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. Today, FIDIC is the largest international global representative body formed of national associations of consulting engineers, who come from more than countries worldwide. The FIDIC Red Book is the standard, and most commonly used, construction contract form in all projects where the design is provided by the Employer, following the traditional procurement route of Design, Bid and Build. The Contractor is paid on a measurement basis for the actual quantities of work performed. The accepted Contract Amount is based on estimated quantities. The Red Book has significantly evolved since its first published edition in
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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.
Today, FIDIC is the largest international global representative body formed of national associations of consulting engineers, who come from more than countries worldwide. The FIDIC Red Book is the standard, and most commonly used, construction contract form in all projects where the design is provided by the Employer, following the traditional procurement route of Design, Bid and Build.
The Contractor is paid on a measurement basis for the actual quantities of work performed. The accepted Contract Amount is based on estimated quantities. The Red Book has significantly evolved since its first published edition in The Pink Book replaced earlier editions from and The Contractor is usually paid on a lump sum basis. The Yellow Book was published for the first time in , with subsequent revisions. The design is carried out by the Contractor and payment is usually on a lump sum basis.
The FIDIC Rainbow Suite has been translated into a number of different languages in an attempt to avoid problems with unofficial and inaccurate translations. The most recent version was published in 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. The first edition of the Gold Book was published in 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 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. The Red Book will naturally be preferable if the Employer has more experience in design and wishes to have a significant role in the design process. The Silver Book is usually preferable if no major unknown risks exist and the Employer prefers to have more security in terms of price and time.
All FIDIC Contracts also include rules for the adaptation of agreed contract amounts and rules for the extension of time for completion and variation procedures. They all require experience and skilful staff, both on behalf of the Employer as well as on behalf of the Contractor, including the Engineer, who is to be independent and impartial.
FIDIC Silver Book: A companion to the 2017 EPC/Turnkey Contract
Under the usual arrangements for this type of contract, the entity carries out all the Engineering, Procurement and Construction: providing a fully-equipped facility, ready for operation at the "turn of the key". This type of contract is usually negotiated between the parties. These risk sharing principles have been beneficial for both parties, the Employer signing a contract at a lower price and only having further costs when particular unusual risks actually eventuate, and the Contractor avoiding pricing such risks which are hard to evaluate. These risk sharing principles are continued in the new updated versions of the Red and Yellow Books. During recent years it has been noticed that much of the construction market requires a form of contract where certainty of final price, and often of completion date, are of extreme importance. Employers on such turnkey projects are willing to pay more - often considerably more - for their project if they can be more certain that the agreed final price will not be exceeded.
FIDIC (Silver Book) - EPC Contract - Original.pdf
For the purposes of this article, our comments relate to the use of the Silver Book in that context, rather than applying more generally to all uses of the Silver Book, although a number of our comments will also apply to other geographies and sectors, and where construction is being financed other than by limited recourse debt. The Silver Book represents a turnkey, fixed price, lump sum arrangement, whereby the contractor assumes the majority of key construction risks. It is recognisable to the vast majority of the international contracting community, and has thus gained a foothold as a useful template on which to base an EPC contract. The contractor assumes the majority of risk on key matters such as design, specifications, time, price, site conditions and certain unforeseen risks. This sets it apart from the Red and Yellow Books, where the Employer retains a number of these key risks, in line with the purpose and scope for which the contract is being used. The difference in risk allocation between the FIDIC suite of contracts has been reflected in the market by differential pricing even taking into account the differences in scope for which the different Books were designed , namely, a contractor bidding under a Red Book risk profile is likely to offer a lower price than for a Silver Book risk profile. In project financed transactions, the preference for a Silver Book allocation has arisen from the need to ensure price and completion date certainty given that the project SPV generally does not have a balance sheet capable of absorbing cost increases beyond levels covered by its committed financial resources.
Download: Fidic Silver Book 2017 Pdf Download.pdf