PROJECT INTEGRATION MANAGEMENT WITH FIDIC

CONTRACTS UNDER THE UMBRELLA OF FAC-1

Adriana SPASSOVA1, Julieta MANCHEVA2, Fantina RANGELOVA3

Keywords: contract; project; FIDIC; collaboration; FAC-1

ABSTRACT

The article examines the implementation of the new trends in the Project Integration Management in
construction. The authors demonstrate how the knowledge from the latest editions of the PMBOK® and
its Construction Extension may be used to manage complex projects with several related FIDIC
contracts for design, construction, supervision, supply chain. The modern multi-party partnering form,
called the “Framework Alliance Contract FAC-1”, can integrate all related two-party FIDIC contracts
between the participants in the investment process. Practical examples demonstrate how several FIDIC
contracts can be managed more efficiently under the umbrella of FAC-1. FAC-1 enables collaboration,
BIM, lean practices and the transfer of knowledge.

1. INTRODUCTION
Integration throughout the project life cycle is of paramount importance. In the construction industry,
not only do the processes interact, but their management is greatly expanded to address multiple
performing organizations, operating simultaneously. Effectiveness and efficiency is dependent on
integration management. The need for increased communication and transparency, coupled with timely
and efficient decision making, makes collaboration a critical technique when countering the effect of
project complexity. [1]
For construction to be successful, an integrated organization needs to be created, the commercial
interests of the parties need to align around the efficiency of the project as a whole, and lean tools and
management methods should be deployed using the latest available technologies. [2]
McKinsey’s 2017 Report recommends several areas to be addressed to boost productivity on projects
by some 50 to 60 percent. One of the main factors is the procurement process. There is a need to move
away from the hostile contracting environment that characterizes many construction projects to a system
focused on collaboration and problem solving [3].
Collaborative activities require coordination and agreed timelines in order to create mutual confidence
among team members that each will create and share the data that they all need to deliver the project.
Collaborative contracts provide the machinery for coordination and the mutual commitments to agreed
activities and timelines [4].
The international standard for collaboration ISO 44001:2017 recognizes the need to:
ü Establish and agree s formal foundation for joint working, including contractual frameworks or
agreements, roles, responsibilities and ethical principles.

1
PhD Student, Eng., Dept. “Construction Management and Economics”, UACEG, Sofia, Bulgaria, email: [email protected]
2
Prof. Dr. Eng., Dept. “Construction Management and Economics”, UACEG, Sofia, Bulgaria, email:
[email protected]
3
Prof. Dr. Eng., Dept. “Construction Management and Economics”, UACEG, Sofia, Bulgaria, email: [email protected]
 ü Determine clarity of purpose, encourage appropriate behavior and identify the potential impacts
on or conflict with the aims of collaborative working [5].

2. FIDIC CONTRACTS AND COLLABORATION

The International Federation of Consulting Engineers FIDIC [6] was founded in 1913 and issued its first
conditions of contract in 1957, further developing the most widely used full suite of contracts for design,
construction and services. These sample documents are known as the «International Best Practice
Documents» and are enjoying ever growing popularity. This is mainly thanks to significant international
lenders who demand generally accepted and proven «rules of the game» in their construction projects
[7].
Collaboration of designers and contractors is provided under the FIDIC Design-Build Yellow Book [8]
and the EPC turn-key Silver Book [9]. The FIDIC Gold Book links design, construction and operation
[10].
However, in case of buildings, the architects are not happy to be governed by the Contractor. The
Contractor is arguably limiting their opportunity to develop the best design, putting them under pressure
for a bigger profit and easier construction operations. FIDIC does not present any option for early
Contractor’s involvement in the contracts with Employer’s design (the Red Book [11] and the Pink
Book [12]).
According to the Principal Drafter of the 2017 updates Siobhan Fahey, the latest FIDIC 2017 edition
develops many of the project management procedures and mechanisms from the 1999 General
Conditions of Contract for major works [8], [9], [11], enhancing and clarifying them to reflect modern
international best-practice [13]. The 2017 edition has improved collaboration as presented on Figure
1:
ü SC (Sub-Clause) 3.7 [Agreement or Determination] now clearly defines a collaborative
problem solving:
Ø A 42-day consultation of the Engineer/ Employer’s Representative with the Parties to
encourage them to reach agreement provides an obligatory first step in solving any issues/
Claims.
Ø The Engineer in the Red/ Yellow Books, though paid by the Employer, is required to “act
neutrally between the Parties” and “not be deemed to act for the Employer”.
Ø The authority of the Engineer cannot be restricted to obtain the Employer’s consent when a
determination has to be issued under Clause 3.7.
ü The new SC 3.6 Silver Book / 3.8 Red/ Yellow Books [Meetings] mandates a forum for
effective communication:
Ø Management meeting may be held to discuss arrangement for future works and/or other
matters;
Ø The Employer’s other Contractors, the public authorities, the utility companies, and/or
Subcontractors may be invited by the Parties to attend the meetings.
ü The new SC 8.4 [Advance Warning] requires each Party to give advance warning to the other
Party of any event that may have an adverse effect on the Works, cause delay or increase the
Contract Price.
ü The new SC 21.4 [Dispute Avoidance] promotes the proactive role of the Dispute Board, now
called DAAB – Dispute Avoidance/Adjudication Board. The DAAB may assist the Parties to
resolve any disagreement during meetings, Site Visits or otherwise, following a joint request by
the Parties or inviting them to make such a joint request.
 SC 3.7, SC 3.6 (3.8),
SC 8.4 & SC 21.4

