own
agreements
• As with the English ICE Conditions there was also a Form
of Tender and Appendix to Tender, and a Form of
Agreement
• Red Book contemplated the existence of Drawings,
Specification and Bills of Quantities as contract documents
Introduction & Principles
Background to FIDIC Contracts contd.
• 3rd Edition published in 1977.
• The first three editions of the Red Book assumed that the detailed
design would be provided to the Contractor by the Employer or the
Engineer.
• Red Book unsatisfactory for contracts where major items of Plant
were manufactured away from site.
• This led to the first edition of the FIDIC Yellow Book for mechanical
and electrical works in 1963, with an emphasis on testing and
commissioning and more suitable for the manufacture and
installation of Plant.
• 2nd Edition published in 1980
Introduction & Principles
Background to FIDIC Contracts
• New editions of both the Red and Yellow Books were
published in 1987
• Red Book 4th Edition 1987 introduced an express term
which required the Engineer to act impartially when
giving a decision or taking any action which might
affect the rights and obligations of the Parties
Introduction & Principles
Background to FIDIC Contracts
•
By 1995 FIDIC had responded to the increasing popularity of
projects being procured on a design and build or turnkey basis.
This resulted in the Conditions of Contract for Design-Build and
Turnkey (Orange Book)
• The Orange Book replaced the traditional “Engineer” by the
“Employer’s Representative”
• The express requirement to be impartial was removed, although
when determining value, costs or extensions of time the Employer’s
Representative had to “determine the matter fairly, reasonably and
in accordance with the Contract”
Introduction & Principles
Background to FIDIC Contracts contd.
• The requirement to submit matters to the Engineer for
his “Decision” prior to an ability to pursue a dispute,
was removed
• In its place – provision of an independent Dispute
Adjudication Board (DAB) was kept.
Introduction & Principles
Background to FIDIC Contracts contd.
• A Red Book 4th Edition Supplement was published in
1996 which gave an option for a Dispute Adjudication
Board, and an option for payment on a lump sum
basis instead of by reference to Bills of Quantities
Introduction & Principles
Background to FIDIC Contracts contd.
• Updates of Red, Yellow and Orange Books were published in
1999 as “Construction” (Red), “Plant and Design-Build”
(Yellow) and “EPC/Turnkey” Contracts (Silver)
•
Under the 1999 Red Book, the Contractor is paid on a remeasurement basis for constructing works designed by others
• Under the other books, the Contractor is paid on a lump-sum
basis for providing works to his own design
• In all cases, disputes are to be settled by a DAB – but a key
role is still reserved for the Engineer
Red Book:
Conditions of Contract for Construction
• Design given to Contractor;
• Payment based on re-measurement
(rates and prices in BOQ applied to
“actual” quantities);
• Supervision by the “Engineer”.
Yellow Book: Conditions of Contract
for Plant and Design-Build
• Detailed Design done by Contractor;
• Payment based on lump-sum;
• Supervision by the “Engineer”.
Silver Book: Conditions of Contract for
EPC/Turnkey Projects
• Design done by Contractor;
• Payment based on lump-sum;
• Supervision by the Contractor – but
Employer maintains presence
through “Employer’s Representative”
if appointed.
Gold Book: Conditions of Contract
for Design, Build & Operate Projects
• Design done by Contractor;
• Payment based on three lump-sums –
one for Design & Build; one for
Operation and one for Asset
Replacement;
• Supervision by the Contractor – but
Employer maintains presence through
“Employer’s Representative”;
• Operation phase is supervised by
Auditing Body.
Green Book: Short Form of Contract
• Intended for projects under US$500 000
and/or <6 months;
• Design can be by Employer or by
Contractor;
• Payment can be by Lump Sum;
Remeasurement or a combination;
• Supervision by the Authorized Person
with possible assistance from Employer’s
Representative.
And the PINK BOOK
• Since 2005 Multilateral Development
Banks use the General Conditions of
the MDB Harmonised Edition of the
FIDIC Construction Contract (3rd
Edition published 2010)
• Based on Red Book: Design given to
Contractor; Re-measurement;
supervision by Engineer;
• MDB Supplement to Contracts Guide
is also available.
…PINK BOOK
• The main areas of difference between the
Red Book and the Pink Book include:
• The Pink Book is more balanced with
respect to periods for taking actions;
• The Pink Book includes a role for the
Bank;
• The Pink Book has a much greater
emphasis on “social issues”;
• The Pink Book has a much greater
emphasis on anti corruption measures.
Which FIDIC Form to Use?
19
Pink Book
The MDB Harmonised Edition of the FIDIC Conditions of Contract
for Construction, referred to as the “MDB Harmonised Construction
Contract” or “Pink Book” comprises:
General Conditions
Particular Conditions (Part A: Contract Data & Part B: Special
Provisions)
• Sample Forms.
•
•
MDB is extensively based on the FIDIC Red Book (1999) – which
means that it is intended for use in relation to contracts where:
•
•
the Contractor is provided with the design by the Employer and
he is paid on a re-measurement basis, applying agreed unit
rates to the actual quantities executed.
MDB Edition: Pink Book
Clause 1: General Provisions subjects which apply to the Contract in general, e.g. definitions,
interpretation applicable language and law, priority of documents,
use of various documents.
Clauses 2 - 5: The Employer; The Engineer; The Contractor;
Nominated Subcontractors –
deal with the duties and obligations of the different
organisations that play a part in the execution of the Works.
Clauses 6 & 7: Staff and Labour; Plant, Materials and Workmanship
deal with the requirements for the items which the Contractor
brings to the site or manufactures or executes.
MDB Edition: Pink Book
Clauses 8 - 11: Commencement, Delays and Suspension;
Tests on Completion; Employer’s Taking Over; Defects
provisions related to the different stages of work and events
during the construction.
Clauses 12 - 14: Measurement and Evaluation; Variations and
Adjustments; Contract Price and Payment
provisions related to measurement , payment and changes
to work .
Clauses 15 & 16: Termination by Employer; Suspension and
Termination by Contractor :
provisions related to contract suspension and termination
MDB Edition: Pink Book
Clause 17: Risk and Responsibility
provisions related to Employer’s and Contractor’s risk and
responsibilities and their consequences
Clause 18: Insurance
includes important provisions and procedures regarding
insurance requirements during or before Works’
commencement.
Clause 19: Force Majeure
defines Force Majeure and it’s consequences . .
MDB Edition: Pink Book
Clause 20: Claims, Disputes and Arbitration –
probably the most frequently used clause in the Conditions
of Contract. Includes procedures for :
• submission and response to Contractor’s claims for
Extension of time of completion or additional payment
under any clause of the condition of contract
• the appointment of the Dispute Adjudication Board
before or during the commencement of the Works