FIDIC WHAT IS FIDIC?
FIDIC is the acronym for its French name “Fédération Internationale Des IngénieursConseils” which implies for; The “International Federation of Consulting Engineers”.
FIDIC is an international standards organization for the consulting engineering & construction and the organization is well known by its contract templates.
FIDIC was founded in 1915 by three founding countries namely Belgium, France and Switzerland.
FIDIC has 97 country members for today and Turkey is one of them.
Turkey became a member of FIDIC via its branch of “Association of Turkish Consultant Engineers and Architects” in 1987.
FIDIC Objectives
What FIDIC Does?
represent globally the consulting engineering industry
support local initiatives and activities
What FIDIC offers?
best business practice and tools to promote a sustainable industry: documents, guides, training etc.
What are FIDIC Principles?
quality, integrity and sustainability.
WHAT IS THE FIDIC FAMILY of CONTRACTS?
The FIDIC „Rainbow Suite‟ of New Contracts was published in 1999.
The FIDIC suite of contracts now covers a wide range of projects and methods of procurement. It is therefore likely that any international contractor or consultant working outside of the UK will frequently encounter FIDIC conditions of contract.
Even subcontractors that only operate within a particular country will from time to time encounter FIDIC derived conditions where they are operating within a supply chain governed by a FIDIC main contract.
The different forms of contract within the FIDIC suite are organized around the extent of design and other responsibilities assumed by the Employer and the Contractor. Therefore, the suite is now aligned with common procurement strategies rather than the nature of the construction works.
The FIDIC forms can therefore be applied to a wide range of differing engineering and construction projects; from traditional civil engineering to hi-tech windmills and heavy duty oil and gas process plants.
The main and commonly used FIDIC templates of contracts and their contents are listed herein below as followings;
1. The RED Book:
o Red Book is one of the best known of the FIDIC contracts and the original edition of the Red Book dates back to 1957. In 1999 FIDIC published a revised suite of contracts with updated versions of the Red book together with Yellow Book and Green Book.
o More recently in 2005 FIDIC published an amended version of the Red Book for use by Multilateral Development Banks.
o Where works are predominantly designed by the Employer, then the Red Book is the appropriate form of contract.
o FIDIC has reduced the number of clauses in all of the recent contracts; previously, the Red Book had 72 clauses and now it contains only 20 clauses similarly with other Green, Silver and Yellow books.
o The Red Book provides conditions of contract for construction works where the design is carried out by the Employer.
o Earlier versions of the Red Book were drafted for use on civil engineering projects however, the Red Book is now applicable to any construction works were the Employer carries out the design.
o The Red Book is not suitable for use where most of the works are to be designed by the Contractor and for such projects it would be more appropriate to use the Yellow Book or Silver Book.
o The General Conditions and the Particular Conditions together comprise the Conditions of Contract. Guidance is provided in the Red Book for the preparation of Particular Conditions should it be necessary to modify the General Conditions. The Guidance also contains various forms of security such as parent company guarantee, advance payment bond and a retention guarantee which can be selected as applicable to the contract via the Particular Conditions.
o The following MDB (Multilateral Development Banks) edition of Red Book which was published on 2005 was prepared with participation of all development banks listed as followings:
African Development Bank
Asian Development Bank
Black Sea Trade and Development Bank
Caribbean Development Bank
European Bank for Reconstruction and Development
Inter-American Development Bank
International Bank for Reconstruction and Development (The World Bank)
Islamic Bank for Development Bank
Nordic Development Fund
o The FIDIC MDB edition of the Red Book was published in order to simplify the use of the FIDIC contract for the MDBs, their borrowers and others involved with project procurement, such as consulting engineers, contractors and contract lawyers.
o Selection of FIDIC Red Book
Advantages
– Employer controls design
– More flexibility for design changes during construction
– More financial control over charges through BoQs
– Open to more competition, so more competitive tender prices
Disadvantages
– Employer has more management demands – Employer must retain designer throughout construction
– Preparation of tender dossier is more difficult (Drawings, Specifications, BoQs)
2. The GREEN Book:
o Green Book was published in 1999.
o Green Book is recommended for engineering and building work of relatively small capital value, generally it should not be used on projects with a contact value greater than US$500,000.
o The Green Book is likely to be most suited fairly simple or repetitive work or work of short duration without the need for specialist sub-contracts.
o However it may also be suitable for contracts which include, or wholly comprise, the contractor‟s design.
o The standard General Conditions are intended to be applicable to the majority of projects although it is possible to introduce Particular Conditions if these are required to amend the Green Book and provide for special circumstances of the project.
o It is interesting to note that the Green Book includes Rules for Adjudication which is an innovation for a suite of contracts that is traditionally thought of as being relevant to the international market and not domestic to the UK.
