It is now 5 years since the FIDIC 2017 editions of the Red, Yellow and Silver Books were published. As anticipated, it’s taking the industry some time to get on board and adopt these latest editions on projects.

Change Can Be Uncomfortable….But it’s Inevitable

Nobody likes change. Employers and engineers are no different. It can be uncomfortable and it takes time and effort to take effect. But, as time moves on more and more projects will move to the FIDIC 2017 editions and it’s critical that project teams understand these contracts.

I also suspect that some engineers will resist the new contracts and will not recommend them to Employers. Why? Because the Engineer now has more obligations. There are also many provisions which provide consequences for the Engineer if they do not comply with their obligations.

Nevertheless, change is inevitable. This means that those involved in project management and contract administration need to know what changes were introduced in 2017 to ensure effective administration and most importantly, to ensure that parties meet their obligations.

Changes Summarised:

The following is a summary of the changes made in the 2017 Editions:

• The Red Book now has 106 pages of General Conditions as opposed to the 1999 Edition, which had 62 pages. The Yellow and Silver books are similarly increased. The increased volume is said to be to bring greater clarity and include more procedures to be followed as a matter of contract.
• The word “Claim” is defined as ‘a request or assertion by either Party to the other Party for an entitlement of relief under any Clause of these Conditions or otherwise in connection with, or arising out of, the Contract or the execution of the Works.’
• There is a provision to include a percentage in the Contract Data (formerly the Appendix to Tender) for profit and if no percentage is stated, the percentage shall be 5%.
• The term “No-objection” is introduced and defined.
• “Notice” is defined as ‘a written communication identified as a Notice and issued in accordance with Sub-Clause 1.3 (Notices and Other Communications)’.
• There are many more requirements for the parties to submit Notices.
• A Notice of Dissatisfaction may be issued by either Party if dissatisfied with an Engineer’s determination.
• There are more detailed requirements for the Contractor’s Programmes, including programmes to show actual progress.
• A provision is included for including rules and procedures to deal with concurrent delay.
• Advance warning provisions have been included.
• The procedures for evaluating and agreeing Variations are more prescriptive.
• The type of events previously included under Employer’s Risks and Force Majeure clauses have been consolidated into a single clause – Exceptional Events.
• Both Employer’s and Contractor’s Claims are now dealt with under Clause 20 (Employer’s and Contractor’s Claims).
• The provisions of dealing with disputes are separated into a new Clause 21 (Disputes and Arbitration) to reflect the fact that claims only become disputes if a Party gives a Notice of a dispute.
• Specific provisions of the requirements of a claim submission are included under Sub-Clause 20.2.4 (Fully detailed Claim).
• Under Sub-Clause 20.2.4 (Fully detailed Claim), the claim submission period is extended from 42 days to 84 days, but submission is now a condition precedent to entitlement.
• Under Sub-Clause 3.7 (Agreement or Determination), if the Engineer does not give Notice of agreement of rejection of a claim within 42 days, the Engineer shall be deemed to have given a Notice rejecting the claim.
• The Dispute Adjudication Board (DAB) is now referred to as the Dispute Avoidance/Adjudication Board (DAAB). This reflects enhanced requirements for the DAAB to be proactive in dispute avoidance.
• All DAABs are standing boards.
• There are many more ‘deeming’ provisions whereby if a Party does not act in accordance with an obligation, then the provisions will state that a specific action is deemed to have taken place.

More Work?

From this, you may think that the new forms of contract require substantially more contract administration than in 1999. But in my opinion, this is not really the case. If we look at Arcadis and HKA’s annual reports on disputes in recent years, major causes of disputes are:

1. Failure of the Parties to comply with their contractual obligations.
2. Failure to administer the contract correctly.
3. Lack of adequately trained and qualified contract administration staff.

This illustrates that project staff did not understand the contract and failed to administer it as FIDIC intended in 1999. To try to address these failings, FIDIC 2017 has more prescriptive procedures. It also introduces more consequences for failing to carry out obligations. Consequently, the new editions do not require significantly more contract administration than the previous editions. Subject to the proviso – if the previous editions had been administered properly and efficiently.

Contractors, employers and engineers who think that they can continue to staff projects with inadequately trained and experienced staff will soon find out that they are mistaken. It will hurt them financially. This will be especially acute, if the companies on the other side of the fence have taken steps to ensure their staff understand the new editions.

The 2017 editions of FIDIC place much more emphasis on and have stricter requirements for notices. Our book on the subject provides a valuable guide. It is available in Kindle, paperback, and hardback from Amazon.

Want to learn more about FIDIC 2017 and the differences from the 1999 editions? Starting 12th October, join us for our NEW live online course – FIDIC 2017 vs 1999: What’s Changed?  Sign up before 7th September to save 25%.