Contract Users’ Newsletter ISSUE 7 July 2021
Published by the International Federation of Consulting Engineers (FIDIC)
www.fidic.org
Five key FIDIC contracts published in Chinese The publication of five FIDIC standard construction contracts in Chinese is a major landmark event for the global construction sector. FIDIC has published five of its key standard construction contracts in Chinese. The publication of the documents is the result of a major translation and publishing licence agreement FIDIC signed last year with Beijing-based China Machine Press, which will enable FIDIC contracts and other key documentation to be translated and published in Chinese. The publication of the five contracts (Yellow, Silver, Red, White and Gold Book contracts) will help to widen the dissemination of FIDIC publications in the Chinese market and due to increased Chinese investment in international markets, the move will also provide a harmonised approach allowing Chinese consultants and contractors to better comprehend FIDIC contracts in their local language enabling them to use the marketleading documents internationally. All five contracts are bilingual, so helping international parties to collaborate in an increasingly globalised world. Hardcopies of the contracts are available from China Machine Press or via FIDIC Consulting Services (Beijing) Ltd and
digital copies can be purchased from the FIDIC bookshop. Commenting on the publication of the contracts, FIDIC chief executive Dr Nelson Ogunshakin said: “I am delighted to see these contracts published in Chinese. It is a major landmark in FIDIC’s aspiration to have the FIDIC 2017 suites of contracts as the foremost infrastructure, engineering and construction procurement contracts adopted in the largest populated country in the world, with the potential to become global standards. “It means that we have now published our standard contracts in in four (Spanish, Portuguese, French and Mandarin) of the key five strategic languages demanded by the seven largest multilateral development banks – World Bank, InterAmerican Development Bank, Caribbean Development Bank, European Bank for
Reconstruction and Development, Asian Infrastructure and Investment Bank, Islamic Development Bank and the African Development Bank, all of whom have recently adopted the FIDIC 2017 contracts for their own investment in infrastructure projects across their operating countries.” Ogunshakin also said that by publishing FIDIC contract documents in the native language of a key infrastructure market, FIDIC is creating a platform where best practice documents in the consulting engineering and construction arena can improve collaboration and communication to achieve better project implementation. “This will aid successful project outcomes in terms of design quality, sustainability, value for money and transparency,” he said.
read more
Issue 7 - July 2021
2 FIDIC Contract Users’ Newsletter
Contracts committee boosted by five new members Five leading global legal, contractual, risk and engineering experts have joined the FIDIC contracts committee. FIDIC has further strengthened its influential contracts committee with the appointment of five new members from across the international construction and infrastructure sector. The five new arrivals will boost the committee’s global experience and capabilities in a number of key areas and ensure that the committee remains at the cutting edge of international construction contract development. The five new members are Mahmoud Abu Hussein (United Arab Emirates), Adriana Spassova (Bulgaria), Jafar Khan (United Arab Emirates), Keith Leung (Singapore) and Eoin Cullinane (Ireland). All bring a wide range of international construction experience including in the areas of major project development and management, legal and risk, employment law, adjudication, arbitration and dispute resolution. FIDIC’s contracts committee is a crucial body for the organisation as it recommends to the FIDIC board which conditions of contract and related documents should be prepared or updated by the federation. The 12-strong international
Issue 7 - July 2021
committee also works closely with FIDIC staff to establish task groups to monitor the committee’s work and review documents to ensure that they take account of the latest industry developments. Members of the committee also liaise with organisations interested in the FIDIC Rainbow suites Conditions of Contract. Commenting on the five new committee members, FIDIC chief executive Nelson Ogunshakin said: “I’m delighted that we have attracted five leading global legal, contractual and engineering experts to sit on the FIDIC contracts committee. They will bring their considerable knowledge and experience to the committee’s work in drafting, producing and regulating the market-leading FIDIC contract suites of construction and professional agreements and I look forward to working with them over the coming months and years.” FIDIC contracts committee chair Vincent Leloup commented: “Our committee is a vitally important one for FIDIC and it is excellent to see these international experts with highly relevant backgrounds so keen to
Mahmoud Abu Hussein (United Arab Emirates)
Adriana Spassova (Bulgaria)
Jafar Khan (United Arab Emirates)
Keith Leung (Singapore)
Eoin Cullinane (Ireland)
become a member of this flagship FIDIC committee. I am delighted that we have attracted such highly qualified and experienced individuals applying to join FIDIC’s contracts team and assist our work and it illustrates the importance of the work that we do on behalf of the global construction contracts community. “The new committee members will help to ensure that our contracts remain the go-to documentation for international funding organisations, clients and other procurers of construction and engineering consultancy services and I cannot wait to start working with them and have them on our team.” The FIDIC contracts committee meets at least
four times a year and its task groups play a key role in the development of new contracts and guidance documents for the industry. Members of the committee advocate and guide best practice in FIDIC Contracts across the global engineering and construction industry and also provide an expert resource for FIDIC on all its contracts and agreements. The committee also advises the FIDIC board and secretariat on all aspects of FIDIC contracts and their use in the international consulting engineering industry.
Click here to find out more about the FIDIC contracts committee and its members.
