FIDIC provides the construction industry’s multiple types of standard forms of contracts called "Rainbow Suite", a versatile collection of contracts tailored to diverse project needs. These internationally recognized forms have become the go-to framework for cross-border construction. This article explores the specific functions of each FIDIC contract and explains how their core features streamline project delivery.
The FIDIC suite of contracts[1] [2]
Conditions of Contract for Construction For Building and Engineering works designed by the Employer (The Red Book) [3]
Also known as the Construction Contract, The Red Book is the best known of the FIDIC contracts. The original
edition of the Red Book dates back to 1957 and has since undergone several
revisions to keep up-to-date with industry changes. Nowadays, the most
common and used versions are 1987, 1999, and 2017. This Contract includes the Conditions of Contract for Construction,
which are recommended for building or engineering works designed by the
Employer or by his representative, the Engineer. Under the usual arrangements
for this type of contract, the Contractor constructs the works in accordance
with a design provided by the Employer. However, the works may include some
elements of Contractor-designed civil, mechanical, electrical and/or
construction works.
Key Characteristics
- Primary Parties : The Employer and the Contractor, with an Engineer to administer the contract.
- Scope of Work : The execution and completion of construction and engineering works in accordance with the Employer's design and specifications.
- Design responsibility: The Employer retains full design responsibility; Contractor design is limited to specified auxiliary items (e.g. temporary works or particular elements) .
- Risk Profile:Considered relatively balanced: Employer bears principal design risk and most unforeseeable ground/force majeure cost risk (through clauses like unforeseeable physical conditions), Contractor bears construction, workmanship, and normal time–cost performance risks.
-
Payments : are normally determined by measurement and applying the rates and prices from the bill of quantities. There is an option for payment to be on the basis of a lump sum.
Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant and for Building and Engineering Works Designed by the Contractor (The Yellow Book)[4]
Also known as the Contract for Plant and Design-Build, The Yellow Book provides conditions of contract for construction works where the design is carried out by the Contractor. The current Yellow Book bears little resemblance to its predecessors. as previous versions focused on electrical and mechanical works, but The current edition drops the words “electrical and mechanical works” from the title and in line with the rest of the FIDIC suite the focus is now more on type of procurement rather than the nature of the works. The Yellow Book is therefore applicable to the provision of electrical and/or mechanical plant, and for the design and execution of building or engineering works. Under the usual arrangements for this type of contract, the Contractor designs and provides the works in accordance with the Employer’s requirements which may include any combination of civil, mechanical, electrical and/or construction works.
Key Characteristics
- Primary Parties: The Employer and the Contractor, with an Engineer to administer the contract.
- Scope of work : Design, execution, testing, and commissioning of the works to meet functional and performance criteria defined in the Employer’s Requirements.
- Design responsibility :Mainly on the Contractor, who prepares the design to satisfy the Employer’s Requirements.
- Risk allocation : Shifts more risk to the Contractor than the Red Book: design, integration and performance risk largely sit with the Contractor; Employer still carries certain “owner” risks such as external/unforeseeable events.
- Payment : is typically structured as a lump-sum, with interim payments linked to the achievement of specific milestones.
Conditions of Contract for EPC/Turnkey Projects (The Silver book)[5]
The Silver Book is suitable for use on process, power and
private-infrastructure projects where a Contractor is to take on full
responsibility for the design and execution of a project. Risks for
completion to time, cost and quality are transferred to the Contractor and
so the Silver Book is only suitable for use with experienced Contractors
familiar with sophisticated risk management techniques.
For many large projects construction is only one part of a wider complicated
commercial venture and financial or other failure of the construction
project will jeopardize the whole venture. The Silver Book approach may suit
such projects as it will provide a greater level of cost certainty than can
be achieved under the more traditional forms of the FIDIC suite.
Key Characteristics
- Brief description: Intended for EPC/turnkey projects where the Employer seeks a fixed price and fixed completion date, with minimal involvement during design and construction.
- Parties: Employer and Contractor; there is no traditional independent Engineer role – administration is more directly under the Employer.
