FIDIC Rainbow Suite

The rainbow suite
The 1999 FIDIC suite part 1

This is the first in a series of articles being published in CES1 with the post 1999 editions of the
FIDIC suite of contracts being the overall subject matter.
Following an introduction to FIDIC and its 1999 suite of contracts the joint authors,
Paul Battrick2 and Phil Duggan3 of Driver4 will discuss many practical issues of using FIDIC
contracts. Their thoughts and opinions are based upon actual working experiences of
working with many FIDIC contracts both past and present.
Paul Battrick
Managing Director (International)
FRICS MCIArb CEDR Accredited
Mediator
consistent with the responsibility to provide

quality services for the benefit of society
and the environment. FIDICs vision is to
be the industries recognised global voice.
Phil Duggan
Director (International)
BSc MSc MCIArb
FIDICs Employer / Contractor contracts,

first issued in 1957, have a distinctly British
feel to them. These early contracts were
work style based such that the Red Book
was relative to civil engineering works; the
Yellow book was relative to electrical and
mechanical works with erection at site;
and the Orange Book was relative to
turnkey or design and build projects.
A Brief History
FIDIC is the French acronym for the
International Federation of Consulting
Engineers. It was formed in 1913 by three
national
associations
of
consulting
engineers. From its base in Geneva it now
has members from some 86 member
associations worldwide.
Whilst best known for drafting contracts
between an Employer and a Contractor,
FIDIC also drafts model agreements for
professional services:
Client and Consultant
Client and Architect
Joint Ventures between Consultants
Sub-consultant Agreement
Representatives Agreement
Indeed FIDIC provides many other

publications and is involved in many
initiatives in an attempt to fulfil its stated
mission; To improve the business climate
and promote the interests of consulting
engineering firms globally and locally,
Paul Battrick, Phil Duggan and Driver Consult Ltd. 2011
The Red Book first issued in 1957, and

having four major revisions, was borrowed
much from the ICE forms of contract whilst
the Yellow book leant upon the forms of
contract drafted by the IMechE / IElecE.
The Orange book was published in 1995
due to a growing trend towards design
and build projects and at that time FIDIC
recognised that the world of contract
drafting was moving on, indeed the
Orange
Book
contained
Dispute
Adjudication Board (DAB) provisions; the
Red Book had, in 1996, a DAB supplement
published by FIDIC.
The drafting committee of mostly
consulting engineers and its many advisors
began to work and in 1999 the FIDIC 1999
suite of contracts were born.
The FIDIC 1999 Suite of Contracts

At this juncture it is worth noting that the
FIDIC 1999 contracts are not a revision of
previous forms; hence First Edition within
their titles.
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Sponsored by perhaps a desire to create

the dominant forms of contract relative to
all forms of construction project coupled
with the changing face of construction a
complete overhaul took place.
The most fundamental change to the new
contracts being the abandonment of the
work based contract; it being replaced by
contracts that recognised which party was
to be responsible for the design of the
Works (or the vast majority of the Works)
and where risk would be allocated.
FIDIC issued three contracts for major
works and one for minor works. It is the
three major work contracts that have
become synonymous with the term FIDIC
Contract. Those being:
The Red Book = Conditions of

Contract for Construction for Building
and Engineering Works Design by
the Employer, also known as the
Construction Contract
The Yellow Book = Conditions of
Contract for Plant and Design Build
for Electrical and Mechanical Plant,
and for Building and Engineering
Works Designed by the Contractor,
also known as the Plant and DesignBuild Contract
The Silver Book = Conditions of
Contract for EPC/Turnkey Projects,
also known as the EPC/Turnkey
Contract
The fourth contract to be issued was the

Short Form of Contract to be known as
the Green Book.
To avoid any confusion it may have been
better to avoid the repeated use of Red
Book and Yellow Book and adopt a
totally new range of colours from the
outset since many contracts are still let
based upon pre-1999 FIDIC contracts.
In 2001 FIDIC published a Contracts Guide
to the three major forms of contract; it has
become known as the Rainbow Book and

FIDIC has perpetuated the rainbow theme
by encouraging all of its subsequently
issued contracts to be known by the
colour of their covers.
The New Red, Yellow and Silver Books

As previously noted a fundamental
change adopted by FIDIC when drafting
these contracts was to move away from a
work style to a contract that reflected
where the responsibility for design would
be allocated.
These contracts were also intended to be
used both on the international market and
domestic markets, although it is suspected
that the vast majority of sales of the
various forms relate to projects where the
nationalities of the contracting parties
differ.
FIDIC not only sought to issue a new suite
of contracts but also, and to its credit,
sought to make the contracts user friendly
and create a best practice manual for
contract administration. The latter being a
topic for a subsequent article.
To aid all users the task group drafting the
contracts were instructed to standardise
the three new major forms. The results
being that, unless differences were
essential,
definitions,
layout,
clause
numbering, and clause wording were
identical.
Accordingly the Red, Yellow and Silver
Books contain only twenty clauses; the last
edition of the old Red Book contained
seventy two clauses whilst the old Yellow
Book fifty one clauses.
An example of standardisation being,
whereas in the old Red Book clause 67 was
headed Dispute, Engineers Decisions
and in the old Yellow Book clause 50 was
headed Disputes and Arbitration the
1999 suite of contracts, at clause 20,
prescribe the conditions under which the
Contractor, the Engineer and the
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Employer should act through the Claims,

Disputes and Arbitration procedure.
2.
Payment procedures under clause

14 Contract Price and Payment
First impressions of the 1999 suite maybe off

putting since the purchased document
appears to be much larger than previous
editions, for instance the new Yellow Book
has, in total, over 100 pages whereas the
old Yellow Book has less than 50 pages.
This is all part of the FIDICs desire to
produce a document that is easier to use
than previous FIDIC contracts and also
other contracts from which Employers and
Engineers can choose.
3.
The sequence of events under

clause 20 Claims, Disputes and
Arbitration following either Party
giving notice of its intention to refer a
dispute to a DAB
The general layout of the Contracts is as

follows:
General Conditions; including an

Appendix
entitled
General
Conditions of Dispute Adjudication
Agreement which includes the
Procedural Rule for a DAB
A section giving guidance for the

preparation
of
any
Particular
Conditions; this section also includes
examples of guarantees, securities
and bonds that are commonplace
on international projects
A section entitled Forms; here FIDIC

provide examples of:
Letter of Tender with supporting

Appendix to Tender
Contract Agreement
DAB Agreements (either a oneperson DAB or three person
DAB)
Whilst the above can be considered to be

the most important elements within a
Contract, FIDIC have continued to be
helpful to those using its contracts. Within
the very useful Forward to the Contract
there are three graphics indicating
timelines relative to:
1.
Principle events from invitation to

tender to return of the Performance
Security
All in all a very complete document that

should require few amendments however,
as we shall see in a later article the
document is not only used but is abused.
The Engineer
Before noting some specifics regarding the
Red, Yellow and Silver Books it is worth
noting that FIDIC have amended the role
of the Engineer in the Red and Yellow
Books (the Silver Book has an Employers
Representative) from the impartial, quasi
arbitral role of previous editions.
The
Engineer is clearly stated to act for the
Employer. He is no longer required to be
impartial but whenever required to make
a determination in respect of value, cost
or time related matter he has to make his
determination fairly, and in accordance
with the Contract, having taken into
consideration all relevant circumstances.
The FIDIC 1999 First Edition Red Book

The main features of this Contract can be
summarised as:
It is suitable for all types of project

where the main responsibility for
design lies with the Employer (or its
Engineer) although provision is made
for the Contractor to design
elements of the Works
The administration of the Contract

and approval of work is carried out
by the Engineer as is certification of
payments and determination of
extensions of time
Payment to the Contractor is based

upon work done and rates as per a
Bill of Quantities (a Standard Method
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of Measurement should be stated);

thus reflecting the likely on site
nature of the Works (a reflection that
the Red Book will most likely be used
for building and civil engineering
projects)
Payment to the Contractor is based

upon a Lump Sum price and
normally against a schedule of
milestones to be achieved by the
Contractor. This reflects that the
Yellow Book will most likely be used
for process plants and the like where
a
high
degree
of
offsite
manufacture
of
plant
and
equipment is foreseen and payment
terms can be drafted to recognise
this situation subject to the listing of
such plant and equipment within the
Contractors tender as within the
Red Book
Risk sharing is balanced between

Parties such as the Employer taking
the risks of adverse physical
conditions and the operation of
the forces of nature that are
considered to be unforeseeable
Claims by both Parties have to follow

procedures, albeit the conditions
imposed upon the Contractor are
harsher with the inclusion of a fatal
notice provision
The Contractor has some financial

protection in that it can request
evidence from the Employer that it
has the finances to pay the
estimated Contract Price
Testing procedures leading to

completion are likely to be more
complicated than within the Red
Book, again reflecting the likely
nature of the project
The Yellow Book shares with the Red

Book the provisions noted above
relative to:
Materials can be paid for both on

and off site if strict criteria are
followed, including the listing of
materials for which payment maybe
sought within the Contractors
tender
The FIDIC 1999 First Edition Yellow Book

The main features of this Contract can be
summarised as:
It is suitable for all projects where the

main responsibility for design lies with
the Contractor based upon the
Employers Requirements although
provision is made for the Employer
(or his Engineer) to design elements
of the Works
The administration of the Contract
and approval of work is carried out
by the Engineer as is certification of
payments and determination of
extensions of time
Risk sharing
Claims by both Parties.
Financial protection for the
Contractor
The FIDIC 1999 First Edition Silver Book

The Red and Yellow Books are said to
provide contracts with a balanced view of
risk sharing meaning:
The Employer pays the Contractor

only when specific risks occur
The Contractor does not have to

include within its tender for risks that
are difficult to value
The above means that the Employer has a

great degree of uncertainty in respect of
the final price and the final time for
completion.
The Silver Book reflects a market desire for
certainty of cost and time; perhaps by a
one off Employer or a totally risk adverse
Employer willing to pay the price or
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potentially by lenders who crave certainty

of price and time, such that the risk
allocation is far from balanced.
The Contractor is asked to allow within its
tender for a wide range of risks relative to
cost and time; such risks will most likely
include all ground conditions (potentially
in a country of which the Contractor will
have little knowledge) and the completion
of the Works will be based upon a strict
but often brief performance related
specification.
The Employer will still bear some risks such
as those related to war, terrorism and
Force Majeure but the unbalanced risk
profile of this Contract will undoubtedly be
a higher price; a factor that Employers
must accept.
The main features of the Silver Book can
be summarised as:
Design liability rests solely with the

Contractor,
the
Employer
will
provide its requirements but these
are often in the form of a brief
performance specification
The Contractor carries out all
engineering,
procurement
and
construction
often
including
performance tests after completion;
a
turn-key
project
allowing
operation of the facility upon
completion
There is not an Engineer within the

Contract; the Employer may appoint
an Employers Representative
It is lump sum Contract with

payment terms most likely similar to
those envisaged under the Yellow
Book
Given the above circumstances under

which an Employer may select a Silver
Book, Employers should recognise the
significant costs for a Contractor to
produce a tender. Accordingly it is hoped
that Employers recognise this and select
only a small number of Contractors to

tender.
Similarly Employers have chosen a turnkey
style of contract and therefore should
allow the Contractor complete freedom
to carry out the Works in its chosen manner
in order to reach any performance criteria
laid down by the Employer.
If the Employer cannot grasp such factors,
or the tender time is too short to allow the
Contractor to compile an adequate
tender, or considerable amounts of work
are underground, or difficult to inspect the
Employer may be better off using a Yellow
book, accepting some additional risks and
receiving a lower tender price.
The FIDIC 1999 First Edition Green Book

The final contract to be issued in 1999 was
the Green Book or Short Form of Contract.
This Contract recognised a need for a
much simpler and shorter contract to suit
projects with a relatively low Contract
Price and short time duration.
The Contract itself is very flexible, any
reader will however recognise the
Contract as being from the same family
albeit it has only fifteen clauses and a total
of ten pages.
The clauses are short and easily
understood; whilst design can be carried
out by either party an Engineer is not
foreseen, however the Employer may
appoint a Representative. Payment can
be made on either a lump sum or
remeasured basis.
As with the major forms the Contract
includes guidance notes (noted as not
forming part of the Contract) as well as an
Agreement together with its Appendix and
Rules for Adjudication. The noticeable
absentee being the Particular Conditions
section; in this respect FIDIC consider that
the Green Book can work without such
conditions however, a cautionary note is
provided should an Employer deem it
necessary to amend the drafted Contract.
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A final thought
Without doubt FIDIC broadened its appeal
to those selecting contract forms, whether
they be Employer, Engineers providing
advice, project funders such that there
was a contract for every occasion.
Nevertheless FIDIC continued to draft
contracts to recognise the marketplace
and sectors of the construction industry as
will be discussed in a subsequent article.
Driver is the trading name of Driver Consult

Ltd, a member of Driver Group plc (AIM:
DRV). Driver Consult is the principle trading
subsidiary of the Group and has been
providing the construction and
engineering industries with commercial
and dispute resolution services since 1978.
During the last year over 2000 engineers,
surveyors and commercial managers have
attended Driver breakfast seminars in the
UK alone. In response to demand Driver
has developed a range of high quality
FIDIC training courses, workshops and
services.
For details please contact us at
international@driver-group.com
or call +44 (0) 20 7247 4989
This article was first published in Civil
Engineering Surveyor (CES) Sept 2011. The
title is the journal of the Chartered
Institution of Civil Engineering Surveyors.
Permitted reproduction quotations,
citations and references
Permission is granted for short quotations or
reproduction in full provided the authors,
company and link to the source are
properly noted.
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Endnotes
1. CES is an abbreviation of the title Civil Engineering Surveyor which is the journal of the
Chartered Institution of Civil Engineering Surveyors.
2. Paul Battrick
FRICS MCIArb CEDR Accredited Mediator
A chartered quantity surveyor, Paul heads Driver Groups London based international
business, with the exception of the Middle East and Africa.
He supports international clients by acting as either a Mediator or Expert Witness in the
event of Litigation and/or Arbitration. He has extensive experience in the Energy sector
advising clients in respect of EPC power plants, constituent parts such as boilers, turbines,
generators and also ancillaries such as flue gas desulphurisation plants. Paul is a
practising CEDR Mediator.
3. Phil Duggan
BSc MSc MCIArb
A director of Drivers international business, Phil has over twenty years industry experience
providing quantum, contractual and commercial advise to clients on major projects.
His experience includes over twelve years in the water & waste water, power generation
and oil, gas and petrochemical sectors with clients depending on his high level of
technical understanding of the mechanical, electrical and process elements.
4. Driver
Driver have excelled at providing construction and engineering focused services since
1978.Our Project Management, Programming, Commercial Management, Quantity
Surveying, Contracts and Dispute expertise supports the delivery of major projects
worldwide and bridges the gaps between the construction, legal and financial sectors.
For more information please visit www.driver-group.com
The companys international business is administered from Drivers London office.
1 Norton Folgate
London
E1 6DB
Telephone +44 (0) 20 7247 4989
Facsimile +44 (0) 20 7247 4959
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This is the second in a series of articles being published in CES1.
In their first article, Paul Battrick2 and Phil Duggan3 of Driver4 discussed the birth of FIDICs
rainbow suite, in this the second article they provide a brief insight into the continued growth
of the rainbow as other contracts have been produced to recognise the demands of the
international construction marketplace
Paul Battrick
Mediator
The Pink Book
Introduction
Whilst funding agencies adopted the

versions of old and new Red Books for
many years it became standard practice
to amend certain clauses. In response to
the Multilateral Development Banks
(MDBs) desire to harmonise their bid
documents including a standard form of
contract, FIDIC responded by issuing the
Conditions of Contract for Construction
MDB Harmonised Edition; the latest version
being issued in 2010.
First a brief introduction followed by an

overview of various forms.
The Gold Book
Phil Duggan
BSc MSc MCIArb
The White Book

As previously noted FIDIC also drafts, as
well as contracts between an employer
and
contractor,
many
agreements
between client and consultant. The
Client / Consultant Model Services
Agreement, now in its fourth edition,
issued in 2006, it has become known as the
White Book.
The Blue Book (or Turquoise Book as it

is sometimes called)
This form is designed specifically for use in
connection
with
dredging
and
reclamation projects. It differs from the
major forms in many ways but perhaps
most importantly that it was drafted in
close collaboration with the International
Association of Dredging Companies
(IADC) and as such has a great input from
contractors from the outset. The current
version of the Form of Contract for
Dredging and Reclamation Works is the
fourth edition issued in 2006.
This form of contract is probably the most

radical of the new colours; it represents a
contract period of over 20 years! It is a
design, build and operate (DBO) contract
that the industry has needed for some
time to reflect the ever growing trend that
contractors no longer construct something
then go away but also maintain and
operate the facility for many years to
come. It has been described as a Yellow
Book with an operate and maintenance
contract bolted on; the First Edition of the
Conditions of Contract for Design, Build
and Operate Projects was issued in 2008.
No colour as yet, but a subcontract

FIDIC has often issued a new form of
contract as a test edition such that the
construction industry can review the
proposed conditions of contract whilst
perhaps using them in a real life situation.
The latest test edition again is a departure
from
the
engineer
driven
FIDIC
organisation since it delves into the world
of the contractor and subcontractor,
although it is noted that advice was
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sought from many working for and with

contracting organisations.
The results being the Conditions of
Subcontract for Construction for Building
and Engineering Works designed by the
Employer issued in 2009. As the title of this
form suggests it is for use with the Red Book
and the Pink Book.
It is the second
attempt at creating a subcontract since
FIDIC issued one in 1994 relative to the old
Red Book
Overview of the various forms

