Contract Users’ Newsletter ISSUE 3 Oct/Nov 2019
Published by the International Federation of Consulting Engineers (FIDIC)
www.fidic.org
A global language for contracts More and more organisations are recognising the value of FIDIC contracts to global infrastructure projects, reports FIDIC’s international client manager, IEVA LIAUGAUDE. FIDIC contracts are getting wider worldwide coverage, becoming more influential as they are adopted by leading clients and funders and sales are on the up. South Africa and the UK are still dominating as key territories for sales, but other areas and clients are also emerging. The ongoing growth in influence and sales is due to a number of factors. FIDIC’s signing of agreements with a number of multilateral development banks has given a big boost to its contracts and their reputation on a global scale. Several new agreements have been signed as a range of organisations - from international funding institutions, major corporations and small contractors recognise the need for harmonised forms of contracts to ensure risk control and savings and to remove the need to create
a bespoke contract. Increasingly, FIDIC contracts are being seen as the common language for a globalised construction and infrastructure world. FIDIC’s contract clients range from Energinet in Denmark, who are constructing a major gas pipeline connecting Denmark and Poland with Norway’s gas fields, to the International Labour Organisation, a UN agency issuing FIDIC contracts to implement their employment-intensive, economic diversification and structural change programmes and also developing countries like Madagascar and East Timor. The growing interest in FIDIC contracts is also backed up by those FIDIC member associations (MAs) who are translating the latest Rainbow Suite 2017 along with other contracts. FIDIC’s Polish and South Korean MAs
have recently completed numerous translations along with FIDIC’s Vietnamese and Ukraine MAs. Other MAs in Georgia, Japan, Russia, Iran, Turkey, Czech Republic, Thailand and others are also in the process of translating FIDIC contract forms and agreements, which will provide even more local exposure in those countries. Due to the ongoing successful collaboration with multilateral development banks, FIDIC is also working closely to finalise translations of key contract forms into Spanish and Portuguese. French, Arabic and Chinese translations are also in the pipeline and being discussed with partners. It all represents good news for FIDIC and better contractual relations in the global construction sector.
FIDIC Africa Contract Users’ Conference, Livingstone, Zambia, 4-7 November 2019
www.fidic.org
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An exciting time to be more involved in FIDIC Association of Consulting Engineers of Zambia (ACEZ) chief executive CHITUWA SINKALA CHULU, who recently joined FIDIC’s directors and secretaries’ advisory council, talks here about the work of the group.
I cannot think of a more exciting time to join the FIDIC DNS advisory council than this. 2019 has been an interesting and challenging year for ACNZ. The association has been aligning its operations with that of FIDIC in order to achieve the common goal of raising the visibility, integrity, and reputation of the engineering and construction sector. The timing for this could not have been more perfect, because our country has embarked on huge public infrastructure projects that requires our members to give their level best. As these projects roll out, we as an association have been advocating for the use of the FIDIC contracts. Our members through the use of FIDIC contracts have been able to render exceptional service not only to government, but to the general public as a whole. This has resulted in reduced costs, improved quality and efficiency in the manner these projects have been undertaken.
Chituwa Sinkala Chulu, chief executive of the Association of Consulting Engineers of Zambia.
The importance of this cannot be overemphasised especially in the face of limited public resources to cater for these projects. This has raised the profile of our consulting engineers as an indispensable stakeholder in the push for sustainable infrastructure development in our country. In the dynamic consulting engineering field, the benefits of being part of the advisory council at this time are plenty. On a personal level, the DNS advisory council will provide a platform for me to network and share best practice. On the one hand, the association will be able to share with its members the best emerging practices in real time.
This will be very beneficial especially to the members working on novel projects that are being undertaken for the first time in our country. This opportunity will also enable us to table challenges that may arise on our end on a global platform quickly in order to gain global insights and perspectives that will allow us to resolve them in a timely manner. As an emerging market member association, we are always at the centre of new foreign investment opportunities. This has made facilitation of partnerships between local and foreign firms at the core of what we do, with a particular focus on skills and technological
transfer that impacts on the wealth of knowledge of the local firms as well as give local perspectives to the foreign firms. That said, being part of the DNS advisory council will advance the interests of the consulting engineering field in Zambia by merging the needs of the small and large firms in the pursuit of our common goals. I’m really looking forward to serving on the advisory council and contributing to the continued success of the consulting engineering field.
