#FIDIC Understanding Basics# By SN Panigrahi Essenpee Business Solutions FIDIC Golden Principles FIDIC essential characteristics of its general conditions of contract Essenpee Knowledge Series

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SN Panigrahi is a Versatile Practitioner, Strategist, Energetic Coach, Learning Enabler & Public Speaker.
He is an International-Corporate Trainer, Mentor & Author
He has diverse experience and expertise in Project Management, Contract
Management, Supply Chain Management, Procurement, Strategic
Sourcing, Global Sourcing, Logistics, Exports & Imports, Indirect Taxes –
GST etc.
He had done more than 150 Workshops on above
Published more than 500 Articles; More than 60 Youtube Presentations
He is an Engineer + MBA +PGD ISO 9000 / TQM with around 29 Yrs of
Experience
He is a certified PMP® from PMI (USA) and become PMI India
Champion
Also a Certified Lean Six Sigma Green Belt from Exemplar Global
Trained in COD for 31/2 Yrs. on Strategy & Leadership
GST Certified – MSME – Tech. Dev. Centre (Govt of India)
ZED Consultant – Certified by QCI – MSME (Govt of India)
Member Board of Studies, IIMM
Co-Chairman, Indirect Tax Committee, FTAPCCI
Empanelled Faculty in NI MSME
He has shared his domain expertise in various forums as a speaker & presented a number of papers in various national and
international public forums and received a number of awards for his writings and contribution to business thoughts.
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com
Hyderabad

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MODULE 1 – INTRODUCTION TO FIDIC
MODULE 4 – OBLIGATIONS AND RESPONSIBILITIES OF THE MAIN PARTIES
MODULE 9 – RISK, LIABILITY AND FORCE MAJEURE
MODULE 3 – GENERAL PROVISIONS OF THE FIDIC FORMS OF CONTRACT
MODULE 10 – CLAIMS, DISPUTES AND ARBITRATION
MODULE 7 – FINANCIAL MATTERS
MODULE 5 – MANAGEMENT OF PROJECTS
Interactions & Group Discussions & Exercises
MODULE 6 – COMMENCEMENT, DELAYS AND COMPLETION
MODULE 8 – TERMINATION AND SUSPENSION
Feedback – Group Photo
MODULE 2 – INTRODUCTION TO THE FIDIC FORMS OF CONTRACT
Recapitulate Lessons Learned
FIDIC
Forms of
Contract

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 Annual investment in the construction sector : $7 trillion,
 Demand growing – anticipate up to $9 trillion by 2020,
 Consulting Services $400 - 500 billion,
 Consulting market reforming – more global,
 Economies still fragile – variable growth rates,
 More private and public funding

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 Creating a Substantial Brand for Consulting Industry Globally,
 Increasing Demand in Terms of Infrastructure Development with Larger and More Complex
Projects,
 Reducing the Risks for the Industry, the Clients and Society in Cost Based Procurement,
 Fighting Corruption to Increase the Effective Benefit from Infrastructure Spending,
 Ongoing Market Pressure from clients to do more with less and growing expectation of
perfection.

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In a fast changing world, our industry is confronted with some new challenges:
• Geopolitical & economic risks: maintaining our industry in a world troubled by geopolitical & economic
re-balancing,
• Sustainability & climate change: equipping our industry to reduce and mitigate climate change impact,
• New technologies: what is their impact (BIM, collaborative work, big data, block chain technology,
IoT…) ?
• Smart cities – urgent needs of urban environments.
• New business models: is our industry on the verge of major disruption like other industries (banks,
hospitality industry…) ?
• Consolidation: consequences of the trend towards mega firms,
• New delivery methods, such as PPPs, PFIs, Alliancing…
• Competitive threats and increasing protectionism,
• Global shortage of skills – future leaders...

