TABLE OF CONTENTS

1. SECTION 1 ............................................................................................. 10
2. SECTION 2 ............................................................................................. 16
2.1. FIDIC Red Book Index ...................................................................................... 16
2.2. General Conditions (Yellow Book) Plant and Design Build ................................ 21
3. SECTION 3: INTRODUCTION ................................................................ 26
4. SECTION 4: WHAT DO THE DIFFERENT CONTRACTS HAVE
IN COMMON? ......................................................................................... 27
4.1. Summary of when Each of the Contracts will be Suitable.................................. 32
4.1.1. Short Form (Green Book) ................................................................................................. 32
4.1.2. The Construction Contract (Red Book) ............................................................................ 32
4.1.3. The MDB Harmonised Construction Contract (Version of the Red Book)........................ 34
4.1.4. The Plant and Design Build Contract (Yellow Book) ........................................................ 35
4.1.5. The EPC/Turnkey Contract (Silver Book) ......................................................................... 35
4.1.6. The Design, Build and Operate ("DBO") Contract (Gold Book) ....................................... 36
4.2. "Definitions Listed Alphabetically" ..................................................................... 37
5. SECTION 5: THE PARTIES TO THE CONTRACT
(SUB-CLAUSE 1.1.2) ............................................................................. 40
5.1. General Provisions (Clause 1) .......................................................................... 41
5.1.1. Clauses We Would Have Expected to See ...................................................................... 41
5.1.1.1. Entire Agreement/Non-variation Clause ......................................................................................... 41
5.1.1.2. Non Waiver Clause ......................................................................................................................... 41
5.2. Communications ............................................................................................... 41
5.2.1. Law and Language (Sub-clause 1.4)................................................................................ 43
5.2.2. Priority of Documents (Sub-clause 1.5) ............................................................................ 43
5.2.3. Contract Agreement (Sub-clause 1.6) .............................................................................. 43
5.2.4. Errors in the Employer's Requirements (Sub-clause 1.9) (Yellow Book) ......................... 45
5.2.5. Delayed Drawings or Instructions (Sub-clause 1.9) (Red Book) ...................................... 45
5.2.6. Confidentiality (Sub-clause 1.9) (Silver Book) .................................................................. 45
5.2.7. Employer's Use of Contractor's Documents (Sub-clause 1.10) (Red, Yellow and
Silver Books)..................................................................................................................... 45
6. SECTION 6: THE EMPLOYER (CLAUSE 2) .......................................... 46
6.1. Right of Access to the Site (Sub-clause 2.1) ..................................................... 46
6.2. Employer's Financial Arrangements (Sub-clause 2.4) ....................................... 46
6.2.1. The Employer's Obligation to Submit Information Regarding His Finances ..................... 46
6.3. Employer's Claims (Sub-clause 2.5) ................................................................. 47
7. SECTION 7: ROLE PLAYERS OTHER THAN THE PARTIES .............. 49
7.1. The Engineer .................................................................................................... 49
7.2. Who Can Act as Engineer Under these Contracts ............................................ 49
7.3. Must the Engineer Act Impartially? .................................................................... 50
7.4. Replacing the Engineer..................................................................................... 52
7.5. Delegation of the Engineer's Authority .............................................................. 55
7.6. Requirements for the Delegation ....................................................................... 55
7.7. Limitations to the Engineer's Authority (Sub-clause 3.1) (Red and
Yellow Books) .................................................................................................................. 55
7.8. Instructions of the Engineer (Sub-clause 3.3) (Red Book) ................................. 55
7.9. The Engineer's Role as Facilitator (Sub-clause 3.5) .......................................... 60
8. SECTION 8: PERFORMANCE SECURITY UNDER THE FIDIC
CONTRACTS (SUB-CLAUSE 4.2) ......................................................... 62
8.1. Advance Payment Guarantees (Sub-clause 14.2) ............................................. 64
8.2. The Contractor's Representative (Sub-clause 4.3) ............................................ 65
8.3. Sub-contractors ................................................................................................ 65
9. SECTION 9: THE FIDIC APPROACH TO SUB-CONTRACTORS
(SUB-CLAUSES 4.4 AND 4.5) ............................................................... 66
9.1. Nominated Sub-contractors Under the Red, Silver and Yellow Books ............... 66
9.2. Unforeseeable Physical Conditions (Sub-clause 4.12) (Red and
Yellow Books) .................................................................................................................. 66