3 FIDIC Contract Users’ Newsletter
Record-breaking FIDIC contracts webinar held
A recent webinar on FIDIC contracts was attended by more than 1,600 people on Zoom and You Tube, a record turnout for any FIDIC event ever. The webinar, FIDIC contracts – the gold standard for projects, was attended by 1,000 people on Zoom with more than 600 others watching live on You Tube. The event looked at why FIDIC contracts were widely and increasingly seen as the gold standard for global infrastructure, engineering and construction projects and the benefits and confidence that they bring to all parties. Speakers at the event included Pablo Laorden, managing partner at Lámbal Abogados in Spain, Karen Gough, barrister and attorneyat-law at 39 Essex Chambers in the UK, Haroon Niazi, partner and head of Middle East at HKA in the United Arab Emirates, Ellis Baker, partner and global head of construction and engineering at White & Case in the UK and
Daduna Kokhreidze, FIDIC’s general counsel. Karen Gough of 39 Essex Chambers stressed the importance of FIDIC contracts continuing to develop and staying ahead of emerging trends in the marketplace. “Getting the best deal that you can does not necessarily getting the best contract and we need to retain our humanity and the way that we work with one another,” she said, highlighting the need to work collaboratively. Haroon Niazi from HKA said that those who weren’t currently using FIDIC contracts were missing out and they needed to get on board. Asked about the issue of the disputes mechanism in FIDIC contracts not appearing to be as effective in preventing issues in the Middle East, Niazi said that the role of the
engineer was crucial especially when contracts amendments were being contemplated. “In the Middle East we do like to change things,” he said while stressing that any changes needed to be made in accordance with FIDIC’s Golden Principles to safeguard the veracity of contracts. Ellis Baker from White & Case spoke about how FIDIC contracts might need to develop in the future. “Moving forward, FIDIC will need to be astute about the criteria in its contracts to cope with new developments in the industry but judging by its position in the market so far I am confident that the contracts will keep pace with industry changes,” he said. Pablo Laorden of Lámbal Abogados highlighted the “huge opportunity” in sectors like wind farms, where
developers were looking for project certainty in a developing area and FIDIC contracts were ideally placed to help in that regard. He also said that having contracts translated into Spanish and Portuguese was crucial. Daduna Kokhreidze, FIDIC’s general counsel, stressed the need to use FIDIC’s Global Principles. “It is important to keep the balance of risk allocation as they are outlined in the FIDIC contracts, so it is important that the contracts are used in the way that they were intended and the Golden Principles can help with this,” she said. Click here to watch a recording of FIDIC contracts – the gold standard for projects on the FIDIC Media YouTube channel.
Issue 7 - July 2021
4 FIDIC Contract Users’ Newsletter
Work starts on delivering new FIDIC Collaborate Contract Task group starts work on new contract for use for collaborative and partnering procurement arrangements on international projects.
FIDIC’s board has agreed to the setting up of a new task group by the FIDIC contracts committee, which, in time, will lead to the development of a new FIDIC Collaborative Contract. The new contract, aimed at the global market, is a significant development for FIDIC in an important area of the international engineering, construction and infrastructure industry. The task group will research the collaborative contracts currently in the market to establish a clear framework of the various approaches currently being taken to collaborative contracting, consider what collaborative contract options are available to FIDIC and identify a preferred collaborative contract solution. Commenting on the setting up of the task group and the prospect of a new collaborative contract, FIDIC contracts committee chair Vincent Leloup said: “I am really pleased that FIDIC has
Issue 7 - July 2021
started work on this exciting project. We have assembled a highly knowledgeable task group, chaired by Andrea Chao based in the Netherlands. Andrea is head of projects and construction (NL) at Simmons & Simmons LLP and has recently delivered similar project in her country which makes her very well placed to lead and understand the challenges of delivering a contract like this.” The full membership of the task group is as follows: • Andrea Chao, Head of Projects and Construction (NL), Simmons & Simmons LLP (Chair). • David Mosey, Professor, Kings College London, UK. • Stefan Cifu-Hayward, Regional Legal Director, Colas, based in Paris. • Jide Okanye, Barrister,
Nigeria. • Justin Masterson, Procurement Manger, Statcraft, based in Ireland. • Mike Hunting, Head of Governance, Risk and Commercial, Atkins, UK. • Andrew Dixon, Commercial Director, QS background, UK. • Lyndon White, Independent Consultant, Collaborative Contracting and ADR, Australia. • Taka Kimure/ Antoine Calmes, ITER Representatives. FIDIC contract committee liaison Kiri Parr commented: “From my discussions with the task group, I know that we have a diverse powerhouse of global professionals representing multiple parts of the industry, jurisdictions and perspectives. I have been blown away by everyone’s
intelligence and passion for this topic and project and I can’t wait to get started on this crucial project for FIDIC and the international engineering, construction and infrastructure industry.” FIDIC chief executive Dr Nelson Ogunshakin commented: “We are very pleased to have FIDIC kick off this initiative, as the first of many to come, as a means of increasing our portfolio of contract forms to address the demands from both advanced and developing countries for collaborative and partnering procurement arrangements on international contracts. Such collaborative contracts will be highly welcomed by the many multilateral development banks and multinational private sector clients who have adopted FIDIC contracts as their preferred standards.”
