Which FIDIC Contract should I use?

C.L.G. Wade, SWECO, Sweden

FIDIC has long been renowned for its standard forms of contract for use between employers

and contractors on international construction projects, in particular:

• Conditions of Contract for Works of Civil Engineering Construction: The Red Book
(1987)

• Conditions of Contract for Electrical and Mechanical Works including Erection on Site:
The Yellow Book (1987)

• Conditions of Contract for Design-Build and Turnkey: The Orange Book (1995)

During its current work in updating the Red and Yellow Books, FIDIC has noted that certain

projects have fallen outside the scope of the existing Books. Accordingly FIDIC has not only

updated the standard forms but has expanded the range, and has - in September 1999 -

published a suite of four new Standard Forms of Contract which are suitable for the great

majority of construction and plant installation projects around the world.

This new suite comprises:

• Conditions of Contract for Construction for Building and Engineering Works Designed
by the Employer: The Construction Contract

• Conditions of Contract for Construction for Building and Engineering Works Designed
by the Employer (M;DB Harmonised Edition) - for bank financed projects only: The MDB
Construction Contract

• Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant
and for Building and Engineering Works Designed by the Contractor: The Plant and Design-
Build Contract

• Conditions of Contract for EPC/Turnkey Projects: The EPC/Turnkey Contract

• Short Form of Contract: The Short Form

• Dredgers Contrcat (based on the Short Form of Contract): Dredgers Contract

The Books in the new suite are all marked ?First Edition 1999? (Test Editions were published

in 1998, and while these remain valid for contracts, significant changes were made in some

cases). The new Books are not to be regarded as direct updates of the existing Books. The

existing Books will still be available as long as there is a demand, but it is expected that the

new suite will supercede and expand the range of the existing Books.
Answer the following questions

A. Relatively small value, short construction time or involving simple or

If the price for the contract is relatively small, say under US$ 500,000, or the construction

time is short, say less than 6 months, or the work involved is relatively simple or repetitive -

dredging work might be a good example:

then consider using the Short Form of Contract, which is a completely new FIDIC Book

specially prepared for such projects.

• It does not matter whether the design is provided by the Employer (or his
Engineer/Architect if he has one) or by the Contractor,

• It does not matter whether the project involves construction, electrical, mechanical, or
other engineering work.

B. Larger or more complex projects

1. Is the Employer (or the Engineer) going to do most of the design?

As in traditional projects, e.g., infrastructure, buildings, hydropower, etc., the Employer did

nearly all the design (perhaps not construction details, reinforcement, etc.) (The Red Book),

• and the Engineer administered the Contract, monitored the construction work and
certified payment

• and the Employer was kept fully informed, could make variations, etc.

• and with payment according to bills of quantities or lump sums for approved work
done.

If this is what is wanted - choose the Conditions of Contract for Construction for Building and

Engineering Works Designed by the Employer (The Construction Contract), which effectively

updates and supercedes the existing Red Book from 1987.

In 2005, FIDIC licenced the Multilateral Development Banks (MDB) to use the MDB

Harmonised Edition of the Construction Contract for projects funded by the banks. The MDB

Construction Contract mainly incorporates Particular Conditions to the Red Book that was used

by the World Bank in its Standard Bidding Documents before it and the other MDBs adopted

the Harmonised Edition.

As in traditional projects, e.g., electrical and mechanical works, including erection on site (The

Yellow Book) the Contractor (or Supplier) did the majority of the design, e.g., the detail design

of the plant or equipment, so that the plant met the outline or performance specification

prepared by the Employer, and in the relatively more recent design-build and turnkey type

projects the Contractor also did the majority of the design, not only of plant projects but also

of various infrastructure and other types of projects, and the project was required to fulfil

the ?Employer?s Requirements?, i.e., an outline or performance specification prepared by the

Employer (The Orange Book),

• and the Engineer (Employer?s Representative in the Orange Book) administered the
Contract, monitored the manufacture and erection on site or construction work and certified
payment,

• and with payment according to achieved milestones generally on a lump sum basis.

