Introduction to FIDIC Conditions of contract Dr. Mirosław J. Skibniewski, A.J. Clark Chair Professor
Introduction to FIDIC Conditions of contract
Dr. Mirosław J. Skibniewski,A.J. Clark Chair Professor
New
ten
den
cy in
con
trac
ts w
orld
wid
e
OU
TL
INE
1.W
hat
is F
IDIC
? 2.
Ch
arac
teri
stic
s of
FID
IC C
ond
itio
ns
of
Con
trac
t3.
Ap
pli
cati
on P
rosp
ect
of F
IDIC
C
ond
itio
ns
of C
ontr
act
4.
New
dev
elop
men
t of
FID
IC C
ond
itio
ns
of
con
trac
t
Wh
at is
FID
IC?
Man
agem
ent
is a
kin
d o
f sc
ien
ce w
hic
h n
eed
s co
nti
nu
ous
sum
mar
izin
g, t
o ex
per
ien
ce d
evel
opm
ent
and
inn
ovat
ion
s th
rou
gh p
ract
ice.
In t
he
con
trac
t fo
r in
tern
atio
nal
en
gin
eeri
ng
pro
ject
s,
the
fun
ctio
n o
f C
ond
itio
ns
of C
ontr
act
is o
f gr
eate
st
imp
orta
nce
pro
vid
ing
the
righ
ts, o
blig
atio
n a
nd
re
spon
sibi
lity
for
th
e p
arti
es c
once
rned
in t
he
Con
trac
t ex
ecu
tion
.
Du
rin
g th
e p
ast
hal
f ce
ntu
ry,
the
Inte
rnat
ion
al
Fed
erat
ion
of
Con
sult
ing
En
gin
eers
(F
IDIC
) h
as
dev
oted
its
elf
to t
he
com
pil
atio
n o
f m
anag
emen
t d
ocu
men
ts f
or a
ll k
ind
s of
pro
ject
s, a
mon
g w
hic
h
the
FID
IC
Con
dit
ion
s of
C
ontr
act
are
of
the
hig
hes
t in
flu
ence
an
d
are
the
mos
t p
opu
lar
app
lica
tion
.
Th
e fi
rst
edit
ion
of
FID
IC C
ond
itio
ns
of C
ontr
act
for
Wor
ks o
f C
ivil
En
gin
eeri
ng
Con
stru
ctio
n (
use
“R
ed B
ook”
in t
he
foll
owin
g) w
as c
omp
iled
in 1
957
, an
d la
ter
its
seco
nd
, th
ird
, an
d f
ourt
h e
dit
ion
wer
e is
sued
in 1
96
3, 1
977
, an
d 1
98
7 re
spec
tive
ly.
Bu
t th
ese
edit
ion
s w
ere
mos
tly
com
pil
ed in
th
e re
fere
nce
of
the
rela
ted
doc
um
ents
of
the
Inst
itu
tion
of
Civ
il E
ngi
nee
rs (
ICE
). T
he
FID
IC
and
Eu
rop
ean
In
tern
atio
nal
Con
trac
tors
(E
IC)
entr
ust
ed t
he
Un
iver
sity
of
Rea
din
g in
19
66
to
sum
mar
ize
the
exp
erie
nce
an
d t
o d
raw
less
ons
from
th
e ap
pli
cati
on o
f th
e fo
rmer
doc
um
ents
.
Wit
h
the
inve
stig
atio
n
of
the
gove
rnm
ents
, em
plo
yers
, co
ntr
acto
rs a
nd
con
sult
ing
engi
nee
rs
all
over
th
e w
orld
abo
ut
thei
r ap
pli
cati
on o
f th
e “R
ed B
ook”
, 20
4 fi
nd
ings
rep
orts
wer
e re
turn
ed.
Acc
ord
ing
to
the
fin
din
gs,
the
FID
IC
Con
trac
t C
omm
itte
e or
gan
ized
a
grou
p
of
exp
erts
to
co
mp
ile
the
new
Con
trac
t C
ond
itio
n m
odel
s to
be
app
lied
in t
he
21st
cen
tury
.
Th
e te
st e
dit
ion
of
thes
e m
odel
s w
as p
ubl
ish
ed in
19
98
, an
d F
IDIC
sol
icit
ed o
pin
ion
s th
rou
ghou
t th
e w
orld
fo
r ad
dit
ion
al
tim
e to
p
ubl
ish
th
e of
fici
al t
exts
in 1
99
9.
Now
F
IDIC
co
nd
itio
n
of
con
trac
t h
as
been
ap
pli
ed
wor
ldw
ide,
es
pec
iall
y in
th
e p
roje
cts
inve
sted
by
Wor
ld B
ank,
Asi
a D
evel
opm
ent
Ban
k,
Afr
ica
Dev
elop
men
t B
ank
etc.