5 FIDIC Contract Users’ Newsletter
Linking up the FIDIC contracts community With more and more organisations signing up to use FIDIC contracts and increasing interest in their use, the online community of users around these standard forms is growing. FIDIC is rightly renowned for its international standard forms of contract for use on national and international construction projects. As well as publishing standard contracts for works and agreements for clients, consultants, sub-consultants, joint ventures and representatives. FIDIC also publishes various business practice documents such as policy papers, guidelines and training manuals. These documents cover a range of issues including risk management, project sustainability management, environment, integrity management, dispute resolution techniques and insurance and a number of guides for quality-based selection, procurement and tendering procedures. With an increasing number of organisations choosing to use FIDIC contracts, the thirst for information and knowledge about these industry-leading documents has never been higher. That interest is underlined by the massive turnouts at FIDIC webinars on contractual issues (see page 5) and the number of questions about contracts that are raised by attendees at FIDIC events, even when they are not specifically dealing with the issue of contracts. There is now a growing community of FIDIC contract users and a desire to come together to discuss key issues of interest and share best practice and to provide an online space for all FIDIC contract users to gather to engage as a community, FIDIC has recently set up an Official FIDIC Contract Users’ Group on LinkedIn. “We want this LinkedIn group to be the leading online community for
FIDIC contract users,” said Nadia Van Der Waltova, digital marketing and communications executive. “Members of the group will be the first to hear of the latest FIDIC contract users’ news, events, training and offers and they can compare experiences with other contract users on the most common challenges facing the industry. We also see the group as providing a forum to brainstorm for creativity and innovation in the future development of FIDIC contracts,” Van Der Waltova said. LinkedIn is already a fruitful platform for raising awareness about FIDIC and its contracts. The recent record-breaking attendance for the FIDIC webinar, FIDIC contracts - the gold standard for projects, was boosted by the massive numbers of people who registered for the event via a FIDIC LinkedIn events page. The LinkedIn event was shared multiple times and over 7,000 professionals marked their interest in attending from a multitude of different industries, job functions and
companies. Within days of the Official FIDIC Contract Users’ Group being set up on LinkedIn, hundreds of people joined it and the numbers are rising every day. “It’s really great to see this level of interest in FIDIC,” said Van Der Waltova, who said that FIDIC was aiming to increase affinity, awareness and engagement to help build a vibrant community of contract users. “Expanding the number of positive engagements with people that know, like, and further refer to FIDIC contracts within their networks is a key aim of our Official FIDIC Contract Users’ Group. In this way we can have useful conversations with industry professionals and help to reinforce FIDIC’s thought leadership in the infrastructure and construction industry,” she said. Click here to sign up to the Official FIDIC Contract Users’ Group on LinkedIn.
Issue 7 - July 2021
6 FIDIC Contract Users’ Newsletter
EIB agreement underlines FIDIC influence with MDBs The signing of a cooperation agreement with the European Investment Bank (EIB) is the latest in a long line of MoUs FIDIC has signed with the global multilateral development banks. In May, FIDIC signed a five-year memorandum of understanding (MoU) with the European Investment Bank (EIB) to foster cooperation on a range of shared objectives and on effective procurement and contract management. The EIB agreement is the latest in a series of MoUs that FIDIC has signed with MDBs worldwide and taken together these agreements will raise the profile and use of FIDIC contracts globally, ensuring greater transparency and upholding high social and environmental standards in the implementation of infrastructure projects. FIDIC has now signed agreements with the vast majority of the key MDBs around the world and this will see FIDIC contracts being referred to and included in many of these banks’ standard bidding documents for projects that they finance. This represents a big vote of confidence in FIDIC’s contracts as it shows that the banks endorse the fair and balanced approach that these documents offer to parties on major construction contracts. The agreement between FIDIC and the EIB will see both organisations collaborate across a number of key areas and activities, including increasing dialogue and expert meetings between both parties, promotion of knowledge-sharing and cross institutional learning, participation in key working groups and training courses relating to the use and application of the FIDIC documents, participation in FIDIC’s
Issue 7 - July 2021
tunnelling and underground works. multilateral development banks Previous agreements also signed with (MDBs) advisory group, involvement a number of international contracting in FIDIC training programmes for organisations including some in China, MDBs and FIDIC contract users and will further widen the influence and use participation in FIDIC conferences and of FIDIC contracts on the global stage. webinars. Highlighting how well regarded Commenting on the agreement FIDIC contracts are by international signed with the EIB, FIDIC chief funders, the comments of Ricardo executive Dr Nelson Ogunshakin Mourinho Félix, EIB vice-president, said: “I am absolutely delighted that are particularly instructive. “I am FIDIC has signed this landmark delighted to sign this MoU between agreement with the EIB and that our two organisations will be working closely on areas of mutual interest. The EIB is the largest multilateral financial institution in the world and the MoU we have signed is a big boost for FIDIC and its members, the EIB, international EIB vice-president Ricardo Mourinho Felix and FIDIC CEO Dr Nelson consulting and engineering firms Ogunshakin at a virtually held signing ceremony. and also the wider the European Investment Bank and global construction sector. We are international engineering federation really looking forward to working with FIDIC. This deepens our cooperation EIB and to building our partnership to strengthen high standards around over the next five years.” procurement. Ensuring transparency, In the past year, FIDIC has preventing corruption and upholding signed similar agreements with the high social and environmental Islamic Development Bank, the standards are essential key elements International Fund for Agricultural for projects backed by the EIB. Development and has recently We take this extremely seriously expanded its agreement with the and this partnership is part of this World Bank to include the FIDIC commitment.” Emerald Book form of contract for
