FIDIC Contracts – An Overview

Roger Button

Head of Middle East Construction

Amereller Legal Consultants

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

1
FIDIC Red Book 1999 (1)

Most Design by Employer

Engineer’s Role in Inspection and Certification

Bills of Quantities or Optional Lump Sum

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS
FIDIC Red Book 1999 (2)

Key Employer Risks:

 Unforeseeable physical conditions

 Forces of Nature
 Employer Design
 War, Riot and Similar Risks

MDB Edition

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

3
FIDIC Yellow Book - 1999

Most Design by Contractor

Type of Project now Irrelevant

Engineer’s Role in Inspection/Certification

Lump Sum Basis of Payment

More Elaborate Testing Procedure

Similar Risk Profile

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

4
FIDIC Green Book

Straightforward Projects of Small Capital Value

No Sub-Contracting Without Consent

Variety of Pricing Options

Employer Liabilities

No Engineer

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

5
FIDIC Blue Book (2006)

Dredging and Reclamation

With or Without Design by Contractor

Variety of Valuation Mechanisms

Engineer to Inspect and Certify

Defined Risks

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

6
FIDIC Silver Book (1)

For Use With BOT/Private Finance Type Projects

Certainty of Time/Price

Contractor Takes Almost All Risk

“The Contract Price shall not be adjusted to take

account of any unforeseen difficulties or costs”

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

7
FIDIC Silver Book (2)

Contractor Risks:
 Fitness for Purpose
 Employer Design
 Site Conditions

Employer’s Risks:
 Force Majeure
 Changes in Law
 Employer Default
 Limit of Contractor’s Liability
MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL
DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

8
FIDIC Silver Book (3)

Employer’s Representative

Limited Employer Control

The Market

Controversy

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

9
FIDIC Gold Book (1)

Design, Build and Operate Projects

Contractor Designs, Manufactures and Installs Project

Operates Completed Project for 20 Years

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

10
FIDIC Gold Book (2)

Design-Build Period – Risk Profile Very Similar to Yellow

Book

Complex Design Review Provisions

Compensation to Employer for Design Rework

Adjustment for Changes in Technology

Lump Sum Price – Possibly Subject to Indexation

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL
DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

11
FIDIC Gold Book (3)

Operation Service Period

 All Risks Arising From Design or Construction of
the Works (Apart From Employer’s Design)
 All Risks Arising From Operation and Maintenance
of the Works Apart from Employer’s Risks

Asset Replacement Fund

Maintenance Retention Fund

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

12
FIDIC White Book - 2006 Edition

Re-arrangement of Layout

Consultant Only Liable if Lack of Skill, Care and Diligence

Impedance: ‘Scope, Cost or Duration’ of the Services

Varied Services – Agreement First

Currency Risk

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

13
FIDIC Sub-Contract (1)

For Use With FIDIC Red Book Only

Sub-Contractor Assumes All Liabilities of Main Contractor

Under the Main Contract, Subject to Certain Exceptions

Any Design By Sub-Contractor to be Fit for Any Purpose

Indicated by or to be Inferred From the Sub-Contract

‘Pay When Paid’

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

14
FIDIC Sub-Contract (2)

Claims Back to Back With Main Contract

Sub-Contractor Takes Risk of Sub-Contract Works Until Take Over

Under Main Contract

Defects Notification Period Expires as per Main Contract

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

15
FIDIC Sub-Contract (3)

Liability for LADs Limited – 10% of Sub-Contract Sum in

Default

Extension of Time and Cost for Non-Cooperation by Other

Sub-Contractors

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

16
FIDIC: Remaining Publications

Joint Venture Agreement (1992)

Sub-Consultancy Agreement (1992)

Model Representative Agreement (1994)

Contracts Guide

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS

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Thank you very much for your attention

MUNICH │ BERLIN │ BAGHDAD │ BASRA │ERBIL

DUBAI │ CAIRO │ RAS AL-KHAIMAH │ DAMASCUS