If this is what is wanted - choose the Conditions of Contract for Plant and Design-Build for

Electrical and Mechanical Plant and for Building and Engineering Works Designed by the

Contractor (Plant and Design-Build Contract) which effectively updates and supercedes both

the existing Yellow Book from 1987 and the Orange Book from 1995.

3. Is it a Privately Financed (or Public/Private Financed) Project of BOT or similar type

Then the Concessionnaire (the ?Employer?) probably requires to have a contract with the

construction Contractor, i.e., an EPC (Engineer, Procure, Construct) Contract, where the

Contractor takes total responsibility for the design and construction of the infrastructure or

other facility, and where there is a higher degree of certainty that the agreed contract price

and time will not be exceeded,

• and the Employer does not wish to be involved in the day-to-day progress of the work,
provided the end result meets the performance criteria he has specified

• and the parties concerned (e.g., sponsors, lenders and the Employer) are willing to
see the Contractor paid more for the construction of the Project in return for the Contractor
bearing the extra risks associated with enhanced certainty of final price and time.

If this is what is wanted - choose the Conditions of Contract for EPC/Turnkey Projects

(EPC/Turnkey Contract) - a completely new FIDIC Book suitable for this purpose.
C. Also for the EPC/Turnkey Contract

1. Is it a Process Plant or a Power Plant (or a factory or similar) where the Employer -
who provides the finance - wishes to implement the Project on a Fixed-Price Turnkey
Basis?

Then the Employer wishes the Contractor to take total responsibility for the design and

construction of the process or power facility and hand it over ready to operate ?at the turn of

a key?,

• and the Employer wishes a higher degree of certainty that the agreed contract price
and time will not be exceeded

• and the Employer wishes - or is used to - the Project being organised on a strictly two
party approach, i.e. without an ?Engineer? being involved

• and the Employer does not wish to be involved in the day-to-day progress of the
construction work, provided the end result meets the performance criteria he has specified

• and the Employer is willing to pay more for the construction of his Project (than would
be the case if the Conditions of Contract for Plant and Design-Build were used) in return for
the Contractor bearing the extra risks associated with enhanced certainty of final price and
time.

If this is what is wanted - choose the Conditions of Contract for EPC/Turnkey Projects

(EPC/Turnkey Contract).

2. Is it an Infrastructure Project (e.g., road, rail link, bridge, water or sewage

Then the Employer wishes the Contractor to take total responsibility for the design and

construction of the infrastructure facility,

• and the Employer wishes a higher degree of certainty that the agreed contract price
and time will not be exceeded, except that if underground works in uncertain or difficult
ground conditions are likely then the risk of unforeseen ground conditions should be borne by
the Employer (and the provisions of the Plant and Design-Build Conditions in this respect -
Sub-Clause 4.12 - would be appropriate),

• and the Employer wishes - or is used to - the Project being organised on a strictly two
party approach, i.e. without an ?Engineer? being involved

• and the Employer does not wish to be involved in the day-to-day progress of the
construction work, provided the end result meets the performance criteria he has specified,
• and the Employer is willing to pay more for the construction of his Project (than would
be the case if the Conditions of Contract for Plant and Design-Build were used) in return for
the Contractor bearing the extra risks associated with enhanced certainty of final price and
time.

If this is what is wanted - choose the Conditions of Contract for EPC/Turnkey Projects

(EPC/Turnkey Contract).

3. Is it a Building Project where the Employer wishes to have his building(s)

As for 2 above

In the case of a building or building development Project, the Employer or his Architect may

have done some or most of the design, but - with suitable modification regarding design

responsibility - the Conditions of Contract for EPC/Turnkey Projects (EPCTurnkey Contract)

may be chosen.

D. Reconstruction or Refurbishment or another type of Project

Check Questions A1, B1 and B2 above or Questions C1 - C3 if applicable, and make your

choice accordingly.

Powerdoc offers a range of products designed to help you manage and access
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All the FIDIC contracts are covered including:

FIDIC's International Civil Engineering Conditions, 4th Edition 1987/1992

FIDIC's Construction Contract 1999

FIDIC's Plant and Design-Build 1999

FIDIC's EPC Turnkey 1999

FIDIC's Short Form 1999

All 4 of FIDIC's 1999 Contracts

Conditions of Contract for Design-Build and Turnkey 1995 Edition