7 FIDIC Contract Users’ Newsletter
New advisory group strengthens links with IFIs A new advisory group has been set up to improve dialogue and help strengthen FIDIC’s links with the international financial institutions. A new advisory group to provide a platform where international financial institutions can have a dialogue with FIDIC’s international financial institutions committee (IFIC) has recently been set up. The group, which includes individuals from international financial institutions and multilateral development banks, will attend FIDIC IFIC meetings as appropriate, share relevant knowledge and experience, highlight international financial institutions’ priorities to the committee and identify relevant topics to which FIDIC should contribute or address as a strategic priority and also share experience on the use of FIDIC contracts and agreements in standard bidding documents and make recommendations on future updates and developments. Given the wide range of international financial institutions from around the world, pulling together the advisory group has been challenging but it is a testament to the willingness of IFIs to get involved that the first meeting of the group had attendance or expressions of interest from the European Bank for Reconstruction and Development, European Investment Bank, Islamic Development Bank, Asian
Development Bank, Japan International Cooperation Agency, KfW Development Bank, French Development Agency and the International Fund for Agricultural Development. The first meeting and a subsequent follow up session saw the banks will present their key priorities and discuss areas of potential collaboration. Going forward, it is envisaged that cooperation will encompass a range of areas, expanding wider than contract-related discussions, to eventually channel through into the work of other FIDIC committees especially those related to sustainability and integrity. Members of the IFIC advisory group are confirmed by the FIDIC secretariat and board upon the consent
and endorsement from the relevant financial institution that the member represents. The composition of the group will reflect as much as possible FIDIC diversity and inclusivity principles and members will be appointed for either a two- or four-year period. The group will provide a key conduit for IFIs and multilateral development bank to share their policies as they relate to FIDIC operations and help to strengthen relations with an important stakeholder grouping for FIDIC. Commenting on the formation of the new group, FIDIC chief executive Dr Nelson Ogunshakin said: “I am delighted that we now have this structured process to engage the IFIs. The first meeting provided FIDIC with an opportunity to gain an
initial insight into the IFIs’ area of interests and also their expectations from the FIDIC international financial institutions committee. “We have taken note of some of the areas raised by the IFIs - notably on sustainability, integrity, translation, training, procurement policy and post-Covid priorities - and the FIDIC team will be giving due consideration on how to best to proceed on the specific points raised during future IFIC meetings which will be organised in the months ahead.” Ogunshakin said that he was looking forward to building a stronger and mutually beneficial collaboration relationship with the IFIs going forward and that the advisory group would play a key role in that.
Issue 7 - July 2021
8 FIDIC Contract Users’ Newsletter
“Relevant and impressive” users’ conference held online The Official FIDIC Contract Users’ Conference (North America, Latin America and Caribbean time zone event) was staged online and delivered in-house by FIDIC from 25-28 May 2021.
The event, sponsored by global strategic partner, international law firm CMS, targeted the Latin America, Caribbean and North America contract users’ community and gave delegates a unique opportunity to share progress on the application and use of FIDIC contracts internationally and across the region. The event included participation from MDBs, private sector organisations and clients, government, engineers, contractors, investors, consultants, and other stakeholders who have an interest in FIDIC contracts. The North America, Latin America and Caribbean time zone event was the first Official FIDIC Contract Users’ Conference organised since FIDIC took the decision to take the running of the events in-house, following a holistic view of its existing events and conferences. Going forward, FIDIC plans to ensure that the voice of the FIDIC contracts community is heard and amplified and as a result provide an even better service to its stakeholders. Introducing the event, FIDIC president Bill Howard highlighted the importance of using FIDIC contracts in an unamended format
Issue 7 - July 2021
and adhering to its ‘Golden Principles’ to guard against problems arising on projects. Opening the first session of the conference, FIDIC president elect Anthony Barry spoke about the important role of the FIDIC contracts committee in developing this key area of the organisation’s business and supporting the construction and infrastructure sector. “Our contracts do not stand alone in the industry – they are backed up by many other documents and approaches, including the FIDIC Body of Knowledge, and are part of a whole ecosystem that is integrated in such a way that supports all those that use them across our industry,” said Barry. The breadth of FIDIC contracts’ use across the global industry was indicated by the number of translations in circulation, said Barry, who also highlighted the significance of the contracts being adopted and used by many of the international multilateral development banks. “FIDIC contracts can be used by developed and developing nations because of the eco-system we have in place to support their use,” he said. Barry also urged delegates to engage proactively with FIDIC to help
