Think about engineering projects you have worked on that have ended badly. These may be projects that have cost you money, projects that may have overrun or ended up in an old-fashioned school yard scrap. Why did they end badly?
One reason may have been that the contract used the wrong words: words that were unclear; words that were unfamiliar to the parties or words that were not relevant for your engineering project. This is where the FIDIC suite of contracts beats the other standard forms of engineering contract hands down. FIDIC uses the right words for all types of engineering projects. Because it’s just like Des Lynam.
It’s just like Des Lynam
FIDIC, like Des, enjoys a great heritage. FIDIC, like Des, is:
- Respected around the world
- Measured, clear, reasoned and logical
- Something that you can rely on in a crisis
- An excellent all-rounder
Other standard engineering forms of contract do not enjoy these qualities.
The NEC suite is an all-rounder, but it does not possess the clarity of FIDIC. MF/1 and IChemE are narrower in scope than FIDIC. They do not possess the all-round abilities of FIDIC. They may be ideal for processessing plants or the supply and installation of electrical, electronic or mechanical plant, but it’s arguable whether they can easily turn their hand to other complex engineering projects.
It’s better than Des Lynam!
It is possible to argue that FIDIC is better than Des. Des’s presence on our screens has faded in recent years. However, FIDIC’s popularity and prominence around the world remains as strong as ever. It’s endorsed by the World Bank, the Islamic Development Bank and the European Commission. It has also been endorsed by more governments than any other contract.
FIDIC’s use is not limited to international projects. FIDIC’s popularity in the UK continues to grow. The NBS National Construction Contracts and Law Survey 2013 stated that FIDIC was the most common form for projects in the UK with a capital value of £25 million plus.
One reason is that it has a logical and robust structure. Its structure is as follows:
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The structure is common to all FIDIC contracts, with a few tweaks to reflect which party takes design risk. Consequently, if you get to grips with one form of FIDIC you can apply that knowledge to the other forms in FIDIC’s Rainbow Suite.
There are a few wrinkles
FIDIC, like Des, has a few wrinkles. It is not the intention of this article to highlight all the issues, but here are a few:
- Law: FIDIC is a standard form contract. Consequently the words in the General Conditions may not sit with the laws of the relevant country where the engineering project takes place. For example, the payment provisions do not comply with the Housing Grants, Construction and Regeneration Act 1996. It is also doubtful whether the liquidated damages provisions comply with aspects of Shariah law.
- Termination at will: the Employer can terminate the contract at will. That is not unusual. However, the Employer does not have to pay the Contractor’s loss of profit. This could cause issues for contractors who have spent a long time preparing for a large engineering project, only to see it be taken away from them soon after the contract is signed. A Contractor who has turned away work may want to recover loss of profit to compensate it for this
- It’s a naked contract: the Employer has to provide reasonable evidence to the Contractor to demonstrate that financial arrangements have been made and will be maintained which will enable the Employer to pay the Contractor. Most Employers are reluctant to provide such evidence.
The FIDIC suite of contracts offers a robust, structured and logical engineering contract. It is an all-rounder. It is easy to work with. It is easy to understand. Therefore, if you are working on complex domestic or international engineering projects, you should consider using the FIDIC suite. It’s just like Des Lynam.