9.3. Unforeseeable Difficulties (Sub-clause 4.12) (Silver Book)................................ 67

10. SECTION 10: DESIGN (CLAUSE 5) (YELLOW BOOK) ........................ 68
10.1. General Design Obligations (Sub-clause 5.1) ................................................... 68
10.2. Design Under the Red Book ............................................................................. 68
10.2.1. Objection to Nomination (Sub-clause 5.2) ........................................................................ 69
10.2.2. Payments to Nominated Sub-contractors (Sub-clause 5.3) ............................................. 69
10.3. Contractor's Documents (Sub-clause 5.2) (Yellow and Silver Books) ................ 69
10.4. Contractor's Undertaking (Sub-clause 5.3) (Yellow and Silver Books) ............... 69
10.5. Technical Standards and Regulations (Sub-clause 5.4) (Yellow and
Silver Books) .................................................................................................................... 70

10.6. Design Error (Sub-clause 5.8) (Yellow and Silver Books) .................................. 70
10.6.1. Design Responsibility ....................................................................................................... 71
11. SECTION 11: STAFF AND LABOUR
(CLAUSE 6) (RED, YELLOW AND SILVER BOOKS) ........................... 73
12. SECTION 12: PLANT, MATERIALS AND WORKMANSHIP
(CLAUSE 7) (RED, YELLOW AND SILVER BOOKS) ........................... 74
12.1. Testing (Sub-clause 7.4) ................................................................................... 74
12.2. Ownership of Plant and Materials (Sub-clause 7.7) (Red, Yellow and
Silver Books) .................................................................................................................... 74
12.2.1. Ownership of Plant and Materials ..................................................................................... 74
13. SECTION 13: COMMENCEMENT, DELAYS AND SUSPENSION
(CLAUSE 8) ............................................................................................ 76
13.1. Commencement of Work (Sub-clause 8.1)........................................................ 76
13.2. Time for Completion (Sub-clause 8.2) ............................................................... 76
13.3. Programme (Sub-clause 8.3) ............................................................................ 76
13.3.1. Early Warning ................................................................................................................... 77
14. SECTION 14: OWNERSHIP OF FLOAT ................................................ 79
14.1. Extension of Time for Completion (Sub-clause 8.4) .......................................... 85
15. SECTION 15: CONCURRENT DELAYS ................................................ 91
15.1. What is a Concurrent Delay? ............................................................................ 93
15.2. Delay Damages (Sub-clause 8.7) ..................................................................... 94
16. SECTION 16: TESTING .......................................................................... 95
16.1. Tests on Completion (Sub-clause 9.1) .............................................................. 95
16.2. Delayed Tests (Sub-clause 9.2) ........................................................................ 96
16.3. Failure to Pass Tests on Completion (Sub-clause 9.4) ...................................... 96
17. SECTION 17: ENTERING INTO THE CONTRACT,
COMMENCEMENT AND COMPLETION PROCEDURES AND
FORMALITIES FOR ENTERING INTO THE CONTRACT ..................... 98
18. SECTION 18: WHEN THE CONTRACT WILL COME INTO
EFFECT ................................................................................................ 101
18.1. Under the Short Form ..................................................................................... 101
18.2. Under the Yellow and Red Books ................................................................... 101
19. SECTION 19: STAGES OF COMPLETION AND DEFECTIVE
WORK ................................................................................................... 108
19.1. Completion Procedures Under the FIDIC Contracts ........................................ 108
19.2. Taking Over the Works Before the Certificates are Issued .............................. 108
19.2.1. How Various Contracts Deal with this Problem .............................................................. 109
19.2.2. How FIDIC Approaches the Problem ............................................................................. 109
19.3. Failure of the Engineer to Issue a Taking Over Certificate .............................. 111
19.4. Taking-Over Under the Green Book (Clause 8) .............................................. 113
20. SECTION 20: DEFECTS LIABILITY (CLAUSE 11) ............................. 114
20.1. Completion of Outstanding Work and Remedying Defects
(Sub-clause 11.1) ............................................................................................................ 114
20.2. Extension of the Defects Notification Period (Sub-clause 11.3) ....................... 114
20.3. Failure to Remedy Defects (Sub-clause 11.4) ................................................. 114
20.4. Performance Certificate (Sub-clause 11.9) ..................................................... 115
20.5. Tests after Completion (Sub-clause 12.1) Yellow Book ................................... 115
20.6. Delayed Tests (Sub-clause 12.2) Yellow Book................................................ 115
21. SECTION 21: MEASUREMENT AND EVALUATION (CLAUSE 12)
(RED BOOK)......................................................................................... 117
21.1. Works to be Measured (Sub-clause 12.1) ....................................................... 117
21.2. Method of Measurement (Sub-clause 12.2) .................................................... 117
21.3. Evaluation (Sub-clause 12.3) .......................................................................... 117
21.4. Omissions (Sub-clause 12.4) .......................................................................... 118
21.4.1. Variations Generally ....................................................................................................... 119
21.5. Value Engineering (Sub-clause 13.2) .............................................................. 119
21.6. Provisional Sums (Sub-clause 13.5) ................................................................ 120
21.7. Daywork (Sub-clause 13.6) ............................................................................. 120
21.8. Adjustments for Changes in Legislation (Sub-clause 13.7) .............................. 120
21.9. Adjustments for Changes in Costs (Sub-clause 13.8) (Red and
Yellow Books)................................................................................................................. 120