Fig. 1 FIDIC 2017 Edition moves towards collaboration

It would seem that this is an attempt by FIDIC to bring in the concept of ‘partnering’ into the FIDIC
contract and to get the parties to co-operate with each other before delay claims start to surface and
positions start to become entrenched [14]. But the FIDIC suite has no multi-party partnering form to
integrate all project participants: designers, supervisors, contractors, subcontractors. The FIDIC contract
mostly underpin the command and control project management style.

3. FAC-1 AS AN INTEGRATOR
In order to have a collaborative working environment, all participants in the construction using FIDIC
contracts may sign an alliance contract. This will ensure easier project management with tools for:
Ø Early warning;
Ø Innovations;
Ø Time & cost saving;
Ø BIM support [15];
Ø Easy transfer of data;
Ø Know-how transfer.
The 2016 modern multi-party Framework Alliance Contract FAC-1 is designed for international use to
integrate projects under FIDIC and any other project contract forms [16]. The Bulgarian Society of
Construction Law (BSCL), full member of the European Society of Construction Law, signed a license
agreement with the Association of Consultant Architects (ACA) and the author of FAC-1 Professor
David Mosey for the translation and adaptation of FAC-1 to comply with the Bulgarian law. The
Bulgarian version of FAC-1 was launched in 2019 [17]. The same was done in Italy and Brazil. The
German and Russian editions are under preparation.
An integrated FAC-1 multi-party Alliance, entered into with a group of selected consultants,
contractors, suppliers or other providers, enables:
ü Increased transparency, improved efficiency through data shared among Alliance Members;
ü Stronger joint commitment to share Objectives;
ü Closer working relationships on agreed Alliance Activities;
ü Improved joint engagement with the Supply Chain & Stakeholders;
ü Collective self-regulation through the Core Group;
ü More open measurement against agreed Targets;
ü More open motivation to earn agreed Incentives.

4. FIDIC CONTRACTS INTEGRATED BY FAC-1

A framework alliance may be formed by one or more employers, designers and the selected framework
contractors and consultants, led by the Alliance Manager.
Figure 2 presents a practical example for this arrangement for an energy efficiency housing programme.
The employers may be several municipalities. The design is prepared by a consultant under a FIDIC
White Book Services Agreement [18]. The employers may select jointly several framework contractors,
including FAC-1 in the tender documents as a multi-party integrator. The framework contractors
compete with prices for each project (a house or a lot including several houses) and sign Project
Contracts with the FIDIC Green Book Conditions of Contract [19]. The same approach may be followed
with the supervisors, who sign FAC-1 and the FIDIC White Book project agreements.

Stakeholders

Supervisor 1

Contractor 1
Supervisor 2
Contractor 2
Employer 1 Supervisor 3
Contractor 3
Employer 2
Contractor 4
Contractor 5 Alliance Manager Designer

Fig. 2 An energy efficiency housing framework alliance with FIDIC contracts, integrated by FAC-1

FAC-1 can successfully integrate the supply chain as well. Figure 3 presents an integrated multi-party
framework alliance for school/ sport infrastructure. FAC-1 led by the Alliance Manager integrates the
selected main contractor who signs FAC-1 and a FIDIC Red Book Contract, the important
subcontractors, signing FAC-1 and the FIDIC Subcontract form [20], the Employer’s Designer and
Engineer, signing the FAC-1 and the FIDIC White Book Agreement for Services.

Alliance Manager
Engineer

Employer

Designer

Subcontractor 1 Subcontractor 2

Contractor

Fig. 3 An integrated alliance for school/ sport infrastructure with FIDIC contracts, united by FAC-1

FAC-1 may be used to integrate the parties involved in complex single projects as well.
The German Federal Construction Agency approved the use of FAC-1 as an improved value tool,
integrating the supply chain, and as a BIM enabler, within the EPC FIDIC 1999 Silver Book Contract
for the New Chancery and Guardhouse of the German Embassy in Sofia. The EPC Contractor GBS will
lead the alliance formed with the subcontractors, able to create improved value and/or give timely inputs
to BIM. Figure 4 presents a similar example, considered by the Russian FIDIC Member Association for
implementation in nuclear projects. The EPC Contractor signs a FIDIC Silver Book contract. The
Employer signs a FIDIC White Book Agreement with the Employer’s Representative. The EPC
Contractor forms an alliance with his designer, subcontractors and suppliers. The designer signs FAC-1
and a FIDIC White Book Agreement with the EPC Contractor. The Subcontractors may sign the FIDIC
Subcontract, or Yellow/ Silver Book contracts. Subcontractors and suppliers may compete within the
alliance for additional work packages, thus striving for improved value and innovations.

