FIDIC RED BOOK & YELLOW BOOK

CHECKLIST OF POTENTIAL AMENDMENTS

The following has been prepared as a check-list in order to help CLIENT to identify which, if any,
amendments, CLIENT would like made to the FIDIC Conditions of Contract for Construction for Building
and Engineering Works Designed by the Employer (the Red Book) and the FIDIC Conditions of Contract for
Plant and Design-Build (the Yellow Book).

The following list is not exhaustive, given that CLIENT intends to make minimal changes to the Red Book
and Yellow Book. If the project team have encountered particular issues on other projects which they wish
to see addressed they should identify those issues.

The columns headed ‘red book’ and ‘yellow book’ are intended to give you a place to respond (so that you
can differentiate between the two (if required).

Clause Potential amendment Red Book Yellow Book

Throughout Amend to remove references to

Tender, Letter of Tender, Letter of
Acceptance, etc. Where commercial
details are included within an
Appendix to Tender appended to the
Letter of Tender they would now be
included in an Appendix / Contract
Particulars appended to the Contract
Agreement (which should make the
contract fairly quick to prepare).

The idea is to exclude tender

documentation – not really an issue of
risk allocation more an issue of
retaining clarity.

1.1.3.1 Base Date

Amend the Base Date (i.e. the date

from which the Contractor accepts risk
of change in law, etc.) to be the
effective date of the Contract (it is
currently 28 days prior to tender
submission).

This is a risk allocation point, but is

probably fairly low level for both
parties.

1.1.6.5 Laws

Broaden the definition of "Laws" to

ensure that the requirements of all
applicable governmental entities are
caught. This should not be an issue.

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Compliance with the various interested

parties’ requirements in Dubai should
be expected and where those
requirements are amended change in
law should apply.

1.7 Assignment

Broaden the provision of assignment

to permit intra group assignments and
any other assignments and novations
which may be required given the
project structure (e.g. assignment by
CLIENT to project lenders).

The point being to maximise the

ability to re-structure and/ or procure
finance.

1.10 / 1.11 Employer's Use of Contractor's

Documents / Contractor's Use of
Employer's Documents

Will there be any specific IP

requirements? E.g. will you wish to
restrict publicity linked to 2020?

Consider whether a licence to use the

IP created by or on behalf of the
Contractor is sufficient. The clause
could be amended such that the
Contractor retains only its IP that
existed as of the date of the Contract
and any new IP would be owned by
CLIENT. This is most likely to be
relevant for ‘iconic’ buildings.

2.1 Right of Access to the Site

Amend to clarify that the Contractor is

only entitled to schedule and cost relief
if and to the extent the Employer's
failure to provide access within the
prescribed time is not caused by the
Contractor. See the comments below
regarding clause 20.1. This could be
caught by a general condition
precedent to the Contractor's
entitlement to relief under the contract
(i.e. the Contractor will only be
entitled to relief to the extent the event

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for which it seeks relief was not

caused by the Contractor).

2.1 (b) and Right of Access to the Site (and

throughout throughout Contract)

Wherever the agreement refers to

‘reasonable profit’:

(i) delete – which is not unusual, but

perhaps not very fair; or

(ii) replace with a defined term

"Profit" or ‘reasonable profit’
which specifies a return e.g. 10%.

2.2 Permits, Licences or Approvals

We would normally make it clear that

the Contractor is required to procure
all necessary permits, licences and
approvals, save for those expressly to
be procured by the Employer and that
the Contractor must, where necessary
and legally permissible, transfer same
to the Employer.

Do you have clarity as to the permits

required for this particular
development?

2.4 Employer's Financial Arrangements

We would normally delete this clause

(i.e. remove the obligation for the
Employer to disclose its financial
arrangements to the Contractor).

Given the status of the event it should

not be an issue as it is likely to be seen
very much as a governmental backed
project irrespective of the actual
corporate structure.

4.1 Contractor's General Obligations

We would typically include: (i) a

requirement for the Contractor to
perform the work in accordance with
good or best industry practice (which
would be defined and benchmarked

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against projects of similar size, scope

complexity etc.), the Specifications
and Drawings and applicable Laws;
and (ii) a statement that the Work
includes all work reasonably inferable
in accordance with good (or best)
industry practice as required for proper
performance of the Work.

