Yellow is signalled

Construction Briefing

By:

The second edition of FIDIC's Yellow Book (Conditions for Plant and Design Build) is due to be released in the coming months. It was pre-launched at the FIDIC annual conference in December, and review of a "conference edition" has enabled the industry to assess the amendments ahead of its formal release.

The original Yellow Book was published in 1999, so it is unsurprising that the second edition contains significant amendments and a lot more words. However, it remains to be seen whether the 50% increase in volume will necessarily result in better outcomes for users.

The Yellow Book is generally used on projects where the Contractor carries out the detailed design of a plant or facility to meet an outline or performance specification. Broadly speaking, the changes that have been made relate mainly to procedure rather than to risk allocation/substantive provisions. Key provisions such as the contractor's general obligations (including the fitness for purpose obligation), and those governing unforeseeable physical conditions remain materially unaltered.

There has been a significant bolstering of certain provisions including:

  • Contract management and notice procedures
  • Programme requirements
  • Claims management and entitlement to extensions of time
  • Requirements around supply of as-built drawings and O&M manuals
  • Quality management system

Many of the changes appear to be aimed at replicating the pro-active contract management approach enshrined in the NEC suite of construction contracts with which most UK (and some international) operators will be familiar. For example in addition to the changes listed above, a clause has been introduced requiring the parties and the Engineer to endeavour to provide each other with "Advance Warning" in relation to known or probable future events or circumstances which may affect the time, cost or quality of the Works - clearly echoing the NEC's "early warning" regime.

Contract administrators for the Employer and the Contractor, as well as the Engineer, will need to be on their toes when utilising the new Yellow Book, with new deeming provisions and time limits for responses to notices presenting potential pit falls. For example, a failure by the Engineer to deal with a Contractor's claim that an instruction constitutes a variation can result in the deemed revocation of the instruction itself - a position unlikely to please Employers.

All indications from FIDIC are that the formal second edition of the Yellow Book will be launched essentially unchanged. DLA Piper's construction and engineering team will therefore continue to publish more detailed analysis of the key changes to the Yellow Book throughout the year.