The White Book
The drafters of the White Book are
predominately engineers who within this
form sought to create conditions of
agreement that would span the life cycle
of
an
engineers
or
consultants
involvement.
Accordingly the document is suitable for
use during:
pre-investment and feasibility studies
the design phase
the administration of a contract
As with FIDIC contracts there are both

general and particular conditions of
contract which combined set out the
scope of the consultants work, payment
terms and the like.
The White Book incorporates the same
financial protection as afforded to
contractors in that the consultant too can
ask the Client (as opposed to the
Employer) if it has the ability to pay the
Consultants fees. In a similar vein, and
maybe not surprising to some, the White
Book limits the consultants responsibilities,
and therefore liabilities, to exercise
reasonable skill, care and allegiance in the
performance of his obligations under the
Agreement.
This limitation is further
qualified since nothing else in the
agreement, or any legal requirement of
the Country or any other jurisdiction can
impose a greater risk upon the consultant.
Thus the consultant/engineer has a limited
risk that, it is suggested, is not in accord
with the thoughts of employers and
contractors alike.
The Blue (Turquoise) Book

The Blue Book is like the Green Book in that
it is abbreviated and flexible. In terms of
being a smaller document the general
conditions are only 16 pages and fifteen
clauses long.
The format has also
changed from the major forms with the
agreement and appendix to the contract
being the first section. Perhaps it is the
major forms that have the order incorrect
since it is those particular terms that are
the most important to recognise especially
in such a flexible form as the Blue Book.
Similarities with the major forms are in the
inclusion of standard forms, such as
securities, a section on adjudication (a
one or three person DAB) with rules and
the adjudicators agreement and the all
important guidance section.
The engineer is still recognised within the
contract however design responsibility can
rest with either the employer (and its
engineer) or the contractor. Payment
terms are extremely flexible and a list of
options,
such
as
lump
sum,
remeasurement and cost plus are all
noted within the appendix.
It is perhaps apparent that a greater input
of a contractors organisation has
influenced some of the general conditions,
as has perhaps the use of other forms
within the industry as a whole:
Notices by the contractor in respect

of a claim must be given within 28
days but there is no fatal provision.
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Claim items are listed as defined risks

which may entitle the contractor to
monetary or time compensation.
The defined risks, recognising the likely

impacts of weather upon the
contractors ability to make progress,
potentially soften the usual clause
wording on one hand, entitling the
contractor to make a claim if any
operation of the forces of nature
affecting the Site/and or the Works,
which was unforeseeable or against
which an experienced contractor
could not reasonably have been
expected to take precautions but
give the employer (and contractor)
less room for debate by also defining
the employers risk to be climatic
conditions more adverse than those
specified in the Appendix.
If disputes are not settled amicably

they are to be settled by referral to
adjudication by a DAB and, if
dissatisfied with the DABs decision (or
if no decision is made within the set
timescale) the dispute can be
referred to Arbitration.
The Blue Book is a model of a contract

drafted by those with a particular section
of the industry in mind and with the
knowledge to incorporate the necessary
variations to standard forms that may
have been considered for use in the past.
The Pink Book
contractor would design the facility; in

other words a Yellow or Silver Book project.
The MDBs include in their number such
organisations as:
The World Bank
The European Bank for Reconstruction

and Development
African Development Bank
The MDBs in fact represent lending

agencies that fund projects on a global
basis and as such play a crucial role in the
development of the planets lasting
infrastructure.
With this level of
importance in mind it was crucial that
FIDIC participated in amending the Red
Book to provide a contract not only that
adhered to the wishes of the MDBs but
also gave borrowers, engineers and
contractors some consistency in format,
leading to fewer ad-hoc and poorly
thought through amendments.
Those faced with a Pink Book will have
often been used to the Red Book and
therefore will be familiar with the general
layout of the contract, the twenty clauses
are still there but there have been
amendments which some may think are
for the better, and others otherwise.
Examples being when compared to the
Red Book:
As previously noted the Pink Book was

created as a derivative of the Red Book.
This reflecting the usual nature of a project
that would require funding from lending or
aid agencies and would deploy from the
outset an engineer to assist in all phases of
the project, especially design.
Those
projects
normally
being
infrastructure types of projects as opposed
to industrial, power, process plants and the
like where funds would normally be from
the employers own resources and the
Minor amendments have taken place

to definitions of which one is worthy of
being noted:
Cost no longer refers to

reasonable profit but states
profit since at clause 1.2 profit is
fixed at 5% unless stated
otherwise in the contract data.
clause 1.5, is a new clause that allows

the lenders representatives to inspect
the site and audit the contractors
accounts and records relative to the
project
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clause 2.1, access to the site must be

given such that the programme can
proceed without disruption
clause 2.4, the employer has to
demonstrate its ability to pay the
contract
price
before
the
commencement date and also
punctually
clause 2.5, the employer must now

give notice of its claims within 28 days
but whilst more onerous there is still no
condition precedent
clause 3.1, the engineer has to gain

the employers approval before
dealing with matters under clauses
dealing with claims in respect of
unforeseeable physical conditions
and the issue of variations
clause 3.5, the engineer now has to

give its determination within 28 days
from receipt of the corresponding
claim or request
clause 6.2, there is an obligation upon

the contractor to inform its personnel
of their liability to pay local income
tax
clause 8.1, the

commence unless:
project
the sequence or progress of the

works.
clause 15.5, whilst the employer can

terminate for convenience it cannot
terminate
to
pre-empt
a
just
termination by the contractor.
clause 15.6, is a new clause that

attempts to deal with corrupt and/or
fraudulent practices.
clause 16.2, the contractor must now

demonstrate that the employers
failures must materially and adversely
affect the economic balance of the
contract and/or the ability of the
contractor to perform the contract
prior to termination.
There are
however two further grounds allowing
the contractor to terminate:
the contract agreement has

been signed by both parties
the contractor has reasonable

proof that funding is in place
the advance payment has

been
received
by
the
contractor
clause 8.6, the contractor can be

paid for acceleration measures to
overcome employer delays
clause 13.1, the contractor is not
bound to carry out a variation if it
would trigger a substantial change in
Failure of the funder to provide

funds.
The absence of the engineers

instruction to commence work
180 days after the letter of
acceptance.
clause 19.2, in order to claim force

majeure the claiming party must
demonstrate that it has been
prevented
from
performing
its
substantial obligations
clause 20.6, arbitration rules may differ

according to the origin of the lending
agency.
cannot
The amendments to the Red Book appear

to be a mixed bag providing support to
the contractor in terms of guaranteed
funding but also apparently allowing the
employer influence over the engineer in
respect of claims for unforeseeable
ground condition and variations.
The latter is not considered to be prudent
especially
when
considering
that
borrowing countries may not have the
sophistication necessary to deal with such
matters.
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The Gold Book

The Gold Book without doubt fills one of
the last gaps in FIDICs toolbox of
contracts. Its use is growing especially as
government departments such as water
authorities warm to the idea of having
foreign contractors bring their knowledge
of providing water treatment and supply
at a profit but also having to be
responsible for remedying defects whilst
remaining in the country rather than being
on the side of the globe.
Accordingly FIDIC has not only responded
to employers who crave to outsource but
also the changing face of contractors
who are now operators too. Any potential
disputes between contractors carrying out
a design and build contract to
questionable standards leading to poor
performance, defects and disputes whilst
leaving the employer to struggle through a
20 year life time of a plant have,
potentially, been negated.
That is,
provided the whole scheme is fully thought
through and both parties, as with all
contracts, are willing and able to act
responsibly towards each other such that
a balance is struck between the
construction and operating elements of
the contract.
will be the responsibility of the

contractor, as is a cost over that
stated on the schedule. Any surplus in
the fund at the end of the twenty
years is divided equally.
The employer is entitled to deduct 5%
from payments during the operation
service period (OPS) in case the
contractor
does
not
fulfil
its
maintenance obligations. The fund is
to be released, if not spent, within the
final payment to the contractor. The
contractor being responsible for its
own defects arising from design and
construction in this period.
An independent audit body is jointly

appointed for the duration of the OPS
to monitor the performance of the
contractor and employer.
Whilst
having no power, the parties are
intended to give due regard to
matters raised by the audit body.
A joint inspection is required at least

two years before the end of the OPS;
any works identified must be carried
out by the contractor who will also
face completion tests similar to those
at the end of the design and build
phase.
Defaulting contractors risk
losing the 5% maintenance retention
fund.
The contracts ethos and key features are:
Design, build plus operation and

maintenance for 20 years by the
contractor on a green field site.
A standing DAB is established from a

set date for the design and build
phase and a new one every 5 years
during the OPS.
Design and build phase risk allocation

similar to the Yellow Book with
exacting completion criteria but also
a cut off date should the contractor
be 182 days late leading to
termination if desired.
The key to success appears to be with the

contractor who must design and build a
quality plant with low operating and
maintenance costs; fit for purpose and
built to last.
Payment on a lump sum basis but a

defined asset replacement fund and
schedule that notes the timing and
cost of the replacement of certain
assets. Costs of replacing plant and
equipment outside of the schedule
However, like any relationship time gives

rise to change and only time will tell if
FIDIC have considered all factors such as
changes in the deliverables required by
the employer. FIDIC has very recently
issued its guide to this form.
5 of 7
The rainbow suite

The Subcontract to the Red and Pink

Books
As noted this form is a test edition with the
first edition arriving sometime later.
The contract seeks to be back to back
with the Red Book, in this respect selected
highlights or lowlights are:
The subcontractor is required to

complete its scope of works such that
no act or omission shall constitute or
cause a breach under the Red Book.
The contractor is entitled to make a

fair decision in respect of its claims
towards the subcontractor and
deduct monies accordingly.
Payments are back to back (where

legal
to
do
so)
such
that
subcontractors may find contractors
using this as a shield to avoid paying
for their own problems
The subcontractor is apparently

responsible for the care of its works
until the main contract works are
taken over. This situation will always
require
careful
management
whatever the form of contract
Notice provisions are passed through

to the subcontractor but with a
reduction in time to 21 days to allow
the contractor to fulfil its obligations
under the main contract.
A subcontract that allows both fair

payment provisions for the subcontractor
for all liabilities of the contractor whilst
obliging the subcontractor to allow the
contractor to make claims upwards will
always be a tough ask; has FIDIC really got
it right?
Perhaps the absence of
subcontractors
from
the
drafting
committee is a clue.
A final thought
FIDIC has continued to broaden its
potential customer base by these further
contracts. The next stop could be a target
price contract but it is understood that we
will see a complete overhaul of the 1999
suite in the not too distant future.

providing
the
construction
and
services.
For details please contact
or call +44 (0) 20 7247 4989
us
at

Engineering Surveyor (CES) October 2011.
The title is the journal of the Chartered
Permitted reproduction
quotations,

properly noted.
6 of 7
The rainbow suite

Endnotes
2. Paul Battrick
business,
with
the
exception
of
the
Middle
East
and
Africa.
3. Phil Duggan
BSc MSc MCIArb
4. Driver
1 Norton Folgate
London
E1 6DB
Telephone +44 (0) 20 7247 4989
Facsimile +44 (0) 20 7247 4959
7 of 7
The rainbow suite

This is the third in a series of articles being published in CES1. The first introduced the rainbow
suite, the second provided insight into the continued growth of the suite.
In this the third article by joint authors, Paul Battrick2 and Phil Duggan3 of Driver4, commenting
upon the FIDIC forms of contract the programming requirements are considered in
conjunction with the procedures in respect of progress reporting. The Parties to the Contract
and the Engineer, but in particular the Contractor, all have clear obligations in respect of the
programming and reporting functions within the FIDIC forms.
Paul Battrick
Mediator
Phil Duggan
BSc MSc MCIArb
Programming and Reporting
A Benefit or Burden for the Contractor

and the Employer and its Engineer?
In this the third article commenting upon
the FIDIC forms of contract the
programming
requirements
are
considered in conjunction with the
procedures in respect of progress
reporting. The Parties to the Contract and
the Engineer, but in particular the
Contractor, all have clear obligations in
respect of the programming and reporting
functions within the FIDIC forms.
It is considered that these obligations are
intended to be considered in tandem with
the provisions for considering claims
submitted by the Contractor such that any
Contractor who neglects, or is allowed to
neglect, its obligations may face a more
difficult task to establish its entitlements
than a Contractor who has fully complied
with its obligations.
For the purposes of this article all
references to Sub-Clause are taken from
the Yellow Book; in simple terms the
Contract for design and build projects
where the design is carried out by the

Contractor.
The drafters of the FIDIC suite of contracts,
and many commentators, say that the
FIDIC contracts not only provide the
mechanisms for dealing with risks,
responsibilities, payment terms, change
and all the other good things necessary to
allow a project to be completed in a
managed and (hopefully) equitable
fashion but they also act as a best
practice project management handbook.
The project management handbook is
most prevalent within the programming
and reporting provisions and no doubt the
FIDIC drafters consider what they thought
the Contractor and the Engineer should
be aware of in order that control of the
project was to the fore and certainty of
outcome, especially in respect of progress,
was assured.
Many of us, and perhaps some FIDIC
drafters, will have received lectures in
management at some stage of our
careers and many will know the
mnemonic.
Family Planning Often Means
Choice of Contraceptives
Careful
Management handbooks quite rightly look

to the perfect world however the real
world is one of harsh commercial realities
and shortcomings in performance in many
respects where, should a Contractor allow
within its bid for every risk and obligation it
would certainly lead to lost tenders. As
with all things compromise is often the
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solution however, to compromise in

respect of programming and reporting
may not be such a wise course of action.
The FIDIC Yellow Book envisages the
typical procedure to be expected in
establishing a contract for a design and
build project:
Invitation
to
bid
(ITB)
with
Employers Requirement included,
no doubt a timescale for the
completion of the project was
stated.
Contractors bid complying or

otherwise with the ITB, including a
timescale which was probably
detailed to some degree noting
any required milestones and/or
those of importance to the
Contractor, such as the provision of
feedstocks.
The coming together of the

Employer and the Contractor to
create a contract detailing without
ambiguity a shared understanding.
It is now that Clause 8, Commencement,

Delays and Suspension takes over, and for
the purpose of this article Sub-Clause 8.3
Programme in particular.
The Contractor, will have agreed or
accepted the Time for Completion noted
within the Appendix to Tender and the
Engineer will have issued a notice of the
Commencement Date. Assuming all other
formalities are in place, such as the
provision of the Performance Security, the
dates
for
commencement
and
completion of the Works, including any
Sections, are now anchored.
Sub-Clause 8.3 Programming

Now Sub-Clause 8.3 takes over!
It is suggested that all programmes in
existence at this point in time should be
cast to one side as from now on only one

programme will matter; the Sub-Clause 8.3
programme and of course the revisions to
it.
This programme will be, or should be, a
baseline against which the performance
of the Contractor and the Employer, if
appropriate, will be monitored, claims for
extensions of Time for Completion will be
based upon and Engineers instructions to
expedite progress will be based.
Its
importance cannot be stressed enough.
However, the requirements upon the
Contractor of Sub-Clause 8.3 goes further
than producing a programme; the
Contractor is required, for the first time to
bear its soul before the Engineer for
scrutiny. Whilst the details to accompany
the programme may seem quite normal to
most they are an obligation upon the
Contractor.
The Contractor has to submit, to the
Engineer, its detailed programme within 28
days after receiving the notice of the
Commencement Date. Realising that the
programme will not be perfect and will be
subject to revision not only to take
account of actual progress but also to
take account of other factors such as subsuppliers
and
sub-Contractors
programmes being agreed as orders and
contracts are placed, the FIDIC drafters
placed a further obligation upon the
Contractor
to
submit
a
revised
programme
whenever
the previous
programme becomes, in effect, out of
date and does not reflect the manner in
which the Contractor will achieve its
obligations.
Every time the Contractor submits a
revised programme it must include:
the order in which the Works will be

carried out
the timing of each stage of design,

preparation
of
Contractors
Documents,
procurement,
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manufacture, inspection, delivery

to site, construction, erection,
testing, commissioning and trial
operation
the periods allowed for the

Engineer to review documents
submitted by the Contractor (SubClause 5.2) and any similar
submissions,
approvals
and
consents
specified
in
the
Employers Requirements
the sequence and timing of

inspections and tests specified in
the contract
a supporting report which includes:
a method statement noting

the
major
stages
of
execution of the Works
the
Contractors
reasonable estimate of the
numbers of each class of
Contractors Personnel and
each type of Contractors
Equipment required at Site
for each major stage of the
Works
Having received all of this information at

the outset of the project and every time
the programme is updated the Engineer
has 21 days in which to state, by a issuing
notice, that it does not comply with the
contract; note that the Engineer does not
have to approve programme should the
Engineer not issue such a notice the
Contractor must proceed in accordance
with the programme; in doing so the
Contractor should be aware that the
Employer will rely upon that programme in
arranging any feedstocks and other inputs
it has to facilitate the completion of the
Works.
FIDIC is silent as to what should happen if
the Engineer gives notice that the
programme does not comply with the
contract; as to what non-compliance
with the contract actually means maybe

left to the Engineers interpretation. It is
considered
that
it
should
mean
compliance with dates and periods of
time stated within the contract including
working hours and periods for approvals
etc by the Engineer but should an
investigation take place into the level of
resources and methods the Contractor
intends to use, probably not. Nevertheless
the Contractor has provided to the
Engineer an insight into such things as its
intended resources which, as we all know,
is also often the starting point for many a
claim prepared by a Contractor.
As noted the Sub-Clause 8.3 programme is
the baseline against which the Engineer
will monitor the Contractors progress and
the Contractors ability to meet the Time
for Completion and decide whether or not
to issue instructions to the Contractor to
prepare and issue a revised programme
and supporting report detailing how the
Contractor will accelerate the Works, as its
own cost and potentially with claims from
the Employer to complete with the Time
for Completion.
There is one other obligation of Sub-Clause
8.3 that is worth nothing; the Contractor is
to inform the Engineer of:
specific
future
events
or
circumstances which may diversely
affect the work (note the Works is
not used)
increase the Contract Price
delay the execution of the Works
It is also worth noting that the Employer

does not have a similar obligation.
The Contractor has to submit estimates
relative to these occurrences and/or a
proposal under the Variation Procedure if
applicable.
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Early warning clauses such as this are now

commonplace and there is no noted
sanction for non-compliance by the
Contractor however, Contractors should
consider this provision in the light of the
fatal notice provisions under Sub-Clause
20.1 (a topic for later discussion).
incorporated into the Works) and

