New FIDIC Green Book Released: a rival to the First Edition Red and Yellow Books?

International

FIDIC has recently published the second edition of its Short Form of Contract, the “Green Book”, as an update to the 1999 edition. This release is important not only in terms of the revised or new provisions and format of the Green Book itself, but also the intended status of the form as an alternative to the 2017 editions of the Red[1] and Yellow[2] Books. There will be a number of market players who will be looking at the 2021 edition of the Green Book as a viable option for their projects when they would not have previously considered using the 1999 Green Book form.

While the 2017 “Rainbow Suite” has been widely welcomed by the international construction market, FIDIC and its users have acknowledged that the length and complexity of the forms necessitate far greater, and more skilled, contract and claims management than their 1999 predecessors, rendering them unsuitable for lower-value and relatively straightforward projects. It is perhaps notable that a number of development banks who have recently adopted the 2017 suite in their standard bidding documents have included the 1999 editions of the Red and Yellow Books in their licence.[3]

The 1999 Green Book was well-suited to development banks’ “Small Works” projects with a capital value of less than $10m, relatively straightforward and/or repetitive work, and short duration. However, as FIDIC explains in the Foreword to the 2021 Green Book, in recent years the form has become increasingly used for projects with a Time for Completion of longer than 2 years, and with a greater capital value. With seemingly a desire to move away from the 1999 suite altogether, FIDIC explains that this 2021 edition of the Green Book can accommodate both Small Works projects as well as relatively larger projects that would nonetheless otherwise still have not been suitable for the 2017 editions of the Red and Yellow Books.

The 2021 Green Book is certainly longer than its predecessor (now 30 pages as opposed to the 1999 edition’s 10 pages), but still considerably shorter than the 2017 forms (the Yellow Book runs to 109 pages[4]). The style (in terms of layout and language) of the 2021 Green Book reflects the 2017 forms, but without the same degree of complexity. This is achieved not only through condensed drafting and less detailed provisions (the Guidance Notes call for detailed provisions and secondary obligations to be included elsewhere, such as in the contract specifications), but also through simpler contractual concepts. For example, and as also featured in the 1999 Green Book, it provides for liquidated damages (in the form of percentages) in the event the Employer omits works to then be executed by another contractor, or in the event of termination, rather than the parties having to spend time and costs on consultants and legal fees to demonstrate and justify a loss and damage claim.

In terms of key features that are new to the form:

  • The Forward contains a suitably long and helpful explanation of the salient features of the form and how it works, as well as a number of “Typical Sequence of Events” flow diagrams for processes such as variations, claims 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/valuing the works, such as lump sum price (single payment, stage payment, with bill of quantities), remeasurement, cost plus, and combinations of options.

  • There are more detailed provisions around Employer’s Risks with compensable delay giving rise to EOT, Costs (including Prolongation Costs) or Costs plus Profit, and excusable delay to EOT only. The various Employer Risk Events and corresponding remedies are all set out in one table.

  • There are two variation procedures: one instructed (where the Contractor is required to execute the variation and settle the time and cost impact separately) and one staged (the Contractor submits a proposal that can be accepted or rejected).

  • The 2021 edition introduces an Engineer to manage the project and determine claims, which brings the Green Book into line with the other main FIDIC forms. Claims must be notified within 28 days, and a fully detailed claim with supporting particulars 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) and remaining in place throughout to provide informal assistance to the parties when issues or disagreements arise, and then determining any dispute referred to him in accordance with the adjudication rules.

Another new feature is the inclusion of 40 proforma notices and requests and other documents required to be submitted under the contract. The Green Book makes it clear that these do not form part of the contract and that FIDIC takes no responsibility for their adequacy; they will need to be adapted for each specific contract. Users will certainly find them helpful, and it will be interesting to see if FIDIC provides equivalent proformas for its other forms.

Overall, the 2021 Green Book is a welcome addition to the FIDIC suite, modernising the FIDIC terms without the complexity of the 2017 books. As well as its stated use for simple and low value projects, FIDIC appears to target this book at parties continuing to use the 1999 forms in order to avoid the additional contract management burden found in the 2017 books. Whether it will fully bridge the gap and render the 1999 Red and Yellow Books obsolete remains to be seen.


[1] Conditions of Contract for the Construction of Building and Engineering Works Designed by the Employer
[2] Conditions of Contract for Plant and Design Build
[3] For example: African Development Bank signs five-year agreement to use International Federation of Consulting Engineer (FIDIC) standard contracts | African Development Bank - Building today, a better Africa tomorrow (afdb.org)
[4] Page numbers refer to length of the General Conditions of each form