- Scope of work: Full engineering, procurement and construction, often on a “turnkey” basis including design, supply, construction, testing and commissioning to deliver a fully operational facility.
- Design responsibility: Almost entirely on the Contractor, including verifying and taking responsibility for the Employer’s Requirements and data, unless expressly carved out.
- Risk allocation: Represents the “Contractor-heavy” end of the FIDIC spectrum: design, quantity, ground conditions (subject to limited carve‑outs), coordination and performance risks are largely allocated to the Contractor, in exchange for price/time certainty for the Employer.
Conditions of Contract for Design, Build and Operate Projects (The Gold book)[6]
The DBO contract adopts a “green-field” DBO scenario with a 20 year
operation period and a single contract awarded to a single contracting
entity (which will almost certainly be a consortium or joint venture) to
optimise the coordination of innovation, quality and performance, rather
than award separate contracts for design-build and for operation. Under
the DBO contract the Contractor has no responsibility for either financing
the project or for its ultimate commercial success. The DBO contract, as
written, is not suitable for contracts which are not based on the
traditional DBO sequence, or where the Operation Period differs
significantly from the 20 years adopted.
Key Characteristics
- Brief description : For long‑term projects where the same Contractor designs, builds and then operates the facility for a defined operation period (e.g. 20 years).
- Parties : Employer and Contractor; an Engineer may be appointed during design and construction, with different provisions during the operation phase.
- Scope of work : Design and construction of the works, followed by operation and maintenance to meet specified performance and service levels during the operation period.
- Design responsibility : Primarily on the Contractor, similar to Yellow/Silver for the design–build phase, with additional responsibility to ensure the design supports long‑term operation obligations.
- Risk allocation : Transfers significant design, construction, performance and operation/maintenance risk to the Contractor over the DBO life cycle; Employer retains ownership and certain macro risks (change in law, force majeure, some demand risk depending on project‑specific drafting).
The terms of the Client/Consultant Model Services Agreement (the White Book)
Key Characteristics
- Brief description : Standard form of professional services agreement between a client and a consulting engineer (not a construction contract).
- Parties : Client (Employer) and Consultant.
- Scope of work : Consulting services: feasibility, investigations, design, tender assistance, construction supervision, project management and related professional tasks as defined in the Particular Conditions/Appendices.
- Design responsibility : Consultant assumes professional liability for the services and designs it provides, subject to agreed standard of care and limits; design risk for services is on the Consultant, but the construction contract with the Contractor remains separate.
- Risk allocation : Allocates professional liability risk (errors/omissions in services) to the Consultant, subject to caps, insurance and standard-of-care wording; commercial, construction and site risks remain with the Client/its construction contracts.
Short Form of Contract (the green Book)
The Short Form of Contract is recommended for engineering and
building work of relatively small capital value. The Guidance
Notes for the Green Book recommended that generally it should not
be used on projects with a contact value greater than US$500,000.
However, depending on the type of work and the circumstances, the
Green Book may be suitable for contracts of considerably greater
value. It is a flexible document containing all the essential
administrative and commercial arrangements. It is possible to
easily amend and supplement the provisions of the Green Book with
differing options incorporated via the Appendix. The Green Book is
likely to be most suited fairly simple or repetitive work or work
of short duration without the need for specialist
sub-contracts.
Key Characteristics
- Brief description : Simplified form for relatively small, simple or repetitive works, usually of short duration and limited capital value.
- Parties : Employer and Contractor; the form can be used with or without an Engineer, but is structurally lighter than the main books.
- Scope of work : General construction or engineering works, minor civil works, building works, or simple design–build where complexity does not justify the full Red/Yellow form.
- Design responsibility : Flexible: default assumption is Employer design for simple works, but the form allows Contractor design where specified (project-by-project drafting).
- Risk allocation : Intentionally simple and relatively balanced for low‑risk projects, with fewer detailed mechanisms for unforeseeable risks; parties rely more on general provisions and local law to manage exceptional risk.