Th
e n
ew m
odel
s in
clu
de
:F
IDIC
Con
dit
ion
s of
Con
tra
ct f
or C
onst
ruct
ion
, the
(N
ew R
ed B
ook)
FID
IC C
ond
itio
ns
of C
ontr
act
for
Pla
nt
an
d D
esig
n/B
uil
d, t
he
(New
Yel
low
Boo
k)
FID
IC C
ond
itio
ns
of C
ontr
act
for
EP
C T
urn
key
Pro
ject
s, t
he
(Sil
ver
Boo
k)
FID
IC S
hort
For
m o
f C
ontr
act
, the
(G
reen
Boo
k)
FID
IC C
ond
itio
ns
of C
ontr
act
(new
ed
itio
n)
rais
ed a
h
igh
er r
equ
irem
ent
to t
he
Par
ties
con
cern
ed in
th
e ar
ea
of c
ontr
act
man
agem
ent
2. C
har
acte
rist
ics
of F
IDIC
C
ond
itio
ns
of C
ontr
act
Un
ific
atio
n o
f T
erm
s an
d C
lau
se
Th
e n
ew e
dit
ion
was
dra
fted
as
the
“New
Red
Boo
k”, t
he
“New
Y
ello
w B
ook”
and
th
e “S
ilve
r B
ook”
by a
wor
kgro
up
un
der
th
e le
ader
ship
of
the
FID
IC C
ontr
act
Com
mit
tee.
Th
e co
ntr
act
form
w
as n
ot in
flu
ence
d b
y th
e fo
rmer
IC
E f
ram
ewor
k, w
hic
h w
as
incl
ud
ed in
all
20
cla
use
s. S
o if
th
e cl
ause
s co
nte
nt
cou
ld b
e u
nif
ied
, it
wou
ld b
e u
nd
er t
he
sam
e ti
tles
an
d e
xpre
ssio
ns.
In
th
ese
thre
e bo
oks,
mor
e th
an 8
0%
of
the
con
ten
t w
as c
onsi
sten
t,
and
85%
of
the
def
init
ion
s an
d e
xpre
ssio
ns
wer
e th
e sa
me.
It
is
of g
reat
hel
p f
or t
he
use
rs t
o u
nd
erst
and
th
em c
omp
lete
ly, s
avin
g st
ud
y ti
me.
Wid
er A
pp
lica
tion
Wh
en t
hes
e n
ew C
ond
itio
ns
of C
ontr
act
wer
e d
raft
ed, F
IDIC
tr
ied
its
best
so
the
Con
dit
ion
s co
uld
be
app
lied
un
der
not
on
lyth
e C
ust
omar
y L
aw (
i.e.
An
glo-
Am
eric
an L
aw S
yste
m),
bu
t al
so
Civ
il L
aw. T
o p
urs
ue
this
, th
e co
ntr
act
wor
kin
g gr
oup
had
an
at
torn
ey p
rese
nt
to r
evie
w t
he
clau
ses,
so
that
th
ey c
ould
be
app
lied
un
der
th
e tw
o la
ws
not
ed a
bove
. Th
e n
ew e
dit
ion
als
o sh
ows
mor
e fl
exib
ilit
y an
d a
dap
tabi
lity
. For
exa
mp
le, i
n t
he
old
edit
ion
, th
e co
nd
itio
nal
per
form
ance
gu
aran
tee
was
nec
essa
ry,
wh
ich
th
e W
orld
Ban
k h
ad d
iffe
ren
t op
inio
ns
of. W
hil
e in
th
e n
ew e
dit
ion
, th
e gu
aran
tee
form
s w
ere
set
by P
arti
cula
r C
ond
itio
ns
wh
ich
can
be
app
lied
giv
ing
the
emp
loye
rs b
ette
r fl
exib
ilit
y.
Ap
pli
cabi
lity
un
der
Var
iou
s P
roje
ct D
eliv
ery
and
C
ontr
acti
ng
Syst
em
1.T
he
“New
Red
Boo
k”ca
n b
e u
sed
in a
ny
kin
d o
f E
ngi
nee
rin
g C
onst
ruct
ion
Con
trac
t.
2.T
he
“New
Yel
low
Boo
k”ap
pli
es t
o th
e lu
mp
su
m c
ontr
act
pro
ject
w
her
e th
e C
ontr
acto
r ta
kes
par
tici
pat
ion
in t
he
des
ign
wor
k.
3.T
he
“Sil
ver
Boo
k”ap
pli
es t
o th
e tu
rnke
y p
roje
cts
of
infr
astr
uct
ure
s or
larg
e-sc
ale
fact
orie
s, w
her
e th
e C
ontr
acto
r ta
kes
on m
ore
wor
k an
d r
isk
wh
ile
the
Em
plo
yer’
s p
arti
cip
atio
n
is s
mal
l (p
riva
te f
inan
cin
g or
gov
ern
men
t fi
nan
cin
g), b
ut
it is
st
rict
ly d
efin
ed u
pon
th
e in
vest
men
t an
d c
onst
ruct
ion
per
iod
. 4
.Th
e “G
reen
Boo
k”ca
n b
e u
sed
in a
ll k
ind
s of
sm
all-
scal
e p
roje
cts.
5.
