United States: FIDIC Issues "Emerald Book" For Underground Works

International construction arbitration welcomes FIDIC's1 latest standard form contract: the "Emerald Book"2. Known more formally as Conditions of Contract for Underground Works the contract is designed to address issues that arise when dealing with sub-surface works and, in particular, it seeks to codify the cost and time impact of "Unforeseeable Physical Conditions". The Emerald Book is an innovative contract. It is a rational but complex contract best suited for employers and contractors who are well advised on design and its direct relationship with the program and costs. We say this because the rights and obligations in the Emerald Book revolve around the Geotechnical Baseline Report (a new document in the world of FIDIC contracts) (GBR) and because the Emerald Book seeks to integrate cost and time through:

  • A specific focus on the Contractor's precise methods of working.
  • A specific focus on the Contractor's estimated rates of progress.
  • By distinguishing between time-related rate items, quantity-related rate items and fixed rate items for the performance of the Works (thus creating greater transparency).

Put simply, the Emerald Book establishes both cost and time based on the descriptions in the Geotechnical Baseline Report such that deviation from the assumptions, statements or analysis in the GBR will lead to an adjustment in the Contract Price and the Time for Completion. Critics will assert that the Emerald Book is a Contractor's charter3 leading to a generous cost-reimbursable paradigm. Its supporters will assert that the Emerald Book represents the optimum risk allocation when dealing with underground works.

The Key Provisions

  • Design: The Works are to be designed by the Contractor according to the reference design by the Employer and the GBR. Given that the General Design Obligations are to be set out in the Employer's Requirements (ERs), the ERs will need to set out whether fitness for purpose or reasonable skill and care obligations are required and/or a preferred design life (for some or all of the Works).

  • Time and Cost Integration: The Emerald Book requires clarity between the assumptions in the 'cost model' and those in the 'time model'. Clause 8.2.1 states:
    "The Completion Schedule shall demonstrate the Time for Completion of the Milestones based on the sequential logical links between the Milestones with Time for Completion that are based on and consistent with the production rates provided by the Contractor in the Baseline Schedule for the Excavation and Lining Works and with the Times for Completion of the other Works" (our emphasis)
  • Geotechnical Baseline Report: This is defined as the geotechnical baseline report to be included in the Contract and which describes the subsurface physical conditions to serve as the basis for the execution of the Excavation and Lining Works, including design and construction methods, and the reaction of the ground to such methods. The GBR (like the Works Information in NEC forms of contract) is of fundamental importance: "The GBR sets out the allocation of the risk between the Parties for such subsurface physical conditions". All subsurface physical conditions not addressed in the GBR shall be considered 'Unforeseeable'. Purely numerical differences in the physical conditions described in the GBR and encountered during the works do not provide sufficient basis for an adjustment in compensation or Time for Completion (for example, a permeability outside the range specified in the GBR is not sufficient, unless the water seepage is higher than the limit specified in the GBR).

  • Extension of Time: All risks arising out of the foreseen properties of the ground, obstacles and adverse reaction to the excavation and ground support processes are assigned to the Contractor as well as the production rates and costs of performing the Works under the conditions set out in the GBR. This means that the Contractor can only obtain an extension of time to the Time for Completion if Unforeseeable Physical Conditions (as defined in Clause 4.12) are encountered. However,
    • If more onerous conditions encountered are higher than described in the GBR, the Time for Completion will be extended (based in part on the production rates included in the Schedule of Baselines (as defined in Clause 8.2.2) and the Completion Schedule (as defined in Clause 8.2.1)).
    • If less onerous conditions than described in the GBR are encountered then the Time for Completion shall be reduced.
    • If less onerous conditions than described in the GBR are encountered then the Costs may also be reduced. Clause 4.12.5 provides:

"... If and to the extent that these more favorable conditions were encountered, the Engineer may take account of the reductions in Cost which were due to these conditions in calculating the additional Cost to be agreed or determined under this Sub-Clause 4.12.5. However, the net effect of all additions and reductions under this Sub-Clause 4.12.5 shall not result in a net reduction in the Contract Price."

  • Prolongation: The adjustment of the Time for Completion due to the difference between the contractually agreed and the encountered subsurface physical conditions also leads to an adjustment of the Contractor's time-related charges. This is an excellent mechanism and the Contractor is required in the Bill of Quantities for the Excavation and Lining Works to distinguish between time-related rate items, quantity-related rate items and fixed rate items for the performance of the Works. Clauses 13.8.2 and 13.8.3 provide more details.