3. The YELLOW Book:
o Yellow Book was also published in 1999 in order to regulate standards for electrical and mechanical plant, and for building works, designed by the Contractor.
o The Yellow Book provides conditions of contract for construction works where the design is carried out by the Contractor.
o The current edition mainly mentions the words “electrical and mechanical works” therefore The Yellow Book is applicable to the provision of electrical and/or mechanical plant, and for the design and execution of building or engineering works. o According to the template of contract; Administration of the project and supervision of the works is carried out by an Engineer who is employed by the Employer. The Engineer is responsible, amongst other things, for issuing instructions, certifying payments and determining completion.
o Where the engineer is required to determine a matter or settle a claim and engineer‟s determination is not agreed by either of the parties then the dispute will be referred to a “Dispute Adjudication Board” for a decision. The DAB is formed of one or three people who are jointly appointed by the parties.
o Selection of FIDIC Yellow Book
Advantages
-Allows the Contractor to offer special design solutions at tender stage
-Employer obtains performance guarantees for designed process
-Can be faster than traditional design method
-Less design risk
-Preparation of tender dossier is easier (Employer‟s Requirements)
Disadvantages
– Less flexible to change the design after the contract is awarded
-Employer retains risk of Employer‟s Requirements
-Longer period for tender and more difficult to evaluate
-Less competition
4. The ORANGE Book:
o Orange Book was published in 1995 in order to provide a design and build option to the then current FIDIC suite.
o The Orange Book was the first FIDIC contract to adopt the now current FIDIC style of drafting and was a template for the drafting teams when preparing the 1999 suite of contracts.
o The Orange Book is drafted for use where the Contractor carries total liability for design. For the Employer, such single-point responsibility may be advantageous, but the benefits may be offset by having less control over the design process and more difficulty in imposing varied requirements.
o The Orange Book is intended for use on turnkey contracts, under which the Employer’s requirements usually include provision of a fully-equipped facility, ready for operation at the turn of a key. The exact Employer requirements will need to be fully detailed to describe the design, construction, fixtures, fittings and equipment required to be provided by the Contractor‟s design.
o When used for turnkey projects it may be necessary to impose a requirement for the Contractor to operate the Works, either for a few months’ commissioning period, or for some years’ operation on a build-operate transfer basis. If this is the case then the FIDIC Gold Book may now be more appropriate.
5. The SILVER Book:
o Silver Book was published in1999.
o The Silver Book is suitable for use on process,power and private-infrastructure projects where a Contractor is to take on full responsibility for the design and execution of a project.
o Risks for completion to time, cost and quality are transferred to the Contractor and so the Silver Book is only suitable for use with experienced Contractors familiar with sophisticated risk management techniques.
o For many large projects construction is only one part of a wider complicated commercial venture and financial or other failure of the construction project will jeopardize the whole venture. The Silver Book approach may suit such projects as it will provide a greater level of cost certainty than can be achieved under the more traditional forms of the FIDIC suite.
o To obtain this increased cost certainty the Silver Book requires the Contractor to accept a higher level of risk than is typical under most other forms of contract. o The Silver Book transfers the risk of ground conditions to the Contractor. Similarly the Contractor also assumes responsibility, subject to some exceptions, for the accuracy of the Employers Requirements which is a major difference to usual design and build contracts.
o However, not all risk is passed to the Contractor under the Silver Book and the Employer still retains risks for war, terrorism and Force Majeure.
o Through the usage of Particular Conditions it is possible for the Employer and Contract to agree alternative risk sharing arrangements before entering into the Contract.
WHICH BOOK to CHOOSE?
How important is the design?
Very important: RED Book
Not so important: SILVER or YELLOW Book
How complicated are the works to be performed ?
Very simple: GREEN Book
Rather complicated: RED or YELLOW Book
How flexible is the budget ?
Very flexible: RED Book
Not very flexible: YELLOW Book
Not flexible at all: SILVER Book
How tight is the budget ?
Very tight: RED Book
Rather comfortable: YELLOW Book
Very comfortable: SILVER Book
How urgently do I have to launch the tender ?
Very urgent: SILVER or YELLOW Book
Not so urgent: RED Book
How short is the completion time ?
Rather short: RED Book
Quite comfortable: SILVER or YELLOW Book
How much do I trust the information I shall provide the contractor with ?
I fully trust them: RED Book
I have rather doubts: SILVER or YELLOW Book
