FIDIC users’ guide

A practical guide to the

1999 Red and Yellow Books

Brian W. Totterdill

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 Published by Thomas Telford Publishing, Thomas Telford Ltd,
1 Heron Quay, London E14 4JD.
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First published 2006

Also available from Thomas Telford Books

FIDIC users’ guide: A practical guide to the 1999 Red Book. B. W. Totterdill.
ISBN: 0 7277 2885 7
FIDIC Conditions of Contract for Construction. ISBN: 2 8843 2022 9

A catalogue record for this book is available from the British Library

ISBN: 0 7277 3441 5

# Brian W. Totterdill and Thomas Telford Limited 2006

All rights, including translation, reserved. Except as permitted by the

Copyright, Designs and Patents Act 1988, no part of this publication may be
reproduced, stored in a retrieval system or transmitted in any form or by any
means, electronic, mechanical, photocopying or otherwise, without the prior
written permission of the Publishing Director, Thomas Telford Publishing,
Thomas Telford Ltd, 1 Heron Quay, London E14 4JD.

This book is published on the understanding that the author is solely

responsible for the statements made and opinions expressed in it and that its
publication does not necessarily imply that such statements and/or opinions
are or reflect the views or opinions of the publishers. While every effort has
been made to ensure that the statements made and the opinions expressed in
this publication provide a safe and accurate guide, no liability or responsibility
can be accepted in this respect by the author or publishers.

Typeset by Academic þ Technical, Bristol

Printed and bound in Great Britain by MPG Books, Bodmin, Cornwall

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 Preface to the second edition

This second edition of the FIDIC Users’ Guide has been extended to include
the Conditions of Contract for Plant and Design-Build, known as the
1999 Yellow Book. It also reviews the other FIDIC Contracts which have
been published since the first edition was written, together with further
discussion based on experience with the practical use of the 1999
Contracts.
During 2005 FIDIC published the Multilateral Development Banks
Harmonised Conditions of Contract for Construction, commonly known as
the MDB Edition. This Contract has been prepared in conjunction with
The World Bank and a group of Multilateral Development Banks and is
included in their procurement documents. The MDB Edition includes
some significant changes to the Conditions of Contract for Construction
and is reviewed in Part 4 of this book.
Since the publication of the first edition there has been an increased use
of the 1999 FIDIC Contracts. The Plant and Design-Build Contract has
become popular, particularly with Employers considering Contractor
design for water-related and environmental projects. This Contract is
very similar in layout and content to the Contract for Construction but
differs in detail due to the different requirements for Contractor design
rather than Employer design and the greater emphasis on electrical and
mechanical plant. These differences are extremely important and
require detailed study when deciding which Contract to use and when
preparing and administering the Contract. Hence this second edition
includes a detailed comparison between the Red and Yellow Books and
a guide to the differences at each Sub-Clause of the Plant and Design-
Build Contract.
Also, since the publication of the first edition, the European Inter-
national Contractors (EIC) have published a very useful series of EIC
Contractor’s Guides to the different FIDIC Contracts. I must acknowledge
the assistance I have received from these Guides, not just in under-
standing the Contractor’s point of view, but also from their suggestions
that potential disputes could be avoided by clarification of the meaning
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 FIDIC users’ guide: A practical guide to the 1999 Red and Yellow Books

of certain clauses. Further details of these Guides can be obtained from

EIC at www.eicontractors.de.
I am also most grateful to FIDIC for allowing the Clauses in the Con-
ditions of Contract to be reproduced and for assistance from The FIDIC
Contracts Guide. Copies of the Conditions of Contract and other FIDIC
publications can be obtained from the FIDIC Bookshop, Box 311 CH-1215
Geneva 15, Switzerland (tel: þ41 22 799 49 00; fax: þ41 22 799 49 01;
fi[email protected]; http://www.fidic.org/bookshop).

iv

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 Preface to the first edition

