Fidic yellow vs fidic silver

1. FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE AND COMMODITIES TRANSPORT TECHNOLOGY
Fidic Yellow vs Silver
Weero Koster
Partner
Norton Rose LLP
February 2012

2. General application
• Yellow Book: design/build contract
electrical/mechanical works, including plant supply
and construction works; allocation of risk on basis
of insurability, project management principles and
ability to foresee and mitigate
• Silver Book: fixed-price, date-certain, lump-sum
turn-key contract:
• Little risk of price increase (but higher price) or
delay for Employer
• Shift of risks to Contractor: design and
execution

3. General risk profile: Shift of risks
• Employer’s Engineer is Employer’s Representative
• Employer’s ‘determinations’
• Setting Out
• (No) Unforeseeable difficulties & verification/
interpretation of Employer data (incl. sub-surface,
hydrological and Employer Requirements)
• General design obligations, design error

4. Shift of risks, cont’d
• No extension of Time for Completion for:
• exceptionally adverse climatic conditions
(except FM)
• unforeseeable shortages in personnel or goods
by epidemic or government actions
• Errors in Employer’s Requirements
• Setting Out
• Unforeseeable physical conditions

5. Shift of risks, cont’d
• Employer’s Risk excludes:
• Use of works by Employer,
• Design of works by Employer’s personnel,
• Unforeseeable operation of forces of nature

6. General risk profile: key
employer issues
• Contractor fully responsible for design and design
coordination (including Employer design)
• Full ground condition risk to Contractor
• Employer to retain influence over project
• Right to Variations
• Limited scope for Contractor claims for
time/money; Contractor will:
• Price these risks, so increase initial Contract
Sum
• Do extensive due diligence to mitigate, leading
to delay in execution

7. Payment & security: key
employer issues
• Fixed price lump sum payments against schedule
of payments & Performance Certificate
• Long payment period
• No claim for additional time or money for e.g.
Variations/innovations, ‘in country” Force Majeure,
Unforeseen ground conditions, setting out or
discovery of fossils
• Robust security package: advance payment bond,
performance bond, retention of money
• Warranty bond after Taking Over (> 2yrs)

8. Programme/delay: key
employer issues
• Liquidated Damages for delay (10 – 20 %, > ?)
• Limited rights for extension of Time for Completion
• Suspension by Employer entitles Contractor
extension of time/ costs

9. Testing and defects,
insurance: key employer
issues
• Suitable testing regime
• Employer technical advisors to set
performance/reliability standards and regime for
testing/ performance guarantee levels
• Liquidated Damages for performance (10 – 20 %,
> ?)
• Defects liability period (1 – 2 yrs): default is 1 yr
• Liability cap, sub-caps and ‘carve-outs’
• Project specific insurance provisions; all insurance
monies go in separate insurance proceeds
account for benefit Employer

10. Permits, change in law, FM:
key employer issues
• Employer planning, environmental/ Contractor
construction and transport: permit schedule
• Change in law after contract signing/ in force,
EH&S developments
• Exhaustive FM list ?
• Location of FM, “in country” FM: costs in addition
to EOT ?

11. FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE AND COMMODITIES TRANSPORT TECHNOLOGY