8.  International Federation of Consulting EngineersFIDIC
 Institution of Civil EngineersICE
 The New Engineering Contract
NEC
 Joint Contracts Tribunal.JCT
 The South African Institute of Contract for Construction
WorksGCC
 Institution of Electrical EngineersIEE
 Institute of Chemical Engineers.IChemE
Multiple organizations exist across the globe who can facilitate the drafting and negotiation of
international construction contracts.
• Prominent National and International contractors or engineering associations, who offer standardized
documents with regard to construction contracts are listed below:

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The International Federation of Consulting Engineers (commonly known as FIDIC,
acronym for its French name Fédération Internationale Des Ingénieurs-Conseils) is an
international standards organization for the consulting engineering & construction best known
for the FIDIC family of contract templates.
The fact that the organisation has a French title bears testimony to its foundation in 1913 by
three wholly or partly francophone countries, Belgium, France and Switzerland.
FIDIC conditions of contract are increasingly being used in the international construction
industry and in projects financed by international development banks.
A condition for successful international expansion, the consulting engineer, contractor or other
professionals involved in management of works contracts need to be conversant with the
main FIDIC Contracts. FIDIC is well known in the consulting engineering field for its work in defining
Conditions of Contract for the Construction industry worldwide.

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The key ingredient for their success as industry standard lies in their balanced approach to the
roles and responsibilities of the main parties, as well as the allocation and management of risk.
For this reason, the fundamental principle behind the FIDIC contracts is the use of General
Conditions of Contract, deemed to be suitable in all cases, based on thousands of successful
projects around the world.
However, given that no two projects are the same, FIDIC does acknowledge that special
conditions will be required for project specific issues, on a case by case basis.
All FIDIC contracts therefore contain guidance on the preparation of Particular Conditions, and
provide examples of the areas where special provisions may be required for a specific project.
To diverge significantly from these guidelines is to increase the risk of shifting the balanced
nature of the contract, and putting into jeopardy the successful implementation of the project.

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 What does "FIDIC" stand for
 Fédération Internationale Des Ingénieurs – Conseils (FIDIC) (from French,
the International Federation of Consulting Engineers)
 The history of FIDIC
 Fédération Internationale des Ingénieurs-Conseils ("FIDIC") is an
international federation of consulting engineers founded in 1913 by three
countries, each wholly or partly francophone, specifically Belgium, France
and Switzerland. Now members in close to 100 countries.
 Currently located at the World Trade Centre in Geneva, Switzerland.
 Further details are available at www.fidic.org.

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FIDIC is charged with promoting and implementing the consulting engineer industry’s strategic goals on
behalf of Member Associations.
Its strategic objectives are to:
 represent world-wide the majority of firms providing technology-based intellectual services
for the built and natural environment;
 assist members with issues relating to business practice;
 define and actively promote conformance to a code of ethics;
 enhance the image of consulting engineers as leaders and wealth creators in society;
 promote the commitment to environmental sustainability;
 support and promote young professionals as future leaders.
 FIDIC arranges seminars, conferences and other events in the furtherance of its goals:
maintenance of high ethical and professional standards; exchange of views and information.
 FIDIC, in the furtherance of its goals, publishes international standard forms of contracts for
works (Short Form, Construction, Plant and Design Build, EPC/Turnkey) and agreements (for
clients, consultants, sub-consultants, joint ventures, and representatives), together with
related materials such as standard pre-qualification forms

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FIDIC is a global representative for the consulting engineering industry, promoting the
business interests of firms supplying technology-based intellectual services for built and
natural environments alike.
FIDIC is well known for its work drafting standard form Conditions of Contract for the
worldwide construction industry, particularly in the context of higher value international
construction projects, and is endorsed by many multilateral development banks
("MDBs").
Companies and organizations belong to FIDIC national member associations which now
represent other professionals, such as architects. FIDIC also has affiliate members
interested in its work, such as lawyers and insurers.
FIDIC organizes conferences, seminars and training courses and, until 2002, FIDIC ran
FIDIC direct, the International Directory of Consulting Engineers, which is now run by
ICONdirect. (see icondirect.net)
FIDIC website, www.FIDIC.org

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 FIDIC publishes various standard contracts to be used for e.g. construction works, large-
scale machinery supplies, infrastructure projects, consultancy services, etc.
 It has become the tradition that FIDIC contracts are known
in popular parlance by the colour of their cover.
 Each contract applies to a specific area and is characterized by an individual colour label.
 The contracts aim at distributing liabilities and risks on the relevant parties, but they are not
"agreed documents", i.e. contracts negotiated and agreed between representative
organizations (contrary to e.g. AB92, the Danish general conditions for the provision of
works and supplies within building and engineering).