Regarding the Red Book, if the

Contractor's Work includes design for
which the Contractor is provided with
design work from the Employer (or the
Employer's other contractors), consider
whether to amend the clause to require
the Contractor to verify and be liable
for such Employer (or other
contractor) design works. This could
be limited to a buildability review of
the relevant part of the Employer’s
design (only).

4.2 Performance Security

Amend to require the Contractor to

increase the amount of the
performance security if the contract
price is increased, to correspond with
such contract price increase.

4.3 Contractor's Representative

Is CLIENT more likely to focus on the

CVs of the Contractor personnel
included in the Contractor’s tender
submission rather than relying on the
wider track record of the Contractor?
If so, we would typically include key
personnel provisions applicable to a
limited number of personnel holding
strategically important roles within the
Contractor’s site management team
e.g. Project Director, Commercial
Director, Head of Health & Safety, etc.
Absent certain circumstances (e.g.
resignation), removal and replacement
of these key employees would require
the Employer's prior consent.

4.4 Subcontractors

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Does CLIENT wish to limit Contractor

subcontracting to subcontractors who
have been approved by CLIENT in
advance?

We sometimes see clauses requiring

the Contractor to assign to the
Employer all benefits the Contractor
may have under its subcontracts,
which extend beyond the defects
notification period. An alternative is to
include a requirement to provide
subcontractor collateral warranties for
key subcontractors.

4.6 Co-operation

Consider whether enhanced

cooperation and coordination protocols
should be included to mitigate the
Contractor schedule and cost relief
resulting from non-exclusive access to
the Site. Does the project management
team have any particular requirements
in this regard – particularly given that
you might have a number of
contractors in close proximity?

4.8 Safety Procedures

This provision may require minor

amendments to the extent the
Contractor is not the only contractor
providing fencing, etc. for the Site. If
some contractors are required to work
within the site boundaries of the
Contractor or the Contractor will be
required to work within the Site
boundaries of any other contractor, we
would typically include an obligation
to comply with the applicable
contractor's HSE policies and
procedures.

Does CLIENT have any particular

2020 HSE requirements? Again, given
the possible close proximity of a
number of contractors consider
whether you might simply want to
impose site wide H&S requirements
(consider also the interface with

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worker welfare).

4.9 Quality Assurance

Does CLIENT have particular 2020

QA requirements that should be
included? We also typically include a
requirement that the quality assurance
system instituted by the Contractor is
approved by the Employer.

4.12 Unforeseeable Physical Conditions

Unforeseeable physical conditions are

the Employer’s risk. We understand
that you intend to maintain this risk
allocation.

4.19 Electricity, Water and Gas

Primarily a specification issue, but

ensure that it is clear which party is to
procure the connections to permanent
utilities and whether the cost is
included or excluded.

Who will be responsible for any delays

in the procurement of the permanent
utilities?

7.1 Plant, Materials and Workmanship

Replace the reference to 'good practice'

with good (or best) industry practice.
We typically also include the
requirement that the execution of the
Work be in accordance with applicable
law.

7.7 Ownership of Plant and Materials

For clarity, consider a statement that

notwithstanding the transfer of
ownership to Plant and Materials from
the Contractor to the Employer prior to
delivery, as applicable, the Contractor
remains responsible for the care and
custody of (and risk of loss or damage
to) the Plant and Materials until the
Taking-Over Certificate is issued or
deemed issued.

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8.1 Commencement of Works

We sometimes see this amended to

require the Contractor to commence
the Work within a specified period of
time from the Commencement Date, or
on the Commencement Date.
Currently the Contractor is required to
commence the Work "as soon as
practicable after the Commencement
Date".

8.4 Extension of Time for Completion

We often see ‘concurrent delay

clauses’ where, if two or more events
cause delay and at least one of those
events is at Contractor's risk, the
Contractor is not entitled to an
extension of time to the extent of the
concurrency.

It may also be worth including details

of how any EOT claims should be
established, rather than have to argue
the merits of the various alternate
analysis methodologies. Doe the PM
team have any preferences?

8.6 Delay Damages

Currently the delay damages apply to

delay to the overall completion date.
Consider whether CLIENT would like
damages to accrue for sections/discrete
portions of the Work as well. NB we
sometimes see clients get carried away
with this – if liquidated damages for
delays in completion of discrete
elements of the works are to be applied
then they should be linked to a loss
which will be incurred if that element
of the works is completed belatedly.

