INTERNATIONAL CONTRACT

FIDIC
INTERNATIONAL CONTRACT

FIDIC ESTABLISHMENT
▸ As a result of a research for independent expert consultants for
the World Fair Exhibitions in 1913, a number of consulting
engineers met to discuss the possibility of forming a global
Federation.

▸ The meeting was a success in that it led to the formal

constitution on 22 July 1913 of FIDIC, Fédération Internationale
des Ingénieurs Conseils, or later, the International Federation of
Consulting Engineers.

▸ The founding principles adopted were Quality, Integrity, and

Sustainability.
INTERNATIONAL CONTRACT

FIDIC ESTABLISHMENT
▸ There were 59 participants at the inaugural meeting; official delegates from
Austria, Belgium, Canada, Denmark, France, Germany, Hungary,
Netherlands, Russia, Switzerland, the United Kingdom and the USA.

▸ Three countries, Belgium, France and Switzerland decided to found the

Federation. The other countries maintained provisional links during the
initial years.

▸ However, due to the World Wars and other major political disturbances,
FIDIC development was slow until the late 1940’s. The number of member
countries changed constantly, and all came from Europe.

▸ In 1959, they were joined by Australia, Canada, South Africa, and the USA.
This made FIDIC a truly international Federation
INTERNATIONAL CONTRACT

▸ FIDIC Secretariat

▸ FIDIC  - World Trade Center II Geneva Airport Box 311

▸ 29 route de Pré-Bois CH-1215 Geneva 15 

INTERNATIONAL CONTRACT

FIDIC CONTRACTS
▸ 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)

▸ Conditions of Contract for Electrical and Mechanical Works

including Erection on Site: The Yellow Book (1987)

▸ Conditions of Contract for Design-Build and Turnkey: The

Orange Book (1995)
INTERNATIONAL CONTRACT

FIDIC CONTRACTS

▸ During its past 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 not only updated the standard

forms but has 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.
INTERNATIONAL CONTRACT

FIDIC CONTRACTS (1)

▸ This 1999 suite comprises:

▸ Conditions of Contract for Construction for Building and Engineering

Works Designed by the Employer: The Construction Contract

▸ Conditions of Contract for Construction for Building and Engineering

Works Designed by the Employer (MDB Harmonised Edition) - for
bank financed projects only: The MDB Construction Contract

▸ Conditions of Contract for Plant and Design-Build for Electrical and

Mechanical Plant and for Building and Engineering Works Designed
by the Contractor: The Plant and Design-Build Contract
INTERNATIONAL CONTRACT

FIDIC CONTRACTS (2)

▸ This 1999 suite comprises:

▸ Conditions of Contract for EPC/Turnkey Projects: The EPC/

Turnkey Contract

▸ Short Form of Contract: The Short Form

▸ Dredgers Contract (based on the Short Form of Contract):

Dredgers Contract

▸ The Books in the 1999 suite are all marked “First Edition 1999” (Test
Editions were published in 1998, and while these remain valid for
contracts, significant changes were made in some cases).
FIDIC CONTRACT
FIDIC CONTRACT - A. RELATIVELY SMALL VALUE, SHORT CONSTRUCTION
TIME OR INVOLVING SIMPLE OR REPETITIVE WORK

1. THE SHORT FORM CONTRACT

▸ If the price for the contract is relatively small, say under US$
500,000, or the construction time is short, say less than 6 months,
or the work involved is relatively simple or repetitive - dredging
work might be a good example: then consider using the Short
Form of Contract, which is a completely new FIDIC Book specially
prepared for such projects. 

▸ It does not matter whether the design is provided by the Employer

(or his Engineer/Architect if he has one) or by the Contractor, 

▸ It does not matter whether the project involves construction,

electrical, mechanical, or other engineering work. 
FIDIC CONTRACT - B. LARGER OR MORE COMPLEX PROJECTS

2. THE CONSTRUCTION CONTRACT

▸ B.1. Is the Employer (or the Engineer) going to do most of the design?

