Why FIDIC contracts • • • • • • • • • • •
Standard form contracts – international standard forms Applicability – suitable for common law or civil law jurisdictions General conditions – fair, risk balances, world wide, accepted by MDBs and international organisations, tested internationally in different jurisdictions Particular conditions are to tailor standard forms to specific project requirements Projects – Public and private projects, private or IFI funded International standard - used extensively with a 60 year track record, allows for competitive bidding Reduce Costs - Reduce contract negotiation costs, time Extensive training - options - increase knowledge and awareness Contract Guides, publications – support in interpretation of contracts Backed up by FIDIC best business practices and guidance. E.g. - Risk, Integrity, Sustainability, Capacity Building Multi-tier dispute resolution – promote dispute avoidance and effective dispute resolution, international neutral venue for dispute resolution
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FIDIC contracts ecosystem • • • • • • • • • • •
International standard - used extensively with a 60 year track record Development supported - Contracts Committee with 13 projects underway Industry Professionals - 100 plus engaged incl advisors & friendly reviewers Industry Bodies - engagement with stakeholders eg IFIs, Contractors Secretariat resourced - legal, communications, publications and training Training programmes - available, resourced and provided FIDIC best practice backed - E.g. Quality, Risk, Integrity, Sustainability etc International network of expert support - across all aspects of the contracts FIDIC Credentialing - certifying people in use of FIDIC Body of Knowledge Multiple Languages - English, Arabic, Chinese, French, Portuguese, Spanish + FIDIC Contract Awards - started in 2019.
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Why FIDIC contracts for the industry? • • • • • • • • • •
Achieving effective delivery of infrastructure - USD22tn annually Achieve efficiency - through internationally standardised contracts Accepted by stakeholders - IFI’s, national governments, private investors, contractors, consultants Fair contracts - risk balanced, experience based Reduce corruption - well understood procurement and management Basis in law - suit common law or civil code systems Particular Conditions - specific project requirements Adjudication - built into FIDIC contracts to provide for dispute avoidance and effective dispute resolution Guides - from procurement to contracts Event and communications programme - supporting the industry
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Why FIDIC contracts for projects? • • • • • • • • • • •
General Conditions - standardised across the FIDIC suite Particular Conditions - specific project requirements Risk allocation understood - more certainty and clarity for all the parties Consistency and standardisation - knowledge base built in all organisations Tendering efficient - tenderers understand and have confidence pricing risk Negotiations focused - on project delivery Project staff - large pool of experience and expertise Contract administration - standardised and efficient Guides - readily available resources supporting users in the field DAABs - built in for dispute avoidance and effective dispute resolution Expert advice - readily available
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FIDIC contracts New professional services agreements
Procurement and best practice
Works contracts
Guides
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Which FIDIC contract to use
Which FIDIC book?
Is the contract largely underground works?
No
Is the contract largely dredging?
No
Is the contract of small value/short duration or the works repetitive/simple?
No
The employer wishes to do most of the design of the works and for the contractor to execute the works
No
The employer wishes the contractor to carry out both the detailed design and the execution of the works
No
The employer wishes a contractor to take total responsibility for design, supply, installation and construction
YES
YES
YES
YES
YES
YES
Emerald book
Dredgers Contract Blue-Green Book
Short Form of Contract Green Book
Construction Contract 1999/2017 Red Book
Plant & DB Contract 1999/2017 Yellow Book
EPC/Turnkey Contract Silver Book
• Sector specific for dredging works • Employer design or design build • Remeasurement, lump sum or cost plus • DAB-Arbitration
• Simplified structure • Remeasurement, lump sum or cost plus • No express provision for Engineer • Adjudicator-Arbitrator
• Sector specific for underground works • Derived from FIDIC Yellow book
• Generally, remeasurement contract (lump-sum also possible • Engineer Certification (dual Role) • Multi-tier dispute resolution
• Generally Lump sum • Engineer Certification (dual Role) • Multi-tier dispute resolution
• higher degree of certainty of final price and time • Generally Lump Sum • Significantly more Risks shifted to the Contractor • No certification
No
Is the contract for design-build operate and maintenance
YES
DBO Contract Gold Book
• The contractor undertakes design and execution of the works and, • thereafter, maintenance and operation
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Which FIDIC contract to use
Which FIDIC book?