11.7 Right of Access

You might want to insert a paragraph

stating that such access is subject to
reasonable prior notice being given to
CLIENT, compliance with the
CLIENT's security, health and safety

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requirements at the site and provided

that the Contractor does not interfere
with the operation of the Works.

13.8 Adjustments for Changes in Cost

If the Contract Price will not be

adjusted for increases/decreases to the
Contractor's costs (e.g. labour, goods,
etc.), consider, for clarity, replacing the
text of clause 13.8 with a paragraph
stating that the Contract Price will not
be subject to any adjustment
notwithstanding any increase in the
Contractor's costs.

14 If the red book is going to be used for

a lump sum contract the calculation of
the contract price and the monthly
payments needs to be revised (the base
contract is a re-measurement contract).

14.13 Final Payment

For clarity, consider including a

paragraph that requires the Contractor
to pay any amounts owed by it to
CLIENT within a specified period of
time, if after set-off from the final
payment payable to the Contractor,
CLIENT is still owed amounts from
the Contractor under the contract.

15.2 Termination by Employer

Consider including CLIENT

termination rights if the maximum
delay liquidated damages become
payable.

16.4 Payment on Termination

Consider whether to delete the

Contractor's entitlement to lost profits
in the event the Contractor terminates
the contract on account of an
Employer default. This is a quite
common amendment, although
perhaps not entirely fair so perhaps not
one to adopt.

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17.1 Indemnities

Consider whether to require the

Contractor to also indemnify CLIENT
for its failure to comply with
applicable laws.

17.6 Limitation of Liability

For clarity, amend the exclusion of

consequential losses to provide that the
Contractor is responsible for
consequential losses in the form of
delay liquidated damages.

Also consider excluding the following

from the Contractor's overall liability
cap (i) Contractor's costs of remedying
defects under clause 11 (Defects
Liability) and (ii) the costs incurred by
CLIENT to complete the works (for
which the Contractor is responsible) in
the event the contract is terminated by
CLIENT for cause.

19.1 Definition of Force Majeure

Consider, for clarity, including a list of

events that will not constitute ''Force
Majeure'' (e.g. foreseeable adverse
weather conditions and economic
hardship).

19.4 Consequences of Force Majeure

Certain Force Majeure events are

wholly Employer's risk (i.e. the
Contractor is entitled to schedule and
cost relief in the event of, amongst
other things, wars, rebellion and
strikes or lockouts). Consider revising
this clause so that each party bears its
own costs in the event of a force
majeure. The Contractor would,
however, remain entitled to an
extension of time in the event of a
Force Majeure.

20.1 Contractor's Claims

Amend this clause to provide that the

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Contractor is only entitled to cost and

schedule relief under the contract: (i)
to the extent the event entitling the
Contractor to relief is not caused by
the Contractor; and (ii) the Contractor
has taken reasonable steps to mitigate
the costs or delay incurred as a result
of the event.

Also consider limiting the Contractor's

claims to those claims that can be
shown, individually, to have an impact
on the schedule (critical path perhaps)
and/or result in additional cost (i.e.
exclude cumulative effects claims
where the event in isolation has little
or no impact, but the totality of events
(e.g. numerous variations) could be
seen to have a more substantial
impact).

20.6 Arbitration

Amend to include the seat of

arbitration.

For clarity, consider adding a clause

stating that the performance of the
contract shall continue during any
dispute resolution process unless the
Works have been suspended under the
contract or the contract has already
been abandoned, repudiated or
terminated.

Are there any third party interests

which need to be dealt with, such as
the requirements of stakeholders,
neighbours, legacy organisations for
after 2020?

Consider including a clause which

requires the Contractor to enter into
collateral warranty agreements with
specified ''beneficiaries'' (e.g. lenders)
upon CLIENT's request.

General Anti-Bribery and Corruption

Additions
Consider including a comprehensive
anti-bribery and corruption provision.

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Boilerplate

We normally include:

 Interpretation;

 Entire agreement;

 Non-waiver;

 Severability;

 Further assurance;

 Amendments;

 Counterparts;

 Third Party rights;

 Confidentiality provisions;

 Prior work clause stating that

the any prior work must be in
accordance with and is subject
to the contract;

none of which should be controversial.

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