influence the development of contracts and offer feedback on the work of the contracts committee to ensure that the organisation remained at the cutting edge of the global construction contract arena. FIDIC contracts committee chair Vincent Leloup, spoke about the evolution of FIDIC contracts, highlighting new contracts in the pipeline, new initiatives and developments including the new FIDIC Green Book. He outlined some of the 14 clauses and key changes in the new FIDIC Short Form of Contract (Green Book) 2nd Edition, which is due to be published towards the end of 2021. Some of the changes in this new 2nd edition include the addition of ‘boilerplate’ clauses on intellectual property, confidentiality, limitation of liability, testing provisions, date of completion, performance certificates, claim and variations, employer’s risks and liquidated damages provision. A key benefit of the Official FIDIC’s Contract Users’ Conferences is the opportunity to get the inside track on new documents in development and Leloup was able to update delegates on ongoing work on the FIDIC Bronze Book: Form of ODBO Contract for
brownfield projects and other exciting new initiatives for 2021, including new contracts on Collaborative Contracting, PPP Projects and EPCM, all of which are scheduled for release at the end of 2021. The four-day conference also looked at the impact of Covid 19 on infrastructure projects and the lessons to be learned. Christopher Seppala, special advisor to the FIDIC contracts committee, highlighted the implications of Covid-19 impacts in different jurisdictions, examining the issues from a civil law versus common law perspective and looked at the key lessons to be learned and how FIDIC contracts had addressed the Covid pandemic. Day two of the conference focused on “Getting it right with FIDIC” and looked at why procurement matters, consultancy agreements and dispute resolution. Emma Schaafsma, a partner at international law firm CMS, spoke from her experience as a dispute lawyer, highlighting what sustainable procurement looks like and the optimal balance of risk. “Procurement is not just about price,” Schaafsma said. She highlighted the problem of contractors trying to recover costs by bidding low and then
9 FIDIC Contract Users’ Newsletter
seeking changes and claims thereafter. Clients should be wary of those that bid low, she said and spoke highly of FIDIC contract forms which had “evolved to reflect market practice and seek to allocate risk to the party most able to bear that risk”. Elsewhere, day three and four of the conference were regional days highlighting the Latin America and USA, Canada and Caribbean use of FIDIC contracts by drawing on the experiences of keynote speakers and case studies from across the different regions. FIDIC board member and chief operating officer at Morrison Hershfield Group Catherine Karakatsanis, said that having attended various sessions throughout the four days of the conference, she had found the content “relevant, impressive and valuable”. In-house production should ensure that the planning and delivery of future Contract Users’
Conferences will bring FIDIC much closer to the subjects under discussion and to the delegates. Barbara Chabloz, FIDIC’s head of conference and events, said: “We plan to improve the content and quality of these conferences by renewing, revamping and relaunching them. We will put FIDIC’s contract users back at the centre of these events, listen to them and what they want to learn about and give a wider range of speakers the opportunity to share their regional experiences of using FIDIC contracts.”
Issue 7 - July 2021
10 FIDIC Contract Users’ Newsletter
Entries open for FIDIC Contract Users’ Awards
The British Normandy Memorial in northern France, the winner of last year’s Project of the Year Award.
FIDIC’s annual awards celebrating excellence in the use of FIDIC contract forms and showcasing good practice through collaboration from across the world are now open for entries.
Issue 7 - July 2021
Entries are now open for the FIDIC Contract Users’ Awards, which recognise excellence in the use of FIDIC contract forms for project delivery and showcase examples of good practice through collaboration from across the world. The awards bring together the global community of FIDIC contract users to celebrate and highlight excellence and best practice and raise the profile of FIDIC contracts on an international scale. This year’s winners will be presented with their awards at the Official FIDIC International Contract Users’ Conference (Europe, Middle East & Africa time zone event) which is planned to take place digitally from 29 November 2021 to 2 December 2021. The awards will be presented digitally at the above conference on the evening of Tuesday 30 November 2021. Last year’s Project of the Year Award was won by the British Normandy Memorial for a special project to build a worthy British national memorial to the men and women who died on D-Day and during the subsequent Normandy campaign in the Summer of 1944. The memorial stands on rising ground in Ver-sur-Mer, Normandy, overlooking Gold Beach and although a British Memorial, it commemorates combatants from 38 different countries worldwide, who fought and died during the campaign. The engineer on the project was Michael Coombs of Alan Baxter Ltd and the contractor was Eiffage.
There are a total of ten categories in this year’s awards as follows: • FIDIC Contracts Project of the Year • FIDIC Contracts Client of the Year • FIDIC Contracts Consultant of the Year • FIDIC Contracts IFI (International Finance Institution) of the Year • FIDIC Contracts Contractor of the Year • FIDIC contract legal or professional services of the Year • FIDIC Contracts trainer(s) of the Year • FIDIC Contract adjudicator(s) of the Year • FIDIC Strategic Partners of the Year • FIDIC Golden Principles Award
The FIDIC Contracts Project of the Year award is for any project procured under a FIDIC Contract. Entries should give a description of best practice achieved on their FIDIC project(s) with particular emphasis on the 1999 or 2017 editions of the FIDIC contract form. The FIDIC Contracts
11 FIDIC Contract Users’ Newsletter
Client of the Year Award is open to entries from any client or organisation and entries should give a description of best practice achieved with their supply chain on their project using FIDIC contract forms. The FIDIC Contracts Consultant of the Year category is open to any consultant or consultancy and engineering organisation and entries will describe the best practice outcomes that they have achieved by using FIDIC contracts. Meanwhile, the FIDIC Contracts IFI (International Finance Institution) of the Year Award is aimed at recognising international finance institutions with the best procurement policy and proactive engagement with borrowers and stakeholders on capacity-building, institutional strengthening and training.
