FIDIC Contracts: Master International Construction Law

📋 Course Contents

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1 Module 1: What is FIDIC?

1.1 Definition

FIDIC (Fédération Internationale Des Ingénieurs-Conseils) is the International Federation of Consulting Engineers, founded in 1913 in Geneva, Switzerland.

1.2 Why FIDIC?

• ✅ International acceptance: World Bank, AfDB, ADB, EBRD
• ✅ Balanced risk allocation: Fair to both parties
• ✅ Comprehensive: Covers most scenarios
• ✅ Tested: Decades of case law and interpretation

1.3 Contract Structure

Document	Description
General Conditions	Standard clauses (don't modify)
Particular Conditions	Project-specific amendments
Employer's Requirements	Scope, specifications (Yellow/Silver)
Contractor's Proposal	Technical and financial offer
Schedules	Rates, program, bonds

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2 Module 2: Red Book (Employer's Design)

2.1 Design Responsibility

• Employer provides complete design
• Contractor executes per drawings and specifications
• Contractor responsible for workmanship and materials
• Limited design liability (only for temporary works)

2.2 Key Features

Feature	Red Book Approach
Payment	Re-measurement (BOQ-based) or Lump Sum
Engineer	Yes - administers contract, issues certificates
Risk Level	Balanced (medium for both parties)
Variations	Engineer can issue instructions
Project Type	Infrastructure, civil works

2.3 When to Use Red Book

• ✅ Traditional infrastructure (roads, bridges, dams)
• ✅ Employer/consultant has complete design
• ✅ Flexibility for changes during construction
• ✅ Government/internationally funded projects

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3 Module 3: Yellow Book (Design-Build)

3.1 Design Responsibility

• Contractor responsible for design and construction
• Employer provides Employer's Requirements (performance specs)
• Contractor submits Contractor's Proposal
• Contractor's design must meet performance criteria

3.2 Key Features

Feature	Yellow Book Approach
Payment	Lump Sum (milestone or schedule-based)
Engineer	Yes - but less design review
Risk Level	Higher for Contractor (design risk)
Variations	Engineer can vary Employer's Requirements
Project Type	Buildings, industrial plants, M&E-heavy

3.3 When to Use Yellow Book

• ✅ Complex buildings with integrated systems
• ✅ Industrial plants and process facilities
• ✅ Employer wants single-point responsibility
• ✅ Contractor has specialized design expertise

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4 Module 4: Silver Book (EPC/Turnkey)

4.1 Key Differences

• ❌ No Engineer - Employer manages directly
• Contractor bears maximum risk
• Fixed price with very limited adjustments
• Contractor responsible for everything (design, procure, construct)

4.2 Risk Allocation

Risk	Silver Book
Design errors	100% Contractor
Unforeseeable ground conditions	Contractor (limited relief)
Price escalation	Contractor (no adjustment)
Delays (most causes)	Contractor risk

4.3 When to Use Silver Book

• ✅ Power plants and process plants
• ✅ Private financing (lenders want certainty)
• ✅ Experienced EPC contractors
• ✅ Employer wants fixed price and date

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5 Module 5: Other FIDIC Books

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6 Module 6: Key Clauses

6.1 Critical Clauses (2017 Edition)

Clause	Subject	Importance
1.1	Definitions	Understand all terms used
3.7	Engineer's Determinations	How disputes are initially resolved
4.12	Unforeseeable Physical Conditions	Ground risk allocation
8.5	Extension of Time	Delay claims procedure
13.3	Variation Procedure	How changes are valued
14.3	Interim Payments	Monthly payment mechanism
20.1	Claims Procedure	28-day notice requirement
21	Disputes and Arbitration	DAB and arbitration process

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7 Module 7: Claims & Variations

7.1 Variations (Clause 13)

A Variation is any change to the Works instructed by the Engineer.

• Changes in quantities
• Changes in quality or specifications
• Changes in levels, positions, dimensions
• Omission of work
• Additional work

7.2 Claims Procedure (Clause 20)

7.3 Common Claim Grounds

• 🏗️ Unforeseeable physical conditions (Clause 4.12)
• ⏰ Employer-caused delays (Clause 8.5)
• 📋 Late drawings/instructions (Clause 1.9)
• 🔄 Variations (Clause 13)
• ⚠️ Force Majeure (Clause 18)

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8 Module 8: Dispute Resolution

8.1 Dispute Resolution Tiers

8.2 DAAB (Dispute Avoidance/Adjudication Board)

• 3 members (or 1 for smaller projects)
• Standing board visits site regularly
• Decision within 84 days
• Binding unless referred to arbitration

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🎯 Final Quiz

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