Other FIDIC Contracts
Other than the above-listed most common FIDIC contracts, below are
also FIDIC contracts for other purposes:
- Pink Book – MDB Harmonised Construction Contract[7]
- Harmonised version of the Red Book adapted for use with Multilateral Development Banks (MDBs) financed projects, incorporating their procurement and policy requirements
- Emerald Book – Underground Works (FIDIC–ITA)[8]
- Based on the enquiries on international best practice in contracting of tunnelling and underground construction works conducted by the ITA-AITES during the last fifteen years and on the ITA-AITES Report 006, these General Conditions of Contract have been specifically drafted by a joint FIDIC – ITA Task Group for use in underground works. Their use may also be appropriate in other types of works that include a significant geotechnical uncertainty.
- Blue-Green Book – Dredging and Reclamation Contract[9]
- Standard form for dredging and reclamation works, sometimes referred to as the Blue‑Green Book
Which FIDIC contract should I use? [10]
A. Relatively small value, short construction time or involving simple or repetitive work
- If the price for the contract is relatively small, say under US$ 500,000, or the construction time is short, say less than 6 months, or the work involved is relatively simple or repetitive - dredging work might be a good example: then consider using the Short Form of Contract, which is a completely new FIDIC Book specially prepared for such projects.
- It does not matter whether the design is provided by the Employer (or his Engineer/Architect if he has one) or by the Contractor,
- It does not matter whether the project involves construction, electrical, mechanical, or other engineering work.
B. Larger or more complex projects
1. Is the Employer (or the Engineer) going to do most of the design?
As in traditional projects, e.g., infrastructure, buildings, hydropower, etc., the Employer did nearly all the design (perhaps not construction details, reinforcement, etc.) (The Red Book),
- and the Engineer administered the Contract, monitored the construction work and certified payment
- and the Employer was kept fully informed, could make variations, etc.
- and with payment according to bills of quantities or lump sums for approved work done.
If this is what is wanted -
choose the Conditions of Contract for Construction for Building and
Engineering Works Designed by the Employer (The Construction Contract), which effectively updates and supercedes the existing Red Book from 1987.
In 2005, FIDIC licenced the Multilateral Development Banks (MDB) to use the
MDB Harmonised Edition of the Construction Contract for projects funded by
the banks. The MDB Construction Contract mainly incorporates Particular
Conditions to the Red Book that was used by the World Bank in its Standard
Bidding Documents before it and the other MDBs adopted the Harmonised
Edition.
2. Is the Contractor going to do most of the design?
As in traditional projects, e.g., electrical and mechanical works,
including erection on site (The Yellow Book) the Contractor (or Supplier) did
the majority of the design, e.g., the detail design of the plant or equipment,
so that the plant met the outline or performance specification prepared by the
Employer, and in the relatively more recent design-build and turnkey type
projects the Contractor also did the majority of the design, not only of plant
projects but also of various infrastructure and other types of projects, and
the project was required to fulfil the “Employer’s Requirements”, i.e., an
outline or performance specification prepared by the Employer (The Orange
Book),
- and the Engineer (Employer’s Representative in the Orange Book) administered the Contract, monitored the manufacture and erection on site or construction work and certified payment,
- and with payment according to achieved milestones generally on a lump sum basis.If this is what is wanted - choose the Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant and for Building and Engineering Works Designed by the Contractor (Plant and Design-Build Contract) which effectively updates and supercedes both the existing Yellow Book from 1987 and the Orange Book from 1995.
3. Is it a Privately Financed (or Public/Private Financed) Project of BOT or similar type where the Concessionnaire takes total responsibility for the financing, construction and operation of the Project?
Then the Concessionnaire (the “Employer”) probably requires to have a contract
with the construction Contractor, i.e., an EPC (Engineer, Procure, Construct)
Contract, where the Contractor takes total responsibility for the design and
construction of the infrastructure or other facility, and where there is a
higher degree of certainty that the agreed contract price and time will not be
exceeded,
- and the Employer does not wish to be involved in the day-to-day progress of the work, provided the end result meets the performance criteria he has specified
- and the parties concerned (e.g., sponsors, lenders and the Employer) are willing to see the Contractor paid more for the constructionf the Project in return for the Contractor bearing the extra risks associated with enhanced certainty of final price and time.
