March 17, 2017

FIDIC Contracts

A new suite of FIDIC contracts is due to be published later this year.

In 1999, FIDIC issued the First Edition of its "Rainbow Suite" of construction contracts, which were intended to be modern and balanced standard forms of construction contract, for the procurement of construction works globally. 

At the recent FIDIC Users' Conference in London, FIDIC issued a "pre-release" version of the "New Yellow Book").

FIDIC plans to publish simultaneously in 2017 new editions of the three principal forms, known as the Red (Construction), Yellow (Plant and Design Build) and Silver (EPC / Turnkey Projects) Books. As before, it is understood that the wording of these forms is to be identical where appropriate, with the result that most of the changes being introduced into the new Yellow Book will also be found in the Red and Silver equivalents.

As a general comment, the New Yellow Book contains significant and extensive amendments, although some were already present in the new Gold Book for Design, Build and Operate contracts introduced in 2008. The key amendments include:

  • greater emphasis on the role of the FIDIC form as a project management tool, resulting in a much longer contract;
  • additional time limits for notices associated with certain claims, including the requirement for "advance warning" from both parties;
  • modification of the Engineer's role, including greater powers;
  • more onerous programming obligations for the Contractor;
  • significant revision of the extension of time ("EOT") mechanism;
  • modifications to the payment provisions;
  • adjustment of theallocation of risk to the Contractor's detriment; and
  • overhauling of the claims and disputes provisions.

FIDIC's aim to provide a clearer contract form that facilitates its use as a project management tool is certainly to be welcomed. However, it is far from clear that the focus on procedure and related additional administrative burden foreseen by this latest contract form will meet with broad acceptance. At the time of publishing, it is unclear how many of the changes proposed in the New Yellow Book will be retained following the ongoing consultation process with the construction industry. 

We will in due course be presenting on the new suite of contracts.