In recent years the role of the Conditions of Contract in a construction

project has undergone a radical change. The Conditions of Contract
were originally a legal document, giving the rights and obligations of
the Parties, and were only consulted when a claim or dispute became a
serious problem. Resident Engineers and Contractor’s Project Managers
were probably aware that such documents existed, but most of them
had never even seen the Conditions of Contract, much less used it as a
reference to guide their actions on the site.
In more recent years, the increase in the size and complexity of projects
and the increasing demand from Clients and Employers that projects
should finish on time and within budget have increased the pressures
for improved management techniques on construction sites. The current
emphasis on improved procedures for the avoidance or resolution of
claims and disputes has added to these pressures on the staff on site.
One of the consequences of the movement towards improving effi-
ciency and reducing costs has been the increasing use of the Conditions
of Contract as a manual of good project management procedures. This
development has been evident in the successive revisions to the
Federation Internationale des Ingenieurs-Conseils (FIDIC) Conditions of
Contract for Works of Civil Engineering Construction, the traditional
FIDIC ‘Red Book’, and experienced a major leap forward with the
publication of the New Engineering Contract by The Institution of Civil
Engineers in London. The New Engineering Contract not only incor-
porated procedures which virtually formed a manual of good project
management techniques and encouraged a less adversarial approach to
the relationship between Contractor and Employer but also was written
in good English, in a style and format that could be readily understood
by construction professionals.
The Conditions of Contract, which were published by FIDIC in 1999,
mark a further step forward in the process of the incorporation of
management procedures expressed in a practical style and format.
Hence, it is now inconceivable that Resident Engineers, Contractor’s
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 FIDIC users’ guide: A practical guide to the 1999 Red and Yellow Books

Managers and the other construction professionals who prepare docu-

ments and administer projects on site should not have the Conditions
of Contract on their desks and refer to its requirements and procedures
on almost a daily basis.
This book is a practical guide for the people who actually use FIDIC
Conditions of Contract, based on the author’s practical experience of
construction projects, conducting training courses and the resolution of
disputes. It is intended to assist the people who are preparing Contract
documents as well as those who are administering the project on the
Site or dealing with claims and disputes. The book includes a detailed
review of the Conditions of Contract for Construction and comparisons
with the other FIDIC Conditions which were published in 1999. The
review must be read together with the wording of the actual Sub-
Clause. The interrelation of the actions and notices by the Employer,
Contractor and Engineer with the milestone events during the construc-
tion of the project are shown in a series of flow charts. There is also a
comparison with previous FIDIC Conditions and a comparison of
Clause numbers to assist those who are familiar with the traditional
FIDIC Red Book. The book is not intended to be a legal analysis of the
new FIDIC Conditions or a comparison of the correct interpretation of
the conditions of contract in different jurisdictions. That task can be left
for those who are better qualified to analyse and speculate on the
correct legal interpretation of controversial Clauses.

vi

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 Contents

Part 1 The Traditional and the 1999 FIDIC Conditions of

Contract 1

1 Introduction to the FIDIC Conditions of Contract 3

1.1 Construction Contracts 3
1.2 The FIDIC Conditions of Contract 4
1.3 The Traditional FIDIC Conditions of Contract 5
1.4 The 1999 FIDIC Conditions of Contract 6
1.5 The MDB Harmonised Construction Contract 7
1.6 Social clauses 8
1.7 Contents of this book 8

2 Comparisons between the different FIDIC Conditions of

Contract 10
2.1 The Traditional and the 1999 Conditions of Contract 10
2.2 The Traditional ‘Red Book’ and the Conditions of Contract
for Construction 10
2.3 Comparison between the different 1999 Conditions of
Contract 13
The Conditions of Contract for Construction
(The Red Book) 14
The Conditions of Contract for Plant and Design-Build
(The Yellow Book) 14
The Conditions of Contract for EPC/Turnkey Projects
(The Silver Book) 16
The Short Form of Contract (The Green Book) 18
The Contract for Dredging and Reclamation Works
(The Blue Book) 20
The MDB Harmonised Conditions of Contract for
Construction (The MDB Edition) 20
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 FIDIC users’ guide: A practical guide to the 1999 Red and Yellow Books

