FIDIC Contracts: Burden or Benefit?

On 25 May 2017, Svitlana Teush, Head of the Real Estate and Construction Group of Redcliffe Partners, made a presentation entitled "FIDIC Conditions of Contract: Practical Aspects and Prospects of Use in Ukraine" during the FIDIC Business Days held in Kyiv.

Svitlana outlined the anticipated novelties in the new FIDIC forms of contracts due for release in 2017, and compared them to the 1999 contracts. She also examined practical issues related to claim management and dispute resolution, including how the limited time frames for submission and consideration of claims correlate with the statute of limitations. The scope of the consulting engineer’s responsibility and possibilities for its extension were another area addressed. In the public procurement context, Svitlana further considered how price compares to other non-price criteria when assessing and selecting the most economically beneficial bid. She also gave practical recommendations for avoiding certain pitfalls, e.g., due to internal inconsistencies in a contract mix, a delayed or otherwise improper setup of dispute adjudication boards, “retouch” and “improvements” of arbitration clauses, and inefficiency or unenforceability of bank guarantees securing performance under contracts.

According to Svitlana, FIDIC contracts should be understood as a project management toolkit - a manual designed to help parties fix their problems promptly and efficiently, as part of a regular and uninterrupted working process, at an early phase and on an ongoing basis. Suppressed, silenced or unresolved problems tend to aggravate at further stages of a construction project, with the increased costs and time needed for their rectification, while FIDIC contacts help avoid such an accumulative adverse effect on a project life cycle. Lastly, Svitlana emphasised that FIDIC contracts maximise their benefits and unveil their potential when integrated in a broader framework involving awareness by market players of the principles, concepts and implementation practices relevant to FIDIC contracts, high professional and construction quality control standards, efficient industry self-governance, competitive market environment and efficient procurement procedures, well-established mechanisms of professional liability insurance and alternative dispute resolution.