Does Green mean go?
Market Insight 31 March 2022 31 March 2022
UK & Europe
Projects & Construction
There are a number of questions that spring to mind about FIDIC’s recently launched second edition of the Green Book.
- Is the 2021 Green Book still a short form construction contract?
- How has the risk profile changed under the 2021 Green Book compared to the 1999 Green Book?
- Does the 2021 Green Book offer an alternative to the complex 2017 FIDIC suite of contracts?
In this article, we attempt to answer these questions.
Is the 2021 Green Book still a short form construction contract?
The short answer is yes. We are pleased to report that the Green Book is still a relatively short form contract with the General Conditions of the 2021 edition coming in at 27 pages compared to 10 pages in the 1999 edition. This may sound like a lot in percentage terms, but the first edition was minimalist and therefore silent on many matters commonly found in construction contracts. FIDIC has introduced additional drafting to existing provisions, new provisions from the other Books as well as some brand new features, but has not added the level of procedural complexity seen in the 2017 suite. It now feels more complete and captures the essential rights and obligations of the parties. The actual 2021 ‘book’ is considerably longer because FIDIC has included flow charts, communication forms, a form of performance security, as well as guidance, to make the Green Book user-friendly.
How has the risk profile changed in the 2021 Green Book?
Many of the new and amended provisions don’t seek to necessarily change the risk allocation between the parties but instead clarify what that risk allocation is, and, generally, such risk allocation reflects a market standard approach that we would expect to see in a construction contract of this nature. Some additional obligations and liabilities have been placed on both the Contractor and the Employer and whilst individually some of them need to be considered carefully and potentially negotiated, the overall risk profile has not been significantly shifted in either party’s favour (although with some exceptions).
You can read more about exactly how the risk profile has changed in our full-length guide below, where we explore the changes between the two editions, from both the Contractor’s and the Employer’s perspective and then take a look at the changes that impact on administering the contract, using a traffic light system to denote where changes fall in that spectrum.
Does the 2021 Green Book offer an alternative to the complex 2017 FIDIC suite of contracts?
FIDIC offers the 2021 Green Book as an alternative to the 2017 Red and Yellow Books and we would support this view, certainly in relation to the Red Book, now that the Green Book has been improved through the inclusion of more express rights and obligations. For it to be used in a Yellow Book scenario, this would depend on the project in question and the parties would likely want to amend certain provisions, such as subcontracting, the design provisions, and the list of Employer risks, and include certain others, such as tests on and after completion.
FIDIC envisages the new Green Book being used where the contract value is less than $10 million but could also be contemplated for values greater than this, provided that the perceived risk level is low and relatively low levels of contract administration and management resources are a desired feature.
We also support FIDIC’s prediction that the 2021 Green Book will be well received in the market and utilised regularly, including as an alternative to the Red Book and, with some amendment, the Yellow Book.