FIDIC RED BOOK CONSTRUCTION CONTRACT
Conditions of Contract for Construction (Second Ed. ). For Building and Engineering Works designed by the Employer. General conditions; Guidance for . of the construction works. Where works are predominantly designed by the Employer, then the Red Book is the appropriate form of contract. Where works. Fédération Internationale des Ingénieurs-Conseils (FIDIC) extends special thanks to . In the preparation of these Conditions of Contract for Construction, it was.
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Page 1. Page 2. Page 3. Page 4. Page 5. Page 6. Page 7. Page 8. Page 9. Page Page Page Page Page Page Page Page Page An introduction to the FIDIC contracts which are reputed as the leading contracts in international engineering and construction projects. The Red Book is suitable for contracts that the majority of design rests with the. The International Federation of Consulting Engineers is an international standards organization for the consulting engineering & construction best known for the FIDIC family of contract . Print/export. Create a book · Download as PDF · Download as PDF · Printable version.
The Silver Book Released in The Silver Book is for turnkey projects. This contract places significant risks on the contractor.
The contractor is also responsible for the majority of the design. The Pink Book First published — an amended version was published , with a further edition in June The Gold Book Released in Part I contains the general terms of the contract, such issues as rights and obligations of each party, procedure for payment, variation, certification and dispute resolution. 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.
The Appendix usually contains sample of documents to be used for the procurement process. The parties are allowed to rearrange the priority of documents or stipulate that no priority or order of hierarchy will apply to the contract.
Further information on these aspects, example wording for other arrangements, and other explanatory material and example wording to assist in the preparation of the Particular Conditions and the other tender documents, are included within this publication as Guidance for the Preparation of the Particular Conditions.
Before incorporating any example wording, it must be checked to ensure that it is wholly suitable for the particular circumstances; if not, it must be amended. Where example wording is amended, and in all cases where other amendments or additions are made, care must be taken to ensure that no ambiguity is created, either with the General Conditions or between the clauses in the Particular Conditions.
It is essential that all these drafting tasks, and the entire preparation of the tender documents, are entrusted to personnel with the relevant expertise, including the contractual, technical and procurement aspects. This publication concludes with example forms for the Letter of Tender, the Appendix to Tender providing a check-list of the sub-clauses which refer to it , the Contract Agreement, and alternatives for the Dispute Adjudication Agreement.
This Dispute Adjudication Agreement provides text for the agreement between the Employer, the Contractor and the person appointed to act either as sole adjudicator or as a member of a three-person dispute adjudication board; and incorporates by reference the terms in the Appendix to the General Conditions. Another relevant FIDIC publication is "Tendering Procedure", which presents a systematic approach to the selection of tenderers and the obtaining and evaluation of tenders.
In order to clarify the sequence of Contract activities, reference may be made to the charts on the next two pages and to the Sub-Clauses listed below some Sub-Clause numbers are also stated in the charts.
A striking new feature of the forms is the inclusion of a set of criteria known as the Golden Principles GPs. This may be in doubt if, for example, the Employer has undertaken heavy amendment of key provisions, whether with or without FIDIC's licence to do so. The GPs 39 are: GP1 The duties, rights, obligations, roles and responsibilities of all the Contract Participants must be generally as set out in the General Conditions and appropriate to the project.
GP2 Particular Conditions must be clear and unambiguous. GP4 All specified time periods must be reasonable.
Introduction to the FIDIC Suite of Contracts
These are not of legal effect but will no doubt be relied upon by parties in negotiation to support their contention that a contract is or is not to be regarded as a 'real' FIDIC contract. While GPs 1, 2 and 4 are straightforward, GPs 3 and 5 may be somewhat problematic in this respect, since Particular Conditions frequently change the risk allocation of the General Conditions, while the Parties, especially in the Middle East states, have sometimes wished to dispense with the DAB under the forms, as unjustified in terms of expense and complexity.
Product, Risk Allocation and Time The Yellow and Silver Books contained 41 limited fitness for purpose obligations, which, for example, did not apply if the purpose was not stated in the Employer's Requirements. The Yellow and Silver Books contain much stronger fitness for purpose obligations, which apply even where no purpose is expressly stated 42 and which are supported by indemnities by the Contractor in respect of acts, errors and omissions in design.
In addition to exclusion of indirect and consequential loss with certain exceptions , FIDIC provides a choice between two alternative regimes.
The basic position is that under the General Conditions total liability is capped at the sum stated in the Contract Data 46 or, if none, the Accepted Contract Amount 47 or Contract Price 48 with certain exceptions. However, FIDIC offers an alternative in the Guidance for Preparation of Particular Conditions 49 providing for separate liability caps for consequential losses and capping of the Contractor's liability for other losses at the value of insurance cover for each, which is a completely different approach.
So far as risk of loss is concerned, the versions have been something of a surprise.
The FIDIC Design Build Operate Gold Book see below had introduced an entirely new system by which all risks were allocated between the Parties, rather than just loss or damage; the Gold Book's risk allocation Clause 50 distinguished between Employer's commercial risks, Employer's risks of damage and Contractor's risks. It had been widely expected that the Gold Book approach would be followed in the preparation of the new editions of the Rainbow Suite forms, a view encouraged by the Pre-Release editions of the Yellow Book.