Materials (things of all kinds, other
than Plant) to be incorporated into
the Works)
Sub-Clause 4.21 Progress Reports

Having given the Engineer an insight into
its initial and revised programmes and
resourcing levels the Contractor is obliged
to prepare reports, on a monthly basis,
that reveal yet more of the Contractors
progress towards Completion.
The monthly reports can be quite a time
consuming exercise to complete since
they require a considerable amount of
detail, let alone six copies to be issued.
Each report must include:
charts and detailed descriptions of

progress including:
each stage of design

(possibly relevant to the
major
stages
identified
within the Sub-Clause 8.3
programme)
Contractors Documents (a
defined
term
including
calculations,
computer
programmes, drawings and
models)
procurement, manufacture
and delivery to site
erection,
commissioning
and trial operations
photographs showing the status of

manufacture and of progress on
the Site
for the manufacture of each main
item
of
Plant
(apparatus,
machinery and vehicles to be
the
name
manufacturer
of
the
the manufacturers location
percentage progress
actual or anticipated dates

of:
commencement of
manufacture
Contractors
inspections
Tests
shipment and arrival

at site
records of the numbers of the

Contractors
Personnel
(the
Contractors staff, Sub-contractor
staff and anyone else working at
the Site)
records
of
the
Contractors
Equipment (types and details of
plant and vehicles used by the
Contractor, its Sub-contractors and
anyone else working at the Site)
copies
of
quality
assurance
documents,
test
results
and
certificates of Materials
list of Variations, notices given by

the Employer of its intention to
make a claim towards the
Contractor and notices of claim
issued by the Contractor
safety statistics, including details of

hazardous
incidents,
activities
relating to environmental aspects
and public relations
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comparisons
of
planned progress
details
of
any
events
or
circumstances that may jeopardise
the Contractors ability to meet the
Time for Completion or any interim
milestones (it is noted that this is
another opportunity for an early
warning of potential delay by the
Contractor)
actual
and
measures being adopted or to be

adopted by the Contractor to
overcome delays (it is not certain if
this relates to recovery measures
being adopted as a result of an
Engineers
instruction
and/or
measures voluntarily adopted; the
latter is most likely given the
required comparison in respect of
progress)
Whilst most Contractors will readily have to

hand, whether allowed for in the bids or
not, the resources and management
structure to comply with the reporting
obligations within Sub-Clause 4.21 it is clear
that those working for the Contractor, Subcontractors, Sub-suppliers and specialist
design houses must also provide the
countless pieces of information required to
allow the Contractor to conform.
It is suggested that perhaps Contractors
who are not used to FIDIC, such as those
from Eastern Europe, who may find
themselves working on externally funded
projects may find these obligations outside
of their normal reporting capabilities.
Similarly some Engineers may also find the
administration of this aspect of FIDIC
somewhat difficult to achieve, albeit it
gives the Engineer the perfect platform to
report to the Employer.
Benefit or Burden?
To consider whether or not
the
programming and reporting obligations
are a benefit or burden for the Contractor,

a simple question must be asked, what
does the Contractor (and all other parties
involved for that matter) really want from
a project?
After the difficulties of bidding and winning
a project the Contract will desire certainty
and to construct with control. That being,
amongst other things, certainty of:
Contribution to overheads and

profit, the lifeblood of any business
Timely completion, to allow the

planned movement of resources
towards the next project
Completion to the required quality

standards, to enhance reputations
A dispute free project, to avoid the

time consuming and expensive use
of resources
Whilst far easier to say than to achieve; to

obtain certainty it requires all involved with
the
Employers,
Engineers
and
Contractors organised to fulfil their
obligations to the standards required and
at the right time.
The initial Sub-Clause 8.3 programme not
only provides the Engineer with a yardstick
to measure projects against but it also
allows the Contractor to inform the
Employer when critical inputs such as free
issue materials, electricity, gas, water or
feedstocks are required. It is therefore
something for the Contractor to measure
the Employers performance against and
every updated programme and report
should therefore contain a statement
regarding the progress of the Employers
obligations as well as the required
information regarding the Contractors
progress. There should be no hindrance
from either the Employer or the Engineer to
the Contractor taking a proactive stance
in relation to a desire to complete the
Works without delay from the Employers
quarter.
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It is clear however, that the focus, on the

Sub-Clause 8.3 programme and its
revisions
is
on
the
Contractors
performance. Despite this opportunity to
set out a clear statement of intent that is
capable of demonstrating cause and
effect in respect of delay to the Time for
Completion all too often Contractors
produce
programmes
that
are
inadequate at the outset, possibly due to
a lack of information from suppliers etc,
and continue to be inadequate when
revised.
A good programme that is properly
maintained is without doubt, a double
edged sword; it allows the Contractor to
identify its own shortcomings and take
instant remedial action as well as identify
delay that falls under the risk area of the
Employer such that an extension to the
Time for Completion can be instantly
requested and hopefully determined by
the Engineer such that the risks of
completion fall back towards the
Contractor.
The reporting requirements within SubClause 4.21 are a great motivator for the
Contractor to have at its fingertips all the
data to allow time to be properly
monitored and adjusted to suit deviations
from any intended programme. In doing
so the Contractor can once again feed
into those responsible for preparing the
programme data indicating the rate of
progress of all concerned allowing the
programme to be adjusted to take
account of either work being completed
earlier than scheduled or likely delays such
that
resources
can
be
deployed
economically and claims, if appropriate
will have strong foundations based upon
fact.
In a similar fashion the Engineer, by
reviewing the available data and early
warnings given by the Contract, can
foresee areas of work where delays are
likely to occur and take appropriate
action by alerting the Employer, especially
if the Employer is culpable, but more

importantly communicating with the
Contractor to mitigate the impacts of
delay and issue a Variation if desired and
required.
Whilst, with all this data to hand, the
Contractor should be able to construct
with control and take the appropriate
action when and if delay occurs,
Contractors
should
also
never
underestimate that the data; resourcing
levels, duration of work operations etc etc
is also with the Engineer who will use this
against any Contractor that submits a
hasty and ill-prepared claim for what
could be a very just entitlement.
There is doubt that in the minds of the
FIDIC drafters that all involved intended to
fulfil their obligations to the standards
required and in a timeous manner but in
the event that this did not happen and
delay occurred the Engineer and the
Contractor would have a wealth of
information to hand to prepare claims for
just entitlements that could be determined
without question under Clause 20,
although that Clause is a topic for another
day.
Sadly all concerned have frailties either as
individuals and/or organisations however
this should not prevent at least the firm
foundations of good programming from
being achieved.
A final thought
Perhaps the FIDIC drafters did attend the
same lectures as it is not too difficult to see
that with any FIDIC contract there are
elements
of;
Forecasting,
Planning,
Organisation, Motivation, Coordination,
Control and Communication
6 of 8
The rainbow suite


providing the construction and
services.
or call +44 (0) 20 7247 4989
Engineering Surveyor (CES) November
2011. The title is the journal of the
Chartered Institution of Civil Engineering
Surveyors.
Permitted reproduction quotations,
properly noted.
7 of 8
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Endnotes
2. Paul Battrick
3. Phil Duggan
BSc MSc MCIArb
4. Driver
1 Norton Folgate
London
E1 6DB
Telephone +44 (0) 20 7247 4989
Facsimile +44 (0) 20 7247 4959
8 of 8
The rainbow suite

This is the fourth in a series of articles being published in CES with the post 1999 editions of
1
the FIDIC suite of contracts being the overall subject matter.

The first article discussed the birth of FIDICs rainbow suite, the second provided a brief insight
into continued growth of the rainbow, the third article looked at programming and reporting
requirements. In this, the latest article, joint authors Paul Battrick and Phil Duggan of
2
Driver look at studying project contracts themselves.

4
manufacturing in Europe had been

Paul Battrick
Mediator
rejected at site in the Far East.
It had been rejected as it was

constructed
Phil Duggan
Director (International) BSc
MSc MCIArb
using
steel
and
not
stainless steel as required by the

specification.
It is easy to tell all involved with the
When
asked
why
an
alternative
management of any construction project to
material was used the reply was
read and fully understand the Contract. No
we
matter how experienced we are there is
from steel.
always
make
these
vessels
always the potential for an amendment to

a previous form, a new revision or an
The specialist Contractor was forced
Employer removing some well understood
to make a new vessel constructed
elements that may fundamentally alter any
out
previous understanding.
resulting
of
the
in
specified
losses
material
and
delay
damages being levied a true story.

Please do not adopt the attitude of Ive
seen that form before or we always do it
All this could have been avoided had
like this as one particular client did to its
someone
detriment.
documentation.
Contract
Whilst not involving a FIDIC
the story
highlights a
considered
the
pertinent
totally
incorrect attitude to adopt; in short:
A clause that is within most contracts that

is similarly misunderstood relates to Force
A specialist Contractor asked for
Majeure. Perceived lists of relevant events
assistance, the pressure vessel it
are carried from one project to another
had
without considering if the events change; if
spent
1000s
of
hours
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the list is exhaustive, since the word
Contractor was entitled to add profit to its
include is often within the clause or if the
cost claims remained silent.
events carry monetary entitlements as well
FIDIC forms Cost expressly excludes profit
as time benefits.
but profit is still an entitlement under
Now in the
certain circumstances as will be explained.

Definitions can vary from contract type to
contract type and, in practical terms, from
work scope to work scope.
FIDIC defines Costs as:
Consider for
yourselves suitable definitions relative to
Cost
means
remeasurable and lump sum contracts and
expenditure
also completion requirements for a road as
incurred or to be incurred),
opposed to a multi phased power plant.
whether on or off the Site,

including
FIDIC
conveniently
provides
definitions
all
reasonably
overhead
and
similar charges, but does not
firstly in the body of the Contract in
include profit.
respect of topics:
All
those
dealing
with
entitlement
(a
The Contract
preferable word to claim) understand that
Parties and Persons
success depends upon the creation and
Dates, Tests, Period and Completion
maintenance of the appropriate records
Money and Payments
and in doing so can fulfil the requirements
Works and Goods
of
Other Definitions
documents and adjudicating upon those
FIDIC
in
both
submitting
claim
documents. The definition of Cost provides

and also in alphabetical order noting the
a starting point in respect of monetary
particular Sub-Clause.
entitlements
and
clause
20
(Claims,
Disputes and Arbitration) provides the end

For
the
purpose
of
this
article
one
point; in between there are many clauses
definition is selected, that of Cost. It often
within FIDIC which give rise to a monetary,
has differing meanings under various forms
and
of Contract, especially bespoke forms, and
Contractor.
often
time,
entitlements
to
the
is often translated when claims are being

prepared to what those preparing the claim
It pays to understand all of these clauses
would like it to mean.
which can be classed as claims under the

Contract as opposed to claims under the
In earlier additions of standard forms,
governing law of the Contract.
including FIDIC forms, whether or not the
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Briefly, and in respect of the latter type of
Extension of time
claim, FIDIC does not contain an exclusive

remedies
clause
and
also
appears
to
foresee such claims, but still governed by

clause
20,
by
the
use
of
the
Sub-Clause 2.1 Right to Assess to the

Site
word
otherwise within the opening paragraph
If delay is caused or Cost incurred as a
of Sub-Clause 20.1.
result of the Employer failing to give the

Contractor
access
to
the
Site
at
the
Below is a list of the Sub-Clauses which
prescribed time the Contractor is entitled
entitle the Contractor to claim additional
to claim:
money (and possibly time) noting when the

definition of Cost remains as per the
Cost plus a reasonable profit
definition or the Contractor is also entitled
Extension of time
to a reasonable profit.
Sub-Clause 4.7 Setting Out
Sub-Clause 1.9 Delayed Drawings or
Instructions (Red Book only)

result of errors in the original setting out
If delay or disruption is caused or likely to
points and levels of reference notified by
be caused as a result of late drawings or
the Engineer the Contractor is entitled to
instructions the Contractor is entitled to
claim:
claim:
Extension of time
Extension of time
Sub-Clause
Sub-Clause
1.9
Errors
in
the
4.12
Unforeseeable
Physical Conditions
Employers Requirements (Yellow Book

only)
If delay is caused or Cost is incurred as a
result
of
errors
in
the
Employers
Requirements which were not previously

discoverable the Contractor is entitled to
claim:

result of the Contractor encountering
physical
conditions
which
are
Unforeseeable the Contractor is entitled to
claim:
Cost (only)
Extension of time
It is worth noting that Unforeseeable is a

defined term meaning not reasonably
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foreseeable by an experienced contractor
by the date for the submission of the
Tender.
Sub-Clause 4.24 Fossils
result of the Contractors compliance with
instructions issued by the Engineer to deal
with the discovery of fossils and the like
the Contractor is entitled to claim:
Cost (only)
Extension of time
Sub-Clause 7.4 Testing

result of testing being delayed by the
Employer or on behalf of the Employer the
Contractor is entitled to Claim:
Sub-Clause 10.2
Parts of the Works
Taking Over of
If the Contractor incurs Cost as a result of

the Employer taking over or using a part of
the Works the Contractor is entitled to
claim:
Sub-Clause 10.3 Interference

Tests on Completion
with

result of tests being delayed by a reason
for which the Employer is responsible the
Contractor, amongst other remedies, is
entitled to claim:
Extension of time
Sub-Clause 11.8 Contractor to Search
Extension of time

searching for a defect for which it was not
liable the Contractor is entitled to claim:
Sub-Clause
Authorities
8.5
Delays
caused
by
If delay or disruption is caused or Cost

incurred as a result of the actions or non
actions of Authorities the Contractor is
entitled to claim:
Sub-Clause 12.2 Delayed Tests (Yellow

Book only)
Cost, with or without profit, appears

not to have been specifically
considered

carrying out Tests delayed by the Employer
until after Completion the Contractor is
entitled to claim:
Extension of time
Sub-Clause
Suspension
8.9
Consequences
of
Sub-Clause 12.4 Failure to Pass Tests

after Completion (Yellow Book only)
If delay is caused or is likely to be caused

or Cost incurred as a result of the
Engineers instructions to suspend work the
Contractor is entitled to claim:

the Employer delaying access to allow
Tests to be carried out the Contractor is
entitled to claim:
Cost (only)
Extension of time
4 of 8
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Sub-Clause
13.7
Adjustments
Changes in Legislation
for
If delay is caused or is likely to be caused

or Cost incurred or likely to be incurred as
a result of changes in the Laws of the
Country the Contractor is entitled to claim:
Cost (only)
Extension of time
It is worth noting that Country is a defined

term meaning the Country in which the
Site (or most of it) is located, where the
Permanent Works are to be executed.
Thus this definition is very limited in the
field of international contracting where
Contractors, Suppliers and Sub-Contractors
may all have originated from Countries
other than where the project is being
carried out and may suffer as a result of
changes in legislation.
Sub-Clause
16.1
Contractors
Entitlement to Suspend Work
result
of
the
Contractor
properly
suspending work (or reducing the rate of
work) the Contractor is entitled to claim:
Extension of time
Sub-Clause 19.4
Force Majeure
Consequences
of

result of Force Majeure events the
Contractor is entitled to claim:
Cost (only) in respect of the events

listed at Sub-Clauses 19.1 (ii), 19.1
(iii) and 19.1 (iv)
Extension of time
The above list is not exhaustive as to

where the Contractor can gain payments
and/or entitlements within the FIDIC
contracts; the list refers to Sub-Clauses
specifically referring to Cost as defined.
In terms of monetary entitlements, SubClauses not referenced include Evaluation
(in respect of the Red Book) and Variations
as well as Payment on Termination where
an alternative set of rules come into being.
The provisions of Sub-Clause 8.4 in respect
of extensions of time should be thoroughly
considered in respect of entitlements to
time extensions.
The subtle differences between the
contents of the listed Sub-Clauses are
interesting if not explainable. The most
interesting of which may be the addition or
not of a reasonable profit to the
Contractors Cost.
Contractors will argue that they are not
charities and all expenditure properly
incurred as a result of others deserves /
should be required to return a profit.
Similarly many of the claim events, had the
scope been fully understood at the time of
tender by both parties, would have been
included within the Contractors bid and the
Contractor would have had the opportunity
to add profit to its foreseen costs.
Contractors and their advisers may wish to
seek an adjustment to the definition of
Cost when negotiating the Contract in the
future.
The influence of whether or not a Cost
attracts profit may also extend to the
preparation of claims for extensions of
time. Whilst many will say that at all times
the causes of delay should be capable of
being clearly identified, this is often not the
case.
There is also the propensity for
Contractors to establish claims around
events that appear to have the best chance
of success or line of least resistance from
the Engineer; perhaps even a global style
5 of 8
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claim is submitted to gain relief from the
deduction of Liquidated Damages.
In any event at some juncture the
Contractor and the Engineer, or perhaps a
DAB or Arbitral Tribunal, have to consider
the causes of delay, establish periods of
extension of time against those causes and
lastly establish if there are any monetary
entitlements to accompany those periods
of delay.
The addition, or not as the case may, be of
profit to a Contractors elements of a
prolongation claim maybe considerable
amount in these days where mega projects
exist and delays run into years not just
days or weeks. Contractors therefore may
select, if possible, delay events that could
maximise their potential financial returns.
In respect of the Contractor declaring its
required profit, it is suggested that instead
of waiting until such time as a claim exists
and
the
Employer
and
its
Engineer/Representative may be seeking to
limit expenditure against claims, the
parties follow the lead given by FIDIC
within the MDB Harmonised Edition (the
Pink Book).
The Pink Book at Sub-Clause 1.2 differs
from the Red Book by the addition of two
paragraphs, in this context the important
one being:
In
these
Conditions,
provisions
including
the
expression Cost plus profit
require this profit to be onetwentieth (5%) of this Cost
unless otherwise indicated in
the Contract Data.
It will therefore be up to the Contractor to
consider that he may wish to declare a
higher profit than 5% at the pre-contract
stage or accept that 5% profit where
applicable on its entitlements listed with
the Contract.
It may be that the
Contractors actual bid margin was less

