Red Book or Yellow Book? Choosing the Right FIDIC Contract

Introduction

When embarking on an international construction project, choosing the right contract form is just as important as selecting the right contractor or design team. In the world of FIDIC (Fédération Internationale Des Ingénieurs-Conseils) contracts, two of the most commonly used documents are the Red Book and the Yellow Book. While both offer balanced risk allocation and clear procedures, they cater to very different project delivery methods. Understanding these differences will help employers and contractors select the most suitable option.

The FIDIC Red Book: Employer-Designed Projects

The FIDIC Red Book is formally titled Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer. As the name suggests, it is used when the design responsibility rests primarily with the employer (or their consultant).

Key Features of the Red Book:

• Design Responsibility: Employer provides detailed drawings and specifications.
• Engineer’s Role: The Engineer administers the contract, supervises the works, and makes determinations.
• Risk Allocation: Contractor’s main role is execution; design-related risks remain with the employer.
• Variations: The Engineer can order changes to the work, with adjustments to time and cost as needed.
• Payment: Usually based on measured work quantities (re-measurement contracts).

When to Use the Red Book:

• Projects with well-defined designs at tender stage.
• Traditional procurement methods.
• Civil engineering works, road construction, and building works where employer retains design control.

The FIDIC Yellow Book: Design-Build Projects

The FIDIC Yellow Book is formally titled Conditions of Contract for Plant and Design-Build. It is suited for projects where the contractor takes on both the design and construction responsibilities.

Key Features of the Yellow Book:

• Design Responsibility: Contractor develops the design to meet the employer’s requirements.
• Risk Allocation: More design and performance risk is transferred to the contractor.
• Performance Specifications: Employer provides functional requirements instead of detailed drawings.
• Testing and Commissioning: More emphasis on performance testing before handover.
• Payment: Often on a lump-sum basis, tied to milestones.

When to Use the Yellow Book:

• Projects where innovation and contractor-led design are advantageous.
• Complex process plants, industrial facilities, or infrastructure requiring integrated design and build.
• Situations where the employer wants a single point of responsibility for design and construction.

Key Differences at a Glance

Choosing the Right Contract

The decision between the Red Book and the Yellow Book hinges on:

1. Who will design the project?
2. Who should bear the design and performance risks?
3. How flexible should the contractor be in proposing solutions?
4. What is the employer’s desired level of involvement during construction?

In general, if the employer wants to retain control over the design, the Red Book is the safer choice. If they want the contractor to handle both design and build—often for efficiency or innovation—the Yellow Book is more appropriate.

Conclusion

Both the FIDIC Red Book and Yellow Book are trusted frameworks in the global construction industry, but their suitability depends entirely on the project’s delivery method, risk profile, and design responsibility. Selecting the right one ensures smoother project execution, fewer disputes, and better alignment between the parties involved.