The Triple Threat | Article on Global Resession | Harsh Kumar
12953021.ppt
1. 1
Brief Introduction to FIDIC
- Types of Manuals -
Motto: “Little knowledge is more dangerous than no
knowledge at all!”
2. FIDIC Conditions of Contract
FIDIC – stands for “Fédération
Internationale des Ingénieurs Conseils”
Headquarters in Geneva, Switzerland
Further information at www.fidic.org
3. The Parties in a FIDIC Contract
Contracting Authority/ Employer
Contractor - Contract between Employer &
Contractor under Red/ Yellow FIDIC
Engineer - Contract between Employer &
Engineer
Engineer to administer FIDIC Contract on
behalf of Employer
5. FIDIC Conditions of Contract
Types of Manuals
FIDIC “New Red Book”:
The Conditions of Contract for Construction
“Which are recommended for building or engineering works
designed by the Employer, or by his representative, the
Engineer. Under the usual arrangements for this type of
contract, the Contractor constructs the works in accordance
with a design provided by the Employer. However, the works
may include some elements of Contractor – designed, civil,
mechanical, electrical and/or construction works”
7. FIDIC Conditions of Contract
Types of Manuals
FIDIC “New Yellow Book”:
Conditions of Contract for Plant Design – Build
“Which are recommended for the provision of electrical and
mechanical plant, and for the design and execution of
building or engineering works. Under the usual arrangements
for this type of contract, the Contractor designs and produces,
in accordance with the Employer’s Requirements, plant
and/or other works; which may include any combination of
civil, mechanical, electrical and/or construction works”.
9. FIDIC Conditions of Contract
Types of Manuals
FIDIC “New Silver Book”:
Conditions of Contract for EPC (Engineering, Procurement,
Construction)/ Turnkey Projects
“Which may be suitable for the provision on a turnkey basis of a
process or power plant or factory or similar facility, or of an
infrastructure project or other type of development, where (i) a
higher degree of certainty of firm price and time is required, and
(ii) the Contractor takes total responsibility for the design and
execution of the project, with little involvement of the Employer.
Under the usual arrangements for turnkey projects, the Contractor
carries out all engineering, procurement, and construction EPC:
providing a fully equipped facility, ready for operation at the “turn
of a key”.
10. FIDIC Conditions of Contract
Types of Manuals
FIDIC “New Green Book” – the “Mini-Red Book”:
Short Form of Contract.
“Which is recommended for building or engineering works of
relatively small capital value. Depending on the type of work
and circumstances, this form may also be suitable for contracts
of greater value, particularly for relatively simple or repetitive
work or work of short duration. Under the usual arrangements
for this type of contract the Contractor constructs the works in
accordance with a design provided by the Employer or his
representative (if any), but this form may also be suitable for a
contract which includes, or wholly comprises, Contractor-
designed civil, mechanical, electrical and/or construction
works.
11. Green Book -
Low value,
simple works
100%
0%
Amount of design by Contractor
•
Risk
transfer
to
Contractor
•
Certainty
of
outturn
price
Red
Yellow
Silver
12. 12
FIDIC “Pink Book” -Harmonised
Conditions of Contract for Constructions
Issued after several Multilateral Development
Banks (MDB) agreed certain modifications for
some Clauses, for better reflecting their financing
principles.
Used for construction and engineering works,
designed by the Employer (as in the Red Book)
Allows the Bank to suspend payments to Borrower
– Sub-Clauses 2.4, 14.7 and 16.1
Engineer’s Authority may be unilaterally changed
by the Employer – Sub-Clause 3.1
Modifications concerning selection and activity of
DAB
13. Basic Principles and Selection of
FIDIC Documents – New Red Book
Design primarily undertaken by Employer or his agent
Works are to be re-measured
Employer appoints Engineer to administer contract on
his behalf
Engineer has power to vary works, but not change
contract
DAB appointed within 28 days of commencement date
and has powers to resolve any dispute and change
“determinations” of Engineer
14. Basic Principles and Selection of
FIDIC Documents – New Yellow Book
The Employer provides project requirements as
defined under item “Employer’s Requirements” (ER)
The “ER” are the basis for the contractor to design
and build the project. Errors within the “ER” are the
liability of the Employer.
The contract is for a fixed sum and not re-measured.
The contract is administered on behalf of the
Employer by the Engineer,
Provision is made for variations by the Engineer.
The general conditions (clauses 1 to 20), except
clauses 5 & 12, are principally the same as red book.
15. Selection of FIDIC Documents
– Risk Management
All contracts contain risks for both Contracting
Authorities/ Employers and Contractors – There is no risk-
free contract
FIDIC attempts to rationalise and allocate responsibilities
for main risks
A key requirement is for the Contract Parties to fully
understand the FIDIC General and Particular Conditions
of Contract that set out their Responsibilities and Risks
within a Project
Every risk given to the other party has its cost, no Party
assumes a risk for free
17. Who takes the financial risk?
Contractor’s Incentive ... and Risk
Employer’s
Risk
...
and
Flexibility
Priced with
Bill of quantities
Lump Sum
18. Main differences from previous
FIDIC editions
The Engineer is no longer to act impartially, but is
acknowledged to be the representative of the Employer
The Contractor is entitled to require the Employer to
provide a proof of funds availability
Disputes Adjudication Board (DAB)
Motto: “Little knowledge is more dangerous than no knowledge at all!”
