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FIDIC Silver Book. Introduction FIDIC – the International Federation of Consulting Engineers – published in September 1999 a suite of four new Standard Forms of Contract. This new suite comprises: Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer: The Construction Contract.
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'The Silver Book; An Unfortunate Shift from FIDIC's Tradition of being Evenhanded and of Focusing on the Best Interests of the Project' (2000) 17 ICLR 477. On the other hand, Huse J. A., in his article, 'The use of the FIDIC Silver Book in the Context of a BOT Project' (2000) 17. FIDIC Silver Book (EPCT) 1999 Contract and Contractors's Claims. GENERAL CLAIMS PROCEDURE ARE LAID IN ( GCC 20.1, 2.5 & 3.5) AND: i. In ECP Contract disproportionately more risks are allocated. The FIDIC Silver Book, in keeping with its turnkey approach to risk allocation, takes this one important step further. Whilst the Employer provides information to tendering contractors, it is the Contractor who is responsible for verifying as well as interpreting that data.

FIDIC Contracts are widely used in the international construction industry and their purpose is to define the contractual relationship between the parties and to allocate the risks between the Contractor and the Employer.

The main forms of FIDIC Contracts are known as:

the Red Book which refers to Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer. If the Red Book has been intended to be used for works designed by the Employer, it can be used also in case the Contractor is in charge for the design of some elements (civil, mechanical, electrical and/or construction works);
the Yellow Book which refers to Conditions of Contract for Plant and Design-Build. This form is recommended for construction of electrical and/or mechanical, building and engineering works where the Contractor designs and provides plants or other works or any combination of civil, mechanical, electrical and/or construction works;
the Silver Book which refers to Conditions of Contract for EPC/Turnkey Projects. The Silver Book is recommended for turnkey provision of process or power plants, factories and/or infrastructure when the Employer wishes the maximum degree of certainty in terms of costs and time of the works and intends to have the Contractors entirely responsible (and liable) for the design and execution of the Works;
the Gold Book which refers to FIDIC Design, Build and Operate Projects where the project os also operated generally via and operational and management contract.

The FIDIC Contracts are composed of General Conditions which can be amended through Particular Conditions to adapt them to the characteristics of the specific project. One thing that should be avoided to the maximum extent is to modify the General Conditions without due care since the modifications of the General Conditions may bring to material inconsistencies and/or pitfalls.

The following note aims at providing a brief introduction to the main features of the Silver Book.

Main features.

The Silver Book deals with turn-key projects ie those projects for which the Contractor takes care and is responsible for the engineering, the procurement and the construction. The Contractor will then deliver to the Employer a plant, a factory or an infrastructure ready to be used by the Employer.

The introductory note of the Silver Book states that the aim of the Book is to give certainty as to the time and costs of the works.

The main features of the Silver Book are that:

the Contractor takes full responsibility for the design of the project;
the project is on a lump sum basis;
the possibility for the Contractor to request and obtain adjustment of the price are limited.

Contractor's obligations.

The Contractor's obligations are specified under Clause 4. Certainly of the most relevant is that under Sub-Clause 4.1 [Contractor's General Obligations] which reads as follows:

'When completed, the Works shall be fit for purposes for which the Works are intended as defined in the Contract'.

The fit-for-purposes obligation is rather burdensome for the Contractor and some disputes may arise in connection with its legal meaning and construction (depending on the governing law of the Contract) even if the obligation is specified to refer to what is 'defined in the Contract'. That means that particular attention should be given first of all to what it is stated in the Contract and in the technical specifications.

Employers' Requirements.

Sub-Clause 4.1 [Contractor's General Obligations] goes on specifying also that the Contractor shall be responsible for any work 'necessary to satisfy the Employer's Requirements' or that, in any event, 'is implied by the Contract' and this is in line with the aim of the Silver Book and the need of the Employer to leave any and all the responsibilities with the Contractor to the maximum possible extent. Said Clause must be read in conjunction with Sub-Clause 5.1 [General Design Obligations] which provides that 'the Contractor shall be deemed to have scrutinized [...] the Employer's Requirements'

With specific limited exception, the Employer shall not be responsible for any error, inaccuracy or omission contained in the Employer's Requirements as included in the Contract. Again particular attention should be given to the Employer's Requirements to avoid any liability actually unknown to the Contractor.

The Contractor shall in addition satisfy himself as to the 'correctness and sufficiency of the Contract Price' (Sub-Clause 4.11 [Sufficiency of the Contract Price]) and this is in line with the main purposes of the Silver Book in terms of certainty of costs of the works and responsibility resting on the Contractor.

Administration of the Contract.

The administration of the Contract remains in the hands of the Employer unless the latter appoints, under Clause 3.1 [The Employer's Representative] the Employer's Representative (which appointment is therefore optional). However, the Employer's Representative does not play an independent role. The Representative is expressly the longa manus of the Employer.

The Employer shall act via determinations which shall be 'fair' as provided by Clause 3.5 [Determinations], determinations which are subject to a notice of dissatisfaction in the case the Contractor believes it appropriate.

Variations and adjustments

Sub-Clauses 13.1 [Right to Vary] to 13.3 [Variation Procedure] provides for the variations and adjustment of the Works. The rationale of the clause stays in that in almost all the construction contracts the need to vary the works may arise during the construction phase and after the contract has already been awarded.

There are three main types of variations:

those purely instructed by the Employer;
those proposed by the Contractor upon request of the Employer;
those proposed by the Contractor.

Sub-Clause 13.1 [Right to Vary] clearly states that 'variations may be initiated by the Employer [...] either by an instruction or by a request for the Contractor to submit a proposal'. Unless the Contractor gives a notice to the contrary in case of specific and limited cases, the latter will be bound by any variation instructed by the Employer.

Variations initiated by the Contractor are instead governed by Sub-Clause 13.2 [Value Engineering] which provides that the Contractor is entitled to propose a variation which may (i) accelerate the completion, (ii) reduce the costs for the Employer, (iii) improve the efficiency of the Works or (iv) otherwise be of benefit to the Employer.

The proposal submitted by the Contractor shall clearly specify any impact that the variation will have on costs and time for completion. If no agreement is reached between the parties in such respect, the Employer shall proceed according to Sub-Clause 3.5 [Determinations] and will be entitled to determine any adjustment to

Fidic Silver Book