This Second Edition of the FIDIC Red Book continues FIDIC's fundamental . Andrew Read, Pedersen Read Consulting, New Zealand (chairman FIDIC. Understanding the FIDIC red book, 2nd edition, gives you clause by clause Understanding the New FIDIC Red Book, a clause-by-clause commentary by J. been dominated by the older FIDIC 87 Red Book, the new. “Red Book” will be of particular interest to those operating in the Gulf region.
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While effectively every clause in the FIDIC Red Book has been amended in the new edition, this briefing focuses on our view of the Top 7 with. Fédération Internationale des Ingénieurs-Conseils (FIDIC) extends special thanks to Engineer & Barrister, UK; lan Fraser, Beca Carter Hollings & Ferner, New. 1 EIC Contractor's Guide to The FIDIC Conditions of Contract for Construction ( The New Red Book), International Construction Law Review.
Both Contractors' and Employers' Claims are now subject to a day time limit, though its enforcement has been assimilated with the power of the Engineer to determine Claims. This differed between the Red Book, which provided for a 'standing' DAB throughout the currency of the Contract, and the Yellow and Silver Books, where an 'ad hoc' DAB would be appointed only following the occurrence of a dispute.
The contracts represent a decisive departure from the ad hoc model.
The Parties can now, following the example of the Gold Book, obtain the assistance of the DAAB throughout the project, both for the avoidance of disputes and in the 'real-time' resolution of disputes as and when they arise.
FIDIC has also taken the opportunity to address what has become known as the Persero issue, after litigation in the Singapore courts. More predictable has been the encouragement in the Guidance for Preparation of Particular Conditions to consider reference to senior executives, mediation, expert determination or some other form of ADR. They contain a number of significant improvements as well as some apparent weaknesses.
Their complexity is likely to be a major factor in deciding whether the new contracts are widely used, or used only for the largest projects. This treatment does not mean that they are unimportant — the reverse is true of nearly all — but that their significance is more specific to a particular type of project or sector.
The Pink Book 66 represents a formalisation of the amendments to the Red Book that had been developed by the MDB 67 for use in aid-funded projects. The purpose was to 'simplify the use of the FIDIC Conditions of Contract not only for the MDBs and their borrowers but also for others involved with project procurement including engineers, contractors, and contract specialists.
It is intended for use on MDB financed projects only.
Essentially, the Pink Book should be regarded as just that — a version of the Red Book, though the amendments should not be underestimated, justifying, as they do, a separate publication.
Many of the amendments are additional provisions aimed at achieving financial probity and transparency.
For example, the Contractor is obliged to follow 'Inspections and Audit by the Bank' 69 of the Site, and of its accounts and records, and the Contractor is to be notified if the Bank suspends payments to the Borrower. It is treated by some commentators as one of FIDIC's principal contracts, although it was published in and so does not form part of the original Rainbow Suite.
In terms of extent of usage it cannot, or cannot yet, be regarded as the equivalent of the Red, Yellow or Silver Books, nor even of the MDB.
This is not only a function of the fact that it is relatively younger than those contracts. The differences are essentially of two kinds: first, those additions which are a product of the Operation Service Phase, following on from the Design-Build Phase; and second, those changes which FIDIC introduced as improvements.
In the result, this has only partly been confirmed by the second editions. The emphasis on dispute avoidance in the new contracts was certainly foreshadowed by the Gold Book, though the Gold Book approach to time bars was only followed to a limited extent in the forms, and the risk allocation regime not at all.
This is an unfortunate omission. Prepared in conjunction with the International Association of Dredging Companies, the Dredging and Reclamation Works Contract has been extensively used for coastal and marine works of all kinds, including ports and harbours. It is well known in the Middle East and benefits from an absence of competitors in a highly specialised sector.
It bears some resemblance to the Short Form of Contract see below in being a straightforward, simplified contract, which can be executed on an Employer-design or design-build basis. This is a matter of agreement; the Contractor agrees to 'carry out design to the extent specified, as stated in the Contract Data.
The extent of the Contractor's design obligation should therefore be clearly stated if disputes are to be avoided. Price can be on a remeasurement, lump sum or cost-plus basis; the Contract Data contains a range of pricing options. The FIDIC Dredging and Reclamation Works Contract is an example of a sector-specific standard form, which, though not generally well known, has a disproportionately large significance within that specialist industry.
FIDIC states that it is 'for engineering and building works of relatively small capital value', or for contracts of greater value requiring 'fairly simple or repetitive work or works of short duration'. Also like the Dredging and Reclamation Works Contract, the Parties can agree the extent, if any, to which the Employer provides input into the design. First, there is no express provision for the appointment of an Engineer to undertake contract administration. FIDIC invites reconsideration of this position; 'although there is no reference to an impartial Engineer, the Employer may appoint an Engineer to act impartially, should he wish to do so.