3 The 1999 FIDIC Red and Yellow Books 22

3.1 Contents of the FIDIC Publication 22
3.2 Preparation of the Contract documents 24
3.3 The layout of the General Conditions 30
3.4 The sequence of construction operations 32
3.5 Preparation of the Particular Conditions 32

4 Claims and dispute procedures 35

4.1 Introduction 35
4.2 Claims and the Conditions of Contract 36
4.3 Claims by the Contractor 36
4.4 Claims by the Employer 41
4.5 The Dispute Adjudication Board (DAB) 42
4.6 Amicable settlement 44
4.7 Arbitration 44
4.8 The Courts 45

5 Flow charts 46
Fig. 1 Time periods in the Conditions of Contract 47
Fig. 2 Progress requirements 49
Fig. 3 Errors in Employer’s requirements (YB only) 51
Fig. 4 Design procedures (YB only) 52
Fig. 5 Workmanship procedures 53
Fig. 6 Procedures at Completion of Works 54
Fig. 7 Procedures during Defects Notification Period 55
Fig. 8 Procedures for advance payment 56
Fig. 9 Payment procedures 57
Fig. 10 Procedures for payment at Completion of Works 58
Fig. 11 Procedures for final payment 59
Fig. 12 Claims by the Contractor 60
Fig. 13 Claims by the Employer 62
Fig. 14 Procedures for disputes 63

Part 2 The FIDIC Conditions of Contract for Construction

and for Plant and Design-Build 65

6 Introduction to Part 2 67

7 Contents: General Conditions 69

8 Definitions listed alphabetically 75

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 Contents

9 Clause 1: General Provisions 77

10 Clause 2: The Employer 103

11 Clause 3: The Engineer 111

12 Clause 4: The Contractor 120

13 Clause 5 (RB): Nominated Subcontractors 147

14 Clause 5 (YB): Design 151

15 Clause 6: Staff and Labour 159

16 Clause 7: Plant, Materials and Workmanship 166

17 Clause 8: Commencement, Delays and Suspension 174

18 Clause 9: Tests on Completion 189

19 Clause 10: Employer’s Taking Over 195

20 Clause 11: Defects Liability 201

21 Clause 12 (RB): Measurement and Evaluation 210

22 Clause 12 (YB): Tests after Completion 215

23 Clause 13: Variations and Adjustments 220

24 Clause 14: Contract Price and Payment 233

25 Clause 15: Termination by Employer 256

26 Clause 16: Suspension and Termination by Contractor 262

27 Clause 17: Risk and Responsibility 266

28 Clause 18: Insurance 273

29 Clause 19: Force Majeure 282

30 Clause 20: Claims, Disputes and Arbitration 288

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 FIDIC users’ guide: A practical guide to the 1999 Red and Yellow Books

Part 3 Appendices 309

A1 General Conditions of Dispute Adjudication
Agreement 311
A2 Annex: Procedural Rules 318
A3.1 Index of Sub-Clauses in the Conditions of Contract for
Construction 321
A3.2 Index of Sub-Clauses in the Conditions of Contract for
Plant and Design-Build 329
A4 Annexes and Forms 337

Part 4 MDB Harmonised Edition of the FIDIC Conditions of

Contract for Construction 355

31 The MDB Edition 357

31.1 Introduction 357
31.2 General changes 358
31.3 Bank changes 359
31.4 Other changes 363
31.5 Changes in the Appendix 377
31.6 Changes to Annex: Procedural Rules 379
31.7 Changes to standard forms 379

Part 5 Sub-Clause comparison 381

A comparison of Sub-Clause numbers between the fourth
edition of ‘The Red Book’ and the 1999 Conditions of
Contract for Construction 383

Index 389

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