Is the consultancy contract for professional services
No
Is the JV Agreement for Consultants
No
Is the Sub-Consultancy Agreement for professional services
No
Is the Sub-Contract to be used with Red Book 1999
No
Is the Sub-Contract to be used with Yellow 1999
No
Is the Construction Contract for MDB funded projects
YES
YES
YES
YES
YES
YES
White Book
JV Agreement for Consultants
Sub-Consultancy Agreement
Sub-Contract
Sub-Contract
MDB Harmonised version
• Mainly for feasibility, design, construction administration
• Suited to be used with White book
• Suited to be used with White book
• Suited to be used with Red 1999. can be used with Pink Book; • operates back-to-back with main contract
• Suited to be used with Yellow 1999; • Operates back-to-back with main contract
• Harmonised version of 1999 Red Book • With bank specific terms, i.e. fraudulent or corrupt practices, staff and labour, etc
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Contract types – a worked example Construction contract:
Employer
Consultant
Sub contractor
Functional link
Sub contractor
Contractor
Sub contractor
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The guidance notes in the contract are there to help users to prepare the tender documents, the contract and draft the particular conditions, to make any modification required for a specific project or for compatibility with governing law. This guidance helps to ensure that the conditions of the contract are tailored to specific contract requirements.
forms
The forms provide the ability to append project information. This is also where parties can append project specific data and any particular conditions to amend general conditions if they needed. Any particular conditions for works contracts should be in the spirit of FIDICs golden principles . Forms of securities provide templates for bank and parent company guarantees.
guidance
The general conditions in the FIDIC contract provide a reliable, tested and sound set of contractual rules. Allocates risk between the parties on fair and equitable basis. These conditions are not editable (in most cases) and are intended to set the standard for construction contracts globally. They set out the rules of engagement, responsibility, change management, disputes, liability, risk and financial management
General Conditions
The structure of FIDIC contracts
This is applicable to all FIDIC works contracts
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FIDIC Golden Principles FIDIC's Golden Principles set out the essential characteristics of its general conditions of contract that should not be amended if the contract is to be regarded as a genuine FIDIC document. • GP1: The duties, rights, obligations, roles and responsibilities of all the contract participants must be generally as implied in the General Conditions, and appropriate to the requirements of the project
• GP2: The Particular Conditions must be drafted clearly and unambiguously • GP3: The Particular Conditions must not change the balance of risk/reward allocation provided for in the General Conditions • GP4: All time periods specified in the contract for contract participants to perform their obligations must be of reasonable duration • GP5: Unless there is a conflict with the governing law of the contract, all formal disputes must be referred to a Dispute Avoidance/Adjudication Board (or a Dispute Adjudication Board, if applicable) for a provisionally binding decision as a condition precedent to arbitration
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General Features of FIDIC Suite of Contracts • • • • •
Commencement Time for Completion Accepted Contract Amount/Contract Price Employer’s Financial Arrangements Risk Allocation - Contractor, Employer or shared •
• • •
unforeseeable physical conditions, fossils and geological findings, access to site, design responsibility, changes, errors in the ERs, Site Data, delays by authorities, delayed instructions, unforeseeable shortages in goods or services, changes in legislation, force majeure events/exceptional events, etc.
Right to Very, Value Engineering The dual role of the Engineer /RED and Yellow Project security • • • •
Advance Payment Guarantee Performance Guarantee Insurance Retention money
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Translations also cover a larger area English Arabic Bahasa Bosnian Bulgarian Chinese Croatian Czech Estonian Georgian German Hungarian French Iranian (Farsi) Italian Japanese
Korean Latvian Laotian Lithuanian Mongolian Polish Portuguese Romanian Russian Serbian Slovakian Spanish Thai Turkish Ukrainian Vietnamese
2016 assets: assets: $2016 8.2 bn $ 8.2 bn
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Chinese translations Five FIDIC standard contracts now available in Chinese language The publication of the documents is the result of a major translation and publishing licence agreement FIDIC signed last year with Beijing-based China Machine Press, which will enable FIDIC contracts and other key documentation to be translated and published in Chinese. The publication of the five contracts will help to widen the dissemination of FIDIC publications in the Chinese market and due to increased Chinese investment in international markets, the move will also provide a harmonised approach allowing Chinese consultants and contractors to better comprehend FIDIC contracts in their local language enabling them to use the market-leading documents internationally.
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Numbers and operations
Source: ODI
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Private Sector
Stakeholders and FIDIC Body of knowledge users Government
IFIs
International organisations
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