High-Point
Bringing Greater Certainty to Major Projects
Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey
Projects
A SHORT SUMMARY
All multilateral development banks (‘MDB’s’) have agreed to fully adopt the FIDIC 2017 suite of
contracts, replacing the FIDIC 1999 version (which has been the baseline contract for many construction
contracts over the last 20 years or so).
The ‘Pink Book’ - MDB’s version of FIDIC’s 1999 ‘Red Book’ – is being phased out.
FIDIC 2017 is very different to FIDIC 1999 – it is nearly twice as long and has almost double the
number of defined terms. A number of those defined terms are very important.
FIDIC 1999 Silver Book FIDIC 2017 Silver Book
Number of Clauses 166 169
Number of Pages 72 123
Number of Words 31,300 58,600
Number of Defined Terms 50 80
There are also important differences in many clauses and FIDIC 2017 is far more prescriptive and
failure to comply with requirements will severely impact rights and entitlements.
Managing contracts under FIDIC 2017 will require much higher contract administration expertise (with
the attendant additional costs).
FIDIC 2017 has vastly different requirements for what constitutes a ‘Variation’, and it is particularly
important for contractors to fully understand these differences.
Updated versions of the FIDIC 2017 contracts were issued at the end of 2022.
Key Changes Between
FIDIC 2017 and FIDIC The World Bank, AIIB, EBRD, EIB, ADB, AfDB, IsDB, IDB, and CDB, have
1999 all agreed to fully adopt the FIDIC 2017 suite of contracts. The ‘Pink Book’
There are many important (the multinational development banks version of the FIDIC 1999 ‘Red Book’) is
changes introduced in the being withdrawn. Some regard FIDIC 2017 as having responded to real
FIDIC 2017 Contract for market requirements and created a valuable and practical contract
management tool. Other commentators view FIDIC 2017 as too lengthy and
EPC/Turnkey Projects (the
overly complex, and hence unsuitable for small or simple projects.
‘Silver Book’):
Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
High-Point
Bringing Greater Certainty to Major Projects
• FIDIC 2017 is considerably more prescriptive than FIDIC 1999 including much greater detailed processes
for establishing entitlements to additional payment and/or extensions of time
• FIDIC 2017 contains numerous new time-bars
• a ‘Notice’ (from either the Employer, the Employer’s Representative, or the Contractor) is required in 80
clauses in the FIDIC 2017 Silver Book
• a ‘Notice of No-objection’ replaces approvals and consents of the Employer’s Representative
• it contains very substantial requirements for the Contractor’s initial programme, and all subsequent
revised programmes (and complying with these requirements is vital to entitlements of the Contractor)
• there are important revisions to the requirements for application for interim payments and for the final
payment
• there are extensive changes to the procedure for submitting, evidencing, and justifying claims
• FIDIC 2017 requires a Dispute Avoidance/Adjudication Board to be appointed from the commencement
of the Contract
• there are important differences in how a ‘Variation is defined and how a contractor obtains payment
and extensions of time for variations.
Some Important Issues Arising from the Changes
There are a number of important issues which require particular attention:
• the definitions for a ‘Claim’, ‘Compliance Verification System’, ‘Contract Data’, ‘Cost Plus Profit’, ‘DAAB
Agreement’, ‘Date for Completion’, ‘Dispute’, ‘Programme’, ‘QM System’, ‘Review’, ‘Schedule of
Performance Guarantees’, ‘Statement’,
and ‘Special Provisions’ Contract administration under FIDIC 2017 will cost
• the definition and application of contractors far more than under FIDIC 1999.
Requirements and processes under FIDIC 2017 are much
‘Exceptional Event’ (which replaces the
more complex and prescriptive. This is particularly the
term “force majeure” under FIDIC 1999)
case with the specific requirements for the initial and
• the amended definition of what
revised programmes, and for submission of a ‘fully detailed
constitutes ‘Unforeseeable’ Claim’. But there are numerous significant advantages in
• the new requirements for the giving of a complying with these requirements and processes. Will
‘Notice’, and how a ‘Notice’ is to be contractors invest in the additional training, expertise,
identified and technology necessary to be better prepared – or can
• the requirement that any ‘Notice’ is “not they afford not to?
