Before 2019, constructing underground posed significant challenges, because the existing FIDIC suite of contracts was primarily designed for above-ground projects. In order to address the unique issues that resulted from underground works, FIDIC and the International Tunnelling and Underground Space Association collaborated to introduce the Emerald Book.
To understand the impact the Emerald Book has on this industry, we must consider its key clauses:
General Overview:
Once a design has been fixed, but prior to tender, it can be very difficult for contractors to offer an alternative design and/or to put forward an alternative offer by way of a non-compliant tender. However, as underground works are difficult to predict, having a flexible mechanism is imperative to avoid disputes.
The Yellow Book provides an opportunity to propose an alternative solution, including design changes to meet the employer's requirements. However, the Yellow Book does not go into specific details about site conditions. The Red Book does not provide as much flexibility for the contractor to deviate from the specified requirements as the Yellow Book.
For detailed provisions related to ground conditions, such as unforeseen surface conditions or geological difficulties, the Emerald Book will be more suitable, as it is intended to overcome these issues by introducing baseline schedules, geotechnical baseline reports and a completion schedule.
Definitions:
Given the distinct nature of underground works, terminology used for underground works may vary from standard definitions or may carry alternative meanings. This often became a battlefield between parties as they attempted to defend their interpretation of the specific term.
The Emerald book aimed to reduce the conflict between parties by providing standard definitions of "Contract Risk Management Plan", "Contract Risk Register", "Contractors Key Personnel", "Excavation", "Geotechnical Data Report", "Geotechnical Baseline Report", "Lining", "Milestone", "Milestone Certificate", "Schedule of Baselines" and "Schedule of Contractors Key Equipment."
General Design Obligations:
With underground works, the designed works can be difficult to fully predict, because the ground conditions may be different to what is initially interpreted. The main issue is: Who bears responsibility?
In the Red Book, the responsibility for detail design rests with the employer. If changes are required during the works, the contractor can assist in implementing the changes but the overall responsibility for design remains with the employer. In underground works, this is a risk the employer is not keen on taking.
In the Yellow Book, the contractor bears the responsibility for detail design and for construction. This provides the contractor with more flexibility to implement changes but again, for underground works, it is usually not a risk the contractor is willing to absorb.
The Emerald Book seeks to combine both as it provides detail design by the contractor with an employer's reference design. It recognises the difficulties of underground work, providing a framework which enhances collaboration between the parties to manage design related issues.
Commencement, Delays and Suspension:
As underground works are unpredictable, having a good mechanism that deals with commencement delays and suspension is imperative. The Emerald Book incorporates a completion schedule, which is a precursor to programmes dependent on date of commencement. It is important to ensure the schedule of baselines is linked to the completion schedule for seamless project management.
Variations and Adjustments
While boreholes are used to predict the ground conditions, their accuracy cannot be confirmed. Therefore, an underground works contract must have the ability to deal with variations and adjustments effectively. The Red Books allows variations and adjustments to be issued by the employer and completed by the contractor. The Yellow Book does not include a similar mechanism. The Emerald Book has a priced bill of quantities. It is issued by the employer, completed by the contractor, and extension of time is dealt with more efficiently.
Why the Emerald Book? was discussed in Why The Emerald Book? A New International Form of Contract for Underground Works? webinar with Martin Smith and Giorgiana Tecuci. To view the webinar and detailed notes click here.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