FIDIC is also keen to recognise the contracting sector for their work and the FIDIC Contracts Contractor of the year category is open to any contracting organisation that can demonstrate best practice and good outcomes achieved on their project using FIDIC contracts. Recognising the work of the legal and wider professional services sector is also important to FIDIC and the FIDIC Contracts Legal or Professional Services of the Year Award will reward best practice by a legal firm during the year based on their outstanding contribution to the wider use of FIDIC contracts. Competition is expected
to be particularly strong in this category and all legal firms working with FIDIC contracts are encouraged to enter. Training on the use of FIDIC contracts is a key area and the FIDIC Contracts Trainer(s) of the Year Award aims to recognise the efforts of an individual or a company in the provision of training for FIDIC contracts. Meanwhile, the FIDIC Contracts Adjudicator(s) of the Year Award will highlight and reward the efforts of an individual or company in the provision of adjudication services for FIDIC contracts. The FIDIC Strategic Partners of the Year Award will be another keenly contested category and will be awarded to an organisation or a group of organisations to recognise their outstanding contribution to the effective use of the FIDIC contracts on a country focused or global scale. Finally, the FIDIC Golden Principles Award will be awarded to any person, organisation or organisations for their strict compliance to the FIDIC Golden Principles on the execution of particular projects using any of the FIDIC contract suites. All entries for all the categories in the FIDIC Contract Users’ Awards need to be submitted and completed online and the closing date for entries is Friday 15 October 2021. The digital entry platform is easy to use and has been set up in such a way that entrants can complete their entry in multiple sittings by saving their work and then returning later to complete their entry.
ENTER NOW! Click here to access the digital entry form for the 2021 FIDIC Contract Users’ Awards.
Issue 7 - July 2021
12 FIDIC Contract Users’ Newsletter
FIDIC backs World Bank move to prevent gender-based violence FIDIC has taken steps to support increased efforts by the World Bank to strengthen prevention of genderbased violence. FIDIC is taking a series of steps to support strengthened measures by the World Bank to address and prevent gender-based violence (GBV), sexual exploitation and abuse (SEA) and sexual harassment (SH). The strengthened requirements by the bank in its works procurement are aimed at guiding borrowers in the assessment of bidders’ responsiveness and competence to comply with specific SEA-SH-related obligations during the bid evaluation process. They also set clear expectations in contract conditions by stipulating obligations to manage GBV/SEA-SH risks that are within the contractors’ control. Contractors and sub-contractors who do not comply with the enhanced requirements will be banned from being awarded a bank-financed contract for two years. Speaking when the bank launched its new guidelines, World Bank Group president David Malpass, said: “Gender-
Issue 7 - July 2021
based violence is unacceptable. We are committed to mitigating and preventing risks of GBV in the projects we finance through robust policies, standards, and practices. Contractors who do not meet the bar will be disqualified.” The World Bank is already highly supportive of the FIDIC DAAB mechanism and makes it a condition precedent to commencing the works on projects. The bank’s move increases the role of Dispute Avoidance/Adjudication Boards (DAABs), already a key feature of FIDIC contracts, on projects where their policies aimed at stopping sexual harassment and sexual exploitation and abuse apply. The additional role for DAABs, reflected in the World Bank Standard Procurement Documents in effect as of January 2021, includes monitoring compliance with the SH and SEA procedures. To support the bank’s strengthened measures to combat gender-based violence and sexual harassment, FIDIC is updating and informing the members of its current list of adjudicators about the new measures and will be providing enhanced training to any new potential adjudicators on the new requirements. FIDIC chief executive Dr
Nelson Ogunshakin said: “FIDIC totally supports this initiative from the World Bank to prevent gender-based violence, which is in line with FIDIC’s code of ethics and founding principles of integrity, and we are working with them to ensure that engineers and DAABs can effectively support this policy. The World Bank is the first multilateral development bank to implement measures which ensure that contractors and subcontractors who don’t comply with these critical requirements on gender discrimination will not receive further bank-financed contracts anywhere in the world for a period of two years. “The World Bank’s decision to increase the role of DAABs also further legitimises the use of the FIDIC contract and DAAB procedures and places an additional responsibility on FIDIC to ensure that all those on the current and future FIDIC President List of Adjudicators understand the expectations of the bank and are trained to be effective.” Given that it finances a large portfolio of infrastructure contracts, the World Bank hopes and expects that the new disqualification mechanism will further raise the bar in preventing GBV and incentivise well-performing contractors. The bank hopes that other multilateral development banks will follow its lead in deepening the collective fight against GBV by adopting similar robust measures.
