The International Federation of Consulting Engineers (FIDIC) and ITA-AITES (the International Tunnelling and Underground Space Association) have teamed up to publish a new form of contract for tunnelling and underground works, The Emerald Book.

The background behind this groundbreaking collaboration was that there were no standard contracts for tunnelling used by the ITA and FIDIC didn’t produce anything specifically for underground works either. We produced standard contracts for various project delivery methods that took into consideration underground works, but these were not specifically designed for extensive underground works which have special characteristics and special risks associated with them.

Back in 2004, the ITA developed a standard approach to managing underground risks for underground projects. They updated this approach in 2011. They looked at best practices to manage underground risks – a risk management tool in effect. The ITA’s expertise was in understanding underground risks and FIDIC’s expertise was in understanding standing conditions of contract.

They approached FIDIC about the possibility of collaborating to produce a standard contract that was specifically designed for underground works, which could incorporate their expertise in managing underground risks and put it in the format of a globally accepted form of standard contract.

So, the ITA brought their collective strengths to the table and jointly collaborated to produce this conditions of contract for underground works, the Emerald Book.

The contract addresses a number of key areas that promote equitable risk allocation and how to deal with conditions typically unforeseeable in tunnelling projects including:

  • Allocation of risk.
  • Disclosure of all available geological and geotechnical information.
  • Inclusion of a contractual geotechnical baseline.
  • Inclusion of a tailored “Unforeseeable Physical Conditions” clause.
  • Implementation of a ground classification system and of supporting particular conditions that properly reflect the effort of excavation and stabilisation.
  • Time for completion is largely influenced by ground conditions.
  • Provision of a flexible mechanism for remuneration according to ground conditions, foreseen and unforeseen.

This contract forces the employer to do their homework on a project and be clear about the underground conditions that the contractor will face and it does so by offering clear guidelines for developing tendering documents thereby helping the employer to do their due diligence homework. The result of that homework is establishing a geotechnical baseline report which gives a clear indication to all contractors what the underground geotechnical conditions are and what they have to take responsibility for.

Whatever is in the geotechnical baseline goes into the tender documents and so all potential contractors will know that. They will know what risks they have to assume and they can then price accordingly. Anything that’s not mentioned in that geotechnical baseline report is seen to be unforeseen and therefore a risk carried by the employer.

The contract clearly spells out what’s needed and spells out the underground risks because working in the underground environment the risks are unique. It forces the employer to spell out those risks for that specific project or tender and the effect of this is to put all offers for tender on a level playing field, so you walk in with your eyes open.

As this is a FIDIC contract like any other FIDIC contract, these are ‘living’ documents. We put them into the market, we put our best foot forward, but we accept market feedback and update the contracts accordingly, so we continually try and improve as we have done with all our contract documents. The Emerald Book is no different. This collaboration between FIDIC and ITA is just the starting point. We will continue to keep an eye on the market’s use of this contract, absorb the lessons learned and then feed those back into the process to ensure that best practices are incorporated into future iterations of the document.

Users need to be aware of the importance of understanding how to use this contract. You have to do your homework before you use it. It is based on full disclosure of information to all parties, so employers really have to have the capacity internally, or seek consultancy capacity, to ensure the preparation of the geotechnical baseline and that the instructions to tender are followed. We expect to do a lot of education and collaboration to ensure that the market uses this valuable tool correctly.

With underground construction a fast-growing market sector due to the increasing demand for use of underground space for infrastructure, FIDIC expects that the new Conditions of Contract for Underground Works (The Emerald Book) should be widely used.

Working together in a spirit of collaboration, FIDIC and ITA has produced a contract that we believe and hope will command the respect and authority of the international tunnel engineering and construction sector and that both clients and contractors can use with confidence. The Emerald Book addresses several critical areas that should lead to the smoother running of contracts in the growing tunnelling and underground works sector.”