to be unreasonably withheld or delayed”
Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
High-Point
Bringing Greater Certainty to Major Projects
• the requirement for the Contractor to provide assistance and documentation to allow the Employer to
obtain any permit, licence, or
FIDIC 2017 is very different to FIDIC 1999. A number of
approval for the Permanent Works
those changes significantly affect the obligations for
• the work to be carried out by a
protecting rights and entitlements. Particular attention must
member of a joint venture
be given to the new requirements for a ‘Notice’, for a ‘Notice
of No-objection’, for a ‘Review’ by the Employer, for monthly
contractor cannot be altered
progress reports, for submissions of the initial and revised without the prior consent of the
‘Programme’, and for what constitutes a ‘Variation’. Employer
• the requirement for a ‘Notice of
Dissatisfaction’ to be given if either the Contractor or the Employer is dissatisfied with a determination
of the Employer’s Representative or with a decision of the Dispute Avoidance/Adjudication Board
• the Employer and the Contractor are
required to advise in advance any event
or circumstance which might adversely
affect performance of the completed
Works, increase the Contract Price, or
delay execution of the Works
• the Employer now has the same
obligations as the Contractor (for the
giving notices, keeping contemporary
records, and submitting detailed
particulars) if it wishes to make a claim
for additional payment, or obtain a reduction in the Contract Price, or for an extension of the ‘Defects
Notification Period’
• when making a determination of any matter or Claim the Employer’s Representative is not deemed to
act for the Employer (this is quite different to the obligation under the FIDIC 2017 ‘Red Book’ where the
Engineer is required to “act neutrally”)
• there are extensive requirements for the submission
of an initial programme and all subsequent revised
programmes (and for ensuring many entitlements
under the contract this is, perhaps, the most
important provision in FIDIC 2017 for contractors)
• monthly reports now include a requirement for the
Contractor to detail events or circumstances which
may adversely affect completion of the Works in
accordance with the Contractor’s ‘Programme’
• there is a very prescribed process for the
preparation of the ‘Contractor’s Documents’ and for
the ‘Review’ of them by the Employer
• the ‘Statement’ to be submitted for applications for interim payment requires much greater
information and details from the Contractor
• there are now provisions for a
Further major differences in FIDIC 2017 affecting obligations for
‘Draft Final Statement’, an
protecting rights and entitlements and for which particular attention
‘Agreed Final Statement’, and
must be given are new requirements for obtaining a ‘Taking-Over
‘Partially Agreed Final
Certificate, for the ‘Tests’ on completion and after completion, for
Statement’ (and compliance the rectifying of defects, and the requirements for notification of a
with each of these is vitally ‘Claim’, and for the contents of a ‘fully detailed Claim’.
important for cash flow)
Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
High-Point
Bringing Greater Certainty to Major Projects
• there are new requirements related to the discharge required to be provided by the Contractor with the
Final Statement, and important links to the ‘Final Payment’ to be made by the Employer
• recommendations are included for any amendments made by employers to the standard conditions –
these are termed the five ‘FIDIC Golden Principles’.
Some Specific Requirements for a ‘Variation’ under the FIDIC 2017 Silver Book
A ‘Variation’ under FIDIC 1999 and FIDIC 2017 is defined in the same terms as a “change to the Employer’s
Requirements or the Works” but there are critical differences between FIDIC 1999 and FIDIC 2017 in the
Contractor’s obligations in respect to the Employer’s Requirements and the Works and these affect the
operation of the variation provisions.
Accordingly, consideration must also be given to Sub-Clause 1.3 [Notices and Other Communications], Sub-
Clause 3.4 [Instructions], Sub-Clause 3.5 [Agreement and Determination], Sub-Clause 4.1 [Contractor’s
General Obligations], Sub-Clause 5.1 [General Design Obligations]; Clause 10.1 [Taking Over the Works and
Sections], Clause 11.9 [Performance Certificate], Clause 20 [Employer’s and Contractor’s Claims], and Sub-
Clause 21.4 [Obtaining DAAB’s Decision].
To understand what might constitute a Variation under FIDIC 2017, it is necessary to:
• examine the terms “Employer’s Requirements” and the “Works” and their use in the FIDIC 2017
Silver Book General Conditions; and
• consider what might constitute a change to the Employer’s Requirements, or a change to the Works.
A change to the Employer’s Requirements can, therefore, be:
• a change to the purpose(s) for which the Works are intended; and/or
• a change to the scope of the Works;
and/or There is nothing more important than the quality of
contemporary site records in determining the entitlement
• a change to the design of the Works;
to extensions of time and/or additional payment, or
and/or
other relief.
• a change to the performance criteria for
the Works; and/or
• a change to the technical criteria for the Works; and/or
• a change to the evaluation criteria for the Works.