16. Red Book 1999
/ 2017
Silver Book
1999 / 2017
Gold Book
2008
Green Book
1999
Blue Book
2006 / 2016
Yellow Book
1999 / 2017
Conditions of Contract for Construction
Conditions of Contract for Plant, Design-Build
Conditions of Contract for EPC/Turnkey
Conditions of Contract for Design-Build and Operate
DBO - (Maintainance)
Conditions of Short Form of Contract
Conditions of Contract for Dredging Work
Orange Book
1995
Conditions of Contract for Design - Build and Turnkey.
Merged with Yellow Book
Pink Book 2010 Red Book Adopted for Multilateral Development Banks (MDBs).
Audits, Labour Provisions, Corruption Avoidance, Dispute Settlement
White Book
1999/ 2006 / 2017
Client/Consultant Model Services Agreement - used to appoint
consultants

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•The Red Book: Conditions of Contract for Construction for Building and Engineering Works designed by the
Employer (1st Ed 1999; 2nd Edition 2017).
•The Pink Book: Harmonised Red Book (MDB Edition) Conditions of Contract for Construction for Building
and Engineering Works designed by the Employer (Version 3 2010) - for use as part of the standard bidding
documents by the Multilateral Development Banks only. The Islamic Development Bank and the World Bank
worked with FIDIC in developing this contract.
•The Yellow Book: Conditions of Contract for Plant and Design-Build - for electrical and mechanical plant, and
for building works, designed by the Contractor (1st Ed 1999; 2nd Edition 2017).
•The Silver Book: Conditions of Contract for EPC/Turnkey Projects (1st Ed 1999; 2nd Edition 2017).
•The Orange Book: Conditions of Contract for Design - Build and Turnkey (1st Ed 1995).
•The Gold Book: DBO Contract - Conditions for Design, Build and Operate Projects (1st Ed 2008).
•The Green Book: Short form of Contract (1st Ed 1999).
•Sub-consultancy Agreement: (1st Ed 1992)
•The White Book: Client/Consultant Model Services Agreement (4th Ed 2006)
•The Blue-Green Book: Dredgers Contract (2nd Ed 2016)
•Conditions of Subcontract for Construction: Used in conjunction with the Red Book and The Pink Book
(Test Book 2009)
What does the FIDIC Suite of Contracts cover?
A substantial amount. In 1999, FIDIC published a completely new suite of contracts, the 'Rainbow Suite', various
contracts having been updated. These include:

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Work of Relatively
Low Value or Simple
or Repetitive Work?
Dredging Work?
FORM OF CONTRACT FOR
DREDGING AND
RECLAMATION WORKS
(2ND ED. 2016)- BLUE BOOK
Yes Yes
SHORT FORM OF CONTRACT
(1ST ED. 1999)
GREEN BOOK
Is the Employer
going to Design
most of the Work?
No
Yes Is the Project
Financed by a
Development Bank?
MDB HARMONIZED EDITION
(3RD VERSION 2010)
PINK BOOK
Yes
CONTRACTS FOR
CONSTRUCTION
(2ND ED. 2017)
RED BOOK
Is the Project for
Plant or with High
Un-forseen Risks?
Yes Is the Contractor to
Operate Works?
DBO – GOLD BOOK
(1ST ED. 2008)
Yes
PSDB – YELLOW BOOK
(2ND ED. 2017)
No
No
No
EPC / T – SILVER BOOK
(2ND ED. 2017)
No
No

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The Fundamental Principles which underlie all FIDIC contracts are:
1/ FIDIC contracts are drafted by engineers experienced in design and
construction,
2/ FIDIC contracts embody a balanced risk allocation between the Parties,
and
3/ The role of ‘the Engineer’ under FIDIC Contracts is critical.
With the aim of increasing clarity and reducing potential misunderstandings on
interpretation, FIDIC has improved the contract provisions in the 2017 edition by making
them more prescriptive and introducing step-by-step project management and procedural
mechanisms.
These set out exactly what is expected from the Employer, the Contractor, and the Engineer
during the performance of the Contract.