▸ As in traditional projects, e.g., infrastructure, buildings, hydropower,

etc., the Employer did nearly all the design (perhaps not construction
details, reinforcement, etc.) (The Red Book)

▸ and the Engineer administered the Contract, monitored the

construction work and certified payment

▸ and the Employer was kept fully informed, could make variations,
etc.

▸ and with payment according to bills of quantities or lump sums for

approved work done.
FIDIC CONTRACT - B. LARGER OR MORE COMPLEX PROJECTS

2. THE CONSTRUCTION CONTRACT

▸ B.1. Is the Employer (or the Engineer) going to do most of the design?

▸ If this is what is wanted - choose the Conditions of Contract for

Construction for Building and Engineering Works Designed by the
Employer (The Construction Contract), which effectively updates and
supercedes the existing Red Book from 1987.

▸ In 2005, FIDIC licenced the Multilateral Development Banks (MDB) to

use the MDB Harmonised Edition of the Construction Contract for
projects funded by the banks. The MDB Construction Contract mainly
incorporates Particular Conditions to the Red Book that was used by
the World Bank in its Standard Bidding Documents before it and the
other MDBs adopted the Harmonised Edition.
FIDIC CONTRACT - B. LARGER OR MORE COMPLEX PROJECTS

3. PLANT AND DESIGN-BUILD CONTRACT

▸ B.2. Is the Contractor going to do most of the design?

▸ As in traditional projects, e.g., electrical and mechanical works,

including erection on site (The Yellow Book) the Contractor (or
Supplier) did the majority of the design, e.g., the detail design of the
plant or equipment, so that the plant met the outline or performance
specification prepared by the Employer, and in the relatively more
recent design-build and turnkey type projects the Contractor also did
the majority of the design, not only of plant projects but also of various
infrastructure and other types of projects, and the project was required
to fulfil the “Employer’s Requirements”, i.e., an outline or performance
specification prepared by the Employer (The Orange Book),
FIDIC CONTRACT - B. LARGER OR MORE COMPLEX PROJECTS

3. PLANT AND DESIGN-BUILD CONTRACT

▸ B.2. Is the Contractor going to do most of the design?

▸ i.e., an outline or performance specification prepared by the Employer (The Orange

Book),

▸ and the Engineer (Employer’s Representative in the Orange Book) administered the
Contract, monitored the manufacture and erection on site or construction work and
certified payment, 

▸ and with payment according to achieved milestones generally on a lump sum basis.

▸ If this is what is wanted - choose the Conditions of Contract for Plant and Design-
Build for Electrical and Mechanical Plant and for Building and Engineering Works
Designed by the Contractor (Plant and Design-Build Contract) which effectively
updates and supercedes both the existing Yellow Book from 1987 and the Orange
Book from 1995.
FIDIC CONTRACT - B. LARGER OR MORE COMPLEX PROJECTS

4. EPC/TURNKEY CONTRACT
▸ B.3. Is it a Privately Financed (or Public/Private Financed) Project of BOT or similar type where the
Concessionnaire takes total responsibility for the financing, construction and operation of the
Project?

▸ Then the Concessionnaire (the “Employer”) probably requires to have a contract with the
construction Contractor, i.e., an EPC (Engineer, Procure, Construct) Contract, where the Contractor
takes total responsibility for the design and construction of the infrastructure or other facility, and
where there is a higher degree of certainty that the agreed contract price and time will not be
exceeded,

▸ and the Employer does not wish to be involved in the day-to-day progress of the work,
provided the end result meets the performance criteria he has specified 

▸ and the parties concerned (e.g., sponsors, lenders and the Employer) are willing to see the
Contractor paid more for the construction the Project in return for the Contractor bearing the
extra risks associated with enhanced certainty of final price and time.

