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ISSN (Print) : 0974-6846
ISSN (Online) : 0974-5645
Indian Journal of Science and Technology, Vol 12(36), DOI: 10.17485/ijst/2019/v12i36/141588, September 2019
A Review about FIDIC Contracts in Saudi
Arabia
Mona Elayed Omran*
Northern Border University, Faculty of Business Administration, Law Department, Arar, Saudi Arabia;
mona_omran83@yahoo.com
Abstract
Objectives: This research aims to clarify the role of FIDIC contracts used by the countries, especially in Saudi Arabia, in
representing the global consulting engineering industry, to be global, effective and more quality and clarifying dispute
resolution methods resulting from the implementation of FIDIC contracts. Methods: FIDIC contracts are contracts
of great importance and value; most of these contracts are large contracts or technology transfer agreements and
they are often parties to countries or public bodies. In the Saudi Arabian kingdom, an FIDIC contract is widely used
for construction projects. However, the project performance still faces several problems, such as delays and additional
costs, which are the consequences of disputes. Findings: FIDIC contracts are the most important and most commonly
used model contracts in the construction industry around the world. They are also applicable to local and international
standards. The FIDIC contract also shows all the terms related to the structural work and defines them in a simple
way to make the work system clear to all without ambiguity or ambiguity. FIDIC contracts give multiple rights to the
contractor and the engineer who supervises the execution of the works has wide powers, supervisory powers and a quasi-
control role when issuing a decision or a judgment during the implementation of the project or when a dispute occurs.
Keywords: FIDIC Contract, FIDIC Contractor, FIDIC Disputes, FIDIC Employer, FIDIC Engineer
1. Introduction engineering projects such as roads, railways, bridges, real
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estate and airports .
A contract is an agreement between two or more parties This construction works “under the umbrella of
and aims to set out the responsibilities, liabilities and FIDIC contract “, characterized by the long time it takes
rights between parties as well as to allocate the risk of the for implementation, which could be more than a decade;
1
parties . “this may be done in separate, a series or a group of
FIDIC contracts are contracts of great importance contracts” between more than one local or foreign party
and value; most of these contracts are large contracts or a technical specialization. Moreover, this construction
or technology transfer agreements and they are often comes at a large cost.
parties to countries or public bodies. These contracts In the Saudi Arabian kingdom, an FIDIC contract
may be for construction or building, whether in simple is widely used for construction projects. However, the
or complicated construction such as hotels or other civil
*Author for correspondence
A Review about FIDIC Contracts in Saudi Arabia
project performance still faces several problems, such as 3. Literature Survey
delays, and additional costs, which are the consequences
of disputes. 3.1 History of Construction Contracts and
FIDIC clauses have a significant effect on project FIDIC Contracts
performance characteristics, which describe the
project performance “like quality, schedule, cost and th
Civil engineering contracts evolved in the 19 century as
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safety” . a result of growth in transportation, which have essential
4
According to , these goals were modified and aspects such as governing time and price for completion.
developed under the amendment of the IAF Statute in At this time, building contractors appear to be under
Beijing in 2005 and the General Assembly held in China pressure to complete the project in the time with the
on September 7, 2005. The amended Article 2 stipulates 5
lowest damage and price and highest specifications .
that FIDIC objectives are as follows: Gradually, the contents of construction contracts have
become more sophisticated and need a new provision,
• Increase the effectiveness of the engineering which is causing some professional institutions to start to
consulting industry to become universal. upgrade the form of their construction contracts.
• Represent the global engineering consulting
industry. 3.2 Construction Contract
• Improve the image of the consultant’s engineers. 6
• Increase quality. According to , construction contracts set forth the
• Increase commitment to sustainable development. intentions and procedures to be employed in any building
• Increase compliance with the Code of Ethics and effort; as such a contract is an “easily understandable,
Business Integrity. mutually agreed-upon document”.
• The Authority shall have jurisdiction over matters A contract is an agreement, usually between two
related to the relevant work. parties, that is enforceable by law. To be valid, all contracts
must meet certain criteria include an offer, acceptance, a
2. Research Objectives meeting of minds, consideration, lawful subject matter
and competent parties.