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 FIDIC Red Book is primarily intended for building and engineering works
where the employer bears the design responsibility.
 FIDIC Yellow Book is primarily intended for contracts on electrical/mechanical
installations where the contractor bears the design and project planning
responsibility,
 FIDIC Silver Book is a turnkey contract.
 All three contracts have been prepared for the purpose of tenders but may
also, with a few adjustments, be applied without a preceding tender.
 The advantage of applying the contracts is that they are all structured in
the same way.
 It is therefore easier for the tenderers to obtain an overview of the
contracts and any deviations from the standard wording and,
consequently, to quickly prepare a tender.

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•After 18 years of preparations, FIDIC has finally published the updated versions of
the contracts Red Book, Yellow Book and Silver Book at the annual “FIDIC
International Contract Users’ Conference” in London on 5 and 6 December 2017
and constitute updates of the former editions from 1999, which can still be used.
•All three contracts have been significantly amended with the core aim of the
majority of the changes being increased clarity and certainty.
•The new contracts are expected to be broadly applied similarly to the previous
versions.
•The new versions of the FIDIC
– Red Book,
– Yellow Book and
– Silver Book
were issued on 5 December 2017

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In addition to the three contracts mentioned above, an updated FIDIC
White Book to be applied for consultancy/advisory services was published
in the spring of 2017.
FIDIC also offers a wide variety of other standard contracts.
We find that the FIDIC Yellow Book and the FIDIC Silver Book are the
ones applied most often, especially within the wind industry, for
infrastructure projects and in large-scale machine supplies, and also in
contexts which they are not originally intended for (e.g. where there is no
design obligation).

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 • To enhance project management tools and mechanisms.
 • Drafted by engineers experienced in design and construction.
 • To reinforce the role of the “Engineer”.
 • To achieve a balance risk allocation. The aim here is more reciprocity between the parties.
 • To achieve clarity, transparency and certainty (sounds like the NEC philosophy).
 • To reflect current international best practice.
 • To address issues raised by users over the past 17 years arising out of the use of the 1999 suite.
 • To incorporate the most recent developments in FIDIC contracts, in particular the Gold Book,
which was published in 2008.

24. CLEAR, COHERENT
FAIR, EQUITABLE
THIRD PARTY
COMPLETE, FLEXIBLE
RECOGNISED
Essential clauses.
Detailed definitions.
Consistent structure.
Risk allocated to party best placed to
control it, bear it, and deal with it.
Drafted by consulting engineers who
design and manage projects.
Range covers most needs.
Readily adaptable to fit requirements
Positive FIDIC image.
World-wide acceptance
Tested for more than 50 years.

25.  Contract between Employer & Contractor under Red/ Yellow FIDIC
 Contracting Authority/ Employer
 Employer – usually the financier and/or owner of the construction project contemplated. Carries the ultimate
responsibility for the success of the project; The Employer includes the legal successors in title to the originally
named Employer.
 Engineer – appointed by the Employer with delegated authority to oversee all aspects of the construction
project contemplated;
 Contractor – selected expert in construction who has the necessary resources and expertise to execute all
aspects of the contemplated construction project.
 Engineer - Contract between Employer & Engineer. Engineer to administer FIDIC Contract on behalf of
Employer
 Employer to appoint the ‘Employer’s Representative’
 Engineer is represented on site by a certain individual called Engineer’s Representative
 Contractor’s Representative has a single-point-of-contact during the performance of the contract
 Subcontractors – Selected by contractor, approved by Engineer, to augment specific works on a construction
project where additional manpower or expertise are needed.