If this is what is wanted - choose the Conditions of Contract for
EPC/Turnkey Projects (EPC/Turnkey Contract) - the FIDIC Book suitable for
this purpose.
C. Also for the EPC/Turnkey Contract
1. Is it a Process Plant or a Power Plant (or a factory or similar) where the Employer - who provides the finance - wishes to implement the Project on a Fixed-Price Turnkey Basis?
Then the Employer wishes the Contractor to take total responsibility
for the design and construction of the process or power facility and
hand it over ready to operate “at the turn of a key”,
- and the Employer wishes a higher degree of certainty that the agreed contract price and time will not be exceeded
- and the Employer wishes - or is used to - the Project being organised on a strictly two party approach, i.e. without an “Engineer” being involved
- and the Employer does not wish to be involved in the day-to-day progress of the construction work, provided the end result meets the performance criteria he has specified
- and the Employer is willing to pay more for the construction of his Project (than would be the case if the Conditions of Contract for Plant and Design-Build were used) in return for the Contractor bearing the extra risks associated with enhanced certainty of final price and time.
If this is what is wanted - choose the Conditions of Contract for
EPC/Turnkey Projects (EPC/Turnkey Contract).
2. Is it an Infrastructure Project (e.g., road, rail link, bridge, water or
sewage treatment plant, transmission line, even dam or hydropower plant) or
similar where the Employer - who provides the finance - wishes to implement
the Project on a Fixed-Price Turnkey Basis?
Then the Employer wishes the Contractor to take total responsibility
for the design and construction of the infrastructure facility,
- and the Employer wishes a higher degree of certainty that the agreed contract price and time will not be exceeded, except that if underground works in uncertain or difficult ground conditions are likely then the risk of unforeseen ground conditions should be borne by the Employer (and the provisions of the Plant and Design-Build Conditions in this respect - Sub-Clause 4.12 - would be appropriate),
- and the Employer wishes - or is used to - the Project being organised on a strictly two party approach, i.e. without an “Engineer” being involved
- and the Employer does not wish to be involved in the day-to-day progress of the construction work, provided the end result meets the performance criteria he has specified,
- and the Employer is willing to pay more for the construction of his Project (than would be the case if the Conditions of Contract for Plant and Design-Build were used) in return for the Contractor bearing the extra risks associated with enhanced certainty of final price and time.
If this is what is wanted - choose the Conditions of Contract for
EPC/Turnkey Projects (EPC/Turnkey Contract).
3. Is it a Building Project where the Employer wishes to have his
building(s) constructed on a Fixed-Price Turnkey Basis generally complete
with all furniture, fittings and equipment?
As for 2 above
In the case of a building or building development Project, the Employer
or his Architect may have done some or most of the design, but - with
suitable modification regarding design responsibility - the Conditions of
Contract for EPC/Turnkey Projects (EPCTurnkey Contract) may be
chosen.
D. Reconstruction or Refurbishment or another type of Project
Check Questions A1, B1 and B2 above or Questions C1 - C3 if applicable, and
make your choice accordingly.
References
- https://fidic.org/sites/default/files/FIDIC_Suite_of_Contracts_0.pdf ↩
- https://fidic.org/bookshop ↩
- https://fidic.org/books/construction-contract-2nd-ed-2017-red-book-reprinted-2022-amendments ↩
- https://fidic.org/books/plant-and-design-build-contract-2nd-ed-2017-yellow-book-reprinted-2022-amendments ↩
- https://fidic.org/books/epcturnkey-contract-2nd-ed-2017-silver-book ↩
- https://fidic.org/books/dbo-contract-1st-ed-2008-gold-book ↩
- https://fidic.org/books/construction-contract-mdb-harmonised-ed-version-2-march-2006-harmonised-red-book ↩
- https://fidic.org/books/conditions-contract-underground-works-2019-emerald-book ↩
- https://fidic.org/books/dredgers-contract-2nd-ed-2016-blue-green-book ↩
- https://fidic.org/bookshop/about-bookshop/which-fidic-contract-should-i-use ↩