Alt
oget
her
, th
ese
fou
r C
ontr
act
Con
dit
ion
s ca
n b
e ap
pli
ed t
o n
earl
y ev
ery
kin
d o
f p
roje
ct, e
xpec
t fo
r th
at o
f m
anag
ing
con
trac
tin
g or
sim
ply
con
sult
ing
or d
esig
nin
g
Hig
h-q
ual
ity
Pro
visi
ons
and
Log
ical
Cla
use
Se
quen
cin
g
Com
par
ed w
ith
th
e or
igin
al “
Red
Boo
k”, t
he
“New
Red
Boo
k”h
as
163
clau
ses,
nea
rly
40
% b
ein
g fr
esh
ly c
omp
iled
. An
ad
dit
ion
al
40
% w
ere
mod
ifie
d a
nd
giv
en s
up
ple
men
ts. O
nly
20
% w
ere
kep
t in
tact
. Th
e ol
d e
dit
ion
ad
opte
d I
CE
’sd
isor
der
ly s
tyle
bit
in t
he
clau
se s
equ
ence
, wh
ile
in t
he
new
ed
itio
n, t
he
rela
ted
su
b-cl
ause
s ar
e p
ut
into
on
e cl
ause
wh
en p
ossi
ble,
an
d c
onve
nie
nt
to t
he
use
rs.
Mor
e Sp
ecif
ic P
rovi
sion
s co
nce
rnin
g th
e R
igh
ts
and
Obl
igat
ion
s of
th
e C
ontr
act
Par
ties
Tak
ing
the
clau
se o
f E
mp
loye
r’s
def
ault
as
an e
xam
ple
, w
e ca
n
see
that
in
con
tras
t to
th
e “R
ed B
ook”
,”th
ree
poi
nts
are
ad
ded
in
to
the
“New
R
ed
Boo
k”:
two
of
them
ar
e co
nce
rned
w
ith
p
aym
ent.
T
he
abov
e sh
ows
the
stri
ct
requ
irem
ents
fo
r th
e E
mp
loye
r.
How
ever
, th
e C
ontr
acto
r sh
all
inst
itu
te
a qu
alit
y as
sura
nce
sys
tem
an
d s
ubm
it t
o th
e E
ngi
nee
r to
au
dit
an
y as
pec
t of
th
e sy
stem
bef
ore
exec
uti
on. M
onth
ly p
rogr
ess
rep
orts
sh
all b
e p
rep
ared
by
the
Con
trac
tor
to s
ubm
it t
o th
e E
ngi
nee
r ev
ery
mon
th, o
ther
wis
e, t
he
pay
men
t w
on’t
be
give
n. A
ny
kin
d o
f br
ibe
can
res
ult
in
Con
trac
tor’
s d
efau
lt.
All
of
the
abov
e ar
e h
igh
re
quir
emen
ts f
or t
he
Con
trac
tor.
Ch
ange
s in
th
e P
rep
arin
g St
yle
Gen
eral
Con
dit
ion
s in
th
e fo
rmer
ed
itio
n w
ere
fair
ly c
onci
se;
som
e re
com
men
dab
le c
lau
ses
wer
e gi
ven
Par
ticu
lar
Con
dit
ion
s.
Wh
ile
in t
he
new
ed
itio
n, t
her
e is
a w
ay a
rou
nd
th
e re
gula
tion
s be
ing
that
th
e G
ener
al C
ond
itio
ns
are
rela
tive
ly c
omp
reh
ensi
ve
and
det
aile
d. A
n e
xam
ple
wou
ld b
e ad
van
ced
pay
men
t an
d
adju
stm
ent
form
ula
. Th
e n
ew e
dit
ion
wri
ters
bel
ieve
th
at it
is
mor
e co
nve
nie
nt
for
the
use
rs t
o d
elet
e th
e cl
ause
s th
ey d
o n
ot
nee
d t
han
to
wri
te t
hem
in t
he
“Par
ticu
lar
Con
dit
ion
s”by
th
emse
lves
.
Con
cise
Lan
guag
e
Th
e la
ngu
age
and
sen
ten
ce s
tru
ctu
res
in t
he
new
ed
itio
n a
re
rath
er e
asy
to u
nd
erst
and
, an
d a
gre
at h
elp
to
the
peo
ple
wh
ose
nat
ive
lan
guag
e is
not
En
glis
h.
3. A
pp
lica
tion
Pro
spec
t of
FID
IC
Con
dit
ion
s of
Con
trac
t
Th
e tr
adit
ion
al p
roje
ct m
anag
emen
t m
ode,
wh
ich
is
un
iver
sal i
n t
he
wor
ld, h
as b
een
ap
pli
ed in
mos
t of
th
e en
gin
eeri
ng
pro
ject
man
agem
ent
case
s in
th
e w
orld
.
