By Dr Samer Skaik
A few years ago I sat in a workshop with the contract management team of a national roads agency. They were good at their jobs. Several of them had been administering donor-funded works contracts for well over a decade, and between them they had probably handled more claims than some law firms see in a generation.
About an hour in, one of the senior engineers said something that stopped the room. He said: we have been running this contract the way we ran the last four, and I am starting to think it is not the same contract.
He was right. It was not.
Somewhere between 2019 and 2021, without much fanfare inside the agencies actually delivering the work, the standard form underneath most internationally financed construction projects changed. The World Bank replaced its long-serving harmonised edition — the document most people in the industry still call the Pink Book, built on the 1999 FIDIC Red Book — with the 2017 second edition of the Red Book, embedded in its standard procurement documents. Other development banks including the Asian Development Bank moved in the same direction over a similar period.
The change was announced. It was covered in the trade press. Conferences were held. And yet, in my experience, a striking number of public sector project teams are still administering their contracts using habits formed under the old form, on projects governed by the new one. That is not carelessness. Nobody sent them on a course. The clauses look familiar enough that you can read them quickly and not notice what has moved.
This article is about what actually moved, from the point of view of the employer rather than the contractor. I am not going to walk through every amendment. I want to focus on the handful of changes that alter what a public employer has to do, and where I most often see agencies caught out.
The change nobody warned employers about
Start with the one that surprises people most.
Under the older form, the notice regime for claims was, in practice, something that happened to contractors. The contractor had to notify within 28 days or risk losing the entitlement. Employers were subject to a much looser obligation, and everybody knew it. A generation of public sector contract administrators learned to think of the claims clause as a defensive instrument — a thing you used to test whether the contractor had done its paperwork properly.
The 2017 form is largely symmetrical. Both parties now claim through the same machinery. If the employer wants to claim — delay damages, the cost of remedying a defect, a reduction in the contract price — the employer must give notice within the same 28 days of becoming aware, and must then submit a fully detailed claim within the period the contract allows.
Read that again if you administer contracts for a public body, because the implications are uncomfortable. Many agencies have no internal process at all for identifying, within 28 days, an event giving rise to an employer claim. The knowledge is often distributed: the resident engineer knows the defect exists, the finance officer knows what it will cost, and the person with authority to issue a notice finds out at the monthly meeting six weeks later. Under the old form that was survivable. Under the new one, employers are losing their own entitlements on exactly the technical grounds they used to rely on against contractors.
I find there is a certain grim justice in this that employers do not always appreciate at the time.
The engineer now has a job with a deadline
The second significant shift concerns the engineer, and it matters more for public employers than for anyone else, because on donor-funded projects the engineer is usually an international supervision consultant working several layers away from the ministry that ultimately decides things.
The older form gave the engineer a fairly compressed instruction: consult, try to reach agreement, and if not, make a fair determination. The 2017 form breaks this into a structured two-stage process with time limits attached. The engineer must first genuinely attempt to bring the parties to an agreement within a defined period, and only if that fails does the engineer proceed to a formal determination, again within a defined period. If the engineer fails to determine in time, the contract treats that silence as a deemed rejection, which the dissatisfied party can then take further.
Tthis mechanism was covered in more detail in an earlier published article on the engineer’s role in dispute prevention, so I will not repeat the analysis here. What I want to flag is the institutional problem it creates for public employers, which the drafting simply does not address.
The engineer is required to act neutrally and to decide within weeks. But on a great many public projects, the engineer cannot commit the employer to anything without an approval that takes months. So the engineer either determines within the period and risks the employer disowning the determination, or misses the period and hands the contractor a route straight past them. Neither is a good outcome, and both are visible on projects I see regularly.
The fix is not contractual, it is administrative: a public employer using this form needs to decide, at the outset, what the engineer is actually authorised to determine without a referral upstairs, and what the escalation route looks like when the answer is nothing. Doing that in week two of the project is a twenty-minute conversation. Doing it in month twenty is a dispute.