Find out more about ACEZ at www.acez.co.zm.
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FIDIC Africa Contract Users’ Conference
Zambia hosts contracts conflab FIDIC’s Africa Contract Users’ Conference in Livingstone, Zambia, will provide essential networking and insightful guidance on successfully using FIDIC contracts, managing major projects, handling claims, dispute avoidance and resolution and lots more.
generating high levels of engagement and debate amongst users and advisers alike. A must-attend session led by FIDIC contracts committee member Siobhan Fahey and board member and contracts expert Aisha Nadar will examine the feedback received on the new contracts and The latest in FIDIC’s series of regional address how the new suite of contracts has been global conferences is the event for FIDIC received by the global industry. contract users in Africa. As well as providing Other sessions at the conference include essential networking and insightful guidance the advantages of using FIDIC contracts on successfully using FIDIC contracts, the compared with other standard forms, effective conference will offer advice and guidance on claims management, FIDIC’s relationship managing major projects, handling claims, with the multilateral development banks, dispute avoidance and resolution and lots more. approaches to risk, arbitration Delegates will have the chance and adjudication and an to hear first-hand from members “More than 30 FIDIC examination of the challenges of the FIDIC contracts committee and task groups, as well as leading experts and contract and opportunities for FIDIC expert advisors and users, on the users from the region contracts in Africa. More than 30 FIDIC experts latest developments regarding the will be present in and contract users from the FIDIC suite of contracts. Zambia to share region will be present in Zambia A top line-up of speakers has lessons learnt in to share lessons learnt in using been assembled for the event, which takes place at the stunning using FIDIC forms of FIDIC forms of contract to underpin some of the most Avani Falls Resort in Livingstone, contract” challenging infrastructure Zambia. The conference opens projects in Africa. A number of new case with an address from Vincent Mwale, minister studies from different industries and countries of housing and infrastructure development in the have been assembled to help bring the benefits Zambian government, whose perspectives on of using FIDIC contracts to life and to help the current state of infrastructure are sure to be delegates understand the practical challenges of worth listening to. FIDIC application in practice. A key part of the conference is a review of the new FIDIC 2017 suite of contracts. Officially zzFIDIC is grateful to supporting partner White & launched in December 2017, these revised and Case and supporting sponsors CMS and Pinsent updated contracts have been received with great Masons for their support of the event. interest by the global construction industry
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Tunnel vision – the making of the Emerald Book FIDIC board member AISHA NADAR is the main board liaison for contracts. She explains the rationale and thinking behind the recently launched FIDIC Emerald Book, the Conditions of Contract for Underground Works. FIDIC’s recent collaboration with ITA-AITES (the International Tunnelling and Underground Space Association) to publish a new form of contract for tunnelling and underground works, The Emerald Book, is a significant development for the global industry. 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 and 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.
The FIDIC Emerald Book.
Civil engineer Matthias Neuenschwander from Switzerland, who chaired the FIDIC task group that developed the Emerald Book.
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. 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
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FIDIC board member Aisha Nadar.
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 fastgrowing 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.
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Updated selection of consultants guide published FIDIC has just published the third edition of its Guidelines for the Selection of Consultants, which are essential reading for anyone looking to choose a consulting engineer for a project. FIDIC’s latest Guidelines for the Selection of Consultants have just been published. The 2019 third edition presents the commonly used methods of consultant selection worldwide, explains the respective procedures used and combines all of these in one compact document, while highlighting FIDIC’s policies in this crucial area. The guide was produced by the FIDIC business practice committee, chaired by Andrew Read from New Zealand. FIDIC has made these guidelines available as a free online download and they are essential reading for both consultancy firms and those organisations that engage them for project work. Selecting the right consultant for a project will enhance the value of the project to investors, stakeholders and the community and will reduce the risks associated with it. Enhancing value will result in improved functional, economical, commercial and environmental performance as well as better acceptance by the communities experiencing the project. Experienced senior officials of major multilateral development banks have often said that “clients should
FIDIC’s Guidelines for the Selection of Consultants.
