Even for the experienced user of FIDIC's various Conditions of Contract, at first glance, the changes in the second edition released in December 2017 seem overwhelming; the number of pages has gone up, and apparently, substantial changes to the governance model have been introduced.
However, after having worked with the 2017 editions on several projects, my conclusion is clear: if you decide to use FIDIC Conditions for your project, choose the 2017 edition and here is why.
There is no "one size, fits all" in the world of standard contracts. The choice of contract type relies on a number of factors specific to the project at hand, including general business practices in the relevant industry or geographical area, a Party’s previous experience with specific standard forms, ease of use, tradition and many other factors.
The FIDIC standard contracts are widely used and recognised and, although, there are numerous alternatives, the FIDIC standard contracts are probably amongst the most commonly used standard contracts for international construction projects.
Undoubtedly, the 2017 editions are in many ways an improvement over the 1999 editions. Although the number of pages has gone up considerably, the language used is still straightforward and, to most users, the provisions are readily understandable, even to persons otherwise untrained in reading legal text.
The main points of improvement are:
- detailed procedures for the key action points (payments, testing etc.) with a clear escalation path for virtually any disagreement
- advance warning provisions with increased level of attention to planning and programming
- substantial expansion of the value engineering provisions, providing a real incentive for the Contractor to perform value engineering.
Primarily, the much clearer procedures provided for payment and resolution of disagreements, with a clear escalation path for virtually any disagreement, is a substantial improvement over the 1999 editions. This makes the 2017 editions even more relevant in the day-to-day management of the execution of the work, invoicing, testing and other important aspects of a construction project.
The role of the Dispute Adjudication Board has expanded to include dispute avoidance, hence it is now called the Dispute Avoidance/Adjudication Board (DAAB) and the DAAB now plays a more active role during project execution; e.g. the parties may request the DAAB "to provide assistance and/or informally discuss and attempt to resolve any issue or disagreement". Under the 1999 editions, the DAB provisions were often deleted because of the perceived cost associated with maintaining the DAB during the project execution. The changes in the 2017 editions were the DAAB is envisaged to play an even more important role, users of the FIDIC Conditions should reconsider this approach. Maybe a DAAB consisting of, e.g. one member from each of the parties' senior management is a more cost sensible approach.
In line with recent developments in partnering and joint benefits/risks programmes, the expanded provisions on advance warning and value engineering also indicate to a more integrated cooperation between Contractor and Employer allowing the parties to share to risks as well as rewards during the realisation of the project.
Some may question whether all the changes are positive i.e. some may argue that the inclusion of the Employer’s claims under the Clause 20 claims procedure and the many, many cut-off provisions applying to all claims are not improvements. But these issues can be easily addressed in the Special Provisions, and the inclusion of the Employer’s Claims in the Clause 20 procedure may even lead to a more nuanced approach by Employers when considering the value of having cut-off provisions at all.
To facilitate the use of the FIDIC contracts, ICE Publishing has released three companions, one for each of the standard conditions released in 2017 and a combined set:
The companions will guide you through the critical phases of your project with a general introduction to international construction contracts and a clause-by-clause commentary to each of the 21 clauses of the 2017 editions. The companions will assist you in preparing construction projects based on the 2017 FIDIC Conditions with document overview and straight-forward guides on the preparation of such documents. For the advanced and experienced user of the FIDIC Conditions, the companions will provide useful insight into the inter-relations between the individual clauses and how changes in one clause will impact other clauses.
During project execution, the companions will provide useful guide to the most important phases of the project such as payments, tests, completion and dispute resolution.