than 5% and so it would gladly accept that
on offer.
A further interesting subtlety is the use or
not of the phrase is likely to cause. It
may have been more prudent upon the
part
of
the
FIDIC
drafters,
when
considering the Employers interests to use
this phrase within all entitlement clauses
so as to be consistent with the early
warning obligations upon the Contractor in
terms of time within Sub-Clause 4.21 and
the general notice provisions of Sub-Clause
20.1.
This may also aid the early
conclusion of claim issues.
Contractors, when drafting sub-contracts
should take note of the differing provisions
within the entitlement clauses such that
the variants, especially in respect of the
recovery of profit, are incorporated into
Sub-Contracts so as not to cause a
shortfall in recovery or lengthy discussions
concerning the right or otherwise to profit
in respect of claim monies.
Although, in
practice it appears that Engineers only
deny profit on the Contractors element of
a claim.
It is noted that Sub-Clause 11.8 Contractor
to Search, does not give a specific
entitlement to a time extension albeit
circumstances can be imagined where a
delay to completion may occur.
Under
these circumstances the Contractor has
two further options to obtain any
entitlement
within
Sub-Clause
8.4
Extension of Time for Completion:
Sub-Clause
8.4(b),
where
an
extension of time may be claimed
as a result of any cause under a
Sub-Clause of the Contract.
Sub-Clause
8.4(e),
where
an
extension of time may be claimed
as a result of any delay impediment
or
prevention
caused
by
or
attributable to the Employer, the
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Employers
Personnel
or
the
Employers other contractors on the
Site.
FIDIC having been thorough in respect of
the Contractors claims towards the
Employer have not carried through this
thoroughness in respect of claims from the
Employer to the Contractor.
There is no definition of cost relative to the
Employers claims towards the Contractor
and therefore it must be left to the
Employers agent or the Engineer, to
determine if profit should be passed on as
a legitimate claim item.
Finally, a brief reference was made above
to claims made under the governing law as
opposed to under the Contract. This is
obviously an option open to the Contractor
however, it is considered that claims
properly made under the Contract will have
a greater chance of speedy resolution. It
may also be quite a time consuming
exercise for a Contractor to take the
necessary legal advice before commencing
a claim under the governing law. Should
this be the case the initial and fatal notice
provisions of Sub-Clause 20.1 may come
into play a topic for another article.
Driver is the trading name of Driver

Consult Ltd, a member of Driver Group plc
(AIM: DRV). Driver Consult is the principle
trading subsidiary of the Group and has
been providing the construction and
engineering industries with commercial and
dispute resolution services since 1978.
services.
or call +44 (0) 20 7247 4989
Engineering Surveyor (CES) Sept 2011.
The title is the journal of the Chartered
quotations, citations and
references
Permission is granted for short quotations

or reproduction in full provided the
authors, company and link to the source
are properly noted.
7 of 8
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Endnotes
1.
CES is an abbreviation of the title Civil Engineering Surveyor which is the journal of
the Chartered Institution of Civil Engineering Surveyors.
2.
Paul Battrick
advising clients in respect of EPC power plants, constituent parts such as boilers,
turbines, generators and also ancillaries such as flue gas desulphurisation plants. Paul is
a practising CEDR Mediator.
3.
Phil Duggan
BSc MSc MCIArb
A director of Drivers international business, Phil has over twenty years industry
experience providing quantum, contractual and commercial advise to clients on major
projects.
4.
Driver
1 Norton Folgate
London
E1 6DB
Telephone +44 (0) 20 7247 4989 Facsimile +44 (0) 20 7247 4959
8 of 8
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This is the fifth in a series of articles being published in CES .
1
Following an introduction to FIDIC and its 1999 suite of contracts the joint authors, Paul
Battrick and Phil Duggan of Driver will discuss many practical issues of using FIDIC
2
contracts. Their thoughts and opinions are based upon actual working experiences of working
with many FIDIC contracts both past and present.
that
are
generally,
but
not
always,
Paul Battrick
Mediator
insurable events; the likeness to clause 18
Phil Duggan
MSc MCIArb
considered to be clear and not in need of
Insurance can be readily viewed.
The
wording within the three major forms is

great explanation saves for the overview
below.
Risk and Responsibility Clause 17 and

beyond
Sub-clause
17.1
provides
for
the
indemnities that the Employer and the

Contractor must provide to each other in
If the phrase risk and responsibility is

mentioned in respect of the FIDIC suite of
contracts many, possibly new to the FIDIC
forms,
would
consider
clause
17
and
possibly 18 and 19, of the major forms and

close out their thought processes.
case injury to people and/or property

occurs
as
result
of
the
actions
of
personnel or other for which they are

responsible during the design, execution
and completion of the Works.
Property
excludes the Works itself which is dealt

with separately at Sub-clause 17.2.
This article reflects upon the allocation of

risk and responsibilities within the major
forms introduced in 1999 (the Red, Yellow
and
Silver
Books)
beyond
the
words
contained within clause 17; but first a
Generally unless specifically allocated to

the Employer and those defined as being
under its responsibility, events are the risk
and responsibility of the Contractor.
consideration of clause 17 as contained

within the Red, Yellow and Silver Books.
Sub-clause
17.2
provides
for
the
Contractors care of the Works, for which it

Clause 17 Risk and Responsibility
is fully responsible until such time as the

Taking-Over
This
clause
is
typical
of
clauses
that
Certificates
Certificate
in
the
(or
case
Taking-Over
of
sectional
allocate risk and responsibility to events

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completion) is issued or deemed to be
over to the Employer should termination
issued in accordance with Sub-clause 10.1,
take place.
save for those items listed within Subclause 17.3 which are Employers Risks.
Sub-clause
17.3
is
entitled
Employers
Risks which, in other words, are the risks

Whilst this Sub-clause specifically deals
that the Contractor has no control over.
with the care of the Works until a TakingOver Certificate has been issued it does not
The Red and Yellow Books have identical
mention
the
lists and it is suggested that these are
possibly
cross referenced with the list of typical
leading to termination. It is suggested that
events that may be classed as a Force
the obligations of the Contractor to care for
Majeure within clause 19.
the
suggested
suspension
Contractor
or
the
Works
by
either
Employer
remain
throughout
that
the
It is also
defined
term
suspension, irrespective of responsibility
Unforeseeable within Sub-clause 17.3(h) is
for the events leading to the suspension,
fully
until such time as work recommences and
difficulties in separating what is unforeseen
from what is unforeseeable when making
Taking-Over
Certificate
is
issued
or
Termination takes place and the Contractor
understood
as
so
many
have
claims.
is released from its obligations in this

respect.
The FIDIC guide confirms the definition of

unforeseeable
to
be
not
reasonably
This may be considered somewhat unjust if
foreseeable by an experienced contractor
the Contractor has not been paid, the
by the date for submission of the Tender.
Employer cannot demonstrate that it has
It goes on to suggest that the frequency of
the arrangements in place to pay and the
natural events relative to the duration of
suspension
the Time for Completion
leading
to
termination
is
may provide
lengthy thus resulting in a high cost burden
guidance as to what should be considered
for
as unforeseeable.
say
the
protection
of
the
Works
including materials stored on and off site.
perhaps
The
survey with your colleagues could take
Contractor
that
relies
upon
the
argument that it was not the cause of the

suspension
and
consequent
five
Taking this suggestion

minute
discussion
and
place noting the following:
termination
and therefore had no responsibility to care
Two projects adjacent to each other;
for the Works - may find itself unable to
same
Contractor,
justify its claims for the work completed or
Employer.
Engineer
and
partially completed and materials handed
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Duration of project A is eight years
unless such events can be justified
and project B is two years with
as being a Force Majeure such
identical commencement dates.
events are deemed to be at the
Statistically
risk of the Contractor.
the
natural
event
occurs every ten years.
The
last
event
happened
nine
Sub-clause 17.4 allows the Contractor to
years ago and occurred one year
put forward its claims in respect of time
after
and
commencement
of
the
projects.
money
in
the
event
that
the
Employers Risks noted within Sub-clause

17.3 result in loss or damage to the Works,
Which event falls within the definition of
Goods or Contractors Documents.
unforeseeable?
As with all other claims submitted by the
The Silver Book has a shortened list losing
Contractor
in
respect
of
perceived
the following:
entitlement either under the Contract or by

law, the procedure within Sub-clause 20.1
Use or occupation by the Employer
must apply or the Contractor risks losing
of any part of the Permanent
any entitlement.
Works, except as may be specified
Employer in the case of the Silver Book)
in the Contract - should this occur
must then proceed in accordance with Sub-
it would be a breach by Employer
clauses 20.1 and 3.5 to determine any
of Sub-clause 10.2 and therefore
entitlement.
not a risk.
entitlement the Contractor is entitled to
Design of any part of the Works by
Cost or Cost plus a reasonable profit as
the Employers Personnel or by
detailed.
The Engineer (or the
In terms of any monetary
others for which the Employer is

responsible
foresees
the
the
Silver
Contractor
Book
Sub-clause 17.5 considers intellectual and
being
industrial
property
rights
and
provides
responsible for the total design of
protection to both the Contractor and the
the Works, however this may be
Employer
compromised by Sub-clause 5.1
parties
where the Employer retains some
designs, copyright and the like where the
responsibilities for information that
intellectual or industrial property rights
can affect design carried out by
have been allegedly infringed by either
the Contractor.
party.
Whilst it is suggested that the
Any operation of the forces of
claims
procedure
nature which is Unforeseeable
applies to claims made under this clause
from
related
claims
to
issued
patents,
of
by
third
registered
Sub-clause
20.1
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(line two stating under any clause) the
relative
to
FIDIC drafters have seen fit to repeat,
performance
albeit in slightly different terms, the fatal
resulting in delay damages and, in respect
nature of a 28 day notice period should
of the Yellow and Silver Books, inadequate
either party wish to submit a claim.
design, workmanship and the failure of

materials
the
in
Contractors
respect
etc.,
of
failed
progress
resulting
in
non-
Sub-clause 17.6 deals with the limits of
performance damages and non-availability
certain
damages if noted within the Particular
liabilities
under
the
Contract.
However, it is perhaps the most important
Conditions.
clause that must be considered in the light
by either party, in respect of loss of use of
of the provision of the governing law
any Works, loss of profit, loss of any
prescribed within the Contract.
Contract
Various
It also excludes any liability,
or
for
any
indirect
or
jurisdictions, either common law or civil
consequential loss or damage other than in
law
respect of a termination or indemnities as
jurisdictions
may
affect
matters
concerning the length of any period in

respect
of
defects
liability,
per Sub-clause 17.1.
the
commencement date for such liabilities can
There is no limit of liability upon the
even negate the clause in its entirety in
liability
respect of the limit of financial liability in
Contractor
the event that gross negligence can be
Contractor towards the Employer excludes
established to have taken place.
the supply of utilities (Sub-clause 4.19),
This
of
the
and
Employer
towards
the
any limitations by the
latter point being reflected within the FIDIC
Employers
forms which confirms that there is no limit
material
of liability in any case of fraud, deliberate
Contractor (Sub-clause 4.20), indemnities
default
(Sub-Clause 17.1)
or reckless
defaulting Party.
misconduct
by the
This statement being
particularly relevant during the bid phase
industrial
equipment
whilst
in
property
and
the
and
free
care
issue
of
intellectual
rights
the
and
(Sub-clause
17.4).
and it is likely that the limit of liability to be

stated within the Particular Conditions will
Risk and Responsibilities elsewhere
be the subject of intense negotiations

between the Employer and Contractor prior
The
opening
paragraph
of
this
article
to the award of the Contract. If no sum is
suggested that many people, possibly new
agreed and stated the Accepted Contract
to the FIDIC forms, will limit their thoughts
Amount will be the limit.
in respect of risks and responsibilities to

clause 17 and possibly clauses 18 and 19.
The Sub-clause is intended to limit the
Those to whom that statement may apply
Contractors liability towards the Employer
are invited to consider that the contract,
4 of 9
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whether Red, Yellow or Silver Book, is in its
cause the applicable rules to be consulted
entirety
fine
balance
responsibilities
Employer
of
risks
and
to establish which party is carrying the risk
between
the
of that event.
Engineer
or
allocated
(and
its
Representative) and the Contractor.
The FIDIC drafters have taken great care

when dealing with the allocation risk such
Whilst
opinions
may
differ
as
to
the
that
internationally
and
less
likely
fairness, and validity in law, of conditions
nationally Employers and Contractors can
such as the fatal 28 day notice with Sub-
establish working relationships for the first
clause 20.1, the FIDIC drafters will have
and perhaps the only time based upon a
considered such a period in the light of
considered set of rules.
other
obligations
placed
upon
the
Contractor within the Contract; such as the
Those rules provide some certainty at the
required monitoring of the programme and
outset to both parties and, if triggered and
related matters (as discussed in the third
operated well, can restore certainty in
article of this series).
respect of the various risks and allocation

of those risks following any necessary
A viewpoint being that any Contractor who
adjustments to all or any of the key factors
is not aware within 28 days that an event,
of scope, time and price.
for which the Employer is culpable, has a

time or money impact does not deserve to
The
most
obvious
differences
in
risk
receive any entitlement!
allocation between Red, Yellow and Silver

Books is in respect of design responsibility
The FIDIC suite of contracts, as with any
and the consequent risks of time and
other contract, can be considered to be no
money
more
therefore scope be amended at some point
than
rule
book
detailing
the
potential consequences should a defined
impacts
should
design
and
in time after the contract award.
event take place.

Design can be translated to mean choice;
If in a game of soccer someone is caught
those with design responsibility have the
handling the ball the referee will give a free
ability to choose, affect the scope and
kick or penalty to the other side. If at the
potentially the time required to complete
outset of a contract it is considered that all
the project and the price for the project.
of
the
risks
and
responsibilities
are
allocated and the key elements of scope,
Accordingly, and in overall terms, the risks
time and price are defined then any event
associated with design responsibility under
that may affect those key elements will
the Red Book rests with the Employer,
5 of 9
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whilst the Contractor carries the risks
of
under the Yellow and Silver Books.
Advance Payment Guarantee.
In all
an
advance
to
an
However,
regular
entitlement it has to comply with at least
Contractor remain its lifeblood; should the
the
in
Engineer fail to certify a payment (if
respect of the issue of notices and the
appropriate) and/or the Employer fail to
subsequent provision of a detailed claim.
make payments at the prescribed time as
The risk of failing to establish contractual
per Sub-clause 14.7 the Contractor can
relationships
and
either reduce the rate of work or suspend
others to allow compliance with these
work provided not less than 21 days notice
periods rests with the Contractor.
has been given. This being in accordance
of
with
Sub-clause
20.1
Sub-Contractors
In this
timely
linked
contracts for the Contractor to gain any

provisions
and
payment
Sub-clause
payments
Should
the
respect the periods stated within Sub-
with
clause 20.1 may be considered short or the
situation not change within the timescales
minimum required to gain adequate data
prescribed
and input from others.
Contractor can terminate the Contract.
There are many areas that are common to
The option of suspension or reducing the
the Red, Yellow and Silver Books that
rate of progress followed by termination
provide protection and therefore less risk
also applies if the Employer cannot provide
to the Contractor.
reasonable
within
16.1.
to
Sub-clause
evidence
16.2
that
the
the
financial
arrangements have been made and are

In the context of perhaps the Contractor
being maintained which will enable the
making a bid to perhaps a special purpose
Employer to pay the Contract Price (as
vehicle it is important to know that that
estimated at the time) as stated with
entity cannot change overnight once the
Sub-clause 2.4. It is not confirmed whose
Contract Agreement has been signed.
estimated Contract Price should be used as
At
Sub-clause 1.7 Assignment it is stated that
neither party shall assign the Contract or
Contractor and the Employer may differ
any part of the Contract without the prior
greatly in this respect especially if the
agreement of the other Party; accordingly
Contractor has the tendency to inflate its
the Contractor (perhaps with the most to
claims to unrealistic values.
lose) is protected from the Employer being
the FIDIC drafters have made provisions to
changed to some party it would never have
reduce the risk of a Contractor suffering
contemplated to be its contracting partner.
from an uncertain payment regime.
The
be
For the purpose of this article there is one
protected to some degree by the provision
more major factor to be considered in
Contractors
cash
flow
may
reference
point;
the
views
of
the
Nevertheless
6 of 9
The rainbow suite

terms of risk allocation; that being the
Should
ability
appropriate) fail to either issue the Taking-
of
the
completion.
It
Contractor
achieve
uncommon
Engineer
(or
Employer
as
for
Over Certificate or give reasons for not
Employers to take occupation of a project
issuing the Certificate within the period of
and subsequently receive income but find
28 days, the Taking-Over Certificate shall
reasons not to accept that the Contractor
be deemed to have been issued on the
has
twenty eighth day.
achieved
is not
to
the
completion
as
defined.
Accordingly the Employer gains income and

is possibly continuing to deduct delay
Sub-clause
damages
further
whilst
the
Contractor
cannot
10.2
support
in
for
all
forms
the
provides
Contractor
by
obtain any of the financial benefits of
confirming that the Employer shall not use
attaining completion, the responsibility for
any part of the Works prior to Completion.
maintenance, wear and tear and the like

remain with the Contractor whilst any
Sub-clause 10.3 within the Red and Yellow
defects liability period cannot commence.
Books
gives
Contractor.
further
In
the
protection
event
to
the
that
the
The FIDIC drafters have considered such
Contractor is prevented from carrying out
circumstances and provided, within Sub-
any tests necessary to attain Completion
clause 10.1, the ability for the Contractor
by a cause for which the Employer is
to attain Completion.
Sub-clause 10.1,
responsible for a period of 14 days the
states in general terms, that when the
Employer will be deemed to have taken
Contractor has completed the Works (or
over the Works and the Engineer must
Sections) in accordance with the Contract
issue
such that no minor outstanding work or
relevant date being that on which the tests
defects prevent the use of the Works for
would have been completed.
Taking-Over
Certificate;
the
what they were intended, the Contractor

may apply by notice to the Employer for a
The defined timescales of every phase of
Taking-Over Certificate.
the dispute resolution procedure within
Employer
within
28
as
The Engineer (or
appropriate)
days
either
will
by
respond
issuing
Clause 20 seek to offer the Contractor
the
some certainty and lessen risk in the event
Taking-Over Certificate or confirming why
that a DAB and Arbitration are necessary,
no certificate can be issued.
The latter
but they are the subject of a different
providing the criteria for the Contractor to
article as is the abuses to the allocation of
fulfil prior to issuing a further notice for a
risk
Taking-Over Certificate.
considered by the FIDIC drafters.
and
responsibility
so
carefully
7 of 9
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providing the construction and engineering
industries with commercial and dispute
resolution services since 1978.
UK alone. In response to demand Driver has
developed a range of high quality FIDIC
training courses, workshops and services.
or call +44 (0) 20 7247 4989
quotations, citations and references

company and link to the source are properly
noted.
8 of 9
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Endnotes
1.
2.
Paul Battrick
3.
Phil Duggan
BSc MSc MCIArb
projects.
4.
Driver
1 Norton Folgate
London
E1 6DB
9 of 9
The rainbow suite