become better aware of the importance of consultant selection and the impact of the choice of the consultant on the overall quality of the completed project”. FIDIC has long advocated that the decision of selecting consultants should be assigned to a group that would base their decisions solely on the concept of quality, guided by their expertise and their ethics. This approach is even more suitable in today’s modern world, with QBS (Quality Based Selection) underscoring the importance of utilising the most appropriate, experienced and reputable individuals for key project decisions. However, while FIDIC recognises QBS as the international best practice for consultant selection, the purpose of the guide is to explain the selection procedures of
different methods and not the promotion of any specific selection method. The guide stresses that the overriding concern when selecting consultants should always be the maintenance of appropriate quality of the professional services provided, with due attention being paid to the suitability of purpose, economy and value, sustainability, efficiency, integrity, management of risks, public welfare, fair opportunity for all consultants and transparency of the process. Guidelines for the Selection of Consultants highlights FIDIC’s recommendations in a number of key areas
including selection method, transparency, capacity building, integrity and anticorruption, fair competition, harmonisation, limitation of liability, professional liability (indemnity) insurance, lifecycle costs and monitoring outcomes. The guide covers in some detail the process of selecting a consultancy firm, highlighting the different selection methods that can be used and how to evaluate proposals. Userfriendly and easy to follow, with a handy definitions and references section, the updated FIDIC Guidelines for the Selection of Consultants are sure to be required reading for consultants and clients alike.
Download the FIDIC Guidelines for the Selection of Consultants at http://fidic.org/ books/selection-consultant-3rd-ed-2019
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Caribbean Development Bank signs up to use FIDIC standard contracts The Caribbean Development Bank has signed a five-year agreement to use FIDIC standard contracts. FIDIC has secured a major agreement with the Caribbean Development Bank (CDB) that will see the international funding organisation adopt the use of nine FIDIC standard contracts for the next five years. CDB is the leading source for development financing in the Caribbean and is committed to supporting inclusive and sustainable growth and good governance in the region. Under the terms of the agreement, FIDIC has granted the CDB a nonexclusive licence to refer to the nine major FIDIC contracts for projects they finance and the documents will be used as part of the bank’s standard bidding documents. The contracts include the latest 2017 Second Edition FIDIC contracts and 1999 editions, which cover a wide range of international construction and infrastructure work. The CDB’s move represents another major endorsement for FIDIC contracts from a major international funding organisation, following similar agreements signed with the World Bank and Inter-American Development Bank earlier this year. FIDIC chief executive Dr Nelson Ogunshakin
said: “This is another major development for FIDIC and we are delighted that the CDB has agreed to use our 2017 editions of the Rainbow suite of contracts, as well as the 1999 editions, as an accepted form of contract for use with their standard bidding documents. This will create more certainty in the market as by facilitating the use of FIDIC contacts on major projects the CDB is
saying that they endorse the fair and balanced approach that these documents offer to parties on major construction contracts. “The CDB’s endorsement should provide additional comfort to the financial, institutional and private equity investors operating in the global market to adopt the use of
A CDB-funded road safety project in Belize, which improved over 80km of road infrastructure between Belize City and Belmopan.
FIDIC standard procurement contracts as an effective tool to mitigate the risk associated with investable infrastructure asset class.” Commenting on the signing of the agreement, Doug Fraser, head of procurement at CDB, said: “We are very pleased to sign this agreement with FIDIC. It provides our borrowing member countries with the ability to use internationally recognised and balanced forms of contract to further their project-specific and development objectives.” The Caribbean Development Bank is a regional financial institution established in 1970 for the purpose of contributing to the harmonious economic growth and development of its borrowing member countries (BMCs). In addition to the 19 BMCs, CDB’s membership includes four regional non-borrowing members – Brazil, Colombia, Mexico and Venezuela and five non-regional, non-borrowing members Canada, China, Germany, Italy - and the United Kingdom. CDB’s total assets as at 31 December 2018 stood at $3.24bn. These include $1.75bn of ordinary capital resources and $1.49bn of special funds resources.
