FIDIC ‘Red Book’ Conditions, 4th Edition
The FIDIC ‘Red Book’ Conditions, 4th Edition are intended to apply to civil engineering work worldwide. They take the same form as the ICE conditions, but with some variations and simplifications to allow for work outside the UK. Additions can be made to cover local needs and different procedures for payment including payment in different currencies. The 4th edition – substantially revising the 3rd – incorporated changes resulting from consultations within the international construction industry and with major international lending agencies. These conditions were accepted by the major lending agencies who recommend or require their use together with additional clauses and amendments proposed by the agencies.
An important requirement in FIDIC4 is that the engineer is specifically required to consult with both the employer and the contractor before making a decision on a contractor’s claim for additional payment or extension of the contract period. Another provision of importance is contained in Clause 52(3) which allows for adjustments to payment with respect to the contractor’s overheads if the value of extra works ordered exceeds 15 per cent of the tendered sum excluding dayworks and provisional items.
1999 New forms
In 1999 FIDIC published four new forms. The first is a Contract for Construction to replace the Red Book. Much of the text and the concepts have remained but the whole is re-organized into what was considered a more logical sequence of clauses. The role of the independent engineer is retained who again has to consult with both parties to try to reach agreement on claims and the like, but if this is not possible, to ‘make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances’. The engineer’s duty to make final decisions on disputed matters is replaced, however, by use of a Dispute Adjudication Board (DAB) selected by the parties.
Asecond form is for Plant and Design-Build which allows for the contractor to undertake design in accordance with the Employer’s requirements set out in the contract. As the title suggests this is intended both for plant supply and installation and for use where much of the civil works may also be designed by the contractor. This contract again uses an independent engineer to monitor design and construction against the requirements and has the DAB to decide disputes.
Additionally FIDIC produced in 1999 a radically different form for engineer, procure and construct (EPC)/Turnkey Projects. Under this form the contractor takes over full responsibility for design and construction including any requirements of the employer, and undertakes to produce works which achieve the desired result. There is no independent engineer but an employer’s representative who carries out various administrative and payment functions on behalf of the employer with disputes again referred to a DAB.
FIDIC have also produced a short form of contract for short-term projects of a fairly simple nature handled directly by the employer’s staff.