FIDIC contracts are the most commonly used standard form of international construction contracts in the world today. Standard FIDIC contracts are frequently used in both large and small construction projects, and they are suitable for parties of different nationalities, speaking different languages and coming from different jurisdictions.
The FIDIC Forms Of Contract
The second type of FIDIC Contract, the so-called FIDIC Yellow Book, is a standard contract where the design is carried out by the Contractor. The Yellow Book is also known as a Plant and Design-Build contract. The Contractor is usually paid on a lump sum basis. The Yellow Book was published for the first time in 1963, with subsequent revisions.
The FIDIC White Book, or the Client/Consultant Model Services Agreement, is another important and well-known part of FIDIC Suite. The most recent version was published in 2017 and is today one of the most widely-used forms of professional services contracts internationally. The second edition of the Sub-Consultancy Agreement accompanying the White Book has also been published.
Other, less well-known FIDIC contracts include the so-called Green Book, which is a short form contract intended for relatively small projects of a repetitive nature or short duration where the Employer provides the design. Pursuant to FIDIC guidelines, USD 500,000 and 6 months are considered as reasonable limits on capital and duration for projects where Green Book forms are used.
Another form of FIDIC Contract is the so-called Gold Book. The first edition of the Gold Book was published in 2008 and is based on a typical design and build contract form where a period of operation and maintenance has been added. The Gold Book encompasses a complex range of different services and is intended to continue beyond a period of 20 years where the parties intend to extend their cooperation throughout the duration of a project.
Finally, the less well-known so-called FIDIC Blue Book contract was published in 2006 and is a form of contract for dredging, reclamation and ancillary construction work with a large variety of administrative arrangements. Usually, it is the Employer who is in charge of the design and the most important part of the Blue Book contract is the description of the activity itself, defined in detail in the specifications, drawings and design of the work.
Despite the importance of the 1999 Forms, there has been very little published on the new concepts adopted in them and how they interact with the previous forms. This important work considers these aspects together with the many developments affecting the fourth edition of the Red Book that have taken place since 1997, when the second edition of this book was published, and relates them to key contracting issues. It is written by a chartered engineer, conciliator and international arbitrator with wide experience in the use of the FIDIC Forms and in the various dispute resolution mechanisms specified in them.
 a detailed comparison of the wording of the1999 three main forms, which although similar in nature; it nevertheless significantly differs in certain areas where the three forms diverge due to their intended purpose;
FIDIC is the International Federation of Consulting Engineers, known by its French acronym. It was formed in 1913, with the objective of promoting the interests of consulting engineering firms globally. It is best known for its range of standard conditions of contract for the construction, plant and design industries.
FIDIC Stands for FÃdÃration Internationale Des IngÃnieurs-Conseils (International Federation of Consulting Engineers) which has about 102 countries as members. The FIDIC forms of contract have conditions suitable for use in all types of construction, electrical, mechanical and domestic contracts.
The Contract for construction includes a set of conditions recommended for building or engineering works where the owner provides most of the design. However, the contract work may also include some contractor-designed civil, mechanical or electrical works.
These days many contractors design a significant portion of the work on their own, so the conditions of contract for construction includes more provisions which are applicable under such cases.
These contracts include a set of conditions suitable for the provisions of electrical and/or mechanical plant and for design and construction of buildings or engineering works. Under this contract, the contractor designs and provides the plants and other works which may include any combination of civil, mechanical, electrical and/or construction works, as per the requirement of the employer.
EPC stands for engineering, procurement and construction. This contract is suitable for turnkey projects such as power plants, process factory, infrastructure projects or any developmental works. The projects under this type of contract have a higher degree of certainty on project cost and time of completion.
The contractor has the responsibility of design andexecution of the project including the guarantees of the performance. The contractorcarries out the engineering, procurement and construction providing a fullyequipped facility ready for operation.
In this contract, the contractor has greater freedom to satisfy the requirements of the end-user as specified in the conditions of the contract. This type of contract seems more profitable to the contractor than the traditional form of contracts, and thus, they are ready to accept the greater degree of risks.
Short form of contract is suitable for small construction works (i.e. small capital value projects) of short duration or of relatively simple and repetitive works. This contract is suitable for any type of engineering and construction projects irrespective of who provides the engineering. Depending on the type of work and circumstances, this type of contract may also be suitable for contracts of higher values.
The contractor has to carry out the construction works as per the design provided by the owner. This contract may also include contractor-designed civil, mechanical, electrical and/or construction works.
The Gold Book is the Conditions of Contract for Design, Build and Operate Projects. It is used in projects where the contractor assumes the design and construction works as well as the operation obligations. The Gold Book is recommended for international projects with high capital needs and long operation periods such as 20 years.
Therefore, engineers, contractors and builders are looking to execute international forms of contract for their projects, which will have a clear scope of works, rights and obligations, and liabilities of the parties. Hence, FIDIC contracts are model contracts for such projects.
It publishes standard forms of contracts for construction works, infrastructure projects, EPC/Turnkey projects, consultancy services, etc. and publishes agreements for clients, consultants, sub-consultants and joint ventures together with related materials such as standard pre-qualification form, performance guarantee form, letter of acceptance, etc.
The FIDIC Model Contracts are drafted for a wide range of projects. They are segregated by the colour given to the cover of the document in which rules and regulations of the contracts are mentioned.
The GCC describes allocation and management of risk between the parties and it contains the general terms of the contract like rights and obligations of parties, procedure for payment, certification, dispute resolution, etc. They are published by FIDIC and should not be amended.
To execute a new contract, the parties have to start from the base, which needs a lot of time starting from appointing lawyers until the contract is executed. By using the FIDIC Model Contracts, the parties can focus directly on the project and can manage the risk efficiently.
The FIDIC Model Contracts are ready to use drafts, which will expedite the discussion and negotiations on the terms and conditions of the contract. The contractors do not have to engage the specialist, which will result in less cost and a shorter time.
As informed above, the FIDIC Model Contracts are divided into different colour books and the parties can choose the contracts as per various features like kind of construction, size & nature of the project, purpose of the contract and identity of the parties. The parties can choose the right book for a certain type of project which will cover different terms and conditions specific to the project.
The FIDIC Model Contracts are published in up to 20 different languages including major languages like Chinese, Japanese, Indonesian, French and Spanish. This means lower translation cost where the contracts need translation into the foreign language of the other party.
Since the FIDIC Model Contracts are accepted worldwide and are easier to use, the parties will be more confident as these contracts can impact significantly on the efficiency and success of the projects.
As FIDIC Model Contracts provide for arbitration, there is little guidance from the Courts as to the intended operation of particular clauses or precedents to follow. This compares to general contracts where there are significantly more decisions about the operation of various clauses.
As we know, every project is different and customization is necessary for every project. To implement modifications in the contract, they tend to shift commercial terms to the schedules of the contract. Moreover, it becomes an exhausting experience as all technical and legal details are put together in the schedules of the contract.
Let us compare the selected clauses and various features regarding the execution of highway construction projects based on EPC mode of NHAI conditions of contract with FIDIC contract. The below points will highlight the difference between the documents prepared based on EPC and FIDIC.
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