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A view from the FIDIC contracts committee FIDIC contracts committee member SIOBHAN FAHEY is a chartered civil and structural engineer and lawyer who specialises in construction law. She spoke to us about her work on the committee and a bit more besides.
What’s your day job, where do you work and what do you do?
My day job is working as a selfemployed and independent dispute resolution practitioner (sometimes referred to as a ‘third party neutral’), helping parties under construction contracts to resolve their disputes. I’m based in Dungarvan, a town on the south coast of Ireland, but I do a lot of travelling with my work, in Ireland and overseas. I act variously as an arbitrator, dispute board member, adjudicator, conciliator and mediator of construction disputes. I also give contractual advice on dispute resolution and dispute avoidance for national and international clients.
Tell us about some of the work you do on the FIDIC contracts committee.
In the contracts committee (CC) we very much work as a team for all the work that the committee carries out for FIDIC. This includes drafting and updating FIDIC contracts (and preparing errata memoranda where necessary), preparing guidance documents for use of FIDIC contracts, advising on the interpretation of contractual provisions in FIDIC contracts, advising on the contents of FIDIC contract users’ conferences, and giving input on the development of FIDIC contract training initiatives.
That said, we each have specific areas of responsibility. I was the CC’s principal drafter of the 2017 Red, Yellow and Silver Books and, now that these forms of contract are starting to be used, my work continues on matters that
arise from their use. I am also the leader of the task group currently drafting a FIDIC subcontract for the 1999 Yellow Book, which is planned for publication later this year.
What are the main contract and business challenges facing the industry as you see them?
The increasingly global nature of major construction contracts has highlighted what can often be fundamental differences in the cultural approach taken by the various stakeholders involved. Those from one part of the world often have a different view on how a project should be managed and executed than those from
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are universally recognised as another. Neither is right, neither fair and balanced between the is wrong - but I have experience parties and are used around the of significant contract and world in many business different fields challenges of construction. arising from the “I act variously as an FIDIC also underlying, and arbitrator, dispute actively often opposing, board member, engages with viewpoints and adjudicator, the global expectations conciliator and construction that arise market by from people’s mediator of disseminating different construction practical cultural disputes.” information backgrounds. on what is best practice Why is for construction projects. The it important for FIDIC CC’s role of ensuring that to have a contracts FIDIC contracts are up to date committee? and they meet the market’s FIDIC is best known for its needs, of advising on training standard forms of contract that
and conferences, and of recommending what is current international best practice is, I believe, very important for “Many FIDIC.
to go out to tender for works or for consultancy services, it is more likely that the best qualified potential tenderers will construction actually submit In your opinion, professionals competitive and firms are how highly bids so resulting regarded are in more costfamiliar with FIDIC contracts FIDIC contracts effective projects without internationally? and experienced a corresponding In all my dealings reduction in with users from in using them. ” quality. around the world, feedback has been very positive. FIDIC contracts, If you could change as published, are very highly one thing about the regarded internationally! What construction industry does tend to cause many what would it be – and difficulties for international users why? is the tendency to introduce It would be that corruption, extensive changes to the asin all its insidious forms, published FIDIC contracts, would be eliminated from which very often have a construction projects. It is significantly adverse effect on such a waste, of money and what was originally a fair and funds of course, but also of balanced contract. While FIDIC the integrity of the people cannot ban the introduction working on a project and of such changes, the CC has of the transparency of their recently addressed this issue dealings. It is very regrettably by preparing and publishing the the case that in those parts of FIDIC Golden Principles. the world where the economy is developing where people Why should clients, most need cost-effective contractors and and timely infrastructure consultants use FIDIC to be built for sustainable contracts? growth, that corruption too FIDIC works contracts, together often plays a role in diverting with the FIDIC consultancy funds from construction agreements, have a very good projects which then languish reputation as being well-drafted, or remain unfinished comprehensive, practical and indefinitely. The local societal useable. As such, for decades cost resulting from delays or they have been extensively incompletion of the project used around the world and, is, inevitably, far greater by all accounts, such use than the monetary benefits continues unabated. Many that some individuals might construction professionals and receive by corruption. firms are familiar with FIDIC contracts and experienced in using them. It follows then that if a client chooses a form of FIDIC contract or agreement
FIDIC contracts committee member Siobhan Fahey pictured with FIDIC chief executive Dr Nelson Ogunshakin.
