FIDIC contracts are often viewed as the global standard.
Given how technical they can seem, you must understand the basics and how to manage the risks of a FIDIC contract to know whether it is right for your construction project.
What are FIDIC contracts?
FIDIC stands for the Fédération Internationale Des Ingénieurs-Conseils or the International Federation of Consulting Engineers.
These standard form contracts are used across infrastructure, energy, transport and construction projects all around the world.
Their approach to risk allocation is that whoever is best suited to manage and control the risk will do so.
What do FIDIC contracts include?
FIDIC contracts can cover all your bases, including payment terms, time for completion, variations, claims and dispute resolution.
A distinctive feature of FIDIC is the rainbow suite. This separates each contract by a different colour and this reflects their procurement model.
These contracts are structured around who carries the responsibility and not the specific type of work carried out.
The red book is commonly used where the employer is responsible for the design and the contractor builds according to that specification.
It’s a more traditional approach and tends to give the employer greater control over how the project is delivered.
The yellow book is more suited to design and build projects and puts more responsibility on the contractor, who takes on both elements.
The silver book goes that one step further and is often used when the contractor delivers a fully operational project.
This is mainly used for EPC or turnkey projects and gives the employer more certainty on timing and cost, but it does mean the contractor takes on a much higher level of risk.
Smaller projects often use the green book and this is more efficient for those with a shorter duration and at a lower value.
There are also other forms, such as the gold book, for design, build and operate arrangements and the blue book, intended for dredging and reclamation works.
What do you need to know before using FIDIC?
You need to carefully consider how responsibility is allocated when choosing the right FIDIC form.
More detailed provisions on contract management and dispute avoidance came into effect in the 2017 updates to the FIDIC suite.
There is now a requirement for more detailed programmes from the get-go and addressing issues earlier.
It also clarifies the distinction between a claim and a dispute and there are separate provisions for dealing with each.
Despite these changes, not every region has fully adopted these updates and this could add additional challenges to getting your contract right.
How can we help with your contract?
FIDIC contracts are detailed for a reason and overlooking even the smallest provisions could put you at risk.
Our professional team can support the drafting and negotiating of your contract and advise you on where amendments alter the balance of risk.
Once your contract is drafted, our help does not stop there.
We can support you during the project and manage any potential claims or disputes that arise.
For more tailored advice on your FIDIC contract, contact our Construction Law team.