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 Defines the
requirements and
specifications
 Provides the
construction site
 Provides the financial
resources (usually)
 Provides the
necessary conditions
to the Contractor for
the execution of works
 Responsible from
executing the works
 Provides the necessary
securities and guarantees
 Held responsible from his
and/or his sub
contractors actions
 Responsible from the
quality of the executed
works as well as the
security of the
construction site
 Prepares the interim
payment reports
 May use sub contractors
as allowed in the
conditions of the contract
 Assigned by the Employer to
represent the Employer
 Name, contact information
and authorities of an
Engineer are stated in
relevant parts of the Works
Contract
 After consulting with the
Employer and the Contractor,
should propose fair and
objective solutions for
claims.
 Checks the quality of the
appropriateness of the
workmanship and the
materials used
 Approves the payment
certificates of the Contractor

28. OLD NEW
Civil
‘Red Book’
4th Edition
1987,1992
Construction
(mainly)
Employer-
Design
1999 / 2017
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”

29. 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
BoQs is done by Employer or Employer’s Representative.
Tenderers fill in their unit prices into the existing BoQs.
Final amount is not fixed, payments are done based on the real amounts executed.
(Exceptions are available eg: lump-sum conracts).
Employer carries the risk for contract amount increases.
The better the design, the flawless the project implementation.
Tender evaluations are relatively simpler.
DAB appointed within 28 days of commencement date and has powers to resolve any
dispute and change “determinations” of Engineer

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Not suitable for projects, which include
► complex E&M elements, which depend upon the
contractor’s own technology,
► off site manufacturing of high value plant,
► considerable extent of contractor’s design.

31. Plant and
Design
Build
(Mainly
Contractor
design)
1999 / 2017
Electrical &
Mechanical
‘Yellow Book’
3th Edition
1987,1988
Design-Build
and
Turnkey
‘Orange Book’
First Edition
1995
OLD NEW
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”.

32.  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.
 Employer Requirements includes only Draft Layout, Operational Parameters, Broad Technical
Specifications and Financial Proposal Format (Schedule of Prices).
 Tenderers submit their technical proposals together with their financial proposals. Technical
proposals cover at minimum methodology, basic design and drawings, bill of supply and similar
supporting documents.
 Generally lump-sum price contracts are used.
 Price increase and other risks are distributed amongst both parties.
 Tender evaluation process is more complicated and requires technical expertise.
 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 21), except clauses 5 & 12, are principally the same as red
book.

33. EPC
Turnkey
Projects
Silver Book
1999 / 2017
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”.

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 Two-party contracts (No Engineer)
 Employer defines design parameters, quality measures and
functional requirements.
 Tenderers submit comprehensive technical proposals supported with
designs.
 Lump-sum contracts are used and all risk lies with the Contractor.
 More suitable for projects like; refinery, petrochemical facilities, power
plants.
 Implemented if the employer foresees high risk for the supply and
assembly of mechanical and electrical components.
 Tender evaluations are very complicated and requires continuous
negotiations.
 Not suitable for Public Projects

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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.
Small
Capital
Value
 For low contract values (< 500,000 USD)
 Simple but repetitive works
 Short Term Sssignments (less than six months)
 Usually Employer takes over the design
responsibility.

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Gold Book – “Conditions of Contract for Design, Build and Operate
Projects” – employed after completion of construction and is typically suitable
where a ‘long-term operation and maintenance’ commitment is required via
design and build obligations. Under this arrangement –
– The contractor must operate and maintain the completed project on behalf of
the employer for a period of typically 20 years from the date of the
Commissioning Certificate.
– During this 20 year period the contractor must meet certain targets and at the
end of the period, the project must be returned to the employer in an agreed
condition.
– Released to public in 2008

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Blue Book – or “Dredgers Contract” – is used in close collaboration with the
International Association of Dredging Companies (IADC)
– Recommended for dredging and reclamation work.
– Typically, the contractor under Blue Book rules constructs the works in
accordance with the employee’s design.
NOTE:
• As with all FIDIC forms listed, the aim has been to produce a straightforward
document which includes all essential commercial provisions, with the Blue Book
also being used for all types of ancillary construction with a variety of
administration arrangements.