Th
e n
ew
edit
ion
h
as
man
y ad
van
ced
id
eas
and
re
gula
tion
s su
ch
as
stan
dar
diz
ing
of
the
Con
trac
t w
ord
s an
d
exp
ress
ion
s,
clea
rer
and
st
rict
er
clai
m
pro
ced
ure
, an
d
emp
has
is
on
the
pro
tect
ion
of
in
tell
ectu
al p
rop
erty
rig
hts
To
Solv
e th
e P
robl
em o
f B
ack
Pay
men
t u
sin
g W
orld
Wid
e E
xper
ien
ce f
or R
efer
ence
It i
s re
por
ted
th
at t
he
back
pay
men
t an
d d
ebt
betw
een
th
e en
gin
eeri
ng
un
its
in C
hin
a h
ave
add
ed u
p t
o 28
0 b
illi
on (
RM
B),
w
hic
h i
s m
ostl
y E
mp
loye
r’s
(gov
ern
men
t in
clu
ded
) d
efau
lt t
o th
e C
ontr
acto
r.
Th
e p
robl
em
has
gr
eatl
y in
flu
ence
d
the
con
stru
ctio
n c
orp
orat
ion
s th
at t
hei
r ec
onom
ic s
tren
gth
wer
e w
eake
ned
. T
he
mar
ket
nee
ds
a le
gal
syst
em
to
pro
vid
e a
guar
ante
e fo
r fr
ee a
nd
fai
r co
mp
etit
ion
.
Sin
ce t
he
pro
blem
s of
th
e E
mp
loye
r’s
fin
anci
al v
acan
cy
or C
ontr
acto
r fi
nan
cin
g ar
e or
igin
atin
g w
orld
wid
e, t
he
rela
tive
cla
use
s an
d r
egu
lati
ons
are
add
ed i
nto
FID
IC
Con
dit
ion
s of
Con
trac
t.
1.E
mp
loye
r’s
fin
anci
al a
rran
gem
ent.
Th
e E
mp
loye
rsh
all
subm
it
wit
hin
28
day
s af
ter
rece
ivin
g an
y re
ques
tfr
om t
he
Con
trac
tor
reas
onab
le e
vid
ence
th
at f
inan
cial
arr
ange
men
t h
as b
een
mad
e. I
fth
e E
mp
loye
r in
ten
ds
tom
ake
any
mat
eria
l ch
ange
to
his
fin
anci
al
arra
nge
men
t, h
esh
all
give
not
ice
to t
he
Con
trac
tor
wit
h d
etai
led
p
arti
cula
rs.
1.If
th
e E
mp
loye
r fa
ils
to e
xecu
te i
n a
ccor
dan
ce w
ith
th
is c
lau
se,
the
Con
trac
tor
may
, af
ter
givi
ng
a 21
d
ays’
not
ice
to
the
Em
plo
yer,
su
spen
d t
he
wor
k or
red
uce
pro
du
ctio
n o
utp
ut
as a
ki
nd
of
w
arn
ing;
if
th
e C
ontr
acto
r d
oes
not
re
ceiv
e an
y re
ason
able
fin
anci
al a
rran
gem
ent
cert
ific
ate
wit
hin
42
day
s af
ter
givi
ng
the
war
nin
g, h
e sh
all
be e
nti
tled
to
term
inat
e th
e C
ontr
act,
for
it
is t
he
Em
plo
yer’
s d
efau
lt.
Als
o th
e C
ontr
acto
r ca
n
get
all
the
com
pen
sati
on
earn
ed
on
the
con
dit
ion
of
E
mp
loye
r’s
def
ault
.
2.It
is
def
ined
in
th
e cl
ause
of
pay
men
t h
ow t
o h
and
le t
he
pro
blem
wh
en t
he
Em
plo
yer
has
th
e p
aym
ent
del
ayed
. If
th
e C
ontr
acto
r d
oes
not
rec
eive
pay
men
t (i
n a
ccor
dan
ce
wit
h t
he
Inte
rim
Pay
men
t C
erti
fica
te)
wit
hin
56
day
s af
ter
subm
itti
ng
mon
thly
st
atem
ent
to
the
En
gin
eer
at
the
begi
nn
ing
of t
he
mon
th,
the
Con
trac
tor
shal
l be
en
titl
ed t
o re
ceiv
e in
tere
st
com
pou
nd
ed
mon
thly
on
th
e am
oun
t u
np
aid
du
rin
g th
e p
erio
d o
f d
elay
. Th
ese
fin
anci
ng
chan
ges
shal
l be
calc
ula
ted
at
the
ann
ual
rat
e of
3 p
erce
nta
ge p
oin
ts
abov
e th
e d
isco
un
t ra
te o
f ce
ntr
al b
ank
in t
he
cou
ntr
y of
th
e cu
rren
cy o
f p
aym
ent.
If
the
Con
trac
tor
doe
s n
ot r
ecei
ve
pay
men
t w
ith
in
42
day
s af
ter
the
exp
iry
of t
he
abov
e 56
d
ays,
he
shal
l be
enti
tled
to
term
inat
e th
e C
ontr
act.
