THE SPREAD OF FIDIC CONTRACTS THROUGHOUT THE WORLD an

insight to their usage.

by Paul Battrick.

Do you want to learn more about FIDIC, please see the programme in our calender
Annual NORDIC FIDIC conference
18th 19 th of June 2008 in Copenhagen

The FIDIC forms now cover a wide range of projects and it is unlikely that any European
contractor or consultant regularly working outside Western Europe would not be
proffered FIDIC conditions by project owners with some reasonable frequency and
consequently unlikely that any sub-contractors would not be proffered FIDIC-derived
conditions by contractors working to FIDIC conditions under the main contract.
Knowledge of FIDIC conditions and tendering procedures should not be regarded as an
essential post-contract project tool solely on FIDIC-projects but an essential commercial
tool for use and of benefit company-wide from commencement of project procurement (in
the case of owners and their consultants) or commencement of tendering (in the case of
contractors and consultants). This is particularly so as the popularity of FIDIC contracts
spreads with public/governmental authorities but also as the forms of contract spreads as
it has done with the more recent additions to the family of forms.
The abbreviation FIDIC (Federation Internationale des Ingenieurs-Conseil) used to be
synonymous with construction contracts in the Middle East. Until 1999 if you mentioned
the FIDIC forms of contract the first, and perhaps only, thing to come to mind would be
Red and Yellow Books; these being the conditions of contract for civil engineering and
mechanical and electrical works or plant construction respectively.
Since 1994, when the FIDIC task group was given the job of updating the Red and
Yellow Books, the mould was broken and FIDIC not only introduced a new book, (the
Orange Book for design, build and turnkey works) but 5 years later discarded the Red,
Yellow and Orange Books for a completely new suite of contracts, known colloquially as
the Rainbow Forms.
In preparing the new forms FIDIC were conscious that there had been criticisms of the
role of the Engineer under the previous Red and Yellow Books, and that these two forms

did not sit well with the new methods of procurement and the roles and responsibilities
demanded by increasingly sophisticated Contractors and Employers. Perhaps it was felt it
would be better to start with a complete new suite of contracts rather than trying to update

or hold onto the three earlier forms. Whatever the reason FIDIC sought to maintain its
aim of drafting contracts that form a basis for good project management with a fair
allocation of risk between the parties.
In 1999 FIDIC produced its Rainbow Forms of Contract comprising:

The Red Book Conditions of Contract for Construction;

The Yellow Book Conditions of Contract for Plant and Design-Build;
The Silver Book - Conditions of Contract for EPC/ Turnkey projects;
The Green Book The Short Form of Contract.

The drafting committee made a significant cultural shift away from the choice of the
earlier forms of contract being determined by the description of the construction works,
to the use of the forms being determined by the extent of design and other responsibilities
assumed by the Employer and the Contractor. Where works are predominantly designed
by the Employer, then the Red Book would be the appropriate form of contract, and
where works are predominantly designed by the Contractor the Yellow Book would be
the appropriate form regardless of whether the works were heavy civils or M&E.
The FIDIC forms can be applied to a wide range of differing engineering and
construction projects; from traditional civil engineering to hi-tech windmills and heavyduty oil and gas process plants. The description of the works is contained in either the
Specification (Red Book) or Employers Requirements (Yellow and Silver Books) and the
roles and responsibilities of the parties and the Engineer/Employers Representative are
contained in the conditions. If a power developer wished to assume design responsibility
for the power plant himself then he could use the Red Book to contract a constructor,
even if such would be an uncommon choice of procurement.
The current Red and Yellow Books bear little resemblance to their well-known
predecessors. For instance, in the current Red Book there is a change to the role of the
Engineer who is now deemed to act for the Employer unless expressly stated to the
contrary, whereas under the old form he was required to act impartially. The new form
now requires an on demand bond, and under both the current Red and Yellow Books
the Contractors obligation is one to deliver the works that are fit for purpose, where no
such obligation previously existed. It is also significant the new Red Book does not use
the words civil engineering anywhere in its title, and similarly the Yellow Book does

not use the words electrical and mechanical works. There are many other examples of
the significant change in emphasis and intent between the current and earlier versions.
The Silver Book Conditions of Contract for EPC/ Turnkey projects are recommended for
use on process, power and private-infrastructure projects where the Contractor executes
the Engineering, Procurement and Construction. Risks for completion to time and quality
are wholly transferred to the Contractor, the form being only suited to experienced