13 FIDIC Contract Users’ Newsletter
Contract translations on the increase More and more FIDIC contracts are being translated into key international languages helping to improve the reach of these important documents across the global construction sector. As an international organisation with a significant global reach, FIDIC rightly prides itself on ensuring that its marketleading contracts are well understood across as many countries as possible. That means getting its standard construction contracts translated into key international languages to encourage their take up in as many countries as possible. Speaking at FIDIC’s recent Official Contract Users’ Conference for North America, Latin America and the Caribbean, Pablo Laorden, founder and managing partner at the law firm Lámbal Abogado, highlighted the key need for native language translations of contracts as a basic step to avoid misunderstandings and controversies on projects. “Given that many contract controversies relate to the ‘specific’ meaning of one word or expression, or to the interpretation of a sentence or paragraph or of a local law or permit, why should we be discussing about each stakeholder’s translation or interpretation when we can have the original contract in our own language?” Laorden said. He made the point that a common language and/or understanding of the contract documents and all communications during the project is key for the success of any project. “The main benefit of using the FIDIC forms in the local language is that it facilitates its understanding by all stakeholders, minimising misunderstandings, claims and disputes, thereby contributing to the success of the project,” said Laorden.
The publication of five key FIDIC contracts in Chinese (see page 1) means that FIDIC has now published its standard contracts in in four - Spanish, Portuguese (to be available in Q3 of 2021), French and Mandarin - of the key five strategic languages demanded by the seven largest multilateral development banks – the World Bank, Inter-American Development Bank, Caribbean Development Bank, European Bank for Reconstruction and Development, Asian Infrastructure and Investment Bank, Islamic Development Bank and the African Development Bank. All of these international funding organisations have recently adopted the FIDIC 2017 contracts for infrastructure projects across their operating countries. In addition to the above, FIDIC has also published translations of a number of its contracts in several international languages. The Ukrainian FIDIC member association recently completed a translation of FIDIC Green book 1999, FIDIC Red 2017 and FIDIC Red 1999 Subcontract (Ed 2011) whereas FIDIC Yellow 2017 and FIDIC Silver 2017 have
also been translated into Serbian. Elsewhere, Portuguese and Italian translations of the 2016 Dredgers contract have been completed in collaboration with the International Association of Dredging Companies with whom FIDIC has an ongoing collaboration agreement. FIDIC also has a translation and license agreement with its Jordanian member association, the Jordan Architects and Consulting Engineers Council, which should mean that key contracts will be published in Arabic in the not too distant future. FIDIC’s international client manager Ieva Liaugaude commented: “The busy activity pipeline of FIDIC contracts translation is answering the industry’s demand to ensure global outreach for all FIDIC contract users. Translations are essential to enhance the understanding of FIDIC contracts by all users across the globe with no exceptions. We are certain that these ongoing translation initiatives will serve the industry’s common goal to introduce balanced and clearly structured FIDIC contracts to anyone interested.”
Issue 7 - July 2021
14 FIDIC Contract Users’ Newsletter
A licence for fair contracting The number and range of licences signed by leading organisations to use FIDIC contracts shows that these industry standard documents are becoming ever more popular around the global construction sector. FIDIC standard forms of contract are increasingly becoming the benchmark for global construction contracts as clients are attracted by the fair and balanced approach they take, especially in the area of project risk. The number of organisations that have signed licence agreements with FIDIC to use our contracts is testament to the high regard in which the documents are held and only serves to raise their profile even more. One such organisation is the International Labour Organization which has recently signed a licence for its Employment Intensive Infrastructure Programme in Lebanon (EIIP) to use the FIDIC Short Form of Contract (Green Book 1999) for two years. The United Nations UNOPS agency, which provides infrastructure, procurement and project management services for a more sustainable world, has signed a bespoke licence for four FIDIC documents to create multiple bespoke contracts for five years. The contracts they will use include the FIDIC Conditions of Contract for Construction Contract (Red Book) 1999 Edition, FIDIC Conditions of Contract for Plant and Design-Build (Yellow Book) 1999 Edition, the FIDIC Short Form of Contract (Green Book) 1999 Edition and the FIDIC Client/ Consultant Model Services Agreement (White Book) 2006 Edition. FIDIC recently granted another UN agency, IFAD, a non-exclusive licence to refer to six major FIDIC contracts for projects they finance and the documents will be used as part of
Issue 7 - July 2021
From site...
