Why FIDIC contracts

• Standard form contracts – international standard forms

• Applicability – suitable for common law or civil law jurisdictions
• General conditions – fair, risk balances, world wide, accepted by MDBs and international
organisations, tested internationally in different jurisdictions
• Particular conditions are to tailor standard forms to specific project requirements
• Projects – Public and private projects, private or IFI funded
• International standard - used extensively with a 60 year track record, allows for competitive bidding
• Reduce Costs - Reduce contract negotiation costs, time
• Extensive training - options - increase knowledge and awareness
• Contract Guides, publications – support in interpretation of contracts
• Backed up by FIDIC best business practices and guidance. E.g. - Risk, Integrity, Sustainability,
Capacity Building
• Multi-tier dispute resolution – promote dispute avoidance and effective dispute resolution,
international neutral venue for dispute resolution

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 FIDIC contracts ecosystem
• International standard - used extensively with a 60 year track record
• Development supported - Contracts Committee with 13 projects underway
• Industry Professionals - 100 plus engaged incl advisors & friendly reviewers
• Industry Bodies - engagement with stakeholders eg IFIs, Contractors
• Secretariat resourced - legal, communications, publications and training
• Training programmes - available, resourced and provided
• FIDIC best practice backed - E.g. Quality, Risk, Integrity, Sustainability etc
• International network of expert support - across all aspects of the contracts
• FIDIC Credentialing - certifying people in use of FIDIC Body of Knowledge
• Multiple Languages - English, Arabic, Chinese, French, Portuguese, Spanish +
• FIDIC Contract Awards - started in 2019.

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 Why FIDIC contracts for the industry?
• Achieving effective delivery of infrastructure - USD22tn annually
• Achieve efficiency - through internationally standardised contracts
• Accepted by stakeholders - IFI’s, national governments, private investors,
contractors, consultants
• Fair contracts - risk balanced, experience based
• Reduce corruption - well understood procurement and management
• Basis in law - suit common law or civil code systems
• Particular Conditions - specific project requirements
• Adjudication - built into FIDIC contracts to provide for dispute avoidance
and effective dispute resolution
• Guides - from procurement to contracts
• Event and communications programme - supporting the industry
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 Why FIDIC contracts for projects?
• General Conditions - standardised across the FIDIC suite
• Particular Conditions - specific project requirements
• Risk allocation understood - more certainty and clarity for all the parties
• Consistency and standardisation - knowledge base built in all organisations
• Tendering efficient - tenderers understand and have confidence pricing risk
• Negotiations focused - on project delivery
• Project staff - large pool of experience and expertise
• Contract administration - standardised and efficient
• Guides - readily available resources supporting users in the field
• DAABs - built in for dispute avoidance and effective dispute resolution
• Expert advice - readily available

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 FIDIC contracts
New professional services agreements Works contracts

Procurement and best practice Guides

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 Which FIDIC book?
Which FIDIC contract to use
The employer wishes to The employer wishes the The employer wishes a
Is the contract Is the contract of small contractor to take total Is the contract for
largely do most of the design of contractor to carry out
Is the contract value/short duration or responsibility for design, design-build operate and
underground No No No the works and for the No both the detailed design No No
largely dredging? the works supply, installation and maintenance
works? contractor to execute and the execution of the
repetitive/simple? construction
the works works

YES YES YES YES YES YES YES

Dredgers Contract Short Form of Contract Construction Contract Plant & DB Contract EPC/Turnkey Contract
Emerald book Blue-Green Book Green Book 1999/2017 Red Book 1999/2017 Yellow Book Silver Book DBO Contract Gold Book

• Sector specific for • Sector specific for • Simplified structure • Generally, re- • Generally Lump sum • higher degree of • The contractor
underground dredging works • Remeasurement, lump measurement contract • Engineer Certification certainty of final price undertakes design and
works • Employer design or sum or cost plus (lump-sum also possible (dual Role) and time execution of the works
• Derived from design build • No express provision for • Engineer Certification • Multi-tier dispute • Generally Lump Sum and,
FIDIC Yellow book • Remeasurement, Engineer (dual Role) resolution • Significantly more Risks • thereafter, maintenance
lump sum or cost • Adjudicator-Arbitrator • Multi-tier dispute shifted to the Contractor and operation
plus resolution • No certification
• DAB-Arbitration

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 Which FIDIC book?
Which FIDIC contract to use
Is the
consultancy Is the JV Is the Sub-Consultancy Is the Sub-Contract to be Is the Construction
Is the Sub-Contract to be
contract for No Agreement for No Agreement for No used with Red Book No No Contract for MDB
used with Yellow 1999
professional Consultants professional services 1999 funded projects
services

