FIDIC contracts are widely used in the construction industry in South Africa and around the world. These contracts provide a framework for managing and executing construction projects, from planning to completion. In this article, we will discuss everything you need to know about FIDIC contracts in South Africa, including what they are, who uses them, and how they can benefit your business.

What is FIDIC?

FIDIC is the acronym given to the Fédération Internationale Des Ingénieurs-Conseils i.e. the International Federation of Consulting Engineers, which is an International Standards Organization for consulting engineering and construction and which is best known for the FIDIC contracts that it publishes.

What is a FIDIC Contract?

FIDIC contracts are legal agreements used in the construction industry to regulate the relationship between the client and the contractor. FIDIC contracts are commonly used in international construction projects, and they are recognized and accepted worldwide. These contracts provide a standard set of terms and conditions that are fair and balanced for both parties.

FIDIC has published various standard form contracts for the construction and engineering industry and which contracts are aimed at the different sectors and are colour coded.

• The old red book - These contracts were aimed at the civil engineering sector (i.e. versus the mechanical/electrical engineering sectors)

• The old yellow book - These contracts were aimed at the mechanical/electrical engineering sector.

• The orange book - was the first design and build contract released by FIDIC.

• The (new) Red Book - is used for contracts where the majority of design rests with the Employer.

• The (new) Yellow Book - is used for contracts where the contractor has the majority of the design responsibility.

• The Silver Book - is used for turnkey projects where the contractor is responsible for the majority of the design.

• The Pink Book - is an adaptation of the Red Book created to fit the purposes of Multilateral Development Banks.

• The Gold Book - is a design-build and operate contract.

Who uses FIDIC contracts in South Africa?

FIDIC contracts are commonly used in South Africa by both private and public sector clients. They are often used in infrastructure projects such as road and bridge construction, water and sanitation, and building construction. These contracts are also used in the engineering industry for projects such as design, supervision, and consultancy services.

What are the Benefits of FIDIC Contracts?

FIDIC contracts offer several benefits for both the client and the contractor. Firstly, they provide a clear framework for managing the project, which reduces the risk of disputes and misunderstandings between the parties. Secondly, they ensure that the project is completed on time and within budget, as the contract outlines the timeline and the cost of the project. Finally, FIDIC contracts provide a legal basis for resolving disputes, as they outline the dispute resolution procedures to be followed.

How do FIDIC Contracts Work?

FIDIC contracts consist of several parts, including the general conditions, the special conditions, and the particular conditions. The general conditions outline the standard terms and conditions of the contract, while the special conditions are specific to the project in question. The particular conditions provide further details about the project, including the project scope, the project timeline, and the cost of the project.

FIDIC contracts also include several key features, such as the variation clause, which allows for changes to the project scope or timeline, and the claims procedure, which outlines the process for making and resolving claims.

Which FIDIC Contract should I Use?

The FIDIC contract which you ultimately choose to use is determined with reference to what the scope of either parties obligations are in terms of the contract and which FIDIC contract bests speaks to these obligations.

Hierarchy of Documents

FIDIC Contracts make provision for a default hierarchy of documents that collectively form the contract between the parties. This order of priority is important as it determines which document takes precedence in the event that any terms between the various documents conflict with one another. The parties are permitted to rearrange the priority of documents or stipulate that no priority or order of hierarchy will apply to the contract. The default order of hierarchy is as follows:

1. The Contract Agreement

2. The Letter of Acceptance (this is the formal acceptance of the contractor's tender and marks the formation of the contract)

3. The Letter of Tender

4. Part II – the special conditions of contract

5. Part I – general conditions of contract

6. The Specification and Drawings (Red Book), The Employer’s Requirements (Yellow Book), the Schedules (Red and Yellow Books)

7. Further documents (if any), listed in the Contract Agreement or in the Letter of Acceptance.

Legal Risks Associated with a FIDIC Contract

It is important that when reviewing, negotiating and/or entering into a FIDIC Contract, that you understand what each parties respective obligations are and what the legal implications of those obligations are. It is advisable to have a contract of this nature properly and comprehensively reviewed by attorneys with the necessary experience.

In conclusion, FIDIC contracts are an essential part of the construction industry in South Africa. By understanding the basics of these contracts, you can ensure that your construction project runs smoothly and is completed on time and within budget. Whether you're a client or a contractor, FIDIC contracts offer several benefits that can help you achieve your project goals. If you have any questions about FIDIC contracts or need help drafting a contract, consult with a legal professional who specializes in construction contracts.

Barter McKellar construction law attorney’s professional have extensive hands on experience with water processing, civil, energy, mechanical piping and erection, engineering, petro-chemical and mining projects throughout Africa. Our construction lawyers have extensive experience in dealing with FIDIC contracts. If you need legal advice in this regard, please contact our offices for more information.