22. SECTION 23: CONTRACT PRICE AND PAYMENT (CLAUSE 14)

(YELLOW AND SILVER BOOKS) ........................................................ 121
22.1. Advance Payment (Sub-clause 14.2) (Red, Yellow and Silver Books) ............. 121
22.2. Application for Interim Payment Certificates (Sub-clause 14.3) (Red, Yellow
and Silver Books) ........................................................................................................... 121
22.3. Schedule of Payments (Sub-clause 14.4) (Red, Yellow and Silver Books) ...... 122
23. SECTION 22: VARIATIONS AND ADJUSTMENTS (CLAUSE 13) ...... 123
23.1. Plant and Materials Intended for the Works (Sub-clause 14.5) (Red, Yellow
and Silver Books) ........................................................................................................... 124
23.2. Issue of Interim Payment Certificates (Sub-clause 14.6) (Red, Yellow and
Silver Books) .................................................................................................................. 124

23.3. Payments (Sub-clause 14.7) (Red, Yellow and Silver Books) .......................... 125
23.4. Delayed Payments (Sub-clause 14.8) ............................................................. 125
23.4.1. Interest Payable on Late Payments ................................................................................ 125
23.4.2. Interim Payment .............................................................................................................. 126
23.5. Payment of Retention Money (Sub-clause 14.9).............................................. 129
23.6. Statement at Completion (Sub-clause 14.10) .................................................. 129
23.7. Application for Final Payment Certificate (Sub-clause 14.11) (Red, Yellow
and Silver Books) ........................................................................................................... 129