Each of these must be considered in the context of in particular:
(i) the Contractor’s obligations under the General Conditions which include:
o the Contractor must execute the Works in accordance with the Contract;
o the Works, when completed, must be fit for the purpose(s) for which they are intended as
defined and described in the Employer’s Requirements;
o the Works must include any work necessary to satisfy the Employer’s Requirements and the
‘Schedules’ completed by the Contractor and included in the Contract;
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Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
High-Point
Bringing Greater Certainty to Major Projects
o the Works must include any work implied by the Contract;
o the Works must include all works necessary for the stability of the Works;
o the Works must include all works necessary for completion, or the safe and proper operation of
the Works; and
o the Contractor cannot make any significant alteration to the arrangements and methods for
executing the Works without submitting this alteration to the Employer; and
(ii) the Contractor’s general design obligations:
o the Contractor is deemed to have
scrutinised the Employer’s
Requirements (including any
design criteria and calculations);
o the Employer is not responsible
for any error, inaccuracy, or
omission of any kind in the
Employer’s Requirements
included in the Contract;
o but the Employer is responsible
for any portion of the Employer’s
Requirements which:
▪ are stated as being unable to be changed;
▪ are stated as the responsibility of the Employer;
▪ define the intended purposes of the Works, or any parts of the Works;
▪ define the criteria for the testing and performance of the completed Works; and
▪ cannot be verified by the Contractor.
There are, however, some issues related to changes to the Employer’s
Requirements and changes to the Works which are not addressed in the
terms related to Variations in the FIDIC 2017 Silver Book:
• an unreasonably or delayed Notice or other communication from the
Employer which affects the sequence or timing of execution of the
Temporary Works
• an unreasonably or delayed Notice or other communication from the
Employer which affects the sequence or timing of execution of the
Permanent Works
• an instruction from the Employer’s Representative (or an assistant)
which the Contractor considers to constitute a Variation, but for
which the Employer issues a Notice confirming the instruction and
rejecting it as a Variation
• incorrectness in the Employer’s Requirements and other data for which the Employer is responsible –
such as errors in:
o information stated in the Contract which cannot be changed, or which is the responsibility of
the Employer
o the definitions of the intended purpose of the Works
o the criteria for testing of the completed Works
o the criteria for the performance of the completed Works
o data or information which cannot be verified by the Contractor
• a ‘Review’ by the Employer of the Contractor’s Documents (which would include comments on such
things as design, working and shop drawings or associated documents) and the incorrect issue of a
Notice by the Employer that those Contractor’s Documents fail to comply with the Employer’s
Requirements and/or the Contract
Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
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Bringing Greater Certainty to Major Projects
• compliance with changed or new technical standards or regulations which the Employer does not
consider constitutes a Variation
• a future event or circumstance (which is
the responsibility of the Employer)
which is advised may adversely affect
the work of the Contractor’s personnel,
or adversely affect performance of the
completed Works, or increase the
Contract Price, or delay execution of the
Works, and which the Employer chooses
not to request the Contractor to submit
a proposal to avoid or minimise the
effect of that event or circumstance
• a Notice from the Contractor that an
instruction issued by the Employer constituted a Variation and ought to have been issued as a Variation
and which cannot be executed with due expedition and without delay because:
o the varied work was ‘Unforeseeable’ relative to the scope and nature of the Works described
in the Employer’s Requirements, or
o the Contractor cannot readily obtain the
construction plant, materials or temporary
works required for the Variation, or
o the Variation will adversely affect the
Contractor’s ability to comply with health and
safety and/or environmental protection
obligations, or
o it will have an adverse impact on the
achievement of the Schedule of Performance
Guarantees, or
o it may adversely affect the Contractor’s
obligation to complete the Works, so they are
fit for the purpose(s) intended
and the Employer issues a Notice confirming the instruction but incorrectly denies the instruction
constituted a Variation.
Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
High-Point
Bringing Greater Certainty to Major Projects
In each of the foregoing:
(a) an issue has arisen, or the Employer or the Employer’s Representative has issued an instruction, which the
Contractor considers constitutes a Variation;
(b) the Contractor issues an appropriate Notice to the Employer confirming the requirement or the instruction
and requesting the Employer to instruct a Variation
(c) the Employer refuses to instruct a Variation and requires the Contractor to comply with the instruction
issued by him or the Employer’s Representative and proceed with the work
(d) the Contractor proceeds with the work.