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Making contract connections in China In a significant step for the global industry, FIDIC has signed two landmark collaboration agreements to work closely with Chinese contractors’ and consultants’ assaociations. FIDIC has signed two ground-breaking agreements that will see the organisation work in close collaboration with the China International Contractors Association (CHINCA) and the China Engineering and Consulting Association (CECA) and help to increase the use of FIDIC contracts in the world’s biggest developing construction market. A memorandum of understanding (MoU) with CHINCA will improve collaboration between international and Chinese businesses, facilitate skills and knowledge transfer and increase the understanding and use of FIDIC contracts. The two-year MoU was signed following discussions between FIDIC and CHINCA during which both organisations agreed the need to improve cooperation between businesses in China and internationally. The MoU also aims to improve the competence of Chinese contractors in the management and application of FIDIC contracts, increase exchanges of engineering professionals and upgrade the skills of individual professionals. The MoU agrees a number of areas for collaboration, including: • Establishing a CHINCAFIDIC resources sharing framework; • Setting up an
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information exchange framework for publications, reports and market information; Joint working to support both organisations’ research activities; Encouraging Chinese contractors to use qualitybased selection; Working together on the Belt and Road Initiative (BRI); Sharing human resources knowledge and collaborating on training initiatives; Increasing exchange visits between the leaders of CHINCA and FIDIC.
Commenting on the signing of the MoU, FIDIC chief executive Dr Nelson Ogunshakin said: “This is a landmark moment for FIDIC and the construction and
FIDIC chief executive Nelson Ogunshakin and CHINCA chairman Fang Qiuchen signing the MoU.
infrastructure industry chairman Fang Qiuchen in China. Both FIDIC commented: “FIDIC and CHINCA represent contracts are one of the most businesses whose activities popular templates used in create a legacy that citizens international infrastructure experience for generations projects. Chinese contractors and the social are one of and economic “This is a landmark the largest impacts of application moment for FIDIC and groups that work the construction and influence for FIDIC wellbeing, infrastructure industry contracts culture and and the MoU in China.” societal between structures FIDIC for decades, so it is essential and CHINCA creates a that we work together communication bridge for the common good. between Chinese contractors I look forward to both and international organisations learning from consultants. CHINCA each other and to a fruitful also looks forward to collaboration to ensure that we create better outcomes for our world and its citizens.” CHINCA
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FIDIC chief executive Nelson Ogunshakin (right) pictured alongside the then FIDIC president Alain Bentéjac and CECA chairman She Shi at the signing of their MoU in Beijing.
