The International Federation of Consulting Engineers (FIDIC) Contracts Committee recently unveiled the much-anticipated new suite of rainbow contracts, with the publication of amended Red, Yellow and Silver Books. The changes reflect only some of the key amendments introduced by the revised 2017 FIDIC contracts. Nevertheless, the changes are significant and it will undoubtedly take time for contracting parties to become familiar with the revised contracts.
A new draft international standard providing information management guidance when using building information modelling has been issued for public comment. The standard is split into two parts. The first part deals with concepts and principles and applies to the whole lifecycle of a built asset, while the second deals with the delivery phase of assets and enables the client or appointing organisation to establish its requirements for information during the delivery phase of assets.
Given the margins with which construction firms operate, the increasing number of claims filed and the growing influence of international organisations, one of the points often raised during construction contract negotiations is the inclusion of clauses limiting financial liability. Liquidated damages provisions for delays and performance provide a much-needed degree of certainty for both parties, although careful drafting is essential.
Due to certain restrictions on indemnity insurance cover, contractors cannot simply rely on their insurance to limit risks; they must also actively manage liability through other means. Consequently, contractual caps on liability are common in international projects. The first thing to consider is the basis on which the cap applies and what exclusions should apply.
Liquidated damages play an important role in ensuring that engineering, procurement and construction contracts are bankable. It is therefore vital to ensure that they are properly drafted so that contractors cannot avoid their liquidated damages liability on a legal technicality. It is also important to distinguish between the different types of performance liquidated damages to protect against allegations that they constitute a penalty.