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White Book – “FIDIC Client/Consultant Model Services Agreement” – this
form of contract is used to appoint consultants to provide services to the
employer such as:
– Feasibility Studies
– Design
– Contract Administration
– Project Management

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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

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Parameters RED YELLOW SILVER GREEN
Design Employer Contractor Employer
Employer or
Contractor
Design Approval
Only Contractor’s
Design (If any)
Engineer approves
or rejects before
executions
N.a.
Only Contractor’s
Design (If any
Financial Proposal Unit Price Lump-sum Price Lump-sum Price
Unit Price / Lump-
sum Price
Payment Schedules Measured quantities
Payment
percentages
Payment Calendar /
Payment
percentages
Measured quantities
or Percentages
Engineer Yes Yes Generally No
No. Employer
representative may
assign if needed.

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Parameters RED YELLOW SILVER GREEN
Tests during
Construction
Significant number
of tests
Relatively less and
simpler
Generally no tests Limited or no tests
Tests at completion
Relatively less and
simpler
Very detailed and
complicated
performance tests
Very detailed and
complicated
performance tests.
Limited or no tests
Risk Distribution
Employer carries
the design risks
Distributed
Contractor carries
the risks
Varies

42. Green Book -
Low value,
simple works
100%0%
Amount of design by Contractor
•RisktransfertoContractor
•Certaintyofoutturnprice
Red
Yellow
Silver

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Delivery Methods under FIDIC Forms of Contract
• Construction Projects are a unique arrangement of processes that involve
various participates with different tasks who are under influence of varied
factors, including numerous hazards and related
risks. Choosing the right “delivery method” (form of construction project) is
important.
• Delivery Method generally selected by the Client.
Delivery Methods differ mainly in:
(1)Design Responsibility
(2)Contract Price Determination
(3)Contract Administration Approach
(4)Risk Allocation

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Two (2) Possibilities –
The Employer – responsible for the design,
preparing detailed tender designs (Drawings,
Specifications, Bill of Quantities, others) –
The Contractor – prepares the
Employer’s requirement not in much
detail, for the sake of a particular
tender – stating only purpose, scope,
and other technical criteria (such as
performance criteria)
Contract Price Determination
– Three (3) Main payment
bases –
 Lump Sum (Fixed Price)
 Cost Plus
 Re-Measurement (Time &
Material)
Three (3) Possibilities –
The Engineer: Employer’s agent whose job is
to monitor and supervise the work with a duty
to make fair determination on certain matters.
The Employers Representative: Contract is directly
administered by the Employer or his representative.
Construction Manager: Employer’s agent hired to coordinate
all processes on Professional Service Agreement basis
without direct responsibility for design and works.
In terms of Risk Allocation, FIDIC Procurement
Procedures Guide states:
• Construction and Engineering Industry is a high risk
industry; • Management of the risks has overriding
importance;
• A risk cannot “be left hanging in the air”
• Practice over many years has shown that
sensible and balanced risk allocation results in
the lowest overall total cost for completed
projects • FIDIC Contracts are based on the
“decentralization principle”
• Every risk must be allocated to one or other party;

45. • 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

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Although the FIDIC family covers a wide range of contracts, there are some common features:
Presentation
FIDIC is usually divided in two parts:
Part – I
General
Conditions
Part I contains the General Terms of the Contract, such as Issues, Rights and Obligations of Each
Party, Procedure for Payment, Variation, Certification and Dispute Resolution.
Part – II
Conditions
of
Particular
Application
Part II of the contract is the conditions of particular application and is to be used to
introduce project specific clauses, such as language of the contract, choice of law, the
name of the person or firm appointed to act as Engineer or Employers representative
for the project among other terms.
Particular Conditions’ is now defined as comprising of two parts:
Part A – Contract Data (‘Appendix to Tender’ document under the 1999 FIDIC) and
Part B – Special Provisions.

