FIDIC 99 Rainbow Contracts Suite - Choosing the Right FIDICcontracts
According to Wikipedia, FIDIC is defined as:
The International Federation of Consulting Engineers (commonly known as FIDIC, acronym for its French name Federation Internationale Des Ingenieurs-Conseils) is an international standards organization for the consulting engineering & construction best known for the FIDIC family of contract templates. The fact that the organisation has a French title bears testimony to its foundation in 1913 by three wholly or partly francophone countries, Belgium, France and Switzerland.
In 1999, FIDIC published the first edition of its widely popular FIDIC Rainbow Suite, that contains six books:
- Conditions of Contract for Construction (the Red Book),
- Conditions of Contract for Plant, Design-Build (the Yellow Book),
- Conditions of Contract for EPC/Turnkey (the Silver Book),
- Conditions of Contract for Design-Build and Operate (Gold Book),
- Conditions of Short Form of Contract (Green Book), and
- Conditions of Contract for Dredging Work (Blue Book).
Historically by the 80s, FIDIC published its Red and Yellow book, based on discipline. The Red Book was tailored for mainly the civil works, while the Yellow Book was mainly for the mechanical and electrical works.
Both books were different in terms of allocation of risk between the parties. In the Red Book, the Employer produces a detailed design for the Contractor to follow, whereas payments are on a remeasured basis against a BOQ.
In the Yellow Book, the Employer sets a Performance Specification in which the Employer describes his output requirements, and the design is carried out by the Contractor.
In the subsequent 1999 Rainbow Suite, FIDIC has evolved its contracts from being based on discipline to a suite based on who carries the design. In that way, FIDIC was able to address much more projects in the constantly evolving market.
Choosing the Right FIDIC Contract #
The most common contracts of the FIDIC 99 Rainbow suite are the Red, the Yellow and the Silver books. The other three mentioned above are very specialized to specific cases or industry, and as such, we shall concentrate on the common Red, Yellow and Silver Books.
The easiest way to classify which FIDIC contract is best or right for a project, is by answering the question 'What is the type of project delivery?'. There are three common ways of project delivery:
The traditional Design-Bid-Build (DBB), in which the Employer produces a detailed design, and then receives tenders or bids from interested contractors. The selected Contractor is tasked with the construction, and as such, the Employer carries more risk.
The Red Book is based on the DBB method, and the payment method is based on a remeasured (unit price) basis. The Red Book is mostly construction related projects and projects with a lower degree of complexity.
The second method is the Design-Build (DB), in which the Employer produces the pre-design stage of the project, and the Contractor is tasked with completing the design and the construction.
The Yellow Book is based on the DB method. The Contractor carries more risk than the Red Book, and the Contractor is paid on a lump sum basis. The Yellow Book is suited to more complex projects where a higher degree of know-how by the Contractor is required, such as electro-mechanical works.
The third method is the Engineering-Procurement-Construction (EPC), in which the Employer produces a performance specification and the Contractor carries out the design and construction phases. After the Time for Completion, the Contractor should deliver the works in a working condition in accordance with the requirements. The Engineer in the Silver Book is replaced with an Employer Representative.
The Silver Book is based on the EPC method, which bears the Contractor the most risk, and is paid on a lumpsum basis. The Silver Book is more suited to complex infrastructure projects where the Employer is not interested in details of the project.
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