YES YES YES YES YES YES

JV Agreement for Sub-Consultancy MDB Harmonised

White Book Consultants Agreement Sub-Contract Sub-Contract version

• Mainly for • Suited to be used • Suited to be used with • Suited to be used with • Suited to be used with • Harmonised version of
feasibility, design, with White book White book Red 1999. can be used Yellow 1999; 1999 Red Book
construction with Pink Book; • Operates back-to-back • With bank specific terms,
administration • operates back-to-back with main contract i.e. fraudulent or corrupt
with main contract practices, staff and
labour, etc

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 Contract types – a worked example
Construction contract:

Employer

Functional link
Consultant Contractor

Sub contractor Sub contractor Sub contractor

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The structure of FIDIC contracts
The general conditions in the FIDIC contract provide a reliable, tested and sound set

Conditions
of contractual rules. Allocates risk between the parties on fair and equitable basis.

General
These conditions are not editable (in most cases) and are intended to set the
standard for construction contracts globally. They set out the rules of engagement,
responsibility, change management, disputes, liability, risk and financial management

The forms provide the ability to append project information.

This is also where parties can append project specific data and any particular

forms
conditions to amend general conditions if they needed. Any particular conditions for
works contracts should be in the spirit of FIDICs golden principles . Forms of securities
provide templates for bank and parent company guarantees.

The guidance notes in the contract are there to help users to prepare the tender
documents, the contract and draft the particular conditions, to make any modification

guidance
required for a specific project or for compatibility with governing law.
This guidance helps to ensure that the conditions of the contract are tailored to
specific contract requirements.

This is applicable to all FIDIC works contracts

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 FIDIC Golden Principles

FIDIC's Golden Principles set out the essential

characteristics of its general conditions of contract that
should not be amended if the contract is to be regarded as a
genuine FIDIC document.

• GP1: The duties, rights, obligations, roles and responsibilities of all the contract participants must be generally as implied in the General Conditions,
and appropriate to the requirements of the project
• GP2: The Particular Conditions must be drafted clearly and unambiguously
• GP3: The Particular Conditions must not change the balance of risk/reward allocation provided for in the General Conditions
• GP4: All time periods specified in the contract for contract participants to perform their obligations must be of reasonable duration
• GP5: Unless there is a conflict with the governing law of the contract, all formal disputes must be referred to a Dispute Avoidance/Adjudication Board
(or a Dispute Adjudication Board, if applicable) for a provisionally binding decision as a condition precedent to arbitration

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 General Features of FIDIC Suite of Contracts
• Commencement
• Time for Completion
• Accepted Contract Amount/Contract Price
• Employer’s Financial Arrangements
• Risk Allocation - Contractor, Employer or shared
• unforeseeable physical conditions, fossils and geological findings, access to site, design
responsibility, changes, errors in the ERs, Site Data, delays by authorities, delayed instructions,
unforeseeable shortages in goods or services, changes in legislation, force majeure
events/exceptional events, etc.
• Right to Very, Value Engineering
• The dual role of the Engineer /RED and Yellow
• Project security
• Advance Payment Guarantee
• Performance Guarantee
• Insurance
• Retention money
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 Translations also cover a larger area
English Korean
Arabic Latvian
Bahasa Laotian
Bosnian Lithuanian
Bulgarian Mongolian
Chinese Polish
Croatian Portuguese
Czech Romanian
Estonian Russian
Georgian Serbian
German Slovakian
Hungarian Spanish 2016 assets:
French Thai $2016 assets:
8.2 bn
Iranian (Farsi) Turkish $ 8.2 bn
Italian Ukrainian
Japanese Vietnamese

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 Chinese translations
Five FIDIC standard contracts now
available in Chinese language

The publication of the documents is the result of a major

translation and publishing licence agreement FIDIC signed
last year with Beijing-based China Machine Press, which
will enable FIDIC contracts and other key documentation to
be translated and published in Chinese.

The publication of the five contracts will help to widen the

dissemination of FIDIC publications in the Chinese market
and due to increased Chinese investment in international
markets, the move will also provide a harmonised approach
allowing Chinese consultants and contractors to better
comprehend FIDIC contracts in their local language
enabling them to use the market-leading documents
internationally.

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 Numbers and operations

Source: ODI
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 Stakeholders and FIDIC Body of knowledge
Private Sector Government users
IFIs

International organisations

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