A brief introduction to FIDIC forms of construction contract

FIDIC, short for "Fédération Internationale des Ingénieurs – Conseils" (International Federation of Consulting Engineers), publishes a suite of construction contracts that are generally used internationally across the globe. FIDIC released their first standard contracts in 1957, with the 1999 revisions being the most internationally recognised. 

Although JCT and NEC standard form contracts are typically used in the UK, FIDIC contracts are generally used for cross-jurisdictional projects. The contracts distribute risks evenly between the contractor and employer; however, the standard forms are often heavily negotiated. 

The key contracts that make up the FIDIC suite are set out below: 

• Conditions of Contract for Construction for Building and Engineering Works (Red Book).
• Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant and for Building and Engineering Works (Yellow Book).
• Conditions of Contract for Engineering Procurement and Construction/Turnkey Project (Silver Book.
• Short Form of Contract (Green Book).

Red Book

The first edition of the Red Book was published in 1957. It was subsequently updated in 1999 and 2017, with new amendments made in 2022. 

The Red Book should be used where the employer is responsible for the majority of the design and is similar to the JCT Standard Form of Building Contract. 

A key feature of the Red Book is that payment is made according to bills of quantities (i.e. a document whereby materials, plant and labour are quantified), although payment can also be made on the basis of agreed lump sums for items of work.

The Red Book is administered by a third-party engineer rather than the contractor or the employer. The engineer is also responsible for monitoring the construction work and certifying interim payments.

Yellow Book

Similar to the Red Book, the first edition of the Yellow Book was published in 1963, which has then been updated in 1999 and 2017, with new amendments made in 2022. 

The Yellow Book should be used when the majority of the design is carried out by the contractor. The Yellow Book is therefore traditionally used for the provision of plant and for building or engineering works on a design and build basis.

The Yellow Book is a lump sum contract with payments made according to achieved milestones on the basis of certification by the engineer (like the Red Book, the engineer administers the contract). 

Silver Book

The second edition of the Silver Book was released in 2017 and has been subject to amendments in 2022. 

This is a ‘turnkey’ contract, where the contractor is responsible for the engineering, procurement and construction of the project to provide a fully operational facility (i.e. the completed facility is ready to be operated by “the turn of a key”). In these circumstances, the contractor bears the majority of the risk.

The Silver Book is used where the certainty of price and completion date is key. The Silver Book allows the employer to achieve greater certainty as to a project’s cost as the contractor assumes greater time and cost risks than under the Yellow Book. 

There is no engineer under the Silver Book, as its responsibilities are assumed by the employer. 

Green Book

The second edition of this contract was published in 2021. The Green Book is intended to be an alternative to the 2017 Red and Yellow Books, where there is lower risk and less need for contract administration. The Green Book would generally apply to contracts with a value of less than $500,000 or a construction time of less than

FIDIC also publishes other standard contracts, including those relating to design, build and operate type projects (Gold Book), underground works (Emerald Book), consultant appointments (White Book) and construction contracts relating to bank-financed projects (Pink Book).

FIDIC contracts remain the international industry standard for a lot of reasons. When selected and administered/managed properly, they provide a tried and tested framework for achieving a successful project outcome, ensuring fair allocation of responsibilities and risks between the employer, contractor and engineer. For cross-jurisdictional projects in particular, FIDIC contracts offer a single negotiable set of terms to suit global Contractors, which saves time and money for all parties involved.

For more information about FIDIC contracts, or if you have any questions about construction law in general, please contact Ross using [email protected] or 0191 211 7999.