FORMS OF CONSTRUCTION CONTRACT Many suites of Construction Contract such as JCT, ICE, ACA, GC/Works, NEC and FIDIC

exist. Although all widely used around the world, the singular, most commonly used in the Middle East is the FIDIC suite of Contracts.

All of the major Contractors operating in the MENA region are familiar with FIDIC and not so familiar with other suites of Contract.

This Contract has been tried and tested many times in the region and in order to avoid difficulties at the outset due to Tenderers being unfamiliar with the type of Contract, we recommend the use of FIDIC.

Introduction to FIDIC Contracts: History and Background Founded in 1913 by the French Federation Internationale Des Ingenieurs-Conseils. First published conditions of contract was in 1957. FIDIC Comprises of over 73 National Associations of Consulting Engineers Worldwide.

Head quarters in Geneva Switzerland. Red Book based upon British form of contracts, used by ICE and reflects British traditions, language and legal system Practical Use of FIDIC Conditions of Contract in International Construction Projects In general, the function of Conditions of Contract is of greatest importance in providing the rights, obligation and responsibility for the parties concerned in the Contract execution (sharing of risks). Parties in a FIDIC Contract The Employer: Contracting Authority Contractor: Contract made between Employer & Contractor. Engineer - Contract between Employer & Engineer Engineer to administer FIDIC Contract on behalf of the Employer Types of FIDIC Contracts and their Use FIDIC has long been renowned for its Standard Forms of Contract for use between Employers and Contractors on international construction projects, in particular: Conditions of Contract for Works of Civil Engineering Construction: The Red Book (1987) First Edition 1957, Fourth Edition 1987 Reprinted 1988 with further amendments Reprinted 1992 with further amendments Conditions of Contract for Electrical and Mechanical Works including Erection on Site: The Yellow Book

(First Edition 1963, Third Edition 1987)
Conditions of Contract for Design-Build and Turnkey: The Orange Book (First Edition 1995)
Conditions of Subcontract for Works of Civil Engineering Construction (First Edition 1994)


Client/Consultant Model Services Agreement: The White Book (Second Edition 1991 and Third Edition 1998)

THE NEW FIDIC CONTRACTS
During its work in updating the Red and Yellow Books, FIDIC has noted that certain projects have fallen outside the scope of the existing Books. Accordingly, FIDIC has updated and expanded the range, and has - in September 1999 - published a suite of four new Standard Forms of Contract, which are suitable for the great majority of construction and plant installation projects around the world. THE NEW FIDIC CONTRACTS
Red Book 1999 Conditions of Contract for Construction
Yellow Book 1999 Conditions of Contract for Plant and DesignBuild.
Silver Conditions of Contract for EPC Turnkey Projects.
Green 1999 Short Form of Contract

FIDIC NEW RED BOOK (1999)
The New Red Book can be used for any kind of Engineering Construction Contract.
It is recommended for building or engineering works that are designed by the Employer, or by his representative, the Engineer.
In general, in this type of contract, the Contractor constructs the works in accordance with a design provided by the Employer (Design, Specifications, Drawings and Bills of Quantities).
Design/operational risk Employer
Employer appoints Engineer to administer the contract, monitor the construction work, and to certify payments Engineer has power to vary Works but not change the contract. The Employer is to be kept fully informed and make variations.
payments are made according to the Bills of Quantities or Lump Sums of approved work done.
DAB (Dispute Adjudication Board) appointed within 28 days of Commencement Date Has power to resolve any dispute and change Determinations of Engineers
However, the works may include some elements of Contractor designed works such as civil, mechanical, electrical and/or construction works.

FIDIC NEW YELLOW BOOK (1999)
The New Yellow Book applies to the lump sum contract project where the Contractor takes participation in the design work.
Employer provides requirements Contractor designs Builds the project according to the Employers Requirements.
Design risk Contractor operational risk Employer
Employer provides project requirements
Errors within the Employers Requirements are the liability of the Employer Lump sum (not re-measured Contract)
the Engineer administers the Contract, monitors the manufacture and erection on site or construction work, and certifies payments


payment according to achieved milestones; generally, on a lumpsum basis
Provisions are made for the Engineers to instruct Variations
DAB appointed Ad-Hoc or Full Term
The general conditions (clauses 1 to 20), except clauses 5 & 12, are principally the same as red book.

FIDIC NEW SILVER BOOK (1999) The New Silver Book Conditions of Contract for EPC (Engineering, Procurement, Construction)/ Turnkey Projects
Applies to turnkey projects of infrastructures or large-scale factories, where the Contractor takes on more work and risk while the Employers participation is small (private financing or government financing), but it is strictly defined upon the investment and construction period.
Employer provides input/output requirements Contractor designs, builds and hands over a fully operational facility that meets the employers initial input/output constraints. Design and operational risk contractor.
the Contractor carries out all engineering, procurement, and construction EPC: providing a fully equipped facility, ready for operation at the turn of a key.
the Contractor is paid more in return for bearing the extra risks; the Engineer is not involved

FIDIC GREEN BOOK (1999)
Short Form of Contract
Recommended for relatively small scale projects (< US$ 500,000.-)
Depending on the type of work and circumstances, this form may also be suitable for contracts of greater value, particularly for relatively simple or repetitive work or work of short duration (< 6 months).
The work involved is relatively simple
any party may do the design

Conclusion Criteria of the the BP Iraq NV project Value of the total project is in excess of $500,000 Fully designed by the Employer The works are not to be re-measurable

The green form for works of a simple nature, short duration, of low value being excluded.

The Silver form for Turnkey projects with Contractor design being excluded. The Yellow form for works with Contractor design being excluded.

The Red form for works of greater value, of longer duration and with Employer design being proposed as the suitable form for the BP Iraq NV project. It can include some Contractor design if so desired. Whilst designed primeraly for the works to be re-measured the form can and has been ammended to remove this requirement.

Old or New Red book? New red book (1999) includes some significant changes to the old Red book (1987). Namely: Changes in the status of the Engineer. Increase in the Contractors right to claim for delay

Introduces the Contractors right to determine the Contract "if the Engineer fails within 56 days after receiving a Statement and supporting documents, to issue the relevant Payment Certificate".

The right of the Employer to terminate the Contract in certain circumstances where the Engineer had certified that the Contractor failed to do certain tasks has been removed.

Introduces the Contractors right to recover financing charges from the Employer for late payment.

There are other changes but in general the New red book has been designed to offer a more balanced contract between the Employer and Contractor.

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