In each of the foregoing circumstances the Contractor would have to adopt the following approach:
• issue a Notice under Sub-Clause 20.2 [Claims For Payment and/or EOT] describing why it considers the
instruction from the Employer or the Employer’s Representative constitutes a Variation and for which
the Employer should properly instruct a Variation under Sub-Clause 13.3.1 [Variation by Instruction] or
request a proposal under Sub-Clause 13.3.2 [Variation by Request for Proposal]
• maintain all necessary contemporary records required to substantiate the Contractor’s position
• submit a fully detailed Claim under Sub-Clause 20.2.4 [Fully detailed Claim] so the Employer’s
Representative can proceed in accordance with Sub-Clause 3.5 [Agreement or Determination]
• prepare for consultation with the Employer (as required by Sub-Clause 3.5.1 [Consultation to reach
agreement]
• if appropriate or necessary, issue a Notice of Dissatisfaction with the Employer’s Representative’s
Determination and proceed under Sub-Clause 21.4 [Obtaining DAAB’s Decision].
In the circumstances where an Employer initiated Variation is issued the following procedure should be
considered:
Consideration of Requirements for an Employer Initiated Variation
Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
High-Point
Bringing Greater Certainty to Major Projects
A simple table of categories of Variations under the FIDIC 2017 Silver Book is shown below:
Categorisation of Variations
Defined Variations Variation Category Examples of Potential Variations
Change to Employer’s Change to the Purposes for which the Works • major changes made by the Employer to the use
Requirements are Intended or function of the completed facility (often
because of some shift in local or international
economic fundamentals)
• changes made by the Employer to the
Employer’s Requirements to enhance
performance of the completed facility or to
improve the design life of the completed facility
• changes made by the Employer to ‘Employer’s
Equipment’ to enhance performance of the
completed facility
• changes made by the Employer to ‘Plant’ (often
by refusing to accept or approve the Plant
proposed by the Contractor)
• changes made by the Employer to ‘Materials’
(often by refusing to accept or approve the
Materials proposed by the Contractor)
Change to the Scope of the Works • major changes to scope of the Works to increase
or decrease the scale of the completed facility
(often because of some shift in local or
international economic fundamentals)
• changes to the scope of the Works to better
ensure or improve the required operational
performance of the facility
• changes to the sequence or timing of the
execution of the Permanent Works and/or the
Temporary Works as a result of the change to
the scope of the Works
Change to the Design of the Works • changes required by the Employer to the designs
submitted by the Contractor under Sub-Clause
5.2 [Contractor’s Documents] for reasons which
are not failures to comply with the Employer’s
Requirements and/or the Contract
• changes required by the Employer under Sub-
Clause 5.4 [Technical Standards and
Regulations] to the designs submitted by the
Contractor for compliance with revised technical
standards and regulations
Change to the Performance Criteria for the • changes required to the performance criteria set
Works out in the Employer’s Requirements which might
include:
o changes to the required design life of the
Works, or some part of the Works
o changes to the specified operating
performance of equipment
Change to the Technical Criteria for the • changes required to the technical criteria set out
Works in the Employer’s Requirements which might
include:
o changes to propriety equipment, materials, or
suppliers
o changes to specified technical standards or
regulations
o changes to the requirements for operating or
reliability performance
Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
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Bringing Greater Certainty to Major Projects
Categorisation of Variations
Defined Variations Variation Category Examples of Potential Variations
Change to the Evaluation Criteria for the • changes required to the evaluation criteria set
Works out in the Employer’s Requirements which might
include:
o changes to the testing requirements for the
Tests on Completion
o changes to the testing requirements for the
Tests after Completion
Change to the Works Change to the Permanent Works • changes to the Permanent Works which might
include:
o changes to quantities or quality of
workmanship, materials or equipment to be
installed in the Permanent Works
o changes to the position of parts of the
Permanent Works
o additions or omissions to the Permanent
Works
Change to the Temporary Works • changes to the Temporary Works which might
include:
o changes to temporary access or egress
arrangements
o changes to working methods or sequence of
working for temporary works (such as
excavation support, scaffolding, formwork
etc).
Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
High-Point
Bringing Greater Certainty to Major Projects
If you require any further discussion or explanation of the matters described above, then please let us know.
Kelvin Hingley London Office
Managing Partner M: +44 7827 927 795
High-Point Partnership LLP O: +44 203 019 3830
E: kelvin.hingley@highpointpartnership.com E: valerie.howell@highpointpartnership.com
www.highpointpartnership.com
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Variations Under the New 2017 FIDIC Silver Book for EPC/Turnkey Projects
