The latest webinar in FIDIC’s 2024 series of online events on 9 April 2024 took a deep dive into one of the most widely used forms of global construction professional services contract currently being used in the marketplace.
The classic contract for clients and consultants: Seven years of the FIDIC 2017 White Book, organised by the FIDIC Contracts Committee, reviewed the use of the FIDIC White Book Client/Consultant Model Services Agreement, the fifth edition of which was published in 2017. The White Book is a key part of the FIDIC suite and is one of the most widely used forms of professional services contract internationally.
A knowledgeable line-up of speakers was assembled for the webinar. Panellists, led by webinar chair Vincent Leloup, founder and managing partner, Exequatur and the chair of the FIDIC Contracts Committee, included James Mwangi, CEO, Kurrent Technologies and vice president of FIDIC, Pieter Mattelaer, deputy group leader - project portfolio management at CERN, Jafar Khan, assistant general counsel (group) at Mott MacDonald and Stephen Davey, partner for professional indemnity at Lockton.
A contract well regarded for its fair balance of risk
Welcoming delegates to the webinar, FIDIC board member James Mwangi highlighted the work of the FIDIC Contracts Committee, which he said plays a crucial role in identifying and anticipating market needs, strategically positioning FIDIC and developing the organisation’s approach to construction contracts. “Those contracts are widely seen as an industry standard across the international construction industry. That reputation is in no small measure down to the excellent work of the members of the Contracts Committee under the fine leadership of its chair Vincent Leloup, who I am delighted to see is moderating today’s webinar,” he said.
Mwangi said that the FIDIC White Book was one of the most widely used forms of construction professional services contract currently being used in the global industry. “The contract represents the basic form of a contract of appointment between a client and the consultant and the book, which is well regarded for its fair balance of risk between the client, is intended to cover the minimum requirements of a typical appointment contract,” he said.
Introducing the webinar, chair of the FIDIC Contracts Committee Vincent Leloup gave a general introduction to the White Book and its main features which included full alignment with FIDIC works contracts and the concepts and terminology around the role of the consultant when acting as engineer. Leloup said that the contract reflected modern international best practice, based on the review of construction law, practice and standard national forms in more than 20 jurisdictions and was concise and user-friendly and included step-by-step detailed procedures to follow for key processes such as variations, suspension and termination and dispute resolution.
More balance needed to appeal to all parties
The first speaker Pieter Mattelaer, deputy group leader - project portfolio management at CERN, highlighted his organisation’s use of the White Book on its projects and also said that he thought that there was a perception amongst clients that the book had been written “by engineers for engineers” and this needed to be addressed to ensure that the balance was seen as fairer for all parties. He also made the point that when dealing with variation clauses, the procedure needed to be made clearer for all parties to understand and that in other areas around exceptional costs the wording could be tightened up too.
Jafar Khan, assistant general counsel, group at Mott MacDonald, detailed the attraction of the contract, which he said adopted a balanced approach to risk management that was widely seen in the market as being fair and reasonable. Khan said that the reasons why consultants prefer the FIDIC White Book included its approach to caps on liability, changes in law, requirements related to reliance on information from the client, its overall reasonable procedures around scope of services and variations and how it deals with fitness for purpose clauses.
Unsurprisingly, Khan believed that the overall balance in the FIDIC White Book was about right though he did think that greater clarity could be given around the Role of the Engineer in the contract including having more limited grounds of recourse against the engineer and the consideration of adding a “hold harmless provision”, rather than just an indemnity from the client.
White Book should be seen as win-win for all users
Stephen Davey, partner for professional indemnity at Lockton, also offered his thoughts on the use of the White Book in the market and detailed where he thought that improvements could be made. While appreciating that all parties to a contract would have their views based on their experiences of using the contract in the real world, in the long run he believed that the White Book contract should be seen as providing a win-win for all concerned due to the overall balanced and fair approach that it has adopted which has been widely recognised in the industry.
Fitness for Purpose and Reasonable Skill and Care
Webinar speakers then looked at the concept of Fitness for Purpose (FFP), what this was and what it means in reality and the difference between FFP and the exercising of Reasonable Skill and Care, which was preferred by consultants. Khan said that consultants don’t like to agree to FFP as they don’t have control over the final works and it is not covered under the terms of its professional indemnity insurance policy. To illustrate the point, Khan highlighted the potential conundrum arising when a consultant was sub-contracted to a design and construct contractor and the contractor has agreed that the works will be Fit for Purpose, without recourse to the consultant.
As ever at a FIDIC webinar on contracts there were many questions from attendees on the use of the contract and its application in different circumstances, as the audience took the opportunity to have access to a knowledgeable group of expert professionals. The discussion which ensued was open and honest and took into account the experience of many of the parties to FIDIC contracts whether they be an employer, an engineer, a legal expert or an insurance expert.
The next webinar in FIDIC’s 2024 series of events takes place on Thursday 13 June 2024 and will launch the latest report in FIDIC’s State of the World series, Tomorrow's Transportation and the Decarbonisation Challenge. The report will take an in-depth look at the impact of transportation on the environment, economies and societies and specifically examine the challenges and innovative solutions in the aviation and shipping sectors.
Watch the full webinar recording below.
