This is the third in a three-part series on the FIDIC Green Book. In this instalment, we will consider the various changes from the First Edition.

New Inclusions:
Provisions that have been added to the Second Edition, released in 2021, include:

  • professional liability insurance,
  • assignment,
  • intellectual property,
  • confidentiality,
  • limits on liability,
  • site data,
  • Employer’s financial arrangements,
  • inspection and testing,
  • commissioning and taking over taking over part of the works
  • responsibility for subcontracting
  • claims and variation have now been separated,
  • Defects and defects notification period, and
  • indemnities.

Some key features have also been added to the 2021 Edition. The form now contains a suitably long and helpful explanation of the salient features of the contract and how it works. There are also a number of typical sequence-of-events flow diagrams for processes such as:

  • variations,
  • claim management, and
  • disputes.

The form now contemplates having particular conditions. Included is a contract data proforma document that contains, among other things:

  • a formula for calculating prolongation costs for compensable delays,
  • a table for sectional completion, detailing times for completion for each section and related delay damages, and
  • a number of options for pricing and valuing the works, such as:
    • lump sum price within which there are:
      • single payment,
      • stage payment
      • with bill of quantities
    • remeasurement,
    • cost plus,
    • and a combination of options.

Employer Risk
There are more detailed provisions around the Employer’s risk with compensable delay giving rise to Extension of Time costs, including prolongation costs, or cost plus profit and excusable delays to Extension of Time only. The various Employer risk events and corresponding remedies are all set out in a single table.

Variations

There are two Variation procedures.
1. Instructed. The Contractor is required to execute the variation and settle the time and cost impact separately.
2. Staged. The Contractor submits a proposal that can be accepted or rejected.

Other Key Features in the New Green Book

The 2021 Edition introduces an Engineer to manage the project and determine claims, bringing the Green Book in line with the other main forms of FIDIC contracts.

Claims must be notified within 28 days and a fully detailed claim with supporting particulars must be produced within 56 days, but these are not expressed to be time-bars.

As with the 1999 Green Book, disputes are to be determined in the first instance by an Adjudicator as a condition precedent to final determination by ICC arbitration. The procedure is somewhat different, however, with the Adjudicator in the 2021 form being appointed from the outset, within 28 days of the contract coming into effect.

The Adjudicator remains in place throughout to provide informal assistance to the parties when issues or disagreements arise, and then determine any dispute referred to him in accordance with the adjudication rules.

The new version also introduces an advanced warning provision where either party is to notify the other and the Engineer to advise the parties of any known probable event which may delay or disrupt the execution of the Works or increase the contract price.

The level of responsibility on the Contractor for its design has now been enhanced. With this corresponding requirement for Professional Indemnity cover by the Contractor to cover any liability arising out of any act, error, or omission by the Contractor in carrying out its designed obligations.

Termination

As in the earlier version, termination costs are predetermined and expressed as LDs – liquidated damages. Payable on termination due to the Contractor’s default on insolvency, these remain at 20% of the value of the unexecuted works.

The Second Edition now clarifies that this is an exclusive remedy. Where the Contractor terminates, it remains entitled to demobilization and any other costs reasonably incurred in expectation of completion of works plus 10% of the value of the incomplete works.

The new version introduces a Termination for Convenience clause for the benefit of the Employer, with the cost being the same as termination by the Contractor for Employer default. Whereas the Employer chooses to exclude works, it is liable to the contractor for the cost of the omission plus 10% of the value of omitted works.

The updated edition also contains certain add-ins for simpler use, including:

  • a new risk table that sets out the Employer’s risk and their consequences,
  • a table that sets out the insurance responsibility of each party, including for Professional Indemnity cover and in case of Contractor’s design, and
  • payment valuation method through a tick-box selection.

This concludes our brief overview of the FIDIC Green Book. Are you using the Green Book? Have you found the updates in the 2021 edition useful? Let us know in the comments.

This guest post was written by Mansoor Ali, FICCP. This post was originally published as two LinkedIn videos, available here and here.

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