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1FIDIC,1EvolutionofFIDICContracts,WhatisFIDIC?,FIDIC,theInternationalFederationofConsultingEngineersrepresentsgloballytheconsultingengineeringindustry.Geneva,SwitzerlandFoundedin1913,currently78MemberAssociationsfromallovertheworld.Internationallyrecognized,especiallyforitshighqualitymodelcontractsforinternationalconstructionindustry.,,1EvolutionofFIDICContracts,FIDICMODELCONTRACTS:EARLYFORMS,ConditionsofContractforWorksofCivilEngineeringConstruction(1957,1965,1977,1987,1992DAB)ConditionsofSubcontractforWorksofCivilEngineeringConstruction(1994)ConditionsofContractforWorksofElectricalandMechanicalEngineering(1963,1980,1987)ConditionsofContractforDesign-BuildandTurnkeyProjects(1995)ModelServiceAgreementBetweenClientandConsultant(1979,1990,1998),1EvolutionofFIDICContracts,FIDICMODELCONTRACTS:CURRENT,RedBookFIDICsConstructionContract1999YellowBookFIDICsPlantandDesign-Build1999SilverBookFIDICsEPCTurnkey1999GreenBookFIDICsShortForm1999,2PhilosophyBehindContract,Whatstheconstructionindustrylike?,2PhilosophyBehindContract,“Wecometogetherwithdifferentgoals.”,CONTRACTOR,EMPLOYER,2PhilosophyBehindContract,Anyconstructionprojectisladenwithrisks,andriskscostmoney.Whoisresponsibleforthelossesifsuchriskseventuate?Howcontractisdesignedtodealwiththem?,Whoknowswhatsdownbelow!,2PhilosophyBehindContract,FlexibilityClarityandsimplicityStimulustogoodmanagement,Agoodcontractis,withtheconstraintoflegalenvironment,alwaysguidedbyveryfundamentalphilosophy,asinNEC:,whichreducestransactioncostsinperfumingthecontract.,2PhilosophyBehindContract,RationaleforRiskAllocationinContract:(Abrahamson,Ashley,Barnes,Ward,Chapman,2PhilosophyBehindContract,ifhecancovertheriskbyinsuranceandallowforthepremiuminsettlinghischarges,anditismostconvenientandpracticablefortherisktobedealtwithinthisway;,2PhilosophyBehindContract,ifthepreponderanteconomicbenefitofrunningtheriskaccruestohim;,2PhilosophyBehindContract,ifitisintheinterestsofefficiencytoplacetheriskonhim;,2PhilosophyBehindContract,if,whentheriskeventuates,thelosshappensallontohiminthefirstinstance,andthereisnoreasonunderanyoftheaboveheadingstotransferthelosstoanother,oritisimpracticabletodoso.,2PhilosophyBehindContract,if,whentheriskeventuates,thelosshappenstoallonhiminthefirstinstance,andthereisnoreasonunderanyoftheaboveheadingstotransferthelosstoanother,oritisimpracticabletodoso.,2PhilosophyBehindContract,ifitisthetraditionforhimtobeartherisks.,InChina,wearastheChinesedo!,RiskAllocationsinFIDIC,FIDICenvisagestwoapproachesinitsmodelcontracts:,Pro-contractor:theRedBook,GreenBookPro-employer:theSilverBook,WhatabouttheYellowBook?,Neutral,WewillfocusontheanalysisofRedBookandSilverBook.,RiskAllocationsinFIDIC,1GeneralProvisions2TheEmployer3TheEngineer4TheContractor5NominatedSubcontractors6StaffandLabour7Plant,MaterialsandWorkmanship8Commencement,DelaysandSuspension9TestsonCompletion10EmployersTakingOver,11DefectsLiability12MeasurementandEvaluation13VariationsandAdjustments14ContractPriceandPayment15TerminationbyEmployer16SuspensionandTerminationbyContractor17RiskandResponsibility18Insurance19ForceMajeure20Claims,DisputesandArbitration,TheBigPictureoftheRedBook:,RiskAllocationsinFIDIC,TheBigPictureoftheSilverBook,1GeneralProvisions2TheEmployer3EmployersAdministration4TheContractor5Design6StaffandLabour7Plant,MaterialsandWorkmanship8Commencement,DelaysandSuspension9TestsonCompletion10EmployersTakingOver,11DefectsLiability12TestsafterCompletion13VariationsandAdjustments14ContractPriceandPayment15TerminationbyEmployer16SuspensionandTerminationbyContractor17RiskandResponsibility18Insurance19ForceMajeure20Claims,DisputesandArbitration,RiskAllocationsinFIDIC,MainRisk-relatedClauses:,17.3EmployersRisks19ForceMajeure8.8SuspensionofWork;4.10SiteData4.12UnforeseeablePhysicalConditions-Red4.12UnforeseeableDifficulties/5.1GeneralDesignObligations-Silver13VariationandAdjustmentInflationandChangeinLegislations8.4ExtensionofTimeforCompletion8.5DelaysCausedbyAuthorities,RiskAllocationsinFIDIC,17.3EmployersRisks,RiskAllocationsinFIDIC,19ForceMajeure,RiskAllocationsinFIDIC,4.12UnforeseeablePhysicalConditions-Red,RiskAllocationsinFIDIC,4.12UnforeseeableDifficulties,RiskAllocationsinFIDIC,5.1GeneralDesignObligations-Silver,RiskAllocationsinFIDIC,8.4ExtensionofTimeforCompletion,RiskAllocationsinFIDIC,Doesriskallocationreallymatter?,No,ifunderfullinsuranceCover,Yes,ifunderinadequateinsuranceCover,Whatistherealityintheinsurancemarket?,4.ConcludingRemarkswithQwhichmayincludeanycombinationofcivil,mechanical,electricaland/orconstructionworks.,EPCT,ConditionsofContractforEPC/TurnkeyProjectsWhicharerecommendedfortheprovisiononaturnkeybasisofaprocessorpowerplant,andwhichmayalsobeusedwhereoneentitytakestotalresponsibilityforthedesignandexecutionofaprivatelyfinancedinfrastructureprojectwhichinvolveslittleornoworkunderground.Undertheusualarrangementsforthistypeofcontract,theentitycarriesoutalltheEngineeringProcurementandConstruction(“EPC”),providingafullyequippedfacility,readyforoperation(atthe“turnofthekey”).,ShortFormofContract,Whichisrecommendedforrelativelysimpleorrepetitivework,orforworkofshortdurationorofsmallcapitalvalue.,Howtochooseasuitablecontractdocument?,ForalargeProject:IstheEmployer(ortheEngineer)goingtodomostofthedesign?IstheContractorgoingtodomostofthedesign?IsitaPrivatelyFinanced(orPublic/PrivateFinanced)Project,oftheBOTorsimilartype?Oron
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