Article on Fidic Silver Book
Does every Silver Lining have a Cloud? The construction market in the UAE poses many challenges: the number and scale of projects have generated a tremendous demand for construction services; the weakening of the US dollar against other major currencies coupled with other inflationary factors has further increased the cost of construction; and the potential impact on the global economy caused by difficulties in the US sub-prime market has created much uncertainty amongst investors. These issues give rise to particular risks for developers and contractors alike. The allocation of risk is one of the most important matters of any construction contract. The traditional approach was to provide a fair balance of risk sharing. This approach had advantages and disadvantages for clients. A client would only pay additional costs when particular risks arose thus obviating the need for the contractor to price in its tender for risks which might not eventuate. The result was better value for the client in that the price closely represented the cost of the work undertaken but this was at the expense of price certainty. Some clients, however, require a form of procurement that gives greater certainty of the final price and completion date. For many years, these clients either used their own bespoke forms of contract or extensively modified standard forms as there were no standard forms suitable. FIDIC standard forms of contract have been used throughout the world for several decades. One of FIDIC’s traditional principles underlying its contracts is balanced risk sharing. In 1999, FIDIC published a new rainbow of contracts. In addition to its traditional red and yellow books, FIDIC introduced some new colours, one of which was the Silver Book, the Conditions of Contract for EPC/Turnkey Projects. The Silver Book is aimed at those clients who want greater certainty of the price and completion date. The Silver Book was heavily criticised following its publication. FIDIC was accused