strengthening cooperation with FIDIC’s newly established Beijing Office in the areas of training, standard contracts and in developing subcontract templates.” A three-year MoU signed with the China Engineering and Consulting Association (CECA) is set to improve collaboration between international and Chinese businesses across a number of key areas and improve the competence of Chinese consultants in planning, design and the management and application of FIDIC contracts. CECA, which represents many Chinese companies working in the engineering and consulting industry, and FIDIC have agreed to collaborate in the following key areas of interest: Information exchange Sharing of information on publications, exchanging weblinks, information sharing on events and exchanging knowledge and
tools on engineering design issues. Membership CECA and FIDIC to explore how they can develop a membership model in China which provides a better representation of the consulting engineering industry by the Chinese FIDIC member association, the CNAEC, and to work together to support international consultants becoming members of CECA. Events and visits FIDIC and CECA will conduct exchange visits to explore collaborative issues, invite each other to participate in their respective organisation’s events and CECA will invite FIDIC to send speakers to its conferences and workshops. Training and certification programmes FIDIC and CECA will discuss establishing a consulting engineer training and
certification programme to meet the needs of the industry globally. One Belt One Road construction To provide opportunities for discussion and collaboration between Chinese, international and local consultants on the Belt and Road initiative and to work towards FIDIC’s values of quality, integrity and sustainability in the delivery of Belt and Road projects. FIDIC and CECA will also collaborate to introduce CECA members to FIDIC member associations and help FIDIC member association firms establish business in China. The two organisations will also work together to recommend association members and firms to form consortiums for joint bidding. Commenting on the agreement with CECA, FIDIC chief executive Dr Nelson Ogunshakin said: “I am delighted that FIDIC has signed this agreement with CECA and to be working
closely with them on areas of mutual interest. I see this as a big boost for FIDIC members, international consulting and engineering firms and also the construction sector in China and look forward to working with them over the next three years.” Former FIDIC president Alain Bentéjac said: “The signing of this MoU is a landmark moment for FIDIC and a significant step in our efforts to work in global partnership with the Chinese construction industry. It is especially significant to see collaboration between industry associations in China and we are delighted to have facilitated this for the benefit of the industry globally as well as in China itself. I am sure that working together we will be able to promote mutual understanding and achieve enhanced cooperation across the entire construction sector in China, thereby improving the quality, sustainability and delivery of services.”
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Russian government gives thumbs up to FIDIC contracts FIDIC’s Russian member association, the National Association of Construction Engineering Consultants (NACEC), has made a significant gain after the government announced it would base its list of engineering services contracts on the FIDIC terms.
contracts. This represents a The Russian Federation has great achievement for our issued new guidance stating association and also for that it will create a list of FIDIC and has come about contracts for engineering because of the effective services that is based on the advocacy campaign we have FIDIC contract terms. It’s undertaken,” she said. great news for FIDIC, its NACEC was able to use member association NACEC its position as a respected and the industry. representative body for The move, which is likely construction to lead to the engineering increased “We hope that the consultants use of FIDIC ministry’s strategy in Russia to contracts on influence the construction will work for the government’s projects, was industry and the thinking. “As hailed as a government alike.” the managing significant director of step forward NACEC I’m a member of by Olga Kubanskaya, the Council for Engineering managing director of FIDIC’s Development in the Ministry Russian member association of Trade and worked on NACEC, and the result of an the strategy document effective lobbying campaign for the Ministry for by her association. Economic Development,” “Our Ministry for said Kubanskaya. “It was Economic Development has our proposal to include drafted the Russian strategy a statement about FIDIC for export services up to contracts in 2025 and this strategy “The strategy states the strategy, as we know includes the that Russia should that FIDIC development contracts can of engineering create an official standard list of help to create services,” better project Kubanskaya contracts based on management explained. FIDIC contracts.” of large “The strategy infrastructure states that projects. We hope that the Russia should create an ministry’s strategy will work official standard list of for the industry and the contracts based on FIDIC
Olga Kubanskaya, managing director of FIDIC’s Russian member association, the National Association of Construction Engineering Consultants.
government alike,” she said. Kubanskaya said that the move by the ministry would help in raising the profile of FIDIC in Russia and the reputation of NACEC members. “It means a lot for NACEC as it means that our agreement for FIDIC books translation and production will now work for the Russian government and this has helped with our licence extension to 2021 for FIDIC documents,” she said. “This year and next year we will have a lot of work together with the Russian government to take the best practices from FIDIC and to apply
them in our programme for standardisation of contracts, which is excellent for widening the reputation of both FIDIC and NACEC members,” Kubanskaya said. The Russian Ministry for Economic Development’s decision to base its engineering services contracts on FIDIC contracts is yet another vote of confidence for a suite of contracts which are becoming ever more respected on the global stage and a further example of the benefits of FIDIC and its member associations working together with national governments for mutual benefit.
