FIDIC Green Book
FIDIC Green Book
Short Form of Contract
First Edition 1999
A FLEXIBLE SOLUTION FOR ENGINEERING AND BUILDING WORK
If you’re in the market for a construction contract, you may have come across the Green Book. This document is the Short Form of Contract, recommended for building and engineering work of relatively small capital value. In this article, we’ll take a closer look at what’s inside the Green Book and when it might be the right choice for your project.
AGREEMENT AND GENERAL CONDITIONS
The Green Book is a flexible document that contains all the essential administrative and commercial arrangements needed for a building or engineering project. It’s a straightforward agreement between the employer and contractor, with the contractor constructing the works according to the design provided by the employer. However, the Green Book can also be suitable for contracts that include or wholly comprise the contractor’s design.
One potential concern for contractors is that there is no reference to an impartial engineer in the contract. Instead, the contract nominates a member of the employer’s personnel as the authorized person to fulfill the traditional duties of the engineer.
RULES FOR ADJUDICATION
The Green Book also includes rules for adjudication, which can be a useful feature for resolving disputes that may arise during the course of the project. Adjudication is a relatively quick and cost-effective method of dispute resolution that can help keep the project on track and avoid costly delays.
NOTES FOR GUIDANCE
To help prepare tender and contract documents, the Green Book also includes notes for guidance. These notes are not part of the contract but can be a valuable resource for understanding the document and ensuring that all necessary steps are taken during the project.
WHEN TO USE THE GREEN BOOK
The Green Book is recommended for engineering and building work of relatively small capital value, but it may be suitable for contracts of considerably greater value, depending on the type of work and circumstances. For example, the Green Book is likely to be most suited to fairly simple or repetitive work or work of short duration without the need for specialist sub-contracts.
The guidance notes for the Green Book recommend that it generally should not be used on projects with a contract value greater than US$500,000. However, the document is flexible, and it’s possible to easily amend and supplement the provisions of the Green Book with differing options incorporated via the appendix.
Understanding the Green Book Contract for Engineering and Building Work
The Green Book Contract, also known as the Short Form of Contract, is a recommended document for engineering and building work of relatively small capital value. It contains essential administrative and commercial arrangements that are flexible enough to be amended and supplemented according to the needs of the project. In this article, we will discuss the contents of the Green Book Contract and its suitability for different types of work.
Contents of the Green Book Contract
The Green Book Contract comprises four main sections: Agreement, General Conditions, Rules for Adjudication, and Notes for Guidance.
Agreement: This section outlines the basic terms and conditions of the contract, including the names of the parties involved, the scope of work, the contract value, and the date of commencement and completion.
General Conditions: These are standard conditions that are intended to be applicable to the majority of projects. They cover issues such as payment, variations, delays, and termination.
Rules for Adjudication: These rules provide a framework for resolving disputes between the parties involved in the contract.
Notes for Guidance: These notes provide guidance on the preparation of tender and contract documents. They do not form part of the contract but can be useful in ensuring that the contract is prepared correctly.
Suitability of the Green Book Contract
According to the Guidance Notes for the Green Book, the contract is recommended for engineering and building work of relatively small capital value. The guidance suggests that it should not be used on projects with a contact value greater than US$500,000. However, depending on the type of work and the circumstances, the Green Book may be suitable for contracts of considerably greater value.
The Green Book is likely to be most suited for fairly simple or repetitive work or work of short duration without the need for specialist sub-contracts. Under the usual arrangements for this type of contract, the Contractor constructs the Works in accordance with the design provided by the Employer. However, it may also be suitable for contracts which include or wholly comprise the contractor’s design.
One area of potential concern for Contractors is that there is no reference to an impartial Engineer in the contract. The contract nominates a member of the Employer’s personnel as the authorized person to fulfill the traditional duties of the Engineer.
EOT under FIDIC Green Book
EOT stands for Extension of Time, while FIDIC Green Book refers to the International Federation of Consulting Engineers (FIDIC) standard form of contract for Design-Build and Turnkey projects.
