The FIDIC Emerald Book 2019

 

The International Federation of Consulting Engineers (FIDIC) launched the first international standard form contract for tunnelling and underground works: the FIDIC Conditions of Contract for Underground Works for tunnelling and underground works, First Edition (2019) (the Emerald Book).

Tunnelling and underground works are amongst the most challenging of all construction projects. These projects require specific contractual mechanisms to effectively deal with the geotechnical challenges inherent in such projects.

The Emerald Book was drafted in consultation with the International Tunnelling and Underground Space Association (ITA-AITES) and was largely inspired by its enquiries on international best practice in the contracting of tunnelling and underground construction works. It serves to allocate risk equitably amongst the parties, as well as mitigate and manage the common risks arising from uncertainties in underground or geotechnical projects.

Here’s what you need to know about the FIDIC Emerald Book:

  • The Emerald Book is a design-build contract, using the FIDIC Yellow Book 2017 as its basis. The contractor prepares the design according to the employer’s requirements and Geotechnical Baseline Report (GBR). It maintains the fundamental principles of FIDIC regarding risk allocation but has specific provisions relating to underground works. These include a mechanism to allocate risk of ground conditions which are considered unforeseeable; a hybrid pricing mechanism; as well as a special mechanism for adjusting the time for completion that is dependent on the actual ground conditions.
  • The GBR is defined as the report that describes the subsurface physical conditions which serve as a basis for execution of the excavation and lining works included in the contract price. It includes design and construction methods and the reaction of the ground to such methods. It is prepared by the employer and is made available to the contractor prior to the base date for submission of the contractor’s tender. Any site conditions not contained in the GBR are considered ‘unforeseen’ and are the employer’s risk as the contractor is deemed to have based his tender on the GBR.
  • The hybrid pricing mechanism introduced in the Emerald Book allows the parties to apply a measurement type pricing using the rates in the bill of quantities for excavation and lining works (the cost of which is largely dependant on the actual subsurface conditions encountered), as well as lump sum pricing for other works which do not require such valuation.
  • The time for completion of the works under the Emerald Book is dependent on the ground conditions actually encountered during excavation in that if conditions more onerous than those stated in the GBR are encountered, the time for completion is extended accordingly, with a corresponding increase in the contractor’s time-related charges. However, if less onerous conditions are encountered than that in the GBR, the time for completion is reduced. The risk related to the ground conditions is assumed by the employer. The time for completion is adjusted according to the ground conditions experienced within the defined limits of the GBR.
  • FIDIC has embraced the concept of a Risk Register, which was first introduced by the New Engineering Contract (NEC). The Contractor is required to provide the Contractor Risk Register and the Contract Risk Management Plan within 28 days of the commencement date. These documents must be maintained and updated regularly throughout the project. The contractor must have a proactive and efficient project team to ensure compliance with this obligation.

Due to the inherent unpredictability to underground and tunnelling projects, users of the Emerald Book must be aware that the contract is not a one-size-fits-all type of contract. Like any other standard form contract, users must ensure that they amend the contract to suit their project needs and ground conditions. The Emerald Book introduces few provisions which convert the Yellow Book in to an underground and tunnelling works contract and the project specific information required to make the contract effective must be completed by the parties in the GBR, the employer’s requirements or the schedules to the contract.  

 

 

Article by

Zama Ncgobo, Director

Nikita Lalla, Chief Executive

Thandeka Nene, Associate