This is the sixth in a series of articles being published in CES .
1
2
technology
or
proprietary
technology.
Paul Battrick
Mediator
Accordingly,
Phil Duggan
MSc MCIArb
Employer proffering a bespoke form of
process
plants
of
all
descriptions and power plants are often

constructed by and EPC contractor with the
contract. The Employers relative to process
and
power
plants
are
likely
to
be
professional Employers in that they will

A Risk too far for the EPC Contractor
This article considers the step change in
respect of the allocation of risks between
the Yellow and Silver books of the FIDIC
1999 suite of Contracts and poses the
question for a traditional EPC contract are
those risks a step too far.
Traditionally
International contracting possess a vast
number of contractors that use the term
EPC
contractor
to
describe
how
they
operate and what services they can provide
construct a number of facilities, probably

have their own in-house as well as external
design
engineers
and
will
understand
completely what they expect from the

finished project in terms of quality of
components
whether
and
that
be
whatever.
The
consistent
choice
relevant
to
maintenance
production
power,
quality
of
future
output
fertiliser
and
or
maybe
components being
operation
considerations
such
and
as
costings and the length of non-productive

shutdown periods.
to their potential Employers; in simple
It is also not uncommon on mega-projects
terms they Engineer or design the works,
for the Employer to commission Front End
Procure all that is necessary to complete
Engineering Design or FEED whereby the
the works and finally Construct the works.
conceptual design is completed such that
This regime is very similar to that utilised
the traditional EPC contractor can complete
by a Design and Build contractor and is
the
applied across the industry, typically in
Employers engineer retained throughout
sectors have some form of black box
the process.
detailed
design
probably
with
the
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The use of turnkey contracting has been
Silver Book. It is perfectly suited; the
more associated with either the Employer
Employer
who
the
professional Employer, possibly a SPV that
construction process but wishes to have
will only construct one bio-mass power
delivered a fully operating facility, such as
plant or whatever; the funders backing the
a hospital with all surgical equipment,
project will most likely demand certainty in
bedding and the like provided and installed
respect of cost and also the time for
by the Contractor such that the hospital
completion (the latter to judge when the
can function within the shortest possible
income stream will commence and profits
time after hand over. Alternatively this
be generated), the Employer may rely
form of procurement has been used by the
entirely on the Contractor for all design
non-professional Employer that may only
issues
ever require one new facility or so few new
sustainable, deliverable and, in respect of
facilities
say a bio-mass power plant, a consistent
wishes
to
that
have
it
will
no
have
part
no
in
internal
resident design functions or no ongoing

relationship
with
external
design
consultants. The Contractor that delivers a

functioning
facility
to
the
Employers
requirements via a turnkey contract is

ideally suited to this type of Employer.
likely
knowing
only
to
be
that
it
non
has
fuel source.
Taking a bio-mass power plant as a typical
example and noting that the tradition EPC
contractor may be reacting to the market
place
by
developing
accommodate
the
its
technology
various
fuel
to
sources
there will most likely be the situation
New Trends
Contractors
is
have
to
react
to
the
marketplace to gain workload; similarly
where the traditional EPC faces a Silver

Book for the very first time.
FIDIC has reacted to a requirement in the
Noting that the front cover used the phrase
marketplace to produce the Silver Book
EPC/Turnkey Projects the Contractor may
and provides more certainty of cost and
have some pre-conceived ideas regarding
time and is perfectly suited to the non-
the term EPC which may be more aligned
professional Employer who may be far
to the Yellow Book.
more
risk
averse,
through
lack
of
familiarity of the construction process or

the requirements of its funders, than the
professional Employer.
With the rise of Special Purpose Vehicles
(SPVs) relative to the renewable energy
sector there is a growing demand for
projects to be administered under the
The Yellow Book and the Silver Book

a brief comparison
The notes below are in the context of
highlighting the obligations and risks a
traditional EPC contractor would face when
working under a Silver Book compared to
working under a Yellow Book.
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It is worth recapping some of the selection
significant or complex that for the
criteria that should be considered by an
Contractor to price all risks under the
Employer (and its advisors) when deciding
Silver Book would be both inequitable
which form of contract is to be used
and cost prohibitive (or a recipe for
together with the fundamental differences
disaster...).
between the Yellow Book and Silver Book.

Silver Book
Yellow Book
Contract
administered
by
and
Contract
Employer
Engineer.
administered
(possibly
by
an
the
Employers
Representative).
Risks are allocated on a fair and
equitable basis.
Disproportionately
more
risks
are
allocated to the Contractor. As a
Tender time is short (or is insufficient
consequence the Contractor should
to
the
require more detailed data regarding
Contractor to assess the risks it is
hydrological, sub-surface and other
obliged to carry out under the Silver
conditions affecting the site to assess
Book) and details of matters such as
risks;
hydrological, sub-surface and other
knowledge
matters affecting the site are not
Requirements.
allow
readily
adequate
available;
time
risks
for
more
detailed
of
and
the
precise
Employers
therefore
remain with the Employer.
In
order
for
the
Contractor
to
properly assess the risks it is obliged
The Employer seeks a lower tender
to carry and to provide the Employer
price but accepts certain risks during
a high degree of cost and time
the duration of the project.
certainty there should be a longer

period for preparation of a tender and
The
Employer
via
its
more discussion with the Employer
Engineer
during that time.
requires a close relationship with the

Contractor throughout the duration of
the project including the more likely
potential to cause change to design.
The Employer accepts a higher tender

price in the knowledge that it has
fewer risks during the duration of the
It is not possible for the tenderers to

properly
inspect
the
site
or
project.
the
amount of underground work is so
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The Employer has no great desire to
There
be involved on a daily basis with the
within the Silver Book as the Contractor
project and is content to allow the
takes responsibility for the accuracy of the
Contractor to take full responsibility
Employers
for the design and construction of the
discussed below.
project
(although
the
reporting
procedures within both the Yellow

Book and Silver Book at Sub-Clause
is
no
corresponding
Requirements
Sub-Clause
as
will
be
Sub-Clause 4.7 Setting Out Yellow

Book and Silver Book
4.21 remain identical perhaps for
Both Books require the Contractor to be
claims
responsible for the setting out of all parts
adjudication
purposes
as
discussed in a previous article).
of the Works based upon the information

provided
within
the
Contract
and
as
From the above and previous articles it is
subsequently provided by the Engineer
clear that the most significant differences
(Yellow Book).
between the Yellow Book and the Silver

Book relate to the transfer of risk from the
Employer to the Contractor. The FICIC
drafters use both wholesale amendments
to Sub-clauses and subtle amendments to
phraseology
to
achieve
their
goals
as
discussed below in the order the SubClauses appear in the Contracts.

Sub-Clause
Employers
1.9
fundamental
difference
being
that
within the Silver Book the Contractor also

takes responsibility for the accuracy of the
setting
out
data
within
the
Contract
(meaning the Employers Requirements).

To carry out the necessary review during
the tender period in order to properly
judge the severity of this risk is one of the
Errors
Requirement
The
in
the
reasons why a longer tender period is
Yellow
required relative to projects being let under
Book only
a Silver Book.
Within the Yellow Book if the error causing
The Yellow Book, since the Employer is
the Contractor to suffer delay or incur Cost
responsible for the accuracy of the setting
could not have been discovered by an
out data, allows that data either to be
experienced contractor exercising due care
noted within the Contract or issued by the
when
Engineer during the course of the project.
scrutinising
Requirements
then,
the
Employers
provided
the
Contractor fulfils the requirements of SubClause 20.1, it may receive an extension of

time and Cost plus reasonable profit that it
is entitled to receive.
If the Contractor suffers delay or incurs

Cost as a result of any error and provided
the
Contractor,
contractor,
could
as
an
not
have
experienced
reasonably
discovered or avoid the delay or Cost then

the claims procedure of Sub-Clause 20.1 is
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applied and the Engineer determines the
risks, considered all such information and
Contractors
entitlements
accepts
extensions
of
time
in
and
respect
Cost
of
plus
Sub-Clause 4.10 Site Data Yellow

Book and Silver Book
for
having
foreseen all difficulties and has allowed,

to carry out the Works. Sub-Clause 4.12(c)
stating the Contract Price shall not be
adjusted to take account of any unforeseen
Sub-Clause 4.10 reaffirms the ethos set

out within Sub-Clause 4.7 noting, within
the Yellow Book, that the Contractor is
for
responsibility
within its Tender, sufficient time and funds
reasonable profit.
responsible
total
interpreting
such
data
whereas the Silver Book takes the same

statement a step further noting that the
Employer shall have no responsibility for
the accuracy, sufficiency or completeness
difficulties or costs.
The only possibility for the Contractor to
perhaps
recover
Cost
(under
certain
circumstances) or gain an extension of

time is if the event is of such magnitude
that it can be considered to fall within the
definition of a Force Majeure (Clause 19).
of such data, except as stated in Sub-
Sub-Clause 5.1 Design Yellow Book
Clause 5.1.
and Silver Book
Sub-Clause
4.12
Unforeseeable
Physical Conditions Yellow Book
The regime, in simple terms, is that the
Sub-Clause
Works to meet the needs of the Employer
4.12
Unforeseeable
Difficulties Silver Book

It
is
worth
Unforeseeable
noting
is
as
that
defined
the
within
term
the
Yellow Book, at Sub-Clause 1.1.6.8, to

mean not reasonably foreseeable by an
experienced contractor by the date for
submission of the Tender.
Book which also changes the Sub-Clause

to
be
Unforeseeable
much
Physical
stated
within
the
Employers
Requirements. Should the Contractor, after

scrutinising
those
requirements,
finds
errors, those errors can be accepted and

remedied by the Engineer in the form of a
Variation. The Contractor would then apply
the appropriate procedures within Clauses
13 and 20 to gain its entitlements in terms
The definition is missing from the Silver

title
Contractor is responsible for designing the
broader
Conditions
than
to
Unforeseeable Difficulties.
of time and/or money.

The
fundamental
difference
within
the
Silver Book is that the Contractor takes

responsibility
for
the
Employers
Requirements including design criteria and
Under the Silver Book the intent is clear;
calculations with only certain exceptions for
the Contractor is deemed to have obtained
which the Employer is responsible those
all necessary information to assess all
being:
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a)
portions,
data
and
information
which are stated in the Contract as

being
immutable
or
the
responsibility of the Employer,
inflated (for good reasons) to cover the

risks that the Employer wishes to pass on.
Conclusions
Employers who choose to employ the
b)
definitions of intended purposes of
Silver Book should do so after careful
the Works or any parts thereof,
consideration
and
careful
selection
of
Contractors to submit bids.

c)
Criteria
for
performance
the
of
testing
the
and
completed
Works, and
d)
portions,
The
Employer
considerable
should
amount
of
respect
work
that
the
is
necessary for a Contractor to properly price

data
and
information
which cannot be verified by the

Contractor,
except
as
otherwise
stated in the Contract.
the risks it is obliged to take on board and

limit
the
numbers
tendering
to
the
minimum to obtain competitive bids.

Employers must realise that the price they
will pay for risk avoidance will be high
Accordingly the Contractor is responsible
potentially higher than the overall cost of
for the incompleteness, any error, any
the same project constructed under a
inaccuracy or omission of any kind in the
Yellow Book.
Employers Requirements as included in

the Contract (except the reasons noted
Contractors familiar in carrying out works
above) in addition to its responsibility for
under EPC Contracts, often bespoke in
the design of the Works.
nature, must understand the differences

contained
within
the
Silver
Book
and
Whilst not perhaps relevant to this Sub-
educate their sales departments to raise a
Clause it is worth noting that the Priority of
red flag when an Employer proffers a
Documents (Sub-Clause 1.5) ranks the
contract under a Silver Book.
Employers
Requirements
above
the
Above all both Parties should know the
Contractors Tender.
Contract, recognise and manage the risks

Once
again
Contractors
the
Employers
time
to
must
allow
give
a
to avoid disputes!
full
investigation and study of the Employers

Requirements at the time of tender, not to
do so will or should only lead to bills being
6 of 8
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or call +44 (0) 20 7247 4989

noted.
7 of 8
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Endnotes
1.
2.
Paul Battrick
3.
Phil Duggan
BSc MSc MCIArb
projects.
4.
Driver
1 Norton Folgate
London
E1 6DB
8 of 8
The rainbow suite

This is the seventh in a series of articles being published in CES .
1
2
wishes to employ a single Contractor to
Paul Battrick
Mediator
design, build and subsequently operate the

completed construction project for a period
of 20 years.
Phil Duggan
MSc MCIArb
Whilst the Gold Book has been likened to a

Yellow Book (the design and build form)
with an added operate and maintenance
contract blended within, it contains many
The Gold Standard
differences to the Yellow Book in addition

This article considers elements of the FIDIC
to the obvious entirely new provisions
Gold Book relative to the submission of
which deal with the suggested period of
claims, predominately by the Contractor
twenty
but also by the Employer, and compares
maintenance.
years
for
operation
and
the procedures with those contained within

It has been suggested, in some quarters,
the Red, Yellow and Silver Books.
that the form should actually have been a

It has been suggested that since the Gold
Yellow
Book was issued some nine years later
containing the operation and maintenance
than the various books issued in 1999 that
provisions.
its
day
familiarity to all parties working with the
thinking within the minds of the FIDIC
contract but FIDIC would have lost the
drafters and may be the blueprint for
opportunity
revisions to the First Editions to the 1999
industry
books.
revisions to the Yellow and other books
provisions
represents
current
The Gold Book a brief recap

It should be recalled from a previous article
that the Gold Book is to be used in a
green field situation where the Employer
Book
with
an
optional
annex
This would have provided
to
showcase
feedback
on)
(and
its
receive
potential
within its family of contracts.

