Introduction
The Contracts Committee at FIDIC is responsible for developing the standard forms of contract used in the civil engineering sector. The declared purpose of the standard forms is to define the parameters of the work to be performed and the responsibilities of the contractor and the client. There can be separate FIDIC contracts for employer-designed and contractor-designed projects. Most financiers, designers, engineers, builders, and sub-contractors from other countries want to execute internationally accepted contracts for their projects to describe the work involved clearly and both parties’ rights, responsibilities, obligations, and liabilities. Over more than 60 years, the FIDIC contracts have been perfected as a model contract for use in international engineering and construction projects by the International Federation of Consulting Engineers (“FIDIC”). The International Federation of Building and Public Works and FIDIC worked together to secure their first contract. The major goal of a FIDIC contract is to protect the public’s interest in home construction and ownership projects.
Numerous types of FIDIC Contracts exist, including the Red Book, Yellow Book, Silver Book, Green Book, White Book, Blue Book, Gold Book and Pink Book. These volumes address issues such as who will be accountable for risk when the building is underway, who will be in charge of developing the design, and who will monitor the contract. Responsibility assignments between the client and the contractor are at the heart of the dispute. The Red Book, widely used in Turkey for building projects, was updated by FIDIC in 1999. The Red Book lays out the fundamental norms of tender and construction contracts, and it is generally accepted that the employer will establish the project of the job and the contractor will have the construction work done.
The Red Book is just one of many that we have created. The Yellow Book is for construction and design contracts, the Silver Book is for turnkey projects where the final Cost and certainty of time are important to the employer, the Green Book is for contracts with a tender price not exceeding $500,000, the White Book is for Employer and consultancy service agreements, and the Golden Books with long operating periods are for investment projects with large capital needs. The Red Book specifies the parameters of the building contract when the employer is in charge of the design.
The White Book is a key component of the FIDIC suite and one of the most frequently used models of professional services contracts globally. It involves the FIDIC Client/Consultant Model Service Agreement. The Blue Book is the first international standard contract form created especially for the dredging sector, and it is a kind of contract for dredging and reclamation works. The name “Gold Book” refers to the terms of a contract for a design, build, and operation project; as a result, it suggests a lengthy commitment on the part of the contractor and presents a novel and distinctive method of procurement. The Silver Book, on the other hand, specifies the terms of the contract for EPC/Turnkey Projects, and as a result, the contractor is responsible for carrying out the engineering, procurement, and construction tasks all the way through to the delivery of a facility that is fully assembled, tested, and ready to use.
Works developed primarily by the contractor are covered in the “FIDIC Yellow Book,” while those developed primarily by the employer are included in the “FIDIC Red Book.” The Silver Book uses a different strategy, with the company paying more for less involvement and responsibility on the owner’s part. The Green Book can be used for employer- and contractor-designed projects, regardless of who is responsible for more of the design work. Because of this, it can serve as a replacement for the more comprehensive FIDIC Red Book (for employer-designed works) and FIDIC Yellow Book (for general construction projects) (for contractor-designed works).
Responsibilities of the Employer
The job of an employer in the building and construction sector is an essential one since, on the one hand, it is exciting and creative, but on the other, it may be alarming when the project is over and the results become obvious.
In accordance with clause 2.1 of the FIDIC Red Book, the employer is responsible for ensuring that the contractor has complete access to the Site and possession of all of its components within 14 days of receiving the acceptance letter.
In accordance with clause 2.1 of the SBD-2 and clause 2.1 and sub-clause 19.1 of the FIDIC Red Book, if the employer fails to transfer any such right or acquisition within such time and the contractor experiences a delay or is unable to pay the Cost. As a result, the contractor is required to give a written notification not to delay the engineer within 28 days. In this case, the contractor must do the following:
o If completion is going to be delayed, ask for an extension of the deadline for any delay that may occur.
o Request that the contract’s price includes payment for any such costs, in addition to an acceptable profit, and the customer is responsible for paying for it.
The disagreement was brought about by the employer’s lack of attention to detail during this particular building project, primarily because the employer has the right to additional compensation if there are changes made to the construction work, pay for them in accordance with the provisions of FIDIC and SBD that have been outlined above.
According to article 2.2 of the FDIC Red Book and clause 2.2 of the SBD-2, the employer shall provide the contractor with such reasonable assistance in connection with the Works as may be requested by the contractor, including but not limited to:
o Clearance through customs and obtaining permits, approvals, and licenses about the work in the contract for the delivery of goods for the work in the contract.
o Provide an affidavit to the contract that you have reviewed applicable local laws before signing.
According to clause 2.3 of the FIDIC Red Book and clause 2.3 of the SBD-2, the employer is responsible for safeguarding the health and safety of personnel on the Site in cooperation with the contractor. This obligation is stated in both of these documents.
It is the job of the employer or the client, according to clause 2.4 of the FDIC Red Book and clause 2.4 of the SBD-2, within under 28 days of getting the contractor’s demand for reimbursement, the employer shall make the financial agreements necessary to enable the employer to pay the Contract Price and shall keep credible evidence that such arrangements have been established and are being sustained. This obligation is outlined in both of these documents.
According to FIDIC Red Book Clause 2.5 and SBD-2 Clause 2.4, the employer is responsible for giving notice regarding those claims to the contractor. This is because if the employer or the client is entitled to a payment under the condition of the contract, the obligation to provide notice of the expiration of the notification period rests with the employer.
