QTS532 Lecture 5 – 14th January, 2025
Bringing Out Areas of Discussions on Claims Under the FIDIC Form of Contract
1. What the FIDIC Suite of Contracts cover
The Red Book: Conditions of Contract for Construction for Building and Engineering Works
designed by the Employer (1st Ed 1999).
The Pink Book: Harmonised Red Book (MDB Edition) Conditions of Contract for Construction
for Building and Engineering Works designed by the Employer (Version 3 2010) - for use as
part of the standard bidding documents by the Multilateral Development Banks only. The
Islamic Development Bank and the World Bank worked with FIDIC in developing this
contract.
The Yellow Book: Conditions of Contract for Plant and Design-Build - for electrical and
mechanical plant, and for building works, designed by the Contractor (1st Ed 1999).
The Silver Book: Conditions of Contract for EPC/Turnkey Projects (1st Ed 1999).
The Orange Book: Conditions of Contract for Design - Build and Turnkey (1st Ed 1995).
The Gold Book: DBO Contract - Conditions for Design, Build and Operate Projects (1st Ed
2008).
The Green Book: Short form of Contract (1st Ed 1999).
Sub-consultancy Agreement: (1st Ed 1992)
The White Book: Client/Consultant Model Services Agreement (4th Ed 2006)
The Blue-Green Book: Dredgers Contract (1st Ed 2006)
Conditions of Subcontract for Construction: Used in conjunction with the Red Book and The
Pink Book (Test Book 2009)
2. What are the most popular forms & the FIDIC approach to Risk Allocation?
The most well known forms of FIDIC Contract are The Red Book (traditional conditions), The
Yellow Book (D&B conditions) and The Silver Book (EPC/turnkey conditions).
3. The contract structure is generally the same:
General provisions (Clause 1)
Page 1 of 3 QS Adenike Ayanda
The Employer, Employer's Administration or Engineer, Contractor, Nominated
Subcontractors OR Design (Clauses 2-5)
Staff and labour, Plant, materials and workmanship (Clauses 6-7)
Commencement, delays and suspension, Tests on completion, Employer's taking over,
Defects Liability, Tests after completion (Clauses 8-11/12)
Measurement and Evaluation OR Variations and Adjustments, Contract Price and Payment
(Clauses 12-14)
Termination by Employer, Suspension and Termination by Contractor (Clauses 15-16)
Risk and Responsibility (Clause 17)
Insurance (Clause 18)
Force Majeure (Clause 19)
Claims, Disputes and Arbitration (Clause 20)
The 1999 Red Book is globally the most commonly used standard form contract for
construction and engineering works where most or all the works are designed by, or on
behalf of, the employer.
When profiling risk, FIDIC has historically allocated risk based on which party is best
placed to assume the risk; in contrast, The Silver book adopts a market practice approach,
placing the majority of risk on the contractor, primarily including design and design co-
ordination, along with any employer design.
With The Red Book and The Yellow Book, the employer takes on risks such as
unforeseeable ground conditions, unforeseeable operations of the forces of nature, force
majeure (such as acts of war, terrorism and natural disasters) planning and environmental
permits, and changes to the law. The party who prepares the design takes on the
responsibility for its defects.
4. One of the Traps for the Unwary: Notices: Conditions Precedent
The most controversial innovation of the FIDIC 1999 Red Book is not amplification or
amendment to the Extension of Time provisions but the requirement under Clause 20.1,
which is a condition precedent to any claim for Extension of Time or Cost.
Page 2 of 3 QS Adenike Ayanda
Reference to Clause 20.1 elsewhere in the contract demonstrates that if the contractor is
not compliant he forfeits any entitlement to an extension of time or cost irrespective of
relevant circumstances.
5. Clause 20.1 states a contractor
“shall give notice to the Engineer, describing the event or circumstances giving rise to the
claim. The notice shall be given as soon as practicable, and not later than 28 days after
the Contractor became aware, or should have become aware, of the event or
circumstance”.
Accordingly, it is absolutely clear contractors must provide, and be alert to, notices under
Clause 20.1 as soon as possible and remain so throughout the contract. The only area in
which the contractor is given any leeway is where it was reasonable to conclude he could
not have been aware of the event or circumstance giving rise to the entitlement to extra
time and/or cost. It is suggested that a prudent contractor should adopt the practice of
having at least 1 review in every 28 day period to assess whether any notice ought to be
given under contract.
Although not a condition precedent of the entitlement to make a claim, Clause 20.1
requires the contractor to keep records, making those records available to the engineer.
Within 42 days of the contractor becoming aware (or should have become aware of the
claim, or over a longer period if the engineer agrees, the contractor must send a fully
detailed claim including supporting particulars. This claim will be treated as interim but it
must be updated at monthly intervals. The final claim must be sent within 28 days after
the end of the effects resulting from the event or circumstance that gave rise to the claim.
The requirements to submit this claim within 42 days and to update the claim are not
conditions precedent in the same way as the initial notice, though it is clear failure to
comply with this requirement will prejudice the contractor’s position.
The engineer has 42 days after receiving the claim to respond with approval or
disapproval and detailed comments. Monthly payment certificates will include the
amounts the Engineer approves within the Contractor’s claim.
Page 3 of 3 QS Adenike Ayanda