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Philippines DTI signs contract training agreement with FIDIC FIDIC has signed a contract training MoU with the Philippines Department of Trade and Industry FIDIC has signed its first ever contract training FIDIC has signed a memorandum of understanding (MoU) with the Philippines Department of Trade and Industry (DTI) to train government engineers and other construction professionals in the use of FIDIC contracts. The two-year MoU was signed following detailed discussions between FIDIC and DTI and has been ratified by the Construction Industry Authority of the Philippines (CIAP), the policy making body for construction in the country. The agreement will assist Officials from FIDIC and the Philippines DTI, including Rowel Barba, undersecretary in the implementation of the Philippine at the Philippines DTI, signing the memorandum of understanding. Construction Industry Roadmap 20202030, which aims to improve sector in the Philippines and we look forward to the quality of construction working closely with stakeholders there over the “We are delighted services and promote integrity, coming months and years.” professionalism and innovation to have signed this Rowel Barba, undersecretary at the across the supply chain. Philippines DTI, said: “The MoU will pave agreement with the Under the terms of the MoU, the way for greater understanding and easier Philippines DTI and the DTI will conduct a national adoption of FIDIC contracts among Filipino to be working in awareness campaign on FIDIC engineers, particularly in the government contracts amongst construction collaboration with agencies that implement Official Development industry stakeholders and include them on delivering Assistance international competitive bidding and the contracts in its regular public private partnership projects. We hope that a FIDIC contract training programmes. They will this will lead to progress as we continue into the training programme also provide training on FIDIC Golden Age of Infrastructure in the Philippines.” contract modules for government for their staff.” Former FIDIC president Alain Bentéjac said: engineers and other professionals “I look forward to FIDIC building a strong involved in the procurement, working relationship in partnership with the contract drafting and administration of DTI and the Construction Industry Authority of contracts for government infrastructure the Philippines as we collaborate contracts. to raise the awareness and use of “The MoU will pave Commenting on the signing of the MoU, FIDIC contracts. I am confident FIDIC chief executive Dr Nelson Ogunshakin the way for greater that this MoU will help in said: “We are delighted to have signed this promoting mutual understanding understanding and agreement with the Philippines DTI and to be and enhanced cooperation across easier adoption of working in collaboration with them on delivering the entire construction sector in FIDIC contracts a FIDIC contract training programme for their the Philippines, thereby improving staff over the next two years. This is excellent among Filipino the quality, sustainability and news for FIDIC and also the construction delivery of services in the sector.” engineers.”
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EBRD is latest funding bank to sign up for FIDIC contracts
The European Bank for Reconstruction and Development has signed a five-year agreement to use FIDIC standard contracts. FIDIC has secured a major agreement with the European Bank for Reconstruction and Development (EBRD) that will see the international funding organisation include the use of nine FIDIC standard contracts for the next five years. FIDIC has granted the EBRD a non-exclusive licence to refer to the nine major FIDIC contracts for projects they finance and the documents may be used as part of the bank’s standard tender documents. The contracts include the latest 2017 Second Edition FIDIC contracts and 1999 editions, which cover a wide range of international construction and infrastructure work, and EBRD signing the agreement represents another significant endorsement for FIDIC contracts from a major international funding organisation.
FIDIC chief executive Dr Nelson Ogunshakin said: “This is a major step because not only has the EBRD agreed to promote the use of FIDIC contracts in their country of operation, they have indicated their interest to enter into an agreement with FIDIC to provide certified training on FIDIC contracts on a project-by-project basis in their ever-increasing countries of operation. We are delighted to discuss this new relationship with EBRD to support their capacity building efforts and provide technical assistance and quality training.” Commenting on the signing of the agreement, Jan Jackholt, the director for the procurement policy and advisory department at the EBRD, said: “Whilst the bank’s procurement policy enables clients of the bank to use any recognised
FIDIC chief executive Nelson Ogunshakin (right) pictured alongside Jan Jackholt, the director for the procurement policy and advisory department at the EBRD, following the signing of the agreement.