The most relevant provision to have in
mind when considering this article is that
the DAB for the construction period is of
the standing variety comprising of three
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members and that it is obliged to visit the
In terms of purely layout there is the
Site at intervals of not more than 140
introduction of new clauses relevant to
days. The provision of a standing DAB no
Avoidance of Disputes (Sub-Clause 20.5)
doubt fuelling the debate as to whether
and Disputes Arising during the Operation
such a DAB aids dispute avoidance by the
Service Period (Sub-Clause 20.10); the
regular visits and discussing at Site an
former being relevant to the standing
agenda prepared with the input of itself
nature of the DAB and the latter relating to
and the Employer and the Contractor or
post issue of the Commissioning Certificate
not.
effectively ending the consortium phase of
The Gold Book Clause 20 provisions

When comparing the provisions of Clause
20 within the Gold Book with the Yellow
and other major forms issued in 1999 the
most obvious change is the physical layout.
Sub-Clause 20.1 (Contractors Claims) has
a completely new format; the use of
referenced
sub-paragraphs
makes
the
clause much easier to consider than the

alternative style of a series of paragraphs
under the Sub-Clause heading.
Sub-Clause 20.2 (Employers Claims) is a
the project.
It is however the provisions of Sub-Clause
20.1 (Contractors Claims) that have and, if
they form the basis for future editions of
other books, will be the cause of significant
debate for many a while to come.
Whilst not wishing to detract from a future
detailed review of the current provisions of
Sub-Clause 20.1 within the major books
issued
the
claims
procedure,
so
blocks
the
detailed
claim
within
the
stated period, failure to do so may

be taken into account to which the
failure has prevented or prejudiced
the Employer becomes aware or should
the proper investigation leading to
have become aware of the relevant event.
do
The Contractor has to submit its

fully
Contractor as soon as practicable after
timetable nor to any given standard.
to
any further.
Employer can submit its Notice to the
neither to be submitted within any stated
in
Contractor from pursuing its claim
the
The particulars of the claimed amount has
are
The Contractor has to submit its
failure
the location has changed the overriding
with
provisions
money within the stated period;
dealt with as Sub-Clause 2.5. Even though
follow
the
Notice of a claim for time and/or
the other books, Employers Claims are
in all FIDIC forms has strict provisions to
1999
essence:
new clause in this location in that within
principles have not. Whilst the Contractor
in
the determination of the claim.
Depending upon which book is

being considered, the Engineer or
Employers Representative has a
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stated
period
to
consider
the
Contractors fully detailed claim

and
respond
with
approval
or
disapproval together with detailed

comments.
determination
in
accordance
with Sub-Clause 3.5 to confirm the

approval of the Contractors claim
noting the extension of the Time
for
Completion
additional
and/or
payment
which
any
the
Contractor is entitled.
Within
the
Gold
Book,
at
Sub-Clause
provided by the Contractor has to be

within
28
protective Notices.
It is also stated that in some jurisdictions
such a fatal Notice clause may be contrary
to the intent of the relevant Law. Such a
statement
reinforces
the
necessity
to
consult a lawyer totally familiar with the

Law governing the Contract before entering
into
any
Contract.
In
principle
the
enforceability of a fatal notice clause has

had support with some courts since it
contradicted the prevention principle; as
20.1(a), the initial Notice that has to be

submitted
that Contractors are required to issue such
days
after
the
Contractor became aware, or should have
noted above when matters stray into the

influence and interpretation of law a lawyer
should be consulted to obtain the most
relevant
advice
to
the
situation
being
encountered.
become aware, of the event that, in the
The FIDIC drafters, within the Gold Book,
Contractors opinion has led to a situation
have perhaps had half an ear leaning
where it is entitled to an extension of the
towards those who consider that fatal
Time
notices
for
Completion
and/or
additional
payment.
Notice renders the claim time barred; in

the simplest of terms the Contractor loses
its right to make a claim.
are
those
within
the
industry,
that consider this fatal notice clause to be

totally unfair and unduly harsh and a
diversion to the smooth running of the
and
since
they
have
relationships
Contractor to be able to proceed with its

claims despite not having submitted a
Notice within the required time period.
The solution being a referral to the DAB
notably within the Contracting fraternity,
project
unjust
introduced a potential opportunity for the
Failure by the Contractor to issue this
There
are
between
the
should the Contractor consider that there

were circumstances to justify the late
submission of the Notice. The DAB has the
authority to override the 28 day time limit
if it considers it fair and reasonable to do
so.
contracting parties since such a clause
In this respect it should be remembered
promotes a Notice being submitted at the
that, under the Gold Book, the DAB is of
merest hint of a potential claim. It is true
the standing variety and accordingly it will
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have had the benefit of regular site visits,
the Contractor; these actions do not count
possible discussions with the Parties and
as an admission of liability. Clearly at this
the Employers Representative concerning
juncture there should be dialogue between
the event and potentially an early sight of
the
relevant documentation such that a swift
Representative and it is suggested that the
decision can be made one way or the
Contractor,
other.
something, takes a pro-active stance and
It remains to be seen whether or not a

standing
DAB
will
actually
encourage
disputes of this (or any) nature. Some of

those who consider that the fatal Notice
provisions are unjust would avoid this
second bite of the cherry as not being the
solution, stating that the most equitable
way forward is to remove the fatal nature
of the Notice and replace it with sanctions
against
the
Contractor
Contractor
actually
since
asks
maintained
and
it
if
are
the
Employers
wants
or
the
records
adequate
such
needs
being
that
determination can be made or is there any

other type of record that would assist the
determination to be made in accordance
with Sub-Clause 3.5. Such an action may
aid the swift resolution of the quantum of a
Contractors claim should there be an
entitlement.
should
late
The Gold Book goes on within Sub-Clause
submission prejudice the Employer.
The
20.1(c) where it again differs from the
FIDIC drafters have compromised, to an
major books issued in 1999.
extent,
the
days after the Contractor became aware
professional Contractor should be aware of
(or should have become aware) of the
the impacts of any event within 28 days.
event or circumstance giving rise to a claim
The debate will no doubt continue.
for an entitlement the Contractor must
but
firmly
believe
that
Following submission of the Notice the

Contractor
must
keep,
at
site
unless
otherwise agreed, such contemporaneous

records
as
may
be
necessary
to
substantiate its claim as required by SubClause 20.1(b).

professional
It is suggested that the
Contractor
will
have
the
Within 42
send to the Employers Representative a

fully
detailed
claim
which
includes
all
supporting particulars of the contractual

basis for the claim plus any delay analysis
or quantum evidence as appropriate.
There are relaxations to the 42 days if
allowed
by
the
DAB
pursuant
to
an
majority of such records in place in any
extension of the original 28 day Notice or if
event and may only need to focus those
agreed between the Contractor and the
records upon the relevant event.
The
Employer Representative who may also ask
Employers
also
for further supporting particulars.
Representation
may
instruct the Contractor to keep specific

records and monitor those being kept by
Accordingly a Contractor may have as little

as 14 days (42-28) after it became aware
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of an event to submit its fully particularised
brief reference to the Clause under which
claim. If the event continues the first fully
the claim is being made.
detailed claim must still
be submitted
within the stated period but it will be

considered as an interim claim.
The
Contractor must submit further claims at

28 day intervals until such time as the
event has finished giving rise to a claim.
No matter how professional a Contractor

maybe it may often prove difficult to
gather all relevant information within the
42 day period, especially if the Contractor
has to rely upon a chain of
such
as
third parties,
Sub-Contractors
and
their
A further new concept is also introduced by
suppliers, to provide basic information and
the FIDIC drafters at this point in the
potentially involve lawyers to advise upon
timeline in respect of claims submission
the contractual or other basis of the claim.
and determination.
If the Contractor fails
to submit a fully particularised claim that

establishes the contractual or other basis
of the claim within the 42 day limit (or
extended limit) then the original 28 day
Notice as per Sub-Clause 20.1(a) shall be
deemed to have lapsed, and the claim will
not be accepted or considered since the
Notice will no longer be considered valid.
As with the original Notice, the Contractor
can apply to the DAB if it considers there
are
circumstances
which
warrant
The
debate
regarding
the
fundamental
right of a Contractor to make a claim being

negated by a time bar clause will no doubt
again rise and this second time bar may
also give rise to an element of subjectivity,
since
the
Employers
Representative
appears to have the power to decide if the

Contractor has established its contractual
basis of the claim in deciding whether or
not the original notice has lapsed.
an
It is hoped that FIDIC intend the deemed
extension to the 42 day period and the
lapse of the original notice only to apply to
Employers Representative has rejected the
the Contractor establishing its contractual
Contractors request for the said period to
or other basis of its claim and not, having
be extended.
established such a basis, to the value of
Within the FIDIC guide to the Gold Book it

is recognised that the provision of a fully
detailed
claim
which
includes
fully
the supporting documentation to establish

the quantum of the claim in terms of time
and/or money.
supporting particulars of the contractual or
The late submission of details being met
other
with the same sanction as within the 1999
basis
extension
of
of
the
time
claim
and
and/or
of
the
additional
payment claimed within a 42 day period

is a far-reaching requirement and it is
therefore not sufficient to simply make a
major books.
In this respect however the writer has
viewed an amendment to the standard
form
that
adds
the
phrase
to
the
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satisfaction
of
Representative
the
in
Employers
respect
of
the
been
rejected
Employers
on
the
basis
Representative
of
the
failing
to
contractual or other basis and particulars
respond in due time.
of claim within the Sub-Clause to abuse
apparently see the instant submission of a
the apparent power of the Employers
claim by the Contractor to the DAB as a
Representative.
more beneficial situation for the Contractor
Sub-Clause 20.1(a) details the time period

that the Employers Representative has to
respond to the Contractors claim both
than
waiting
and
determination
from
The FIDIC drafters
waiting
the
for
Employers
Representative.
establishing the contractual or other basis
Whilst on the face of it the default of the
and particularising the claim.
Employers Representative and the other
mandatory
42
day
There is a
period
for
the
provisions of Sub-Clause 20.1 may lead to
Employers Representative to respond to
more issues ending up with the DAB it
the contractual or other basis of the claim
would appear that the FIDIC drafters have
however, by requesting further particulars
attempted to provide an overall timetable
it is suggested that the same 42 day period
(adequately noted within the Flow Charts
for replying to the quantum of the claim
at page 9 of the book) for the resolution of
may be extended.
Contractors claims.
In giving its decisions
Certainly to succeed
the Employers Representative must use
the Contractor has to be able to establish
the
its
provisions
of
Sub-Clause
3.5
(Determinations).
claims
swiftly
and
with
all
particularisation!
However, if the Employers Representative

fails to adhere to the timetable and fails to
respond to at least whether or not the
Contractor has established a contractual or
other
basis
of
its
claim
either
the
Contractor or the Employer may consider

the
claim
has
been
rejected
by
the
Employers Representative.
Whilst the Gold Book allows either Party to
refer the matter to the DAB it is more likely
to be the Contractor after its claim has
6 of 8
The rainbow suite

or call +44 (0) 20 7247 4989

noted.
7 of 8
The rainbow suite

Endnotes
1.
2.
Paul Battrick
3.
Phil Duggan
BSc MSc MCIArb
projects.
4.
Driver
1 Norton Folgate
London
E1 6DB
8 of 8
The rainbow suite

This is the eighth in a series of articles being published in CES .
1
2
An Engineer is likely to be involved during
Paul Battrick
Mediator
the
Phil Duggan
MSc MCIArb
to tender to any number of would be
procurement
phase
assisting
the
Employer with the many tasks that have to

be fulfilled prior to forwarding the invitation
Contractors.
Perhaps the first of those tasks can be
called establishing what is to be procured
Contract Administration
and may include:

Some background thoughts
Identifying
In this article the administration of a
project
contract
studies.
is
considered;
firstly
in
very
the
and
exact
scope
carrying
out
of
the
feasibility
organic terms and secondly placing that

role into the framework of some of the
FIDIC books.
For ease and convenience, and at least for
the first part of this article, the term
Engineer is used to mean the entity that
assists the Employer with whatever tasks
are required. It is recognised that some
professional Employers will have such in
house resources.
Establishing
suitable
location
and
liaising with local authorities to gain the

necessary approvals and consents.
Organising any investigations that are
necessary
such
as
tests
relative to
ground conditions.
Provide
advice
in
respect
of
procurement strategy and selection of a
It is considered that any project has two
suitable form(s) of contract to match
distinct phases that represent pre and post
that strategy whether it be a single
contract; these phases could be called the
contractor, multiple package contractors
procurement and construction phases.
or other procurement
considering
which
routes always
party
will
be
1 of 8
The rainbow suite

responsible for the design of the project
and where other risks will fall.
Preparing
design
Preparation of the documentation to

form the Contract.
documents
to
The
above
selection
of
tasks
is
not
whatever level is required; perhaps full
unremarkable and is typical of the tasks
design or outline design on a basis for
carried out by an Engineer relative to any
the
project whether it be ultimately procured
preparation
of
the
Employers
Requirements.
using designs created by the Engineer or

whether the Contractor designs the project
Providing advice regarding the likely

time span of the construction phase
together with costing advice such that
the Employer may create an overall
budget for the project and any other
associated costs to ensure completion of
a functioning project.
based upon the Employers Requirements.

It is clear that during this procurement
phase that the entity that provides the
Employer with such assistance will have
gleaned
for the project whether from internal or

external sources including the provision
of cash flow forecasts.
tremendous
amount
of
knowledge relative to the project and in

most
Liaison with those providing the funds
circumstances
(especially
if
that
entity was an external firm) the Employer

will want to retain that knowledge and
have the entity administer the Contract.
Indeed the Employer may have always
considered using the same Engineer for
Provide advice in respect of suitable
both the procurement and construction
Contractors to be sent invitations to bid.
phases of the project and used the FIDIC

White
Book
as
the
form
of
contract
Preparation of documents forming the
between these two parties. The White Book
invitation to bid in both technical and
recognises such an appointment within its
commercial/contractual
The
foreword where it is noted that the White
latter after having providing advice as to
Book is suggested for use in respect of pre-
the most suitable form of Contract to be
investment and feasibility studies, design
used to meet the overall procurement
and
strategy.
project management, both for Employer-
terms.
administration
of construction
and
led design teams and for Contractor-led

Review
the
numerous
bids
received
Contractors,
take
from
part
the
in
negotiations to arrive in the selection of

the most appropriate Contract.
design
teams
under
Design
and
Build
procurement.
It is clear therefore that FIDIC foresaw the
use of the White Book in respect of the Red
2 of 8
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and Yellow Books of the first issued major
The Engineer is defined in the Red and
forms but perhaps not the Silver Book. It is
Yellow Books at Sub-Clause 1.1.2.4 as the
also clear that the Red and Yellow Books
person appointed by the Employer to act as
have an Engineer within their provisions
the Engineer for the purposes of the
whereas the Silver Book utilises, for good
Contract and named in the Appendix to
reasons,
Tender, or other person appointed from
the
term
Employers
time to time by the Employer and notified
Representative.
The
function
within
the
Red
and
Yellow Books
This article continues by discussing the
Engineers role relative to the Red and
Yellow Books but in doing so merely notes
that the role within Red Book contracts is
also to design the Works on behalf of the
Employer whereas in both the Red and
to the Contractor under Sub-Clause 3.4

[Replacement of the Engineer]
From this definition it is important to note
that the Engineer should be appointed
during the procurement or pre-contract
phase such that full details can be provided
to the Contractor within the Appendix to
Tender.
Yellow Books the Engineer is to administer
Contractors
the Contract on behalf of the Employer.
and/or
As noted in a previous article the 1999

suite of Contracts amended the traditional
and sometime controversial role of the
Engineer being the pre-arbitral decision
maker in respect of disputes between the
Parties
by
Adjudication
installing
Board
as
the
the
Dispute
need
to
individual
know
will
which
firm
administer
the
Contract since the choice of Engineer may

influence the Contractors pricing strategy
or at least be taken into account when
considering the risks associated with the
Construction phase.
Engineers,
just
like
Contractors,
have
pre-arbitral
reputations in respect of the quality and
decision making body should either Party
manner they carry out their obligations.
dispute any determination made by the
For instance to work with an Engineer who
Engineer, who now acts officially as the
has
agent of the Employer.
convince
It is an anathema in the eyes of many that

the FIDIC drafters can suggest that the
Engineer can also act as the DAB and
reputation
that
of
being
difficult
Contractor
has
to
an
entitlement to an extension to the Time for

Completion may lead a Contractor to price
the risk of Delay Damages being deducted.
review its own decisions made whilst acting
It is an obligation upon the Employer to
as the Employers agent. That is perhaps a
appoint an Engineer as noted within Sub-
topic to be considered in a later article.
Clause 3.1 and therefore it is also an

obligation for the Employer to maintain an
3 of 8
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Engineer throughout the course of the
It should also be noted that should the
project, including the appointment of a
Engineer issue a reply or determination in
replacement if necessary, for not to do so
respect of a matter where the Employers
would make the Contract unworkable since
approval
there
body
deemed to have been obtained. If it has
(especially the Employer) to take over the
not been obtained the Engineer may be in
duties of the Engineer.
breach of the terms of its agreement with
is
no
Constraints
provision
upon
for
any
the
Engineers
is
required
such
approval
is
the Employer.
It is not uncommon to see lengthy lists of
Powers
However, the Employer may restrict the
powers of the Engineer by requiring the
Engineer to seek the Employers approval
prior to making certain determinations.
Any such constraints are to be noted within
the Particular Conditions such that once
again the Contractor has the opportunity to
consider the matter when calculating its
bid.
constraints
placed
upon
the
Engineer
relative to the Sub-Clauses most likely to

give reason for the Engineer to determine
that the Contractor is entitled to additional
Costs and/or extensions to the Time for
Completion. The controlling nature of the
Employer should be thoroughly considered
when deciding if the project is actually
going to conclude successfully and without
recourse to formal dispute resolution.
The FIDIC guide also notes words of

caution for the Employer when considering
what constraints, if any, to place upon the
Constraints - maybe influenced by the

Pink Book
Engineer noting that When deciding which
It is understood that, at the request of
constraints
to
banks and funding agencies the FIDIC
Conditions,
the
list
in
the
Employer
Particular
should
take
drafters
within
the
Multilateral
account of the likelihood of the Contractor
Development Bank version of the Red Book
being entitled to recover the additional
(the Pink Book) have actually including
costs he incurs whilst the Engineer awaits
constraints within the General Conditions
the Employers written approval.
where the Engineer is required to obtain
It is suggested that the FIDIC guide should

have
mentioned
time
implications
in
addition to cost implications caused by the
the Employers prior approval before taking

actions:
Sub-Clause
4.12
agreeing
or
Employer causing the Engineer to fail in
determining an extension of time or
responding to the Contractor within a
additional cost relative to unforeseeable
prescribed time or reasonable time.
physical condition.
4 of 8
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Instructing a Variation under Sub-Clause
The
FIDIC
Guide
also
clarifies
that
13.1 except when an emergency exists
independent means independent from the
in the opinion of the Engineer or when
Employer. Clearly whilst acting as the
the value of the Variation is less than
Employers agent the FIDIC drafters expect
the percentage specified in the Contract
the Engineer to act at least fairly in
Data.
carrying out its wide range of duties.
Approving a Variation proposed by the

Contractor
in
accordance
with
Sub-
Clause 13.2
Fair play required

For Contractors it is most important that
the Engineer acts fairly when considering
matters that have an impact upon the
Specify the amounts to be paid in the
Contractors ability to proceed in a manner
applicable currencies in accordance with
the Contractor foresaw when pricing its
Sub-Clause 13.4.
tender and recognising that when this

economic path is affected by matters
It is hoped that future editions of the FIDIC
outside of the Contractors risk area that
books do not follow the desires of funders
the Engineer recognises in a timely fashion
and that Employers also choose not to
the entitlements properly demonstrated by
constrain
the Contractor.
their
chosen
Engineers
and
perhaps take note of the suitable warning

within the FIDIC Guide which states:
The FIDIC Books do not write a job

specification for the Engineer; at Sub-
When examining the tender documents
Clause 3.1 it is confirmed that the Engineer
and considering the role of the Engineer,
shall carry out duties assigned to him in
tenderers
the Contract, and further, The Engineers
may
take
account
of
such
matters as:
staff
the Engineers technical competence and

reputation, particularly in relation to
reviewing Contractors Documents.
shall
include
suitably
qualified
engineers and other professionals who are

competent to carry out these duties.
Since the Engineer is not a party to the
Contract it has no authority to amend the
the degree of independence indicated by
Contract, also as confirmed within Sub-
the status of the appointed Engineer,
Clause 3.1 however, the authority (unless
namely whether he is an independent
constrained) to issue Variations does give
consulting engineer, and
the Engineer the authority to amend the

scope of the Works. It perhaps goes
the
practical
consequences
of
any
without saying that only the Employer can
constraints on the Engineers authority.
terminate the Contract under Sub-Clause
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15.2 although the Engineer may well be
The Silver Book gives the Employer the
instrumental in that event taking place.
ability
In essence the Engineer under the Red and