Employer
Employer’s Representative

EPC Contractor

Alliance Manager

Designer
Sub 1
Sub 2
Sub 3 Supplier 2

Supplier 1 Supplier 3

Fig. 4 An EPC Contractor-led alliance for NPP/ TPP with FIDIC contracts, integrated by FAC-1

An integrated alliance may be formed under the umbrella of FAC-1 for complex infrastructure projects,
where connected sections and related facilities are executed by different contractors, sometimes with
different funds. Figure 5 demonstrates an example for high speed railway or water / sewage projects.
The contractors for different work packages sign different FIDIC contracts (Red or Yellow Book,
depending on the design responsibility), integrated by FAC-1. The FIDIC Engineers and Employer’s
Designers sign the FIDIC White Book Agreement and FAC-1. The Alliance Manager is facilitating the
integration management. The consistent FAC-1 documents establish shared Objectives and encourage a
collaborative approach to agreed Alliance Activities [21].

Alliance Manager

Employer

Subcontracts Designer 2

Contractor 4 Designer 1

Contractor 3 Engineer 2
Contractor 2
Engineer 1
Contractor 1

Fig. 5 An integrated alliance for infrastructure with FIDIC contracts, united by FAC-1

Employers who are not ready to form a multi-party alliance, can enter into separate FAC-1 contracts,
forming linked alliances with the contractors, designers, consultants, integrating the related projects with
the support of the Alliance Manager. Figure 6 shows an example for a high speed railway project, where
the Employer, the Alliance Manager and the FIDIC Engineer sign 3 similar FAC-1 contracts for the two
related sections (Red Book FIDIC contract for the construction, White Book FIDIC agreements for the
design) and the signaling (design-build FIDIC Yellow Book contract).

Engineer Employer Alliance Manager

Contractor Section 1 Designer 1 Signaling Section 2 Designer 2

Fig. 6 Linked alliances with FAC-1 for related railway sections & facilities, integrating FIDIC contracts
 5. CONCLUSION
The collaborative contracts are an important tool for the project integration management. The
international multi-party standard form FAC-1 can be used to integrate two-party FIDIC contracts for
frameworks or single complex projects.

SOURCES
[1] PMI, Construction Extension to the PMBOK® Guide, 2016, pp.29-30
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delivery, 2017, p. 21
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report, 2017,
https://www.mckinsey.com/~/media/McKinsey/Industries/Capital%20Projects%20and%20Infrast
ructure/Our%20Insights/Reinventing%20construction%20through%20a%20productivity%20revo
lution/MGI-Reinventing-Construction-Executive-summary.ashx
[4] Mosey D., Collaborative Construction Procurement and Improved Value, 2019, ISBN
9781119151913, p. 135
[5] ISO 44001:2017 Collaborative business relationship management systems - Requirements and
framework, Sections 8.6.2.1, 8.6.10
[6] FIDIC (Federation Internationale Des Ingenieurs-Conseils), www.fidic.org
[7] Klee L., International Construction Contracts Law. 2nd ed Wiley-Blackwell, 2018, ISBN: 978-1-
119-43038-4 (Kindle ed) Loc 15119
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& Mech. Plant & For Building & Engineering Works Designed by the Contractor (Yellow Book)
[9] FIDIC, 1st ed 1999, 2nd ed 2017, Conditions of Contract for EPC/ Turnkey Projects (Silver Book)
[10] FIDIC, 2008, Conditions of Contract for Design, Build, Operate (Gold Book)
[11] FIDIC, 1st ed 1999, 2nd ed 2017, Conditions of Contract for Construction. For Building and
Engineering Works designed by the Employer (Red Book)
[12] FIDIC, MBD Harmonised Ed 2005, 2006,2010, Conditions of Contract for Construction (Pink
Book)
[13] Sioban, F., 2016, FIDIC Users’ Conference London
[14] Dedezade T., Clause 8: Commencement, Delays and Suspension, Corbett & Co Knowledge Hub,
http://corbett.co.uk/wp-content/uploads/Clause-8-Commencement-Delays-and-Suspension-.pdf
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[16] Mosey D., Framework Alliance Contract FAC-1, 2016
[17] BSCL, Рамков договор на Алианса FAC-1, 2018
[18] FIDIC, FIDIC, 5th Ed 2017, Client/Consultant Model Services Agreement (White Book)
[19] FIDIC, 1st ed 1999, The Short Form of Contract (Green Book)
[20] FIDIC, 2011, Conditions of Subcontract for Construction For building and engineering works
designed by the Employer.
[21] Mosey D., FAC-1 Briefing Paper, 2016, p. 3