General Overview of FIDIC

Contract Forms
Posted on November 2, 2010 5 Comments
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What is FIDIC?
FIDIC stands for the Federation Internationale des Ingenieurs-Counseils
(International Federation of Consulting Engineers) established in 1913
by a group of French and Swiss engineers. The foundation was found in
an effort to create a uniform set of documentation for contractual
agreements which are applicable for use in different types of
construction projects, and also to simplify the bidding processes to
become more user friendly. Keep in mind that most FIDIC forms of
contracts are agreements between the employer and the contractor.
The reason behind FIDICs popularity
FIDIC was written in a user friendly and simple language, with clear
and logical structure. Moreover, the FIDIC forms of contracts are
consistent in their language and structure with each other making it
easy and practical to set up two, or even more contracts for the same
work (e.g., employer-contractor and contractor-subcontractor) with
minimal conflicts and adjustments between the contracts, at the same

time, each of the contracts is complete and can stand by itself. Most
importantly however, the FIDIC standard forms have been tested by
the industry for extensive period of time in many jurisdictions all over
the world. This not only allowed the FIDIC forms to improve, but also
allowed the construction industry to get used to, and like, the FIDIC
forms. If it is known by one thing, the construction industry is very slow
to adopt change (specially major ones).

What are the types of FIDIC forms (Contracts)?

FIDIC forms (contracts, and sometime called books) are divided by
colours to make it easy to identify their operation. The major ones are
the following four:
Short Form of Contract (Green Book) or
the Mini-Red Book; Construction (Red Book) which includes

Conditions of Subcontract. Construction (Red Book)

MDB Edition or the Pink Book;
Plant and Design-Build (Yellow Book);
and EPC Turn-Key Projects (Silver Book).
The Red and Yellow Books are the most popular in the list.

Other books published by the FIDIC:

Design-Build and Turnkey (Orange Book);
Design, Build and Operate Book;
Employer-Consultant form of contract (White Book);

Tendering Procedure (Blue Book);

Dredging and Reclamation Work (They ran out of colours here, no
seriously it has no colour).
When it comes to general construction the first four (i.e., Green, Red,
Yellow, Silver) are the most relevant, for that they are introduced
further bellow. In later articles the Red Book will be discussed in great
depth.
The Green Book
This is the Short Form of Contract. It is used mostly for simple,
repetitive, short duration jobs. Some of them with no sub-contractors
or engineers (consultants) involved. The general contractor often
carries both the design and the construction process.
The Red Book.
This is for the very common job works, designed mainly by the
employer, may require some plant design from the contractor, and the
project is administrated by an engineer (consultant) who is hired by the
employer.
The Yellow Book
The contractor is responsible for the plant design, building and
engineering works. Yet still the employer might be required to carry
some design.

The Silver Book

The contractor carries the engineering, procurement and construction
tasks up to the final delivery of a fully equipped, tested and ready to
run facility.

What is the base for creating all these contract forms?

It is all about risk allocation between the employer and the contractor.
What essentially maters is, who is responsible for the design of the
project, disregarding who is actually doing the design. This makes the
issue all about Risk V.S. Cost. The more the risk taken by the
contractor, the higher the cost payed by the employer. So in relation to
the books, the Red Book sits on the lower end of the risk spectrum for
the contractor which reflects a lesser consideration (lesser pay). The
Yellow is a bit risker, and finally the Silver allocates all the risk to the
contractor, therefor higher consideration.

Have you heard before about the MDB Harmonized Edition of

the Red Book?
FIDIC was successful in encouraging a group of international lenders
(i.e., MDB) to adopt their standards by introducing an adjusted copy of
the Red Book called the MDB Harmonized Edition, which differs from
the regular Red Book by giving more protection to the lending
institution. The MDB group came to make the MDB edition a standard
in most of their bidding documents. MDB stands for Multilateral

Development Banks, which are a group of banks lead by the World

Bank.

What is the composition of FIDIC contracts?

FIDIC contracts consists mainly from:
1.

Contract Agreement;

2.

Letter of Tender;

3.

Letter of Acceptance;

4.

Conditions of Contract;

5.

Specifications;

6.

Drawings;

7.

Schedules;

8.

Dispute Adjudication Agreement.

What else can you tell me?

FIDIC contracts consists of two types of terms and conditions, general
conditions and particular conditions. The general conditions are the
standard combination of contract provisions, while the particular
conditions are the result of negotiation between the parties and are
designed to modify or delete some of the general conditions. If you are
a contractor pay attention mostly to the particular conditions, they will
reflect the conditions of work on the contractual level.
Interested to know more? Follow this link (Principles of the Red Book)

SamirK.com by Samir Kadhim 2010

Source article written by: Georgy Borisov
Posted in FIDIC Tagged construction, fidic, law