international form of contract, the reality is that the FIDIC forms of contracts are the most widely used forms of contracts in our countries of operations. “We are very pleased that we now have an agreement that enables the bank to align its standard tender documents with various FIDIC contracts which makes it easier to ensure that also other policies of the bank like the environmental and social policy and the enforcement policy are adequately covered. We are also pleased about the dialogue in regard to capacity building which hopefully can lead to a programme
for better support to clients and consultants in the appropriate use of FIDIC contracts.” New FIDIC president Bill Howard said: “I’m delighted to see this move by the EBRD, which builds on my predecessor Alain Bentéjac’s excellent work with the international funding institutions. Strengthening FIDIC’s relationships with the banks and the international funding institutions will enhance our efforts to establish a new dedicated committee to address and coordinate FIDIC’s engagement with the financial institutions that will benefit the whole industry.”
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CERN signs licence agreement with FIDIC CERN, the European Organisation for Nuclear Research, has signed a licence agreement with FIDIC to use and amend FIDIC’s Construction Contract 2nd Edition (2017 Red Book). The licence allows CERN to use the Red Book’s terms to create a bespoke contract in relation to its Science Gateway project in Geneva, Switzerland.
CERN is a European research organisation that operates the largest particle physics laboratory in the world. Its Science Gateway project is a new scientific education and outreach centre, to be designed by worldrenowned architects, Renzo Piano Building Workshop. The purpose of the project is to create a hub of scientific education and culture to inspire younger
generations with the beauty of science. Aimed at engaging audiences of all ages, the Science Gateway will include inspirational exhibition spaces, laboratories for hands-on scientific experiments for children and students from primary to highschool level, and a large amphitheatre to host science events for experts and nonexperts alike.
Artistic view of CERN’s Science Gateway.
New subcontract for plant design and build A new FIDIC Conditions of Subcontract for Plant and Design Build is due for publication and set to be launched at the FIDIC International Contract Users’ Conference in London on 2-5 December 2019. The Yellow Book Conditions of Subcontract is for use in conjunction with the FIDIC Conditions of Contract for Plant and Design Build, First Edition 1999. The clauses of general application contained in the subcontract are based on the FIDIC Conditions of Subcontract for Construction, First Edition 2011, with changes where necessary to reflect the differences between
the FIDIC Conditions of Contract for Plant and Design Build, First Edition 1999 and the FIDIC Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer, First Edition 1999. The document includes a series of flow charts which show the critical sequences of activities which are specific and unique to the subcontract form of contract. These have been included to facilitate an understanding of the procedures and terminology found in these FIDIC Conditions of Subcontract for Plant and Design Build.
Integrity management guidelines published
FIDIC has published its Guidelines for Integrity Management System in the Consulting Industry 1st Edition (2019) Part III. This comprehensive toolkit sets out a road map on how consulting engineering firms could apply integrity management in their work and provides the details on how to develop a FIDIC integrity management system (FIMS) and use it in their dayto-day consulting practice. The guide shows how consulting companies that already have a functioning FIMS may move towards the adoption and eventual certification of an integrity management system incorporating an antibribery framework under an ISO 37001 standard. Developing a FIMS presents an ideal opportunity for a consulting company to introduce improved business practices designed to enhance the quality of business management. To download FIDIC’s Integrity Management Guidelines visit http://tiny.cc/4alnez
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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 contract users’ conferences Future FIDIC contract users’ conferences are taking place in London so make sure you save the dates today. The first winners of The FIDIC Contract Awards will be presented at the London FIDIC Contract Users’ Conference in December.
Save the date!
32nd FIDIC International Contract Users’ Conference, 2-5 December 2019 Main Conference: Tuesday 3 and Wednesday 4 December 2019 Workshops: Monday 2 and Thursday 5 December 2019 Location: Novotel London West, London, UK
FIDIC Middle East Contract Users’ Conference, February 2020 Dates to be confirmed
3rd FIDIC Latin America Contract Users’ Conference, March 2020 Dates to be confirmed
Location: Hotel TBC
Location: Crowne Plaza Hotel de México, Mexico City, Mexico
Find out more at https://law.knect365.com All dates/locations may be subject to change.
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