In 2017, the 5th edition of the FIDIC White Paper, a model contract for the provision of consulting services in the field of construction, was released. The revised list of services of the White Paper includes:
- conducting a pre-investment study of projects
- preparation of a feasibility study
- project management
- administration of construction contracts
The main goal of adopting the new edition of the White Paper was to establish a fair balance in the distribution of risks between the consultant and the customer, provide conditions for risk insurance & establish requirements for the quality of the services provided.
Let’s take a look at the main changes in the new edition of the FIDIC-17 White Paper.
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According to the new edition, the consultant must possess a sufficient level of skills, which includes accuracy & thoroughness expected from a consultant who has experience in providing appropriate services in projects of a similar scale, nature & complexity. This is not to say that the new wording sounds more specific compared to the previous one, where there was no condition on the compliance of consultant services with similar services in the market.
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The new edition does not establish any rules with regard to the violation of the terms of the contract by the contractor if the result does not meet the original goal regardless of the fault of the contractor. Instead, it establishes that the actions of the consultant should be aimed at fulfilling the goals stipulated by the terms of the contract. That is, if the consultant acted in good faith but failed to meet the initial requirements of the customer for reasons beyond their control, the consultant may not be considered at fault.
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Changed List of Services
According to the new edition, the client is entitled to change the list of services provided by the consultant under the contract. To do this, the client must contact the consultant by making an appropriate statement. However, such a change should not affect the scope or nature of the services provided by the consultant.
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Suspension & Termination of the Contract
Under the revised version, the client has the right to suspend the contract at their own request. The consultant can do so in case of non-payment, a force majeure event or failure of the client to fulfil their financial obligations under the contract. Termination of the contract at the initiative of the client is possible if:
- the consultant does not eliminate the violation within 28 days
- the consultant is declared insolvent
- in case corruption has been detected
Termination is possible within 56 days after the client notified the consultant of their desire to terminate the contract. It is also possible in the event of a force majeure event that led to the suspension of the contract for more than 168 days.
Termination of the contract at the initiative of the consultant is possible if the contract is suspended by the client for more than 168 days. It is also possible in cases where the client is declared insolvent, the client’s actions were found to be corrupt, the client has failed to make a payment, or the client is unable to fulfill their financial obligations under the contract. Termination is also possible if the contractor suspends execution of the contract for more than 168 days due to a force majeure event.
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Specification of Services
The new edition of the White Book contains rules for filling out Appendix 1 (the one that deals with specification of services) to the standard form of the contract. Under the new rules, the Appendix should contain a description of the services provided. Also, the parties should describe all factors that do not affect the quality of the consultant's services, specify the procedure for administering the main contract by the consultant & identify the relation between the services provided under the main contract & the ones provided by the consultant.
The main challenge was to maintain a balance of interests of clients and consultants in the distribution of risks & determining the terms of responsibility of a consultant for failure to fulfill the conditions of the contract. In general, the consultant’s status quo has been preserved but taken on a new form. The new standard form of the contract has expanded some of the provisions of the previous versions, making them more convenient for implementation in the framework of construction projects.
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