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The Philosophy of Risks in the FIDIC New Red Book
A Philosophies of Risks
1. The theory of risk in the construction industry has been developed in the past twenty years to such an extent that it is now common knowledge that for a construction contract to be performed in an effective manner, the inherent risks must be allocated to the contracting parties on some logical basis, which should be made known to them. Thus, it has been said that the main purpose of a contract is to identify the principles of allocating the risks facing the contracting parties. ... In its Guidance Notes to the NEC form of contract (the 6th edition), it is said that risks should be given to ‘the party best placed to manage it, in order to minimize extra cost and delay if the risk occurs? ... He identified the following common considerations (based on “Engineering Construction Risks? ... Whether, if the risk is transferred, it leads to the possibility of risks of different nature being transferred back to the employer. ... and it is most economically beneficial and practicable for the risks to be dealt with in that way; or
3. ... So the appropriate philosophy of risks should be added with incentivisation, i. ... , construction contract should create incentives so that the person best able to control or avoid risks will do that efficiently. ... the Partnering Approach for risk sharing was strongly recommended as to enable all participants in a project to work together as a team rather than in competition with each other, provided a structured and formal management framework that ensures the interests, needs, expectations, constraints and risks of every stakeholder must be given fair and proper consideration. ...
B The New FIDIC Red Book
1. The 1999 edition of FIDIC Conditions of Contract for Construction (the new ‘Red Book? was based on FIDIC previous standard contract form (4th edition), the latter was interfered significantly by the ICE form of contract (5th edition). Therefore, it is not surprisingly when a copy of the Foreseeability Test in NEC is found in the new Red Book. ... Bunni even considers in his work The FIDIC Form of Contract that the principles underlying the NEC Conditions "are in essence the same for the Red Book (referring to the 4th edition)". ... 12 of the new Red Book (or sub-clause 12.2 of the 4th edition of FIDIC Red Book), the contractor is entitled to an extension of time or payment from the employer to cover delay suffered or cost incurred due to the Unforeseeable Physical Conditions, of which the word ‘Unforeseeable? ... 4 of the old Red Book), ‘Any operation of the forces of nature against which is Unforeseeable or against which an experienced contractor could not reasonably have been expected to take adequate preventative precautions?
Approximate Word count = 2148
Approximate Pages = 8.6
(250 words per page double spaced)
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