About fidic red and orange book

The FIDIC Condition of Contract is a comprehensive document which contains general Condition of Contract together with a Form of Tender and Form of Agreement – all of which are essential parts of the Contract under which the Civil Engineering works of the Enterprise are to be performed.

The FIDIC Conditions of Contract are divided into separate parts, each serving the purpose of collecting together clauses applicable to most forms of construction, to allow the Employer to define any special arrangements or conditions which he requires to control effectively his function in the Enterprise, and also to identify clearly whether he or the Contractor is to accept specified constructional or financial risks.

Part I contains standardised clauses in respect of responsibilities, authorities, liabilities, each to the other, and in general terms gives a clear explanation of the nature and standards of the construction required but, more particularly, to the Contractor, provides specific definitions of the timing and the basis of the payment he is to receive.

Part II identifies again the selected conditions already contained in Part I, for particular application. These clauses gives positive identification to the name of the Employer and the Engineer and also the specific involvement of the Employer and a number of clarifications in respect of inter alia insurance, liquidated damages, nominated sub-contractors, certificates and payments.

The remaining parts of the document are the Form of Tender and Form of Agreement, and these need not be limited to the terms as listed therein because further terms could be added as necessary should circumstances are the wishes of the Employer or the Contractor make his desirable, but the content of any such conditions once accepted cannot be modified other than by mutual agreement of the two parties involved in contact.

There are two aspects of the construction that the Employer needs to consider when choosing the appropriate contracting methods are the design function and co-ordination of the works. The Employer can himself provide one or both of these functions, or he can allocate them to one or more third parties. Methods of contracting available to the Employer can be split into two broad categories: Design-bid-build, which separates the design and construction functions, and Design-build and turnkey, which places the entire project, including design and construction, in the hand of Contractor.

The Design-bid-build (FIDIC Red Book) method is the traditional approach to construction contracts. First the employer provides for the design of the project in accordance with his requirements. The designer chosen by the employer then provides a set of drawings sufficient for construction. In this contract the Employer provides the design and co-ordination of the project; thus he will be responsible for the interface between the design and construction aspects of the projects.

The Design-build and turnkey (FIDIC Orange Book) arrangement (also known as “package deal”, “design and build” or “design and construct”) places the duty to design and construct solely on the Contractor. The term “turnkey” tends to mean the most extreme form of placing design and construction responsibilities on the Contractor, such that after completion, the Employer need only turn the key to commence operation of the construction facilities.

The comparison between Traditional (Red book) and Design-build and turnkey (Orange book) form of Contracts are as follows: ConsiderationsTraditional (Red Book)Design-Build and Turnkey (Orange Book)DesignBy a Consultant for the EmployerBy the Contractor. Usually by his Consultant.Tender SubmissionMethod StatementPriced Bill of QuantitiesOutline design including drawingsMethod StatementsPriced activity schedule of other payment scheduleContract DocumentsCondition of ContractsSpecificationDetailed drawingsBill of QuantitiesCondition of ContractsEmployer’s RequirementsOutline drawingsActivity Schedule or similar payment scheduleFunctional RequirementsAgreed with Employer before the design consultant starts work. Recorded in the design brief. Generally not included in the contract.Forms a vital part of the contract. A key part of the Employer’s Requirements.

Prepared by the Employer’s advisor.SpecificationA detailed specification for materials and workmanship is included in the contract Minimum standards in key areas are included in the Employer’s requirements Supervision of construction By the Engineer and the Resident Engineer’s team for the Employer. The team is usually from the Consultant who produced the detailed design. By the Designer to ensure that his design is being carried out. By the Employer’s Representative to ensure that the Employer’s Requirements are being satisfied.

Payments

By measurement of work done and valuing that work against the priced bill of quantities. Against Activity Schedule or similar payment schedule.

In the recent years the use of turnkey contracts for construction projects, and in particular infrastructure projects, has become popular with employers and financing institutions. However, although the turnkey approach is in fashion and it provides many benefits to these entities, it also has certain disadvantages. The advantages and disadvantages are as follows:

ConsiderationsTraditional (Red Book)Design-Build and Turnkey (Orange Book)DesignControl of design. We know what we will get.Competition of design – Opportunity to compare different solutions. Design can take account of Contractors own preferred methods and any specialist equipment he owns.

Producing different designs adds to the cost to the industry and therefore to Employers in general. ResponsibilityDivided responsibility. If things go wrong, the Contractor can often blame the designer. Single point responsibility – an advantage for the Employer.

Tender evaluation Easy to compare tenders. Tender evaluation more difficult – need to review adequacy of designs, not simply compare prices. Tender period Design should be complete before tender process starts. Shorter tender period is necessary but overall time from initial concept to start of construction is longer. Limited design needed before tender process and construction can start on part of the works as soon as design of that part is complete. Design and construction can therefore proceed at the same time with overall time saving. Variation

Variations relatively easy to introduce if necessary.Variations more difficult to introduce and cost of variations more difficult to assess and agree.

Author : Md. Jahangir AlamContracts EngineerBhairab Bridge Project