3.C
ontr
acto
r F
inan
ced
Pro
ject
’s e
xecu
tion
. It
is s
pec
iall
y se
t u
p i
n
the
Par
ticu
lar
Con
dit
ion
s an
Exa
mp
le P
rovi
sion
s fo
r C
ontr
acto
r F
inan
ce,
wh
ich
def
ines
th
at i
f it
is
Con
trac
tor
fin
anci
ng
and
he
has
com
mit
ted
to
the
pro
ject
, th
e E
mp
loye
r sh
all
del
iver
a b
ank
pay
men
t gu
aran
tee
to t
he
Con
trac
tor
wit
hin
28
day
s af
ter
both
p
arti
es
hav
e en
tere
d
into
th
e C
ontr
act
Agr
eem
ent.
If
th
e C
ontr
acto
r d
oes
not
rec
eive
th
e gu
aran
tee,
th
e E
ngi
nee
r sh
all
not
iss
ue
the
not
ice
to c
omm
ence
. It
is d
efin
ed i
n t
he
guar
ante
eth
at if
th
e E
mp
loye
r fa
ils
to m
ake
pay
men
t in
fu
ll b
y th
e d
ate
14
day
s af
ter
the
exp
iry
of t
he
per
iod
sp
ecif
ied
in
th
e co
ntr
act
asth
at w
ith
in w
hic
h s
uch
pay
men
t sh
ould
hav
e be
en m
ade,
th
e C
ontr
acto
r sh
all
been
en
titl
ed t
o d
eman
d f
or p
aym
ent
from
th
e ba
nk
wit
h a
cer
tifi
cate
, C
ontr
acto
r’s
sign
atu
res
wh
ich
mu
st b
e au
then
tica
ted
by
his
ban
kers
or
by a
not
ary
pu
blic
.
To
Car
ry o
ut
the
Gen
eral
Con
trac
tin
g M
ode
of
Des
ign
/Bu
ild
an
d E
PC
Tu
rnke
y E
nth
usi
asti
call
y
FID
IC m
ake
s ou
t th
e “N
ew Y
ello
w B
ook”
an
d
“Sil
ver
Boo
k”in
dep
end
entl
y in
a
dd
itio
n
to
mee
t th
e d
evel
opm
ent
ten
den
cy
of
inte
rna
tion
al p
roje
ct m
an
ag
emen
t m
ode.
Acc
ord
ing
to t
he
stat
isti
cs a
nd
for
ecas
t of
th
e A
mer
ican
D
esig
n/B
uil
d I
nst
itu
tion
, th
e m
arke
t sh
are’
s ch
ange
te
nd
ency
of A
mer
ican
mai
n e
ngi
nee
rin
g co
nst
ruct
ion
m
ode
du
rin
g 19
85
to 2
015
is s
how
n in
th
e T
ab. 1
.
To
Mak
e C
lear
th
e P
osit
ion
of
the
Con
stru
ctio
n
Sup
ervi
sin
g E
ngi
nee
r,
Rai
se
Th
eir
Wor
kin
g R
esp
onsi
bili
ty,
and
Op
en u
p N
ew R
egio
ns
of W
ork
In t
he
“New
Red
Boo
k”,
it n
eed
s th
e E
ngi
nee
r to
be
tim
elie
r, a
nd
m
ore
exp
lici
t in
sol
vin
g th
e p
robl
ems
than
bef
ore.
It
pay
s m
ore
resp
ect
to t
he
pos
itio
n a
nd
th
e au
thor
ity
of t
he
En
gin
eer,
su
ch a
s,
wit
hou
t th
e co
nse
nt
of t
he
Con
trac
tor,
th
e E
mp
loye
r sh
all
not
be
enti
tled
to
exch
ange
th
e E
ngi
nee
r or
im
pos
e fu
rth
er r
estr
icti
on o
n
the
En
gin
eer’
s au
thor
ity
wh
ich
has
bee
n s
pec
ifie
d in
th
e co
ntr
act.
En
gin
eer’
s au
thor
ity
incl
ud
es:
Mak
ing
it
clea
r th
at
the
En
gin
eer
belo
ngs
to
“E
mp
loye
r’s
Per
son
nel
”, w
hil
e th
ere
is n
o st
ress
th
at h
e is
an
in
dep
end
ent
par
ty.
Wh
en t
he
En
gin
eer
mak
es a
dec
isio
n,
ther
e w
ill
be n
o m
ore
stre
ss o
n im
par
tial
ity,
bu
t h
e is
sti
ll r
equ
ired
to
be f
air.