More notices, more discipline, more paperwork
The 2017 form is a substantially more prescriptive document than its predecessor. There are more notices, they are more formally defined, and the consequences of getting the form wrong are more explicit. There is a mutual advance warning obligation, which requires each party to warn the other of probable future events affecting the work, the price or the programme.
Whether you regard this as an improvement depends on your temperament. My honest view is that the discipline is good and the volume is genuinely burdensome, and that the burden falls unevenly. A large international contractor has a commercial department, a planner, and a claims consultant on retainer. A provincial water utility has one contract officer who is also covering a few other projects.
That imbalance has practical consequences. If the employer’s side cannot keep pace with the notice regime, the correspondence record over time starts to look one-sided in a way that has nothing to do with the merits — and correspondence records are what dispute boards and arbitral tribunals read. I have seen employers with perfectly good positions damaged by nothing more than the fact that they replied late, replied informally, or did not reply at all.
If you take one operational point from this post, make it this: a public employer moving onto the 2017 form needs more contract administration capacity than it needed under the old form, not the same amount. That is a resourcing decision, and it is best made before the project starts rather than during the first claim.
The time bar softened, but not as much as people think
The 28-day notice requirement in the older form had a fearsome reputation, and deservedly so. Meritorious claims worth very large sums were extinguished on it.
The 2017 form softens the edge. If a party misses the notice period, the other side must raise that objection within a defined window, and if it does not, the objection is lost. Where the objection is properly raised, the mechanism allows the substantive claim to proceed with the time-bar issue carried alongside it, and it can be taken into account whether the delay in notifying actually prejudiced anybody.
Employers sometimes read this as a general amnesty for late claims. It is not. But it does mean that a public employer can no longer expect to win simply by pointing at a calendar, and that responding promptly to a late notice is now itself a contractual obligation with teeth. When a late notice arrives, do not put it in a drawer to be dealt with when someone has time. The clock has started running against you.
The dispute board became something different
The final change is the one closest to my own practice, so I will try to be restrained about it.
Under the older form the standing panel was a dispute adjudication board. Its function was in the name: disputes came to it, and it adjudicated them. The 2017 form renames it a Dispute Avoidance/Adjudication Board and gives it an express avoidance function. Either party, or both together, can ask the board for informal assistance on a disagreement well before it has hardened into a dispute.
This is a genuinely different animal, and it changes what a good appointment looks like. Under the old model you could reasonably appoint on adjudicative credentials alone, because adjudicating was the whole job. Under the new one, a board that only ever behaves like a tribunal is delivering perhaps half of what the parties are paying for.
The related change is the emphasis on the board being in place from the start rather than convened when needed, which I wrote about in the first post in this series. The two changes reinforce each other. A board cannot help you avoid a dispute it only heard about after it became one.
What I would tell an agency starting a project tomorrow
Four things, none of them complicated.
Find out which form your contract is actually on. That sounds absurd, but I have sat in meetings where the parties disagreed about it for twenty minutes. The particular conditions matter as much as the general conditions, and on bank-financed work they are extensive.
Build an internal trigger for your own claims. Somebody has to be responsible for spotting, within days rather than weeks, an event that entitles the employer to something, and for getting a notice out. This is the single cheapest improvement available to most public employers on this form.
Decide what the engineer can determine without you. Write it down. Tell the engineer.
Resource the notice regime honestly. If the contract expects a volume of correspondence your team cannot produce, that is a problem to solve in the project budget, not a problem to discover in the first adjudication.
The engineer at that workshop was right that it was not the same contract. What I would add, having thought about it for a few months since, is that it is not really a harder contract either. It is a more demanding one, and it is demanding of both sides equally. That is a good change. It just requires the employer’s side to show up differently than it used to.
This post is the second in a series for public sector employers delivering infrastructure under internationally financed contracts. Related reading: The First Four Weeks: How Public Infrastructure Employers Set a Project Up to Avoid Disputes.
Similar Posts:
- The UAE Civil Code and Claims under the Red Book FIDIC in the UAE
- The ‘notices’ provision
- FIDIC 1999 or something else in disguise?
- Contract variations
- The disappearance of the impartial engineer
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