▸ If this is what is wanted - choose the Conditions of Contract for EPC/Turnkey Projects (EPC/Turnkey
Contract) - the FIDIC Book suitable for this purpose. 
FIDIC CONTRACT - C. ALSO FOR THE EPC/TURNKEY CONTRACT

4. EPC/TURNKEY CONTRACT
▸ C.1. Is it a Process Plant or a Power Plant (or a factory or similar) where the Employer - who provides the finance
- wishes to implement the Project on a Fixed-Price Turnkey Basis?

▸ Then the Employer wishes the Contractor to take total responsibility for the design and construction of the
process or power facility and hand it over ready to operate “at the turn of a key”,

▸ and the Employer wishes a higher degree of certainty that the agreed contract price and time will not be
exceeded

▸ and the Employer wishes - or is used to - the Project being organised on a strictly two party approach, i.e.
without an “Engineer” being involved

▸ and the Employer does not wish to be involved in the day-to-day progress of the construction work,
provided the end result meets the performance criteria he has specified

▸ and the Employer is willing to pay more for the construction of his Project (than would be the case if the
Conditions of Contract for Plant and Design-Build were used) in return for the Contractor bearing the extra
risks associated with enhanced certainty of final price and time.

▸ If this is what is wanted - choose the Conditions of Contract for EPC/Turnkey Projects (EPC/Turnkey Contract).
 
FIDIC CONTRACT - C. ALSO FOR THE EPC/TURNKEY CONTRACT

4. EPC/TURNKEY CONTRACT
▸ C.2. Is it an Infrastructure Project (e.g., road, rail link, bridge, water or sewage treatment plant, transmission line, even dam or
hydropower plant) or similar where the Employer - who provides the finance - wishes to implement the Project on a Fixed-
Price Turnkey Basis?

▸ Then the Employer wishes the Contractor to take total responsibility for the design and construction of the infrastructure
facility

▸ and the Employer wishes a higher degree of certainty that the agreed contract price and time will not be exceeded,
except that if underground works in uncertain or difficult ground conditions are likely then the risk of unforeseen ground
conditions should be borne by the Employer (and the provisions of the Plant and Design-Build Conditions in this respect
- Sub-Clause 4.12 - would be appropriate), 

▸ and the Employer wishes - or is used to - the Project being organised on a strictly two party approach, i.e. without an
“Engineer” being involved

▸ and the Employer does not wish to be involved in the day-to-day progress of the construction work, provided the end
result meets the performance criteria he has specified,

▸ and the Employer is willing to pay more for the construction of his Project (than would be the case if the Conditions of
Contract for Plant and Design-Build were used) in return for the Contractor bearing the extra risks associated with
enhanced certainty of final price and time.

▸ If this is what is wanted - choose the Conditions of Contract for EPC/Turnkey Projects (EPC/Turnkey Contract).  
FIDIC CONTRACT - C. ALSO FOR THE EPC/TURNKEY CONTRACT

4. EPC/TURNKEY CONTRACT
▸ C.3. Is it a Building Project where the Employer wishes to have
his building(s) constructed on a Fixed-Price Turnkey Basis
generally complete with all furniture, fittings and equipment?

▸ As for 2 above

▸ In the case of a building or building development Project, the

Employer or his Architect may have done some or most of the
design, but - with suitable modification regarding design
responsibility - the Conditions of Contract for EPC/Turnkey
Projects (EPC/Turnkey Contract) may be chosen.
FIDIC CONTRACT - D. RECONSTRUCTION OR REFURBISHMENT OR ANOTHER
TYPE OF PROJECT

RECONSTRUCTION OR REFURBISHMENT

▸ Check Questions A, B1 and B2 above or Questions C1 - C3

if applicable, and make your choice accordingly.
FIDIC CONTRACT
END OF SLIDES

THANK YOU

Cahyono Bintang Nurcahyo, ST, MT