  • Cost of Excavation and Lining Works: Such works are to be paid for using the rates and prices set out in the Bill of Quantities. The Contractor is under an obligation to measure the as-built quantities which are then agreed or determined by the Engineer. The Accepted Contract Amount shall be deemed to cover all other Underground Works and all things necessary for the proper execution and completion thereof. A detailed procedure for the remeasurement exercise is set out at Clause 13.8. The mandatory obligation to distinguish between the differing rates is excellent. Clause 13.8.3 provides:

"The Bill of Quantities for the Excavation and Lining Works shall include fixed rate items, time-related rate items and quantity-related rate items for the Excavation and Lining Works as follows:

(a) Fixed rate items for, as appropriate, the provision of Contractor's Equipment, facilities, and supervision, facilities and services required by the Employer's Personnel, fees for relevant Contractor's overhead charges, and the maintenance of such provisions for the relevant section of the Excavation and Lining Works for the period necessary according to the Completion Schedule.
(b) Time-related rate items for, as appropriate, the extended or reduced availability and maintenance of the fixed rate items in sub-paragraph (a) above, all expressed, unless otherwise specified, in units for an extension or reduction for a calendar day.
(c) Quantity-related rate items for the Excavation and Lining Works, and Plant supply and installation for the relevant portion of the Works.
(d) Unless provided otherwise in the Particular Conditions, value-related charges for compliance with contractual provisions such as, without limitation, insurance, securities, permits, and levies for the relevant portion of the Excavation and Lining Works, shall be included as percentage additions in the rates described in (a), (b) and/or (c) above.

The unit rates and prices referred to in this Sub-Clause 13.8.2 [Bill of Quantities for Excavation and Lining Works] shall not vary with changes in measured quantities and shall be deemed to cover the entire remuneration of the Contractor for such Excavation and Lining Works".

The Battleground

A fundamental point of deviation in international construction contracts is risk allocation. Some Employers take the view that agreement of a fixed price lump sum contract means that the Contractor bears all risks associated with delivery of the Works. In contrast, the FIDIC asserts4 that:

Each risk of foreseeable subsurface physical conditions shall be allocated in the [GBR] to the Party that is best positioned to control it, which leads to more effective risk control. Transparent and equitable allocation of ground related risks leads to more competitive Tenders and lower outturn costs of the Works. The Employer should avoid establishing an overly conservative GBR, as this will render it less effective. Instead, the Employer is advised to provide realistic statements in the GBR to give tenderers confidence in the fairness of the Schedule of Baselines as the basis for the Tender

The technical, commercial and legal 'battleground' will be the GBR. The GBR is a contract document and listed as the sixth most important document out of the 12 listed in Clause 1.5 Priority of Documents. The precise rights and precise obligations express and/or implied in the GBR are of fundamental importance to the effective operation of the Emerald Book. Put another way, if the GBR fails then the Emerald Book fails. The irresistible conclusion is that for the Emerald Book to operate commensurate with FIDIC's aspirations, the Employer, Contractor and Professional Consultants all need to be clear and confident that the GBR accurately and fully captures the 'risk allocation term-sheet'. It is often said that disputes are inevitable in construction projects—this is especially so when one considers subsurface ground conditions. All eyes ought to be on the GBR, the Completion Schedule and Schedules of Baselines.


1 The International Federation of Consulting Engineers (commonly known as FIDIC, an acronym for its French name: Fédération Internationale Des Ingénieurs-Conseils) is an international standards organization for the consulting engineering & construction best known for the FIDIC family of contract templates.

2 The Emerald Book provides:

  • General Conditions
  • Guidance for the Preparation of Particular Conditions and Annexes: Example Forms of Securities
  • Guidance for the Preparation of Tender Documents and Annexes: Table of Contents of the Geotechnical Baseline Report, Example Forms of Schedule of Baselines, Completion Schedule, Schedule of Contractor's Key Equipment
  • Forms of Letter of Tender, Letter of Acceptance, Contract Agreement and Dispute Adjudication/Avoidance Agreement.

Although, the Second Edition of the "Conditions of Contract for Plant and Design-Build, 2007" ("Yellow Book" 2017) was used as the basis for drafting the Emerald Book's General Conditions of Contract it is important to note that over sixty clauses and sub-clauses deviate from those in the Yellow Book.

3 The Emerald Book was developed by FIDIC in collaboration with the International Tunneling and Underground Space Association (ITA) through a joint Task Group 10 (established in 2014) on 'Contract Form for Tunneling and Underground Works'. Given that ITA members are contractors who engage in tunneling, the ITA may be perceived by some to be 'pro-Contractor'. There is also a view that Clause 4.12.5 evidences a pro-Contractor approach since the net effect of all additions and reductions under Sub-Clause 4.12.5 shall not result in a net reduction in the Contract Price.

4 Emerald Book Appendix A: The Geotechnical Baseline Report.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions