The short form of the contract is suitable for small construction work (i.e. projects with a low net present value) of short duration or relatively simple and repetitive work. This contract is suitable for any type of engineering and construction project, regardless of who provides the engineering. Depending on the nature of the work and the circumstances, this type of contract may also be suitable for higher-value contracts. Contractual conditions for planning, construction and operation projects. FIDIC model contracts are ready-to-use projects that will speed up the discussion and negotiation of contract terms. Contractors do not have to hire the specialist, which reduces costs and shortens time. The Contractor may be entitled to an extension of time if: These contracts have been addressed to the civil engineering sector, which is different from the mechanical/electrical engineering sector. Therefore, engineers, contractors and builders strive to execute international forms of contract for their projects, which have a clear scope of work, rights and obligations, as well as the responsibilities of the parties.
Therefore, FIDIC contracts are model contracts for such projects. Over the years, FIDIC has continuously improved its contracts. The organization added new forms of contracts, replaced previous ones, and updated important terms. The following table gives a brief overview of FIDIC contracts to date: it publishes standard contract forms for construction services, infrastructure projects, EPC/turnkey projects, consulting services, etc. and publishes agreements for clients, consultants, sub-consultants and joint ventures as well as related documents such as the standard prequalification form, performance guarantee form, acceptance letters, etc. In most FIDIC forms, there is a standard hierarchy for the documents that make up the contract. The ranking is as shown below and in case of inconsistencies, the first of the list prevails: EPC stands for Engineering, Procurement and Construction. This contract is suitable for turnkey projects such as power plants, processing plants, infrastructure projects or development works. Projects covered by this type of contract have a higher level of certainty regarding project costs and completion schedule. In addition, most FIDIC forms provide for a multi-level dispute resolution mechanism. Depending on the type of FIDIC contract, the most common method used to resolve disputes is in four stages: first, the decision of the engineer, who is the representative of the employer who directs the construction project; second, the engineer`s decision may be reviewed by a Dispute Resolution Committee (« ATM »), an independent body composed of one or three building experts who make their decision; thirdly, the parties should endeavour to settle their dispute amicably; and finally, the final remedy is to resolve the dispute by binding arbitration or by a national court, depending on the agreement of the parties in the particular conditions.
This is FIDIC`s first design-build and operation contract. The Silver Book is intended for turnkey projects. This contract involves considerable risks for the contractor. The contractor is also responsible for most of the design. Since 1957, future FIDIC treaties have successfully adopted the principles of other legal systems, in particular the civil law system. However, the basic framework of English legal principles has survived. For example, the provisions on lump-sum compensation have been maintained. One question to keep in mind is whether the engineer`s suggestions can be considered variations. This is determined by the facts of a particular event. The Red and Yellow Books provide that if the engineer gives an oral instruction and the contractor confirms that instruction in writing within two business days, if the engineer does not reject that confirmation within two business days, that confirmation is deemed to be the engineer`s written instruction. It is therefore very important to ensure that any oral instruction that changes the scope of the works is confirmed in writing.
Previously, failure to meet these deadlines meant that compensation was limited to amounts supported by contemporary documents. Now, there is no right to compensation if the contractor does not comply. FIDIC stands for International Federation of Consulting Engineers, to which about 102 countries belong. FIDIC contract forms have conditions that are suitable for use in all types of construction, electrical, mechanical and household contracts. Other lesser-known FIDIC contracts include the « Green Paper », which is a short-form contract for relatively small projects of a repetitive nature or of short duration when the employer provides the design. According to FIDIC guidelines, $500,000 and 6 months are considered an appropriate capital and duration limit for projects that use Green Book forms. The Yellow Book (the factory and design-build contract) is intended to be used when the work is designed by the contractor. This is a lump sum contract in which the contractor undertakes to deliver the project at a fixed price.
The contractor therefore assumes the risk of quantities. FIDIC published its first contract in 1957, entitled The Form of the Contract for Civil Engineering Construction Works. As its title suggests, this first order was aimed at the construction sector and quickly became known for the color of its cover and therefore the Red Book. The expansion of the national highway in India is mainly financed by the World Bank and the World Bank, and the other multilateral development banks stress that the conditions of FIDIC will be included in their tender documents. In India, however, contracts are being developed by the Ministry of Roads and Highways, and projects are based on the Engineering, Procurement and Construction (EPC) contract scheme set out in the guidelines of the National Highway Authority of India (« NHAI »). EPC stands for Engineering, Procurement and Construction. Under an EPC delivery model, an EPC contractor is typically responsible for the design, construction, and commissioning of a plant. The contractor assumes engineering, procurement and construction tasks until the final delivery of a fully equipped, tested and operational facility.
The Red Book (the construction contract drawn up by the employer for construction and engineering work) must be used when the employer is responsible for the design of the work. This is a revaluation contract, which means that in their contract, the employer and the contractor agree on rates for the type of work and these rates are applied to the amount of that work that the contractor performs. The employer runs the risk that the quantities it considers to be more or less accurate, while the contractor must ensure that its unit prices are reasonable for the quantities. NBS` survey of contracts and law shows that one of the areas that participants found challenging in international projects was the use of unknown contract forms. This article by Koko Udom, former Head of Contacts and Law at NBS, briefly presents FIDIC contracts, which are considered the main contracts in international engineering and construction projects. This is the short form of the contract. It is mainly used for simple, repetitive and short-term work. The first FIDIC treaties were based on English legal principles.
This bias was so strong that Ian Duncan Wallace QC expressed it cautiously when commenting on the FIDIC Red Book, first edition: The White Paper is an important part of the FIDIC suite and one of the most widely used forms of professional services contracts internationally. Contractual conditions for the use of engineering and construction services with a relatively low net present value or with short construction times. The founding members of FIDIC were Belgium, France and Switzerland. FIDIC led a difficult life until the late 1940s with a changing number of members, all from Europe. In 1959, Australia, Canada, South Africa and the United States merged to form FIDIC International. The first member associations from developing countries joined in 1965 (Central Africa, now Malawi, Zambia and Zimbabwe) and Colombia in 1967. The following table gives a brief overview of FIDIC contracts: To conclude a new contract, the parties have to start from the bottom up, which takes a long time from hiring lawyers to performing the contract. By using FIDIC model contracts, parties can focus directly on the project and effectively manage risk. The type of contract chosen by an employer or the parties depends on the needs of each project and the employer`s interests and preferences as to who should be responsible for the design.
The Red Book is of course preferable if the employer has more design experience and wants to play an important role in the design process. Otherwise, the employer can opt for the Yellow Book or another form of FIDIC Suite. The silver book is usually preferable if there are no unknown major risks and the employer prefers to have more certainty in terms of price and time. This type of FIDIC contract is also suitable for the design and construction of construction and engineering works. This contract requires the appointment of an engineer to manage the contract. The parties have the right to rearrange the priority of documents or to determine that no priority or hierarchical order applies to the contract. This can be done in Part II of the contract. Although the FIDIC family covers a wide range of contracts, there are some common features: contractual conditions for equipment and constructions for electrical and mechanical equipment, as well as construction and civil engineering services. The GCC describes the sharing and management of risks between the parties and contains the general contractual conditions such as the rights and obligations of the parties, payment procedures, certification, dispute resolution, etc. .
