Introduction to FIDIC Conditions of Contracts · During the past half century, the International...
46
Introduction to FIDIC Conditions of contract Dr. Mirosław J. Skibniewski, A.J. Clark Chair Professor
Transcript of Introduction to FIDIC Conditions of Contracts · During the past half century, the International...
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.
