Table of Contents

How to Structure a Construction Contract Under FIDIC

Introduction: Why FIDIC Contracts Matter

Many construction professionals face confusion when drafting or negotiating contracts, especially in international projects. Poorly structured contracts can lead to project delays, cost overruns, or even legal disputes. The FIDIC suite of contracts (developed by the International Federation of Consulting Engineers) provides a widely accepted and balanced framework for construction agreements.

This guide will walk you through how to structure a construction contract using FIDIC standards—whether you’re a consultant, contractor, developer, or legal advisor.

Who This Is For / When to Use It

This guide is ideal for:

Construction companies working on international or government-funded projects
Project owners needing standardized and enforceable terms
Legal professionals advising in the engineering or construction sectors
Consultants drafting contracts based on FIDIC

Use this guide when:

Starting a new infrastructure or construction project
Dealing with public tenders
Managing multi-country engineering ventures

Step-by-Step Guide to Structuring a FIDIC-Based Construction Contract

Step 1: Choose the Right FIDIC Contract Type

FIDIC offers several forms, each tailored for a specific scenario:

Red Book: For building and engineering works designed by the employer
Yellow Book: For design-build contracts (contractor designs and executes)
Silver Book: For turnkey projects with higher contractor risk
Green Book: For short-term or small contracts
Gold Book: For design-build-operate contracts

Why it matters: Selecting the wrong form can shift risk unfairly or leave out essential clauses.

Step 2: Use the General Conditions as a Base

FIDIC contracts come with standardized General Conditions (Part I), which cover:

Definitions and interpretations
The role of the Engineer
Employer and contractor obligations
Extensions of time
Payments and variations

How to use: Do not change Part I unless absolutely necessary. Instead, use Part II (Special Conditions) for modifications.

Step 3: Draft the Particular Conditions (Part II)

This section allows you to adapt the contract to local laws and project-specific needs. Focus on:

Governing law and dispute resolution method (court or arbitration)
Site access dates and working hours
Milestone schedules or completion deadlines
Insurance obligations
Currency and payment terms

Tip: Be precise. Vague conditions in Part II often lead to disputes.

Step 4: Include Key Annexes and Appendices

A well-structured FIDIC contract should include attachments such as:

Appendix to Tender: A table that summarizes financial and administrative terms
Specifications and Drawings
Bill of Quantities (BoQ)
Performance Security and Advance Payment Guarantees
Program (Construction Schedule)

Step 5: Align the Contract with Local Legal Requirements

Some jurisdictions require:

Official language translations
Stamping and registration
Local insurance carriers or banks for bonds

Practical tip: Consult local counsel or a FIDIC-trained professional to ensure compliance.

Step 6: Define Clear Roles and Communication Protocols

A typical FIDIC contract outlines the role of the Engineer as a contract administrator. Make sure to:

Specify how instructions are issued (e.g., written notice, site instructions)
Include timeframes for responses or approvals
Clarify delegation rules and approval rights

Mistake to avoid: Leaving the Engineer’s authority vague can result in confusion or unauthorized decisions.

Step 7: Draft Dispute Resolution Clauses Wisely

FIDIC recommends a three-tier approach:

Engineer’s Decision (initial dispute resolution)
Dispute Adjudication/Avoidance Board (DAB or DAAB)
Arbitration (under ICC Rules or agreed forum)

Be sure to clearly define:

Timeframes to raise and respond to claims
Binding vs. non-binding stages
Institutional rules for arbitration

Mini Case Study: Structuring a Contract in the Gulf Region

A UAE-based infrastructure firm used the Yellow Book for a water treatment project. The project was cross-border, involving a local developer and an Italian engineering consultant.

By customizing Part II, they aligned payment milestones with local bank transfer procedures and added a mandatory Arabic translation for enforcement purposes. They also appointed a DAAB early to avoid delays.

Outcome: Disputes were avoided, and the project finished one month ahead of schedule.

Closing Thoughts + CTA

A well-structured FIDIC construction contract balances risk, increases transparency, and supports smoother project execution. Whether you’re a contractor or project owner, taking the time to customize the agreement correctly is one of the best ways to reduce disputes.

Need help drafting or reviewing a FIDIC contract? Book a call with Muhammad Helmy, the construction law expert.