The FIDIC 1999 Red Book Essay Example | Topics and Well Written Essays - 1500 words

The FIDIC 1999 Red Book - Essay Example In accordance with the Red and Yellow Books, it is the employer, who essentially assumes responsibility for risks such as changes in law, unforeseeable ground conditions, unpredictable natural calamities, force majeure, and environmental permits. On the other hand, the party assigned with designing, assumes the responsibility for its defects. Nonetheless, the risk sharing principles of the FIDIC are advantageous for both, the Employer and the Contractor. The Construction and Plant & Design-Build Books shed further light on the subject of risk-sharing principles. Overall, risk allocation notions and philosophies recognize standards of fair risk-allocation, like the following: 1. Risks should be allocated to the party that is in a better position to handle them. 2. Risks should not be assigned to a part, which cannot deal with the repercussions in the event of the risk becoming a reality. This paper seeks to explore the distribution of risks as per the FIDIC code between various partie s namely the employer, the contractor and the engineer in order to discover how risks are fairly allocated. Adoption by United Arab Emirates (UAE) In 2007, the UAE government adopted new contracts, based on the broad principles of the FIDIC conditions for construction, plant and design and build form of contracts. These contracts offer two forms, namely, Conditions of Contract for Construction and Conditions of Contract for Design and Build1. However, these contracts exclusively apply to public centre construction entities in UAE; thus, private developers are free to adopt any preferred form of contract. Arguably, while some new provisions are in the Employer’s interest, others tend to favour the Contractor. The Contractor The new contracts entailed subtle changes from the FIDIC forms of contract, that impose more stringent requirements on the Contractor and alleviate the balancing obligations that FIDIC had introduced to foster a more even risk-allocation amongst parties. Fo r instance, a noteworthy amendment was made in the Design and Build form, which originally was based on the Yellow Book. The primary philosophy behind this contract was for the employer to assume responsibility for both, providing accurate information to the contractor and delineating his precise requirements. In the event of discovery of erroneous information as provided by the Employer or unforeseen physical conditions, the Contractor shall have a right to recover additional expenditure and seek an extension. However, these aforementioned provisions regarding remedy have been deleted from the UAE contracts. Not only that, but the UAE law expressly states that the Contractor shall be liable for any subsequent defects in the design, irrespective of the fact that it was prepared by the Employer2. In addition, the Employer is to maintain responsibility for unforeseeable physical conditions. Sub-clause 4.123 serves as a classic illustration to elucidate the above point. It states that normally, a contractor can deal with subsoil problems; although, he might fail to make allowance for the extra costs incurred with regard to this problem.