23.8. Issue of Final Payment Certificate (Sub-clause 14.13) .................................... 130

23.9. Cessation of Employer’s Liability (Sub-clause 14.14) (Red, Yellow and
Silver Books) .................................................................................................................. 130
24. SECTION 24: SUSPENSION AND TERMINATION .............................. 132
25. SECTION 25: TERMINATION OF CONTRACT .................................... 135
25.1. Employer's Unilateral Right to Terminate the Contract (Sub-clause 15.5)
(Red, Yellow and Silver Books)....................................................................................... 143
25.1.1. The Employer’s Right to Terminate the Contract (Termination for Convenience) .......... 143
25.1.2. Risk and Responsibility ................................................................................................... 144
25.1.3. Risk Under the Silver Book ............................................................................................. 144
25.1.4. Consequences of the Employer Bearing the Risk .......................................................... 156
26. SECTION 26: THE FIDIC APPROACH TO FORCE MAJEURE ........... 157
26.1. Indemnities (Sub-clause 17.1) (Red, Yellow and Silver Books)........................ 158
26.2. Contractor's Care of the Works (Sub-clause 17.2) ........................................... 158
26.3. Intellectual and Industrial Property Rights (Sub-clause 17.5) ........................... 159
26.4. Limitation of Liability (Sub-clause 17.6) (Cap on Liability) ................................ 159
26.4.1. Decennial Liability ........................................................................................................... 160
27. SECTION 27: INSURANCE (CLAUSE 18)............................................ 164
27.1. General Requirements for Insurances (Sub-clause 18.1) ................................ 164
27.2. Insurance for Work and Contractor's Equipment (Sub-clause 18.2) ................. 164
28. SECTION 28: FORCE MAJEURE (CLAUSE 19) .................................. 165
28.1. Optional Termination, Payment and Release (Sub-clause 19.6) ...................... 165
28.2. Release from Performance Under the Law (Sub-clause 19.7) ......................... 165
29. SECTION 29: CLAIMS, DISPUTES AND ARBITRATION
(CLAUSE 20) ......................................................................................... 166
29.1. Claims Procedure and Time Bars .................................................................... 166
29.2. Claims Procedure Under the Contracts ........................................................... 169
29.3. The Engineer's Obligation to Respond to a Claim............................................ 176
29.4. Dispute Resolution (Sub-clause 20.4) ............................................................. 179
29.4.1. Adjudication vs Arbitration .............................................................................................. 179
30. SECTION 30: COMMON AMENDMENTS TO FIDIC CONTRACTS .... 185
31. ANNEXURE "1" - SUGGESTED AMENDMENTS TO THE FIDIC
SUITE OF CONTRACT DOCUMENTS ................................................. 186
31.1. Sub-clause 1.3 [Communications] ................................................................... 186
31.2. Sub-clause 2.4 [Employer's Financial Arrangements] ...................................... 187
31.3. Sub-clause 3.2 [Delegation by the Engineer] ................................................... 187
31.4. Sub-clause 3.3 [Instructions of the Engineer] (Consequent Amendment to Clause
13 [Variations and Adjustments]) ..................................................................... 188
31.4.1. For Separate Consideration ............................................................................................ 188
31.5. Sub-clause 3.4 [Replacement of the Engineer] ................................................ 189
31.6. Sub-clause 4.2 [Performance Security] ........................................................... 189
31.7. Sub-clause 4.12 [Unforeseeable Physical Conditions] ..................................... 190
31.8. Sub-clause 5 [Nominated Subcontractors]....................................................... 190
31.9. Sub-clause 10 [Employer's Taking Over] ......................................................... 191
31.10. Sub-clause 10.3 [Early Warning] ..................................................................... 192
31.11. Sub-clause 12.4 [Failure to Pass Tests after Completion]................................ 192
31.12. Sub-clause 13.2 [Value Engineering]............................................................... 192
31.13. Sub-clause 14 [Contract Price and Payment] .................................................. 192
31.14. Sub-clause 14.8 [Delayed Payment]................................................................ 192
31.15. Latent Defect Liability Period (Consequential Amendment to
Sub-clause 17.6 [Limitation of Liability]) ....................................................................... 193

31.16. Sub-clause 20 [Claims, Disputes and Arbitration] ............................................ 194

32. ANNEXURE “2” – ICC UNIFORM RULES FOR CONTRACT
BONDS .................................................................................................. 195