48. SN Panigrahi 48
In most FIDIC forms there is a default hierarchy for the documents forming the contract. The order of priority is
as stated below and in the event of inconsistency the first on the list takes precedence:
1.The Contract Agreement
2.The Letter of Acceptance (this is the formal acceptance of the contractor's tender and marks the
formation of the contract)
3.The Letter of Tender
4.Part II – the conditions of particular application
5.Part I – general conditions of contract
6.The Specification and Drawings (Red Book), The Employer’s Requirements (Yellow Book), the
Schedules (Red and Yellow Books)
7.Further documents (if any), listed in the Contract Agreement or in the Letter of Acceptance.
The parties are allowed to rearrange the priority of documents or stipulate that no priority or order of hierarchy
will apply to the contract. This can be done in Part II of the contract.

49. SN Panigrahi 49
Designed as a companion for both the first-time and also more experienced user, the book
presents an accessible guide to the 21 clauses of the 2017 FIDIC Conditions of Contract,
using the Conditions of Contract for Construction (Red Book) as a basis.
Opening chapters provide an introduction to international construction contracts, including
the entire FIDIC suite of contracts, and there is also a list of definitions of key terms.
Chapters in Part 2 provide a brief introduction to each of the Clauses and Sub-Clauses in the
Red Book, and explain how they are interlinked. A final section provides a concise practical
guide to the use of the FIDIC Conditions, and a summary of special provisions discussed in
Part 2.

50. 50
Clause – 1
General
Provisions
Clause – 2
The
Employer
Clause – 3
The
Engineer
Clause – 4
The
Contractor
Clause -5
Nominated
Subcontract
ors
Clause – 6
Staff and
Labour
Clause – 7
Plant,
Materials
and
Workmanshi
p
Clause – 8
Commence
ment, Delays
and
Suspension
Clause – 9
Tests on
Completion
Clause – 10
Employers
Taking Over
Clause – 11
Defects after
Taking Over
Clause – 12
Measurement
and
Evaluation
Clause - 13,
Variations
and
Adjustments
Clause – 14
Contract
Price and
Payment
Clause – 15
Termination
by Employer
Clause – 16
Suspension
and
Termination
by
Contractor
Clause – 17
Care of the
Works and
Indemnities
Clause – 18
Exceptional
Events
Clause –19
Insurance
Clause – 20
Employer's
and
Contractor's
Claims
Clause – 21
Disputes and
Arbitration

51. SN Panigrahi 51
 General provisions (1)
 The Employer, Employer‟s Administration OR Engineer, Contractor, Nominated Subcontractors OR
Design (2-5)
 Staff and labor, Plant, materials and workmanship (6-7)
 Commencement, delays and suspension, Tests on completion, Employer‟s taking over, Defects
Liability, Tests after completion (8-11 & 12)
 Measurement and Evaluation OR Variations and Adjustments, Contract Price and Payment (12-14)
 Termination by Employer, Suspension and Termination by Contractor (15-16)
 Care of the Work and Indemnities (Risk and Responsibility) (17)
 Insurance (18)
 Exceptional Events (Force Majeure ) (19)
 Employer‟s and Contractor‟s Claims (20)
 Disputes and Arbitration (21)

52. 52
Clause – 17
Risk and Responsibility
Clause – 17
Care of the Works and
Indemnities
Clause – 18
Insurance
Clause – 18
Exceptional Events
Clause – 19
Force Majeure
Clause – 19
Insurnace

53. SN Panigrahi 53
Clause 20
Claims, Disputes &
Arbitration
Clause – 20
Employer's and
Contractor's Claims
Clause – 21
Disputes and Arbitration

54. SN Panigrahi 54
Special Provisions
Part A
Contract Data
Part B
Special Provisions

55. SN Panigrahi 55
Sub-Clause 3.7 [Determinations] of the Red and Yellow Books 2017, which replaces Sub-
Clause 3.5, details the Engineer's role in dealing with Parties' claims and introduces a step-
by-step procedure with time limits;
Sub-Clause 8.3 [Programme] has been updated with additional requirements for the initial
programme and all revised programmes to be submitted to the Engineer (under the Red and
Yellow Books 2017) or to the Employer (under the Silver Book 2017), i.e. the critical path and
any float or linked activities, key delivery dates for plant and materials, as well as any delays
and the sequence and timing of remedial works shall be displayed;
Sub-Clause 20.2 [Claims for Payment and/or EOT] prescribes the step-by-step procedure to
be followed for Employers' and Contractors' claims for time and/or money. If the Engineer
(under the Red and Yellow Books 2017) or the other Party's (under the Silver Book) initial
response is that the Notice of Claim is time-barred due to the 28 day time-bar provision, but
the claiming Party disagrees, the claiming Party is required to include these points in the fully
detailed claim and these need to be taken into account in the agreement/determination;