If t
he
Con
trac
tor
and
Em
plo
yer
hav
e a
hea
ted
dis
pu
te,
ther
e w
ill
be n
o n
eed
for
th
e E
ngi
nee
r to
med
iate
bef
ore
eith
er p
arty
ap
pli
es
for
arbi
trat
ion
. So
th
e D
isp
ute
A
dju
dic
atio
n
Boa
rd
(DA
B)
has
bee
n s
et u
p t
o so
lve
the
pro
blem
Th
e m
ode
of E
ngi
nee
r’s
sup
ervi
sin
g is
als
o ap
pli
ed i
n t
he
“New
Y
ello
w B
ook”
, wh
ile
the
resp
onsi
bili
ties
of
En
gin
eer
are
the
sam
e on
th
e w
hol
e w
ith
wh
at i
s sa
id i
n t
he
“New
Red
Boo
k”,
that
is,
th
e E
ngi
nee
r sh
ould
man
age
not
on
ly t
he
con
stru
ctio
n,
but
in
des
ign
ing,
incl
ud
ing
revi
ewin
g an
d a
pp
rovi
ng
the
qual
ific
atio
n o
f th
e d
esig
ner
an
d s
ub-
des
ign
er,
Con
trac
tor’
s d
esig
n d
ocu
men
ts,
par
tici
pat
ing
in t
he
dis
cuss
ion
of
the
des
ign
, an
d i
nst
ruct
ing
the
Con
trac
tor
to p
rep
are
furt
her
Doc
um
ents
. B
ut
any
En
gin
eer’
s re
view
, ap
pro
val,
or c
onse
nt
of t
he
Con
trac
tor’
s d
ocu
men
ts s
hal
l n
ot r
elie
ve t
he
Con
trac
tor
from
an
y ob
liga
tion
or
resp
onsi
bili
ty.
To
Pre
par
e th
e M
OD
EL
of
Shor
t F
orm
Con
trac
t
Man
y sm
all
scal
e an
d
larg
e sc
ale
pro
ject
s ca
n
use
si
mp
le
tech
niq
ues
su
ch a
s in
res
iden
tial
are
as,
also
nee
d a
con
trac
t. S
o w
e sh
all
com
pil
e a
shor
t fo
rm o
f co
ntr
act
in r
efer
ence
to
FID
IC
“Gre
en B
ook”
. It
is n
eces
sary
to
be f
airl
y fl
exib
le in
th
e m
ode
and
re
quir
emen
ts o
f m
anag
emen
t.
To
Imp
rove
th
e M
edia
tion
Met
hod
s fo
r D
isp
ute
Th
e n
ew e
dit
ion
tak
es t
he
exp
erie
nce
of
USA
an
d W
orld
Ban
k in
so
lvin
g th
e co
nst
ruct
ion
d
isp
ute
, w
hic
h
resu
lts
in
DA
B
to
med
iate
th
e d
isp
ute
. T
he
mos
t ou
tsta
nd
ing
mer
it o
f D
AB
is
that
it
is
com
pos
ed o
f th
ree
exp
erts
wh
o ar
e ch
osen
, ap
pro
ved
an
d
pai
d f
or b
y bo
th p
arti
es.
Th
ese
exp
erts
go
to s
ite
to s
olve
th
e d
isp
ute
occ
urr
ing
betw
een
th
e tw
o p
arti
es a
fter
com
men
cin
g co
nst
ruct
ion
wor
k. W
hil
e in
th
e F
IDIC
“R
ed B
ook”
, th
e E
ngi
nee
r is
req
uir
ed t
o m
edia
te t
he
pro
blem
wh
ich
he
can
not
han
dle
. It
is
har
d t
o be
im
par
tial
be
cau
se t
he
En
gin
eer
is t
he
Em
plo
yer’
s em
plo
yee,
so
very
oft
en
the
con
trad
icti
on w
ill s
till
be
un
solv
ed a
fter
a lo
ng
tim
e.
New
dev
elop
men
t of
FID
IC c
ond
itio
ns
of c
ontr
act
��
De
sig
n-B
uil
d O
pe
rate
Co
ntr
act
It w
as p
ubl
ish
ed o
n
Sep
tem
ber
200
7,
Gol
d B
ook
New
DB
O d
ocu
men
t fo
r lo
ng-
term
con
trac
tB
ackg
rou
nd
Th
e D
BO
ap
pro
ach
to
co
ntr
acti
ng
com
bin
es
des
ign
, co
nst
ruct
ion
, an
d l
ong-
term
op
erat
ion
(an
d m
ain
ten
ance
) of
a
faci
lity
in
to
one
sin
gle
con
trac
t aw
ard
ed
to
a si
ngl
e co
ntr
acto
r (w
ho
wil
l u
sual
ly b
e a
join
t ve
ntu
re o
r co
nso
rtiu
m
rep
rese
nti
ng
all
the
dis
cip
lin
es a
nd
ski
lls
call
ed f
or i
n a
DB
O
arra
nge
men
t.
Pu
blic
p
riva
te
par
tner
ship
s,
PP
Ps,
ar
e th
is
arra
nge
men
t).
DB
O’s
adva
nta
ges
Tim
e: W
ith
pos
sibi
liti
es t
o ov
erla
p s
ome
des
ign
an
d b
uil
d
acti
viti
es it
wil
l be
pos
sibl
e to
min
imiz
e d
elay
s an
d o
pti
miz
e th
e sm
ooth
flo
w o
f co
nst
ruct
ion
act
ivit
ies.
