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Georgy Borisov
Associate, Head of Real Estate
Practice, Moscow
Baker Botts LLP
.......................
What is FIDIC?
Given the vast number of various forms of con-
tracts in the construction industry worldwide,
the community has always struggled to create
certain uniform sets of documentation that
would simplify the bidding process, be more
“user friendly”, and could be repetitively used
for different types of construction projects.
FIDIC is one of many professional associations
that has been trying to achieve these goals in
the last several decades.
FIDIC is the Federation Internationale des
Ingenieurs-Counseils (International Federation
of Consulting Engineers), established in 1913
by a group of French and Swiss engineers, with
its headquarters in Geneva, Switzerland. It is an
internationally recognized organization repre-
senting over 1 million professionals in 75 coun-
tries. In the past couple of years, we have expe-
rienced significant growth in interest from our
clients, Russian and international developers,
project sponsors and construction contractors,
in using FIDIC standard forms for construction
projects in Russia. We see the reason for that in
acknowledgement by the industry that FIDIC
forms are clear and coherent, all clauses are
essential, the definitions are detailed and the
structure of every standard contract is consis-
tent with the other FIDIC standard contracts.
More important, in our view, is that FIDIC
forms are fair and equitable – risk is allocated
to the party which is best able to control, bear
and deal with such risk. Every FIDIC standard
form is complete and flexible – the standard
forms cover most needs and are readily adapt-
able to fit any requirement of the parties to it.
And last, but not least, FIDIC standard forms are
recognized by the industry – they have been
tested for an extensive period of time in many
jurisdictions all over the world.
The FIDIC “Rainbow”
There are several types of FIDIC contracts (or
books), most bearing a dedicated color to
allow for easier identification and operation
of each form:

Short Form of Contract (Green Book),

Construction (Red Book),

Plant and Design-Build (Yellow Book),

EPC Turn-Key Projects (Silver Book),

Employer-Consultant form of contract
(White Book),

Dredging and Reclamation Work (no color)
and Tendering Procedure (Blue Book).
Below we will briefly speak about the first
four forms, i.e. Green, Red, Yellow and Silver
Books, as these are of most relevance to a gen-
eral construction project.
In addition to the logic shown in the diagram
shown here, the factors influencing the choice
of form of the contract are: Value/Complexity;
Design Responsibility; Need for Variations; Risk
Allocation; Work Type; Payment; Administration;
and Involvement of the Engineer.
What are the basic differences?
Short Form Contract (Green Book) is used for
simple or repetitive work or for works of short
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FIDIC Contracts
FIDIC based construction contracts are becoming increasingly popular in
the Russian construction industry. This article attempts to clarify what FIDIC
standard forms are, the principles upon which the forms are based, the structure
of the standard forms and the ways in which each standard form differs from the
other standard forms.
duration, and for projects with no need for spe- STRAIGHTFORWARD PROJECT/ Conditions of
cialists (sub-contractor) or an Engineer as all НЕСЛОЖНЫЙ ПРОЕКТ Contract for
нет/no
the design is done by the Contractor. EMPLOYER DESIGN/ да/yes Construction /
да/yes ПРОЕКТ ЗАКАЗЧИКА Условия договора
Construction Form of Contract (or Red строительного
Book) is used where the design is done by Fixed price – lump sum нет/no подряда
(or on behalf of) the Employer; the project Short Form Little employer involvement
may require the Contractor to supply plant of Contract / No major unforeseen risks/
Фиксированная цена – CONTRACTOR DESIGN/
Сокращенный ПРОЕКТ ПОДРЯДЧИКА
design and/or execute some design, and the единовременная выплата.
контракт Plant and/or high unforeseen risks/
project is administered by an Engineer hired Минимальная вовлеченность
by the Employer. заказчика. Отсутствие существенных Производственные и/или высокие
непредвидимых рисков непредвидимые риски
In the Plant and Design-Build Contract no
(Yellow Book) the Contractor is responsible да/yes
нет/no да/yes
for Plant, Building and Engineering Works, DISCUSS IN DETAIL/
though the Employer may have executed ПОДРОБНОЕ ОБСУЖДЕНИЕ EPC Turn-Key
Employer’s requirements with the Plant and
some design. Projects / Design-Build /
Contractor, and negotiate a modified Проектирование,
EPC Turn-Key form of contract (Silver FIDIC contract/ материально- Производственное
Book) provides for engineering, procurement Обязательства заказчика перед техническое проектирование/
подрядчиком и заключение обслуживание строительство
and construction by the Contractor who is to договора FIDIC в новой редакции и строительство
deliver a fully equipped facility to the Employer «под ключ»
with tests on completion. The design is per-
formed by the Contractor in accordance with payment can start only after certified inter- FIDIC suggests that the Letter of Tender and
the Employer’s requirement. im payments exceed 30% of the Accepted Letter of Acceptance, documents that are part
All these different forms, in essence, are Contract Amount and the advance pay- of the tender documentation, are made a part
about risk allocation between two parties ment must be repaid before 80% of such of the contract.
(Employer and Contractor), and are based on Accepted Contract Amount is certified. A special feature of any FIDIC contract
one fundamental issue – who is responsible for In other words, the Employer (and the is that its terms and conditions consist
the design of the project. The issue is not who lender) is better protected under the MDB of both General Conditions and Particular
is doing design, but who is responsible for it. Harmonized Edition as compared to the Conditions. The General Conditions are a
regular form of the Red Book. standard combination of contract provisions,
Risks and Price while the Particular Conditions are the result
As you can see from the above diagram, the Composition of the Contract of negotiation between the parties and are
formula is simple – the contract price is direct- The FIDIC contract, being a full agreement designed to modify or delete some of the
ly dependent on the risks (mostly, foreseen) between the Employer and the Contractor for a General Conditions.
taken by the Contractor, with the Red Book given project, is a compilation of several com- FIDIC’s tender process suggests that
on the lower end of the risk spectrum for the ponents, which, taken together, form the con- the Employer include the chosen standard
Contractor for the lesser consideration, and the tractual arrangement of the parties. A FIDIC FIDIC contract and the proposed Particular
Silver Book requiring the Contractor to accept contract consists of: Conditions in the tender documentation
all the project’s risks.
Contract Agreement package with or without the possibility

Letter of Tender for the Contractor to negotiate the terms
MDB Harmonized Edition of Red Book
Letter of Acceptance of the Particular Conditions, depending on
FIDIC has been successful in introduc-
Conditions of Contract the terms of the tender. In either event, it
ing its standards to international lenders.
Specification is the Particular Conditions which reflect
A group of international banks (MDBs, or
Drawings the specificity of the project on the con-
multilateral development banks) led by
Schedules tractual level. Accordingly, contractors
The World Bank and which also includes
Dispute Adjudication Agreement should exercise maximum care when
the EBRD, Nordic Bank of Development, As utilization of a FIDIC form is very often reviewing and negotiating the Particular
Inter-American Development Bank, Black the result of a FIDIC based tender process, Conditions.
Sea Trade and Development Bank, Asian
Development Bank, African Development
Bank and Islamic Bank for Development),
have made the special edition of the FIDIC Silver Book /
Red Book a part of their standard bidding Серебряная
Yellow книга
document. In other words, international Book /
Рынок/ Red Book /
lenders prefer (and sometimes insist) that Желтая
market Красная
книга
Risk / Риск
the construction projects they finance uti- Книга
lize the Red Book Harmonized Edition.
The special features of this edition of
the Red Book are: an Engineer has less
authority; and deduction of the advance Price / Цена
119