Contractors who are familiar with sophisticated risk management techniques. FIDIC also
point out that this form is not suitable to those projects with high unforeseen risk.
Departing from tradition there is no reference to the Engineer; perhaps due in part to
the potentially reduced role for the Engineer where the Employer has a reduced
influence on the engineering and the validation of engineering is more concentrated on
validating the end-performance and validating the potential ease of operation,
maintenance and spares. For example, the Contractor assumes responsibility, subject to
some exceptions, for the accuracy of the Employers Requirements.
The drafting committee also sought to reduce the number of clauses in all of the new
contracts. The Orange Book contained 20 clauses, as now do the Red, Yellow and Silver
Books. Previously, the Red Book had 72 clauses, although the amount of words in the
current forms has increased. Additionally, the drafting committee sought to standardise
the terms across the Rainbow Suite so that wherever possible the same words and
definitions have the same meanings and the clauses are now grouped in a logical manner
across all the contracts. Therefore, knowledge of one form of FIDIC conditions is of
immediate benefit in respect of other forms.
In all three documents, there is a significant core of common conditions with little
significant revision between them. An example of where the provisions differ is the
treatment of responsibility for ground conditions. On this point, you would be forgiven
for thinking that provisions of the Silver Book would be the same as the Yellow Book.
Not so, the treatment of ground conditions between the two is quite different. Under the
Yellow Book, the Contractor does not take responsibility for ground conditions, whereas
he does under the Silver Book. Users should not fall into the trap of thinking that both
contracts are pretty much the same, simply because under each the contractor is primarily
responsible for design.
The Green Book was produced with the guidance that is should not be used for contracts
of more than U$500,000. The Green Book is a flexible document, which allows for a
range of differing options to be incorporated via the Appendix. Care has been taken to
use simple wording throughout the document and the form can be used for projects with

minimal Contractor design to situations where full Contractor design is required. The
term Engineer does not exist within the form, but instead the contract provides that it is
a member of the Employers personnel that is to be nominated as the authorised person
who fulfils the functions normally undertaken by the Engineer.
FIDIC did not stop in 1999 and since has added further forms:

The Turquoise Book - FIDIC Form of Contract for Dredging and Reclamation
Works published in January 2006;
The MDB Conditions - Conditions of Contract for Construction MDB
Harmonised Edition published in May 2005 and revised in March 2006;
The White Book Model Services Agreement revised in October 2006;

Currently FIDIC has also published two contracts is test and pre-press editions:
The Model Representative Agreement - intended for Consultants wishing to enter
into a contract with a Representative for the provision of services in a foreign
country was published as a Test Edition in 2004;
The DBO Contract - Conditions of Contract for Design, Build and Operate
Projects published as a Pre-press Seminar Edition in September 2007 with the
complete document to be published in 2008.
FIDIC stated in 2004 that FIDIC is of the opinion that a Subcontract form would be a
desirable addition to FIDIC's publications and it is possible that a Subcontract form may
be added to the existing sets of conditions; presumably as a Subcontract form to the red
book first.
The FIDIC forms now cover a wide range of projects and it is unlikely that any European
Contractor or consultant regularly working outside Western Europe would not be
proffered FIDIC conditions by project owners with some reasonable frequency and
consequently unlikely that any sub-contractors would not be proffered FIDIC-derived
conditions by Contractors working to FIDIC conditions under the main contract.
Employers would also be well advised to consider FIDIC conditions where standard
conditions suited to the form of procurement are not readily available in either the
country where the permanent works will be finally installed (site) or the governing
jurisdiction and where they wish to avoid the risks and expense of preparing a bespoke
contract. Employers may even benefit from proffering FIDIC conditions where potential
bidders are from different countries and may perceive a familiar and more mutual (and
possibly fairer than standard) form of contract as increasing the attractiveness of
tendering and reducing the potential contracting risks.

Both the Government of Romania and Abu Dhabi Investment Authority adopted the
FIDIC forms of contract in 2006 (albeit with some bespoke particular conditions
implemented); both of whom are major clients to the construction industry.
Many of the Development Banks will adopt the MDB Conditions in their standard
bidding conditions, although a number have, for many years, required their borrowers or
aid recipients to follow the FIDIC Conditions of Contract for Construction. MDBs
adopting the conditions of particular relevance to Europe are the World Bank, Council of
Europe Development Bank (CEB) and the European Bank for Reconstruction and
Development (EBRD). Even where the Employer is not responsible for design then
EBRD projects are often tendered upon the FIDIC Yellow and Silver Books.
If you want to learn about the FIDIC, see your NORDIC Conference programme 2008.
Best Regards,
Nohr Con Team