Fin
anci
al: W
ith
cos
t re
stra
ints
an
d c
omm
itm
ents
an
d o
ther
ri
sks
bein
g ca
rrie
d b
y th
e C
ontr
acto
r, t
her
e is
less
ris
k of
p
rice
ove
r-ru
ns.
Qu
alit
y: W
ith
th
e C
ontr
acto
r re
spon
sibl
e fo
r 20
yea
rs
oper
atio
n, h
e h
as a
n in
tere
st t
o d
esig
n a
nd
bu
ild
qu
alit
y p
lan
t w
ith
low
op
erat
ion
an
d m
ain
ten
ance
cos
ts. N
ot o
nly
wil
l th
e p
lan
t be
‘fit
for
pu
rpos
e’bu
t it
wil
l be
buil
t to
last
.
Bas
ical
ly t
he
succ
ess
of a
tru
e D
BO
con
trac
t d
epen
ds
on t
he
com
mit
men
t of
th
e C
ontr
acto
r to
th
e co
mp
lete
pro
ject
-an
d
the
best
way
to
do
that
is t
o co
ver
the
wh
ole
des
ign
-bu
ild
an
d
the
oper
atio
n e
lem
ents
in
a s
ingl
e co
ntr
act.
Th
at i
s w
hy
FID
IC c
hos
e a
sin
gle
lon
g te
rm P
erfo
rman
ce S
ecu
rity
wit
h a
su
bsta
nti
al r
edu
ctio
n i
n v
alu
e on
com
ple
tion
of
the
des
ign
-bu
ild
–bu
t w
ith
an
on
-goi
ng
com
mit
men
t by
th
e C
ontr
act
to
per
form
an
d c
omp
lete
th
e op
erat
ion
ser
vice
.
Th
e fo
rmat
of
a D
BO
arr
ange
men
t ca
n b
e ba
sed
on
eit
her
a
‘gre
en f
ield
’sce
nar
io (
D-B
-O),
or
on a
‘bro
wn
fie
ld’s
cen
ario
(O
-D-B
). E
ith
er is
qu
ite
com
mon
, how
ever
th
e co
ntr
actu
al
requ
irem
ents
an
d p
roce
du
res
are
quit
e d
iffe
ren
t.F
IDIC
has
ch
osen
to
pro
du
ce a
doc
um
ent
base
d o
n t
he
DB
O
gree
n f
ield
sce
nar
io, w
ith
a G
uid
e (w
hic
h w
ill b
e p
ubl
ish
ed in
20
08
) co
nta
inin
g gu
idel
ines
on
th
e ch
ange
s n
eces
sary
to
cove
r a
brow
n f
ield
arr
ange
men
t, in
wh
ich
FID
IC Y
ello
w
Boo
k fo
r th
e D
B is
th
e ba
sem
ent.
Th
e ot
her
im
por
tan
t fa
ctor
con
sid
ered
in
DB
O d
ocu
men
t is
th
e le
ngt
h
of
the
oper
atio
n
per
iod
, si
nce
th
e co
nd
itio
ns
suit
able
for
lon
g-te
rm o
per
atio
n a
re n
ot n
eces
sari
ly s
uit
able
fo
r a
shor
t-te
rm o
per
atio
n.
Fro
m t
he
exp
erie
nce
of
the
DB
O
mem
bers
it
w
as
dec
ided
th
at
the
mos
t u
sefu
l p
erio
d
to
con
sid
er w
as 2
0 y
ears
op
erat
ion
–ag
ain
giv
ing
guid
elin
es i
n
the
Gu
ide
if a
sh
orte
r p
erio
d w
ould
be
requ
ired
Ris
k co
ntr
ol in
DB
O c
ontr
act
DB
O c
an b
e vi
ewed
as
a co
mp
lete
met
hod
in
PP
Ps.
Th
is m
eth
od
is
a lo
ng-
term
p
roce
ss
incl
ud
ing
pro
cure
men
t,
con
stru
ctio
n,
oper
atio
n,
and
tra
nsf
er,
in w
hic
h h
igh
ris
k sh
ould
be
pay
th
e m
ost
atte
nti
on t
o.
Abo
ut
PP
Ps:
A w
ide
spec
tru
m o
f op
tion
s is
ava
ilab
le f
or t
he
del
iver
y of
p
ubl
ic
infr
astr
uct
ure
an
d
serv
ices
, ra
ngi
ng
from
d
irec
t p
rovi
sion
by
the
gove
rnm
ent
to o
utr
igh
t p
riva
tiza
tion
, w
ith
in
crea
sin
g re
spon
sibi
liti
es, r
isks
, com
mit
men
t, a
nd
rew
ard
str
ansf
erre
d f
rom
th
e go
vern
men
t to
th
e p
riva
te s
ecto
r.
