International Federation

of Consulting Engineers

FIDIC RULES ABOUT CIVIL

CONTRACTS

Presented By :
Group 3

Nikhil Gupta 10P215

Ashwin Nair 10P213
Poulomi Mukherjee 10P219
Shashank Shekhar 10P232
Vipul Manglik 10P241
 FIDIC
Fédération Internationale des Ingénieurs-Conseils/
International Federation of Consulting Engineers

• Founded in 1913
• Founding member countries were Belgium, France
and Switzerland
• Members of FIDIC are called Member Associations
which are National Associations to which the
companies and organizations within the country
belong to
• Mission
Promote business interests

• Objectives
Represent consulting engineering industry globally
Develop business methods
Promote ethics
Enhance image of consulting engineers
Be the authority on issues relating to business practice

• Strategy
Lead and support national Member Associations

• Action plan
Broaden membership
Provide best-practice support
Fight corruption
Demonstrate industry's contribution
Promote role in sustainable development
 FIDIC and India
• Consulting Engineers Association of India
(CEAI) is the Member Association from India
representing the Indian engineering
consultancy profession at FIDIC
• CEAI became a Member Association of FIDIC
in the year 1980
Member Associations
1 million professionals in 75 countries
 STATISTICAL INFORMATION
• Technology-based services supplied by the consulting
engineering industry $110 billion
• Total construction cost $2700 billion
• FIDIC national Member Associations 75
• Industry staff represented 1 million
• Firms represented 30,000
• Main sectors supplied by the industry
- transport 54%
- industrial & commercial buildings & facilities 20%
- land development 14%
- drainage, water & waste 12%
 FORMS OF CONTRACT
• FIDIC publishes internationally recognized
forms of contract for infrastructure works
 FORMS OF CONTRACT
• Since March 2006 Multilateral development
banks use the Harmonized Construction
Contract
 Green Book
• For engineering & building work of small value(<
$50,000)
• Essential administrative & commercial
arrangements
• Most suited for simple, repetitive, short duration
work where no sub contracting is involved
• Design provided by Employer
• No impartial engineer, contractor nominates
Employer’s personnel
 Red Book
• Construction work where design is carried out by employer
• Newer version
– More focus on procurement rather than nature of work, no
more applicable to just ‘civil eng’
• Engineer employed by Employer
• Engineer responsible for issuing instructions, certifying
payments, determining completion, etc
• In case of dispute between parties
– Engineer resolves the dispute
– Disagreement with Engineer’s decision – DAB settle the dispute
– Disagreement with DAB’s decision – Resolved via an
International arbitration
 Red Book(MDB Edition)
• Simplifies use of FIDIC contracts by MDBs,their
borrowers & others involved with project
procurement
• Some of the participating banks in the
preparation
– Asian Development Bank
– African Development Bank
– Nordic Development Fund
– The World Bank
• Incorporates the requirements of MDBs
 Yellow Book
• For Electrical and Mechanical plant, & for building works
designed by Contractor
• More focus on type of procurement rather than work
• Administration & supervision carried out by Engineer,
appointed by the Employer
• Engineer responsible for issuing instructions, certifying
payments, determining completion, etc
• In case of dispute between parties
– Engineer resolves the dispute
– Disagreement with Engineer’s decision – DAB settle the dispute
– Disagreement with DAB’s decision – Resolved via an
International arbitration
 Orange Book
• For design build and turn key
• Contractor carries total liability for design
• Advantageous for employer, but has less
control over design
• Earlier version of Red & Yellow books
contained design build & turnkey options
 Silver Book
• For Process, Power & Private infrastructure
projects
• Contractor takes full responsibility for design
& execution
• Provides increased cost certainty
• Contractor also provides for accuracy of
Employers requirements
• No reference of an Engineer in the book
Which Contract to Use?
 MAJOR PARTIES TO CONTRACT
• EMPLOYER
• CONTRACTOR
• SUB-CONTRACTOR
 EMPLOYER
• Employer pays contractor the contract Price in
consideration of the execution of the works
• Employees an engineer for the contract(his
representative)
• Appoints other staff members, delegates work
• Need to give right to access and possession of site within
the time stated in tender
• For giving possession, performance security must be
given by contractor to employer
• Any delay in giving possession by employer leads to:
– Extension of time
– Payment of cost plus reasonable profit
 EMPLOYER
• In such case, contractor need to give notice to engineer who shall
proceed to evaluate ‘determinations’ according to contract clauses
• However, if employer delay caused due to contractor, he/she not
entitled to extra time and money
• Possession of site may be partial /complete depending on the
number of contractors employed
• In shared possession, clarification needed in particular conditions
• Contractor’s responsibility of site’s security , safety and insurance;
for shared possession extent of responsibility must be stated in
contract
• Employer to provide reasonable assistance to contractor :
– Obtain copies of laws of country relevant to contract
– For contractor’s application for any permits, licenses or approvals by
the laws of country
 EMPLOYER
• Employer responsible for ensuring employer’s personnel and other
contractor’s on site :
– Cooperate with contractor’s efforts
– Take actions similar to which the contractor is required for safety
procedures and protection of environment
• Employer claims of any payment - to be notified to contractor by
employer or engineer
• Clauses for determination of payment to be mentioned in contract;
engineer shall use these to evaluate the determinations
• Amount may be deducted from contract price and payment
certificates
• Employer deducting money not entitled to will lead to contractor
claiming for all consequences for deductions
 CONTRACTOR
• Executes and completes the works and remedy any defects
therein, in conformity with the provisions of the contract
and Engineer’s instructions
• Accepts other secondary obligations
• Responsible for adequacy, stability and safety of site
operations and methods of construction
• Required to submit details of arrangements and methods
to be used to engineer
• No further significant alteration to be made without
notifying the engineer
• Deliver performance security to employer within 28 days
after receiving the letter of acceptance and also send a
copy to Engineer
 CONTRACTOR
• Employer to return the performance security to contractor within
28 days after receiving a copy of the performance certificate
• Appoints a representative; contractor’s equivalent to engineer
• Representative must :
– Receive approval of engineer
– Not to be replaced or removed without prior notice to engineer
– Acts on contractor’s behalf
– Present on site whenever work in progress
• Responsible for acts or defaults of any sub-contractors or his
employees
• Maintain co-operation in work between employer’s personnel,
other contractors or any other government body on the site
 SUBCONTRACTING
(Christopher R Seppala-Partner, White and Case, Paris)

