Role of the Engineer under FIDIC Yellow and Red Book

As a starting point, the engineer is appointed by the employer and shall carry out the duties assigned to the engineer under the contract.

While the 1999 versions of the FIDIC Yellow and Red Book contained limited wording on the qualifications of the engineer, the wording has been expanded in the 2017 versions to include that the engineer shall be a professional engineer with suitable qualifications, experience, and competence to act as the engineer under the contract and shall be fluent in the defined governing language.

Within this broad framework, the employer is entitled to choose the engineer at its discretion; i.e., the employer may choose an engineer from its organization, appoint the employer’s design consultant, or appoint a third-party specialist.

Although the employer may have a wide range of options for appointing the engineer, appointing the right one may be crucial to the project. As described below, the engineer’s role includes several areas of contract administration and management, as well as the duty to make determinations.

While it may be tempting, as an employer, to select an employer-friendly engineer, doing so may lead to significantly more disputes and disagreements between the employer and the contractor over the course of the project.

Instead, it is advisable to appoint a professional, qualified engineer with a clear understanding of the role and the neutrality requirements, whether appointed internally within the employer’s organization or as a third party. One of the engineer’s key strengths under the FIDIC framework is the ability to resolve disputes at an early stage efficiently while keeping the project on track.

Under the Danish AB-terms, there is no dedicated engineer role. Instead, the AB terms for construction (AB 18) and the design and build terms (ABT 18) have limited wording on the role of the consultants and their duties in the relationship between the employer and the contractor. Instead, the role of the employer’s consultant is merely set out to act on behalf of the employer.

The primary clause on the employer’s consultant is found in clause 28 in AB 18 and ABT 18 setting out that the employer must appoint a representative and the authority of the representative to act on behalf of the employer.

As a starting point, the consultant’s authority is limited to variations to the works and resultant amendments to the contract in terms of price, time, and security, involving an additional payment of a maximum of DKK 50,000 for each variation, and an extension of time of not more than five working days for each variation.

Compared to the FIDIC Yellow and Red Book, the role of the engineer is significantly more detailed and with a higher level of authority, including, but not limited to

• Supervision and inspection (design review under FIDIC Yellow)
• Issuing of instructions/variations
• Measurement and certification
• Determination

Unlike the Danish AB terms, the FIDIC conditions do not impose specific cost and time limitations on the engineer's authority, instead the terms presuppose that no limitations are imposed to ensure that the engineer can carry out the role satisfactory. To have a similar authority under the Danish AB terms, particular conditions must be drafted.

Regardless of whether the AB or FIDIC terms are chosen, Danish case law may be relevant when considering whether to place limitations on the authority of the engineer or the employer’s representative.

In a new ruling (TBB 2026.837 VBA) from the Danish Building and Construction Arbitration Board, the Danish arbitration tribunal found that a contractor cannot automatically rely on a consultant’s execution of variation orders if the work falls outside the scope of the consultant’s apparent authority. Consequently, each variation order outside the scope of the authority may be subject to scrutiny regardless of whether the consultant has approved the variation order.

Consequently, under Danish construction law, a contractor (and employer) should be very mindful of any limitations on the engineer/the employer’s representative.

The most significant difference in authority under the FIDIC Yellow and Red Books, in light of Danish construction law, is the engineer's duty to either reach an agreement or make a determination in the event of a claim between the employer and the contractor.

Although the engineer is appointed by and remunerated by the employer and acts on behalf of the employer, Sub-Clause 3.7 of the FIDIC Yellow and Red Book 2017 provides that the Engineer shall act neutrally when carrying out duties to reach an agreement or make a determination under Sub-Clause 3.7 (Sub-Clause 3.5 in the 1999 versions).

If the engineer is unable to reach an agreement with the parties, the engineer shall, within a predefined framework, determine the entitlement of the claim in question. Once a determination has been made, both parties must be aware of the strict time requirements if either wishes to challenge it. As a starting point, any determination by the engineer is deemed final and binding if no notice of dissatisfaction is given within 28 days after receipt of the determination.

If either party gives notice of dissatisfaction, the next steps in the dispute resolution process commence, requiring the parties to devote additional time and resources to settle the matter.