the fund’s standard bidding documents. The contracts mainly include the 2017 Second edition FIDIC contracts, which cover a wide range ...to solar of international construction and infrastructure work and IFAD’s move to use the documents represents a major endorsement for the contracts from an international funding organisation. This is a significant move from a key UN agency. Another key organisation that has Scatec has chosen FIDIC contracts to help deliver the150 MW Sukkur solar plant project portfolio in Sindh, Pakistan. renewed its ongoing licence to use FIDIC to be $11m. The project has a total contracts is IKEA who have been using estimated capex of $100m with a debt FIDIC contracts since 2015. They leverage of 75%. recently bought two watermarked FIDIC has signed dozens of licence collections for a number of key FIDIC agreements with organisations all over contracts and one bespoke licence for the work and many more are in the a project in Malaysia. Another vote pipeline. Commenting on this success, of confidence for our contracts from a FIDIC’s international client manager leading global brand. Ieva Liaugaude, said: “The post-Covid Elsewhere, FIDIC has signed 16 recovery is still very much underway bespoke licenses with renewable and now more than ever FIDIC is ready power producer Scatec for its 150 MW to offer well-structured and balanced Sukkur solar plant project portfolio contracts that are well known and in Sindh, Pakistan. Working for the supported by key funding agencies. National Energy Power Regulatory We are pleased to enjoy the trust Authority, Scatec and its local partner, invested in these ongoing partnerships Nizam Energy, are working on the and delighted to have established finance and construction of the project. new affiliations with prominent Scatec will hold 75% of the equity, stakeholders.” with Nizam holding the remaining 25% and annual revenues are expected
15 FIDIC Contract Users’ Newsletter
Book now for Official FIDIC Contract Users’ Conference for Asia and Australasia Contract users in Asia and Australasia will gather online on 13-15 July for the latest Official FIDIC Contract Users’ Conference. The Official FIDIC Contract Users’ Conference (Asia and Australasia time zone event) is being staged online and delivered in-house by FIDIC on 13-15 July 2021. The three-day conference is a must-attend event for all those working with FIDIC contracts in Asia and Australasia and bookings are open now. This event, targeting both the Asia and Australasia contract users’ community, offers a unique opportunity to share progress on the application and use of FIDIC contracts internationally and across the region and will include participation from MDBs, private sector organisations and clients, government, engineers, contractors, investors, consultants, and other stakeholders who have an interest in FIDIC contracts. Day 1 of the conference on Tuesday 13 July (FIDIC Contracts - current state of play, latest developments and future plans) will offer
delegates a comprehensive overview of the current state of play regarding FIDIC’s market-leading contract documents and includes an update on planned new contracts in the pipeline and the latest news on new initiatives and developments underway. The first day of the conference will also take a look at the latest regional developments on FIDIC contracts and also highlight how to best use them to improve project procurement. The day will be rounded off with an ‘Ask the FIDIC contracts committee’ Q&A where delegates will be able to quiz the members of the committee on any and all matters related to FIDIC contracts. Day 2 of the conference on Wednesday 14 July 2021 (Where are the clients and the Contractors in the ASPAC region and what are they doing? Best Practices) will focus on the multilateral
development banks (MDBs) and their use of FIDIC contracts across the Asian and Australasia region. Leading representatives from the MDBs, including the Asian Infrastructure Development Bank, Islamic Development Bank, Asian Development Bank and World Bank will offer their perspectives on the contracts they are using and how they are using them. Day 2 will also see key clients and contractors from the region giving an update on their use of FIDIC contracts and offering their views. Day 3 on Thursday 15 July 2021 (Innovation & Disruption, where the changes are coming from) will examine how innovation, disruption and change are affecting future project delivery, especially in the technology area, and how FIDIC contracts might need to
adapt to take account of these changes. There will also be a session on how the Covid pandemic has impacted the industry and the role of FIDIC contracts in supporting users through challenging times. Speakers will also look at dispute avoidance and resolution trends during the pandemic and there will also be a mustattend session on the role of dispute avoidance and adjudication boards and how these are working in practice across the region. Places at the conference cost €275 for the full three days and there is a 10% discount for two or more participants attending from the same company. Click here for further details of the conference and to book a place.
Issue 7 - July 2021
16
Contract Users’ Newsletter
CONTACT US l Please send news, views and articles on FIDIC contracts to the newsletter editor Andy Walker at awalker@fidic.org
l For contract order queries email FIDIC at fidic.pub@fidic.org
l Send general FIDIC enquiries to fidic@fidic.org
Upcoming FIDIC conferences and events future infras tru ct u
2
1
10 a
in ing st
re
Inv e
Details of future FIDIC conferences and events of interest, so make sure you save the dates today.
nd
13 Septem ber
20
Global Infrastructure Conference
FIDIC Global Infrastructure Conference 2021, 10 and 13 September 2021 Virtual online event Click here to register your interest to attend.
FIDIC Project Awards Winners’ presentation event Evening of Monday 13 September 2021
All you need to know about the FIDIC Short Form of Contract (Green Book) 2nd Edition Tuesday 5 October 2021 at 12noon CET Free FIDIC contracts committee webinar
FIDIC Committee Webinar Series
Click here to register.
FIDIC International Contract Users’ Conference, London December 2021 Main conference: 29 November – 2 December 2021
All dates/locations are subject to change and some events may be virtual depending on the Covid situation.
Find out more and check the latest details at http://fidic.org/events
FIDIC Contract Users’ Awards Winners’ presentation event Evening of Tuesday 30 November 2021
FIDIC CONTRACT USERS’ CONFERENCES 2021 FIDIC is grateful to strategic sponsor CMS for its support of our Official FIDIC Contract Users’ Conference series.
CMS_LawTax_CMYK_from101.eps
Issue 7 - July 2021