• How a contractor should go about

subcontracting work?
• Conditions of subcontract are intended to use
in conjunction with the Red Book
 Clause 4
• Subcontractor shall be deemed to have full
knowledge of the main contract (-contractor’s
prices)
• Subcontractor shall generally have all obligations
and liabilities of the contract or under the main
contract
• No privity shall exist between the subcontractor
and the employee
• Breaches by the subcontractor of the subcontract
which cause damage to the contractor of the
main contract.
 Clause 7.2
• Subcontractor is delayed by an event on the
“critical path” of contraction progress for
which the contractor is entitled to an
extension of time if the contractor is entitled
thereto.
• Contractor operates under extension that it is
not entitled to.
• Breach of subcontract by the contractor
 Clauses 11.2 & 16
• Manner of payment of the subcontracter price –
critical issue in a subcontract for the
subcontractor
• “Pay when Paid”
• Risk transfer - quantum of subcontracting work
• If contractor has failed to pay amount i.e.
properly due and payable to the subcontractor,
the contractor will be liable to pay the interest on
the overdue amount @ payable to employer by
the contractor under the main contract
 Clause 19
Sub Clause 19.1- b/w Contractor & Sub Contractor
Different Countries Assumed –International
Arbitration (Red Book)
If Same Country-Part II has to be modified
Sub Clause 19.2- b/w Employer & Contractor

84---------------------70--------------56---------Arbitration
Employer-------Each Party------Buffer-------Arbitration
THANK YOU!!