Yellow Books is likely to be an independent
consulting engineering practice that has
been involved in the project since its
inception and will be involved until the
close out of all technical and financial
matters.
Contract
to
appoint,
at
any
time,
an
Employers Representative to act on the

Employers behalf as prescribe within SubClause 3.1. It is suggested by this SubClause that it is the standard or norm that
the Employers Representative shall be
deemed to have the full authority of the
Employer under the Contract, except in
respect of Clause 15 [Termination by the
Administration
under
the
Silver Book
Employer].
In simple terms, with the exception of
The Silver Book (Conditions of Contract for
Clause 15, whenever the Silver Book states
EPC/Turnkey Projects) foresees a different
Employer
regime that, in reality, and in practical
Employers Representative.
terms may not be so different during the

construction phase.
During the procurement phase it is highly
likely that the Employer will employ an
independent
consulting
engineering
practice to assist in the matters noted

above leading to the issue of the tender
documents
to
the
various
Contractors
expected to make a bid.
this
can
be
replaced
by
Some final thoughts:

The FIDIC drafters have standardised
many of the clauses within the 1999
suite such that the wording is identical
save for Engineer versus Employer (read
also Employers Representative).
An Employer who has used the services
of
an
independent
The same entity would most likely assist
engineering
with the lengthy negotiations expected
procurement phase is likely to appoint
under a Silver Book to arrive at a Contract
the
of mutual understanding. However, once
Contract under a Red, Yellow or Silver
the contract has been awarded that same
Book.
entity
may
disappear
completely
of
the
Contract
entity
throughout
to
administer
the
the
since
unlike the Red and Yellow Books the

administration
same
practice
consulting
is
Independent
consulting
engineering
practices will use the same staff whether
undertaken by the Employer and not the
they
are
acting
as
Engineer
or
third party Engineer.
Employers Representative such that the

differences between the administration
of a Yellow Book and a Silver Book
6 of 8
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become blurred until the differing risk
allocations enter the fray.
Using
the
term
Employers
Representative within the Gold Book for

an entity with a different profile from
the Employers Representative within
the
Silver
Book
may
lead
to
misunderstandings.

or call +44 (0) 20 7247 4989

noted.
7 of 8
The rainbow suite

Endnotes
1.
2.
Paul Battrick
3.
Phil Duggan
BSc MSc MCIArb
projects.
4.
Driver
1 Norton Folgate
London
E1 6DB
8 of 8
The rainbow suite

This is the ninth in a series of articles being published in CES .
1
2
the Employer and the Engineer (and any
Paul Battrick
Mediator
other adviser to the Employer).

The Employer may have to fund the project
and only be able to commence repaying
Phil Duggan
MSc MCIArb
the debt it is incurring when the Works are

completed and revenue starts to flow. This
being typical of toll roads, power-plants
and many petro-chemical facilities.
Cash flow is lifeblood
In
respect of these types of projects the

Lord Denning is quoted as saying There
Employer has a desire to see completion
must be cash flow in the building trade. It
attained at the prescribed time and the
is the very life blood of the enterprise.
final account settled swiftly such that it can
There has probably never been a more
complete its financial accounts timeously
relevant statement within any industry in
and comprehend just how and when actual
todays troubled times.
profits will be made.
The statement was made in the 1970s and
The Engineer too will have an incentive to
referred to the cash flow of a Contractor.
see the final account settled as soon as
It is suggested that the cash flow of all the
possible after the completion of the Works
parties (and advisers) is equally important
since it will wish to re-allocate its personnel
recognising
however
Contractors
cash
flow
that
that
it
is
is
the
to other projects having completed its
at
the
tasks with the minimum use of resources;
greatest risk since it takes on the role of
especially,
funder when carrying out work that may or
Engineers fees were a percentage of the
may not be claimable but is required to
amount paid to the Contractor.
as
still
happens,
if
the
complete the Works.

It can be seen therefore that all those
However, it should be considered and
involved have an incentive to conclude all
understood that cash flow is important,
issues swiftly to maximum cash flow and
albeit in different ways perhaps, to both
more importantly for the future of any
1 of 8
The rainbow suite

business; generate profit. Indeed all those
involved
crave
certainty
of
financial
outcome of any project by, in the perfect

world, having the final account completed
and agreed on the day the Works are
completed.
Utilising The Red Book

The Red Book is commonly thought of as a
remeasurement
Contract
in
that
the
majority of the Contract Price consists of

work described with a Bill of Quantities or
some other form of schedule that when
There is very rarely the perfect world
executed has to be measured to ascertain
scenario; instead Contractors often face an
the exact quantities of work undertaken.
uphill battle to have work valued and
Provided the circumstances under which
claims
determined.
Engineers
expend
the work was undertaken remains largely
rebutting
claims
as intended, the rates within the Bill of
possibly because, if certified, they will have
Quantities or schedules will be applied to
recognised payments to the Contractor
the actual, and hopefully easily agreed
beyond the amount stated to the Employer
quantities. For this latter reason some call
within budgets; the budgets upon which
this form of Contract a unit rates Contract.
countless
man-hours
the Employer obtained its funding.
The
Employer can perhaps do no more than

watch from the side-lines and wait for its
project to be completed whilst paying the
bills and wonder when income will be
Sub-Clause 12.1 prescribes what should

happen to the Works that have to be
remeasured:
Whenever the Engineer requires
generated.
any part
measured, reasonable notice shall
A culture of helping others to help you,
be
actioned by all involved to provide more

certainty
of
financial
outcome
enhanced cash flow, at least for some,
a)
along the way may seem fanciful but it is a
to
promptly
send
philosophy that Contractors should adopt
the
Contractors
either
attend
another
or
qualified
representative to assist the
towards Engineers (and the Employers
Engineer
where appropriate) and in fact is probably
in
making
the
measurement, and
a requirement within the FIDIC Books; the
b)
adage that any Contractor should keep

far from the truth
given
Representative, who shall:
and
records, records and more records is never
of the Works to be
supply
any
particulars
requested by the Engineer.

The gist of these provisions is that the
Engineer takes the lead in respect of the
remeasurement; should the Contractor not
send
representative
to
assist
the
2 of 8
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Engineers
measurements
must
be
12.3
of
the
accepted as accurate.
circumstances:
Further, if the part of the Works to be
(a)
(i)
Red
Book
notes
such
the measured quantity of
remeasured is to be remeasured from
the item is changed by
records (assumed to be drawings in the
more than 10% from the
main, but also the records such as piling
quantity,
logs)
then
these
records
shall
be
(ii)
this
change
in
quantity
prepared by the Engineer. The Contractor,
multiplied
when requested, shall attend to examine
specified rate for this item
and agree the records with the Engineer,
exceeds
signing the records when agreed.
Failure
Accepted
Engineers
Amount,
to
attend
renders
the
(iii)
measurements as being accurate.
(iv)
subsequently must review the records and

Contractor
has
14
them.
The
after
being
days
requested to examine the records to give
change
in
quantity
this item is not specified in

rate item;
or
(i)
the work is instructed

under Clause 13
Failure to do so and the records are
[Variations and
deemed to be accurate and incapable of

being challenged at a later date.
Contract
the Contract as a fixed
(b)
such a notice.
the
and
considered to be inaccurate. The Engineer

vary
of
item by more than 1%,
noted in what respects the records are
or
0.01%
per unit quantity of this
records/measurements it must give notice
confirm
such
directly changes the Cost
Should the Contractor disagree with the
either
this
by
Adjustments],
(ii)
no
rate
or
price
is
The final Contract Price is accordingly built
specified in the Contract
up month by month in accordance with the
for this item, and
measurement procedures above and other
(iii)
no specified rate or price
elements that where the Contractor has an
is appropriate because the
entitlement.
item of work is not of
In respect of measured works it may be

that the circumstances under which the
project was priced may have changed or
the work was not foreseen.
Sub-Clause
similar character, or is not

executed
under
similar
conditions, as any item in

the Contract.
3 of 8
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Each new rate has to be derived from any
which the Contractor considers himself to
relevant rates and prices in the Contract
be
with
take
documents which shall include the report
account of the circumstances giving rise to
on the progress during this month in
the change. If there are no suitable rates
accordance with Sub-Clause 4.21 [Progress
to be adjusted then a new rate or price
Reports].
reasonable
adjustments
to
must be determined. The new rate or price

shall be derived from the reasonable Cost
of carrying out the work plus profit taking
into account all relevant matters.
The
valuation
of
Variations
Engineer
(possibly
(a)
up
which
results
in
Variation
provisions
of
be
valued
Clause
12
as
under
(b)
to
the
end
of
the
month
any amounts to be added and

deducted for changes in legislation
being
and changes in cost, in accordance

with
Sub-Clause
[Adjustments
the
for
13.7
Changes
in
Legislation] and Sub-Clause 13.8
previously
[Adjustments
discussed.
As
the
(b) to (g) below);
be determined by the Engineer. Any such

must
and
items described in sub-paragraphs
instructed, new rates or prices may have to

Variation
executed
(including Variations but excluding
request for a proposal from the Contractor)

submit a proposal to benefit the Employer
Works
Contractors Documents produced
or following a request by the Contractor to
supporting
the estimated Contract value of

the
contains
following
with
applicable, in the sequence listed:
is the direct result of an instruction issued

the
together
Further the Statement has to include, as
identical provisions. Whether the Variation

by
entitled,
for
Changes
in
Cost];
previously
noted
measured
work,
(c)
any amount to be deducted for
Variations and other entitlement all add
retention, calculated by applying
into monthly payment applications which
the percentage of retention stated
finally derive from the Contract Price. The
in the Appendix to Tender to the
rules in respect of the issue of Interim
total of the above amounts, until
Payment Certificate are prescribed within
the amount so retained by the
Clause 14; Sub-Clauses 14.3 and 14.5 are
Employer
of particular interest.
Retention Money (if any) stated in
Sub-Clause
14.3
notes
that
The
Contractor shall submit a Statement in six

copies to the Engineer after the end of
each month, in a form approved by the
reaches
the
limit
of
the Appendix to Tender;

(d)

deducted for the advance payment
and
repayments
in
accordance
Engineer, showing in detail the amounts to

4 of 8
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with Sub-Clause 14.2 [Advance
(e)
Cost
delivering
the
Plant
deducted for Plant and Materials in
Materials
to
the
accordance with Sub-Clause 14.5
supported
by
satisfactory
[Plant and Materials intended for
evidence;
any other additions or deductions

which
may
have
become
due
under the Contract or otherwise,

including those under Clause 20
(b)
in
all
previous
acquiring
and
and
Site,
the relevant Plant and Materials:

(i)
are
those
Appendix
listed
to
in
the
Tender
for
payment when shipped,
and
the deduction of amounts certified
of
and either:
[Claims, Disputes and Arbitration];

(g)
submitted a statement of the
Payment];
the Works];
(f)
(ii)
(ii)
Payment
have been shipped to the

Country, en route to the Site,
Certificates.
in
It is noted that these provisions are very
accordance
with
the
Contract; and
prescriptive.
(iii)
Sub-Clause
14.5
deals
with
what
are
described
in
clean
is
shipped bill of lading or other
commonly known as materials off-site or
evidence of shipment, which
as the FIDIC drafters put it Plant and
has been submitted to the
Materials intended for the Works.
Engineer
Again it is worth noting the prescriptive

nature of the requirements placed upon the
Contractor; for the Engineer to certify any
amount the following conditions must be
satisfied:
(a)
of
with
payment
of
freight and insurance, any

other documents reasonably
required,
and
guarantee
in
form
bank
and
issued by an entity approved
the Contractor has:

(i)
evidence
together
kept
by the Employer in amounts
satisfactory
records
and currencies equal to the
orders,
amount due under this Sub-
receipts, Costs and use of
Clause; this guarantee may
Plant and Materials) which
be in a similar form to the
are available for inspection,
form
and
Clause
(including
the
referred
14.2
to
in
Sub-
[Advance
Payment] and shall be valid

until the Plant and Materials
5 of 8
The rainbow suite

are properly stored on Site
The above may appear to be recital of
and protected against loss,
various
damage or deterioration;
prescriptive, extracted from the Red Book
some
extremely
relative to the payment for the Works to
or
(c)
provisions,
the Contractor by the Employer as certified

by the Engineer. It was meant to be!
the relevant Plant and Materials:

(i)
in
the
Early passages of this article talked about
Tender
for
cash flow and helping others to help you.
payment when delivered to
The FIDIC drafters have attempted to help
the Site, and
the
are
those
Appendix
(ii)
listed
to
have been delivered to and

are properly stored on the
Site, are protected against
Contractor
by
being
extremely
prescriptive in what the Contractor has to

do to preserve its cash flow; Sub-Clause
14.3 being a prime example.
or
It is considered that Contractors should not
deterioration, and appear to
simply comply with the Contract and sit
be in accordance with the
back for it as Contractors that carry out the
Contract.
Work accordingly have every opportunity
loss,
damage
Satisfaction of the above will permit the

Engineer to include 80% of the cost of the
Plant and Materials (including delivery to
to compile records at the time the work

was carried out.
Contractors looking to
benefit cas flow can also help themselves.
Interim
Payment.
It is Contractors that will (or should) know
fail
make
if the work is being carried out under
comprehensive list of Plant and Materials
circumstances that require new rates to be
within tenders (see Sub-Clause 14.5(b) (i)
applied or something more that triggers
and 14.5 (c) (i)) and are denied the
the provisions of Clause 20.
site)
within
Contractors
opportunity
an
often
to
to
successfully
claim
such
goods, usually after allowing payment to

Sub-Contractors or Sub-Suppliers therefore
damaging cash flow.
In the perfect world Engineers should

welcome a Contractor being proactive and
taking the lead when it comes to making
records
whether
Whilst not covered by this article it is worth
remeasurements
noting
claims.
that
the
Sub-Clause
20.1
procedures in respect of Claim include the

Engineer requesting certain records to be
kept by the Contractor in order to value
any claim by the Contractor.
they
or
be
simple
to
support
details
The provisions of FIDIC do not prevent a

Contractor
from
asking
an
Engineer,
following the submission of a Sub-Clause

20.1 notice, what records would you like
6 of 8
The rainbow suite

to
be
kept
to
assist
you
with
your
who invest in the resources to fulfil the
determination.
Similarly
there
Cash flow can be enhanced by Contractors
is
nothing
to
stop
Contractor asking the Engineer if there are

any further measurements, photographs,
obligations of the prescriptive elements of

the FIDIC Books, after all this is only
making the Engineers role a little easier.
records or whatever prior to work being
Positive actions such as the above may not
covered over.
only enhance cash flow but also reduce

disputes
and
foster
good
working
relationships.
Cash flow can be enhanced by Contractors
that invest in their commercial resource
and seek to help the Engineer to carry out
Alternatively that may happen only in a

perfect world
its functions, after all to fulfil its role with

the latest expenditure is a positive result.
Driver is the trading name of Driver Consult Ltd, a member of Driver Group plc (AIM: DRV).
Driver Consult is the principle trading subsidiary of the Group and has been providing the
construction and engineering industries with commercial and dispute resolution services since
1978.
During the last year over 2000 engineers, surveyors and commercial managers have attended
Driver breakfast seminars in the UK alone. In response to demand Driver has developed a
range of high quality FIDIC training courses, workshops and services.
international@driver-group.com or call +44 (0) 20 7247 4989
This article was first published in Civil Engineering Surveyor (CES) Sept 2011. The title is the
journal of the Chartered Institution of Civil Engineering Surveyors.
Permitted reproduction quotations, citations and references
Permission is granted for short quotations or reproduction in full provided the authors,
company and link to the source are properly noted.
7 of 8
The rainbow suite

Endnotes
1.
2.
Paul Battrick
3.
Phil Duggan
BSc MSc MCIArb
projects.
4.
Driver
1 Norton Folgate
London
E1 6DB
8 of 8
The rainbow suite

This is the tenth in a series of articles being published in CES .
1
Battrick and Phil Duggan of Driver Trett will discuss many practical issues of using FIDIC
2
The following list of provisions is taken
Paul Battrick
Mediator
from the Red Book (which is in the main,

identical to those of Yellow Book1)
Phil Duggan
MSc MCIArb
Determinations by the Engineer

There is often a common misunderstanding
in respect of the matters upon which the
Engineer is authorised (or even obliged) to
make a determination in accordance with
the
principles
of
the
FIDIC
suite
of
1.9
Delayed Drawings or Instructions;
2.1
Right of Access to the Site;
2.5
Employers Claims;
4.7
Setting Out;
4.12 Unforeseeable Physical Conditions;

4.19 Electricity, Water and Gas;
4.20 Employers Equipment and Free-Issue
Material
Contracts. The Engineer simply does not

have authority and / or an obligation to
determine any matter that may be put to
them. Indeed, Sub-clause 3.5 states:
Whenever these Conditions provide that
the Engineer shall proceed in accordance
4.24 Fossils
7.4
Testing;
8.9
Consequence of Suspension;
9.4
Failure to Pass Tests on Completion;
with this Sub-Clause 3.5 to agree or

determine any matter, the Engineer shall
consult with each Party in an endeavour to
10.2 Taking Over of Part of the Works;

10.3 Interference
reach agreement
of
determinations)
Tests
on
Completion;
In other words, the Engineers duties (in

respect
with
only
11.4 Failure to Remedy Defects;
apply
whenever the Contract Conditions provide.
Paul Battrick, Phil Duggan and Driver Trett 2012
The provisions that differ are in respect of Subclauses 12.2 (Delayed Tests); 12.3 (Evaluation); 13.2
(Value Engineering) and 13.3 (Variation Procedure)
1 of 5
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avoidance
11.8 Contractor to Search;
of
disputes.
This
is
largely
because the drafters of the Conditions have
12.3 Evaluation;
deliberately
12.4 Omissions;
13.2 Value Engineering;
placed
collaboration
and
relationships
when
an
emphasis
enhancing
looking
upon
working
at
the
requirements for the Engineer to proceed

to determine any of the listed matters.
13.7 Adjustments for Changes in

Legislation;
In proceeding to make any determination,

the Engineer ought to consult with both the
14.4 Schedule of Payments;
Contractor and Employer with a view to

15.3 Valuation at Date of Termination;
16.1 Contractors Entitlement to Suspend
Work;
seeing if an agreement can be reached.

