Benefits of FIDIC General Conditions of Contracts
Fédération Internationale des Ingénieurs – Conseils (FIDIC) started in 1913 in Belgium, and currently consists of more than 100 member countries. The name in itself means International Federation of Consulting Engineers. FIDIC has a French title that signifies the fact that it was founded by three wholly or partly francophone countries, Belgium, France, Switzerland, in the year 1913. It is currently headquartered at the World Trade Center in Geneva Switzerland.
With the advent of globalization and economies being more and more open, the need for regulatory bodies and proper contractual systems had increased exponentially. Across borders, interpretation of clauses, headings and wording changes not just due to language barriers but also because of the general use.
With respect to engineers, contractors and builders FIDIC plays the role of a governing body. Consulting engineers such as those from the Consulting Engineers Association of India (CEAI) – the apex body for consulting engineers in India, all comply with the norms set by the FIDIC. FIDIC contracts or FIDIC Model Contracts as they are popularly known, act as standardized versions of contracts for different international and turnkey projects. This increases clarity and vice-versa reduces the confusion.
FIDIC introduced the Model General Conditions of Contracts (GCC) in order to establish standardization in its contracts. Moreover, GCC describes the terms like rights and obligations of the parties, Payment terms, dispute resolution etc. With the construction industry complying with these conditions, there are several advantages of the contracts.
1. International Standards
FIDIC being the international governing body for consulting engineers, all member associations and the contractors comply with its regulations. With standardized processes and terms of contracts in place, it becomes easier for all parties involved to carry out smooth negotiations.
2. Focus on Projects
Executing a contract can be a very tedious task for the involved parties. It is a time-consuming process and before even the project begins, lawyers need to be appointed who can look after the legal matters. However, in case of FIDIC contracts, the involved parties can directly focus on the respective project instead and mitigate the legal risks involved efficiently.
3. Varying Contracts
Depending on the nature of the project, FIDIC GCC differ with respect to the type of construction, purpose of the project, identity of the parties etc. Accordingly, these contracts are divided into different colour books. For instance, the silver book consists of conditions of contract for EPC/turnkey projects, the gold book consists of conditions of contract for design, build and operation projects so on and so fort
4. Faster drafting of New Tender Documents
On adopting FIDIC GCC and repeated use of these GCC helps to reduce the tendering process time. Apart from this, it’s convenient to prepare a new tender. It also encompasses a vast set of clauses and these are already tested in worldwide projects. Specific clauses, if required, to execute any project, can be conveniently introduced in Special condition of Contracts (SCC).
5. Practical Applicability
The intent with which these clauses of FIDIC GCC have been prepared is focused specifically on such major projects which include all the different types of large construction projects. Clauses such as, Indemnification, General Clauses, Rights etc. are covered in such contracts.
6. Lesser Language Constraints
FIDIC model contracts GCC are available in 20 languages which includes Chinese, Japanese, Indonesian, French and Spanish. This gives a wide range of acceptance for these contracts.
7. Fair for All
The FIDIC being the governing federation for consulting engineers, GCC are never biased towards any particular party. Thus, all the involved parties can rely on the terms and clauses since they balance their obligations and duties. In short, FIDIC GCC are drafted in such a way that it minimizes the dispute between the members.
8. Mitigation of Disputes
Since the contracts protect the interests of all the parties involved, the risk of disputes is significantly lowered. Moreover, the FIDIC provides guides which explain the terms behind each clause and the provisions it entails. When the parties have a mutual understanding of the clauses, disagreement is a rarity.
FIDIC carries out a wide range of functions. The purpose of FIDIC is to provide assistance in meeting the strategic goals of the consulting engineering industry’s goals. It also acts as a source of information. Its most important function is that it publishes standard forms of contracts for construction based works from small scale to large. This has been beneficial to numerous contractors in this sector and can be adopted to an even greater extent.
Found this article helpful? You might want to read some more informative articles on the CEAI official website.