There is no DAB, but an adjudicator, and no time for amicable dispute resolution. Reflecting the anticipated smaller scale of disputes, there is no reference to ICC arbitration.
The Green Book is, in effect, an international version of domestic minor works contracts and it reflects this perspective throughout. The General Conditions are prepared to operate 'back to back' with the Red Book in terms of rights and obligations. In the case of the Force Majeure provisions, this is literally done with the words 'The provisions of Main Contract Clause 19 Force Majeure shall apply to the Subcontract.
These represent typical sequences of the principal events, of payment events and of Subcontractor claims and disputes under alternative versions of the dispute resolution provisions.
Subcontract disputes are resolved by reference to a Subcontract DAB, followed by time for amicable settlement in the event of reference to arbitration, which provides for ICC Rules with one arbitrator rather than three as the default position.
They differ from the Rainbow Suite Contracts and the other standard forms as above in that they are not construction contracts and do not involve the contractor. Most significant of these by far is the White Book. The contract is between the 'downloadr' of the services: 'Client' rather than 'Employer,' and the 'supplier' of the services: 'Consultant' rather than 'Contractor.
The basic Consultant's duty of care was stated to be 'no other responsibility than to exercise reasonable skill, care and diligence in the performance of his obligations under the Agreement. This is still said to be only to the extent achievable using reasonable care and skill, so would constitute an issue in the provision of design services, for example, for a design-and-build contractor required to give a fitness for purpose obligation to the employer for design and so would often not be back-to-back.
However, there has been a significant strengthening of the reasonable skill, care and diligence standard itself to 'that to be expected from a consultant experienced in the provision of such services for projects of similar size, nature and complexity'.
The actual substance of the scope of services is very limited.
Some more guidance notes have been inserted by the fifth edition, but the Appendices are still largely blank pages, to be filled in by the parties. Conditions of Contract for Construction Second Ed. For Building and Engineering Works designed by the Employer.
In particular, it has been recognised for, among other things, its principles of balanced risk sharing between the Employer and the Contractor in projects where the Contractor constructs the works in accordance with a design provided by the Employer. For example, this edition provides:. These Conditions of Contract for Construction include conditions, which are likely to apply to the majority of such contracts.
Essential items of information which are particular to each individual contract are to be included in the Particular Conditions Part A — Contract Data. In addition, it is recognised that many Employers, especially governmental agencies, may require special conditions of contract, or particular procedures, which differ from those included in the General Conditions.
These should be included in Part B — Special Provisions. To assist Employers in preparing tender documents and in drafting Particular Conditions of Contract for specific contracts, this publication includes Notes on the Preparation of Tender Documents and Notes on the Preparation of Special Provisions, which provide important advice to drafters of contract documents, in particular the Specifications and Special Provisions. In drafting Special Provisions, if clauses in the General Conditions are to be replaced or supplemented and before incorporating any example wording, Employers are urged to seek legal and engineering advice in an effort to avoid ambiguity and to ensure completeness and consistency with the other provisions of the contract.
This publication begins with a series of comprehensive flow charts which typically show, in visual form, the sequences of activities which characterise the FIDIC Construction form of contract.
The charts are illustrative, however, and must not be taken into consideration in the interpretation of the Conditions of Contract. This publication also includes a number of sample forms to help both Parties to develop a common understanding of what is required by third parties such as providers of securities and guarantees.
Drafters of contract documents are reminded that the General Conditions of all FIDIC contracts are protected by copyright and trademark and may not be changed without specific written consent, usually in the form of a licence to amend, from FIDIC. If drafters wish to amend the provisions found in the General Conditions, the place for doing this is in the Particular Conditions Part B — Special Provisions, as mentioned above, and not by making changes in the General Conditions as published.
Clauses 1 to Index of Sub-Clauses FIDIC wishes to record its appreciation of the time and effort devoted by all the above. Under the usual arrangements for this type of contract, the entity carries out all the Engineering, Procurement and Construction: providing a fully-equipped facility, ready for operation at the "turn of the key".
This type of contract is usually negotiated between the parties. Short Form of Contract, which is recommended for building or engineering works of relatively small capital value. Depending on the type of work and the circumstances, this form may also be suitable for contracts of greater value, particularly for relatively simple or repetitive work or work of short duration.
The forms are recommended for general use where tenders are invited on an international basis. Modifications may be required in some jurisdictions, particularly if the Conditions are to be used on domestic contracts.
In the preparation of these Conditions of Contract for Construction, it was recognised that, while there are many sub-clauses which will be generally applicable, there are some sub-clauses which must necessarily vary to take account of the circumstances relevant to the particular contract.