For
exa
mp
le,
sup
ply
an
d s
ervi
ce c
ontr
acts
usu
ally
hav
e a
shor
t d
ura
tion
. In
su
ch
con
trac
ts,
the
pri
vate
co
ntr
acto
r p
erfo
rms
spec
ifie
d
task
s (e
.g.,
mat
eria
l/
equ
ipm
ent
sup
pli
es,
wor
ks
con
stru
ctio
n
and
fa
cili
ties
m
ain
ten
ance
) w
her
eas
it
is
not
d
irec
tly
resp
onsi
ble
for
pro
vid
ing
rela
ted
ser
vice
s. I
n a
lea
se-
and
-op
erat
e co
ntr
act,
th
e p
riva
te
con
trac
tor
oper
ates
an
d
mai
nta
ins
the
faci
liti
es a
t it
s ow
n r
isk
agai
nst
th
e p
aym
ent
of a
le
ase
fee.
In
a b
uil
d-o
per
ate-
tran
sfer
(B
OT
) p
roje
ct,
the
pri
vate
co
ntr
acto
r is
als
o re
spon
sibl
e fo
r bu
ild
ing
and
fin
anci
ng
the
pro
ject
an
d i
t h
as t
o tr
ansf
er p
roje
ct f
acil
itie
s in
op
erat
ion
alco
nd
itio
ns
and
fre
e of
cos
ts t
o th
e go
vern
men
t at
th
e en
d o
f th
eco
nce
ssio
n t
erm
. In
div
esti
ture
, th
e ow
ner
ship
of
exis
tin
g as
sets
an
d
the
resp
onsi
bili
ty
for
futu
re
exp
ansi
on
and
u
pke
ep
are
tran
sfer
red
to
the
pri
vate
con
trac
tor,
in a
dd
itio
n t
o fi
nan
cin
g an
d
carr
yin
g ou
t th
e in
vest
men
ts r
equ
ired
to
mee
t th
e ob
liga
tion
s sp
ecif
ied
in t
he
con
trac
t an
d/o
r a
gen
eral
reg
ula
tory
fra
mew
ork.
Th
e w
hol
e p
roce
ss o
f a
PP
P (
DB
O)
pro
ject
an
d k
ey is
sues
are
sh
ould
in
foll
owin
g fi
gure
.
Lot
s of
ris
ks h
ave
been
iden
tifi
ed a
s fo
llow
ed:
It c
omes
from
L. B
ing
et a
l. (2
00
5) T
he
allo
cati
on o
f ris
k in
PP
P/P
FI
con
stru
ctio
n p
roje
cts
in t
he
UK
, In
tern
ati
ona
l Jou
rna
l of
Pro
ject
Ma
na
gem
ent,
23: 2
5–35
.
Th
eref
ore,
a n
ew D
BO
con
trac
t sh
ould
han
dle
th
ese
risk
s to
p
urs
ue
the
succ
essf
ul
pro
ject
s.
FID
IC h
as d
esig
ned
new
cla
use
to
dea
l th
e ri
sks
in D
BO
con
trac
t:R
estr
uct
ure
d C
lau
ses
17 –
19 (
Cla
use
17:
Ris
k A
lloc
atio
n, C
lau
se
18: E
xcep
tion
al R
isks
, Cla
use
19
: In
sura
nce
)
Iden
tifi
ed t
he
Ris
ks t
o be
car
ried
by
each
Par
ty
Dif
fere
nti
ated
bet
wee
n R
isks
du
rin
g th
e D
esig
n-B
uil
d P
erio
d
and
Op
erat
ion
Ser
vice
Per
iod
Cla
ssif
ied
th
e R
isks
into
Com
mer
cial
Ris
ks a
nd
Ris
ks o
f D
amag
e
Tak
en a
way
th
e te
rm F
orce
Maj
eure
Th
e st
ruct
ure
of
emp
loye
r an
d c
ontr
acto
r in
D
BO
doc
um
ent
Th
e n
ew D
BO
doc
um
ent
form
atT
he
form
at o
f th
e n
ew d
ocu
men
t fo
llow
s th
e tr
adit
ion
al f
orm
at
and
layo
ut
of p
revi
ous
FID
IC d
ocu
men
ts, w
ith
20
cla
use
s, a
nd
, w
her
e ap
pro
pri
ate,
usi
ng
the
sam
e te
rmin
olog
y an
d d
efin
itio
ns
wh
ich
are
fou
nd
in t
he
oth
er d
ocu
men
ts.
Th
e d
ocu
men
t w
ill h
ave
Gen
eral
Con
dit
ion
s, P
arti
cula
r C
ond
itio
ns,
flo
w c
har
ts a
nd
sam
ple
for
ms
–ju
st li
ke t
he
oth
er
FID
IC d
ocu
men
ts, a
nd
a G
uid
e w
hic
h w
ill i
ncl
ud
e, a
mon
gst
oth
er t
hin
gs, g
uid
elin
es o
n h
ow t
o ch
ange
th
e cl
ause
s if
it is
re
quir
ed t
o h
ave
a d
ocu
men
t fo
r a
‘bro
wn
fie
ld’s
itu
atio
n, o
r an
op
erat
ion
per
iod
sig
nif
ican
tly
dif
fere
nt
to t
he
pre
viou
s m
eth
od
adop
ted
in o
ther
FID
IC c
ontr
act.