FIDIC Contracts: Scope, Risks and Procurement Processes

In this podcast, Ricardo talks about the types of contracts of the International Federation of Consulting Engineers (FIDIC). These contracts are widely used in engineering projects and published as books. Ricardo explains that the contracts are well prepared, bringing best practices that can be applied to various types of projects. Visit the site of the federation at http://fidic.org/

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Episode transcript

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Hello everyone. Welcome to the five minutes PM. Podcast today I'd like to discuss with you about fidic Contracts, it's a modality of contracts that we use basically engineering. And it's a very relevant two for us to analyze how we share the Risks between the contractor and the client. So fidic is the International Federation of Consulting Engineers its based in Switzerland, it's more than a hundred year old organization and they have members in many, many countries, including countries like Brazil, the United States with the American council of engineering companies and be a focus it's an engineering contract, best practice in their main product.

Or of course they have training's and other things, but their main product, he is the rainbow guide's the rainbow guides are international standard forms of Contracts for works. So if I can make an analogy, it's like the Incoterms in India, national Procurement like fob free on board. Yeah. In this kind of modality So this is mainly focused on how you share Risks and which are the responsibilities of the parties in the engineering side. So it's a set of gate guides for main guides in for additional ones.

You can buy this guide, the costs around from 30 to 200 eeros and you can download then on the fidic.org website. So I want to share with you first, the main Contracts why we called it is rainbow guys because they use different colors. So we have the red book, yellow book, silver book, green book, white book, blue book, pink book in gold book. So let's discuss each of them. Let's start with the most relevant ones. First the red book, the red one book consider in a guide that considered that all design effort is made by the client and the construction that is made by the contractor.

You have a house. So you dry in, you make all the design of your new house and then you give this design to a constructor that will build it for you. Or if there is any a problem on the construction site, the contractor is responsible for that. But if for any reason, there is a window that was misplaced it on the design or a door that is in the wrong position on the design. This is all responsibility of the client. So this he is the red book. So all the templates on the red book and all the Contracts on the red book, focused on design responsibility, have the client construction, have the contractor, the second, the yellow book, the yellow book, the design and the construction, our responsibility of the contractor.

So the client provides engineering supervision, but it's not responsible for the design. So on this case, of course, the cost of the contract probably increase. And also the risk for the contractor is that increasing two because of the design is also responsible. And the silver book, the design and the full construction is also by the contractor. But what is the difference between the silver and the yellow, the yellow, the client provides engineering supervision, but the silver book, the kind of established performance criteria.

So I do not engage it on the engineering side. I tell them, I need a two bedroom house. I need this. So I give the construction company a basically my performance and neat. And then they built everything. They wait, they think its more suitable. So they assumed all the responsibility does is what we call a turnkey or EPC kind of project. The last one is the green book. The green book is more focused on his more works. It's a very flexible, it can go from rad to silver book, but its more aiming to is more work.

So if you need to do a small kind of an agreement, you can use this as a, the green book as a reference for you. I'm the additional guide's. We have the white book that it's more for the engineering construction services. It's more for day a consulting service. Let's suppose you need to contract a consultant to do some work. You can use the white book as a reference. The blue book is a simplified process. It's more focused on dragon services, water removals services.

And this So, it's a more simplified at the more specific Processes the pink book. It's the work with donors solo that you have an entity like the word bank or like IDB or like African development bank. Okay. Working with a client and a construction company. So you have the pink book to support you on this kind of project. And the gold book is designed Butte and operate for 20 years. So this is a very common guide. When you were doing privatization, when you were transferring from public to private sector, some kind of work when you ask the contractor to design, to Bute and also to operate, for example, a nuclear power plant, an hydroelectrical power plant.

So its like the yellow server book, but it includes the operation and the last but not least there is a, not a modality of contract called NEC tree. And it's a new family of contracts that facilitates the implementation of sound project management principles. So it's a new kind of, because fidic Contracts that they focus very much on the engine as the main responsible for the contract under that, we are talking about the project manager as the person responsible for the process.

So it's less anti kind focus because fidic, it's pretty much thinking of that. And you may have a claim, so you may have a problem. So you have the fidic so this it's less anti claim. It's more on the past side, but it much more work because you need to close all the potential gaps, comparing them with the fidic. That is much more fun. If we buy one of those books, you'll have all the templates, all the tender, everything for you to put in place a contract like that. I know this may be something quite new for many of you.

And I know that some of you are from it or other sectors. Why am sharing you this? Because I always open our minds too. What is going on in the project management field? And many times we have challenges with the kind of Contracts we use. And this can be extremely helpful even if you were not from an engineer's site, because I think I'm short that using this kind of template, you can speed up and be much more reliable, reducing the way Risks off your project. I hope you enjoy this podcast and see you again next week with another five minutes before, Podcast see you.

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