FIDIC Contracts A progress report from FIDIC Contracts ... - FIDIC 2014... · – Applying all...

FIDIC Contracts

A progress report from FIDIC Contracts

Committee

FIDIC Contract & Agreement forms

Kaj Möller (SWE).

• FIDIC Executive Committee Member (2011-2015);

• Liaison with FIDIC Contracts Committee; and

• Head of Export, Sweco Group. www.swecogroup.com– Scandinavian based engineering consultant firm;

– Total turnover of app 1 BEUR;

– Export assignments in 80 countries (East Europe, Central-, South- and

Southeast-Asia, Africa, South- and Central America) annually; and

– Applying all FIDIC contracts and agreement forms in our external

contracting and operations, upstream and downstream.

http://www.swecogroup.com/

Why does FIDIC invest in standard forms for

Contract and Agreements?

• Create a first-class globally recognized contract standard for

industries investing in engineering, construction and related

operations;

• Promote the role of the Engineer and its importance in

balancing party´s risk exposure in construction investments.

• Secure integrity, transparence and accuracy in Clients

projects.

• Represent a continuous QA chain, from Basic Project

Considerations through Programming, Procurement,

Construction, Completion to Operations and Maintenance;


FIDIC Procurement Procedures Guide, 1st edition 2011



Best 2014 reading recommendation:

FIDIC Procurement Procedures Guide, 2011.

How does FIDIC do this?

FIDIC produces contract forms that we think are:

.


• COMPLETE, FLEXIBLE• Range covers most needs.

• Readily adaptable to fit

requirements.

• Choice of form can then

match projects

characteristics.

• RECOGNISED• Positive FIDIC image.

• World-wide acceptance

• Tested for more than 50 years

• CLEAR, COHERENT• Essential clauses.

• Detailed definitions.

• Consistent structure.

• Harmonized.

• FAIR, EQUITABLE• Risk allocated to the party

best placed to control it, bear

it, and deal with it.

• THIRD PARTY• Drafted by consulting

engineers who design and

manage projects.


.


Modell agreements for

professionals services:• Client/Consultant

• Joint Venture

• Sub-Consultant

• Representative

Forms of contract for works:• Construction and Sub-

Contractor

• Construction (MDB)

• Plant, Design & Build

• Turn Key

• Dredging

Forms of contract for works

and operations:• Design, Build & Operate

(DBO)


.


Contract Guides

and Policy Papers.Conferences, Work-shops

and Training.Close contact with key -

users and partners to fine-

tune and improve quality.

On the drawing board by the CC:

• Task Group 4A – Update of Joint Venture Model Agreement and Sub-

Consultant Model Agreement;

• Task Group 4B – Update of Client / Consultant Model Agreement (White

Book);

• Task Group 6 – Update of 1999 Rainbow Suite (Red, Yellow and Silver

book);

• Task Group 7 – Update of Dredgers Contract;

• Task Group 9 – New Yellow Book / Silver Book Sub-contract Forms

• Task Group 10 – New Tunnelling/Underground Contract;

• Task Group 11 – New Operate, Design & Build (ODB) Form of Contract;

• Task Group 12 – New Contract & Agreement - Glossary of Terms;


Which trends do we see 1(2):• Undoubtedly, fair and balanced contracts generate healthy

project completions. But there is mixed understanding of

the potential by the Clients. Experienced

financiers/employers vis-à-vis “New moneys”;

• With less and less time for implementation (from

investment decision to Investment pay-off) the need for the

Independent Engineer is greater than ever;

• The trend for a Turn Key or Design & Build delivery method

is still gaining popularity. More push for “Choice of Delivery

Method = project characteristics” is still needed;

• More assignments serving the Contractor rather than the

Employer.


Which trends do we see 2 (2):

• Employers wants stronger focus on “Fit for its

purpose” and thus operations liability contract (e.g.

DBO) are more and more preferred, not only to off

load their balance sheet;

• Over-tweaking of FIDIC based contracts, where the

intention of the forms are lost. Yet, still claimed to be

FIDIC contracts;

• A need for more forms available in multiple

languages;

• Health & Safety, Sustainability, Information

Management (e.g. BIM) and Integrity are areas of

interest which are given more and more contractual

attention by the Employers;


Plantagon Green House – Urban Agriculture


• A Build-only delivery method is not suitable when: • the total project time is limited; or

• contractors works experience is crucial in design stage to achieve the final result.

• A Design & Build delivery method is not suitable when:• Early cost-estimate accuracy is crucial; or

• Employer wants detailed influence the design;

• An EPC delivery method is not suitable when:• If it is a ”first time ever” project with crucial local permits,

approvals, codes and standards needed;

• There are significant unknown risks, e.g unknown underground conditions, in the project; or

• If the Employer intends to supervise closely or control the Contractor's work, or to review most of the construction drawings; or

• If the Employers is not willing to pay extra for the transfer of risks.

Basic programming considerations

Should FIDIC respond to these trends, and

if so, how? 1 (2):

• Is the set of Agreement & Contract forms by FIDIC

matching the needs of the future? What new forms of

contracts could be needed? Are any forms foreseen to

become obsolete soon?;

• What is the future role of the Independent Engineer in

Turn Key and/or Design & Build contracts? Are there any

alternatives?

• Health & Safety, Sustainability, Information Management

(e.g. BIM) is a selection of new areas of interest which are

given more and more attention by the Employers. How

deep into these areas should FIDIC contract and

agreement forms reach?

• What document formats should be used in the future.

Paper copies, encrypted pdf, format for Tablets /

handhelds?


Should we respond to these trends, and if

so, how? 2 (2):

• How about “Golden Clauses” of FIDIC General

Conditions? Clauses not the be changed in order to be a

FIDIC based contract? Introduction of a FIDIC Contract

Authentication ID?

• How should FIDIC charge for its forms? With the current

business model FIDIC are selling some ten thousands

copyright protected General Conditions / year. Yet, no one

knows how many millions of contract, based on FIDIC

forms, that are signed world-wide every year, without

FIDIC receiving any revenue.


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