• To highlight the imbalance between the parties 3.2.1 Construction Contract Types
through the exchange of obligations between
them. Contracts between the owner and the contractor are
• To study all the problems of the engineers that frequently divided into several categories: Lump sum
concern their protection and development without contracts; unit price contracts; cost plus contracts;
regard to political, religious or customary trends. design build contracts; management-oriented contracts;
• To compile consultants from all languages and two-stage selective tendering; negotiated contracting;
countries to establish associations of engineers continuity contracting; serial contracts; and turnkey
in countries where such associations do not contract.
exist. 3.3 FIDIC Contract History and
• To build the foundations and rules that Development
allows consulting engineers to maintain the
best performance in the practice of their The FIDIC is Federation Internationale des Ingenieurs
profession. Conseils (FIDIC), are show in Figure 1 or the
international federation of national associations of
2 Vol 12 (36) | September 2019 | www.indjst.org Indian Journal of Science and Technology
Mona Elayed Omran
Figure 1. Schematic diagram for choosing perfect FIDIC types.
independent consulting engineers, which was founded which is required for contracts to finance projects and is
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in by the national associations of three European shared by several development banks and international
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countries, now with membership from over 60 financial institutions .
countries. 3.3.1 Traditional FIDIC Forms of Contract.
The model contracts issued by the International
Federation of Consulting Engineers (FIDIC) “established General and special conditions of contract for works
in 1957 and updated periodically since 1999” are among of civil engineering construction are considered fair and
the most famous and widely used contracts in the balanced to both parties, where the contract is able to
construction sector. This type of contract is internationally 9
bear and control that risk .
recognized and adopted by the International Federation of 8
According to FIDIC organization, the FIDIC are five
Consulting Engineers plus the World Bank authorization, books as follows:
Vol 12 (36) | September 2019 | www.indjst.org Indian Journal of Science and Technology 3
A Review about FIDIC Contracts in Saudi Arabia
• Red Book: This is a name for the model contract Group Thirteen, “Contractor’s Equipment, Temporary
issued by the FIDIC and for construction work Works and Materials”; Group Fourteen, “Measurement”;
designed by the employer, that is, the typical Group Fifteen, “Provisional Sums”; Group Sixteen,
contract between the employer and the contractor “Nominated Subcontractors”; Group Seventeen,
with regard to civil engineering or known as “Certificates and Payment”; Group Eighteen, “Remedies”;
Conditions of Contract for Construction. Group Nineteen, “Special Risks”; Group Twenty, “Release
from Performance”; Group Twenty-one, “Settlement of
• Yellow Book: This is intended to hold mechanical Disputes”; Group Twenty-two, “Notices”; Group Twenty-
and electrical works contracts, including on-site three, “Default of Employer”; Group Twenty-four,
installation or known as Conditions of Contract “Changes in Cost and Legislation”; and Group Twenty-
for Plant and Design Build. five, “Currency and Rates of Exchange”.
• White Book: This is known as the FIDIC model 3.3.3 New Developments in FIDIC 99
for the contract between the employer and Construction Contract
the consultant engineer, which includes the The general conditions FIDIC 99 consist of 20 clauses
obligations of both the client or the employer and (163 sub-clauses), which is different in arrangement
the consultant. from the general conditions FIDIC 87, which consist of
• Silver Book: This is known as the FIDIC model 72 clauses in 25 articles. FIDIC 99 provide new additions
for the design, construction and turnkey contract such as employer claims, the Disputes Adjudication Board
and it is noted that this contract type must include (DAB) and force majeure. Which will be described as
the following clauses: Project design contract; following?
supervising a project; contract of a white business Clause One: “General provisions”: This clause consists of
and holding paint works. 14 sub-clauses. The definitions contain new concepts such
• Green Book: This is the short form of a contract. as Appendix to Tender, Base Date, Tests on Completion,
Contractor Documents, Dispute Adjudication Board
3.3.2 FIDIC 87 Contracts for Works of Civil (DAB) and Employer Equipment.
Engineering Construction. Clause Two: “The Employer”: This clause consists of 5
According to10, the general conditions of FIDIC contract, sub-clauses and determines the employer’s duties and
th
4 edition, “released in 1987”, consist of 25 groups or obligation in handing over the site and its consequences
articles. These articles include 72 subarticles as follows: to the contractor, such as permits, licenses or approval.
Group One, “Definitions and Interpretation”; Group Two, The financial arrangements guarantee the ease of payment
“Engineer and Engineer’s Representative”; Group Three, and the employer’s claims address the extension of the
“Assignment and Subcontracting”; Group Four, “Contract defect notification period due to the contractor’s failure
Documents”; Group Five, “General Obligations”; to remedy defects.
Group Six, “Labor”; Group Seven, “Materials, Plant and
Workmanship”; Group Eight, “Suspension”; Group Nine, Clause Three: “The Engineer”: This clause consists of
“Commencements and Delays”; Group Ten, “Defect 5 sub-clauses and determines the engineer’s duties
Liability”; Group Eleven, “Alterations, Additions and and obligation, delegation and the rule of engineer
Omissions”; Group Twelve, “Procedure for Claims”; replacement. The engineer has the authority in issuing
4 Vol 12 (36) | September 2019 | www.indjst.org Indian Journal of Science and Technology
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