Maybe you have already received it from another source but this is a must-read. I therefore prefer to also share with you the FIDIC document available at the link below. It explains the changes from the first (1999) to the second (2017) edition of the Rainbow Suite (Red, Yellow and Silver Books):

press release_rainbow suite_2018_03

After 20 to 30 minutes of reading, you will have a good understanding of the changes. Most of us have over a decade of experience with FIDIC 1999. We know the clause numbers and where to look for the appropriate mechanisms. Here you have a short summary of what I got out of reading the attached document and where to find the changes:

There are few but important changes to the contract structure and some relocated clauses:

  • Limitation of liability is no longer in Clause 17 but has been moved to become the last sub-clause of Clause 1.
  • Former “Force Majeure” has been renamed “Exceptional Event” and is delt with in clause 18.
  • Insurance has been moved to clause 19.
  • We now have 21 clauses. Former clause 20 is split in two parts to deal first with claims (new clause 20, also covering Employer’s Claims) and then only with disputes (new clause 21).

FIDIC cares about conflict/dispute avoidance:

  • There are encouragements to reach agreements between the Parties.
  • The role of the Engineer or Employer’s Representative is clarified in order to “act neutrally between the Parties” on certain issues and “to fairly consider the amount of interim payment due” (sub-clause 14.6).
  • FIDIC favours standing Dispute Avoidance/Adjudication Boards (now DAAB instead of DAB) under clause 21.

Step-by-step approaches also reflect this. The parties will know where they are in the process on the following subjects:

  • Claims and determinations (sub-clause 3.7).
  • Unforeseeable conditions (sub-clause 4.12).
  • Review of Contractor’s design (sub-clause 5.2).
  • Advance payment (sub-clause 14.2), interim payments (sub-clause 14.6) and Final Statement (sub-clause 14.11/14.13).
  • Termination by Employer (clause 15) and Contractor (clause 16).
  • Employer’s and Contractor’s claims for time and/or money (sub-clause 20.2).
  • Disputes (sub-clause 21.4)

Variations are an important source of conflict and are therefore further detailed:

  • Employer to show financial arrangements are in place for Variations (sub-clause 2.4).
  • Mechanism to recover in case an instruction does not state that it is a variation (sub-clause 3.4/3.5).
  • Determination does not just apply to claims but also to issues like: variations, payments, EOTs, day-works etc.
  • Contractor’s right to object to an instructed variation (sub-clause 13.1).
  • Additional entitlement for changes to permits/permissions/licences/approvals obtained for the Works (sub-clause 13.6).

And finally, further Project Management best practices are incorporated: 

  • Regular management meetings (sub-clause 3.6/3.8).
  • Detailed requirements for initial programme and updates (sub-clause 8.3). For example, the requirement for a supporting report to overcome effects of any delay.
  • Detailed test programme (sub-clause 9.1) and repeat testing (sub-clause 11.6).
  • Equal time bar for claims from both parties (sub-clause 20.2).

Conclusion

We will all need some more time before we are as familiar with the FIDIC 2017 editions as we were with FIDIC 1999. Personally, I am happy to change. FIDIC has put good efforts in making their standard contracts more balanced (dispute avoidance, dealing with delicate issues like variations and programme and further introducing project management best practices). The ultimate goal remains, of course, to have a maximum of successfully completed projects, which meet the expectations of all parties and the end users.

Other publications concerning FIDIC can be found by clicking here.

About AfiTaC

AfiTaC.com is the blog on commercial and contractual subjects for the Project Businesses (Construction, Infrastructure, Oil & Gas, Power & Renewable, Water Supply & Sanitation, etc). Its objective is to stimulate reflection, learning, convergence to balanced contracts and positive dispute resolution. You can subscribe to our newsletter by writing to “newsletter@afitac.com”. You can also connect to our LinkedIn page. Engagement with the readers is what keeps us going. So, don’t hesitate to exchange with us by commenting here below, liking our publication on LinkedIn and writing to us “info@afitac.com”. 


5 Comments

Liaqat hayat · 3 April 2018 at 4 h 50 min

Thanks for providing a brief picture of fidic 2017 and is very helpful.

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[…] The updated clause has a step-by-step procedure. The starting point is the consultation of the Parties to encourage them to reach an agreement. If this is not successful, the Engineer shall determine the matter. This determination can either become final and binding (after exhaustion of a time period) or can be challenged in front of the DAAB. If you want to read more about the changes introduced with FIDIC 2017, you can click here. […]

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