The Contractor
Whether it’s an individual or a company, the building contractor groups all the necessary experts. A project management office is a business that handles the preparation, execution, and control of projects. The contractor is responsible for laying out the steps necessary to complete the construction. The construction company is in charge of staffing, supervising, and paying all workers, as well as procuring all necessary supplies through the help of vendors. A building contractor’s duties include ensuring that the building project is finished on time, within budget, and in accordance with all local, state, and federal standards. The contractor is responsible for securing all permits and licenses to initiate the construction project.
Responsibilities of Contractor
A contractor is responsible for design execution and completion of work successfully according to the contract, with the instruction of the consultant/engineer, and treating flaws, as stated in clause 4.1 of the FIDIC Red Book.
The contractor shall ensure the sufficiency, steadiness, and security of all Site activities and construction processes in accordance with FIDIC Red Book clause 4.1.
When requested by the consultant/engineer, the contractor must provide specific information on the scope of work and the means and techniques the contractor intends to employ in carrying out the work, per article 4.1 of the FIDIC Red Book. Major changes are to be made to these plans and procedures by informing the engineer/consultant.
For the employer to operate, preserve, disassemble, reconstitute, regulate, and stimulate this section of the Works under the Specification and the FIDIC Red Book, the contractor has to supply the Engineer/consultant with “as-built” documentation and instructions for using and maintaining it that are comprehensive enough.
According to section 4.6 of the FIDIC Red Book, Contractor shall cooperate with the employer, people appointed by the employer, engineer/consultant, and personnel of any lawfully established public organizations involved in the execution on or around the Site of any work not included by the contract.
In accordance with Article 4.7 of the FIDIC Red Book, the contractor must establish the location of the Works regarding the specified points, lines, and levels of reference established at the outset of the project or as otherwise notified by the Engineer or consultant. The contractor is responsible for correcting any misalignment, mismeasurement, or dispositioning of the Works.
Employers are held liable under clause 4.7 of the FIDIC Red Book when they make mistakes in a contractually required area; however, contractors must make reasonable efforts to confirm the accuracy of such information before relying on it.
The contractor is accountable for following all necessary health and safety procedures and regulations, as stated in article 4.8 of the FIDIC Red Book. To ensure the safety of all authorized users of the Site and to maintain a conducive environment for viewing the Works, any potential hazards must be eliminated; the contractor shall erect and operate security, lighting, and guards and watch the Works until completion.
The common responsibilities of the employer (owner) and the contractor and how the responsibilities can be divided, if any.
According to clause 4.22 of the FIDIC Red Book, the Employer (owner) and the Contractor (worker) are jointly responsible for preventing unauthorized individuals from entering the Site. This includes employees of both the contractor and the client company and anyone else who might be involved in the project which has been identified to the contractor (worker) as a member of the manager’s authorized personnel working for other contractors.
Furthermore, the Contractor and the Employer are accountable for seeing the project through from start to end.
The most common conflict between the contractor and the employer
According to the FIDIC Red Book, customer negligence and the employer’s refusal to supply the contractor with appropriate specifications and supplementary information have led to conflicts. The company has also proposed the construction of a tank farm; the builder has objected because he does not have the necessary legal authorization to construct the farm tank. Under certain conditions, the contractor has the right to both an extension of the allotted amount of time and payment for the additional labour that has been added to the scope of the contract.
If the contractor believes that he is eligible for an extension of time or further payment per the sections on Claims, Disputes, and Arbitration in SBD-2 19.1 and FIDIC Red Book 20.1, then the contractor is required to submit a notification to the Engineer or consultant stating the occurrence or scenario that gave rise to the claim.
As soon as possible, but by 28 days after the contractor becomes aware of the event or circumstance or should have been aware of it.
This indicates that the service provider has to tell the customer up to a month and a half after the event. When the client owns such a notice, he is responsible for approaching the contractor with a request for an extension and making any necessary additional payments.
Suppose the contractor fails to notify the customer within the allotted time. In that case, the customer has the right to claim the contractor and ask for an extension of the deadline and additional pay.
The contractor shall maintain such records at the Site or other locations as may be acceptable to the Engineer as necessary to establish any claim. This is because no conflict will occur between the parties if the employer fulfills his duties as an employer and provides the contractor with his requirements, specification, and all the supplementary information.
Conclusion- a recommendation to avoid conflicts between the contractor and the employer
In conclusion, to avoid conflicts between the contractor and the employer, I recommend that: The Employer is obligated to submit overall project requirements and conduct routine inspections of work in progress. Avoiding large cost claims and delays in project completion requires him to prevent unnecessary work and changes. Employers should explain all of the project’s intricacies in the contract paperwork and choose the best contractor for the job through a bidding procedure, which helps get the best rates for a specific task and to which the contractor must closely adhere (Terms, Conditions, and Specifications), hire the best contractor who can get the job done, not the one with the lowest bid. Next, have a conversation with the contractor you’ve chosen to give him an idea of what you expect from the project and its scope of work. In addition to routine project monitoring from execution to completion to acquire the desired output, the employer should endeavor to keep to the task in the initial contract and avoid changes and Additional Work as feasible.
References
Brink, W. (2021). Assessing programme clause changes in the 2017 FIDIC Red Book. Civil Engineering= Siviele Ingenieurswese, 29(2), 68-69.
Godwin, W. (2020). The 2017 FIDIC contracts. John Wiley & Sons.
Hillig, J. B., Dan-Asabe, D., Donyavi, S., Dursun, O., & Thampuratty, A. (2010). Fidic’s Red Book 1999 edition: a study review. Proceedings of the institution of civil engineers-management, procurement and law, 163(3), 129-133.
Sahin Sengul, E. (2022). Extension of Time in Construction Contracts according to the FIDIC Red Book. Necmettin Erbakan Universitesi Hukuk Fakultesi Dergisi, 5, 140.
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