A COMPARISON BETWEEN FIDIC YELLOW
BOOK & SILVER BOOK
PLANT, DESIGN -BUILD / EPC CONTRACT
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A COMPARISON BETWEEN FIDIC YELLOW BOOK & SILVER BOOK
PLANT,DESIGN -BUILS / EPC CONTRACT
FIDIC Design and Build contracts and EPC (Engineering, Procurement, and Construction)
contracts are two common types of contracts used in the construction and engineering
sectors. While they share similarities, there are distinct differences between them in
terms of scope, responsibility, and risk allocation. Here's a detailed comparison:
FIDIC Design and Build Contract
FIDIC (International Federation of Consulting Engineers) provides a suite of standard
contracts widely used in international construction projects. The "Design and Build"
contract, often referred to as the "Yellow Book," is one such contract.
1. Scope:
The contractor is responsible for both the design and construction of the
project.
The employer provides the initial project requirements and performance
specifications.
2. Responsibility:
The contractor takes on significant responsibility for both the design and
construction aspects.
The employer has some involvement in the initial design phase but then
relies on the contractor to complete the project.
3. Risk Allocation:
Risks are shared, but the contractor assumes most of the design and
construction risks.
The employer is responsible for providing accurate initial information and
performance specifications.
A COMPARISON BETWEEN FIDIC YELLOW BOOK & SILVER BOOK MIRZA SHAHID BAIG
PLANT, DESIGN -BUILD / EPC CONTRACT [email protected]
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4. Contract Structure:
The contract is based on detailed performance specifications provided by
the employer.
There is flexibility in how the contractor meets these specifications,
allowing for innovation and optimization.
5. Payment Terms:
Payment is often based on milestone achievements, or a lump sum agreed
upon at the contract’s outset.
6. Variations:
Variations (changes) can be initiated by the employer, but they usually
lead to adjustments in contract price and completion time.
EPC (Engineering, Procurement, and Construction) Contract
An EPC contract, also known as a "turnkey" contract, is a comprehensive form of
contracting in which the contractor is responsible for all activities from design,
procurement, construction, to commissioning and handover of the project.
1. Scope:
The contractor is responsible for the entire project lifecycle, from detailed
design to procurement, construction, and commissioning.
The employer provides a basic concept or functional requirements.
2. Responsibility:
The contractor assumes full responsibility for the project, delivering a fully
operational facility.
The employer’s role is minimal after providing the initial requirements.
3. Risk Allocation:
The contractor assumes almost all project risks, including design,
procurement, construction, and performance risks.
A COMPARISON BETWEEN FIDIC YELLOW BOOK & SILVER BOOK MIRZA SHAHID BAIG
PLANT, DESIGN -BUILD / EPC CONTRACT
[email protected] 3
The employer’s risks are limited to those associated with the initial
requirements and external factors.
4. Contract Structure:
The contract is usually based on a fixed price, ensuring that the contractor
delivers the project within a specified budget.
The contractor provides a "turnkey" solution, meaning the project is
delivered ready for use.
5. Payment Terms:
Payment is typically based on fixed milestones, with a significant portion of
the payment made upon project completion and commissioning.
6. Variations:
Variations are less common in EPC contracts because the scope is usually
well-defined upfront. Any changes can lead to significant renegotiation
and cost adjustments.
Key Differences
1. Scope and Involvement:
FIDIC Design and Build involves the employer more in the initial design
phase, whereas EPC contracts involve the contractor from start to finish
with minimal employer involvement after the initial stage.
2. Risk Allocation:
In FIDIC Design and Build, risks are shared but predominantly lie with the
contractor for design and construction. In EPC contracts, the contractor
assumes nearly all risks associated with the project.
A COMPARISON BETWEEN FIDIC YELLOW BOOK & SILVER BOOK MIRZA SHAHID BAIG
PLANT, DESIGN -BUILD / EPC CONTRACT [email protected]
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3. Responsibility:
The responsibility in FIDIC Design and Build is focused on meeting
performance specifications, whereas in EPC contracts, the contractor is
responsible for delivering a complete, operational facility.
4. Payment Terms:
Payment structures in FIDIC Design and Build are more flexible and can be
milestone-based or lump sum. EPC contracts typically involve a fixed-price
structure, reducing financial uncertainty for the employer.
5. Flexibility and Variations:
FIDIC Design and Build contracts allow for more flexibility and potential
variations, while EPC contracts aim to minimize changes and are more
rigid in scope and pricing.
Conclusion
Both FIDIC Design and Build and EPC contracts are effective for different types of
projects and client needs. The choice between them depends on factors such as the
desired level of employer involvement, risk appetite, project complexity, and the
importance of a fixed budget and timeline.
A COMPARISON BETWEEN FIDIC YELLOW BOOK & SILVER BOOK MIRZA SHAHID BAIG
PLANT, DESIGN -BUILD / EPC CONTRACT [email protected]