One of these express exceptions is the category of 'Exceptional Events' 53 which has replaced 'Force Majeure', though the meaning of 'an event or circumstance' is somewhat similar to the Force Majeure provisions of the contracts, with the notable addition of 'tsunami' to 'natural catastrophes'. The crucial question of time has received significant new provisions in the forms. FIDIC now offers the possibility of an additional Sub-Clause 54 allowing the Employer to designate Milestones, which would have to be completed by specified dates, failing which, Delay Damages would be payable.
A second major departure relates to programming. The programming provisions were generally regarded as outdated and they have been replaced by a much more detailed and prescriptive programme Clause.
For example, the Australian standard form AS gives the contract administrator the power to apportion responsibility for delay as between Employer and Contractor to determine entitlement for an extension of time. FIDIC has by contrast made no such provision in the General Conditions, leaving the Parties free to agree arrangements as a Particular Condition, otherwise the Contractor's entitlement is to be assessed 'as appropriate taking due regard of all relevant circumstances'.
Construction Contract 2nd Ed ( Red Book)
In the Red and Yellow Books, 57 there was a distinction between situations where the Engineer was 'deemed to act for the Employer' and those where, in making determinations, 58 the Engineer had a duty to act fairly. This basis is preserved in the editions. However, in making a determination now, the Engineer is under a duty to act neutrally and is not deemed to act for the Employer. FIDIC explains this new obligation on the Engineer as a duty to treat both Parties 'even-handedly, in a fair minded and unbiased manner'.
Under the Silver Book, there was no Engineer; contract administration was undertaken by the Employer, who might appoint an Employer's Representative to act on its behalf, and the Employer was obliged to act fairly.
The Silver Book requires 60 the Employer to appoint an Employer's Representative, who must act fairly and who is not deemed to act for the Employer. It can therefore be said that the Silver Book will always be administered by the Employer's Representative, and not the Employer; there is thus some resemblance to the role of the Engineer under the Red and Yellow Books, though the duty in making a determination is to be fair, with no mention of 'neutrality'. One of the most controversial aspects of the Rainbow Suite contracts was the time-bar provision, by which failure to give notice of a claim within 28 days would result in a Contractor losing its entitlement to an extension of time or additional payment, whereas the Employer had only to make a claim 'as soon as practicable'.
The Multilateral Development Bank MDB version of the Red Book see below instituted a 28 day time limit for Employers' claims, but without the sanction of loss of entitlement for non compliance.
FIDIC has tried to address the main criticism of the claims procedures. The provision 61 is over three times as long as its predecessor and is remarkably complex. Both Contractors' and Employers' Claims are now subject to a day time limit, though its enforcement has been assimilated with the power of the Engineer to determine Claims. This differed between the Red Book, which provided for a 'standing' DAB throughout the currency of the Contract, and the Yellow and Silver Books, where an 'ad hoc' DAB would be appointed only following the occurrence of a dispute.
The contracts represent a decisive departure from the ad hoc model.
The Parties can now, following the example of the Gold Book, obtain the assistance of the DAAB throughout the project, both for the avoidance of disputes and in the 'real-time' resolution of disputes as and when they arise. FIDIC has also taken the opportunity to address what has become known as the Persero issue, after litigation in the Singapore courts. More predictable has been the encouragement in the Guidance for Preparation of Particular Conditions to consider reference to senior executives, mediation, expert determination or some other form of ADR.
They contain a number of significant improvements as well as some apparent weaknesses. Their complexity is likely to be a major factor in deciding whether the new contracts are widely used, or used only for the largest projects.
This treatment does not mean that they are unimportant — the reverse is true of nearly all — but that their significance is more specific to a particular type of project or sector. The Pink Book 66 represents a formalisation of the amendments to the Red Book that had been developed by the MDB 67 for use in aid-funded projects. The purpose was to 'simplify the use of the FIDIC Conditions of Contract not only for the MDBs and their borrowers but also for others involved with project procurement including engineers, contractors, and contract specialists.
It is intended for use on MDB financed projects only. Essentially, the Pink Book should be regarded as just that — a version of the Red Book, though the amendments should not be underestimated, justifying, as they do, a separate publication. Many of the amendments are additional provisions aimed at achieving financial probity and transparency.
For example, the Contractor is obliged to follow 'Inspections and Audit by the Bank' 69 of the Site, and of its accounts and records, and the Contractor is to be notified if the Bank suspends payments to the Borrower.In terms of extent of usage it cannot, or cannot yet, be regarded as the equivalent of the Red, Yellow or Silver Books, nor even of the MDB.
The sub-clauses which were considered to be applicable to many but not all contracts have been included in the General Conditions, which will facilitate their incorporation into each contract.
The charts are illustrative, however, and must not be taken into consideration in the interpretation of the Conditions of Contract. Keep in touch. Drafts were reviewed by many persons and organisations, including those listed below.
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Watermarked Contracts and Agreements Collection English only electronic version. However, in the case of the dispute provisions contained in Clauses A second major departure relates to programming.
Included in collection: They contain a number of significant improvements as well as some apparent weaknesses.
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