The Guide Notes state that:
Complying
17.4 Consequences of Employers Risks;
with
these procedures
and
maintaining a co-operative approach to the

determination of all adjustments should
19.4 Consequences of Force Majeure; and
Perhaps, the confusion surrounding the

of
the
determinations
Engineer
under
the
likelihood
of
achieving
successful project
20.1 Contractors Claims
role
enhance
in
issuing
the
new
Conditions, arises from the role of the

Engineer under the previous ones. In a
similar vein to the role of the Engineer
under the older ICE Conditions of Contract
(in particular the 5th and 6th Editions) under
the previous FIDIC Conditions (4th Edition),
the Engineer was authorised to issue an
There is no stipulation as to how the

consultation process should be conducted
and so it is pretty much left to the
Engineer to dictate how this is done.
However,
perhaps
one
of
the
most
common complaints that we hear are that

the Engineer does not consult with the
parties prior to issuing a determination,
and the question then is what status does
such a determination have?
Engineers Decision on any matter so
The process is intended to work so that
referred to them. Essentially therefore, the
there
Engineer was a key player within the
consultation) with the aim of concluding an
Disputes procedures.
agreement. In the event that agreement is
In a way, under the 1999 Edition, the

Engineer can also be a key player in the
dispute process, although moreover in the
is
collaboration
(by
way
of
not reached, then the Engineer is obliged

to issue a fair determination (that means
fair according to the requirements of the
2 of 5
The rainbow suite

Contract). A failure by the Engineer to
Where one of the Parties are dis-satisfied
strictly follow this procedure does not
with
however
the
Engineer, then their primary recourse of
invalid. The
action is normally to refer the matter as a
whole intent of the provisions of Sub-
dispute to the Dispute Adjudication Board
clause 3.5 is to arrive at a determination
for resolution. Herein, perhaps lies the
(decision on a matter permissible) that is
route whereby the Employer in particular
binding upon the Parties and there is no
may apply pressure towards the Engineer
provision within the Sub-clause for any
to strictly follow the contractual procedure
such decision reached to be invalidated by
in future (and to consult with the Parties).
necessarily
mean
determination is somehow
that
any failure to follow any procedure. It must

therefore be assumed that in the event
that the Engineer has failed to consult with
the Parties before issuing a determination
that this has not detracted from what the
Engineer intends that determination to be,
which can only be interpreted as that the
Engineer has made a decision and that he
intends
such
to
be
binding
upon
the
Parties.
any
determination
issued
by
the
Can you imagine a scenario where an

Employer has to expend considerable sums
of money in dealing with a dispute referred
to DAB when perhaps he ultimately feels
that proper dialogue (i.e. consultation)
would have led to a better understanding
of the issues at hand in the first place and
which
would
have
meant
that
an
agreement was likely in the first place? In

such a case, you could be sure that the
There is no express timescale included
Employer
within Sub-clause 3.5 for the Engineer to
Engineer of his duties as laid out within his
issue a determination, although it is noted
service agreement (which no doubt would
that
Sub-clause
remind
administration
of
the
include
consents
and
Contract in accordance with the Contract
determinations shall not be unreasonably
Conditions) in order to prevent such an
withheld or delayed.
occurrence repeating itself!
the
to
that
certificates,
for
want
provides
Approvals,
1.3
would
the
3 of 5
The rainbow suite

Driver Trett is the trading name and a member of Driver Group plc (AIM: DRV). Driver Trett is
the principle trading subsidiary of the Group and has been providing the construction and
engineering industries with commercial and dispute resolution services since 1978.
Driver Trett breakfast seminars in the UK alone. In response to demand Driver Trett has
developed a range of high quality FIDIC training courses, workshops and services.
4 of 5
The rainbow suite

Endnotes
1.
2.
Paul Battrick
3.
Phil Duggan
BSc MSc MCIArb
A director of Driver Tretts international business, Phil has over twenty years industry
projects.
4.
Driver Trett
Driver Trett have excelled at providing construction and engineering focused services
since 1978.Our Project Management, Programming, Commercial Management, Quantity
The companys international business is administered from Driver Tretts London office.
1 Norton Folgate
London
E1 6DB
5 of 5
The rainbow suite

This is the eleventh in a series of articles being published in CES .
1
Battrick and Phil Duggan of Driver Trett will discuss many practical issues of using FIDIC
2
Contractors have their opinions regarding
Paul Battrick
Mediator
Phil Duggan
MSc MCIArb
the
various
publications
Books,
such
as
as
noted
those
within
issued
by
European International Contractors.

Similarly, leading practitioners have taken
considerable efforts to draft, and have
published, their thoughts and guidance on
Uses (or Miss-Uses) and Abuses of
how to understand and operate the FIDIC
FIDIC Contracts
suite;
fine
example
being
FIDIC
Contracts - Law and Practice by Ellis Baker,

The drafting committees of the various
Ben Mellors, Scott Chalmers and Anthony
FIDIC Books took a considerable amount of
Lavers.
time to arrive at the published editions,

whatever the colour of the Book and
Equally FIDIC have issued their own guides
whichever
year
finally
books, firstly in respect of the Red, Yellow
published.
In doing so consultation took
and Silver Books and latterly in respect of
place
with
the
Book
industry
was
leaders
although
the Gold Book.
predominantly from the Employers side via

Employers, their Engineers and
Guidance does not stop at the written
Funders.
word; firms such as Driver offer numerous

training
The results of the deliberations are a suite
courses
to
develop
an
understanding of the FIDIC suite.
of Contracts that, whilst many will say

have a bias towards the Employer and their
With
associates (Funders, Insurers, Engineers
promoting of the FIDIC contracts by FIDIC
and the like), are accepted by Contractors
itself it is a triumph that so many tenders
and more or less understood in their pure
are issued based upon a FIDIC Book,
and un- amended forms.
whether it be Red, Yellow, or whatever
all
of
this
understanding
and
1 of 7
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colour.
Many of these tenders adopt a
There
are
endless
reasons
why
the
FIDIC Book upon the insistence of those
admirable FIDIC Books are put to one side,
funding the project whether it be an aid
these reasons include:
agency,
development
bank
or
speculative investor.
previous working practices;
a desire to shift all risk to the
Contractors register to receive sets of
Contractor
tender documentation, often
having
certainty of time and price;
provide
upon
bid
bonds,
based
to
the
in
the
quest
a hard line towards the Contractor
invitation containing the information that
enshrined
with
the contract will be a FIDIC Book of one
previous
governmental
colour or another.
and/or;
However,
upon
receipt
of
the
for
culture
inexperienced
or
style
speculative
tender
investors who do not understand
package and upon considering the FIDIC
either the construction process or
based Contract, Contractors very often
the
discover that the form of contract bears
sharing/allocation.
concepts
of
risk
little or no resemblance to a FIDIC Book,

the
issued
form
little
Whatever the reason Employers and the
resemblance to an amended form based
Engineers should realise that to prepare a
upon
bid is a considerable investment on the
the
often
suggestions
bears
for
operation
produced by FIDIC themselves within their
part
guidance notes and books.
uncertainty
surrounding
conditions
contract
yet
threat
In
simple
words;
what
is
inside
of
a
is
Contractor
and
another
face
the
of
in
an
the
uncertain world. For instance, Contractors
Contract conditions is very different from
working within the international arena are
that stated on the FIDIC tin!
facing competition from new Contractors

on
the
block
The hours spent drafting the standard
international
Books,
collapse
guidance
notes,
text
books,
of
often
forced
marketplace
their
due
own
into
the
to
the
domestic
delivering seminars and the like has to
marketplace.
some
side.
are often desperate to maintain workload
Contractors have to perform risk analysis
(and their skilled workforce) and in doing
in respect of contracts that have become a
so often price projects sub-economically.
extent
been
put
to
one
The new kids on the block
bespoke forms of contract.

To
add
to
the
tendering
Contractor
challenges, a bespoke FIDIC contract

2 of 7
The rainbow suite

that if priced properly in terms of making
claims being settled equitably or fewer
allowances for risk allocation would add a
disputes
considerable amount to a tender bid is not
amendment
the most welcomed of challenges.
As
where a culture of Employer supremacy
everyone (the Employer, the Funder, the
over Contractors is considered the only
Engineer and all others involved) knows to
method of working.
arising
it
is
is often
unsure
seen
but
this
in locations
price risk costs money and will inevitably

lead to a higher tender and consequently a
Clause 20.1: The shortening of the initial
higher Contract Price.
and fatal notice period of 28 days that a

Contractor has to give should it consider
Whilst it is understood that we are in times
itself entitled to an extension of time
of
and/or
harsh
commercial
reality
and
the
additional
payment
is
passing on of risk and creation of bespoke
commonplace. Periods as short as 5 days
FIDIC
are common (Readers do not need to send
contracts
are
commonplace,
Employers may do well to consider that an
notice
unsuccessful
amendment
project
with
an
almost
of
shorter
periods).
leaves
Contractors
This
in
an
unworkable contract suffering delay and
unworkable situation when considering that
claims leading to disputes is not was
it has to create contracts with it Sub-
intended (and often promised by advisers)
Contractors (leading to sub-sub-contracts)
at the outset.
In such circumstances the
and Suppliers that should reflect this notice
failure to meet the completion date(s) and
period or take on risk itself of recognising
budget
claims when it cannot have the same
overrun
resolution
via
proceedings
formal
has
dispute
effectively
claims
considered
by
the
Engineer
or
passed the problems that it sought to avoid
Employer.
The motive is again often said
back to the Employer and, as appropriate,
to be to avoid the submission of claims and
its Funders.
therefore disputes.
It is not possible to catalogue all the
Clause 20.1: The failure to provide details
abuses and missuses to the FIDIC suite
of a claim within the initial period of 42
that have been viewed but here are just a
days and the final claim details within 28
few.
days after the end of the effects of the

event(s) have often be turned into fatal
Clause 20.2: It is commonplace to see the
events; meaning that the Contractor loses
removal of all provisions relating to the
its right to claim by not meeting these
appointment
deadlines.
Board.
of
Dispute
Adjudication
further
twist
has
been
Whether or not Employers and
viewed; even when the Contractor has
their Engineers believe this will result in
provided its details, in the event the
3 of 7
The rainbow suite

Engineers
(or
certifying
party)
often
been deleted. Again often when SPVs are
subjective judgement results in a belief
involved and they wish to retain the right
that the details provided do not rise give to
to leave the project at an early stage
an entitlement the Contractor loses all
possibly to obtain their profit through sale
rights to a claim. The motive is again said
and move on to another investment.
to be to avoid submission of claims and

therefore disputes.
Clause 8.3: Whilst the Engineer only has

to
inform
the
Contractor
where
the
Various clauses including Profit: As
Programme does not
previously noted many clauses within the
Contract, amendments to the standard
FIDIC suite entitle the Contractor to either
forms often require the approval of the
Cost
profit.
Contractors Programme by the Engineer.
Contractors are not charities and should be
Prior to giving approval, Engineers require
entitled to a profit upon its turnover yet
Contractors to provide even more details
many Employers and their Engineers take
than required by the FIDIC suite.
or
Cost
plus
reasonable
comply with the
an opposite view and delete the profit

element
from
all
of
the
Contractors
additional monetary entitlements.
Clause 14.3: A recent development to be
The
submitted by the Contractor alongside its
motive being perhaps to reduce costs with
application for payment is a statement
a view to achieving budget certainty.
detailing the profitability of the project.

One such requirement was accompanied by
Clause 2.4: It is only equitable that a
an obligation placed upon the Contractor to
Contractor enters into a contract with an
open up its accounts to the Employers
Employer capable of paying for the work it
Cost Consultant.
receives and to their credit FIDIC have
also being a new player to the Contract
recognised this with the insertion of Clause
and taking over some of the duties of the
2.4.
Engineer.
However,
often
prompted
by
Not
This Cost Consultant
surprisingly
drafted
all
the
the
Cost
speculative investors funding projects this
Consultant
proposed
clause is being removed possibly with the
amendments to the pure FIDIC Contract
knowledge that such Funders often are
and in doing so created a role for itself.
Special Purpose Vehicles (SPVs) that rise

and fall as quickly as the ocean tides.
Clause
1.7:
The
requirement
for
the
Clause
20.1:
Perhaps
forms
amendments
mirroring
in
other
respect
of
entitlements to an extension of time which
Contractor to give its consent prior to the
are
Employer being permitted to assign the
prescribed method of time impact analysis
whole or part of the contract has often
is used. Perhaps this is not a bad thing to
sometimes
only
claimable
if
4 of 7
The rainbow suite

ease through and encourage time issues to
normal and one that Contractors expect
be dealt with prospectively and/or as the
and can cope.
work proceeds as intended by the FIDIC
seek to minimise costs it is not uncommon
drafters.
for a further year to be added.
However, as Employers
Thus
attempting to lower costs of operation and

Clause 13.7: The deletion of this clause in
maintenance,
maybe
of
its entirety is commonplace thus leaving
facility, for the Employer.
production
Contractors facing uncertainty in countries

perhaps that need to increase revenues in
The
above
are
just
some
examples
these hard times and may do so by
relevant to specific clauses within any of
increasing the costs of employment by tax
the FIDIC Books.
raising measures. The motive of increasing
above does not provide too much food for
certainty of price is considered not to be
thought for Employers and their advisers!
It is hoped that the
equitable.
A Contractor recently commented that it
Clause 14.4: Payment milestones should
answered an invitation to bid based upon a
produce a regime whereby Contractors
Yellow
have adequate funds to carry out the
documents
intended
the
contract had been amended such that the
Perhaps seen as a
conditions were more onerous towards the
carrot to entice Contractors to achieve
Contractor than the Silver Book! This state
completion at a date earlier than stated
of affairs is becoming commonplace and
and accelerate (at their own cost) progress
renders the time spent drafting standard
payments relate to milestones that can be
forms of Contract that are understood and
achieved at later stages of the project.
can be priced economically a waste.
scope
of
intended timeframe.
works
within
Book
but
arrived
when
virtually
the
the
tender
whole
The Contractor has no option at the time of

bidding but to factor in additional financing
It is said that a Contract is a coming
costs, if it considers that the competition
together of Parties of equal bargaining
will allow such a luxury.
power.
In the light of the above, is that
really true?
Clause 1.1.3.7: A Defects Notification
Period of 365 days is considered to be
5 of 7
The rainbow suite
Driver Trett is the trading name and a member of Driver Group plc (AIM: DRV). Driver Trett is
the principle trading subsidiary of the Group and has been providing the construction and
engineering industries with commercial and dispute resolution services since 1978.
Driver Trett breakfast seminars in the UK alone. In response to demand Driver Trett has
developed a range of high quality FIDIC training courses, workshops and services.
6 of 7
The rainbow suite

Endnotes
1.
2.
Paul Battrick
3.
Phil Duggan
BSc MSc MCIArb
A director of Driver Tretts international business, Phil has over twenty years industry
projects.
4.
Driver Trett
Driver Trett have excelled at providing construction and engineering focused services
since 1978.Our Project Management, Programming, Commercial Management, Quantity
The companys international business is administered from Driver Tretts London office.
1 Norton Folgate
London
E1 6DB
7 of 7

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The rainbow suite

The 1999 FIDIC suite part 1

consistent with the responsibility to provide

FIDICs Employer / Contractor contracts,

Client and Consultant

Client and Architect

Joint Ventures between Consultants

Indeed FIDIC provides many other

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2011

The Red Book first issued in 1957, and

The FIDIC 1999 Suite of Contracts

The rainbow suite

Sponsored by perhaps a desire to create

The Red Book = Conditions of

The fourth contract to be issued was the

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2011

become known as the Rainbow Book and

The New Red, Yellow and Silver Books

The rainbow suite

Employer should act through the Claims,

Payment procedures under clause

First impressions of the 1999 suite maybe off

The sequence of events under

The general layout of the Contracts is as

General Conditions; including an

A section giving guidance for the

A section entitled Forms; here FIDIC

Letter of Tender with supporting

Whilst the above can be considered to be

Principle events from invitation to

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2011

All in all a very complete document that

The FIDIC 1999 First Edition Red Book

It is suitable for all types of project

The administration of the Contract

Payment to the Contractor is based

The rainbow suite

of Measurement should be stated);

Payment to the Contractor is based

Risk sharing is balanced between

Claims by both Parties have to follow

The Contractor has some financial

Testing procedures leading to

The Yellow Book shares with the Red

Materials can be paid for both on

The FIDIC 1999 First Edition Yellow Book

It is suitable for all projects where the

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2011

The FIDIC 1999 First Edition Silver Book

The Employer pays the Contractor

The Contractor does not have to

The above means that the Employer has a

The rainbow suite

potentially by lenders who crave certainty

Design liability rests solely with the

There is not an Engineer within the

It is lump sum Contract with

Given the above circumstances under

only a small number of Contractors to

The FIDIC 1999 First Edition Green Book

The rainbow suite

Driver is the trading name of Driver Consult

Paul Battrick, Phil Duggan and Driver Consult Ltd. 2011

The rainbow suite