What are FIDIC contracts and why
should they be used in the
construction field?
Bucharest, 01 April 2015
Note: this editorial has been published in Arena Constructiilor
magazine on 31 March 2015 and may be visited at the following
web-site address:
http://www.arenaconstruct.ro/ce-sunt-contracte-fidic-si-de-ce-artrebui-folosite-in-domeniul-constructiilor/
FIDIC contracts represent agreements in the construction and
installation field, used as standards in the international arena.
These contracts have been drafted by the International
Federation of Consulting Engineers (commonly known as
FIDIC, acronym for its French name Fédération Internationale
Des Ingénieurs-Conseils) founded in 1915 by three European
states (Belgium, France and Switzerland).
With reference to the construction agreements, the main purpose
of FIDIC was to create standard contracts that may be used for a
variety of construction and installation projects, considering that,
in essence, constructing any project around the world have as
foundation the same main principles (leaving aside the technical
and geographical specificities).
These standard agreements cumulate an experience of decades in
construction and installation projects and represents documents
that take into account, in a balanced manner, the interests of both
parties involved.
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In 1999, FIDIC has issued a series of standard construction and installation agreements that may
be used based upon the specificities of the project had into account.
Three of the most well-known standard agreement are “red” FIDIC, “yellow” FIDIC and “green”
FIDIC, named as such based upon the color given to the cover of the document under which such
have been published.
“Red” FIDIC [“Conditions of Contract for Construction for Building and Engineering Works
Designed by the Employer”] (the construction contract), whose first edition has been drafted in
1956 is used for works in which the design (almost entirely) is made by the employer.
The risks undertaken by the parties are balanced, and the payment of the works is made based
upon the monthly bill of quantities or based on the lump sums for items of works.
“Yellow” FIDIC [“Conditions of Contract for Plant and Design-Build for Electrical and
Mechanical Plant and for Building and Engineering Works, Designed by the Contractor”] (the
plant and design/ build contract).
This type of agreement is used in construction works in which the design is ensured by the
contractor, such undertaking, at the same time, an increased level of risks. This represents a lump
sum contract in which the payments are made based upon the certification by the engineer (like
the “red” FIDIC, the engineer administers the contract).
“Green” FIDIC is used, in general, for low value projects (by virtue of example, under $
500,000) or developed over a short period of time (by virtue of example, under 6 months),
regardless if the design is made by the contractor or by the employer. There is no engineer and
payments are made on a monthly basis.
In addition to the above mentioned three standard agreements, FIDIC has also drafted other
standard contracts based upon the specificities of the construction projects (by virtue of example,
banks’ financed projects, “turnkey” projects, projects involving not only the construction, but
also the operation by the contractor).
In Romania, the importance of these contracts has been completely understood in 2008 when the
legislation provided the obligation for the authorities to use the “red”, “yellow” and “green”
FIDIC in the public procurement projects (G.O. no. 34/2006).
Unfortunately, the legal regulation based on which these contracts have been approved has been
repealed in 2009.
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Starting with 2011, the “red” and “yellow” standard FIDIC agreements have been reintroduced
in the transport infrastructure investment works of national importance, financed out of public
funds, performed by all units under the authority of the Transportation and Infrastructure
Ministry and only for projects with a value of over Euro 5 million.
As all standard agreements, the professionalism and dedication of the legal consultant has a
paramount importance for the way in which these FIDIC agreements are adapted (through the
Particular Conditions), based upon the project’s technical, commercial and legislative
characteristics.
In the international arena, “red” FIDIC contracts represent the most widely used standard
agreement for construction and installation projects designed by the employer.
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