Under FIDIC Green Book, there are several provisions that address the issue of EOT. The contractor may be entitled to an extension of time for completing the works if certain events occur that are beyond their control. These events are referred to as “Relevant Events” and may include, but are not limited to, the following:
- Unforeseeable shortages in labor or materials
- Adverse weather conditions
- Delay or default by the owner or their agents
- Changes in the scope of the works
The EOT calculation is based on the Contractor’s program and progress. The Contractor is required to submit a detailed construction program, including a critical path analysis, to the Engineer for approval. The approved program is then used as a basis for monitoring the Contractor’s progress and determining any delay caused by Relevant Events. The delay is then added to the contract period and an EOT is granted accordingly.
The formula for calculating EOT under FIDIC Green Book is as follows:
EOT = (CD – ED) – AD – I
Where:
- EOT is the Extension of Time
- CD is the Contract Duration (i.e. the agreed time for completing the works)
- ED is the Actual End Date (i.e. the date on which the Contractor completes the works)
- AD is the Actual Delay (i.e. the delay caused by Relevant Events that are the Contractor’s responsibility)
- I is the Concurrent Delay (i.e. the delay caused by Relevant Events that are the Owner’s responsibility)
It should be noted that the calculation of EOT under FIDIC Green Book can be quite complex, particularly when there are multiple Relevant Events and/or Concurrent Delays. Therefore, it is important to seek expert advice and to document all delays and their causes in a timely and accurate manner.
As an example, let us assume that the Contract Duration for a construction project is 24 months, and the Contractor completes the works on the 26th month due to a delay caused by adverse weather conditions (a Relevant Event) that lasted for 2 months. In addition, there was a Concurrent Delay of 1 month caused by changes in the scope of the works initiated by the Owner. The EOT calculation would be as follows:
EOT = (24 – 26) – 2 – 1 EOT = -5
Based on this calculation, the Contractor is not entitled to an Extension of Time as the delay caused by Relevant Events and Concurrent Delays is less than the Contract Duration.
Conclusion
In conclusion, the Green Book Contract is a flexible document that is suitable for engineering and building work of relatively small capital value. It contains essential administrative and commercial arrangements that can be easily amended and supplemented according to the needs of the project. Contractors should be aware of the potential limitations of the contract and ensure that they understand their obligations and responsibilities before entering into an agreement.
FAQs
- What is the Green Book Contract?
The Green Book Contract is a recommended document for engineering and building work of relatively small capital value. It contains essential administrative and commercial arrangements that are flexible enough to be amended and supplemented according to the needs of the project.
- What are the main sections of the Green Book Contract?
The Green Book Contract comprises four main sections: Agreement, General Conditions, Rules for Adjudication, and Notes for Guidance.
- What does the Agreement section of the GB Contract include?
The Agreement section outlines the basic terms and conditions of the contract, including the names of the parties involved, the scope of work, the contract value, and the date of commencement and completion.
- What is the suitability of the Green Book Contract?
The Green Book Contract is most suitable for relatively small projects, such as simple or repetitive work or work of short duration without the need for specialist sub-contracts. The formula for determining the suitability of the Green Book Contract is:
Green Book Contract = (Engineering and building work of small capital value) + (Simple or repetitive work) + (Short duration projects) + (No need for specialist sub-contracts)
An example of the suitability of the GB Contract is a small construction project such as a residential property renovation, which requires basic construction work of relatively low value and does not require specialist sub-contracts.
- What should Contractors be aware of before entering into a Green Book Contract?
Before entering into a Contract, Contractors should be aware of the following:
- The scope and limitations of the project
- The payment terms and conditions
- The dispute resolution process
- The indemnity and insurance requirements
- The termination clauses
Formula: Green Book Contract = (Engineering and building work of small capital value) + (Simple or repetitive work) + (Short duration projects) + (No need for specialist sub-contracts)
Example: A small-scale road construction project is valued at $500,000, is expected to last for six months, and requires basic construction work without any specialist sub-contracts. This project would be suitable for a Green Book Contract.
Table:
Criteria | Value |
Capital value | Small |
Type of work | Simple or repetitive |
Duration | Short |
Specialist sub-contracts | Not required |