56. SN Panigrahi 56
Sub-Clause 21 [Constitution of the DAAB] provides for a "standing" Dispute Avoidance/Adjudication Board (DAAB),
i.e. the board is appointed at the start of the Contract and is in place for the duration of the Contract; furthermore,
the procedure to obtain the DAAB's decision and a Party's failure to comply with such decision has been clarified in
Sub-Clause
The Engineer is “Neutral / Non-Partisan” NOT “ Independent” NOT “ Impartial”
Early (Advance) Warning; Employer, Contractor and Engineer should “endeavor to advise” each other in advance of
any known or probable future events or circumstances which SHALL adversely affect the work. (originated in gold
book)
The Program and Extension of Time (EoT) Claims
Enhanced Claims Provisions and more use of FIDIC Time Bar “greater reciprocity between the employer and
contractor” AND “a Claim becomes a Dispute if it is rejected (in whole or in part) or ignored”.
Concurrent Delays / BIM can be added in Special Provisions.
Exceptional Risks (Force Majeure); The Contractor is entitled to EoT and its costs if there are any exceptional risks
or Employer risks during the design/build period.
Dispute Adjudication Boards (“DABs”) Changed to Dispute Avoidance / Adjudication Boards (“DAABs”)

57. SN Panigrahi 57
Typically used to describe the entire scope of a construction project;
• Contract Documents form the “Contract” and are the sole declaration of
agreement between parties involved.
• Contract Documents normally consist of the following: –
 Agreement
 General Conditions
 Supplementary Conditions
 Technical Specifications
 Drawings
 Addenda
 Bonds
 Insurance
 Contractors Bid or Proposal
 Notice of Award
 Notice to Proceed

58. SN Panigrahi 58
In some cases, Contract Documents include “Supplements”;
 Invitation to Bid
 Instructions to bidders
 Shop Drawings
 Written Interpretations
 Clarifications
• Once Parties have executed the Contract Documents, the only
way to amend them is by issuing Change Order or Work Order
Directive

59. SN Panigrahi 59
FIDIC has has launched its Golden Principles to 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
contract.
In a bid to safeguard the integrity of FIDIC contracts and to ensure that employers, contractors and the
public are not misled about what is and what isn’t a bone fide FIDIC contract, the FIDIC Golden Principles
outline the essence of a FIDIC contract and articulate those essential characteristics of FIDIC’s general
conditions that should not be amended if it is to be recognised as a FIDIC contract.
The Golden Principles are the output of the work of a FIDIC task group (TG15) which looked at the
essential characteristics of FIDIC contracts that must not be amended if it is to be recognised as a genuine
FIDIC contract. Task group chair Husni Madi, who is also the CEO of Jordan-based Shura Construction
Management, explained the thinking behind the principles.
The FIDIC Golden Principles were launched at the FIDIC Asia Pacific Contract Users’ Conference in Hong
Kong on 25 June 2019. The 12-page guide, The FIDIC Golden Principles (First Edition 2019), outlines the
five Golden Principles and explains in detail the reasoning behind each of them.Each of the five Golden
Principles (GPs) are explained in the guide

60. 60
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.
GP - 1
The Particular Conditions must be drafted clearly and unambiguously
GP - 2
The Particular Conditions must not change the balance of Risk / Reward
allocation provided for in the General Conditions.GP - 3
All Time Periods Specified in the Contract for Contract Participants to perform their
obligations must be of Reasonable Duration.GP - 4
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.
GP - 5

61. SN Panigrahi 61

62. 62
https://www.youtube.com/channel/UCVZ
ScNa_leR8XbYINEwTFwQ/videos
SN Panigrahi

63. 63

64. Contact Details:
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com 64