Use of FIDIC Red Book on International Road Projects

Transcription

1 Use of FIDIC Red Book on International Road Projects Ellis Baker Partner & Global Head, Construction & Engineering Phone: +44 (0) Sept 2015

2 Key features of the Red Book

3 Key features of the Red Book Used for building or engineering works designed by the Employer Employer, through the Engineer, is responsible for design Contractor is responsible for construction The works may include some elements of Contractor-designed civil, mechanical, electrical and/or construction works Contract includes drawings, specifications, bill of quantities 3

4 Key features of the Red Book Architect Consultancy Agreements Engineer Employer Construction Contract (Red Book) Contractor Sub-Contracts Sub- Contractor Sub- Contractor Sub- Contractor 4

5 Key features of the Red Book Payment based on measurements: Bill of quantities, certification by the Engineer, and final remeasurement If want fixed price contract can use alternate wording Changes it from a measurement contract to a lump sum contract 5

6 Key features of the Red Book Engineer, typically a consulting engineer, is appointed by the Employer to carry out the design (usually) and supervise the construction of the project Engineer acts for the Employer Certifies payment Makes determinations (e.g. EOTs) Keeps Employer informed 6

7 Key features of the Red Book Commonly used in conjunction with: White Book (Client/Consultant Model Services Agreement) Conditions of Subcontract for Construction for Building and Engineering Works 7

8 Usage of the Red Book

9 Usage of the Red Book Procurement model widely used around the world, including CEE Used on many road projects funded by international development banks, most recently: Bulgaria Multiple contracts as part of Plodiv Roads Rehab Project (2016) Bosnia and Herzegovina Multiple contracts as part of the Pan European Corridor Motorway (Pocitelj to Zvironvici) (2015) Macedonia Motorway between Kumanovo Miladinovci (2015) Georgia Georgia East West Highway (2015) 9

10 Usage of the Red Book Examples continued: Romania Multiple contracts as part of Galati Urban Infrastructure Rehab Project (2015) Sri Lanka Extension of Southern Expressway (2014) Vietnam Noi Bai Lao Cai Expressway (8 sections, 5 contractors, >$1 billion) 10

11 Common Issues on Road Projects

12 Common Issues on Road Projects Design changes Under the Red Book, Employer provides the design Gives Employer control over the design BUT Employer responsible for risk of any errors Contractor entitled to Variation if any design changes required E.g. due to changes in road alignment 12

13 Common Issues on Road Projects Geotechnical conditions Under the Red Book, Employer takes risk of Unforeseen physical conditions High risk for road projects e.g. rock encountered (difficult to excavate) e.g. Poor soil suitability (additional piles required) 13

14 Common Issues on Road Projects Site access Under the Red Book, Employer required to provide access to Site Contractor entitled to relief if Site access delayed On road projects, access often delayed due to: Delays in land acquisitions Requirement to phase access to keep the road operational during construction Disruptions caused by third parties (e.g. disgruntled landowners) 14

15 Common Issues on Road Projects Social and environmental issues Red Book requires Contractor to take steps to protect environment and limit nuisance to people Is a particular risk for road projects High potential to damage environment Construction generates a lot of noise and dust Contracts often amended to include additional environment and community engagement requirements 15

16 Amendments to the Red Book

17 Amendments to the Red Book In practice, the Red Book is frequently amended Countries often have standard form contracts based on an amended version of the Red Book RSD is preparing draft contract for highway projects in the Czech Republic 17

18 RSD amendments to the Red Book Contractor to provide a Warranty Bond Will be provided in lieu of (not in addition to) Retention Money Is a common amendment to the Red Book International contractors will be please to see this - improves their cash flow 18

19 RSD amendments to the Red Book Employer may claim contractual penalties in parallel with general damages Contractual penalties no longer Employer s sole remedy for delay (other than termination) Will be of concern to international contractors They will expect that if an amount is stipulated in the Contract the Employer cannot claim that amount AND general damages May cause them to qualify their tenders 19

20 RSD amendments to the Red Book Dispute resolution limited to Czech civil courts Common practice to adopt a tiered dispute resolution process E.g. some combination of amicable settlement/mediation/dab/arbitration/court International contractors will prefer arbitration to Czech courts Many different arbitration options ICC Arbitration London Court International Arbitration 20

21 Conclusions

22 Conclusions Many good reasons for using the Red Book Balanced risk allocation but still protects the Employer s interests Well accepted will be familiar to international contractors Well supported is recommended/required by many development banks Is effective clear and complete conditions; time limits; dispute resolution 22

23 Conclusions Particular Conditions allow flexibility to amend the Red Book for specific projects Used by RSD on draft contract for highways Some of RSD amendments are commonly made and will be familiar to international contractors (e.g. warranty bond) Other RSD amendments may be resisted by international contractors 23

24 Worldwide. For Our Clients. White & Case LLP 5 Old Broad Street London, EC2N 1DW United Kingdom Tel: Fax: In this presentation, White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.